Incredible.
Henry Samueli, the co-founder of Broadcom has pled guilty to charges in connection with the backdating investigation at Broadcom. What is incredible is that Mr. Samueli did not plead guilty to backdating, or fraud, or any of the underlying crimes, he pled guilty to making a false statement to the SEC staff during the course of their investigation.
Another executive convicted of making false statements, rather than the underlying crime. Has corporate America lost its mind? Do people really think that the SEC staff is too stupid to figure out that you are lying?
And this one is worse. Martha Stewart was convicted of lying during an interview. She was not sworn, it was not a deposition, and was not a formal setting. While I am not condoning her conduct, it is somewhat understandable to succumb to the temptation to lie to save your own neck in an informal interview, sitting across a desk from the SEC attorney. Not the right thing to do, but one can understand the temptation.
According to the WSJ article, Mr. Samueli was testifying at a deposition, under oath, in the middle of a significant and well publicized investigation, and swore that he was not involved in the granting of backdated options for Broadcom's top executives. Well gee, he must have thought that the Staff was too dumb to find the January 2002 email that he sent to a bunch of people in which he said that the company should grant options to executives based on its October 2001 share price. I guess he figured that the four or five or six people that he sent it to would not have copies, and that the email retention policies of Broadcom would not have maintained copies, and that none of the people involved would ever remember the email, or discuss the email with investigators.
And he also must have thought that the SEC would not find the files that he received after that email from the HR department that detailed the backdated option grants.
Now, that doesn't sound like a very strong case for the SEC, and perhaps Mr. Samueli could have prevailed at a trial. I obviously don't know and I am not convinced that the procedure for backdating options was necessarily fraudulent. I also don't know that those two examples of his involvement are enough to get him convicted for lying to the Staff, or perjury, but apparently he and his lawyer thought so.
At the same time, the WSJ is saying that Mr. Samueli will be sentenced to 5 years of probation, no jail time and a 12 million dollar fine. It could very well be that Mr. Samueli decided to take the guarantee of no jail time on a marginal claim rather than risk a trial on the substantive claims, but that is not really my point.
My point is when taking to government investigators, tell the truth, or shut up. Those are your only two choices. Giving prosecutors a slam dunk on a perjury count is not the answer to your dilemma.
Ex-Broadcom Officer Pleads Guilty - WSJ.com
Tuesday, June 24, 2008
Saturday, June 21, 2008
Obama Proposes a 52% Tax Rate
I hate to raise political discussion here, but this presidential election has to be one the most concerning in my lifetime. There is simply no good choice among the candidates. Sure, McCain supporters will tell you that he is a war hero, and Obama's supports will tell you that he is a great speaker, but neither of them will, IMHO, be a great president.
And quite honestly, they both scare me. McCain for his age, his confusion, and his blind faith in following President Bush. And Obama because we don't know enough about him.
But here is what we do know. Obama intends to raise income taxes, and he intends to raise them big time. I will never forget his statement during the primaries, when he wanted to completely remove the cap on social security taxes. At the present, the tax is only paid on the first $102,000 of income. Obama proposed removing that cap completely, effectively raising taxes on everyone making over $102,000 by 7.5%. Think about that, if you are making over $102,000 a year, your marginal tax rate is 28%, if you make over $170,000 it is 33%. Today you pay 7.5% up to $102,000 for social security. If Obama has his way, the marginal tax rate for the guy who makes $150,000 a year will be 35%.
Obama's answer at the time? He didn't care, he said that he wasn't concerned because only 6%of the population earns over $100,000 a year. He clearly indicated his plan to soak the "rich" - defined as those of us making over $100,000, and he clearly does not care what we say about it.
Obama has changed his position a bit. Now he is proposing to keep the cap from $102,000 to $250,000, so that only those who earn over $250,000 will have this increase. So, the top wage earners will now have a tax rate of 42%, and for those who are self employed, and making over $350,000, their tax rate will now be a whopping 50%!
So, if you work hard, become successful, and do well, Obama wants to take 50% of your earnings for taxes, and he is doing that to the individuals who already pay over 90% of the taxes in this country. Then of course, add in state and local taxes, and that high income tax payer is going to be paying close to 60% of his adjusted gross income in taxes. SIXTY PERCENT IN TAXES!
Of course, all of these income figures are adjusted gross income, so the proposal affects a few less people than presented, but that is not the point. First, as pointed out by the Wall Street Journal, Social Security is not a welfare program. The reason there is a cap on the tax at $102,000, is that the maximum benefit that one can receive is based on a maximum salary of $102,000. I won't repeat the discussion here, but read the WSJ article - Obama is going to increase the social security tax on those making over $102,000, with no benefit to those people.
Obama's argument? He claims that it is unfair for middle-class earners to pay the Social Security tax "on every dime they make," while millionaires and billionaires pay it on only "a very small percentage of their income." In his original plan he was not raising the tax solely on millionaires and billionaires - he was raising it for cops, firemen, college professors, computer programmers, accountants, school administrators, and everyone else who makes $103,000 a year - these people are hardly millionaires. The current revision raises the bar a bit, but people making $250,000 are hardly millionaires - not when the average price of a home in the northeast is $280,000, and real estate taxes run at a rate of 3% or so a year.
And if it is not fair that they don't pay social security tax on "every dime they make" why is it fair to force them to pay taxes on "every time they make" when they will never, ever, see the benefit of that tax?
Someone needs to remind our politicians that this is not a welfare state, and we all need to take care of ourselves. Sure, we need to assist others in trouble, but that does not mean that we keep raising taxes and squandering the taxes on pork and election year handouts.
But I have a unique idea - how about we cut spending by 10%. A measly 10% off of the federal budget. The federal budget is 3 TRILLION dollars (without the Iraq war). Take out mandatory spending - social security, medicare, unemployment benefits and interest on the national debt, and the budget is ONE TRILLION DOLLARS. Take out defense, and the budget is 600 BILLION. See Wikipedia's budget summary for the exact figures.
Cut that part of the budget, across the board, by 10%, and there is a savings of SIXTY BILLION DOLLARS.
I know that none of this affects most Americans, but it should concern every American. If it does not affect you, it affects your community and will undoubtedly effect you as those who are being soaked by taxes raise their prices to make up for the lost income. More importantly, it will affect your children, who will do what you ask them to do - work hard, be successful and earn a good living.
We are not a socialist country. Our foundations are in the concept of work hard, better yourself, and be successful. We cannot punish those who succeed with oppressive taxes, and continue to hand out money to the masses without destroying our economic system, and ultimately, our country.
And quite honestly, they both scare me. McCain for his age, his confusion, and his blind faith in following President Bush. And Obama because we don't know enough about him.
But here is what we do know. Obama intends to raise income taxes, and he intends to raise them big time. I will never forget his statement during the primaries, when he wanted to completely remove the cap on social security taxes. At the present, the tax is only paid on the first $102,000 of income. Obama proposed removing that cap completely, effectively raising taxes on everyone making over $102,000 by 7.5%. Think about that, if you are making over $102,000 a year, your marginal tax rate is 28%, if you make over $170,000 it is 33%. Today you pay 7.5% up to $102,000 for social security. If Obama has his way, the marginal tax rate for the guy who makes $150,000 a year will be 35%.
Obama's answer at the time? He didn't care, he said that he wasn't concerned because only 6%of the population earns over $100,000 a year. He clearly indicated his plan to soak the "rich" - defined as those of us making over $100,000, and he clearly does not care what we say about it.
Obama has changed his position a bit. Now he is proposing to keep the cap from $102,000 to $250,000, so that only those who earn over $250,000 will have this increase. So, the top wage earners will now have a tax rate of 42%, and for those who are self employed, and making over $350,000, their tax rate will now be a whopping 50%!
So, if you work hard, become successful, and do well, Obama wants to take 50% of your earnings for taxes, and he is doing that to the individuals who already pay over 90% of the taxes in this country. Then of course, add in state and local taxes, and that high income tax payer is going to be paying close to 60% of his adjusted gross income in taxes. SIXTY PERCENT IN TAXES!
Of course, all of these income figures are adjusted gross income, so the proposal affects a few less people than presented, but that is not the point. First, as pointed out by the Wall Street Journal, Social Security is not a welfare program. The reason there is a cap on the tax at $102,000, is that the maximum benefit that one can receive is based on a maximum salary of $102,000. I won't repeat the discussion here, but read the WSJ article - Obama is going to increase the social security tax on those making over $102,000, with no benefit to those people.
Obama's argument? He claims that it is unfair for middle-class earners to pay the Social Security tax "on every dime they make," while millionaires and billionaires pay it on only "a very small percentage of their income." In his original plan he was not raising the tax solely on millionaires and billionaires - he was raising it for cops, firemen, college professors, computer programmers, accountants, school administrators, and everyone else who makes $103,000 a year - these people are hardly millionaires. The current revision raises the bar a bit, but people making $250,000 are hardly millionaires - not when the average price of a home in the northeast is $280,000, and real estate taxes run at a rate of 3% or so a year.
And if it is not fair that they don't pay social security tax on "every dime they make" why is it fair to force them to pay taxes on "every time they make" when they will never, ever, see the benefit of that tax?
Someone needs to remind our politicians that this is not a welfare state, and we all need to take care of ourselves. Sure, we need to assist others in trouble, but that does not mean that we keep raising taxes and squandering the taxes on pork and election year handouts.
But I have a unique idea - how about we cut spending by 10%. A measly 10% off of the federal budget. The federal budget is 3 TRILLION dollars (without the Iraq war). Take out mandatory spending - social security, medicare, unemployment benefits and interest on the national debt, and the budget is ONE TRILLION DOLLARS. Take out defense, and the budget is 600 BILLION. See Wikipedia's budget summary for the exact figures.
Cut that part of the budget, across the board, by 10%, and there is a savings of SIXTY BILLION DOLLARS.
I know that none of this affects most Americans, but it should concern every American. If it does not affect you, it affects your community and will undoubtedly effect you as those who are being soaked by taxes raise their prices to make up for the lost income. More importantly, it will affect your children, who will do what you ask them to do - work hard, be successful and earn a good living.
We are not a socialist country. Our foundations are in the concept of work hard, better yourself, and be successful. We cannot punish those who succeed with oppressive taxes, and continue to hand out money to the masses without destroying our economic system, and ultimately, our country.
Friday, June 20, 2008
The 'Perp Walk' Debate: Prejudicial or Legit?
The WSJ Law Blog is discussing one of my pet peeves - the perp walk - when prosecutors take an innocent person, in handcuffs, and parade him or her before the press for a photo op. It is a disgusting practice, undermines a basic tenant of our constitution, and is simply low class.
They just did it to the two Bear Stearns money managers who were indicted yesterday. There is simply no valid reason for this practice, except to humiliate the victim. Defendants surrender themselves with their attorney all of the time, without fanfare. Parading the defendant in handcuffs, in public, when he hasn't even been arraigned, nevermind convicted, is remincent of Medieval public stocks as punishment. But even in those times, the humiliation was for the guilty, not the arrested.
Giuliani used "perp walks" all the time. I was involved in one case many years ago when he was the United States Attorney in the SDNY. The feds had arrested 6 or 7 stockbrokers, and marched them from the federal building in Foley Square to the Courthouse, all handcuffed together. For those of you not familiar with downtown NYC, that walk is over a city blocks, through a park. The marshals walked a bit faster than the victims, and stretched them out across the park, making a great public display for the press.
It was so outrageous that it became a Saturday Night Live news item-"Wall Street brokers start fundraiser - Handcuffs across America." There was absolutely no reason for that conduct. None. Except for some perverse sense of pleasure in humilating another human being - who was innocent, by the way.
Giuliani had a couple of other tricks, like arresting a senior trader on the trading floor, with the press in attendance. Of course, none of the stock brokers in my case were ever convicted of anything, and the senior trader was not convicted of anything either. How do you undo the punishment that you unilaterally imposed on the innocent victim of your perverse sense of justice? You can't.
Prosecutors use the "perp walk" to humiliate the victim, and to get their name in the paper, and for no other reason. It is an outrage, and should be stopped immediately. If Judge Mukasy won't stop it, we need a federal judge to dismiss an indictment becuase of prosecutorial misconduct. That will stop the practice in a heartbeat.
Law Blog - WSJ.com : The 'Perp Walk' Debate: Prejudicial or Legit?: "The ‘Perp Walk’ Debate: Prejudicial or Legit?"
They just did it to the two Bear Stearns money managers who were indicted yesterday. There is simply no valid reason for this practice, except to humiliate the victim. Defendants surrender themselves with their attorney all of the time, without fanfare. Parading the defendant in handcuffs, in public, when he hasn't even been arraigned, nevermind convicted, is remincent of Medieval public stocks as punishment. But even in those times, the humiliation was for the guilty, not the arrested.
Giuliani used "perp walks" all the time. I was involved in one case many years ago when he was the United States Attorney in the SDNY. The feds had arrested 6 or 7 stockbrokers, and marched them from the federal building in Foley Square to the Courthouse, all handcuffed together. For those of you not familiar with downtown NYC, that walk is over a city blocks, through a park. The marshals walked a bit faster than the victims, and stretched them out across the park, making a great public display for the press.
It was so outrageous that it became a Saturday Night Live news item-"Wall Street brokers start fundraiser - Handcuffs across America." There was absolutely no reason for that conduct. None. Except for some perverse sense of pleasure in humilating another human being - who was innocent, by the way.
Giuliani had a couple of other tricks, like arresting a senior trader on the trading floor, with the press in attendance. Of course, none of the stock brokers in my case were ever convicted of anything, and the senior trader was not convicted of anything either. How do you undo the punishment that you unilaterally imposed on the innocent victim of your perverse sense of justice? You can't.
Prosecutors use the "perp walk" to humiliate the victim, and to get their name in the paper, and for no other reason. It is an outrage, and should be stopped immediately. If Judge Mukasy won't stop it, we need a federal judge to dismiss an indictment becuase of prosecutorial misconduct. That will stop the practice in a heartbeat.
Law Blog - WSJ.com : The 'Perp Walk' Debate: Prejudicial or Legit?: "The ‘Perp Walk’ Debate: Prejudicial or Legit?"
Tuesday, June 3, 2008
Mel Weiss Sentenced to 30 Months for Kickback Scheme
Mel Weiss, the former king of the plaintiff's class action bar, was sentenced to 30 months in prison after plead guilty to charges that he and some of his partners obtained $251 million dollars in attorney fees, by paying $11 million in illegal kickbacks to lead plaintiffs. While that is a typical prosecutor's view of the world, there was a kickback scheme since Weiss plead guilty to a federal racketeering conspiracy charge, admitting he lied to judges and secretly paid kickbacks to plaintiffs, in cash or through intermediary law firms, as part of a criminal enterprise that lasted 25 years.
Weiss also agreed to forfeit $9.75 million and to pay a $250,000 fine.
The WSJ is reporting that Milberg is close to a $75 million dollar settlement with prosecutors, his trial is set to begin in August.
The story is at Law.com - http://www.law.com/jsp/article.jsp?id=1202421890210&rss=newswire
Weiss also agreed to forfeit $9.75 million and to pay a $250,000 fine.
The WSJ is reporting that Milberg is close to a $75 million dollar settlement with prosecutors, his trial is set to begin in August.
The story is at Law.com - http://www.law.com/jsp/article.jsp?id=1202421890210&rss=newswire
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