Two Wisconsin state Supreme Court justices who allegedly had a violent encounter over collective- bargaining legislation won’t face charges, said a state district attorney appointed as special prosecutor to review the incident.
“I have determined that no criminal charges will be filed” against David Prosser and Ann Walsh Bradley for the incident on June 13, Sauk County District Attorney Patricia Barrett said yesterday in a statement.
The alleged violence between the judges took place while the top state court was grappling with what became a decision the next day reinstating legislation limiting public employees’ ability to engage in collective bargaining.
Dane County Chief Judge C. William Foust earlier this month selected Barrett from neighboring Sauk County to review the incident at the request of Dane District Attorney Ismael Ozanne, who said he wanted to avoid allegations any action he took was politically motivated.
The Supreme Court is in the state capital, Madison, which is also the Dane county seat. Ozanne’s office in March filed the lawsuit challenging Governor Scott Walker’s collective- bargaining legislation, which led to the June Supreme Court ruling.
According to the Milwaukee Journal-Sentinel, Bradley accused Prosser of putting her in a chokehold, a claim that Prosser denied.
The Wisconsin Supreme Court’s public information officer, Tom Sheehan, didn’t immediately reply to a phone call and e-mail seeking comment on Barrett’s decision. Prosser didn’t immediately respond to a phone message seeking comment.
Fuld, Lehman Executives to Settle Lawsuit for $90 Million
Lehman Brothers Holdings Inc. (LEHMQ) executives including former Chairman Richard Fuld will settle an investor lawsuit using a $90 million payment from the defunct firm’s insurers, according to a court filing.
The investors blamed Lehman officers and directors for losses on Lehman stock and options from June 12, 2007, to Sept. 15, 2008, according to the filing in U.S. Bankruptcy Court in Manhattan. Fuld, 65, was chief executive officer of New York- based Lehman, once the fourth-largest U.S. investment bank, before its 2008 bankruptcy.
A bankruptcy examiner said Lehman foundered because of too much debt, which it tried to hide from investors, and risky real estate investments.
Patricia Hynes, a lawyer for Fuld, didn’t immediately respond to an e-mail seeking comment.
Lehman said in November that Fuld would get $10 million from insurers as part of an officers-and-directors program paying for the costs of lawsuits. It also said insurers would be asked to pay as much as $90 million in costs for unidentified defendants in civil, criminal and regulatory proceedings.
Lehman has asked the judge to modify bankruptcy law on nine previous occasions to tap its directors-and-officers insurance, according to yesterday’s filing.
The bankruptcy case is In re Lehman Brothers Holdings Inc., 08-13555, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
Drimal Should Get 70- to 80-Month Prison Term, U.S. Says
Craig Drimal, the former Galleon Group LLC trader who pleaded guilty to insider-trading charges, should get a prison term of 70 to 80 months, which is within federal sentencing guidelines, the U.S. said in a memo.
Drimal pleaded guilty last month in federal court in New York charges of conspiracy and securities fraud. Drimal admitted that he and others at Galleon traded on inside information obtained from lawyers working on transactions involving 3Com Corp. and Axcan Pharma Inc. in 2007. Drimal said the information was obtained from Arthur Cutillo and Brien Santarlas, lawyers at Boston-based Ropes & Gray LLP.
Drimal has suggested that the court impose community service or home confinement in lieu of a “substantial” prison term, prosecutors said. The request should be denied in order to send a “strong message of deterrence to others in the hedge fund community” and because the “nature and extent of his criminal conduct doesn’t warrant community service,” prosecutors said.
Drimal is scheduled to be sentenced by U.S. District Judge Richard Sullivan on Aug. 31. Drimal’s attorney, Jane Anne Murray, said she filed a memorandum last week asking the judge to impose a sentence below the federal guidelines.
“We’re not surprised by their position; it’s been consistent,” Murray said in a telephone interview. “We disagree with the government on a number of issues including the applicable guidelines. And we’re seeking a sentence that is substantially lower than the one the government is seeking.”
Prosecutors also asked the court to obtain a judgment against Drimal to recover the amount of the proceeds of his crimes, which they said are at least $7 million.
The case is U.S. v. Goffer, 10-cr-00056, U.S. District Court, Southern District of New York (Manhattan).
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Barry Bonds Asks Judge to Toss Conviction or Order New Trial
Lawyers for Barry Bonds, Major League Baseball’s home-run record holder, asked a federal judge to throw out his conviction for obstructing a federal probe of steroid use by professional athletes or order a new trial.
There was no crime in the slugger’s 146-word answer to a grand jury about whether his trainer ever gave him anything that required an injection with a syringe, in which he spoke about being a “celebrity child” who didn’t “get into other people’s business,” his lawyers told U.S. District Judge Susan Illston at a hearing yesterday in San Francisco.
Dennis Riordan, Bonds’s attorney, said the former San Francisco Giants outfielder took about 75 seconds to respond to prosecutors’ direct question and eventually answered “no.” He said upholding the conviction would mean that a defendant could face five years in prison simply by taking 75 seconds to provide a direct answer to the grand jury.
“It’s really preposterous to say there was evasion,” Riordan told Illston, who ended the hearing without issuing a ruling.
Bonds, 47, was convicted in April by a federal jury in San Francisco of obstructing a U.S. probe of steroid use by professional athletes. In a response of about 130 words, Bonds didn’t say yes or no when asked if his trainer Greg Anderson ever game him anything “that required a syringe to inject yourself with.”
Riordan said other evidence shouldn’t be weighed in deciding whether Bonds’s answer to the specific question about a syringe injection was evasive. Illston disagreed.
“I’m obliged to view the totality of the evidence,” Illston told Riordan. “I don’t think it’s fair to say, just focus on the one statement. It seems to me we need to look at this in the context of all the evidence in this trial.”
The case is U.S. v. Bonds, 07-00732, U.S. District Court, Northern District of California (San Francisco).
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National Century’s Poulsen Conviction, 30-Year Term Upheld
A federal appeals court upheld the 30-year prison term of Lance Poulsen, founder of National Century Financial Enterprises Inc., as well as his convictions at separate trials on obstruction of justice and fraud charges.
Poulsen was found guilty by jurors in federal court in Columbus, Ohio, in October 2008 of fraud, conspiracy and money laundering for defrauding investors of $2.9 billion. Seven months earlier, a separate jury convicted him of trying to bribe the main witness against him. U.S. District Judge Algenon Marbley sentenced him to 30 years in the fraud case.
The 6th U.S. Circuit Court of Appeals in Cincinnati yesterday rejected Poulsen’s claims that Marbley made several improper rulings at each trial and that his prison term was too long. Poulsen had said he shouldn’t get a longer sentence than the chief executive officers of WorldCom Inc. and Enron Corp., who got 25 and 24 years, respectively.
“Poulsen cites a number of sentences given to those whom he refers to as ‘the most notorious financial fraudsters in corporate America,’” according to the opinion by a three-judge panel of the appeals court. “Poulsen presents no coherent argument as to why his sentence is substantively unreasonable.”
Poulsen, 68, is incarcerated at the Williamsburg Federal Correctional Institution in South Carolina, according to the U.S. Bureau of Prisons website. His release date is listed on the site as Dec. 4, 2033.
The appeals panel ruled that Marbley properly determined the loss to investors as $2.89 billion, even though prosecutors had said once to jurors that the loss was only “over $2 billion.”
Poulsen’s attorneys William Terpening and Peter Anderson didn’t immediately return a call seeking comment on the ruling.
Poulsen’s 30-year term for the fraud case is concurrent with his earlier 10-year term for the obstruction case.
The appeals are U.S. v. Poulsen, 08-4218 and 09-3658, 6th U.S. Circuit Court of Appeals (Cincinnati).
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TCW CEO Stern Says Gundlach’s Firing Had to Be ‘Surprise’
TCW Group Inc. Chief Executive Officer Marc Stern testified that the firing of Jeffrey Gundlach, who was the asset management firm’s chief investment officer, had to be done in a way that made it a surprise.
Stern told state court jurors in Los Angeles yesterday that his October 2009 trip to Paris to talk to TCW’s parent company, Societe Generale (GLE) SA, about buying Metropolitan West Asset Management LLC was kept “confidential” from Gundlach. TCW bought MetWest to manage the fixed-income funds that had been run by Gundlach on Dec. 4, the day he was fired.
“The element of surprise was essential to the preservation of the company,” Stern said in response to questions from Brad Brian, a lawyer for DoubleLine Capital LP, the firm Gundlach started after he was fired by TCW. Stern said it would be “on the margin” advantageous to TCW to allow Gundlach little time to set up competing funds if he was going to be terminated.
TCW, based in Los Angeles, sued Gundlach, 51, in January 2010, after more than half of its fixed-income professionals joined his new firm. TCW seeks $375 million in damages, claiming Gundlach stole its trade secrets, including client portfolio data, to start DoubleLine.
Gundlach, who had worked at TCW for 25 years and who was named Morningstar’s Fixed Income Manager of the Year in 2006, countersued, saying TCW fired him to avoid having to pay management and performance fees for the distressed-asset funds his group managed and that went “through the roof.” Gundlach seeks about $500 million.
The case is Trust Co. of the West v. Gundlach, BC429385, California Superior Court, Los Angeles County.
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Apple to Win German Ban on Samsung Tablet Sales, Judge Says
The Dusseldorf court is unlikely though to expand the ban on sales beyond Germany to other European Union countries as Apple sought, Presiding Judge Johanna Brueckner-Hofmann said in a preliminary assessment yesterday. A ruling is scheduled for Sept. 9.
“In the court’s view, Apple has a case to keep” the German ban, Brueckner-Hofmann said at the hearing yesterday. “There are a lot of alternative ways to design a tablet device, as the market amply shows. We think Apple’s EU design rights grant a medium range of protection, if not a broad one.”
The legal battle between Cupertino, California-based Apple and rival device makers is intensifying as an increasing number of consumers use smartphones to surf the Web, play games and download music. Apple, the world’s top smartphone seller, has filed patent cases against handset makers using Google Inc.’s Android operating system, including Samsung, Motorola Mobility Holdings Inc. and HTC Corp.
The Dusseldorf court on Aug. 9 granted Apple, the maker of the iPad, a preliminary sales ban in 26 of the 27 EU member countries, only to scale back its reach a week later over jurisdictional doubts. The court yesterday signaled that it would back that approach in its verdict.
The court is likely to find that it doesn’t have jurisdiction to issue a ban applicable outside Germany against a company based outside the EU, Brueckner-Hofmann said. Samsung’s German unit, for which the ban applies EU-wide, is independent and doesn’t allow the court to assume jurisdiction for both companies alike, she said.
The German case is LG Dusseldorf, 14c O 194/11.
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Bank of America Depressed Libor Rates, Schwab Says in Suit
Charles Schwab Corp. (SCHW), the largest independent brokerage by client assets, sued Bank of America Corp., Citigroup Inc. (C) and other banks claiming they manipulated the London interbank offered rate, or Libor, starting in 2007 in violation of U.S. antitrust law.
The banks conspired to depress Libor rates by understating their borrowing costs, thereby lowering their interest expenses on products tied to the rates, according to the lawsuit filed Aug. 23 in federal court in San Francisco, where Schwab is based.
The banks “reaped hundreds of millions, if not billions, of dollars in ill-gotten gains,” Schwab wrote.
In separate suits in April, three European asset-management firms and the Carpenters Pension Fund of West Virginia sued the banks claiming they manipulated Libor. U.S. and U.K. officials are cooperating in a probe of possible Libor manipulation, a person close to the investigation said in March.
The Schwab suit seeks unspecified damages, which may be tripled under antitrust law. It also includes claims for racketeering and securities fraud.
“We believe the suit is without merit,” Danielle Romero- Apsilos, a spokeswoman for New York-based Citigroup, said in an e-mail. Lawrence Grayson, a spokesman for Charlotte, North Carolina-based Bank of America, declined to comment.
The case is Schwab Money Market Fund v. Bank of America Corp. (BAC), 11-cv-4186, U.S. District Court, Northern District of California (San Francisco).
Guaranty Financial Trustee Suit Accuses KBW of Short Sales
The liquidation trustee for Guaranty Financial Group Inc. (GFGFQ) sued KBW Inc. (KBW), claiming that the investment bank used inside information about the Texas lender to short its stock before KBW collapsed.
Kenneth Tepper, the trustee, is seeking to recover $20 million in fees KBW obtained as Guaranty Financial’s investment banker, profit it received from betting against the company’s shares and other damages, according to a suit filed Aug. 24 in New York State Supreme Court in Manhattan.
“KBW’s disregard of its contractual obligations and illegal and improper use of GFG’s and the bank’s material, non- public, confidential, inside information undermined GFG’s efforts to raise capital, one of the very purposes for which KBW had been engaged,” Tepper alleged.
Guaranty Financial, based in Austin, Texas, filed for bankruptcy protection in 2009.
Krista Eccleston, a spokeswoman for New York-based KBW, declined to comment.
The trustee on Aug. 22 sued cardboard-box maker Temple- Inland Inc., which spun off Guaranty Financial in 2007.
The case is Tepper v. Keefe, Bruyette & Woods Inc., 652349-2011, New York state Supreme Court, New York County (Manhattan).
To contact the editor responsible for this report: Michael Hytha at email@example.com.