Monthly Archives: June 2004

Cubs sweep Stros

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The Stros once promising season sank to the bottom on Thursday night as the Cubs completed a four game sweep of the Stros at the Juice Box, 5-4.
The Stros are now 33-32 and in fifth place in the NL Central. Since peaking at a season-high 10 games over .500 at 21-11 and leading the NL Central by three games on May 11, the fifth-place Astros have gone 12-21 and are now four and a half games behind the Cards. They have lost four in a row, six of their last seven, and 17 of their last 26 games.
For the first part of this hideous past month, the Stros hitting was decent and the pitching generally — with the exception of Clemens — was below average. The pitching has turned around over the past two weeks, but the hitting has gone south as the Stros scored a total of eight runs in the four games with the Cubs.
Roy O battled gamely tonight, giving up 4 runs on 11 hits through seven tough innings. However, journeyman Glendon Rusch handcuffed the Stros, and a mini-uprising in the ninth spiced by Jason Lane‘s first homer of the season petered out.
The Angels come to town tomorrow for a weekend series at the Juice Box as the Stros search for that elusive winning formula. Pete Munro will likely start for the Stros, so expect some hard-hitting in this one, at least from the Angels.

More on Hidalgo trade

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The Chronicle reports today that the other player in the Stros’ probable trade of Richard Hidalgo is Mets’ right-handed relief pitcher, David Weathers. Here is what Baseball Prospectus says about Weathers:

Weathers can be a cheap, serviceable back-end piece of almost every team’s bullpen, fill 70 something innings, and not embarrass himself. There’s some value in that, but he’d be well-served to try and sneak onto a team with a bullpen in flux, steal 15-20 saves and then get someone to bite on him as a closer. Billy Beane would probably be willing to sign on for a cut of the proceeds from the subsequent free agent deal.

Weathers, who is 35 and a 14 year veteran, is earning $3,93 million this season. Hidalgo has been on the trading block for two years since he took a nosedive from a production standpoint after signing an absurdly overpriced contract on the heels of an outstanding 2000 season. Hidalgo is currently “earning” $12 million this season, and will be owed a $2 million buyout after the season because no team in their right mind would pick up his $15 million option for next season.
So, this proposed trade is a salary dump for the Stros for their mistake of grossly overpaying for Hidalgo. I think it is a mistake for the Stros to give up on Hidalgo, but there is no question that they badly overpaid him over the term of his current contract. Sometimes it’s easier for team management to trade a player rather than face their own mistakes.
UPDATE: The Stros and Mets pulled the string, as Hidalgo goes to the Mets for Weathers and minor leaguer Jeremy Griffiths, a 26 year old righthander who will begin in the Stros’ organization at AAA New Orleans. Griffiths is 5-2 with a 3.47 ERA in 13 starts for AAA Norfolk this season, allowing 63 hits while walking 29 and striking out 31. Here is Baseball Prospectus’ analysis of him coming into this season:

Griffiths managed to drop his walk and home runs allowed rate some last year, but NL hitters lit him up with a .328 batting average against. A pedestrian pitcher with a fastball that’s neither fast nor big on movement, the Mets’ 2004 season’s in big trouble if Griffiths gets those projected 15 starts.

Well, certainly not a great trade for the Stros by any stretch. However, a good trade for Hidalgo was a dream once the Stros overpaid for him after his great 2000 season.

A tax lawyer’s view on tax simplification

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From the incomparable Stu’s Views:
tax simple.gif

Not so fast, Jenkens & Gilchrist

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This NY Times article reports on a scrape that Dallas-based law firm Jenkens & Gilchrist got into with a New York judge over an unauthorized letter that the firm recently sent to clients who bought tax shelters that the firm promoted. Here are earlier posts on Jenkens & Gilchrist’s tax shelter-related problems.
Jenkens & Gilchrist agreed in March to pay $75 million in settlement of a class-action lawsuit that had been brought on behalf of over 1,100 clients of the firm who had bought the disputed tax shelters. The settlement included some provisions for protecting the clients’ identities in court records that would be available to the general public.
However, in a letter that Jenkens & Gilchrist sent to its clients on May 28, the law firm offered the opportunity to stay completely out of the public record of the case by accepting just $100 from the firm rather than each client’s share in the $75 million settlement.
That offer went over about as well as a fart in church with the judge in the class action case. U.S. District Judge Shira A. Scheindlin sent a rather unusual letter of her own yesterday to the 1,100 Jenkens & Gilchrest clients instructing them that they should ignore the Jenkens & Gilchrest letter because she had not approved it as part of the settlement.
A lawyer representing Jenkens & Gilchrist said yesterday that the firm had withdrawn the offer to its clients contained in the letter and that the whole affair had been a big misunderstanding.
I guess so.
However, none of these machinations over the proposed class settlement will hide the Jenkens & Gilchrist clients’ identities from the Internal Revenue Service. In May, U.S. District Judge James Moran ordered the firm to turn over the names of all its tax shelter clients to the I.R.S.

Scruffin’ Stros lose again

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The Stros lost their third straight game to the Cubs on Wednesday night, 4-1.
The Stros wasted a good pitching performance be Tim Redding, who gave up two runs on eight hits over seven innings. But the Stros continue to scruff at the plate, scattering a bunch of singles off of Greg Maddux around one extra base hit (a game opening double by Bidg). Nothing is looking good for the Stros right now, as Everett has a hitch in his giddyup, Hidalgo is on the trading block and not playing much, and Berkman has cooled off after being the only consistently good hitter over the past month.
Roy O tries to avoid the sweep tomorrow night. The Stros are in free fall, and it’s getting ugly at the Juice Box, folks.

Andersen loses appeal of its criminal conviction related to Enron

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This Chronicle story reports that the Fifth Circuit Court of Appeals in New Orleans announced earlier this afternoon that it has affirmed the 2002 criminal conviction of Enron Corp‘s former accounting firm, Arthur Andersen for obstruction of justice.
Here is the Fifth Circuit’s opinion.

Hidalgo deal almost done?

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Reports out of New York are that the Mets and the Stros are close to a trade that would send the Stros’ Richard Hidalgo to the Mets.
The following is recently exiled Brandon Duckworth‘s pitching line from last night’s game at AAA New Orleans:
Player Name IP H R ER BB K HR ERA
B.Duckworth 2.2 7 6 6 1 1 0 20.25
Ouch!

Holman Jenkins on Reagan’s legacy to business

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Holman Jenkins, Jr.’s Wall Street Journal ($) Business World column today is a nice tribute to the late President Reagan’s legacy toward the business community. Here is a tidbit:

The late president came into his political maturity as a traveling spokesman for General Electric, a company that each age seems to rediscover as an icon of American industry. Mr. Reagan traversed the land and heard GE executives complain about taxes and regulation, and, lo, somehow he understood that this was a bad thing, which was an achievement for his time.
Mr. Reagan’s GE years are shrouded in mystery, or at least shrouded in the discarded newspaper morgues of a hundred defunct small-town newspapers in places he visited and spoke on GE’s behalf. He received a treatment not unlike the rigorous apprenticeship afflicted on future CEOs of GE, shipped from place to place, meeting the company’s far-flung employees, seeing its various businesses up close. His GE minder, Ed Langley, was fond of saying that Mr. Reagan was “marinated in the middle class” in a way no politician could match, an experience that would have “turned Jane Fonda into Margaret Thatcher.”
Mr. Reagan drew a novel lesson from this experience: that corporations were full of hardworking, inventive people creating things of practical use to their fellow Americans. He failed to notice the befouling of any wetlands or the extinction of any owls. To many critics who even now are starting to pipe up, Mr. Reagan was an enemy of the poor — because to be supportive of business was, ipso facto, to be an enemy of the poor. He would have understood; he was once a business basher himself. In 1948, Mr. Reagan stumped right along with Harry Truman, giving speeches that blamed the excessive profits of greedy businessmen for inflation.
Here resides the single most overlooked achievement of Mr. Reagan’s legacy, what Bear Stearns economist David Malpass calls his “reminding us that the private sector is OK.”

Read the whole piece.

KPMG tax shelter snags some big fish

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A KPMG tax shelter that the Internal Revenue Service last year declared abusive snared a group of prominent American companies, reflecting the popularity of efforts to reduce corporate taxes has become. Here are earlier posts on KPMG’s mounting problems relating to promotion of such tax shelters. The highly aggressive shelter that KPMG promoted was called the “contested liability acceleration strategy,” or CLAS, and it has been estimated that the promotion of the shelter generated $20 million in fees for the firm..
This Wall Street Journal ($) article reports that the IRS contends tht the KPMG promoted shelter generated at least $1.7 billion in tax savings for more than 25 companies. Delta Air Lines, Whirlpool Corp., Clear Channel Communications Inc., WorldCom Inc., Tenet Healthcare Corp. and the U.S. units of AstraZeneca PLC and Fresenius Medical Care AG all bought the shelter. Apparently, several other prominent companies signed agreements to buy the shelter, but it was unclear whether those companies actually implemented it.
A federal grand jury in Manhattan is currently investigating KPMG‘s past tax-shelter activities. At this point, it’s not known what penalties the IRS will seek from KPMG in connection with CLAS or other past shelter sales.

More Baylor-Methodist split fallout

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Following on this post of earlier this week regarding the brewing divisions in the Texas Medical Center resulting from the decision of Baylor College of Medicine to terminate its 50 year relationship with the Methodist Hospital, this Chronicle story reports on Dr. Charles Brunicardi‘s resignation as the Methodist Hospital’s chief of surgery, which is the first key defection from Methodist in the battle between Methodist and Baylor to retain staff members.
Dr. Brunicardi did not resign from Methodist’s medical staff and will continue treating patients and performing surgical procedures at Methodist.
Dr. Brunicardi is a heavyweight in the Medical Center, and his defection is a blow to Methodist. Stay tuned as the battle for doctors between Baylor and Methodist heats up.