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DEFENSE LAWYERS ATTACK FRAUD EVIDENCE Two high-profile corporate fraud trials began last week in New York, with defense lawyers in both doing their best to shred the government’s cases. In opening arguments Jan. 27 in the retrial of former Tyco International Ltd. executives L. Dennis Kozlowski and Mark Swartz, defense lawyers took aim at the prosecution’s assertions of theft. “You tell me how you steal when you sign a promissory note and repay it,” Kozlowski’s lawyer, Stephen Kaufman, said to the jury. Kaufman said his client had done so when he borrowed company funds to buy $12 million in artwork. “If that’s theft, I need a new form of Webster’s,” the lawyer said. Kozlowski, Tyco’s former chairman and chief executive officer, and Swartz, the former chief financial officer, face charges of grand larceny because they allegedly stole $150 million in unauthorized bonuses and loans. The Manhattan District Attorney’s Office also has brought felony counts of securities fraud, conspiracy, and falsifying business records. The executives’ first trial ended in a mistrial in April. The defense maintains that their clients had legitimately received massive bonuses, which they attributed in large part to the enormous growth of Tyco’s revenue and profits during the pair’s tenure. Witness testimony in the case begins this week. Earlier last week, the lawyer for Bernard Ebbers, the former chief executive of WorldCom, sought to place blame for the $11 billion scandal that rocked the one-time telecommunications giant on the company’s ex-chief financial officer, Scott Sullivan. In opening statements, Reid Weingarten of D.C.’s Steptoe & Johnson told jurors that it was Sullivan, not Ebbers, who masterminded the accounting fraud that inflated revenue and mischaracterized expenses in an attempt to prop up the company’s stock during the 2000-01 economic slump and that Sullivan has now turned on Ebbers to save his own neck. Prosecutors blamed Ebbers for orchestrating the massive accounting fraud. The motive, said Assistant U.S. Attorney David Anders, was Ebbers’ desperation to avoid financial ruin. Weingarten described Ebbers as a charismatic coach, a “telecom cowboy” with a gambler’s penchant for risk-taking. Accounting methods were not among his client’s strengths, said Weingarten. At WorldCom, those responsibilities fell to Sullivan, the “brilliant superstar” who ran the company’s accounting department, Weingarten said.” All of the accounting decisions were made by Scott Sullivan,” he contended. Ebbers, 63, is accused of nine counts of securities fraud, conspiracy, and filing false public reports. If convicted, he could face up to 85 years in jail. — Michael Bobelian and Anthony Lin, New York Law Journal SEEKING SOURCES George Washington University Law professor Richard Pierce Jr. has been a chief critic of Judge Royce Lamberth and his handling of Cobell v. Norton, the massive Indian Trust case in the U.S. District Court for the District of Columbia. Last year, Pierce, who specializes in administrative law and is not a party in the case, went so far as to file a judicial misconduct complaint against Lamberth that was ultimately dismissed. Also in 2004, Pierce penned an article for the Administrative Law Review titled “Judge Lamberth’s Reign of Terror at the Department of the Interior,” in which he accused the longtime federal jurist of defamatory and abusive practices against government attorneys. The article focused on Lamberth’s decisions to hold two Interior secretaries as well as other officials in contempt and requiring the department to disconnect its computer system from the Internet for security reasons. It included references to interviews with unnamed current and former Interior Department lawyers. Now, Keith Harper of the Native American Rights Fund, a lawyer for a class of more than 500,000 plaintiffs in Cobell, wants to find out whom Pierce talked to. On Jan. 19, Harper subpoenaed Pierce to a Feb. 1 deposition. Harper says he wants to know whether Department of Justice lawyers were feeding Pierce information in an attempt to derail the case. “He had conversations with people that revealed information about our case,” says Harper. Pierce retained GW Law colleague Jonathan Turley to fight the subpoena. “We are deeply concerned about the implications of a subpoena targeting a vocal critic of a court or counsel,” Turley said in a statement. “If successful, this type of vexatious practice would threaten any journalist or academic who writes pieces critical of a court or counsel.” In court papers filed Jan. 27, Turley argues that Pierce should not be forced to name his sources because these unidentified lawyers merely spoke about the adverse effects of Lamberth’s rulings. — Tom Schoenberg STARR POWER Virginia death row inmate Robin Lovitt has few chances left to stay alive, and one of them rests with the U.S. Court of Appeals for the 4th Circuit. Normally, such a situation would be virtually hopeless, given the 4th Circuit’s reputation for turning down death penalty challenges. But Lovitt does have one person in his corner who may be able sway the conservative court. Former Independent Counsel Kenneth Starr, dean of Pepperdine University School of Law, is scheduled to argue Lovitt’s case before a 4th Circuit panel on Feb. 1. Kirkland & Ellis, where Starr is of counsel, has been handling the case pro bono since 2001. Lovitt was convicted of the 1998 stabbing death of Clayton Dicks at a Northern Virginia pool hall. In court papers, Lovitt’s legal team argues that Virginia prosecutors failed to turn over evidence that could have been used to bolster the defense and that Lovitt’s trial counsel did not properly investigate the case or explore Lovitt’s history of abuse by his stepfather. Complicating matters is the fact that all the physical evidence from the case, including the alleged murder weapon, was thrown away by an Arlington, Va., court clerk while Lovitt’s appeals were pending. Starr was unavailable for comment. — Tom Schoenberg RAMPING UP Arnold & Porter took a major step last week toward beefing up its corporate practice in New York, bringing eight partners from Minneapolis-based Dorsey & Whitney on board. As many as eight associates may follow. It comes just a week after Arnold & Porter snagged six top securities enforcement lawyers from Fulbright & Jaworski, including Michael Trager. The New York expansion is the firm’s largest hire in years. It puts the New York office, with 70 attorneys, slightly behind Arnold & Porter’s Los Angeles outpost, which is the firm’s largest outside the D.C. area. “It’s important for us and for our clients to expand in New York and to diversify our practice there,” says firm chair Michael Sohn. “The reasons have to do with the close connection between transaction work in New York and our regulatory expertise here in Washington.” The exodus comes as Dorsey has seen significant defections from many of its satellite offices, including in the District. The new partners include former Dorsey New York office head James Swire, an intellectual property litigator, Stewart Aaron, a securities litigator, and Ramon Marks, a former head of the international litigation and arbitration departments at Dorsey. Swire says he chose Arnold & Porter because of the firm’s commitment to expand its corporate work. — Emma Schwartz BANK VAULT Shaw Pittman rainmaker Thomas McCormick bid farewell to his firm of nearly 28 years last week to become general counsel at his longtime client Chevy Chase Bank. The move comes at a critical juncture for Shaw Pittman, which is in advanced stages of merger negotiations with San Francisco-based Pillsbury Winthrop. It is unclear how, or if, McCormick’s move will affect the discussions or the future of the firm’s corporate practice, which McCormick led until last year. “I have loved what I’ve done but I thought that at this stage of my life, it would be an interesting thing to take on a different set of challenges,” McCormick said by cell phone while waiting to leave on vacation to Spain. A proponent of firm expansion, McCormick says the possible merger did not influence his decision to leave and was “one of the things that made it a very hard choice.” Firm managing partner Stephen Huttler said in a statement that he was “pleased” for McCormick and looked forward to a “continuing close relationship” with him. During his tenure, McCormick helped solidify the firm’s hold on key local corporate clients and was central to Daniel Snyder’s 1999 acquisition of the Redskins. — Emma Schwartz NEGATIVE TREATMENT A 2002 D.C. voter initiative that requires substance abuse treatment instead of incarceration for certain nonviolent drug offenders is dead, again. The D.C. Court of Appeals last week upheld a Superior Court ruling that the initiative was a “law that appropriated funds” and therefore impeded on the government’s discretion in the budget process. But Senior Judge John Steadman, writing for a three-member panel that included Chief Judge Annice Wagner and Judge Inez Smith Reid, wrote that the measure required the allocation of funds in order to achieve its stated intentions. Supporters of the ballot measure, which passed with 78 percent of the vote in 2002, say they are undeterred. “We spent most of last year preparing for this decision,” says Bill Piper, president of the D.C. Campaign for Treatment and director of national affairs for the Drug Policy Alliance. He says the group will now lobby the D.C. Council to pass a law mandating treatment instead of incarceration. If that effort is unsuccessful, Piper says voters can expect another initiative on the ballot in 2006. — Bethany Broida LORDS OF DISCIPLINE The D.C. Court of Appeals has rejected a two-year-old proposal by the D.C. Bar that would have allowed lawyers and nonlawyers in the District to form multidisciplinary practice firms. Among the court’s concerns: ethics and necessity. Annice Wagner, chief judge of the court, wrote in a Dec. 21, 2004, letter that it was unclear whether the proposal was “grounded on either a real need from lawyers or pressing demand from the consumers of legal services.” And, she said, there “remains some doubt” whether additional guidelines to limit the erosion of client confidentiality, conflicts of interest, and attorney-client privilege would “suffice.” Proponents of multidisciplinary practices had hoped that combining law firms with other professional practices such as accounting or psychology, as is common in Europe, could help firms broaden their services to clients. But opponents contended that such alliances would compromise a firm’s ethics — particularly crucial in the aftermath of the recent corporate scandals — because other professions do not always adhere to the same ethical code of conduct as lawyers. The American Bar Association came out against multidisciplinary practice in 2000. Some D.C. firms already operate joint partnerships with outside consultants — such as the relationship between Covington & Burling and Kissinger McLarty Associates — but the firms must bill separately. — Emma Schwartz

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