“Occupy Wall Street” protesters lost a bid to overturn their eviction and the removal of tents and structures from a lower Manhattan park where they had been demonstrating 24 hours a day for eight weeks.
New York State Supreme Court Justice Michael Stallman, responding to a request that he reverse the eviction, ruled the protesters didn’t show “they have a First Amendment right to remain in Zuccotti Park along with their tents, structures, generators and other installations.”
The ruling may complicate demonstrators’ plans to mark the two-month anniversary of the movement tomorrow with calls on its website to “shut down Wall Street” and “occupy the subways.” The protesters said they’ll seek to “confront Wall Street with the stories of people of the frontlines of economic injustice,” then gather at transit hubs at the start of the evening rush across the city’s five boroughs.
New York police pushed into the park early yesterday morning, forcibly removing demonstrators who had been camping there to protest unemployment, income inequality and the financial industry.
The New York eviction may signal a turning point for the movement as municipal officials seek to curtail sister protests that have sprung up in cities including Oakland, California, Portland, Oregon, and Salt Lake City and in other countries, including Australia where protesters were ordered today to remove their tents from a park in Melbourne’s city center.
Officials in New York and elsewhere have cited local ordinances, health and crime as reasons to curtail or end similar demonstrations.
The park was reopened yesterday afternoon, with a few dozen people waving American flags while some played instruments or sang “We Shall Not Be Moved.” No tents or sleeping bags were visible as police searched protesters when they entered.
“The court’s ruling vindicates our position that First Amendment rights do not include the right to endanger the public or infringe on the rights of others by taking over a public space,” Mayor Michael R. Bloomberg said yesterday in an e-mailed statement. “Zuccotti Park will remain open to all who want to enjoy it, as long as they abide by the park’s rules.”
The New York Civil Liberties Union said it will review the court decision and explore ways to proceed, Executive Director Donna Lieberman said in a statement.
“This was not about public health and safety,” said Yetta Kurland, a lawyer for the protesters. “This was a pretext to shut down the occupation.” She said they haven’t yet decided whether to appeal the decision.
The case is In the Matter of the Application of Jennifer Waller v. City of New York, 11112957, New York State Supreme Court, New York County (Manhattan).
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Olympus Faces U.S. Group Lawsuit Over Alleged Fraud, Losses
Olympus Corp., the camera maker being investigated by Japanese, U.S. and U.K. authorities for alleged accounting irregularities, was sued by an investor in its American depositary receipts seeking class-action status.
Olympus, former president Michael C. Woodford, ex-chairman Tsuyoshi Kikukawa and current president Shuichi Takayama caused the company to engage in fraud, resulting in investor losses, according to the complaint filed Nov. 14 in federal court in Pennsylvania.
The lawsuit by New York-based Sarraf Gentile LLP seeks class, or group, status on behalf of other investors in the U.S. Plaintiff Lloyd Graham, who bought Olympus ADRs on Oct. 27, seeks unspecified damages.
New York-based Bernstein Liebhard LLP said in a separate statement it also filed a class lawsuit in the same court against Olympus. That filing couldn’t be confirmed on the court’s website.
Yoshiaki Yamada, a spokesman for Tokyo-based Olympus, declined to comment, saying he hasn’t confirmed the lawsuit yet. Olympus said last week its shareholders in Japan asked the company’s auditors to sue directors for 139.4 billion yen ($1.8 billion) in compensation.
Woodford said the lawsuit against him was “ridiculous.”
“It relates to shares bought after I was fired,” he said. “I don’t understand why I’m included.”
The case is Graham v. Olympus Corp. (7733), 11-07103, U.S. District Court, Eastern District of Pennsylvania (Allentown).
Otkritie Says Banker Embezzled $18 Million ‘Golden Hellos’
Otkritie Financial Corp., a Russian brokerage partly owned by state-run VTB Group, said in a civil lawsuit that a senior executive in its London office embezzled at least $17.8 million in signing bonuses meant for colleagues.
George Urumov told Otkritie when he joined the bank as global head of fixed income in January that he would bring four colleagues with him from Knight Capital Group Inc. if they all received $5 million “golden hellos,” the brokerage said in a lawsuit filed in London on Oct. 6. Instead, Urumov arranged for three payments, of $500,000, $750,000 and $1 million, and kept the remainder of the $25 million pool, according to the filing.
Otkritie, based in Moscow, said it suffered a loss of at least $23 million through the deception. While at Knight Capital, Urumov “built a successful franchise in less than 18 months, trading in excess of $100 billion of bonds,” Otkritie said in a statement Jan. 17. Before Knight Capital, he worked for HSBC Holdings Plc (HSBA), where he was director of trading for Europe, the Middle East and Africa, and as a trader for Lehman Brothers Holdings Inc., according to Otkritie.
Alexey Karakhan, a Moscow-based spokesman for Otkritie, said by mobile phone that Urumov had been suspended. Howard Snell, head of Otkritie’s London office, declined to comment when reached on his mobile phone. Urumov couldn’t be reached for comment through Otkritie’s press office.
Urumov’s law firm, Farrer & Co. in London, “have made it clear that their client strongly denies all of the allegations made against him and intends to defend Otkritie’s claim,” it said in an e-mailed statement.
The case is Otkritie versus Urumov, High Court of Justice, Queen’s Bench Division, No. 11-1182.
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UBS, Ernst & Young Are Sued Over Luxembourg Madoff Funds
UBS AG (UBSN) and Ernst & Young LLP were sued for more than $1 billion to offset any amount two Luxembourg funds must pay the trustee liquidating Bernard L. Madoff’s investment firm.
The lawsuits mark the second set of claims filed by the liquidators of LuxAlpha Sicav-American Selection fund and Luxembourg Investment Fund against UBS, the funds’ custodian bank, and Ernst & Young’s local unit, the auditor. Both entities were among 17 Luxembourg funds forced to suspend customer redemptions after losses from Madoff’s Ponzi scheme.
LuxAlpha, which had $1.4 billion in net assets a month before Madoff’s 2008 arrest, and Luxembourg Investment Fund, which had $419 million before it was dissolved, are being sued by Irving H. Picard, the trustee liquidating Bernard L. Madoff Investment Securities LLC. In the suits filed in Luxembourg, LuxAlpha is seeking $766.5 million and Luxembourg Investment Fund $502.3 million, about the same as Picard wants from them.
The goal is to protect any funds the liquidators win through their lawsuits against clawback actions by Picard in the U.S., said Alain Rukavina, a liquidator for the Luxembourg funds.
“Our additional lawsuits seek to make the parties pay the amounts the funds could be held liable to pay in the U.S. case,” Rukavina said.
Ernst & Young representatives in Luxembourg and London weren’t able to comment immediately.
“UBS has not yet been served with the liquidators’ additional claim, but UBS considers any such claim to be without merit and will continue to defend itself vigorously,” Dominique Gerster, a bank spokesman in Zurich, said in an e-mailed statement.
Madoff, 73, pleaded guilty in 2009 and was sentenced to 150 years in prison for using money from new clients to pay earlier investors.
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U.K. Prosecutors Said to Open Formal Probe of Olympus
U.K. prosecutors are opening a formal investigation into accounting irregularities at Olympus Corp. after the company said last week that three executives colluded to hide losses from investors, a person familiar with the probe said.
Britain’s Serious Fraud Office, which prosecutes white-collar crime, is working with the U.S. Federal Bureau of Investigation and Department of Justice, according to the person, who wasn’t authorized to speak about the case and declined to be identified.
The probe centers on $687 million in fees paid to Axam Investments Ltd., a now-defunct Cayman Islands fund connected to U.S.-based Japanese banker Hajime Sagawa. The payment was related to Olympus’s purchase of the British company Gyrus Group Plc in 2008. The fees totaled more than a third of the $2 billion purchase price.
Michael Knuefer, a European spokesman for Olympus, didn’t respond to e-mails and calls requesting comment.
Michael C. Woodford, the Olympus president who was fired last month after he asked the board to review the payments made to advisers in the acquisition, provided documents to the SFO, including a PricewaterhouseCoopers report that he commissioned.
The company reversed denials that there was any wrongdoing and fired Executive Vice President Hisashi Mori over his role in covering up the losses with former Chairman Tsuyoshi Kikukawa, who resigned last month. Olympus auditor Hideo Yamada will step down, the company said last week.
Olympus President Shuichi Takayama said the company was looking into the role played by special purpose funds in hiding the losses, which date back to the 1990s.
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News Corp. (NWSA) Can’t ‘Guarantee’ U.K. Phone Hacking Ended in 2007
News Corp. can’t guarantee phone hacking at its News of the World tabloid in Britain ended in 2007, when a reporter and private investigator were jailed, a lawyer for the company told a U.K. government inquiry.
London police suspect phone hacking continued at the newspaper until at least 2009, possibly dating the practice to James Murdoch’s tenure as head of News Corp.’s British unit, the judge overseeing the probe was told Nov. 14. London-based News International apologized for the scandal again yesterday at the inquiry and said the evidence will have to be reviewed.
“I am not going to give any guarantee that there was no phone hacking by or for the News of the World after 2007,” News Corp. lawyer Rhodri Davies said at yesterday’s hearing. If there was, “it wasn’t the thriving cottage industry” that existed before the arrests.
News Corp. closed the News of the World in July to help contain the five-year-old scandal after it was revealed the tabloid hacked the phone of a murdered school girl in 2002, when she was still missing. U.K. Prime Minister David Cameron called for the inquiry to find out what went wrong in the industry and possibly propose new press regulations.
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Allied Home Mortgage’s FHA Privileges Reinstated by Judge
Allied Home Mortgage Corp. can originate and underwrite Federal Housing Authority-insured home loans, a judge said, reversing a U.S. agency’s suspension of those privileges.
The U.S. sued Houston-based Allied Home Mortgage and Chief Executive Officer James C. Hodge in Manhattan federal court on Nov. 1, and the Department of Housing and Urban Development suspended the company’s FHA lending privileges the same day. The U.S. said Allied “repeatedly” lied about its compliance with FHA mortgage requirements.
Hodge sued HUD a day later in federal court in Houston, claiming the loss of FHA privileges would “effectively kill Allied” and eliminate 723 jobs. Allied, which last year said it was the largest closely held mortgage broker in the U.S., asked for a court order barring the FHA suspension until the HUD lawsuit is resolved.
“The potential destruction of plaintiffs’ business outweighs any harm that would be suffered by the government before the issues can be litigated,” U.S. District Judge Melinda Harmon said in a 22-page order filed yesterday.
The company’s case is Allied Home Mortgage Corp. v. Donovan, 4:11-cv-3864, U.S. District Court, Southern District of Texas (Houston). The government’s case is U.S. v. Allied Home Mortgage Corp., 11-cv-5443, U.S. District Court, Southern District of New York (Manhattan).
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BP Can’t Use Transocean Insurance for Oil Spill, Judge Rules
BP filed claims with Transocean’s carriers last year, seeking to gain access to $750 million in coverage under multiple policies. Lloyd’s of London, along with other excess underwriters, and Ranger Insurance, Transocean’s primary insurer, opposed the claims, contending the rig owner’s contract with BP didn’t provide such coverage.
The carriers owe no duty to pay claims or defense costs to BP, U.S. District Judge Carl Barbier said yesterday.
“The court finds that BP, under the drilling contract, assumed responsibility for Macondo well oil release pollution liabilities,” Barbier said in a 42-page ruling. “Because Transocean did not assume these liabilities, there is no additional insurance obligation in favor of BP for these liabilities.”
The Macondo blowout and the explosion that followed killed 11 workers and set off the worst offshore oil spill in U.S. history. The accident and spill led to hundreds of lawsuits against London-based BP and its partners and contractors. The lawsuits over economic losses and personal injuries have been combined before Barbier.
The lawsuits also name as defendants Transocean, the Switzerland-based owner and operator of the Deepwater Horizon drilling rig that exploded and sank; Houston-based Halliburton Co. (HAL), which provided cementing services to the well; and Cameron International (CAM), which provided blowout-prevention equipment.
BP’s minority partners in the well, Anadarko Petroleum Corp. (APC) and Mitsui & Co. (8031)’s Moex Offshore LLC unit, were also sued. Anadarko and Moex have joined BP in seeking coverage from Transocean’s insurance.
Brian Kennedy, a spokesman for Transocean, said the company was “pleased with the outcome.” He declined to comment further. “We will let the court’s decision speak for itself.”
The judge’s decision on insurance coverage “doesn’t in any way address the causes of the accident or any of BP’s defenses to Transocean’s claims against BP,” Scott Dean, a BP spokesman, said in an e-mail.
“The enforceability of the indemnification provision in the drilling contract will depend on the court’s determination at trial of Transocean’s conduct,” Dean said. “To allow Transocean to avoid paying its share of any damages or governmental fines and penalties in these circumstances would be against applicable law and sound public policy.”
The insurance disputes by Lloyd’s and Ranger are combined with other spill-related lawsuits in In Re Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico on April 20, 2010, MDL-2179, U.S. District Court, Eastern District of Louisiana (New Orleans).
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Boeing-Lockheed Venture Must Give U.S. Pay Data, Judge Says
U.S. District Judge Royce Lamberth in Washington said Nov. 14 that United Space, the largest U.S. space-shuttle contractor, must give the Labor Department the information. The venture sued to block an April 11 department order requiring the company to turn over detailed compensation data within 30 days or face debarment and cancellation of its contracts.
“The Department of Labor has not accused United Space of employment discrimination,” Lamberth said in his ruling. “The department has merely required United Space to submit data about its employee compensation. Submission to such lawful investigations is the price of working as a federal contractor.”
Lamberth said his ruling would be put on hold until Nov. 28 to give United Space time to seek an appeal.
The Houston-based company had $1.81 billion in government contracts last year, according to Bloomberg Government data. In April, the National Aeronautics and Space Administration awarded United Space a contract extension, valued at as much as $436.5 million, to provide support for shuttle operations, which ended when space shuttle Atlantis landed in Florida in July.
Tracy Yates, a spokeswoman for United Space, said the company is still reviewing the ruling and weighing its options. She said that if the company appeals, it will seek to delay implementation of Lamberth’s order. If it decides not to appeal, it will comply and turn over the data.
“We will not take any action that will impact our ability to continue operating under our government contracts or from bidding on future contracts,” Yates said.
The case is United Space Alliance v. Solis, 11-cv-00746, U.S. District Court, District of Columbia (Washington).
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Obama-Roberts Legacies to Be Shaped by Health-Care Ruling
The Supreme Court’s review of the U.S. health-care overhaul all but guarantees a legacy-shaping ruling for both President Barack Obama and Chief Justice John Roberts, Bloomberg News’ Greg Stohr reports.
The court’s ruling will help determine Obama’s political future as he seeks re-election in November. The court could burnish Obama’s credentials as a problem-solver or leave him to go before the electorate stripped of his signature legislative achievement.
For Roberts, the case stands as the most consequential in his six years as chief justice. A ruling striking down all or part of the law would be a legal watershed, putting new curbs on Congress’s ability to address national issues and establishing the Roberts court as the bulwark against perceived legislative overreaching. The court, which announced Nov. 15 it will hear the case, probably will rule in late June.
The law, known as the Affordable Care Act, would expand coverage to an estimated 32 million Americans who lack insurance. The central legal issue is whether Congress had constitutional power to require Americans to either acquire insurance or pay a penalty. Lower courts split on the question.
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Daugerdas Judge Grants Hearing on Juror Conduct in Tax Case
A judge will hold a hearing to determine whether to grant a new trial to Paul Daugerdas, a former lawyer at the defunct firm Jenkens & Gilchrist, and three others convicted in a 10-year tax-shelter scheme.
U.S. District Judge William Pauley in Manhattan said yesterday he will hold an evidentiary hearing on the conduct of Catherine Conrad, Juror No. 1 in the 10-week trial. He didn’t set a date. The defendants claim Conrad hid details of her background from the court, including a law degree, at least four arrests and the fact that she was serving a sentence of probation for shoplifting.
The jury, including Conrad, convicted Daugerdas in May on more than 20 criminal counts, including conspiracy, tax evasion and attempting to impede the Internal Revenue Service.
The jury also returned guilty verdicts for Denis Field, the former chief executive officer at accounting firm BDO Seidman LLP; Donna Guerin, a Jenkens & Gilchrist lawyer; and David Parse, a former accountant for Deutsche Bank AG (DBK) unit Alex. Brown. Craig Brubaker, a second former Alex. Brown accountant, was found not guilty.
The defendants claim Conrad wouldn’t have been permitted to serve on the jury if she had told the truth about her background. Her presence on the panel deprived them of a fair trial, they said.
The case is U.S. v. Daugerdas, 09-CR-581, U.S. District Court, Southern District of New York (Manhattan).
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Jefferson County Judge Known for ‘Rule-From-the-Bench’ Style
Thomas B. Bennett, the Birmingham, Alabama-based judge overseeing the biggest U.S. municipal bankruptcy, comes to court ready to rule, said attorneys who have appeared before him in his 16 years on the federal bench, Bloomberg News’ Steven Church reports.
Bennett, chief bankruptcy judge for the Northern District of Alabama, was selected last week to manage the case of Jefferson County, whose seat is Birmingham, the state’s biggest city. He asserted his style the first day the county and its major creditors appeared in court on Nov. 10.
That day, he denied a bid by creditors, who are owed more than $3 billion, for extra time to prepare for a hearing about whether the municipality is eligible for bankruptcy court protection. In a soft voice that forced listeners in the courtroom to strain to hear, Bennett told lawyers to be prepared to work weekends and holidays.
“The idea that holidays are necessarily going to slow this process is wrong,” Bennett said. “You should expect that you will have a full time job, at least for the next 30 days.”
The decision didn’t surprise Alabama attorneys who know Bennett. He doesn’t like to put off decisions or allow cases to be delayed, said attorney Buddy Oldshue, a shareholder in charge of the bankruptcy and creditors’ rights section of the law firm Rosen Harwood PA in Tuscaloosa, Alabama.
Jefferson County’s Chapter 9 case leaves creditors including JPMorgan Chase & Co. (JPM), the biggest U.S. bank by assets, facing hundreds of millions of dollars in losses. The move also could saddle county residents with higher sewage fees to repay the debt that led to the financial debacle.
The case is In re Jefferson County, 11-05736-9, U.S. Bankruptcy Court, Northern District of Alabama (Birmingham).
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Perry Calls for Federal Judge Term Limits and Reduced Congress
Texas Governor Rick Perry, who needs a strong Iowa showing for a chance to resurrect his campaign, used a speech in the state yesterday to call for a streamlined federal government, term limits for federal judges and a “part-time” Congress with smaller pay and office budgets.
“It’s time to tear down the monuments to bureaucratic failure, and put in place a smaller, more efficient federal government that puts the American people first,” Perry said during a campaign event on the factory floor of Schebler Co., a manufacturing company in Bettendorf, Iowa.
Perry presented the proposals during his first visit to Iowa since a debate stumble in Michigan that he called embarrassing and has been followed by a drop in support in polls.
Perry said term limits for federal judges are needed because too many are legislating from the bench. He said future appointees wouldn’t receive lifetime positions under his plan.
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