Category: Law and Lawyers
Zero Hedge, Bulgaria, and Me
Much to my surprise, my blog post last month about the popular US website Zero Hedge and its ties to Bulgaria has turned into a big story in Buglaria.
If you can read Bulgarian here’s some of the coverage:
Club.bg story on Zero Hedge and me
Frog News.bg story on Zero Hedge and me
English language Q&A with Frog News’ Diana Yonkova (Bulgarian version)
Here’s what happened: On December 23rd, I received word that a criminal complaint has been filed against me with the general prosecutor in Bulgaria.
The complaint was filed by Krassimir Ivandjiiski, who registered the Zero Hedge website in Bulgaria and manages the company that owns it.
Krassimir’s son, Daniel, runs Zero Hedge, which publishes a mix of finance, global news and pro-Russia commentary and is popular with right-wingers and people like Donald Trump Jr. and Nigel Farage.
Krassimir Ivandjiiski has accused me of various “crimes.” I should note that Mr. Ivandjiiski did not tell me what crimes I had allegedly committed, nor did he inform what country’s laws I may have violated. He also refused to provide me a copy of the complaint, but he did send me an English translation that I have posted here as a PDF.
According to Mr. Ivandjiiski it’s a crime to reveal public information such as Zero Hedge’s domain registration and corporate filings. He is also upset that I pointed out the blatantly anti-Semitic content he publishes on his Buglarian website, Strogo Sekretno (Top Secret).
Krassimir Ivandjiiski demanded that I take down my blog post by December 31st, which I have refused to do. I have hired a lawyer in Bulgaria, Nikolay Hadjigmenov to represent my interests. It would set a terrible precedent if I am charged with a crime for writing a story someone didn’t like.
I’ve set up a GoFundMe to defray the costs of representation, as I make no money from this site and assume the legal risks myself. So if you support this kind of work and value a free press, please consider making a donation.
Lanny Davis and Metabolife
My Rolling Stone piece on Michael Cohen’s attorney Lanny Davis, who also represents a high-level Russian Mafia associate, is up. You can read it here.
[Apologies for repeating this post a second time, but after I posted an earlier draft, I realized, as I often do, that this might be something worth publishing.]
I’ve been aware of Davis for a long time, ever since his days representing a sleazy San Diego firm called Metabolife.
Metabolife was founded in 1995 by a man named Michael Ellis, an ex-cop who had a felony record for a meth lab bust in the San Diego suburb of Rancho Santa Fe. While on probation, Ellis had a brilliant idea. He realized that, thanks to a loophole in the law, he could sell speed legally. Thus was born Metabolife.
Metabolife’s pills contained ephedra, the herbal form of the stimulant ephedrine, which is a key ingredient in methamphetamine. It was legal to sell ephedra at the time, thanks to a law sponsored by Senator Orrin Hatch, the Utah Republican, who dabbled in the vitamin business as a young man.
Hatch’s law deregulated the dietary supplements industry. Dietary supplement makers no longer had to show their products were safe. Under the law, Metabolife had no duty to report even the deaths of its customers.
Sales took off. Revenues at privately-held Metabolife had soared to more than $360 million in four years, but the company had a problem: People who gobbled its pills sometimes wound up in the hospital — or worse. One user’s heart rate zoomed to 300 beats a minute. Some turned into psychotic speed freaks. A Government Accounting Office report found Metabolife’s pills caused 18 heart attacks, 26 strokes, 43 seizures and five deaths.
When Congress started to investigate whether Ellis“put sales above safety,” Metabolife hired Lanny Davis, who was then with the DC powerhouse firm of Patton Boggs. (Interestingly, Cohen worked for the same firm, now known as Squire Patton Boggs, after Trump’s election.)
I wrote a story for The Associated Press in 2004 pointing all this out:
“Patton Boggs earned millions helping project reassurances to Congress and its customers that Metabolife products were safe,” I wrote. “In mid 2002, Patton Boggs lobbyist Lanny Davis wrote a senator whose subcommittee was investigating Metabolife that the company had received only 78 ‘unproven, anecdotal allegations’ of strokes, heart attacks, seizures and deaths.”
Prosecutors alleged company founder Michael Ellis lied about Metabolife’s safety record in a 1998 letter to the U.S. Food and Drug Administration, which Patton Boggs attorneys helped him draft. (One former and four current Patton Boggs attorneys were subpoenaed by a federal grand jury in San Diego. A judge ruled they had to testify.)
Here’s a snippet of the FDA letter:
That wasn’t true. The FDA finally banned sales of ephedra in 2004, saying it was linked to 155 deaths, including 23-year-old Baltimore Orioles pitcher Steve Bechler. Ellis was eventually convicted of lying to the FDA; Metabolife pleaded guilty to tax evasion.
The conclusion is this: Davis and Patton Boggs helped Metabolife as it covered up a health crisis. Before I get a nasty letter from Mr. Davis, let me say that there’s no evidence that he did anything wrong or acted unprofessionally. But credibility matters, and after years of representing shady clients, Davis’ may find his credibility in short supply when he needs it most.
Devin Nunes v Fusion GPS
What are the limits of a congressional committee’s power?
That is the question posed by the actions of Rep. Devin Nunes who is using — abusing, some say — his power as chairman of the House intelligence committee to investigate Fusion GPS, the company that produce the Steele dossier.
In its purported investigation of Russian meddling in the 2016 election, the committee has issued a single subpoena for financial records. That subpoena went to Fusion GPS’ bank and is now the subject of a lawsuit in U.S. District Court in Washington D.C.
You’ll recall that Chairman Nunes worked on the Trump campaign and purportedly recused himself from his committee’s Russia investigation. But he is unable to restrain himself when it comes to Fusion GPS. The subpoena to the firm went out with his signature on it.
Fusion GPS says the subpoena, which demands years of records, is little more than a transparent effort by Chairman Nunes to expose its clients — even those that had nothing to do with Russia — and destroy the secretive company’s business model.
It’s worth noting that Deutsche Bank, which has all sorts of shady dealings with Russia and continued lending to Trump even after he sued them, got a pass from Chairman Nunes’ committee.
In a more recent court filing a few days ago, lawyers for Fusion GPS make the claim that Chairman Nunes is actively working to undermine his own committee’s investigation:
There is evidence that the Committee is coordinating with the President, his personal lawyers, and the Senate Judiciary Committee to misdirect attention to Fusion and its associates in an effort to punish and discredit Fusion, due to their perceived role in exposing the ties between the Trump campaign and the Russians. This coordinated effort includes the subpoena to Fusion’s bank and the apparent leaks from the Committee, and it has been amplified in recent days by attacks on the FBI and Justice Department by members of Congress, the President, and his lawyers.
In its pleadings to the court, Fusion GPS cites the Supreme Court ruling in Watkins v. United States. This case involved John Watkins, a labor organizer, who in 1954 was subpoenaed to testify before Sen. Joe McCarthy’s House Committee on Un-American Activities. Watkins answered questions about his own activities in the Communist Party but he refused to answer questions about other people. He was convicted of contempt of Congress, but appealed his conviction saying Congress had abused its powers.
The Supreme Court agreed, ruling 6-1, that Congress’ power to investigate was broad, but not unlimited. “No inquiry is an end in itself; it must be related to, and in furtherance of, a legitimate task of the Congress,” the court ruled. “Investigations conducted solely for the personal aggrandizement of the investigators or to ‘punish’ those investigated are indefensible.”
Indefensible seems an apt work to describe Chairman Nunes’ investigation of Fusion GPS.
Mark Cuban files brief supporting … Ray Lucia?
Update: A federal appeals court denied Ray Lucia’s appeal to have his lifetime ban overturned in August 2016.
Mark Cuban, the outspoken Dallas Mavericks owner, is a regular on Shark Tank, a show where he’s regularly pitched by entrepreneurs seeking to expand their businesses.
Cuban and the other investors say “I’m in” or “I’m out” depending on whether they like the pitch or not.
Cuban is obviously a savvy investor, but he’s an explosive guy. He’s known in the sports world for his outbursts at NBA officials and referees that have cost him more than $1 million in fines.
Today, I learned that Cuban has filed a friend of the court brief on behalf of Ray Lucia, a former San Diego investment adviser who was permanently banned from trading by federal securities regulators. This legal brief is the courtroom equivalent of an angry outburst at NBA official.
Cuban filed his brief this month in Lucia’s appellate lawsuit against the U.S. Securities and Exchange Commission before the D.C. Circuit Court of Appeals. Lucia argued that his lifetime ban should be thrown out since his case was heard by an administrative law judge, instead of an appointed officer, as required by the U.S. Constitution.
His brief, filed Feb. 8, states, “As a first-hand witness to and victim of SEC overreach, Mr. Cuban has an interest in supporting petitioners’ appeal in this case, and in particular demonstrating that both statutory language and legislative history clearly show that Congress specifically intended that SEC hearings only be held before constitutional officers.”
Seems like weak stuff to me, but Mark Cuban is a vindictive fellow and he has an axe to grind.
The SEC accused Cuban of insider trading when he sold his stake in a Canadian Internet company to avoid a $750,000 loss. Cuban maintained his innocence, and was acquitted by a federal jury in Texas three years ago.
Cuban goes on to state, “When the laws are applied inconsistently or the process by which they are enforced is rigged to favor the government, capital formation is impeded because market participants do not have clear rules for understanding their investment risks.”
This is the point where I say “I’m out.” Ray Lucia wasn’t some bold entrepreneur chasing the next big thing. He was making millions fleecing retirees out of their nest eggs.
I started writing critically about Lucia in 2010 after his attorney threatened to sue me for $300,00 . I figured that if someone would bother with a bozo like me something must be seriously wrong. Turns out, I was right.
Back then, Lucia was at the height of his power. He had thousands of accounts and $300 million in assets under management. In the 12 months leading up to January 31, 2010, his family of companies reported $14.1 million in gross income, according to court records.
Lucia made money mainly by collecting commissions on those who fell for his “Buckets of Money” strategy. He pitched retirees at flashy seminars, often with the help of his buddy, actor Ben Stein.
Elderly clients were convinced to invest in non-traded real estate investment trusts (REITs) that locked away their money for years. That’s not a great position for an elderly person who needs liquidity, but when REITs are generating $8.7 milllion in gross commissions for Lucia’s companies in 2010, you might overlook such details.
Lucia assured his clients they could retire in comfort because he had backtested his “Buckets of Money” strategy and it was based on “science, not art.” The SEC called his bluff and today, Lucia says he is nearly bankrupt.
Someone, however, must be paying for Lucia’s legal team at Gibson, Dunn & Crutcher, one of the country’s top law firms. Is that you Mark?
Saudi Takedown Notice
I have received a letter from a law firm requesting that I takedown an affidavit filed in New York State Supreme Court that listed $1 billion worth of properties secretly owned by HRH Prince Abdul-Aziz bin Fahd, the youngest and favorite son of King Fahd, and his relative, Sheik Khalid N Al Assaf.
I downloaded the document while it was publicly available on the court’s website and posted it here after I read an article about it in Britain’s Independent newspaper. The affidavit has since been sealed and removed from the court’s website.
Attorney Howard Kaplan of Arkin Kaplan Rice LLP says the affidavit “contains or purports to contain obviously proprietary and sensitive business information. It is extremely detrimental to our clients’ interests to have this confidential information still available on and downloadable from your blog side. Moreover, the Hill affidavit itself is not only one-sided but, in many instances, demonstrably false.”
I am considering Kaplan’s request and would like to hear from any readers as to whether they believe there is any value in having this information remain publicly available.
Full disclosure: Kaplan’s partner, Stanley Arkin, and I met socially, but we have not communicated in years.