— A federal court jury on Friday found the owner of a company that sells "male enhancement" tablets and other herbal supplements guilty of conspiracy to commit mail fraud, bank fraud and money laundering.
Steve Warshak, whose conviction was reported Friday by The Cincinnati Enquirer, is founder and president of Berkeley Premium Nutraceuticals, which distributes Enzyte and a number of products alleged to boost energy, manage weight, reduce memory loss and aid restful sleep.
Television ads for Enzyte feature "Smiling Bob," a goofy, grinning man whose life gets much better after he uses the product, which allegedly boosted his sexual performance.
Warshak, 40, could face more than 20 years in prison and his company could have to forfeit tens of millions of dollars.
Messages seeking comment from Warshak’s Boston attorney Martin Weinberg and Assistant U.S. Attorney Anne Porter were left at their offices Friday night.
Prosecutors claimed customers were bilked out of $100 million through a series of deceptive ads, manipulated credit card transactions and the company’s refusal to accept returns or cancel orders. They said unauthorized credit card charges generated thousands of complaints over unordered products.
Warshak’s mother, Harriett Warshak, also was convicted of conspiracy, bank fraud and money laundering. Two other company employees were convicted on related charges.
Harriet Warshak said she would appeal. "We don’t believe it was a fair verdict," she said.
Several friends and relatives of the defendants wept as the verdicts were read.
"It’s a sad day," said Bruce Whitman, an attorney who represented an employee who was acquitted. "I find it hard to believe the other defendants were convicted."
He said the accusations should have been made in a civil court, not a criminal court.
The government also alleged the defendants obstructed investigations by two federal agencies.
Some former employees, including relatives of Warshak, pleaded guilty to other charges and cooperated with prosecutors. They testified that the company created fictitious doctors to endorse the pills, fabricated a customer-satisfaction survey and made up numbers to back claims about Enzyte’s effectiveness.
Defense lawyers characterized that testimony as tainted because it was forced by the threat of prosecution.
The defense contended in the trial that Berkeley suffered from customer service that didn’t keep pace with the company’s rapid growth from a one-person startup in 2001 to 1,500 employees in 2004.
Weinberg also had told jurors that Berkeley had been targeted by the government in "a relentless criminal investigation."
MGM Mirage says its fourth-quarter profit soared, primarily on a hefty gain related to its CityCenter project.
The Las Vegas-based casino operator says net income surged to $872.2 million, or $2.85 per share, from $201.6 million, or 69 cents per share, in the prior year.
The company says earnings from continuing operations jumped to $870.8 million, or $2.85 per share, from $199.1 million, or 68 cents per share.
MGM (MGM, Fortune 500) says quarterly revenue rose 4 percent to $1.93 billion from $1.85 billion a year earlier payday loans.
Analysts polled by Thomson Financial expected net income of 55 cents per share on revenue of $1.92 billion.
Quarterly results included a $1.03 billion gain related the contribution of CityCenter to a joint venture.
Yahoo is adopting severance plans to take effect if the Web portal is taken over by Microsoft (MSFT, Fortune 500).
The plans cover all of Yahoo’s full-time employees, including its top executives, for two years after a change in control of the company.
Workers who lose their job without cause - or quit for good reason as Yahoo (YHOO, Fortune 500) defines it - would continue to receive their salary and medical benefits for 4 to 24 months, plus reimbursement for "outplacement services" for two years savings account payday advance.
The departing employees’ stock options would also vest faster than scheduled.
Oil prices rose slightly Monday, gaining after further hints that OPEC may cut production if global supplies continue to rise.
The Organization of Petroleum Exporting Countries has trimmed its forecasts for demand this year by 100,000 barrels a day, but it has also hinted it may cut production if global supplies of crude continue to rise, according to Dow Jones Newswires.
Several reports in recent days, though, have suggested that global economic conditions may not be deteriorating as quickly as feared. The U.S. Federal Reserve said Friday that industrial production in the world’s largest economy rose last month in line with expectations. On the other hand, the Energy Department, the International Energy Agency and now OPEC have all cut demand forecasts.
OPEC is scheduled to meet March 5 in Vienna to review its production policy.
Light, sweet crude for March delivery rose 40 cents to $95.90 a barrel in electronic trading on the New York Mercantile Exchange by midday in Europe.
Trading volumes on Monday were thinner than usual due to the President’s Day holiday in the United States and the start in London of the International Petroleum Week, a reputed oil industry conference.
The Nymex crude contract rose 4 cents Friday to settle at $95.90 a barrel after alternating frequently between positive and negative territory. Oil prices have risen more than $8 in little more than a week.
On Sunday, Venezuelan President Hugo Chavez soothed American motorists, saying that Venezuela is not preparing to cut off oil shipments to the United States.
The socialist leader rattled oil markets when he threatened a week ago to halt shipments to the United States in retaliation for Exxon Mobil’s success in persuading courts in the U.S. and Europe to freeze Venezuelan assets.
"We don’t have plans to stop sending oil to the United States," Chavez said Sunday during a visit to heavy-oil projects in Venezuela’s petroleum-rich Orinoco River basin that were nationalized last year.
But he added that Venezuela could cut off supplies to the United States if Washington "attacks Venezuela or tries to harm us." Chavez has repeatedly warned against a possible U.S bad credit payday loan. invasion to seize control of Venezuela’s immense oil reserves. U.S. officials have denied any such plan exists.
The United States relies on Venezuela for about 10% of its oil imports.
Chavez’s administration is locked in a legal battle with Exxon Mobil over compensation for the nationalization of one of four heavy-oil projects in the Orinoco River basin.
Exxon Mobil (XOM, Fortune 500) is seeking to freeze billions of dollars in Venezuelan assets in the United States and Europe to guarantee a payoff if it wins a decision by an international arbitration panel.
Last month, a British court injunction ordered the temporary freezing of up to $12 billion in assets of state-run Petroleos de Venezuela, or PDVSA.
Traders also were keeping an eye on developments in Nigeria, where militants responsible for attacks on the country’s oil infrastructure asked U.S. President George W. Bush to mediate in the long-lasting crisis.
The Movement for the Emancipation of the Niger Delta, or MEND, began intensifying its attacks two years ago, kidnapping foreign workers and sabotaging oil infrastructure.
As a result of the conflict, Nigeria, Africa’s biggest producer and a major supplier of crude to America, has seen its output fall by about 20%, helping send oil prices higher.
In London, Brent crude for April delivery rose 33 cents to $94.96 a barrel on the ICE Futures exchange.
Heating oil futures rose 0.51 cent to $2.652 a gallon while gasoline prices gained 0.42 cent to $2.498 a gallon. Natural gas futures rose 17.9 cents to $8.839 per 1,000 cubic feet.
The managing director of the International Monetary Fund said Friday he is urging Chinese leaders to ease exchange rate controls to address global financial imbalances and their own economic challenges.
Slower U.S. economic growth should affect China but the IMF still expects the economy to expand about 10% this year, said Dominique Strauss-Kahn. He met Thursday with Premier Wen Jiabao and other Chinese leaders.
"What I am working at is trying to explain to Chinese authorities… that it’s in their own interests to have more flexible exchange rates," Strauss-Kahn said. He said that would "help to address both China’s economic challenges and global imbalances."
Beijing’s trading partners complain that China’s currency, the yuan, is kept undervalued, giving an unfair price advantage to Chinese exporters and adding to the country’s swollen trade surplus.
Strauss-Kahn declined to say whether the yuan exchange rate is misaligned but said it is moving in the right direction. Beijing revalued the yuan by about 2% against the U.S. dollar in July 2005 and has allowed it to rise by more than 13% since then. But the United States and others want faster action, and some American lawmakers are calling for punitive steps if Beijing fails to act.
The multibillion-dollar influx of export revenues also is causing Chinese domestic economic problems, straining the central bank’s ability to contain pressure for prices to rise faxless payday loans. The bank drains billions of dollars a month from the economy through bond sales and has piled up $1.53 trillion in foreign reserves.
Strauss-Kahn’s 10% growth estimate was in line with an IMF forecast issued last month. China’s economy expanded by 11.4% in 2007 but economists expect a slight slowdown this year due to lower U.S. demand for exports and Chinese government efforts to cool a boom in credit and investment. Forecasts for 2008 range from 9.5% to 11%.
Strauss-Kahn said he stressed to Chinese planners that a more flexible exchange rate could help achieve their goal of reducing reliance on exports by encouraging China’s own consumers to spend more.
"More domestic demand growth will be what China needs, not export-driven growth," he said.
Also Friday, the IMF said it will sign an agreement with Beijing to cooperate in development efforts in low-income countries. China has been expanding such cooperation with the IMF and other international bodies as its economic and political profile rises on the world stage.
The Justice Department will allow two private-equity firms to go ahead with a $19.5 billion buyout of Clear Channel Communications, the largest operator of radio stations in the United States.
To address competition concerns, the agency is requiring Bain Capital and Thomas Lee Partners to sell radio stations in Cincinnati, Houston, Las Vegas and San Francisco.
The Federal Communications Commission’s earlier approval of the deal was contingent on San Antonio-based Clear Channel (CCU, Fortune 500) selling radio stations in 42 markets.
Before you can say “Barack Obama is president of the United States,'' the economy will be growing faster again.
That forecast is based on the rise in the five-year Treasury yield from its lowest level relative to two- and 10- year notes since 2001. The last two times that happened was during the recessions of 1990 and 2001, and the economy began to expand within nine months.
“We're actually starting to see tell-tale signs by the market that it expects the economy to be in recovery in six to nine months,'' said James Caron, head of U.S. interest-rate strategy in New York at Morgan Stanley. The five-year note “tends to be the most forward-looking point on the curve,'' said Caron, whose firm is one of the 20 primary dealers of U.S. government securities that trade with the Federal Reserve.
If past is prologue, then the five-year note's yield indicates the economy will be on the mend by the Nov. 4 general election. Whoever wins the White House may have Fed Chairman Ben S. Bernanke to thank for cutting interest rates at the fastest pace in almost two decades and President George W. Bush and Congress for a proposed $168 billion stimulus package.
Obama, the junior senator from Illinois, and New York Senator Hillary Clinton each control about half the delegates needed for the Democratic Party's nomination. Arizona Senator John McCain is the front-runner among Republicans.
`Put in Place'
While the risk of a recession is now even, growth will accelerate to a 2.5 percent annual rate in the final three months of the year from 0.6 percent last quarter, according to the median forecast of 62 economists polled by Bloomberg News from Jan. 30 to Feb. 7.
“The economy in the second half will definitely get a boost from the fiscal plan'' and Fed rate cuts, said Stuart Spodek, co-head of U.S. bonds in New York at BlackRock Inc., which manages $513 billion in debt. “The pieces are being put in place.''
Spodek said he sold five-year notes in the first two weeks of January and bought two-year securities.
The yield on the benchmark 2 7/8 percent Treasury due in January 2013 fell 5 basis points, or 0.05 percentage point, to 2.69 percent last week and was at 2.63 percent today, according to New York-based bond broker Cantor Fitzgerald LP. The price rose 7/32, or $2.19 per $1,000 face value, to 100 27/32. The benchmark two-year note's yield fell 13 basis points to 1.94 percent.
What Caron bases his forecast on is the yield on the five- year note compared with the average of the two- and 10-year Treasury. Five-year yields dropped 16 basis points below the average on Jan. 22. The last time they were lower was January 2001, when the difference was 18 basis points no checking account payday advance. The U.S. was in a recession was from March to November 2001.
`Back to Normal'
In August 1990, five-year yields were 2 basis points below the average and rose to 36 basis points above by June 1991. There was a recession from July 1990 through March 1991.
To avert a recession, the Fed cut its target rate for overnight loans between banks twice this year, to 3 percent from 4.25 percent. Central bank officials are confident their actions will pull the economy out of its malaise. Dallas Fed President Richard Fisher said expansion is poised to resume in the second half of the year.
“We're going to go back to normal growth rates,'' he said Feb. 7 in a Bloomberg Television interview during a visit to Mexico City. “We're going to have slower growth for a while, for a half-year.''
Service Slowdown
Yields on five-year notes have increased 14 basis points since the Fed first reduced rates this year on Jan. 22, while two-year note yields have fallen 6 basis points.
Hindering a recovery is the weakest labor market in more than seven years, a decline in services industries and a slowdown in consumer borrowing.
Employers shed 17,000 jobs in January, the first reduction since 2003, the Labor Department said Feb. 1. The Institute for Supply Management's non-manufacturing Index unexpectedly contracted in January at the fastest pace since the 2001, the Tempe, Arizona-based group said Feb. 5. Consumer debt rose at the slowest pace in eight months in December as borrowers cut back on credit-card use, the Fed reported Feb. 7.
Proposals by Obama and Clinton to revive the economy are similar. Both recommend allowing the Bush tax cuts to expire, extending unemployment insurance and reducing demand for foreign oil by building more environmentally sensitive energy sources.
Uninterrupted Growth
McCain favors making Bush's 2001 and 2003 tax cuts permanent. He also advocates a mix of spending reductions and lower taxes or reforms to boost growth.
As Bush leaves office, his departure may be “analogous to the first President Bush,'' said Margaret Patel, who oversees $1.4 billion at Evergreen Investment Management Co. in Boston.
President George H.W. Bush, the current president's father, left in January 1993 with the economy at the beginning of almost 10 years of uninterrupted growth, she said.
“The economy may be stabilized and starting to do better,'' said Patel, who is avoiding Treasuries and buying high-yield debt of energy and basic-materials companies.
Weyerhaeuser Co. said Friday it swung to a fourth-quarter loss as the deteriorating U.S. housing market cut into demand for lumber - a downturn the paper and wood products company expects will continue through 2008.
Federal Way, Wash.-based Weyerhaeuser (WY, Fortune 500) reported a loss of $63 million, or 30 cents per share, compared with a profit of $507 million, or $2.12 per share, a year earlier. Excluding write-downs from housing-related business, restructuring costs and other special items, Weyerhaueser would have earned $90 million, or 42 cents per share, in the latest period.
Revenue fell 18% to $3.94 billion from $4.8 billion.
Analysts polled by Thomson Financial had expected a profit of 35 cents per share excluding items, but forecast higher revenue of $4.13 billion.
Chief Executive Steven Rogel called 2007 a "challenging year" for the paper and wood products industry no fax payday loans. Paper demand has been gradually weakened by a shift to the Internet for news, billing, mailing and other information that was once communicated on paper. The housing downturn has made it more difficult for the industry to maintain profits.
"The continuing erosion of the U.S. housing market created very unfavorable market conditions," Rogel said in a statement. He added that the company expects those conditions to continue through 2008.
Australia's building approvals fell the most in five years in December and business confidence weakened, signaling today's interest-rate increase by the central bank may be its last.
Permits granted to build or renovate homes slid 16 percent from November, the statistics bureau said in Sydney today. The decline was four times more than economists forecast. An index measuring business confidence dropped to a one-year low in the fourth quarter, National Australia Bank Ltd. said separately.
Retail-spending growth cooled to 0.5 percent in December from 0.8 percent in November, another sign that the fastest economic expansion in three years is beginning to slow. Even after today's reports, the central bank raised it benchmark rate by a quarter point to 7 percent, its 11th increase since 2002.
Housing construction may be “succumbing to the Reserve Bank's long tightening campaign,'' said Brian Redican, a senior economist at Macquarie Research in Sydney. The decline in approvals, if sustained, reduces the risk that the central bank will raise interest rates again after today's move, he said.
The Australian dollar traded at 90.69 U.S. cents at 4:04 p.m. in Sydney from 90.68 cents before the reports were released.
Governor Glenn Stevens and his board increased borrowing costs to curb the fastest inflation in 16 years. Underlying inflation accelerated to 3.8 percent in the fourth quarter from a year earlier, a Jan. 23 report showed.
Building Approvals
Building approvals fell by the most since November 2002 in December, today's report showed. The median estimate of 25 economists surveyed by Bloomberg News was for a 4 percent drop no teletrak payday loans. Permits granted to build private houses declined 11.6 percent and approvals for apartments and renovations slumped 25 percent.
As well as today, the central bank raised the overnight cash rate by a quarter point in both August and November. Each increase added about A$42 ($38) a month to the average $250,000 home loan, according to the Housing Industry Association.
An index of business sentiment fell 3 points to 6 in the fourth quarter from the previous three months, National Australia Bank said today. A reading above zero shows those expecting their industry to improve in the coming quarter outnumber those predicting a deterioration.
Corporate confidence declined on concern higher interest rates and slowing global growth will curb sales. That may prompt businesses to pare hiring and investment.
The 0.5 percent increase in retail sales in December was less than the median forecast of 0.6 percent in a Bloomberg News survey. Sales have risen in each of the past seven months, the statistics bureau said today.
Consumer spending was the main driver of the economy's 4.3 percent expansion in the third quarter from a year earlier, the strongest annual growth since 2004.
“Looking ahead, sales will likely moderate as consumers feel the pinch of still-elevated petrol prices, falling share prices, and rising interest rates,'' said Helen Kevans, an economist at JPMorgan Chase & Co. in Sydney.
The Federal Open Market Committee decided today to lower its target for the federal funds rate 50 basis points to 3 percent.
Financial markets remain under considerable stress, and credit has tightened further for some businesses and households. Moreover, recent information indicates a deepening of the housing contraction as well as some softening in labor markets.
The Committee expects inflation to moderate in coming quarters, but it will be necessary to continue to monitor inflation developments carefully.
Today’s policy action, combined with those taken earlier, should help to promote moderate growth over time and to mitigate the risks to economic activity. However, downside risks to growth remain. The Committee will continue to assess the effects of financial and other developments on economic prospects and will act in a timely manner as needed to address those risks.
Voting for the FOMC monetary policy action were: Ben S online payday advance. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Sandra Pianalto; Charles I. Plosser; Gary H. Stern; and Kevin M. Warsh. Voting against was Richard W. Fisher, who preferred no change in the target for the federal funds rate at this meeting.
In a related action, the Board of Governors unanimously approved a 50-basis-point decrease in the discount rate to 3-1/2 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Atlanta, Chicago, St. Louis, Kansas City, and San Francisco.
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