Friday, July 25, 2014

Corruption By Cuomo: Spiralling Out Of His Control

From Betsy Combier:

Why would anyone in NY State want this man to be re-elected Governor? Let's hope the fix is not in yet.

Betsy

A situation Cuomo can’t control anymore

By Blake Zeff 5:34 a.m. | Jul. 25, 2014
The New York Times A-1 blockbuster that Andrew Cuomo’s team was dreading finally landed on Wednesday, and it wasn’t pretty. It painted a picture of the governor’s dealings—including allegations his administration quashed an anti-corruption panel’s subpoenas to his allies—that even his supporters privately admit doesn’t look so hot. 
And with a primary and general re-election campaign and an investigation by the U.S. attorney all looming, this saga has only just begun.  
The question now is: How will all this play out for the governor, in terms of both the politics and the law?
On the former, the first place to look is the governor’s response. You can always get a sense of how fearful of a breaking story a politician is by his public schedule immediately afterward. 
In this case, Cuomo was slated to appear at the Bronx County Democratic dinner on Wednesday night. But, an insider tells Capital, he quietly backed out in an effort to avoid public attention. Similarly, the source says the governor—who is sitting on a massive campaign warchest and an insurmoutable-looking lead in the polls—had planned events for Thursday, but they, too, were removed before a public schedule went out. (Could we hear from Cuomo today? It would be less surprising, as he knows that comments made on a Friday end up in less-well-read Saturday editions of the paper.)
Another intriguing element of Cuomo’s reaction is the 13-page statement his team provided theTimes in response to its questions. One particularly memorable passage began like this (with emphasis added): "The Governor claimed the Commission ultimately had independent investigative authority through the Co-chairs. The Governor did not and could not mean that the Commission as an entity was legally independent from him."
It’s not every day that your own defense characterizes your public statements as mere "claims" which it then sets out to debunk immediately afterwards. But such is the spot Cuomo is in.
A key issue is whether in fact the Moreland Commission appointed by Cuomo to investigate public corruption was a mere instrument of the governor—with which he could do whatever he pleased—or an independent entity.
When the commission was announced, of course, the governor had publicly trumpeted its independence.  As the Times notes, Cuomo said upon its launch that it would be "totally independent," adding in August that "anything they want to look at, they can look at—me, the lieutenant governor, the attorney general, the comptroller, any senator, any assemblyman."  
But when allegations of interference by Team Cuomo first surfaced earlier this year, the governor’s characterization of the commission changed. Now his contention was that he couldn’t possibly "interfere" with any investigations because the commission was in fact not independent, but controlled by him.  
"It’s not a legal question," he told the Crain’s editorial board back in April. "It’s my commission. My subpoena power, my Moreland Commission (see picture from the Broadway Show - oops, from the Commission, below - Editor). I can appoint it, I can disband it. I appoint you, I can un-appoint you tomorrow… So, interference? It’s my commission. I can’t 'interfere' with it, because it is mine. It is controlled by me."
Leaders of the Moreland Commission, front row, from left: Kathleen M. Rice, Milton L. Williams Jr. and
William J. Fitzpatrick, the panel's co-chairs, and Regina M. Calcaterra, its executive director. Credit 
           Michael Nagle  for The New York Times        
 
That was a few months ago. In the lengthy statement to the Times Wednesday, still another shift in the characterization of the commission was detectable. Not only was this no longer an independent commission, but now Team Cuomo added that the Moreland Commission couldn’t possibly investigate Cuomo’s dealings because "it would have been a major problem, " claiming that "a commission appointed by and staffed by the executive cannot investigate the executive."
To do so, Cuomo’s team added, would constitute "a pure conflict of interest and would not pass the laugh test."
If that’s true, someone better tell Mario Cuomo.  
Back in 1987, a spate of ethics scandals led the first Governor Cuomo to appoint a Moreland Commission of his own, which he called the New York State Commission on Government Integrity, but later came to be known as the Feerick commission (after the Fordham law dean who chaired it). As Jerry Goldfeder and Myrna Perez noted in theNew York Law Journal:
"The Feerick commission could and did subpoena witnesses; it held public hearings throughout the state; and issued 20 reports prior to its final set of recommendations. Looking to have as broad an impact as possible, the seven-person panel tackled a wide swath of issues. These included campaign finance reform; election of judges; fairer personnel practices; liberalized ballot access rules; neutral contracting procedures; protection for whistleblowers; and forfeitures of pensions."
It also did something else: "After a 40-month, comprehensive and thorough investigation, including scrutiny of campaign finance filings of Cuomo and other statewide officials, a unanimous panel concluded in 1990 that New York’s campaign finance laws were a ‘disgrace and embarrassment’ and the state had ‘not yet demonstrated a real commitment to ethical reform in government.’"
In other words, a Moreland commission appointed by Mario Cuomo investigated the executive and lived to tell the tale. But don’t just take the Law Journal’s word for it.
"The rare appearance of a Governor before a commission looking into campaign financing had all the drama of a preseason game," the Times reported back in 1989 on the commission’s investigation of Albany fund-raising practices. "One item of evidence was a document with shorthand codes for lists of potential contributors drawn up by Mr. [Mario] Cuomo's chief fund-raising assistant, Lucille Falcone."
The commission would go on to castigate the elder Cuomo’s practices, with the AlbanyTimes Union reporting later in 1990 that "Gov. Mario M. Cuomo is still soliciting contributions of up to $25,000 and is well on his way to having a $10 million campaign kitty despite criticism of such fund-raising practices by the Cuomo-created State Commission on Government Integrity."
It appears the younger Cuomo’s story may need some tightening.  
But the most obvious source of potential harm to Cuomo’s political fortunes would be legal trouble. And here’s where key bits of the story have remained particularly elusive. However hypocritical and unseemly the behavior by the governor and aide Larry Schwartz may have been, there has been no serious explanation yet about how any of it was illegal. Legal experts differ on whether federal prosecution is even a possibility.
But as I’ve previously written on this site, U.S. Attorney Preet Bharara poses potential trouble here for Team Cuomo. He’s smart, politically experienced (he was a senior Capitol Hill aide with me a decade ago), and will not be intimidated by the moment, or by the governor. If the results of his investigation into the disbanding of Moreland suggest that there’s a prosecution to be done, he’ll do it.  
In one sense, it would be a stretch: The commission was a state entity, and Bharara’s job is to prosecute federal crimes. He won’t want to stretch and lose.
But while a person typically can’t be charged with federal obstruction of justice for interfering with a state entity, a determined prosecutor could make an argument that the federal rule applies here. 
The federal witness-tampering statute (18 U.S. code 1512), for example, applies to "[w]hoever knowingly uses intimidation, threatens, or corruptly persuades another person, or attempts to do so, or engages in misleading conduct toward another person, with intent to … influence, delay, or prevent the testimony of any person in an official proceeding" or "cause or induce any person to—"
(A) withhold testimony, or withhold a record, document, or other object, from an official proceeding;
(B) alter, destroy, mutilate, or conceal an object with intent to impair the object’s integrity or availability for use in an official proceeding;
(C) evade legal process summoning that person to appear as a witness, or to produce a record, document, or other object, in an official proceeding; or
(D) be absent from an official proceeding to which such person has been summoned by legal process …
The "official proceeding" language here refers to a federal proceeding. But if any of the entities the Cuomo administration reportedly shielded from the Moreland commission’s questions are under investigation by or of interest to any federal office, it could theoretically provide an opening for the U.S. attorney.
That's far from a slam dunk. But the very threat of such legal action could be enough to get people at the bottom and middle of the chain to share what they know, so prosecutors can work their way up.  
Bharara may have already offered clues to his intentions.
If a prosecutor is laying the groundwork for possible action, the first step would be to get all relevant Moreland Commission documents (and based on those, see what others are needed), which Bharara has done. Once all the documents are collected, the prosecutor’s office would start at the bottom of the chain, perhaps with an assistant to the commission’s executive director—which Bharara has also just done.  (Regina Calcaterra’s assistant Heather Green was subpoenaed and will appear before a grand jury on Monday.)
Lower-level witnesses like Green would be asked to provide any information they might have, including communications, whether they remember any meetings between major players at specific times. The information gleaned would then be waved at players up the chain in an effort to get them to talk, and implicate bigger fish. Obvious subsequent steps would include going to Calcaterra and Schwartz, with the ultimate goal being to nail the most senior target possible.
Depending on the severity of their potential charges, ability to cooperate and relevant knowledge, they could get immunity or a potential reduced sentence to help nab a bigger player.   
Of course, the prosecutor could determine there’s not enough to proceed, and, in what would be a best-case scenario for the governor, dissolve the investigation entirely. Another, middle-ground scenario would be the issuance of a grand jury report (a highly unusual occurrence) that lays out for the public an excoriation of the conduct as reprehensible but not criminal.
Whatever happens, one thing is clear: Unlike the Moreland commission’s work, the outcome of Bharara’s investigation is out of Cuomo's hands.

Wednesday, February 26, 2014

U.S. Supreme Court Rules That Victims of Allen Sanford's Ponzi Scheme May Sue

Convicted financier Allen Stanford, who is serving 110 years in prison for his $7 billion Ponzi scheme,
arrives at Federal Court in Houston for sentencing June 14, 2012.


U.S. justices say Allen Stanford victims can sue lawyers, brokers

LINK

Investors in Allen Stanford's $7 billion Ponzi scheme can sue to recoup losses from lawyers, insurance brokers and others who worked with the convicted swindler, the U.S. Supreme Court ruled on Wednesday.
 On a 7-2 vote, the court held that lawsuits filed in state courts can go forward. The majority said the ruling would not affect the U.S. Securities and Exchange Commission's (SEC) ability to enforce securities law as some had feared.

Stanford's fraud involved the sale of bogus certificates of deposit by his Antigua-based Stanford International Bank. He is serving a 110-year prison sentence.

New York-based law firms Chadbourne & Parke LLP and Proskauer Rose LLP and insurance brokerage Willis Group Holdings Plc were sued by former Stanford investors. The investors also sued financial services firm SEI Investments Co and insurance company Bowen, Miclette & Britt.

"It's clear the justices understood that ruling for the defendants would create an immunity that Congress never imagined," said Tom Goldstein, a lawyer representing the former Stanford clients.

Representatives from the two law firms said that when the case returns to the lower court the defendants would move to dismiss the suit on other grounds.

Writing for the majority, Justice Stephen Breyer said the Securities Litigation Uniform Standards Act (SLUSA) did not prevent the state lawsuits from proceeding. The law says that state lawsuits are barred when the alleged misrepresentations are "in connection with" the purchase or sale of a covered security, which is defined as a security listed on a national exchange at the time the alleged unlawful conduct occurred.

As the defendants in the case were not selling securities traded on U.S. exchanges, "it is difficult to see why the federal securities laws would be - or should be - concerned with shielding such entities from lawsuits," Breyer wrote.

IMPACT ON SEC

The Obama administration, representing the SEC, had sided with the defendants to try to protect the agency's authority to pursue wide-ranging investigations.

The administration said the "in connection with" language in SLUSA that limits state court lawsuits mirrors language in federal law that gives broad authority of the SEC to pursue such misrepresentations.

Justice Anthony Kennedy wrote in a dissenting opinion that the ruling would have a negative impact on the SEC because it "casts doubt on the applicability of federal securities law to cases of serious securities fraud." Kennedy was joined in dissent by Justice Samuel Alito.

Securities law experts backed the majority's view that the ruling was relatively narrow.

Donald Langevoort, a professor of law at Georgetown University, said he was "very surprised" the SEC tried to argue that a ruling in favor of the plaintiffs could diminish the government's enforcement powers.

"The opinion is imminently correct as a matter of common sense and legal policy," Langevoort said.

Charles Smith, of the law firm Skadden, Arps, Slate, Meagher & Flom LLP who represents clients before the SEC, said the agency would be comforted by the limited scope of the ruling.

"The decision is crafted in a way that is intended not to interfere with the SEC's enforcement authority," he said.

The SEC, via a spokesman, declined to comment.

The defendants had sought Supreme Court review after the New Orleans-based 5th U.S. Circuit Court of Appeals in March 2012 said the lawsuits brought under state laws by the former Stanford clients could go ahead.

The former Stanford clients are keen to pursue state law claims because the Supreme Court previously held that similar "aiding and abetting" claims cannot be made under federal law.

The class-action lawsuits filed by the former investors accused Thomas Sjoblom, a lawyer who worked at both law firms, of obstructing a SEC probe into Stanford, and sought to hold the other defendants responsible as well.

The cases are Chadbourne & Parke LLP v. Troice et al, U.S. Supreme Court. No. 12-79; Willis of Colorado Inc et al v. Troice et al, U.S. Supreme Court, No. 12-86; and Proskauer Rose LLP v. Troice et al, U.S. Supreme Court, No. 12-88.

(Reporting by Lawrence Hurley, additional reporting by Sarah N. Lynch; editing byHoward Goller, G Crosse and Amanda Kwan)

Obama Campaign Pocketed Ponzi Schemer Cash

The Center for Public Integrity | Posted 01.23.2014 | Politics
The Center for Public Integrity Obama isn't the only politician who has declined to return Stanford campaign contributions to help make Stanford's defrauded investors whole. A total of 39 candidates and committees have kept their campaign funds despite the pleas by the receiver.

Ponzi Schemer's Alleged Cohorts Face Charges

Reuters | Posted 10.31.2012 | Business
WASHINGTON, Aug 31 (Reuters) - U.S. securities regulators charged former officials of Stanford Group Co for their role in the demise...

VOTE: The Worst Financial Scandal Of All Time

The Huffington Post | Mark Gongloff | Posted 08.13.2012 | Business
Lots of people out there are saying the Libor scandal is the worst financial scandal of all time. But how can we even know such a thing? There's only ...

110 YEARS IN PRISON

AP | JUAN A. LOZANO | Posted 08.14.2012 | Business
HOUSTON -- Former jet-setting Texas tycoon R. Allen Stanford had plenty of things to say Thursday before a federal judge sentenced him to 110 years in...

Convicted Ponzi Schemer Blames U.S. For Destroying His Business

Reuters | Posted 06.14.2012 | Business
Allen Stanford, facing sentencing for running a $7 billion Ponzi scheme, on Thursday blamed the U.S. government for ruining his business and said he n...

Politicians Won't Return Ponzi Payoffs

Michael Winship | Posted 05.09.2012 | Politics
Michael Winship Texas financier Robert Allen Stanford was convicted on 13 out of 14 criminal counts of fraud. But what most stories failed to mention was the large amount of his clients' cash that was spent on campaign contributions, greasing the corrupt nexus of money and politics for personal gain.

Victims: Ponzi Schemer's Conviction Is 'Bittersweet'

AP | JUAN A. LOZANO | Posted 05.07.2012 | Business
HOUSTON — A prosecutor asked jurors on Wednesday to allow federal authorities to seize $330 million from nearly 30 accounts controlled by convic...

The Wheels On the Justice Bus Go Slowly Round And Round

The Huffington Post | Mark Gongloff | Posted 03.07.2012 | Business
You need eight ounces to make a cup, but only seven and a half things are necessary for knowing each day. Here's your daily allotment: Thing One: S...

Houston Financier Convicted Of $7 Billion Investor Fraud

AP | JUAN A. LOZANO | Posted 05.06.2012 | Business
HOUSTON — Texas tycoon R. Allen Stanford spent more than 20 years charming investors, who handed him billions of dollars they had spent their li...

Marcus Baram

Volcker Rule Limps To Finish Line

HuffingtonPost.com | Marcus Baram | Posted 01.18.2012 | Business
"The Watchdog" is back off the leash, with more bark and bite. After a six-month break to focus on some other duties here at HuffPost, I'm happy to be...

SEC Ramping Up Efforts To Stop Hedge Fund Fraud

The Huffington Post | Alexander Eichler | Posted 12.28.2011 | Business
Memo to hedge fund managers: It's a bad time to try to overachieve. The Securities and Exchange Commission is cracking down on hedge fund fraud, and t...

Former S.E.C. Official Subject Of Criminal Probe

Reuters | Sarah N. Lynch | Posted 07.14.2011 | Business
WASHINGTON (Reuters) - Federal criminal authorities are investigating whether a former U.S. securities regulator inappropriately represented alleg...

PRISON MATES

Posted 05.25.2011 | Business
Jailed financier Allen Stanford has been moved to a prison hospital in Butner, North Carolina, to treat his addiction to anti-anxiety medication, ac...

Accused Ponzi Schemer Stanford Sues Fed For $72 Billion

AP | JUAN A. LOZANO | Posted 05.25.2011 | Business
HOUSTON — Jailed Texas financier R. Allen Stanford has filed a lawsuit accusing prosecutors and federal agents of depriving him of his constitutiona...

Accused Ponzi Schemer Stanford Heads To Prison Hospital

Posted 05.25.2011 | Business
Allen Stanford, accused of a $7 billion Ponzi scheme, is on the way to a prison hospital to receive treatment for addiction to anti-anxiety medica...

Alleged Ponzi Schemer Stanford Ruled Unfit To Stand Trial

AP | JUAN A. LOZANO | Posted 05.25.2011 | Business
HOUSTON — A judge has ordered that former Texas billionaire and financier R. Allen Stanford, awaiting trial on charges he bilked investors out o...

SEC May Charge Allen Stanford's Brokers

Posted 05.25.2011 | Business
HOUSTON: U.S. regulators have notified some brokers who worked for indicted financier Allen Stanford that they may face civil fraud charges, the Fina...

Allen Stanford's Execs Knew He Was Bilking Investors, Witness Says

AP | JUAN A. LOZANO | Posted 05.25.2011 | Business
HOUSTON — Executives who worked with Texas financier R. Allen Stanford were aware of problems at his now defunct Caribbean bank, including fabri...

Madoff: "Screw the Victims"

Norb Vonnegut | Posted 05.25.2011 | Business
Norb Vonnegut I just returned from Nino's in Manhattan, where the authors of The Club No One Wanted to Join gathered to discuss their book. They are a group of twenty-nine investors in Madoff's Ponzi scheme.

Jason Linkins

SEC IG's Report On Allen Stanford Investigation Underreported

HuffingtonPost.com | Jason Linkins | Posted 05.25.2011 | Media
As big a fan as I am of strong financial regulatory reform, I'm also something of an SEC skeptic, dating back to that time President Barack Obama appo...

Stanford, Texas Billionaire, Attempts To Get Out Of Jail A Third Time

AP | JUAN A. LOZANO | Posted 05.25.2011 | Business
HOUSTON — Texas financier R. Allen Stanford's attorneys said Tuesday that jail has reduced their client to a "wreck of a man" who is severely de...

Pete Sessions Spokesman Defends 'I Love You' Email To Allen Stanford

Posted 05.25.2011 | Politics
The Miami Herald reported on Sunday that Rep. Pete Sessions (R-Tex.) once penned a love note of sorts to jailed financier Allen Stanford. "I love yo...

The Most Scandalous White-Collar Cases Of 2009 (PHOTOS)

Huffington Post | Mallika Rao | Posted 05.25.2011 | Business
Bernie Madoff is only one of the white-collar offenders exposed this year for bilking the country out of millions. Whether stealing from dying family...

AP: Ponzi Busts Nearly Quadrupled In 2009

Posted 05.25.2011 | Business
(AP -- CURT ANDERSON) - It was a rough year for Ponzi schemes. In 2009, the recession unraveled nearly four times as many of the investment scams as ...

Rep. Gregory Meeks Travelled On Tab Of Conman Allen Stanford

on the tab of con artist | By Greg B. Smith | Posted 05.25.2011 | New York
Queens Democrat, Rep. Gregory Meeks, sometimes accompanied by his wife, Simone-Marie, took six trips to sun-drenched locales from Antigua to St. Lucia...