Friday, April 30, 2010

Legal Profession at ‘Transformative Stage’, ABA President Says in Law Day Message

ABA President Carolyn B. Lamm says in a Law Day op-ed that lawyers need to adapt their practices and acquire new cultural understandings to adjust to law in the 21st Century.

The legal profession is at “a transformative stage,” Lamm writes in a commentary on this year’s Law Day theme: "Law in the 21st Century: Enduring Traditions, Emerging Challenges."
Lamm notes changes throughout the world as economic markets become global, populations become more mobile, and the Internet bridges distances.

“The law, too, is changing,” she writes. “New technologies are increasingly having a profound impact on the legal profession and reshaping the practice of law. Indeed, the legal profession is at a transformative stage in its history.

“Our global interdependence places new demands on lawyers to move flexibly and fluidly within and between nations. Lawyers face new challenges from attorney credentials to licensing requirements to regulation of the legal profession. We must renew our commitment to the enduring principles of law, become knowledgeable about other legal systems, recognize the need to adapt our practices, and acquire new cultural understandings.”

President Obama acknowledged Law Day in a presidential proclamation that referred to the need for “time-honored legal traditions” in “an increasingly interconnected world.”

"The prosperity we enjoy as a nation of laws increasingly depends on preserving the rights and liberties not just in our own country but also in other nations," the proclamation says.

President Dwight Eisenhower established Law Day on May 1, 1958, as “a day of national dedication to the principle of government under law." The ABA provides leadership to bar associations, courts, schools and community groups honoring the tradition. More Law Day information is available at the ABA website.

Tarzana lawyer Richard Fine remains behind bars in contempt case

Thursday, February 12, 2009

Supreme Court Orders Disbarment of Attorney Richard I. Fine


The California Supreme Court yesterday ordered that a prominent Beverly Hills attorney be disbarred for filing a stream of disqualification motions and other papers containing what the State Bar Court found to be false and frivolous charges regarding members of the state bench.
The high court, at its weekly conference in San Francisco, voted 6-0 to deny review and to adopt the State Bar Court’s recommendation that Richard I. Fine lose his license to practice law. Justice Kathryn M. Werdegar was absent and did not participate.

Honn was declared involuntarily inactive in October 2007 after Hearing Judge Richard Honn said Fine’s “remarkable academic and professional background” as a leading antitrust and taxpayer rights lawyer did not justify his “improper and vindictive reactions” to rulings of Commissioner Bruce Mitchell and other judicial officers.

‘Never-Ending Attack’

The hearing judge said Fine “engaged in what amounts to an almost never-ending attack on anyone (including attorneys and judicial officers) who disagreed with him or otherwise got in his way.” Fine, Honn said, “kept digging himself into deeper and deeper problems” and failed “to appreciate the harm he has imposed on so many people and on the court system.”
Fine, the onetime head of the Los Angeles City Attorney’s antitrust unit and counsel for the plaintiffs in a number of highly publicized class actions and taxpayer suits, has blamed his troubles on state judges and other officials whom he accuses of retaliating against him for his years of challenges to the benefits paid to Los Angeles Superior Court judges by the county.
Fine claims that judges who receive the benefits have a conflict of interest in any case involving the county, and that they have, over the years, improperly failed to disclose the conflict and to disqualify themselves from cases to which the county is a party.

The Court of Appeal last year ruled in Sturgeon v. County of Los Angeles that the benefits are unconstitutional because they have not been authorized by the Legislature. The court did not say that judges who have been receiving the benefits had a conflict of interest as contended by Fine, but Fine—who was not involved in the Sturgeon case—said the decision vindicated him.
Fine told the MetNews he intends to seek review in the U.S. Supreme Court based on what he said are violations of his constitutional rights to free speech and due process of law. He has argued, among other things, that Honn had an undisclosed conflict of interest because the disciplinary charges stemmed from his battle with the county, which gives $30,000 a year to Special Olympics of Southern California, on whose board Honn serves.

Honn’s participation in the case violates the “implicit right to honest services” and should be investigated as a violation of federal fraud statutes, Fine said.

Federal Suit

The now-disbarred lawyer is also suing the State Bar in federal court, arguing that the statute that permits disbarment for acts of moral turpitude not amounting to crimes violated the Due Process Clause. That suit, pending before Judge Dale Fisher in the U.S. District Court for the Central District of California, has been on hold pending the outcome of the State Bar proceedings, Fine said.

“This is political payback for my having exposed the corruption in the judicial system,” Fine said yesterday. “....I would have to question whether the California Supreme Court ....even read the papers....This is on one of the greater travesties of justice...They want to take the lawyer who has saved the taxpayers more than $1 billion dollars and put him out of the bar when they have done nothing about the corruption in the judicial system.”

He added that there is “not one scintilla of substantive evidence” that he has violated ethics rules.

In other conference action, the justices:
•Left standing a ruling by Div. Five of this district’s Court of Appeal, which threw out a $1.5 million verdict in favor of a former Los Angeles deputy city attorney who was discharged after angrily suggesting to a clerk that then-Los Angeles Superior Court Commissioner (now Judge) Joseph Biderman “would have to answer to the Creator” for a judicial ruling which she opposed.
The panel ruled in Magnandonovan v. City of Los Angeles, B192892, that the hostile language directed at Biderman was a legitimate nondiscriminatory reason to discharge Lynn Magnandonovan, and that her pretext evidence was insufficient as a matter of law to support a reasonable inference of intentional retaliation.

Magnandonovan admitted to making the offending comment to Biderman’s court clerk after Biderman took Magnandonovan’s motion to revoke a convicted child molester’s probation off calendar when Magnandonovan failed to timely appear for the hearing. Biderman testified that he understood Magnandonovan’s remarks as a “veiled reference” to his homosexuality, and that he “felt very personally insulted”; “was very upset about it”; and “was in shock about the whole thing.”

While allowing the ruling to stand, the high court declined to order publication of the Court of Appeal opinion.

•Declined to review a ruling by the First District’s Div. Four that the State Bar’s subrogation rights against an attorney whose clients were reimbursed by the Client Security Fund are not limited to the amount of a litigation settlement between the lawyer and the clients. The case is State Bar of California v. Statile (2008) 168 Cal.App.4th 650.

•Agreed to decide whether police violated the Fourth Amendment when they entered a mentally disordered man’s home to confiscate his gun after taking him into custody outside for posing a danger to others.

The Third District Court of Appeal ruled last October in People v. Sweig (2008) 167 Cal.App.4th 1145, said there was no constitutional authority for the warrantless entry in the absence of exigent circumstances. The panel rejected the prosecution’s argument that the entry was justified under the “community caretaking exception” to the Fourth Amendment.

The U.S. Supreme Court denied a bid Monday by Tarzana attorney Richard I. Fine to be released from jail, where he has spent more than a year after ignoring a judge's order to divulge information about his personal assets.

Fine has been held in solitary confinement at Men's Central Jail since early 2009 after he refused to pay $46,329 in attorneys' fees relating to a lawsuit or to reveal details of his personal finances. Superior Court Judge David P. Yaffe found him in contempt of court and ordered him held until he divulges the information.

Sterling E. Norris, the counsel for Judicial Watch in San Marino, said he was surprised Fine wasn't released because the high court has ruled in the past the longest someone can serve time in jail under "coercive confinement" is about five months.

"Otherwise, it becomes penal," Norris said. "Mr. Fine has probably done more time than most dope dealers, burglars and robbers. I think it's unjust."

Fine maintains his confinement is related to his lawsuit that challenges Los Angeles County's practice of paying judges an annual bonus of $57,000 in addition to their state salary of $179,000.

He has asked the U.S. Supreme Court to determine the legality of the bonuses, but the justices did not rule Monday on his petition.

In a telephone interview from jail, Fine said he would continue his battle over his confinement, as well as the broader issue of judicial pay.

"The court wants me to disclose my assets so they can then take those assets and force their illegal orders," Fine said. "The underlying issue the Supreme Court will decide is whether Judge Yaffe even had the right to sit as a judge and enter any orders. So this is a Catch-22.

"(Yaffe) wants to enforce an illegal order he doesn't even have the right to make."

Superior Court spokesman Allan Parachini said he could not comment on the pending case.
Glendale attorney Paul B. Beach, the county's attorney in the case, did not return calls for comment.

Operation Agatha
Operation Agatha (Saturday, June 29, 1946) sometimes called Black Shabbat or Black Saturday because it began on the Jewish sabbath, was a police and military operation conducted by the British authorities in the British Mandate of Palestine. Soldiers and police searched for arms and made arrests in Jerusalem, Tel-Aviv, and Haifa, and in several dozen settlements; the semi-official Jewish Agency was raided. The total number of British security forces involved is variously reported as 10,000, 17,000, and 25,000. About 2,700 individuals were arrested, among them Moshe Sharett. The British objectives included dissuading the Haganah and the Palmach, Lehi (Stern Gang), and the Irgun Tzvai Leumi, from undertaking further attacks against British troops and officials, as well as possibly dissuading a unilateral proclamation of a Jewish state, and bolstering morale.

Wednesday, April 28, 2010

Dutch Controlled Demolition expert Believes WTC-7 was wired with explosives on 9/11

Danny Jawenko, a Dutch controlled demolition expert, gives his unbiased opinion on World Trade Center building 7's collapse:

Contrary to "Debunker" allegations, Danny Jawenko hasn't retracted his statements:

Chief of Department FDNY (ret.) Daniel Nigro Addresses "Conspiracy Theories"

This is a message from Chief of Department (ret.) Daniel Nigro, addressing the conspiracy theories surrounding the collapse of WTC7. Thank you very much for this statement, Mr. Nigro. The work you and your colleagues did that day will never be forgotten. Regarding WTC 7:

The long-awaited US Government NIST (National Institute of Standards and Technology) report on the collapse of WTC 7 is due to be published at the end of this year (although it has been delayed already a few times [ adding fuel to the conspiracy theorists fires!]). That report should explain the cause and mechanics of the collapse in great detail. Early on the afternoon of September 11th 2001, following the collapse of WTC 1 & 2, I feared a collapse of WTC 7 (as did many on my staff).The reasons are as follows:

1. Although prior to that day high-rise structures had never collapsed, The collapse of WTC 1 & 2 showed that certain high-rise structures subjected to damage from impact and from fire will collapse.

2. The collapse of WTC 1 damaged portions of the lower floors of WTC 7.

3. WTC 7, we knew, was built on a small number of large columns providing an open Atrium on the lower levels.

4. numerous fires on many floors of WTC 7 burned without sufficient water supply to attack them.

For these reasons I made the decision (without consulting the owner, the mayor or anyone else - as ranking fire officer, that decision was my responsibility) to clear a collapse zone surrounding the building and to stop all activity within that zone. Approximately three hours after that order was given, WTC 7 collapsed. Conspiracy theories abound and I believe firmly that all of them are without merit.

Regards, Dan NigroChief of Department FDNY (retired)

Interesting. I would like for someone to ask Mr.Nigro why he thinks Larry Silverstein is lying about speaking on the phone with him.


Naomi Campbell Loses Her Temper when asked about Blood Diamond

SEC employees surfed porn as economy fell

One senior attorney spent up to 8 hours a day downloading porn

By Daniel Wagner

WASHINGTON - Senior staffers at the Securities and Exchange Commission spent hours surfing pornographic websites on government-issued computers while they were being paid to police the financial system, an agency watchdog says.

The SEC's inspector general conducted 33 probes of employees looking at explicit images in the past five years, according to a memo obtained late Thursday by The Associated Press.
The memo says 31 of those probes occurred in the 2 1/2 years since the financial system teetered and nearly crashed.

It was written by SEC Inspector General David Kotz in response to a request from Sen. Charles Grassley, R-Iowa.

The memo was first reported Thursday evening by ABC News. It summarizes findings of past inspector general probes and reports some shocking findings:

A senior attorney at the SEC's Washington headquarters spent up to eight hours a day looking at and downloading pornography. When he ran out of hard drive space, he burned the files to CDs or DVDs, which he kept in boxes around his office. He agreed to resign, an earlier watchdog report said.

An accountant was blocked more than 16,000 times in a month from visiting websites classified as "Sex" or "Pornography." Yet, he still managed to amass a collection of "very graphic" material on his hard drive by using Google images to bypass the SEC's internal filter, according to an earlier report from the inspector general. The accountant refused to testify in his defense and received a 14-day suspension.

Seventeen of the employees were "at a senior level," earning salaries of up to $222,418.
The number of cases jumped from two in 2007 to 16 in 2008. The cracks in the financial system emerged in mid-2007 and spread into full-blown panic by the fall of 2008.
California Rep. Darrell Issa, the top Republican on the House Committee on Oversight and Government Reform, said it was "disturbing that high-ranking officials within the SEC were spending more time looking at porn than taking action to help stave off the events that put our nation's economy on the brink of collapse."

He said in a statement that SEC officials "were preoccupied with other distractions" when they should have been overseeing the growing problems in the financial system.

SEC spokesman John Nester said in a statement Friday that each of the offending employees has been disciplined or is in the process of being disciplined, and some have already been suspended or dismissed. "We will not tolerate the transgressions of the very few who bring discredit to their thousands of hardworking colleagues," said Nester, adding the agency has lately increased penalties.

Wednesday, April 21, 2010

SEC probing Lehman accounting trick

Schapiro seeking information about similar transactions at 19 other banks

By Alan Zibel

WASHINGTON - The Securities and Exchange Commission is examining whether any of the 19 largest U.S. banks are using an accounting trick that a bankruptcy examiner has said led to the collapse of Lehman Brothers, SEC Chairman Mary Schapiro said Tuesday.

Schapiro testified at a congressional hearing that the SEC is scrutinizing Lehman's use of the accounting move, known as Repo 105, that allowed it to mask its weakness before it failed.
She said the agency has sent letters to the 19 banks, seeking information about any such transactions.

The hearing is looking into what led to Lehman's meltdown in September 2008. But it also drew lawmakers into a partisan squabble over the Obama administration's push for financial regulatory reform.

Lehman's collapse was the biggest corporate bankruptcy in U.S. history and threw global financial markets into crisis. The hearing probed the bankruptcy examiner's report that said the firm masked $50 billion in debt.

Schapiro said the SEC is examining "the truthfulness of the disclosure" in Lehman's financial filings.

"It's not clear any action by the SEC could have saved Lehman Brothers, but we are determined to use the lessons of that experience to be more effective," Schapiro said. "More vigorous oversight and a new approach are essential."

Richard Fuld, Lehman's former CEO, said he has "absolutely no recollection whatsoever" of any documents related to the so-called Repo 105 accounting maneuver. After reviewing the transactions, he said the firm complied with accounting standards.

Fuld expressed regret about the company's collapse.

"One day we had a firm," he said. "The next day we did not. A lot of people got hurt by that, and I have to live with that."

The bankruptcy examiner, Anton Valukas, criticized the company and the SEC.
"Although the public had a right to expect that firms like Lehman were being regulated in a meaningful way, in reality, they were not," Valukas told lawmakers. Regulators, he said, missed opportunities to alter Lehman's conduct "before its situation had reached the point of no return."
In his report last month, Valukas disclosed that Lehman put together complex transactions that allowed the firm to sell securities — mainly those made up of mortgages — at the end of a quarter. That wiped them off its balance sheet, avoiding the scrutiny of regulators and shareholders. Then the bank quickly repurchased them — hence the term "repo."

Valukas' report reached no conclusion on whether executives violated securities laws. But it did suggest there may be enough evidence to support civil damages in a trial.

Cities lost $1.7 billionTwo lawmakers testified at the hearing that Lehman's meltdown cost school districts, local governments and hospitals millions, forcing them to make cutbacks.
Rep. Anna Eshoo, D-Calif., said 40 municipalities nationwide lost around $1.7 billion after the firm went under. She is introducing legislation that would require the federal government to compensate those governments. Eshoo said San Mateo County, which is in her district, lost $155 million.

Another lawmaker said numerous governments and hospitals in his state suffered huge losses.
"These were school districts and local governments that made investments that they believed were conservative," said Rep. Ed Perlmutter, D-Colo. "They trusted that federal regulators were keeping a watchful eye on companies like Lehman Brothers."

Treasury Secretary Timothy Geithner said at the hearing that Lehman's collapse highlights why the Obama administration's proposal to reform the financial system is needed. That legislation includes a mechanism to allow the government to safely wind down ailing financial companies whose collapse could take down the entire financial system and the broader economy.

Lawmakers used the hearing to spar over the Obama administration's push for financial regulatory reform.

Republicans asserted that regulators' failure to prevent Lehman's collapse is proof that the proposed financial reforms won't work either.

"Given their track record, giving these regulators more power will provide the markets with a false sense of security, while hampering the free market," said Rep. Scott Garrett, R.-N.J.
‘A more effective regulator’Republicans accused Democrats of trying to continue federal bailouts by injecting more money into Wall Street companies.

But the committee's chairman, Rep. Barney Frank, D-Mass., called that a "blatant mischaracterization," arguing that "no money can be spent in these cases until the institution is out of business."

Schapiro, who was not at the SEC in the fall of 2008, said the agency didn't do enough to oversee the five largest investment banks, even though it had authority over them since 2004. That oversight program, she said, did not have enough resources.

Going forward, "the SEC is determined to become a more effective regulator," she told lawmakers. "We are determined to use the lessons of that experience to be more effective."

Her comments come days after the SEC filed civil fraud charges against Goldman Sachs, alleging it withheld information in a complex transaction involving risky mortgage securities.

Federal Reserve Chairman Ben Bernanke testified at the hearing that the central bank wasn't aware that Lehman used the accounting move. And even if the Fed did know, it wouldn't have changed the Fed's view that the company was in bad financial shape, he said.

Although the SEC was Lehman's chief regulator, the Fed began to monitor the firm after trouble surfaced in the financial industry.

Friday, April 16, 2010

U.S. charges Goldman with subprime fraud

By Jonathan Stempel and Steve Eder

Goldman Sachs: Charges ‘unfounded’ and it will ‘defend the firm’

NEW YORK - Goldman Sachs Group was charged with fraud by the U.S. Securities and Exchange Commission over its marketing of a subprime mortgage product, igniting a battle between Wall Street's most powerful bank and the nation's top securities regulator.
The civil lawsuit is the biggest crisis in years for a company that faced criticism over its pay and business practices after emerging from the global financial meltdown as Wall Street's most influential bank.

It may also make it more difficult for the industry to beat back calls for reform as lawmakers in Washington debate an overhaul of financial regulations.

Goldman called the lawsuit "completely unfounded," adding, "We did not structure a portfolio that was designed to lose money."

The lawsuit puts Goldman Chief Executive Lloyd Blankfein further on the defensive after he told the federal Financial Crisis Inquiry Commission in January that the bank packaged complex debt, while also betting against the debt, because clients had the appetite.
"We are not a fiduciary," he said.

The case also involves John Paulson, a hedge fund investor whose firm Paulson & Co made billions of dollars by betting the nation's housing market would crash. This included an estimated $1 billion from the transaction detailed in the lawsuit, which the SEC said cost other investors more than $1 billion. Paulson was not charged.

Fabrice Tourre, a Goldman vice president whom the SEC said was mainly responsible for creating the questionable mortgage product, known as ABACUS, was charged with fraud.
Goldman shares slid 12.8 percent on Friday, closing down $23.57 at $160.70 on the New York Stock Exchange. The decline wiped out more than $12 billion of market value, and trading volume topped 100 million shares, Reuters data show.

The news dragged down broad U.S. equity indexes, which fell more than 1 percent. The perceived risk of owning Goldman debt, as measured by credit default swaps, increased. Treasury prices rose as investors sought safe-haven government debt.

More severe than expected "These charges are far more severe than anyone had imagined," and suggest Goldman teamed with "the leading short-seller in the industry to design a portfolio of securities that would crash," said John Coffee, a securities law professor at Columbia Law School in New York.

"The greatest penalty for Goldman is not the financial damages -- Goldman is enormously wealthy -- but the reputational damage," he said, adding that "it's not impossible" to contemplate that the case could lead to criminal charges. Coffee spoke on Reuters Insider.
Goldman vowed to defend itself.

"The SEC's charges are completely unfounded in law and fact," it said. "We will vigorously contest them and defend the firm and its reputation."

E-mails from former Washington Mutual Inc CEO Kerry Killinger read aloud during a congressional hearing this week illustrated clients' concerns about working with Goldman.
In 2007, Killinger discussed hiring Goldman or another investment bank to help Washington Mutual find ways to reduce its credit risk or raise new capital, according to one of the e-mails, which Michigan Democratic Sen Carl Levin read during the hearing.

"I don't trust Goldie on this," Levin quoted one of Killinger's e-mails as saying. "They are smart, but this is swimming with the sharks. They were shorting mortgages big-time while they were giving (Countrywide Financial Corp) advice."

The SEC lawsuit announced on Friday concerns ABACUS, a synthetic collateralized debt obligation that hinged on the performance of subprime residential mortgage-backed securities, and which the regulator said Goldman structured and marketed.

According to the SEC, Goldman did not tell investors "vital information" about ABACUS, including that Paulson & Co was involved in choosing which securities would be part of the portfolio.

The SEC also alleged that Paulson took a short position against the CDO in a bet that its value would fall.
In a statement, Paulson & Co said it did buy credit protection from Goldman on securities issued in the ABACUS program, but did not market the product.

Tourre was not immediately available for comment.

Goldman had not disclosed that the SEC was considering a lawsuit but had known charges were possible and had urged the SEC not to file them, people familiar with the situation said on Friday. The sources requested anonymity because the probe was not public.

To better understand CDOs, the SEC in 2008 approached some hedge funds, including Paulson & Co, whose investment Paulo Pellegrini was among those to talk with the regulator.

By betting against subprime mortgage-related debt, Pellegrini helped Paulson's firm earn an estimated $15 billion in 2007. Pellegrini last year left to start his own firm.

Coming out swinging The lawsuit is a regulatory and public relations nightmare for Blankfein, who has spent 18 months fending off complaints that Goldman has been an unfair beneficiary of taxpayer bailouts of Wall Street.

Blankfein became chief executive less than a year before the product challenged by the SEC was created.

"This could be the beginning of a period where you have a regulatory cloud over Goldman Sachs, and perhaps even the entire investment banking industry," said Hank Smith, chief investment officer at Haverford Trust Co in Philadelphia.

John Paulson is not related to Henry "Hank" Paulson, who was Blankfein's predecessor as Goldman chief executive and later become U.S. Treasury secretary.

The SEC lawsuit represents an aggressive expansion of regulatory efforts to hold people and companies responsible for the nation's financial crises.

It could help the regulator rehabilitate its reputation after missing other high-profile cases, including Bernard Madoff's Ponzi scheme.

"The SEC has come out swinging," said Cary Leahey, senior managing director of Decision Economics in New York.

Robert Khuzami, head of the SEC's enforcement division, said John Paulson was not charged because it was Goldman that made misrepresentations to investors, not Paulson.

Still, Khuzami called Paulson's firm "a hedge fund that had a particular interest in the securities performing poorly."

More lawsuits to come? It is unlikely that criminal charges will be brought, a person close to the matter said. Representatives for the Justice Department declined to comment.

Yet the lawsuit is widely expected to spur other lawsuits, and is "probably the first of several," according to Doug Kass, president of hedge fund Seabreeze Partners Management.

"Regulators and plaintiffs' lawyers are going to be looking at other deals, to what kind of conflicts Goldman has," said Jacob Zamansky, a lawyer who represents investors in securities fraud lawsuits.

"I've been contacted by Goldman customers to bring lawsuits to recover their losses," he added. "With the SEC bringing fraud charges it's going to expose what's behind the curtain."

According to the SEC, Goldman marketing materials showed that a third party, ACA Management LLC, chose the securities underlying ABACUS, without revealing Paulson's involvement.
The SEC complaint quotes extensively from internal e-mails and memos, noting that in early 2007 it had become difficult to market CDOs tied to mortgage-backed securities.

It quoted a January 23, 2007, e-mail from Tourre to a friend as saying: "The whole building is about to collapse anytime now ... Only potential survivor, the fabulous Fab ... standing in the middle of all these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implications of those monstrosities!!!"

Another e-mail, to Tourre from the head of Goldman's structured product correlation trading desk, complained: "The CDO biz is dead we don't have a lot of time left."

Independence matters to clients Other communications detail the importance of hiring ACA.

The SEC said Goldman reached out to German bank IKB to buy securities that Paulson was selling, knowing it would buy only securities selected by an independent asset manager.
"We expect the strong brand-name of ACA as well as our market-leading position in synthetic CDOs of structured products to result in a successful offering," a March 12, 2007, Goldman e-mail said.

IKB ultimately took on exposure to ABACUS, as did the Dutch bank ABN Amro Holding NV.
The German government ultimately bailed out IKB in the summer of 2007, in part because of the bank's investments, while lenders that eventually bought much of ABN Amro were also subjected to their own government bailouts.

In a statement after U.S. markets closed, Goldman said it lost more than $90 million on the transaction, six times the $15 million fee it received, and provided "extensive disclosure" on the securities involved.

It also said it never represented to ACA Capital Management, which invested $951 million in the transaction, that Paulson was going to be a "long" investor, meaning that Paulson was betting the securities would gain in value.

Paulson & Co paid Goldman $15 million to structure and market the ABACUS CDO, which closed on April 26, 2007, the SEC said. Little more than nine months later, 99 percent of the portfolio had been downgraded, the SEC said.

Janet Tavakoli, president of Tavakoli Structured Finance Inc in Chicago and author of a book on synthetic CDOs, said it may have been common on Wall Street for hedge funds to play big roles in picking mortgage-backed securities for use in CDOs.

"Many investors were not aware of how disadvantaged they were by these CDO structures," she said.

Washington impactThe charges are expected to fuel anti-Wall Street sentiment on Capitol Hill where sweeping financial industry reforms are expected to soon arrive on the Senate floor for a vote.

A Democratic bill, strongly supported by President Barack Obama, would slap new restraints on major banks, likely curtailing their opportunities for profit and revenue growth.

Similar legislation was approved in the House of Representatives in December. Analysts believe a bill could be signed into law by Obama by mid-year.

"Banks were getting their mojo back, successfully fighting the regulatory reform bill," said James Ellman, president of Seacliff Capital in San Francisco. "Clearly, such malfeasance could help get the bill to go through."

Goldman in 2008 won a $5 billion investment from Warren Buffett's Berkshire Hathaway Inc.
Last month, Buffett praised Goldman as a "very, very strong, well-run business," and said of Blankfein, "You cannot find a better manager."

Buffett had no immediate comment, his assistant Carrie Kizer said.

The SEC lawsuit was assigned to U.S. District Judge Barbara Jones, who was appointed to the bench in 1995 by President Bill Clinton. She presided over the 2005 criminal trial of former WorldCom Inc Chief Executive Bernard Ebbers over an $11 billion accounting fraud at the phone company.

The case is SEC v. Goldman Sachs & Co et al, U.S. District Court, Southern District of New York, No. 10-03229.

Library of Congress Will Save Tweets

Mumbai Terrorist Was US Agent

A spy unsettles US-India ties

By M K Bhadrakumar News that the United States Federal Bureau of Investigation (FBI) had reached a plea bargain with David Coleman Headley, who played a key role in the planning of the terrorist strike in Mumbai in November 2008 in which 166 people were killed, has caused an uproar in India. The deal enables the US government to hold back from formally producing any evidence against Headley in a court of law that might have included details of his links with US intelligence or oblige any cross-examination of Headley by the prosecution. Nor can the families of the 166 victims be represented by a lawyer to question Headley during his trial commencing in Chicago. Headley's links with the US intelligence will now remain classified information and the Pakistani nationals involved in the Mumbai attacks will get away scot-free. Furthermore, the FBI will not allow Headley's extradition to India and will restrict access so that Indian agencies cannot interrogate him regarding his links with US and Pakistani intelligence. In return for pleading guilty to the charges against him Headley will get lighter punishment than the death sentence that was probably most likely.

Headley's arrest in Chicago last October initially seemed a breakthrough in throwing light on the operations and activities of Lashkar-e-Taiba (LeT), the Pakistan-based terrorist organization, in India. But instead the Obama administration's frantic efforts to cover up the details of the case have been taken to their logical conclusion. The plea bargain raises explosive questions. The LeT began planning the attack on Mumbai sometime around September 2006. According to the plea bargain, Headley paid five visits to India on reconnaissance missions between 2006 and the November 2008 strike, each time returning to the US via Pakistan where he met "with various co-conspirators, including but not limited to members of LeT". The plea bargain simply refers to the Pakistani handlers of Headley as A, B, C and D. But who are they? We will never know.

The LeT's close links with Pakistan's Inter-Services Intelligence (ISI) are legion and it is inconceivable that such a massive operation - with huge international ramifications and the potential to trigger war with India - could have been undertaken without the knowledge of the ISI, headed by General Ashfaq Parvez Kiani, the present army chief, from October 2004 until October 2007. The plea bargain says chillingly that after Headley's fifth visit to India, "Lashkar [LeT] Member A advised defendant [Headley] of a number of details concerning the planned attacks, including that a team of attackers was being trained in a variety of combat skills, the team would be traveling to Mumbai by sea and using the landing site recommended by the defendant, the team would be fighting to the death and would not attempt to escape following the attacks." Yet, the operative part of the plea bargain not only rules out Headley's extradition to India but does not show that Headley gave any kind of formal commitment to the FBI to subject himself to interrogation by the Indians.

He has merely agreed to give testimony in any foreign judicial proceeding that is held in US territory. In essence, the Americans are saying that they will tell the Indians what Headley is saying and there is no need to interrogate him face-to-face. This is diametrically opposite to the US's approach to the Lockerbie trial after a bombed Pan Am flight crashed into the Scottish town of Lockerbie in 1988. Altogether 270 died. Abdelbaset Ali Mohmed al-Megrahi, a Libyan, was convicted of involvement in the bombing. Again, the plea bargain confirms that Headley had a criminal record in the US from 1989 as a conspirator to import heroin and spent a total of six years in prison as a result of four convictions. He was later recruited as an agent by US drug-enforcement authorities, who after the 9/11 attacks in the US coordinated closely with the Central Intelligence Agency (CIA). How much did the CIA know? The plea bargain details that while working as an American agent Headley attended at least five “training courses” conducted by the LeT in Pakistan, including sessions in the use of weapons and grenades, close-combat tactics and counter-surveillance techniques, from February 2002 until December 2003.

Training courses in April and in December 2003 were each of three months' duration and in such close proximity to the 9/11 attacks that it stretches credulity to believe the CIA didn't care to know what their agent was doing in the LeT training camps. Today, the heart of the matter is how much did the CIA know in advance about the Mumbai terrorist strike and whether the Obama administration shared all "actionable intelligence" with Delhi? A senior Indian editor wrote on Sunday, "Headley ... was convicted on drug charges and sent to jail in the US. We know also that he was subsequently released from jail and handed over to the Drug Enforcement Administration, which said that it wanted to send him to Pakistan as an undercover agent. All this is a matter of public record. What happened between the time the US sent Headley into Pakistan and his arrest at Chicago airport a few months ago? How did an American agent turn into a terrorist? The US will not say." Yet, cooperation in the fight against terrorism lies within the first circle of US-India strategic cooperation. The Mumbai attacks led to unprecedented counter-terrorism cooperation between India and the US - "breaking down walls and bureaucratic obstacles between the two countries' intelligence and investigating agencies", as a prominent American security expert, Lisa Curtis, underscored in US congressional testimony on March 11 regarding the Mumbai attacks and Headley.

To quote Curtis, "Most troubling about the Headley case is what it has revealed about the proximity of the Pakistani military to the LeT." Curtis put her finger spot on the US government's deliberate policy to view the LeT through the prism of India-Pakistan adversarial ties. This is despite all evidence of the LeT's significant role since 2006 as a facilitator of the Taliban's operations in Afghanistan by providing a constant stream of fighters - recruiting, training and infiltrating insurgents across the border from the Pakistani tribal areas. The US policy is impeccably logical. It prioritizes the securing of Islamabad's cooperation on what directly affects American interests rather than squandering away Pakistani goodwill by Washington covering for the Indians. This political chicanery lies at the core of the unfolding Headley drama. What emerges, even if one were to give the benefit of the doubt to the CIA, is that Headley was its agent but he possibly got involved with Pakistan-based terrorist organizations and became a double agent.

No doubt, the US administration is behaving very strangely. It has something extremely explosive to hide from the Indians and what better way to do that than by placing Headley in safe custody and not risk exposing him to Indian intelligence? The speculation gaining respectability in Delhi is that Washington knew in advance about the Mumbai attack and deliberately chose not to pass on details to Delhi. Indeed, Washington knew of Headley's repeated missions to India from 2006 but did not share the information with the Indians. Headley, in fact, visited Mumbai once even after the city was attacked. Clearly, the Obama administration was apprehensive that Headley might spill the beans if the Indians got hold of him and the trail could then lead to his links with the CIA, the LeT and the Pakistani military. And where would that leave the US? Obama is obviously in no position to "pressure" the Pakistani military leadership.

The US's obsession is to somehow end the fighting in Afghanistan before the US presidential election campaign commences in 2012. The extent to which the US is beholden to the Pakistani military today is apparent from the about-turn lately by even a self-styled "agnostic" like the AfPak special representative, Richard Holbrooke, about the Pakistani military leadership's commitment to the fight against terrorism. A foreign policy in shambles All said, however, the Americans seem to count on their skill to manipulate the Indian elite. Robert Blake, the US assistant secretary of state for South Asia who used to be the deputy head of the US Embassy, visited Delhi last week on a damage-control exercise. He huddled with the Indian corporate sector, which is hugely influential with the political class.

However, will the strategy of leveraging the pro-US lobby in Delhi work this time to ease the strain in the US-India “partnership”? The Mumbai terror attack left deep scars in the Indian public psyche. For the first time in recent years, the Indian public has closed ranks with prevalent opinion in Pakistan that sees the US as a diabolic, self-centered power, which double-crosses its partners, friends and allies in single-minded pursuit of its interests. This perception has consequences for the democratically elected government in Delhi. The big question is whether the ruling party in India can any longer afford to be seen sharing Indian Prime Minister Manmohan Singh's robust enthusiasm for a US-centric foreign policy.

It has been a devastating blow to Manmohan's personal prestige that the FBI's plea bargain deal unfolded in the week he had earmarked for the tabling of legislation in parliament that would facilitate the entry of American companies into the Indian market for nuclear commerce. Manmohan's visit to Washington to attend a nuclear summit hosted by Obama on April 12 was expected to give a fillip to US-India ties, but Headley haunts the ambience surrounding that visit. The Headley case exposes the fallacies underlying India's foreign policy ever since Manmohan assumed office as prime minister in 2004 - that "strategic partnership" with the US could be central insofar as contacts with Pakistan were best conducted under the US watch and Delhi's interests as an emerging power lay in harmonizing with US regional policies.

A rethink on foreign policy has now become almost inevitable. Delhi recently rolled out the red carpet to Russian Prime Minister Vladimir Putin. Delhi may now seriously engage Tehran, despite Manmohan's manifest indifference toward India-Iran ties. The prime minister will find it even harder now to "operationalize" the India-US nuclear deal of 2008, due to an inability to legislate a liability bill that the US nuclear industry seeks as a pre-requisite for doing business in India. To what extent US expectations to corner a big share of India's arms bazaar are going to be realized us unclear, no matter the clout of US arms manufacturers with the Indian military community. All eyes in Delhi are trained on the US-Pakistan strategic dialogue in Washington on Wednesday in which Kiani is expected to pitch for a long-term strategic partnership between the two countries that duly recognizes Pakistan's pivotal role in US policies. Most certainly Delhi can be expected now to work full throttle to resist the US-Pakistani game plan to engage the Taliban and to reintegrate them in Afghan power structures.

The Headley saga underscores that the US-Pakistan axis in Afghanistan carries lethal potency for India's national security interests.

Ambassador M K Bhadrakumar was a career diplomat in the Indian Foreign Service. His assignments included the Soviet Union, South Korea, Sri Lanka, Germany, Afghanistan, Pakistan, Uzbekistan, Kuwait and Turkey.

Mumbai Terrorist Was US Agent

Alex Newman Reports: Mumbai Terrorist Was US Agent Part 1

U.S Agent Involved In Mumbai Terror Attack, Caught Preparing False flag Op. in Danemark

FBI Makes Deal with India, CIA Terrorist David Coleman Headley Spared Death and Extradition

U.S Agent Pleads Guilty to Planning The Mumbai Terror Attack

Children and Reuters journalists Killed in Iraq by U.S Military

Leaked video reveals chaos of Baghdad attack

(CNN) -- The soldiers of Bravo Company 2-16 Infantry had been under fire all morning from rocket-propelled grenades and small arms on the first day of Operation Ilaaj in Baghdad.
Two Apache attack helicopters, code-named Crazyhorse 18 and 19, headed out to help the ground troops clear insurgents from an area of the New Baghdad district of the Iraqi capital.
Forty minutes later, nine people in the street were dead, including a photographer and his assistant for the news agency Reuters. Two Iraqi children were injured, while U.S. forces suffered no casualties.

The engagement on July 12, 2007, gained international attention because of the deaths of the Reuters journalists.

Pentagon documents on the investigation (pdf)
Now, aerial footage from one of the helicopters made public by the Web site WikiLeaks has led to new revelations about exactly what happened in the sweltering heat that morning.
WikiLeaks, which publishes anonymously submitted documents, video and other sensitive materials, posted the aerial footage Monday.

The video footage showed that one of two photojournalists killed was being rescued when the gunship's crew fired on the van to which he was being carried. Saying the footage was still classified, Wikileaks contended it "clearly shows the unprovoked slaying of a wounded Reuters employee and his rescuers."

On Tuesday, the Pentagon made public a partially redacted report on the incident that concluded the Apache attackers had no way of knowing the journalists were among suspected insurgents on the street.

"It must be noted that details which are readily apparent when viewed on a large video monitor are not necessarily apparent to the Apache pilots during a live-fire engagement," the report said, adding that the pilots viewed the scene on a much smaller screen while trying to fly safely and look for enemy insurgents.

From that perspective, the journalists' cameras looked like weapons carried by the suspected insurgents, including rocket-propelled grenades and assault rifles, according to the report. In addition, the journalists lacked any distinctive clothing or markings to distinguish themselves from the combatants, the report said.

In a statement posted on the Reuters Web site Tuesday, the agency's editor-in-chief, David Schlesinger, called the footage "difficult and disturbing to watch, but also important to watch."
"I will continue to campaign for better training for the military -- to help as much as possible to teach the difference in form between a camera and an RPG or between a tripod and a weapon," Schlesinger's statement said.

The two photojournalists were Saeed Chmagh and Namir Noor-Eldeen. In the video footage, both can be seen carrying photo equipment as they walked in the streets of New Baghdad on the morning of the incident.

From the limited view of an aerial camera mounted on a helicopter gunship, the scene appears relatively calm. The journalists walk in the middle of the road amid a group of men, seemingly unconcerned about potential imminent danger.

To the military, the group of "military-aged men" represented a threat that required engagement.

Retired Army Brig. Gen. Mark Kimmitt told CNN on Tuesday the incident occurred at the height of the insurgency on a morning when fighting had occurred for four hours.

According to the investigation report dated July 17, 2007, five days after the incident, two in the group of men carried cameras with long lenses while some others had weapons including rocket-propelled grenades and automatic rifles.

"The cameras could easily be mistaken for slung AK-47 or AKM rifles, especially since neither cameraman is wearing anything that identifies him as media or press," the report says.
In the Apaches, the aerial attackers notified each other of weapons being carried by the group in the street.

"That's a weapon," says one voice on the transcript of the video. A few seconds later, a voice in Crazyhorse 18 confirms: "Have individuals with weapons."

"Yup, he's got a weapon, too," says the next recorded voice a few seconds later.

The helicopters get ready to attack, with a request to engage, or shoot, "five to six individuals with AK-47" rifles.

"Roger that. Uh, we have no personnel east of our positions. So, uh, you are free to engage. Over," comes the reply.

However, the men on the street have moved toward a building that blocks them from the view of the aerial camera, prompting the following comments on the helicopters' transcript:
"I can't get 'em now because they're behind that building," one voice says. Seconds later, another says one of the men on the street has a rocket-propelled grenade.

Again, the building obscures the view from the helicopters. The frustration becomes evident in the voices on the transcript.

"Yeah, we had a guy shoot -- and now he's behind the building," one voice says, while another curses.

"Just [expletive], once you get on 'em, just open 'em up," says one voice.
Seconds later, that is exactly what happens.

"You're clear," a voice says, followed by another that says, "All right, firing."
Multiple voices ensue, with calls of "Let's shoot," "Light 'em all up," and "Come on, fire."
A few seconds later, a voice says: "All right, we just engaged all eight individuals." In the ensuing exchange of information, one voice says: "All right, hahaha, I hit 'em."
On the ground, the group had gathered on the side of the road with little visible awareness of what was about to happen.

They are instantly cut down by the strafing from the Apache gunship's 30 mm machine gun and enveloped in a cloud of smoke and dust.

Asked by CNN why the men in the street appeared unprepared for the attack, Kimmitt noted the helicopter could have been as far as 800 meters away and might have looked to be circling the general area rather than focusing on them.

"What you're looking at is a screen under high magnification," Kimmitt said. "So it's very clear that had they seen helicopters aiming at them, they probably would have taken some different action. But our technology is such that we can do this from quite a distance away."

One of the journalists, Noor-Eldeen, appears in the video footage to have been killed in the first round of strafing. It shows that Chmagh surviving the initial shooting, but apparently he died when the gunship opened fire on people attempting to get him to a van that arrived, apparently to collect the wounded.

"We have individuals going to the scene, looks like possibly, uh, picking up bodies and weapons," says a voice on the transcript a few minutes after the initial shooting.
Repeated requests to open fire get no response, and voice can be heard saying: "Come on, let us shoot."

The order to engage, or start shooting, comes shortly thereafter. About 90 seconds later, a voice says: "No more shooting."

In the following minutes, ground soldiers on the scene find two wounded Iraqi children at the scene. The investigation report describes one of the children as a young girl in the van, who suffered a stomach injury.

"This tragic incident was investigated at that time by the brigade involved, and the investigation found that the forces involved were not aware of the presence of the two reporters, and that all evidence available supported the conclusion by those forces that they were engaging armed insurgents, and not civilians," Maj. Shawn Turner, a U.S. military spokesman, told CNN in a written statement Monday.

Turner rejected any insinuation that the U.S. Army tried to cover up the manner in which the journalists were killed, saying: "We regret the loss of innocent life, but this incident was promptly investigated, and there was never any attempt to cover up any aspects of this engagement."

The U.S. command in Iraq said the video was "presumably associated" with the raid that led to the two journalists' deaths, but said it was still working to verify the authenticity of the footage.
A total of 139 journalists, nearly 120 of them Iraqis, have been killed during the 7-year-old war, according to the New York-based Committee To Protect Journalists. At least 16 of those were killed by U.S. fire, and the committee said the video released Monday "raises questions about the actions of U.S. military forces and the thoroughness and transparency of the investigation that followed."

"This footage is deeply disturbing and reminds us of what journalists in war zones undergo to bring us the news," Joel Simon, the group's executive director, said in a written statement. "The video also confirms our long-held view that a thorough and transparent investigation into this incident is urgently needed."

Reuters' Schlesinger said the video footage, while difficult to watch, showed the extreme difficulties and threats that face journalists in conflict zones.
"There is no better evidence of the dangers each and every journalist in a war zone faces at any time," Schlesinger's statement said.

Along with his promised push for journalists' safety, Schlesinger said he also would "continue to press for thorough and objective investigations," and that he and Thomson Reuters Chief Executive Officer Tom Glocer would seek a meeting with Pentagon officials to "press the need to learn lessons from this tragedy."

"What matters in the end is not how we as colleagues and friends feel; what matters is the wider public debate that our stories and this video provoke," his statement said.

Wikileaks leaked video of Civilians killed in Baghdad - Full video