Debate heats up on Justice's deferred-prosecution deals

The legal debate over the Justice Department's aggressive prosecution of businesses has been reignited after the recent indictment of securities class-action law firm Milberg Weiss, plus an ongoing court battle between prosecutors and former KPMG executives indicted on fraud charges.

Collapsed Hedge Fund Bayou Wants Its Money Back

There may be a rude surprise in store for investors who think they escaped getting burned by last year’s scandal at hedge fund Bayou Group.
The fund, which raised more than $450 million before it abruptly imploded in August with most of that money missing, filed for Chapter 11 protection on Tuesday in New York. As part of the bankruptcy, Bayou’s court-appointed overseer hopes to claw back funds that were paid out to previous Bayou investors over the past two years.

Mushrooming Backdating Scandal Hits McAfee’s Top Lawyer

McAfee, Inc. terminated its general counsel Kent Roberts after an internal review of the company’s employee stock options revealed an “improper” grant involving Mr. Roberts in 2000. Here’s the press release from the antivirus-software king, the latest company to be ensnared by the backdating scandal.

Big Buyout in the Pipeline

If there was a question about whether potential conflicts would prompt investment bank Goldman Sachs to lower its profile in private equity investing, here is a $22 billion answer. The firm’s buyout arm has a prominent role in Monday’s proposed management-led buyout of Kinder Morgan, which, if it gets done, would be the largest leveraged buyout since Henry Kravis’ private equity shop made its audacious run at RJR Nabisco in the late 1980’s.

Plaintiff Says Incentives Were Offered in KPMG Case

A lead plaintiff in a proposed tax shelter settlement that was brokered by the class-action securities law firm of Milberg Weiss Bershad & Schulman indicated that he was offered a financial incentive to serve as plaintiff, according to documents filed yesterday in federal court in Newark.

Verdict on an Era: Arrogance and Recklessness at Enron

Kurt Eichenwald, author of Conspiracy of Fools, an inside look at the events leading up to the Enron collapse, has an excellent wrap-up article on the Lay and Skilling verdicts in today's New York Times. His opening paragraphs are particularly succint:

"Regardless of whether the jury verdict against Kenneth L. Lay and Jeffrey K. Skilling is upheld, testimony from 56 days of trial has sealed what is sure to be history's judgment - one that is unlikely to be vulnerable to appeal.

The Enron case will forever stand as the ultimate reflection of an era of near madness in finance, a time in the late 1990's when self-certitude and spin became a substitute for financial analysis and coherent business models. Controls broke down and management deteriorated as arrogance overrode careful judgment, allowing senior executives to blithely push aside their critics.

Indeed, it could be argued that the most significant lesson from the trial had nothing to do with whether the defendants, both former Enron chief executives, committed the crimes charged in their indictments. Instead, the testimony and the documents admitted during the case painted a broad and disturbing portrait of a corporate culture poisoned by hubris, leading ultimately to a recklessness that placed the business's survival at risk."

Bill Lerach Soldiers On and Mints Money

While his former partners are dealing with the indictment of Milberg Weiss, class-action raj Bill Lerach stood outside the Houston federal courthouse this morning trumpeting a multi-billion dollar settlement in the Enron shareholder civil litigation.
According to the WSJ, Lerach was the original focus of the Milberg Weiss kickback investigation when it began in 1999. In 2004, Lerach split from the firm to create Lerach Coughlin Stoia Geller Rudman & Robbins in San Diego

Judge Approves 3 Enron Banks' Civil Settlement

HOUSTON, May 24 (Reuters) — A federal judge approved a $6.6 billion civil settlement on Wednesday by three banking companies accused in a lawsuit of helping the Enron Corporation hide financial abuses that led to its collapse.

Some Mergers Bring Honeymoons, Others Bring Lawsuits

Companies and their boards face challenging legal issues when embarking on any business combination. When the deal wraps up, everyone generally breathes a sigh of relief. But the real legal challenge may begin immediately after the companies publicly announce the deal.

Why Wasn’t Spitzer Involved in the Milberg Weiss Investigation?

In his more than seven years as New York’s attorney general, Eliot Spitzer has never seemed to meet a kickback case he didn’t like. So why didn’t he have a hand in the Milberg Weiss case?
That’s the question some Spitzer watchers are asking, after his campaign said that he plans to return the $124,455 in contributions given to him by lawyers at the indicted class-action law firm.

Vonage trades at discount in debut

NEW YORK (MarketWatch) -- Vonage Holdings Corp. fell below its offering price in its stock-market debut Wednesday as Wall Street hung up on the Internet-phone provider in what could be the worst opening day for an IPO all year.

Giant technology leveraged buyouts expected

SAN FRANCISCO (MarketWatch) -- Leveraged buyouts of technology companies will reach unprecedented scale in the next two years because funds have raised billions of dollars in new money recently and have easy access to attractively priced credit, executives of leading private-equity firms said on Tuesday.

eBay Sued Over Skype Technology

StreamCast Networks filed a federal lawsuit against eBay and 21 other defendants on Monday in a dispute over the rights to Internet telephony technology, according to the AP. Last year, eBay bought Internet telephone company Skype for $2.6 billion. StreamCast, the company behind online file-swapping software Morpheus, says it developed the technology that led to the online phone service.

Delaware’s Judge Chandler to Lawyers: Plain English, Please!

Delaware Chancery Court Judge William Chandler said he will approve News Corp.’s proposed settlement of a shareholder lawsuit over its “poison pill” corporate defensive measures, but warned that it better write the agreement in plain English.

Whirlpool Puts Hoover on the Block

Whirlpool has sifted through the assets of recently acquired Maytag and decided to divest several business lines that it picked up in the deal. Among the brands slated for sale are Hoover, which makes vacuum cleaners, as well as Amana and Jade, both of which make commercial appliances, Whirlpool said Tuesday in a press release.

Sara Lee Agrees to Drop Poison Pill, But Not Yet

They say nobody doesn’t like Sara Lee, but plenty of people don’t like its poison-pill takeover defense. The company’s shareholders approved a non-binding resolution to dissolve the poison-pill provision in October, and Sara Lee management responded on Monday by meeting them halfway, the Chicago Tribune reported.

Lawyer Pleads Guilty to Funneling Money

A Los Angeles lawyer pleaded guilty yesterday to a tax charge related to claims that he funneled money to a client of Milberg Weiss Bershad & Schulman, the law firm indicted last week for paying more than $11 million in kickbacks.

7 indicted in National Century failure

Seven former executives of the defunct National Century Financial Enterprises were indicted Monday on money laundering, conspiracy and securities fraud charges stemming from the Dublin company's 2002 collapse.
Officials alleged the company's collapse was the largest corporate fraud case involving a privately held company that the FBI has investigated. The 60-count indictment seeks to recover about $2 billion in property.

Apollo files $1.5 billion IPO

Apollo Management LP, the New York-based private equity firm, is raising a $1.5 billion publicly traded private equity vehicle similar to the one raised on May 3 by Kohlberg Kravis Roberts & Co. According to sources, Apollo is raising the money as a 144A private placement, and plans to list the securities on the Euronext Amsterdam exchange within the next two weeks, after which the fund will become publicly traded.

A Fannie Mae Settlement Is Reported

Fannie Mae, the giant mortgage buyer, is expected to pay more than $400 million today as part of a settlement to resolve claims that executives manipulated earnings in the 1990’s so they could receive bigger bonuses, The New York Times reported.