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Judge blocks Vonage from adding new customers
Lawyer Blog News | 2007/04/06 19:15

Vonage Holdings Corp. cannot add new customers while it appeals a finding that it infringed Verizon Communications Inc. patents for making phone calls over the Internet, a federal judge ruled on Friday. Vonage plans to appeal U.S. District Judge Claude Hilton's order that allows Vonage to only provide service to existing customers. Vonage is also required to post a $66 million bond.

Hilton said Vonage could be irreparably injured if he completely barred its use of Verizon technology. "Some question whether they could stay in business," he said.

However, the judge said Verizon would be injured if Vonage was completely free to continue infringing the patents.

A lawyer for Vonage, Roger Warin, told the court the ruling was a "slow strangling" of the company. The difference between a partial stay or a total prohibition on using the technology amounted to "cutting off oxygen or a bullet to the head," he said.

Hilton is expected to sign his order next Thursday. Vonage is then free to take the case to the U.S. Court of Appeals for the Federal Circuit, which specializes in patent cases.

U.S. equities markets were closed for the Good Friday holiday. Vonage shares closed down almost 7 percent on Thursday to $3.37 on the New York Stock Exchange ahead of the court hearing. Verizon shares rose 1 percent to $38 on the NYSE.

Rebecca Arbogast, an analyst with Stifel Nicolaus, said Hilton's order was a blow to Vonage. "If they can't get new customers (while they appeal the case), I think it's going to be tough to attract capital."

Hilton announced on March 23 that he intended to issue an injunction blocking all use of Verizon's technology, sending Vonage shares down nearly 26 percent that day.

The judge gave Vonage two weeks to try to convince him to stay the injunction. Verizon then suggested the judge allow Vonage to keep servicing its existing customers if a stay was necessary.

Earlier in March, a jury found Vonage had infringed three patents owned by Verizon. The jury said Vonage must pay $58 million, plus 5.5 percent royalties on future sales.

Vonage stock has steadily lost value since its initial public offering at $17 a share in May last year. The shares posted an all-time closing low of $3 after Hilton's March 23 hearing.



Cemex approval paves way for next Rinker move
Lawyer Blog News | 2007/04/06 01:27

The Department of Justice announced today that it has reached a settlement that will require Mexico-based Cemex S.A.B. de C.V. to divest 39 ready mix concrete, concrete block, and aggregate facilities in Arizona and Florida in the event Cemex succeeds in its hostile takeover of Australia-based Rinker Group. The Department said that without the divestitures the proposed acquisition would substantially lessen competition for ready mix concrete in certain metropolitan areas in Arizona and Florida, as well as result in increased prices for ready mix concrete, concrete block, and aggregate sold to customers handling state Department of Transportation and large building projects. The total value of the Cemex/Rinker transaction, including Rinker's debt, is approximately $12 billion.

The Department's Antitrust Division filed a civil antitrust lawsuit today in U.S. District Court in Washington, D.C. to block the proposed transaction. At the same time, the Department filed a proposed consent decree that, if approved by the court, would resolve the lawsuit and the Department's competitive concerns.

"Without the divestitures required by the Department, purchasers of ready mix concrete, concrete block and aggregate in these areas of Florida and Arizona, including state departments of transportation, would likely have faced higher prices if the transaction is completed. The Department's action will ensure that these customers will continue to receive the benefits of competition,"said Thomas O. Barnett, Assistant Attorney General for the Department's Antitrust Division.

Ready mix concrete is a building material used in large construction projects including buildings, highways, bridges, tunnels, and other projects. Concrete block is a building material used in the construction of residential and commercial structures. Aggregate is crushed stone and gravel produced at quarries, mines, or gravel pits that is used in, among other things, the production of ready mix concrete, concrete block, and asphalt.

The Department concluded that the deal would have resulted in increased prices for ready mix concrete sold to customers handling state Department of Transportation projects and other large building projects in the metropolitan areas of Fort Walton Beach/Panama City/Pensacola, Jacksonville, Orlando, Tampa/St. Petersburg, and Fort Myers/Naples, Fla., and the areas of Flagstaff and Tucson, Ariz. In Flagstaff, Rinker and Cemex are the only two competitors capable of supplying ready mix concrete for these large projects, and in the other areas in which divestitures are being required there are only one or two firms in addition to Cemex and Rinker that are capable of serving large projects.

The Department also said that the acquisition also would have resulted in an increase in prices for concrete block for a significant number of customers in the metropolitan areas of Tampa/St. Petersburg and Fort Myers/Naples, Fla., where Cemex and Rinker account for more than 60 percent of concrete block sales.

Finally, the Department said that the acquisition would have resulted in increased prices for aggregate to a significant number of customers in the Tucson, Ariz., area where Cemex and Rinker are among a small number of firms capable of supplying aggregates meeting state Department of Transportation specifications.

On Oct. 27, 2006, Cemex announced its intention to acquire Rinker through a hostile cash tender offer. The offer was due to expire on March 30, 2007, but Cemex extended it until April 27, 2007.

Under the terms of the proposed consent decree, once Cemex obtains control of Rinker, Cemex must divest certain ready mix concrete assets to a single buyer in each of the areas of competitive concern. The terms of the proposed consent decree also require the divestiture of all of Rinker's concrete block-related assets in the Tampa/St. Petersburg and Fort Myers/Naples areas. Cemex must divest two aggregate plants in the Tucson, Ariz., area to the same acquirer that purchases the two ready mix plants to be divested at the same locations. Under the consent decree, the Department's Antitrust Division must approve the buyer of all of the divested assets.

Cemex, headquartered in Nuevo León, Mexico, produces and distributes cement, ready mix concrete, aggregate, concrete block, concrete pipe, and related building materials to customers in more than 50 countries. In 2006, Cemex reported total sales of approximately $24.6 billion. Cemex is the largest United States supplier of ready mix concrete and cement and the seventh largest United States supplier of aggregate. Approximately 25 percent of Cemex's revenues are earned in the U.S. Cemex operates in the U.S. through its wholly-owned subsidiary, Cemex Inc., which is headquartered in Houston.

Rinker, headquartered in Chatswood, Australia, produces and distributes aggregate, ready mix concrete, cement, concrete block, asphalt, concrete pipe, and other construction materials through its operations in the U.S. and Australia. In 2006, Rinker reported total sales of approximately $4 billion. Rinker is the second largest U.S. supplier of ready mix concrete and the fifth largest U.S. supplier of aggregate. Approximately 80 percent of Rinker's revenues are earned in the U.S. Rinker operates in the U.S. through its subsidiary, Rinker Materials Corporation, which is headquartered in West Palm Beach, Fla.

As required by the Tunney Act, the proposed consent decree, along with the Department's competitive impact statement, will be published in the Federal Register. Any person may submit written comments concerning the proposed decree during a 60-day comment period to Maribeth Petrizzi, Chief, Litigation II Section, Antitrust Division, U.S. Department of Justice, 1401 H Street, N.W., Suite 3000, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the court may enter the final judgment upon a finding that it serves the public interest.



DOJ busts insulation service companies
Lawyer Blog News | 2007/04/06 01:25

Two Long Island, N.Y. insulation service companies and an owner of the companies pleaded guilty today to conspiring to rig bids on the supply of maintenance and insulation services to New York Presbyterian Hospital (NYPH) and Mount Sinai Medical Center (Mount Sinai), the Department of Justice announced.

Michael Theodorobeakos of Upper Saddle River, N.J., and two maintenance and insulation companies he co-owned – Monosis Inc. (Monosis) and STU Associates Inc. (STU) – pleaded guilty in U.S. District Court in Manhattan for rigging bids to NYPH and Mount Sinai. Between approximately 2000 and September 2005, NYPH and Mount Sinai purchased substantial quantities of maintenance and insulation services from Theodorobeakos, Monosis, STU and co-conspirators. Theodorobeakos and the co-conspirators attempted to create the appearance that NYPH and Mount Sinai were awarding contracts based on competitive bids, when, in fact, they frequently were not.

"The Antitrust Division is committed to protecting the competitive market for Americans," said Thomas O. Barnett, Assistant Attorney General in charge of the Department's Antitrust Division. "We will continue to apprehend and bring to justice those who rig bids and thereby deprive the public of the benefits afforded by a truly competitive bidding process." As part of the conspiracy, the indictment charges that Theodorobeakos, Monosis, STU and the co-conspirators carried out the conspiracy by:

Designating which company would submit the low bid and which company would submit a higher, complementary bid;

Creating the illusion of a competitive bidding process by using each other's letterhead to submit high, non-competitive bids; and

Providing and being aware of kickbacks to co-conspirators in order to frustrate and subvert the competitive bidding policies of NYPH and Mount Sinai.

The bid rigging crime with which Theodorobeakos is charged carries a maximum penalty of 10 years in prison, three years of supervised release, and a $1 million fine for an individual. Monosis and STU face a maximum fine of $100 million. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victim of the crime, if either of those amounts is greater than the statutory maximum fine.

This charge arose from an ongoing federal antitrust investigation of fraud, bribery, tax-related offenses and bidding irregularities in the award of maintenance and service contracts to the engineering departments of Mount Sinai and NYPH. The investigation is being conducted by the Antitrust Division's New York Field Office with the assistance of the Federal Bureau of Investigation (FBI) and the Internal Revenue Service Criminal Investigation.



Alleged faux beau pleads not guilty in check fraud
Lawyer Blog News | 2007/04/05 18:32

A disbarred lawyer who police say scammed women in Illinois and eight other states out of more than $1 million pleaded not guilty today for allegedly cashing bogus checks here.

Hillard Jay Quint, 42, entered his plea when he appeared before Cook County Judge Diane Cannon in the Criminal Courts building. He is charged with identity theft and four counts of deceptive practice for allegedly cashing $16,000 in checks written on a closed bank account under the alias Matt Goldstein.

At the brief hearing, Quint, dressed in a tan jail outfit, told the judge he cannot afford an attorney. He is being held without bond pending trial.

Quint was arrested Feb. 23 at his Gold Coast apartment. While in Chicago, police say he represented himself as a wealthy CEO from California while dating women he met through online services.

Authorities allege Quint dated at least eight women in Chicago and scammed $24,000 from three of them.

Belmont Area detective Cindy Serafini said Wednesday the investigation into the alleged fraud was ongoing, and more charges were possible.

Quint is scheduled to appear in court for a status hearing on May 14.



Jackson-Hewitt accused of tax fraud schemes
Lawyer Blog News | 2007/04/05 15:54

The Internal Revenue Service (IRS) and the Department of Justice have filed suit against five Jackson Hewitt franchises, seeking an injunction to bar the companies from preparing tax returns and alleging that all five corporations were involved in fraudulent tax return preparation including the filing of exaggerated claims and the use fake W-2 forms. The government, which filed lawsuits Tuesday in Chicago, Atlanta, Detroit and Raleigh, further alleged  that as a result of the fraudulent activity the US Treasury took a loss of over $70 million. The suits also claim that the corporations, owners, and employees received kickbacks for helping costumers file the fraudulent returns.

Speaking about the lawsuits, IRS Commissioner Mark Everson stated that:

I am deeply disturbed by the allegation that a major franchisee of the nation's second-largest tax preparation firm is intentionally preparing improper tax returns with inflated refunds. I'm particularly concerned that many taxpayers of modest means could actually end up owing the government thousands of dollars if they claimed an improper refund.

The five corporations named as defendants are Chicago Suit: Smart Tax, Inc. of Chicago; Ask Tax, Inc.; Atlanta Suit: Smart Tax of Georgia, Inc.; Detroit Suit: So Far, Inc.; and Raleigh Suit: Smart Tax of North Carolina, Inc.; all Jackson Hewitt Tax Service franchises. The suits also name Farrukh Sohail, who wholly or partially owns each of the five corporations, as co-defendant.



Hartford Man Pleads Guilty To Sex-Trafficking Ring
Lawyer Blog News | 2007/04/05 07:40

Brian Forbes of Hartford, Conn., pleaded guilty to six counts related to his role in a sex-trafficking ring. Forbes is the ninth of ten defendants to plead guilty to federal charges in this case. In his plea agreement, Forbes has admitted to placing three juveniles in prostitution and compelling two adults into prostitution through force, fraud or coercion.

On Aug. 8, 2006, Forbes, along with nine other co-defendants, was charged in a 64-count superseding indictment related to the operation of a trafficking ring in Connecticut. Forbes was also charged, along with and two of his co-defendants, with sex trafficking minors and sex trafficking by force, fraud and coercion. Today, Forbes pleaded guilty to three counts of sex trafficking of minors; two counts of sex trafficking adult women through force, fraud or coercion; and conspiracy to use interstate facilities to promote prostitution. Forbes faces a maximum penalty of up to life in prison and a fine of up to $1.5 million.

"This sex trafficking case, like many others, involved the repeated victimization of American citizens," said Wan J. Kim, Assistant Attorney General for the Civil Rights Division. "All too often, these crimes occur right in our own backyards. The Justice Department will remain dedicated to prosecuting this form of modern-day slavery."

"Women and girls being forced to commit sexual acts against their will and under the threat of violence is a brutal crime," said Kevin J. O'Connor, U.S. Attorney for the District of Connecticut. "Federal law enforcement is committed to vigorously prosecuting those who engage in human trafficking, especially when minors are victimized."

Human trafficking prosecutions are a top priority of the President of the United States and the Department of Justice. In the last six fiscal years, the Civil Rights Division, in conjunction with U.S. Attorneys' Offices, has increased by six-fold the number of human trafficking cases filed in court.  In fiscal year 2006, the Department obtained a record high number of defendants charged and defendants convicted in human trafficking prosecutions.

The case was investigated by the Federal Bureau of Investigation, the Hartford and Windsor Police Departments, and the Internal Revenue Service. The case is being prosecuted by Assistant U.S. Attorney Jim Genco and Special Litigation Counsel Andrew J. Kline of the Civil Rights Division's Human Trafficking Prosecution Unit.



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