Wednesday, October 30, 2013

Medical marijuana-using parents get baby back

Story originally appeared on USA Today.

Child Protective Services took the baby in September after alleging the Michigan couple might be exposing the infant to marijuana.

LANSING, Mich. — Baby Bree is back home.

In a case that galvanized Michigan supporters of medical marijuana, custody of an infant seized by Child Protective Services workers last month was awarded to the child's parents Friday in a Lansing courtroom.

"I'm ecstatic," said Bree's mother, Maria Green, standing outside the courtroom with a dozen medical marijuana activists wearing green ribbons.

"Bree will be in her own bed tonight. We're going to hug her and read to her and love her," said Maria's husband, Steve Green.

On Sept. 13, Steve and Maria Green, each a state-approved marijuana user, stood in their Lansing home in shock as employees from the county's Child Protective Services unit said the Greens might be exposing their infant daughter Bree to marijuana. As police looked on outside the Greens' two-story gray house, Bree was taken from her mother's arms and driven away.

That action triggered an outcry of "Free Baby Bree" — on websites and the Greens' Facebook page, at rallies and fund-raisers, on the weekly web-streamed Planet Green Trees Radio and outside the Ingham County courthouse.

Four attorneys volunteered their time. And leaders of the medical-marijuana community declared the case would make or break future investigations involving medical marijuana by child protective units across the state.

"The idea that medical marijuana patients can't be good parents is just drug-war hysteria," said Charmie Gholson, 49, of Ann Arbor. But the Greens aren't the first to suffer the loss of a child, Gholson said.

"This has been going on almost since the law passed," she said. Gholson is founder of Michigan Moms United, what she calls "a campaign to re-educate the public and legislators about how the failed drug war destroys families."

Steve Green, 34, is a former auto mechanic who suffers from severe epileptic seizures that no medicine would relieve until he tried marijuana, he said. Maria Green, 31, is a former preschool teacher who has multiple sclerosis and operates a home-based business, selling her own nutrition supplements, "that keeps a roof over our heads," she said. Both are state-approved medical-marijuana users, as their attorneys showed in court.

At their previous home in Auburn Hills, the couple was charged with manufacturing marijuana — a four-year felony — because Oakland County authorities found them growing marijuana. Friday's court order allows them to resume growing the plants, Covert said.

"I was there and I have to tell you — that was hard to watch," Joshua Covert, the couple's key attorney, said about Bree being taken away. But Friday's decision had him smiling.

"We said we're going to let the parents medicate (with marijuana) but not around the children, just what they've been doing all along, and allow some type of regular testing of the baby, maybe a mouth swab," to prove that Bree was not being exposed, Covert said.

The Greens had been scheduled for a jury trial Monday, but this week their luck turned. Ingham County Probate Judge Richard Garcia, at an evidentiary hearing Wednesday, voiced doubts about the actions of social workers and their allegations on a Child Protective Services petition. That led Garcia to call for a special hearing Friday. That's when the couple heard the words they longed to hear — that Baby Bree would come back to her mother and father.

"We've been hoping and praying for this, and we were joking about the return policy," Maria Green said. The infant has been living with her parents near Port Hurton, under a temporary custody arrangement.

The Ingham County assistant prosecutor who represented Child Protective Services at Friday's hearing declined to comment.

Ingham County Prosecutor Stuart Dunnings III said Tuesday that he could not comment directly about Bree Green's parents' fitness to raise her.

"But I would hope that any parents who have the need to use prescription medication would do so in a manner that does not expose their child to harm," Dunnings said.

In Michigan's see-saw battle over the legitimacy of medical marijuana, the Greens have become heroes to those who support full legalization of the drug.

But for those at the other end of the spectrum, medical marijuana activity in Michigan has become a cover for drug dealing.

"I've seen it first-hand," said Roseville Police Chief James Berlin, who spent most of his career in narcotics enforcement.

"I'm sure there's legitimate patients, but we spend a lot of time and effort investigating guys who have their (state registry) card and they're raising plants and selling the drug to anyone who'll buy from them," Berlin said.

Monday, October 28, 2013


This story first appeared in USA Today.

Toyota settled a fatal crash case that allegedly involved sudden acceleration in a Toyota Camry the day after an Oklahoma jury awarded victims $3 million.

The jury already found Toyota Motor Corp. liable Thursday for the crash that killed Barbara Schwarz and injured Jean Bookout. Schwarz' family and Bookout each would have gotten $1.5 million if the jury's decision hadn't been superseded by the settlement.

The jury was deliberating punitive damages on top of the $3 million when the settlement was reached Friday.

The jury decided Toyota acted with "reckless disregard" for the rights of others.

Toyota spokeswoman Carly Schaffner said the company strongly disagreed with the verdict and would continue defending its vehicles in similar cases.

This was the first trial in which the plaintiffs made Toyota electronic malfunctions the centerpiece of an unintended acceleration case, according to safety advocate Sean Kane, whose clients include plaintiff attorneys

"And what may be significant going forward is not the verdict...but what is entered into the public record about what Toyota knows about the failures of its Electronic Throttle Control System– Intelligent (ETCS-i) and when they knew it," Kane said Friday in a release.


 Toyota to pay $1.1B for 'unintended acceleration'

Earlier this month, a California jury failed to find Toyota liable for the death of a California woman who was killed when her 2006 Camry apparently accelerated and crashed despite her efforts to stop. Jurors deliberated for about five days before concluding the vehicle's design didn't contribute to the death of 66-year-old Noriko Uno, who died in August 2009 when she was struck by another motorist, sending her vehicle into a telephone pole and tree.

In July, a federal judge in California approved a $1.6 billion settlement in a class action suit filed over economic loss suffered by owners who say their vehicles lost value over the adverse publicity about the issue.


This story first appeared in USA Today.

Trustee seeking to recover funds lost by investors wants Supreme Court to review case

The nation's largest bank isn't out of financial jeopardy for its business link to the Bernard Madoff fraud scandal.

The court-appointed trustee trying to recover billions Madoff stole in the now-infamous Ponzi scheme petitioned the U.S. Supreme Court this month, asking it to issue the final word on whether JPMorgan Chase should pay for taking little action on suspicious activity in the account Madoff held at the bank.

The petition also argues that Swiss banking giant UBS, global bank HSBC and other financial institutions should share legal liability with JPMorgan for failing to stop the fraud.

"Madoff did not sustain this unprecedented fraud for more than two decades by himself," David Rivkin, the counsel for trustee Irving Picard, wrote in the Oct. 9 petition. "Instead, he was aided by a network of financial institutions, feeder funds and individuals who funneled investments" into Madoff's firm, provided financial services "and (of course) skimmed off substantial amounts for their efforts."

The petition asks the Supreme Court to review a federal appeals court decision in June that upheld lower court rulings that barred the trustee from pursuing financial recovery from the financial institutions. The lower courts ruled the federal law that empowers the trustee limits him to customer claims against Madoff's now-insolvent business.

The high court set a Dec. 9 deadline for the banks and feeder funds to file legal responses. They have repeatedly said they acted in good faith and could not have detected or stopped Madoff's scheme.

Formally known as a writ of certiorari, the petition represents a legal long shot. The Supreme Court agrees to accept only a fraction of the thousands of cases submitted for review. But Picard's petition argues that several federal appeals courts around the nation have issued differing rulings on similar matters. The Supreme Court sometimes reviews such cases to resolve legal discrepancies.

David Sheehan, Picard's chief counsel, maintained the trustee has legal authority "to pursue compensation from any third party that collaborates with a broker to defraud its customers."

JPMorgan "was foremost among (financial institution) collaborators, standing at the very center of Madoff's fraud for over 20 years," Picard's petition argues.

Billions of dollars flowed through Madoff's retail checking account at the New York-based bank "in suspicious and repetitive round-trip transactions." Madoff was assumed to be making investments on behalf of thousands of mom-and-pop clients, celebrities, charities and financial institutions, and the account funds weren't "segregated in any fashion," the petition argued.

According to the trustee's petition, JPMorgan's chief risk officer, John Hogan, warned colleagues about 18 months before the fraud collapsed that "there is a well-known cloud over the head of Madoff and that his returns are speculated to be part of a Ponzi scheme." But the bank response was to assign a junior employee "to see what a Google search could turn up about Madoff," the petition argues.

Despite its suspicions, JPMorgan ultimately invested with several feeder funds that funneled money to Madoff. But unlike thousands of other investors, JPMorgan Chase redeemed more than $276 million before the scheme crumbled. At that time, the bank sent a suspicious activity report about Madoff to the United Kingdom's Serious Organized Crime Agency.

"But these revelations came too late to do anyone, save JPM, any good," the petition argued.

Madoff confessed to the fraud in December 2008 and pleaded guilty the following year without standing trial. He's now serving a 150-year federal prison term. Accountants and other experts assisting Picard determined that the scam ran up nearly $20 billion in losses. Five former Madoff employees are currently on trial in New York on charges they were knowing participants in the scheme.

JPMorgan could also face criminal liability for its long financial relationship with Madoff. The New York Times reported Thursday that federal authorities and the bank have discussed a deferred prosecution agreement in which the bank would pay a financial fine and make acknowledgments concerning its Madoff-related activity.

The Times account, which cited information from people briefed on the inquiry, reported that JPMorgan could also be required to hire an independent monitor.

The Manhattan U.S. Attorney's office declined to comment. JPMorgan spokesman Joe Evangelisti reiterated previous statements that all personnel "acted in good faith" with regard to Madoff's banking.

Separately, JPMorgan is negotiating a potential record-setting $13 billion settlement to address the role the bank and its subsidiaries played in marketing mortgage-backed securities during the run-up to the 2008 financial collapse. The tentative agreement is expected to include a mixture of fines and consumer relief.


Story first appeared in USA Today.

Legal feuding pits industry blue blood against moonshiner purist over trademarks.

LOUISVILLE, Ky. (AP) — A white whiskey named for a famed Appalachian moonshiner started out being sold in Mason jars, to honor its roguish roots, but switched to square-shaped bottling. That new look has the upstart distiller embroiled in a trademark infringement fight with Jack Daniel's Tennessee whiskey. A Tampa Patent Lawyer is paying close attention to this story.

The legal feuding pits an industry blue blood against a tiny distiller that proudly claims to carry on the tradition of moonshiner Marvin "Popcorn" Sutton. The irascible Sutton wrote a paperback called "Me and My Likker" and recorded videos on how to make moonshine.

Sutton, known for his long gray beard and faded overalls, took his own life in 2009 rather than go to prison for making white lightning.

Now, the whiskey maker he inspired is facing its own legal problems. A Milwaukee Patent Lawyer will be following these actions.

The owner of the Jack Daniel's trademark sued the Nashville, Tenn.-based distiller of Popcorn Sutton's Tennessee White Whiskey. The lawsuit claims the bottling and labeling for the Popcorn Sutton product is "confusingly similar" to the ubiquitous packaging for Jack Daniel's.

The suit filed in Nashville wants the Popcorn Sutton bottle removed from the market. It says the new packaging hit the shelves in either late 2012 or early 2013.

"Defendants' use of the new Popcorn Sutton's trade dress in connection with their Tennessee white whiskey is likely to cause purchasers and prospective purchasers of the product to believe mistakenly that it is a new Tennessee white whiskey product in the Jack Daniel's line," the lawsuit said. A Boston Patent Lawyer is closely monitoring.

The suit was filed by California-based Jack Daniel's Properties Inc., a subsidiary of Brown-Forman Corp. Watching this filing is an Atlanta Trademark Lawyer.

Jack Daniel's is the flagship brand of Louisville-based Brown-Forman, which sold 11 million cases of the Black Label Tennessee Whiskey in the fiscal year that ended April 30. Jack Daniel's whiskey is produced in Lynchburg, Tenn.

Named as defendants are J&M Concepts LLC and Popcorn Sutton Distilling LLC, which operate in Nashville.

The defendants did not respond to phone calls and emails seeking comment Friday.

The small distillery's website says Popcorn Sutton's white whiskey is currently available in Tennessee, Kentucky, Arkansas and Georgia.

The suit notes what it said are the similarities between the packing for Jack Daniel's and the Popcorn Sutton spirit. Both bottles are square shaped with angled shoulders and beveled corners, with white-on-black labeling color schemes, the suit said. Even the font style of the Popcorn Sutton labeling is reminiscent of the Jack Daniel's label, it said. A Richmond Trademark Lawyer is reviewing the actions of this case.

Except for minor tweaks, the Jack Daniel's packaging has been "a consistent commercial impression" for decades, the suit said. That packaging is part of "one of the oldest, longest-selling and most iconic consumer products" in U.S. history, it said.

The suit said the defendants' master distiller, Jamey Grosser, cited Sutton for inspiring the makeover for his brand's look. Grosser noted that Sutton wanted to sell his moonshine in eye-catching packaging once he could afford to do so. The old moonshiner would say: "My whiskey is too good to be in a damn jar," the suit said.

Nick Reifsteck, manager of Old Town Wine and Spirits in Louisville, said the Popcorn Sutton's whiskey seemed more popular in its simpler bottle.

"When it was in the Mason jars, it was a better seller, more of a curiosity," he said Friday.

Jack Daniel's last year released its own white spirit — an unaged rye. So far, the company has produced about 100,000 bottles for sale in the U.S., Brown-Forman said.

The lawsuit seeks an injunction to stop the defendants from using their current bottle. It also asks for unspecified damages. A Boston Trademark Lawyer will continue to monitor this story.

For Jack Daniel's, it's the latest round of legal fighting in its vigilance to protect its trademark, its parent company said.

"We've taken action against many individuals and companies all over the world for infringing in the Jack Daniel's trademark," Brown-Forman spokesman Phil Lynch said Friday. "We are vigorous in our defense of all our trademarks, and especially Jack Daniel's."


Story first appeared in USA Today

CINCINNATI (AP) — Nine Ohio and West Virginia residents who have cancer and other diseases have filed federal lawsuits this month against chemical giant DuPont, alleging the company knowingly contaminated drinking-water supplies with a chemical used by one of its plants.
The lawsuits, filed Oct. 8 and this week, are among about 50 such cases — including one alleging wrongful death — filed against DuPont since April, when a court-appointed science panel found probable links between exposure to perfluorooctanoic acid, also known as C8, and kidney cancer, testicular cancer and thyroid disease, among others.
DuPont, based in Wilmington, Del., uses C8 at its plant near Parkersburg, West Va., on the Ohio line but plans to stop making and using the chemical by 2015. C8 is a key ingredient in Teflon, the coating used on cookware, clothing and other products.
The recent litigation is the latest in a years-long battle between DuPont and residents of the mid-Ohio Valley, in the heart of Appalachia along the Ohio River.  A Chicago Personal Injury Lawyer is following this case closely. 
About 80,000 area residents filed a class-action lawsuit against the company in 2001. It resulted in a settlement in which DuPont agreed to pay as much as $343 million for residents' medical tests, the removal of as much C8 from the area's water supply as possible and a science panel's years-long study into whether C8 causes disease in humans.
"These are folks who've been waiting many, many years to be able to pursue these claims," said Rob Bilott, a Cincinnati attorney who has been working on the case for more than 15 years and represents the Mid-Ohio Valley residents. "Our goal is to be able to get these resolved for them and move forward as quickly as we can."  A Newark Personal Injury Lawyer agrees this can take years to pursue claims.
In a written statement, DuPont spokesman Dan Turner pointed out the company's efforts to pay for the medical study of C8 and fund a medical monitoring program for residents exposed to the chemical.
"Lawsuits such as these ignore family history, lifestyle choices and other causes of health issues and disease in specific individuals," Turner said. "DuPont will vigorously defend against any and all such lawsuits not based upon valid science."
The roughly 50 recent lawsuits in Ohio and West Virginia, which seek unspecified damages, have been consolidated into one case being presided over by a federal judge in Columbus. The first trial in the matter is set for September 2015.
Many of the lawsuits are more than 50 pages long and accuse the company of negligence, concealment, fraud, deception, battery and the "negligent, intentional and reckless infliction of emotional distress and outrage."  A Miami Personal Injury Lawyer is not surprised by the amount of documentation require for such a case.
The lawsuits allege that DuPont's own research had concluded by at least 1961 that C8 was toxic and it conducted studies in the 1980s showing higher-than-normal birth defects among babies born to its female employees.
DuPont is accused of recklessly, maliciously and knowingly ignoring the risks and releasing C8 into the air and groundwater through its production practices, all while telling members of the public and news media that C8 was safe.
"No reasonable person could be expected to endure the knowledge that an entity has knowingly and intentionally exposed them to years of harmful contact with a dangerous chemical, and has furthermore actively misrepresented and/or concealed such danger from them, while reaping hundreds of millions of dollars in profits as a direct and proximate result," the lawsuit says.
The lawsuits quote internal notes written by DuPont's attorneys, obtained during previous litigation, that show their apparent frustration.
"Too bad the business wants to hunker down as though everything will not come out in the litigation," wrote one attorney who was not named in 2001, according to the lawsuit. "God knows how they could be so clueless. Don't they read the paper or go to the movies?"
Among the lawsuits is one filed by Virginia Morrison of Parkersburg, West Va., accusing DuPont of causing the death of her husband in 2008 from injuries related to kidney cancer.
DuPont denies all the allegations in court filings, saying that plaintiffs' damages, if any, were caused by acts of God or actions of others, "over which DuPont had no control," and were not reasonably foreseeable by the company.  A Minneapolis Personal Injury Lawyer will continue to monitor this case. 

Tuesday, October 22, 2013


Story first appeared in The Detroit News.

Four Volkswagen AG factory workers in Chattanooga, Tenn., have filed a federal complaint against the German automaker, accusing it of trying to force them to accept representation by the United Auto Workers union.

It is the latest bizarre twist in the UAW's ongoing campaign to organize the one foreign-owned automobile factory in the United States that has not actively rebuffed the union.

While most foreign automakers have fought to keep the UAW out of their factories, Germany's "co-determination" laws have made VW receptive to at least some form of union representation. Those laws give labor a significant voice on Volkswagen's supervisory board, and representatives from the German auto union IG Metall have pressured management to enter discussions about union representation at the U.S. plant -- the only major assembly plant without formal labor representation.

Last month, the UAW announced that a majority of workers at the Chattanooga plant had signed cards in support of union representation in creating a German-style works council. Now, a group of workers at the plant has accused VW of making worker acceptance of these works councils a condition of getting future product allocated for the factory.

The Chattanooga plant is competing with a VW factory in Mexico for a new crossover based on the CrossBlue concept shown in Detroit in January.

Last week, four VW workers in Chattanooga -- backed by the National Right to Work Foundation -- filed a formal complaint against the company with the National Labor Relations Board, accusing a senior manager of hinting that product would only come to Tennessee if workers there accepted UAW representation.

"With reports that Volkswagen is considering Chattanooga to build its new SUV, this is no idle threat," said foundation president Mark Mix in a statement. "If VW management was discouraging workers from joining the UAW with threats, there's little question that an NLRB prosecution would have already begun at the UAW's behest."

Both VW and the UAW declined to comment on allegations.

This is the latest in a series of legal moves, all made with the support of the National Right to Work Foundation, to block or delay the UAW's organizing effort in Chattanooga.

Three of the workers who filed this complaint were parties to another complaint filed last month challenging the UAW's "card check" system.

Thursday, October 17, 2013


Story first appeared in USA TODAY.

JPMorgan Chase will pay a $100 million fine and admit to reckless conduct and market manipulation in connection with its 2012 "London whale" trading debacle, the Commodity Futures Trading Commission announced Wednesday. A Washington DC Securities Lawyer is watching the case closely.

With the latest fine, the bank's total penalties for the London whale case top $1 billion. Last month, JPMorgan agreed to pay $920 million to settle charges brought by the Federal Reserve, the Comptroller of the Currency, the Securities and Exchange Commission and Great Britain's Financial Conduct Authority.  A San Diego Securities Lawyer agreed that this appears to be standard practice.

That's on top of the losses the trading ultimately cost the bank — an estimated $6.2 billion.  This left a Raleigh Bankruptcy Lawyer with many questions.

In a statement, JPMorgan said it neither admitted nor denied the CFTC's legal conclusion that there was a violation. A Los Angeles Bankrupcy Lawyer still had his doubts, however.

"We are pleased to be able to put behind us another aspect of the (Chief Investment Office) trading matter by the resolution of the CFTC investigation," the bank said.

The scheme, as outlined by regulators, was as simple as the financial instruments it involved were complex. 

The bank had sold short a basket of credit derivatives, betting on their value to fall. Each month, traders had to report their profits or losses for the month, and in February 2012, they faced huge losses on a bet that had reached $65 billion in value. To drive down the price of the derivatives, JPMorgan sold another $7 billion of the instruments short in one day, which reduced losses on the bank's existing bets by creating artificial selling pressure, regulators said.  A New York Securities Lawyer was curious about the details of the case.

"They were short protection, and they sold more protection,'' the commission said in its statement. "The Commission is now better armed than ever to protect the market from traders, like those here, who try to 'defend' their position by dumping a gargantuan, record-setting, volume of swaps virtually all at once, recklessly ignoring the obvious dangers to legitimate pricing forces." An Indianapolis Bankruptcy Lawyer wondered how this would impact homeowners.

Despite the newest London whale settlement, JPMorgan still faces a criminal investigation of the trading episode by federal prosecutors. Two former JPMorgan employees involved in the London whale trades are also facing federal criminal charges and SEC civil charges.

JPMorgan, the nation's largest bank, is under intense scrutiny from multiple regulators for its conduct in a variety of matters before and since the 2008 financial crisis. A Pittsburgh Bankruptcy Lawyer saw many cases during this financial crisis.

Last week, the bank said it had set aside $23 billion in reserves to pay for settlements and litigation expenses. It is currently negotiating a settlement with the Justice Department about its handling of mortgage-backed securities that could reach a reported $11 billion. Including settlements already paid out, and others for which it has not yet established reserves, JPMorgan said its exposure to claims stemming from the financial crisis could top $36 billion. With a Denver Bankruptcy Lawyer handeling multiple cases, he was unavailable for comment.

The bank reported a $380 million loss for the third quarter after increasing those reserves by $9.2 billion.


Story first appeared in USA TODAY.

Six years ago, William Reed was a Nevada businessman listed as the corporate officer for more than 1,000 companies purportedly headquartered in a lone Las Vegas office suite.

Now he has a new title: federal prison inmate, sentenced to nine years behind bars.

Nevada Senior U.S. District Judge Philip Pro imposed the sentence Tuesday after Reed pleaded guilty to tax conspiracy, attempted tax evasion and aggravated identity theft in a case involving his part in a thriving mini-industry that helps an untold number of clients attempt to hide financial assets from the IRS and other government agencies, creditors and courts.

Pro also ordered Reed, 63, to pay nearly $4.2 million in restitution as part of the sentence.

A Feb. 2007 USA TODAY report showed that Reed and his company, Asset Protection Group, took advantage of gaps in domestic incorporation laws and virtually non-existent government oversight to promote some U.S. states as secrecy rivals of traditional offshore tax havens.

Asset Protection Group attracted clients in part with a promotional video in which actor Robert Wagner warned that without asset protection, "You could lose everything you've worked so hard for, in a flash." Clients paid as much as $9,800 for the firm's asset protection program and became company consultants.

Reed and the firm typically formed new Nevada corporations for the clients that listed him, not them, as the sole officer. The procedure took advantage of laws in Nevada and other states that often do not require the actual owners of corporations to be disclosed.

"Our consultants purchased the corporations, resold them, and I never knew who actually used them," Reed wrote in a statement filed with the court last week. "Some of our customers used the corporations to hide their assets or income from the IRS."

Reed personally owes more than $34.4 million in taxes, and Asset Protection Group transactions add an additional $14 million in tax liabilities, federal court records show.

Reed's sentence was more lenient than the 12-year term recommended in a presentencing report. But it was harsher than the six-year term defense attorney attorney Paola Armeni urged in a Oct. 8 sentencing memorandum.

While acknowledging that Reed had "failed to pay his own taxes" and continued to engage in activities that "deprived the IRS from collecting money from many others," Armeni argued in the memo that he deserved a lighter sentence based on his help recovering nearly $3 million for the IRS.

Armeni also cited Reed's help providing evidence against alleged co-conspirators, his age and need to assist with care of his 88-year-old mother.

"As someone with no prior criminal activity, I am humbled and humiliated. I'm truly ashamed," Reed wrote in his court statement.

However, Assistant U.S. Attorney J. Gregory Damm argued in a court filing last week that Reed should get no leniency for satisfying a fraction of his overdue tax bill. "The government has made a good faith evaluation of the defendant's assistance to date and has concluded that he has not yet provided "substantial assistance to authorities," Damm wrote.


Story first appeared in USA TODAY.

NEW YORK — The trial of five former employees of Ponzi scheme mastermind Bernard Madoff opened Wednesday with a prosecutor branding the defendants as active participants in the notorious fraud that stole billions of dollars from average investors, charities, financial firms and others. A Boston Insurance Bad Faith Lawyer is watching the case closely.

The jury — eight women, four men and six alternates — listened as Assistant U.S. Attorney Matthew Schwartz charged that the defendants fabricated stock trades, created phony books and records, built a computer program that automated the scam and then lied to investors, regulators and banks for decades.

Their actions allegedly helped perpetuate the elaborate fiction that Madoff generated eerily steady investment gains for thousands of customers via a shrewd stock-trading strategy. In reality, he kept the scheme running by using some customers' money to pay others. An Iowa Insurance Bad Faith Lawyer was shocked by the boldness of the tactics.

"For more than 30 years, Bernard Madoff ran a multi-billion dollar fraud that turned out to be the largest Ponzi scheme in history," said Schwartz. "These are the people who helped him do it."

Schwartz argued that no one person could have run such an elaborate fraud unaided, as Madoff, now 75, claimed after he confessed to the estimated $19 billion fraud as it teetered toward collapse in Dec. 2008 as investors sought withdrawals amid the national financial crisis.  A San Francisco Insurance Bad Faith Lawyer agreed that others had to know.

During a more than hour long opening government statement in the same federal courthouse where Madoff was sentenced to a 150-year prison term without standing trial, Schwartz pointed at each of the five alleged co-conspirators in turn and then outlined what he described as their individual roles in the fraud.

JoAnn Crupi, 52 and Annette Bongiorno, 64, decided which stocks and bonds to say that Madoff had purchased, then helped fabricate millions of phony records that supposedly documented transactions that never took place, said Schwartz. They also monitored a Madoff firm bank account that held investors' money and served as a giant slush fund, he charged. Many were shocked including an Atlanta Insurance Bad Faith Lawyer.

Jerome O'Hara, 50, and George Perez, 47, "created customized computer programs that automated the lying," said Schwartz. The programs were allegedly custom-designed to fool the Securities and Exchange Commission, banks and others that periodically audited or questioned Madoff's business operation.

Daniel Bonventre, 66, "cooked the books," falsifying the Madoff firm's general ledger, helping the scheme from banks and regulators and even helping Madoff evade taxes for decades, said Schwartz.  A New York Insurance Bad Faith Lawyer thought employees of Madoff were going to have a difficult time getting through dilemma.

Why did the five do it? "The most simple reason of all: greed," the prosecutor charged.

Crupi grew wealthy working for Madoff, buying a $2.7 million beach house with money allegedly stolen during the final weeks of the scam and charging years of personal expenses to the Madoff firm's corporate credit card, Schwartz alleged. A San Diego Insurance Bad Faith Lawyer was not surprised by use of Crupi's lavish wealth.

Bongiorno similarly raked in millions of dollars, including $2,000 weekly in "walking around" money on top of her salary and purported investment gains, Schwartz charged.

O'Hara and Perez collected more than $100,000 each from the scam and once allegedly up Madoff for a payment in diamonds so the transaction couldn't be traced.  A Birmingham Insurance Bad Faith Lawyer agreed that it goes to show that even though it can't be traced, you will eventually get caught.

And Bonventre got more than $1 million he used to pay common charges on his Manhattan apartment, his country club bill, a son's tuition bill and other personal expenses, Schwartz charged.

The government's opening statement offered the first inside glimpse into the workings of the alleged scheme. Schwartz said prosecutors plan to present evidence and testimony from investigators, banks, and even some investors who were conned out of their life savings by the scam during a trial that is expected to last as long as five months.  A Tampa Insurance Bad Faith Lawyer often sees people that have been taken advantage of.

Prosecutors have listed up to 100 potential government witnesses. The star is expected to be Frank DiPascali, Madoff's former chief financial officer. The 57-year-old Queens, N.Y. native waived indictment by a grand jury and pleaded guilty to ten counts of conspiracy, fraud and other charges in Aug. 2009.

"I'm standing here to say that from the early 1990s until December 2008, I helped Bernie Madoff and other people carry out a fraud," DiPascali said at that plea hearing.  A Denver Insurance Bad Faith Lawyer agreed that the wrongdoers should be punished.

Defense lawyers were scheduled to give their opening statements Thursday. U.S. District Judge Laura Taylor Swain conferred with attorneys from both sides after the prosecution's first-day legal salvo and then cautioned jurors that opening statements are overviews, not evidence.


This story first appeared in the Detroit Free Press.

Very important lesson for drug traffickers: Do not store your half-ton of weed in the backseat of your car.
A Brazilian drug smuggler did just that, police say, and the man was killed when he crashed into a tree while being chased by police ... because the 1,100 pounds of weed came barreling forward and crushed him against the steering wheel


Story first appeared in The Detroit Free Press.

Judges from around the state gathered at the Grand Hotel on Mackinac Island in late August, taking time off from the bench for an educational conference.

Two Oakland County Circuit Court judges took those days off and listed them as “educational’’ days on their time cards. But they never showed up for the conference.

Records obtained by the Free Press under the Freedom of Information Act show Judges Rae Lee Chabot and Shalina Kumar marked down Aug. 19 and 20 as education days to attend the Michigan Judges Association Annual Conference. The county paid the $150 registration fee for Chabot. Kumar did not register.

Neither set foot on the island. Both called the time cards a mistake and said they would rectify them.

“It was an oversight,” Chabot said this week. “I planned to go and changed my plans.”

Kumar said she’d instructed her secretary to change the records when she decided not to attend, and mark the days as vacation, but the change wasn’t made. “It was a clerical error,” she said. “It will be corrected.”

Chief Judge Nanci Grant agreed the records will be corrected.

“Judges often request time off well in advance of their scheduled absences,” Grant said in an e-mail to the Free Press. “As we all know, plans may change, and the judges are provided the opportunity to reconcile their time off in compliance with the court rule at the end of each calendar year.”

Under Michigan Court Rules, judges are allowed 20 vacation days a year but can take an extra 10 with the approval of the chief judge. Chabot and Kumar had used their 20 days but had not sought additional vacation days.

Legal experts say judges have to be extra careful how they conduct themselves. Law professor and ethics expert Larry Dubin cited canons that govern judges.

“Canon 2 of the Michigan Code of Professional Responsibility states, ‘A judge must expect to be the subject of constant scrutiny,’ because judges are held to a higher standard of integrity than other people,” Dubin said. “Judges have to even avoid the appearance of impropriety. When a judge has given false information about not being on the bench on a given day, the judge owes the public and the courts an honest explanation.”

Tuesday, October 15, 2013


Story first appeared in The Detroit News.

Lansing— Lawmakers must pass corrective legislation that could spark another squabble over Medicaid expansion, the Senate’s appropriations chairman says.

“I would hope that people want it to go reasonably smoothly ... (but) some might say we’re not done fighting,” said Sen. Roger Kahn, R-Saginaw.

Follow-up legislation is needed because the Senate backers didn’t win immediate effect for the Medicaid act Snyder signed into law Sept. 16. It will make more than 400,000 additional state residents, earning 100 to 133 percent of the federal poverty guideline, eligible for government-funded health care.

The legislation can’t take effect until about three months into 2014, so state lawmakers have to come up with $70 million to cover Medicaid mental health services during that period. Had the expansion taken effect immediately, the coverage cost would have transferred to the federal government Jan. 1.

The Senate Fiscal Agency says cleanup legislation also is needed to revise downward by $500 million the amount of federal Medicaid funds received and spent this fiscal year. The bill specifies $1.7 billion, but the three-month delay will reduce the amount to around $1.1 billion or $1.2 billion, according to fiscal agency analysts.

The $70 million outlay and the technical adjustment through what’s termed a “negative supplemental appropriation” of $500 million could be wrapped into a single bill.

Lawmakers probably would take up the legislative proposal in about five weeks, Senate Majority Leader Randy Richardville, R-Monroe, told the press last week. He said Kahn would craft the proposal.

“There’s a fair amount of accounting work to be done,” Kahn said. “I would imagine before it gets ramped up, there will need to be a discussion between Richardville, (House Speaker Jase) Bolger and (Gov. Rick) Snyder.”

A spokeswoman for Sen. Patrick Colbeck, R-Canton, whose staunch opposition nearly prevented passage of the Medicaid expansion, said he wasn’t available for comment Friday.

Spokesman Ari Adler said it had been Bolger’s understanding nothing much more than the $70 million appropriation was needed as a follow-up. The $500 million is “just gone ... (and) we don’t need to take any action on it,” he added.

“Either way, this should not be seen as some sort of proxy on Medicaid reforms,” Adler said. “The policy debate was already held, the votes were cast and the outcome is done.”

Friday, October 11, 2013

Michigan woman gets jail for embezzling from law firm

Story originally appeared on the Detroit Free Press.

A woman who pleaded guilty to embezzling a six-figure sum from a Bay City law firm where she worked for more than a decade has been sentenced to a year in jail. reports 50-year-old Kathryn Charbonneau this week learned her punishment in a Bay County courtroom.

She'll also be expected to pay restitution, but the amount hasn't yet been determined. After her release, she'll be on probation for five years.

The Portsmouth Township woman made the plea earlier this year to one count of embezzlement of $100,000 or more. Officials have said $446,000 was missing.

Charbonneau previously worked for the firm of Rieman & Reyes.

Thursday, October 10, 2013


Story first appeared in the Detroit News.

During U.S. Supreme Court oral arguments in December 2006, Jennifer Gratz recalls sitting in the courtroom and hearing justices refer to her name. It wasn’t a personal reference — they were alluding to the 2003 case with her name on it.

“Stop talking about me like that,” Gratz remembers thinking. “I’m not a policy. I’m a real person.”

The Southgate native was in the court that day because the case involved race and the 14th Amendment rights of students.

Her issue. Her cause.

For the past 17 years, Gratz, 36, has devoted her time and energy to fighting against racial preferences and unequal treatment under the law. Whether she likes it or not, she’s the face of the affirmative action fight she won against the University of Michigan in 2003, as well as Michigan’s racial preferences ban. “I’m so passionate about it,” she says.

Michigan’s ban, the constitutional amendment voters approved in 2006, was overturned last year by the 6th Circuit Court of Appeals. The High Court has taken up the case and hears oral arguments Tuesday.

Gratz will be there. And it’s the second time in a decade she’ll be in the court regarding a case that involves her directly.

While this case doesn’t have her name on it, it holds her heart and soul. “I find this case more personal than the one that bears my name,” Gratz says.

That’s because she poured three years into getting the Michigan Civil Rights Initiative passed. Gratz says the day of the 2003 Supreme Court decision, she knew her fight wasn’t over.

“I realized I would dedicate my life to equality,” she recalls. Three years later, her efforts paid off.

But it hasn’t been easy. Married since 2003 and living in San Diego, Gratz largely spent those years working on the initiative in Michigan. She left her job at a software company and risked a long-distance relationship with her husband.

And now, depending on how the court rules on Michigan’s affirmative action ban, Gratz is mulling a run next year for U-M Board of Regents. To do that, she’d have to spend significant time away again from her husband and their new microbrewery in Fort Myers, Fla.

Why in the world would she want to devote that kind of time to a university that rejected her?

“I want to take the battle full circle,” Gratz says. As a regent, she’d be in a position to tackle some of her core concerns. “I’d be there to address hard issues.”

She’s adamant it’s not revenge or malice that drives her. “I love the university still,” she says. Gratz thinks sometimes about what direction her life would have taken if she’d been accepted. While her U-M Dearborn education was a good one, she knows it’s the not the same.

Yet she values the university and credits the U-M hospital for saving her brother’s life a few years ago, after he was diagnosed with a rare form of cancer.

Gratz has continued her fight against affirmative action since she was a teenager, and she doesn’t regret it. For her, it’s about making institutions like U-M better by being fair in their admissions policies.

“I would do it all over again in an instant,” she says.


Story first appeared on USA TODAY.

Joseph Hosey is facing jail time for simply doing his job.

Hosey, a reporter for in Illinois, has balked at an order to reveal the identity of a confidential source. As a result, Will County Judge Gerald Kinney found the journalist guilty of "minor direct criminal contempt." The judge says Hosey, a 10-year reporting veteran, must pay $1,000 in court costs, additional fines of $300 a day for three months and, after that, spend up to three months in jail.

Luckily, the penalty has been stayed while Hosey appeals. But that hardly alters the fact that the decision is a horrendous example of judicial overreaching. Especially since there is absolutely no indication that the information Hosey disclosed has had a negative impact on anything.

David Cuillier, president of the Society of Professional Journalists, has decried the ruling as "an absolute outrage and an affront to a free press and everything this nation holds dear." I couldn't agree more. Cuillier, a former reporter and editor who teaches journalism at the University of Arizona, says the situation is something he'd expect to encounter in a Third World nation, not in the great state of Illinois.

The episode comes in the midst of a very tough period for journalists seeking important but hard-to-come-by information and the people who provide it to them. The Obama administration has shown unprecedented zeal in clamping down on leakers, prosecuting a record-breaking number of people under the Espionage Act, of all things. And it is seeking to force New York Times reporter James Risen to reveal a secret source.

In the wake of a backlash against its heavy-handed tactics, the Justice Department drafted guidelines providing protection for reporters, and the White House called on Congress to pass a federal shield law that would in many cases safeguard sources' confidentiality. Sen. Charles Schumer, D-N.Y., the bill's chief sponsor, assured me awhile back that he's confident it will pass. But given what's happening on Capitol Hill these days, I wouldn't bet too heavily on much of anything getting done there.

And shield laws, while helpful, are hardly a panacea. Forty-eight states and the District of Columbia have such laws or court precedents that protect anonymity. In fact, Illinois is one of those states. And that makes Kinney's ruling even harder to fathom.

While named sources are always preferable, confidential sources have long played an important role in shedding light on things that the public needs to know. Watergate and the Pentagon Papers are high-profile examples, but there are countless other cases in which nameless whistle-blowers have exposed important abuses via the press. They are a lot less likely to blow those whistles if they think their names will become public.

Hosey's ordeal began earlier this year, when the Patch reporter posted a series of stories packed with vivid details about a particularly gruesome double murder in Joliet in January. The pieces were based in part on confidential police reports. is a nationwide network of hyperlocal news sites owned by AOL.

A lawyer for one of the defendants, arguing that the articles could taint the jury pool, asked Kinney to make Hosey reveal his source. The court collected more than 500 sworn statements from employees of the Joliet Police Department, the Will County State's Attorney's office and lawyers in the case. To the surprise of absolutely no one, all denied that they had anything to do with the leak.

The judge ordered Hosey to turn over all the documents he has relating to the double murder. And if those don't reveal the source, he said Hosey will have to do it. Commendably, the reporter demurred.

Deciding cases like this one is generally a balancing act, in which the judge has to decide whether there is such an overarching need to unmask the source that it outweighs First Amendment and freedom of information concerns. Chuck Tobin, one of the nation's top media lawyers, is hard-pressed to see what that could be in this instance.

"The identity of the person who leaked the police reports to the Patch won't help the court decide whether the defendants are guilty or innocent of these terrible murders," says the Washington, D.C.-based attorney. "So there doesn't seem to be any interest in this case that would outweigh the public's interest, under the Illinois shield law, in helping reporters honor their promises to sources."

He adds, "The leaked records here were police reports about one of the most grisly crimes in recent history. No news organization or journalist should face punitive fines and jail for revealing information so obviously in the public interest."

Lucy Dalglish, the former longtime head of the Reporters Committee for Freedom of the Press, points to a a couple of factors that may have swayed the judge. First of all, she says, jurists tend to give a lot of leeway when such requests come from the defense, given the Sixth Amendment's fair trial imperative.

Also, Kinney may feel that grand jury secrecy has been compromised, and judges hate it when that happens, adds Dalglish, now dean of the Philip Merrill College of Journalism at the University of Maryland.

That said, Dalglish says that, like Tobin, she doesn't see how the outcome of the case could be affected by uncovering the leaker. It simply puts a chill on free speech.

Let's hope cooler heads prevail and the appellate court throws out this punitive order. It's the right thing to do.

Tuesday, October 8, 2013


Story first appeared on USA TODAY.
WASHINGTON — A week into the government shutdown, and still no end in sight.

However, according to some bartenders and service industry employees on Capitol Hill, that is not keeping members of Congress from getting out and about.

"Storm," a bartender at the Hawk and Dove said, "I don't think the public would be happy to know that they are actually enjoying this time."

According to him, lawmakers have been coming by the local bar all week. He says they were doing the same thing last Monday, the night of the shutdown.

He added, "There was a private party upstairs with a few Congress people and senators here that night."

That observation was echoed by another manager at a different establishment who spoke on condition of anonymity.

Monday, October 7, 2013

The high cost of corruption: How Kwame Kilpatrick's crimes deepened Detroit's crisis

Story originally appeared on Freep.

Former Detroit Mayor Kwame Kilpatrick was a spender, a schemer and a liar.

And taxpayers paid for it, by the millions.

Over seven years, Kilpatrick's public corruption schemes, lavish lifestyle and ethical missteps cost taxpayers at least $20 million, a tab the financially strapped city was in no position to pick up but did anyway -- usually without knowing.

On Thursday, Kilpatrick will be sentenced for 24 corruption convictions. As he heads to federal prison for what could be decades, one important question lingers: How much did his extortion, kickback and bribery rackets contribute to the city's financial crisis and its filing in July for the largest municipal bankruptcy in the nation's history?

"Kilpatrick is not the main culprit of the city's historic bankruptcy, which is the result of larger social and economic forces at work for decades," federal prosecutors said in court documents. "But his corrupt administration exacerbated the crisis."

In purely monetary figures, the cost of Kilpatrick's ring of corruption is staggering:

  • There's the $8.4-million settlement the city coughed up in the 2007 police whistle-blower trial.
  • Another $9.6 million in illegal profits was pocketed over the years through crooked water and sewer contracts, the government says.
  • A $500,000 state grant that was meant for kids and seniors instead went to Kilpatrick's contractor friend, Bobby Ferguson, and Kilpatrick's wife, Carlita Kilpatrick. Taxpayers also paid $42,000 to lease two Lincoln Navigators for the former first lady.
  • Kilpatrick misused his city-issued credit card, charging more than $210,000 in his first three years in office for perks like a family trip to Las Vegas, spa visits, a hotel room for the babysitter and an $850 steak dinner. The mayor's petty cash fund also was abused to the tune of $144,000, which covered things like Lions football tickets, a Rolling Stones concert, health club membership and $43,000 worth of meals.
  • Tax dollars aside, there's also the $84 million in losses to troubled city pension funds. Six individuals, including Kilpatrick appointee and former fraternity brother Jeffrey Beasley, face criminal charges in that case. Kilpatrick wasn't indicted, but he is named as a coconspirator.
  • The cost to taxpayers for prosecuting him and providing him with a public defender won't be known until his appeals are exhausted.

But much more difficult to quantify is the nonmonetary cost of corruption: the betrayal of the public's trust. The honest contractors who were elbowed out of deals, even though their bids were lower. The businesses that refused to participate in pay-to-play schemes and just stayed away -- or went somewhere else.

"The numbers don't tell the gravity of the situation," said Reid Schar, the former federal prosecutor who successfully prosecuted former Illinois Gov. Rod Blagojevich. "When you have public corruption cases, the things that are very difficult to gauge and are not captured are, 'How much of public confidence is eroded by what the person has done? ...

"How do you put a value on a company that didn't bid or get the job?' You don't know."

In 2002, for example, Kilpatrick killed a plan to add a House of Blues restaurant at Ford Field because the company that proposed it refused to hire Kilpatrick's father and codefendant as its minority partner. Kilpatrick had pledged $10 million in city funds but changed his mind when the company refused to hire his dad.

In 2006, Ferguson used his relationship with the mayor to pressure a company into giving him 40% of a contract to renovate the Detroit police headquarters. The company offered 30%. Ferguson declined. The company then bowed out of the deal.

In 2001, minority contractor William Hayes was stiffed out of a $24.7-million sewer repair job that Kilpatrick steered to Ferguson instead. Six years later, Hayes closed his 40-year-old excavation business, claiming later that Ferguson and Kilpatrick made it impossible for him to compete for water and sewer contracts.

"He helped put me out of business," Hayes told the Free Press in March, referring to Ferguson. "It said right in the text messages. He told Kwame to put me out."

Meanwhile, Kilpatrick padded the city payroll with friends and family, including a cousin who admitted stealing nearly $20,000 from the Manoogian Mansion restoration fund. City payroll records show that more than two dozen of Kilpatrick's appointees were relatives or close friends who got an average 36% in salary increases while other employees got 2%.

The government is seeking at least 28 years in prison for Kilpatrick and up to 28 years for his longtime friend and partner in crime, Ferguson, who got $127 million in city contracts while Kilpatrick was mayor. Prosecutors said at least $73 million of that work was obtained illegally.

The defense is challenging the sentencing guidelines, saying the high end of Kilpatrick's sentence should be 15 years. The defense will make its own sentencing recommendation on Monday.

Schar, who got a 14-year conviction for Blagojevich, said the government's request for Kilpatrick is noteworthy, but not surprising.

"The courts are becoming less tolerant of the behavior and are willing to punish them more severely," Schar said of corrupt politicians.

For example, former Illinois Gov. George Ryan, who preceded Blagojevich, got 6½ years for 18 public corruption convictions in 2006. Five years later, Blagojevich got 14 years on similar counts. And last year, Jimmy Dimora, a county commissioner in Cuyahoga County, Ohio, got 28 years in prison.

"You're beginning to see (public corruption sentences) move up. ... The trend is definitely up," Schar said. "It seems clear that because these types of cases continue nationwide, the lesser sentences are not proving a sufficient deterrent."

Prosecutors in Detroit agree. "Unfortunately, the prosecutions and resulting penalties in past public corruption cases in this region have not been sufficient," they said in court documents. "They clearly did not dissuade Kilpatrick and his associates from using the mayor's office to engage in a brazen six-year crime spree."

"Kilpatrick is more culpable -- and his misconduct more pervasive -- than any other public corruption defendant sentenced in recent memory," prosecutors wrote in their sentencing memo, later adding: "None of the other public officials disrupted his community as profoundly as Kilpatrick did."

Todd Haugh, a law professor at Chicago-Kent College of Law, says he believes Kilpatrick's criminal record is especially damaging. He has been to jail three times: once for obstruction of justice and perjury in the text message scandal and twice for probation violations, including one that took place in the middle of his public corruption trial. He took a cash wire money transfer from a pastor in Chicago and never reported it to his parole officer.

"I can't imagine that he's not going to get a very stiff sentence," said Haugh, a white-collar crime expert who helped amend federal fraud sentencing guidelines, which stiffened public corruption penalties in 2004.

"That's a problem under the (sentencing) guidelines. It shows that someone has a history of doing the wrong thing, and that's something judges care about," said Haugh, adding that the monetary cost of Kilpatrick's crimes also is noteworthy. "This is a lot of money. We're not talking about a couple thousand bucks here. We're talking about pretty big amounts."

Kilpatrick and Ferguson have repeatedly denied any wrongdoing. Ferguson has long maintained that he earned every contract he got. And Kilpatrick has argued that he didn't have as much say over contracts as the government claims, and that he never forced anyone to give Ferguson work.

Kilpatrick's lawyer, Harold Gurewitz, argues that Kilpatrick's suggested punishment is based on crimes that were never proved. He also said Kilpatrick's criminal history was overstated, and Kilpatrick was never the leader of any conspiracy.

"I have faith in the judicial system," said Gurewitz. "All we can really hope and pray for is that the system works in the way that it's intended."

When U.S. District Judge Nancy Edmunds sentences Kilpatrick, she will have several factors to consider, including: the purpose of the punishment, the harm that was caused, deterrence, whether the defendant can be rehabilitated, and how other similar defendants have been punished to ensure there's no disparity.

Haugh noted that Edmunds also can consider the city's bankruptcy filing. "That's like a CEO cooking the books and the company goes bankrupt. ... I don't know that there's a reason the judge can't consider that."

Edmunds also heard plenty at trial. There was minority contractor Avinash Rachmale, who said that he gave Ferguson $1.7 million for no work because he feared having his contracts killed. Contractor Thomas Hardiman said he lost two contracts worth $15 million combined because he wouldn't give Ferguson a big enough cut. Past mayoral employees said they were hit up for cash twice a year to buy Kilpatrick Christmas and birthday gifts. And Emma Bell, Kilpatrick's fund-raiser, said that she gave the ex-mayor more than $200,000 in cash kickbacks because she felt pressured.

"It struck me as such a brazen case," said Richard Winters, a veteran government professor at Dartmouth College who has researched and written about political corruption.

"I can't believe that the courts will ignore that anecdotal evidence," said Winters, referring to allegations of pay-to-play schemes that shoved certain businesses out of deals.

Winters noted that public corruption doesn't always deter economic development. For example, Illinois and Chicago have had plenty of public corruption, including four convicted governors -- yet Chicago is thriving.

Unfortunately, Detroit's not in the same boat. The city says it's bankrupt.

"I would be hesitant to lay something as big as that at the foot of (Kilpatrick)," said Schar, the Blagojevich prosecutor. "But if I wanted to subtly address this, I'd say, 'We're in bankruptcy. There may have been ways to avoid that.' "


Story first appeared in Portland Press Herald

NEW ORLEANS — When BP used a capping stack to seal its blown-out well in the Gulf of Mexico, the device didn’t just shut the source of the nation’s worst offshore oil spill. Its pressure gauge also provided scientists with crucial data about the rate that crude that was spewing from the well when engineers finally killed it in July 2010.

Experts for BP and the federal government used the pressure gauge data in calculating how much how much oil spilled into the Gulf during the 87 days it took to plug the well. But each side will provide a federal judge with very different estimates when the second phase of a trial resumes Monday for litigation spawned by the spill.

U.S. District Judge Carl Barbier is scheduled to hear three weeks of testimony from dueling experts to help him calculate how much oil spilled into the Gulf —  a key factor in determining how much more money BP and its contractors owe for their roles in the deadly disaster.

Justice Department attorneys will try to persuade Barbier that the pressure gauge on the capping stack provided the best set of data about the flow of oil from the well.

“The pressure data, collection rates, and geometry of the capping stack are by far the most accurate and reliable sources of information on flow rate, and were recognized as such by all parties at the time,” they wrote in a pretrial filing.

BP, however, says the government’s experts ignored other important data. Company lawyers say its experts used a “proven methodology” that doesn’t require “simplistic and unverified assumptions about flow conditions.”

“In contrast, the United States’ experts employ unproven methods that require significant assumptions and extrapolations in lieu of, and even directly inconsistent with, the available data and other evidence,” company attorneys wrote.

The Deepwater Horizon drilling rig was working at the site of BP’s Macondo well off the Louisiana coast when the well blew out April 20, 2010. The explosion on the rig killed 11 workers and set off a massive fire. The rig sank less than two days later to the bottom, about a mile below the Gulf surface.

The Justice Department’s experts estimate 4.2 million barrels, or 176 million gallons, spilled into the Gulf after the blowout. BP has urged Barbier to use an estimate of 2.45 million barrels, or nearly 103 million gallons, in calculating any Clean Water Act fines.

Both sides agree that 810,000 barrels, or 34 million gallons, escaped the well but were captured before the crude could pollute the Gulf.

Under the Clean Water Act, a polluter can be forced to pay a maximum of either $1,100 or $4,300 per barrel of spilled oil. The higher maximum applies if the company is found grossly negligent, as the government argues BP should be. But penalties can be assessed at amounts lower than those caps.

Using the government’s figures, a maximum penalty if the company is found grossly negligent could total $18 billion. Using the company’s figures, that maximum penalty would be around $10.5 billion.

For the trial’s first phase, Barbier heard eight weeks of testimony about the causes of the April 2010 well blowout.

Barbier divided the trial’s second phase into two parts. For the first segment, he heard four days of testimony last week about BP’s efforts to cap the well. He set aside 12 days of testimony for the second segment, which will consist almost exclusively of technical testimony by experts.

Government experts believe the oil was flowing from the well at a higher rate shortly after the blowout than it was when the well was sealed with the capping stack.

“Basic principles of oil production hold that reservoir pressure depletes and flow rates wane over time,” Justice Department attorneys wrote.

BP’s experts concluded that flow rates increased over time, due in part to the erosion of steel rams on the rig’s blowout preventer. Martin Blunt, a BP expert who is a professor of petroleum engineering at Imperial College in London, also took other factors into consideration, including the “compressibility” of the rocks in the reservoir BP was drilling.

“In assessing the data, Dr. Blunt uses a conservative lens,” BP attorneys wrote. “Dr. Blunt accounts for fundamental geological facts and principles of physics acknowledged by United States experts but omitted in their flow calculations.”

Calculating the rate that oil was flowing from the well has been a contentious issue from the beginning of the disaster.

Marcia McNutt, who was director of the U.S. Geological Survey at the time of the blowout, led the government’s Flow Rate Technical Group and frequently interacted with BP officials while its engineers scrambled to seal the well. In videotaped testimony shown to Barbier last week,
McNutt said it didn’t appear that anyone from the government was inside BP’s “circle of trust” when it came to sharing data about a procedure called “top kill” that failed to seal the well.

McNutt also said it took longer for her team of scientists to arrive at a flow-rate estimate because they got poor data from BP.

“Did you feel that BP was not a willing partner when it came to flow rate?” a lawyer for Deepwater Horizon rig owner Transocean Ltd. asked McNutt.

“There was this tenseness,” McNutt said. “It was almost kind of a chill in the room when flow-rate issues came up.”

Timothy Crone, a professor of marine geophysics at Columbia University, was the lead researcher on what was billed in September 2010 as the first independent, peer-reviewed study of the leak’s volume. Crone and a colleague analyzed underwater video to arrive at an estimate that closely mirrors the federal government’s current calculation of how much oil escaped the well.

Crone said he is surprised the topic is still being debating three years later.

“The majority of scientists who worked on the problem are in agreement,” he said. “I can understand why BP wants to make it a question again, but in my opinion it’s not.”

Thursday, October 3, 2013

Patients Of Indicted Oakland Co. Cancer Doctor Meet For Support In Weeks Before Trial

Story first appeared in The Detroit News.

Rochester Hills— Cathy Bastian fears her future.

The Oakland Township woman says she is scared of what 21 rounds of chemotherapy she didn’t need did to her body. A Boston Medical Malpractice Lawyer was shocked by the case.

The treatments, administered by indicted oncologist Farid Fata, went on for 18 months after she was told she no longer had any evidence of a deadly form of lung cancer in her body.

“He kept me on chemotherapy for a year and a half,” Bastian said during a meeting with other patients of the embattled oncologist. “I begged for my life. I said ‘Dr. Fata, I don’t think my body can take it anymore.’ ”

Bastian says she received 33 sessions of chemotherapy when medical tests indicated she needed 12 sessions to cure her early form of small-cell lung cancer, which has a low survival rate if not caught early. A Boca Raton Medical Malpractice Lawyer was watching the case closely.

Bastian is a member of a group of former patients and family members who say they are seeking justice in the wake of criminal charges filed against Fata for Medicare fraud.

The group plans to protest Wednesday outside U.S. District Court before the start of a bond hearing. Fata is being held on a $9 million bond and his lawyers are asking a judge to lower it so their client can be free pending trial later this month on multiple charges of health care fraud.

The doctor maintains he is innocent, according to his co-counsel, Christopher Andreoff.

The group of his former patients gathers regularly at a hotel near Crittenton Hospital’s Cancer Center in Rochester Hills, where some of them first met Fata. They hug each other and share tears as they recall their time as Fata’s patients.

They wonder aloud if their exposure to unnecessary chemotherapy will make them even sicker in the days, months or years to come.  A Miami Medical Malpractice Lawyer said this may be a possibility.

Last month, they launched a letter-writing campaign to state lawmakers and county prosecutors, hoping officials will review state laws regarding licensing physicians. They want Fata to face state criminal charges along with the federal charges.

Many of them plan to follow the case and attend every court hearing involving the doctor. A Chicago Medical Malpractice Lawyer agreed he would also be following the case closely.

Fata, the owner of Michigan Hematology Oncology P.C., which has offices in Rochester Hills and six other locations, including Bloomfield Hills and Oak Park, is charged with submitting false and fraudulent claims for medical treatments that were not medically necessary. 

Among the allegations: Fata administered chemotherapy and other cancer treatments to patients who didn’t need them. He also is accused of engaging “in a scheme to unlawfully enrich himself” by soliciting and receiving kickbacks in exchange for referring patients for home health care and hospice services.

The federal charges, filed last month, allege that from August 2007 to July 2013, Fata’s MHO practice billed Medicare around $225 million, of which $109 million was for chemotherapy or other cancer treatments. Of the approximately $225 million, Medicare paid more than $91 million to Fata’s medical practice.

Kevin Brown, a Lake Orion resident, said he was very fond of Fata and credited the doctor with curing him of cancer in 2007. Brown said he was shocked when Fata suggested he have more chemotherapy as part of a “maintenance” plan.

“This guy told me I was going to see him the rest of my life,” said Brown.

Angry and filled with questions, Brown said he believes his recent onset of alopecia (hair loss that occurs when the immune system attacks hair follicles) can be attributed to the cancer drug Fata prescribed for him a year even after scans showed him to be cancer-free.

“I just want to meet him face to face ... man to man and ask him why did he do that to me?”

Fata has been in the Wayne County Jail under federal custody since last month, when he was arrested after federal authorities raided his home and medical offices in Oakland County.

His trial is set for mid-October. If convicted, Fata faces a maximum of 10 years for each count.

BP Wins Reprieve Over Gulf Of Mexico Payouts

Story first appeared on BBC News.

BP wins reprieve over Gulf of Mexico payouts

Oil giant BP's attempts to limit claims over the 2010 Gulf of Mexico oil spill have been given a boost after a US appeals court halted some payments.

A federal appeals court has asked a lower district court to take a fresh look at which claims are legitimate.

The higher court said that if businesses that did not suffer losses from the spill were compensated, the whole settlement could be invalid.

BP said it was "extremely pleased" with the ruling, which justified its fears.

The oil giant, which had agreed to pay compensation for the disaster, argued that the terms of existing settlement meant that people and businesses were being paid huge sums for false claims.

The appeals court has now ordered Judge Barbier at the lower district court to review the wording of the deal in order to draw up a narrower set of definitions that will exclude unfair claims.

BP had originally expected the payouts to total $7.8bn (£4.9bn). Earlier this year, the company said the payouts had reached $9.6bn, and in July BP warned that the trust fund set up to compensate victims was about to run out.

Judge Brown accepted that BP may be paying out hundreds of millions of dollars for dubious claims, money that it would be difficult for the company to recover.

"There is no need to secure peace with those with whom one is not at war," she said. "The district court had no authority to approve the settlement of a class that included members that had not sustained losses at all, or had sustained losses unrelated to the oil spill, as BP alleges.

"If the administrator is interpreting the settlement to include such claimants, the settlement is unlawful," she added.

BP has faced about $42.4bn in criminal and civil charges since the disaster aboard the Deepwater Horizon drilling rig, which triggered the worst offshore oil spill in US history.

The blast killed 11 workers and released an estimated four million barrels of oil into the gulf.

BP, which has made two previous, unsuccessful, attempts to halt compensation payments, said in a statement that "it was extremely pleased with today's ruling".

It added: "It affirms what BP has been saying since the beginning: claimants should not be paid for fictitious or wholly non-existent losses.

"We are gratified that the systematic payment of such claims by the claims administrator must now come to an end."

Tuesday, October 1, 2013

Merck to Fire 8,500 Workers in Cost-Cutting R&D Shift

Story first appeared in  Bloomberg News.

Merck to Fire 8,500 Workers in Cost-Cutting R&D Shift

Merck & Co. (MRK), the second-biggest U.S. drugmaker by sales, will fire 8,500 workers and revamp its research and development after seeing new medicines delayed by U.S. regulators.

The 8,500 jobs to be eliminated are in addition to the 7,500 positions Merck has already announced, the Whitehouse Station, New Jersey-based company said in a statement today. The combined number equals about 20 percent of the workforce.

The overhaul is part of a new strategy being set by R&D chief Roger Perlmutter. Chief Executive Officer Ken Frazier hired Perlmutter in April to replace Peter Kim, under whom experimental drugs in cardiovascular, surgery, and osteoporosis encountered development setbacks.

New primary care drugs developed before Perlmutter took over either haven’t been approved, or are likely to face limited sales. Suvorexant, a sleep pill, in July wasn’t approved by U.S. regulators at the two highest doses, and the lower dose isn’t available yet. The medicine will also face competition from existing, widely used generic medicines. Odanacatib, an experimental osteoporosis treatment, has been delayed while the company conducts a second study.