Mfarmam: Making Money Scam

Financial institutions typically don't ask customers to take their money elsewhere.

But the AFTRA-SAG Federal Credit Union, which is not affiliated with the actors' unions but serves many of their members, took the unusual step this week of asking well-heeled depositors to consider withdrawing some of their funds.

“Due to the unusual economic and market conditions, we are asking you, a select group of our large depositors, to move a portion of your funds to another institution," the credit union said in a letter mailed out this week. “This request is a temporary one, so we would like to explain why we are making this request: The Credit Union is ‘flooded with cash.’”

The letter went on to say that even though the AFTRA-SAG Federal Credit Union was flush with deposits, returns from investments in U.S. government-backed securities had been unusually low. At the same time, “most members are reluctant to borrow causing our loan growth to decline.”

Interest income from loans is a key source of income for credit unions because they help maintain capital ratios required by federal regulations.

Requests like the one made by the AFTRA-SAG Federal Credit Union are relatively rare, said Henry Kertman, spokesman for the California Credit Union League. But they are not unheard of: A handful of other credit unions in California have taken similar steps to improve their capital ratios.

“There is more money to lend than there are people to take out loans on that money," Kertman said. “As a result, some credit unions have taken very aggressive steps to reduce the amount of capital they have on hand.”

Those steps include offering more competitive terms and interest rates on loans, and lower interest rates on deposits to discourage consumers from putting too much in their bank accounts.

While banks have also been affected by the low rate of borrowing, credit unions, which are owned by members, have been squeezed even more because they pay slightly higher rates on deposits than do banks and savings and loans.

This year, more than 600 taxi drivers were implicated in a giant taxi scam in which drivers overcharged passengers more than $1.1 million by flipping switches on their meters that kicked in higher rates. In the wake of the scandal, the Taxi and Limousine Company scrambled to portray the incident as a series of isolated incidents and mistakes by a select number of drivers. But according to one of those taxi scammers, these were no Lee Harvey Oswalds: it really was all a giant evil conspiracy!

According to driver Joseph Kastner, a group of drivers would meet together at cabby conferences in garages around the city and plot their nefarious schemes. "I met a series of drivers who decided to rob the public. They were actually having meetings at my old garage," Kastner, 49, told the TLC during a Sept. 30 administrative court hearing. Kastner is one of those accused drivers; he is charged with allegedly cheated 3,925 passengers out of $7,756, the sixth highest amount for an individual driver. Kastner claims that he wanted to become a whistleblower, alleging that the scams were much bigger than let on previously, and that he had stuff on the TLC as well, but no one took his offer: "I tried to tell them over and over again at the hearing. They didn't listen to a word I said. They just don't want to hear it," he told the Post.

So is Kastner trying to escape his fate by alleging a citywide conspiracy, making up stories to look better, or is there really an underground network of thieving taxi drivers plotting to steal unwitting customer's money? TLC obviously didn't take his claims seriously, but the Post sides with Kastner, saying that other cabbies and industry insiders confirm his story, and bad hacks pull other stunts such as charging drivers to put on the heat, pressing the "extra" button on tolls and bridges, and posing as livery drivers at airports and charging more than double the flat fee of $45 to Manhattan. Whether or not the conspiracy is as widespread as Kastner would have you believe, the best thing you can do is consult the Passenger Bill of Rights, and always be vigilant of extra charges of any kind.

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Sunday, December 19, 2010

Making Money Scam

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