Wednesday, August 24, 2016

CNBC 10 years later, indicted tech CEO Kobi Alexander pleads guilty to one count of securities fraud

10 years later, indicted tech CEO pleads guilty to one count of securities fraud
Indicted Comverse Technology founder Jacob "Kobi" Alexander pleaded guilty to one count of securities fraud in a federal court in Brooklyn on Wednesday afternoon, almost exactly 10 years after moving to Africa in what the government says was a clear attempt to flee prosecution.
U.S. District Judge Nicholas Garaufis denied bail, arguing that Alexander's intelligence and guile are clear indications that he cannot be trusted. Alexander will be sent to a maximum-security facility between now and his sentencing on Dec. 16. He faces up to 10 years in prison.
After the hearing, lead defense attorney Benjamin Brafman told CNBC, "We are bitterly disappointed by the judge's ruling, but he's the judge and I'm not."
Defense attorneys argued he should be set free on $25 million bond pending his sentencing. In a court filing Monday, Brafman said Alexander is not a flight risk

Jacob ' Kobi'' Alexander, the former Comverse Technology Inc. chief executive officer stands before US District Judge Garaufis in Brooklyn Federal Court.
Garaufis said  “Maybe he would go out and hide out in a cave or go to another country where he could live more comfortably ... than Namibia,”  "This is a very smart man (Alexander) who's made millions and millions of dollars. He's sizing up the situation on this side of the bench, so spare me, I wasn't born yesterday."

Alexander moved his family to Namibia in July 2006, as prosecutors were preparing a sweeping fraud case against the tech executive. A federal grand jury ultimately indicted him on 35 counts including conspiracy, fraud, obstruction of justice and witness tampering, in a 15-year scheme to manipulate Comverse options. But Brafman argued that because Alexander left before he was charged, he did not flee. And now that he has left Namibia, he has no place else to flee to.

Prosecutors paint a much different picture in a filing Wednesday morning. Arguing that Alexander is "cunning and resourceful," they want him held without bail. Otherwise, they say, "the government is confident that the defendant could find his next Namibia should he so choose."

The government's letter includes newly released details of Alexander's maneuvers as prosecutors were bearing down on him during the summer of 2006 amid public fury over a wave of accounting-fraud cases in the wake of the dot-com bubble.

Wednesday, August 17, 2016

BLOOMBERG: Aeropostale’s Sycamore Rift Goes to Trial as Vote Proceeds

Aeropostale’s Sycamore Rift Goes to Trial

Aeropostale CEO  Julian Geiger claims the private equity firm backing the distressed teen retailer wanted it to crumble
The retailer has asked ( Judge) Lane to disqualify New York-based private equity firm Sycamore Partners from using its $150 million debt to bid at the auction. A trial on Aeropostale’s complaint began Aug. 15 in the SDNY Bankruptcy Court.

Julian Geiger former CEO of Aeropostale on witness stand questioned by Sycamore partners attorney Robert Ellis
 The proposed reorganization accounts for the different ways Sycamore’s claims will be treated based on how the litigation plays out. But the plan gives no estimate of what some creditor groups would recover because Aeropostale has yet to find a so-called stalking horse to make the starting bid for its assets. Lane questioned how creditors can vote when there is no “floor” for the sale.

Richard Slack of Weil Gotshal questioning Julian Geiger on the stand. Weil represents Aeropostale in the bankruptcy proceeding.

Aeropostale has said since the outset of its bankruptcy in May that Sycamore used a supplier it controls, MGF Sourcing Holdings Ltd., to drive the company into Chapter 11. On July 22, the retailer accused Sycamore of pursuing a “loan to own” strategy and said the firm and its managing partner Stefan Kaluzny traded on inside information about the company.

Monday, August 15, 2016

Sean Stewart convicted of insider trading

UPDATE: Sean Stewart convicted on all counts.

A jury ended its first week of deliberations Friday apparently deadlocked on at least one of the counts charging a Long Island-reared investment banker with illegally passing his father insider trading tips worth $1.1 million.

AUSA McCallum examines FBI witness with jury seated left, Sean Stewart far right. 7/28/16 Artwork by Aggie Kenny

 Halfway into the fourth day of deliberations, the foreperson sent a note Friday to the judge saying that a unanimous verdict “may not likely happen” on each of the nine counts against Sean Stewart, 35, formerly of North Merrick.

Sean Stewart testifying in his own defense, Federal Defender Martin Cohen at podium representing Mr Stewart. Artwork by Elizabeth Williams

Sean Stewart’s father, Robert Stewart, 61, of North Merrick, has admitted profiting from information about pending mergers and acquisitions about which his son knew inside information because he was an investment banker on the deals.
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Sean Stewart faces up to 20 years in prison if convicted.
The jury’s note, sent out shortly after noon, said, “If the jury is at an impasse on a particular count, which we cannot resolve, does that mean that we have to render a not-guilty verdict, as the government has not met its burden of proof for some of the jurors? Or do we render a ‘no decision’ vote? There is no option on the verdict sheet for a ‘no decision’ option. Do we continue to deliberate until we come up with a unanimous decision, which may not likely happen?”

Wednesday, August 10, 2016

The Second Circuit Makes Chevron v. Donziger Simple

The Second Circuit Makes Chevron v. Donziger Simple

by Michael Goldhaber

Appellant Javier Piaguaje, one of the Ecuadorean plaintiffs, on the stand in New York in 2013. (ILLUSTRATION: Elizabeth Williams)
To this day, half the Internet portrays Steven Donziger as a hero for suing Chevron Corporation in Ecuador. As the accomplished filmmaker Joe Berlinger put it in a public radio interview only two weeks ago, “It’s a very complicated story.” Well, it’s certainly a messy story. But as a matter of epistemology, law and morality, it’s always been simple. On Monday the U.S. Court of Appeals for the Second Circuit laid it out with admirable clarity. Donziger lied and cheated his way to a multibillion-dollar Ecuadorean judgment against Chevron.
A 500-page trial ruling in 2014 found Steven Donziger and his team in Ecuador liable for countless acts of litigation fraud. Both books on the case (by me and the esteemed Paul Barrett) agree that the facts of the litigation fraud are mostly indisputable. And in court, they weren’t disputed. While Donziger and his allies kept smearing U.S. district judge Lewis Kaplan in podcasts, they never renewed their charges of bias on appeal (despite the Second Circuit inviting them to do so). And most devastatingly — in their 325 pages of appeal briefs — they never challenged the trial court’s factual account. “[Y]ou choose not to take [it] on,” noted Judge Barrington Parker Jr. at argument.  “You don’t take it on at all.” The appellate ruling pounds on that point in both its opening and closing paragraphs.
The Second Circuit delivers its own words in a tone of dispassionate legal certainty. But a ruling that affirms Kaplan on every point channels the trial judge’s passion by constantly quoting him with added emphasis. Simply reading the Second Circuit’s “emphasis ours” passages produces a remarkable and devastating text.
The appeal judges begin with an extended highlight of Kaplan’s wise preface (excerpted here in part):
The Court assumes that there is pollution in the Oriente.… [But an] innocent defendant is no more entitled to submit false evidence, to coopt and pay off a court-appointed expert, or to coerce or bribe a judge or jury than a guilty one. So even if Donziger and his clients had a just cause–and the Court expresses no opinion on that–they were not entitled to corrupt the process to achieve their goal…. The wrongful actions of Donziger and his Ecuadorian legal team would be offensive to the laws of any nation that aspires to the rule of law, including

Chevron attorney Randy Mastro questioning Steven Donzinger on the stand. Sting in audience. Judge Lewis Kaplan presiding ILLUSTRATION: Elizabeth Williams

Every time Donziger has lost over the past five years, well-meaning supporters have scorned the decision makers as “corporately inclined.”  This is an affront to reason. As the Second Circuit eloquently affirms, Kaplan was merely following the facts. Although litigation fraud has no political valence, some may find it noteworthy that two of the appeal judges (Barrington Parker and Amalya Kearse) are African-Americans originally appointed by Democrats, and the third (Richard Wesley) overruled Kaplan earlier in the case. Judge Kearse also laid the foundation of alien tort jurisprudence, and that’s perfectly appropriate. Like the human rights jurists who filed an amicus brief against Donziger, she knows that there’s no tension between promoting human rights, and policing the integrity of its advocates.
Ecuador – and they knew it.

Law36 Feud Over Witness Caps CEO's $100M WTC Fraud Trial> VERDICT UPDATE

Larry Davis 65, of Canada, was convicted of one count of wire fraud and one count of conspiracy to commit wire fraud, each of which carries a maximum sentence of 20 years in prison.  He is scheduled to be sentenced November 15, 2016.

Law360, New York (August 9, 2016, 7:25 PM ET)
Pete Brush -- Prosecutors seeking to convict steel construction CEO Larry Davis of fraud for taking $100 million of World Trade Center rebuilding dollars that were supposed to go to women and minority contractors on Tuesday sharply rejected a defense allegation that a key government witness was browbeaten into pleading guilty. 
Defense Attorney Sam Talkin gives closing statement and claimed a key witness against his client had been brow beaten into pleading guilty. 
The dispute came during closing arguments of the seven day trial before Manhattan Federal Court  Judge Loretta Preska. Davis is  charged with a 100 M dollar fraud.
AUSA Robert Lee Boone closing statement

Monday, August 8, 2016

AP: US court rules for Chevron in Ecuador rainforest damage case

US court rules for Chevron in Ecuador rainforest damage case
NEW YORK (AP) — Ecuadorean plaintiffs cannot collect a $9 billion judgment in the U.S. against energy company Chevron for rainforest damage, a federal appeals court ruled Monday, upholding a judge's finding that the judgment was obtained through bribery, coercion and fraud.
The 2nd U.S. Circuit Court of Appeals in New York said U.S. District Judge Lewis A. Kaplan had the authority after a trial to rule in March 2014 as he did. It noted, however, that Kaplan's decision doesn't invalidate the Ecuadorean judgment and doesn't stop the enforcement of the judgment outside the U.S.
A U.S. spokeswoman for the Ecuadoreans, Karen Hinton, said they were shocked and called it a "sad day for the U.S. justice system."

Judge Nicholas Zambrano on the stand cross examined by Chevron attorney Randy Mastro during the 2013 trial in Manhattan Federal court. Jusdge Lewis Kaplan presiding

Steven Donzinger on the stand questioned by Randy Mastro attorney for Chevron. Sting in audience far right seated next to Amazon tribal leader.

In a decision written by Circuit Judge Amalya Kearse, a three-judge 2nd Circuit panel rejected the argument by the Ecuadorean plaintiffs that they were unaware of wrongdoing by lawyers in the case and shouldn't be held responsible.
"There is no authority suggesting that a party ignorant of its attorney's fraudulent actions may enforce a fraudulently procured judgment," the panel said. "Even innocent clients may not benefit from the fraud of their attorney."
An attorney for a New York City lawyer, Steven Donziger, who was heavily criticized by Kaplan, called the 2nd Circuit decision "unprecedented in American law" and vowed to explore all options on appeal.
"Never before has a U.S. court allowed someone who lost a case in another country to come to the U.S. to attack a foreign court's damages award," attorney Deepak Gupta said. "The decision hands well-heeled corporations a template for avoiding legal accountability anywhere in the world. And it throws the entire international judgment enforcement framework out the window."
The case resulted from a long-running court battle between Amazon rainforest residents and oil companies.

Reed Brodsky cross examines Amazon tribal leader in Manhattan Federal Court, during the Chevron v Donzinger trial in 2013

Friday, August 5, 2016

Investment banker testifies at his insider trading trial AP WIRE

NEW YORK (AP) — An investment banker charged with teaming with his father to use inside information to make money in the stock market insisted from the witness stand Thursday that he never knew his father would make illegal trades.
“I am innocent,” Sean Stewart said at his Manhattan federal court trial. “I never ever gave my father information expecting him to trade.”
Prosecutors say Stewart fed Robert Stewart information about five pending mergers involving public health care companies, enabling him to work with a stock broker to earn $1.1 million illegally. During the four-year period from 2011 to 2015, Sean Stewart worked first for JPMorgan Chase & Co. and later at Perella Weinberg Partners LP.
Authorities said Robert Stewart got $150,000 and the broker got the rest, while the father passed along some winnings by paying for his son’s 2011 wedding rehearsal dinner and a photographer. The father has pleaded guilty and was sentenced to a year of home detention.
Sean Stewart, 35, testified he had such a close relationship with his parents that he sometimes talked about work, including pending acquisitions that were supposed to be secret. He said earned less than $100,000 annually at JPMorgan after finishing at Yale in 2003, but had boosted his pay to about $500,000 by 2010, when he was made vice president.

Sean Stewart on the stand questioned by his defense attorney Martin Cohen. "I spoke very freely with them( his parents). I know now that the consequences are severe,” Stewart said. “At the time, it felt completely natural to have these discussions.” Artwork by Elizabeth Williams
He said he never told his parents they should not trade on any information they heard from him because it never occurred to him that they would do so.
He said he never told his father the price that a company would be sold for or when a sale would occur, answering “absolutely not” repeatedly when asked those questions about each deal.
The son testified he could not recall talking about some of the deals at all, though he conceded he must have because his father initiated stock trades with information he could not have gotten elsewhere.
Even on those deals, though, Stewart insisted he never would have mentioned the amount of money involved or the anticipated closing dates.

Wednesday, August 3, 2016



Shiwei Yan (aka, Sheri Yan) weeping during her sentencing before U.S. District Judge Vernon S. Broderick as her daughter Victoria observes.

Attorney Christine H. Chung appeals for a light sentence for Yan, citing her childhood hardships.

Yan addresses court pre sentencing, apologizing for her actions. In imposing sentence, Judge Broderick said, “To those bent on perverting decision-making” through bribery, “this simply will not be tolerated…there are consequences to these actions.”  In addition to her prison term of 20 months, YAN was sentenced to two years of supervised release, was fined $12,500, and was ordered to forfeit $300,000.