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Former surgeon-general attacks Bush
Law & Politics | 2007/07/11 12:29

The first surgeon-general appointed by US President George Bush has accused his Administration of political interference and muzzling him on issues such as embryonic stem cell research.

Dr Richard Carmona, a Bush nominee who served from 2002 to 2006, is one of a growing list of present and former Administration officials to charge that politics often trumped science within what had previously been largely nonpartisan government health and scientific agencies.

Dr Carmona told the House Committee on Oversight and Government Reform that political appointees routinely scrubbed his speeches for politically sensitive content and blocked him from speaking out on public health matters.

The Administration, he said, would not allow him to speak or issue reports about stem cells; emergency contraception; sex education; or prison, mental and global health issues. Top officials delayed for years and tried to water down a landmark report on second-hand smoke, he said.

Released last year, the report concluded that even brief exposure to cigarette smoke can cause immediate harm.

Dr Carmona said he was ordered to mention President Bush three times on every page of his speeches. He also said he was asked to make speeches to support Republican candidates.

"Anything that doesn't fit into the political appointees' ideological, theological or political agenda is often ignored, marginalised or simply buried," he said. "The problem with this approach is that in public health, as in a democracy, there is nothing worse than ignoring science, or marginalising the voice of science for reasons driven by changing political winds."

A former professor of surgery and public health at the University of Arizona, Dr Carmona said he was told not to speak out during the national debate over federal funding for embryonic stem cell research, which President Bush opposes.

"Much of the discussion was being driven by theology, ideology, (and) preconceived beliefs that were scientifically incorrect," he said. "I thought, this is a perfect example of the surgeon-general being able to step forward, educate the American public … I was told the decision had already been made — 'stand down, don't talk about it.' That information was removed from my speeches."

White House spokesman Tony Fratto rejected claims of political interference, saying Dr Carmona had all the support he needed to carry out his mission. "As surgeon-general, Dr Carmona was given the authority and had the obligation to be the leading voice for the health of all Americans," Mr Fratto said. "It's disappointing to us if he failed to use his position to the fullest extent in advocating for policies he thought were in the best interests of the nation."

Dr Carmona said that when the Administration touted funding for abstinence-only education, he was prevented from discussing research on the effectiveness of teaching about condoms as well as abstinence. Officials even discouraged him from attending the Special Olympics because, he said, of that charitable organisation's longtime ties to a "prominent family" that he refused to name.

"I was specifically told by a senior person, 'Why would you want to help those people?' " Dr Carmona said.

When asked after the hearing if that "prominent family" was the Kennedys, Dr Carmona responded: "You said it. I didn't."



Pace of US class-action filings well below average
Legal Career News | 2007/07/10 18:08

The number of new U.S. securities class-action filings remains well below average, as stock prices rise and the government takes a harder line on corporate wrongdoing, a study released on Tuesday shows. The study comes as business groups are waging a campaign to rein in shareholder lawsuits, saying the claims are often frivolous and are harming the competitiveness of U.S. markets by discouraging international companies from listing their securities here out of fear of litigation.

The Supreme Court also has issued recent rulings that could make it tougher for investors to bring class-action claims against corporations. In one case, the court said that plaintiffs must show convincing evidence that fraud occurred or else a lawsuit can be dismissed at the pre-trial stage.

Fifty-nine federal securities cases requesting class-action status were filed in the first six months of this year, down 42 percent from an average mid-year filing rate of 101 from the 1996-to-2005 period, according to the study by legal research firm Cornerstone Research and Stanford University Law School.

Courts must certify lawsuits as class-actions. Many cases end up getting tossed out by judges before they reach that stage. If class-actions do get certified, the vast majority end up getting settled rather than going to trial.

The number of filings this year was up slightly from 53 cases in the same period in 2006, but it still marks the fourth consecutive six-month period with below average filings, the report found.

"We've now had two years worth of extremely low filing activity," said Joseph Grundfest, a Stanford University law professor. "This is starting to look like a permanent shift, not a transitory phenomenon."



Former Alaska Lawmaker Guilty Of Bribery
Lawyer Blog News | 2007/07/10 16:05

The Gonzo-deathclock resumed ticking last night after the Electronic Frontier Foundation revealed that months before embattled U.S. Attorney General Alberto Gonzales told Congress in 2005 that "There has not been one verified case of civil liberties abuse" regarding the use of National Security Letters, he had been informed of several civil liberties abuses committed by the FBI using NSLs. Gonzales and other administration officials went even further, telling Congress that that no abuses of the USA Patriot Act had ever occurred. This, too, documents obtained by the EFF through FOIA prove, was untrue. (to see the full documents, go here.) Unauthorized surveillance, illegal searches, wiretapping the wrong people, collecting data the feds never asked for -- Gonzales had been told about it all. Yet in testimony designed to persuade Congress to re-authorize the Patriot Act, Gonzales described a smoothly running counter-terror machine that had exercised exquisite care not to infringe upon citizens' rights. The AG even feigned surprise when the Justice Department's inspector general this March released a damning report about widespread NSL violations at the FBI:

"The laws authorizing NSLs, as well as specific rules set down by the FBI and by me, established strict policies for how they would be issued and carried out....

I was upset when I learned this, as was Director Mueller.  To say that I am concerned about what has been revealed in this report would be an enormous understatement.

Failure to adequately protect information privacy is a failure to do our jobs. And although I believe the kinds of errors we saw here were due to questionable judgment or lack or attention, not intentional wrongdoing, I want to be very clear: there is no excuse for the mistakes that have been made, and we are going to make things right as quickly as possible.

I have told the Director that I will not accept the problems identified in the report, and I will not be satisfied until procedures and policies that should have been followed are being followed, to the letter."

Read the full speech here.

DOJ spinmeisters are already trying to smooth things over, claiming that it was unclear whether Gonzales had actually read the reports about legal violations and civil liberties abuses. All the abuses reported to Gonzales were, however, grave enough to also be submitted to an independent intelligence oversight board designed to safeguard civil liberties. A story today in the Washington Post quoted DOJ spokesman Brian Roehrkasse as saying that just because a violation is reported to the oversight board "does not mean that a USA Patriot violation exists or that an individual's civil liberties have been abused."

But Caroline Fredrickson, the Director of the ACLU's Washington Legislative Office condemned Gonzales' actions today in a statement:

"Congress has been hoodwinked by the Attorney General and it's time for consequences.  From the US Attorney scandal to warrantless wiretapping, this administration has misled the American people time and again.  We know now that Mr. Gonzales provided false testimony in order to build a case for reauthorization of the Patriot Act.  It is now apparent that Congress and the public simply cannot afford to take anything this administration says about the war on terror at face value.

No government should have these broad powers in the first place and it has become painfully obvious that our government cannot be trusted to police itself.  This administration seems to think that the end justifies the means and when it comes to the means, it's anything goes.  Without Mr. Gonzales' false testimony, the Patriot Act may not have been authorized in its current form.  Now, more than ever, is the time to reopen and re-examine the Patriot Act."

Congress may also decide it's time to re-examine the possibility that Gonzales shut down a DOJ probe into the administration's NSA warrantless wiretapping program because he knew it would target his actions as former White House counsel. Murray Waas of the National Journal first reported the story here.

As expected, Democratic lawmakers are outraged. Rep. Jerry Nadler (D-New York), the chairman of the House Judiciary Subcommittee on the Constitution, Civil Rights and Civil Liberties, quickly called for Gonzales' resignation, along with the appointment of a special prosecutor to investigate Gonzales' statements to Congress and whether the AG and other officials broke the law with the NSA wiretapping program.

"Attorney General Gonzales has shown an apparent reckless disregard for the rule of law and a fundamental lack of respect for the oversight responsibilities of Congress," Nadler said. "The man entrusted with enforcing our nation's laws must also abide by them, and Mr. Gonzales has apparently failed in that duty. Providing false, misleading or inaccurate statements to Congress is a serious crime, and the man who may have committed those acts cannot be trusted to investigate himself."

A former Alaska lawmaker was convicted Monday of taking thousands of dollars from a corrections company consultant in exchange for his help in the Legislature.

"I'm devastated," former state Rep. Tom Anderson said after the federal jury announced its bribery verdict.

Anderson, 39, was accused of conspiring to take money he thought was coming from a private prison firm, Cornell Industries Inc.

The money was supplied by the FBI through an informant working for Cornell who secretly recorded his conversations with Anderson and a coconspirator, former municipal lobbyist Bill Bobrick.

Anderson was one of four current or former state lawmakers facing federal bribery indictments. The other three face trial this fall for charges related to Anchorage-based oil field services company VECO Corp.

"I think the prosecution has criminalized being a legislator over the last year," Anderson said. "I think I fell victim to that."

Minutes after Anderson's conviction, Gov. Sarah Palin signed into law an ethics reform package for state officials was signed into law.

Palin said the law will help re-establish the public's trust, noting Anderson's case revealed a broader problem with public officials.

"I believe it could be a precursor for what's to come, and it's unfortunate," she said.

Anderson's family, including his wife, state Sen. Lesil McGuire, were not present for the verdict.

Anderson said they couldn't get to the downtown Anchorage courthouse in time after it was announced the jury had reached a verdict.

Judge John Sedwick ordered Anderson to surrender his passport and scheduled sentencing for Oct. 2.

Anderson was arrested Dec. 7 and charged with seven felonies, including conspiracy, bribery, money laundering and interfering with commerce, a charge connected to a demand for payments. He faces a maximum penalty of 115 years in prison and a $1.75 million fine.

Department of Justice officials in Washington said Anderson was held accountable for his crimes.

Anderson "corrupted his elected office when he took official actions in exchange for bribery payments," Assistant Attorney General Alice S. Fisher said. "His illegal conduct impaired the integrity of the oath he took to represent citizens of the state of Alaska."

Bobrick pleaded guilty in May to bribing Anderson. He agreed to testify against Anderson in exchange for prosecutors' request for lenience at sentencing.

Anderson was accused of accepting nearly $26,000 he thought was coming from Cornell through Frank Prewitt, a former corrections department commissioner and an FBI informant was a $150,000-per-year consultant for Cornell.

The Houston-based company operated halfway houses in Alaska and hoped to build a private prison and a juvenile psychiatric treatment center in Alaska.

The defense argued that Anderson backed Cornell without being on the take and that Prewitt wore a wire to bag a legislator and deflect investigators from his legal problems.

Prosecutors contend Bobrick and Anderson trolled for cash in conversations with Prewitt, using a phony Web-based newsletter as a front for Cornell to funnel payments to Anderson.

Anderson, finishing his first term as a Republican legislator from east Anchorage, was strapped for cash, prosecutors said, as he romanced McGuire, who was then a state representative.

He owed child support payments and was looking for a payoff of about $3,000 per month when the Legislature was not in session.



Ex-partner at US law firm pleads guilty to conspiracy
Court Feed News | 2007/07/10 14:13

A former partner of Milberg Weiss & Bershad, one of the first law firms in America to bring class actions against large companies, yesterday agreed to plead guilty to hiding payments made by the legal firm to clients in exchange for them taking part in lawsuits. The case highlights concerns in the US about the rising cost of litigation, boosted by class actions and the substantial settlements that some of the cases attract.

Milberg Weiss is one of the best-known law firms that bring class actions on behalf of shareholders and customers against large companies. The firm boasts that it has recovered more than $45 billion (£22.3 billion) on behalf of clients in cases connected with financial fraud.

David Bershad, a 67-year-old former managing partner at the law firm, yesterday agreed to plead guilty to conspiracy to obstruct justice and make false statements under oath. Those charges could attract a sentence of up to five years in prison. Mr Bershad has agreed to return $7.75 million, pay a $250,000 fine and cooperate with the US Attorney’s office in Los Angeles.

For the past seven years, federal prosecutors have been investigating whether Milberg Weiss, the firm, Mr Bershad and his former partner Steven Schulman took part in a scheme to pay millions of dollars in illegal kickbacks to shareholders so that they would serve as lead plaintiffs in class action fraud cases.

The prosecutors were trying to ascertain whether, once a case was settled, some of the legal fees due to the firm were paid to the lead plaintiffs. Such payments are illegal because lead plaintiffs have to represent other members of the class action and have to declare that their interests are in line with the others’.

Mr Bershad was indicted last year by a Los Angeles grand jury along with Mr Schulman for making such payments in cases where the firm was paid $216 million. Milberg Weiss and Mr Schulman, who has since retired, pleaded not guilty. The trial is to due to start in January.

In a statement, Milberg Weiss & Bershad said: “We understand David Bershad will plead guilty today to conspiracy to obstruct justice. Mr Bershad had been on a leave of absence since May 2006 and his relationship with Milberg Weiss LLP has been terminated. We remain confident that his actions will have no effect on the firm’s commitment to its clients and its ongoing work to protect public shareholders and consumers.”

Federal investigators finally got lucky in the long-running inquiry in May last year. Los Angeles prosecutors secured a guilty plea from Howard Vogel, who admitted that he and his family had received $2.5 million in illegal payments from the law firm in return for becoming lead plaintiffs in a number of class actions. Mr Vogel named four partners at Milberg Weiss and also agreed to cooperate with the investigation.

Mr Bershad had responsibility for overseeing the finances and accounting processes of Milberg Weiss, according to court papers.



Big Tort Lawyer Turns State's Evidence
Headline News | 2007/07/10 14:07

Federal prosecutors are closing in on two titans of the class action bar, Melvyn Weiss and William Lerach, after one of their former law partners pleaded guilty to scheming to make secret payments to plaintiffs in securities lawsuits. David Bershad, 67, entered a guilty plea to one felony count of conspiracy before Judge John Walter yesterday afternoon. During the 40-minute hearing, Bershad told the judge that prosecutors were correct when they charged that the firm where he worked for nearly four decades, Milberg Weiss & Bershad, paid investors to serve as named plaintiffs. Bershad, the longtime financial chief for the firm, also implicated Messrs. Weiss and Lerach by agreeing that they were aware of and participated in the payments.

"Of course, this is the worst possible development," a law professor at New York University, Stephen Gillers, said. "It bodes ill for Partners A & B," the professor said, using the pseudonyms prosecutors have adopted to refer to Messrs. Weiss and Lerach in court proceedings. "Each of them is clearly in the prosecutors' sights," Mr. Gillers said. With Bershad's testimony, prosecutors "may now have the ability to pull the trigger" and obtain an indictment of the two men, Mr. Gillers said.

"It seems pretty damning to me," another professor who has been following the case, Larry Ribstein of the University of Illinois, said. "They are facing a trial or pretty hard time, if all this pans out."

Messrs. Weiss and Lerach have not been charged with any crime. However, in recent weeks, the pair has been in plea discussions with federal prosecutors, a lawyer involved in the case said, speaking on condition of anonymity.

Mr. Weiss's attorney, Benjamin Brafman, declined to comment on the development. Mr. Lerach's lawyer, John Keker, did not respond to a message seeking comment for this article.

Bershad could receive up to five years in prison on the conspiracy count. Prosecutors and Bershad's lawyers agreed that sentencing guidelines call for 18 months to two years in his case, though Judge Walter is not obligated to follow that recommendation. Bershad also agreed to forfeit $7.75 million of his receipts from the various lawsuits and to pay a $250,000 fine.

At yesterday's hearing, Bershad and one of his lawyers, Cristina Arguedas, stood at a lectern as a prosecutor, Richard Robinson, outlined the facts the government would seek to prove if Bershad went to trial. For 15 minutes, the prosecutor described the scheme by which Milberg Weiss used secretly paid plaintiffs to win the race to be first to file securities lawsuits.

"Generally, these individuals were promised that they would be paid approximately 10% of the net attorneys' fees that Milberg Weiss obtained," Mr. Robinson said. This gave Milberg Weiss an advantage because plaintiffs' firms that filed first were likely to be named as lead counsel and to enjoy a larger share of attorneys fees when cases were settled, he said. In 1995, Congress changed the laws related to class actions, and first-to-file status became less critical.

In one of the case's most eye-catching allegations, Mr. Robinson said Bershad kept in his office a stash of cash contributed by Milberg Weiss partners. The prosecutor said this became a "secret payment fund" used to make off-the-books distributions to plaintiffs, who were expected to take less than the customary 10% if they were paid in cash.

Mr. Robinson said Partner A, Mr. Weiss, made at least one payment from the fund, and Partner B, Mr. Lerach, sought reimbursement for a cash payment to a plaintiff. The prosecutor said Partner A also used a "phony option," which court papers indicate related to an artwork, to pay $175,000 owed to one plaintiff involved in the scheme.



China executes former chief of food and drug agency
Legal World News | 2007/07/10 12:58

The former official, Zheng Xiaoyu, who had been sentenced to death on May 29, was executed Tuesday, the Xinhua News Agency reported. Zheng was found guilty of taking 6.49 million yuan, or about $850,000, in bribes, including cash and gifts, and dereliction of duty, Xinhua reported. Zheng "sought benefits" for eight pharmaceutical companies by approving their drugs and medical devices during his tenure as China's chief drug and food official from June 1997 to December 2006, according to the media report.

During Zheng's tenure, six types of medicine were approved that turned out to be fake and some pharmaceutical companies used false documents to apply for approvals.

In comments on Zheng's case, a spokeswoman for the State Food and Drug Administration, Yan Jiangying, said Tuesday that corrupt officials have shamed the country's food and drug supervision system, Xinhua reported.

"We should seriously reflect and learn from these cases," Yan said. "We should fully protect public food and drug safety. The new drug registration regulation, which will come out soon, will ensure the transparency of the drug approval procedure."

In late June, China shut down 180 food producers that were found to be using improper industrial chemicals and additives.

Also last month, the U.S. Food and Drug Administration said it is imposing stricter controls on farm-raised Chinese seafood because of long-term health concerns about contamination with drugs and unsafe food additives, but that there is no immediate danger to consumers.

The action, which was effective immediately, covers farm-raised shrimp, eel, catfish, and two other kinds of fish, basa and dace, from China, the world's largest producer of farmed fish and the third-largest exporter of seafood to the United States.



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