Tuesday, January 31, 2012

Property Owners Fighting Eminent Domain

First appeared in Associated Press
When federal regulators approved a 39-mile natural gas pipeline through northern Pennsylvania's pristine Endless Mountains, they cited the operator's assurances that it would make sparing use of eminent domain as it negotiated with more than 150 property owners along the pipeline's route.

Yet a few days after winning approval for its $250 million MARC 1 pipeline in the heart of the giant Marcellus Shale gas field, the company began condemnation proceedings against nearly half of the landowners - undercutting part of the Federal Energy Regulatory Commission's approval rationale and angering landowners.

Some of the landowners are now fighting the company in court, complaining that Central New York Oil and Gas Company LLC steamrolled them by refusing to negotiate in good faith on monetary compensation and the pipeline's location. Their attorneys say CNYOG has skirted Pennsylvania's eminent domain rules.

The company, a subsidiary of Inergy LP of Kansas City, Mo., insists it's trying to reach a "fair settlement" with all property owners and wants to be a good neighbor.

The dispute could foreshadow eminent domain battles to come as more pipelines are approved and built to carry shale gas to market in states like Pennsylvania, New York and Ohio.

The company promotes the MARC 1 pipeline as key infrastructure in developing the Marcellus Shale, a rock formation underneath Pennsylvania and surrounding states that experts believe holds the nation's largest reservoir of gas. The MARC 1, a high-pressure steel pipeline 30 inches in diameter, will connect to major interstate pipelines and the company's own natural gas storage facility in southern New York state.

CNYOG hopes to start construction soon and finish by July, but it awaits permits from Pennsylvania environmental regulators and the U.S. Army Corps of Engineers.

It also needs to answer the legal challenge from residents.

Many of the complaining landowners say they favor natural gas drilling and some have leased land to gas drillers. What rankles them is that FERC has invested CNYOG with the power of eminent domain, taking away their bargaining power.

"Once the government becomes involved, this is what happens. Because you lose that leverage," said a landowner who faces condemnation of part of their 175-acre parcel in Sullivan County.

The landowners say CNYOG offered less than a third of the amount that another pipeline company had previously paid them to install a gathering line on their land. The difference? Gathering lines - smaller pipelines that take gas from the wellhead to a transmission line or processing facility - are not regulated by the federal government and companies that operate them don't have condemnation power.

A landowner said a company representative who made them the lowball offer told them to "take it or leave it."

"There's no negotiating with this company. They come and they tell you what they're going to do. They're telling you what they're going to pay. And they're counting on the government to enforce it," said a landowner in a recent interview at the Sullivan County Courthouse, where a judge has scheduled a mid-February hearing on the landowners' concerns.

Amounts offered by CNYOG range from a few hundred dollars to tens of thousands of dollars, depending on the amount of property taken. Court papers filed by CNYOG in late December say it valued damages at 37 condemned properties in Sullivan County at $310,900.

The pipeline has been controversial since it was first proposed two years ago.

FERC, which considers all applications for new interstate pipelines, received 22,000 comments on the MARC 1 project, with many expressing concern about environmental and safety impacts. The Environmental Protection Agency also worried about potential damage to the forest ecosystem, noting the pipeline will cross dozens of pristine waterways in an area popular with hikers, hunters and fishermen.

FERC ultimately determined the pipeline would not significantly impact the environment and allowed it to proceed.

The commission was also supposed to consider whether there would be an "unneeded exercise" of eminent domain - the often-contentious legal process by which the government, or a party such as a public utility, takes private property for public benefit.

Indeed, the commission said last year its approval relied on the company's assertion that it was acquiring land "through negotiated agreements with landowners, thus minimizing the need" to condemn people's land.

In reality, the company had prepared condemnation papers for dozens of properties even before winning commission approval on Nov. 14. Within a few days, it began eminent domain proceedings against 74 of 152 property owners along the pipeline's route through the mountains of Bradford, Lycoming and Sullivan counties.

An attorney for the environmental group Earthjustice, said the large number of condemnations suggests that CNYOG "never made a serious effort to get negotiated agreements with the landowners that the landowners thought were fair." Earthjustice has intervened in the case and is challenging the pipeline's approval.

While most of the landowners receiving condemnation papers have since settled - the company says private agreement has been reached with more than 80 percent of the landowners – an environmental lawyer suggested the pace of settlements has quickened because condemnation takes leverage away from the property owner.

The company insists it has met its obligation to negotiate. Its attorney said there were several "meet-in-the-middle cases" involving compromise.

"It's not like we were sitting silently until the FERC order and rushed to the courthouse," said the company’s attorney who is based in Vestal, N.Y. "To say we did not attempt to negotiate in good faith is incorrect."

The lawyer acknowledged, however, that CNYOG told landowners that if they challenged the company in court, forcing it to incur legal expenses, then any deal on the table would be withdrawn.

Some landowners aren't interested in the money. They're more concerned about the pipeline's route.

CNYOG told a landowner that it plans to cut a 50-foot-wide, 400-foot-long gash through an ancient stand of trees across the front of his property. When the landowner proposed an alternate route through an open field that would preserve his trees and views, the company said it wasn't interested and offered instead to pay him for the wood.

"That's not negotiation. It was their way or no way, and 'we'll see you in court.' It's the little guys against Goliath," said the landowner, who has challenged the company in court.

Another landowner has appealed to federal regulators to force CNYOG to abandon plans for an access road along her property. She said the road is at the bottom of a long hill and around a sharp bend where there have been many accidents, at least one of them fatal.

When the landownder pressed the company to use an alternate route a short distance away, she said, the company told her that would result in a six-month delay.

"I want them to go elsewhere. I don't want somebody to die because of stupidity," she said.

In a statement, the company said it has accommodated dozens of landowner requests for route changes, but can't do more because of "environmental, cultural and biological restrictions as well as other land use constraints."

Some landowners who didn't bother fighting the pipeline say the company still managed to leave a bad taste.
A landowner in Sonestown said she signed with CNYOG because she didn't feel it was worth it to hire a lawyer to fight for more money. Even as she signed the paperwork, she got a hint of the company's negotiating stance.

"They said that other people were holding out because they wanted more money," the landowner recalled. "They said, 'We're not paying more money because this is a federal line that's going to go through no matter what, and $2 a foot is what we pay.'"

Friday, January 27, 2012

Chevron Facing Criminal Charges in Brazil

First USA Today
Reuters is reporting that a November oil spill off Brazil will likely result in criminal charges "within weeks" against Chevron Corp., its top local executive and some employees of Transocean Ltd., the drilling rig firm involved in the Gulf of Mexico disaster. A West Hollywood Environmental Lawyer watched closely.

Three Brazilian government officials involved in the case told Reuters that a federal court filing "will likely include a request for criminal indictment" of George Buck, chief executive of Chevron's Brazil unit, along with other staff members.

The case has not yet been presented to a judge, who would decide "whether to accept the charges and proceed with indictments," Reuters writes.

Chevron spokesman Kurt Glaubitz told Reuters the California-based oil giant "believes that the charges are without merit" and that "Chevron is confident that once all the facts are fully examined, they will demonstrate that Chevron responded appropriately and responsibly to the incident."

A Transocean spokesman declined to comment. A Portland Environmental Lawyer was interested in the non-comment.

Federal prosecutors have already filed a civil lawsuit that seeks $11 billion for the 2,400-barrel spill about 75 miles off the southeastern coast of Brazil.

A Federal Police report has accused Chevron and Transocean of taking "unacceptable" risks and concluded that the 4,000-foot-deep well "could not and should not have been drilled." Police recommended that 17 individuals be indicted, including as many as 12 from Chevron, Reuters says, citing legal documents
A pressure "kick" from natural gas occurred Nov. 7 after the well was tapped in the Fade oil field, triggering an emergency blowout preventer. But days later, oil was found leaking from the ocean floor several hundred feet from the plugged well.

The failure of a blowout preventer triggered the April 2010 explosion and fire that destroyed a Transocean rig drilling for BP and resulted in the historic Gulf disaster. No criminal charges were ever filed. Although, a Salt Lake City Environmental Lawyer was curious about the situation.

Today in New Orleans, a federal judge ruled that Transocean's contract with BP shielded it from paying many pollution claims but that the rig owner is not exempt from punitive damages and civil penalties.

In his ruling, U.S. District Judge Carl Barbier said Transocean is responsible for claims directly related to pollution caused by its Deepwater Horizon rig.

Transocean Saved by BP Contract

First appeared in USA Today
The rig owner involved in drilling the ill-fated well that blew out in the Gulf of Mexico and spewed more than 200 million gallons of oil will not have to pay many pollution claims because it was shielded in a contract with well-owner BP, a federal judge ruled Thursday. A Wash DC Environmental Lawyer watches.

The ruling comes as BP, the U.S. southern states affected by the disaster and the federal government are discussing a settlement over America's largest offshore oil spill.

BP PLC, Transocean Ltd. and Halliburton Co. have been sparring over who was at fault for causing the blowout. The out-of-control well was capped in July 2010. Federal investigators have said that BP bears ultimate responsibility for the spill, but has faulted all three companies to some degree. An Amsterdam Environmental Lawyer watches the case closely.

Thursday's decision may have spared Transocean from having to pay potentially billions of dollars in damage claims. However, U.S. District Judge Carl Barbier said the driller still is not exempt from paying punitive damages and civil penalties that arise from the April 20, 2010, blowout 100 miles off the Louisiana coast. Those penalties could amount to billions of dollars.

Law experts were split over who is a clear-cut winner. A New Orleans Environmental Lawyer is pretty decided.

BP has been pursuing agreements with multiple parties to reach settlements that would make an upcoming trial involving hundreds of spill lawsuits in New Orleans unnecessary, or at least resolve as many of the issues as possible.

The Justice Department also is involved, working with the states to create an outline for a settlement that would resolve their potentially multibillion dollar claims against BP and the other companies involved in the disaster, Alabama Attorney General Luther Strange told The Associated Press.

Justice led a meeting last week in Washington among the U.S. states in an effort to formulate an agreement that would satisfy government and state claims, including penalties and fines, Strange said. He also indicated if there is a settlement that officials are discussing what to do with the $20 billion fund set up by BP to pay victims. A Chicago Environmental Lawyer hopes there’s more to come.

The lead attorneys for individuals and businesses suing BP were not at the meeting.

According to Strange, a federal magistrate judge has been asked to expedite settlement discussions. The Louisiana attorney general's office said in a statement to the AP that it is in settlement discussions with BP, which would not comment on any deals in the works. A first phase of the trial is set for Feb. 27 to determine liability for the spill.

"The closer you get to a trial date, the more pressure builds to reach a settlement," Strange said.
Despite the decision, BP claimed victory and said Barbier's ruling "at a minimum" left Transocean facing "punitive damages, fines and penalties flowing from its own conduct." A St. Louis Environmental Lawyer is wondering what’s next.

Transocean spokesman Lou Colasuonno said in an emailed statement that the company was pleased to see its position affirmed.

"This confirms that BP is responsible for all economic damages caused by the oil that leaked from its Macondo well, and discredits BP's ongoing attempts to evade both its contractual and financial obligations," he said.

Blaine LeCesne, an associate professor at Loyola University law school, however, said Barbier's ruling was a "major victory" for Transocean.

"If anything is going to compel the parties toward settlement, it's going to be this," he said. "I think BP is in a very bad position now, and they don't have a lot of leverage."

A University of Michigan Law School professor who served as chief of the Justice Department's environmental crimes section said the ruling had no clear-cut winner. David Uhlmann said it prevents BP from collecting billions of dollars from Transocean to help cover cleanup costs and pay for claims over economic losses and environmental damage from the spill. But the decision leaves Transocean facing potentially billions of dollars in civil and criminal penalties under the Clean Water Act, he added. A Fresno Environmental Lawyer may agree.

"It's a partial win for each side and a partial loss for each side," Uhlmann said.

Under a drilling contract, BP and Transocean agreed to indemnify each other in the case of an accident, with BP taking responsibility for pollution originating from the well and Transocean for any pollution or accidents aboard the rig.

However, in court BP argued that the contract did not shield Transocean if the drilling company acted in manner that was grossly negligent.

Barbier said the contract was a "clear and unequivocal agreement" to provide "broad indemnity."

"As we have said from the beginning, Transocean cannot avoid its responsibility for this accident," BP said.
The British oil giant said it had "stepped up" and admitted its role in the spill and paid billions of dollars in claims.

BP also is eager to resolve its disputes with its partners on the doomed rig. The companies have sued and countersued each other for billions of dollars to protect themselves when it comes to paying damages to victims and penalties to the government.

Months ago, BP offered to resolve its dispute with Transocean if Transocean paid BP roughly $4.5 billion, according to a person briefed on the discussions who spoke to the AP on condition of anonymity because the talks are confidential. Transocean rejected the offer, and there have been no substantive discussions between the companies about figures since then, the person said, adding that Thursday's ruling could spur further talks. A Pittsburgh Environmental Lawyer is curious.

Eric Schaeffer, who led the Environmental Protection Agency's civil enforcement office from 1997 to 2002, said Thursday's ruling will put even more pressure on BP.

"If BP is less able to shift some of those costs to Transocean, if they understand they are going to bear Transocean's share of compensatory damages, I'd want to get it settled," Schaeffer said. "That's no longer a wild card."

Outrageous State Laws

First appeared in Divine Caroline
I’ve never claimed to have extensive knowledge of U.S. legislation throughout history, but it’s safe to say that I and most people I associate with are law-abiding citizens … or not. As it turns out, every state in this country has at least one wacky legal stipulation that could land residents in hot water if they don’t comply. Don’t say I didn’t warn you.

It’s illegal to wear a fake mustache that causes laughter in church.

Whispering in someone’s ear while he’s moose hunting is prohibited.

Cutting down a cactus may earn you a twenty-five-year prison term.

It’s illegal to mispronounce the name of the state of Arkansas.

You may not eat an orange in your bathtub.

It’s unlawful to lend your vacuum cleaner to your next-door neighbor (Denver).

A pickle cannot actually be a pickle unless it bounces.

It’s illegal to get married on a dare.

Washington, D.C.
It’s against the law to post a public notice calling someone a coward for refusing to accept a challenge to duel.

If you tie an elephant to a parking meter, you must pay the same parking fee as you would for a vehicle.

It’s illegal to change the clothes on a storefront mannequin unless you draw the shades first.

All residents may be fined for not owning a boat.

A man must not give his sweetheart a box of candy weighing fewer than fifty pounds.

It’s illegal to take a French poodle to the opera (Chicago).

The value of pi is 4, and not 3.1415.

One-armed piano players must perform for free.

It’s illegal to throw knives at men wearing striped suits (Natoma).

Every citizen is required to take a shower once a year.

Biting someone with your natural teeth constitutes simple assault, but biting someone with your false teeth classifies as aggravated assault.

If you keep your Christmas decorations on display after January 14, you’ll be fined.

It’s against the law to wash or scrub a sink, no matter how dirty it is (Baltimore).

No gorilla is allowed in the backseat of any car.

A woman may not cut her own hair without her husband’s permission.

It’s illegal to paint a sparrow with the intent of selling it as a parakeet (Harper Woods).

Walking a dog without dressing it in diapers is forbidden (Temperance).

Children may buy shotguns in Kansas City, but not toy cap guns.

It’s a felony for a wife to open her husband’s mail.

Bar owners may not sell beer unless they brew a kettle of soup simultaneously.

It’s illegal for men with mustaches to kiss women.

New Hampshire
It’s forbidden to sell the clothes you’re wearing to pay off a gambling debt.

New Jersey
It’s against the law for a man to knit during the fishing season.

New Mexico
Females may not appear unshaven in public.

New York
While riding in an elevator, you must talk to no one, fold your hands, and look toward the door.

North Carolina
It’s against the law to sing off-key.

North Dakota
It’s illegal to lie down and fall asleep with your shoes on.

You must honk the horn whenever you pass another car, according to the state’s driver’s education manual.

It’s forbidden to take a bite out of another person’s hamburger.

State law requires dishes to be drip-dried.

It’s illegal to sleep on top of a refrigerator outdoors.

Rhode Island
You may not bite off another person’s leg.

South Carolina
If a man promises to marry an unmarried woman, he is required by law to keep his promise.

South Dakota
It is illegal to lie down and fall asleep in a cheese factory.

Selling hollow logs is strictly forbidden.

You may not shoot a buffalo from the second story of a hotel.

It is illegal not to drink milk.

Women must obtain written permission from their husbands to wear false teeth.

Tickling a woman is unlawful.

It’s illegal to pretend that one’s parents are wealthy.

West Virginia
If you make fun of someone who does not accept a challenge, you risk a six-month prison sentence.

Unless a customer specifically requests it, margarine may not be substituted for butter in a restaurant.

Unless you have an official permit, you may not take a picture of a rabbit from January to April.

This Court Is Adjourned
Whew! With all this legislation, it’s a wonder we’re not all sharing a prison cell right now. Granted, something tells me the Los Angeles Police Department has bigger fish to fry than popping people who dare to eat oranges while bathing, and that most people who saw me catching some shut-eye on top of a fridge in Pennsylvania wouldn’t call the cops on me, but you never know when you might come across that rare whistle-blower who wants you persecuted to the fullest extent of the law, so it’s probably better to be safe than sorry. The next time I tie up my elephant at a parking meter in Florida, I’ll be sure to bring a pocket full of quarters.

Wednesday, January 25, 2012

Selling Drugs on Google

First appeared in Wall Street Journal
Wearing leg irons and guarded by federal agents, David Whitaker posed as an agent for online drug dealers in dozens of recorded phone calls and email exchanges with Google sales executives, spending $200,000 in government money for ads selling narcotics, steroids and other controlled substances.

Over four months in 2009, Mr. Whitaker, a federal prisoner and convicted con artist, was the lead actor in a government sting targeting Google Inc. that yielded one of the largest business forfeitures in U.S. history.

"There was a part of me that felt bad," Mr. Whitaker wrote in his account of the undercover operation viewed by The Wall Street Journal. "I had grown to like these people." But, he said, "I took ease in knowing they…knew it was wrong."

The government built its criminal case against Google using money, aliases and fake companies—tactics often used against drug cartels and other crime syndicates, according to interviews and court documents. Google agreed to pay a $500 million forfeiture last summer in a settlement to avoid prosecution for aiding illegal online pharmaceutical sales.

Google acknowledged in the settlement that it had improperly and knowingly assisted online pharmacy advertisers allegedly based in Canada to run advertisements for illicit pharmacy sales targeting U.S. customers.

"We banned the advertising of prescription drugs in the U.S. by Canadian pharmacies some time ago," the company said in its sole comment on the matter. "However, it's obvious with hindsight that we shouldn't have allowed these ads on Google in the first place."

The half-billion dollar forfeiture, although historically large, was small change for Google, which holds $45 billion in cash. But the company's acceptance of responsibility opened the door to potential liability for taking ads from other people involved in unlawful acts online, such as distributing pirate movies or perpetrating online fraud.

Google has long argued it wasn't responsible for the actions of its more than one million advertisers. But the forfeiture paid by Google represented not just the money it made from the ads, but also the revenue collected by illegal pharmacies through Google-related sales.

In an important shift, the settlement "signals that, where evidence can be developed that a search engine knowingly and actively assisted advertisers to promote improper conduct, the search engine can be held accountable as an accomplice," according to Peter Neronha, the lead prosecutor.

Unknown is whether the company will toss aside advertisers as a result. "If Google were to adopt a much more restrictive definition of problematic advertisements, everyone would immediately notice a drop in their revenue," said Eric Goldman, director of the High Tech Law Institute at Santa Clara University.

The government's case also contained potentially embarrassing allegations that top Google executives, including co-founder Larry Page, were told about legal problems with the drug ads.

Mr. Page, now Google's chief executive, knew about the illicit conduct, said Mr. Neronha, the U.S. attorney for Rhode Island who led the multiagency federal task force that conducted the sting. "We simply know from the documents we reviewed and witnesses we interviewed that Larry Page knew what was going on," he said in an interview after the August settlement.

Mr. Neronha declined to detail the evidence, which was presented in secret to a federal grand jury. Other people familiar with the case said internal emails showed Sheryl Sandberg, a former top Google executive who left in 2008 for Facebook Inc., had raised concerns about the ads.

Prosecutors could have used that evidence to argue Google deliberately turned a blind eye to lawbreaking to protect a profit stream estimated by the government in the hundreds of millions of dollars.

Ms. Sandberg declined to comment through a spokesman. Mr. Page also declined to comment.

Google says it has strict policies in place to prevent criminals from using its ad services and it bans advertisers who repeatedly violate its guidelines.

"We ban not just ads but also advertisers who abuse our platform, and we work closely with law enforcement and other government authorities to take action against bad actors," said Kent Walker, Google's general counsel.

Mr. Whitaker's story, told here for the first time, presents a different picture. Shuffling into federal court in handcuffs and beige overalls last month, the 37-year-old prisoner looked like he could pass for an employee of a Silicon Valley start-up.

The Tennessee native suffers from bipolar disorder, according to court submissions by his lawyers, and has a history of manic spending and fraud sprees. When he was 16 years old, Mr. Whitaker took his mother's credit card, rented a private jet and flew his girlfriend for a shopping spree in Knoxville, the documents said.

Mr. Whitaker's path to undercover operative began in 2005, when he took millions of dollars in orders for Apple iPods and other electronics at below market prices and skipped town without filling the orders, according to his account and court documents. He hopscotched around the U.S. in a private jet, evading arrest and protected by a private security detail. He briefly rented a Miami mansion for $200,000 a month.

He fled to Mexico in 2006 and started an Internet pharmacy, selling steroids and human growth hormone to U.S. consumers through Google ads, he said. The two substances—sold in the U.S. by prescription only—are sought by body builders to add muscle and by older consumers seeking to slow the signs of aging; they aren't approved in the U.S. for such uses. Google's policy prohibited advertising their sale online.

"It was very obvious to Google that my website was not a licensed pharmacy," Mr. Whitaker wrote to the Journal. "Understanding this, Google provided me with a very generous credit line and allowed me to set my target advertising directly to American consumers."

Mr. Whitaker was arrested in Mexico in March 2008 for entering that country illegally and returned to the U.S. to face charges of wire fraud, conspiracy and commercial bribery in the iPod case. Mr. Whitaker told U.S. authorities about the alleged role Google played in helping his Mexico-based pharmacy.

Federal prosecutors, seeking to test the allegation, set up a task force in early 2009 with Mr. Whitaker's help. On weekdays, he was escorted from the Wyatt Detention Facility in Central Falls, R.I., to a former school department building in North Providence, R.I. There, under the watch of federal agents, he set a snare for Google.

Posing as the fictitious Jason Corriente, an agent for advertisers with lots of money to spend, Mr. Whitaker bypassed Google's automated advertising system to reach flesh-and-blood ad executives. Federal agents created www.SportsDrugs.net, designed to look "as if a Mexican drug lord had built a website to sell HGH and steroids," Mr. Whitaker said in his account of the sting.

Google first rejected it, along with an anti-aging website called www.NotGrowingOldEasy.com. But the company's ad executives worked with Mr. Whitaker to find a way around Google rules, according to prosecutors and Mr. Whitaker's account.

The undercover team removed a link to buy the drugs directly—instead requiring customers to submit an online request form—and Google approved it. "The site generated a flood of email traffic from customers wanting to buy HGH and steroids," Mr. Whitaker said.

To pay Google's fees for the growing online traffic, undercover agents made payments every two or three days with a government-backed credit card.

Federal agents grew more brazen. They created a site selling weight-loss medications without a prescription, according to Mr. Whitaker and people familiar with the matter. They also added another site selling the abortion pill RU-486, which in the U.S. can only be taken in a doctor's office.

Google's ad team in Mexico approved the site, so U.S. consumers searching for "RU 486" would see an ad for the site. Google ad executives allowed the agents to add the phrase "no prescription needed."

Days later, federal agents added links to buy the drugs directly. Such sales broke U.S. laws prohibiting the sale of drugs from outside the country and without a prescription. "There were photos of the drugs, descriptions, labels that clearly printed out that we were shipping without a prescription and it was from Mexico," Mr. Whitaker said.

By the end of the operation in mid-2009, agents were buying Google ads for sites purportedly selling such prescription-only narcotics as oxycodone and hydrocodone. Agents also got Google's sales office in China to approve a site selling Prozac and Valium to U.S. customers without a prescription.

"Google's employees were instrumental in bypassing policy regarding pharmacy verification," Mr. Whitaker told the Journal. "The websites were blatantly illegal."

At the agents' direction, Mr. Whitaker said he signaled his illegal intent to Google ad executives, including Google's top manager in Mexico. As a tape recorder ran, he walked Google executives through the illegal parts of the websites. He said he told ad executives that U.S. Customs had seized shipments, for example, and that one client wanted to be "the biggest steroid dealer in the United States."

Agents at first ignored the flood of orders. But as the ersatz sites morphed into full-fledged Internet pharmacies, they worried that clients, some sick, would be expecting medication.

So customers were told they had to become members by filling out an online form and to receive a "membership kit." The kits never arrived, but it stopped users from placing orders, Mr. Whitaker said.

In the summer of 2009, U.S. agents visited Google's headquarters in Mountain View, Calif., to tell corporate executives about the evidence they had collected. Prosecutors served grand jury subpoenas and eventually collected four million pages of internal emails and documents, as well as witness testimony.

The federal task force, which also included the Food and Drug Administration's Office of Criminal Investigation, was preparing criminal charges against the company and its executives for aiding and abetting criminal activity online, prosecutors said.

Google hired attorney Jamie Gorelick, the former deputy U.S. Attorney General under President Bill Clinton. Two years later, the company reached a settlement with the government, a decision that stopped the likely introduction of emails to top Google executives had the case gone to trial.

"Suffice to say this was not two or three rogue employees at the customer service level doing this on their own," said Mr. Neronha, the U.S. attorney. "This was corporate decision to engage in this conduct."

Six private shareholder lawsuits have so far been filed against Google's executives and board members, alleging they damaged the company by not taking earlier action against the illegal pharmacy ads.

Google has other potential legal exposure. Record companies and movie studios say Google willfully profits from illegal Internet piracy—an issue raised last week, when Congress dropped antipiracy legislation after opposition from Internet companies, including Google.

A 2011 study commissioned by NBC Universal estimated that nearly a quarter of all Internet traffic relates to pirated movies, TV shows and games. "There's big business in being agnostic about what sites you place your ads on," said Jay Roth, national executive director of Directors Guild of America, which backed antipiracy legislation.

Online scams pose another potential legal threat. Searches relating to mortgage refinancing have been among the most popular on Google, Eric Schmidt said in 2009 when he was chief executive. An investigation by Consumer Watchdog, a consumer advocacy group, found that a large number of companies selling "mortgage modification" on Google bore the hallmarks of fraud.

The special inspector general's office for the Troubled Asset Relief Program in November said it had shut down 85 alleged online loan modification schemes that defrauded homeowners through Google ads.

"Google has a natural long-term financial incentive to make sure that the advertisements we serve are trustworthy so that users continue to use our services, and we aren't afraid to take aggressive action to achieve that goal," the company said.

To end the sting, federal agents killed off Mr. Whitaker's fictional character. They sent the Google employees a final email, allegedly from Jason Corriente's brother, saying the online entrepreneur died in a car crash.

Mr. Whitaker, who pleaded guilty and faced a maximum 65-year prison term, was sentenced in December to six years, following what federal prosecutors called "rather extraordinary" cooperation. He is due for release in two years.

Antipiracy Case Creates Questions

First appeared in NY Times
If Megaupload is guilty, then who among its brethren is innocent?

On Thursday, federal authorities shut the Web site of Megaupload, a file-sharing service, and accused its operators of copyright infringement and running a vast “Mega Conspiracy.” They could face 20 years in prison. A Jacksonville Copyright Lawyer is interested in the case.

But Megaupload was not the only such service on the Web. Many companies have crowded into the online storage market recently, most of them aimed at consumers and businesses that want convenient ways to get big data files out of their teeming in-boxes, off their devices and into the cloud — perhaps so that friends or co-workers can download them. They include MediaFire, RapidShare, YouSendIt, Dropbox and Box.net. And there are similar services from Amazon, Google and Microsoft.

All of these market themselves as legitimate ways to store content online. But they are inherently ideal for anyone looking to illegitimately upload and share copyrighted video and audio files. Most companies rarely, if ever, inspect individual files to see if the material they store on behalf of users violates copyrights, unless they are notified by someone claiming infringement. A Wash DC Intellectual Property Lawyer is interested in the copyright laws.

The Megaupload indictment reminds companies that how they manage copyrighted material on their sites could determine whether they continue to operate freely or face legal consequences. At the same time, it offers a look at just how widespread such piracy is and how tricky it can be to cut down on it, given the many ways people can send files to each other online.

“The goal of the Megaupload indictment is to push and prod other companies to take copyright infringement more seriously,” said Orin S. Kerr, a law professor at George Washington University.

Federal prosecutors seem to have thrown the book at Megaupload. The indictment asserts that the company’s business model depended on people violating copyright and that it gave them incentives to do so, while charging subscription fees for watching video and placing ads in front of material it did not own.

When asked to remove copyrighted works, the indictment says, Megaupload at best removed a particular version but left copies elsewhere in its system.

Federal prosecutors assert that although the site claimed to be protected under the Digital Millennium Copyright Act, or D.M.C.A., the business was in fact a sham that made $175 million off $500 million in copyrighted goods. Web sites that operate in the United States are typically offered “safe harbor” for copyright violations under the D.M.C.A., as long as they do not profit from the illegitimate material and immediately take it down once contacted. A Bucharest Copyright Lawyer has seen similar issues.

But the act treats violations “very much as a ‘you know it when you see it’ rule,” said Aaron Levie, chief executive of Box.net, a popular online storage company. “You look at how they make money, and you look at how they treat D.M.C.A. requests to take down material.”

Megaupload waved the D.M.C.A. flag even though it was based in Hong Kong and many of its executives were in New Zealand. It was a juicy federal target for its sheer size. The site accounted for roughly 1 percent of total Internet traffic in North America, nearly 2 percent of traffic in the Asia-Pacific region and more than 11 percent in Brazil, according to Sandvine, a Canadian company that provides equipment to monitor Internet traffic. The indictment contends that Megaupload has over 180 million registered users and, at one point, was the 30th-most-visited site on the Web.

Ira P. Rothken, a lawyer for Megaupload, said on Thursday, “Megaupload believes the government is wrong on the facts, wrong on the law.”

Mr. Levie of Box.net noted that his company and Dropbox, as well as the services from Google and Microsoft, were less likely prosecution targets because they depended to a large extent on legitimate corporate purchases of their storage. These services are more focused on sharing within organizations and small groups. While this can make it more difficult for an outsider or the authorities to see who is storing what, it makes it less likely that huge copyright violations are taking place. A Hato Rey Copyright Lawyer is concerned about similar issues.

Lori Shen, a spokesman for YouSendIt, said any comparison between that site and Megaupload would be inaccurate.

“YouSendIt is a private and secure business collaboration tool for business users. It provides a secure vehicle to share, send, sign and sync business content online,” Ms. Shen said.

Megaupload had its fans in the workplace, too. A study published Thursday by the security firm Palo Alto Networks indicated that the use of Megaupload on corporate networks was greater than the combined use of Box.net, Dropbox and YouSendIt, as measured by the amount of data transferred. Of course, it is not clear how much of that data was work-related and how much was for the purpose of in-cubicle entertainment. An Athens Copyright Lawyer is curious.

After the indictment, a number of Megaupload users took to Twitter to complain that they had used it to back up personal files, to share files with clients and as a collaboration tool.

When asked about the Megaupload case, RapidShare, Minus and several other consumer-oriented storage sites offered statements saying that they respected copyright and complied with requests to take down material.

The Megaupload indictment came amid a battle in Washington over antipiracy legislation. Some of the recent concern among those in the tech industry about the Stop Online Piracy Act, or SOPA, was that it would permit the rapid shutdown of any site that had even a small amount of unauthorized copyrighted material on it, a big risk for sites that accept uploads from users. Backers of the legislation, which has been shelved for now, say it was aimed only at foreign sites that were primarily about piracy. A Boston Copyright Lawyer is interested in the implications.

As online storage businesses go, Mr. Levie said, Megaupload was more lucrative than most. “I looked at the list of cars Kim Dotcom owned and wondered if I was in the wrong business,” he said, a reference to the company’s founder.

He added: “Then again, I’m not in jail.”

Chevron Doesn't Want to Pay Damages

First appeared on Yahoo! News
Chevron Corp has filed an appeal with Ecuador's Supreme Court to review a judgment that the U.S. oil company pay $18 billion in damages for polluting the Amazon jungle.

An Ecuadorian judge ordered the U.S. major to pay the damages after a fraught legal battle that has lasted nearly two decades and looks like it will run even longer.

The California oil company inherited the case when it bought Texaco a decade ago. Its appeal on Friday argued that the lower courts violated Ecuador's constitution by refusing to take corrective action in response to what Chevron calls "extensive fraud and corruption" committed by the plaintiffs' lawyers and representatives.

Chevron said the original judgment, delivered last February by an Ecuadorian court in the jungle city of Lago Agrio, was based on faulty evidence and retroactive application of a law, while ignoring releases of liability granted to Texaco by Ecuador in the 1990s.

"Today's appeal gives (the Supreme Court) an opportunity to correct the grave injustices that have occurred in this case," Hewitt Pate, Chevron's general counsel, said in a statement.

The case is being watched closely by the oil industry for precedents that could influence other claims against companies accused of pollution in the countries where they operate.

Plaintiffs have responded to the accusations by citing Chevron's own test data in documenting the pollution and arguing that Ecuador's release for Texaco did not prevent third parties from suing for damages.

In related litigation in New York, the plaintiffs also accuse the company of mishandling soil and water samples during the Lago Agrio trial by maintaining two different laboratories, based on testimony from a Chevron expert.

Along with the appeal in Ecuador, Chevron asked that it not be required to post a bond to prevent enforcement of the judgment during the appeal process, arguing that such a payment would violate Ecuador's obligations under an order issued last February by an international arbitration tribunal.

Pablo Fajardo, a lawyer for the plaintiffs, said the next step would be to see whether the Lago Agrio appeals court requires Chevron to pay.

"If it asks (Chevron) to pay a bond, and if it pays the bond, then only the bond can stop us from carrying out the sentence," Fajardo told Reuters.

Asked if the plaintiffs were looking at any country in particular where it could seek to collect the damages, he said they would first await the decision on the bond. "We haven't done anything, we don't have any plans yet," Fajardo said.

Chevron no longer has assets in Ecuador, so questions surround the enforcement of the original ruling. A lawyer for the company accused the plaintiffs last May of planning to seek enforcement in countries hostile to Chevron.

The entire case may be reheard far from both Ecuador and the United States. The arbitration tribunal in The Hague, operating under a U.S.-Ecuador treaty, ordered Ecuador to take all measures at its disposal to suspend enforcement of the Lago Agrio judgment until the arbitrators have their say.

The tribunal is expected to rule any day on the question of whether or not it has jurisdiction in the case.

Divorce Sales - Making It Better

First appeared on Your Tango
Selling your married-life stuff can be cathartic -- especially while acquiring new, chic stuff.

I can think of a Housewife or two who could benefit from this. Divorce Sales, the latest craze to come out of Los Angeles, is a company founded by entrepreneur Jill Alexander. The 37-year-old smartypants started the company to help wealthy divorcees sell down their stuff. Everything from jewelry to designer clothes to dining room sets are totally game — and don't worry, it's not being laid out on the front lawn with red tags. Divorce Sales are held in chic hotel ballrooms and the ilk all around L.A.

Alexander assures that the goal of the company is less about turning a profit, and more about helping women get through a difficult time in their lives. She explains: "It is a really cathartic experience. When you clear out your closet, it can be freeing. You are downsizing, but you also don't want the clothes from your past life." The Stir: Man Locks Wife In Basement For 8 Years (Keeps Girlfriend Upstairs)

I totally get that — there are clothes in my closet I find hard to look at because they remind me of a particularly bad time in my life (which reminds me, I need to donate them). I can understand why divorced women would want to rid themselves of these old memories and start fresh with new clothes. I'd be down for selling my stuff if I ever got a divorce, but I have a feeling my H&M tops and Gap jeans really wouldn't bring in that much dough.

But hey, if Alexander says it's not about the money, maybe she'd help me if I needed it. She's poised to take her Divorce Sales on the road because, after all, people are getting divorced across the country and not just in California. The first New York sale is coming up. The Stir: Frazzled Mom Banned From Grocery Store For 'Stealing' Milk

I see Divorce Sales as a win win win win scenario. The divorcees get a cathartic experience and a little start-over money, the shoppers get great deals on designer wares, Alexander gets her cut so that she can continue hosting Divorce Sales, and she donates some of the proceeds to charity.

Divorce sounds terrible. Sure, all I know about it is what I've seen on reality TV, but good god it looks horrendously painful and emotional. If Divorce Sales can help a woman through it, I'm all for it. Plus, I kind of want to shop the one coming to NY and support the cause.

Congress Can Decide on Cross-Border Pipelines

First appeared on Yahoo! News
The Congress has the constitutional right to legislate permits for cross-border oil pipelines like TransCanada's Keystone XL, according to a new legal analysis released late on Friday.

The study by the nonpartisan Congressional Research Service could give a boost to Republicans drafting legislation to overturn a decision this week by President Barack Obama to put the $7 billion Alberta-to-Texas project on ice. A West Hollywood Environmental Lawyer has been watching the case.

Historically, U.S. presidents have made executive decisions on pipelines that cross borders. But Congress had the power all along to weigh in on the permits, said the study, done by four legislative attorneys with the CRS.

"If Congress chose to assert its authority in the area of border-crossing facilities, this would likely be considered within its Constitutionally enumerated authority to regulate foreign commerce," the study said.

Republicans in Congress have elevated the Canadian pipeline and the construction jobs it would create into an election-year issue, accusing Obama of caving in to environmental groups. They pushed to include a deadline for a permit approval in a payroll tax cut bill that Obama signed into law in December.

But this week, Obama and the State Department said an environmental review of a portion of the proposed pipeline could not be rushed, closing the door on a quick start to the project.


The CRS study examined the history of decisions by presidents on thorny issues involving approval of cross-border projects such as bridges and power lines stretching back to 1869, when President Ulysses Grant ruled on a French transatlantic cable used to send telegrams.

The report also looked at more recent court cases involving oil and gas pipelines crossing the Canada-U.S. border.

While the U.S. president has authority over foreign affairs, the U.S. Constitution gives Congress the power to regulate foreign commerce, the report explains.

Until now, presidents have issued permits by executive order for pipelines, and Congress has stayed out of the matter. A Salt Lake City Environmental Lawyer is curious about the change.

The report did not comment on specific proposals floated by Republicans in the Senate and House of Representatives, but said that "legislation altering the pipeline border crossing approval process appears likely to be a legitimate exercise of Congress's constitutional authority to regulate foreign commerce,"
Legislation on cross-border "facilities" like pipelines "is unlikely to raise significant constitutional questions, despite the fact that such permits have traditional been handled by the executive branch alone," it said.


Any "plan B" drafted by Republicans would still have to clear a very big political hurdle. While legislation could easily pass in the Republican-controlled House, the Democratic-led Senate is another matter.

"Regardless of whether the Republican legislation seeking to rubber-stamp Keystone XL would pass constitional muster, it would still need to pass the Senate and be signed by the president, and that is not going to happen," a Senate Democratic aide said on Friday.

But the CRS report "greatly helps the conversation" among Senate and House Republicans strategizing about how to keep the project alive, said Ryan Bernstein, an energy adviser to Senator John Hoeven of North Dakota, whose office requested the study.

"I think this confirms what we've been saying all along - Congress has the authority to approve the Keystone pipeline," said Bernstein, who is helping Hoeven draft legislation that would see Congress approve the project. A St. Louis Environmental Lawyer may agree.

Earlier on Friday, Republicans in the House of Representatives said they were considering using upcoming payroll tax cut or highway construction bills to force quick approval of the pipeline.

Representative Lee Terry, whose home state of Nebraska would host part of the pipeline, has drafted legislation to shift the Keystone decision-making process from the Obama administration to the independent Federal Energy Regulatory Commission, which regulates pipelines in the United States.

The House Energy and Commerce Committee will hold a hearing on Wednesday about Terry's bill and other Keystone measures.

Kodak Has High Hopes for Bankruptcy

First appeared in USA Today
The picture of what Eastman Kodak's future will look like remains blurry despite its Thursday filing for Chapter 11 bankruptcy protection.

As part of the company's attempts to regain its financial footing, U.S. Bankruptcy Judge Allan Gropper in New York has given Kodak permission to borrow an initial $650 million from Citigroup, The Associated Press reported Friday. The company is required under its bankruptcy financing terms to produce a reorganization plan by Feb. 15, 2013.

Even after failing spectacularly to re-invent itself over the past decade, the iconic film manufacturer is pressing ahead with its current strategy for rejoining the ranks of leading technology companies. The plan: persuade consumers and small-business owners to try out its line of digital printers and software.

But Kodak's best chance for a big rebound post-bankruptcy might actually be in the emerging global market for giant commercial inkjet printers that can sell for $1 million or more a pop, analysts say. "They are definitely going after this market," says Pete Basiliere, research director at Gartner, the tech industry research firm. "These are home inkjet printers on steroids."

There's a bit of irony in Kodak's future being intertwined with the growth of these cutting-edge inkjet printers. Their rising importance has been driven by a modernization push at large commercial printing plants around the world that often involves replacing aging off-set printing presses, which use Kodak film, with inkjets.

Worldwide shipments for the largest of these massive digital printers held steady at more than 7,000 each year from 2006 through 2010, despite the global recession, according to Gartner. The market is expected to grow steadily for years to come, driven partly by an expected wave of advancements in inkjet printing technologies, says Basiliere. A Raleigh Bankruptcy Lawyer agrees.

Kodak's success is far from a given. The company must prove it can execute a winning business plan in the face of withering competition, something it has repeatedly failed to do in the past few decades.

Yet CEO Antonio Perez is not ready to throw in the towel. He said in a statement that Chapter 11 gives Kodak the best chance to succeed in tapping more value from its treasure trove of imaging patents while continuing to compete in the dynamic inkjet imaging market. Breakthrough technologies give "Kodak a competitive advantage in our growing digital businesses," he says.

The company has 120 days to submit a plan for becoming viable again. Company spokesman Christopher Veronda said Kodak will take "a series of many steps over a number of months." In court fillings, Kodak indicated it will do more of what it has already been doing, including selling patents, cutting spending on retirees and putting more emphasis on its existing product lines.
Meanwhile, Bob Volpe and Arthur Roberts, board members of Kodak retiree group EKRA, said the group will seek a seat on a creditors' committee that will review Kodak's reorganization plan; retirees will push to retain benefits. A Sacramento Bankruptcy Lawyer is curious about the outcome.

Successful Chapter 11 reorganizations typically take a year or more. However, if the company's plan falters, court proceedings could shift to breaking up Kodak and selling the pieces to pay off creditors, says bankruptcy consultant Larry Perkins of Conway MacKenzie. That breakup process can be carried out in a matter of months.

For the moment, Perez seems committed to reviving Kodak. "He's the incumbent guy doing his best," says Perkins. "Realistically, he inherited a lot of problems that have been brewing over a long period of time."

Perez has much to unravel. Kodak muddled its way through the sea change from film-based to digital imagery, and the company faces proven competitors including the likes of Nikon, Canon, Hewlett-Packard and Ricoh.

"Kodak is still a highly recognized brand. But how does it leverage this?" says Jack Gold, principal analyst at J. Gold Associates, who worked summer jobs at Kodak as a youth. "If it tries to compete in commodity markets, it likely will lose. If it competes at the high end, what products can it bring to market that will outshine its competition?"

A powerful legacy

The iconic Rochester, N.Y., company, whose history dates to the late 19th century and the technical and marketing genius of founder George Eastman, has been besieged for the past three months by rumors that it would make a bankruptcy filing. Those rumblings had intensified in the past two weeks. Many Philadelphia Bankruptcy Lawyer professionals have been talking about it.

The filing listed assets for the company of $5.1 billion and debts of $6.75 billion. Perez assured employees that it will be business as usual under Chapter 11. "Kodak expects to pay employee wages and benefits," the company said.

As of a year ago, Kodak had 18,800 employees companywide. The worldwide figure is now 17,000, the company said in its bankruptcy papers, about 8,000 of them in the U.S.

At its peak in the early 1980s, the company employed 130,000 worldwide, nearly half in Rochester. Kodak has about 25,000 retirees in the Rochester region, so the company's legacy is a powerful one there.

The filing was made in the Southern District of New York, a common location for major bankruptcy cases because the New York City metropolitan area has the infrastructure of banks, law firms and other institutions needed to handle complex legal matters.

Citigroup has committed to providing Kodak with a $950 million line of credit to help sustain its operations while it reorganizes its finances.

Kodak said it expects to continue operating its businesses while in Chapter 11, "and to continue the flow of goods and services to its customers."

Perez said in a video statement on Kodak's website that the company has four objectives while in bankruptcy reorganization:

•Obtaining the financing to reassure its employees, customers and other stakeholders that the company will stay in business.

•Pursuing patent-infringement claims against major companies including Apple.

•Adjusting its "legacy costs" to a fairer level.

•Driving growth in the printing businesses Perez has declared are its future.

The filing wasn't a surprise, though no one outside the company knew precisely when it would come. Kodak was scheduled to report its 2011 fourth-quarter and full-year financial results on Jan. 26, and it may have become apparent to company officials that the news would be bad, leading to a pre-emptive move into Chapter 11.

Kodak had said in November that it was in danger of being unable to pay its bills at some point in 2012 unless it received a substantial infusion of cash. What seemed like the best potential source of cash was the sale of its digital patent portfolio, which analysts said could fetch up to $3 billion. But Kodak's filing seems to indicate it now thinks it will have a better chance of selling the patents under court supervision. A Des Moines Bankruptcy Lawyer has been watching the cases closely.

Perez has insisted that Kodak would return to profitability this year as it pursues a strategy of building several key business lines — digital printing presses, package printing, commercial and home inkjet printers and workflow software. The company's traditional film business, though still generating substantial revenue, continues to shrink, and just last week lost its status as a stand-alone operating division within the company.

Kodak owes a lot of well-known companies a lot of money, including Bank of New York Mellon; retailers Wal-Mart, Target and Best Buy; and Hollywood studios Warner Bros. and Disney.

How much those companies get will be determined during bankruptcy-court proceedings.

Monday, January 23, 2012

At Least 102 Fraudulent Mortgage Bailouts Lands Chicago Lawyer in Jail

First appeared in FBI: Chicago Division
A former Chicago lawyer was sentenced to 15 years in federal prison for engaging in mortgage and bankruptcy fraud schemes involving a so-called “mortgage bailout” program that purported to “rescue” financially distressed homeowners but instead tricked victims into relinquishing title to their homes and declaring bankruptcy. The defendant, Norton Helton, participated in at least 102 fraudulent mortgage bailout transactions and more than a dozen fraudulent bankruptcies in 2004 and 2005. He was ordered to pay more than $3.2 million in mandatory restitution to various lenders and financial institutions that were not repaid by the borrowers or fully recovered through subsequent foreclosure sales, federal law enforcement officials announced today.

Helton, 50, of Atlanta and formerly of Chicago, was sentenced Wednesday by U.S. District Judge Samuel Der-Yeghiayan in federal court in Chicago. He was ordered to begin serving his sentence in June.

Helton and two co-defendants, Charles White and Felicia Ford, were convicted of multiple fraud counts following a five-week trial in June and July 2010. White, 43, of Chicago, was sentenced late last year to more than 22 years in prison, while Ford, 39, of Chicago, is awaiting sentencing next month.

White owned and operated Eyes Have Not Seen (EHNS), which purported to offer insolvent homeowners mortgage bailout services that would prevent them from losing their homes in foreclosure by selling their property to third-party investors for whom the defendants fraudulently obtained mortgage financing. The victim-clients were assured they could continue living in their homes rent and mortgage-free for a year while they attempted to eliminate their debt and repair their credit. EHNS misled clients concerning the operation of the purported program. In particular, victim-clients were not told that their homes were, in fact, being sold to third parties and that ENHS would strip their homes of any available equity at the time of sale, which EHNS did. Instead, ENHS clients were told that they were only temporarily transferring their homes and would preserve their ownership rights.

Helton was recruited by White to represent ENHS participants at the real estate transactions it orchestrated. The victim-clients typically met Helton for the first time at the closings at which they sold their homes. Helton worked to placate individuals who questioned the program and to dissuade them from retaining independent legal advice. He received above-market legal fees for appearing at closings at which he did little more than guide victim-clients through the paperwork that sold their homes with EHNS receiving all of the profits from the sale. Helton further used the ENHS real estate closings to recruit prospective bankruptcy clients, informing them that bankruptcy would serve as a component of the bailout program. Helton subsequently filed more than a dozen bankruptcy petitions for victim-clients that omitted any reference to their recent EHNS property sales.

In addition to participating in ENHS’s bailout program, Helton attempted to implement his own mortgage bailout program through Diamond Management of Chicago, Inc., a foreclosure avoidance company comparable to EHNS. Helton marketed Diamond’s bailout program and his bankruptcy services as part of a “credit repair” system.

Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois, announced the sentence today with Robert D. Grant, Special Agent in Charge of the Chicago Office of the Federal Bureau of Investigation; Barry McLaughlin, Special Agent in Charge of the U.S. Housing and Urban Development Office of Inspector General in Chicago; and Thomas P. Brady, Inspector in Charge of the U.S. Postal Inspection Service in Chicago. The U.S. Trustee Program, a Justice Department component that oversees administration of bankruptcy cases and private trustees, also assisted in the investigation.

The government is being represented by Assistant U.S. Attorneys Joel Hammerman and Mark E. Schneider.
The case is part of a continuing effort to investigate and prosecute mortgage fraud in northern Illinois and nationwide under the umbrella of the interagency Financial Fraud Enforcement Task Force, which was established to

Thursday, January 19, 2012

New Labor Laws Anger Michigan Farmers

First appeared in Up North Live
The Michigan Farm Bureau and its members are worried about new rules the U.S. Labor department is considering on children working in agriculture. A Raleigh Employment Attorney has been following the story closely.

The new rules would  would prohibit most children under age 16 from driving tractors, using power equipment, working with livestock in certain circumstances and doing work at heights over 6 feet. A Memphis Employment Lawyer sees these changes having impact.

At the bureau's annual meeting this week in Grand Rapids the organization collected 488 comments and signatures from farmers opposing the new rule proposal and submitted them to the Department of Labor.
Farm Bureau members also adopted policy denouncing " all efforts by the DOL to restrict the ability of young workers to obtain appropriate employment in agriculture if they desire to work."

Federal officials say the rules are needed because farming is one of the nation's most dangerous occupations, but many farmers say children learn important life lessons and might develop an interest in agriculture by working on farms or ranches. A Denver Employment Lawyer is interested in this argument.

Michael Hancock, the assistant administrator for policy at the Labor Department's Wage and Hour Division, said the rules covering child farm workers haven't been updated in more than 40 years and that changes are needed to address the dangers of working with tractors and other large farm machines, and large Ag Tires.
Farming, he said, is "the single-most hazardous occupation, as measured by fatalities, for children."

Nearly 29 out of every 100,000 farm workers in the U.S. die on the job, according to the National Safety Council. Among workers ages 15 to 24, the rate is about 21 deaths per 100,000 workers. Statistics for workers younger than 15 aren't available because there isn't enough data on them.

Hancock compared the proposed rules, which mostly apply to farm employees between the ages of 12 and 16, to those prohibiting a teenager from operating a meat slicer in a restaurant or a cardboard compactor in a grocery store.  A Raleigh Employment Lawyer thinks about that argument.

"Farm Bureau takes the safety of all agricultural employees, particularly youth, very seriously," said Sarah Black, director of the MFB Public Policy and Commodity Division.

"In fact, the Michigan Farm Bureau has a department devoted to agricultural labor and safety services and we firmly believe safety precautions have a place and purpose on farms.

The proposed DOL rule, however goes too far and we worry that the changes could jeopardize opportunities for youth to gain valuable work experience on Michigan Farms."

"There's any number of things kids can do on a farm that will be totally unaffected by these regulations," Hancock said. For instance, he said, they can still detassle corn, haul hay and feed cattle.

Hancock also said he supports the proposed exemptions in the rules for children working on their parents' farms or on farms where a parent is a main operator.

"If the parents are responsible for what goes on on that farm, they're uniquely able to judge those risks," Hancock said.

Agricultural groups say the parental exemption raises a lot of questions because many farms or ranches today are technically owned by limited liability corporations or other entities even if they are run by families.
They say the proposed rules simply aren't clear about how they would apply to various ownership structures. A Boston Employment Lawyer is also thinking about these things.

The Labor Department can only regulate employer-employee relationships, so Hancock said the proposed rules shouldn't affect 4-H, Future Farmers of America or other educational programs. And, they may not keep children from helping on their grandparents' or uncle's farms if they aren't paid.

"I think there is a clear path forward for kids who want to pursue agriculture as a career," Hancock said.

Monday, January 16, 2012

Are Visas Rules Changing for Illegal Immigrants?

First appeared in Associated Press
The Obama administration wants to more quickly reunite Americans with their illegal immigrant spouses and children in a move long sought by advocates but panned by Republicans as a way to push unpopular policies around Congress. Many North Carolina Immigration Lawyer advocates are paying attention.

Currently, many illegal immigrants must leave the country before they can ask the federal government to waive a three- to 10-year ban on legally coming back to the U.S. The length of the ban depends on how long they have lived in the U.S. without permission.

On Friday, the Obama administration proposed changing the rule to let children and spouses ask the government to decide on the waiver request before they head to their home country to seek a visa to return here legally.

The illegal immigrants would still have to go abroad to finish the visa process, but getting a provisional waiver approved in advance would reduce the time they are out of the country from months to days or weeks, said Alejandro Mayorkas, director of U.S. Citizenship and Immigration Services.

The purpose is "to minimize the extent to which bureaucratic delays separate Americans from their families for long periods of time," Mayorkas told reporters.

It currently takes about six months for the government to issue a waiver, Mayorkas said.

The waiver shift is the latest move by President Barack Obama to make changes to immigration policy without congressional action. Congressional Republicans repeatedly have criticized the administration for policy changes they describe as providing "backdoor amnesty" to illegal immigrants.

The proposal also comes as Obama gears up for a re-election contest in which the support of Hispanic voters could prove a determining factor in a number of states. The administration hopes to change the rule later this year after taking public comments. Many North Carolina Immigration Lawyer advocates are paying attention.

Rep. Lamar Smith, R-Texas, on Friday accused the president of putting the interests of illegal immigrants ahead of those of Americans.

"It seems President Obama plays by his own rules to push unpopular policies on the American people," the House Judiciary Committee chair said in a statement.

Immigrants who do not have criminal records and who have only violated immigration laws can win a waiver if they can prove their absence would cause an extreme hardship for their American spouse or parent. The government received about 23,000 hardship applications in 2011 and more than 70 percent were approved.

About 75 percent of the applications were filed by Mexicans, according to U.S. Citizenship and Immigration Services.

Immigrant advocates have long complained about the current system, which can split up families for months or years. And since there's no guarantee a person will win a waiver to return, many immigrant families refuse to take the risk of going abroad to apply for one.

Laura Barajas, a 42-year-old stay-at-home mom in Orange County, is due to travel to Ciudad Juarez in two weeks to try to get her papers. She and her U.S. citizen husband are trying to stay positive, but she is afraid to leave him and their two young children behind.

"I don't want to be separated for a long time from my children," said Barajas, who came to the U.S. illegally to find work, then met her future husband and stayed. "I'm not going to risk taking them to a place that I don't even know after 18 years."

Pro-immigration activists and lawyers embraced the change, saying it would keep families together and encourage more people now in the United States illegally to emerge from the shadows and apply for visas. Some said it could even save lives.

Rep. Jared Polis, D-Colo., recalled the case of Tania Nava Palacios, who went to Ciudad Juarez -- a hotbed for drug-fueled violence -- with her American husband and son in pursuit of a waiver. Drug cartel members killed her husband last year, his office said in a statement.

Kelly Alfaro, of Washington state, said her husband, Guillermo, waited in Mexico for eight months last year after he had his visa interview in Ciudad Juarez.

"I was terrified for his safety because I know how dangerous it is there and I had no way of knowing how long he would have to stay in Mexico," she said.

Democratic lawmakers welcomed the Obama administration's move to change the immigration system by rulemaking after efforts at a legislative overhaul failed.

"Has it taken a while? Yes. Is it happening? Yes," said Rep. Luis Gutierrez, D-Ill., who has encouraged such changes. "Am I looking forward to telling people to vote for him? Absolutely."

Immigration has become a difficult issue for Obama ahead of the November election. As a presidential candidate, he pledged to change what many consider to be a broken immigration system.

To that end, Homeland Security Secretary Janet Napolitano announced plans last year to review some 300,000 pending deportation cases in an effort to target criminal illegal immigrants, repeat immigration law violators and those who pose a national security or public safety threat.

Napolitano said the DHS would delay indefinitely the cases of many illegal immigrants who have no criminal record and those who have been arrested for only minor traffic violations or other misdemeanors. A pilot program is under way to begin reviewing the case.  A North Carolina Immigration Attorney is investigating the idea as well.

Immigration and Customs Enforcement Director John Morton also issued a memo in June outlining how immigration authorities could use discretion in deciding which illegal immigrants to arrest and put into deportation proceedings.

Congressional Republicans have decried the policy changes, arguing that the Obama administration is circumventing Congress.

Several attempts at an immigration law overhaul have failed in recent years, including the so-called DREAM Act, which would have allowed for some young illegal immigrants brought to the U.S. as children to earn legal status if they went to college or joined the military.

Feds Question Diamond Foods’

First appeared in Accounting Today
Snack maker Diamond Foods is reportedly being investigated by federal prosecutors who are working with the Securities and Exchange Commission to probe the accounting for the company’s payments to walnut growers.

Diamond revealed last fall that it had made a pre-harvest “momentum payment” to walnut growers in early September, prior to the delivery of the fall walnut crop to reflect the fiscal 2012 projected market environment. The company said the payment had been accounted for in its fiscal 2012 cost of goods sold and in the guidance provided by the company on Sept. 15, 2011.

However, several walnut growers said they received payments for nuts they didn’t plant and questions have arisen over whether the payments were timed for the purposes of earnings management.

The company revealed that its audit committee was looking into the timing of the payments and how they were recognized on the books. The Securities and Exchange Commission began probing whether Diamond violated accounting rules shortly after the company’s audit committee began its investigation.

Diamond, which sells the Emerald brand of nuts, Kettle potato chips and Pop Secret popcorn, has been preparing for its largest acquisition ever, the purchase of Pringles from Procter & Gamble for $2.35 billion, announced last April. The investigation has raised questions over whether that acquisition will be completed, and shares of Diamond have been volatile in recent months.

On Thursday, The Wall Street Journal revealed that prosecutors in the U.S. Attorney’s Office in San Francisco have also launched a criminal investigation. Shares of Diamond slid up to 11 percent on Friday morning following the report. Two major investors in the company also began selling off their shares on Wednesday.

Diamond Foods said it was cooperating with the investigation. “Diamond continues to cooperate with the SEC in its ongoing investigation," said a Diamond Foods spokesperson in an emailed statement. "The SEC has said its investigation should not be construed as an indication that any violations of law have occurred. It is not unusual for the SEC to coordinate with other agencies and to the extent other agencies request information, the company would cooperate fully. Diamond’s internal investigation into certain crop payments to walnut growers is ongoing and the audit committee has reached no conclusions on the matters it is examining. The audit committee currently anticipates completing its investigation by the middle of February.”

Friday, January 13, 2012

Legitimate Medical Malpractice Lawsuits Are Not Being Reviewed in Connecticut

First appeared in Insurance Journal
After losing a baby because of an incompetent cervix, Patricia Votre thought she was well prepared when she got pregnant again. She made arrangements with her doctors to consult with high-risk pregnancy experts from Yale University and to have the specialists take over her care.

But when she began having problems including a fever and back pain, her doctors refused to turn over her care to the Yale experts, failed to treat her according to the Yale group’s recommendations and even hid the experts’ care plan from her, according to a lawsuit she filed in 2006. Her son, Miles, nearly died at birth from an E. coli infection and lived for 51 days before succumbing to a blood infection in 2003.

Despite the serious allegations, Votre was never able to get her case before a jury. A judge dismissed her lawsuit based on a technicality added to the state’s medical malpractice law in 2005 as part of the national “tort reform” debate. It requires plaintiffs in all malpractice cases to get an opinion from a medical expert backing up their allegations before they can sue, but legal fights over the credentials of those experts have led to many cases being dismissed.

“It was just not right. It was just not fair,” said Votre of Woodbridge, Conn., who’s now 41 and the mother of two children ages 7 and 12. “They used the law to manipulate the situation. It wasn’t about my baby. It was about me.”

Although the law was aimed at preventing frivolous lawsuits and reducing high malpractice insurance rates, it’s had the unintended consequence in many cases of keeping seemingly legitimate lawsuits out of Connecticut’s court system, an Associated Press review has found. The worst part, plaintiffs say, is that doctors, nurses, dentists and other medical professionals end up not being held accountable for their mistakes.  Milwaukee Medical Malpractice Lawyers handled similar issues.

Since the law took effect, the number of malpractice cases filed in the state has dropped 20 percent to an average of 292 per year from an average of 364 annually, state records show. It’s not clear how much of the decrease can be attributed to the opinion letter requirement, but malpractice lawyers believe the mandate has played a big role.

“The argument is made that these (opinion letters) preclude the filing of a frivolous claim,” New Haven attorney Joel Faxon said. “It’s all just fear-mongering. It’s an impediment to bringing a case that gives them (defendants) a leg up.”

Faxon said there is already a malpractice lawsuit screening process that’s been effective for years. Most lawyers won’t file lawsuits unless there is very strong evidence of malpractice because the cases are expensive to litigate, he said.

Similar laws have been declared unconstitutional in several other states including Washington, Arkansas, Ohio and Oklahoma, mainly because the opinion letters can cost thousands of dollars and can prevent people who can’t afford them from getting their day in court, according to the Center for Justice & Democracy at New York Law School. But, lawyers for doctors and hospitals say, plaintiffs’ lawyers usually assume the cost of the letter as part of their fees, and plaintiffs will eventually need to pay an expert to testify at trial. Chicago Medical Malpractice Lawyer professionals help with all issues.

The wording of Connecticut’s statute says that experts who write opinions for plaintiffs must have “similar” credentials to those of the medical professionals accused of malpractice, and the opinion letters must be attached to lawsuits when they are filed.

But state judges have interpreted the law to mean that the experts must have credentials that are identical to those of the defendants. Many cases have been dismissed because the opinion writers’ certifications didn’t match up exactly with those of the defendants.

Both Democratic and Republican state lawmakers, who approved the 2005 law under pressure from doctors and hospital officials complaining about high malpractice insurance rates, say that’s not what they intended and they tried to ease the opinion letter requirements in the 2011 legislative session. The bill was passed by the House but died in the Senate at the end of the session, under heavy opposition from doctors and hospital officials.

“I don’t think anyone should be barred from the courthouse doors before the merits are heard,” said Republican state Sen. John Kissel of Enfield. “The party’s that’s forgotten in all of this is the injured individual who is suffering because of what he or she believes in medical malpractice.”

Kissel expects lawmakers in the 2012 session to take up another bill that would relax the opinion letter mandate. And an appeal filed with the state Supreme Court in a malpractice case is challenging the constitutionality of the law.

Lawyers for doctors and hospitals, however, say the law has been effective at weeding out frivolous claims and reducing their clients’ litigation costs, and they would continue to oppose any efforts to change the statute.

Eric Stockman, a New Haven attorney who has represented both plaintiffs and defendants in malpractice cases, said state law before 2005 required lawyers who filed malpractice lawsuits to declare in writing that the cases had merit.

“There was really no way to challenge whether that inquiry (by plaintiffs’ lawyers) was done,” Stockman said.

Since the 2005 opinion letter law took effect, “We really stopped seeing those really bad cases,” he said, referring to frivolous claims.  Grand Rapids Medical Malpractice Lawyer professionals do not see claims as frivolous.

Stockman also said he believes part of the effort to relax the opinion letter requirements is to protect plaintiffs’ lawyers from legal malpractice claims that could arise if they don’t get the right expert to write the letter and their clients’ cases are dismissed.

One malpractice case that was dismissed because of the opinion letter requirement played a prominent role in this year’s legislative debate after having led to a landmark state Supreme Court ruling.

Richard Bennett Sr. of New Milford crashed his car while having a diabetic seizure in November 2006. He was brought to the New Milford Hospital, where his blood sugar was stabilized and he was given medication for back pain before being discharged.

But a doctor failed to diagnose the spine and leg fractures Bennett suffered, and Bennett died two months later of a heart condition caused by severe pain from the injuries, according to a lawsuit filed by Bennett’s family. The retired machinist was 69.

The lawsuit went all the way to the state Supreme Court, which last January upheld dismissals of the Bennetts’ case by lower courts because the author of the Bennetts’ opinion letter was a trauma surgeon and the defendant was an emergency room doctor. Virginia Beach Medical Malpractice Lawyer professionals help clients with similar cases.

But the Supreme Court did allow Bennett’s family to refile the lawsuit, which remains pending. The ruling, however, set a landmark precedent that upheld the opinion letter law, including its requirement that cases be dismissed if the opinion letters aren’t sufficient.

“It just defied logic,” said the Bennett family’s lawyer, Andrew Pianka. He added that the 2005 law is “actually being implemented … in a manner to defeat valid claims.”

Doctors and hospital officials insist that tort reforms including the opinion letters, known as “certificates of merit,” have helped lower malpractice insurance rates, and they don’t believe the measures have created barriers to the courts.

“It makes no sense at all to allow someone to file a medical malpractice lawsuit without the most superficial of investigations,” said Dr. David S. Katz, a general surgeon in Milford, Conn., and former president of the Connecticut State Medical Society.

“There has to be a least a basis from a qualified expert as to whether malpractice occurred or not,” he said. “There has to be a screening process and I think it’s a smart way to go.”

But the Center for Justice & Democracy recently released a report, echoing previous studies, saying that certificates of merit and other tort reforms have no effect on malpractice insurance rates. The report says rate levels go up and down based on insurance companies’ financial performance and the economy.

“The certificate of merit is weeding out legitimate cases,” said Joanne Doroshow, executive director of the center.

In Patricia Votre’s case, she sued her doctors for alleged breach of contract and infliction of emotional distress — not malpractice. But a judge ruled that her case involved alleged medical malpractice and dismissed her lawsuit because she never filed an opinion letter from a medical expert. The state Appellate Court upheld the ruling, and the state Supreme Court declined to hear the case.

In an ironic twist, Votre said her case set a precedent for dismissing malpractice cases.
“I feel that my son is made a mockery of at this point,” she said. “I can’t even explain to you what he went through. Now his memory is being trashed.”

Edmund Lohnes of Denver said he nearly died in 2007 because of a medical mistake at a New Haven hospital when staff gave him a drug to which he was allergic, despite his wearing a red wristband alerting staff to the allergy. He also sued, but his lawsuit was dismissed because the doctor who wrote his opinion letter was a pulmonologist while the defendant was licensed to practice emergency medicine. A Houston Medical Malpractice Lawyer dealt with a similar case earlier this year.

“I’m not going to be able to hold this doctor and the hospital accountable,” Lohnes said. “It affects the whole gauntlet of what I thought America was all about.”