November 18, 2005

S.O.B. Alliance Member NixGuy: “Jean Schmidt Making the Right People Angry”

Filed under: OH-02 US House,Taxes & Government — Tom @ 9:38 pm

I’ll say.

Video Here at Political Teen–It’s one for the hard drive.

Story here.

Section from story to save for posterity:

House Republicans maneuvered for swift rejection Friday of any notion of immediately pulling U.S. troops out of Iraq, sparking a nasty, sometimes personal debate over the war following a Democratic lawmaker’s own call for withdrawal.

….. At one point in the emotional debate, Rep. Jean Schmidt, R-Ohio, told of a phone call she received from a Marine colonel.

“He asked me to send Congress a message – stay the course. He also asked me to send Congressman Murtha a message – that cowards cut and run, Marines never do,” Schmidt said.

You go girl.
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UPDATE: Made 4 the Internet“I did not support Jean Schmidt for the 2nd Congressional District house seat and I now publicly admit that I was wrong. She is providing STRONG conservative leadership for the wonderful people of southern Ohio. I made a mistake Rep. Schmidt and I apologize.” He also has part of a strong speech by Congresswoman Ileana Ros-Lehtinen of Florida.

UPDATE 2: Lifelike Pundits–Jean Schmidt: Ball Buster?

UPDATE 3: How to tell when a Republican makes an effective or memorable statement–The AP scrubs it from its later reports. Too bad, AP, we have the vid.

UPDATE 4: The vote was 403-3 against immediate withdrawal:

The House on Friday overwhelmingly rejected calls for an immediate troop withdrawal from Iraq, a vote engineered by the Republicans that was intended to fail. Democrats derided the vote as a political stunt.

“Our troops have become the enemy. We need to change direction in Iraq,” said Rep. John Murtha of Pennsylvania, a Democratic hawk whose call a day earlier for pulling out troops sparked a nasty, personal debate over the war.

The House voted 403-3 to reject a nonbinding resolution calling for an immediate troop withdrawal.

“We want to make sure that we support our troops that are fighting in Iraq and Afghanistan. We will not retreat,” Speaker Dennis Hastert, R- Ill., said as the GOP leadership pushed the issue to a vote over the protest of Democrats.

It was the second time in less than a week that President Bush’s Iraq policy stirred heated debate in Congress. On Tuesday, the Senate defeated a Democratic push for Bush to lay out a timetable for withdrawal.

Murtha, a 73-year-old Marine veteran decorated for combat service in Vietnam, issued his call for a troop withdrawal at a news conference on Thursday. In little more than 24 hours, Hastert and Republicans decided to put the question to the House.

Democrats said it was a political stunt and quickly decided to vote against it in an attempt to drain it of significance.

Nice try, Dems–no sale. You’re on the record now as being against immediate troop withdrawal. Y’all know, phony-baloney polls notwithstanding, that the country is behind finishing the job professionally and leaving a representative government that can defend itself behind. You knew that a vote for the resolution would be a call-out to any and all primary and general election challengers who know where the country really stands on this. A lot more than three of you really believe that we should immediately withdraw, but you wouldn’t vote that way. Those of you who wouldn’t vote your beliefs are exactly what Jean Schmidt referred to. You cut and ran ….. over a vote.

Oh, and another thing: Have fun telling your MoveOn base during the next year that you really didn’t mean it. (“I was against immediate withdrawal before I was for it.”)

UPDATE 5: Another excellent sign–Andrew Sullivan is in full freak-out mode (he calls her “Jean Smith”).

UPDATE 6: Kevin at Wizbang“House Republicans should introduce a version of the Murtha plan every week until the 2006 elections.”

UPDATE 7: More–PoliPundit (“Will you marry me, Jean?”; sorry, Poli, she’s taken), Powerline, EU Rota, Ace, Junkyard Blog (“Who are the Democrats booing?”), Hewitt, The Captain (“So much for no-confidence votes”), Atlas Shrugs, My VRWC (IDs the 3–McKinney, Wexler, Serrano), OpiniPundit (“Democrats: No Conviction, No Courage”), PowerPundit, Sister Toldjah (“The media is outright lying [about Schmidt's comments]“).

UPDATE 8: The roll call–includes 6 who voted Present. Of those six, special cop-out awards go to Nadler (represents the district where the World Trade Center towers were), McDermott (Baghdad Jim, whose pre-war publicity-stunt trip to Iraq was designed to try to stop it; now he won’t vote to get out), and Hinchey (this was his chance to stand up to the Rove Conspiracy, and he wimped out).

UPDATE 9: NY Times indulges in fantasy–The Democrats are humiliated, and their story is “Session Exposes Political Risks Ahead for G.O.P.” Uh-huh.

UPDATE 10: Rhymes with Right gets it right: “Democrats Silence Marine’s Voice” (i.e., the Marine who spoke with Jean Schmidt). Bingo.

Sony’s (Deserved) Living Hell: Day 9 Update

It was only last Thursday when security firms showed the world that “hackers were distributing malicious programs over the Internet that exploited … (Sony’s) antipiracy technology’s ability to avoid detection.” In other words, their antipiracy technology was, unbeknownst to users, leaving their computers vulnerable.

Last Friday, Sony moved to suspend making CDs with the antipiracy technology.

Problem over? Hardly, it’s only the beginning:

It can’t get worse, right? Oh, yes it can, and it has (bolds are mine):

Software Writers Spot Open Source in Sony BMG CDs
November 18, 2005

BARCELONA (Reuters)—Controversial copy-protection software used by music publisher Sony BMG on music CDs appears to have tapped an open source project, raising questions about copyrights, software experts said on Friday.

….. This music player contains components from an open source project, an MP3 player called LAME, it emerged.

“Multiple software components on the CD have references to the LAME open source MP3 code,” Finnish software developer Matti Nikki said in an e-mail.

After unraveling the code, others found similar evidence.

“We can confirm that at least 5 functions in the XCP software are identical to functions in LAME,” said Thomas Dullien at security software firm Saber Security in Bochum, Germany, which specializes in the analysis of complex software.

Open source software, if used, needs to be identified as such, so that it can be freely shared with others. Developers on Slashdot.org and other Internet bulletin boards could not find an open source reference in the copy-protection software.

If open source software is tightly integrated into a single executable program, the whole application has to become open source software, even open source software such as LAME whose MP3 encoder is licensed under the more relaxed Lesser General Public License (LGPL), a lawyer said.

“That’s the flipside of open source: If you don’t respect the open source rules, the old regime of copy protection comes back in full force,” said attorney and Internet specialist Christiaan Alberdingk Thijm at law firm SOLV in the Netherlands.

There was LAME and other LGPL code in the program, and significant amounts were tightly integrated into the executable program, Saber Security said.

“We can confirm the existence of significant amounts of code from FAAC (which is LGPL) in the executable … These functions are part of ECDPlayerControl.ocx, thus directly integrated into the executable,” Dullien said in an e-mail.

First4Internet, which sold the XCP software program used by Sony BMG on its CDs, declined to comment after repeated requests since Monday.

Sony BMG, which also declined to comment, has positioned itself as a defender of artists’ rights.

So the “defender of artists’ rights” has, through a vendor (for whose actions Sony is responsible), lifted open-source code and put it into a commercial product.

At the rate things are deteriorating for Sony, I halfway expect to learn that the late Akio Morita’s famous early-1990s book, “The Japan That Can Say No,” was plagiarized from Japan’s World War II leader Tojo.
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UPDATE: Geez, there’s more–add violating personal privacy to the offense list:

….. computer expert and co-author (Mark Russinovich) of the Sysinternals blog discovered the rootkit and figured out where it had come from.

Then he discovered what it did. Besides installing a player for the CD and copy-protection software, Sony also hid other code that contacted the company every time a user played a song.

Yes, you read that right.

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Nov. 18: Outside the Beltway Jammer.

A Fitting Wrap-up to “Sarbanes Oxley Should Apply” Week

Filed under: Economy,Taxes & Government — Tom @ 3:09 pm

On Wednesday, I suggested that the Internal Revenue Service (IRS), based on a report detailing serious internal control problems issued by the Government Accountability Office (GAO), should be forced to comply with Sarbanes Oxley. “SarBox,” for those who don’t follow business news very much, is the collection of onerous rules relating to accounting, internal controls, and management conduct that were imposed on publicly-traded companies in the US in the wake of Enron’s bankruptcy several years ago.

On Thursday, I wondered whether the two Government-Sponsored Enterprise (GSE) home loan monsters, Freddie Mac and Fannie Mae, are in compliance with SarBox, as they are legally required to be, because their shares are traded publicly. Based on the comment of S.O.B. Alliance member Porkopolis at that post, the answer is an obvious “no.”

But the week’s prize for Best Candidate for SarBox Required Compliance goes to ….

…. (drum roll please) ….

The European Union (HT American Thinker through Lucianne), which for the eleventh year in a row could not get a statement of financial assurance from its auditors (ya gotta love the headline):

11 years’ chaos for EU accounts
November 17, 2005

EUROPE’S official financial watchdog has refused to approve the EU’s accounts for the 11th year in a row because they are so full of fraud and errors.

The European Court of Auditors refused to give a statement of assurance on the EU’s E100billion ($160.3 billion) budget for 2004. “The vast majority of the payment budget was again materially affected by errors of legality and regularity,” it said.

The audit found major shortcomings in the EU’s two biggest areas of spending – farm subsidies and regional development.

And it refused to approve the budgets for the EU’s foreign policy, aid program and internal policies, particularly its research program. However, financial assistance to countries applying to join the EU was certified, as was the administration budget.

The report is highly embarrassing for the European Commission, which said it was “sad” about the findings but insisted it had made progress on improving its account-keeping.

….. Greece was singled out for criticism, with olive farmers claiming for trees that did not exist, farmers seeking support for goats they did not own, and inspectors faking inspections.

Half the project budgets approved by the commission were inadequately monitored.

“The situation, which represents no major improvement, was largely due to over-declaration of costs, declarations of ineligible costs or the absence of supporting documentation, such as proofs of delivery of services paid for,” the Court of Auditors found.

EU Rota anticipated this, though it wasn’t a tough call.

Some will probably suggest the United Nations would be a better candidate than all of the above. Folks, there are limits to what even SarBox can do. Based on what has happened in the wake of attempted audits of the Oil For Food program thus far, I’d say don’t bother (note the report’s findings of 702 deficiencies on Page 4)–It’s a hopeless case.

Foundation Director: Big-$ Donors to Colleges Need to Restrict and Monitor How the Funds are Used

Filed under: Business Moves — Tom @ 1:45 pm

James Piereson, Executive Director of the John M. Olin Foundation, has important thoughts for those who donate large amounts to our universities:

We can no longer assume that college graduates possess even a rudimentary knowledge of history, for instance, or that they understand basic concepts like federalism or the separation of powers or, indeed, that they know about the ideas and events that have shaped our institutions. All this great wealth, donated with the best of intentions, appears to have had the perverse effect of liberating academic institutions to do a less than admirable job of educating the young.

And what do the young learn when they do learn? Entrepreneurs may give generously, but college faculties are today awash in antibusiness and anti-free-market prejudices, with scholarly publications beating the drum against globalization and the supposed depredations of capitalism.

….. All this is roughly quantifiable. A recent national survey of college faculty showed that 72% of professors held liberal and left-of-center views, while just 15% held conservative ones. This imbalance, surveys show, has grown worse since the early 1980s. It is a strange paradox indeed that academic opinion should have moved so far to the left in a period of unprecedented wealth and prosperity for colleges and universities themselves–let alone in a period of capitalism’s triumph and communism’s defeat.

This is why donors can’t just give money and hope it gets used wisely:

Here is where the charitable giving comes in. These trends have taken hold in academia in part because too many donors have failed to exercise appropriate care when signing over their funds.

….. Donors are often unaware that they are entitled to set aside their money for purposes of their own choosing, not just established categories. As former Yale provost Frank Turner has said: “Donor restrictions can call institutions of higher education to fulfill their highest ideals.” A few diligent philanthropists, like publisher Philip Merrill and investor Sir John Templeton, craft careful agreements with universities before any checks are signed and then monitor their gifts regularly.

….. Obviously, this sort of due diligence does require time and effort on the part of the donor, But if even a few more philanthropists were watching where their funds ended up, college officials would surely monitor their programs more carefully.

I would also encourage big-money donors to consider contributing to next-generation higher-learning solutions that go around the universities with walls. In addition to operating under antiquated learning models, some of America’s established universities appear to be so philosophically hostile to open and honest academic inquiry that they may be incurable.

Government-Underwritten Terrorism Insurance (Unfortnuately) Looks Certain to Be Extended for 2 Years

Filed under: Economy,Taxes & Government — Tom @ 12:32 pm

From AP via OSM news–The Senate has passed it, and The White House supports it:

The Senate on Friday voted to renew a post-Sept. 11 act providing federal safeguards for the insurance industry in the event of a devastating terrorist attack.

The voice vote extended for two years the Terrorism Risk Insurance Act (TIA), while putting more of the financial burden on the insurance industry.

….. The bill extends the Terrorism Insurance Act that was to expire on Dec. 31 while increasing from $5 million to $50 million in 2006 and $100 million in 2007 the amount of property and casualty losses that would trigger federal payments.

It reduces coverage in the program by excluding commercial vehicles, theft, surety and other items and raises the deductibles for insurers before federal help begins.

After the deductible is reached, the federal government covers 90 percent of insured losses in 2006 and 85 percent in 2007.

The White House, in a statement, expressed support for the Senate bill, saying it sends the proper signal to the marketplace that the program is envisioned to be temporary and is consistent with administration goals of encouraging private markets and reducing taxpayer exposure.

Not noted in the AP/OSM piece, but picked up in this Washington Post story (link requires registration) is that the government’s maximum liability would be $100 billion; it is not clear if this is per year or (God forbid) per incident if there is more than one attack in a calendar year. The WaPo piece indicates that the House version of the bill has some differences from the Senate version, but I see little reason to doubt that a bill will be passed by Congress and signed by the president before the end of the year.

Even with the tweaks to the deductibles, co-pays, and scope of coverage, I believe the extension of TIA is a very big mistake. Read this post to see why it should have been allowed to expire, and why TIA’s existence has the potential to throw the country into chaos if a horrific terrorist attack with a six-figure loss of life occurs. Because of TIA, we’re all just going to have to pray even harder that it never does.

French Diplomat Admits Taking Oil-For-Food Money, and There’s More

Filed under: Corporate Outrage,Economy,Taxes & Government — Tom @ 11:24 am

And it’s one of the diplomats the French government tried to distance itself from about a month ago.

I don’t think so, guys. The UK Telegraph reports (HT Ace; bolds are mine):

I took Saddam’s cash, admits French envoy

One of France’s most distinguished diplomats has confessed to an investigating judge that he accepted oil allocations from Saddam Hussein, it emerged yesterday.

Jean-Bernard Mérimée is thought to be the first senior figure to admit his role in the oil-for-food scandal, a United Nations humanitarian aid scheme hijacked by Saddam to buy influence.

The Frenchman, who holds the title “ambassador for life”, told authorities that he regretted taking payments amounting to $156,000 (then worth about £108,000) in 2002.

The money was used to renovate a holiday home he owned in southern Morocco. At the time, Mr Mérimée was a special adviser to Kofi Annan, the UN secretary general.

According to yesterday’s Le Figaro, he told judge Philippe Courroye during an interview on Oct 12: “I should not have done what I did. I regret it.”

….. No decisions have been announced about possible criminal charges against Mr Mérimée. He told the judge that he did not declare the income to the tax authorities, according to Le Figaro.

….. Mr. Mérimée, who was French ambassador to Australia, Italy, India and the UN, told the judge that after he was retired by the French foreign ministry he began working for a Moroccan bank, BMCE. It was owed large sums by Saddam’s regime.

In 1999, he flew to Baghdad to discuss repayment and met Tariq Aziz, the deputy prime minister, who offered to use oil-for-food money.

But that idea was swiftly rejected by BCME’s president, who said any such deal would provoke American wrath.

Instead, the Frenchman said he decided to go into business “on his own behalf.”

He added: “Tariq Aziz recognised the interest I had taken in Iraq, and the advice I had given him.”

The ambassador said the French authorities had known of his every move.

I sense the “plausible deniability” defenses of Kofi Annan and higher-ups in France’s government crumbling.

Money Tip of the Day: Disconnect from the Net When You’re Not at Your Computer

Filed under: Consumer Outrage,Money Tip of the Day,Privacy/ID Theft — Tom @ 10:18 am

In the midst of one of his epic rants, John Dvorak dishes out an important suggestion:

….. the (security) problem ends up boiling itself down to an old assertion: 24/7 connectivity is a bad thing. We need an On-Demand Internet. On top of that, we need to be armed to the teeth with antispyware and antivirus software.

This situation is totally out of control with today’s architecture, and it’s about time we scrap the whole structure. And by this I mean Linux, Unix, Mac OS, and Windows. Scrap it all.

Another solution is to get offline. Why are we online 24/7? What’s the point? While you sleep, software is checking to see if it’s legally loaded. Adware is pinging the mother ship telling someone that you like L.L. Bean as a place to shop. Pop-ups are being fed to you. It’s like rats at night doing all their work.

Since what Dvorak wants in the second paragraph above will never happen, follow his suggestion: When you’re not on the Internet, disconnect the Ethernet cord if you’re hardwired, or turn off the wireless card if you’re using WiFi, even if you put your computer to sleep.

Bizzy’s AM Coffee Biz-Econ Links (111805)

Filed under: Consumer Outrage,Economy,Taxes & Government — Tom @ 8:01 am

Economy Getting Past Hurricane Hiccup I

It will take a couple more months of increases to prove that things are back on track, but the October production news was very encouraging:

Industrial production at U.S. factories, mines and utilities rose at the fastest pace in 17 months in October, posting a solid rebound from the Katrina devastation.

The Federal Reserve reported that industrial output was up a healthy 0.9 percent last month as refineries and oil and natural gas platforms began production again after widespread shutdowns caused by hurricanes Katrina and Rita.

Output was in line with analysts’ expectations.

“The rebound in manufacturing output was stronger than generally thought. A lot of it is concentrated in aircraft,” said Kevin Logan, senior economist, Dresdner Kleinwort Wasserstein in New York, noting the end of a strike at Boeing.

….. Last month’s increase followed a 1.5 percent plunge in September, which had been the biggest one-month drop in industrial production in more than two decades.

Economy Getting Past Hurricane Hiccup II

New unemployment claims came in well below expectations:

First-time claims for state unemployment insurance benefits dropped 25,000 to 303,000 the week ended Nov. 12, from an upwardly revised 328,000 the prior week, the Labor Department said.

Wall Street economists had forecast new claims to slip to 322,000 from the original reading of 326,000 the week ended Nov. 5.

There were about 10,000 new claims last week related to hurricanes Katrina and Rita, bringing the total since Sept. 3 linked to the devastating Gulf Coast storms to 545,000 claims, not adjusted for seasonal factors, a Labor Department analyst said.

Hurricane Wilma, which struck Florida late last month, led to about 9,000 unadjusted claims for a running total of 16,400 related claims since the storm hit.

The closely watched four-week moving average of claims, considered a better gauge of labor market activity because it flattens weekly volatility, fell for the sixth straight week.

The four-week average dropped to 321,500 the week ended Nov. 12 from 335,000 the prior week.

Spending on College Athletics Soaring

Something to ponder as we head into rivalry weekends throughout the rest of November–College sports spending is spiraling upward:

Division I-A schools spent about $3.8 billion on athletics in 2004-05, a number that could nearly double in the next 10 years if spending continues at its current pace.

Athletic expenses rose about 8% a year between 2002-03 and 2004-05, according to a USA TODAY analysis of reports schools filed last month with the Department of Education. The NCAA says it found about a similar rise in spending for the two years before that.

That means while the Class of 2005 was in college, athletic spending rose by about a third, according to a USA TODAY analysis of federal reports.

The rate of increase “is what everyone’s working on,” said Transylvania University accounting professor Dan Fulks, who is studying the issue for the NCAA’s biennial report due out in 2006. “I think it’s probably flattening out.”

The rate of athletic spending is roughly double the increase in overall college spending, which has been 3% to 4% during those years, according to the NCAA. Athletic spending at that pace “is not sustainable in the long run,” NCAA President Myles Brand said.

“We have a system under stress. Revenue streams have been increasing as well. But it’s unrealistic to believe (they will) increase at double the rate of the general university for the foreseeable future,” he said.

Yes, “revenue streams have been increasing,” but Mr. Brand, in a November 1 speech in Charleston, WV, acknowledged that most Division I programs lose money:

Brand said while many academic departments operate on million dollar budgets, only a handful break even or make money. Ohio State, according to Brand, has the largest budget for athletics in the NCAA at nearly $100 million. He said the average is “about $35 to $40 million, and most lose money.”

That’s just the beginning. Students who could care less about participating in sports or attending sporting events, especially commuters, end up subsidizing athletics through general fees and other charges. If those out-of-line charges were taken away, I would guess that nearly every Division I program would be in the red. The higher the subsidies go, the more future students who don’t care about the antiquated and overrated “college experience” will gravitate towards online education that doesn’t waste resources, not to mention brick and mortar, on non-academic diversions.

Positivity: Documentary with No Dialogue Is Success

Filed under: Positivity — Tom @ 6:11 am

I’m surprised too, but very pleased:

(more…)

On Yeah, He’s a Hawk (Murtha Getting a “Murthaless” Fisking)

Acting on an unlinked tip from a commenter at Gateway Pundit, I have found that Rep. John Murtha of Pennsylvania, who became a sudden Mainstream Media hero yesterday by calling the Iraq War “unwinnable,” was one of two Congressman to support reinstituting the draft during last fall’s presidential campaign-stunt season:

The House voted 402-2 to defeat the draft bill offered last year by Rep. Charles Rangel, D-N.Y.

Even he urged Democrats to vote against the bill, and charged Republicans were cynically trying to use the measure to escape election-season questions about the war in Iraq.

Just two lawmakers, Rep. John Murtha, D-Pa., and Rep. Pete Stark, D-Calif., struck off on their own and voted for the measure.

“We are in a war, and not only a small segment of the population should fight in that war,” said Murtha.

Murtha probably does not qualify as “Unhinged,” because to become unhinged you have to have been hinged at some time in the past, which appears highly unlikely.

Murtha is being fisked, well, Murthalessly:

  • Gateway Pundit’s post shows that Murtha has changed his positions and opinions on the war more than his underwear (but not by much).
  • Bryan Preston, in the midst of a dream job (guest-blogging at Michelle Malkin’s place): “So today’s speech wasn’t as much a change of heart as a change of venue.”
  • Instapundit asks, “He’s a hawk?”
  • Willisms squashed the “small segment of the population” meme like a bug over a week ago.
  • Mudville Gazette rips Murtha for his patently false claim that “Over 15,500 (soldiers) have been seriously injured” (7th para at congressman’s press release)–How does a former soldier think he’s going to slip garbage like that past our guys and gals in Iraq?

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UPDATE: John McCain: “Now is the last time we should send a message that withdrawing troops is more important than achieving success.”

Update: Investigation into Illegal Payments to Shareholder-Suit Plaintiffs

Filed under: Corporate Outrage,Economy,Taxes & Government — Tom @ 12:02 am

The “we knew it all along, we just couldn’t prove it” investigation of the manipulation of shareholder shakedown suits has been going on for years now.

These are the “it’s management’s fault” lawsuits that have followed, as night follows day, almost any significant drop in a major publicly-held company’s stock. The legal and investigative work is tedious, the characters involved are slippery and, of course, it’s difficult to know whether the perps will ever get justice served on them.

Up to now, about the only coverage of this investigation has been in The Wall Street Journal. But in a sign that the Mainstream Media may actually begin following this investigation consistently, The LA Times (link probably requires registration and will be archived with two or fewer weeks) reports the following (bolds are mine, and explain the nature of the investigation and allegations):

It was a seemingly routine shareholder lawsuit that attracted little attention when it was filed in 1995. Investors claimed that a Downey-based medical group had offered shares to the public without warning that its plans to buy another company were falling apart.

Settled years ago, the suit has become a focus in the federal government’s probe of lawyers who represented the plaintiffs — top class-action law firm Milberg Weiss Bershad & Schulman of New York.

People familiar with the Milberg investigation, speaking on condition of anonymity, say the government has granted immunity to several participants in the 1995 lawsuit to gain their cooperation. Prosecutors have declined to say why the 1995 case has drawn their interest, or even to confirm that it has.

The U.S. attorney’s office in Los Angeles has been investigating allegations that Milberg lawyers paid kickbacks to people who served as ready-made plaintiffs in securities class actions, and that participants also may have lied in court proceedings or tax filings to cover up the practice.

No one at Milberg has been charged. But prosecutors have informed top partners Melvyn I. Weiss and David Bershad and ex-partner William S. Lerach that they are targets, say people close to the investigation.

….. The Milberg investigation began late in 2001 when informant Steven G. Cooperman, a plaintiff in as many as 60 Milberg cases, struck a deal with the government to win a lighter sentence in an unrelated case. The former Beverly Hills eye surgeon faced as many as 10 years in federal prison for faking the theft of a Monet and a Picasso from his home and then swindling insurance companies out of $17.5 million. In return for his help in the Milberg probe, Cooperman wound up serving 21 months.

In addition to serving as a frequent plaintiff for Milberg lawyers, Cooperman also scouted out new lawsuits. This was the role he played in 1995 when he alerted Milberg to a possible lawsuit against AHI Healthcare Inc., a group of physician networks then based in Downey, say lawyers familiar with the case.

….. In his divorce trial last fall in Connecticut, Cooperman testified that he had received about $5 million from his arrangement with Milberg from 1988 through 1997, but he did not name the cases involved.

Milberg has said it frequently paid referral fees to lawyers who sent clients to the firm. Such referral fees are widely regarded as a legitimate way to ensure that clients find their way to lawyers with expertise in handling their particular claims.

But in the lone indictment that has been filed in the case, authorities charged that illegal payments were disguised as referral fees to a lawyer who funneled them to his client.

The indictment in June charged frequent Milberg client Seymour M. Lazar, 78, of Palm Springs with taking $2.4 million in “secret and illegal kickbacks” from an unnamed “New York law firm” — which Milberg acknowledged was a reference to itself.

This is important because it is illegal for named plaintiffs in class-action cases to have a special interest or concealed inducements beyond others in the class. It would seem possible that some verdicts in cases where such special interests existed could be thrown out because the plaintiff did not come to court with “clean hands.”

Successful prosecutions will also permanently tarnish the record of the law firms that have enriched themselves using front men like Mr. Lazar and Mr. Cooperman. These firms, and these people, rarely were, and still rarely are, the white knights protecting shareholder interests they pretend to be, a pretense that the business press has generally accepted for years without question.

No, these people are legal opportunists. To paraphrase and update what I wrote previously: If these front men are guilty, please reserve them prison cells near Mr. Rigas of Adelphia, Bernie Ebbers of Worldcom, and corrupt executives of that ilk, and for an equivalent amount of time. As to Milberg Weiss, if the government can put Arthur Andersen out of business for Enron, the least it can do is disbar and imprison the offending partners for brazenly illegal payments in these mostly frivolous “strike suits.” These suits’ cumulative dollar amounts not only dwarf those involved in Enron, but in most cases are situations where the companies sued did no wrong, and simply paid money to make the problem go away and to avoid years of costly attorney and executive time.

As they say, “Developing….”
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Previous posts:

  • June 27–Payoffs to Shareholder Suit Plaintiffs Alleged
  • Aug. 19–Update: The Multi-Billion Dollar Shareholder-Suit Payoffs Investigation Is Gaining Steam; Only the WSJ Cares