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Wyatt pleads guilty in Iraq oil case
Court Watch | 2007/10/02 07:18

Texas oil billionaire Oscar Wyatt, who in the mid-1990s was involved in a land dispute with a group of agencies in Utah, faces up to two years in prison after pleading guilty to paying an illegal kickback to the regime of late Iraqi leader Saddam Hussein in exchange for the right to purchase oil.  The surprise plea, coming in the third week of a trial related to the United Nations oil-for-food program, ends a case that threatened to send the oil man to prison for the rest of his life. He faces 18 to 24 months when he's sentenced Nov. 27.

"I didn't want to waste any more time at 83-years-old fooling with this," Wyatt said after the hearing in Manhattan federal court.

Wyatt was accused of paying millions of dollars to Iraq outside of the 1996 U.N. program, created to allow Iraq to use oil revenue to buy food and medicine, easing the impact of sanctions imposed after its 1990 invasion of Kuwait. The Iraqis were permitted to select the companies that would receive oil.

Wyatt, indicted on five counts, pleaded guilty to one, conspiracy to commit wire fraud. He also agreed to forfeit $11 million.

The U.N. oil-for-food program became corrupted in 2000 when Iraqi officials began demanding illegal surcharges in return for contracts to buy Iraqi oil. The program ran from 1996 to 2003.

During the trial, prosecutors demonstrated that Wyatt had such a close relationship with Iraq that he was able to meet with Hussein in December 1990 to argue for the release of Americans being held as potential shields in the event of a U.S.-Iraq war.

The government insisted that Wyatt later took advantage of that relationship to secure the first contract under the oil-for-food program and to continue to receive oil deals after other American companies were denied access.

Wyatt's defense lawyers argued that their client was an American hero who never knowingly paid surcharges to the Iraqi government to win oil deals.

Wyatt made his early fortune in oil and eventually built a system to collect natural gas burned off in Texas oil wells, enabling him to sell the fuel to homeowners as far away as Utah, Michigan and New England.

Wyatt's ties to Utah run deeper than just selling natural gas. In the mid-1990s, he opposed an initiative put together by competing federal, state and private interests that called for conservation groups to purchase ranches in the Book Cliffs area of eastern Utah.

Those groups - in an effort to improve wildlife habitat and protect land from overgrazing - planned to turn the properties over to the U.S. Bureau of Land Management and the state's Division of Wildlife Resources.

The agencies would then agree to convert federal grazing permits to allow elk rather than cattle on the property.

Wyatt owned some of the ranchland and believed elk were eating forage that should have been feeding his 2,100 head of cattle. He challenged the initiative in court in an effort to outbid the DWR for the grazing permits. He eventually dropped his lawsuit, and the groups put together 500,000 acres for conservation.



Blackwater under fire in U.S. Congress
Breaking Legal News | 2007/10/02 06:15
U.S. security contractor Blackwater, under investigation over deadly incidents in Iraq, defended its role there on Tuesday, but lawmakers took aim at the company's actions in a Sept. 16 shooting in which 11 Iraqis were killed. Blackwater founder and former Navy SEAL Erik Prince said in in testimony prepared for the House of Representatives Committee on Oversight and Government Reform that his staff acted "appropriately" on that day in a very complex war zone.

"There has been a rush to judgment based on inaccurate information, and many public reports have wrongly pronounced Blackwater's guilt for the deaths of varying numbers of civilians," Prince said in the testimony.

"Congress should not accept these allegations as truth until it has the facts," added Prince.

Iraq's government has been strongly critical of Blackwater and has called the shooting incident a crime.

Committee chairman Henry Waxman, a California Democrat, said there were serious questions about Blackwater's performance and that the Sept. 16 shooting was just the latest in a number of "troubling" incidents.

"Is Blackwater, a private military contractor, helping or hurting our efforts in Iraq," Waxman asked in his opening statement.

"Blackwater will be accountable," he added.

Blackwater, which has received U.S. government contracts worth more than a billion dollars since 2001, is under intense scrutiny over its security work in Iraq, where Prince said the North Carolina firm had about 1,000 personnel.

The hearing comes amid growing questions over the role of private contractors in Iraq and whether the U.S. government relies too heavily on outsiders to perform jobs traditionally done by the military.


U.S. Postpones Domestic Spy Satellite Program
International | 2007/10/02 03:59

A program to employ spy satellites for certain domestic uses has been postponed because of privacy concerns. Congress had already provided money for the program, which was to begin this month. But some lawmakers demanded more information about its legal basis and what protections there were to ensure that the government was not peering into the homes of Americans. As a result, the Homeland Security Department is not formally moving ahead with the program until it answers those questions, a department spokesman said.

The program would have expanded access to material gathered by satellites that monitor American territory to agencies involved in emergency response, border control and law enforcement. A new office within the Homeland Security Department, called the National Applications Office, would coordinate requests from civilian agencies for satellite information. Currently, civilian use of the material has generally been limited to monitoring weather and climate changes and to making maps.

Representative Bennie Thompson, Democrat of Mississippi, an opponent of the program, commended the department on Monday for its decision to "go back to the drawing board and get it right."

The department would not say how long it planned to postpone the program. "We are cooperatively working with the Congress to answer any questions that they have," said a spokesman, Andrew Lluberes. "We are totally confident that this is going to go forward."



U.S. court opens term, with terrorism, death penalty
Legal Business | 2007/10/02 02:16
The U.S. Supreme Court began a new term on Monday featuring blockbuster cases on Guantanamo prisoners and the death penalty, and it rejected some 2,000 appeals that had piled up during its summer recess. Returning to the bench, the nine justices also heard arguments on Washington state's primary election system and whether parents of disabled students can get reimbursed for sending their children to private schools.

Legal experts are watching this term to see the future direction of the highest U.S. court that has been closely divided, with a 5-4 conservative majority bolstered by President George W. Bush's two appointees -- Chief Justice John Roberts and Justice Samuel Alito.

The court will rule on whether the hundreds of detainees at the U.S. military prison in Guantanamo Bay in Cuba can use American courts to challenge their indefinite confinement and on the current lethal injection method of execution.

The term that ended in June was marked by a sharp shift to the right on divisive social issues like abortion and civil rights law. Legal experts are divided on whether the trend will continue this term, an issue already being discussed in the November 2008 presidential race.

ROMNEY WOULD NAME STRICT CONSTRUCTIONISTS

In Boston, Republican candidate Mitt Romney said cases this term could dramatically affect the "lives of all Americans" and he vowed to name justices "in the strict constructionist mold" of Roberts, Alito and their fellow conservatives, Antonin Scalia and Clarence Thomas.



Putin Says He Will Run for Parliament
International | 2007/10/02 02:01

President Vladimir V. Putin, who is barred from seeking another term, suggested Monday that he might become prime minister next year, seeming to confirm what many analysts had assumed: that he plans to hold on to the power he has accrued over eight years.

Mr. Putin, who spoke at the congress of the United Russia party, the country's dominant political force, said he would lead that party's candidate list in the December parliamentary elections.

The announcement was at once consistent and surprising. The president, who is popular among Russia's citizens and has a centralized lock on his government, has often said he intended to remain involved in politics beyond his second term. He has even said that he may seek re-election after another president holds the office, as the Russian Constitution allows him to do.

But he had not previously suggested a new political office for himself immediately after the presidential election next March, as he did when he said he could become Russia's next prime minister.

"Heading the government is quite a realistic proposal," he said, before adding a qualifier he often uses when publicly discussing his plans for 2008. "But it is too early to think about that."

In Mr. Putin's years in the Kremlin, Russia's economy and international influence have expanded, and many Russians have seen their living conditions improve.

Mr. Putin's speech here elevated the Kremlin's stagecraft to new levels. United Russia's party congress led the national news broadcasts, which featured scenes of Mr. Putin sitting on an elevated viewing stand above each speaker as a crowd looked up toward him adoringly.

One speaker, a weaver from the Ivanovo oblast, or district, pleaded with party officials to find a way to keep Mr. Putin in office for a third term. "I see so many big bosses and just smart people at this congress," said the weaver, Yelena Lapshina. "I appeal to all of you — let's think of something together so that Vladimir Vladimirovich Putin will remain the president of Russia after 2008 as well."

The use of a weaver from Ivanovo borrowed directly from Soviet iconography and the pantheon of state-endorsed heroes of the proletariat. Mr. Putin's managers quickly topped even that clear symbol, as an athlete in a wheelchair rolled onto the stage and praised the president.

"Vladimir Vladimirovich, you are lucky," said the athlete, Mikhail B. Terentyev, a ski champion from the Paralympic games. The crowd broke out in applause.

Mr. Terentyev continued: "And while you are the president, the luck accompanies Russia. You have become a talisman for tens of millions of people, a symbol of the successful development of the country. Of course it is up to you to decide which place in the country's political life you will occupy, but no matter what decision you make, I want you to stay with us, with Russia."

Mr. Putin looked down from his seat, head tilted, eyebrows raised, emanating calm and power.

The day's events ignited a new round of speculation about Mr. Putin's path through the elections ahead.

The prime minister's position in Russia is often viewed as a step toward the presidency; Mr. Putin briefly held the job under President Boris N. Yeltsin before swiftly rising to the seat of power.

Last month Mr. Putin abruptly appointed Viktor A. Zubkov, a confidant of little prior prominence, to the prime minister's post. He then hinted that Mr. Zubkov could succeed him as the president. The president's remarks, taken together, suggested that when his term expires he might step one rung down the government's ladder — and then step back up.

But Mr. Putin's latest speech also accompanied his acceptance of a new type of prominence: as the symbolic head of Russia's dominant political party, United Russia. The party unfailingly supports the Kremlin and Mr. Putin, although the president has never joined it and did not join it on Monday.

By accepting the position at the head of the party's candidate list, Mr. Putin instantaneously lent the party his vast domestic political stature — and, in all likelihood, the resources of the Russian government — to its efforts to extend its dominance in Russia's 450-seat Duma, the lower house of Parliament.

The party had appeared already to bank on its close relationship with Mr. Putin. Its slogan for the parliamentary campaign, even before Mr. Putin agreed to be on the party list, was "Putin's Plan: Russia's Victory."

The party holds a strong majority of the Duma's seats. Its leadership said Monday that Mr. Putin's new public support guaranteed it an unconditional victory in the next round of elections, scheduled for Dec. 2.

The small remaining opposition conceded as much soon after the president's remarks were broadcast on national television. Grigory A. Yavlinsky, the leader of the opposition Yabloko party, said on the Ekho Moskvy radio station that the day's events were further proof of a "one-party system in Russia."

Whether Mr. Putin could serve in Parliament and as president simultaneously is an open question. Russia's Constitution and electoral law allow parties to nominate candidates for the legislature who are not party members, but the Constitution also requires a separation of powers as one of its fundamental principles.

However, Maya Grishina, a member of the federal Central Election Commission, told the official RIA Novosti news agency that "the head of the state is not banned to nominate his candidacy at any election, including the parliamentary election."

"Along with this he can still carry out his duties," she said. "The law doesn't contain any restrictions on this."

Gleb O. Pavlovsky, a political scientist who leads a research institute closely connected with the Kremlin, said that Mr. Putin would give his name to the party as an electoral locomotive, but would not actually seek a seat in the Parliament after the results were tallied in December.

Instead, Mr. Pavlovsky said, Mr. Putin had identified the party and the parliamentary campaign as another possible base of power after he leaves office. "The party may become his main tool after the end of his presidency," he said by telephone. "The new president won't be able to appoint a prime minister without the support of the party leader."



Refco Shareholders Sue Law Firm Over IPO
Class Action | 2007/10/02 01:16

Refco Inc. shareholders on Monday sued the Chicago law firm that advised the company in its $583 million initial public offering in 2005, saying it knowingly participated in a fraud that "cost innocent investors hundreds of millions of dollars." The lawsuit is the latest salvo against the Mayer Brown firm, which served as Refco's chief legal adviser for a decade before the company collapsed into bankruptcy. The law firm also has been sued by a court-appointed bankruptcy administrator, and by the buyout firm Thomas H. Lee Partners.

The shareholders, led by the giant bond fund Pacific Investment Management Co., indicated for more than a year that they aimed to go after Mayer Brown, but previously refrained from identifying the firm in a class-action lawsuit against alleged perpetrators of the fraud that led to Refco's collapse. Last year, the shareholders said in court documents they expected to reach a settlement with Mayer Brown.

In their suit, filed with the U.S. District Court in Manhattan, the shareholders also listed Joseph Collins, a Mayer Brown partner, as a defendant. Mayer Brown employs about 1,400 lawyers in six countries. Collins is head of its derivatives group.

Collins wasn't available to comment Monday. In a statement, Mayer Brown said it intended to defend itself "with vigor" and is "confident of a positive resolution." It said it believes securities laws don't allow lawsuits to be brought "against an outside adviser where the company allegedly misrepresented its financial position."

Refco was once one of the biggest commodity brokerages in the United States. It collapsed in October 2005 - just two months after its IPO - amid allegations that its chief executive hid $430 million in bad debt. Federal prosecutors charged the executive, Philip Bennett, with fraud. Bennett, who was ousted from the company, pleaded not guilty. The company sold its key assets and has gone out of business.

Since then, a court-appointed official responsible for collecting funds on behalf of Refco's creditors has sued about dozen investment banks, accounting firms and other "insiders" that played a role in the company's IPO. The official, Marc Kirschner, has sought more than $1 billion in damages from those defendants, including Mayer Brown.

The Refco shareholders' allegations against Mayer Brown are similar to those in Kirschner's lawsuit. The shareholders said Refco's relationship with Mayer Brown began in 1994, when Collins brought the "Refco account" with him from a previous law firm. Because Mayer Brown billed Refco about $5 million a year, Refco was an "extremely lucrative" account.

The importance of that account led Collins to participate in a cover-up of "hundreds of millions of dollars" in bad debt at Refco, the shareholders' lawsuit said. Revealing those debts, by properly accounting for them, would have "threatened the company's survival" - and Collins' fees, the lawsuit said.

Collins became Bennett's "go-to guy" at Mayer Brown, working with him in "devising, documenting and concealing the massive fraudulent scheme that was intended to, and did, result in the false financial statements on which investors innocently relied."

"In return for tens of millions of dollars in legal fees from Refco, Collins and Mayer Brown abandoned their responsibilities as honest professionals and became willing participants in a fraudulent scheme that cost innocent investors hundreds of millions of dollars," the lawsuit said.



TX. Legal trade Political bond is strong
Legal Business | 2007/10/01 08:00

One need only look to the names of Houston's law firms to see the city's political and legal landscapes are intertwined. Bracewell & Giuliani stands out most now — with former New York mayor and presidential candidate Rudy Giuliani's name chiseled in stone outside the downtown tower offices. The city's Big Three firms have political cachet, too. Vinson & Elkins is named in part for former political power broker and County Judge James A. Elkins. The Baker in Baker Botts is the ancestor of current firm member and former Secretary of State James A. Baker III. Fulbright & Jaworski's name includes that of Watergate special prosecutor Leon Jaworski.

Though smaller firms may have a party leaning and plaintiffs' firms usually back Democrats, large firms typically are happy to have their partners meddle in mainstream politics and run for office, no matter the party.

"It's totally encouraged," said Pat Mizell, a former state district judge and Republican activist who is a partner at Vinson & Elkins. "We've been at it a long time here, we've had John Connally, Howard Baker in D.C. and Congressman Mike Andrews." Connally was Texas governor, Baker a U.S. senator from Tennessee and Andrews is from Houston.

That's not even to mention political power broker and former partner Joe B. Allen, 2006 Democratic U.S. Senate nominee Barbara Radnofsky, and former U.S. Attorney General Alberto Gonzales.

Part of the synergy is the logical link between lawyers and lawmaking. But it has as much to do with the connections made in politics boosting the bottom line for law firms.

"It's better to know a lot of people as a lawyer. The more contacts you have, the better you can serve your clients," Mizell said.

Individual idealism can be involved, as well. Those ideals may vary within a large firm.

At Bracewell & Giuliani, managing partner Pat Oxford is heavily involved in the Giuliani presidential campaign and has been a Bush family crony for years. But partner Carrin Patman ran for Congress as a Democrat while at the firm a few years back.

Patman said political activity is a part of "the fabric of the firm." Founder Searcy Bracewell was a state legislator himself, she noted. "The firm likes to be represented on both sides," said Patman, who is raising funds for Democratic presidential candidate Hillary Rodham Clinton.

Chris Bell, a former city councilman, mayoral candidate, congressman and last year's Democratic nominee for Texas governor, now works for Patton Boggs, a Washington, D.C.-based law firm known for lobbying — a profession that requires political activity and savvy.

"Not all professions lend themselves to public service from a scheduling standpoint like the law does," Bell said. He was at Houston firm Beirne, Maynard & Parsons while on the City Council and while running for mayor and Congress. The same firm is now home to former Republican state Rep. Joe Nixon.

A cursory view last week of 2007 federal elections filings for folks who listed their Houston law firms showed a wide variety of contributions within big firms.

As you'd expect, at Bracewell & Giuliani there were a lot of contributions for the name partner. But a few lawyers also gave to the campaigns of Democrats Clinton, Sen. Barak Obama, New Mexico Gov. Bill Richardson, and former U.S. Sen. John Edwards, and on the GOP side, former Massachusetts Gov. Mitt Romney.

Fulbright & Jaworski's two biggest presidential contribution beneficiaries as of last week were Obama and Giuliani. At Vinson & Elkins it was Clinton, Giuliani and Obama. And at Baker Botts, the favorites were Romney, Obama and Republican U.S. Sen. John McCain of Arizona.

Frank Harmon, a small-firm lawyer and local Republican activist, said one of the places law firms and politics interact the most is in judicial races.

"Right now, every day I receive at least one, and as many as three, invitations to a judicial fundraiser. Nobody could write a check to all these guys," said Harmon.



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