Tuesday, June 28, 2016

BLOOMBERG Oil Investor Zukerman Pleads Guilty in Tax Evasion Case

Patricia Hurtado contributed to this story.

Oil-industry investor Morris Zukerman faces more than seven years in prison after pleading guilty to federal charges of evading more than $40 million in taxes.
Zukerman’s plea comes just a month after prosecutors accused the 72-year-old of aggressively seeking to evade taxes beginning in 2007, falsely claiming millions of dollars in deductions and providing false information for IRS audits. He admitted to failing to report $28 million in profits from the sale of an oil company and repeatedly lying to his accountants -- in one instance creating backdated documents to support his claim.
AUSA Stanley Okula ( standing) during the plea of Morris Zuckerman ( seated right)  Zukerman told a judge in Manhattan federal court, pausing several times to compose himself “These statements to the court mark the start of the difficult and painful process of accepting responsibility for and redressing what I recognize as serious criminal wrongdoing,” . He said his guilty plea “gives me an opportunity to repair some of the damage my actions have caused my family, my government, and the many friends, colleagues, and business associates.”

Artwork Scheme

The indictment alleged that Zukerman shipped paintings to addresses in Delaware and New Jersey to evade New York state sales tax on artwork that immediately went to his Park Avenue duplex in Manhattan. He didn’t plead guilty to that charge but will pay restitution to New York state of $4.6 million.
Zukerman also took a charitable deduction for money he claimed was donated to a local conservation group in Maine to acquire land on Black Island, when in reality he had simply bought the land himself, according to his guilty plea.

Monday, June 20, 2016

BLOOMBERG: Hulk Hogan Lawsuit Against Gawker Media Halted Until July 13

Hulk Hogan Lawsuit Against Gawker Media Halted Until July 13

Gawker went to Manhattan federal court Wednesday to seek a bankruptcy judge’s approval of a loan to fund the company while it appeals the verdict and arranges an asset sale.
Gawker has also asked that the court shield its founder, Nick Denton, from litigants. In addition to the Hogan verdict, the company is facing lawsuits that seek about $169 million, according to court filings. The parties to the Hogan suit agreed to a standstill until next month.
The case is In re Gawker Media LLC, 16-11700, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

Gawker is facing lawsuits from several former subjects of its articles, including Mr. Bollea, blogger Charles C. Johnson, journalist Ashley Terrill and tech entrepreneur Shiva Ayyadurai.
“We can no longer afford to litigate on all of these fronts,” Gregg Galardi, Gawker’s lawyer,(pictured) told the judge Wednesday. ( click on image to see larger)

WSJ: Bernard Madoff Investors to Receive Another Payout

WSJ Blog:

Bernard Madoff Investors to Receive Another Payout

Total recoveries reach nearly $9.5 billion

 By Jacqueline Palank


Bernard Madoff’s cheated investors will receive another multimillion-dollar payout, bringing their total recoveries since the collapse of his Ponzi scheme to nearly $9.5 billion.
Judge Stuart M. Bernstein of the U.S. Bankruptcy Court in Manhattan on Wednesday authorized the seventh payout to investors in Bernard L. Madoff Investment Securities LLC, court papers show.
The judge’s order means liquidation trustee Irving Picard can mail out checks worth $171 million to investors, expected for mid-July, according to a statement. Another $76 million will be held in reserve for future distribution.

Irving Picard, seated in court (far right) while Judge Bernstein's approves the 171 million dollar payout. The latest distribution will bring total investor recoveries to about $9.45 billion of more than $17 billion in stolen principal. Mr. Picard has been leading efforts to track down stolen funds since shortly after the collapse of Mr. Madoff’s massive Ponzi scheme in December 2008. He has recovered more than $11 billion, but some of those funds haven’t yet been paid out to investors. And in court papers, Mr. Picard says he “anticipates recovering additional assets through litigation and settlements. ( click on image to see larger)

The most recent distribution, made last December, saw $1.2 billion paid out to investors. Prior distributions have fallen between $400 million and $5 billion, court papers show.
Paving the way for the latest round of distributions are a number of settlement payments that Mr. Picard has collected in recent months. For instance, Madoff investor Vizcaya Partners Ltd. paid nearly $25 million to settle litigation seeking the return of false profits it received during the course of the Ponzi scheme.

Wednesday, June 1, 2016

Citi Shareholders Can Push $800M Suit Directly: Del. Court


Law360, New York (May 24, 2016, 4:07 PM ET) -- Delaware's high court ruled Tuesday that investment trusts controlled by insurance executive Arthur L. Williams and his wife Angela properly sued Citigroup Inc. directly, and did not have to proceed derivatively, on claims they lost $800 million when the bank duped them into holding shares that plunged during the financial crisis.
The Delaware Supreme Court ruling clears away one lingering question in the high-dollar 2010 lawsuit, which is on appeal after U.S. District Judge Sidney H. Stein threw it out in October 2013. On appeal the Second Circuit asked the First State for guidance on whether the so-called holder claims were direct or derivative.

"The Williamses were the holders of Citigroup stock. Citigroup itself is not a holder, and at oral argument Citigroup's counsel was unable to identify any authority in New York or Florida law that would suggest that the issuer of stock should be the plaintiff in a holder claim lawsuit," Chief Justice Leo E. Strine Jr. wrote for the court.

During oral arguments in April, Judge Strine had showed little inclination to adopt Citi's position that the case had to proceed as a derivative action, in which a plaintiff essentially stands in the shoes of the corporation to right an alleged wrong.
Jeffrey Lamken, of Molo Lamken  representing AHW investors, answering questions by Judge Strine

Wide shot of Delaware en banc hearing in the Citigroup v AHW Investors;  Jeffrey Lamken making argument to the court
The trusts sued Citigroup and several bank executives in 2010, arguing the bank falsely asserted its exposure to residential mortgage-backed securities losses was minimal. As a result, the trusts claim, Williams held on to 16.6 million shares he had received as part of a merger of his insurance business and lost $800 million as Citigroup’s stock price plummeted 95 percent.

With the Delaware ruling in hand the appeal now moves back to the Second Circuit, which could take up the question of whether the case can be revived and, if so, whether the Williamses can proceed under Florida law, which is seen as more friendly to holder plaintiffs seeking damages. Judge Stein had applied New York law in his dismissal analysis.

“We are hopeful that that Second Circuit will reverse Judge Stein and allow the case to proceed under settled Florida holder law,” said Jacob Zamansky of Zamansky LLC, attorney for the Williamses. “The record shows that Mr. Williams relied on misrepresentations by Citigroup in deciding to hold his stock.”