Monday, December 30, 2013


Story first appeared on

Detroit — Emergency Manager Kevyn Orr and lawyers for two banks reached a new $165 million agreement Tuesday for terminating a pension debt deal blamed for plunging Detroit into bankruptcy.

The new agreement saves Detroit an additional $65 million and was announced in court this morning before Chief U.S. District Judge Gerald Rosen, who is the lead mediator in Detroit’s bankruptcy case. The city spent two days trying to reach more favorable terms for ending the pension deal as part of a settlement seen as crucial to Orr's overall plan to shed billions in city debt.

“It's the first, I think it's fair to say, significant agreement in the bankruptcy,” Rosen said today, according to a court transcript. “We understand this has been difficult for everybody and we appreciate it.”

The deal must be finalized by Jan. 31 and approved by U.S. Bankruptcy Judge Steven Rhodes. It was unclear whether bond insurers and others who objected to the original $230 million deal will fight the new agreement.

“We are very pleased and hope that this is a change that Judge Rhodes is happy with,” lead Detroit bankruptcy lawyer David Heiman said Tuesday outside federal court before climbing into a taxi.

Asked if he was happy about reaching the deal early on Christmas Eve, he simply said: “Yes.”

Mediation talks have been private and security guards were stationed outside Rosen’s courtroom Tuesday morning. Rosen ordered the city, banks and bond insurers to meet Monday and on Christmas Eve to negotiate a deal that could free up money for restructuring.

In all, Detroit will save $128 million by terminating the troubled debt deal reached during ex-Mayor Kwame Kilpatrick’s tenure. That represents a 43 percent savings, according to Orr.

The settlement means Detroit won’t have to borrow as much money to pay off two banks, UBS and Bank of America. Instead of borrowing $350 million from London-based Barclays, the city will borrow $288 million.

Detroit will pay $165 million to the banks and spend $120 million on basic city services, including blight removal, updating city information technology and other “quality of life” improvements.

“This is an important development for the city and its residents because it means we can start moving forward on implementing needed investments in public safety and services,” Orr said in a statement Tuesday.

The negotiation sessions were ordered late last week after Rhodes expressed concern about Detroit’s plan to pay two banks up to $230 million to end an interest rate swap arrangement. Rhodes questioned whether the deal was fair to other city creditors.

“Clearly they were sent a message and they listened to what Judge Rhodes had to say – that he wasn’t going to approve it,” said Douglas Bernstein, a Bloomfield Hills attorney and expert on municipal bankruptcy. “Absent that push, nobody would have done anything and they would have had to fight it out with the other creditors.”

The renegotiated deal comes three weeks after Rhodes ruled that Detroit is eligible for Chapter 9 bankruptcy relief and said pensions can be cut in bankruptcy court.

“This is an indication that Detroit, at least for now, is starting to follow the same pattern as bankruptcies in other cities in that once you get by the eligibility dispute, settlements fall into place,” Bernstein said.

Before Rhodes raised his concern, Detroit proposed borrowing $350 million from Barclays. Orr wants to use most of the loan to pay off UBS and Bank of America for a hedge owed on interest rate swaps tied to $1.44 billion in 2005-06 pension debt.

A city banking consultant Friday said Detroit’s legal team was engaged in “extraordinarily active” negotiations with the banks to lower the swap settlement amount. Based on the value of the swaps, which is calculated based on increasing interest rates, Detroit could owe UBS and Bank of America $200 million if the city pays the banks 75 cents on the dollar, said James Doak, managing director at the consulting firm Miller Buckfire.

Several groups had objected to the initial deal, arguing it gave banks a greater payout than other creditors. Orr has proposed paying pensioners as little as 20 cents on the dollar.

Rhodes halted a trial Wednesday to determine whether Detroit could borrow the money and settle the swaps debt before presenting its debt-cutting plan of adjustment.

The judge scheduled the trial to continue Jan. 3.

A two-day trial last week focused on a soured loan deal Kilpatrick’s administration used to pump $1.44 billion into pension funds in 2005 and 2006. The deal included an interest rate swap piled on $800 million of pension debt, court records show.

Detroit’s interest rate swaps with UBS and Bank of America were supposed to protect the city from rising interest rates. But the deal soured for Detroit when prevailing interest rates plummeted in 2008-09, causing the city’s annual payments on the swaps to rise to $50 million.


Story first appeared in Los Angels Times.

Three American Express Co. subsidiaries have agreed to pay about $75 million in restitution and penalties for a variety of illegal practices involving hundreds of thousands of credit-card customers, regulators said Tuesday.

American Express Travel Related Services Co. Inc., American Express Centurion Bank and American Express Bank were accused of unfair billing practices and deceptive marketing of add-on products, such as payment protection and credit monitoring.

The Consumer Financial Protection Bureau ordered the companies to return $59.5 million to more than 335,000 customers. The American Express subsidiaries are also paying $16.2 million in penalties to three regulatory agencies: the CFPB, Federal Deposit Insurance Corp. and Comptroller of the Currency.

“We first warned companies last year about using deceptive marketing to sell credit card add-on products, and everyone should be on notice of this issue,” said CFPB Director Richard Cordray. “Today we are refunding thousands of American Express customers who were harmed by these illegal practices. Consumers deserve to be treated fairly and should not pay for services they do not receive.”

American Express said in a statement that it has canceled the programs in question and made much of the restitution to customers.
The canceled programs include Identity Protect, Account Protector and Lost Wallet Protector, which was marketed in Puerto Rico.

"American Express continues to conduct internal reviews designed to identify issues, correct them and ensure that its products and practices meet a high standard of quality," the company said.

The CFPB alleged that from 2000 to 2012, the subsidiaries and their vendors and telemarketers engaged in misleading and deceptive tactics to sell some of the company’s credit card add-on products. One such product, a payment protection product called “Account Protector,” allowed consumers to request that 2.5% of their outstanding balance, up to $500, be canceled if they encounter certain life events like unemployment or temporary disabilities.

American Express also marketed its “Lost Wallet” product as being able to assist card members in Puerto Rico with canceling and replacing lost or stolen credit cards, including non-American Express cards, and providing other services, such as recovering lost or stolen documents.

The regulators said the companies misled consumers about the benefits of the products, the length of coverage and the costs.

The companies were also accused of unfair billing practices related to identity protection products. The company charged many consumers for these products without written authorization, the regulators said.

In addition, the companies were accused of unfairly charging card holders interest and fees. Some unfair monthly fees pushed account balances past their limits, causing additional unfair fees and interest, the regulators said.

Tuesday, December 24, 2013


Story first appeared on

The New Jersey Legislature approved legislation on Thursday that would allow students without legal immigration status to pay in-state college tuition. Gov. Chris Christie planned to sign it on Friday, a spokesman said. A New York Immigration Lawyer is looking over the legislation.

The bill’s passage was assured after Mr. Christie, a Republican, struck a deal with Democratic lawmakers, who agreed to a demand of his that they change the bill to remove a provision allowing undocumented immigrants access to state financial aid programs.

“This is what compromise looks like,” the governor said at a news conference in Trenton after the accord was revealed.

The legislation, commonly known as the Dream Act, had become a political wedge between the state’s large immigrant population and Mr. Christie, who has long tried to balance the sometimes-conflicting demands of being the chief executive of a liberal-leaning state while also gathering support for a possible Republican presidential candidacy.

After the deal was struck, the State Assembly passed a bill that would have allowed certain immigrants without legal status to qualify for in-state tuition as well as financial aid. The Senate approved an identical bill last month.

But in keeping with the terms of the compromise, Mr. Christie blocked the measure with a conditional veto that included a demand for the removal of the financial aid provision. Under a conditional veto, a bill is rejected unless the Legislature agrees to the changes or overrides the veto with a two-thirds majority in both chambers.

This legislative choreography was the culmination of years of lobbying by immigrants and their advocates for so-called tuition equality in New Jersey.

With Mr. Christie’s signature, New Jersey will join at least 17 other states where in-state tuition is available to some immigrant students without legal status, according to the National Immigration Law Center. Three states — California, New Mexico and Texas — allow those immigrants access to state financial aid.

During Mr. Christie’s re-election campaign this year, he spoke favorably of tuition equality. But after winning by a landslide, helped by the support of about half of Hispanic voters, he made comments on the issue that drew the criticism of the bill’s supporters, who accused him of waffling.

Mr. Christie took the opportunity of the compromise to strike back at his critics, saying that his position had always remained consistent. “Shame on all the people — shame on you — who accused me and others of playing politics with this issue,” he said. “You were wrong.”

The compromise bill will allow access to in-state tuition for immigrants without legal status who have graduated from a New Jersey high school after at least three years of attendance.

Mr. Christie said the legislation would become effective immediately, allowing students to take advantage of it in time for the spring semester.

Supporters of the measure cheered the agreement but vowed to continue pushing for legislation to allow some immigrants lacking legal status to receive state tuition assistance.

“Today is a historic day in New Jersey, but the fight is not over,” Udi Ofer, executive director of the American Civil Liberties Union of New Jersey, said in a statement.

“His veto will put up a roadblock for many of New Jersey’s best and brightest students who cannot afford the skyrocketing cost of a college education.”

Mr. Christie said on Thursday that he was concerned that opening state tuition assistance programs to undocumented immigrants would potentially turn New Jersey into what he called “a magnet state,” drawing out-of-state students wanting to take advantage of the state’s generosity. “I care about taking care of New Jersey kids,” he said, “whether they’re citizens or undocumented.”

Supporters of the legislation have argued that people brought to the country as children should not be penalized for their parents’ actions, and that increasing access to higher education will encourage more immigrants to excel in high school and add to the state’s highly skilled work force.

But opponents have feared that the measure would cost the state money and college slots that would otherwise go to help native-born students and immigrants with legal status.

Friday, December 20, 2013


Story first appeared on the BBC.

Google has been fined 900,000 euros (£751,000) for breaking Spanish data protection laws.

The fine is the maximum it is possible to levy on a firm that has broken the nation's privacy laws.

It was imposed after Google changed its privacy policy and started combining personal information across its online services.

Google said it had co-operated with the Spanish inquiry and would act once it had seen the agency's full report.
Biggest fine

Google changed its privacy policy in March 2012 and began the process of combining the data that people surrendered when they used its many services.

The change led many European data protection authorities to look into Google's privacy policy. The investigation carried out by Spain's privacy watchdog has now led to it imposing a fine - the maximum possible under Spanish law.

Google collected information across almost 100 services, said the Spanish data protection agency, but had not obtained the consent of people to gather information nor done enough to explain what would be done with the data.

The "highly ambiguous" language Google employed on its privacy policy pages made it hard for people to find out what would happen to their data, said the agency in a statement. Google also kept data for too long and made it far too hard for people to delete data or manage the information they surrendered.

The 900,000 euro fine is made up of three separate penalties of 300,000 euros each for breaking different parts of Spanish privacy laws.

Google said it had worked closely with the Spanish data agency during its investigation and said it would await publication of the full report before taking any action.

The search giant could also face further action from other European data protection bodies. In late November, the Netherlands data protection authority said Google's 2012 policy change also broke its laws. France is also believed to be contemplating levying a fine over Google's data handling policies.

Wednesday, December 18, 2013


Story first appeared on ESPN.

FALL RIVER, Mass. -- Former New England Patriots tight end Aaron Hernandez has been sued by the family of a man he's accused of killing while police investigate the death of another person on the periphery of that case.
The wrongful-death lawsuit was filed Monday in Superior Court in New Bedford, Mass., according to The Herald-News, based in nearby Fall River. A Minneapolis Wrongful Death Lawyer is watching the case closely.

Hernandez has pleaded not guilty to murder in the June 17 shooting death of Odin Lloyd, a semi-professional football player who was dating the sister of Hernandez's girlfriend. He is held without bail.

The lawsuit alleges Hernandez "maliciously, willfully, wantonly, recklessly or by gross negligence caused Odin Lloyd to suffer personal injuries that directly resulted in his death."
The Lloyd family's attorney, Kevin J. Phelan, declined to comment on Tuesday. A message was left with a law firm that has represented Hernandez.

The court filing says unspecified damages probably exceed the value of Hernandez's $1.25 million home, and it seeks a real estate attachment up to $5 million. The Lloyd family also seeks a court order to keep the Patriots from paying Hernandez more than $3 million it believes he's owed from his contract. A Virginia Beach Wrongful Death Lawyer is not surprised by the millions being sought after in damages.

A hearing is scheduled Thursday on those two restraining orders to preserve Hernandez's assets.
The filing notes another claim is being made against Hernandez in a Florida lawsuit by a friend, Alexander Bradley, who alleges Hernandez shot him in the face after they argued outside a Miami club in February.

Meanwhile, police are investigating the death of a Connecticut woman with ties to Hernandez.
Tabitha Perry, who lived in Hernandez's hometown, Bristol, was found unconscious and not breathing inside a Southington home. She died Monday.  According to a Boca Raton Wrongful Death Lawyer the case just keeps getting more complicated.

In June, Perry survived a car accident that killed Hernandez's friend Thaddeus Singleton III. Police say she and Singleton, who was married to Hernandez's cousin, had a child together.
The state medical examiner's office said Tuesday that Perry's death required further study, and police said they were waiting for the results of toxicology tests. They said there were no suspicious circumstances found at the time of the investigation.

Perry is one of several people with ties to Hernandez who have died in the past six months.
An uncle, Robert Valentine, died in a moped crash in August. Singleton died June 30, when the car he and Perry were in went off a road, went airborne and became lodged inside a country club building. Police have ruled the crashes accidents.

Investigators have said Singleton introduced Hernandez to two men who also face charges in Lloyd's death. An Atlanta Wrongful Death Lawyer said more details will surface as the case moves forward.

Tuesday, December 17, 2013


Story first appeared in the Detroit Free Press.

U.S. Bankruptcy Judge Steven Rhodes on Monday allowed appeals of two of his critical rulings -- finding Detroit eligible for bankruptcy and its pension systems subject to cuts to retirees -- to proceed to the U.S. 6th Circuit Court of Appeals.

Rhodes certified his eligibility ruling, which allows creditors including labor unions and the official group representing retirees to appeal his decision to permit Detroit to enter into the largest municipal bankruptcy in U.S. history.

Rhodes did not act on requests from lawyers for unions and retirees that he support their bid to fast-track appeals. Rhodes said only that he certified his Dec. 3 ruling and would decide "in the next day or two" whether to support expedited appeals in the 6th Circuit.

Court proceedings resume today as Rhodes begins hearing evidence in what could be a three-day trial on the city's request for $350 million in new financing from Barclays, a London-based banking company. The financing is controversial because it would pay off about $230 million in debt owed to two banks before the city figures out how it will repay other creditors.

The city said it needs the additional financing now to free up about $180 million in annual casino revenue. The city also would gain access to $120 million that it could use to fund its revitalization and improve city services.

Orr has said that the city urgently needs to improve city services such as police and fire response times and that the additional financing is essential to those improvements.

During questioning on the appeals Monday, Sharon Levine, a lawyer for the city's largest union, the American Federation of State, County and Municipal Employees, said the union sees the issue of pension rights in Detroit as one of national importance because cities and other governments across the nation pay attention to how such benefits are decided.

AFSCME and other creditors are fighting Rhodes' decision to declare Detroit eligible to proceed with Chapter 9 bankruptcy and not to treat pensions as protected from cuts.

While the city's two pension plans are fighting the eligibility ruling, they are committed to negotiating with the city, said Lisa Fenning, a lawyer for the pension systems. "We are not trying to slow down the process," she said.

Lawyers for the city had argued that appeals should wait until after Detroit files its detailed plan of adjustment, the legal term for the strategy it will finalize to emerge from bankruptcy, including what cuts it plans for creditors and how Detroit would operate post-bankruptcy.

Emergency manager Kevyn Orr's restructuring team hopes to file the plan of adjustment by early to mid-January with agreement from a number of creditors. He led the city's filing for Chapter 9 protection in July, saying Detroit had about $18.5 billion in debt and liabilities it couldn't afford to pay in full, including $3.5 billion in unfunded pension liabilities. Unions and the city's two pension plans dispute that figure.

The retiree groups and other creditors argue that Michigan's constitution protects pensioners from cuts, but Rhodes' Dec. 3 ruling found that the federal bankruptcy code trumps state law.

The city's bankruptcy lawyers want to move as rapidly as possible and had hoped appeals would be stayed until the city presents the plan of adjustment.

But Corinne Ball, a lawyer for the Jones Day firm that represents the city, said in court Monday that Detroit would support moving the appeals out of U.S. District Court in Detroit to the U.S. 6th Circuit Court of Appeals in Cincinnati on an expedited basis to speed up resolution of the appeals.

Fenning told Rhodes that quick hearings on the appeals could help prevent complications later. She said the appeals court could affirm Rhodes' ruling, reverse it or provide a middle ground where Detroit is found to be eligible to proceed with bankruptcy but without the ability to cut pension benefits.

Fenning said that her firm has been retained to fight the matter to the Supreme Court, if necessary.

Historically, challenges to eligibility have been resolved prior to appeals court arguments, said Douglas Bernstein, who leads the banking, bankruptcy and creditors' rights practice at the Plunkett Cooney law firm in Bloomfield Hills.

"The 6th Circuit still has to agree to hear the immediate appeal," Bernstein said.

Complicating the Detroit issue is that there's so little precedent for many of the questions raised by Detroit's bankruptcy, Bernstein said.

Rhodes "recognizes that we don't have any binding precedent, and it involves a matter of public importance," he said. "Whether or not we ever see a decision on the appeals remains to be seen, as the parties very well may settle prior to disposition."

The proposed financing agreement is one of the most complex and important elements in the city's bankruptcy proceedings. If approved, the financing would be used to settle a claim from UBS and Bank of America Merrill Lynch, which hold city debt from a soured Wall Street bet that was backed by the city's casino tax revenues.

The interest rate swaps are investments that tried to lock in steady interest rates on a $1.44-billion loan in 2005.

The city told Rhodes on Friday that it plans to call five witnesses -- including Orr -- and creditors said they would call several financial consultants.

However, Rhodes told attorneys from both sides he does not plan to rule on how the city can spend the loan or if the loan is necessary because bankruptcy code gives a city the right to obtain additional financing in a bankruptcy case. Instead, Rhodes said, he will base his decision on whether "it is fair and equitable and whether it is in the best interest of the estate."


Story first appeared in USA TODAY.

NEW YORK (AP) — Discount retailer Loehmann's has filed for bankruptcy protection for the third time and plans to liquidate its business.

Loehmann's Holdings on Sunday filed for Chapter 11 bankruptcy protection in federal bankruptcy court in Manhattan. It indicated in filings that it plans to sell its remaining assets in an auction subject to the court's approval.

The New-York based retailer, which has 39 stores and its online operations, said in a statement that its business was undermined by increased competition in the off-price retail niche and limited access to capital.

Loehmann's traces its roots to 1921, when Frieda Loehmann opened the retailer's original store in Brooklyn. It is known for its "Back Room," where bargain shoppers search for designer clothes on the cheap.

The company filed for bankruptcy protection in 2010 due to overwhelming debt and emerged in 2011. It also filed for Chapter 11 reorganization in 1999, emerging in 2000 after closing 25 stores.

SB Capital Group, Tiger Capital Group and A & G Realty Partners, which have handled other retailer liquidations, have agreed to make an initial bid of $19 million for Loehmann's assets, according to court documents. The auction is expected to begin Dec. 30 and be approved by the court in early January.

The company also said Monday that its CEO Steven Newman has left the company. It said its stores and online business will continue to operate normally during the bankruptcy process.

Friday, December 13, 2013


Story first appeared on Fox News.

"Cannibal sandwiches," an appetizer featuring raw, lean ground beef served on cocktail bread, may be a Wisconsin tradition, but they are not safe, health officials said, noting that more than a dozen people became ill after consuming them last holiday season.

Health officials confirmed four cases tied to E. coli bacteria and 13 likely cases in people who ate the sandwiches at several gatherings late last year, the Centers for Disease Control and Prevention said a report issued this week. The meat came from a Watertown market that later recalled more than 2,500 pounds of meat.  A Tulsa Food Borne Illness Lawyer is not surprised by this number.

Cannibal sandwiches were tied to outbreaks in Wisconsin in 1972, 1978 and 1994. The appetizer, also called "tiger meat," ''steak tartare" or simply "ground beef," is usually a simple dish of lean ground meat seasoned with salt and pepper on rye cocktail bread with sliced raw onion, said Milwaukee historian John Gurda, who served it at his 1977 wedding reception. Occasionally, a raw egg will be mixed with the meat.

Cannibal sandwiches have been a festive dish in German, Polish and other ethnic communities in the Milwaukee area since the 19th century, Gurda said. The 66-year-old said it was once common to see them at wedding receptions, meals following funerals and Christmas and New Year's Eve parties. The dish has become less common in recent years with greater awareness of the risks of uncooked meat and fewer people eating beef, but Gurda said he still runs into it.

"It's like a coarse pate and when you put the onions on, there's a crunch as well and that kind of cuts the softness," he said.

Keith Meyer, who runs L&M Meats, a Kenosha butcher shop started by his father, recalled his German grandfather and other "old guys" gobbling the ground beef when he was growing up. With his grandfather gone, Meyer's family no longer serves the dish, but the 57-year-old said, "It's really not that bad, if you get by the texture of it."

"It's like eating a cold hamburger that's a little on the raw side," Meyer added.

His butcher shop sells 50 to 100 pounds of freshly ground round on Christmas Eve, New Year's Eve and perhaps a day before those holidays to people wishing to make cannibal sandwiches. Glenn's Market and Catering, the Watertown butcher involved in the recall, does a similar holiday business, vice president Jeff Roberts said.

Both stores label their ground beef with warnings about consuming raw or undercooked meat, but the men said it's unlikely people are buying it to cook. With the fat trimmed off before grinding, the meat is too lean to make a decent hamburger, Meyer said.

Carol Quest, director of the Watertown health department, said its investigation found no health or other violations at Glenn's Market. It's hard to say what happened to the meat once it left the store, she said.

"The big message is that people need to cook their food properly and make sure they're taking temperatures of their meat," Quest said.

Ground beef should be cooked to an internal temperature of 160 degrees as measured with a food thermometer.

The state health and agriculture departments issued a warning Thursday telling residents to avoid cannibal sandwiches, and Quest said her department plans one as well. Its investigation into the E. coli outbreak, which included interviews with more than 50 people who ordered meat from Glenn's, found some weren't aware of the dangers but others felt safe because they'd eaten the dish before with no ill effects, she said.

Symptoms of an E. coli infection include stomach cramps and diarrhea. It can lead to kidney failure, particularly in the elderly, children and people with weak immune systems.

Roberts said some of his employees eat tiger meat, but he doesn't.

"I'm not into raw meat," he said. "I cook all mine."

Wednesday, December 11, 2013


Story first appeared on

New York — The former right-hand man of disgraced financier Bernard Madoff told a New York City jury Tuesday that a crying Madoff revealed to him that his financial empire was a gigantic fraud just before the rest of the world learned the truth nearly five years ago.

Frank DiPascali, Madoff’s former lieutenant and the government’s star witness at the trial of five former Madoff employees, said Madoff called him into his Manhattan office and told him to close the door behind him on a day that Madoff, the former Nasdaq chairman, had spent staring out his window.

“Crying, he said: ‘I’m at the end of my rope. I have no money,’ ” DiPascali told jurors in federal court on the eve of the five-year anniversary of Madoff’s arrest.

When it seemed DiPascali didn’t understand, Madoff said: “I don’t have any more god------- money! Don’t you get it?” DiPascali recalled, his own voice rising and accelerating so fast that the judge had to direct him to slow down.

DiPascali said he spent several hours in the office listening to Madoff recount his detailed plan to reveal the true nature of a private investment business that had blown nearly $20 billion of money entrusted to him by thousands of investors, including charities, Hollywood actors and producers and the owners of the New York Mets baseball team.

Just days after sending out statements implying that the money he managed had more than tripled in value since he began investing decades earlier, Madoff revealed his biggest worry amid his description of “a little game plan” to reveal his house of cards, the witness testified.

“One of the last things I want is to go out of this office in handcuffs in front of all of the employees,” DiPascali said Madoff told him. “I want to do this on my terms.”

DiPascali said Madoff’s revelations hit him hard, making him realize “the whole shooting match is going right down the toilet and we’re all going to get arrested.”

DiPascali, 57, has been testifying for the past week about his role in fabricating trades that he said began after the stock market crashed in 1987. He is cooperating with the government in the hopes that his testimony leads to a major reduction in any prison sentence. Among those being tried are Madoff’s former longtime secretary, his director of operations, an account manager and two computer programmers.

On Dec. 11, 2008, Madoff was arrested at his Manhattan apartment by FBI agents.

Several months later, he pleaded guilty to fraud charges, maintained he had acted alone and was sentenced to 150 years in prison. Madoff, 75, is imprisoned in North Carolina.

DiPascali testified he always believed Madoff had investments in foreign banks and major real estate projects to cover investors’ accounts, even as he and others created fake trading programs.


Story first appeared on

To say that the Obamacare website,, has been troublesome for the American public is an understatement. Since its launch on Oct. 1, report after report has stated that access is at best slow and at worst impossible. The website has performed so poorly that Wired Magazine released a story with the headline that read “Obamacare Website Is in Great Shape — If This Were 1996.”

However, over the last month a more startling problem has come to the forefront. The healthcare website is a risk to personally identifiable information of all of its users.

An Associated Press report revealed that no end-to-end security tests were performed and the non-existence of a security leader renders such tests impossible to perform today. The AP also noted that HHS Secretary Kathleen Sebelius’ testimony in another hearing confirmed this, and that an Authorization to Operate memo outlined significant security problems, the details of which were redacted except to say, “the threat and risk potential is limitless.”

A group of security specialists testifying to the House Science Committee recently echoed these findings. David Kennedy, a former cyber-intelligence analyst for the U.S. Marine Corps and the founder of an online security firm, told the committee that the risk to the public was easy to spot. “Fundamental security principles,” he said, are “not being followed.” The witnesses each offered similar assessments: Americans should avoid until it has been certified as safe for public consumption.

There is no quick fix. Avi Rubin, a University of Michigan graduate and current professor at Johns Hopkins, explained that you cannot solve a software problem by throwing money and people at it. “Once a project falls behind schedule, sticking to a hard deadline can result in a faulty system that is not properly tested,” he observed. Rubin also added, “One cannot build a system and add security later any more than you can construct a building and then add the plumbing and duct work afterwards.”

In its haste to implement Obamacare, the White House acted recklessly and put the personal information of users attempting to obtain health insurance at risk. It also potentially compromised dozens of other federal agencies and their systems because taps into numerous other federal websites. This problem cannot be taken lightly.

Despite numerous public statements from security experts that the website should be taken down while performance and security problems are fixed, President Barack Obama and Democrats in Congress continue to insist that Americans use the site. They would rather prop up the failing healthcare law rather than protect the American people’s privacy.

The job of Congress is to protect people’s rights, not take them away. That’s why I have introduced the Safe and Secure Federal Websites Act. My bill requires that future websites created by the federal government be reviewed by the Government Accountability Office and certified as secure by the issuing agency’s Chief Information Officer before being made available to the public. Furthermore, the Safe and Secure Federal Websites Act forces the White House to take down until it has been deemed safe, forcing the Department of Health and Human Services to implement standard security protocols that ensure the public no longer places itself in the sights of hackers simply because they follow the advice of the White House.

Obamacare has shown the difficulties of liberal governance and the troubles that happen when politicians try to control the most important aspects of our lives. The failure of comes from political cowardice rather than anticipated glitches. One of the main reasons the HHS website is nearly 25 times larger than Facebook, one of the largest websites in the world, stems from the Obama administration hiding the increased premiums from the public before federal subsidies are calculated. The administration knew that people would reject Obamacare if the skyrocketing premiums it has caused became too apparent. The White House placed an election over the protecting the public.

Government makes decisions poorly because politicians and bureaucrats too often do not have the same incentives of the citizenry. While Americans want the opportunity to succeed, elected officials too often develop large projects like Obamacare, paid for by taxpayer money, that often fail for the people (but help special interests).

Too often, failed federal programs leave our fellow citizens behind. The president’s healthcare reform was passed by one party over a bipartisan opposition. But now, many of our friends and neighbors are being hurt by it. Regardless of its good intentions — and trying to help people gain health insurance coverage is a good intention — government is almost always less efficient and more costly than the private sector. Whenever we discuss new projects, Congress should ask whether the government actually needs to get involved in the first place.

The Safe and Secure Federal Websites Act will ensure that politics never trumps the security of some of the most important personal information Americans have.

We were sent to Washington not to use the levers of power for political follies and misadventures, but rather to help our fellow citizens while still protecting the freedoms we all hold so dear.


Story first appeared on

An extraordinary thing happened in Washington, D.C., last week. Appearing before a House Judiciary subcommittee, several constitutional scholars forthrightly and unmistakably outlined the leading danger to the survival of our constitutional republic: the usurpation of powers by President Barack Obama.

This wasn’t just me, a non-lawyer, perplexed by how out-of-whack constitutional checks and balances have become and how enfeebled the legislative branch is.

This wasn’t even Mark Levin, a constitutional lawyer himself, explaining to his radio audience that we are living in “post-constitutional” times.

This was, for starters, Jonathan Turley, a liberal Georgetown law professor, who, noting that he once voted for Obama, nonetheless warns America that the concentration of executive branch powers, having accelerated under George W. Bush, is approaching a crisis under Obama. “The problem with what the president is doing is that he’s not simply posing a danger to the constitutional system,” Turley said. “He’s becoming the very danger the Constitution was designed to avoid.”

Turley was referring to the imperial-style powers Obama’s executive branch has amassed to the detriment of the Constitution’s system of checks and balances. When functional, checks and balances prevent any one branch of government (executive, legislative, judiciary) from becoming more powerful than any other.

Today, that system is broken. “Each branch is given the tools to defend itself, and the framers assumed that they would have the ambition and institutional self-interest to use them,” Turley stated in written testimony. “That assumption is now being put to the test as many members remain silent in the face of open executive encroachment by the executive branch.”

Nicholas Rosenkranz, a constitutional law professor at Georgetown also affiliated with the libertarian Cato Institute, cogently laid out several examples of executive branch encroachment. The first was suspending the “employer mandate” in Obamacare via presidential decree (via blog post!) at the White House website; the second was enforcing by executive order the DREAM Act, despite its (repeated) failure to pass in Congress and become the law of the land; the third was presiding over an IRS that has discriminated against and punished political opponents in the tea party.

According to the Constitution, Rosenkranz explained in his testimony, “The president cannot suspend laws altogether. He cannot favor unenacted bills over duly enacted laws. And he cannot discriminate on the basis of politics in his execution of the laws. The president has crossed all three of these lines.”

Another witness was Michael Cannon, director of health policy studies at the Cato Institute. Emphasizing the non-partisan urgency in the need to address presidential overreach, Cannon noted he was not a Republican and that he in fact supported Obama’s social policies regarding women, minorities and gays. Cannon outlined numerous unilateral actions President Obama has taken to retool the Affordable Care Act — in effect, making law, which is not within a president’s powers. According to Cannon, it is no longer accurate to say the Affordable Care Act, as passed by Congress, is still the law of the land.

Cannon’s testimony continued: “Today, with respect to health care, the law of the land is whatever one man says it is — or whatever this divided Congress will let that one man get away with saying. What this one man says may flatly contradict federal statute. It may suddenly confer benefits on favored groups, or tax disfavored groups without representation. It may undermine the careful and costly planning done by millions of individuals and businesses. It may change from day to day.” And then: “This method of lawmaking has more in common with monarchy than democracy or a constitutional republic.”

“More in common with a monarchy?” I don’t think I’ve ever heard such dire testimony. Will it get Congress’s attention? It got mine. What about the American people? Will they be alarmed by what Turley describes as a “shift of power within our tripartite government toward a more imperial presidential model?” Will they let their representatives know they better start checking and balancing presidential powers that these same representatives have permitted to run amok?

This takes us to another problem, one I’m not certain the Founders provided an answer for: a Fourth Estate (the press) in the tank for the current chief executive. In other words, will the American people even hear much about this constitutional case against Barack Obama? So far, most media have yawned. Or, in the case of Dana Milbank in the Washington Post, misreported the hearing as a meeting of impeachment-obsessed Republicans. (At his blog, Turley went so far as to correct Milbank, writing that impeachment “actually came up little in the hearing which was 99 percent focused on the separation of powers and the rise of an uber-presidency under Bush and Obama.”)

Impeachment and even elections, that natural correction mechanism, aside: “There is one last thing to which the people can resort if the government does not respect the restraints that the Constitution places on the government,” Michael Cannon said in the most dramatic remarks of the session. “Abraham Lincoln talked about our right to alter our government or our revolutionary right to overthrow it. That is certainly something that no one wants to contemplate,” he continued. “If the people come to believe that the government is no longer constrained by the laws, then they will conclude that neither are they.”

And then what happens?

From The Detroit News:

Tuesday, December 10, 2013


Story first appeared on

CINCINNATI (AP) — From Twitter and Facebook to Amazon and Google, the biggest names of the Internet are blasting a federal judge's decision allowing an Arizona-based gossip website to be sued for defamation by a former Cincinnati Bengals cheerleader convicted of having sex with a teenager.

In court briefs recently filed in the 6th U.S. Circuit Court of Appeals in Cincinnati, the Internet giants warn that if upheld, the northern Kentucky judge's ruling to let the former cheerleader's lawsuit proceed has the potential to "significantly chill online speech" and undermine a law passed by Congress in 1996 that provides broad immunity to websites.

"If websites are subject to liability for failing to remove third-party content whenever someone objects, they will be subject to the 'heckler's veto,' giving anyone who complains unfettered power to censor speech," according to briefs filed Nov. 19 by lawyers for Facebook, Google, Microsoft, Twitter, Amazon, Gawker and BuzzFeed, among others.

Those heavy hitters "really tell you how major of an issue this is," said David Gingras, attorney for Scottsdale, Ariz.-based and its owner, Nik Richie, 34, who lives in Orange County, Calif.

A message left for Jones' attorney, Eric Deters, seeking comment wasn't immediately returned.

The case centers on the federal Communications Decency Act, passed in 1996 to help foster growth and free speech on the Internet by providing immunity from liability to websites for content posted by their users. The law also was designed to encourage websites to self-police offensive material.

Judges and appeals courts across the country have upheld the law in hundreds of cases.

But not Richie's.

His website,, allows users to submit posts — anonymously if they want — about anyone from the girl next door to professional athletes and politicians, often accusing them of promiscuity, cheating on their spouses or getting plastic surgery or picking apart their looks. Richie screens each post, decides what goes up and often adds his own commentary.

Most recently, Richie broke the news of Anthony Weiner's latest round of marital indiscretions.

In December 2012, former Bengals cheerleader Sarah Jones, 28, also a former high school teacher in northern Kentucky, sued Richie over posts concerning the sexual history of her and her ex-husband. Jones said the posts were untrue and caused her severe mental anguish and embarrassment.

Richie said that the posts were submitted to him anonymously and that it was not up to him to judge their accuracy. He simply posted them and added a comment about high school teachers and sex.

In July, after federal Judge William Bertelsman allowed the lawsuit to proceed, jurors found that the posts about Jones were substantially false and Richie had acted with malice or reckless disregard by publishing them, and they awarded Jones $338,000.

Richie is asking the 6th Circuit to find that Bertelsman should never have allowed the case to proceed, which would nullify the jury's verdict.

Oral arguments in the case will be held in Cincinnati, likely in the beginning of 2014, with a decision expected in the summer.

Gingras, other attorneys specializing in Internet law and civil rights groups criticize Bertelsman's ruling as based on his own personal distaste of and not on legal precedent.

Bertelsman ruled four separate times in the case against arguments over the Communications Decency Act, finding that the very name of Richie's website, the way he manages it and the personal comments that he adds all encourage offensive content.

Richie's own commentary about the Jones posts effectively validated all the anonymous accusations against her, Bertelsman said.

The posts about Jones were unrelated to a criminal case that emerged against her in March 2012 in which she was accused of having sex with her former student, a teenager. Jones later pleaded guilty to sexual misconduct and custodial interference as part of a plea deal that allowed her to avoid jail time but prohibited her from teaching again.

Jones and the student, then 17, are still together and say they're in love and engaged to be married.

Monday, December 9, 2013

DIA joins talks to protect its art in bankruptcy, free it from city ownership

Story originally appeared on Freep.

The Detroit Institute of Arts has joined behind-the-scenes federally mediated talks to shield the museum from creditors in Detroit’s bankruptcy and bolster at-risk municipal pensions.

The museum’s direct involvement in the talks, which also include leaders from at least 10 national and local charitable foundations, signals that the parties are moving closer to a grand bargainbrokered by U.S. Chief District Judge Gerald Rosen. The plan would funnel about $500 million into pensions, thereby buying the DIA its independence from city ownership and freeing up more money for city services.

Two sources with detailed knowledge of the talks but not authorized to speak on the record confirmed that museum leaders had joined the negotiations, which began in Rosen’s chambers a month ago with a gathering of foundation heads — without the DIA at the table. One source said there have been at least one meeting and multiple phone calls between DIA representatives and Rosen.

The source said that the talks had not yet addressed such specifics as how much money — or in what form — the DIA might contribute financially to the plan, but described the talks as moving “swiftly.” The source said the details of the museum’s contribution likely would be discussed next week.

DIA Chief Operating Officer Annmarie Erickson said Friday that the museum would have no official comment about participating in the talks, but added: “We feel optimistic about the direction in which things are moving.”

Rosen’s deal is an attempt to prevent the city-owned DIA from being forced to sell some of its irreplaceable masterpieces to appease creditors in bankruptcy court. But if the plan were also to remove the DIA from city ownership and establish it as an independent nonprofit, it would mark a radical resetting of the museum’s structure and operations.

For the first time in 95 years, the DIA — a world-class museum many champion as an anchor of a post-bankruptcy Detroit — would not be subjected to the boom-and-bust cycles of Detroit’s finances and the sometimes capricious whims of city politics. Wayne State University art historian Jeffrey Abt pointed to a strikingly ironic turn of history.

“When the museum was taken over by the city in 1919, it was a time of tremendous prosperity and the ability of the city to support the museum seemed boundless,” said Abt. “But then came the depression, and, for the most part, the museum hasn’t prospered. Now with the city at its lowest point, you might have the museum ejected from city control. The historical symmetry is quite remarkable.”

Rosen has been trying to convince the foundations, which control more than $25 billion in assets, to contribute hundreds of millions of dollars to a rescue plan aimed at simultaneously resolving two of the most contentious conflicts in the bankruptcy drama — the battle over the DIA and the fight over potentially steep cuts to pensions for 23,000 retirees.

The foundations include some of the country’s largest, including the New York-based Ford Foundation and the Troy-based Kresge Foundation, as well as smaller local organizations like Detroit’s Hudson-Webber Foundation.

A Rosen-brokered deal could provide Detroit emergency manager Kevyn Orr — and U.S. Bankruptcy Judge Steven Rhodes — with a politically expedient way of removing the DIA from the table and providing unions a $500-million incentive to reduce the size of pension cuts in Orr’s upcoming plan of adjustment. Ultimately, Rhodes will have to approve any restructuring plan submitted by Orr.

But bankruptcy experts cautioned that whatever plan emerges from Rosen’s mediation will still be just a component of an overall solution. Detroit bankruptcy attorney Doug Bernstein said a key will be whether other unsecured creditors object to pensioners receiving what could be perceived as a $500-million bonus. At the same time, many creditors are sure to fiercely contest a plan they believe leaves the DIA collection beyond their reach.

“The key to Rosen’s proposal will be how it plays out in the grander scheme of the entire plan of adjustment,” said Doug Bernstein of the Plunkett Cooney law firm.

Rosen’s proposal still faces significant hurdles before a deal could be reached. Although some sources have told the Free Press that larger foundations, including the Ford Foundation, have expressed support for Rosen’s rescue fund, some of the smaller foundations are wary of committing a proportionately larger percentage of their resources to bailing out Detroit. The boards of directors of all of the foundations will have to decide whether diverting funds to municipal pensions on behalf of the DIA is consistent with their missions.

The DIA’s endorsement is not a slam dunk either. Museum leaders have steadfastly maintained that any plan to monetize its collection has to pass muster on three counts: No art can be sold. The survival of the tri-county property tax has to be guaranteed, because without the roughly $22 million in annual funds, the museum effectively would be forced to shut down. And whatever financial contribution the museum might make, its ability to raise endowment funds can’t be unduly impaired.

As part of its drive to pass the millage, DIA leaders pledged to raise hundreds of millions of dollars for the endowment — its nest egg — so that when the millage expires in a decade, the museum will be able to make up the difference with investment income. The DIA could balk if Rosen’s plan required tapping out its major donors, leaving them unable or unwilling to support the endowment.

Another potential stumbling block regarding a plan to spin off the DIA from city ownership would be a potential outcry among some Detroiters than the city is being stripped of its most prized assets.

In the best-case scenario for the deal moving forward, Rosen would be able to forge a deal within the next few weeks, before Orr submits his blueprint for restructuring city finances and creating a pathway out of bankruptcy.

In the wake of Rhodes’ ruling this week that Detroit is eligible for Chapter 9 protection, the next two months are expected to be a whirlwind of hardball talks, shifting alliances and legal posturing as Orr negotiates with bondholders, pensioners and other creditors while preparing his plan.

Orr, who regards the DIA as a city asset he can tap for cash, believes he can’t make a deal Rhodes will approve without money from the museum. Orr has strongly hinted that his initial plan will include a revenue stream from the DIA amounting to about $500 million — the same amount that multiple sources have said is driving Rosen’s negotiations. Orr’s plan, which is expected by early January, will almost assuredly spark howls of protest from creditors pushing for a greater recovery of their losses.

Orr’s office has told the museum repeatedly for months that it must monetize its collection — squeeze money out of the art either by selling it or some other form of leveraging. DIA leaders have pledged to fight in court any plan that puts its collection at risk.

Also at the table in talks with Rosen have been leaders from the John S. and James L. Knight Foundation, W.K. Kellogg Foundation, Charles Stewart Mott Foundation, Skillman Foundation, Community Foundation for Southeastern Michigan, McGregor Fund and Fred A. and Barbara M. Erb Foundation.

Wednesday, December 4, 2013


This story first appeared in The Washington Post

Opponents of the health-care law took their latest legal challenge to a federal courtroom in the District on Tuesday in a case that many critics of the law view as their last and best chance to gut it before key provisions kick in Jan. 1.

Though some legal scholars view the case as a long shot, it could have significant consequences if it is successful. Millions of people in 34 states could be denied the government subsidies established by the law to help low- and middle-income people pay their health-insurance premiums starting next year.

Even those who think the case has no merit are closely watching it unfold.

“You can no longer take a look at an allegation that on its face appears to have no merit whatsoever and simply dismiss it out of hand,” said Sara Rosenbaum, a health-law professor at George Washington University and a supporter of the Affordable Care Act. “All you need is a very energetic plaintiff and a sympathetic judge. It takes very little to set a case in motion.”

It is one of a number of cases bubbling up through the court system more than a year after the Supreme Court upheld the law, dealing a blow to those who have viewed the law as an unconstitutional and un-American infringement of their freedom. Now, the lawsuits are centering more on the way the law is being implemented.

The most visible lawsuits are those questioning the law’s requirement that businesses provide people health insurance that covers contraception. Last week, the Supreme Court agreed to consider a case brought by the owners of Hobby Lobby, an arts-and-crafts chain, who said the new mandate that they cover birth control runs counter to their religious principles.

Supporters of the mandate have said it protects the rights of workers to get certain benefits regardless of their employer’s religious views.

Also on Tuesday, AIDS advocates in St. Louis filed suit against the state of Missouri for passing laws that restrict the activities of “navigators” — helpers who are paid through federal grants to assist people as they sign up for health insurance. They argue that the rules, which among other things require navigators to be certified by the state, conflict with federal law.

Supporters of the navigator restrictions say they were necessary to protect consumers from being misled by poorly trained or unethical navigators.

But the case heard before District Court Judge Paul L. Friedman on Tuesday could have more serious consequences for the overall health-care law.

At issue are the subsidies that low- and middle-income people are set to receive next year. The plaintiffs — three private employers and four individual taxpayers — argue that Congress intended the law’s subsidies for low- and middle-income people to go only to people in states that set up their own health-insurance exchanges.

The exchanges are online marketplaces where people are supposed to be able to log on to browse health-plan features and prices, apply for subsidies and enroll in coverage. Thirty-four states opted not to set up their own marketplaces, leaving the task up to the federal government.