LAW BLOG NEWSLETTER
from The Wall Street Journal Online
December 8, 2008 -- 6:25 p.m. EST
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TODAY'S POSTS
- Alleged 9/11 Mastermind Declaims on Due Process and Carrier Pigeons
- Bankruptcy Wave Hits Chicago -- Tribune Files for Chapter 11
- DOJ Files Criminal Complaint Against Marc Dreier; Others Sue
- North Dakota Sends Delaware a Wake-Up Call on Corporate Governance
- High Court Bats Down Petition to Hear Obama Citizenship Case
- WaPo: Partisanship Alive and Well at Sixth Circuit
- Blackwater in Baghdad: Unsealed Indictment Against 5 Could Arrive Today
- In Wake of Founder's Arrest, Dreier LLP on Brink
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Alleged 9/11 Mastermind Declaims on Due Process and Carrier Pigeons
At his June arraignment, Khalid Sheikh Mohammed, an alleged 9/11 mastermind, expressed some serious disdain for the U.S. Constitution. I consider all American constitution evil, he told a military judge, because it permits same-sexual marriage and many other things that are very bad. Do you understand?
Khalid Sheikh Mohammed, center, and co-defendant Walid Bin Attash, left, attending a pre-trial session, Dec. 8, 2008, at the Guantanamo Bay Naval Base, Cuba . (AP/ Janet Hamlin) Now Mohammed and four co-defendants are voicing similar displeasure over the pace of due process. Today, they said they wanted to confess to the 9/11 conspiracy and asked a military judge to take their guilty pleas. The move came as the court was scheduled to hear a host of defense motions challenging the military charges against the defendants. Here are stories from the WSJ and the NYT.
"We don't want to waste time," Mohammed told the judge, Col. Stephen Henley. "We want to enter a plea" to capital charges stemming from the hijack attacks.
Ali Abdul Aziz Ali, Mohammed's nephew and alleged assistant, said, "I wanted to enter a plea from the first arraignment day."
Col. Henley ruled that Mohammed, Ali and Walid bin Attash, who's accused of running an al Qaeda training camp, could drop the motions and enter pleas. They are acting as their own lawyers because of their stated distrust of Americans. (For KSM's opinions on that, click here.) But defense lawyers claimed that two defendants, Ramzi Binalshibh and Mustafa al Hawsawi, were mentally incompetent to take such a serious step, and the judge deferred a decision until psychological evaluations could be considered.
Interestingly, Mohammed said the defendants had met to discuss their case and after a Nov. 4 meeting signed a letter to the judge seeking to withdraw the defense motions and seeking a hearing "in order to announce our confessions." They were annoyed today, reports the WSJ, when the judge said he had only read their letter Sunday. "Is the commission using a carrier pigeon?" Mohammed scoffed. Henley said he had lacked a secure facility in which to read the letter before arriving at the base.
See and Post Comments: http://blogs.wsj.com/law/2008/12/08/alleged-911-mastermind-declaims-on-due-process-and-carrier-pigeons?mod=djemWLB&reflink=djemWLB&reflink=djemWLB
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Bankruptcy Wave Hits Chicago -- Tribune Files for Chapter 11
Look out Chicago, the wave is crashing at your shores. Media conglomerate Tribune Company, which was taken private last year by real estate bigwig Sam Zell, has filed for Chapter 11 bankruptcy protection. The Chicago Cubs franchise, including Wrigley Field, are not part of the filing, reports the WSJ.
Here's the filing and here's the WSJ story.
Sidley Austin's James Conlan (U. of Iowa, U. of Iowa law, and pictured) is the lead lawyer on the bankruptcy. Also on the filing is Cole Schotz's Norman Pernick.
See and Post Comments: http://blogs.wsj.com/law/2008/12/08/bankruptcy-wave-hits-chicago-tribune-files-for-chapter-11?mod=djemWLB&reflink=djemWLB&reflink=djemWLB
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DOJ Files Criminal Complaint Against Marc Dreier; Others Sue
We sort of figured that this post wasn't the last we'd do on Marc Dreier, but we didn't realize we'd be hitting the story again so soon. The news:
The Criminal Charge: According to a release issued by the U.S. attorney's office in New York and an accompanying criminal complaint, Dreier was arrested late Sunday night, presumably upon his arrival back in New York, on charges stemming from a $100 million fraud against various hedge funds.
The SEC Suit: The SEC also filed suit against Dreier on Monday, alleging that he has been marketing and selling fake promissory notes to investors. Click here for the SEC's complaint.
The Wachovia Suit: Wachovia Bank sued Dreier LLP and Marc Dreier (in addition to a handful of others) today, alleging that a credit revolver and term loan extended to the firm are in default, as of November 1, upon which the bank is owed some $12.7 million. Click here for a copy of the complaint.
Dreier has tapped Gerald Shargel to represent him. Reached via email by Dow Jones Newswires, Shargel declined to comment, saying only, "I will have a comment later."
See and Post Comments: http://blogs.wsj.com/law/2008/12/08/doj-files-criminal-complaint-against-marc-dreier-others-sue?mod=djemWLB&reflink=djemWLB&reflink=djemWLB
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North Dakota Sends Delaware a Wake-Up Call on Corporate Governance
Delaware corporate law under siege!
It's a hot-button issue we've hit before. In March, for instance, we asked whether Congress might ever consider creating a federal corporate law as a reaction to alleged corporate favoritism in Delaware. Well, Congress hasn't done so (yet), and shareholder activists are instead taking their pleas for corporate governance reform to other states -- namely, North Dakota, as the WSJ reports today.
Only two publicly traded companies are incorporated in the state, notes the Journal, but last year North Dakota lawmakers -- prodded by out-of-state activists including Carl Icahn -- enacted the nation's most shareholder-friendly corporate-governance law.
The law prescribes rules that companies incorporating in North Dakota can adopt as a package, including requiring an annual shareholder advisory vote on executive pay and the naming of a chairman who isn't an executive. The rules also provide for the annual election of directors and make it easier for shareholders to nominate their own director candidates.
So who's behind the effort? A lawyer, of course. In 2005, a group of activists, including Carl Icahn, hired Philly lawyer William H. Clark Jr. to draft a pro-shareholder governance model. Clark first took the legislation to Vermont, home to only five public companies in 2005. But one company objected, and the bill died in committee.
The following year, North Dakota removed a provision from its constitution that had discouraged companies from incorporating there. Clark then began building support for a revamped corporate-governance bill.
Secretary of State Al Jaeger, who thinks the law might attract business to North Dakota, supports the effort. "Our position was ... we will build it," Jaeger told the Journal. "If somebody wants to come and play in our ball field, that's great."
The North Dakota law is unlikely to draw much business to the state soon, experts say. But activist investors say the North Dakota law adds fuel to the debate over shareholder rights and oversight, which has intensified during the financial crisis.
See and Post Comments: http://blogs.wsj.com/law/2008/12/08/north-dakota-sends-delaware-a-wake-up-call-on-corporate-governance?mod=djemWLB&reflink=djemWLB&reflink=djemWLB
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High Court Bats Down Petition to Hear Obama Citizenship Case
On Friday, Loyal Law Blog readers expressed a flood of interest in a lawsuit over whether President-elect Barack Obama was constitutionally qualified to serve as president. Unfortunately for the petitioner in the case, the Supreme Court expressed seemingly little interest.
As we noted, Justice Thomas picked up the petition to hear a lawsuit filed by New Jersey attorney Leo Donofrio after it was denied by Justice Souter. Justice Thomas referred it to the full court, which decided to distribute the case for the justices conference.
In the petition, Donofrio reportedly conceded that Obama was born in Hawaii, as Obama claims. But Donofrio contended Obama was not a natural born citizen, as required by Article II, Section I of the U.S. Constitution, because he was not exclusively a U.S. citizen at the time of his birth. Obamas father was a citizen of Kenya, formerly British East Africa, so Obama was a British citizen as well.
Today, SCOTUSblog reports that the Court denied Donofrio's request. SCOTUSblog notes that this marks the second time in recent weeks that the Court turned aside such a challenge. In neither instance did the Court offer a reason for turning down the applications.
See and Post Comments: http://blogs.wsj.com/law/2008/12/08/high-court-bats-down-petition-to-hear-obama-citizenship-case?mod=djemWLB&reflink=djemWLB&reflink=djemWLB
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WaPo: Partisanship Alive and Well at Sixth Circuit
Partisanship may be something the incoming Obama administration is trying to get away from, but it's still very much alive and kicking on the 6th Circuit, the federal appellate court that covers Michigan, Ohio, Kentucky and Tennessee. Click here for the page-one story today in the Washington Post.
From where we sit, the most interesting current to emerge from the story was the alleged use of the en bancs on the circuit, i.e., that Republican-appointed judges are increasingly calling for en banc hearings -- hearings from the full court -- in order to reverse rulings made by three-judge panels that they don't like.
"Anytime two of us show up on a panel and they don't like it, they yank it," said one Democratic-appointed judge on the circuit. Under 6th Circuit rules, that's now how it's supposed to work. According to the Post, en bancs are allowed in order to ensure "uniformity of the court's decisions" when separate panels of three randomly appointed judges disagree, or when questions of "exceptional importance" are at stake. According to Post research, initial verdicts by panels dominated by Democratic appointees were clearly reversed by Bush's appointees and other Republican picks 17 times out of 28 decisions issued by the full court.
Chief judge and Reagan appointee Danny Boggs said, however, that party affiliation is not uniformly predictive, noting that he has occasionally sided with Democratic appointees and that most rulings by three-judge panels are unanimous.
See and Post Comments: http://blogs.wsj.com/law/2008/12/08/wapo-partisanship-alive-and-well-at-sixth-circuit?mod=djemWLB&reflink=djemWLB&reflink=djemWLB
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Blackwater in Baghdad: Unsealed Indictment Against 5 Could Arrive Today
Interesting legal news out of Iraq could come down today in the shape of an unsealed indictment against five Blackwater security guards. Last week, news outlets reported that a grand jury indictment had been obtained against the guards for allegedly killing Iraqi civilians in Baghdad's Nisour Square on Sept. 16, 2007. Click here for the AP report, here and here for NYT reports.
Lawyers for the five men have said they did nothing wrong and that they would surrender to authorities today.
The events of Sept. 16 remain murky. The defendants have said they opened attack after coming under fire; Blackwater has maintained the five did nothing wrong.
In Baghdad, the Times reports, a traffic officer who said he witnessed the killing of 21 people on the day, said the five started "shooting randomly at people without any reason, he said.
Still, the case could be tough for prosecutors to win. Lawyers for the men are expected to challenge everything from the venue where the charges are being brought, the District of Columbia, to the federal law being used to prosecute the men. In part, they fear that a jury in D.C., where the Bush administration, the Iraq war and Blackwater are particularly unpopular, might favor the prosecution's case. "These battlefield incident prosecutions are notoriously difficult to win no matter what the forum," said Tara Lee, a former Navy lawyer and partner at DLA Piper in Reston, Va., to the WSJ.
Immunity for security contractors became a major issue recently in negotiations of the security pact that lays the ground rules for American troops continuing presence in Iraq.
See and Post Comments: http://blogs.wsj.com/law/2008/12/08/blackwater-in-baghdad-unsealed-indictment-against-5-could-arrive-today?mod=djemWLB&reflink=djemWLB&reflink=djemWLB
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In Wake of Founder's Arrest, Dreier LLP on Brink
Things aren't looking too hot over at 499 Park Ave., where Dreier LLP is based. In the wake of last week's arrest of the firm's founder, Marc Dreier, up in Toronto, the firm is in danger of collapsing. Click here for today's WSJ story, which has more details on the circumstances surrounding Dreier's arrest; click here and here for Law Blog coverage from last week; here from a story from AmLaw Daily, which contains a link to the document issued last week by police in Toronto as well as a picture of a disheveled and wind-blown Dreier.
On the firm itself: The firm is reeling, with lawyers scrambling to launch new firms, after Dreier -- its sole equity partner -- was arrested Tuesday in Toronto for allegedly impersonating another person to complete a business transaction. He has been released on bail but faces a criminal charge that carries a possible 10-year prison term.
It's still possible the firm could recover, but several partners interviewed say they have their doubts. One litigation partner said he spent Saturday packing up his personal effects. "Bank accounts have been frozen; they're shutting our BlackBerrys down on Monday," he said.
Dreier, 58 years old, hasn't responded to requests for comment. His attorney, Edward Greenspan, said Dreier will plead not guilty to the charges in Canada. Greenspan called the allegations against his client relatively minor and said that no money changed hands. He declined to say more, citing a court order.
Of course, we'll keep you posted on events as they unfold.
See and Post Comments: http://blogs.wsj.com/law/2008/12/08/in-wake-of-founders-arrest-dreier-llp-on-brink?mod=djemWLB&reflink=djemWLB&reflink=djemWLB
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Suit Against Adams & Reese Came in Like a Lion, Out Like a Louse
Only in New Orleans could you have something this juicy. Or maybe this head-scratching, depending on your perspective.
Jamie Perdigao's lawsuit against his former law firm, Adams and Reese, alleging racketeering, became the required reading of the steamy New Orleans spring after he filed it in the Eastern District of Louisiana federal court in May. It was filled with allegations of -- what else? -- corruption. Perdigao, a former partner and the firm's ethics advisor, pointed his finger at the venerable A&R whose shenanigans -- at least as detailed in the 73-page complaint -- are as odious as any found in a John Grisham novel, including ones that says the firm helped a client to bribe a U.S. attorney, using a sitting Congressman as the bagman. Jealous lawyers at other, less powerful firms, so wanted it to all be true.
Who was this white knight of the bar alleging such shocking misdeeds? There's the stickler. Perdigao had already been charged in a federal indictment in March on 59 counts of mail fraud, bank fraud, tax evasion, money laundering and more, alleging that he laundered $30 million, much of it stolen from Adams & Reese over 15 years of employment. (Some ethics advisor.)
A&R, for its part, angrily denied the allegations in the complaint, arguing that it was the victim, rather than Perdigao, and said it was cooperating with the U.S. Attorney's office.
Well, A&R folks must be toasting Hurricanes over the way the whole thing came down. In October, Perdigao's bond was revoked for violating several terms of the bond, including allegedly illegally hacking into the A&R computer system and for failing to disclose that he was arrested in February for shoplifting at a Wal Mart. (Here's the Times-Picayune story.) A few days later, Perdigao pleaded guilty to 30 felony counts and now faces 300 years in prison. (Again, the Times-Pic.)
This week, Perdigao dropped the civil suit against A&R. (AP story, courtesy of Law.com).
See and Post Comments: http://blogs.wsj.com/law/2008/12/05/suit-against-adams-reese-came-in-like-a-lion-out-like-a-louse?mod=djemWLB&reflink=djemWLB&reflink=djemWLB
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Details Emerge in Marc Dreier Saga, But Much Remains Unclear
Let's get you up to speed on what we know about the situation involving New York City lawyer Marc Dreier. One thing's for sure: it's strange and murky.
First things first. Dreier, who heads the prominent, 250-lawyer Dreier LLP, was arrested Tuesday in Toronto for allegedly impersonating another individual. The alleged offense took place during a meeting between the Ontario Teachers Pension Plan and private-equity firm Fortress Investment Group. According to the New York Times, Dreier was accused of impersonating Michael Padfield, a lawyer for the Ontario Teachers Pension Plan. What's still unclear is why Dreier was there, or what the meeting involved in the first place.
After learning of fraudulent behavior, Ontario Teachers said in a statement, we immediately alerted the police. The pension plan declined to elaborate, including whether it was represented by Dreier. Similarly, a statement released by Fortress says: While visiting Ontario Teachers offices on Tuesday afternoon, a Fortress employee observed suspicious behavior by an individual and immediately alerted Ontario Teachers staff. We continue to cooperate with law enforcement.
According to his attorney, Edward Greenspan, Dreier will plead not guilty. The event is relatively minor, he told us on Friday. No money passed. Nothing actually occurred except an allegation of impersonation. He declined to say more, citing a court order that the facts not be discussed.
After spending two days in jail in Milton, Canada, west of Toronto, Dreier was released Thursday on bail of $100,000 Canadian dollars.
Dreier LLP did not reply to repeated requests for comment. But in the wake of Dreier's arrest, the firm rests in precarious shape, with lawyers already leaving. On Friday, Paul Traub, the co-chair of the firm's bankruptcy department, sent a letter to clients announcing he and a group of other bankruptcy lawyers had resigned from the firm but would continue to practice together under a different name, Traub, Bonacquist & Fox LLP. "In light of recent developments, of which we were unaware until yesterday, we have resigned from Dreier LLP, effective immediately," the letter states.
Dreier LLP is a bit of an odd duck in the world of law firms. Marc Dreier himself owns all of the equity in the firm, with other partners paid salaries that are tied in part to the amount of business they generate, according to lawyers who have worked at the firm.
Find other coverage of the situation here (Toronto Globe & Mail) and here (Above the Law).
See and Post Comments: http://blogs.wsj.com/law/2008/12/05/in-the-marc-dreier-saga-some-details-emerge-but-much-remains-unclear?mod=djemWLB&reflink=djemWLB&reflink=djemWLB
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LAW VIDEO
A federal judge hands control of MGA Entertainment's Bratz franchise over to Mattel, the maker of Barbie. It's a crushing blow for MGA, which is deeply dependent on Bratz. WSJ's Nicholas Casey reports.
http://online.wsj.com/video/barbie-comes-out-on-top-in-bratz-battle/E96BBD88-88EA-49A6-A548-A2641FDBFCCB.html?mod=djemWLB&reflink=djemWLB
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TOP LAW NEWS
Marc Dreier, founder of a New York law firm, was charged by U.S. prosecutors in a case alleging a multimillion-dollar real-estate fraud involving hedge funds. - Law Blog: Sued From All Sides
http://online.wsj.com/article/SB122875839668488461.html?mod=djemWLB&reflink=djemWLB
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