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Crunching the Numbers of the Mott "Loan"
(Printed in the Towanda Daily Review on February 21, 2009.)

Editor:

In 2005, Brenda Mott plead guilty to four felony charges involving the theft from the Canton Borough Authority (CBA) of over $500,000 as contended by the state, with restitution of $659,043 ordered. Currently, Mrs. Mott is repaying $200/mth to CBA, although restitution payments in two previous years were significantly higher.

According to the Review (Jan. 10, 2009), Mrs. Mott had repaid approximately $30,000. Other reports indicate that a slightly higher amount had been repaid. However, it is clear that a significant balance remains, and for the purpose of this letter, I'll use a figure of $630,000.

In arguments to increase the restitution payment amount, State Deputy Attorney General Christopher J. Jones had commented that at the current rate of $200/mth, full repayment would take 261 years.

The above figure is correct, but assumes that no interest is included in the repayment. If CBA had use of the missing $630,000 and invested it at a 2% annual interest rate, they would receive $1050/mth in interest from the investment. If Mrs. Mott still has the money and had surreptitiously invested it at 2%, she would get $1050/mth, pay $200 to CBA, and clear $850/mth -- less income taxes of course.

If Mrs. Mott had borrowed $630,000 from a lender (if any survive) at 2% interest over 261 years, and had somehow negotiated $200/mth payments with a final balloon payment, this final balloon payment in the year 2270 would be a little over $94 million.

If she had gotten a loan with the same conditions as above except for 30 years, the final balloon payment would be a much more reasonable $1.05 million.

The terms of Mrs. Mott's "loan", even if they did include a felony rap and a few months in jail, seem quite reasonable.

John L. Ferri
jlferri@epix.net



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