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Court to weigh state's duty to English learners
Court Center |
2009/04/20 16:31
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The Supreme Court on Monday takes up an Arizona case that could limit a federal court's power to tell states to spend more money to educate students who aren't proficient in English.
Arizona state legislators and the state superintendent of public instruction want to be freed from federal court oversight of the state's programs for English learners. They've been ordered by a lower court judge to spend potentially hundreds of millions of dollars to comply with rulings in a 17-year-old case.
Parents of students attending southern Arizona's Nogales Unified School District sued the state in 1992, contending programs for English-language learners in Nogales were deficient and received inadequate funding from the state. In 2000, a federal judge found that the state had violated the Equal Educational Opportunities Act's requirements for appropriate instruction for English-language learners. He ordered state legislators to create a plan to provide sufficient funds and placed the state's programs for non-English speaking students under court oversight. Since then, the two sides have fought over what constitutes compliance with the order. Arizona has more than doubled the amount that schools receive per non-English speaking student and taken several other steps prescribed by the No Child Left Behind Act, a broader education accountability law passed by Congress in 2002. Plaintiffs say that's not enough to comply with federal law and a judge agreed. But the state appealed, and now the high court will answer the question. |
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Davis Wright Tremaine Being Sued
Firm News/Oregon |
2009/04/14 20:39
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Davis Wright Tremaine LLP, one of the Northwest’s largest law firms, is being sued for violating Oregon securities law by investors in Sunwest Management Inc., the disgraced senior living operator.
The Portland office of Davis Wright Tremaine referred calls to the public relations department in its Seattle office, which could not be reached to comment.
The lawsuit filed in Multnomah County Circuit Court names a series of Oregon limited liability corporations as plaintiffs and seeks to represent approximately 1,200 Oregon investors as a class action matter.
The named plaintiffs all invested in senior housing communities controlled by Jon Harder and Sunwest Management.
The suit accuses Davis Wright Tremaine and Timothy Dozois, a partner in the firm, of misleading investors into thinking they were buying into specific properties and that they would receive rent payments from Sunwest, which managed the series of allegedly independent properties. The suit seeks compensation for damages from the loss of value of Sunwest Management, once a $2 billion-plus company.
Damages could run into the hundreds of millions of dollars.
Attorneys involved in the case said they do not know the limits of Davis Wright Tremaine’s professional liability insurance. Oregon is the only state that mandates malpractice insurance for attorneys, but the amount is limited to about $300,000 per related case, according to the Oregon State Bar Professional Liability Fund. Large firms often carry excess insurance.
The suit seeks to hold Sunwest’s lawyers accountable to investors for misleading them about the nature of their investments.
“The defendants omitted material facts in connection with their own statements to investors. Defendants and other attorneys in Portland, Oregon also participated and materially assisted in the unlawful sale of these securities through their relationship with (Sunwest founder and controlling owner) Jon M. Harder and his enterprise of closely related Oregon companies,” plaintiffs claim.
Harder, who has filed for personal bankruptcy, is not a defendant in the case.
Justine Fischer, a Portland attorney working for the plaintiff’s team, said the next step is to have the suit designated as a “complex” case and assigned to a judge already hearing other legal matters pertaining to Harder and the Sunwest matter.
The investor suit mirrors a lawsuit filed in U.S. District Court for Oregon by the U.S. Securities and Exchange Commission.
Like the investor suit, the SEC suit characterizes Sunwest as a “Ponzi” scheme and said the company improperly managed its empire, which once included about 250 senior living centers, as a single operation instead of the unrelated businesses it described to investors.
Investors purchased shares of the real estate as tenants in common and were supposed to be paid rent by Sunwest Management.
Instead, Sunwest diverted funds from profitable properties to pay costs of unprofitable ones. When the economy collapsed and Sunwest could not secure credit, the company stopped making mortgage payments on some properties, triggering dozens of foreclosures and other legal actions.
The suit accuses Davis Wright Tremaine of facilitating the scheme by misrepresenting the “unitary” nature of the operation.
The suit says Davis Wright Tremaine and Dozois prepared numerous documents that misled investors into thinking they were buying into particular properties, including memoranda, disclosure materials, tenancy in common agreements, triple net lease documents, warranty deeds, operating agreements, real property purchase agreements and escrow instructions.
“The defendants and the Harder Enterprise did not tell investors that revenue generated in connection with the property they were investing in could be commingled and used to help fund less profitable properties owned and operated by the Harder Enterprise or would be loaned to less profitable properties. Investors also were not told that the Harder Enterprise had engaged extensively in such commingling of funds in the past and intended to continue do to so in the future,” the suit claims.
In addition to Fischer, the plaintiffs are being represented by two Washington, D.C., law firms, Cohen Milstein Sellers & Toll PLLC and the Law Office of Herbert Adelman. |
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Davis Polk Recruits Ex-SEC Aide
Court Center |
2009/04/13 16:30
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Law firm Davis Polk & Wardwell recruited the Securities and Exchange Commission's former enforcement chief and another former high-level government lawyer to join its white-collar defense group, part of an effort to expand its Washington practice.
Linda Chatman Thomsen, who left the SEC earlier this year, and Raul Yanes, former staff secretary to President George W. Bush, are joining the law firm as partners. Both had worked at Davis Polk in New York before joining the government. The duo will be the first litigators in the 11-person Washington office in years. Former SEC Commissioner Annette Nazareth and Robert Colby, a former deputy director of the SEC's trading and markets division, also recently joined the firm's Washington office to focus on financial regulatory issues. Davis Polk clients, including large financial institutions, are closely entangled with the government as it has pumped billions of dollars into financial rescue plans. Congress is studying new regulation of financial markets. |
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Man jailed for dodging child support for 14 kids
Headline News |
2009/04/12 16:31
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Authorities in Michigan say a man fathered 14 children with 13 different women and owes more than $530,000 in unpaid child support.
The Flint Journal reports 42-year-old Thomas Frazier was jailed Thursday. Court records say he hasn't made a support payment in six years.
The newspaper says the unemployed man could be held for 90 days if he doesn't pay $27,900. Frazier says he thinks he fathered only three of the children and that it's unrealistic for authorities to expect him to pay child support that was $3,000 a month at one point. Frazier remains held at the Genesee County Jail. It wasn't immediately clear if he had a lawyer who could speak for him. |
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Nationally Ranked Securities Group Joins SRFF LLP
Firm News |
2009/03/23 16:29
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Harvey J. Kesner, previously head of the New York Business and Securities Regulation Group at Haynes and Boone, LLP, and Ben Reichel, a partner, have joined the corporate and securities practice of Sichenzia Ross Friedman Ference LLP ("SRFF") as partners. The new additions couple two of the most active and dynamic securities practices in New York and result in one of the most experienced and productive corporate finance groups in the United States, representing well over 100 publicly traded companies.
Both the SRFF practice and Mr. Kesner's group have long focused on the needs of public companies, hedge funds, institutional investors, money managers, high net worth individuals, underwriters, placement agents and broker-dealers. Both practices have a well-established prominence in PIPES, venture capital, reverse mergers, public offerings and general corporate and securities law compliance. Since 2007, the combined practices have represented over 87 PIPE transactions totaling $900 million in value. The addition of Harvey and Ben brings the total number of attorneys in the SRFF corporate finance group to 21 lawyers and the total number of lawyers firm wide to 30. SRFF's practice groups include business and securities litigation, securities enforcement and broker dealer regulation.
"We are very fortunate to have Harvey and Ben join forces with us. The combination of their practice with ours continues our leading position in business counseling and securities transactions and has further expanded our market share," said Richard Friedman, managing partner of the firm. "Their addition solidifies SRFF's position as an industry leader and demonstrates our tradition of growth by careful additions of individual practitioners and cohesive practice groups that share our collegial and entrepreneurial spirit, and a dedication to quality of service."
Mr. Kesner stated, "Uniting both of these nationally recognized practices makes perfect sense. We are joining SRFF to consolidate our two similar and competitive practices under a single roof. We have always respected SRFF's professionals including their success in establishing a strong presence in China. Many of our friends and clients view SRFF as the international leader in small- and mid-cap public company representation and we look forward to continuing to expand both domestically and abroad."
Mr. Kesner focuses his practice on complex domestic and international transactions. He represents issuers, underwriters, agents and other financial intermediaries in public and private offerings, as well as in equity, debt, and derivative securities transactions. Mr. Kesner has an extensive background in representing issuers and other parties in mergers and acquisitions, private equity and venture capital transactions.
Mr. Kesner spent several years in Washington, D.C., where he was a senior attorney in the Division of Corporation Finance of the SEC. He holds an M.B.A. in finance from American University in Washington, D.C., where he also earned his J.D. Mr. Kesner received his B.S. from the State University of New York at Binghamton. Mr. Kesner served as General Counsel of a NYSE listed company and had previously been associated with several large New York law firms.
Mr. Reichel's practice focuses on corporate securities, venture capital, mergers and acquisitions, and general company representation. He has represented issuers in private and public offerings of debt and equity securities, including IPOs, secondary, PIPE and registered rights offerings. He has also represented investment firms and private companies in venture capital transactions, as well as hedge fund formation. In addition, Mr. Reichel has represented public and private companies, both as buyers and sellers, in various M&A deals, including statutory mergers, stock purchase transactions and asset sales and acquisitions. His practice also includes assisting public companies with their SEC filings, and advising them on securities law and daily corporate matters. Mr. Reichel received his J.D. from New York University School of Law and completed his B.A. at Yeshiva University. |
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Obama Moves to Block AIG Bonuses
Politics & Law |
2009/03/19 18:19
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A tough-talking President Barack Obama moved yesterday to block the $165 million in bonuses for American International Group executives that prompted a new wave of outrage at corporate America and taxpayer bailouts.
Despite the aggressive approach, it's unclear whether he can get the payments back. But the White House said it would modify the terms of AIG's pending $30-billion bailout installment to at least recoup the $165 million the bonuses represent. That wouldn't rescind the bonuses, just require AIG to account for them differently.
Separately, state Attorney General Andrew Cuomo said he will subpoena the names of AIG officials involved and copies of their employment contracts to determine whether the bonuses are legal, given the firm's weak finances.
Manhattan-based AIG was saved from insolvency by $170 billion in taxpayer-backed loans - and reported a $61.7-billion loss in the fourth quarter last year. It revealed on the weekend that it used more than $90 billion in its federal aid to pay out banks, some of which had received their own U.S. government bailouts.
Yesterday, Obama gave voice to rising disgust since Saturday, when the bonuses became public. Cuomo said the bonuses were paid to members of the specific AIG unit at the root of the firm's near-collapse from bad, mortgage-backed debt.
"How do they justify this outrage to the taxpayers who are keeping the company afloat?" Obama asked. He asked Treasury Secretary Timothy Geithner "to use that leverage and pursue every legal avenue to block these bonuses and make the American taxpayers whole."
AIG has said it had no choice but to pay the bonuses under agreements signed last year before it got into difficulties and sought a bailout. Spokeswoman Christina Pretto said: "We are in contact with the attorney general and will, of course, respond to his request."
Obama didn't specify a possible legal strategy for blocking the payments. However, Cuomo said he was investigating whether the employment contracts cited by AIG were legally flawed - technically "fraudulent" - under state debtors and creditors law. They would be, he said, if AIG management knew when it signed them that weak finances would render them unable to pay the bonuses without outside help. Contracts can be renegotiated, he said, adding, "You could argue that if the taxpayers didn't bail out AIG those contracts would be worth the paper they're printed on."
Experts in corporate law said the Obama administration has an important advantage in the controversy. In return for the bailout, the government now owns 80 percent of the company. "They're the big dog in the room now and can put some leverage on AIG to straighten this out," said attorney Jim Ervin, a partner at Benesch, Friedlander, Coplan & Aronoff Llp in Ohio.
Attorney Ross Albert, a partner at Morris Manning & Martin Llp of Atlanta, said it's difficult to be specific about the government's options without seeing the contracts in question, but added, "If the bonus is based on achieving some bench mark and it turns out the bench marks achieved were through accounting hocus-pocus, not reality, they wouldn't even have a legal right to this bonus," Albert said.
But Stephen Breitstone, a tax specialist in the Mineola law firm Meltzer, Lippe, Goldstein & Breitstone Llp, said the law Cuomo cited is intended for cases where companies facing bankruptcy are seeking to keep money away from creditors by giving it to employees or others. "If he can prove that's what this is, that's a pretty bold accusation," Breitstone said.
Labor and employment attorney Carmelo Grimaldi, who works with Breitstone, said, "I think the government is going to have a difficult situation given the fact that these contracts were made. If they provide for bonuses, AIG faces a breach of contract if they don't pay these bonuses."
This story was supplemented with Bloomberg News and Associated Press reports.
Challenges to AIG's actions
President Barack Obama wants to block bonuses paid by AIG. Here are two weapons in his arsenal:
NEW TERMS. Modifying terms of AIG's pending bailout installment to at least recoup the equivalent in bonuses.
MAJORITY OWNERSHIP. The government owns 80 percent of AIG - an important advantage because it can force the company to change practices.
State Attorney General Andrew Cuomo has begun issuing subpoenas for AIG information.
KEY PROBE. He is investigating whether AIG employment contracts were "fraudulent" by promising bonuses executives knew the company could not afford. |
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Gilman & Pastor File Class Action vs. "Chinese Drywall"
Legal Watch |
2009/03/19 18:12
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Notice is hereby given that Gilman and Pastor has filed a lawsuit in the United States District Court for the Middle District of Florida asserting class action claims on behalf of homeowners, building owners, community developments and owner associations across the United States to recover losses associated with the removal, replacement and remediation of defective "Chinese Drywall," as well as damages for personal injury.
Residents who may be affected include those living in homes that were built between 2002 and 2007, when imported Chinese Drywall was used by several of the major building companies. The defendants named in this lawsuit include Knauf Gips KG, the leading manufacturer in drywall located in Germany, Knauf Plasterboard Tianjin (KPT), a Chinese drywall manufacturer; Knauf Group, the German parent company of KPT; Banner Supply, a Miami building supply company; and Rothchilt International Ltd., a China-based exporter. Developers that have been identified as possible users of this drywall include Lennar Homes, W.C.I., Tousa, Engel Homes and other national home builders.
The lawsuit alleges that "fly ash" waste material from Chinese power plants was used in the manufacture of this Chinese Drywall. These waste materials can leak into the air and emit harmful sulfur compounds, including sulfur dioxide and hydrogen sulfide.
Our investigation has concluded that this is far more serious and vastly more extensive than previously determined. More than 550 million pounds of Chinese drywall was imported to the U.S. during the housing boom from 2004 to 2006. There are approximately 60,000 homes affected by these defective building materials in multiple states across the USA, with defective Chinese drywall gaining entry through ports in Alabama, California, Florida, Georgia, Hawaii, Louisiana, Mississippi, Missouri, New York, North Carolina, Pennsylvania, Texas, Virginia and Washington, among others.
There is no easy way to fix the damage caused by the defective drywall. In most cases, owners of homes where the toxic drywall was installed are forced to move out, gut their homes to remove the toxic materials, and rebuild the interiors of the homes with new drywall before moving back in. All personal property inside the home that may have been contaminated by the sulfur gases must also be replaced. The Sulfur emissions may also cause extensive electrical damage. Corrosion of air-conditioning units and wiring has been linked to Chinese drywall. Residents in homes built with the defective drywall have also reported suffering from respiratory problems, nose bleeds, coughing, and irritation of sinuses, eyes and throats.
Prompt action is important. With many builders and developers filing for bankruptcy protection or closing their doors, a delay in asserting your claim may limit your recourse against the builders that installed the defective materials or their suppliers.
News agencies and informational web sites could be especially helpful to consumers by alerting them to this serious problem.
Gilman and Pastor is a national litigation firm with offices in Boston, Massachusetts, and Naples, Florida, specializing in product liability litigation, consumer class actions and complex business litigation. For 30 years our attorneys have recovered more than a billion dollars on behalf of our clients.
Gilman and Pastor's managing partner, Kenneth G. Gilman, has worked extensively to assist building owners recover losses from defective building materials. Gilman and Pastor was appointed by the United States District Court as lead class counsel in Sebago Inc et al. v. Beazer East, Inc. and Johns Manville against the two manufacturers of phenolic foam roof insulation. PFRI, when exposed to even small amounts of moisture, releases an acidic leachate that corrodes metal roof decks. In 2000, the United States District Court in Massachusetts approved a nationwide class settlement which involved remediation of class members' buildings with payments of a combined estimated value of more than $350 million.
You may learn more about our lawsuit and our investigation into Chinese Drywall by contacting Kenneth G. Gilman toll-free at (888) 280-1236. Additional information is available online at www.defective-drywall.com. We can assist you in all phases of this matter, including properly scheduled inspections. |
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