Foreclosure Accord, Stanford, J&J, Gupta, BP in Court News
California and New York, along with Florida, agreed to join more than 40 other states in a nationwide settlement 16 months in the making that seeks to end abusive bank foreclosure practices that followed the collapse of the housing bubble, a person familiar with the matter said.
The decision by New York Attorney General Eric Schneiderman and California Attorney General Kamala Harris ensures the settlement has the backing of two officials who had been among the most outspoken in pushing for changes. The deal may be worth as much as $39 billion, according to the person, who declined to be identified because the terms haven’t been made public.
“With California and New York signing on, it’s a huge deal,” said Kurt Eggert, a professor at Chapman University School of Law in California who has been following the talks. “California and New York were the biggest critics of this deal, so if they sign on, that’s a sign that this is a real deal. It’s not just a show.”
All 50 states announced 16 months ago that they were investigating bank foreclosure practices following disclosures that faulty documents were being used to seize homes. Officials from a group of state attorneys general offices and federal agencies, including the Justice Department, have since negotiated terms of a proposed settlement with Bank of America Corp., JPMorgan Chase & Co. (JPM), Citigroup Inc. (C), Wells Fargo & Co. (WFC) and Ally Financial Inc. (ALLY)
Iowa Attorney General Tom Miller, who is helping to lead talks with the states, announced this week that more than 40 states had signed on to the settlement as of a Feb. 6 deadline. California, New York and Florida were among the holdouts, along with Nevada and Arizona.
California’s refusal to sign threatened to undercut the significance of the agreement because it’s the most populous state and has one of the highest foreclosure rates in the country.
The settlement will provide as much as $17 billion in loan principal reductions and other loan modifications for borrowers, according to a draft letter outlining the deal. Banks will also provide $3 billion in mortgage refinancing and pay $1.5 billion to about 750,000 borrowers who lost their homes to foreclosure, according to the letter.
The agreement, which will go into effect over a three-year period, requires the banks to report compliance to an outside monitor who will report to state attorneys general, according to the letter. Banks will pay “heavy penalties” for failing to adhere to the settlement, according to the letter.
Shum Preston, a spokesman for Harris, didn’t return phone or e-mail messages yesterday seeking comment on California joining the settlement. Dani Lever, a spokeswoman for Schneiderman, and Geoff Greenwood, a spokesman for Iowa’s Miller, declined to comment.
Florida is working on final details and expects to sign on to the agreement, Jenn Meale, a spokeswoman for Attorney General Pam Bondi, said in a phone interview.
Besides New York, California and Florida, other states that hadn’t signed on to the agreement as of the Feb. 6 deadline to decide were Nevada, Arizona, Massachusetts, and Delaware. Officials in Arizona and Delaware couldn’t be reached for comment after regular business hours yesterday. Brad Puffer, a spokesman for Massachusetts Attorney General Martha Coakley, declined to comment yesterday.
Nevada Attorney General Catherine Cortez Masto was still reviewing terms of the proposed settlement, her spokeswoman, Jennifer Lopez, said yesterday in an e-mail.
Rick Simon, a spokesman for Charlotte, North Carolina-based Bank of America, didn’t respond to an e-mail seeking comment on the talks with Arizona.
For more, click here.
Stanford Had 100-Foot Ocean Yacht, CFO Settled for 12-Foot Boat
James M. Davis, Stanford Financial Group’s ex-finance chief, told jurors that R. Allen Stanford was the mastermind and prime beneficiary of what prosecutors said was a $7 billion Ponzi scheme built on bogus certificates of deposit at Stanford’s Antiguan bank.
“Who ran the companies, you or Mr. Stanford?” Assistant U.S. Attorney William Stellmach asked Davis, who has been testifying under a plea agreement at Stanford’s fraud trial in federal court in Houston. “Who profited overwhelmingly from the conduct you described with the CD money?”
“Mr. Stanford,” Davis replied to both questions.
Davis identified a photo of an ocean-going sport yacht as one of several Stanford owned before regulators seized his assets on suspicion of fraud in early 2009. Davis told jurors yesterday he owned a small boat on the pond at his Mississippi farm.
“Mr. Stanford’s boat was 100 feet long; your boat was 12 feet long,” Stellmach asked Davis. “Is that a fair reflection of how this was all divvied up,” referring to proceeds each man realized from the alleged Ponzi scheme.
“Yes, that’s a fair reflection,” Davis replied. “Follow the money,” he added, pointing across the courtroom at his former boss.
Stanford, 61, has denied all wrongdoing and is fighting charges he mislead investors about the safety and oversight of deposits at his bank. Prosecutors claim Stanford skimmed more than $2 billion to fund a lavish lifestyle and dozens of private companies that ranged from Caribbean airlines and real estate developments to cricket tournaments.
Stanford’s attorneys presented evidence during the five days Davis spent on the stand trying to paint the ex-CFO as a thief who stole millions from Stanford’s operations and ran the companies with little input from his boss.
The case is U.S. v. Stanford, 09cr342, U.S. District Court, Southern District of Texas (Houston).
For more, click here.
For the latest trial and appeals news, click here.
BP Said to Seek U.S. Settlement of Gulf Spill Pollution Claims
BP Plc (BP/) is negotiating with U.S. officials to settle pollution claims over the 2010 Gulf of Mexico oil spill that may leave the company liable for as much as $17.6 billion in fines, a person familiar with the talks said.
The government cited the energy company with violations of the federal Clean Water Act for the offshore spill, the biggest in U.S. history. Officials are seeking fines of as much as $4,300 for each of the 4.1 million barrels spilled after the explosion of the BP-leased Deepwater Horizon oil rig.
The company is also in settlement talks with other firms tied to the spill, said the person, who declined to be identified because the matter isn’t public. BP is set to begin a Feb. 27 trial in New Orleans federal court in which it and other companies will face claims by business owners and residents from the region who had their property and livelihoods damaged or destroyed. The Macondo well blowout killed 11 people, sullied hundreds of miles of coastline and damaged fishing and tourism.
The trial before U.S. District Judge Carl Barbier will unify hundreds of lawsuits by fishermen, tour operators and state and local governments. BP, meanwhile, is seeking to shift some of the blame, and damages claims, onto co-defendant companies which helped drill and operate the well.
The Clean Water Act allows the government to seek fines of $1,100 per barrel of oil spilled automatically. That can rise to as much as $4,300 a barrel if a judge finds the company was grossly negligent in allowing the pollution to occur.
At $1,100 a barrel, the maximum penalty would be $4.51 billion using the government’s estimate of barrels spilled. A finding of gross negligence would boost that to $17.6 billion.
Daren Beaudo, a BP spokesman, declined to comment on settlement talks.
BP needs to settle Clean Water Act claims before a trial over its level of culpability for the spill, said David Uhlmann, former head of the U.S. Justice Department’s environmental-crimes unit.
“There’s no rational justification for going to trial,” said Uhlmann, now a law professor at the University of Michigan. The incentive for “BP is overwhelming for a settlement.”
BP is prepared to settle with other parties before trial if the conditions are right, Chief Executive Officer Robert Dudley told Bloomberg Television Feb. 7.
“With a reasonable settlement, we will settle,” he said. “If it’s not a reasonable settlement, we’ll go to court.”
The case is In Re: Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico on April 20, 2010, 2-10-md-1979, U.S. District Court, Eastern District of Louisiana (New Orleans).
For more, click here.
J&J Hip Patients Improperly Solicited by Firm, Distributor Says
Recipients of Johnson & Johnson (JNJ) hip implants recalled by the company were improperly solicited as clients by an Atlanta law firm using confidential patient data, according to lawyers defending a suit against a J&J distributor.
J&J’s DePuy unit recalled its ASR hips in 2010, prompting at least 4,500 lawsuits. The Atlanta firm, Childers, Schlueter & Smith LLC, filed some of the lawsuits, including five against an ASR distributor and sales representative. In the pretrial exchange of evidence, the firm got 130,000 pages of documents.
One document included patient-identifying information that the defendants failed to black out, according to court filings. The law firm used that information to solicit new clients, which violates federal law protecting patient privacy, according to lawyers for the ASR distributor and sales representative. They are seeking sanctions against Childers Schlueter.
State Judge Alvin T. Wong will hold a hearing today in state court in Decatur, Georgia. The motion by the ASR distributor and sales representative claims the law firm used the information to “generate and disseminate solicitation letters denominated as ‘advertisements’ to such patients seeking their representation.”
Childers Schlueter sued DC Medical LLC, the ASR distributor; MJW Orthopedics, the former ASR sales representative; and Michael J. Wright, the sole MJW shareholder. The case was filed on behalf of Candace and Gordon Hershberger of Georgia. She had both hips replaced with ASR devices, and both need replacement, according to her complaint filed in February 2011.
Childers Schlueter denied in court papers that it acted improperly, saying DC Medical and MJW want to discourage notification about the recall and “disparage and impugn the professionalism” of the firm.
In August 2010, J&J recalled 93,000 ASR hips worldwide, including 37,000 in the U.S., saying that more than 12 percent of the devices failed within five years. J&J, based in New Brunswick, New Jersey, is the world’s second-largest seller of health products.
Childers declined to comment before the hearing.
Lorie Gawreluk, a DePuy spokeswoman, declined to comment on the sanctions litigation. She said of the pending federal lawsuits: “DePuy will defend itself against the allegations raised in the litigation and believes the evidence will show the company acted appropriately and responsibly.”
The case is Candace and Gordon Hershberger v. DC Medical LLC, 11A34982-2, State Court of DeKalb County, Georgia (Decatur). The federal case is In Re DePuy Orthopedics Inc., ASR Hip Implant Products Liability Litigation, 10-MD-2197, U.S. District Court, Northern District of Ohio (Toledo).
For more, click here.
Deutsche Bank Won’t Face Mortgage-Bond Fraud Suits, Judge Rules
Deutsche Bank AG (DBK) won dismissal of two lawsuits in which investors in residential mortgage-backed securities accused the bank of selling them securitized loans it internally disparaged as “crap.”
U.S. District Judge Jed Rakoff in Manhattan, in an order filed Feb. 7, dismissed two separate lawsuits by Brussels-based Dexia SA (DEXB) and Teachers Insurance and Annuity Association of America. The investors had “in certain key respects” failed to provide sufficient particular facts to support their fraud allegations, the judge said.
Rakoff said he would issue a more specific written opinion at a later date. The investors could amend their claims in so far as these relied on loans sponsored by Deutsche Bank Structured Products, the judge said.
Gerald Silk, a lawyer representing the investors in both cases, didn’t return a call seeking comment on the ruling.
The cases are Dexia v. Deutsche Bank, 11-05672, and Teachers Insurance and Annuity Association of America v. Deutsche Bank, 11-06141, U.S. District Court, Southern District of New York (Manhattan.)
Gupta Wasn’t Rajaratnam’s Only Goldman ‘Insider,’ U.S. Says
A second “insider” at Goldman Sachs Group Inc. (GS) allegedly leaked tips to hedge fund manager Raj Rajaratnam, U.S. prosecutors told the judge presiding over the case of former Goldman Sachs director Rajat Gupta.
The government’s disclosure about another Goldman Sachs tipster for Rajaratnam, who was convicted of insider trading in May, came during the Feb. 7 arraignment of Gupta on revised insider-trading charges that broaden the scope of the alleged conspiracy. Gupta, 63, pleaded not guilty.
Assistant U.S. Attorney Reed Brodsky submitted a Feb. 3 letter to the court describing “certain witness statements relating to an insider at Goldman Sachs & Co. who provided information to Raj Rajaratnam that did not relate to Goldman and/or Procter & Gamble. (PG)”
U.S. District Judge Jed Rakoff in Manhattan, who is overseeing Gupta’s case, told lawyers Feb. 7 that he reviewed the statements in the Feb. 3 letter and agreed with prosecutors to keep them under seal because the alleged tips weren’t related to any of the charges against Gupta.
“They have nothing to do with any issue in this case, directly or indirectly, and therefore do not need to be disclosed,” Rakoff said.
Gupta, the one-time McKinsey & Co. leader and former director at Procter & Gamble Co., was accused in October by Manhattan U.S. Attorney Preet Bharara of passing inside information to Rajaratnam, co-founder Galleon Group LLC. The U.S. says Gupta tipped Rajaratnam about Goldman Sachs and P&G earnings.
Gupta’s lawyer, Gary Naftalis, has asked the government to share any evidence that Rajaratnam had an inside source at Goldman Sachs other than his client.
The defense lawyer said he’s seeking the evidence to show at the trial that the other source is the culprit, not Gupta. Rakoff also pressed prosecutors to name the purported source, whom he called “Mr. X.”
David Wells, a spokesman for Goldman Sachs, declined to comment Feb. 7 on the government’s letter to the court. Naftalis declined to comment on the hearing after court.
For more, click here.
BP Won’t Face Some E-Mails in Gulf Spill Trial, Judge Says
Lawyers suing BP Plc and other defendants over the 2010 Gulf of Mexico oil spill won’t be able to use several internal e-mails in the trial over fault for the incident, a judge said.
One e-mail includes a comment from a BP geologist two months before the April 2010 well blowout referring to a “s---- y cement job” at the project. Halliburton Co. (HAL), which provided cementing services, asked that the e-mail be barred from trial, saying the communication was a joke and the geologist didn’t create it as a business activity.
The comment about the cement job isn’t a business record and “is not admissible,” U.S. Magistrate Judge Sally Shushan said in a ruling yesterday in New Orleans. “It must be demonstrated that the e-mail at issue was not sent or received casually, nor was its creation a mere isolated incident.”
Shushan also excluded an e-mail from a Halliburton employee who called tests before the blowout unsuccessful. London-based BP and Transocean Ltd. (RIG), owner of the Deepwater Horizon rig that exploded, asked the judge to exclude the June 2010 e-mail, calling it hearsay.
In the e-mail, Ryan Haire of Halliburton told another company employee: “I read some report that stated that the two negative tests we did were considered successful? I stated that I found them to unsuccessful and I was checking to see if maybe you knew why Transocean and BP were calling them successful?”
“There is no evidence that Haire possessed personal knowledge that BP and Transocean called the two negative pressure tests successful,” Shushan said yesterday.
The explosion of the BP well killed 11 workers and caused the worst offshore oil spill in U.S. history. It also spurred hundreds of lawsuits against BP and its partners, including Vernier, Switzerland-based Transocean, Houston-based Halliburton and The Woodlands, Texas-based Anadarko, which owned 25 percent of the well.
The nonjury trial begins Feb. 27 in federal court in New Orleans before U.S. District Judge Carl Barbier. Shushan’s decisions on evidence must be approved by Barbier before trial. She gave the parties until today to make any objections.
The case is 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).
Wall Street Groups Seek to Delay CFTC Limits on Speculation
Two Wall Street groups asked a federal judge to delay a U.S. Commodity Futures Trading Commission rule that limits speculation, saying the regulation is already imposing “significant, irreversible costs.”
The International Swaps and Derivatives Association Inc. and the Securities Industry and Financial Markets Association filed a request Feb. 7 with U.S. District Judge Robert Wilkins in Washington, urging him to put the rule on hold while he considers their legal challenge.
“Compliance efforts will include restructuring of corporate relationships and divestment -- irreversible changes in ownership,” Eugene Scalia, a lawyer for the groups, said in the filing. “These costs are being incurred now and will continue to rise absent a preliminary injunction, and they will be impossible to recoup if the rule is invalidated -- as it likely will be.”
The groups, in one of the financial industry’s highest-profile efforts to weaken 2010’s Dodd-Frank law, filed lawsuits in two federal courts in Washington in December challenging the rule setting caps on the number of contracts a trader can have.
Wilkins yesterday ordered the commission to respond to the request by Feb. 17 and scheduled a hearing for Feb. 27.
Steven Adamske, a CFTC spokesman, didn’t respond to e-mail messages seeking comment on the groups’ filing.
The groups made an almost identical request to delay the rule with the U.S. Appeals Court in Washington, which dismissed the case after ruling it must first be considered by the district court.
The case is International Swaps and Derivatives Association v. U.S. Commodity Futures Trading Commission, 11-02146, U.S. District Court, District of Columbia (Washington).
Ex-Areva CEO Lauvergeon Says Spies Hired to Hurt Her Image
Areva SA (AREVA), the world’s largest nuclear reactor builder, commissioned a company to spy on Anne Lauvergeon’s husband to damage her reputation, lawyers for the former chief executive officer told a Paris court yesterday.
Lauvergeon, who was replaced two weeks before her contract expired, asked the court to order an expert review of Areva’s dealings with the research company for a civil suit, claiming the goal was to mar her public image.
“It was her reputation that’s been called into question,” said Alexandre Merveille, one of her lawyers.
Lauvergeon attended two hearings yesterday in Paris in complaints she’s filed against her former company, which denied her a third term as CEO in June, naming then-head of marketing Luc Oursel to take her place. She asked commercial court judges to order Areva to honor 1.5 million euros owed her under the terms of the package offered by the board last year.
“It’s a contractual question,” Lauvergeon said after the second hearing. “I have the right to two years of pay; I took much less than what was due me. I’m not one of those greedy executives.”
For more, click here.
For the latest lawsuits news, click here.
Fortress, Relativity Sued by Investor in Sony Film Deal
Aramid Entertainment Fund Ltd., a hedge fund that specializes in financing movies, filed the complaint yesterday in Los Angeles County Superior Court. The fund accuses Fortress of breach of contract, among other claims, for allegedly using confidential information obtained from Aramid to make a deal with Sony that destroyed Aramid’s investments.
“This is one of the greatest heist stories ever told in the movie business,” Aramid said in the complaint.
Aramid in 2008 invested $22 million in Class B notes in a so-called film-slate financing deal negotiated between Relativity Media, an independent movie financier and producer, and Sony Pictures, according to the complaint. The agreement was set up to fund as many as 45 movies over five years and included a $525 million commitment from Citigroup Inc., Aramid said.
In 2010, New York-based Fortress, a manager of buyout and hedge funds, did due diligence on Aramid’s portfolio, according to the complaint. Fortress didn’t make an offer for any of Aramid’s assets and used information about the Sony investments to buy the outstanding balance of Citigroup’s stake, $226.7 million, for 50 cent on the dollar, according to the complaint.
Fortress, now the majority owner of the Class A and Class B notes, then agreed with Sony to cap the amount of payments due to the investors at $216 million, which left nothing for Aramid, the only other investor in the Class B notes, according to the complaint.
Fortress made a gross profit of at least $96.1 million and paid Relativity $14.5 million to agree to the deal, Aramid said.
Gordon Runte, a spokesman for Fortress, didn’t return a phone call to his office seeking comment on the allegations after regular business hours.
Adam Keen, a spokesman for Relativity, didn’t return a call to his office seeking comment on the lawsuit.
The case is Aramid Entertainment v. Fortress Investment, BC478589, Los Angeles County Superior Court.
Danaher Investors Challenge Delaware-Only Lawsuit Rules
Danaher Corp. (DHR), the maker of microscopes and water-treatment systems, was sued for adopting corporate bylaws that force shareholders to bring claims against the company solely in a Delaware court.
Shareholders of AutoNation Inc. (AN), the largest U.S. automobile retailer, travel website Priceline.com (PCLN) and truck maker Navistar International Corp. (NAV) are also challenging the policy. They said in lawsuits made public Feb. 7 that the companies violated investor rights by requiring litigation to be heard in Chancery Court in Delaware, where judges hear cases without juries.
Such a provision “permits directors to control the forum for litigation against them and thereby reduces their risk of liability,” while avoiding jury trials, according to the plaintiffs, pension funds with investments in the companies.
Founded in 1792, the Wilmington-based court has become a top forum for litigating business disputes because more than 60 percent of Fortune 500 companies are incorporated in the state, according to Jill Fisch, a professor of business law at the University of Pennsylvania in Philadelphia.
Washington-based Danaher, Fort Lauderdale, Florida-based AutoNation, Norwalk Connecticut-based Priceline and Lisle, Illinois-based Navistar are all incorporated in Delaware.
Brian Ek, a Priceline spokesman, said the company would have no comment. Matt McGrew, a spokesman for Danaher; Marc Cannon, a spokesman for AutoNation; and Steve Schrier, a Navistar spokesman, didn’t immediately respond to e-mails seeking comment on the lawsuits.
The pension plans’ suits were filed in Chancery Court jointly by law firms Kessler Topaz Meltzer & Check LLP of Radnor, Pennsylvania, and Prickett, Jones & Elliott, PA, of Wilmington.
The cases are Boilermakers Local 154 v. Priceline.com, CA7216; Boilermakers Local 154 and Key West Police & Fire Pension Fund v. Danaher, CA7218; Larry Sutton v. AutoNation, CA7221; and Singh v. Navistar, CA7222, Delaware Chancery Court (Wilmington).
For more, click here.
For the latest new suits news, click here. For copies of recent civil complaints, click here.
News Corp. Settles More Phone-Hacking Suits, Delays U.K. Trial
News Corp. (NWSA)’s British newspaper unit settled at least 15 more lawsuits by victims of illegal voice-mail interceptions at its News of the World tabloid and delayed the first civil trial in the scandal by two weeks.
Lawyers for the company read apologies to nine victims yesterday, including soccer agent Sky Andrew, one of the paper’s first known phone-hacking targets, and actor-comedian Steve Coogan. While lawyers said dozens more lawsuits would soon be filed, the only remaining complaint ready for the so-called test trial was filed by Welsh singer Charlotte Church.
Judge Geoffrey Vos denied a request by News Corp. to indefinitely delay the trial to deal with what the company said were difficulties related to Church’s claim. He rescheduled the trial for Feb. 27. “If it is a hard nut to crack, then certainly it is my job to crack it,” Vos said.
News Corp. has agreed to pay out more than 5 million pounds ($7.9 million) to resolve claims by hacking victims, settling 54 lawsuits out of 60 that were filed by October. The scandal led New York-based News Corp. to close News of the World in July and the company faces a separate judicial inquiry and three related police probes.
More than 50 victims are preparing new lawsuits, lawyer Mark Lewis said in an interview yesterday. The U.K. unit, News International, has admitted liability and tried to resolve the cases out of court, offering victims an online process overseen by a former judge to begin settlement talks.
Daisy Dunlop, a spokeswoman for News International, declined to comment.
The Metropolitan Police Service has said more than 800 people were targeted and thousands of other names were found in the notes of Glenn Mulcaire, the ex-News of the World private investigator who was jailed for phone hacking in 2007.
For more, click here.
Harry Redknapp Cleared of Using Monaco Bank to Evade Taxes
Tottenham manager Harry Redknapp, the favorite to be next coach of England’s soccer team, was cleared of evading taxes after convincing the jury a Monaco bank account was a gift from a friend.
The 64-year-old was accused of working with Sheffield Wednesday owner Milan Mandaric to avoid taxes on $295,000 by placing the funds in the account named after Redknapp’s late bulldog Rosie when both men worked together at Portsmouth, a club Mandaric owned. Mandaric was also cleared of the two charges after the jury deliberated for five hours. The men embraced when the verdict was delivered, and mouthed “thank you” as the jury filed out.
“It’s been a nightmare,” Redknapp told reporters outside. “It’s been five years. This is a case that never should have come to court.”
The case ends almost six years of scrutiny into Redknapp’s financial affairs. He traveled to Monaco at Mandaric’s request to open the offshore account where prosecutors alleged he received a bonus payment of $145,000 in 2002 as his share of the profits of a player sale and a second one of $150,000 linked to keeping Portsmouth in the Premier League in 2004. The defendants both took the witness stand to insist the payments were unrelated to soccer and were for investments made in U.S. stocks on Redknapp’s behalf by Mandaric.
Mandaric, whose daughter flew to the U.K. to join him from California, said he was “delighted.”
“I never doubted the truth would prevail, nor the fact that the British justice system would come to the right conclusion,” he said.
“We have no regrets about pursuing this case because it was vitally important that the facts were put before a jury,” Chris Martin, the assistant director for criminal investigations for the U.K.’s revenue service, said.
For more, click here.
Rothstein Firm Manager Pleads Guilty in $1.2 Billion Swindle
William Boockvor, the uncle of convicted confidence man Scott Rothstein, admitted to his role in a $1.2 billion Ponzi scheme run by his nephew.
Boockvor, 66, served as the manager at Rothstein’s law firm in Fort Lauderdale, Florida, from 2007 until the scheme unraveled and the firm was forced into bankruptcy in October 2009. He pleaded guilty in federal court in West Palm Beach, Florida, to conspiracy to commit wire fraud.
He admitted that he arranged for fraudulent bank statements to be given to investors in Rothstein’s scheme. Investors believed that they were buying stakes in sexual-harassment and discrimination cases that had been confidentially settled. The cases were fictitious. Boockvor is cooperating with investigators in a probe that has led to charges against eight people.
Prosecutors have said in court papers that employees of Toronto-Dominion Bank (TD) helped further the fraud by reassuring investors their money was safe in Rothstein’s account.
During the hearing, Boockvor’s attorney, Jack O’Donnell, said his client was “basically a courier.” Outside of court, O’Donnell wouldn’t give details of his client’s cooperation, saying “more will be revealed.” Boockvor was initially charged Dec. 1.
U.S. District Judge Daniel Hurley set sentencing for May 7. Boockvor faces as long as five years in prison. Boockvor told the judge that he had heart surgery last year to bypass five blocked arteries.
The case is U.S. v. Boockvor, 11-cr-60281, U.S. District Court, Southern District of Florida (West Palm Beach).
For the latest verdict and settlement news, click here.
Ted Stevens Prosecution Misconduct Report to Be Made Public
A report on prosecutors’ misconduct in the failed corruption case against the late U.S. Senator Ted Stevens of Alaska will be released to the public next month.
U.S. District Judge Emmet Sullivan in Washington yesterday ordered Henry F. Schuelke III, the special counsel who investigated the matter, to file his 500-page report on the court’s docket on March 15.
“To deny the public access to Mr. Schuelke’s report under the circumstances of this case would be an affront to the First Amendment and a blow to the fair administration of justice,” Sullivan said in a 55-page opinion.
Sullivan set aside the verdict against Stevens in April 2009 and ordered an investigation into whether prosecutors’ conduct, which he said was the worst he had seen in 25 years on the bench, was criminal.
In November, Sullivan said Schuelke had concluded the prosecutors’ misconduct didn’t warrant criminal contempt charges. The judge, who oversaw the trial and appointed Schuelke, ordered prosecutors and lawyers for Stevens and other witnesses to argue whether the report should be made public.
Four of the Stevens prosecutors, who aren’t named in the ruling, objected to releasing the report, claiming that Schuelke’s investigation should be treated like a grand jury probe, which is nonpublic and bound by secrecy rules.
“The unique circumstances of this case are distinct from the concerns expressed by the opposing attorneys,” said the judge, adding that the lawyers can submit comments for publication with the report.
Tracy Schmaler, a Justice Department spokeswoman, said in an e-mail that the department didn’t object to the report’s release.
Brendan Sullivan Jr. of Williams & Connolly LLP, a lawyer for Stevens, didn’t immediately respond to a phone message seeking comment on yesterday’s ruling.
The case is In re Special Proceedings, 09-00198, U.S. District Court, District of Columbia (Washington).
For more, click here.
Delta Air Lines Sanctioned for Withholding Evidence in Suit
Delta Air Lines Inc. (DAL) must pay plaintiffs’ legal fees in an evidence-gathering fight with customers, a judge said after finding the carrier wrongly withheld 60,000 documents in a lawsuit claiming it colluded with another airline.
Because there “is no smoking gun” implicating Delta in a conspiracy with AirTran (LUV) Holdings Inc. to charge $15 to check the first bag as alleged in the 2008 suit, paying legal fees and costs is sufficient, U.S. District Judge Timothy Batten wrote in an order.
Betsy Talton, a spokeswoman for Atlanta-based Delta, said the company doesn’t comment on pending litigation. Delta is the world’s second-largest carrier. AirTran is now a unit of Dallas-based Southwest Airlines Co.
The withheld documents turned up in a related civil investigation by the U.S. Justice Department’s antitrust division.
The case is In re Delta/AirTran Baggage Fee Antitrust Litigation, 1:09-md-02089, U.S. District Court, Northern District of Georgia (Atlanta).
McDermott Hires Former U.S. Attorney for White-Collar Practice
McDermott Will & Emery LLP hired Jennifer R. Taylor, a former U.S. Justice Department prosecutor, as the law firm expands its white-collar practice.
Taylor, 36, was a federal prosecutor in the fraud section of the criminal division, handling securities, bank and procurement fraud and investigations under the Foreign Corrupt Practices Act, McDermott said yesterday in a statement. She will join the firm’s Washington office as a partner in its white-collar and securities defense practice group.
McDermott is an international firm with more than 1,000 lawyers. It was the 28th-largest grossing law firm in fiscal 2010 with revenue of $788.5 million, according to the American Lawyer, a trade publication.
For the latest litigation department news, click here.
To contact the reporter on this story: Elizabeth Amon in Brooklyn, New York, at email@example.com.
To contact the editor responsible for this story: Michael Hytha at firstname.lastname@example.org.