LAW BLOG NEWSLETTER
from The Wall Street Journal Online
January 2, 2009 -- 5:25 p.m. EST
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TODAY'S POSTS
- Staver: AZ Bar Rule Recommendation is Affront to Traditional Values
- Is Big Business Scared of Obama?
- L'Affaire Madoff: One of the Last In Hopes to be First Out
- New Year, New Laws: A Look at a Few Taking Effect
- CJ Roberts: Pay Freeze Could Damage Fabric of Federal Judiciary
- The Clawback Conundrum: A Friday Morning Madoff Roundup
- Readers' Choice: The Law Blog Newsmaker of 2008
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Staver: AZ Bar Rule Recommendation is Affront to Traditional Values
Consider the following recommendation currently before the State Bar of Arizona: According to reports, the bar is considering changing its oath that requires lawyers to affirm they won't "permit considerations of gender, race, age, nationality, disability or social standing to influence" their duty of care to clients. The proposal is to add "sexual orientation" to that list.
At least one leading lawyer in the Catholic community -- Mathew Staver, chief of Liberty Counsel and Dean of Liberty University Law School -- is outraged. "I believe that this is a major threat to the practice of law," Staver (Southern Missionary College, U. of Kentucky Law) told Catholic Online. "This is an attempt to literally license those out of business and to revoke the license of those who, in fact, have traditional moral values."
(Note: Loyal Readers will remember Staver from his effusive praise of the Supreme Court's June decision in Heller, the Second Amendment case. Staver said in a statement: Praise the Lord and pass the ammunition is the best way to describe todays decision.")
From Catholic Online:
Staver believes the campaign is going nationwide and will be a tool used by homosexuals to hold back Christian lawyers. "If they then can hold over your head the license and the ability to practice law, that will be a devastating blow to those of us who believe in traditional family values," he points out.
According to Staver, this is an issue that lawyers and law school students cannot ignore. "It's a ticking time bomb," he concludes. "It is a land mine just waiting for someone to step on them."
Many believe that same sex attraction is a disorder. There is also some evidence that it can be cured. Here's a hypo that Staver offered to WorldNetDaily: "What if you represent someone in a divorce and you're the attorney of record. Afterwards this person enters into a lesbian lifestyle and wants a change of custody. They want the child. That presents Christian attorneys with a conflict with their religious beliefs. Would [that Christian lawyer] want to continue to represent that person? It would be pushing that child into a homosexual lifestyle."
LBers, we'd love to hear your thoughts on this one (let's keep it civil, please!).
See and Post Comments: http://blogs.wsj.com/law/2009/01/02/staver-az-bar-rule-recommendation-is-affront-to-traditional-values?mod=djemWLB&reflink=djemWLB&reflink=djemWLB
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Is Big Business Scared of Obama?
What accounts for a spate of recent settlements between businesses and the Justice Department? According to the WaPo, there have been more than a dozen business-related settlements since the presidential election, with more coming in January.
Since November, the Justice Department has announced 19 settlements or plea deals with companies, compared with 16 in the same time frame the year before. In 2006, department officials announced five business settlements in the same time frame.
A 'better Bush than Obama' mentality could be the reason, suggests the WaPo. Corporate lawyers point to statements by Attorney General-designate Eric Holder, who told an audience last month that he would expand the focus of federal prosecutors into corporate suites. The climate for business settlements could get tougher in three weeks.
"What they obviously are trying to do is take advantage of an administration that's deemed to be more friendly to business," Cono R. Namorato, a Caplin & Drysdale lawyer, told the WaPo. "I know of no tax reason for doing it now."
Another reason could be that the holidays are a PR-friendly time. "This is traditionally the time to ram a settlement through because no one notices," Patrick Burns, a spokesman for Taxpayers Against Fraud, told the WaPo. "Putting it out between Christmas and New Year's is brilliant."
Law Blog Readers: One could certainly argue over the premise of the WaPo article. Is a jump from 16 business related settlements, in the same period of 2007, to 19 in 2008, significant?
See and Post Comments: http://blogs.wsj.com/law/2009/01/02/is-big-business-scared-of-obama?mod=djemWLB&reflink=djemWLB&reflink=djemWLB
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L'Affaire Madoff: One of the Last In Hopes to be First Out
Earlier today, we mentioned that investors who received redemptions from Madoff within 90 days of the firm's collapse are particularly vulnerable to the dreaded clawback laws -- meaning they could be required to cough up the dough. But what about investors who paid in to Madoff within the last 90 days? How about six days before he was charged with running a $50 billion Ponzi scheme?
That's the situation allegedly faced by Martin Rosenman, president of New York-based Stuyvesant Fuel Service Corp., who claims, in a complaint filed yesterday in bankruptcy court in Manhattan, that Irving Picard, the trustee, has no right to the $10 million that Rosenman invested. Here's the complaint, and here's a Bloomberg report.
According to the filing, Rosenman, who hadnt previously invested with Bernard Madoff Investment Securities LLC, spoke by phone with Madoff on Dec. 3 about investing. "Madoff stated that the fund was closed until Jan. 1, 2009, but that Mr. Rosenman could wire money," according to the complaint. Rosenman alleged he received a fax from Madoff Securities employee Jodi Crupi on Dec. 5 that told him to transfer funds to a JPMorgan Chase & Co. account, which he did.
On Dec. 9, Rosenman received a confirmation from Madoff Securities telling him hed sold short $10 million in U.S. Treasury bills, a transaction he never authorized, according to the court filing. Bloomberg's call to Crupi was not immediately returned.
The confirmation contains a CUSIP number (an identification number) for the transaction, Rosenman said in his complaint. Multiple electronic searches for securities under this number have shown that it does not exist. In other words, BMIS never transacted a trade of U.S. Treasury Bills on the Family's behalf.
The Rosenman family, represented by Howard Kleinhendler at Wachtel & Masyr, is seeking an order from U.S. Bankruptcy Judge Burton Lifland requiring JPMorgan to turn over the funds.
George Stamboulidis, an attorney at Baker & Hostetler which represents Picard, didnt immediately return Bloomberg's call seeking comment.
See and Post Comments: http://blogs.wsj.com/law/2009/01/02/laffaire-madoff-one-of-the-last-in-hopes-to-be-first-out?mod=djemWLB&reflink=djemWLB&reflink=djemWLB
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New Year, New Laws: A Look at a Few Taking Effect
Yesterday, as revelers recovered from New Year's Eve festivities, a bevy of new state laws took effect. Here are several that caught our eye:
Stalking stalkers: In Illinois, judges can now require satellite tracking of stalkers who repeatedly violate orders of protection, though most jurisdictions have not yet bought the equipment needed to carry out the new law. One source tells the Chicago Trib that the financial impact on the state will be larger than the accumulation of $200 fines that results from the underlying violations.
Don't text and drive: In California, the highway patrol, according to the LAT, plans no grace period before enforcing a new law prohibiting the use of text-messaging devices -- including cellphones, BlackBerrys and laptop computers -- while driving. (That includes being stopped at a light.) Fines are $20 for first offenses and $50 for subsequent violations.
Messed up in Mass: It's no longer a crime in Massachusetts to have one ounce or less of pot. Those who are caught with an ounce or less will get a ticket similar to a building code citation, notes the Globe. They can appeal the civil infraction in court within 21 days or pay a $100 fine set in the law. Juvenile violators would have to pay the fine and attend a drug abuse counseling course, or have the fine increased to $1,000.
Breath-alyze, before you drive: Under laws that took effect yesterday in Alaska, Colorado, Illinois, Nebraska and Washington state, drivers convicted of a first-time DUI must install breath-alcohol ignition interlocks on their cars if they want to keep driving while their licenses are suspended. Under Illinois's law, according to this report in the State, drivers must pay the full costs of the devices -- about $80 -- which prevent them from starting their engines if they fail the test. If caught skirting the device by having someone else blow into it, the driver could go to jail for 3 years.
Confronting the hog-waste lagoon: A new North Carolina law will set stricter rules on how hog waste is collected and disposed of. On farms, waste storage containers must now have alarms that will alert farmers when the container is almost at capacity. According to WECT Wilmington, the law "was made in an effort to ban hog waste lagoons that can overflow."
See and Post Comments: http://blogs.wsj.com/law/2009/01/02/new-year-new-laws-a-look-at-a-few-taking-effect?mod=djemWLB&reflink=djemWLB&reflink=djemWLB
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CJ Roberts: Pay Freeze Could Damage Fabric of Federal Judiciary
Photo: AP In her 2008 State of the Judiciary, New York Court of Appeals Chief Judge Judith Kaye, whose 25 year career on the bench ended Wednesday, called the nearly 11-year salary freeze for New York's judges a "continuing misery." In an interview, she told the Law Blog: "You cant freeze the salary and expect that, as the demands get greater on the courts, youll continue to draw the people you need to deal with the problems."
In his 2008 year-end report, Supreme Court Chief Justice -- who in 2006 branded the federal judiciary's pay freeze a constitutional crisis" -- made nearly the same argument. Over at WashWire, WSJ Supreme Court reporter Jess Bravin reports:
. . [T]he chief justice chose to unfurl an artifact of Americana in the service of raising judges salaries, a delicate topic amid a recession and rising unemployment. The actual Star-Spangled Banner that flew over Fort McHenry during the British attack in 1814 can now be viewed at the Smithsonians newly renovated National Museum of American History, he observed. Yet the stripes are frayed, the canton is worn, and one of its 15 stars has gone missing, he wrote. Some of those scars came from pitched battle but others regrettably, from later neglect.
In case anyone missed the metaphor (American flag=judicial pay), Roberts then shifted to requesting a raise.
The Judiciarys needs cannot be postponed indefinitely without damaging its fabric, he wrote. Given the Judiciarys small cost, and its absolutely critical role in protecting the Constitution and rights we enjoy, I must renew the Judiciarys modest petition: Simply provide cost-of-living increases that have been unfairly denied!
Federal district judges, notes Bravin, get the same salary as senators and representatives, $169,300. Circuit judges clock in at $179,500, the eight associate justices of the Supreme Court receive $208,100 and Roberts himself earns $217,400.
For more on Roberts' year-end report, click here for a WaPo report, here for an NYT report and here for an L.A. Times report.
See and Post Comments: http://blogs.wsj.com/law/2009/01/02/cj-roberts-pay-freeze-could-damage-fabric-of-federal-judiciary?mod=djemWLB&reflink=djemWLB&reflink=djemWLB
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The Clawback Conundrum: A Friday Morning Madoff Roundup
on the Bernie Madoff front. Here's a Friday morning round-up:
Tax havens and clawbacks: The WSJ reports that investigators believe Madoff had at least one and possibly multiple accounts located in offshore tax havens or locales with robust privacy laws. Madoff's lawyer, Ike Sorkin, declined to comment. Meanwhile, investors who received redemptions from Madoff are still trying to determine whether they'll be expected to return those funds. Particularly vulnerable are investors who received a payout within 90 days of the firm's collapse, notes the WSJ. But Irving Picard, the trustee, could try to wrest from investors any fictitious profits they got as far back as six years before its liquidation, the limit for New York cases. Investors who became suspicious of Madoff's investment-advisory business might have a tougher time defending themselves against clawbacks than those who had no idea, according to Greg Blue, a partner at Morgenstern & Blue LLC. Madoff, Merkin, Millstein . . . and the duty of loyalty? Bloomberg reported that Weil Gotshal partner Ira M. Millstein, a corporate-governance specialist for four decades, wrote a 2000 letter stating that Yeshiva University followed procedures adequate to prevent either the appearance or the reality of a conflict of interest. The opinion cleared the way for financier J. Ezra Merkin -- a Yeshiva trustee who served on the investment committee -- to continue to accept Yeshiva as an investor as long as Merkins role was disclosed. Millstein is a senior associate dean for corporate governance at Yale business school, as well as a visiting professor. Yeshiva invested in Merkins Ascot Partners, which channeled money to Madoff, who also served as a Yeshiva trustee at the time of Millsteins letter.
Mr. Merkin fully complied with Yeshivas disclosure and other policies concerning its investment in the Ascot Fund, Andrew Levander, Merkin's lawyer at Dechert, told Bloomberg. in an e-mail today. Millstein, Madoff and a spokesman for Yeshiva all declined to comment to Bloomberg.
See and Post Comments: http://blogs.wsj.com/law/2009/01/02/the-clawback-conundrum-a-friday-morning-madoff-roundup?mod=djemWLB&reflink=djemWLB&reflink=djemWLB
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Readers' Choice: The Law Blog Newsmaker of 2008
Before you close your browsers for the last time in 2008 and head off to well-deserved celebrations, we're going to call on you one last time, Loyal Law Blog Readers.
After much deliberation (and some spirited argument) we've compiled, for your consideration, a list of 10 legal newsmakers (listed below in alphabetical order). Now it's your turn to vote. Simply click on the button that appears after your selection. And if you'd like to try to sway your fellow readers, there's always the comment section, too.
Have a safe evening and a great New Year!
H. Rodgin Cohen: As a Sullivan & Cromwell lifer and the chair of the firm since 2000, this isn't the first year that Cohen (Harvard, Harvard Law) has been in the news. Cohen, a banking lawyer and Sheryl Crow fan, finished 2007 by putting together a slew of deals between Wall Street banks and sovereign wealth funds. This fall, Cohen spent 'five weeks in hell' (his words) working on a load of assignments, from government rescues to bank acquisitions, including AIG, Barclays, Fannie Mae, Goldman, J.P. Morgan, Lehman and Wachovia.
Andrew Cuomo: As Wall Street's new sheriff (is he?), 2008 brought Andrew Cuomo a daunting number of messes to clean up -- from the subprime mortgage debacle, to insider-trading probes and even a crackdown on short-sellers. In August, Cuomo (Fordham, Albany Law) orchestrated a spate of settlements to have Merrill, Citi and UBS buy back more than $35 billion of illiquid auction-rate securities. Click here for our Cuomo coverage.
Marc Dreier: The allegations of fraud against Marc Dreier (Yale, Harvard Law), the New York lawyer who alone ran Dreier LLP, were eclipsed in the news, only a week later, by what's believed to be the biggest Ponzi scheme in history. But we'll let you decide what's more brazen: A $50 billion international Ponzi scheme or eating a live California scorpion fish on a stick, with its heart still beating? Click here for our Dreier coverage.
Patrick Fitzgerald: Earlier this month, between news of the alleged scams of Marc Dreier and Bernie Madoff, Patrick Fitzgerald, the U.S. Attorney for the Northern District of Illinois, delivered some fascinating legal reading in the form of a two-count criminal complaint against Illinois Gov. Rod Blagojevich. Earlier today, Fitzgerald (Amherst, Harvard Law) hinted that other "potential defendants" may yet be charged in relation to the case.
Ben Kuehne: The February money-laundering indictment of Ben Kuehne (U. of Miami Law), a prominent Miami defense attorney, raised some serious ire among the Florida defense bar. Lawyers and judges called the allegations absurd and argued that the prosecution would ultimately scare lawyers away from representing accused drug dealers and threaten the Sixth Amendment's guarantee of counsel of choice. Click here for our Kuehne coverage.
Bill Lerach & Mel Weiss: These estranged former law partners and plaintiffs' bar kings found the same fate in 2008: jail. For his part, Lerach continued to make news when it was reported that, over the summer, he was placed in lock-down after he allegedly offered a corrections officer the use of his San Diego Chargers tickets. Later, Lerach was transferred from Lompoc, a fence-less mens camp outside Santa Barbara, to a medium-security institution in Phoenix.
Harvey Miller: As the economy continues to tank, it's no surprise that the country's preeminent bankruptcy lawyer has had a big 2008. Bankruptcy gurus spent the first half of the year anticipating a big wave of Chapter 11 filings. But when the sets began to come in, Weil Gotshal's Miller (Brooklyn College, Columbia Law) caught the biggest curl when he was tapped to handle the Lehman bankruptcy. Will GM be his next assignment?
David Remes: Remes, a former Covington & Burling partner, is perhaps the one lawyer on our list whom not everyone will immediately recognize. But what if we say 'press conference in Yemen'? Does that help? Remes (Columbia, Harvard Law) garnered a lot of publicity back in July when we reported that he de-pantsed himself at a press conference. When Remes, who at the time was representing more than a dozen Yemeni detainees at Guantanamo, returned to the States, he told the Law Blog that he'd dropped trou in order to demonstrate what he felt were the inappropriate body searches that detainees undergo several times per day. Here's our coverage.
Dickie Scruggs: Scruggs, another one of the nation's most high-profile plaintiffs' lawyers, got caught up in a sordid and riveting case of judicial bribery. As a result, Scruggs (Ole Miss, Ole Miss Law) pleaded guilty in March and is now serving a five year sentence at the Federal Correctional Institution in Ashland, Kentucky.
Eliot Spitzer: The second week in March was a real whirlwind when news broke that Spitzer, then New York's governor, had been caught on a federal wiretap arranging to meet with a high-priced prostitute at Washington's Mayflower Hotel. For one dizzying week we batted around phrases like Mann Act, structuring and Client 9. Spitzer (Princeton, Harvard Law) resigned immediately and eventually moved on to the real estate biz. Last month, Michael Garcia, then the U.S. Attorney for the Southern District of New York, announced that his office would not seek criminal charges against Spitzer.
See and Post Comments: http://blogs.wsj.com/law/2008/12/31/readers-choice-the-law-blog-newsmaker-of-2008?mod=djemWLB&reflink=djemWLB&reflink=djemWLB
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