Federal Judge Hopeful Young Lawyers Heed Disgraced Partner's Words

Two Ex-Partners Get Jail Time for Dirty Tricks in Litigation
The New York Law Journal by Amanda Bronstad - October 28, 2008

LOS ANGELES – A federal judge has sentenced David Bershad, a former senior partner at Milberg, and Steven Schulman, another former Milberg partner, each to six months in prison. The two are the last of the four former partners at Milberg, previously called Milberg Weiss, who were charged in the government's kickback case, which alleged the firm and seven of its partners obtained $251 million in attorney fees by making secret and illegal payments to lead plaintiffs in shareholder and class action securities cases. Earlier this year, William Lerach, who left Milberg in 2004 to form his own firm, now called Coughlin Stoia Geller Rudman & Robbins, was sentenced to 24 months, and Melvyn Weiss, co-founding partner of Milberg, was sentenced to 30 months.

On Monday, U.S. District Judge John Walter, of the Central District of California, who has been overseeing the Milberg case, drew several distinctions between Bershad and Schulman and their senior counterparts, Lerach and Weiss. Most specifically, he criticized several lawsuits that Milberg has filed against Schulman and Bershad in an attempt to recover funds for a $75 million payment the firm is obligated to pay under a non-prosecution agreement reached several months ago with prosecutors. In contrast, Lerach and Weiss, who are now in prison, received significant payments from the firm. "I'm truly saddened by the fact that obviously some great lawyers who have come before me," Walter said on Monday, are "standing at the lectern for the last time." Bershad pleaded guilty last year to conspiring to obstruct justice and making false statements under oath. As part of the deal, Bershad has paid $7.75 million in forfeitures. On Monday morning, before a full courtroom, Walter sentenced Bershad to six months in prison and imposed a $250,000 fine. He ordered Bershad to begin serving his sentence on Jan. 5. Bershad has requested serving his sentence in a men's minimum security facility in Otisville, N.Y. Bershad's lawyers initially had sought a sentence of probation – a move that his lawyer, Cristina Arguedas, a partner at Arguedas, Cassman & Headley in Berkeley, Calif., admitted was an "uphill battle" given Walter's reluctance to grant leniency in his sentencing of other defendants in the case. "He was hoping for probation," Arguedas said after the hearing. "We thought he had legitimate arguments for probation." But she admitted that Bershad had anticipated Walter to impose incarceration.

In fact, at the hearing, Walter said he was inclined to sentence Bershad to a sentence not unlike that imposed on Lerach, who pleaded guilty to the same conspiracy charge. In doing so, Walter noted that Bershad was responsible for the daily operations of the law firm. But in court, Bershad's lawyers argued that their client's participation and early plea deal with federal prosecutors significantly helped the government obtain later plea deals with Lerach and Weiss. "When David announced he was pleading guilty, everything changed," Arguedas said. "David Bershad is responsible for the pleas of all the people who followed him." Arguedas also argued that Bershad lost much more than Lerach did when he decided to plead guilty in the case. Specifically, he lost his marriage and much of his wealth, as well as his professional relationships and bar license. In the end, Walter appeared persuaded by Bershad's remorse and the letters of support. He also acknowledged Bershad's assistance in the case, although he didn't grant a request by federal prosecutors for a sentence of three months in prison, plus three months of community confinement.

Assistant U.S. Attorney Richard Robinson had argued that Bershad corroborated the testimony of another former Milberg partner regarding bonuses that were given to partners who paid the kickbacks. He also confirmed information revealed in documents about a kickback Weiss had agreed to pay to Steve Cooperman, a paid plaintiff, which was disguised as a phony art option. And he provided new information, such as the existence of paid plaintiffs in Florida and Weiss's efforts to obstruct justice during the investigation by refusing to turn over certain documents. In court, Bershad said: "I personally take responsibility for what I did. It was wrong." Monday afternoon, in a less crowded courtroom, Walter sentenced Schulman to six months in prison, plus a $250,000 fine. Schulman has paid $1.85 million in forfeitures, as well. Schulman, who pleaded guilty last year to a federal racketeering charge, is scheduled to begin his sentence on Jan. 13 and has requested that he serve his time in a minimum security prison in Schuylkill County in Pennsylvania. At the hearing, Assistant U.S. Attorney Douglas Axel said Schulman's plea deal provided substantial information relating to the firm's payments to Howard Vogel, one of the lead plaintiffs. Vogel was sentenced earlier this month to three months in prison. But he also said that Schulman provided less information than did Bershad because he waited so long to plead guilty. As a result, prosecutors were seeking up to 12 months in prison.

Schulman's attorney, Herbert Stern, of Stern & Kilcullen, in Roseland, N.J., said his client waited to plead guilty in an attempt to salvage his law license as part of a potential deal with prosecutors. He said Schulman, who had requested six months in prison, should not be sentenced to more months than Bershad. "Unlike some of the other folks who have come before you, he's wiped out financially," Stern said. In court, Schulman said he hoped that young lawyers would learn a lesson from his mistake when faced with similar ethical choices. "My error was to take the wrong route when that occurred," he said. "Today, I pay already a high price. I really don't know exactly how I will get out of this problem." Initially, Walter criticized Schulman for having attempted to minimize his role in the Milberg conspiracy. But in concluding his sentencing decision, Walter acknowledged the numerous letters written on Schulman's behalf and the impact that prison time would have on his three young children. "To have a career such as yours end in such a fashion is a true tragedy," Walter said. "I hope young lawyers across the country will listen to your words."

Milberg Kickback Partner Gets Six Months

Ex-Milberg Lawyer Bershad Sentenced to Six Months 
Bloomberg by Edvard Pettersson

Oct. 27 (Bloomberg) -- Former Milberg law firm partner David Bershad, who pleaded guilty last year to conspiracy for his part in a scheme to pay plaintiffs illegal kickbacks in shareholder suits, was sentenced to six months in prison. U.S. District Judge John Walter, at a hearing today in Los Angeles, rejected a request by Bershad's lawyers for a probationary sentence as well as a request by prosecutors for three months in prison and three months of community confinement. Bershad, 68, also was ordered to pay a $250,000 fine. He already has forfeited $7.75 million. "I personally take responsibility for what I did,'' Bershad said before Walter read the sentence. Bershad was indicted two years ago together with the New York firm, then called Milberg Weiss Bershad & Schulman, and former partner Steven Schulman. Prosecutors said they secretly paid clients to file shareholder class-action lawsuits that brought in $251 million in attorney fees. Schulman, 57, pleaded guilty after Bershad and will be sentenced later today. Prosecutors sought a more lenient sentence against Bershad than against former Milberg partners Mel Weiss and Bill Lerach, who were sentenced to 2 1/2 years and 2 years, respectively. Bershad was the first senior lawyer at Milberg to plead and his cooperation helped the government to get guilty pleas from Weiss and Lerach, Assistant U.S. Attorney Richard Robinson said at today's hearing.

`Uphill Battle'

"We thought he had legitimate arguments for probation,'' Bershad's lawyer, Cristina Arguedas, said after the hearing. ``We knew we would be standing here in an uphill battle.'' Bershad was ordered to start serving his sentence Jan. 5. His lawyers asked he be sent to a minimum-security prison camp in Otisville, New York. Milberg in June agreed to pay $75 million to settle the charges. The firm faced extinction if convicted of secretly paying three clients more than $11 million to serve as lead plaintiffs. The tactic, dating back to 1979 and continuing to as recently as 2005, helped the firm file cases faster than rivals, ensuring a bigger share of settlements, prosecutors said. "He was one of the architects of the scheme,'' Walter said, in rejecting Bershad's request for probation. ``With the exception of Weiss and Lerach, there was no partner who had more intimate knowledge of the scheme than Mr. Bershad.'' The case is U.S. v. Milberg Weiss, 05-00587, U.S. District Court, Central District of California (Los Angeles). To contact the reporter on this story: Edvard Pettersson in Los Angeles at epettersson@bloomberg.net.

With Spineless Leaders, He said-She said Continues

NY Judge Faults Senate Suits in Spitzer Case as "Shameful" Waste of Resources
The New York Law Journal by Joel Stashenko - October 27, 2008

A state judge concluded the politically charged litigation between the state Senate and former Governor Eliot Spitzer last week, but not before condemning the parties for their "cavalier" and "shameful" wasting of court time and taxpayer money. State Supreme Court Justice Emily Jane Goodman in Manhattan ordered that the proceedings be discontinued, with prejudice, pursuant to stipulations of discontinuance submitted to the court by the litigants earlier this month. However, the judge complained that judicial and non-judicial staff in her chambers had spent "considerable" time and effort between August, when she got the case after Supreme Court Justice Richard F. Braun recused himself, and October, pouring through the voluminous briefs to prepare for a scheduled Oct. 16 hearing. On Oct. 7, however, Justice Goodman wrote that her chambers was informed that stipulations of discontinuance were about to be filed with the court to end the litigation in Matter of Office of the Governor of the State of New York v. Winner, 406848/07 and Matter of Dopp v. Winner, 114958/07. "Now it appears the effort was a shameful waste of public resources and took precious time from other matters," she wrote. "No comment is necessary concerning the considerable fees paid by the public to private law firms litigating this matter on behalf of the Legislative and Executive bodies. . . . While it is always the Court's goal to end conflict, the cavalier use of Court time and public resources is less welcome."

Justice Goodman wrote that the motion practice in the litigation between the Senate and the Spitzer administration "underscores the low regard" the executive and Senate have for the Judiciary. Republicans in the Senate majority had sought to subpoena e-mails, BlackBerry messages and other internal communications related to efforts by the Democratic Spitzer administration to use the state police to gather records on state-funded travel by Mr. Spitzer's former chief rival, Senate Majority Leader Joseph Bruno. Mr. Spitzer and Darren Dopp, the governor's one-time communications director, moved separately to quash subpoenas for the information issued by Senator George H. Winner Jr., R-Elmira, chairman of the Senate Committee on Investigations. Mr. Spitzer's attorneys argued that the Legislature does not have the power to subpoena the governor's office and that many of the materials were privileged. Mr. Winner on Friday said Senate Republicans favored dropping the litigation because the internal documents they sought had been released earlier this year after investigations of the Spitzer administration activities by the Commission on Public Integrity and Albany County District Attorney P. David Soares.

Both of those investigations would not have been mounted had it not been for the Senate's efforts to push for more information, Mr. Winner contended. "We prodded Public Integrity and Soares to at least do something," said Mr. Winner, R-Elmira. "Without our actions, none of these misdeeds by the governor's staff and the governor would have come to light." As for Justice Goodman's comments about wasteful litigation, Mr. Winner blamed Justice Braun for the length of the case. "The fact of the matter is, the arbitrary recusal of her colleague was the reason this has dragged on," Mr. Winner said. "We had briefed the case and held arguments before Judge Braun and we were waiting for a decision. Instead of a decision we got an arbitrary recusal." The urgency surrounding the Senate investigation dissolved following the abrupt resignation of Mr. Spitzer in March for patronizing a prostitute. Mr. Bruno has since retired. Senate Republicans said they spent $132,000 in taxpayer money to retain Washington, D.C., attorney Joseph E. diGenova of diGenova & Toensing to advise them on the Winner commission's investigation.

Governor David Paterson's office did not respond to messages seeking comment on Justice Goodman's ruling and an estimate of how much it cost the governor's office to fight the Senate subpoenas. A spokeswoman for Mr. Spitzer did not respond to a call for comment. Mr. Dopp was suspended by Mr. Spitzer last year and was never allowed to return to work for the state. He is now with an Albany lobbying and public relations firm. Mr. Dopp's attorney, Michael L. Koenig of Greenberg Traurig in Albany, declined comment Friday on Justice Goodman's criticism of the litigation but said he was grateful that Mr. Dopp's case against the Senate had been concluded. Mr. Dopp was found by the public integrity commission to have violated a provision of Public Officers Law by using his official position to secure unwarranted privileges from the state police for himself and Mr. Spitzer. Mr. Dopp has promised to challenge that finding at a hearing before a commission administrative law judge, though Mr. Koenig said Friday the commission has yet to schedule a date for that hearing.

Albany Times Union on Attorney Actions in Fraud Cases

Fraud cases in region test responsibilities of lawyers
Defendants who say they trusted attorneys raise issue of prosecutorial double standard

The Albany Times Union by BRENDAN J. LYONS - October 26, 2008

ALBANY — Nine years ago, Mark Slagen fell into financial troubles after the house he shared with his wife, Ann, burned and left them homeless as their insurance coverage ran short. Slagen, a former police officer and state Inspector General's Office investigator, said an acquaintance introduced them to a mortgage broker, Anthony Andersen, who pledged to help them refinance their way out of trouble. Slagen would later regret the introduction, which would lead to his being convicted in a felony mortgage fraud scheme. He cooperated with the FBI and that effort, according to federal prosecutors, helped force Andersen to plead guilty. Andersen's corrupt deals relied on the work of other licensed professionals, including at least one attorney, James Blendell of Latham, who records show served as the closing agent for many of Andersen's bad deals. Like other Capital Region attorneys embroiled in the paperwork of mortgage fraud scandals, Blendell was reported to state disciplinary authorities, but never accused of wrongdoing. Attorneys for Slagen and other people caught up and convicted in the fraud schemes have accused the Justice Department of selective prosecutions.

It all unfolded in early 2001 when Andersen convinced him to "flip" two real estate properties in Troy and Rensselaer, court records show. It was a crime that involved falsely inflating the value of the homes so the broker, Andersen, could pocket the profits of a mortgage set up to fail. It was, according to the FBI, a classic mortgage fraud scheme. ''Slagen's responsibilities would be to appear at the closings and sign some paperwork, and that he would be compensated,'' according to his plea agreement. Looking back, Slagen, who pleaded guilty to a felony but was sentenced to probation because he cooperated with the FBI, said he felt duped by Andersen and Blendell, who was never implicated in any of the crimes for which Slagen and Andersen both were convicted. Court records and public documents filed in Rensselaer County indicate Blendell handled numerous real estate closings that were part of Andersen's sprawling mortgage fraud scheme. Andersen, of Holyoke, Mass., and his wife, Lisa Andersen, both pleaded guilty to fraud-related charges and await sentencing.

Prosecutors did not identify Blendell in court documents by name. Donald T. Kinsella, Slagen's attorney, questioned why his client was singled out when Blendell and at least seven other so-called ''straw purchasers'' in the case, including a police detective, were not charged. ''For some inexplicable reason, the government chose not to prosecute other individuals who were complicit with Mr. Andersen in the far-ranging scheme in which Mr. Slagen was but a limited participant,'' Kinsella wrote in a memo to the judge prior to his client's sentencing. ''Mr. Slagen has provided information to the New York state authorities in this matter, and we expect that at least one professional will be facing sanctions from New York state authorities.'' Blendell did not respond to requests for comment.

Slagen said he questioned Blendell whether his two property deals were legal. ''I brought in a copy of the Public Officer's Law and put it on his desk,'' Slagen said. ''He said to me this is completely legitimate.'' It isn't the only case in which allegations of a prosecutorial double standard have emerged. Berne Watkins, a Glenmont businessman, partly blames his former business attorney, Michael Kornstein of Albany, for his conviction on fraud charges related to a massive property deal that involved former Urban League Director Aaron Dare, who is in prison for his role. Watkins, 71, is scheduled to report to federal prison later this month to begin a 9-month sentence for his guilty plea last year in the $8.5 million real estate scheme. The crimes centered on the sale of three large rental properties Watkins owned in Albany and Schenectady.

At Watkins' sentencing last summer, his defense attorney questioned why others in the deal were not prosecuted. Kinsella, without naming Kornstein, noted that the attorney had approved a series of phony promissory notes that served as a basis for the federal charges against Dare and Watkins. There are no allegations Kornstein knew the notes were phony. ''There were others in the case who could've been prosecuted who weren't: an attorney who drafted the documents, including the phony notes,'' Kinsella told a judge. ''I'm not a real estate attorney, but the first time I saw them, just looking at them, they were, obviously, bogus.'' Kornstein declined to comment. ''I trusted my lawyer and if he knew there was something wrong with the documents he should have told me,'' Watkins said. ''I created no words in any of those things.'' Watkins said that after he pleaded guilty and agreed to cooperate, he met with an assistant U.S. Attorney to talk about Kornstein's role. ''The meeting lasted 10 minutes,'' Watkins said. ''He hardly asked a question.''

Reluctantly, Lawyers Accepted $40 Million Contingent Fee

Fee Deal Provokes Skepticism
The New York Law Journal by Joel Stashenko - October 24, 2008

ALBANY - Graubard Miller did not like a contingent fee agreement that produced a $40 million payoff in just five months, but it accepted the arrangement to keep a 22-year client with the firm, lawyers told the Court of Appeals yesterday. Members of the Court appeared skeptical during an hour of oral arguments about the size of the fee and several questioned the propriety of Graubard Miller seeking to collect the entire amount. Judge Robert S. Smith echoed several of his colleagues when he wondered whether a legitimate contingency agreement, "where it works out so favorably to the lawyer, where it is so much money for so little work," could be considered unconscionable.

Attorneys for Graubard Miller's late client, Alice Lawrence, argued that the law firm is seeking to collect an unconscionable amount for little work and after assuming little or no risk under the arrangement. The contingency arrangement, under which the firm was to receive 40 percent of a final settlement sought by Ms. Lawrence in a legal battle over her late husband Sylvan's real estate empire, was Ms. Lawrence's idea, attorney Mark Zauderer told the judges yesterday. "The firm did not want to undertake this on a contingency arrangement," Mr. Zauderer, of Flemming Zulack Williamson Zauderer, argued on behalf of Graubard Miller. "They didn't request it. They're not a contingency law firm. They don't do that kind of work. She said, 'Put your money where your mouth is.'" The agreement signed by Ms. Lawrence and Graubard in January 2005 replaced an hourly arrangement under which the firm had billed her $18 million over 21 years. Five months later, a $100 million settlement was reached to end Ms. Lawrence's dispute with the estate of Seymour Cohn, Sylvan Lawrence's brother and former business partner, over real estate holdings of the two men that were once valued at more than $1 billion.

Ms. Lawrence subsequently refused to pay the contingent fee. Mr. Zauderer suggested that Graubard Miller brought a complex and contentious case to a close and that the $40 million fee only looks questionable in retrospect because a settlement was reached unexpectedly in a short period of time. Mr. Zauderer said Graubard Miller assumed considerable risk in going from an hourly fee agreement with Ms. Lawrence to the contingency arrangement because of how long the case had dragged on before 2005 and a setback Ms. Lawrence had just suffered in the case in Surrogate's Court in Manhattan. "Many lawyers would not have taken this case in January 2005 on a contingency basis. . . . It was not a slam dunk," Mr. Zauderer said. But judge after judge yesterday kept returning to the sheer size of the fee and, no matter the agreement Graubard Miller signed with Ms. Lawrence, whether the firm was entitled to it. Judge Smith said he could understand that Graubard Miller may well not have expected to see the Lawrence case settle so quickly. "You never anticipated anything like this," he told Mr. Zauderer. "You anticipated a much smaller amount, much more work, much higher risk of recovery. This was a complete surprise. Are you still entitled to take 40 percent of a $100 million surprise"

"Yes, you are," Mr. Zauderer replied. "What case says that?" Judge Smith asked. "There's no case that says you can't. I would infer from all the cases that have addressed what is an unconscionable fee in terms of a percentage," Mr. Zauderer said. Chief Judge Judith S. Kaye repeatedly asked Mr. Zauderer and Graubard Miller partner Steven Mallis, who also appeared yesterday to defend the fee, what precisely the firm's attorneys had done from January to May 2005 to justify the $40 million fee. "It had to do with skill and negotiating strategy and bluffing," Mr. Mallis told the Court. "It had to do with a whole lot of factors." With some exasperation, Chief Judge Kaye kept trying to push for more details. "You're not even giving us a clue," she told Mr. Mallis. "All you're saying is 'skill' and 'risk.'" "What else is there?" Mr. Mallis said. Mr. Mallis also faced sharp questioning from the Court about his acceptance of a $1.5 million gift from Ms. Lawrence in 1998 and about her payment of $2.7 million to cover gift taxes for Mr. Mallis and two other Graubard Miller partners who received a total of $3.5 million in gifts. "Why wouldn't you mail the check back and say, 'You can't give me a gift, I'm your lawyer?'" Judge Eugene F. Pigott Jr. asked.

"I was satisfied, for reasons which do not appear in the record, that this was utterly and totally voluntary and I am perfectly happy to have a full evidentiary exposition of all the facts and circumstances surrounding it," Mr. Mallis responded. "Based upon what I knew at the time, there was absolutely no impropriety and I can tell your honor that if I thought there was one iota of impropriety, that check would have gone back to Mrs. Lawrence in a heartbeat." Ms. Lawrence's estate is also seeking the return of the 1998 gifts from Graubard Miller. Leslie D. Corwin of Greenberg Traurig, attorney for Ms. Lawrence's estate, told the Court the contingent arrangement was unconscionable both when the agreement was signed and when it became clear how large the fee payment would be. "Under both of those circumstances . . . at the time that it was signed and also at the time when the fee was requested and the Court looks in hindsight at that fee, under both scenarios this revised fee agreement could never pass muster," Mr. Corwin argued. The Court of Appeals had originally scheduled the case on an expedited basis on its March calendar, but it was moved back to yesterday following the Feb. 16 death of Ms. Lawrence. She was 83. Ms. Lawrence first retained Graubard Miller, then known as Graubard Moskovitz McGoldrick Dannett & Horowitz, in 1983 to represent her in matters related to Mr. Lawrence's estate.

When Mr. Lawrence died in 1981, he and his brother held a real estate portfolio that included several Wall Street office towers and the former Port Authority building at 111 Eighth Ave. Over the course of the long dispute, before the $100 million settlement, another $350 million had been paid out of the estate. Litigation over the property dragged on for more than 20 years, with Ms. Lawrence seeking the sale of the portfolio and Mr. Cohn opposing her. A 1983 retainer called for an hourly billing arrangement under which Ms. Lawrence ultimately paid Graubard Miller $18 million. Ms. Lawrence's estate is seeking rescission of the contingent fee agreement as well as the return of all previous fees on the grounds of unjust enrichment and breach of fiduciary duty (NYLJ, Sept. 15, 2005). A former member of the Court of Appeals, Howard Levine, reviewed the fee arrangement at the direction of Manhattan Surrogate Renee Roth. He concluded that as a referee, he did not have the authority to find the contingent fee unconscionable without knowing more about the circumstances of how it came to be substituted for the long-standing hourly billing arrangement between Ms. Lawrence and Graubard Miller. The Appellate Division, First Department, affirmed by a 4-1 vote, holding that while the fee might "seem excessive and invite skepticism," it was not unconscionable on its face (NYLJ, Nov. 28, 2007).

The First Department majority observed that before any determination regarding unconscionability could be made, "the circumstances underlying the agreement must be fully developed," including any discussions leading to the agreement as well as the prospects of successfully concluding the litigation in Ms. Lawrence's favor. However, a sternly worded dissent from Justice James A. Catterson referred to the fee as "nothing short of greed" and said he would have referred the firm to the Departmental Disciplinary Committee. Mr. Corwin urged the Court yesterday to find the contingent fee arrangement unconscionable without further court proceedings. Messrs. Zauderer and Mallis told the court Graubard Miller has never adequately been allowed to present the facts, from the firm's standpoint, that support the fee arrangement. Norman A. Senior and Robert L. Berchem appeared on behalf of Ms. Lawrence's three children. Joel.Stashenko@incisivemedia.com

More Court Comedy in Judicial Pay Lawsuit

Kaye Seeks to File Amicus Brief in Judges' Pay-Raise Suit
Newsbriefs - The New York Law Journal by Dan Wise - October 24, 2008

Chief Judge Judith S. Kaye yesterday asked the Appellate Division, First Department, for permission to file an amicus brief in a case seeking to force a pay raise for the state's 1,300 judges. The chief judge also asked the appeals court to let her lawyer, Bernard W. Nussbaum, participate in the Nov. 18 argument of the appeal in Larabee v. Governor, 11201/97. In the Larabee appeal, Governor David A. Paterson and the Legislature are seeking to overturn a June summary judgment ruling by Justice Edward H. Lehner (See Profile) requiring them to implement a pay raise reflecting the rise in the cost of living since judges' salaries were last increased in 1999 (NYLJ, June 11). Justice Lehner ordered lawmakers and the governor to proceed in "good faith" to enact a raise within 90 days, but that ruling has been stayed pending the outcome of the appeal (NYLJ, Aug. 28). Chief Judge Kaye has a separate suit, Kaye v. Silver, 40076/08, in which a summary judgment motion has been pending before Justice Lehner since July 17. Writing that the governor and lawmakers have made "expansive contentions" in Larabee, Chief

Judge Kaye's brief asks the First Department to resolve all issues raised at the trial level in both cases. Pressing a point unique to her case, she contends the judges' salaries have fallen to "unconstitutionally low" levels whether measured "by what others make today or by comparison to what other judges made in the past." In Larabee, Justice Lehner found that the two other branches had violated the separation of powers doctrine by linking judges' raises to extraneous issues. The four individual judges, who brought Larabee with the backing of their judicial associations, contend their salaries - Supreme Court justices earn $136,700 a year - have been eroded 30 percent by inflation since the 1999 raise. An appeal on the viability of claims raised in a third lawsuit, Maron v. Silver, 4108/07, was argued in the Third Department in September and a decision is pending (NYLJ, Sept. 4).

Lawyers Skip Rewrite, Attempt to Erase History

Three Lawyers' Bid to Have NY Sanctions Against Them "Erased" Rebuffed
New York Law Journal by by Mark Hamblett - October 22, 2008

Three lawyers who tried to settle their way out of sanctions and to erase the sanctions decision from legal publications and databases have been rebuffed by the U.S. Court of Appeals for the Second Circuit. Attorneys Maryann Peronti of New York and Gary M. Jewell and Stephen Smith of Houston, and their firms, were sanctioned $64,656 in March by Southern District Judge Lewis A. Kaplan for filing a meritless lawsuit against a stock trader.

But the lawyers and their firms agreed to settle with the trader, Knight Capital Markets, on one condition - that the Second Circuit first vacate the sanctions judgment. Circuit Judges Robert Sack and Robert Katzmann and, sitting by designation, Southern District Judge Jed Rakoff, refused to go along in ATSI Communications Inc. v. The Shaar Fund, Ltd., 08-1815. "We would be hard pressed to conclude that the judgment here, sanctioning lawyers appearing before a United States District Court, is insignificant. And it is precisely to avoid the public's scrutiny of the sanctions that ATSI's counsel seeks vacatur," the panel said in an opinion written by Judge Sack. The panel also ripped the lawyers for seeking a court order directing West Publishing Co., Westlaw, the Bureau of National Affairs (BNA) and LexisNexis that Judge Kaplan's opinion be "depublished" - removed from any publication or database in which it appears. "We note the extraordinary nature of a request to require privately owned and operated publishers to discontinue publishing public records, raising as it would serious constitutional questions," the court said.

However, the court said it did not have to reach that issue because it was refusing to vacate the sanctions, despite the possibility that its ruling might scuttle the settlement. The court said it was bound by U.S. Supreme Court precedent: U.S. Bancorp Mortgage Co. v. Bonner Mall Partnership, 513 U.S. 18 (1994), which held that, absent exceptional circumstances, a motion to vacate a judgment must be denied where a party has mooted its appeal through settlement. The first complaint in the action was filed in 2002 as ATSI, through its counsel - Messrs. Jewell and Smith of Christian Smith & Jewell in Houston and Ms. Peronti, now a solo practitioner, who was then at Koerner, Silberberg & Weiner (now White & Williams) - alleged that Samuel Levinson committed securities fraud. As explained by Judge Kaplan, the fraud was allegedly accomplished by selling convertible preferred shares in ATSI to the Shaar Fund and then having Mr. Levinson and others manipulate the price of ATSI shares downward to benefit from the more favorable rates of conversion of the preferred shares.

Judge Kaplan dismissed the case in 2004 with leave to replead and ATSI later filed second and third complaints charging Mr. Levinson, Rose Glen and others with manipulating the price of the stock downward after agreeing not to put pressure on the stock price. They also added as a defendant Knight, which, as the market maker in ATSI shares, the plaintiffs claimed, must have been aware of the manipulation. Judge Kaplan dismissed the action in February 2005, saying the "complaint failed to allege with particularity any trades or other activities that Rose Glen Capital Management and the Levinson defendants engaged to manipulate downward the price of ATSI common stock." The judge said the allegations were "farfetched, to say the least," and the claim that Knight must have known about the manipulation was "simply ridiculous." "Even assuming that Knight was the principal market maker, all that it 'must have known' is that some person or persons was involved in large sales of ATSI common stock," Judge Kaplan said in awarding the $64,656 that Knight spent defending the suit. At the circuit, both parties moved for vacatur of the judgment.

Under 28 U.S.C. §2106, courts of appeal have the equitable power to vacate "any judgment, decree, or order a court lawfully brought before" them for review. It is customary for the circuit to issue vacatur when a matter becomes moot on appeal. But the exception to that rule is the U.S. Bancorp holding: Vacatur should not issue where mootness derives from settlement. Judge Sack explained that part of the reason for the U.S. Bancorp rule was that "denying vacatur after settlement 'advances the public interest' in preserving judicial precedent and the proper course of appellate procedure." While the precedent rationale is less compelling when deciding to vacate a district court's judgment as opposed to that of a federal court of appeals, Judge Sack said, application of the rule here would help "advance the interest in preserving orders and judgments." The parties here argued that U.S. Bancorp should not apply because they conditioned settlement on vacatur.

"We disagree," Judge Sack said. "The parties cannot change that result by sleight of the draftsman's hand - making the settlement contingent upon, rather in contemplation of, vacatur. Unlike a motion made after settlement is complete, the appeal in this case is not yet moot." The parties tried in vain to persuade the court to apply the "exceptional circumstances" exception to the U.S. Bancorp rule, arguing that the public has no interest in Judge Kaplan's decision and the decision does not purport to make precedent. "As we have noted, district courts do not, by deciding cases, create law, they apply it," Judge Sack said. "Nor is there anything in U.S. Bancorp to suggest that, at the request of the parties, we are supposed to examine a district court decision and vacate it when we do not think it to be of particular importance." Ms. Peronti declined comment. Thomas Sheridan of Hanly Conroy Bierstein Sheridan Fisher & Hayes represented all three attorneys. He also declined comment. Thorn Rosenthal of Cahill Gordon & Reindel represented Knight Capital Markets.

More Feasting on the Bones of the Dead

Surrogate-gate?

Judicial Reports by Jason Boog -  October 22, 2008
jasonboog@judicialstudies.com

Presumptive Manhattan Surrogate Judge Nora Anderson is under investigation for her campaign finance practices. But even if she followed the rules, her donor list is disturbing. Nora Anderson swept the Manhattan Surrogate primary by a virtual landslide, but the price of victory — both literal and figurative — is proving steep.  Reportedly, the Manhattan DA’s office is investigating whether Anderson actually paid $270,000 to her campaign from her own pocket or if the money came from another source. If it came from another source, it would likely constitute an illegal donation; if it came from Anderson, then she is prohibited from repaying herself with proceeds from any of the rounds of fundraising that she has undertaken since her primary victory.

In an added twist, Judicial Reports has learned that the McManus Democratic Association was served with a subpoena Tuesday as part of an investigation into the campaign. “They asked for all records between Nora Anderson and ourselves,” said District Leader James R. McManus. “But there were no records. She used the club for her campaign. It was a handshake.” McManus declined to provide more detail.

PARSING THE MONEY

Whatever the nature of Anderson’s problems with campaign law compliance, the lineup of her donors — both before and after primary day — is rife with attorneys who have reason to believe they might be in a position to receive lucrative appointments from Anderson once she takes the bench.  According to the New York State Board of Elections, Anderson raised $238,344 in private donations leading up to the primary. She also received a loan of $225,000 from her employer, estate lawyer Seth Rubenstein. Political consultant Jerry Skurnick from Prime New York said that any outstanding loan would raise red flags in a typical campaign.  “In past campaigns, I’ve been told that if a loan is not repaid by the date of the primary it becomes a contribution,” he explained. Skurnick’s belief is confirmed by the 2008 Election Law:

“A loan made to a candidate or political committee, other than a constituted committee, by any person, firm, association or corporation other than in the regular course of the lender’s business shall be deemed, to the extent not repaid by the date of the primary, general or special election, as the case may be, a contribution by such person, firm, association or corporation.”

If that $225,000 contribution was categorized as a donation after the primary, it is one that exceeded the $32,000 limit under law. As of a September 19 post-primary filing, the campaign still listed $197,000 of the Rubenstein loan as outstanding. On October 2, her campaign filings reported that Anderson had loaned her campaign a total of $368,000 from her own finances. According to that October report, Anderson had repaid the remaining $197,000 of Rubenstein's loan.

THE NEVER-ENDING FUNDRAISER

According to one published excerpt from Anderson’s invitation to a post-election fundraiser, she was asking for contributors to give between $1,000 and $29,000: “Celebrate with her and help us retire the debt,” read the invitation. When asked how Anderson was coping with campaign donations from attorneys who work in Surrogate Court, campaign manager Michael Oliva said he couldn’t speak to how the judge would deal with financial matters, urging a call to Anderson herself. Neither Anderson nor Rubenstein returned calls for comment.

According to the 2008 Judicial Campaign Ethics Handbook, Anderson’s post-primary politicking is legal — and will remain so for a half-year after she takes the bench, as long as she is repaying debts to donors other than herself or family members:  “A judicial candidate’s campaign committee may, within the applicable window period, hold a post-election fund-raising event, the proceeds of which will be used to satisfy outstanding election debts to third parties. The campaign committee may not, however, sponsor an event for the purpose of repaying loans made to the committee by the candidate or the candidate’s relatives, or where it is intended that any funds remaining after payment of campaign debts would belong to the political party organization.” The handbook also states that this behavior is only permissible within a special “window period.” By law, that window opens nine months before the primary, judicial convention or official nominating meeting for the judgeship; and, by the same law, closes six months after the general election for the Surrogate Court.

LEGAL LUCRE

These fundraisers are all permissible, but exploring Anderson’s campaign war chest ($238,000 in contributions) reveals the contradictions inherent in the Surrogate Court election system. Even if she has followed the rules, Anderson’s committee accepted contributions from 13 different lawyers who had received many coveted guardianship assignments in the New York Surrogate Court during the last year. Leading that list was New York attorney Charles Gibbs, who received three guardianship appointments in Manhattan Surrogate Court last year — earning more than $198,000 in fees.

Collectively, the donors in question received 26 guardianships and earned $368,700 in guardianship fees in the Manhattan Surrogate Court — in the last year. (For a complete list, click here.) In addition to those individual contributions, 17 other gifts came from law firms that included estate law, elder law, guardianship, and other Surrogate Court practice areas. In all, Anderson received nearly $30,000 in contributions from these types of firms. Greenfield Stein & Senior contributed $6,800 and Finkelstein & Virga contributed $5,000, and both firms included Surrogate Court practice. (For that list, click here.) In an arcane election law twist, all New York judges are permitted to hold fundraisers and interact with contributors — but they are not supposed to know who contributed to them. The law reads:

“A judicial candidate may attend his/her own fund-raising event and may actually see and acknowledge individuals in attendance, but the identities of those who contribute to a judicial candidate’s campaign should otherwise be kept from the candidate except to the extent legally permissible.” During the heated primary season, the losing Surrogate candidate John J. Reddy, Jr., offered to restrict his contributors in a dramatic way — removing all campaign contributors from his list of eligible attorneys for guardianship assignments. In an interview this week, Reddy guardedly spoke of political donations. “I think more likely a large number of [Surrogate law attorneys] are contributing only because it is their aspiration that the court will better be served by a [particular candidate]. I don’t think you can look at the contributions and say that these people anticipate appointments,” he said. “At the same time, I thought it was better to be up front about [my contribution policy]. And that didn’t dissuade many attorneys from contributing,” he concluded, alluding to the more than $600,000 collected during his Surrogate bid.

And if you like your dead bones with ice cream, CLICK HERE to see the Tom Carvel Estate Feast.

Big Gun to Lead Federal Judge Impeachment

BigLaw Partner To Lead Impeachment Probe of Federal Judge, Again

New York Lawyer by David Ingram; The BLT: The Blog of Legal Times - October 17, 2008

Not too many lawyers have experience with the impeachment of a federal judge. But the House Judiciary Committee has found one to serve as special counsel for its impeachment inquiry into U.S. District Court Judge Thomas Porteous. The committee says it has hired Alan Baron, a partner in the D.C. office of Holland & Knight. Baron was the House’s special impeachment counsel when lawmakers voted to impeach then-federal judges Alcee Hastings and Walter Nixon in the late 1980s. (The Senate then removed both judges from office.) Baron will work with a 12-member, bipartisan task force in charge of the inquiry. The task force is charged with conducting an investigation and then recommending whether to pursue impeachment. Impeachment would require a vote by the full House. “We are confident that Mr. Baron’s qualifications will be of great assistance to the task force as it seeks the facts of this case,” committee Chairman John Conyers (D-Mich.) and ranking member Rep. Lamar Smith (R-Texas) said in a statement Wednesday. Conyers should know Baron’s qualifications.

Two decades ago, he was chair of the House Judiciary subcommittee that oversaw Baron’s year-and-a-half-long Hastings investigation. In the mid-1990s, Baron served as the Democrats’ chief counsel on the Senate Governmental Affairs Committee’s investigation of 1996 campaign fundraising. In private practice, he has specialized in white-collar defense. Porteous, a Clinton appointee, serves in the eastern district of Louisiana, though he is suspended from hearing cases. He is accused of soliciting and receiving cash from lawyers with cases pending before him and of committing perjury in his personal bankruptcy case. This summer, the Judicial Conference of the United States referred Porteous’ case to the House with the message that impeachment might be warranted. In September, the Judicial Council for the 5th U.S. Circuit Court of Appeals removed his staff and issued a public reprimand.

Thanksgiving Comes Before Halloween This Year (CLICK HERE FOR STORY)

BREAKING NEWS: Coming to a Corrupt Court Near You: A New Administrative Judge

First, is was announced that Manhattan Administrative Judge Jacqueline W. Silbermann, the deputy chief administrative judge for matrimonial matters, was going to leave her post in December. The "official story" was she really only stayed on because Chief Judge Kaye "asked" her to stay on last year. The "REAL STORY" is that she was told she'd get the boot from the administrative post and return to a regular calander by year's end, so she "decided" to take a job a Blank Rome.

And just last week, it was revealed that 9th Judicial District Administrative Judge Francis Nicolai, was told that he was no longer welcome as the administrator of anything. He was also told to move out of his "shrine-like" administrative offices by the end of December.

Seems like the holidays are coming a bit early this year.

Bad DA's (Pirro) Make Bad TV

Pirro Gains New Perch, but Past Isn’t Far Behind
The New York Times by JOSEPH BERGER - October 12, 2008

WHITE PLAINS, NY-  BELYING F. Scott Fitzgerald’s maxim that there are no second acts in American lives, Jeanine F. Pirro is now appearing afternoons as a black-robed judge on her own television reality show, arbitrating domestic quarrels like one between a middle-aged roué and the gold-digging fiancée he claimed was fleecing him. Just like Judge Judy. But her first act, as a Westchester district attorney for 12 years who was so charismatic that she was a Republican challenger to both Hillary Rodham Clinton and Andrew Cuomo, just won’t stop intruding, nipping at her feet like a frustrated terrier. When her program premiered last month, two dozen pickets paraded before the Manhattan offices of Warner Brothers, its distributor, deploring the depiction of Ms. Pirro as a judicial paragon. Prosecutors, the pickets argued, must see that justice is done, not just settle scores. “The show portrays her as a crusader of justice,” said Jeffrey Deskovic, a leader of the pickets. “In fact, she made a regular habit of prosecutorial misconduct and breaking rules.” In 1989, Mr. Deskovic was prosecuted by the district attorney’s office and wrongly convicted — though not when Ms. Pirro was in charge — of the rape and murder of a 15-year-old fellow student at Peekskill High School. He lost the next 16 years to the bleakness of prison until DNA evidence submitted by the Innocence Project to Ms. Pirro’s successor pointed to another man as the killer and led the authorities to free him.

Mr. Deskovic claims that when Ms. Pirro was the district attorney he twice wrote to her from prison asking her to match semen and hair samples taken from the girl against the state’s DNA database. Ms. Pirro referred questions about legal matters to her lawyer, William I. Aronwald, who said that a search of office files never turned up such letters and that formal appeals based on trial errors could not have concerned a DNA match because at the time of the trial there was not yet a DNA database. But Mr. Deskovic’s case is not the only one clouding Ms. Pirro’s reinvention after a series of scandals stemming mostly from the mischief of her estranged husband. There are two more cases. A few days before Ms. Pirro’s program premiered, another of the office’s signature felons went free — Richard DiGuglielmo. He was off duty as a police officer in 1996 when he shot to death Charles Campbell, who had twice struck Mr. DiGuglielmo’s father with a baseball bat during a parking dispute in front of the father’s deli in Dobbs Ferry. The racially charged case — Mr. DiGuglielmo is white, the dead man was black — hinged on whether Mr. Campbell was about to swing again or was retreating. The former version would have shored up Mr. DiGuglielmo’s case for self-defense, but witnesses at trial said, in the words of one, that Mr. Campbell had been “backpedaling away from the older guy,” suggesting that the father was out of danger and thus the shooting bolstered the charge of depraved indifference.

But last month Judge Rory J. Bellantoni of Westchester County Court concluded that the Dobbs Ferry police relentlessly and improperly interrogated two witnesses who had initially told the police that Mr. Campbell was in the process of swinging the bat yet again. After five days, those witnesses shaded their testimony closer to the police and prosecution theory of a retreat followed by a reckless shooting. Judge Bellantoni said that Ms. Pirro’s office should have turned over information about the repeated grilling and the inconsistencies to the defense. Mr. Aronwald, speaking for Ms. Pirro, contended that the judge’s strongest criticism was of the police. And, he said, a finding that an assistant district attorney did something improper “is not the same thing as saying that the district attorney did something improper.” “There was no evidence presented that Jeanine Pirro knew or was aware that information that was required to be turned over to the defense was being withheld or suppressed,” he said. A third high-profile case that raised questions about Ms. Pirro’s fairness resulted in the release last year of Anthony DiSimone, who was convicted of the fatal knifing in 1994 of Louis Balancio, a college student, during a fight between Italian and Albanian gangs outside a Yonkers bar. Ms. Pirro celebrated the conviction in 2001 as “the culmination of a fight for justice” against Mafia-linked gang members. But last year Judge Charles L. Brieant of Federal District Court threw out the conviction because of what he termed “egregious” withholding of exculpatory evidence.

That evidence included a tape recording made on the day before Ms. Pirro announced Mr. DiSimone’s indictment. In that conversation, a federal prosecutor told Ms. Pirro that an informant had appeared who claimed that another gang member, Darin Mazzarella, confessed to holding Mr. Balancio down while his brother, Nick, stabbed him. Ms. Pirro never turned the tape over to the defense; indeed, her office used Mr. Mazzarella as its lead witness. Mr. Aronwald said that Ms. Pirro was under the impression that she was supposed to wait for the federal prosecutor to verify the informant’s credibility and that when he did not contact her, she assumed that the informant had turned out to be untrustworthy. Nevertheless, critics like Mr. Deskovic say that while watching Judge Pirro on her television show it is worth thinking about the fact that she or at least her office has been slapped on the wrist by two different judges for less-than-fair prosecutions. The issues in those cases were not those of low-rent television squabbles, but ended up costing two men, who may have been innocent, precious years of their lives.  E-mail: joeberg@nytimes.com

Wall Steet Fraud + No Accountability = Financial Crisis

FBI resources limited for economic probes
Reuters News Service - October 18, 2008

NEW YORK (Reuters) – The FBI, after years spent focusing on national security, is struggling to find agents and resources to investigate wrongdoing tied to the country's economic crisis, The New York Times reported in Sunday editions. Citing current and former FBI officials, the Times said cutbacks in its criminal investigative workforce following the September 11 attacks left the FBI weaker in areas like white collar crime. The cutbacks were the result of a shift in focus to terrorism and intelligence matters. More than 1,800 agents, or nearly one-third of all those in criminal programs, moved into those areas, the Times said.

"Clearly, we have felt the effects of moving resources from criminal investigations to national security," the newspaper quoted FBI Assistant Director John Miller as saying. "In white collar crime, while we initiated fewer cases over all, we targeted the areas where we could have the biggest impact. We focused on multimillion-dollar corporate fraud, where we could make arrests but also recover money for the fraud victims." While the FBI plans to double the number of agents working on financial crimes, people within and outside the Justice Department question where the agents will come from and whether that will suffice, the Times said.

Records and interviews show that FBI officials have warned of a looming mortgage threat since 2004, and asked the Bush administration to fund such nonterrorism investigations, but the requests were denied and no new agents were approved for financial criminal investigation work, the newspaper said. Internal FBI data shows the cutbacks were especially sharp in areas of white collar crime like mortgage fraud, with more than 600 agents lost, or more than one-third of 2001 levels. According to Justice Department data, fraud prosecutions directed at financial institutions dropped by nearly one-half from 2000 to 2007, insurance fraud cases fell 75 percent and securities fraud decreased by 17 percent, the Times said.

"The administration's top priority since the 9/11 attacks has been counterterrorism," Justice Department spokesman Peter Carr told the paper. "In part, that's reflected by a significant investment of resources at the FBI to answer the call from Congress and the American public to become a domestic intelligence agency, in addition to a law enforcement agency." According to the Times, several former law enforcement officials said that senior administration officials, notably those at the White House and the Treasury Department, made clear that they were concerned the Justice Department and the FBI were taking an anti-business attitude that could inhibit corporate risk-taking. One former official said some in the administration characterized aggressive corporate prosecutions as "over-deterrence." (Reporting by Chris Michaud)

NY Lawyer Suspended for Forgery

NY Lawyer Suspended for Forgery
The New York Law Journal by Anthony Lin - October 16, 2008

The Appellate Division, First Department, has ordered a three-year suspension for a lawyer convicted in New Jersey of forging his clients' signatures on a $75,000 settlement check from which he failed to distribute their share. Anthony M. Mahoney had originally been convicted in 2002 on two theft counts as well but those were ultimately reversed in 2006 by the New Jersey Supreme Court. Noting that the twists and turns of the criminal case had delayed Mr. Mahoney's New York disciplinary proceedings and then removed the most serious charges, a referee had recommended a three-year suspension retroactive to January 2004. The referee cited Mr. Mahoney's previously unblemished disciplinary record and history of active community involvement in her recommendation and noted he had made restitution to his clients within months of his alleged theft. The hearing panel in the case, however, urged a prospective five-year suspension on the grounds that Mr. Mahoney only made restitution after he became aware his actions were the subject of a criminal investigation. In ordering a prospective three-year suspension, the court split the difference, noting that his misconduct appeared "truly aberrational" but was nonetheless serious.

Another Greedy Lawyer Caught Up in Pension Probe

Another NY Lawyer Caught Up in Pension Probe
The New York Law Journal by Joel Stashenko - October 17, 2008

A former partner at the Albany law firm at the center of Attorney General Andrew M. Cuomo's probe of lawyers improperly enrolled in public pension systems has agreed to give back $250,000 to the state and its Common Retirement Fund. Mr. Cuomo said yesterday that E. Michael Ruberti improperly earned pension credits from 1991 to 1995 while listed as an employee of the Troy Central Schools District. In fact, the attorney general said Mr. Ruberti was employed at the Albany firm now known as Girvin & Ferlazzo and was working as an independent contractor for the district. Mr. Ruberti will give back $250,000 in pension benefits to the state and pay another $20,000 as part of his settlement, according to Mr. Cuomo. The attorney general said another $407,500 that Mr. Ruberti has received in public pension funds since his retirement in 1995 will not be affected by the settlement because the lawyer met the criteria while working for the Hamilton-Fulton-Montgomery Board of Cooperative Educational Services to properly be classified as a public employee. Girvin & Ferlazzo agreed to pay the state $500,000 under an earlier settlement in the pension investigation with Mr. Cuomo's office, and several current or former partners have also settled with the state and lost public pension payments.

Oops! $40 Million NY Judge Forgets He Lives In Connecticut

The math is simple: Wall Street Greed + Court Corruption = Financial Crisis

But first, our Oops! We had originally posted the $20 Million Judge in NYSE Grass Langone Judge Gets $20 Million $weetheart Deal

But we corrected our Oops!, in 40 Million Dollar Judge Has No Conflicts

And we did a follow up in $40 Million Reasons Not to Lie to Jonathan Lippman

And now a great article from our friends at Judicial Reports

LexPosition: Crisis? What Crisis?
Judicial Reports by Scott H. Greenfield - October 15, 2008
SHGLaw@AOL.com

A small case of judicial misjudgment draws histrionics from a tabloid and a misguided "protocol" from the court administration.  The law presents so many emergencies. Babies yearning to be returned to their mothers. Innocent men begging to be saved from the noose. But freaked-out mergers-and-acquisitions lawyers? Sorry.  With so much injustice in the world, the Daily News has decided to pick on New York County Supreme Court Justice Charles Ramos as its poster child for judicial neglect.

At issue was Citigroup’s emergency application to stop its newest potential main squeeze, Wachovia, from hooking up with Wells Fargo. For this, they knocked on the door of Justice Ramos’s weekend home in Connecticut. Ramos granted a stay. Within 24 hours, the stay was vacated because it had been issued out of State. The Daily News editorial decries the absence of a readily available Manhattan judge in an “emergency.” What emergency? “It is an understatement,” opined the News editorialist, to say that the stakes are astronomical in the battle . . . where depositors, shareholders, employees, and taxpayers deserved the highest level of judicial attention.”

And the rest of New York is chopped liver? Apparently, when there are billions at stake (that’s with a “B”), a different level of judicial attention is demanded — a drive-through judicial window should be open past midnight and on weekends.  Sure, one can question Justice Ramos for seeking a piece of the big financial crisis action and forgetting the arcane detail that he lacks the jurisdiction to render an order from Connecticut. But one could similarly be critical of the legion of well-dressed lawyers, to be paid mere millions (that’s with an “M”), for their inattention to detail when they neglected to mention the problem.

But aside from the sexy zeros involved, this was never an emergency to begin with. Nothing compelled the litigants to move so decisively or irrevocably over a weekend, or precluded them from waiting until Monday morning to seek relief. No agreement made on Saturday can’t be unmade on Monday. And if a party acts precipitously, as parties sometimes do, then the same damages could be collected on a weekday as would be available to any other contract-breacher.  The numbers were huge, but the issues were no different from any other dispute. This was a business deal gone south, not life or death.

That Justice Ramos allowed his day of rest to be disturbed, and sought to accommodate the demands as best he could, was an indication of his willingness to give the parties far more judicial attention than they deserved. The courthouse doors have never been open 24/7 before to any party for the asking, and yet the State of New York has survived.  The Daily News cites Appellate Justice James McGuire’s vacating the stay as proof of Ramos’s judicial failing. To the contrary, the reason we have appeals is to challenge a lower court’s decision. This isn’t a new concept, and every reversal, or “chuck the whole megillah” as the Daily News so colorfully describes it, isn’t a badge of shame on the judiciary. It’s the way the system is supposed to work.

But none of this explains what differentiates this attack on Justice Ramos — and the entire New York judiciary for its failure to have a judge happily waiting in the wings lest a billion-dollar deal go bust on a Saturday — from the myriad true emergencies that have happened throughout New York’s history. There’s only one outstanding feature that I can smell: The Daily News had to get a piece out on one of the most significant stories capturing the hearts and minds of tabloid readers in New York, and darn those judges for not conveniently being available before deadline. The upshot, unfortunately, is that Chief Administrative Judge Ann Pfau has issued a memorandum to address this (anomalous, mind you) media catastrophe. The current economic crisis, she said, will "foster additional emergency applications," and she cited the importance of having a "protocol in place" so that lawyers can find a judge in an "orderly" fashion during evenings, weekends, and holidays.

No doubt, judges will be clamoring for the chance to be the “go to” judge on holidays, especially when they feel the compulsion to prove that they’re worth that big, huge pay raise sent with love from Albany. Maybe not. An intake desk for the courts on the weekend is fine, but wouldn’t this latest crisis have been resolved by a standing order for weekend judges to put in a call to their Administrative Judge in (so-called) emergencies? What's more, as NYU Law Professor Oscar Chase points out, the new protocol still doesn’t mention that the judge needs to be within her jurisdiction to issue an effective order. So what happens if the AJ reaches a judge on her cellphone at the Jersey beach instead of East Hampton? One wave sounds the same as another.

While Justice Ramos praises the new protocol as a way to stop judge-shopping (which Justice Pfau says isn't a problem), the new protocol isn't a requirement, but an adjunct to the old way of calling up your favorite judge. So anyone seeking a friendly robe (which Pfau says no one is doing) can beat the system anyway.  Ultimately, the only lawyers who will avail themselves of this new system to avoid "scratch[ing] around" for a judge will be the ones who don't know where to find a friendly jurist when they need one. And if that's the case, then the litigants have a bigger emergency on their hands than they thought.

Administrative Judge Going to Blank Rome

NY Justice to Step Down, Join BigLaw
The New York Law Journal by Daniel WIse - October 15, 2008

Justice Jacqueline W. Silbermann, the deputy chief administrative judge for matrimonial matters, will leave the bench at the end of the year to become of counsel at the New York office of Philadelphia-based Blank Rome. Justice Silbermann is also the administrative judge in charge of civil cases in Manhattan Supreme Court. At age 71, Justice Silbermann is one of the few administrative judges to have served beyond 70. She has overseen the handling of matrimonial cases throughout the state since 1997 and has been in charge of the Civil Term in Manhattan since 2001.

Justice Silbermann said Chief Judge Judith S. Kaye had asked her to stay on an additional year to provide continuity in the chief judge's administrative team. Chief Judge Kaye is set to leave the bench on Dec. 31 after turning 70, the mandatory retirement age, earlier this year.

New York Times on Official Corruption

Scrubbing New Jersey Politics
New York Times EDITORIAL - October 14, 2008

Given New Jersey’s well-deserved reputation for official corruption, Gov. Jon Corzine’s proposed ethics reforms come as welcome relief. The only question we would ask is why he took so long. When he campaigned for governor three years ago, Mr. Corzine promised sweeping reforms that would once and for all change the shabby way Trenton does business. Early on, he nibbled around the edges of that pledge — persuading the Legislature to create a state comptroller to monitor government spending and to ban state legislators from simultaneously holding another elected office.

But he failed to tackle the big enchilada of official corruption New Jersey-style: the ease with which contractors seeking government business are able to skirt the law barring campaign contributions to candidates for state office. Mr. Corzine has now issued an executive order, effective in November, to block contractors from laundering their contributions to state candidates through local political organizations. A second order would prohibit these so-called pay-to-play practices at all levels of government, including municipalities and school boards. He also called for legislation prohibiting legislative leaders from using their political action committees to accept contributions from government contractors.

Mr. Corzine has acted at a time when the polls suggest that he could face a tough re-election battle next year. Ethics in government may be a major issue in the campaign, especially if the Republicans nominate Christopher Christie, the United States attorney for New Jersey, who will try to present himself as a crusader against public corruption. However tardy, and whatever the motivation, Mr. Corzine’s moves are welcome and essential. We hope New Jersey’s Legislature will now act quickly.

New York’s governor, David Paterson, has also long argued for reform of Albany’s sleazy mess. But he has done little to improve legislative ethics. We hope Mr. Corzine’s actions will inspire Mr. Paterson to move forward.

Lawyer Convicted of Tampering, Bribing Witness

Jury finds attorney tampered with witness
The Connecticut Republican American by Jonathan Shugarts - October 10, 2008

WATERBURY — After three days of deliberation, a jury Thursday found New Britain criminal defense attorney Robert Karanian guilty of bribery and tampering with a witness, but cleared him of a more serious larceny charge that could have sent him to prison for 20 years. The guilty verdict came as a shock to both Karanian and his attorney, Richard Brown, who said the decision seemed to contradict the evidence presented during the trial in Waterbury Superior Court. Brown said an appeal of the verdict is planned. Karanian, 56, is scheduled to be sentenced on Nov. 21, when he'll face up to 10 years in prison for each charge. Karanian's 28-year career also is in jeopardy, as his law license could be revoked, according to Brown.

Karanian, whose practice is based in New Britain, was arrested last year on charges he stole $12,000 from his former client, Daniel Chiulli, a convicted Rocky Hill drug dealer. Police found 7 pounds of marijuana in Chiulli's home, but through a deal arranged with prosecutors he received three years of probation for the crime. Chiulli, 41, testified that his former attorney led him to believe he needed to give Karanian $12,000 as part of that sentence and that Karanian would transfer the money as a donation to charity. Chiulli was suspicious of Karanian and secretly recorded a conversation the two shared shortly before the sentence was arranged.

According to Karanian's arrest warrant, Chiulli confronted Karanian about the money and the attorney tried to return some of it. Karanian also coached Chiulli on how to respond if investigators asked him questions about the money, according to his arrest warrant. "Here's what you say... it was a fee," Karanian can be heard saying on the recording. "I can give you something back, but I mean basically it's coming out of my pocket." That tape was played for a jury of three men and three women, who were told by Kevin Shay, a prosecutor from the Chief State's Attorney's Office, to focus on the piece of evidence when making their decision. Brown dissected Chiulli's statements to investigators during two days of testimony, trying to leave the jury with the impression that Chiulli was a schemer who couldn't be believed.

That argument may have had an impact on jurors. At about 2 p.m. on Wednesday a note was sent to Judge Jon M. Alander by the jurors, asking him if they could stop deliberating, because they had found Chiulli's testimony unreliable. Deliberations continued for an additional day, however, and a verdict was reached Thursday. "I thought the evidence was tenuous at best," Brown said. "It appeared there was reasonable doubt on all three counts." Karanian, who is married with three children, leaned forward slightly, resting his fingertips on the table in front of him as the jury foreman read the verdict. Although he had kept a calm demeanor throughout the trial, his jaw dropped slightly when the word "guilty" was spoken. "I'm shocked," Karanian said shortly after the verdict. "It seems it was contrary to the evidence."

Accused Judge Cries Government Misconduct

Defendants Salvo Back at Feds in Ga. Court Corruption Case
The ABA Journal by Martha Neil

A former Georgia judge and his wife are firing back in a federal prosecution over claimed court corruption in the Alapaha Judicial Circuit, alleging "outrageous government misconduct" in matters related to the ongoing case against them and at least nine other defendants. Specifically, lawyers for Berrien Sutton and his wife, Lisa Sutton, point in two motion filings to what a legal publication describes as "a sting in which federal agents gave marijuana to an ex-con, arranged his arrest and allegedly told him to try to bribe his way out of trouble." There is also other claimed prosecutorial misconduct, writes the Fulton County Daily Report, in an article reprinted by New York Lawyer. The two are seeking to have the charges against them dismissed or, failing that, to have the prosecutors removed from the case. The alleged target of the sting was Brooks Blitch III, former chief judge of the Alapaha Circuit, who is also a defendant in the federal case.

The Suttons are accused of honest services fraud, due to claimed overpayments for their government work. (She is a former Alapaha court administrator.) Blitch faces fraud, extortion and conspiracy charges, notes another article in the Daily Report. "Most of the indictments of other court and law enforcement personnel were drawn from federal wiretaps of Blitch's chambers in the Clinch County Courthouse," the reprinted Daily Report article states. Prosecutors either could not be reached by the legal publication for comment or declined to comment about the claimed misconduct.

Ethics Attorney Pleads Guilty in Sexual Battery Case

Outgoing Oklahoma Bar Association General Counsel Enters Plea in Biting Case
The Associated Press - October 10, 2008

A lawyer who examined misconduct allegations against attorneys for the Oklahoma Bar Association has been given a year of probation on a charge of outraging public decency. Dan Murdock entered an Alford plea to the misdemeanor count Thursday, maintaining he did nothing wrong at a June 28 wedding shower but acknowledging that Oklahoma County prosecutors had enough evidence to persuade a jury otherwise. Murdock, 62, was accused of groping and biting a woman that day at Remington Park. He originally was charged with two felony counts of sexual battery. "I understand the nature of the charges and the evidence that would be presented against me," he wrote in court papers. "I understand this evidence, if believed, could be sufficient to convict me." The woman told Oklahoma City police Murdock pulled down her blouse and bit her on the breast. The woman said Murdock also grabbed her by the hair, bit the back of her neck and grabbed her outside her clothes in her genital area.

Besides the probation, District Judge Jerry Bass ordered Murdock to undergo an alcohol assessment and perform 50 hours of community service. "He'll be speaking to people that are in therapy for alcohol abuse and the like," District Attorney David Prater said. Murdock declined comment Thursday. Attorney Tom Riesen said Murdock is pleased the case has been resolved. "This has been a very stressful time for him and he's looking forward to moving on." Murdock resigned his post as general counsel at the bar association last week, but he won't leave that job until Dec. 31. In that position, he looked into accusations of misconduct against lawyers. If Murdock were himself to face such allegations, a seven-member commission would investigate to see whether there is any merit to the claim, according to the bar association. The state Supreme Court ultimately would decide whether disciplinary action is appropriate.