Galleon Tipster Lawyer, Ex-Smith Barney’s Shah, News Corp. in Court News
Jason Goldfarb, a New York attorney who pleaded guilty to passing inside information from two other lawyers to ex-Galleon Group LLC trader Zvi Goffer, was sentenced to three years in prison.
U.S. District Judge Richard Sullivan made the ruling Aug. 19 at a hearing in Manhattan federal court. Federal sentencing guidelines, which aren’t binding on judges, called for a term of 37 to 46 months. Prosecutors from the office of U.S. Attorney Preet Bharara said Goldfarb, of Brooklyn, New York, deserved a term at the high end of that range.
“Goldfarb’s crimes were particularly egregious because of his status as an attorney,” the U.S. said in court papers filed Aug. 12. “While working as an attorney obligated to protect client confidences, Goldfarb engaged in a scheme to misappropriate information protected by the attorney-client privilege in order to enrich himself.”
Goffer was convicted of all 14 criminal counts against him in June, in the second trial of defendants charged in a nationwide investigation of insider trading at hedge funds. Goffer’s former boss, Galleon Group co-founder Raj Rajaratnam, was convicted of insider trading in May. Prosecutors are seeking a sentence of more than 24 years when Rajaratnam is sentenced Sept. 27.
Prosecutors claimed Goldfarb conspired with Goffer to pay thousands of dollars to Arthur Cutillo and Brien Santarlas, lawyers at Boston-based Ropes & Gray LLP, for information about transactions their firm was working on. Cutillo, who was Goldfarb’s college roommate, and Santarlas pleaded guilty.
Cutillo admitted that he and Santarlas leaked information about transactions involving 3Com Inc. and Axcan Pharma Inc. Goldfarb passed the tips to Goffer, who traded on the information, Cutillo said.
The case is U.S. v. Goffer, 10-cr-00056, U.S. District Court, Southern District of New York (Manhattan).
Ex-Smith Barney Adviser Shah Gets 38-Month Term for Fraud
Sanjeev Jayant Kumar Shah, a former financial adviser at Smith Barney, was sentenced to 38 months in prison for stealing $3.25 million from one client in a bid cover up a failed trade he made for another.
Shah took the money from Belize Bank to cover heavy margin calls after a calculation error on a set of complicated foreign- exchange trades for Concorde Bank resulted in losses, according to a sentencing memorandum. Shah’s lawyer, Ed Little, said he panicked, seeking to avoid admitting his mistake to Concorde Bank and to Smith Barney. Shah pleaded guilty in November.
U.S. District Judge William Pauley on Aug. 19 sentenced Shah to less than the 78 to 97 months suggested by federal sentencing guidelines, noting that Shah used $2 million of his own and his family’s funds to meet the margin calls. Pauley also agreed with Shah’s lawyer that the defendant could easily have fled to Kenya, where his family lives, to avoid prosecution.
“He made a very tragic mistake and then he compounded it, time and time again, through any number of fraudulent acts, to conceal that mistake,” Pauley said.
The case is U.S. v. Shah, 10-cr-1169, U.S. District Court, Southern District of New York (Manhattan).
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News Corp. Hacker Ordered by U.K. Judge to Name Reporters
Glenn Mulcaire, the private investigator jailed in 2007 for intercepting celebrities’ voice mails while working for News Corp.’s News of the World tabloid, must reveal who told him to hack phones, a U.K. judge ruled.
Mulcaire on July 29 was told he can’t appeal a High Court order that he name who at the paper told him to intercept voice- mail messages for model Elle Macpherson and other public figures, according to the lawyer for Steve Coogan, a comedian who believes his phone was hacked. The names must be revealed by Aug. 26, he said.
Mulcaire “will now have to identify exactly who at the News of the World asked him to access the mobile phones of the named individuals and who he provided the information to,” John Kelly, with the law firm Schillings in London, said Aug. 19 in an interview. The revelation could show hacking took place on an “industrial scale,” he said.
Mulcaire and News Corp. (NWSA)’s U.K. newspaper unit are defendants in dozens of civil lawsuits filed by people who claim their voice mails were accessed. London’s Metropolitan Police are examining Mulcaire’s notebooks and contacting possible victims, and have arrested 13 people, including the newspaper’s former editors, Rebekah Brooks and Andy Coulson.
A lower court judge rejected in February Mulcaire’s argument that the identities of those who requested the hacking weren’t relevant to the celebrities’ lawsuits since he had already admitted to the breaches. The names will help claimants understand the scope of the alleged conspiracy between Mulcaire and the newspaper, the judge ruled.
Mulcaire’s lawyer, Sarah Webb, declined to comment when reached by phone Aug. 19.
Hacking Detective Arrested on Leaks as Probe Nets 14th Suspect
A London police detective was arrested for leaking information about the probe into phone hacking at the News of the World, while the department also said it had detained a 14th suspect in that investigation.
Dan Evans, a former reporter at the News of the World, is the 35-year-old man police said they arrested Aug. 19 on suspicion of intercepting voice mails, according to a person familiar with the situation.
The 51-year-old detective was arrested at work Aug. 18 for misconduct related to unauthorized disclosure of information about the phone-hacking investigation, known as Operation Weeting, police said in a statement. He was suspended from duty.
“I made it very clear when I took on this investigation the need for operational and information security,” said Sue Aker, the Metropolitan Police Deputy Assistant Commissioner in charge of the police investigation into phone hacking. “It is hugely disappointing that this may not have been adhered to.”
U.K. newspapers have on several occasions published details of phone-hacking arrests before public announcements were made. The Daily Telegraph and Sky News reported the Aug. 19 arrest was linked to information given to the Guardian newspaper.
Both men have been released on bail, the police said.
Earlier this year the Met police renewed their probe into claims journalists and investigators at News Corp.’s now defunct News of the World accessed private voice mails to get stories after information from civil lawsuits indicated the practice went beyond a reporter and private investigator jailed in 2007.
Evans has been cooperating in lawsuits against News Corp.’s U.K. unit brought by victims of phone hacking. In February, he agreed to allow interior designer Kelly Hoppen, one of the group of celebrities suing the company, to search his computer for evidence, his lawyer said at the time.
Mets Owners Say Madoff Trustee Lacks Proof They Knew of Fraud
A $1 billion lawsuit by the trustee liquidating Bernard Madoff’s firm against the owners of the New York Mets should be dismissed, a lawyer for the baseball team’s owners told a federal judge.
Karen Wagner, an attorney for owners Fred Wilpon and Saul Katz, argued to U.S. District Judge Jed Rakoff that the trustee, New York lawyer Irving Picard, has failed to show evidence they ignored red flags that should have alerted them to Madoff’s fraud.
Picard’s case “doesn’t plead anything amounting to willful blindness,” Wagner said in a hearing in Manhattan on Friday.
The trustee, New York lawyer Irving Picard, claims Wilpon and Katz must turn over the $300 million in profits for the benefit of Madoff victims who lost more than they gained in the fraud. Picard claims they can’t keep the $700 million principal because they “turned a blind eye” to concerns Madoff was running a fraudulent scheme.
David Sheehan, a lawyer representing Picard, argued in the hearing that he has to show only that Wilpon and Katz had information that should have prompted them to question Madoff about his operations.
Sheehan said the trustee wants the case heard by a jury if it goes to trial. Rakoff said he will rule on the request by the end of September. He scheduled a two-week trial to begin March 5 if he doesn’t dismiss the suit. Rakoff said he will permit the parties to go forward with the exchange of evidence in the case.
The case is Picard v. Katz, 11-cv-03605, U.S. District Court, Southern District of New York (Manhattan).
Clemens Should Face Retrial on Perjury Charges, U.S. Says
Former Major League Baseball pitcher Roger Clemens should be tried again on charges that he lied to Congress, U.S. prosecutors argued, saying government conduct that led to a mistrial was simply a mistake.
Prosecutors in Washington on Friday asked U.S. District Judge Reggie Walton to reject Clemens’s bid to have the indictment against him dismissed. Walton ended the first trial on July 14 after prosecutors showed jurors a video clip containing information he had ruled couldn’t be part of the government’s perjury and obstruction case.
“The government accepts responsibility for its oversight, and regrets the burdens that error has placed on this court and defendant,” U.S. Attorney Ronald C. Machen Jr. wrote in a brief. “There was no intention to run afoul of any court ruling.”
Clemens, 49, in a motion filed last month argued that under the U.S. Constitution he can’t face a jury twice for the same crime. His lawyer, Rusty Hardin, alleged that the experienced prosecutors on the case intentionally provoked the mistrial after setbacks cast doubt on whether Clemens could be convicted.
“The record refutes the defendant’s claim,” prosecutors said in last week’s filing. “The government’s case was -- and is --strong. Nothing had happened thus far at trial that would have provided the government with any motive to cause a mistrial.”
The presentation of the barred evidence was a mistake, not misconduct, prosecutors said.
Walton raised the possibility that the government might not be able to bring the former New York Yankees pitcher before a new jury when he stopped the trial. He said at the time that he would have to assess whether the government, “having precipitated this mistrial,” could retry Clemens or whether “re-prosecution is barred by double jeopardy.”
Walton scheduled a Sept. 2 hearing to decide whether the seven-time Cy Young Award winner will be tried again.
The case is U.S. v. Clemens, 10-cr-00223, U.S. District Court, District of Columbia (Washington).
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Miles Davis’s Trademark Owners Sue New York’s Miles’ Cafe
The owners of the late jazz trumpeter Miles Davis’s trademarks sued the operators of a Manhattan jazz club called Miles’ Cafe alleging infringement.
Miles Davis Properties LLC, which includes two of Davis’s children and a nephew, said Friday the club and an owner, Satoru “Miles” Kobayashi, violated registered trademarks including one of a silhouette of the musician and composer playing his trumpet, in a complaint in federal court in Manhattan.
“Defendants are intentionally free-riding off the goodwill associated with the Miles Davis marks by using them to promote a jazz club entitled Miles’ Cafe in a way that is likely to mislead the public,” lawyers for the trademark owners said in the complaint.
Kobayashi, a trumpeter, told a publication that Miles Davis appeared to him in a dream and told him to change his first name to Miles and open a cafe in his name, according to the complaint.
No one answered the phone at the Miles’ Cafe on 52nd Street in Manhattan.
Davis, who died in 1991, released 67 studio albums and 51 live albums, court papers state. His 1959 album “‘Kind of Blue’’ is the best-selling jazz album of all time, according to the complaint. A pioneer in various styles of jazz including cool, hard bop, modal and fusion, Davis received eight Grammy awards and was inducted into the Rock ‘n’ Roll Hall of Fame.
Miles Davis Properties has not authorized any use of the name for a jazz club or other entertainment venue, the complaint states.
The case is Miles Davis Properties LLC v. Miles’ Cafe Corp., 11-5816, U.S. District Court, Southern District of New York (Manhattan).
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U.K. Lawmakers Seek Answers From News Corp.’s Former Law Firm
British lawmakers investigating phone-hacking at News Corp.’s News of the World have turned their attention to the criminal defense firm hired by the company’s U.K. unit in 2006 to conduct an internal probe.
Members of Parliament sent a letter seeking evidence from London-based BCL Burton Copeland after receiving new testimony from News Corp. Deputy Chief Operating Officer James Murdoch and several former executives, Britain’s Culture, Media and Sport Committee said in an Aug. 16 statement. The company claims the law firm’s investigation found no evidence of widespread phone hacking -- a determination that has since been debunked.
Andy Coulson, the tabloid’s former editor, who was arrested last month, told the committee in 2009 that Burton Copeland had been hired to find out ‘‘what the hell had gone on” after the tabloid’s royal reporter Clive Goodman was arrested for phone hacking, according to a transcript. “There was nothing that they asked for that they were not given,” he said.
Earlier government probes into phone-hacking ended when lawmakers and police reached dead ends in their queries. The Metropolitan Police reopened the case in January after celebrities’ civil lawsuits revealed evidence the crime went beyond Goodman. Since then, 13 people have been arrested and News Corp. was forced to shutter the 168-year-old tabloid to contain public anger.
Calls and e-mails to Burton Copeland founder and senior partner Ian Burton weren’t returned.
Lawmakers have suggested News International should have become aware earlier that hacking was widespread, with police saying at least 4,000 phones may have been targeted, allegedly including those of members of Parliament.
Burton Copeland reviewed e-mails and financial records for nine months in 2006 and 2007, the tabloid’s former legal manager, Tom Crone, told the committee in 2009. It didn’t uncover evidence that phone hacking extended beyond Goodman and Glenn Mulcaire, the private investigator jailed for intercepting messages for members of the British royal family, he said.
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Grupo Mexico Unit Ordered to Pay Law Firm $122.4 Million
Grupo Mexico SAB’s U.S. mining unit must pay $122.4 million in fees and $6.5 million in expenses to the Houston law firm the Mexican copper producer spent six years fighting in federal courts in Texas.
U.S. Bankruptcy Judge Richard S. Schmidt in Corpus Christi, Texas, on Aug. 18 ordered Asarco LLC to pay the fees and expenses of Baker Botts LLP, which won a judgment potentially worth more than $6 billion against Grupo Mexico in 2008 related to Asarco’s bankruptcy. The case was settled when Grupo Mexico agreed to pay creditors about $2.5 billion to bring Asarco out of bankruptcy.
“The results obtained in these cases are nothing short of extraordinary,” Schmidt wrote, explaining why he thought the fees were justified.
The judge credited Baker Botts with winning billions of dollars for Asarco’s creditors, who included victims of asbestos poisoning and governmental agencies responsible for cleaning up mining pollution.
“Baker Botts performed at an exemplary level,” Schmidt wrote in an opinion issued last month. The payment order was issued Aug. 18.
G. Irvin Terrell was Baker Botts’s lead attorney in the fraudulent-transfer suit. Jack L. Kinzie was the lead lawyer in the bankruptcy case before Grupo Mexico regained control of Asarco and hired a new law firm.
Asarco objected to the fees. The company’s new attorney, Marty L. Brimmage Jr. of the law firm Haynes & Boone LLP, didn’t immediately reply to an e-mail requesting comment on the fee decision.
The case is In re Asarco LLC, 05-21207, U.S. Bankruptcy Court, Southern District of Texas (Corpus Christi).
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New York Law School Suit Most Popular Docket on Bloomberg
A lawsuit accusing New York Law School of inflating statistics on graduates’ jobs and pay by former students was the most-read litigation docket on the Bloomberg Law system last week.
The lawsuit, filed Aug. 10 in New York, and a second suit filed in Michigan against Thomas M. Cooley Law School, claim the schools knowingly inflated employment and salary statistics to recruit and retain students. The complaints were filed by three New York law graduates and four Cooley graduates seeking to represent all current and former students at both schools.
“Any claims that prospective students or our graduates have been misled or legally harmed by our reporting are simply baseless,” James Thelen, Cooley’s associate dean for legal affairs and general counsel, said Aug. 10 in an e-mailed statement.
“These claims are without merit and we will vigorously defend against them in court,” Richard A. Matasar, dean of New York Law School, said Aug. 10 in a statement.
The case is Gomez-Jimenez v. New York Law School, New York state Supreme Court (New York).
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To contact the editor responsible for this story: Michael Hytha at email@example.com