The prosecution rested on Friday in the sexual assault trial of former Houston Rocket and Basketball Hall of Famer Calvin Murphy in which five of his daughters have testified that Murphy sexually molested them years ago. Here are earlier posts on the indictment and trial of Murphy in this matter.
Although I have not sat in on any of this trial and Murphy is ably represented by Houston criminal defense attorney Rusty Hardin, my sense is that the case has not gone particularly well for Murphy to date. Press accounts have described the jury members as being visibly affected by the searing testimony of Murphy’s daughters, and the jury will almost certainly hold Murphy’s prodigious promiscuity (14 children by nine different women) against him.
Nevertheless, Mr. Hardin has plugged away at creating reasonable doubt by highlighting the daughters’ ulterior motives and inconsistencies in their stories. His defense strategy apparently will center around testimony from Murphy’s other children and Murphy’s testimony. This may be a case in which Murphy’s performance on the stand will ultimately determine whether the jury decides to convict or acquit. I expect the trial to last another week or so.
One thing is for sure — this trial has been bloody for Murphy, who is finished in his career as a media personality in Houston regardless of the outcome of the trial.

2004 Democratic Presidential nominee John Kerry has been accused of having questionable judgment on certain matters. But if the following piece from The New York Post’s Page Six of November 18 is true, this would take the cake in the bad judgment department:

LIBERAL loser John Kerry might be planning to strike back at John O’Neill, the “Unfit for Command” author who claims some of the credit for Kerry’s defeat, sources say.
In the book, published by Regnery not long before the election, O’Neill ? who, like Kerry, commanded swift boats in Vietnam ? attacked Kerry’s war record and branded him a traitor.
O’Neill sold over 800,000 copies and his group, Swift Boat Veterans for Truth, raised $25 million to battle the Kerry campaign and ran TV ads trashing the candidate. Former Sen. Bob Dole endorsed the group.
O’Neill says he wrote the book because Kerry called his fellow Vietnam vets monsters, terrorists and war criminals, for which he has never apologized. Kerry has called O’Neill’s charges lies, though he made some of the comments in front of the Senate Foreign Relations Committee in 1971.
“I will leave it to the professionals to decide whether we played a crucial role in defeating Kerry, but I am very satisfied,” O’Neill crowed to the London Sunday Telegraph days after George W. Bush’s victory.
The paper reported Kerry was “furious” at staffers who advised him not to fight back against O’Neill and noted that the nominee was “enraged” over the book.
Now, “the Kerry camp is thinking about filing a libel lawsuit against Regnery and O’Neill,” a source close to the candidate’s inner circle tells PAGE SIX. “I don’t know if they will actually go forward, but consideration is serious. If Kerry plans on running again in 2008 ? and I’m hearing he will ? it would make sense that he’d file the suit.”
Kerry’s rep, David Wade, said he hadn’t heard about any proposed lawsuit, but promised to look into it.
“It would be a lot smarter of Kerry to just apologize,” O’Neill told PAGE SIX. “No lawsuits are going to change the testimony he gave and the impact it had on POWs.”

This defamation lawsuit idea was actually trotted out during the Presidential campaign. “Noted” legal scholar, John Dean — the convicted felon who somehow crafted his legacy of testifying to Congress against his client (former President Richard M. Nixon) into a job as an expert legal commentator — wrote this article opining that Senator Kerry would have a pretty good defamation claim against Mr. O’Neill, who is a longtime and well-regarded Houston attorney.
An unsolicited piece of advice for Senator Kerry — if you thought that the Swift Boat Vets’ accusations were bad and things could not get any worse, then go ahead and sue John O’Neill. That will likely generate a nightmare of Biblical proportions for you. Mr. O’Neill was reasonably effective as an advocate against you during the campaign even though he was out of his element on the public stage. However, Mr. O’Neill is quite comfortable and completely in his element inside a courtroom. Trust me on that one.

This NY Times article interviews Jerome Schneider, who for the past 20 years or so made a fortune setting up offshore banks and phony investments in tax havens such as the Cayman Islands, Grenada, Montserratt, Vanuatu, the Cook Islands, and the Pacific Island of Nauru to assist wealthy U.S. citizens in avoiding income taxes.
His handbook, “The Complete Guide to Offshore Money Havens,” became quite popular among wealthy folks who are willing to take such risks. The 2000 edition of the book even carried an endorsement from Louisiana Republican Representative Billy Tauzin, who also spoke at a conferences in which Mr. Schneider promoted his tax evasion schemes.
In at least the understatement of the month, a spokesman for Mr. Tauzin conceded that Mr. Tauzin’s involvement with Mr. Schneider was “a stupid mistake.”
Well, the gig is up for Mr. Schneider, who pled guilty in February to conspiring to help his clients evade the tax laws. And those who invested with Mr. Schneider just might receive an invitation of sorts soon:

Mr. Schneider, who pleaded guilty in February to conspiring to help his clients evade the tax laws, said that he expected “every single one” of his clients to be prosecuted or sued for the taxes they evaded. He said clients sought to evade taxes on incomes ranging from $100,000 to $40 million, though most were from a third to half a million dollars.

Some of those who benefitted from Mr. Schneider’s schemes could prove to be fairly interesting:

[Mr. Schnieder] said that all his clients had two things in common – they were rich and they wanted to escape taxes.
Most of the nation’s major accounting firms worked with one or another of his clients, he said, and he named two law firms that he said were central to his business.
He said one prominent actress sent money to the United International Bank in Nauru, which he said he created. He said the actress paid $50,000 for a legal opinion asserting that the arrangement was legal.
Mr. Schneider also said that in 1988 he arranged for a prominent motivation coach to place $250,000 in an offshore bank without reporting the money to the I.R.S.
In addition, Mr. Schneider said that a billionaire media businessman, one of several clients who he said were on the Forbes 400 list of the wealthiest Americans, sent $40 million to a sham bank in Nauru to pay for a nut-processing company in 1994.

What is perhaps most amazing about Mr. Schneider’s scheme is how long it took federal authorities to investigate Mr. Schneider, even after he plopped the basis for such an investigation in their lap:

The Senate Permanent Investigations subcommittee called Mr. Schneider as a witness in 1983 hearings on offshore tax evasion, and two years later the Comptroller of the Currency warned American banks about dealing with some of the offshore banks Mr. Schneider created.
Mr. Schneider said his undoing began the day more than a decade ago when he asked Jack Blum, a former United States Senate investigator, to speak at one of his offshore seminars. Mr. Blum, who specializes in exposing international financial crimes, wrote a letter to the Justice Department that prompted the investigation that led to Mr. Schneider’s guilty plea.
Mr. Blum said, “That Schneider could operate openly for years, buying ads in the Wall Street Journal and the American Airlines flight magazine, shows the utter failure of tax law enforcement.” He said law enforcement had known about Mr. Schneider for years, but failed to act.
The I.R.S., in court papers, said it began investigating Mr. Schneider in 1997, 14 years after his Senate testimony, because of the letter from Mr. Blum. It took five more years to obtain an indictment.

Oh well, better late than never. Read the entire article.

Paul A. Frame, Jr., the former CEO of Houston-based geophysical seismic provider Seitel, Inc., has been indicted of defrauding the company of $750,000 to settle a lawsuit by his former fiancee. The criminal case against Mr. Frame is pending in U.S. District Court in Houston.
Seitel emerged earlier this year from a chapter 11 case that was commenced in 2003 several months after Mr. Frame had been terminated as CEO amidst revelations of Mr. Frame’s use of corporate assets for personal purposes and accounting issues regarding the value of Seitel’s primary asset, which is its library of geophysical seismic data. The indictment against Mr. Frame consists of two counts of mail fraud, two counts of wire fraud, money laundering and making a false statement to the Securities and Exchange Commission.
Mr. Frame is accused of using $750,000 from Seitel without Board of Directors’ authorization to settle a lawsuit that his former fiancee brought against him. The colorful allegations in that lawsuit asserted that Mr. Frame took back $1 million in gifts that he had given his former fiancee, including sable, lynx and chinchilla jackets, expensive jewelry and two wedding dresses, and that Seitel was responsible for Mr. Frame’s alleged wrongdoing as well. In addition to the settlement with his former fiancee, the SEC has also alleged in a civil complaint that Mr. Frame used Seitel funds without Board approval to race a Ferrari and to install an expensive security system in his tony River Oaks home.
After Seitel’s reorganization, Mellon Financial holds a 21.8% stake in the company, and ValueAct Capital owns a 12.3% stake. Shares of Seitel closed Tuesday at $1.07.

Following on this earlier post regarding Judge Richard Posner’s criticism of law review articles, Judge Posner and Randy Kozel debate the issue over at Legal Affairs this week. Hat tip to The Volokh Conspiracy for the link to this interesting disussion.

The Supreme Court declined on Monday to consider whether retailer Kmart Corp. should have been allowed to pay more than $300 million to about 2,500 “key vendors” immediately after filing its chapter 11 case in January, 2002.
The Kmart case stemmed from Kmart’s decision immediately after the filing of its chapter 11 case to request that the Bankruptcy Court approve emergency payments to its key vendors (including over 1,000 newspapers) on the grounds that such payments were essential to preserving Kmart’s going concern value for the ultimate benefit of all of its creditors.
Absent such payments, key vendors of bankrupt companies often refuse to do business and provide trade credit with a debtor even though their post-bankruptcy claims receive a higher priority of payment than pre-petition unsecured claims. Bankruptcy Courts often authorize such payments to key vendors, and the Bankruptcy Court in Kmart’s case elected to do so.
However, the District Court and the the 7th U.S. Circuit Court of Appeals reversed the Bankruptcy Court’s key vendor ruling and held that Kmart had failed to establish that business from its designated key vendors was any more necessary to the survival of Kmart than business from certain companies that were excluded from key vendor status.
The effect of the Supreme Court’s refusal to review the 7th Circuit’s decision is that the lower courts remain split on the issue of key vendor payments. Some courts deny such payments on the grounds that the Bankruptcy Code contemplates that any such payments to the debtor’s creditors should only be made under a confirmed plan of reorganization. However, the better view is that, under appropriate circumstances, a debtor should be allowed to pay key vendors at the outset of a case to hedge the risk that the debtor would otherwise meltdown into liquidation to the detriment of creditors before a reorganization plan can even be proposed.
Kmart’s “key vendor” motion was unusally aggressive and neither the 7th Circuit’s decision nor the Supreme Court’s refusal to review that decision prevents a Bankruptcy Court from approving key vendor payments under appropriate circumstances. But it is clear that from these rulings that debtors will be required to tailor such key vendor programs more carefully than Kmart did.

If corporations are so big and powerful, then why are there so many corporate crime laws? Doesn’t it make more sense that corporations would lobby to restrict enactment of such laws?
Maybe not, according to University of Michigan law professor Vikramaditya S. Khanna. In this interesting paper (download required), Professor Khanna argues that corporate executives may reasonably believe that consenting to enactment of corporate crime laws is the least risky course:

One of the fundamental puzzles of corporate crime legislation is how does so much of it get enacted given that it targets corporations that are considered some of the most powerful and effective (if not the most powerful and effective) lobbyists in the country. My analysis suggests that corporate crime legislation may grow because it is a preferred response for corporate interests when some congressional action is inevitable. Corporate criminal liability?s growth could then be explained by the following: Some degree of ?punishment? is necessary, as a political matter, to satisfy public desires during recessions when revelations of corporate wrongdoing are numerous, and corporate crime legislation achieves that while imposing lower costs on business interests relative to other measures that could be undertaken (e.g., increasing corporate civil liability or managerial criminal sanctions).
The normative implications depend on one?s priors about the world and on which political account(s) one finds persuasive. However, one thing appears clear regardless of the preferred political account(s): If we start with the notion that corporate wrongdoing is under-deterred, then we would want to argue for curtailing corporate criminal liability and increasing the focus on corporate civil liability and managerial liability. That raises serious questions about how we regulate this area.

Former former Harris County state district court judge David Medina is expected to be named today to the Texas Supreme Court by Governor Rick Perry during a ceremony at 10:30 a.m. at the South Texas College of Law in Houston. Mr. Medina is currently serving as the Governor’s general counsel.
The appointment will fill the second of two vacancies on the nine-member court. Mr. Medina will replace Michael Schneider, who was confirmed as a U.S. District Judge in Tyler in September. The other vacancy was filled by Wallace Jefferson, a Supreme Court justice who Governor Perry recently promoted to chief justice. Chief Justice Jefferson replaced former Supreme Court Chief Justice Tom Phillips, who retired to enter private practice.
Mr. Medina, who is 46, was born in Galveston and grew up just to the north in Hitchcock. He graduated in 1980 from Southwest Texas State University (now Texas State University-San Marcos), where he was a member of the baseball team and the state-championship karate team. He subsequently received his law degree from South Texas, where he was on the dean’s list and was a member of the American Bar Association Regional Moot Court National Championship Team.
From 1996 to 2000, Mr. Medina served as judge of the 157th District Court in Harris County, during which time the Houston Bar Association members consistently cited him as one of the top jurists in Harris County. Before and after his tenure on the bench, Mr. Medina worked for Cooper Industries, a worldwide manufacturer of electrical products, tools and hardware. He has served as Governor Perry’s general counsel since January of this year.
Before becoming Governor Perry’s general counsel, Mr. Medina was involved in a controversy when he was arrested in June 2002 and charged with driving while intoxicated. His trial ended in a hung jury, and then Medina pleaded guilty to making an improper lane change, paid a fine, and the original DUI charge was dismissed.
Upon appointment to the Supreme Court, Mr. Medina will have to through the Texas Senate’s confirmation process next year. To remain on the bench, Mr. Medina would have to run for election in 2006.

This New York Times article reports on a San Diego federal judge’s order on Thursday that froze almost $600 million in investment accounts as the Justice Department probes charges of illegal tax avoidance involving California-based xÈlan, a company that markets tax-savings plans to doctors. The company’s Web site says it was founded 32 years ago by doctors to help other physicians with financial matters, ranging from pension plans to disability and long-term care insurance. It calls itself “the Economic Association of Health Professionals.”
The Internal Revenue Service estimates that some 4,000 doctors are involved in what it alleges is a fraudulent tax-reduction scheme, and they could owe as much as $420 million in taxes, interest and penalties. The Justice Department alleged that “persons and entities affiliated with xÈlan” have advised thousands of doctors and other medical professions to invest in “various fraudulent tax avoidance schemes,” including purported supplemental-insurance products and improper charitable-deduction schemes involving a xÈlan-related foundation. The government’s complaint said more than $500 million is held in investment accounts controlled by xÈlan-related and Barbados-based Doctors Benefit Insurance Co.
I don’t know whether the government’s charges against xÈlan have any validity, but it has been my experience that doctors are generally easy prey for promoters of investment scams and tax avoidance schemes. With a lot of money and not much time to analyze such matters, doctors are tailor-made for making bad investment decisions. As a result, I have represented many doctors over the years in extracting them from poor investment decisions that they have made.
My first experience with this phenomena is instructive. Over 25 years ago, while still in law school, my late father — noted Professor of Medicine Walter M. Kirkendall — called me one day to ask me to accompany him to a breakfast meeting at Houston’s old Shamrock Hilton to advise him regarding an investment “opportunity” that was going to be pitched to him and a number of other Texas Medical Center doctors at the meeting.
So, my father and I attended the meeting, along with about 50 other Medical Center doctors. During the meeting, a group of slick promoters from Dallas promoted limited partnership interests (at $75,000 a pop) in an entity that would own the rights to a movie. The movie was being filmed at the time and was called “Coming Back,” a preposterous tale about the adjustments that several Dallas Cowboy football stars had to make in playing professional football after returning home as Vietnam veterans. The promoters even played a few film clips from the movie, which were absurdly bad.
“We expect this to be hit throughout the country, particularly among professional football fans,” commented the promoters. But the real money to be made, the promoters assured in hushed tones, was in the overseas markets. “The Dallas Cowboys are simply huge in Japan,” they exclaimed breathlessly.
Through the presentation, my father and I were actually having a wonderful time, enjoying the free breakfast while rolling our eyes at each other and chortling about the absurdity of it all. At the conclusion of the meeting, the promoters asked that any doctor interested in investing to come up to the front of the conference room and they would make arrangements for giving them a discount on their investment in the film. That pitch brought a final chortle from my father and me, as we simply could not believe that anyone would be so gullible to invest any money in such a surefire scam as this movie. So, as the meeting concluded, we stood up and proceeded to leave.
As my father and I made our way out of the conference room, we were almost stampeded by the dozens of doctors literally sprinting to the front of the conference room to make their investment in the film.
About a year and a half later, the promoters of the film were convicted of securities fraud in federal court in Dallas.
To this day, no word on how “Coming Back” ever did in the Japanese market. ;^)