BUSINESS-01
Mayor: We're Open for Business; U.S. Working Class Whites Dissatisfied
with the Economy; Twitter Spikes on Takeover Rumors; Yahoo Data Breach Puts
Verizon Deal in Spotlight; Marriott Completes Merger with Starwood; U.S.
Crackdown on Mail Fraudsters; MG to Halt Manufacturing in U.K.; IG Nobel
Prizes Awarded for Imaginative Achievements - Part 2>
Blake Ellis, Melanie Hicken>
Editor, Recode; Arne M. Sorenson Marriott International CEO; Richard
Burden, Minister of Parliament, Birmingham, Northfield; Thomas Thwaites, IG
Nobel Prize Winner, Biology>
recorded by Keith Scott's wife was released to the public. Her attorney
says the family is sharing in because the police won't release their own
body cam video of the incident. North Carolina, the state has had one of
the fastest rates of economic growth anywhere in the United States. The
unrest that's burst out in Charlotte is putting that prosperity under some
question. There are just six weeks left until the U.S. election. The new
poll numbers from CNN and the Kaiser Family Foundation show the vast
majority of working class whites in the United States are deeply
dissatisfied with the economy. Twitter stocks soared more than 20 percent
after CNBC network tweeted that the social media platform is considering
selling itself. Yahoo had least 500 million of its user accounts hacked.
And it's raised questions about its potential $4.8 billion tie up with
Verizon. If you're checking in tonight to either a Starwood hotel or a
Marriott hotel or one of the 30 brands that the new company has, you're now
staying with the world's biggest hotel company. The $13 billion deal that
brought together Marriott and Starwood closed today. MG, the very name
conjures up the iconic vehicle, a statement of motoring at its best in the
British style. Now they will no longer be made or at least the cars will
no longer be made in the United Kingdom, total production of the MG is
moving to China. If you have ever wondered what it was like to be a cat or
a dog for a day, we will introduce you to the man that lived as a goat and
who won an award for doing so.>
Automotive Industry; Elections; Race Relations; Media; Technology;
Internet; Crime; Science>
(END VIDEOTAPE)
QUEST: Arne Sorenson of Marriott, and I will be writing about that in tonight's newsletter, which is hitting your mailboxes just about now if you've signed up for it. And you know where you sign up for newsletter. The QUEST MEANS BUSINESS newsletter is CNNMoney.com/quest. It arrives after the New York market closes. Prepares you for the day ahead.
[16:30:02] Massive in scale, global in scope. The U.S. Justice Department is vowing to crack down on mail fraud. A special CNNMoney Investigation revealed the companies behind the scams.
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment. We're going to be showing you a CNN investigation that reveals the companies behind a scam global in scope. Honored for living as a goat literally. We're going to speak to the winner of this year's IG Nobel Prize. Before all of that this is CNN and here the news always comes first.
The wife of an African-American man killed by police in Charlotte, North Carolina has released her own cell phone video of the shooting. An attorney for the family of Keith Scott says the footage is being released because the police won't reveal and release their own video of the incident.
The Syrian government says an all-out military offensive is under way against rebels in eastern Aleppo. Opposition activists claim, they're saying that 150 air strikes hit the city on Friday and at least 120 people have been killed. Many others are trapped beneath the rubble.
Ted Cruz who ran to be the Republican presidential candidate has endorsed Trump. It's an unexpected reversal from Cruz who repeatedly said he would never endorse the Republican candidate. Donald Trump says he is greatly honored and looks forward to working with Cruz for many years.
President Obama has vetoed a bill that would allow family members of the 9/11 to sue Saudi Arabia. The White House claims it could expose U.S. diplomats and servicemen to litigation in other countries. Republican and Democratic leaders in Congress say they'll override, or at least attempt to override the veto next week.
The U.S. Justice Department is launching an unprecedented crack down on global mail fraud. Now these are the people who prey on the desperate, the sick, and the elderly, offering unrealistic offers. An international network of con artists and companies tricked some of America's most vulnerable people out of literally everything they had. Now the Attorney General of the United States, Loretta Lynch, said that the U.S. government agencies are working to shut down the scammers who have caused so much pain to so many.
(BEGIN VIDEO CLIP)
[16:35:10] LORETTA LYNCH, U.S. ATTORNEY GENERAL: Their activities, the activities were here to talk about today, have cheated Americans out of hundreds of millions of dollars. This fraud is massive in scale. It is global in scope, and it can be devastating on an individual level.
(END VIDEO CLIP)
QUEST: One of the main targets of the crackdown is a Canadian payment company that's called PacNet Services. The company has now been labeled a significant transnational criminal organization by the American Treasury Department. CNNMoney exclusively confirmed that PacNet is a key target in this crack down. And we witnessed how countless victim's lives have been devastated by the horror of mail fraud.
(BEGIN VIDEOTAPE)
ROB COLLINS, FATHER HAS GIVEN THOUSANDS TO MAIL SCAMS: The people who do this to people, they don't have enough prisons for you guys.
CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT (voice-over): Rob Collins says mail fraud scams drained his dad's life savings.
COLLINS: He was spending all of his check each month on these sweepstakes and the psychics.
Hey dad.
Every time he called me, "I'm winning $10 million, $15 million. I'm winning a new Mercedes."
ROMANS: He would send checks to claim his prize.
COLLINS: Have you ever gotten any money back?
UNIDENTIFIED MALE: No.
ROMANS: Jennifer Bell saw the same thing happen to a relative.
JENNIFER BELL, RELATIVE GAVE LIFE SAVINGS TO MAIL SCAMS: She actually took out a reverse mortgage on her home so she could continue to give more money to scams. She had given away the entire value of her home, approximately a hundred thousand dollars.
ROMANS: The scams varied, but many had one thing in common.
BELL: When we went through her bank accounted, I kept noticing these little $25 checks. But I noticed they were all processed by one company called PacNet.
She was sending money to a different person. But the processer was always the same.
COLLINS: I saw that PacNet on lots and lots of checks.
ROMANS: PacNet is a payment processer. It says it does everything in its power to prevent fraud, but our investigation finds that while it does work with legitimate businesses, it has processed payments for an alarming number of scams that have faced serious government actions.
Here's how it works. Global fraudsters need a way to stay under the radar and bring in money from victims in all sorts of currencies. That is where companies like PacNet come in.
PacNet cashes checks for clients under its name and takes its cut of course. PacNet says it is a victim too and cuts ties when it is alerted to anything illegal. But that's little consolation for some families.
BELL: Literally to have all of her money suck away from her systematically by scammers. It's just devastating. There is no house. There is no nothing. You know, she didn't have a proper funeral. She didn't have any of that. All she had was junk mail.
(END VIDEOTAPE)
QUEST: Investigative reports stems from months long investigation into PacNet by our CNNMoney writers, Blake Ellis and Melanie Hicken, who joins me now in Washington. Good to see you both. Superb report there. So Blake, from what I understood of this there are really two sides to this. There's the fraudsters and then there are those companies that if you like, inadvertently or middle men facilitate the fact that it can happen and the fraud can take place. Is that right?
BLAKE ELLIS, CNNMONEY INVESTIGATIONS, SENIOR WRITER: Yes, exactly. So there are the fraudsters are the ones who perpetrate the frauds and the scams that are preying on elderly victims all over the world. And then there are the payment processors like PacNet, which the company we looked into, that are cashing those payments. And without the processors, the scammers would never be able to get the money from victims.
QUEST: It all begs the question then, doesn't it to some extent, of how much, whether it be PacNet or any other payment processor, how vigilant should these companies be against the large number of checks that they must receiving?
MELANIE HICKEN, CNNMONEY INVESTIGATIONS, SENIOR WRITER: Yes, well I mean they're there are warning signs, there are key warning signs that banking officials have supposed to look for. A large number of small deposits. There are a lot of returns from unhappy customers. Our understanding is many of the schemes involved may have had some of the warning signs. But was interesting is the U.S. government has gone even further than that to say that not only was PacNet cashing the checks, but they were actively helping their clients evade authorities. So the U.S. Treasury Department has said that PacNet executives were lying on custom forms, routing checks through secret bank accounts. It went beyond what the typical banking official would be doing.
[16:40:04] ELLIS: But it is interesting because PacNet has said to us that it has never knowingly processed payments for scammers. But what we found was something completely different. We found scam after scam that was processed by PacNet. And the government found that they very much knowingly were processing these payments.
QUEST: Even, let's give PacNet the full benefit of the doubt here, even if they were unaware initially, certainly later on they were made very well aware on numerous occasions, if I'm right, Blake, They've been made very well aware that this was going on. And do not seem to have taken steps to stop it.
ELLIS: Yes, well even with the Maria Duval scam that we talked to you about a while back, the government found that they had been warned by a State Attorney General that about the Maria Duval scam and about complaints that they had gotten, and even after that, PacNet continued to process payments. We found so many examples of scams where there were these government warnings. There were criminal actions against these scammers, and PacNet continued processing payments for them.
Melanie, to some extent you can't completely protect people totally from against themselves. These scam artists are out there, hearing the report, it's tragic a woman managed to fritter away the value of her house, but I'm not sure what society does to protect people from themselves.
Well, what we've heard from family members, the advice that they would give so that other people aren't in their shoes is, these victims tend to have dementia or Alzheimer's. And so they don't realize what they're doing. So family members we've talked to have said I wish I would have tried to get power of attorney years ago. I wish I had paid a little closer attention. It's a delicate topic. People don't want to ask their parent to hand over their checkbook. But a lot of the victims we've talked to had said they wished they had that tough conversation years ago.
A British classic in Chinese hands. The carmaker MG is moving all of its manufacturing to China. We're going to hear from a member of Parliament who says MG is making a wrong turn.
(COMMERCIAL BREAK)
QUEST: MG, the very name conjures up the iconic vehicle, a statement of motoring at its best in the British style. Now they will no longer be made or at least the cars will no longer be made in the United Kingdom, total production of the MG is moving to China. Now MG, it's spiritual home has always been Longbridge in Birmingham.
[16:45:01] The plant of course has been making automobiles for decades, a vast number of Austins, British Leylands in the 1960s and 70s. It opened in 1905 and of course then now it is owned by Nanjing Automobile Corporations, a Chinese company, but in the U.K.
Well if you step into the production line I will be able to show you exactly. Now first made engines for some of MG's most famous cars. Look at that. Get right in there, the MGA in the 1950s. That's what you call a true motorists delight.
And there on the production line, well, they state getting a little more utilitarian and a bit more ordinary, the MG 1100. Arguably one of the first built in Longbridge in the 1960s. and funny enough the year I was built.
In 2005 though MG Rover entered administration. The company moved on and you have them continue and it is now owned now by SAIC, China's largest car maker. In 2011 you have the MG 6, the first new car launched in the U.K. for some 16 years. And these are the two cars currently operated at that site.
The MGG S and the MG 3. 2015 was the most successful year to date. Most cars are sold abroad. But the question of course is how much of the car is actually manufactured in the U.K. versus merely assembled at the Longbridge plant.
Well, the whole thing is hugely disappointing bearing in mind the great mark of MG to have such a decision. Those are the words of Richard Burden a British member of Parliament from Birmingham Northfield who joins me now from Longbridge via skype.
Sir, thank you. There was an inevitability about this wasn't there in the sense that the cars were really only being assembled there. The parts were already being imported to a large extent. It was only a matter of time before the Chinese decided to make the cars and just ship them in.
RICHARD BURDEN, MINISTER OF PARLIAMENT, BIRMINGHAM, NORTHFIELD: I'm not sure that is true. That is certainly the case, but the assembly at Longbridge these days is very, very different from the heritage that MG and Rover before it had at Longbridge. It's not been a manufacturing plant.
But as you said in your introduction there. The thing about Longbridge is it is part of the spiritual home of that mark. And that is why I think it is a bad move for the Chinese company to cease all assembly there. I think the main point that I and others has been making to them is they're doing a lot of good work there, they are doing research and development there. A lot of technical stuff. Let's talk with them about how we can add value to that. And then look at the issue of assembly after that.
QUEST: Right. On that point --
BURDEN: They have done it the other way around.
QUEST: But there is still going to be that other work done and that design, the work being done there, and to some extent the inevitability is the shifting to the lowest common factor of the actual assembly whether because the goods are already being manufactured there or it is simply cheaper to make the cars there.
BURDEN: Certainly they're facing big cost pressures. The site they're operating on at Longbridge is far too big for the scale of operation they're doing. And because they import the kits, if you like, of those cars. The value of the pound has dropped, a lot of that to do with the result of the referendum on the EU.
And that has added to their costs a lot, so I do understand their problems, but I worry about what they're doing, it is because having a base of manufacture or at least assembly in the U.K. and in Longbridge is important to their brands. They're not doing their own brand any favors by jettisoning until we're able to talk to them about how we can add value to the really good stuff their doing there on research and development.
QUEST: Well, anyone who remembers Longbridge from the big days of the rallies outside to the marvelous days of manufacturing, sir. I can well understand why you are putting up such a strong fight. Thank you for joining us tonight on this Friday, I really appreciate it.
BURDEN: Thank you, very much.
QUEST: As we continue after the break, if you have ever wondered what it was like to be a cat or a dog for a day, we will introduce you to the man that lived as a goat and who won an award for doing so. Well, I promise it is all about making, creating, and innovating.
(COMMERCIAL BREAK)
QUEST: Here on QUEST MEANS BUSINESS we do a lot of thinking and quite a lot of laughing. Well, the IG Nobel prizes honor achievements that make people do exactly that. They laugh and then think. And we wanted celebrate with them also after the 2016 winners were announced last night at Harvard, the IG Nobel. These were our favorites. In the field of economics, Sarah Forbes and Mark Avis for their work on assessing the perceived personalities of rocks. From a sales and marketing perspective.
Them you have the field of chemistry, slightly more tongue in cheek, Volkswagen for solving the problem of excessive automobile emissions by producing fewer emissions when the cars are being tested. I am sure they weren't laughing about that in Germany. It is either magic or cheating depending on your point of view.
And then the field of biology. Thomas Thwaites for creating prosthetic limbs that allowed him to live with and understand the movement of goats. And for that he won the IG Nobel award. And the IG Nobel award winner Thomas Thwaites joins me now.
Sir, I mean, congratulations. I --
THOMAS THWAITES, IG NOBEL PRIZE WINNER, BIOLOGY: Thank you.
QUEST: Why did you want to live as a goat for three days and what did you learn?
THWAITES: It is not as strange of a thought as it sounds.
QUEST: I assure it is, sir.
THWAITES: Maybe we need some introduction. I think we may have all had a thought like that, you know, certainly when I was a child, I can remember wanting to be the pet cat or something so I didn't have to trudge off to school. I think at root it was this, I was going through a bit of a slump, a down patch in my life, and I guess that thought recurred, wouldn't it be lovely to take a holiday from all of this become a goat.
QUEST: Of all of the animals you choose, why a goat?
THWAITES: Actually, I started off wanting to become an elephant, but after a bit of research, it became clear that -- I mean, it became clear that elephants, I don't know, they're almost a bit too human. They eat with an appendage, so I wanted to get away from that experience, and also they sort of seem to understand their own mortality, they're kind of -- I wanted to escape from those thoughts on my own mortality. I just wanted to be.
QUEST: So my final question, sir. What did you learn from this? Because the IG Nobels have a serious underlying point to them. Besides the good laugh that we had. What is did you learn?
THWAITE: I think it was a philosophical investigation. I think it was more a kind of a reminder that we are nothing but animals, ourselves. Despite all of our kind of wondrous sort of -- our wonderful minds, or wonderful brains. We are at root animals as kind of fallible and irrational as any other of the creatures on the planet.
So possibly more of a philosophical investigation, but if you want something a bit more kind of factual, well, I learned all about the tastes of different kinds of grass in a pasture and I learned to be a bit of a grass connoisseur.
QUEST: Sir, we're very grateful that you're back on two feet. Congratulations, on your IG Nobel. Next time I'm in the U.K., I insist we get together to discuss more about living as a goat. Thank you, sir, good to have you on the program.
We'll have a Profitable Moment after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's Profitable Moment. Marriott is now the largest hotel group in the world. And in doing so we need to remember, of course, that the biggest is not always the best. Arne Sorensen talked about that very point to us this evening.
But even so, the sheer size and scale of Marriott is now mind boggling. The largest with over a million rooms where you can stay. It is almost enough to make you want to be a goat. That's QUEST MEANS BUSINESS for tonight. Whatever you're up to in the week ahead, I hope it is profitable. I'm away next week, I'll see you when I get back. Have a good week.
END
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