Judges on a US Court of Appeals for the Second Circuit panel questioned how the Federal Communications Commission enforces indecency standards during oral arguments Wednesday in a challenge brought by the Fox television network. The FCC ruled that Fox violated indecency standards when two unscripted expletives were aired during the 2002 and 2003 Billboard Music Awards. The FCC did not impose a fine for the violations because they predated a change in FCC precedent allowing the agency to levy fines for isolated incidents.

Fox appealed the FCC ruling, arguing that the FCC standards are arbitrary. The federal appeals court questioned why certain words are considered indecent in the context of an awards show but wouldn't be indecent in other contexts, such as a news program. The FCC lawyer told the court that context plays a role in determining indecency and noted that if the offensive language was used in the news context, it would not likely be used to "pander, titillate, or for shock value."

US District Judge David Lawson of the Eastern District of Michigan has ruled that the University of Michigan, Michigan State University and Wayne State University can delay until July 1, 2007 implementing Proposal 2, an amendment to the Michigan Constitution banning affirmative action in public employment, public education and state contracting. Lawson's ruling, which came in a lawsuit filed just days after the amendment's passage, gives the universities time to complete the 2006-2007 admissions cycle under current procedures. Michigan voters approved  the constitutional amendment Nov. 7, and it was expected to take effect later this week. The Center for Individual Rights immediately criticized the ruling, and filed a motion seeking an emergency hearing to intervene in the lawsuit so the group can challenge Tuesday's ruling. AP has more.

In addition, a coalition of civil rights groups, including the American Civil Liberties Union and the Detroit Branch of the NAACP filed a lawsuit in federal court Tuesday challenging the constitutionality of Proposal 2 based on the US Supreme Court's 2003 ruling that the federal constitution permits the University of Michigan to consider race as a factor in the admissions process. The Supreme Court upheld the University law school admissions policy, while rejecting the more rigid undergraduate admissions system as discriminatory.

Pyongyang is still insisting that Washington lift financial measures against North Korean interests before Pyongyang will move ahead on the issue of dismantling its nuclear weapons program.

U.S. Treasury official Daniel Glaser, who met with North Korean financial officials on the sidelines of the nuclear talks earlier this week, says those talks were "businesslike and useful." But Glaser says further talks are needed before there can be any agreement between the two sides.

"We hope to get to do that. We've discussed the possibility of meeting next month, perhaps in New York," he said.

The dispute revolves around a bank in Macau, Banco Delta Asia, which Washington says helped North Korea with counterfeiting and money-laundering activities. U.S. restrictions on the bank have resulted in a North Korean account there with $24 million being frozen.

Thursday, amid cautious expressions of optimism, it was announced that the nuclear talks among North and South Korea, the U.S., China, Japan and Russia would be extended by a day until Friday.

WASHINGTON - The U.S. Department of Housing and Urban Development awarded $9,675,050 in grants today to public housing authorities across the U.S. The housing agencies use this funding to hire service coordinators who connect public housing residents with resources in the community to lead them to economic independence.

"An old Chinese proverb tells us it is better to teach one how to fish than to give one a fish, for the one who is taught will eat for a lifetime, not only a day," said HUD Secretary Alphonso Jackson, who announced the funding today. "These grants are true to the proverb because they allow local housing agencies help low-income families thrive for a lifetime by leading them to employment that moves them to self-sufficiency, even homeownership."

The monies awarded are from HUD's Public Housing Family Self-Sufficiency (PH FSS) program, which awards grants to public housing authorities (PHAs) to hire service coordinators to link residents with supportive services that help them find education and job training.

PH FSS funding allows PHAs to hire program coordinators who work directly with residents to guide them to education and training opportunities, job placement organizations and local employers. Residents sign a contract to participate, which outlines their responsibilities towards completion of training and employment objectives up to a five-year period. For each participating family that is a recipient of welfare assistance, the PHA must establish an interim goal that the participating family be independent from welfare assistance prior to the expiration of the contract. During the period of participation, residents may earn an escrow credit based on increased earned income, which they may use in a variety of ways, including continuing their education or making a down payment toward home purchase.

A 2005 HUD study showed low-income families who participated in a similar HUD family self-sufficiency program saw their incomes increase at a higher rate than non-participants.

WASHINGTON – A federal jury in Concord, New Hampshire has convicted four former senior executives of Enterasys Networks, Inc. on charges arising out of accounting fraud at the computer network products company formerly based in Rochester, N.H., Assistant Attorney General Alice S. Fisher and Acting U.S. Attorney Joseph N. Laplante for the District of New Hampshire announced today.

The jury returned its verdicts Tuesday afternoon after six-and-one-half days of deliberations following a five-week trial.

The jury returned guilty verdicts against the following defendants:

*Robert J. Gagalis, former Enterasys Chief Financial Officer, for one count of conspiracy, two counts of securities fraud, one count of making false statements to auditors of a public company, and four counts of wire fraud. The jury acquitted Gagalis on one count of wire fraud and one count of falsifying books and records of a public company.

*Bruce D. Kay, former Enterasys finance executive, for one count of conspiracy, two counts of securities fraud, one count of falsifying books and records of a public company, one count of making false statements to auditors of a public company, and three counts of wire fraud. The jury acquitted Kay on one count of wire fraud.

*Robert G. Barber, former Enterasys business development executive, for one count of conspiracy, two counts of securities fraud, and one count of making false statements to auditors of a public company. The jury acquitted Barber on one count of falsifying books and records of a public company.

*Hor Chong (David) Boey, former finance executive in Enterasys’s Asia Pacific division, for one count of conspiracy, two counts of securities fraud, one count of falsifying books and records of a public company, one count of making false statements to auditors of a public company, and two counts of wire fraud. The jury acquitted Boey on two counts of wire fraud.

The jury was unable to reach a verdict on most counts against former Enterasys Chief Operating Officer Jerry Shanahan. The jury acquitted Shanahan of one count of causing false entries to be made to Enterasys’s books and records.

The charges on which the four defendants were convicted stem from a scheme that began in the summer of 2001 to falsely inflate Enterasys’s revenue to increase, or at least maintain, the price of Enterasys stock. The scheme involved the backdating and falsification of documents and the concealment of material terms of deals in “secret side letters” all to facilitate the fraudulent recognition of revenue. The conspirators also fraudulently created false revenue by secretly investing company funds in other companies and caused those companies to use the investment proceeds to buy Enterasys products. As a result of this fraudulent scheme, Enterasys overstated its revenue by more than $11 million in the quarter ending September 1, 2001. Enterasys’s shareholders lost approximately $1.3 billion after the company disclosed one of the fraudulent transactions and a pending investigation by the U.S. Securities & Exchange Commission.

Gagalis and Kay are scheduled to be sentenced on March 21, 2007. Barber and Boey are scheduled to be sentenced on March 22, 2007. The defendants convicted of mail fraud, wire fraud and conspiracy offenses carry a maximum sentence of up to five years on each count. The maximum sentence for securities fraud is 10 years per count. The offenses also carry maximum fines of $250,000 per count.

Several other former Enterasys executives, including Henry Fiallo, Enterasys’s former Chairman, Chief Executive Officer and President, previously pleaded guilty to felony charges in connection with this scheme. Their sentencings are scheduled for April 2007. Eight former Enterasys executives have now been convicted of felonies in this matter.

“Accounting schemes designed to artificially inflate a company’s revenues are doomed to fail. And as the verdicts in the Enterasys case prove, executives will be held accountable for their roles in these conspiracies,” said Assistant Attorney General Alice S. Fisher of the Criminal Division. “The Department of Justice and our partners on the President’s Corporate Fraud Task Force remain committed to protecting investors and preserving the integrity of the markets.”

Acting U.S. Attorney Joseph N. Laplante praised the verdict, stating, “The investing public deserves and needs accurate financial information about public companies. The successful prosecutions in this case should serve as a substantial deterrent to others in similar circumstances who might otherwise be inclined to ‘cook the books.’”

The case was prosecuted by Assistant U.S. Attorney Bill Morse from the U.S. Attorney’s Office in Concord, and Senior Litigation Counsel Colleen A. Conry and Special Attorney Eva M. Saketkoo from the Fraud Section of the Justice Department’s Criminal Division in Washington, D.C. The investigation was conducted by the Federal Bureau of Investigation and the U.S. Postal Inspection Service. The criminal investigation was coordinated with a civil investigation conducted by the SEC’s Central Regional Office in Denver. The case was brought under the auspices of the President’s Corporate Fraud Task Force.

BOSTON – Overseas Shipholding Group Inc. (OSG) has today agreed to plead guilty to 33 felony counts related to deliberate vessel pollution from nine ships and false pollution log entries in three additional ships, in six U.S. ports around the nation. OSG will pay a record $37 million—the largest-ever criminal penalty involving deliberate vessel pollution—and plead guilty to charges related to illegal dumping of waste oil, criminal violations of the Clean Water Act/Oil Pollution Act and the Act to Prevent Pollution from Ships, conspiracy, false statements and obstruction of justice. This multi-district investigation was conducted in Boston, Mass.; Portland, Maine; Los Angeles.; San Francisco; Wilmington, N.C.; and Beaumont, Texas.

OSG is a U.S. corporation headquartered in New York and is one of the largest publicly traded tanker companies in the world. Today’s prosecution involves violations that occurred on 12 oil tankers. The $37 million penalty includes a $27.8 million criminal fine which will be divided among the districts and a $9.2 million organizational community service payment that will fund various marine environmental projects coast to coast. “OSG has engaged in repeated and deliberate pollution of our oceans,” said Acting Associate Attorney General William Mercer. “What is more disturbing is that OSG’s management failed to uncover or stop this illegal activity after allegations were brought to the attention of management on several occasions and again after the initiation of the government’s investigation. This penalty has secured justice against OSG and will serve as a deterrent for all other companies who attempt to circumvent the law for their own financial gain and at the expense of the environment.”

“The Coast Guard takes its obligation as a steward of the marine environment very seriously,” said Rear Adm. Tim Sullivan. “We are committed to achieving our ultimate goal—industry-wide compliance with international and domestic pollution prevention rules. The case demonstrates that scofflaws within maritime industry can no longer treat intentional discharging of oil and the penalties associated with those acts as a ‘cost of doing business.’ Instead, the industry must embrace a culture of compliance. Effective, transparent partnerships between industry and our regulators are vital to allow the international pollution prevention system to work as designed. Failure by industry to meet this challenge of change will only result in further investigations, prosecutions and expense to all.”

In addition to the plea agreement, a detailed joint statement of facts was filed today in court, in which OSG has admitted that the following information is accurate:

*OSG made illegal releases of oily waste from approximately August 2001 to October 2003 from the M/T Uranus into waters off the coast of New England, in close proximity to Maine and Massachusetts, including the island of Nantucket. Discharges were made from the M/T Uranus through a long flexible hose trailed overboard at night, then through a hard bypass pipe that the ship’s Fitter was forced to make, and at a later point in time, by flushing an oil detecting sensor with fresh water.

*OSG is responsible for dumping overboard sludge (concentrated black waste oil) at night from three ships. In the case of the M/T Overseas Shirley, the ship’s 1st Engineer wrote a letter to OSG senior management alleging the “habitual criminal of sludge discharge to sea” and estimated that approximately 40,600 gallons of sludge had been intentionally dumped overboard through a bypass hose. OSG discounted the allegations at the time, but they were corroborated by the government’s investigation.

*OSG violated the Clean Water Act by discharging approximately 2,640 gallons of oily waste and sludge from the M/T Neptune off the coast of North Carolina. OSG concluded no oil had been discharged at the time notwithstanding receipt of a “Private and Confidential” memo (initialed by three senior company managers,) from an outside auditor who told the company that he had observed oil leaking from a bypass hose and believed that the discharge was not an isolated event. *OSG made illegal discharges of oily waste in 2004-2005 from the M/T Pacific Ruby in U.S. waters in the Gulf of Mexico. Crew members contacted the Coast Guard alleging that the Chief Engineer had tricked pollution control equipment while making overboard discharges.

*OSG concealed deliberate and illegal discharges by deliberately falsifying official ship records, including the Oil Record Book, making discharges at night, and by hiding bypass equipment during U.S. port calls so that the Coast Guard would not discover the criminal activity.

*Numerous OSG crew members, including chief engineers, engaged in conspiracies to commit illegal pollution and falsify ship records while certain lower level crew members knowingly participated because they were explicitly or implicitly threatened by superiors with loss of employment if they refused.

*Shore-side management failed to provide and exercise sufficient supervision and management controls to prevent or detect criminal violations by its employees.

*A motive for the crimes was financial—OSG was saving the cost of offloading waste oil in port and the time it would take to comply with the law.

Criminal violations continued on some ships during the three years in which OSG was under investigation. On six vessels (M/T Ania, M/T Cabo Hellas, M/T Cleliamar, M/T Overseas Portland, M/T Vega, M/T Pacific Sapphire), OSG self-reported violations which prosecutors credited by imposing fewer charges and reduced criminal fines. OSG also implemented new technology on its ships designed to prevent illegal pollution. According to papers filed in court, prosecutors did not seek even higher penalties on account of OSG’s cooperation during the investigation and because of compliance measures taken before and during the investigation and those promised as part of a plea agreement with prosecutors.

Per the terms of the plea agreement, OSG is also subject to a three-year term of probation during which it must implement and follow a stringent environmental compliance program that includes a court-appointed monitor and outside independent auditing of OSG ships trading worldwide.

The government’s investigation was initiated after the Coast Guard in Boston received a referral from the Marine Safety Branch of Transport Canada, indicating that records for the M/T Uranus showed that bilge waste was being disposed while the official Oil Record Book failed to account for the disposal of waste. It was determined that these illegal discharges occurred within U.S. waters off-the-coast of Maine and Massachusetts. During this time, crew members discharged approximately 150,000 gallons of oil-contaminated waste while “tricking” the Oil Content Meter designed to detect and prevent discharges containing more than 15 parts per million oil, the international limit established by the MARPOL Protocol, an international treaty implemented by the Act to Prevent Pollution from Ships.

The government’s investigation grew to include evidence of deliberate violations of the MARPOL Protocol and U.S. law by the following 12 oil tankers: M/T Ania, M/T Cabo Hellas, M/T Neptune, M/T Overseas Alcesmar, M/T Overseas Cleliamar, M/T Overseas Shirley, M/T Overseas Portland, M/T Pacific Sapphire, M/T Pacific Ruby, M/T Rebecca, M/T Uranus, and M/T Vega.

Today’s prosecution was made possible through the combined efforts of the U.S. Coast Guard units in each port, the Coast Guard Investigative Service, Coast Guard Office of Maritime and International Law, Coast Guard Office of Investigations and Analysis, and Environmental Protection Agency Criminal Investigations Division. The case was prosecuted by the Environmental Crimes Section of the U.S. Department of Justice and the U.S. Attorney’s Offices in the affected districts.