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September 30, 2006

Baylor Med decides to go it alone

The Houston professional community and the Medical Center was abuzz yesterday with Baylor College of Medicine's announcement late this week that the school will construct a new teaching hospital in the Texas Medical Center and end its recent affiliation with St. Luke's Episcopal Hospital as its primary teaching hospital. This move comes only a couple of years after Baylor (which has no affiliation with Baylor University in Waco) terminated its longstanding with the Methodist Hospital as its primary teaching facility (previous posts here), a relationship that was as storied as the Medical Center itself. As usual, the Chronicle's Todd Ackerman -- who has done a superlative job in covering the Baylor-Methodist split and the changing nature of Baylor within the Medical Center -- has this excellent report on the development.

Baylor's new hospital will resolve Baylor's increasing concern over being the nation's only top-20 medical school that does not own a hospital or whose department chairs do not head the key medical departments at an affiliated teaching hospital. The announcement is really not a surprise as there have been rumors for the past six months or so that Baylor-St. Luke's partnership was on the rocks. Although the two institutions entered into merger negotiations shortly after they entered into the teaching hospital affiliation, those negotiations didn't go anywhere as St. Luke's staked a vision of providing medical services in new hospitals throughout the far-flung Houston metropolitan area. The straw that broke the camel's back was St. Luke's dragging its feet in making Baylor department chairs the head of the hospital's parallel medical departments.

The demise of Baylor's relationships with both Methodist and St. Luke's is a reflection of the difficulties involved in sustaining long-term business and professional relationships in the face of the fast-changing world of American health care finance. When those pressures overwhelm a productive relationship such as the one that Baylor and Methodist long-enjoyed, the risk increases that a decline in the quality of medical care will be the ultimate result, which is a risk that should concern all of us. On the other hand, Baylor is presenting an ambitious plan for maintaining its position as one of the top medical schools in the country, and more competition between outstanding hospital facilities in one of the nation's top medical centers could well generate even better medical care and research. How it turns out will reflect much in regard to the direction of the American health-care finance system and the challenges of training physicians within that changing system.

Posted by Tom at 8:00 AM | Comments (0) | TrackBack (0)

September 29, 2006

One of the risks of the modern church

It's trendy these days for megachurches to provide all sorts of special services for their members. One of the most popular of such services is marriage counseling, which this NY Times article reports placed a Texas church squarely in the crosshairs of a defamation lawsuit when the minister providing the service went and blabbed confidential information about one of the church members to the church elders.

The leaders of the churches providing these services better recognize that such lawsuits are part of the risk of providing such a service and that it is not at all clear that the traditional separation between church and state is going to insulate the church from liability. Pastors who are leading their churches down this course need to ask themselves how their flocks will react when the church must raise money to pay a damages award from such a lawsuit or even just to pay the considerable cost of defending one. That's not the type of sacrificial atonement that Christ had in mind.

Speaking of risks for megachurches, Victoria Osteen -- wife of Lakewood Church's Joel Osteen -- has resolved her little Christmas season snit with the FAA, but that apparently is not the end of the story:

The Federal Aviation Administration has fined Victoria Osteen, wife of Lakewood pastor Joel Osteen, $3,000 after determining she had interfered with a Continental Airlines crew member aboard a flight late last year.

And this week, a flight attendant filed suit claiming she was assaulted by Victoria Osteen during that flight to Vail, Colo., for the Christmas holidays.

Osteen has paid the penalty, which is not an admission of guilt

Mrs. Osteen is well-represented by none other than the ubiquitous Rusty Hardin.

Posted by Tom at 4:55 AM | Comments (1) | TrackBack (0)

The most uncomfortable place right now in the United States?

Answer: The St. Louis Cardinals clubhouse.

Let's put this in perspective. 10 days ago, the Cardinals won their game that day and the Stros lost theirs. At that time, the Cards were 79-69 and the Stros were 72-77. The Stros were trailing the Redbirds by a seemingly insurmountable 8.5 games.

After completing a sweep of the Pirates yesterday afternoon, the Stros are now 81-78 and a mere half game behind the 81- 77 Cards, who got creamed by the Brewers last night. So, in a week and a half, the Stros have gone from less than a five percent chance of making the playoffs to being a legitimate contender. You gotta love baseball.

Although there is a element of luck in what has happened, it's really not that surprising when you look at the statistics. The Stros stellar pitching has continued to improve -- as it usually does over the 2nd half of the season -- and the hitting, although still well below Naitional League average, has improved enough so as not to undermine the excellent pitching. On the other hand, the Cardinals' pitching -- which has been deteriorating for over a season now -- has gone into the tank while their hitting has been pretty much relegated to an occasional Pujols tater.

The Stros have three games against the Braves in Atlanta and the Cards have three more games at home against the Brewers and a make-up game, if necessary, against the Giants on Monday in St. Louis. If the Stros and Cards tie, the one-game playoff is on Tuesday at Minute Maid Park in Houston.

Posted by Tom at 4:46 AM | Comments (0) | TrackBack (0)

September 28, 2006

Ryder Cup post-mortem

John Huggan is the European correspondent for both Golf Digest and Golf World magazines, and his thoughts on the just-concluded Ryder Cup matches addresses the rather embarrassing question of whether the U.S. team has fallen so far behind the European squad that the U.S. should consider making their team "the Americas" team:

[O]ne has to wonder what Jack Nicklaus was thinking as he surveyed from afar the carnage that was America's Team. Was he musing the possibility of the hapless US side being bolstered by the likes of Canada's Mike Weir, Angel Cabrera of Argentina and Columbian Camilio Villegas in a newly constituted 'Americas' team? To even suggest such a thing can no longer be dismissed as frivolous or mere mischief making. After two successive nine-point shellackings that hardly bode well for the new world's prospects at Valhalla two years hence, it is a question that brings with it a growing legitimacy.

Then, Huggan takes off on Phil Mickelson, he of the abysmal 1-7-1 record in the past two Ryder Cup matches:

The question is simple: Is he willing to take golf even remotely seriously after the PGA Championship in August? If not, Mickelson should forfeit his place in all future US sides. That he should pitch up in Ireland not having played competitively for a month was a disgrace, an insult to his teammates and indicative of his less than enthusiastic approach to representing his country in golf's most compelling event. Instead of being on the course these past few days, the 36-year old Californian should have taken the advice offered by a wonderfully 'Irish' sign at the K Club: "Lost people should go to the information centre in the tented village."

Finally, Huggan can't resist relishing in the misfortune of golf's most visible bodyguard . . er, I mean, . . caddie, Steve Williams, who carries Tiger Woods' bag:

Finally, on a personal note, your correspondent is sure he is hardly alone in taking an enormous amount of pleasure from the delicious last day moment that saw Woods' caddie, the despicable Steve Williams, slip on a rock left of the 7th green and drop his boss's 9-iron into the drink. The only pity was that the endlessly boorish New Zealander did not do likewise.

That would have been the perfect end to a memorable week. Well done Darren [Clarke]. Well done Ireland. Get a grip America.

Meanwhile, this GolfonLine piece indicates that the off-air comments of NBC golf analyst Johnny Miller were inadvertantly picked up in the media center and in the U.S. team locker room, and apparently those comments were doozies:

While chatting off-air with his colleagues, Miller said Tiger Woods was "playing like crap" and that he hit one shot like a "cripple."

Only Miller wasn't entirely off the air.

Unbeknownst to the NBC crew, its off-air banter had actually been piped into the U.S. team's locker room (as well as the media center).

While expressing continued exasperation with the U.S. team's performance, Miller also referred to Scott Verplank as a lead weight and said that U.S. Captain Tom Lehman should have benched Tiger Woods and Phil Mickelson in the afternoon's foursome matches, but that he didn't because Lehman was afraid to "take the heat" he would face for shelving the world's No. 1 and 3 ranked players.

The NBC team learned about the locker room feed when David Toms alerted on-course reporter Mark Rolfing. Rolfing immediately told his colleagues, and an awkward silence ensued. Miller, seemingly unfazed, then sent greetings to the U.S. team.

Within minutes, the NBC feed to the media center went silent.

Finally, Golf World's Brett Avery gives out this report card on the American Ryder Cup team members' performance, and it is not a pretty picture. My favorite is the comment on Chris DiMarco (0-3-1):

Grade: F. Go to the chalkboard and write 100 times: "I am the no. 15 player in the world and should have played like it." And when you're done, hand the chalk to Mickelson.

Posted by Tom at 5:37 AM | Comments (1) | TrackBack (0)

The surprising Fastow sentence

This Kristin Hays-Tom Fowler/Chronicle article picks up on an aspect of the six-year sentence assessed to former Enron CFO Andrew Fastow earlier this week that has largely been ignored in the media but noted earlier here -- the Enron Task Force eliciting testimony from Fastow during the Lay-Skilling trial that represented to the jury that Fastow was a more credible witness because he had agreed to a minimum ten-year prison sentence and, thus, had no incentive to lie. As we know now, Fastow had not really agreed to anything of the sort and, in fact, successfully petitioned U.S. District Judge Ken Hoyt for a lighter sentence. The article quotes several experts -- including former Enron Task Force director Andrew Weissmann -- who express surprise that the Task Force did not attempt to require Fastow to serve a minimum of ten years.

Although interesting, the article fails to address the most troubling aspect of the Fastow sentencing hearing -- that is, the apparent failure of any of the attorneys involved to inform Judge Hoyt about how the Lay-Skilling jury was misled by Fastow's testimony. When Judge Hoyt finds out about that he was not informed about that, my sense is that he is not going to be pleased.

The public reaction to the Fastow sentence has been fascinating and reflects the dubious nature of the Justice Department's regulation of business-through-criminalization policy. Viewed in a vacuum, the Fastow sentence is reasonably fair. Fastow effectively embezzled millions from Enron and ruined the careers of several other Enron executives who he induced to participate in the embezzlement. Six years is a harsh sentence, so Fastow is certainly not getting off lightly.

However, the Fastow sentence was not handed down in a vacuum. Not only did Fastow and the Task Force prosecutors mislead the jury in order to convict Lay and Skilling, they trampled justice by needlessly ruining the careers of the four Merrill Lynch executives in the Nigerian Barge case and they are currently doing the same thing to the three U.K. bankers in the NatWest Three case. There is simply no way to reconcile Fastow's sentence with the six-year sentence handed down to Jamie Olis -- who did not steal anything and refused to tell lies about others -- or the seven-year sentence of former Enron chief accountant Richard Causey, who also did not steal anything and who has not testified against anybody. The death of Ken Lay from defending himself against a weak and unjust case, as well as the effective life sentence likely faced by Jeff Skilling, further underscore the confusing message conveyed by the Fastow sentence.

As Larry Ribstein has repeatedly observed, criminal cases involving business executives have become a sort of lottery, incrementally undermining the principles of justice and respect for the rule of law upon which the success of American society is largely based. If we lose respect for those principles, then "do you really think you could stand upright in the winds [of abusive state power] that would blow then?

Posted by Tom at 4:30 AM | Comments (5) | TrackBack (0)

Stros' streak continues; Cards' streak ends

As noted earlier here and here, the past week and a half has been fun for the Stros as an improbable series of events has catapulted the club back into playoff contention. The Stros won again in Pittsburgh last night, using nine pitchers for the second time in three games and overcoming a 6-1 deficit. The Stros (80-78) have now won eight straight games.

Unfortunately, the Cardinals (81-76) finally broke their seven game losing streak, which is what really got the Stros back in the race for a playoff spot. Accordingly, the Cards' magic number to win the NL Central title is now four -- that is, any combination of further Cardinal wins (they have five games left) and Stros losses (they have four games left) equaling four means that the Cardinals win the title.

Roy O and the Stros go for the sweep this afternoon against the Pirates while the Cardinals open up a four game series at home tonight against the Brewers.

Posted by Tom at 4:00 AM | Comments (0) | TrackBack (0)

September 27, 2006

Mayor Bloomberg, save your money

This short WSJ ($) article left me shaking my head:

New York City Mayor Michael Bloomberg appointed consulting firm McKinsey & Co. yesterday to examine why more international companies are choosing to raise money outside of New York.

The two-month, $600,000 study comes as many of the largest initial stock offerings bypass a listing with NYSE Group Inc. and Nasdaq Stock Market Inc. for listings in London or in their home markets. Mr. Bloomberg and Sen. Charles Schumer (D., N.Y.) will review the results in an effort to improve New York's position as a financial center.

Many big international IPOs no longer want to have their shares listed on a Western stock market, in part because they want local investors or because big international investment firms can often buy the stock even if its not listed in New York. Out of the top 25 global IPOs in each of the last two years, London snagged 11 listings, Hong Kong picked up six and New York received four, according to recent data.

Regulation costs, legal risks and increased white-collar-crime enforcement also get a lot of attention. The four-year-old U.S. Sarbanes-Oxley accounting-and-governance law has made it more expensive for companies, especially smaller ones, to list.

Investment-bank underwriting fees are also substantially lower in London -- 3% to 4% of IPO receipts, compared with 6.5% to 7% in the U.S., according to a June report commissioned by the City of London.

Yesterday, at a private-equity conference in New York sponsored by Dow Jones & Co., Nasdaq Chief Executive Bob Greifeld said he couldn't think of a reason for the difference in the IPO fees and predicted that there would be more pricing pressure on U.S. underwriting fees in coming years.

Mayor Bloomberg should save his city's money. For the answer to the question posed, all the Mayor needs to do is talk to his state's future governor and examine this mindset, which the future governor embraces. That mindset leads to abominations such as this and this, which business owners tend to notice after awhile. Indeed, the proponents of such dubious policies are widely-publicizing them to the international business community.

All of this has already contributed greatly to U.S. public companies and executive talent fleeing in droves to private equity. Why on earth would any international company choose to raise public money in such an environment?

Posted by Tom at 4:59 AM | Comments (0) | TrackBack (0)

Byron Nelson, R.I.P.

Golf's quintessential gentleman -- Byron Nelson -- died yesterday in his home near Dallas at the age of 94. Here are the Dallas Morning News, the NY Times, and the LA Times obituaries, along with a PGATour.com timeline of Nelson's life, a list of his records, and a handy summary of his career.

Nelson -- who was affectionately known as "Lord Byron" -- was a contemporary of his fellow Texan Ben Hogan, and was more successful on the PGA Tour than Hogan during the time that Nelson played (Hogan struggled on the Tour until he perfected his swing in his mid-30's, by which time Nelson had retired). Nelson established one of the most remarkable records in sports history when he won 11 consecutive pro golf tournaments in 1945 (Dan Jenkins contends that it was actually 13 straight), a record -- similar to Joe DiMaggio's 56-game hitting streak in baseball -- that will likely never be broken. Nelson won an incredible 18 tournaments that year and 52 (including five major tournaments) over his relatively short 16 year career on the Tour. He retired in 1946 from full-time competitive golf at the age of 34 after achieving his goal of earning enough money to buy a ranch in his beloved Texas.

Nelson was a kind and gentle man who remained active until his death. He set a wonderful example for all of us and represented much of what makes golf such an endearing pastime. He will be sorely missed (particularly by Dallas' PGA Tour event) for many reasons, not the least of which was his perspective on how fortunate the modern PGA Tour players are:

"I only won $182,000 in my whole life," said Nelson in a 1997 interview. "In 1937, I got fifth-place money at the British Open -- $187 -- and it cost me $3,000 to play because I had to take a one-month leave of absence from my club job to go."

Posted by Tom at 4:10 AM | Comments (0) | TrackBack (0)

This is getting very interesting

The Stros beat the Pirates last night while the Cardinals behind their ace Carpenter lost again to the Padres. The Stros' (79-78) winning streak is now seven, the Cardinals' (80-76) losing streak is seven, and the Stros have pulled to within 1.5 games of the NL Central lead with five games to go.

If the Stros win three of those five games (two more against the Pirates and three against the Braves), then the Cardinals can still pull it out by winning just 3 of their final six games (one more against the Pads, four against the Brewers, and a make-up game against the Giants, if necessary). So, the Stros are still a longshot to win the division (the Stros are out of the race for the NL Wildcard playoff spot). But it's sure refreshing to watch the Cardinals sweating this one out. The ghost of the 1964 Phillies -- who blew a 6.5 game lead for the National League title by losing 10 of their final 12 games -- is looming large over the Redbirds right now.

If the Stros and Cards end up tied for the NL Central title, then there will be a one-game playoff at Minute Maid Park next Tuesday.

Posted by Tom at 4:00 AM | Comments (1) | TrackBack (0)

September 26, 2006

More on the Fastow sentence

It's a good thing that Andy Fastow's counsel did not mention Fastow's following testimony on March 8 in the Lay-Skilling trial during Fastow's sentencing hearing today in front of U.S. District Judge Kenneth Hoyt:

Q. Does the government decide your sentence?

A. My Judge decides the sentence.

Q. And who is your Judge?

A. Judge Hoyt.

Q. Is that right here in Houston, in this courthouse?

A. Yes.

Q. Do you recall the maximum sentence that you could be sentenced to for these crimes?

A. For the crimes I've pled guilty to?

Q. Yes.

A. Yes. Ten years.

Q. And was there a minimum sentence that you pleaded guilty to?

A. My plea agreement states that I agree to a sentence of 10 years. [. . .]

Q. And in agreeing -- in addition to agreeing to serving 10 years in prison, did you also have to forfeit moneys?

A. Yes.

The foregoing testimony was elicted on direct examination of Fastow by Enron Task Force prosecutor John Hueston for the purpose of representing to the Lay-Skilling jury that Fastow's testimony was credible because he had agreed to a floor of ten years of prison time. On March 8th, Skilling counsel Daniel Petrocelli followed up by asking Fastow during cross-examination about the sentence that he had agreed to under his plea deal:

Q. Okay. And you said you have to go to jail for 10 years; right?

A. Well, my sentence is for 10 years. I could potentially have time off for good behavior. [. . .]

23 Q. Okay. And the reason why you just answered my question in the way you did is because you want to communicate to the jury that Mr. Skilling is a criminal along with you, correct?

A. No, Mr. Petrocelli. I'm just trying to answer the questions honestly. My outcome is already determined.

Q. Well, not --

A. I'll be sentenced to ten years as far as I understand. It doesn't matter -- my sentence isn't affected by whether
Mr. Skilling is convicted or not.

Then, on re-direct examination by Hueston on March 13th, Fastow testified as follows:

Q. And as a result of your pledge to cooperate, did you agree to plead guilty to a 10-year minimum sentence of imprisonment?

A. A 10-year maximum imprisonment.

Q. And what is the minimum amount of time that that plea agreement calls for?

A. It calls for a 10-year sentence.

Q. So after January 14th, can your cooperation lower that 10 years?

A. My understanding is that I will be sentenced to 10 years. The Judge ultimately has a discretion; but in my plea agreement, I agreed to the 10-year sentence.

Later that same day, Hueston asked Fastow about the suggestion made during cross-examination that Fastow had forged the key Global Galactic agreement between Fastow and former Enron chief accountant, Richard Causey:

Q. And after all this time, you found and turned over the document to the FBI, you remembered, late May or June; is that right?

A. I believe that's correct, yes.

Q. And you turned it over because you were cooperating?

A. Yes, sir.

Q. And this is months after, six months after, you enter your plea of guilty; is that right?

A. Approximately, yes, sir.

Q. And can this document lower your sentence now, under your understanding?

A. My understanding is, no.

Q. And if, as the defense was suggesting, you were just falsely creating this document, wouldn't it have been better to do so before you entered a plea of guilty, when you were bargaining with the government?

A. Well, one could argue that. [. . .]

Q. Mr. Fastow, if as the defense suggests, you're on some sort of mission to say or do anything to convict Jeff Skilling, might you have been tempted to just add a couple more initials to that Global Galactic document?

A. Sir, I have no incentive to add any initials. My incentive is to be truthful. If I'm not truthful, I could go to prison for life. By making a document more compelling, I can't lower my sentence.

Q. By trying to do that, there's only one thing you're sentence would do; right?

A. I'm sorry?

Q. If you tried to alter a document or tell a lie, there's only one direction that sentence can go?

A. That's correct. That would be a lie. That means my sentence would go up, potentially, to a life sentence.

Want to make a bet that the Task Force prosecutors did not inform Judge Hoyt today during Fastow's sentencing hearing that Fastow and the Task Force had previously represented to the Lay-Skilling jury that Fastow's testimony was more credible because he had agreed to a minimum ten-year sentence?

Posted by Tom at 1:35 PM | Comments (0) | TrackBack (1)

Try to make sense of this

Let's see if I get this straight.

On one hand, Andrew Fastow -- who served up his wife as a sacrifical lamb for his embezzlement of millions from Enron that triggered one of the largest bankruptcy cases in U.S. history, who used the NatWest Three to hide his embezzlement of millions more and then turned on the U.K. bankers to save his skin, who very well may have forged Richard Causey's initials on the Global Galatic "agreement," whose bizarre testimony during the Lay-Skilling trial was largely discounted by jurors and who had a large hand in ruining the careers of four innocent Merrill Lynch executives in order to lessen his prison sentence -- is sentenced to six years in prison.

On the other hand, Jamie Olis -- who worked on a transaction to improve his company's earnings, did as he was told by his superiors, did not profit from the transaction, defended his company and himself against allegations of wrongdoing with regard to the transaction and did not trigger any type of insolvency case by his company -- is sentenced to six years in prison.

These results are not the product of a rational application of our criminal justice system. Ellen Podgor has additional thoughts, particularly how the Fastow sentence may bear on the anticipated life sentence that former Enron CEO Jeff Skilling faces.

Posted by Tom at 12:45 PM | Comments (4) | TrackBack (1)

An interesting letter to Judge Lake

The day before one of the relatively few real Enron criminals is scheduled to be sentenced, an interesting letter to U.S. District Judge Sim Lake became public in regard to the sentencing of former Enron CEO Jeff Skilling.

During and after the Lay-Skilling trial, Heartland Institute economists Paul Fisher and Jim Johnston authored several articles (previous posts here) that challenged the myth that Enron was merely a house of cards propped up through the fraud of its leaders (that myth has been a recurring theme on this blog, see here, here, here, here, here, and here, to cite just a few posts).

Now, in this letter to U.S. District Judge Sim Lake, Fisher and Johnston urge Judge Lake -- in connection with the sentencing of Skilling -- to take into consideration the huge beneficial impact that Enron had on various important markets. In so doing, Fisher and Johnston remind us once again of the vacuous nature of the real presumption in the Lay-Skilling trial -- that is, that Skilling and Lay were rich and Enron collapsed, so they must be guilty of something in connection with Enron's descent into bankruptcy:

From an economic perspective, the harm [that Skilling and Lay caused] is difficult to calculate. For sure, the collapse caused a huge notional loss to investors and employees in the form of pension and savings plans. However, Ken Lay and Jeff Skilling were not convicted of causing the collapse. They were convicted of lying about Enron's financial condition (and one count of insider trading [against Skilling]). If the misrepresentation of Enron's financial condition in 2001 as alleged in the indictment had not occurred, presumably the bad news would have been known earlier. That in turn would have caused the Enron share price to collapse sooner and even less time would have been available for investors and employees to liquidate their holdings.

The implication of this reality is that there was no additional harm done to the investors and employees from the alleged hiding of Enron's profits and losses. While it may have changed the identity of the losers it did not increase the totality of the losses.

On balance, the benefits created by Ken Lay and Jeffrey Skilling in building Enron seem to us to far outweigh any incremental harm done to investors from the alleged fraud. The economists we know who have carefully studied the risk management practices and techniques developed by Enron agree that they were beneficial and will continue to be so. Not giving this reasonable weight will send a potentially harmful message. That is not to excuse any fraud, but rather to recognize the context of the decision.

Meanwhile, this Carrie Johnson-Brooke Masters/WaPo article explores the dubious reasoning behind prison sentences for businesspersons convicted of fraud that are harsher than those handed down for first-degree murder or treason.

Posted by Tom at 4:16 AM | Comments (1) | TrackBack (0)

Visiting the Longhorns

This past Saturday, I traveled to Austin for the day with my buddy Jerry Sagehorn to meet my brothers Bud and Mike, and my brother-in-law Gene Acuna to watch the 7th-ranked Texas Longhorns play their Big 12 Conference opener against the Iowa State Cyclones, who are coached by my longtime friend, Dan McCarney.

McCarney -- or "Coach Mac" as most everyone calls him -- and I grew up together in Iowa City, Iowa, where we were teammates on a championship high school football team at City High in 1970. We have remained close friends over the years, and so I have tried to attend each game that Iowa State plays in Texas since Coach Mac became head coach at ISU in 1994. Coach Mac graciously comes through with a few sideline passes for me to use, and it's always a great experience attending a game in Austin and College Station.

The Longhorns really have it going these days. After winning their first National Championship last season since 1970, the Horns are re-loading this season with a talented and deep group of players who are not only fast and strong, but also well-motivated. Mac's Cyclones battled hard and, had a couple of plays turned out differently, could have been in a position to pull an upset over the 24 point-favored Horns at the end. However, the Horns dominated both lines of scrimmage over the final two-thirds of the game and methodically pulled away for a 37-14 victory.

The FilmLoop below contains some of the photographs that I took from the sideline during the game along with my comments about attending a game on the sidelines at D.K. Royal-Texas Memorial Stadium. As with College Station, Austin is one of the great college football venues in the country. I am blessed to have the opportunity to experience it up close and personal, and I am grateful to be able to pass along the experience to you.

Posted by Tom at 4:15 AM | Comments (0) | TrackBack (0)

They couldn't pull this off, could they?

After I wrote off the Stros in my two previous periodic reviews of the club's season (here and here), the hometown team is making things interesting.

First, the Stros swept the Cardinals in a four-game series over this past weekend (including three straight games in which they won in their last at bat). Then, last night, the club used 25 players -- including a franchise record-tying nine pitchers and seven pinch hitters -- to nip the Phillies 5-4 in Philadelphia and reach the .500 mark (78-78) for the first time since July 6. The Stros have now won six straight, the Cards have lost six straight and the Stros find themselves only 2.5 games behind the Cards in the National League Central with six games to play (three at Pittsburgh and three at Atlanta). The Cards have seven games remaining at home (two against the Padres, four against the Brewers and a makeup game against the Giants, if necessary). Even if the Stros go 4-2 over the final six games, the Cards only have to win three of their remaining games to win the title outright, so the Stros are still a longshot. However, it's fun to watch the Cardinals gripping -- that's usually the position that the Stros are in.

By the way, Tory Gattis passes along this hilarious Onion article that places Roger Clemens' seemingly endless string of final games in the perspective of many opposing baseball fans, particularly those in Boston who thought that Clemens' last game was going to occur over a decade ago.

Meanwhile, my friend Jim Bob Baker, a University of Oklahoma diehard, passes along the following observation about the lingering effects on the OU fan base of the Oklahoma Sooners' controversial loss last week at Oregon:

The only phrase that makes people in Oklahoma more nervous these days than "tornado warning" is when they hear "the play is under review . . ."

Posted by Tom at 3:59 AM | Comments (0) | TrackBack (0)

September 25, 2006

Demagoging Amaranth

Following on this earlier cue, NY Times business columnist Gretchen Morgenson contends in this column (Times Select, registration required) that Amaranth Advisors, LLP's loss of $6 billion or so last week on the natural gas trading market is conclusive proof that energy markets are in need of more government regulation:

Many of Amaranth’s monster trades in the natural gas markets were conducted on over-the-counter markets or with so-called voice brokers and so were not on regulators’ radar screens.

It is too soon to tell what role Amaranth’s gamble had on natural gas prices. But speculators played a significant role in the astonishing rise in energy prices in recent years.

Such is the conclusion of a compelling Congressional report produced in June by the Senate’s Permanent Subcommittee on Investigations of the Committee on Homeland Security and Governmental Affairs. The 49-page report detailed the explosion in energy speculation on unregulated trading markets and recommended eliminating the so-called Enron loophole that put electronic energy trading off the regulatory reservation.

See how easy that was? Just associate "Enron" with a company that suddenly lost about 2/3rd's of its assets and, presto! -- you have the need for more government regulation of trading markets without any analysis whatsoever of whether such regulation would ultimately be more expensive than the cost of the allowing markets to allocate loss. Indeed, how one earth would it have helped had Amaranth made filings with the CFTC? Does anyone really think that such a requirement would have prompted Amaranth to modify its trading practices?

As noted earlier here and here, allowing investors to make bets in energy trading markets -- although not widely understood by the general public -- is tremendously beneficial in forecasting energy prices. Not only will greater regulation of those markets likely undermine those benefits, Morgenson's dubious assertion that speculation in energy markets has caused an increase in natural gas prices is based upon a Senate report that, as noted earlier here, is a sham that was essentially produced by the regulators to feather their nest.

Although I could go on and on about the irresponsible nature of Morgenson's analysis, but Larry Ribstein's weekly evisceration of Morgenson does it much better than I ever could:

As in any free market, the natural gas market aggregates many right and wrong trader bets into a collective judgment about reality that is usually more accurate than a single mind can come up with. This judgment assists society in allocating resources, thereby making us all better off. We may not like what the market is telling us – i.e., that prices are going up -- but that doesn't mean we should regulate it. If we're going to constrain the operation of these markets we ought to be very sure that this regulation helps them be more accurate.

Even if there is a case for regulation (which I doubt), nothing about the problems at Amaranth suggests that such regulation will get us more accurate energy prices. Amaranth made a bad bet and its rich investors suffered. Perhaps Amaranth misled its investors about its trading strategies. But as far as I've seen, there was no manipulation of energy markets.

That doesn't stop Morgenson from linking Amaranth, with absolutely no justification, to BP traders' manipulation of propane prices and, of course, to Enron. Morgenson ends her story by saying that "as last week's implosion of Amaranth shows, Enron's' troubling legacy lives on." Morgenson wants to talk about regulating markets, and Amaranth happens to be the most visible anecdote right now connected with those markets, and so she's damn well going to use it for her purposes, relevant or not.

This is irresponsible. The task of a financial columnist with millions of readers should be to enlighten readers, not mislead them with a magician's sleight of hand (Amaranth = BP/Enron). Sadly, we have come to expect this sort of thing from Morgenson. No doubt Morgenson's column will be fodder for equally disingenuous lawmakers who are working on regulating energy markets as we write, and she will play her part in the manufacture of misguided regulation. In the end, Morgenson will get the attention for her writing she craves, while doing more harm than any of the targets of her weekly indignation.

Posted by Tom at 5:24 AM | Comments (1) | TrackBack (0)

Well, at least we were good sports

After losing the Ryder Cup over the weekend for the fifth time in the last six competitions, the United States team is certainly an easy target for criticism and the golf writers are taking dead aim:

The Houston Chronicle's golf columnist Steve Campbell channels Dan Jenkins and Jack Burke in this tongue-in-cheek column that preceded the final day's matches. Campbell follows that column with this fine article on the emotional performance of Euro team member, Darren Clarke.

Lawrence Donegan of the Guardian pretty well summed up the U.S. squad's effort:

[S]o one-sided was the contest that at times during yesterday's session of 12 singles matches it seemed the impossible was on the cards - a Ryder Cup without drama.

Scott Michaux in the Augusta Chronicle is not particularly happy (registration required) with Chris DiMarco, who contributed all of 1/2 point to the U.S. team's score during the matches:

The only thing more embarrassing than the final result was DiMarco fist-pumping his birdie on the 17th hole that extended his match with Lee Westwood. His comeback effort from five down with seven to go against a player who was ill overnight and carrying a fever on the course was meaningful only to himself. It was like doing a dance after a sack with your team trailing by seven touchdowns. Hitting two balls in the water on the 18th was his just reward.

The Golf Gazette's Ken Carpenter recommends an easy way to improve the U.S. team next time around -- ditch Phil Mickelson (1/2 point in this Ryder Cup):

If Phil Mickelson wants to “shut it down” after the PGA Championship every year, then he should give up his spot on the team and go to the beach. In the last two Ryder Cups he’s 1-7-1; in the last two Presidents Cups he’s 3-5-2 — that’s an abysmal 4-12-3 record, totally unacceptable for someone annually ranked in the top three in the world. In 2008, Mickelson needs to play his way into shape prior to the event — assuming he isn’t fully retired by that point.

By the way, just to put Mickelson's Ryder Cup futility in perspective, Arnold Palmer was 22-8-2, Jack Nicklaus 17-8-3 and Lee Trevino 17-7-6 in Ryder Cup competition.

Martin Johnson of the Daily Telegraph describes the victory toast of European captain Ian Woosnam, a fellow who has been known to knock back a few:

After spending months practising his speeches in front of the bedroom mirror, one of golf's great bon viveurs had promised himself a small libation at the end of it all, but we didn't think this would involve an attempt to down an entire jeroboam of champagne in one herculean swig. The end result was a blowback of such Vesuvian proportions that the eruption of escaping champagne flew out of every visible orifice bar Woosie's ears.

And the Chicago Tribune's Ed Sherman projects the U.S. roster for the 2012 matches at the Chicago-area course Medinah, and includes the following jab:

Michelle Wie: She couldn't do any worse than her predecessors.

Posted by Tom at 4:20 AM | Comments (4) | TrackBack (0)

2006 Weekly local football review

Redskins 31 Texans 15

Oh, my.

It's only been three games, but let's face it -- the Kubiak Era is looking like an utter disaster. As noted in this earlier post, when Bob McNair replaced former general manager Charley Casserly and head coach Dom Capers, he changed the model of the football operation from a strong GM-field coach model to the strong coach-support GM model. Thus, Kubiak -- who had never been a head coach -- was a somewhat unusual choice to replace Capers.

Through three games, Kubiak looks like a marginal improvement over the Texans' previous offensive coordinators, but a fairly disastrous choice as a head coach. Indeed, there is precious little that has occurred in the first three games that indicates that this team is any better overall than the 2-14 team of last season. Although the Texans' offense has been dreadful in large parts of each of the first three games, the Texans defense is in complete disarray after giving up almost 500 yards for the third straight game and making 36-year old Redskins QB Mark Brunell look like Hall-of-Famer Steve Young. But what's most distressing is that the Texan defenders don't even look as if they have ever seen a screen pass or draw play, and don't appear to have a clue as to situations in the game when those plays are likely to be called. Talent limitations aside, such lack of preparation is a sure sign of bad coaching.

Absent a win next week against a Miami team that has a feckless offense but strong defense, the Texans will likely be 0-6 because, after their bye in Week Five, they play at Dallas and at home against Jacksonville. Thus, the next realistic chance for a victory would be in Week Eight against the Titans. Moreover, based on their performance in the first three games, the Texans appear to have a realistic chance of winning only three or four of their remaining games -- my pre-season prediction of six wins is a pipe dream at this point. Bob McNair does not deserve this.

Houston Cougars 34 Oklahoma State 25

The red-hot Coogs (4-0) rode a superlative performance from senior QB Kevin Kolb to an impressive victory over Oklahoma State (3-1) before a near-capacity crowd on the UH campus. The Cougars are looking as if they are a bonafide Conference USA title contender this season, although they have a difficult next month as they play a well-rested and hungry Miami Hurricane team at the Orange Bowl next Saturday, then always-tough Southern Miss at Hattiesburg two weeks after that game, and then explosive UTEP at home the week after that.

Texas Longhorns 37 Iowa State 14

In their first Big 12 Conference game of the season, the Horns (3-1) methodically hammered a solid Iowa State (2-2) team, although this game would have been closer had the Cyclones not sustained a Longhorn scoring drive with a penalty while trailing 16-14 and later failed to execute an easy interception that resulted in a Texas touchdown. The Horns have an impressive blend of speed, size and strength, particularly on defense where their lock-down cornerbacks allow the front seven to bring withering pressure on the opposing team's QB on virtually every pass play. The Horns have another scrimmage next Saturday in Austin against Sam Houston State (a Division I-AA team), but then it's OU weekend in Dallas the weekend after. My sense is that the Sooners are going to have their hands full with this Texas squad.

Texas Aggies 45 Louisiana Tech 14

H'mm. After last week's debacle against Army, the Aggie fans had to endure a two-hour weather delay before this game and then a first quarter in which the Aggie offense had two three-and-outs and a fumble that led to a La Tech TD. Thankfully for Coach Fran, the 4-0 Ags turned it on and cruised to an easy victory over a mediocre and outmanned La Tech (1-2) team. After completion of the cupcake portion of their schedule, the Aggies next face a battle-tested 3-1 Texas Tech team that has largely owned the Aggies over the past decade. My sense is that the Aggies have made a big mistake in not playing a more challenging schedule before facing Tech.

Florida State 55 Rice 7

Now that 0-4 Rice is through with the brutal part of its schedule, here's hoping the Owls get back starting QB Chase Clement (injured since the end of the Owls' first game against Houston) back this week in time to play against Army this week in West Point. The Owls can't compete against such teams as Texas and FSU, but they are capable of pulling out at least a couple of wins in their remaining games if Clement returns and the Owls can avoid injuries that deplete their fragile depth.

Posted by Tom at 4:19 AM | Comments (4) | TrackBack (0)

September 24, 2006

Declining Texas medical malpractice premiums

This Ft. Worth Star-Telegram article from about a month ago reports that, since enactment of the Texas Medical Malpractice and Tort Reform Act of 2003, medical malpractice lawsuits in Tarrant and Dallas Counties have been reduced by as much as 60%. A couple of weeks later, this Austin Business Journal article and this PIAA press release report that Texas doctors are enjoying one of the steepest declines in malpractice insurance premiums rates in recent history -- almost 30% over the past four years.

Pretty hard to argue that the parallel reduction in lawsuits and insurance premiums are a coincidence.

Posted by Tom at 8:27 AM | Comments (11) | TrackBack (0)

September 23, 2006

It's not Austin, but . . .

Even when the New York Times provides a generally favorable review of the College Station, Texas -- about 100 miles northwest of downtown Houston and the home of Texas A&M University -- the newspaper cannot resist making a snarky comment about one of A&M's most hallowed institutions -- the magnificent Fightin' Texas Aggie Band. In commenting on the experience of attending a football game in College Station, the Times article makes the following observation:

"Don’t miss halftime; you’d have to go to North Korea to match the choreographed pageantry of A&M’s band and corps of cadets."

Posted by Tom at 5:35 AM | Comments (4) | TrackBack (0)

September 22, 2006

Jamie Olis resentenced to six years

U.S. District Judge Sim Lake resentenced Jamie Olis to six years in prison this afternoon (Olis has already served about 2.5 years in prison) in the latest chapter of the three year saga that has become arguably the starkest example government's dubious criminalization of business during the post-Enron era.

During the hearing, Judge Lake read portions of a lengthy opinion that he has written on the Olis resentencing. Although Judge Lake found that a sentencing guidelines sentence for Olis would be in a range of 151-188 months based on an estimated $79 million damage amount (the intended tax benefit to Dynegy from Project Alpha), he concluded that Olis deserved a non-guidelines sentence because of Olis' exemplary character, the fact that Olis did not personally gain from Project Alpha, and that Dynegy did not fail as a going concern as a result of the transaction. Judge Lake also concluded that the extensive publicity relating to Olis' case and other recent white collar business cases has sufficiently informed the business world of the severity of fraudulent business conduct that principles of general deterrence do not require a guidelines sentence.

Although six years is a harsh sentence, my initial reaction to Judge Lake's decision (before reading it) is that it would be very difficult to mount an effective appeal on Olis' behalf to reduce the sentence. On the other hand, the prosecution -- exhibiting a lack of judgment that has become routine during this era of criminalizing business -- announced at the end of the hearing that it intends to appeal Judge Lake's opinion to the Fifth Circuit.

Frankly, I hope the government does appeal the sentence. That utter lack of prosecutorial discretion might be the only way to prompt the Fifth Circuit to take a whack at reducing Olis' sentence further.

Update: Doug Berman, Ellen Podgor and Larry Ribstein, all of whom have blogged extensively on the Olis case, add their initial thoughts. Professor Podgor's point about the disparity between Olis' sentence and the sentences of his co-defendants who copped pleas is particularly insightful. Judge Lake notes in this opinion that this disparity in treatment between cooperating defendants and defendants who assert their innocence is a mechanism that Congress has adopted to facilitate cooperation in federal criminal investigations. But what looks good in theory has become ugly in practice. Given the government's overwhelming resource advantage and the willingness of prosecutors to appeal to jurors' resentment to obtain convictions, asserting innocence in white collar criminal cases has become a risk that is too huge to take.

Posted by Tom at 2:30 PM | Comments (4) | TrackBack (2)

Why rich folks go broke

Houstonian, former heavyweight boxing champ and now successful businessman George Foreman is featured in this Timothy O'Brien/New York Sunday Times article from last weekend that explores the question of why many prominent people are incapable of maintaining their wealth and end up wrestling with insolvency.

Foreman, who is a remarkable and fascinating fellow, tells the story in the article of how he blew his first fortune from winning the heavyweight championship the first time around and how that experience drove him to make the attempt to win it again at the age of 45. Big George rebounded from his insolvency experience by earning several multimillion-dollar purses during his brief return to boxing in the early-1990’s and then making millions more by reinventing himself as a good-natured entrepreneur and pitchman, cleverly peddling the popular hamburger grills that bear his name.

Interestingly, Foreman's flirtation with insolvency did not involve the usual story of corrupt managers taking advantage of a young, uneducated and unsophisticated boxer. Rather, Foreman experienced insolvency the right way, taking risks and learning from them:

Mr. Foreman, unlike most entertainers and athletes, had homegrown financial antennae, and his budgetary acumen surfaced at a relatively early age. He slugged his way into prominence by winning a gold medal at the 1968 Olympics, and a year later, when he was 20, he turned pro. Schooled, he said, in the perils of errant spending by the financial predicament of the boxing legend Joe Louis, he decided to form the George Foreman Development Corporation in 1971.

“I had so much time alone,” he recalls. “Not many people thought I would be champ of the world. Didn’t have any friends at all. And what I would do is walk to the bookstore, and I’d buy books. And they were books on taxes, accrual taxes, estimated taxes, and you better make a corporation.”

Mr. Foreman says his homework persuaded him to put about 25 percent of what he earned at every bout into a pension and profit-sharing plan controlled by his corporation. “I had all this time dreaming of this, so that when money came upon me I was already prepared,” he says.

Despite how closely Mr. Foreman tended his nest egg, most of his assets remained exposed. He describes the way he invested his unencumbered cash, about $5 million, as a series of blunders: “Oil wells, gas wells, banks, flop, flop, flop.”

Despite a present net worth of several hundred-million dollars, Foreman is not complacent:

“I will never feel secure again,” he says. “I’ve got to earn, earn, earn, earn.”

Respect every dollar, Mr. Foreman reiterated, respect every dollar.

“You can become complacent,” he says. “You can say, ‘I’m successful,’ which is the kiss of death. In America it’s hard to wake up hungry. It’s frightening. You can become complacent and wake up tomorrow totally homeless.”

Posted by Tom at 5:04 AM | Comments (0) | TrackBack (0)

Steven D. Levitt on gangs and crack cocaine

In this clever and lively lecture, University of Chicago Economics Professor Steven D. Levitt of Freakonomics (Morrow 2005) fame explores his research into the economics of gang members selling crack cocaine. Levitt's description of the way in which some gang members added the correct answer to the initial multiple choice question that the field researcher posed to them is priceless.

Hat tip to Greg Mankiw for the link to Levitt's lecture.

Posted by Tom at 4:44 AM | Comments (0) | TrackBack (0)

Duck Soup

To say that college football is a passion in Oklahoma is an understatement, which has been reflected this week as many supporters of the University of Oklahoma football team are undergoing psychotherapy over a blown call by a replay official on an onsides kick that allowed the University of Oregon Ducks to nip the Sooners at the end of their game last Saturday in Eugene, Oregon.

Well, Oregon apparently has had enough of the OU criticism over the blown call and is now fighting back. Don't miss this hilarious news conference as the Oregon Duck explains with White House Press Secretary-style clarity that the replay official's call was actually the correct one.

Posted by Tom at 4:21 AM | Comments (1) | TrackBack (0)

September 21, 2006

The Fastow sentencing memorandum

As Jamie Olis awaits his resentencing for working on a transaction for which he did not profit, Andrew Fastow's lawyers (one of whom is Olis' attorney -- small world, isn't it?) filed a sentencing memorandum earlier this week that claims that Fastow has "stepped up to take responsibility," has expressed "full remorse" for his role in Enron's demise and "is a changed man." WaPo's Carrie Johnson reports on the memorandum here and a copy of the Fastow sentencing memo can be downloaded here.

Before you become convinced that Fastow has turned his back on his evil ways and become a paragon of virtue, take a moment to review the following:

How Fastow served up his wife as a sacrifical lamb for his effective embezzlement of funds from Enron;

How Fastow used the NatWest Three to hide his embezzlement of funds from Enron and then turned on the bankers to save his skin;

How Fastow may have forged Richard Causey's initials on the Global Galatic "agreement";

Fastow's bizarre testimony in the Lay-Skilling trial; and

Fastow's involvement in ruining the careers of four innocent Merrill Lynch executives in order to lessen his prison sentence.

Changed man? Heck, it looks to me as if Fastow has manipulated the Enron Task Force in the same manner as he manipulated many of his colleagues at Enron.

Posted by Tom at 6:54 AM | Comments (3) | TrackBack (0)

The resentencing of Jamie Olis

US District Judge Sim Lake announced yesterday that Jamie Olis will be resentenced on Friday at 2 p.m., almost a year after the Fifth Circuit Court of Appeals reversed Judge Lake's previous 24+ year sentence. As we await another chapter in what has emerged as one of the most egregious injustices of the government's criminalization of business interests during the post-Enron era, the following are a sampling of my posts on the Olis saga since I began following the case two and a half years ago:

My first post on the sad case of Jamie Olis (March 24, 2004), a little over a month after the beginning of this blog;

The WSJ's Holman Jenkins notices the sad case of Jamie Olis (March 31, 2004);

Larry Ribstein addresses the Olis case for the first time, marking the beginning of this fine scholar's writings in the blawgosphere on the dubious nature of the government's regulation-of-business-through-criminalization policy (April 7, 2004);

Olis is ordered to report to prison on May 20, 2004 (May 5, 2004);

The Wall Street Journal runs its first thorough article on the Olis case (May 20, 2004);

Novelist and former prosecutor Mark Costello decries the Olis sentence and the increasing criminalization of business interests in the New York Times (June 7, 2004);

The Los Angeles Times weighs in with a thorough article on the Olis case (July 12, 2004);

Sentencing scholar Douglas Berman takes up the Olis case, beginning his excellent blawgosphere analysis of the unjust nature of the sentence (July 16, 2004);

The sad case of Olis gets even sadder as he is transferred to a prison far away from his wife and young daughter (January 31, 2005);

The government's misrepresentation of the market losses in the Enron Nigerian Barge trial mirrors the prosecution's misrepresentation of the market loss involved in the Olis case (April 20, 2005);

Would Olis have fared better had he been tried and sentenced in Russia? (June 1, 2005);

While Theodore Siphol goes home, Bill Fuhs and Jamie Olis go to jail (June 24, 2005);

The Olis case is lost amidst the myopia of the NY Times (September 16, 2005);

Embezzling $43 million and copping a plea is better than embezzling nothing and asserting one's innocence at trial (October 16, 2005);

Finally, some justice for Jamie Olis as the Fifth Circuit reverses his 24+ year sentence (November 1, 2005);

The Chronicle's business columnist Loren Steffy -- who generally supports the government's regulation-of-business-through-criminalization policy -- says that the government has gone too far in the Olis case (November 24, 2005);

The Justice Department's initial reaction to the reversal of Olis' sentence is that he should be resentenced to "only" 15 years (December 21, 2005);

The Justice Department drags its feet in regard to the Olis resentencing (January 18, 2006);

Short-selling and the genesis of the case against Olis (February 4, 2006);

Hope for Olis on the key market loss issue (February 27, 2006);

Martin Frankel's sentence exposes the absurdity of Olis' original sentence (March 24, 2006);

"Prison time is slow time" (June 22, 2006);

More hope for sanity in the resentencing of Olis (August 1, 2006);

Professor Grundfest takes on the market loss issue in the Olis case (August 22, 2206);

The Justice Department continues misrepresenting the market losses in the Olis case (September 6, 2006) while The Economist weighs in on the market loss issue (September 19, 2006);

The prosecution asked Professor Grundfest what? (September 13, 2006); and

The Olis resentencing hearing concludes (September 14, 2006).

Update: As usual, Larry Ribstein has a most insightful observation about the Olis resentencing:

The government has built much of its scheme for putting business in jail on this unfortunate young father. For more than two years, prosecutors could use the Olis example to soften up defendants for pleas and cooperation, sort of like a murdering despot pointing to his display of his enemies' spiked heads. A significant reduction in Olis's sentence would not only be a welcome bit of justice for Jamie Olis, but an important symbolic turn in the government's questionable campaign.

Update 2: Olis was resentenced to six years.

Update 3: Olis' ordeal continues (December 10, 2006).

Update 4: Did the Bureau of Prisons forget about Olis (February 1, 2007)? And Olis finally receives a ticket to Bastrop (February 11, 2007).

Update 5: Troubling information is revealed regarding the DOJ's interference with the Olis defense (May 28, 2007).

Update 6: The Olis connection to the KPMG criminal case (June 13, 2007).

Update 7: Information on what really happened during Olis' criminal trial finally starts to come out (October 9, 2007).

Update 8: Did the prosecution violate its Brady obligation to turnover exculpatory evidence to the Olis defense (December 4, 2007)?

Update 9: Why is the United States imprisoning people such as Jamie Olis (April 27, 2008)?

Update 10: This is criminal justice (Aug 9, 2008)?

Update 11: People who live in glass houses . . . (Aug 26, 2008).

Update 12: But what about he case in which the threat worked? (December 5, 2008).

Update 13:Olis as a casualty of the criminalization-of-business lottery (January 13, 2009).

Update 14Reflecting on astonishing abuses of power (August 10, 2009).

Update 15: Jamie Olis and the trial penalty (October 27, 2009).

Posted by Tom at 5:18 AM | Comments (1) | TrackBack (0)

Wasting talent

So, a tortured Jeff Skilling is back in the news as a result of being cited for public intoxication while visiting Dallas a week or so ago.

While many await with anxious anticipation the imposition of the harsh prison sentence that Skilling will almost certainly receive, I continue to think about the great waste that results from the government's criminalization policy toward risk-taking businesspersons and Skilling's legacy of beneficial risk-taking.

This is not the product of a rational criminal justice system.

Posted by Tom at 4:46 AM | Comments (1) | TrackBack (0)

September 20, 2006

You just knew this was coming

The business news was awash with articles over the past couple of days about how Amaranth Advisors, LLP lost $5 billion or so by making wrong bets that natural gas prices would rise. Inasmuch as Monday morning quarterbacking is much easier than actually making money in placing such bets, it's fairly clear what happened. As gas prices fell precipitously because of a storage glut, Amaranth increased bets that would pay off exponentially only if natural-gas prices rebounded in anticipation of a cold winter or as a result of a hurricane hammering natural-gas facilities. That hasn't happened and so prices have continued to erode.

Meanwhile, Amaranth's risk management systems apparently did not accurately measure how much downside risk the company faced and did not provide an effective mechanism for hedging that risk. Amaranth's bets went bad because the company misjudged the spread, which is the movement of the difference between prices for different month contracts. The institutions and wealthy investors that invested with Amaranth knew about that risk, but they took it because of the potential for big gains if Amaranth bet right. Nothing too unusual about that.

So, with that backdrop, why is this necessary?:

Connecticut Attorney General Richard Blumenthal said on Tuesday he is investigating apparent large losses at Amaranth Advisors LLC, the Greenwich-based hedge fund manager, and stepped up calls for more industry oversight.

In a statement, Blumenthal said "particularly problematic are alleged representations made to investors in recent weeks by the management of Amaranth that may be contrary to apparent facts." [. . .]

Blumenthal last year said he was investigating ways to make hedge funds safer for investors in the wake of the fallout from Stamford, Connecticut-based Bayou Management, which collapsed in the wake of a trading scandal. Two top Bayou managers pleaded guilty to federal fraud charges and are awaiting sentencing.

"The facts about mammoth losses by Amaranth offer additional powerful and compelling evidence about the need to reform disclosure and oversight requirements," said Blumenthal.

As if those reformed disclosure and oversight requirements will -- or even should -- prevent the next Amaranth. Indeed, the fact that several Amaranth investors investigated Amaranth's books personally and determined the extent of their exposure is an indication that the hedge fund market is working, not that it needs to be dipped into the criminal justice or governmental regulatory system.

By the way, this Ann Davis/WSJ article (no subscription needed) profiles Brian Hunter, the 32 year-old Amaranth trader who is largely responsible for placing the bad bets.

Posted by Tom at 5:53 AM | Comments (0) | TrackBack (0)

A story that Bill O'Reilly would love

Oil prices kept falling yesterday as the October crude contract on the New York Mercantile Exchange dropped $2.14 to settle at $61.66 a barrel, which is the lowest price for a front-month crude contract in six months. A couple of weeks ago, Pejman Yousefzadeh wrote this TCS Daily op-ed in which he observed that, despite such declining prices, the Bill O'Reilly-type claims of manipulation of oil markets continue to persist.

As if on cue, this NewsBusters post reports on a recent installment of the CNN show, "The Situation Room," in which CNN reporter Bill Schneider speculated ominously that the current decrease in energy prices has been timed to help Republicans in the midterm elections:

"The drop in prices may last a couple of months, long enough to get through the November election. Could that be what the oil companies want?"

Schneider's observation was then "buttressed" with the insight of one Tyson Slocum, a "consumer advocate:"

"Eighty-one percent of their money goes to members of the Republican Party. I cannot say for sure whether or not they are influencing prices to assure that outcome, but it is, I think, more than just a coincidence that we're seeing an easing of prices at a time of running up to a very, very important election."

That's a helluva consumer advocate who argues that lower prices for consumers is a dark conspiracy of the Republican Party and big energy companies. Does that mean that the far lower energy prices that existed in the run-up to the 2000 election were the result of an equally dark conspiracy of the Democratic Party and big energy companies?

Posted by Tom at 5:07 AM | Comments (0) | TrackBack (0)

KPMG continues to play rough with its former partners

In this earlier post, I noted that KPMG's resistance to paying its former employees' defense costs in the KPMG tax shelter criminal case could end up being an element in prompting US District Judge Lewis Kaplan to dismiss the charges because of the government's prosecutorial misconduct in coercing the firm into that position.

Now, it looks as if KPMG has gone one step further. According to this Lynnlee Browning/NY Times article, KPMG is now suing several of its former employees who are also defendants in the criminal case for damages resulting from their alleged embezzlement from the firm and breach of fiduciary duty to the firm in regard to their involvement with the tax shelters.

That lawsuit -- along with the firm's continued refusal to pay their employees' defense costs in the criminal case -- must be giving current KPMG partners a warm and fuzzy feeling, don't you think? Also, a note to KPMG -- such civil suits have a little process called "discovery," which often leads to the publication of embarrassing information. As if the firm needs any more bad publicity from this seemingly endless debacle.

Meanwhile, this Wall Street Journal editorial ($) reports that two previously undisclosed IRS memos to KPMG from 2003 and 2004 confirm that the Service didn't think there was anything wrong with the shelters. The defendants in the criminal case are understandably demanding all government documents relating to such memos, and the prosecution -- as is typical in this era of criminalizing business -- is resisting those demands. In short, the legality of the KPMG tax shelters was a subject of debate within the IRS, but the Justice Department brought the criminal case anyway before the IRS had even won a court ruling declaring the shelters to be illegal.

So much for due process, eh?

Posted by Tom at 4:16 AM | Comments (1) | TrackBack (0)

September 19, 2006

Awaiting the Jamie Olis sentence

As we await U.S. District Judge Sim Lake's decision on the resentencing of Jamie Olis later this week, this Economist article does an excellent job of summarizing the issues that are at play in determining the all-important market loss issue with regard to Olis resentencing. I particularly enjoyed the last sentence of the article:

"If Judge Lake has been spending the summer getting up to date on economics, perhaps Mr Olis will be out of prison much sooner than he must once have feared."

Posted by Tom at 4:30 AM | Comments (0) | TrackBack (0)

Why aren't the U.S. teams winning the Ryder Cup?

Damon Hack of the NY Times reports on the boys' road trip of the U.S. Ryder Cup team a couple of weeks ago "to bond" before this week's matches (and to try and figure out why the U.S. has gotten creamed four out of the last five matches). However, as Hack (what a great name for a golf writer!) notes in the article, Houston's Jack Burke, a former Ryder Cup member and one of Hal Sutton's assistant captains on the U.S. Ryder Cup that got scorched two years ago, suggested in his recent book It’s Only a Game that the reason the U.S squad is getting beaten so regularly is really quite simple -- the U.S. team members have made so much money through the years that they have become soft.

In this GolfforWoman.com article, Clear Thinkers favorite Dan Jenkins expands on Burke's thought in explaining why so many PGA Tour sponsors want Michelle Wie to play in their tournament:

As a sponsor, the tour says, it's okay if I sell tickets, but my main job is to help 200 guys I've never heard of make a lot of money. They need to make all this money so they can live in one of those tract mansions, probably on the water hole of a golf course in a gated community where it'll be safe to let their urchins run loose and annoy people.

Near as I can tell, they deserve to be rich because they know how to hit a golf ball. Doesn't matter that they've never read a book that didn't have a cure for the slice in it, and they resist thinking about anything beyond the next Marriott.

I'm talking about a guy like--I've looked it up--one of the 47 PGA Tour players who made more than a million bucks in prize money last year, although he didn't win a golf tournament.

Or like one of the 10 guys out there who won more than two million dollars last year but didn't win a tournament.

Did you hear me? Ten guys go squat, diddly, Circle O Ranch, the Big Empty, but they're allowed to scoop two mil.

Is this a great country or what?--as people used to say before the saying got worn out.

Some people might want to come back in the next life as Chris DiMarco. Here's a guy who clipped the sponsors for a little more than $3.5 million last year while not winning a golf tournament. Uh-huh. Three point five and oh-for-trophy.

You might wonder how many fans he lured into the 24 tournaments he entered in 2005 while he was not winning but banking all that coin. My educated guess is none. His wife would be a comp, as would the two Florida Gators pals who might happen to be in town.

Nothing against DiMarco, a perfectly charming fellow and capable golfer. It's the system. Tyranny from the bottom. That's what I've been calling it for years. DiMarco and those other winless guys are merely taking advantage of it. The fact is, Phil and Tiger are the only golfers who sell tickets these days. The spectacle sells the rest. The tournament comes to town, and it's a social event, a happening, a picnic, a kegger, a few days loafing around on the rich guy's lawn.

Posted by Tom at 4:15 AM | Comments (2) | TrackBack (0)

Former EES CEO gets 2.5 years in prison

David Delainey, former CEO of Enron Energy Services, was sentenced on Monday to 2 and a half year in the pokey in connection with his plea deal in which he pled guilty to insider trading charges and sang like a canary for the prosecution during the criminal trial of former key Enron executives Ken Lay and Jeff Skilling.

Delainey went over-the-top in his testimony against Lay and Skilling, so the Enron Task Force didn't oppose a lenient sentence for him. Moreover, Delainey's counsel requested a probated sentence from US District Judge Kenneth Hoyt, who is generally considered a relatively light sentencing judge. As a result, it was expected in the local legal community that Delainey would probably receive a similar sentence to that of Timothy DeSpain.

However, Delainey's desire to placate prosecutors appears to have backfired as Judge Hoyt commented during the sentencing hearing that his criminal conduct was "a lot deeper and a lot wider, . . . than is expressed in this charge." Thus, the length of the sentence -- and particularly the fact that Delainey was hauled off to jail straight from the courtroom -- is mildly surprising. It is also tragic in that Delainey's testimony during the Lay-Skilling trial was not particularly credible. My sense is that he agreed to the plea bargain solely to hedge the risk of a longer prison sentence on the charges.

By the way, this Kristen Hays/Chronicle article outlines the sentencing schedule for former Enron executives in the upcoming months.

Posted by Tom at 4:00 AM | Comments (1) | TrackBack (0)

September 18, 2006

The untenable corporate crime liability standard

John Hasnas is a professor of ethics and law at Georgetown University's McDonough School of Business and is the author of the book, Trapped: When Acting Ethically is Against the Law (Cato 2006), which is an adaptation of Professor Hasnas' article Ethics and the Problem of White Collar Crime. This previous post discussed one of Professor Hasnas' articles on the perverse effect that implementation of the Department of Justice's Thompson Memo has had on companies serving up their employees as sacrificial lambs to avoid an Arthur Andersen-like meltdown.

Following on that article, Professor Hasnas authored this WSJ ($) op-ed over the weekend on the real problem that underlies such policies as those implemented under the Thompson Memo:

DOJ policy is merely a symptom of the underlying disease: the untenable standard of corporate criminal liability embodied in federal law. Attempting to reform DOJ policy without changing the law is a bit like treating a lung-cancer patient's cough. It won't hurt, but it won't help that much either.

When should corporations be subject to criminal punishment? Perhaps never. These entities cannot be imprisoned, only fined; and the fines are paid by the corporations' shareholders. The defining characteristic of the modern publicly traded corporation is the separation of ownership and control: Shareholders do not control the actions of corporate employees. Thus, imposing criminal punishment on a corporation, rather than on the employees who committed the offense, punishes shareholders who are innocent of wrongdoing.

And what should the standard be?:

A highly restrictive standard would require the prosecution to demonstrate some positive step taken by corporate policy makers to facilitate the employees' criminal conduct. A less restrictive standard would require only that upper management be willfully blind or perhaps merely negligent with regard to employee misconduct. An even less restrictive standard would presume corporate involvement in employee criminal activity, but allow corporations to raise their good faith efforts to discourage employee wrongdoing as an affirmative defense. But even the least restrictive standard would be sufficient to break DOJ's stranglehold on corporations.

Read the entire piece. Changing the standard of corporate criminal liability would not interfere in the slightest with the government's ability to prosecute corporate employees and would preserve jobs and wealth for those who not involved in any corporate criminal activity. Moreover, it would prevent the government from coercing companies into becoming quasi-law enforcement agencies or risk being prosecuted out of business. That would provide at least a modest (and long overdue) balancing of the playing field in corporate criminal matters.

Posted by Tom at 4:20 AM | Comments (2) | TrackBack (0)

This is "exceptional service?"

Apparently, "service" such as that described here, here and here will get you an exceptional service award from the U.S. Department of Justice.

Trampling justice and the rule of law while destroying careers, jobs and wealth is "exceptional" governmental service?

God help us all.

Posted by Tom at 4:15 AM | Comments (0) | TrackBack (0)

2006 Weekly local football review

Colts 43 Texans 24

It was not as "close" as the score indicates. Behind 17-0 before they appeared to look up, the Texans (0-2) could not force the Colts (2-0) to punt until it was 30-10 midway through the fourth quarter. The only way that the local team ended up with 24 points was by scoring three largely meaningless TD's in garbage time when the Colt defenders were merely attempting to avoid injury. After two games, the replacement of the Casserly-Capers regime with the Kubiak crew looks like the quintessential rearranging of the deck chairs on the Titanic, particularly on defense. The Texans have winnable games the next two Sundays at home against the Redskins and the Dolphins, so they better get a win or two in those games or this season could quickly deteriorate into a repeat of the 2005 nightmare. With each passing week, this Texans team is looking more like the inept early 1970's Oilers teams. Where are Sid Gillman and Bum Phillips when you really need them?

Texas Longhorns 52 Rice 7

In what amounted to an exhibition scrimmage in Houston before next weekend's Big 12 Conference opener against Iowa State (2-1) in Austin, the (2-1) Horns trampled the undermanned Owls (0-3) at Reliant Stadium in an indictment of the current structure of NCAA Division I college football. In the next absurdity on their schedule, the Owls go to Florida State next weekend to be served up to the nationally-ranked Seminoles. Sigh.

Texas Aggies 28 Army 24

Inasmuch as the Ags (3-0) had to put up a goal line stand at the end to pull out a game by 4 that they were favored to win by 27.5, let's put A&M's "victory" in perspective:

Combined points scored by Army (1-2) against previous opponents, Arkansas State and Kent State: 23

Arkansas State's margin of victory vs. Army: 8

Army's Total Offense:
vs. Arkansas State - 164
vs. Kent State - 275
vs. Texas A&M - 322

Army's Total Yards Rushing:
vs. Arkansas State - 95
vs. Kent State - 104
vs. Texas A&M - 136

Army's Total Yards Passing:
vs. Arkansas State - 69
vs. Kent State - 171
vs. Texas A&M - 186

Quotes from Coach Fran:

"We attacked and had tremendous pursuit and that paid off."

"I felt like if we make it, the game is pretty much in our hands. I wish I'd have punted now [rather than going for it on 4th and 1 and failing to get a first down before Army's final drive], I guess, but it all worked out."

"Our defense really rose up on that [final] series. I think we grew up a lot on that series."

"We didn't have a lot of miscues, but every one of them we had was costly."

Buck Harvey's analysis of the game: "Dennis Franchione didn't lose a game or his job Saturday night. But he's on his way to doing both." The Ags conclude the cupcake portion of their schedule next week at home against Louisiana Tech (1-1) before beginning Big 12 Conference play the following week against Texas Tech (2-1) in College Station.

Houston 42 Grambling State 22

In their second straight impressive offensive performance, the 3-0 Cougars chewed up Grambling and led 42-7 early in the third quarter before calling the dogs off. The Coogs have "show me" games upcoming at home against Oklahoma State and at Miami over the next two weeks, so we'll get a better idication in those two games of whether the Cougars have really arrived than we have gotten in their first three.

Posted by Tom at 4:00 AM | Comments (0) | TrackBack (0)

September 17, 2006

A Houstonian is the top CEO-golfer

Houston has a rich tradition in both golf and business, so it's no surprise that a Houston resident has been named the best CEO-golfer by Golf Digest magazine. In its October print edition (no web link available), Golf Digest rates the top 200 CEO-golfers of all the Fortune 1000 companies and Jim Crane, CEO of Houston-based air freight and logistics company, EGL ("Eagle Global Logistics"), comes away with the no. 1 rating. As the article notes:

Crane, who grew up caddieing at Norwood Hills Country Club in St. Louis, gratefully recalls getting to play for free on caddie day. Price isn't an issue for him now. With homes in Houston, Nantucket and Pebble Beach, and with 400 offices in locations from Shanghai to Istanbul to Santiago, he admits to having two identical sets of clubs -- one that he keeps in Houston, where he plays near his office at Lochinvar Golf Club, and the other -- "Oh, this will sound bad," he says, "but it's a personal one, not the company's" -- on his plane. "It makes it easy to get from Point A to Point B," he says.

When working at his London office, Crane stays at Queenswood . . . because it's convenient, and he can sometimes hit balls after work. Even though Crane enjoys tournaments and plays in many fund-raisers, more of his golf is business than social. "If you can't close in four hours, you can't sell," he says of opportunites offered by the game.

Posted by Tom at 8:06 AM | Comments (1) | TrackBack (0)

September 16, 2006

Three Houston businessmen arraigned in the Premiere Holdings criminal case

In a case that has been swirling around Houston legal and business circles for the past five years, the three former owners of Houston-based Premiere Holdings of Texas -- which promoted itself as a high-yield investment fund to prominent Houstonian investors but spiraled into bankuptcy in late 2001 amid allegations of Ponzi scheme-type activity -- pled not guilty yesterday in connection with their arraignment in federal court in Houston on securities fraud and money laundering charges in a 24-count indictment (you can download a pdf of the indictment here).

Attorney Ted Murray, securities broker David Lapin, and securities broker Jeffrey Wigginton are charged in the indictment for their roles in the promotion and sale of unregistered security interests to investors through Premiere Holdings between 1999 and late 2001. Although the case has been preliminarity scheduled for trial trial on October 30, 2006, my sense is that a case of this nature will not go to trial that quickly after indictment.

Premiere Holdings has been an item of local interest for quite some time for a couple of reasons. First, the company promoted itself as a high-yield investment fund to mainly wealthy and conservative Houstonians, and often advertised itself through several of the talk show hosts on the Houston conservative radio station KSEV. Moreover, Premiere's business unraveled soon after the September 11, 2001 attacks on New York and Washington, but that story flew somewhat under the radar screen of the local business media that was preoccupied with the demise of Enron, which was taking place at the same time. Finally, one of the defendants -- David Lapin -- is related to prominent Houston attorneys Jack Lapin (father) and Bobby Lapin (brother).

The Justice Department's press release on the indictment is here and a previous press release on an SEC action against the three owners is here. A couple of Houston Business Journal articles on the Premiere Holdings case from late 2001 are here and here.

Posted by Tom at 7:38 AM | Comments (0) | TrackBack (0)

September 15, 2006

Former Enron Assistant Treasurer gets four years probation

In the first of many sentencing hearings that will take place this fall n connection with various Enron-related criminal cases, Timothy DeSpain, a 41-year old former assistant treasurer of Enron from 1999 to 2002, was sentenced this morning by U.S. District Judge Ewing Werlein to four years probation in connection with a 2004 plea agreement in which he pled guilty to a single count of securities fraud. Here is an earlier blog post with background on DeSpain's role at Enron and his plea deal. The Chronicle's Tom Fowler files a report on the sentencing here.

Posted by Tom at 10:18 AM | Comments (0) | TrackBack (0)

Milton Friedman on limited government

Russell Roberts over at Cafe Hayek points us to a remarkable Open Mind video from over 30 years ago of Milton Friedman discussing principles of economics and limited government. The entire video is about a half hour, but if you watch nothing else, take a moment to marvel at Professor Friedman brilliantly responding to an inflammatory opening question that suggests he lacks compassion for his fellow man. Professor Friedman calmly refuses to take the bait and turns the issue around to question the motives of those who advocate the cure-all of government intervention:

INTERVIEWER: Professor Friedman, I wonder if I might begin the program by saying that you're a kind gentleman, yet you're identified by many with those who seem -- to those who make that identification to want us not to do kind and gentle things -- perhaps not provide for the poor, perhaps not provide for the aged -- and I wonder how you'd reconcile these phenomena and whether you feel it's fair to characterize you as a conservative economist.

FRIEDMAN: Well, let me start at the end of that first. I never characterize myself as a conservative economist. As I understand the English language, conservative means conserving, keeping things as they are. I don't want to keep things as they are. The true conservatives today are the people who are in favor of ever bigger government. The people who call themselves liberals today -- the New Dealers -- they are the true conservatives, because they want to keep going on the same path we're going on. I would like to dismantle that. I call myself a liberal in the true sense of liberal, in the sense in which it means (inaudible) and pertaining to freedom.

Now, that brings me to your second point. One of the great mistakes is to judge policies and programs by their intentions rather than their results. We all know a famous road that is paved with good intentions. The people who go around talking about their soft heart -- I share their -- I admire them for the softness of their heart, but unfortunately, it very often extends to their head as well, because the fact is that the programs that are labeled as being for the poor, for the needy, almost always have effects exactly the opposite of those which their well-intentioned sponsors intend them to have.

INTERVIEWER: As an example, what are you referring to?

FRIEDMAN: Let me give you a very simple example. Take the minimum wage law. Its well-meaning sponsors -- there are always in these cases two groups of sponsors. There are the well-meaning sponsors and there are the special interests who are using the well-meaning sponsors as front men. You almost always when you have bad programs have an unholy coalition of the do-gooders on the one hand and the special interests on the other. The minimum wage law is as clear a case as you could want. [. . .]

[T]he minimum wage law is most properly described as a law saying employers must discriminate against people who have low skills. That's what the law says. The law says here's a man who would -- has a skill which would justify a wage rate of $1.50, $2.00 an hour. You can't, you may not employ him. It's illegal. Because if you employ him you have to pay him $2.50. Well, what's the result? To employ him at $2.50 is to engage in charity.

Now there's nothing wrong with charity. But most employers are not in a position where they can engage in that kind of charity. Thus the consequences of minimum wage rates have been almost wholly bad, to increase unemployment and to increase poverty. Moreover, the effects have been concentrated on the groups that the do-gooders would most like to help. The people who have been hurt most by minimum wage laws are the blacks. I've often said that the most anti-Negro law on the books of this land is the minimum wage rate. And so I think the real answer to your question is that you must not judge a bottle solely by its label. You have to look at what's inside and see what the law or the measure produces.

Indeed, Professor Friedman's analysis with regard to the minimum wage applies equally well to eviscerate this local government boondoggle.

Posted by Tom at 6:34 AM | Comments (1) | TrackBack (0)

More gripping for the Ryder Cup matches

As noted here earlier, there is something about the upcoming Ryder Cup matches next week in Ireland (perhaps that the American squad has lost four of the last five matches?) that provokes some entertaining reactions.

In this IdahoStatesman.com article, NBC golf color man and former PGA Tour player Johnny Miller rips the American Ryder Cup team:

"This is probably on paper the worst Ryder Cup team we've ever fielded," Miller said during [a] press conference . . .

Miller also expressed reservations about captain Tom Lehman, who will decide how to use his 12 players. He will create four two-man teams for each of the first four rounds.

Miller says it's imperative that Lehman pair Tiger Woods with Jim Furyk, and Phil Mickelson with Chris DiMarco, because those pairings have worked in the past.

That could leave the team's inexperienced players, including four Ryder Cup rookies, paired together.

"I believe if he divides those up we're going to get creamed," Miller said of the Woods-Furyk and Mickelson-DiMarco teams. "I'm really concerned that Lehman uses the theory that we've got to use a good player with a not-so-experienced player." [. . .]

Miller, a former Ryder Cup player, will call the action for NBC.

"It's going to be tough to win with the team (Europe has) got," he said.

I don't think Miller will be the one pursuing interviews from the American squad members for NBC during the matches. Meanwhile, this blog post of senior GolfWorld writer John Hawkins, an excellent golfer himself, provides a more balanced analysis of the American squad's prospects.

And just to make sure that the gripping regarding the matches is taking place on both sides of the Atlantic, former three-time European Ryder Cup captain Bernard Gallacher heaped additional criticism (see previous post here) on current Euro team captain Ian Woosnam for failing to tell Euro captain's choice Lee Westwood that he was on the team before Woosnam made his decision to select him public and said that Woosnam had taken "a massive gamble" by selecting Irishman Darren Clarke, whose wife died last month after a long battle with cancer.

Finally, check out Nike's new commercial below touting Michelle Wie's ability to compete against male professional golfers. H'mm, note to Nike -- image really isn't everything!

Posted by Tom at 5:49 AM | Comments (2) | TrackBack (0)

More rumblings in the Nigerian Barge appeal

In a move that may backfire, the Enron Task Force filed this petition requesting that the entire Fifth Circuit Court of Appeals consider and reject the decision of a Fifth Circuit three-judge panel from last month (previous posts here and here) that struck down the wire fraud and conspiracy convictions of four Merrill Lynch executives involved in the controversial Enron-related Nigerian Barge case. The Chronicle's Kristen Hays reports on the Task Force's motion here and this post from a year ago provides an extensive thread of posts discussing the case.

The Task Force's petition -- which is focused on the "honest services" issue in the appeal -- is somewhat odd, which may reflect the Task Force's reservations about filing it at all given the considerable risk that a majority of the Fifth Circuit could adopt Judge Harold DeMoss' dissent in the panel decision. On a threshold basis, the motion does not even mention that the Fifth Circuit panel's decision reversed and rendered the convictions of Merrill Lynch executive William Fuhs on all counts and then makes the ludicrous suggestion in a footnote that former Enron CEO Jeff Skilling's anticipated appeal of his conviction and former Enron executive Chris Calger's recent motion to withdraw his plea agreement are somehow valid reasons for reconsidering the panel's decision ("we can't allow those evil former Enron executives be protected by the law!"). Beyond that, the Task Force's short pleading mischaracterizes the panel's decision and fails to address the Task Force's seminal problem with the entire Nigerian Barge prosecution -- that the Task Force prosecuted the Merrill Lynch executives for doing their jobs in connection with Enron's sale of an asset to Merrill for which Enron, not Merrill, may have improperly accounted, although even that issue was never proven by the Task Force during the trial.

Meanwhile, in another interesting development, two of the former Merrill executives involved in the Nigerian Barge appeal, Dan Bayly and Robert Furst, who face the possibility of a retrial as a result of the Fifth Circuit panel's decision -- filed this motion for rehearing in which they request the Fifth Circuit panel to address a key evidentiary issue -- the trial court's decision to allow the Task Force to introduce an email of Brown that was prepared over a year after the barge transaction took place -- that the panel did not address in its original decision because of its reversal of the convictions on other grounds. Bayly and Furst argue in the motion that the panel's ruling on that evidentiary issue will resolve the issue in any re-trial of the case and should be known to the entire Fifth Circuit before it decides whether to grant en banc review of the panel's decision (if Bayly and Furst are right that the trial court erred in admitting the Brown email, then even an en banc reversal of the panel's decision on the honest services issue would not alter the reversal of the convictions).

Posted by Tom at 4:44 AM | Comments (0) | TrackBack (0)

September 14, 2006

Stros 2006 Review, Part Nine

As I've noted before, it's funny how our expectations for the Stros color the way in which we view the team at a particular stage of the season.

After essentially playing themselves out of the National League playoff race in the eighth 1/10th segment of the season, the Stros (71-74) have actually played quite well over their ninth segment of the season, going 10-6 and completing a segment with a winning record for just the third time this season. However, as the Stros enter their final 17 games of the season, the general consensus in the local media is that the Stros have not been playing well and certainly not as well as last season at this time when they were also contending for the NL wildcard playoff spot.

Indeed, taking a look at where the Stros stood last season at this time is instructive as to where the Stros find themselves this season. After 145 games last season, the Stros were 77-71, which means that the team had won only six more games than the current club at the same stage of the season. That 2005 team was plagued by the same chronic hitting woes that the current Stros team is experiencing -- that club's team runs created against average ("RCAA," explained here) after 145 games was within a run or two of being the same as this season's club (-38).

Meanwhile, the 2005 club's pitching staff -- led by the extraordinary starting trio of Clemens, Pettitte and Oswalt -- had an outstanding 97 runs saved against average ("RSAA," explained here) after 145 games. This year's staff currently has a very respectable 54 RSAA (third in the NL), but that performance is only about half as good as last season's pitching staff's incredible performance after 145 games.

Thus, expectations aside, the reality is that this season's club has not improved in hitting from last season's club and thus, the roughly 43 fewer runs saved by the 2006 pitching staff in comparison to the 2005 staff is the difference between the 2005 club winning six more games than the 2006 club at the same stage of the season. That difference -- as well as a couple of nagging injuries to Pettitte and Clemens down the stretch of this season -- is more than enough to prevent this fragile Stros club from making the push necessary to contend seriously for a playoff spot.

Despite the disappointment of missing the playoffs after the past two magical seasons and flirting with a sub-.500 season for only the second time in the past 14 seasons, the Stros did have a couple of good things happen since the review of the club's 8th segment of the season:

The Stros locked up Roy Oswalt (3.06 ERA/33 RSAA (tied for 4th in RSAA in Major League Baseball); and

Lance Berkman (57 RCAA (tied for 4th in Major League Baseball)/.414 OBA/.616 SLG/1.030 OPS) officially became the 2nd best hitter in Stros history and, with his tater in yesterday's win against the Cardinals, became the first Major League Baseball switch-hitter since the late Mickey Mantle to hit 40 or more home runs in multiple seasons (Mantle's stats for his 18-year career were 1099 RCAA/.421 OBA/.557 SLG/.977 OPS).

The club's hitting and pitching statistics to date are set forth below, and pdf's of the current hitting stats are here and the current pitching stats are here, courtesy of Lee Sinins' sabermetric Complete Baseball Encyclopedia. The abbreviations for the hitting stats are defined here and the same for the pitching stats are here:

As noted in the earlier segments, the Stros' main problems are easy to identify. A lineup that includes Ausmus (-35 RCAA/.306 OBA/.282 SLG/.588 OPS), Everett (-27 /.288/.352/.640), Taveras (-15 /.333/.343/.676), and now Biggio (-14 /.310/.424/.734) is destined to be a far below-average National League hitting lineup. Those four players have created an astounding 91 fewer runs than merely average National League hitters would have generated in those five spots in the lineup. In fact, had those five players been just half as bad in hitting as they have been this season, the Stros would have gained back almost all of the 43 runs that this club's pitching staff has failed to save in comparison with last season's staff. If that had occurred, then this club likely would have won at least the six more games that the 2005 club had won at this time of the season and certainly would be right in the middle of -- if not leading -- this year's race for a playoff spot.

Which brings us to the Stros' biggest problem, which is the club's icon and its probable first Hall-of-Famer, Bidg. Although Bidg was able to push his freak-of-nature, 40-year old physique to solidly above-average hitting seasons during the 2004 and 2005 seasons, the bottom has fallen out this season as he has generated a -15 RCAA over the past three months. Moreover, unlike light-hitting teammates Taveras and Everett who at least field their positions in an above-average manner, Bidg is now a serious defensive liability, and the club's indulgence of Bidg's below-average performance has had the serious side-effect of stunting the development of such younger players as Chris Burke (5/.359/.443/.802), Jason Lane (-8/.328/.404/.732) and even 2B Brooks Conrad (.334 OBA/.534 SLG/.868 OPS/24 HR's) at AAA Round Rock. None of those players will ever be good as Bidg was during his prime, but each of them would probably produce at a superior level to Bidg at this stage of their respective careers.

Nevertheless, as the Chronicle's John Lopez pointed out earlier in the week (and Larry Dierker chimes in today), the Stros are unlikely to let Bidg go after this season when he will be only 80 hits or so shy of 3,000 hits. That's understandable given Bidg's stature on the team and in the community, but everyone should understand that there is a real cost to the Stros indulging yet another below National League-average hitter in the club's lineup. Not only is there the impact of blocking younger players' development, the Stros will have to allocate Bidg at least 375-425 plate appearances next season for him to reach 3,000 hits, assuming that he continues hitting at the same level that he is currently hitting. That's more plate appearances than a part-time starter would receive, so the Stros appear to be locked into having yet another position manned by a below average National League-hitter next season.

Meanwhile, next season's pitching staff will likely lose Clemens (2.27 ERA/23 RSAA) and Pettitte (4.37 ERA/3 RSAA), and will not have the rehabbing Backe (3.77 ERA/4 RSAA), but the Stros appear to be better prepared to rebound from those losses internally than in the hitting department. Young pitchers Hirsh (6.10 ERA/-5 RSAA), Albers (4.35 ERA/0 RSAA), Nieve (4.06/5 RSAA) and Buchholz (5.95 ERA/-18 RSAA) all appear to have the potential to be at least average National League pitchers, and the minor league system contains several other pitchers who will be maturing into MLB-grade over the next couple of seasons. Although Lidge's (5.21 ERA/-5 RSAA) deterioration this season has been troubling, Wheeler (2.51 ERA/14 RSAA), Qualls (4.10 ERA/4 RSAA) and the rest of the bullpen have performed at an above-average National League-level this season and will form a sound core for the bullpen next season. Thus, despite the Stros' chronic hitting woes, the club's pitching remains in reasonably good shape and will likely continue to be the focal point of the club as it attempts to continue the success of the Biggio-Bagwell era during the Berkman-Oswalt era.

So, what should the Stros do? Clearly, going forward with Ausmus, Everett, Taveras and Bidg in the lineup next season is a sure sign of surrender, so let's hope that doesn't happen. Taveras and Lidge probably have the most trade value and both of them should definitely be offered in trade this upcoming off-season for more hitting, probably a hard-hitting corner outfielder. Other than Berkman, Oswalt and most of the pitching staff, almost everyone else on the Stros roster should be expendable for the right price, but the problem is that light-hitting players such as Ausmus and Everett -- and inconsistent ones such as Ensberg (12/.389/.458/.847), Huff (-6/.332./455/.787), Lamb (6/.359/.485/.844) and Lane -- are hard to move in trade. However, given the $40+ million in payroll that will be freed by the expiration of the Bagwell, Clemens, Pettitte and Preston Wilson contracts, the Stros also have the financial flexibility to be in play for a free agent acquisition or two, which may be a more practical alternative than attempting to parley their below average-hitters into a productive trade. Although free agents are usually overpriced in comparison to home-grown talent and thus, tend to be riskier, the Stros appear to have little choice at this point than to take those risks to bolster a hitting attack that has now been in decline for the sixth straight season.

The Stros have an interesting schedule over their final 1/10th segment of the season as they meet the playoff-contending Phillies, Reds and Cardinals in 11 of their final 17 games. That should give Stros GM Tim Purpura and his staff a glimpse of how the club stacks up against the current National League playoff clubs, which should help Stros management finalize their plan on retrofitting the Stros to regain playoff status for next season. Look for my final Stros review of the season shortly after the end of the regular season, at which time I will grade each of the Stros players based on primarily objective critieria, rather than the subjective criteria preferred by some members of the local media.

Posted by Tom at 8:45 AM | Comments (0) | TrackBack (0)

Houston's nature trail

One of the things about Houston that has surprised many guests of mine over the years are the beautiful nature areas that have been preserved in city's core. One of the best of such areas is the Memorial Park area, which includes the Houston Arboretum & Nature Center, the 155-acre nature sanctuary on the banks of Buffalo Bayou literally within the shadows of the West Loop skyscrapers. Chronicle columnist Doug Pike, who is one of the local newspaper's fine contingent of writers on hunting, fishing and other outdoor activities, provides this column today in which he reviews the types of wildlife that visitors can see while hiking through the arboretum. If you have never visited th arboretum (and even many longtime Houstonians have not), I highly recommend it. Just watch out for the snakes and the feral hogs!

Posted by Tom at 6:01 AM | Comments (0) | TrackBack (0)

Olis resentencing hearing concludes

After a hearing in state court yesterday concluded, I was able to attend the conclusion of the resentencing hearing for Jamie Olis in U.S. District Judge Sim Lake's court (Tom Fowler's Chronicle article on the hearing is here). My sense is that the hearing went reasonably well for Olis.

Judge Lake allowed Olis to make a personal statement to him during the hearing, and Olis' statement was equally heartfelt and heart-wrenching. Olis, who was not allowed even to look at his delightful and dedicated family in the courtroom during the two-day hearing, choked back tears as he told Judge Lake that he was sorry that he did not -- as a young, mid-level executive at a big, publicly-owned company -- question the judgment of proceeding with a transaction (Project Alpha) for which he was convicted, and that he was hugely frustrated that he could not do anything about it now. Although Judge Lake is notoriously hard to read, he was clearly moved by Olis' statement.

In questioning the attorneys during final argument, Judge Lake was primarily interested in the general deterrent effect of the sentence. Olis defense attorney David Gerger contended that the prison time that Olis has already served and the other ramifications from his conviction (fines, enjoined from serving as an officer of a public company, public humilation, etc) are more than a sufficient general deterrent for other mid-level executives at publicly-owned companies from engaging in wrongdoing, and that the lengthy sentence being proposed by the prosecution is really just a thinly-veiled deterrent for business executives from exercising their right to assert their innocence at trial. Unfortunately, not mentioned during the hearing was the hugely detrimental effect that the Olis sentence could have on beneficial risk-taking that creates jobs for communities and wealth for shareholders.

Meanwhile, Judge Lake -- who clearly has a sound understanding of the sentencing issues -- zeroed in on the prosecution by asking why the government was asking for a sentence of a mid-level company executive who did not personally profit from the transaction for which he was convicted that is equal to or harsher than the recent sentences levied on several more senior executives who actually looted their companies while committing wrongdoing. In what I thought was the defining moment of the portion of the hearing that I attended, the lead prosecutor could not answer Judge Lake's pointed question and blathered on about how it was important to make Olis a poster boy for what can happen to a business executive who engages in corporate crime. There is no question that Judge Lake noticed the evasiveness of the prosecution on that key point.

So, what will Judge Lake do? Given that he originally levied the 24+ year sentence on Olis and generally has a reputation of levying stiff sentences, a couple of fellow courtroom spectators predicted afterward that Judge Lake would come back with a 10-12 year sentence. However, I know that Judge Lake is a man of compassion and grace, and the circumstances of Olis' case simply do not call for a sentence of that length. Thus, I'm betting that the sentence lands in the 4-7 year range, with the hope that it will fall into the lower part of that range and that Judge Lake will allow a portion of the sentence to be served in home detention or at least near Olis' wife and young daughter. Judge Lake stated at the end of the hearing that he will likely issue his ruling late next week, so stay tuned.

Posted by Tom at 4:42 AM | Comments (1) | TrackBack (0)

September 13, 2006

Would you want to march at a Texans game?

Although not as bad a public relations blunder as last year's decision to roast their fans during their first home game, the Texans were not particularly hospitable to the high school band that performed at this past Sunday's opening game of the 2006 season. In addition to being subjected to NFL-mandated pat downs before entering the stadium, Houston-based public relations expert John Wagner reports that the band members were not even allowed to watch one play of the game!

Of course, based on the way the game went after the Texans' first drive, the kids didn't miss much as a result of the Texans' lack of hospitality.

Posted by Tom at 6:43 AM | Comments (3) | TrackBack (0)

The Olis market loss hearing

The hearing phase of the re-sentencing of former Dynegy executive Jamie Olis involving the key market loss issue is taking place yesterday and today before U.S. District Judge Sim Lake, and the Chronicle's Tom Fowler files this report on yesterday's proceedings. The hearing is expected to conclude today and Judge Lake -- who is usually quite prompt in rendering rulings -- is expected to issue his decision on the market loss issue shortly.

By the way, according to the Chronicle article, the prosecutor in the Olis case used the same "deep" line of questioning in attempting to impeach the testimony of Olis expert Joseph Grundfest that the Enron Task Force prosecutors used during the Lay-Skilling trial:

During cross examination, Assistant U.S. Attorney Jimmy Sledge challenged Grundfest's motive for getting involved in the case, noting a number of news articles that mentioned he is doing this pro bono.

"Does it warm your heart to read nice things about yourself?" Sledge asked.

That a prosecutor stoops to that level of questioning (in front of a sophisticated judge rather than a jury, no less!) in an attempt to impeach the testimony of a noted expert who is donating his time to address a gross injustice is an appalling reminder of the lack of adult supervision that presently plagues the Department of Justice.

Posted by Tom at 6:11 AM | Comments (1) | TrackBack (0)

The insidious nature of criminalizing business

Under mounting criticism over its dubious tactics in regard to threatening to go Arthur Andersen on KPMG in the prosecution of the firm's promotion of questionable tax shelters, the Justice Department is now making nice in Congress. Yesterday, deputy attorney general, Paul J. McNulty testified during a hearing of the Senate Judiciary Committee and, while defending such dubious tactics as criminalizing a potential defendant's rights to counsel and to assert the privilege against self-incrimination, suggested that the DOJ might consider some changes on the margin to its corporate crime guidelines such as the odious Thompson Memo. Here is a link to McNulty's testimony and to that of other witnesses at the hearing.

But McNulty's arrogance in defending the Justice Department's campaign to criminalize business in the post-Enron era was not even the most appalling part of the hearing. That occurred when Andrew Weissmann, the former chief of the Enron Task Force, presented this written statement in which he calls for revision of the Thompson memo and a “rethinking of corporate criminal liability.” According to the Weissmann, who parleyed his Enron Task Force job into a partnership at Jenner & Block, the Thompson memo “should be revised so that it no longer encourages an environment where employees risk losing their jobs or legal defense merely for exercising their constitutional right not to speak to the government . . . ” He went on to observe the following:

In determining whether to indict a company, the Department of Justice should not permit consideration of the company’s treatment of an employee who has asserted her Fifth Amendment right. This factor should simply not come into play in the analysis of whether a corporation has or has not cooperated. Although a company itself can properly fire an employee or cut off legal fees based on whether she cooperates with an investigation, the Department of Justice should not weigh in on this determination – and not because a court may ultimately deem the company’s actions as government conduct. Rather, for policy reasons, the Department of Justice should simply not base its decision to prosecute a company on whether a person has been punished by her employer for asserting a constitutionally guaranteed right.

But then Weissmann -- appearing to be far more open-minded than he was during his prosecutor days -- calls for a “rethinking of corporate criminal liability:”

Although the Thompson Memorandum has recently received significant negative attention, and is in some ways an easy target, it is not the real source of the problem. The root cause that renders the Thompson Memorandum such a sharp weapon is the standard for criminal corporate liability and the absence of systemic checks to restrict the government’s power to charge corporations whenever an employee strays. The current standard for corporate criminal responsibility affords prosecutors enormous – and unduly disproportionate – leverage and power. In this climate, a corporation has little choice but to conform its conduct to the Thompson Memorandum factors, even in the absence of a prosecutor’s overt threats.

Of course, Weissmann then proposes a feckless change for the standard for corporate criminal liability in which the government would be required to take into account “a company’s attempts to deter the criminal conduct of its employees:”

Holding the government to the additional burden of establishing that a company did not implement reasonably effective policies and procedures to prevent misconduct would both dull the threat inherent in the Thompson Memorandum as well as help correct the imbalance in power between the government and the corporation facing possible prosecution for the acts of an errant employee. A more stringent criminal standard, one that ties criminal liability to a company’s lack of an effective compliance program, would have the added benefit of maximizing the chances that criminality will not take root in the first place – since corporations will be greatly incentivized to create and monitor a strong and effective compliance program. The objectives of law-abiding society, the criminal law, and even of the Department of Justice’s Thompson Memorandum itself, would then be well served.

So, in short, unless a company has what the DOJ deems as a satisfactory compliance program to deter bad conduct, Weissmann contends that it is acceptable for the government to go Arthur Andersen on companies that pay for the defense costs of employees who assert such fundamental rights as the privilege against self-incrimination. Neither mentioned nor challenged is Weissmann's dubious judgment in contributing to billions of dollars in economic loss and inestimable human hardship from pre-emptively prosecuting Arthur Andersen out of business, Weissmann's continual threats to go Arthur Andersen on Merrill Lynch because of its payment of defense costs for the four former Merrill executives involved in the equally reprehensible Nigerian Barge prosecution and the long line of serious prosecutorial abuses that Weissmann was involved in with regard to the Enron criminal cases.

That the Senate Judiciary Committee is seeking guidance from someone such as Weissmann with a questionable background in abusing fundamental principles of our justice system speaks volumes regarding the unlevel playing field that business interests face in defending against the government's increasing regulation-through-criminalization policy. As Geoffrey Manne appropriately asked awhile back, "Where's the outrage?"

Posted by Tom at 4:38 AM | Comments (3) | TrackBack (0)

September 12, 2006

Thinking about global climate change

Andrew Dessler is an associate professor in the Texas A&M University Department of Atmospheric Sciences. A couple of months ago, I came across his interesting new blog that focuses on the science and politics of climate change. In this Chronicle article, the Chronicle's science reporter, Eric Berger, interviews Professor Dessler, who makes the following common sense observation about the climate change debate:

[T]here are a lot of really legitimate uncertainties [about global climate change] that people don't seem to argue about. It's a little bit disappointing that people are still arguing over whether the Earth is round or not. Whether humans are causing the increase in CO2 is really like arguing whether the Earth is round. We know it is. There's no question. We've got lots of evidence. The debate isn't really where it should be at this point: We need to view climate change as a risk. It's a somewhat uncertain risk, but it's a risk nonetheless. The question really becomes, as a policy, how do we address this risk?

Eric has a podcast of his entire interview with Professor Dessler over at his SciGuy blog.

Posted by Tom at 7:04 AM | Comments (0) | TrackBack (0)

Dell in the crosshairs

Despite Hewlett-Packard's current problems with its board of directors, my sense is that Dell, Inc. would prefer to have H-P's problems rather than the ones that the Round Rock-based computer manufacturer faces (previous posts here and here).

This NY Times article reports that Dell will delay filing its fiscal second-quarter reports because of a widening Securities and Exchange Commission investigation and an internal company probe into its financial accounting. To make matters worse, Dell also reported that the U.S. attorney for the Southern District of New York has subpoenaed records in regard to an investigation of the company's financial reporting from 2002 to present. Continuing a trend that has knocked 30% of the value of Dell's stock this year, Dell shares declined over 2% yesterday to $21.19.

Dell was already being investigated by the SEC for the timing of its revenue recording, but yesterday's announcement stated that the investigations have branched into areas "relating to accruals, reserves and other balance sheet items."

Translation: "We many need to restate prior earnings."

Posted by Tom at 6:32 AM | Comments (1) | TrackBack (0)

The Enronesque prosecution of Conrad Black

Washington attorney Alykhan Velshi writing in this New English Review op-ed examines the Conrad Black indictment and doesn't like what he sees:

The trial by attrition of Conrad Black has exposed the dark underbelly of the legal system, where the government can ruin a man, take his property, his means of livelihood, and make him a social pariah – all without the hassle of securing a conviction. There is an insidious little worm that has crept into the legal system, an iconoclastic mentality that is distorting the rule of law. Focused less on securing justice than on bringing down the high and mighty, all the while pandering to the politics of envy, it affects the entire system of corporate governance.

This is highlighted by three developments in the law of corporate governance: the concentration of power in the hands of minority shareholders, the criminalization of technical regulatory violations, the abandonment of the rule of law in favor of aggressive prosecutorial tactics, and the entrenchment of a culture that penalizes success.

Velshi doesn't get everything right, but his piece is nevertheless worth reading for his analysis of the troubling (and all-too-common) characteristics of the Black prosecution. Check it out.

Posted by Tom at 3:46 AM | Comments (0) | TrackBack (0)

September 11, 2006

The art of predicting energy prices

Oil prices continued a steady slide last week, ending the week at a five-month low as concerns about possible shortages that fueled this summer's rally ebbed. The October crude contract on the New York Mercantile Exchange settled at $66.25, the lowest level for a front-month contract since April 5. The contract has lost more than $11 in the past month. Previous posts on the energy markets are here.

Meanwhile, James Hamilton posted this typically astute analysis of the big discovery in the Gulf of Mexico last week and explains why it may not have as big an effect on energy markets as big discoveries of the past. Also, the Chronicle's David Kaplan provides this interesting article on Houston-based chemical engineer Henry Groppe, who has long been one of the most respected behind-the-scenes experts in the Houston business community for predicting energy prices. As noted in this Resource Investor piece from last year, the 80-year old Groppe is the forerunner of such younger experts as Matt Simmons, who have carved-out careers in advising businesses on risks relating to energy prices.

Finally, this recent Economist article reminds us the silliness of bashing big U.S. oil companies for supposedly controlling energy prices. Turns out that the thirteen largest oil companies in the world are all state-owned and control about 90 percent of the world's oil reserves. The biggest U.S. major -- Exxon Mobil -- is a measly 14th and controls only a fraction of the world's reserves.

Pass that information along to Bill O'Reilly if you have a chance.

Posted by Tom at 7:00 AM | Comments (0) | TrackBack (0)

The best and worst of the Stros

As the Stros play out the string of the 2006 season amidst the beginning of the football season, the Stros' lone slugger -- Lance Berkman -- quietly reached another milestone in his quest to become the best hitter in Stros history.

Over the weekend against the Brewers, Berkman overtook future Hall of Famer Craig Biggio for second place in career runs scored against average ("RCAA") among Stros players. As regular readers of this blog know, RCAA is a Lee Sinins-developed statistic that is among the best in reflecting the effectiveness of a hitter. The reason for this is that it focuses on the most important statistic in baseball for a hitter -- creating runs. Whereas more commonly cited statistics such as batting average can be very misleading (for example, some local media commentators misconstrue Willy Taveras' .284 batting average as meaning that he is having a good hitting season), RCAA is particularly valuable in evaluating hitters because it focuses on the two most important things in winning baseball games -- that is, creating runs and avoiding making outs.

RCAA computes the number of runs that a particular player creates for his team relative to the number of outs that he makes while creating those runs, and then compares that number of runs to the number that a hypothetical average player in the league would create while using an equivalent number of outs. Inasmuch as the hypothetical average player's RCAA is always zero, a player can have either an RCAA that is a positive number -- which indicates he is an above average hitter -- or an RCAA that is a negative number, which means that he is below-average hitter.

Moreover, RCAA is also a valuable tool to evaluate hitting ability because it provides a good measure for comparing hitters who played during different eras. Inasmuch as RCAA measures a player's hitting ability against that of an average player in the player's league for each particular season, a player's career RCAA measures how a hitter compared to an average hitter during that hitter's career. Thus, comparing RCAA of hitters from two different eras allows us to compare how those hitters produced relative to an average hitter in their particular era, whereas comparisons of other hitting statistics -- such as on-base average, slugging percentage, and batting average -- are often skewed between players of hitter-friendly eras (such as the past 15 year or so) versus players of pitcher-friendly eras, such as the late 1960's and early 70's.

With Berkman passing Bidg in career RCAA over the weekend, the following is the revised Stros top-10 career RCAA list:

In fact, Berkman's current season is now among the top 10 hitting seasons in Stros history, a category that Berkman and Jeff Bagwell dominate:

Berkman is also 4th in the National League in RCAA since 2000, the year in which he became a regular MLB player:

And he is 8th among all Major League Baseball players in RCAA since 2000:

By the way, on the other side of the RCAA ledger, Stros catcher Brad Ausmus is very quietly putting together one of the worst hitting seasons in Stros history, and is closing in on Roger Metzger's record worst -37 RCAA for one season. Here are the top 10 worst seasons for a Stros hitter, a category that Ausmus dominates:

Moreover, Ausmus is easily the worst hitter in Stros history:

And Ausmus is the 4th worst hitter in Major League Baseball since 1994, the year in which he became a regular MLB player:

Thus, in Berkman and Ausmus, the Stros have among the best and the worst of hitters. Whether the club during this off-season attracts a couple of hitters with positive RCAA -- while foregoing hitters such as Preston Wilson who have negative RCAA -- will largely determine whether the Stros will compete for a playoff spot in the 2007 season and beyond.

Posted by Tom at 5:31 AM | Comments (0) | TrackBack (0)

2006 Weekly local football review

Ohio State 24 Texas Longhorns 7

Ohio State came into Austin on Saturday night and won the season's first big game by playing as exceptionally as Texas did last year in Columbus. The Horns did not play badly and would have been threatening to take the lead deep in Ohio State territory midway through the 4th quarter had Michael Pittman not fumbled away a Longhorn TD in the first half. Although the Horns ran the ball reasonably well against an always rugged Buckeye defense, none of the Horns' receivers were able to break a big play, which is going to be an important element for the Longhorns to win big games in the post-Vince era. And what on earth is UT doing allowing Matthew McConaughey to act like an idiot on national TV while on the Longhorns sideline? The Horns have a nice scrimmage against Rice this weekend in Houston at Reliant Stadium before beginning the Big 12 schedule the following weekend in Austin against Iowa State.

Eagles 24 Texans 10

What was that I said in the pre-season review of the Texans of not being able to protect their QB and not being able to pressure the opposition's QB? Eagles QB Donovan McNabb carved up the mediocre Texans secondary like a Thanksgiving turkey as he could have checked stock quotes on most of his pass drops against the ineffectual Texan pass rush. Meanwhile, Texans QB David Carr was, as usual, running for his life while being sacked five times, usually on jailbreak blitzes by the Eagles that Carr may not have recognized properly. And on one of the sacks, Texans RB Vernand Morency completely whiffed on his blocking assignment. The more things change with the Texans, the more things remain the same. The Chronicle's John McClain has a good blog post on the game, and mentions that things don't get any easier as the Texans go to Indianapolis next week to help Peyton Manning pad his career passing statistics.

Houston Cougars 45 Tulane 7

That's more like it. After an unimpressive first game against Rice, the Cougars plastered a veteran Tulane team in running up 621 yards of total offense, almost perfected balanced between rushing and passing. More importantly, however, is that the Cougar defense put in its second impressive preformance by holding the Green Wave to 244 yards of total offense while dominating the line of scrimmage. The Coogs take on Grambling next week at home before returning home the following weekend for Okie State. Stay tuned to the Cougars -- they have the tools to become something special.

UCLA 26 Rice 13

The 0-2 Owls made a game of it again versus the Bruins, but ultimately UCLA cruised to the victory. As with last week's game against Houston, the Owls struggled again on offense, gaining less than 200 yards total offense as starting QB Chase Clement was out with a broken finger. The Owls have now lost 18 of their last 19 games and are 0-13 on the road since closing the 2003 season with a win at Louisiana Tech. With Texas looming next week and Florida State the week after, the Owls do not have a realistic chance of winning a game until they travel to West Point to meet Army on September 30.

Texas Aggies 51 Louisiana Lafeyette 7

The Ags continued the cupcake portion of their schedule as they trounced La-La. It's not a good indication of the quality of a program's non-conference schedule when the premier opponent is Army, which the Ags take on next week at the Alamodome in San Antonio. As noted before, none of these glorified scrimmages are doing much to prepare the Aggies for a well-seasoned Texas Tech team, which beat a good UTEP team in overtime over the weekend and will be the Aggies first real opponent when they invade Kyle Field on September 30.

Posted by Tom at 4:14 AM | Comments (2) | TrackBack (0)

September 10, 2006

The silicosis-asbestos web

Don't miss this Matt Tolson/Houston Chronicle investigative piece on the cooperation between several Houston plaintiff's attorneys -- including prominently John O'Quinn -- regarding the prosecution of dubious silicosis and asbestos claims, sometimes based on the same plaintiff (see related earlier post here). This part of the article is particularly interesting:

From the moment in late 2004 that silicosis litigation began to unravel under [U.S. District Judge Janis] Jack's scrutiny, [former O'Quinn partner Richard] Laminack has denied any wrongdoing. The O'Quinn firm did not do asbestos work, he said, so it should not be lumped in with other firms who recycled their old clients, a practice that Jack saw as presumptive evidence of fraud.

"We never, never represented an asbestos claimant and then turned around and retreaded it as a silicosis claimant," Laminack told the judge, an assertion he repeated to the congressional committee. "We never, ever did that."

In a hearing in Jack's Corpus Christi courtroom last August, Laminack — who did not return calls from the Houston Chronicle — insisted that neither he nor his firm should bear much of the blame for that sort of overreaching because they had no asbestos history. Unlike the Waco firm of Campbell Cherry, which had mined thousands of its previous asbestos clients as a source for new silicosis claims, he said, the O'Quinn firm was getting its clients mostly by referral from other firms.

Defense lawyers at that hearing pointed out that a significant percentage of Laminack's silicosis clients in fact did have asbestos claims — notwithstanding which lawyer represented them — which prompted Jack to warn that the presence of those old lawsuits "stretches credibility" for their silicosis claims.

"I don't like it, either," Laminack replied. "I don't want to represent people that don't have legitimate cases."

On its face, Laminack's indignation appeared credible. Defense attorneys who had combed records of the Manville Trust, the nation's largest asbestos trust fund set up in 1988 to settle personal injury claims to victims of asbestos exposure, turned up no claimants who had been represented by the O'Quinn firm.

What they did find, however, was an arrangement that Laminack did not mention. Hundreds of silicosis claimants had been represented in their asbestos lawsuits by Foster. Though nominally head of his own firm, Foster was tightly connected to the O'Quinn operation, according to documents produced by the congressional committee.

O'Quinn's firm had bankrolled Foster's in 2001 and set it up in offices just down the hall from its own. Two of the three Foster firm managers were O'Quinn partners, according to annual filings with the Secretary of State's Office. Laminack told the committee that this was to keep Foster from borrowing money without O'Quinn's approval. The two firms shared conference rooms and receptionists, as well as screening companies and diagnosing physicians.

Foster did not return a phone call from the Chronicle seeking comment.

"There was the facade of two separate firms, one to handle asbestos, one to handle silicosis," said an investigator for the committee, speaking on condition he not be identified. "It's pretty obvious they were a wholly owned subsidiary."

Posted by Tom at 8:45 AM | Comments (1) | TrackBack (0)

September 9, 2006

Institutionalized scapegoating

Two news items at the end of this week reflect the festering cauldron of resentment toward business in American society that government is manipulating to advance its troubling regulation-through-criminalization policy.

First, there was the news that New York's Attorney General Eliot Spitzer -- after defaming former AIG chairman and CEO Hank Greenberg in the media (see also here) and strong-arming the company to show Greenberg the door -- dropped virtually all the substantive charges of wrongdoing in his lawsuit against Greenberg. All that is left in the lawsuit is what amounts to an arcane accounting dispute over about $25 million in the context of a $150-200 billion company.

So, over this relative pittance, Spitzer blemished the reputation and career of a man who generated enormous wealth for millions of AIG shareholders, while extracting a $1.64 billion fine from AIG by threatening to cause the company to endure an Enronesque meltdown (see also here). For this and other anti-business crusades, Spitzer will soon be rewarded with the governorship of New York. Larry Ribstein adds additional perspective.

And lest you think that Spitzer's manipulation of AIG and Greenberg is an isolated incident, just review what happened to the Merrill Lynch executives in the Enron-related Nigerian Barge case and the prosecutor who caused that outrage.

Meanwhile, a day after Spitzer dropped his lawsuit, New York authorities arrested Peter Dicks, the chairman of the English publicly-owned gambling company, Sportingbet. Dicks was detained under an outstanding warrant issued by Louisiana gaming authorities and the arrest comes just a couple of months after federal authorities arrested David Carruthers, the former CEO of BetOnSports, another British publicly-owned gaming company.

By the way, while Dicks sits in jail today, gamblers will place billions of dollars worth of bets in Louisiana casinos.

As Geoffrey Manne aptly asks, "Where's the outrage?"

Posted by Tom at 7:32 AM | Comments (1) | TrackBack (0)

September 8, 2006

Academic wrangling

Turns out that former Texas Southern University president Priscilla Slade's decision to teach accounting at the school -- while under indictment for accounting irregularities -- was not a good idea. The school announced yesterday that Ms. Slade has been put on leave from her teaching duties and that a proceeding is being commenced to attempt to revoke her tenure at the school. The proceeding to revoke tenure will almost certainly be postponed pending disposition of the criminal charges against Ms. Slade.

Meanwhile, up in always-interesting Austin, University of Texas law professor Loftus Carson's lawsuit against the University of Texas and related parties hasn't received much publicity. However, that all changed when Professor Loftus filed a motion to recuse U.S. District Judge Sam Sparks from his case after the Austin American-Statesman listed Judge Sparks as one of 30 judges who have received complementary Longhorn football tickets and attended exclusive receptions while at UT football games. Judge Sparks recused himself from Professor Loftus' case yesterday and appointed a judge who is not a Longhorns fan (a rare jurist in Austin) to handle the case. I mean, what else could Judge Sparks have done given that the no. 2 Longhorns are playing no. 1 Ohio State on Saturday night in Austin?

By the way, the Statesman article on the Loftus case reports that Judge Sparks observed during the recusal hearing that he considered the tickets and receptions "a small favor" from UT for the time that he serves on panels at the UT Law School. Longhorn football tickets "a small favor?" Judge Sparks has obviously not purchased any UT football tickets lately. ;^)

Posted by Tom at 5:29 AM | Comments (0) | TrackBack (1)

James deAnda, R.I.P.

Former U.S. District Judge James deAnda, former chief judge of the U.S. District Court for the Southern District of Texas, died yesterday at the age of 81 at his summer home in Traverse City, Mich. after a short bout with prostrate cancer.

Judge deAnda was the last surviving member of a four-man legal team that handled the appeal in Hernandez v. Texas, the landmark 1954 Supreme Court case that overturned an all-white jury's murder conviction of a Texas man because Hispanics had been systematically excluded from the jury pool in the case. The Supreme Court ruled for the first time in Hernandez that Hispanics were a separate group deserving of the same Constitutional protections as other minorities.

Judge deAnda was a native Houstonian who graduated from Davis High School before obtaining an undergraduate degree from Texas A&M and a law degree from the University of Texas. He practiced law in Houston for almost 30 years before President Carter appointed him to the U.S. District Court bench in 1979, where he served with grace and wit until he resigned in 1992 to return to private practice. Judge deAnda continued to practice law ably until shortly before his death.

A funeral Mass will be celebrated for Judge deAnda at 11 a.m. Wednesday, September 13th at St. Michael's Catholic Church on Sage Rd. near the Galleria.

Posted by Tom at 5:28 AM | Comments (0) | TrackBack (0)

Houston Texans, Year Five

Has it really been only a year since the pre-season review of the Texans' 2005 season? Look at all that has transpired over the past year:

The Texans had a disastrous start to what was considered a promising 2005 season, which included a first home game roasting of some understandably upset season-ticket holders;

A previously-fawning media bailed out quickly as the Texans ship was sinking, even though some reporters remained quite confused over the Texans seemingly inexplicable decline;

Former Texans general manager Charlie Casserly was initially in disbelief over the season, but then became increasingly defensive over criticism of his personnel management, which -- at least in regard to drafting players -- turned out not to be as bad as most folks assumed, although it became apparent that selecting QB David Carr with the first pick of the 2002 NFL draft was a mistake;

As the Texans' fortunes faded, hope sprang anew that the team would be revived by a once-in-a-decade-type running back, only to have those hopes dashed by intrigue and then the selection of what may end up being a more prudent choice in the long run, even though John McClain contended that it is impossible (except for him) to evaluate NFL drafts accurately in the short term;

Coach Dom Capers graciously accepted being cut loose at the end of the horrifying season, but then worked his new job to scam Texans owner Bob McNair for more salary. Meanwhile, despite strong denials from Casserly and McClain that Casserly was being shown the door, Casserly was fired after the NFL draft even while denying that he was being fired, and then confirmed that he was indeed fired a couple of months later;

After three seemingly successful seasons and a fourth disastrous season in the team's first four years, Texans owner Bob McNair changed the management model for the Texans going into the team's fifth season;

Increasingly sophisticated statistical analysis of professional football generated some underappreciated factors for determining the outcome of NFL games; and

Although more circumspect about the Texans' prospects in comparison with the pre-season last year, the local media's pre-season coverage of the team and its players frequently continues to lack any objective analysis.

Whew! So where does that leave the Texans coming into the 2006 season? Well, certainly not in great shape but, somewhat surprisingly, in better shape than would normally be the case of team coming off a 2-14 season. Indeed, a reasonable case can be made that the Texas are finally moving in the right direction.

To understand where the Texans are at this point, it's helpful to review briefly where the team has been. The Texans were the toast of the town for their first three seasons of existence in which the team and the local media trumpeted the party line that the organization was building a playoff contender "the right way" -- i.e., through prudent drafting and development of young players while eschewing the temptation of the short-term rewards of relying on generally over-priced veterans who were in the downside of their careers. The progressively better won-loss records in the first three seasons (4-12, 5-11, and 7-9) -- plus the drafting of young stars such as WR Andre Johnson, RB Dominack Davis and CB Dunta Robinson -- seemed to indicate that the Texans' plan was working.

Unfortunately, those won-loss records camouflaged some big problems. As noted in the pre-season review before last season, the tip-off that the Texans were primed to crater during the 2006 season was that the Texans entered each of their first four seasons with the same two core problems -- the Texans' offensive line could not protect QB Carr and the Texans' defensive front could not apply adequate pressure on the opposing team's QB. Although former GM Casserly tried (remember the Texans' flirtation with Orlando Pace two years ago?), he was never able to address those problem areas effectively, and ultimately that failure was the primary reason that both Casserly and Capers lost their jobs with the Texans.

That's not to suggest that there weren't other big problems. In retrospect, Capers' decision before last season to convert the defense from a relatively successful 4-3 alignment to the 3-4 because that latter alignment tends to give Peyton Manning and the Colts more problems than the 4-3 completely overestimated where the Texans stood relative to such premier teams as the Colts. The Texan players never took to the 3-4 alignment and, as a result, the defense was actually worse than the offense last season, which is really saying something given how abysmal the Texans' passing offense was last season. In that regard, the offensive line in 2005 continued its contribution to QB Carr's anxiety-in-the-pocket syndrome as Football Prospectus 2006 concluded that the group was responsible for blowing blocks than resulted in an incredible 36 sacks of Carr. No other NFL offensive team had more than 30.

Which brings us to Carr, who has proven primarily in his NFL career to date that he is not good enough for the Texans to have used the franchise's first draft pick on him. Nevertheless, that does not mean that he cannot still develop into a productive NFL quarterback. Carr has been treated somewhat unfairly in that he has been hammered physically more than any other NFL QB over the first four years of his career. As a result, Carr has developed understandable anxiety-in-the-pocket syndrome (sometimes called "happy feet"), which has resulted in even more sacks than what the offensive line already gave up through blown blocks. That pocket anxiety, combined with a below-average ability to pick-up secondary receivers and a somewhat side-arm delivery, has made Carr a relatively poor pocket passer during his four-year NFL career. How many top-flight NFL QB's can you name who have been poor pocket passers?

Nevertheless, Carr is new Coach Gary Kubiak's reclamation project and a big part of the storyline for this season will be whether Carr becomes a viable starting NFL QB. One of Carr's contemporaries, Drew Brees, emerged seemingly out of nowhere to become an effective NFL QB in the fourth season of his career, so it would not be unheard of for Carr to show the same type of improvement in his fifth season. However, to hedge the risk that Carr does not develop, the Texans picked up QB Sage Rosenfels from the Dolphins in the off-season to back-up Carr, and he clearly is the best backup QB that the Texans have ever had. So, even if Carr does not improve this season, the Texans QB position has been upgraded.

The primary reason that the Texans' prospects are looking brighter this season is that the team finally addressed during this past off-season both of the team's core problems that have bedeviled the team from inception. On the offensive line, the Texans used two third round draft picks on Pitt tackle Charles Spencer and Miami tackle Eric Winston, and both of them are expected to contribute this season -- indeed, Spencer will start at one of the Texans' chronic trouble spots, left tackle (in addition to the flirtation with Pace, remember Tony Boselli?). Veteran center Mike Flanagan and veteran tackle Ephraim Salaam were also brought in from Green Bay and Jacksonville respectively, while veterans Chester Pitts, Zach Weigert, Fred Weary, Steve McKinney and a talented group of tight ends round out what is clearly the deepest and most talented offensive line in the Texans' short history. That new-found depth is a big part of the reason why the Texans let underachiever OT Todd Wade go during the off-season and waived unsuccessful small college project OT Seth Wand in the final pre-season roster cut.

By the way, despite the fact that the Texans offensive line has not been able to protect Carr adequately, it should be noted that the unit actually has improved steadily over the past two seasons in run blocking. Inasmuch as the zone blocking scheme that the line used last season is similar to the one that Coach Kubiak uses in his system, there is a reasonable probability that the Texans' running attack will continue to improve this season, despite the fact that the Texans -- due to the season-ending injury to Davis -- will be depending on a couple of relatively inexperienced running backs this season along with the uninspiring Ron Dayne. Morevoer, even though the loss of Davis is unfortunate, it will likely help the Texans' offense in the critical area of pass blocking. Davis was an atrocious pass-blocker (he led all non-lineman NFL players last season in blown blocks that led to QB sacks), so it's hard to imagine any of Davis' replacements this season being as bad as Davis was in that department.

Similar to the restocking of the offensive line, the Texans also upgraded their defensive front during the off-season. Everyone knows about the first pick in the 2006 NFL Draft, DE Mario Williams, but equally important was the off-season acquisition of DE Anthony Weaver from Baltimore, who is a legitimate run-stuffer to complement DT Seth Payne. With the Texans going back to the 4-3 alignment, last season's first-round draft choice DT Travis Johnson has emerged as a starter during training camp (allowing the Texans to dump high-salaried DT Robaire Smith) and speedy former LB's Jason Babin and Antwan Peek were effective pass rushers off the edge in passing situations during the pre-season. Moreover, second-round draft pick MLB DeMeco Ryans looks like a potential star, which is a badly-needed dose of talent in an otherwise mediocre linebacking corps. Thus, the front seven of this year's Texans' squad appears to be the first group in Texans history that has the legitimate potential to generate much-needed pressure on the opposition's QB.

One additional point about Williams. Yes, it's unlikely that he will be as good an NFL rookie as Reggie Bush. However, it's easier for a star at the running back position to excel in his rookie NFL season than it is for a defensive lineman. If Williams develops properly, then he should be a solid contributor to the Texans defense for a long time, which will justify the Texans' use of the first draft pick on him over Bush. To use an Oilers analogy, the Texans -- at this stage of their development -- need an Elvin Bethea more than they need an Earl Campbell.

Despite the apparent improvement in those two chronic problem areas, the Texans -- as you would expect from a team coming off a 2-14 season -- still have a myriad of problems. The left offensive tackle, running back and QB situations have already been mentioned, but the defensive secondary beyond star CB Robinson is certainly not top-level NFL quality. Until All-Pro kick returner Jerome Mathis returns from injury rehab, the Texans are relying on cast-offs for their kickoff return men, while kicker Kris Brown has been a below-NFL average kicker during his tenure with the team. WR Eric Moulds is on the downside of productivity in his NFL career and it remains to be seen whether he will be an effective complement to star WR Johnson, although it should be noted that third WR Kevin Walters appears to be a big upgrade over the personnel that the Texans have had in that third wideout position in previous seasons. Finally, by my count, the Texans have at least 12 new starters (seven on offense; five on defense), including five rookies, so it would not be surprising if it takes a few games for those units to begin hitting on all cylinders.

What does all of this mean? Well, not much at this point, but it does appear that the Texans have a reasonable chance of showing dramatic improvement this season. Scanning the 16-game schedule, there are only 3-4 games where it appears at this time that the Texans don't have a realistic chance of winning the game, so that leaves 12-13 games where the Texans have a legitimate shot of winning. My sense is that winning a third of those games would be a disappointment for this team, although still a significant improvement over last season. Most reasonable people would consider winning half of those winnable games as a successful first season of the Kubiak era, so that means that five is the over/under for the number of Texan wins this season.

Although I won a steak dinner from a friend by taking the under bet on Texan wins last season, I'm taking the over bet this season. That bet is probably not justified by the team's prospects, so I'm counting on the karma that It's high time for something good to happen for the football team of Bob McNair, who is one of the classiest professional sports franchise owners in Houston's history. Let'er rip Texans, and let the chips fall where they may.

By the way, several good local resources for information on the Texans and the NFL have developed over the post year, and I recommend that you check them out:

As noted in an earlier post, Stephanie Stradley a/k/a Texans Chick has been doing a good job of covering the team over the past several months and is preparing for her first season of blogging the team;

Chronicle senior NFL writer John McClain has recently started a blog. Although McClain tends to shoot from the hip more than I prefer, there is no question that he has a wealth of knowledgeable about the NFL; and

Although not technically a blog, Warren DeLuca's HoustonProFootball.com is "your-balls-to-the-wall source of Houston Texan news, information and wild-ass opinion."

Posted by Tom at 5:27 AM | Comments (5) | TrackBack (1)

September 7, 2006

Appreciating Agassi

Don't miss this superb Jay Winick/Opinion Journal op-ed on tennis icon, Andre Agassi, who retired gracefully this past weekend after after putting on a stirring performance during the first three rounds of the U.S. Open tournament in New York.

I've never met Agassi, but I have followed his career with interest because of our mutual friendship with prominent Las Vegas attorney, David Chesnoff. Several years ago, I had the pleasure of spending a morning with Agassi's parents while Andre's father gave David's son a tennis lesson at the Agassi's Las Vegas home where they have lived for several decades. Andre's parents are wonderfully down-to-earth folks who are a joy to be around, so it's no surprise to me that their son has matured into a fine man.

By the way, although probably not the greatest tennis player of his generation, Agassi nevertheless is one of the most remarkable athletes of this era. A case in point is a golf game that he played several years ago with David in which Agassi faced a daunting recovery shot around trees to a small green protected by a lake. Agassi grabbed a 3-iron, sized up the situation and then hammered a 200 yard shot that sliced around the trees on to the green, stopping 15 feet from the cup. Agassi calmly put the club back in his bag, jumped into the golf cart, looked at David and asked with a wink:

"So, David. What's so tough about this game again?"

Posted by Tom at 5:43 AM | Comments (0) | TrackBack (0)

Is the backdating options scandal "the Enron of 2006?"

Yes, in an observation made yesterday during a Senate committee hearing that should send shivers up the spine of anyone concerned about the increasing criminalization of business in the United States, that's how Senator Robert Menendez (N.J. Dem) characterized the widespread practice of backdating options as a means of compensating corporate executives (previous posts here).

That Senate hearing follows on a recent and far more reasoned discussion of the issues involved in backdating options that Matthew Bodie began here. Larry Ribstein returned Bodie's serve here and Bodie volleyed back here. Geoffrey Manne and Josh Wright got into the game with this post, which Bodie responded to here. Finally, Professor Ribstein ripped this winner to close the discussion, at least for now.

Compare the depth of the foregoing discussion with the superficial platitudes described in the article about the Senate hearing yesterday. Then consider the damages to lives, communities and careers that occurred as a result of the criminalization of business that occurred as a result of the Enron meltdown. Is the allegedly wrongful conduct in regard to the practice of backdating options so clear that it should be handled with the blunt instrument of the criminal justice system? If you really think so, then consider this.

Posted by Tom at 5:09 AM | Comments (0) | TrackBack (0)

Wanted: Adult supervision at the Enron Task Force

This one takes the cake.

After trampling justice and the rule of law for five years while damaging lives, families and careers of former Enron executives and a selected few who did nothing other than have the misfortune of engaging in transactions with Enron, the Enron Task Force outdid itself yesterday in responding to the Ken Lay Estate's motion to vacate the jury verdict against the late Mr. Lay. In its response, the Task Force requests U.S. District Judge Sim Lake to postpone ruling on the Lay Estate motion until the Task Force has had an opportunity to lobby Congress to change the law that mercifully provides for the dismissal of charges against individuals such as Lay who die during the criminal proceedings. The Chronicle's Tom Fowler reports on the Task Force pleading here, Chronicle business columnist Loren Steffy comments here and the NY Times' Alexei Barrionuevo reports here.

Given the Task Force's lengthy track record of exhibiting dubious judgment, its over-the-top response to the Lay Estate motion is really not surprising. However, it is a stark reminder that the use of the overwhelming power of government to criminalize business executives -- now even in death -- is seriously out of hand, as even some prominent former Justice Department officials are now acknowledging publicly. As Sir Thomas More reminds us, we better address the difficult task of curtailing use of that power, lest it be used on us.

Posted by Tom at 3:59 AM | Comments (3) | TrackBack (0)

September 6, 2006

HP's board under the microscope

The Wall Street Journal's Alan Murray reports in this article ($) (related NYT article here and Newsweek article here) about the internal investigation that ensued of the Hewlett-Packard board of directors after former HP CEO Carly Fiorina (previous posts here) was forced out early last year. The subject of the investigation was the leaking of confidential information to a Wall Street Journal reporter regarding board deliberations and ultimately led to the resignation of one board member -- venture capitalist Tom Perkins -- and the board's decision not to nominate a second board member -- George Keyworth, the alleged leaker -- for another term on the company's board.

The article is interesting and all, and certainly maintaining the confidentiality of board deliberations is important. However, if I were an HP investor, I would feel a whole lot better about the company if I was not left with the impression that the company's board members behaved in a manner not quite as mature as my 16 year-old daughter's social circle of friends.

Update: Professor Bainbridge predicts that HP's directors are not going to react kindly in regard to the way in which the HP board chairperson handled the investigation, and Larry Ribstein is about as impressed with the HP's corporate governance as I am.

Posted by Tom at 6:22 AM | Comments (0) | TrackBack (0)

McClain leads more cheerleading for the Texans

As noted earlier here and here earlier, even his hyprocrisy in turning on the Texans during their disastrous 2005 season after predicting in the pre-season that the team was a playoff contender does not deter Chronicle NFL sportswriter John McClain from engaging in more cheerleading for the Texans with this puff-piece regarding the team's recent acquisition of journeyman running back, Ron Dayne (for a positive, but more realistic, view of Dayne, see John Lopez's column here). The article even includes a chart noting that Dayne is the fifth Heisman Trophy winning running back to have played for a Houston professional football team, the others being former Oilers Billy Cannon, Earl Campbell, Mike Rozier and Eddie George.

Not mentioned in McClain's article is that Dayne is overweight and slow, and is unlikely to have any meaningful impact on the Texans' performance this season. Football Prospectus, which uses objective criteria to rank Dayne as a below-NFL average running back for his career, observes that "Dayne's problem has always been finding the hole to run through. You literally have to stick the hole in front of him, slap him across the face, point, and yell 'HOLE!'"

Now, this all may work out just fine for the Texans, but don't you think that such a counter-analysis of Dayne might creep into at least a part of an article by the Chronicle's lead NFL writer? Stay tuned for my pre-season evaluation of the Texans coming this Friday.

Posted by Tom at 5:19 AM | Comments (8) | TrackBack (0)

Prosecution continues bidding in the Olis sentencing case

Let's see here. First, the Justice Department misleads U.S. District Judge Sim Lake in regard to the true amount of the market loss resulting from the transaction that forms the basis of former mid-level executive Jamie Olis' conviction, which in turn resulted in the imposition of an over-the-top 24+ year sentence.

Then, after the Fifth Circuit reversed that abomination, the prosecution -- while dragging its feet in regard to the re-sentencing of Olis -- recommended to Judge Lake in December of last year that the Olis should be re-sentenced to "only" 15 years in the slammer.

Now, after U.S. District Judge Jed Rakoff provided a much needed dose of sanity in regard to sentencing of business executives and Stanford University law professor Joseph Grundfest eviscerated the Olis prosecution's market loss arguments, the Chronicle's Tom Fowler reports that the Olis prosecution is now contending that Olis should be re-sentenced to "only" 12 1/2 years.

At this rate, I figure the prosecution will finally reduce their demands for the length of Olis' sentence to an appropriate level by, say, 2009 or so.

The hearing on the market loss issue in the Olis case is scheduled for next Tuesday. Inasmuch as it is going on 11 months since the Fifth Circuit reversed Olis' original sentence, Judge Lake will likely re-sentence Olis shortly after Tuesday's hearing.

Posted by Tom at 4:34 AM | Comments (0) | TrackBack (0)

September 5, 2006

Big news from the oil patch

Chevron Corp. and partners Devon Energy Corp. and Norway's Statoil ASA are expected to announce today (WSJ ($) article here and NYT article here) the first successful oil production from a deep-water region in the Gulf of Mexico called the Jack Field that could become the biggest domestic source of oil since the discovery of Alaska's North Slope over 30 years ago.

Meanwhile, the Wall Street Journal ($) is reporting that Paris-based Compagnie Generale de Geophysique has agreed to acquire Houston-based geophysical seismic company Veritas DGC Inc. for about $3.1 billion in cash and stock.

And Clear Thinkers favorite James Hamilton notes a drop in gasoline prices, which is good news. Or is it?

Posted by Tom at 6:10 AM | Comments (0) | TrackBack (0)

Costly assumptions

Tory Gattis over at Houston Strategies continues to do a great job of analyzing Houston Metro's proposed Richmond (or is that Westpark?) rail line (see here and here). However, I continue to be amazed by the Houston mainstream media's myopia in failing to take a look at the rail experience of Los Angeles, an area that shares many characteristics with the Houston metro area, but is much more densely-populated, which is normally a requirement for making an urban rail line successful.

That myopia is leading to a dangerous dynamic in the rail transit debate that USC urban economics professor Peter Gordon notes in commenting on this LA Times story regarding extension of the LA region's rail system. Professor Gordon observes that, despite irrefutable evidence that the LA rail system has been a boondoggle of massive proportions, the LA Times article does not even bother to address the threshold issue of whether more money should be dumped into the black hole rail transit system in the first place. Rather, the article assumes that the money will be spent and then simply addresses the issue of where it will go. Professor Gordon notes the incongruity of it all:

Three light-rail lines have been added to L.A. county's transit system in the last 20 years. Together, these cost $2.5 billion in capital costs, they serve about 125,000 passengers per day and account for a fiscal loss of approximately $252 million per year -- if one acknowledges that capital costs are real, something that transit operators and boosters often neglect.

If one wants to believe that there are external benefits, a variety of optimistic assumptions on auto trips replaced, cuts the loss to "only" $245 million/year. These are simple spreadsheet calculations that anyone can do. Further, no one alleges that the three lines have had any impact on L.A. area traffic conditions. In fact, complaints about "gridlock" are a staple -- and the pricing cure is still deemed too esoteric and/or sinister. In fact, there are no correlations known to man or woman to show that projects like this relieve traffic.

None of these simple facts made it into [the LA Times article] . . . Billions of dollars are at stake and a know-nothing debate is respectfully cited -- when it is simply about which part of town and which politician gets first run at the trough.

The recent LA Time article follows another one from a couple of months ago that declares that "California's highways, once the gold standard of the interstate system, are today some of the busiest, most dilapidated and under-financed roads in the country." That article then goes on to describe the failing highway system without even mentioning the fact that diversion of billions from that formerly great highway system to an unsuccessful rail transit system largely explains the mess.

As noted here and here over a year ago, Houston is at the stage of spending "merely" hundreds of millions on its dubious light rail system, but we can already see the same dynamic developing here that has been so costly for the Los Angeles region -- huge investment of public funds in an inflexible rail transit system, poor return on that investment, unwillingness to admit mistakes with regard to that investment and continuation of expensive mass transit policies that only get worse over time. Here's hoping that a few statesmen emerge among City of Houston elected officials who take a look at the evidence from the LA experiment and move the Metropolitan Transit Authority toward a more realistic and productive public transit system that is tailored for the Houston metro area. However, given the typical quality of the City of Houston's investment decisions, count me as pessimistic that any such re-evaluation will occur.

Posted by Tom at 5:17 AM | Comments (3) | TrackBack (0)

It's football season, so let's talk golf

The start of the college football season over the Labor Day weekend tends to overwhelm all other sports news, but it's hard to overlook the fact that Tiger Woods shot a 63 yesterday to win his fifth straight golf tournament, a streak that includes two major championships. Doug Ferguson puts it in perspective:

Byron Nelson won 11 straight tournaments in 1945, a streak regarded as one of the most untouchable in sports. Woods won six straight at the end of 1999 and the start of 2000, and Ben Hogan won six in a row in 1948.

Woods now takes a week off before heading to England for the HSBC World Match Play Championship, followed by the Ryder Cup. His next PGA Tour start will be the American Express Championship outside London at the end of September.

He still isn’t even halfway home to Nelson’s hallowed mark, but he surpassed Lord Byron in one category with his 53rd victory, moving into fifth place alone on the career list. Woods, who finished at 16-under 268, won for the seventh time this year. No other player has won more than twice.

By the way, only Hogan has had a streak similar to Woods' current one where more than one major was involved. Hogan won four straight in 1953, including three majors.

Meanwhile, European Ryder Cup team captain Ian Woosnam finalized the European team over the weekend by picking Darren Clarke of Northern Ireland and Lee Westwood of England as his captain's picks (see PGATour.com overview of the Euro squad here). Those selections prompted the following outburst from Sweden's Thomas Björn, who labeled Woosnam the worst Ryder Cup captain ever:

“So far his captaincy has been the most pathetic I have ever seen,” Björn said. “I haven’t spoken to him for six months and now I find that I’m not in the team watching television. How can that be right? He has put a lot of players through misery because he just hasn’t done the right thing.

“I have nothing against Lee Westwood. But if you can find one category in which he has beaten me then I would like to see it. I have played better than him in the qualifying phase — and then Woosnam bases his decision on results which are more than five years old. I don’t understand the way he is handling the whole situation. It doesn’t look like he is burdened by leadership qualities.

“He came into the bar at the hotel and gave me 20 seconds about Lee having won twice at the K Club. In a bar — that kind of sums it up. He can’t walk up to me, tell me in 20 seconds and expect me to be happy. I’m very disappointed. I think he’s been very poor in the way he’s handled the players.”

Woosnam cited Westwood’s two victories at the K Club as being among the factors that influenced him, leaving unsaid that Björn ran up an 11 on the 17th in the final round of last year’s Smurfit European Open when he had begun the day four strokes clear of the field.

“If that’s what it’s come down to then why didn’t he tell me I don’t think you’ve got the bottle to stand on the 17th tee?” Björn asked. “Yes, Lee’s won twice there. But Nick Faldo and Seve Ballesteros won at Augusta and I don’t think they’d be picked if this Ryder Cup was being played there.

“Woosie played with me when I finished second at the K Club (in 2001) by finishing three-four-three (an eagle and two birdies). So I’ve had good experiences there, too. But if it’s come down to one bad one then why didn’t he tell me?”

And just for good measure, Woosnam can't understand why former Euro Ryder Cup team captain Bernhard Langer is advising his friend -- current US team captain Tom Lehman -- on the upcoming matches, while Langer can't understand why Woosnam hasn't bothered calling him for advice.

This Ryder Cup is serious business, eh? ;^)

Posted by Tom at 4:37 AM | Comments (0) | TrackBack (0)

September 4, 2006

2006 Weekly local football review

The Labor Day weekend marks the beginning of the football season and HCT's weekly local football reviews, so here's the first weekly review of the 2006 season:

Houston 31 Rice 30

The only real game of the weekend occurred at Rice Stadium on Saturday night as the Cougars pulled one out that they should not have won against the feisty Owls playing their first game under new head coach Todd Graham. The Coogs looked to be preparing for a blowout by taking a 14-0 lead in the first quarter, but then the Ows scored 30 straight points behind clever QB Chase Clement over the next quarter and a half to take a 16 point lead, only to have UH score the final 17 points of the game to nab the victory.

Despite the win, Cougar supporters were not thrilled. The Cougars under head coach Art Briles frequently engage in an untraditional, discombobulated sort of game that leaves UH supporters scratching their heads. Briles runs an unconventional offense -- sort of a combination of the Wing-T, Single Wing, Run 'N Shoot, and Spread offenses, if you can imagine that -- which, when it is clicking, is very difficult to defense. Unfortunately, the offense is also based largely on timing and, when a defense figures out how to disrupt that timing, the UH offense struggles. And when Houston's offense stuggles, it tends to affect the other components of the UH football team.

That's precisely what happened on Saturday night. In the first quarter, the Cougar offense was clicking and it looked as if it would dominate the game. Then, in the second quarter, Rice's defense made a couple of adjustments and began disrupting the timing of the UH offense, UH senior QB Kevin Kolb started looking like a freshman starting his first game, the Cougars dispensed with what had been an effective running game in the first quarter, the UH punting and kickoff return teams made several atrocious plays, the Owls hit a couple of big plays and presto, the Cougars found themselves down by 16 points. The Cougar booster club was not happy.

At least UH showed the moxie to turn things around enough to pull out the win. And there were certainly some bright spots for the Cougars -- Rice's offense got over 130 yards of their 280 total yards on two plays in the 2nd quarter, so the Houston defense shut down Rice for most of the game. Moreover, UH has a group of fleet receivers and an explosive running back in Roshawn Pope. But the bottom line on this first game is that either the Cougars took Rice lightly or the Cougar players are not much better than the Rice players. Either way, that does not bode well for the Cougars' prospects over the remainder of the season.

By the way, former Rice athletic director Bobby May is probably not a popular man right now around the Rice football office. The Owls' next three games are at UCLA, Texas at Reliant Stadium, and at Florida State. If the Owls can survive those games with a minimum of injuries, then my sense is that this plucky bunch can win a game or two in Graham's initial season. Despite that dire forecast, based on what I saw Saturday night, the Owls appear to be moving in the right direction.

Texas Longhorns 56 North Texas 7

The Longhorns dispensed with one of three non-conference cupcakes on their 2006 schedule as perfectly-named Longhorn QB Colt McKoy had a smashing debut. However, a question for you: How does playing a team that has players that are not as good as Texas' second team do any good in preparing the Horns for their next game against No. 1-rated Ohio State?

Texas Aggies 35 The Citadel 3

The Aggies easily won their first game by holding The Citadel to under 245 yards of total offense, but how does defending offenses such as those of The Citadel and the next three Aggie opponents -- La-La (a/k/a Louisiana-Lafayette), Army and La Tech (Louisiana Tech) -- prepare the Aggies for defending on September 30th the explosive offense of their nemesis of the past several seasons, the Texas Tech Red Raiders?

Posted by Tom at 7:23 AM | Comments (0) | TrackBack (0)

September 3, 2006

They never really had a chance

As noted in this post at the conclusion of the Lay-Skilling trial, my sense is that the trial was over before it began because the jury -- particularly its leaders -- was predisposed to convict. According to this Brenda Sandburg/American Lawyer article, the jury consultants working the Lay-Skilling case thought the same thing. In fact, they gave little hope that any jury anywhere could be empaneled that would view the case without a strong predisposition to convict.

Remember that the next time you read and hear the prosecution in a criminal case undertaking a propaganda campaign to fan the flames of resentment and scapegoating in the jury pool. As Sir Thomas More reminds us, do any of us really think that we could "stand upright in the winds that would blow" if that power were applied to us?

Posted by Tom at 8:20 AM | Comments (2) | TrackBack (0)

September 2, 2006

Lay and Skilling's legacy of beneficial risk-taking

During the criminal trial of Ken Lay and Jeff Skilling, attorney Paul Fisher and economist Jim Johnston of the Heartland Institute authored this piece (see also here) regarding the unjust prosecution Lay and Skilling that echos a common theme of this blog (see here, here, here, here, here and here) regarding almost all of the Enron-related criminal prosecutions -- that the prosecutions were fundamentally weak criminal cases that were really a smokescreen to promote an underlying political agenda of regulating beneficial risk-taking that generates robust markets and creation of wealth and jobs.

Following up on their earlier piece, Fisher and Johnston have written this excellent article that speculates on what the business legacy of Lay and Skilling should be. In so doing, Fisher and Johnston note another common theme of this blog (most recently here) -- the intrinsic weakness of the convictions against the two executives:

We are left with two convictions that are devoid of any gain to the perpetrators and illogical to the extreme. The real culprit, in our opinion, is the political establishment in California, primarily Democrats, who were intent on punishing a friend of President George W. Bush and his father. While the California Democrats have escaped unscathed, except for ex-governor Davis, the energy trading system is impaired and corporate accounting is now in chaos. It remains to be seen if these institutions will recover any time soon.

However, even more importantly, Fisher and Johnston note the extraordinary wealth creation that resulted from Lay and Skilling's risk-taking at Enron, and lament how the understanding of the beneficial nature of that risk-taking is now largely lost amidst the media and government-hyped societal condemnation of Lay, Skilling and Enron:

At the end of the day, when the successes and mistakes are tallied for Ken Lay and Jeffrey Skilling, we predict the result on balance will be positive. Perhaps the biggest contribution was to provide risk management of natural gas prices for producers and industrial consumers. Enron operated the over-the-counter market for a year until the exchange-traded futures and options contracts were offered on the New York Mercantile Exchange in 1990. Those futures contracts are now among the most liquid in the world.

The electricity markets established for California are no longer traded. However, there is a market in the PJM (Pennsylvania, New Jersey, Maryland) region and an auction is to be established soon in Illinois. In the meantime, natural gas contracts serve as a hedging vehicle because gas is the fuel used at the margin to generate electricity.

Enron's failed broadband joint venture with Blockbuster was intended to bring video on demand. This now exists on cable and is similar to the iPod offered by Apple Computer. This latter system is a masterful accommodation to copyrighted music and video programming where artists are compensated.

Weather derivatives started by Enron and Koch Industries in 1996 for a swap in the following year have evolved into an exchange-traded contract offered by the Chicago Mercantile Exchange. Futures and options contracts based on temperatures in 18 U.S., nine European, and two Asia-Pacific cities are now traded in this market.

Finally, the establishment of a robust water market by Enron failed. However, much was learned from the effort and there is optimism about another try.

We fervently hope that Ken Lay and Jeffrey Skilling will be remembered for their extraordinary contributions, rather than their politically-inspired prosecution.

Amen. As noted in my posts on the Lay-Skilling trial and the Nigerian Barge case, the Enron Task Force turned the Enron-related criminal cases into morality plays that appealed to the dynamics of resentment and scapegoating in disingenously portraying legitimate and productive business transactions as complex frauds. The result has been a dangerous misuse of the government's overwhelming prosecutorial power to impose burdensome regulatory costs on valuable markets. In reality, a far more progressive government policy would be to encourage precisely the type of risk-taking that Lay and Skilling promoted at Enron to facilitate productive markets, employment growth and wealth creation.

Posted by Tom at 8:18 AM | Comments (0) | TrackBack (0)

September 1, 2006

An attempt to withdraw a guilty plea exposes a dirty secret of the Enron criminal cases

As noted in this previous post about the typical mainstream media view toward the Enron criminal prosecutions, most media accounts of the case have perpetuated the myth (see also here) that the Enron Task Force has done a good job in handling the criminal cases, partly because the Task Force has obtained plea bargains from 16 former Enron executives. Inasmuch as those former executives pled guilty, the media's reasoning goes, that is proof that Enron really was just a den of thieves that needed to be eradicated.

However, the truth is far more nuanced. At least several of those 16 plea bargains were the result of the Enron Task Force bludgeoning a former Enron executive who had not committed a crime into a plea deal to avoid the high risk of asserting innocence in a venue that is highly adverse to anyone that worked for the social pariah, Enron. Indeed, any former Enron executive only needed to review the ordeals that Jamie Olis and the four former Merrill Lynch executives in the Nigerian Barge case -- much less that of Ken Lay and Jeff Skilling -- to be reminded that attempting to assert innocence in the face of weak criminal charges was a losing proposition.

Well, at least one former Enron executive who the Task Force bludgeoned into a plea deal is attempting to withdraw it. Chris Calger, a former executive with Enron North America who pled guilty a year ago to a single criminal conspiracy count, has replaced the attorney who advised him in connection with that plea deal and hired Philip Hilder, Sherron Watkins' counsel (it's a small world, isn't it?) to file a motion (download site here) requesting that he be allowed to withdraw his guilty plea. As noted in this Tom Fowler/Houston Chronicle article on the motion, Calger argues that he should be allowed to withdraw his guilty plea because it was based on the Task Force's malleable theory that any remotely questionable business judgment of a business executive is a criminal act of depriving the executive's company (or, in the case of the Merrill Lynch executives in the Nigerian Barge case, of another company) of that executive's duty to provide the company with the executive's "honest services." Inasmuch as the Fifth Circuit eviscerated that theory in its recent decision in the Nigerian Barge case, Calger reasons that he should be allowed to withdraw his guilty plea.

As noted in this post at the time, the Calger plea deal was obtained under particularly egregious circumstances. In an extraordinary exchange with an Enron Task Force prosecutor during the Calger plea bargain hearing (the post highlight in the previous sentence contains the transcript of the hearing), U.S. District Judge Lynn Hughes makes clear that the Task Force prosecutor neither understood the underlying transaction involved in the indictment nor could articulate precisely what crime Calger had committed. At the end of the hearing, a Judge Hughes accepted Calger's guilty plea, although it is clear from the transcript that he was troubled in doing so.

Calger's guilty plea is only one of several (see here, here, here, here and here) that were obtained by the Enron Task Force under questionable circumstances. As with the Task Force's equally dubious tactic of fingering dozens of former Enron executives as unindicted co-conspirators to induce them from testifying for Lay and Skilling (as well as for the Merrill Lynch executives and other Enron-related defendants), the Task Force's bludgeoning of guilty pleas out of overwhelmed individuals is a serious affront to justice and the rule of law that the media has largely ignored. Yale Law Professor John Langbien, who has written extensively on prosecutorial abuse in the American criminal justice system, puts the tactic of bludgeoning guilty pleas into perspective:

Plea bargaining concentrates effective control of criminal procedure in the hands of a single officer. Our formal law of trial envisages a division of responsibility. We expect the prosecutor to make the charging decision, the judge and especially the jury to adjudicate, and the judge to set the sentence. Plea bargaining merges these accusatory, determinative, and sanctional phases of procedure in the hands of the prosecutor.

Students of the history of the law of torture are reminded that the great psychological fallacy of the European inquisitorial procedure of that time was that it concentrated in the investigating magistrate the powers of accusation, investigation, torture and condemnation. The single inquisitor who wielded those powers needed to have what one recent historian has called 'superhuman capabilities [in order to] . . . keep himself in his decisional function free from the predisposing influences of his own instigating and investigating activity.'"

I cannot emphasize too strongly how dangerous this concentration of prosecutorial power can be. The modern prosecutor commands the vast resources of the state for gathering and generating accusing evidence. We allowed him this power in large part because the criminal trial interpose the safeguard of adjudication against the danger that he might bring those resources to bear against an innocent citizen -- whether on account of honest error, arbitrariness, or worse.

As noted here and here, the pressure is overwhelming for individuals caught in the crossfire of a highly-publicized criminal investigation such as the one involving Enron. So, I ask again -- who is the greater threat to justice and the rule of law? The Chris Calgers of the world? Or out-of-control prosecutors who place businesspeople in the untenable position of risking a long prison sentence for merely asserting their innocence? Or a pliable media that largely ignores this injustice to fan the flames of the latest juicy story? My answer is here, here, here, here and here.

Posted by Tom at 4:51 AM | Comments (1) | TrackBack (0)