Alabama county buys time to avoid bankruptcy filing

Leaders of Alabama’s most populous county voted unanimously Friday to reject a settlement with Wall Street creditors to pay off more than $3.1 billion in debt and bought more time to avoid what would be the largest municipal bankruptcy ever filed.

The five members of the Jefferson County Commission also unanimously approved a resolution to give the commission president and finance chair until Sept. 16 to personally negotiate a deal.

The county has been trying to avoid filing bankruptcy over more than $3.1 billion in sewer system debt for three years. Its problems stem from a mix of outdated sewer pipes, the economy, court rulings and public corruption.

State officials and a court-appointed receiver have been closely involved in the talks.

Ex-Merrill Lynch director loses appeal of conviction

A federal appeals court panel Friday upheld a former Merrill Lynch executive’s conviction on perjury and obstruction charges that stemmed from a bogus 1999 deal involving Enron.

A three-judge panel of the 5th U.S. Circuit Court of Appeals rejected James A. Brown’s contention that federal prosecutors improperly withheld favorable evidence in his case.

Brown’s attorney, Sidney Powell, said she would ask the full appeals court for a rehearing.

“We remain convinced the government failed to meet its disclosure obligations,” she said.

The charges centered on Enron Corp.’s sham 1999 sale to Merrill Lynch of three power barges moored off the Nigerian coast. Brown was a managing director at Merrill Lynch and head of its strategic asset and lease finance group at the time.

J.C. Penney calls profit flat after aggressive markdowns

J.C. Penney Co. reported a flat second-quarter profit Friday as the department store retailer aggressively marked down prices on fashions to get its middle-income shoppers to keep spending in an increasingly uncertain economy.

The company also issued third-quarter profit guidance that fell well below Wall Street estimates and said back-to-school shopping is starting later this year. It declined to offer a full-year outlook amid stock market turmoil fueled by fear about the economy and the downgrade of the federal debt.

Penney, like many stores catering to middle- to lower-income shoppers, faces increasing uncertainty heading into the two most important retail seasons of the year — back-to-school and the winter holiday season.

Stores are passing along higher prices on clothing to offset rising raw material costs.

Still, with anxiety rising over a potential double-dip recession, retailers’ ability to raise prices going forward could fade fast.

Mortgage fraud schemes still widespread, FBI says

Mortgage fraud remains widespread in the depressed housing market, with perpetrators motivated by high profits and little risk of getting caught, the FBI said Friday.

The FBI’s annual report on mortgage fraud said such schemes are particularly resilient and hard to discover, and their total cost is unknown.

Real estate firm CoreLogic says more than $10 billion in loans were made with fraudulent application data in 2010, the report noted.

Fraud last year stayed at levels seen in 2009 as the housing market remained in distress, providing ample opportunity for schemes, the report said.

The bureau’s pending probes into mortgage fraud increased 12 percent last year over 2009, officials said.

The most prevalent schemes involve falsifying financial information to qualify buyers who otherwise would be ineligible for a loan.

Other crimes involve inflated appraisals, including schemes that use dishonest appraisals to sell homes at elevated prices. Some get-rich-quick schemes persuade investors to buy rental property or land believing the price will appreciate quickly. 

— From news service reports