Divided 8th Circ allows Plattsmouth's 10 Commandments to stand

Since monument is nearly 10 blocks from the city hall and Courthouse, the monument represents merely a passive memorial to the nation's religious heritage. 08/19/05 ACLU NE Foundation v. City of Plattsmouth U.S. Court of Appeals Case No. 02-2444 District of Nebraska [PUBLISHED] [Bowman, Author, for the Court En Banc]Like the Ten Commandments onument in Van Orden v. Perry, 125 S.Ct. 2854 (2005), the Plattsmouth monument makes passive - and permissible - use of the text of the Ten Commandments to acknowledge the role of religion in our nation's heritage, and the district court's judgment in favor of the ACLU is reversed. Judge Bye, joined by J. Morris S. Arnold, dissenting, argue calling the 10 commandments a passive statement detracts from its powerful but religious message; the monument is in a quiet area where people will think about it and get brainwashed into christianity, and it was put in a long time ago when America did not embrace diverse cultures. funny the plaintiff in the case did not belong to any religion. there are plenty of buddists, muslims, hindus in Nebraska now, none of them have objected. The District Court granted summaryjudgment in favor of the plaintiffs, finding that both Doe and the ACLU havestanding to bring suit and that the City's display of the monument violates theEstablishment Clause. On appeal, a divided panel of this Court affirmed. ACLU Nebraska Found. v. City of Plattsmouth, 358 F.3d 1020 (8th Cir. 2004), vacated and rehearing en banc granted, April 6, 2004. With the benefit of the United States Supreme Court's recent decision in Van Orden v. Perry, 125 S. Ct. 2854 (2005), we now reverse.Using the test described by the Supreme Court in Lemon v. Kurtzman, 403 U.S. 602 (1971), the District Court held that thepresence of the monument in a City park violates the Establishment Clause.The Chief Justice went on to cite recent cases in which the Supreme Court did not apply the Lemon test. See,e.g., Zelman v. Simmons-Harris, 536 U.S. 639 (2002); Good News Club v. Milford Cent. Sch., 533 U.S. 98 (2001). Chief Justice Rehnquist ultimately concluded that the Lemon test was "not useful in dealing with the sort of passive monument that Texas has erected on its Capitol grounds." Van Orden, 125 S. Ct. at 2861. Instead,he declared that Establishment Clause analysis in these circumstances was "drivenboth by the nature of the monument and by our Nation's history." Id. Explicitlyrecognizing the religious nature and significance of the Ten Commandments, id. at2863, the Chief Justice distinguished the "passive use" of the Ten Commandmentstext by the State of Texas from the impermissible use of the text by the State ofKentucky, where copies of the text hung in public-school classrooms and "confronted elementary school students every day," id. at 2864 (distinguishing Stone v. Graham,449 U.S. 39 (1980)). After discussing in some detail our Nation's history insofar asthe use of the Ten Commandments and other religious symbols are concerned, id. at2859–63, Chief Justice Rehnquist—with a fifth vote from Justice Breyer concurring in the judgment—concluded that the State of Texas did not violate the EstablishmentClause by its display of the Ten Commandments monument on its Capitol grounds,id. at 2864.Like the Ten Commandments monument at issue in Van Orden, the Plattsmouthmonument makes passive—and permissible—use of the text of the Ten Commandments to acknowledge the role of religion in our Nation's heritage.the Plattsmouth monument is located in arelatively isolated corner of Memorial Park, more than ten blocks distant fromPlattsmouth City Hall and, as far as the record shows, not close to any other buildingthat is part of City government. This fact provides further support for our conclusionthat Van Orden effectively protects the Plattsmouth monument from successful attackunder the Establishment Clause."[s]imply having religious content or promoting a message consistent with a religious doctrine does not run afoul of the Establishment Clause." Id. at 2863; BYE, Circuit Judge, with whom MORRIS SHEPPARD ARNOLD, Circuit Judge,joins, dissenting; (not only are these brillant judical scholars, they are art critics!).Pedestrians, picnickers, and others using the park, however, have an unrestricted view of the Ten Commandments as written on the monument. Nothing in the monument's surrounds suggests its religious message might notbe its raison d'etre.The monument shares its environs with trees and recreationalequipment but none of this mise-en-scéne reflects an intent to merely complement anotherwise secular setting by drawing upon one of the Ten Commandments' secular applications. Rather, the monument's stark religious message stands alone withnothing to suggest a broader historical or secular context. Shades of Jim Crow and Salem Witch Trials from barely 40 years ago! : Many earlier monuments and inscriptions appeared at a time when we "may not have foreseen the variety of religions for which this Nation wouldeventually provide a home." McCreary, 125 U.S. at 2747 (O'Connor, J., concurring)(why arent Muslims, Jews, Buddhists or Hindus joining the Snivel Liberties Union Lawsuit as Plaintiffs?) Indeed, "for nearly a century after the Founding, many accepted the idea that America was not just a religious nation, but 'a Christian nation,'" (wont be for long if those whom the 8th Circuit dissenters enable have anything to do with it, Allah is Great) In today's pluralistic America we no longer accept norcountenance such a narrow reading of the Establishment Clause.the Plattsmouth monument stands alone with nothing to recommend it but its religious message.It is not enough that Plattsmouth's monument has stood formore than thirty-five years in Memorial Park. Without the contextualizing presenceof other messages or some indicia of historical significance, there is nothing to freethe display from its singular purpose of advancing its religious message. (Maybe these Mainstream Protestan manquees are remembering their Sundays past getting that old time religion) To say a monumentinscribed with the Ten Commandments and various religious and patriotic symbolsis nothing more than an "acknowledgment of the role of religion" diminishes theirsanctity to believers and belies the words themselves. (We) respectfully dissent.

Nebraska homeowners subject to excessive closing costs

8th Circuit has held that HUD does not have authority to limit marked up closing costs under Federal Real Estate Settlement Procedures Act. Are markups illegal? Depends where you live August 19, 2005 Federal Circuits have split on whether RESPA allows lenders to charge borrowers the actual or marked up cost when closing on home loans. Ex: charging for a credit report $65, not $3 Ex: $500 for an appraisal, not $25 for one done onver the internet. HUD has interpreted the Real Estate Settlement Procedures Act to ban markups and extra fees without justification. But title companies and lending industry groups fought HUD's administrative rules, HUD Policy Statement 2001-1, 66 Fed. Reg. 53,052 (Oct. 18, 2001)Summary , and in some cases won. The 3rd Circuit Court of appeals in august sided with HUD, and became the third straight court to do so. Normally that would put the issue to rest, but not this hot potato. That's because three other federal appellate courts, covering 15 states, have ruled the opposite, sanctioning markups without limit within their jurisdictions.Santiago v. GMAC 3rd Circuit court of appeals 8-4-2005 Here's the state-by-state division: * Unlimited markups allowed: Residents of 4th Circuit: Maryland, Virginia, North and South Carolina, West Virginia, 7th Circuit: Illinois, Wisconsin, Indiana, 8th Circuit Haug et al v Bank of America : Iowa,Minnesota, Missouri, Arkansas, Nebraska and North and South Dakota have no federal legal protections against markups. No matter how little your mortgage company paid for documents, tax services, appraisals, messenger services, etc., it is free to charge whatever it thinks it can squeeze out of you. * No markups allowed: 11th Circuit Sosa v. Chase Manhattan Corp., 348 F.3d 979 (11th Cir. 2003): Residents of Florida, Georgia, Alabama, 2nd Circuit Kruse v. Wells Fargo Home Mtge, Inc. (No. 03-7665, 2nd Cir. Sept. 10, 2004). New York, Connecticut, Vermont, 3rd Circuit: Pennsylvania, New Jersey and Delaware live in the current no-markup zone. They can sue lenders and other service providers for markups and expect to prevail in the courts, based on appellate court decisions covering their jurisdictions. * Limbo zone states: If you don't live in or plan to buy property in any of the states already named, you are in a legal limbo-land when it comes to markups. HUD says its rules prevail and you cannot have fees marked up by a lender or title agency unless additional services are rendered to justify the extra costs. But no cases have been decided by the highest federal court in your area, and therefore neither you nor your loan and settlement service providers know whether markups are legal or not. The latest case, handed down Aug. 4 by the U.S. Court of Appeals for the 3rd Circuit (Santiago v. GMAC Mortgage Group Inc.), involved a class action suit against GMAC, one of the country's highest-volume home lenders. A GMAC Mortgage customer alleged that the company marked up various fees in connection with the closing of his loan, and thereby violated HUD's ban. Citing earlier federal appellate court rulings that HUD lacked statutory authority to ban markups, GMAC asked the district court to throw out the class action -- and it did. The home buyers then took the case to the appellate level, where HUD's position on markups was affirmed. A 3-3 split in circuits may lead to Supreme Court Cert.

No decisions from the Nebraska Supreme Court today. court.nol.org

8th Circ: SSDI claimant may not adjust time attorney fees are paid to avoid Worker Comp Offset

Minnesota Worker Comp law provides benefit reduction after injured worker's disability benefits exceed $25000 when worker is on SSDI; Injured worker concurrently on SSDI sought to allocate attorney fees to period of time that would reduce this offset and employer agreed; 8th Circ upholds social security administration refusal to time date of fees to a time other than when the claimant paid atty fees Sunde v. Barnhart 08/15/05 U.S. Court of Appeals Case No. 04-3164 District of Minnesota Claimant and employer could not allocate attorneys' fees to a period of time other that the period when they were incurred so as to maximize disability benefits, and the Commissioner did not err in rejecting the stipulation as inconsistent with 42 U.S.C. Sec.424a and 20 C.F.R. Sec. 404.408(d)."The (Social security) Act limits the amount of DIB an individual may receive when simultaneously receiving Workers’ Compensation (WC) benefits. See 42 U.S.C. § 424a(a); 20 C.F.R. § 404.408(a). When an individual’s combined DIB and WC benefits exceed eighty percent of the individual’s pre-disability earnings, the Actrequires a reduction in DIB – called a DIB “offset.” See 42 U.S.C. § 424a(a); Berger v. Apfel, 200 F.3d 1157, 1159 (8th Cir. 2000)."Amounts paid or incurred, or to be incurred, by the individual for legal expenses in connection with the claim foror the injury or occupational disease on which the public disability award or settlement agreement is based, are excluded in computing the reduction under paragraph (a) of this section [i.e., 42 U.S.C. § 424a(a)]20 C.F.R. § 404.408(d)The federal offset does not apply where state law allows an employer to take a “reverse offset.” See 42 U.S.C. § 424a(d). Minnesota is one such state. See Minn.Stat. Ann. § 176.101 sub. 4 (West 1993 & Supp.). After a Minnesota worker receives $25,000 in weekly permanent total disability WC benefits, the Social Security Administration (SSA) pays the full DIB amount while the employer reduces its WC payments to the injured employee, paying only enough to meet the eighty percentceiling. In this way, the federal “offset” is “reversed.”"from January 1, 1996 through November 19, 1996 became the only period during which Sunde’s DIB could possibly be vulnerable to a federal offset due to his concurrent receipt of federal DIB and state WC benefits."the Pl Sunde and his employer worker comp insurer stipulated had incurred $6,500 in attorney’s fees as a result of pursuing his WC claim. They agreed to allocate the fees to the period dated January 1 through November 19, 1996,; "Neither the text of§ 404.408(d) nor the POMS(social security program manual) actually address whether Sunde may allocate legal feesalready paid to an illusory date.""Wesee no basis for binding the SSA to the terms of an original stipulation that essentiallyincreases an individual’s maximum allowable DIB by creating an illusory payment period for attorney’s fees.""In Sunde’s case, evidence of a bare intent to evade the offset is clear. The stipulation stated unequivocally that the “settlement [was] intended to maximize the employee’s entitlement to Social Security disability benefits.”

8th Circ reverses defective carpet verdict for StatLims

Insurance company purchased carpeting for remodeled offices that wore out too quickly. Pl claimed equitable tolling excused filing suit beyond 5 year statute of limitations. Deal between 2 sophisticated parties did not indicate fiduciary relationship Employers Mutual v. Collins & Aikman 08/16/05 U.S. Court of Appeals Case No. 04-3420 Southern District of Iowa There was no fiduciary relationship between the parties in this arms-length commercial transaction, and the statute of limitations could not be tolled by the doctrine of fraudulent concealment. In Iowa To toll the statute of limitations, the plaintiff must prove 1) "the defendant affirmativelyconcealed the facts on which the plaintiff would predicate [the] cause of action," or2) "a confidential or fiduciary relationship exists between the person concealing the cause of action and the aggrieved party" combined with proof the defendant breachedits duty of disclosure. Rieff v. Evans, 630 N.W.2d 278, 290 (Iowa 2001) mere silence may be sufficient to prove the defendantbreached its duty of disclosure. Kurtz v. Trepp, 375 N.W.2d 280, 283 (Iowa Ct. App.1985).Collins argues the doctrine of fraudulent concealment does not apply because there was insufficient evidence to prove the existence of a fiduciaryrelationship between it and EMC. We agree. We conclude, in the context of this buyer/seller relationship,Collins's statements were an insufficient basis upon which to find a fiduciary relationship. Although a fiduciary relationship may arise between buyers and sellers Asa-Brant, Inc. v. ADM Investor Serv., Inc., 344 F.3d 738, 741 (8th Cir. 2003), a pl. claiming equitable tolling must prove special factors between the parties such a superior knowledge of one party and reliance by the other. In this case rather, the sole evidence of a fiduciary relationship comes from Collins's statement it would work on behalf of EMC to discover the source of the carpet problems. Acting on behalf of another may indicate a fiduciary relationship, but based on all the facts and circumstances of this case we conclude those two statements were insufficient as a matter of law to transform this arms-length buyer/seller business transaction into a fiduciary relationship.

River Wars: 8th circs uphold Army Corps decisions on MO River reservoir releases

8th Circs in pair of rulings hold North Dakota could not prevent water releases from Missouri River reservoir in North Dakota to maintain downstream navigation; 8th Circ also find in separate case that the Corps in charge of the MO river system did not have a legal obligation to maintain a minumum downstream flow on the river State of North Dakota v. U.S. Dept. of Army U.S. Court of Appeals Case No. 04-2204 and No. 04-2737 District of Minnesota and 08/16/05 American Rivers v. U.S. Army Corps North Dakota case: District court did not err in dismissing State's suit to enjoin the Corps of Engineers from releasing water from Lake Sakakawea to support downstream navigation on the Missouri River; North Dakota cannot enforce its state water quality standards against the Corps unless Congress has unequivocally waived the federal government's sovereign immunity from suit, and the Clean Water Act, pursuant to which the state standards were adopted, specifically states that it shall not be construed as impairing the authority of the Secretary of the Army to maintain navigation; further, allowing states to use their water-quality standards to control how the Crops balances water-use interests would frustrate the Flood Control Act of 1944. 08/16/05 American Rivers v. U.S. Army Corps U.S. Court of Appeals Case No. 04-2737 and No. 04-2994and No. 04-2878 and No. 04-2794 and No. 04-2785 and No. 04-2774 District of Minnesota Flood Control Act of 1944 does not impose a duty on the Corps to maintain a minimum level of downstream navigation independent of other interests, and the Corps' balance of water-use interests in the 2004 Master manual is in accordance with the Flood Control Act and is not arbitrary or capricious; the operation of the Missouri River reservoir system is subject to the requirements of the Endangered Species Act, and it was lawful for the Corps to consult with the Fish and Wildlife Service to produce the 2003 Amended Biological Opinion; claims based on summer low flow are moot; challenges to the Fish and Wildlife Service's decisions in producing the 2003 Amended Biological Opinion rejected; Corps' selection of the Preferred Alternative in the Environmental Impact Statements was not arbitrary or capricious; claims by the Mandan, Hidatsa and Arikara Nation were properly dismissed for lack of standing.

State v Nguth; child abuse conviction reversed

Felony child abuse conviction reversed because trial court refused to read justification and lesser included offense instructions, even though Def.wholly denied hitting the victim. State v. Nguth, 13 Neb. App. 783 august 16, 2005. No. A-04-1037. The Hall County District Court convicted John K. Nguth, an African immigrant, of Class IIIA felony child abuse § 28-707(1)(b)and the Court sentenced him to 9 months in the Hall County jail. Nguth appealed claiming the Court erred in refusing to accept his proposed instructions on justification and lesser included child abuse offenses. Nguth claimed § 28-1413, justification for force against a child, could apply to justify his conduct. The trial court denied the justification instruction because the def. denied hitting the child. However if any evidence supports the instruction , the court should include the defense instruction. State v. Kinser, 252 Neb. 600, 567 N.W.2d 287 (1997){self defense}. 28-1413 is not an excuse to the crime of child abuse, but may be a defense when evidence exists to supportit, and the adult def. is qualified to assert it. Here the Defe acted as a guardian even though he was not legally a guardian. Lesser included defenses: Nguth also alleges that the district court erred in overruling his request that negligent child abuse be nstructed as a lesser-included offense, and we take up this issue because it is likely to recur upon our remand. [A] court must instruct on a lesser-included offense if (1) the elements of the lesser offense for which an instruction is requested are such that one cannot commit the greater offense without simultaneously committing the lesser offense and (2) the evidence produces a rational basis for acquitting the defendant of the greater offense and convicting the defendant of the lesser offense.State v. Williams, 243 Neb. 959, 965, 503 N.W.2d 561, 566 (1993) The Nebraska Supreme Court has held that misdemeanor child abuse is a lesser-included offense of felony child abuse under § 28-707. See State v. Parks, 253 Neb. 939, 573 N.W.2d 453 (1998), where state of mind is an element of the offense. "one state of mind may be included ina nother" Court reverses also on lesser included offense and rules on it as it may arise in subsequent appeal; Finally the court will not resverse and dismiss, rather it will remand for a new trial. State v. Noll, 3 Neb. App. 410, 527 N.W.2d 644 (1995), overruled on other grounds, State v. Anderson, 258 Neb. 627, 605 N.W.2d 124 (2000) (if defendant appeals conviction and obtains reversal based on trial error, Double Jeopardy Clause does not forbid a retrial so long as sum of evidence offered by State and admitted by trial court, whether erroneously or not, would have been sufficient to sustain guilty verdict).

IRS Reversed course on insurance policies for the wealthy to avoid estate tax

According to reports in the Ny Times, the IRS in 1996 permitted a elderly wealthy person to purchase a large insurance policy in order to avoid estate taxes, because the insured could count as a gift a much lower insurance premium rate. I.R.S. Loophole Allows Wealthy to Avoid Taxes However just a year later the IRS reversed course and said it would disallow sizeable premiums that were desinged to aovid estate and give taxes by David Cay Johnston In recent months some of the wealthiest older Americans have been buying huge life insurance policies on themselves. Curiously, these people have shopped not for the cheapest rates but for the highest rates they can find. In some cases, they delightedly pay 10 times the lowest rates for that insurance. Why would anyone willingly pay so much? Taxes. Through a technique invented by a lawyer in New York and a chemical engineer in California, each dollar spent on this insurance can typically eliminate $9 in taxes. Spend $10 million on this insurance, avoid $90 million or more in income, gift, generation-skipping and estate taxes. "I'm not saying this is the best thing since sliced bread, but it's really good for pushing wealth forward tax free," said Jonathan G. Blattmachr, the New York lawyer who heads the estate tax department at Milbank, Tweed, Hadley & McCloy and who explained the plan in a half-dozen interviews. The technique is legal, blessed by the I.R.S. in 1996. But some leading tax lawyers, as well as some accountants and insurance agents, say it shouldn't be. They say it effectively disguises a gift to one's heirs that should be taxed like any other gift. They also say it is but one example of how a tax exemption on life insurance that was approved by Congress in 1913 to help widows and orphans has been stretched to benefit the very richest Americans. Several thousand of these jumbo policies have been sold, according to agents who sell them, all under confidentiality agreements with the buyers and their advisors. One member of the Rockefeller family took out a policy, according to people who have seen documents in the deal. The several billion dollars of this insurance already sold, much of it in the last 18 months, means that tens of billions of taxes will not flow into federal and state government coffers in the coming decade or so. In recent months, policies with first-year premiums alone of $4.4 million, $10 million, $15 million, $25 million, $32 million and $40 million have been sold by New York Life Insurance, Massachusetts Mutual Life Insurance and other underwriters, according to insurance agents, accountants and tax lawyers who have worked on these deals. The agents selling the policies find them hard to resist — they can earn millions of dollars for selling just one such policy. The technique works this way. An older person — typically someone who does not expect to live long and who has at least $10 million and usually much more — wants to avoid estate taxes, which are 50 percent with such fortunes. Under tax law, money from a life insurance policy goes at death to heirs tax free. The premium paid on that life insurance is considered a gift to those heirs. Any annual premium that exceeds $11,000 is therefore subject to the gift tax of 50 percent. Only the wealthiest Americans pay such large premiums and are subject to this tax. The new technique sidesteps the gift tax in a two-step process. First, the person who is buying the policy reports on his tax return only a small part of what he really paid in premiums. Wouldn't the I.R.S. say that is cheating? No. It's perfectly legal. The reason is that insurance companies offer many different rates for the same policy. And the buyer is allowed to declare on his tax return the insurance company's lowest premium for that amount of insurance, even if that person could never qualify for that rate because of his age and health, and even if no one has actually ever been sold a policy at that rate. A low premium means a low gift tax. But in fact the buyer has really paid the very highest premium offered by that insurer for that amount of insurance. The insurer then invests the difference between the highest premium and the lowest premium. That investment grows tax free, paying for future premiums on the policy. At death, the entire face value of the policy is paid tax free to heirs. In an example cited by one agent, a customer paid a $550,000 premium for the first year alone, the highest price offered by the insurance company, for a policy that was also offered at $50,000, the lowest price. So $550,000 can be passed on to heirs tax free. Yet the gift tax is only $25,000 — 50 percent of the lowest premium, instead of $275,000, which is 50 percent of the highest premium. The I.R.S. would not comment officially. But an I.R.S. official who specializes in insurance matters said he had not heard that so many people were exploiting this loophole. He could not say whether the issue would be re-examined. The deal gets better because of a second step. Even that $25,000 tax can be avoided by shifting the gift-tax obligation to the spouse through a trust. In 1982, Congress made all transfers between spouses tax free, so the gift tax disappears. If the policy holder continues to pay huge premiums year after year, he can pass along much or all of his fortune tax free if he lives long enough. Michael D. Brown of Spectrum Consulting in Irvine, Calif., said, many clients in their 50's and 60's, working with other agents, are now trying to do just that. By far the biggest deals have been made by two insurance agents who work together, Mr. Brown, a former chemical engineer, and Louis P. Kreisberg of the Executive Compensation Group in Manhattan. The technique was devised in 1995 by Mr. Blattmachr and Mr. Brown. Mr. Blattmachr has since expanded his idea and other estate tax lawyers have copied his methods. "In 1995 I was told that this was the stupidest idea ever by a guy who is now collecting millions in commissions from selling" such insurance, Mr. Blattmachr said. Among his peers Mr. Blattmachr is renowned for his creativity in finding ways to pass down fortunes without paying taxes and without breaking the law. He is a busy man. Recently he set off to counsel clients in eight cities over three days — a trip made possible by a client who provided him with a private jet. Afterward he spent the weekend fishing with his brother, Douglas, whose company, Alaska Trust, helps wealthy Americans set up perpetual trusts, some of them using Mr. Blattmachr's insurance plan. One buyer of an insurance plan like Mr. Blattmachr's paid $32 million in the first year for a policy that will pay $127 million tax free to the grandchildren, according to a lawyer who worked on the deal and spoke on condition of not being identified. No gift taxes were paid. Sales of such insurance soared after the Internal Revenue Service announced 18 months ago that it was considering restrictions on similar techniques, which are known as split-dollar plans. In Alaska, premiums for such insurance totaled just $1.1 million in 1999, but ballooned to more than $80 million last year, state records show. This month, when the I.R.S. issued its proposed restrictions, it did nothing to stop Mr. Blattmachr's plan. Indeed, the proposed I.R.S. rules can be read as strengthening the validity of his plan, Mr. Blattmachr and some other estate tax lawyers say. Mr. Brown said that in some cases, when the policy holder dies quickly, both the government and the heirs come out winners, at the expense of the insurance company. "This is a good deal because both the government and the heirs get 90 percent of what they could have gotten," he said. He added: "We think it is good policy to allow this because it discourages games like renouncing your citizenship or investing offshore." But many estate tax lawyers and insurance experts think that because Mr. Blattmachr's plan is similar to the plans the I.R.S. moved to stop on July 3, it should be ended as well. While the I.R.S. in 1996 approved the outlines of the Blattmachr plan, these opponents argue that the plan as sold by agents like Mr. Brown and Mr. Kreisberg stretches that ruling so far that it no longer provides protection in an I.R.S. audit. Some of them say it is the huge fees involved that are blinding their competitors to aspects of the Blattmachr plan that make it vulnerable to being banned as an abusive tax shelter. Commissions for the insurance agents run between 70 percent and 200 percent of the first-year premium when it is $1 million or so, while on the jumbo policies commissions are typically 9 percent to 11 percent, or up to $4.4 million on a policy with a $40 million first-year premium, Mr. Kreisberg said. He acknowledged that many peers in the estate tax world say that he earned $100 million in gross commissions last year, but said, "I wish it were half that." Mr. Kreisberg did not dispute a statement by someone with knowledge of payment records that his small firm's commissions this year have already reached $20 million. Lawyers who opine on the validity of the deals can also earn big fees. Mr. Blattmachr gets $100,000 for his basic opinion letter and is reported to have charged as much as $250,000. Sanford J. Schlesinger of the law firm Kaye Scholer said he passed up a chance to collect a six-figure fee for advising on one of these deals because he thinks the deals should not pass muster with the I.R.S. "My mother taught me that if something seems too good to be true, it isn't true," he said. Other leading estate tax lawyers, as well as some accountants and insurance agents, say Mr. Blattmachr's insurance technique should fail because it is wholly outside the intent of Congress in giving tax breaks for life insurance, the I.R.S. ruling on the plan notwithstanding. "If the I.R.S. understood this they would say that it relies on a disguised gift — and if you have to pay gift taxes, then Jonathan's insurance deal does not work," said an estate partner at a tax firm in New York, who like others, said they could not be identified because they have signed confidentiality agreements that are part of all such insurance deals. Another legal expert said paying 10 times too much for insurance in a plan like this reminds him of a matriarch selling the family business to her granddaughter for $10 million when it was actually worth 10 times that amount. "The I.R.S. wouldn't let a family get away with selling the business for a dime on the dollar," this lawyer said, "and they should not allow it to work in reverse through insurance." Wealthy Family Sues Famous Lawyer Over Tax Plan By Wendy Davis, Trusts & Estates contributing writer Online Exclusive, Jul 8 2003 New York real estate magnate Charles B. Benenson and his wife file suit accusing noted trusts and estates lawyer Jonathan Blattmachr of breach of contract and conflict of interest. At core, but not part of the complaint, is the reverse split dollar arrangement—a tax loophole that the IRS recently warned it will not allow Print-friendly format E-mail this information High-profile trusts and estates lawyer Jonathan Blattmachr is famous for his clever use of trusts, family limited partnerships and sophisticated insurance plans to reduce inheritance and gift taxes. But last summer a particular insurance tactic that he had employed caught the attention of the U.S. Treasury and Internal Revenue Service after it was detailed in a front-page article in The New York Times decrying the lucrative loophole for the ultra-rich. Now, a family that bought the same type of policy made notorious by the Times—and the subject of an official notice from the Service—is suing Blattmachr and his law firm, Milbank, Tweed, Hadley & McCloy LLP. The family, Charles B. Benenson, of Benenson Realty Company, his wife Jane and his son (Jane's stepson) William, claims that the plan they bought is not the one his family expected. In Los Angeles this June, the Benensons filed suit for breach of contract, malpractice and other charges. Specifically, the Benensons claim that the insurance policy, which is supposed to pay $48.5 million in death benefits, is underfunded by about $1.5 million and might lapse within the next decade. The family blames Blattmachr, a New York-based partner at Milbank, as well as husband-and-wife insurance agents Louis and Amie Kreisberg; insurance agent Michael Brown; and the insurance companies that sold the policy. These firms include: Spectrum Consulting L.P. (also called Spectrum Financial Network Insurance and Investments, L.L.C.), where Brown is a managing partner and member; Executive Compensation Group, where Louis Kreisberg is an officer; CM Life Insurance Company, a subsidiary of Massachusetts Mutual Financial Group; and Massachusetts Mutual Financial Group. The Benensons also allege that Blattmachr, who introduced them to the Kreisbergs and the other players in the deal, did not "fully disclose" that he also represented the other parties at the time of the introduction. (Louis Kreisberg is on the editorial board of Trusts & Estates magazine; Blattmachr is a contributor to the magazine.) A spokesman for Milbank, who asked not to be identified, says: "Milbank's only client in the matter…was the Benensons, and they were faithfully served." Calling the suit "baseless" and "meritless," the firm spokesman said that the lawyers "intend to defend ourselves vigorously and we fully expect to prevail." "Milbank and Mr. Blattmachr practice law," added the spokesman. "The Benensons are complaining about the insurance product that they acquired. Neither Milbank nor Mr. Blattmachr had anything to do with the client's choice of insurance products." Kreisberg says that the lawsuit is frivolous and he fully intends to defend against it. Brown and Mass Mutual declined to comment. The Benensons are asking for the approximately $1.5 million they say it will take to fund the plan, a refund of the fees and commissions they paid to Blattmachr and the insurance agents, and punitive damages. Milbank Tweed's fee, according to the complaint, was $970,000; that included the work done on the deal and a tax opinion letter. Commissions to the insurance agents and broker, according to the suit, ran to more than $4.4 million. The Benensons also agreed to keep the details of the deal confidential, says one of their current lawyers, Virginia Miller of Anderson Kill & Olick PC, the law firm where former New York City mayor Rudolph Giuliani once worked. IRS Warning The Benensons' policy, a family reverse split dollar arrangement, became a popular estate planning strategy among the very wealthy from 2000 to 2002. Armed with a 1996 IRS ruling, Blattmachr and others presented such plans as a way of passing family wealth to heirs without estate tax and with greatly reduced gift taxes on the premiums. "I'm not saying this is the best thing since sliced bread, but it's really good for pushing wealth forward tax-free," Blattmachr said, according to The New York Times article last July. The Times story noted that insurance companies had sold thousands of these policies, adding up to billions of dollars of insurance, the bulk of it issued since early 2001. Shortly after publication of the newspaper article, the Treasury Department and IRS issued a notice refuting Blattmachr's interpretation of the gift tax required on premium payments. Before that notice, purchasers of these plans believed that they did not have to pay gift taxes on the entire amount of the premium price, but instead could value the premiums based either on government tables or the insurance company’s published rates (usually lower than the amount actually paid.) The August Notice, 2002-59, changed that. It said that the donor could no longer use the government’s premium rates or lower insurance company rates if the donor, or donor’s estate, has the right to the insurance. The August notice was accompanied by a press release stating that the IRS would not respect reverse split dollar arrangements "where the parties attempt to avoid taxes by using inappropriately high current term insurance rates, prepayment of premiums or other techniques to understate the value of taxable policy benefits." The warning was loud and clear. Soon afterward, wealthy families stopped purchasing these types of plans, say insurance lawyers. But what about those families like the Benensons that already had such plans in their estates? Estate planning experts note that it is too soon for such plans to have been audited by the IRS. For now, the Benensons are not complaining in their lawsuit about the tax consequences of the plan. But the suit, filed just before the statute of limitations for a possible complaint ran out, could be amended later. The family’s lawyers say that the Times article helped spur the lawsuit in that it contributed to their disillusionment with Blattmachr and the insurance agents. "The itch that they had was scratched by The New York Times and then drew blood," says their attorney Eugene Anderson, name partner of Anderson Kill. Allegations The Benenson family alleges that Blattmachr approached them in early 2000 with a life insurance plan that he proposed would be a perfect fit for the family. Blattmachr, who had represented the family for several years, according to the Benensons' current lawyers, allegedly presented the policy as an estate-planning tool that would result in lower taxes while taking account of the Benensons cash flow needs. In 1986, New York real estate magnate Charles B. Benenson was listed in the Forbes 400 with a net worth estimated at more than $200 million. Benenson, a Yale grad, had built his father’s Bronx apartment house business into a realty empire, investing with several other New York City builders, including Lawrence Tisch and Harry Helmsley. The plan Blattmachr allegedly approved involved purchasing a $60 million life insurance policy on his wife Jane, who was 81 years old in the summer of 2000, when the deal was signed. In a complex sequence of events, the family is said to have used the Alaska Trust Company, run by Blattmachr's brother, Douglas, to create a trust to buy the insurance policy. Other parties Benenson claims were involved in the transaction include the Kreisbergs, Michael Brown and companies headed by them, with Massachusetts Mutual Financial Group the ultimate insurer. According to the complaint, the Benensons were supposed to pay about $23.5 million in premiums during the first three years of the policy, but also get back about $3.7 million in a partial surrender. Meanwhile, the policy proceeds were to decrease from $60 million in the first year to $48.5 million in year four, after which the plan was to pay $48.5 million regardless of when Jane died. To make matters even more complicated, the policy was backdated to June of 1999, when Jane was still 80 because Mass Mutual does not issue this type of policy on people older than 80. The family's current lawyers say the backdating, while perfectly legal in itself, ended up causing the confusion that led to the problems. The Benensons thought they were agreeing to pay about $10.96 million in premiums in the first year, $7.2 million in the second year and $5.6 million in the third year. The family also expected to withdraw approximately $3.7 million in the second year. But what the family says it did not realize was that the schedule of payments and withdrawals also was backdated one year. According to the Benensons, this meant that they were supposed to pay around $18 million, then receive $3.7 million back shortly upon signing the contract. Instead, they only paid around $10.9 million and never withdrew the $3.7 million. The Benensons claim they did not know anything was amiss until June of 2001, when the Kreisbergs allegedly asked for an additional $577,616. Relations between the Benensons and the defendants soon unraveled. Who Understood What? One of the steps the Benensons took was to hire Richard Harris, a New Jersey insurance agent, as a consultant. "From a life insurance point of view, in terms of all the twists and turns, this is rocket science," says Harris of the intricate deal. He alleges that the family never received all of the materials they were entitled to. Without that paperwork, he says, there is no way the Benensons could have fully understood the policy they had purchased. Harris also concludes that if the family now takes out the $3.7 million, the policy will be left underfunded and will lapse within the next 10 years, before Jane's 93rd birthday. These numbers are somewhat inexact, says Harris. Benenson attorney Virginia Miller calculates that the policy would lapse even earlier, before Jane's 91st birthday. Regardless, Harris and Miller both say that it is their understanding that the family did not realize they had to pay two years' worth of premiums upon signing. Had this been clearer, the family might not have done the deal. "If they thought they had to put up $18 million up front instead of $11 million up front, they might not have gone ahead with transaction," says Harris. This is also where Blattmachr's representation of both the insurance agents and Benensons becomes problematic, say the Benensons' lawyers. As the agents' commission was dependent on the deal going through, they had a motive to see it close. That motive, they allege, created a potential conflict of interest that was not "fully disclosed" as early as it could have been. Miller says that Blattmachr did disclose the potential conflict of interest before the family signed the deal. But, she says, the Benensons did not agree in writing to waive the potential conflict of interest, as is required by legal ethics rules in California—where the lawsuit was filed and where William Benenson, trustee of the insurance trust, lives. Miller also claims that the Benensons did not fully understand the ramifications of the potential conflict. Yet another allegation in the complaint is that Blattmachr did not disclose his relationship with the Alaska Trust Company, whose president and CEO is Jonathan's brother, Douglas Blattmachr. Even so, courts looking at the Benenson situation might not view the potential conflict as problematic, say legal ethics experts. Malpractice claims frequently contain allegations that an attorney did not disclose a conflict of interest, says legal ethics scholar John Leubsdorf, a professor at Rutgers School of Law, Newark. But, adds Leubsdorf, disgruntled clients can't prove malpractice simply because there is a conflict of interest. There also has to be a problem with the legal services received and, if the lawyer provided good representation, the conflict will not in itself be grounds for a lawsuit. The Benensons' complaint lists a variety of other matters about which they contend they were misled. For example, the Benensons believed the agents' compensation would be about $2 million to $2.5 million, but now say that the agents and their broker together received more than $4.4 million. The legal complaint does not provide an explanation for the Benensons' mistaken belief about the fees, but Harris claims that the amount was too deeply buried in the fine print. Another, related allegation is that no one discussed with the Benensons the possibility of funding the deal with private placement life insurance. Harris says that commissions are usually much lower with private placement life insurance because they are separately negotiated. "Generally, when those things become negotiated," says Harris, "the numbers are hugely different." He estimates that the commission only would have been $600,000 with private placement. An Industry Watches For all of the allegations in the complaint, the one claim that is missing—an accusation that Blattmachr gave bad tax advice—is what industry observers are most interested in seeing litigated. Even in the pre-August 2002 heyday of the family reverse split dollar plan, tax and insurance experts were divided about whether it was a legitimate way of lessening taxes. Some think that Blattmachr might yet prevail should the IRS fight the tax breaks in court. But others remark that these types of aggressive tax-lessening policies were always a train wreck waiting to happen. "Highly paid people tempt clients with ways to circumvent the intent of the tax laws," says Joseph Belth, a professor emeritus of insurance at Indiana University. But, he says, purchasers of these aggressive policies frequently don't realize the ramifications of their plans. "In most policies issued for non-traditional products, there's a great deal of risk on the policy-holder," says Belth. "The whole nature of the risks assumed by a policy-holder are not made completely clear at the time of sale."

Looming effective date of new Bankruptcy Law dilemma for Airlines

The approaching effective date of the Bankruptcy Reform law puts major airlines contemplating bankruptcy in dilemma of whether to file or wait out the storm. The Bankruptcy Reform law not only hit consumer debtors hard; provisions in the code will require speedier plan confirmation, more restrictions on assuming commerical leases and hiring key executives. Also debtors in possession spend cash quickly on operating under chapter 11, including in Uniteds Case $1.4billion in one quarter. Mon, Aug. 15, 2005 Deal with mechanics might not keep Northwest out of Chapter 11 Associated Press MINNEAPOLIS - Looming right behind the big question of whether Northwest Airlines mechanics will strike this week is another one: Has the airline moved too late to avoid bankruptcy? Analysts are starting to wonder - even assuming Northwest gets the $1.1 billion in cuts it wants from its unions. Northwest lost more money in its last quarter alone than it proposes to save from mechanics each year. It faces hundreds of millions of dollars in pension payments next year. And jet fuel remains stubbornly expensive. "We think the risk of bankruptcy is too high to continue to hold the stock," Standard & Poors analyst James Corridore wrote in a research note advising investors to sell. He's not swayed by Northwest's $2.1 billion in cash. "They've got what seems like a pretty high amount of cash," he said an interview, "but a lot of that is dedicated to funding operating losses, or pending debt maturities." Most of the nation's older carriers are struggling. United Airlines and U.S. Airways are in Chapter 11. Northwest and Delta Air Lines have both said they may be forced into bankruptcy, too. Northwest has said it needs those worker pay cuts and changes in pension law to stay out of Chapter 11. Under the current law, it would need to contribute $800 million to its pension in 2006 and $1.7 billion in 2007. Airline consultant Alan Sbarra of San Francisco said bankruptcy is the quickest path toward a major restructuring. Northwest has tried to avoid that. "It seems very, very difficult to do, especially if you don't have the cooperation of labor," he said. Delta has also tried to avoid bankruptcy, "and they're finally admitting that they're going to have to look at bankruptcy," he said. "It's a last resort, but it's also the only option in a lot of ways these days." With bankruptcy, timing matters. The bankruptcy law becomes more restrictive on Oct. 17 - the new law will make it harder to pay bonuses to managers to keep them at the company, and will generally force companies to either exit bankruptcy or liquidate faster. Delta has declined to say whether those changes figure into its bankruptcy planning. Northwest chief executive Doug Steenland has acknowledged that it is one factor of many. Some employees have speculated that Northwest wants to file for bankruptcy so it can impose terms on union workers. But Steenland has said repeatedly that the airline loses more than it gains in bankruptcy. Bankruptcy isn't cheap. United Airlines parent UAL Corp. reported spending $1.4 billion on reorganization during its second quarter alone, including $602 million related to unloading its pensions on the federal government's pension insurer. "You start to hemorrhage money when you're in Chapter 11. So I think there's a lot of reason for Northwest not to file. I think those would outweigh any rush to file before the October changes," said Lowell Peterson, a bankruptcy expert with Meyer Suozzi English and Klein in New York.

Ky paen to "conservative" world heralds' wisdom

Former Council bluff resident now editor the the Kentuck Standard, Bardstwon posts the following paen to the "conservative" Omaha world Herald and the "sage" of Omaha Harold Andersen. Didnt suburban families in western Douglas county know they have to shoulder society's burdens, and not just their own in raising good families? They need to so poor disadvantaged kids, along with their meth dealer teachers can suck off the affluence of suburban school districts. As usual the voices of wisdom get to send their kids to private schools like Creighton Prep and Brownwell Talbot. Friday, August 12, 2005 4:12 PM EDT RON FILKINS THE KENTUCKY STANDARD -- 8/14/05 Mixing a bit of work with pleasure was in the heartlands last week, where some tempers are flaring, not unlike the situation we've had recently in Bardstown and Nelson County. Except it's a double load in Omaha. You took a bite of the first hot potato if you guessed one of the disputes is annexation. The second hot tater, wrapped in a jalapeno and drenched in hot sauce, is the big brother city school district wanting to swallow up affluent suburban school districts. Talk about angst; our magistrates would have to take a seat in the back of the pickup to the boys out there shucking corn. The first battle pits City of Omaha vs. the town of Elkhorn. The trial got underway two weeks ago and whatever the decision, the losing side is expected to appeal to the Nebraska Supreme Court. In a nutshell, Omaha wants to extend its tentacles to gobble up the town of Elkhorn, a community of about 8,000. Omaha's stated position is that it must have Elkhorn, so it doesn't block westward growth. In Nebraska, the smaller towns yield (obviously, not without a fight) to the metropolitan cities as long as the town has not reached a population of 10,000. Omaha Mayor Mike Fahey made his plans known in January. Elkhorn, to counter the assault by Omaha, has itself been annexing various subdivisions, trying to cross the magic 10,000 shield to where it could no longer be forcibly taken in. The trial is Omaha's biggest annexation battle since it took in the community of Millard in 1971. That case ended when the U.S. Supreme Court refused to hear it. This time around, both sides are loaded for bear. Turn up the heat by 20,000 BTUs. Invoking an 1891 law, the Omaha Public School System is seeking to absorb the affluent school systems of Ralston, Millard and Elkhorn. The 114-year-old law calls for the principle of "one city, one school district." The venerable retired publisher of the conservative powerhouse Omaha World-Herald, Harold W. Andersen, lines up in favor of the suburban districts coming under the fold of metro school system. As he noted in a recent column, Omaha school district leaders want the "residents of the entire city to share in serving the best interests of all the city's students, including the disadvantaged youngsters who are concentrated primarily in the Omaha public schools." He notes, in 1971 the Omaha system had 64,000 students as compared to today's enrollment of 46,500. Through the ensuing years, there was a great migration west to the new suburbs that someday may stretch to the capital city of Lincoln. Andersen wrote, "Some of the westward movement was described as 'white flight' to escape mandatory school busing from the Omaha district." Busing ended some years ago in Omaha. What's left in the inner city school district? More than 50 percent of the students come from low-income families. Nearly 7,000 students, Andersen detailed, were enrolled in special education classes and another 5,849 students were enrolled in English-as-a-second-language classes. "OPS officials say that socioeconomic problems reflected in OPS' enrollment are problems properly of concern to all residents of the city, who share the benefits of Omaha's economic, cultural and recreational resources without sharing in the problems associated with educating all of the children within the city." I grew up right across the river from Omaha, on the working man's west side of Council Bluffs, Iowa. I can remember back in 1958, riding in the rear seat of my dad's 1956 Chevy, to what was then near the very west outskirts of Omaha, the 7800 block of W. Dodge. Our mission was to view the handsome new building the company for which my sister would spend all 38 years of her working life was moving into. We shuddered at the thought of a 20-minute commute, one-way. Today, commerce and residential growth has expanded another two-fold beyond that point. The housing developments go on and on, in a huge swath west. Interstate highways and dizzying interchanges have led the way to covering fields, where straight rows of crops and fields with livestock once were omnipresent. Attending a social engagement on the far Westside Saturday evening, the OPS plan was a topic of discussion. Somewhat surprising to me was that several friends, all Republicans, who live in the affected areas are not in opposition to the OPS plan. For the most part, they see it as a natural evolution. It should be noted, their children are raised and out of the house. While it wasn't brought up, they probably would see their school tax rates go down, as the 'burb school districts tax heavily to support their schools of plenty -- nearly three times what we pay in Bardstown, for example. In the case of OPS, then, Andersen sees the good of the whole as superseding the good of some. I feel the same way about our annexation puzzle right here at home. The Omaha World-Herald helps set the agenda, and often helps determine the outcomes, for Omaha and, indeed, the state of Nebraska. Warren Buffet may very well have earned the title of the Sage of Omaha, but Andersen's has long been an esteemed voice of reason. In situations where emotions run high, the ability to reason, logically and with intelligence, is often in short supply.

Thuston County residents oppose Gov's deputizing Tribal Police

Governor OKs sharing legal duties with tribes August 13, 2005 WORLD-HERALD Gov. Dave Heineman signed agreements Friday designed to clarify law enforcement powers on the Omaha and Winnebago Indian reservations, despite strong opposition in Thurston County and a threatened lawsuit.The agreements allow tribal police, with proper training, to enforce state laws, primarily traffic laws, and permit state troopers to enforce tribal offenses. The governor cited endorsements from the Attorney General and State Patrol in signing the cross-deputization agreements. He said complex jurisdictional issues on the reservations had left some crimes unpunished. "Not everyone in Thurston County recognizes the benefit of this agreement," Heineman said. "But my first responsibility is public safety." In Thurston County, the sheriff, county attorney and county board all opposed the idea. So did nearly 400 people attending a meeting with state officials last month in Pender, Neb. The opposition was pointed at the Omaha Tribal Police, a force opponents said is unprofessional and practices selective law enforcement as influenced by the tribal council. "I'm really disappointed that they wouldn't consider any other alternatives," said Thurston County Board Chairwoman Teri Lamplot. She said she will discuss filing a lawsuit over the issue with the county attorney. "That's probably the only thing that will solve this thing," Lamplot said. Thurston County Sheriff Chuck Obermeyer was harsher. Allowing politicians to get involved in law enforcement issues, he said, "was like having a dentist take your appendix out.""Who are we going to cross-deputize next, the Girl Scouts?" Obermeyer said. State officials said only tribal officers with proper state or federal training would be cross-deputized, allowing them to write tickets for state courts. Nebraska, pursuant to Public Law 280, assumed civil and criminal jurisdiction over Nebraska reservations in 1953. In 1969, the U.S. government granted the OmahaTribe retrocession on criminal jurisdiction. See 84-168 RRS Neb. {governors authority to enter retrocession agreements} In 1986, the assistant U.S. secretary forIndian affairs accepted retrocession to the United States of all criminal jurisdictionexercised by the state over the Winnebago Reservation. The 1986 Nebraska Legislature offered the retrocession. By Tribal Resolution No. 86-37, the Winnebago Tribe ofNebraska acknowledged and endorsed the offer of the state to retrocede criminaljurisdiction to the United States.Nebraska Blue Book Four Winnebago Tribe officers currently qualify. Friday's agreement renews a previous cross-deputization pact that has prompted no complaints.It was unclear whether any Omaha Tribal officers currently qualify. State officials said there were none, while a tribal official said there might be a handful. Attorney General Jon Bruning said the "heart" of the agreement is clarifying that state troopers have jurisdiction on tribal land. Indian reservations have a unique tangle of legal jurisdictions, involving federal, state, county and tribal police. Jurisdiction varies depending on who is involved and the type of crime.Disputes and confusion have arisen in recent weeks. In two recent cases, state troopers were waived off by tribal officials in responding to serious traffic accidents. One case involved an attempted motor vehicle homicide, which is being handled in tribal court. The driver, allegedly drunk, was a nephew of Omaha Tribal Chairman Orville Cayou.The family of the victim has accused Cayou of meddling in the case, which he denies. The family maintains the driver should be prosecuted in federal or state court, where potential penalties are harsher. Officials said jurisdictional issues raised in that case are not addressed by the new agreement. That dispute centers on a separate issue: whether roads within the Village of Macy are public or private. Cayou said the cross-deputization agreement was long overdue. "We're going to do everything on our part to make it work," he said.

Ameritrade faces class action suits for delayed trades

Omaha-based Online Broker Ameritrade Is Being Accused of Delaying Orders to Buy and Sell Stock The Associated Press Aug. 10, 2005 - Omaha Nebraska-basedOnline broker Ameritrade is being accused of costing investors $100 million by delaying orders to buy and sell stock. A class-action lawsuit filed in U.S. District Court alleges that Omaha-based Ameritrade Holding Corp. in one instance took more than an hour to execute a trade, costing an investor more than $26,000. "Some of the trades ... were delayed hours," said Plaintiff's attorney Max Folkenflik, who filed the lawsuit for Telco Group, Inc., a telecommunications company based in Flushing, N.Y., on behalf of all Ameritrade customers since April 2000. Ameritrade spokeswoman Kim Hillyer declined comment on the lawsuit. Folkenflik said Ameritrade advertised that the median time to execute all trades from August 2003 to January 2004 was less than three seconds. In one example listed in the lawsuit, Telco placed an order to buy 175,000 shares on the Nasdaq Stock Market on Jan. 7, 2004. The high price when the trade order was received was $37.54 per share, while the low price was $37.53. The transaction was received at approximately 3:05 p.m. but was not executed until 4:20 p.m., when the shares were trading at $37.68 per share, according to the lawsuit. "As a result of Ameritrade's failure to process the trade promptly and at the best possible price under the circumstances ... Telco lost $26,250," according to the lawsuit.Another class-action lawsuit against Ameritrade is pending. That lawsuit was filed by David Zannini of Angier, N.C., and three other Ameritrade customers who said the glitches in Ameritrade's online system were caused by "antiquated and inadequate systems and an insufficient number of employees" to help customers make trades. The lawsuit claims Ameritrade spent its money on recruiting new subscribers rather than fixing the problems.That action is pending in Douglas County District Court. The dismissal of another class-action lawsuit against Ameritrade is on appeal to the Nebraska Court of Appeals.That lawsuit was filed by Mitchell Green of Los Angeles, who agreed in 1998 to pay $20 a month for an Ameritrade service to get real-time information on stocks and options. His lawsuit, however, alleged that the information on the options agreements to buy or sell a stock at a certain time or price was "stale."Douglas County District Judge Gary Randall recently ruled that Ameritrade's promise to make "real time" trades did not amount to a contract with its customers. Founded by Joe Ricketts of Omaha, Ameritrade rapidly expanded in 1997 when it began offering rates as low as $8 a trade. Ameritrade recently signed a deal to acquire rival TD Waterhouse USA from TD Bank Financial Group for about $3 billion. The deal would make Ameritrade the largest online broker at an estimated 239,000 average daily client trades. Last year, Ameritrade had net income of $272.3 million, or 64 cents a share on $880.1 million in revenue.Shares in the company rose 9 cents to $20.06 in afternoon trading on the Nasdaq Stock Market.On The NetAmeritrade: http://www.ameritrade.com U.S. District Court of Nebraska: http://www.ned.uscourts.gov/

August 13, 2005 Nebraska Supreme Court rules in Homeowners' favor in case of titles forfeited to foreclosure avoidance scheme; adopts "lodestar" calculation for prevailing parties attorney fees and holds prior bankruptcy litigation was not res judicata as to this litigation. WORLD-HERALD STAFF WRITER Eicher v. Mid America Fin. Invest. Corp., 270 Neb. 370 August 12, 2005. ##S-03-1257 & S-04-1184. The Nebraska Supreme Court on Friday sided with former Omaha homeowners who said they were tricked into signing over the titles to their homes by a local company claiming to offer foreclosure assistance. In a victory for 10 Omaha households - 13 individuals in all - the Supreme Court upheld a 2003 Douglas County District Court judgment totaling about $1 million against Mid-America Financial Investment Corp., 3035 Harney St.The company must give back the titles to homes still occupied by six of the 10 households, pay damages to all 10 - including two left out of the 2003 judgment - and pay attorney fees.The total amount Mid-America will owe is expected to increase from the previous judgment, which included $169,000 in damages in addition to the house titles and $377,000 in attorney fees. Douglas County District Court Judge Peter Bataillon had sided with plaintiffs who testified that Mid-America sought them out, offered them loans to cover the amount of their home loan deficiency and during rushed, hectic meetings had them sign what they later discovered were purchase agreements. The State Supreme Court upheld Bataillon's ruling on the plaintiff's complaint under Consumer Protection Act (hereinafter CPA), Neb. Rev. Stat. §§ 59-1601 to 59-1622 (Reissue 1998 & Cum. Supp. 2000), and the Uniform Deceptive Trade Practices Act (hereinafter UDTPA), Neb. Rev. Stat. §§ 87-301 to 87-306 (Reissue 1999)., and refused Mid-America's argument that plaintiffs could have read the terms for themselves in the transaction documents. The Supreme Court held that joinder of the similar claims was proper and not prejudicial Neb. Rev. Stat.§ 25-705 (Cum. Supp. 2004)& § 25-311 (Cum. Supp. 2004), "The general rule that one who fails to read a contract cannot avoid the effect of signing it applies only in the absence of fraud. See, Mayer v. Howard, 220 Neb. 328, 370 N.W.2d 93 (1985); Day v. Kolar, 216 Neb. 47, 341 N.W.2d 598 (1983)."Because the district court specifically found that each of the plaintiffs was fraudulently induced to sign what were misrepresented as loan documents," wrote Judge Kenneth Stephan, "the general rule binding a party to a signed contract does not apply." Mid-America remains an active company, run principally by Scott Bloemer and Elaina Hollingshead.The Supreme Court allows the "lodestar " method to calculate an attorney fee award: this court has never specifically approved the “lodestar multiplier” approach to calculating court-ordered attorney fees. However, defendants’ brief does not include any argument as to why we should not do so, and plaintiffs provide no reasons why we should. Accordingly, we apply the standards articulated in In re Guardianship & Conservatorship of Donley, supra, and Schirber, supra, in our review of whether the fee award constitutes an abuse of discretion. Finally the Supreme Court held that one of the pLianitff's adversary proceedings regarding the defendant in bankruptcy court were not res judicata nor collaterally estopping this subsequent litigation " "The issue addressed by the bankruptcy court was whether Street’s transfer of his property to Mid America was involuntary. Although some of the evidence related to whether there was collusion involved, the issue of whether the transfer was involuntary for purposes of standing under the federal Bankruptcy Act does not equate with the issue of whether the transfer was induced by fraudulent representations on the part of Mid America, Bloemer, or Hollingshead. That precise issue was neither presented nor resolved in the bankruptcy litigation. Accordingly, the doctrine of collateral estoppel is inapplicable. Because Street’s claim in this case was not barred by the judgment in the prior bankruptcy action under the doctrines of either res judicata or collateral estoppel, the district court erred in granting the motion for partial summary judgment dismissing his claim." The two also run another property company at the same address called Bel Fury. Lawsuits alleging fraud are pending against Bel Fury in U.S. District Court and Douglas County District Court. A Sarpy County judge had ruled in Mid\America's favor in the case of similar actions against it from distressed homeowners.

NESCT to hear appeal of Lincoln City "impact fees"

High court will review legality of 'impact fees' LINCOLN (AP) - Cities and developers across the state are watching a Nebraska Supreme Court case that will decide the legality of Lincoln's so-called "impact fees" on new homes.S-04-0782, Home Builders Association of Lincoln,et al v. The City of Lincoln, The high court will hear a case next month brought by the Home Builders Association of Lincoln and Hartland Homes Inc., which sued after the fees were adopted by the City Council in 2003. People buying new, single-family homes in Lincoln are paying at least $2,800 in impact fees, which can be used to help pay for things like streets and sewers elsewhere in the city. The builders argue that the fees are not authorized by the Legislature and amount to an illegal tax. Lancaster County District Judge Paul Merritt Jr. ruled that Lincoln lacked the power to collect a fee to pay for growth but said that its city charter gave it the right to collect an impact tax similar to the occupation tax charged for vending machines. The builders' lawyer, William Blake, cites a 1980 court case in which Lincoln charged developers a fee as a condition for having a new subdivision approved so nearby arterial streets could be paved. In that case, the high court ruled the fee was illegal because the arterial streets were general improvements and there was no local benefit that could be specially assessed against the subdivision. Blake said the impact fees are merely a way to generate revenue. Chief Assistant City Attorney Rick Peo cites a case decided by the Montana Supreme Court that said impact fees imposed only upon new users of expanded water and wastewater services in Billings was "a valid exercise" of a city's home rule power. The Montana court distinguished taxes and special assessments from service charges. "A tax is levied for the general public good, and without special regard to the benefit conferred upon the individual or property," the court said. "A special assessment is levied to force payment for benefit equal in value to the amount. "The fee is imposed for the benefit of new users of water and sewer facilities, whose use of these systems gives rise to the need for the additional water and sewer capacity," the court said

Follow up: Sarpy County Dist Court dismisses NRD lakes project

Follow up Judge abruptly dismisses lawsuit seeking to prevent Papio NRD's project to develop Sarpy dams with private developers WORLD-HERALD STAFF WRITER A partnership between private developers and the Papio-Missouri River Natural Resources District to build two dams near Papillion does not violate the law, Sarpy County judge Thompson ruled today. A group of landowners in Washington County sued the district to stop the project, alleging that the district had no authority to enter such agreements and that the proposed Shadow Lake and Midlands dams would benefit the developers more than the public.District Judge George Thompson abruptly ended the trial today after three days of testimony, surprising attorneys for the NRD who had planned to continue their case. Thompson ruled that a cooperative agreement among the district, the City of Papillion and the developers of the Shadow Lake Towne Center and Shadow Lake subdivision is valid. He dismissed the lawsuit, filed by five Washington County couples. The development agreement calls for the NRD to spend $3.3 million to construct the dams. In recent years, NRD officials have turned to partnerships as a way to save money as the cost of land in the Papillion Creek watershed is pushed up by development pressure. Thompson said an important factor in the case was the City of Papillion's rejection of dry detention basins, which had earlier been proposed as a solution to capture runoff across the shopping center site at 72nd Street and Nebraska Highway 370. That rejection forced developers and the NRD to consider other flood control options, the judge said. Their solution, building dams along Midlands Creek, was one in which "all the parties gave a little bit," he said. Bill Allen, developer of the 430-acre Shadow Lake housing project at 72nd Street and Schram Road, said he was pleased by the order. "We've been confident from day one that the NRD was acting in accordance with the law," Allen said. During the trial, Allen's attorney suggested that the landowners sued to stop the Shadow Lake project in order to set a precedent preventing a proposed large lake project that would flood their land in Washington County. The same plaintiffs sued to stop a public-private dam project at 192nd and West Dodge Road. Kevin McManaman, an attorney representing the landowners, said he may comment on the ruling later. During the trial, Lee Becker, a former Nebraska state hydrologist hired by the landowners for $200 an hour as an expert witness, testified that the two dams help contain runoff from the developers' property. But Becker said the dams offer only "minimal" flood control after Midlands Creek goes under Nebraska Highway 370 and empties into the west branch of the Papillion Creek, Becker said. The project does nothing to control flooding on the West Branch of Midlands Creek, which joins with the main creek downstream of the dams, he said. Marlin Petermann, assistant general manager of the NRD, disagreed with Becker's conclusion. He said the dams would create 487 acre-feet of water storage and reduce the flow of floodwaters off the site by 25 percent. The Shadow Lake dams would provide flood control, improve water quality, control erosion and provide recreation, he said.

WC Court on remand for WC Court rule 11 error was free to increase disability awardMeredith v. Schwarck Quarries, 13 Neb. App. 765 Filed August 9, 2005. No. A-03-1136. Worker comp case went back to trial court when appeals court found trial judge's decision did not comply with WCCrule 11 (reasoned decisions). On remand the court increased permanent disability from 44% to perm total disability. Although the review panel found the trial court exceeded its authority on remand when it changed its findings on perm. disability the appeals court disagrees and reinstates the trial court ruling for perm total disability: "When a cause is remanded with specific directions, the court to which the mandate is directed has no power to do anything but to obey the mandate. The order of the appellate court is conclusive on the parties, and no judgment or order different from, or in addition to, that directed by the appellate court can be entered by the trial court. However the remand to the trial court in this case was not an instruction to enter a final judgment. Rather, our remand included instructions for the trial court to “enter an order which complies with the requirements of rule 11 (reasoned decisions), based on the whole record available to the court when the first award was entered.”Where a workers’ compensation award is reversed on the basis that the award fails to comply with Workers’ Comp. Ct. R. of Proc. 11 (2002), the order is effectively rendered a nullity. On a subsequent appeal, the issue is not whether the order on remand is inconsistent with the original award, but, rather, whether it is supported by the evidence under the applicable standard of review. "The trial court entered an order which, if the evidence supports the findings in that order and the order sets forth a reasoned decision, complies with rule 11. Our order did not prevent the trial court from modifying its prior order if the court determined that the evidence as it already existed on the record supported a different determination of disability."

8th Circ denies stay of mandate in Iowa sex offender challenge

Iowa sex offenders forced to move away from residences too close to schools or daycare facilities lose motion to stay mandate in 8th Cir. pending cert pet to SCOTUS. 08/08/05 John Doe v. Tom Miller U.S. Court of Appeals Case No. 04-1568 Southern District of Iowa Doe V. Miller, 405 F.3d 700 (8th Cir. 2005), rejects appellants' constitutional challenges to the residency restrictions of Iowa Code Sec. 692A.2A. Appellant's Motion to Stay the Issuance of Mandate pending the filing of petition for certiorari is denied. Divided panel decision and divided panel ruling on enbanc review insufficient to stay mandate; not very likely that SCOTUS would grant certpet. Forcing sex offenders to move not irreparable harm.

NESCt to hear appeal of Internet pedophile sting

Appeal claims Omahan was set up in sex sting LINCOLN (AP) - Omaha man found guilty of internet child enticement in Douglas County District Court has his appeal on the call of the Nebraska Supreme Court claiming the police entrapped him. The Nebraska Supreme Court will hear an appeal Sept. 9. Ronald Cody was convicted after chatting online with a 14-year-old "girl" in 2003 who turned out to be a State Patrol officer posing as a teen in an Internet chat room.S-04-1042, State v. Ronald W. Cody (Appellant) After more than an hour of conversation laced with sexually explicit language, they agreed to meet at a library, where Cody was arrested.Cody was convicted of conspiracy to commit first-degree sexual assault on a child. Douglas County District Judge Gregory Schatz sentenced Cody to 30 days in jail and three years of probation, including 120 days of electronic monitoring. He also was required to register with the State Patrol as a sex offender.Cody's lawyers argue that their client was entrapped - meaning that he was enticed into committing a crime that he otherwise would not commit. A 2002 ruling by the high court that said Omaha police broke the law by placing false magazine advertisements and exchanging letters with a man who was arrested in a pedophile sting. State v. Canaday, 263 Neb. 566 Filed March 29, 2002. No. S-01-150. In that case, Ronald Canaday was arrested after responding to an ad in a swingers' magazine placed by Omaha police officers in 1998 that said: "Lisa . . . Single mom looking for right man who likes kids and understands needs!" Assistant Attorney General Kevin Slimp said Cody's trial judge was correct to rule that although Cody was induced to commit the conspiracy, he had been predisposed to commit the crime before talking with the undercover officer. Nebraska lawmakers passed a bill in 2004 that created the crime of enticing a child using a computer.28-320.02 Sexual assault; use of computer; prohibited acts; penalties. also applies to make defendants attempting to entice undercover officers guilty of the crime: "No person shall knowingly solicit,coax, entice, or lure (a) a child sixteen years of age or younger or (b) a peace officer who is believed by such person to be a child sixteen years of age or younger.." Recently the WD Mo Federal Court set aside the conviction and directed acquittal of an internet stalker uner 18 USC 2422 on the technicality that he was actually stalking an undercover officer, something the federal law does not explicitly addressed. Other federal circuits (US v Meeks, 9th Circ 2005) however had upheld convictions (the 10th and 11th Circuits) even though the defendants had been stalking undercover agents.

Neb. GOP candidates attack Kelo

Saturday August 6, 2005 Osborne rings in on eminent domain WORLD-HERALD Republican gubernatorial candidate Tom Osborne called on state lawmakers Friday to act to protect private property owners from what he called an abusive use of the power of eminent domain.Osborne said that in light of a controversial U.S. Supreme Court decision in June, Kelo, which allows a city to acquire privately owned land and transfer it to a commercial developer, lawmakers should consider ways to protect Nebraska property owners.The 3rd District congressman and former University of Nebraska football coach is one of three candidates seeking Nebraska's 2006 GOP gubernatorial nomination. The others are Gov. Dave Heineman and Omaha businessman Dave Nabity.Nabity said he would be willing to study any proposal Osborne made to address eminent domain. He said that he, too, would like to see "safeguards put in place for property owners."Heineman said through spokesman Aaron Sanderford that he and his staff have already begun working with lawmakers to explore possible changes to Nebraska laws in light of the June ruling. He said Heineman believes in the "protection of private property rights."Osborne noted that he has supported a bill in Congress to prohibit use of federal housing and urban development funds to enforce the Supreme Court ruling. He also noted that a constitutional amendment has been drafted in Massachusetts to ban land seizures for commercial purposes.

LB117 Meth enforcement may violate HIPAA

Log Books for purchase of meth ingredients may violate HIPPAA and increase prison population Lincoln Journal Star Would a requirement that people sign log books when buying flu and cold medicines used by meth makers impinge on privacy rights? Even purchasing over the counter medications could constitute "protected health information." Should all medicine containing pseudoephedrine go behind the counter, or just pill forms?Not addressed by the Legislature, however, was a question that has deep financial ramifications: Will stiffer penalties for meth crimes called for in LB117 2005 Legislative Session quicken the day the state will have to build a new prison? Early estimates done by the state Department of Correctional Services indicate that is a possible result of the bill that carried the promotional flags of two of the state's top offices, those of Gov. Dave Heineman and Attorney General Jon Bruning, on the path to approval.Beginning in early September, most types of medicine containing pseudoephedrine, one of the ingredients that can be used to make meth, will be kept behind store counters where only those 18 and older will be able to buy them."Based on our preliminary estimates, we feel like (LB117) may have a long-running impact" on state prison populations, said Corrections Department spokesman Steve King. Most of the roughly 400 nonviolent drug offenders that could have been diverted from prison and into treatment programs each year under a reform plan devised by district court judges and the state Community Corrections Council could land behind bars because of the tougher meth penalties.The state prison population could double by 2025, with LB117 as the primary reason.

* The inmate population could reach 140 percent of the prison system's capacity by next year instead of 2010 even without LB117 because sentencing guidelines central to drug-crime reforms are not yet in place. LB117, however, would make staying below the mark more difficult.And the mark has political importance: State statute says once the prison population reaches 140 percent, the governor can declare an emergency and may begin putting inmates on parole until the population is pared to 125 percent of capacity.Corrections officials won't go as far as saying they will have to ask for money to build a prison within the next year or two, but they say the possible consequences of LB117 demand attention — and soon."We're sitting at 134 percent of capacity right now," King said, "and certainly we are aware we are overcrowded and that if we continue to expand growth, and growth is not abated — and passage of 117 only adds to that growth — with all of that ... the department is going to have to seriously look at issues of capacity."But a state senator who chairs a council that has worked for 1½ years to build a system for diverting nonviolent drug offenders from prison into treatment programs said it's too early to sound an alarm. Sen. Kermit Brashear of Omaha said the bill does not rob prosecutors of the discretion to determine whether meth arrestees should be charged as users instead of dealers and manufacturers. The latter two are the target of LB117."Only if you take everything in the worst-case scenario — no prosecutorial discretion, etcetera, etcetera," will LB117 severely spike the prison population, he said."We'll have to wait and see how the prosecutorial process and convictions go."For some state officials, the current prison population and approach to drug crimes represented by LB117 recalls the days preceding the 1997 legislative session.It was a landmark year for state corrections. Legislators authorized construction of a $70 million prison in Tecumseh, and, not coincidentally, also began to embrace the idea of seeking alternatives to sending nonviolent offenders to prison to avoid a multimillion-dollar repeat.Planted was a seed that would grow into the Community Corrections Council, which is chaired by Brashear. He has said continuing to fill prisons with nonviolent drug offenders could "break the bank," by forcing construction of another prison. A growing recognition that treatment, not hard time, was a better rehabilitation tool for drug offenders complemented the desire to avoid more prison building and provided the Community Corrections Council with a foundation for its reforms.Some on the council say ideas embodied in LB117 represent a reversal of sorts.

"The philosophy of incarceration being a significant solution to the problem is obviously contrary to community corrections being a solution," said John Icenogle, district court judge for Buffalo and Hall counties. "But the Legislature has said this problem is so severe they don't trust it to community corrections, and we have to accept that."

Lancaster County District Court Judge Karen Flowers, also on the council, said LB117 appears to be the antithesis of the movement toward community corrections but, like Brashear, said law enforcement will have discretion when making charges and it's too early to gauge the bill's impact.

One reason the bill could boost prison populations is its effect of weakening a centerpiece of the reforms endorsed by the council: proposed new sentencing guidelines that would urge judges to place nonviolent drug offenders without extensive criminal histories into treatment programs and probation.

The Corrections Department estimated the guidelines could divert 400 people from prison annually, equal to about 10 percent of the total prison population. The guidelines have not yet been approved by the Nebraska Supreme Court, which is awaiting estimates from the State Probation Administration.

Pushing to have stiffer penalties in the bill was Attorney General Bruning. New penalties in LB117 include mandatory-minimum prison sentences for crimes that previously could have landed offenders on parole — or, under the proposed sentencing guidelines, in treatment programs. Where possession of 10 grams of meth with the intent to sell previously carried no mandatory prison sentence, it now prompts a mandatory sentence of at least three year, one year more than the current, average prison stay of a meth offender.

In the mid-range, getting caught with between 28 grams and 99 grams carried a possible sentence of up to 20 years, but no mandatory minimum. Now, meth dealers convicted of selling amounts in that range must be locked away for at least five years.

Bruning, who was on vacation and unavailable for comment, according to his staff, released a written statement: "LB117 brings the penalties for possession of methamphetamine equal to the penalties for possession of heroin and cocaine. Prior to this bill's passage, an individual who possessed more than a pound of meth would be eligible for the same penalty as someone who possessed only 28 grams of cocaine ..."

"By equalizing the penalties for possession, we are better equipped to go after the manufacturers and traffickers ..."

That's an antiquated approach to the drug problem, said Sen. Dwite Pedersen of Elkhorn, a substance abuse counselor who speculated that prison populations didn't arise as an issue during debate on LB117 because there was a desire to get tough, quick, on meth.

"People just didn't take long enough to look at it," he said. "And the people that wanted it pushed very hard without looking at the consequences.

"The whole thing with the meth bill was this ‘get tough on crime' message coming down from the governor's office and State Patrol."

Heineman said through spokesman Aaron Sanderford that LB117's effect on the prison population was considered long before its passage. If the bill has the desired effect of decreasing the manufacture of meth in the state, Heineman said, it could cut the number of meth-related arrests, reducing the number of people who land in jail on meth charges.

The bill should not, he added, extend more punishment to small-time meth users.

Like state legislators who approved the bill, the governor says it's time to play hardball with meth offenders to keep the public safe.

"I'm not going to lose a moment's sleep because violent drug dealers and manufacturers will spend a little longer behind bars."

Reach Nate Jenkins at 473-7223 or njenkins@journalstar.com.

Meth lab numbers

A new bill that stiffens penalties on methamphetamine dealers and manufacturers is kicking in at a time when the number of meth labs in the state appears to be declining.

Number of labs:

2001: 222

2002: 361

2003: 245

2004: 225

2005 (so far): 106

CPA applicant with felony record wins license from NESCT

Due process required Accountants' Board to specify character/fitness issues applied to applicant who met statutory standards Troshynski v. Nebraska State Bd. of Pub. Accountancy,270 Neb. 347 Filed August 5, 2005. No. S-04-510. The Nebraska State Board of Public Accountancy denied the Plaintiff his CPA designation because he had a criminal record from 1990, namely conspiracy to distribute cocaine. The Plaintiff appealed the Board's denial to the Lancaster County district court where District Judge Mcginn reversed the Board's decision. The Board argues to the Supremes that § 1-114 RRS Neb.(Cum. Supp. 2004) allows it discretion to refuse a certificate eventhough an applicant meets the statute’s enumerated requirements. NESCT holds: although the statute would allow the Board rulemaking ability to establish character and fitness standards, The Board could not deny the Plaintiff his CPA designation because it did not instiute such standards; district court affirmed. "The Public Accountancy Act is codified at Neb. Rev. Stat. §§ 1-105 to 1-171 (Reissue 1997 & Cum. Supp. 2004) and provides for the creation of the Board in § 1-107." "the Board is authorized to “adopt and promulgate rules and regulations of professional conduct appropriate to establish and maintain a high standard of integrity and dignity in the profession of public accountancy.” § 1-112" " § 1-114(2) provides:...the board shall issue a certificate of certified public accountant to any person...(b) who has passed a written examination in accounting, auditing, and such other related subjects as the board determines to be appropriate." "we hold that the act implicitly permits the Board to use its rulemaking authority under § 1-112 to promulgate standards and procedures whereby the character and fitness of an applicant for initial certification may be considered by the Board in determining whether the applicant is a qualified person under § 1-105.01." However " (The Boards regulations) have no rules pertaining to character and fitness standards or procedures applicable to initial certification." "Because the Board had not established character and fitness standards and procedures through the proper exercise of its rulemaking authority, its attempt to do so on an ad hoc basis resulted in a denial of Troshynski’s right to due process." NESCT distinguishes result of this case from Bartlett v. State Real Estate Commission, 188 Neb. 828, 199 N.W.2d 709 (1972) bad character/fitness could prevent licensing since, applicants had due process notice that this would be an issue.