2nd Circuit People and Events News - U.S. Second Circuit
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Before there was Enron, there was Cendant. Cendant, a travel and real estate company, cooked its books for 12 years, in one of the largest accounting frauds ever. When the fraud was discovered, Cendant's stock crashed, with investors losing $19 billion in a single day -- the largest tumble on record, until Enron came around.

It took three trials and over eight years for Walter Forbes, former Cendant chairman, to be convicted of securities fraud for his role in the fraud. He was sentenced to 12 years and ordered to pay $3.275 billion in restitution -- again, the largest restitution award ever, until Bernie Maddof came around. 

Forbes won't be getting a fourth trial, as the Second Circuit on Tuesday rejected his request to be retried because of newly discovered evidence. Not only does the case keep Forbes locked up, but it adds a new layer to the Second Circuit's treatment of newly discovered evidence. While known but physically unavailable evidence may be considered newly discovered, that which was withheld because of the Fifth Amendment will not.

Four years after an FBI dragnet brought down her husband, Arlene Drimal's lawsuit against agents who listened in to her privileged conversations with her husband has been dismissed. According to the Second Circuit, Drimal's allegations of improper wiretapping failed to assert sufficient facts under Iqbal and Twombly.

Drimal's husband, Craig Drimal, pleaded guilty to securities fraud in connection with the collapse of the Galleon hedge fund and its founder, Raj Rajaratnam, whose insider trading landed him one of the longest white collar criminal sentences ever. The case against Mr. Drimal and Rajartnam relied heavily on wiretaps.

More than 22 years ago, environmental advocates accused Texaco, later acquired by Chevron, of polluting the Amazonian rainforest homeland of 30,000 Ecuadorians. Since then, the controversy has produced reams of media coverage, a well-received documentary, and a judgment of nearly $9 billion against Chevron.

It also produced a three hundred page court opinion finding that the billion dollar judgment to be based on fraudulent evidence, bribery and deceit -- and preventing enforcement of the judgment under an anti-racketeering statute often used for mobsters, not environmental lawyers.

Figure Skater Oksana Baiul Loses Defamation Suit (Again)

Okasana Baiul became famous after she beat both Nancy Kerrigan and Tonya Harding to win the gold medal in figure skating at the infamous 1994 winter Olympic games. Then she fell into alcoholism, resulting in a 1997 car accident.

She revitalized herself, however, and joined season 13 of "The Apprentice." She's also the plaintiff in a defamation suit filed against Disson Skating and NBC, where she claimed Disson and NBC promoted her appearance at a skating event she was actually never supposed to appear at, then made statements creating the impression (she says) that she failed to show up for that appearance. The Second Circuit last week upheld a district court's dismissal of her claim, in which Brian Boitano makes a special guest appearance.

Arne Svenson, a visual artist, created a series of photographs, entitled "The Neighbors," by using a telephoto lens to photograph the residents of the building across the street from him. His photos capture people at mundane and intimate moments like napping on a couch or scrubbing a floor. The neighbors, who did not know they were being photographed in their homes and did not consent to having their images displayed, sued, alleging the works violated their privacy rights.

A New York appellate court sided with the artist last Friday, finding that the artistic expression is constitutionally protected and exempt from the state's privacy law.

2nd Cir. Limits Madoff Trustee's Clawback Powers

Bernie Madoff just won't stop popping up everywhere. As you'll recall, the disgraced investor was sentenced to 150 years in prison for defrauding clients out of about $18 billion in a Ponzi scheme that lasted almost 20 years.

What remained of Madoff's company was placed under the control of a trustee, Jean Luc Irving H. Picard. Picard's job is to recover as much as he can, however he can, and attempt to compensate investors who lost money.

Faster than you can say "engage," customers who profited on the scheme decided they wanted to keep those profits.

Michael Lewis Didn't Defame Wing Chau in 'The Big Short': 2nd Cir.

Michael Lewis' nonfiction book The Big Short, published in 2011, chronicled the 2008 financial crisis as seen through the eyes of some of the people involved in it, including the hedge fund managers who "shorted" (bet against) the market.

In one chapter of the book, Steven Eisman, one of Lewis' sources, meets Wing Chau, the owner of an investment firm that managed collateralized debt obligations (CDOs). CDOs were investments comprised of portions of thousands of subprime mortgages; they were a key vector for the financial collapse.

Loretta Lynch, N.Y. Prosecutor, Nominated for Attorney General

When Eric Holder announced last month that he was done, finished, outta here, everyone wondered who the next Attorney General of the United States would be.

And they also wondered how President Obama would be able to push through someone who was as tough as Holder was on issues that -- well, let's say issues that the new Senate majority might not want the new AG to be investigating so much.

Well, wonder no more. President Obama has confirmed the rumors, nominating U.S. Attorney Loretta Lynch to the post. If confirmed, Lynch would be the second woman, the second African American, and the first African American woman to hold the post.

2nd Cir. Allows JPMorgan Employee's Whistleblower Suit to Proceed

In a nonprecedential yet significant order, a panel of the Second Circuit vacated the district court's grant of summary judgment in Sharkey v. J.P. Morgan Chase and remanded for further proceedings.

Jennifer Sharkey was a manager in the Private Wealth Management division of JPMorgan Chase & Co. Part of her job involved assessing client risk. One client in particular seemed fishy to her: She was unsure where his money was coming from, the client had a history of having millions of dollars go missing, and he didn't always provide the information she asked for.

Arab Bank Found Liable for Supporting Terrorism

Following two days of deliberations, a federal jury in Brooklyn found the Jordan-based Arab Bank liable for a series of suicide bombings in Israel and Palestine in the early 2000s.

Witnesses testified that not only did Hamas and other alleged terrorist organizations, like the Saudi Committee for the support of the Intifada al-Quds, use Arab Bank to transfer money to the families of suicide bombers, but Arab Bank knew that this was going on.