Another fraudulent transfer suit; this one is vs Keystone Consulting

Lou Pearlman bankrutpcy trustee Soneet Kapila filed this suit against Keystone Consulting Associates of Florida, seeking to recover $635,470 he says was fraudulently transferred from Lou Pearlman and his companies during the two years before the bankruptcy filing. Kapila says Keystone had a contract to be paid $10,000 to provide consulting services to the Trans Continental companies, but did not provide any services. Shaun Keck of Tampa is the only officer of Keystone listed in state records, but he is not named in Kapila's action.

Soneet Kapila goes after Michael Crudele

This was a long time coming, but today Lou Pearlman bankruptcy trustee Soneet Kapila sued Michael Crudele, a key figure in the EISA sales program, for recovery of fraudulent transfers. Judge Arthur Briskman signed a temporary restraining order, which prohibits Crudele and his company, Aegis Consulting, from taking any action regarding any assets transferred from Pearlman and his companies or that are the "proceeds or products" of those transfers without Kapila's authorization or court approval. He's also supposed to account to the trustee for what he's done with the property. The order is based on this emergency motion and supporting documents such as this and this.

Kapila says Crudele and his company, Aegis, got $7.5-million in the four years prior to the bankruptcy filing. Trans Continental Airlines even bought Florida Prepaid College Plans for Crudele's three children for $30,872. Also note the generous donations of $67,000 to Bell Shoals Baptist Church in 2004 and 2005. Soneet wants Crudele to give the money back. (If you read it, you'll note he makes two sets of claims, one for transfers over four years and one for transfers over two years in case the judge doesn't go along with the four years.) Who knows how much of the money has been spent. But Soneet did track down a Crudele account for $175,000 with Gries Investment Fund I LLC and there's $23,232 left in Prepaid College money. The exhibits at the back of the suit lists the transfers.    

Kapila says Crudele contracted with sales agents to market the EISA program and distributed the fraudulent sales materials. "All material inquiries from investors about the operation of the EISA priogram and/or the investment and withdrawal of investor funds in the EISA program were directed to defendant Crudele."

Here's the letter Alan Gross sent to Lou Pearlman

Since there has been some interest in this, I thought I'd post this copy Alan Gross sent me of the letter he wrote to Lou Pearlman last December. He said he did not receive a response.

Update: Here also is a copy Alan provided me of a letter he sent to the Securities and Exchange Commission in 1995.

page one, page two   

How do I let the IRS know I've moved?

Q: We are going back north and are worried our rebate check will not reach us. What should we do?

A: File this change of address form with the IRS and, just in case, fill out a form with the post office to have your mail forwarded.

Live the rich life without being rich

Is St. Petersburg’s free museum day on your calendar for May 17? How about one of these adventures: Civil War Days at Heritage Village in Largo (free, May 17), $5 Day at Lowry Park Zoo in Tampa (May 18) or maybe the Ruskin Tomato Festival ($5, May 3 and 4)? Or how about just going to the beach or taking a walk in a nearby park?

My column this Sunday is about living a rich life without being rich. You're invited to contribute your own ideas about free and low-cost things to do in the Tampa Bay area. In addition, I have some suggestions for more absorbing activities. 

Here are readers' suggestions about great low-cost things to do.

Wachovia agrees to pay restitution to victims of its telemarketing customers

Interesting news today from the Office of the Comptroller of the Currency: Wachovia Bank will pay $144-million to settle charges that it allowed telemarketers to use its accounts to help them take millions of dollars from elderly people across the country. The federal Office of the Comptroller of the Currency said Friday that  Wachovia failed to act against the telemarketers even after the victims and their banks complained they were being defrauded.

The government said the telemarketers, including one based in Largo, obtained bank account information from their victims while selling vouchers for discount travel and products or offering free gifts or free trial memberships. The information was then used to draft money out of the victims’ accounts and deposit it in the Wachovia accounts of the telemarketers and payment processors. One of the companies was FTN Promotions of Largo, subject of this FTC lawsuit last year. I think it's interesting that Wachovia was not accused of any fraud but of failing to have the systems in place to adequately respond to the complaints of fraud and then do something about them. Wachovia, incidentally, says it no longer allows pure telemarketing companies to have accounts.

IRS getting an early start on rebate checks

President Bush said this morning that rebates will start going out Monday, four days earlier than previously announced. The first rebates will go out by direct deposit to taxpayers who included bank account information on their tax returns and whose returns were processed by April 15. About 7.7-million people are expected to get their rebates electronically. The IRS plans to start mailing paper checks May 9 and complete the first wave of mailings by July 11. People who filed later will get their rebates later. In fact it's not too late to file a 2007 return and get a rebate.

Rebates range from $300 to $600 for singles and $600 to $1,200 to joint filers, plus $300 for each child under 17.

Here's the rebate delivery schedule originally announced by the IRS.

Personal income growing fast in Florida--or at least it was in 2006

Thanks to population and job growth, both the Tampa Bay area and Florida as a whole outpaced the nation in personal income growth in 2006. However, on a per capita basis, we were a hair below the national average on both counts.

Here's the scoop: The Tampa Bay area saw a 7.6% increase in overall personal income to $95.8-billion in 2006. That compares to a 7.4% increase statewide and 6.7% increase nationally. On a per capita basis, though the change was smaller, 5.5% on both the Tampa Bay and state level compared to 5.6% nationally. Per capita income was $35,541 for Tampa Bay, $36,720 for Florida and $36,714 nationally. Over the decade from 1996 to 2006 wages were growing at a faster rate than investment earnings (dividends, interest and rent) or transfer payments (such as Social Security). However, between 2005 and 2006, that situation reversed with investments and transfer payments growing faster than wages.

See the info county by county here, Florida here, and a really cool map here.

Banks want to be reimbursed $539,593 from Pearlman bankruptcy estate

The five banks that filed the petition to force Lou Pearlman into bankruptcy are asking the court to reimburse their fees and expenses to the tune of $539,593. Their motion says they deserve to have these costs treated as administrative claims (which get paid before any pre-bankruptcy debt) because they provided "substantive assistance" and "substantial benefit" to all creditors defrauded by Pearlman.

They note that claims in the Pearlman bankruptcy alone have now passed $588-million. Soneet Kapila also has filed financial statements for February, including this one for the main Lou Pearlman bankruptcy. It shows $2.9-million collected to date in the Pearlman bankruptcy. 

Florida Prepaid College Plan wins kudos

College savings plan guru Joe Hurley likes the Florida Prepaid College Plan, but isn't so enamored with its younger sibling, the Florida College Investment Plan. Hurley gives the prepaid plan four out of five caps on his Web site, SavingforCollege.com, meaning he thinks it is "an excellent program with many benefits for the participant and positive investment attributes. If it has any significant weaknesses then it also has some particularly good things to recommend it." The caps are little mortar boards. The investment plan only gets three caps, meaning "a very good program that offers valuable benefits but may have some limitations or concerns that investors need to be aware of." But then Hurley is pretty picky. Florida residents can buy an investment-style plan from another state, but there aren't any that rate Hurley's five caps for out-of-state residents.The closest are Illinois' Bright Start College Savings plan (the direct-sold version, not the broker-sold), the Michigan Education Savings Plan, the College Savings Plan of Nebraska , the South Carolina Future College 529 Savings Plan and the Virginia Education Savings Trust, all of which get 4.5 caps for nonresidents. Here's his full list of ratings and here's the Web site for the Florida plans.

Judge rejects sentencing delay

U.S. District Judge Kendall Sharp denied a request from Lou Pearlman's defense lawyer to postpone sentencing until August. In this order, the judge said "in light of the time remaining for the parties to prepare for sentencing, this Court sees no compelling reason to grant a continuance." That means the sentencing is still on for May 21 unless he changes his mind. Defense lawyer Fletcher Peacock said both the U.S. attorney's office and the U.S. probation office joined in his request. He said they've all been "inundated" working on a crack cocaine sentencing underway.

Pearlman faces up to 25 years in prison after pleading guilty to stealing more than $300-million from banks and investors.

Can I convert savings bonds to a Roth IRA?

Q:  I have about $10,000 in savings bonds stretching from 1986 to about 1999, half in parents' names and half in childrens (both 17). Would like to convert into Roth IRA contributions. What are the tax ramifications of cashing in the bonds or can I convert them?

A: No conversions allowed. If the bonds are cashed, the owner will owe income tax on the accrued interest. For students the extra income may have a negative impact on financial aid eligibility if they will be going to college in 2009. If the bonds held in the parents' name are cashed when the children are in college, the interest income may be tax-free. See details on page 55 of this document.

 

Will your money last as long as you do?

That's the question facing retirees who don't have a traditional pension. Naturally, the financial services industry is coming up with ideas on how to answer it. The latest is a new offering Vanguard introduced today. Fidelity Investments also offers a set of income replacement funds. And, of course, there is the option of the traditional life annuity. Today's New York Times has a story on the money management challenge facing retirees.

Is gold a buy or a sell? How about the dollar?

Gold: buy or sell? was the question of the week this past week and I found Times readers seriously divided. (Read some of their opinions here.) Friday gold was trading at $915 an ounce and silver at around $18, both off from their all-time highs. Gold and silver have been great investments for those prescient enough to buy at the right time, but mediocre to lousy for those whose timing was off. I wouldn't want to be the person who paid $800 an ounce for gold back in the 1980s. This site offers historical charts that provide some perspective. My view is that gold is better considered an economic safety net than an investment. I don't think you should have more than 10% of your investment assets in precious metals.

Gold, of course, is a hedge against inflation and a store of value when the dollar is declining. EverBank in Jacksonville has managed to capitalize on both trends, as I wrote in Sunday's column. The bank's specialty is currency-linked bank accounts that allow you to profit or lose money on big movements in the dollar. (Transaction costs mean small movements aren't profitable.) The bank also sells gold. If you're the trader type, you'd be better served by a currency-linked ETF, such as these created by CurrencyShares.

Should some fraudulent insurance sales practices be a crime?

Florida CFO Alex Sink wants to make it a felony for insurance agents to forge signatures on insurance and annuity documents or trick people into swapping one annuity or insurance policy for another. But, as my colleague Jennifer Liberto wrote today, Sink blames Metropolitan Life for trying to block the bill's passage. In the story, Rep. Clay Ford expresses concern about sending more people to prison, claiming "we already have prisons filled with people who commit white-collar crimes." I'd call that statement extremely doubtful. The armed robber who steals $10 from someone on the street is far more likely to go to prison than the insurance agent who steals someone's life savings. So far no insurance agents have even had their licenses revoked for selling the EISA fraud.

Senate Bill 2082 also increases the penalty-free cancellation period on policies from 10 to 14 days.

Here's your chance to ask an expert your financial questions

The Florida Institute of CPAs is celebrating "Financial Fitness Friday" Friday, April 18, by volunteering to answer your financial questions.So here's your chance to ask that question you always wanted to know but were afraid to ask me :)

Call the FICPA Financial Fitness Hotline toll-free at (800) 342-3197, ext. 554, between 9 a.m. and 5 p.m. Friday.

More information about financial topics is available at the American Institute of CPAs' "360 Degrees of Financial Literacy" Web site. 

Florida College Investment Plan gets a thumbs-up from Morningstar

Morningstar gives the Florida College Investment Plan high marks for low costs and simplicity in this new report. The one criticism offered is the lack of an international investment option. The College Investment Plan is the sister program to the popular Florida College Prepaid Plan. You can enroll for $50 plus a minimum initial purchase of $250. How much you'll have at college time depends on how much you save and how well your investments perform. If you're interested in checking out other states' plans, Morningstar says the best ones are in Maryland, Virginia, Illinois and Colorado.

Who gets the liquor license Pearlman sold at the 11th hour?

Jack Pennel filed this motion in bankruptcy court, trying to gain clear title to a liquor license that the Lou Pearlman-owned Downtown Exchange Lounge sold Dec. 29, 2006 as the Trans Continental ponzi scheme was collapsing. He claims the license was sold to Inno-Cepts Exchange, operator of the Pearl Restaurant. Inno-Cepts then alledgedly used the license as collateral to borrow $350,000 from a Robert Zlatkiss. Pennel had guaranteed the loan and ended up with the liquor license, but the state wouldn't allow him to transfer it because of the bankruptcy proceeding.

Phony broker used St. Pete address

Scamsters know it can take years for investigators to catch up with them and by then they've already moved on with their money. The SEC this week launched a new early-warning system known as "PAUSE" for Public Alert: Unregistered Soliciting Entities. When a complaint comes in and the SEC verifies the company is not registered to sell securities, the information will be made public on the SEC Web site. The initial list includes Global Direct Financial Inc., which listed a St. Petersburg address even though it apparently never had an office here. The SEC says it's likely that Global wasn't even in the United States. This posting from a Motley Fool message board offers some insight into how Global and similar companies operate.

Want to throw $50 down the drain? Sign up here

I am constantly amazed by how readily people accept some of the outlandish statements scamsters make. Someone recently told me about Imperia Invest IBC, a deal that is so obviously a scam it would be hilarious if it weren't for the sad fact that people are being duped out of their money. You put up $50 and as soon as they've accumulated 10,000 members ($500,000), they're going to make all kinds of money for you with a traded endowment policy trading foreign currency and using secret offshore banks. Ultimately payouts will be in the billions. After you pay them $50, they're going to loan you $80,000 for your trading account, which will earn 1.2% A DAY guaranteed and compounded. Apparently the Imperia people aren't too good with a  financial calculator, but in their example, they say that after six months, your share of the profits will be $134,000. The Web site is written in very awkward English, causing me to assume that it was written by a foreign scamster, maybe one of the notorious Nigerians. However, I've been told that the wording reflects the way deaf people communicate in sign language. In other words, this site is written by someone who knows sign language and is targeting deaf people with this scam. How sad.

I assume, based on the way this is presented, that this is only hitting people up for $50 and once the scammers have as much money as they think they can get, they'll shut down. Of course there could be something else going on---identity theft or a follow-up request for a larger amount of money.

Don't Forget: Today is Tax Day

If you haven't filed your income tax return, today's the day! Your return, or your request for an extension, should be electronically filed or postmarked by midnight tonight. Check out our tax guide for tips if you're still working on your return. If you're looking for a post office open after hours in the Tampa Bay area, try one of these:

TAMPA: Main Post Office (5201 W Spruce St) full service until midnight, New Tampa Station (16350 Bruce B. Downs Blvd) full service until 9 p.m.

BRANDON: Main Post Office (1315 Oakfield Dr.) full service until 10 p.m.

ST PETERSBURG: Main Post Office (3135 First Ave S) full service until midnight.

CLEARWATER: Main Post Office (100 S Belcher Rd) full service until 9 p.m.; drive-through dropoff until midnight.

TARPON SPRINGS: Main Post Office (859 E. Lime St) full service until 9 p.m.

In addition, many other post offices have outside collection boxes where mail is picked up until 9 pm. Just be sure to check the last pick-up time posted on the mail box before dropping in your tax return.

Ouch! Wachovia cuts dividend

There are more signs that troubles in the financial sector aren't over yet and this one is really going to hurt investors. Wachovia Corp. said today it is cutting its quarterly dividend from 64 cents to 37.5 cents a share, seeking a $7-billion capital infusion and cutting 500 jobs. Wachovia blamed bad timing in its acquisition of Golden West, expanding its mortgage business at exactly the wrong time.  Of course the dividend cut is also the wrong time for investors who have seen their CD income plummet.

Want to learn more about money? Here are some good places to start

There's so much information out there, it can be overwhelming to know where to start. I came across some recommendations today that I think would benefit anyone who wants to learn more.

Here are RETIREMENT PLANNING RESOURCES, available for free online and in some cases by mail.

Here are INVESTMENT BOOKS recommended on the Vanguard Diehards' forum.

Why prosecutors strike plea bargains

The Orlando Sentinel has an interesting piece today explaining the reasoning behind plea agreements, both from the prosecutor's and the defense lawyer's points of view.

Scam State: Series warns readers about fraud

Some of you may have noticed that the Times has been running an occasional series about financial fraud to educate readers about how they work. Here are the ones we've published so far:

Ponzi schemes, Lottery and Sweepstakes Scams, Pump and Dump Schemes, Tips to Avoid Becoming a Scam Victim

Do you have a scam you'd like to suggest for this series? Each scam we highlight needs to be illustrated with an example that has a Tampa Bay connection. The Lou Pearlman case is obviously an example of a Ponzi scheme, although I used a different example here so people wouldn't get the impression it's the only Ponzi scheme around. In fact, the majority of investment frauds are a variation of a Ponzi scheme.

On a related note: Tonight's Dateline program (7 p.m., NBC) turns a spotlight on the highly questionable sales pitches insurance agents use to sell annuities to older people.

Helpful resources for your family's financial future

Many Americans are woefully uninformed about money and it costs them dearly. The subprime mortgage debacle wasn't solely caused by greed; ignorance played a big role. But, as I discuss in today's column, some groups are trying to upgrade our knowledge of finances to help us live better lives. One, is the United Way of Tampa Bay, which recently launched the Web site My Family's Future. It has a great set of personal finance calculators, including this one that shows how to pay off credit card debt. And it has the beginnings of a search engine to connect people with organizations and companies that offer various kinds of financial help (currently limited to Pinellas and Hillsborough counties).

Here are some other non-commercial sites that offer personal finance information: My Florida Money, America Saves,  American Savings Education Council, U.S. Financial Literacy and Education Commission, Federal Trade Commission, Federal Deposit Insurance Corp. Do you have a favorite site to add to the list? 

Can someone who gets SSI benefits qualify for the rebate?

Q:  I have an elderly friend who’s 79 and lives off Social Security payments of $600 a month.  She has not been filing taxes.  She lives in a government-subsidized housing and was told by the management of the housing that she’s an SSI recipient and not eligible for the IRS tax rebate.  However, as in your column, I keep reading that people who are not required to file should file anyway if they want to receive the rebate.  Should she file or not?

A: If she gets at least $3,000 a year in Social Security benefits (not including the SSI benefits), then she should file a return and will get the rebate. You are not disqualified because you receive SSI benefits, but the SSI benefits cannot count toward the $3,000 in required Social Security income.

Can I get a sales tax deduction for my new swimming pool?

Q: I understand that an airplane, RV, and building materials for a home improvement can be claimed as a major expense when determining the sales tax deduction.  What about if you have a swimming pool installed?

A: I think the addition of a pool would qualify as a substantial home improvement, which would make the sales tax paid on materials separately deductible. However, there is a problem. You must have paid the sales tax personally or your contract with the contractor must contain certain wording. (See p. A-5 of this document.) 

Say goodbye to the mansion

Bankruptcy Judge Arthur Briskman this morning approved trustee Soneet Kapila's motion to abandon any interest in Lou Pearlman's Windermere mansion. This allows Bank of America to go ahead and foreclose. It's a shame for investors that this scam unraveled when the real estate market was in the dumps. I'm sure the property could have been sold for a nice gain a few years ago.

The judge also approved Kapila's motions to sell the 2004 Rolls Royce Phantom and 2006 Cadillac limo, which the feds seized last year. The vehicles will go to Bache Auto Sales on consignment; estimates are that the Rolls will sell for $195,000 and the limo for $50,000. Click on the link for more details.

Here's the memo from the hearing. Note that Rene Chamberlain was in attendance as attorney for Pearlman. The judge gave her another 14 days to file her response to the last order, and continued the whole issue to May 8.

Economic gloom is getting us down

Are you feeling good about your finances and the future? If so, you're part of a shrinking crowd of optimists. It seems that at least once a week - and more often several times a week - I see another survey that points to growing gloom about finances. In today's paper, I wrote about the annual Retirement Confidence Survey, which this year featured the biggest ever drop in confidence about having enough money to finance a comfortable retirement.

Here's another report out today from the Pew Research Center on the "middle class blues," focused on the difficulty middle class families are having maintaining their standard of living. I recommend the report to you as it has lots of fascinating findings. Here's one: Some groups have improved their standard of living since 1970: seniors (ages 65 and older), blacks, native-born Hispanics and married adults. Losers include young adults (ages 18 to 29), the never-married, foreign-born Hispanics and people with a high school diploma or less.

Lou Pearlman sentencing likely delayed until August

Lou Pearlman's defense lawyer, Fletcher Peacock, filed this motion asking that the sentencing, now set for May 21, be postponed until August or later. This is not a surprise, as Peacock indicated at the hearing on Pearlman's plea agreement that the May date probably would not allow enough time. U.S. Assistant Attorney Roger Hanberg and U.S. Probation Officer David Salce, who has been assigned to the case, and Pearlman himself all agree to the delay, according to the filing. I don't think the judge will object.

"Adequate review and preparation for sentencing cannot be accomplished by May 21," Fletcher's motion says.

The delay also will allow time for prosecutors and bankruptcy trustee Soneet Kapila to have a better grip on just how much help Pearlman is going to be in terms of pursuing assets.

'Ooops, I don't really have those documents,' says Rene

Former Pearlman lawyer Rene Chamberlain says she doesn't actually have the documents the court ordered her to produce. Therefore, she is striking them from her list of items for which she claims protection by  attorney-client privilege. Here is the latest exciting installment of the very strange case of Ms. Chamberlain and her documents.

In other news, bankruptcy trustee Soneet Kapila has formally filed to abandon any interest in Lou Pearlman's Windermere mansion since he hasn't been able to sell it and it's a burden to the bankruptcy estate to keep it up. Bank of America, which holds the mortgage, will get the property by foreclosure.

Can I take early IRA withdrawals and avoid the penalty?

Q: I have been told that there is a way to take distributions from an IRA, a little known Section t72, I believe, that allows a person once the age of 55 is reached to withdraw for five consecutive years the same amount of money. My friend has not been able to find it. Does one has to stop working completely? Is part time work allowed?

A: Yes, there is a way to take early IRA distributions without penalty under an IRS rule known as 72(t). Here's a calculator and some explanation of the rules, which are complicated. It's generally advisable to have a tax professional assist you in calculating the correct amount to withdraw. Then you absolutely must follow the schedule. Whether you work or how much your work makes no difference.

How do I handle the distribution from my IRA?

Q: Last year, I took a qualified distribution from my Roth IRA to help pay for my MBA tuition.  I elected to have federal tax withheld when I took the distribution and now I'm wondering how I report that on my 1040 form.  Do I just list the amount of the distribution on line 15b and add the tax I paid to the total payments on line 72?  That seems to make the most sense--but this is the IRS, so I'm not so sure!

A: If it is truly a "qualified" distribution, then it is not taxable. However, you have to be at least 59 1/2 or disabled for it to be qualified. Even if you are too young for it to be qualified, you don't owe tax on the part that represents the return of your contribution. Roth distributions are treated as having first come from contributions, then from earnings. So your taxable amount to report on line 15b may be zero depending on all of the above. The tax withheld would be included on line 64 since it was withheld from a 1099 form. 

Can I deduct my margin interest?

Q: I'm curious. Can I claim my stock account margin interest on my 1040? It really adds up.

A: Yes, you can deduct margin interest (attach Form 4952 to Schedule A) up to the amount of your net investment income. There are, however, some other limitations. For example, margin debt used to buy tax-exempt investments is not deductible. In addition, if you choose to include capital gains and qualified dividends as part of your net investment income, you lose the favorable tax treatment you would otherwise enjoy. So proceed with caution.

Do you need to file a second tax return to get a rebate?

Several people have asked me that question today so I thought I'd explain. One tax return is enough for almost everyone. Here's the exception. You need to file a second return if:

*You receive Social Security or VA disability benefits that you did not report on the return you filed AND

*You paid less than $300 in total taxes ($600 if it was a joint return) on the return you filed.

If the above applies to you, you should file a 1040X (amended return) following these special instructions. The Social Security or VA benefits are not reported as taxable income. They are just reported to qualify you for the minimum economic stimulus payment ($300 single/$600 married.) If you paid at least $300/$600 in taxes, you already will be getting at least the minimum payment and there is no need to file an amended return.

Rene Chamberlain's attorney wants to quit

Alan Perlman filed this request for his law firm, Ordono & Yoss of Fort Lauderdale, to be allowed to withdraw as Rene Chamberlain's attorney in the Lou Pearlman bankruptcy case. He cites "irreconcilable differences."

By the way, the transcript of Lou Pearlman's plea hearing is now in his court file, but is not available electronically. That means if you happen to be in the Orlando area, it should be available for your reading pleasure in the clerk's office at the federal courthouse.

The clock is ticking: Have you filed your tax return?

April 15 is approaching fast, but some of us, including me, still haven't filed our tax returns. It's not that my return is terribly complicated. It's that I owe the IRS, so there's no incentive to file early. My husband and I generally do the quick version of our return early in the tax season (we always file online) to figure out whether we owe. If it looks like we might have a refund, we'll get busy with the detailed version. But this year, as usual, there isn't going to be a refund. We could file now and pay later, but it's easier to just wait until next weekend to do both. 

Our goal with withholding and estimated tax payments is to come as close as we can to breaking even, but it's a little tricky because my husband has some self-employment income and expenses.

In today's paper, I offer some tax season tips and reminders. If you've got a question, send it my way. Or check out our online tax guide.

How safe is your brokerage account?

The problems at Bear Stearns and other brokerages have left many investors wondering: What about my brokerage firm? Would my money be safe if it went broke? The answer thank goodness, is usually yes. Your money would be safe thanks to the Securities Investor Protection Corp. In my column Sunday, I talk about what's covered and what isn't. Here are some steps you can take to be sure you are covered:

• Look for the words “Member SIPC” when dealing with a brokerage.
• Make checks payable to the SIPC member company, not to other companies or the broker.
• Keep copies of trade confirmations and of recent statements.
• Check statements to be sure nothing is amiss.
• Call if you fail to receive a statement.

Will you spend more or less on vacation this year?

High gas prices and inflation-pinched wallets are prompting some people to cut back on their vacation plans. However, others say they'll just spend more this year, some of them taking the same trips but expecting to spend more filling up the gas tank. When I asked the question of Times readers, here are some of the responses I got. I think I'll probably spend about the same. How about you?

How do you get started with a Roth IRA?

Q: My son is 30 and wants to start a Roth IRA. Where should he put his $1,000 and how does he begin to do it? We won't hold you responsible with the outcome. It is our responsibility, but we are not knowledgeable like you about such things.

A: Getting started with an IRA is a three-step process: 1. Opening an account with an IRA trustee, such as a bank, brokerage firm or mutual fund company. 2. Putting money in the account (you have until April 15 to make a contribution of up to $4,000 for 2007 plus an extra $1,000 for those 50 and older). and 3. Choosing the investment.

The type of investment you want will influence where you open the account. For example, if all you want is a bank CD, then your best bet is to simply open an IRA with a bank that offers CDs with above-average yields. How much money you plan to invest also matters since a fund company or brokerage may have a minimum account size or charge fees that make a small account unfeasible. In some cases you can get around an account minimum by signing up for monthly transfers from your checking account to your IRA, such as this program from Fidelity.

Since your son has a long time to go until retirement, I'd recommend a mutual fund that invests in stocks or a combination of stocks and bonds. He should choose only one fund to get started, which can be overwhelming because there literally are thousands of fund choices out there. The important things are to choose a fund that's broadly diversified rather than focused a particular area such as small stocks or health care and to choose one that has reasonable expenses. I don't recommend any particular funds, but I will give two examples of funds you can buy directly from fund companies with $1,000 minimums for IRAs: T. Rowe Price Retirement 2045 Fund and Vanguard STAR Fund. Another approach is to open an IRA account with a low-cost brokerage firm and buy funds available through that firm with no transaction fees.

Forfeiture motion filed in Pearlman case

Part of Lou Pearlman's plea agreement with the government is a $200-million forfeiture judgment. This motion from the U.S. attorney's office, asks the judge to enter the judgment on the record, to become final at his sentencing. It explains (on p. 3) that even though the amount of the losses is more than $300-million, the judgment was set at $200-million as part of the plea agreement. Also it explains (on p. 5) that judgments are used when the defendant no longer has the actual stolen money or traceable property in his possession or the government cannot locate them. "Here, because the United States could not locate specific property constituting or derived from proceeds, directly or indirectly, traceable to the fraudulent schemes, that is the actual funds obtained, the United States seeks a forfeiture money judgment."

Sentencing is set for 9 a.m. Wednesday, May 21, although it could be delayed.

Kudos to University of Tampa student investors

Students in an applied investment management class at the University of Tampa apparently know their stuff. They more than doubled the performance of the Standard & Poor's 500 Index last year and, as a result, won first place in a recent global money management competition.

The students managed real money, the Bailey Student Investment Fund, a $150,000 investment portfolio established five years ago with a $100,000 gift from the Bailey family. They earned a 14.62% return for 2007, compared to a 5.49% return on the Standard & Poor's 500 Index. Half the portfolio was invested in exchange-traded index portfolios to get broad domestic and international exposure to the markets and half in individual stocks and funds selected by the students. Ten percent of the portfolio was invested in stocks or funds that provide exposure to alternative asset classes such as real estate, commodities and private equity.

The best investments for 2007: iShares MSCI Brazil ETF, Apple Inc and iShares MSCI Canada ETF. The worst: iShares Cohen & Steers Realty ETF, Gamestop Inc., Vanguard Emerging Markets ETF.

The group placed first in the graduate division for core-style portfolios in the Redefining Investment Strategy Education 8th Annual Global Student Investment Forum held at the University of Dayton last week.

"This is a huge recognition," said Marcus Ingram, the fund's faculty adviser. "UT competed strongly with large schools that manage funds in the millions of dollars and which have unlimited resources and direct access to assistance from Wall Street firms."

Then again, maybe this is a sign that assistance from Wall Street firms isn't necessarily a good thing.

Estimated taxes: The form is not in the mail

If you pay estimated taxes and you haven't received a form in the mail, it's time to spring into action. You'll need to get a form, either by downloading the 1040-ES right here or by calling the IRS toll-free at 800-829-3676 and asking to have forms mailed to you. The first payment for 2008 is due April 15.

IRS officials have drastically curtailed their mailing of paper forms as more people file by computer. They say about 40% of those mailed out in the past were not used. However, they acknowledge they were overzealous and cut off people who should have received by the forms. 

Chamberlain gets extension of time to turn over documents

Bankruptcy Judge Arthur Briskman has given Rene Chamberlain until April 7 to submit documents in the Lou Pearlman bankruptcy. She previously asked the judge to reconsider a turnover order, saying she hadn't been properly served.

Not much activity in bankruptcy court filings right now.

Can I contribute my IRA withdrawal back to my IRA?

Q: I understand that I will need to start drawing from my IRA when I turn 70 and 1/2, but I don’t need the income. Can I turn around and deposit my withdrawal back into my IRA and use it as a tax deductible contribution?

A: No. You cannot make a contribution to a traditional IRA once you reach 70 and 1/2. There is no age limit on contributing to a Roth IRA as long you have earned income. However, you can’t get a tax deduction for your Roth contribution.

How can I replace my 7% annuity?

Q: I have a fixed-term IRA annuity yielding 7 percent that ends in July. What can I invest this in? I am 80 years old and need this income to live on. My health so far is good.

A: I'm afraid the days of 7 percent returns are long gone for the type of investment you have now. Consider instead an immediate annuity that will pay you a monthly income you can’t outlive. You’ll get the largest payment if you choose the option with nothing for your survivors.

You also could create your own annuity with CDs and money market accounts, withdrawing both income and principal to meet your income needs. Of course you run the risk of running out of money with that option. A third option is a reverse mortgage if you own your home.

Does our financial regulation need revamping?

U.S. Treasury Secretary Henry Paulson proposes an overhaul of the nation's system for regulating financial services, including banking, securities, commodities trading, insurance and mortgage brokerage. There's no question that the system we have now is outdated, but would consolidation result in more efficient regulation or just less regulation? As I wrote today, there's already a big debate under way. Consumer advocates are fearful that transferring power away from the states would mean even less oversight of brokers and insurance agents. Here's the executive summary of the plan and here's the whole thing for those who have time to read 200+ pages.

Paulson's proposals
• Set federal licensing standards and disclosure requirements for mortgage companies and mortgage brokers. Create a federal commission to evaluate state mortgage regulation.
• Give the Federal Reserve broader powers to stabilize markets, including authority to review private pools of capital such as hedge funds.
• Convert thrifts to national banks regulated by the Office of the Comptroller of the Currency, eliminating the Office of Thrift Supervision. Eventually consolidate all federal bank regulators.
• Let insurance companies choose whether they want to be regulated by a new federal Office of National Insurance or stay under state jurisdiction.
• Merge the Securities and Exchange Commission and the Commodity Futures Trading Commission. Eventually consolidate consumer protection and enforcement across all financial services.