Sept. 10 (Bloomberg) -- Dentons LLP advised Molex Inc., a maker of electronic components for products such as Apple Inc.’s iPhone, which agreed to a $7.2 billion acquisition by Koch Industries Inc., the holding company controlled by the billionaire Koch brothers. Latham & Watkins LLP represented Wichita, Kansas-based Koch.
Dentons’ team was led by Mike Froy, corporate and securities partner. Members of the team included Matthew Dyckman, corporate and securities; Pamela Baker, employee benefits; and Stephen Libowsky, antitrust/competition.
Latham advised Koch with a Chicago-based deal team led by corporate partners Mark Gerstein, Bradley Faris and Timothy FitzSimons. Advice was also provided by Bradley Kotler and David Rathgeber, financing; Sean Berkowitz and Catherine Palmer, corporate compliance; Bradd Williamson, benefits and compensation; Diana Doyle, tax; Art Foerster, environmental; Jeffrey Tochner, intellectual property; David Shapiro, real estate; and Richard Brown, U.K. securities matters.
Koch will buy Molex’s shares for $38.50 apiece, a 31 percent premium over the publicly traded common stock, according to a statement yesterday. The companies expect to complete the transaction by the end of the year.
Koch, a closely held company that owns biofuel and fertilizer makers to commodity-trading services, is using the acquisition to expand into connector components. The deal won the support of the Krehbiel family, which has controlled Molex since it began as a manufacturer of moldable plastic in 1938.
The deal will turn Molex into a stand-alone division of Koch, with the company retaining its name and headquarters in Lisle, Illinois. Molex sells interconnection systems to automakers, mobile-phone companies and military customers. That includes Apple, which uses some Molex connectors for the iPhone 5, the top-selling smartphone.
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Neiman Marcus Bought by Ares, Canada Fund for $6 Billion
Cleary Gottlieb Steen & Hamilton LLP advised Neiman Marcus Inc., the Dallas-based luxury chain, on its agreement to sell itself to Ares Management LLC and the Canada Pension Plan Investment Board for $6 billion. Proskauer Rose LLP advised Ares Management and the Canada Pension Plan. Latham & Watkins LLP was finance counsel to the buyers.
Cleary Gottlieb, which acted as counsel to TPG Capital and Warburg Pincus as well as Neiman Marcus, had a deal team that included Bob Davis and David Leinwand, mergers and acquisitions. Additional team members included Meme Peponis and Amy Shapiro, finance; Jason Factor, tax; Brian Byrne, antitrust; and Steven Horowitz, real estate.
The Proskauer deal team was led by Michael Woronoff, co-head of the firm’s private equity/mergers and acquisitions group and head of the Los Angeles office. The team also included partners Andrea Rattner, executive compensation; Michael Fernhoff, tax; Daryn Grossman, intellectual property; Douglas Frank, real estate; Scott Cooper and Baldassare Vinti, litigation; Kristen Mathews, privacy; Howard Robbins, labor; and Alicia Batts, antitrust.
Latham is advising Ares on financing related to the Neiman Marcus transaction with a team led by partners Kirk Davenport, Joshua Tinkelman and Jason Licht.
Ares and the pension fund will hold an equal economic interest in Neiman, and the chain’s management will retain a minority stake, the buyers said in a statement yesterday. The deal probably ends prospects for a Neiman initial public offering.
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Senior FTC Antitrust Attorney Joins Arnold & Porter
Peter J. Levitas, a former deputy director in the Bureau of Competition at the Federal Trade Commission, will join Arnold & Porter LLP’s Washington office as partner in the antitrust group.
In his government position, which Levitas held for four years, he was responsible for the FTC’s Mergers 1, Health Care, and Anticompetitive Practices divisions, as well as the FTC’s Northeast Regional Office in New York, the firm said in a statement. He oversaw investigations and related litigation for merger and conduct cases and was the lead negotiator in the settlement of the Intel litigation, as well as the Google investigations, according to the firm.
“Pete brings deep knowledge of the policy, investigation and litigation issues at both the state and federal levels,” Arnold & Porter Chairman Thomas H. Milch said in the statement. “As an experienced antitrust attorney with a broad range of government experience, he fully understands the competition landscape facing corporations today, particularly those who may be dealing with state or federal investigations of a merger or alleged anticompetitive conduct.”
Levitas also worked for more than five years as a trial attorney in the Department of Justice antitrust division. He previously spent seven years as the staff director and chief counsel to the U.S. Senate Judiciary Committee’s Subcommittee on Antitrust, Competition Policy and Consumer Rights.
Arnold & Porter LLP has more than 800 lawyers at eight offices in the U.S. and Europe.
Justice Department’s Avi Gesser Returns to Davis Polk
Davis Polk & Wardwell LLP said Avi Gesser, former deputy director of the U.S. Justice Department, criminal division’s Deepwater Horizon task force, will rejoin the firm’s litigation department as a partner in the white-collar criminal defense group.
Gesser, who worked on the task force from early 2011 through August, was responsible for its operation and jointly responsible for investigating and prosecuting BP, Transocean and Halliburton in connection with the Macondo oil spill in the Gulf of Mexico, the firm said. In 2013, the companies all pleaded guilty to criminal conduct in connection with the oil spill, the largest criminal resolution in U.S. history.
From mid-2010 to December 2012, Gesser was the counsel to the chief of the Justice Department, criminal division’s fraud section, where he assisted in overseeing more than 100 federal prosecutors who work on Foreign Corrupt Practices Act, securities, health care, and other fraud investigations.
“We are delighted to welcome back Avi, whose invaluable government experience will be a great asset to our world-class white collar criminal defense team assisting our clients on their most sensitive investigations and trials,” Thomas J. Reid, Davis Polk’s managing partner said in a statement. “Avi joins a long list of Davis Polk lawyers who have returned to the firm after government service, such as a number of our current litigators who have held senior positions with the DOJ, the SEC, the White House and the CIA.”
Davis Polk has more than 750 lawyers in offices in the Americas, Europe and Asia.
Former White House Senior Lawyer Bershteyn Rejoins Skadden
Boris Bershteyn, who held several senior legal and regulatory positions at the White House and its Office of Management and Budget, rejoined Skadden, Arps, Slate, Meagher & Flom LLP as of counsel in New York.
Bershteyn will focus on regulatory and enforcement actions by government agencies, as well as on Supreme Court, appellate and trial-level litigation.
Bershteyn was acting administrator of the Office of Information and Regulatory Affairs from 2012 to 2013, where he headed the federal agency that reviews executive branch agencies regulations. Before that, he was general counsel of OMB, where he coordinated the office’s litigation and compliance matters, and counseled the OMB director on administrative, regulatory, fiscal, and legislative issues, the firm said.
He also worked as OMB’s deputy general counsel from 2009 to 2010. From 2010 to 2011, Bershteyn was special assistant to the president and associate White House counsel, advising senior administration officials on legal aspects of regulatory, economic, health, and environmental policy.
“As clients around the world face an increasingly complex global regulatory environment and high-stakes disputes across jurisdictions, Boris’ skills and insight will further enhance our capacity to respond,” David M. Zornow, global head of Skadden’s litigation and controversy practices, said in a statement.
Skadden has about 1,800 attorneys at 23 offices in the Americas, Europe and Asia.
Secret Swiss Accounts No Longer Safe Tax Dodge, Prosecutor Says
Taxpayers who still believe they can hide secret Swiss bank accounts from the Internal Revenue Service are “beyond foolish,” the top U.S. tax prosecutor said as a five-year crackdown expands to new offshore havens, Bloomberg News’ David Voreacos reports.
The enforcement drive has forced a “remarkable” change in the ability of the U.S. to find secret accounts in Switzerland, the world’s largest offshore financial center with about $2.2 trillion of assets, said Kathryn Keneally, assistant attorney general in the Justice Department’s tax division.
“If someone had an account in Switzerland, it is beyond foolish to think that that account is going to remain secret,” said Keneally, 55. “In the last five years, we’ve seen a remarkable change in our ability to get information concerning Swiss bank accounts. It’s extraordinary. Switzerland is no longer a good place to hide assets for tax reasons.”
Keneally, in her first interview since taking the job in April 2012, said a new U.S. amnesty program for Swiss banks to disclose how they aided tax evasion puts taxpayers and offshore enablers at risk of prosecution. Since 2009, the U.S. has prosecuted 68 U.S. taxpayers, three Swiss banks, and 30 bankers, lawyers, and advisers. Another 38,000 Americans moved $5.5 billion to the U.S. and avoided prosecution by saying who helped them offshore.
Fourteen firms, including Credit Suisse Group AG, the second-largest Swiss bank; HSBC Holdings Plc, the largest European bank; and Julius Baer Group Ltd., Switzerland’s third-largest wealth manager, are under criminal investigation. On Aug. 29, the U.S. announced a program for other Swiss banks to avoid charges.
They must pay penalties, disclose their cross-border activities, give detailed account information for U.S. clients, describe other banks that got their secret accounts, and cooperate in requests for information under a U.S.-Swiss tax treaty. Banks that don’t come forward by the Dec. 31 deadline could face criminal charges, Keneally said.
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Veteran Malpractice Payouts Hit 12-Year High on Taxpayer Tab
A $17.5 million malpractice judgment on behalf of veteran Christopher Ellison against the Department of Veterans Affairs in 2012 was the largest against the agency in a dozen years, Bloomberg News’ Kathleen Miller reports.
It was one of more than 400 payments the U.S. government made last year to resolve VA malpractice claims, according to agency records obtained through a Freedom of Information Act request. The total cost came to $91.7 million, also the highest sum in at least 12 years.
The cases against the VA have included missed diagnoses, delayed treatment and procedures performed on wrong body parts. U.S. lawmakers and veterans’ advocates say they reflect deep flaws in the agency’s health-care system even as the department tends to more former troops, including those who fought in Iraq and Afghanistan.
“The rapid rise in malpractice judgments against VA mirrors the emerging pattern of preventable veteran deaths and other patient safety issues at VA hospitals,” Representative Jeff Miller, a Florida Republican and chairman of the House veterans committee, said in an e-mailed statement. “What’s missing from the equation is not money or manpower -- it’s accountability.”
The 2012 malpractice payments stemmed from both court judgments and administration settlements. The payouts, made by the U.S. Treasury’s Judgment Fund, rose 28 percent last year from about $72 million in 2011, the VA records showed. Taxpayers have spent at least $700 million to resolve claims filed against the veterans agency since 2001, according to the data.
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Chevron Won’t Seek Money Damages in Ecuador Pollution Case
Chevron Corp. said it won’t seek monetary damages against two plaintiffs in a racketeering suit the company filed claiming they committed fraud to win a $19 billion verdict in a pollution case in Ecuador.
The company today also asked that the trial, set to begin in federal court in Manhattan next month, be held in two parts, one before a federal jury and a second phase before a judge.
Chevron, the second-largest U.S. oil company, was ordered to pay as much as $19 billion in compensatory and punitive damages for Texaco Inc.’s alleged dumping of toxic drilling wastes in the Ecuadorean jungle from 1964 to about 1992. The ruling came in an 18-year-old lawsuit decided by a judge in Lago Agrio, a provincial capital near the Colombian border.
The company filed a racketeering suit in federal court in New York in 2011 accusing the Ecuadoreans and their lead legal adviser, Steven Donziger, of improperly influencing a court expert in the case in Lago Agrio and committing fraud to win the judgment. U.S. District Judge Lewis Kaplan in New York, who is presiding over the case, has scheduled an Oct. 15 trial.
The San Ramon, California-based oil company said it won’t seek money damages against two Ecuadoreans and that a jury should determine claims of liability against all of the defendants as well as Donziger and his law firm.
Chevron also asked that a jury determine what, if any, compensatory and punitive monetary damages should be paid by Donziger and asked Kaplan to determine what remedies should be imposed. The company is asking Kaplan to decide if the plaintiffs should be barred from further harming Chevron and to issue an order that protects its assets.
Chevron denies wrongdoing in the Lago Agrio lawsuit. The company said Texaco cleaned up its share of the pollution at its former oil fields, which were taken over by PetroEcuador, Ecuador’s state-owned oil company. Chevron said it was released from any future liability by an agreement between Texaco and Ecuador. Chevron acquired Texaco in 2001.
The racketeering case is Chevron v. Donziger, 11-00691, U.S. District Court, District of New York (Manhattan). The case in Ecuador is Maria Aquinda v. Chevron, 002-2003, Superior Court of Nueva Loja, Lago Agrio, Ecuador.
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Law Firm News
Former Dewey Law Firm Managers to Face Suit in Iowa
The three former top executives from Dewey & LeBoeuf LLP, the defunct law firm, must face trial before a U.S. district judge in Des Moines, Iowa, after failing to have a lawsuit by Aviva Life & Annuity Co. transferred to the bankruptcy court in Manhattan where Dewey was liquidated.
Des Moines-based Aviva alleged in a complaint filed in December that the trio induced the insurance company into buying $35 million of secured notes in April 2010. Aviva said the firm represented it was “financially sound” when there was $100 million in “undisclosed debt to certain highly compensated partners.”
Aviva sued Steven Davis, the former Dewey chairman; Stephen DiCarmine, the former executive director; and Joel Sanders, the chief financial officer. The firm itself couldn’t be named in the suit because it was in bankruptcy.
The Dewey managers asked U.S. District Judge James E. Gritzner in Des Moines to transfer the case to the bankruptcy court in New York, where Dewey’s Chapter 11 plan was approved by confirmation order in February. Gritzner in an opinion yesterday concluded that it was proper for the suit to remain in Iowa.
Aviva alleges that Dewey kept obligations secret even from the firm’s own partners to avoid the “possibility of a mass defection” and misstated revenue “by over $100 million per year.” The managers said the insurance company was given a private placement memorandum that “clearly explained the dire financial situation.”
Gritzner analyzed how the bankruptcy court in New York could have what is known as “related-to” jurisdiction over the suit. Jurisdiction would be based on the possible effect of the suit on Dewey’s Chapter 11 plan.
He said the case must stay in Iowa because the bankruptcy judge could only issue a recommended decision. In the interest of judicial economy, the district court should keep the case, Gritzner said.
Ned Bassen of Hughes Hubbard & Reed LLP, attorneys for DiCarmine and Sanders, called the suit “preposterous.”
Dewey’s liquidating Chapter 11 plan was implemented in March. The firm estimated that midpoint recoveries for secured and unsecured creditors under the plan would be 58.4 percent and 9.1 percent, respectively. The plan created a trust to collect and distribute remaining assets.
Dewey once had 1,300 lawyers. The liquidation began under Chapter 11 in May 2012. At the outset of bankruptcy, there was secured debt of about $225 million and accounts receivable of $217.4 million, the firm previously said. The petition listed assets of $193 million and liabilities of $245.4 million.
The Iowa case is Aviva Life & Annuity Co. v. Davis, 12-cv-00603, U.S. District Court, Southern District of Iowa (Des Moines). The bankruptcy is In re Dewey & LeBoeuf LLP, 12-bk-12321, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
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