Goldman, Madoff, DSK, EMG, Nakheel, Conrad Black in Court News
Rajat Gupta, the former Goldman Sachs Group Inc. (GS) director, can proceed with a lawsuit claiming the U.S. Securities and Exchange Commission violated his rights when it filed an administrative action accusing him of passing illegal stock tips.
The SEC initiated the administrative proceeding in Washington on March 1, claiming Gupta passed information to Galleon Group LLC co-founder Raj Rajaratnam about Goldman Sachs and Procter & Gamble Co. (PG), where Gupta was also on the board.
U.S. District Judge Jed Rakoff ruled yesterday that Gupta, who hasn’t been charged criminally, may argue that the agency intentionally singled him out for unfair treatment in retaliation for claiming his innocence. Rakoff said that all of the other suits filed in the Galleon case, against 21 people and seven companies, are in federal court.
“We have the unusual case where there is already a well- developed public record of Gupta being treated substantially disparately from 28 essentially identical defendants, with not even a hint from the SEC, even in their instant papers, as to why this should be so,” Rakoff wrote in an opinion yesterday.
Rajaratnam was found guilty of 14 criminal counts of conspiracy and securities fraud on May 11. He is awaiting sentencing.
The case is Gupta v. SEC, 11-CV-1900, U.S. District Court, Southern District of New York (Manhattan).
SIPC Opposes Attempt by Mets Owners to Dismiss Madoff Suit
The Securities Investor Protection Corp. opposed a request by the owners of the New York Mets baseball team to dismiss a $1 billion suit by the trustee liquidating Bernard Madoff’s firm.
The trustee, Irving Picard, is suing Fred Wilpon and Saul Katz and their firm, Sterling Equities, seeking the return of $700 million in principal and $300 million in profit from Madoff’s Ponzi scheme. Picard claims the team’s owners had a duty to investigate “red flags” warning of possible fraud.
SIPC yesterday asked U.S. District Judge Jed Rakoff in Manhattan to let the suit go forward, arguing that Picard has the legal authority to pursue the claim.
Rakoff agreed this month to review the case, which Picard filed last year in bankruptcy court. He said judges have struggled with the duty of inquiry into fraud for more than half a century and the duty may not have applied to the Mets owners.
The case is Picard v. Katz, 11-cv-03605, U.S. District Court, Southern District of New York (Manhattan).
Strauss-Kahn’s French Accuser Makes Statement to Paris Police
Paris police took a statement yesterday from French writer Tristane Banon, who has accused Dominique Strauss-Kahn of attempting to rape her.
Banon met with the police yesterday, said Agnes Labregere- Delorme, a spokeswoman for the prosecution, which began a preliminary investigation on July 8 into her claim that the former International Monetary Fund chief assaulted her in 2003.
Strauss-Kahn, 62, stepped down from the IMF after being charged with sexually assaulting a maid at a New York hotel in May. He was released from home confinement this month and had his bail returned after U.S. prosecutors uncovered evidence the 32-year-old woman who accused him had lied about key aspects of her life. Strauss-Kahn denies the claims in both cases.
Banon’s lawyer David Koubbi declined to comment on her police statement.
Strauss-Kahn has called Banon’s claims “imaginary” and asked that a slander complaint against her be prepared, according to his lawyers.
At the time of the alleged incident, Banon was an intern with magazine Paris Match and had just signed a contract for a book on politicians’ regrets. She met Strauss-Kahn for a follow- up interview at his friend’s apartment in Paris, she said in an interview published in the July 6 issue of L’Express.
Strauss-Kahn turned off her tape-recorder and began assaulting her, touching her breasts and putting his hands in her mouth and underwear, she said, according to the magazine. She kicked him and said “you’re not going to rape me,” then ran out, got in her car and called her mother, the magazine quoted her as saying.
EMG Shareholders Seek $8 Billion in Pipeline Damages
Shareholders of East Mediterranean Gas Co. will take legal action against Egypt, seeking more than $8 billion in damages for interruptions in natural gas supply through a cross-border pipeline, a company official said.
The shareholders from Israel, the U.S. and Thailand agreed on the action in the wake of three explosions in the past five months that damaged the pipeline, which carries gas from Egypt to Israel, Nimrod Novik, a member of the EMG board, said yesterday. The company will pursue the claims through the International Court of Arbitration, a dispute resolution service run by the Paris-based International Chamber of Commerce.
“The lawyers have advised the government of Egypt as well as the United States and other relevant governments that this process is under way,” Novik said in a telephone interview from his office in Herzliya, north of Tel Aviv .
Egypt restored gas exports to Israel last week at 20 percent of contracted amounts after a July 4 explosion disrupted the network. Among the shareholders in EMG are Egypt National Gas Co., Israeli businessman Yossi Maiman, U.S. billionaire Sam Zell and PTT Pcl (PTT), Thailand’s biggest energy company.
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New Suits
Pfizer Sues Apotex Over Generic Version of Pain Drug Lyrica
Pfizer Inc., the world’s largest drugmaker, accused Apotex Inc. in a lawsuit of infringing two U.S. patents for the nerve- pain drug Lyrica.
Apotex, based in Toronto, plans to market a generic version of Lyrica before the newest patent expires in 2018, Pfizer said in a complaint filed July 8 in federal court in Wilmington, Delaware. Pfizer claimed it “will be substantially and irreparably harmed” by the alleged infringement.
Lyrica generated more than $800 million in sales in the first quarter for New York-based Pfizer, which is selling units and trimming jobs in preparation for pending loss of patent protection for its best-selling drug Lipitor, used to control cholesterol.
Elie Betito, a spokesman for closely held Apotex, didn’t immediately return voice and e-mail messages seeking comment on the filing.
The case is Pfizer Inc. (PFE) v. Apotex Inc., U.S. District Court, District of Delaware (Wilmington).
To see the patents, click: 6,197,819 and 5,563,175.
Nakheel’s Ex-CEO Suing Developer for $3.7 Million in Dues
Nakheel PJSC’s former chief executive officer, Chris O’Donnell, is suing the developer of palm-shaped islands off Dubai’s coast for $3.7 million in unpaid dues, interest and damages.
The CEO, who quit last month after five years at the developer’s helm, filed the lawsuit in the Dubai World Special tribunal on June 22, according to a court filing dated June 22 and made available on the court’s website yesterday.
O’Donnell is seeking $3 million in long-term incentives as well as $290,850 in losses tied to currency fluctuations. He is also asking Nakheel to pay $180,000 in interest, calculated at 12 percent per year, the documents show.
Nakheel, which is restructuring $13 billion of debt, was forced to cut hundreds of employees and cancel or delay property projects after the global credit crisis caused demand in Dubai to evaporate. Home prices in Dubai dropped more than 60 percent from their peak in mid-2008.
The former CEO was paid 3.8 million dirhams ($1 million) in basic annual salary and was given a business class ticket to his home country of Australia every year, the documents show.
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Verdicts/Settlement
Conrad Black Must Go Back to Prison by Sept. 6, Court Says
Conrad M. Black, the former Hollinger International Inc. chairman and chief executive officer sentenced to serve an additional year in prison, must report by Sept. 6, a federal court in Chicago said.
Black’s original 6 1/2-year term was reduced to 3 1/2 years last month by U.S. District Judge Amy J. St. Eve after the former newspaper publisher successfully appealed two of three mail fraud counts of which he was convicted in 2007.
St. Eve, in an order dated July 5 and posted on the court’s electronic docket yesterday, recommended that Black, 66, be returned to the low-security prison at Coleman, Florida, where he spent 29 months before being granted bail last year.
Hollinger International was once the world’s third-biggest publisher of English-language newspapers. Its publications included the U.K.’s Daily Telegraph, Canada’s National Post and the Jerusalem Post.
Black was originally found guilty for his role in the theft of $6.1 million from the Chicago-based company now known as Sun- Times Media Group Inc. Convictions overturned on appeal reduced the total value of the theft to $600,000.
Each court reviewing the case upheld the jury’s finding that Black obstructed justice when he removed boxes from his Toronto office that prosecutors said contained documents sought by the U.S. government.
The U.S. Bureau of Prisons has final say on where Black will serve the remainder of his punishment.
The case is U.S. v. Black, 05-cr-00727, U.S. District Court, Northern District of Illinois (Chicago).
Illinois ‘Jobs Now!’ Stimulus Plan Upheld by Top State Court
Illinois Jobs Now!, the $31 billion economic stimulus package of Governor Pat Quinn, was upheld by the state Supreme Court in a ruling on the legality of the legislation that created the program.
The court’s decision yesterday reversed a Jan. 26 ruling by an intermediate-level appellate panel that held the legislation creating the plan violated a state constitutional requirement that bills be limited to a single subject.
“What this means is our jobs recovery program can go forward, full speed ahead,” Quinn said yesterday in a televised press conference.
The lower-court’s ruling derailed projects approved by the state legislature in 2009 and cast doubt on the future of economic-development plans that were part of the stimulus package.
Among those plans were investments in state roads, railways, schools and broadband Internet access, said Quinn, who said he wanted to be “the builder governor.”
The now-overturned decision had also blocked a revenue stream generated by higher liquor taxes, privatization of the state lottery and levies on video poker operations.
Objecting to the tax increases, W. Rockwell Wirtz, the owner of the Chicago Blackhawks hockey team, and his liquor distributorship, Wirtz Beverage Illinois, sued to block the program.
The Wirtz group, in an e-mailed statement issued by outside spokesman by Guy Chipparoni, said while it was disappointed by the outcome, it respected the court’s opinion.
“Our issue was not with the lawmakers, but the law,” Chipparoni said.
The case is Wirtz v. Quinn, 111903, Illinois Supreme Court (Springfield).
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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: Michael Hytha at mhytha@bloomberg.net.
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