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Going to Jail Lea W. Fastow, the wife of former Enron Corp. chief financial officer Andrew Fastow, pleaded guilty on May 6 to one misdemeanor count of filing a false tax return and was sentenced to the maximum of 12 months in federal prison and one year of supervised release. U.S. District Judge David Hittnerof Houston rejected a plea bargain Fastow’s lawyer, Houston criminal defense attorney Mike DeGeurin, negotiated with the Enron Task Force calling for a sentence of five months in prison and five months of home confinement. At the request of prosecutors, Hittner dismissed a six-count felony indictment against Fastow that included charges of wire fraud and money laundering. Fastow told Hittner she made “errors in judgment” and said she could not undo the past. Following the sentencing hearing, DeGeurin expressed disappointment that Hittner did not follow the terms of the plea deal. The sentence is “not appropriate and it’s not fair,” DeGeurin, of Foreman, DeGeurin & Nugent, said. Andrew Weissmann, director of the Enron task force, noted after the hearing that Fastow’s 12-month sentence is about twice the average for similar tax offenses, and said she will serve the entire sentence because there is no provision for good time behavior on misdemeanor charges. Weissmann also said Fastow could serve longer if she violates a cooperation agreement with the government and prosecutors again file felony charges against her. But Weissmann declined to criticize Hittner’s sentence, and said it is within the judge’s discretion. Fastow was charged in an information with one count of falsely filing a tax return for 2000. On April 7, Hittner rejected an earlier plea deal in which Fastow would have received a sentence of five months in prison and five months at home for pleading guilty to one felony count of filing a false tax return. But Fastow withdrew her guilty plea to that charge after Hittner indicated in court he would not follow the plea deal, a move that paved the way for prosecutors to charge her with a misdemeanor and strike a new deal. [ See "Rejected Plea Deal Bad News for Prosecutors and Fastow," Texas Lawyer, April 12, 2004, page 1.] Fastow’s plea on May 6 averts a trial set to begin on June 7 in Brownsville. That Special Someone Ken Feinberg was sought after first as a special master by the 9-11 plaintiffs and now by the former clients of Dallas-based Jenkens & Gilchrist. That news comes from a recent jointly filed motion by the lawyers representing Jenkens and the lawyers representing plaintiffs in a proposed class-action settlement with the Dallas firm regarding tax-shelter advice it gave some of its clients. The two sides state in the motion, filed in federal court in the Southern District of New York, that they have contacted Feinberg. He is the acting special master in the litigation arising out of the 9-11 terrorist attacks on America and founding partner in the Washington, D.C.- and New York-based Feinberg Group. The two sides have asked Feinberg to determine if he will be available as the special master in their proposed class-action settlement, first announced in March. [ See "Taxing Times," Texas Lawyer, March 15, 2004, page 1.] In Thomas Denney v. Jenkens & Gilchrist, et al., filed in the Southern District of New York, lawyers representing the plaintiffs and lawyers representing Jenkens have proposed a $75 million settlement. The proposal calls for the firm to contribute $5.25 million to the settlement pot, and insurance carriers and three partners to foot the bill for the remainder. According to the filing, Feinberg, who did not a return a telephone call seeking comment before presstime on May 6, expects to complete his pro-bono work on the 9-11 claims by June 15. At that point, the two sides told the court in their motion, he will provide detail for the court about his qualifications as a special master. One Battle Lost Jenkens & Gilchrist recently lost a courtroom battle to protect the identity of more than 1,100 former tax-shelter clients. In a memorandum opinion and order signed on April 20, U.S. District Judge James B. Moranof Chicago found the identity of clients is not subject to the attorney-client privilege. Moran denied a motion filed by lawyers for Jenkens to dismiss United States of America v. Jenkens & Gilchrist, a John Doe summons suit filed by the government to force the firm to reveal the names of the clients. In his order, Moran cited United States v. BDO Seidman, a 2003 7th U.S. Circuit Court of Appeals ruling that found a group of former clients of an accounting firm did not have the right to intervene in a similar enforcement suit. Moran also cited rulings by U.S. District Judge Matthew Kennellyof Chicago in a similar enforcement suit pending against Sidley Austin Brown & Wood. On April 28, Kennelly ruled in United States v. Sidley Austin Brown & Wood that 48 former Sidley tax-shelter clients could not intervene to protect privilege, and he issued an order for Sidley to comply with the John Doe summons. (On April 30, Kennelly issued a stay pending appeal by the intervenors.) [ See "Enforcement Action Against Sidley May Put Privilege to the Test,"Texas Lawyer, April 12, 2004, page 5.] William Parrish, a Jenkens shareholder in Austin, says the firm will comply with Moran’s order to reveal the identities of its former tax-shelter clients, but the firm has asked the judge to allow the former clients to assert privilege in connection with documents in firm files. “We believe we did our best to assert the rights of our former clients. While we respectfully disagree with the ruling, we understand the court’s ruling and intend to comply,” Parrish says. Meanwhile, despite the 7th Circuit opinion in BDO Seidman, the issue of identity privilege and the attorney-client privilege may get appellate review in the Sidley litigation. George Connelly, a shareholder in Houston’s Chamberlain, Hrdlicka, White, Williams & Martinwho represents some of the intervenors, says some of his clients intend to appeal Kennelly’s ruling. William Conlon, a partner in Sidley working on the enforcement suit, did not return a telephone call seeking comment before presstime on May 6. Finding in Favor of Firm Locke Liddell & Sapp won summary judgment in a tortious interference suit filed against the firm in 2003 in connection with its representation of a group of orthodontists who hired the firm to help them void contracts with a company providing practice management services. On April 23, 61st District Judge John Donovanof Houston granted a summary judgment motion filed by Locke Liddell and four partners named in Orthodontic Centers of America Inc., et al. v. Locke Liddell & Sapp, et al. In addition, Donovan granted a motion for summary judgment for two doctors also named as defendants. In Orthodontic Centers, Louisiana-based Orthodontic Centers of America Inc. and 45 subsidiaries alleged the Locke Liddell defendants and other defendants conspired to tortiously interfere with the practice management company’s contracts with the orthodontists. [ See "Firm Braces for Tortious Interference Suit," Texas Lawyer, Jan. 26, 2004, page 1.] In their motion for summary judgment, the Locke Liddell defendants argued the plaintiffs have no private right to sue Locke Liddell for representing clients and no standing to sue for alleged solicitation of clients. The Locke Liddell defendants also alleged in the motion for summary judgment that the tortious interference suit was filed in retaliation for the success of their orthodontist clients in underlying litigation � about 10 suits Locke Liddell filed on behalf of about 60 orthodontists nationwide. “The lawsuit was all about harassment and attempted intimidation for the success we had in the underlying suits,” alleges Locke Liddell partner Roger Cowie, a defendant in the suit. “We’ve always viewed it as a nuisance lawsuit.” A lawyer for Locke Liddell, Eric Nichols, a partner in Beck, Redden & Secrestof Houston, says, “The basic argument is pretty straightforward. A party cannot sue the lawyers on the other side of ongoing disputes for representing their clients.” Scott Clearman, a partner in Houston’s McClanahan & Clearmanwho represents the OCA plaintiffs, was in trial and did not return two messages seeking comment before presstime on May 6. But Clearman has disputed the retaliation characterization, and said in January, “It’s not retaliatory to try to defend a company from unbridled solicitations of people to breach contracts and hire attorneys to sue.” The litigation continues against other defendants, and Brian Walsh, an associate with McClanahan & Clearman, says the firm will appeal the summary judgment rulings. The Reluctant Bankrobber When Bryan Worley Bellew walked into a Plano bank on April 5, 2002, he was sporting what bank employees called an “obvious wig.” Police later found that Bellew also had a firearm and a demand note in a briefcase along with instructions he had written to himself on how to rob a bank, according to an appellate opinion. But that was not sufficient evidence to support an attempted bank robbery conviction, according to an April 28 decision by the 5th U.S. Circuit Court of Appeals, because Bellew never threatened anyone inside the bank. Bellew asked to speak to the bank manager, but was told to wait, according to U.S. v. Bellew . So after waiting for awhile, Bellew got up an left as bank employees called police. Police intercepted Bellew and arrested him, according to the opinion. A panel opinion written by Judge Fortunato “Pete” Benavidesreversed and remanded Bellew’s conviction and ordered that the trial court acquit Bellew. The panel, which also included Judges Carl Stewartand James Dennis, ruled that the government’s theory that Bellew “attempted to intimidate” the bank staff was not sufficient to uphold his conviction. “Anytime you get a reversal you’re surprised,” says Garland Cardwell, a partner in Sherman’s Munson Munson Cardwell & Keese, who represented Bellew on appeal. “But when you get a reversal and an acquittal saying the government didn’t prove their case, I’ve never had one, and I’ve been practicing law for 20 years.” Andrew Stover, an assistant U.S. attorney who prosecuted Bellew, did not return two telephone calls seeking comment before presstime on May 6. Bellew’s actions just didn’t amount to attempted bank robbery, Cardwell says. “You have to pass a note or something,” he says. Mr. President-Elect Only 102 votes separated the winner from the loser in the election for president-elect of the State Bar of Texas. The Bar announced on May 3 that Eduardo R. Rodriguez, senior partner in Brownsville’s Rodriguez, Calvin, Chaney & Rodriguez, won the election with 9,479 votes to 9,377 for Richard T. “Dick” Miller, owner of the Law Offices of Richard T. Millerin San Saba. “I knew it was going to be close, but 102 votes is closer than I thought it would be,” Miller says. Kimberly Schmitt, Bar spokesperson, says 73,154 ballots were sent and 19,241 cast in the election. Rodriguez will become State Bar president in June 2005. “I will work to ensure that our State Bar is a strong organization of value to lawyers now and in the future,” Rodriguez says. Miller says he believes the Bar will be well served with Rodriguez as its president. Also on May 3, the Bar announced that Lee Ann Reno, a shareholder in Amarillo’s Sprouse Shrader Smith, defeated Phillip Mack Furlow, managing partner for Huffaker Furlowin Tahoka, in the election for president-elect of the Texas Young Lawyers Association. Reno garnered 2,583 votes to 1,191 for Furlow.

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