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Obama Moves to Block AIG Bonuses
Politics |
2009/03/19 11:19
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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 amp; Aronoff Llp in Ohio.
Attorney Ross Albert, a partner at Morris Manning amp; 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 amp; 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
Court Watch |
2009/03/19 11:12
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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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Levi Korinsky Investigate Breach of Fiduciary Duty
Firm News |
2009/03/04 09:03
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Levi amp; Korsinsky (Lamp;K) is investigating breaches of fiduciary duty and other violations of state law by the board of directors of Nobel Learning Communities, Inc. (Nobel Learning or the Company) (Nasdaq:NLCI) arising out of their failure to negotiate in good faith with a potential purchaser of the Company and pursue a transaction designed to maximize shareholders value. On September 22, 2008, Knowledge Learning Corporation made an offer to buy the Company for $17 per share which represents a 25% premium to the prior day's closing share price and is a price the Company's stock has not reached since 1996. The Board, however, has taken actions designed to maintain control over the Company and impede the maximization of shareholder value. These actions include the adoption of a rights plan in response to purchases of Company stock by entities controlled by or affiliated with Michael Milken who is the founder of Knowledge Learning Corporation.
If you own common stock in Nobel Learning and wish to obtain additional information, please contact us at the number listed below or visit http://www.zlk.com/nlci.html
Lamp;K has experience in prosecuting investor securities litigation and an extensive practice in actions involving financial fraud and represents investors throughout the nation, concentrating its practice in securities and shareholder litigation. |
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Class Action Filed Against Oppenheimer Funds
Firm News |
2009/02/27 09:34
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Abraham, Fruchter amp; Twersky, LLP filed a class action lawsuit in the United States District Court for the Eastern District of New York against Oppenheimer Funds, Inc. (Oppenheimer) on behalf of purchasers of the Rochester Fund Municipals (Rochester or the Fund) (NASDAQ: RMUNX) (NASDAQ: RMUBX) (NASDAQ: RMUCX) from February 26, 2006 through October 21, 2008 (the Class Period).
The complaint charges Oppenheimer, the Fund and certain of its Trustees with violations of the Securities Act of 1933. The suit claims Oppenheimer, which runs the Fund, misled investors about the risks of investing in the Fund, resulting in an over 30% decline in the Fund's value. The lawsuit identifies the following funds as affected: A Shares (RMUNX), B Shares (RMUBX) and C Shares (RMUCX).
The complaint alleges that the Registration Statements through which shares of the Fund were sold failed to disclose that under certain circumstances Trusts which contain Inverse Floaters, such as those employed by the Fund, may be put to the Fund for repayment of principal. This caused the Trusts to be collapsed and required the Fund to repay the principal amount of the tendered securities. In order to do so, the Fund was forced to sell securities from its portfolio regardless of market conditions and accept prices far below the values at which the bonds were carried on its books.
This risk factor was always present wherever inverse floaters were employed. However, no disclosure was made in any of the Prospectuses filed as part of Registration Statements with respect to the sale of the Fund's shares. Because of this lack of disclosure, the Fund's shares traded at artificially inflated prices during the Class Period.
On October 21, 2008, Rochester filed a Prospectus Supplement which disclosed the relevant risks associated with the Fund's investment in Inverse Floaters. As of October 21, 2008, the Fund's shares traded at $12.35 per share, down from $18.00 per share at the beginning of the year.
Plaintiff seeks to recover damages on behalf of all those who purchased shares of Rochester Fund Municipals from February 26, 2006 through October 21, 2008. The Plaintiff is represented by Abraham, Fruchter amp; Twersky, LLP which has extensive experience in securities class action cases, having been ranked among the leading class action law firms in terms of recoveries achieved by a survey of class action law firms conducted by Institutional Shareholder Services.
If you would like to discuss this action or if you have any questions concerning this notice or your rights as a potential class member or lead plaintiff, you may contact: Jeffrey Abraham or Jack Fruchter of Abraham, Fruchter amp; Twersky, LLP at 212-279-5050, or via e-mail at jabraham@aftlaw.com or jfruchter@aftlaw.com, respectively. If you wish to serve as lead plaintiff, you must move the Court no later than sixty days from today. Any member of the proposed class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain a member of the proposed class. |
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Christian Boot Camp Accused of Abusing Kids
Topics |
2009/02/26 13:42
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Thayer Learning Center and its successor the Teen Life Skills Center abused children at its Christian boot camp, hog tying them naked and spraying them with a hose, duct-taping children together overnight, throwing ice water on them as they shivered naked on a concrete floor, putting them in solitary confinement for a month, and forcing a girl to eat her own vomit, one girl's mother claims in Federal Court.
The mother, Ruth Romer, claims that Teen Life Center, of Kidder, Mo., is a mere continuation of the predecessor Thayer Learning Center and that the creation of the successor for in whole or in part for the purpose of escaping liability for the tortious acts of Thayer Learning Center.
Teen Life is a Utah corporation. Also sued are Dorothy Steele, Willa Bundy and John Bundy, all of Springerville, Utah.
Romer also claims her daughter was provided with inadequate medical care. She says Thayer and its staff tells kids to suck up your drama, denies them medical attention, and terminates employees who report abuse to public agencies and law enforcement.
She says the defendants screen mail to and from children, routinely misrepresent the physical and emotional status of children in their care when speaking to the parents of said children, and misrepresent to parents the level, or lack thereof, of qualified medical training for staff at Defendant Thayer.'
She claims that children at Defendant Thayer were routinely 'taken down,' meaning physically incapacitated and taken to the ground through 'choke holds' and other means.
She claims that when a child was 'taken down' the 'drill instructor' or staff involved, would yell 'grenade,' meaning all other 'cadets' must get on the ground face down with their hands over their eyes and head, so as not to be witnesses to the event.
She claims that children at Defendant Thayer were routinely 'smoked' meaning that they were forced to perform physical exercise and exertion until they collapsed from physical exhaustion.
She claims that Some children have spent thirty days or more in solitary confinement, during which time they are forced to hear 'motivational' tapes over and over.
Children have been restrained with zip ties around their ankles and wrists.
Children have been restrained and attached to furniture.
Male children have been stripped to their underwear, 'hog tied' and sprayed with a hose. ...
A child was thrown into a barbed-wire bundle and told to get himself out.
During the summer, for punishment, children have been placed in a 'hot box' which is an outside, rubber-sealed tent.
For punishment, children have been duct taped and/or belted together for an entire day and sometimes overnight.
For punishment, a child has been forced to brush her teeth for a four hour, non-stop time period.
Students were stripped down to their underwear, tied up, and laid on a concrete floor and ice cold water was poured on them every hour.
Restroom breaks were so limited that students regularly soiled themselves.
The restricted bathroom breaks led to various urinary tract infections and bladder infections.
One girl was forced to sit in a plastic tub containing urine for at least two and one-half hours. ...
A female student vegetarian was forced to eat meatballs. The student got sick and vomited in her hands. 'The girl was then forced to eat the vomit.'
And so on.
Here are the defendants: Thayer Learning Center LLC, Teen Life Skills Center Inc., Parent Help LLC, 2B Enterprises Holdings LLC, A 2B Enterprises LLC, Dorothy Steele, Willa Bundy, and John Bundy.
The Romers seek punitive damages. They are represented by James Thompson with Edelman amp; Thompson of Kansas City, Mo. |
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Munger, Tolles Olson Retains Clearwell to lower costs
Law Firm News |
2009/02/23 09:59
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Clearwell Systems, Inc., a leader in intelligent e-discovery, today announced that Munger, Tolles amp; Olson, LLP (MTO), a California-based 2008 AMLAW 200 Law Firm, has deployed the Clearwell E-Discovery Platform to help lower e-discovery costs and more rapidly respond to litigation and governmental document requests.
The current financial downturn has spurred a flood of new investigations, surpassing the total number of cases filed from the savings and loan crisis over the last two decades. Affected enterprises and executives face lawsuits and inquiries from investors, financial regulators and the government that require extremely fast responses that drain resources and drive up the cost of e-discovery. Clearwell's rapid processing and analysis of case documents can help clients and law firms respond more cost-effectively to e-discovery requests under extremely tight deadlines. Furthermore, Clearwell's Transparent Search and advanced cull-down features help ensure that only the relevant data is produced and the process is defensible, thus mitigating legal risks.
Responding successfully to time-sensitive litigation and governmental document requests requires efficient and cost-effective e-discovery processes that maintain accuracy and defensibility, even under tight timelines, said Ron Best, director of legal information systems at MTO. The Clearwell E-Discovery Platform allows us to more quickly index, search, analyze, and cull-down case data in a product with very robust and transparent tracking and audit capabilities.
As enterprises navigate through the current financial crisis, many are being hit two-fold with the burden of e-discovery requests from increased litigation and investigations, said Aaref Hilaly, president and CEO at Clearwell Systems. In order to defensibly respond to these e-discovery requests, enterprises and law firms are seeking products that provide a level of transparency not available with traditional 'black-box' technologies.
About Clearwell Systems
Clearwell Systems is transforming the way enterprises perform electronic discovery in response to litigation, regulatory inquiries, and corporate investigations. By automating the processing, analysis and review of electronically stored information, Clearwell enables enterprises to accelerate early case assessments, lower processing costs, reduce review workload, and gain control of electronic discovery. Clearwell received the highest ranking of 'Strong Positive' in Gartner, Inc.'s, 2008 MarketScope for E-Discovery Software Product Vendors, and was ranked a Top 5 E-Discovery Software Provider Overall in the 2008 Socha-Gelbmann Electronic Discovery Survey. For more information, visit www.clearwellsystems.com or read the E-discovery 2.0 blog at: http://www.clearwellsystems.com/e-discovery-blog/. |
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