Eideard

Wegelin & Co, corporate headquarters, St. Gallen, Switzerland
Daylife/AP Photo used by permission

Wegelin & Co., the 270-year-old Swiss bank facing criminal charges in a U.S. crackdown on firms suspected of aiding tax evasion, failed to appear at a court hearing as prosecutors called the bank a “fugitive.”

Prosecutors said after the hearing…in Manhattan federal court that three Wegelin client managers charged in the case also failed to appear and were considered fugitives.

When no defendants or defense attorneys showed up in court, U.S. District Judge Jed Rakoff asked prosecutors for a proposal on how to proceed. Prosecutors said they will confer with the Justice Department and advise Rakoff on their proposals. “Unlike an individual, arresting a company is somewhat difficult,” Rakoff said…

Wegelin is the first overseas bank to be indicted by the U.S. for aiding tax fraud, federal prosecutors in New York said this month. The three Wegelin client managers at the Zurich branch, Michael Berlinka, Urs Frei and Roger Keller, were also indicted.

The managers serviced “undeclared accounts” for U.S. taxpayers, meaning the income derived from them wasn’t reported to the U.S. Internal Revenue Service, according to the superseding indictment filed this month.

Nothing new about international bankers considering themselves above the law. Especially when an historic function of their services is aiding their clients in defrauding the tax departments of one or another government.

For the first time in modern history we have a Department of Justice that actively seeks to repatriate the funds hidden abroad – instead of just relying on the crooks for fundraising.

Johnson & Johnson will pay more than $1 billion to the U.S. and most states to resolve a civil investigation into marketing of the antipsychotic Risperdal, according to people familiar with the matter.

J&J, the world’s largest health products company, reached an accord last week with the U.S. attorney in Philadelphia, according to the people, who weren’t authorized to speak about the matter. It doesn’t resolve negotiations over a possible criminal plea, they said…

J&J, based in New Brunswick, New Jersey, disclosed in August that it reached an agreement to settle a misdemeanor criminal charge related to Risperdal marketing. The company is in negotiations to pay about $400 million more to settle this portion of the investigation, one of the people said…

A majority of U.S. states will join the settlement, the people said. Which ones will accept the final agreement hasn’t been determined, they said. Each state can decide whether to join the federal government’s settlement or pursue its own case.

Typically, states with cases in court continue to pursue their own. Texas alone is asking for more than $1 billion in a case that goes to trial next week. Risperdal, which was first approved by the Food and Drug Administration in 1993, later became J&J’s best-selling drug…

The FDA approved Risperdal in 1993 for psychotic disorders including schizophrenia. That market is limited, and Janssen sought to sell Risperdal for bipolar disorder, dementia, mood and anxiety disorders and other unapproved uses, according to documents in the lawsuit by the state of Louisiana.

Hundreds of Janssen salespeople sold to doctors, nursing homes, Veteran’s Administration facilities and jails, the records show. Marketers gave doctors materials about studies of unapproved uses for Risperdal. Janssen sponsored clinical trials of the drug’s effect on other illnesses…

“The ultimate resolution of the above criminal and these civil matters is not expected to have a material adverse effect on the company’s financial position,” J&J officials said in the filing.

Of course it won’t. Johnson and Johnson – in 2010 – had $62 billion in revenue, gross profit of $42.8 billion, and net income after taxes of $13.3 billion.

They spent $6.7 million on lobbying.

“The direct number to the CEO of AT&T is in the top righthand drawer of your desk”

A U.S. appeals panel on Thursday upheld the constitutionality of a federal law that grants immunity to telecommunications companies that assist the U.S. government in conducting surveillance of American citizens. However, the 9th U.S. Circuit Court of Appeals also revived a separate lawsuit against the government over its surveillance activities.

Several lawsuits filed in the wake of revelations about warrantless wiretapping alleged that telecom companies provided authorities with direct access to nearly all communications passing through their domestic facilities. Besides the government itself, defendants included AT&T, Sprint Nextel and Verizon.

In 2008, Congress granted telecoms immunity for cooperating with the government’s intelligence-gathering activities. A district judge in San Francisco upheld the law as constitutional, and dismissed the claims against the companies.

In a ruling on Thursday, a unanimous three-judge panel of the 9th Circuit agreed…

Cindy Cohn, legal director for the Electronic Frontier Foundation, a leading plaintiff in both cases, said they had not yet decided whether to appeal the telecom ruling…

Cohn said it has been nearly six years since warrantless wiretapping was revealed. “I think the American people deserve a little faster justice than that,” she said.

Some of us – foolish as it has turned out to be – expected that the Obama Administration would come down on the side of Liberty for All and the rest of that good stuff and reverse the crap spying and censorship brought upon this land by the Bush/Cheney cabal.

Wrong.

The National Rifle Association has filed a lawsuit challenging a new federal regulation requiring gun merchants along the border with Mexico to report bulk sales of certain semiautomatic rifles, contending that the Obama administration exceeded its powers by imposing the rule last month without Congressional permission.

The N.R.A. is bringing the lawsuit in the name of two firearms dealers in Arizona. Its complaint asks a judge in the Federal District Court for the District of Columbia to issue an injunction barring enforcement of the rule by the Bureau of Alcohol, Tobacco, Firearms and Explosives.

“N.R.A. has always viewed this as a blatant attempt by the Obama administration to pursue their gun control agenda through back-door rule-making, and the N.R.A. will fight them every step of the way,” said Wayne LaPierre, the executive vice president of the gun rights group…

“We think that the action we have taken is consistent with the law,” Eric Holder told reporters, “and that the measures that we are proposing are appropriate ones to stop the flow of guns from the United States into Mexico.”

The rule requires licensed firearms dealers in Arizona, California, New Mexico and Texas to report within five days whenever someone buys more than one weapon like a variant of the AK-47 assault weapon. The rule covers any semiautomatic rifle capable of accepting a detachable magazine and ammunition larger than .22 caliber.

The rule is meant to make it harder for Mexican drug cartels to obtain military-style weapons and smuggle them to Mexico, where they are illegal to sell to consumers. American weapons — often bought by “straw buyers” who have a right to buy them for themselves — have been flooding across the Southwest border for years, fueling drug violence in Mexico.

We’ve blogged about “straw buyers” before. None of this means much of anything to the monomaniacs running the NRA. There was a time when they were a useful organization supporting sensible practices for hunting and sports gun owners. Now, they’re the military center of the nutball brigade.

Plus – I get to crap on people who really defame my background. Just as I can joke about flying with my wife’s family full of pilots – I come from an extended family full of gunsmiths, trap shooters and hunters. Some of the best fun I’ve had in the Southwest was handgun hunting when I lived in the Navajo Nation. Would I join the NRA? Not even with counterfeit money from the Koch Bros.

If the government obtains a search warrant to seize your computer and later finds that it cannot get into the device because it is encrypted, does that search warrant require you to produce your password and allow access to investigators?

That is the crux of a case currently being fought between the Department of Justice and a Colorado woman accused of mortgage fraud.

Ramona Camelia Fricosu and her husband, Scott Anthony Whatcott, were indicted last year for preying on people in the Colorado Springs area who were about to lose their homes to foreclosure.

In the course of the investigation, the FBI executed search warrants on Fricosu’s home and seized her Toshiba Satellite M305 laptop. Upon inspection, however, they discovered that the device was encrypted, barring the agents access to its contents.

On May 6, the FBI asked a Colorado district court to compel Fricosu to enter her password into the computer. She did not actually need to tell the government her password; she “could enter the password without being observed,” according to the filing.

Her lawyers, and now the Electronic Frontier Foundation, however, argued that that would be tantamount to self-incrimination. In a Friday filing, the EFF pointed to the Fifth Amendment, which says that “no person … shall be compelled in any criminal case to be a witness against himself.”

“Decrypting data on a computer is a testimonial act that receives the full protection of the Fifth Amendment. This act would incriminate Fricosu because it might reveal she had control over the laptop and the data there,” EFF attorney Marcia Hofmann argued. “The government has failed to show that the existence and location of the information it seeks is a foregone conclusion.”

The government, however, argued that “it is undisputed that the contents of Ms. Fricosu’s encrypted drive are not protected under the Fifth Amendment because the files were created voluntarily and prior to the execution of the search warrant.” The contents of the computer have “evidentiary value,” the filing said.
DOJ went on to say that “public interests will be harmed absent requiring defendants to make available unencrypted contents in circumstances like these.”

Arguing legal points with the Department of Justice unfortunately means you’re aiding in establishing legal precedent which can be warped step-by-step into regulations used to abuse what little legal privacy we have. TSA and other hacks fronting for Homeland Insecurity use similar regs already being fought in courts around this land to steal your property and then require you to aid in that theft.

Though it’s not difficult to see the useful legal ends to which this case might be dedicated, it’s equally clear that our government offers no guarantee against abusive implementation of the same decisions for sleazy political ends.

Two former senior Taylor, Bean & Whitaker Mortgage Corp executives were sentenced on Friday to several years in prison for their roles in a nearly $3 billion fraud that took down the big lender and a major bank.

The fraud ran more than seven years until August 2009 when TBW collapsed after the U.S. housing market imploded, taking Colonial BancGroup Colonial Bank with it and putting hundreds of people at the firm out of work.

Company and bank officials were accused of trying to cover up enormous losses by moving money between accounts at Colonial Bank and selling mortgage loans that did not exist, were worthless or already had been sold.

The Obama administration elicited guilty pleas from six senior executives. TBW’s former chairman, Lee Farkas, was convicted by a jury in April on 14 counts of bank, securities and wire fraud as well as conspiracy.

“They knew that without their fraud scheme, TBW would fail,” said Neil MacBride, the U.S. attorney for eastern Virginia. “They allowed Lee Farkas to control and manipulate them into doing what they knew was wrong, and now they will pay for their crimes.”

It is one of the few cases in which prosecutors have been able to penetrate the executive suites of a major firm in the wake of the 2008 global financial crisis. Most prosecutions have involved lower-level employees or much smaller firms…

Judge Leonie Brinkema…sentenced TBW’s former president, Raymond Bowman, to 30 months in prison. He had pleaded guilty to a conspiracy fraud charge as well as for lying to investigators when they raided the mortgage firm two years ago…

Connolly told the judge that the TBW investigation was ongoing. Farkas is due to be sentenced on June 27.

Throw the key away!

This week, a federal jury in Virginia convicted mortgage executive Lee Farkas on fraud and conspiracy charges that could send him to prison for life.

Authorities say Farkas tried to defraud banks out of almost $3 billion, in one of the biggest cases to come out of the mortgage crisis. And that, critics say, is the problem. Almost three years after the economy nearly collapsed, most top Wall Street banks and their executives have emerged with no criminal trouble. And that’s making people angry.

The argument that prosecutors have gone light on the nation’s largest banks for their role in the financial meltdown has become really popular — even if it’s not true.

Not so for Farkas, 58, who cut a larger-than-life figure in his north Florida community. In his heyday, Farkas collected cars — including a 1963 Rolls Royce and a Ford Model A. He served caviar in the dining room at his mortgage lending company Taylor Bean and Whitaker, or TBW…

“Farkas was really the mastermind of one of the largest bank fraud schemes in history,” says Lanny Breuer, who runs the criminal division at the Justice Department. “What he did led not only to the downfall of TBW, perhaps the second largest mortgage lending company in the United States, but also led to the failure of one of the country’s largest commercial banks, Colonial.”

Late Tuesday, a federal jury in Virginia convicted Farkas of all 14 charges against him. A judge immediately ordered Farkas into custody. He could get life in prison when he’s sentenced July 1…

Breuer of the Justice Department says public opinion doesn’t influence his decisions.

“When we believe we have a criminal case where we can prove each of the elements beyond a reasonable doubt, we’re going to do it,” he says. “When we don’t believe we can prove a case beyond a reasonable doubt, we’re not going to do it, no matter … how popular it would be.”

Two parts of the same problem. The lawyers who seem to set the standards for judges and legal beagles alike have slowed down the system of justice so radically that you could die of old age before you have a chance at justice in America. And the bits and pieces that fade away over time diminish the likelihood of a conviction.

Probably little need to note lobbyists paid by Wall Street who carry the message to an outraged Congress – whose wallets are as open as their mouths. They’re most often a subset of the same group of lawyers chartered and funded by corporations to rebuild that edifice in the image of corruption and shame.

Daylife/Getty Images used by permission
The latest photo of corporate meat puppets

House Republicans have hired a prominent conservative attorney to defend the federal Defense of Marriage Act in a pending lawsuit, legal sources say, and will make an effort to divert money from the Justice Department to fund its high-profile fight. House Speaker John Boehner disclosed the legal and political strategy in a letter Monday to House Minority Leader Nancy Pelosi…

“The burden of defending DOMA, and the resulting costs associated with any litigation that would have otherwise been born (sic) by DOJ (The Department of Justice), has fallen to the House,” Boehner said. “Obviously, DOJ’s decision results in DOJ no longer needing the funds it would have otherwise expended defending the constitutionality of DOMA. It is my intent that those funds be diverted to the House for reimbursement of any costs incurred by and associated with the House, and not DOJ, defending DOMA…”

Paul Clement is a former solicitor general under President George W. Bush, serving from 2005 to 2008. It was his job to defend federal laws and executive actions in court, similar to what he will be doing now as a private lawyer on retainer. He was mentioned at one time as a possible Supreme Court nominee. He would have fit in perfectly with the other reactionary liars appointed by Bush.

Separately, he also is representing more than two dozens states in their lawsuit against the administration over the sweeping health care reform law passed by Congress last year. That case is pending in a federal appeals court in Atlanta.
In the Defense of Marriage Act dispute, groups on both sides of the issue noted the highly charged political aspects.

“Not only are House Republican leaders defending the indefensible, they’ve brought in a high-priced attorney to deny federal recognition to loving, married couples,” said Joe Solmonese, president of the Human Rights Campaign. “Speaker Boehner appears ready to go to great lengths, and the great expense of a high-power law firm, to try to score some cheap political points on the backs of same-sex couples…”

President Barack Obama on February 23 ordered the Justice Department to stop defending the constitutionality of the law. “The president has concluded that given a number of factors, including a documented history of discrimination, classifications based on sexual orientation should be subject to a more heightened standard of scrutiny,” said Attorney General Eric Holder. The key provision in the law “fails to meet that standard and is therefore unconstitutional…”

These bigots have a perfect right to maintain their fight against the tide of progress and civil rights. Hate-mongers are a protected species under our Constitution.

There’s no good reason why American taxpayers should pick up the tab for their revanchist politics. There’s no shortage of wealthy thugs like the Koch Bros around to pay the bill for rightwing politicians running for office. Let ‘em pay for the fightback against the 21st Century.

An inmate holds the only book he’s allowed to read

The US Justice Department is asking a federal judge in South Carolina to allow it to intervene in a lawsuit against a sheriff who allegedly forbids prisoners in his jail from receiving books, magazines, or printed materials other than copies of the King James version of the Bible…

“The only book, magazine, newspaper, or religious publication that [jail officials] consistently permit prisoners to possess is the Bible,” the Justice Department says in its complaint. “These practices discriminate against non-Christian prisoners in violation of the First Amendment’s Establishment Clause…”

Government lawyers are asking the federal judge in the case to declare the jail’s policies illegal and unconstitutional. They are also asking the judge to order the sheriff and his staff to “permit detainees and prisoners in their custody to have outside reading material…”

The original lawsuit was filed in October by the American Civil Liberties Union on behalf of Prison Legal News, a monthly journal covering prison law issues. PLN is distributed to inmates across the country.

The ACLU suit says that since 2008 the jail has blocked delivery of copies of PLN and books discussing prisoner rights.

David Fathi, director of the ACLU National Prison Project, praised the Justice Department for taking action against the jail.

“The fact that the Justice Department has chosen to intervene in this case should send a clear signal to jail officials that systematically denying detainees access to books, magazines, and newspapers is unconstitutional,” he said. “The policy in place at the Berkeley County Detention Center is nothing short of censorship, and there is no justification for shutting detainees off from the outside world in such a draconian way.”

I think I’m reasonably even-handed in my attitudes toward prisons and penal systems. Given the mean streets where I grew up, I’ve known a number of folks who ended up on the inside. Most of them should have been there. A number should not – mostly because of racism and bigotry.

Being locked up for crimes doesn’t entitle anyone to any perks; but, the necessities of life have to include an opportunity to stay current with news and society – and always a chance to educate yourself and try to find a path to a self-sustaining life without crime. This bible-thumping bumpkin ain’t helping anyone including society at large.

Rustock, purveyor of more e-mail spam than any other network in the world, was felled last week by Microsoft and federal law enforcement agents.

A lawsuit by Microsoft that was unsealed at the company’s request late today triggered several coordinated raids last Wednesday that took down Rustock, a botnet that infected millions of computers with malicious code in order to turn them into a massive spam-sending network.

“This botnet is estimated to have approximately a million infected computers operating under its control and has been known to be capable of sending billions of spam mails every day,” Richard Boscovich, senior attorney in the Microsoft Digital Crimes Unit, wrote in a blog post today.

The Wall Street Journal first reported that it was Microsoft’s digital crimes unit, working in concert with U.S. marshals, that raided seven hosting facilities across the country and seized the command-and-control machines that ran the network. Those are the servers that send instructions to the fleet of infected computers to dish out spam messages hawking such items as phony lottery scams and fake and potentially dangerous prescription drugs.The takedown was known internally as Operation b107.

Shutting down Rustock could put a huge dent in spam worldwide. Tech security giant Symantec estimated last year that Rustock was responsible for 39 percent of the world’s spam. Global spam levels dropped 12 percent after Dutch authorities took down a Trojan horse named Bredolab last November.

Rock on, Microsoft. Cleaning up the ethically-diseased flavor of hacker is always worthwhile.

No doubt there will be a new rationale for script kiddies – or the occasional “honest” crook – who will rejoin the scumsuckers of spam. Their relationship to ordinary folks who simply wish to avail themselves of modern communications will continue to be parasitic.