Citigroup, Vodafone, Bwin Interactive, GE, Pfizer, Boeing in Court News

Former Citigroup Inc. stockbroker Ralph Casbarro was fined $500 and received no prison sentence or probation for his involvement in a scheme to let day traders eavesdrop on internal conversations over brokers’ “squawk boxes.”

Casbarro, 48, was fined yesterday by U.S. District Judge I. Leo Glasser in Brooklyn, New York. Casbarro pleaded guilty in 2005 to one count of conspiracy to commit securities fraud. He was fired by Citigroup before being indicted.

“I know what I did was wrong without a shadow of a doubt and I’m sorry for it,” Casbarro told the judge.

Kenneth Mahaffy Jr., a former broker at Merrill Lynch & Co. and Citigroup, and five co-defendants were found guilty in the case in April 2009. Mahaffy was sentenced to two years in prison in December. In July, the men lost a bid to have their convictions tossed, after claiming that prosecutors hid evidence of their innocence.

Glasser criticized the government for putting off Casbarro’s sentencing for so long.

“This has been five years since Mr. Casbarro pleaded guilty,” the judge said. “Is that really part of the sentence that has already been imposed?”

Assistant U.S. Attorney Jonathan Green said Casbarro agreed to the delays as part of his cooperation accord with prosecutors. Casbarro gave important assistance to the government, prosecutors said, though they didn’t call him to testify against his co-defendants.

The case is U.S. v. Mahaffy, 05-cr-00613, U.S. District Court, Eastern District of New York (Brooklyn).

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Indian Court Dismisses Vodafone’s Tax Claim Challenge

The Bombay High Court dismissed Vodafone Group Plc’s challenge of a tax claim exceeding $2 billion after the court ruled Indian authorities have the right to pursue the case.

Indian tax authorities have the jurisdiction to seek taxes from Vodafone International Holdings BV on its 2007 purchase of Hutchison Whampoa Ltd.’s wireless operations in the country, Judges D.Y. Chandrachud and J.P. Devadhar said. India’s tax department had argued the world’s biggest mobile-phone company failed to withhold taxes on its acquisition of Hutchison’s stake in Hutchison Essar Ltd., or HEL.

The ruling is a setback for Vodafone in a case seen by investors as a test of India’s tolerance toward the use of tax havens for acquisitions, according to Akil Hirani, a managing partner at Mumbai-based law firm Majmudar & Co. Britain’s Prime Minister at the time Gordon Brown wrote in December to his Indian counterpart Manmohan Singh that taxing cross-border deals such as Vodafone’s could create uncertainty for foreign investors and affect the country’s investment climate.

The court directed tax authorities to not issue a final order on its claim for a period of eight weeks and allowed Vodafone 12 weeks to appeal the ruling.

Vodafone is reviewing the judgment and is likely to appeal the ruling, spokesman Ben Padovan said by telephone.

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German Gambling Monopoly Is Unjustified, EU’s Top Court Rules

Germany’s state monopoly on sports-betting and lotteries risks being struck down after the European Union’s highest court said the country’s current rules are incompatible with EU law.

Germany can’t block betting companies such as Bwin Interactive Entertainment AG from providing betting services while allowing public monopolies to “carry out intensive advertising campaigns” to maximize lottery profits, the European Court of Justice in Luxembourg said yesterday. Shares in Bwin rose the most in more than a month after yesterday’s rulings.

“We are delighted with today’s rulings,” Katharina Riedl, a spokeswoman for Vienna-based Bwin, said in a telephone interview, calling the decisions “trend setting.” “This is a historic opportunity to change German gambling regulation,” following the examples of the U.K., France and Italy, she said.

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New Suits

Former GE Unit Executive Sues Company for $10 Million

General Electric Capital Services was sued by a former executive who claims he was forced out for questioning the company’s treatment of an asset.

Edward Gormbley, who worked for GE Capital from 2000 until he quit in September 2009, filed his suit today in state court in Stamford, Connecticut. The complaint also names parent General Electric Co. and its chief executive officer, Jeffrey Immelt.

Gormbley said he was punished for challenging the valuation of silicon-maker Momentive Performance Materials, an investment asset. GE Capital overstated Momentive’s value in December 2008 to improve its own balance sheet, he said. Valuing the asset correctly would have reduced “GE Capital’s earnings 100 percent,” in the fourth quarter that year, according to the complaint.

“Mr. Gormbley refused to play GE’s game and just ‘get along,” according to the filing. “GE and GE Capital’s response was direct, unmistakable and as subtle as a hangman’s noose.”

Gormbley said he was shorn of responsibilities, was downgraded in employee evaluations and had his annual bonus slashed, effectively forcing him out of the company. He resigned in September 2009 and is seeking $10 million in damages.

“The allegations in Mr. Gormbley’s complaint are meritless,” Russell Wilkerson, a spokesman for Fairfield, Connecticut-based GE, said in an e-mailed statement. “The company will vigorously defend itself against these baseless assertions.”

The case is Gormbley v. General Electric Co., FST-CV10- 6006588-S, Connecticut Superior Court (Stamford).

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Roger Clemens Argues McNamee’s Suit Should Be Tossed

A lawyer for Roger Clemens urged a judge to throw out a lawsuit in which the former Major League Baseball pitcher is accused of defamation by his onetime trainer, Brian McNamee.

McNamee’s complaint fails to state claims he can sue over, and Clemens didn’t defame him, Rusty Hardin argued at a hearing yesterday before U.S. District Judge Sterling Johnson Jr. in Brooklyn, New York.

“Mr. McNamee is suing Mr. Clemens because Mr. Clemens has consistently denied that Mr. McNamee committed a crime” by injecting him with illegal drugs, the lawyer said.

Clemens, 48, defamed McNamee by alleging that McNamee lied when he told investigators the former New York Yankees pitcher used steroids, the trainer said in the suit, filed last year.

The ballplayer was indicted last month by a federal grand jury in Washington on charges that he lied to the U.S. Congress in denying he used steroids and human growth hormone to boost his performance. He pleaded not guilty on Aug. 30 and a trial was set for April.

Clemens wasn’t in the courtroom for yesterday’s hearing.

Johnson said he’d rule on the dismissal request at a later date. Hardin, of Houston, told the judge that if his motion is denied, he’ll ask to freeze the suit until the criminal case is resolved. Richard D. Emery, a lawyer for McNamee, said he probably wouldn’t oppose that request.

The defamation case is McNamee v. Clemens, 09-1647, U.S. District Court, Eastern District of New York (Brooklyn). The criminal case is U.S. v. Clemens, 10-cr-00223, U.S. District Court, District of Columbia (Washington).

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Pfizer Unit Denied Permission to Exit Bankruptcy

Pfizer Inc.’s Quigley unit, a former asbestos maker, was denied permission to exit bankruptcy by a judge who found the world’s largest drug company manipulated the bankruptcy process to benefit itself.

U.S. Bankruptcy Judge Stuart M. Bernstein in New York yesterday rejected Quigley’s fourth reorganization plan and said parties should discuss dismissal of the case. He said the plan was filed in “bad faith” by Pfizer and cited testimony that asbestos claims directed at Quigley could total $4.45 billion over the next 42 years.

“In a nutshell, Pfizer bought enough votes to assure that any plan would be accepted,” Bernstein wrote.

In a 90-page ruling that covers Pfizer’s failed attempts to deal with its growing asbestos liabilities since June 1985, Bernstein noted that a lawyer who represented both Quigley and Pfizer settled claims against Quigley and got releases for Pfizer at no additional cost.

Settling claimants were then given a financial incentive to vote in favor of Quigley’s bankruptcy plan through a series of legal moves before and after the bankruptcy filing, the judge wrote.

“We are disappointed in the court’s ruling as we continue to believe that Pfizer has no liability for Quigley’s conduct,” a Pfizer spokesman, Chris Loder, said in a telephone interview.

The case is In re Quigley Co., 04-15739, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

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Boeing Unit Wins Dismissal of Torture Flights Case

A lawsuit alleging a Boeing Co. unit disguised the delivery of suspected terrorists to secret prisons where they were tortured was dismissed by a U.S. appeals court.

An 11-judge panel of a San Francisco-based appeals court overruled a finding by a three-judge panel that a lower-court judge was wrong to dismiss the case based on government claims that the litigation might reveal state secrets.

Douglas Letter, a Justice Department lawyer, argued in December to the 11-judge panel that classified information confirming or denying the Boeing unit’s relationship with the Central Intelligence Agency may be revealed if the case proceeds.

Ben Wizner, a lawyer at the American Civil Liberties Union, which filed the case, claimed the government inappropriately relied on a classified statement by General Michael Hayden, the former Central Intelligence Agency director, to get the case dismissed prematurely.

The case is Mohamed v. Jeppesen, 08-15693, U.S. Circuit Court of Appeals for the Ninth Circuit (San Francisco).

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

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