Letter of Apology » 2008 » March

Keith Shelton Reinstated To Mississippi Bar

Dave Westheimer — Mon, 31 Mar 2008 05:32:56 +0000

Last month we posted here concerning a 5-part series at folo about Keith Shelton, an attorney in Mississippi who was framed and disbarred in what can best be characterized as an outrageous miscarriage of justice by a former district attorney and a corrupt judge. We are pleased to note that the Mississippi Supreme Court on Friday reinstated Keith Shelton (.pdf) to the Mississippi Bar. The decision is well worth reading as an official confirmation of the underlying facts; note especially the concurring opinion of Justice Dickerson. The Clarion-Ledger story here fails to accurately report the background of the case. Congratulations to Mr. Shelton, and a hat tip to folo.

A Bizarre Move By Dickie Scruggs

Dave Westheimer — Mon, 31 Mar 2008 05:05:58 +0000

A two paragraph addendum to this Sun Herald story about the suspension of Judge Bobby DeLaughter indicates that Dickie Scruggs has asked the Mississippi Supreme Court to dismiss disbarment proceedings against him subsequent to his guilty plea “because U.S. District Judge Neal B. Biggers Jr. has not yet accepted his plea.”

However, on page 16 of the transcript of Scruggs’ March 14 plea hearing, Judge Biggers says [emphasis added] “the Court will accept your guilty plea and enter a judgment of guilty on your plea.”

Despite signing a plea agreement, Scruggs had to be prodded by his attorney John Keker into admitting his guilt in open court. Now this. It’s hard to figure out what he hopes to accomplish by this move, but once Judge Biggers learns of it, we shall probably hear more in short order.

Title Agent Sentenced, Mortgage Broker Pleads Guilty In Equity Stripping Scheme

Dave Westheimer — Mon, 31 Mar 2008 05:01:51 +0000

Andrea Batronie, a licensed title agent from Land O’Lakes, Florida, was sentenced on Friday to 30 months in prison by US District Judge Richard Lazzara in Tampa for her part in a $6 million “equity stripping” mortgage fraud scheme that included identity theft. Batronie was found guilty of conspiring to commit mail, bank and wire fraud last October. A day earlier, licensed mortgage broker Luis Uribe pleaded guilty to single counts of wire fraud and aggravated identity theft in the same scheme. Uribe is said to have obtained 32 mortgage loans under false pretenses through a shell contracting company using stolen identities, apparently on the premise of additional construction work to be done. However, no work was ever performed by the contracting company. At closing Batronie would divert the funds into bank accounts under their control. Tampa Tribune, Tampa Bay Business Journal.

Judge Limits Prosecution Scope in Schiff Case

Dave Westheimer — Sun, 30 Mar 2008 05:19:09 +0000

A March 19 ruling in the case of former Bristol-Myers Squibb CFO and senior VP Frederick Schiff has limited the scope of the prosecution’s case and delayed the trial which was to have begun last week in US District Court in Newark, New Jersey while the government appeals the ruling. Schiff and former Bristol-Myers executive VP Richard Lane were indicted in 2005 on charges of conspiracy and securities fraud in connection with a “channel stuffing” scheme to inflate sales. US District Judge Faith Hochberg’s ruling prevents prosecutors from tying Schiff’s alleged activities to investor losses when Bristol-Myers Squibb’s stock price dropped when the practice was disclosed. Judge Hochberg also criticized prosecutors for repeatedly changing the theory of the crime, saying “the court will permit no further ‘legal theory morphs’ in this case.” Lane’s trial will also be delayed. NY Times, Newark Star-Ledger.

Convicted National Century Exec Rebecca Parrett AWOL, Arrest Warrant Issued

Dave Westheimer — Sat, 29 Mar 2008 06:18:56 +0000

In Columbus, Ohio on Thursday evening, US District Judge Gregory Frost issued a bench warrant for the arrest of Rebecca Parrett, one of the five executives of National Century Financial Enterprises convicted on March 13 on fraud charges in connection with the company’s 2002 collapse (here and earlier). Parrett, a co-founder of the company and vice chairwoman, secretary, treasurer and director, was found guilty of one count of conspiracy, six counts of securities fraud, one count of wire fraud and one count of money laundering. After the verdicts were announced, US District Judge Algenon Marbley allowed all five convicted executives to remain under house arrest with electronic monitoring pending sentencing. Parrett was supposed to report to the Pretrial Services Office near her home in Carefree, Arizona, for installation of an electronic ankle bracelet but she failed to show up and her whereabouts are unknown. The US Marshal’s Office has begun a search. Columbus Business First, Bloomberg.

Mississippi Supreme Court Suspends DeLaughter

Dave Westheimer — Sat, 29 Mar 2008 06:17:22 +0000

In response to the petition by the Mississippi Commission on Judicial Performance for an interim suspension of Circuit Judge Bobby DeLaughter (earlier here and here), the Mississippi Supreme Court on Friday suspended DeLaughter indefinitely. The commission has charged DeLaughter with willful misconduct in two cases, Wilson v. Scruggs and Kirk v. Pope. In the former case, Joey Langston has pleaded guilty to bribing DeLaughter via former Hinds County DA Ed Peters on behalf of Dickie Scruggs. No one else has yet been indicted but DeLaughter is known to be under federal investigation in the case (Clarion-Ledger, Sun Herald).

More On Siegelman’s Release Pending Appeal, Possible HJC Testimony

Dave Westheimer — Fri, 28 Mar 2008 07:20:57 +0000

Just hours after the House Judiciary Committee asked the DOJ to release former Alabama Governor Don Siegelman under guard to allow him to testify before Congress in May (Montgomery Advertiser, AP) — a move brought about by the DOJ’s refusal to cooperate with the HJC — the US Court of Appeals for the Eleventh Circuit on Thursday granted Siegelman’s motion for release on bond pending appeal, finding that his appeal raises substantial questions of law or fact. Since this issue had twice before been remanded to district court, the decision can be viewed as a direct repudiation of US District Court Judge Mark Fuller’s actions. Siegelman may be released as early as today (NYT (with link to order), AP). Scott Horton at Harper’s has editorial commentary here. In related news, the 11th Circuit has has given attorneys for Siegelman and HealthSouth founder Richard Scrushy until May 23 to file appellate briefs. Siegelman’s attorney Vince Kilborn estimated oral arguments on the case could be heard in late 2008 (AP).

Former Suprema Specialties CEO Sentenced To 15 Years in Prison

Dave Westheimer — Fri, 28 Mar 2008 06:35:41 +0000

In Newark, New Jersey on Thursday, US District Judge Stanley Chesler sentenced former Suprema Specialties Inc. President and CEO Mark Cocchiola to 15 years in prison for his role in a fraud that caused the Paterson, New Jersey cheesemaker to collapse in 2002. He was also ordered to pay $115 million restitution to investors and banks; the total loss has been estimated at more than $177 million. Cocchiola and Suprema Specialties CFO Steve Venechanos were convicted in April 2007 on 38 counts including conspiracy, bank fraud, making false statements to the SEC,wire fraud and mail fraud. The charges arose from a complex and long-running scheme to increase the company’s stock price by fraudulently inflating inventories and by billing $400 million in non-existent sales. Venechanos is scheduled for sentencing on April 7. New Jersey Star-Ledger, AP.

Breaking News: Siegelman Granted Appeal Bond

Dave Westheimer — Thu, 27 Mar 2008 21:52:17 +0000

The US Court of Appeals for the Eleventh Circuit on Thursday granted former Alabama Governor Don Siegelman’s request to be released from prison pending the outcome of his appeal (Birmingham News).

Bankruptcy Court Examiner Points Finger At KPMG In New Century Subprime Failure

Solomon Wisenberg — Thu, 27 Mar 2008 13:44:35 +0000

KPMG either initiated or tolerated accounting fraud at New Century Financial Corp., according to a 581 page report by Michael Missal, the bankruptcy court’s independent examiner appointed at the request of the Department of Justice to investigate New Century’s 2007 plunge into bankruptcy. The report also blames New Century’s management, and details significant departures from generally accepted accounting practice. New Century was once the nation’s second largest subprime lender. Reuters has an excellent piece here by Amanda Beck. The Washington Post’s Carrie Johnson has a story as well. KPMG, the financial industry’s poster child for abandoning your employees in the face of a federal investigation, vigorously denies the report’s conclusions.