Business Briefing

Carpinteria man charged with fraud

Federal agents arrested a Santa Barbara County man on mail and wire fraud charges related to an alleged Ponzi scheme that raised $12 million from investors across the U.S.

Peter Jerald Frommer, 34, of Carpinteria raised the money between 2004 and 2006 by saying his company, Cap Exchange, would invest in surplus property purchased at a discount from defunct companies. He allegedly offered a guaranteed return of 8% to 15% during cycles of a few weeks.

Instead of investing the money as he said he would, Frommer used the proceeds to lead a lavish lifestyle and pay off early investors, the U.S. attorney’s office alleged. The charges carry a maximum sentence of more than 200 years in prison.

Madoff’s sons agree to limits

Andrew and Mark Madoff, whose father, Bernard Madoff, is serving 150 years in prison for the largest-ever Ponzi scheme, agreed to restrict movement of their own personal assets, not incur debt beyond $1,000 and give a monthly accounting of their expenses.

Peter and Shana Madoff Swanson, Bernard Madoff’s brother and niece, signed similar agreements, according to documents filed in U.S. Bankruptcy Court in Manhattan.

THE ECONOMY

Americans borrow less

Americans borrowed less for the 11th consecutive month in December, paying off credit cards while increasing borrowing for cars and other products.

The Federal Reserve said total borrowing dropped by a seasonally adjusted $1.8 billion -- far less than the revised $10.6 billion seen in November. It also was well below the $9 billion that analysts had expected.

Obama seeks to expand lending

Seeking to create more jobs, President Obama asked Congress to temporarily expand two lending programs for the owners of small businesses.

Obama wants businesses to be able to refinance their commercial real estate loans under the Small Business Administration. He also wants the SBA to increase loans used for lines of credit and capital.

COURTS

Judge’s loan issue in foreclosure

A Florida appeals court ordered a trial judge to remove himself from a foreclosure proceeding by Bank of America Corp.’s Countrywide unit after the homeowner said the judge received a discount loan from an affiliate of the Calabasas mortgage lender.

The homeowner alleged that Circuit Judge Hugh Carithers in Jacksonville, Fla., received favorable interest rates not available to the public in his own dealings with the lender.

DEFENSE

BAE Systems to settle charges

British defense company BAE Systems said it would pay more than $400 million in fines after reaching settlements with Britain’s anti-fraud agency and the U.S. Justice Department over investigations into its activities in Saudi Arabia and Tanzania.

BAE said under its agreement with Washington it would plead guilty to one charge of conspiring to make false statements to the U.S. government over regulatory filings. The agreement is subject to court approval.

-- times staff and wire reports