Longboat Retirement Solutions LLC

Part Three: Self Directed Retirement Questions May 19, 2015

This is the third installment in the Self Directed Retirement Questions, Answered.

These are questions I’ve been asked, my answers to those questions, and some commentary.

Question:  What is the difference between a Self Directed IRA and a Solo 401k?

Answer:  A Self Directed IRA requires a Custodian.  Custodians are generally banks and investment houses.  These Custodians charge fees to baby sit your money and tell you where you can and cannot invest your savings.  An SDIRA is far better than a standard IRA, but it can still have high management fees, hoops to jump through, and limitations in what you can invest in.

A Solo 401k, which is designed for the self employed, enables you to invest in anything that the IRS allows.  You become the Custodian; therefore you don’t have any filters on your investments (within the framework of the IRS’s allowed investments).  You basically don’t have to ask permission to use your own savings as you see fit.  Since it is a 401k, you can also borrow up to 50% of the value, up to $50,000.  And again, you don’t have to ask permission or fill out piles of paperwork to take out a loan.  You draw up the terms, put the terms in your safe, write a check from your 401k to you, and then just make the monthly payments to your 401k.  Because you are making payments to your 401k, the interest is essentially free – you are paying yourself!  A Solo 401k also enables you to contribute as the employee and the employer; in other words you can contribute over $50,000 a year to your retirement account – or over $100,000 if your spouse is a partner in the business.  This is a BIG deal.

My thoughts on the two different approaches boils down to this:

If you can, go with the Solo 401k.


Bondpocalypse February 13, 2013

Filed under: Corporate Malfeasance,Economics,Investing Globally — larsfforsberg @ 10:10 pm
Tags: , , ,

…and another fraud begins.


U.S. Sues Wells Fargo: Yet Another Bailed-Out Bank Accused of Fraud October 11, 2012

Filed under: Corporate Malfeasance,Uncategorized — larsfforsberg @ 1:07 am
Tags: , , , , , , ,


BY: Matt Taibbi

Earlier this year, Charlie Munger, who is billionaire Warren Buffet’s right hand at Berkshire Hathaway and a sort of self-proclaimed mad oracle of Wall Street, made some interesting comments. He bashed people who buy gold, delivering an all-time amazing quote:

Gold is a great thing to sew onto your garments if you’re a Jewish family in Vienna in 1939 but civilized people don’t buy gold – they invest in productive businesses.

Munger, if you might remember, is the same gazillionaire dickhead who two years ago ripped people experiencing post-crash economic hard times, saying they should “suck it in and cope” and that anyone who wants to complain about the Wall Street bailouts should realize they were “absolutely required to save your civilization” (Munger thinks a lot about “civilization”). He added that even if you didn’t like them, “you shouldn’t be bitching about a little bailout. You should have been thinking it should have been bigger.”

Some of those bailouts we shouldn’t have complained about, of course, were directed at one of Munger’s favorite companies – banking giant Wells Fargo, in which Munger and Buffett are heavily invested. Wells Fargo got as much as $36 billion in federal aid after the crash and got a massive push from the government to help it buy up the dying crash-era megabank Wachovia for $12.7 billion, a shotgun wedding that created the second-biggest bank in America. Wells Fargo not only got $25 billion in TARP funds just before it bought Wachovia, it got a special tax break from then-Treasury Secretary Hank Paulson, which some reports say was worth as much as $25 billion to WF at that time.

This is all just background for the latest news: Wells Fargo is being sued by the State for vast fraud in the mortgage markets. The U.S. Attorney in the Southern District of New York, Preet Bharara, yesterday brought a case against WF seeking “hundreds of millions of dollars” in damages for what it says is a decade of fraudulent behavior, in which WF wrongfully certified more than 100,000 mortgages as being eligible for federal mortgage insurance. Basically, Wells Fargo screwed the FHA and HUD by mass-approving loans without regard for whether they were defective or not. From the L.A. Times:

When Wells Fargo discovered problems with the loans, it failed to notify HUD, which administers the FHA program, as required, the suit said. The action alleges more than 10 years of misconduct.

“The extremely poor quality of Wells Fargo’s loans was a function of management’s nearly singular focus on increasing the volume of FHA originations – and the bank’s profits – rather than on the quality of the loans being originated,” Bharara’s office said in a statement.

The action by the U.S. Attorney here in New York comes on the heels of another suit against Chase brought last week by Eric Schneiderman in Obama’s Mortgage Fraud Task Force. That action alleges similar mortgage-related scumbaggery by Bear Stearns, which Chase acquired in another government-brokered, market-concentrating shotgun wedding in early 2008.

So in just a week, we’ve seen two pretty big actions brought against the Coke and the Pepsi of the American commercial banking world. We’ll see how they pan out, but it’s interesting, if nothing else.

So just to recap Munger’s comments: gold is not an investment for civilized people, it’s for panicked Jews fleeing the Holocaust. Civilized people, according to Munger, instead invest in productive businesses like Wells Fargo, which according to this new suit spent a decade committing mass fraud and dumping tens of thousands of dicey loans onto the lap of the taxpayer. If we think about it in retrospect, Wells Fargo then got rewarded for years of bad behavior by receiving tens of billions more in bailout money, which it used to buy a dominating market share – artificially inflating its share price for the next generation, to the benefit of wrinkly old greedheads like Charlie Munger. And if you don’t like it, you should suck it in and cope.

I wonder what Munger thinks about his investment now. Is it still civilized?


R. Allen Stanford gets 110-year sentence for Ponzi scheme June 24, 2012

BY: Miami Herald Staff


In this March 6, 2012 file photo, R. Allen Stanford leaves the Bob Casey Federal Courthouse in Houston. Stanford, once considered one of the wealthiest people in the U.S., with a financial empire that spanned the Americas, was convicted on charges he bilked investors out of more than $7 billion. The 62-year-old is set to be sentenced by a Houston federal judge on Thursday, June 14, 2012.
Nick de la Torre / AP
In this March 6, 2012 file photo, R. Allen Stanford leaves the Bob Casey Federal Courthouse in Houston. Stanford, once considered one of the wealthiest people in the U.S., with a financial empire that spanned the Americas, was convicted on charges he bilked investors out of more than $7 billion. The 62-year-old is set to be sentenced by a Houston federal judge on Thursday, June 14, 2012.
The billionaire banker who plotted one of the biggest Ponzi schemes in U.S. history from a fancy high-rise office in Miami and a bank in Antigua was sentenced Thursday to 110 years in prison.R. Allen Stanford, 62, could have received 230 years. His attorneys pushed for 41 months.

U.S. District Judge David Hittner had final say, issuing the sentence after presiding over a hearing in Houston where two people spoke on behalf of Stanford’s investors about how the $7 billion fraud over 20 years affected their lives.

For what is considered to be the largest financial fraud, Bernie Madoff was sentenced in 2009 to 150 years in prison, convicted of bilking investors for more than $15 billion.

Stanford once spread his wealth across South Florida, living in a $10 million mansion in Coral Gables, bobbing on Biscayne Bay aboard a $6 million yacht and presiding over his financial empire from posh headquarters at the Miami Center near Bayfront Park.

He also was the big man in Antigua, with a newspaper, a couple of restaurants, a development company and lavish cricket grounds where he once bankrolled a $20 million winner-take-all match. His lawyers at his trial said their client was a visionary businessman who tried to bolster the economy of Antigua, where he was known as “Sir Allen” after being knighted by the government.

On Thursday, Stanford was just another convict in court awaiting his fate.

“To the bitter end, he was a con man and a coward,” prosecutor William Stellmach said, chastising Stanford for defrauding thousands of people of their life savings.

Stanford was found guilty in March by a federal jury in Houston. Arrested three years ago, he was convicted of 13 of 14 fraud-related counts.

His downfall marks the end of his rise from humble roots in Texas to one of the richest people in the United States.

Three years ago, The Miami Herald found that Stanford made a deal with Florida regulators allowing him to open a special trust office without regulation. His office sold $800 million in bogus certificate of deposits, mainly to South American investors. Checks were sent to Antigua and records were destroyed.

Calling Stanford arrogant and remorseless, prosecutors said he used the money from those investors to fund a string of failed businesses, bribe regulators and pay for a lavish lifestyle that included yachts, a fleet of private jets and sponsorship of cricket tournaments.

After his arrest, the man whose net worth was estimated at $2 billion had to rely on court-appointed attorneys to defend him. His assets were frozen and then seized.

Three other former Stanford executives are scheduled for trial in September. A former Antiguan financial regulator was indicted and awaits extradition to the United States.

During Thursday’s sentencing hearing, Stanford gave a rambling statement to the court in which he denied he did anything wrong. Speaking for more than 40 minutes, Stanford said he was a scapegoat. He blamed the federal government’s “gestapo tactics,” when a U.S.-appointed receiver took over his companies, for tearing down his business empire and preventing his investors from getting any of their money back.

“I’m not here to ask for sympathy or forgiveness or to throw myself at your mercy,” Stanford told Hittner. “I did not run a Ponzi scheme. I didn’t defraud anybody.”

Angela Shaw, a Dallas-area woman who founded the Stanford Victims Coalition and spoke during the hearing, said while she had hoped the financier would receive the maximum sentence, she was more upset that Stanford didn’t apologize in court for what he did.

“It would have gone a long way to show there is some level of remorse and some measure of humanity,” she said.

Jaime Escalona, a Venezuelan man who lost $1.5 million and founded the Coalition of Latin American Stanford Victims, turned to face Stanford and said: “You deserve what’s coming to you. You are a dirty rotten scoundrel.”

Madoff’s name was often mentioned during Thursday’s sentencing, with prosecutor Stellmach insisting Stanford’s crimes were worse because he kept most of the fraudulent proceeds for himself, bribed regulators and targeted middle-class investors. Defense attorney Ali Fazel said that unlike Madoff, Stanford had legitimate businesses.

In addition to sentencing Stanford to prison, the judge ordered him to forfeit $5.9 billion. But that was mostly symbolic.

Stanford is now penniless.