Biogen, AIG, Kroll, Lehman, Chrysler in Court News

Billionaire investor Carl Icahn sued in Delaware Chancery Court, asking a judge to rule his director nominees at the annual meeting of Biogen Idec Inc. (BIIB) were validly elected.

Stockholders voted yesterday on the Cambridge, Massachusetts-based drug company’s slate of four directors and four more backed by Icahn. Alex Denner said he was elected to one seat, along with another Icahn associate, Richard Mulligan. Biogen said voting results will be released later this month.

In a complaint yesterday in Wilmington, Delaware, Icahn asked for an order to stop the company “from taking any steps toward seating its director nominees.”

Biogen, with $4.09 billion in sales last year, is the world’s biggest maker of multiple sclerosis drugs.

Icahn, with a 5.6 percent stake, claimed in the suit that Biogen unfairly adjourned the meeting, denying investors “their right to a fair vote and a resolution of this long-standing contest.”

Icahn wasn’t immediately available in his New York office yesterday to comment on the future of the lawsuit.

A Biogen spokeswoman, Naomi Aoki, said in an interview that company Chairman Bruce R. Ross had “clear authority” to recess the meeting, which ended at 2 p.m.

The case is High River Limited Partnership and Icahn Partners LP v. Biogen Idec Inc., CA4642, Delaware Chancery Court (Wilmington).

AIG Accused of Staging Arrest to Avoid Paying Verdict

American International Group Inc. (AIG), the insurer saved from collapse by the U.S. government, played a role in an immigrant’s arrest in what his lawyer said was a bid to get the Polish construction worker deported so the company won’t have to pay a $2.7 million verdict that he won.

The 41-year-old worker, Aleksander Janda, was arrested June 2 in Queens, New York, on charges related to using someone else’s Social Security number, including identity theft, said Helen Peterson, a spokeswoman for Queens District Attorney Richard Brown. He was released yesterday on his own recognizance.

In February, Janda won the $2.7 million jury verdict from a property owner for an injury he received after falling 12 feet onto a cement floor while working. In a letter last month, a lawyer for Janda told the judge that AIG contacted Queens prosecutors to get Janda arrested and deported. AIG is the insurer for the property owner.

“It was AIG who contacted the Queens District Attorney’s office and the U.S. Department of Homeland Security in an effort to have the plaintiff arrested on criminal charges and then deported,” the worker’s lawyer, Brett J. Nomberg of Brand Brand Nomberg & Rosenbaum LLP in New York, wrote on May 29 to the state court judge in charge of the case, Bernice D. Siegal.

Marie Ali, an AIG spokeswoman, declined to comment.

After the Feb. 17 verdict, the property owner asked the judge to set aside the award and order a new trial, Nomberg said in a phone interview. If Janda is deported, he won’t be able to appear at the new trial, Nomberg said.

The civil case is Janda v. Michael Rienzi Trust, 12146/2006, New York Supreme Court (Queens). The criminal case is People v. Janda, 2009QN030322, New York City Criminal Court (Queens).

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Stanford Alleged Fraud Missed by Kroll, Suit Says

Kroll Inc., a risk-consulting firm hired to review Stanford International Bank Ltd.’s financial soundness, failed to find “numerous red flags,” that cost a tradesmen’s group $2.5 million, a federal lawsuit says.

Antigua-based Stanford International, accused of an $8 billion fraud, denies any wrongdoing. The National Electrical Contractors Association Inc. accuses Kroll, a unit of Marsh & McLennan Cos. (MMC), the second-biggest insurance broker, of “gross negligence” when it issued a “clean report” in 2007, the May 26 suit in federal court in Miami said.

“Kroll submitted a falsely positive report knowing it would be used and relied upon,” the suit said.

Emilie Moghadam, a Kroll spokeswoman with the firm Fleishman-Hillard, said, “Kroll denies liability in connection with this engagement.”

The case is National Electrical Contractor’s Union v. Kroll Inc., 09cv21415, U.S. Southern District of Florida (Miami).

For more new suits news from yesterday, click here. For copies of recent civil complaints, click here.


Shell Nigeria Must Face Human-Rights Lawsuit in U.S.

Shell Petroleum Development Co. of Nigeria, an affiliate of Royal Dutch Shell Plc (RDSA), must face a lawsuit accusing it of crimes against humanity, a U.S. federal court ruled.

The U.S. Court of Appeals in New York yesterday reinstated a case against Shell Nigeria, which a lower-court judge had dismissed last year. A related human-rights suit against Royal Dutch Shell was scheduled to go to trial last month and has been postponed indefinitely.

The appeals court also ordered the trial-court judge to reconsider rulings barring the plaintiffs from obtaining documents from Shell Nigeria. Judith Brown Chomsky, one of the lawyers suing Shell and Shell Nigeria, said the plaintiffs are now “optimistic” they will get more documents.

“This is another step in holding Shell Nigeria accountable for its role in the human-rights violations,” Chomsky said in a statement.

A hearing scheduled for yesterday in the case against Royal Dutch Shell was postponed. Shell Nigeria is part of Royal Dutch Shell as an “indirect subsidiary,” Chomsky said in an interview.

Both companies are accused by relatives of activists killed from 1990 to 1995 in Nigeria of helping the government carry out attacks. The appeals court said in its ruling yesterday that the U.S. court had sufficient jurisdiction over Shell Nigeria.

A spokesman for Royal Dutch Shell, based in The Hague, didn’t return a call seeking comment.

The case is Wiwa v. Shell Petroleum, 08-1803, U.S. Court of Appeals (Manhattan).

Lehman to Pay $127.6 Million to Cover Pension Underfunding

Lehman Brothers Holdings Inc. will pay $127.6 million plus interest to cover underfunded pension liabilities under a settlement with the Pension Benefit Guaranty Corp.

U.S. Bankruptcy Judge James Peck approved the deal at a hearing yesterday in New York, saying it will free up the former investment bank from further dealings with the PBGC, smoothing its Chapter 11 case. PBGC will take over as trustee of the plan.

The collapsed investment bank’s pension plan became underfunded in December because of the downturn in equity market, Lehman lawyer Richard Krasnow said. The PBGC on Dec. 12 sought to involuntarily terminate the plan.

The settlement will help the bank to avoid penalties that could result in the pension agency getting as much as $200 million from District Court action, Krasnow said. Without the deal, the PBGC could seek funds from Lehman units that aren’t in bankruptcy and have “significant assets,” such as Neuberger Berman, he said.

Lehman, based in New York, filed the largest bankruptcy in U.S. history on Sept. 15 with assets of $639 billion. Barclays, the third-biggest U.K. bank by assets, paid $1.54 billion for Lehman’s North American brokerage and real estate after Lehman went bankrupt. The sale closed Sept. 22.

The case is In re Lehman Brothers Holdings Inc., 08-13555, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

Grupo Mexico Ordered to Escrow $8.8 Billion in Stock

Grupo Mexico SAB (GMEXICOB), Mexico’s largest mining company, was ordered by a U.S. judge to put into escrow $8.84 billion worth of stock in Southern Copper Corp. (SCCO) while it appeals a Texas court loss.

U.S. District Judge Andrew Hanen in Brownsville, Texas, ruled June 2 that Grupo’s Americas Mining unit must set aside the stock after losing a lawsuit and being ordered to return 260 million shares of Southern Copper to Asarco LLC along with $1.38 billion in cash.

Hanen said in his written ruling that he wouldn’t force Grupo Mexico to set aside any cash during its appeal of the lawsuit. Requiring the company to post a bond for such a large amount during the credit crisis would be “an undue burden” on Americas Mining and may harm creditors of Asarco in its bankruptcy case, Hanen wrote.

“We see this as something good, because we were asking for this ruling,” Juan Rebolledo, a Grupo Mexico spokesman, said in a phone interview June 2.

Americas Mining lost a trial last year in which it was accused of dumping Asarco into bankruptcy in part by stripping it of its most valuable asset, shares in Southern Copper.

After the trial, in which Grupo Mexico’s Chairman German Larrea Mota-Velasco testified, Hanen ordered Americas Mining to return 260 million shares of the Peruvian copper miner to bankrupt Asarco. The judge also ordered the company to pay Asarco $1.38 billion in past dividends.

Americas Mining is appealing the decision.

The lawsuit is Asarco LLC v. Americas Mining Corp., 1:07- cv-00018, U.S. District Court, Southern District of Texas (Brownsville). The bankruptcy case is In re Asarco LLC, 05- 21207, U.S. Bankruptcy Court, Southern District of Texas (Corpus Christi).

To read more of this story, click here.

For more lawsuits news from yesterday, click here.


Kozeny Aide Tells of George Mitchell, $96,000 Dinner

Viktor Kozeny’s security chief told a jury how the Czech expatriate brought ex-Senator George Mitchell into a deal to buy Azerbaijan’s oil company, spent $96,000 on a dinner for six, and befriended powerful American investors.

John Pulley, who provided security for Kozeny, took the witness stand yesterday in Manhattan federal court on the first day of testimony in the bribery trial of Connecticut entrepreneur Frederic Bourke. Bourke is accused of conspiring with Kozeny to bribe leaders in Azerbaijan, which borders the Caspian Sea, in a failed 1998 deal to buy the state oil company.

Prosecutors used Pulley’s testimony to link Bourke to Kozeny, explain how Kozeny brought influential investors like Mitchell into the deal, and lived an extravagant lifestyle. Kozeny, who’s also been charged in the case, has successfully fought extradition from his home in the Bahamas.

“He had a yacht, he had an island, he was having a house renovated in London, and he was building in Nassau,” Pulley, a former agent with the Drug Enforcement Administration, testified. “His entourage, when we travelled, was five people.”

Kozeny made headlines in 1997 after paying about $20,000 for lunch for three people at London’s Le Gavroche. Pulley said he was one of three at the lunch. Pulley also testified about a private dinner in 1998 at the St. Regis hotel in New York, where Kozeny hosted Bourke, money manager Aaron Fleck, and two or three others. It cost about $96,000, Pulley said.

“Wine,” Pulley testified, when asked by Assistant U.S. Attorney Iris Lin why both meals were so costly.

“Yes, we had many nice dinners,” Kozeny wrote yesterday in an e-mail to Bloomberg News. “Nice Petrus 1945 and a great uncut Cuban cigar.” He said that was “indeed the norm for oligarchs those days.”

Bourke, 63, is accused of conspiring with Kozeny in a $350 million deal to bribe Azeri leaders so they would sell the oil company, known as Socar, for pennies on the dollar. He faces 30 years in jail if convicted of a money-laundering and bribery conspiracy.

Bourke, Mitchell and other investors have denied knowing of Kozeny’s bribery scheme.

The case is U.S. v. Kozeny, 05-cr-00518, U.S. District Court, Southern District of New York (Manhattan).

To read more of this story, click here.

Automatic Data Ex-Worker Wins New Trial Over Firing

A former controller at Automatic Data Processing Inc. (ADP), the world’s largest payroll processor, deserves a new trial after jurors rejected her claim that she was fired for complaining about billing practices, an appeals court ruled.

Diane Redvanly didn’t get a fair trial because the judge improperly allowed evidence about whether she lied on her ADP job application by failing to disclose she was previously fired from NYNEX Corp., a New Jersey appeals court panel ruled.

Jurors in state court in Jersey City, New Jersey, shouldn’t have heard about the NYNEX dispute, which led Redvanly to file a wrongful termination lawsuit that settled for $210,000, the panel ruled. Jurors hearing her ADP whistleblower case should only hear such evidence at the damages phase of a trial, not the earlier liability portion, according to the opinion.

ADP, based in Roseland, New Jersey, intends to appeal the ruling to the New Jersey Supreme Court.

“Ms. Redvanly’s allegations are 100 percent false and were unanimously rejected by the jury,” ADP said in an e-mailed statement. “Should this be retried, we fully expect that a new jury will once again find in ADP’s favor.”

Redvanly, a former regional controller in ADP’s East National Service Center in Clifton, New Jersey, sued under the anti-retaliation provision of the state Conscientious Employee Protection Act.

Redvanly’s attorney, John Shahdanian, said he was “thrilled” by the opinion, which could lead to a settlement with ADP.

The case is Diane Redvanly v. Automated Data Processing, A- 4082-06T2, Superior Court of New Jersey, Appellate Division.

To read more of this story, click here.

Gecina’s Rivero, Soler Ask Paris Court to Restore Voting Rights

Gecina SA (GFC) Chairman Joaquin Rivero and Spanish investor Juan Bautista Soler asked a Paris appeals court to restore their joint voting rights to 31.3 percent before the real estate company’s shareholder meeting on June 15.

A Paris commercial court last month cut their votes to 20 percent and banned Rivero from presiding over the annual meeting at the request of Spanish developer Metrovacesa SA (MVC), based on a 2007 regulatory decision over disclosure violations by Rivero and Soler.

The suit “is a misuse of the court process,” said Cyril Bonan, a lawyer for Rivero, at a June 2 hearing before the Paris appeals court. “This is a listed, public company,” and courts don’t have the right to unseat a board chairman because shareholders disagree.

Rivero and Soler have been in a long-running dispute with Metrovacesa, Gecina’s largest shareholder with a 27 percent stake. Metrovacesa is seeking to pressure Gecina to complete a 2007 agreement to separate the companies by transferring Paris properties to an affiliate.

The appeals court said it would rule on June 10.

Metrovacesa and a shareholder group filed the original complaint, asking the commercial court to enforce the market regulator’s decision at the meeting. The investors want more say in running the company and dispute Gecina’s decision to purchase properties in Spain from Rivero and Soler at the June meeting.

For more trial and appeals news from yesterday, click here.


Ex-BDO Seidman Vice Chairman Pleads Guilty in Fraud

Former BDO Seidman LLP Vice Chairman Charles Bee pleaded guilty yesterday to federal charges that he helped clients evade more than $200 million in taxes through illegal tax shelters.

Bee’s plea in Manhattan federal court follows that of two other BDO Seidman officials, former Vice Chairman Adrian Dicker and ex-principal Michael Kerekes. Bee, 63, agreed to forfeit $20 million and homes in Boca Raton, Florida, and Saddle Brook, New Jersey, and he faces a maximum of 15 years in prison on three fraud counts, prosecutors said.

Acting U.S. Attorney Lev Dassin in New York said Bee and BDO Seidman’s chief executive officer, whom he didn’t name, were leaders of the firm’s Tax Solutions Group from 1998 to 2000, selling tax shelters to wealthy clients. Working with the law firm Jenkens & Gilchrist, the group sold illegal shelters, Dassin said.

“Bee knew that the clients who purchased the tax shelter had no non-tax business reasons for entering into the transactions,” Dassin said in a statement. “Bee and his co- conspirators reviewed and approved the use of a legal opinion letter issued by J&G that contained false and fraudulent representations purportedly made by the clients.”

Adam Abensohn, the lawyer for Bee, declined to comment.

BDO Seidman said in a statement that its shelter group was dissolved several years ago.

“BDO Seidman has cooperated fully with the government’s tax shelter investigation and will continue to do so,” the statement said, adding that the firm won’t comment further.

The case is U.S. v. Bee, 09-cr-545, U.S. District Court, Southern District of New York (Manhattan).

AT&T, Carriers Can’t Be Sued in Domestic-Spying Cases

A federal judge dismissed customer lawsuits accusing AT&T Inc. (T) and other telecommunications companies of helping the government spy on Americans, saying Congress has shielded the company from such claims.

Congress passed a bill in July giving the companies retroactive immunity from lawsuits claiming they violated privacy laws by handing over information about customers’ telephone and e-mail communications to the government without court permission.

The companies are accused of assisting in a U.S. domestic- surveillance program launched after the Sept. 11, 2001, terrorist attacks. At least 30 lawsuits were pending against the companies when the bill passed.

The case is In Re. National Security Agency Telecommunications Records Litigation, 06-0672, U.S. District Court, Northern District of California (San Francisco).

For more verdict and settlement news from yesterday, click here.

On the Docket

Chrysler’s June 5 Sale Is Put on Hold by Appeals Court

Chrysler LLC’s plan to sell its best assets to a new entity on June 5 was put on hold by a federal appeals court that will hear arguments that day by creditors challenging terms of the deal.

U.S. Bankruptcy Judge Arthur Gonzalez in New York had said the sale to a group led by Fiat SpA (F) could be completed at noon June 5. He moved the date up from June 15, noting in an order that Chrysler is losing $100 million a day as it awaits a sale designed to make it a viable company in world markets.

The Manhattan-based appeals court is to hear the challenge to terms of the sale by a group of Indiana pension funds at 2 p.m. and written arguments are due by noon today, the appeals court said in an order late yesterday.

Indiana Treasurer Richard Mourdock said he was pleased the Court of Appeals agreed to hear state funds’ arguments that they and other secured creditors have been made secondary to government-preferred unsecured creditors “in contravention of longstanding bankruptcy law.”

The case is In re Chrysler LLC, 09-50002, U.S. Bankruptcy Court, Southern District of New York (Manhattan)

To read more of this story, click here.

To contact the reporter on this story: Elizabeth Amon in Brooklyn, New York at

To contact the editor responsible for this story: David E. Rovella at

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