Former IBM executive pleads guilty to insider trading in Galleon probe

Michael Kraemer at 3:20 PM ET

[JURIST] Former International Business Machines Corp. (IBM) [corporate website] senior vice president Robert Moffat pleaded guilty [press release, PDF] Monday to conspiracy and securities fraud charges stemming from his involvement in the largest hedge fund insider trading case in US history. US Attorney Preet Bharara [TIME profile] said, “[Moffat] willfully ignored his professional and legal responsibilities,” and provided inside information in breach of fiduciary duties, facilitating illicit securities transactions. Moffat’s plea is in connection with the probe surrounding Galleon Group [partnership website] hedge fund founder Raj Rajaratnam [FT profile; JURIST news archive] and former hedge fund consultant Danielle Chiesi. Moffat’s conviction is the eleventh among 21 people currently under investigation [JURIST report] by the Department of Justice [official website].

Last month, a federal judge decided Rajaratnam’s criminal trial [JURIST report] will begin October 25. Former Intel Capital [corporate website] executive Rajiv Goel pleaded guilty [JURIST report] to insider trading charges in connection with the Galleon probe earlier in February. Rajaratnam, Chiesi, Goel, and Moffat were arrested in October and charged [complaint, PDF] along with two other individuals and two business entities with insider trading. The complaint alleged that the individuals provided Galleon Group and another hedge fund with material nonpublic information about several corporations upon which the funds traded, generating $25 million in illicit gain. Rajaratnam and Chiesi pleaded not guilty [JURIST report] in December after being indicted for insider trading.

State attorneys general to challenge health care reform legislation

Steve Dotterer at 3:47 PM ET

[JURIST] Attorneys general from several states said Monday that they plan to file lawsuits challenging the constitutionality of the health care reform bill [text, PDF] passed [JURIST report] Sunday by the US House of Representatives [official website]. Attorneys general from at least 12 states – Florida, South Carolina, Alabama, Nebraska, Texas, Oklahoma, Pennsylvania, Washington, Utah, North Dakota, South Dakota and Virginia – plan to file challenges after President Barack Obama signs the bill into law. Virginia plans to file a separate lawsuit from the single lawsuit to be brought by the other states. At issue in the lawsuits is the power of Congress to require individuals to purchase insurance. Congress has the power under Article I, Section 8 [text] of the US Constitution to regulate interstate commerce, and the states have decided to challenge this power’s application to health care legislation. Obama is scheduled to sign the bill on Tuesday.

Last week, Idaho Governor CL “Butch” Otter (R) [official website] became the first governor to sign [JURIST report] a bill [H 391 text] into state law banning any federal mandate for individuals to have health insurance. The Idaho Health Freedom Act orders the state attorney general to file a lawsuit against the national government over any law making health insurance mandatory. Two weeks ago, the Virginia General Assembly [official website] passed [JURIST report] a similar bill [text, PDF]. The bill, called the Virginia Health Care Freedom Act, says that no individual shall be held liable if they refuse to sign up for health care. Governor Robert McDonnell (R) [official website] has said that he will sign [WTVR report] the bill into law. About 30 other states are working on similar measures to negate [ALEC report] the federal mandate for health insurance.

Supreme Court News

The Supreme Court just released its opinion in Johnson v. United States, no. 08-6925, reversing the Eleventh Circuit and finding that because the Florida offense of battery by offensive touching does not require the use of physical force, it does not qualify as an ACCA predicate under 935 (e)(2)(B)(i).

Lawyer Steven Townsend

Four cleared of illegal beer sales

By: Bill Vidonic
Beaver County Times
Friday March 5, 2010 05:29 PM
BEAVER — A Beaver County attorney and three employees at an Industry golf course were cleared Friday of charges that they sold beer without a license.
Al Torrence, the Beaver Area School District solicitor, had been charged with five counts of selling beer at Rivers Edge Golf Course, 1326 Ohioview Drive.
Others charged with the same offenses were: Kathy Jo Dyke, 41, of Negley, Ohio; Beverly Jean Kordecky, 58, of East Palestine, and Henry Camp, 52, of 1275 Corporation St., Beaver.
After a preliminary hearing Friday morning, Beaver County District Judge Joseph Schafer dismissed all charges against the four.
State police reported that on April 29 Dyke served two beers to an undercover state trooper and charged him $2 for each; the golf course does not have a liquor license.
A state police trooper testified Friday that he went back to the golf course a couple more times through September, and again paid for beer there.
Though police described Torrence as the owner of the golf course, defense attorney Steve Colafella said Friday that was misleading, as it’s owned by a for-profit corporation, though Torrence is listed as incorporating the corporation that owns the golf course.

Colafella said there was no evidence presented Friday that Torrence sold beer or permitted the sales to take place. Torrence had denied selling the beer.
Other defense attorneys said that no one was ever forced to pay for beer there.
Senior Deputy Attorney General Todd Goodwin said a sign saying, “Beer, $2 donation” hanging on a refrigerator at the golf course was “a ruse” and said that the undercover trooper was charged for the beer, which breaks the law.
After the charge dismissals Friday, Torrence asking for donations for the beer has been going on for decades at the golf course. He said some people donate money and some don’t.
Torrence said the golf course would do some employee training and take other steps to ensure that patrons know that they did not have to pay for the beer.
“I think the (hearing) came out the way it should have,” Torrence said.
Attorney Steve Townsend, who represented Kordecky, said the prosecution of the four was “a waste of resources.”

Supreme Court upholds bankruptcy law provisions applied to attorneys

Jaclyn Belczyk at 10:14 AM ET

[JURIST] The US Supreme Court [official website; JURIST news archive] on Monday ruled [opinion, PDF] in Milavetz, Gallop & Milavetz v. United States [Cornell LII backgrounder; JURIST report] that attorneys are considered debt relief agencies under the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) [text] when they provide qualifying services. The court also held that the BAPCPA, which requires certain disclosures in advertisements, does not violate attorneys’ First Amendment [text] rights. The US Court of Appeals for the Eighth Circuit ruled [opinion, PDF] that, while bankruptcy attorneys meet the definition of a debt relief agency, the BAPCPA provisions codified in 11 USC § 526(a)(4) [text] are unconstitutional as applied to attorneys. In partially reversing the opinion below, Justice Sonia Sotomayor wrote:
Because § 528’s requirements that Milavetz identify itself as a debt relief agency and include certain information about its bankruptcy-assistance and related services are “reasonably related to the [Government’s] interest in preventing deception of consumers,” we uphold those provisions as applied to Milavetz.
Justices Antonin Scalia and Clarence Thomas filed separate opinions concurring in part and concurring in the judgment.

The case arose when Minnesota law firm Milavetz, Gallop & Milavetz, PA [firm website] filed suit against the US government seeking a declaratory judgment that attorneys were not debt relief agencies under the BAPCPA and that certain provisions of the BAPCPA were unconstitutional as applied to attorneys. The district court ruled in favor of Milavetz, and the appeals court affirmed in part and reversed in part, causing both parties to appeal to the Supreme Court.

ACBA Judiciary Committee Nominee


Steven C. Townsend

Steven C. Townsend is a graduate of Indiana State University (B.A. Criminal Justice) and University of Pittsburgh School of Law (J.D., Civil Litigation Certificate).  He currently serves as a Criminal Justice Act Panel Attorney for the Western District of Pennsylvania District Court and as a member of the Conflict Attorney Panel for Beaver County. As a member of the firm Eddy DeLuca Gravina & Townsend, he practices in many areas of law with an emphasis in federal and state criminal law. He is an annual speaker and faculty member for the Pennsylvania Bar Institute’s Criminal Law Update.  He is also a member of the following Allegheny County Bar Association committees: Family Law, Military and Veteran’s Affairs, and Small & Sole Practitioner.  He also serves as a Board Member for Riverside Center for Innovation and as a member of the Allegheny County Veteran’s Court Task Force.  Steven is admitted to the Supreme Court of Pennsylvania, United States District Court, Western District of Pennsylvania, and the United States District Court, Central District of Illinois.

Second amendment

[JURIST] The US Supreme Court [official website; JURIST news archive] heardoral arguments [day call, PDF; merit briefs] Tuesday in McDonald v. City of Chicago [oral arguments transcript, PDF; JURIST report] on whether the Second Amendment [text] right to keep and bear arms is incorporated as against the states by the Fourteenth Amendment’s Privileges or Immunities or Due Process Clauses. The appeal challenges a ruling [opinion, PDF; JURIST report] by the US Court of Appeals for the Seventh Circuit, which upheld a Chicago handgun ban. In 2008, the Supreme Court struck down a similar handgun ban in the District of Columbia in District of Columbia v. Heller [opinion, PDF; JURIST report], but circuit courts have so far refused to extend that ruling to other municipalities’ handgun bans. Counsel for the petitioners argued:

Although Chicago’s ordinances cannot survive the faithful application of due process doctrines, there is an even simpler, more essential reason for reversing the lower court’s judgment. The Constitution’s plain text, as understood by the people that ratified it, mandates this result.

The National Rifle Association (NRA) [advocacy website] also argued on behalf of petitioners. Counsel for the respondent, the city of Chicago, argued:

The Second Amendment should not be incorporated and applied to the States because the right it protects is not implicit in the concept of ordered liberty. States and local governments have been the primary locus of firearms regulation in this country for the last 220 years. Firearms unlike anything else that is the subject of a provision of the Bill of Rights are designed to injure and kill.

The majority of justices appeared to favor petitioners’ view.

Also Tuesday, the court heard arguments in Hui v. Castaneda[oral arguments transcript, PDF; JURIST report] on whether the Federal Tort Claims Act is the sole remedy for claims regarding the care provided by Public Health Services personnel. The Court will decide if the act precludes the cause of action recognized inBivens v. Six Unknown Named Agents of the Federal Bureau of Narcotics [opinion text]. The US Court of Appeals for the Ninth Circuit ruled that the legislation did not preclude a Bivens action, while the Second Circuit has held [opinion, PDF] that it does. Counsel for the petitioners argued:

Congress extended an absolute immunity to officers and employees of the Public Health Service. That provision, reflecting Congress’s policy judgment that the immunity was necessary to revitalize the Public Health Service, makes a claim against the United States under the Federal Tort Claims Act the exclusive remedy for injury or death resulting from the performance of medical or related function and precludes any other civil action or proceeding against the individuals by reason of the same subject matter.

Counsel for the respondents argued that a Bivens claim is not barred by statute.