November 2008

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Court Gets Ticked Off Again At Stevens’ Prosecutors

November 29, 2008 in Prosecutorial Misconduct, Public Corruption by Solomon Wisenberg | No comments

The full text of Judge Emmet Sullivan’s Friday, November 28, order in the Ted Stevens case reads as follows:

“MINUTE ORDER as to THEODORE F. STEVENS. The Court, sua sponte, cancels the hearing scheduled for December 1, 2008. The government is directed to file a response to the defendant’s Motion to Access Government Filing and for Consideration of Additional Remedies by no later than December 15, 2008. The government shall also address any reasons why the Court should not strike the government’s ex parte pleading for failure to comply with Local Criminal Rule 49.1(h). The Court notes it has reminded the government of LCrR 49.1(h) in the past with respect to sealed filings in this case. See, e.g., MINUTE ORDER dated September 4, 2008. The defendant’s reply shall be filed December 29, 2008. A hearing is scheduled on the pending motions for January 15, 2009 at 2:00 pm in Courtroom 24A. Signed by Judge Emmet G. Sullivan on November 28, 2008.”

How did we get here? To recap, on November 15, government witness David Anderson sent a post-verdict letter to the Court alleging that some of his trial testimony was false and that the government knew it was false. (The government had been forced to call Anderson to the stand after Judge Sullivan struck Anderson’s time sheets from the record based on the government’s failure to disclose exculpatory information to the defense concerning Anderson’s work history.) Anderson’s letter apparently arrived at the Court on November 20. Judge Sullivan entered Anderson’s letter into the record on November 21. Later that day, the defense filed a motion for discovery and an evidentiary hearing regarding Anderson’s allegations.

Even later that day, the government filed an initial response, promising to respond more fully by November 24. November 24 came and went, seemingly without a government filing. But that’s because the government made its filing on that date ex parte. On November 25, the Court set a “brief hearing” on the defense’s motion, for Monday, Decmber 1 at 10:30. On November 26, the Court issued a new order changing the hearing to a staus conference.

Also on the 26th, the defense filed a motion for access to the government’s allegedly unauthorized November 24 ex parte filing, and for additional remedies, contending that: “The government’s unilateral ex parte communication with the Court is a clear violation of the rules. The ex parte filing should be rejected; its contents should be disclosed to defense counsel; and the Court should consider whether other remedies are appropriate.” The defense maintained that the government should have informed the defense of its intent to file an ex parte motion ahead of time, so that the defense could have litigated the issue with the Court. It looks from the wording of yesterday’s order as if the Court is inclined to agree with the defense. The Anchorage Daily News has a story about  the latest developments here.

Government Tell Its Story Ex Parte in Stevens Case

November 27, 2008 in Prosecutorial Misconduct, Public Corruption by Solomon Wisenberg | No comments

According to an ADN.com story here, the government did make its promised Monday filing, responding to allegations of subornation of perjury, in the Ted Stevens case. It’s just that the filing was ex parte, allegedly to protect a separate ongoing investigation. To nobody’s surprise, Stevens’ lawyers are upset about the manner in which the government made the ex parte filing and notified, or failed to notify, the Stevens camp.

A Thanksgiving Story

November 27, 2008 in Uncategorized by Dave Westheimer | No comments

Giving Thanks by Jennifer James in the Los Angeles Times.

If only Beltway politicians could understand as well as a child!

Renzi Co-Defendant Sandlin Gets Three Year Prison Sentence In Texas Case

November 27, 2008 in Bank Fraud by Dave Westheimer | No comments

In Sherman, Texas on Tuesday, US District Judge Richard Schell sentenced James Sandlin of Sherman to three years in prison in a bank fraud case. A jury convicted Sandlin in June on two counts of submitting a false statement to a federally insured financial institution (earlier); the indictment charged that he failed to disclose a $996,000 debt on financial statements he submitted to a Sherman bank (DOJ, AP).

Sandlin is former business associate of US Rep. Rick Renzi (R-Ariz.) and was indicted with Renzi in February in a different case (earlier).

Former Prince George’s School Superintendent Sentenced To Six Years In Prison

November 27, 2008 in Public Corruption by Dave Westheimer | No comments

UD District Judge Peter Messitte on Tuesday sentenced former Prince George’s County Schools Superintendent Andre Hornsby to six years in prison for illegally steering district contracts to LeapFrog Enterprises, a company run by his now ex-girlfriend, in exchange for kickbacks. Hornsby was convicted in July on six of the 22 public corruption-related counts he faced: three counts of honest service wire fraud and one count each of evidence tampering, witness tampering and obstruction of justice (earlier). Although the DOJ press release describes a second scheme in detail, the three wire fraud counts on which he was convicted all relate to the LeapFrog allegations (Baltimore Examiner).

Judge Sullivan Schedules Hearing On Stevens Witness

November 26, 2008 in Prosecutorial Misconduct, Public Corruption by Dave Westheimer | No comments

US District Judge Emmet Sullivan on Wednesday scheduled a hearing for next Monday to consider a request by attorneys for Sen. Ted Stevens to question prosecution witness Dave Anderson about the letter he sent to the court and lawyers for both sides (earlier here and here). Anderson, a former VECO employee and nephew of former VECO CEO Bill Allen, is is seking to “clarify” his testimony at trial that he had not been offered immunity in exchange for his testimony against Stevens (WaPo).

NatWest Three’s Bermingham Returns To UK

November 26, 2008 in Enron by Dave Westheimer | No comments

Bloomberg reports that former NatWest investment banker David Bermingham was flown to the UK on November 21 to finish serving his 37 month prison sentence for wire fraud in connection with a scheme devised by former Enron CFO Andrew Fastow. Bermingham entered prison in May. All three bankers were cleared to return on November 6 (earlier). In the UK, unlike in the US federal system, Bermingham will automatically be eligible for parole after serving half his sentence.

Pastor Convicted, Associate Pleads Guilty In Attempted Bankruptcy Fraud

November 26, 2008 in Other Fraud by Dave Westheimer | No comments

A federal jury in Manhattan last week convicted William Spencer of Oakland, California of bankruptcy fraud in connection with the attempted purchase of Hawaiian Airlines out of bankruptcy in 2003. Spencer is the pastor of the House of Truth in Oakland. He and his associate Paul Boghosian were indicted in April 2005 on charges that they attempted to defraud the US Bankruptcy Court for the District of Hawaii by providing false documentation claiming that their Hawaiian Investment Partners Group could provide $500 million in financing to reorganize the airline. They then allegedly used the false documentation to solicit investors, since they apparently didn’t actually have any money. Boghosian pleaded guilty to bankruptcy fraud on October 29. Sentencing for both men in scheduled for January 30, 2009 before US District Judge Loretta Preska, who presided over the trial (Reuters, DOJ).

Report Reveals DeLaughter-Peters Connections In Eaton Case

November 25, 2008 in Dickie Scruggs, Public Corruption by Dave Westheimer | No comments

Eaton v. Frisby is a civil trade secrets case not directly related to Dickie Scruggs as far as we know, but it came to light as a result of what’s now known as the “Scruggs II” case. It’s under investigation by the FBI in connection with public corruption allegations against Hinds County Circuit Judge Bobby DeLaughter and former Hinds County DA Ed Peters. Frisby maintains that DeLaughter started ruling in favor of Eaton once Peters secretly entered the case on behalf of Eaton.

In a Monday Clarion Ledger story, Jimmie Gates reports on a report filed under seal earlier this month by David Dogan III. Dogan was appointed Special Master in the case after an earlier turn of events we covered here, when DeLaughter removed the first special master under suspicious circumstances and the replacement special master resigned.

In the report, Dogan asserts that Peters maintained improper contact with DeLaughter and recommends that emails and documents showing the communication be produced in connection with the lawsuit.

The documents to be produced show a design, and in certain cases direct evidence, of engaging in contact with Judge DeLaughter on an ex parte basis. Such conduct is not permissible and is, as a matter of law, improper.

In addition to the federal investigation, DeLaughter is the subject of a continuing investigation by the Mississippi Judicial Performance Commission, which suspended him with pay. Circuit Judge Swan Yerger is now handling the lawsuit.

Ex-CFO Of Hilfiger Licensee Sentenced To 66 Months In $19 Million Fraud

November 25, 2008 in Embezzlement by Dave Westheimer | No comments

Martin Bodner, former CFO of Tommy Hilfiger Handbags and Small Leather Goods Inc. (a Tommy Hilfinger licensee), was sentenced on Friday to 66 months in prison by US District Judge P. Kevin Castel in Manhattan. Bodner pleaded guilty on September 15 to a two-count information charging him with mail fraud and wire fraud (earlier); he admitted embezzling more than $19 million from the company between 2000 and 2007, largely by using his authority to secretly increase his salary and bonuses, arranging to be reimbursed for phony expenses and using company funds to pay for personal expenses. Bodner was also ordered to pay over $17.3 million restitution and to forfeit luxury items including real estate and cars (DOJ, North Country Gazette).

The Filing That Never Was? Government Fails To Deliver Promised Response In Latest Ted Stevens Donnybrook

November 25, 2008 in Prosecutorial Misconduct, Public Corruption by Solomon Wisenberg | No comments

In its preliminary response last Friday to Senator Stevens’s Motion For Discovery And An Evidentiary Hearing Regarding Allegations In Letter From David Anderson, the government noted its intent “to provide a more detailed submission to the Court on Monday.” The government also claimed to have “obtained substantial additional evidence…that prove [sic] the falsity of Mr. Anderson’s allegations and that further explicitly prove [sic] Mr. Anderson’s collusion with an interested party in the preparation and transmission of Mr. Anderson’s letter.” The government  then stated that it would “describe and submit that additional information to the Court in a subsequent filing on Monday.” Well, Monday has come and gone, and the PACER docket sheet indicates no new filings, under seal or otherwise, by the government. Anderson’s letter claimed, among other things, that his trial testimony denying government-offerred immunity to him and his family members was untrue and obtained under duress.

Couple Sentenced To 30 Months In Prison In Southwest Airlines Ticket Scam

November 24, 2008 in Wire Fraud by Dave Westheimer | No comments

Althea Jackson and her husband James Jackson on Thursday were each sentenced to 30 months in prison by US District Judge Orlando Garcia in San Antonio for their roles in the theft and resale of more than 5,600 ticket vouchers from Southwest Airlines, resulting in a loss to Southwest of $800,000. The Jacksons pleaded guilty to wire fraud on February 12. Our earlier coverage (here and here) details the involvement of public officials who bought tickets; those who did have all stated that they had no knowledge that the tickets were stolen. It’s not known if the investigation is still open (Express-News, DOJ).

More Charges In Rubashkin, Agriprocessors Case

November 24, 2008 in Bank Fraud, Other Fraud by Dave Westheimer | No comments

A superseding federal indictment unsealed on Friday afternoon includes the previous immigration and bank fraud charges against former Agriprocesssors CEO Sholom Rubashkin and adds new counts. Rubashkin now faces charges of conspiracy to harbor undocumented aliens for profit, harboring undocumented aliens for profit, conspiracy to commit document fraud, aiding and abetting document fraud, six counts of aiding and abetting aggravated identity theft, and two counts of bank fraud.

Also named are the corporation and four other management team members: Brent Beebe, Hosam Amara, Zeev Levi and Karina Freund. Amara and Levi are believed to have fled to Israel after the May immigration raid at the Postville, Iowa kosher meat processing plant. Amara and Freund were named in an earlier indictment. The Iowa Independent has a full listing of the charges and background.

Former Enron Prosecutor Blasts SEC Case Against Mark Cuban

November 24, 2008 in Insider Trading by Dave Westheimer | No comments

Former Enron Task Force co-lead prosecutor John Hueston says that the SEC’s insider trading case against Mark Cuban is flimsy, that Cuban isn’t an insider, and that he wouldn’t have brought the case:

….the case really appears to be just a he-said-she-said case. And so, I believe Mr. Cuban has a very strong factual defense before he even gets to any legal arguments. For an insider trading case, he’s not an insider at all. He is essentially a stockholder, essentially pitched to make an additional investment. He was disgusted by that pitch and the direction of the company and sold his stock. And he did so in a very open way consistent with someone who had nothing to hide.

And the SEC in a target-driven matter has now drummed up a case, based on pressured and apparently uncorroborated testimony of one other person on a phone line. That is certainly not a criminal case. And it makes for a risky and flimsy case even under a civil standard. It makes me wonder why the SEC has decided to file this case. And I would not be surprised at all if Mr. Cuban took the SEC to trial over this case.

Hueston is now a partner with Irell & Manella (Corporate Crime Reporter).

Poulsen Prosecutor Named Chief Counsel Of Office of Congressional Ethics

November 24, 2008 in Uncategorized by Dave Westheimer | No comments

The Columbus Dispatch reports that the Office of Congressional Ethics, created earlier this year by the House, will be led by AUSA Leo Wise (.pdf), who successfully prosecuted former National Century Financial Enterprises CEO Lance Poulsen in both his fraud and witness tampering trials. Wise was named staff director and chief counsel. He’ll have his hands full.

Stevens Prosecution Witness Says He Lied On Stand; DOJ Says He’s Lying Now

November 22, 2008 in Public Corruption by Dave Westheimer | No comments

VECO employee Dave Anderson, nephew of former VECO CEO Bill Allen, told jurors in the public corruption trial of Sen. Ted Stevens that he was testifying without a formal grant of immunity. He now says he had an immunity agreement with prosecutors and that he “would not have given the same testimony” without it (we briefly discussed his testimony here). His new statements came in a November 15 letter to US District Judge Emmet Sullivan and attorneys for both sides, and were publicly disclosed yesterday in a defense filing that accused prosecutors of suborning perjury.

Prosecutors filed a response later yesterday, saying they have proof that Anderson’s new statements are false and proof of “Mr. Anderson’s collusion with an interested party in the preparation and transmission of Mr. Anderson’s letter.” (WaPo)

Rubashkin Denied Bond On Bank Fraud Charges; Tension High In Town

November 21, 2008 in Bank Fraud by Dave Westheimer | No comments

After a Wednesday bond hearing in Cedar Rapids, Iowa, US Magistrate Judge Jon Scoles ruled on Thursday that former Agriprocessors CEO Sholom Rubashkin must remain in federal custody pending his trial on bank fraud charges. Scoles ruled that Rubashkin is a serious flight risk, citing substantial evidence against Rubashkin and the $20,000 in cash and passports found in a travel bag in the Rubashkin home. Agriprocessors is the giant kosher slaughterhouse in Postville, Iowa that was raided in May by immigration officials, resulting in the arrest and detention of about 400 illegal immigrants.

Rubashkin was arrested last Friday on the bank fraud charges (earlier); he is accused of diverting millions of dollars in customer payments that were part of First Bank’s collateral and instructing an employee to delete evidence of the scheme from the company’s computers. His arrest came just one day after he posted bond on criminal immigration charges resulting from the May raid. His trial on the immigration charges is scheduled for January 20, but no date has been scheduled on the bank fraud charges (Des Moines Register, Iowa Independent).

Meanwhile tensions are reportedly very high in Postville, where the plant sits idle and workers have not been paid as promised. Threats of violence have been reported (Iowa Independent, Failed Messiah).

Another Abramoff Scandal Case: Former Legislative Aide Pleads Guilty To Tax Charges

November 21, 2008 in Public Corruption by Dave Westheimer | No comments

Trevor Blackann, a former legislative assistant to Sen. Kit Bond (R-Mo.) and Rep. Roy Blount (R-Mo.), on Thursday pleaded guilty before US District Judge Richard Roberts in DC to making a false statement on his 2003 tax return. He admitted failing to report at least $4,100 in illegal gifts that he received from lobbyists connected with Jack Abramoff, including a paid trip to see a 2003 World Series game. He also “admitted knowing that the World Series trip and other tickets, meals and drinks provided by the lobbyists were given to him for, or because of, official action the lobbyists were seeking from Blackann.” The time frame of the activities correspond to his employment with Sen. Bond. No sentencing date was announced (DOJ, The Hill).

Former Pennsylvania Judge Convicted In Insurance Fraud

November 20, 2008 in Mail Fraud by Dave Westheimer | No comments

A federal jury in Pittsburgh on Wednesday convicted former Pennsylvania Superior Court Judge Michael Joyce on two counts of mail fraud and six counts of money laundering for giving false information to colllect an insurance settlement. Joyce collected $440,000 from two insurance companies after a slow-speed traffic accident in August 2001; evidence presented at trial showed that he used his official letterhead as part of his effort to obtain the settlement. He claimed to have debilitating neck and back injuries, but later engaged in physical activities in public, including golfing, scuba diving, rollerblading and piloting airplanes. Joyce was suspended last year after being indicted; he chose not to run for reelection. His sentencing is scheduled for March 10, 2009 (Law.com, AP).

Massachusetts State Senator Wilkerson Indicted On Extortion Charges, Resigns

November 20, 2008 in Public Corruption by Dave Westheimer | No comments

Longtime Massachusetts State Senator Dianne Wilkerson, a Democrat from Roxbury, was indicted on Tuesday by a federal grand jury in Boston on eight counts of of attempted extortion under color of official right for allegedly accepting $23,500 in cash payments between June 2007 and October 2008. Wilkerson was arrested on October 28 after being photographed by an undercover agent stuffing a $1000 cash payment into her bra (earlier). The bribes were allegedly paid to help secure a liquor license for a nightclub and to push legislation to transfer public land for a proposed private development. Wilkerson resigned her seat yesterday. The investigation remains active (DOJ, Boston Globe).

Langston Sentencing Set For December 16

November 19, 2008 in Dickie Scruggs, Public Corruption by Dave Westheimer | No comments

The Daily Journal reports that Joey Langston will be sentenced for his role in “Scruggs II” on December 16 before Chief US District Judge Michael Mills. Langston pleaded guilty in January to a one-count information charging him with bribing Judge Bobby DeLaughter. I anticipate more pleas and/or indictments shortly. Here’s our recent coverage.

Cuban: No Confidentiality Agreement

November 19, 2008 in Insider Trading by Dave Westheimer | No comments

Attorneys for Mark Cuban on Tuesday fired back at the SEC on Cuban’s Blog Maverick, disputing the SEC’s claim that Cuban agreed to keep confidential the information he was given about a proposed stock sale at Mamma.com Inc. The entry excerpts their transcribed interview with former Mamma.com CEO Guy Faure:

CHRISTOPHER CLARK :

1) Q- We spoke earlier about you were telling Mr. Cuban in words or substance : “I have confidential information for you”.

A- Right.

2) Q- Do you recall anything Mr. Cuban said in response or reply to that statement by you ?

A- No, I do not.

They also ask:

Why did the SEC end their multi-year investigation of Mamma.com Inc. for alleged securities laws violations days before interviewing present and former Mamma.com Inc. executives about this matter? Was the timing a coincidence? We think not.

Reuters has more.

PurchasePro’s Junior Johnson Sentenced To 108 Months In Prison For Securities Fraud

November 19, 2008 in Securities Fraud by Dave Westheimer | No comments

The founder and CEO of PurchasePro, Charles E. “Junior” Johnson of Las Vegas, on Friday was sentenced to 108 months in prison for securities fraud by US District Judge Liam O’Grady in Alexandria, Virginia. Johnson was convicted on May 15 of conspiracy, securities fraud, witness tampering, and obstruction in connection with a scheme to falsely inflate the now-defunct company’s first quarter 2001 revenue to meet Wall Street’s expectations. PurchasePro’s primary product was a business-to-business “marketplace license” sold through its business partner, AOL. Johnson was considered the mastermind of the scheme; six other PurchasePro executives were convicted and AOL paid $210 million to settle charges aiding and abetting securities fraud (DOJ, AP).

Senate Republicans Postpone Vote On Stevens

November 19, 2008 in Public Corruption by Dave Westheimer | No comments

McClatchy reports that Senate Republicans decided to postpone the vote they had plannned yesterday to decide whether to toss convicted Sen. Ted Stevens out of the Senate Republican Conference until his Senate race is resolved. The latest results (ADN/McClatchy) have Stevens’ Democratic opponent, Anchorage Mayor Mark Begich, ahead of Stevens by 3,724 votes with only about 2,500 absentee ballots left to be counted.

Agriprocessors’ Sholom Rubashkin Charged With Bank Fraud

November 18, 2008 in Bank Fraud by Dave Westheimer | No comments

It’s been a bad year for former Agriprocessors CEO Sholom Rubashkin. The giant kosher meat processing plant he ran for years was raided by ICE in May, resulting in the arrest and detention of about 400 illegal immigrants and his removal as CEO. The Postville, Iowa plant is owned by his father, Aaron Rubashkin. On October 30, Sholom Rubashkin was arrested and charged with charged with with conspiracy to harbor undocumented aliens for profit, aiding and abetting document fraud and aiding and abetting aggravated identity theft. On November 5, Agriprocessors filed Chapter 11 bankruptcy.

Last Friday, he was rearrested, this time on charges of bank fraud. He’s accused of defrauding a bank on Agriprocessors’ $35 million line of credit by diverting millions of dollars in customer payments that were part of the bank’s collateral. He also allegedly instructed an Agriprocessors employee to delete evidence of the scheme from the company’s computers.

Rubashkin had been released on bond Thursday on the October 30 immigration charges, but he was taken back into custody early Friday. After an initial appearance later on Friday before US Magistrate Judge Jon Scoles, he was ordered held pending a detention hearing scheduled for Wednesday (DOJ, Des Moines Register).

Washington Man Convicted In $35 Million Ponzi Scheme

November 18, 2008 in Securities Fraud by Dave Westheimer | No comments

After a two week trial in Tacoma, on Thursday a federal jury convicted Charles Nolon Bush of Port Orchard, Washington on 27 counts including securities fraud, wire fraud, mail fraud and money laundering in connection with a Ponzi scheme he allegedly operated between 1998 and 2002. Bush had left the US in 2002 and was arrested in Poland after being indicted in 2006. He was extradited in 2007. Bush was accused of accepting $35 million through three entities from hundreds of investors with promises of high yields, then diverting most of it to fund a lavish lifestyle and pay off early investors. He faces a statutory maximum of 20 years in prison on each count; sentencing is scheduled for February 6, 2009 before US District Judge Benjamin Settle (DOJ, Bizjournal).

Two WexTrust Owners Indicted In $9.2 Million Securities Fraud

November 18, 2008 in Securities Fraud by Dave Westheimer | No comments

When WexTrust Capital LLC principals Steven Byers and Joseph Shereshevsky were arrested in August and charged with conspiracy to commit secuties fraud (earlier), we speculated that more criminal counts might be forthcoming due to the massive civil fraud charges filed by the SEC which allege a $255 million Ponzi scheme. Last week, Byers and Shereshevsky were indicted on one count of securities fraud and one count of conspiracy in connection with the same $9.2 million fraud scheme alleged when they were arrested. No further criminal activities are included in the indictment — at least, not yet (DOJ, Virginian-Pilot).

Mark Cuban Documents Bailout Abuses, SEC Charges Him With Insider Trading

November 17, 2008 in Insider Trading by Dave Westheimer | No comments

October 13: Mark Cuban launches Bailout Sleuth, a blog which exposes the secrecy surrounding the government TARP bailout and documents the massive giveaway of federal funds.

November 17: The SEC files a civil complaint (.pdf) charging Cuban with insider trading, alleging that he avoided a loss of $750,000 by selling his shares of Mamma.com Inc. based on non-public information.

Coincidence? Cuban’s response on his Blog Maverick claims that the matter has been before the SEC for two years. Why now?

Cuban calls it “a product of gross abuse of prosecutorial discretion.” It’s also pocket change to him. Bloomberg has more.

More Prosecutorial Misconduct Allegations Surface In Siegelman Appeal

November 17, 2008 in Prosecutorial Misconduct, Public Corruption by Dave Westheimer | No comments

TIME reported on Friday that it has obtained internal documents showing that USA Leura Canary continued to direct the prosecution of former Alabama Governor Don Siegelman long after she formally recused herself. Canary’s husband Bill is a close political ally of Alabama Governor Bob Riley, who defeated Siegelman in 2002 and easily won reelection against him in 2006 after he was convicted in mid-campaign. The documents are among those provided by whistleblower Tami Grimes, who was prominently featured in 60 Minutes’ feature on the Siegelman case. Grimes also provided evidence of contact between a juror and a member of the prosecution team.

The US Court of Appeals for the Eleventh Circuit will hear oral arguments December 9 in the appeal of Siegelman and co-defendant Richard Scrushy. The DOJ and the House Judiciary Committee continue to investigate. The Press-Register has more.

Second Scruggs Criminal Case Still Percolating

November 17, 2008 in Dickie Scruggs, Public Corruption by Dave Westheimer | No comments

The “other” criminal matter involving Dickie Scruggs is the case in which Joey Langston pleaded guilty in January to bribing Judge Bobby DeLaughter via former Hinds County DA Ed Peters on behalf of Scruggs to influence the Wilson v. Scruggs civil suit. Prosecutors are referring to this case as “Scruggs II”. We’ve heard nothing recently until last week, when prosecutors filed a motion for downward departure from the maximum sentence permitted under Langston’s plea agreement. The motion was supposed to be filed under seal; it was inadvertently made public and quickly withdrawn.

While it’s no secret that Langston pleaded guilty (.pdf) and agreed to cooperate in exchange for a maximum sentence of 36 months, the withdrawn filing contained details not intended to be made public. Still, we can tell you that the case is very much alive (Clarion-Ledger, AP/Sun Herald).

Supreme Court Will Hear Appeal Of Enron Broadband’s Yeager

November 17, 2008 in Enron by Dave Westheimer | No comments

The US Supreme Court on Friday agreed to hear the appeal of former Enron Broadband Division strategic planning executive Scott Yeager, who is fighting a retrial on insider trading charges. Yeager’s retrial on 13 onsider trading and money laundering counts had been scheduled for next March before US District Judge Vanessa Gilmore in Houston, but the Supreme Court is not expected to hear arguments before February or March. Yeager was acquitted in 2005 on conspiracy and fraud counts but jurors were hung on insider trading and money laundering counts. The essence of his appeal is that he couldn’t have engaged in insider trading and money laundering since he’s not guilty of participating in the alleged conspiracy and fraud. In March, a three-judge panel of the Fifth Circuit ruled that Gilmore was correct in refusing to dismiss the counts.

The Court’s list of accepted cases didn’t include the appeal of Yeager’s co-defendant Rex Shelby, former broadband divison software executive. Shelby’s attorney held out hope that he won’t be on Monday’s rejected list. His retrial is scheduled for January. A third co-defendant, Joseph Hirko, pleaded guilty last month to one count of wire fraud and sgreed to serve a sentence of 12 to 16 months in prison (Houston Chronicle).

Senate Republicans May Vote Stevens Out Of Conference On Tuesday

November 17, 2008 in Public Corruption by Dave Westheimer | No comments

McClatchy reports that Senate Republicans will hold a secret vote on Tuesday and decide whether to toss convicted Sen. Ted Stevens out of the Senate Republican Conference. Meanwhile, at the Washington Post, jurors explain how badly Stevens hurt himself by taking the stand in his defense.

RIP: John Kavanaugh Russell 1935-2008

November 14, 2008 in Obits by Solomon Wisenberg | No comments

LetterOfApology mourns the late October passing of John Russell, ace newspaperman and former Justice Department Criminal Division spokesman. John Russell was a consummate professional and a gentleman of the old school. His kindness was legendary and I will never forget various offers of assistance he made to me over the years. Our sympathies go out to his wife Neille, and his daughters, grandchildren, and great-grandchildren. The Cincinatti Enquirer has an obituary here.

Ex-Shriners Hospital CFO Sentenced To 41 Months In Prison For $800K Theft

November 14, 2008 in Embezzlement by Dave Westheimer | No comments

Robert Brodzin, former CFO of for Shriners Hospital for Children – St. Louis, was sentenced on November 7 to 41 months in prison by US District Judge Catherine Perry for embezzling $828,000 from the hospital between 2004 and 2008. Brodzin pleaded guilty in August to one count of mail fraud (earlier). He admitted stealing the funds by billing the hospital for services that were never rendered by three dummy companies he had set up. He used the money for luxuty items and and for his tanning salon business (DOJ, Bizjournal).

Former Alaska Businessman Sentenced To Six Months In Public Corruption Case

November 14, 2008 in Public Corruption by Dave Westheimer | No comments

Bill Weimar, former owner of now-defunct Alaska-based Allvest, Inc., was sentenced on Wednesday by Chief US District Judge John Sedwick in Anchorage to six months in prison on public corruption charges, to be followed by six months home detention. Weimar pleaded guilty in August to a two count information charging him with conspiracy to commit honest services mail and wire fraud and structuring financial transactions (earlier). He admitted conspiring in 2004 with an unnamed consulting firm to funnel $20,000 in illegal payments to Jerry Ward, a former state senator who was trying to regain his seat in 2004; Ward allegedly would have supported a private prison project in which Weimar held a contingent interest. VECO (of Ted Stevens infamy) was initially a partner with Allvest in the proposed prison project but was apparently no longer involved by the time of the conspiracy (Anchorage Daily News, DOJ).

Follieri Complains That Brooklyn Isn’t Like Manhattan

November 14, 2008 in Securities Fraud by Dave Westheimer | No comments

Raffaello Follieri, the recently convicted former boyfriend of actress Anne Hathaway (earlier), is not happy with conditions in the federal prison in Brooklyn and wants to go back to the facility in Manhattan where he was held pending trial (MSN/AP). Hopefully his fellow inmates won’t read the story.

UBS Senior Executive Raoul Weil Indicted

November 13, 2008 in Tax Fraud by Dave Westheimer | No comments

Raoul Weil, chairman and CEO of UBS’ global wealth management and business banking division, on Wednesday was indicted by a federal grand jury in the Southern District of Florida on charges of conspiring to defraud the IRS by helping US citizens avoid paying federal income tax. The indictment (.pdf) comes as part of the DOJ’s ongoing investigation of UBS’ cross-border banking business. Weil’s division provides cross-border services to about 20,000 clients with assets of about $20 billion. The indictment alleges that about 17,000 of those clients concealed their identities and Swiss bank accounts from the IRS, and that UBS assisted them by failing to report Form 1099 information to the IRS. Weil is accused of facilitating this and failing to stop it (Bloomberg, DOJ). UBS has issued a press release stating that Weil will relinquish his duties.

Fourth Circuit Upholds Jefferson Indictment

November 13, 2008 in Public Corruption by Dave Westheimer | No comments

In a unanimous decision (.pdf), a three-judge panel of the US Court of Appeals for the Fourth Circuit on Wednesday affirmed the public corruption indictment of US Rep. William Jefferson (D-La.), upholding the US District Court’s earlier decision refusing Jefferson’s motion to dismiss most of the 16 counts he faces. Jefferson contended that the grand jury could have heard some protected Speech or Debate Clause materials, claiming that any mention of Speech or Debate Clause material in a grand jury proceeding mandates the dismissal of all counts related to that evidence. The court rejected this argument, ruling that even if the grand jury heard some testimony about Jefferson’s congressional activities it wouldn’t be enough to overturn the indictment:

The principle of grand jury independence is firmly rooted and jealously protected in our federal system of justice. Because it is an independent investigative body, the federal courts have consistently accorded a grand jury “wide latitude to inquire into violations of criminal law.”

Barring an appeal to the US Supreme Court, Jefferson’s is expected to stand trial early next year (Times-Picayune).

Laid-Off Computer Tech Arrested For Extortion After Threatened Computer Hacking

November 13, 2008 in Internet Fraud by Dave Westheimer | No comments

Viktor Savtyrev of Old Bridge, New Jersey was arrested on Monday and charged with two counts of violating a federal cyberextortion statute for allegedly threatening to hack the computer system of his former employer if the company didn’t meet his demands for money, better medical coverage and a good job reference. Savtyrev, a systems administrator, was one of 14 employees laid off on November 5 by Third Avenue Management, a Manhattan-based mutual fund manager. The next day, he allegedly emailed the company attorney and three employees, threatening to breach and damage the company’s computers if his demands weren’t met. He repeated his threats in an additional email and two phone conversations which were recorded, at one point saying he would get “comrades from Belarus” to help him hack the company’s servers. Savtyrev is a Russian but has legal permanent resident status — at least for now. At his initial hearing on Monday in US District Court in Newark before US Magistrate Judge Patty Shwartz, Savtyrev’s attorney called it “an idle threat.” A bail hearing is scheduled today. He can probably forget about getting that good job reference (Newark Star-Ledger, Computerworld).

Former Real Estate Manager Pleads Guilty To $3 Million Theft From Homeowners Associations

November 12, 2008 in Embezzlement by Dave Westheimer | No comments

Jeffrey Koger of Herndon, Virginia, pleaded guilty to wire fraud and tax evasion counts on Monday before US District Judge Leonie Brinkema in Alexandria. Koger was the formerly the CFO of his father’s real estate management firm, Koger Management Group, which managed about 400 homeowners associations. He admitted embezzling about $3 million from a bank account that received dues from homeowners and distributed them to the various associations. On about 140 occasions between 2003 and 2006 he diverted funds to his own accounts; among other things, he invested $733,000 of the embezzled funds in a restaurant and paid a contractor almost $500,000 to remodel his house and a fitness center. He also admitted failing to pay more than $775,000 in income taxes during that period.

The investigation began after Robert Koger, the father, told Fairfax City police that he suspected his son had embezzled $800,000 before leaving the firm in late 2006. The firm filed for bankruptcy in July 2007 but Robert Koger has said he intends to repay the associations.

Jeffrey Koger’s sentencing is scheduled for February 6, 2009; he faces a maximum of 25 years in prison, but he also faces a Virginia state trial later in February on multiple violent felony charges in connection with a shootout with police early this year (DOJ, WaPo).

Former Firefighter Pleads Guilty To $500K Theft

November 11, 2008 in Embezzlement by Dave Westheimer | No comments

Grant Gaspard of Olympia, Washington, a former assistant fire chief, on Friday pleaded guilty to mail fraud before US District Judge Ricardo S. Martinez in Seattle. In an indictment unsealed in August, Gaspard was charged with embezzling over $500,000 from South King Fire & Rescue, where he was in charge of financial and procurement operations. Gaspard admitted operating an elaborate scheme involving fraudulent purchase orders and a fake company; he used the embezzled funds to buy luxury goods. He also admitted submitting phony documentation to cover up unauthorized purchases on his fire district credit card. Gaspard faces a probable sentence of 33 to 41 months in prison when he is sentenced on January 30, 2009 (Tacoma News Tribune, DOJ).

Big Dig Contractor Sentenced, Fined In Overbilling Scheme

November 11, 2008 in Other Fraud, Sentencing by Dave Westheimer | No comments

McCourt Construction Company was sentenced on Friday to a $500,000 fine and three years probation by US District Judge Richard Stearns in Boston for its role in an overbilling scheme on Boston’s Big Dig project. Stearns also ordered the company to pay $600,000 restitution to the Massachusetts Turnpike Authority. McCourt pleaded guilty earlier this year to conspiracy to defraud the US government with respect to claims on a federal highway project. Two of its supervisors pleaded guilty conspiracy to commit highway project fraud by making false statements and were sentenced last month. The charges arose from overbilling on the I-93 Tip O’Neill Tunnel project. McCourt admitted participating in over 1500 instances of overbilling between 2002 and 2005 in which subcontractors charged journeyman labor rates for work actually done by apprentices (DOJ, Boston Bizjournal).

New Wecht Prosecutor Wants Change Of Venue; Charges To Be Reduced

November 10, 2008 in Prosecutorial Misconduct, Public Corruption by Dave Westheimer | No comments

US District Judge Sean McLaughlin held a status conference on Friday afternoon in the pending retrial of former Allegheny County Coroner Cyril Wecht on public corruption charges. McLaughlin was named to handle the case only a week earlier. AUSA James Wilson told McLaughlin that the government plans to file for a change of venue, claiming bias due to media coverage will make it impossible to select jurors. That’s right — the government wants a change of venue. Considering the conduct of US District Judge Arthur Schwab and former lead prosecutor Stephen Stallings, it’s easy to see why they’re worried. AUSA Leo Dillon told McLaughlin that a new indictment will be filed which will see 27 counts dropped, reducing the number of counts to 14. The original indictment of January 2006 included 84 counts.

McLaughlin set this Friday as the deadline for filing a new indictment and November 21 as the deadline for the defense to file new dismissal and suppresion motions and for prosecutors to file a change of venue motion, but he declined to set a new trial date: “I just don’t think it makes sense right now to throw a dart out there to try to hit a date that isn’t likely to stick anyway.” Perhaps he sees the tenure of USA Mary Beth Buchanan coming to a merciful end soon into the coming administration (Pittsburgh Post-Gazette, Tribune-Review).

Brother Of DC Tax Office Fraud Ringleader Gets 51 Month Sentence

November 10, 2008 in Public Corruption, Tax Fraud by Dave Westheimer | No comments

Richard Walters of Bowie, Maryland, brother of DC Tax Office fraud ringleader Harriette Walters, was sentenced on Tuesday to 51 months in prison by US District Judge Alexander Williams in Greenbelt, Maryland for his role in the $48 million fraud scheme. He had pleaded guilty to receipt of stolen property and conspiracy to commit money laundering in connection with a property tax refund scheme, and had cooperated with authorities. Walters’ business, Helmet’s Plumbing, was used to launder 15 fraudulently issued DC tax refund checks totaling $4.9 million between 2001 and 2007. Over $1 million of that amount went into accounts he controlled.

Five more cooperating defendants will be sentenced by Judge Williams, including three in December. Harriette Walters pleaded guilty in September in DC (earlier). She will be sentenced on March 25, 2009 by US District Judge Emmet Sullivan (DOJ, WaPo).

Stevens Juror Starts A Blog

November 10, 2008 in Public Corruption by Dave Westheimer | No comments

Colleen Walsh, the alternate juror in the Ted Stevens trial who replaced AWOL Juror No. 4, is blogging about her experience: Juror 11 Explains All. She has her own names for the cast of characters, likening lead prosecutor Brenda Morris to Rosie Perez and lead defense attorney Brendan Sullivan to Mr. Burns of The Simpsons.

NatWest Three Cleared For Return To UK

November 7, 2008 in Enron by Dave Westheimer | No comments

David Bermingham, Giles Darby and Gary Mulgrew, three British investment bankers known as the NatWest Three, will now be able to leave for the UK to serve the remainder of their 37 month prison sentences. On Thursday, the three men appeared before US Magistrate Judge Frank Maas in New York, who approved the transfers. The former Greenwich NatWest bankers were indicted on seven counts of wire fraud in 2002 in connection with a scheme devised by former Enron CFO Andrew Fastow and his right-hand man Michael Kopper. They pleaded guilty in 2007 to one count of wire fraud and were sentenced to 37 months in prison plus a total of $7.3 million in restitution by US District Judge Ewing Werlein in Houston on February 22, 2008 (earlier). Their plea agreements allowed a transfer to the UK after several months, where they will be eligible for parole after serving half their sentences. Each has already served about six months (Bloomberg).

Spitzer Is Off The Hook(er); He Won’t Be Charged In Emperors Club VIP Case

November 7, 2008 in Government Overreaching, Public Corruption by Dave Westheimer | No comments

USAO Michael Garcia (Southern District of New York) said Thursday that his office will not seek criminal charges against former New York Governor Eliot Spitzer in the Emperors Club VIP case. Four people connected to the operation have pleaded guilty to prostitution and/or money laundering charges (earlier). From the press release (.pdf):

ELIOT SPITZER has acknowledged to this Office that he was a client of, and made payments to, the Emperors Club VIP. Our investigation has shown that on multiple occasions, Mr. SPITZER arranged for women to travel from one state to another state to engage in prostitution. After a thorough investigation, this Office has uncovered no evidence of misuse of public or campaign funds. In addition, we have determined that there is insufficient evidence to bring charges against Mr. SPITZER for any offense relating to the withdrawal of funds for, and his payments to, the Emperors Club VIP.

In light of the policy of the Department of Justice with respect to prostitution offenses and the longstanding practice of this Office, as well as Mr. SPITZER’s acceptance of responsibility for his conduct, we have concluded that the public interest would not be further advanced by filing criminal charges in this matter.

Spitzer issued a separate statement:

I appreciate the impartiality and thoroughness of the investigation by the U.S. Attorney’s Office. I acknowledge and accept responsibility for the conduct it disclosed.

Bloomberg has more.

Former Natural Gas Trader Sentenced To Prison In False Reporting Case

November 7, 2008 in Other Fraud by Dave Westheimer | No comments

Another former natural gas trader has been sentenced to prison for reporting false prices to industry publications in order to influence pricing. Donald Burwell of Richardson, Texas, a former El Paso Corporation trader, was sentenced to 10 months in prison on Monday by US District Judge Vanessa Gilmore in Houston. He pleaded guilty in 2006 to one count of reporting fictitious natural gas trades (Reuters, DOJ). See earlier here and here for other prosecutions.

Jefferson Wins Primary Runoff In New Orleans; Texas Third Court Chief Judge Defeated

November 6, 2008 in Public Corruption by Dave Westheimer | No comments

We won’t know for a couple of weeks whether or not just-convicted Alaska Sen. Ted Stevens will retain his seat, but there are two other races of interest involving public corruption cases:

In Louisiana’s 2nd Congressional District, Democratic Rep. William (Cold Cash) Jefferson easily won his primary runoff race over former TV news anchor Helen Moreno (Times-Picayune). He is heavily favored to win the December 6 general election contest against Republican candidate Anh “Joseph” Cao, an attorney and former ethics professor (profiled here). Jefferson was indicted in 2005 on 16 counts including bribery, racketeering, money laundering and obstruction of justice.

Texas’ Third Court of Appeals Chief Justice Ken Law, whose recent alleged actions have caused controversy in the cases of Tom DeLay associates John Colyandro and Jim Ellis (here and here), has been defeated in his reelection bid by Woodie Jones, who formerly served on the court for 12 years (Austin American-Statesman). The final margin was about 52% to 48%. This will mean the court will now have three Democrats and three Republicans. However, the court has already refused to reconsider its recent ruling and it takes a majority to overturn that. Travis County DA Ronnie Earle is retiring; it’s not known if his successor, Rosemary Lehmberg, will be as aggresive in pursuing a further appeal.

Judge Places Gen Re Fraud Amount At Over $500 Million

November 6, 2008 in Accounting Fraud by Dave Westheimer | No comments

In Hartford on Friday, US District Judge Christopher Droney ruled that investor losses were between $544 million and $597 million in the case of four former executives of Berkshire Hathaway’s General Re and one former executive from AIG who were convicted in February (earlier) on charges related to fraudulent reinsurance accounting transactions. While it’s less than the $1.4 billion figure put forth by prosecutors, it’s still enough to indicate the probability of substantial prison sentences. Droney also ruled that the fraud had more than 250 victims, which also increases the potential sentences under the guidelines. The original sentencing date of May 15, 2008 was postponed; a new date has not been scheduled (Reuters).

Milberg Defendants Cooperman, Selzer Sentenced

November 5, 2008 in Racketeering, Tax Fraud by Dave Westheimer | No comments

In Los Angeles on Monday, US District Judge John Walter sentenced the last two defendants in the long-running kickback scheme at the former Milberg Weiss law firm, now known as Milberg LLP. Former client Steven Cooperman, who acted as a lead plaintiff in some Milberg cases, was sentenced to four months in prison and two years of supervised release; Cooperman pleaded guilty to a conspiracy count last year. Paul Selzer, a former outside attorney who helped Milberg funnel kickbacks to clients, was sentenced to two years probation; Selzer pleaded guilty in July to a tax obstruction count (Reuters).

Ex-Goldman Trader Pajcin, On Probation, Disappears

November 5, 2008 in Insider Trading, Securities Fraud by Dave Westheimer | No comments

Former Goldman Sachs trader David Pajcin, one of the principals in a wide-ranging $6.7 million insider trading and securities fraud scheme, has disappeared. Pajcin was sentenced in January to time served (earlier) after having been jailed for about two years but was put on three years supervised release. A separate civil case against Pajcin and other defendants is still ongoing before the SEC, and SEC trial lawyer Scott Black has now informed US District Judge Kimba Wood that Pajcin “is in violation of his probation.” Neither the USAO in Manhattan nor Pajcin’s criminal defense attorney knows where he is. Pajcin has family in Croatia and is believed to have left the country (Bloomberg, Reuters).

Alaska Bar Goes After Stevens’ License; Missing Juror Went To The Races

November 4, 2008 in Public Corruption by Dave Westheimer | No comments

The Alaska Bar Association on Thursday asked the Alaska Supreme Court to suspend Sen. Ted Stevens’ law license pending his appeal. Under state bar rules, a felony conviction is effective as soon as the jury rules, but Stevens will be allowed to file defense memoranda (Anchorage Daily News).

AWOL Juror No. 4, now identified as Marian Hinnant, did actually show up Monday to explain her absence to US District Judge Emmet Sullivan. She did go to California, but not for her father’s funeral — he’s alive and living in North Carolina. Turns out she had bought a ticket to fly to California to see the Breeders’ Cup at Santa Anita Park, and she didn’t expect the trial to last as long as it did. Her reported statements in court Monday were bizarre and incoherent. Judge Sullivan did not sanction her and said he was convinced that she had been unable to continue deliberating; he was kind enough not to say it’s because she’s a raving loon (ADN/McClatchy, Legal Times).

Ex-UBS Exec Guttenberg Gets 78 Month Prison Sentence For Insider Trading

November 4, 2008 in Insider Trading by Dave Westheimer | No comments

Mitchel Guttenberg, a former executive director in the equity research department of UBS Securities LLC, was sentenced on Monday to 78 months in prison for insider trading by US District Judge Deborah Batts in Manhattan. Guttenberg pleaded guilty (.pdf) in February to two counts of conspiracy and four counts of securities fraud, admitting that he frequently fed inside information to two clients from 2001 to 2006 (Bloomberg, $WSJ$).

Filming In Theater Results In 21 Month Prison Sentence

November 4, 2008 in Entertainment Fraud by Dave Westheimer | No comments

In Washington last week, US District Judge Richard W. Roberts sentenced Michael Dwayne Logan of Baltimore to 21 months in prison for using a camcorder in a theater to tape two movies. Logan was caught last November in a DC theater using a high definition camcorder to tape Disney’s Enchanted; he had recorded about 50 minutes of the film when he was arrested. A forensic investigation connected him to a pirated copy of 28 Weeks Later that DC police had obtained earlier in the year. Logan pleaded guilty to two counts of Unauthorized Recording of Motion Pictures in a Motion Picture Exhibition Facility (Ars Technica, DOJ).

New Judge Named For Wecht Retrial

November 3, 2008 in Public Corruption by Dave Westheimer | No comments

US District Judge Sean McLaughlin, based in Erie, Pennsylvania, on Friday was selected by Chief US District Judge Donetta Ambrose to preside at the retrial of former Allegheny County Coroner Cyril Wecht. No trial date has been set and it’s not certain that there will be a retrial, but the mediation process has broken down. Former Third Circuit Judge Timothy Lewis, who has been working with both sides to to avoid a retrial, said last week that talks had ended.

It became clear to me that one side was unwilling to participate in the necessary follow-up that could have been productive. I will not work with a party who appears uncommitted to a mediation process, although I hasten to add, that is its prerogative.

He didn’t say who was unwilling to participate in the follow-up, but there’s no doubt it was USA Mary Beth Buchanan (Pittsburgh Post-Gazette, Tribune Review).

Kroger VP, Three Supermarket Managers Plead Not Guilty In Labor Fraud Case

November 3, 2008 in Other Fraud by Dave Westheimer | No comments

In US District Court in Los Angeles last week, four officials connected with Ralph’s Supermarket pleaded not guilty to labor fraud charges in connection with the 2003-2004 California supermarket strike and lockout. Scott Drew, a vice president with Cincinnati-based Kroger, which owns Ralph’s, and former Ralph’s managers Charles Vance, Randall Kruska and Karen Montoya were indicted in September on charges that they participated in a conspiracy to secretly rehire hundreds of locked-out employees under false names and false social security numbers during the 2003-2004 labor dispute. A December 23 trial date has been scheduled (Supermarket News, LA Times/AP). There’s no word about former Ralph’s vice president Patrick McGowan, who was indicted on the same charges.

Ted Stevens: “I have not been convicted of anything.”

November 1, 2008 in Public Corruption by Dave Westheimer | No comments

In a meeting Thursday with the editorial board of the Fairbanks Daily News-Miner, Sen. Ted Stevens on Thursday claimed his conviction was still pending: “I’ve not been convicted yet. There’s not a black mark by my name yet, until the appeal is over…” (News-Miner)

The Anchorage Daily News reports that he reiterated the claim Thursday night in a televised debate with his general election opponent, Anchorage Mayor Mark Begich, saying: “I have not been convicted of anything.”

Meanwhile, AP reports that US District Judge Emmet Sullivan has ordered missing Juror No. 4 to appear before him on Monday to explain her absence and refusal to communicate with the court. Good luck with that, Judge Sullivan.

Lance Poulsen Convicted On All Counts

November 1, 2008 in Health Fraud, Securities Fraud by Dave Westheimer | No comments

After only about four hours of deliberation, a jury in US District Court in Columbus has convicted former National Century Financial Enterprises CEO and co-founder Lance Poulsen on one count of conspiracy, one count of wire fraud and money laundering conspiracy, four counts of concealment of money laundering and six counts of securities fraud in connection with the company’s 2002 collapse which cost investors about $1.9 billion. The testimony of the government’s star witness, former executive VP for compliance Sherry Gibson, was central to the prosecution’s case. Gibson’s testimony was critical in the trial which resulted in the March convictions of five other former National Century executives. In addition, jurors heard Gibson testify about the attempt of Poulsen and his associate Karl Demmler to bribe her to change her story; Poulsen was convicted in that case and sentenced to 10 years in prison in August. US District Judge Algenon Marbley did not immediately set a sentencing date in this case (Columbus Dispatch, Columbus Bizjournal).

Tom Petters Again Denied Bond; Judge Will Investigate Special Treatment

November 1, 2008 in Securities Fraud by Dave Westheimer | No comments

Chief US District Judge Michael Davis on Friday refused to grant bail to Tom Petters, affirming the earlier ruling of US Magistrate Judge Jeffrey Keyes (Star Tribune).

Meanwhile, WCCO’s Esme Murphy has filed a complaint with Judge Davis over the seemingly preferential treatment shown to some Petters defendants, including the unscheduled bond hearing for Larry Reynolds:

I am amazed that this group of co-defendants that have admitted to stealing a total of 3 billion dollars from unwitting investors is getting this kind of special treatment.

Judge Davis will look into it but told Murphy that “all court hearings should be open to the public and all hearings should be posted in the court calendar.”