A lawsuit alleges the IBM employees credit union in South Florida caused its members to lose millions by steering them to investments in bonds from a now-bankrupt Georgia finance company that made loans to churches and faith-based organizations.

The claim, made in a lawsuit filed this week in federal district court in West Palm Beach, is against the 85,000-member IBM Southeast Employees Federal Credit Union, which is based in Boca Raton. It has $800,000 in assets and 22 branches, according to the credit union's web site.

The suit says the credit union directed members to Wellstone Securities, a broker-dealer that has gone out of business, and that Wellstone recommended members buy bonds issued by Cornerstone Ministries Investments, which is now in liquidation and under investigation by George securities regulators.

"The credit union and its CEO Lary McCants deny the allegations and intend to vigorously defend themselves in court," said its attorney Michael D. Lozoff of Adorno & Yoss in Miami.

He said the suit is one of many where victims of fraud, bad judgment or the troubled economy seek to "recover their losses by imposing blame on the nearest deep pockets."

Three South Florida law firms -- Sallah & Cox in Boca Raton, Dimond, Kaplan & Rothstein in Miami, and Blum & Silver in Boca Raton - filed the suit on behallf of Claudie Schorrig, a retired IBM employee. The suit sees class-action status, for what the attorneys say are "hundreds of victims."

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Sorry, I have gotten behind on my blogging. I think I'll blame Bernie.

Here's what I've been writing for the newspaper this week. First, Wednesday's column about a dysfunctional Florida program that aims to help homebuyers but it doesn't have any money or procedures for people to use it. The story is here:
http://tr.im/qwO2

And the second is a screed filled with the the anger of South Floridians at Bernard Madoff. My story about his sentencing is here:
http://tr.im/qwPn

And the third was last Sunday's column, about term life insurance, where rates have been low for years, but premiums are going up soon.
http://tr.im/qwTO

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Let's mix tax and mortgage fraud and see how bad that can be.

The latest: People are amending their 2008 tax returns to show that they've bought a home and are entitled to the $8,000 first-time homebuyers tax credit.

But they haven't bought a home.

They did, however, get a big fat check, because that tax credit is refundable.

A local mortgage processor tells me she seen loan applications from five families that have done this.

The first-time homebuyers tax credit covers any home purchased by Dec. 1 this year. So these families could indeed get a home by the deadline and everything would be OK. But I have a feeling that wasn't the point.

If they don't, they probably would have to repay the tax credit. And, they could be in legal trouble, too, for filing a false tax return.

Meanwhile, some of these folks have such poor credit, they're not going to qualify for a mortgage. Now or in December.

Dangerous game they're playing.

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How does an exceedingly rich person, one whose assets may have a net worth of $1 billion, end up $500 million in debt?

The answer, for Michael Jackson as much as for any of us, is more than likely, bit by bit.

I have seen it with rich people as well as the non-rich. The amount of money you have really doesn't matter when it comes to debt.

What makes a difference whether you can arrange your life around the amount of money you have. Or less than what you have.

What works is having an idea of where you want to go in your life and sticking to that plan, not letting every temptation that comes along divert your money away from your goal.

You want something you don't have the cash for, you borrow. It's the same proposition at $1,000 or $1 million.

You can do it in small amounts, with credit cards or home equity loans, or in large amounts, if your name is Michael Jackson.

You can make bigger mistakes when you're richer. But that's no advantage, as I see it.

He should have gotten help, real help, with money issues.

Where were his financial advisors, as he sank into debt?

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I'm always wary when someone says, "It's different this time."

But maybe it is.

The National Foundaiton for Credit Counseling says one-third of Americans think they'll never be able to afford a home.

Even more telling results from its recent poll: Almost half don't believe owning a home is a good way to build wealth.

What a change that would be from the basic message politicians and the tax code have been sending for years.

What could replace a home as a way to build wealth?

What do you think? Owning a home, does it make sense? Will it ever?

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The Federal Deposit Insurance Corp. says some funky things are happening with certificates of deposit.

The FDIC says there’s a game going on at some companies that can’t actually deliver an insured CD, but they’re selling them anyway.

The game goes like this: The company advertises high-rate, insured CDs. But you have to visit the office to get one. Then you find out that a minimum deposit is required and you may have to endure a sales pitch for other products. If you actually want the CD, you are then sent to a terminal to buy the CD over the Internet from the bank that’s actually FDIC-insured.

Protect yourself. Always check to see if the bank where you are buying the CD is FDIC-insured, really. And if the rate is far higher than normal (you can find normal at www.bankrate.com), ask why.

To read more, go here:
http://tr.im/pkI6

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Don't think too much about your retirement.

I know that's the opposite of what most financial advisors say. But I think most people's retirement plans work the other way, surviving on neglect. Which saves them in troubled times, when any pot of money might get raided.

Summertime is the time to set up your account and, well, here's the rest. My most recent commentary from The Nightly Business Report on PBS...

http://tr.im/p3Qf

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Florida’s recession is worse than anything this state has seen in more than a half century, when it comes to money in your pocket.

The Bureau of Economic Analysis said Thursday that Florida now has had three consecutive quarters -- a total of nine months -- in which the personal income of state residents has declined.

That hasn’t happened since the BEA began keeping records in 1948. Florida hasn’t even had two consecutive quarters of falling income until now.

Personal income is a measure of all the income to residents of the state. BEA said job losses, low interest rate payments and cuts in dividend income, plus direct pay cuts are to blame for the decline.

“Salaries have taken a drastic hit,” said Jorge Roca, a recruiter for Spherion in the Miami Office. He says it’s not uncommon to see a candidate in a sales position who was making $150,000 in salary plus commission now be offered a position that offers total compensation of $60,000 to $70,000.

The worst period for Floridians’ income in 61 years could have been even worse, had it not been for Social Security, unemployment and other so-called “transfer payments” that held steady.

“Those are very important in all the states because that’s really the only thing supporting personal income these days,” said BEA economist David Lenze.

Florida recorded a 0.9 percent fall in personal income in the first quarter of this year, compared to the fourth quarter of 2008.

The nation as a whole saw personal income fall 0.5 percent. In the fourth quarter, U.S. personal income fell 0.4 percent.

Florida’s first-quarter decline was larger than income cuts in all but seven states.

Expect more of the same for the remainder of this year, experts say. Roca, the recruiter, says the number of jobs to be filled has been growing, but pay levels remain depressed because employers have so many candidates to choose from in the ranks of the unemployed.

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Don’t know why so many people don’t seem to know this, but let me correct a misperception.

You may believe that if you sell your home in a short sale, you could be in for a big tax bill – as if getting out from under your old mortgage is the same as actually making some money.

That’s not true, at least when it comes to taxes.

There’s a two-year-old law that allows you to avoid federal income tax on forgiven mortgage debt, such as what you’d have in a short sale or a loan modification, under certain conditions.

The IRS says the Mortgage Forgiveness Debt Relief Act of 2007 allows you to exclude from your taxable income:

-Up to $2 million in mortgage debt

-If it’s forgiven between 2007 and 2012

-If the debt t is discharged due to a decline in the home’s value or the taxpayer’s financial condition

-If it was for your principal residence

It’s a break, for those in dire distress.

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President Obama’s financial reform proposal, what do you think?

I am all for the Consumer Financial Protection Agency in concept, but the list of what it might do seems weak. I want this board to have true power to shake down financial products and let consumers know what they are and what dangers they pose. From what I see, it looks like this board will primarily require mortgages to be simpler. Not enough consumer protection for me.

I do like that the Securities and Exchange Commission is told to hold stockbrokers to a fiduciary standard when they give advice. That means, brokers would have to put your interests ahead of their own. Right now, under SEC rules, brokers need only recommend something suitable for you. And who defines suitable? If two products are suitable, why not recommend the one that pays the higher commission? Suitability is squishy. A fiduciary standard is a much higher standard. I’d like to see it be the rule, for everyone who dispenses investment advice.

But then again, I come at this from a perspective of people making long-term plans to accomplish their own financial goals. I’m not the take-the-money-and-run type.

To read the Obama adminstration's proposal, go here:
http://www.treasury.gov/news/index1.html

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