More on the latest prosecutorial abuse

online gambling2.jpgFollowing on the latest example of out-of-control federal prosecutors, Cato Institute’s Radley Balko has the best line of the day in responding to one of the vapid rationalizations for Congress’ jihad against online betting — “we have to protect our chidren from such evils:”

“The people who are pushing this ban in Congress . . . try to argue these sites prey on children, which is totally ridiculous,” [Balko] said. “If your kid has access to your checking account or credit card and is making transfers to off-shore accounts across the world, Internet gambling is the least of your worries.”

Balko has more on the absurdity of all this here.

What’s driving the latest business scandal?

backdating options_scandal04.jpgAs noted in this previous post, the mining of claims in regard to the widespread corporate practice of backdating options as a method of executive compensation is in full gear despite the relatively straightforward nature of the legal issues related to the practice. So, what’s driving this litigation freight train?
In this lucid post regarding the allegedly dastardly practice of granting options after the stock market dropped on the heels of the 9/11 attacks, Larry Ribstein observes that the scandal reflects a journalistic cooking of the books:

The whole backdating/springloading story has had the aspect of the mutual fund “scandal” — leveraging a bunch of tangentially related stories involving quite disparate practices into one big scandal that keeps the readers coming back and buying newspapers. The last thing the journalists want is the sort of analytical clarity that we need for useful public policymaking. Rather, they want to obfuscate differences to enlarge the apparent, though not actual, size of the story. With respect to the 9/11 “scandal,” the reporters can add to the usual book-cooking large dollops of greed-and-resentment-mongering curried in sanctimony.

But now, the WSJ’s Peter Lattman — author of the popular Law Blog — weighs in with this WSJ ($) article that reports on another powerful driver of the latest business scandal de jure — big law firms:

For public companies, investigations of possible stock-option backdating have become a huge headache. But for big law firms, they’re the latest full employment act, generating hour after billable hour of work across practice areas, from tax and executive compensation to securities and white-collar defense.[. . .]
Because cases of backdating can require restating earnings, there is tremendous pressure on companies to address any problems immediately. And even as backdating touches myriad legal disciplines, individual players — from the company itself to a board committee to individuals — often require their own separate counsel. [. . .]
Some law firms are marketing themselves aggressively in the area. Earlier this month, [law firm] Proskauer [Rose] issued a press release saying it had formed a “Stock Options Task Force,” bringing together more than 20 lawyers across practice areas. Mr. Cleary says that when he and his partners began to work on options-timing matters they asked themselves, “Why are we doing this all discretely? We can be much more efficient, much more nimble and much more effective in handling these issues collaboratively.”

Ah, the synergistic power of the media and big law firms! ;^)

Michael Shelby, R.I.P.

shelby4.jpgMichael Shelby — former U.S. Attorney for the Southern District of Texas from 2001-2005 and more recently a partner at Houston’s Fulbright & Jaworski (previous posts here and here) — died at his home in northwest Houston on Tuesday from what authorities described as a self-inflicted gunshot wound. Shelby, who was 47, had been suffering from cancer that had rendered him unable to work in recent weeks. The Chronicle story on Shelby’s life is here.

Ted Estess eulogizes Ross M. Lence

Ross LenceAs noted in this post from last week on the funeral services for one of Houston’s finest teachers, Dr. Ross M. Lence of the University of Houston, Dr. Ted Estess — Dean of the University of Houston Honors College and one of Ross’ closest friends — gave a superb eulogy during the Requiem Mass for Ross.

Ted has kindly allowed me to post the text of his eulogy (pdf here), the quality of which is surpassed only by Ted’s moving delivery of the eulogy during the funeral mass. Take a moment to read this touching tribute from a dear friend to a teacher’s teacher who has left an indelible mark on Houston:

Farewell to Our Teacher and Friend

I begin with the salutation that Ross himself used most often: Salutem in Domine.

Our teacher and friend Ross Lence was well known and loved for many things: certainly for the clarity and sharpness of his intellect; for the generosity and gaiety of his spirit; for his indefatigable dedication to his students.

In his early years, he was known for the briskness of his step across campus, such that admiring students hurried to keep up; throughout his years, we knew him for the garish colors and shocking patterns of his ties and suspenders.

But perhaps above all, our friend and brother Ross was known and loved for the quickness of his wit; for the merriment and laughter that he bestowed on any gathering, effortlessly, with grace, bite, and kindness.

If his greeting was Salutem in Domine, his farewell was Gaudeamus! Rejoice! Take pleasure in life! Enjoy!

A spirit of hilaritas and felicitas! That is what our friend gave us. That  is what we gladly remember, what we shall sorely miss.

So it is not surprising that every one of Ross’ students has some story to tell. One student received his first paper back from the Good Doctor, only to read this comment: “Young man, if we are going to communicate, we are going to have to settle on a common language. I prefer English.”

This morning, we have no difficulty finding a common language. And I am not speaking of English. What we hold in common — what holds us in common — is gratitude, respect, and affection for Ross himself.

For you see, Ross Lence had an extraordinary capacity to dispose persons in a common direction, and to constitute community. The means by which he did so was conversation; for conversation, practiced with Ross’ wit and generosity, binds persons together. It builds and manifests community.

Anyone who visited Ross in the hospital this past weekend, or anyone who saw him during the year of his illness, witnessed that community. Last evening and again this morning, that community gathered in abundance, present and palpable.

Graybeards from the early 1970’s are taking interest in current Honors students; graduates from the 1980’s are interacting easily with Lencians from the 90’s — all of them, students, faculty, and alumni from four decades, immediately connecting, telling their own stories about their outrageous and beloved teacher and friend.

One Lencian tells of the student who, having been late or absent from class a number of times in the semester, walked up to turn in her final exam. His back turned to her, the Good Doctor was writing something on the board, as she said:

“Dr. Lence, you are a horrible teacher, and I want you to know that because of the way you teach, we haven’t learned a single thing this semester.”

And without so much as turning around, Ross replied:

“Yes, madam, and you are empirical proof of that.”

Circero helps us understand the charisma — the spirited gifts — of Ross Lence when he says, “The essence of friendship consists in the fact that many souls . . . become one.”

The collegial community of friends that arose around Ross Lence owed much, of course, to his own altogether distinctive qualities: his personality was as winsome and energetic and engaging as one is ever apt to find.

Donald Lutz — Ross’ close colleague of thirty-five years and a master teacher himself — got it right when he told me earlier this week, “Every thing that Ross did had a little bit of magic about it. He was a chariot of fire, a visitor from another place, a gift of God.”

Ross was our chariot of fire, our celebrity teacher, the one we showed off, the one whom we sent out to the community, the one in whose radiating light we like to stand, as if to suggest, We are a bit like him ourselves. He was our high star (High Star was the street on which Ross lived in Houston for some thirty years), the one by whom we charted our course and calibrated our compass, pedagogically, intellectually, and morally.

But not always politically. Ross was sometimes — well, often — heard to complain about the state of political affairs in the country he so dearly loved. He would snort, “In America, anything is permitted between and among consenting adults except the shooting of firecrackers.”

Those of you who studied Greek philosophy with Ross certainly learned that we can measure every art, including the art of teaching, by its product. The monument to the artist is what he creates.

If we would see the monument to Ross Lence, we need only look around this morning at the community that he, as artist and midwife, brought into being.

Ross would of course want me to say that he had much help in his life and his work, most notably that of his mother, Nickie. “Big Momma” he sometimes called her. One needs only to meet Nickie to see the source of many of her son’s gifts. Over the years, literally thousands of students came to her house to see her son and to eat her food. They also came for the beer.

Our friend Ross, of course, was a teacher of virtue, a philosopher, a lover of wisdom. But he was, as well, a lover of sights and sounds, and of all things beautiful. His offices at the University were appointed more stylishly than mine and other faculty’s offices. And I have to say it: he was an impulsive shopper. Once he told me, “Ted, the only things I regret are the things I didn’t buy.”

To be sure, not all students took to Ross — some were unhappy because he wouldn’t tell them what they should think. He wouldn’t even tell them what he thought.

Other students were unhappy because Ross was irreverent. He said things that would get any other faculty member fired. He talked about cannibalism and goats, and you were never quite sure why.

He certainly was a trickster. Some students, and probably one or two colleagues and an occasional dean, suspected him of being a diabolical Machiavelli. This made him especially happy.

But in reality, the wellspring of Ross’ irrepressibility, of his merriment and generosity, the ground bass of the songs that he sang, was religious. To him, teaching itself was a religious vocation.

I am speaking of religious in the root sense of the word: re-ligio, a binding together again, as ligaments connect and bind. Ross was bound, first of all, to life itself; to reality and to the structure of the real; but also to country, family, and friends — and to the religious tradition that nurtured him from his mother’s arms to his dying day.

The inclination of Ross Lence toward the religious is evident in words that he wrote several years ago to the parents of an Honors student who had suddenly, and tragically, died. As was his custom when people were in trouble — and Ross did such things an untold number of times over the years — Ross reached out to those parents.

He visited them in their home, attended the funeral service of their son, called them several times, and wrote a note, a portion of which I, in closing, want to share with you. As is often the case with what a teacher says, these words of Ross return now to their source:

How I wish that some faint words of mine could erase the sorrow in your hearts. All of us wish for a little more time to reflect and to love life. But God will never abandon those who love him. I am reminded of the immortal words of Catullus on the death of his own brother: atque in perpetuum, frater, ave atque vale — and so for all eternity, brother, hail and farewell.

How not to treat friends

BetonSports.gifFirst, federal prosecutors heavy-handed tactics generated a political firestorm with one of America’s closest allies over the NatWest Three case. Now this:

In a sharp escalation of their crackdown on Internet gambling, United States prosecutors said yesterday that they were pressing charges against the chief executive of BetOnSports, a prominent Internet gambling company that is publicly traded in Britain, and against several other current and former company officers.
Federal authorities arrested the chief executive, David Carruthers, late Sunday as he was on layover at Dallas-Fort Worth International Airport on his way from Britain to Costa Rica. In a hearing yesterday in Federal District Court in Fort Worth, he was charged with racketeering conspiracy for participating in an illegal gambling enterprise.

Let me get this straight. Carruthers is a UK citizen, legally runs a UK-based company with a UK-based website, and he gets arrested in the US because US citizens are gambling on his website?
Here’s hoping that the UK raises hell with the Bush Administration over this latest incident as well as the handling of the NatWest Three case (which, by the way, has not generated even a civil case in the UK, much less a criminal one). As Larry Ribstein has pointed out on many occasions, the remedy of granting federal prosecutors broad latitude to criminalize business interests is generating a wave of prosecutorial abuse that is far more troubling than the original “problem” that the remedy is supposed to address. Christine Hurt has more.

“A peep show of utter horror”

death penalty2.jpgOn of my favorite books of 2003 was Erik Larson’s Devil in the White City (Crown 2003) (website here), the engaging tale of Chicago and the 1893 World’s Fair, which has just finished an astounding 124th straight week on the NY Times Bestseller List. A movie is currently being planned for the book, so the Chicago Sun-Times interviewed Larson and several other experts on the “White City” to determine the source of the fascination over the 1893 Fair:

On the one hand, Larson says, the White City was designed and built by the Gilded Age elite “as a way of demonstrating that America could come up with this level of sophistication. They went for drama at a time when architecture had very little relevance for most of the country, paving the way for things to come by inserting into the American psyche an appreciation for architecture. The sheer beauty in that array of buildings in the Court of Honor, ingeniously using the backdrop of the lake to stage the whole thing, was enough to knock anybody flat.”
But if the White City was a dream made real, much of the rest of Chicago was a nightmare.
“The fair gripped people,” [Chicago Architecture Foundation lecturer Christopher] Multhauf says, “partly because it was a vision of beauty in a place that was so squalid.” The streets were a quagmire of mud and manure, the air laced with soot and the rank aroma of stockyards and slaughterhouses. Poverty was widespread; labor unrest simmered and sometimes boiled. Prostitution flourished. Not far from the baronial mansions of Prairie Avenue, there were 31 brothels on Clark Street between Congress and Harrison, all of which were open at the time of the fair. The German writer Paul Lindau called Chicago “a peep show of utter horror, but extraordinarily to the point.”

Read the entire article and, if you have not already done so, pick up this fine book.

Innocence as a distraction

death penalty.jpgDavid Dow, a University Distinguished Professor of Law at the University of Houston, is one of nation’s leading experts on the death penalty and the author of Executed on a Technicality: Lethal Injustice on America’s Death Row (Beacon 2006) (previous death penalty posts here). Rick Garnett passes along this NY Times op-ed from several weeks ago in which Professor Dow makes the interesting point that “innocence is a distraction” in the political and legal debate over capital punishment:

For too many years now, though, death penalty opponents have seized on the nightmare of executing an innocent man as a tactic to erode support for capital punishment in America.
Innocence is a distraction. . . [M]ost people on death row did what the state said they did. But that does not mean they should be executed.
Focusing on innocence forces abolitionists into silence when a cause cÈlËbre turns out to be guilty. When the DNA testing [proved that such a defendant] was a murderer, and a good liar besides, abolitionists wrung their hands about how to respond. They seemed sorry that he had been guilty after all.
I, too, am a death penalty opponent, but I was happy to learn that [the defendant] was a murderer. I was happy that the prosecutors would not have to live with the guilt of knowing that they sent an innocent man to death row. . . .
As Justice Scalia has said elsewhere, of course we are going to execute innocent people if we have the death penalty. The criminal justice system is made up of human beings, and fallible beings make mistakes.
But perhaps that is a price society is willing to pay. If the death penalty is worth having, it might still be worth having, despite the occasional loss of innocent life. . .
[We] ought to focus on the far more pervasive problem: that the machinery of death in America is lawless, and in carrying out death sentences, we violate our legal principles nearly all of the time.

Professor Dow nails the key issue in the death penalty debate. Proponents of the death penalty reason that it is not wrong for the state to kill a person as punishment for murder where that person was lawfully convicted in a fair and accurate criminal justice process. However, reasonable proponents of the death penalty must confront the reality that errors will occur in carrying out the death penalty in even a morally-justified criminal justice system. By making the above-stated moral justification the central issue in the debate, proponents of the death penalty are overlooking the glaring defects in the process that undermine the moral justification.

Dome redevelopment plan lurches forward

Reliant Astrodome Hotel.jpgHas it really been almost two years since we began talking about what to do with the Astrodome? (previous posts here, here, here and here).
After floating a Gaylord Texan-type concept for the past year or so, Astrodome Redevelopment Corp. and Harris County are ready to enter into a letter of intent regarding ARC’s $450 million plan to reinvent the Astrodome as a luxury convention hotel with a parking garage and new exit from Loop 610 South to keep the facility from interfering with Houston Texans games and the Houston Livestock Show and Rodeo. ARC is a consortium comprised of Oceaneering International Inc., a publicly traded firm working in engineering, science and technology; URS, an architectural and design firm; NBGS International, a theme park developer; and Falcon’s Treehouse, a Florida-based design firm.
Although touted “as a major milestone,” the letter of intent is not such a big deal. ARC needs it to be able to negotiate deals with the array of entities (Texans, Rodeo, Harris County, financiers, investors, etc.) that it will have to cut deals with in order to make a deal of this magnitude come together. The letter of intent requires ARC to have its financing arranged in six months and to have its final deal cut with the county in a year.
Although I’m surprised that this proposal has gotten this far, I give the chances of the Astrodome hotel actually coming together without public financing as roughly the same as the Texans making the Super Bowl this upcoming season.

Houston’s most influential churches

megachurch.jpgThe Church Report has released its annual list of America’s 50 Most Influential (Protestant) Churches and, as with last year’s list, several Houston megachurches made the list.
Lakewood Church and the ubiquitous Joel Osteen come in again as the highest-rated local church at fifth, while Kerry Shook’s Fellowship of The Woodlands dropped from no. 17 last year to 41 this year, and KirbyJohn Caldwell’s Windsor Village United Methodist dropped from no. 43 to 49. Surprisingly, Ed Young’s Second Baptist Church — one of Houston’s original megachurches and arguably its most influential — dropped out of the top 50 list altogether after being listed at no. 33 last year.
The list is interesting in that it includes churches from both ends of the current political debate that is raging among Protestants regarding the core nature of megachurches. Osteen, Shook and a number of others on the list preach what traditionalists criticize as a feel-good gospel that views God as sort of a cosmic bellhop who exists to meet desires of humans and to make them feel comfortable with material wealth. Dallas’ T.D. Jakes (Potter’s House – 8) even denies the orthodox doctrine of the Holy Trinity, although the rest of his message has a harder edge than that of either Osteen or Shook. On the other hand, the list also includes a number of church leaders — including notably John MacArthur (Grace Community – 31), John Piper (Bethlehem Baptist – 42) and Dallas’ Tony Evans (Oak Cliff – 44) — who advocate the more traditional Christian theology that emphasizes Christ’s divinity, justification by faith, sacrifice and stewardship.
Meanwhile, the Catholics just shake their heads and go off to Mass. ;^)

Is KPMG’s tough stance helping its former partners in the tax shelter case?

kpmg logo50.jpgIn connection with negotiations over its non-prosecution agreement with the Justice Department in the KPMG tax shelter case, KPMG decided to give in to a DOJ “suggestion” and revoke in the tax shelter case its longstanding policy of paying defense costs of the firm’s partners who were accused of wrongdoing in the course of firm’s business. U.S. District Judge Lewis Kaplan issued a blistering decision condemning the DOJ’s tactic, but stopped short of dismissing the case. Rather, he directed the former KPMG partners to sue KPMG to reimburse them for the defense costs.
As noted in this earlier post, I’m skeptical that attempting to force KPMG to pay the defense costs through another legal action is a sufficient remedy for the prosecutorial misconduct and, according to this Lynne Browning/NY Times article, it’s looking as if my skepticism is warranted — KPMG is contesting any obligation to pay its former partners’ defense costs in the tax shelter case.
Frankly, despite Judge Kaplan’s belief that KPMG should pay the defense costs, KPMG’s position is a smart one. If the firm voluntarily paid the costs, then it faces the risk that the DOJ would view that action as a lack of cooperation, which could damage KPMG’s prospects of avoiding a criminal prosecution in a future case. On the other hand, if the firm continues to stiff its former partners, then it does not run the risk of being perceived as being uncooperative by the DOJ and besides — even if it loses the former partners’ civil action for reimbursement of the defense costs — the firm will only have to pay about the same amount that it would if it paid the defense costs voluntarily.
However, the more interesting question is whether KPMG’s continued refusal to pay the defense costs will ultimately persuade Judge Kaplan that dismissal of the criminal case is the only effective remedy to the Justice Department’s improper interference with the financing of the defendants’ legal defense. Judge Kaplan is already perturbed with the prosecution’s foot-dragging on other issues in the case, and the financial plight faced by the defendants as a result of KPMG’s refusal to pay their defense costs may be enough to push Judge Kaplan toward dismissal of the charges against the former KPMG partners. If so, then KPMG’s tough stance on refusing to pay its former partners’ defense costs could turn out to be better for its former partners than if the firm had simply paid the defense costs after issuance of Judge Kaplan’s earlier decision.