Observations of the legal scene from the Cornhusker State, home of Roscoe Pound and Justice Clarence Thomas' in-laws, and beyond.
Tuesday, November 01, 2005
Former Washington DC Mayor Marion Barry pleads guilty to failure to pay taxes; original charges comprised accusation that he failed to file returns for several years; he seeks probation for Misdemeanor Convictions Washington Post Former D.C. mayor Marion Barry pleaded guilty yesterday to two misdemeanor tax charges, admitting in federal court that he failed to pay most of his income taxes for five years after departing from the District government in 1999.
Barry, who returned to politics last year after being elected to represent Ward 8 on the D.C. Council, earned more than $530,000 during his five-year hiatus from office but never filed a tax return documenting the income, prosecutors said.
Outside the courthouse, Barry voiced regret but offered no explanation. "I made a mistake," he said in brief remarks after the plea.
Barry (D), who faces up to 18 months behind bars and criminal fines of up to $30,000, will seek probation when he is sentenced Jan. 18, his attorney, Frederick D. Cooke Jr., said in court. It was, coincidentally, on that date in 1990 that Barry was arrested at the Vista Hotel after being videotaped smoking crack, an image that for years has haunted him and the city he led. Prosecutors said they will take no position on Barry's sentence.
The tax investigation centered on Barry's income in the years after he left the mayor's office in January 1999. The Internal Revenue Service started sending him delinquency notices in 2002 and continued to do so for about three years. Earlier this year, with the taxes still unpaid, a criminal investigation was launched.
A grand jury began hearing evidence of the alleged fraud, and the prospect of felony charges loomed for Barry, who is 69 and no longer the indefatigable figure he was earlier in his political career. A cancer survivor, Barry has diabetes and high blood pressure and has been hospitalized at least three times this year.
With the potential consequences apparent, Barry and his attorney moved swiftly to bring the investigation to a close, according to prosecutors. After being informed of the criminal inquiry, Barry immediately agreed to file returns, pay all taxes due and admit his crimes, the prosecutors, Assistant U.S. Attorneys James W. Cooper and Thomas E. Zeno, said in papers presented yesterday in court.
Barry, his attorney and prosecutors have been working toward a plea agreement for the past few weeks. Because the charges are misdemeanors, not felonies, Barry will be able to remain on the council. He signed off on the agreement yesterday morning, and hours later, he was in the courtroom.
Wearing a charcoal suit, a dark tie and a white shirt with monogrammed French cuffs, Barry listened as Cooper outlined the offenses to Magistrate Judge Deborah A. Robinson. Asked by Robinson whether the allegations were true, Barry paused briefly and said, "Yes, it's accurate."
Charged with one count of failing to pay his federal income taxes and one count of failing to pay his District taxes, both for calendar year 2000, Barry was summoned to a podium in the well of the courtroom to enter his plea.
After each charge was read by courtroom clerk Lorita Miller, Barry said, "Guilty, your honor."
Investigators found no evidence of tax evasion, the prosecutors said. Tax evasion -- a felony charge -- is the deliberate misrepresentation of income records in an effort to lower the amount of taxes owed.
Sources close to the investigation said that Barry was not charged with tax evasion because some employers had withheld taxes and some tax forms had been filed, which proved that he was not trying to hide his income.
Barry has agreed to make arrangements with the IRS to resolve his tax debt, which is a civil matter.
During the five years when his taxes went unpaid, Barry did not have a regular job or salary, but he took on a variety of projects.
He was hired as a consultant for several companies, including M.R. Beal & Co., an investment banking company that paid him more than $250,000 over five years. He also did consulting work for the Vienna-based developer KSI Services Inc. and National Corrections and Rehabilitation Corp., a company that operated group homes.
In an interview during last year's council campaign, Barry acknowledged that money was tight. He added, "I ain't too proud to beg."
As a council member, Barry is paid $92,520 a year. He also is eligible to receive a $34,000 annual pension from the government.
Barry's political career goes back more than three decades. He was elected mayor in 1978 and easily won reelection to second and third terms. He was in his third term when the FBI videotaped him smoking crack at the Vista; he later was convicted of one count of misdemeanor drug possession.
Soon after completing a six-month prison sentence, Barry launched a political comeback. He won a D.C. Council seat in 1992 and a fourth term as mayor two years later.
Mayor Anthony A. Williams (D) said in a statement that he is pleased that Barry's tax matters are being resolved.
"I've always admired Marion Barry; however, no one is above the law -- everyone needs to file both their federal and District taxes on time and accurately," Williams's statement said. "I understand that former Mayor Barry has agreed to make full restitution, and now I look forward -- and I am sure that he does too -- to moving on to other issues."
The tax bills, though, are not the only expenses Barry faces over legal issues. He has yet to fully pay a $35,000 court judgment stemming from a run-in with a custodian at Baltimore-Washington International Airport in 2000.
The custodian, Terrie Jenkins, accused Barry in a lawsuit of shoving her and exposing himself in an airport bathroom. Her attorney, Barry Glazer, said that Barry failed to make payments, so his paycheck is being garnished $1,131 a month.
Barry also has not settled a dispute over money with Dion Jordan, who served as the campaign manager in his bid for the Ward 8 council seat last year. Jordan alleged that the campaign owed him $3,700, and he got a court judgment ordering Barry and the campaign to pay up; Jordan said he is still owed about $1,500.
Barry and his fourth wife, Cora Masters Barry, separated in 2002, and he has since lived in a couple of apartments, including his current residence in Southeast Washington. A year after the separation, some of Barry's close advisers established a trust to help pay his rent and other personal expenses.
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M.R. Beal Settles With California Water District (Update1)
By Martin Z. Braun
Sept. 20 (Bloomberg) -- M.R. Beal & Co. agreed to settle allegations that it conspired to bribe an official with a California water agency in exchange for helping a New York dealer land a lucrative derivative contract in 2001.
M.R. Beal, the fourth-biggest minority-owned underwriter of municipal bonds last year, agreed to pay the West Basin Municipal Water District $100,000, according to a filing yesterday in Ventura County Superior Court. M.R. Beal denied any wrongdoing.
``We believe that the settlement was a fair disposition of the matter,'' said West Basin board president William Baker. ``It vindicates the district's position that we've had all along that this was an unfair transaction.''
West Basin sued M.R. Beal, derivatives dealer Rice Financial Products and Philadelphia-based financial adviser P.G. Corbin & Co. for fraud in 2004. The suit alleges that a consultant hired by M.R. Beal paid $25,000 to a West Basin board member for his support in approving a $141.8 million interest- rate swap with Rice. West Basin says the swap wasn't priced at fair market value, unjustly enriching the parties in the deal.
The settlement agreement with West Basin follows a court ruling last week voiding the interest-rate swap with Rice. The ruling cited a state law that allows a government body to break a contract in which an official has a financial interest.
Eric Starkman, a spokesman for M.R. Beal, declined to comment.
Derivatives are financial agreements whose value varies with the price of underlying securities or indexes. In a swap, two parties agree to exchange payments over a period of time. Typically, one party will agree to pay a fixed rate, while the other pays a rate that changes with a benchmark index or formula defined in the contract. The private contracts aren't regulated.
Extortion
U.S. state and local borrowers have used at least $400 billion of interest-rate swaps and other derivatives to help lower debt costs and hedge against rising interest rates, according to Moody's Investors Service.
In March 2005, Tyrone Smith, a former West Basin board member was sentenced to 24 months in federal prison for extorting about $25,000 from Garland Hardeman, a consultant hired by M.R. Beal. Rice had hired M.R. Beal to win approval of the 2001 deal, which was meant to lower the cost of debt service on the district's debt.
Hardeman, a former Inglewood city councilman, was paid $50,000 by M.R. Beal, and then gave Smith $25,000 in five cash payments. West Basin alleged that Hardeman was instructed to offer the money by then-M.R. Beal employee Tony Stovall. Stovall now works for Rice.
Fees Questioned
With Smith's advocacy, West Basin, which provides water to 900,000 residents in Los Angeles County, approved the interest rate swap by a 3-2 vote.
The agency alleges Rice earned between 500 percent and 1,500 percent more than customary for the swap and that P.G. Corbin's advice on the deal wasn't independent. M.R. Beal received $250,000 for assisting Rice, court documents say.
Smith, the former water agency board member, has testified that he was unaware that M.R. Beal, through Stovall, had any role in the $25,000 payment he received, court records say.
West Basin wants to return its profits on the swap and says Corbin is liable for malpractice and fraud. A trial is scheduled Nov. 6.
In court filings, M.R. Beal said it wasn't a party to the swap and wasn't involved in negotiating the pricing of the instrument. In addition, the underwriter said West Basin's fraud claim failed because the district has made, not lost, money on the swap.
Rick Taylor, a partner at Dakota Communications and spokesman for West Basin said the agency has made $3 million from the swap so far, while Rice has made $9 million.
To contact the reporter on this story: Martin Z. Braun in New York at Mbraun6@bloomberg.net .
Last Updated: September 20, 2006 17:51 EDT
Decided on August 14, 2003
Andrias, J.P., Saxe, Sullivan, Ellerin, JJ.
1386
[*1]Spectra Securities Software, Inc., Plaintiff-Appellant,
v
MuniBEX.com, Inc., Defendant, M.R. Beal & Company, et al., Defendants-Respondents.
Joseph J. Ortego
Robert J. Luddy
Order, Supreme Court, New York County (Richard Lowe, III, J.), entered June 3, 2002, which granted the motion of defendants M.R. Beal & Company (M.R. Beal) and Bernard Beal to dismiss plaintiff's third, fourth and fifth causes of action, unanimously affirmed, without costs.
In December 1998, M.R. Beal and plaintiff entered into discussions about plaintiff's ability to provide software, services and support to facilitate M.R. Beal's establishment of an Internet-based municipal bond trading network. The negotiations resulted in M.R. Beal and plaintiff executing a letter of intent in June 1999, pursuant to which the parties agreed to negotiate a mutually acceptable agreement in good faith. In May 2000, approximately one week before the execution of the parties' Definitive Agreement, plaintiff was informed that the party it would be contracting with was defendant MuniBEX.com, a corporation formed in January 2000 to operate the Internet trading network. Plaintiff unsuccessfully sought guarantees from M.R. Beal and Bernard Beal before signing the Definitive Agreement with MuniBEX.com, which subsequently defaulted on payments due. Plaintiff thereafter commenced the instant action seeking damages on breach of contract and fraud theories from MuniBEX.com, M.R. Beal and Bernard Beal.
The IAS court properly dismissed plaintiff's third and fifth causes of action seeking to pierce the corporate veil and hold M.R. Beal and Bernard Beal liable. Plaintiff failed to show that M.R. Beal and Bernard Beal used their alleged domination of MuniBEX.com to commit a fraud or wrong against it warranting equitable intervention (see Matter of Morris v New York State [*2]Dept. of Taxation & Fin., 82 NY2d 135, 141-142; and see TNS Holdings v MKI Sec. Corp., 92 NY2d 335). The Definitive Agreement entered into between plaintiff and MuniBEX.com was the product of substantial negotiations, which included discussions on the very issue of MuniBEX.com executing the Definitive Agreement.
The IAS court also properly dismissed plaintiff's fourth cause of action against Bernard Beal, alleging that it was fraudulently induced to enter the Definitive Agreement by statements made by Bernard Beal assuring plaintiff that it would not be harmed by naming MuniBEX.com as the party to the Definitive Agreement. Under the circumstances, the alleged statements can only be understood as expressions of opinion, which are nonactionable (see Longo v Butler Equities II, L.P., 278 AD2d 97).
We have considered plaintiff's remaining contentions and find them unavailing.
THIS CONSTITUTES THE DECISION AND ORDER
OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.
ENTERED: AUGUST 14, 2003
CLERK
Big mess at UMDNJ (NARAL Lobbyist and former Corzine staffer gets top job at state-run UMDNJ)
Bergen Record & NJ RTL ^ | 04.24.05 | Pat Alex
Posted on 04/25/2005 9:59:52 PM PDT by Coleus
UMDNJ lobbyist may face conflict
Christy Davis-Jackson was hired last August to serve as a $156,000 vice president and full-time legislative lobbyist for the University of Medicine and Dentistry of New Jersey.
While on the public payroll, though, Davis-Jackson continues to be registered with the state as a private lobbyist representing business clients that include a casino industry association - an outside interest that UMDNJ officials said would violate their conflict-of-interest policy.
UMDNJ on Thursday said Davis-Jackson reported to them in August that she had "discontinued her interest" in her firm - Davis & Partners LLC on Halsey Street in Newark.
But a receptionist at the private firm on Thursday told a caller that Davis-Jackson was at a meeting and would return the call today; her secretary at UMDNJ also said she was at a meeting when called a short time later.
Davis-Jackson, who has worked at UMDNJ since August, said Thursday that it's all a misunderstanding - "all smoke, no fire."
Davis-Jackson acknowledged she had not filed the proper paperwork to inform the state that she no longer represented private clients. But she maintained she has not been associated with her firm nor represented outside interests since being hired at UMDNJ.
She said she didn't know she had to file paperwork. She added that the receptionist at Davis & Partners must have been flustered in saying that Davis-Jackson was in a meeting.
Davis-Jackson also said she can't figure out how to change the phone mail at Davis & Partners, where the recording at her extension says she is away from her desk. "We had a very sophisticated telephone system,'' she said. She said two former employees are still in the phone mail system but that workers can't figure out how to remove them.
Davis-Jackson said she has put her "assets in trust" and retains "no day-to-day managing authority" at the firm she founded. Her name remains attached to the firm because "my political background had more marquee."
Davis-Jackson is a former Democratic strategist and campaign aide to U.S. Sen. Jon Corzine. She is married to the Rev. Reginald T. Jackson, president of the state Black Ministers Council.
Lobbyists are required to register with the state Election Law Enforcement Commission (ELEC). Davis-Jackson said she will file the necessary paperwork today to inform ELEC that she no longer represents private clients. A "notice of termination" is required, said a commission representative.
As of the first quarter of 2005, Davis was listed in ELEC records under her maiden name, Christy Davis, as representing five clients: the Casino Association of New Jersey, Babyland Family Services in Newark, Mr. Beal, NARAL of New York and PKF Mark III Inc., a Pennsylvania-based contracting firm with large contracts in New Jersey.
John J. Petillo created the position of vice president of government affairs at UMDNJ shortly after he became interim president in June. Petillo became president late last year. He is set to be formally inaugurated on Tuesday.
Davis-Jackson was in the middle of a controversy at the university last week after she approved a $10,000 grant to an organization run by Newark Councilwoman Gayle Chaneyfield-Jenkins. The group, Women with Hats on for the Cure, is not a registered charity. The money went toward a reception for breast-cancer awareness scheduled for the Robert Treat Hotel in Newark this fall.
The university subsequently put a moratorium on charitable donations and Petillo said they would be handled differently in the future, perhaps by the university's non-profit foundation.
Calls to Petillo about Davis-Jackson's job were referred to Maryann Master, vice president of human resources. Master said any outside lobbying on Davis-Jackson's part would have been a violation of the university's conflict-of-interest regulations. Employees are required to fill out conflict-of-interest forms.
"She [Davis-Jackson] followed the procedure, completed the form, and followed through in freezing her assets at the firm and she discontinued her interest in the firm," Master said.
In addition to her salary, Davis-Jackson also gets the use of a late-model Dodge Durango.
Questions about the university administration and spending practices have been mounting in recent weeks. UMDNJ officials acknowledged Tuesday that tighter controls are needed at the sprawling university, which is composed of three medical schools and has an annual budget of $1.6 billion.
Petillo said he will review all no-bid contracts above $50,000 and provide a monthly list of bid waivers to the university's board of trustees. The move came after journalists requested copies of no-bid contracts from 2002 to the present. The university released a list of 2002 waivers on Tuesday that totaled more than $126 million, and included more than $900,000 in fees for outside lobbyists.
Petillo and the university board moved to initiate an outside audit of spending practices. They are negotiating with retired state Supreme Court Justice James Coleman to conduct the review.
Are you staring to see the pattern
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