Monthly Archives: February 2007

Judge Robinson hands Westar’s Wittig another excessive sentence

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westar020607.jpgOn the heels of the 10th Circuit’s scathing decision last month setting aside the convictions of former Westar Energy executives David Wittig and Douglas Lake, this Greg Burns/Chicago Tribune article reports that the legal tug-of-war between U.S. District Judge Julie Robinson and the appellate court over her handling of the criminal cases against Wittig continues.
As Burns reports, Judge Robinson re-sentenced Wittig earlier in the week to 24 months in prison on a bank fraud conviction that was not related to the larger prosecution of Wittig and Lake in regard to Westar. Judge Robinson handed down that sentence despite the fact that the 10th Circuit had already struck down two of her previous sentences on that charge, the most recent of which suggested that the sentence on the charge should be a maximum of six months. Wittig has already served over a year in prison.
Beyond his reporting on Wittig and the Westar-related criminal cases, Burns’ article is well worth reading simply for the depth of his analysis of how the prosecutions reflect the questionable nature of the regulation-of-business-through-criminalization policy that the federal government and state actors such as Eliot Spitzer adopted after the bursting of the stock market bubble at the beginning of this decade. As Burns notes, the Westar prosecutions have played more on widespread resentment of wealthy businesspersons than on clear lines of criminal liability. Such analysis is a refreshing change of perspective from what much of the mainstream media serves up about prosecutions of business interests.

Regulating private equity buyouts

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moneyrolls.jpgMatthew Bishop over at The Economist.com makes the salient point that the concern over private equity buyouts is getting a bit hysterical:

THE backlash against the private-equity boom is becoming a tad hysterical. Take yesterday’s Financial Times (of February 5th), in which John Gapper issues a ìwake up callî about what he says may be the next big financial scandal, ìmanagement buy-outs of public companies by executives backed by private-equity firms.î
What is the problem, exactly? According to Mr Gapper: ìTo state the obvious, any chief executive who plans to buy the company that he or she leads faces a huge conflict of interest with its shareholders. The job of an executive is to make a company as valuable as possible so that its shares fetch the highest possible price. But any director who bids for a company is eager to pay as little as possible so that he or she can reap the maximum reward in the future.î
Still, Mr Gapper concedes that not every management buyout is ìinherently flawedî. That makes him a moderate compared with another financial writer, Ben Stein, who wants them to be made illegal.
As Mr Stein claimed not long ago in the New York Times, ìmanagement buyouts are great for management. But by every standard I can see, they are yet another sad sign of how our corporate trustees have lost their moral compass. The time for them to stop is long overdue. If the stockholders have hired you and pay your wage to manage their assets, your job is to do that for themónot to buy them out at fire-sale prices and turn around and make billions that rightfully belong to them. The management buyout is a sad and infuriating avatar of a decadent age.î

Whoa, Nellie, says Bishop:

Mr Gapper and Mr Stein talk as though the mere existence of a potential conflict of interest will lead directly to wrongdoing. But one of the great strengths of capitalism is its ability to develop efficient mechanisms to manage conflicts of interest. When a boss considers selling his firm to private equity, the check on him is particularly simple: the shareholders of his firm must approve any sale. In a few recent cases, such as a bid for CableVision, shareholders have considered the offer inadequate and blocked the sale. That is evidence, not of a brewing scandal, but of market forces at work.

Indeed. My anecdotal experience is that a good sign to hold on to one’s pocketbook firmly is when someone tells you that it is better to have fewer bidders competing to purchase something. Indeed, my sense is that a management-led, private equity-financed play for a public company is usually just as likely to spur competing offers for the company as it is an attempt to lowball the public company’s shareholders. When the folks who know the most about a company’s business show that kind of confidence in the value of the company, that sends a strong signal to the market that more value can be made. Such confidence tends to be contagious.

Institutionalized fanaticism

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signing%20day.jpgIf your friends or co-workers who follow college football closely are acting a bit stressed out today, then it’s quite likely that the source of their anxiety is a 17 or 18 year old who they have never met.
Yes, today is that day of the absurd dubbed “National Signing Day” when we are deluged with the rather odd spectacle of grown men fawning over high school football players to induce them to come take advantage of their university’s resort facilities rather than their competition’s resort facilities. And, oh yeah, if they can earn a few “tips” from well-heeled alums while enjoying those resort facilities, then that’s alright, too.
Indeed, this NY Times article already suggests that the University of Illinois’ inexplicably strong recruiting class this year may be the result of cheating. With the proliferation of the blogosphere over the past couple of years, a host of blogs follow the recruiting wars closely and often with keen wit. The following are a few of the interesting posts on this year’s recruiting season that I’ve stumbled across:

The Wizard of Odds explains why all of this competition over the quality of recruiting classes is largely meaningless;
The Sunday Morning QB examines the strange system in which all of this has evolved;
The House that Rock Built explores the ripple effect of recruiting decisions;
Every Day Should Be a Saturday reveals how recruiting foretold Rex Grossman’s mediocre Super Bowl performance (just kidding);
A widget that displays a map reflecting where a school’s recruits are coming from; and
The College Football Resource page has more information than you should ever want to know about this year’s top recruits and where they are going.

Meanwhile, as university presidents continue to dither over this fundamentally flawed system of regulating rents, this post from a couple of years ago suggests that a better system is readily available so long as the colleges forsake being the NFL’s free minor league system, a position with which Malcolm Gladwell agrees. As noted earlier here, big-time college football as presently structured is hopelessly corrupt, but it’s a pretty darn entertaining form of corruption. Adopting a structure much closer to college baseball would likely minimize the corruptive elements of college football while not affecting the entertainment value of the sport much. But it’s going to take leadership and courage from the top of the universities to promote and implement such a reform.
What are the chances of such leadership emerging? Probably about the same as Rice knocking off Texas next season in Austin.

Reflecting on the aftermath of Barbaro

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Barbaro.jpgNow that the hyperbole from the unfortunate death of Barbaro is dying down, some much-needed perspective is beginning to appear in the articles about horse racing.
In this NY Times piece, Gina Rarick compares the European style of horse training and racing, and posits that the injuries that Barbaro suffered are the inevitable result of the more extreme training regimen that thoroughbreds endure in an American racing system focused primarily on speed.
Meanwhile, this Bill Finley/NY Times article introduces us to Barbaro’s kid brother, a yet-unnamed yearling still frolicking in the fields of Kentucky. Will the young colt develop as well as his big brother? As they say in the horse-racing business, “you never know, but that’s part of the charm.”

But do they have WiFi?

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coffee_ov1_small.jpgIt was a tough day for yuppies yesterday as this Consumer Reports analysis concluded that good ol’ fashioned McDonald’s coffee was superior to Starbuck’s in taste testing. But both McDonald’s and Starbucks are going to have a hard time competing with the new coffee franchise described in this LA Times article:

On a quick break from his job as a trash hauler, Rob Chapman was in the mood for some coffee. So he pulled his truck into the Sweet Spot Cafe, a drive-through espresso stand on busy Aurora Avenue here in the Seattle suburbs.
“Do you want a Wet Dream or the Sexual Mix today, honey?” asked barista Edie Smith, dressed in a tight-fitting yellow blouse that did a less than fully effective job of covering her cleavage. She leaned down in the window, perhaps all the closer to hear his order. He chose the first option: a coffee with white chocolate, milk and caramel sauce.
It is possible, of course, that Chapman and the dozens of other drive-by customers at the parking lot stand one recent morning stopped by only for the coffee.
But, as Chapman dryly observed, “I do enjoy coming here more than Starbucks.”
In a way, it is perhaps stunning that it took so long for entrepreneurs here to figure out that coffee, the fabled Seattle obsession, mixes very well with sex, the fabled human obsession.
But apparently it does, to judge from the growing number of steamy espresso stands that have popped up around the region in the last year or so.
At the Sweet Spot here in Shoreline, the Natte Latte in Port Orchard and the Bikini Espresso in Renton, not to mention the multi-stand Cowgirls Espresso, the term “hot coffee” has clearly taken on a whole new meaning.

It’s safe to say that it’s only a matter of time before this type of coffee shop catches on in Houston.

One of the Chron’s good guys retires

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doggett.gifI don’t fish much and hunt even less, but I have enjoyed enjoyed the writing of Houston Chronicle Outdoors columnist Joe Doggett for the past 35 years. Over that time, Doggett has cogently addressed a wide variety of subjects and issues that impact hunting and fishing in a manner that made them equally interesting to the avid and casual outdoorsman alike. This past Sunday, Doggett wrote his final column for the Chronicle before heading toward a retirement for which his occupation prepared him particularly well. He will be missed.
By the way, Doggett’s last column gave me an excuse to pass along the specially-made YouTube commercial below with a hilarious hunting theme. Enjoy.

Update on the case of Dr. Pou

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Anna%20M%20Pou020507.jpgSpeaking of prosecutorial excess, the case of Dr. Anna Pou — the former University of Texas Health Science Center professor and physician who was arrested last year in Louisiana on wrongful death charges for her actions in attempting to save lives during the chaotic aftermath of Hurricane Katrina — was back in the news last week. The New Orleans coronor announced that he had not found evidence that would show that the cases were homicides, although he noted that he was continuing to gather evidence and had reached no final conclusion.
Dr. Pou’s case was transferred to Orleans Parish after Louisiana Attorney General Charles Foti had labeled her and two nurses who were assisting her during the chaos as murderers. Just to make sure he got the most publicity possible for his lack of prosecutorial discretion, Foti repeated those charges on 60 Minutes several months ago. Ultimately, the decision on whether to prosecute will come down to Eddie Jordan, the District Attorney of New Orleans, who is still planning on presenting evidence to a grand jury. With the the coronerís current classification, what on earth is there to present to a grand jury?

“Mike Nifong would approve?”

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fifth%20circuit.jpgIn criminal law appellate circles, the Fifth Circuit Court of Appeals is known as a black hole into which appeals of convictions go and reversals rarely occur.
However, about a year ago, the Fifth Circuit vacated a criminal conviction of one Humberto Cuellar, who had been convicted of international money laundering after he was found with $83,000 hidden in his VW Beetle as he headed to Mexico via Del Rio, Texas. The prosecution needed to show that Cuellarís transportation of the money was designed to conceal its source and that Cuellar knew of the concealment. Inasmuch as the prosecution focused solely on the fact that the money was hidden in Cuellarís car to establish these elements, a Fifth Circuit panel concluded that the evidence was insufficient to support conviction and that money laundering requires some showing that the defendant tried to pass off the money as legitimate. In short, simply attempting to smuggle the money to Mexico does not equate with money laundering.
But not so fast. The Fifth Circuit decided to rehear the appeal en banc and, in this decision, reverses the panel decision and affirms the original conviction by a 13-3 vote. In a stinging dissent, Judge Jerry Smith of Houston notes that the majority’s decision facilitates prosecutorial misconduct by allowing the government to charge Cuellar with the crime of money laundering — which carries a sentence of up to 20 years — rather than his true crime of currency smuggling, which has a sentence of only up to five years. In arguing that the prosecution didn’t come close to making a money laundering case, Judge Smith observes that “this is a case of a prosecution run amok” and that Mike Nifong — the disgraced former prosecutor in the Duke lacrosse team case — “most surely would approve.” Ouch!
Hat tip to Robert Loblaw.

Remembering Chocolate Thunder

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Darryl%20Dawkins.jpgGiven the Rockets mediocrity over the last decade or so, it’s hard to get too enthusiastic about professional basketball in Houston. This season’s Rockets team is not bad, but it hasn’t had all of its working parts playing at the same time yet and, even with all those components working, probably isn’t as good as the NBA Western Conference powers Dallas, Phoenix and San Antonio. By the way, the best way to keep up with the Rockets is through Jonathan Feigen’s blog, which is excellent.
About 30 years ago, the Rockets also had a pretty good team, but they were beaten in the Eastern Conference playoffs by the Philadelphia 76ers, who were led by Julius Erving and. one of the true characters of NBA history, 20 year-old center Darryl Dawkins, he of the “Chocolate Thunder-flying, Robinzine-crying, teeth-shaking, glass-breaking, rump-roasting, bun-toasting, wham-bam I am jam.” The NY Times checks in with the always entertaining Chocolate Thunder, who, among other things, used to claim to be an alien from planet Lovetron where he spent off-season practicing “interplanetary funkmanship” with his girlfriend Juicy Lucy.

The brains behind the Bears’ previous Super Bowl team

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Buddy%20Ryan.jpegWith the Chicago Bears playing in Super Bowl XLI, it was only a matter of time before the NY Times caught up with Buddy Ryan, the architect of the suffocating Bears defense that dominated the game the last time the Bears played in the Super Bowl (1985).
Ryan holds a special place in the hearts of Houston football fans. During the 1993 season, while passing through Houston as the defensive coordinator for a pretty good Oilers team, Ryan hauled off and slugged fellow Oilers assistant coach, Kevin Gilbride, on the sidelines during a nationally televised game. The reason for the outburst was Ryan’s frustration over Gilbride’s dubious coordination of the Oilers’ mercurial Run ‘n Shoot offense in that particular game. Local sports wags still shake their heads over that incident.
Although volatile, Ryan was a superb defensive football coach and certainly one of the best in NFL history. He was most well-known for that fine defense on the 1985 Bears Super Bowl championship team, but he may have done an even better job in coordinating the defense on the 1969 New York Jets team that upset the mighty Baltimore Colts in Super Bowl III. Most people remember Joe Namath’s famous prediction from that game, but the the Jetsí offense only scored 16 points. On the other hand, Ryan’s Jets defense held the high-powered Baltimore offense to 7 points after Vince Lombardi’s Packers had put up 35 and 33 points in the first two Super Bowls. Most folks before Super Bowl III thought that the AFL teams were chronically overmatched in playing against the established NFL powers, but the Jets and the Kansas City Chiefs in Super Bowl IV changed that perception forever.
Ryan’s genius was the unmitigated aggressiveness with which his defenses played. Focusing on sacking the QB (“We’re trying to find out the identity of the opposition’s second team QB,” Ryan would quip with a wink), forcing turnovers and and stopping the offense on third-down, Ryan ushered in the era of bringing zone blitzes from everywhere on the field to disrupt the offense. Interestingly, the underdog Bears’ chances of winning today are largely dependent on whether the Bears’ defense can effectively pressure Colts QB Peyton Manning. Ron Rivera, who played for Ryan on the 1985 Bears championship team, is the Bears’ defensive coordinator trying to figure out how to do that.
As with many top notch coordinators in football, Ryan was not a particularly effective head coach. He was fired from NFL head coaching jobs at Philly and Arizona before retiring to his Kentucky horse farm in 1995 after 34 years of coaching in the NFL. He continues to raise horses there while caring for his Alzheimerís-ridden wife of 36 years and following the careers of his two sons, both of whom followed him into coaching.