Monthly Archives: January 2006

Jamie Olis resentencing hearing postponed

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Jamie Olis8.jpgThe long-awaited resentencing hearing in the sad case of Jamie Olis that was scheduled to take place today has been postponed indefinitely to give U.S. District Judge Sim Lake time to review recently-filed materials in the case relating to the key issue of market loss causation and to conduct another hearing on the market loss issue. You can download a copy of Olis’ lengthy memorandum on the market loss and related sentencing issues — which includes copies of letters from Olis and his wife to Judge Lake — here.
Although the delay in the resentencing is unfortunate, it is understandable. There is no harder working judge in the country right now than Judge Lake, who is literally snowed under with both the prodigious materials relating to the Olis resentencing and dozens of pre-trial motions in the run-up to the complex trial of former key Enron executives Ken Lay and Jeff Skilling that is scheduled to begin on January 30 in Houston. Given Judge Lake’s nature, I suspect that he will attempt to schedule the market loss hearing in the Olis case before the commencement of the Lay-Skilling trial.
Meanwhile, Doug Berman — who has provided the flat-out best analysis in the blogosphere of the Olis case from a sentencing perspective — added this informative post earlier in the week and this post today on the key issues to be addressed in the Olis resentencing hearing. As this earlier post notes, the prosecution misled Judge Lake in the previous sentencing hearing on the key market-loss issue, and I’m optimistic that Judge Lake will come to understand this time around the folly of attributing any meaningful market loss to Olis’ participation in the ill-fated Project Alpha, a point that is amply buttressed in Olis’ memorandum on resentencing by the expert reports of Rice University business professor Bala Dharan, former SEC economist Craig McCann, and well-known Houston energy securities analyst John Olson. In contrast, the Justice Department’s strikingly superficial response to the Olis memorandum and expert reports comes across as mean-spirited and baseless. If Judge Lake properly concludes that the reasons for market loss are simply too diffuse to attribute to Olis’ actions, then my sense is that he will reduce Olis’ sentence to considerably less than the 5-7 years that Professor Berman is predicting.
Update: Professor Berman comments on the postponement, as well as the resentencing hearing of Olis’ co-defendants (both copped pleas), which will proceed as scheduled today.

Texas Longhorns 41 USC Trojans 38

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texas longhorn logo.jpg
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The University of Texas Longhorns, National Champions!
It’s taken me until 9 a.m. the morning after the game just to recover enough to pass along my thoughts.
In short, the game was hugely entertaining, if not particularly well-played in all respects. The first quarter was just kind of an all-around mess, Texas owned the second quarter, the third quarter turned into a fist fight between two heavyweights who could not defend themselves, and then Vince Young simply picked up his Texas team in the last six minutes of the fourth quarter and refused to let them lose.
It was truly a game for the ages and a perfect example of the reason that I prefer college football to the NFL.
By the way, don’t miss the Austin American-Statesman’s photo gallery containing a measly 143 photos from the Rose Bowl game.

First things first for Clarett

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Clarett.jpgYou may have heard that former star Ohio State running back Maurice Clarett was wanted by Ohio police earlier this week for his alleged participation in a robbery.
Well, according to this NY Times article, Clarett had a particularly compelling reason to delay turning himself in to police for a couple of days:

Clarett declined to answer most questions from reporters, but he did reveal that he watched Ohio State beat Notre Dame on Monday night before turning himself in to the police. Clarett, who had been wanted for almost two days, apparently wanted to see his former teammates play in the Fiesta Bowl, the same game in which he achieved stardom and helped capture the 2002 national championship for the Buckeyes. Asked about Ohio State’s 34-20 victory over the Irish, Clarett cracked a half-smile and said:

“Glad we won.”

Remember that follow up question

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witness chair.jpgThis San Diego Union-Tribune story reminded me that, in asking questions about the credentials of an expert witness, it’s usually a good idea to ask a few follow-up questions before moving on to other areas:

The Medical Board of California is investigating whether a surgeon it used as an expert witness lied about his qualifications when testifying against other doctors in disciplinary hearings.
According to a transcript of the hearing, [Dr. Don J.] Schiller implied he currently was certified by the American Board of Surgery when questioned by Deputy Attorney General Mary Agnes Matyszewski. But Schiller . . . has not been a board certified surgeon for 18 years, though his resume indicates he is certified and he has sworn under oath to being certified.
In an interview, Schiller said that when he testifies as an expert witness, he says he was certified by the American Board of Surgery in 1977. But he doesn’t volunteer that he has not renewed the certification.

“If I am ever asked if I was re-certified I say ‘no,'” Schiller said.

And that’s how he testified Sept. 23 in the San Diego case:

“Are you board certified, sir?” deputy attorney general Matyszewski asked, according to a transcript of the hearing.
“I was certified by the American Board of Surgery in 1977,” Schiller responded before Matyszewski moved on to other questions about his professional background.

Is the Task Force gripping in preparation for the Lay-Skilling trial?

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skilling and lay4.jpgAn unusually high number of the prospective jury pool for the upcoming trial of former key Enron executives Ken Lay and Jeff Skilling already have concluded that the two men are guilty of various business crimes merely because of their connection with the social pariah, Enron. Although such widespread bias against the two defendants would seem to be great source of comfort for Enron Task Force prosecutors, there are increasing signs that the Task Force is not sanguine about its case against Messrs. Lay and Skilling. As Larry Ribstein points out, that’s part of the conunbrum of the lottery-style system of criminalizing agency costs in the first place.
The Wall Street Journal’s John Emshwiller, who has as good an information pipeline into the Task Force as any reporter covering the Enron case, has a couple of W$J articles today (here and here) in which he reports that the Task Force — less than a month before trial — has made a new allegation of wrongdoing against Skilling relating to the former Enron CEO’s December 6, 2001 SEC deposition testimony. The gist of the new allegations are that the Task Force contends that Skilling lied when he testified that he sold over $15 million of Enron stock on September 17, 2001 because of concerns over the impact of the 9/11 attacks on the stock market (Skilling resigned from Enron in August, 2001). The Task Force contends that Skilling lied about the reason for that September 17 stock sale and that evidence of the lie is that he failed to inform the SEC during the deposition that he had inquired with a broker on September 6th about selling less than half as much Enron stock as he sold on September 17th.
H’mm, cranking up a new allegation of wrongdoing less than a month before trial based on those dubious facts? Sure looks like a bunny trail to me.
Meanwhile, as I speculated in this earlier post, this Emshwiller article confirms that, even though Richard Causey’s plea bargain last week simplifies the Task Force’s case against Lay and Skilling, the Task Force’s post-plea bargain debriefing of Causey has apparently left prosecutors undecided on whether even to use the former Enron chief accountant as a witness against Lay and Skilling.
Last minute preparations for a big trial are usually somewhat chaotic and often involve minor alterations in strategy. However, adding new allegations of misconduct and wondering whether even to use a key witness involved in the allegations are not the type of strategy decisions that one normally wants to be making less than a month before trial. As with the Task Force’s schizophrenic approach to Arthur Andersen, the latest revelations about the Task Force’s preparations for the Lay-Skilling trial do not reflect that the Task Force is particularly confident about its case. Although the Task Force has already won the public relations battle regarding the Enron scandal, winning its legacy case in the courtroom may prove to be far more difficult.

Good karma for the Rose Bowl

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darrell Royal_200_20.jpgAs Texans prepare for the long-awaited Rose Bowl matchup tonight between the Texas Longhorns and the USC Trojans, this Ray Buck/Ft. Worth Star Telegram article does a good job of telling how Longhorn coach Mack Brown’s relationship with legendary former Texas coach Darrell Royal has been an important part of Brown’s success in bringing UT back to the top tier of major college football.
As noted in this earlier post, Texas won two undisputed national championships under Coach Royal, one in 1963 and the other in 1969. But after Royal retired in 1975, the Longhorns got close in 1977 and 1983 and then gradually faded from the top tier of big-time college football. By the time Brown was hired seven seasons ago, the Horns were not even a national championship contender. The article contains a number of interesting observations from Coach Royal, not the least of which is the following:

When asked if his presence might be a source of motivation for the Longhorns, Royal had one more answer for everyone:

“If they need any kind of motivation,” Royal said, “they’re in the wrong game.”

Meanwhile, this interesting Alex Barra/W$J article on the development of big-time college football players over the past 20 years includes the following observation from Clear Thinkers favorites, Dan Jenkins:

“Comparing the best college teams of the past five or so years to legendary champions of the past is like comparing supersonic jet fighters to propeller-driven World War II planes. The game has really changed that quickly. Most of the players I see on top teams today look like they were manufactured in laboratories.”

By the way, the best line that I’ve heard in the run-up to the Rose Bowl was the following:

When [former USC wide receiver] Mike Williams lost his court challenge to the NFL underclassman rule and was not allowed to return to college football, did he still count against USC’s salary cap?

“Slugger”?

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PWilson.jpgAs the Stros continue to troll the used car lot of free agent hitters during this off-season, Chronicle Stros beat writer Jose de Jesus Ortiz reminds us that he relies on Stros press releases rather than objective research in this article entitled “Astros near deal for slugger”:

Astros general manager Tim Purpura’s hopes for landing a run-producing outfielder may come to fruition today. And if those plans work out, it’s most likely free agent center fielder Preston Wilson will land with the National League champions.
Wilson, 31, hit .260 with 25 home runs, 90 RBIs and 148 strikeouts for the Colorado Rockies and Washington Nationals in 2005. All-Star third baseman Morgan Ensberg, who had 36 homers and 101 RBIs, was the only Astro with more RBIs last year than Wilson.
Wilson, who earned $12.5 million in 2005, would likely get a contract worth less per year than the one-year, $6 million offer Nomar Garciaparra spurned from the Astros.

So, Wilson is a “run-producing outfielder” and about as good a slugger as Morgan Ensberg? H’mm, let’s look at the facts.
Wilson is a 31 year-old outfielder who has played eight seasons with the Marlins, Rockies and the Nationals. In those eight seasons, he has had a barely above-average runs created against average (RCAA, explained here) in four seasons and below-average in the other four. Wilson has a career -17 RCAA, which means that he has created 17 fewer runs for his teams over his eight seasons than an average National League hitter would have generated over the same period. In contrast, Ensberg has created 43 more runs than an average National League hitter would have during his five seasons with the Stros. Wilson’s career stat line is .333 OBA/.478 SLG/.811 OPS, which means he is below-average for getting on base and slightly above-average in terms of slugging. Lance Berkman — who is a real slugger — has a career stat line in one less season than Wilson of 289 RCAA/.416 OBA/.557 SLG/.973 OPS.
In short, Wilson is a slightly below-average outfielder whose main attribute is that he would probably be less bad than Willy Taveras at making outs and in not creating runs. But he is not a “slugger” and most likely never will be. A more appropriate analysis would question why the Stros management is even considering throwing a substantially above-average National League salary at such a player.
01/04/05 Update: The Stros signed Wilson to a $4.5 million one year deal with an option to retain him for three years for another $24 million. Absent Wilson turning into a far more productive player in 2006 than he has been in his previous eight MLB seasons, I cannot imagine the Stros picking up that option.

WSJ goes blawging

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WSJ online.gifThe Wall Street Journal ($) begins the new year by rolling out a new blawg called — somewhat unimaginatively — “Law Blog,” focusing “on law and business, and the business of law.” Former Forbes Magazine reporter Peter Lattman — who is an attorney — is the lead writer for the WSJ Law Blog, which will include contributions from reporters and editors at The Wall Street Journal and Dow Jones Newswires. Law Blog is a part of the WSJ’s rollout of this flashy new Law news page, which the Journal says will focus on “news, trends and buzz for lawyers at firms and in-house law departments, as well as the business people who work with them.” Check the new blawg and page out.

While UAL lurches to chapter 11 exit, Independence Air tanks

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UAL-logo10.gifOverall, the U.S. airline industry improved a bit last week as United Airlines parent UAL Corp. announced that it received creditor approval of its chapter 11 plan to emerge from bankruptcy next month as low-cost airline Independence Air announced its plan to liquidate rather than to attempt to emerge from its recently-filed reorganization case. Here are the earlier posts on the UAL financial problems and the Independence Air bankruptcy.
As noted earlier here, UAL has arranged a $3 billion all-debt exit financing package to emerge from chapter 11 funded by J.P. Morgan Chase & Co., Citigroup Inc. and General Electric Co. About half of that credit facility is dedicated to repay the $1.3 billion debtor-in-possession loan that has kept United operating through its over-three year adventure in Chapter 11.
United’s plan reminds the market of the risks involved in investing in or extending trade credit to a highly-leveraged legacy airline these days. Although the plan proposes to pay secured, priority tax, and administrative claims in full, UAL’s $20 billion in unsecured claims will receive a dividend of between 4% to 8% of such claims in the reorganized UAL common stock while existing common and preferred equity receive nada. UAL’s restructuring advisers have estimated that the reorganized UAL will have an equity value of about $1.9 billion upon emergence from bankruptcy, but the market is already somewhat bullish on the reorganized United (do people ever learn?) — UAL bonds are currently trading at much stronger prices than the four to eight cents on the dollar that UAL unsecured claims will receive under the plan.

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Why John Lopez is wrong about the bowl system

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bowl games.jpgAs you sit back today to watch any number of the six college bowl games, you might come across Chronicle sportswriter John Lopez’s column from yesterday in which he characterizes this past Saturday’s EV1.net Houston Bowl as the “Apathy Bowl” because of the low turnout from local football fans and renews the call for an NFL-style playoff system to determine a national champion in NCAA Division I-A college football.
Lopez’s opinion is a common one, arguably even the majority view of most folks who follow college football passionately. However, it is wrong for a variety of reasons, not the least of which is the health of college football as we know it.
Lopez’s view is that the BCS system — which has set up Wednesday’s USC-Texas Rose Bowl matchup for the national championship and will have a championship game next season a week after four major New Year’s Day bowl games — is killing the bowl system, anyway. He cites the low attendance figures for lesser bowl games that do not figure in the national championship equation as dispositive evidence that the bowl system is flawed and that a playoff system would generate far more interest (i.e., money). Lopez predicts that peripheral bowls will die off as sponsors ditch games for lack of interest in the face of the more popular BCS bowl games.

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