A former paralegal told Florida investigators that workers at a law firm that processed foreclosures signed paperwork without reading it, misdated records and skirted rules protecting homeowners in the military.
Tammie Lou Kapusta, who said she spent more than a year at the Law Offices of David J. Stern PA, made the accusations in a Sept. 22 interview with lawyers for Florida Attorney General Bill McCollum. In August, McCollum announced a probe of three law firms to see whether improper documents were created and filed with state courts to hasten the foreclosure process.
Jeffery Tew, a lawyer for the Stern firm, denied Kapusta’s claims.
Kapusta, who spoke under oath, said the Stern firm ballooned from 225 employees when she started in March 2008, to more than 1,100 when she was fired in July 2009. She described a disorganized workplace where documents got lost and mortgages were misfiled. The training process was “stupid and ridiculous,” she said.
“There were a lot of young kids working up there who really didn’t pay attention to what they were doing,” she said, according to a transcript. “We had a lot of people that were hired in the firm that were just hired as warm bodies.”
Kapusta’s statements were reported Oct. 7 in the Tampa Tribune. Tew, of Tew Cardenas LLP in Miami, said he wasn’t aware of the interview until it was released to the public.
“We didn’t get a chance to cross-examine her,” he said. “It was a one-sided statement by a disgruntled employee. There was a lot of animus and personal references, and she seeks to besmirch people’s reputation. The law firm denies there’s any accuracy in the charges.”
There is a court hearing set for Oct. 12 to determine whether McCollum’s office has jurisdiction over the firm’s conduct, Tew said.
“This is a civil investigation, and the attorney general hasn’t made any conclusions,” Tew said.
David J. Stern and officials of his Plantation, Florida- based mortgage-processing company, DJSP Enterprises Inc., didn’t respond to a request for comment. DJSP shares the same address and phone number as the law firm.
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Louisiana, Texas and Florida Lawyers to Lead BP Spill Cases
A federal judge appointed four lawyers from three states to lead a 15-member steering committee for thousands of people and businesses suing over the BP Plc oil spill in the Gulf of Mexico.
The four-member executive committee appointed by U.S. District Judge Carl Barbier in New Orleans is made up of attorneys from Louisiana, Texas and Florida. Brian H. Barr of Pensacola, Florida, Scott Summy of Dallas, James Roy of Layafette, Louisiana, and Stephen Herman of New Orleans will “coordinate the responsibilities” of the larger plaintiffs’ steering committee representing hundreds of lawyers involved in cases against BP and other companies including Halliburton Co. and Transocean Ltd.
Barbier is overseeing more than 400 consolidated lawsuits brought by fishing, tourism and real-estate interests claiming harm from the largest marine oil spill in U.S. history. He announced the selections Oct. 8 after reviewing applications from more than 100 attorneys.
BP has accepted responsibility for damage caused by about 4.1 million barrels of crude oil released off the Louisiana coast from a well ruptured by the explosion and sinking of Transocean’s Deepwater Horizon drilling rig in April. Most of the lawsuits are proposed class actions against BP, Transocean and other companies involved in drilling the well.
They include Halliburton Energy Services Ltd, which provided well-cementing services, and Cameron International Corp., which made the blow-out prevention equipment. BP’s minority partners in the well, Anadarko Petroleum Corp. and Mitsui Oil Exploration Co., are also defendants in many of the lawsuits.
The case is In re Oil Spill by the Oil Rig “Deepwater Horizon” in the Gulf of Mexico, on April 20, 2010. MDL-2179, U.S. District Courts, Eastern District of Louisiana (New Orleans).
Lions Gate Conspired to Thwart Hostile Bid, Icahn Says
Carl Icahn, the billionaire investor attempting to take control of Lions Gate Entertainment Corp., told a Canadian court that the independent film studio conspired with several large shareholders to thwart his bid.
Lions Gate Vice Chairman Michael Burns worked with investors Mark Rachesky and Kornitzer Capital Management Inc. to dilute Icahn’s stake in a July transaction, his lawyers argued in filings to the British Columbia Supreme Court ahead of an Oct. 12 hearing, citing e-mails from Burns. His argument ignores much of the evidence, Lions Gate said in its filings.
“The purpose of the scheme devised by Burns and Rachesky, if it came to fruition as it did, was to significantly dilute the shareholding interest of Mr. Icahn,” according to the filing. The aim was “to eliminate any realistic ability to achieve his stated goal to win a forthcoming proxy contest to replace the Lions Gate board.”
Icahn is trying to reverse a debt-for-equity swap that hinders his hostile bid for the studio by putting more shares in the hands of opponents. Icahn, 74, contends in documents filed with the court that Lions Gate executives and investors executed the deal at a price below what Icahn was offering at the time.
Icahn’s argument ignores the bulk of the evidence and the transaction’s beneficial effects for the company, Lions Gate said in its own filings. Moody’s cited the deal in raising its outlook on the Vancouver-based company’s debt to positive.
Kornitzer, who didn’t own the debt personally, said in an interview that selling it was in the best interest of his clients.
“It had nothing to do with Mr. Icahn,” Kornitzer said. “I made my clients money and I got out.”
Rachesky didn’t return a phone call seeking comment.
Lions Gate spokesman Peter Wilkes said the studio had no comment beyond the documents.
The court has scheduled three days of hearings starting tomorrow.
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FDIC May Seek $1 Billion From Failed-Bank Executives
The Federal Deposit Insurance Corp. has authorized lawsuits against more than 50 officers and directors of failed banks as the agency aims to recoup more than $1 billion in losses stemming from the credit crisis.
The lawsuits were authorized during closed sessions of the FDIC board and haven’t been made public. The agency, which has shuttered 294 lenders since the start of 2008, has held off court action while conducting settlement talks with executives whose actions may have led to bank collapses, Richard Osterman, the FDIC’s acting general counsel, said in an interview.
“We’re ready to go,” Osterman said. “We could walk into court tomorrow and file the lawsuits.”
The FDIC, which reviews losses for every bank failure, has brought only one case against officers or directors tied to recent collapses -- a suit filed in July seeking $300 million in damages from four executives of IndyMac Bancorp Inc.
When a bank fails, the agency’s investigators take about 18 months to complete their autopsies, meaning most of the probes stemming from the financial crisis are ongoing, Osterman said.
If FDIC investigators determine litigation is possible early in their review process, they send letters to officers and directors alerting them that a suit may be coming to recoup a portion of the losses to the agency’s insurance fund.
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Swatch’s Chief Will Take UBS to Court Over Investments
Swatch Group AG Chief Executive Officer Nick Hayek said the Swiss watchmaker plans to seek about 30 million Swiss francs ($31 million) in damages from UBS AG in a court case over investment losses.
“We are not at war with UBS, but we are not in agreement with what the management and the people did with us,” Hayek said Oct. 8 in a phone interview. Le Matin, a Swiss newspaper, put a photo of Hayek on its front page Oct. 8, saying he was declaring war against the Swiss investment bank.
Swatch, the Biel, Switzerland-based owner of the Omega and Breguet brands, filed a lawsuit against UBS last month regarding “absolute return” investments made in 2009 that weren’t supposed to lose value.
“Since we know that the new management of UBS wants to change the culture of the company, it would be helpful for them to give a signal outside,” Hayek said.
UBS spokeswoman Tatiana Togni said the bank doesn’t comment on ongoing litigation.
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Deripaska Can’t Call Russian Crime Expert in U.K. Suit
Oleg Deripaska, formerly Russia’s wealthiest man, lost a court ruling over presenting expert evidence about Russian organized crime in a lawsuit brought against him by a former business partner.
Michael Cherney is suing Deripaska for at least $3 billion in the High Court in London claiming he failed to honor an agreement concerning stakes in two aluminum companies. Deripaska is co-owner of Moscow-based United Co. Rusal, the world’s biggest aluminum company.
Cherney was a “representative of Russian organized crime,” who infiltrated his business as part of a “protection racket,” Deripaska’s lawyer Ali Malek said at a hearing Oct. 8. Malek said a judge should hear evidence from an organized crime expert at a trial over the dispute, scheduled to take place in 2012. The expert would testify on the “endemic” criminality that infected Russian business in the 1990s, he said.
Justice Nigel Teare ruled that expert evidence on the issue isn’t necessary, as information about the nature of Russian organized crime doesn’t help to determine whether Cherney was “part and parcel” of it.
Cherney’s lawyer, David Foxton, said in an interview after the hearing that his client denies the allegations and has “nothing to do” with organized crime.
“Mr. Cherney claims to have been a business partner of Mr. Deripaska and alleges he is entitled to a stake in UC Rusal, for which he is seeking compensation,” Deripaska’s spokesman David Osborn said in an e-mailed statement. Cherney’s claim is “baseless, riddled with holes and contradictory.”
Deripaska will continue to pursue his application to allow evidence about organized crime to be introduced, the spokesman said.
The case is 2006-1218 Michael Cherney v. Oleg Deripaska.
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Man Pleads Innocent to FSA Insider-Trading Charges
Helmy Omar Sa’aid, a man accused of insider trading by U.K. market regulator the Financial Services Authority, pleaded innocent at a court hearing.
Sa’aid denied 13 charges of insider dealing Oct. 8 at Southwark Crown Court in London. A trial has been scheduled to begin Jan. 10.
He is accused of improper trading over a 10-year period in U.K.-listed stocks such as RCO Holdings Plc, Staffware Plc, South Staffordshire Plc, and Southern Vectis Plc, according to the indictment.
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Airgas Loses Bid to Invalidate Meeting-Date Bylaw
Airgas Inc., trying to fend off a $5.5 billion hostile bid from Air Products & Chemicals Inc., lost a bid to invalidate a new bylaw that shortens the date for the company’s annual meeting, paving the way for a takeover.
Delaware Chancery Court Judge William B. Chandler III ruled Oct. 8 that the bylaw, approved by Airgas shareholders last month, doesn’t improperly shorten directors’ terms on the industrial-gas company’s staggered board. Air Products may use the ruling to take control of Airgas at the January meeting.
While the ruling probably will be appealed, the presumption is that the decision stands, Mark Gulley, a New York-based analyst at Soleil Securities, said Oct. 9 in a telephone interview. Court testimony indicates Air Products would pay as much as $70 a share and Airgas would start negotiations at that price, he said.
“It would be in the interest of both parties to negotiate a friendly transaction,” Gulley said. He recommends buying shares of Air Products and rates Airgas “hold.”
Lawyers for Radnor, Pennsylvania-based Airgas had argued shareholders erred when they voted Sept. 15 in favor of the bylaw by Air Products, which moved up the date of Airgas’s annual meeting. It was backed by Air Products.
David Reno, an Air Products spokesman, and Airgas spokesman Andrew Siegel both declined to comment on Chandler’s ruling.
The case is Airgas Inc. v. Air Products & Chemicals Inc., 5817, Delaware Chancery Court (Wilmington).
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Ex-Park Avenue Bank Chief Antonucci Pleads Guilty
Charles Antonucci, the former president of Park Avenue Bank in Manhattan, pleaded guilty to charges he lied to regulators and embezzled bank funds.
Antonucci, 59, told U.S. District Judge Naomi Buchwald Oct. 8 that he lied to get more than $11 million in federal bailout funds for the bank, took bribes and embezzled money and participated in a scheme to defraud Oklahoma insurance regulators in the $37.5 million sale of an insurer that was later forced into receivership.
Prosecutors said Antonucci is the first person convicted of trying to defraud the U.S. Troubled Asset Relief Program, which was passed by Congress to prop up threatened banks. Antonucci pleaded guilty to criminal counts including fraud, bribery, embezzlement and conspiracy.
Antonucci, who was arrested in March, is free on $2 million bail. He faces as much as 20 years in prison on the most serious counts when he’s sentenced in April.
The case is U.S. v. Antonucci, 10-cr-507, U.S. District Court, Southern District of New York (Manhattan).
O2, Vodafone Lose U.K. Ruling to Free Up 3G Spectrum
A European Union directive to start using the 900 and 1800 megahertz bands for 3G technology doesn’t oblige the U.K. to change O2’s and Vodafone’s licenses before studying how the move would affect competition, according to a ruling Oct. 7 by the Competition Appeal Tribunal in London.
“We are naturally disappointed,” Telefonica spokesman David Nicholas said in an e-mail. “We believe EU legislation gives us the immediate right to use 2G spectrum for 3G services. Speedy liberalization is in the best interest of U.K. consumers.”
The breadth and speed of a service can help operators gain market share as users shift their phones onto more reliable networks. Vodafone slipped to the U.K.’s No. 3 provider after France Telecom SA’s Orange and Deutsche Telekom AG’s T-Mobile units merged to form a company called Everything Everywhere.
O2 appealed after Britain’s telecommunications regulator, Ofcom, denied its request to let it use 3G technology on the 900 megahertz band in anticipation of the EU directive. Everything Everywhere and Hutchison Whampoa Ltd.’s U.K. unit, which use the 1800 megahertz airwave, backed Ofcom in the case.
The tribunal “found that Ofcom was right in its view of the correct interpretation of the European law on the liberalization of the 900 and 1800 MHz spectrum, contrary to the position taken by O2,” Ofcom spokesman Rhys Hurd said in a statement.
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Airgas Lawsuit Most Popular Docket on Bloomberg
Delaware Chancery Court Judge William B. Chandler III is hearing the trial, which began Oct. 4 in Georgetown.
Chandler is presiding over the trial of Air Products’ lawsuit over Airgas’s refusal to accept a takeover offer of $65.50 a share. Air Products, based in Allentown, Pennsylvania, is the second-biggest U.S. industrial-gases producer behind Praxair Inc.
The cases are Air Products & Chemicals Inc. v. Airgas Inc., 5249, Delaware Chancery Court (Wilmington); and Airgas Inc. v. Air Products & Chemicals Inc., 5817, Delaware Chancery Court (Wilmington).
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To contact the editor responsible for this story: David E. Rovella at email@example.com.