Call of Duty Sells Billions : Makers Head to Court

Activision's wildly popular video game "Call of Duty: Black Ops" has streaked past the billion-dollar sales mark this month, but the gaming company may not have a lot to celebrate this Christmas.

Activision has been in a pitched battled with "Call of Duty" developers since April, and on Tuesday, the company pulled another player, Electonic Arts, into the lawsuit. The developers, Jason West and Vincent Zampella, had created Activision's blockbuster Call of Duty franchise as heads of Infinity Ward, a studio Activision bought in 2003.

In the amended lawsuit, Activision names EA as a defendant, accusing the Redwood City, Calif., publisher of hatching a secret plot to "destabilize, disrupt and ... destroy Infinity Ward." The lawsuit accused EA of working through talent management firm Creative Artists Agency to "hijack" West and Zampella from Infinity Ward, based in Encino.

'Millionaire' Creators Win $319m Verdict Against Disney

A federal district court judge in Riverside on Tuesday denied the Walt Disney Co.'s attempts to overturn a verdict awarding $319 million in damages and interest to the creators of "Who Wants to Be a Millionaire," reports the Los Angeles Times.

Judge Virginia Phillips denied Disney's motions seeking to throw out the jury's July verdict or to order a new trial in the 6-year-old dispute. Disney has 30 days in which to appeal the decision.

The British creators of the game show, Celador International, sued Disney in 2004, claiming it had been denied its ability to profit from the success of the game show, which aired on the entertainment giant's ABC network for three years, beginning in the summer of 1999. Celador argued that a series of "sweetheart deals" struck among a clutch of Disney-owned companies kept the show in the red, even as it became ABC's first No. 1 show in more than a decade.

Celador had asked the jury to award damages of up to $395 million, based on experts' estimates of the profit "Millionaire" would have generated had the network paid a fair-market price. The jury awarded slightly less -- $260 million in network fees and $9.2 million in money owed from the sale of related merchandise.

Legal Jobs Decline for Second Straight Month

Despite upbeat forecasts earlier this week, the monthly employment report from the Bureau of Labor Statistics shows slower than expected growth in the private sector, and a significant drop in jobs in the legal sector.

The report, released Friday, shows that the legal services sector lost 1,100 jobs in November after experiencing a drop in October, as well. Those losses come at a time when many analysts were expecting healthy growth. The New York Times reports that an increase of 150,000 jobs had been the consensus prediction. More.

Comic Book Artist's Estate Sues Marvel To Terminate Lucrative Copyright Licenses

A New York federal judge has weighed in on an important case that could be worth billions of dollars and impact the future of Iron Man, X-Men, The Incredible Hulk, Spider-Man, and other iconic super-hero characters.

The case involves the ongoing attempt by the estate of comic book artist Jack Kirbyto terminate a copyright grant over his legendary work. After Kirby's children served 45 notices of copyright termination, Marvel Entertainment sued the estate in New York District Court, seeking a declaration that the creations were "works-made-for-hire" and not eligible for termination. The estate countersued, seeking its own declaration that the termination notices were served properly to Marvel.

Last month, New York federal judge Colleen McMahon rejected a bid by Marvel to throw out the Kirby estate's main counterclaim. The judge decided it wasn't a "redundant" claim, meaning she will soon have an opportunity to shake up Marvel's universe, if she so decides, with a potentially devastating future ruling.

But the judge's decision wasn't a complete loss for Marvel. Far from it.

The studio was successful in avoiding an accounting on how much money is potentially at stake. Judge McMahon agreed with Marvel's contention that it would be premature to adjudicate the issue before it's decided whether or not the Kirby material can be terminated. More.

Catfish Documentary Sparks Fair Use Battle

Ever since Catfish premiered at Sundance in January, the documentary has engendered controversy. Made for just $30,000, it grossed more than $3 million and has left audiences scrambling to figure out whether the amazing story being told is just an elaborate hoax.

We might get an answer to that question, thanks to a lawsuit filed today in U.S. District Court in Los Angeles against distributors Universal and Relativity Media, as well as the directors and producers of the film. The lawsuit filed by Threshold Media seeks statutory damages and profits from the defendants and an injunction.

In one of the crucial scenes of Catfish, Angela-posing-as-Megan sends Nev a song that she claims to be hers. It wasn’t, of course. In truth, it was a YouTube version of the song All Downhill From Here by singer-songwriter Amy Kuney, who is signed to Spin Move Records, owned by Threshold Media Corp. Later in the film, during the closing credits, Kuney's entire song is again played.

At first, Spin Move seemed proud of Kuney’s quasi-involvement in the film, touting it on its website. But the record label soon removed the post.

For some time now, Threshold has been attempting to get filmmakers to pay licensing fees for the song. According to the new copyright infringement lawsuit, the producers have rejected doing so. According to Threshold’s LA lawyer, Neville Johnson, the producers claimed that since the song was part of a real-life documentary, it was a “fair use” of the copyright. More.

SAGWatch News Aggregator Cleared of Wrongdoing

The anonymously run SAGWatch website, which aggregates news about SAG, AFTRA and other Hollywood unions, has long come under fire by members of SAG’s MembershipFirst faction, the now all but defunct group associated with former guild president Alan Rosenberg. They criticize the site for its pro-merger and anti-MembershipFirst stance.

In October, as The Hollywood Reporter reported, anonymous claims surfaced that AFTRA board member David Browde runs the website and that by so doing was in violation of an agreement between SAG and AFTRA that prohibits leaders of each union from disparaging the other union. Browde told THR then that the accusation was false. AFTRA said it would investigate.

On Wednesday, AFTRA released a statement that its outside counsel had concluded an investigation and "found no evidence suggesting any infractions (of the non-disparagement agreement and the union's own confidentiality rules) took place." More.

Ex-Associate Sues Akin Gump for Biased Termination

An ex-associate in Akin Gump Strauss Hauer & Feld's New York office has sued the law firm, claiming Akin Gump discriminated against her when it fired her for purported economic reasons in 2009.

Tameka Simmons, who said she was the only black female attorney in the New York office before being let go, accused the 800-lawyer firm of creating "pretextual" economic reasons for her firing. The lawsuit, filed in the U.S. District Court for the Southern District, also accuses the firm of denying Ms. Simmons mentoring, supervision and work opportunities promised when she was recruited from Debevoise & Plimpton in 2007.

Ms. Simmons, who is claiming discrimination and retaliation under federal and state law, is seeking unspecified compensatory and punitive damages. She also is seeking to force Akin Gump to reinstate her as an associate and pay her the earnings and benefits she would have received had she not been fired. More.

Quadrangle Group's Steve Rattner Charged in Pay To Play Scheme

The Securities and Exchange Commission earlier this month charged former Quadrangle Group principal Steven Rattner with participating in a widespread kickback scheme to obtain investments from New York’s largest pension fund.

The SEC alleges that Rattner secured investments for Quadrangle from the New York State Common Retirement Fund after he arranged for a firm affiliate to distribute the DVD of a low-budget film produced by the Retirement Fund’s chief investment officer and his brothers. Rattner then caused Quadrangle to retain Henry Morris – the top political advisor and chief fundraiser for former New York State Comptroller Alan Hevesi – as a “placement agent” and pay him more than $1 million in sham fees even though Rattner was already dealing directly with then-New York State Deputy Comptroller David Loglisci and did not need an introduction to the Retirement Fund.

The SEC alleges that after receiving pressure from Morris, Rattner also arranged a $50,000 contribution to Hevesi’s re-election campaign. Just a month later, Loglisci increased the Retirement Fund’s investment with Quadrangle from $100 million to $150 million. As a result of the $150 million investment with Quadrangle, the Retirement Fund paid management fees to a Quadrangle subsidiary. By virtue of his partnership interest in Quadrangle and its affiliates, Rattner’s personal share of these fees totals approximately $3 million.

Rattner agreed to settle the SEC’s charges by paying $6.2 million and consenting to a bar from associating with any investment adviser or broker-dealer for at least two years.

“New York State retirees deserve investment advisers that are selected through a transparent, conflict-free process, not through payoffs, undisclosed financial arrangements and movie distribution deals,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. David Rosenfeld, Associate Director of the SEC’s New York Regional Office, added, “Rattner delivered special favors and conducted sham transactions that corrupted the Retirement Fund’s investment process. The assets of New York State workers were invested for the hidden purpose of enriching Morris and Loglisci’s brother.”

The SEC previously charged Morris and Loglisci for orchestrating the fraudulent scheme that extracted kickbacks from investment management firms seeking to manage the assets of the Retirement Fund. The SEC charged Quadrangle earlier this year.

According to the SEC’s complaint against Rattner filed in U.S. District Court for the Southern District of New York, Morris informed Rattner in the fall of 2003 that Loglisci’s brother was involved in producing a film called “Chooch.” Morris suggested that Rattner help Loglisci’s brother with the theatrical distribution of the film. Rattner met with Loglisci’s brother and agreed to assist him, but Rattner’s efforts did not lead to a distribution deal. Approximately one year later, Loglisci’s brother contacted Rattner about DVD distribution of “Chooch.” Within days of speaking to Loglisci’s brother, Rattner contacted Loglisci about investing in a new Quadrangle private equity fund being marketed by the firm. Rattner told Loglisci that he had arranged a meeting between Loglisci’s brother and a Quadrangle affiliate — GT Brands — to discuss a possible DVD distribution deal.

The SEC alleges that after Loglisci’s brother met with GT Brands and telephoned Rattner to complain about the treatment he had received from GT Brands, Rattner warned a GT Brands executive to treat Loglisci’s brother “carefully” because Quadrangle was trying to obtain an investment through Loglisci. After GT Brands made clear to Rattner that it was not interested in distributing the film, Rattner instructed the GT Brands executive to “dance along” with Loglisci’s brother. According to an e-mail, Rattner telephoned Morris to inquire whether “GT needs to distribute [the Chooch] video” in order to secure an investment from the Retirement Fund. Morris offered to “nose around” to determine how important the DVD distribution deal was to Loglisci. GT Brands ultimately reversed course and offered to manufacture and distribute the DVD at a discount from its standard fee. Rattner approved the proposed terms of the distribution deal.

The SEC’s complaint alleges that in late October 2004, after Rattner and others from Quadrangle had already met with Loglisci and the Retirement Fund’s private equity consultant and received encouraging feedback from both of them, Morris met with Rattner and offered his placement agent services to Quadrangle. Morris warned Rattner that Quadrangle’s negotiations with the Retirement Fund could always fall apart. Although Quadrangle was already working with a placement agent, Quadrangle agreed to pay Morris as well.

According to the SEC’s complaint, soon after Quadrangle retained Morris as a placement agent and Rattner had advised Morris that GT Brands was moving forward with the deal to distribute the Chooch DVD, Loglisci personally informed Rattner that the Retirement Fund would be making a $100 million investment in the Quadrangle fund.

The SEC alleges that Morris later contacted Rattner and pressed him for a financial contribution to Hevesi’s re-election campaign. Although Rattner purportedly had a personal policy that he would not make political contributions to politicians who have influence over public pension funds, Rattner agreed to find someone else to make the contribution. After speaking with Morris, Rattner asked a friend and the friend’s wife to each contribute $25,000 to Hevesi’s campaign. The day after these contributions were communicated to Hevesi’s campaign staff, Hevesi telephoned Rattner and left him a message thanking him for the contribution. In late May 2006, Rattner’s friend transmitted the promised campaign contributions to Rattner, who forwarded the two checks to Hevesi’s campaign. Approximately one month later, Loglisci committed the Retirement Fund to an additional $50 million investment in the Quadrangle fund.
In settling the SEC’s charges without admitting or denying the allegations, Rattner consented to the entry of a judgment that permanently enjoins him from violating Section 17(a)(2) of the Securities Act of 1933 and orders him to pay approximately $3.2 million in disgorgement and a $3 million penalty. The settlement is subject to court approval. Rattner also consented to the entry of a Commission order that will bar him from associating with any investment adviser or broker-dealer with the right to reapply after two years.

The SEC’s investigation was conducted by Joseph Sansone and Maureen Lewis of the New York Regional Office. The investigation is continuing.

SEC Foils Diamond Trading Ponzi Scheme

The Securities and Exchange Commission has obtained an emergency court order freezing the assets of a Colorado man and his company charged with running a Ponzi scheme with money invested for diamond trading.

The SEC alleges that Richard Dalton and Universal Consulting Resources LLC (UCR) raised approximately $17 million from investors in 13 states for two fraudulent offerings that were generally referred to as the “Trading Program” and the “Diamond Program.” Investors in both programs received monthly payments which Dalton told them were profits from successful trading. However, there is no evidence to substantiate the $10 million in claimed profits from the two programs, and the vast majority of funds that came into UCR bank accounts were from new investors instead of actual profit-generating activity. Dalton used money from new investors to fund the monthly payments to existing investors while continuing to recruit new investors in order to keep his scheme going. Meanwhile, Dalton stole investor funds to purchase a home and a vehicle and pay for his daughter’s wedding reception.

Investors often learned of Dalton through a friend or family member who had previously invested with him. These new investors placed great weight on the fact that someone they knew and trusted received regular monthly payments from Dalton. Some investors even invested funds from their self-directed IRA retirement accounts.

“Dalton made his Ponzi scheme falsely appear profitable by continuing to bring in new investor money,” said Donald Hoerl, Director of the SEC’s Denver Regional Office. “Investors should be skeptical when someone promises low risk and high guaranteed returns, and focus on the details of the investment being offered rather than the lure of profits paid to friends and family.”

According to the SEC’s complaint filed in U.S. District Court in Denver, Dalton told investors in UCR’s Trading Program that their money would be held safely in an escrow account at a bank in the United States, and that a European trader would use the value of that account — but not the actual funds — to obtain leveraged funds to purchase and sell bank notes. According to Dalton, the trading was profitable enough that he was able to guarantee returns of 4 to 5 percent per month — or 48 to 60 percent per year — to investors. Dalton claimed that he had successfully run the Trading Program for nine years.

According to the SEC’s complaint, UCR began offering the Diamond Program in early 2009. Dalton claimed the program would profit by using investor funds for diamond trading. Similar to the Trading Program, Dalton claimed that investor funds would be safely held in an escrow account. Under the Diamond program, Dalton enticed investors with a guaranteed 10 percent monthly return — or 120 percent annual return.

The SEC further alleges that Dalton, who had no other employment or legitimate source of income, funded his personal life at the expense of investors. Dalton spent or withdrew in excess of $250,000 from UCR accounts that held investor money and used those funds for personal expenses, including paying $5,000 for his daughter’s wedding reception and $38,000 to purchase a vehicle. Dalton also transferred more than $900,000 from another UCR account in order to purchase a home. The home was purchased solely in the name of his wife, Marie Dalton, in an attempt to protect it from creditors. The asset freeze obtained by the SEC extends to the assets of Dalton’s wife, who is named as a relief defendant.

The SEC’s complaint alleges that Dalton and UCR violated Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, Sections 10(b) and 15(a)(1) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint names Marie Dalton as a relief defendant in the case in order to recover investor assets now in her possession.

Kerry Matticks, John Mulhern and Jay Scoggins of the SEC’s Denver Regional Office conducted the investigation.

The Honorable Robert E. Blackburn in the U.S. District Court in Denver granted the SEC's request late yesterday for an asset freeze against Richard Dalton, Marie Dalton and UCR and a temporary restraining order and other remedies against Richard Dalton and UCR. In addition to the emergency relief for investors, the SEC seeks permanent injunctions, disgorgement plus pre-judgment interest, and financial penalties against all of the defendants.
The SEC’s investigation is ongoing.

Former San Diego Officials Agree to Pay Financial Penalties in Municipal Bond Fraud Case

The Securities and Exchange Commission today announced that four former San Diego officials have agreed to pay financial penalties for their roles in misleading investors in municipal bonds about the city's fiscal problems related to its pension and retiree health care obligations. It's the first time that the SEC has secured financial penalties against city officials in a municipal bond fraud case.

The SEC settlement with the four former city officials requires the approval of U.S. District Judge Dana M. Sabraw in the Southern District of California. The SEC filed charges in April 2008 against former San Diego City Manager Michael Uberuaga, former Auditor & Comptroller Edward Ryan, former Deputy City Manager for Finance Patricia Frazier, and former City Treasurer Mary Vattimo. The SEC alleged that the officials knew the city had been intentionally under-funding its pension obligations so that it could increase pension benefits but defer the costs. They also were aware that the city would face severe difficulty funding its future pension and retiree health care obligations unless new revenues were obtained, benefits were reduced, or city services were cut. However, despite this extensive knowledge, they failed to inform municipal investors about the severe funding problems in 2002 and 2003 bond disclosure documents.

"Municipal officials have a personal obligation to ensure that investors are provided with complete and accurate information about the issuer's financial condition," said Rosalind Tyson, Director of the SEC's Los Angeles Regional Office. "These former San Diego officials are paying a price for their actions that jeopardized the interests of investors and put the city's current and future retirees at risk."

The four former officials agreed to settle the SEC's charges without admitting or denying the allegations and consented to the entry of final judgments that permanently enjoin them from future violations of Securities Act of 1933 Section 17(a)(2). Under the settlement terms, Uberuaga, Ryan, and Frazier each pay a penalty of $25,000 and Vattimo pays a penalty of $5,000.

The SEC's charges against a fifth former city official — Assistant Auditor & Comptroller Teresa Webster — are still pending.

The SEC litigation was handled by John M. McCoy III, David J. Van Havermaat, and Catherine W. Brilliant.

Healtchare Finance Exec. On The Run For $2.8b Fraud Scheme Arrested In Mexico

Former National Century Financial Enterprises (NCFE) executive Rebecca S. Parrett, 62, has been arrested in Mexico, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division, U.S. Attorney Carter M. Stewart for the Southern District of Ohio and U.S. Marshal Cathy Jones for the Southern District of Ohio. Parrett fled in March 2008 after a federal jury convicted her on charges stemming from her role in a $2.8 billion fraud that led to NCFE’s collapse.

Mexican authorities arrested Parrett in Ajijic, Jalisco, Mexico, based on information provided to them by the U.S. Marshals Service in Columbus, Ohio. Parrett was immediately deported according to Mexican immigration laws. Mexican authorities escorted Parrett to Los Angeles where deputy U.S. Marshals arrested her on the warrant issued after her conviction. Parrett will appear before a federal judge in U.S. District Court in Los Angeles today, then will be returned to Columbus.

"Corporate executives found guilty for their fraudulent activity will not be allowed to escape justice by fleeing the United States," said Assistant Attorney General Lanny A. Breuer. "Like any defendant convicted by a jury, Ms. Parrett is today facing the consequences of her actions."
"The U.S. Marshals Service has followed all leads and devoted countless hours to the search for Parrett," said U.S. Attorney Stewart. "Their persistence has led to her arrest. Now she will finally face justice."


"The U.S. Marshal Service never wavered or slowed in our commitment to bring Rebecca Parrett to justice," said U.S. Marshal Cathy Jones. "Even fugitives with great financial resources willing to flee the country for years, as she did, will always have to look over their shoulder. The U.S. Marshals Service is world-renowned for having the resources to conduct complicated fugitive investigations, and this arrest again displays our commitment to ensuring the integrity of the criminal justice system."

A jury convicted Parrett, the former vice chairman, secretary, treasurer, director and owner of NCFE, on March 13, 2008, of charges including conspiracy, securities fraud and wire fraud. Parrett fled after the conviction. She was sentenced on March 27, 2009, to 25 years in prison. She was also ordered to forfeit $1.7 billion in property representing the proceeds of the conspiracy and to pay restitution of $2.3 billion, jointly and severally with other defendants. NCFE, formerly based in Dublin, Ohio, was one of the largest healthcare finance companies in the United States until it filed for bankruptcy in November 2002.

Parrett and other NCFE executives engaged in a scheme from 1995 until the collapse of the company to deceive investors and rating agencies about the company’s financial health and how investors’ money would be used. The court noted that 275 healthcare providers filed bankruptcy in whole or in part because of NCFE’s collapse. Parrett and nine other executives were convicted or pleaded guilty in connection with the fraud that led to the company’s collapse.

The investigation into Parrett’s disappearance generated leads in more than a dozen U.S. states and several foreign countries. Many federal, state and local police agencies assisted the U.S. Marshals Service in Columbus with its pursuit of the fugitive.

The cooperative investigation that led to Parrett’s arrest included assistance from the Southern Ohio Fugitive Task Force (SOFAST); the U.S. Department of State, Diplomatic Security Service; the Internal Revenue Service - Criminal Investigation Division; the Columbus Division of Police; the FBI; the Grove City, Ohio, Police Department; the Ohio Bureau of Criminal Identification and Investigation; the Drug Enforcement Administration; the U.S. Immigration and Customs Enforcement; the Ohio Adult Parole Authority; and the U.S. Postal Inspection Service. Officials also expressed their gratitude to Mexican authorities for their significant assistance in this matter.

Banking Criminals in Very High Places

The UK bank Barclays admitted altering its books for more than 10 years to hide hundreds of millions of dollars from countries such as Cuba, Libya and Iran.

In May, ABN Amro, now part of Royal Bank of Scotland Group, agreed to pay $US500m to end allegations that it helped Iran, Libya, Sudan and Cuba evade US sanctions by “stripping” the identities of transactions to conceal the countries from which they originated.

Last December, Credit Suisse Group paid $US536m to settle similar violations involving transactions with Iran. In early 2009, a unit of London-based Lloyds Banking Group paid $US350 million related to similar charges by US and New York prosecutors, who accused the bank of masking the origin of payments from Iran and Sudan.

The $331m settlement-agreement of criminal charges is an embarrassment for Barclays, which became a major player on Wall Street by snapping up the collapsed US operations of Lehman Brothers in 2008 and has been trying to burnish the UK bank's reputation on both sides of the Atlantic as a good corporate citizen.

A federal court filing said Barclays “accepts and acknowledges responsibility for its conduct and that of its employees”. US officials said the bank altered payment messages or deleted information about sanctioned countries. More

Florida CEOs Charged for Orchestrating Pump-and-Dump Schemes

The Securities and Exchange Commission today charged two Florida-based corporations and their CEOs for orchestrating two separate pump-and-dump schemes in which they issued numerous misleading press releases hyping their operations or services while their respective CEOs repeatedly sold their stock for significant profits.

The SEC alleges that Quri Resources, Inc. and its CEO Jaime Santiago Gomez of Miami and Quito, Ecuador, issued misleading press releases for several months in 2009 falsely claiming that it was about to begin drilling on a mining project in Ecuador with a probable gold reserve worth more than $1 billion. The SEC separately charged Atlantis Technology Group and CEO Christopher Dubeau of Weston, Fla., for disseminating press releases over an eight-month period touting phony business relationships with television networks to sell their video and telecommunication services that did not even exist.

"Investors were duped into believing that Quri Resources was a successful mining company and that Atlantis Technology Group was selling cutting-edge technology services. Both companies misled investors with exaggerated claims while their respective senior executives illegally dumped shares into the market," said Eric I. Bustillo, Director of the SEC's Miami Regional Office. "We will continue to crack down on companies that promote misleading information."

According to the SEC's complaint filed in federal court in Miami against Quri Resources and Gomez, the misleading press releases were issued from at least February to July 2009. In addition to the false claims about the purported mining project, the SEC alleges that Quri misrepresented that it had signed letters of intent to acquire two valuable mining projects in Arizona, acquired a second mining project in Ecuador and anticipated producing gold within three months, and signed a letter of intent to acquire a third valuable mining project in Ecuador. The SEC further alleges that Gomez, who reviewed and approved the misleading press releases, repeatedly sold Quri stock in unregistered transactions as the press releases were being issued. Gomez made proceeds of approximately $17,500 in dumping the stock.

According to the SEC's complaint filed in federal court in Miami against Atlantis Technology Group and Dubeau, the Fort Lauderdale-based company issued misleading press releases from at least Aug. 7, 2009, to April 5, 2010. The SEC alleges that Atlantis falsely claimed that its subsidiary Global Online Television Corporation offered Internet protocol television (IPTV) services and video phone services to consumers, and had relationships with television networks to offer their content to subscribers. However, the subsidiary was not even in a position to offer IPTV or video phone services at that time, and Atlantis has never had any contract with a television network or any agreements to offer media content to customers.

The SEC further alleges that Dubeau drafted, reviewed, and approved Atlantis's misleading press releases while knowing that Atlantis did not have the capabilities or business relationships the press releases claimed. Meanwhile, Dubeau sold more than 60 million shares of Atlantis stock for proceeds of about $240,000, and he received $77,000 of the proceeds from an associate's sale of more than 16 million shares.

The SEC is seeking injunctions against further violations and the return of ill-gotten gains with prejudgment interest and financial penalties against Gomez and Dubeau. The SEC is additionally seeking an officer and director bar against Dubeau, and penny stock bars against Gomez and Dubeau.

The Quri Resources matter was investigated by Elizabeth Fatovich and Thierry Olivier Desmet in the SEC's Miami Regional Office. The Atlantis Technology matter was investigated by Mr. Desmet and Drew Panahi in the Miami office. Edward McCutcheon will be handling the litigation of both cases. The SEC appreciates the assistance of the Financial Industry Regulatory Authority (FINRA) in these matters.

Family Insider Trading Ring Busted in Million-Dollar Scheme

The Securities and Exchange Commission today charged a pair of freight railway employees and four family members with perpetrating an insider trading scheme that garnered more than $1 million in illegal profits.

The SEC alleges that W. Gary Griffiths and Cliff M. Steffes learned confidential information in early 2007 about the upcoming acquisition of Florida East Coast Industries Inc. (FECI), which owned the freight railway where they worked in Jacksonville, Fla. Griffiths and Steffes tipped family members with the non-public information. The traders collectively purchased more than $1.6 million in company stock and options ahead of the May 8, 2007 announcement of the acquisition of FECI by an affiliate of Fortress Investment Group LLC.

"We allege these individuals exploited their personal and family relationships for monetary gain and that their misuse of confidential information gave them an illegal advantage over other traders in the market," said Merri Jo Gillette, Director of the SEC's Chicago Regional Office.

According to the SEC's complaint filed in U.S. District Court for the Northern District of Illinois, Griffiths is a resident of Elkton, Fla., and vice president and chief mechanical officer of Florida East Coast Railway. Steffes, who currently resides in Lisle, Ill., worked in the rail yard in Jacksonville when the insider trading scheme occurred.

The SEC alleges that in the weeks leading up to the impending acquisition of FECI, the two men tipped Rex C. Steffes, who is Steffes's father and Griffiths's brother-in-law, with the confidential information. Also tipped were the two brothers of Cliff Steffes — Bret Steffes and Rex R. Steffes — and his uncle Robert J. Steffes. The insider trading scheme generated more than $1 million in illicit profits after the acquisition of the company was announced publicly.

The SEC has charged the defendants with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Without admitting or denying the SEC's allegations, Robert J. Steffes has consented to a court order that would permanently enjoin him from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and require him to pay disgorgement of $104,981, prejudgment interest of $15,951 and a penalty of $104,981.

This case was investigated by Scott B. Tandy, Kent W. McAllister, Kevin R. Barrett, Rebecca Bernard, John J. Sikora, Jr. and Norman Jones in the SEC's Chicago Regional Office.

Women Still Face Significant Gender Bias in News Media Coverage

Women are still significantly underrepresented and misrepresented in news media coverage, according to Global Media Monitoring Project research in 108 countries coordinated by the World Association for Christian Communication, despite significant change since the project began 15 years ago.

76% of the people heard or read about in the world’s news are male. The world seen in news media remains largely a male one.
The GMMP monitored 1,365 newspapers, television and radio stations and Internet news sites, 17,795 news stories and 38,253 persons in the news in 108 countries with 82% of the world’s people.

The report Who Makes the News? The Global Media Monitoring Project 2010 (http://www.whomakesthenews.org/gmmp2010/globalreport-en) was released today in Arabic, English, French and Spanish, along with numerous regional and national reports.

24% of people in the news are female, compared to 17% in 1995. 44% of persons providing popular opinion in news stories are female compared to 34% in 2005.

Today female reporters are responsible for 37% of stories compared to 28% fifteen years ago, and their stories challenge gender stereotypes twice as often as stories by male reporters.

Gender bias in Internet news is similar and in some respects even more intense than that found in the traditional news media.

The 2010 report contains a plan of action for media professionals and others committed to gender-ethical news media.

The GMMP is the largest and longest running research and advocacy initiative on fair and balanced gender representation in the news media. It is coordinated by WACC, a global network of communicators promoting communication for social change, in collaboration with data analyst Media Monitoring Africa, and with support from the United Nations Development Fund for Women.
For further information: http://www.whomakesthenews.org, Contact: GMMP National Coordinators (http://www.whomakesthenews.org/gmmp2010/national-coordinators)

DOJ Settles with Six Tech Companies in Anittrust Violations Case

The Department of Justice announced Friday that it has reached a settlement with six high technology companies – Adobe Systems Inc., Apple Inc., Google Inc., Intel Corp., Intuit Inc. and Pixar – that prevents them from entering into no solicitation agreements for employees. The department said that the agreements eliminated a significant form of competition to attract highly skilled employees, and overall diminished competition to the detriment of affected employees who were likely deprived of competitively important information and access to better job opportunities.

The Department of Justice’s Antitrust Division filed a civil antitrust complaint today in U.S. District Court for the District of Columbia, along with a proposed settlement that, if approved by the court, would resolve the lawsuit.

According to the complaint, the six companies entered into agreements that restrained competition between them for highly skilled employees. The agreements between Apple and Google, Apple and Adobe, Apple and Pixar and Google and Intel prevented the companies from directly soliciting each other’s employees. An agreement between Google and Intuit prevented Google from directly soliciting Intuit employees.

“The agreements challenged here restrained competition for affected employees without any procompetitive justification and distorted the competitive process,” said Molly S. Boast, Deputy Assistant Attorney General in the Department of Justice’s Antitrust Division. “The proposed settlement resolves the department’s antitrust concerns with regard to these no solicitation agreements.”

In the high technology sector, there is a strong demand for employees with advanced or specialized skills, the department said. One of the principal means by which high tech companies recruit these types of employees is to solicit them directly from other companies in a process referred to as, “cold calling.” This form of competition, when unrestrained, results in better career opportunities, the department said.

According to the complaint, the companies engaged in a practice of agreeing not to cold call any employee at the other company. The complaint indicates that the agreements were formed and actively managed by senior executives of these companies.

The complaint alleges that the companies’ actions reduced their ability to compete for high tech workers and interfered with the proper functioning of the price-setting mechanism that otherwise would have prevailed in competition for employees. None of the agreements was limited by geography, job function, product group or time period. Thus, they were broader than reasonably necessary for any collaboration between the companies, the department said.

The department said in its complaint:

• Beginning no later than 2006, Apple and Google executives agreed not to cold call each other’s employees. Apple placed Google on its internal “Do Not Call List,” which instructed employees not to directly solicit employees from the listed companies. Similarly, Google listed Apple among the companies that had special agreements with Google and were part of the “Do Not Cold Call” list;
• Beginning no later than May 2005, senior Apple and Adobe executives agreed not to cold call each other’s employees. Apple placed Adobe on its internal “Do Not Call List” and similarly, Adobe included Apple in its internal list of “Companies that are off limits”;
• Beginning no later than April 2007, Apple and Pixar executives agreed not to cold call each other’s employees. Apple placed Pixar on its internal “Do Not Call List” and senior executives at Pixar instructed human resources personnel to adhere to the agreement and maintain a paper trail;
• Beginning no later than September 2007, Google and Intel executives agreed not to cold call each other’s employees. In its hiring policies and protocol manual, Google listed Intel among the companies that have special agreements with Google and are part of the “Do Not Cold Call” list. Similarly, Intel instructed its human resources staff about the existence of the agreement; and
• In June 2007, Google and Intuit executives agreed that Google would not cold call any Intuit employee. In its hiring policies and protocol manual, Google also listed Intuit among the companies that have special agreements with Google and are part of the “Do Not Cold Call” list.

The proposed settlement, which if accepted by the court will be in effect for five years, prohibits the companies from engaging in anticompetitive no solicitation agreements. Although the complaint alleges only that the companies agreed to ban cold calling, the proposed settlement more broadly prohibits the companies from entering, maintaining or enforcing any agreement that in any way prevents any person from soliciting, cold calling, recruiting, or otherwise competing for employees. The companies will also implement compliance measures tailored to these practices.

Today’s complaint arose out of a larger investigation by the Antitrust Division into employment practices by high tech firms. The division continues to investigate other similar no solicitation agreements.

Adobe Systems Inc. is a Delaware corporation with its principal place of business in San Jose, Calif., and 2009 revenues of nearly $3 billion. Apple Inc. is a California corporation with its principal place of business in Cupertino, Calif., and 2009 revenues of more than $42 billion. Google Inc. is a Delaware corporation with its principal place of business in Mountain View, Calif., and 2009 revenues of more than $23 billion. Intel Inc. is a Delaware corporation with its principal place of business in Santa Clara, Calif., and 2009 revenues of more than $35 billion. Intuit Inc. is a Delaware corporation with its principal place of business in Mountain View, Calif., and 2009 revenues more than $3 billion. Pixar is a California corporation with its principal place of business in Emeryville, Calif.

The proposed settlement, along with the department’s competitive impact statement, will be published in The Federal Register, as required by the Antitrust Procedures and Penalties Act. Any person may submit written comments concerning the proposed settlement within 60 days of its publication to James J. Tierney, Chief, Networks & Technology Enforcement Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street N.W., Suite 7100, Washington D.C. 20530. At the conclusion of the 60-day comment period, the court may enter the final judgment upon a finding that it serves the public interest.

Lobbyist Pleads Guilty to Role in Illegal Campaign Contribution Scheme

Paul Magliocchetti, the founder and president of PMA Group Inc., a lobbying firm, plead guilty Friday in federal court in Arlington, Va., to making hundreds of thousands of dollars in illegal campaign contributions and making false statements to a federal agency, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Neil H. MacBride of the Eastern District of Virginia.

Magliocchetti was charged in an indictment unsealed on Aug. 5, 2010. According to the indictment, Magliocchetti orchestrated a scheme to make illegal conduit and corporate federal campaign contributions in an effort to enrich himself and PMA by increasing the firm’s influence, power and prestige among the firm’s current and potential clients as well as among the elected public officials to whom PMA and its lobbyists sought access. The federal campaigns that received these funds were unaware of Magliocchetti’s scheme.

Magliocchetti admitted that, from 2005 through 2008, he used members of his family, friends and PMA lobbyists to make unlawful campaign contributions. Aware of the strict limits on individual federal campaign contributions – and the outright ban on corporate contributions – Magliocchetti admitted that he instructed the conduits to write checks out of their personal checking accounts to specific candidates for federal office and that, for the purpose of making these contributions, Magliocchetti advanced funds to or reimbursed these individuals using personal and corporate monies. Magliocchetti also admitted that, through this scheme, he caused various federal campaign committees to unknowingly create and file false reports with the Federal Election Commission (FEC) regarding the contributions they had received. These reports, which the FEC made available to the public, falsely stated that the conduits had made contributions, when in fact the contributions were made by Magliocchetti or PMA.

"For years, Mr. Magliocchetti, by using conduit contributors, hid the fact that he and his company were donating significant funds to campaigns in violation of the federal election laws. Mr. Magliocchetti, in an effort to cover his tracks, used family, friends and business associates to secretly funnel hundreds of thousands of dollars to political campaigns, all in an effort to enrich himself and increase his power and prestige," said Assistant Attorney General Lanny A. Breuer. "This case is an important reminder to all who seek to evade the federal campaign finance laws that they will be prosecuted to the full extent of the law."

"Mr. Magliocchetti is answering for his brazen disregard for the law to achieve political influence and enrich himself," said U.S. Attorney MacBride. "Campaign finance laws give transparency to political contributions, and protect the public’s ability to see who’s really funding a campaign."

"Americans should be confident that elections are not being influenced by illegal campaign contributions. Those who undermine this process and use it to gain power and influence should be punished" said Shawn Henry, Assistant Director in Charge of the FBI’s Washington Field Office. "I’m proud of the diligent efforts put forth by special agents from the Defense Criminal Investigative Service and FBI who investigated this matter."

Magliocchetti pleaded guilty to one count each of making false statements, making illegal conduit contributions and making illegal corporate contributions. The maximum penalty for making false statements to a federal agency and making illegal campaign contributions from a corporation is five years in prison, and a $250,000 fine, to be followed by a term of up to three years of supervised release. The maximum penalty for making illegal campaign contributions in the name of another is five years in prison, a fine of not less than 300 percent of the amount involved in the violation and not more than the greater of $50,000 or 1,000 percent of the amount involved in the violation, and a three year term of supervised release. Magliocchetti is scheduled to be sentenced on Dec. 17, 2010.

This case is being prosecuted by Deputy Chief Justin V. Shur and Trial Attorneys M. Kendall Day and Kevin O. Driscoll of the Criminal Division’s Public Integrity Section, and by Assistant U.S. Attorney Mark D. Lytle of the U.S. Attorney’s Office for the Eastern District of Virginia. The case is being investigated by the FBI and the Defense Criminal Investigative Service.

Equifax Sued for Leaking Consumer Information to Lexis/Nexis

Equifax Information Services claims LexisNexis slipped up in selling its reports on a civil judgment, prompting a consumer to file a Fair Credit Reporting Act claim against it. Equifax says it was sued by a consumer who claims the credit agency failed "to adopt reasonable procedures to ensure maximum possible accuracy in its reporting of the status of judgments that have been set aside, vacated or dismissed with prejudice." Equifax sued LexisNexis, a "public records vendor," in Federal Court. It says LexisNexis has not responded to its demand for indemnification.

According to the complaint, the two companies have a 2008 agreement that requires "LexisNexis to provide Equifax with the 'status' of judgments." more

ABC Faces Revived Defamation Suit by Rev. Fred Price

Last Tuesday, the United States Court of Appeals overturned a federal judge's controversial ruling that ended Rev. Frederick K. C. Price’s defamation lawsuit against ABC "20/20" and correspondent John Stossel. According to the Court, Judge R. Gary Klausner had erroneously ruled in the matter.

In the lower court's decision, Judge Klausner found that even though Stossel's broadcast took Price’s words out of context, the prominent national television evangelist could not establish that the broadcast was false or misleading, as Price had made similar statements elsewhere.

But a three-member panel at the Federal Ninth Circuit Appeals Court determined that Judge Klausner had overreached. The Court found that Klausner erred both by comparing the statements in the clip with Price's actual wealth and possessions, and by agreeing with the network that the clip was "substantially true" based on that comparison.

"Under controlling Supreme Court precedent on when journalists' misquotations of statements made by public figures are false for purposes of establishing actual malice, there is a substantial likelihood that Price can establish that the publication of the clip was false," Judge Mary Schroeder wrote.

Price’s litigation stems from a heavily edited March 2007 broadcasted clip, wherein he states:

"I live in a 25-room mansion. I have my own $6 million yacht. I have my own private jet and I have my own helicopter and I have seven luxury automobiles."

The clip was edited to conceal that Price was speaking hypothetically about a wealthy person who was spiritually unsatisfied.

It is reported that ABC later apologized. However, the Ninth Circuit has ordered the case reopened.

Paul Weiss and Lowenstein Ordered to Pay $1.96 Million for Filing Frivolous Suit

Bergen County, N.J., Superior Court Judge Ellen Koblitz doesn't seem too worried about sparing the reputations of Paul, Weiss, Rifkind, Wharton & Garrison and Lowenstein Sandler. In June, you'll recall, she found that the two firms had filed a frivolous suit on behalf of billionaire Ronald Perelman in a family dispute over hundreds of millions of dollars. On Friday she issued a final opinion (pdf), rejecting the firms' arguments for mercy and ordering them to pay $1.96 million in legal fees to the defendants, Perelman's former father-in-law and brother-in-law.

"Paul Weiss and Lowenstein Sandler argue that since they are both such important, well-regarded law firms, the mere finding that they engaged in frivolous litigation is deterrence enough," Koblitz wrote. "They argue that this court's finding of frivolous litigation has been widely publicized and besmirches their reputation, which will cost them untold, unspecified damages. A monetary sanction, however, is clearly appropriate here." more

EFF Urges Supreme Court to Block NASA's Invasive Background Checks

Washington, D.C. - Earlier this month, the Electronic Frontier Foundation (EFF) urged the United States Supreme Court to uphold an appeals court decision that blocks invasive and unnecessary background checks at the National Aeronautics and Space Administration (NASA), arguing that the over-collection of personal data puts employees' privacy at risk.

The case was originally filed by federal contract employees working at CalTech's Jet Propulsion Lab, which houses NASA's robotic spacecraft laboratory. The workers were low-risk, by NASA's own admission, and did not work on classified projects. Yet the government instituted sweeping background checks, including a requirement to list three references who were then questioned about the employees' general behavior. NASA said it needed the information to assess "suitability" for government employment, and would check factors like "carnal knowledge," "homosexuality," "cohabitation," and "illegitimate children." more

BlackBerry Torch Levels the PDA Field

Momentum in the smartphone market has shifted in favor of Apple and Google, but BlackBerry maker Research In Motion hopes it can still reverse course before it's too late. RIM (RIMM) is widely expected to unveil a new touch-screen smartphone with a pull-out keyboard at a corporate event on Tuesday. The device is likely the much-hyped AT&T (T, Fortune 500) BlackBerry Slider 9800, leaked images of which have flooded the Internet over the past several weeks.

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Senate confirms Elena Kagan to Supreme Court

Chief Justice John Roberts will swear in Elena Kagan as the nation's 112th Supreme Court justice on Saturday, making one-third of the nation's highest court women for the first time in history.
Supreme Court spokeswoman Kathy Arberg said Roberts telephoned Kagan to offer "warm congratulations" Thursday, shortly after the Senate confirmed her to the post. The 63-37 vote represented a victory for President Obama, who has doubled the number of women ever named to the Supreme Court with his first two nominees.

"I am confident that Elena Kagan will make an outstanding Supreme Court justice," Obama said in Chicago, where he was traveling. "And I am proud, also, of the history we're making with her appointment." more

Prop 8 Overturned - Battle Continues

Yesterday Chief U.S. District Judge Vaughn Walker overturned California's Prop 8, a same-sex marriage ban voted in by Californians in 2008! The matter is likely to go to the Supreme Court, so it's not settled yet, but it's a heartening result nonetheless! Still, the DOMA and way too many states' laws and/or state constitutions specifically prohibiting same-sex marriage continue to blanket the country in bigotry and hate. more