UFC’s Boston road trip well worth it

With his signature bombast, Dana White has vowed to “blow the (expletive) roof” off TD Garden.

And the UFC president will attempt to back up that boast when his mixed martial arts organization makes its Massachusetts debut at the Garden with Saturday’s pay-per-view event, UFC 118.

White, media savvy and ever-quotable, will be ubiquitous this week. He’ll attend Wednesday’s Red Sox [team stats]-Mariners game at Fenway Park [map] and will make numerous radio and television appearances. And there will be plenty of star power around the city with dozens of UFC fighters on hand for the Fan Expo at the Hynes Convention Center on Friday and Saturday.

On fight night, music will blare, fans will roar and the action will excite.

It figures to be a wild week. But getting the UFC to Boston was the result of a quiet and steady process that took years.

Mapping out plans

The map, measuring about 4 x 6 feet, rests against the window in Marc Ratner’s Las Vegas office.

Displaying the United States and Canada, the map features three colors: green, yellow and gray, representing the different stages of MMA regulation.

Green means MMA is sanctioned in the state, yellow means regulation is pending and gray means the state or province has no athletic commission, as is the case in Alaska and Wyoming. The UFC won’t hold an event in unregulated states, so the organization has strived for MMA regulation in the other 48 states with commissions.

When Ratner joined the UFC in 2006 after 14 years as executive director of the Nevada State Athletic Commission, there was far less green on the map. MMA was sanctioned in 22 states and faced an uphill battle, due to lingering misconceptions that the sport was no-holds-barred.

As the UFC’s vice president of regulatory affairs, Ratner has spearheaded the effort to get the sport regulated across the country. Well-respected from his time overseeing many of the biggest fights in boxing, Ratner set out to educate legislators about MMA.

“It’s always about education,” Ratner said. “We had to do more education to really have the legislators really understand exactly what we were doing and really explain to them about the healthy and safety.”

While the UFC aimed to grow the sport globally, it had a keen eye on a few markets. One of those targeted spots was Massachusetts.

Though smaller, local promotions had legally conducted shows for years, there was no government regulation.

The first step in bringing UFC to the Bay State came in May 2008 when White and Ratner enlisted the Dewey Square Group, a Boston-based lobbying firm. Though it succeeded in getting an MMA regulation bill passed as an amendment to the 2008 budget, there was not enough time for a full hearing, so it didn’t get through the legislature.

When a new legislative session began in 2009, State Sen. James E. Timilty, the chairman of the public safety and homeland security committee, made the bill a priority.

“We should have some oversight just to make sure something doesn’t go wrong,” said Timilty (D-Walpole). “And secondly, there’s a significant economic benefit.”

At a hearing in front of the public safety committee at the State House in April 2009, Ratner was joined by other executives and UFC lightweight Kenny Florian, a Dover native who is set to fight on Saturday’s card.

The bill ultimately faced little opposition, passing by a 34-1 vote in the Senate and a 144-10 vote in the House. Gov. Deval Patrick signed the bill into law in November.

Massachusetts then became the 42nd state to regulate MMA. Such progress wouldn’t have been possible without Ratner’s work.

“The guy is legendary for his work with the (Nevada) athletic commission,” White said. “To have a man like that going out representing us and working with all these other commissions to get it done, you can’t put a value on that.”

Garden is ripe

Regulation paved the way for the UFC to come to Massachusetts, but it wasn’t the final hurdle. The UFC needed a venue, and though there was some discussion of an outdoor show at Fenway Park, TD Garden – home to the Celtics [team stats] and Bruins [team stats] – was the only realistic option.

Once MMA got regulated, the UFC and Garden quickly agreed on the date.

“We knew from seeing what was happening in other major markets that the UFC is breaking out and doing incredible numbers,” Garden president John Wentzell said. “The interest is skyrocketing, both live as well as on the pay-per-view side. We knew it was a very hot commodity and it hasn’t disappointed.”

The state also needed to revamp its athletic commission to include officials with backgrounds in mixed martial arts. The three-person commission grew to five.

Though the commission has experienced some growing pains, everything is now going smoothly with UFC 118 now just six days away. Commissioner Todd Grossman – noting that “the biggest show on Earth” is about to be held in Boston after just five months of planning – said it is testament to the panel’s hard work and progress.

“The fact that we’ve been able to get a program up and running as efficiently as we have is quite impressive for a government agency,” he said.

Green means go

Ratner’s map now has 44 green states. Among the UFC’s priority destinations, only New York remains unrealized, but Ratner considers regulation in the Empire State inevitable.

That’s the same belief Ratner had in Massachusetts when he set out to convince its lawmakers two years ago. Now that it’s come to fruition, the UFC will get the big, glitzy payoff for all the dull, behind-the-scenes work.

“You know how much this means to me and how long I’ve wanted to come there and how much I love the city of Boston,” said White, who once lived in South Boston and ran a boxing gym in the Hub. “Boston has always been good to me. Believe me when I tell you, I’m going to put on a show that’s going to blow the (expletive) roof off that place.”

Article URL: http://www.bostonherald.com/sports/other_sports/ultimate_fighting/view.bg?articleid=1276271

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Revival on tap for Hub channel

$11m plan turns Fort Point into a social hot spot

By Casey Ross, Globe Staff  |  August 14, 2010

Boston’s Fort Point Channel, for decades a polluted workhorse of industry, is about to undergo a dramatic transformation to a recreational and social playground that could host floating restaurants and music shows, kayak rentals and fishing charters.

This fall, major property owners along the channel will lay the groundwork for its renaissance with new public docks that will increase access to the milelong waterway, advancing the city’s vision of a civic space akin to the Boston Common or the Rose Fitzgerald Kennedy Greenway.

An $11 million plan for improvements to the channel is modeled, in part, on waterfronts in Chicago, Seattle, and other cities where museums, outdoor dining, and public events draw crowds to their shorelines.

The catalyst for the burst of activity in Boston is a law signed earlier this month by Governor Deval Patrick that essentially rezones the channel for recreational use, allowing installation of docks and other floating structures that were once banned to protect commercial navigation.

“These changes will allow us to take an urban waterway and activate it in ways that have been very successful in other cities,’’ said James Rooney, head of the nearby convention center and president of Friends of the Fort Point Channel, a civic group involved in the channel restoration.

Most of the boat ramps, taxi stations and docks will be built by commercial property owners who are required by their environmental permits to improve public access and amenities to their waterfronts.

Funds for many other improvements, such as floating art barges and water festivals, will be raised from fees charged to firms planning future building projects in the area.

New developments are moving slowly in the down economy, so it may take several years before new attractions are built. The shuttered Boston Tea Party Museum, for example, is still raising money to complete renovations and reopen facilities closed after being struck by lightning in 2001.

Another wave of improvements will probably result from the eventual redevelopment of the US Postal Service mail facility, which is planning to relocate to South Boston. But that project, too, has also been slowed by the recession.

Still, the new access points to begin construction this fall will open the channel to an array of possibilities, including floating restaurants and cafes, fountains, model boat racing, and other attractions included in a plan City Hall has for the area.

“I’ve always seen this area as a great opportunity for rowing and other events on the water,’’ Mayor Thomas M. Menino said in an interview. “Right now, it’s really just dead, unused space. But the improvements in access will help us open it up and plan for the future of that whole area.’’

Already Boston Properties has built a 60-foot ramp to a dock that will provide temporary docking service for visiting boaters behind the 32-story tower it is building at the corner of Congress Street and Atlantic Avenue. The tower will have an expansive public plaza on the channel to eventually include a new tour service and concierge desk that will provide information on waterfront attractions.

Further up the channel, Procter & Gamble Co., which owns Gillette and its sprawling headquarters in South Boston, will begin construction this fall on a 60-foot dock in an area that will be dedicated to canoeing and kayaking. City officials are also urging Procter & Gamble to provide free public parking on its property, a request the firm is considering.

The Boston Children’s Museum is planning to build a dock for a water taxi station next spring. The museum is also exploring floating educational facilities and a possible partnership with a boat rental service, although those plans are still being developed.

“We would love to see this channel come alive,’’ said Amy Auerbach, the museum’s chief financial officer. “There are so many teaching and learning opportunities, and we want to take advantage of that as much as we can.’’

In many ways, Fort Point is ideal for a public park. The channel itself is about a mile long with a watersheet stretching more than 50 acres, making the area larger than the Boston Common. The expanded access will offer new perspectives to view the Boston Tea Party, which was staged in this corner of the harbor in 1773, and the wharves and warehouses that made the city a maritime center. The channel is also protected from wind and choppy surf, making it an ideal place to learn to use kayaks and canoes.

Parts of it still suffer from its past as an industrial zone, particularly the further reaches between the MBTA railroad tracks and Interstate 93, where trash and other debris are in plain view.

For more than a century, the channel was an active shipping route that provided access to smoke-belching rail and lumber yards in South Bay. But commercial traffic slowed dramatically in the 20th century, and for the last 50 years it has remained largely unused.

Recently some portions of the channel waterfront were spruced up. A new boardwalk in front of the Boston Children’s Museum, for example, is a popular fishing site, a fact that still seems surreal to those who remember when water in the channel was repellent to any form of life.

Rooney is a South Boston native who vividly recalls the rotten-egg stench emanating from the channel during his youth.

“It was so bad you didn’t even want to walk or drive over the bridges, ’’ he said.

As the Greenway was a byproduct of years of Big Dig construction, Fort Point Channel’s comeback is due to another major public works project: The $3.8 billion cleanup of Boston Harbor, which removed decades worth of sewage and industrial filth and made the water safer for recreational use.

While today its gray-green waters are hardly pristine, the channel is free of dangerous levels of contaminants, and it offers a pleasant getaway for residents and office workers. Sunny afternoons bring lunch-time crowds; office workers gather with their Blackberries out as children fish and tourists whiz by on bicycles or Segway scooters.

Getting to the next step could take years, but environmental advocates say the first wave of change promises that the once-forgotten channel is on its way to becoming a much livelier place.

“It’s not instantly going to be Venice on the water, but it will offer cultural activities that people can easily access,’’ said Vivien Li, executive director of the Boston Harbor Association. “People from all over the city will be able to enjoy the waterfront in a very safe area.’’

Casey Ross can be reached at cross@globe.com.

Bridal Show Scam Busted: Woman Committed Cross-Country Wedding Fraud, Says FBI

BOSTON (CBS/AP)

Thousands of bridal show exhibitors were jilted in an alleged scam in Boston, according to the FBI, which says a Pittsburgh woman cheated wedding businesses out of thousands of dollars for a “show” that never happened.

The FBI said 47-year-old Karen Tucker, who was arrested Tuesday, pulled off similar bridal show scams in five other states. She’s charged with wire fraud and aggravated identity theft.

Tucker and an uncharged co-conspirator allegedly posed as representatives of a business known as The Boston 411, then led the Massachusetts Convention Center Authority to believe they would hold an extravagant home and bridal show at the Hynes Convention Center over three days in March.

The heavily promoted show promised exhibitors face time with thousands of pre-registered brides-to-be, though few were actually lined up, authorities said. Prosecutors said Tucker and the other person collected fees in advance from exhibitors, but used most of the money for personal expenses, including rent, restaurants and shopping trips to Wal-Mart.

Tucker’s business even promised some money from the never-held show would be used to help victims of the Haiti earthquake, authorities said.

Tucker made a brief appearance in U.S. District Court in Pittsburgh on Tuesday. She will be held without bail until a detention hearing can be held in Boston.

Boston wedding photographer Aram Orchanian said he paid $750 through the PayPal online money transfer service to rent a corner booth at the Boston show and spent $3,000 more to produce promotional materials for it.

“I don’t understand how somebody can do this,” Orchanian said after learning of Tucker’s arrest Tuesday. “It’s just money to her, but to the people she did this to, it is their business.”

Tucker also allegedly conducted scams against wedding businesses in Ohio, Florida, Maryland, Nevada and Texas. Authorities said she ran a scheme in Miami between March and July of 2009, when an online version of “South Beach Bride” magazine was created with the promise that a printed magazine with ads from paid advertisers would be published and distributed. No printed magazine was published and the advertisers were not refunded their money, authorities said.

Durivage said authorities believe Tucker and her co-conspirator have, “with varying degrees of success,” run similar schemes in Columbus, Ohio, Las Vegas, Baltimore and Dallas.

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In New York, Geithner Kicks off Financial Reform Sales Tour

Treasury officials are fanning out across the country this week to cities known for their financial institutions, including Boston, Charlotte and Philadelphia, to sell financial reform to Americans.

First stop: New York, where Treasury Secretary Timothy Geithner gave a speech late Monday afternoon at NYU’s Stern School of Business. There, before a small audience, he laid out the moral argument for financial reform and urged bankers to act before the government forced them to curb their excesses. “You can do all of that right now even before the first new rule of financial reform is written,” he said. After charting out the causes of the Great Recession, Geithner went through the four pillars of financial reform: consumer protection, mortgage lending, the derivatives market and increased leverage for global financial institutions.

Though his speech gave a more detailed look at the Obama administration’s plans, the crux of his talk centered about the ethical argument that banks need to keep more capital on hand and regulate themselves—just as consumers need to do a better job of saving—all for the good of the country. Both the tone of the speech and the Treasury officials’ roster of appearances were reminiscent of the way President Obama’s people marketed health care legislation and the stimulus package.

In early February 2009, Obama went to the heart of communities hit by the Great Recession: Elkhart, Ind., Fort Myers, Fla., and Peoria, Ill., to talk up the need for a stimulus package—just as Geithner came to the heart of the banking industry in Manhattan on Monday. A large segment of Geithner’s talk centered on the ways financial reform will help consumers. He talked specifically about simpler disclosures for auto loans, credit cards and mortgages, as well as better enforcement of consumer finance and mortgage scams, much like the Obama administration’s recent efforts to try to explain to health care reform to the general public by talking about the ways it would help ordinary Americans. The administration recently spent $700,000 on national cable TV ads, for instance, in which Andy Griffith says health care reform will give seniors free check-ups and lower prescription costs.

But, moral arguments notwithstanding, the administration still needs to sell the bill to bankers and financial leaders if not in public, then at least behind closed doors.

Geithner met Mayor Michael Bloomberg for breakfast Monday morning and privately ate lunch with leaders from the city’s financial and real estate sectors. According to Reuters, the lunch list included Laurence Fink of BlackRock, Donald Marron of LightYear Capital, Eric Mindich of Eton Park Financial Management and James Tisch of Loews Corp.

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What companies do in a tough economy.

NEW YORK – A burrito company known for super-sized stuffed tortillas goes small. A chocolatier turns to cheaper pick-me-ups rather than expensive indulgences. A furniture retailer expands in the midst of the housing market bust.

Three businesses with three different stories, yet one unmistakable conclusion. For all the hand-wringing about the economy, plenty of companies are getting it right. They’re doing it the same way businesses have survived bad economies for decades: through innovation, cutting costs
and a little luck.

“When you see big national companies struggling, many times I wonder how we will make it,” says John Pepper, who founded the Boston-based burrito chain Boloco 13 years ago. “We are constantly blocking and tackling. We have to be.”

What follows are three good-news stories in a bad-news economy.

Trouble for Boloco’s burrito business showed up two years ago in the form of brown paper bags, the kind that workers in Boston’s financial district were using to tote their lunches in from home. As that was happening, two national burrito chains, Chipotle and Qdoba, expanded in New England, where Boloco has 16 stores.

It didn’t take long before the crowds thinned at Boloco. The worst part was that business dropped in the first and last 15 minutes of the two-hour lunchtime crush. The result: sales fell about 20 percent in its city locations and 10 percent across the company.

“The shoulders of the business fell off a lot,” Pepper says. “People were ordering the same, but there were less people.”

Pepper knew that offering cheaper and smaller items during a recession can be a bad idea in the food business. Slowing sales can get slower if too many people trade down. But he still thought there was an opportunity to grab people who didn’t want a huge burrito for lunch or might want to try some of his food without committing to a larger size.

The “mini” line includes burritos, shakes, smoothies and bowls, which has all the stuff that goes in a burrito except the tortilla. The 8-ounce mini burrito goes for $3.95, compared with the $6.25 for the 20-ounce original and $5.35 for a 14-ounce small. A mini shake sells for $2.95, while the original goes for $4.50.

Not only did people come back, now they visit more often. They don’t just buy a mini burrito, but pair minis together, or better yet, they buy an original burrito and then tag on a mini shake.

The value of the average transaction is up about 8 percent, and overall sales and profits are about 13 percent higher than a year ago.

“What we did was controversial because we are in the ‘super-size me’ business, but it worked,” Pepper says.

Lake Champlain Chocolates owner Jim Lampman was also watching his thriving business slow as the recession took hold two years ago.

The Vermont-based company’s annual sales fell by about 8 percent. Many of the 3,000 stores that carry its chocolates began ordering less and some stores couldn’t pay their bills.

Lampman, who founded the company in 1983, eliminated higher priced items and priced candy in ways that would attract buyers, like under $20, $15, $10 and $5.

A chocolate lollipop that once sold for as much as $6 was knocked down to $3.50 or so. Each one, from hearts to pumpkins, is hand-painted, so he scaled back on the design to save labor costs. He kept his seasonal packaging the same last year, saving $100,000. He depleted the inventories that he had.

Lampman also recognized the value of keeping his customers. He shipped products even when a store didn’t spend the required minimum of $250. He forgave some outstanding bills.

“A downturn like this forced us to be more focused on our operations and how we handle products,” Lampman says. “The result was we got all the business back we lost, and now are having one of our best years ever.”

At Unlimited Furniture Group Inc., owner Lenny Kharitonov thinks this is the right time to build his New York-based retail and distribution company into a national chain.

In the last two years, he expanded to seven stores from two and entered new markets in Chicago, Atlanta, Orlando, Boston and Washington. He took advantage of a glut of commercial real estate to negotiate flexible and affordable leases for new stores.

Kharitonov also uses the drop in newspaper advertising to his advantage by getting cheaper rates. Finding talented workers is easier and less expensive, too, because unemployment is so high.

It’s a risky strategy during the housing slump. The furniture business suffers when people don’t move, which means they don’t need new things for their homes. Plenty of his competitors have closed stores or gone out of business.

Kharitonov is making money, but not a lot.

“If we can be successful in a bad economy, then we will be in good shape in a stronger economy,” Kharitonov says.

He’s got a point. The economy will eventually lift from its funk. When it does, these companies should be well on their way.
___

Rachel Beck is the national business columnist for The Associated Press. Write to her at rbeck(at)ap.org

C’s loss cost Boston serious green

A victory celebration that never happened cost the cash-strapped city nearly $450,000 in police overtime as an army of cops hit the streets to control expected crowds of Boston Celtics [team stats] fans during the NBA Finals.

The Celts failed in their bid to win an 18th title, but a City Hall watchdog says the team should foot their fair share of the police OT bill just the same.

“The economy is down, but with the playoffs, money is coming in for the Celtics,” said Matthew Cahill, executive director of the Boston Finance Commission. “Taxpayers shouldn’t shoulder the complete burden of these things. It would only be just to share the burden of the police overtime.”

But it’s unlikely the Menino administration will go after the Green for the green, seeing it instead as a responsibility for the Police Department’s ranks of blue.

“The Boston Police Department develops safety and security plans, and Boston police will consider all revenue sources (to cover the costs),” said Dot Joyce, spokeswoman for Mayor Thomas M. Menino.

BPD spokesman Eddy Chrispin pointed out that the city, not the sports teams, traditionally pays for overtime following playoff games during title runs.

Cracking down on rowdy rooters outside the TD Garden and the Fenway bars on June 15 and 17 – Games 6 and 7 of the NBA Finals – cost $441,363, according to the Boston Police Department.

Cahill noted there is a history of partnership between the city and its teams to pay for police. The Celtics and local businesses helped pay for cops at championship parades in the past, most notably kicking in $350,000 – half of all noncop costs – when the Green Team hoisted its 17th banner in 2008.

Cahill, the city’s finance watchdog, said there’s nothing wrong with asking.

“It would be even better if the Celtics offered,” Cahill said. “They benefit financially from the playoffs.”

Calls and e-mails to the Celtics were not returned.

The nearly $450,000 paid for a dramatic show of force for the final two games of the 2010 NBA Finals, as Hub police brass sought to tamp down on shenanigans and mayhem that marred earlier sports celebrations.

In all, 3,159 officers over two days were used to keep a lid on violence in North Station and the Fenway. Police shut access to streets and barred patrons from entering taverns after the third quarter.

Article URL: http://www.bostonherald.com/news/regional/view.bg?articleid=1268232

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Bradley needs ankle surgery; will miss summer league
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Boston Business Journal – July 17, 2010
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Is $2,250 Per Song the New Standard for Online Copyright Infringement?

Article Courtesy of:  PC Magazine

By David Murphy

Fancy a $675,000 penalty for illegally downloading 30 songs off the Internet? That was the kind of music Boston University graduate student Joel Tenenbaum was ready to face following a July 2009 verdict that found him liable for sharing 30 copyright-protected songs on the popular Kazaa P2P network.

The damage–$22,500 per song–has since been lowered by U.S. District Judge Nancy Gertner, who cut out roughly 90 percent of the original penalty to a more “manageable” $67,500, or $2,250 per pirated track. We say that as we do, for the move still puts Tenenbaum in an untenable financial position.

“A $67,500 pricetag for 30 songs is still a bill Joel cannot afford,” wrote Debbie Rosenbaum on the site Joel Fights Back. “Even Judge Gertner added, ‘Significantly, this amount is more than I might have awarded in my independent judgment.’”

The Recording Industry Association of America, plaintiffs in the case, remains less than thrilled by the decision. According to a statement released by the RIAA, the group plans to contest the decision on the grounds that it invalidates the carefully construed arguments–reached by a jury–as to the reparations owed.

“The judge appropriately recognized the egregious conduct of the defendant, including lying to the court about his behavior, but then erroneously dismisses the profound economic and artistic harm caused when hundreds of songs are illegally distributed for free to millions of strangers on file-sharing networks,” the organization said.

Interestingly, Gertner’s reduction in fees exactly matches a similar reduction performed by Michael Davis, chief judge for the U.S. district court for the District of Minnestora, in the not-quite-so-different case of Jammie Thomas-Rasset versus the RIAA. Thomas-Rasset, found liable for infringing 24 different copyrights for sharing music on Kazaa, was facing a $1.92 million penalty herself.

Finding the penalty to be too far into, “the realm of gross injustice,” said Davis, the judge instead reduced the total damages to $54,000. That’s $2,250 per song as well, or three times the minimum amount provided for by U.S. copyright law.

That doesn’t mean that the RIAA has accepted the ruling, however. In fact, the group elected to pursue its rights to a third trial against Thomas-Rasset and Davis, in response, ordered both parties to figure it all out via third-party arbitration. That didn’t quite work, and the third case against Thomas-Rasset will kick off on October 4 of this year.

Though it might appear that judges are looking to set a payment precedent in cases of P2P-based copyright infringement of music, the RIAA has made it clear that it’s equally willing to go to the mat to preserve what it feels are fair and adequate restitutions for its member labels.

That said, these two major court cases are, indeed, the only ones that have actually gone to trial based on the RIAA’s lawsuit threats–most accused settle out of court to an amount far less than the $2,250-per-song “standard” that’s emerging.

U.S. Banks Risk ‘Untold Problem’ as Muni Debt Swells

By Dakin Campbell

(Bloomberg) — Citigroup Inc., State Street Corp. and U.S. Bancorp are among U.S. banks whose municipal bond holdings have reached a 25-year high just as state budget deficits swell to $140 billion, the most since the start of the recession.

Commercial lenders added more than $84 billion to their holdings since 2003, according to the Federal Reserve, pushing total investments to $216.2 billion at the end of the first quarter. Bank regulators and ratings companies are ramping up scrutiny of banks most at risk of being forced to raise more capital should debt prices slide.

“There is a huge untold problem here,” said Walter J. Mix III, a former commissioner of the California Department of Financial Institutions who closed 30 banks during the last banking crisis in the 1990s. “The economics lead to the conclusion that there will be downward pressure on these bonds.”

At Cullen/Frost Bankers Inc., the biggest Texas lender, holdings of municipal debt exceeded Tier 1 capital, a key measure of a bank’s ability to absorb losses, by $491 million at the end of the first quarter, data compiled by Bloomberg show. For State Street, based in Boston, the holdings make up 50 percent of Tier 1 capital. U.S. Bancorp, the Minneapolis lender, has a ratio of 28 percent. It’s 11 percent at Citigroup, the data show.

Municipal Bond Yields

Default speculation and a move by investors to the safest securities drove municipal bond yields to a 13-month high relative to U.S. Treasuries in the first half of the year. Now, the Federal Deposit Insurance Corp. has asked analysts to look into the issue, according to spokeswoman Michele Heller.

The 9.5 percent U.S. unemployment rate and slump in property prices have slashed local governments’ ability to pay bills. Billionaire investor Warren Buffett, speaking at a June 2 hearing of the Financial Crisis Inquiry Commission in New York, predicted a “terrible problem” for municipal bonds. Buffett has said a U.S. state facing default may need a federal rescue.

Analysts and investors remain divided about the level of risk. Lenders hold just 8 percent of the $2.8 trillion state and local government debt market, and municipal bonds are only about 2 percent of total bank assets, according to the Fed.

‘Train Wreck’

“The open issue is whether it’s a slowly emerging train wreck,” said Jeff Davis, an analyst at Guggenheim Securities LLC, a unit of Guggenheim Partners LLC, whose executive chairman is former Bear Stearns Cos. Chief Executive Officer Alan D. Schwartz. “It’s hard to paint all general obligation and all revenue bonds with the same brush. The portfolios won’t go to zero.”

Municipal defaults are a slender risk, according to Moody’s Investors Service, which said in a February report that the investment-grade rate during the past four decades was 0.03 percent, compared with 0.97 percent for similar corporate issues. Investors eventually recoup an average of 67 cents on the dollar for defaulted municipal bonds.

While the historical default-rate risk for municipal debt is below corporate obligations, sudden declines in prices have already created losses at some banks.

Citigroup had an unrealized loss of $1.8 billion in the third quarter of 2008, when the municipal market sank 3.8 percent, the biggest quarterly decline since 1994, company filings and Bank of America Merrill Indexes show. The loss was deducted from the firm’s equity.

Citigroup

“Citi’s exposure to the municipal market is of the highest quality,” Danielle Romero-Apsilos, a spokeswoman for the New York-based firm, said in a statement. “We conduct rigorous stress tests under a variety of scenarios and are comfortable with our position.”

Citigroup had the largest municipal holdings among the biggest banks as of March 31, with $13.4 billion of state and local government bonds, according to FDIC call reports. That’s down from $13.8 billion at the end of last year. Bank of America Corp. held $8.5 billion, Wells Fargo & Co. owned $7.6 billion and JPMorgan Chase & Co. held $4.5 billion. Each accounted for less than 8 percent of Tier 1 capital, according to the FDIC.

Bank of America, based in Charlotte, North Carolina, has made “significant progress” boosting capital and reducing risk-weighted assets, spokesman Jerry Dubrowski said. The lender trimmed its municipal investments by more than $800 million in the first quarter. JPMorgan spokeswoman Jennifer Zuccarelli didn’t return a call for comment.

Wells Fargo

Wells Fargo, based in San Francisco, boosted its municipal holdings by more than $2 billion in the first quarter, data compiled by Bloomberg show. The investments are in municipalities “we know very well,” Chief Financial Officer Howard Atkins said on May 13.

State Street, the second-largest independent custody bank, owned $6.2 billion of state and local government debt at the end of March, the data show. State Street is “very comfortable” with its portfolio and has had no material credit issues, spokeswoman Carolyn Cichon said. At Minneapolis-based U.S. Bancorp, which owned $6.6 billion of municipal bonds, spokeswoman Jennifer Wendt also declined comment.

Cullen/Frost, which says it’s the only one of the 10 biggest Texas banks to survive the 1980s savings-and-loan crisis, is “extremely comfortable” with the municipal investments, CFO Phillip Green said in a July 1 interview.

$1 Billion in Bonds

The 142-year-old lender, based in San Antonio, bought $1 billion of municipal bonds in the 12 months through February, Green said that month. Most were issued by Texas school districts and insured by the state’s Permanent School Fund guarantee program, he said in last week’s interview.

Municipal debt gained 2 percent in the second quarter underperforming Treasuries by 2.7 percentage points, according to Bank of America Merrill indexes. In 2009, state and local government debt rose 14.5 percent.

U.S. states are likely to face $140 billion in cumulative budget gaps in the coming year, according to the Center on Budget and Policy Priorities. Last year, 187 tax-exempt issuers defaulted on $6.4 billion of securities, the most since 1992, according to data from Distressed Debt Securities in Miami Lakes, Florida.

“It’s a market where it’s clear that the underlying fundamentals are lousy,” said Michael Aronstein, chief investment strategist at Oscar Gruss & Son Inc., a New York- based brokerage. “People can say fundamentals don’t matter but I’ve been doing this for 32 years. They do.”

–With assistance from Dunstan McNichol in Trenton, New Jersey and William Selway in Washington, D.C. Editors: Alec McCabe, David Scheer.

To contact the reporter on this story: Dakin Campbell in San Francisco at dcampbell27@bloomberg.net

To contact the editor responsible for this story: Alec McCabe at amccabe@bloomberg.net.

‘Such a nice couple’

This drawing dated June 28, 2010 shows five of the 10 arrested Russian spy suspects in a New York courtroom.

Russian spies: High-tech gear, plus old Cold War methods

The accused Russian spies arrested this week used a combination of very advanced methods and equipment as well as old-style spycraft like the ‘dead drop.’

By Peter Grier, Staff writer
posted June 29, 2010 at 7:44 pm EDT

Lakers’ NBA title caps a lucrative month for sports business

It didn’t hurt that the Lakers were up against their rivals, the Celtics, for the NBA title. But it isn’t just ABC and the NBA that are scoring financially. There’s hockey, golf, tennis, and the World Cup, too.

By Mark Trumbull, Staff writer
posted June 18, 2010 at 3:59 pm EDT

The 15 hot cars to watch in 2010

If the economy recovers, 2010 could be a very good year for Ford Motor Co. and General Motors Co., both of which are poised to launch new high-volume, high-mpg vehicles next year.

Cars like the Chevrolet Cruze and Ford Focus compacts, with the promise of low prices and stingy fuel consumption, seem perfectly suited to the mood of the times. Chrysler hopes to rekindle buyers’ passions with new versions of the Chrysler 300C and Dodge Charger.

Japanese and German automakers have few potential big sellers in the wings. Hyundai looks set to continue its momentum with a couple of stylish new vehicles, however.

Here’s an advance look at some of the most intriguing or significant new models coming over the next year:

CHEVROLET CRUZE: The roomy compact could be a top seller for General Motors. The Cruze looks to be competitive with stalwarts like the Toyota Corolla and Honda Civic, but Chevrolet will need head-turning fuel economy to persuade skeptical buyers to try its new small car. Look for EPA ratings above 40 mpg from Cruzes featuring a turbocharged 1.4-liter engine and six-speed automatic transmission.

CHEVROLET VOLT:

The 500-pound gorilla of next year’s vehicle introductions. Advance publicity for the extended-range electric car has been unprecedented, from the promise of a 230- mpg. EPA rating for city fuel economy to GM’s peekaboo unveiling of the Volt’s styling. If the car delivers on its promise, it could revolutionize the auto industry and change the way people think of GM. Any foul-ups will generate headlines around the world, however. “GM has to get the Volt right,” Merkle said.

CHRYSLER 300 and DODGE CHARGER:

The second generation of the last great cars Chrysler developed. They’ll be under a microscope, because the originals were so good, and because they’re the first new Chryslers since Fiat took control of the company. The cars’ styling recaptures the originality and excitement of the first Chrysler 300, and their rear-drive platforms should delight fans. Fuel economy will almost certainly be a challenge, however.

FORD EXPLORER:

America’s best-selling SUV will be replaced by a more fuel-efficient car-based vehicle, but the name could confuse some buyers. The new crossover wagon may not be rugged enough for owners of traditional SUVs, while crossover shoppers may dismiss it because they assume an Explorer must be a big, heavy SUV. “Ford has to market the new Explorer really well so people know what it is,” Hall said.

ACURA ZDX:

Honda’s luxury brand needs a hit, but its pricey new crossover faces challenges. “It’s a bold move to make an untested vehicle like that a brand’s flagship model,” said Stephanie Brinley of consultant AutoPacific. Prices for the 300-horsepower V6 crossover with the sloping roof and hatchback will start at $50,000, according to Edmunds.com. “It’s going to be a niche vehicle,” said consultant Erich Merkle of Autoconomy.com. “You lose function and form with the low roofline.”

CADILLAC CTS COUPE:

“It enhances the sex appeal of the whole Cadillac lineup,” Brinley said. The CTS sedan elevated Cadillac to the front rank of luxury brands, but the coupe still has to “earn its stripes,” said Jim Hall, managing director of 2953 Analytics. “The BMW 3-series owns the luxury coupe segment,” he said. “It’s tough to establish a new vehicle’s credibility,” he said.

FORD FOCUS:

Ford’s sophisticated global compact car is to finally go on sale in the United States. The new Focus promises to be a quantum leap better than the current model, but it will have to remain affordable to succeed. “Ford has a lot riding on the Focus,” Brinley said. “They need to prove they can be profitable with a small car.”

FORD FIESTA:

The attractive subcompact will test American buyers’ appetite for small cars. “The design is a knockout,” Merkle said. “It’s got a cute factor like the Mini Cooper, but is more affordable. It could appeal to empty-nesters as well as young buyers.”

HONDA ACCORD CROSSTOUR:

Honda’s alternative to Toyota’s sleek Venza crossover wagon attempts to meld an Accord-style nose to a Civic-like tail. The styling could be polarizing, but the car’s position as a roomy flagship to the popular Accord line should generate interest. Edmunds.com predicts prices will start at $31,500.

HYUNDAI SONATA:

Sketches of the new midsize sedan’s slinky profile show a stunning departure from today’s staid Sonata. Combined with Hyundai’s steadily rising quality scores, the Sonata could be a game-changer for the Korean brand. “It trumps the Accord and Camry’s design and could take a piece out of both of them,” Merkle said. Hyundai’s popular Tucson small crossover SUV gets an equally striking redo as the brand repositions itself upward.

JEEP GRAND CHEROKEE:

An all-new version of the vehicle that spawned the luxury-SUV craze and became an icon for its brand. The new Grand Cherokee’s sleek, modern looks and significantly improved interior are major selling points, but it faces a market that’s grown cool to SUVs. Boosting fuel economy significantly while maintaining the off-road capability of a true Jeep will be a challenge.

LEXUS LF-A:

Lexus’ first sports car, the LF-A is intended to prove Toyota’s luxury brand can go toe-to-toe with Porsche and BMW. The LF-A is expected to come in coupe and convertible models and feature a 5.0-liter V10 and sequential manual transmission. The LF-A concept debuted at auto shows in 2007, and the car’s long gestation raises some questions. “It’s been a stop-and-start program,” Brinley said. “Will it still fire the imagination when it finally arrives?”

SCION TC:

Scion has had trouble with the second generation of its cars — the xB grew bigger and less funky, while the xA failed and was replaced by the equally disappointing xD. The replacement for the sporty tC coupe could be an important indicator of whether Toyota has a coherent plan for its youth brand. “The jury’s kind of out on Scion,” Merkle said. “The tC could be a make-or-break vehicle.”

TOYOTA SIENNA:

The well-equipped minivan has become a mainstay of Toyota sales and a family favorite. “It’s a big player in the market and in American life,” Brinley said. “Minivans are still a huge segment of the market. There’s no better vehicle for hauling people.” The Sienna has a loyal following and could boost its sales further if the new model has exceptional fuel economy or unique kid-friendly features.

___

Mark Phelan: phelan@freepress.com

___

Visit the Freep, the World Wide Web site of the Detroit Free Press, at http://www.freep.com.

Article URL: http://www.bostonherald.com/business/automotive/view.bg?articleid=1198391

Mass. wind farm wins U.S. approval

Massachusetts Gov. Deval Patrick, left, speaks with U.S. Interior Secretary Ken Salazar, right, after Mr. Salazar announced that the Obama administration has approved what would be the nation’s first offshore wind farm, off Cape Cod, during a press conference at the Statehouse, in Boston, Wednesday, April 28, 2010. The decision clears the way for a 130-turbine wind farm in Nantucket Sound off the coast of Massachusetts. (AP Photo/Steven Senne)

Small business loans get big lift

Another sign of a nascent recovery

By Robert Gavin, Globe Staff  |  June 12, 2010

Massachusetts small businesses, seeing prospects improving, are borrowing more money through government loan programs to expand, hire, and start ventures, providing another sign that the state’s economic recovery is gaining traction.

Borrowing through the US Small Business Administration’s primary guaranteed loan program has more than doubled in Massachusetts over the past year, and is on track to match levels not seen since 2005. The loan activity in Massachusetts is also among the most robust in the nation: Only eight other states have had more activity over the past several months, according to the agency.

“SBA activity is a barometer of the economy, and small businesses’ access to capital,’’ said Bob Nelson, director of the agency’s Massachusetts office. “We’re seeing more optimism, more choices for businesses to get capital, and more competitiveness among lenders. There’s certainly a lot more work to be done, but we’re seeing some positives.’’

Credit has been a critical issue for state and national economies, and particularly for small businesses, a major generator of new jobs. In the wake of the financial crisis and deep recession, many banks became reluctant to lend, preferring to hold onto capital they might need to offset bad loans and weather the downturn. Many businesses, in turn, were reluctant to borrow and add debt when the economy was sliding.

“The problem has not been a lack of credit, but a lack of sales and economic activity to support that credit,’’ said Bill Vernon, Massachusetts director of the National Federation of Independent Business, a small business advocacy group. “Now, I think, we’re heading in the right direction. It’s bumpy and inconsistent, but there are more companies doing better than they were a year ago.’’

As the outlook has improved, so has SBA lending. From October through the end of March, the first six months of the federal fiscal year, Massachusetts lenders made 923 SBA loans totaling $142.3 million, compared with 443 loans worth $61.8 million during the same period in fiscal 2009.

SBA loans — commercial loans from banks that are mostly guaranteed by the US government — represent only a small slice of small business lending. In March, Massachusetts banks had more than $9 billion of small business loans on their books, down slightly from nine months earlier, according to the Federal Reserve Bank of Boston. Still, the rebound in SBA lending suggests a change in conditions. As recently as last fall, some Massachusetts businesses were complaining that they couldn’t even get SBA loans through local banks.

In addition to the surge in SBA lending, the number of lenders making such loans has also jumped in recent months, to about 120 from fewer than 90 in the same period last year.

Among the new lenders is East Boston Savings Bank, which has made nearly $2 million in SBA loans since October, according to the agency. One of those loans was for up to $300,000, and went to Elin Agustsson. Two weeks ago, she opened the Busy Bee Bakery near a Melrose commuter rail station, and created 10 new jobs — three full-time and seven part-time. Agustsson, 51, said she had dreamed for years of starting her own bakery, and decided the time was right, despite a still shaky economy.

“Even in a recession, people still need to eat,’’ Agustsson said. “The Obama administration is pushing banks to lend, and banks are looking for people, people they can count on.’’

A number of factors have contributed to East Boston Savings’s move into the small business market, including federal stimulus legislation that increased SBA guarantees to up to 90 percent for most loans, from 75 percent, said Richard Gavegnano, East Boston Savings’s chief executive. Another factor, he said, was the struggle of large national banks hurt in the subprime mortgage meltdown and financial crisis. The bank, with 19 branches in Suffolk County and on the North Shore, has added an executive who focuses specifically on SBA lending.

“With the message clear that government wants to facilitate small business lending, and the megabanks pulling back, we felt there was an opportunity,’’ Gavegnano said. “We want to participate in small business activity, and we’ve ramped up considerably.’’

Small business, which traditionally has been underserved by lenders who preferred to make larger, more profitable loans, is increasingly viewed as a growth market, local bankers said. As a result, the increase in SBA guarantees has provided incentives for some banks to break into small business lending, and for longtime participants in SBA programs to expand their lending.

For example, First Trade Union Bank of Boston, founded by the Massachusetts Carpenters Combined Pension and Annuity Funds, traditionally focused its lending on commercial real estate, bank officials said. It turned toward SBA lending last year as way to further diversify its loan portfolio, bank officials said, and has made more than $6 million in small business loans since October, according to SBA data.

Eastern Bank, the state’s top SBA lender, increased its lending eightfold over the past year, writing more than 170 loans valued at $8.5 million between October and March, according to SBA data. “The fact that we have SBA behind these loans allows us to be more confident and get credit into the hands of small businesses,’’ said Joe Riley, the Boston bank’s executive vice president of retail and business banking.

In many ways, the reliance on the SBA guarantees shows that the economy, credit, and confidence are not back to normal after the historic downturn of the past two years. Still, bankers said, the increased lending demonstrates that conditions are improving. Earlier this week, a Federal Reserve survey found that many New England businesses across several sectors were reporting solid sales and customer demand.

Such companies include Cercone Brown & Co., a Boston public relations and advertising firm. The nine-year-old company, which employs 22, recently received a $250,000 SBA loan through Eastern Bank to help it expand into a new office and nearly double its space. The company has also added two employees and expects to hire more in the coming months.

“When you get more business, you have to move into a bigger office. You need people. You need to invest in new programs,’’ said Len Cercone, a founding partner. “Small businesses are entrepreneurial, and when you add a little capital, you can turn that entrepreneurial spark into a fire.’’

Robert Gavin can be reached at rgavin@globe.com.

Casinos get boost as DeLeo signs on

Joins Patrick, Murray in push for gaming

By Matt Viser Globe Staff / September 19, 2009

House Speaker Robert A. DeLeo expressed strong support yesterday for bringing resort-style casinos to Massachusetts, one of the clearest indications yet that lawmakers are poised to expand gambling as they seek fresh revenues in a down economy.

In a separate speech yesterday morning, Senate President Therese Murray also made the case that Massachusetts should legalize casinos, asserting that they would bring hundreds of new jobs and capture money currently going to Foxwoods and Mohegan Sun in Connecticut.

The comments by DeLeo and Murray put the state’s top three political leaders on similar ground in support of resort-style casinos for the first time as the Legislature plans to begin considering a major bill as early as next month.

DeLeo has been a supporter of expanded gambling, but in the past has put an emphasis on installing slot machines at racetracks instead of building resort-style casinos complete with amenities such as hotels, shops, and golf courses.

“Given the importance of economic development, as well as the vital need for revenue, I have expanded my thinking,’’ DeLeo said in an address in Waltham to a meeting of Associated Industries of Massachusetts. “In addition to my backing of slots, I now support resort casinos.’’

At about the same time, Murray, speaking to the Plymouth Area Chamber of Commerce, said: “The reality is that hundreds of millions of dollars are going to Connecticut casinos from Massachusetts residents every year. We need to explore ways how we can capture that revenue.’’

She said building casinos would means hundreds of construction jobs, as well as permanent employment once the casinos open.

In an interview yesterday, DeLeo said House lawmakers are drafting legislation, with hearings likely to begin next month.

A debate before the full House, he said, could begin before lawmakers recess in mid-November, but seems more likely early next year.

Governor Deval Patrick’s plan to license three resort casinos was defeated last year, in large part because of opposition by House Speaker Salvatore F. DiMasi.

With DiMasi now out of office, the debate has shifted dramatically: It is no longer about whether Massachusetts will see expanded gaming, but when and in what form.

“What has interested me all along is the jobs and the revenue,’’ Patrick told reporters yesterday in the Berkshires. “And I think there is a way to do this that maximizes the jobs and revenues and minimizes – not eliminates, minimizes – the adverse impacts.’’

Still, the casino industry has struggled mightily with the economic downturn, forcing many developers to scale back projects and focus on retaining their current properties, rather than on adding new ones.

The Globe reported Sunday that Foxwoods in Connecticut, which has long been a success story in the casino industry, laid off about 6 percent of its workforce last year and saw its revenues from slot machines plunge 13 percent in July, compared with the previous year.

Nonetheless, DeLeo cast the plan yesterday as a ministimulus package for Massachusetts, one he said would bring in new revenues and create jobs as the state seeks to recover economically.

“I’m still trying to formulate my ideas, but I’m hoping this will not just be a gaming bill, but also an economic development one,’’ DeLeo said in the interview.

“I’m just really concerned about the future,’’ he said. “I think the only way we’re going to get out of this economy is jobs, jobs, and more jobs.’’

He also said that lagging state revenues are an incentive to find a new source of money.

That argument may have more urgency after Patrick announced yesterday that he expects to make further spending cuts this year because of falling revenues.

“I don’t see an appetite for new taxes, and we don’t have much left in the rainy day fund,’’ DeLeo said. “We need to bring in new revenue.’’

He also argued that slot machines could be installed quickly at the racetracks, bringing in new revenues, while giving casino companies more time to build resort casinos, which would create new construction jobs.

DeLeo said one option that may be considered involves the licensing of two casinos, one in Eastern Massachusetts, one in Western Massachusetts, and then allowing slots at Plainridge and Raynham Park racetracks.

But when asked about installing slots at racetracks, Murray said she is “not hot on that, but I’m going to listen.’’

“That’s fast money,’’ she said in an interview. “But is it sustainable?’’

She cited Twin River in Rhode Island, which relies on slots and filed for bankruptcy in June.

She said several senators have been working on different proposals over the summer, but added that it will take time to put together the regulatory framework that would allow casino developers to begin building.

“It’s really a three-year process,’’ she said. “If we’re going to do it, we need to start.’’

Many specifics have to be worked out, including how many casinos would be licensed, whether there would be any preference given to a Native American tribe, and how potential developers would secure the rights to build.

Casino developers have been closely monitoring the gambling debate in Massachusetts and have scoured the state for land and partnerships.

Mohegan Sun in Connecticut has been laying the groundwork to build a casino in Palmer, a small community near Springfield. Several developers have looked at land in neighboring Warren.

Suffolk Downs in East Boston has been jockeying for the past two years, securing key political backing and trying to ensure that it has the inside track on a Boston-area casino. Wonderland Greyhound Park in Revere has joined with Suffolk Downs to compete for one casino license.

One potential wrinkle is the Mashpee Wampanoag Tribe, whose attempt to use its federal rights to open a casino in Middleborough has been derailed by a US Supreme Court ruling.

There are several other developers who have hired lobbyists and expressed interest in Massachusetts previously, but have not announced specific plans.

Andrea Estes of the Globe staff contributed to this report. Matt Viser can be reached at maviser@globe.com.

Amazon profit up 68 pct; outlook scares investors

By RACHEL METZ, AP Technology Writer Rachel Metz, Ap Technology Writer

SAN FRANCISCO – Amazon.com Inc. said Thursday that its first-quarter profit surged 68 percent, showing that consumers are even more comfortable opening their wallets to the online retailer as the economy slowly improves. But investors were spooked by Amazon’s forecast for the current quarter and its shares fell 6 percent in extended trading.

Amazon earned $299 million, or 66 cents per share, in the January-March period. That compares with a profit of $177 million, or 41 cents per share, in the year-ago quarter.

Amazon’s earnings per share in the most recent quarter were 5 cents more than expected by analysts polled by Thomson Reuters.

Revenue rose 46 percent to $7.13 billion, well above the $6.87 billion analysts expected.

For the current quarter, Amazon expects revenue of $6.1 billion to $6.7 billion. That would be an increase of 31 percent to 44 percent over last year, but it also means Amazon’s revenue could fall below analysts’ current expectations for $6.43 billion in revenue.

“It’s an appropriate range,” Chief Financial Officer Tom Szkutak said during a conference call with reporters.

Amazon shares fell $9.09 to $141 in after-hours trading, after finishing regular trading up $3.66 at $150.09. Earlier in the day the stock hit an all-time high of $151.09, adjusted for splits.

Colin Gillis, a BGC Partners analyst, said the quarter was good, but not great, while Amazon’s stock was priced for a “stellar” report.

Revenue from books, CDs, DVDs and other media grew 26 percent to $3.43 billion. Electronics and other “general merchandise” revenue increased 72 percent to $3.51 billion. This second segment includes revenue from online shoe and apparel retailer Zappos, which Amazon bought late last year.

In North America, revenue rose nearly 47 percent to $3.78 billion. Revenue rose 45 percent to $3.35 billion elsewhere.

Szkutak said that while Amazon’s growth sped up during the quarter, it’s difficult to say how much of this is due to the economy improving.

“We still, even during the downturn, had solid growth, so it’s hard for us to break that out,” he said.

The first quarter ended right before the arrival of a major competitor to Amazon’s Kindle e-reader: Apple Inc.’s iPad tablet device. Like the Kindle, the iPad can wirelessly download books.

As in the past, Amazon declined to give details about Kindle sales. It reiterated that the device is Amazon’s best-selling product, but the meaning of that is unclear, given that the Kindle can only be bought on Amazon’s site. Amazon will start selling the Kindle at some Target stores later this month.

Yankees-Red Sox rivalry reaches peak

Baseball’s most storied rivalry gets even more heated.

It had been nine long years since the Yankees did something really objectionable in the minds of New England baseball fans.

You know, win the World Series.

But now the Yankees are the defending world champions, meaning Red Sox fans are certain to resume their regularly scheduled rancor. And this year, for the first time since 2004, those jeers should last into October.

That’s right: We’re due for another postseason meeting between the game’s economic leviathans.

In one sense, this is an unprecedented time in baseball’s biggest, haughtiest, most extravagant rivalry.

The Yankees won their first World Series in 1923 — and then 25 more by the time Boston claimed its next title in 2004. Then the Red Sox won again in ’07. Now the Yankees are back on top.

So, this is the first time the Red Sox and Yankees have each won a world title during the same three-year span.

At long last, we have a back-and-forth. For the sake of the rivalry, that’s a good thing. What fun would Michigan-Ohio State be if the same team won all the time? (OK, a bad example.)

In all seriousness, I’m curious to find out whether there will be any extra venom among Red Sox fans Sunday, when a national television audience tunes in to watch the old rivals play under the lights at Fenway Park. (Sounds like October already.)

We know New Englanders loathe the Yankees. But will the curse words bubble forth a little more often, given the built-in resentment toward any reigning champ?

The Yankees haven’t played at Fenway while holding the title belt since Sunday, Sept. 2, 2001. That’s better known as the night Carl Everett broke up Mike Mussina’s perfect game bid with two out in the ninth inning.

New York won, 1-0, thanks to Enrique Wilson’s double that scored Clay Bellinger. David Cone took the loss for Boston. Joe Kerrigan was managing the Red Sox.

You get the idea: This was a long time ago.

The rivalry reached its high ebb shortly thereafter, with those colossal seven-game encounters in the ’03 and ’04 American League playoffs. The teams have played memorable games since. But there’s no way they mattered more.

We won’t see anything like it again, because Boston’s 86-year interregnum (and all the anxiety that went with it) was a subtext to every pitch.

But the bile and the pride and the passion?

Still there.

“Nothing has transpired to diminish the intensity of the rivalry,” said Dr. Andrew Zimbalist, the sports business expert and economics professor at Smith College. “It is there in full glory.”

“The intensity will never waver,” asserted Dr. Harvey Frommer, a sports author and professor at Dartmouth College. “There is a strut in New England and a diss attitude in New York and a lot of vulgarity passed down through the generations.”

And yet … Five autumns have come and gone without the Red Sox and Yankees meeting in an ALCS. It was Boston’s fault last year; the Angels swept their division series.

The drought is hard to figure. But it’s not going to last.

This is the year.

Note the lower-case “t” and lower-case “y.” Nothing profound. Nothing biblical. Nothing about curses or spells or any of that stuff.

It’s far simpler than that: The Red Sox and Yankees are the two best teams in the majors. Sooner or later, they are going to end up in the same tavern.

And the noise will be earsplitting.

“The rivalry can’t get any more heated than it has been,” said Todd Greene, a backup catcher for the Yankees in 2001. “The Sox fans have a huge dislike for the Yankees. The Yankees fans will absolutely gloat and rub this latest championship in their face. However, Sox fans have reason to believe that they will be back in the World Series.”

The casts have changed since last year — and certainly since the teams’ last postseason encounter, back when Ruben Sierra was a Yankee and Pokey Reese a Red Sox.

The Red Sox signed John Lackey, Adrian Beltre, Marco Scutaro and Mike Cameron.

Theme: pitching and defense.

The Yankees dealt for Curtis Granderson and Javier Vazquez, signed Nick Johnson, Chan Ho Park and Randy Winn.

Theme: seasoned pros who don’t make loads of money.

Tampa Bay deserves all the positive attention it receives, but the Rays won’t be able to keep up this year. The financial chasm is simply too great to overcome. In time, we will appreciate how great, and how rare, their 2008 pennant really was.

The Red Sox are my pick to win the division and World Series — I’m a sucker for pitching and defense — but both titles will come by the barest of margins. Remember that the 2009 season series finished 9-9, and that was after the Red Sox won the first eight.

This year, the series will stand 13-12 when it’s all over. Advantage: Boston.

The optimists

Taking risks during the downturn starts to pay off for local businesses

By Jenn Abelson, Globe Staff  |  March 28, 2010

They were last year’s risk takers. They opened doors while others shuttered them. Call them crazy — many did — for expanding during the worst downturn since the Great Depression.

Now, a year later, these five bold New England businesses are still standing. In almost every case, they have been rewarded for their decisions. And they are pretty pleased with themselves.

“It was absolutely the right move. We gained market share and saw sales grow,’’ said Chris Cheek, vice president of franchise development for Bruegger’s, the Vermont bagel chain that opened 16 shops last year and acquired a Canadian company with 125 restaurants. “A lot of competitors were hunkering down and closing. We weren’t fearful of the economy. It was the right time to grow — not to retreat.’’

For many New England companies, 2009 was a year they’d like to forget. They spent months slashing jobs and employee benefits, slicing operations, and figuring out how to survive. But several businesses embraced the recession as an opportunity not to be missed. Major store closings opened up prime real estate, and struggling landlords were willing to negotiate rents, even at coveted addresses on Newbury Street. Massive layoffs created an ample supply of talented workers, and the falloff in demand for construction made it cheaper to build new enterprises.

“The lesson learned is that opportunity always exists, even in tough times,’’ said Madison Riley, a retail analyst with Kurt Salmon Associates, a consultancy in Boston. “For established businesses and start-ups, it was a great time to make investments.’’

It wasn’t always easy. Karen Blom, co-owner of Zoar Outdoor in Charlemont, last year considered delaying a $600,000 zip line project called Deerfield Valley Canopy Tours. Instead, she pressed ahead, betting the adventure company could capitalize on people vacationing closer to home. A year later, Blom knows it was the right move. More than 7,000 people visited the canopy tours — about 2,000 above projections. And the company, despite lowering prices to $80 from the $100 it initially planned, was able to make its loan payments and turn a small profit.

“It was scary. We had a lot of sleepless nights,’’ Blom said. “But in the end, it all worked out perfectly. And I’m feeling way more confident this year.’’

Even as car sales plummeted about 20 percent and other dealers closed up shops, auto magnate Herb Chambers kept expanding his empire. He added four dealerships, including the most recent, a Kia dealership in Burlington. As he strolled the floor of the new shop recently, Chambers, looking tan and relaxed, boasted that he had stolen business from competitors and saved up to 15 percent on construction costs by building after prices had plunged.

When he spotted a car with rival Quirk Auto plates getting a new transmission at his Kia dealership in Burlington, Chambers stopped and smiled: “It makes my heart flutter when I see other dealers’ cars here. It makes you feel like you’re winning the game.’’

And he isn’t slowing down. Chambers is adding Cadillac and Hyundai to his stable for a total of 48 dealerships by year-end. The investments, he says, will pay off in the long term and allow him to increase his grip on the market when the economy recovers. Cautious consumers who are postponing purchases of new vehicles are creating pent-up demand for the next year or two as repairs become too costly or autos break down for good.

“We are really happy with what we did,’’ Chambers said.

On Newbury Street, the Swiss boutique Nespresso has found its groove selling espresso machines to consumers who want to save money by making the beverages at home. The upscale merchant had long coveted a spot on Newbury Street and grabbed the location after it was vacated by Domain Home, a home furnishings chain that went bankrupt. The Boston shop — open and doing well, according to a Nespresso spokesman — was one of two the retailer launched last year, and another three boutiques are planned this year for Miami and New York.

Several European merchants have followed Nespresso’s lead and filled empty storefronts on Newbury, where rents are down significantly. But a few blocks over, Downtown Crossing is still ground zero for the recession. The massive redevelopment of the Filene’s site has been a hole in the ground since financing fell apart, and beleaguered businesses have continued to close up shop.

William Ashmore, however, is busy trying to launch his second restaurant in Downtown Crossing, Stoddard’s Fine Foods & Ale. He had hoped to open up last April, but a litany of unexpected construction problems — the ceiling was caving in, the ventilation was insufficient, a second elevator was needed — pushed back the project and doubled the cost. Ashmore, who is an owner of the Ivy restaurant across the street on Temple Place, is approaching his 70th consecutive week of construction and preparation for the venture, styled after a pre-Prohibition pub with 25 beers on tap, a shoe shiner, and other period details.

“I’m pretty . . . nervous because we’ve bitten off a lot,’’ he said.

But Ashmore says he feels lucky that the delays saved him from opening in the worst of the recession, and gave him time to build up hype around the restaurant. Plans for a private men’s club caused an unexpected brouhaha with the National Organization of Women, and passersby keep banging on the door asking for tours and the opening date. (Maybe this week?)

When he’s not feeling the pressure of fulfilling all the promises he’s made, Ashmore, who lives in the apartment above Stoddard’s, is feeling good about the days ahead. He’s already making plans for a third restaurant in the neighborhood, a Neapolitan pizza shop, and believes Downtown Crossing has a future.

“I’m more optimistic now than I was a year ago,’’ Ashmore said. “I see how everything is finally coming together.’’

Jenn Abelson can be reached at abelson@globe.com.

Financial Impact – Entering the Superproject Void

By LOUIS UCHITELLE

Generation after generation, giant public works projects have altered the American landscape. The Erie Canal and the transcontinental railroad come to mind. So do massive urban sewer and sanitation systems, the Tennessee Valley Authority, rural electrification, the Hoover Dam, the Interstate System, the subway networks in San Francisco and Washington, the Big Dig in Boston … and the list abruptly stops.

For the first time in memory, the nation has no outsize public works project under way. The Big Dig, with its three and a half miles of underground highways channeling traffic beneath downtown Boston, was completed in December 2007, the month the Great Recession began.

So what are we missing, exactly? Huge public works — or more precisely, their historic absence — didn’t cause the recession any more than their renewal would quickly draw the country out of it. But their effect on the economy is almost always noticeable if not easily measured. Some economists argue that the continual construction of new megaprojects adds a quarter of a percentage point or more, on average, to the gross domestic product over the long term. Again, cause and effect aren’t clear, but the strongest periods of economic growth in America have generally coincided with big outlays for new public works and the transformations they bring once completed.

If their absence creates a void, particularly in a recession, what can fill it?

There is the quick-fix approach: stimulus. Giant public works projects take time to plan, cost lots of money and — the real sore spot for some — tend to add to taxes and deficits, regardless of how many people they might put to work for generations. Mindful of these political realities, President Obama has earmarked just $80 billion — a tenth of his stimulus package — for megaprojects, and put off most of that down payment until next year. His focus instead has been on spending hundreds of billions to quickly and visibly repair existing public works, especially highways, and also levees, dams and locks, particularly in the New Orleans area. That’s not a bad thing — those repairs are certainly needed — but it doesn’t create permanent wealth.

Another approach is to finance new projects several notches smaller in cost and boldness — and in contribution to economic growth. Denver and Salt Lake City, for example, are extending light rail and bus lines into the outlying suburbs, at a cost of less than $5 billion apiece. In New York, construction of the Second Avenue subway proceeds unhurriedly. All three projects, once finished, will bring new commercial activity to the communities they serve. Over time, the additional tax revenues from these activities will pay down the debt incurred in the construction. That has been the financial justification for many public works projects since World War II.

By the standards of the past, however, they are not the spectacular feats of engineering and ingenuity that greatly enhance the economy. The Erie Canal was just such a feat, linking the western frontier with East Coast markets. So was the transcontinental railroad, connecting the West Coast with Omaha and the existing Eastern railroads, spawning towns and commerce along the new Western route. Several generations later, the interstate highways were built by the states, mainly with federal money and federal planning, giving the auto and trucking industries a huge lift.

“The public works projects that have the largest effect on economic growth are those that integrate markets in different areas of the country,” said Francisco Rodriguez, director of research at the Human Development Report Office of the United Nations and author of a recent study on the role of infrastructure investment on economic growth.

If there is anything in the Obama administration’s approach that can be compared to the megaprojects, it would be the giant computer system, now being planned, to make health records available in hospitals and doctors’ offices across the country. Some economists argue that computerized records would raise economic output just as the Hoover Dam did 73 years ago. Still, only $19 billion has been set aside; the project is expected to cost nearly $100 billion, and who knows if the funding will materialize.

“Last year at this time we were debating whether we should be concentrating our spending on big projects that, in the long run, add to economic growth,” said John J. Wallis, an economic historian at the University of Maryland. “That debate never got resolved, and the stimulus bill we enacted in February ended up focused instead on quick spending.”

Absent a groundswell of public demand, those advocating large-scale projects are not widely heard. Gov. Edward G. Rendell of Pennsylvania, a Democrat, is perhaps the most outspoken.

“Just think about a high-speed rail system for the country,” the governor said, envisioning in particular a system that would link Philadelphia and Pittsburgh. “Think what it would mean for steel factories, concrete factories, asphalt factories, electrical equipment factories. It would mean a massive amount of orders and a lot of economic growth.”

Mr. Obama has allocated just $8 billion as a down payment for high-speed rail — in Mr. Rendell’s view not a drop in a $3 trillion bucket, a bucket that seems unlikely fill anytime soon. “I think we should get private capital involved,” he said, noting that the private sector has often in the past participated in the financing of big projects that in the long run benefit business.

Economists in the Obama administration acknowledge that when it comes to giant public works, the president has not yet gone far, but they suggest that he could be seen as having accomplished as much as Franklin Roosevelt did in 1933. Roosevelt, however, took office that year in the depths of the Depression. As a response to the crisis, public spending on megaprojects multiplied, and the effect remains: many of today’s post office buildings, for example, were built in that era, speeding up mail delivery; and thousands of miles of dirt roads were paved.

Mr. Obama’s Great Recession, by contrast, has been a milder affair, and a recovery appears to have started, even without the softening effects of megaprojects. If the recovery materializes, government investment in such large-scale efforts is likely to run up against an opposition that has prevailed since the late 1970s, when government came to be seen as inefficient — a second-string alternative to the private sector. Adding to the skepticism, many economists and policy makers reversed a view they once held — that rising output would generate enough additional tax revenue to pay down the national debt, including debt connected to megaprojects.

Now at least some in the administration have come to believe that megaprojects have value. Jared Bernstein, chief economist for Vice President Joseph R. Biden Jr., said, “We are on the eve of making truly significant and lasting down payments that are going to plant some lasting seeds.”

Aquarium volunteer lands at Revere High

Don Pinkerton started his new job as a teacher at Revere High School about a year after he was laid off from a financial services firm.

The 51-year-old Swampscott resident used his time and some well-known local resources to reinvent himself. And today he said he feels fortunate to have weathered a difficult situation.

“I know a lot of people are really struggling, and I have friends who are looking for work, so I know how hard it can be,” he said.

Pinkerton said it was solid support from his family and some money that he had saved up for emergencies that gave him the time to execute a career transition.

There was also a valuable stop at the New England Aquarium.

“It was a great experience,” he said of the days he spent assisting visitors at the bustling Boston institution. “I realized I really like being in a science-oriented environment, and I really enjoyed helping to educate people.”

Pinkerton wasn’t paid for his time, but it was rewarding nonetheless. At the aquarium he realized he could thrive as a science teacher.

Aquarium officials say the past year has brought them a 15 percent to 20 percent increase in new volunteers. In 2009, about 100 more volunteers worked 11,000 more hours than in 2008.

“We have experienced a lot more interest due to the economy,” said Mona Chang, the aquarium’s manager for volunteer programs. “People have more time because many of them have lost their jobs.”

Pinkerton majored in a science in college, then spent 25 years in finance. The December 2008 separation agreement he signed with his former employer prohibits him from speaking about the firm.

“I was happy most days and I was paid well,” he said. “The work was challenging, but it was never really me.”

The layoff was a wake-up call of sorts.

In addition to volunteering at the aquarium, Pinkerton helped out at the Museum of Science, took graduate-level science courses at Salem State College, worked as a substitute teacher and received a state teaching certification.

This past December he landed his dream job, teaching biology at Revere High School.

Article URL: http://www.bostonherald.com/business/general/view.bg?articleid=1231184

Alleged threats rattled Realtor Michael Carucci

Unnamed figure in extortion case comes forward

By Shelley Murphy, Globe Staff – Article Courtesy of Boston.com CLICK HERE

Boston Realtor Michael Carucci thought he was going to be showing $1 million Back Bay properties to a new client during a meeting that had been arranged by phone but was a little scared when three men he described as thugs showed up at his office.

His fear turned to anger when the men said they had been sent by one of Carucci’s longtime friends, realtor David Gefke, to collect a $60,000 business debt. They allegedly even threatened him and his family.

“There was a part of me that just wanted to let this go,’’ Carucci said yesterday. “But at the end of the day, it isn’t right. And when they mentioned my wife and family . . . I think a message has to be sent that this is unacceptable.’’

Carucci, 51, chief executive of The Boston Real Estate Group, alerted the FBI and Boston police about the Jan. 29 confrontation, then cooperated in an investigation that led to the arrest of Gefke and another man Friday, followed by the arrest of two more men yesterday. All four are charged with extortion.

It is an ironic twist for Carucci, now seeking justice from the same government that once targeted him.

He was indicted in 1997 on federal charges that he laundered money for notorious Boston gangster Stephen “The Rifleman’’ Flemmi by helping him buy real estate in Boston’s Back Bay.

After a lengthy court battle, Carucci was acquitted of 94 counts. A jury convicted him of a handful of charges, but a federal appeals court overturned his conviction in 2004.

“I do believe in the system,’’ said Carucci, adding that his past legal battles did not give him pause in seeking the government’s help. “It was a very easy decision,’’ he said.

Carucci, who lives in a luxury downtown apartment and owns a Bentley, is not identified by name in the federal case and is referred to in an FBI affidavit as John Doe.

However, Michael Carucci acknowledged yesterday that he is the alleged victim.

The FBI affidavit unsealed in federal court this week alleges that Gefke, 48, who is president and founder of First Capital Mortgage Group in Boston and East Springfield LLC, dispatched several enforcers to threaten Carucci in a bid to force him to pay what he asserted was still owed on a $90,000 debt.

The FBI alleges that Carucci was also threatened at the Bristol Lounge at the Four Seasons Hotel in Boston and stripped of his $5,000 Mont Blanc watch. Later, he was allegedly forced to turn over several additional expensive watches.

Michael B. Lee, 29, an Irish national living in Dorchester, was arrested with Gefke Friday. Gefke and Lee are being held without bail pending a hearing Friday on whether they should remain jailed until the case is resolved.

Two more, Patrick Dehertogh and Brandon Milby, were arrested late yesterday on extortion charges and are expected to appear before a federal magistrate judge today, according to a spokeswoman for the US attorney’s office. She had no additional information on the two.

The affidavit says that Gefke filed a lawsuit last month asserting that Michael Carucci owed him money from the 2007-2008 renovation of a condominium on Commonwealth Avenue in the Back Bay.

Carucci’s attorney negotiated an out-of-court settlement, but when the deal fell apart, Gefke allegedly enlisted Lee and two other men to collect the money, the affidavit says.

The suit, filed by Gefke in Boston Municipal Court, alleges that Michael Carucci signed a promissory note in 2008 agreeing to repay East Springfield Street LLC, $47,650, plus 14 percent interest by March 11, 2009 for a loan on the condominium. The suit says he has not made any payment.

In a reply to the suit, Carucci denied breaching the contract.

Yesterday Michael Carucci said he agreed to pay the money to Gefke, but only if he signed an agreement that the debt was settled. He said an unidentified investor from Boca Raton, Fla., had funded the loan.

“I didn’t want to pay him the money, then two or three months later have the guy in Florida say, ‘You owe me the money,’ ’’ said Carucci.

He described Gefke as a longtime friend and said he was stunned that Gefke would allegedly send “legbreakers’’ to try to collect money from him.

Carucci said he is in a difficult situation and added that it is harder “given what’s happened to me in the past and how it could be misread by the general public that doesn’t have the facts.’’

Carucci summed up his past case as “a difference of opinion’’ with the Justice Department over what his responsibilities were when a qualified buyer wanted to buy real estate.

After Carucci’s indictment in the money laundering case, Flemmi was charged with 10 murders and publicly exposed as a longtime FBI informant. He is serving a life sentence after pleading guilty to the slayings.

“Had I known then what I know now, I wouldn’t have walked away from [Stephen “The Rifleman’’ Flemmi]; I would have run away from him,’’ Carucci said.

In the six years since he was exonerated in the money laundering case, Michael Carucci has become one of Boston’s most successful realtors.

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UNITED STATES v. CARUCCI

After a lengthy court battle, Michael Carucci was acquitted of 94 counts.

A jury convicted him of a handful of charges, but a federal appeals court overturned his conviction in 2004.

UNITED STATES, Appellant, v. Michael L. CARUCCI, Defendant, Appellee,

United States, Appellee, v. Michael L. Carucci, Defendant, Appellant,

United States, Appellant, v. Michael L. Carucci, Defendant, Appellee.

Nos.?02-2198, 03-1158 and 03-1244.

— April 13, 2004

Before LIPEZ, Circuit Judge, CAMPBELL, Senior Circuit Judge, and STAHL, Senior Circuit Judge.

Martin G. Weinberg, with who m Oteri, Weinberg & Lawson, were on brief, for Michael L. Carucci.Demetra Lambros, Attorney, with whom Michael J. Sullivan, United States Attorney, Richard L. Hoffman, Assistant United States Attorney, and James D. Herbert, Assistant United States Attorney, were on brief, for the United States.

Defendant-appellant Michael Carucci was a real estate broker and a business associate of Stephen Flemmi, the notorious leader of Boston’s “Winter Hill Gang.” Carucci and Flemmi were indicted on charges relating to money-laundering, but only Carucci’s case was tried. ? Both during and after the jury trial, the district court, pursuant to Fed.R.Crim.P. 29, entered judgments of acquittal on dozens of the charged counts. ? Ultimately, Carucci was found guilty of two counts of engaging in monetary transactions in criminally-derived property in violation of 18 U.S.C. §?1957.

On appeal, Carucci contends that the evidence was insufficient to establish criminal liability under the statute, and challenges the trial court’s “willful blindness” instruction to the jury. ? The government cross-appeals, contending that the district court erred in entering the post-verdict judgments of acquittal; ?in ordering a conditional new trial should the Rule 29 rulings be reversed; ?and in sentencing. ? For the reasons set forth below, we reverse Carucci’s conviction on the two counts and affirm the district court’s judgments of acquittal on the remainder.

I.?BACKGROUND

A.?Factual history

We set forth the facts underlying Carucci’s convictions in the light most favorable to the verdict. ? See United States v. Diaz, 300 F.3d 66, 69 (1st Cir.2002).

1.?238 Marlborough Street

Carucci’s company, Group Boston Real Estate, managed a building at 238 Marlborough Street in Boston. ? One of the owners of the property expressed interest in selling, and Carucci offered to help find a buyer. ? In 1991, Carucci submitted a bid from Flemmi. ? During the negotiations, the seller asked Carucci where Flemmi’s money was coming from, and Carucci told them it was from lottery winnings. ? Flemmi, however, told others that the money was from a family trust. A few months after the sale, Carucci told the seller that the money had come from Flemmi’s family.

In the course of the property sale, Carucci referred Flemmi to Anthony Summers, a real estate lawyer. ? At trial, Summers testified that in September, 1992, Carucci asked Summers whether he thought it would be a problem to sell real estate to Flemmi. ? Summers responded, “as long as he did everything legally, that I didn’t think he’d have a problem.”

On October 2, 1992, the Marlborough Street deal closed for $945,000. ? Carucci, Summers, and Flemmi, among others, attended the closing. ? The purchaser was a nominee trust set up by Summers, the “238 Marlborough Street Trust.” ? The trustees were Carucci and one of Flemmi’s sons, Stephen Hussey; ?Flemmi was the beneficial owner. ? Flemmi paid in cash with seven checks. ? The checks were drawn from different accounts, none of which bore Flemmi’s name, and different banks. ? Three were payable to the Mary Irene Trust?¹ (of which Flemmi was a trustee), three were payable to Mary Flemmi (Flemmi’s mother) and one was payable to Jeanette Flemmi (Flemmi’s ex-wife). ? In conjunction with the sale, Summers drafted a mortgage evidencing a $975,000 loan from the Mary Irene Trust to the 238 Marlborough Street Trust. ? The mortgage, on which Flemmi’s name appeared, was publicly recorded.

Also on October 2, 1992, Flemmi and Carucci entered a joint venture agreement concerning the development and sale of the condominium units at 238 Marlborough Street. ? Carucci invested $15,000 of his sales commission into the joint venture, and Flemmi handled the remaining costs.

2. ?362 Commonwealth Avenue

In mid-1992, another real estate broker told Carucci that 362 Commonwealth Avenue in Boston, a commercial condominium containing a laundromat, was available as an investment property. ? Carucci submitted an offer on the property signed by Hussey as trustee of SMS Realty Trust and provided a binder check for $1,000 signed by him and drawn on the account of Group Boston. ? He also participated in the sale negotiations.

According to the purchase and sale agreement, the purchaser of the property was Jeannette Benedetti, trustee of Comm-1 Realty Trust. The agreement was signed by Benedetti and Karen Snow, Flemmi’s daughters. ? On October 26, 1992, Carucci signed over to the listing broker a check for $5,125 from the Mount Washington Bank payable to Group Boston to serve as a deposit.

At the property closing on December 9, 1992, three checks were tendered as payment: ?a Mount Washington Bank check in the amount of $30,500 and a Hyde Park Savings Bank check in the amount of $70,000, both payable to Benedetti, and a $16,408.37 Winter Hill Federal Savings Bank check payable to Summers & Summers.

Prior to the closing, in November, 1992, Commonwealth Laundries, Inc. was formed, with Carucci and Flemmi as the major stockholders. ? Jian-Fen Hu, Flemmi’s girlfriend, was president, treasurer, clerk, and director. ? On December 11, 1992, Commonwealth Laundries entered into a lease of 362 Commonwealth Avenue with Comm-1 Realty Trust. ? Hu and Benedetti (as trustee) signed the lease. ? Commonwealth Laundries borrowed $120,000 from the Mary Irene Trust to purchase equipment and $110,000 from Flemmi for improvements.

At trial, Flemmi’s other son, William St. Croix, testified pursuant to an immunity agreement about his many years of criminal activity. ? He also testified that he first met Carucci at his father’s home in Milton, Massachusetts, in 1990 or 1991. ? At that time, Carucci told him he was going to broker the sale of the house. ? When St. Croix asked Carucci if he knew who his father was, Carucci responded, “Yes, everybody knows who your father is. ? Your father was the big guy.” ? St. Croix testified that he visited Group Boston’s offices “probably hundreds of times.”

B.?Procedural history

On March 11, 1997, a grand jury of the United States District Court for the District of Massachusetts returned a 103-count indictment against Flemmi and Carucci. ? It charged both defendants with conspiracy to commit money-laundering in violation of 18 U.S.C. §?1956(h); ?substantive money-laundering offenses in violation of 18 U.S.C. §?1956; ?transactions in criminally derived property in violation of 18 U.S.C. §?1957; ?and RICO conspiracy in violation of 18 U.S.C. §?1962(d). ?In May 2001, as part of a consolidated plea in another case, Flemmi pleaded guilty to an information that encompassed the money-laundering conspiracy charges and the charges against him in this case were dismissed.

In March and April, 2002, Carucci alone was tried before a jury. ? At the close of the government’s case, pursuant to Fed.R.Crim.P. 29(a), the district court granted Carucci’s motions for judgment of acquittal on counts 1, 14-66, and 76-103. ? It then submitted counts 2-13 and 70-75 to the jury. ? These counts charged violations of §§?1956 and 1957 and concerned the laundromat venture. ? Specifically, counts 9-13 and 73-75 related to the purchase of the condominium, and counts 2-8 and 70-72 related to the purchase of the laundry equipment.

On April 16, 2002, the jury returned a verdict finding Carucci not guilty on the §?1956 counts (2-13) and guilty on the §?1957 counts (70-75). ? At a post-verdict hearing, the district court granted judgment of acquittal on counts 70-72 and 74, and provisionally granted a new trial on those counts. ? This left standing only the verdicts on counts 73 and 75, which concern, respectively, the December 9, 1992, transfer of a Mount Washington Bank check in the amount of $30,500 and a Hyde Park Savings Bank check in the amount of $70,000.

On December 20, 2002, the district court sentenced Carucci to ten months in the custody of the Bureau of Prisons, with a recommendation that Carucci serve his sentence in a community confinement center (CCC), followed by twenty-four months of supervised release. ? The same day, the Department of Justice announced that the Bureau of Prisons would no longer permit CCC placement for more than ten percent of the sentence imposed. ? On December 31, 2002, the district court revised the sentence to encompass five months’ incarceration and five months’ home confinement.

II.?DISCUSSION

A.?Carucci’s challenge to his conviction under 18 U.S.C. §?1957

Carucci contends that there was insufficient evidence to convict him on counts 73 and 75, which charge him with engaging in monetary transactions in criminally-derived property in violation of 18 U.S.C. §?1957. ? We review Rule 29 determinations de novo. ?United States v. Boulerice, 325 F.3d 75, 79 (1st Cir.2003) (citing United States v. Carroll, 105 F.3d 740, 742 (1st Cir.1997)). ? We will affirm the conviction if, “after assaying all the evidence in the light most amiable to the government, and taking all reasonable inferences in its favor, a rational factfinder could find, beyond a reasonable doubt, that the prosecution successfully proved the essential elements of the crime.” ?Id. (quoting United States v. O’Brien, 14 F.3d 703, 706 (1st Cir.1994)).

To establish a violation of 18 U.S.C. §?1957, the government must prove that (1) the defendant engaged or attempted to engage in a monetary transaction with a value of more than $10,000; ?(2) the defendant knew that the property involved in the transaction had been derived from some form of criminal activity; ?and (3) the property involved in the transaction was actually derived from specified unlawful activity. ?18 U.S.C. §?1957(a).² Subsection (c) of the statute provides: ?“the Government is not required to prove the defendant knew that the offense from which the criminally derived property was derived was specified unlawful activity.” ?Id. §?1957(c). ?In other words, a defendant may not be convicted under §?1957(a) unless he knew that the transaction involved “criminally derived property,” but he need not know that the property was derived from the “specified unlawful activity.” ?United States v. Richard, 234 F.3d 763, 768 (1st Cir.2000) (quoting United States v. Gabriele, 63 F.3d 61, 65 (1st Cir.1995)) (internal quotation marks omitted).

Carucci maintains that the evidence as to each of these elements is insufficient to support conviction on counts 73 and 75. ? We need not address the first two requirements of §?1957, because we hold that the government did not adduce sufficient evidence that the purchase of 362 Commonwealth was derived from proceeds from specified unlawful activity. ? We explain below.

1.?Scope of the specified unlawful activity

A threshold issue on appeal is the scope of the specified unlawful activity (“SUA”) charged to the jury. ? The indictment set forth four SUAs as underlying the §§?1956 and 1957 charges: ?drug trafficking, extortion, loan sharking, and gambling. ? During the charge conference, the district court ruled that there was insufficient evidence to submit loan sharking and drug dealing to the jury.

In the jury charge, however, the court’s instructions were inconsistent. ? During two occasions in the charge, the court instructed that all four crimes constituted specified unlawful activity. ? First, it stated:

You are instructed that the offenses of conducting an illegal gambling business, engaging in extortionate credit transactions, interference with commerce by extortion, and distribution and conspiracy to distribute narcotics ? constitute specified unlawful activity ?

Later, after reciting the four offenses again, the court instructed:

Each of the crimes just listed qualifies as specified criminal activity. ? Thus, if you find beyond a reasonable doubt that any of the funds involved in the transactions listed in the indictment derived from the commission of any of these crimes by any person, then the transactions involved proceeds derived from specified criminal activity.3

The court then stated that it would provide further details as to the elements of the SUA offenses later.

In the context of instructing on §§?1956 and 1957, however, the court described only the elements of extortion and gambling. ? As to those two offenses, it stated that it was instructing the jury “as to the elements of the offenses listed as specified unlawful activity in the indictment ?” It set forth the elements of extortion and gambling that the government had to prove beyond a reasonable doubt in order for the jury to find a crime “from which Flemmi derived illegal proceeds.” ? The court did not state the elements of loan sharking or drug trafficking, and did not mention those offenses again.

Carucci maintains that the district court’s failure to set forth the elements of drug trafficking prevented the jury from basing a §?1957 conviction on that SUA.⁴ We need not decide this issue because, even assuming that the jury was instructed correctly, there is insufficient record evidence that the funds used in the real estate transactions were actually derived from the specified unlawful activities, as opposed to other criminally derived proceeds. See section II(A)(2), infra.

2.?Evidence of specified unlawful activity

As discussed supra, the statute requires proof that the property involved in the transaction was actually derived from specified unlawful activity. ?18 U.S.C. §?1957(a). ? Application of this requirement is not always straightforward. ? This circuit and others have held that §?1957 convictions necessitate proof beyond a reasonable doubt of the predicate crime. ? See, e.g., United States v. Burgos, 254 F.3d 8, 14 (1st Cir.2001) (stating that in order to convict the defendant of money-laundering, “the government had to prove that he had attempted to distribute cocaine to satisfy the specified unlawful activity element of the crime” (internal quotation marks omitted)); ?United States v. Lovett, 964 F.2d 1029, 1041-42 (10th Cir.1992) (“the elements of the particular ‘specified unlawful activity’ ? are essential elements that the prosecution must prove in order to establish a violation of §?1957”); ?see also United States v. Blackman, 904 F.2d 1250, 1257 (8th Cir.1990). ? However, proof of a specific, individual underlying offense-i.e., a particular unlawful mailing in a mail fraud SUA, or a particular drug sale in a drug trafficking SUA-is not necessary to support a §?1957 conviction. ? See United States v. Richard, 234 F.3d 763, 768 (1st Cir.2000); ?United States v. Mankarious, 151 F.3d 694, 701-02 (7th Cir.1998). ? Rather, circumstantial evidence may suffice to allow a jury to infer a predicate act from an overall criminal scheme. ? See, e.g., Mankarious, 151 F.3d at 702-03; ?United States v. Jackson, 983 F.2d 757, 766-67 (7th Cir.1993); ?Blackman, 904 F.2d at 1257.

Even applying this broad construction of §?1957 liability, the evidence of specified unlawful activity adduced at Carucci’s trial was insufficient to support his conviction.⁵ We first consider the evidence of gambling and extortion, the two SUAs that were unequivocally charged to the jury. ? During the extensive trial testimony, the only specific mention of either gambling or extortion was by Flemmi’s son, St. Croix. ? Initially, he testified as to his personal criminal history:

Q:? What other types of criminal activities have you been involved in?

A: ?I have been involved in drug rip-offs, selling drugs, extortion, gambling, arson, operating an illegal club.

St. Croix then stated that Flemmi was involved in “some” of those activities, but did not specify which ones. ? No other witnesses testified about Flemmi’s participation in gambling or extortion, or about proceeds therefrom. ? Thus, at very best, St. Croix’s testimony fell short of stating that Flemmi engaged in gambling or extortion, and there was simply no other evidence on this critical point.

St. Croix’s testimony suffers from an additional weakness: ?it did not indicate a time frame in which the gambling and extortion, if any, occurred. ? In order to establish §?1957 liability, Flemmi must have derived proceeds from gambling or extortion before November 22, 1992, the last date money was deposited into the accounts on which the transactions at issue were drawn. ? See Mankarious, 151 F.3d at 704 (“A money launderer must obtain proceeds before laundering can take place.”); ?United States v. Christo, 129 F.3d 578, 580 (11th Cir.1997) (same).

After careful consideration of the record, we conclude that there was insufficient evidence for a rational jury to find that Flemmi derived proceeds from gambling or extortion before November 22, 1992. The gambling SUA, as the district court instructed, required proof beyond a reasonable doubt that Flemmi conducted a gambling business that (1) violated Massachusetts law; ?(2) was knowingly and intentionally conducted, financed, managed, supervised, directed or owned by five or more persons; ?and (3) which was either in substantially continuous operation for thirty or more days or had a gross revenue of $2000 or more on any single day. ? See 18 U.S.C. §?1955. ? Even if the jury could have reasonably inferred a violation of Massachusetts law, there was no evidence presented to the jury as to the second or third elements required for the specified federal gambling crime. ? Moreover, the term “gambling” is possessed of common meanings apart from the legal definition. ? See Webster’s Third New International Dictionary 932 (1986). ? Even if the jury believed that Flemmi was involved with “gambling,” we cannot presume that it found that all of the elements of §?1955 were satisfied.

As to extortion, the SUA required the government to prove that (1) Flemmi knowingly and willfully obtained property from the victim by means of extortion; ?(2) Flemmi knew that the victim parted with property because of extortion; ?and (3) the extortion affected interstate commerce.⁶ 18 U.S.C. §?1951. ? Again, no evidence was presented to the jury as to these elements. ? As with gambling, St. Croix’s equivocal identification of Flemmi with only “some” of his own criminal activities fell short of indicating that “extortion” was one of them. ? Furthermore, even if the jury could reasonably surmise from St. Croix’s use of the terms “gambling” and “extortion” that Flemmi’s conduct satisfied the statutory elements of those offenses, there is no evidence linking it to the relevant accounts during the relevant time period in the relevant amount.

As to the SUA of drug trafficking, the government points to two pieces of evidence purporting to link Flemmi to drug trafficking proceeds. ? First, St. Croix testified that a drug dealer named Johnny Debs agreed to purchase $100,000 of cocaine from him in the late 1980s. ? He stated that Debs knew nothing about St. Croix, but approached him because of Flemmi’s reputation as a narcotics dealer. ? Second, St. Croix testified that he took drugs from dealers whom he promised to pay after selling the drugs. ? He did not intend to repay the dealers, however, and said he instead “would divvy it up with people that I was involved in and later my father.” ?(It is not entirely clear from the testimony whether this scheme was merely a plan, or whether the “divvying” in fact took place.) ? St. Croix also testified that he was involved in drug trafficking from 1989 to 1997.

Assuming without deciding that this evidence shows that Flemmi engaged in drug trafficking, it falls short of establishing that the funds used in the real estate transactions were actually derived from drug funds as opposed to other criminally-derived proceeds. ? As with gambling and extortion, there is no evidence as to the amount of proceeds or the specific time frame in which the proceeds were conveyed to Flemmi. ? Indeed, the fact that St. Croix specified that any sharing with Flemmi happened “later” suggests that Flemmi was unlikely to have derived drug-trafficking proceeds before the 1992 transaction. ? Accordingly, to infer from this testimony that at least $10,000 of the funds involved in the real estate transaction in 1992 were derived from Flemmi’s drug trafficking is too great a stretch.

The government points to evidence of Flemmi’s leadership of an organized crime gang and apparent lack of legitimate income to support the SUAs. It argues that the testimony that Flemmi was a leader of the Winter Hill Gang “told the jury much about Flemmi and his money.”?⁷ The government also points to the fact that Flemmi’s parents had meager incomes and lived frugally, and hence could not have provided any money to Flemmi for the purchase.

While these factors certainly suggest criminally derived income in a general sense, the evidence fails to supply a link to gambling, extortion or drug trafficking specifically. ? Accepting that Flemmi’s income was illegitimate, it could have been linked to any number of criminal activities; ?to conclude from this evidence that Flemmi derived proceeds from the specified SUAs is simply too speculative.

Moreover, a §?1957 conviction cannot be based solely on the finding that a known criminal had no other legitimate income. ?Blackman, 904 F.2d at 1257. ? In the cases cited by the government, courts generally affirm money-laundering convictions only where such evidence is accompanied by additional, more specific indicia of criminal activity. ? See, e.g., United States v. Hetherington, 256 F.3d 788, 794 (8th Cir.2001) (evidence of defendant’s awareness that his company’s “entire operation was based on deceit”); ?United States v. Eastman, 149 F.3d 802, 804 (8th Cir.1998) (evidence of defendant’s illegal drug purchases, and evidence that the money defendant provided for transaction had a drug scent); ?United States v. Meshack, 225 F.3d 556, 572 n. 12 (5th Cir.2000) (evidence of drug transactions at defendant’s restaurant); ?United States v. King, 169 F.3d 1035, 1039 (6th Cir.1999) (evidence that defendant “coordinated a multi-person drug distribution business”).

The government also contends that Flemmi’s use of cash and money orders-as well as his use of multiple banks, multiple checks, and nominee trusts-supports the inference that the transactions were derived from SUAs. Again, this evidence does not establish a sufficient nexus to the specified SUAs. While it is true that a suspiciously structured financial transaction can constitute circumstantial evidence of money-laundering, the cases cited by the government consistently feature additional evidence of unlawful activity. ? See, e.g., United States v. Smith, 223 F.3d 554, 577 (7th Cir.2000) (“Witnesses testified that Wilson personally bought and sold drugs, so the jury knew that he had illegal cash sloshing around that could have been used.”); ?United States v. Reiss, 186 F.3d 149, 152-53 (2d Cir.1999) (in convoluted sale of airplane, an associate who was “heavily involved in narcotics trafficking and money laundering in the United States” facilitated the transaction). Here, there is no comparable evidence that Flemmi had engaged in the specified SUAs in the relevant time period.

In sum, the evidence in the §?1957 case against Carucci is simply too thin. ? While Flemmi’s apparent lack of legitimate income and the structuring of his financial dealings certainly suggest criminal activity, the government failed to prove a nexus to the alleged specified unlawful activity, much less to the accounts involved in the transactions at issue. ? Carucci’s convictions on counts 73 and 75 cannot stand.⁸

B.?The government’s cross-appeal

We now turn to the government’s cross-appeal. ? The government contends that the district court erred in allowing Carucci’s motion for acquittal on counts 70 through 72 and 74, which set forth additional violations of §?1957. ?(Counts 70 through 72 related to the purchase of the laundry equipment; ?count 74 related to the purchase of the condominium.) ? As grounds for its decision, the district court stated that there was insufficient evidence to establish that Carucci knew that the property involved in the transactions had been derived from criminal activity.

As noted supra, we review Rule 29 determinations de novo. ? Counts 70-72 and 74 are fatally undermined by the government’s failure of proof as to §?1957′ s requirement that the transactions at issue were derived from specified unlawful activity. ? As discussed supra, no reasonable jury could conclude that the purchases of the equipment or condominium involved proceeds from Flemmi’s gambling, extortion, or drug trafficking. ? Accordingly, we affirm the district court’s grant of Carucci’s Rule 29 motion, albeit on different grounds.⁹

III.?CONCLUSION

For the reasons set forth above, we reverse Carucci’s convictions on counts 73 and 75 of the indictment and affirm the district court’s judgments of acquittal on counts 70-72 and 74.

FOOTNOTES

1.  ?The money contributed by the trust constitutes more than half of the total payment and can be linked to a series of substantial cash deposits over a one-month period in 1982 at Winter Hill Savings Bank.

2.  ?18 U.S.C. §?1957(a) states, in relevant part:“Whoever ? knowingly engages or attempts to engage in a monetary transaction in criminally derived property of a value greater than $10,000 and is derived from specified unlawful activity, shall be punished ?”

3.  ?This instruction was given during the portion of the charge dealing with the §?1956 claim. ? It was expressly incorporated into the portion concerning §?1957.

4.  ?At oral argument before this court, the government expressly abandoned its argument that loan sharking constituted a SUA for purposes of the §?1957 charge. ? Accordingly, we do not consider it further.

5.  ?The government attempted but failed to present additional evidence concerning the SUAs. At trial, the district court excluded extensive testimony by government witnesses concerning Flemmi’s participation in extortion, drug dealing and gambling schemes, as well as his lack of legitimate income. ? The court determined that the proffered evidence was insufficiently linked to the transactions specified in the indictment and to Carucci’s criminal liability. ? Additionally, the court held that some of the evidence suffered from hearsay and relevance problems. ? The government’s position on appeal is that the evidence that the district court allowed in was sufficient, standing alone, to support Carucci’s §?1957 convictions.

6.  ?It appears to be undisputed that it is Flemmi’s criminal conduct that is at issue for purposes of §?1957, not St. Croix’s.

7.  ?The government also goes into some depth as to St. Croix’s involvement with drug dealing and extortion and expressly urges us to apply the saying “like father, like son.” ? None of the evidence concerning St. Croix’s conduct supports a conclusion that Flemmi himself engaged in the SUAs.

8.  ?Accordingly, we need not deal with the other issues Carucci raises on appeal, including the adequacy of the jury instructions.

9.  ?As a result of this holding, we need not address the district court’s award of a conditional new trial should the Rule 29 rulings be reversed. ? Nor do we address the sentencing issue raised by the government.

Budgeting is back in vogue, and these websites make it easier

By Kimberly Blanton, Globe Correspondent

Buyer’s remorse hit Scott Schulthess minutes after he flipped open his laptop at a Cambridge coffee shop to review his spending habits last year on PearBudget.com.

“This makes me feel bad,’’ said the 26-year-old computer programmer, focusing in on his June purchase of an iPhone, displayed in his online account on the budget-tracking website. On impulse, he bought the new phone rather than repairing his old one. “Basically, a waste of $400.’’

In tough economic times, more and more people are flocking to budget-tracking websites – Pear Budget, Mint.com, money.Strands.com, Wesabe.com, and JustThrive.com – that give users a sense of where they’re actually spending their money each month. Some budget-tracking sites are even rolling out new features such as iPhone applications, Twitter alerts, and Spanish-language options as they compete more fiercely for customers. Personal finance websites, ranging from budget trackers to financial blogs, are becoming increasingly popular and now attract one in four people who use the Internet, according to Comscore.com, which tracks Web traffic.

“There’s been a profusion of these things, in part because of what’s going on in the broader economy,’’ said Paul Kedrosky, who writes an economics blog in San Diego called Infectious Greed. “People feel they have to be more frugal, so budgeting’s in vogue.’’

These budget-tracking websites are becoming so popular that banks are now purchasing the software for their online customers so they can preserve crucial banking relationships. Budgeting software “is the future of online banking,’’ said Peter Glyman, a founder of Geezio, which sells the software to banks and credit unions.

The theory behind budget-tracking websites is that people often know their money disappears fast but they don’t know precisely where it goes. Seeing, in detail, where spending occurs is the first step to curbing it. To help users budget, these sites sort each expense into a fixed or customized category – rent, utilities, clothing, Starbucks, gym membership – and then compare actual spending to that category’s budget amount, specified by the user in advance. The sites’ colorful charts display whether users are under- or over-budget every month in each category.

A common realization by users of budgeting websites is how much they spend every month eating out, said Aaron Patzer, Mint’s founder and chief executive. Indeed, in a recent survey of Mint users, 90 percent said they changed their spending habits after using the budgeting software, and 40 percent said they cut back on dining out.

“Having the feedback and the awareness that you went to Starbucks 30 times last month changes peoples’ habits,’’ Patzer said.

Schulthess, the Cambridge resident, said he and his girlfriend started taking cooking classes so they could cut their food budget after Pear Budget showed he was spending $500 a month on dining out. Despite lapses like the iPhone splurge, he said Pear Budget helps him stick to his goal of saving 10 percent of his income. Schulthess said he’s saved about $200 per month on food alone.

“If you get laid off or wanted to change your job, you need financial security to be comfortable,’’ he said.

Budgeting websites are free to users, but some earn revenues each time they successfully direct users to financial products, such as credit cards, offered by advertisers, which some say implicitly encourages the use of credit to someone who may instead need to curb their spending.

The sites also differ in how they collect data. Some sites are automated budget trackers, which require users to provide their bank, credit card, IRA, and other account numbers and their online passwords. The budgeting site then uses this information as permission to receive a download of their spending and income data from the financial institution.

Mint, which extracts the data automatically, has emerged as the giant among the sites. With more than 1 million unique visitors per month, according to Compete.com, a website that tracks Internet traffic, Mint became so successful that it was purchased by financial software maker Intuit in September for $170 million. Intuit plans to replace the online version of its famous Quicken software with Mint’s more modern technology, the companies said. Wesabe, which also extracts data automatically, is the second-most-popular site for individuals, with more than 35,000 unique visitors per month.

But many potential customers, particularly older users, are uncomfortable with turning over their account information to a third party. To reach a broader audience, some budget sites are adapting. Money Strands, which was rolled out less than a year ago, offers manual and automatic data entry. Mint.com said that it also plans to offer manual data entry in coming months.

“Many people from all ages say, ‘I would never share that information,’ ’’ said Diane Ty, an AARP senior vice president and expert on personal finance.

Pros: Mint.com uses state-of-the-art software to extract a user’s financial information from bank accounts, credit cards, and other sources. Unlike some sites, it also tracks a wide range of financial activities, from IRAs to college funds. Other features include a weekly e-mail or text message listing user’s five largest expenditures. Slick, colorful graphics and an iPhone application are also appealing.

Cons: Requires users to turn over account passwords, though the company points out that it does not store users’ personal information – only data – or their passwords. Users report issues arise from downloading data from their bank or other accounts such as an inability to connect to certain financial institutions and glitches in categorizing some expenditures.

Final word: Mint.com is the granddaddy of budgeting websites. The site said that it is working to continually support more institutions.

Pros: Rolled out less than a year ago and in use at a major Spanish bank, the budget-tracking website has features older sites lack, including a Spanish-language capability, iPhone app, advanced data analysis, and support for 44 currencies. Key distinction from other sites: automated data extraction, like Mint, but also a manual capability for those leery of turning over bank account information to third parties.

Cons: The newest of the budget-tracking sites is still working out the kinks and responding to user comments and complaints. Does not integrate investment accounts.

Final word: The jury’s out. But Atakan Cetinsoy, vice president of personal finance products, said the company is serious about creating a website that strikes the crucial balance between simplicity and usefulness. An “obvious next step’’ is to integrate users’ investment accounts, he said.

Pros: Popular because it’s really easy to use and simplifies for people who may be overwhelmed by budgeting. Founder responds personally to users’ questions.

Cons: No automated data download – only manual expense and income entry is allowed by the software.

Final word: Created by Charlie and Sarah Park in 2004 and still run out of their Williamsburg, Va., home. Park said he remains true to his original mission of helping people, providing personal service, and creating a homey feel.

Pros: The best site for people who seek the emotional encouragement of an online support group to discuss financial issues or solicit solutions to problems such as debt overload. Offers suggestions for low-cost retailers in the user’s neighborhood. Has iPhone and other smartphone apps. User complaints and questions are visible to all – not just members who log in.

Cons: Advice from third parties can be unreliable. Users complain that responses to requests for Web support have slowed, and the company agrees it is running behind. Automated data extraction only.

Final word: The four-year-old company is one of the most popular sites – 37,500 unique visits per month – and suffers from some growing pains. Customer support has slowed but remains a priority: Founder and chief executive Marc Hedlund responds personally on the site to users with complaints and questions.

Pros: Cool feature allows users to designate a specific savings goal and track progress toward that goal. The site also provides education or guidance about how to reach goal.

Cons: Automated data extraction only. Budget tracker also can be accessed via MoneyRight.com in the wake of acquisition by Lending Tree.

Final word: For those who find it hard to take directions via e-mail or Twitter, JustThrive is a great bet. It provides good customer service over the phone, which is important for serious budget trackers who aren’t Web whizzes.

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The New York Times Company

Mo Vaughn’s home runs

By Amanda Fung

Published: February 14, 2010 – 5:59 am

Six months after Mo Vaughn set up Omni New York in 2004, the fledgling real estate firm struck, snapping up a 286-unit affordable housing complex in the Bronx. By the end of its second year, Omni New York had tripled its holdings to a total of 869 units.

As far as most people were concerned, however, Mr. Vaughn was still a Mets first baseman, even though his baseball career ended in 2003.

“I wanted people to take us seriously and know that we were the real deal,” says Mr. Vaughn, who is seated at a Brooklyn eatery with his partner, Eugene Schneur, explaining his transition from baseball hero to real estate mogul—albeit one whose new uniform includes not just sharply tailored suits but large diamond-encrusted hoop earrings. “I wanted respect.”

These days he’s got it—not as the American League’s former MVP but as the managing director of one of the city’s best-regarded and most active buyers and managers of affordable housing. Along the way, Mr. Vaughn and company have earned a place as one of the city’s top choices for turning around distressed residential properties.

Today Omni ranks as a midsize firm capable of competing with the bigger players, swallowing up sprawling properties such as the decrepit 14-building, 416-unit complex in the South Bronx that Omni bought the mortgage on at a foreclosure auction—with the city’s blessing—in December. “Given their track record, they are ideally suited to deal with troubled projects,” says NYC Housing Preservation and Development Commissioner Rafael Cestero.

Since 2004, Omni has spent over $500 million buying and rehabilitating 21 affordable-housing buildings with a total of nearly 3,500 units in the Bronx, Brooklyn, Long Island and as far away as Wyoming. The majority of the buildings they own and manage are Section 8 buildings, whose low-income tenants rely on federal vouchers to help pay their rent. Omni finances its deals using tax-exempt bonds and the proceeds from the sale of low-income-housing tax credits.

Making money and doing good

That is exactly what it did when it acquired the Noble Drew Ali Plaza in the Brownsville section of Brooklyn—the 2007 deal that put Omni on the map. At the time, the five-building complex with 358 units was a haven for drug dealers and addicts, its hallways urine-soaked and graffiti-lined and its apartments crumbling.

Omni purchased the property out of bankruptcy for $23 million with financing from various city agencies, including HPD, as well as federal grants. The developer then poured $25 million into refurbishing everything from new elevators and energy-saving appliances to 326 security cameras. After two years of work, Messrs. Schneur and Vaughn capped off the revitalization by giving the complex a new handle: “The Plaza.”

“Noble Drew Ali, without a doubt, was one of the most complicated projects [we've seen],” says Mr. Cestero. “They restored it to a quality place for people to live by taking a very aggressive approach to renovating buildings.”

Today Mr. Vaughn, who played for the Boston Red Sox in the 1990s, spends most of his time on the operations side of the business, working with Omni’s construction, management and maintenance teams, while Mr. Schneur focuses on the dealmaking.

“I’m the eyes,” said Mr. Vaughn, who got his start in real estate by investing in Manhattan nightclubs with help from Mr. Schneur, then his attorney. “I make sure that everything that needs to get done gets done.”

In fact, Omni was his idea. In Ohio, where Mr. Vaughn spent his off-seasons, he met a developer successfully buying affordable housing using tax credits and decided to try the concept out in New York.

“They are smart people,” says Lisa Gomez, executive vice president of affordable housing developer L+M Development Partners. “They get how to do affordable housing and look to the double bottom line [of making money and doing good].”

Size doesn’t matter

But competition for distressed properties is increasing as the drought in luxury housing deals drags on. Meanwhile, the price of tax credits—a key currency in such deals—has plummeted by nearly a third, forcing Omni to scramble for more state and city subsidies to fill the gap.

“We used to be able to get deals done without subsidies,” says Mr. Schneur.

Omni’s rapid growth also presents challenges. By year’s end, it expects to have close to 5,000 units. For a firm whose two founders visited their early holdings as many as four times a week, the sheer scale of the portfolio now makes maintaining that degree of oversight difficult—even with the aid of a staff at its midtown headquarters that now numbers about 120.

“We can’t cut corners and be complacent,” says Mr. Vaughn. “If we continue to be humble and work hard, we will be fine.”

In fact, Mr. Vaughn and his partner are stepping up their act. Prior to the market collapse, Omni had been priced out of Manhattan. Mr. Schneur recalls one deal where Omni bid $20 million for a Manhattan building that went for $30 million.

Last month, Omni had better luck, buying its first Manhattan properties—two Section 8 buildings in Harlem with 53 units—for $5.5 million. Now, as a number of big, financially troubled properties, including Lawrence Gluck’s 1,230-unit Riverton in Harlem, make their way through foreclosure, they are weighing a bid. Even Manhattan’s vast middle-income oasis Stuyvesant Town-Peter Cooper Village looms as a potential target.

“Size doesn’t matter,” says Mr. Vaughn. “They fit within our philosophy of preserving decent affordable housing.”

Consumers Head Online for Local Business Information

By Gregg Stewart