Original Story: freep.com
A Brighton woman pleaded guilty Tuesday to embezzling from her employer, to whom she tearfully whispered an apology as she was led away to a holding cell. A Birmingham criminal lawyer provides counsel and strategic advice to individuals, corporations, and other entities facing criminal investigations or charges.
The plea deal includes a sentence agreement that will put Brynn Annette Robinson, 35, behind bars for three to 15 years for embezzling more than $100,000 from AArbor Colorants Corp. on Citation Drive in Brighton. The plea deal also calls for Robinson to pay $200,000 in restitution.
Sentencing is Jan. 7 in Judge Michael P. Hatty’s courtroom.
In entering the plea, Robinson acknowledged that she used the company’s credit cards between March 2012 and August for her personal use. A Salt Lake City criminal lawyer is following this story closely.
“I’m very sorry,” she whispered to one of the company co-owners, who was sitting in the courtroom.
Robinson entered the plea as a habitual offender. Her criminal history includes a 2003 conviction for embezzling and using a financial transaction device without permission in Washtenaw County and a 2010 attempted filing of a false police report in Shiawassee County. A Hartford employment lawyer is reviewing the details of this case.
AArbor Colorants is a privately held company in business since 1987 that is a “customer-driven flushed colors and dry color pigments manufacturer,” according to its website at www.aarbor.com.
Wednesday, December 16, 2015
Thursday, December 10, 2015
KARMANOS ALLEGES FRAUD IN NEW LAWSUIT AGAINST COMPUWARE
Original Story: freep.com
Peter Karmanos Jr. has filed his own shareholder lawsuit against Compuware, the Detroit-based company he founded, claiming a proposed settlement with other Compuware shareholders is too small.
The Karmanos' lawsuit, which also names his four young sons as co-plaintiffs, alleges fraud and blackmail were involved in the company's decision last year to sell itself to private equity firm Thoma Bravo for $2.4 billion, or $10.92 per share, a price that Karmanos argues was unfair and that undervalued Compuware. A Birmingham securities lawyer is reviewing the details of this case.
Peter Karmanos personally received more than $52.5 million from his Compuware shares -- not including an additional $16.5 million that he was awarded earlier this year by an arbitrator after Karmanos sued the company for firing him as a consultant and for canceling his remaining stock options. The company is still appealing the $16.5 million award.
Compuware's board voted to fire Karmanos for cause in response to profane comments he made regarding board members and the company's largest shareholder, an activist New York hedge fund called Elliott Management that had sought a sale. Karmanos retired from day-to-day work at Compuware in March 2013. A Tulsa finance attorney represents clients in business and investment transactions.
The Karmanos lawsuit was filed last week in Wayne County Circuit Court. It seeks unspecified damages and potentially the unwinding of the Compuware - Thoma Bravo deal.
“Frankly, they felt that the settlement did not provide any economic benefit to them," the Karmanos' attorney, Sharon Almonrode of The Miller Law Firm in Rochester, said Tuesday. "It did not address many of the issues that were raised in our complaint, and accordingly, they opted out.”
She did not say how much money additional Peter Karmanos believes he and his sons are due.
The Karmanos lawsuit contends that Compuware was worth more than what it sold for and that key information was missing from the materials distributed before the shareholder vote, such as Peter Karmanos' interest in perhaps buying parts of Compuware.
It also accuses the company's largest shareholder -- activist hedge fund Elliott Management -- of having "engaged in blackmail, and the other defendants succumbed to the blackmail instead of reporting it to the relevant authorities."
Besides Compuware, the lawsuit names as defendants former Compuware board members or executives including Gurminder Bedi, Fritz Henderson, William Grabe, Bob Paul and Daniel Follis. Thoma Bravo and Elliott Management are also named. A Harrisonburg securities lawyer is following this story closely.
The sale of Compuware to the Thoma Bravo private equity firm was overwhelmingly approved by Compuware shareholders in a December 2014 vote. Prior to the vote, the deal had prompted several shareholder class-action lawsuits that consolidated into one case in Wayne County Circuit Court.
Lawyers on both sides of that case reached an agreement that involved Compuware disclosing additional information before the shareholder vote to show why the deal made sense.
Under the terms of the case's proposed settlement, the plaintiffs' lawyers would declare that the extra information "empowered the shareholders of Compuware to make a fully informed decision" when voting. The settlement is still pending in court. (It also proposes that Compuware pay the plaintiffs' lawyers $525,000 for their fees.)
But Karmanos is not part of that main shareholder lawsuit. He and his four young sons, who are minors, opted out of the earlier lawsuit to retain their right to file a separate lawsuit. The sons' mother, Danialle Karmanos, is acting as their custodian in the lawsuit.
The alleged blackmail was the compiling of dossiers with information on certain board members by an Elliott Management portfolio manager, including a remark to Compuware's then-CEO Bob Paul about the vintage Aston Martin sports car that Paul kept at home in his garage and that few people knew about.
A Compuware representative said the company doesn't comment on legal matters. Elliott Management said in a statement that "(it) is pleased to have been involved in a process that maximized value for Compuware shareholders.” Former CEO Paul did not return a message seeking comment. A Boca Raton corporate attorney has experience representing clients in shareholder lawsuits.
Steven Harms, an adjunct professor in business of Walsh College, said shareholder lawsuits are fairly common in corporate deals but can be tough to win.
"They have a steep road to climb in order to prevail," Harms said. "My guess is that as a lawyer for 39 years, more are lost than won."
Since the December sale, Compuware has been split into two main pieces. Its mainframe business is still headquartered in Detroit on the fourth floor of what was formerly known as the Compuware building.
Peter Karmanos Jr. has filed his own shareholder lawsuit against Compuware, the Detroit-based company he founded, claiming a proposed settlement with other Compuware shareholders is too small.
The Karmanos' lawsuit, which also names his four young sons as co-plaintiffs, alleges fraud and blackmail were involved in the company's decision last year to sell itself to private equity firm Thoma Bravo for $2.4 billion, or $10.92 per share, a price that Karmanos argues was unfair and that undervalued Compuware. A Birmingham securities lawyer is reviewing the details of this case.
Peter Karmanos personally received more than $52.5 million from his Compuware shares -- not including an additional $16.5 million that he was awarded earlier this year by an arbitrator after Karmanos sued the company for firing him as a consultant and for canceling his remaining stock options. The company is still appealing the $16.5 million award.
Compuware's board voted to fire Karmanos for cause in response to profane comments he made regarding board members and the company's largest shareholder, an activist New York hedge fund called Elliott Management that had sought a sale. Karmanos retired from day-to-day work at Compuware in March 2013. A Tulsa finance attorney represents clients in business and investment transactions.
The Karmanos lawsuit was filed last week in Wayne County Circuit Court. It seeks unspecified damages and potentially the unwinding of the Compuware - Thoma Bravo deal.
“Frankly, they felt that the settlement did not provide any economic benefit to them," the Karmanos' attorney, Sharon Almonrode of The Miller Law Firm in Rochester, said Tuesday. "It did not address many of the issues that were raised in our complaint, and accordingly, they opted out.”
She did not say how much money additional Peter Karmanos believes he and his sons are due.
The Karmanos lawsuit contends that Compuware was worth more than what it sold for and that key information was missing from the materials distributed before the shareholder vote, such as Peter Karmanos' interest in perhaps buying parts of Compuware.
It also accuses the company's largest shareholder -- activist hedge fund Elliott Management -- of having "engaged in blackmail, and the other defendants succumbed to the blackmail instead of reporting it to the relevant authorities."
Besides Compuware, the lawsuit names as defendants former Compuware board members or executives including Gurminder Bedi, Fritz Henderson, William Grabe, Bob Paul and Daniel Follis. Thoma Bravo and Elliott Management are also named. A Harrisonburg securities lawyer is following this story closely.
The sale of Compuware to the Thoma Bravo private equity firm was overwhelmingly approved by Compuware shareholders in a December 2014 vote. Prior to the vote, the deal had prompted several shareholder class-action lawsuits that consolidated into one case in Wayne County Circuit Court.
Lawyers on both sides of that case reached an agreement that involved Compuware disclosing additional information before the shareholder vote to show why the deal made sense.
Under the terms of the case's proposed settlement, the plaintiffs' lawyers would declare that the extra information "empowered the shareholders of Compuware to make a fully informed decision" when voting. The settlement is still pending in court. (It also proposes that Compuware pay the plaintiffs' lawyers $525,000 for their fees.)
But Karmanos is not part of that main shareholder lawsuit. He and his four young sons, who are minors, opted out of the earlier lawsuit to retain their right to file a separate lawsuit. The sons' mother, Danialle Karmanos, is acting as their custodian in the lawsuit.
The alleged blackmail was the compiling of dossiers with information on certain board members by an Elliott Management portfolio manager, including a remark to Compuware's then-CEO Bob Paul about the vintage Aston Martin sports car that Paul kept at home in his garage and that few people knew about.
A Compuware representative said the company doesn't comment on legal matters. Elliott Management said in a statement that "(it) is pleased to have been involved in a process that maximized value for Compuware shareholders.” Former CEO Paul did not return a message seeking comment. A Boca Raton corporate attorney has experience representing clients in shareholder lawsuits.
Steven Harms, an adjunct professor in business of Walsh College, said shareholder lawsuits are fairly common in corporate deals but can be tough to win.
"They have a steep road to climb in order to prevail," Harms said. "My guess is that as a lawyer for 39 years, more are lost than won."
Since the December sale, Compuware has been split into two main pieces. Its mainframe business is still headquartered in Detroit on the fourth floor of what was formerly known as the Compuware building.
Thursday, December 3, 2015
MENTAL COMPETENCE SUIT AGAINST REDSTONE RAISES QUESTIONS OVER FUTURE OF VIACOM AND CBS
Original Story: latimes.com
The lawsuit filed this week challenging the mental competence of media mogul Sumner Redstone has raised questions among legal and business experts over the future of the 92-year-old billionaire's empire and how his companies should respond. An Iowa probate lawyer is following this story closely.
Redstone controls CBS Corp. and Viacom Inc., which owns Paramount Pictures, MTV and other media properties. The companies have a combined market value of about $45 billion, but neither has publicly discussed details of Redstone's deteriorating health.
The suit filed in Los Angeles County Superior Court by Manuela Herzer claims Redstone was not mentally competent when he removed her from oversight of his healthcare last month.
Redstone's lawyers have called the legal action by Redstone's ex-girlfriend "preposterous," "meritless" and "riddled with lies" — but it could nonetheless force CBS and Viacom to address the issue of Redstone's competence, some legal experts say.
Companies are not required to disclose medical details about their executives, according to analysts. But they do have to divulge "material" information — in other words, anything that reasonable investors would need to make informed decisions when buying and selling stocks. An ESOP lawyer represents clients in business exit planning and employee stock ownership programs.
If the court finds that Redstone is in fact incapable of making decisions, that could open up the companies to potential lawsuits from shareholders claiming that key information was kept from them, lawyers said.
"It raises the question of who knew what when, and what should've been disclosed to shareholders at what point in time," said Los Angeles attorney Bryan Sullivan, a partner at Early Sullivan Wright Gizer & McRae who has handled fiduciary duty matters. "If one person in the power structure knew he was incompetent, then there is potential liability under SEC regulations for failure to disclose material facts."
A representative for Viacom did not respond to a request for comment, and CBS declined to comment.
The issue of executive health came to the forefront in 2009 when Apple Inc. co-founder Steve Jobs took a medical leave and disclosed a hormone imbalance. Jobs, who had undergone surgery in 2004 to remove a cancerous tumor in his pancreas, did not say whether his cancer had returned at the time but said that the issue was "more complex" and required a six-month leave.
In April 2009, Jobs underwent a liver transplant. That procedure triggered a discussion of whether Apple, long known for its secretive corporate culture, had run afoul of federal securities rules by not disclosing the severity of the executive's condition. Jobs returned to work at Apple in June 2009.
He took another leave from Apple in 2011 — citing health issues — and resigned from his post before he died that October from complications of pancreatic cancer. A Des Moines probate attorney is reviewing the details of this story.
Another recent high-profile case of an executive's declining health taking center stage was former Los Angeles Clippers owner Donald Sterling, who lost control of his enterprise after being declared mentally incapacitated.
In the aftermath of the release of an audio recording of Sterling disparaging blacks in April 2014, the 81-year-old executive's wife sought control of the National Basketball Assn. team.
In May 2014, two doctors found Sterling, who by then was banned for life from the NBA, mentally incapable of continuing on as a member of the family trust that owned the basketball franchise. Shelly Sterling then reached a deal to sell the Clippers to former Microsoft Corp. Chief Executive Steve Ballmer for $2 billion.
Donald Sterling has unsuccessfully fought the sale of the team in court.
Some corporate governance experts say companies have been more forthright about their executives' health problems since the Jobs ordeal. Still, it often makes more sense for companies to stay muted, said law professor Allan Horwich, who practices at the Chicago firm Schiff Hardin. Firms can expose themselves to greater risk if they make affirmative public statements about an executive's health.
"This issue becomes much more difficult for the company when they do say something and they leave out information about the health of an executive who might not be able to serve," said Horwich, who focuses on securities litigation and fiduciary duty matters. He also teaches at Northwestern University's Pritzker School of Law.
Steven Davidoff Solomon, a law professor at UC Berkeley, also said it's unclear what the companies would need to divulge to shareholders and when.
"Given the control he has over the company, one would like to think that the company would think this is material information that should be disclosed," Solomon said. "But it's hard to know how much the company knows and how much it doesn't know and what it's real duties are."
The future of Viacom and CBS has been the subject of much speculation on Wall Street in recent months. Viacom has suffered from falling ratings at its cable networks and a weak film slate from its Paramount Pictures movie studio. Shares of Viacom, which owns MTV, Nickelodeon and Comedy Central, have fallen 32% this year. In contrast, CBS' stock has decreased just 8%.
On Friday, Viacom shares slipped $1.19 to $51.16, while CBS fell 23 cents to $50.75. A Los Angeles finance lawyer is knowledgeable in asset sales, debt and equity finance claims, and financial restructuring matters.
Herzer's suit demands that Redstone receive a mental examination, including a brain scan, and submit to a videotaped deposition. If her suit succeeds, Herzer could return to prominence in Redstone's affairs. Her suit asked the court to determine that her authority as the healthcare agent be reinstated.
Herzer was the agent of Redstone's advance healthcare directive and says she made decisions about his medical care until she was expelled from Redstone's home last month. Viacom Chief Executive Philippe Dauman then took over as the agent of Redstone's healthcare directive. If a doctor determines that Redstone has become incapacitated, Dauman would make decisions on Redstone's behalf. Redstone's lawyers say the former girlfriend filed the suit to avoid being cut out of his will.
--------
For the Record
An earlier version of this article said Manuela Herzer made healthcare decisions on Sumner Redstone's behalf until she was expelled from his home. The article should have said Herzer says she made decisions about Redstone's medical care.
--------
Redstone and his family control 79% of the voting shares of the two companies. Redstone has not been involved in the day-to-day functions of Viacom or CBS for some time. CBS is run by CEO Leslie Moonves.
When Redstone dies, the Sumner M. Redstone National Amusements Trust will determine what happens to his controlling interest in the companies. The companies each have a two-tier stock structure, with most shareholders owning nonvoting shares.
Still, a fraught and protracted legal battle could harm the Redstone empire even if the court finds the allegations to be meritless, said David Becher, a professor of finance at Drexel University.
"Even if it is a frivolous suit and there's nothing going on, I think the distractibility is going to hurt the company," Becher said.
The lawsuit filed this week challenging the mental competence of media mogul Sumner Redstone has raised questions among legal and business experts over the future of the 92-year-old billionaire's empire and how his companies should respond. An Iowa probate lawyer is following this story closely.
Redstone controls CBS Corp. and Viacom Inc., which owns Paramount Pictures, MTV and other media properties. The companies have a combined market value of about $45 billion, but neither has publicly discussed details of Redstone's deteriorating health.
The suit filed in Los Angeles County Superior Court by Manuela Herzer claims Redstone was not mentally competent when he removed her from oversight of his healthcare last month.
Redstone's lawyers have called the legal action by Redstone's ex-girlfriend "preposterous," "meritless" and "riddled with lies" — but it could nonetheless force CBS and Viacom to address the issue of Redstone's competence, some legal experts say.
Companies are not required to disclose medical details about their executives, according to analysts. But they do have to divulge "material" information — in other words, anything that reasonable investors would need to make informed decisions when buying and selling stocks. An ESOP lawyer represents clients in business exit planning and employee stock ownership programs.
If the court finds that Redstone is in fact incapable of making decisions, that could open up the companies to potential lawsuits from shareholders claiming that key information was kept from them, lawyers said.
"It raises the question of who knew what when, and what should've been disclosed to shareholders at what point in time," said Los Angeles attorney Bryan Sullivan, a partner at Early Sullivan Wright Gizer & McRae who has handled fiduciary duty matters. "If one person in the power structure knew he was incompetent, then there is potential liability under SEC regulations for failure to disclose material facts."
A representative for Viacom did not respond to a request for comment, and CBS declined to comment.
The issue of executive health came to the forefront in 2009 when Apple Inc. co-founder Steve Jobs took a medical leave and disclosed a hormone imbalance. Jobs, who had undergone surgery in 2004 to remove a cancerous tumor in his pancreas, did not say whether his cancer had returned at the time but said that the issue was "more complex" and required a six-month leave.
In April 2009, Jobs underwent a liver transplant. That procedure triggered a discussion of whether Apple, long known for its secretive corporate culture, had run afoul of federal securities rules by not disclosing the severity of the executive's condition. Jobs returned to work at Apple in June 2009.
He took another leave from Apple in 2011 — citing health issues — and resigned from his post before he died that October from complications of pancreatic cancer. A Des Moines probate attorney is reviewing the details of this story.
Another recent high-profile case of an executive's declining health taking center stage was former Los Angeles Clippers owner Donald Sterling, who lost control of his enterprise after being declared mentally incapacitated.
In the aftermath of the release of an audio recording of Sterling disparaging blacks in April 2014, the 81-year-old executive's wife sought control of the National Basketball Assn. team.
In May 2014, two doctors found Sterling, who by then was banned for life from the NBA, mentally incapable of continuing on as a member of the family trust that owned the basketball franchise. Shelly Sterling then reached a deal to sell the Clippers to former Microsoft Corp. Chief Executive Steve Ballmer for $2 billion.
Donald Sterling has unsuccessfully fought the sale of the team in court.
Some corporate governance experts say companies have been more forthright about their executives' health problems since the Jobs ordeal. Still, it often makes more sense for companies to stay muted, said law professor Allan Horwich, who practices at the Chicago firm Schiff Hardin. Firms can expose themselves to greater risk if they make affirmative public statements about an executive's health.
"This issue becomes much more difficult for the company when they do say something and they leave out information about the health of an executive who might not be able to serve," said Horwich, who focuses on securities litigation and fiduciary duty matters. He also teaches at Northwestern University's Pritzker School of Law.
Steven Davidoff Solomon, a law professor at UC Berkeley, also said it's unclear what the companies would need to divulge to shareholders and when.
"Given the control he has over the company, one would like to think that the company would think this is material information that should be disclosed," Solomon said. "But it's hard to know how much the company knows and how much it doesn't know and what it's real duties are."
The future of Viacom and CBS has been the subject of much speculation on Wall Street in recent months. Viacom has suffered from falling ratings at its cable networks and a weak film slate from its Paramount Pictures movie studio. Shares of Viacom, which owns MTV, Nickelodeon and Comedy Central, have fallen 32% this year. In contrast, CBS' stock has decreased just 8%.
On Friday, Viacom shares slipped $1.19 to $51.16, while CBS fell 23 cents to $50.75. A Los Angeles finance lawyer is knowledgeable in asset sales, debt and equity finance claims, and financial restructuring matters.
Herzer's suit demands that Redstone receive a mental examination, including a brain scan, and submit to a videotaped deposition. If her suit succeeds, Herzer could return to prominence in Redstone's affairs. Her suit asked the court to determine that her authority as the healthcare agent be reinstated.
Herzer was the agent of Redstone's advance healthcare directive and says she made decisions about his medical care until she was expelled from Redstone's home last month. Viacom Chief Executive Philippe Dauman then took over as the agent of Redstone's healthcare directive. If a doctor determines that Redstone has become incapacitated, Dauman would make decisions on Redstone's behalf. Redstone's lawyers say the former girlfriend filed the suit to avoid being cut out of his will.
--------
For the Record
An earlier version of this article said Manuela Herzer made healthcare decisions on Sumner Redstone's behalf until she was expelled from his home. The article should have said Herzer says she made decisions about Redstone's medical care.
--------
Redstone and his family control 79% of the voting shares of the two companies. Redstone has not been involved in the day-to-day functions of Viacom or CBS for some time. CBS is run by CEO Leslie Moonves.
When Redstone dies, the Sumner M. Redstone National Amusements Trust will determine what happens to his controlling interest in the companies. The companies each have a two-tier stock structure, with most shareholders owning nonvoting shares.
Still, a fraught and protracted legal battle could harm the Redstone empire even if the court finds the allegations to be meritless, said David Becher, a professor of finance at Drexel University.
"Even if it is a frivolous suit and there's nothing going on, I think the distractibility is going to hurt the company," Becher said.
Thursday, November 5, 2015
DOCTOR AT SHELDON SILVER TRIAL TELLS OF ELABORATE ARRANGEMENT, YEARS IN MAKING
Original Story: nytimes.com
In New York’s ornate Capitol building in Albany, a plan two years in the making was taking root. Everyone would benefit: Victims of mesothelioma, a rare but deadly form of cancer caused by exposure to asbestos, would be sent to a reputable law firm; the firm would pick up new clients; and a well-regarded cancer research clinic would receive funds. A San Francisco asbestos litigation attorney represents clients protect their legal rights in the face of devastating losses resulting from asbestos exposure.
And at the center of all this was Sheldon Silver, then the State Assembly speaker, prosecutors say.
The alleged arrangement, which has become the heart of the corruption case against Mr. Silver, came into focus at his trial on Wednesday, as Dr. Robert N. Taub of Columbia University testified in federal court in Manhattan as a government witness. Prosecutors charge that Mr. Silver, a Democrat from the Lower East Side, traded official actions for $3 million in an illegal kickback scheme.
Dr. Taub, who testified under a nonprosecution agreement, ran a clinic at Columbia dedicated to mesothelioma research. The clinic long relied on government grants, wealthy donors and even gifts from law firms and their foundations to fund his research.
But Weitz & Luxenberg, a major personal injury law firm that represents victims of mesothelioma, had not been a donor to Dr. Taub’s research, and he testified on Wednesday that he wanted to change that. A Charleston asbestos litigation attorney is reviewing the details of this case.
In 2003, the doctor reached out to Mr. Silver, who was on the law firm’s payroll, and asked the Assembly speaker to persuade the firm to make a contribution. Mr. Silver said that the firm could not do that, but not long afterward, Mr. Silver asked Dr. Taub if he could refer mesothelioma patients to Weitz & Luxenberg.
Dr. Taub testified that he agreed, and started sending potentially lucrative cases to Mr. Silver, which he said numbered at least two dozen over the years.
“I hoped to develop a relationship with him that would help fund mesothelioma research and would help my patients as well,” he told the jury.
In January 2005, after a ceremony at the Capitol to honor Mr. Silver, the two men met and discussed briefly Dr. Taub’s request for state funds to support his research. Mr. Silver eventually arranged for New York State to give Dr. Taub’s clinic two grants of $250,000 each in the years that followed.
Weitz & Luxenberg, in turn, typically gave Mr. Silver one-third of what it recovered in the cases, which totaled $3 million. Prosecutors have said that this arrangement was illegal, and that Mr. Silver was using his office for personal gain. A Newark criminal lawyer is following this story closely.
Dr. Taub, 79, is one of the government’s key witnesses in the trial of Mr. Silver, who has pleaded not guilty to fraud, extortion and money laundering charges. The government has alleged that Mr. Silver, 71, abused his position as one of the most powerful men in the state for personal gain, and in the case of Dr. Taub directed $500,000 of taxpayer money to him.
The doctor was a witness of contrasts. He came across as authoritative and passionate about treating mesothelioma, his life’s pursuit. He said he was one of only a few doctors in the world who specialized in treating mesothelioma, and estimated there are 3,000 new cases of the disease each year in the United States. “I’m put on this earth to help these people,” he said. “That’s what I want to do.”
At the same time, he acknowledged, he initially lied to federal investigators when they knocked on his door one day at 6 a.m. in the summer of 2014 and confronted him about his referrals to Mr. Silver.
“I was terrified and panicked, and I irrationally wanted to divorce myself” from the matter, Dr. Taub testified. Later, he said, he realized he had made a mistake and contacted investigators. Eventually, he said, he divulged everything he knew to the government, which reached a non-prosecution agreement in exchange for his cooperation.
Dr. Taub said he was introduced to Mr. Silver in the 1980s by a close friend, C. Daniel Chill, a lawyer who once served as counsel to a previous Assembly speaker, Stanley Steingut.
The doctor, in agreeing to refer patients to Mr. Silver at Weitz & Luxenberg, said he knew how valuable such cases could be for all involved, including Mr. Silver.
“I knew it would benefit his standing in the firm,” Dr. Taub said, acknowledging that it could also help him financially.
The doctor said that he made referrals to Mr. Silver for about a decade. He said he was unaware of Mr. Silver’s financial arrangements with Weitz & Luxenberg, but said Mr. Silver made it clear he was “pleased” at the referrals.
At some point, Dr. Taub was made aware he should send Mr. Silver a letter seeking state funding for his research program. Mr. Chill helped him draft the letter to the speaker, Dr. Taub testified.
After he sent that letter, the doctor said, the first state grant arrived.
Dr. Taub testified that Mr. Silver said at one point that he should not tell Mr. Chill about “any further referrals” made to the speaker.
“I didn’t know what to make of it actually,” Dr. Taub said. “He just wanted it kept between me and Mr. Silver, between me and him.”
Mr. Chill declined to comment.
In 2010, Dr. Taub began referring clients to another law firm that had agreed to provide significant financial backing for his research. Not long after, Mr. Silver visited Dr. Taub at his office at Columbia, and mentioned he was getting fewer referrals.
Dr. Taub said the two men parted on friendly terms and he kept sending referrals to Mr. Silver. “Just not as many,” the doctor told the jury.
During cross-examination on Wednesday, Mr. Silver’s lawyer, Steven F. Molo, asked Dr. Taub if he had “an explicit agreement to exchange patients for grants.”
“I did not,” he said.
Mr. Silver helped Dr. Taub in other ways. The doctor testified Mr. Silver arranged for him to be honored by New York State, helped get his son a job, and even offered to help him navigate red tape in organizing a mesothelioma run near the World Trade Center site, in Mr. Silver’s district.
“It will probably cost us,” Dr. Taub wrote in an email to another person involved in the run’s organization. “He is very good at getting people to owe him. But if he says he will deliver, he does.”
In New York’s ornate Capitol building in Albany, a plan two years in the making was taking root. Everyone would benefit: Victims of mesothelioma, a rare but deadly form of cancer caused by exposure to asbestos, would be sent to a reputable law firm; the firm would pick up new clients; and a well-regarded cancer research clinic would receive funds. A San Francisco asbestos litigation attorney represents clients protect their legal rights in the face of devastating losses resulting from asbestos exposure.
And at the center of all this was Sheldon Silver, then the State Assembly speaker, prosecutors say.
The alleged arrangement, which has become the heart of the corruption case against Mr. Silver, came into focus at his trial on Wednesday, as Dr. Robert N. Taub of Columbia University testified in federal court in Manhattan as a government witness. Prosecutors charge that Mr. Silver, a Democrat from the Lower East Side, traded official actions for $3 million in an illegal kickback scheme.
Dr. Taub, who testified under a nonprosecution agreement, ran a clinic at Columbia dedicated to mesothelioma research. The clinic long relied on government grants, wealthy donors and even gifts from law firms and their foundations to fund his research.
But Weitz & Luxenberg, a major personal injury law firm that represents victims of mesothelioma, had not been a donor to Dr. Taub’s research, and he testified on Wednesday that he wanted to change that. A Charleston asbestos litigation attorney is reviewing the details of this case.
In 2003, the doctor reached out to Mr. Silver, who was on the law firm’s payroll, and asked the Assembly speaker to persuade the firm to make a contribution. Mr. Silver said that the firm could not do that, but not long afterward, Mr. Silver asked Dr. Taub if he could refer mesothelioma patients to Weitz & Luxenberg.
Dr. Taub testified that he agreed, and started sending potentially lucrative cases to Mr. Silver, which he said numbered at least two dozen over the years.
“I hoped to develop a relationship with him that would help fund mesothelioma research and would help my patients as well,” he told the jury.
In January 2005, after a ceremony at the Capitol to honor Mr. Silver, the two men met and discussed briefly Dr. Taub’s request for state funds to support his research. Mr. Silver eventually arranged for New York State to give Dr. Taub’s clinic two grants of $250,000 each in the years that followed.
Weitz & Luxenberg, in turn, typically gave Mr. Silver one-third of what it recovered in the cases, which totaled $3 million. Prosecutors have said that this arrangement was illegal, and that Mr. Silver was using his office for personal gain. A Newark criminal lawyer is following this story closely.
Dr. Taub, 79, is one of the government’s key witnesses in the trial of Mr. Silver, who has pleaded not guilty to fraud, extortion and money laundering charges. The government has alleged that Mr. Silver, 71, abused his position as one of the most powerful men in the state for personal gain, and in the case of Dr. Taub directed $500,000 of taxpayer money to him.
The doctor was a witness of contrasts. He came across as authoritative and passionate about treating mesothelioma, his life’s pursuit. He said he was one of only a few doctors in the world who specialized in treating mesothelioma, and estimated there are 3,000 new cases of the disease each year in the United States. “I’m put on this earth to help these people,” he said. “That’s what I want to do.”
At the same time, he acknowledged, he initially lied to federal investigators when they knocked on his door one day at 6 a.m. in the summer of 2014 and confronted him about his referrals to Mr. Silver.
“I was terrified and panicked, and I irrationally wanted to divorce myself” from the matter, Dr. Taub testified. Later, he said, he realized he had made a mistake and contacted investigators. Eventually, he said, he divulged everything he knew to the government, which reached a non-prosecution agreement in exchange for his cooperation.
Dr. Taub said he was introduced to Mr. Silver in the 1980s by a close friend, C. Daniel Chill, a lawyer who once served as counsel to a previous Assembly speaker, Stanley Steingut.
The doctor, in agreeing to refer patients to Mr. Silver at Weitz & Luxenberg, said he knew how valuable such cases could be for all involved, including Mr. Silver.
“I knew it would benefit his standing in the firm,” Dr. Taub said, acknowledging that it could also help him financially.
The doctor said that he made referrals to Mr. Silver for about a decade. He said he was unaware of Mr. Silver’s financial arrangements with Weitz & Luxenberg, but said Mr. Silver made it clear he was “pleased” at the referrals.
At some point, Dr. Taub was made aware he should send Mr. Silver a letter seeking state funding for his research program. Mr. Chill helped him draft the letter to the speaker, Dr. Taub testified.
After he sent that letter, the doctor said, the first state grant arrived.
Dr. Taub testified that Mr. Silver said at one point that he should not tell Mr. Chill about “any further referrals” made to the speaker.
“I didn’t know what to make of it actually,” Dr. Taub said. “He just wanted it kept between me and Mr. Silver, between me and him.”
Mr. Chill declined to comment.
In 2010, Dr. Taub began referring clients to another law firm that had agreed to provide significant financial backing for his research. Not long after, Mr. Silver visited Dr. Taub at his office at Columbia, and mentioned he was getting fewer referrals.
Dr. Taub said the two men parted on friendly terms and he kept sending referrals to Mr. Silver. “Just not as many,” the doctor told the jury.
During cross-examination on Wednesday, Mr. Silver’s lawyer, Steven F. Molo, asked Dr. Taub if he had “an explicit agreement to exchange patients for grants.”
“I did not,” he said.
Mr. Silver helped Dr. Taub in other ways. The doctor testified Mr. Silver arranged for him to be honored by New York State, helped get his son a job, and even offered to help him navigate red tape in organizing a mesothelioma run near the World Trade Center site, in Mr. Silver’s district.
“It will probably cost us,” Dr. Taub wrote in an email to another person involved in the run’s organization. “He is very good at getting people to owe him. But if he says he will deliver, he does.”
SUBURBAN COUPLE ORDERED TO PAY $6.4M FOR PAYDAY LOAN DEBT COLLECTION SCHEME
Original Story: chicagotribune.com
A Federal Trade Commission crackdown on the debt collection industry has resulted in a $6.4 million settlement for victims of a suburban Chicago couple who ran a phantom payday loan debt collection scheme, authorities said Wednesday. A Louisville debtor and creditor lawyer represents clients in collection matters.
Charles and Chantelle Dickey of Oswego were ordered to pay the amount by a Chicago federal judge Tuesday, and banned from operating a debt collection agency.
It is unclear from court documents whether the defendants' assets, which were frozen during the investigation, will be sufficient to pay the judgment. They could not be reached for comment.
The FTC and the Illinois attorney general's office charged the couple in April with threatening and intimidating consumers over payday or other short-term loans that were not owed. Many consumers paid the couple's now-defunct Aurora-based collection company, KIP, simply because they wanted to end the harassment, according to authorities. A Las Vegas contract lawyer is following this story closely.
"You have scam operations that are collecting fake debts that consumers do not owe, and they do it through threatening and harassing individuals into eventually paying money that they don't owe," Illinois Attorney General Lisa Madigan said.
Operating under multiple business names including Payday Loan Recovery Group and Second Chance Financial, the defendants targeted consumers over loans they claimed were delinquent, threatening to garnish wages, suspend or revoke their driver's licenses, have them arrested or sue those who did not pay, according to the complaint.
Some of the victims had taken out short-term loans from payday lenders, but the loans were not delinquent, nor did the defendants have the right to collect on the loans, the complaint said. Many of the victims were outside Illinois, a spokeswoman for the Illinois attorney general's office said. An Aiken debtor and creditor lawyer is reviewing the details of this case.
The judgment includes proceeds from the sale of a car and the turnover of any assets held by third parties, including financial institutions.
Former employees believe the Dickeys may hold KIP assets in Puerto Rico, Jamaica and the Bahamas, according to a court-appointed receiver in the case.
The couple's Oswego home is in foreclosure, authorities said.
The nationwide initiative, Operation Collection Protection, includes 30 new actions by federal, state and local law enforcement agencies against collectors who use tactics like harassing phone calls and false threats of litigation, arrest and wage garnishment.
FTC Chairwoman Edith Ramirez said abusive debt collection has risen along with consumer debt, with nearly 30 million consumers having at least one account in collection. She said while the vast majority of debt collection contacts are legal, many are not.
"We receive more complaints about this industry than any other," Ramirez said. Last year consumers filed over 280,000 complaints with federal authorities related to debt collection, she said.
This year, the FTC has filed 11 cases against more than 50 defendants, secured more than $88 million in judgments and banned 24 defendants from the industry, Ramirez said.
A Federal Trade Commission crackdown on the debt collection industry has resulted in a $6.4 million settlement for victims of a suburban Chicago couple who ran a phantom payday loan debt collection scheme, authorities said Wednesday. A Louisville debtor and creditor lawyer represents clients in collection matters.
Charles and Chantelle Dickey of Oswego were ordered to pay the amount by a Chicago federal judge Tuesday, and banned from operating a debt collection agency.
It is unclear from court documents whether the defendants' assets, which were frozen during the investigation, will be sufficient to pay the judgment. They could not be reached for comment.
The FTC and the Illinois attorney general's office charged the couple in April with threatening and intimidating consumers over payday or other short-term loans that were not owed. Many consumers paid the couple's now-defunct Aurora-based collection company, KIP, simply because they wanted to end the harassment, according to authorities. A Las Vegas contract lawyer is following this story closely.
"You have scam operations that are collecting fake debts that consumers do not owe, and they do it through threatening and harassing individuals into eventually paying money that they don't owe," Illinois Attorney General Lisa Madigan said.
Operating under multiple business names including Payday Loan Recovery Group and Second Chance Financial, the defendants targeted consumers over loans they claimed were delinquent, threatening to garnish wages, suspend or revoke their driver's licenses, have them arrested or sue those who did not pay, according to the complaint.
Some of the victims had taken out short-term loans from payday lenders, but the loans were not delinquent, nor did the defendants have the right to collect on the loans, the complaint said. Many of the victims were outside Illinois, a spokeswoman for the Illinois attorney general's office said. An Aiken debtor and creditor lawyer is reviewing the details of this case.
The judgment includes proceeds from the sale of a car and the turnover of any assets held by third parties, including financial institutions.
Former employees believe the Dickeys may hold KIP assets in Puerto Rico, Jamaica and the Bahamas, according to a court-appointed receiver in the case.
The couple's Oswego home is in foreclosure, authorities said.
The nationwide initiative, Operation Collection Protection, includes 30 new actions by federal, state and local law enforcement agencies against collectors who use tactics like harassing phone calls and false threats of litigation, arrest and wage garnishment.
FTC Chairwoman Edith Ramirez said abusive debt collection has risen along with consumer debt, with nearly 30 million consumers having at least one account in collection. She said while the vast majority of debt collection contacts are legal, many are not.
"We receive more complaints about this industry than any other," Ramirez said. Last year consumers filed over 280,000 complaints with federal authorities related to debt collection, she said.
This year, the FTC has filed 11 cases against more than 50 defendants, secured more than $88 million in judgments and banned 24 defendants from the industry, Ramirez said.
IN RELIGIOUS ARBITRATION, SCRIPTURE IS THE RULE OF LAW
Original Story: nytimes.com
A few months before he took a toxic mix of drugs and died on a stranger’s couch, Nicklaus Ellison wrote a letter to his little sister.
He asked for Jolly Ranchers, Starburst and Silly Bandz bracelets, some of the treats permitted at the substance abuse program he attended in Florida. Then, almost as an aside, Mr. Ellison wrote about how the Christian-run program that was supposed to cure his drug and alcohol problem had instead “de-gayed” him. A Columbia religious institutions lawyer have experience representing clients in cases involving religious institutions.
“God makes all things new,” Mr. Ellison wrote in bright green ink. “The weirdest thing is how do I come out as straight after all this time?”
To his family and friends, Mr. Ellison’s professed identity change was just one of many clues that something had gone wrong at the program, Teen Challenge, where he had been sent by a judge as an alternative to jail.
But when his family sued Teen Challenge in 2012 hoping to uncover what had happened, they quickly hit a wall. When he was admitted to the program, at age 20, Mr. Ellison signed a contract that prevented him and his family from taking the Christian group to court.
Instead, his claim had to be resolved through a mediation or arbitration process that would be bound not by state or federal law, but by the Bible. “The Holy Scripture shall be the supreme authority,” the rules of the proceedings state. A Miami alternative dispute resolution lawyer is experienced in resolving disputes through mediation and arbitration.
For generations, religious tribunals have been used in the United States to settle family disputes and spiritual debates. But through arbitration, religion is being used to sort out secular problems like claims of financial fraud and wrongful death.
Customers who buy bamboo floors from Higuera Hardwoods in Washington State must take any dispute before a Christian arbitrator, according to the company’s website. Carolina Cabin Rentals, which rents high-end vacation properties in the Blue Ridge Mountains of North Carolina, tells its customers that disputes may be resolved according to biblical principles. The same goes for contestants in a fishing tournament in Hawaii.
Religious arbitration clauses, including the one used by Teen Challenge, have often proved impervious to legal challenges. A Fresno mediation attorney is reviewing the details of this case.
Scientology forbids its followers from associating with former members who have been declared “suppressive persons,” according to people who have left the church. But this year, a federal judge in Florida upheld a religious arbitration clause requiring Luis Garcia, a declared suppressive, to take his claim that the church had defrauded him of tens of thousands of dollars before a panel of Scientologists, instead of going to court.
Pamela Prescott battled for years to prove that she had been unjustly fired from a private school in Louisiana. The crux of her case — which wound through arbitration, a federal appeals court and state court — was references in her employment contract to verses from the Bible.
In legal circles, those cases, along with the Ellison suit, are considered seminal examples of how judges have consistently upheld religious arbitrations over secular objections. They also reflect a battle in the United States over religious freedom, a series of skirmishes that include a Kentucky clerk’s refusal to issue marriage licenses to same-sex couples and a Muslim woman’s being passed over for a job at Abercrombie & Fitch because she wore a head scarf.
More than anything, the cases show the power of arbitration clauses. An investigation by The New York Times found that companies have used the clauses to create an alternate system of justice. Americans are being forced out of court and into arbitration for everything from botched home renovations to medical malpractice.
By adding a religious component, companies are taking the privatization of justice a step further. Proponents of religious arbitration said the process allowed people of faith to work out problems using shared values, achieving not just a settlement but often reconciliation. A Denver alternative dispute resolution attorney is following this story closely.
Yet some lawyers and plaintiffs said that for some groups, religious arbitration may have less to do with honoring a set of beliefs than with controlling legal outcomes. Some religious organizations stand by the process until they lose, at which point they turn to the secular courts to overturn faith-based judgments, according to interviews and court records.
“Religious arbitration, at its best, ensures that people can resolve their disputes in accordance with deeply held religious beliefs,” said Michael A. Helfand, an associate professor at Pepperdine University School of Law and an arbitrator in a rabbinical court in New York. “But both religious communities and courts need to make sure that the protections the law has put in place to make it a fair and unbiased process are actually implemented.”
Few courts have intervened, saying the terms of arbitration are detailed in binding contracts signed by both parties. Some judges are also reluctant to risk infringing the First Amendment rights of religious groups, according to a review of court decisions and interviews with lawyers.
Some plaintiffs counter that it is their First Amendment rights being infringed because they must unwillingly participate in what amounts to religious activity.
“I am being forced to go before a court run by a religion I no longer believe in,” said Mr. Garcia, the former Scientologist. “How could that happen?”
Lest Ye Be Judged
Religion has long been at the center of Pamela Spivey’s life. She taught Sunday school, went to Bible-study camps and watched preachers on television.
So when her friends at the Park West Church in Knoxville, Tenn., suggested that she send her son Nick to Teen Challenge, she didn’t ask many questions. “When you think Christian, you automatically think good,” said Ms. Spivey, who goes by the name Cheri.
It certainly seemed better than the alternative. After breaking his probation sentence for drunken driving and crashing into four parked cars, Mr. Ellison faced a year in jail. A Westchester County drunk driving lawyer aggressively defends DWI cases.
As an alternative, the prosecutor in the case agreed to Mr. Ellison’s enrolling in Teen Challenge, a program that teaches participants to overcome addiction by studying the Bible and becoming more “Christ-like.”
Teen Challenge was highlighted by President George W. Bush as a successful faith-based program that deserved federal funding. “Government can pass law and it can hand out money,” Mr. Bush said in a 2006 speech. “But it cannot love.”
Like his mother, Mr. Ellison was a committed Christian, but he was never comfortable in church, his family said. He loved to write songs and poems. He had long bangs and was rarely without his Pokémon hat. But when he drank, they said, he could become violent and out of control.
Mr. Ellison was also openly gay — something his friends said was not easy in Knoxville public high school, where teachers were allowed to question evolution. “I was scared for him to be so open about it,” said his friend Emily Kinser. “But I was also so proud of him.” An Atlanta education lawyer provide assistance with board governance, bylaws, and business-related issues.
Friends and family said Mr. Ellison drank and took drugs to escape the pressures of not fitting in. “Society is telling him he’s not right,” said Ms. Kinser. “He felt unwanted.”
The night before he left for Teen Challenge in January 2011, Mr. Ellison was upbeat as he ate pizza with friends and family at his favorite restaurant in Knoxville.
His yearlong program in Pensacola, Fla., consisted of doing manual labor for many hours a day. Local landscaping companies, carwashes and a fish market employed the men, former participants and their families said. Teen Challenge said money from the “work assignments” helped cover some expenses and the men were not entitled to compensation, according to a participant consent form.
“This wasn’t treatment, this was free labor,” said Angie Helms, whose son Tyler attended Teen Challenge with Mr. Ellison.
Teen Challenge explained that working was a way for the men in the program to overcome their addiction. Work is “one of the central purposes for human existence,” according to the consent forms.
Zack Sharp worked in the front office at Teen Challenge when Mr. Ellison attended. He also handed out over-the-counter medication and herbal remedies to the other men in the program. Mr. Sharp, who was 24 and had abused every substance “I could get my hands on,” said he broke down and ingested some of the herbal pain medicine one day. He said he had a seizure, fell and dislocated his shoulder.
Mr. Sharp said he connected with Mr. Ellison partly because they were both gay. Coming from a conservative family in West Virginia, Mr. Sharp said he was accustomed to people trying to “heal” him — through prayer, even exorcisms. At Teen Challenge, Mr. Sharp said, he knew how to play along with attempts to make him straight. But Mr. Ellison seemed more sensitive to the pressures, he said.
In a written report in March 2011, a counselor at Teen Challenge noted that Mr. Ellison had acknowledged having “homosexual relationships” and that he would bring this up in future sessions with Mr. Ellison to “see where he stands.”
About two weeks later, the counselor wrote that Mr. Ellison was making progress: “He admits that it’s wrong and had agreed to ask the Lord to help him with this issue on a daily basis.”
Officials at Teen Challenge, reached by phone and email, declined to comment.
There were other, subtler pressures. Mr. Ellison told his family that someone had taunted him by leaving pantyhose on his bed. He got in trouble for things like not turning off the air-conditioning before going to church and for entering another student’s bedroom, his disciplinary records show. For one infraction, he had to copy a passage from the Bible 200 times.
“It’s ironic,” Mr. Ellison wrote to his family. “The model Christians here are the ones I have the most trouble with. I want Matthew 7 tattooed onto my forehead.” He was referring to the biblical passage, “Judge not, lest ye be judged.”
Mr. Ellison was months into the program when he was sent home for disciplinary reasons, according to court papers.
Mr. Sharp, who credits Teen Challenge with helping him kick his addiction, said the program was unfair to those who broke the rules. He recalled at one point watching Mr. Ellison pack his bag and walk out the front gate of the facility. No one was permitted to talk to him as he left.
Ms. Spivey bought him a bus ticket home. Back in Knoxville, Mr. Ellison turned himself in to the authorities, because leaving Teen Challenge was a violation of his court order.
A prosecutor permitted Mr. Ellison to return to the Pensacola program, but he soon got into trouble again. Teen Challenge agreed to move him to another facility in Jacksonville.
About a month later, Ms. Spivey got a call while she was out walking her dog. A manager at Teen Challenge said Mr. Ellison was intoxicated and was being taken to the hospital.
Ms. Spivey said she asked to speak with her son, but was told he did not want to talk to her.
When Ms. Spivey called the hospital, she was told that Mr. Ellison had never been “seen or admitted” there, according to the lawsuit she filed against Teen Challenge.
Mr. Ellison did not have a cellphone and he did not know anyone in Jacksonville, his family said.
“Please pray for my son,” Ms. Spivey posted on Facebook that evening. “He is in Jacksonville, Florida, and he is missing.”
Somehow, Mr. Ellison ended up at a CVS in downtown Jacksonville, where he met a woman who drove him to her apartment. The two stayed up that night drinking, according to a sheriff’s report.
At about 4 p.m., the woman told investigators, she checked on Mr. Ellison, who was sleeping on her couch. He had stopped snoring and his skin was cold. An autopsy revealed cough medicine and methadone in his system.
Ms. Spivey was outside pacing when a Knoxville police cruiser pulled up to her home before dawn on Aug. 21, 2011. She knew right away that her son was dead.
With her children Cameron and Katie, Ms. Spivey made the eight-hour drive to Jacksonville.
“I just wanted to know the truth,” she said.
The Peacemaker Method
When word got out that some of the early Christians had strayed, the Apostle Paul was concerned. Among their grave offenses: incest, prostitution and suing one another in court.
Christians should not take their problems before “unbelievers,” Paul wrote in his letter to the Corinthians. Disputes should be resolved inside the church.
Centuries later, Paul’s writings inspired a group of lawyers in Los Angeles to develop the practice of Christian conciliation. The group’s work ultimately gave rise to Peacemaker Ministries, a nonprofit that devised a legal process that draws on the Bible. A Boston nonprofit lawyer is following this story closely.
The peacemaker method is used by private schools, Christian lawyers and others. Clauses requiring Americans to use Christian arbitration instead of civil court now appear in thousands of agreements like the one Mr. Ellison signed with Teen Challenge.
“Our secular court system is darn good,” said Bryce Thomas, a Christian conciliator in Hickory, N.C. “But it doesn’t get into deep moral issues like sin and reconciliation.”
A tall and outgoing lawyer, Mr. Thomas said he was called to leave his private practice and take up Christian conciliation full time. He works out of an office on the bottom floor of his house, where there is a crucifix on the wall near a bust of Abraham Lincoln. To clear his head, he likes to stroll around a “peace path,” a garden of rhododendrons and towering trees behind his house.
“The Lord spoke to me when I was 59 and said, ‘I want you to give up your law practice and do peacemaking,’” said Mr. Thomas. “I said, ‘Lord, how about when I am 65?’ And he said, ‘No, Bryce, I need you now.’”
That was in 2006, he said, not long after a federal appeals court upheld one of his rulings, establishing an important precedent for how Christian arbitration can trump secular objections.
The dispute involved Northlake Christian School in Covington, La., and Pamela Prescott, a teacher and principal for about 12 years who said she was fired with little explanation. She blamed her termination on a new school administrator, who she said had undermined her at every turn.
He also made her feel uncomfortable, she said. At one staff meeting, the administrator surprised Ms. Prescott by washing her feet, an apparent reference to Jesus’ washing his disciples’ feet.
“It was creepy,” Ms. Prescott recalled. “I may be a Christian. But I am also a normal person.”
The oldest of five girls, Ms. Prescott was raised in New Orleans. Her father is a lawyer, but Ms. Prescott came to believe that suing another Christian was wrong.
Still, her firing had damaged her reputation, she said. The school gave her a few days to leave campus and never fully explained the reason for her termination to students and parents. No other Christian schools would hire her. “It was like I had stolen something,” she said.
Ms. Prescott said she had tried to engage the school to resolve the dispute informally, but it didn’t work. Feeling she had no other choice, Ms. Prescott filed a federal lawsuit, claiming sexual harassment and discrimination by the school.
When word of her lawsuit got out, parents from the school and former colleagues avoided her at church and at the local Walmart, she said. Her pastor suggested she stop teaching Sunday school.
The school moved to compel Christian mediation and then arbitration, which was eventually held in a rented room at city hall in Mandeville, La. Mr. Thomas oversaw the proceedings, which resembled a civil trial with some exceptions. The arbitration began most days with a prayer. And when a teacher cried on the witness stand, Mr. Thomas allowed the woman and Ms. Prescott to hug.
The school argued that a survey of parents revealed unhappiness with Ms. Prescott’s leadership. But only a small number of families had filled out the survey, and Ms. Prescott never saw the results.
Mr. Thomas dismissed Ms. Prescott’s claims of harassment and gender discrimination. But he found that the school board had violated its own contract when it failed to provide Ms. Prescott with any feedback before firing her. The contract required the school to follow Matthew 18:15, which implores Christians to confront each other before raising their problems with anyone else.
“If your brother sins against you,” the verse states, “go and tell him his fault between you and him alone.”
Mr. Thomas awarded Ms. Prescott about $157,000 for lost income and damage to her reputation.
“This woman had no idea her job was in jeopardy,” Mr. Thomas said in an interview. “They treated her badly.”
In his ruling, he urged the two sides to reconcile in a way “that glorifies God.” But Northlake was not ready to move on.
The school had required Ms. Prescott to agree to Christian arbitration as a condition of her hiring. But when Northlake lost, it appealed the arbitration award in federal court, arguing that Mr. Thomas’s ruling was inconsistent with Louisiana law.
The case dragged on for four more years. An appeals court in New Orleans ruled that it had no ground to overturn the Christian arbitrator. Northlake appealed the case all the way to the Supreme Court, which declined to hear it.
The current headmaster of Northlake said he could not comment on the case because it involved a previous administration. He added that the school still used Christian arbitration.
In the end, Ms. Prescott said she felt vindicated, despite having spent all but $8,000 of her settlement on legal costs.
“My faith is still strong,” she said. “But I am more careful in dealing with Christians than I used to be. They are just people with no more ability to be good than anyone else.”
The Price of Enlightenment
By the time he left Scientology, Luis Garcia had signed off on two dozen arbitration clauses in agreements with the church, requiring him to settle any dispute before a panel of fellow Scientologists.
In just about every aspect of church life, including training and making donations, members must settle any issue internally rather than going to court.
Yet, there has never been an actual arbitration in the six-decade history of Scientology, according to court records and a lawyer for the church.
Mr. Garcia’s may be the first.
An entrepreneur and a native of Madrid, Mr. Garcia said Scientology gave him the confidence to open a successful print shop and yogurt store in Orange County, Calif.
Mr. Garcia and his wife, Maria, dedicated years to Scientology, taking dozens of classes to try to reach enlightenment. He estimates that his family spent $2.3 million on courses, fees and donations.
In 2008, Mr. Garcia reached the highest level in Scientology, where he said all of one’s past lives are supposed to be easily recalled. “But that didn’t happen,” he said. “That’s when I began to question everything.”
Mr. Garcia said he sent an email criticizing the church management to hundreds of Scientologists in November 2010. The church declared the Garcias “suppressives” and excommunicated them, according to a legal brief submitted by his lawyers.
Mr. Garcia said he wanted back the roughly $68,000 he had paid the church for training courses he never took and other expenses, according to his lawsuit. He also demanded that the church return $340,000 he said his family had given for the construction of a “Super Power” building in Clearwater, Fla.
Neither a spokeswoman from Scientology nor a church lawyer commented on the allegations in Mr. Garcia’s lawsuit.
Mr. Garcia said he repeatedly felt pressured to give money to keep officials from blocking his path toward enlightenment or writing him up for an ethics violation.
One night in Clearwater, a church official asked Mr. Garcia for $65,000 to pay for a large cross that would sit atop the Super Power headquarters, according to the lawsuit. “She said it would be the Garcias’ cross,” Mr. Garcia recalled in an interview.
Another former Scientologist, Bert Schippers of Seattle, said he was told the cross would be dedicated in his honor after he agreed to make a donation.
Scientology moved to force Mr. Garcia’s case into arbitration. The process seemed like a farce, he said. An arbitration run by a panel of Scientologists, his lawyers argued, could not possibly be impartial. As a declared suppressive, Mr. Garcia was considered a pariah. Church members who interacted with him risked being harassed, according to court papers filed by his lawyers.
“The hostility of any Scientologists on that panel is not speculation,” his lawyers argued. “It is church doctrine.”
A church official testified that the panel would be instructed to act fairly. In a statement, a lawyer for the church said that even though Scientology had never conducted an arbitration, the church had a set of procedures it used to resolve disputes with members.
In his decision, Judge James D. Whittemore of Federal District Court in Tampa said the Garcias were bound by the terms of the contract they had signed with the church. While acknowledging that Mr. Garcia may have a “compelling” argument about the potential bias of the process, Judge Whittemore said the First Amendment prevented him from even considering the issue.
“It necessarily would require an analysis and interpretation of Scientology doctrine,” wrote Judge Whittemore, who was appointed by President Bill Clinton. “That would constitute a prohibited intrusion into religious doctrine, discipline, faith and ecclesiastical rule, custom or law by the court.”
Mr. Garcia said he was still deciding whether to go through with arbitration.
Judge Whittemore’s ruling has also been a blow to the network of former Scientologists who have spoken out against the church.
“I do not understand why the courts are going along with it,” Mr. Schippers said.
Mr. Garcia’s lawyer, Theodore Babbitt, said the ruling might have scuttled many future lawsuits against the church. “Arbitration,” Mr. Babbitt said, “is inoculating the Church of Scientology from liability.”
The Elusive Truth
In Jacksonville, Ms. Spivey’s family tried piecing together her son’s final hours, picking up clues wherever they could.
At Teen Challenge, they pressed the staff for the name of the employee who supposedly took Mr. Ellison to the hospital. The treatment facility declined to identify him, the family said.
The local CVS where Mr. Ellison was seen hours before his death allowed the family to review video from its security cameras, which showed Mr. Ellison walking out of the store with a bottle of soda around 1 a.m.
The woman who picked him up near the CVS said he wanted to call home, but her cellphone was out of minutes.
Most of the family’s questions remained unanswered. They still did not know whether the pressure Mr. Ellison felt at Teen Challenge about being gay exacerbated his drug abuse. Or how he ended up on his own in a strange city with no money or cellphone.
Ms. Spivey said she was convinced that only a lawsuit could force Teen Challenge to explain what had happened. But the contract that Mr. Ellison signed when he enrolled in the program stated that any dispute had to go to Christian conciliation.
His family said they thought it was hypocritical that Teen Challenge was willing to collect food stamp subsidies to feed participants in the program, but insisted on the separation of church and state when it came to their legal case.
The conciliation would start as a mediation. If mediation fell apart, the case would move to formal arbitration, a process that could include prayer.
Ms. Spivey said even though her faith had deepened since her son’s death, she did not want to take part in an arbitration involving religion. “I didn’t want to do worksheets on the Bible and then kiss and make up,” she said. “I wanted to find out what happened to Nick.”
In an appeal filed in Florida state court, Ms. Spivey’s lawyer, Bryan S. Gowdy, focused on the First Amendment’s protection of religious freedom — including the right not to exercise it.
Mr. Gowdy quoted James Madison, who wrote that the “religion then of every man must be left to the conviction and conscience of every man.”
But the judges in the First District Court of Appeals were satisfied that there was no constitutional conflict.
The appeals court found that the rules of Christian conciliation were not that different from those governing secular arbitration and included only a “scattering of religious elements,” which served to “solemnize the process and to promote and advance conciliation as a spiritual goal.”
If she still had a problem, the court ruled, Ms. Spivey could let someone else represent Mr. Ellison’s estate.
Ms. Spivey decided to go ahead with the mediation, though she said she worried how Christian panelists would view her son because of his homosexuality and drug addiction.
Peacemaker Ministries, which would run the process, said the mediation would incorporate prayer and scripture, according to a motion Ms. Spivey’s attorney filed in Florida circuit court. Lawyers for both sides were also told that if they attended, they could not advocate on their clients’ behalf. Ms. Spivey had to pay a $5,000 retainer and a $750 fee to Peacemaker Ministries, her lawyer said in court papers.
Dale Pyne, chief executive of Peacemaker Ministries, said he understood Ms. Spivey’s reluctance about conciliation since it was her son who had signed the arbitration agreement, not her. But he said the process helped “those in conflict to reconcile their issues and their relationships.” He added that “most of that is highly unlikely in a court process.”
Last year, Ms. Spivey decided to settle with Teen Challenge. She said she felt she was neglecting her other two children by obsessing over the case, which had gone on for more than two years. She declined to disclose the settlement amount.
Ms. Spivey said that without a court trial, she was never able to learn what happened to her son, not just on the night he died, but during his stay at Teen Challenge.
His family still does not know why he wrote the letter saying he was no longer gay, or whether he meant it. “I don’t actually believe it,” his sister Katie said.
Mr. Ellison did not mail the letter. His family found it in his duffel bag at the apartment where he died. It was mixed in with clothes, family pictures and his Bible.
A few months before he took a toxic mix of drugs and died on a stranger’s couch, Nicklaus Ellison wrote a letter to his little sister.
He asked for Jolly Ranchers, Starburst and Silly Bandz bracelets, some of the treats permitted at the substance abuse program he attended in Florida. Then, almost as an aside, Mr. Ellison wrote about how the Christian-run program that was supposed to cure his drug and alcohol problem had instead “de-gayed” him. A Columbia religious institutions lawyer have experience representing clients in cases involving religious institutions.
“God makes all things new,” Mr. Ellison wrote in bright green ink. “The weirdest thing is how do I come out as straight after all this time?”
To his family and friends, Mr. Ellison’s professed identity change was just one of many clues that something had gone wrong at the program, Teen Challenge, where he had been sent by a judge as an alternative to jail.
But when his family sued Teen Challenge in 2012 hoping to uncover what had happened, they quickly hit a wall. When he was admitted to the program, at age 20, Mr. Ellison signed a contract that prevented him and his family from taking the Christian group to court.
Instead, his claim had to be resolved through a mediation or arbitration process that would be bound not by state or federal law, but by the Bible. “The Holy Scripture shall be the supreme authority,” the rules of the proceedings state. A Miami alternative dispute resolution lawyer is experienced in resolving disputes through mediation and arbitration.
For generations, religious tribunals have been used in the United States to settle family disputes and spiritual debates. But through arbitration, religion is being used to sort out secular problems like claims of financial fraud and wrongful death.
Customers who buy bamboo floors from Higuera Hardwoods in Washington State must take any dispute before a Christian arbitrator, according to the company’s website. Carolina Cabin Rentals, which rents high-end vacation properties in the Blue Ridge Mountains of North Carolina, tells its customers that disputes may be resolved according to biblical principles. The same goes for contestants in a fishing tournament in Hawaii.
Religious arbitration clauses, including the one used by Teen Challenge, have often proved impervious to legal challenges. A Fresno mediation attorney is reviewing the details of this case.
Scientology forbids its followers from associating with former members who have been declared “suppressive persons,” according to people who have left the church. But this year, a federal judge in Florida upheld a religious arbitration clause requiring Luis Garcia, a declared suppressive, to take his claim that the church had defrauded him of tens of thousands of dollars before a panel of Scientologists, instead of going to court.
Pamela Prescott battled for years to prove that she had been unjustly fired from a private school in Louisiana. The crux of her case — which wound through arbitration, a federal appeals court and state court — was references in her employment contract to verses from the Bible.
In legal circles, those cases, along with the Ellison suit, are considered seminal examples of how judges have consistently upheld religious arbitrations over secular objections. They also reflect a battle in the United States over religious freedom, a series of skirmishes that include a Kentucky clerk’s refusal to issue marriage licenses to same-sex couples and a Muslim woman’s being passed over for a job at Abercrombie & Fitch because she wore a head scarf.
More than anything, the cases show the power of arbitration clauses. An investigation by The New York Times found that companies have used the clauses to create an alternate system of justice. Americans are being forced out of court and into arbitration for everything from botched home renovations to medical malpractice.
By adding a religious component, companies are taking the privatization of justice a step further. Proponents of religious arbitration said the process allowed people of faith to work out problems using shared values, achieving not just a settlement but often reconciliation. A Denver alternative dispute resolution attorney is following this story closely.
Yet some lawyers and plaintiffs said that for some groups, religious arbitration may have less to do with honoring a set of beliefs than with controlling legal outcomes. Some religious organizations stand by the process until they lose, at which point they turn to the secular courts to overturn faith-based judgments, according to interviews and court records.
“Religious arbitration, at its best, ensures that people can resolve their disputes in accordance with deeply held religious beliefs,” said Michael A. Helfand, an associate professor at Pepperdine University School of Law and an arbitrator in a rabbinical court in New York. “But both religious communities and courts need to make sure that the protections the law has put in place to make it a fair and unbiased process are actually implemented.”
Few courts have intervened, saying the terms of arbitration are detailed in binding contracts signed by both parties. Some judges are also reluctant to risk infringing the First Amendment rights of religious groups, according to a review of court decisions and interviews with lawyers.
Some plaintiffs counter that it is their First Amendment rights being infringed because they must unwillingly participate in what amounts to religious activity.
“I am being forced to go before a court run by a religion I no longer believe in,” said Mr. Garcia, the former Scientologist. “How could that happen?”
Lest Ye Be Judged
Religion has long been at the center of Pamela Spivey’s life. She taught Sunday school, went to Bible-study camps and watched preachers on television.
So when her friends at the Park West Church in Knoxville, Tenn., suggested that she send her son Nick to Teen Challenge, she didn’t ask many questions. “When you think Christian, you automatically think good,” said Ms. Spivey, who goes by the name Cheri.
It certainly seemed better than the alternative. After breaking his probation sentence for drunken driving and crashing into four parked cars, Mr. Ellison faced a year in jail. A Westchester County drunk driving lawyer aggressively defends DWI cases.
As an alternative, the prosecutor in the case agreed to Mr. Ellison’s enrolling in Teen Challenge, a program that teaches participants to overcome addiction by studying the Bible and becoming more “Christ-like.”
Teen Challenge was highlighted by President George W. Bush as a successful faith-based program that deserved federal funding. “Government can pass law and it can hand out money,” Mr. Bush said in a 2006 speech. “But it cannot love.”
Like his mother, Mr. Ellison was a committed Christian, but he was never comfortable in church, his family said. He loved to write songs and poems. He had long bangs and was rarely without his Pokémon hat. But when he drank, they said, he could become violent and out of control.
Mr. Ellison was also openly gay — something his friends said was not easy in Knoxville public high school, where teachers were allowed to question evolution. “I was scared for him to be so open about it,” said his friend Emily Kinser. “But I was also so proud of him.” An Atlanta education lawyer provide assistance with board governance, bylaws, and business-related issues.
Friends and family said Mr. Ellison drank and took drugs to escape the pressures of not fitting in. “Society is telling him he’s not right,” said Ms. Kinser. “He felt unwanted.”
The night before he left for Teen Challenge in January 2011, Mr. Ellison was upbeat as he ate pizza with friends and family at his favorite restaurant in Knoxville.
His yearlong program in Pensacola, Fla., consisted of doing manual labor for many hours a day. Local landscaping companies, carwashes and a fish market employed the men, former participants and their families said. Teen Challenge said money from the “work assignments” helped cover some expenses and the men were not entitled to compensation, according to a participant consent form.
“This wasn’t treatment, this was free labor,” said Angie Helms, whose son Tyler attended Teen Challenge with Mr. Ellison.
Teen Challenge explained that working was a way for the men in the program to overcome their addiction. Work is “one of the central purposes for human existence,” according to the consent forms.
Zack Sharp worked in the front office at Teen Challenge when Mr. Ellison attended. He also handed out over-the-counter medication and herbal remedies to the other men in the program. Mr. Sharp, who was 24 and had abused every substance “I could get my hands on,” said he broke down and ingested some of the herbal pain medicine one day. He said he had a seizure, fell and dislocated his shoulder.
Mr. Sharp said he connected with Mr. Ellison partly because they were both gay. Coming from a conservative family in West Virginia, Mr. Sharp said he was accustomed to people trying to “heal” him — through prayer, even exorcisms. At Teen Challenge, Mr. Sharp said, he knew how to play along with attempts to make him straight. But Mr. Ellison seemed more sensitive to the pressures, he said.
In a written report in March 2011, a counselor at Teen Challenge noted that Mr. Ellison had acknowledged having “homosexual relationships” and that he would bring this up in future sessions with Mr. Ellison to “see where he stands.”
About two weeks later, the counselor wrote that Mr. Ellison was making progress: “He admits that it’s wrong and had agreed to ask the Lord to help him with this issue on a daily basis.”
Officials at Teen Challenge, reached by phone and email, declined to comment.
There were other, subtler pressures. Mr. Ellison told his family that someone had taunted him by leaving pantyhose on his bed. He got in trouble for things like not turning off the air-conditioning before going to church and for entering another student’s bedroom, his disciplinary records show. For one infraction, he had to copy a passage from the Bible 200 times.
“It’s ironic,” Mr. Ellison wrote to his family. “The model Christians here are the ones I have the most trouble with. I want Matthew 7 tattooed onto my forehead.” He was referring to the biblical passage, “Judge not, lest ye be judged.”
Mr. Ellison was months into the program when he was sent home for disciplinary reasons, according to court papers.
Mr. Sharp, who credits Teen Challenge with helping him kick his addiction, said the program was unfair to those who broke the rules. He recalled at one point watching Mr. Ellison pack his bag and walk out the front gate of the facility. No one was permitted to talk to him as he left.
Ms. Spivey bought him a bus ticket home. Back in Knoxville, Mr. Ellison turned himself in to the authorities, because leaving Teen Challenge was a violation of his court order.
A prosecutor permitted Mr. Ellison to return to the Pensacola program, but he soon got into trouble again. Teen Challenge agreed to move him to another facility in Jacksonville.
About a month later, Ms. Spivey got a call while she was out walking her dog. A manager at Teen Challenge said Mr. Ellison was intoxicated and was being taken to the hospital.
Ms. Spivey said she asked to speak with her son, but was told he did not want to talk to her.
When Ms. Spivey called the hospital, she was told that Mr. Ellison had never been “seen or admitted” there, according to the lawsuit she filed against Teen Challenge.
Mr. Ellison did not have a cellphone and he did not know anyone in Jacksonville, his family said.
“Please pray for my son,” Ms. Spivey posted on Facebook that evening. “He is in Jacksonville, Florida, and he is missing.”
Somehow, Mr. Ellison ended up at a CVS in downtown Jacksonville, where he met a woman who drove him to her apartment. The two stayed up that night drinking, according to a sheriff’s report.
At about 4 p.m., the woman told investigators, she checked on Mr. Ellison, who was sleeping on her couch. He had stopped snoring and his skin was cold. An autopsy revealed cough medicine and methadone in his system.
Ms. Spivey was outside pacing when a Knoxville police cruiser pulled up to her home before dawn on Aug. 21, 2011. She knew right away that her son was dead.
With her children Cameron and Katie, Ms. Spivey made the eight-hour drive to Jacksonville.
“I just wanted to know the truth,” she said.
The Peacemaker Method
When word got out that some of the early Christians had strayed, the Apostle Paul was concerned. Among their grave offenses: incest, prostitution and suing one another in court.
Christians should not take their problems before “unbelievers,” Paul wrote in his letter to the Corinthians. Disputes should be resolved inside the church.
Centuries later, Paul’s writings inspired a group of lawyers in Los Angeles to develop the practice of Christian conciliation. The group’s work ultimately gave rise to Peacemaker Ministries, a nonprofit that devised a legal process that draws on the Bible. A Boston nonprofit lawyer is following this story closely.
The peacemaker method is used by private schools, Christian lawyers and others. Clauses requiring Americans to use Christian arbitration instead of civil court now appear in thousands of agreements like the one Mr. Ellison signed with Teen Challenge.
“Our secular court system is darn good,” said Bryce Thomas, a Christian conciliator in Hickory, N.C. “But it doesn’t get into deep moral issues like sin and reconciliation.”
A tall and outgoing lawyer, Mr. Thomas said he was called to leave his private practice and take up Christian conciliation full time. He works out of an office on the bottom floor of his house, where there is a crucifix on the wall near a bust of Abraham Lincoln. To clear his head, he likes to stroll around a “peace path,” a garden of rhododendrons and towering trees behind his house.
“The Lord spoke to me when I was 59 and said, ‘I want you to give up your law practice and do peacemaking,’” said Mr. Thomas. “I said, ‘Lord, how about when I am 65?’ And he said, ‘No, Bryce, I need you now.’”
That was in 2006, he said, not long after a federal appeals court upheld one of his rulings, establishing an important precedent for how Christian arbitration can trump secular objections.
The dispute involved Northlake Christian School in Covington, La., and Pamela Prescott, a teacher and principal for about 12 years who said she was fired with little explanation. She blamed her termination on a new school administrator, who she said had undermined her at every turn.
He also made her feel uncomfortable, she said. At one staff meeting, the administrator surprised Ms. Prescott by washing her feet, an apparent reference to Jesus’ washing his disciples’ feet.
“It was creepy,” Ms. Prescott recalled. “I may be a Christian. But I am also a normal person.”
The oldest of five girls, Ms. Prescott was raised in New Orleans. Her father is a lawyer, but Ms. Prescott came to believe that suing another Christian was wrong.
Still, her firing had damaged her reputation, she said. The school gave her a few days to leave campus and never fully explained the reason for her termination to students and parents. No other Christian schools would hire her. “It was like I had stolen something,” she said.
Ms. Prescott said she had tried to engage the school to resolve the dispute informally, but it didn’t work. Feeling she had no other choice, Ms. Prescott filed a federal lawsuit, claiming sexual harassment and discrimination by the school.
When word of her lawsuit got out, parents from the school and former colleagues avoided her at church and at the local Walmart, she said. Her pastor suggested she stop teaching Sunday school.
The school moved to compel Christian mediation and then arbitration, which was eventually held in a rented room at city hall in Mandeville, La. Mr. Thomas oversaw the proceedings, which resembled a civil trial with some exceptions. The arbitration began most days with a prayer. And when a teacher cried on the witness stand, Mr. Thomas allowed the woman and Ms. Prescott to hug.
The school argued that a survey of parents revealed unhappiness with Ms. Prescott’s leadership. But only a small number of families had filled out the survey, and Ms. Prescott never saw the results.
Mr. Thomas dismissed Ms. Prescott’s claims of harassment and gender discrimination. But he found that the school board had violated its own contract when it failed to provide Ms. Prescott with any feedback before firing her. The contract required the school to follow Matthew 18:15, which implores Christians to confront each other before raising their problems with anyone else.
“If your brother sins against you,” the verse states, “go and tell him his fault between you and him alone.”
Mr. Thomas awarded Ms. Prescott about $157,000 for lost income and damage to her reputation.
“This woman had no idea her job was in jeopardy,” Mr. Thomas said in an interview. “They treated her badly.”
In his ruling, he urged the two sides to reconcile in a way “that glorifies God.” But Northlake was not ready to move on.
The school had required Ms. Prescott to agree to Christian arbitration as a condition of her hiring. But when Northlake lost, it appealed the arbitration award in federal court, arguing that Mr. Thomas’s ruling was inconsistent with Louisiana law.
The case dragged on for four more years. An appeals court in New Orleans ruled that it had no ground to overturn the Christian arbitrator. Northlake appealed the case all the way to the Supreme Court, which declined to hear it.
The current headmaster of Northlake said he could not comment on the case because it involved a previous administration. He added that the school still used Christian arbitration.
In the end, Ms. Prescott said she felt vindicated, despite having spent all but $8,000 of her settlement on legal costs.
“My faith is still strong,” she said. “But I am more careful in dealing with Christians than I used to be. They are just people with no more ability to be good than anyone else.”
The Price of Enlightenment
By the time he left Scientology, Luis Garcia had signed off on two dozen arbitration clauses in agreements with the church, requiring him to settle any dispute before a panel of fellow Scientologists.
In just about every aspect of church life, including training and making donations, members must settle any issue internally rather than going to court.
Yet, there has never been an actual arbitration in the six-decade history of Scientology, according to court records and a lawyer for the church.
Mr. Garcia’s may be the first.
An entrepreneur and a native of Madrid, Mr. Garcia said Scientology gave him the confidence to open a successful print shop and yogurt store in Orange County, Calif.
Mr. Garcia and his wife, Maria, dedicated years to Scientology, taking dozens of classes to try to reach enlightenment. He estimates that his family spent $2.3 million on courses, fees and donations.
In 2008, Mr. Garcia reached the highest level in Scientology, where he said all of one’s past lives are supposed to be easily recalled. “But that didn’t happen,” he said. “That’s when I began to question everything.”
Mr. Garcia said he sent an email criticizing the church management to hundreds of Scientologists in November 2010. The church declared the Garcias “suppressives” and excommunicated them, according to a legal brief submitted by his lawyers.
Mr. Garcia said he wanted back the roughly $68,000 he had paid the church for training courses he never took and other expenses, according to his lawsuit. He also demanded that the church return $340,000 he said his family had given for the construction of a “Super Power” building in Clearwater, Fla.
Neither a spokeswoman from Scientology nor a church lawyer commented on the allegations in Mr. Garcia’s lawsuit.
Mr. Garcia said he repeatedly felt pressured to give money to keep officials from blocking his path toward enlightenment or writing him up for an ethics violation.
One night in Clearwater, a church official asked Mr. Garcia for $65,000 to pay for a large cross that would sit atop the Super Power headquarters, according to the lawsuit. “She said it would be the Garcias’ cross,” Mr. Garcia recalled in an interview.
Another former Scientologist, Bert Schippers of Seattle, said he was told the cross would be dedicated in his honor after he agreed to make a donation.
Scientology moved to force Mr. Garcia’s case into arbitration. The process seemed like a farce, he said. An arbitration run by a panel of Scientologists, his lawyers argued, could not possibly be impartial. As a declared suppressive, Mr. Garcia was considered a pariah. Church members who interacted with him risked being harassed, according to court papers filed by his lawyers.
“The hostility of any Scientologists on that panel is not speculation,” his lawyers argued. “It is church doctrine.”
A church official testified that the panel would be instructed to act fairly. In a statement, a lawyer for the church said that even though Scientology had never conducted an arbitration, the church had a set of procedures it used to resolve disputes with members.
In his decision, Judge James D. Whittemore of Federal District Court in Tampa said the Garcias were bound by the terms of the contract they had signed with the church. While acknowledging that Mr. Garcia may have a “compelling” argument about the potential bias of the process, Judge Whittemore said the First Amendment prevented him from even considering the issue.
“It necessarily would require an analysis and interpretation of Scientology doctrine,” wrote Judge Whittemore, who was appointed by President Bill Clinton. “That would constitute a prohibited intrusion into religious doctrine, discipline, faith and ecclesiastical rule, custom or law by the court.”
Mr. Garcia said he was still deciding whether to go through with arbitration.
Judge Whittemore’s ruling has also been a blow to the network of former Scientologists who have spoken out against the church.
“I do not understand why the courts are going along with it,” Mr. Schippers said.
Mr. Garcia’s lawyer, Theodore Babbitt, said the ruling might have scuttled many future lawsuits against the church. “Arbitration,” Mr. Babbitt said, “is inoculating the Church of Scientology from liability.”
The Elusive Truth
In Jacksonville, Ms. Spivey’s family tried piecing together her son’s final hours, picking up clues wherever they could.
At Teen Challenge, they pressed the staff for the name of the employee who supposedly took Mr. Ellison to the hospital. The treatment facility declined to identify him, the family said.
The local CVS where Mr. Ellison was seen hours before his death allowed the family to review video from its security cameras, which showed Mr. Ellison walking out of the store with a bottle of soda around 1 a.m.
The woman who picked him up near the CVS said he wanted to call home, but her cellphone was out of minutes.
Most of the family’s questions remained unanswered. They still did not know whether the pressure Mr. Ellison felt at Teen Challenge about being gay exacerbated his drug abuse. Or how he ended up on his own in a strange city with no money or cellphone.
Ms. Spivey said she was convinced that only a lawsuit could force Teen Challenge to explain what had happened. But the contract that Mr. Ellison signed when he enrolled in the program stated that any dispute had to go to Christian conciliation.
His family said they thought it was hypocritical that Teen Challenge was willing to collect food stamp subsidies to feed participants in the program, but insisted on the separation of church and state when it came to their legal case.
The conciliation would start as a mediation. If mediation fell apart, the case would move to formal arbitration, a process that could include prayer.
Ms. Spivey said even though her faith had deepened since her son’s death, she did not want to take part in an arbitration involving religion. “I didn’t want to do worksheets on the Bible and then kiss and make up,” she said. “I wanted to find out what happened to Nick.”
In an appeal filed in Florida state court, Ms. Spivey’s lawyer, Bryan S. Gowdy, focused on the First Amendment’s protection of religious freedom — including the right not to exercise it.
Mr. Gowdy quoted James Madison, who wrote that the “religion then of every man must be left to the conviction and conscience of every man.”
But the judges in the First District Court of Appeals were satisfied that there was no constitutional conflict.
The appeals court found that the rules of Christian conciliation were not that different from those governing secular arbitration and included only a “scattering of religious elements,” which served to “solemnize the process and to promote and advance conciliation as a spiritual goal.”
If she still had a problem, the court ruled, Ms. Spivey could let someone else represent Mr. Ellison’s estate.
Ms. Spivey decided to go ahead with the mediation, though she said she worried how Christian panelists would view her son because of his homosexuality and drug addiction.
Peacemaker Ministries, which would run the process, said the mediation would incorporate prayer and scripture, according to a motion Ms. Spivey’s attorney filed in Florida circuit court. Lawyers for both sides were also told that if they attended, they could not advocate on their clients’ behalf. Ms. Spivey had to pay a $5,000 retainer and a $750 fee to Peacemaker Ministries, her lawyer said in court papers.
Dale Pyne, chief executive of Peacemaker Ministries, said he understood Ms. Spivey’s reluctance about conciliation since it was her son who had signed the arbitration agreement, not her. But he said the process helped “those in conflict to reconcile their issues and their relationships.” He added that “most of that is highly unlikely in a court process.”
Last year, Ms. Spivey decided to settle with Teen Challenge. She said she felt she was neglecting her other two children by obsessing over the case, which had gone on for more than two years. She declined to disclose the settlement amount.
Ms. Spivey said that without a court trial, she was never able to learn what happened to her son, not just on the night he died, but during his stay at Teen Challenge.
His family still does not know why he wrote the letter saying he was no longer gay, or whether he meant it. “I don’t actually believe it,” his sister Katie said.
Mr. Ellison did not mail the letter. His family found it in his duffel bag at the apartment where he died. It was mixed in with clothes, family pictures and his Bible.
Tuesday, October 27, 2015
LAWSUIT SAYS MANHATTAN REAL ESTATE WAS USED TO LAUNDER MONEY
Original Story: wsj.com
A banker and a former politician from Kazakhstan tried to launder tens of millions of dollars of stolen money through New York real-estate holdings, a civil lawsuit alleges.
The men allegedly conspired with New York developer Joseph Chetrit to hide at least $40 million by investing in a former Manhattan hotel and the Cabrini Medical Center, according to a complaint filed on Oct. 12 by Kazakhstan’s largest city, Almaty, and one of the nation’s biggest lenders, BTA Bank. A New York commercial real estate lawyer provides professional legal counsel and extensive experience in many aspects of commercial real estate law.
The Kazakh men, ex-BTA chairman Mukhtar Ablyazov and former Almaty mayor Viktor Khrapunov, are separately under investigation for criminal fraud in Kazakhstan, the complaint says. Mr. Ablyazov is alleged to have stolen billions of dollars from BTA and Mr. Khrapunov is alleged to have stolen about $300 million from Almaty, according to the complaint, filed in federal court in Manhattan.
The Kazakh men parked “corrupt assets” in New York City real estate to avoid the scrutiny of escalating international investigations, the complaint alleges. Mr. Chetrit, also a defendant in the lawsuit, was aware of the criminal investigations of the Kazakhs when he agreed to use their money for his projects, according to the complaint. The suit seeks damages of up to $18 billion and was filed by law firm Boies, Schiller & Flexner LLP. A New Orleans commercial real estate lawyer is following this story closely.
Mr. Ablyazov, who is being held by authorities in France, couldn’t be reached for comment. Previously, he has said he is innocent of any criminal wrongdoing and all accusations against him are ungrounded and politically motivated.
Peter Sahlas, an attorney for the Ablyazov family, said the former bank chairman had not been served and was unaware of the New York lawsuit.
The family would consider the suit “just another instance of a corrupt and kleptocratic foreign regime availing itself of the U.S. legal system to carry out its political vendettas,” Mr. Sahlas said in an interview.
A spokesman for Mr. Khrapunov said: “Having obtained nothing after years of proceedings in Switzerland and the United States, Kazakhstan is trying again to use the legal system of a Western country to harass and destroy political opponents.” A Las Vegas commercial real estate lawyer represents clients in commercial real estate defense claims.
Mr. Chetrit and his lawyer didn’t respond to requests for comment.
The suit represents a rare specific legal allegation of money laundering through U.S. real estate.
Foreign buyers in recent years have flooded into major markets like Manhattan, particularly attracted to high-end condominiums, as they seek stable, long-term investments, property analysts say.
But with few disclosure requirements in the U.S. for real-estate transactions—wealthy buyers often preserve their anonymity by making purchases using limited liability companies—money-laundering experts warn the area is ripe for abuse by those looking to park ill-gotten gains. A Greenville commercial real estate lawyer is reviewing the details of this case.
Because the use of corporate structures to buy real estate has become commonplace, including by legitimate buyers who want to protect their privacy or other assets from liability, a sale to an LLC doesn’t necessarily raise red flags.
Banks and brokerages are far more regulated than real estate and are required to report suspicious activity. Real estate doesn’t face such requirements, which is an “enormous loophole in our financial system,” said Louise Shelley, director of the Terrorism, Transnational Crime and Corruption Center at George Mason University.
Mr. Chetrit has done numerous high-profile deals, including for the former Sony Building on New York’s Madison Avenue, which he bought with partners for $1.1 billion in 2013. He previously was a co-owner of the Willis Tower, the former Sears Tower, in Chicago. A Louisville commercial real estate attorney has managed a variety of commercial real estate cases for a wide range of clients.
Mr. Chetrit sold the Kazakh men, through their special purpose vehicle, stakes in two Manhattan properties now closed and being converted into condo buildings, according to the complaint: the Flatotel and the Cabrini Medical Center.
Mr. Chetrit referred to one of the Kazakhs’ contacts with code names like “Jose” and “Pedro” in conversations secretly recorded by an associate of the Kazakhs, according to the complaint.
As chairman of BTA, Mr. Ablyazov directed the bank to make a series of loans to companies under his control that were never repaid to BTA, according to the complaint. BTA in 2009 defaulted on debt held by foreign investors, the complaint says.
Since the default, BTA has filed 11 proceedings against its former chairman and his associates, according to the complaint. U.K. courts have awarded BTA more than $4 billion in damages for claims against Mr. Ablyazov and his associates, the suit says.
In 2012, a U.K. court sentenced him to 22 months imprisonment “for his numerous actions in contempt of court,” the complaint said. Mr. Ablyazov is challenging that judgment at the European Court of Human Rights in France, according to Mr. Sahlas.
The Kazakh banking executive is being held in a French jail, where he has been denied bail three times and is fighting extradition, according to the complaint.
Mr. Khrapunov was mayor of Almaty from 1997 to 2004, coming to power six years after his country declared independence from the former Soviet Union. The complaint alleged he transferred city money to himself and his family through various schemes, including sales of city-owned real estate to his spouse and friends at below-market prices.
Mr. Khrapunov and Mr. Ablyazov pooled their money and initially moved the proceeds to Switzerland in 2007, according to the lawsuit.
The partners created a special purpose vehicle, called Triadou SPV S.A., which was incorporated in Luxembourg, the lawsuit said.
An associate of the two Kazakhs met with Mr. Chetrit in Geneva and said that Mr. Chetrit “expressed sympathy” and said his own family had faced political sanctions in Morocco, according to the complaint.
A banker and a former politician from Kazakhstan tried to launder tens of millions of dollars of stolen money through New York real-estate holdings, a civil lawsuit alleges.
The men allegedly conspired with New York developer Joseph Chetrit to hide at least $40 million by investing in a former Manhattan hotel and the Cabrini Medical Center, according to a complaint filed on Oct. 12 by Kazakhstan’s largest city, Almaty, and one of the nation’s biggest lenders, BTA Bank. A New York commercial real estate lawyer provides professional legal counsel and extensive experience in many aspects of commercial real estate law.
The Kazakh men, ex-BTA chairman Mukhtar Ablyazov and former Almaty mayor Viktor Khrapunov, are separately under investigation for criminal fraud in Kazakhstan, the complaint says. Mr. Ablyazov is alleged to have stolen billions of dollars from BTA and Mr. Khrapunov is alleged to have stolen about $300 million from Almaty, according to the complaint, filed in federal court in Manhattan.
The Kazakh men parked “corrupt assets” in New York City real estate to avoid the scrutiny of escalating international investigations, the complaint alleges. Mr. Chetrit, also a defendant in the lawsuit, was aware of the criminal investigations of the Kazakhs when he agreed to use their money for his projects, according to the complaint. The suit seeks damages of up to $18 billion and was filed by law firm Boies, Schiller & Flexner LLP. A New Orleans commercial real estate lawyer is following this story closely.
Mr. Ablyazov, who is being held by authorities in France, couldn’t be reached for comment. Previously, he has said he is innocent of any criminal wrongdoing and all accusations against him are ungrounded and politically motivated.
Peter Sahlas, an attorney for the Ablyazov family, said the former bank chairman had not been served and was unaware of the New York lawsuit.
The family would consider the suit “just another instance of a corrupt and kleptocratic foreign regime availing itself of the U.S. legal system to carry out its political vendettas,” Mr. Sahlas said in an interview.
A spokesman for Mr. Khrapunov said: “Having obtained nothing after years of proceedings in Switzerland and the United States, Kazakhstan is trying again to use the legal system of a Western country to harass and destroy political opponents.” A Las Vegas commercial real estate lawyer represents clients in commercial real estate defense claims.
Mr. Chetrit and his lawyer didn’t respond to requests for comment.
The suit represents a rare specific legal allegation of money laundering through U.S. real estate.
Foreign buyers in recent years have flooded into major markets like Manhattan, particularly attracted to high-end condominiums, as they seek stable, long-term investments, property analysts say.
But with few disclosure requirements in the U.S. for real-estate transactions—wealthy buyers often preserve their anonymity by making purchases using limited liability companies—money-laundering experts warn the area is ripe for abuse by those looking to park ill-gotten gains. A Greenville commercial real estate lawyer is reviewing the details of this case.
Because the use of corporate structures to buy real estate has become commonplace, including by legitimate buyers who want to protect their privacy or other assets from liability, a sale to an LLC doesn’t necessarily raise red flags.
Banks and brokerages are far more regulated than real estate and are required to report suspicious activity. Real estate doesn’t face such requirements, which is an “enormous loophole in our financial system,” said Louise Shelley, director of the Terrorism, Transnational Crime and Corruption Center at George Mason University.
Mr. Chetrit has done numerous high-profile deals, including for the former Sony Building on New York’s Madison Avenue, which he bought with partners for $1.1 billion in 2013. He previously was a co-owner of the Willis Tower, the former Sears Tower, in Chicago. A Louisville commercial real estate attorney has managed a variety of commercial real estate cases for a wide range of clients.
Mr. Chetrit sold the Kazakh men, through their special purpose vehicle, stakes in two Manhattan properties now closed and being converted into condo buildings, according to the complaint: the Flatotel and the Cabrini Medical Center.
Mr. Chetrit referred to one of the Kazakhs’ contacts with code names like “Jose” and “Pedro” in conversations secretly recorded by an associate of the Kazakhs, according to the complaint.
As chairman of BTA, Mr. Ablyazov directed the bank to make a series of loans to companies under his control that were never repaid to BTA, according to the complaint. BTA in 2009 defaulted on debt held by foreign investors, the complaint says.
Since the default, BTA has filed 11 proceedings against its former chairman and his associates, according to the complaint. U.K. courts have awarded BTA more than $4 billion in damages for claims against Mr. Ablyazov and his associates, the suit says.
In 2012, a U.K. court sentenced him to 22 months imprisonment “for his numerous actions in contempt of court,” the complaint said. Mr. Ablyazov is challenging that judgment at the European Court of Human Rights in France, according to Mr. Sahlas.
The Kazakh banking executive is being held in a French jail, where he has been denied bail three times and is fighting extradition, according to the complaint.
Mr. Khrapunov was mayor of Almaty from 1997 to 2004, coming to power six years after his country declared independence from the former Soviet Union. The complaint alleged he transferred city money to himself and his family through various schemes, including sales of city-owned real estate to his spouse and friends at below-market prices.
Mr. Khrapunov and Mr. Ablyazov pooled their money and initially moved the proceeds to Switzerland in 2007, according to the lawsuit.
The partners created a special purpose vehicle, called Triadou SPV S.A., which was incorporated in Luxembourg, the lawsuit said.
An associate of the two Kazakhs met with Mr. Chetrit in Geneva and said that Mr. Chetrit “expressed sympathy” and said his own family had faced political sanctions in Morocco, according to the complaint.
Thursday, October 15, 2015
LAWSUIT: 'MOST INTERESTING MAN' IS 'LEAST HONORABLE'
Original Story: usatoday.com
(NEWSER) – Jonathan Goldsmith doesn't always get sued but when he does, it can get nasty.
The actor best known for portraying the "Most Interesting Man in the World" in Dos Equis ads is being sued for breach of contract by his former talent agency, which claims he has stopped paying commission on the roughly $1 million a year he makes from the ads, according to the Hollywood Reporter. A Boston contract lawyer is following this story closely.
"There is nothing interesting about being a deadbeat or failing to pay those directly responsible for one's career success," the complaint says. "As it now turns out, had Goldsmith landed a role that more accurately portray[ed] his true character, he would have landed the role of 'The Least Honorable Man in the Entertainment Business.'"
Goldsmith's former manager at Jordan Lee, Inc. says Goldsmith, who got the Dos Equis job in 2006 stopped paying the 10% commission a year ago because he felt he had paid "enough," TMZ reports. The lawsuit says the actor's relationship with the agency changed after the agent who got him the role — and is now his wife — left the company, per the Reporter. A Vienna contract lawyer provides professional legal counsel and extensive experience in many aspects of contract law.
Goldsmith, whose acting career began in the 1950s, returned to acting and auditioned for the "Most Interesting Man" role after another lawsuit destroyed the business he left Hollywood for, he said in a Forbes interview last month. A Columbia SC contract lawyer is reviewing the details of this case.
(In his spare time, Goldsmith has been trying to eliminate landmines in Cambodia.)
(NEWSER) – Jonathan Goldsmith doesn't always get sued but when he does, it can get nasty.
The actor best known for portraying the "Most Interesting Man in the World" in Dos Equis ads is being sued for breach of contract by his former talent agency, which claims he has stopped paying commission on the roughly $1 million a year he makes from the ads, according to the Hollywood Reporter. A Boston contract lawyer is following this story closely.
"There is nothing interesting about being a deadbeat or failing to pay those directly responsible for one's career success," the complaint says. "As it now turns out, had Goldsmith landed a role that more accurately portray[ed] his true character, he would have landed the role of 'The Least Honorable Man in the Entertainment Business.'"
Goldsmith's former manager at Jordan Lee, Inc. says Goldsmith, who got the Dos Equis job in 2006 stopped paying the 10% commission a year ago because he felt he had paid "enough," TMZ reports. The lawsuit says the actor's relationship with the agency changed after the agent who got him the role — and is now his wife — left the company, per the Reporter. A Vienna contract lawyer provides professional legal counsel and extensive experience in many aspects of contract law.
Goldsmith, whose acting career began in the 1950s, returned to acting and auditioned for the "Most Interesting Man" role after another lawsuit destroyed the business he left Hollywood for, he said in a Forbes interview last month. A Columbia SC contract lawyer is reviewing the details of this case.
(In his spare time, Goldsmith has been trying to eliminate landmines in Cambodia.)
Tuesday, October 6, 2015
AMERICAN APPAREL'S ROAD TO BANKRUPTCY LITTERED WITH LAWSUITS
Original Story: forbes.com
As the prospects of bankruptcy for American Apparel have shifted from “if” to “when,” the company is faced with mounting legal baggage. A bankruptcy filing would automatically pause all lawsuits against the company, but its docket has grown in recent months with complaints from vendors, employees, shareholders and its infamous former CEO, Dov Charney – himself the target of a series of sexual harassment suits. A Toledo bankruptcy lawyer is reviewing the details of this case.
Last week, the New York Stock Exchange notified the company that it is at risk of being delisted from the exchange. The company has until November 15 to come into compliance with listing standards, but will likely be in bankruptcy court before then. American Apparel is ironing out the preliminary details of a restructuring plan that would see it skip a $14 million coupon payment due October 15 and use the 30-day grace period to drum up revenues during its pivotal Halloween shopping period before filing for Chapter 11, sources have told Debtwire.
Outside the small world of lawyers and bankers who have long eyed a restructuring for the company, American Apparel is as well known for Charney’s antics as it is for its clothing. A 2004 Jane magazine profile described Charney repeatedly masturbating in front of its reporter during interviews, and other stories followed that Charney referred to women as “sluts” and demanded that his store managers fire “ugly” employees. Lawsuits followed, alleging sexual harassment against many of the company’s female employees. A Boston M&A lawyer represents business clients in company restructuring and acquisitions.
American Apparel’s board of directors ousted Charney as chairman in June 2014, with cause – accusing him of refusing to take sexual harassment training and using company funds as hush money for former employees. The board highlighted the mounting legal expenses the company faced while defending lawsuits aimed at Charney, and said that potential financing sources would not deal with the company while Charney was involved.
Following his dismissal, Charney pursued a hostile takeover of American Apparel, reaching a deal with hedge fund Standard General to increase its hold on the company’s stock to 43% and potentially prop up Charney to retake control of the company. This May, a group led by Eliana Gil Rodriguez, a former American Apparel employee and friend of Charney’s, sued the company in Delaware claiming that the board had concealed a plot to fire Charney after its reelection in June 2014 by issuing false and misleading statements.
But the alliance of Charney and Standard General was short-lived, as Charney filed a suit in June accusing Standard General and American Apparel of conspiring to remove him from the company. The hedge fund filed a lawsuit in July claiming that Charney had not met the financial conditions of the deal.
In September, American Apparel shareholders sued Standard General and board member Joseph Magnacca, the former CEO of RadioShack, claiming that the hedge fund is using the same vulture tactics on American Apparel that it used when it bought RadioShack debt to keep the company out of Chapter 11 before acquiring half its stores in bankruptcy. American Apparel’s shareholders claim that Magnacca and Standard General are too entangled, with Magnacca allegedly texting Standard General’s leader that he would be “anyplace anytime” for the hedge fund.
Vendor The Knit House Corp also sued the company last month, seeking $53,667 it claims was never paid on a fabric merchandise agreement. In June, BSG Tech LLC sued the company for infringement of its sound technology patents. More than 200 employees filed a class action against the company in April, claiming that they were laid off without proper legal notice. A Minneapolis class action lawyer is experienced in the effective resolution of class actions lawsuits as related to damage inflicted upon groups of people.
As bankruptcy fast approaches, shareholders are going after Standard General and Magnacca, Standard General and Charney are pursuing each other following their breakup, and Charney at this point is on no one’s team while he continues to make noise. Now Charney’s declaration of good faith at the time of his joining with Standard General has an ironic echo as the family drama comes under the jurisdiction of a bankruptcy judge. A Kansas City bankruptcy lawyer is following this story closely.
“The least important thing was me,” Charney said at the time. “I know that will be dealt with fairly later.”
As the prospects of bankruptcy for American Apparel have shifted from “if” to “when,” the company is faced with mounting legal baggage. A bankruptcy filing would automatically pause all lawsuits against the company, but its docket has grown in recent months with complaints from vendors, employees, shareholders and its infamous former CEO, Dov Charney – himself the target of a series of sexual harassment suits. A Toledo bankruptcy lawyer is reviewing the details of this case.
Last week, the New York Stock Exchange notified the company that it is at risk of being delisted from the exchange. The company has until November 15 to come into compliance with listing standards, but will likely be in bankruptcy court before then. American Apparel is ironing out the preliminary details of a restructuring plan that would see it skip a $14 million coupon payment due October 15 and use the 30-day grace period to drum up revenues during its pivotal Halloween shopping period before filing for Chapter 11, sources have told Debtwire.
Outside the small world of lawyers and bankers who have long eyed a restructuring for the company, American Apparel is as well known for Charney’s antics as it is for its clothing. A 2004 Jane magazine profile described Charney repeatedly masturbating in front of its reporter during interviews, and other stories followed that Charney referred to women as “sluts” and demanded that his store managers fire “ugly” employees. Lawsuits followed, alleging sexual harassment against many of the company’s female employees. A Boston M&A lawyer represents business clients in company restructuring and acquisitions.
American Apparel’s board of directors ousted Charney as chairman in June 2014, with cause – accusing him of refusing to take sexual harassment training and using company funds as hush money for former employees. The board highlighted the mounting legal expenses the company faced while defending lawsuits aimed at Charney, and said that potential financing sources would not deal with the company while Charney was involved.
Following his dismissal, Charney pursued a hostile takeover of American Apparel, reaching a deal with hedge fund Standard General to increase its hold on the company’s stock to 43% and potentially prop up Charney to retake control of the company. This May, a group led by Eliana Gil Rodriguez, a former American Apparel employee and friend of Charney’s, sued the company in Delaware claiming that the board had concealed a plot to fire Charney after its reelection in June 2014 by issuing false and misleading statements.
But the alliance of Charney and Standard General was short-lived, as Charney filed a suit in June accusing Standard General and American Apparel of conspiring to remove him from the company. The hedge fund filed a lawsuit in July claiming that Charney had not met the financial conditions of the deal.
In September, American Apparel shareholders sued Standard General and board member Joseph Magnacca, the former CEO of RadioShack, claiming that the hedge fund is using the same vulture tactics on American Apparel that it used when it bought RadioShack debt to keep the company out of Chapter 11 before acquiring half its stores in bankruptcy. American Apparel’s shareholders claim that Magnacca and Standard General are too entangled, with Magnacca allegedly texting Standard General’s leader that he would be “anyplace anytime” for the hedge fund.
Vendor The Knit House Corp also sued the company last month, seeking $53,667 it claims was never paid on a fabric merchandise agreement. In June, BSG Tech LLC sued the company for infringement of its sound technology patents. More than 200 employees filed a class action against the company in April, claiming that they were laid off without proper legal notice. A Minneapolis class action lawyer is experienced in the effective resolution of class actions lawsuits as related to damage inflicted upon groups of people.
As bankruptcy fast approaches, shareholders are going after Standard General and Magnacca, Standard General and Charney are pursuing each other following their breakup, and Charney at this point is on no one’s team while he continues to make noise. Now Charney’s declaration of good faith at the time of his joining with Standard General has an ironic echo as the family drama comes under the jurisdiction of a bankruptcy judge. A Kansas City bankruptcy lawyer is following this story closely.
“The least important thing was me,” Charney said at the time. “I know that will be dealt with fairly later.”
ABANDONED IT PROJECTS COST DUTCH GOVERNMENT UP TO €5 BILLION A YEAR
Original Story: amsterdamherald.com
More than a third of major IT projects in the Netherlands never see the light of day, costing the government up to €5 billion a year, according to a highly critical report by a Parliamentary inquiry.
A commission headed by Liberal (VVD) MP Ton Elias, called for an independent regulator to be set up so that IT specialists can monitor the progress of large-scale projects. An Amsterdam IT lawyer is reviewing the details of this case.
Projects often failed because those commissioning them lacked the technological knowledge, said Elias. “Things go wrong on every level and at every stage.
“It is one great unsightly mass, with no clear objectives, direction or cost control.” He noted that the lost money “could have been spent on healthcare or defence”.
Elias’s panel looked at a range of IT projects, including the OV chipcard used to pay for public transport and the A73 motorway tunnels. An Amsterdam IT attorney is following this story closely.
It found that 36 per cent of large projects – those with a budget of €7.5 million or more – were aborted before they were put into service. More than half (57%) either went over time or over budget, or did not meet expectations. Just 7% were judged to be successful.
Elias also said Parliament was failing in its duty to oversee projects funded by the public purse.
He said lack of interest and expertise by MPs meant they were not scrutinising the process properly. “Moreover, the provision of information to Parliament by the cabinet is frequently insufficient,” he said.
The commission’s work was hampered by problems obtaining the relevant information from ministers, according to Elias, who urged MPs to be more stringent. “Parliament needs to use its powers and take its scrutiny role seriously.”
The commission recommended that all projects costing more than €5 million be scrutinised by the Office for IT Testing (Bureau ICT Toetsing), which would measure their progress against 10 basic standards.
“The experts would act as a gatekeeper for IT projects. In addition it would drive it into the heads of IT departments that things could, and should, be done differently,” Elias said.
More than a third of major IT projects in the Netherlands never see the light of day, costing the government up to €5 billion a year, according to a highly critical report by a Parliamentary inquiry.
A commission headed by Liberal (VVD) MP Ton Elias, called for an independent regulator to be set up so that IT specialists can monitor the progress of large-scale projects. An Amsterdam IT lawyer is reviewing the details of this case.
Projects often failed because those commissioning them lacked the technological knowledge, said Elias. “Things go wrong on every level and at every stage.
“It is one great unsightly mass, with no clear objectives, direction or cost control.” He noted that the lost money “could have been spent on healthcare or defence”.
Elias’s panel looked at a range of IT projects, including the OV chipcard used to pay for public transport and the A73 motorway tunnels. An Amsterdam IT attorney is following this story closely.
It found that 36 per cent of large projects – those with a budget of €7.5 million or more – were aborted before they were put into service. More than half (57%) either went over time or over budget, or did not meet expectations. Just 7% were judged to be successful.
Elias also said Parliament was failing in its duty to oversee projects funded by the public purse.
He said lack of interest and expertise by MPs meant they were not scrutinising the process properly. “Moreover, the provision of information to Parliament by the cabinet is frequently insufficient,” he said.
The commission’s work was hampered by problems obtaining the relevant information from ministers, according to Elias, who urged MPs to be more stringent. “Parliament needs to use its powers and take its scrutiny role seriously.”
The commission recommended that all projects costing more than €5 million be scrutinised by the Office for IT Testing (Bureau ICT Toetsing), which would measure their progress against 10 basic standards.
“The experts would act as a gatekeeper for IT projects. In addition it would drive it into the heads of IT departments that things could, and should, be done differently,” Elias said.
COURT RULING ON CANNABIS GROWERS PROMPTS FRESH DEMANDS FOR LEGAL SUPPLY CHAIN
Original Story: amsterdamherald.com
A court has ruled that two cannabis farmers who supplied coffeeshops in Groningen should not be punished because they effectively ran a legitimate business.
The 49-year-old man and his 39-year-old female partner cultivated cannabis on two plantations in Bellingwolde and Bierum. The court heard they used approved biological techniques, paid their electricity bills and even had an arrangement with the tax office. A Sacramento tax lawyer is reviewing the details of this case.
The prosecution service asked for work orders of 180 and 120 hours to be imposed on the couple, but the court decided they should not be penalized despite finding them guilty. Judges found that the plantations were run responsibly and had no links with the criminal fraternity.
The judgment was greeted with applause and cheering from the public gallery.
Campaigners described the judgment as a “groundbreaking” moment for Dutch drugs policy, which coffeeshop owners have been lobbying for decades to reform.
Officially cannabis is illegal, but the sale of small quantities is permitted under tightly controlled conditions in licensed “coffeeshops”. However, production and supply remain outlawed, leaving cannabis cafes no choice but to buy their wares on the black market. A Melbourne business lawyer represent corporations and small businesses in all areas of general business law.
The judges noted: “The fact that the sale of soft drugs from these coffeeshops is tolerated implies that the coffeeshops have suppliers and, by extension, there are cultivators to meet the demand for produce. The policy does not make clear how this process of supply should take place.”
Magda Berndsen, MP for the centrist-liberal D66 party, told NRC: “This decision by the court is groundbreaking, it opens up the back door for the coffeeshops. [Justice] minister Opstelten’s decision to keep cannabis cultivation illegal is now untenable in the light of this judgment.
“Regulating cannabis production is the only solution to most of the problems that municipalities are struggling with. It will bring down the health risks, free up policy capacity for other priorities
But justice minister Ivo Opstelten, in an initial reaction, signaled that the government had no plans to change its policy. He described the judgment as surprising, but explained: “I don’t want to say too much more because I don’t want to tread on the prosecution service’s toes.”
The investigation began in 2009 when police seized more than 2500 plants and eight kilograms of hemp from the two plantations. The couple who ran them chose to contest the case as a “matter of principle”. A Westchester County criminal defense lawyer is following this story closely.
“Prosecuting us is hypocritical,” they told NRC Handelsblad. “Smoking weed is allowed and coffeeshops that sell it are tolerated by the municipality. But anyone who cultivates plants and supplies coffeeshops at the back door is committing an offence. It doesn’t make sense.”
In recent years several municipalities have tried to set up legal supply chains to break the link between coffeeshops and criminality. But the government in The Hague has blocked all attempts to extend the policy of official tolerance to growers.
Last year the city of Utrecht set up its own cannabis growers’ club and asked the ministry of justice for an exemption, but the public health ministry overruled the initiative.
A court has ruled that two cannabis farmers who supplied coffeeshops in Groningen should not be punished because they effectively ran a legitimate business.
The 49-year-old man and his 39-year-old female partner cultivated cannabis on two plantations in Bellingwolde and Bierum. The court heard they used approved biological techniques, paid their electricity bills and even had an arrangement with the tax office. A Sacramento tax lawyer is reviewing the details of this case.
The prosecution service asked for work orders of 180 and 120 hours to be imposed on the couple, but the court decided they should not be penalized despite finding them guilty. Judges found that the plantations were run responsibly and had no links with the criminal fraternity.
The judgment was greeted with applause and cheering from the public gallery.
Campaigners described the judgment as a “groundbreaking” moment for Dutch drugs policy, which coffeeshop owners have been lobbying for decades to reform.
Officially cannabis is illegal, but the sale of small quantities is permitted under tightly controlled conditions in licensed “coffeeshops”. However, production and supply remain outlawed, leaving cannabis cafes no choice but to buy their wares on the black market. A Melbourne business lawyer represent corporations and small businesses in all areas of general business law.
The judges noted: “The fact that the sale of soft drugs from these coffeeshops is tolerated implies that the coffeeshops have suppliers and, by extension, there are cultivators to meet the demand for produce. The policy does not make clear how this process of supply should take place.”
Magda Berndsen, MP for the centrist-liberal D66 party, told NRC: “This decision by the court is groundbreaking, it opens up the back door for the coffeeshops. [Justice] minister Opstelten’s decision to keep cannabis cultivation illegal is now untenable in the light of this judgment.
“Regulating cannabis production is the only solution to most of the problems that municipalities are struggling with. It will bring down the health risks, free up policy capacity for other priorities
But justice minister Ivo Opstelten, in an initial reaction, signaled that the government had no plans to change its policy. He described the judgment as surprising, but explained: “I don’t want to say too much more because I don’t want to tread on the prosecution service’s toes.”
The investigation began in 2009 when police seized more than 2500 plants and eight kilograms of hemp from the two plantations. The couple who ran them chose to contest the case as a “matter of principle”. A Westchester County criminal defense lawyer is following this story closely.
“Prosecuting us is hypocritical,” they told NRC Handelsblad. “Smoking weed is allowed and coffeeshops that sell it are tolerated by the municipality. But anyone who cultivates plants and supplies coffeeshops at the back door is committing an offence. It doesn’t make sense.”
In recent years several municipalities have tried to set up legal supply chains to break the link between coffeeshops and criminality. But the government in The Hague has blocked all attempts to extend the policy of official tolerance to growers.
Last year the city of Utrecht set up its own cannabis growers’ club and asked the ministry of justice for an exemption, but the public health ministry overruled the initiative.
Monday, September 21, 2015
KWAME KILPATRICK STILL FIGHTING FOR NEW TRIAL
Original Story: freep.com
A defiant Kwame Kilpatrick is not giving up on getting out of prison, this time asking for the entire U.S. 6th Circuit Court of Appeals bench to consider his appeal.
A three-judge panel from the 6th Circuit refused to grant the former Detroit mayor a new trial last month, upholding his public corruption conviction and 28-year prison sentence. So now Kilpatrick is asking for what is known as an “en banc” review, which means he wants all of the judges who sit on the 6th Circuit to hear his case. An Atlanta RICO lawyer represent clients in racketeering cases involving bribery, money laundering, and corruption.
In a Friday court filing, Kilpatrick repeated his long-held belief that his trial lawyers had a conflict of interest and were ineffective. The three-judge appellate panel already ruled that Kilpatrick never proved that, nor did he prove that federal agents prejudiced him with their hearsay testimony before the jury, as Kilpatrick has argued.
Kilpatrick, who was convicted in 2013 following a sixth-month trial, is hoping the entire 6th Circuit bench sees things differently, claiming he didn't get a fair trial for three reasons:
Kilpatrick's appeal focuses heavily on his longtime defense attorney James Thomas, who Kilpatrick tried to get thrown off the case at the start of his trial, citing a conflict of interest: Thomas and his associate were working for a law firm that was suing Kilpatrick over the same alleged crimes of which Thomas was defending him. A Chicago RICO lawyer is reviewing the details of this case.
At Kilpatrick's request, Thomas asked U.S. District Judge Nancy Edmunds to withdraw from the case. But Edmunds denied it, noting that when Kilpatrick ran out of money and couldn't afford a lawyer, he requested Thomas, so he got him. Edmunds also found that Thomas had been a good and effective lawyer for Kilpatrick.
Thomas represented Kilpatrick throughout the six-month trial that ended with Kilpatrick getting convicted in March 2013 on 24 counts for crimes including racketeering, extortion and bribery.
Two months after the guilty verdict, Kilpatrick officially dumped Thomas, telling Edmunds that "a grave error" occurred in his case and that he needed a new lawyer.
Thomas agreed that it was time for him to step down.
Edmunds appointed Harold Gurewitz to handle Kilpatrick's case.
The prosecution, meanwhile, has scoffed at all of Kilpatrick's arguments.
"He cannot show that, absent the alleged (attorney) conflict, the result of (his trial) would have been different," Assistant U.S. Attorney Andrew Goetz has written in court documents. A Milwaukee RICO lawyer is following this story closely.
Bobby Ferguson, Kilpatrick's longtime contractor friend and codefendant, also was convicted of multiple crimes. Ferguson, who got a 21-year prison sentence, also appealed his conviction, but the 6th Circuit upheld his conviction.
Historically, federal appeals courts have sided with prosecutors, upholding convictions roughly 95% of the time, according to the Administrative Office of the U.S. Courts.
A defiant Kwame Kilpatrick is not giving up on getting out of prison, this time asking for the entire U.S. 6th Circuit Court of Appeals bench to consider his appeal.
A three-judge panel from the 6th Circuit refused to grant the former Detroit mayor a new trial last month, upholding his public corruption conviction and 28-year prison sentence. So now Kilpatrick is asking for what is known as an “en banc” review, which means he wants all of the judges who sit on the 6th Circuit to hear his case. An Atlanta RICO lawyer represent clients in racketeering cases involving bribery, money laundering, and corruption.
In a Friday court filing, Kilpatrick repeated his long-held belief that his trial lawyers had a conflict of interest and were ineffective. The three-judge appellate panel already ruled that Kilpatrick never proved that, nor did he prove that federal agents prejudiced him with their hearsay testimony before the jury, as Kilpatrick has argued.
Kilpatrick, who was convicted in 2013 following a sixth-month trial, is hoping the entire 6th Circuit bench sees things differently, claiming he didn't get a fair trial for three reasons:
- He was forced to go to trial with a lawyer he didn't want — and shouldn't have had — due to a conflict of interest.
- The judge erred in allowing two FBI agents to offer their opinions to jurors about what Kilpatrick's and others' text messages meant and how texts and phone calls showed the ex-mayor was involved in crooked contracts.
- The nearly $4.7 million he was ordered to pay in restitution was not authorized under federal law. The 6th Circuit has ruled in Kilpatrick’s favor on this issue.
Kilpatrick's appeal focuses heavily on his longtime defense attorney James Thomas, who Kilpatrick tried to get thrown off the case at the start of his trial, citing a conflict of interest: Thomas and his associate were working for a law firm that was suing Kilpatrick over the same alleged crimes of which Thomas was defending him. A Chicago RICO lawyer is reviewing the details of this case.
At Kilpatrick's request, Thomas asked U.S. District Judge Nancy Edmunds to withdraw from the case. But Edmunds denied it, noting that when Kilpatrick ran out of money and couldn't afford a lawyer, he requested Thomas, so he got him. Edmunds also found that Thomas had been a good and effective lawyer for Kilpatrick.
Thomas represented Kilpatrick throughout the six-month trial that ended with Kilpatrick getting convicted in March 2013 on 24 counts for crimes including racketeering, extortion and bribery.
Two months after the guilty verdict, Kilpatrick officially dumped Thomas, telling Edmunds that "a grave error" occurred in his case and that he needed a new lawyer.
Thomas agreed that it was time for him to step down.
Edmunds appointed Harold Gurewitz to handle Kilpatrick's case.
The prosecution, meanwhile, has scoffed at all of Kilpatrick's arguments.
"He cannot show that, absent the alleged (attorney) conflict, the result of (his trial) would have been different," Assistant U.S. Attorney Andrew Goetz has written in court documents. A Milwaukee RICO lawyer is following this story closely.
Bobby Ferguson, Kilpatrick's longtime contractor friend and codefendant, also was convicted of multiple crimes. Ferguson, who got a 21-year prison sentence, also appealed his conviction, but the 6th Circuit upheld his conviction.
Historically, federal appeals courts have sided with prosecutors, upholding convictions roughly 95% of the time, according to the Administrative Office of the U.S. Courts.
$900 MILLION PENALTY FOR G.M.’S DEADLY DEFECT LEAVES MANY COLD
Original Story: nytimes.com
As the number of deaths linked to defective cars made by General Motors has steadily risen to 124, victims’ families have waited for the answer to a burning question: How will federal prosecutors hold the automaker accountable for its decade-long failure to disclose the defect? A Sydney product liability lawyer is reviewing the details of this case.
On Thursday, they got their answer, and many were disappointed.
In a settlement with prosecutors, no individual employees were charged, and the Justice Department agreed to defer prosecution of the company for three years. If G.M. adheres to the agreement, which includes independent monitoring of its safety practices, the company can have its record wiped clean.
And even though General Motors will pay a $900 million penalty, it was 25 percent less than the record $1.2 billion Toyota agreed to pay last year. A Taipei products liability attorney is following this story closely.
“I don’t understand how they can basically buy their way out of it,” said Margie Beskau, whose daughter Amy Rademaker was killed in an October 2006 crash in Wisconsin. She added, “They knew what they were doing and they kept doing it.”
At a news conference, Preet Bharara, the United States attorney for the Southern District of New York, defended the settlement. “It has been a challenging case, for the agencies, for the prosecutors and for me,” Mr. Bharara said. “We’ve had to think long and hard about the appropriate resolution in this case.”
Mr. Bharara said that the victims had been paramount in the minds of the prosecutors on the case.
“I met personally with families who lost loved ones in tragic accidents involving the switch and, I’ll tell you, those were among the most searing moments I’ve ever spent in my six-plus years as United States attorney,” he said. A Budapest product liability lawyer have experience managing a variety of products liability cases for a wide range of clients.
G.M.’s cooperation, he said, was the reason the settlement was reached after only 18 months, rather than after four years or more, as in the Toyota case.
“From the moment the top management came forward to disclose the defect in February of 2014, the company’s cooperation and remediation have been fairly extraordinary,” Mr. Bharara said, citing G.M.’s creation of a compensation fund for victims of the defect and its dismissal of 15 employees, among other factors.
“Good behavior after the fact does not absolve G.M. or any company of responsibility,” Mr. Bharara said, “but companies should be encouraged to act as G.M. did here to help the truth come out faster.”
Mr. Bharara cited an internal investigation conducted for G.M. as favorable in determining the penalties paid by the automaker.
The two law firms hired for that inquiry, King & Spalding and Jenner & Block, had previously done legal work for G.M. And court papers show that Anton R. Valukas, the chairman of Jenner & Block, who headed the G.M. investigation, helped represent the automaker in its talks with the Justice Department. A Vienna products liability lawyer provides professional legal counsel and extensive experience in many aspects of product liability law.
Mr. Valukas declined to be interviewed, and several corporate lawyers said such arrangements are not unusual because an outside law firm that conducts an investigation knows the facts of a case. But Deborah L. Rhode, a professor at Stanford Law School, said the public’s interest may suffer when a law firm wears so many different hats.
“It would be nice to know that the law firm doing the internal investigation was truly disinterested and didn’t have an interest in subsequent representation” of the same company, Ms. Rhode said.
The overall tone of the news conference was notably more subdued than the bravado that accompanied the Toyota announcement last year. At that news conference, the attorney general at the time, Eric Holder, and Transportation Secretary Anthony Foxx both attended and spoke, calling Toyota’s behavior shameful. On Thursday, neither Mr. Holder’s successor, Loretta Lynch, nor Mr. Foxx attended.
The complaint filed by prosecutors details what has become a familiar narrative in the G.M. safety crisis — employees within General Motors were aware going back more than a decade of problems with the ignition switch, which is prone to turning off, cutting the engine and disabling systems like power steering and airbags.
But prosecutors focused their attention to a relatively short period of time — only about 20 months from the spring of 2012 to February 2014, when G.M. began recalling 2.6 million older cars to fix the switch — even though the first reports of the problem had been made more than a decade earlier. As awareness of the problem grew inside the company, the automaker’s legal department was aggressively fighting back against a mounting wave of litigation, even settling lawsuits.
Mr. Bharara emphasized that individuals could still be charged, but bringing a case against employees faces higher legal hurdles than in some other industries. Two employees in particular were singled out in the complaint as playing a central role in concealing information from regulators, but they were identified only by a vague job description.
“This knowledge extended well above the ranks of investigating engineers to certain supervisors and attorneys at the company — including G.M.’s safety director and G.M.’s safety attorney,” prosecutors said in their statement of facts that accompanied the complaint.
The Justice Department and G.M. declined to comment on the identities of the safety director and safety attorney. But among those dismissed last year were Carmen Benavides, the director of product investigations, and William Kemp, a G.M. lawyer who handled safety matters. Both of their actions as described in Mr. Valukas’s internal investigation and in congressional documents match the descriptions in the complaint.
Mr. Kemp did not return a message left at his home and Ms. Benavides did not return an message left at a LinkedIn account matching her name and career description.
Lawmakers who have been persistent critics of G.M. were unpersuaded by the settlement.
“This outcome fails to require adequate and explicit admission of criminal culpability from G.M. and individual criminal actions,” said Senators Richard Blumenthal of Connecticut and Edward J. Markey of Massachusetts, both Democrats, in a joint statement. “This outcome is extremely disappointing.”
G.M. struck a tone of contrition on Thursday. In a meeting with employees at G.M.’s huge technical center north of Detroit, Mary T. Barra, the chief executive, again apologized.
“Let’s pause for a moment and remember that people were hurt and died in our cars,” Ms. Barra told about 1,000 workers gathered in an atrium at the company’s vehicle engineering center. “That’s why we are here.”
Ms. Barra had flown back overnight from the Frankfurt Auto Show to attend the town hall, and then take questions from reporters.
Her address to workers highlighted all the improvements in safety practices that G.M. has made since the company first began recalling the defective vehicles.
But she admitted that it will take more than apologies for G.M. — which went bankrupt in 2009 and needed a $49 billion government bailout to survive — to restore its reputation in the eyes of consumers.
“We accept the penalties being announced today because they are part of being accountable,” she said. “But apologies and accountability do not amount to much if you don’t change your behavior.”
Her address to employees came on a day when G.M. reached another legal milestone, setting aside $575 million to resolve the cases of about 1,380 people, all represented by Robert C. Hilliard. Mr. Hilliard, a lawyer who is among those leading the class-action cases against the automaker, said that 45 death cases were among those settled. The $575 million also includes the settlement of a shareholder suit filed by the New York State Teachers’ Retirement System.
Altogether, the private lawsuit settlements resolve more than half the outstanding private cases against G.M.
In the end, victims said they were unsatisfied by the Justice Department’s announcement.
“I don’t see how Mary Barra can sleep,” said Laura Christian, the birth mother of 16-year-old Amber Rose, who was killed in a July 2005 crash in Maryland. She said the deferred-prosecution agreement was like probation.
“We buried our loved ones because G.M. buried a deadly defect,” Ms. Christian said. “And yet today all G.M. has to do is write another check to escape. We can’t escape — every day I am missing a daughter.”
As the number of deaths linked to defective cars made by General Motors has steadily risen to 124, victims’ families have waited for the answer to a burning question: How will federal prosecutors hold the automaker accountable for its decade-long failure to disclose the defect? A Sydney product liability lawyer is reviewing the details of this case.
On Thursday, they got their answer, and many were disappointed.
In a settlement with prosecutors, no individual employees were charged, and the Justice Department agreed to defer prosecution of the company for three years. If G.M. adheres to the agreement, which includes independent monitoring of its safety practices, the company can have its record wiped clean.
And even though General Motors will pay a $900 million penalty, it was 25 percent less than the record $1.2 billion Toyota agreed to pay last year. A Taipei products liability attorney is following this story closely.
“I don’t understand how they can basically buy their way out of it,” said Margie Beskau, whose daughter Amy Rademaker was killed in an October 2006 crash in Wisconsin. She added, “They knew what they were doing and they kept doing it.”
At a news conference, Preet Bharara, the United States attorney for the Southern District of New York, defended the settlement. “It has been a challenging case, for the agencies, for the prosecutors and for me,” Mr. Bharara said. “We’ve had to think long and hard about the appropriate resolution in this case.”
Mr. Bharara said that the victims had been paramount in the minds of the prosecutors on the case.
“I met personally with families who lost loved ones in tragic accidents involving the switch and, I’ll tell you, those were among the most searing moments I’ve ever spent in my six-plus years as United States attorney,” he said. A Budapest product liability lawyer have experience managing a variety of products liability cases for a wide range of clients.
G.M.’s cooperation, he said, was the reason the settlement was reached after only 18 months, rather than after four years or more, as in the Toyota case.
“From the moment the top management came forward to disclose the defect in February of 2014, the company’s cooperation and remediation have been fairly extraordinary,” Mr. Bharara said, citing G.M.’s creation of a compensation fund for victims of the defect and its dismissal of 15 employees, among other factors.
“Good behavior after the fact does not absolve G.M. or any company of responsibility,” Mr. Bharara said, “but companies should be encouraged to act as G.M. did here to help the truth come out faster.”
Mr. Bharara cited an internal investigation conducted for G.M. as favorable in determining the penalties paid by the automaker.
The two law firms hired for that inquiry, King & Spalding and Jenner & Block, had previously done legal work for G.M. And court papers show that Anton R. Valukas, the chairman of Jenner & Block, who headed the G.M. investigation, helped represent the automaker in its talks with the Justice Department. A Vienna products liability lawyer provides professional legal counsel and extensive experience in many aspects of product liability law.
Mr. Valukas declined to be interviewed, and several corporate lawyers said such arrangements are not unusual because an outside law firm that conducts an investigation knows the facts of a case. But Deborah L. Rhode, a professor at Stanford Law School, said the public’s interest may suffer when a law firm wears so many different hats.
“It would be nice to know that the law firm doing the internal investigation was truly disinterested and didn’t have an interest in subsequent representation” of the same company, Ms. Rhode said.
The overall tone of the news conference was notably more subdued than the bravado that accompanied the Toyota announcement last year. At that news conference, the attorney general at the time, Eric Holder, and Transportation Secretary Anthony Foxx both attended and spoke, calling Toyota’s behavior shameful. On Thursday, neither Mr. Holder’s successor, Loretta Lynch, nor Mr. Foxx attended.
The complaint filed by prosecutors details what has become a familiar narrative in the G.M. safety crisis — employees within General Motors were aware going back more than a decade of problems with the ignition switch, which is prone to turning off, cutting the engine and disabling systems like power steering and airbags.
But prosecutors focused their attention to a relatively short period of time — only about 20 months from the spring of 2012 to February 2014, when G.M. began recalling 2.6 million older cars to fix the switch — even though the first reports of the problem had been made more than a decade earlier. As awareness of the problem grew inside the company, the automaker’s legal department was aggressively fighting back against a mounting wave of litigation, even settling lawsuits.
Mr. Bharara emphasized that individuals could still be charged, but bringing a case against employees faces higher legal hurdles than in some other industries. Two employees in particular were singled out in the complaint as playing a central role in concealing information from regulators, but they were identified only by a vague job description.
“This knowledge extended well above the ranks of investigating engineers to certain supervisors and attorneys at the company — including G.M.’s safety director and G.M.’s safety attorney,” prosecutors said in their statement of facts that accompanied the complaint.
The Justice Department and G.M. declined to comment on the identities of the safety director and safety attorney. But among those dismissed last year were Carmen Benavides, the director of product investigations, and William Kemp, a G.M. lawyer who handled safety matters. Both of their actions as described in Mr. Valukas’s internal investigation and in congressional documents match the descriptions in the complaint.
Mr. Kemp did not return a message left at his home and Ms. Benavides did not return an message left at a LinkedIn account matching her name and career description.
Lawmakers who have been persistent critics of G.M. were unpersuaded by the settlement.
“This outcome fails to require adequate and explicit admission of criminal culpability from G.M. and individual criminal actions,” said Senators Richard Blumenthal of Connecticut and Edward J. Markey of Massachusetts, both Democrats, in a joint statement. “This outcome is extremely disappointing.”
G.M. struck a tone of contrition on Thursday. In a meeting with employees at G.M.’s huge technical center north of Detroit, Mary T. Barra, the chief executive, again apologized.
“Let’s pause for a moment and remember that people were hurt and died in our cars,” Ms. Barra told about 1,000 workers gathered in an atrium at the company’s vehicle engineering center. “That’s why we are here.”
Ms. Barra had flown back overnight from the Frankfurt Auto Show to attend the town hall, and then take questions from reporters.
Her address to workers highlighted all the improvements in safety practices that G.M. has made since the company first began recalling the defective vehicles.
But she admitted that it will take more than apologies for G.M. — which went bankrupt in 2009 and needed a $49 billion government bailout to survive — to restore its reputation in the eyes of consumers.
“We accept the penalties being announced today because they are part of being accountable,” she said. “But apologies and accountability do not amount to much if you don’t change your behavior.”
Her address to employees came on a day when G.M. reached another legal milestone, setting aside $575 million to resolve the cases of about 1,380 people, all represented by Robert C. Hilliard. Mr. Hilliard, a lawyer who is among those leading the class-action cases against the automaker, said that 45 death cases were among those settled. The $575 million also includes the settlement of a shareholder suit filed by the New York State Teachers’ Retirement System.
Altogether, the private lawsuit settlements resolve more than half the outstanding private cases against G.M.
In the end, victims said they were unsatisfied by the Justice Department’s announcement.
“I don’t see how Mary Barra can sleep,” said Laura Christian, the birth mother of 16-year-old Amber Rose, who was killed in a July 2005 crash in Maryland. She said the deferred-prosecution agreement was like probation.
“We buried our loved ones because G.M. buried a deadly defect,” Ms. Christian said. “And yet today all G.M. has to do is write another check to escape. We can’t escape — every day I am missing a daughter.”
Friday, September 18, 2015
ACLU: HOSPITAL DENIES TUBAL LIGATION TO WOMAN WITH TUMOR
Original Story: freep.com
A Flint-area Catholic hospital has until the end of Friday to change its mind and perform a tubal ligation on a pregnant woman with a brain tumor – or face a potential lawsuit from the American Civil Liberties Union. A San Diego healthcare lawyer is reviewing the details of this case.
The ACLU is fighting on behalf of Jessica Mann, 33, of Flushing, a pregnant woman with a life-threatening brain tumor who was denied a request to get her tubes tied at the time of her scheduled cesarean section next month.
According to the ACLU, Genesys Regional Medical Center in Grand Blanc won't allow the sterilization procedure on religious grounds. Mann's doctor requested a medical exception to the hospital's prohibition on sterilization, arguing that a future pregnancy could harm Mann because of her brain tumor, said the ACLU.
But Genesys wouldn't budge, triggering a demand letter from the ACLU last week. The ACLU argues the hospital could be violating state law by denying appropriate care. An Albany healthcare lawyer is following this story closely.
Johnny Smith Jr., a spokesman for the hospital's parent, Ascension, declined comment, citing patient privacy. He would only say that the company follows the "ethical and religious directives" of the Catholic church.
This issue isn't a first for the ACLU, which last month convinced a Catholic hospital in California to change course in a similar case involving tubal ligation.
Under the threat of a potential lawsuit from the ACLU, Mercy Medical Center in Redding, Calif., changed its mind in agreeing to perform a postpartum tubal litigation on a woman. The hospital had initially denied a request by the woman's doctor to tie her tubes, but changed course within days of receiving a demand letter from the ACLU.
According to the ACLU, tubal ligation, commonly known as getting one's “tubes tied,” is the contraception method of choice for more than 30% of married women in the U.S. An estimated 600,000 women annually undergo this procedure, which is often performed at the time of a cesarean section, the group said. A Chicago healthcare lawyer defends clients in a wide variety of large, complex health care and medical negligence cases.
Ten of the 25 largest hospital systems in the U.S. are Catholic-sponsored, and nearly one of nine hospital beds in the country is in a Catholic facility. According to the ACLU, these Catholic hospitals operate under binding “ethical and religious directives” issued by the U.S. Conference of Catholic Bishops. Among the directives is that sterilization for the purpose of contraception as “intrinsically evil.”
The ACLU argues that bishops should not be playing the role of doctors.
A Flint-area Catholic hospital has until the end of Friday to change its mind and perform a tubal ligation on a pregnant woman with a brain tumor – or face a potential lawsuit from the American Civil Liberties Union. A San Diego healthcare lawyer is reviewing the details of this case.
The ACLU is fighting on behalf of Jessica Mann, 33, of Flushing, a pregnant woman with a life-threatening brain tumor who was denied a request to get her tubes tied at the time of her scheduled cesarean section next month.
According to the ACLU, Genesys Regional Medical Center in Grand Blanc won't allow the sterilization procedure on religious grounds. Mann's doctor requested a medical exception to the hospital's prohibition on sterilization, arguing that a future pregnancy could harm Mann because of her brain tumor, said the ACLU.
But Genesys wouldn't budge, triggering a demand letter from the ACLU last week. The ACLU argues the hospital could be violating state law by denying appropriate care. An Albany healthcare lawyer is following this story closely.
Johnny Smith Jr., a spokesman for the hospital's parent, Ascension, declined comment, citing patient privacy. He would only say that the company follows the "ethical and religious directives" of the Catholic church.
This issue isn't a first for the ACLU, which last month convinced a Catholic hospital in California to change course in a similar case involving tubal ligation.
Under the threat of a potential lawsuit from the ACLU, Mercy Medical Center in Redding, Calif., changed its mind in agreeing to perform a postpartum tubal litigation on a woman. The hospital had initially denied a request by the woman's doctor to tie her tubes, but changed course within days of receiving a demand letter from the ACLU.
According to the ACLU, tubal ligation, commonly known as getting one's “tubes tied,” is the contraception method of choice for more than 30% of married women in the U.S. An estimated 600,000 women annually undergo this procedure, which is often performed at the time of a cesarean section, the group said. A Chicago healthcare lawyer defends clients in a wide variety of large, complex health care and medical negligence cases.
Ten of the 25 largest hospital systems in the U.S. are Catholic-sponsored, and nearly one of nine hospital beds in the country is in a Catholic facility. According to the ACLU, these Catholic hospitals operate under binding “ethical and religious directives” issued by the U.S. Conference of Catholic Bishops. Among the directives is that sterilization for the purpose of contraception as “intrinsically evil.”
The ACLU argues that bishops should not be playing the role of doctors.
Thursday, September 17, 2015
GM TO PAY $900M TO RESOLVE IGNITION SWITCH PROBE
Original Story: detroitnews.com
Washington — Federal prosecutors are expected to announce Thursday that General Motors Co. will pay a $900 million fine as part of a criminal investigation into GM’s delayed recall into defective ignition switches in 2.6 million cars, The Detroit News has learned. A Charleston defective products lawyer is reviewing the details of this case.
GM is expected to be charged with at least two felonies, including wire fraud, for misleading consumers and hiding information from the National Highway Traffic Safety Administration, three people briefed on the settlement said. It also will enter into a deferred prosecution agreement with the U.S. Attorney’s Office in New York over the defect that was linked to 124 deaths, as well as face oversight from an independent monitor. GM will not have to plead guilty as part of the agreement.
NHTSA declined to comment.
The defective ignition switch, mostly installed in Chevrolet Cobalts and Saturn Ions, allowed the key to inadvertently turn off the engine in some vehicles, which disabled power steering and air bags. GM CEO Mary Barra fired 15 employees and disciplined five others last year after an internal investigation showed the automaker largely ignored the problem for a decade. An Irvine product liability lawyer represents clients who have been injured as a direct result of the use or contact with a defective or dangerous product.
The $900 million fine is less than the $1.2 billion that Toyota Motor Corp. paid last year after it was charged with wire fraud — because federal prosecutors credited the Detroit automaker with swift and significant cooperation. The government is not expected to announce any criminal prosecutions of individuals, but prosecutors are expected to say the investigation remains open.
The Wall Street Journal reported some details of the settlement earlier.
A spokeswoman for U.S. Attorney Preet Bharara in New York declined to comment, as did GM, which reiterated it is cooperating fully with the investigation. A formal announcement is expected Thursday in New York. Resolving the probe represents a major milestone for Barra, who took over shortly before the scandal exploded last year. A Jackson product liability lawyer is following this story closely.
The settlement comes after GM set aside $4.2 billion last year to pay for recall and ignition compensation fund expenses and transformed how it approached safety issues. Barra repeatedly appeared before Congress to address the ignition problems and the automaker came under withering criticism for its approach to safety. Barra blamed a “culture of incompetence and neglect” and pledged never to forget what happened.
Peter J. Henning, a Wayne State University law professor, said the fact that GM cooperated may be why its fine comes in less than Toyota’s. He expects the Justice Department will say it continues to investigate individuals related to the case and that the continuing investigation doesn’t preclude charging individuals.
“GM reacted,” he said. “Once it became known to senior management, they took steps to address it not only with victims, but also with the government. They were much more forthcoming and essentially it created a template on how to cooperate.”
Laura Christian of Harwood, Maryland is the birth mother of Amber Marie Rose, a 16-year-old who was killed in a 2005 crash tied to the ignition switch defect. Christian said she will be greatly disappointed if GM is fined less than Toyota and if nobody from GM is criminally charged.
“This is one of the worst days since Amber died,” Christian said by phone Wednesday night, nearly in tears. “I was really hoping, really, really hoping that the Justice Department would hold GM accountable.”
In May 2014, GM agreed to pay a then record-setting $35 million civil penalty to the National Highway Traffic Safety Administration and make significant safety changes. In doing so, GM admitted it broke the law. It entered into a three-year consent agreement with NHTSA.
Transportation officials said some within GM knew ignition switch problems would turn off air bags in Cobalts as early as November 2009. NHTSA Acting Administrator David Friedman said he had no records indicating Barra knew of the defect, but said that GM engineers, investigators, lawyers and other executives knew of it and failed to act to protect consumers.
The Securities and Exchange Commission, Transport Canada and all 50 state attorneys general also have been investigating GM for nearly 18 months.
Federal prosecutors, aided by the FBI and a federal grand jury, have interviewed dozens of current and former GM executives, lawyers and engineers, including Barra. They also have talked to employees at auto supplier Delphi, which made the ignition switch.
A fund run by compensation expert Ken Feinberg approved compensation for nearly 10 times more than the 13 deaths GM executives reported as the controversy unfolded in 2014. The fund also approved claims for 17 serious injuries and 258 less-serious injuries.
GM is paying at least $1 million in each death claim and gave Feinberg and his staff the final decision on approving or rejecting all claims. It placed no cap on the amount Feinberg could award, but he is not allowed to assess “punitive damages.” A Nashville wrongful death lawyer represents clients in wrongful death cases and negligent accidents.
The automaker expects it will spend $625 million in compensation; it already has paid out $280 million in claims.
Joseph Spak, an analyst with RBC Capital Markets LLC, said in a note to investors Wednesday that the firm had been expecting a $1.5 billion settlement for GM with the Justice Department. If the fine comes in smaller, Spak said it would be a “slight positive” for GM and its stock.
Henning said the settlement with the DOJ came quickly for a case such as this.
“It lets GM put it behind it quickly, and that way it becomes exactly what GM wants, which is (to be) yesterday’s news,” he said.
GM also faces hundreds of lawsuits stemming from the faulty part, including 100 U.S. class-action lawsuits and 21 in Canada from owners who say the recalls reduced the value of their vehicles.
The automaker also faces 172 U.S. lawsuits and nine in Canada over injury or death claims; those are separate from the compensation claims. There are also suits pending by shareholders. A Detroit automotive lawyer represent clients in a variety of automotive law matters including product liability matters.
The first trial stemming from the dozens of suits filed against GM and consolidated in front of a federal judge in New York is set to start in January. Lawyers are deposing dozens of current and former GM executives, including Barra set for October.
Washington — Federal prosecutors are expected to announce Thursday that General Motors Co. will pay a $900 million fine as part of a criminal investigation into GM’s delayed recall into defective ignition switches in 2.6 million cars, The Detroit News has learned. A Charleston defective products lawyer is reviewing the details of this case.
GM is expected to be charged with at least two felonies, including wire fraud, for misleading consumers and hiding information from the National Highway Traffic Safety Administration, three people briefed on the settlement said. It also will enter into a deferred prosecution agreement with the U.S. Attorney’s Office in New York over the defect that was linked to 124 deaths, as well as face oversight from an independent monitor. GM will not have to plead guilty as part of the agreement.
NHTSA declined to comment.
The defective ignition switch, mostly installed in Chevrolet Cobalts and Saturn Ions, allowed the key to inadvertently turn off the engine in some vehicles, which disabled power steering and air bags. GM CEO Mary Barra fired 15 employees and disciplined five others last year after an internal investigation showed the automaker largely ignored the problem for a decade. An Irvine product liability lawyer represents clients who have been injured as a direct result of the use or contact with a defective or dangerous product.
The $900 million fine is less than the $1.2 billion that Toyota Motor Corp. paid last year after it was charged with wire fraud — because federal prosecutors credited the Detroit automaker with swift and significant cooperation. The government is not expected to announce any criminal prosecutions of individuals, but prosecutors are expected to say the investigation remains open.
The Wall Street Journal reported some details of the settlement earlier.
A spokeswoman for U.S. Attorney Preet Bharara in New York declined to comment, as did GM, which reiterated it is cooperating fully with the investigation. A formal announcement is expected Thursday in New York. Resolving the probe represents a major milestone for Barra, who took over shortly before the scandal exploded last year. A Jackson product liability lawyer is following this story closely.
The settlement comes after GM set aside $4.2 billion last year to pay for recall and ignition compensation fund expenses and transformed how it approached safety issues. Barra repeatedly appeared before Congress to address the ignition problems and the automaker came under withering criticism for its approach to safety. Barra blamed a “culture of incompetence and neglect” and pledged never to forget what happened.
Peter J. Henning, a Wayne State University law professor, said the fact that GM cooperated may be why its fine comes in less than Toyota’s. He expects the Justice Department will say it continues to investigate individuals related to the case and that the continuing investigation doesn’t preclude charging individuals.
“GM reacted,” he said. “Once it became known to senior management, they took steps to address it not only with victims, but also with the government. They were much more forthcoming and essentially it created a template on how to cooperate.”
Laura Christian of Harwood, Maryland is the birth mother of Amber Marie Rose, a 16-year-old who was killed in a 2005 crash tied to the ignition switch defect. Christian said she will be greatly disappointed if GM is fined less than Toyota and if nobody from GM is criminally charged.
“This is one of the worst days since Amber died,” Christian said by phone Wednesday night, nearly in tears. “I was really hoping, really, really hoping that the Justice Department would hold GM accountable.”
In May 2014, GM agreed to pay a then record-setting $35 million civil penalty to the National Highway Traffic Safety Administration and make significant safety changes. In doing so, GM admitted it broke the law. It entered into a three-year consent agreement with NHTSA.
Transportation officials said some within GM knew ignition switch problems would turn off air bags in Cobalts as early as November 2009. NHTSA Acting Administrator David Friedman said he had no records indicating Barra knew of the defect, but said that GM engineers, investigators, lawyers and other executives knew of it and failed to act to protect consumers.
The Securities and Exchange Commission, Transport Canada and all 50 state attorneys general also have been investigating GM for nearly 18 months.
Federal prosecutors, aided by the FBI and a federal grand jury, have interviewed dozens of current and former GM executives, lawyers and engineers, including Barra. They also have talked to employees at auto supplier Delphi, which made the ignition switch.
A fund run by compensation expert Ken Feinberg approved compensation for nearly 10 times more than the 13 deaths GM executives reported as the controversy unfolded in 2014. The fund also approved claims for 17 serious injuries and 258 less-serious injuries.
GM is paying at least $1 million in each death claim and gave Feinberg and his staff the final decision on approving or rejecting all claims. It placed no cap on the amount Feinberg could award, but he is not allowed to assess “punitive damages.” A Nashville wrongful death lawyer represents clients in wrongful death cases and negligent accidents.
The automaker expects it will spend $625 million in compensation; it already has paid out $280 million in claims.
Joseph Spak, an analyst with RBC Capital Markets LLC, said in a note to investors Wednesday that the firm had been expecting a $1.5 billion settlement for GM with the Justice Department. If the fine comes in smaller, Spak said it would be a “slight positive” for GM and its stock.
Henning said the settlement with the DOJ came quickly for a case such as this.
“It lets GM put it behind it quickly, and that way it becomes exactly what GM wants, which is (to be) yesterday’s news,” he said.
GM also faces hundreds of lawsuits stemming from the faulty part, including 100 U.S. class-action lawsuits and 21 in Canada from owners who say the recalls reduced the value of their vehicles.
The automaker also faces 172 U.S. lawsuits and nine in Canada over injury or death claims; those are separate from the compensation claims. There are also suits pending by shareholders. A Detroit automotive lawyer represent clients in a variety of automotive law matters including product liability matters.
The first trial stemming from the dozens of suits filed against GM and consolidated in front of a federal judge in New York is set to start in January. Lawyers are deposing dozens of current and former GM executives, including Barra set for October.
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