Daily Archives: June 25, 2005

Is Lerach a target?

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Lerachenrondocs150ap2.jpgThe dozens of securities fraud lawsuits against Enron and various other parties are consolidated under the federal multi-district litigation rules in Houston federal court. The legal community involved in those cases is abuzz today with the news that a federal indictment last week of two Southern California lawyers is a sign that the lead plaintiff’s lawyer in the Enron securities fraud litigation — William Lerach — and his former firm (Milberg Weiss Bershad Hynes & Lerach) may also be targets of the investigation. Mr. Lerach and Milberg Weiss split last year, and Mr. Lerach started a new firm based in San Diego.
The indictment of almost 70 pages (press release here) accuses a former Milberg Weiss client — Palm Springs lawyer Seymour Lazar — of taking $2.4 million in kickbacks from a “New York law firm,” presumably Milberg Weiss. Although Mr. Lazar’s personal attorney — Paul Selzer — was also named in the indictment, the indictment contains no formal charges against “the New York firm.” The indictment alleges that the New York firm reaped $44 million in attorney fees from over 50 cases in which Mr. Lazar was the lead plaintiff. As an inducement for Mr. Lazar and his family members to serve as lead plaintiff, the indictment alleges that the New York firm and others secretly paid Mr. Lazar kickbacks out of a portion of the firm’s attorneys fees.
The indictment is the result of an investigation that began in 2002 that resulted in subpoenas being issued to dozens of law firms that have been co-counsel with Milberg Weiss in securities fraud class action cases over the years. Speculation is rampant throughout the plaintiffs’ securities class action bar that the purpose of the indictment of Messrs. Lazar and Selzer is to pressure them to turn on the former Milberg Weiss lawyers.
In addition to observing that it is “saddened” by the indictment, a Milberg Weiss press release stated the following:

“We are also surprised and disappointed that, in the face of recent criticism of the government following the reversal of the Arthur Andersen conviction, the U.S. attorney’s office would risk harming the Milberg Weiss firm and its many fine lawyers and staff by making this accusation in circumstances where the firm cannot defend itself.”

As usual, Professor Ribstein provides insight and caution regarding this latest use of governmental power against an unpopular target (i.e., plaintiffs’ class action securities fraud lawyers) of the day. Moreover, check out Professor Hennings’ thoughts on the differences between the government’s potential case against Milberg, Weiss and the prosecution of Arthur Andersen, and Professor Bainbridge’s comments regarding the implications of the possible indictments on the prosecution of class actions.

Houston attorney pleads guilty in kickback scheme

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burd.jpgHouston personal injury lawyer Gene Burd pleaded guilty Friday to a charge of making a false statement on his 1997 Federal Income Tax Return in connection with a kickback scheme that Mr. Burd engaged in with a local chiropractor, Paul Samson Christie. Here is the Justice Department’s press release on Mr. Burd’s guilty plea (as well of that of his co-defendant, Mr. Christie), and the earlier press releases on the indictment and superceding indictment are here and here.
According to the DOJ press release, Mr. Burd employed runners to bring him auto accident victims. After signing the victims up to a contingency fee contract, Mr. Burd would refer the clients to Mr. Samson’s chiropractic clinics for physical therapy. Subsequently, Mr. Burd would pay the clinics for the chiropratic services provided to the clients out of a portion of the insurance settlement that he would negotiate on behalf of his clients. Mr. Samson would then turn around and kickback to Mr. Burd in cash 40-50% of the payment that Mr. Burd would make to the clinics. Mr. Burd did not report the cash kickbacks as income on his tax returns.
Mr. Burd faces a maximum of three years in federal prison, without parole, a $100,000 fine, and civil monetary penalties. Sentencing is scheduled for September 30 before U.S. District Judge Melinda Harmon.

Throwing popcorn at Enron

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logo_dynegy.gifThis NY Times article interviews Bruce A. Williamson, the former Duke Energy executive who the Dynegy, Inc. board brought in to restructure (some would say liquidate) the company following the economic fallout in the energy trading industry resulting from the company’s failed bid for Enron and Enron’s bankruptcy in late 2001. Previous posts are here and here regarding Dynegy’s settlement of claims at least indirectly related to its Enron bid.
The entire interview is mildly interesting and certainly further evidence for the widespread rumors in the business community that Dynegy is for sale. However, Mr. Williamson’s observation about life after Enron is priceless:

Q. Yes. What’s the mood like [in Houston after Enron]?
A. If you’re in the oil upstream exploration and production, there’s a lot of money coming in. The biggest concern the upstream companies have is where to go from there. What do they do with the money? They’re running out of places they want to go to explore.
The power merchants, and that includes ourselves and Reliant, El Paso, Calpine, Duke, are all recovering and have all been inwardly focused for the past two and a half years. I think broadly in the community in Houston, it goes in waves. Enron sort of dies down and then something rears its head up and washes it back in the news.
The Enron movie came out at the River Oaks Theater, literally a few blocks from where Ken Lay lives, and that was quite an event. One person – a board member that I will keep nameless – told me he hadn’t been to a movie like this since he was 12 and went to see “Hopalong Cassidy.” Someone would come on the screen and people would boo and hiss and throw popcorn.

Is Tom Fazio good for golf?

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no 17 TPC hole2.jpgOne of the highlights in the development of the blogosphere over the past several years has been the emergence of specialized blogs. As an inveterate golfer, an interesting part of the blogosphere for me has been the golf blogs, a number of which are listed in the blogroll on the right.
One of the golf bloggers who I particularly enjoy is Jay Flemma (he actually maintains two blogs, here and here), who is a New York City-based intellectual property and entertainment lawyer who is carving a name for himself in writing about golf course design. In his latest post, Jay addresses an issue that this Ron Whitten Golf Digest article explored earlier this year: Is well-known golf course designer Tom Fazio good for the game?
Jay’s analysis of Fazio’s latest designs is timely in this neck of the woods because Fazio’s new course here in The Woodlands, Texas — where many folks still believe the Shell Houston Open should be played — will open on a beautiful piece of land in the western part of The Woodlands later this year. After noting that several analysts of golf course design are observing that Fazio’s recent designs are boring and excessively expensive to maintain (much less play), Jay observes the following about the direction of Fazio’s course design:

I stuck up for Fazio here. I love World Woods, Barton Creek, Pine Hill, PGA, TPC-MB, Ventana. . . lots of Tom. Then I played Atunyote in Utica and was underwhelmed. There was nothing of interest except two good risk reward par-5s, 5 and 12, and 9, 11 and 18 were good. The rest was nothing I had not seen before. This is $175. Casino Golf – nuff said. The design was muted, the natural setting was ordinary farmland and the price was twice what it’s worth . . . That’s why architectural echo is an important factor in rating a golf course. It offers a way to compare courses to the greats.

Jay covered the U.S. Open last weekend and his blogs include interviews with players and a level of analysis that you simply will not see in the mainstream media. If you are interested in golf, take a moment to check out the golf section of my blogroll, particularly Jay’s blogs, Geoff Shackelford‘s, and Texas Golf. The golf blogs are another reflection of how the blogosphere is redefining the way in which specialized information and knowledge is communicated.

The latest reason to build a new baseball stadium

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Washington stadium.jpgApart from the redevelopment boondoggles that will necessarily follow from the U.S. Supreme Court’s Kelo decision, this Washington Post article reports on yet another reason that governmental promoters will cite to support this.