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Ex-Alaska Governor's top aide to plead guilty to fraud
Political and Legal | 2008/03/04 07:34
A top aide to former Alaska Gov. Frank Murkowski admitted on Monday to fraud as part of a wide-ranging corruption conspiracy that has ensnared several state politicians and implicated many of Alaska's top political figures.

Jim Clark, who was the former governor's chief of staff, agreed to plead guilty to a single count of conspiracy fraud in a filing in U.S. District Court in Anchorage. He was scheduled to enter his plea at an arraignment hearing on Tuesday.

Clark admitted to taking $68,550 in illegal contributions from the state's largest oil-services company, VECO Corp, for Murkowski's failed 2006 reelection bid in exchange for working on VECO's behalf to secure an industry-friendly version of tax legislation, according to the plea agreement.

He is the first official from the Murkowski administration to be charged in a federal criminal investigation that has so far resulted in convictions of three former state lawmakers, the indictment of a fourth and guilty pleas from two top VECO executives and one former lobbyist.

Murkowski, who was also a former U.S. senator, was soundly defeated in the 2006 Republican primary by Sarah Palin, Alaska's current governor who ran as an anti-corruption reformer.

Clark and VECO conspired to hide the illegal contributions "in a manner so that the public would be deceived and the payments would not be disclosed, as required by law," according to charging documents.

The federal investigation centers around a revision of an oil-tax law that passed the state legislature in 2006 at Murkowski's urging. Bill Allen and Rick Smith, two former VECO executives, pleaded guilty to bribing state lawmakers for a pro-industry version of the bill and other favorable actions.

Former state Senate President Ben Stevens, son of powerful U.S. Senator Ted Stevens, received much of that bribe money, Allen and Smith testified in court last year.



Barr Shares Jump on Patent Dispute Win
Securities | 2008/03/04 07:28
Shares of Barr Pharmaceuticals Inc. jumped Tuesday as Wall Street predicted the drug developer would gain more revenue from generic sales of the birth-control pill Yasmin following a patent dispute victory.

The stock gained $3.80, or 8.3 percent, to $49.47 in midday trading. The shares have traded between $45.41 and $58.38 over the last 52 weeks, and are off 14 percent since the start of the year.

The patent dispute stretches back to 2005, when Barr asked the Food and Drug Administration to approve a generic version of Berlex and Schering AG's Yasmin. The companies then sued Barr. Germany-based Bayer AG bought Schering in 2006, becoming Bayer Schering Pharma AG, and inherited the ongoing lawsuit.

The Yasmin patent loss is part of a wider movement by generic drug developers to chip away at lucrative patents before they expire. Yasmin had sales of about $570 million in 2007. Other large generic drug companies, including Teva Pharmaceutical Industries Ltd. and Mylan Inc. are embroiled in their own Paragraph IV, or patent challenges, with big pharma.

Bayer has not yet said whether it will appeal the U.S. District Court for the District of New Jersey's ruling, which holds that the patent is invalid because it is obvious. However, the company has said it continues to retain exclusive distribution rights in the U.S. until March 2009.

Barr did not include sales of generic Yasmin in its 2008 guidance and stands to benefit as it will likely launch a generic version of in 2008, several analysts said.

"Despite a likely appeal, we believe that upon final approval, Barr will risk a launch to bolster a 2008 earnings outlook that was lackluster without patent wins," said Citi Investment Research analyst Andrew Swanson, reaffirming a "Hold" rating and upgrading his price target to $57 from $55.

He said Barr would face only a low risk of losing an appeal, citing prior case law, and added the decision could even effect the patent for Bayer's birth-control pill Yaz, which is a low-dose version of Yasmin.

Cowen and Co. analyst Ken Cacciatore reaffirmed a "Neutral" for Barr and said generic Yasmin sales could add between $80 million and $100 million to revenue in 2008 and then between $110 million and $140 million in 2009

"Given the lack of likely meaningful additional competition due to the difficult nature in manufacturing oral contraceptives, we believe that generic Yasmin should remain fairly stable for the following years thereafter," he said, in a note to investors.

Meanwhile, Goldman Sachs analyst Randall Stanicky and Banc of America analyst Frank H. Pinkerton reaffirmed "Buy" ratings for Barr.



Another law firm surfaces in Rezko case
Legal Business | 2008/03/04 06:33

The name of the Bryan Cave law firm has come up in pretrial legal battles in the criminal case against politically connected entrepreneur Antoin "Tony" Rezko.

In a footnote to a motion last week seeking to exclude some government evidence against Rezko, his defense lawyers disclosed for first time that prosecutors have alleged that Rezko paid a $1.5 million bribe to Iraq's former electricity minister to obtain a contract in that country. The alleged bribe was paid from an escrow account held by Bryan Cave, prosecutors said.

Rezko's lawyers said that every aspect of the bribe claim is "demonstrably false."

The bribe allegation is unrelated to the federal influence-peddling and fraud charges against Rezko, whose trial began Monday with jury selection. Its disclosure shows the scope of Rezko's relationship with lawyers who have represented his real estate and restaurant businesses in civil matters.

Another law firm, Freeborn & Peters, was identified by prosecutors last month for its involvement in a $3.5 million overseas wire transfer to Rezko and his associates. The government did not suggest anything illegal on the law firm's part, but evidence of the wire transfer led a federal judge to revoke Rezko's bail in January.

Another one of Rezko's lawyers, Gene Murphy, was a partner in Bryan Cave's Chicago office from April 2004 to August 2005. When Murphy left Bryan Cave, the firm stopped representing Rezko, said Jeffrey Morof, the head of Bryan Cave's Chicago office.

Murphy, who has started his own law firm, said the claim that an alleged bribe came from a Bryan Cave account is "absolutely baseless." He declined further comment on Rezko, other than adding that he no longer represents him.

Morof also denied that the firm had any involvement in an alleged transfer of funds to the former electricity minister.

The bribe allegation came up in a private hearing held in the judge's chambers, according to Rezko's lawyers. A spokesman for the U.S. attorney's office declined to comment.

Blogger unmasked: A vocal critic of some patent lawsuits who blogged anonymously under the pseudonym "Patent Troll Tracker" has revealed himself after being pressured by one of his frequent targets. The blogger is Rick Frenkel, an intellectual-property lawyer at Cisco Systems.

He recently disclosed on his blog that he faced an e-mail threat of being named. In his blog, he tracked lawsuits by companies that acquired patents solely to sue for infringement. Chicago lawyer Raymond Niro represents a number of these entities that have come to be known by the derogatory term of patent trolls.

Niro, tired of being criticized anonymously in the blog, had recently offered a $10,000 bounty for anyone who unmasked the blogger. Niro said no one has stepped forward to claim the reward.

On the move: Assistant U.S. Atty. Daniel Rubinstein has joined Greenberg & Traurig's Chicago office as a shareholder, the firm's equivalent of partner. He worked in the U.S. attorney's office in Chicago for four years, primarily in the complex fraud section. ... Sonnenschein Nath & Rosenthal hired Brian Lambert as its chief marketing officer. He most recently was at Wachovia Corp., where he was head of business development in the treasury services division. ... Jennifer Nijman, a former president of the Chicago Bar Association, has left Winston & Strawn to start her own firm with Susan Franzetti, a solo practitioner who previously worked at Sonnenschein. Their practice will focus on representing businesses in environmental matters.



Suspect in Ivy League ID Theft in Court
Breaking Legal News | 2008/03/04 01:32
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.

"I just hope that she never gets to see the light of day again," she said.

Reed answered routine questions from U.S. Magistrate Judge William M. Catoe and showed no emotion during the brief proceedings. Catoe entered a not guilty plea to all charges.

Reed, who was arrested Feb. 3 outside Chicago, is 29; Brooke Henson would be 29 in April.

Reed began posing as Henson in October 2003, obtaining an ID card in Ohio using her name, date of birth and Social Security number, Assistant U.S. Attorney Walt Wilkins said.

Two months later, Reed took a high school equivalency test in Ohio using Henson's name and received a degree, Wilkins said. Again using Henson's information, she took a college entrance exam in California in May 2004, using her score to apply for admission to Columbia, the prosecutor said.

Reed attended the New York school for two years, beginning in August 2004, Wilkins said. She then applied for and received student loans in Henson's name, in amounts investigators have said exceeded $100,000.

Reed then applied to the state of South Carolina for a duplicate copy of Henson's birth certificate, which she received at an address in Massachusetts. In 2006, Reed also applied for a U.S. passport in Henson's name, Wilkins said.

Investigators have said Reed stole multiple people's identities and also was admitted to Harvard and California State University, Fullerton, though she has not been charged in those cases and Wilkins did not discuss them Monday.

Assistant Federal Defender Lora Collins, who was appointed Monday to represent Reed but did not appear with her in court, did not immediately return a message seeking comment.

A message left at Columbia University's public affairs office after business hours Monday was not immediately returned.



Rigas appeal denied by Supreme Court
Breaking Legal News | 2008/03/03 09:00
Adelphia Communications founder John Rigas and his son, Timothy, lost their final appeal Monday of their convictions for fraud that led to the collapse of the nation's fifth-largest cable television company. The Supreme Court rejected the appeal without comment. The elder Rigas, 83, is serving a 15-year prison term, while his son, the former chief financial officer, was sentenced to 20 years in prison.

The 2nd U.S. Circuit Court of Appeals in New York last year upheld their convictions on charges of securities fraud, conspiracy to commit bank fraud and bank fraud.

Lawyers for the two men argued that fraud charges should be thrown out because accounting terms were not explained to the jury and because the Rigases properly followed accounting rules during transactions that the government said were fraudulent.

Federal investigators began looking at Adelphia after it said in a footnote to a press release in 2002 that the company had approximately $2.2 billion in liabilities not previously reported on its balance sheet.

At trial, prosecutors said the Rigas family used the business for personal expenses, withdrawing millions of dollars to finance everything from 100 pairs of bedroom slippers for Timothy Rigas to more than $3 million to produce a film by John Rigas' daughter, Ellen, to $26 million on 3,600 acres of timberland to preserve the view outside the father's home.

Prosecutors said John Rigas once even spent $6,000 to fly two Christmas trees to New York for his daughter.

Last year, another son, Michael Rigas, was sentenced to 10 months home confinement after pleading guilty to a charge of making a false entry in a company record.

John Rigas, the son of Greek immigrants, created Adelphia from nothing when he bought the rights to wire the town of Coudersport, Pa., for cable television in 1952.

The problems arose after he took Adelphia public in 1986 and the company grew rapidly in the late 1990s.

Adelphia served more than 5 million customers in 31 states. It collapsed into bankruptcy in 2002.

It moved to Greenwood Village, Colo. Comcast Corp. in Philadelphia and Time Warner Cable, a unit of Time Warner Inc., have since bought Adelphia's cable assets.



Qualcomm Loses Another Legal Fight
Patent Law | 2008/03/03 08:58
Mobile technology company Qualcomm absorbed another legal blow Monday when a British court ruled its claims of patent infringement against handset maker Nokia were invalid.

The U.K. High Court said Nokia Corp., the world's largest mobile phone maker by sales, had not infringed two patents regarding GSM mobile phone standards.

Qualcomm Inc. has been trying to bring an injunction against Nokia that would prevent it from selling products using the GSM patents in the U.K. GSM, or Global System for Mobile Communications, is the world's dominant second-generation mobile phone technology standard.

Qualcomm, which has filed 11 lawsuits around the world against Nokia in the past two years, has failed to win over the courts in its fight the Finnish handset maker.

"We are pleased with the Court's decision that the patent claims are invalid and believe it is consistent with and supported by the facts," said Nokia Chief Financial Officer Rick Simonson. "This is the second court to conclude that Qualcomm does not have relevant and valid GSM patents."

Last week, the U.S. International Trade Commission turned down Qualcomm's petition for a review of an earlier decision, which said Nokia hadn't infringed on three patents, as claimed by Qualcomm.

The two mobile phone-technology giants have tussled in court over patent-licensing agreements that expired in April last year. Qualcomm charges patent royalties to mobile phone makers, which Nokia and some other companies say are excessive.

Richard Windsor, an analyst at Japanese investment bank Nomura said that the focus now shifts to a Delaware Court and a 3G patent dispute, where arguments are expected to begin this summer.

"Qualcomm is weak in GSM and we think it has been deploying a strategy of firing out legal long-shots," said Windsor. "The hope is that a victory in one of these cases will bring Nokia to the negotiating table, but, so far, it's not achieved this."

"The main focus now is going to be the Delaware case in July," said Windsor. "However, it's our view that Qualcomm is unlikely to prevail in that case either."

Andrew Gilbert, president of Qualcomm in Europe, said the British court's decision was "not devastating."



Same-sex marriage on court docket
Practice Focuses | 2008/03/03 08:57

As gay-rights groups call for marital equality and opponents warn of a public backlash, societal decay and religious conflict, the California Supreme Court is prepared for an epic three-hour hearing Tuesday on the constitutionality of the state law defining marriage as the union of a man and a woman. It shapes up as the most momentous case the court has heard in decades - comparable to the 1981 ruling that guaranteed Medi-Cal abortions for poor women, the 1972 ruling that briefly overturned the state's death penalty law, and the 1948 decision, cited repeatedly in the voluminous filings before the court, that struck down California's ban on interracial marriage. The arguments on both sides are weighty.

Supporters of same-sex marriage invoke the state's commitment to equality regardless of gender or sexual orientation, the needs of the children of gay and lesbian couples, the persistence of societal discrimination, and legal rights such as freedom of expression, association and privacy.

In defense of its law, the state cites a cultural tradition far older than statehood, the will of the people as expressed in a 2000 initiative, the steps California has already taken toward equal rights for gays and lesbians, and the power of lawmakers and voters to determine state policy.

Beyond those arguments, groups opposing same-sex marriage want the court to justify the state law on moral or scientific grounds, as an affirmation that limiting matrimony to a man and a woman is best for children and society.

A ruling is due within 90 days. The case combines four lawsuits - three by nearly two dozen couples who want to marry and the fourth by the city of San Francisco, which entered the dispute after the court overturned Mayor Gavin Newsom's order that cleared the way for nearly 4,000 same-sex weddings in February and March 2004.

The suits rely on the California Constitution, which state courts have long interpreted as more protective of individual rights than the U.S. Constitution. The plaintiffs invoke a passage in the 1948 ruling on interracial marriage - the first of its kind by any state's high court - in which the justices recognized a "right to join in marriage with the person of one's choice."

Judge Richard Kramer of San Francisco Superior Court echoed that language in March 2005, when he ruled that the state's ban on same-sex marriage violated "the basic human right to marry a person of one's choice." He also said the marriage law constitutes sex discrimination - prohibited by another groundbreaking California Supreme Court ruling in 1971 - because it is based on the gender of one's partner.

But a state appeals court upheld the law in October 2006. In a 2-1 decision, the court rejected Kramer's findings of discrimination and said California was entitled to preserve the historic definition of marriage while taking steps to protect the rights of same-sex couples who register as domestic partners.

Advocates crowd in

As the case reached the state's high court, the participants and the arguments multiplied. Conservative religious organizations, including sponsors of the 2000 ballot measure that reinforced the opposite-sex-only marriage law, accused the state of making a half-hearted defense of its law and sought to justify it as a pro-family measure. Marriage is for procreation, and children fare best with married fathers and mothers, they argued. They also said the definition of marriage is so deeply engrained in the law that judges have no power to change it.

The coalition of conservative religious groups warned that a ruling against the state law would "fracture the centuries-old consensus about the meaning of marriage."

An opposing assortment of liberal denominations counseled the court against a state endorsement of "the religious orthodoxy of some sects concerning who may marry."

The court also heard from hundreds of organizations representing psychologists, anthropologists and other professions, city and county governments, law professors, businesses, civil rights advocates and social institutions.

Judges and limits

Underlying all the arguments is a debate about the proper role of courts in a democracy, particularly on contentious social and political issues. It's the same question - how far, and how fast, judges should move to correct injustices they perceive in the actions of elected officials - that has confronted jurists pondering such issues as segregation, school prayer and abortion.

The subject was raised with unusual frankness in written arguments by Attorney General Jerry Brown's office, which is leading the defense of the marriage law that Brown signed as governor in 1977.

"One unintended and unfortunate consequence of too radical a change is the possibility of backlash," said Deputy Attorney General Christopher Krueger. Same-sex marriage may someday be legalized in California, he said, "but such a change should appropriately come from the people rather than the judiciary as long as constitutional rights are protected."

Brown said last week he wasn't asking the court to sacrifice principles to politics, only observing that rulings that "ride roughshod over the deeply held judgments of society" can have unintended consequences.

He noted that the court majority swung from liberal to conservative after three of his appointees, including Chief Justice Rose Bird, were unseated in a 1986 election that centered on their votes to overturn death sentences.



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