Colorado Business Litigation Lawyer Blog

In an April 28, 2010 Senate subcommittee hearing, Senator Carl Levin (D-Mich.) grilled Daniel Sparks, former head of Goldman Sachs mortgage department, about an email that Sparks received from Thomas Montag, Goldman’s former head of sales and trading. In the June 22, 2007 email, Montag made reference to a series of mortgage-backed investments Goldman was selling to its customers as one “shi**y deal.” Sen. Levin noted that even after the date of the email Goldman continued to sell the same investments to customers. Quite naturally, Goldman officials didn’t tell those customers that it was a shi**y deal.

Sparks continued to deny that the email said precisely what it meant. Instead, he claimed that the email had to be put into context. Sen. Levin observed that the context was “mighty clear,” and asked Sparks if he was at all bothered by the fact that Goldman continued to sell the investments after June 22 with knowledge that it was a bad (fooled you!) deal for the customer.

If corporate greed makes you wince, in the immediate future you should refrain from watching TV and reading newspapers.

Continue reading " Sen. Levin Knows a Shi**y Deal When He Sees One " »

We all know by now what a Ponzi scheme is. Some sharp hedge fund manager or other investment guru sells fund shares, usually to close friends and relatives, and friends and acquaintances of each, promising a higher rate of return than could reasonably be earned in a legitimate investment. Typically, the fund doesn’t generate earnings with which to pay the promised interest to the investors. Instead, money paid in by later investors is used to pay interest to early investors. It doesn’t take much imagination to deduce that this house of cards, so to speak, eventually will collapse. When it does, typically nobody gets paid back.

The Security and Exchange Commission (SEC) is the body with authority to investigate these monetary funds. The SEC can impose huge fines on these bogus companies and freeze and seize their assets. Unfortunately, recent history has shown that the performance of the SEC leaves much to be desired. Click here to read about the breathtakingly inept and careless oversight that the SEC exercised in the Bernard Madoff debacle. To make matters even worse, it recently has been discovered that high level SEC staffers were busy watching porn on their government computers instead of doing the job for which they were hired. One lawyer watched as many as 8 hours of porn during the day.

Now comes an April 28, 2010 Denver Post article that reports that yet another $122 million Ponzi scheme has been discovered operating in Colorado. Sean Miller, a Greenwood Village-based hedge fund manager, said he was the only person involved in the wrongdoing. Although phony financial statements claimed $120 million in assets, there was actually only $15 million in a Morgan Stanley account.

As in all con games, experts say the so-called victims are oftentimes not victims at all. Lured by the promises of unusually high rates of return, these “victims” rarely ask questions about why the investment is consistently making investors so much money.

Will this never end?

Here we go again. Another Wall Street giant has been accused of defrauding its investors. Goldman Sachs & Co., a global investment banking and management firm, allegedly failed to disclose conflicts of interest in mortgage investments it sold during the failing housing market. Fabrice Tourre, a Goldman Sachs vice president, has also been charged by the SEC for his involvement. The Securities and Exchange Commission announced the charges last Friday.

According to Marcy Gordon with the Associated Press, Paulson & Co. is the Goldman Sachs client being investigated. The AP identifies Paulson as “one of the world’s largest hedge funds” and reports them as having paid Goldman approximately $15 million in 2007 for structuring the deals. Losses by investors reportedly exceed $1 billion.

The SEC allegations suggest Goldman failed to disclose to investors that Paulson & Co.
played a part in selecting mortgages and were in a position to profit from the waning mortgage values. Investors were told an independent, objective third party selected the securities.

The Goldman Sachs website reported the following statement today: “The SEC’s charges are completely unfounded in law and fact and we will vigorously contest them and defend the firm and its reputation.”

We will follow the saga and continue to report on it.

Continue reading " Goldman Sachs Faces Civil Fraud Charges " »

A reader of the Aspen, Colorado Local Spur recently wrote in, “How Many Days Would You Need for a Vacation to Aspen, Colorado?” One reader thoughtfully answered that it would depend on the time of year, since there are some interesting things to do and see in the summer. Another answered that a couple of days should suffice, since in the winter one who doesn’t ski would get bored after that length of time.

As a native who has lived in the Denver Metro area all of my life, I have some different ideas about vacations to Aspen.

In the winter, for most people at least, your money will probably be exhausted in one day and one night. You see, Aspen has never been touted as an inexpensive vacation area, what with its neatly parked corporate and private jets and limos. And one soon gets tired of trying to spy movie stars and other equally famous and/or important people.

In the summer, your money should allow you to eat at one prohibitively expensive Aspen restaurant and soak in the large hot springs pool in Glenwood Springs, about 40 miles to the north.

In either event, it is likely that the Aspen locals will tire of you before or at the same time as your money runs out. Local Aspenites, whether rich or poor, have a low tolerance level for flatlanders, which they commonly and affectionately call “turkeys.”

I say all this with tongue- in- cheek, of course. We Denverites love the scenic drive from Denver to Aspen at least once every five or ten years. And we don’t mind emptying our pockets when we get there, either. After all, where but in Aspen can a Coloradan (Coloradoan?) enjoy at least one day of hoping to ski with the rich and famous?

As promised, I am following-up on my previous article, "Corruption on Colorado’s North Metro Drug Task Force?"

The Denver Post reported on April 1, 2010 that Dan Tang, prominent owner of a Thornton Chinese restaurant, was sentenced in U.S. District Court to an 18-month prison sentence for his part in financing a marijuana growing operation.

Tang’s attorneys had recommended probation. The U.S. Attorney’s Office had recommended a sentence ranging from 11 to 30 months, which is well below the guideline of 70 to 87 months in prison for this type of offense. According to an Assistant U.S. Attorney, this sentencing concession was made because she believes Tang had a “diminished role’ in the marijuana-growing organization.

Responding to the defense request for probation, the judge said, "I just don't understand why he shouldn't go to jail. . . . If it means discomfort for him, so be it. If it means the [restaurant] business has to perform in different ways, that is a consequence of his criminal conduct."

It should be noted that the growing operation probably could not have operated without Tang’s financial contribution. If this is the “diminished role” the Assistant U.S. Attorney was referring to, it is difficult to imagine what a major role would be.

The father of a U.S. Marine killed in action in Iraq has been ordered by the Fourth Circuit U.S. Court of Appeals to pay court costs of $16,510 to the leader of a Topeka, Kansas church group. The anti-gay group picketed outside the Marine’s 2006 funeral, holding signs that read among other things, “God hates you” and “You’re going to hell” and “Thank God for dead soldiers.”

Unsurprisingly, the Marine’s family sued the church group for invasion of privacy, intentional infliction of emotional distress and civil conspiracy. A jury awarded the family $2.9 million in compensatory damages and $8 million in punitive damages, later reduced to $5 million.

The church group appealed to the Court of Appeals, saying that their First Amendment rights had been violated. The court agreed and reversed the jury’s verdict.

Now, the U.S. Supreme Court has agreed to hear the case on the legal issues of laws designed to protect the "sanctity and dignity of memorial and funeral services" and the privacy of family and friends of the deceased. The court will determine how far states and private entities such as churches and cemeteries may go to justify picket-free zones and “floating buffers” at funerals to silence or restrict speech and movements of demonstrators exercising First Amendment rights.

Sometimes the law gets in the way of common sense.