"As for evidence, I wanted something in black and white, something like fingerprints." -- A juror explaining why he voted to acquit former HealthSouth CEO Richard Scrushy
Some in Silicon Valley can hardly contain their glee over the possibility of getting payback against the king of shareholder lawsuits. A federal probe involving the law firm Milberg Weiss Bershad & Schulman may ultimately pull in William Lerach, a onetime partner who left a year ago to start his own firm. No charges have been levied against Milberg Weiss or Lerach, but on June 23 Seymour Lazar, a plaintiff on multiple cases brought by the firm, was indicted by a grand jury.
The indictment, which does not mention Milberg Weiss or Lerach, alleges that Lazar was improperly paid for working with an undisclosed firm so it could quickly file suits. Many of the cases cited were brought in California courts, which were typically handled by Lerach's San Diego operation. Given Lerach's controversial reputation, many think he must be a key focus of the probe. Says one securities lawyer: "He's a high-profile guy, and he has made a lot of enemies."
Lerach has long been the scourge of tech execs. To be sure, plenty of his cases were valid, justifying Lerach's claims that he defended shareholders against fraud and insider trading. But on many occasions, say execs, Lerach was preying on companies that happened to have volatile stocks by squeezing them for juicy settlements.
Almost as irksome was his attitude. Once, after speaking out against Lerach on a national news show, Seagate Technology's then-CEO Alan Shugart got a letter including Lerach's business card, on which he had scrawled: "Dear Al -- There's more coming."
The feds won't confirm that Lerach is even a target of the probe. His firm declined to comment. Milberg Weiss said it was cooperating, but said the investigation "unfairly implicates the firm" in "baseless" allegations. Meanwhile, some Valley execs are mulling their legal options against Lerach. "I'd love to sue him," says one CEO. Getting any money back would be a long shot, say securities lawyers. That doesn't mean no one will try. "Most companies wouldn't bother, but there are going to be some very angry people out there," says Bruce Vanyo, a partner at Wilson Sonsini Goodrich & Rosati. For Lerach's victims, "this is very personal."
The latest twist in cyber-tricks: "spear-phishing." Old-style phishing e-mails, purportedly from eBay or banks, were blunt and obvious compared with spear phish, which appear to originate within your company. Whereas phish are blasted out to millions, spear phish are highly targeted. That makes the new threat "far more sinister," says Mark Sunner of British e-mail security outfit MessageLabs, whose filters nabbed 612,408 spear phish in June, up from just 56 in January.
Spear phish often appear to be sent by reps from the human resources or info-tech department. MessageLabs provided four versions of a June 15 attack on an unnamed company, in which e-mail signed "Security Department Assistant" asked a worker to update his user name and password, or risk suspension. If successful, hackers gain access to secure networks. In another case, the MyTob virus, hidden in a spear phish, asked users to click a link. Then it dropped in spyware to steal data. In May, Israeli officials busted several companies that used e-mail with attachments disguised as vendor queries to download spyware, then gather intelligence on rivals. Workers, beware: That e-mail isn't coming from inside the company!
Houston's Compaq Center has hosted the NBA finals and concerts by the Rolling Stones. But on July 16, it will be "born again" as the new home of Lakewood Church -- the largest in the U.S. Pastor Joel Osteen will deliver sermons to a sanctuary seating 16,000 from a stage flanked by 30-foot waterfalls, massive high-definition screens, and a 250-voice choir. So far, Lakewood has paid only about $45 million of the $92 million renovation costs. Since its 30-year lease bars events like concerts that compete with nearby Toyota Center, Lakewood must fill the gap with donations. That shouldn't be difficult for a church whose yearly revenues already top $50 million.
Will the U.S. craze for Japanese culture extend to a Gap (GPS) wannabe? Uniqlo, a retailing giant with 680 stores in Asia and Britain, plans to open its first three U.S. outlets this fall in New Jersey malls. A household name in Japan, Uniqlo hopes to woo Americans with quality materials such as Egyptian cotton and ring-spun denim, quantity (108 colors and designs of cashmere sweaters), and modest prices -- mostly from $29 to $40.
That low-key approach contrasts with the bold ambitions of Uniqlo's execs. Chairman and CEO Tadashi Yanai's goal is to triple sales, to $10 billion, and become the world's No. 1 casual apparel company by 2010. But Gap, the current leading specialty retailer, with more than 3,000 stores and $16 billion in revenue, isn't sweating just yet. In fact, the chain will open its first three Banana Republic stores in Tokyo at about the same time Uniqlo launches here. Stand back and watch the fleece fly.
Flummoxed over how to greet the CEO in the elevator? Not if you work at UPS (UPS) or Kimberly-Clark (KMB). They are among those that insist on first names from the bottom of the ladder on up -- and put it in writing. The UPS handbook states: "Using first names helps to generate a friendly and informal atmosphere." Says Kimberly's Web site: "Kimberly-Clark people don't stand on rank." David Morand, a management professor at Penn State at Harrisburg, says such policies can boost morale. Tell that to the boss the next time you have a chance.
When Carolyn Vesper Bivens turned 40, fellow staffers at USA Today's marketing department toasted her with a spoof proclaiming her commissioner of the Ladies Professional Golf Assn. "Dreams come true," says Bivens, now 52, who was named to the position on June 16. As the first female commissioner of the 55-year-old league, Bivens is taking over during an upswing for women's golf. TV viewership has risen 26% in the past four years, spurred by the popularity of superstar Annika Sorenstam. Bivens will try to build on that with a new brand campaign, "These Girls Rock," focusing on young stars such as Paula Creamer, Cristie Kerr, and Birdie Kim, whose dramatic, 18th-hole shot won the U.S. Women's Open.
Bivens first picked up clubs at 23 as a way to network. Her marketing prowess was established as president of Interpublic Group's (IPG) Initiative Media North America. From now on, she'll be playing the game -- and selling it.
Forgot your wallet? Just pay with your finger. San Francisco startup Pay By Touch is bringing fingerprint scanning to supermarkets. Its devices scan a shopper's finger and translate 40 "data points" into an algorithm, linking to bank or credit-card accounts. Scanners are being tested at about 200 stores, including Albertson's (ABS) in Portland, Ore., Piggly Wiggly in Georgia and South Carolina, and Cub Foods in Minnesota. John Morris, a 23-year IBM (IBM) vet who became Pay By Touch president in May, says he'll target big-box retailers, convenience stores, and fast-food chains, too. "There's no fumble factor for the wallet," says Morris.
Merchants have a big incentive to sign up: Each finger transaction linking to a checking account costs about 12 cents to process, vs. an average 40 cents for a bank debit card and 70 cents for credit cards. That's because Pay By Touch uses Automated Clearing House (ACH), which mostly transmits payroll direct deposits. A Visa spokesman says one drawback for merchants is that ACH transactions don't clear instantly. Still, fees paid to banks by MasterCard and Visa have soared by 19% to $20 billion since 1998, says Morgan Stanley analyst Kenneth Posner. Merchants, who are fighting in court to lower those fees, would be more than happy to flick them away.