Wyly Brothers, Alcatel, BP, Roche, Facebook in Court News

Samuel Wyly and Charles Wyly, the Texan brothers and entrepreneurs who funded ads helping George W. Bush’s presidential campaigns, were sued by U.S. regulators who accused them of misleading investors while selling hundreds of millions of dollars in stock.

The Wylys used “an elaborate sham system of trusts and subsidiary companies” in the Isle of Man and Cayman Islands over a 13-year period to hide control of securities linked to companies where they were board members, the Securities and Exchange Commission said July 29 in a lawsuit filed in New York federal court. They illegally kept investors in the dark as they sold off holdings, and in one case made illegal insider trades, the SEC said.

“The cloak of secrecy has been lifted from the complex web of foreign structures used by the Wylys to evade the securities laws,” the SEC’s deputy enforcement director, Lorin Reisner, said in a statement. “They used these structures to conceal hundreds of millions of dollars of gains in violation of the disclosure requirements for corporate insiders.”

The brothers “intend to vigorously defend themselves --and expect to be fully vindicated,” said their attorney, William A. Brewer III in Dallas.

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Barnes & Noble Files Lawsuits Against Alcatel, Xerox

Barnes & Noble Inc., which makes the Nook electronic reader and sells books from its website, sued Xerox Corp. and Alcatel- Lucent SA over demands the bookseller pay royalties for patents.

The U.S. subsidiary of Alcatel says the Nook violates seven of its patents, New York-based Barnes & Noble said in a lawsuit filed July 29. Xerox says that barnesandnoble.com violates four its patents, the book seller said in a separate court filing July 29. Neither claim is valid, Barnes & Noble said in its lawsuit. It asked the court to rule in its favor.

“We filed the declaratory judgment actions to make clear, as outlined in the complaints, that we are not infringing any valid Xerox and Alcatel-Lucent patents,” Barnes & Noble spokeswoman Mary Ellen Keating said in an e-mail. “We cannot further comment on pending litigation.”

Mary Ward, a spokeswoman for Alcatel-Lucent, declined to comment in an e-mail. A Xerox spokeswoman didn’t respond to an e-mail asking for comment.

The cases are barnesandnoble.com LLC v. Xerox Corp., 1:10- cv-05758, and Barnes & Noble Inc. v. Alcatel-Lucent USA Inc., 1:10-cv-05759, both in U.S. District Court, Southern District of New York.

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Lawsuits/Pretrial

U.S. Justice Staff Said to Urge Subpoenas for BP Managers

U.S. Justice Department attorneys conducting a criminal probe of the BP Plc well explosion in the Gulf of Mexico have recommended that a grand jury be convened and BP managers subpoenaed to determine if any laws were broken, a person familiar with the investigation said.

The subpoenas also would target employees of rig operator Transocean Ltd., said the person, who was briefed by the attorneys and asked not to be identified. London-based BP is the majority owner of the well that exploded on April 20, killing 11 workers and triggering the worst oil spill in U.S. history.

Offshore drilling regulators from the Interior Department agency formerly known as the Minerals Management Service would be summoned to testify about the process under which BP received permits to drill the well about 40 miles (64 kilometers) off the Louisiana coast, and whether any improper relationships existed between agency employees and the company, the person said.

Contractors that worked for BP and Transocean aboard the rig also might be compelled to testify, according to the person.

Senior Justice Department officials still have to approve a grand jury, which would be a special panel or one that sits regularly. The recommendations were made by department attorneys in Washington and New Orleans, the person said. The panel would probably meet in New Orleans, the person said.

Hannah August, a Justice Department spokeswoman, and Kathy English, a spokeswoman for U.S. Attorney Jim Letten of the Eastern District of Louisiana, declined to comment.

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Fugitive Polly Peck Founder Granted Bail in London

Asil Nadir, the founder of Polly Peck International Plc who fled to northern Cyprus in 1993, can return to the U.K. on bail before standing trial in London for embezzling 30 million pounds ($47 million).

Nadir’s bid for bail was granted and he must attend court in London on Sept. 3, Judge David Bean said at a hearing July 30 at the Old Bailey criminal court. Within eight hours of returning to the U.K. he must be fitted with an electronic security tag, Bean said.

Nadir’s lawyer, William Clegg, told Bean his client had agreed with the U.K. Serious Fraud Office, which is prosecuting the case, to return to London, surrender his passport, visit the police every week and attend his criminal trial.

“Mr. Nadir is today anxious to return to this country and face his trial,” Clegg said before the ruling. Nadir has already taken an option to rent an apartment in London, his lawyer said.

Nadir fled the U.K. after he was charged with theft and false accounting. Polly Peck was a food-packaging firm that collapsed in 1990 after it failed to pay creditors. Administrators found more than 700 million pounds were unrecoverable from the subsidiaries.

Victor Temple, a lawyer for the SFO, said during the hearing that the agency would not oppose bail if Nadir appeared in court to request it.

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Trials/Appeals

Singapore Death Penalty Book Author Won’t Apologize

Alan Shadrake, the British author charged for contempt of court for challenging the integrity and independence of Singapore’s judiciary, said he wouldn’t apologize for his book on the city’s death penalty.

“I want to have my day in court,” he said after his trial was adjourned July 30 to allow his lawyer more time to prepare a defense of fair criticism and fair comment. “I didn’t spend three years writing the book only to run away,” Shadrake said.

The 75-year-old writer is also being investigated for criminal defamation by Singapore authorities. His book “Once a Jolly Hangman: Singapore’s Justice in the Dock,” suggests that the government “succumbs to political and economic pressures” in meting out the death penalty, the Attorney-General’s Chambers said in court papers.

Shadrake can “tender an unreserved apology in unqualified terms,” David Chong, chief counsel of the Attorney-General’s civil division, said in court July 30. “Justification is no defense” for contempt of court, Chong said.

Refusing to apologize would count as an“aggravating factor,” the Attorney-General’s office said in a statement July 30. “An apology tendered to the court, if unqualified and sincere, may mitigate the punishment,” according to the statement.

The book “insinuates that the Singapore judiciary is a tool of the People’s Action Party to muzzle political dissent” through the award of “heavy damages in defamation actions brought without legal basis,” the Attorney General’s office said in the court papers. The book contains comments that imply the Singapore judiciary was “guilty of impropriety” by being “biased particularly against the weak, poor or less educated,” according to the papers.

Shadrake’s lawyer M. Ravi asked Justice Quentin Loh to order Chong “not to put unnecessary fear in the media” after the prosecutor told journalists not to cite contentious statements from the book or risk being in contempt as well.

The case is Attorney-General v. Alan Shadrake OS720/2010 in the Singapore High Court.

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On the Docket

Roche Holding to Face Hollywood Stars in Accutane Trial

Roche Holding AG faces a lineup of Hollywood stars in the New Jersey trial of an actor’s lawsuit alleging he suffered the loss of his colon after taking the company’s Accutane acne drug.

James Marshall, who played U.S. Marine Louden Downey in the 1992 hit movie “A Few Good Men,” claims his acting career was derailed by his use of Accutane, which Roche no longer sells. Marshall will ask a jury to award at least $11 million in damages at a trial starting next week that will feature testimony from stars such as Martin Sheen and Brian Dennehy, according to court filings.

Sheen, Dennehy and Director Rob Reiner will testify that Marshall, 43, was headed for stardom before bowel ailments allegedly caused by Accutane forced doctors to remove his colon, Michael Hook, the actor’s lawyer, said in an interview. Basel, Switzerland-based Roche faces thousands of lawsuits claiming it failed to warn patients that the drug could cause inflammatory bowel disease in some users, Hook said.

“The jury will hear that James Marshall had the potential to be the next James Dean-like star,” Hook said. “That dream is gone because he took something to treat acne.”

Roche officials said July 30 that Accutane’s safety label contained a warning about the risks of inflammatory bowel disease for more than 20 years.

Marshall’s case has been combined with claims by two other former Accutane users for trial before Judge Carol Higbee in state court in Atlantic City, New Jersey.

The case is Greenblatt v. Hoffman-La Roche Inc., ATL-l- 1246-06, New Jersey Superior Court, Atlantic County (Atlantic City).

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Court Filings

Facebook Lawsuit Most Popular Docket on Bloomberg

A lawsuit by a New York man who claims he owns 84 percent of Facebook Inc., the world’s biggest social networking service, was the most-read litigation docket on the Bloomberg Law system last week.

Paul Ceglia, of Wellsville, New York, sued Facebook and its founder and Chief Executive Officer Mark Elliot Zuckerberg in state court in New York’s Allegany County on June 30. In the suit, Ceglia claims that a contract he and Zuckerberg signed in April 2003 entitles Ceglia to ownership of most of the privately held company.

Chief Executive Officer Mark Zuckerberg said on July 21 that he is “quite sure” he never signed such a contract.

Zuckerberg, speaking in a TV interview with ABC World

The case is Ceglia v. Zuckerberg, 10-CV-00569, U.S. District Court, Western District of New York (Buffalo).

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To contact the reporter on this story: Elizabeth Amon in Brooklyn, New York, at eamon2@bloomberg.net.

To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net.

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