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The Honolulu Advertiser

Posted at 2:11 p.m., Tuesday, April 3, 2007

Business highlights: Toyota sales, oil prices, tax fraud

Associated Press

TOYOTA REPORTS 11.7% RISE IN U.S. SALES

DETROIT — Toyota's U.S. sales jumped 11.7 percent last month, boosted by record hybrid sales and strong overall car sales, and fellow Japanese automakers Honda and Nissan both reported solid gains. But GM's sales fell 4 percent while Ford posted a 9 percent decline and DaimlerChrysler fell 4.1 percent.

The numbers Tuesday come as the domestic automakers have seen Asian rivals led by Toyota capture growing shares of the U.S. market. But despite its decline, Ford still held off Toyota for the No. 2 U.S. sales spot for the month, and Ford regained from GM the claim to having the nation's top-selling pickup truck even though F-series sales fell 15.1 percent.

In all, Toyota Motor Corp. sold 242,675 light vehicles in the U.S., including 140,009 cars, up 19.4 percent from the same month a year ago, and 102,666 trucks, a 2.7 percent increase. So far this year, Toyota has sold 61,635 hybrids in the U.S., up 68 percent from the first three months of last year. That includes 28,453 hybrids last month.

Detroit-based General Motors Corp., which saw its fleet sales drop for the month as it works to cut low-profit sales to rental car companies, sold 345,418 light vehicles, including 136,866 cars, up 2.3 percent, and 208,552 trucks, down 7.7 percent.

OIL PRICES DROP

NEW YORK — Crude oil prices settled down more than $1 a barrel Tuesday as tensions eased in the standoff between Britain and Iran over captive British military personnel.

Prices had risen steadily since 15 British sailors and marines were detained March 23 by Iran for allegedly entering Iranian waters. On Monday, crude finished below $66 a barrel, paring earlier gains after Iran's chief international negotiator called for an end to "the language of force" in the dispute.

Light, sweet crude for May delivery lost $1.30 to settle at $64.64 a barrel on the New York Mercantile Exchange. Oil prices traded as high as $68.09 early last week. Two weeks ago, the contract was trading under $60 a barrel.

On London's ICE Futures exchange, Brent crude for May dipped 93 cents to settle at $67.81 a barrel on Tuesday.

INSURERS GET HIGHER MEDICARE PAYMENTS

WASHINGTON — Shares of some of the largest health insurers rose Tuesday after the government announced higher-than-expected payment increases for companies that operate private Medicare plans.

The Centers for Medicare and Medicaid Services said late Monday that preliminary payments to companies that run Medicare Advantage programs will rise 3.5 percent for 2008. The payment boost, made to insurers for each Medicare participant they cover, is less than last year's 3.9 percent update, but above Wall Street estimates of a 2 percent to 3 percent increase.

Of the 43 million Americans 65 years or older who receive healthcare through Medicare, about 8 million are enrolled in Medicare Advantage plans run by private companies. The program was designed to expand Medicare and better manage costs, though recent statistics show the government spends more on patients in Medicare Advantage plans than those in traditional Medicare.

The 2008 payment rate mainly serves as a benchmark against which companies will offer their services, rather than a final payment amount. Companies typically offer to provide Medicare benefits for less than the benchmark because they get to keep a portion of the cost difference. The remaining savings go back to the federal government.

JACKSON HEWITT FRANCHISES ACCUSED OF FRAUD

WASHINGTON — The government said Tuesday it is trying to shut down more than 125 Jackson Hewitt tax preparation stores in four states for systematic "tax-fraud schemes."

The Justice Department accuses the franchises of bilking the government out of more than $70 million through fraudulent practices such as using phony W-2 forms, bogus deductions and fuel tax credits and false claims regarding the earned income tax credit.

Jackson Hewitt Tax Services Inc. is the nation's second largest tax preparer. The franchises were either totally or partially owned by Farrukh Sohail, the Justice Department said, and involved "a pervasive and massive series of tax-fraud schemes," according to court filings.

Sohail and other defendants "created, directed, fostered, and maintained a business environment" at the Jackson Hewitt franchises "in which fraudulent tax return preparation is encouraged and flourishes," according to court documents.

Employees were encouraged to ignore telltale signs of fraudulent information and to file claims even when it was obvious customers were using fake W-2 forms or false deductions.

EMPLOYEES STILL WARY OVER TRIBUNE'S FUTURE

CHICAGO — Months of uncertainty involving Tribune Co.'s sale have given way to a new set of concerns for its employees, who are now wrestling with unanswered questions about an unusual arrangement that will give them majority ownership and a good deal of the risk but no control.

Journalists working for Tribune's newspapers expressed a mixture of wariness and relief Tuesday, a day after the announcement of an esoteric $8.2 billion deal that will make multibillionaire investor Sam Zell chairman and install an employee stock ownership plan.

Like many other Tribune employees, Tim Phelps, Washington bureau chief of Long Island, N.Y.-based Newsday, said he didn't have enough information about the complex structure to know if the employee ownership model will be effective.

Even outside experts were still puzzling over Tribune's ESOP, an arrangement rarely used in the newspaper industry. Corey Rosen, founder and executive director of the nonprofit National Center for Employee Ownership, said the "huge" number of questions about it make it difficult to say whether it's good or bad for employees.

APPLE, EUROPEAN ITUNES DEAL MAY VIOLATE RULES

BRUSSELS, Belgium — The deals Apple Inc. struck with record labels to stock its European iTunes stores may violate EU competition rules, regulators said Tuesday.

Apple and the record companies were notified of an investigation into their agreements after regulators built up a "very strong case," said European Union spokesman Jonathan Todd.

People can only download singles or albums from the iTunes store in their country of residence — a policy that amounts to unlawful "territorial sales restrictions," the Commission said.

Apple spokesman Steve Dowling said the company wanted to operate a single store for all of Europe, but music labels and publishers said there were limits to the rights they could grant to Apple.

Investigators have been gathering evidence on Apple's deals with Sony BMG Music Entertainment, Universal Music Group and EMI Group PLC for the past two years, after Britain's Consumers' Association filed a complaint with the Commission in 2004.