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End Corruption in the Courts!

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Sunday, December 2, 2012

Saturday, December 1, 2012

Wednesday, November 14, 2012

Thursday, August 16, 2012

New York FBI Chief to Retire

FBI - NEW YORK FIELD OFFICE PRESS RELEASE - New York FBI Chief to Retire

Tuesday, August 14, 2012

Monday, August 13, 2012

Friday, July 6, 2012

Wednesday, June 27, 2012

NY Legal Ethics Scandal Whistleblower Back in Federal Court

NY Legal Ethics Scandal Whistleblower Back in Federal Court

Witness Tampering Brings NY Attorney Christine Anderson Back to Federal Court

Widespread 'Ethics' Corruption Now Includes Threat on Witness in a Federal Proceeding

CLICK HERE TO SEE THE STORY AND THE JUNE 25, 2012 FILED PAPERS

Wednesday, June 6, 2012

Insight Into Corruption-Protection At Top Law Firms

Former Attorney Gets Record Insider-Trading Sentence
The American Lawyer by Tom Huddleston Jr.  -  June 6, 2012

Former attorney Matthew Kluger was sentenced on June 4 to 12 years in prison for his role in a massive insider-trading scheme that carried on for nearly two decades and was made possible in large part by his position as an associate with a series of Am Law 100 firms.  According to Bloomberg, his prison term is the longest ever imposed for insider trading, exceeding the 11-year sentence given last year to Galleon Group co-founder Raj Rajaratnam.  Prosecutors say the scheme netted a combined total of more than $37 million in illicit gains for the 51-year-old Kluger—who, based on federal sentencing guidelines, faced between 11 and 14 years in prison—and his two collaborators: former stock trader Garrett Bauer and mortgage broker Kenneth Robinson.  In handing down what she acknowledged was a harsh sentence, U.S. District Court Judge Katharine Hayden in Newark, N.J., said that Kluger's crime warranted such a stiff penalty because "it allows greedy, arrogant people to make money off others."  In a statement to the court, Kluger expressed remorse for his actions. He said he wanted the court to know "how terribly, terribly sorry I am." He also expressed a desire to make reparations to some of those he wronged along the way. "I will do anything I can to try and regain a modicum of the trust that I destroyed [with] so many people and so many institutions," he said.

The sentencing comes a little more than one year after prosecutors accused Kluger in a federal complaint of participating in the insider-trading ring. Kluger pleaded guilty to all four counts against him, including conspiracy to commit securities fraud, securities fraud, conspiracy to commit money laundering, and obstruction of justice (NYLJ, Dec. 16, 2011).  The three-man operation kicked off in 1994, according to Robinson's court testimony, when Kluger was a summer associate at Cravath, Swaine & Moore, and continued as he moved on to associate positions at Skadden, Arps, Slate, Meagher & Flom; Fried, Frank, Harris, Shriver & Jacobson; and, finally, Wilson Sonsini Goodrich & Rosati.  Kluger stole confidential information related to corporate transactional work being handled by his employer at each stop, then passed details of pending corporate mergers to Robinson, the scheme's middleman. Robinson would then pass the details on to Bauer, who would then use the inside information to purchase shares for all three men, according to Robinson's testimony.

Across the span of the roughly 17-year scheme, Kluger and his cohorts traded ahead of more than 30 separate transactions, prosecutors say. In December, as part of a settlement agreement with the U.S. Securities and Exchange Commission, the three men agreed to repay their illegal profits from the conspiracy. Prosecutors have said that Bauer took the "lion's share of the profits," which is why the former trader was required earlier this year to forfeit roughly $31.6 million. For his part, Kluger agreed to forfeit $516,000. Robinson will pay $845,000.  In court on June 4, Kluger's attorney, Alan Zegas of Chatham, N.J., argued that his client was insulated from Bauer during the course of the conspiracy and was misled by his co-conspirators as to the amount of stock being purchased as a result of the inside information he was passing along. According to Zegas, Kluger claims the three men began the scheme with an agreement to split all proceeds equally, and that Kluger would have ceased providing the inside information had he known Bauer planned on purchasing a higher volume of stock.  Assistant U.S. Attorney Judith Germano made it clear during the sentencing that the government didn't accept Kluger's claims of what she called a "loosey-goosey agreement" between the trio to split their gains three ways.  Zegas used his client's supposed ignorance about the scope of the scheme to argue for a lighter sentence, even going so far as to ask that Hayden delay sentencing until a hearing could be scheduled to weigh additional evidence he said would establish his client's ignorance about the scope of Bauer's trading activities. The judge refused that request.  After being sentenced, Kluger told a group of reporters that he had been forthcoming with the government since the time of his arrest and reiterated his belief that further discovery would reveal that his cohorts deliberately withheld information from him throughout the scheme.  "A hearing with Ken Robinson on the stand…he would have admitted to doing things on each deal actively to mislead me," Kluger said.  Zegas told reporters that he is considering appealing the sentence.

Recorded ConversationsThe case came together after Robinson agreed to cooperate with prosecutors and recorded several conversations with Kluger whose contents were contained in a criminal complaint filed against the former lawyer. Robinson pleaded guilty last April to one count of conspiracy to commit securities fraud and two counts of securities fraud. Like Kluger, Bauer pleaded guilty in December to all four counts against him.  Among the more interesting details of the case is the origin of obstruction of justice charges against Kluger and Bauer. In Kluger's case, he destroyed a computer and an iPhone upon learning that authorities had searched Robinson's home, according to court documents, while also instructing Robinson to destroy a prepaid cellphone that he had used to communicate with Kluger and Bauer.  Meanwhile, Bauer's obstruction of justice charge came about after he broke his own prepaid cellphone into two pieces and tossed them in separate trash cans at a Manhattan McDonald's.  Bauer was sentenced to nine years in prison on June 4, while Robinson got 27 months. Robinson received a shorter sentence due to his cooperation with authorities. (Since his arrest, Bauer has been telling his story to groups of people at such places as business schools and law schools, encouraging others not to follow his criminal path, Bloomberg reports.)  For her part, Germano asserted that Kluger was the scheme's mastermind and that none of the illegal trading would have been possible without the insider information he stole from his employers. She also frequently returned to the fact that the scheme began while Kluger was just a summer associate—pointing out that he had already headed down a criminal path before he even became a full-time lawyer.  "He was an attorney who had a duty of trust," she said, "a duty to uphold the confidence" of his clients and employers.  @|Tom Huddleston Jr., a reporter for The American Lawyer, an affiliate, can be contacted at thuddleston@alm.com.

Selective Sex Abuse Justice

The selective justice of Charles Hynes 
The New York Daily News by Arnold Kriss  -  OPINION  -  June 6, 2012 
His only duty should be to the victims 

Brooklyn District Attorney Charles Hynes’ justification for not disclosing the names of sex abuse defendants in the Orthodox Jewish community as a way to protect victims and witnesses — a revelation of which much has been made lately in the press — is unpersuasive.  “I haven’t seen this kind of intimidation in organized crime cases or police corruption,” Hynes told the Daily News last week. “Nobody gives a damn about victims (in the Orthodox community). All they care about is protecting the abusers.”  Prosecuting sex abuse cases is always tough — and the closed-off world of Orthodox Judaism does pose its own challenges. But that is no excuse for the kind of lax (some might even say nonexistent) prosecution that Hynes oversaw for some two decades — at least until becoming more aggressive in recent years.  And then there is Hynes’ nondisclosure policy, which remains unchanged despite calls for openness. Hynes has been steadfast in his position that disclosing the names of arrested sexual predators from this insular community will discourage future victims from coming forward.  What makes Hynes’ position indefensible is that, while he has long protected Orthodox Jews accused of sex crimes, he has no hesitation releasing defendants’ names in similar cases when it comes to other groups.

For instance, on Jan. 26, 2011, Hynes announced the indictment of two men (neither an Orthodox Jew) who forced teenage girls into prostitution. One of the victims filed a report that resulted in the arrest of two named defendants.  A year later, in another press release, Hynes’ office announced the indictments of 43 gang members, disclosing the names of the gang leaders charged and describing the crimes perpetrated against the unnamed victims.  Any of the violent gang-affiliated defendants who were charged could have easily figured out the identity of the victims and witnesses by simply reading that press release.  These in-the-open prosecutions demonstrate the imbalance of Hynes’ practice of disclosing only the identities of certain charged defendants who live in certain communities — while keeping the public in the dark about other defendants, perhaps those who come from powerful voting blocs whose support Hynes needs.  After all, gang members and pimps do not simply “shun” a victim who reports a crime, as is supposedly done by the Orthodox. Instead, they often intimidate, threaten, coerce and, in some cases, kill, witnesses and victims.  Even without publicly disclosing an Orthodox defendant’s name to protect a victim, the extremely personal nature of a sex abuse allegation usually means that the victim’s and witness’ identity is discernible to an alleged sex abuse defendant and his lawyer.  All they have to do is to read the factual portion of a criminal complaint and review other material furnished by the prosecutor.  And while the criminal case is pending for months, nothing stops a criminal defendant from disclosing that an informant lives among them, thus opening the floodgates of intimidation.  In other words, Hynes’ “discretion” does nothing for the very victim he purports to serve. It just garners him favor from a group that does not like attention drawn to itself.  But that’s not how our criminal justice system should work; the rule of law requires equal treatment for all individuals. A district attorney who represents the people of Brooklyn compromises the mission of his office by serving one community’s self-interest for secrecy. This unequal treatment is unacceptable no matter how you justify it.  Kriss, a former Brooklyn assistant district attorney who challenged Hynes in 2005, has also served as a Police Department deputy commissioner for trials. He is currently in private practice in Manhattan. 

Another Effort to Simplify Corrupt Structure of Courts

State Bar Joins Call for Constitutional Amendment to Simplify Structure of Courts
The New York Law Journal by John Caher  -  May 30, 2012

ALBANY, NY - In the latest multi-decade effort to reconfigure New York's archaic court structure, the New York State Bar Association is joining about 50 legal organizations, business leaders, good government groups and citizens calling for a constitutional amendment. The proposed amendment would consolidate the state's unwieldy court system into two tiers. It would merge county court, family court, surrogate's court and the Court of Claims into a new Supreme Court, while creating a new district court comprised of the district courts on Long Island and city courts. The measure would not affect the town and village courts.  A "Coalition for Court Simplification" has been established by the Fund for Modern Courts and on Tuesday, State Bar President Vincent Doyle Jr. of Connors & Vilardo in Buffalo announced that the bar will join the coalition. Other members include the African Services Committee, the Business Council of New York, the Lawyers Committee Against Domestic Violence, the League of Women Voters, the New York City Bar Association, New York County Lawyers' Association and St. Luke's-Roosevelt Crime Victims Treatment Center. "The existing court structure no longer adequately serves the citizens of New York," said Doyle. Now, a contested divorce with child custody and domestic violence issues could involve three different courts: Supreme Court to address the marital dissolution and financial issues; Family Court to deal with child custody and county court to handle domestic violence and order of protection issues. "The labyrinth of overlapping jurisdictions of multiple courts creates unnecessary financial burdens and delays for millions of litigants. It needs to be changed," Doyle said.  The coalition is co-chaired by former state bar president, Stephen Younger of Patterson, Bellknap, Webb & Tyler, and Fern Schair of Fordham Law School.

Advocates, many lawmakers and chief judges dating back at least to the 1970s have been struggling to re-cast a court system created at a time when Brooklyn was a cow pasture. According to the coalition, revamping the court system would save taxpayers $121 million annually while saving litigants $433 million a year in attorney fees.  Milton Williams, chairman of Modern Courts, said the organization is attempting to keep the issue alive and increase momentum.  "It is a massive issue with so many different angles and components that it is hard to have everyone on the same page at the same time," said Williams, of Vladeck, Waldman, Elias & Englehard. "We are able to accomplish some goals immediately and others where we have to keep chipping away. This is one we just keep chipping away at."  Heather Briccetti, president and CEO of the Business Council of New York State, said her organization joined the coalition because it views court simplification partially as an economic/ government efficiency issue.  "As part of our reform agenda, we support government consolidation, and this is an obvious one," said Briccetti, an attorney. "A secondary reason is we represent employers and when an employee is going through a difficult time, like a divorce, we think it would be better for the employee and employer if they only had to go to one court versus maybe three. Also, our members are sometimes involved in lawsuits and we think having a simplified court system will save them money and time."  Although there is no court consolidation bill now before the Legislature, Briccetti said she believes the reform effort is closer to success than it has been as a result of the broad scope of interests reflected in the coalition.  "There is a real push to build a strong coalition," Briccetti said. "We've got the state and city bar associations on board and lot of diverse interests. I think it has a better shot now than it has in the past."  Mark Mahoney, spokesman for the state bar, said that although there is no pending legislation to amend the state Constitution, the organization hopes to generate interest this session. Several lawmakers have repeatedly stated their support for court consolidation. Amending the Constitution requires action by successive legislatures followed by a public referendum. Since this is the last year of a session, if the currently sitting Legislature passed a measure this year and the body elected in November passes it next year, it could appear on the ballot as early as 2013.  @|John Caher can be reached at jcaher@alm.com

Panel Suspends Attorney for Trying to Deceive Court

Panel Suspends Attorney for Trying to Deceive Court
The New York Law Journal by Brendan Pierson  -  June 6, 2012

Manhattan attorney Armand Rosenberg has been suspended for one year for trying to deceive a court in the course of a real estate dispute, confirming the recommendation of the Departmental Disciplinary Committee for the First Judicial Department. The charges against him arise from a case in which he represented Peter Costalas, a member of a family partnership along with his brothers James and John that owned five buildings and 12 restaurants. According to the First Department's ruling yesterday, Peter "diverted millions of dollars in partnership funds and mortgaged buildings" by using forged signatures "to cover losses incurred in connection with his personal trading in stock options." His brothers sued him, and he reached a settlement that included giving them his share in the partnership. The brothers later sold their share to Vivia Amalfitano, James' daughter. In 2001, Peter sued her and her husband in Manhattan state court, alleging his partnership had been transferred away fraudulently and he was still a partner. That suit was dismissed, and the Amalfitanos sued Peter in federal court for allegedly deceiving the state court during the litigation by providing false information. Southern District Judge Naomi Reice Buchwald agreed that Armand had engaged in a "persistent pattern of unethical behavior" and assessed treble damages of $268,245 against him (NYLJ, Feb. 17, 2009). She found that Rosenberg filed the state lawsuit on behalf of Peter "despite knowing it was entirely baseless" because the lawyer had represented Peter in the earlier settlement and knew he had given up his partnership. The panel consisted of Justices Richard Andrias, David Saxe, John Sweeny, James Catterson and Rolando Acosta. Rosenberg is represented by Richard Maltz.

Matter of Rosenberg, M-3654
Disciplinary Proceeding, Appellate Division, First Department  -  M-3654
Cite as: Matter of Rosenberg, M-3654, NYLJ 1202557354417, at *1 (App. Div. 1st, Decided June 5, 2012)  -  Before: Andrias, J.P., Saxe, Sweeny, Catterson and Acosta, JJ.  -  Decided: June 5, 2012
Jorge Dopico, Chief Counsel, Departmental Disciplinary Committee, New York (Scott D. Smith, of counsel), for petitioner.  Richard M. Maltz, for respondent.

Disciplinary proceedings instituted by the Departmental Disciplinary Committee for the First Judicial Department. Respondent, Armand J. Rosenberg, was admitted to the Bar of the State of New York at a Term of the Appellate Division of the Supreme Court for the First Judicial Department on April 2, 1951.

PER CURIAM  -  Respondent Armand J. Rosenberg was admitted to the practice of law in the State of New York by the First Judicial Department on April 2, 1951. At all time relevant to this proceeding, respondent's registered office was within the First Department.  By order dated October 13, 2010 this Court granted the Departmental Disciplinary Committee's petition for an order giving collateral estoppel effect to an April 2006 decision by the U.S. District Court for the Southern District of New York in the case of  Amalfitano v. Rosenberg  -  (428 F Supp 2d 196 [SDNY 2006], affd 572 F3d 91 [2d Cir 2009]), in which respondent was found to have engaged in fraudulent conduct, in violation of New York Judiciary Law §487, and imposed treble damages in the amount of $268,245.54. Our order further found that respondent's conduct violated DR 1-102(A)(4) (conduct involving dishonesty, fraud, deceit or misrepresentation), DR 1-102(A)(5) (conduct prejudicial to the administration of justice), DR 1-102(A)(7) (conduct that adversely reflects on respondent's fitness as a lawyer), DR 7-102(A)(4) (knowingly using perjured testimony), and DR 7-102(A)(5) (knowingly making a false statement of law or fact), and referred the matter to a Hearing Panel for a sanction hearing. The Committee is now seeking an order confirming the Hearing Panel's findings of fact, conclusions of law and recommendation of a one-year suspension.  This matter stems from respondent's representation of Peter Costalas, who, along with his two brothers, James and John, were members of a family partnership that owned five buildings and twelve restaurants. Peter diverted millions of dollars in partnership finds and mortgaged buildings by use of forged signatures in order to cover losses incurred in connection with his personal trading in stock options. As a result, James and John commenced an action against Peter and his brokers. In August 1993, respondent negotiated an agreement on Peter's behalf in which Peter, among other things, assigned and transferred his interest in the partnership to John, and in return, was dismissed as a defendant in the litigation.  Thereafter, Vivia Amalfitano, James' daughter, purchased the partnership's remaining building and restaurant from John and James. In May 2001, respondent commenced an action in New York County, Supreme Court, naming Vivia and her husband, Gerard Amalfitano, Esq., as defendants, alleging that they defrauded John and James into conveying the partnership's remaining property and business, and that Peter was still a partner. The action was eventually dismissed during trial. Respondent then unsuccessfully appealed the trial court's order denying his motion to vacate (see  Costalas v. Amalfitano  -  23 AD3d 303 [2005]).  In March 2004, the Amalfitanos commenced the above-mentioned federal action against respondent alleging that respondent's commencement and prosecution of the state court action against them constituted a violation of Judiciary Law §487.  We agree with the recommendation of the Panel that respondent should be suspended for one year ( Matter of Berglas, 16 AD3d 1 [2005] [one-year suspension, where respondent submitted three filings to the INS containing false information regarding his clients' addresses]; Matter of Nash, 166 AD2d 84 [1991] [one-year suspension, where respondent falsely notarized documents and submitted false verifications and affidavits in a matrimonial action]).  Accordingly, the Committee's motion to confirm the Hearing Panel's determination should be granted and respondent suspended from the practice of law for one year, and until further order of this Court.  All concur.

'Highly Qualified' List For Top Judicial Post Grows

10 Justices Found Highly Qualified for P.J. Post
The New York Law Journal by John Caher - June 6, 2012

Two more judges were found to be highly qualified for the position of presiding justice of the Appellate Division, Second Department, bringing the number of judges in the running to at least 10, according to sources close to the process. Appellate Division, Second Department Justices Sheri Roman and Reinaldo Rivera were among the names of highly qualified judges forwarded by a screening panel to Governor Andrew Cuomo, who will name a successor to A. Gail Prudenti, who became chief administrative judge in December. The Law Journal has reported the names of the other judges on the list: Acting Presiding Justice William Mastro of the Second Department and five of his colleagues: Leonard Austin, Cheryl Chambers, Randall Eng, Robert Miller, and Peter Skelos. At least two First Department justices, Angela Mazzarelli and David Friedman, also were recommended, sources said (NYLJ, May 25). The governor expects to make an appointment this month, a source said. The governor must choose from among the candidates found highly qualified by 13-member screening panels in each department. Douglas Dunham of Skadden, Arps, Slate, Meagher & Flom chairs the Second Department screening panel.

Related Background Story:

At Least 8 Found 'Highly Qualified' for Presiding Justice, Sources Say
The New York Law Journal by John Caher - May 25, 2012

At least eight judges are apparently in the running for presiding justice of the Appellate Division, Second Department, as a screening panel has forwarded to Governor Andrew Cuomo the names of judges it found "highly qualified" to succeed A. Gail Prudenti as leader of the Brooklyn appeals court. Several sources close to the process said the screening panel has advanced Acting Presiding Justice William Mastro of the Second Department and five of his colleagues: Leonard Austin, Cheryl Chambers, Randall Eng, Robert Miller and Peter Skelos. In addition, at least two First Department justices, Angela Mazzarelli and David Friedman, were recommended, sources said. The governor's counsel's office has concluded interviewing candidates with an eye toward making an appointment in June, a source said. The Second Department has been without a permanent presiding justice since last fall, when Prudenti became chief administrative judge and Mastro, as senior associate, automatically took over as acting presiding justice. The Brooklyn-based court, which is the busiest appellate court in the state, is the only one of the four departments that continues to operate with an acting presiding justice. In early April, Cuomo appointed Karen Peters as presiding justice of the Third Department to replace Acting Presiding Justice Thomas Mercure (NYLJ, April 6). Meanwhile, all four Appellate Division departments remain shorthanded, especially the Fourth Department in Rochester that is down 25 percent of its judges with three of 12 spots vacant. The First and Second departments are each down three of their 20 and 22 judges, respectively, and the Third is operating with one short of its full contingent of 12. Appellate Division justices are selected by the governor from the ranks of elected Supreme Court justices; acting Supreme Court justices are not eligible. The governor must choose from among the candidates found highly qualified by 13-member screening panels in each department. Douglas Dunham of Skadden, Arps, Slate, Meagher &  Flom chairs the Second Department screening panel. John Caher can be contacted at jcaher@alm.com

Tuesday, June 5, 2012

Lawyer-Prosecutor Takes Swing At Cop During Traffic Stop

Brooklyn Asst. DA in highway stop and ‘pop’ 
The New York Post by Ikimulisa Livingston, Christina Carrega and Jose Martinez  -  June 5, 2012

He objected to getting pulled over, so a Brooklyn prosecutor literally fought the law — taking a swing at a Queens cop, officials said yesterday.  In the latest in a series of black eyes for the office of District Attorney Charles Hynes, assistant DA Yaser Othman was arrested early Saturday night after he took a wild swing at Sgt. Benjamin Benson when the cop stopped him for swerving through traffic on the Whitestone Expressway, officials said.  The 41-year-old prosecutor, who was hired by the Brooklyn DA in 2010, was suspended without pay after his arrest, during which officers allegedly also found a joint in a cigarette pack in his car.  He was charged with marijuana possession, resisting arrest, reckless driving and attempted assault.  A team of Queens Narcotics cops in an unmarked van reported seeing Othman swerve his white 2002 Mitsubishi Galant in and out of traffic without using turn signals, police said.  Othman allegedly cut the van off and was finally pulled over near Astoria and Ditmars boulevards around 6:20 p.m. He refused to get out and had to be removed from his car by Sgt. Benson, Queens prosecutors said.  That’s when he swung at Benson with a right haymaker that missed while trying to avoid being handcuffed, prosecutors allege. Police said they recovered the joint during a search of the car.  A source in the Brooklyn DA’s Office said Othman hadn’t been in any trouble in his two years on the job, adding, “He hasn’t been around long enough to have developed any type of reputation.”  Near his Queens home yesterday, Othman, a father of two, insisted he’ll be cleared.  “I am innocent of what they say that I did. The truth is going to come out,” he said.  Othman, who is assigned to a unit that prosecutes low-level offenders in neighborhoods such as Canarsie and East New York, denied the joint was his, saying:  “I don’t know anything about a marijuana cigarette. I can’t say if they planted it.”  Othman appealed to witnesses who may have encountered his run-in with the law. He was freed without bail after being arraigned on Sunday.  His arrest comes on the heels of increased pressure on his boss over Hynes’ handling of sexual predators in the ultra-Orthodox Jewish community.  It also follows the abrupt resignation last month of a top sex-crimes prosecutor who allegedly failed to disclose that an Orthodox woman had recanted her claims of being beaten, raped and pimped out by four men.  Othman’s allegedly wild ride is another embarrassment for Brooklyn prosecutors, who in 2010 had a murder conviction tossed for not disclosing crucial information to the defense in the case of a man who spent 16 years in prison.  ikimulisa.livingston@nypost.com

Lawyer-Prosecutors Held Boozy Bash in Evidence Room

Bronx prosecutors held boozy bash in main ticket-fixing evidence room: sources 
The New York Post by Kirstan Conley and Jeane MacIntosh  -  June 4, 2012

A rowdy group of Bronx prosecutors took over the main evidence room in the NYPD ticket-fixing scandal — drinking and partying among the piles of tapes and files before a Yankee game, The Post has learned. About 40 people, including prosecutors and their civilian guests, milled around room 617 during the boozy May 23 bash at the Bronx District Attorney’s Office, where, sources said, Internal Affairs probers keep the mountain of wiretaps and documents for DA Robert Johnson’s sweeping ticket-fixing case against 16 NYPD cops and five civilians. “It could damage the whole ticket-fixing case,” a source who witnessed the revelry told The Post. “If even one civilian got through the door, it’s a problem. Evidence must be safeguarded in a secure location.” The door to room 617 is usually locked and bears a sign that reads: “No Unauthorized Entry.” It’s unclear whether someone in IAB granted the city lawyers access or whether someone in the DA’s Office had the key. During its ticket-fixing probe, IAB secretly recorded a staggering 139,000 phone calls and intercepted 311,000 text messages and e-mails. The judge in the case has said there are also an estimated 20,000 pages of grand-jury minutes and testimony. “Evidence is everywhere in there, stacked in boxes, floor to ceiling,” one source said of room 617. “It’s the field office for Bronx IAB.” “The reason this is a problem is that the room is supposed to be locked 24/7.” “This will raise questions. This is no way to run an investigation. The Bronx DA will have to admit it happened . . . There were too many people, too many witnesses [not to].” The Wednesday night party — a warm-up for that evening’s Bronx DA Night at Yankee Stadium — started at the Bronx’s DA’s sixth floor reception area, which had been set up as a bar, sources said. But prosecutors, their girlfriends and other guests were soon milling in and out of room 617, a witness said. “They were all right there, next to the evidence,” the witness said. A spokesman for DA Johnson confirmed the pre-game festivities but insisted the party didn’t compromise evidence. “Present and former staff members and their families gathered at the office prior to attending a Yankees game,” said DA spokesman Steve Reed. “They conducted themselves maturely and did nothing to compromise the work of the office.” One source scoffed at the notion that “families” were included in the boozy blowout and said there were no kids in sight. “If your family includes a stable of hot women, then I guess you could call it a ‘family’ event,” the source said. With the drinks free-flowing, several partygoers even bailed on the Yankee game. “Most never made it to the game. It’s always that good of a party,” one source said. It’s unclear whether IAB investigators or detectives and rank-and-file NYPD cops attended the festivities. But one law-enforcement source heard cops discussing the party ahead of time.  “I heard people joking that this party was going on, and that we should go after them,” the source said. jeane.macintosh@nypost.com 

Saturday, June 2, 2012

Judges From High-Profile Drug Cases Suspended

Mexico suspends, probes judges of key drug cases
The Associated Press by Adriana Gomez Licon  -  June 2, 2012

MEXICO CITY (AP) — Mexican court authorities have suspended two federal judges who presided over high-profile drug cases, saying investigators are looking into possible irregularities involving the jurists.  The Federal Judiciary Council said Friday evening that it was temporarily relieving appellate Judge Jesus Guadalupe Luna and district Judge Efrain Cazares of their duties, but its statement didn't describe the allegations being investigated. The Attorney General's Office declined to comment Saturday. Both judges have taken part in cases involving well-known people with alleged ties to Mexico's drug business.  In April 2008, Luna ordered the release of the son of purported Sinaloa drug cartel chief Joaquin "El Chapo" Guzman. Ivan Archivaldo Guzman Salazar had been sentenced by a lower court to five years in prison for money laundering, but the appellate judge ruled that there was no proof the money he used to open two bank accounts came from drug trafficking and that being the son of the infamous capo wasn't grounds for imprisonment.  Last summer, Luna upheld a lower court ruling that cleared Sandra Avila Beltran of organized-crime charges despite efforts by Mexico and the U.S. to prosecute the woman nicknamed "Queen of the Pacific." Avila is wanted on a 2004 U.S. indictment as a suspect tied to the seizure of more than nine tons of U.S.-bound cocaine on Mexico's west coast.  A judge acquitted Avila in December 2010 of charges stemming from that drug confiscation, and Luna backed that decision by citing a lack of evidence. U.S. authorities have sought extradition of Avila, a niece of Miguel Angel Felix Gallardo, known as "the godfather" of Mexican drug smuggling, but that has been rejected twice by other judges on grounds she shouldn't be prosecuted in the U.S. on charges that have been dismissed in Mexico. The other suspended judge, Cazares, has been accused by Mexico's government of ignoring credible evidence when he released some of the mayors detained in a mass arrest of officials in the western state of Michoacan in 2009. The federal attorney general alleged the officials had ties to the La Familia drug gang, and prosecutors filed a complaint against Cazares saying he improperly acquitted the officials. With all of the officials freed by various judges, the crackdown became one of the most embarrassing episodes in President Felipe Calderon's 5 1/2-year-long offensive against drug cartels. Most recently, drug battles have escalated as Mexico's two most powerful drug cartels, the Sinaloa and Zetas gangs, wage a war in several regions considered strongholds of one or the other. Late Friday, a group of armed men opened fire on a police station in the border city of Matamoros, which is across the Rio Grande from Brownsville, Texas. Tamaulipas state Interior Secretary Morelos Canseco Gomez said they threw an explosive, possibly a grenade, but no one was injured in the attack. Canseco said he did not know the motive or the gang behind it. The attack came only days after suspected drug cartel gunmen set off a car bomb near a police barracks in the same state, wounding eight officers.  Adriana Gomez Licon on Twitter: http://twitter.com/agomezlicon

Friday, June 1, 2012

Judges Should Write Their Own Opinions

Judges Should Write Their Own Opinions
The New York Times by William Domnarski - OP-ED Contributor  -  May 31, 2012

Riverside, Calif.  -  There is a crisis in the federal appellate judiciary. No, I’m not referring to the high number of judicial vacancies or overloaded case dockets — though those are real problems. The crisis I have in mind rarely is discussed because it raises too many embarrassing questions. I’m talking about the longstanding and well-established practice of having law clerks ghostwrite judges’ legal opinions. We have become too comfortable with the troubling idea that judging does not require that judges do their own work.  With so much news and controversy about what federal appellate judges say in their opinions, it would be natural for a layperson to assume that such opinions actually come from judges’ own pens (or keyboards). But ever since the beginning of the law-clerk age, which dates back at least 70 years, most judges have been content to cast their vote in a case and then merely outline the shape of their argument — while leaving it to their clerks to do the hard work of shaping the language, researching the relevant precedents and so on. Almost all federal appellate judges today follow this procedure.  There are, of course, understandable reasons for this arrangement. For one thing, it’s efficient: it helps judges manage the ever increasing flow of cases to be decided. It’s also familiar: it resembles the modern law-firm model (known to many judges from earlier stages in their careers) in which associates draft documents and senior partners edit them. Furthermore, the law is not a literary pursuit but a system of rules, principles and arguments: in a legal opinion the fine points of language can seem less important than the underlying logic of the decision.  But in truth, much of importance is lost when judges outsource the writing of their opinions to their less experienced assistants. Judge-written opinions require greater intellectual rigor, exhibit more personal style and lend themselves to more honest and transparent conclusions.

An informal review of federal appellate court opinions over the past five years suggests that of the more than 150 active judges, only a tiny number almost always write their own opinions in full, among them Frank H. Easterbrook, Richard A. Posner and Diane P. Wood, of the United States Court of Appeals for the Seventh Circuit, and Michael Boudin, of the First Circuit. A few others evidently write a fair percentage of their opinions from start to finish. Another relatively small group adds stylistic flair like dramatic introductions or figurative language. The former appellate judge Abner J. Mikva has said that when he served on the District of Columbia Circuit, he reserved for himself the opening paragraph of his opinions.  It is no coincidence that Judge Posner, the most influential (and most widely cited) appellate judge of his generation, writes his own opinions. His judicial voice is marked with stylistic touches, to be sure, shunning (and even lampooning) legalese as well as disregarding the traditional five-part structure on which law clerks typically rely. But what most grabs the reader is the voice of a judge thoroughly engaged with a problem in the law and working through it with enthusiasm, almost joy. As Judge Posner himself has written, “I know that only a few of the readers of my opinions are not lawyers, but the exercise of trying to write judicial opinions in a way that makes them accessible to intelligent lay persons contributes to keeping the law in tune with human and social needs and understandings and avoiding the legal professional’s natural tendency to mandarin obscurity and preciosity.”  Unlike lawyers who are paid to argue for just one side in a case, judges are paid to pursue the truth. The bench is free from the limitations of advocacy; judges get to test arguments and follow a line of reasoning wherever it might take them. They get to explore the law. The opinion, properly done, reveals the judge sorting through the problem, thinking on the page. For similar reasons, judge-written opinions are also less vulnerable to a judge’s reflexive political and ideological leanings. The act of writing brings judges closer to the specific details and relevant issues of a case, forcing them to reckon with the case at hand in all its particulars, rather than seeing it as an instance of some more general theory or problem.  There is also the matter of intellectual integrity. Put simply, it cannot be accepted as legitimate that judges can put their names on opinions that they did not write. It’s not quite plagiarism, but it puts me in mind of the product known in the academic world as “managed books”: a professor will use research assistants to not only research a project but also write a first draft — but nonetheless the professor claims the work as his own. The managed books approach has been condemned as an affront to intellectual integrity. There is no principled reason the judicial counterpart should not be similarly condemned. I am reminded of Henry J. Friendly, the great judge of the Second Circuit, who explained that he wrote his own opinions because “they pay me to do that.”  Younger members of the judiciary need to take a hard look at themselves and ask how what they are doing stacks up against the known examples of judging at its highest level — not just Judge Posner and his contemporaries who write, but also gifted writers among judges of earlier eras like Learned Hand and Oliver Wendell Holmes Jr. The next generation will need to accept the opportunities and challenges of appellate judging and dare to do all the work that befits a judge.  William Domnarski, a lawyer, is the author of “Federal Judges Revealed.”

Thursday, May 31, 2012

Top Judge Speaks Out Again Over America For Sale

Citizens United Attacks From Justice Stevens Continue
The Huffington Post by Mike Sacks - May 31, 2012

WASHINGTON, DC -- A day after receiving the Presidential Medal of Freedom, retired Justice John Paul Stevens on Wednesday night backed President Barack Obama's suggestion during his 2010 State of the Union address that the Citizens United decision could lead to "foreign entities" bankrolling American elections.  He urged the U.S. Supreme Court to explicitly explain why the president's words were "not true," as Justice Samuel Alito famously mouthed on camera, breaking the justices' usual stoic appearance during the president's annual speech.  Stevens has been a trenchant critic of Citizens United since the court decided the case in January 2010. On the day the opinion was announced, he spent 20 minutes reading from the bench a summary of his 90-page dissent. Stumbling over some words that day convinced Stevens, now 92, to retire, but he continued to condemn the ruling in speeches, writings and even on the Colbert Report.

In a speech at the University of Arkansas' Clinton School of Public Service, Stevens challenged his former colleagues to defend Alito's "not true" moment by reconciling the court's sweeping language in Citizens United that the First Amendment "generally prohibits the suppression of political speech based on the speaker's identity," with its subsequent decision -- made without briefing, argument, or written opinion -- to uphold a ban on campaign spending by non-citizens.  Alito's reaction, Stevens said, "persuade[s] me that that in due course it will be necessary for the court to issue an opinion explicitly crafting an exception that will create a crack in the foundation of the Citizens United majority opinion." In doing so, he continued, "it will be necessary to explain why the First Amendment provides greater protection to the campaign speech of some non-voters" -- that is, domestic corporations -- "than to that of other non-voters" such as the Canadian Harvard Law School graduate who remains barred from making campaign contributions.  The lawsuit brought by the Canadian citizen "unquestionably provided the court with an appropriate opportunity to explain why the president had misinterpreted the Court's opinion in Citizens United. "[T]he court instead took the surprising action of simply affirming the district court without comment and without dissent."  The decision in that case, Bluman v. FEC, meant that "notwithstanding the broad language used by the majority in Citizens United, it is now settled, albeit unexplained, that the identity of some speakers may provide a legally acceptable basis for restricting speech," Stevens said.  But the court cannot forever evade a written reckoning with the logical conclusion of its Citizens United decision, Stevens said.  "I think it is likely that when the court begins to spell out which categories of non-voters should receive the same protections as the not-for-profit Citizens United advocacy group, it will not only exclude terrorist organizations and foreign agents, but also all corporations owned or controlled by non-citizens, and possibly even those in which non-citizens have a substantial interest," Stevens said, referencing a case in which he joined the Citizens United majority to hold that speech made or funded by terrorist groups have no First Amendment protection. "Where that line will actually be drawn will depend on an exercise of judgment by the majority of members of the court, rather than on any proposition of law identified in the Citizens United majority opinion."  The justices will soon have another opportunity to clarify the scope of Citizens United in a challenge to Montana's corporate spending limits brought by an out-of-state organization. Although Stevens did not explicitly reference this case, which the justices will discuss in private at their June 14 conference, he lambasted the Citizens United majority for overruling a precedent that allowed states to bar corporate spending from beyond their borders. For the states with such laws, "those corporate non-voters were comparable to the non-voting foreign corporations that concerned President Obama when he criticized the Citizens United majority opinion," Stevens said.  "If the First Amendment does not protect the right of a graduate of Harvard Law School to spend his own money to support the candidate of his choice simply because his Canadian citizenship deprives him of the right to participate in our elections, the fact that corporations may be owned or controlled by Canadians -- indeed, in my judgment, the fact that corporations have no right to vote -- should give Congress the power to exclude them from direct participation in the electoral process," Stevens concluded.

Wednesday, May 30, 2012

Top Judicial 'Ethics' Lawyer Tembeckjian Settles His Lack-of-Sex Lawsuit

Judicial 'Ethics' Chief Counsel Robert Tembeckjian's Sexless Money Grab
EXCLUSIVE - May 30, 2012

According to the wife of New York State's Commission on Judicial Conduct (the "CJC") Chief Counsel, the story involves the lack of sex to the top attorney at the state agency that oversees the ethics of all New York State judges.  Robert Tembeckjian's wife, New York Daily News reporter Barbara Ross, also says that the ordeal began near a Pizzeria Uno Restaurant and involved "filthy, black, slippery grease."

The lawsuit, Barbata Ross and Robert Tembeckjian v. Betty G. Reader Revocable Trust, et al., , was filed on July 5, 2007 in The New York Supreme Court in the Bronx (Index #17038-07). The additional defendants included Emigrant Business Credit Corporation, Uno Restaurant Holdings Corp; Individually and d/b/a Uno Chicago Grill, Pizzeria Uno Corporation, Individually and d/b/a Uno Chicago Grill, and NJC Carting Corporation, Individually and d/b/a Nicholas J. Cicale Carting. The plaintiffs were represented by Edward A. Steinberg of Leav & Steinberg, LLP with offices at 120 Broadway, 18th floor, New York, New York 10271. While the incident occurred in Manhattan, where the Tembeckjians live, the original complaint indicates that one defendant, NJC Carting Corporation, had an address at 2847 Dudley Avenue in the Bronx.  According to a source, the case settled in April of 2012.

The legal action, according to Ross and Tembeckjian, involved the lack of the defendants to adequately maintain the sidewalk near 391-395 Sixth Avenue in Manhattan. Apparently, Barbara found herself walking in front of the Pizzeria Uno but then suddenly sitting in filthy, black, slippery grease. Barbara described what happened under oath, saying, "I can only liken it to a bagel overstuffed with cream cheese; when you squish it, the stuff comes out on the side. My shoe, my left shoe, the inside of my left shoe, had a ridge of grease, and my clothes were covered with it, my hands were covered with it."

Robert Tembeckjian Claimed Lack of Sex From Barbara Ross

Robert Tembeckjian alleged in the lawsuit that his sex life had been adversely affected on April 6, 2006 when his wife Barbara Ross was, "lawfully traversing over and upon the sidewalk in front of premises 395 Sixth Avenue in the County, City and State of New York." Bob also asserted that his wife "was caused to slip and fall at the aforesaid place as a result of the negligence of defendants…. and without any negligence on her part contributing thereto."  Co-plaintiff Robert Tembeckjian further claimed, "….loss of services, companionship, society, and consortium of plaintiff Barbara Ross that would normally flow between a husband and wife."  Under oath, Barbara was asked if there had been any disruption in the sexual relationship between her and her husband as a result of the accident. "Yes…. we were monks, for months….until the end of August when I began to feel better…."  The good news, for those interested in the top judicial 'ethics' counsel Tembeckjian's sexual happiness, is, according to Barbara, that their sexual relations resumed, "after my shoulder got really better, so probably November of '06."

The Tembeckjians Couldn't Take State-Paid Trip to Hawaii

When asked where she had traveled to since the accident, Barbara mentioned outside Syracuse and San Diego. The San Diego trip, Ms. Ross said, was "vacation slash business, last summer," adding, "[b]ut we lost a trip to Hawaii, because I couldn't deal with -- we lost a -- my kid is still not letting me live it down. A trip to Hawaii, which substantially would have been paid for by my husband's job because it was a business trip. I couldn't, I couldn't do the flight." Ms. Tembeckjian also indicated that there was an "out-of-pocket loss" not only for her family but for friends who where going to accompany her daughter on that trip.  It is unknown whether either of the Tembeckjians had been asked if they knew how many state judges and their families had been provided with taxpayer-paid trips to Hawaii.

Bob Too Busy Selectively Enforcing Judicial Ethics to Peel Potatoes

During her April 4, 2008 deposition, Barbara indicated that there were "many, many meals" that she couldn't prepare, so they had, "a lot of eat-out," adding, "If you can peel a potato with one hand, I'll tell you how you do it, you put it between your knees and it takes you 45 minutes to do three pounds of potatoes."  Ms. Tembeckjian also said she stopped using her maiden name Boylan, opting for Ross, about two years out of college because, "I worked for another nut named Boylan and I didn't want them to think I was related." After clarifying that Ross had been her prior married name, Barbara indicated that she had been the power of attorney for an Edith Asbury from about April of 2006.

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More on this story soon........

More Background on 'Ethics' Top Counsel Tembeckjian

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Questions on Gross Legal and Banking Ethical Failings

Two Big Questions for Thursday, May 31, 2012: How many 'officers of the court' will be involved in Manhattan District Attorney Cy Vance's $500 Million Dollar Mortgage Fraud Announcement, and what will Governor Cuomo do regarding the gross ethical failings of the legal and banking communities? 

Facing Down the Bankers

The New York Times by Annie Lowrey  -  May 30, 2012



WASHINGTON, D.C. — Sitting in a corner office high above K Street here, Dennis M. Kelleher, one of the most powerful lobbyists on financial regulatory reform, looks every bit the corporate lawyer and high-ranking Senate aide he formerly was: tailored suit, quick smile, assertive tone.  But Mr. Kelleher does not work for banks. He works against them.  “What is at stake is whether the American people are at risk of another Great Depression,” Mr. Kelleher, who is 54, said in a recent interview. “We exist to fight back against the forces trying to make us forget just how bad it was.”  Mr. Kelleher is the president of Better Markets, a nonprofit organization that pushes for a stringent interpretation of the Dodd-Frank financial regulatory law, which passed in 2010 but whose specific rules and regulations are currently the focus of an intense, complex and expensive behind-the-scenes battle.  Think of Better Markets as Occupy Wall Street’s suit-wearing cousin.  Mr. Kelleher, a Harvard Law School alumnus and a former partner at Skadden, Arps, Slate, Meagher & Flom — is a wisecracking, fast-talking operator who just happens to think that banks would devastate the economy if given the chance.  The financing for the K Street office comes not from small donations but from millions contributed by Michael Masters, an Atlanta-based hedge fund manager who believes that the markets are as imperfect as the people participating in them, and therefore need stricter rules.  Better Markets does not march against banks, or bring loudspeakers to their lobbies. It instead writes detailed comment letters to regulators, meets with them, files friend-of-the-court briefs, puts out studies and testifies before Congress.

The goal, Mr. Kelleher said, was to present an alternative argument to the one made by the banks and their small army of lobbyists. “For a long time, there had been no organization dedicated solely to going to toe-to-toe with the financial industry, on any issue, no matter how complex or obscure,” he said. “That’s what we do.”  Still, Better Markets and the handful of other advocates for the public interest — Americans for Financial Reform, the A.F.L.-C.I.O. and a few think tanks among them — remain seriously outmanned.  Take lobbying on the Volcker Rule, a controversial portion of the Dodd-Frank law that would prevent depository institutions from making certain speculative bets. From July 2010 to October 2011, financial institutions met with federal agencies to discuss it some 351 times, according to an analysis by Kimberly D. Krawiec, a law professor at Duke. Public interest groups, including Better Markets, held just 19.  “It’s David versus Goliath,” said Byron Dorgan, the former North Dakota senator and Mr. Kelleher’s former employer. “But at least David’s there.”  Since JPMorgan Chase announced that it had lost $2 billion or more on a failed hedge, Mr. Kelleher has made an effort to be everywhere: in its crisis, he saw his opportunity to stress that banks need tougher controls.  “Jamie Dimon’s poor fortune is good news for financial reform and taxpayers,” said Mr. Kelleher, referring to the bank’s chief executive. “Because, as it is unendingly noted, he’s the best banker in the world,” he said wryly. “The universe, maybe. It can get intergalactic with the compliments.”

He raced to New York for a television appearance. He spoke with more than two dozen reporters, and corresponded with several more. In Better Markets’ 16 months of existence, Mr. Kelleher has become a favorite source for the media, speaking in long, quotable peals and in a broad-voweled Massachusetts accent.  In his sound bites, the JPMorgan affair is a “debacle.” Investment banks need to remember the “hierarchy of guilt” for the crisis. (They are at the top.) A weak rule on swaps is an “indefensible retreat” from tougher regulation and a “poster child for the pernicious effect of industry’s army of lobbyists.”  He also met with the heads of the Securities and Exchange Commission and the Commodity Futures Trading Commission.  “It’s good to get some balance into the mix,” said Gary S. Gensler, the chairman of the commodities commission. “My mom and your mom don’t usually have somebody who’s going to spend the time reading the detailed rules, and do not necessarily have the same resources or desire to be into the minute details that the large financial interests on the other side of this debate do.”  The industry’s lobbyists argue that they, too, are on the side of reform — just not excessive reform. “The industry is in favor of better regulation,” said T. Timothy Ryan Jr., the president of the Securities Industry and Financial Markets Association.  Excessive regulation, he argues, would raise costs for businesses and individuals. “The banks are in much better shape, because many of them have been earning some money, retaining those earnings, and upping their capital,” Mr. Ryan said. “If we produce through regulations banks that make no money, it’s not going to strengthen the financial system.”

If any thread runs through Mr. Kelleher’s career, it is a knack for showing up just after a crisis. After growing up in modest circumstances in central Massachusetts, Mr. Kelleher enlisted in the Air Force and served as a crash rescue firefighter. As a corporate lawyer, he specialized in the legal cleanup after a scandal — as when an executive was caught committing fraud, or a company was caught cooking its books.  A partner in Skadden’s Boston office, he had been quietly involved in Democratic politics while working in corporate law. In 1996, he took a year off to work on one of Senator Edward M. Kennedy’s committee staffs. In 2004, he came back to Washington and never left, working for Senator Barbara A. Mikulski, the liberal aggressive Maryland Democrat and then Mr. Dorgan.  On Capitol Hill, Mr. Kelleher worked on a broad range of issues — Afghanistan, health care and safety-net programs. He won a reputation as loquacious and assertive, twisting arms for Mr. Dorgan and wearing down interlocutors in long negotiations.  “Dennis was generally acknowledged to be a star,” said Ted Kaufman, the former Delaware Senator who served as an adviser to Vice President Joseph R. Biden Jr. for years before taking his vacated Senate seat in 2009. “He was really, really smart, and really knew how to make an argument,” he said.  When Mr. Dorgan retired, Mr. Kelleher fielded calls from lobbyists and law firms, but decided to keep working for the public. Mr. Masters, the hedge fund manager who had met Mr. Kelleher when he testified on Capitol Hill, convinced him to help him start a nonprofit, Better Markets. Both Mr. Masters and Mr. Kelleher felt that there were too few public intellectuals or research groups capable of giving detailed counterpoints to the investment banks and other financial firms.  So Mr. Masters agreed to finance Better Markets for a minimum of five years. His financial contribution — the organization shows $3 million in financing in a 2010 regulatory filing — has raised speculation that he built the organization to soak up information in Washington or to influence the rule-writing process. (Hedge funds may reap the benefits if investment banks are strictly regulated, after all.)  But Mr. Masters said he had been shocked by the poor understanding of financial markets on Capitol Hill, and said the crisis proved the need for more regulation. He dismissed the notion that his motivations were financial. “If I wanted to alter my portfolio positions, I could do it in 24 hours,” he said.  The odds remain against Better Markets and fellow public-interest advocates, Mr. Kelleher concedes.  “It’s a battle in which the Wall Street lobbying and public-relations machine will have a decisive advantage,” said Mr. Kaufman, the former Delaware senator. “With the regulators, you don’t have to win. You just have to gum them up. And that is exactly what Wall Street has done.”

Cyrus R. Vance, Jr.
District Attorney, New York County  -  For Immediate Release
May 31, 2012
DA VANCE: ABACUS BANK AND 19 INDIVIDUALS CHARGED IN LARGE-SCALE MORTGAGE FRAUD CONSPIRACY

  • Employees and Managers Charged With Routinely Submitting False Documents to Fannie Mae
  • Prosecution Marks the First Time a Bank Has Been Indicted in Manhattan Since 1991

Manhattan District Attorney Cyrus R. Vance, Jr., today announced the indictment of ABACUS FEDERAL SAVINGS BANK (“ABACUS” or the “Bank”) and eleven of its former employees in a false document mortgage fraud scheme resulting in the sale of hundreds of millions of dollars worth of fraudulent loans to the Federal National Mortgage Association, commonly known as “Fannie Mae.” The District Attorney also announced that an additional eight former employees have already waived indictment and admitted their guilt in connection with this conspiracy. The 184-count indictment charges eleven individuals and ABACUS itself with residential mortgage fraud, securities fraud, grand larceny, conspiracy, and falsifying business records, among other related charges.[1] The defendants include former senior managers, as well as former employees who worked in various capacities for the Bank’s lending business. Each defendant faces charges related to his or her involvement in the criminal conspiracy, which the indictment charges occurred between May 2005 and February 2010.  “The lessons of the financial crisis are still being learned,” said District Attorney Vance. “The public must have confidence that when a bank issues a loan that it later re-sells to Fannie Mae, and by extension the nation’s investors, it will engage in honest and ethical practices and follow the rules set by regulators,” said District Attorney Vance. “Loan schemes based on fraud inevitably will unravel, as this one did. Today’s indictment re-affirms our commitment to transparency and straight dealing in the financial markets. We cannot settle for less.”  Steve A. Linick, Inspector General of the Federal Housing Finance Agency, said: “We are proud to have contributed to this effort, which to date has produced multiple indictments of individuals who allegedly engaged in this significant fraud scheme. My office is committed to ferreting out fraud throughout the housing system, and partnering with law enforcement agencies making a similar commitment.” Charles R. Pine, Director of Field Operations for IRS-Criminal Investigation, said: “The public has the right to expect security and integrity from the banks they entrust their money to, regardless of their size. The protection of the nation’s financial system remains a top priority for IRS-Criminal Investigation.” The indictment, representing the culmination of a two-and-a-half-year investigation, charges that ABACUS, its employees, and its managers engaged in a conspiracy involving the regular and systematic falsification of residential mortgage application documents. The defendants falsified these documents so that they could earn commissions and fees by ensuring that otherwise unqualified borrowers would receive loans, which ABACUS then sold to Fannie Mae pursuant to an ongoing agreement. After purchasing these fraudulent mortgages, Fannie Mae repackaged them into mortgage-backed securities and sold them to outside investors. As a result of the hundreds of millions of dollars in charged fraudulent loans, ABACUS earned many millions of dollars in loan origination, purchasing, and servicing fees over the five-year period covered by the indictment.  ABACUS is a federally-chartered deposit and lending institution headquartered at 6 Bowery Street in Chinatown. The Bank operates seven branches across New York City, New Jersey, and Pennsylvania, and primarily serves the Chinese-American community. The loan department at ABACUS consisted of three separate units: loan origination, processing, and underwriting. All of these units and several of the branches were implicated in the conspiracy. Charged in the indictment is YIU WAH WONG, who served as the Bank’s Chief Credit Officer, Vice President, and Underwriting Supervisor. WONG was the most senior Loan Department manager and reported directly to the Bank’s CEO. Also charged in the indictment is WAI HUNG “RAYMOND” TAM, the Loan Origination Supervisor. According to the indictment, these ABACUS managers trained lower level employees that the accuracy of loan application information was immaterial; what mattered was making sure that borrowers were able to obtain Fannie Mae-backed mortgages. Managers also encouraged loan officers and processors to be discreet by making sure that the falsified information would be believable in the eyes of the Bank’s regulator, the Office of the Comptroller of the Currency, as well as Fannie Mae. ABACUS loan originators, also called loan officers, are accused of regularly instructing prospective borrowers to make misrepresentations in their loan applications and often authored falsified documents themselves. According to the indictment, originators coached borrowers to inflate their income, assets, and job titles, and to falsify Verification of Employment forms. Loan officers are charged with creating false gift letters to obscure the source of the borrowers’ down payments and disguise borrowers’ liabilities as assets. The loan originators charged in the indictment were: WEN FANG “FANNY” WANG, YING CHUAN “SHELLEY” WANG, JIE QIONG “MICHELLE” NAN, CHI FUNG “DANNY” LAU, and PHOEBE LEE. Loan officers QIBIN “KEN” YU, RUO LAN “JULIE” CHEN, LIEN “LILY” QUACH, XIAOMIN “JANE” HUANG, and YIM “KATY” CHENG all previously pleaded guilty to felonies for their participation in this scheme. Loan officer JIN HUA “JENNY” ZHANG has been charged by felony complaint with Falsifying Business Records in the First Degree and related charges. Loan processors, including defendants WAI CHING “ALICE” WONG and YUK YIN “LORETTA” LAM CHENG, are accused of helping originators concoct inflated incomes for borrowers.  Specifically, processors manipulated loan origination software in order to calculate how much income borrowers needed to show in order to qualify for loans. According to the indictment, processors also facilitated the falsification of borrowers’ employment information by providing blank Verification of Employment forms to originators and loan applicants instead of mailing the forms directly to employers. Processor MICHELLE WONG LI previously pleaded guilty to Falsifying Business Records in the First Degree in connection with her conduct. According to today’s indictment, loan underwriters approved loans they knew contained falsehoods, and knowingly failed to conduct adequate scrutiny of obviously false documents. Former underwriters VICTORIA TSUI and YI YI ZHAO were charged in the indictment. ANDY CHEN, who served as an underwriter, previously pleaded guilty to Falsifying Business Records in the First Degree. Between 2005 and 2010, ABACUS is charged with selling hundreds of millions of dollars worth of fraudulent loans to Fannie Mae. Notwithstanding the fact that these loans were replete with misrepresentations and falsified information, ABACUS represented to Fannie Mae that the loan documents were accurate and truthful, a prerequisite for purchases made by Fannie Mae. ABACUS knew that once the loans were in Fannie Mae’s portfolio, the mortgages would be bundled together with other loans and sold by Fannie Mae as securities in the secondary loan market. Over the course of the fraud, ABACUS and its employees earned many millions of dollars in commissions, origination and servicing fees. The District Attorney’s investigation into this misconduct continues. Anyone with information should call the District Attorney’s Office at (212) 335-3600.  Assistant District Attorneys Edward Starishevsky, Senior Investigative Counsel, and Julieta V. Lozano led the investigation under the supervision of Polly Greenberg, Chief of the Major Economic Crimes Bureau, and Adam Kaufmann, Chief of the Investigation Division.  Investigative Analyst Steven Koch and Trial Preparation Assistants Marisa Calleja, Elisabeth Daniels, Melissa Brown, and Kathleen Dougherty assisted in the investigation.  In addition, Investigator Jason Malone of the District Attorney’s Investigations Bureau participated in the investigation under the supervision of Supervising Investigator Santiago Batista.  District Attorney Vance thanked the Office of Comptroller of the Currency, Fannie Mae, IRS Criminal Investigations, the Federal Deposit Insurance Corporation, Federal Housing Finance Agency, and the Federal Housing Finance Agency Office of the Inspector General, whose work on this matter was part of the Residential Mortgage-Backed Securities Working Group formed by President Obama and Attorney General Holder, for their respective contributions to this investigation.

Indicted Defendants:
ABACUS FEDERAL SAVINGS BANK
New York, NY
Charges:
• Conspiracy in the Fourth Degree, a class E felony, 1 count
• Scheme to Defraud in the First Degree, a class E felony, 1 count
• Violation of G.B. L. §352-C(5), a class E felony, 1 count
• Violation of G.B. L. §352-C(6), a class E felony, 27 counts
• Grand Larceny in the First Degree, a class B felony, 1 count
• Grand Larceny in the Second Degree, a class C felony, 27 counts
• Falsifying Business Records in the First Degree, a class E felony, 100 counts
• Attempted Grand Larceny in the Second Degree, a class D felony, 1 count
• Residential Mortgage Fraud in the First Degree, a class B felony, 1 counts
• Residential Mortgage Fraud in the Second Degree, a class C felony, 14 counts
• Attempted Residential Mortgage Fraud in the Second Degree, a class D felony, 1 counts
YIU WAH WONG, D.O.B. 11/6/1950
Flushing, NY
Charges:
• Conspiracy in the Fourth Degree, a class E felony, 1 count
• Scheme to Defraud in the First Degree, a class E felony, 1 count
• Violation of G.B. L. §352-C(5), a class E felony, 1 count
• Violation of G.B. L. §352-C(6), a class E felony, 27 counts
• Grand Larceny in the First Degree, a class B felony, 1 count
• Grand Larceny in the Second Degree, a class C felony, 27 counts
• Falsifying Business Records in the First Degree, a class E felony, 100 counts
• Attempted Grand Larceny in the Second Degree, a class D felony, 1 count
• Residential Mortgage Fraud in the First Degree, a class B felony, 1 counts
• Residential Mortgage Fraud in the Second Degree, a class C felony, 14 counts
• Attempted Residential Mortgage Fraud in the Second Degree, a class D felony, 1 counts
WAI HUNG “RAYMOND” TAM, D.O.B. 5/22/1955
Brooklyn, NY
Charges:
• Conspiracy in the Fourth Degree, a class E felony, 1 count
• Grand Larceny in the First Degree, a class B felony, 1 count
• Grand Larceny in the Second Degree, a class C felony, 27 counts
• Falsifying Business Records in the First Degree, a class E felony, 100 counts
• Attempted Grand Larceny in the Second Degree, a class D felony, 1 count
• Residential Mortgage Fraud in the First Degree, a class B felony, 1 counts
• Residential Mortgage Fraud in the Second Degree, a class C felony, 14 counts
• Attempted Residential Mortgage Fraud in the Second Degree, a class D felony, 1 counts
WEN FANG “FANNY” WANG, D.O.B. 6/18/1972
Little Neck, NY
Charges:
• Conspiracy in the Fourth Degree, a class E felony, 1 count
• Grand Larceny in the First Degree, a class B felony, 1 count
• Grand Larceny in the Second Degree, a class C felony, 9 counts
• Falsifying Business Records in the First Degree, a class E felony, 36 counts
• Residential Mortgage Fraud in the First Degree, a class B felony, 1 counts
• Residential Mortgage Fraud in the Second Degree, a class C felony, 5 counts
YUK YIN “LORETTA” LAM CHENG, D.O.B. 5/21/1948
Fresh Meadows, NY
Charges:
• Conspiracy in the Fourth Degree, a class E felony, 1 count
• Grand Larceny in the First Degree, a class B felony, 1 count
• Grand Larceny in the Second Degree, a class C felony, 5 counts
• Falsifying Business Records in the First Degree, a class E felony, 12 counts
CHI FUNG “DANNY” LAU, D.O.B. 10/13/1983
Flushing, NY
Charges:
• Conspiracy in the Fourth Degree, a class E felony, 1 count
PHOEBE LEE, D.O.B. 6/13/1966
Flushing, NY
Charges:
• Conspiracy in the Fourth Degree, a class E felony, 1 count
JIE QUIONG “MICHELLE” NAN, D.O.B. 11/14/1980
Flushing, NY
Charges:
• Conspiracy in the Fourth Degree, a class E felony, 1 count
• Grand Larceny in the Second Degree, a class C felony, 1 counts
• Falsifying Business Records in the First Degree, a class E felony, 3 counts
VICTORIA TSUI, D.O.B. 8/16/1975
Brooklyn, NY
Charges:
• Conspiracy in the Fourth Degree, a class E felony, 1 count
• Grand Larceny in the First Degree, a class B felony, 1 count
• Grand Larceny in the Second Degree, a class C felony, 7 counts
• Falsifying Business Records in the First Degree, a class E felony, 30 counts
• Residential Mortgage Fraud in the First Degree, a class B felony, 1 counts
• Residential Mortgage Fraud in the Second Degree, a class C felony, 6 counts
YING CHUAN “SHELLY” WANG, D.O.B. 6/11/1968
College Point, NY
Charges:
• Conspiracy in the Fourth Degree, a class E felony, 1 count
• Grand Larceny in the Second Degree, a class C felony, 2 counts
• Falsifying Business Records in the First Degree, a class E felony, 6 counts
• Residential Mortgage Fraud in the Second Degree, a class C felony, 2 counts
WAI CHING “ALICE” WONG, D.O.B. 5/24/1958
Brooklyn, NY
Charges:
• Conspiracy in the Fourth Degree, a class E felony, 1 count
• Grand Larceny in the First Degree, a class B felony, 1 count
• Grand Larceny in the Second Degree, a class C felony, 10 counts
• Falsifying Business Records in the First Degree, a class E felony, 44 counts
• Attempted Grand Larceny in the Second Degree, a class D felony, 1 count
• Residential Mortgage Fraud in the First Degree, a class B felony, 1 counts
Residential Mortgage Fraud in the Second Degree, a class C felony, 3 counts
Attempted Residential Mortgage Fraud in the Second Degree, a class D felony, 1 counts
YI YI ZHAO, D.O.B. 9/6/1964
Brooklyn, NY
Charges:
• Conspiracy in the Fourth Degree, a class E felony, 1 count
• Grand Larceny in the First Degree, a class B felony, 1 count
• Grand Larceny in the Second Degree, a class C felony, 6 counts
• Falsifying Business Records in the First Degree, a class E felony, 19 counts
• Residential Mortgage Fraud in the First Degree, a class B felony, 1 counts
• Residential Mortgage Fraud in the Second Degree, a class C felony, 3 counts
Jin Hua “Jenny” Zhang
• Charged by felony complaint with Falsifying Business Records in the First Degree and related charges.
Previously charged defendants who have pled guilty:
Andy Diansi Chen
• Pled guilty to one count of Falsifying Business Records in the First Degree, a class E felony.
Ruo Lan “Julie” Chen
• Pled guilty to one count of Falsifying Business Records in the First Degree and one count of Scheme to Defraud in the First Degree, both class E felonies.
Yim “Katy” Cheng
• Pled guilty to one count of Falsifying Business Records in the First Degree and one count of Scheme to Defraud in the First Degree, both class E felonies.
Xiaomin “Jane” Huang
• Pled guilty to one count of Falsifying Business Records in the First Degree, a class E felony.
Michelle Wong Li
• Pled guilty to one count of Falsifying Business Records in the First Degree a class E felony.
Lien “Lily” Quach
• Pled guilty to one count of Falsifying Business Records in the First Degree a class E felony.
Qibin “Ken” Yu
• Pled guilty to: one count of Grand Larceny in the Third Degree, a class D felony, one count of Falsifying Business Records in the First Degree, a class E felony and one count of Scheme to Defraud in the First Degree a class E felony.

[1]The charges contained in the indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty.  ###


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New York County District Attorney | duggane@dany.nyc.gov| 212-335-9400

Judge Favors PD Culture of Corruption

Judge sides with LCG, LPD during first police corruption hearing 
The Advertiser by Nicholas Persac - May 29, 2012 
Plaintiff attorney vows to continue fight in Lafayette's 'Serpico' case 

Lafayette, LA - A 15th Judicial District Court judge ruled this morning in favor of the local government and police department during the first court hearing in a lawsuit filed by nine Lafayette Police Department officers who claim a culture of corruption has lead to physical threats and racial discrimination.  "All the judge did was dissolve the temporary restraining orders," Stephen Spring, an attorney for the nine LPD plaintiffs, said during a phone interview after this morning's court hearing. "Obviously I'm disappointed, but it's not over by a long shot. We're discussing our options right now, and the rest of the suit is still there. This is chapter two."  The case began when LPD officials launched an internal investigation to determine which employee may have leaked an Internal Affairs document.  The nine officers who filed the lawsuit argue the investigation into the leak unfairly targeted the plaintiffs and violated portions of the Policeman's Bill of Rights. Those officers accused the department of using such investigations as a way to punish officers who bucked the alleged culture of corruption within LPD.  Spring said one option he's already considering is filing an appeal to try to have today's decision overturned by a higher court.  Defense attorney Michael Corry asked Judge Kristian Earles to review secret audio recordings that Spring claimed bolstered his case and proved the LPD higher ups made threats against his clients.  During the two-hour hearing Tuesday morning, Earles first granted a brief recess so Corry and his defense team could examine one of the recordings. Earles then instructed Spring to play the tape, which recorded plaintiff LPD officer Gabe Thompson talking with LPD Patrol Division Commander Maj. George "Jackie" Alfred, before the court.

"When Judge Earles heard the entire 17 minute recording, he found the city was absolutely right and there was no irreparable harm, damage, loss or injury," Corry said outside the courthouse while talking with reporters. "Judge Earles did not even require the testimony of any witnesses. All he needed to do was hear the entirety of the tape, which he did, to find that the city should prevail."  Before Spring played the recording for the court, he and Corry questioned Thompson, who said he used a secret recording device disguised as a writing pen to tape the conversation he had with Alfred.  “I don’t care if they call it retaliation, and they can say whatever they want to say,” Alfred allegedly said on the recording, according to Spring. “This stuff has gotten personal, and when it becomes personal, a lot of stuff can happen … even fighting and shooting.”  Corry said the tape did not provide enough evidence of any real threat, pointing to the fact that Thompson laughed "no less than 22 times" during the conversation.  "There is nothing on that tape that is threatening," Corry said. "This isn't a smoking gun. This is simply an attempt to stop an investigation."  LPD officer Scott Poiencot, one of Spring's clients as a plaintiff, testified during today's hearing and said he loaned Thompson the spy-like pen without knowing what he was going to record.  In the lawsuit, Spring compares his clients to Frank Serpico — the NYPD officer who testified against police corruption and is portrayed by Al Pacino in a 1971 film. The reality of taking such a stand, Spring said, has left the officers with “genuine fears” of being physically assaulted, battered or even shot, in addition to facing “unlawful … disciplinary proceedings.”  Though Spring vowed to continue fighting his clients' case, Corry said today's decision should effectively end the "Serpico" case.  "What we do know is that Judge Earles has found their claim was completely baseless and meritless," Corry said. "There is nothing else to go forward. It's over."

Federal Judge Schedules Corruption Retrial

Judge Schedules Retrial for Former Senate Leader
The Associated Press  -  May 30, 2012

A federal judge has set Feb. 4, 2013, in Albany to start the retrial of former New York Senate Majority Leader Joseph Bruno on fraud charges and imposed a gag order on the lawyers.  Northern District Judge Gary Sharpe said yesterday the case will be tried in court, not the press, while acknowledging he imposed the same rule at the 2009 trial, where Bruno himself held daily press conferences on the courthouse steps to say he was innocent while his lawyers stood quietly by.  The retired 83-year-old has remained free while the U.S. Court of Appeals for the Second Circuit overturned his two convictions for so-called "honest services fraud," citing a U.S. Supreme Court ruling in another case that such convictions must show direct bribes or kickbacks (NYLJ, Nov. 17, 2011). Bruno was once one of the three most powerful officials in state government.

Blog Archive

See Video of Senator John L. Sampson's 1st Hearing on Court 'Ethics' Corruption

The first hearing, held in Albany on June 8, 2009 hearing is on two videos:


               Video of 1st Hearing on Court 'Ethics' Corruption
               The June 8, 2009 hearing is on two videos:
         
               CLICK HERE TO SEE Part 1
               CLICK HERE TO SEE Part 2