Court may opt to pay fees from Bible suit

Topics in Legal News 2008/03/03 11:28   Bookmark and Share

Harris County Commissioners Court will decide today whether it will pay about $400,000 in legal fees to a woman who sued to have a Bible removed from a monument near the downtown civil courthouse.

All but about $40,000 in fees were incurred after the county appealed the case to the U.S. Supreme Court.

"Harris County officials have been poor stewards of taxpayers' money," said Randall Kallinen, lawyer for Kay Staley, a real estate agent and lawyer who sued to have the Bible removed. "They knew displaying the Bible was unconstitutional, and they continued fighting for political reasons."

County Attorney Mike Stafford said the county appealed the case because officials believed that there was a constitutional question about whether a Bible could be part of a display honoring a person.

"You can't just look at what the trial court does and give up," he said.

The court is scheduled to discuss possible payment of the legal fees in executive session.

In 1956, the county gave Star of Hope mission permission to erect the monument with a Bible displayed in it to honor a key benefactor, William Mosher. The monument was near the entrance of the then-Civil Courts Building on Fannin.

Four years ago, U.S. District Judge Sim Lake ruled that the display violated the First Amendment's Establishment Clause, which prohibits governments from endorsing or inhibiting a religion. Lake ruled the display promoted Christianity, and the Bible was taken out.

The case could have ended a year ago when the U.S. Fifth Circuit Court of Appeals declared the case moot after the county moved the monument while the Civil Courts Building was restored. But the county appealed to the Supreme Court.

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Suspect in Ivy League ID Theft in Court

Court Watch 2008/03/03 11:27   Bookmark and Share
A woman accused of using a missing person's identity to get into an Ivy League school made her first court appearance Monday, and the victim's relatives said they just want the theft suspect punished.

When Esther Elizabeth Reed was indicted last year, Brooke Henson's relatives said they hoped Reed could tell authorities where to find her.

"Of course at first, it was just giving us hope that Brooke was alive," Lisa Henson, Brooke's aunt, said Monday.

Investigators have since said they don't think Reed had anything to do with Henson's 1999 disappearance.

Reed is accused of stealing Henson's identity in 2003 and posing as her to obtain false identification documents, take a high school equivalency test and get into Columbia University.

She was indicted last year and made her first court appearance Monday on federal charges of identity theft, mail and wire fraud and obtaining false identification documents. If convicted on all four charges, Reed faces a possible $1 million fine and 47 years in prison, time Lisa Henson said she hopes Reed will serve.

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Justices reject appeal by Adelphia founder, son

Legal Business 2008/03/03 11:20   Bookmark and Share
The U.S. Supreme Court rejected on Monday an appeal by Adelphia Communications Corp founder John Rigas and his son Timothy of their conspiracy and fraud convictions.

The justices declined to review a ruling by a U.S. appeals court in New York which upheld the pair's convictions on 22 of 23 counts of conspiracy and securities and bank fraud.

A jury found the father and son guilty in 2004 of the charges that accused them of concealing loans and stealing millions from the cable operator.

John Rigas, formerly Adelphia's president and chief executive officer, was sentenced in 2005 to 15 years in prison, while Timothy Rigas, the former finance chief, was sentenced to 20 years. They began serving their prison terms last year.

In the appeal, defense attorneys argued that federal prosecutors were required to prove that John and Timothy Rigas had violated Generally Accepted Accounting Principles or call an expert accounting witness in order to convict them of securities fraud.

The attorneys also argued that the reversal by the appeals court of the bank fraud convictions on count 23 for John and Timothy Rigas required the reversal of their bank fraud convictions on count 22.

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A Selection of Breyer's Hypotheticals

Court Watch 2008/03/02 14:18   Bookmark and Share
The nine justices in black robes file into the Supreme Court consumed with thoughts about the great legal issues of the day. Only one of them is likely to ask questions involving raccoons, an unruly son, pet oysters or even the dreaded "tomato children."

When Justice Stephen Breyer leans toward his microphone at the end of the bench, lawyers can expect to be asked almost anything. The 69-year-old Breyer is the court's most frequent practitioner of the hypothetical question, a conjurer of images that are unusual and occasionally bizarre.

"The last time I was up there arguing, it was easier for him to wrap his mind around bicycle pedals," said Carter Phillips. The experienced Supreme Court lawyer recalled an exchange with Breyer during arguments over patents for computer chips.

"He kept shifting the focus over to bicycle pedals and I was trying to live with him in that world," Phillips said. "I was taking the bicycle pedals and putting them on my Stair Master."

The hypothetical is a mainstay of Supreme Court arguments. At their best, such questions help justices address what is bothering them after they have pored over hundreds of pages of dense, often dry legal briefs.

"The point is to try to focus on a matter that is worrying me," Breyer said in an interview with The Associated Press. "Sometimes it's easier to do that with an example."

From the lawyer's perspective, the well-constructed example "helps focus the mind," said Roy Englert, a Supreme Court lawyer who studied antitrust law under Breyer at Harvard Law School.

One recent case involved punishment for repeat criminals under a difficult-to-decipher provision of federal law. The image Breyer called to mind was one to which any parent or sibling could relate.

"Suppose with your own children: 'I told you half an hour ago not to interrupt your sister when she is doing her homework. This is the second time you've done it.' Wouldn't you, with your own child — I would with mine — think that the second time he did it was worse behavior than the first time?" Breyer said. "I just told him not to."

The point was succinct and sweet. "It's a familiar example, your honor," conceded Charles Rothfeld, the lawyer for the recidivist whose case was before the court.

The justices generally have distinct styles in the way they ask questions.

Antonin Scalia makes liberal use of sarcasm. John Paul Stevens begins with an unassuming, "May I ask ...?" Then, Phillips said, "it's a dagger through the heart." Ruth Bader Ginsburg digs deep into the case record and is a stickler for following the rules.

Breyer, said Supreme Court specialist Thomas Goldstein, sometimes comes up with a situation "that is so extreme that it makes you think just about the legal principle because the facts are impossible."

Or, as Breyer said, "An odd example can call particular attention to the point."

Goldstein was on the receiving end of such a question in a dispute last year over the patent for a gas pedal.

"Now to me, I grant you I'm not an expert, but it looks at about the same level as I have a sensor on my garage door at the lower hinge for when the car is coming in and out, and the raccoons are eating it," Breyer said. "So I think of the brainstorm of putting it on the upper hinge, OK? Now I just think that how could I get a patent for that?"

Englert said Breyer is still the law professor he knew 30 years ago. "He had to learn how to keep a bunch of 22-to-25-year-olds entertained and interested," Englert said.

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Peloton hedge fund to liquidate and close shop

Legal Business 2008/03/02 12:38   Bookmark and Share
Peloton Partners LLP, a London-based hedge fund that formerly held nearly $3 billion in assets, is liquidating its two funds and shutting down, the firm told investors on Wednesday, according to two people familiar with the situation.

Peloton last week told investors that it was liquidating its $2 billion ABS Fund after lender banks pulled back on credit. It held out hopes that it could salvage its second fund, the $1.6 billion Multi-Strategy Fund, even though some 40 percent of that fund's assets were invested in the ABS Fund.

Today, however, the fund told investors that the Multi-Strategy Fund is being liquidated in coming days, with the proceeds returned to investors, the source said.

It is unclear at this point what proceeds, if any, investors will get from the liquidation of the two funds, the company told investors.

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Filing Shines Light On Expert-Witness Payments

Headline Legal News 2008/03/02 12:37   Bookmark and Share

Court papers filed recently suggest two partners at one of the nation's most active firms for shareholder lawsuits asked a federal court to approve expenses that were improperly inflated.

The documents were filed in federal court last week as part of a guilty-plea agreement for John Torkelsen, a former expert witness on damages who was used by Milberg Weiss LLP and other plaintiffs class-actions firms in the 1980s and '90s. Mr. Torkelsen agreed to plead guilty to perjury for making false statements in federal court.

In connection with the plea agreement, the government submitted a statement, which Mr. Torkelsen attested to as true, saying that on at least three occasions he submitted inflated fee requests to courts, and that the law firm he worked with knew the requests were inflated. That firm, which the plea papers refer to only as a New York firm, was Milberg Weiss, according to a person familiar with the situation.

Two partners at the law firm now called Coughlin Stoia Geller Rudman & Robbins LLP, which spun off from Milberg Weiss in 2004, were involved in a lawsuit mentioned in the plea statement while they were lawyers at Milberg Weiss. Filed in 1995, the lawsuit alleged that Sunrise Medical Inc., a medical-product manufacturer, fraudulently overstated its income. In 1996, Mr. Torkelsen filed a sworn statement that his firm incurred $420,000 in fees in the case. But according to the plea statement, that amount was inflated by $130,000, a discrepancy that both Mr. Torkelsen and the law firm knew about, according to the plea papers.

In 1996, Coughlin Stoia lawyer Keith Park, then at Milberg Weiss, filed a sworn declaration in the Sunrise case that asked the court to reimburse its expenses for experts. Mr. Torkelsen's firm was one of Milberg's experts in the case. Mr. Park asserted that Milberg Weiss had kept an accurate record of its expenses.

Coughlin Stoia name partner Patrick Coughlin, then a Milberg Weiss lawyer, filed a sworn statement asking the court to approve the settlement and to reimburse Milberg Weiss for its expenses in the case. Mr. Coughlin described Mr. Torkelsen's firm and other experts in the case as "instrumental in developing the evidence and quantifying the damages suffered by the class." The expenses were approved, as was the settlement of the case, for $21 million in damages.

It isn't known whether Messrs. Park or Coughlin knew fees were inflated. They aren't named in Mr. Torkelsen's plea papers. "Any suggestion that anyone here did anything improper in this matter is inaccurate and irresponsible," said Coughlin Stoia in a statement. A firm spokesman declined to provide specifics. Through a spokesman, Messrs. Coughlin and Park declined to comment.

Neither of the lawyers, nor the firm, has been accused of wrongdoing, and prosecutors are unlikely to charge any lawyers in connection with Mr. Torkelsen's criminal conduct, according to people familiar with the investigation

"We are not aware of any partner of Milberg Weiss LLP having knowledge of any of the misconduct detailed in Mr. Torkelsen's plea agreement," Milberg Weiss said in a statement.

The government's investigation of Mr. Torkelsen was part of a broader investigation of Milberg Weiss, which was charged in 2006 with paying improper kickbacks to clients. Milberg Weiss and its senior partner, Melvyn Weiss, are fighting the charges. Three other former Milberg Weiss lawyers, including William Lerach, who moved to what is now the Coughlin firm at the time of the 2004 split, have pleaded guilty.

As part of Mr. Lerach's plea agreement, reached last fall, the government agreed not to prosecute Messrs. Coughlin or Park in connection with various matters, including the work of a "Princeton" damages expert for Milberg Weiss or Coughlin Stoia. Mr. Torkelsen's firm was called Princeton Venture Research Inc. No other lawyers were specifically named in Mr. Lerach's plea agreement.

The government said Mr. Torkelsen's inflated fees were part of a broader scheme to help conceal the true nature of "the New York law firm's" payment arrangement with the expert. A person familiar with the matter identified the firm as Milberg Weiss. Mr. Torkelsen would present himself to courts as an independent expert when in fact he was paid on a contingent basis, with his payment depending on the plaintiffs prevailing in the case, the government said. Securities lawyers say that kind of payment arrangement creates a potential conflict, because it could encourage an expert to exaggerate the extent to which plaintiffs have been harmed.

Plaintiffs lawyers typically must front their expenses, such as expert fees, in contingency-fee suits, and they recoup them if the suit is successful. By paying an expert on a contingent basis, a law firm wouldn't have to take that risk.

Inflating fees in successful cases allowed the New York firm to make up for fees not paid out to Mr. Torkelsen in unsuccessful cases, the plea papers say. The costs of these makeup payments were borne at least in part by class-action plaintiffs, who in some instances paid for work that Mr. Torkelsen didn't perform in their cases.

Mr. Torkelsen is in federal prison after being convicted on unrelated charges. His lawyer didn't respond to a request for comment.

Mr. Torkelsen once was one of the top damages experts in the securities-fraud field, according to securities lawyers. From 1993-96, he billed class-action firms more than $60 million, according to the papers accompanying his plea agreement.

Coughlin Stoia is one of the nation's leading firms in securities class actions, in which shareholders typically blame stock losses on misleading statements by corporate executives. The firm topped the charts in terms of total settlements in such cases in 2006, the most recent year for such data, according to RiskMetrics Group Inc.

Coughlin Stoia has been particularly active of late in the area of securities class actions related to the subprime-lending meltdown. According to a report last month by Navigant Consulting, it has filed more such suits than any law firm -- more than a dozen. Mr. Coughlin is the lead lawyer in the Enron Corp. securities-fraud litigation, in which Coughlin Stoia seeks almost $700 million in fees for itself and other plaintiffs lawyers in the case.

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