Wednesday, July 27, 2011


This story first appeared on
A popular family of real-estate funds that has raised billions of dollars from small investors over the years saw sales plunge in its latest fund in June, after a securities regulator filed a complaint against the broker that markets the funds.
The unlisted Apple REIT 10, which, like other Apple real-estate investment trusts, is sold through broker David Lerner Associates Inc., raised $26.6 million in June, according to investment-banking firm Robert A. Stanger & Co., which tracks REITs through SEC filings. That compares with $51.2 million in May and $66.1 million in April.
By contrast, Robert A. Stanger noted, nontraded REITs overall raised more money in June than in the previous month.
At the end of May, the financial industry's regulating body filed a complaint against the Lerner firm, charging that the broker was misleading investors in the way it marketed the funds. Lerner has called the complaint by the Financial Industry Regulatory Authority, or Finra, baseless.
David Lerner Associates General Counsel Joseph Pickard put the blame for the sales decline on the Finra complaint, negative press and two class-action lawsuits against Lerner. One suit filed in New Jersey charged that the firm duped investors into buying Apple REITs by misstating the business model and failing to disclose risks.
Mr. Pickard said in a statement that though these products remain a viable investment option for suitable investors, the allegations involving the Apple REITs, the negative media attention, and the actions of self-interested lawyers have undoubtedly affected sales. He also said the company will defend against the class-action suits, which he called without merit.
Since 2000, the Apple family of nontraded REITs has raised about $6.2 billion, according to Robert A. Stanger.
Finra's complaint takes particular issue with the valuations of four of the Apple REITs, which have long maintained a constant share price of $11. The securities regulator questioned why Apple's valuations of its extended-stay hotels remained the same during the financial crisis, when the extended-stay hotel industry suffered a significant, material downturn.
For the June statement, the Apple funds were listed as "not priced" instead of the previous $11 valuation. Mr. Pickard said the recent stir and hoopla in other people's minds about the Apple REIT pricing contributed to DLA's decision to change the statement format.
Earlier this month, Finra indicated it had concerns with nontraded REITs that extend beyond Lerner and Apple. Typically, these unlisted funds charge higher fees than publicly traded real-estate investment trusts and pay higher dividends.
Finra is weighing new reporting rules for all nontraded REITs. Under the proposal, heavy upfront fees of about 10% would have to be reflected in valuations. And if the broker-dealer selling the nontraded REIT had reason to believe the value estimated by the REIT sponsor is inaccurate, the broker would have to remove it from its account statements.

Tuesday, July 26, 2011


Story first appeared in the Associated Press.
Stonehenge still stands in Great Britain after thousands of years. But its quirky counterpart in California's Mojave Desert appears destined for a much shorter existence.
Kim Fahey, who assembled a dozen colorful structures out of used, discarded, junked and just-plain-unwanted materials over nearly 30 years, acknowledged this week that whether his future home is in a jail cell or on a ranch just down the road, he's leaving the property the public has come to know as Phonehenge West.
The self-taught builder who constructed a 70-foot art deco tower, a barn, replicas of a 16th century Viking house and an antique railroad car among other structures, has been ordered to tear them all down because he put up each one without building permits.
He was to be sentenced Friday in Los Angeles County Superior Court on a dozen misdemeanor building code violations. He faces a maximum of a year in jail on each count, as well as substantial fines, although he could also be sentenced to probation.
As he was packing books Fahey said he is losing more interest in the place every day. He had kept most of the books in the loft area of a barn he built partly out of discarded utility poles, and which he connected to Phonehenge West's other buildings with wooden bridges resembling something out of Disneyland's Tom Sawyer's Island attraction, only more colorful.
Supporters have hailed the work as a stunning example of American folk art that should be preserved. County building officials say it is a threat to public safety and must be torn down.
Fahey, meanwhile, says he's moving to Tehachapi, a small town at the foot of California's Sierra Nevada mountain range. But the colorful, burly builder, who constructed his little village on a 1.7-acre piece of property he bought in the old California Gold Rush town of Acton, says he isn't giving up entirely. Fahey promised to appeal, and a Memphis Law Firm agrees with that choice.
In the meantime, the fate of Phonehenge West is uncertain.
Authorities say only one building, which was on the property when Fahey moved in 30 years ago, is a legal residence and the others must go. Los Angeles County Public Works spokesman Bob Spencer said it's unlikely the county would do the demolition work, however, but might hire an independent contractor.
Fahey said that in compliance with a court order he evicted six people who were living in Phonehenge West's unpermitted buildings and is shutting off power to them this week. One of his sons remains in the legal building.
Fahey was originally scheduled to be sentenced two weeks ago, but when the judge learned he had initially ignored the court order she threw him in jail and rescheduled sentencing to Friday. His family bailed him out last week.
The retired telephone company technician had minor run-ins with county officials for decades before they arrived five years ago and ordered him to stop constructing his tower. That triggered a five-year legal battle that culminated with his sentencing.


Story first appeared in the Associated Press.
A McDonald's manager in the Atlanta area is accused of punching a mother after she brought her autistic children and a service dog inside the restaurant, authorities said.
Tiffany Denise Allen is charged with simple battery, simple assault and disorderly conduct, according to a Cobb County warrant.
Jennifer Schwenker entered the McDonald's in Marietta with her twins and service dog on July 12. Allen, who was off-duty at the time, became angry that the dog was inside, the warrant states. Police say Allen followed the mother around the restaurant, then punched her in the face in the parking lot.
Surveillance video shows McDonald's employees trying to restrain their co-worker, police wrote in the warrant.
J.M. and Jan Owens, who operate the store on Bells Ferry Road, said they're cooperating with police. They added that at their McDonald's restaurant, they respect and value their customers and their safety and well-being is always a top priority.
They added that they strive to comply with all applicable laws. Crone & McEvoy helps those who want to file a suit that includes the Americans with Disabilities Act. They said it is their policy to make their restaurants accessible to all customers, including those with disabilities and special needs, whether or not they need the assistance of service animals.
A phone listing for Allen could not be located. McDonald's officials say that she is no longer employed by the Oak Brook, Ill.-based company.


Story first appeared in the Associated Press.
A group of computer hackers on Thursday claimed to have breached NATO security and accessed hoards of restricted material.
The group called Anonymous said it would be "irresponsible" to publish most of the material it stole from NATO but that it is sitting on about 1 gigabyte of data.
Anonymous posted a PDF file on its Twitter page showing what appeared to be a document headed "NATO Restricted" and dated Aug. 27, 2007.
"Hi NATO," the group teased on Twitter. "Yes, we haz more of your delicious data," hinting that more would be released in the next few days.
A NATO official, who could not be named under standing rules, said the organization was aware that a hacker group had released what it claimed to be classified NATO documents on the Internet.
The official stated that NATO security experts are investigating these claims, and they strongly condemn any leak of classified documents, which can potentially endanger the security of NATO allies, armed forces and citizens.
Anonymous is a loosely organized group of hackers sympathetic to WikiLeaks. It has claimed responsibility for attacks against corporate and government websites worldwide.
The group also claims credit for disrupting the websites of Visa and MasterCard in December when the credit card companies stopped processing donations to WikiLeaks and its founder, Julian Assange.
On Tuesday U.S. authorities announced 14 arrests in connection with December attacks on Internet payment service PayPal that were claimed by Anonymous. Two other Americans, four Dutch nationals and one Briton were arrested on suspicion of participating in other attacks against companies and organizations, U.S. authorities said.


Story first appeared in the Associated Press.
Google Inc.'s quarterly lobbying expenses surpassed $2 million for the first time as the U.S. government conducts a wide-ranging investigation into the Internet search leader's business practices.
The company spent $2.06 million trying to make its points with lawmakers and regulators during the April-June period, a 54 percent increase from $1.34 million a year earlier, according to documents filed late Wednesday.
This year's second-quarter lobbying bill is by far the largest that Google has run up since opening its Washington, D.C., office in 2005 to push its agenda. The previous high came during the first three months of the year when Google's poured $1.48 million into its lobbying efforts.
In another first, Google is now spending more on lobbying than Microsoft Corp., a fierce rival and critic that has urged government regulators to rein in Google.
Microsoft, traditionally one of the technology's industry's big spenders in Washington, put $1.85 million into lobbying during the second quarter.
Google's increased focus on lobbying comes at a time it is facing the same kind of regulatory heat that Microsoft dealt with during the late 1990s.
The U.S. Justice Department ultimately filed a lawsuit alleging that Microsoft had used its dominant Windows operating system to kill competition in the then-nascent Web browser market. That sparked a legal battle that distracted Microsoft for years and forced the company to change the way it bundled its Internet Explorer browser with Windows.
The U.S. Federal Trade Commission last month launched its own inquiry into whether Google is abusing its dominance of Internet search to funnel online traffic to its own services and drive up the prices of the ads that generates most of its revenue. European regulators opened a similar investigation into Google late last year.
Google Executive Chairman Eric Schmidt is expected to defend the company's business practices in September when he is scheduled to appear before a U.S. Senate committee that focuses on antitrust law.
The state of Internet competition was among the topics that Google lobbyists addressed during the second quarter, according to a statement filed with the U.S. Senate's secretary's office. Google discussed the matter with members of Congress, the FTC and the Justice Department, the filing said.
To help make its case, Google hired Stewart Jeffries, a former antitrust counsel for the House Judiciary Committee, this year. Jeffries was among Google's registered lobbyists in the second quarter.
Other issues covered by Google's lobbyists included: regulation of online advertising and privacy; patent reform; online security; renewable energy, international free speech and censorship; and international tax reform.
The company directed its powers of political persuasion at the Commerce Department, the executive office of the President, the Federal Communications Commission, the Department of Homeland Security and the U.S Trade Representative.


Story first appeared in the Associated Press.
Huge increases in deportations of people after they were arrested for breaking traffic or immigration laws or driving drunk helped the Obama administration set a record last year for the number of criminal immigrants forced to leave the country, documents show.
The U.S. deported nearly 393,000 people in the fiscal year that ended Sept. 30, half of whom were considered criminals. Of those, 27,635 had been arrested for drunken driving, more than double the 10,851 deported after drunken driving arrests in 2008, the last full year of the Bush administration, according to Immigration and Customs Enforcement.
An additional 13,028 were deported last year after being arrested on less serious traffic law violations, nearly three times the 4,527 traffic offenders deported two years earlier, according to the data.
The spike in the numbers of people deported for traffic offenses as well as a 78 percent increase in people deported for immigration-related offenses renewed skepticism about the administration's claims that it is focusing on the most dangerous criminals.
President Barack Obama regularly says his administration is enforcing immigration laws more wisely than his predecessor by focusing on arresting the "worst of the worst." He promised in his 2008 presidential campaign to focus immigration enforcement on dangerous criminals. As recently as May 10, Obama said in a speech in El Paso, Texas, that his administration was focused on violent offenders and not families or folks who are looking to scrape together an income.
Most of the immigrants deported last year had committed drug-related crimes. They totaled 45,003, compared with 36,053 in 2008. Drug-related crime - described as the manufacture, distribution, possession or sale of drugs - has been the No. 1 crime among immigration for years. Drunken driving was third in the number of offenses last year.
An illegal immigrant from Bolivia, Carlos Montano, is awaiting trial in Virginia on charges of involuntary manslaughter in a drunken driving incident that killed Benedictine nun Denise Mosier and injured two other nuns. The case fueled national debate over deportations of criminal immigrants because Montano had two previous drunken driving arrests, in 2007 and 2008. He was not held by ICE or deported after the arrests. An ICE report concluded that new federal immigration policies would have prevented Montano's release.
But the rise in traffic offenders in the deportation statistics and in some other categories worries immigration advocates, particularly because traffic stops are largely made by police, sheriff's deputies and state highway patrol officers. Local law enforcement has become more involved in immigration enforcement because of new programs that encourage it.
Officers are using their new authority to remove as many unauthorized people from their jurisdictions as they can, and that frequently means going after traffic violators instead of serious criminals.
Homeland Security Secretary Janet Napolitano noted that most people in the United States are arrested for misdemeanor offenses. But she said that the percentage of felons deported will change over time. She added the more serious offenders are still in prison, and they are not going to see them reflected in the numbers until they can begin to remove them.
The issue is one Obama is trying to carefully navigate in his bid for a second term as he relies on the record deportations numbers to bolster his tough-on-enforcement stance while trying to convince immigrant and Latino voters he deserves more time to get a comprehensive immigration bill through Congress.
Marshall Fitz, immigration policy director at the liberal Center for American Progress think tank, said some of the people being counted as criminals have committed traffic violations that would usually draw a traffic ticket. But when the driver can't produce a valid license, the officer pursues questions about immigration status.
Illegal immigrants caught in traffic stops often are pressured into signing an agreement to leave the United States and to pay a fine or somehow acknowledge responsibility for the traffic offense and thereby end up in the statistics as criminals even though they never went to court, Fitz said.
Kumar Kibble, Immigration and Customs Enforcement deputy of immigration, said in some cases people picked up on traffic offenses are found to have committed other crimes. But ICE attempts to categorize each deported immigrant in its statistics based on the worst crime in the person's record. ICE says the statistics involve only people who have been convicted of a crime.
Darrel Stephens, executive director of Major Cities Chiefs Association, an organization of sheriffs and police chiefs, said the data show ICE is deporting criminals. He noted that even though traffic offenses have more than doubled, they are just 7 percent of the total criminal deportations. Meanwhile, dangerous drugs and drunken driving deportations comprised 23 percent and 14 percent of the criminal deportations, respectively.
The drunken driving deportations are particularly important, he said. Fatal drunken driving accidents involving illegal immigrants often cause outrage in communities where they occur.
There are an estimated 11 million people in the country illegally, 7 million to 8 million of whom are believed to be adults.
Kibble said the numbers show his agency's system of giving priority for deportation to people who pose a public threat is working. Last year, 36,178 criminals were deported as a result of the Secure Communities program, now in place in more than 1,400 jurisdictions, up from 14 in 2008. It's expected to be in more than 3,000 jurisdictions nationally by 2013.
Secure Communities is the Homeland Security Department's system of identifying immigrants for deportation through fingerprints taken by local officers when booking people on criminal charges. The local law enforcement agencies routinely send the prints to the FBI for criminal background checks. The FBI shares the fingerprints with Homeland Security to look for potentially deportable immigrants, who can be in the country illegally or legally.


Story first appeared on the Associated Press.
Virginia's governor is livid that his famously tight-fisted state could face higher borrowing costs to build roads and schools. Maryland has put off a $718 million bond sale for three days because of the current financial uncertainty. And California plans to borrow about $5 billion from private investors next week to ensure it can cover day-to-day operating expenses should the federal government default on its debt.
As President Barack Obama and congressional leaders struggle to reach a debt-limit deal, state government leaders are bracing for the impact on their budgets and economies of a threatened Aug. 2 federal government default.
This week, Moody's Investors Service warned that it probably will lower the credit rating on five states if it downgrades the U.S. government's credit rating. The firm concluded that Maryland, Virginia, South Carolina, Tennessee and New Mexico would be most at risk.
Virginia Gov. Bob McDonnell said he is very unhappy. In fact, they are furious. The Republican pointed out that the state's triple-A credit rating has been in place since 1938, and that it potentially could be lowered through no fault of the state's.
While state officials said the actual cost of a downgrade won't break the bank, they're not happy about the possibility of paying higher borrowing costs after years of budget cuts. They also worry about the economic impact of federal employees potentially not getting paid, or the government not going ahead with contracts or being able to make Medicaid payments.
Local officials are concerned too, and the looming crisis will be high on the list of topics when dozens of mayors meet in Los Angeles on Friday at the U.S. Conference of Mayors.
Mayor Scott Smith, of Mesa, Ariz said they just feel like they are doing everything they can to get their financial house in order and yet macro forces in Washington primarily are causing them to basically spin their wheels, because even their best efforts are being undermined by indecision and uncertainty.
Moody's has said there is a small but rising risk that the federal government will default on its debt, prompting the firm to place the U.S. government's triple-A credit rating under review.
A U.S. rating downgrade would have a ripple effect on states. Moody's said any action on the states' ratings would come within 10 days.
Virginia's and Maryland's top credit ratings are at risk because they are home to large numbers of federal employees and their economies are tied to a lot of government contracts. The other states were placed under review for one or two of these factors, as well as high Medicaid spending and debt tied to variable interest rates.
Tennessee Gov. Bill Haslam, a Republican, said he wasn't too worried because he believes his state is in strong shape financially. But that impact on their debt would cause some increased interest costs. So they are concerned about it, but not overly because of the financial condition they are in.
Other governors expressed outrage this week at the failure to reach a compromise in Washington. Talks are focused on a deal to allow the Treasury department to raise the debt ceiling in exchange for spending cuts and possibly tax increases.
Maryland Gov. Martin O'Malley, who is chairman of the Democratic Governors Association, said in a recent interview that the bigger truth here is that no state is an island. He added that they are all part of the same country, and if we allow extremists in the Republican Party to drive the wealthiest country on the planet into a default on debt that's already incurred, then shame on us. There's no reason for this, and there's no state that will be shielded from this effect.
South Carolina Gov. Nikki Haley, a Republican, blamed the president saying President Obama needs to lead - it's time for him to work with Congress to pass real, long-term spending cuts, and let our economy get moving.
Top ratings are gold standards for states when they issue bonds for everything from building roads and schools to, in South Carolina's case, industrial facilities such as the one Boeing Co. is using to assemble jets.
That top rating saves South Carolina some money when it borrows, but the number is not huge. The difference between the cost to borrow money for a top-rated state and one a notch below is small - about 0.15 percent now. That would add about $75,000 to the annual interest payment tab on $50 million in bonds, or slightly more than $1 million over 15 years.
Moody's biggest concern in South Carolina was federal Medicaid payments. A reduction in those payments would blow a hole in South Carolina's budget. The state had a 10 percent unemployment rate in May, and has a poverty rate of 17 percent. The combination means about one in five South Carolina residents gets Medicaid benefits.
Linda Robinson, a 55-year-old health care worker in Columbia, S.C., worries that her patients will lose Medicaid benefits. She is concerned that they won't get proper care, then they'll be shutting them down and health care workers will be out of work themselves.
In Virginia, a downgrade from the triple-A rating would be more a blow to the state's proud reputation for sound fiscal management than to its actual finances, said Manju Ganeriwala, the state treasurer.
Ganeriwala said a downgrade would have little effect on the state's borrowing capacity or even the cost of borrowing given low interest rates.
In New Mexico, a downgrade by Moody's should have no immediate effect, according to finance officials there. New Mexico, like Maryland, only uses general obligation bonds to finance certain capital projects, and it doesn't use bonds to pay for any government operations.
Maryland's Kopp said it's hard to say how much a downgrade would cost Maryland in savings from getting the best possible borrowing rates, because it depends on how tight the market is.
O'Malley said that if governments have to undertake fewer important projects, it's a real blow to the jobs recovery.
But state officials are mindful of other potential impacts, too. Kopp wonders how default would affect federal funding for Medicaid, the state-federal program that provides health insurance for the poorest Americans.
Federal workers can also expect to feel a pinch. If there is a default or they don't reach an agreement, they are in jeopardy of not being paid. If they do reach an agreement, they are going to take some very substantial hits to their pay, their retirement and possibly even their health benefits
Also sweating the outcome are states that borrow to pay operating costs.
In California, the state typically borrows money in late summer to pay operating expenses until most income tax receipts arrive in the spring. But State Treasurer Bill Lockyer said Thursday he is seeking bids next week on $5 billion in private loans to help the state avoid a cash shortage in case the impasse in Washington isn't broken.
The treasurer's office is taking the precaution because it's unclear whether California would be able to borrow that much money if global credit markets are thrown into turmoil.


Story first appeared on the Associated Press.
James Murdoch was under pressure Friday over claims he misled lawmakers about Britain's phone hacking scandal, as a lawmaker called for a police investigation and Prime Minister David Cameron insisted the media scion had questions to answer about what he knew and when he knew it.
The presumed heir to Rupert Murdoch's media empire testified before a parliamentary committee that he was not aware of evidence that eavesdropping at the News of the world went beyond a jailed rogue reporter. But in a sign that executives are starting to turn against the company, two former top staffers said late Thursday they told him years ago about an email that suggested wrongdoing at the paper was more widespread than the company let on.
The claim brings more trouble for the embattled James Murdoch, who heads the Europe and Asia operations of his father's News Corp., as his family fights a scandal that has already cost it one of its British tabloids, two top executives and a $12 billion-dollar bid for control of lucrative satellite broadcaster British Sky Broadcasting.
Tom Watson, a legislator from the opposition Labour Party, called for Scotland Yard to look into the allegation and said it "marks a major step forward in getting to the facts of this case."
If their version of events is accurate, it doesn't just mean that Parliament has been misled, it means police have another investigation on their hands.
James Murdoch, who was not testifying under oath at Tuesday's parliamentary hearing, could face sanction if it becomes clear he deliberately misled lawmakers - but the prospect is highly unlikely. The last time the House of Commons fined anyone was in 1666.
The House of Commons no longer has the power to imprison a nonmember, but it could refer a case to the Metropolitan Police.
Still, News International, News Corp.'s British newspaper arm, said James Murdoch stood by his statement about the scandal, which exploded with revelations journalists at the News of the World tabloid hacked the phone of a 13-year-old murder victim while police were still searching for her and broadened to include claims reporters paid police for information.
That set off a firestorm which hit at the highest reaches of British society. It forced Rupert Murdoch to shutter News of the World, prompting a spate of high-profile resignations and departures at News Corp. and delivering the 80-year-old media baron and his son to be grilled before lawmakers.
Cameron, who himself has been tainted by the scandal after hiring an ex-News of the World editor, continued to distance himself from a once-cozy relationship with the Murdochs.
James Murdoch, in his testimony, batted away claims he knew the full extent of the illegal espionage at the News of the World when he approved a 700,000 pound ($1.1 million) payout in 2008 to soccer players' association chief Gordon Taylor, one of the phone hacking victims.
News International had long maintained that the eavesdropping was limited to a single rogue reporter, Clive Goodman, and the private investigator he was working with to break into voice mails of members of the royal household.
But an email uncovered during legal proceedings seemed to cast doubt on that claim. It contained a transcript of an illegally obtained conversation, drawn up by a junior reporter and marked "for Neville" - an apparent reference to the News of the World's chief reporter, Neville Thurlbeck.
Because it seemed to implicate others in the hacking, the email had the potential to blow a hole through News International's fiercely held contention that one reporter alone had engaged in hacking. If James Murdoch knew about the email - and was aware of its implication - it would lend weight to the suggestion he'd approved the payoff in an effort to bury the scandal.
James Murdoch told lawmakers he was not aware of the email at the time, but former legal adviser Tom Crone and ex-editor Colin Myler contradicted him.
The Conservative lawmaker who heads the committee, James Whittingdale, said James Murdoch would be asked in writing to clarify his testimony, but would not be recalled before the committee.
Murdoch's News Corp. is trying to keep the damage from spreading to its more lucrative U.S. holdings, including the Fox network, 20th Century Fox and the Wall Street Journal.
British politicians have felt the heat too, with the country's top two party leaders falling over each other to distance themselves from papers they once courted assiduously.
Cameron's former communications director - Murdoch newspapers veteran Andy Coulson - came under fresh scrutiny Thursday after it was reported that he did not have a top-level security clearance, which spared him from the most stringent type of vetting.
The former News of the World editor was arrested this month in connection with allegations that reporters at the tabloid intercepted voice mails. Victims included celebrities, crime victims and politicians.
Lawyers could also have been targeted, according to The Law Society. It said solicitors had been warned by police that their phones may have been hacked by the paper.
Scotland Yard, accused of failing to properly investigate the scandal for years, has also been asked to investigate another explosive claim: That journalists bribed officers to locate people by tracking their cell phone signals.
The practice is known as "pinging" because of the way cell phone signals bounce off relay towers as they try to find reception. Jenny Jones, a member of the board that oversees the Metropolitan Police Authority, called for the inquiry into the alleged payoffs by journalists at the News of the World.


Story first appeared in Bloomberg News.
Oracle Corp.’s $6.1 billion damage estimate in its patent infringement lawsuit against Google Inc. over the use of Java technology in the Android operating system was thrown out by a federal judge.
U.S. District Judge William Alsup in San Francisco ruled yesterday that a new damage estimate should start as low as $100 million, a figure Google was offered, and rejected, in 2006 to license Java from Sun Microsystems Inc., before Sun was acquired by Oracle, according to a court filing. The $6.1 billion estimate assumed that all of the seven patents Oracle is suing over were used in Android and the company didn’t present sufficient facts to support that, Alsup said. A Krakow Intellectual Property Lawyer watched the case unfold.
Alsup said in his written ruling that the court is strongly of the view that the hypothetical negotiation should take that $100 million offer as the starting point.
Oracle, the largest maker of database software, sued the Internet search-engine company last year, claiming Google didn’t obtain a license for the patents infringed by Android. Besides seeking damages, Oracle wants the court to order destruction of all products that violate its copyrights.
A trial is scheduled for Oct. 31. Deborah Hellinger, an Oracle spokeswoman, and Aaron Zamost, a Google spokesman, declined to comment on the ruling. A Leeds Intellectual Property Lawyer finds this interesting.
‘A Substantial Possibility’
Alsup said that if a jury determines that Oracle’s patents were infringed, there is a substantial possibility Google will be ordered to permanently stop selling any infringing products. A new damage estimate should address assumptions that an injunction may be granted and can be based on a portion of Google’s advertising revenue garnered from Android devices, he said.
The $100 million starting point can be adjusted upward to assume that all parts of the patents that Oracle cited in its complaint are valid and infringed, Alsup ruled.
Oracle’s new damage report is due 35 days before an Oct. 17 pretrial conference, Alsup said. A Taipei Intellectual Property Lawyer will be interested about the ruling.
Google, based in Mountain View, California, denies infringing and asked Alsup at a July 21 hearing to throw out Redwood City, California-based Oracle’s damage estimate.


Story first appeared on
Google Inc. has made changes to the way its search engine displays information about local businesses, a move that follows the disclosure of a U.S. antitrust investigation of its business practices.
The company said it removed snippets of customer reviews that were taken from other Web firms for its Google "Places" service, which has millions of pages for local businesses. Google's practices have drawn fire from some of those Web companies, and are believed to be among the issues the Federal Trade Commission is investigating.
Since last year, TripAdvisor, Yelp and Citysearch—sites with local-business reviews generated by their visitors—have complained Google effectively stole their content and posted it on Google's own pages. Google Places competes with those sites and provides information on millions of restaurants, hotels and other businesses, including store hours, location and photos.
Following Thursday's change, Google Places showed a marked decline in the number of reviews listed for some businesses. For example, Keens Steakhouse in New York displayed 60 reviews Friday, compared with more than 3,000 last month.
While some rivals welcomed the change, they continued to support the antitrust investigation into Google and complained the company still gives preferential placement to Google Places over links to their sites in search results.
Stephen Kaufer, TripAdvisor's chief executive, said in an interview Friday he will continue to object to Google's promotion of Places pages above TripAdvisor and other competitors.
Mr. Kaufer said he has responded to requests for information from the FTC that included questions about the service. He said the agency also asked questions about Google's search-advertising business as well as how Google is leveraging its dominance as a search engine to promote other Google services. He didn't elaborate.
Vince Sollitto, a Yelp spokesman, said Google had essentially been building its business on the back of others' efforts. He stated that it's too bad it took an antitrust investigation for them to do something people have been clamoring for for more than a year.
Google, which hasn't been accused of wrongdoing by the FTC, has denied anticompetitive practices while stating that it creates services to benefit users rather than other websites. Copyright lawyers have said Google's use of reviews from other sites could potentially be protected under the so-called fair-use doctrine, which Google has cited as a reason it can excerpt news articles in its Google News service.
Earlier this year, a Google product management director said in an interview that Places helps users reach sites such as Yelp and TripAdvisor because each excerpt includes a link to the source of the content. He said Google wants to shuttle you to the best sources as quickly as possible.
In its blog post Thursday explaining the changes to Places, Google doesn't mention the FTC investigation, which the company disclosed last month. A Google spokeswoman declined to comment on Friday.
Avni Shah, director of product management, commented in the post that based on careful thought about the future direction of Place pages, and feedback they have heard over the past few months, review snippets from other web sources have now been removed from Place pages.
The company launched Places in April 2010 as an improvement to the prior business listings displayed by its search engine. Besides posting excerpts of reviews from other sites, the service aggregated multiple reviews from Yelp, TripAdvisor and other sites to produce a kind of average review score for individual businesses.
Over the past year, however, Google has been able to get more of its own users to write reviews. Ms. Shah said the service will be changed so that rating and review counts reflect only those that've been written by fellow Google users.
Google sells some ads on individual Place pages, which creates a connection between the company and merchants around the world.
Links to the pages often appear near the top of the search results page when people search for information on local businesses, in part because they aren't subject to the same Google algorithm that ranks other websites in search results.
Google Places links often are ranked above links to Yelp, TripAdvisor and UrbanSpoon and Citysearch, which are owned by IAC.
Since last year those sites have called on Google to stop posting excerpts of their user-generated reviews and to stop directing Google users to Places rather than their sites. Part of the FTC's antitrust probe of Google involves such complaints by Google's competitors, people familiar with the matter have said.
TripAdvisor's Mr. Kaufer said Google's move Thursday is a positive sign, but he’d love for them to come out with a statement that 'we promise not to do it again."' He said Google was stealing their content to create a competitor to TripAdvisor and other local-business information sites.
Mr. Sollitto, of Yelp, said the alleged preferential ranking that Google gives to its own services, such as Places, continue to warrant the numerous investigation into Google's practices.


Story first appeared in Bloomberg News

Joe Cioffi, a physician from Fairfield, Connecticut, settled for visitation rights to his son after he and the boy’s mother split up. Soon, he decided that wasn’t enough, so he spent four years struggling to win primary custody.

Cioffi felt that concerning his clash with his former girlfriend he shouldn’t be the underdog. He added that he is a professional, pays his bills, he isn’t a criminal, and he is home at night, so he decided to play harball with the situation.

Cioffi’s custody victory and living arrangement encapsulate two distinct changes driving a 27.3 percent jump in U.S. families led by single fathers in the past decade, according to figures released from the 2010 census. While the number of single dads remains small, greater acceptance of shared custody and more unmarried couples have altered traditional ideas of child rearing, demographic experts said.

One professional claimed it’s time for us to stop assuming that single parents are always women, because there is a visible presence now of single men caring for their kids. We didn’t see that a few decades ago.

Single dads now account for 8 percent of American households with children, up from 6.3 percent in 2000 and 1.1 percent in 1950, census data show. Cioffi’s community has outpaced the national rise in households led by single fathers. (His former girlfriend, through her attorney Janis Laliberte, declined to comment for this story.)

Single-Father Surge

The number in Fairfield County rose 31 percent during the decade, to
5,457 from 4,167, three times the growth in single mothers, who were up 10.1 percent to 21,811, according to the census. Fairfield, which has 335,545 total households, is one of the wealthiest counties in the nation with a median household income of $81,114.

Male same-sex households with related children are a small portion nationwide and in Connecticut, where they made up 828 of the state’s
1,371,087 households in 2010.

As fathers have gotten more involved in the lives of their children and mothers have increasingly entered the workforce, it has become less unusual for fathers to seek and gain custody.

If the dad is really interested in getting custody and wants to have a relationship with his kids, he is far more successful than he was 20 years ago.

Hoosier Daddies

Indiana passed the first state law in the U.S. favoring joint parenting in 1973. Before then, the mother was presumed the better caregiver and entitled to legal custody of the children. Unless the mother was dead or in jail or mentally ill, the father typically wouldn’t get the child.

Every state has since passed laws favoring some kind of joint parenting. Few have gone as far as Oregon, which approved a law in 1997 that gave joint physical custody the presumption.

A recently published analysis of Oregon divorce records by Brinig showed that sole custody awarded to mothers dropped to 51 percent from
68 percent in the five years after the law took effect.

Even with weaker laws, other states showed big gains for fathers getting custody of children. The most significant growth period may be past. Between 1990 and 2000, the number of single fathers grew by 37.9 percent, greater than the 27.3 percent increase between 2000 and 2010, according to the census.

Amicable Agreement

Matt Abourezk, 49, a single father in Darien, Connecticut, said the idea of only occasional contact with his two sons was unthinkable. He and his ex-wife readily agreed to trade weeks with the children. He felt two weeks was an awful long time to not see his kids.

The rise in the number of single fathers also likely reflects an increase in the number of unmarried couples living together, according to Mark Mather, a demographer at the Population Reference Bureau, a Washington-based research group.

The fact that cohabitation rates have increased means that a lot of these single dads we’re seeing could be living with a partner. They may be living with them or may have a relationship.

Cohabitation rates more than doubled to 7 percent nationwide between
1995 and 2010, according to a Pew Research Center analysis of census figures. In Connecticut, 6.6 percent of the 1.4 million households are unmarried partners.

Broader Shift

The growth in single fathers remains a small percentage of the larger shift away from the traditional family. The majority of single parents are still mothers. They head 7.2 percent of all American households, not just those with kids, compared with 2.4 percent of those households led by single fathers, according to census figures.

As women have entered the workforce in larger numbers, they continue to do more of the parenting and still end up spending more time with the kids.

Between 1965 and 2000, men more than doubled the time they spent playing with and teaching their children, from 2.5 to 6.5 hours a week, according to a 2007 study by the Russell Sage Foundation, a New York-based social-science research organization. Mothers spent almost double that amount engaging in such activities, or 12.9 hours a week, in 2000.

Even some fathers who have won a greater share of child custody say that mothers are better caregivers.


Story first appeared in Bloomberg News

Credit Suisse Group AG’s former head of North America offshore banking, Markus Walder, was among seven bankers charged with conspiring to help clients in the U.S. evade taxes through secret bank accounts.

The seven bankers and an eighth executive were charged yesterday in an amended indictment in federal court in Alexandria, Virginia. Four of the Credit Suisse bankers were previously charged. The new defendants include Walder, Susanne D. Ruegg Meier, a former Credit Suisse manager, and Andreas Bachmann, another former banker at the Zurich- based lender, Switzerland’s second largest.

The indictment increases pressure on Credit Suisse, which said July 15 that the Justice Department notified it that was a target of a criminal probe over former cross-border private banking services to U.S. customers. The U.S. is pursuing banks, bankers and advisers that encouraged American taxpayers to hide accounts from the Internal Revenue Services.

According to the indictment managers and bankers working in the cross-border business knew and should have known that they were aiding and abetting U.S. customers in evading their U.S. income taxes.

Walder, a Swiss resident, supervised teams of private bankers in Geneva and Zurich who worked in an unregistered private banking business in the U.S., and was a senior manager in a business registered with the U.S. Securities and Exchange Commission, according to the indictment.

$3 Billion in Assets

Walder and others helped U.S. customers evade income tax through accounts not declared to the IRS, according to the indictment. In the fall of 2008, the bank maintained thousands of secret accounts for U.S. customers with as much as $3 billion in assets, according to a Justice Department statement.

The indictment traces how the bankers helped 35 American customers hide their funds in undeclared bank accounts. One of the accounts was opened in 1953 by a resident of Elizabeth, New Jersey, by an individual identified only as “customer 26.” That person died in 1998 and the account was taken over by another Credit Suisse customer, the indictment said.

The bank said in a statement yesterday that Credit Suisse is committed to a fully compliant cross- border business and that subject to their Swiss legal obligations and throughout this process they will continue to cooperate with the U.S. authorities in an effort to resolve these matters.

Already Charged

Those bankers already charged on Feb. 24 were Marco Parenti Adami, Emanuel Agustoni, Michele Bergantino and Roger Schaerer. They live in Europe and have not appeared yet in U.S. court.

The indictment yesterday also named Josef Dorig, the chief executive officer of a trust and asset management company owned by the bank.

Separately yesterday, federal prosecutors in New York accused Beda Singenberger, 57, a Swiss financial adviser, of conspiring with more than 60 U.S. taxpayers to hide more than $184 million in offshore accounts.

According to the indictment against the Credit Suisse bankers, while operating an illegal U.S. cross-border business, the bank made false filings to the Federal Reserve in 2005 and 2007 that sought to conceal its participation in the tax-evasion scheme.

The bankers also used three Swiss private banks, a Swiss cantonal bank and two asset management firms to help U.S. taxpayers hide accounts from the IRS, according to the indictment.

In 2008, U.S. prosecutors conducted a probe into whether UBS AG, Switzerland’s biggest bank, helped Americans evade taxes. In February 2009, the U.S. criminally charged UBS with aiding tax evasion by U.S.

Data to IRS

UBS avoided prosecution by paying $780 million, admitting it fostered tax evasion, and giving the IRS data on more than 250 accounts to avoid criminal prosecution. It later turned over data on another 4,450 accounts. In October, the U.S. dropped its criminal case against UBS.

The U.S. filed a civil action in April against London-based HSBC Holdings Plc, the largest European bank by assets, seeking information about U.S. citizens who may have banked in India to hide accounts from the IRS.

In the past two years, prosecutors have filed criminal tax charges against more than two dozen UBS clients, four UBS bankers, four other alleged offshore enablers and several other clients of Credit Suisse and HSBC.

IRS Changes Innocent Spouse Rule

Story first appeared in USA TODAY

The IRS said Monday that it will make it easier for some taxpayers who were unaware of their spouse's tax misdeeds to seek innocent-spouse relief.
The "innocent-spouse rule" allows taxpayers to seek relief from their spouse's tax debts, even if they signed a joint return. In the past, the IRS has required taxpayers to file for relief within two years after a collection notice. The deadline has prevented taxpayers in the dark about their spouse's tax debts from seeking relief, the IRS taxpayer advocate and legal aide attorneys said.
On Monday, IRS Commissioner Douglas Shulman said the IRS is eliminating the deadline for taxpayers who seek innocent-spouse status under the "equitable relief" provision. This type of relief is often sought by taxpayers who were victims of domestic abuse, the IRS said.
The rule change will apply to cases that are pending before the IRS, Shulman said. Taxpayers whose applications for relief were rejected because of the two-year deadline can reapply and the IRS is being as flexible as they can.
Obtaining innocent-spouse relief is difficult, even for taxpayers who file on time. The IRS receives more than 50,000 innocent-spouse applications a year and grants fewer than half. About 2,000 requests are denied each year because of the two-year deadline, according to the IRS.
To obtain innocent-spouse relief, taxpayers must prove to the IRS that they didn't know, or have reason to know, that their spouse underpaid income taxes. The IRS will also consider factors such as the taxpayer's education and the couple's financial situation.
Rep. Pete Stark, D-Calif., said the rule change removes an arbitrary obstacle for innocent spouses, primarily women, and helps us move toward a more equitable tax system.
IRS Taxpayer Advocate Nina Olson called the rule change a welcome occasion where everybody has emerged a winner.

Wednesday, July 20, 2011


Lawmakers and enforcement agencies called for hearings and further investigation Tuesday after learning that the illegal practice known as robo-signing has continued in the mortgage industry.
The Associated Press reported on Monday that county officials in at least three states - Massachusetts, North Carolina and Michigan - say they have received thousands of mortgage documents with questionable signatures since last fall. That's when forged signatures and false affidavits - also called robo-signing - led to a temporary halt to foreclosures. Banks and mortgage processers promised to stop the practice. But the findings of the county officials indicate that robo-signing is still a widespread problem.
Sen. Sherrod Brown, D-Ohio., chair of the Financial Institutions and Consumer Protection Subcommittee, said the subcommittee will hold a hearing on the robo-signing issue.
Wall Street and some in Washington want the public to believe that robo-signing is a thing of the past, but the same risky practices that put our economy on the brink of collapse continue to infect the housing market.
Rep. Maxine Waters, D-Calif., a senior member of the House Committee on Financial Services said the lenders who continue the practice need to be investigated and prosecuted. She believed regulators should step in and that the absence of stronger regulation is the reason why the system broke down in the first place" She said the county officials' findings show lenders will not stop
County officials, who are responsible for keeping land records, including property deeds, say that they have received thousands of robo-signed documents filed in their offices since October.
In Essex County, Mass., the office that handles property deeds has received almost 1,300 documents since October with the signature of "Linda Green," but in 22 different handwriting styles and with many different titles.
In Guilford County, N.C., the office that records deeds says it received 456 documents with suspect signatures from Oct. 1, 2010, through June 30. And in Michigan, a fraud investigator who works on behalf of homeowners says he has uncovered documents filed this year bearing the purported signature of Marshall Isaacs, an attorney with foreclosure law firm.
Early Tuesday, an official from the office of Minnesota attorney general, Lori Swanson, contacted the Essex County's John O'Brien to get more information for its own investigation into robo-signing. The Massachusetts attorney general's office also confirmed that it is meeting with several of the state's 21 registers of deeds to assess the extent of robo-signing in the state.
Also on Tuesday, nine recorders of deeds in Illinois held a press conference to say they will assist the state's attorney general Lisa Madigan who is investigating robo-signing in her state.
Rep. Waters, meanwhile, says the Office of the Comptroller of the Currency, or the OCC, is the main federal regulator for banks. As such, it's the OCC's responsibility to investigate the banks.
The OCC has been criticized by lawmakers and consumer advocates for going easy on banks in the past. The same criticism has resurfaced since the robo-signing scandal broke in September. Last fall, The Associated Press found that robo-signed documents led to banks wrongfully foreclosing on people who had paid their mortgages in full. When asked about the issue, an OCC spokesman flatly denied that any such thing had ever occurred.
The OCC partnered with other federal regulators and conducted a review of bank procedures including robo-signing in December. In April, the 14 largest national banks entered into a consent decree with the OCC in which they vowed to submit action plans as to how they would address such systemic issues as robo-signing.
Last week, the banks delivered those action plans to the OCC, which is now reviewing them, a spokesman said.

Tuesday, July 19, 2011


We’ve all had obnoxious neighbors. The stoners who play music too loud, the dysfunctional lovers who are always yelling at each other… it’s part of life.
Most of us, though, have not lived next door to our own personal cyber-terrorist. Minnesota attorney Matthew Kostolnik has.
His neighbor launched a calculated campaign to terrorize his neighbors, doing whatever he could to destroy the careers and professional reputations of Matt and Bethany Kostolnik, to damage the Kostolniks’ marriage, and to generally wreak havoc on their lives.
On Tuesday, the man who published child pornography and sent a death threat to Joe Biden, all under Kostolnik’s name, was sentenced to 18 years in prison.
Barry Ardolf, 46, repeatedly hacked into his next-door neighbors’ Wi-Fi network in 2009, and used it to try and frame them for child pornography, sexual harassment, various kinds of professional misconduct and to send threatening e-mail to politicians, including Vice President Joe Biden.
Problems started the day the Kostolniks moved into their new house in Blaine, a Minneapolis suburb. Ardolf allegedly kissed Matthew’s four-year-old son on the lips after the boy wandered into Ardolf’s yard. The understandably concerned parents reported their neighbor to the police, setting in motion a nightmare ordeal.
Ardolf downloaded Wi-Fi hacking software and spent two weeks cracking the Kostolnik’s WEP encryption. Then he used their own Wi-Fi network to create a fake MySpace page for the husband, where he posted a picture of a pubescent girl having sex with two young boys. Under the “about me” section, he wrote:
“I bet my coworker that since I’m a lawyer and a darn great one that I could get away with putting up porn on my site here. I bet that all I have to do is say that there is plausible deniability since anybody could have put this on my site. Like someone hacked my page and added porn without my knowledge. This is reasonable doubt. I’m a darn good lawyer and I can get away with doing anything!”
He then e-mailed the same child porn to one of the husband’s co-workers, and sent flirtatious e-mail to women in Mr. Kostolnik’s office. “You are such a fox,” read one of the e-mails. He sent the message’s through the husband’s genuine e-mail account.
But that’s not all. A few months later this poor guy got a surprise office visit from the Secret Service:
[I]n May 2009, the Secret Service showed up at Kostolnik’s office to ask about several threatening e-mails sent from his Yahoo account, and traced to his IP address, that were addressed to Biden and other politicians. The subject line of one e-mail read: “This is a terrorist threat! Take this seriously.”
“I swear to God I’m going to kill you!,” part of the message to Biden said.
Thankfully, Kostolnik’s firm hired a forensics investigator to look into the situation, and the investigator found data pointing to Ardolf.
One thing led to another, the FBI got a search warrant, and they found a LOT of evidence in Ardolf’s house: hacking manuals, handwritten notes laying out his revenge plans, mail stolen from the Kostolniks’ mailbox, the pornographic image posted on MySpace and sent to the husband’s co-worker, and evidence of similar harassment against another neighbor.
Not sure what the lesson is here regarding technology, privacy or practicing law. It’s just nice to see, in the end, the good guys on top and the bad dude behind bars, thanks to the operation of the justice system.


Earlier it was reported that somebody was looking to Craigslist for potential plaintiffs to sue Thomas M. Cooley Law School over the school’s published post-graduate employment statistics. As many of you know, Thomas Jefferson School of Law has already been hit with with a similar lawsuit.
Well, apparently Cooley isn’t going to sit around and wait for somebody to sue them. Instead, the school is going to sue first.
A message from Cooley president Don LeDuc informed students that Cooley is suing a New York law firm and four anonymous “John Doe” commentators on the internet. We haven’t seen the lawsuit, so we don’t know exactly who the school is suing. According to LeDuc, Cooley is not trying to police the internet. Instead he says the school is trying to defend its reputation and the value of a Cooley Law degree.
Here are some excerpts from the President to the students:
Cooley filed two lawsuits in Ingham County today.
The first lawsuit is against a small New York law firm. Our suit contends that the firm has defamed us and tortuously interfered with our student relationships, and that the firm and two of its lawyers have been unethically soliciting former and present Cooley students to join in a class action lawsuit against us. At our insistence, the firm previously retracted blatantly false online statements about Cooley, but only days later the firm moved their focus to Craigslist and Facebook, where they began circulating a draft complaint filled with more false and damaging statements about Cooley.
The second lawsuit is against four John Doe defendants. As with the law firm defendants, we contend the Doe defendants are defaming Cooley online and tortiously interfering with our student relationships through a series of false, damaging, and often vulgar statements in Internet blogs and comments to those blogs and other sites.
Two main falsities run through the defendants’ online statements.
First, the bloggers state that Cooley is engaged in student loan fraud and stealing tuition money. They say we are secretly employed as bankers, not professors, who are engaged in the fraudulent sale of student loans. We are called criminals and said to be under investigation by two federal agencies.
Second, the law firm defendants falsely state that we are fraudulently hiding a preposterous 41% student loan default rate and fraudulently reporting and misrepresenting our post-graduation employment and salary numbers, misleading students into attending law school.
The actual facts are as follows.
Default rates — Student loan default rates are calculated by the U.S. Department of Education’s Default Prevention and Management Office. We are not involved in their calculation. Cooley’s most recent default rate was 2.2%. While the rate is slightly higher than in the previous four years, it is the same as it was in 2001, and is lower than our default rate in the mid-to-late 1990s, during the last recession. The most recent national average default rate was 7.0%.
The past five years Cooley had overall default rates of 1.5%, 0.8%, 0.8%, 0.7%, and 2.2%. The rates for Cooley graduates during the same years were 0.6%, 0.1%, 0.1%, 0.1%, and 0.6%. As you can see from above, even at the most recent 2.2%, Cooley’s default rate is very low compared to the national default rate.
The defaulters are predominantly students who did not graduate. In the past five years, only 16 graduates entered into default. The other 55 defaulters in that time did not graduate, and are likely to have lower student loan debt totals in default. Not all of our students have loans, but of the current graduates who do, the average indebtedness is approximately $105,000.
The defendants’ statements about manipulation of students to obtain loans, selling loans, or having employees who are really bankers are just bizarre. We have never been investigated regarding irregularities in our loan program by any governmental agency.
Employment data — We have reported our employment data exactly as required by the American Bar Association and the National Association for Law Placement.
The reported figure we use publicly is the number that the ABA publishes in its Official Guide to ABA-Approved Law Schools. We are required to submit this information in a specific format that includes the number and percentage of graduates employed among those whose status is known. In the 2011 Official Guide, Cooley’s reported employment rate was 78.8%.
We have never manipulated the data or attempted to mislead anyone. No school I know of, Cooley included, makes any promise or commitment about jobs for graduates, other than to say it provides placement counseling and assistance to graduates seeking to get jobs. And, of course, all who pass the bar are equipped with the necessary skills to begin a solo practice, in which they may work as lawyers if they are willing to make the effort required to be successful. In that sense, law students graduate with the means to begin working for themselves almost immediately — something that cannot be said for most other professions.
The entire conversation about employment in the law and legal occupations is almost entirely wrong:
1. According to the Bureau of Labor Statistics (BLS), the unemployment rate among lawyers in 2010 was 1.5%, for those in all legal occupations it was 2.7%, and for all occupations it was 9.6%, which drops to 8.9% when those who have never been in the labor market or are returning from military service are excluded.
2. The 2.7% unemployment rate for legal occupations, including lawyers, was better than the rate for all other occupations in the BLS category of management, professional, and related occupations except for health care practitioners and technician occupations (2.5%). This data shows that becoming a lawyer is a better choice for those considering a career, not a worse choice.
3. According to the National Association of Law Placement (NALP), the preliminary unemployment rate for the 2010 graduates of the 192 ABA-approved law schools that reported data to NALP was 6.2%, about the same as it was in 2002.
4. Cooley’s unemployment rate for 2010 was 17.05%, slightly higher than it was in 2002. Like the national rate, Cooley’s rate fell during the decade until the recession, when it bumped up. This reflects unemployment among the graduating class in 2010 and includes those who did not pass the bar on the first try and those who did not attempt a bar examination.
While it would not be appropriate for me to publicly discuss our entire legal strategy, rest assured that we have given much consideration to these actions, and our Board has agreed that legal action is necessary to protect and defend the school’s reputation and the value of your degree. We could have done nothing, but then we risk being sued by the defendant law firm, and the media would then report only the false and defamatory hyperbole stated in the draft complaint that the firm has been circulating on Facebook and advertising on Craigslist.
We are not suing anyone for expressing a negative opinion about Cooley online, and we are not attempting to police the Internet. We believe these particular defendants have crossed the line both legally and ethically, calling us criminals who deceive our students and steal their tuition money, and ascribing to us fraudulent student loan activities and default rates that, if true, would cause either the Department of Education or Department of Justice to shut us down immediately.
In short, we’ve determined that we need to protect Cooley’s reputation and stand up for our students and more than 15,000 graduates. And we continue to look at ways to counter the negative comments with positive comments about us, including online.
Thanks for your support.


Rebekah Brooks's arrest on Sunday thrust a former top newspaper official at News Corp. into the heart of a criminal investigation into dubious reporting tactics and alleged police corruption. But any charges she might face are likely weeks or months away—if charges are ever filed at all.
That is because the English legal system can use an arrest as an early step in a criminal investigation. That's a contrast to the U.S., where charges often follow closely on the heels of an arrest, experts say.
In Britain, an arrest is often an initial means of gathering evidence from a suspect before charges are brought.
Ms. Brooks was released without being charged around midnight on Sunday, after about 12 hours. A spokesman for Ms. Brooks said she is assisting police.
When Ms. Brooks was arrested Sunday, she formally moved to a suspect from a witness in the probe of phone-hacking and bribery allegations involving News International, the U.K. newspapers unit of News Corp. As a formal suspect she is guaranteed certain rights; in addition, the refusal to answer questions during her arrest can later be used against her if she later provides responses during a trial, according to legal experts.
Once people are questioned, any evidence will be put in the hands of the Crown Prosecution Service, which prosecutes criminal cases investigated by the police in England and Wales, and which will decide what the charges, if any, are brought.
Police and prosecutors will be looking at what did she actually know? And was she negligent in her oversight of what was going on? But she almost certainly won't be charged at this stage, one source said.
As of Sunday, it was still possible that she would appear before a parliamentary committee on Tuesday for a hearing on the case. If she is charged, however, she wouldn't be able to give public evidence because it could prejudice the trial.
Also unlike the U.S., the U.K. doesn't formally use plea bargaining when it comes to charges, with rare exceptions, legal experts say. It can be invoked when it comes to sentencing, although usually informally, they said. This could limit the ability of prosecutors to extract information on other News Corp. executives from Ms. Brooks since they cannot offer her leniency in exchange, legal experts say.
Conversely, Ms. Brooks will be less able to shield herself from serious charges in exchange for cooperation, a common practice in the U.S.
Generally it is up to the prosecution to decide charges. "It is not something she can negotiate—it is out of her hands.
News Corp. also owns The Wall Street Journal.

Thursday, July 14, 2011


Connecticut became the first state in the nation this month to mandate paid sick days for workers, a move advocates say could be a catalyst for similar campaigns in 20 other cities and states considering such a benefit.
Bartenders, librarians, dental hygienists and other service workers in Connecticut are poised to earn paid sick time at the start of 2012.
While San Francisco and Washington, D.C. currently guarantee paid sick days for workers, with some minor variations in the laws, Connecticut is the first state to follow their lead.
The move is being watched closely by Massachusetts and California and the cities of Philadelphia, Seattle and Denver, all of which are considering similar legislation or have active campaigns underway.
Advocates say paid sick days reduce public health risks and provide job security for workers who need time off to care for themselves or a sick family member at relatively minimal cost to employers. Opponents say the costs are unaffordable.
One side stated that the basic reality is that there are 40 million people in the United States that don't have paid sick days. They risk being fired or disciplined if they are sick, a child is sick, or a family member needs medical care.
In Connecticut, service workers will accrue one hour of paid sick time for every 40 hours worked that can be used after having been employed a certain amount of time. They must work, on average, at least 10 hours a week and can accrue up to five days.
Some estimates show the cost to employers that currently provide no sick days would be a small fraction of sales. Proponents note that studies show typical workers will use far fewer than their allotted sick days.
The bill, passed by legislators earlier this summer, covers only service workers paid by the hour at firms with more than 50 employees, excluding manufacturers and some others.
Despite the limitations, advocates say the law is an important catalyst for burgeoning campaigns to mandate sick pay elsewhere. There are roughly 20 cities and states moving toward such a requirement.
Connecticut Governor signed the bill on July 1 and has long supported the paid sick leave mandate.
Those opposed argue the costs, which could vary substantially across business sectors, are too high. Some business groups say it will drive up labor costs.
Employers, particularly small businesses such as restaurants or hair salons, will be hard-pressed to find the money for those added benefits, they say. A still-sputtering economy amplifies the challenge.
For employers to comply, it could mean passing higher prices on to consumers or reducing employee wages and benefits in other ways.
One side feels Connecticut employers are already a generous bunch, and this mandate puts the state at a competitive disadvantage in attracting new businesses.

Wednesday, July 13, 2011


The Los Angeles Dodgers filed for bankruptcy protection on Monday, blaming Major League Baseball for rejecting a television deal that would have given the storied baseball team an urgent injection of cash.
The filing marks a dramatic attempt by Dodgers owner Frank McCourt, who is embroiled in a bitter divorce from his ex-wife, to prevent the league and MLB Commissioner Bud Selig from seizing the team, which McCourt bought in 2004.
In a court filing, the team said it had been on the verge of running out of cash but that the Chapter 11 filing will allow it to meet payroll, sign players, pay vendors and continue playing baseball.
It is becoming rather clear and likely inevitable that Frank McCourt will end up selling part or all of the franchise. The back-and-forth between him and Major League Baseball leaves them where they won't be able to coexist much longer.
Selig responded to the bankruptcy filing with a statement blaming the Dodgers' financial woes on McCourt's excessive debt and his diversion of club assets to address personal needs. He said his goal from the outset has been to ensure that the Dodgers are being operated properly now and will be guided appropriately in the future for their millions of fans. He feels the ideas and proposals that he has been asked to consider have not been consistent with the best interests of Baseball.
On June 20, the league vetoed the Dodgers' proposed $3 billion, 17-year television contract with News Corp's Fox Broadcasting Co, saying it ran contrary to the best interests of the team, the game and fans.
The deal promised an upfront payment to the Dodgers of $385 million, but Selig has criticized the proposed use of part of that money to fund McCourt's divorce.
McCourt has said the payment was crucial to the team's health. According to a court filing, the Dodgers need to pay or set aside more than $28 million for payroll by July 1.
McCourt said that they brought the commissioner a media rights deal that would have solved the cash flow challenge that he presented to him a year ago. McCourt feels that Selig has turned his back on the Dodgers, treated them differently, and forced them to the point they find themselves in today.
Forbes magazine in March ranked the Dodgers as baseball's third-most valuable team, worth $800 million. That is more than twice what McCourt paid, and trails only the New York Yankees and Boston Red Sox, it said.
Monday's filing punctuates a stunning fall for one of baseball's marquee teams, whose roots date to 1884 when it played in New York as the Brooklyn Atlantics.
The team became the Dodgers permanently in 1932, and broke Major League Baseball's racial barrier when Jackie Robinson began playing in 1947. It began playing in Los Angeles in 1958 and has called Dodger Stadium home since 1962.
This year, the team has a 35-44 record and has seen home attendance decline sharply. The Dodgers have won six World Series championships, but none since 1988.
Selig took over day-to-day control of the Dodgers in April amid worries about team finances, and security concerns that followed a brutal Opening Day beating of San Francisco Giants fan Bryan Stow in the Dodger Stadium parking lot.
Monday's filing comes less than a year after the Texas Rangers baseball team emerged from bankruptcy, owned by a group that includes Hall of Fame pitcher Nolan Ryan.
Another marquee franchise, the New York Mets, is also overloaded with debt, and its owners, face a $1 billion lawsuit by the trustee seeking money for victims of Bernard Madoff's Ponzi scheme.
The owners are in talks to sell part of that team to hedge fund manager David Einhorn for $200 million.
Other teams to file for bankruptcy in recent years include the Buffalo Sabres and Phoenix Coyotes of the National Hockey League.
The Dodgers arranged a $150 million, one-year financing from lenders so the team can operate normally while in bankruptcy. The variable interest rate on the loan would be at least 10 percent, and the team could draw $60 million immediately and $90 million later.
The Dodgers' filing in the U.S. bankruptcy court in Delaware shows between $500 million and $1 billion of assets and between $100 million and $500 million of liabilities.
Four other related entities also filed for protection from creditors, including one that owns Dodger Stadium.
The Dodgers said the team's largest unsecured creditors include former outfielders Manny Ramirez and Andruw Jones, who are owed $21 million and $11.1 million, respectively.
Ramirez retired in April rather than accept a 100-game suspension for violating baseball's drug policy, after serving a 50-game suspension in 2009. Jones plays for the New York Yankees.
Los Angeles Superior Court Judge Scott Gordon scheduled a one-day trial in August to decide whether the Dodgers belong to Frank McCourt, or whether the McCourts should split the team.
The McCourts' lawyers on June 17 said the pair had resolved all issues in their divorce except for the Dodgers' ownership.
The Dodgers have historically been one of the greatest brands in sports. Buyers may view this as a chance to buy in with the knowledge they can rehabilitate the brand, rebuild the fan base, and add to its value over time.

Tuesday, July 12, 2011


Caterpillar Inc. used offshore subsidiaries in Switzerland and Bermuda to avoid about $2 billion in U.S. taxes from 2000 to 2009, boosting its earnings through a tax and financial statement fraud.
The company, the world’s largest construction-equipment maker, sold and shipped spare parts globally from an Illinois warehouse while improperly attributing at least $5.6 billion of profits from those sales to a unit in Geneva, according to the suit filed by Daniel J. Schlicksup. He was a global tax strategy manager for Caterpillar from 2005 to 2008.
Schlicksup, 49, sued in U.S. District Court in Peoria, Illinois, in 2009, claiming he was moved to a job that limits his career opportunities because he complained to superiors that the Swiss Structure ran afoul of U.S. tax rules. He’s seeking a court order to give him back his old job and prevent any retaliation. He also seeks stock options that he claims were wrongly withheld as well as legal fees and punitive damages.
His lawsuit, which calls the structure a tax dodge, followed a request for job protection he filed with the U.S. Department of Labor under provisions of the Sarbanes-Oxley Act, court records show. The law bars retaliation against corporate whistleblowers. Schlicksup declined to comment for this story. His attorney, declined to say whether Schlicksup has taken his concerns to the Internal Revenue Service.
A Caterpillar spokesman said the company has engaged in no wrongdoing, and its attorneys said in a court filing that Schlicksup’s transfer wasn’t a demotion. He declined to comment on the suit’s specific allegations, saying Caterpillar uses ethics training and complies with applicable tax laws and regulations.
It could be difficult to prove the company underpaid U.S. taxes. A former corporate tax attorney said IRS officials have had only mixed success recovering large settlements in corporate income-tax cases, and $2 billion would be an extraordinarily large recovery.
Peoria-based Caterpillar, which reported year over year earnings growth exceeding 250 percent in each of the last two quarters, is among several U.S. multinationals asking Congress to end U.S. corporate income taxes on profits earned abroad. The company had $3.7 billion of pretax income last year on $42.6 billion in revenue, 68 percent of which came from offshore.
The company is asking for a level playing field when we compete with foreign competitors. Caterpillar’s Swiss strategy, as described in depositions and exhibits attached to Schlicksup’s lawsuit, reflects one way U.S. corporations reduce their actual tax rates. Aided by lower taxes overseas, the company had an overall effective tax rate of about 26 percent on about $27 billion of pretax income from 2000 through 2009. The top federal corporate income tax rate in the U.S. is 35 percent.
U.S. multinationals including Google also report overall effective tax rates that are lower than the U.S. rate -- partly because of the effect of their overseas operations. Google’s overall effective rate for 2007 through 2009 was about 25 percent, based on disclosures in its annual reports. Its overseas tax rate for the period was 2.4 percent.
Caterpillar’s Swiss income is subject to a 10 percent tax rate. While the combined federal, state and local tax rate in Geneva is about 24 percent, companies frequently receive exemptions.
The company said in the document that one purpose of the Swiss structure is to lower its taxes. It also agreed that Caterpillar pays more tax to Switzerland and less tax to the United States than it would have without the strategy.
Around 1999, the U.S. parent company transferred the role of global purchaser of spare parts from third-party manufacturers from itself to the Swiss unit.
The Geneva subsidiary, Caterpillar SARL, or CSARL, had no spare-parts employees and did not work to sell or ship the parts, Schlicksup claims in the lawsuit. The parts are shipped to dealers around the globe from a warehouse in Morton, Illinois, about 10 miles southeast of Caterpillar’s Peoria headquarters, according to the lawsuit, which also describes the spare-parts business as the company’s most profitable line.
In order to shift profit to Switzerland, Caterpillar pretended to shift the management and control of a large portion of its most profitable business segment to Switzerland, but in reality the management and control of this business remains in the United States. Everything is done the same way it was done before except that on paper, now CSARL is doing it, not Cat, while in practice Cat is doing everything. While the Swiss unit nominally buys the parts from suppliers, it maintains its inventory in the U.S. unit’s Morton warehouse, where Caterpillar Inc. employees ship it and send invoices.
The lawsuit, which is in the evidence-gathering phase, alleges that the Swiss structure is improper because it has no legitimate business purpose beyond cutting Caterpillar’s U.S. tax bills.
Courts have generally sided with taxpayers who use foreign subsidiaries. You don’t need much substance in the foreign corporation for it to be accepted under current rules, and that’s a problem.
To survive a challenge, a taxpayer must show that transactions between the subsidiary and its parent were done with the intent of making a profit, whatever the tax consequences, and had realistic potential to create income.
The sale of parts was clearly profitable, so the question is whether a court would satisfied with that or ask whether routing the sales via Switzerland had to have its own separate economic substance. It is suspect the likely answer is that the transaction satisfies economic substance as a whole, but it’s hard to tell without knowing more facts.Still, if the inventory is maintained in the U.S., that would raise questions of whether Caterpillar Inc. is deriving taxable income from it.
Some say the IRS and tax courts will find that the Swiss subsidiary doesn’t handle the Cannon spare parts transactions themselves -- and thus doesn’t meet the standard.
Most cases will say that even if an entity has substance you will look to see if its transactions have substance.
While the Swiss structure moved income to Geneva, Caterpillar had New York-based accounting firm devise a complementary “Bermuda strategy” aimed at returning some cash to the U.S. without paying tax on it. The documents are filed as exhibits to the lawsuit.
Under current law, American companies can defer federal income taxes on most overseas earnings as long as the money remains abroad. Foreign income brought to the U.S. is subject to tax at the 35 percent rate -- with credits for overseas taxes paid. Congress is considering a one-time tax holiday that would reduce the rate to 5.25 percent.
Caterpillar reported total expenses of $3.68 billion for U.S. federal taxes on $12.3 billion in pretax U.S. profit from 2000 through 2009, an effective rate of 30 percent. It reported $2.97 billion for taxes on $14.4 billion of non-U.S. pretax profits, a rate of 20.6 percent on foreign income.
Overall, including U.S. state taxes, Caterpillar reported an effective tax rate for the period of 26 percent, or $6.9 billion on pre-tax profits of $26.8 billion, based on its disclosures.
Caterpillar’s U.S. federal income tax return for 2003 reflects far lower numbers: $4,667 in tax on taxable income of $18 million and revenue of $22.8 billion. The Caterpillar spokesman, declined to comment on the 2003 return, which was filed as an exhibit to Schlicksup’s complaint.
Schlicksup, a lawyer and a certified public accountant with a master’s degree in tax law, tried for two years, beginning in 2007, to persuade senior Caterpillar that the Swiss plan might violate U.S. law, according to e-mails filed as evidence in his suit. A Caterpillar employee since 1992, he became concerned after researching the economic substance issue in late 2006, he said in a declaration filed with his suit.
His bosses, Caterpillar’s general counsel and its chief compliance and ethics training officers, rejected his concerns as unfounded, e-mails show.
In subsequent e-mails to various executives, Schlicksup wrote that Caterpillar had not set aside enough cash in the event the IRS disallowed the Swiss strategy. In response, the company’s senior corporate counsel, told him that executives had reviewed his concerns. They were satisfied that the matter was adequately addressed and handled appropriately, and that this matter is therefore closed.
Ultimately Schlicksup summarized his concerns in a 15-page May 2008 memo to Caterpillar’s chief executive officer. He warned of what he called serious shareholder fraud involving overstated income, according to the declaration he filed in court in December 2009.
The executives did not respond, according to his complaint. Then, in August of 2008, a human resources executive told Schlicksup that he could transfer to Caterpillar’s information technology division or leave the company, his complaint says.
The new job involved overseeing implementation of a computer system he knew nothing about, his suit claims, for less pay and a smaller bonus target. Schlicksup called it a demotion. After a meeting with Caterpillar’s human resources department, his pay was restored, according to the lawsuit, though he says the transfer out of his area of expertise makes him unlikely to be promoted.
In September 2008, Schlicksup’s new boss, Chief Information Officer, gave him a draft agreement to restore his compensation, according to the lawsuit. It required Schlicksup to stop accusing Caterpillar of any unlawful, unethical or improper conduct, according to a copy of the draft filed as an exhibit in the suit. Caterpillar alleges that they do business ethics training. Schlicksup demanded changes, including a payment to make up for lost promotions. The email response was that the company was no longer pursuing the agreement. Schlicksup remains employed by Caterpillar’s information services division.
The company said it hadn’t retaliated against Schlicksup.


A new state law allowing same-sex marriage will go into effect July 24, and New York City is making special arrangements for those wanting to get married on the historic date.
Mayor Michael Bloomberg announced that city clerk offices will be open for a full day Sunday, and workday hours have been extended until July 29. The state marriage applications are available now, and couples are urged to apply.
"This is a historic moment for New York, a moment many couples have waited years and even decades to see -- and we are not going to make them wait one day longer than they have to," Bloomberg said.
New York legalized same-sex marriage in June. The Marriage Equality Act was a priority for Gov. Andrew Cuomo after winning election in November. The law was passed under a Republican-led Senate after days of delays and negotiations between the two parties.
The legislation met with opposition from some religious groups, but in the city that gave birth to the gay and lesbian rights movements in the 1960s, the signs of celebration are apparent. One bridal shop window already displays two female mannequins -- one dressed in tuxedo and the other in a wedding gown.
New York is the sixth state -- joining Massachusetts, Connecticut, Iowa, Vermont, and New Hampshire -- to grant same-sex marriage licenses. The District of Columbia also allows same-sex marriages.


A federal appeals court on Friday struck down a state constitutional amendment that barred Michigan colleges from considering race or gender in admissions decisions.
The Sixth U.S. Circuit Court of Appeals concluded that the law violated the U.S. constitution, a victory for civil-rights advocates who challenged the ban. The ruling comes as California wrestles with a similar challenge to its ban on race-influenced admissions, a restriction that exists in three other states.
Michigan voters in 2006 approved an initiative known as Proposal 2 that banned consideration of race in college admissions for public universities. A group of minority students, backed by affirmative-rights advocacy groups, sued on grounds that it violated federal law.
A couple of judge found that Proposal 2 unconstitutionally alters Michigan's political structure by impermissibly burdening racial minorities.
Michigan Attorney General Bill Schuette, a Republican, elected last year said he would appeal the decision to the full Sixth Circuit rather than to the U.S. Supreme Court. The law will remain in force during the appeal, he added. He stated that entrance to our great universities must be based upon merit, and he will continue the fight for equality, fairness and rule of law.
The amendment, which passed with 58% of the vote, also pertained to government hiring.
Plaintiffs argued the ban unfairly discriminated against taking race into account while other considerations—children of alumni and the disabled among others—were allowed. Supporters of the ban insisted the measure allowed for an even playing field without special preferences for race. Several of its backers couldn't be immediately reached Friday.
In 2008, a federal district-court judge in Detroit upheld the law, finding it was race-neutral.
The law has forced the University of Michigan and other schools to alter admissions policies that give minorities preferential treatment. The university is reviewing the possible implications of the court's decision and recognizes that there may be further legal steps as well.
The battle over racial preferences in college admissions began in the 1960s and '70s, as racial diversity began to be used as an admissions criterion. In the 1990s, several U.S. Supreme Court decisions said public universities couldn't establish race-based quotes or treat applications uniquely based on race.
In the intervening years, California, Colorado, Nebraska and Washington state enacted bans similar to Michigan's. Arizona voters rejected one in November 2010.
One 24-year-old Mexican-American plaintiff from Detroit, graduated from University of Michigan in Ann Arbor in 2010. She was a beneficiary of race-influenced admission before the ban took place, but said she saw the minority population on the Ann Arbor campus drop during her time there.
Now, she worries about the fate of her sister, a high-school junior who wants to attend the University of Michigan.

Friday, July 1, 2011


Massey Energy Co. could have prevented the West Virginia mine explosion that killed 29 workers last year and the company failed to disclose some hazards in reports it provided to government inspectors, federal safety officials said Wednesday.
The U.S. Labor Department's top lawyer, said not recording hazards where required was a potential criminal violation of the Mine Act and they have notified the U.S. attorney of that.
The Justice Department's probe of the accident is continuing, it said recently. Its investigation has so far resulted in a criminal indictment against the former head of safety at the Upper Big Branch mine for allegedly attempting to destroy evidence. He has pleaded not guilty.
The April 2010 explosion at Massey's Upper Big Branch mine in Montcoal, W.Va., was the worst U.S. coal-mining disaster in 40 years. It resulted in several wrongful death lawsuits against Massey and led to the resignation of the company's chief executive and the sale of Massey.
At a briefing Wednesday in Beaver, W.Va., a coal administrator for mine safety and health at the Mine Safety and Health Administration, said they found there to be two sets of books kept by Massey.
Onshift reports, written by Massey miners, are for recording any hazardous conditions and gas levels at mines. These reports, co-signed by mine management, are shown to government inspectors. The others were production reports detailing coal output and any reasons for production delays, including safety issues, also written by Massey employees. MSHA didn't say if the two sets of reports were written by the same workers.
Three examples were citied in which on shift reports didn't include hazards noted in production reports. One production report noted hazards such as low air flow that didn't appear in an onshift report shown to government inspectors.
Federal law requires a mine employee to conduct an on-shift examination in each area where miners are working at least once a shift to check for hazardous conditions, test for methane and oxygen and determine if airflow is adequate. All hazards are required to be included in onshift reports for government inspectors.
Federal investigators concluded that the explosion occurred because broken water sprays on a cutting machine failed to put out an initial spark that ignited methane gas and triggered a coal-dust explosion. A gas detector that should have tested for potentially explosive methane hadn't been turned on since March 18, 2010, more than two weeks before the explosion.
A crack in the mine's floor that Massey had identified as the source of the inundation of methane was too shallow and not connected to a potential gas source below. Moreover, gas readings before the accident and just after it showed methane levels far lower than would have been expected with an inundation.
Alpha bought Massey this month for $7.1 billion. An Alpha spokesman said Alpha is hearing this information from MSHA at the same time everyone else is, and they will look at this claim [regarding the two sets of records] as well as all information that's available to them as they conduct their own review into what took place at Massey's Upper Big Branch mine in April 2010. He also said Alpha's review is in its early stages and that the company is starting to assemble specialists. The full MSHA report, when it's made available, will be part of what their team will closely review.
Massey completed a 102-page report, which was released by after the company was sold, saying the explosion was caused by an inundation of natural gas, a naturally occurring event beyond its control.
Massey's report said water sprays functioned adequately. This report didn't address book-keeping practices.
Alpha previously criticized the release of the Massey probe report, calling it unauthorized.
An independent report released in May by the top mine regulator in the Clinton administration, found Massey operated the mine in a profoundly reckless manner and was largely to blame for an explosion. At the time, Massey said it disagreed with his conclusion that the explosion was fueled by coal dust, and said they believed the explosion was caused by a massive inundation of methane-rich natural gas.
MSHA and Massey officials have clashed repeatedly since the accident over various reports regarding levels of highly explosive methane gas and combustible coal dust within the mine. Nongovernment safety experts said the government's findings, which put most responsibility for the accident on mine management, could have a bearing on wrongful-death lawsuits stemming from the blast.
A Beckley, W.Va., lawyer representing two families, who filed wrongful-death lawsuits, said about five such suits have been settled and more than 10 were still pending.