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Truth Tracker: Merchant Cash Advances (Part 1)

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truth tracker
Trap with stack of credit cards. Unsafe credit risk. Black background



Retirement Media Inc. Presents: The Truth Tracker. Last week you learned of a Philadelphia area sales-firm that is advertising on radio and television, guaranteeing double-digit rates of return, which is being accomplished in a confusing and very questionable manner. Supported with documentation, the Truth Tracker learned that these returns are made possible through the use of promissory notes and Merchant Cash Advances – commercial capital advances that carry incredibly unethical rates of interest. Small businesses obtain these high-risk advances when their credit is too weak to secure a loan from a traditional lending institution, such as a bank.

Last week the Truth Tracker laid out the proposed investment pattern: A Better Financial Plan takes money from an initial investor (like you) through a promissory note and lends that money to a “middle man” high-risk alternative lending company, Par Funding, which then may lend the money to high-risk borrowers (small businesses) throughout the country as Merchant Cash Advances (we emphasize this is supported by truth and documentation). The money that is paid back from the high-risk borrowers (the principal and interest) is then used to pay back the investors who were promised double-digit returns in the promissory notes which are guaranteed by A Better Financial Plan. 

Unlike bank loans, which are regulated and have protections in place for the borrowers, Merchant Cash Advances are alternative, high-risk commercial advances that are not regulated and leave vulnerable high-risk borrowers at the mercy of predatory alternative lenders. In some cases, and especially today as companies struggle with the COVID-19 pandemic, these advances carry a lethal dosage of risk.

There are hundreds of high-risk alternative lenders who deal in Merchant Cash Advances. They promise quick access to capital in as little as four hours with interest rates that can soar above 30%. High-risk borrowers pay back these advances using a percentage of their daily or weekly sales until the lender is paid-in-full (including interest). But this is where the problem comes in: with the pay-back! The Truth Tracker has learned that hundreds of high-risk borrowers that take these high-risk advances from the high-risk alternative lender are struggling to pay off the money that was lent to them.

Par Funding, a high-risk alternative lender that may frequently work with A Better Financial Plan, has opened hundreds of cases against their high-risk borrowers in the Philadelphia Court of Common Pleas to collect on missed payments. According to court filings from January 2020 to April 2020, this high-risk alternative lender has sought payment from hundreds of high-risk borrowers across the country for the amount of more than $78 million dollars.

In there lies the issue with Merchant Cash Advances: If Par Funding, the high-risk alternative lender that works with A Better Financial Plan is not being paid back from their high-risk borrowers, then THEY, in turn, cannot pay back A Better Financial Plan, who cannot pay the initial investor (you) their guaranteed returns, promised to them through an unregulated promissory note! Thus potentially leading to a series of defaults on the promissory notes that you are invested in.

The strange thing is A Better Financial Plan (which may have issued you the promissory note for Merchant Cash Advances) acknowledges that there is risk involved with their investment programs but A Better Financial Plan is not liable or responsible for any losses that pertain to your unregulated promissory notes. Given today’s terrible economic landscape, these already high-risk Merchant Cash Advances could turn lethal for the high-risk borrowers defaulting on their payments and the unregulated promissory notes sold to you, the investor.

Considering that a majority of the country has been shut down due to the COVID-19 pandemic, more and more high-risk borrowers with weak credit may begin to fold, so what does that mean for you as someone invested in these high-risk, unregulated Merchant Cash Advance promissory notes through A Better Financial Plan? It potentially could mean that your promissory note will default and the liability could be on you. But if you fully educate yourself on A Better Financial Plan and understand the dynamic between Par Funding, the high-risk alternative lenders, the high-risk borrowers, and the lethally high-risk advances being issued to the high-risk borrowers, you can avoid this nightmare altogether.

Truth Tracker: Dean Vagnozzi (Part 1)

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Dean James Vagnozzi, CEO of A Better Financial Plan Capital Management, LLC in King of Prussia, Pennsylvania can be heard marketing his company on KYW 1060-AM Radio from time to time. Considered by some to be a revolutionary investor for his outside of the box investments, Vagnozzi offers four known investments for his clients. These include litigation funding, real estate funds, life insurance, and merchant cash advances. Two investments have been disclosed to the public in a marketing scheme to promote ABFP Income Fund 4, LLC for merchant cash advances along with Atrium Legal Capital 3, LLC for litigation funding. Vagnozzi implores investors to come meet with him and his staff so they can be educated about the investments. If not, investors can spend fifty dollars to access educational videos produced by Vagnozzi and A Better Financial Plan, only to get the money back should they choose to invest.

When dealing with the investment community, most investors would agree that a degree of transparency is necessary to maintain confidence in investing. Vagnozzi prefers to operate behind closed doors, luring clients into his office with promises of high returns and mitigated risk. A handful of videos embedded in Vagnozzi’s website show many of the same consumers reiterating these high returns, specifically from Merchant Cash Advance investments.

Merchant cash advances (MCA) are loans that are given to small businesses who are seeking short term capital for expansion or projects. The companies receiving MCAs are required to pay immense interest rates on these advances, sometimes upwards of 35%. As the interest is paid back, according to Vagnozzi’s testimonials, investors receive their monthly guaranteed interest payments. Depending on the principal investment amount, investors are guaranteed to see a 10%, 12%, or even 14% annual return on MCAs. Vagnozzi has a history of guaranteeing double digit returns, although he refrains from publicly stating a guarantee – unless you go to ABFPIncomefund.com.

Vagnozzi also has a history of negligence in the investment community. Recently in 2019, Vagnozzi was featured in a Philadelphia Inquirer article highlighting an enforcement order that forced him to pay a fine of $490,000 to the Pennsylvania Department of Banking and Securities. He was ordered to pay this fine for not complying with security regulations outlined in the Pennsylvania Securities Act of 1972 and being an unregistered broker in the sale of non-negotiable promissory notes. Among those included in the case was Complete Business Solutions Group, also referred to as Par Funding – a Philadelphia based company who lends small businesses money through merchant cash advances. In December of 2018, Par Funding was given a cease and desist order by authorities in New Jersey for their role in selling unregistered securities to raise capital for merchant cash advances.

According to a 2019 SEC filing, Par Funding and A Better Financial Plan still maintain a working relationship. Considering Par Funding issues MCAs, it is reasonable to believe that individuals who invest with Vagnozzi are having their investments lent to Par Funding to make cash advances, with the returning interest being used to pay investors monthly interest payments. One client of Vagnozzi’s financial business confirmed that their contract is being used to fund such investments.

When looking at Vagnozzi’s SEC filings, several investment and income funds list debt and equity securities as the primary investments being offered since 2018. Currently, all ABFP Income Funds are being advertised for MCAs and have been incorporated in Delaware since April 2018. This fund, along with three others have not been made accessible through an EDGAR or SEC search. Further, according to FINRA, there is no evidence to attest that Vagnozzi has obtained the proper licensing to broker securities in the State of Pennsylvania. It is known that Vagnozzi, through A Better Financial Plan, is paying investors using interest paid from merchant cash advances and at least one of the securities being issued to fund these advances has been confirmed as a promissory note – the same security that caused the Pennsylvania Department of Banking and Securities to issue a final order against Vagnozzi in 2019.

Vagnozzi does not have to register these securities with the State of Pennsylvania due to an exemption. Pursuant to SEC rule 506 of Regulation D, Vagnozzi is exempt from listing and registering the securities he sells. According to the Department of Banking and Securities however, you must be a registered broker-dealer, agent, or issuer to sell securities. According to the same regulation, the State of Pennsylvania Department of Banking and Securities does not require registration of the individual if they obtain exemptions to register the securities they issue. Therefore, although Vagnozzi is not listed on FINRA or IAPD as a registered broker, he is exempt due to the department’s rules.

His involvement with Par Funding is only the tipping point of Vagnozzi’s negligence in the investment community. In 2016-2017 Vagnozzi was listed as a defendant in a bankruptcy case in Texas. Although the case was ultimately dismissed with prejudice, the claims of the case speak for themselves. Specifically dealing with life settlements, an investment avenue that Vagnozzi allegedly continues to promote, defendant licensees were said to have misrepresented life expectancies when conducting sales on behalf of Life Partner Holdings, Inc. in order to force investors to pay premiums for a longer term and eventually abandon the contracts. Defendants in the case were also alleged to have received large amounts of finder’s fees and commissions, more than what Texas regulatory laws deemed as fair.

The question still remains whether or not Dean Vagnozzi is upholding his responsibility to protect consumers and their investments. While FINRA and IAPD are accurate in not listing Vagnozzi as a licensed broker, Pennsylvania securities regulations dictate that he is exempt from registration. Since the securities he sells are exempt, so is he from having to register as a broker, agent, or issuer. Considering the State of Pennsylvania is very lenient in their regulation of merchant cash advances, as well as the licensing thereof, it is especially important that the involved parties remain transparent in their transactions. Transparency issues were raised in a statement from one client of Vagnozzi, as the client was not aware of which Philadelphia based company is involved with the MCAs.

Truth Tracker: Dean Vagnozzi (Part 2)

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Dean J. Vagnozzi, CEO of A Better Financial Plan Capital Management, LLC claims he is the most ethical investor in the business, despite his history of financial negligence. Part one of this Truth Tracker investigation highlighted multiple instances where this claim would come into question. Included in that article were the enforcement order issued by the Department of Banking and Securities, his defense as a licensee in bankruptcy court, and his interactions with clients. In an attempt to expand on his interactions, Retirement Media, Inc. sat down with a client of A Better Financial Plan to shed light onto the dealings of Vagnozzi and his business.

John Doe, a resident of Pennsylvania met with Vagnozzi’s staff to invest a large sum of money after hearing about A Better Financial Plan’s enormous returns. As a retired individual, he was seeking high-growth investments  and decided to put Vagnozzi’s method to the test. After discussing the outlines of the deal, Vagnozzi guaranteed a 10% annual return and full repayment of principal once the contract matured. This is not a deviation from prior rhetoric from Vagnozzi’s business as he is currently advertising 10%-14% returns on abfpincomefund.com. The investment being advertised on that website is merchant cash advances. 

According to Doe, his monthly earnings are derived from interest paid on merchant cash advances. As discussed in part one, merchant cash advances or MCAs, are given to small businesses attached with high interest payments of 35% or more. The client went on to explain that after he makes his investment, A Better Financial Plan lends the funds to a Philadelphia based company that then issues the MCAs. When asked if he knew what company was working with Vagnozzi, he stated that he was unaware. Further, after the small business receives the advance they must pay back the loan along with interest. This 35% interest payment “legitimizes the 10% [annual interest payments] to prospective customers,” said Doe.

Thus, the money travels from the investor (lender) to Vagnozzi’s company (borrower), which then lends the money again to an unknown Philadelphia based company who hands out the merchant cash advances. Once the money is repaid along with the interest, that money funnels its way back through the unknown company to Vagnozzi, which he then uses to deposit the investor’s monthly interest payments. There is sufficient evidence however, to believe that the Philadelphia based company is Par Funding – the business that is associated with Vagnozzi who received an enforcement order for the sale of unregistered securities. This process was not outlined in the client’s contract and further, Doe stated that he was not informed about who manages the money after it gets invested. The only information the client has about his investment is contained in his contract, stating that he will receive a 10% annual return along with full repayment of principal once the contract matures.

In his meeting with A Better Financial Plan, Doe stated that merchant cash advances were the only investment opportunity being promoted by Vagnozzi’s staff. Further, the only information Doe gathered about other investments were from leaflets around the office. While in the meeting he recalled a powerpoint presentation being used to quickly explain the details of the investment while adding, “[I received] no physical paperwork other than my contract.” While the entire encounter was professional, Doe stopped short of calling it informative. Following the meeting, Doe was informed that his contract was backed by Allianz, in the event of default. When he requested a copy of the policy to read he was denied. Instead, he was told to come and read the policy in their office.

The contract that Doe referred to is a promissory note issued by one of the several income funds incorporated in Delaware, but doing business in King of Prussia at A Better Financial Plan. Doe explained that even though he wrote a check to one of the funds, he did not know its purpose. “At worst, the contract is potentially misleading,” Doe said, but remains confident in his investment.

Doe’s contract also consists of an unsecured promissory note which states that it is not registered with the Securities and Exchange Commission, nor with the State of Pennsylvania.  The Pennsylvania Department of Banking and Securities states that, “[S]mall businesses that want to issue stock or debt and do not qualify for an exemption must register the security with the Department. ” They go on to say, “The business may not make offers or sales of securities in Pennsylvania until the offering has been cleared by the department.”

With that said, Vagnozzi is exempt from registering the securities he sells with the SEC and Pennsylvania due to Rule 506 of Regulation D. He is also exempt from being a registered broker due to the same rules as discussed in part one. Vagnozzi was previously fined by the Department of Banking and Securities for not being a registered agent and selling unregistered securities. The order levied a fine of $490,000 against Vagnozzi. When the client learned of this, he was alerted, but not dismayed about the 2019 enforcement order. Doe maintained that Vagnozzi’s staff claimed the enforcement was due to a large gray area in the regulation of securities.

While Vagnozzi is exempt from registering his securities with the state and exempt from being a registered issuer, the process that Doe described raises a few red flags. First and foremost, the client was only presented with one investment option and received no physical paperwork explaining the details of his investment. Doe was also denied the ability to read the policy that protects his plan unless he were to physically come to A Better Financial Plan’s headquarters. The fact that the client was not aware of who manages his money after he invested is troublesome to say the least. At the end of the day, Dean Vagnozzi seems to have corrected past wrongdoing despite his behind closed doors tactics. 

Truth Tracker: Dean Vagnozzi (Part 3)

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Dean J. Vagnozzi, CEO of A Better Financial Plan Capital Management, LLC claimed that the enforcement order issued to him by the Pennsylvania Department of Banking and Securities was due to a large gray area in the law. In reality, if an agent is engaged in the sale of securities on behalf of someone else, the agent must be registered – even if the issuing company is exempt from registering. Vagnozzi’s legal team stated that they preferred a settlement with the department instead of expensive litigation. The truth of the matter is that Vagnozzi would have lost the case. Therefore, in order to mitigate the damage, Vagnozzi and his team settled and tried to spin the story.

In an emailed statement from Vagnozzi’s legal team, it was said that Vagnozzi was in the process of obtaining the proper credentials to become a broker, however, according to the Department of Banking and Securities, this is not true. In an email to clients, Vagnozzi’s attorney claimed that the Department had alleged Vagnozzi acted as a broker in connection to the securities being sold by Par Funding. This statement is also a blatant lie. According to the official redacted 2019 enforcement order, the Department alleged that, “[Vagnozzi] effected transactions in securities in Pennsylvania while neither registered nor exempt from registration as an ‘agent’ in willful violation of Section 301(a) of the 1972 Act 70 P.S. §1-301(a).” While the state’s definition for agent and broker-dealer are relatively similar, the difference comes down to how the transactions were being effected and whether or not compensation was received for effecting the sale. In this case, Vagnozzi was effecting transactions on behalf of Par Funding and receiving compensation for them, thus classifying him as an agent. Therefore, there is no gray area in the department’s ruling and in an attempt to set the record straight, Vagnozzi’s legal staff willfully misled clients on the matter.

Nearly one year following Vagnozzi’s enforcement order, A Better Financial Plan, LLC has found a way to exploit the “gray area” of the law. Although legal, Vagnozzi and his team skirted the so-called gray area to comply with regulations. If what Mr. Doe explained in part two is true about how his promissory note investment works, Vagnozzi would now be considered an “Issuer” according to the PA Securities Act of 1972. An issuer is defined as, “any person who issues or proposes to issue any security, and any promoter who acts for an issuer proposed to be formed.”

In order to explain this process, the proposed investment pattern that took place pre-enforcement must be analyzed. Prior to 2019, a Philadelphia based company, Complete Business Solutions Group, Inc (d/b/a Par Funding) issued non-negotiable promissory notes to unregistered agents to be sold to investors on behalf of Par Funding. Those funds would then be used to lend merchant cash advances to small businesses who would pay back the principal plus a high interest payment. Those payments would then be used to pay the monthly and annual payments on client’s promissory notes. Since Vagnozzi was not a properly registered agent to effect transactions on behalf of Par Funding, he was forced to pay a fine. 

In order to skirt these regulations, Vagnozzi began issuing the securities, thus working around the laws and registration requirements. The new process, according to Mr. Doe places Dean Vagnozzi (d/b/a A Better Financial Plan) as the instigator of the post-enforcement proposed investment pattern. Through several ABFP Income Funds registered with the SEC through Form D, Vagnozzi issued promissory notes (and potentially other securities) to investors. The investment money is then lent to a Philadelphia based company for the purpose of merchant cash advances – it is not known what company specifically engages in the advances, however, Par Funding sounds familiar according to Doe. Using this information, it is reasonable to believe that Par Funding is still engaged in this process with A Better Financial Plan. After the investment money is lent to Par Funding, that money is then given out as advances to small businesses at interest rates of 35% or more. The companies pay back the principal and interest on those advances and the earned funds reverse track through Par Funding, back to A Better Financial Plan and then into the accounts of Vagnozzi’s investors as their monthly interest payments.

This is how Vagnozzi guarantees and legitimizes double digit annual returns of 10%, 12%, or 14%. The return however is dependent on the principal investment from the investor. Investing 100k-250k guarantees a return of 10%. 251k-500k guarantees a 12% return and 501k or more guarantees a 14% annual return. This linear process, according to Doe, legitimized his investment in promissory notes with A Better Financial Plan. Since Vagnozzi filed an exemption with the SEC to file Form D, he is exempt from registering the securities – in this case promissory notes – with the State of Pennsylvania. In the same respect, because he filed this exemption, Vagnozzi does not have to register himself as an issuer of securities with the Pennsylvania Department of Banking and Securities. Further, Par Funding is not acting as an agent of A Better Financial Plan and does not need a license to engage in merchant cash advances. Since these advances are not considered loans, no federal or state oversight is required.

While the Department of Banking and Securities declined to comment on this proposed investment pattern, there is reasonable evidence to suggest that this is how A Better Financial Plan issues securities for merchant cash advances. It is also reasonable to assert that the other investment funds incorporated by Vagnozzi operate in a similar fashion. These limited liability and limited partnerships include: Atrium Legal Capital I,II, and III, several Pillar Life Settlement Funds, a Woodland Falls Investment Fund, two ABFP Multi-Strategy Investment Funds, and an ABFP Libra Fund. Based on a flyer from a Vagnozzi event promoting litigation funding for the Atrium Legal Capital, LLC, the pattern of investment remains similar to that of merchant cash advances.

Vagnozzi’s investment opportunities are legal, but they are certainly not transparent. John Doe received nothing in the form of physical paperwork regarding his investment in merchant cash advances. Further, in article two Doe stated that when he requested to see a copy of the policy that protects his contract, he was denied. Rather, he was told to come into the office to read the policy. Doe’s contract does not list who manages the investment, how the investment accrues its monthly and annual interest payments, nor what the investment is for – the contract does not mention merchant cash advances. The only information contained in Doe’s contract is that he invested a principal sum of money for a guaranteed 10% annual interest rate. Considering he received no physical paperwork that would document the aforementioned information about how the investment works raises significant red flags about transparency.

In the end, while Vagnozzi claims he is the most ethical guy in the business, the truth is that he skirts around securities regulations and lacks transparency as an investment professional. He denies clients access to information regarding their contracts unless they physically come to his office, purposely misleads clients concerning his 2019 enforcement order, and his staff issues contracts and provides no physical paperwork for his clients. The investment packages promoted by Vagnozzi are certainly alternative to the mainstream and that should result in increased transparency during the process, not less. While he is technically within the bounds of the law and regulations, transparency seems to remain an issue for Vagnozzi.

Biden Wins Big on Super Tuesday

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What is being called a miraculous comeback by former Vice President Joe Biden was capped off with huge upset victories in 10 of the 14 Super Tuesday States. While sweeping the southern states, Biden stole victories from Vermont Senator Bernie Sanders in Maine, Massachusetts, Minnesota, Texas, and Virginia. 

During the February primaries, the Biden campaign struggled to gain traction until bouncing back in South Carolina. His performance in the Palmetto State propelled him to the top of the delegate count as the polls closed on Super Tuesday. Biden has officially rejuvenated his campaign and looks to be a contender to secure the nomination to face President Trump in November. 

Since the South Carolina primary, four candidates dropped out of the race and threw their support behind the former vice president. Tom Steyer, Pete Buttigieg, Senator Amy Klobuchar, and Beto O’Rourke publicly announced their support of Biden’s efforts on the eve of the Super Tuesday matchups, ultimately providing one last boost before voters went to the polls. 

Biden Victories
AlabamaArkansasMaineMassachusettsMinnesota
North CarolinaOklahomaTennesseeTexasVirginia
Sanders Victories
CaliforniaColoradoUtahVermont

Bernie Sanders had a disappointing Super Tuesday despite winning California, which allocates the largest number of delegates in the democratic primary. Sanders was leading in the polls in Massachusetts, Oklahoma, Texas, Virginia, and was leading Joe Biden in Minnesota before Amy Klobuchar dropped out of the race, but failed to win any of the states. Senator Elizabeth Warren lost her home state of Oklahoma as well as coming in third in Massachusetts – Warren is one of the sitting Senators from the state of Massachusetts. 

Former New York City Mayor Michael Bloomberg saw his name on the ballot for the first time in the democratic primary after skipping the first four primaries. Despite spending more than $500 million, Bloomberg is only projected to win 66 of the 1,344 delegates at stake. Bloomberg did win the Pacific Island territory American Samoa for a total of 4 delegates. Following his poor performance, Bloomberg announced Wednesday morning that he was suspending his campaign and endorsing front runner, Joe Biden. Warren also announced her campaign was suspending their efforts, but declined to endorse any of the remaining candidates.  

Only three candidates remain in the democratic primary, despite Joe Biden and Bernie Sanders being the only two with a viable path to the nomination. Congresswoman Tulsi Gabbard has remained in the race while only winning 2 delegates from American Samoa. Gabbard plans on staying in the race, while fighting with the Democratic National Committee to let her onto the debate stage prior to the next round of primaries.

With Super Tuesday in the rear-view, another group of states, including Michigan will hold primaries on March 10th. Although several states are still tallying results from Super Tuesday, Joe Biden is projected to be the new democratic front runner leading up to these primaries. California, Colorado, Tennessee, and Utah have yet to allocate all of their states delegates. Based on current results, Joe Biden is forecasted to have 701 pledged delegates and a majority of the popular vote with 39.1%. Sanders is projected to trail Biden by a small margin with 622 pledged delegates. The results below are subject to change when the official delegate count is certified.  

CandidateProjected DelegatesTotal Vote CountPercentageProjected Super Tuesday Delegates
Joe Biden7014,920,00139.1%+646
Bernie Sanders6224,023,94532.0%+562
Elizabeth Warren751,799,28914.3%+67
Michael Bloomberg661,726,43813.7%+67
Tulsi Gabbard2101,7150.8%+2

After a stunning comeback to the front of the democratic field, Biden needs 1,290 more pledged delegates to win the democratic nomination based on current projections. While the primary season for the democratic party may last through the month of June, Biden and his campaign have recaptured a viable path to secure the nomination ahead of Bernie Sanders. Before Tuesday’s events, talks of a contested convention filled the media airwaves along with worries of Sanders becoming the nominee. With Biden’s resurgence, these fears have been put to rest for the time being as the two candidates look to battle it out for the remainder of the democratic primary to see who will face President Trump in the general election.    

CandidateTotal DelegatesTotal Vote CountPercentageSuper Tuesday Delegates
Donald J. Trump*8717,062,00097.5%+785
Bill Weld1179,6462.5%+0

President Trump moved closer to the 1,276 delegates needed to win the republican nomination as he won all 13 Super Tuesday states defeating challenger Bill Weld. Trump picked up 785 delegates en route to a grand total of 871 in the republican primary. The republican party will also hold primaries on March 10th with 271 delegates at stake. 

Biden Surges in South Carolina

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Former Vice President Joe Biden delivered a huge victory for his campaign on Saturday’s primary in South Carolina. The First in the South primary overwhelmingly cast their ballots for Biden, rejuvenating his campaign and narrowing the delegate race between himself and Vermont Senator Bernie Sanders. This boost for the former vice president will improve his chances of a successful Super Tuesday, which takes place on March 3rd in several states. 

Biden captured nearly 50% of the popular vote in the Palmetto State, with Sanders coming in a distant second place. Billionaire philanthropist Tom Steyer invested most of his resources into the state, but failed to secure any delegates. Steyer, along with Indiana Mayor Pete Buttigieg, and Senator Amy Klobuchar all suspended their campaigns following poor performances in the primary, reducing the number of presidential candidates in the race to five. Of those five, Biden and Sanders were the only two who reached the 15% threshold to capture delegates from the contest. 39 of the 54 delegates were awarded to Biden and 15 to Sanders. 

CandidateDelegatesVote CountPercentage
Joe Biden39256,11148%
Bernie Sanders15105,22620%
Tom Steyer059,19711%
Pete Buttigieg043,6128%
Elizabeth Warren037,3537%
Amy Klobuchar016,6783%

Source: ABC News

With Buttigieg, Steyer, and Klobuchar exiting the race, Biden will likely see a boost in his performance in the Super Tuesday contests. Senator Amy Klobuchar announced her intentions to endorse Biden while she informed voters of her decision to drop out. The former Mayor of New York City, Michael Bloomberg, will join the presidential race on Super Tuesday after missing all four of February’s primary elections. With more than 1,000 delegates at stake on March 3rd, Bloomberg can certainly make up some ground; however, his candidacy raises the chances of a contested democratic convention.  

Current projections show that none of the candidates running on the democratic ticket will be able to secure the 1,991 delegates needed to win the nomination on the first ballot – a projection that could possibly change with three candidates dropping out of the race 48 hours after Saturday’s primary. Since the Democratic National Committee changed voting rules for the primaries, super-delegates will only vote if a candidate fails to win the nomination on the first ballot. If the convention is contested, it may cause some disruptions within the democratic party if the candidate with the most delegates does not win – currently Bernie Sanders has the most delegates.  

CandidateDelegatesTotal Vote CountPercentage
Bernie Sanders60268,45124.9%
Joe Biden53323,29230.1%
Pete Buttigieg25176,86216.4%
Elizabeth Warren8111,21410.3%
Amy Klobuchar7104,0319.7%
Tom Steyer075,1177.0%

As the February primaries come to a close, Bernie Sanders has a slight edge over Joe Biden in the total delegate count. With Biden’s victory in South Carolina however, Sanders could be in for a tougher fight as the momentum from South Carolina may lift Biden’s campaign in states where he was trailing Sanders. Multiple high-level democrats have come out and publicly endorsed Biden over Sanders on the eve of Super Tuesday with the hopes of boosting him back to the front runner status. Buttigieg’s 25 total delegates, and Klobuchar’s 7 total delegates will remain on the table and possibly be reallocated if none of the remaining candidates can secure 1,991 pledged delegates on the first ballot at the convention. 

No primary was held on the republican side of the presidential ticket in South Carolina. Similar to Nevada, delegates will be allotted at the time of the republican convention in August. President Trump continues to travel across the nation to hold rallies, with plans to stop in North Carolina on Monday night on the eve of Super Tuesday. While the president does have a republican challenger – former Massachusetts Governor Bill Weld – Trump is the presumptive nominee with more than 90% in national polls in the republican primary. 

Wells Fargo Settles With Department of Justice and SEC

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Wells Fargo is once again making headlines as they have agreed to settle with the Securities and Exchange Commission and Department of Justice for their role in the latest financial scandal. Since 2015, Wells Fargo has been alleged in financial misconduct on nearly 20 separate occasions – even more when looking prior to 2015. This time, bank employees created fraudulent accounts to boost sales along with transferring customers’ money without their knowledge or consent. As a result, customers began to question why certain fees and accounts were appearing in their bank statements which ultimately came to light in 2016.  

After a number of investigations, Wells Fargo has settled to pay $500 million to the SEC for investors who were harmed during the 14-year-long scheme, as well as, a $3 billion fine to avoid criminal prosecutions from the Department of Justice (DOJ). Reports from the DOJ suggest that internal Wells Fargo senior officials were made aware of the actions taking place to inflate sales in 2002, but did not implement the appropriate measures to apprehend the wrongdoing which carried on from 2002-2016. The DOJ and Wells Fargo settled on a deferred prosecution, which grants amnesty to the bank so long as they cooperate with any further investigations into their misconduct. 

Michael D. Granston, the Deputy Assistant Attorney General for the Department of Justice’s Civil Division stated, “This settlement holds Wells Fargo accountable for tolerating fraudulent conduct that is remarkable both for its duration and scope, and for its blatant disregard of customer’s private information.” According to a DOJ press release on the agency’s findings, Wells Fargo knowingly and willingly sold financial products to consumers who may not have needed them in their account. On multiple occasions these products were sold without the customer’s knowledge and fake accounts were created to shift money around to reach sales quotas. 

Furthermore, customers were pressured into purchasing products that they did not need or want. Despite public commentary from the bank about putting the needs of the customer first, Wells Fargo employees and executives willingly committed unlawful acts by putting the interests of the bank ahead of their consumers. 

In a statement, Stephanie Avakian, Co-Director of the SEC’s Division of Enforcement said, “Wells Fargo repeatedly misled investors, including through a misleading performance metric, about what it claimed to be the cornerstone of its Community Bank business model and its ability to grow revenue and earnings.” Avakian’s statement comes at a time when misconduct by Wells Fargo and its subsidiaries seems routine. From 2009-2013, Wells Fargo Advisors improperly advised clients to sell and reinvest in Market-Linked Investments before the securities reached maturity. Doing so generated funds for the bank while depleting investors’ returns and as a result the SEC fined Wells Fargo $4 million in 2018. These events took place following the 2008 financial crisis, which Wells Fargo was also implicated in, for their role in the housing crisis by misrepresenting mortgages and issuing thousands of loans that would later default, ultimately harming consumers and investors. 

These are only a handful of the enforcements made against one of the largest banks in America. Other examples of misconduct include misrepresenting or failing to disclose information to investors, including unnecessary add-ons for consumers’ accounts like pet insurance, charging clients without their knowledge, discrimination suits, evicting and repossessing automobiles from active duty military members, and deceptivley hiding fees in small business owners’ accounts. 

Despite consistently violating different laws and regulations, Wells Fargo will not face criminal prosecutions from the Department of Justice. Including the $3.5 billion being paid by Wells Fargo in this case, the bank has paid billions of dollars in fines for their role in multiple scandals and fraudulent schemes that span more than 20 years. Multiple CEOs have resigned from their positions and senior officials have been complicit with the banks deceptive and unlawful practices, all while knowing what was taking place. If Wells Fargo can ever be able to rebuild their reputation as one of the largest banks in the United States it will take a considerable amount of work and effort to regain the confidence of the consumer.   

Vermont Senator Bernie Sanders Pulls Ahead in Nevada

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After three primary contests, Senator Bernie Sanders has started to pull away from the packed democratic presidential nominee field. Voters went to the polls on Saturday, February 22 and handed Sanders his second victory in the primaries. Capturing nearly 50% of the vote, Senator Sanders carried the day while former Vice-President Joe Biden came in a distant second place. Nevada is the second caucus to take place in the primary election season, but it is the first state that has a strong minority presence – mainly latin voters. 

Vice-President Biden secured his best primary performance so far, leapfrogging Senators Amy Klobuchar of Minnesota and Elizabeth Warren of Massachusetts in the delegate count. Biden is now third with a total of 15 delegates. Indiana Mayor Pete Buttigieg had a third place performance, his worst of the three contests that have taken place, with 14.3% of the vote in Nevada. Candidates Warren, Klobuchar, and Tom Styer all fell short of 10% and were awarded no delegates in the caucus. On the republican side of the ballot, no caucuses took place and all 25 delegates were awarded to the incumbent, President Trump. 

CandidateDelegatesVote CountPercentage
Bernie Sanders2441,07546.8%
Joe Biden919,17920.2%
Pete Buttigieg317,59814.3%
Elizabeth Warren011,7039.7%
Tom Styer04,1204.7%
Amy Klobuchar07,3764.2%

Source: Politico

Former Mayor and Businessman Michael Bloomberg is set to enter the democratic race on March 3 when voters in several states head to the polls on Super Tuesday. Before those contests get underway however, Bloomberg will have to sit on the sidelines when the South Carolina primary takes place on February 29, the fourth consecutive primary or caucus that he will miss. Bloomberg is betting on a stellar performance on Super Tuesday as more than 1,300 delegates are up for grabs from the packed democratic field. 

Democrats will face off in another debate on Tuesday, February 25 in Charleston, South Carolina in preparation for the weekend primary. Bloomberg will be on the stage as he has qualified for the debate, but he will not be on the ballot when voters head to the polls. 54 total delegates will be awarded on the first ballot for the democratic primary in South Carolina with Sanders and Biden being favored to win the state. 

With Senator Sanders declared victorious in New Hampshire and Nevada, he is sure to pick up momentum heading into South Carolina and the soon to follow Super Tuesday contests. For the moment, however, Sanders maintains a healthy lead in the early state delegate count with 45 total delegates. The chart below is an updated delegate tracker. 

CandidateDelegatesTotal Vote CountPercentage
Bernie Sanders45163,22530.2%
Pete Buttigieg25133,25024.6%
Joe Biden1567,79112.5%
Elizabeth Warren873,86113.7%
Amy Klobuchar787,35316.2%
Tom Styer015,2602.8%
CandidateDelegatesTotal Vote CountPercentage
Donald J. Trump*86161,16091.9%
Bill Weld114,2138.1%

Like Nevada, South Carolina will not hold a republican primary for the presidential race. Instead, delegates will be allocated before or during the nominating convention in August 2020. Aside from Sanders momentum in the democratic race, President Trump’s approval rating continues to increase, jumping nearly five percentage points since late-October 2019 according to Real Clear Politics poll averages. As of February 25, President Trump’s average approval sits at 46.3%, while some polls like Rasmussen show an even higher approval of 52%. 

The Trump Economy

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President Trump’s approval ratings are at an all-time high as his campaign ramps up their efforts to secure reelection in November. His increasing approval is due in large part to American’s level of confidence in the economy, which is higher than it has been in twenty years. Regardless of the fact that the current economic expansion began before President Trump’s 2016 election, his administration has defied initial projections that his financial policies would quickly result in recession or even a depression. 

Instead, gross domestic product has remained positive in every quarter since President Trump took office in January of 2017. Wages and salaries have continued to increase under his administration, and 4.7 million jobs have been created in the process. The first job report of 2020 released by the Bureau of Labor Statistics in January is sure to help Trump’s reelection campaign get off to a hot start as initial projections were outpaced by more than 70,000 jobs. The news release by the bureau cited the majority of job growth coming from the healthcare industry, construction, transportation, and warehousing. If President Trump’s job numbers can continually remain positive throughout 2020, it will be a major talking point for his campaign as he stumps around the country. 

In the final State of the Union address for his first term, President Trump stated that the United States was experiencing a “Great American Comeback,” while touting his administration’s accomplishments. Historically, a strong economy has boded well for an incumbent president. In setting the stage for the 2020 presidential election, Trump’s approval rating on the economy is one of his best polling indicators. On average, 56% of Americans approve of his economic policies, with some polls, such as Gallup, showing support upwards of 63%. 

According to Gallup, President Trump is enjoying the highest approval rating that he has had since taking office in 2017, at 49%. Despite his 50% disapproval rating, Trump’s approval is hovering around the same levels his predecessors maintained during their reelection campaigns. Overall, his approval has remained unaffected by the impeachment trial. Real Clear Politics polling has shown that Trump regained his average approval polling percentage of 45.5% from late-September of 2019 when the impeachment inquiry began. 

Trump has fortified his support among Republicans with a 94% approval rating in the recent Gallup poll. He has also gained more support from independents with 42% supporting his reelection campaign. Notwithstanding the polarization of support for or against President Trump, he is on strong footing for his reelection bid. If the economy can continue roaring like it has during the first three years of his administration, President Trump will have a strong advantage. 

The stock market has been another big proponent for Trump’s reelection campaign. Before taking office in 2017, financial experts stated that the policies and tax cuts that were proposed by then candidate Trump would cause the market to crash and the economy to fall into a depression. Three years later the analysis of the fiscal policies proposed and enacted by President Trump reflect a different story. 

At the end of the day, the Trump economy has outperformed and defied analysts projections. Jobs, wages, and incomes have risen and in some cases, exceeded expectations. It is certain to be another exciting, but polarizing election cycle in the United States; however, if history stands to repeat itself, the strong economic numbers being reported will benefit the Trump campaign greatly in the general election. 

Housing Market Rates Drop

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There are winners and losers in every financial crisis. When the stock market dips, there are individuals that benefit from the fall. That was certainly the case when the Coronavirus became a global threat. In this case, real estate received a boost. Mortgage rates have fallen to their lowest levels in nearly four years at 3.45%. This is a result of a strong correlation between stock market volatility and investors responding by pushing money into bonds. 

A report from Freddie Mac indicated that with the decreased rates, combined with the strong financial economy, home buying will be in high demand over the course of 2020. Aside from the 30 year fixed-rate mortgage, the 15 year fixed-rate also decreased to 2.97%. Since February 2019, rates have fallen nearly one full percentage point across the board. The only obstacle that would get in the way of these low rates is if investors flood the market when the Coronavirus is contained. More cities across the country are reporting new cases from the virus as some countries are evacuating their citizens who are in infected areas. 

Some reports have suggested that the economy is due for a downturn into recession, citing the Coronavirus as the beginning of the end. In spite of those projections, the economy is on its longest successful run, showing positive growth for a decade. Recession alarms were raised all throughout 2019 to no avail. Recognizing this, recession alarmists no longer try to pinpoint when a recession is likely, instead they simply state that something will stall the economy. In contrast, the economy has thrived under an unpredictable president, two tense, but mitigated military interventions, a very contentious political environment, and a deadly global virus – so far. 

Despite the rhetoric, the same analysts have indicated that if a recession were to happen, the housing market would be an anchor for the economy, ultimately giving it strength in a time of overall economic weakness. This is a stark contrast from the housing market’s role in the 2007-2008 financial crisis, when the housing bubble burst and the economy fell into the Great Recession. Their claim is that homeowners and buyers today operate much differently than those in the mid-to-late 2000’s. Certain regulations have impacted the way that individuals buy and own homes and unlike the housing crisis, fewer individuals are getting into contracts that they can not afford. 

For now, investors and analysts feel safe in predicting that the housing market will sustain significant success throughout 2020 and an increase in home buying overall with rates at their current levels. Similar reports have also shown that during the strong economic expansion the United States has seen over the last decade, housing market values have strengthened. Therefore, individuals who were not displaced during the Great Recession have seen the values in their homes increase over that period of time. This expansion has also led to an increase in home prices for buyers, decreasing the demand during that same period. If the economy were to dip into another recession, economists argue that the housing market will serve as a buffer for the economy. 

Overall, current mortgage rates are making it more attractive for potential homeowners to invest in the housing market. Since the economy and housing markets have fared well during the last decade of economic expansion, even a slight downturn in the market would not adversely affect homeowners such as it did during the 2008 financial crisis. As long as the supply and demand for housing remains near equivalence, the housing market should act as a buffer in the event of a recession. 

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