High court restricts whistleblower lawsuits
The Associated Press - March 30, 2010
WASHINGTON, D.C. -- The Supreme Court on Tuesday placed limits on existing whistleblower lawsuits alleging local governments misused federal money, in a decision that produced newcomer Sonia Sotomayor's first dissenting opinion. But the just-enacted health care overhaul law contains a provision that changed the federal False Claims Act in a way that would appear to allow new, similar lawsuits to go forward. The court voted 7-2 to hold that a technical, though important aspect, of the federal whistleblower law applies to local governments. One section of the law prohibits whistleblower lawsuits when public disclosure of the alleged fraud occurs through a court hearing, a news report or congressional or administrative audit. In an opinion by Justice John Paul Stevens, the court ruled that the language on administrative audits refers to a report prepared by any government, not just a federal government document. The question had divided federal appeals courts. Justice Sotomayor dissented, saying her colleagues "misread the statutory text" to limit whistleblower claims. Justice Stephen Breyer joined the dissenting opinion. But, in any event, the health care legislation signed by President Barack Obama last week changed the false claims law so that it now refers specifically to federal reports. Stevens noted the change in a footnote to his opinion, but said it did not affect pending lawsuits. Once allegations are disclosed publicly, often by the media, individuals face a higher hurdle in bringing fraud suits on the federal government's behalf. Otherwise, people could read a newspaper account or an indictment and then rush to the courthouse to file suit. The issue arose in a lawsuit alleging fraud on the part of the Graham County Soil and Water Conservation District in western North Carolina in the use of federal disaster assistance following a damaging storm in 1995. The False Claims Act allows a whistleblower to collect up to 30 percent of a judgment against a party found liable. Since Congress reinvigorated the Civil War-era law in 1986, those suits have returned more than $16 billion to the government The case is Graham County Soil and Water Conservation District v. U.S., 08-304.
Tuesday, March 30, 2010
Corrupt Lawyers Teach Paralegals How To Be Corrupt
Department of Justice Press Release
For Immediate Release
March 26, 2010 United States Attorney's Office
Southern District of New York - Contact: (212) 637-2600
Paralegal Sentenced in Manhattan Federal Court to Three Years in Prison for Role in Multimillion-Dollar Mortgage Fraud and Foreclosure Rescue Schemes
PREET BHARARA, the United States Attorney for the Southern District of New York, announced that MARINA DUBIN, a real estate paralegal, was sentenced yesterday to two concurrent three-year prison sentences in connection with her involvement in a multimillion-dollar, sub-prime mortgage fraud scheme and another foreclosure rescue scheme. DUBIN, 33, of Brooklyn, New York, pleaded guilty to two counts of conspiracy to commit mail, wire, and bank fraud on June 12, 2008, before United States District Judge RICHARD J. HOLWELL, who also imposed the sentence yesterday in Manhattan federal court.
According to the Indictment, other documents filed in these and related cases, and statements made in court:
The Mortgage Fraud Scheme
From 2004 through January 2007, DUBIN was a paralegal who acted as the bank attorney and settlement agent for numerous loans obtained by the participants in a wide-ranging mortgage fraud scheme. The scheme was led by ALEKSANDER LIPKIN, 31, of Brooklyn, New York, and other participants included mortgage brokers and loan processors who worked at the Brooklyn mortgage brokerage firm AGA Capital NY, Inc. ("AGA Capital") and its successors, as well as real estate appraisers, loan account executives, a lawyer, straw buyers, and others. DUBIN and her co-defendants submitted loan applications containing false information and material omissions, as well as other false documentation such as bank statements, to obtain loans that otherwise would not have been funded. During the course of the mortgage fraud scheme, AGA Capital and its successors brokered over 1,000 home mortgages and home equity loans with a total face value of at least $200 million dollars and earned at least $4 million in commission fees on those loans. The various lenders defrauded by the scheme have claimed actual losses of approximately $11.6 million on loans that have completed foreclosure. Of the 27 defendants charged in this case (United States v. Aleksander Lipkin, et al.), 25 pleaded guilty; one of the defendants, attorney ALEXANDER KAPLAN, 35, of Brooklyn, New York, was found guilty following a jury trial and is scheduled to be sentenced on April 6, 2010.
GARRI ZHIGUN, 33, of Brooklyn, New York, who supervised the operations of AGA Capital and was LIPKIN's business partner, was sentenced on May 28, 2009, by Judge HOLWELL to 100 months in prison, three years of supervised release, and was ordered to forfeit $2.5 million and pay approximately $11.6 million in restitution.
The Foreclosure Rescue Scheme
From November 2003 through April 2005, MAURICE McDOWALL, 55, of Brooklyn, New York, LIPKIN and DUBIN engaged in a fraud scheme targeting homeowners whose homes, primarily in Brooklyn and Bronx, New York, were in foreclosure or facing foreclosure, by offering them a plan to "save" their homes. The proposed plan included the refinancing of the homeowners' debt with new, larger mortgages. Because the distressed homeowners typically had poor credit and were not eligible to refinance their debt at favorable terms, the defendants induced them to "sell" their homes to straw buyers, who would apply for loans to be used to "save" the home. The defendants promised that once the straw buyer obtained the mortgage, the proceeds would be used to pay off the homeowners' old debt and make one year's worth of payments on the new loans. The homeowners were told that, during that year, they could continue to live in their homes and work on improving their finances and credit. Finally, the defendants explained to the homeowners that, at the end of the year, the title to their homes would be returned to them by the straw buyers, with their credit repaired and their homes saved. There were also cases in which the defendants did not explain to homeowners that the plan to "save" their home required them to deed their house to a third party and did not obtain permission to deed the homes to others. In such cases, the defendants effectively stole the property of the homeowners by forging the homeowners' signatures on various documents that transferred the homes to straw buyers without the homeowners' knowledge.
McDOWALL, who directed the daily operations of the scheme, and LIPKIN, a mortgage broker who coordinated the submission of fraudulent information to lenders on behalf of straw buyers, obtained more than 80 home mortgages and/or equity loans valued at over $20 million. In some instances, the defendants failed to make even one payment on the loans, causing the loans to default immediately; in nearly every other case, they eventually failed to make the payments and defaulted on the loans, thereby "cashing out" on the properties. As a result, the distressed homeowners lost the titles to their homes and faced eviction, the straw buyers owed the lenders hundreds of thousands of dollars that they were unable to repay, and the lenders suffered losses from the defaulted loans. DUBIN served as the settlement agent for the vast majority of the fraudulent loans obtained in the course of the scheme. In that capacity, she organized closings, prepared documents, and disbursed the fraudulently obtained proceeds to various defendants. McDOWALL was previously sentenced by United States District Judge ROBERT P. PATTERSON to 120 months in prison and three years of supervised release, with 100 hours of community service to be performed in the first year after release. In addition, Judge PATTERSON ordered McDOWALL to forfeit $2.5 million. Of the three other defendants charged in this case, one pleaded guilty and the other two were found guilty on charges of conspiracy, wire fraud, and bank fraud, following a 12-day jury trial in Manhattan federal court.
LIPKIN was sentenced by Judge HOLWELL for his role in both the mortgage fraud scheme and the foreclosure rescue scheme (United States v. Maurice McDowall, et al.) on June 4, 2009, to 110 months in prison, five years of supervised release, and was ordered to forfeit $7 million and pay approximately $11.6 million in restitution. In addition to the 36-month prison term, DUBIN was sentenced to three years of supervised release. Judge HOLWELL also ordered DUBIN to forfeit $7 million and pay approximately $11.6 million in restitution. Mr. BHARARA praised the work of the Federal Bureau of Investigation, the New York City Police Department, and the Department of Homeland Security's U.S. Immigration and Customs Enforcement. He also thanked the New York State Attorney General's Office for its role in the investigation. This case was brought in coordination with President BARACK OBAMA's Financial Fraud Enforcement Task Force, on which Mr. BHARARA serves as a Co-Chair of the Securities and Commodities Fraud Working Group. President OBAMA established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. This case is being prosecuted by the Office's Organized Crime Unit. Assistant United States Attorneys JONATHAN B. NEW, AVI WEITZMAN, JULIAN J. MOORE, and JOHN T. ZACH are in charge of the prosecutions.
BACKGROUND STORY:
Leader Of Foreclosure Scheme And Mortgage Broker Plead Guilty
Maurice McDowall, 49, and Aleksander Lipkin, a/k/a ”Alex," 29, pleaded guilty in Manhattan federal court to participating in a wide-ranging home foreclosure rescue scheme, which defrauded homeowners who were facing foreclosure and banks and other lenders who made mortgage and home equity loans. Lipkin also pleaded guilty to participating in another scheme to defraud numerous subprime mortgage lenders. As previously reported by Mortgage Fraud Blog and according to the Indictment to which both McDowall and Lipkin pleaded guilty (United States v. Maurice McDowall, et al., 07 Cr. 1054), and the superseding Indictment to which Lipkin also pleaded guilty (United States v. Aleksander Lipkin, et al., S2 06 Cr. 1179), other documents filed in the cases, and statements made during the guilty plea proceedings:
Regarding the foreclosure rescue scheme, from November 2003 through April 2005, McDowall and Lipkin engaged in a fraud scheme targeting homeowners whose homes, primarily in Brooklyn and Bronx, New York, were in foreclosure or facing foreclosure, by offering them a plan to “save” their homes. The proposed plan included the refinancing of the homeowners’ debt with new, larger mortgages. Because the distressed homeowners typically had poor credit and were not eligible to refinance their debt at favorable terms, the defendants induced them to “sell” their homes to third parties, or straw buyers, who would apply for loans to be used to “save” the home. The defendants promised that once the straw buyer obtained the mortgage, the proceeds would be used to pay off the homeowners’ old debt and make one year’s worth of payments on the new loans. The homeowners were told that, during that year, they could continue to live in their homes and work on improving their finances and credit. Finally, the defendants explained to the homeowners that, at the end of the year, the title to their homes would be returned to them by the straw buyers, with their credit repaired and their homes saved. There were also cases in which the defendants did not explain to homeowners that the plan to “save” their home required them to deed their house to a third party and did not obtain permission to deed the homes to others. In such cases, the defendants effectively stole the property of the homeowners by forging the homeowners’ signatures on various documents that transferred the homes to straw buyers without the homeowners’ knowledge. In furtherance of the scheme, McDowall and Lipkin submitted loan applications to various banks and lending institutions on the straw buyer’s behalf. In submitting these applications, the defendants regularly used documents containing false or misleading information, including information concerning the straw buyer’s income, assets, and existing debt, to improve the straw buyer’s credit-worthiness. In addition to false statements concerning the straw buyers’ financial profile, the defendants misrepresented to lenders that the straw buyers intended to reside in the property that would secure each mortgage or loan, when, in fact, the properties were already occupied by the distressed homeowners.
McDowall, who directed the daily operations of the scheme, and Lipkin, a mortgage broker who coordinated the submission of fraudulent information to lenders on behalf of straw buyers, obtained more than eighty home mortgages and/or equity loans valued at over $20 million. In some instances, the defendants failed to make even one payment on the loans, causing the loans to default immediately; in nearly every other case, they eventually failed to make the payments and defaulted on the loans, thereby “cashing out” on the properties. As a result, the distressed homeowners lost the titles to their homes and faced eviction, the straw buyers owed the lenders hundreds of thousands of dollars that they were unable to repay, and the lenders suffered losses from the defaulted loans. The defendants’ profit consisted of the difference between the value of the new and old loans; they also earned at least $1.4 million in fees.
Regarding the subprime scheme, from 2004 through January 2007, Lipkin participated in a scheme to defraud various subprime banks and lending institutions. Lipkin conspired with other mortgage brokers and processors who worked at the mortgage brokerages AGA Capital NY, Inc. (”AGA Capital”) and Northside Capital NY, Inc. (”Northside Capital”), in Brooklyn, as well as with real estate appraisers, loan account executives, a paralegal, a lawyer, straw buyers, and others. Lipkin and his co-defendants submitted loan applications and supporting documents with false information and material omissions, as well as other false documentation such as bank statements, to subprime lenders in order to induce the lenders to make loans that otherwise would not have been funded. In some instances, the conspirators obtained mortgages in the names of persons whose identities had been stolen. During the course of this scheme, AGA Capital, its successor, Lending Universe Corporation, and Northside Capital brokered over one thousand home mortgages and home equity loans with a total face value of at least $200 million dollars. AGA Capital, Lending Universe and Northside Capital earned a total of at least $4 million in commission fees on the loans. The subprime lenders that issued the mortgages and loans brokered by Northside Capital, AGA Capital and Lending Universe have suffered actual losses of at least $4.5 million as a result of the fraud scheme. McDowall pleaded guilty before United States District Judge Rpbert P. Patterson, and Lipkin pleaded guilty before United States District Judge Richard J. Holwell. McDowall pleaded guilty to one count of conspiracy to commit bank and wire fraud. He faces a maximum prison term of thirty years and a maximum fine of the greater of $1 million or twice the gross pecuniary gain or loss resulting from the crime, and he must pay restitution to the victims of his crime. In addition, McDowall also agreed to forfeit a total of $2.5 million. He is scheduled to be sentenced by Judge Patterson on September 9, 2008.
Lipkin pleaded guilty to one count of conspiracy to commit mail, wire and bank fraud. He faces a maximum prison term of thirty years and a maximum fine of the greater of $1 million or twice the gross pecuniary gain or loss resulting from the crime, and he must pay restitution to the victims of his crime. Lipkin also agreed to forfeit a total of $7 million. He is scheduled to be sentenced by Judge HOLWELL on October 10, 2008. Of the four other defendants charged in United States v. Maurice McDowall, et al., one has pleaded guilty and the rest await trial, which is scheduled for June 23, 2008. As to the defendants awaiting trial, the charges are merely accusations, and the defendants are presumed innocent unless and until proven guilty. Of the 26 other defendants charged in United States v. Aleksander Lipkin, et al., four have pleaded guilty and the rest await trial, which is scheduled for November 17, 2008. As to the latter group, the charges are merely accusations, and the defendants are presumed innocent unless and until proven guilty. Mr. Garcia praised the efforts of the Federal Bureau of Investigation, New York City Police Department, and U.S. Immigration and Customs Enforcement. He also thanked the New York State Attorney General’s Office for its outstanding work in the investigation. Assistant United States Attorneys Katherine R. Goldstein and Jonathan B. New are in charge of the prosecution.
For Immediate Release
March 26, 2010 United States Attorney's Office
Southern District of New York - Contact: (212) 637-2600
Paralegal Sentenced in Manhattan Federal Court to Three Years in Prison for Role in Multimillion-Dollar Mortgage Fraud and Foreclosure Rescue Schemes
PREET BHARARA, the United States Attorney for the Southern District of New York, announced that MARINA DUBIN, a real estate paralegal, was sentenced yesterday to two concurrent three-year prison sentences in connection with her involvement in a multimillion-dollar, sub-prime mortgage fraud scheme and another foreclosure rescue scheme. DUBIN, 33, of Brooklyn, New York, pleaded guilty to two counts of conspiracy to commit mail, wire, and bank fraud on June 12, 2008, before United States District Judge RICHARD J. HOLWELL, who also imposed the sentence yesterday in Manhattan federal court.
According to the Indictment, other documents filed in these and related cases, and statements made in court:
The Mortgage Fraud Scheme
From 2004 through January 2007, DUBIN was a paralegal who acted as the bank attorney and settlement agent for numerous loans obtained by the participants in a wide-ranging mortgage fraud scheme. The scheme was led by ALEKSANDER LIPKIN, 31, of Brooklyn, New York, and other participants included mortgage brokers and loan processors who worked at the Brooklyn mortgage brokerage firm AGA Capital NY, Inc. ("AGA Capital") and its successors, as well as real estate appraisers, loan account executives, a lawyer, straw buyers, and others. DUBIN and her co-defendants submitted loan applications containing false information and material omissions, as well as other false documentation such as bank statements, to obtain loans that otherwise would not have been funded. During the course of the mortgage fraud scheme, AGA Capital and its successors brokered over 1,000 home mortgages and home equity loans with a total face value of at least $200 million dollars and earned at least $4 million in commission fees on those loans. The various lenders defrauded by the scheme have claimed actual losses of approximately $11.6 million on loans that have completed foreclosure. Of the 27 defendants charged in this case (United States v. Aleksander Lipkin, et al.), 25 pleaded guilty; one of the defendants, attorney ALEXANDER KAPLAN, 35, of Brooklyn, New York, was found guilty following a jury trial and is scheduled to be sentenced on April 6, 2010.
GARRI ZHIGUN, 33, of Brooklyn, New York, who supervised the operations of AGA Capital and was LIPKIN's business partner, was sentenced on May 28, 2009, by Judge HOLWELL to 100 months in prison, three years of supervised release, and was ordered to forfeit $2.5 million and pay approximately $11.6 million in restitution.
The Foreclosure Rescue Scheme
From November 2003 through April 2005, MAURICE McDOWALL, 55, of Brooklyn, New York, LIPKIN and DUBIN engaged in a fraud scheme targeting homeowners whose homes, primarily in Brooklyn and Bronx, New York, were in foreclosure or facing foreclosure, by offering them a plan to "save" their homes. The proposed plan included the refinancing of the homeowners' debt with new, larger mortgages. Because the distressed homeowners typically had poor credit and were not eligible to refinance their debt at favorable terms, the defendants induced them to "sell" their homes to straw buyers, who would apply for loans to be used to "save" the home. The defendants promised that once the straw buyer obtained the mortgage, the proceeds would be used to pay off the homeowners' old debt and make one year's worth of payments on the new loans. The homeowners were told that, during that year, they could continue to live in their homes and work on improving their finances and credit. Finally, the defendants explained to the homeowners that, at the end of the year, the title to their homes would be returned to them by the straw buyers, with their credit repaired and their homes saved. There were also cases in which the defendants did not explain to homeowners that the plan to "save" their home required them to deed their house to a third party and did not obtain permission to deed the homes to others. In such cases, the defendants effectively stole the property of the homeowners by forging the homeowners' signatures on various documents that transferred the homes to straw buyers without the homeowners' knowledge.
McDOWALL, who directed the daily operations of the scheme, and LIPKIN, a mortgage broker who coordinated the submission of fraudulent information to lenders on behalf of straw buyers, obtained more than 80 home mortgages and/or equity loans valued at over $20 million. In some instances, the defendants failed to make even one payment on the loans, causing the loans to default immediately; in nearly every other case, they eventually failed to make the payments and defaulted on the loans, thereby "cashing out" on the properties. As a result, the distressed homeowners lost the titles to their homes and faced eviction, the straw buyers owed the lenders hundreds of thousands of dollars that they were unable to repay, and the lenders suffered losses from the defaulted loans. DUBIN served as the settlement agent for the vast majority of the fraudulent loans obtained in the course of the scheme. In that capacity, she organized closings, prepared documents, and disbursed the fraudulently obtained proceeds to various defendants. McDOWALL was previously sentenced by United States District Judge ROBERT P. PATTERSON to 120 months in prison and three years of supervised release, with 100 hours of community service to be performed in the first year after release. In addition, Judge PATTERSON ordered McDOWALL to forfeit $2.5 million. Of the three other defendants charged in this case, one pleaded guilty and the other two were found guilty on charges of conspiracy, wire fraud, and bank fraud, following a 12-day jury trial in Manhattan federal court.
LIPKIN was sentenced by Judge HOLWELL for his role in both the mortgage fraud scheme and the foreclosure rescue scheme (United States v. Maurice McDowall, et al.) on June 4, 2009, to 110 months in prison, five years of supervised release, and was ordered to forfeit $7 million and pay approximately $11.6 million in restitution. In addition to the 36-month prison term, DUBIN was sentenced to three years of supervised release. Judge HOLWELL also ordered DUBIN to forfeit $7 million and pay approximately $11.6 million in restitution. Mr. BHARARA praised the work of the Federal Bureau of Investigation, the New York City Police Department, and the Department of Homeland Security's U.S. Immigration and Customs Enforcement. He also thanked the New York State Attorney General's Office for its role in the investigation. This case was brought in coordination with President BARACK OBAMA's Financial Fraud Enforcement Task Force, on which Mr. BHARARA serves as a Co-Chair of the Securities and Commodities Fraud Working Group. President OBAMA established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. This case is being prosecuted by the Office's Organized Crime Unit. Assistant United States Attorneys JONATHAN B. NEW, AVI WEITZMAN, JULIAN J. MOORE, and JOHN T. ZACH are in charge of the prosecutions.
BACKGROUND STORY:
Leader Of Foreclosure Scheme And Mortgage Broker Plead Guilty
The Mortgage Fraud Blog - June 6, 2008
Maurice McDowall, 49, and Aleksander Lipkin, a/k/a ”Alex," 29, pleaded guilty in Manhattan federal court to participating in a wide-ranging home foreclosure rescue scheme, which defrauded homeowners who were facing foreclosure and banks and other lenders who made mortgage and home equity loans. Lipkin also pleaded guilty to participating in another scheme to defraud numerous subprime mortgage lenders. As previously reported by Mortgage Fraud Blog and according to the Indictment to which both McDowall and Lipkin pleaded guilty (United States v. Maurice McDowall, et al., 07 Cr. 1054), and the superseding Indictment to which Lipkin also pleaded guilty (United States v. Aleksander Lipkin, et al., S2 06 Cr. 1179), other documents filed in the cases, and statements made during the guilty plea proceedings:
Regarding the foreclosure rescue scheme, from November 2003 through April 2005, McDowall and Lipkin engaged in a fraud scheme targeting homeowners whose homes, primarily in Brooklyn and Bronx, New York, were in foreclosure or facing foreclosure, by offering them a plan to “save” their homes. The proposed plan included the refinancing of the homeowners’ debt with new, larger mortgages. Because the distressed homeowners typically had poor credit and were not eligible to refinance their debt at favorable terms, the defendants induced them to “sell” their homes to third parties, or straw buyers, who would apply for loans to be used to “save” the home. The defendants promised that once the straw buyer obtained the mortgage, the proceeds would be used to pay off the homeowners’ old debt and make one year’s worth of payments on the new loans. The homeowners were told that, during that year, they could continue to live in their homes and work on improving their finances and credit. Finally, the defendants explained to the homeowners that, at the end of the year, the title to their homes would be returned to them by the straw buyers, with their credit repaired and their homes saved. There were also cases in which the defendants did not explain to homeowners that the plan to “save” their home required them to deed their house to a third party and did not obtain permission to deed the homes to others. In such cases, the defendants effectively stole the property of the homeowners by forging the homeowners’ signatures on various documents that transferred the homes to straw buyers without the homeowners’ knowledge. In furtherance of the scheme, McDowall and Lipkin submitted loan applications to various banks and lending institutions on the straw buyer’s behalf. In submitting these applications, the defendants regularly used documents containing false or misleading information, including information concerning the straw buyer’s income, assets, and existing debt, to improve the straw buyer’s credit-worthiness. In addition to false statements concerning the straw buyers’ financial profile, the defendants misrepresented to lenders that the straw buyers intended to reside in the property that would secure each mortgage or loan, when, in fact, the properties were already occupied by the distressed homeowners.
McDowall, who directed the daily operations of the scheme, and Lipkin, a mortgage broker who coordinated the submission of fraudulent information to lenders on behalf of straw buyers, obtained more than eighty home mortgages and/or equity loans valued at over $20 million. In some instances, the defendants failed to make even one payment on the loans, causing the loans to default immediately; in nearly every other case, they eventually failed to make the payments and defaulted on the loans, thereby “cashing out” on the properties. As a result, the distressed homeowners lost the titles to their homes and faced eviction, the straw buyers owed the lenders hundreds of thousands of dollars that they were unable to repay, and the lenders suffered losses from the defaulted loans. The defendants’ profit consisted of the difference between the value of the new and old loans; they also earned at least $1.4 million in fees.
Regarding the subprime scheme, from 2004 through January 2007, Lipkin participated in a scheme to defraud various subprime banks and lending institutions. Lipkin conspired with other mortgage brokers and processors who worked at the mortgage brokerages AGA Capital NY, Inc. (”AGA Capital”) and Northside Capital NY, Inc. (”Northside Capital”), in Brooklyn, as well as with real estate appraisers, loan account executives, a paralegal, a lawyer, straw buyers, and others. Lipkin and his co-defendants submitted loan applications and supporting documents with false information and material omissions, as well as other false documentation such as bank statements, to subprime lenders in order to induce the lenders to make loans that otherwise would not have been funded. In some instances, the conspirators obtained mortgages in the names of persons whose identities had been stolen. During the course of this scheme, AGA Capital, its successor, Lending Universe Corporation, and Northside Capital brokered over one thousand home mortgages and home equity loans with a total face value of at least $200 million dollars. AGA Capital, Lending Universe and Northside Capital earned a total of at least $4 million in commission fees on the loans. The subprime lenders that issued the mortgages and loans brokered by Northside Capital, AGA Capital and Lending Universe have suffered actual losses of at least $4.5 million as a result of the fraud scheme. McDowall pleaded guilty before United States District Judge Rpbert P. Patterson, and Lipkin pleaded guilty before United States District Judge Richard J. Holwell. McDowall pleaded guilty to one count of conspiracy to commit bank and wire fraud. He faces a maximum prison term of thirty years and a maximum fine of the greater of $1 million or twice the gross pecuniary gain or loss resulting from the crime, and he must pay restitution to the victims of his crime. In addition, McDowall also agreed to forfeit a total of $2.5 million. He is scheduled to be sentenced by Judge Patterson on September 9, 2008.
Lipkin pleaded guilty to one count of conspiracy to commit mail, wire and bank fraud. He faces a maximum prison term of thirty years and a maximum fine of the greater of $1 million or twice the gross pecuniary gain or loss resulting from the crime, and he must pay restitution to the victims of his crime. Lipkin also agreed to forfeit a total of $7 million. He is scheduled to be sentenced by Judge HOLWELL on October 10, 2008. Of the four other defendants charged in United States v. Maurice McDowall, et al., one has pleaded guilty and the rest await trial, which is scheduled for June 23, 2008. As to the defendants awaiting trial, the charges are merely accusations, and the defendants are presumed innocent unless and until proven guilty. Of the 26 other defendants charged in United States v. Aleksander Lipkin, et al., four have pleaded guilty and the rest await trial, which is scheduled for November 17, 2008. As to the latter group, the charges are merely accusations, and the defendants are presumed innocent unless and until proven guilty. Mr. Garcia praised the efforts of the Federal Bureau of Investigation, New York City Police Department, and U.S. Immigration and Customs Enforcement. He also thanked the New York State Attorney General’s Office for its outstanding work in the investigation. Assistant United States Attorneys Katherine R. Goldstein and Jonathan B. New are in charge of the prosecution.
Monday, March 29, 2010
Old Lawyer Trick: If Caught Stealing, Run to Rehab
Missing Lawyer Turns Up In Florida Rehab
Insurance policy has covered client fund losses so far
The Connecticut Law Tribune by Douglas S. Malan - March 29, 2010
An Avon attorney who is suspected of absconding with clients’ funds turned up at a Florida rehabilitation center last week and apparently checked himself in. Deron S. Drumm, 38, had operated a two-lawyer real estate and bankruptcy practice up until a few weeks ago. Connecticut grievance officials have been trying to locate him after funds were discovered missing from his client trust account. Last week, they got a call from the HealthCare Connection of Tampa telling them that Drumm had appeared at their clinic. The clinic, which opened in 1995, specializes “in the treatment of impaired professionals,” according to its web site. In legal circles, the clinic is known for its addiction-recovery program designed specifically for attorneys, and is run by attorney Timothy J. Sweeney. He did not return repeated calls for comment. “Within Florida, HealthCare Connection is the preferred provider” of health care services for lawyers, said Michael J. Cohen, executive director of the Florida Lawyers Assistance Program. “They have one of the pre-eminent programs in the country.” A web site for the HealthCare Connection Foundation says it costs about $35,000 to pay for one patient’s “intensive day/night treatment with community housing, including food, medications, and clothing, if necessary.” The treatment lasts for three months. Drumm disappeared from Connecticut earlier this month after a real estate closing on March 10. Grievance officials were alerted when a $119,000 check to a lending institution bounced due to insufficient funds in Drumm’s client trust account. The check was to pay off an existing mortgage on the property that was transferred on March 10. On March 12, Drumm sent an e-mail to his associate, Matthew Mancini, saying that he was “out of here.” Drumm has been a member of the state bar since 2004 and has no prior disciplinary history. Last June, he moved his office to Avon after practicing in Berlin. Chief disciplinary counsel Mark Dubois has been in touch with Drumm’s title insurance carrier and learned that it paid the mortgage holder $119,000 from Drumm’s policy. There’s also the possibility that an additional $150,000 claim will be made against the insurance policy, Dubois noted. Assistant disciplinary counsel Beth Baldwin has set up Mancini as the trustee for the firm’s clients. Baldwin said “there’s nothing we can do” in the Office of Disciplinary Counsel to compel Drumm to return to the state, and she wasn’t aware of any criminal complaint against Drumm. Baldwin moved for an interim suspension of Drumm’s law license earlier this month, and a hearing on Drumm’s disciplinary case is scheduled for March 29. Baldwin said as of last Thursday, no attorney had filed an appearance on Drumm’s behalf. “We’ll have a hearing, whether [Drumm] is here or not,” Baldwin said.
Insurance policy has covered client fund losses so far
The Connecticut Law Tribune by Douglas S. Malan - March 29, 2010
An Avon attorney who is suspected of absconding with clients’ funds turned up at a Florida rehabilitation center last week and apparently checked himself in. Deron S. Drumm, 38, had operated a two-lawyer real estate and bankruptcy practice up until a few weeks ago. Connecticut grievance officials have been trying to locate him after funds were discovered missing from his client trust account. Last week, they got a call from the HealthCare Connection of Tampa telling them that Drumm had appeared at their clinic. The clinic, which opened in 1995, specializes “in the treatment of impaired professionals,” according to its web site. In legal circles, the clinic is known for its addiction-recovery program designed specifically for attorneys, and is run by attorney Timothy J. Sweeney. He did not return repeated calls for comment. “Within Florida, HealthCare Connection is the preferred provider” of health care services for lawyers, said Michael J. Cohen, executive director of the Florida Lawyers Assistance Program. “They have one of the pre-eminent programs in the country.” A web site for the HealthCare Connection Foundation says it costs about $35,000 to pay for one patient’s “intensive day/night treatment with community housing, including food, medications, and clothing, if necessary.” The treatment lasts for three months. Drumm disappeared from Connecticut earlier this month after a real estate closing on March 10. Grievance officials were alerted when a $119,000 check to a lending institution bounced due to insufficient funds in Drumm’s client trust account. The check was to pay off an existing mortgage on the property that was transferred on March 10. On March 12, Drumm sent an e-mail to his associate, Matthew Mancini, saying that he was “out of here.” Drumm has been a member of the state bar since 2004 and has no prior disciplinary history. Last June, he moved his office to Avon after practicing in Berlin. Chief disciplinary counsel Mark Dubois has been in touch with Drumm’s title insurance carrier and learned that it paid the mortgage holder $119,000 from Drumm’s policy. There’s also the possibility that an additional $150,000 claim will be made against the insurance policy, Dubois noted. Assistant disciplinary counsel Beth Baldwin has set up Mancini as the trustee for the firm’s clients. Baldwin said “there’s nothing we can do” in the Office of Disciplinary Counsel to compel Drumm to return to the state, and she wasn’t aware of any criminal complaint against Drumm. Baldwin moved for an interim suspension of Drumm’s law license earlier this month, and a hearing on Drumm’s disciplinary case is scheduled for March 29. Baldwin said as of last Thursday, no attorney had filed an appearance on Drumm’s behalf. “We’ll have a hearing, whether [Drumm] is here or not,” Baldwin said.
Friday, March 26, 2010
New York Post Confronts Judge on Schoolkids
Do it for the children, judge
The New York Post - EDITORIAL -March 26, 2010
State Supreme Court Justice Joan Lobis sure has a misplaced sense of doing right by city schoolkids. Wednesday was to be the day when a nerve-racking process dating back four months was to come to an end for some 80,000 eighth-graders. They were supposed to find out what high schools they'll be attending in September, after submitting a list of up to a dozen they'd be willing to attend. Ah, but they didn't know about the roadblock the UFT and the NAACP were about to throw in their way. A barrier that Judge Lobis has all too gladly kept firmly in place.
The two groups filed suit last month challenging the city's right to close 19 failing schools, including 15 high schools. Like Jamaica HS in Queens -- where barely one in three African-American students graduates within four years. Or Paul Robeson HS in Brooklyn, with a student body that is 95 percent African-American -- and where only one in 10 students earns the Regents diploma, soon to be required for graduation. That is, schools patently failing in their duty to children. Because eighth-graders weren't given the option of including any of these high schools on their request forms -- as if any would want to -- Judge Lobis barred the Department of Education from notifying those students what schools they've been matched with. And that ban stays in effect until she decides the merits -- such as they may be -- of the UFT-NAACP lawsuit. What nonsense. As one parent told The Post: "We are all waiting to move on with our lives, and we need to know what the plan is." But they can't find out until Judge Lobis makes up her mind. Or at least allows the process to go forward. Stop procrastinating, judge. Give these kids a break.
The New York Post - EDITORIAL -March 26, 2010
State Supreme Court Justice Joan Lobis sure has a misplaced sense of doing right by city schoolkids. Wednesday was to be the day when a nerve-racking process dating back four months was to come to an end for some 80,000 eighth-graders. They were supposed to find out what high schools they'll be attending in September, after submitting a list of up to a dozen they'd be willing to attend. Ah, but they didn't know about the roadblock the UFT and the NAACP were about to throw in their way. A barrier that Judge Lobis has all too gladly kept firmly in place.
The two groups filed suit last month challenging the city's right to close 19 failing schools, including 15 high schools. Like Jamaica HS in Queens -- where barely one in three African-American students graduates within four years. Or Paul Robeson HS in Brooklyn, with a student body that is 95 percent African-American -- and where only one in 10 students earns the Regents diploma, soon to be required for graduation. That is, schools patently failing in their duty to children. Because eighth-graders weren't given the option of including any of these high schools on their request forms -- as if any would want to -- Judge Lobis barred the Department of Education from notifying those students what schools they've been matched with. And that ban stays in effect until she decides the merits -- such as they may be -- of the UFT-NAACP lawsuit. What nonsense. As one parent told The Post: "We are all waiting to move on with our lives, and we need to know what the plan is." But they can't find out until Judge Lobis makes up her mind. Or at least allows the process to go forward. Stop procrastinating, judge. Give these kids a break.
Monday, March 22, 2010
Attorney Gives New Meaning to "Free"
Lawyer Joyce David probed for requesting $50K in public funds to defend bouncer Darryl Littlejohn
The New York Daily News by Alison Gendar and Scott Shifrel - March 21, 2010
Joyce David is being investigated for asking for public funds after agreeing to take case for free.
A prominent Brooklyn lawyer is under investigation for asking for $50,000 in public funds to defend murderous bouncer Darryl Littlejohn - after agreeing to take the case for free, the Daily News has learned. Joyce David, 60, is the target of an ethics complaint by a city official and could be the first casualty in a bitter fight over a taxpayer-funded program for defendants who can't afford an attorney. The complaint was filed by Mayor Bloomberg's deputy criminal justice coordinator, Shari Hyman, who is pushing for an overhaul of the so-called 18b "assigned counsel" program, sources said. A City Hall spokesman declined to comment, while David's lawyer said she had done nothing wrong. A well-known lawyer who once headed the Kings County Criminal Bar Association, David has represented the likes of former Jet Mark Gastineau and wrote a book, "What You Should Know if You're Accused of a Crime." Locked up at Rikers Island for the murder of Imette St. Guillen in 2006, Littlejohn read David's book and told Justice Cheryl Chambers he wanted her to represent him instead of the two 18b lawyers already assigned. Chambers refused until David offered to work for free, and the case eventually wound up in Justice Abe Gerges' courtroom. In 2008, David wrote to Gerges and revealed she had tried and failed to get paid from Littlejohn's mother's estate and could no longer work for free. She asked to be appointed as part of the 18b plan. "I have spent hundreds of hours to date in my representation of Mr. Littlejohn and expect that, to do an effective job, I will have to spend hundreds more hours," David wrote in a letter obtained by The News. Gerges assigned David to the 18b pool, setting her up for a $46,000 fee, which has been held up because of questions about how she got the case. She waged a vigorous defense, but Littlejohn was convicted of first-degree murder last June and sentenced to life without parole. She later resigned from the 18b plan. Her lawyer said there was nothing untoward about asking to be included in the program. "She didn't do anything wrong either ethically or legally," David's lawyer, Richard Mischell, said. "She was upfront with her request and the judge could have said, 'no.'" sshifrel@nydailynews.com
The New York Daily News by Alison Gendar and Scott Shifrel - March 21, 2010
Joyce David is being investigated for asking for public funds after agreeing to take case for free.
A prominent Brooklyn lawyer is under investigation for asking for $50,000 in public funds to defend murderous bouncer Darryl Littlejohn - after agreeing to take the case for free, the Daily News has learned. Joyce David, 60, is the target of an ethics complaint by a city official and could be the first casualty in a bitter fight over a taxpayer-funded program for defendants who can't afford an attorney. The complaint was filed by Mayor Bloomberg's deputy criminal justice coordinator, Shari Hyman, who is pushing for an overhaul of the so-called 18b "assigned counsel" program, sources said. A City Hall spokesman declined to comment, while David's lawyer said she had done nothing wrong. A well-known lawyer who once headed the Kings County Criminal Bar Association, David has represented the likes of former Jet Mark Gastineau and wrote a book, "What You Should Know if You're Accused of a Crime." Locked up at Rikers Island for the murder of Imette St. Guillen in 2006, Littlejohn read David's book and told Justice Cheryl Chambers he wanted her to represent him instead of the two 18b lawyers already assigned. Chambers refused until David offered to work for free, and the case eventually wound up in Justice Abe Gerges' courtroom. In 2008, David wrote to Gerges and revealed she had tried and failed to get paid from Littlejohn's mother's estate and could no longer work for free. She asked to be appointed as part of the 18b plan. "I have spent hundreds of hours to date in my representation of Mr. Littlejohn and expect that, to do an effective job, I will have to spend hundreds more hours," David wrote in a letter obtained by The News. Gerges assigned David to the 18b pool, setting her up for a $46,000 fee, which has been held up because of questions about how she got the case. She waged a vigorous defense, but Littlejohn was convicted of first-degree murder last June and sentenced to life without parole. She later resigned from the 18b plan. Her lawyer said there was nothing untoward about asking to be included in the program. "She didn't do anything wrong either ethically or legally," David's lawyer, Richard Mischell, said. "She was upfront with her request and the judge could have said, 'no.'" sshifrel@nydailynews.com
Sunday, March 21, 2010
URGENT: Join NYS Senator Eric Adams Tonight In Virtual Town Hall Meeting!
NYS Senator Eric Adams Joins Majority Conference Colleagues to Reform the Position of State Police Superintendent
Posted by Eric Adams on Wednesday, March 17th, 2010
Government Operations, Police
NYS Senator Eric Adams Joins Majority Conference Colleagues to Reform the Position of State Police Superintendent NYS Senator Eric Adams and Colleagues to Remove Politics from Appointment Process and Job Performance of State Police Superintendent, Mandating Independence and Accountability Legislation is designed to introduce sweeping reforms that will ensure the integrity of the Office of NYS Police Superintendent NYS Senator Eric Adams states: “Today we announce legislation to reform the process through which the Superintendent of the State Police is nominated and confirmed and operates within his office. This major overhaul will halt the intrusion of political chicanery by requiring greater transparency, accountability, and independence in the operations of the State Police. “The Superintendent will be appointed by the Governor, with the advice and consent of the Senate, to a single ten-year term. Only the full Legislature will have the authority to remove the Superintendent from his or her position, through a majority vote in both houses. In the event the Superintendent resigns or is no longer able to perform his or her duties, the Governor will appoint an interim Superintend for a four-month period, followed by a permanent new Superintendent to serve the remainder of the incomplete term. “Further, the responsibilities of the Superintendent will be expanded to include the submission of annual reports to the Legislature detailing the inter- and intra-governmental activities of the State Police in the most recent fiscal year. These reports will be public documents and must include:
• Information detailing any special requests from the Executive or the Legislature for services beyond traditional duties of the State Police;
Posted by Eric Adams on Wednesday, March 17th, 2010
Government Operations, Police
MEDIA ADVISORY
NYS Senator Eric Adams Joins Majority Conference Colleagues to Reform the Position of State Police Superintendent NYS Senator Eric Adams and Colleagues to Remove Politics from Appointment Process and Job Performance of State Police Superintendent, Mandating Independence and Accountability Legislation is designed to introduce sweeping reforms that will ensure the integrity of the Office of NYS Police Superintendent NYS Senator Eric Adams states: “Today we announce legislation to reform the process through which the Superintendent of the State Police is nominated and confirmed and operates within his office. This major overhaul will halt the intrusion of political chicanery by requiring greater transparency, accountability, and independence in the operations of the State Police. “The Superintendent will be appointed by the Governor, with the advice and consent of the Senate, to a single ten-year term. Only the full Legislature will have the authority to remove the Superintendent from his or her position, through a majority vote in both houses. In the event the Superintendent resigns or is no longer able to perform his or her duties, the Governor will appoint an interim Superintend for a four-month period, followed by a permanent new Superintendent to serve the remainder of the incomplete term. “Further, the responsibilities of the Superintendent will be expanded to include the submission of annual reports to the Legislature detailing the inter- and intra-governmental activities of the State Police in the most recent fiscal year. These reports will be public documents and must include:
• Information detailing any special requests from the Executive or the Legislature for services beyond traditional duties of the State Police;
• Information provided by the State police to the Governor or his/her staff or to the Legislature beyond traditional reporting requirements of the State Police, including the purpose for said information;
• Any special disciplinary action taken by the Superintendent regarding inter- or intra- governmental affairs involving State Police personnel, based upon a special request made to the State Police by the Executive, the Legislature, or any other public or quasi-public entity;
• Requests for information of any kind other than the traditional information provided by the State Police from any Executive branch, Legislative branch, public authority, or local government entity;
• The report must include a certification signed by both the Superintendent and the Administrator of the State Police Executive Service Unit attesting that the information provided is true to the best of his/her knowledge. If such certification is found to be false fraudulent, the Superintendent may be subject to sanctions and penalties deemed appropriate by the Legislature.
• The report must include a certification signed by both the Superintendent and the Administrator of the State Police Executive Service Unit attesting that the information provided is true to the best of his/her knowledge. If such certification is found to be false fraudulent, the Superintendent may be subject to sanctions and penalties deemed appropriate by the Legislature.
“The Superintendent also will be required to testify before the Legislature at public hearings on a biennial basis to review the personnel and administrative activities of the State Police along with future plans and initiatives of the agency. “The legislation also requires a two-year rotation of every civilian and sworn officer assigned to the State Police Executive Service Unit. “The role of the New York State Police must be free from the influence of politics. The State Police cannot ‘serve, protect and defend the people’ if the integrity of its decisions is hamstrung by political concerns. This legislation will reform the way in which the Superintendent of the State Police is appointed and revise his duties. It will guarantee the independence of the State Police and ensure that its focus on law enforcement and crime prevention remains undiluted by any outside pressure, interference, or manipulation.”
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Friday, March 19, 2010
Sex For Legal Services OK in NY, But NG in CT
Trading Sexual Favors For Legal Services
The Connecticut Law Tribune by Douglas S. Malan - March 15, 2010
Torrington attorney faces sanctions after two women make allegations
Ethics rules allow lawyers to take payment in different forms from their clients—cash, check, credit card. A naked back rub is not one of the options. When Torrington attorney Ira S. Mayo allegedly offered to waive a client’s fees in exchange for a massage, he triggered an investigation that seems to have jeopardized his law license over an encounter with a woman—again. Mayo’s case is before Middletown Superior Court Judge Robert L. Holzberg, who is consulting with chief disciplinary counsel Mark Dubois and Mayo’s attorney, Michael Fasano Sr., about possible sanctions against Mayo. This is familiar territory for the 45-year-old Mayo. In September 2005, his license was suspended for 15 months for making unwanted sexual advances toward clients who were referred to him by the Susan B. Anthony Project for abused women. But part of the stipulation of Mayo’s return to the bar in January 2007 was his agreement not to be alone with women in his office and not to represent women in domestic relations matters. Grievance officials determined Mayo violated that order. Rosemary Shadrick, Mayo’s former client, also said that Mayo told her a rub-down would suffice as payment for Mayo’s legal services in 2007. “In this case, our concern is there’s a pattern” of behavior, said chief disciplinary counsel Mark Dubois. Mayo referred questions to Fasano, his lawyer, who did not return a call seeking comment. The three-member grievance reviewing committee in Hartford that heard the case last September disagreed as to what degree Mayo violated ethics rules. David I. Channing, a public defender in Rockville, was the only one convinced that Mayo was attempting to have sexual relations with Shadrick, as prohibited by Practice Book Rule 1.8. Under that rule, which was implemented in 2007, a sexual relationship between an attorney and client is allowed only if the intimate relationship predates the professional one. Mayo “made several inappropriate sexual comments and touched Ms. Shadrick in an inappropriately intimate manner,” Channing wrote, by hugging her and kissing her on the cheek. But the committee majority—attorney John C. Matulis Jr. and layman John B. Walsh—saw it differently: “There was conflicting evidence as to whether or not [Mayo] made sexual advances on [Shadrick] and whether he ever physically touched her in an inappropriate way.”
Courthouse Encounter
Shadrick, who now lives in Illinois, went to Mayo to help her get a restraining order against her abusive ex-boyfriend and to handle a criminal matter that stemmed from that relationship. Shadrick said her ex-boyfriend had her arrested after she used a key to get into his house and ended up taking some clothes that belonged to him. Shadrick described the naked back rub offer to grievance officials. She also discussed an encounter outside of the Bristol courthouse when Mayo was updating Shadrick about her case. “He then went on to ask me if we could get together,” Shadrick stated. “And said he liked kinky sex.” Shadrick told grievance officials that at the time Mayo was representing her, she was afraid to say anything about his actions for fear that she would end up in jail or that her ex-boyfriend would come after her. Shadrick eventually hired a new lawyer. Grievance officials flew Shadrick back to Connecticut to testify against Mayo. After Shadrick filed her complaint in February 2009, Dubois’ office learned of a female inmate at York Correctional Institution in Niantic who claimed that Mayo made similar offers of waiving legal fees in exchange for sexual favors. That information came to light because Mayo had complained to state police that one woman, Tara Wilbur, was trying to blackmail him into paying her $3,000 bail bond after she was arrested last February for selling heroin in Torrington. “She said she was going to blackmail me to pay the money or make a claim that I raped her,” Mayo told police last year. “I feel that Tara…will make up a lie about me to get me in trouble because she knows about my past” with other female clients. Wilbur had a different story. She told state police that she met Mayo in the summer of 2008, shortly after she turned 18. Mayo was representing Wilbur and her ex-boyfriend in a separate criminal matter. Wilbur described graphic comments and propositions that Mayo made to her when the two were alone in his office. She said Mayo, at one point, unzipped his pants in front of her. “He wanted to prey on a barely-18-year-old girl,” Wilbur told police. Though Wilbur filed no grievance complaint against Mayo, her statements to police are part of the record as Judge Holzberg decides how to respond to Shadrick’s complaint against Mayo. “I hate that [Mayo] can take women in such bad situations and keep abusing his privilege of being a lawyer over and over,” Shadrick told grievance officials. “I am afraid he will continue to hurt women like me.”
The Connecticut Law Tribune by Douglas S. Malan - March 15, 2010
Torrington attorney faces sanctions after two women make allegations
Ethics rules allow lawyers to take payment in different forms from their clients—cash, check, credit card. A naked back rub is not one of the options. When Torrington attorney Ira S. Mayo allegedly offered to waive a client’s fees in exchange for a massage, he triggered an investigation that seems to have jeopardized his law license over an encounter with a woman—again. Mayo’s case is before Middletown Superior Court Judge Robert L. Holzberg, who is consulting with chief disciplinary counsel Mark Dubois and Mayo’s attorney, Michael Fasano Sr., about possible sanctions against Mayo. This is familiar territory for the 45-year-old Mayo. In September 2005, his license was suspended for 15 months for making unwanted sexual advances toward clients who were referred to him by the Susan B. Anthony Project for abused women. But part of the stipulation of Mayo’s return to the bar in January 2007 was his agreement not to be alone with women in his office and not to represent women in domestic relations matters. Grievance officials determined Mayo violated that order. Rosemary Shadrick, Mayo’s former client, also said that Mayo told her a rub-down would suffice as payment for Mayo’s legal services in 2007. “In this case, our concern is there’s a pattern” of behavior, said chief disciplinary counsel Mark Dubois. Mayo referred questions to Fasano, his lawyer, who did not return a call seeking comment. The three-member grievance reviewing committee in Hartford that heard the case last September disagreed as to what degree Mayo violated ethics rules. David I. Channing, a public defender in Rockville, was the only one convinced that Mayo was attempting to have sexual relations with Shadrick, as prohibited by Practice Book Rule 1.8. Under that rule, which was implemented in 2007, a sexual relationship between an attorney and client is allowed only if the intimate relationship predates the professional one. Mayo “made several inappropriate sexual comments and touched Ms. Shadrick in an inappropriately intimate manner,” Channing wrote, by hugging her and kissing her on the cheek. But the committee majority—attorney John C. Matulis Jr. and layman John B. Walsh—saw it differently: “There was conflicting evidence as to whether or not [Mayo] made sexual advances on [Shadrick] and whether he ever physically touched her in an inappropriate way.”
Courthouse Encounter
Shadrick, who now lives in Illinois, went to Mayo to help her get a restraining order against her abusive ex-boyfriend and to handle a criminal matter that stemmed from that relationship. Shadrick said her ex-boyfriend had her arrested after she used a key to get into his house and ended up taking some clothes that belonged to him. Shadrick described the naked back rub offer to grievance officials. She also discussed an encounter outside of the Bristol courthouse when Mayo was updating Shadrick about her case. “He then went on to ask me if we could get together,” Shadrick stated. “And said he liked kinky sex.” Shadrick told grievance officials that at the time Mayo was representing her, she was afraid to say anything about his actions for fear that she would end up in jail or that her ex-boyfriend would come after her. Shadrick eventually hired a new lawyer. Grievance officials flew Shadrick back to Connecticut to testify against Mayo. After Shadrick filed her complaint in February 2009, Dubois’ office learned of a female inmate at York Correctional Institution in Niantic who claimed that Mayo made similar offers of waiving legal fees in exchange for sexual favors. That information came to light because Mayo had complained to state police that one woman, Tara Wilbur, was trying to blackmail him into paying her $3,000 bail bond after she was arrested last February for selling heroin in Torrington. “She said she was going to blackmail me to pay the money or make a claim that I raped her,” Mayo told police last year. “I feel that Tara…will make up a lie about me to get me in trouble because she knows about my past” with other female clients. Wilbur had a different story. She told state police that she met Mayo in the summer of 2008, shortly after she turned 18. Mayo was representing Wilbur and her ex-boyfriend in a separate criminal matter. Wilbur described graphic comments and propositions that Mayo made to her when the two were alone in his office. She said Mayo, at one point, unzipped his pants in front of her. “He wanted to prey on a barely-18-year-old girl,” Wilbur told police. Though Wilbur filed no grievance complaint against Mayo, her statements to police are part of the record as Judge Holzberg decides how to respond to Shadrick’s complaint against Mayo. “I hate that [Mayo] can take women in such bad situations and keep abusing his privilege of being a lawyer over and over,” Shadrick told grievance officials. “I am afraid he will continue to hurt women like me.”
Check back Monday to see letter to the Connecticut Attorney Ethics Committee urging them to consider how New York whitewashes improper actions by horny attorneys.
UPDATE ON: Embattled Manhattan Surrogate Fraud Scandal
Manhattan judge comes out swinging against fraud accusations
The New York Post by Laura Italiano - March 19, 2010
The New York Post by Laura Italiano - March 19, 2010
Embattled Manhattan Surrogate Court Judge Nora Anderson came out swinging today against charges she illegally funneled $250,000 into her 2008 run for the bench -- portraying herself as a hard-working underdog who had no hand in reporting the movement of money in and out of her campaign coffers. Prosecutors have her under indictment for allegedly taking the quarter-mil in gifts and loans from her former boss -- millionaire Brooklyn lawyer Seth Rubenstein, her co-defendant -- well in excess of campaign limits, and of then intentionally hiding the money's source in campaign finance reports. A very simple money trail shows the loot going directly from Rubenstein's accounts and into Anderson's in two lump payments, assistant district attorney Daniel Cort told jurors. The trail goes on to show Anderson dumping the loot into her cash-strapped campaign, he said. Anderson faces anywhere from probation up to four years prison if convicted of intentionally lying that the money didn't exceed campaign limits since it was her own money, not Rubenstein's. But Anderson today insisted she was too busy following the busy schedule set for her by her campaign manager to know what her staff were filing in those reports. Instead, she was shaking hands in subways, speaking to community groups and texting her campaign manager at three in the morning -- all while paying the bills through her lawyering day job. "You can just imagine what a tough uphill battle this lady had," her lawyer, Gustave Newman, told jurors, noting that Anderson was elected despite having no name recognition and no support from the city Democratic Committee. As for the allegedly knowingly false campaign finance reports, filed in September, 2008, Anderson passed blame for any alleged improprieties on her campaign committee. "Once the committee is appointed its the duty of the committee concerning the contents of those reports," Newman told jurors. Rubenstein, too, insisted through his lawyer, Frederick Hafetz, that Rubenstein did not knowingly file the allegedly false reports.
BACKGROUND:
Wednesday, March 17, 2010
Justice For Sale: Money Floods State Campaigns for Judgeships
ABC News Exclusive: Study Shows Money Flooding into Campaigns for State Judgeships
ABC NEWS EXCLUSIVE by Matthew Mosk - March 17, 2010
Justices Ginsburg, O'Connor Say Fundraising Could Corrupt System, Reform is Needed
In rare public remarks last week, U.S. Supreme Court Justice Ruth Bader Ginsburg said the money involved in electing judges remains one of the most pressing concerns facing the American court system. And she joined her former colleague, Sandra Day O'Connor, in calling for reform. "If there's a reform I would make, it would be that," Ginsburg said when asked about the issue at the National Association of Women Judges Thursday night. Yet money has continued to pour into the campaign accounts of state judges around the country, and ABC News has obtained an advanced copy of a study showing the amounts involved are unprecedented. In the past decade, candidates for state judgeships raised more than $206 million, more than double the $83 million judges raised in the 1990s, according to the soon-to-be released study by the Brennan Center for Justice at NYU School of Law and Justice at Stake, two non partisan groups that advocate for reforming the judicial selection process. Three of the last five state Supreme Court election cycles topped $45 million. And judges shattered fundraising records in all but two of the 21 states with contested Supreme Court elections in the last ten years, the report found. "State judicial elections have been transformed," the report says, and the money involved has created "a grave and growing challenge to the impartiality of our nation's courts." Concerns about the expanding role of money in judicial elections achieved widespread attention two years ago when ABC News and other outlets documented contributions from West Virginia mining executive Don Blankenship to fund an advertising campaign for a candidate for that state's high court. The CEO of the country's fourth largest coal company helped raise more than $3.5 million for ads aimed at getting a new judge elected, all while his company was appealing to the State supreme court a $70 million judgment against it. That case led the U.S. Supreme Court to cry foul, saying a justice should step aside from a case if one of the parties has given so much money that the probability of bias would not be "constitutionally tolerable."
Electing judges is a common practice in the U.S., with nearly 90 percent of all judges in 39 states facing at least some form of election during their tenure. Some advocates for expanding judicial elections say the contests serve a valuable purpose. Jim Bopp, an Indiana lawyer who has been pushing for more states to elect their judges, said many conservatives view the elections as "a way to keep judges within the proper bounds. A way to keep them judges rather than judicial activists." But others see the Blankenship controversy as a proverbial canary in the coal mine for what top judicial scholars including Justice O'Connor -- are now calling an alarming political trend. The amount of money flowing into these contests, O'Connor told a group of Georgetown Law students last month, has become "a threat to judicial independence." "If both sides unleash their campaign spending without restrictions," O'Connor said, it will "erode the impartiality of the judiciary." More expensive battles are coming. Thirty eight state court justices will be on state ballots this year, and in many of the races, the fundraising has already begun. Last week, on the same day Ginsburg was calling for reform, top Alabama appellate lawyers were flowing into the Ruth's Chris Steak House in downtown Birmingham for a reception honoring Alabama Supreme Court Justice Michael F. Bolin, according to an invitation to the event. The requested contribution was $250. Bolin is seeking reelection to the bench after first being elected in 2004 with more than $1 million in financial support from business groups, according to the National Institute on Money in State Politics. Alabama campaigns have been exceptionally contentious in recent years, as business interests and trial lawyers have squared off behind opposing candidates for the state supreme court. A 2003 study by the Institute found that out of 1,424 court cases they examined, 904 of them -- or 63 percent -- involved a party or attorney who had made a contribution to a Supreme Court Justice before that Justice ruled on the contributor's case. Bopp said there's a reason Bolin and other business-backed judges won seats on the court. They were elected, Bopp said, to help reverse a trend of rulings that favored trial lawyers. For years, Bopp said, "Democrat judges in Alabama created tort hell." "What was happening was, the trial lawyers had seized control of the state supreme court and their rulings were very favorable to the trial lawyers," he said. "There became very substantial opposition to these judicial activists and they were defeated."
Similar battles fueled by business groups on one side, and trial lawyers on the other -- have been erupting all around the country. In many cases, the involvement of local interest groups serves to hide the role of the national money in the contests. In Washington State in 2004, for instance, a pro-business group called the Voters Education Committee poured $1.4 million into attack ads in an attorney general's race. After the group refused to identify its investors, the state launched an investigation that uncovered one major source of its funds the U.S. Chamber of Commerce, the powerful pro-business lobby in Washington. Chamber officials declined to comment for this report. Another flashpoint has been Wisconsin, where a business group made up of utilities, insurance carriers, investment houses , and others began supporting candidates in judicial elections. Wisconsin Manufacturers & Commerce spent $4 million on ads that blanketed the airwaves in recent contests for two seats on the Wisconsin State Supreme Court, according to research by the Wisconsin Democracy Campaign, a non partisan group that tracks political giving in the state. The most controversial ad in the 2008 campaign was produced by the business-backed challenger to Justice Louis Butler. The ad accused Butler of setting a child molester free to rape again, and showed a photo of Butler, who is black, next to the mug shot of the rapist, who is also black. "Louis Butler worked to put criminals on the street, like Ruben Lee Mitchell, who raped an 11 year old girl with learning disabilities," the ad said ominously. "Butler found a loophole & Mitchell went on to molest another child. Can Wisconsin families feel safe with Louis Butler on the Supreme Court?" The Wisconsin Judicial Commission called the ad misleading and the ad's sponsor, Michael Gableman, later conceded in a public statement that he made his case to voters "imperfectly and in shorthand, a necessity in judicial campaigns." Gableman narrowly won the election anyway and now sits on the court. Lawyers for the Wisconsin business group have told reporters that their involvement in judicial elections is a matter of free speech, and that judges they help elect should be free to hear cases even when Wisconsin Manufacturers & Commerce is itself a party.
"Individuals and organizations spend money to help elect a judicial candidate precisely because they want that candidate to be a judge that is, to preside over cases, including their own," one of the group's attorneys, Mike Wittenwyler said in a petition to the court. "There is nothing corrupt about that. That is democracy." After Wisconsin Manufacturers & Commerce spent $2.2 million to help elect conservative candidate Annette Ziegler in 2007, its lawyers filed a friend-of-the-court brief on a major corporate tax case. Ziegler authored a 4-3 decision in the case that ruled in the group's favor. Notoriety from that episode, along with fallout from the U.S. Supreme Court ruling in the West Virginia case, helped prompt the court to consider new rules spelling out when campaign donations create conflicts of interest. What emerged were new guidelines saying justices do not have to sit out a case just because one of the parties involved donated to them. At a contentious meeting where the justices debated the new guidelines, Gableman said forcing a justice to step aside would lend credence to the incorrect assumption that "judges, by receiving lawful campaign contributions, are somehow suspect or are going to be swayed or persuaded or more inclined to vote for one party or the other." "The electorate has the right to support the judicial candidates that they feel are the best," he said. But Wisconsin Justice Ann Walsh Bradley, one of the three dissenters to the new policy, said she was "dumbfounded" by the decision to let sitting justices solicit donations from parties with pending cases before them. She said if she described that policy to her friends back home, she knew how they would respond. "Are you crazy?" would be their reaction, she told her colleagues. "Are you kidding?" The new recusal rules, the majority acknowledged, were taken nearly word-for-word from a proposal drafted by the Wisconsin Manufacturers & Commerce.
Justices Ginsburg, O'Connor Say Fundraising Could Corrupt System, Reform is Needed
In rare public remarks last week, U.S. Supreme Court Justice Ruth Bader Ginsburg said the money involved in electing judges remains one of the most pressing concerns facing the American court system. And she joined her former colleague, Sandra Day O'Connor, in calling for reform. "If there's a reform I would make, it would be that," Ginsburg said when asked about the issue at the National Association of Women Judges Thursday night. Yet money has continued to pour into the campaign accounts of state judges around the country, and ABC News has obtained an advanced copy of a study showing the amounts involved are unprecedented. In the past decade, candidates for state judgeships raised more than $206 million, more than double the $83 million judges raised in the 1990s, according to the soon-to-be released study by the Brennan Center for Justice at NYU School of Law and Justice at Stake, two non partisan groups that advocate for reforming the judicial selection process. Three of the last five state Supreme Court election cycles topped $45 million. And judges shattered fundraising records in all but two of the 21 states with contested Supreme Court elections in the last ten years, the report found. "State judicial elections have been transformed," the report says, and the money involved has created "a grave and growing challenge to the impartiality of our nation's courts." Concerns about the expanding role of money in judicial elections achieved widespread attention two years ago when ABC News and other outlets documented contributions from West Virginia mining executive Don Blankenship to fund an advertising campaign for a candidate for that state's high court. The CEO of the country's fourth largest coal company helped raise more than $3.5 million for ads aimed at getting a new judge elected, all while his company was appealing to the State supreme court a $70 million judgment against it. That case led the U.S. Supreme Court to cry foul, saying a justice should step aside from a case if one of the parties has given so much money that the probability of bias would not be "constitutionally tolerable."
Electing judges is a common practice in the U.S., with nearly 90 percent of all judges in 39 states facing at least some form of election during their tenure. Some advocates for expanding judicial elections say the contests serve a valuable purpose. Jim Bopp, an Indiana lawyer who has been pushing for more states to elect their judges, said many conservatives view the elections as "a way to keep judges within the proper bounds. A way to keep them judges rather than judicial activists." But others see the Blankenship controversy as a proverbial canary in the coal mine for what top judicial scholars including Justice O'Connor -- are now calling an alarming political trend. The amount of money flowing into these contests, O'Connor told a group of Georgetown Law students last month, has become "a threat to judicial independence." "If both sides unleash their campaign spending without restrictions," O'Connor said, it will "erode the impartiality of the judiciary." More expensive battles are coming. Thirty eight state court justices will be on state ballots this year, and in many of the races, the fundraising has already begun. Last week, on the same day Ginsburg was calling for reform, top Alabama appellate lawyers were flowing into the Ruth's Chris Steak House in downtown Birmingham for a reception honoring Alabama Supreme Court Justice Michael F. Bolin, according to an invitation to the event. The requested contribution was $250. Bolin is seeking reelection to the bench after first being elected in 2004 with more than $1 million in financial support from business groups, according to the National Institute on Money in State Politics. Alabama campaigns have been exceptionally contentious in recent years, as business interests and trial lawyers have squared off behind opposing candidates for the state supreme court. A 2003 study by the Institute found that out of 1,424 court cases they examined, 904 of them -- or 63 percent -- involved a party or attorney who had made a contribution to a Supreme Court Justice before that Justice ruled on the contributor's case. Bopp said there's a reason Bolin and other business-backed judges won seats on the court. They were elected, Bopp said, to help reverse a trend of rulings that favored trial lawyers. For years, Bopp said, "Democrat judges in Alabama created tort hell." "What was happening was, the trial lawyers had seized control of the state supreme court and their rulings were very favorable to the trial lawyers," he said. "There became very substantial opposition to these judicial activists and they were defeated."
Similar battles fueled by business groups on one side, and trial lawyers on the other -- have been erupting all around the country. In many cases, the involvement of local interest groups serves to hide the role of the national money in the contests. In Washington State in 2004, for instance, a pro-business group called the Voters Education Committee poured $1.4 million into attack ads in an attorney general's race. After the group refused to identify its investors, the state launched an investigation that uncovered one major source of its funds the U.S. Chamber of Commerce, the powerful pro-business lobby in Washington. Chamber officials declined to comment for this report. Another flashpoint has been Wisconsin, where a business group made up of utilities, insurance carriers, investment houses , and others began supporting candidates in judicial elections. Wisconsin Manufacturers & Commerce spent $4 million on ads that blanketed the airwaves in recent contests for two seats on the Wisconsin State Supreme Court, according to research by the Wisconsin Democracy Campaign, a non partisan group that tracks political giving in the state. The most controversial ad in the 2008 campaign was produced by the business-backed challenger to Justice Louis Butler. The ad accused Butler of setting a child molester free to rape again, and showed a photo of Butler, who is black, next to the mug shot of the rapist, who is also black. "Louis Butler worked to put criminals on the street, like Ruben Lee Mitchell, who raped an 11 year old girl with learning disabilities," the ad said ominously. "Butler found a loophole & Mitchell went on to molest another child. Can Wisconsin families feel safe with Louis Butler on the Supreme Court?" The Wisconsin Judicial Commission called the ad misleading and the ad's sponsor, Michael Gableman, later conceded in a public statement that he made his case to voters "imperfectly and in shorthand, a necessity in judicial campaigns." Gableman narrowly won the election anyway and now sits on the court. Lawyers for the Wisconsin business group have told reporters that their involvement in judicial elections is a matter of free speech, and that judges they help elect should be free to hear cases even when Wisconsin Manufacturers & Commerce is itself a party.
"Individuals and organizations spend money to help elect a judicial candidate precisely because they want that candidate to be a judge that is, to preside over cases, including their own," one of the group's attorneys, Mike Wittenwyler said in a petition to the court. "There is nothing corrupt about that. That is democracy." After Wisconsin Manufacturers & Commerce spent $2.2 million to help elect conservative candidate Annette Ziegler in 2007, its lawyers filed a friend-of-the-court brief on a major corporate tax case. Ziegler authored a 4-3 decision in the case that ruled in the group's favor. Notoriety from that episode, along with fallout from the U.S. Supreme Court ruling in the West Virginia case, helped prompt the court to consider new rules spelling out when campaign donations create conflicts of interest. What emerged were new guidelines saying justices do not have to sit out a case just because one of the parties involved donated to them. At a contentious meeting where the justices debated the new guidelines, Gableman said forcing a justice to step aside would lend credence to the incorrect assumption that "judges, by receiving lawful campaign contributions, are somehow suspect or are going to be swayed or persuaded or more inclined to vote for one party or the other." "The electorate has the right to support the judicial candidates that they feel are the best," he said. But Wisconsin Justice Ann Walsh Bradley, one of the three dissenters to the new policy, said she was "dumbfounded" by the decision to let sitting justices solicit donations from parties with pending cases before them. She said if she described that policy to her friends back home, she knew how they would respond. "Are you crazy?" would be their reaction, she told her colleagues. "Are you kidding?" The new recusal rules, the majority acknowledged, were taken nearly word-for-word from a proposal drafted by the Wisconsin Manufacturers & Commerce.
Tuesday, March 16, 2010
Corrupt Manhattan Judge Takes The Stand In Fraud Case
Manhattan judge fighting back in contribution fraud case
The New York Post by LAURA ITALIANO - March 16, 2010
A Manhattan judge is at the defendant's table today, as jury selection begins in her campaign fraud case. Testimony is expected to begin as soon as tomorrow. Surrogate Court Judge Nora Anderson is charged with sneaking $250,000 in illegal contributions into her 2008 primary campaign coffers. "I will tell you this," Anderson said, when reached on the eve of jury selection yesterday. "These were forms which show who contributed what -- how much to my campaign. The ethical rules forbade me to see those forms," she said. "I did not see them. I did not sign them. I did not file them. I have no idea what they say. Intent is always an element of a crime -- and the people have to prove intent." Anderson won the November 2008 election, was indicted the next month, and was sworn in the month after as one of Manhattan's only two Surrogate Court judges -- the judges who preside over the estates of the dead. But she was suspended immediately, with pay, by the state Court of Appeals pending the outcome of her case. "I hope that I am vindicated," she said. "That I can reaffirm my promises to the voters and go to work." The trial is expected to take about three weeks.
The New York Post by LAURA ITALIANO - March 16, 2010
A Manhattan judge is at the defendant's table today, as jury selection begins in her campaign fraud case. Testimony is expected to begin as soon as tomorrow. Surrogate Court Judge Nora Anderson is charged with sneaking $250,000 in illegal contributions into her 2008 primary campaign coffers. "I will tell you this," Anderson said, when reached on the eve of jury selection yesterday. "These were forms which show who contributed what -- how much to my campaign. The ethical rules forbade me to see those forms," she said. "I did not see them. I did not sign them. I did not file them. I have no idea what they say. Intent is always an element of a crime -- and the people have to prove intent." Anderson won the November 2008 election, was indicted the next month, and was sworn in the month after as one of Manhattan's only two Surrogate Court judges -- the judges who preside over the estates of the dead. But she was suspended immediately, with pay, by the state Court of Appeals pending the outcome of her case. "I hope that I am vindicated," she said. "That I can reaffirm my promises to the voters and go to work." The trial is expected to take about three weeks.
2nd Circuit on Carvel: Westchester Court Bribery Scheme Remanded
08-4576-cv Carvel v. New York State
PRESENT:
JOSÉ A. CABRANES,
BARRINGTON D. PARKER, Circuit Judges,
STEFAN R. UNDERHILL, District Judge;
Appeal from an August 8, 2008 judgment of the United States District Court for the Southern District of New York (Shira A. Scheindlin, Judge).
UPON CONSIDERATION WHEREOF, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that the judgment of the District Court is AFFIRMED IN PART and VACATED IN PART. The cause is REMANDED to the District Court.
Plaintiff-appellant Pamela Carvel (“plaintiff”), pro se, brings this action under 42 U.S.C. §§ 1981, 1983, and 1985, against several private attorneys, state disciplinary committee members, and a probate judge involved in the administration of the estate of Thomas and Agnes Carvel. Plaintiff alleges that defendants conspired to defraud the estate of hundreds of millions of dollars and conceal those offenses from the public. Plaintiff further claims that defendants engaged in a conspiracy to deprive her of her rights to due process, equal protection, and free speech, as well as her right to petition the government for redress of grievances. She also asserts various state law claims. The District Court, acting sua sponte, dismissed plaintiff’s complaint for lack of jurisdiction and for failure to state a claim upon which relief can be granted. Plaintiff now appeals from that dismissal. We assume the parties’ familiarity with the underlying facts, the procedural history of this action, and issues raised on appeal. We review a district court’s dismissal of a complaint de novo. See Shakur v. Selsky, 391 F.3d 106, 112 (2d Cir. 2004). Undertaking that review, we affirm most aspects of the District Court’s dismissal of plaintiff’s complaint in this action but vacate and remand one aspect of that dismissal.First, we agree with the District Court that the Eleventh Amendment bars plaintiff’s claims against the State of New York and the Office of Court Administration of the Unified Court System. See Gollomp v. Spitzer, 568 F.3d 355, 368 (2d Cir. 2009) (holding that New York State Unified Court System is “unquestionably an arm of the State” and entitled to Eleventh Amendment sovereign immunity (internal quotation marks omitted)). Second, any claim for damages against Anthony Scarpino, a New York State Supreme Court Justice, is barred by the doctrine of absolute judicial immunity. See Huminski v. Corsones, 396 F.3d 53, 75 (2d Cir. 2005). Third, plaintiff lacks standing to bring any claim against the attorneys of the disciplinary departmental committee who declined to prosecute ethics complaints against plaintiff’s former attorneys. See In re Phillips, 510 F.2d 126, 126 (2d Cir. 1975) (holding that private citizens lack standing to participate in attorney disciplinary proceedings). Finally, however, we cannot affirm the District Court’s dismissal of plaintiff’s conspiracy allegations under § 1983. Plaintiff alleges a “strong appearance of bribery” surrounding $400,000 in loans given to Justice Scarpino. App. 26 (Compl. ¶¶ 69-70). Although Justice Scarpino enjoys the benefit of absolute judicial immunity from that claim, the other defendants involved in the alleged “bribery” scheme do not. See Dennis v. Sparks, 449 U.S. 24, 28-29 (1980). Because the District Court did not explicitly address this claim before dismissing it sua sponte, we lack a basis on which to affirm its dismissal. We therefore vacate the dismissal with respect to the “bribery” claim and remand for the District Court to address the claim in the first instance. We have considered plaintiff’s remaining arguments on appeal and have determined that they
are meritless.
For the foregoing reasons, the August 8, 2008 judgment of the District Court is AFFIRMED IN PART and VACATED IN PART. The cause is remanded to the District Court for proceedings consistent with this Order.
FOR THE COURT, Catherine O’Hagan Wolfe, Clerk of Court
UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
SUMMARY ORDER
Rulings by summary order do not have precedential effect. Citation to a summary order filed on or after January 1, 2007, is permitted and is governed by Federal Rule of Appellate Procedure 32.1 and this court’s Local Rule 32.1.1. When citing a summary order in a document filed with this court, a party must cite either the Federal Appendix or an electronic database (with the notation “summary order”). A party citing a summary order must serve a copy of it on any party not represented by counsel. At a stated term of the United States Court of Appeals for the Second Circuit, held at the Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, in the City of New York, on the 12 day of March, two thousand and ten.PRESENT:
JOSÉ A. CABRANES,
BARRINGTON D. PARKER, Circuit Judges,
STEFAN R. UNDERHILL, District Judge;
The Honorable Stefan R. Underhill, of the
U.S. District Court for the District of Connecticut, sitting by designation.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
PAMELA CARVEL, Plaintiff-Appellant,
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
PAMELA CARVEL, Plaintiff-Appellant,
v. No. 08-4576-cv
NEW YORK STATE, Office of Court Administration of the
Unified Court System, THOMAS J. CAHILL, in his official and
individual capacity, SHERRY COHEN, in her official and
individual capacity, EVE MARKEWICH, individually and as a
partner of Blank Rome LLP, FRANK STRENG, individually and
as a partner of McCarthy Fingar LLP, JONE DOE, JANE DOE,
DOE CO. 1-20, GARY L. CASELLA, DEBORAH MCCARTHY,
WILLIAM GRIFFIN, individually and as co-owner
of Hudson Valley Bank, LAURA WERNER, individually and
in her official capacity, ANTHONY SCARPINO, individually and
in his official capacity and CHARLES SCOTT, individually and in
his official capacity, Defendants-Appellees.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
FOR APPELLANT: Pamela Carvel, pro se, London, England.
FOR APPELLEE: Andrew M. Cuomo, Attorney General of the State of New York, Barabara D. Underwood, Solicitor General, MichaelBelohlavek, Senior Counsel, and Patrick Walsh, Assistant Solicitor General, Office of the Attorney General of the State of New York, New York, New York.
Unified Court System, THOMAS J. CAHILL, in his official and
individual capacity, SHERRY COHEN, in her official and
individual capacity, EVE MARKEWICH, individually and as a
partner of Blank Rome LLP, FRANK STRENG, individually and
as a partner of McCarthy Fingar LLP, JONE DOE, JANE DOE,
DOE CO. 1-20, GARY L. CASELLA, DEBORAH MCCARTHY,
WILLIAM GRIFFIN, individually and as co-owner
of Hudson Valley Bank, LAURA WERNER, individually and
in her official capacity, ANTHONY SCARPINO, individually and
in his official capacity and CHARLES SCOTT, individually and in
his official capacity, Defendants-Appellees.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
FOR APPELLANT: Pamela Carvel, pro se, London, England.
FOR APPELLEE: Andrew M. Cuomo, Attorney General of the State of New York, Barabara D. Underwood, Solicitor General, MichaelBelohlavek, Senior Counsel, and Patrick Walsh, Assistant Solicitor General, Office of the Attorney General of the State of New York, New York, New York.
Appeal from an August 8, 2008 judgment of the United States District Court for the Southern District of New York (Shira A. Scheindlin, Judge).
UPON CONSIDERATION WHEREOF, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that the judgment of the District Court is AFFIRMED IN PART and VACATED IN PART. The cause is REMANDED to the District Court.
Plaintiff-appellant Pamela Carvel (“plaintiff”), pro se, brings this action under 42 U.S.C. §§ 1981, 1983, and 1985, against several private attorneys, state disciplinary committee members, and a probate judge involved in the administration of the estate of Thomas and Agnes Carvel. Plaintiff alleges that defendants conspired to defraud the estate of hundreds of millions of dollars and conceal those offenses from the public. Plaintiff further claims that defendants engaged in a conspiracy to deprive her of her rights to due process, equal protection, and free speech, as well as her right to petition the government for redress of grievances. She also asserts various state law claims. The District Court, acting sua sponte, dismissed plaintiff’s complaint for lack of jurisdiction and for failure to state a claim upon which relief can be granted. Plaintiff now appeals from that dismissal. We assume the parties’ familiarity with the underlying facts, the procedural history of this action, and issues raised on appeal. We review a district court’s dismissal of a complaint de novo. See Shakur v. Selsky, 391 F.3d 106, 112 (2d Cir. 2004). Undertaking that review, we affirm most aspects of the District Court’s dismissal of plaintiff’s complaint in this action but vacate and remand one aspect of that dismissal.First, we agree with the District Court that the Eleventh Amendment bars plaintiff’s claims against the State of New York and the Office of Court Administration of the Unified Court System. See Gollomp v. Spitzer, 568 F.3d 355, 368 (2d Cir. 2009) (holding that New York State Unified Court System is “unquestionably an arm of the State” and entitled to Eleventh Amendment sovereign immunity (internal quotation marks omitted)). Second, any claim for damages against Anthony Scarpino, a New York State Supreme Court Justice, is barred by the doctrine of absolute judicial immunity. See Huminski v. Corsones, 396 F.3d 53, 75 (2d Cir. 2005). Third, plaintiff lacks standing to bring any claim against the attorneys of the disciplinary departmental committee who declined to prosecute ethics complaints against plaintiff’s former attorneys. See In re Phillips, 510 F.2d 126, 126 (2d Cir. 1975) (holding that private citizens lack standing to participate in attorney disciplinary proceedings). Finally, however, we cannot affirm the District Court’s dismissal of plaintiff’s conspiracy allegations under § 1983. Plaintiff alleges a “strong appearance of bribery” surrounding $400,000 in loans given to Justice Scarpino. App. 26 (Compl. ¶¶ 69-70). Although Justice Scarpino enjoys the benefit of absolute judicial immunity from that claim, the other defendants involved in the alleged “bribery” scheme do not. See Dennis v. Sparks, 449 U.S. 24, 28-29 (1980). Because the District Court did not explicitly address this claim before dismissing it sua sponte, we lack a basis on which to affirm its dismissal. We therefore vacate the dismissal with respect to the “bribery” claim and remand for the District Court to address the claim in the first instance. We have considered plaintiff’s remaining arguments on appeal and have determined that they
are meritless.
CONCLUSION
For the foregoing reasons, the August 8, 2008 judgment of the District Court is AFFIRMED IN PART and VACATED IN PART. The cause is remanded to the District Court for proceedings consistent with this Order.
FOR THE COURT, Catherine O’Hagan Wolfe, Clerk of Court
National Crisis Of Courts Of Law Corrupted By Politics
Wife of Justice Thomas starts group for 'citizen activists'
The Washington Post by Robert Barnes and Dan Eggen - March 16, 2010
Into the heightened political atmosphere between the Supreme Court and the Obama administration comes now Virginia Thomas, the conservative activist and wife of Justice Clarence Thomas, who is founder of a new nonprofit lobbying and political-organizing group catering to the "citizen activists" of the "tea party" movement. Virginia "Ginni" Thomas says Liberty Central Inc. will educate motivated citizens to "preserve freedom and reaffirm the core founding principles," according to the group's Web site, and will serve as a way for concerned Americans to "make a difference in the fight for liberty and against the liberal Washington agenda." Virginia Thomas did not return calls on Monday. But she said in an interview with a conservative blogger at a meeting of the Conservative Political Action Committee last month that she had left her job working for a small college because of her concern that the country is off-track. "We've got to get the Constitution back to a place where it means something . . . or we're headed for tyranny," she told blogger Ed Morrissey. Thomas's group was founded in January and she promoted it at the CPAC convention. But it was not until this past weekend, after a story in the Los Angeles Times, that awareness of the new organization prompted a debate about the involvement of a justice's spouse in a political movement. It comes at a time of increased sensitivity between the White House and congressional Democrats on one side and the court's conservative majority on the other. It started with President Obama's unusually blunt criticism of the court during his State of the Union address, when he lambasted the court's 5 to 4 ruling that gave corporations and unions greater leeway to use their general treasuries to buy ads for and against political candidates. Chief Justice John G. Roberts Jr. said last week that Obama's use of the address to criticize the court -- six of the nine black-robed justices were at the front of the House chamber -- was "very troubling." Roberts questioned whether the court should continue to attend what he described as a "political pep rally." The White House responded with a renewed broadside, and Obama has said he was working with Congress to try to temper the effects of the decision, which he said would allow special interests to bankroll American elections. A court spokeswoman said Justice Thomas would not comment on his wife's new endeavor or how he might recuse himself should a conflict arise. Justices make their own decisions about removing themselves from cases and usually do not explain why. Most typically, they recuse themselves when they have a financial interest in an issue before them, or when a decision could affect a family member.
Sue Hamblen, Liberty Central's national coordinator, said Virginia Thomas met with ethics officials for the federal courts and was told her work "was in no way a conflict of interest." "She did not give up her First Amendment rights when her husband became a Supreme Court judge," Hamblen said. Hamblen said that the group is nonpartisan and does not intend to make endorsements in political campaigns but that it will issue "scorecards" ranking candidates on conservative issues. "We are very seriously not Republican or Democrat; we are conservative," Hamblen said. "Our intent is to remain nonpolitical except in terms of furthering the core principles of the founding fathers." Liberty Central, which is organized as a nonprofit, is free to raise unlimited amounts of money and is generally not required to disclose its donors. Hamblen said the group has "received a lot of donations over the last couple days," mostly from small donors. Hamblen said the group is not formally affiliated with the conservative "tea party" groups that have sprouted across the nation over the past year to protest the Obama administration's fiscal policies. The group conducted a joint online poll in January with one of the largest such groups, Tea Party Patriots, whose leaders also issued a statement of support for Thomas's new venture. The LibertyCentral.org Web site also lists an endorsement from former defense secretary Donald M. Rumsfeld, who says that "Ginni can help channel the frustration felt by millions across America at the current course of our country." Virginia Thomas's biography on the site says she "is a fan of Rush Limbaugh, Mark Levin and Laura Ingraham and other talk radio hosts," and that she is "is intrigued by Glenn Beck and listening carefully." A longtime political activist, she has worked for former House Republican leader Richard A. Armey (Tex.), the conservative Heritage Foundation and the U.S. Chamber of Commerce. She most recently worked in Washington for Hillsdale College, a small liberal arts school in Michigan. Hamblen said other judges have had politically active spouses. For instance, Judge Marjorie O. Rendell of the U.S. Court of Appeals for the 3rd Circuit in Philadelphia is married to Pennsylvania's Democratic governor, Ed Rendell. Following the judicial Committee on Codes of Conduct, Marjorie Rendell does not accompany her husband to political events. But she presides over other events as first lady. She seeks guidance from the committee over potential conflicts, and has a policy of recusing herself from a case in which a party has made a hefty contribution to her husband's campaign, unless both sides agree to waive the disqualification. In California, Judge Stephen R. Reinhardt of the U.S. Court of Appeals for the 9th Circuit recuses himself in cases brought by the Southern California branch of the American Civil Liberties Union, which is headed by his wife, Ramona Ripston.
The Washington Post by Robert Barnes and Dan Eggen - March 16, 2010
Into the heightened political atmosphere between the Supreme Court and the Obama administration comes now Virginia Thomas, the conservative activist and wife of Justice Clarence Thomas, who is founder of a new nonprofit lobbying and political-organizing group catering to the "citizen activists" of the "tea party" movement. Virginia "Ginni" Thomas says Liberty Central Inc. will educate motivated citizens to "preserve freedom and reaffirm the core founding principles," according to the group's Web site, and will serve as a way for concerned Americans to "make a difference in the fight for liberty and against the liberal Washington agenda." Virginia Thomas did not return calls on Monday. But she said in an interview with a conservative blogger at a meeting of the Conservative Political Action Committee last month that she had left her job working for a small college because of her concern that the country is off-track. "We've got to get the Constitution back to a place where it means something . . . or we're headed for tyranny," she told blogger Ed Morrissey. Thomas's group was founded in January and she promoted it at the CPAC convention. But it was not until this past weekend, after a story in the Los Angeles Times, that awareness of the new organization prompted a debate about the involvement of a justice's spouse in a political movement. It comes at a time of increased sensitivity between the White House and congressional Democrats on one side and the court's conservative majority on the other. It started with President Obama's unusually blunt criticism of the court during his State of the Union address, when he lambasted the court's 5 to 4 ruling that gave corporations and unions greater leeway to use their general treasuries to buy ads for and against political candidates. Chief Justice John G. Roberts Jr. said last week that Obama's use of the address to criticize the court -- six of the nine black-robed justices were at the front of the House chamber -- was "very troubling." Roberts questioned whether the court should continue to attend what he described as a "political pep rally." The White House responded with a renewed broadside, and Obama has said he was working with Congress to try to temper the effects of the decision, which he said would allow special interests to bankroll American elections. A court spokeswoman said Justice Thomas would not comment on his wife's new endeavor or how he might recuse himself should a conflict arise. Justices make their own decisions about removing themselves from cases and usually do not explain why. Most typically, they recuse themselves when they have a financial interest in an issue before them, or when a decision could affect a family member.
Sue Hamblen, Liberty Central's national coordinator, said Virginia Thomas met with ethics officials for the federal courts and was told her work "was in no way a conflict of interest." "She did not give up her First Amendment rights when her husband became a Supreme Court judge," Hamblen said. Hamblen said that the group is nonpartisan and does not intend to make endorsements in political campaigns but that it will issue "scorecards" ranking candidates on conservative issues. "We are very seriously not Republican or Democrat; we are conservative," Hamblen said. "Our intent is to remain nonpolitical except in terms of furthering the core principles of the founding fathers." Liberty Central, which is organized as a nonprofit, is free to raise unlimited amounts of money and is generally not required to disclose its donors. Hamblen said the group has "received a lot of donations over the last couple days," mostly from small donors. Hamblen said the group is not formally affiliated with the conservative "tea party" groups that have sprouted across the nation over the past year to protest the Obama administration's fiscal policies. The group conducted a joint online poll in January with one of the largest such groups, Tea Party Patriots, whose leaders also issued a statement of support for Thomas's new venture. The LibertyCentral.org Web site also lists an endorsement from former defense secretary Donald M. Rumsfeld, who says that "Ginni can help channel the frustration felt by millions across America at the current course of our country." Virginia Thomas's biography on the site says she "is a fan of Rush Limbaugh, Mark Levin and Laura Ingraham and other talk radio hosts," and that she is "is intrigued by Glenn Beck and listening carefully." A longtime political activist, she has worked for former House Republican leader Richard A. Armey (Tex.), the conservative Heritage Foundation and the U.S. Chamber of Commerce. She most recently worked in Washington for Hillsdale College, a small liberal arts school in Michigan. Hamblen said other judges have had politically active spouses. For instance, Judge Marjorie O. Rendell of the U.S. Court of Appeals for the 3rd Circuit in Philadelphia is married to Pennsylvania's Democratic governor, Ed Rendell. Following the judicial Committee on Codes of Conduct, Marjorie Rendell does not accompany her husband to political events. But she presides over other events as first lady. She seeks guidance from the committee over potential conflicts, and has a policy of recusing herself from a case in which a party has made a hefty contribution to her husband's campaign, unless both sides agree to waive the disqualification. In California, Judge Stephen R. Reinhardt of the U.S. Court of Appeals for the 9th Circuit recuses himself in cases brought by the Southern California branch of the American Civil Liberties Union, which is headed by his wife, Ramona Ripston.
Another New York Attorney Shows How Big Corrupt Deals Are Done
...and it appears to be just fine with corrupt ethics attorneys Alan W. Friedberg, Chief Counsel of the Appellate Division, First Department Departmental Disciplinary Committee (DDC), and Roy L. Reardon, DDC Chairman and Simpson Thacher Partner....
The New York Law Journal by Mark Hamblett - March 16, 2010
A former McGuireWoods partner admitted yesterday to using his position as counsel to small companies to make $10 million in illegal profits. One-time securities lawyer Louis W. Zehil pleaded guilty to securities fraud and conspiracy to commit securities fraud before Southern District Judge Deborah A. Batts, admitting he used his position as counsel for several companies to secretly buy and then sell millions of shares at favorable prices. "I knew what I was doing was wrong," Mr. Zehil told the judge. "I take full responsibility for my actions." Mr. Zehil, 44, a resident of Florida, worked at McGuireWoods until 2007 when he was forced to resign after it was revealed he had issued fraudulent opinion letters for the handling of private investments in public entities. Mr. Zehil worked at the firm's Jacksonville, Fla., and New York offices, specializing in representing small companies that were going public through reverse mergers, transactions in which the companies become public by merging with publicly traded shell corporations. In these so-called "PIPE" transactions, investors commit to buying a set number of restricted shares at a discount price to the market price (or the anticipated market price following the reverse merger) and the issuer agrees to file a resale registration statement at a later date so the investor can resell the shares in the public market. Until the registration for the resale takes place, the shares are not freely tradeable. Mr. Zehil, however, issued opinion letters to the stock transfer agents of seven companies to which he was counsel, stating there was no need to have the shares they were sending Strong Branch Ventures IV and Chestnut Capital Partners II marked with a legend noting the shares were restricted. Both Strong and Chestnut were front companies owned by Mr. Zehil. With other PIPE investors holding restricted shares based on his legitimate opinion letters, Mr. Zehil was able to sell his own "unrestricted" shares and net $10 million between January 2006 and February 2007. The companies were Gran Tierra Energy Inc.; Foothills Resources Inc.; MMC Energy Inc.; Alternative Energy Sources Inc.; Ethanex Energy Inc.; GoFish Corp.; and Kreido BioFuels Inc. Mr. Zehil never informed his clients that he was buying the shares. He appeared to choke up yesterday when Judge Batts walked him through the procedures and consequences of his guilty plea. "I'm a little nervous," he told the judge, asking if he could allocute by reading a prepared statement.
The conspiracy involved an unnamed associate at the firm who has not been charged. Mr. Zehil said the associate mailed the opinion letters to the companies and was aware that what she was doing was illegal. Nonetheless, Mr. Zehil said he believed the associate went along with the scheme only because she was deferring to his senior position at McGuireWoods. "I acted alone," he told the judge, adding that he "circumvented my firm's opinion policies." When Judge Batts asked if that was entirely true that he acted alone, given that Mr. Zehil was admitting to a conspiracy, defense lawyer Andrew M. Lawler spoke up. "My client is just trying to make it clear that he is accepting primary responsibility" and that the associate followed directions because of his "position with the firm," Mr. Lawler said. Mr. Zehil's actions were first discovered by a firm associate, who reported the matter to the firm's managers in February 2007. Partners at McGuireWoods investigated. Mr. Zehil admitted issuing the opinion letters but at first denied owning the Strong and Chestnut front companies. The partners then informed clients what Mr. Zehil had done, forced his resignation and reported him to the Securities and Exchange Commission, which filed a companion civil suit against Mr. Zehil in the Southern District, Securities and Exchange Commission v. Zehil, 07 Civ. 1439. That suit is pending. "What Louis Zehil did was contrary to everything that McGuireWoods stands for," William Alcott, a partner at the 900-lawyer Richmond, Va.-based firm, said yesterday in an interview. Fortunately, he added, the firm "discovered what he was doing, although he took great pains to do it in secret. We demanded his resignation and we turned him in." Mr. Zehil, a 1995 graduate of Columbia Law School, worked at Hale & Dorr and White & Case before moving to the New York office of Jones Day as an associate. He joined McGuireWoods' 35-lawyer New York office as a partner in 2004. Mr. Zehil is scheduled to be sentenced in United States v. Zehil, 07 Cr. 659, on July 26. Securities fraud carries a maximum of 20 years in prison and conspiracy a maximum of five years, but the plea agreement between Mr. Zehil and the government states that his stipulated U.S. Sentencing Guidelines range is from five years and three months to 61/2 years. Southern District Assistant U.S. Attorney Eugene Ingoglia represented the government. Mr. Zehil and Mr. Lawler, a solo practitioner, declined comment following the guilty plea. Mark Hamblett can be reached at mhamblett@alm.com.
Monday, March 15, 2010
Second Circuit Focus on Corrupt Thomas Cahill, Gary Casella and Other Thugs
NY Attorney Advertising Rules Smacked Down by Second Circuit
The New York Law Journal by Noeleen G. Walder - March 15, 2010
The New York Law Journal by Noeleen G. Walder - March 15, 2010
In rejecting the bulk of New York's content-based restrictions on attorney advertising, the U.S. Court of Appeals for the Second Circuit held Friday that a ban on the use of nicknames like "Heavy Hitters" or client testimonials about pending cases violates the First Amendment.
The circuit also held that preventing lawyers from employing special effects or portraying a judge in an ad did not "materially advance" the state's interest in prohibiting misleading speech. "The speech that Defendants' content-based restrictions seeks to regulate—that which is irrelevant, unverifiable, and non-informational—is not inherently false, deceptive, or misleading. Defendants' own press release described its proposed rules as protecting consumers against 'potentially misleading ads,'" the panel wrote in Alexander v. Cahill, 07-3677-cv, 07-3900-cv. The ruling primarily affirms the July 2007 decision by Northern District Judge Frederick J. Scullin. The appellate panel disagreed with Judge Scullin in finding that one provision of the rules, which bars ads from portraying a "fictitious law firm" or "the use of a fictitious name to refer to lawyers not associated together in a law firm" was "actually misleading" and not entitled to First Amendment protection. The panel also upheld a portion of the rules requiring attorneys to wait 30 days after accidents before targeting advertising to solicit personal injury clients. The rules, which went into effect on Feb. 1, 2007, and are codified in New York's Code of Professional Responsibility at 22 NYCRR §1200, were adopted by the four state Appellate Divisions and challenged by Alexander & Catalano, a Syracuse-based personal injury firm, the firm's managing partner, James Alexander, as well as Public Citizen Litigation Group. The circuit opinion was written by Judge Guido Calabresi and joined by Judge John M. Walker Jr. Judge Sonia Sotomayor was the third member on the panel before being elevated to the U.S. Supreme Court last year.
Gregory A. Beck of Public Citizen, the lead attorney for the plaintiffs, said the rules restrict basic, advertising techniques that people see on television all the time, which are "harmless to consumers." And while the state contended the rules make lawyers look dignified, they actually have the effect of making attorney ads look "antiquated and strange," Mr. Beck said in an interview. According to David G. Keyko of Pillsbury Winthrop Shaw Pittman, who served as the lead attorney for the New York City Bar, which submitted an amicus brief supporting the plaintiffs, the ruling does not change the status quo, since an injunction prohibiting the state from enforcing the rules remained in effect. But, he said, the decision "assures everyone that the rules will not spring back into place." Public Citizen, a Washington, D.C.-based group founded by Ralph Nader, and Alexander & Catalano first challenged the rules in February 2007. Prior to their adoption, Alexander & Catalano had not only dubbed itself "heavy hitters," but ran ads depicting partners as giants towering over buildings and counseling space aliens. The law firm of James L. Alexander, and Peter Catalano challenged the 2007 regulations. One commercial showed a judge in a courtroom, who was there to "make sure [the trial] is fair." Another used wisps of smoke and blue electrical currents to highlight the firm's name. While the new rules were less restrictive than a draft version introduced in 2006, Alexander & Catalano and Mr. Beck nonetheless maintained the "cumulative effect" of the regulations was to "prohibit a wide range of potentially interesting" advertising, relied on by consumers "of moderates means."
The circuit also held that preventing lawyers from employing special effects or portraying a judge in an ad did not "materially advance" the state's interest in prohibiting misleading speech. "The speech that Defendants' content-based restrictions seeks to regulate—that which is irrelevant, unverifiable, and non-informational—is not inherently false, deceptive, or misleading. Defendants' own press release described its proposed rules as protecting consumers against 'potentially misleading ads,'" the panel wrote in Alexander v. Cahill, 07-3677-cv, 07-3900-cv. The ruling primarily affirms the July 2007 decision by Northern District Judge Frederick J. Scullin. The appellate panel disagreed with Judge Scullin in finding that one provision of the rules, which bars ads from portraying a "fictitious law firm" or "the use of a fictitious name to refer to lawyers not associated together in a law firm" was "actually misleading" and not entitled to First Amendment protection. The panel also upheld a portion of the rules requiring attorneys to wait 30 days after accidents before targeting advertising to solicit personal injury clients. The rules, which went into effect on Feb. 1, 2007, and are codified in New York's Code of Professional Responsibility at 22 NYCRR §1200, were adopted by the four state Appellate Divisions and challenged by Alexander & Catalano, a Syracuse-based personal injury firm, the firm's managing partner, James Alexander, as well as Public Citizen Litigation Group. The circuit opinion was written by Judge Guido Calabresi and joined by Judge John M. Walker Jr. Judge Sonia Sotomayor was the third member on the panel before being elevated to the U.S. Supreme Court last year.
Gregory A. Beck of Public Citizen, the lead attorney for the plaintiffs, said the rules restrict basic, advertising techniques that people see on television all the time, which are "harmless to consumers." And while the state contended the rules make lawyers look dignified, they actually have the effect of making attorney ads look "antiquated and strange," Mr. Beck said in an interview. According to David G. Keyko of Pillsbury Winthrop Shaw Pittman, who served as the lead attorney for the New York City Bar, which submitted an amicus brief supporting the plaintiffs, the ruling does not change the status quo, since an injunction prohibiting the state from enforcing the rules remained in effect. But, he said, the decision "assures everyone that the rules will not spring back into place." Public Citizen, a Washington, D.C.-based group founded by Ralph Nader, and Alexander & Catalano first challenged the rules in February 2007. Prior to their adoption, Alexander & Catalano had not only dubbed itself "heavy hitters," but ran ads depicting partners as giants towering over buildings and counseling space aliens. The law firm of James L. Alexander, and Peter Catalano challenged the 2007 regulations. One commercial showed a judge in a courtroom, who was there to "make sure [the trial] is fair." Another used wisps of smoke and blue electrical currents to highlight the firm's name. While the new rules were less restrictive than a draft version introduced in 2006, Alexander & Catalano and Mr. Beck nonetheless maintained the "cumulative effect" of the regulations was to "prohibit a wide range of potentially interesting" advertising, relied on by consumers "of moderates means."
The ads had "no potential to confuse or deceive consumers," the plaintiffs argued in their complaint, which named Thomas J. Cahill, former chief counsel for the Department Disciplinary Committee for the Appellate Division, First Department, as a defendant (NYLJ, April 16, 2007). The suit was also filed against other members of the disciplinary committee responsible for enforcing the Code of Professional Responsibility. On July 20, 2007, Judge Scullin threw out the content-based restrictions after finding the state failed to show that the categorical bans directly advanced their interest in barring misleading speech. However, the judge upheld the 30-day moratorium on soliciting clients in personal injury or wrongful death cases. On appeal, Assistant Solicitor General Owen Demuth urged the circuit panel to reverse the decision on content-based regulations, which Mr. Demuth said prohibited the use of "unverifiable, non-informational or otherwise irrelevant information" and should not be afforded First Amendment protection. The circuit disagreed with respect to most of the content-based restrictions. Relying on the test articulated in the U.S. Supreme Court's 1980 holding in Central Hudson Gas & Electric Corp. v. NYS Public Service Commission, 447 U.S. 557, the circuit found that all of the restrictions, except for the provision prohibiting the use of fictitious firms, failed to materially advance the state's interest in protecting the legal profession's image and barring inherently or actually misleading commercial speech. While some client testimonials suggest that past performance is indicative of future performance, "not all testimonials will do so, especially if they include a disclaimer," Judge Calabresi wrote. The panel also held that the defendants failed to demonstrate that the wholesale ban on ads portraying a judge, employing monikers like Heavy Hitters, and the use of attention grabbing techniques that were not relevant to selection of counsel were "inherently or actually misleading in all cases." However, the panel held that the ban on using fictitious names such as the Dream Team to "give the misleading impression" attorneys belong to the same firm is constitutional. According to the decision, the plaintiffs acknowledged at oral argument that they were not challenging this regulation. Turning to the 30-day moratorium, the circuit cited the U.S. Supreme Court ruling in Florida Bar v. Went for It, 515 U.S. 618, which upheld a rule banning direct-mail solicitations. The harms "are just as compelling with respect to targeted attorney advertisements on television, radio, newspapers, and the Internet as they are in justifying a ban on targeted mailings of attorney advertisements," Judge Calabresi concluded. Jeffrey A. Udell, chair of the New York City Bar's Professional Responsibility Committee, said in an interview that he was pleased the court struck the most overbroad and unreasonable provisions of the rules. However, Mr. Udell, a partner at Olshan Grundman Frome Rosenzweig & Wolosky, said he disagreed with the decision to uphold the 30-day moratorium, which he said unfairly place accident victims at a disadvantage. A spokesman for the state attorney general said the office is reviewing the decision. The New York State Bar Association and Arent Fox submitted an amicus brief supporting the 30-day moratorium. Bernice K. Leber, former president of the state bar, which argued before the Second Circuit in favor of the cooling-off period, said Friday's ruling affirms the sensitivity that the members of the bar must show to accident victims and their families. Ms. Leber, a partner at Arent Fox, cited a series of air crashes and the Staten Island Ferry accident as having highlighted the need for a moratorium on how long lawyers must wait before retaining clients. Noeleen G. Walder can be reached at nwalder@alm.com. Joel Stashenko contributed to this report.
Sunday, March 14, 2010
Judith Kaye: Only Answerable to the Corrupt Machine
Cuomo elects to punt: Ducking Paterson investigation shortchanges voters
The New York Daily News - EDITORIAL - March 14, 2010
Attorney General Andrew Cuomo has placed the most important decision of his tenure - whether to charge Gov. Paterson with crimes - in the hands of a prosecutor who was not elected and is not answerable to the people. Esteemed as former Chief Judge Judith Kaye is, that's not how things are done in New York. This state's Constitution and laws call for prosecutorial power to be vested in officials who are chosen by popular vote. That's why local district attorneys are elected. That's why attorneys general are elected. That's why Cuomo was elected. Cuomo - an unannounced contender to replace Paterson in the governor's office - says he was legally obligated to take on the case when Paterson asked him to. He also says that, after preliminary review, he believes that he should step back to avoid feeding any possible perception that politics would distort the matter. Duly noted. Also duly noted are two facts: First, that Cuomo took a hit in the polls after becoming involved in the case. Second, that Kaye will serve only as an assistant attorney general. She meets Cuomo's definition of "independent counsel" only because he says he will cede all decision-making authority to her. These in-and-out contortions are a commentary on how little faith New Yorkers have that Albany leaders will put duty first. One big reason for this trust deficit is that the public has been entirely cut out of choosing its top state officials. Paterson moved up after Eliot Spitzer imploded. Richard Ravitch was appointed lieutenant governor by Paterson. Controller Tom DiNapoli was named by the Legislature after Alan Hevesi was forced to resign. And Cuomo, the only statewide official chosen for his post by voters, has punted an extraordinarily critical matter to an unelected outsider. Oh, Albany.
The New York Daily News - EDITORIAL - March 14, 2010
Attorney General Andrew Cuomo has placed the most important decision of his tenure - whether to charge Gov. Paterson with crimes - in the hands of a prosecutor who was not elected and is not answerable to the people. Esteemed as former Chief Judge Judith Kaye is, that's not how things are done in New York. This state's Constitution and laws call for prosecutorial power to be vested in officials who are chosen by popular vote. That's why local district attorneys are elected. That's why attorneys general are elected. That's why Cuomo was elected. Cuomo - an unannounced contender to replace Paterson in the governor's office - says he was legally obligated to take on the case when Paterson asked him to. He also says that, after preliminary review, he believes that he should step back to avoid feeding any possible perception that politics would distort the matter. Duly noted. Also duly noted are two facts: First, that Cuomo took a hit in the polls after becoming involved in the case. Second, that Kaye will serve only as an assistant attorney general. She meets Cuomo's definition of "independent counsel" only because he says he will cede all decision-making authority to her. These in-and-out contortions are a commentary on how little faith New Yorkers have that Albany leaders will put duty first. One big reason for this trust deficit is that the public has been entirely cut out of choosing its top state officials. Paterson moved up after Eliot Spitzer imploded. Richard Ravitch was appointed lieutenant governor by Paterson. Controller Tom DiNapoli was named by the Legislature after Alan Hevesi was forced to resign. And Cuomo, the only statewide official chosen for his post by voters, has punted an extraordinarily critical matter to an unelected outsider. Oh, Albany.
Saturday, March 13, 2010
New York's Culture of Corruption
Corruption 101: required reading
The Albany Times Union - EDITORIAL - March 12, 2010
David Loglisci's account of how he allowed kickbacks to go on in the state's pension system while he was its chief investment officer should be required reading for every politician and state employee. Beyond shedding fresh light on how the pension fund was corrupted at the highest levels, the two-page statement Mr. Loglisci read in court Wednesday is a primer in political patronage, and how it can become so institutionalized that it passes for business as usual. And it's a warning that whether it's called a kickback, pay-to-play or patronage, it is not good government, and, as Mr. Loglisci now knows all too well, it could be criminal. For his role in a scheme that got him a promotion, he now faces prison. Mr. Loglisci detailed how a senior official in the Comptroller's Office told him that firms looking to handle certain investments for the $129 billion pension fund had to be cleared by Hank Morris, then-Comptroller Alan Hevesi's political adviser and campaign manager. To get the business, Mr. Loglisci said, firms had to contribute to Mr. Hevesi's campaign, or pay a "placement fee" to Mr. Morris or his associates. The use of placement fees or campaign contributions as bribes prompted an investigation by Attorney General Andrew Cuomo's office that has netted more than $120 million in payments from people and firms that played along. Six individuals have pleaded guilty for paying or receiving kickbacks. Mr. Morris has been indicted. Mr. Hevesi, who resigned in 2006 after his conviction in connection with personal uses of state resources, hasn't been charged so far in the pension schemes. How much damage, if any, was done to the pension fund by this corrupted investment system may never be known. Comptroller Thomas DiNapoli has since banned, by executive order, the use of placement agents and fees, and the awarding of investment business to donors to a comptroller or candidate for comptroller for two years following a contribution. That, and more, should, of course, be law. While the hundreds of millions of dollars at stake in this scheme make it so remarkable, the case should put politicians on notice that the spoils they may have come to view as perks of public office -- jobs for family and pals, a personal favor on the side, the award of a discretionary contract -- may end up being Exhibit A at their corruption trial. And state employees who go along with this because the boss said so should know they do so at their own peril, and that if they allow this play, they, too, may have to pay.
The issue:A former top state pension fund official admits his role in a pay-to-play scheme.
The Stakes: A culture in which political patronage is the norm encourages such abuses.
The Albany Times Union - EDITORIAL - March 12, 2010
David Loglisci's account of how he allowed kickbacks to go on in the state's pension system while he was its chief investment officer should be required reading for every politician and state employee. Beyond shedding fresh light on how the pension fund was corrupted at the highest levels, the two-page statement Mr. Loglisci read in court Wednesday is a primer in political patronage, and how it can become so institutionalized that it passes for business as usual. And it's a warning that whether it's called a kickback, pay-to-play or patronage, it is not good government, and, as Mr. Loglisci now knows all too well, it could be criminal. For his role in a scheme that got him a promotion, he now faces prison. Mr. Loglisci detailed how a senior official in the Comptroller's Office told him that firms looking to handle certain investments for the $129 billion pension fund had to be cleared by Hank Morris, then-Comptroller Alan Hevesi's political adviser and campaign manager. To get the business, Mr. Loglisci said, firms had to contribute to Mr. Hevesi's campaign, or pay a "placement fee" to Mr. Morris or his associates. The use of placement fees or campaign contributions as bribes prompted an investigation by Attorney General Andrew Cuomo's office that has netted more than $120 million in payments from people and firms that played along. Six individuals have pleaded guilty for paying or receiving kickbacks. Mr. Morris has been indicted. Mr. Hevesi, who resigned in 2006 after his conviction in connection with personal uses of state resources, hasn't been charged so far in the pension schemes. How much damage, if any, was done to the pension fund by this corrupted investment system may never be known. Comptroller Thomas DiNapoli has since banned, by executive order, the use of placement agents and fees, and the awarding of investment business to donors to a comptroller or candidate for comptroller for two years following a contribution. That, and more, should, of course, be law. While the hundreds of millions of dollars at stake in this scheme make it so remarkable, the case should put politicians on notice that the spoils they may have come to view as perks of public office -- jobs for family and pals, a personal favor on the side, the award of a discretionary contract -- may end up being Exhibit A at their corruption trial. And state employees who go along with this because the boss said so should know they do so at their own peril, and that if they allow this play, they, too, may have to pay.
The issue:A former top state pension fund official admits his role in a pay-to-play scheme.
The Stakes: A culture in which political patronage is the norm encourages such abuses.
To comment: tuletters@timesunion.com
Friday, March 12, 2010
Andy's Odd Choice...
Judge Judy's friends
The New York Post - EDITORIAL - March 7, 2010
Former New York Chief Judge Judith Kaye has become the “go to” lawyer these days for dubious outfits that find themselves in hot water. The shady Working Families Party hired Kaye and her firm, Skadden Arps, to conduct an internal review of its for-profit arm in hopes of forestalling prosecutors’ criminal probes. And when top brass at the State University system found itself under the gun thanks to the scandal-scarred SUNY-Binghamton basketball program, it, too, turned to Kaye. SUNY has been taking criticism as the result of Binghamton President Lois DeFleur’s ambitious program to bring big-time basketball to her campus. DeFleur and Athletic Director Joel Thirer decided their school should move from Division III to the top-level Division I and push hard for a berth in the NCAA tournament. So they built a $33 million arena and hired a new head coach, Kevin Broadus, to recruit top athletes. Within two years, Binghamton had made the tournament. But then the school’s hoop dreams turned into a nightmare. Broadus’ players had been steered into courses like Bowling I and Theories of Softball; when they couldn’t pass even those, their grades were changed. Before long, three of his players had been expelled and two others kicked off the team for arrests ranging from shoplifting to selling crack. Broadus was fired, Thirer resigned and DeFleur has announced her retirement. But it wasn’t SUNY — or even Binghamton — that gave Kaye what turned out to be a million-dollar contract. It was the Research Foundation of the State University of New York — whose money is supposed to support instruction and organized research. Officials say they had the foundation pay so that taxpayer money wouldn’t be used to fund her report. But it also allowed SUNY to get around a state law requiring that such contracts be let out to bid and approved by both the attorney general and the comptroller. It also meant, according to published reports, that SUNY Chancellor Nancy Zimpher was able to steer the contract directly to Kaye, her preferred choice to head the probe. And, wouldn’t you know it, Kaye’s report pretty much spared top SUNY officials from serious criticism. Fortunately, the school says it will repay half of the cost of the contract — which gives state Comptroller Tom DiNapoli the right to get involved. As he most definitely should.
Former New York Chief Judge Judith Kaye has become the “go to” lawyer these days for dubious outfits that find themselves in hot water. The shady Working Families Party hired Kaye and her firm, Skadden Arps, to conduct an internal review of its for-profit arm in hopes of forestalling prosecutors’ criminal probes. And when top brass at the State University system found itself under the gun thanks to the scandal-scarred SUNY-Binghamton basketball program, it, too, turned to Kaye. SUNY has been taking criticism as the result of Binghamton President Lois DeFleur’s ambitious program to bring big-time basketball to her campus. DeFleur and Athletic Director Joel Thirer decided their school should move from Division III to the top-level Division I and push hard for a berth in the NCAA tournament. So they built a $33 million arena and hired a new head coach, Kevin Broadus, to recruit top athletes. Within two years, Binghamton had made the tournament. But then the school’s hoop dreams turned into a nightmare. Broadus’ players had been steered into courses like Bowling I and Theories of Softball; when they couldn’t pass even those, their grades were changed. Before long, three of his players had been expelled and two others kicked off the team for arrests ranging from shoplifting to selling crack. Broadus was fired, Thirer resigned and DeFleur has announced her retirement. But it wasn’t SUNY — or even Binghamton — that gave Kaye what turned out to be a million-dollar contract. It was the Research Foundation of the State University of New York — whose money is supposed to support instruction and organized research. Officials say they had the foundation pay so that taxpayer money wouldn’t be used to fund her report. But it also allowed SUNY to get around a state law requiring that such contracts be let out to bid and approved by both the attorney general and the comptroller. It also meant, according to published reports, that SUNY Chancellor Nancy Zimpher was able to steer the contract directly to Kaye, her preferred choice to head the probe. And, wouldn’t you know it, Kaye’s report pretty much spared top SUNY officials from serious criticism. Fortunately, the school says it will repay half of the cost of the contract — which gives state Comptroller Tom DiNapoli the right to get involved. As he most definitely should.
Thursday, March 11, 2010
Cuomo Recuses Himself From Gov Probes, Taps Former Chief of Corrupt Courts
Cuomo recuses himself from Paterson probes, taps Kaye
The Albany Times Union by Jimmy Vielkingy/Mike Groll/Associated Press - March 11, 2010
The Albany Times Union by Jimmy Vielkingy/Mike Groll/Associated Press - March 11, 2010
Attorney General Andrew Cuomo said he is appointing former Chief Judge Judith Kaye as an “independent counsel” responsible for overseeing investigations into David Paterson’s administration, recusing himself from two ongoing probes. “We did a preliminary review. What we have found in the preliminary review is that there are credible issues to be resolved. Once you make that determination then the question then becomes, well how do you conduct the investigation?” Cuomo said in a conference call Thursday afternoon. He said that the investigation was a “complex, weighty matter indeed. It is further complicated in this case due to the political atmosphere.” Cuomo began his first investigation of the Executive Chamber and State Police at Paterson’s request, after the New York Times reported the governor and a Trooper had contact with a woman pursuing domestic violence charges against David Johnson, the governor’s special assistant. A second complaint was forwarded to Cuomo’s office by the Commission on Public Integrity, which last week found Paterson made untrue statements under oath about his intention to repay the New York Yankees for World Series Tickets he solicited.
Cuomo said that the preliminary review included “hundreds of pages, thousands of e-mails and interviewed dozens of witnesses. An immediate resolution of these matters does not appear to be at hand,” Cuomo said. “We are fully cognizant of the need to do the investigation quickly, as well as the need to do the investigation thoroughly.” He declined to comment on how long the investigation might stretch. He also said the decision to recuse himself was a “legal determination,” and denied that political considerations played into it. A poll found A poll Cuomo’s standing among voters has slipped since he agreed to be the investigation’s steward. He is widely expected to run for governor, though he has consistently (and continued Thursday) to refuse to articulate his exact plans. While not announcing his intention to run for governor, Cuomo’s move is obviously aimed at avoiding charges that he’s coming down to hard on Paterson, perhaps in hopes of getting him to resign or somehow clearing the way for his ascension. “I understand the political environment and I understand the ferocity of politics in New York,” Cuomo said.
New York's Corruption, Second to None
Former Hevesi Aide Pleads Guilty in Pension Case
The New York Times by DANNY HAKIM - March 10, 2010
ALBANY, New York — The former chief investment officer for the state’s pension fund pleaded guilty to securities fraud on Wednesday, saying he helped steer pension money to political contributors to former State Comptroller Alan G. Hevesi and to companies that paid kickbacks to Mr. Hevesi’s top political consultant, Hank Morris. The guilty plea by David J. Loglisci, who has agreed to cooperate with investigators from the office of Attorney General Andrew M. Cuomo, is among the most significant developments in the case since it began nearly three years ago and suggests that the inquiry is moving closer to Mr. Hevesi. In State Supreme Court in Manhattan, Mr. Loglisci described a “culture of corruption” under Mr. Hevesi, saying senior officials in the comptroller’s office directed him to gain approval from Mr. Morris before signing off on investments. “I effectively ceded my authority over the alternative investment portfolio to Morris,” Mr. Loglisci said, reading from a prepared statement. “Morris corrupted the investment process to favor those who either made contributions to the comptroller’s campaign, which Morris managed, or agreed to pay placement or other fees to Morris or his associates, and to punish those who would not.” Giving such authority to Mr. Morris, an outsider who ran Mr. Hevesi’s campaigns, would represent a startling breach; Mr. Morris collected millions in consulting fees from investment firms.
Mr. Loglisci is the sixth person to plead guilty in the case but the first official from the comptroller’s office. The investigation centers on the lucrative benefits that friends and associates of Mr. Hevesi reaped by their proximity to the state’s $129 billion pension fund, one of the largest investment pools in the nation. Investment companies, including prominent firms like the Carlyle Group, have paid $120 million in settlements with Mr. Cuomo’s office and agreed to change their practices. The biggest change adopted by the companies and the state pension fund has been a ban on the use of placement agents, the middlemen who facilitate deals between investment firms and public pensions. The Securities and Exchange Commission has been conducting its own parallel inquiry into the matter. Mr. Morris, who was indicted last year along with Mr. Loglisci, declined to comment through his lawyer on Wednesday. A lawyer for Mr. Hevesi, who resigned in 2006 after pleading guilty to an unrelated felony related to state workers’ service as chauffeurs for his wife, strongly rejected any suggestion that the comptroller had permitted politics to guide investment decisions. “Alan Hevesi never instructed David Loglisci or anyone at the comptroller’s office to obtain Hank Morris’s approval prior to recommending or declining proposed alternative investments,” the lawyer, Bradley Simon, said. “Mr. Hevesi never directed Mr. Loglisci to cede his authority to Hank Morris.”
Mr. Loglisci has been a central figure in the investigation since it began. He pleaded guilty to a felony violation of the Martin Act, a sweeping state securities law, and faces up to four years in prison. Mr. Cuomo’s office said in a statement that Mr. Loglisci “acknowledged breaching his duties and intentionally engaging in fraud, deception and concealment in connection with numerous investment transactions.” He also admitted to destroying evidence, namely a list of placement agents who had been paid by investment firms doing business with the state pension fund. In a telephone news conference after Mr. Loglisci’s plea, Mr. Cuomo was repeatedly pressed about Mr. Loglisci’s statement in court that senior officials had instructed him to clear investment decisions with Mr. Morris. Mr. Loglisci reported directly to Mr. Hevesi and the comptroller’s chief of staff, Jack Chartier. Mr. Cuomo declined to say whether Mr. Hevesi was one of the senior officials referred to in Mr. Loglisci’s statement. “The words speak for themselves,” Mr. Cuomo said, adding that he would not comment on “anything Mr. Hevesi knew or didn’t know.”
“This is the chief investment officer,” he said. “He did report directly to the comptroller, at that time Mr. Hevesi.” When Mr. Morris and Mr. Loglisci were indicted nearly a year ago, Mr. Cuomo’s office accused Mr. Morris of having positioned himself as a gatekeeper, controlling access to about $10 billion in pension assets that were to be invested in hedge funds and private equity firms. Mr. Loglisci said Wednesday in court that Mr. Morris used his control over the pension fund to secure campaign contributions from investment firms. Shortly after Mr. Hevesi’s election in 2002, Mr. Morris played a key role in installing Mr. Loglisci, who had worked on Wall Street, in the chief investment officer’s position. “With today’s plea,” Mr. Cuomo said in his statement, “a former top official overseeing the state’s single largest asset admitted that decisions were driven by politics and greed — not the best interests of the fund or its beneficiaries.” Mr. Loglisci’s role in the case has been a colorful one. One of his brothers made a low-budget movie called “Chooch,” which featured, among other things, a nine-pound dachshund named Kiwi Limone. Several prominent investors seeking pension fund business put money into the movie-making effort. Prosecutors have said that other benefits were doled out to other aides under Mr. Hevesi; investment firms are accused of conferring gifts on behalf of Mr. Chartier to the actress Peggy Lipton, a close friend, including a large loan and rent payments. And last October, Raymond B. Harding, the former chief of the Liberal Party in the state, admitted that he had accepted more than $800,000 in exchange for doing favors for Mr. Hevesi, including a scheme to secure an Assembly seat for Mr. Hevesi’s son, Andrew.
The New York Times by DANNY HAKIM - March 10, 2010
ALBANY, New York — The former chief investment officer for the state’s pension fund pleaded guilty to securities fraud on Wednesday, saying he helped steer pension money to political contributors to former State Comptroller Alan G. Hevesi and to companies that paid kickbacks to Mr. Hevesi’s top political consultant, Hank Morris. The guilty plea by David J. Loglisci, who has agreed to cooperate with investigators from the office of Attorney General Andrew M. Cuomo, is among the most significant developments in the case since it began nearly three years ago and suggests that the inquiry is moving closer to Mr. Hevesi. In State Supreme Court in Manhattan, Mr. Loglisci described a “culture of corruption” under Mr. Hevesi, saying senior officials in the comptroller’s office directed him to gain approval from Mr. Morris before signing off on investments. “I effectively ceded my authority over the alternative investment portfolio to Morris,” Mr. Loglisci said, reading from a prepared statement. “Morris corrupted the investment process to favor those who either made contributions to the comptroller’s campaign, which Morris managed, or agreed to pay placement or other fees to Morris or his associates, and to punish those who would not.” Giving such authority to Mr. Morris, an outsider who ran Mr. Hevesi’s campaigns, would represent a startling breach; Mr. Morris collected millions in consulting fees from investment firms.
Mr. Loglisci is the sixth person to plead guilty in the case but the first official from the comptroller’s office. The investigation centers on the lucrative benefits that friends and associates of Mr. Hevesi reaped by their proximity to the state’s $129 billion pension fund, one of the largest investment pools in the nation. Investment companies, including prominent firms like the Carlyle Group, have paid $120 million in settlements with Mr. Cuomo’s office and agreed to change their practices. The biggest change adopted by the companies and the state pension fund has been a ban on the use of placement agents, the middlemen who facilitate deals between investment firms and public pensions. The Securities and Exchange Commission has been conducting its own parallel inquiry into the matter. Mr. Morris, who was indicted last year along with Mr. Loglisci, declined to comment through his lawyer on Wednesday. A lawyer for Mr. Hevesi, who resigned in 2006 after pleading guilty to an unrelated felony related to state workers’ service as chauffeurs for his wife, strongly rejected any suggestion that the comptroller had permitted politics to guide investment decisions. “Alan Hevesi never instructed David Loglisci or anyone at the comptroller’s office to obtain Hank Morris’s approval prior to recommending or declining proposed alternative investments,” the lawyer, Bradley Simon, said. “Mr. Hevesi never directed Mr. Loglisci to cede his authority to Hank Morris.”
Mr. Loglisci has been a central figure in the investigation since it began. He pleaded guilty to a felony violation of the Martin Act, a sweeping state securities law, and faces up to four years in prison. Mr. Cuomo’s office said in a statement that Mr. Loglisci “acknowledged breaching his duties and intentionally engaging in fraud, deception and concealment in connection with numerous investment transactions.” He also admitted to destroying evidence, namely a list of placement agents who had been paid by investment firms doing business with the state pension fund. In a telephone news conference after Mr. Loglisci’s plea, Mr. Cuomo was repeatedly pressed about Mr. Loglisci’s statement in court that senior officials had instructed him to clear investment decisions with Mr. Morris. Mr. Loglisci reported directly to Mr. Hevesi and the comptroller’s chief of staff, Jack Chartier. Mr. Cuomo declined to say whether Mr. Hevesi was one of the senior officials referred to in Mr. Loglisci’s statement. “The words speak for themselves,” Mr. Cuomo said, adding that he would not comment on “anything Mr. Hevesi knew or didn’t know.”
“This is the chief investment officer,” he said. “He did report directly to the comptroller, at that time Mr. Hevesi.” When Mr. Morris and Mr. Loglisci were indicted nearly a year ago, Mr. Cuomo’s office accused Mr. Morris of having positioned himself as a gatekeeper, controlling access to about $10 billion in pension assets that were to be invested in hedge funds and private equity firms. Mr. Loglisci said Wednesday in court that Mr. Morris used his control over the pension fund to secure campaign contributions from investment firms. Shortly after Mr. Hevesi’s election in 2002, Mr. Morris played a key role in installing Mr. Loglisci, who had worked on Wall Street, in the chief investment officer’s position. “With today’s plea,” Mr. Cuomo said in his statement, “a former top official overseeing the state’s single largest asset admitted that decisions were driven by politics and greed — not the best interests of the fund or its beneficiaries.” Mr. Loglisci’s role in the case has been a colorful one. One of his brothers made a low-budget movie called “Chooch,” which featured, among other things, a nine-pound dachshund named Kiwi Limone. Several prominent investors seeking pension fund business put money into the movie-making effort. Prosecutors have said that other benefits were doled out to other aides under Mr. Hevesi; investment firms are accused of conferring gifts on behalf of Mr. Chartier to the actress Peggy Lipton, a close friend, including a large loan and rent payments. And last October, Raymond B. Harding, the former chief of the Liberal Party in the state, admitted that he had accepted more than $800,000 in exchange for doing favors for Mr. Hevesi, including a scheme to secure an Assembly seat for Mr. Hevesi’s son, Andrew.
Corrupt Federal Judge Thrown Off Bench
Federal Judge Impeached by House
The Associated Press by Larry Margasak - March 11, 2010
The Associated Press by Larry Margasak - March 11, 2010
WASHINGTON, D.C. — The House has voted to impeach a federal judge from Louisiana. A House Judiciary Committee task force charged District Judge G. Thomas Porteous Jr. with a long-standing pattern of corruption. The first of four impeachment articles was approved Thursday, 412-0. The second passed 410-0. The case goes to trial in the Senate, where a two-thirds vote is needed to convict Porteous of high crimes and misdemeanors. Porteous was accused of taking cash from lawyers and gifts from a bail bondsman; lying to the Senate and the FBI to win confirmation; and making false statements in his bankruptcy proceedings to hide financial problems and gambling debts. If convicted in the Senate, Porteous would become the eighth federal judge in U.S. history to be impeached and convicted.
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