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Legal news from Wednesday, January 12, 2005




Former Yukos CEO attacks Russian legal system
Jeannie Shawl on January 12, 2005 4:02 PM ET

[JURIST] Addressing a Russian court Wednesday, former Yukos [corporate website] CEO Mikhail Khodorkovsky [JURIST Newsmaker] called the tax fraud against him and the oil company "inventions" and said that Russian investigators had removed "uncomfortable" documentation in the case. During his trial on tax evasion and fraud charges, Khodorkovsky said that "my confidence in Russian justice has been undermined by the decision of the courts in the Yukos case, which have easily recognized as legal ... any inventions of the tax authorities and the prosecutor's office." Khodorkovsky maintains a trial website in English, which provides regular updates on the status of the trial. Also Wednesday, Khodorkovsky confirmed that he has handed over his majority shares in Menatep [corporate website], the company that is Yukos' main shareholder, to Leonid Nevzlin, a business partner who lives in self-imposed exile in Israel. AP has more.






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FL appeals court asked to rehear Schiavo right-to-die case
Jeannie Shawl on January 12, 2005 3:35 PM ET

[JURIST] Lawyers for the parents of Terry Schiavo [JURIST Newsmaker], the brain damaged woman at the center of a long running right-to-die dispute, asked a Florida appeals court Wednesday to reconsider its decision not to grant a new trial in their suit [JURIST report]. Seeking to prevent Schiavo's husband from removing her feeding tube, Schiavo's parents hope to argue that recent statements by Pope John Paul II calling euthanasia a sin would impact Schiavo's decision not to be kept alive artificially. AP has more. Previously on JURIST's Paper Chase...






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Federal judge finds that Pricewaterhouse withheld evidence in fraud suit
Jeannie Shawl on January 12, 2005 3:06 PM ET

[JURIST] US Magistrate Judge Patricia A. Hemann has recommended that a federal district judge enter a default judgment against PricewaterhouseCoopers [corporate website] for the company's failure to turn over documents and other evidence in an accounting fraud suit brought by former client Telxon and its shareholders. Hemann's nonbinding recommendations come after Telxon and its shareholders filed motions for sanctions against PwC for failing to comply with discovery rules in a lawsuit where PwC is accused of failing to conduct audits in accordance with generally accepted accounting principles. In her report to Judge Kathleen O'Malley, Hemann wrote that "In some cases, it is difficult to avoid the conclusion [that PwC] engaged in deliberate fraud" and that "there is strong evidence that documents have been destroyed, placing plaintiffs and Telxon in a situation which cannot be remedied." Responding to Hemann's report, which was completed in July but unsealed Tuesday, PricewaterhouseCoopers issued a statement noting its objections to the recommendations, but acknowledging "an error in discovering and producing documents in the litigation later than that should have occurred." The New York Times has more.






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Massachusetts GOP pre-emptively registers web domains of possible Dem candidate
Jeannie Shawl on January 12, 2005 2:31 PM ET

[JURIST] In anticipation of a run for governor by Massachusetts Attorney General Tom Reilly [official profile], the Massachusetts Republican Party [official website] has pre-emptively registered website addresses that Reilly could have used as a campaign website. Despite the fact that Reilly has not said whether he will run for governor in 2006, the state republican party has registered several domain names, such as reillyforgovernor.com, with the intent "to have some fun if he is indeed the nominee." Legal experts suggest that the maneuver gives an new twist to the old practice of cybersquatting [Wikipedia article], giving rise to the traditional options of arbitration [ICANN dispute resolution policy] or selecting an alternative domain name. Reuters has more.






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Corporations & securities brief ~ SEC may bring action against NYSE
Amit Patel on January 12, 2005 2:18 PM ET

[JURIST] Leading Wednesday's corporations and securities law news, the SEC [official website] will bring an enforcement action against the NYSE [official website] for failing to supervise its floor-trading specialists. The action, which is expected to be brought by mid-February, will most likely result in a negotiated settlement of the long-running probe. The SEC is also expected to reach similar agreements with smaller stock exchanges. Reuters has more.

In other corporations and securities law news...

  • OfficeMax Inc. [corporate website] announced a delay in the release of financial results after an internal probe revealed employees had been fabricating documentation for the company's $3.3 million in billings. OfficeMax also announced the resignation of CFO Brian Anderson. Anderson will be replaced by former CFO Ted Crumley on an interim basis until the company finds a permanent replacement. Read the OfficeMax press release announcing the moves. Reuters has more.

  • The NASD [official website] announced it has censured and fined Banc One Securities Corp. $400,000 over violations involving late trading of mutual funds. The fine is the largest imposed for such a violation by the NASD. Read the NASD press release. AP has more.

  • Boxing promoter Don King [Don King Productions corporate website] filed a defamation suit against ESPN [media website] claiming he was portrayed in a false light in a segment aired last May on the cable sports channel. King is seeking over $2.5 billion in damages. AP has more.

  • The drug maker Mylan Laboratories Inc. [corporate website] appears to be getting out of its contentious $4 billion takeover bid for rival King Pharmaceuticals Inc. [corporate website] after King announced a restatement of its earnings for 2002 and 2003. Read the Mylan press release commenting on the bid. AP has more

  • The NYSE has imposed a record $19 million fine on investment bank Morgan Stanley [corporate website]. The fine is part of an agreement reached with the company last year over regulatory and supervisory lapses. Read the NYSE press release. Reuters has more

  • Motorola Inc. [corporate website], the world's second-largest mobile-phone maker, announced President Mike Zafirovski has resigned. Zafirovski will not be replaced as the company's four division chiefs will report directly to the CEO. Read the Motorola press release. Bloomberg has more.

  • Microsoft Corp. [corporate website] announced finance chief John Connors [official biography] has resigned and will join a venture capital firm in Washington. Read the Microsoft press release. Bloomberg has more.
Click for previous corporations and securities law news.





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Thatcher to plead guilty in Equatorial Guinea coup plot
Jeannie Shawl on January 12, 2005 2:14 PM ET

[JURIST] Mark Thatcher [BBC profile], son of former British Prime Minister Margaret Thatcher, will plead guilty to charges over his involvement in an Equatorial Guinea coup plot, according to BBC reports. Thatcher was arrested by South African officials in August [JURIST report] for helping to finance the failed coup attempt in violation of South Africa's Foreign Military Assistance Act [text]. Thatcher will reportedly plead guilty to being negligent in investing in an aircraft that was used by the alleged coup plotters. BBC News has more. Previously in JURIST's Paper Chase...






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European Parliament endorses EU constitution
Matt Lubniewski on January 12, 2005 1:51 PM ET

[JURIST] The European Parliament [official website] Wednesday overwhelmingly endorsed the first proposed EU constitution [official European Convention website; PDF text]. Parliamentarians passed a resolution backing the constitution 500-137 in an initial stage of a ratification process that is expected to last up to two years. Read the European Parliament press release on the vote. The constitution will only come into effect if all 25 EU member states ratify it. Only two countries, Lithuania and Hungary, have as yet ratified the constitution. Ratification remains controversial in many key countries, such as France, Great Britain, the Netherlands, and Poland. The EU constitution was agreed upon last July, after a lengthy drafting process. Reuters has more. In a related story, the Spanish parliament today voted to authorize the Spsnish government to hold the first national referendum on the EU constitution on February 20. The vote will be non-binding. AP has more.






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South Korean court acquits operators of file-sharing site
Matt Lubniewski on January 12, 2005 1:32 PM ET

[JURIST] A South Korean appeals court Wednesday acquitted the operators of a Korean-language website that allows users to freely swap song files. Yang Jung-hwan and his brother, Il-hwan, created Soribada [corporate website in Korean] South Korea's most popular music-swapping site, in 2000. Prosecutors indicted them in 2001 [CNET report] on criminal charges of aiding copyright infringement, a crime punishable by up to five years in prison. The Seoul High Court [official profile from the Supreme Court of Korea] held that those who download songs through Soribada do commit copyright infringement, but that the Yang brothers could not be held responsible for merely providing the service. The Yangs insisted that their service only provides private channels of communication and that they had no ability to control or monitor users' activities. AP has more. South Korean music labels say they lose millions of dollars in album sales because of Soribada. File-sharing exchanges are particularly popular in South Korea, where 70 percent of homes have high-speed broadband Internet access. From South Korea Chosun Ilbo provides local coverage.






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Sri Lankan man arrested in alleged tsuanmi child sale case
Matt Lubniewski on January 12, 2005 1:26 PM ET

[JURIST] A 63-year old Sri Lankan man has been released on bail after his initial arrest on charges of attempted to sell his two young granddaughters to foreigners after their home was destroyed, and their mother killed, by the tsunami in December. The UN and international relief agencies have expressed concern [UNICEF press release] about child trafficking [UNICEF backgrounder] in the chaos caused by the tsunami, which orphaned many young children. Sri Lankan police [official website] have been instructed to be on the lookout for potential child trafficking cases, and authorities have posted additional police and military at relief camps to protect against women and child abuse. The arrested man, identified as A.H. Somadasa, was released on bail Tuesday, and is due to appear in court next month. AP has the full story here.






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Chilean court approves bail for Pinochet
Matt Lubniewski on January 12, 2005 1:06 PM ET

[JURIST] The Chilean Court of Appeals on Wednesday approved bail of $3500 for former dictator Gen. Augusto Pinochet [JURIST Newsmaker]. Pinochet is being tried on nine counts of kidnapping, and one count of homicide which are alleged to have occured during in Chile during his 1973-1990 dictatorship. The court also rejected a request by an Argentine judge to strip Pinochet of his immunity from prosecution that Pinochet could be questioned about the 1974 assassination in Argentina of his military predecessor. On Monday, Judge Juan Guzman, who initially put Pinochet under house arrest, approved bail, a decision that required affirmation by the Court of Appeals. Court of Appeals President Juan Gonzalez stated that both decisions, which favor Pinochet, were unanimous. From Santiago, El Mostrador provides local coverage in Spanish. AP has more.






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Russian parliament supports ban on 'disrespectful' foreign visitors
Matt Lubniewski on January 12, 2005 12:36 PM ET

[JURIST] The Russian Duma [official site in Russian], the lower house of parliament, approved a bill Wednesday which allows the government to ban foreign visitors who show "disrespect" to the country. Anyone found by a court to have offended Russia's "generally accepted spiritual, cultural and social values" may be barred from entering the country, although the bill does not state what those values are. Additionally, the bill would prevent people with infectious diseases, such as HIV, from obtaining long-term visas to stay in the country. Rights groups have objected that such a ban could be used to keep government critics out of Russia. The bill must still pass an additional two readings in the Duma before it can be ratified. The bill was initially approved, without debate, by a vote of 353-44. BBC News more. From Russia, MosNews provides local coverage.






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US officially ends search for banned weapons in Iraq
Matt Lubniewski on January 12, 2005 12:18 PM ET

[JURIST] The White House announced Wednesday that the US has officially ended its search for biological, chemical, and nuclear weapons in Iraq. White House press secretary Scott McClellan stated that while there is no longer an active search for weapons, "There may be a couple, a few people, that are focused on that," but that "a lot of their mission is focused elsewhere now." The Iraq Survey Group [Wikipedia entry], made up of about 1,200 military and intelligence specialists, spent nearly two years searching for weapons-producing installations, and found no substantial evidence of banned weapons. Chief US weapons inspector Charles Duelfer [CSIS profile] is expected to deliver his final report on the weapons search next month, but McClellan stated that it would be substantially the same as the preliminary findings [report text] from last September. The Washington Post has the initial report here [registration required]. The AP story is available from the Boston Globe here [official website].






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Iraqi PM admits elections will not be nationwide
Bernard Hibbitts on January 12, 2005 11:18 AM ET

[JURIST] Iraqi Interim Prime Minister Iyad Allawai [official profile] acknowledged for the first time Tuesday in a televised address that in "some pockets" of Iraq people would not be able to participate in the national assembly vote scheduled for January 30. The acknowledgement came in the wake of a growing number of attacks against election workers, facilities and the general Iraqi infrastructure that earlier this week prompted the mass resignation of the Anbar province electoral commission [JURIST report]. Allawi and members of the national Independent Electoral Commission of Iraq [official website] have nonetheless insisted that the vote will go on. AP has more.






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Supreme Court: US can deport convicted refugees without destination consent
Bernard Hibbitts on January 12, 2005 11:04 AM ET

[JURIST] In addition to its long-awaited sentencing ruling in Booker [JURIST report], the US Supreme Court Wednesday handed down two immigration-related decisions. In Jama v. INS [Duke Law backgrounder], the Court narrowly held 5-4 (Souter, Stevens, Ginsburg and Breyer JJ. dissenting) that a refugee living in the US - in this instance a Somalian from a country with no functioning government - could be deported after receiving a criminal conviction, even if their country of destination does not consent to the repatriation. Read the opinion. In the consolidated cases of Clark v. Martinez and Benitez v. Wallis [Duke Law backgrounder], the Court ruled by the larger margin of 7-2 (Justice Thomas and Chief Justice Rehnquist dissenting) that the US could only hold an illegal immigrant subject to a deportation order who could not be returned to his or her home country for "so long as is reasonably necessary to achieve removal", indicating that habeas would be granted if there is "no significant likelihood of removal in the reasonably foreseeable future." Read the opinion.






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International brief ~ Venezuelan leader jump-starts controversial land reform law
D. Wes Rist on January 12, 2005 10:45 AM ET

[JURIST] Leading Wednesday's international brief, Venezuelan President Hugo Chavez [official website in Spanish] issued a presidential decree Tuesday creating a presidential and national land commission to implement the provisions of Venezuela's four year old land reform law. The law, called Plan Zamora [Wikipedia article], focuses on breaking up the large estates owned by a minute percentage of the overall Venezuelan population. The law has been viewed as critical to the domestic political success of Chavez's administration, and the delay in implementing its provisions has been a sore spot among the leader's normally loyal lower class supporters. Chavez pledged that landowner concerns about constitutional rights and private property interests would be addressed on an individual basis, but remained firm in his assertion that Venezuela's land must be more equitably distributed to its entire population. BBC News has more.

In other international legal news...

  • The European Union [official website] will open talks Wednesday with Iran on a formal trading partnership now that EU, US, and UN officials have finished negotiations over Iran's planned refinement of nuclear materials [JURIST Hot Topic]. Included as incentive in the negotiations is the promise of support from the EU for Iran's bid to gain membership in the World Trade Organization [official website]. The negotiations require equal response from Iran on key issues such as human rights, regional security in the Middle East, the fight against terrorism, and non-proliferation of weapons of mass destruction. The Guardian has more.

  • The African Union [official website] concluded its annual Meeting of the Peace and Security Council (PSC) on Tuesday, pledging a stronger level of involvement in ending the numerous conflicts currently occurring on the continent. The body discussed easing the eligibility requirements for the office of president in Cote d'Ivoire, which would pave the way to allowing popular leader Alassane Ouattara [Wikipedia profile] to be a candidate in the upcoming elections. The PSC also recommended that the rebels in western Sudan use the recent peace agreement between the northern and southern regions as a model for its own peace process, and encouraged the Sudanese government to enter peace talks with the rebels. The PSC has also authorized the use of AU troops to help the Democratic Republic of the Congo disarm Hutu rebels currently sheltering in its territory near the Rwandan border. Rwandan President Paul Kagame [official profile] has warned that he will use massive troop movements to draw out the rebels if they are not taken care of internally. Read the official resolutions of the PSC. Voice of America has more. In a related story, the chairman of the PSC, Gabon's President Omar Bongo Ondimba [Wikipedia profile], called for the creation of an African humanitarian organization that would be capable of dealing with disasters, such as the recent Indian Ocean tsunamis, as well as the fall out from the many civil wars and violent unrest that occur on the continent. Ondimba said that while the AU cannot currently fund the equipment and resources needed for such a body, the organizational structure and support systems should be designed and reviewed so that the implementation of the Humanitarian relief agency could occur as quickly as possible. South Africa's Sunday Times has more.

  • Acting Secretary-General of the Organization of American States, Luigi R. Einaudi [official profile] and Juan Gabriel Valdés, the Chief of the UN Stabilization Mission in Haiti [official website], reported to the OAS Permanent Council [official website] Tuesday on progress being made to prepare Haiti for general elections, scheduled for sometime in 2005. Valdez expressed optimism about the process, and noted that the next undertaking would be the creation of a national registry to ensure that elections would be fair and legal, laying the framework for a stable Haitian government. The report prefaced Wednesday's discussion of the situation in Haiti by the UN Security Council [official website], which will examine election preparations and will most likely discuss increasing funding for the project. Read the OAS press release.





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BREAKING NEWS ~ Supreme Court rules on sentencing guidelines
Bernard Hibbitts on January 12, 2005 10:28 AM ET

[JURIST] AP is reporting that the Supreme Court has ruled that federal judges have been improperly adding time to criminals' sentences, a decision that puts in doubt longtime sentencing rules.

10:32 AM ET - The ruling is in the consolidated cases of US v. Booker and US v. Fanfan [Duke Law backgrounder]. The questions presented to the Court were:

1. Whether the Sixth Amendment is violated by the imposition of an enhanced sentence under the United States Sentencing Guidelines based on the sentencing judge's determination of a fact (other than a prior conviction) that was not found by the jury or admitted by the defendant.

2. If the answer to the first question is "yes," the following question is presented: whether, in a case in which the Guidelines would require the court to find a sentence-enhancing fact, the Sentencing Guidelines as a whole would be inapplicable, as a matter of severability analysis, such that the sentencing court must exercise its discretion to sentence the defendant within the maximum and minimum set by statute for the offense of conviction.
From DC, the Supreme Court litigation firm of Goldstein & Howe has posted these early details on their SCOTUSblog.
The Supreme Court ruled today that the federal Sentencing Guidelines must satisfy the standards of the Sixth Amendment as applied in the Court's ruling in Blakely v. Washington. Justice Stevens wrote an opinion on that point, and Justice Breyer wrote a separate opinion saying that the Guidelines can no longer be mandatory, but can continue to operate "in a manner consistent with congressional intent."

Justice Breyer's opinion declares, in key parts: "The District Courts, while not bound to apply the Guidelines, must consult those Guidelines and take them into account when sentencing....The courts of appeals review sentencing decisions for unreasonableness. These features of the remaining system, while not the system Congress enacted, nevertheless continue to move sentencing in Congress' preferred direction, helping to avoid excessive sentencing disparities while maintaining flexibility sufficient to individualize sentences where necessary.

"...Ours, of course, is not the last word: The ball now lies in Congress' court. The National Legislature is equipped to devise and install, long-term, the sentencing system, compatible with the Constitution, that Congress judges best for the federal system of justice."
The full text of the Court's ruling should be available online shortly. Review the Court's root ruling from last year in Blakely v. Washington, invalidating on Sixth Amendment grounds a Washington state statute authorizing a judge to impose a sentence above the "standard range" specified if aggravating factors justified the increase. In a JURIST Forum column this past September University of Pittsburgh law professor Sandra Jordan reflected on the Supreme Court's possible application of Blakely to federal sentencing:
The trouble is that over 44% of sentences in federal court are based on sentencing enhancements that are not proven to a jury or admitted by the defendant. These enhancements, also known as "relevant conduct" in federal court, have the practical effect of increasing, even quadrupling, federal prison time to be served. Relevant conduct can increase a sentence many years, and it need never be proven to a jury or established beyond a reasonable doubt. As a result, thousands of federal sentences are based on information that may be determined to be unconstitutional in light of the Blakely ruling. If the Court holds the federal guidelines to the same standard as it applied to the Washington sentencing scheme, as expected, then Blakely review can potentially disrupt the sentences of thousands of federal prisoners.

Besides the logistical problems that will result if the federal guidelines are struck down or held to the Blakely microscope, legal observers are watching closely to discern what guidance the Court will lend to the sentencing process. If the Court elevates the role of the jury to include fact-finding obligations, jurors could then assume much more power in the trial of criminal cases. This result brings its own set of problems, notably the consideration of information that would otherwise be excluded during the guilt phase of a trial.

The current interpretation of the federal sentencing guidelines allows the government to enhance the defendant's sentence by incorporating "relevant conduct" information that would otherwise be excluded from the trial and use this same information at the time of sentencing. This strategy, condoned by the courts until now, has contributed to our swelling prison population in the United States. Blakely's rationale is sound and founded on the principle that punishment should be based only on the facts of the case under deliberation....

Perhaps for the first time since the passage of the federal guidelines in 1987, there is an opportunity to re-evaluate their actual effectiveness as they currently operate. Granted, the guidelines standardized the sentencing process. However, one unanticipated result of the guidelines was that they shifted sentencing power from the judicial branch to the executive branch. Prosecutors now control the entire criminal prosecution, including sentencing, by negotiating the plea and any crime-specific or extraneous factors which determine the ultimate sentence. Most observers would agree that the result has been a skewed sentencing jurisprudence which certainly was not contemplated by the drafters of the guidelines system. Judges have resigned themselves to the reality that the guidelines leave no room for debate or compromise. Now Blakely opens the dialogue on sentencing once again, something that is certainly overdue. If the guidelines do not survive in their entirety, it presents an opportunity to revamp sentencing policy and to factor out all of the troubling concerns with the guidelines. With an open and inclusive dialogue, change can reflect that which is desirable in sentencing and ferret out the overly formulistic approach that troubled so many guidelines experts. This is a welcome scenario."
Read the full text of Jordan's JURIST op-ed entitled A Time for Reasoned Sentencing Policy.

10:59 AM ET - Read the full text of the Supreme Court's opinion in Booker, now online from Cornell.





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FTC wins first court order directing shutdown of X-rated spammers
Bernard Hibbitts on January 12, 2005 10:04 AM ET

[JURIST] The Federal Trade Commission [official website] announced Tuesday that it has won a court order [PDF copy] directing six advertising companies to stop sending sexually explicit spam e-mails. Read the original FTC complaint [PDF copy]. The order was handed down January 3 by a federal judge in Las Vegas. The companies had agreed to stop the e-mails even before the issuance of the order, but it nonetheless represents the first enforcement of a new regulation requiring sexually explicit e-mails to carry what is essentially a warning label in their subject line (the "Adult Labeling Rule", 16 CFR Part 316.1). The same law also imposes liability on the operators of Web sites profiting from sexually explicit splam e-mail traffic. Read the FTC press release. AP has more.






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Graner defense begins at Abu Ghraib abuse trial
Bernard Hibbitts on January 12, 2005 9:32 AM ET

[JURIST] Defense arguments begin Wednesday in the military trial of Spc. Charles Graner [Wikipedia profile], charged with multiple counts [original chargesheet; two charges have since been dropped] in connection with the highly-publicized abuse of Iraqi detainees at Abu Ghraib {JURIST Hot Topic] prison in Iraq. Defense attorney Guy Womack [law firm website] is expected to lead witnesses in support of his contention that Graner was simply following orders, softening up detainees in preparation for their interrogation by militaryb intelligence officers. In prosecution testimony Tuesday, two former detainees described on videotape how Graner and other soldiers humiliated, hurt and mistreated them, and how Graner seemed to enjoy the process. AP has more.






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