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Burris denies Senate-seat deals, waits for court
Political and Legal | 2009/01/09 09:35
Roland Burris raised his right hand in a committee room at the Illinois Capitol, swearing to tell a room full of lawmakers the truth about his appointment by embattled Gov. Rod Blagojevich to the state's vacant U.S. Senate seat.

With his promise that he'd made no deals to gain the appointment, Burris cleared what he called one of the two hurdles between him and the oath that would make him Illinois' junior senator. Senate Democrats raised both obstacles.

The other hurdle, the signature that Illinois Secretary of State Jesse White has so far declined to provide on paperwork certifying Burris' appointment, is in the hands of the Illinois Supreme Court. White has said the governor shouldn't have appointed someone to fill President-elect Barack Obama's Senate seat, given the corruption charges against him.

"I feel like I've passed this test with flying colors," the 71-year-old Burris told reporters Thursday after testifying for almost 90 minutes before the committee, which later voted to recommend impeaching the governor. "I have nothing to hide."

Now Burris awaits the court's decision. It isn't clear how long that will take.

Blagojevich was arrested Dec. 9 on federal charges that include allegations he schemed to sell or trade Obama's Senate seat.

The two-term Democratic governor has denied any wrongdoing, but Senate Democrats had warned that the corruption allegations would strip credibility from anyone he named to fill the vacancy. Blagojevich ignored them and appointed Burris on Dec. 30, creating a furor.

White pressed the governor not to fill the seat before Burris' appointment, then withheld his signature as a "ceremonial" stand against the move, White spokesman Dave Druker said Thursday. If the court says White has to sign, he will, according to Druker.



Lennar shares drop after deal questioned on website
Securities | 2009/01/09 09:22

Lennar Corp. shares took a beating Friday morning after self-proclaimed fraud buster Barry Minkow criticized the financial structure of some of its deals.

Shares of the nation's second-largest homebuilder (NYSE: LEN) were down $2.20 to $9.22 shortly before noon.

Minkow, who served more than seven years for a stock fraud involving carpet-cleaning company ZZZZ Best, released a list of what he termed 10 red flags involving Lennar. He now operates the Fraud Discovery Institute and has posted details of his allegations at www.frauddiscoverynetwork.com.

Lennar provided "vague and less-than-transparent responses to the SEC inquiries about off-balance sheet, joint-venture debt,” the institute alleges.

Minkow’s group alleges that the builder has “exhibited a pattern of behavior over a sustained period of time of deceptive business practices, ranging from building homes using Chinese drywall to cut costs, to causing the California Public Retirement Fund (CALPERS) to lose approximately $1 billion.”

Lennar said it was working on a response to Minkow’s allegations.

The institute said it has sent a letter of complaint to the Securities and Exchange Commission, the FBI and the IRS.



SEC reopens insider-trading probe of hedge fund
Securities | 2009/01/09 08:06
The Securities and Exchange Commission has reopened its investigation of possible insider trading involving a major hedge fund, a case closed two years ago that prompted scrutiny by Congress and the agency's internal watchdog.

The SEC is examining whether the hedge fund, Pequot Capital Management, traded Microsoft Corp. shares on confidential information provided by a former employee of the technology company that it hired, a person familiar with the inquiry said Thursday.

The person spoke on condition of anonymity because the SEC has not publicly acknowledged reopening the probe. SEC spokesman John Nester declined to comment Thursday.

New information that surfaced last month revived interest in the case. Documents that emerged in a divorce proceeding in Connecticut showed that Pequot began paying $2.1 million to a key witness in the case in mid-2007.

The documents show a payment by Pequot of $700,000 at that time to David Zilkha, a former Microsoft employee later hired by the hedge fund. Zilkha received an additional $700,000 in mid-2008 and was slated to receive the same amount this year, according to the documents in the divorce case between Zilkha and his ex-wife, Karen Kaiser.

"To me it smells like hush money, but I have no idea," her attorney, Mark Sherman, told The Associated Press Thursday.

Zilkha's lawyer, Norm Pattis, declined to comment.

Pequot, a $4.3 billion hedge fund based in Westport, Conn., and its founder and chairman, Arthur Samberg, have denied any wrongdoing.

Pequot spokesman Jonathan Gasthalter said the payments to Zilkha were made "pursuant to the settlement of a civil claim related to his employment and termination by Pequot that was first presented to the firm in January 2007 after all investigations had been closed."

Gasthalter said Pequot will cooperate fully with all requests for information and is confident that its trading in Microsoft shares "was at all times proper."



Calif. gay marriage foes want donors anonymous
Breaking Legal News | 2009/01/09 03:37
Supporters of the ballot measure that banned gay marriage in California have filed a lawsuit seeking to block their campaign finance records from public view, saying the reports have led to the harassment of donors.

"No one should have to worry about getting a death threat because of the way he or she votes," said James Bopp Jr., an attorney representing two groups that supported Proposition 8, Protect Marriage.com and the National Organization for Marriage California. "This lawsuit will protect the right of all people to help support causes they agree with, without having to worry about harassment or threats."

The lawsuit, filed Wednesday in federal court in Sacramento, asks the court to order the secretary of state's office to remove all donations for the proposition from its Web site.

It also asks the court to relieve the two groups and "all similarly situated persons" from having to meet the state's campaign disclosure requirements. That would include having to file a final report on Proposition 8 contributions at the end of January, as well as reports for any future campaigns the groups undertake.

Proposition 8, approved by 52.3 percent of California voters on Nov. 4, reversed a state Supreme Court decision allowing gay marriage. The measure's opponents have asked the Supreme Court to overturn it.

The lawsuit filed Wednesday cites a series of incidents in which those who gave money to support Proposition 8 received threatening phone calls, e-mails and postcards. One woman claims she was told: "If I had a gun, I would have gunned you down along with each and every other supporter."

Another donor reported a broken window, one said a flier calling him a bigot was distributed around his hometown and others received envelopes containing suspicious white power, according to the lawsuit.



Larry Craig dropping further appeals
Breaking Legal News | 2009/01/08 08:36
A lawyer for former Idaho Sen. Larry Craig says they won't ask the Minnesota Supreme Court to void Craig's conviction in an airport bathroom sex sting.

Minneapolis attorney Tom Kelly says he concluded that the state Supreme Court would not accept a petition for further review of the case, so it would be a futile exercise. He says that means the legal wrangling in the case is over.

Thursday was the 30-day deadline for Craig to ask the high court to review a Minnesota Court of Appeals decision that went against him.

The Idaho Republican was arrested in 2007 by an undercover police officer who was conducting a sting operation against men cruising for gay sex at the Minneapolis-St. Paul International Airport. The senator quietly pleaded guilty to disorderly conduct and paid a fine, but changed his mind after word of his arrest became public. He insisted he was innocent and that he was not gay. He did not seek re-election.



2 Ill. men accused of running $15M fraud scheme
Criminal Law | 2009/01/08 06:36
Two men passed themselves off as foreign currency traders to swindle customers out of $15 million, which they used to pay for a lifestyle that included strip clubs, jewelry and private jets, according to a criminal complaint unveiled Wednesday in federal court.

Charles G. Martin, 43, of Glencoe, Ill., and Malibu, Calif., was arrested Tuesday night in the Los Angeles area, and John E. Walsh, 60, of Lake Forest was picked up Wednesday morning on a criminal complaint charging them with wire fraud.

A court order closed their One World Capital Group LLC in December 2007 and froze its last $636,815 of assets. The two men operated a "Ponzi-like" scheme diverting money out of customer accounts and into their pockets, prosecutors said.

The criminal complaint was filed in U.S. District Court on Tuesday.

One World was formed in 2005 and had offices in Winnetka and New York, prosecutors said. Martin and Walsh misled customers and federal regulators to conceal the fact that they siphoned off money customers thought was being used for currency trades.

Credit card and bank records show Martin spent more than $1 million at a strip club and restaurants, nearly $1 million at hotels and $1 million renting private jets, prosecutors said. He also purchased a fleet of luxury vehicles, donated hundreds of thousands to celebrity charity events and hired bodyguards, they said.



Google cuts temporary workers but murky on details
Venture Business News | 2009/01/08 04:37
Google Inc. has jettisoned a substantial number of temporary workers in a recent austerity drive spurred by the recession, although the Internet search leader still intends to spend billions of dollars during the next two years on product research, development and acquisitions.

The spending plans were outlined in a regulatory filing that also provided some clues about the magnitude of a recent payroll purge targeting Google's legion of contractors and other workers who aren't considered full-time or part-time employees.

The filing to the Securities and Exchange Commission was submitted on Dec. 15, but it was made on paper, leaving it unavailable through the various Web services that track reports to the agency. The Associated Press obtained a copy of the records this week.

A key section of the filing is being kept confidential because Google maintains it contains trade secrets, but the publicly accessible parts provide some information that hadn't previously been disclosed.

For instance, Google revealed it currently has 24,400 employees, including 4,300 interns, temporary workers and contractors. That contrasts sharply with the roughly 10,000 contractors that Google co-founder Sergey Brin said the company had in October. "It's really high," Brin said in an Oct. 16 interview with the San Jose Mercury News.

Google acknowledged in late November that it planned to significantly reduce the number of its contractors and retain all of its full-time employees.

But the company wouldn't specify how many of the temporary workers were being dumped, feeding rampant speculation among bloggers and even industry analysts. Published estimates of the cost-cutting's impact ranged from a few hundred to all 10,000 of Google's contractors.



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