Monday, February 27, 2012

$133 Million Settlement for Mortgage Fraud Lawsuit

First appeared in Detroit Free Press
The U.S. government announced Friday that it had reached a $133-million settlement with Troy-based Flagstar Bank that resolves a civil fraud lawsuit accusing the bank of fraudulent mortgage lending practices.

The lawsuit, filed by the U.S. attorney for the Southern District of New York and the U.S. Department of Housing and Urban Development, alleged that Flagstar used unqualified employees to approve mortgage loans backed by HUD, approved mortgage loans that did not comply with HUD and Federal Housing Administration underwriting requirements, and made false certifications on mortgage loans.

The lawsuit "is another stark example of how certain lenders put profit ahead of responsibility by recklessly churning out mortgage loans without regard to the risk that those loans would default or the significant consequences for the individual homeowners who would inevitably default on their loans," Preet Bharara, U.S. attorney for the Southern District of New York, said in a statement Friday.

Flagstar's CEO and president Joseph Campanelli said in a statement that the bank "is one of the leading originators and servicers of FHA-insured loans, and we remain committed to continuing in that capacity. This agreement with the Department of Justice allows us to move forward and to continue to focus on core operations and on serving our customers."

This is the fourth lawsuit brought by Bharara's office against residential mortgage lenders. The government also has sued Deutsche Bank, Allied Home Mortgage and CitiMortgage, a subsidiary of Citibank. CitiMortgage reached a $158-million settlement with the government.

Under terms of the settlement, Flagstar agreed to pay $15 million within 30 business days and will pay an additional $118 million as soon as it meets certain financial benchmarks. An independent third party, paid for by Flagstar, will monitor the bank's compliance with HUD and FHA lending rules for at least one year.

Flagstar also agreed to implement a training program for employees involved in the originating and underwriting of FHA loans, and it agreed to terminate the senior managers who had been overseeing the bank's manual underwriting process.

Because of the settlement, Flagstar will revise its fourth-quarter 2011 and full-year 2011 earnings, which were announced Jan. 24. The bank said its net loss for the fourth quarter could increase by between $25.9 million and $34.3 million, but it still expects to achieve profitability this year.

Flagstar is one of the largest residential mortgage lenders in the country, originating $26.6 billion in mortgages in 2010. The bank is the largest publicly held savings bank in the Midwest, with $13.6 billion in total assets and 113 branches in Michigan. It is majority-owned by MatlinPatterson Global Advisers, a New York-based private equity firm.

The bank did not return requests for comment late Friday.

Wednesday, February 22, 2012

Former Fiesta Bowl CEO and Others Plead Guilty to Felony

First appeared in USA Today
Former Fiesta Bowl Chief Executive John Junker, another former bowl officer and a current high-ranking bowl employee pleaded guilty Tuesday to charges stemming from their roles in a fraudulent campaign-contribution scheme.

Joining Junker in entering pleas in Maricopa County Superior Court were Jay Fields, the bowl's former vice president of marketing, and Peggy Eyanson, the bowl's current senior director of business operations.

Junker pleaded guilty to one felony of soliciting a fraudulent scheme, in which employees made political campaign contributions that were reimbursed with bowl funds. He faces up to 2 and one-half years in prison, though probation is available. Sentencing is scheduled for April 26.

Junker, fired by the bowl last spring, also agreed to pay the bowl $62,500 in restitution, covering the cost of roughly $48,000 in campaign-contribution reimbursements as well as miscellaneous questionable expenses.

Fields and Eyanson each pleaded guilty in the same hearing to one count of making a prohibited campaign contribution, a misdemeanor.

Under the plea agreement, Fields was sentenced to pay a $4,600 fine and was placed on one year of supervised probation. He was forced to resign last March.

Eyanson, who will keep her job at the Fiesta Bowl, was sentenced to pay a $4,500 fine and was placed on one year of supervised probation. The bowl's attorney, Nathan Hochman, said Eyanson fully cooperated with law enforcement and helped the bowl's investigators, who uncovered spending irregularities as well as the reimbursements for campaign contributions.

Junker, according to his attorney, also has reached a plea agreement with the U.S. Attorney's Office, which also is investigating the Fiesta Bowl. In that case, Junker will admit to to a single federal felony charge stemming from similar allegations.

As part of Junker's plea agreement with the state, both sides agreed that if he receives prison time in both cases he would serve his initial time in federal prison and would receive credit for his state sentence. If Junker receives prison time in both cases, the sentences would run concurrently, according to the state plea bargain.

The U.S. Attorney's Office has neither confirmed nor denied it has a deal with Junker.

Junker repeatedly said "yes, sir," and "no, sir" when asked questions by Maricopa County Superior Court Judge Douglas Rayes as to whether Junker understood the deal. Junker took no questions after the hearing, but he shook a reporter's hand and wished his family well.

The state Attorney General's investigation began after The Arizona Republic in December 2009 first reported that current and former employees said they were reimbursed over nine years for making campaign contributions at the urging of Junker. Such reimbursements violate campaign-finance laws. For months, Junker denied the allegations.

The contributions went to local and state politicians who helped the Fiesta Bowl obtain financial subsidies, and to members of Congress who supported the Bowl Championship Series, a fraternity of top college football bowl games including the Fiesta Bowl.

On Tuesday, a factual basis for plea was entered with the court as part of Junker's plea agreement.

That six-page document says Junker knew it was illegal for corporations to make donations to political candidates and it was illegal to pretend to use other people's names to make those contributions. The document also says Junker instructed Natalie Wisneski, the bowl's former chief operating officer, to give employees bonuses for engaging in the scheme.

A federal grand jury last November indicted Wisneski on nine counts, including seven felonies. Her trial in U.S. District Court is scheduled for March 6, but her attorneys have asked that it be postponed to give them more time to prepare a defense. Her attorneys attended Tuesday's hearing, but declined comment.

Attorney General Tom Horne said after the hearing that others remain targets of the state's criminal investigation, but he declined to provide specific details.

"Our investigation is still ongoing as to other potential targets, so I am limited in what I can share with you," Horne said.

Horne also took a shot at the Fiesta Bowl's board of directors for a lack of oversight of Junker and spending at the bowl. An independent investigation, commissioned by the bowl well after The Republic's 2009 story, found widespread financial mismanagement, including the bowl paying for strip-club outings by Junker, Fields and another former officer, Shawn Schoeffler.

"Members of a nonprofit board and its officers need to understand the policies regarding authorized expenditures, salaries and bonuses," Horne said. "A board of directors needs to create a system of checks and balances to ensure that the charities serve their mandate."

The Fiesta Bowl issued a statement saying it has fully cooperated with Horne's office, and has "worked tirelessly on this case to bring those who violated the law to justice." The bowl also implemented a series of financial and oversight reforms.

Junker in his plea also admitted that he knew the tax returns filed by the non-profit entities that run the Fiesta Bowl were false when they stated that no political contributions had been made. Junker also stated that the tax returns were false when they stated the bowl did not engage in lobbying, when in fact a person identified as Lobbyist C and "others over the years lobbied heavily for the Fiesta Bowl."

The document does not identify Lobbyist C, but during the court hearing Junker's attorney, Stephen Dichter, said that person was attorney Gary Husk. The plea deal also said Lobbyist C was involved with the reimbursement scheme and told Junker that "everyone did it."

Records show Husk was a lobbyist for the bowl from 2000 to January 2011, but Husk's attorney said Tuesday that his client was not the bowl's chief lobbyist until 2004 or 2005, and he said Husk repeatedly told the bowl it was illegal to reimburse employees for making campaign contributions.

Husk has done nothing illegal or unethical, said former Maricopa County Attorney Rick Romley, a member of Husk's defense team.

Tuesday, February 21, 2012

Migrants Are Concerned By Immigration Laws in Alabama

First appeared in USA Today
When Alabama's immigration law went into effect in September, it sent shock waves throughout Hispanic communities within the state. Whole families left overnight, parents pulled their children out of school, and city centers became ghost towns as legal and illegal immigrants alike hid from police.  A Philadelphia Immigration Lawyer watches from afar.

In the months since, a number of illegal immigrants who fled have returned.

"Little by little, it's been calming down," said Gabby Sullivan, a legal immigrant from Mexico who has been helping community groups in the southern city of Robertsdale.

But as Republican legislative leaders promise only minor adjustments to the law and with an 11th Circuit Court of Appeals hearing on portions of the law set for March 1, Hispanics are still living "with one foot out of the state, ready to flee for good," Sullivan said.  A Panama Immigration Lawyer is curious about what will happen.

Evelyn Servin, director of the North Alabama Hispanic Coalition for Equal Rights, said many of the Hispanic people who work in poultry plants around Russellville have completely changed their way of life to avoid running into police.

"People are still afraid to go out," Servin said. "Many of them go grocery shopping at night when they can't be seen in their cars. A lot of them are just staying home and not going anywhere."

Alabama followed Arizona's lead by passing a law last year aimed at making everyday life difficult for the state's estimated 120,000 illegal immigrants. The Alabama law, known as H.B. 56, allowed local police to check the immigration status of people stopped for other crimes, required public school officials to collect data on the number of illegal immigrants enrolling, and forbade illegal immigrants from entering into private contracts or conducting any business with the state.

Federal courts blocked some portions of the law, including the immigration checks at schools. But unlike judges in Arizona and other states who have barred police from checking immigration status during routine stops, U.S. District Judge Sharon Blackburn in Birmingham allowed the police enforcement provision to go into effect in September.

The effects of those rulings are widespread. Even a Raleigh Immigration Lawyer sees the effects.

A University of Alabama study released in January found that the law could cost the state up to $10.8 billion per year — a combination of losing up to 80,000 illegal immigrants who earn and spend money in the state, lost local and state tax revenue, and the costs to enforce and defend the law in court.

Even though schools are now barred from checking the immigration status of new students, parents continue to keep their children out of schools.

In the weeks leading up to the law going into effect, about 1,120 Hispanic students were absent — typically about 3.5% of the state's 32,000 Hispanic students, according to state Department of Education spokeswoman Malissa Valdes. After the law went into effect Sept. 28, the state has averaged more than 1,500 Hispanic absences each day — close to 5%.

"While there remains many legal challenges to Alabama's immigration law, its effect on the operation of Alabama's public schools has been minimal, and the initial fear of parents has subsided," state Superintendent Tommy Bice said.

Alabama Gov. Robert Bentley, a Republican, is working with legislators to fix some portions of the law that have led to confusion and complications for legal residents and businesses.

Jay Reed, president of Alabama Associated Builders and Contractors, said changes would focus on reducing penalties for employers who may inadvertently hire a small number of illegal immigrants, and to reduce the paperwork required by the law. Bentley's spokesman, Jeremy King, said any changes would not diminish the intent of the law of ensuring "that everyone working in Alabama is doing so legally."

One of the few bright spots that civil rights activists see in the H.B. 56 controversy is that all people in Alabama — U.S. citizens, legal residents and illegal immigrants — are learning about the bill-making process and the court-review process that has followed. It is a curious thing for a Shanghai Immigration Lawyer.

"It's funny to see everyday people talking about the appellate court system and the fact that the (U.S.) Supreme Court will be issuing a decision in the summer over S.B. 1070 (Arizona's law) and how that will have repercussions for H.B. 56," said Gwendolyn Ferreti, a community organizer in Tuscaloosa. "That's really inspiring, that an immigrant community has gotten to know this so well and so intimately."

US Courts Going Digital

First appeared in USA Today
Courts across the country are moving forward with projects to move to digital record-keeping in efforts to save time, paper and, most important, money.

From a system that will tie together circuit civil, county civil, felony and juvenile courts in Lee County, Fla., to a system-wide integration of digital court records in Minnesota, courts are pursuing plans to allow all levels of courts to share information.

"There's virtually no state that isn't trying to do something in this area," said Tom Clarke, vice president for research & technology at the Williamsburg, Va.-based National Center for State Courts.

Clarke says that while the courts' digital migration dates back more than 20 years ago, the recession and its ensuing budget cuts have quickened the pace. Since 2008, court budgets, on average, are down nearly 20%, he said. The labor savings promised — through electronic filing in particular — has garnered a lot of attention, Clarke said.

The Minnesota project will mean a traffic offender can "walk into any courthouse and pay the ticket — or pay it online," said Bruce Graham, president of the courts and justice division of Tyler Technologies, a Texas-based software developer working with courts across the USA.

·         Vermont: The state launched an e-filing project with two civil courts last year, and intends to extend e-filing to the rest of its courts in the next two to three years, said Rick Conklin, a project manager with the state judiciary.
·         Washington: The Superior Court in Chelan County is completing a project that will enable public defenders and prosecutors to handle felony cases electronically in the courtrooms. The court clerk's office and the judges already operate paperlessly, County Clerk Kim Morrison said.
·         California: Stanislaus County Superior Court is creating electronic copies of voluminous civil court case files to be shipped to appellate courts, cutting the workload for some staffers by half. The court wants to use the software next for juvenile court cases headed for appeal.

Lee County, Fla., court leaders look forward to using Odyssey, a Tyler Technologies software system that will tie together circuit civil, county civil, felony and juvenile courts. A rollout date hasn't been determined, said Linda Doggett, chief operating officer for the county clerk of court. "The sooner it gets done, the more money we save," she said.

"I would like us to be as paperless as possible," Lee County Judge Frank Mann Jr. said.

Some attorneys agree. D. Todd Smith, an appellate law attorney in Austin, said he appreciates Travis County's e-filing system for its ease of use and flexibility.

"If I have a document to file, and I want to file it at 11:59 p.m. on the day that it is due, I can do that," he said.

He thinks the convenience outweighs the extra cost of electronic filing fees. Paul Embley, chief information officer with the National Center for State Courts, estimates fees range from $5-$7 per filing and sometimes higher, with some states or municipalities offering annual rates.

The convenience argument doesn't sway Marshal Willick, a family law attorney in Las Vegas, who raises several objections to Clark County's mandatory e-filing and related fees. "It puts lawyers in the position of either absorbing those costs, or passing them along to their clients," Willick wrote in his online newsletter.

Paper forms aren't becoming obsolete everywhere. Lauren Passalacqua, a spokeswoman for the New York City mayor's office, confirmed the city had just ordered new electric typewriters for the police department and more than 18 city agencies. That's because there are certain forms with carbon copies that require actual keystrokes to complete, she said.

In the nation's court systems, too, "there are still places where carbon copies are the standard," said Embley at the National Center for State Courts. "It is a lot easier to change or automate internal processes than to automate those between agencies," Embley said.

Tuesday, February 14, 2012

Guatemala Considering Drug Legalization

First appeared in Associated Press
U.S. inability to cut illegal drug consumption leaves Guatemala with no option but to consider legalizing the use and transport of drugs, President Otto Perez Molina said Monday, a remarkable turnaround for an ex-general elected on a platform of crushing organized crime with an iron fist.

Perez said he will try to win regional support for drug legalization at an upcoming summit of Central American leaders next month. He got his first public support on Monday at a security meeting with El Salvador President Mauricio Funes, who said he too is willing to consider legalization.

"We're bringing the issue up for debate. Today's meeting is intended to strengthen our methods of fighting organized crime," Perez said with Funes. "But if drug consumption isn't reduced, the problem will continue."

But after returning to El Salvador, Funes said he personally doesn't support legalization because it would "create a moral problem," though he supports Perez's right to bring up the issue for consideration.

"Imagine what it would mean," Funes said. "Producing drugs would no longer be a crime, trafficking drugs would no longer be a crime and consuming drugs would no longer be a crime, so we would be converting the region in a paradise for drug consumption. I personally don't agree with it and I told President Otto Perez so."

Perez's proposal comes as drug cartels have taken over large swathes of Guatemala and other Central American countries, fueling some of the highest murder rates in the world. A May 2011 report by the U.S. Congressional Research Service said that 95 percent of all cocaine entering the United States flows through Mexico and its waters, with 60 percent of that cocaine having first transited through Central America.

In just a month in office, Perez has transformed himself from one of Latin America's toughest advocates of military action against drug cartels to one of the region's strongest voices for drug legalization. His stance provoked strong criticism from the United States over the weekend, and intense discussion inside the country, where Guatemalans argued for and against his proposal in the streets and on radio talk shows.

One analyst said Perez's about-face could be designed to pressure the U.S. into providing military aid, currently banned by the U.S. Congress because of past human rights abuses.

"This is kind of like a shot across the bow, saying if you don't help us, this is what we can do," said Anita Isaacs, a Guatemala expert and professor of political science at Haverford College.

But Perez's backers said the change grew out of the realization that if demand continues in the U.S., the small country will never have the resources to fight the flow of illegal drugs from producers in South America to the world's largest consumer market in the U.S.

"Are we going to be responsible to put up a war against the cartels if we don't produce the drugs or consume the drugs? We're just a corridor of illegality," Eduardo Stein, a former Guatemalan vice president who headed Perez's transition team.

"The issue of drug trafficking and consumption is not on the North American political agenda. The issue of drugs in the U.S. is very marginalized, while for Guatemala and the rest of Central America it's very central," he added.

U.S. President Barack Obama would cut funds to fight drug trafficking in Latin America in 2013, according to his budget proposal released Monday. While the Obama administration has promised to shift anti-drug resources from law enforcement and military intervention to treatment and prevention, funding would be restored to slightly higher than 2011 levels in the proposal after suffering a cut in 2012.

A growing number of former Latin American leaders have come out in favor of legalization, saying the U.S. efforts to fight drug trafficking in Latin America have only caused more violence and sucked up resources.

Colombia President Juan Manuel Santos has said he would be open to legalization if the entire world agreed.

"It's a theme that must be addressed," Colombia's Foreign Minister Maria Holguin told reporters in Cartegena Monday. "The war on drugs definitely hasn't been the success it should be and it's something the countries should discuss."

Honduras, another major transit country, has never formally considered legalization. Mexico President Felipe Calderon has said it wouldn't make sense to legalize drugs in the region as long as they remain illegal in the U.S.

Perez, 61, was elected in November and took office last month on a platform of cracking down on the country's rampant crime, a product of gang and cartel violence, along with the legacy of a bloody 1960-1996 civil war.

Army, police and paramilitary are blamed for killing the vast majority of 200,000 victims, most of whom were Mayan.

More than half of Guatemalans live in poverty in a nation of 14 million overrun by organized crime and Mexican drug cartels. Perez's predecessor, former President Alvaro Colom, sent troops to retake some provinces from the Zetas drug gang.

Perez, the first former general to be elected president since peace accords were signed in 1996, also took office with the mission of ending a long-standing U.S. ban on military aid imposed during the civil war because of concerns over human rights abuses.

Close advisers say he supports meeting the conditions set by various U.S. congressional appropriations acts for restoring aid that was first eliminated in 1978, including reforming a weak justice system and prosecuting war criminals.

But both U.S. and Guatemala officials agree that a reverse on the ban won't happen any time soon. Among other reductions, Obama's budget proposal cuts military aid to the region for fighting drugs by $5 million.

Perez first made his drug proposal over the weekend.

Political analyst Alvaro Pop said Guatemala would benefit from legalization "because it would get us out of a fight that has blocked our chances of developing as a country." But he added that Perez would have to carefully define exactly what he wants to legalize.

The U.S. Embassy in Guatemala issued a statement Sunday saying that legalizing drugs wouldn't stop transnational gangs that traffic not only drugs, but also people and weapons.

Monday, February 13, 2012

Charity Aid System Corrupting Hospital Practices

First appeared in NY Times
For most of her life, Hope Rubel was a healthy woman with good medical insurance, an unblemished credit history and a solid career in graphic design. But on the day an ambulance rushed her to a Manhattan hospital emergency room shortly after her 48th birthday, she was jobless, uninsured and having a stroke.

Ms. Rubel’s medical problem was rare, a result of a benign tumor on her adrenal gland, but the financial consequences were not unusual. She depleted her savings to pay $17,000 for surgery to remove the tumor, and then watched, “emotionally paralyzed,” she said, as $88,000 in additional hospital bills poured in. Eventually the hospital sued her for the money. An Omaha Hospital Lawyer is interested in these cases.

Yet that year the hospital, NewYork-Presbyterian/Weill Cornell, had already collected $50.2 million from the state’s so-called Indigent Care Pool to help care for people like Ms. Rubel who have no insurance and cannot pay their bills.

New York’s charity care system, partly financed by an 8.95 percent surcharge on hospital bills, is one of the most complicated in the nation, but many states have wrestled with aggressive debt collection by hospitals in recent years. Like New York, several passed laws curbing hospitals’ pursuit of unpaid bills, including Illinois, California and Minnesota.

But a new study of New York hospitals’ practices and state records finds that most medical centers are violating the rules without consequences, even as the state government ignores glaring problems in the hospitals’ own reports.  An Oklahoma City Hospital Malpractice Lawyer is interested in defending the health care system in these situations.

“The entire system is corrupted, and it isn’t working for patients,” said Elisabeth R. Benjamin, vice president of health initiatives at the Community Service Society of New York, a nonprofit antipoverty group, which is releasing the two-year study on Monday.

The state’s Department of Health acknowledges systemic problems, including the need for better reporting and enforcement, a spokesman, Michael Moran, said. A group of patient advocates and hospital administrators is being convened to develop a better system, he said, and the department is engaged in “a comprehensive data integrity project that will include the retention of an outside auditor.”

The study found that some hospitals did not provide financial aid applications at all, and that many made impermissible demands for irrelevant documents or failed to supply key information, like eligibility rules for big discounts required by state law in 2007. Data reported to the state was obviously faulty, it found.

Yet even hospitals that reported they had spent nothing on financial aid, or had filed hundreds of liens against patients’ homes, were allowed to collect without questions from the charity care pool, which distributes more than $1 billion a year.

Hospitals are not legally barred from seeking judgments or liens, but must first offer an aid application, help the patient complete it, and wait while it is pending. Instead, many hospitals turn to collection agencies, and sue when that fails. The unpaid bills — typically reflecting much higher rates than what insurers pay — are then treated as the equivalent of charity care.

Change is now urgent, health care experts agree, because the state pool stands to lose hundreds of millions of federal dollars in 2014, when provisions of the health care overhaul will no longer treat so-called bad debt, based on uncollected bills, as if it were charity care.

“There’s a law in place, and obviously it should be complied with,” said David Rich, an executive with the Greater New York Hospital Association, a trade group. But, he added, “hospitals are providing a lot of charity care at a loss.”

He said hospitals were improving their compliance with the law, which requires aid to patients with income up to 300 percent of the poverty line, or up to $33,000 for a single person. But, often stymied by patients who fail to complete applications for aid, he said, many hospitals have moved to simply deeming some patients eligible without an application, using what he called “a soft credit check” at registration to gauge income and assets.

Myrna Manners, a spokeswoman for NewYork-Presbyterian Hospital, said that it would be inappropriate to discuss specific cases, but that the hospital “proactively helps patients at every step” of the financial aid process. It approved 25,861 applications in 2010, the most recent annual data.

“Where there has been a determination that there is an ability to pay, we still go to all lengths to ensure that we resolve the matter before it becomes a legal action,” she said.

Court records abound in judgments against patients who say they had little or no chance to apply for help. A couple fighting foreclosure in Elmont, Nassau County, has a $41,000 default judgment from NYU Langone Medical Center for emergency surgery on their disabled adult son in 2007, when their insurance unexpectedly dropped him. He was eventually approved for Medicaid, but it would not pay for the surgery retroactively.

The mother, Myrlene Stimphil, 55, a nurse at a city hospital, said she had sought a reduced payment plan from NYU Langone, but was told only that the hospital would get back to her. Instead, she said, collectors were calling her son, now 24, who suffered brain damage at his premature birth.

“We don’t want to be a burden,” she said, as her husband, Antenor Francois, 56, a former cabdriver, looked through old bills. One announced, “Welcome to Portfolio Recovery Associates!” and added that the collection agency “purchased your account from NYU Hospitals Center.”

Lisa Greiner, a spokeswoman for the hospital, which collected $10.7 million from the charity care pool in 2010, said she could not comment on the case under privacy laws. But the hospital no longer uses that collection agency, and under new leadership in the last three years, its reported financial aid approvals soared to 36,000 in 2010, from 256 in 2008.

Christopher Ward, 49, living in his father’s house in White Plains on a $200-a-week disability payment from a workplace spinal injury, recalled stopping at an A.T.M. — “just to have something in my pocket to buy food” — and discovering that his accounts, totaling less than $4,000, had been seized.

“I tore my hair out for a long time not understanding why all this was happening to me,” Mr. Ward said, admitting to memory lapses.

Court records show that NewYork-Presbyterian obtained a $102,636 judgment against him in 2007, including 9 percent interest back to 2004, when, uninsured, he underwent emergency surgery for a brain aneurysm. Now his ailing, widowed father, 75, a teacher at Mercy College, worries that anything he leaves for Christopher could be seized.

State hospitals seem to be especially aggressive collectors. State University of New York Downstate Medical Center, in Brooklyn, secures hundreds of judgments annually through the attorney general’s office, which says such suits protect the state’s interest in case a former patient comes into money. A Clarksdale Hospital Lawyer is watching these cases closely.

One picked at random: a $12,000 judgment in 2008 against Cherrilyn McFarlane, a single mother on public assistance, for one day’s care for her newborn five years ago, when her Medicaid coverage had briefly lapsed. Ms. McFarlane said the judgment could hurt her plans to seek a student loan for nursing school. “I want to get it cleared,” she said.

To Hope Rubel, the greatest fear was that the suit itself would deter employers from hiring her and leave her destitute, she wrote the judge. Finally, she said, a law clerk directed her to the hospital’s financial aid department. It said more documents were needed to decide her eligibility.

“I had given them everything,” she said. In despair after a year of courthouse meetings, she said, she offered $100 a month, and at the court’s urging, the hospital’s lawyers accepted. “I’ll be paying for the rest of my life,” she said.

Man Finally Goes to Trial for Wife’s Diving Murder

First appeared in Associated Press
A dream honeymoon to scuba dive on Australia's Great Barrier Reef turned into a terrible nightmare, and the horror is about to play out years later in a courtroom in Alabama.

An Alabama man who already served prison time in Australia after pleading guilty to a reduced charged in the death of his bride goes to trial Monday, accused of murdering her for insurance money. Tina Thomas Watson drowned during a scuba dive on the reef just days after her wedding in October 2003.

Gabe Watson is charged with capital murder - which normally is punishable by death - but faces life in prison without parole if convicted because of a deal the state made years ago with Australian officials to guarantee his return to the U.S.

Tina Watson's father said the family has endured eight years of delays and disappointments getting to the trial date.

"It's been a traumatic, excruciating ordeal," said Tommy Thomas, of suburban Helena.

Watson, 34, and Tina met in college. They wed and went to Australia to dive - a trip prosecutors claim Watson meticulously planned so he could kill the 26-year-old woman and make it seem like an accident.

Watson is accused of killing Tina Watson by turning off her air supply and bear-hugging her as she drowned while diving on a shipwreck in 2003. Don Valeska, an assistant state attorney general handling the case, argues Watson killed the woman believing he could collect on a modest life insurance policy.

Originally charged with murder in Australia, Watson avoided a jury trial there by pleading to a charge of manslaughter and serving 18 months for not doing enough to save his wife. He was an experienced diver; she was a novice.

The defense will argue during the trial that Tina Watson's death was an unintended, horrible mishap. One of Watson's lawyers said the man - who is free on bond and has remarried - was anxious to get the trial started.

"He's nervous. He's ready to get this trial behind him so he can be a free person," defense lawyer Joseph Basgier said after a hearing last month.

The state has subpoenaed people from as far away as Australia and California to testify about what happened that day on a dive boat called the Spoilsport, but it's unclear how many will take the stand. The defense has subpoenaed potential witnesses including former Alabama Attorney General Troy King, who pushed for state charges against Watson.

The case has aroused deep passions both in Australia and the United States, with hundreds of people joining sites on Facebook to show support either for Watson or the Thomas family.

Tina Watson's sister, Alanda Thomas, counted down to the start of the trial by posting messages to a group called "Call for Gabe Watson to do what is right!"

"Please everyone continue to pray for (j)ustice for Tina," she wrote.

Tommy Thomas said he is glad his former son-in-law will finally face a jury.

"This is our last chance to get justice, and we know it," Thomas said in an interview. "But we're confident, and if the bulk of the evidence is presented it doesn't matter whether it's a jury in Alabama or a jury in Australia, we're going to get a just outcome."

Once Watson finished his sentence in Australia in November 2010, the country deported him to the United States with an agreement from Alabama and federal prosecutors that he wouldn't face the death penalty. Such a deal is required under Australian extradition law.

Watson's attorneys asked an Alabama judge to throw out the state charge, arguing he was being tried twice for the same offense, but the judge refused. The state argued successfully that Watson could be tried in Alabama for something that happened in Australia by claiming he plotted the killing in the state.

The trial was delayed for 10 months because of concerns that layoffs linked to budget shortages would prevent court officials from providing adequate security.

Thursday, February 9, 2012

Bankruptcy Lawyers Warn About Student Debt

First appeared in USA Today
Student debt is looming as a national problem that could have repercussions reminiscent of the mortgage crisis, says a report by the National Association of Consumer Bankruptcy Attorneys.

Total debt from student loans is about $1 trillion, about 14 times more than 15 years ago, and well above the estimated total credit card debt of $798 billion.

The study, released Tuesday and based on a nationwide survey of 860 bankruptcy lawyers, said bankruptcy attorneys nationwide are seeing "what feels too much like what they saw before the foreclosure crisis crashed onto the national scene."

The report calls for a change in bankruptcy laws. A Philadelphia Bankruptcy Lawyer is curious what will happen.

In the survey, 81% of respondents said potential clients with student loan debt have increased "significantly" or "somewhat" in the past four years.

And 95% of respondents reported that few student loan debtors have any chance of discharging what they owe through a bankruptcy proceeding because they have to prove "undue hardship" — a standard that is difficult to meet.

The bankruptcy attorneys association's report urges a change in bankruptcy laws so those burdened with student debt would be on the same footing as others facing bankruptcy. A Wilmington Bankruptcy Lawyer sees the value in this.

"It's not fair and needs to be corrected," said U.S. Rep. Steve Cohen, D-Tenn., sponsor of legislation that would make changes suggested in the report.

Cohen outlined the revisions in a conference call with reporters Tuesday, along with officials from the bankruptcy lawyers association. Douglas Lustig, a trustee for federal bankruptcy court in western New York, agreed that something should be done.

"The problem is that you have former students who filed for bankruptcy and are not able to get a fresh start," said Lustig, who also represents clients in bankruptcy court.

Those with student debt should be able to discharge all or part of the money owed in a bankruptcy proceeding and the law should be changed so the debt can be paid over a longer period of time, Lustig said. A Baton Rouge Bankruptcy Lawyer sees the merit in this idea.

The high cost of college tuition and room-and-board, plus high interest rates charged by some private lenders, are all adding to the problem, experts say.

"The rising cost of education definitely needs to be in the forefront of people's minds," said Cassandra Robinson, 23, who graduated from the University of Rochester in 2010 and owes about $100,000 in student debt. A Cherry Hill Bankruptcy Lawyer understands her trials.

William Brewer Jr., president of the National Association of Consumer Bankruptcy Attorneys, offered a warning.

"Take it from those of us on the frontline of economic distress in America," he said. "This could very well be the next debt bomb for the U.S. economy."

Tuesday, February 7, 2012

Keeping Foreign Laws Out of State Courtrooms

First appeared in the Wall Street Journal
State lawmakers across the U.S. have started 2012 with a controversial message to their judges: keep foreign laws out of our courtrooms.

Twenty-one states are considering measures that would prohibit judges from applying the laws or legal codes of other nations in a wide variety of cases. Three states—Tennessee, Louisiana and Arizona—recently added versions of such laws to the books, while a fourth—Oklahoma—worked a similar change into its constitution in 2010.

The movement is motivated largely by a handful of organizations that claim Islamic Sharia law and, to a lesser degree, laws of other nations, are creeping into courtrooms and American life, especially in divorces and child-custody disputes. Sharia, loosely defined as a set of moral and religious principles in Islam, is woven into the legal systems of many Muslim nations. It covers issues ranging from what to eat and drink to structuring a loan to setting up an inheritance and divorce, among other things.

Virginia Delegate Bob Marshall, a Republican, said he decided to introduce a bill last month after hearing from constituents. "I heard concerns from people when I went door-to-door last year about foreign influence in U.S. law," he said, though he didn't recount any specific instances raised by constituents.

Opponents of the "American laws for American courts" movement argue that laws barring outside influences are unnecessary, unconstitutional and motivated by anti-Muslim bigotry. "It's an election year, and far too often we're seeing this kind of rhetoric playing on the fears of the voters," said state Sen. Nan Rich of Florida, a Democrat.

Concerns about Sharia have been expressed in recent months by Republican presidential hopefuls Newt Gingrich and Rick Santorum. Mr. Santorum has called Sharia "incompatible with the civil code of the United States." Last month, Mr. Gingrich told a South Carolina town-hall audience that he would be open to supporting a Muslim-American president as long as the candidate renounced Sharia law.

Backers of the bills, which include conservative organizations Act! for America and the American Public Policy Alliance, point to several dozen cases spanning the past 30 years, many of which deal with a common theme: whether a U.S. court erred in upholding a child-custody or divorce decision made in a Middle Eastern nation. Supporters concede that the problem isn't yet widespread, but as Florida state Sen. Alan Hays puts it, they "want to get ahead of the problem before it spreads."

Skeptics of the prohibitions counter that foreign statutes and international law, which concerns dealings among nations, have never been binding on state or federal courts. Judges occasionally cite in their opinions nonbinding materials for context or to illustrate points. In a 2005 Supreme Court opinion that concluded it was unconstitutional to execute juvenile offenders, Justice Anthony Kennedy wrote that "the opinion of the world community, while not controlling our outcome, does provide respected and significant confirmation for our own conclusions."

Last month, a federal appellate court in Denver, in upholding a temporary injunction postponing Oklahoma's amendment banning the use of Sharia and foreign law generally, said it likely violated the U.S. Constitution's establishment clause, which prohibits laws giving special treatment to one religion over others. A trial court has yet to issue a final ruling on the challenge to the amendment.

While the pending bills don't mention Sharia or any other system specifically, Muslim groups and others say that fact does little to mask the laws' true design.

"Removing 'Sharia' [from proposed laws] was purely a political move," said Muneer Awad, the plaintiff in the Oklahoma case and the head of that state's arm of the Council on American-Islamic Relations, an advocacy group. "The goals are all the same: to target Islam."

Those making an effort to stamp out the application or validation of foreign laws in the U.S. system cite several dozen cases from around the country in which judges have had to decide whether to heed court decisions made in other countries that may have been influenced by Islamic law or traditions.

In one oft-cited custody dispute from 1996, a Maryland state appellate court deferred to a Pakistani court order awarding custody of a 12-year-old girl to her father in Pakistan, rather than her mother in Maryland.

The Maryland court held that the Pakistani court had, in fact, looked to the "best interests of the child," even though it had also invoked an Islamic notion known as Hazanit, which gives preference to the father in custody cases. A dissenting judge criticized the six-judge majority for failing to more heavily weigh the Pakistani court's suggestion that, if custody were given to the mother, the child would live in an "un-Islamic society."

"It's very illustrative of the type of decision that would never have happened" with the proposed laws in place, said Stephen Gelé, a New Orleans lawyer and spokesman for the American Public Policy Alliance, which drafted the model law adopted by many states.

If there were such a law, explained Mr. Gelé, the Maryland court would have been forced to consider whether the mother's "fundamental rights" were violated by the Pakistani court's decision before deferring to it.

Another example offered is a 2009 New Jersey dispute that involved a Muslim couple who had moved to the U.S. from Morocco. A trial court didn't consent to the wife's request for a restraining order despite finding that her husband had assaulted her. The court's rationale: The man believed it was his religious right to have nonconsensual sex with his wife, and he lacked the requisite criminal intent needed to justify the order.

An appellate court reversed the lower court's ruling in 2010 and granted the restraining order. However, Mr. Gelé said the trial court's decision shouldn't be overlooked: "Trial judges need to get these cases right, because not everyone has the money to appeal."

Monday, February 6, 2012

“Sister Wives” Have a Case

First appeared in Associated Press
A federal judge has ruled there's sufficient evidence to allow a polygamous family made famous by a reality TV show to pursue a lawsuit challenging the constitutionality of Utah's bigamy law.
U.S. District Judge Clark Waddoups on Friday dismissed Utah's governor and attorney general from the case, but allowed the suit to proceed against Utah County Attorney Jeffrey Buhman, the Deseret News and Salt Lake Tribune report.
Buhman threatened to prosecute Kody Brown and his four wives — Meri, Janelle, Christine and Robyn — after the TLC show "Sister Wives" debuted in September 2010, but his office has not filed charges.
The family sued Buhman, Gov. Gary Herbert and Attorney General Mark Shurtleff in July 2011, claiming Utah's bigamy statute violates its constitutional rights to due process, equal protection, free exercise of religion, free speech and freedom of association.
Waddoups, in his 21-page ruling, wrote that he dismissed Herbert and Shurtleff from the case because Shurtleff assured the Browns that they wouldn't be prosecuted. Shurtleff has a policy of not prosecuting consenting adult polygamists as long as they're not committing other crimes.
But the judge wrote that Buhman conducted interviews with the news media that made it clear he intended to investigate and prosecute the Browns. The fact that no charges have been filed does not matter, he added.
"The entirety of actions by the Utah County prosecutors tend to show either an ill-conceived public-relations campaign to showboat their own authority and/or harass the Browns and the polygamist community at large, or to assure the public that they intended to carry out their public obligations and prosecute violations of the law," Waddoups wrote.
There's reason for the Browns to believe they could face prosecution in Utah County, the judge continued, and that could have a "chilling effect" on their ability to practice their First Amendment rights in the state.
But the Browns must show that there's a real and viable threat to their constitutional rights for the lawsuit to hold up in court, Waddoups wrote.
Brown moved his wives and 16 children from Lehi to the Las Vegas area in January 2011.
Buhman said he had not yet reviewed the ruling and was not prepared to comment.

Scandal at French Breast Implant Factory

First appeared in Reuters
In March 2010, a pair of health inspectors acting on a tip paid a three-day visit to a factory in this hilly town on the Mediterranean coast.

The factory was the headquarters of Poly Implant Prothese (PIP), a leading international maker of breast implants founded by French entrepreneur Jean-Claude Mas. The inspectors found something odd: six discarded plastic containers of Silopren, a liquid silicone designed for industrial, not medical use, lined up along the outside wall of the production site. A St. Louis Health Care Lawyer wonders about the instance.

A week later, gendarmes descended on the plant. Mas skipped out just ahead of them, eluding interrogation for nearly eight months, but his game was up. In the nearly two years since, the cheap silicone used in PIP's fake breasts has continued to leach into women's bodies. In France, 1,262 of the roughly 300,000 breast implants the company sold worldwide have split open in the past two years. PIP has been closed down, Mas has been arrested and put under investigation for alleged bodily harm, and French and European safety regulators have been thrust into an uncomfortable spotlight. A San Diego Products Liability Lawyer is watching the investigation.

Mas, 72, a grocer's son from the south of France, had no scientific training. Yet for the first decade of this century he was able to manufacture and sell faulty breast implants on international markets that he and some of his employees knew to be substandard, according to testimony given to French police and seen by Reuters.

The history of breast implants is littered with flawed devices, a colorful cast of intertwined players and billion-dollar lawsuits. Reuters reviewed hundreds of pages of police investigation transcripts and financial documents, and interviewed former PIP employees, the company's suppliers, customers and health experts, to piece together this latest chapter in that history. Many  Kansas City Products Liability Lawyer professionals are familiar with these issues.

It is a tale of a haphazardly run and cash-strapped company that allegedly took desperate and sometimes deceptive steps to shave costs and hide the true ingredients of its devices. PIP's efforts were made easier by a European regulatory regime that had been essentially outsourced to the very companies that are meant to be regulated.  A Philadelphia Products Liability Defense Lawyer is curious what the laws are going to say.

Among the new details to emerge: PIP was able to save an estimated 1.2 million euros ($1.6 million) in one year by using the industrial-grade silicone in its implants, according to figures cited by police investigators. And it relied on crude, unscientific tests of product quality, such as judging silicone gel by sticking a finger in it, according to one former worker. Some 75 percent of its implants used the non-approved, cheaper gel, Mas told police.

"Maybe it's shameful, but there you go," Yves Haddad, a lawyer who represents both Mas and his now-defunct company, told Reuters at the end of December. "We live in a capitalist world."

Mas, who declined to comment for this story, has said his products are harmless. After the health ministry advised Frenchwomen to have the devices removed, he told French radio network RTL last month that the decision was "criminal" and the health minister "needs to be committed."  A Des Moines Health Care Lawyer finds this interesting.


Jean-Claude Florent Mas, born in Tarbes, near the Spanish border, was a salesman by temperament. He sold everything from life insurance to wine and dental equipment. He entered health care in the mid-1960s, working for various labs, including one that was bought by Bristol-Myers in the 1970s, where he stayed until 1980 as a salesman in the south of France. Mas' attorney, Haddad, says his client was one of the firm's top salesmen, although Bristol-Myers could not confirm that or say why he left.

It was after Bristol-Myers that Mas got involved in breast implants. He began working with a French plastic surgeon, Henri Arion, who had made France's first breast implant in 1965, and was now selling saline implants under the name Simaplast.

It wasn't a great start. Simaplast's implants eventually were found to be prone to rupture, according to a 1999 study by U.S. non-profit Institute of Medicine. Simaplast morphed into a company named MAP - the precursor to PIP - where Mas said he performed every job from production to sweeping the floors. The small group of employees included a woman, Dominique Lucciardi, who would become Mas' companion and mother of his two children. They would take turns filling the prostheses, he told police.

In 1991, aged 52, Mas launched PIP, a limited liability company and chose as its headquarters the site of the old Simaplast factory. In preparation, he had applied for a patent to sell implants containing silicone covered in polyurethane foam, he told police.

As he launched PIP, a breast implant scandal involving Dow Corning was sweeping across the United States. The American firm was found to have knowingly concealed safety concerns about its implants, and in 1992, the U.S. Food and Drug Administration called for a moratorium on the devices. Four years into PIP's life, in 1995, France also banned silicone in breast implants, a ban that ended in 2001.

Mas found that by innovating, he could still bring products to market. He switched to implants filled with saline solution and launched a pre-filled version; other brands needed to be filled while the patient was on the operating table. PIP's new product saved time, and surgeons liked it. PIP moved into the huge U.S. market in 1996, and soon the United States made up 40 percent of its revenue, according to company records.


Opportunities for PIP grew on its home turf in 2001, when France lifted its ban on silicone implants, and the United States slowly began to approve more versions containing silicone gel, for which Mas already had a formula. "When I started PIP I brought this formula that I had kept," he told police. "Why change it?"

Regulators had never examined nor approved that filler, but Mas insisted to his staff that it was perfectly safe, his ex-employees told Reuters.

Building on his innovations in saline implants, in 2002 Mas brought a new twist to silicone by launching an asymmetrical product that became popular with surgeons and patients, because it gave a more natural look than the "classic" style of implant, which resembled a perfectly round orb.

PIP's approach to filling these implants was novel. On paper, the company said it used NuSil, a silicone blend made by a California company of the same name, which can be used in medical applications, including implantable devices. NuSil was founded by PIP's former U.S. distributor, Donald McGhan, who is now in prison in Texas for an unrelated fraud conviction. The company has declined any comment on the PIP affair.

But in reality, PIP was mostly using Mas' own non-approved PIP gel, which looked and felt exactly like NuSil, but cost a seventh of the price.

A liter of NuSil cost about 35 euros, versus 5 euros for PIP's version, Thierry Brinon, PIP's former technology head in charge of research and development, told police. Each implant on average used 330 cubic centimeters of gel. That meant it cost 11.55 euros to fill an implant with NuSil and a mere 1.65 euros to use PIP's gel, a difference of 9.90 euros on each implant produced.

Claude Couty, the former chief financial officer of PIP, told police it cost an average total of 38 to 42 euros to manufacture an implant filled with PIP gel, versus 52 for an implant filled with NuSil. Investigators in the legal case file estimated that in one year alone, 2009, using PIP gel instead of NuSil saved the company nearly 1.2 million euros.

PIP sold implants to French surgeons for about 300 euros a piece. Abroad, the asking price was about 100 euros, according to former PIP staff and surgeons.

"This formula is perfect," Mas told police. "It's better than the formula for making NuSil."


But because NuSil was a known quantity and his gel recipe was not, Mas concealed the implants' ingredients from the regulator. Flaws in Europe's regulatory system gave him a helping hand.

France has a government regulator, the Agence Francaise de Securite Sanitaire des Produits de Sante, or AFSSAPS, which has the power to remove products from the market but does not certify them. But the agency that certified PIP's implants was actually a private company, based in Germany. TUV Rheinland first approved PIP's saline implants in 1997. Its officials paid annual visits to the factory in La-Seyne-sur-Mer and announced them 10 days in advance, in accordance with European guidelines.

That gave PIP plenty of time to hide the truth. Ahead of TUV visits, workers would clear away evidence of the cheaper silicones PIP was using and put together a doctored version of documents that included no references to the use of unapproved silicone, Mas and ex-managers told police. All internal communications related to TUV's visits were oral, said one former worker.

"Since 1997, we automatically hid the products that allowed us to make the PIP gel," Mas told police, according to notes in the case file, "because I knew they weren't regulation." In his second police interview, Mas said he had given "the order to hide the truth from TUV" since 1993.

TUV sued PIP in February 2011, saying PIP had tarnished its reputation by using TUV's name to market sub-standard products and that it had been systematically misled.


There were other gaps in the regulations that helped PIP keep its products on the market for so long. The system does not require on-site, unannounced checks of the implants' contents. Nor does it require that the chemical composition of the implants, once approved, be re-tested. A Salem Health Care Lawyer finds this curious.

A TUV spokesman said it would only have made an unannounced visit for checks if there were very serious indications that something was amiss. There have been no cases of unannounced checks in Germany in the past 40 years, he added.

Moreover, TUV's yearly audits are essentially audits of overall processes; they do not perform on-site lab tests. The German company believes PIP deliberately deceived it.

AFSSAPS said it tested the insides of PIP's implants in 2001 to make sure they were what PIP said they were when silicone breast implants were allowed back onto the French market.

After 2001, however, that job went to two independent French laboratories: LEMI, Laboratoire d'Evaluation des Materiels Implantables and LNE, Laboratoire National de Metrologie et d'Essais. Mas told police the laboratories performed tests in 2002 and 2008.

AFSSAPS' deputy director general, Francois Hebert, told Reuters these tests were likely ordered by PIP following requests from surgeons, who may have sent back defective implants and asked for further evaluation.

LNE said its tests were mechanical - how likely PIP's implants were to resist pressure, for instance - but declined to provide further information. LEMI said its tests related to toxicity, but also declined to provide further information.

The first random test by AFSSAPS would not come until mid-2010 by which time PIP was under investigation by police. That was when AFSSAPS issued a report which said, "this one does not reach the degree of quality of a silicone gel intended for breast implants."

This week, France's health department and AFSSAPS submitted a report to the country's health minister acknowledging gaps in the French and European regulatory system. The report cited the lack of unannounced visits and on-site testing of implants but said that PIP's alleged fraud was so sophisticated that "it's not evident that an inspection, even an unannounced one, could have been effective."


The raw silicone materials for the PIP-formula gel included different products: Silopren - which was kept in the containers that had been spotted by inspectors - and Baysilone. PIP bought these silicone oils from a German distributor, Brenntag. It turned to a French distributor, Gaches Chimie, for a third oil, Rhodorsil 47V1000.

Brenntag confirmed it sold silicone oils to PIP from 2001 to 2010, but said it stopped when it was made aware PIP was under investigation. A Brenntag spokesman, Hubertus Spethmann, said that as far as Brenntag knew, PIP was a diversified supplier whose products included wound dressing pads and other padding products that could be filled with silicones such as the oils it produced. Brenntag would not comment on the orders PIP made or any payment problems with the French company.

Reuters could not independently confirm that these items were sold by PIP.

Representatives from Brenntag periodically asked to visit PIP's headquarters, according to one ex-PIP employee, a request that caused much worry within PIP. Brenntag would not comment on the visits.

On at least two occasions, Brenntag sales representatives paid a visit, but were welcomed by Mas in his office and did not visit the production labs, the former worker said this month.

"Mas would tell them we used the silicone oil for creams, certainly not breast implants," said the ex-worker. "We were very uncomfortable and let Mas do all the talking."

Gaches Chimie also confirmed it occasionally sold its silicone oil to PIP from the early 2000s until 2009, when the orders stopped. CEO Pierre Gaches said he did not believe his company was PIP's main supplier and never had concerns about the ultimate use of the oil, because it is used in many industrial applications.


Even as PIP used unapproved materials for its silicone implants, its innovative saline products were running into problems in the United States. Lawsuits from hundreds of patients alleged they deflated, sometimes within months of surgery. The FDA was never to approve PIP's silicone products, instead posting a warning about the firm's practices on its website. A Savannah Products Liability Lawyer thinks this is an outrage.

Mas made a reverse takeover to try to open PIP to U.S. capital and prepare the way for a re-launch.

In 2003, his Luxembourg holding company Milo Finance bought a majority stake in U.S.-listed Heritage Worldwide, and handed to Heritage the control of PIP. In its first annual filing with the U.S. Securities and Exchange Commission after the merger, Heritage disclosed that for the financial year ended June 23, 2003, PIP had a loss of $693,336. That loss grew to $5.6 million in 2004.

PIP also turned to markets where regulation was not as stringent. It found distributors to open sales in 10 new countries "in which no regulatory problems were anticipated," Heritage said in its 2003 annual report. Exports were less profitable - foreign sales fetched about a third of the French price - but there was volume in South America, which soon became PIP's top market with two-thirds of sales, driven by Venezuela and Colombia.

In 2005 and 2006, PIP showed a profit. One former employee said these were the "glory days" for the company, which employed about 120 workers. Operating margins reached 20 percent, the sort of level an early cellphone maker could expect. "We'd see a smile on the face of Mr. Couty," said a former manager. One of those years, the company bought new BMWs for Couty and Mas, Couty told police. He did not respond to requests for an interview.

Mas, now at France's retirement age of 65, took on a chairman's "supervisory and advice-giving" role in 2004, for which he received 360,000 euros per year, a five-fold rise over his 2003 salary.

Finance chief Couty became CEO, but PIP's liquidator, Xavier Huertas, wrote in a March 2010 report that Mas continued to control production, R&D and sales, and "in fact, to lead the company at the side of Mr. Couty."

However, crisis was around the corner. Litigation and the financial shocks of 2008 were to send Mas back into PIP's labs, to try to improve on his "perfect" gel formula.


Mas was never trained as a scientist. He was a tinkerer, an experimenter who relied on his gut. But even he was to realize that PIP gel had a problem: it leaked too much silicone oil.

Of seven former PIP staff interviewed by Reuters, only two said they had no idea that the company was using a homemade gel. Three others suggested they kept quiet because they were worried about their jobs.

After 2005, PIP staff became more vocal. That year, the heads of production, quality control and research and development together asked Mas to fill all PIP's implants with NuSil, Hannelore Font, the company's quality control director, told police. Mas replied this would be "economically impossible". Font did not return calls requesting an interview.

For 2008, PIP set aside 1.4 million euros to cover potential lawsuits, according to liquidation documents. It had underestimated. A British court ordered the company to pay 1.6 million euros to plaintiffs who alleged the envelopes covering PIP's implants were not strong enough and leaked gel. U.S. litigation cost another 160,000 euros.

"All this litigation weakened the health of the company," said Haddad, the attorney for PIP and Mas.

Complaints rose, and PIP's customers paid more slowly. The liquidator noted that PIP's export clients on average took nearly nine months to settle.

Suppliers balked, too. NuSil held up a shipment destined for PIP due to non-payment, PIP's purchasing manager, Nadine Carrodano, told police. Couty wrote to Mas describing what he called his "fears for the future."

By June 30, 2009, PIP's debts reached 8.5 million euros. "In every area the company was crumbling," Carrodano told police. She declined to comment.


In 2008, PIP invested 300,000 euros on a new machine to make the implants' shells, hoping more uniformity would cut leakage, according to Couty.

Brinon, PIP's technical director, said Mas came to him in early 2008 and told him to start developing a new gel, PIP 2. Brinon refused, and the task went instead to another worker who had never worked on implants before coming to PIP. The goal, he said, was to create a gel that would not leak so much oil. This was crucial: silicone gel that seeps out may cause irritation and inflammation in women's bodies.

That worker told Reuters that Mas relied on trial and error, adding a bit of this and a bit of that in the lab: "He didn't do scientific tests," the former worker said. "He'd look and say, 'that's good, that's bad.'"

To judge whether more or less oil was seeping out of the gel, the worker said, "you would look and then put your finger in the gel and you'd see if there was oil or not on your finger."

Finally, midway through 2008, PIP 2 was ready.

Brinon was sceptical. His own mother, who had once had cancer, had a PIP implant and he was worried, he told police. He began doing his own tests on PIP gel and NuSil. He told police that PIP 1 gel excreted more oil than PIP 2, and much more than NuSil, which leaked oil in "infinitessimal amounts."


Mas threw himself into export sales. His passport, a copy of which is included in police documents, shows visits to Panama, Venezuela, Colombia, Brazil, Uruguay, Ecuador, China, Singapore and the Philippines in 2008 and 2009.

Back at home, staff morale was low.

On May 4, 2009, a commerce court in the city of Toulon ordered PIP into the French equivalent of Chapter 11 proceedings. A Leeds Bankruptcy Lawyer contemplates what this means.

About a dozen employees were laid off, month-to-month workers' contracts were cut and evening shifts scaled back, according to liquidation documents. A Paris Bankruptcy Lawyer is wondering what else will happen.

Font, the quality-control staffer, told police she delivered an ultimatum to Mas at a meeting with other managers, saying she would no longer sign off on implants ready to be shipped. Instead, Couty took that on.

TUV performed an audit in early 2010. Purchasing manager Carrodano told police she was "close to tears" after TUV gave PIP the thumbs-up. Font got a doctor to sign a medical release to keep her away from work. Unpaid suppliers stopped sending raw materials; production ground to a halt.


On March 16, 2010, AFSSAPS officials came calling, a visit that had been arranged five days in advance. AFSSAPS had recently received letters from a Marseille surgeon signaling his concerns with PIP rupture rates. The regulator also received in the mail photos sent anonymously of empty containers of non-approved raw materials at PIP's plant.

On the first day of their visit, inspectors noticed nothing abnormal. The following morning, without telling PIP, they visited PIP's production facility. It was then they spotted the empty containers labeled "Silop," for Silopren. The lead inspector estimated they had contained nearly 9 tonnes of the liquid silicone.

Days later, when police visited the site, Mas slipped out quickly. When French police finally managed to question him in November, they asked why he had left in such a hurry. According to a police transcript of the interview, he said he was no longer in charge of the company - he had handed the reins to his finance director years back. "I thought it wasn't me you were coming to see..."

Within two weeks of the regulators' visit, PIP was shut down and AFSSAPS pulled its implants from the market. Some 29,000 products were seized. Laid-off staff burned tires and hurled discarded implants into the car park.

Mas went abroad again. Costa Rica, Nicaragua, Columbia, Spain and Venezuela are among visits his passport records in 2010. In Costa Rica, he was pulled over and charged with drunk driving.

On September 27, 2010, Mas transferred his ownership of a real estate holding company to his partner Lucciardi and their son, according to Luxembourg filing documents. That company holds the title to a four-bedroom villa with a pool not far from PIP's headquarters.

It was here police arrested Mas in January. The home, according to estate agents, is currently listed for sale at about 1.6 million euros.

In their questioning of Mas in October 2011, he told police that over the years, 75 percent of PIP's implants were filled with his homemade formula. The French regulator says there are so far 1,262 cases of the devices rupturing in France. Health experts say no concrete link has been shown between PIP implants and breast cancer, but the French government has advised women to have their PIP implants removed.

Mas, who is out on bail, was asked by police what he thought of the women who issued complaints about the failed devices. "It's about fragile people, or people who are doing it for the money," he said, according to the interview transcript.

Friday, February 3, 2012

Polo Club Founder Adopts Girlfriend to Save Assets in DUI Case

First appeared on ABC News
A wealthy Florida polo club founder has adopted his longtime adult girlfriend in what attorneys believe may be a legal maneuver to protect his financial assets--which he estimates as "several hundred million dollars"--as he faces a trial for a drunk driving incident that killed a 23-year-old. A Hackensack Personal Injury Lawyer has been watching the case.

John Goodman, 48, formally adopted Heather Laruso Hutchins, 42, in October 2011. The couple started dating in 2009. Goodman is the founder of the International Polo Club Palm Beach in Wellington, Fla.
West Palm Beach Judge Glenn Kelley wrote in a court order that the twists in the case "border on the surreal and take the Court into a legal twilight zone."

"The Defendant has effectively diverted a significant portion of the assets of the children's trust to a person with whom he is intimately involved at a time when his personal assets are largely at risk in this case," the judge wrote. An Oklahoma City Estate Planning Lawyer is curious.

Goodman is being sued by Lili and William Wilson for the wrongful death of their son Scott Patrick Wilson, who had come home from college for his sister's birthday, and died in a car crash on Feb. 12, 2010.

According to police, Goodman, who was driving a Bentley, ran a stop sign and slammed into Wilson's car. Goodman did not call police or an ambulance, and left the crash scene on foot, police said. It was determined that Goodman's blood alcohol level was more than twice the legal limit.

Man Adopts Girlfriend, 42, Before Civil Suit Over DUI Death

Goodman's civil trial is set for March 27 and his criminal trial for charges of DUI manslaughter, vehicular homicide and leaving the scene of a crash is on March 6. He faces up to 30 years in prison if convicted. A Rochester NY Personal Injury Lawyer wonders what will happen.

Neither of Goodman's two biological children have reached the age of 35, the pre-determined age at which they can control their trust funds. Since Hutchins is over the age of 35, her adoption entitles her immediately to a one-third beneficiary interest in the trust.

The court had previously ruled that the assets owned by Goodman's children could not be considered part of his net worth in the calculations for assessing punitive damages for the Wilson family, but the family thinks the adoption should change the ruling.

"Plaintiffs view the adoption of Ms. Hutchins as a 'game-changer' and as grounds to now include the assets of the children's trust, at least in some fashion, in the punitive damages calculation," Kelley wrote.

Attorneys representing the Wilsons believe that the move is Goodman's way of maintaining control of his money.  A Chicago Estate Planning Lawyer is curious if this will work.

"By way of this adoption John Goodman effectively owns or has direct control of one-third of the trust assets," Wilson family attorney Scott Smith told in an email. "It cannot go unrecognized that he has adopted his 42-year-old adult girlfriend as opposed to a child in need."

Goodman established the trust for his children in 1991 with $1.5 million. Within seven years, that trust had grown to more than $100 million and is currently worth "several hundred million dollars," according to his attorney.

"Nothing in this arrangement with Ms. Hutchins is illegal," Goodman's attorney Daniel Bachi said in a statement. "Everything that has been done by Mr. Goodman was done with the intention to preserve and grow the assets of the Trust for his two minor children, even should he personally be unable to continue his historical role in achieving these goals."

Bachi maintains that the adoption will have "no effect on the civil proceedings" and that Goodman does not benefit from it.

"Mr. Goodman asserts that the adoption makes Ms. Hutchings a beneficiary and, until a probate court holds otherwise, this Court will assume this is true," Kelley wrote.

The judge wrote that a probate court with jurisdiction over the trust will determine whether the adoption is a "sham," as it relates to the children's trust. A Sioux Falls Estate Planning Lawyer is wondering about similar cases.

On Jan. 25, a Palm Beach County judge denied Goodman's request to move the trial to Miami due to the negative publicity and attention he has received in the Palm Beach area since the accident.

"March will be an exhausting and understandably difficult time for Mr. and Mrs. Wilson, but they are prepared to move forward in honor of their only son's memory," Smith wrote.