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Ex-worldcom Ceo Branded A Liar

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Posted 01 December 2004 - 08:03 AM

Halliburton asbestos deal sealed

01.12.04

PITTSBURGH - Halliburton, the world's largest oilfield-services company, says a bankruptcy judge has approved a US$1.5 billion ($2.1 billion) settlement of asbestos claims between two of its subsidiaries and insurers.

US Bankruptcy Judge Judith Fitzgerald in Pittsburgh approved the settlement yesterday between Halliburton's DII Industries and Kellogg Brown & Root and more than 150 insurance companies, Halliburton said in a statement.

Court approval cleared the way for Halliburton to complete a US$4.8 billion plan to settle all current and future asbestos claims. The settlement resolved a dispute between Halliburton and insurers over how much the company was entitled to for asbestos liability and was the result of decades of litigation and two years of mediation, Halliburton attorneys said when Fitzgerald tentatively approved the agreement on November 18.

"This is clearly one of the concluding steps toward permanently resolving our asbestos and silica liability that will provide payments to the impaired claimants," said Dave Lesar, chairman of Halliburton, in the statement.

Shares of Houston-based Halliburton rose 25USc to US$40.96 in New York trading. The news was released after the close of US markets.

DII and KBR unit filed for bankruptcy in 2003 to win court approval of settlements. The company agreed to pay $2.78 billion in cash, 59.5 million shares of common stock and notes worth $54 million to settle 462,000 current and future claims.

http://www.nzherald....bjectID=8501124
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Posted 03 December 2004 - 12:44 AM

Ohio Tort "Reform" Law Held Unconstitutional

August 16, 1999 - News From ATLA:

The Ohio Supreme Court today struck down as unconstitutional the nation's most extreme law limiting the legal rights of citizens and protecting corporations from liability for their actions.

In a 4-3 decision, the Court held that, in enacting what it called "the most comprehensive and multifarious" so-called tort "reform," the Ohio General Assembly attempted to exercise powers that the Ohio Constitution specifically granted only to the state's judiciary. Richard H. Middleton, Jr., president of the 55,000 member Association of Trial Lawyers of America, hailed the Court's "historic" decision, adding, "It's an enormous victory for the citizens of Ohio, the rule of law, and the separation of powers that is the backbone of our constitutional form of government."

"No special interests, regardless of their political influence, should be able to insulate themselves from responsibility and accountability for the injuries they cause. The independence of the judiciary and the civil justice system must never be compromised. Those bedrock principles were affirmed by the Ohio Supreme Court today," Middleton said.

Robert S. Peck, ATLA's Senior Director of Legal Affairs and Policy Research who prepared and argued the challenge, said, "The Court's decision ends an attempted hostile takeover of the civil justice system by those interested in avoiding responsibility for the injuries they cause others." Peck, who, along with Cleveland lawyer Don Iler, argued the case before the Court in September, said, "The Court's decision vindicates the rights and values that went into the drafting of the Ohio Constitution."

"Foremost among those values was the idea that businesses should be held accountable for their wrongdoing and that their ability to wield political influence in the legislature should not permit the justice system to be manipulated to their advantage," said Peck. "In enacting the tort 'reform' law, the legislature attempted to put itself in the seats of the Supreme Court justices, the trial judges of the state, and the jury," Peck added. "But the state constitution specifically forbids the exercise of judicial authority by the legislature. The Court's decision today ends an attempted hostile takeover of the civil justice system by those interested in avoiding responsibility for the injuries they cause to others."

The majority opinion of the Court noted: "Fairness and judicial economy, as well as the preservation of judicial independence, require this court to address this cause which is of the greatest concern to all the citizens of Ohio. By doing otherwise, this court would become a willing participant in divesting the courts of judicial power and a coconspirator in the abdication of fundamental individual rights and liberties contained in our Constitution."

>>>>>NOTE: The full text of the opinion may be found at http://www.sconet.oh...ort_Reform.html

Ohio Academy of Trial Lawyers president Mike Monteleone said, "The Court has made it clear that our constitution was meant to protect individuals as well as big business, and families as well as corporations. It means corporations cannot escape responsibility for their misconduct. This decision also means that independent juries will be able to continue to make decisions on a case-by-case basis."

The Court majority observed that, enactment of this "most comprehensive and multifarious legislative measure thus far...marks the first time in modern history that the General Assembly has openly challenged this court's authority to prescribe rules governing the courts of Ohio and to render definitive interpretations of the Ohio Constitution binding upon the other branches of government." And it was the Court's definitive interpretation that "the General Assembly may not enter upon the judicial business of settling the constitutionality of its own laws, disregard a Supreme Court decision on the subject, reenact legislation previously declared violative of the Constitution, or in any other way exercise, direct, control, or encroach upon the judicial power."

The 246-page statute was a wish list of all the tort "reform" laws anyone had ever imagined, including caps on non-economic damages, limits on joint and several liability, abrogation of the collateral source rule, certificates of merit in medical malpractice cases, etc. Among the many millions of dollars spent by big-business interests in support of the tort "reform" legislation that would rob Ohio citizens of many of their legal rights, the three major U.S. auto makers and the insurance industry alone reported lobbying expenses in excess of $10 million.

ATLA, whose members who represent injured consumers and workers, is the largest trial bar in the world. Its Legal Affairs Department originates and participates in legal challenges and appellate briefs in order to preserve the unique constitutional and legal rights afforded American citizens under the U.S. Constitution and state constitutions.

In December of 1997, the Illinois Supreme Court struck down as unconstitutional a similar state statute also challenged byATLA's legal team. In addition, the Indiana Supreme Court ruled 4-1 in Martin v. Richey on July 8, 1999, that a two-year statute of limitations for medical malpractice victims is unconstitutional as applied to the victim of undiagnosed breast cancer. The court's narrow opinion was based in part on an innovative strategy and arguments advanced by ATLA, which emphasized the Indiana constitutional guarantee of a right to a remedy. The court found the law unconstitutional "because it requires a plaintiff to file a claim before she is able to discover the alleged malpractice and her resulting injury, and, therefore, it imposes an impossible condition on her access to the courts and pursuit of her tort remedy."

http://www.voiceofth...tortreform.html
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Posted 03 December 2004 - 12:46 AM

Browse through the article library:

http://www.voiceofth...om/article.html
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Posted 16 December 2004 - 12:32 AM

Mexico charges U.S. with labor violations
December 13 , 2004

NEW YORK — Mexican officials have charged that the United States is violating labor rules of the North American Free Trade Agreement by failing to protect workers from dangerous work conditions or to ensure that those hurt on the job receive timely, adequate compensation and medical treatment for their injuries and illnesses.

In 2001, injured workers of the It’s About TIME! Campaign for Workers’ Health and Safety filed a lawsuit under NAFTA against Gov. George Pataki, New York’s Workers’ Compensation Board, and the federal government. Before suing, the group repeatedly attempted to persuade Pataki to address widespread sweatshop conditions and a ruinous state workers’ compensation system.

Investigators for Mexico’s Department of Labor and Social Welfare discovered significant evidence in New York of “serious obstacles [that] impede workers’ rights [to] compensation for occupational injuries and illnesses.”

According to the campaign, injured workers welcomed Mexico’s findings. “These findings confirm what we injured workers have been raising all these past years,” said Cornetta McNeal, who was injured after years as a home care worker.

McNeal argued that Pataki was responsible for allowing thousands of New York workers to get hurt. “His treatment of disabled workers seeking workers’ compensation benefits is even worse,” she added. McNeal has been forced to wait more than 10 years without workers’ compensation benefits or medical treatment.

Quoted by It’s About TIME, Michael Wishnie, co-director of the Immigrant Rights Clinic at the NYU School of Law and counsel for the petitioners, said, “The Pataki administration’s stunning disregard for injured workers made New York the first state to be the exclusive target of a challenge under the NAFTA labor side agreement, and now New York is the first whose labor practices have been referred for ministerial consultations in such a case.”

Mexico recommended that the U.S. Secretary of Labor meet with Mexican officials as a first step toward resolving the violations.

http://www.vermontguardian.com/dailies/090....shtml#article1
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Posted 16 December 2004 - 12:36 AM

new york, new zealand, the story is the same......but nz is still small enough to make change, unless the govt is under instruction from another govt.
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Posted 02 January 2005 - 09:43 PM

Homeless Iraq vets showing up at shelters

By Mark Benjamin
UNITED PRESS INTERNATIONAL


Washington, DC, Dec. 7 (UPI) -- U.S. veterans from the war in Iraq are beginning to show up at homeless shelters around the country, and advocates fear they are the leading edge of a new generation of homeless vets not seen since the Vietnam era.

"When we already have people from Iraq on the streets, my God," said Linda Boone, executive director of the National Coalition for Homeless Veterans. "I have talked to enough (shelters) to know we are getting them. It is happening and this nation is not prepared for that."

"I drove off in my truck. I packed my stuff. I lived out of my truck for a while," Seabees Petty Officer Luis Arellano, 34, said in a telephone interview from a homeless shelter near March Air Force Base in California run by U.S.VETS, the largest organization in the country dedicated to helping homeless veterans.

Arellano said he lived out of his truck on and off for three months after returning from Iraq in September 2003. "One day you have a home and the next day you are on the streets," he said.

In Iraq, shrapnel nearly severed his left thumb. He still has trouble moving it and shrapnel "still comes out once in a while," Arellano said. He is left handed.

Arellano said he felt pushed out of the military too quickly after getting back from Iraq without medical attention he needed for his hand -- and as he would later learn, his mind.

"It was more of a rush. They put us in a warehouse for a while. They treated us like cattle," Arellano said about how the military treated him on his return to the United States.

"It is all about numbers. Instead of getting quality care, they were trying to get everybody demobilized during a certain time frame. If you had a problem, they said, 'Let the (Department of Veterans Affairs) take care of it.'"

The Pentagon has acknowledged some early problems and delays in treating soldiers returning from Iraq but says the situation has been fixed.

A gunner's mate for 16 years, Arellano said he adjusted after serving in the first Gulf War. But after returning from Iraq, depression drove him to leave his job at the U.S. Equal Employment Opportunity Commission. He got divorced.

He said that after being quickly pushed out of the military, he could not get help from the VA because of long delays.

"I felt, as well as others (that the military said) 'We can't take care of you on active duty.' We had to sign an agreement that we would follow up with the VA," said Arellano.

"When we got there, the VA was totally full. They said, 'We'll call you.' But I developed depression."

He left his job and wandered for three months, sometimes living in his truck.

Nearly 300,000 veterans are homeless on any given night, and almost half served during the Vietnam era, according to the Homeless Veterans coalition, a consortium of community-based homeless-veteran service providers. While some experts have questioned the degree to which mental trauma from combat causes homelessness, a large number of veterans live with the long-term effects of post-traumatic stress disorder and substance abuse, according to the coalition.

Some homeless-veteran advocates fear that similar combat experiences in Vietnam and Iraq mean that these first few homeless veterans from Iraq are the crest of a wave.

"This is what happened with the Vietnam vets. I went to Vietnam," said John Keaveney, chief operating officer of New Directions, a shelter and drug-and-alcohol treatment program for veterans in Los Angeles. That city has an estimated 27,000 homeless veterans, the largest such population in the nation. "It is like watching history being repeated," Keaveney said.

Data from the Department of Veterans Affairs shows that as of last July, nearly 28,000 veterans from Iraq sought health care from the VA. One out of every five was diagnosed with a mental disorder, according to the VA. An Army study in the New England Journal of Medicine in July showed that 17 percent of service members returning from Iraq met screening criteria for major depression, generalized anxiety disorder or PTSD.

Asked whether he might have PTSD, Arrellano, the Seabees petty officer who lived out of his truck, said: "I think I do, because I get nightmares. I still remember one of the guys who was killed." He said he gets $100 a month from the government for the wound to his hand.

Lance Cpl. James Claybon Brown Jr., 23, is staying at a shelter run by U.S.VETS in Los Angeles. He fought in Iraq for 6 months with Alpha Company, 1st Battalion, 2nd Marines and later in Afghanistan with another unit. He said the fighting in Iraq was sometimes intense.

"We were pretty much all over the place," Brown said. "It was really heavy gunfire, supported by mortar and tanks, the whole nine (yards)."

Brown acknowledged the mental stress of war, particularly after Marines inadvertently killed civilians at road blocks. He thinks his belief in God helped him come home with a sound mind.

"We had a few situations where, I guess, people were trying to get out of the country. They would come right at us and they would not stop," Brown said. "We had to open fire on them. It was really tough. A lot of soldiers, like me, had trouble with that."

"That was the hardest part," Brown said. "Not only were there men, but there were women and children -- really little children. There would be babies with arms blown off. It was something hard to live with."

Brown said he got an honorable discharge with a good conduct medal from the Marines in July and went home to Dayton, Ohio. But he soon drifted west to California "pretty much to start over," he said.

Brown said his experience with the VA was positive, but he has struggled to find work and is staying with U.S.VETS to save money. He said he might go back to school.

Advocates said seeing homeless veterans from Iraq should cause alarm. Around one-fourth of all homeless Americans are veterans, and more than 75 percent of them have some sort of mental or substance abuse problem, often PTSD, according to the Homeless Veterans coalition.

More troubling, experts said, is that mental problems are emerging as a major casualty cluster, particularly from the war in Iraq where the enemy is basically everywhere and blends in with the civilian population, and death can come from any direction at any time.

Interviews and visits to homeless shelters around the Unites States show the number of homeless veterans from Iraq or Afghanistan so far is limited. Of the last 7,500 homeless veterans served by the VA, 50 had served in Iraq. Keaveney, from New Directions in West Los Angeles, said he is treating two homeless veterans from the Army's elite Ranger battalion at his location. U.S.VETS, the largest organization in the country dedicated to helping homeless veterans, found nine veterans from Iraq or Afghanistan in a quick survey of nine shelters. Others, like the Maryland Center for Veterans Education and Training in Baltimore, said they do not currently have any veterans from Iraq or Afghanistan in their 170 beds set aside for emergency or transitional housing.

Peter Dougherty, director of Homeless Veterans Programs at the VA, said services for veterans at risk of becoming homeless have improved exponentially since the Vietnam era. Over the past 30 years, the VA has expanded from 170 hospitals, adding 850 clinics and 206 veteran centers with an increasing emphasis on mental health. The VA also supports around 300 homeless veteran centers like the ones run by U.S.VETS, a partially non-profit organization.

"You probably have close to 10 times the access points for service than you did 30 years ago," Dougherty said. "We may be catching a lot of these folks who are coming back with mental illness or substance abuse" before they become homeless in the first place. Dougherty said the VA serves around 100,000 homeless veterans each year.

But Boone's group says that nearly 500,000 veterans are homeless at some point in any given year, so the VA is only serving 20 percent of them.

Roslyn Hannibal-Booker, director of development at the Maryland veterans center in Baltimore, said her organization has begun to get inquiries from veterans from Iraq and their worried families. "We are preparing for Iraq," Hannibal-Booker said.

http://washingtontim...21848-6449r.htm
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Posted 08 January 2005 - 10:03 AM

Posted on Fri, Jan. 07, 2005

R E L A T E D L I N K S
• Click here to read the complaint

HEALTHCARE

Doctor files suit against Aetna

A Broward doctor is taking on the health insurance industry because they're paying only a third or less of his charges.

BY JOHN DORSCHNER

[email protected]

In the latest battle over getting paid for emergency room treatment, a Pompano Beach orthopedic surgeon is leading a federal lawsuit alleging that Aetna and three other health insurers are engaged in a criminal conspiracy to pay only a fraction of doctors' charges.

Peter Merkle and his attorneys are asking U.S. District Judge James I. Cohn to certify a classaction for all doctors having similar problems with Aetna, Neighborhood Health, Vista Healthplans and Blue Cross Blue Shield of Florida's Health Options.

The health plans have yet to file responses in court and most have yet to be formally served, but their spokesmen told The Herald Thursday that their payments in such cases are legal and customary.

''Aetna typically pays more than Medicare for what is described in this particular complaint, and we believe that we are paying a reasonable amount of money under Florida law, which recognizes that paying arbitrary or unreasonable amounts are not required,'' said Aetna spokesman David W. Carter.

''If they pay you whatever they feel like, you might as well close your doors and go fishing,'' Merkle said Thursday in a telephone interview. He said he hesitated about suing insurers ``because you don't want to bite the hand that feeds you. But then I realized that the hand wasn't feeding me, it was stealing from me.''

The core issue, which providers band insurers have been fighting in the courts for several years, concerns cases when a person with health insurance is rushed to a hospital that is out of his insurer's network.

In such cases, the hospitals -- and the doctors who are also out-of-network -- generally bill the health plans at their full rates.

The insurers complain that these rates are often obscenely high and have frequently refused to pay them.

Hospitals counter that insurers are trying to force them into unfair contracts that would bring them into the network or -- worse -- make contracts unnecessary if insurers can simply pay what they feel like.

The disputes have erupted into bitter court battles. On the east coast of Florida, a case between HCA hospitals and Vista ended up being settled out of court. On the Gulf Coast, a lawsuit between Blue Cross Blue Shield of Florida and the BayCare Health System of Clearwater continues to be contested in several courts and is being closely watched by the entire industry.

In the BayCare case, the argument is over what constitutes ''usual and customary'' charges, which are required by Florida law for out-ofnetwork providers. In 2003, an arbitrator from a firm called Maximus concluded that BCBSF met the law's provisions by paying 120 percent of Medicare rates.

BayCare is still fighting the so-called Maximus decision in the courts, but it appears that health plans may now be using it as a benchmark for out-of-network payments.

''The Maximus decision reinforced our belief that our reimbursement is in accordance with Florida statutes,'' said BCBSF spokesman Bruce Middlebrooks.

''VISTA pays nonparticipating providers for emergency services in accordance with state and federal law,'' wrote spokeswoman Pam Gadinsky in an e-mail.

Out-of-network doctors face the same problems as hospitals, but as small businessmen many feel they don't have the resources to fight the insurers.

''After you've written four or five letters to the insurance company and then spent an hour on the phone on hold, most doctors just write a lot of it off as bad debt,'' said Alan Routman, a Fort Lauderdale orthopedic surgeon and former president of the Broward County Medical Association.

Merkle was an exception. His complaint says that in the summer of 2003 he saw Aetna and other insurers dramatically reduce their payments to him.

His attorneys used the example of a complicated wrist fracture, which Merkle charges $1,850 to treat. Aetna, which had been paying $1,168, cut its check to $668.62. Health Options paid $469.69 for the procedure, Vista $587.27 and Neighborhood Health $604.31.

The similarity of these payments has caused Merkle's attorneys to charge that the insurers are engaging in a ''pattern of racketeering activity'' and are carrying out ''conspiratorial efforts'' to lower doctors' payments.

Bruce S. Rubin, spokesman for Neighborhood Health, called the allegations of conspiracy ``ludicrous. We've been paying a certain percentage of Medicare for years. It's standard procedure.''

One of Merkle's attorneys, Larry Kopelman of Fort Lauderdale, acknowledges that some gross provider charges can be astonishingly high. ``But what the insurance industry is doing is wrong. To simply, unilaterally pick a figure to pay is wrong. Our intent is to hopefully arrive at a usual and customary charge that's fair to everybody.''

http://www.miami.com...10584453.htm?1c
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Posted 26 January 2005 - 06:26 PM

Ex-WorldCom CEO Branded A Liar
26/01/2005 02:44 PM - Paul Thomasch - Reuters

Former WorldCom chief executive Bernard Ebbers repeatedly lied to investors, violating their trust and costing them billions of dollars, a prosecutor charged as Ebbers' fraud trial opened.

"What this case is really about is the choice Bernard Ebbers made in the fall of 2000," federal prosecutor David Anders told jurors in his opening statement at the trial.

Anders said the former WorldCom CEO could decide to confess that the company's financial results had sunk with the rest of the telecommunications industry - or he could choose to deceive the investing public.

"Faced with that choice, Bernard Ebbers chose to lie. Not once, not twice, but again and again and again," Anders told jurors who were sworn in earlier on Tuesday.

Ebbers' lead attorney, Reid Weingarten, countered during his opening statement that his client "cannot be found criminally liable for a fraud he did not know about and did not participate in."

"It is just not in him to commit the crimes with which he is charged," Weingarten said during his opening, in which he took pains to describe Ebbers as a man who worked his way up from jobs as a milkman, a bouncer and a basketball coach who earned his college degree in education.

"No accounting courses, no management courses, no business courses," Weingarten said, as his client sat before the crowded courtroom, dressed in a tweed jacket and tie, often with his hand on his chin and his legs crossed.

"Bernie, he was charismatic and visionary. Interested in numbers? You go to Scott Sullivan."

Indeed, Weingarten repeatedly attacked Scott Sullivan throughout the opening statement, blaming the company's finance chief for the accounting tricks that eventually buried WorldCom in an US$11 billion scandal.

Sullivan has pleaded guilty and is cooperating with prosecutors, who have charged Ebbers with securities fraud, conspiracy and lying to regulators.

"When people buy stock in a company, they purchase the right to be told the truth," Anders, the prosecutor, said. "Bernard Ebbers violated that trust by directing this fraud, and then telling lie after lie after lie about how his company, WorldCom, was performing."

In its case, the government will allege that Ebbers knew the company he built into a telecommunications powerhouse would not be able to meet financial targets it set during the technology boom in the late 1990s.

So, the government says, Ebbers orchestrated a fraud in 2000, ordering other executives to use questionable accounting to paint a rosier picture of the company's finances.

They charge that he lied to federal securities regulators as he cheated investors by misleading them about the health of the company, which filed for bankruptcy in 2002. It emerged last year using the name MCI.

Prosecutors will also charge that Ebbers had most of his wealth tied up in the company's stock, which he used to secure enormous bank loans. That, they will argue, gave him motive to keep the share price artificially inflated.

In his opening, Ebbers' lawyer countered that Ebbers never sold his stock - and logically would have if he were involved in a fraud that could become public.

"If you believe you're in the midst of a criminal conspiracy, that WorldCom is just a house of cards, just sell the stock. He did just the opposite."

Rather, Weingarten said, Ebbers believed in the company and was kept in the dark about accounting by Sullivan, who he described as short and arrogant, a liar and a phony.

"Scott thought of Bernie as his social inferior, his professional inferior. Behind his back, he called him names, like the milkman," Weingarten told the jury that includes two teachers, a nurse, and three bank workers, among others.

Ebbers faces a maximum prison sentence of 85 years if convicted.

http://xtramsn.co.nz...4051264,00.html
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Posted 26 January 2005 - 06:28 PM

Jury Picked In Retrial Of Ex-Tyco Execs
26/01/2005 05:47 PM - Christine Kearney - Reuters

A jury of six men and six women was chosen for the retrial of two former Tyco International Ltd executives accused of looting US$600 million from the conglomerate.

Prosecution opening arguments in the case, in which former chief executive Dennis Kozlowski, 58, and former finance chief Mark Swartz, 44, are accused of using Tyco as their personal piggy bank, are set to begin on Wednesday.

The original case ended in a dramatic mistrial last April after an apparent holdout juror received a threatening letter, ending 12-days of deliberations jurors said were "poisonous."

The judge in the case had been pressured for a mistrial for days on the grounds that the media pressure had made it impossible for the jury to reach a verdict. That pressure came after an "OK" hand gesture from one juror toward the defense raised questions of jury tampering.

The new jury took one week to select and consists of 12 jurists and six alternates. Among them are a mortuary technician, a retired theatrical agent, a construction worker and several city employees and former bank employees.

During selection, Kozlowski's lawyer Stephen Kaufman asked potential jurors what they thought it took to succeed in business and whether they might be prejudiced against wealthy people, lavish lifestyles, corporations or the media.

"My client earned more than US$100 million a year. Would that fact be something that you would question or doubt," he asked.

Prosecutor Kenneth Chalifoux told potential jurors the defendants had families and asked if this would stop them reaching a guilty verdict and also questioned how they would feel if asked to transfer funds out of their boss's account.

Jurors were also asked if their judgment would be affected by hearing or reading about the US$2 million Kozlowski spent on his wife's 40th birthday party - something that was covered in lurid detail by new York tabloids.

During the retrial prosecutors will place less emphasis on Kozlowski's lavish spending, such as payments of US$5 million for a diamond ring and US$15 million for home furnishings, including US$600,000 on a shower curtain.

Instead they will focus on charges that the two men stole US$170 million by hiding unauthorized bonuses and secretly forgiving loans to themselves as well as obtaining an additional US$430 million through fraudulent stock sales.

Defense lawyers, who contend Tyco approved all payments to the men, will make their opening statements on Thursday. The first testimony is expected Monday.

Kozlowski and Swartz are charged with 31 counts including grand larceny, conspiracy and falsifying business records.

State Supreme Court Judge Michael Obus, who presided over the first trial, recently dismissed an enterprise corruption charge against the men - a charge of running a business criminally which is normally reserved for mobsters.

The first trial lasted six months and cost prosecutors US$6 million. The retrial is expected to last four months.

If convicted, the two men face up to 30 years in prison.

Kozlowski and Swartz built Tyco into one of the world's biggest conglomerates. Their trial was seen as a pivotal one among a slew of US corporate scandals in recent years.

Tyco's general counsel Mark Belnick was acquitted in a separate case last year of conspiring with Kozlowski and Swartz to take a US$17 million bonus to help Kozlowski cover up suspicious payments to his girlfriend and falsifying business records to conceal US$14 million in loans.

http://xtramsn.co.nz...4051265,00.html
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Posted 27 January 2005 - 02:21 PM

WorldCom chief 'told lie after lie'
By Ken Belson in New York
January 27, 2005


Opening the long-awaited fraud trial of Bernard Ebbers, who as chief executive presided over the spectacular collapse of the grossly inflated telecommunications giant WorldCom, a federal prosecutor argued on Tuesday that Ebbers told "lie after lie after lie" to cover up the company's mounting losses and stave off the downfall.

Ebbers had known that WorldCom's "books were cooked", said David Anders, the US lawyer who is leading the government's case, because "he told people to do it" as early as the year 2000.

"This wasn't just the problem of Bernard Ebbers, the CEO," Mr Anders told the jury at the federal courthouse in New York, "but Bernard Ebbers who owned millions of shares himself."

Contributing to his motive to lie, Mr Anders said, was the fact that Ebbers had pledged millions of his WorldCom shares as collateral for personal loans.

But Ebbers' lawyers said he was not guilty of any crime and had been misled by subordinates he trusted to handle WorldCom's complex finances.

Reid Weingarten, the lead defence lawyer, compared the government's case to a television docudrama where facts are conveniently left out if they do not fit the planned storyline.

"There are zillions of documents in this case and there ain't one smoking gun," Mr Weingarten said in an opening statement twice as long as the prosecution's.

He said his client was in the dark about the fraud, a victim himself who never acted as if he were engaged in a conspiracy and who lost hundreds of millions of dollars of his own money as a result of the actions of others.

He said Ebbers was loyal to WorldCom (renamed MCI after it emerged from bankruptcy) to the end, even after he was "unceremoniously" dumped as chief executive.

Ebbers had little background in accounting, his lawyer said, and relied on others to handle accounting intricacies.

Mr Weingarten accused the government's central witness, Scott Sullivan, former WorldCom chief financial officer, of masterminding the fraud, charging that Sullivan "is more than a liar, but a poseur".

The trial is the latest in a string of high-profile corporate criminal cases at the New York courthouse recently, including those of: Martha Stewart, now serving a prison term for lying to investigators; John Rigas, the founder of Adelphia Communications; and Frank Quattrone, the most successful investment banker of the 1990s tech boom. All were found guilty by juries last year.

Ebbers, 63, sat motionless through the opening statements in the third-floor courtroom, though his face at times turned red and his brow often furrowed. Opening arguments in the case came almost a year after Ebbers was indicted on charges of conspiracy, securities fraud and filing false claims with regulators.

The $US11 billion ($14.3 billion) fraud led WorldCom in 2002 to file for bankruptcy protection, the largest in American history.

The indictment was the culmination of work by prosecutors, who won guilty pleas from five of Ebbers' subordinates, including Sullivan.

The case is being closely watched not only because of the scale of WorldCom's collapse but also because it may provide an indication of how juries will respond to claims by Ebbers and other chief executives that they knew nothing about schemes hatched on their watch.

http://www.smh.com.au/news/Business/WorldC...6415664557.html
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Posted 29 January 2005 - 03:05 AM

June 17, 2004

Contacts:
Robert Nardoza
United States Attorney's Office
(718) 254-6323

PRESS RELEASE

Top Corporate Officers of Allou Healthcare Indicted in Massive Corporate Fraud, Arson,Insurance Fraud and Bribery Schemes

ROSLYNN R. MAUSKOPF, United States Attorney for the Eastern District of New York and a member of the President's Corporate Fraud Task Force, WILLIAM E. KEZER, Postal Inspector-in-Charge, New York, ROSE GILL HEARN, Commissioner, New York City Department of Investigation, NICHOLAS SCOPPETTA, Commissioner, New York City Fire Department, WILLIAM G. McMAHON, Special Agent-in-Charge, Bureau of Alcohol, Tobacco, Firearms & Explosives, and RAYMOND W. KELLY, Commissioner, New York City Police Department, announced today the indictment of HERMAN JACOBOWITZ, VICTOR JACOBOWITZ, JACOB JACOBOWITZ, *** JACOBOWITZ, IRVIN BROWN, JACOB FEKETE, NACHMAN LICHTER and SHOLEM KLEIN in connection with a massive corporate fraud scheme that led to the bankruptcy of Allou Healthcare, Inc. ("Allou"), an arson that damaged Allou's Brooklyn warehouse and that served as the basis for fraudulent claims submitted by the defendants to Allou's insurance carriers, and a bribery scheme intended to falsify the Fire Marshal's report on the arson. (1)

The defendants will be arraigned on the indictment this afternoon by United States District Judge John Gleeson at the U. S. Courthouse, 225 Cadman Plaza East, Brooklyn, New York.

THE CORPORATE FRAUD

The indictment unsealed in the United States District Court in Brooklyn this morning charges Allou's top officers and controlling shareholders with a long-running corporate fraud scheme that looted Allou and plunged it into bankruptcy in April 2003, destroying the holdings of thousands of investors. (2) Prior to its bankruptcy, Allou, which distributed health and beauty aids and pharmaceuticals, was a public company traded on the American Stock Exchange and was one of the largest companies on Long Island with approximately 300 employees and over $500 million in reported annual revenues. Today's indictment expands the charges brought against these defendants in criminal complaints at the time of their arrest in August 2003.

The indictment charges that defendants HERMAN JACOBOWITZ (Allou's chief executive officer), VICTOR JACOBOWITZ (the chairman of Allou's board of directors), JACOB JACOBOWITZ (Allou's executive vice president), *** JACOBOWITZ (manager of various companies controlled by the Jacobowitz family) and IRVIN BROWN (the head of Allou's computer department) engaged in a scheme to defraud both Allou's creditors and shareholders by issuing false and misleading financial statements to its lenders and to the investing public. During the course of the long-running scheme, which the indictment alleges began in 1991, Allou had a line of credit from a syndicate of banks that permitted it to borrow an amount equal to 60% of the value of its inventory and 85% of the value of its accounts receivable. Allou's top officers fabricated documentation for hundreds of millions of dollars in non-existent inventory and sales in order to increase the funds Allou could borrow under its line of credit.

Specifically, Allou funds were sent to JACOBOWITZ-controlled entities for phantom purchases of inventory, and then a portion of these funds were sent back to Allou in payment of bogus invoices reflecting non-existent sales. Thus, the defendants engaged in a circular movement of funds to inflate inventory and accounts receivable in order to fraudulently increase Allou's borrowing power. As part of this scheme, the indictment alleges that the defendants siphoned millions of dollars from Allou for their personal enrichment by transferring more funds from Allou to the JACOBOWITZ-affiliated companies than was returned by these companies to Allou.

The indictment charges that, in addition to misrepresenting Allou's true financial condition to its lenders, the defendants also provided the same fraudulent and misleading financial information to the Securities and Exchange Commission and the investing public. Furthermore, in order to meet its quarterly and annual earnings projections, Allou's top officers manipulated the value of its inventory to create additional earnings, which had the effect of fraudulently inflating the price of Allou's stock.

Finally, the indictment charges that HERMAN JACOBOWITZ falsely certified to the SEC that the quarterly and annual reports filed by Allou with the SEC fairly presented the financial condition and results of Allou's operations.

To facilitate the scheme and conceal it from auditors and regulators, the indictment alleges that the defendants created, in effect, two sets of financial books within Allou's computer system. This dual system permitted the co-conspirators to use a secret password to access data regarding the bogus sales and inventory, while keeping these fabricated transactions concealed from most of Allou's employees, and permitted Allou to provide this false information to its lenders and auditors.

The indictment alleges that, in April 2003, as a result of the unraveling of the defendants' fraudulent scheme, Allou was forced into bankruptcy and trading in its stock was halted. As a result of Allou's bankruptcy, the shares of Allou common stock held by the investing public are now virtually worthless. It is estimated that Allou's lenders lost approximately $140 million as a result of the scheme.

ARSON, BRIBERY AND INSURANCE FRAUD As alleged in the indictment, on September 25, 2002, between 11:00 p.m. and midnight, a three alarm fire broke out at a warehouse located at 80 Evergreen Avenue in Brooklyn, New York. Approximately 245 firefighters responded to the blaze, with two suffering injuries. The Evergreen warehouse stored health and beauty aid products, fragrances and cosmetics for Allou. The cause of the fire was investigated by the Joint Arson Task Force, which included members of ATF, the Arson and Explosion Squad of the New York City Police Department, and the Special Investigations Unit of the Bureau of Fire Investigation of the New York City Fire Department. Fire Marshals from the Special Investigations Unit determined that the fire was the result of arson. In part because the Fire Marshals declared the fire an arson, Allou's insurance carriers withheld payment on Allou's insurance claim.

As charged in the indictment, the defendants HERMAN JACOBOWITZ, VICTOR JACOBOWITZ and NACHMAN LICHTER caused the fire to be deliberately set at the Evergreen warehouse. HERMAN JACOBOWITZ, VICTOR JACOBOWITZ and IRVIN BROWN then caused Allou to submit a false and fraudulent insurance claim regarding its losses attributable to the fire. The defendants participated in the arson and engaged in the insurance fraud scheme, the indictment alleges, in order to conceal the massive ongoing bank fraud and securities fraud at Allou.

The indictment charges that, after the investigating Fire Marshals issued a Fire and Incident Report declaring that the fire was caused by arson, and Allou's insurers consequently refused to pay its claim, the defendants HERMAN JACOBOWITZ, VICTOR JACOBOWITZ, *** JACOBOWITZ, JACOB FEKETE, NACHMAN LICHTER and SHOLEM KLEIN sought to bribe a New York City Fire Marshal to change the Fire Department's official report. In order to provide the Fire Department with an ostensible basis to change its conclusion regarding the cause of the fire, the indictment alleges that the defendants HERMAN JACOBOWITZ, VICTOR JACOBOWITZ, *** JACOBOWITZ, JACOB FEKETE, NACHMAN LICHTER and SHOLEM KLEIN obstructed the federal grand jury investigation into the fire by fabricating and planting evidence, namely burned electric space heaters, in the fire debris at the Evergreen warehouse. FEKETE then arranged to have Fire Marshals -- acting undercover as corrupt Fire Marshals -- recover this bogus evidence from the warehouse as part of the investigation into the cause of the fire.

The indictment alleges that on July 30, 2003 and August 1, 2003,

defendant JACOB FEKETE gave an undercover Fire Marshal a total of $50,000 in cash, toward a promised bribe of $100,000, in exchange for a revised Fire and Incident Report declaring that the cause of the Fire at the Evergreen warehouse was accidental. "Today's indictment presents a portrait of a corporation whose top executives corrupted every aspect of their company's operations and who violated nearly every criminal statute designed to address corporate malfeasance, " stated United States Attorney ROSLYNN R. MAUSKOPF. "The sheer scope and variety of the crimes committed by these defendants is staggering: a massive, decade-long fraud scheme, arson and bribery of a government official. Moreover, the fact that these crimes were carried out by the top officers of a public company to enrich themselves at the expense of their shareholders, creditors and insurers makes their conduct even more outrageous. This prosecution demonstrates that, using the new tools provided to prosecutors by the Sarbanes-Oxley Act, we will ensure that such shocking criminal conduct will be dealt with severely." Ms. MAUSKOPF thanked the Securities and Exchange Commission for their assistance in the corporate fraud investigation, and King's County District Attorney Charles J. Hynes for his office's assistance in the arson investigation.

WILLIAM E. KEZER, Postal Inspector-in-Charge, stated, "The senior executives at Allou Healthcare ignored their fiduciary duties to the company's stockholders by committing widespread accounting fraud which bankrupted the company. They also engaged in arson and bribery to cover up their egregious offenses. As a member of the President's Corporate Fraud Task Force, the US Postal Inspection Service will continue to aggressively investigate and work with our law enforcement partners to bring to justice those who commit acts of corporate fraud."

ROSE GILL HEARN, Commissioner, New York City Department of Investigation, stated, "The avarice of these defendants canceled out any concern for the fact that by torching their Brooklyn warehouse they created a horribly dangerous situation in which at least two of the 245 responding firefighters were injured and any number could have been killed as they spent nearly 15 hours trying to extinguish a raging inferno. The defendants' conduct became even more reckless when they sought to bribe a Fire Marshal by promising him $100,000 in cash in exchange fora new fire report declaring that the fire was accidental in origin rather than arson. I congratulate all of the investigators who contributed to this case, especially to those from DOI who orchestrated dozens of undercover operations and tape recorded conversations to help develop the weighty evidence that resulted in today's indictment."

"The Fire Department applauds the outstanding investigative efforts and diligence of the U.S. Attorney's Office as well as the many other local and federal agencies involved in bringing about this indictment," said Fire Commissioner NICHOLAS SCOPPETTA. "I am particularly proud of the Fire Marshals from the FDNY's Bureau of Fire Investigation, for their ingenuity and resourcefulness during this lengthy investigation."

WILLIAM G. McMAHON, Special Agent-in-Charge, Bureau of Alcohol, Tobacco, Firearms Explosives, stated, "This case is a classic example of individual and corporate greed which ultimately resulted in victimizing the insurance companies and creditors, the public investors and more seriously, the very firefighters who responded to the fire. Through the efforts of the ATF Joint Arson Task Force and our other partners, we are sending a message to the criminal-corporate world that arson-for-profit schemes will not be tolerated. Those individuals who use arson to line their own pockets will be thoroughly investigated, arrested and prosecuted to the full extent of the law."

RAYMOND W. KELLY, Commissioner, New York City Police Department, stated, "These individuals were paid to safeguard a corporation's assets and shareholders' interests. Instead, they used their positions to loot and steal. These arrests and indictment signify this Department's commitment to work with other agencies in pursuing criminals whether they operate in alleyways or boardrooms."

If convicted, the defendants face a maximum sentence of 30 years' imprisonment on each of the conspiracy and bank fraud counts; 25 years' imprisonment on the securities fraud count; 20 years' imprisonment on each of the mail fraud counts, the counts charging false SEC filings, the counts charging false certifications of financial reports and the count charging obstruction of justice; 40 years' and 10 years' imprisonment respectively on the two arson counts; and 15 years' and 10 years' imprisonment respectively on the two bribery counts. On each of the counts, the defendants also face fines ranging from $250,000 to $1,000,000 or twice the loss resulting from the offense.

In addition, the indictment seeks a forfeiture judgment against all defendants including, but not limited to, a sum of $140 million, for which the defendants are jointly and severally liable. The indictment also seeks forfeiture of assets of the defendants HERMAN JACOBOWITZ, VICTOR JACOBOWITZ, JACOB JACOBOWITZ, *** JACOBOWITZ and IRVIN BROWN that are directly traceable to the bank fraud. Finally, the indictment seeks forfeiture of substitute assets consisting of 18 real properties and cooperative apartments located in New York.

The government's case is being prosecuted by Assistant United States Attorneys Ronald White, Richard Faughnan, Richard Weber and Kathleen Nandan.


The Defendants:


VICTOR JACOBOWITZ

176 Penn Street

Brooklyn, N.Y. 11211

DOB: 6/18/32


HERMAN JACOBOWITZ

116 Rutledge Street

Brooklyn, N.Y. 11211
DOB:7/8/60

JACOB JACOBOWITZ
171 Hooper Street
Brooklyn, N.Y. 11211
DOB:4/29/61

*** JACOBOWITZ
73 Lynch Street
Brooklyn, N.Y. 11211
DOB: 10/25/63

IRVIN BROWN
6 Esther Lane
Monsey, N.Y. 10952
DOB: 6/28/60

JACOB FEKETE
364 Marcy Avenue
Brooklyn, N.Y. 11206
DOB: 12/30/63

NACHMAN LICHTER
3 Fessler Drive
Monsey, N.Y. 10952
DOB: 8/4/70

SHOLEM KLEIN
133 Gerry Street, #4R

Brooklyn, N.Y. 11206

DOB: 10/20/78


1. The charges contained in the indictment are merely allegations and the defendants are presumed innocent unless and until proven guilty

2. The defendants HERMAN JACOBOWITZ, VICTOR JACOBOWITZ, JACOB JACOBOWITZ, and IRVIN BROWN have also been charged with violations of federal securities laws in a related civil action filed by the United States Securities and Exchange Commission today in the Eastern District of New York.

http://www.usdoj.gov...r/2004jun17.htm
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#12 User is offline   lara84 

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Posted 30 September 2008 - 08:25 AM

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