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Arizona Shooting, UBS, AIG, Barclays in Court News

Updated on

Jared Lee Loughner is scheduled to appear in court today to face charges of attempting to kill U.S. Representative Gabrielle Giffords and murdering U.S. District Judge John Roll in a shooting spree at a Tucson, Arizona, shopping mall that claimed six lives and wounded at least 14 others, federal prosecutors said.

Loughner, 22, is accused of killing Roll and Gabriel Zimmerman, a member of Giffords’ staff and a federal employee, according to a criminal complaint filed yesterday in Phoenix. He is also charged with attempting to murder Giffords and two other members of her staff who are also federal employees, prosecutors said.

Roll, who rose from bailiff to become chief judge of Arizona’s federal courts, was killed in Tucson because he dropped by a political event to thank Giffords for her help with a shortage of jurists in their state.

He was in “the wrong place at the wrong time,” Pima County Sheriff Clarence Dupnik said in explaining why Roll, 63, had come to a constituent meeting at a supermarket to say hello to Giffords.

After attending mass at the nearby downtown cathedral, where he frequently attended services daily, Roll would have gone home to “do the floors” as he did every Saturday, Dupnik said at a press conference that day.

“I have never met a more sincere, fair-minded, brilliant federal judge or any judge for that matter in my whole life,” Dupnik said.

Stephen Paul Barnard, a Tucson defense attorney who has known Roll since the 1970s when they were both city prosecutors, said the judge’s death is “insurmountable, senseless and tragic.”

“At least to me and other people who knew him as a person, he was the symbol of what a human being strives to be and he was taken away overnight,” Barnard said in a phone interview.

Barnard, a Democrat, said Roll, who he described as a conservative Republican, enjoyed lively discussions about politics “but always with humor, never anger.”

He was nominated to the U.S. District Court in Arizona by President George H.W. Bush in 1991. He had been an Arizona state judge since 1987. Before that, he worked as a county prosecutor and a federal prosecutor in Tucson.

Roll became chief judge of the Arizona federal court in 2006 and sought to bring in additional judges and resources to help manage a growing workload, predominantly cases involving drug smuggling and illegal immigration, according to a statement from the U.S. Court of Appeals in San Francisco, whose district includes Arizona.

Loughner is scheduled to make his initial court appearance today in federal court in Phoenix. He remains in custody.

The court docket didn’t list a lawyer for Loughner. Manny Tarango, a spokesman for U.S. Attorney Dennis Burke in Phoenix, didn’t immediately return calls for comment.

The case is U.S. v. Loughner, 11-00035, U.S. District Court, District of Arizona (Phoenix).

For more about the shooting, click here.

For more about Judge Roll, click here.


Massachusetts Top Court Hands Foreclosure Loss to U.S. Bancorp

US Bancorp and Wells Fargo & Co. lost a foreclosure case in Massachusetts’s highest court that will guide lower courts in that state and may influence others in the clash between bank practices and state real estate law.

The state Supreme Judicial Court upheld Jan. 7 a judge’s decision saying two foreclosures were invalid because the banks didn’t prove they owned the mortgages.

“We agree with the judge that the plaintiffs, who were not the original mortgagees, failed to make the required showing that they were the holders of the mortgages at the time of foreclosure,” Justice Ralph D. Gants wrote. The court upheld a decision by Massachusetts Land Court Judge Keith C. Long in Boston.

Teri Charest, a spokeswoman for US Bancorp, didn’t return a call for comment. Jason Menke, a spokesman for Wells Fargo, didn’t have an immediate comment.

Charest previously referred questions on the case to the loan servicer for both mortgage-backed trusts, American Home Mortgage Servicing Inc. Philippa Brown, a spokeswoman for Coppell, Texas-based American Home Mortgage, didn’t have an immediate comment.

The case is U.S. Bank v. Ibanez, 10694, Supreme Judicial Court of Massachusetts (Boston). The lower-court cases are U.S. Bank National Association v. Ibanez, 08-Misc-384283, and Wells Fargo Bank NA v. LaRace, 08-Misc-386755, Commonwealth of Massachusetts, Trial Court, Land Court Department (Boston).

UBS Banker Poteroba’s Co-Defendant Koval Pleads Guilty

Alexei Koval, accused of conspiring with former UBS AG investment banker Igor Poteroba to make almost $1 million in an insider-trading scheme, pleaded guilty to securities fraud in Manhattan federal court.

Koval, 36, of Chicago, who worked at Northern Trust Corp. as a pricing manager until last March, admitted Jan. 7 to conspiring to commit securities fraud and three counts of insider trading. He was indicted in May for his role in a scheme that prosecutors in the office of Manhattan U.S. Attorney Preet Bharara said began in 2005.

Poteroba, 37, once an executive director at UBS Securities LLC, pleaded guilty to insider-trading charges on Dec. 22 after being accused of tipping friends to potential mergers. He wasn’t named in the May 20 indictment filed by prosecutors against Koval.

“What I did was, I agreed with others to get inside information on publicly traded securities and to use this information to trade for profit,” Koval told U.S. District Judge Paul Crotty Jan. 7

Prosecutors said Poteroba leaked to Koval and a third person tips on six UBS Healthcare client mergers and acquisitions under consideration. The ring used code such as “frequent flier miles” and references to a Macy’s Inc. wedding registry and made at least $870,000 from the illegal trades, prosecutors said.

The judge said that based on a plea agreement between the U.S. and Koval’s lawyer, the defendant could face 30 to 37 months in prison when he is sentenced April 12.

The case is U.S. v. Poteroba, 10-CR-443, U.S. District Court, Southern District of New York (Manhattan).

For more, click here.

AIG Agrees to Pay in Workers’ Compensation Settlement

American International Group Inc., recipient of a $182.3 billion U.S. government rescue, agreed to pay $450 million to rivals for shortchanging industry-funded pools that insure injured workers.

Travelers Cos. and Hartford Financial Services Group are among the seven competitors that will receive the money, New York-based AIG said in a proposed settlement filed Jan. 6 in Chicago. Liberty Mutual’s Safeco subsidiary filed a lawsuit in 2009 accusing AIG of “long-term fraudulent underreporting,” seeking more than $1 billion. Liberty Mutual, which was seeking class-action status for the case, wasn’t included in the settlement.

AIG, once the world’s largest insurer, agreed in December to pay $100 million in fines and $46.5 million in taxes and assessments to settle a probe by state regulators of workers’ compensation payments. Chief Executive Officer Robert Benmosche has been resolving legal disputes with investors and former CEO Maurice “Hank” Greenberg as he sells assets to repay the bailout and gain independence from government control.

“It is unfortunate that Liberty is refusing to participate in this fair and reasonable settlement,” said Mark Herr, a spokesman for AIG. “As the seven other settling insurers have recognized in seeking to intervene in the action, Liberty’s preference to continue litigating is not in the best interests of the class members.”

Gary Elden, an attorney for Liberty Mutual, said in a statement that the settlement is “an act of self-interest and is detrimental to the 600-member class” because it ignores evidence of underreporting that occurred during the lawsuit.

For more, click here.

Galleon Defendant Hariri Prepares for Prison, Hopes for Future

Ali Hariri, the former Atheros Communications Inc. vice president set to begin an 18-month prison term after pleading guilty in the Galleon Group LLC insider-trading probe, said he was “absolutely wrong” when he told a friend and mentor about the company’s earnings.

Hariri, in his first published interview since his arrest in November 2009, said he felt manipulated by Ali Far, a co-founder of the hedge fund Spherix Capital LLC in San Jose, California.

Hariri pleaded guilty March 3 in federal court in New York to giving Atheros earnings data to Far, who made hundreds of thousands of dollars by trading ahead of the company’s announcements. Far, who had also been an analyst and portfolio manager at New York-based Galleon, pleaded guilty in October 2009 and is aiding the U.S. probe.

“I had a big mouth and it was absolutely wrong,” Hariri said Jan. 6. “I’m not blaming him. It was my own mistake.”

Hariri, 39, who is scheduled to report to federal prison Jan. 31, said he wants to help others avoid his mistakes and hopes to “do something meaningful” after his release. His sentencing judge said Hariri made $2,500 on stock tips he got from Far.

Far’s lawyers, Steven Kobre and Andrew Lourie, didn’t immediately return a call seeking comment. Prosecutors didn’t immediately comment.

Atheros General Counsel Adam Tachner, according to a letter read in court by Arguedas, described Hariri as “a good person, who allowed himself to be led astray by the pressure to demonstrate success among his friends and family.”

The case is U.S. v. Hariri, 09-02436, U.S. District Court, Southern District of New York (Manhattan).

For more, click here.

For the latest verdict and settlement news, click here.

New Suits

Genentech Sued Over Withdrawn Psoriasis Drug Raptiva

Roche Holding AG’s Genentech Inc. was sued by a Texas psoriasis sufferer who alleges he developed lymphoma while taking Raptiva, a drug the company stopped selling in 2009 when studies linked it to a fatal brain infection.

Genentech, a unit of Basel, Switzerland-based drugmaker Roche, began a phased withdrawal of Raptiva in April 2009 after three patients taking it were diagnosed in the preceding six-month period with progressive multifocal leukoencephalopathy, or PML, a rare, incurable brain disease.

Houston-area psoriasis patient Cary Massa, 51, was diagnosed with classic Hodgkin’s lymphoma in March 2009, after taking Raptiva from February 2006 to January 2008, according to a complaint filed Jan. 7 in Houston federal court.

“Despite knowing that Raptiva posed the risk of serious injuries for anyone who took the drug, defendants pushed Raptiva to market on unfounded claims of efficacy and safety while downplaying altogether and denying the drug’s life-threatening risks,” Mark Lanier, Massa’s attorney, said in the filing.

Berkeley, California-based Xoma (US) LLC, which helped develop Raptiva with South San Francisco-based Genentech, was also named in the suit, which accuses the companies of failure to warn, product liability, breach of warranty, fraud by concealment and gross negligence.

Tara Iannuccillo, a Genentech spokeswoman, declined to comment in a telephone interview, citing a company policy not to discuss litigation.

The case is Massa v. Genentech Inc. and Xoma (US) LLC, 4:11-cv-00070, U.S. District Court, Southern District of Texas (Houston).

For the latest new suits news, click here. For copies of recent civil complaints, click here.


Madoff Aide Bongiorno Wins Freedom as Judge Cuts Bail

Annette Bongiorno, who is accused of helping her former boss, Bernard L. Madoff, run a multibillion-dollar Ponzi scheme, was released from a federal jail Jan. 7 after a judge cut her bail to $3 million.

Bongiorno, who has been held in lockups in Florida and Manhattan since Dec. 21, expected to be “home by dinner,” one of her lawyers, Diane Ferrone, said after court Jan. 7. “She has been through the mill,” another attorney, Maurice Sercarz, said following the court appearance.

U.S. District Judge Laura Taylor Swain in Manhattan cut Bongiorno’s bail Jan. 7 from $5 million to $3 million after prosecutors seized most of her bank accounts and defense lawyers agreed to disclose others. The judge required eight people to guarantee the bail.

Bongiorno, 62, is among five people facing charges of helping Madoff defraud investors of billions of dollars. Prosecutors argued that Bongiorno is likely to flee. Madoff, 72, is serving a 150-year sentence.

Bongiorno, who pleaded not guilty Jan. 7 to conspiracy and fraud charges, will remain under house arrest in Manhasset, New York, one of two homes that she and her husband own.

The case is U.S. v. Bongiorno, 10-cr-228, U.S. District Court, Southern District of New York (Manhattan).

For more, click here.

Icahn Opposes Lions Gate Effort to Continue Suit

Carl Icahn asked a judge a second time to dismiss a lawsuit by Lions Gate Entertainment Corp., saying the studio’s claims that he tried to interfere with its plans became moot when his tender offer for the company expired.

Icahn, chairman of Icahn Enterprises LP in New York, didn’t violate any law by not disclosing “tentative or inchoate plans” he might have had about merging the Vancouver-based studio and Metro-Goldwyn-Mayer Inc., he said Jan. 6 in a filing in U.S. District Court in New York.

Lions Gate said Dec. 30 it wants to continue its lawsuit against Icahn, forcing him to pay damages for interfering with its plans. The New York financier should reveal details of a “secret” agreement he had with MGM creditors, it said in a court filing.

It also wants to know about a “side deal” Icahn allegedly struck with another large shareholder of the studio, Mark Cuban, about buying his shares, it said.

According to Lions Gate, Icahn offered Cuban, co-founder of the TV network HDNet and owner of the Dallas Mavericks basketball team, “special consideration” for his agreement to tender a 5.4 percent Lions Gate to Icahn as the billionaire tried to acquire the studio.

Icahn said Jan. 6 that his company “vigorously denies that it had any concrete plans regarding MGM or any understanding or agreement with Cuban.”

The case is Lions Gate Entertainment Corp. v. Icahn, 10-cv-8169, U.S. District Court, Southern District of New York (Manhattan).

For the latest lawsuits news, click here.


PharmAthene Not Promised License, Ex-Siga Chair Says

PharmAthene Inc. was never promised a license for a drug used to treat smallpox in case of a U.S. biological terror attack, Siga Technologies Inc.’s former chairman said in court.

Donald Drapkin’s testimony in a Delaware Chancery Court trial contradicted ex-PharmAthene Chief Executive Officer David Wright’s statements that Siga officials “guaranteed” manufacturing rights to the drug, known as ST-246, as part of merger talks.

“I certainly wasn’t going to do a licensing agreement and a merger agreement,” Drapkin told Judge Donald Parsons Jr. on Jan. 7. “When I said I wouldn’t do a licensing agreement and a merger, they didn’t put up any objections.”

PharmAthene, based in Annapolis, Maryland, sued New York-based Siga in 2006, asking a judge to affirm the purported licensing agreement for the drug, which has gotten the attention of U.S. officials seeking ways to counter potential biological terror attacks. Siga contends the licensing talks never concluded and that the written term sheet bore the heading “non-binding.”

Both PharmAthene and New York City-based Siga develop products to counter biological warfare agents such as anthrax and smallpox. PharmAthene had a net loss of $32.3 million on 2009 sales of $27.6 million. Siga had a net loss of $17.6 million on revenue of $13.8 million.

Siga said in October the U.S. Health and Human Services Department selected it for a $500 million contract to produce

1.7 million doses of its smallpox antiviral. The contract may generate as much as $2.8 billion, according to court filings. Federal officials are investigating whether Siga qualifies for the contract.

Siga officials’ decision to renege on the agreement caused $1.07 billion in damage to PharmAthene, an expert witness for the biotech company testified. PharmAthene wrapped up its case last week. Parsons is hearing the case without a jury, which is customary in Chancery Court.

Testimony in the case is expected to go until Jan. 12 and then the trial will be suspended until Jan. 18th. Parsons said Jan. 7 that he expects the case to finish by Jan. 21.

The case is PharmAthene Inc. v. Siga Technologies Inc., CA2627, Delaware Chancery Court (Wilmington).

For more, click here.

Barclays’s Disputes Over Lehman Brokerage May Continue

Barclays Plc said disputes over an $11 billion profit it allegedly made buying bankrupt Lehman Brothers Holdings Inc.’s brokerage may not all be resolved in a current trial and might need “further adjudication.”

Barclays is awaiting a verdict from a U.S. bankruptcy judge on whether it owes money to Lehman or the brokerage trustee, or whether it will get the $3 billion it says it is owed. The assets were at issue in more than 30 days of court testimony at a nonjury trial that ended in October.

The key dispute is over $769 million in securities held in the Lehman brokerage’s customer reserve accounts, which London-based Barclays is claiming and the trustee is holding onto, Barclays said in a filing Jan. 6 in U.S. Bankruptcy Court in Manhattan. The U.S. Securities and Exchange Commission said last month that a transfer of the funds might violate U.S. law.

The U.K. bank, New York-based Lehman and the trustee all agree that this issue may require more court proceedings and rulings, according to Barclays’s filing.

Kimberly Macleod, a Lehman spokeswoman, said she couldn’t immediately comment.

Barclays was the sole bidder for the brokerage in September 2008 after Lehman filed the biggest bankruptcy in U.S. history.

The case is In re Lehman Brothers Holdings Inc., 08-13555, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

For the latest trial and appeals news, click here.

Court Filings

Allstate Sues Countrywide Over $700 Million Investment

Allstate Corp.’s lawsuit against Bank of America Corp. and its Countrywide mortgage unit over $700 million in residential mortgage-backed securities the insurer purchased, was the most-read litigation docket on the Bloomberg Law system last week.

Allstate, based in Northbrook, Illinois, said in the complaint, filed Dec. 27, that the mortgage-backed securities, purchased from March 2005 to June 2007, suffered “drastic and rapid loss in value” when large numbers of homeowners began to default on their mortgages.

The suit, which seeks unspecified damages, alleges fraud, negligent misrepresentation and violation of U.S. securities laws. In addition to Bank of America and Countrywide, Allstate names as defendants former Countrywide officials including former chairman and chief executive officer, Angelo Mozilo.

“We are still reviewing the complaint, but this unfortunately appears to be a situation where a sophisticated investor is looking for someone to blame for a downturn in the economy and losses on an investment it made,” Bill Halldin, a spokesman for Charlotte, North Carolina-based Bank of America, said in a statement after the suit was filed.

The case is Allstate Insurance Co. v. Countrywide Financial Corp., 10-cv-9591, U.S. District Court, Southern District of New York (Manhattan).

For more, click here.

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