Kissel, Assange, Credit Suisse, Goldman, J&J in Court News
Nancy Kissel, accused of murdering her banker husband, broke down in a Hong Kong court today after saying that she wasn’t able to help their daughter and said she tried to protect herself from abuse by spiking his drinks.
“I couldn’t do anything to help her,” she said after telling the nine-member jury that Robert Kissel, then head of the Asian distressed asset business of Merrill Lynch & Co., locked himself in their daughter’s room after the then 9-year- old failed to make her bed. “It’s all my fault, everything. I wasn’t strong enough.”
Kissel, whose guilty plea to manslaughter has been rejected by prosecutors, was describing how her relationship with her husband was “spiraling down” in the months before she killed him in November 2003. Prosecutors say she deliberately drugged and then bludgeoned him to death. She was the main beneficiary of his $18 million estate and was having an affair at the time of the killing, the jury has been told.
After talking about her daughter this morning Kissel looked over her left shoulder at her mother in the public gallery and apologized for not telling her, saying nobody would have believed her.
Jane Clayton, Robert’s sister who had testified earlier in the retrial for the prosecution, then walked out of the court.
Kissel’s lawyer Edward Fitzgerald then tried to ask her about the electrical technician in Vermont that she had an affair with, but Kissel continued to talk about her daughter. Judge Andrew Macrae then adjourned the hearing for a recess.
Fitzgerald said in his opening statement on Feb. 22 that the Michigan-born mother of three suffered from depression and was provoked into the killing after years of abuse.
Kissel, 46, was convicted of murder in 2005 and sentenced to life in prison. Hong Kong’s Court of Final Appeal ruled in February 2010 the conviction was unfair and ordered a new trial. The retrial began Jan. 11.
A manslaughter conviction may mean a sentence of eight to 12 years, Kissel’s lawyers have said. She has already served more than six years in prison.
The case is HKSAR v. Nancy Ann Kissel, HCCC55/2010 in Hong Kong’s High Court of First Instance.
U.S. Indicts Four Swiss Bankers in Tax-Evasion Conspiracy Case
Four bankers who worked at Credit Suisse Group AG were charged with conspiring to help U.S. clients evade taxes through secret bank accounts, according to an indictment yesterday and people familiar with the matter.
Marco Parenti Adami, Emanuel Agustoni, Michele Bergantino and Roger Schaerer conspired with clients at “one of the biggest banks in Switzerland,” according to an indictment in federal court in Alexandria, Virginia. Zurich-based Credit Suisse, the second-biggest bank in Switzerland, is the bank, according to the people who requested anonymity because they aren’t authorized to speak publicly about the indictment.
The bank’s managers in its cross-border business “knew and should have known that they were aiding and abetting U.S. customers in evading their U.S. income taxes,” according to the indictment. In the fall of 2008, the bank had “thousands” of accounts with $3 billion in assets not declared to the U.S. Internal Revenue Service, according to the indictment.
The scheme included setting up undeclared accounts protected by Swiss bank secrecy, providing banking and investment services in New York to holders of those accounts, and having bankers provide unlicensed banking services to customers they visited in the U.S., according to the indictment.
“We are cooperating with the authorities in their investigation against these four individuals,” Marc Dosch, a bank spokesman in Zurich, said in a statement.
The case is U.S. v. Marco Parenti Adami, 11-cr-95, U.S. District Court, Eastern District of Virginia (Alexandria).
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Bank of America Sued by Investors Seeking to Unload Loans
Bank of America Corp., the biggest U.S. bank by assets, was sued by investors in mortgage-backed bonds who are seeking to force the bank to buy back loans underlying their securities.
Bank of America’s Countrywide Financial unit breached representations and warranties about the loans, which it originated, the investors said in the complaint filed yesterday in New York State Supreme Court in Manhattan.
“Each of these breaches of representations and warranties materially and adversely affected the interests of both the trust and plaintiffs in those mortgage loans,” they said.
The lawsuit against Bank of America was filed as defaults on mortgage loans soar and mortgage investors demand that banks buy back poorly performing loans. So-called mortgage putbacks may cost banks and lenders as much as $90 billion, JPMorgan bond analysts said in an October report.
The plaintiffs in the New York lawsuit are a group of limited liability companies with variations of the name Walnut Place, according to the court filing. They also claimed in the lawsuit that Bank of New York Mellon Corp., the trustee for investors, “unreasonably failed” to sue Bank of America to force it to repurchase the loans.
The plaintiffs are suing on behalf of the trust that holds the loans and which issued the mortgage bonds, according to the court filing. The original balance of securitization involved in the case was $2.8 billion, according to data compiled by Bloomberg.
Kevin Heine, a BNY Mellon spokesman, declined to immediately comment. Jerry Dubrowski, a spokesman for Charlotte, North Carolina-based Bank of America, didn’t return a call seeking comment. Bank of America acquired Countrywide in 2008.
The case is Walnut Place LLC v. Countrywide Home Loans Inc., 650497-2011, New York State Supreme Court (Manhattan).
CVS Unit Sued by IMS Health Over Drug-Data Contracts
A unit of CVS Caremark Corp., the largest U.S. provider of prescription drugs, was sued by market-intelligence firm IMS Health Inc. for allegedly violating contracts to supply drug- sales data.
IMS, based in Norwalk, Connecticut, is asking a Delaware Chancery Court judge to force the CVS unit to comply with the agreements. The contract terms weren’t disclosed in the complaint, filed under seal in Wilmington on Feb. 7.
“IMS has suffered and is suffering injury, which can be only incompletely compensated through a later award of damages,” the company said in redacted court papers made public yesterday.
More than 4 billion prescriptions are dispensed in the U.S. annually, IMS said. It collects data from pharmacies for use by drug companies, marketers and government agencies for research, sales, compliance, safety and tracking disease.
CVS fills about 1 billion prescriptions a year, IMS lawyers said in a filing. CVS, based in Woonsocket, Rhode Island, has 7,000 affiliated stores.
“We are aware that IMS Health has filed a breach of contract action against various CVS Caremark entities,” Christine Cramer, a spokeswoman for CVS, said in an e-mail. “The company believes that the lawsuit is without merit and intends to vigorously defend against IMS Health’s claims,” Cramer said.
The case is IMS Health v. Caremark LLC, CA6174, Delaware Chancery Court (Wilmington).
LaBranche Shareholders Sue to Stop Sale to Cowen Group
LaBranche & Co. shareholders sued to stop the market- maker’s planned sale to financial services firm Cowen Group Inc., saying they’re not getting fair value.
The deal is structured to deter competing bids and will result in LaBranche stockholders ceding control for less than the company’s true value, the investors said in a complaint filed Feb. 22 in New York State Supreme Court.
“The proposed transaction is the product of a flawed process that is designed to ensure the sale of LaBranche to Cowen on terms preferential to Cowen, but detrimental” to LaBranche shareholders, Stanley and Barbara Moskal said in their complaint, which seeks class-action status.
Under the proposed deal announced Feb. 17, Cowen will acquire LaBranche in an all-stock transaction. LaBranche shareholders will receive 0.998 share of Cowen common stock for each LaBranche share. LaBranche is a market-maker in options, exchange-traded funds and futures.
Jeffrey McCutcheon, LaBranche’s chief financial officer, didn’t immediately return a call seeking comment. Dan Gagnier, a Cowen spokesman, declined to immediately comment. Both companies, which are based in New York, were sued.
The case is Stanley Moskal v. LaBranche & Co. Inc., 650472-2011, New York State Supreme Court (Manhattan).
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WikiLeaks’s Assange Should Be Extradited to Sweden
Julian Assange, founder of the anti-secrecy website WikiLeaks, should be extradited from Britain to Sweden to face questioning over sexual-assault allegations by two women, a U.K. judge ruled.
District Judge Howard Riddle in London made the ruling today and said Assange had seven days to appeal. Geoffrey Robertson, one of Assange’s lawyers, said at the court hearing he would appeal the ruling.
“It does not seem unreasonable to me” that the Swedish prosecutor would request Assange’s presence in Sweden for questioning “in a matter as serious as this,” Riddle said.
Assange was arrested in December after Sweden issued a so- called European arrest warrant. The alleged sexual misconduct, which two Swedish women claim took place in August, was revealed as WikiLeaks drew condemnation for posting thousands of classified U.S. military and diplomatic communications. Assange’s lawyers are fighting the extradition and claim the case may be politically motivated.
Winifred Jiau Bail Package Will Be Approved, U.S. Judge Says
A U.S. judge said he will approve a bail package for Winifred Jiau, after saying the former consultant to Primary Global Research LLC is a “flight risk” because of ties to her native Taiwan.
U.S. District Judge Robert Patterson said yesterday he would agree to release Jiau if she posts $50,000 cash and a parcel of real estate worth an estimated $25,000 in addition to a total of $500,000 assets to be posted by friends.
“I think that if the defendant puts up a sufficient amount of cash in addition to the parcel of land that I would approve the bail application,” Patterson said in a hearing yesterday. “I do think that there is a risk of flight and therefore there has to be a bond.”
In the hearing, Jiau, 43, pleaded not guilty to conspiracy and securities-fraud charges contained in a federal indictment made public yesterday. Jiau has been in custody since her arrest in December on a criminal complaint with similar charges to those contained in the indictment.
Assistant U.S. Attorney Avi Weitzman argued against bail for Jiau, telling Patterson she is likely to flee to Taiwan, which Weitzman said doesn’t have an extradition treaty with the U.S. Jiau has family in Taiwan and none in the U.S., he said. Jiau lived in that country until she was 23 and again from 2004 to 2005, according to Weitzman.
Prosecutors claim that from 2006 to 2008 Jiau passed inside information to an unnamed hedge fund portfolio manager and to Noah Freeman, the Boston hedge fund manager who pleaded guilty Feb. 7 to securities fraud.
Jiau passed tips on Nvidia Corp. and Marvell Technology Group Ltd. to the two men, according to the indictment. She was paid as much as $10,000 a month in return. Weitzman told Patterson yesterday that Jiau received a total of $208,000 from Primary Global in two years.
The case is U.S. v. Jiau, 10-mj-02900, U.S. District Court, Southern District of New York (Manhattan).
Basis Seeks Order to Save Greywolf Documents in Goldman Suit
Basis Capital, an Australian hedge fund suing Goldman Sachs Group Inc. over losses related to credit default swaps, sought a court order to preserve documents held by Greywolf Capital Management LP, a New York firm that advised on the investments.
Goldman Sachs had pitched Greywolf as “responsible for initial asset selection” of mortgage securities making up the “Timberwolf” collateralized debt obligation purchased by Basis, according to documents filed in federal court in Manhattan. Goldman Sachs actually had the right to reject any security suggested by Greywolf, Basis said in the documents, which refer to the hedge fund by its acronym BYAFM.
Basis “believes that Greywolf is likely to be in possession of documents probative of BYAFM’s claims,” the company said in the Feb. 17 filing, which was posted on the court’s website Feb. 22.
Greywolf, based in Purchase, New York, is reducing the size of its operation, as funds under management declined to $956 million in January from $3.5 billion in 2007 and the number of investment professionals the firm employs dropped to 16 from 27 over the same time period, Basis said.
U.S. District Judge Barbara Jones had ordered a halt to examination of documents in the case until she decides whether the lawsuit should proceed. Goldman Sachs asked the judge in September to throw out the lawsuit, claiming Basis made the deal in Australia and can’t sue in the U.S. Jones’s decision is still pending.
The case is Basis Yield v. Goldman Sachs, 1:10-cv-04537, U.S. District Court, Southern District of New York (Manhattan).
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Abramovich Loses Bid to End Berezovsky’s Suit Over Sibneft
Roman Abramovich, the Russian billionaire who owns Chelsea Football Club, lost a bid to dismiss a lawsuit filed in London by his former business partner Boris Berezovsky over shares of oil company OAO Sibneft.
The Court of Appeal in London upheld a March ruling saying Berezovsky’s $3.5 billion lawsuit can go to trial. The three- judge panel rejected all but one of Abramovich’s grounds for appeal.
Berezovsky claims in the suit that Abramovich used “threats and intimidation” to force him to sell Sibneft shares at a fraction of their value. Berezovsky sold Abramovich the Sibneft stake for $1.3 billion between 2001 and 2003. Then in 2005, Abramovich sold Sibneft to state-run OAO Gazprom for $13.1 billion. Berezovsky claims he lost as much as $4 billion on the deal.
John Mann, a spokesman for Abramovich, didn’t immediately respond to an e-mail seeking comment on yesterday’s ruling. Efforts to reach him by phone weren’t successful.
“This is the second unsuccessful attempt by Mr. Abramovich to stop this case,” Berezovsky’s lawyer Mark Hastings said in an e-mailed statement. “It is another significant judgment and we are all delighted with the result.”
The case is: Berezovsky v. Abramovich, 07-942, High Court of Justice, Queen’s Bench Division, Commercial Court.
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Google Belgian Copyright Appeal Could Decide European Policy
Google Inc. is fighting a Belgian ruling blocking it from publishing links to local newspapers on its online news service at a hearing yesterday that could decide the fate of search engines and referencing services in Europe.
Google is appealing a 2007 Belgian court ruling that its news search breached copyright laws, forcing it to remove links and snippets of articles from French- and German-language newspapers. The judge in that case “seemed to have badly understood” the functioning of Internet search services, Google’s lawyers said.
“This case will have serious consequences to the way information is searched and managed” on the Internet, Eric Valgaeren, one of the lawyers representing Google, told the Brussels Court of Appeal yesterday. “A negative ruling would put at risk all referencing services or even cause them to disappear.”
The court should “put an end to the hypocritical position” of the claimants and the “astronomical sums” they’re seeking, Valgaeren, who works in the Brussels office of law firm Stibbe, said at the hearing.
Copiepresse, a group that represents French and German- language newspapers, and an association that represents journalists on copyright issues, were among those that filed the original lawsuit after Google News was introduced in Belgium in 2006. Newspapers lose advertising revenue when Google uses snippets of their stories and direct links, said Flip Petillion, a Brussels-based partner with Crowell & Moring LLP, who isn’t involved in the matter.
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Roche Gave Accutane Warning, Lawyer Says in Actor’s Trial
Roche included warnings in Accutane’s label that some users suffered rectal bleeding, diarrhea and other indications of bowel disease, Rod Richmond, one of the drugmaker’s lawyers, said in opening statements yesterday in the trial of a lawsuit brought by James Marshall, who played U.S. Marine Louden Downey in the 1992 hit movie “A Few Good Men.”
“The warning was accurate,” Richmond told a state court jury in Atlantic City, New Jersey. “The credible evidence will show” that Roche properly warned Marshall and his doctors about the drug’s health risks, he said.
Marshall, 44, a New Jersey native, is seeking at least $11 million in damages. The actor’s suit has been combined with those of two other former Accutane users for trial.
Marshall’s portion of the case will feature testimony from Hollywood celebrities such as Martin Sheen, Brian Dennehy and Rob Reiner. They will testify that Marshall was headed for stardom before bowel ailments allegedly caused by Accutane forced doctors to remove his colon, Michael Hook, one of the actor’s lawyers, said in his open statement Feb. 22.
The case is Greenblatt v. Hoffmann-La Roche Inc., ATL- l-1246-06, New Jersey Superior Court, Atlantic County (Atlantic City).
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U.S. Supreme Court Opens Automakers to Seatbelt Lawsuits
The U.S. Supreme Court opened the auto industry to new lawsuits over seatbelt design, ruling that Mazda Motor Corp. must defend against claims pressed by the family of a woman killed while riding in an MPV minivan.
The justices unanimously said yesterday that compliance with a 1989 federal seatbelt regulation doesn’t shield a company from claims that it should have installed a safer type of belt. Justice Stephen Breyer wrote for the court that regulators intended to set only a minimum standard.
The ruling, which directly applies to cars made prior to 2007, marks a change in the law in much of the country. Every lower court to consider the issue had concluded that the federal rules preempted suits by accident victims over seatbelt design.
The ruling scales back a 2000 decision that said federal law insulates automakers from claims under state product- liability law that they should have moved more quickly to install air bags. Justice Sonia Sotomayor said in a concurring opinion that lower courts had been reading too much into that opinion.
The case is Williamson v. Mazda Motor of America, 08-1314, U.S. Supreme Court (Washington).
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MERS Can Foreclose in California, State Appeals Court Rules
Merscorp Inc., operator of the electronic-registration system that contains about half of all U.S. home mortgages, has the right to foreclose on defaulted borrowers in California, a state appeals court ruled.
U.S. courts have differed in recent years on whether Merscorp’s Mortgage Electronic Registration Systems, or MERS, unit has the right to bring a foreclosure action.
“Under California law MERS may initiate a foreclosure as the nominee, or agent, of the noteholder,” California Court of Appeal Justice Joan K. Irion in San Diego wrote in a Feb. 18 ruling.
Merscorp, based in Reston, Virginia, and owned by Fannie Mae, Freddie Mac, JPMorgan Chase & Co. and other mortgage- industry companies, said in a Feb. 16 announcement that it will propose a rule change to stop members from foreclosing in its name.
“It’s incorrect,” Ehud Gersten, the San Diego lawyer who brought the suit on behalf of the borrower, Jose Gomes, said of the ruling in a phone interview yesterday. “I disagree with it completely.”
Gersten said he will appeal the decision.
The case is Gomes v. Countrywide Home Loans Inc., D057005, California Court of Appeal (San Diego).
Abbott Wins Reversal of J&J’s $1.67 Billion Patent Victory
The 2009 verdict, the largest patent-related damages award in U.S. history, was reversed yesterday by the U.S. Court of Appeals for the Federal Circuit in Washington, according to the court’s website. The three-judge panel ruled the patent, co- issued to New York University and J&J’s Centocor unit, is invalid.
J&J, which sells the competing arthritis medicine Remicade, had convinced a jury that Abbott infringed the patent, which J&J said covered the human antibodies used in Humira. The appeals court ruled that J&J’s patent application never described fully human antibodies and said at most the claims “constitute a wish list of properties” that such an antibody would have.
“The opinion confirms that you can’t claim what you didn’t invent,” said William Lee of WilmerHale in Boston, who represented Abbott in the case.
Rob Bazemore, president of the Centocor unit, said in a statement the company is considering whether to ask the panel to reconsider its decision or request that the case be heard by all active judges of the court.
The case is Centocor Inc. v. Abbott Laboratories, 10-1144, U.S. Court of Appeals for the Federal Circuit (Washington). The lower court case is Centocor Inc. v. Abbott Laboratories, 07cv139, U.S. District Court, Eastern District of Texas (Marshall).
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LabCorp Can Complete Purchase of Westcliff, Judge Rules
Laboratory Corp. of America can complete the purchase of rival clinical-testing company Westcliff Medical Laboratories Inc., a U.S. judge ruled, rejecting a challenge by the U.S. Federal Trade Commission.
U.S. District Judge Andrew J. Guilford in Santa Ana, California, denied Feb. 23 the FTC’s request for a preliminary injunction. The agency argued in court papers that the transaction would harm competition in Southern California.
LabCorp, the second-largest independent clinical laboratory in the U.S., agreed to buy Santa Ana-based Westcliff Medical for $57.5 million in May.
“Based on the applicable facts and law concerning the relevant markets and other issues, the court cannot conclude that the FTC is likely to succeed on the merits,” Guilford wrote in his 40-page decision.
The FTC in December filed for an injunction to prevent Burlington, North Carolina-based LabCorp from merging with Westcliff, claiming it would lead to higher prices and lower quality in the Southern California market for clinical laboratory-testing services sold to physician groups.
The FTC filed a motion to appeal the decision yesterday and another request to prevent the transaction from being completed until the appeal is decided, FTC spokesman Mitchell Katz said.
“We are disappointed with the court’s ruling,” FTC Bureau of Competition Director Richard Feinstein said in an e-mailed statement.
Steve Anderson, LabCorp’s director of investor relations, didn’t return a telephone message seeking comment.
The case is Federal Trade Commission v. Laboratory Corporation of America, 10-cv-1873, U.S. District Court, Central District of California (Santa Ana).
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SEC’s Top Lawyer Becker Sued for Inheriting Madoff Profits
David M. Becker, the departing chief lawyer at the U.S. Securities and Exchange Commission, said he had no detailed knowledge of how his parents came to earn $1.5 million from an investment in Bernard Madoff’s Ponzi scheme.
Becker and his brothers, who inherited the money upon his mother’s death in 2004, were sued in bankruptcy court in New York by the trustee liquidating Madoff’s firm, Irving H. Picard, who seeks to recover the funds as a fictitious gain.
“It is true that my brothers and I were designated as co- executors of my mother’s will, and it is also true that we were the residual beneficiaries of my mother’s estate,” Becker, 63, said yesterday in an e-mail. “I have no direct knowledge of any of the other facts -- how and when the Madoff account was opened, what was invested, and what was in the account when it was liquidated.”
Becker, who had been the SEC’s general counsel from 1999 to 2002, returned to that role in 2009. At the time, the agency was reeling from its failure to uncover the Madoff scandal before it unraveled in 2008. Asked whether he disclosed his family’s investment with Madoff when he rejoined the SEC, he said, “I can’t discuss internal discussions.”
Becker is finishing his last week as general counsel and senior policy adviser at the agency. A Feb. 1 announcement of his pending departure from the SEC came eight days before the date on a pre-trial summons from Picard that was served to Becker and his brothers, William and Daniel.
Becker said the summons came in the mail “sometime late last week” and that he had “no idea” when the case was filed. He said his departure from the SEC post is “not remotely” related to the Madoff lawsuit. It reflects the end of his “two- year deal” with SEC Chairman Mary Schapiro, he said.
Mark D. Cahn, a deputy general counsel, was promoted to replace Becker. Cahn said he is set to start work on Feb. 28.
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