The law allowing civil commitment of "sexually dangerous" federal inmates intrudes on police powers that the Constitution reserves for states, many of which have their own similar statutes, a three-judge panel of the 4th U.S. Circuit Court of Appeals said.

Civil commitment power "is among the most severe wielded by any government," Judge Diana Gribbon Motz wrote. "The Framers, distrustful of such authority, reposed such broad powers in the states, limiting the national government to specific and enumerated powers."

In upholding a decision by U.S. District Judge W. Earl Britt of Raleigh, N.C., the 4th Circuit became the first federal appeals court to rule on an issue that has divided courts nationwide. A judge in Minnesota reached the same conclusion as Britt, while courts in Hawaii, Oklahoma and Massachusetts upheld the measure.

Thursday's ruling is binding only in the states included in the 4th Circuit: Virginia, North Carolina, South Carolina, West Virginia and Maryland.

U.S. Department of Justice spokesman Charles Miller said it was too early to comment on what steps the government might take next. The department could appeal the ruling to the U.S. Supreme Court or seek a rehearing before the full federal appeals court.

Citing separation of powers, the state's 3rd District Court of Appeal in Sacramento ruled Wednesday it could not intervene because Gov. Arnold Schwarzenegger had not signed the bill into law.

The lawsuit was filed by the Howard Jarvis Taxpayers Association, with support from most Republican state lawmakers. It argued that the Democratic majority acted illegally when it passed the tax increases because it did so with a simple majority vote.

The state Constitution requires a two-thirds majority for tax increases.

John Coupal, president of the taxpayers association, said the group was considering an appeal to the state Supreme Court and a new lawsuit in federal court because the vote violated the constitutional rights of the Republican minority members.

"We are still looking at this case for potential appeals because we believe this issue needs to be resolved," he said.

Schwarzenegger vetoed the $18 billion proposal, which included a mix of tax increases and spending cuts as a way to start closing California's $42 billion budget deficit. The governor said the package didn't make enough labor and environmental concessions.

With his promise that he'd made no deals to gain the appointment, Burris cleared what he called one of the two hurdles between him and the oath that would make him Illinois' junior senator. Senate Democrats raised both obstacles.

The other hurdle, the signature that Illinois Secretary of State Jesse White has so far declined to provide on paperwork certifying Burris' appointment, is in the hands of the Illinois Supreme Court. White has said the governor shouldn't have appointed someone to fill President-elect Barack Obama's Senate seat, given the corruption charges against him.

"I feel like I've passed this test with flying colors," the 71-year-old Burris told reporters Thursday after testifying for almost 90 minutes before the committee, which later voted to recommend impeaching the governor. "I have nothing to hide."

Now Burris awaits the court's decision. It isn't clear how long that will take.

Blagojevich was arrested Dec. 9 on federal charges that include allegations he schemed to sell or trade Obama's Senate seat.

The two-term Democratic governor has denied any wrongdoing, but Senate Democrats had warned that the corruption allegations would strip credibility from anyone he named to fill the vacancy. Blagojevich ignored them and appointed Burris on Dec. 30, creating a furor.

White pressed the governor not to fill the seat before Burris' appointment, then withheld his signature as a "ceremonial" stand against the move, White spokesman Dave Druker said Thursday. If the court says White has to sign, he will, according to Druker.

Lennar Corp. shares took a beating Friday morning after self-proclaimed fraud buster Barry Minkow criticized the financial structure of some of its deals.

Shares of the nation's second-largest homebuilder (NYSE: LEN) were down $2.20 to $9.22 shortly before noon.

Minkow, who served more than seven years for a stock fraud involving carpet-cleaning company ZZZZ Best, released a list of what he termed 10 red flags involving Lennar. He now operates the Fraud Discovery Institute and has posted details of his allegations at www.frauddiscoverynetwork.com.

Lennar provided "vague and less-than-transparent responses to the SEC inquiries about off-balance sheet, joint-venture debt,” the institute alleges.

Minkow’s group alleges that the builder has “exhibited a pattern of behavior over a sustained period of time of deceptive business practices, ranging from building homes using Chinese drywall to cut costs, to causing the California Public Retirement Fund (CALPERS) to lose approximately $1 billion.”

Lennar said it was working on a response to Minkow’s allegations.

The institute said it has sent a letter of complaint to the Securities and Exchange Commission, the FBI and the IRS.

The SEC is examining whether the hedge fund, Pequot Capital Management, traded Microsoft Corp. shares on confidential information provided by a former employee of the technology company that it hired, a person familiar with the inquiry said Thursday.

The person spoke on condition of anonymity because the SEC has not publicly acknowledged reopening the probe. SEC spokesman John Nester declined to comment Thursday.

New information that surfaced last month revived interest in the case. Documents that emerged in a divorce proceeding in Connecticut showed that Pequot began paying $2.1 million to a key witness in the case in mid-2007.

The documents show a payment by Pequot of $700,000 at that time to David Zilkha, a former Microsoft employee later hired by the hedge fund. Zilkha received an additional $700,000 in mid-2008 and was slated to receive the same amount this year, according to the documents in the divorce case between Zilkha and his ex-wife, Karen Kaiser.

"To me it smells like hush money, but I have no idea," her attorney, Mark Sherman, told The Associated Press Thursday.

Zilkha's lawyer, Norm Pattis, declined to comment.

Pequot, a $4.3 billion hedge fund based in Westport, Conn., and its founder and chairman, Arthur Samberg, have denied any wrongdoing.

Pequot spokesman Jonathan Gasthalter said the payments to Zilkha were made "pursuant to the settlement of a civil claim related to his employment and termination by Pequot that was first presented to the firm in January 2007 after all investigations had been closed."

Gasthalter said Pequot will cooperate fully with all requests for information and is confident that its trading in Microsoft shares "was at all times proper."

"No one should have to worry about getting a death threat because of the way he or she votes," said James Bopp Jr., an attorney representing two groups that supported Proposition 8, Protect Marriage.com and the National Organization for Marriage California. "This lawsuit will protect the right of all people to help support causes they agree with, without having to worry about harassment or threats."

The lawsuit, filed Wednesday in federal court in Sacramento, asks the court to order the secretary of state's office to remove all donations for the proposition from its Web site.

It also asks the court to relieve the two groups and "all similarly situated persons" from having to meet the state's campaign disclosure requirements. That would include having to file a final report on Proposition 8 contributions at the end of January, as well as reports for any future campaigns the groups undertake.

Proposition 8, approved by 52.3 percent of California voters on Nov. 4, reversed a state Supreme Court decision allowing gay marriage. The measure's opponents have asked the Supreme Court to overturn it.

The lawsuit filed Wednesday cites a series of incidents in which those who gave money to support Proposition 8 received threatening phone calls, e-mails and postcards. One woman claims she was told: "If I had a gun, I would have gunned you down along with each and every other supporter."

Another donor reported a broken window, one said a flier calling him a bigot was distributed around his hometown and others received envelopes containing suspicious white power, according to the lawsuit.

Minneapolis attorney Tom Kelly says he concluded that the state Supreme Court would not accept a petition for further review of the case, so it would be a futile exercise. He says that means the legal wrangling in the case is over.

Thursday was the 30-day deadline for Craig to ask the high court to review a Minnesota Court of Appeals decision that went against him.

The Idaho Republican was arrested in 2007 by an undercover police officer who was conducting a sting operation against men cruising for gay sex at the Minneapolis-St. Paul International Airport. The senator quietly pleaded guilty to disorderly conduct and paid a fine, but changed his mind after word of his arrest became public. He insisted he was innocent and that he was not gay. He did not seek re-election.