November 12, 2007

WaPo Gives Convicted ‘King of Torts’ 1,500 Words to Whine

Those wondering why circulation at the Washington Post has dropped over 15% in the past 2-1/2 years will get a large part of their answer at Sunday’s Page B01 column by William Lerach (“Loser CEOs, Raking It In”; HT Rory Miller).

That’s Bill Lerach. Yes, THAT Bill Lerach. The self-styled, one-time “King of Torts,” and former partner at the once-untouchable Milberg Weiss law firm. The now criminally convicted Bill Lerach.

For those who are unfamiliar with the story of Bill Lerach and Milberg Weiss, here’s a relatively quick synopsis, courtesy of a subscription-only editorial at the Wall Street Journal excerpted by yours truly in May 2006, when Milberg Weiss and two of its partners were indicted:

The 102-page indictment out of the Los Angeles U.S. Attorney’s office is a remarkable account of mass-tort corruption that has long been suspected by anyone paying attention. It accuses Milberg Weiss, as well as partners David Bershad and Steven Schulman, of paying off their class-action plaintiffs. The accused say they’ll fight the charges. But this exercise has already done a public service by turning over a rock to expose the dirty world of securities “strike” suits that Milberg Weiss helped pioneer.

At best these are acts of legal extortion, with law firms jumping on a company with a falling share price to allege fraud on behalf of shareholders — whether or not there has been any bad behavior. The law firms claim to represent so many investors that most companies settle rather than keep paying legal fees to fight in court. Shareholders typically receive only token payments, while the likes of Bill Lerach and Melvyn Weiss have become rich as Croesus. Even Congress has recognized this as a racket, passing a 1995 reform over Bill Clinton’s veto that has moderated some abuses but failed to stop the shakedowns.

This indictment breaks new ground, however, in alleging that many of these suits aren’t just unethical but have been illegally manufactured. In order to file a securities suit, tort firms require a “lead plaintiff” who was actually harmed and seeks to represent thousands of other unnamed shareholders. According to prosecutors, Milberg Weiss was paying millions of dollars in kickbacks to its lead plaintiffs.

For some of these “investors,” filing lawsuits seemed to be a full-time job. Howard Vogel, a New Jersey businessman who turned state’s evidence in April, served, or had his relatives serve, in 40 suits. Retired Palm Springs lawyer Seymour Lazar is accused of taking part, or having his family take part, in 70 suits. All told, the indictment claims Milberg Weiss raked in some $216.1 million from lawsuits in which they kicked back cash to plaintiffs.

The indictment also asserts that the accused didn’t just happen to be invested in these stocks. Rather, “the Paid Plaintiffs purchased the securities at issue anticipating that the securities would decline in value, in order to position themselves to be named plaintiffs in securities fraud actions and to obtain kickback payments. . . .”

To make it perfectly clear to those who are new to all of this: It is illegal for named plaintiffs in class-action cases to have a special interest or concealed inducements beyond others in the class — hence the need to conceal the kickbacks.

Note that the investigation into Milberg Weiss began during the Clinton Administration and continued into the Bush Administration. This is important to know, because Milberg Weiss and its defenders, including four Democratic congresspersons in 2006, have occasionally trotted out claims of persecution by the Bush Administration. Also note that Milberg Weiss and its partners have made very sizable political contributions going overwhelmingly to Democrats. They have continued to do so, even after the firm’s indictment.

The Wall Street Journal was virtually alone in covering developments in the government’s prosecution of these cases until shortly before the law firm was indicted.

The late-October wrap-up of the case is at the Journal’s Law Blog:

It’s official: After agreeing to plead guilty last month to a felony, Bill Lerach entered his plea in federal court this morning in Los Angeles. He pleaded to a conspiracy charge for agreeing to conceal from judges kickback payments made by his old firm, Milberg Weiss.

….. Lerach’s plea deal calls for him to serve a one to two year sentence, but we’ll have to wait to see if judge John Walter accepts that sentencing range. Lerach is due to be sentenced January 14, 2008.

In light of this history, the Post somehow believes that Lerach is entitled to 1,500 words in which to spout off about “the American principles of responsibility, accountability and justice.” Really.

It only took until the fourth paragraph for Mr. Lerach to ask for a pity party:

Now I’m being held accountable for overzealously pursuing these corporate scam artists.

Two weeks ago, I pleaded guilty to a conspiracy charge involving payments made to plaintiffs in lawsuits against major corporations. Under the terms of the plea, which requires court approval, I agreed to pay the government $8 million in fines and penalties and to serve at least one year in federal prison.

Just after he incoherently brings up a “Justice Department (that) is busy defending waterboarding and targeting Democratic activists,” Lerach wraps up his column with characteristic self-aggrandizement:

I’m on my way to prison because, in my zeal to stand up against this kind of corporate greed over the years, I stepped over the line. It turns out that the legal system is a lot tougher on shareholder lawyers than it appears to be on Wall Street executives.

In between, Lerach makes some valid points about management accountability to shareholders and employees. What he doesn’t say is that his firm’s strike suits accomplished almost nothing to substantively improve that situation. Government criminal prosecutions of people like Bernie Ebbers, Dennis Kozlowski, and top management at Enron did.

The strike suits did improve one bottom line — that of Bill Lerach and his partners. A chart in this 2004 Forbes article show that Milberg Weiss collected legal fees of about $850 million in just 16 of the cases it handled from 1998-2003. Many more followed. Note that the legal fees collected were typically 20% – 33% of the related settlement amounts. That same Forbes article puts the firm’s total settlement winnings at a mind-boggling $30 billion. Do the math; it’s quite likely that the firm has raked in $6 billion, and possibly much more, in legal fees.

As described above, Milberg Weiss, Lerach, and their imitators care very little about what actually causes sudden share price drops; they only want to identify them, to sue based on them, and, ideally, to extract an out-of-court shakedown settlement without the dirty work of proving anything at a trial. If the situation of CEO non-accountability for poor performance is reverting to the old form, as Lerach claims, the answers are criminal prosecutions in cases where true criminality has occurred, aggressive shareholder action to replace pliant boards of directors and non-criminal but greedy managers, and adamant shareholder/board refusal to sign on to golden parachutes and other too-generous executive compensation arrangements.

The decision by the Post to give Lerach an open microphone is a disgrace, and an outrage. Am I supposed to believe there was no one else without a criminal record available to make his arguments?

Meanwhile, Post managers are probably still trying to explain the paper’s circulation bleed.

Cross-posted at NewsBusters.org.

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UPDATE: Carter Wood at the Manufacturer’s Blog

Lerach organized a conspiracy to pay off plaintiffs in return for filing class-action lawsuits, a multiyear crime that brought his lawfirm, Milberg Weiss, and Lerach millions upon millions of dollars and degraded the civil justice system. And he’s making excuses?

UPDATE 2: Courtesy of Mr. Wood, a link to this “Media Backtalk” comment by the WaPo’s Howard Kurtz (not a fave around here) –

How does a guy who’s a newly confessed crook have the standing to start lecturing us about all the problems with CEOs? He may or may not be right, but it was odd to publish a piece by a plaintiff’s lawyer that allowed him to so briefly brush aside his criminal conviction.

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Previous Posts:

  • Jan. 5, 2007 — There Were Fewer US Securities Class Action Suits in 2006; One Reporter Apparently Isn’t Happy about That
  • Dec. 8, 2006 — The Milberg Weiss 1990s IPO Class Action Suit May Have Imploded
  • Sept. 15 — There’s a “Firm” Reason Why Shareholder Lawsuits Are Down
  • June 14 — What, Returning Money Only Goes Back One Campaign Cycle?
  • May 22 — Milberg Weiss: A Quick Overview, and the Fallout Begins
  • May 19 — Milberg Weiss: At Long Last, Two Partners, and the Firm Itself, Are Indicted
  • April 30 — Is the Jig Finally Up on Milberg Weiss?
  • Dec. 14, 2005 — Quebec’s Lawyers Are Mimicking Milberg Weiss’s US Class-Action Tactics
  • Nov. 18 — Update: Investigation into Illegal Payments to Shareholder-Suit Plaintiffs
  • Aug. 19 — Update: The Multi-Billion Dollar Shareholder-Suit Payoffs Investigation Is Gaining Steam; Only the WSJ Cares
  • June 27 — Payoffs to Shareholder Suit Plaintiffs Alleged

Gregg Jackson Recounts Mitt Romney’s History. Romney Supporters Owe Us a Complete Rebuttal.

Filed under: Economy,Health Care,Life-Based News,Taxes & Government — Tom @ 9:05 am

Mitt Romney, his campaign, chief apologists Hugh Hewitt and Dean Barnett (now at the Weekly Standard; his latest is here), and “name” endorsers like Paul Weyrich owe us definitive rebuttals of the claims made by Gregg Jackson (with assistance from Paul Dinger) in his Townhall column last Friday (“Romney Secrets the Media Are Hiding from You”).

I’ve looked around for a rebuttal, and haven’t found one.

(The column brought to my attention later this morning in the Update below isn’t even in the neighborhood of being a rebuttal.)

I believe that it’s because they don’t have a rebuttal.

I interpret their collective silence of roughly 72 hours — “an eternity in the blogosphere,” as Patterico and others have noted, and as Hugh Hewitt of all people surely knows — as acknowledgment that Jackson, who lives in Massachusetts and has directly experienced Mitt Romney’s handiwork, is right.

Until someone among the parties I’ve just named comes up with a point-by-point, substantive response that addresses each and every one of the items noted below, Jackson’s claims will stand around here, and will ring true with most fair-minded people who read his column.

The only attempt I see to recognize and rebut Mr. Jackson predates his latest column. It is this post by John Mark Reynolds “responding” to Jackson’s week-earlier article (“Is This the End of Evangelism in America?”) criticizing one Wayne Grudem. Mr. Grudem, apparently a prominent theologian described as “a Research Professor of Bible and Theology at the Phoenix Seminary in Phoenix, AZ,” not only declared his personal support of Mr. Romney, but argued in mid-October that “Evangelicals Should Support Mitt Romney.”

I’m not a theologian, and I’m not going to pretend to play one in the blogosphere. That said, I believe I can recognize when someone is twisting himself into pretzels constructing a defense, or a critique. On that point, let’s just say that if there was a competition to find the Nadia Comaneci and Olga Korbut, respectively, of punditry, I believe that Wayne Grudem and John Mark Reynolds would be the odds-on favorites to win. Reynolds adds mountains of ugly icing to his tasteless cake by exaggerating Jackson’s positions, engaging in immature name-calling, and seeing a whole host of things in Gregg’s November 2 column that simply aren’t there.

But let’s get back to more familiar ground, namely Romney’s pronouncements during successful and unsuccessful political campaigns, and his performance as governor of Massachusetts.

Here where gold-medal wordsmithing gymnast Grudem stands:

….. Romney’s positions on social, economic, and international issues are all soundly conservative. On major issues such as protection of the unborn, a Constitutional amendment to protect marriage, strong national defense and victory against radical Islamic terrorists, securing our border, a signed pledge of no tax increases, promoting school choice, and appointment of Supreme Court justices who will interpret law, not make new law, Romney holds solidly conservative positions. His positions are the ones the majority of evangelicals have supported in the past.

Some people object that Romney has “flip-flopped” on some of these positions. I think that accusation is exaggerated. He hasn’t flip-flopped back and forth, he has simply become more consistently conservative. I think that’s a good thing in a political and media climate that is more and more liberal.

Silver medalist Reynolds essentially called out Jackson a week ago:

Mr. Jackson attacks Mr. Romney’s time as governor without giving any evidence for it beyond slogans.

Of course, that wasn’t the purpose of Jackson’s November 2 evangelically-based column.

But given Reynolds’ challenge, all I can say now is: Be careful what you wish for, John Mark.

Jackson, who is a best-selling author, co-blogger and co-host at Pundit Review Radio (on which yours truly has appeared twice), and now has his own web site, backed up the evidence truck on Friday. What spilled forth is compelling and convincing.

I’ll first list the Jackson excerpts that respond directly to Grudem’s pro-Romney arguments (bolds are mine throughout the remainder of this post):

(protection of the unborn)
- “He was pro-choice when he was elected and pro-abortion when he left the governor’s office.”
- “Romney’s Massachusetts health care plan ….. covers abortion. What kind of Pro-lifer thinks abortion should be part of his health care plan? Romney signed this bill into law after he claims he had a discussion with an anonymous Harvard doctor wherein he discovered abortion was morally wrong.
- “Unlike Reagan who had a true turnaround on abortion, Romney has ping-ponged back and forth on this issue for years.”
- “….. running for governor in Massachusetts, Romney was definitely Pro-choice and promised he would not touch any abortion law. During a candidate’s debate, he was so firmly Pro-choice, he renounced an endorsement from Massachusetts’ Citizens for Life.

(traditional marriage)
- “When the Massachusetts’ Supreme Court imposed gay marriage on the citizens of the Commonwealth, Romney could have exercised a “bill of address” to impeach the activist judges. But he didn’t. He signed something he didn’t have to directing town clerks to issue marriage licenses to same sex couples or be fired.
- “Romney ….. directed his Department of Health to change the state marriage licenses to read ‘Party A’ and ‘Party B’ replacing ‘Husband’ and ‘Wife.’ Romney was under no legal obligation to do (this).”

(tax increases)
- “Big spenders Hillary and Ted K(ennedy) praised the health care law signed by Romney. ….. Romney Care increases government mandates, regulations, costs and bureaucracy with less choice for consumers. The Congressional Budget Office noted that this level of government intervention and regulation was ‘unprecedented.’”

(strict constructionist judges)
- “The Boston Globe reports that as governor, Romney ‘passed over GOP lawyers for three quarters of the 36 judicial court vacancies he faced, instead tapping registered Democrats or Independents including two gay lawyers who have supported expanded same-sex rights.’”

There are other troubling points Jackson raises, again with evidence:

(Right to keep and bear arms)
“He declared his love for Massachusetts’ fascistic gun laws and favors the Brady Law, which the NRA opposes.”

(Public safety and corruption)
- “Mitt presided over the opening of the most corrupt and most expensive public works project in U.S. history – The Big Dig tunnel-bridge system. This project killed nearly a dozen people in the 48 months since it opened. ….. Here was a public safety issue a conservative could have made a presidential-run-reputation on, exposing the Democrat corruption and fixing the problems. But he ignored it, preserving the public health menace for future victims. Instead, he took campaign contributions from international Big Dig contractors.”

(Moving conservatism forward)
- “When he was elected, Massachusetts had a Republican governor for nearly two decades. When he left, it didn’t.”

Perhaps Romney and his acolytes will acknowledge the obvious, and then try to explain why Their Man Mitt is still somehow the best candidate among the GOP’s top tier. I don’t see how.

Maybe they’ll lapse into the attack mode of John Mark Reynolds. If so, they will fool no one.

I do know this: They ignore Gregg Jackson, and the serious blemishes in Mitt Romney’s record, at their great and potentially grave peril.

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UPDATE: Sorry, Kevin McCullough, your Townhall piece doesn’t cut it. Only specific answers to the specific items above will.

And spare me the garbage about “journalistic integrity” unless you can tell me you did a detailed sit-down interview with Barack Obama before ripping him — or have even done one since.

And Kevin, it takes a lot of gall to tell people like Gregg Jackson, Sandy Rios, and Brian Carmenker that they seem to be “in essence only telling half the story, and half truths,” and to move to within an inch of questioning their personal integrity on that basis.

If these three are telling less than the whole story, it’s because it’s all they have to work with. The other “half” needs to come from Romney and/or his minions.

And we’re still waiting. Out with it, people.

UPDATE 2: McCullough swings and misses at Strike Two, while the Evangelicals for Romney make it look like they’re responding without responding at all. Point-by-point is the only acceptable method, folks — and you know it. Update 2A: I’m also told that what “Mr. Journalistic Integrity” McCullough posted is the content of what was supposed to be a private e-mail without getting the permission of the e-mailer. I stopped making this mistake a year ago. McCullough’s been writing columns and opining for a decade or more. What’s his excuse?

Couldn’t Help But Notice (111207)

I’d love to see the Alternative Minimum Tax (AMT) repealed, but unconditionally and without offsets involving new taxes. If the “paygo” crowd wants offsets, they should reduce spending. That is why the AMT repeal passed last week is totally unacceptable. I believe that AMT repeal would mostly pay for itself (unlike the cap gains and dividends tax cuts, which have totally paid for themselves) in additional tax revenues from increased economic activity.

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Michael Medved continues the stunning roll that he is on:

….. one of the most common (and ignorant) indictments of the Iraq War ….. (has) ….. angry critics of Bush policy emphatically insisting: “This is the first time in history we ever attacked any country that hadn’t attacked us first.” In fact, virtually all our major wars began without some clear-cut attack by the enemy on American soil: the French-and-Indian War, the Revolutionary War, the War of 1812, the Mexican War, the Spanish American War, World War I, Korea, Vietnam and the First Gulf War claimed a total of tens of thousands of American lives based on incidents or interests, but without any undeniable mass assault. In 230 years of history only the Civil War (where Lincoln cleverly lured Southern forces into the initial bombardment of federal property at Fort Sumter) and World War II (where Japan struck at precisely one of those outposts of empire in distant Hawaii that anti-imperialists often decry) commenced in response to enemy strikes.

Read the whole thing.

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It looks like we’ll still have Antioch College to kick around. Run some of the numbers at the article, though, and you’ll see that the school, whose enrollment is now smaller than my high school senior class, will probably need eeeeevil capitalistic help to survive.

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This type of campus-victim hoax is all too frequent (HT Taranto at Best of the Web, who notes big differences between the campus newspaper story just linked and this WaPo article).

The frequency of these incidents is a red-flag indicator that the punishments are usually too light. Why the students are able to remain at the school after such serious betrayal is hard to fathom.

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Peak Oilers must deal with more “bad” news (HT American Thinker):

Petroleo Brasileiro SA, Brazil’s state-controlled oil company, said its Tupi field may contain as much as 8 billion barrels of oil and natural gas, an amount that could boost the country’s reserves by 62 percent. The company’s shares rose the most in more than nine years.

In an update at the American Thinker post, Ed Lasky mentions a reader’s clarification that what is recoverable is far less. Fair enough, but if the past is any guide, the estimate of how much oil is there is probably low.

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Somebody ought to figure out the imputed value of this:

The big broadcast networks have treated the Democratic frontrunners like celebrities worthy of intense coverage, while the Republican candidates have received far less TV time. A new Media Research Center study of the ABC, CBS and NBC morning news shows has found that in the first 10 months of 2007, the networks spent more time covering the Democratic race and spent far more time interviewing the Democratic candidates than the Republicans. And those interviews were much friendlier to the Democrats, with the morning show anchors emphasizing a predominantly liberal agenda.

All three networks spent more time covering the Democrats’ nomination race than the contest for the GOP nomination. Overall, 431 out of the total 797 campaign segments (54%) focused on the Democrats, compared to 247 (31%) devoted to the Republicans. The remaining 119 stories (15%) either dealt with both parties about equally, or dealt with a nonpartisan campaign topic, such as the growing use of YouTube by all candidates.

The indefatigable Media Research Center, for whom yours truly is a Contributing Editor at its NewsBusters blog, has extensively chronicled this (“Rise and Shine on Democrats“), with an accompanying Executive Summary.

Positivity: Waynesville soldier rescues driver from burning truck

Filed under: Positivity,US & Allied Military — Tom @ 5:56 am

The story is out of Topeka, KS, and is relayed in a Rolla, MO newspaper:

Published: Thursday, November 1, 2007 11:30 PM CDT

A Waynesville soldier who will deploy to Iraq around Thanksgiving recently rescued a driver who went off Interstate 70 near Topeka, Kan. The incident occurred on Sept. 30.

Tim Larrington, a sergeant first class now preparing to leave for Iraq at Fort Riley, KS, and his wife, Sandra, told what happened that day to a reporter for the Topeka Capital-Journal. At the time, he and his wife were headed for a Red Lobster in Topeka to enjoy a quiet Sunday evening dinner.

Larrington said he was cruising westbound on I-70 when he saw a vehicle headed eastbound careen off the road.

His wife did not see a thing, but Larrington turned around at the next exit.

As the Larringtons neared the accident site, they saw smoke rising from deep in a ditch. Sandra Larrington called 911.

After working his way down a step hill, Larrington found Daniel Milligan, a 23-year-old resident of Manhattan, KS, unable to get out of his burning pickup truck.

Larrington also discovered that Milligan had a broken right leg. Larrington said he told Milligan, “Dude, I am going to get you out of the truck.”

With help from Milligan, Larrington was able to hold open the driver’s side door and pulled Milligan from the truck and up the steep hill to the guardrail.

By the time the two made it to the guardrail, the pickup and a motorcycle Milligan was hauling in the back of the truck were consumed in flames.

Milligan’s leg required surgery that evening at a Topeka hospital.

Milligan was not sure what caused him to crash as he drove home from racing his motorcycle south of Topeka that afternoon. Kansas Highway Patrol troopers could not figure it out either.

The accident scene was not visible to drivers on I-70. Larrington was the only driver to see Milligan crash.

Later, after Tim Larrington called Milligan’s mother, Mindy Milligan said she would forever be thankful to the Larringtons. “It’s a miracle,” she said. …..

Go here for the rest of the story.