History > 2006 > USA > Federal justice (II)

Federal prosecutors in Brooklyn

carried out a skeleton model that was used to show a mob victim's wounds

Ramin Talaie for The New York Tiimes        July 2, 2006

 Mob Family's Undoing, a Turncoat at a Time        NYT        3.7.2006
http://www.nytimes.com/2006/07/03/nyregion/03mob.html

U.S. Court Orders City

to Ensure Aid for Battered Immigrants

August 30, 2006
The New York Times
By NINA BERNSTEIN

A federal judge yesterday ordered the city to stop illegally denying food stamps and other aid to battered immigrant women and children and to overhaul the error-plagued computer programs and training manuals that continue to lead welfare workers to turn them away.

The judge determined that high-level city policymakers had long been aware of the systemic problems, but did little or nothing to fix them until a group of battered women filed a lawsuit late last year. As a result, if the city and state continue to fight the lawsuit, the judge said, he will be highly likely to find them liable for “deliberate indifference” to violations of the plaintiffs’ federal and state rights.

“It is not the policy of the United States, nor of the State of New York, to leave destitute the battered immigrant wives and children of lawful U.S. residents just because their abusive husbands are no longer supporting them or providing them with a basis for obtaining aid,” the judge, Jed S. Rakoff of United States District Court in Manhattan, wrote in his 83-page decision. He certified the lawsuit as a class action and issued a preliminary injunction against the city and state.

The judge commended the city for fixing some of the problems since February, when he issued a partial injunction and held nine days of hearings in the case. But he added that problems persisted because of inadequate training, poor computer design and faulty directives.

“The simple truth, moreover, is that the ameliorative actions now taken by the city and state defendants would not likely have been taken if this lawsuit had not been brought and had the court not issued its initial injunction,” he wrote.

The decision is awkward for Mayor Michael R. Bloomberg, who is preparing to unveil a plan for attacking poverty in the city, a central goal of his second term. The plan is expected to focus on children, young adults and the working poor.

Jane Tobey Momo, senior counsel for the city, said officials were reviewing the opinion to determine the city’s next steps. “While we are disappointed in the court’s findings,” she wrote in a statement, “we are pleased that the court recognized and commended the city for the extensive recent steps taken to ameliorate the difficulties in delivering benefits to noncitizen immigrants.

“The difficult and changing federal and state statutes, regulations and policies present continuing challenges to the process,” she added.

When the lawsuit was filed in December by the New York Legal Assistance Group and the Legal Aid Society, the lawyers called it a last resort, saying that officials had failed to fix problems that forced hundreds of women to choose between staying safe and feeding their families, despite government policies aimed at supporting them until they can get on their feet.

The suit seeks back benefits that range from a few hundred dollars to one or two thousand dollars per family in the class. “That represents months of being able to get by,” said Ronald Abramson, a partner at Hughes Hubbard & Reed, which worked on the case for months without charge, but is now likely to be able to collect more than a million dollars in legal fees from the city.

About a dozen plaintiffs, mostly identified only by initials, include a woman from Senegal helping to prosecute the man accused of torturing her and murdering her sister; a Mexican mother of two whose husband chased her with a gun; and a Bangladeshi woman whose husband, since hospitalized for mental illness, kicked her in the abdomen while she was pregnant, cut up her clothes and threatened to kill her when she tried to go to work.

Several fled to domestic violence shelters, only to find themselves unable to buy food or medicine for their children. In an affidavit, one breast-feeding mother wrote of going hungry and of feeling powerless as she and her young children lost weight.

The abuse, documented in orders of protection, police reports and letters from domestic violence shelters, was not in question. Nor was eligibility for aid, often affirmed through administrative “fair hearings,” only to be denied again or automatically cut off.

One of the basic problems lay in the pull-down computer menu that caseworkers used when entering information about a noncitizen applying for aid. The list of eligible immigration categories mistakenly omitted “battered qualified alien,” the category in which these women and children fit.

That problem was fixed recently, after Judge Rakoff’s February order, but other deficiencies remain. The judge called the violations “the direct results of the flawed design of the city’s computer system, the pervasive errors in the city’s training materials and policy directives, and the widespread worker ignorance resulting from inadequate training of the city’s employees.”

“The Court readily concludes that, given the pervasive and systemic nature of the various problems resulting in the unlawful denial of benefits to plaintiffs, plaintiffs have established a very high likelihood that the city will be found liable on all the plaintiffs claims,” he wrote.

In 45 pages devoted to legal findings, he determined that the plaintiffs had established “an overwhelming likelihood of success on their contention that the city, in its failure to adequately train its employees, was ‘deliberately indifferent’ to the violation of plaintiffs’ federal rights.” He added that the state was “vicariously liable” because it supervises the city’s provision of public aid and had failed to change its own programming problems and faulty directives.

Jason Brown, a spokesman for Gov. George E. Pataki, said state officials would not comment until they review the decision.

Mr. Abramson said even last winter, when the judge ordered the city to provide aid to the named plaintiffs, the city’s lawyers returned to court saying their efforts had been stymied because the computer system “errored-out” many of the cases.

But eventually all the families involved in the lawsuit received aid, said Caroline Jane Hickey, a lawyer with New York Legal Assistance Group. “We are thrilled with Judge Rakoff’s decision to protect the rights of a population with almost no voice,” she said.

She cited the case of the Mexican mother identified as J.Z. in the lawsuit, who has since been able to move into public housing in the Bronx with her two children. She has passed a high school equivalency test and found a job at her children’s school.

“She has managed to completely turn her life around,” Ms. Hickey said. “She plans to be a nurse.”

    U.S. Court Orders City to Ensure Aid for Battered Immigrants, NYT, 30.8.2006, http://www.nytimes.com/2006/08/30/nyregion/30immigrant.html

4 More Sentenced in ’03 Killing of Undercover Detectives

August 3, 2006
The New York Times
By MICHAEL BRICK

The government called it the Stapleton Crew, a Staten Island organization devoted to “murder, attempted murder, carjacking, obstruction of justice, assault, robbery, narcotics trafficking and firearms trafficking.”

On March 10, 2003, members of the crew fatally shot two undercover police detectives in the front seat of a car in Tompkinsville, and since then prosecutors have sought to hold eight people responsible.

Of the eight, three have already pleaded guilty to second-degree murder in State Supreme Court on Staten Island. The remaining five appeared in Federal District Court in Brooklyn this week, including four who were sentenced yesterday to prison terms ranging from 10 years to 27 years for their roles in the killings.

The man prosecutors suspect fired the shots is scheduled to go to trial next month.

The four in court yesterday, who had pleaded guilty in exchange for negotiated sentences, were led before Judge Nicholas G. Garaufis in the afternoon. A grand ceremonial courtroom was reserved for the occasion, a majestic place with portraits of judges around the perimeter to frame a long mural depicting the forging of the railroads. There were big leather chairs elevated in a row under a flag and seal, and it was there that Judge Garaufis sat to meet the defendants one by one.

Across from him, the spectators’ gallery was filled with row upon row of police officers in uniform and detectives in suits. The lawmen occupied the rows behind and around the families of the slain detectives, watching. These three years later, the killings still resound, said Detective Richard Ortiz.

“Every time you go out there,” he said, “you know it’s a very real possibility it could happen again.”

Up first before the judge was Angel Rodriguez, 24, known by the street name Ice and wearing a prison jumpsuit, glasses and Converse Chuck Taylor sneakers. Mr. Rodriguez, who was in police custody at the time of the killings, pleaded guilty last year to conspiracy on the counts not involving the murders.

The judge recited the clinical mathematics of sentencing guidelines and criminal history categorization. Colleen Kavanagh, an assistant United States attorney, referred to Mr. Rodriguez as one of the “non-death-eligible defendants.”

The judge ordered the negotiated sentence of 10 years, then repeated this routine for Jamal Brown, 23, who had also pleaded guilty to conspiracy and received 12 years. Each time, the judge spoke for the record, noting standard orders of court fees and rehabilitation programs.

Each time, the men before him sounded their yeses and nos in low, docile tones. Federal marshals dressed like lawyers in suits and ties guarded them from a few paces away.

Next came Paris Bullock, 24. Ms. Kavanagh said he had pleaded “guilty to a role in the felony murder of detectives Nemorin and Andrews” — and it was then, nearly an hour into the hearing, that the names of the slain men were first mentioned: James V. Nemorin and Rodney J. Andrews, kin to the women biting their lips in the room’s front row.

The judge said the sentencing guidelines called for life in prison for Mr. Bullock.

“He is most deserving of such a sentence in view of his wanton disregard for human life,” Judge Garaufis said. He went on: “Frankly, I consider him just as guilty of this unspeakable crime of double homicide of police officers as the person who pulled the trigger.”

Saying he was reluctant to do so, the judge then ordered a negotiated sentence of 25 years for Mr. Bullock.

He ordered the next man, Michael Whitten, 22, who had admitted a leadership role in the conspiracy, to serve 27 years in prison.

“I view this defendant’s conduct as morally bankrupt,” the judge said, “and totally worthy of our disdain.”

Then the officers and detectives filed out of the big courtroom. One detective, Paul DiGiacomo, said, “Now we can concentrate on the shooter, Ronell Wilson.”

Mr. Wilson, 24, known as Rated R, had his own court appearance earlier this week. The room was smaller and nearly empty but for a few marshals. Those marshals were dressed nothing like lawyers. They wore uniforms and bulletproof vests, and they stood close behind Mr. Wilson, the last of the eight, the only one who has not pleaded guilty. Prosecutors are seeking the death penalty for him. The judge set a trial date for next month.

    4 More Sentenced in ’03 Killing of Undercover Detectives, NYT, 3.8.2006, http://www.nytimes.com/2006/08/03/nyregion/03shot.html

Union Leaders on Trial for Racketeering and Extortion Plead Guilty

August 2, 2006
The New York Times
By DAVID STABA

BUFFALO, Aug. 1 — For more than three decades, leaders of a powerful union used violence and intimidation against contractors, independent workers and even members of other unions to control the construction industry in the Niagara Falls area, according to federal prosecutors, strangling economic development in the process.

On Tuesday, prosecutors declared victory in their long-running war against the union, Local 91 of the Laborers’ International Union of North America, when three of its former officials abruptly pleaded guilty to racketeering charges and a fourth to extortion. Their pleas came in the third week of a federal trial that was expected to last as long as two months and followed vivid testimony of intimidation and violence.

“This has been the most significant F.B.I. criminal investigation in western New York in the past 20 years,” said Laurie Bennett, special agent in charge of the Federal Bureau of Investigation’s office here. “I say that because of the widespread violence and the significant and devastating economic loss to the community.”

The local’s former president, Mark Congi, along with Albert Celeste, an assistant business agent, and Paul Bellreng, a steward and picket captain, each admitted to engaging in a racketeering conspiracy. Joel Cicero, the local’s former training director, pleaded guilty to using his position on the Niagara Falls Bridge Commission to extort jobs for the union local.

Witnesses in the first days of the trial described threats against themselves and their relatives, slashed tires, vandalism at construction sites and, in one case, explosives thrown through the window of an apartment where nonunion workers from New Jersey were sleeping.

“It wasn’t only the implied threat that you played by the rules of Local 91 or you didn’t do business at all, but there have been documented cases of physical violence, damage to property and intimidation,” Superintendent John R. Chella of the Niagara Falls Police said at a news conference on Tuesday. “The message was clearly sent — either play the game, or pay the price.”

On Thursday, Goran Stevanovich, who was a nonunion worker at an asbestos-removal project in the spring of 1997, described how Local 91 pickets threw steel pipes and other objects at him and his co-workers and shouted threats. He testified that the most chilling one came from Mr. Bellreng.

“ ‘Do you ever ask yourself where are Alexander and Daniella right now?’ ” Mr. Stevanovich quoted Mr. Bellreng as asking him, referring to his two young children.

Several weeks later, Mr. Bellreng said, “Goran, don’t worry. I’m coming tonight to take your head off,” Mr. Stevanovich testified.

That night, two bricks with explosives taped to them crashed through windows at the apartment where Mr. Stevanovich and three others were sleeping. One landed about a foot from his head, with the explosion causing permanent hearing loss in his right ear and burning his bedding, he testified. Four union members later admitted to involvement in the attack, which they said took place on Mr. Congi’s orders. Those union members had agreed to testify against the four union officials.

Mr. Stevanovich testified that the next day, Mr. Bellreng said, “Goran, how was sleeping in the fire last night?”

Shortly after Mr. Stevanovich’s testimony and cross-examination, defense lawyers approached prosecutors and asked to make a plea deal, said Terrance P. Flynn, United States attorney for the Western District of New York.

“I believe they saw the strength of his testimony and became aware of his appeal to the jury and to the public,” Mr. Flynn said.

Witnesses at the trial described a range of job-site vandalism that they ascribed to Local 91 members. A New York state trooper said 220 feet of wood fencing built by a company he ran in his off-duty hours was destroyed after he rebuffed Mr. Congi’s demands to put union workers on the job.

In all, 19 union members were indicted over the last four years. Only one was acquitted. The rest pleaded guilty or were convicted. Most had agreed to testify against the four union officials in the trial that ended on Tuesday.

Mr. Flynn said the lineup of former defendants waiting to testify helped make the defense team’s position untenable.

“You can attack one, but it’s difficult to attack all of them,” he said.

Each of the felony counts carries a potential 20-year prison term. As part of the plea arrangement, prosecutors agreed to ask Judge Richard J. Arcara to sentence Mr. Congi to 15 years, Mr. Celeste and Mr. Bellreng to five years each, and Mr. Cicero to probation.

Mr. Flynn said the local’s threats and reputation for violence hurt the local economy by discouraging businesses. “They just weren’t going to bother with Niagara County,” he said. “It just wasn’t worth the violence, the intimidation and the extra costs.”

    Union Leaders on Trial for Racketeering and Extortion Plead Guilty, NYT, 2.8.2006, http://www.nytimes.com/2006/08/02/nyregion/02union.html

Blogger Jailed After Defying Court Orders

August 2, 2006
The New York Times
By JESSE McKINLEY

SAN FRANCISCO, Aug. 1 — A freelance journalist and blogger was jailed on Tuesday after refusing to turn over video he took at an anticapitalist protest here last summer and after refusing to testify before a grand jury looking into accusations that crimes were committed at the protest.

The freelancer, Josh Wolf, 24, was taken into custody just before noon after a hearing in front of Judge William Alsup of Federal District Court. Found in contempt, Mr. Wolf was later moved to a federal prison in Dublin, Calif., and could be imprisoned until next summer, when the grand jury term expires, said his lawyer, Jose Luis Fuentes.

Earlier this year, federal prosecutors subpoenaed Mr. Wolf to testify before a grand jury and turn over video from the demonstration, held in the Mission District on July 8, 2005. The protest, tied to a Group of 8 meeting of world economic leaders in Scotland, ended in a clash between demonstrators and the San Francisco police, with one officer sustaining a fractured skull.

A smoke bomb or a firework was also put under a police car, and investigators are looking into whether arson was attempted on a government-financed vehicle.

Mr. Wolf, who posted some of the edited video on his Web site, www.joshwolf.net , and sold some of it to local television stations, met with investigators, who wanted to see the raw video. But Mr. Wolf refused to hand over the tapes, arguing that he had the right as a journalist to shield his sources.

On Tuesday, Judge Alsup disagreed, ruling that the grand jury “has a legitimate need” to see what Mr. Wolf filmed.

Mr. Wolf, a recent college graduate, is the latest journalist to face prison time for refusing to cooperate with federal investigators. Last year, the New York Times reporter Judith Miller served nearly three months in jail after refusing to divulge her sources in the investigation of the leak of a covert C.I.A. agent’s name.

Jane Kirtley, a professor of media ethics and law at the University of Minnesota, said that although the jailing of journalists had become more common, Mr. Wolf’s case was the first she had heard of in which a blogger had been pursued and eventually jailed by federal authorities.

“There is a tendency on the part of the prosecutors to go aggressively after people not perceived to have a big gun behind them,” Ms. Kirtley said. “They are the most vulnerable links in the chain.”

While California has a so-called shield law meant to protect journalists and their sources, no such law exists at the federal level. Even if there was such a law, Ms. Kirtley said, it is unclear whether a blogger and freelancer would fall under it.

According to his Web site, Mr. Wolf has been active in his defense, holding news conferences and posting interviews and newspaper articles on his site. On Tuesday, however, the site’s last message read, “This blog will be updated sometime shortly after my hearing ... wish me luck guys!”

Mr. Wolf has attracted supporters, including the American Civil Liberties Union and the San Francisco Board of Supervisors, which introduced a resolution objecting to the federal government’s role in the investigation. The Society of Professional Journalists contributed to Mr. Wolf’s legal defense fund.

Mr. Fuentes said he had already prepared an appeal and would file it immediately. He also planned to ask for bail, though he was not certain where the money to post it would come from. “His mother has been trying to fund-raise,” Mr. Fuentes said. “But he might lose his job.”

    Blogger Jailed After Defying Court Orders, NYT, 2.8.2006, http://www.nytimes.com/2006/08/02/us/02protest.html

U.S. Wins Access to Reporter Phone Records

August 2, 2006
The New York Times
By ADAM LIPTAK

A federal prosecutor may inspect the telephone records of two New York Times reporters in an effort to identify their confidential sources, a federal appeals court in New York ruled yesterday.

The 2-to-1 decision, from a court historically sympathetic to claims that journalists should be entitled to protect their sources, reversed a lower court and dealt a further setback to news organizations, which have lately been on a losing streak in the federal courts.

The dissenting judge said that the government had failed to demonstrate it truly needed the records and that efforts to obtain reporters’ phone records could alter the way news gathering was conducted.

The case arose from a Chicago grand jury’s investigation into who told the two reporters, Judith Miller and Philip Shenon, about actions the government was planning to take against two Islamic charities, Holy Land Foundation in Texas and Global Relief Foundation in Illinois. Though the government contended that calls from the reporters tipped off the charities to impending raids and asset seizures, the investigation appears to be focused on identifying the reporters’ sources. No testimony has been sought from the reporters, and there has been no indication that their actions are a subject of the investigation.

“No grand jury can make an informed decision to pursue the investigation further, much less to indict or not indict, without the reporters’ evidence,” Judge Ralph K. Winter Jr. wrote for majority, in an opinion joined by Judge Amalya Lyle Kearse. “We see no danger to a free press in so holding. Learning of imminent law enforcement asset freezes/searches and informing targets of them is not an activity essential, or even common, to journalism.”

George Freeman, vice president and assistant general counsel of The New York Times Company, disputed the majority’s characterization. Ms. Miller and Mr. Shenon, he said, “were conducting their journalistic duties by getting reaction to an ongoing story.”

Mr. Freeman added: “The move against the charities was not a surprise. No one has ever alleged that any federal agent was hindered or hurt or didn’t succeed.”

Mr. Freeman said The Times had not decided whether to pursue an appeal, either to the full appeals court, the United States Court of Appeals for the Second Circuit, or to the United States Supreme Court.

Ms. Miller, who retired from The Times last year, said she was very disappointed. “That this was 2-to-1 showed how close these issues are and the need for a federal shield law to protect journalists, their telephone numbers and hence their sources,” she said.

In an unrelated case last year, a federal appeals court in Washington ordered Ms. Miller and Matthew Cooper, then of Time magazine, to testify before a grand jury about conversations with their sources. They did so after receiving their sources’ permission, though not before Ms. Miller spent 85 days in jail.

Patrick J. Fitzgerald was the prosecutor in both cases, though he acted as United States attorney in Chicago in the charities case and as special counsel in the Washington case. His spokesman, Randall Samborn, declined to comment yesterday.

While yesterday’s decision represented a clear loss for The Times, the majority ruled for the paper on several subsidiary points and left open the possibility that it would protect reporters’ sources in cases involving other kinds of reporting.

The majority said, for instance, that the paper had been entitled to bring a civil suit in New York to challenge a grand jury subpoena in Chicago. It also said that whatever protections the reporters had against being called to testify about their sources also extended to their phone records. And it said that “courts can easily find appropriate means of protecting the journalists involved and their sources” where “government corruption or misconduct” is involved.

But the court rejected The Times’s central argument, saying that neither the United States Supreme Court’s 1972 decision in Branzburg v. Hayes, which considered the scope of the protections offered by the First Amendment, nor later developments in other areas of the law provided the paper with the ability to protect the phone records at issue in the case.

The majority ruled that the government could overcome any privilege that even a broad reading of the Branzburg decision allowed. It also declined to adopt a so-called common-law evidentiary privilege based on the shield laws almost all states have adopted, saying the government could similarly defeat any plausible version of such a privilege.

In seeming to acknowledge the existence of privilege, though one subject to a balancing test, the decision differed from the one issued by the federal appeals court in Washington last year that sent Ms. Miller to jail.

“There is a lot more to be heard from the courts before this issue is resolved one way or the other,” said Floyd Abrams, who represented The Times in both cases.

In his dissent, Judge Robert D. Sack said the government had not shown that the phone records contained important information that could not be obtained elsewhere. Judge Sack added a cautionary note about the consequences of unfettered access to reporters’ phone records.

“Reporters might find themselves,” he said, “as a matter of practical necessity, contacting sources the way I understand drug dealers to reach theirs — by use of clandestine cellphones and meeting in darkened doorways. Ordinary use of the telephone could become a threat to journalist and source alike. It is difficult to see in whose best interests such a regime would operate.”

Judge Winter was appointed by President Ronald Reagan, Judge Kearse by President Jimmy Carter and Judge Sack by President Bill Clinton.

    U.S. Wins Access to Reporter Phone Records, NYT, 2.8.2006, http://www.nytimes.com/2006/08/02/washington/02phones.html?hp&ex=1154577600&en=f960a842e0fe8b0a&ei=5094&partner=homepage

Aryan Brotherhood Leaders Are Convicted in Murders

July 29, 2006
The New York Times
By TORI RICHARDS

SANTA ANA, Calif., July 28 — A federal jury convicted four leading Aryan Brotherhood gang members on Thursday of running a criminal enterprise from behind bars that routinely engaged in murder, narcotics trafficking and conspiracy in an effort to rule the nation’s prisons.

The middle-aged defendants stared stoically at the court clerk as she spent an hour reading and verifying the verdicts, which could lead to a possible death sentence for two defendants and life in prison for the others. All four were convicted of racketeering, conspiracy and murders dating back to 1979.

It was a sweeping victory for the prosecution, which got guilty verdicts on five of the six counts after two weeks of jury deliberations. Jurors acquitted two defendants on a single murder charge, but convicted them on racketeering and conspiracy charges that allege a host of murders were committed to benefit the gang. Jurors also convicted them on three other murder counts.

They were indicted in 2002 along with 36 other gang members and associates under the Racketeer Influenced and Corrupt Organizations Act, which was originally created to prosecute Mafia families. The group was accused of committing 32 murders and attempted murders.

“If we get a conviction on anything, the government thinks it’s a big win,” Terri Flynn, an assistant United States attorney, said before the verdicts were read. “Even a conviction on conspiracy keeps them in prison and may allow more stringent housing.”

The trial of the admitted leaders, Barry B. Mills, 57, and Tyler D. Bingham, 58, will go to a penalty phase on Aug. 15 that could result in a verdict of death. The two other defendants, Christopher O. Gibson, 46, and Edgar W. Hevle, 54, will be sentenced on Oct. 23 and face at least 20 additional years in prison. Until this trial started, all except for Mr. Mills were eligible for parole within the next 13 years.

“If my client is convicted of even one count, it’s essentially a life sentence because he’ll never live to get out of prison,” a lawyer for Mr. Hevle, Donald Calabria, said during the trial, which began March 14.

The Aryan Brotherhood began in San Quentin prison in California in the 1960’s as a way for white inmates to protect themselves during a racially charged era. Trial testimony painted a picture of a ruthless cadre of villains who routinely ordered assassinations of rivals and their own members for such perceived ills as disrespect, homosexuality or failing to follow orders.

The highly organized group had a political structure with Mr. Mills and Mr. Bingham at the top, privy to meting out life or death punishments at whim. A parade of former Aryan Brotherhood members testified about life in the gang and how they used methods like lip reading, invisible ink or lawyer mail privileges to pass messages that ordered killings.

One such incident started a race war in a Pennsylvania prison that left two black inmates dead. Mr. Mills and Mr. Bingham were convicted of these murders, which were the death penalty counts.

Lawyers have disputed the government’s claims, insisting that members did not murder within a vast conspiracy but rather to survive in the hellish prison system. The group is more of a social club than anything and enjoys playing cards, reading and crocheting, said Mark Fleming, a lawyer for Mr. Mills.

Mr. Fleming and other lawyers vigorously objected to prosecutors’ rewarding the informants with a new life in the witness protection program and paying them thousands of dollars to testify before the grand jury and ultimately this trial. To date, one witness has been paid $153,000 for living expenses, a car allowance and education, Mr. Fleming said.

Before winning release, the informants were housed in a special cellblock at a federal “supermaximum” prison in Colorado, where they were fed information by the government to help prepare the case, defense lawyers claimed.

This is the first group of defendants to face trial. Nineteen other defendants have pleaded guilty, one died in custody and the rest are awaiting trial.

    Aryan Brotherhood Leaders Are Convicted in Murders, NYT, 29.7.2006, http://www.nytimes.com/2006/07/29/us/29aryan.html

Judge Temporarily Blocks Georgia Sex-Offender Provision

June 27, 2006
The New York Times
By BRENDA GOODMAN

A federal judge has temporarily prevented the State of Georgia from forcing eight sex offenders from their homes Saturday — the day a law that prohibits sex offenders from living within 1,000 feet of school bus stops goes into effect. According to a brief filed by the plaintiffs' lawyers, the provision would make nearly 9,000 sex offenders and their families homeless because there are virtually no housing arrangements that meet the law's requirements.

    Judge Temporarily Blocks Georgia Sex-Offender Provision, NYT, 27.7.2006, http://www.nytimes.com/2006/06/27/us/27brfs-004.html?ex=1154059200&en=1fca7551a4bcbbf7&ei=5070

Law Restricting Sex Offenders Clears a Hurdle

July 26, 2006
The New York Times
By BRENDA GOODMAN

ATLANTA, July 25 — Noting that his ruling would probably cause “delay, confusion and inconsistent actions,” a federal judge in Georgia said he could not keep the state from enforcing a new law that makes it illegal for registered sex offenders to live near school bus stops, because Georgia has no school bus stops as defined by the law.

“There is no evidence in the record to indicate that any local school board of education has designated school bus stops pursuant to the act,” wrote the judge, Clarence Cooper of Federal District Court.

To enforce the law, Judge Cooper said, school board members would first have to “designate” bus stops, a responsibility most districts delegate to a transportation director.

Though Judge Cooper denied the injunction, his ruling was still a backhanded and likely temporary victory for the 11,000 registered sex offenders in Georgia, many of whom had been notified by local sheriff’s offices that they would have to move or face up to 10 years in prison.

Representative Jerry Keen, a Republican who is House majority leader and sponsor of the bill, issued a statement with the speaker of the House saying he was pleased by the ruling and was confident school districts would “take whatever steps necessary to officially designate school bus stops with the goal of locating those stops as far as possible from the residences of convicted sex offenders.”

But in January, as he argued for the bill, Mr. Keen seemed to hope it would accomplish something different. “We don’t want these types of people staying in our state,” he said.

Judge Cooper’s ruling sets the stage for more legal battles over what the Southern Center for Human Rights calls a “sloppily written and counterproductive” law. Lawyers for the center, which is representing a class of the state’s registered sex offenders, have said the law is unconstitutional.

“The court has very clearly ruled that this issue is not over yet,” said Sarah Geraghty, the main lawyer for the plaintiffs.

    Law Restricting Sex Offenders Clears a Hurdle, NYT, 26.7.2006, http://www.nytimes.com/2006/07/26/us/26sex.html

Threats up against federal judges

Updated 7/26/2006 11:52 PM ET
USA TODAY
By Donna Leinwand

Threats against federal judges and other court employees have reached record numbers, the U.S. Marshals Service says.

The number of threats in fiscal year 2005 increased 63% from 2003. Marshals investigated 953 threats and inappropriate communications in 2005. Threats this fiscal year, which began Oct. 1, are outpacing last year: Marshals have investigated 822 incidents.

"It seems like every few months there's some type of major threat to a judge," says U.S. Marshals Service Director John Clark. "It's very clear to me that we need to continue to be vigilant."

The Marshals Service, charged with protecting federal judges, prosecutors, jurors and other court employees, has tripled its number of threat investigators and analysts from eight to 25 to respond to the threats, says Donald Horton, chief inspector for the marshals' Office of Protective Intelligence.

A 24-hour threat analysis and intelligence center with new technology becomes fully operational in October, Clark says. "We're striving for faster, real-time analysis," he says.

"All threats can be evaluated within a 24-hour period if not instantly," Horton says.

He attributes the increase in threats to more litigation, more aggressive communication from people with complaints against judges, easier access to judges' information and improved reporting of threats.

Recent high-profile shootings have drawn national attention to judicial security and underscored weaknesses in judicial protection.

In February 2005, a man with a history of threatening letters and angry court filings broke into U.S. District Judge Joan Lefkow's house in Chicago and killed her husband and mother. The man killed himself nine days later during a traffic stop in Wisconsin.

A year before the killings, a U.S. Justice Department inspector general's report criticized the marshals' threat assessment process as "untimely and of questionable validity."

The inspector general found that the marshals failed to meet their own time standards in more than 73% of the threat assessment cases.

Congress responded to the Lefkow murders by approving nearly $12 million to install security systems at judges' homes. Congress also is considering other security proposals, including tougher criminal penalties for people convicted of threatening judges.

State judges, who are not under the marshals' protection, also are vulnerable. In June, Washoe, Nev., family court Judge Chuck Weller was shot in court chambers.

    Threats up against federal judges, NYT, 26.7.2006, http://www.usatoday.com/news/nation/2006-07-26-judges-cover_x.htm

Judge Rejects Customer Suit Over Records From AT&T

July 26, 2006
The New York Times
By ADAM LIPTAK

A federal judge in Chicago dismissed a class-action lawsuit yesterday against AT&T that claimed it had illegally given information about its customers to the National Security Agency. The judge, Matthew F. Kennelly, based his ruling on the state secrets privilege, which can bar suits that would disclose information harmful to national security.

The ruling is at first blush at odds with a decision last week by a federal judge in San Francisco. That judge, Vaughn R. Walker, allowed a similar suit against AT&T to proceed notwithstanding the state secrets privilege.

But the two decisions can be reconciled, Judge Kennelly wrote. The Chicago case concerns records of phone calls, including when they were placed, how long they lasted and the phone numbers involved. The San Francisco case, by contrast, mainly concerns an N.S.A. program aimed not at a vast sweep of customers’ records but at the contents of a more limited number of communications.

Because the Bush administration has confirmed the existence of such targeted wiretapping, the San Francisco suit could proceed without running afoul of the state secrets privilege, Judge Walker ruled last week. ‘‘The government has opened the door for judicial inquiry,” he wrote, “by publicly confirming and denying material information about its monitoring of communications content.”

In his decision yesterday, Judge Kennelly said there had been no comparable confirmation by the government or AT&T of “the existence or nonexistence of AT&T’s claimed record turnover.” He refused to rely on news accounts of the program as proof of its existence and noted that “no executive branch official has officially confirmed or denied the existence of any program to obtain large quantities of customer telephone records.”

The case was brought by the journalist Studs Terkel, five other individual plaintiffs and the American Civil Liberties Union of Illinois. They argued that the program violated a federal law that forbids the disclosure of some customer records to the government, and they sought a court order to stop it.

Among the papers the government submitted to Judge Kennelly to urge the dismissal of the case on state secrets grounds was a declaration from John D. Negroponte, the director of national intelligence. “Even confirming that a certain intelligence activity or relationship does not exist, either in general or with respect to specific targets or channels,” Mr. Negroponte said, “would cause harm to the national security because alerting our adversaries to channels or individuals that are not under surveillance could likewise help them avoid detection.”

Judge Kennelly noted his “great antipathy” for dismissing the suit. “Nothing in this opinion,” he wrote, “prevents the plaintiffs from using the legislative process, not to mention their right of free speech, to seek further inquiry by the executive and legislative branches into the allegations in their complaint.”

More than 30 lawsuits over government surveillance programs are pending in the nation. Only one, in Detroit, has moved beyond questions of procedure and privilege to consider the legality of the wiretapping program. A decision in that case is expected soon.

    Judge Rejects Customer Suit Over Records From AT&T, NYT, 26.7.2006, http://www.nytimes.com/2006/07/26/us/26nsa.html

Judge Declines to Dismiss Privacy Suit Against AT&T

July 21, 2006
The New York Times
By JOHN MARKOFF

SAN FRANCISCO, July 20 — A federal judge on Thursday rejected a motion by the Bush administration to dismiss a lawsuit against AT&T over its cooperation with a government surveillance program, ruling that state secrets would not be at risk if the suit proceeded.

The case was filed in February by the Electronic Frontier Foundation, a civil liberties group, and alleged that AT&T was collaborating with the National Security Agency in a surveillance program tracking the domestic and foreign communications of millions of Americans.

In rejecting the motion brought by the Justice Department, Vaughn R. Walker, chief judge of the Federal District Court for the Northern District of California, ruled that the government had already disclosed in broad terms whose communications it monitored, and that it was generally interested in calls between the United States and other countries.

“The government has opened the door for judicial inquiry by publicly confirming and denying material information about its monitoring of communications content,” Judge Walker wrote.

“Because of the public disclosures by the government and AT&T,’’ he added, “the court cannot conclude that merely maintaining this action creates a ‘reasonable danger’ of harming national security.”

The judge also rejected a separate motion to dismiss by AT&T, which had argued that its relationship with the government made it immune from prosecution.

Judge Walker noted that his ruling should not be interpreted as an indication that his review of classified material presented by the government confirmed the accusations in the suit.

The government’s surveillance of telephone and Internet activity as part of its effort to track terrorists was disclosed in an article in The New York Times last December. In filing its lawsuit, the Electronic Frontier Foundation cited the testimony of a former AT&T technician who disclosed technical documents about the installation of monitoring equipment at an AT&T Internet switching center in San Francisco.

“This cases arises against the backdrop of the accountability of the government as it pursues its surveillance program,” said Marc Rotenberg, director of the Electronic Privacy Information Center, a civil liberties group based in Washington. “This is a significant victory for the principle of government accountability.”

Cindy Cohn, legal director for the Electronic Frontier Foundation, said the lawsuit was one of about 35 filed in different states in response to disclosures about the surveillance program, which the Bush administration has acknowledged. Senator Arlen Specter, Republican of Pennsylvania, has introduced legislation to consolidate those cases before a special court that had previously been established under the Foreign Intelligence Surveillance Act to deal with such issues.

Separately, at the request of AT&T, Verizon and the government, a federal court in Chicago has begun to consider whether the cases should be consolidated or heard before separate federal courts.

An AT&T spokesman, Walt Sharp, said the company was evaluating its options in light of the judge’s ruling. Mr. Sharp emphasized that the company was committed to protecting the privacy rights of its customers.

A Justice Department spokesman did not return telephone calls seeking comment.

In a separate lawsuit filed before a federal court in Detroit, the American Civil Liberties Union is suing the National Security Agency over the surveillance program.

Lawyers for the Electronic Frontier Foundation said they assumed the government would appeal the ruling, and said the next phase of the case would deal with whether the judge would permit the discovery phase of the trial to continue during the appeal process.

“Everyone expects the government to appeal, and that could take some time,” said Robert D. Fram, a partner at Heller Ehrman, the San Francisco firm representing the foundation in the case.

    Judge Declines to Dismiss Privacy Suit Against AT&T, NYT, 21.7.2006, http://www.nytimes.com/2006/07/21/washington/21data.html

2 Are Charged in Criminal Case on Stock Options

July 21, 2006
The New York Times
By DAMON DARLIN and ERIC DASH

SAN FRANCISCO, July 20 — Federal prosecutors on Thursday filed the first criminal charges against executives in a mushrooming investigation into the possible manipulation of stock options.

Gregory L. Reyes, the chief executive of Brocade Communications until January 2005, and Stephanie Jensen, the vice president for human resources until 2004, were each charged in a criminal complaint with one count of securities fraud. Prosecutors said the two doctored the minutes of board meetings, job-offer letters and other documents to make it appear that employees were granted stock options at an earlier date, when the share price of Brocade was lower.

The Securities and Exchange Commission also filed a civil complaint, which named Brocade’s former chief financial officer, Antonio Canova, as well as the other two executives. (Mr. Canova, who resigned in December 2005, was not named in the criminal case.)

The criminal complaint is the most significant step yet by investigators in what is shaping up to be a large-scale scandal in the corporate world. Corporations — from small technology companies like Altera and Mercury Interactive to industry giants like UnitedHealth — have been ensnared in investigations into whether their executives or boards improperly granted stock options at attractive prices.

Now that prosecutors in San Francisco have fired the first volley, many lawyers said they expected a flurry of indictments to follow.

“I think we’re going to see a quick succession of cases,” said Scott S. Balber, a lawyer with Chadbourne & Parke who would not say whether any of his corporate clients had been contacted by regulators regarding the backdating of options.

So far, federal prosecutors in San Francisco, Manhattan and Brooklyn have opened more than 33 cases looking at potential accounting problems or fraud; the Securities and Exchange Commission is examining at least 80 companies. More than a dozen senior executives have been dismissed. Nearly every company has been reviewing its practices.

“This case will not be the last,’’ said Linda Chatman Thomsen, the director of the S.E.C. enforcement division.

An option gives the holder the right to buy shares of stock at a predetermined price in the future, commonly the market price on the date they were granted. Instead of offering higher salaries, companies sometimes prefer to lure potential hires with stock options, conserving company cash.

According to the criminal and civil complaints filed Thursday in Federal District Court in San Jose, Calif., Mr. Reyes routinely backdated documents to provide new employees with a larger compensation package. Brocade, a maker of data storage networking products, is based in San Jose.

The Department of Justice criminal complaint does not contend that any of the three company officials directly made financial gains from the backdating. But Kevin V. Ryan, the United States attorney for Northern California, said the government was not obligated to prove personal financial gain in this case.

Instead, prosecutors are building a case that suggests that the intent was to hire highly qualified employees that other companies had wanted.

The S.E.C.’s civil complaint does contend that Mr. Reyes was motivated by personal gain and did receive backdated options himself. “He was thus motivated to continue the scheme, in part, to enrich himself and his fellow officers,” the S.E.C. complaint says.

Although Brocade’s board approved those grants, the government did not name any directors as defendants. Ms. Thomsen and Mr. Ryan did not rule out the possibility that others at Brocade might be charged. Mr. Ryan also declined to discuss whether any employees or former employees had been granted immunity to testify or help the government build its criminal case.

At a news conference in San Francisco, Christopher Cox, the chairman of the S.E.C., called the backdating practice “poisonous” and said “the S.E.C. is committed to bringing it to an end nationwide.”

The criminal charge carries a penalty of as much as 20 years in prison and a fine of $5 million.

Lawyers for Mr. Reyes and Ms. Jensen denied the charges. “Financial gain is always the motive in securities fraud cases, and here there was none,’’ Mr. Reyes’s lawyer, Richard Marmaro, said in a statement. A call to Mr. Canova’s lawyer was not returned.

Options are a powerful incentive for executives to try to get the stock price higher so that the option becomes “in the money,’’ meaning the shares can be bought at a price below the current market price.

Handing out in-the-money options is not illegal as long as the grants are disclosed to shareholders. At the time in question in this case, in-the-money options had to be counted as an expense on the company’s books. (New rules now require companies to deduct options as an expense.) Failure to disclose or to deduct in-the-money options from income could lead to securities fraud charges. And because such options do not qualify for tax breaks once they are exercised, such grants raise tax fraud issues, too.

Yet what remains unclear is where regulators and prosecutors will draw the line when it comes to backdating. Brocade’s case may be different because it involves allegations of doctoring documents.

But other companies will argue that the rules establishing a stock option’s grant date were not always clear, or at least open to interpretation. For a period during the 1990’s, for example, several companies including Microsoft granted stock options for rank-and-file employees at monthly lows, often with the blessing of auditors.

Other companies may suggest the backdated options were caused by legitimate paperwork delays; there was sloppiness but no criminal wrongdoing. And even among top S.E.C. regulators, there is a significant debate brewing over another common but disturbing options practice: at what point does the opportunistic granting of stock options at attractive prices ahead of good news become illegal?

Defense lawyers are struggling to get a sense how far investigators will pursue cases and where the line should be drawn between aggressive grant practices and fraud.

Brocade “is a good case to start with because it involves allegations of falsified documents,’’ said Kenneth A. Raskin, head of the global executive compensation, benefits and employment law practice at White & Case. “Other cases are not going to be as black and white."

The Brocade case illustrates how one company granted stock options in a frenzied Silicon Valley culture.

Technology start-ups were sprouting throughout the Bay Area and beyond and desperately needed to fill jobs. Stock prices often swung wildly from day to day. And instead of offering higher salaries, companies preferred to offer stock options.

At the same time, few outsiders scrutinized the practice. Accounting and law firms sought to please their clients; misinformation, intentional or not, was abundant.

Indeed, backdating stock options was so common among Silicon Valley firms, several West Coast lawyers and compensation experts said, that it was viewed at the time as the equivalent of running a stop sign in the desert. Executives were often willing to push the boundaries or in some cases simply ignore the rules.

“It was a high-risk, high-reward time,” said Tom G. LaWer, a partner at Greenberg Traurig’s Silicon Valley practice. “You had people who were entrepreneurs. They often started with small companies where every day is a bet-your-company decision. In this case, a lot of them concluded the risk was small and the reward was great.”

From 2000 to 2004, Mr. Reyes and Ms. Jensen falsified company records, including minutes of directors’ meetings, and employment-offer letters and understated Brocade’s expenses and overstated its income, according to the S.E.C.

Ms. Jensen reported directly to Mr. Reyes. The S.E.C. contends he backdated options grants on at least nine occasions in 2001 and 2002 and on six occasions in 2003 and 2004.

Mr. Reyes was given sole authority to grant stock options by Brocade’s board, in essence, making him the company’s compensation committee, the government contends. Mr. Reyes and Ms. Jensen often waited until the end of a fiscal quarter before granting options at the lowest price for that quarter.

In fact, the practice became so routine that by June 2003, “an HR employee prepared a memorandum describing the practice,” the S.E.C. complaint says.

Damon Darlin reported fromSan Francisco for this article and Eric Dash from New York. Julie Creswell contributed reportingfrom New York.

    2 Are Charged in Criminal Case on Stock Options, NYT, 21.7.2006, http://www.nytimes.com/2006/07/21/business/21options.html?ei=5094&en=cf5f86f41994c379&hp=&ex=1153540800&adxnnl=1&partner=homepage&adxnnlx=1153463238-SUPWfMnjiDW8MVtWH89Bhw

Instigator of Steroids Inquiry Is Said to Be a Target

July 20, 2006
The New York Times
By DUFF WILSON

SAN FRANCISCO, July 19 — While national attention has focused on a possible federal indictment of Barry Bonds as early as Thursday, the grand jury in the case is also investigating one of the world’s top track coaches, according to people with knowledge of the proceedings.

The coach, Trevor Graham, set off the Bay Area Laboratory Co-Operative steroids case when he anonymously mailed a syringe to the United States Anti-Doping Agency in June 2003. Chemists found a new type of steroid in the syringe, prompting the biggest drug scandal in the history of sports.

The Balco investigation has led to four criminal convictions, sanctions against 14 track and field athletes, the return of one Olympic medal and the storm of doubt that has followed Mr. Bonds as he approaches the major league career record for home runs.

Mr. Graham is the head coach at Sprint Capitol USA in Raleigh, N.C., and he has trained some of the world’s top track and field athletes, including Marion Jones, Tim Montgomery and C. J. Hunter. He is the current coach of Justin Gatlin, who jointly holds the world record in the 100-meter dash.

In a lengthy statement to federal investigators in 2004, Mr. Graham denied setting up any of his athletes with illegal performance-enhancing drugs. While at least six athletes for Mr. Graham have received suspensions for drug use, he has always denied direct knowledge or involvement.

But a man who worked with Mr. Graham has told the grand jury here and federal investigators that he was the main supplier of performance-enhancing drugs to Mr. Graham and many of his athletes, including Ms. Jones and Mr. Montgomery, the onetime holder of the 100-meter world record, according to people with knowledge of the testimony. They spoke on condition of anonymity because the investigation had not concluded.

The man, Angel Guillermo Heredia, 31, of Mexico and Laredo, Tex., an athlete and a nutritionist, has testified that he provided steroids, human growth hormone and the performance-enhancing drug EPO at the direction of Mr. Graham from about 1996 through 2000, the people with knowledge of the testimony said. Mr. Heredia told investigators that he split with Mr. Graham over a financial dispute.

Mr. Heredia’s account contradicts what Mr. Graham told investigators in June 2004. Mr. Graham said he had never met Mr. Heredia in person and had not spoken to him since 1997, according to a summary of the interview prepared by Jeff Novitzky, an I.R.S. agent who is leading the Balco investigation.

Unlike Mr. Bonds, Mr. Graham did not testify before the grand jury and thus would be unlikely to be charged with perjury. But he could face charges of making false statements or obstructing justice.

Mr. Graham did not respond to e-mail messages Wednesday summarizing the testimony against him and seeking his comment. Lawyers for Mr. Heredia and Mr. Graham also did not return multiple telephone calls and e-mail messages seeking comment.

Mr. Heredia testified twice before grand juries in San Francisco, once in 2003 or 2004 and again on March 24. The New York Times has reviewed a copy of Mr. Heredia’s most recent grand jury subpoena.

The subpoena ordered Mr. Heredia to bring records since 1997 and testify about eight people. Mr. Graham led the list, followed by seven athletes from his camp: Ms. Jones, Mr. Hunter, Antonio Pettigrew, Garfield Ellwood, Michelle Collins, Duane Ross and Jerome Young.

Mr. Heredia testified that all had used steroids or, in Mr. Graham’s case, had dispensed them. Mr. Heredia testified that he knew that because he had provided the drugs, sometimes having them carried across the border from Mexico.

Mr. Heredia’s home in Laredo is just across the border from Nuevo Laredo, Mexico, where pharmacies flourish. Street agents beckon visitors into storefronts. They offer prescriptions for a variety of controlled substances without having to see a doctor or receive a medical check-up. Some of these drugs are legal in Mexico but not in the United States. They are, however, still banned in athletics.

Mr. Heredia provided the grand jury with receipts and other financial records, e-mail messages and the results of blood and urine tests of athletes.

He testified that he made a drug plan for Ms. Jones, provided the drugs to her and worked with her in preparation for the 2000 Sydney Olympics, where she won a record five medals, including three golds.

“Ms. Jones has always been emphatically clear that she has never used performance-enhancing drugs,” Richard M. Nichols, Ms. Jones’s lawyer, said in a telephone interview Wednesday night. Mr. Nichols said he had never heard of Mr. Heredia.

Ms. Jones’s career faltered badly after the Balco investigation in 2004, and she missed almost all of last year because of injuries. She has returned to top form this summer, though, and earlier this month ran her fastest time in the 100 meters in four years.

Mr. Montgomery has been suspended from competition until June 2007 for using a steroid, and his world record in the 100 meters was taken away.

Mr. Hunter is Ms. Jones’s ex-husband and a former world champion shot-putter who was disqualified from the 2000 Olympics after testing positive for steroids. Ms. Jones and Mr. Pettigrew hold Olympic gold medals. Mr. Young, a sprinter, was ordered to return his gold medal after a steroids finding and was barred for life by the United States Anti-Doping Agency.

Mr. Ellwood was a runner and coach. Ms. Collins and Mr. Ross were sprinters. Last year, Ms. Collins accepted a four-year ban for doping violations.

Mr. Heredia has also talked with federal investigators more recently about some of the athletes Mr. Graham is currently coaching, including Mr. Gatlin, a gold medal winner who tied the world record in the 100-meter dash, and the fellow sprinters Shawn Crawford and Lisa Barber. But Mr. Heredia told investigators that he had no knowledge of steroid use by them.

Mr. Heredia told investigators that many professional and Olympic athletes cheated with drugs because their competitors did, that it was easy to beat testing procedures and that he would like to help clean up sports.

His account echoes many of the statements made by Victor Conte, the founder of Balco, who is serving the end of a sentence of four months in prison and four months of house arrest for money laundering and steroid distribution.

Mr. Heredia told the grand jury that he set up drug usage by Mr. Montgomery and then had his blood tested at a Mexican laboratory. The Mexican blood tests were independently corroborated by documents found in Balco offices.

Mr. Heredia told investigators that he provided drugs only to international and professional athletes, not to younger amateur athletes. He also told investigators that he was a major supplier of performance-enhancing drugs and was an expert in developing programs to take them safely and avoid detection.

In interviews with The Times, John Burks, Mr. Graham’s former assistant coach and close friend, said that he did not have firsthand knowledge of steroid use but that he knew Mr. Heredia and Mr. Graham well and that he believed there was illegal drug use at Sprint Capitol USA. Mr. Burks said he testified before the grand jury once.

Mr. Burks has known Mr. Graham since they ran on the track team together at St. Augustine’s College in Raleigh, N.C., and lived together there. Mr. Burks was an assistant coach at Sprint Capitol from 1999 to early 2001. Mr. Burks also split with Mr. Graham over a financial dispute.

Mr. Burks said he told the grand jury that Mr. Graham instructed him to prevent unannounced drug testing at the training track.

“He was away from town with other athletes, and he said don’t let anybody test anybody,” Mr. Burks said. He recalled athletes dodging the tests when alerted. “At Sprint Capitol, drug testers would show up, and athletes would run and jump fences and hide,” Mr. Burks said in an interview.

Mr. Graham, a quarter-miler who won a silver medal for Jamaica at the Seoul Olympics in 1988, became a famous coach by nurturing the career of Ms. Jones. He later admitted that he had sent authorities the Balco syringe, which he said he obtained from an athlete who purchased it from Mr. Conte.

“I was just a coach doing the right thing,” Mr. Graham told reporters at the 2004 Athens Games.

Mr. Heredia and Mr. Burks have told the grand jury that Mr. Graham did not turn in the syringe to clean up sports, but rather, to try to knock out Mr. Conte’s Balco operation, which was setting up athletes with other coaches and competing with Sprint Capitol. Mr. Conte has said the same thing.

Mr. Graham denied any involvement with banned drugs during an interview with federal investigators on June 8, 2004, according to a nine-page summary of the interview, attached to a court file in the Balco case.

Two paragraphs of Mr. Graham’s statement deal with Mr. Heredia, who is nicknamed Memo.

“Graham never set up any of his athletes with drugs obtained from Memo LNU,” the interview summary says, using a designation for Last Name Unknown. “Graham is not aware of any of his athletes getting drugs from Mexico. Graham has no connections with a Mexican laboratory. The only contact Graham had with Memo was over the phone, when he was trying to assist him with entry into St. Augustine’s. Graham last spoke with Memo on the phone in approximately 1997.”

Mr. Heredia testified that Mr. Graham strongly encouraged some of his athletes to take performance-enhancing drugs and had personal contact with him, provable by photographs.

    Instigator of Steroids Inquiry Is Said to Be a Target, NYT, 20.7.2006, http://www.nytimes.com/2006/07/20/sports/20track.html?hp&ex=1153454400&en=d6aea92b92e6b119&ei=5094&partner=homepage

Under rulings, Georgia can't require voter photo IDs this year

Updated 7/12/2006 9:56 PM ET
AP
USA Today

ROME, Ga. (AP) — The same federal judge who threw out Georgia's voter ID law last year blocked the state Wednesday from enforcing its revised law during this year's elections.

The ruling came less than two hours after the Georgia Supreme Court denied the state's emergency request to overrule a state court order that blocked enforcement of the new photo ID law during next week's primary elections and any runoffs.

U.S. District Judge Harold Murphy's ruling, which he delivered verbally from the bench, was much broader, also including the Nov. 7 general elections and any runoffs.

If the rulings stand, Georgia voters will not have to show a government-issued photo ID to cast a ballot this year. The state's primary election — which would have been the first election for which the IDs were required — is scheduled for Tuesday. The general elections are Nov. 7.

Murphy said the state's latest attempt at requiring voter photo IDs discriminated against people who don't have driver's licenses, passports or other government IDs.

"That is the failure of this legislation as it stands," he said.

The judge last October rejected a more stringent voter ID requirement, saying it amounted to an unconstitutional poll tax because of the fees associated with getting the required ID. The Legislature this year passed a new law that made the IDs free and available in all counties.

Murphy commended lawmakers for addressing problems with the previous version but said more work is needed. The latest version still denies citizens equal protection under the law, he said.

"The court never said there cannot be a proper voter ID law," he said.

Mark Cohen, the state's lead attorney, declined to comment on whether the state would appeal. Unless the ruling is reversed, Murphy's injunction will remain in place through the November runoff elections.

Republican Gov. Sonny Perdue and other supporters of the IDs had argued they were needed to prevent election fraud. Civil rights groups challenged the law in both federal and state court, arguing that it discriminated against poor, elderly and rural voters. They also argued that voter fraud in Georgia stems from absentee ballot voting, an issue not even addressed by the law.

"They have chosen deliberately to legislate only in an area where there was no problem," Emmett Bondurant, the critics' lead attorney, told Murphy in court.

Cohen argued that Georgia must restore confidence in the election system.

"The public in general in this country has a great distrust for the voting system," he said. "People are questioning whether voting is going on properly."

He also said the law does not deny Georgians the right to vote, because voters may cast an absentee ballot.

On July 7, a county judge issued a temporary order blocking Georgia from enforcing the voter ID law in the primary and any runoffs.

The Supreme Court's decision pertained only to that order and does not prevent the case from coming before the high court again.

    Under rulings, Georgia can't require voter photo IDs this year, UT, 13.7.2006, http://www.usatoday.com/news/nation/2006-07-12-voter-ID_x.htm

Judge Upholds F.B.I. Search of Lawmaker's Office

July 11, 2006
The New York Times
By KATE PHILLIPS

WASHINGTON, July 10 — While acknowledging the unprecedented nature of the F.B.I. search of Representative William J. Jefferson’s legislative offices, a federal judge ruled Monday that the seizure of records there was legal and did not violate the constitutional separation of powers between Congress and the executive branch.

The search, the first of a Congressional office, touched off a firestorm on Capitol Hill, where lawmakers joined in bipartisan protests to the Bush administration over the Justice Department’s decision to seek evidence of bribery on legislative ground. President Bush personally intervened and ordered the seized documents temporarily sealed.

The constitutional battle will not end with the decision Monday by Judge Thomas F. Hogan of Federal District Court. Mr. Jefferson’s lawyer, Robert F. Trout, quickly announced that he would appeal. And while Judge Hogan said the documents seized in an overnight raid May 20 and 21, including computer hard drives and boxes of records, could now be turned over to investigators, the defense is likely to seek a stay of that release.

In a statement announcing the appeal, Mr. Trout said: “A bipartisan group of House leaders joined us in court to argue that these procedures were in direct violation of the speech or debate clause of the Constitution, which the framers specifically designed to protect legislators from intimidation” by other branches of government.

The Justice Department and the House leadership have been negotiating over new procedures in case other search warrants for Congressional offices are sought by investigators. Mr. Jefferson is a Democrat, but wide-ranging corruption investigations have ensnared aides to several Republican congressmen this year. Brian Roehrkasse, a spokesman for the Justice Department, said the discussions “about harmonizing policies and procedures for possible future searches” would continue.

The White House press secretary, Tony Snow, said of the decision, “At this point, we’re standing clear and letting both sides assess it.”

Judge Hogan’s ruling was not altogether surprising, given the nature of his questions at a court hearing last month. He also signed the original warrant, finding that investigators had probable cause to search Mr. Jefferson’s office in their pursuit of a case involving accusations that the congressman had received bribes of stock and cash from a communications business in his home state, Louisiana, in exchange for promoting the sale of its services and equipment to African countries.

Agents have said they found $90,000 in cash in frozen-food containers in Mr. Jefferson’s freezer at his home here. Some documents remained sealed in the case.

Mr. Jefferson, who has not been indicted, was stripped of his seat on the House Ways and Means Committee last month because of the inquiry. The former head of the Louisiana company and one of Mr. Jefferson’s former aides pleaded guilty to bribery and conspiracy charges in the case.

In a sometimes scolding tone, Judge Hogan wrote that the warrant had not violated Mr. Jefferson’s rights against unreasonable search and seizure, nor did it step on constitutional principles. “The facts and questions of law here are indeed unprecedented,” the judge wrote. “It is well established, however, that a member of Congress is generally bound to the operation of the criminal laws as are ordinary persons.”

The judge rejected arguments by Mr. Trout and a bipartisan advisory group representing the House leadership that the search had violated the centuries-old balance of powers among the branches of government, which is reinforced in the speech or debate clause. It prohibits a president, prosecutor or plaintiff from prosecuting or suing lawmakers over their legislative work and protects them from being forced to testify about that work. The warrant, the judge ruled, did not interfere with Mr. Jefferson’s legislative actions.

The defense had argued for a broad interpretation of the constitutional privilege granted Congress, saying Mr. Jefferson should have received prior notice of the search, to review and withhold legislative materials from investigators. “Congressman Jefferson’s interpretation of the speech or debate privilege would have the effect of converting every Congressional office into a taxpayer-subsidized sanctuary for crime,” the judge concluded.

What could not be avoided in a discussion of a search warrant sought by the executive branch, approved by the judicial branch and executed on the legislative branch was Judge Hogan’s role. He contended that he intervened as a neutral authority, as a check on the power by the Bush administration.

“If there is any threat to the separation of powers here, it is not from the execution of a search warrant by one co-equal branch of government upon another, after the independent approval of the third separate, and co-equal branch,” he wrote. “Rather, the principle of the separation of powers is threatened by the position that the legislative branch enjoys the unilateral and unreviewable power to invoke an absolute privilege, thus making it immune from the ordinary criminal process of a validly issued search warrant.”

He noted that the founding fathers had rejected a proposal that would have allowed Congress “to be the exclusive judges of their own privileges.” And he rebuffed a House argument that executing search warrants on legislative offices would subordinate Congress to the other branches or expose it to abuses by those branches. “This claim does not merely trivialize the role of the court, but actually ignores it completely,” he wrote.

    Judge Upholds F.B.I. Search of Lawmaker's Office, NYT, 11.7.2006, http://www.nytimes.com/2006/07/11/washington/11jefferson.html?hp&ex=1152676800&en=663cda56e5ad633a&ei=5094&partner=homepage

Ex-Soldier's Case Now Goes to Grand Jury

July 7, 2006
By THE ASSOCIATED PRESS
Filed at 10:13 a.m. ET
The New York Times

LOUISVILLE, Ky. (AP) -- The case of a former Army private charged with slaying and raping an Iraqi woman and killing her family will be presented to a grand jury this month.

Steven D. Green, 21, entered a plea of not guilty through his public defenders Thursday. He also waived a detention hearing and a preliminary hearing, and agreed that his case would be prosecuted in the Western District of Kentucky.

Assistant U.S. Attorney Brian Butler said the case would be presented before a grand jury sometime in mid-July, probably in Paducah.

U.S. Magistrate Judge James Moyer set an arraignment date of Aug. 8 in Paducah for Green, who was arrested Friday by FBI agents in Marion, N.C.

Green answered Moyer's questions about his inability to pay for an attorney, saying he has about $6,000 in a checking account and owns a 1995 Lincoln Town Car.

''I don't have anything else,'' he told the judge.

According to a federal affidavit, Green and other soldiers targeted the Iraqi young woman after spotting her at a traffic checkpoint near Mahmoudiya. Green is being tried in federal rather than military court because he no longer is in the Army.

Military officials concluded Thursday that since Green had received his final discharge papers, he was no longer under the control of the Army and would not be subject to a court martial. No other soldiers have been charged in the case.

Green, who served 11 months with the 101st Airborne Division, based at Fort Campbell, Ky., received an honorable discharge and left the army in mid-May. He was discharged because of an ''anti-social personality disorder,'' according to military officials and court documents.

A psychiatric condition, anti-social personality disorder is defined as chronic behavior that manipulates, exploits or violates the rights of others. Someone with the disorder may break the law repeatedly, lie, get in fights and show a lack of remorse.

President George W. Bush, speaking on CNN's ''Larry King Live'' on Thursday, said the Iraqis should understand that the allegations will be handled ''in a very transparent upfront way.''

''People will be held to account if these charges are true,'' Bush said.

Associated Press Writers Kim Gamel in Iraq and Lolita C. Baldor in Washington, D.C., contributed to this report.

    Ex-Soldier's Case Now Goes to Grand Jury, NYT, 7.7.2006, http://www.nytimes.com/aponline/us/AP-Ex-Soldier-Charged-Trial.html?hp&ex=1152331200&en=7c8904883db1d418&ei=5094&partner=homepage

The Overview

Enron Founder, Awaiting Prison, Dies in Colorado

July 6, 2006
The New York Times
By KURT EICHENWALD

Kenneth L. Lay, who as founder of the Enron Corporation rose to peaks of influence in business and politics, only to fall into disgrace amid scandal, died early yesterday morning in Aspen, Colo., while awaiting a judge's sentencing this fall that could have sent him to prison for decades.

Mr. Lay, who was 64 years old, died of coronary artery disease, according to Scott Thompson, the chief deputy coroner for Pitkin County, Colo. The finding was based on an autopsy completed late yesterday.

The death of Mr. Lay was a final, unexpected chapter in a complex personal and corporate drama that played out in public view in the years since Enron's collapse into bankruptcy in late 2001. It came at a time of enormous stress for Mr. Lay, who was awaiting sentencing after his conviction on May 25 on multiple counts of fraud and conspiracy stemming from his actions in the weeks before Enron's demise.

As recently as Friday, federal prosecutors filed a motion in federal court in Houston seeking forfeiture of Mr. Lay's remaining assets, including his home in Houston, though his death means that the government may not be able to proceed with that motion. [Page C1.]

While sorrowful and disbelieving about his conviction, according to people who have been in contact with him in recent days, Mr. Lay had been speaking of his probable prison sentence in almost a resigned manner.

"He seemed healthy, peaceful, with a good and positive perspective on his life and his future," Dr. Stephen P. Wende, Mr. Lay's pastor at the First United Methodist Church in Houston, said of a meeting he had with the former Enron chairman on Thursday. "He certainly didn't want to go to prison, but if that is where he went, he felt God could use him there."

Mr. Lay had been in Old Snowmass, Colo., staying with friends at the Pabst Ranch for the week with his wife, Linda. A call for emergency assistance came from the home at 1:41 a.m. yesterday, according to a statement from Joe DiSalvo, the director of investigations for the Pitkin County Sheriff's Office. Mr. Lay was taken to the Aspen Valley Hospital, where he was pronounced dead at 3:11 a.m.

With Mr. Lay's death, his successor at Enron, Jeffrey K. Skilling — the man widely viewed as the brains behind Enron's rise, and who was convicted alongside Mr. Lay of fraud in their joint trial — will stand alone before the court to be sentenced for his role in what has proved to be the greatest corporate scandal in American history.

Before the scandal, Mr. Lay was a rags-to-riches story, a onetime Missouri farm boy ensconced among the elite of American business. He walked among presidents and political heavyweights, who turned to him for advice and campaign cash. He was a regular visitor to the White House under President Bush, who famously bestowed upon Mr. Lay the endearing nickname "Kenny Boy."

But it all came unstuck as Enron spiraled toward bankruptcy, setting off a scandal that shook its hometown, Houston, and transformed the once-revered Mr. Lay into a reviled figure nationwide.

A corporation that had been thought to represent the best of business was revealed instead to be the worst, infused with both criminality and incompetence. What had seemed to be unstoppable financial power was exposed as the product of accounting manipulations and deceit. And Mr. Lay himself was transformed from a man worth hundreds of millions of dollars to someone near financial ruin.

While his criminal acts did not occur until the final months before Enron's downfall, Mr. Lay became the symbol of the scandal, condemned as a liar and a cheat. Through it all, and to his dying day, Mr. Lay maintained his innocence, portraying himself as an honest, hard-working man who had been railroaded by prosecutors and deceived by a dishonest chief financial officer at Enron, Andrew S. Fastow, whom he blamed for the company's demise.

The country house where local residents said Mr. Lay was staying is about 15 miles and a universe away from the glitz of Aspen. Dominated by a horse pasture and a corral in front, the relatively modest wooden house, on a rural winding road, had rusting farm implements in the pasture and faded gray outbuildings off the gravel driveway.

A county sheriff's deputy barred visitors from entering the yard. But a woman who said her name was I. V. Pabst came out to speak with a reporter, and to praise Mr. Lay. "Ken Lay was a wonderful, kind-hearted generous man," she said. "We are all suffering from a broken heart." She declined to say more. Ms. Pabst owns the Pabst Ranch and is the great-granddaughter of the founder of the Pabst Brewing Company.

Ms. Kimberly, the family spokeswoman, confirmed in a statement that Mr. Lay had died. "The Lays have a very large family with whom they need to communicate, and out of respect for the family we will release further details at a later time," Ms. Kimberly said in the statement.

There had been no known warnings of heart problems, Ms. Kimberly said, and Mr. Lay had continued exercising every day, a habit he developed years ago. While Mr. Lay showed signs of physical and emotional exhaustion during the trial in the spring, in recent weeks, friends said, he was looking healthier than they had seen him in years.

It is not unprecedented, however, for the stress of trial to contribute to the death of white-collar defendants. In 1988, for example, David W. C. Clark, a New York lawyer convicted in an insider trading case, died from chronic alcoholism just days before he was scheduled to be sentenced.

Mr. Lay was a short, soft-spoken man with courtly manners who could also show flashes of anger and impatience — a combative side that emerged while he testified in his own defense, damaging his case. He said he planned to appeal his conviction. He was awaiting his sentencing for 10 felonies, including six charges relating directly to his work at Enron and four counts of bank fraud involving his personal finances. Now, his case has instead come to an unexpected end that has left some of his former colleagues stunned.

"I think it's tragic," said Mark Palmer, Enron's former spokesman, who said he had not spoken to Mr. Lay since 2002. "But Ken was a spiritual guy and he believed the Lord has a plan for him. If this is it, I hope he's at peace."

Mr. Lay was born in 1942, the middle child of a deeply religious but struggling Missouri family. The first turning point in Mr. Lay's life came in his sophomore year at the University of Missouri, when he signed up for a course in introductory economics. He was fascinated by theories of free markets, and abandoned his plans to attend law school in favor of pursuing a career in business.

In the late 1960's, he began a career in the energy business that was interrupted by a stint in the Navy and one at the Federal Power Commission, a federal agency in Washington.

In the 1980's, while back in the energy business, Mr. Lay established a reputation as an intellectual dynamo in an industry not known for its cutting-edge thinking, which led to a job at age 42 running a company that would become Enron when Mr. Lay helped engineer the merger of two pipeline companies, Houston Natural Gas and Internorth, an Omaha energy company.

Under Mr. Lay's direction, Enron embarked on an ambitious expansion that secured him a place at the front table among America's top businessmen.

But, it would later become obvious, Enron's finances were not anywhere as strong as the company's reported financials made them appear.

Throughout the 1990's, Enron slowly became addicted to accounting machinations allowed under a technique known as structured finance. This legitimate mechanism is used by most large companies to help diversify risk, bringing in outside investors and shifting assets and debt to off-books entities.

By 1998, Enron had voluminous off-books partnerships set up by Mr. Fastow, its chief financial officer. But Mr. Fastow had begun using the vehicles years before to direct corporate cash to himself and a few trusted allies — without the knowledge of Mr. Lay, according to Mr. Fastow's testimony.

Mr. Lay was aware of many of the off-books entities, if not their full purpose. And in 1999, he along with the Enron board approved of the creation of a special fund called LJM, which was headed by Mr. Fastow and was expected to be used for structured finance deals.

Instead, LJM and its successor, LJM2, became vehicles of crime, used to disguise the financial rot underpinning Enron's veneer of success.

In early 2001, Mr. Lay turned the chief executive reins of the company over to Mr. Skilling, although he retained the title of chairman. But in August of that year, Mr. Skilling resigned unexpectedly from the company and Mr. Lay returned to his old job.

The resignation of Mr. Skilling set off suspicions that something was deeply wrong within Enron, but Mr. Lay set himself up in his long-familiar role of corporate cheerleader, assuring employees and investors that everything was fine. In making those statements, the jury found at his criminal trial, Mr. Lay lied to the public, not revealing internal concerns he was hearing about the company's shaky financial condition and questionable accounting.

In his statements to investors, Mr. Lay assured employees that he was purchasing Enron stock — a claim that was true only in the most limited sense. While he had purchased some shares in the open market, for months Mr. Lay had been selling far more stock back to the company and using most of the proceeds to pay down bank loans. The complex transactions resulted in about $100 million being transferred from Enron to Mr. Lay, and ultimately to his lenders.

The questions about Enron's financial underpinnings left the company reeling, and the company filed for bankruptcy in December 2001. In addition to Mr. Lay and Mr. Skilling, 22 others have either pleaded guilty or been convicted of charges related to the company's failure.

The collapse, which cost investors billions and thousands of employees their jobs and retirements, devastated Mr. Lay, according to people who knew him. "He felt very keenly the pain of those who had lost livelihoods, life savings and lifelong jobs at Enron," said Dr. Wende, Mr. Lay's pastor. "The man I saw carried that with him at a deep emotional level."

    Enron Founder, Awaiting Prison, Dies in Colorado, NYT, 6.7.2006, http://www.nytimes.com/2006/07/06/business/06enron.html

The Legal Case

Lay's Death Complicates Efforts to Seize Assets

July 6, 2006
The New York Times
By SIMON ROMERO

HOUSTON, July 5 — In yet another bizarre twist to the Enron saga, the sudden death of Kenneth L. Lay on Wednesday may have spared his survivors financial ruin. Mr. Lay's death effectively voids the guilty verdict against him, temporarily thwarting the federal government's efforts to seize his remaining real estate and financial assets, legal experts say.

"The death of Mr. Lay in all likelihood will render the government's hard-fought victory null," said Christopher Bebel, a former federal prosecutor based here who specializes in securities fraud.

But while the death of Mr. Lay may have limited government efforts in his criminal case, he remains the subject of civil lawsuits by the Securities and Exchange Commission and former investors and Enron employees. Those lawsuits could still proceed, with the aim of taking control of some of Mr. Lay's remaining assets.

Mr. Lay and Jeffrey K. Skilling, the two chief executives who guided Enron through its rise and fall, were found guilty in May of fraud and conspiracy, and were free on bail pending their sentencing.

Just last Friday, the Justice Department had moved to seize a total of $183 million in assets belonging to the two men.

The bulk of those assets belong to Mr. Skilling. Five years ago, Mr. Lay's personal fortune was valued as high as $400 million. But a large part of that was tied to the value of Enron's stock, which is now virtually worthless.

Mr. Lay testified at his trial that his net worth had declined to liabilities of $250,000, hampered by mounting legal bills and poor-performing investments. But his finances were apparently not so dire. According to legal documents filed at the federal courthouse here Friday, Mr. Lay had holdings in an investment account at Goldman Sachs valued at $6.3 million.

In addition, prosecutors said that Mr. Lay's full-floor luxury apartment in this city's River Oaks district had at least $1.5 million in value that could be forfeited to the United States.

The government's forfeiture effort ahead of the planned sentencing of Mr. Lay and Mr. Skilling this fall, however, has been thrown into doubt, at least in relation to Mr. Lay's assets since the death of a criminal defendant before his sentencing and the appeal process may void the criminal case against him.

"Technically, he was found guilty, but that's extinguished as of today," said Joel M. Androphy, a prominent defense lawyer in Houston.

A person involved in the government's action against Mr. Lay, who did not want to be identified because of the sensitivity of the case, said that Mr. Lay's death did not necessarily rule out proceeding with forfeiture actions, explaining, "The family at the end of the day cannot sit on the fruits of the fraud." But, this person said: "Even if the verdict is nullified, he paid for his actions with his life. That is more tragic."

The civil lawsuits against Mr. Lay may continue with efforts to seize his remaining assets, but even those moves may be complicated by his death since technically there was no conviction of Mr. Lay in the criminal case to rely upon as proof.

Still, lawyers in the civil lawsuits may proceed against Mr. Lay's remaining assets through motions inspired by admiralty law. Under that law, the government or a private party can take action against property (or the ship) without going after the owner (the captain), legal experts said.

Lawyers involved in the civil lawsuits, however, have already signaled that they were more interested in seeking compensation from institutions with deeper pockets that may have profited from improper dealings with Enron, like Wall Street investment banks, rather than focusing on Mr. Lay. Shortly after Enron filed for bankruptcy protection in late 2001, Mr. Lay still had extensive real estate holdings, including three beachfront homes in Galveston, Tex., and two luxury homes in Aspen, Colo., one with five bedrooms and the other with four bedrooms. All those properties have since been sold.

Any life insurance policies bought by Mr. Lay may also be shielded from federal seizure efforts since state laws normally cover such payments. While jurors found Mr. Lay guilty, his death may also complicate any efforts to go after life insurance proceeds, even if the original policies were acquired with ill-gotten gains.

Attention now shifts to Mr. Skilling, Mr. Lay's protégé. The sentencing of Mr. Skilling is now set for October instead of September at the request of his Los Angeles-based lawyer, Daniel Petrocelli, who had a previously scheduled trial involving the rock band The Eagles.

Mr. Skilling has more assets open to federal seizure than Mr. Lay had, including more than $50 million in cash and securities in a Charles Schwab account, $4.6 million in value at his 9,000-square-foot home in Houston and a condominium worth nearly $580,000 in Dallas, according to the government's forfeiture documents.

Mr. Petrocelli said the government's efforts to go after the assets of his client and those of Mr. Lay illustrated an overreaching of federal authority. "The issue is the recklessness and overzealousness with which the government has pursued the Enron case right from the inception," Mr. Petrocelli said.

At issue, too, are Mr. Skilling's obligations to his lawyers. Mr. Petrocelli's law firm, O'Melveny & Myers, is awaiting more than $20 million of payments from its client for work carried out since last September. "Jeff wants to pay his lawyers, to whom he owes tens of millions of dollars," Mr. Petrocelli said, "and would like to satisfy family obligations including child support."

Lawyers for Mr. Lay may also be left with unpaid invoices. Michael Ramsey, a lawyer for Mr. Lay who experienced his own heart problems during the trial, declined to comment on Wednesday, saying simply, "I am not well."

For Mr. Skilling, an even more pressing concern may be his sentencing before Judge Simeon T. Lake III, with sentencing experts saying Mr. Skilling could get more than 20 years of jail time in a medium- or maximum-security prison, in line with federal sentencing guidelines. If anything, Mr. Lay's death may warrant even harsher scrutiny of Mr. Skilling's crimes by Judge Lake.

"Jeff Skilling is quite literally the last man standing in the Enron scandal," said Robert A. Mintz, a former federal prosecutor now in private practice in New Jersey.

Alexei Barrionuevo contributed reporting for this article.

    Lay's Death Complicates Efforts to Seize Assets, NYT, 6.7.2006, http://www.nytimes.com/2006/07/06/business/06legal.html?hp&ex=1152244800&en=12e4c2e105c3adef&ei=5094&partner=homepage

Kenneth L. Lay, Ex-Chairman of Enron, Dies

July 5, 2006
The New York Times
By THE NEW YORK TIMES

HOUSTON - Enron's founder and chairman, Kenneth L. Lay, died of a heart attack at his vacation home in Colorado, according to his spokeswoman.

"Ken Lay passed away early this morning in Aspen. The Lays have a very large family with whom they need to communicate. And out of respect for the family, we will release further details at a later time," Kelly L. Kimberly said in a statment this morning.

In May, Mr. Lay was found guilty on six counts of fraud and conspiracy and four counts of bank fraud. The former chief executive, Jeffrey K. Skilling, was convicted of 18 counts of fraud and conspiracy and one count of insider trading.

For years, Enron's gravity-defying stock price made it a Wall Street darling and an icon of the ''New Economy'' of the 1990's. But its sudden collapse at the end of 2001 and revelation as little more than a house of cards left Enron, with its crooked E logo, the premier public symbol of corporate ignominy. Investors and employees lost billions when Enron shares became worthless.

Enron's fall had a far greater impact than on just the energy industry by heightening nervousness among average investors about the transparency of American companies. ''The Enron case and all the other scandals and cases that trailed after it may have finally punctured that romance with Wall Street that has been true of American culture for a while now,'' said Steve Fraser, a historian and author of ''Every Man a Speculator: A History of Wall Street in American Life.''

At Enron, Mr. Skilling was the visionary from the world of management consulting who spearheaded the company's rapid ascent by fastening on new ways to turn commodities, like natural gas and electricity, into lucrative financial instruments.

Mr. Lay, the company's founder, was the public face of Enron. Known for his close ties to President Bush's family, he built Enron into a symbol of civic pride and envy here in its hometown of Houston and throughout the financial world.

    Kenneth L. Lay, Ex-Chairman of Enron, Dies, NYT, 5.7.2005, http://www.nytimes.com/2006/07/05/business/05wire-enron.html?hp&ex=1152158400&en=4dcb7630c39801b3&ei=5094&partner=homepage

Ex-G.I. Held in 4 Slayings and Rape in Iraq

July 4, 2006
The New York Times
By DAVID S. CLOUD and KIRK SEMPLE

WASHINGTON, July 3 — A recently discharged Army private has been arrested on charges of raping an Iraqi woman and killing her and three family members four months ago in their house, federal prosecutors said Monday.

The former soldier, Steven D. Green, 21, had recently been discharged from the Army for a "personality disorder," the prosecutors said. They said Mr. Green and other soldiers had discussed the rape in advance and carried out the crimes after drinking alcohol, leaving a checkpoint and changing from their uniforms into black clothing.

A criminal complaint made public by the prosecutors on Monday charged that Mr. Green shot the three family members, including a child, with an AK-47 assault rifle found in the house in Mahmudiya before he and another soldier raped the woman. Citing interviews with unnamed participants, the document alleges that Mr. Green, his face covered with a brown T-shirt, then "walked over to the woman and shot her several times." It says the soldiers returned to the checkpoint with blood on their clothes and agreed that the episode was "never to be discussed again."

Mr. Green, who appeared in federal court on Monday in Charlotte, N.C., was arrested there on Friday, the prosecutors said. The documents they made public provided the first official account of the rape and killings, whose broad outlines emerged last week after American military officials in Baghdad said they were investigating the incident. The military originally thought Iraqi insurgents were responsible after several Iraqis approached an American checkpoint and said a family had been killed in their home, the charging documents said.

The rape victim was identified in the American court documents as a 25-year-old woman, but there have been conflicting accounts of her age. In Iraq, the mayor of Mahmudiya said Monday that the rape victim had been only 15 years old.

The mayor, Mouayid Fadhil, said that those killed included the rape victim's parents and her 7-year-old sister, and that the attackers also tried to set the rape victim's body on fire, apparently in an effort to cover up evidence.

American officials said they could not confirm that the house had been set on fire by soldiers. But the complaint refers to crime scene photographs, including one showing a "burned body."

The case is one of five recent incidents in which American military personnel have come under investigation for killing unarmed Iraqis, and it is the first in which an alleged participant has been charged in civilian courts, which prosecutors said was necessitated by Mr. Green's discharge.

A White House spokeswoman, Dana Perino, said: "The president has full confidence in the military to investigate alleged crimes and to punish anyone convicted of abhorrent behavior that dishonors the proud traditions of our military. He will not comment on ongoing investigations so as not to prejudice the outcome; however, he believes that 99.9 percent of our men and women in uniform are performing their jobs honorably and skillfully and they deserve our full appreciation and gratitude."

The charges were brought against Mr. Green after public disclosure of the investigation last week led prosecutors to fear he might try to flee, said Marisa Ford, an assistant United States attorney in Louisville, Ky., where the charges were brought.

The prosecutors said Mr. Green was likely to be transferred next week to Louisville, a four-hour drive from Fort Campbell, Ky., where his unit, the 101st Airborne Division, has its headquarters.

Cecilia Osequera, a public defender who represented Mr. Green at his court appearance Monday, declined to comment.

The case is in federal court because the crime was committed abroad. The Army is considering whether it could reactivate Mr. Green in order to allow the military to prosecute him, rather than leaving the case to civilian authorities, an Army official said. If convicted in either military or civilian court, Mr. Green could face the death penalty, prosecutors and Army officials said.

Military officials have said they first learned about the rape and killings last month, after Mr. Green left the Army. He had received an honorable discharge after only 11 months in the service because of what the charging documents described only as a "personality disorder." His departure was unrelated to the incident, the Army official said, adding that he had no more information about Mr. Green's disorder.

Army officials and prosecutors said that, before his arrest, Mr. Green might have been planning to attend a funeral service Saturday at Arlington National Cemetery for Specialist David J. Babineau, one of three soldiers ambushed at a checkpoint in Yusufiya in June. Two other soldiers who survived the ambush were taken prisoner by insurgents and later killed and mutilated.

Though Mr. Green and the three ambush victims reportedly came from the same unit, the 502nd Infantry Regiment of the 101st Airborne, so far, the Army official said there was no evidence that the Americans had been abducted in retaliation for the rape and killing of the Iraqis.

Other participants in the crimes are likely to be charged by military prosecutors and face court-martial, a prosecutor involved said.

At least three other soldiers suspected of involvement in the rape and killing of the Iraqis are being held in a military base in Iraq, but several soldiers interviewed by prosecutors, identified in charging documents only as "sources of information," said that Mr. Green was responsible for the killings and that he and another unidentified soldier, referred to as a "known participant," committed the rape.

The incident came to light last month after soldiers in the regiment were undergoing "a combat stress debriefing" related to the ambush of three Americans, the charging documents said. After entering the house, the compliant alleged that Mr. Green herded family members into a back bedroom and closed the door. After shots were heard, he emerged, telling the other soldiers, "I just killed them. All are dead," according to one unidentified soldier.

Participants in the attacks later told another soldier who had remained behind at the checkpoint to "dispose of the AK-47 in a canal across the street," the document says.

The Iraqi mayor, Mr. Fadhil, said the body of the rape victim, Abeer Qasem Hamzeh, had multiple bullet wounds and burn marks. Her sister, Hadeel, was shot in the head, he said, reading from a hospital report; her father, Qasem Hamzeh Rasheed, who was in his mid-40's, suffered head trauma; and her mother, Fakhariya Taja Muhassain, was shot several times.

Three sons were at school at the time of the March 12 attack, the mayor added.

An American military official, who was granted anonymity because he was not authorized to speak on the record, said investigators still had no firm ages for the family members and said the rape victim had been classified by Iraqis in Mahmudiya as an "adult." But in Iraq, girls who have reached child-bearing age are often referred to as adults.

American military officials announced their investigation into the attack last week and said they were pursuing allegations that soldiers from the 502nd Infantry Regiment were involved.

A committee of Iraqi officials opened its own investigation into the case on Saturday after conversations with the American military, Mr. Fadhil said. The committee includes Mr. Fadhil, a judge from Mahmudiya, the director of the town's hospital, the local police chief, a member of the Mahmudiya town council and a representative from the Iraqi Army, the mayor said.

An Army spokesman, Maj. Todd Breasseale, said the American authorities welcomed the development. "We would encourage any civilian judiciary or any civilian legislative arm to explore their own investigation," he said in a telephone interview. "That's what a free and open government system does. We wouldn't even think to hinder it."

David S. Cloud reported from Washington for this article, and Kirk Semple from Baghdad. Mona Mahmoud contributed reporting from Baghdad.

    Ex-G.I. Held in 4 Slayings and Rape in Iraq, NYT, 4.7.2006, http://www.nytimes.com/2006/07/04/us/04arrest.html?hp&ex=1152072000&en=4d0bc116d2e076c6&ei=5094&partner=homepage

    Related http://news.findlaw.com/nytimes/docs/iraq/usgreen63006cmp.html

Mob Family's Undoing, a Turncoat at a Time

July 3, 2006
The New York Times
By WILLIAM K. RASHBAUM

For Baldassare Amato, a Sicilian immigrant who came to this country more than 30 years ago, traditions seem to die hard. But they are dying nonetheless.

Over the last five weeks, Mr. Amato, a slender, hard-eyed 54-year-old, has listened intently in Federal District Court in Brooklyn as prosecutors and Mafia turncoats have told stories of gangland murder in rich detail, stories that could land Mr. Amato in prison for life.

But in the process, they have also told another story, about the decline of the Bonanno family, which in the last four years has seen its ranks decimated and its traditions crumble as a literal mob of defectors has rushed into the open arms of the government, not least among them the boss, Joseph Massino.

On the first day of the trial, the prosecutors surveyed the wreckage that is the crime family as Mr. Amato sat stoically. An assistant United States attorney spent more than an hour projecting individual mug shots and surveillance photographs of nearly four dozen Bonanno mobsters on a wall-size screen over the heads of Mr. Amato and his two co-defendants. The pictures were annotated for the jury by an expert witness, who, under questioning by a prosecutor, described their roles in the crime family.

It was a grim tally. Twelve are dead, 26 are in prison — half of them cooperating with the F.B.I. and prosecutors — with the rest on the street. Brooklyn prosecutors say that over all, in the last four years, they have won convictions against roughly 75 mobsters or associates in a crime clan with fewer than 150 made members.

Prosecutors say Mr. Amato has devoted most of his adult life to the crime family, and the scope of the government's assault did not seem lost on him.

A dour man who still speaks with a thick accent, he was 18 when he came to Brooklyn with his parents from Castellammare del Golfo, a fishing village on Sicily's rocky northern shore known for the mob giants it has sent to Brooklyn over the last century.

In 1979, when he was just 27, he was present — and some argue complicit — in one of the most infamous mob killings in New York history, the slaying of Carmine Galante, the Bonanno boss. Galante was gunned down on a humid July day after a late lunch in the rear garden of a Brooklyn restaurant. A famous photograph shows him dead amid the toppled tables and chairs with a cigar still clenched between his teeth.

Mr. Amato, who is known as Baldo, never rose above the rank of soldier, prosecutors say. But he has long been a respected — and feared — power in the family, particularly among its Sicilian-born members, who seem to hew more closely to mob tradition than those born here.

In fact, the fear that he instilled was apparent in the courtroom two weeks ago. When a cooperating witness took the stand and saw Mr. Amato sitting at the defense table, he balked, at first refusing to testify moments after he sworn in by the presiding judge, Nicholas G. Garaufis.

"You may be seated," Judge Garaufis told the witness, Francesco Fiordilino, a 36-year-old Bonanno associate who also came to Brooklyn from Castellammare del Golfo and knew Mr. Amato from childhood.

"Your Honor, I ain't testifying," Mr. Fiordilino suddenly volunteered.

"What's that?" the stunned judge asked.

"I ain't testifying," he repeated.

The defense and prosecution agreed to break for lunch. The lead prosecutor, John Buretta, said that during the recess, the government would speak to the witness, who had testified without reservations in 2004 against Mr. Massino, then the family's boss.

After the break, Mr. Buretta explained Mr. Fiordilino's reticence: "The witness is scared of Baldo Amato."

And before the jury returned, Judge Garaufis gave a warning to Mr. Amato's family members in the gallery: "If anyone in the audience is passing glances at the witness, the person will be excluded from the trial henceforth, and I don't mean maybe."

From the witness stand, Mr. Fiordilino gave the jury his own explanation for his earlier refusal.

"I was a bit nervous," he said. "I know the defendant, and his family knows my family a long time."

His reluctance probably did not help Mr. Amato, who is charged with racketeering conspiracy and the murders of two Bonanno associates in 1992.

Mr. Fiordilino was just one of a half-dozen Bonanno family defectors who testified in the trial, which is expected to wrap up with closing arguments this week. Another witness was Salvatore Vitale, the family's underboss when Mr. Amato went to prison in 1999 on federal robbery conspiracy charges. Mr. Amato has been in prison ever since and thus did not see firsthand as a virtual army of Bonanno figures became turncoats over the last four years.

During much of the testimony, Mr. Amato remained impassive, as he watched his former confederates detail the history and mores of the crime family.

Mr. Vitale's testimony was damning. He discussed a meeting he had at a diner in Queens with another Bonanno family figure whom he had previously asked to arrange for gunmen from Canada to kill a family associate. But the man, Gerlando Sciascia, known as George from Canada, arrived at the meeting instead with Mr. Amato, and suggested Mr. Amato be the gunman.

"Baldo turned around and says to me: 'Mr. Sal, I'll take care of it, don't worry about it, ' " Mr. Vitale testified, adding that Mr. Amato continued: "You bring the guy, and don't worry about it. I'll take care of it. I'll kill him."

Mr. Amato's lawyer, Diarmuid White, acknowledged in his opening statement that his client had "made a wrong turn" as a young man and he promised the jurors that he would not "present him to you as a man who has led an admirable life." But he also told the panel that the evidence they would hear linking his client to the murders was "thin" and the witnesses "not trustworthy."

Last week, he said that if Mr. Amato were acquitted, "he plans to spend the rest of his days on a island off the coast of Sicily, engaged in the trade of his ancestors, fishing."

Prosecutors, however, contend that the evidence is anything but thin. They have nonetheless turned to a bit of stagecraft to make sure that Mr. Amato never leaves prison, going so far as to wheel in a model of a full-size skeleton and stand it in front of the jury box to help with the testimony of a forensic pathologist during the fourth week of the trial.

The pathologist, Amy Mundorff, used the skeleton to explain the injuries to the body of the man prosecutors say Mr. Amato had volunteered to kill: Robert Perrino, who oversaw the newspaper delivery operation at The New York Post until he was shot to death in 1992.

Prosecutors have charged that Mr. Amato shot him several times in the head in a social club run by one of his co-defendants, Anthony Basile, 36. Mr. Basile, identified at the trial as a Bonanno associate, is charged with providing the location for the murder and being part of the clean-up crew that disposed of the body.

After the murder, Mr. Perrino's corpse was buried in a heavy equipment yard on Staten Island. But prosecutors said it was moved several years later when Mr. Basile was arrested on an unrelated case and some of his accomplices feared that he might lead the authorities to the grave.

The F.B.I. found the body nonetheless and dug it up on Dec. 12, 2003, Ms. Mundorff testified. She spent a grisly afternoon on the stand, taking the jury through photographs of Mr. Perrino's skeletal remains, which had been wrapped in a rug, explaining how flesh decomposes, where the bullets had entered and how to differentiate between bones broken before and after death. She placed small round red stickers on the right side of the back of the skeleton's skull to indicate the bullet entry wounds, and blue stickers on the front and sides to show where the bullets exited as the rapt jury looked on. She used a green sticker to indicate where a bullet fragment had remained inside the skull.

She also testified that there was a small hole consistent with a sharp object being jammed into the side of Mr. Perrino's skull.

That matched testimony later from another Bonanno turncoat, who said a member of the clean-up crew had noticed that Mr. Perrino was still alive as they prepared to dispose of the body and had jammed an ice pick into his head.

Under questioning by another prosecutor, Jeffrey Goldberg, that witness, Frank Lino, a former capo, said he complained to Mr. Vitale, who had directed him to oversee the killing and cleanup, saying that the gunman had done a shoddy job. "Next time you send somebody to get killed, make sure the guy is dead — when we walked up there, the guy was alive, he could have shot us," Mr. Lino said he had told Mr. Vitale.

Mr. Basile's defense in the case, put forward by his lawyer, Gail Laser, has presented a striking contrast to Mr. Amato's. The two men, sitting at opposite ends of the defense table, separated by the third defendant, Stephen Locurto, could almost be seen as representing the mob's old world and new.

The old-world Mr. Amato shows little emotion and speaks little to his lawyer, Mr. White. Mr. Basile, on the other hand, often shakes his head during testimony, sometimes rolling his eyes, scribbling on a notepad and whispering to Ms. Laser.

Mr. Locurto, 45, who prosecutors have said is a soldier in the family, also seemed to take a path that veered from the more traditional world of Mr. Amato. He testified in his own defense, an unusual violation of Mafia protocol, though it was unclear whether he had sought permission from the family hierarchy to do so.

But it was Mr. Basile's case that seemed to present the most stunning departure from the old-world Mafia mores. His lawyer, Ms. Laser, sought to portray him in her opening statement as a young man swept away by the romance of the gangsters he saw in his Bensonhurst neighborhood, men with money, cars, women and respect. As a result, she said, he made a mistake and associated with the wrong people.

Perhaps because she did not want the jury to confuse her client with a tough guy, let alone a killer, she painted a picture of him that must have rankled the traditional Mr. Amato.

"He is terrified," she told the jury, "that he finds himself in this enormous, intimidating courtroom with all of these lawyers, with these F.B.I. agents, with the court and, of course, all of you, judging him, as he sits here, fighting for his life, for what will be for him the rest of his life."

    Mob Family's Undoing, a Turncoat at a Time, NYT, 3.7.2006, http://www.nytimes.com/2006/07/03/nyregion/03mob.html

Ex-Governor and Executive Convicted of Bribery

June 30, 2006
The New York Times
By KYLE WHITMIRE

MONTGOMERY, Ala., June 29 — After twice telling a judge it was deadlocked, a federal jury on Thursday convicted former Gov. Don E. Siegelman and a former HealthSouth chief executive, Richard M. Scrushy, on charges that they conspired in a bribery scheme seven years ago.

Two other defendants who had served in the Siegelman administration were acquitted on charges that they participated in a racketeering scheme during Mr. Siegelman's term in office.

Federal prosecutors suffered a defeat a year ago when another Birmingham jury acquitted Mr. Scrushy on charges that he participated in a $2.7 billion accounting fraud at HealthSouth, the chain of rehabilitation hospitals he founded.

At a news conference after the verdict Thursday, the acting United States attorney, Louis Franklin, praised the jurors for holding Mr. Siegelman and Mr. Scrushy "accountable for what they did."

"The message to everybody else is that public servants have a fiduciary duty to the citizens of Alabama, and they should take that very seriously," Mr. Franklin said.

Lawyers for both men said they would appeal, and both remained free on bond.

On Tuesday, jurors sent their second note reporting that they were deadlocked to Judge Mark Fuller of United States District Court. In the note, the foreman said several jurors had been "lackadaisical" and had refused to deliberate. Judge Fuller gave the jury a stern instruction to continue deliberating.

The verdict came after a six-week trial and 11 days of deliberations. Mr. Siegelman was convicted of conspiracy, bribery, mail fraud and obstruction of justice. The jurors convicted Mr. Scrushy of bribery, conspiracy and mail fraud. The longest term, up to 20 years, is carried by the mail fraud convictions.

Mr. Siegelman's former chief of staff, Paul Hamrick, and his former transportation director, Gary Roberts, were cleared on all charges.

"I think that we underestimated the jury's capacity to render a verdict on a complex body of evidence," said William Stewart, emeritus professor of political science at the University of Alabama. "Perhaps the jury has voted to bring about a higher standard of government in Alabama."

Mr. Siegelman, a Democrat, called the case a ruthless campaign tactic by Gov. Bob Riley, a Republican who defeated him four years ago. During the trial, Mr. Siegelman campaigned unsuccessfully for the Democratic nomination for governor, sometimes soliciting votes on the courthouse steps.

Having held most of the state's executive offices, Mr. Siegelman once cast himself as Alabama's first "New South" governor. Considered progressive, he was elected governor in 1998 on the promise to pay college tuition for Alabama students with an education lottery.

But the lottery proposal, which was strongly opposed by religious conservatives, was defeated in a referendum. It was a costly defeat for Mr. Siegelman, who personally guaranteed the repayment of more than $2 million in financing for the state lottery campaign committee.

The debt from that fueled the bribery scheme, prosecutors said. The jury found that Mr. Scrushy had arranged for two payments of $250,000 each. The payments were made, prosecutors said, in exchange for an appointment on the Certificates of Need Review Board, a state agency that regulates hospitals.

After the verdict, Mr. Siegelman said: "If I am really guilty of this, then every other person in public office had better look out. Because everybody is raising money and putting people on boards and in positions."

Mr. Scrushy said: "There is no evidence to tie me to any of these charges. It is very sad that this could happen in this country."

    Ex-Governor and Executive Convicted of Bribery, NYT, 30.6.2006, http://www.nytimes.com/2006/06/30/us/30verdict.html?hp&ex=1151726400&en=e1070acf0e073335&ei=5094&partner=homepage

In 'Mafia Cops' Case, the Prosecution Comes to the Defense of the Defense

June 24, 2006
The New York Times
By ALAN FEUER

It would be hard to imagine a day in court more bizarre than yesterday's postscript to the so-called Mafia Cops corruption trial.

Everything was upside down and backward.

The two former detectives convicted of being killers for the mob openly attacked their former lawyers — men whom they had paid good money to defend them at the trial. The prosecutors then defended the defense lawyers — men whom they had spent a month attacking.

A convicted murderer declared himself an "animal lover" who would knock on doors to find the owner of an injured cat. A few hours earlier, he had sworn — under oath and on penalty of prosecution — that he would have no trouble lying, if indeed it helped his case.

So it went in Federal District Court in Brooklyn, at a hearing that sounded as if had been penned by Lewis Carroll. With references to "fragrant lies" and "racial epitaphs," it was down the rabbit hole, through the looking glass and beyond.

Some background is required. The subject of the hearing was a request for a new trial by the former detectives, Louis J. Eppolito and Stephen Caracappa, who blame their former lawyers for their guilty verdicts on April 6. Two months later, they were sentenced to life in prison, although the imposition of that sentence was suspended pending appeal. Now they argue that their lawyers, Bruce Cutler and Edward Hayes, bungled the defense.

Mr. Hayes and Mr. Cutler are two of New York's most prominent lawyers, though arguments were made that they dropped the legal ball. Mr. Cutler, for example, spent more time in court discussing his Brooklyn heritage than his own client. One afternoon, Mr. Hayes fell asleep on a park bench during the lunch break.

The day began — as one might expect — oddly, as Joseph Bondy, Mr. Eppolito's new lawyer, rose to announce his first, and most important, witness.

"Louis Eppolito calls Louis Eppolito," Mr. Bondy said.

With that, Mr. Eppolito, in a pewter-colored suit and sneakers, took the stand. He promptly assaulted Mr. Cutler's reputation, saying that although he had paid the lawyer a $250,000 retainer, Mr. Cutler had never fully explained to him the charges in the case and had refused to work through lunch.

In fact, he said, Mr. Cutler not only refused four times to let him take the stand, he refused to speak with him at all. "Tell him he's annoying me," Mr. Eppolito quoted Mr. Cutler as having told a colleague one day. This was within earshot of the client, who said he answered, "I'm not deaf."

There was no time yesterday for Mr. Cutler to defend himself against these charges, though he was amply defended by the prosecution. In fact, the lead prosecutor, Robert Henoch, praised his old opponent — and suggested that Mr. Eppolito's charges were untrue.

He said, for instance, that Mr. Cutler had won bail for Mr. Eppolito — bail to which Mr. Henoch, at one point, had himself objected. He also reminded Mr. Eppolito that he had once said on television: "Bruce Cutler is not a good lawyer. Bruce Cutler is a great lawyer."

Mr. Henoch did object to Mr. Eppolito's excuse for why, his lawyer's order notwithstanding, he had told no one else about his wish to take the stand.

It was this: On the first day of jury selection, he was late for court. (There had been a crash on the Long Island Expressway and he had been caught in traffic.) His tardiness had angered Judge Jack B. Weinstein, and Mr. Eppolito said that ever since that day he feared the judge's wrath.

Mr. Henoch said, "You're fighting for your life, but you didn't want to raise your hand and tell the judge you want to testify?"

"My heart was in my mouth," Mr. Eppolito said.

Mr. Eppolito never did testify at the trial, though when he testified at yesterday's hearing, it became evident why Mr. Cutler had kept him off the stand. He revealed himself to be a man with a tangential relation to reality — who, in one breath, said he wanted to attack a man with a hatchet and in the next proclaimed, "I'm not a violent guy."

He was also revealed as a connoisseur of what he called "racial epitaphs" — though, he said, that did not make him racist. The government says it has tapes of Mr. Eppolito disparaging blacks with a particularly nasty term. "I don't use it to hurt their feelings," Mr. Eppolito explained. "I just use it for slang."

Mr. Eppolito had a strange take, too, on Burton Kaplan, a government witness who testified at the trial that he was Mr. Eppolito's liaison to the mob. Mr. Kaplan, a wholesale clothier, was simply the man from whom he bought his suits, Mr. Eppolito said.

Astonished, Mr. Henoch asked if it was more than a coincidence that the man he bought these suits from happened to be an associate of the Luchese crime family. Not at all, Mr. Eppolito said: Mr. Kaplan was the only man he knew who could find a good fit for his large chest and small waist.

And on and on it went — until finally, Mr. Henoch was reduced to saying: "What is the basis for that statement? Why are you saying it, other than it's your perception of reality?"

It was perfectly in keeping with the hearing that the chief investigator for the case came around to his adversary's point of view.

"I hate to agree with Cutler," the investigator said, "but this guy should be nowhere near the stand."

    In 'Mafia Cops' Case, the Prosecution Comes to the Defense of the Defense, NYT, 24.6.2006, http://www.nytimes.com/2006/06/24/nyregion/24lawyers.html

Judge Orders U.S. to Decide if Muslim Scholar Can Enter

June 24, 2006
The New York Times
By ANTHONY RAMIREZ

A federal judge in New York yesterday ordered the Bush administration to decide by September whether to grant an entry visa to a prominent Muslim scholar. The scholar has been barred from entering the United States for nearly two years, first because of supposed ties to terrorism, then for unspecified national security reasons.

The American Civil Liberties Union filed the suit on behalf of three academic groups, including the PEN American Center, which had invited the scholar, Tariq Ramadan, a Swiss citizen, to speak at its meetings.

In a 34-page ruling, Judge Paul A. Crotty of United States District Court in Manhattan said that while the United States must come to a decision on admitting Mr. Ramadan, the academic groups had not met the legal burden for other demands.

The groups had sought an order to stop the government from barring Mr. Ramadan under provisions of the Patriot Act and a finding that the government had abridged the free-speech rights of the groups, which also include the American Academy of Religion and the American Association of University Professors.

Judge Crotty, noting the government's shifting reasons for Mr. Ramadan's exclusion, said, "While the Government may exclude Ramadan if he poses a legitimate threat to national security, it may not invoke 'national security' as a protective shroud to justify the exclusion of aliens on the basis of their political beliefs."

Jameel Jaffer, deputy director of the A.C.L.U.'s national security program, said that "we're very happy with the decision that we got."

Mr. Jaffer added that the decision was significant, "one, because it clearly rejects the government's contention that Professor Ramadan endorsed terrorism and two, it makes clear that the government cannot use the immigration laws as a means of manipulating political debate inside the United States."

The suit was filed against the State Department and the Department of Homeland Security. Bridget Kelly, a spokeswoman for the United States attorney for the Southern District, said the government's lawyers were reviewing the ruling and would have no immediate comment.

Mr. Ramadan is a scholar of Arab descent who is now a visiting fellow at Oxford University. He has published more than 20 books, 700 articles, and 170 audiotapes focusing on Islam and the Western world.

He is also the grandson of Hasan al-Banna, a founder in 1928 of the Muslim Brotherhood, an Egyptian group that opposes Hosni Mubarak, the president of Egypt and an ally of the United States. A group that has been known for violence, the brotherhood recently elected members to Egypt's parliament.

Mr. Ramadan's troubles began in July 2004 when his work visa, known as H-1B, was revoked and he was later unable to accept a tenured professorship at the University of Notre Dame.

    Judge Orders U.S. to Decide if Muslim Scholar Can Enter, NYT, 24.6.2006, http://www.nytimes.com/2006/06/24/nyregion/24scholar.html

Court Says S.E.C. Lacks Authority on Hedge Funds

June 24, 2006
The New York Times
By FLOYD NORRIS

A federal appeals court ruled yesterday that the Securities and Exchange Commission lacks the authority to regulate hedge funds, dealing a possibly fatal blow to the commission's efforts to oversee a rapidly growing industry that now has $1.1 trillion in assets.

A three-judge panel of the United States Court of Appeals for the District of Columbia Circuit ruled unanimously that the commission exceeded its power by treating investors in a hedge fund as "clients" of the fund manager. The commission has authority over any manager with at least 15 clients, and it used that to require hedge fund managers to register.

The ruling, unless overturned on appeal, means that Congressional action would be required to grant the S.E.C. the authority to force hedge fund managers to register, or for the commission to impose any other rules on such funds.

The ruling does not leave such funds totally above the law since they are treated like any other investor in determining whether they violated securities laws. As a result, the decision will not affect an S.E.C. investigation into possible insider trading by a major hedge fund manager, Pequot Capital Management, which was disclosed in a New York Times article yesterday.

Christopher Cox, who became S.E.C. chairman after the rule was adopted, said the commission would review the issue, but stopped short of indicating that it would continue to seek authority over hedge funds.

"The S.E.C. takes seriously its responsibility to make rules in accordance with our governing laws," Mr. Cox said in a statement. "The court's finding, that despite the commission's investor protection objective its rule is arbitrary and in violation of law, requires that going forward we re-evaluate the agency's approach to hedge fund activity."

He said the commission would "use the court's decision as a spur to improvement in both our rule making process and the effectiveness of our programs to protect investors, maintain fair and orderly markets, and promote capital formation."

As hedge funds have grown, and as some have collapsed amid fraud or because they took excessive risks, pressures to regulate them have grown. But fund managers have protested that the vast majority have acted responsibly and should not be subjected to what James C. McCarroll, a lawyer with Reed Smith, a New York law firm, said yesterday were "regulatory overlays and burdens" approaching those faced by mutual funds.

The S.E.C. rule, adopted in December 2004 on a 3-to-2 vote, called for fund managers with more than $30 million in assets and at least 15 investors to register with the commission. Nearly 1,000 managers did so by the deadline of Feb. 1, 2006.

The S.E.C. rule exempted funds that imposed two-year lockups on investors' money, meaning the money could not be withdrawn for at least that long, leading a number of funds to impose such lockups. Some may choose to remove or ease those rules now.

Hedge funds, as the appeals court opinion written by Judge Arthur R. Randolph noted, "are notoriously difficult to define." But they generally are open only to wealthy investors and charge fees based on a percentage of the assets under management plus a portion of the profits.

The growth of hedge funds has made some managers incredibly wealthy, with incomes dwarfing even those of high-paid corporate chief executives. Alpha, a publication of Institutional Investor, reported that two hedge fund managers earned more than $1 billion each in 2005.

The pressure for more oversight of hedge funds grew after one fund, Long-Term Capital Management, almost collapsed in 1998. The Federal Reserve, fearful that such a collapse could cause systemic risk, encouraged Wall Street firms to mount a rescue, which they did.

The emergence of activist hedge funds, which sometimes act in concert with each other and can become the largest shareholders of some companies, has also increased calls for regulation, both here and in Europe. A German politician called such funds "locusts" that plundered German companies and then fired German workers. Some European governments have pushed for international regulation of such funds.

The decision to push for S.E.C. registration was made by Mr. Cox's immediate predecessor, William H. Donaldson. Mr. Donaldson argued that the funds had grown so large they could cause systemic risk to the financial markets, and that a gradual process of "retailization," through such trends as "fund of funds" that allow relatively small investments, had made it more important for regulators to have at least some knowledge of what was going on in the funds.

The rule, besides requiring registration, also enabled the commission to make periodic inspections of a hedge fund's records. But it did not impose many other rules that apply to public funds, like disclosure of investment portfolios or a requirement for independent directors.

The S.E.C. approved the rule over the dissents of the two Republican members of the commission other than Mr. Donaldson, Cynthia A. Glassman and Paul S. Atkins, who argued the rule was unnecessary and exceeded the commission's authorization.

The S.E.C. decided to interpret the word "client" as it did because there appeared to be no other way for the commission to claim jurisdiction over hedge funds. Such funds are structured to avoid being subject to commission regulation.

The law requires investment advisers to register with the S.E.C., but it exempts "any investment adviser who during the course of the preceding 12 months has had fewer than 15 clients" unless one of those clients is a public mutual fund.

To overcome that exemption, the S.E.C. wanted to define each investor in a hedge fund as a client. But the appeals court noted that if every investor in a mutual fund were counted as a client, there would have been no need for the specific provision that required mutual fund advisers to register. And it added that the commission's rule was arbitrary because it would exempt hedge funds with fewer than 15 investors.

Under the court's ruling, hedge fund managers who registered with the commission could choose to de-register. But it is at least possible that some will choose not to withdraw their registrations, and may argue to investors that their decision to register provides an additional measure of safety, since the commission has the right to review books of anyone who is registered.

The decision was the second court rejection of a rule imposed by the commission over the dissents of Mr. Atkins and Ms. Glassman. The other rule required that at least 75 percent of directors, including the chairman, on mutual fund boards be independent from the fund sponsor.

In that case, however, the appeals court ruled that the commission had not followed proper procedures to consider the costs of the ruling, leaving the way open for the commission to still adopt it. The S.E.C. is seeking comment on what it should do.

In his confirmation hearing last year, Mr. Cox said he had no intention of revoking rules already adopted by the commission, but he has not indicated what course he will now take on the mutual fund issue. Ms. Glassman decided not to seek a new term, and Kathleen L. Casey, the staff director of the Senate Banking Committee, has been nominated by President Bush to succeed her.

    Court Says S.E.C. Lacks Authority on Hedge Funds, NYT, 24.6.2006, http://www.nytimes.com/2006/06/24/business/24fund.html?hp&ex=1151208000&en=d83a2581bf7444cd&ei=5094&partner=homepage

Judge Denies Bail to Three Charged in Prison Case

June 23, 2006
The New York Times
By ABBY GOODNOUGH

TALLAHASSEE, Fla., June 22 — A federal judge on Thursday ordered three guards charged in a prison sex ring here held without bail, but released two others until their August trial because he did not consider them dangerous or likely to flee.

A sixth guard charged in the scandal, Ralph Hill, 43, died Wednesday in a shootout with federal agents who had come to arrest the men as they left their shifts at the Florida Correctional Institution. A federal agent, William Sentner, 44, was also killed in the early morning gun battle.

The guards were indicted this week on charges of giving contraband to female inmates in exchange for sex, as well as bribing and threatening them to keep silent. Robert Davis, a government prosecutor, said Thursday that the contraband included alcohol, food, money and marijuana.

Magistrate Judge William C. Sherrill Jr., of the Federal District Court for the Northern District of Florida, ordered Alfred Barnes, Gregory Dixon and Alan Moore held without bail. They will be held in an undisclosed location, and — at their lawyers' request — the judge said they would be isolated from other inmates.

Mr. Davis said that Mr. Dixon and Mr. Moore tried to evade arrest after the shootings, and that Mr. Dixon ignored a federal agent's order to get out of his car, and that he tried to drive away. Mr. Dixon's lawyer, Timothy Jansen, said his client simply had not understood what was going on. That was not enough to persuade the judge to free Mr. Dixon, who is accused of trading contraband for sex with four inmates.

Judge Sherrill ordered Mr. Barnes held without bail because he "appeared more substantially involved" in the alleged conspiracy than his co-defendants. Mr. Davis said the government had recordings of telephone calls he made implicating Mr. Barnes, and other incriminating evidence.

The judge said the two others, Vincent Johnson and E. Lavon Spence, could go free until trial, but ordered them put under curfew and said they must wear electronic monitoring devices part of the time. None of the five guards can have any contact with inmates at the prison or their relatives, or with employees of the prison, Judge Sherrill said.

A trial for all five has been set for Aug. 21.

About two dozen relatives and friends of the guards attended the detention hearing, including wives, children, siblings, parents and pastors. Their lawyers said the guards all had deep roots in the community, had worked many years at the prison without incident, and had served in the military. None had criminal records except Mr. Barnes, who was convicted of cruelty to animals four years ago after withholding food and water from his pit bulls.

"If there's a remarkable similarity," Judge Sherrill said of the men, "it's that each and every one of them has a large number of favorable factors."

He singled out Mr. Johnson, the only guard not accused of having sex with inmates, for praise after the man's lawyer, Robert Morris, said he had triggered an alarm just after the shooting, helped staunch the bleeding of an injured prison lieutenant and provided cover for a federal agent in the line of fire.

Mr. Morris said his client was leaving the prison complex with Mr. Hill when the confrontation took place. A prison lieutenant injured in the shootout — whose identity still was not released Thursday — was leaving with them, Mr. Morris said.

There was little mention of Mr. Hill during the hearing, partly because lawyers for the other guards said it would be prejudicial to discuss a fatal shooting that none of Mr. Hill's co-defendants had anything to do with. But Mr. Davis, the government lawyer, said a DNA sample that Mr. Hill had provided under court order early this year matched a semen sample provided by one inmate.

"Beyond complying with a mandate of this court," Mr. Davis said, "he did nothing to cooperate with this investigation."

Records show that Mr. Hill worked in Miami as a corrections officer and owned a house there before moving to Tallahassee, that he filed for bankruptcy in 2001, and that his license to carry a concealed weapon expired in 1999. Mr. Davis said the government would seek a superseding indictment, potentially adding "a number of substantial charges." As it stands, the five guards are each charged with one felony count of conspiracy, witness tampering, mail fraud and interstate transportation in aid of racketeering.

The charges carry maximum sentences of 20 years in prison.

Armando Garcia, a lawyer for Mr. Barnes, asked why his client should be held based on "disgraceful, scandalous, scurrilous allegations" with no evidence introduced at the hearing to back them up.

But Mr. Davis said it was crucial to keep the guards away from the prison, so they could not intimidate inmates out of testifying against them.

"They are highly vulnerable," Mr. Davis said of the inmates. "They are subject to threats and coercion by the defendants and other unindicted co-conspirators."

Terry Aguayo contributed reporting for this article from Miami.

    Judge Denies Bail to Three Charged in Prison Case, NYT, 23.6.2006, http://www.nytimes.com/2006/06/23/us/23florida.html

Prosecutors Can't Keep a Secret in Case on Steroid Use

June 23, 2006
The New York Times
By ADAM LIPTAK

About eight pages of a 51-page government brief filed in federal court in San Francisco on Wednesday were electronically blacked out to protect what prosecutors said was sensitive material concerning a grand jury's investigation into steroid use in baseball.

But the secret passages can be viewed by simply pasting the document into a word processing program. The passages open a window onto a particularly aggressive government leak investigation, one that seeks to force two San Francisco Chronicle reporters to reveal the identity of their confidential sources. The passages also help explain why prosecutors are pursuing the matter so vigorously.

The glitch was first reported in The New York Sun.

The Chronicle reporters, Mark Fainaru-Wada and Lance Williams, received subpoenas in May seeking their sources for articles that quoted verbatim from grand jury testimony. The filing on Wednesday was the government's response to the reporters' motion to quash the subpoenas.

Phil Bronstein, the editor of The Chronicle, said the government might have taken more care to protect the blacked-out passages in light of the nature of its investigation. "It's a little surprising and ironic in this case in particular," Mr. Bronstein said, "that this information which the government filed is somehow available to the public."

Eve Burton, vice president and general counsel of the Hearst Corporation, which owns The Chronicle, said prosecutors might be guilty of the very thing that they were investigating. "It is our hope," she said, "that the government did not leak the document."

Mistakes in handling sensitive materials electronically are relatively common. Indeed, the government made a similar mistake once before in the steroids investigation.

In February 2004, prosecutors in San Francisco sent documents to news organizations revealing that Gary Sheffield, a Yankees outfielder, had sent mail to the supplements laboratory at the center of the investigation: the Bay Area Laboratory Co-Operative, or Balco. In paper copies of the filings, Mr. Sheffield's name had been blacked out.

The current leak investigation is being handled by federal prosecutors in Los Angeles because government employees in San Francisco are among the relatively limited number of people who had access to the grand jury transcripts.

Thom Mrozek, a spokesman for the United States attorney in Los Angeles, declined to comment on the substance of the mistakenly released passages. "The electronic filing by the Department of Justice — which appropriately redacted certain material — was not as secure as it should have been," Mr. Mrozek said in a statement. "It is an unfortunate error, one that we regret."

The blacked-out passages mostly summarize and quote from e-mail messages between Mr. Fainaru-Wada and one of his sources, and they suggest that the government views the conduct of both with disdain. The source, Victor Conte Jr., was the president of Balco, which distributed performance-enhancing drugs to athletes.

After Mr. Conte's indictment on charges of distributing steroids in February 2004 but before he pleaded guilty and was sentenced to four months in prison last year, Mr. Conte, other defendants in the case and their lawyers were provided with grand jury transcripts so they could prepare their defense. Judge Susan Illston of the Federal District Court in San Francisco issued a protective order that forbade them from disseminating the transcripts. The defendants and their lawyers all signed the order.

The e-mail messages between Mr. Fainaru-Wada and Mr. Conte indicate that the government believes that Mr. Conte nevertheless provided the transcripts to The Chronicle. Mr. Fainaru-Wada, the filing says, "repeatedly discussed with Conte secret grand jury information and e-mailed Conte in an effort to gain access to the grand jury transcripts." The e-mail messages were obtained by the government in January 2005 when F.B.I. agents searched Mr. Conte's home.

In an e-mail message on June 18, 2004, Mr. Conte wrote, according to the filing: "I would say at this point the only way the athletes' grand jury testimonies will come out is at trial. Unless I give you a copy of the indexed CD-ROM that contains all 30,000 pages of evidence. How would you like that? Just kidding."

Mr. Fainaru-Wada pursued the matter in a series of e-mail messages over the next several days.

"I'm still waiting for that CD-ROM," he wrote on June 20, adding that he was "somewhat reticent to be terribly overt on the e-mail front." The next day, Mr. Fainaru-Wada suggested communicating by "pay phone or cell or even meeting." He added, "As with the CD-ROM, waiting, waiting, waiting."

On June 24, a Chronicle article quoted at length from the grand jury testimony of Tim Montgomery, a former Olympic sprinter.

After the article was published, the reporter and his source discussed the legality of the disclosure and whether their earlier e-mail messages had included incriminating information. "If I find something," Mr. Fainaru-Wada wrote in July, "how should I let you know, given your concerns about being watched?"

Ms. Burton, the Hearst lawyer, declined to address the e-mail correspondence. "We don't comment in any regard on our news-gathering processes," she said.

Mr. Conte has signed a sworn statement denying that he was the source and has allowed his lawyers to file papers seeking to dismiss the indictment based on supposed government misconduct. That motion, the filing on Wednesday says, may have been "a fraud on the court."

In a statement yesterday, a lawyer for Mr. Conte, Mary McNamara, said her client "did not leak grand jury transcripts."

"It is unclear why the government's submission discusses e-mails that plainly prove no breach of the law by Mr. Conte, Ms. McNamara continued. "The government admits that the leaker could be anyone, government personnel included."

The Chronicle has said that its reporting brought an important issue to public attention. The filing on Wednesday disputed that, saying the leaked information added nothing of substance to the indictment in the case and "served only to titillate and hold up to public ridicule those athletes who admitted using steroids before the grand jury."

Mr. Bronstein disagreed, saying, "It's very clear that it was not the indictment but the reporting itself that created the national dialogue."

    Prosecutors Can't Keep a Secret in Case on Steroid Use, NYT, 23.6.2006, http://www.nytimes.com/2006/06/23/us/23leak.html?hp&ex=1151121600&en=9efc7454a76490e0&ei=5094&partner=homepage

For 2 Ex-Detectives, Life Terms and Tales of Grief

June 6, 2006
The New York Times
By ALAN FEUER

Calling their crimes the "most heinous" he had ever seen in court, a federal judge issued — but did not officially impose — life in prison sentences yesterday for two retired New York detectives convicted in April of taking part in at least eight murders for the mob.

The sentencing of the men, Louis Eppolito and Stephen Caracappa, drew to a conditional close a stunning case of police corruption that began 20 years ago when they stopped a jeweler on the highway, helped to kill him and later left his body buried under concrete in an auto-body shop.

The judge, Jack B. Weinstein, issued the harshest penalty he could, but held up its imposition until he conducts a hearing later this month to determine if the men had shoddy lawyers, as they contend, and deserve a new trial.

There was little reaction from either man in Federal District Court in Brooklyn and both returned to jail, where Mr. Caracappa's face has grown skeletal and Mr. Eppolito has grown a white goatee and gotten somewhat slimmer.

By law, the friends and family of a victim can address the court at sentencing, and before the penalty was read, there were brutally emotional — and achingly personal — accounts from the survivors.

One of them was Michal Weinstein, daughter of the jeweler, Israel Greenwald, who on Feb. 10, 1986, disappeared after giving young Michal a hug as she waited for a bus. She was 10 years old then, and as she spoke from the stand, addressing both defendants by name, it was with a caged fury that only now, after 20 years, had found release.

"You took away our daddy," she said, "and by doing that you took away our childhood. You took away our mother. You stole our innocence. You filled our nights with nightmares and our days with torture."

She posed a list of questions to the men: Did they know what it was like to be asked about your father and not have an answer? To be treated with fear and pity? To watch from the window as your mother's car is repossessed? To leave the only home you ever knew and loved because you could not afford the mortgage? To take charity from the very charities your father once gave to? To visit a friend who had lost a loved one and be envious? Because they had a grave?

"To be envious of a grave," she said.

It seemed impossible after such a speech for another syllable to be spoken, but three more family members of victims took the stand and then, sheepishly, Mr. Eppolito rose to speak.

He began contritely, saying that he understood the families' pain and that, in 22 years as a detective, he had often had to deliver news about a death. He had knocked on doors, he said, had spoken to grieving widows — "I know the feelings."

He then invited the families of his victims — the Greenwalds, the Hydells, the Linos — to visit him in jail, where he promised he could prove to them he was an innocent man.

It was at this point that without warning and certainly without permission, a large man wearing a seashell necklace suddenly stood up.

"Mr. Eppolito!" he yelled from the gallery. "Do you remember me?"

Apparently baffled, Mr. Eppolito said, "No."

"I'm the guy you put away for 19 years! I'm Barry Gibbs! You don't remember me? You don't remember what you did to me? To my family?"

The marshals quickly led the man outside, as the courtroom burst into applause.

Mr. Gibbs went to prison 19 years ago for murder, but was released in September when a judge in Brooklyn found that Mr. Eppolito had intimidated the only eyewitness in the case into lying on the stand. Mr. Gibbs's startling appearance put something of a kink in Mr. Eppolito's speech, which he amended on the spot, repeating that he did not know the man.

Later, after Judge Weinstein issued the sentence (which, aside from life in prison, included a $1 million fine and a $400 special court fee), there was discussion of the next hearing, scheduled for June 23. At that time, it is likely that the defendants' former lawyers, Bruce Cutler and Edward Hayes, will take the stand to be questioned on their legal work at trial.

As has happened often in the case, the various players spilled outside the courthouse to discuss things with the news media.

Mr. Gibbs, tanned and healthy, said that Mr. Eppolito had taken his "constitutional rights and put them in the street."

He found a strange bedfellow in Anna Lino, wife of Edward Lino, whom Mr. Eppolito and Mr. Caracappa were found to have murdered 16 years ago.

"Nineteen years," she said. "Don't you think he has a right to have an outburst?"

    For 2 Ex-Detectives, Life Terms and Tales of Grief, NYT, 6.6.2006, http://www.nytimes.com/2006/06/06/nyregion/06cops.html

The Enron Case That Almost Wasn't

June 4, 2006
The New York Times
By ALEXEI BARRIONUEVO and KURT EICHENWALD

"GUILTY."

Judge Simeon T. Lake III's reading of the verdict landed like a bombshell in his federal courtroom in Houston. The first cries came from the second row, where the children of Kenneth L. Lay, the former Enron chairman, lurched forward and began sobbing.

Dressed in a cobalt blue jacket, Linda Lay, Mr. Lay's wife, dropped her head onto his shoulder as the judge continued to read a series of fraud and conspiracy verdicts. Each count was punctuated by one word: "guilty."

When the judge finished, Mr. Lay, 64, had been convicted of 10 crimes — and a man who was once a close ally of President Bush and presided over one of the nation's most influential companies became someone who may spend the rest of his life in prison.

But the journey from the collapse of Enron to Mr. Lay's conviction was anything but predictable. Instead, it was a long and arduous legal journey for federal prosecutors, filled with false leads and evidentiary dry holes. The public widely perceived the criminal case against Mr. Lay to have been a "can't lose" proposition, similar to the parallel case assembled against Enron's former chief executive, Jeffrey K. Skilling. But the legal hurdles on the path to Mr. Lay's conviction were so daunting that some prosecutors privately worried that they would never even be able to charge Mr. Lay with any crimes.

Prosecutors eventually defined and pinned down Mr. Lay's misdeeds by focusing on what amounted to the most basic of childhood transgressions. After analyzing millions of pages of documents, deconstructing complex accounting mechanisms, unwinding complex trading transactions and interviewing scores of witnesses, they found a theme that carried the day: Mr. Lay chose to lie — to his shareholders, his employees and his banks — and those lies were his crimes.

The process of dissecting Mr. Lay's misdeeds also forced prosecutors to pull apart the strange corporate machinery of Enron itself. There, too, prosecutors discovered, the blindingly complex gave way to the maddeningly simple: Enron was not a delicate, innovative engine of profitability; it was a hodgepodge of often impenetrable activities, some of which were designed so their architects could simply steal money.

"I liken it to being like some strange mechanical device that dropped out of the sky, and a group of engineers who had never seen anything like it had to take it apart and figure out what it was," said Samuel W. Buell, who was one of the first prosecutors to investigate Mr. Lay. "But at the end of the day, the machine just ended up being a coffee maker."

Even so, the case against Mr. Lay was never clear-cut, prosecutors say. And a review of their efforts to directly link Mr. Lay to crimes at Enron reveals that at times it seemed that their quarry might remain permanently beyond their reach.


SHORTLY after Enron collapsed in December 2001, the Justice Department assembled a special federal task force to delve into the complexities of the company. One fact emerged quickly, task force members said: there was no obvious case to be made against Mr. Lay. Investigators focused on the use of murky partnerships, particularly a vehicle known as LJM, to manipulate Enron's financial performance. But that inquiry unearthed little evidence of crimes involving Mr. Lay.

"There was this public perception of Ken Lay as the mastermind, but that really didn't bear out," said Leslie R. Caldwell, who headed the task force in its first two years. "We realized very fully early on that Lay was not involved in the decision-making day to day and that we weren't going to be able to prove his involvement in the structuring of transactions like LJM."

Other areas appeared more promising. Corporate filings revealed that Mr. Lay had sold about $100 million worth of his Enron shares, most of them back to the company through a complex transaction involving a corporate line of credit. Almost all of the money from the sales went toward paying down personal bank loans that were secured by the Enron shares. If the task force could prove that Mr. Lay sold the shares because of nonpublic information he had about the company, the theory went, he may have committed insider trading. But it was virtually impossible to prove insider trading for shares sold back to the company, since Enron theoretically had the same information as Mr. Lay.

"The insider-trading characterization of these sales just never seemed sustainable, except on some very broad theory that, when you know things at a company aren't going well, you can't sell," Mr. Buell said. "We needed something more tangible than that."

So prosecutors developed a new theory about Mr. Lay's trades: that he looted Enron by pulling $100 million out of its coffers even as the company's financial situation was deteriorating. Prosecutors were cagey, never signaling to Mr. Lay's defense team that they had abandoned the insider-trading theory and replaced it with a new allegation.

But the task force ultimately decided it could not even build that case. There was no clear evidence that Mr. Lay had actively tried to deceive Enron's board, and he could contend that he had relied on Enron lawyers to approve all of his trades.

Other avenues of investigation also dried up. There had been suspicions that Mr. Lay had tried, perhaps improperly, to use his political influence with the Bush administration to get assistance for his company as it was floundering in late 2001. He had made numerous phone calls to members of the administration at the time; the task force decided to find out what had transpired.

Over a series of days, the task force interviewed multiple government officials, including Alan Greenspan, then the chairman of the Federal Reserve; Donald L. Evans, then the Commerce secretary; and Paul H. O'Neill, then the Treasury secretary. Each had received telephone calls from Mr. Lay in that crucial period, but no evidence of wrongdoing emerged from the discussions.

In the spring of 2003, Ms. Caldwell called a task force meeting in downtown Washington to reorient the group's legal strategy. Instead of unraveling myriad, intricate details from separate transactions, she suggested, it might be wiser to explore the case as a series of intertwined transactions.

The new approach was called "The Picture of Dorian Gray theory," after the Oscar Wilde story about a man who retains his youth and beauty because his portrait, which shows him aging and corrupt, hides his many sins. Prosecutors speculated that they could build a fraud case against Enron by proving that the company publicly portrayed itself as strong and vibrant, even though executives like Mr. Lay knew that it was rotting from the inside.

"It was definitely a shift in investigative strategy," Ms. Caldwell said of the meeting. "We had to focus on the big picture, and not just the individual transactions. But it was just a seed that pointed to a direction. It wasn't as if that immediately led us to decide what we were going to charge."

By the fall of 2003, other pieces were falling into place. Andrew S. Fastow, Enron's former chief financial officer, had been indicted on fraud and other counts and the outlines of criminal cases against Mr. Skilling and Richard A. Causey, the former chief accounting officer, were taking shape. As the task force shifted its attention to securing indictments against Mr. Skilling and Mr. Causey, it put the investigation of Mr. Lay on a back burner.

But on the same day Mr. Skilling was indicted in early 2004, Enron's former treasurer, Ben F. Glisan Jr., appeared before a grand jury in Houston and gave prosecutors a little gift. In addition to providing evidence against Mr. Skilling, he testified that Mr. Lay knew he was lying in 2001 when he provided upbeat statements about Enron's prospects even as the company was plummeting toward bankruptcy proceedings.

"That was a real turning point for a whole variety of reasons," said Andrew Weissmann, a former task force director who questioned Mr. Glisan that day. "Ben Glisan clearly pointed the way to the Lay case. I was relieved."

AFTER months of being spread thin on personnel, the task force was also reinforced with a crew of top-flight lawyers. Mr. Buell began focusing more closely on the Skilling case, and Ms. Caldwell hired Sean M. Berkowitz, a prosecutor from Chicago recommended by United States Attorney Patrick J. Fitzgerald, to assist Mr. Buell. To take charge of the Lay investigation, the task force turned to John C. Hueston, a well-regarded — and aggressive — prosecutor from Southern California. Although hired to work primarily on the Skilling investigation, Mr. Berkowitz soon began trading notes with Mr. Hueston on how to handle both inquiries.

Mr. Hueston, 42, revived the Lay investigation, bringing Mr. Glisan back to the grand jury and questioning numerous other witnesses. "John is a really, really good investigator," Mr. Weissmann said. "He just dug into this."

Mr. Hueston turned up yet another potential crime as he examined Mr. Lay's personal finances. Although Mr. Lay signed contracts prohibiting use of his personal bank loans to buy stocks on margin in excess of certain amounts, he had done so anyway. To Mr. Hueston, that suggested that Mr. Lay had committed a fraud by violating federal banking laws restricting such transactions.

Other dominoes continued to fall. An F.B.I. agent assembled evidence that Mr. Lay lied to accountants to help Enron avoid a huge write-down. New witnesses, meanwhile, told the grand jury fresh details about other possible lies by Mr. Lay. As the government continued to build its case, Mr. Lay's lawyers tried to stave off indictment. In the summer of 2004, the Justice Department granted Mr. Lay an unusual final appeal to the highest levels of the agency, but that appeal ultimately failed. Around the same time, the task force wrote sealed letters to two federal judges in Houston, saying prosecutors anticipated bringing an indictment against Mr. Lay — soon.

"I always thought that was an act of betrayal, an act of deceit," said Mr. Lay's lead lawyer, Michael W. Ramsey, suggesting that the letters indicated that the review effort was a sham. Mr. Hueston said in an interview that the letters were simply anticipatory and "courtesy notes" for the judges, not promises of an impending indictment.

Mr. Hueston advocated charging Mr. Lay with making false statements, similar to the charges being brought against Mr. Skilling.

HE interviewed securities analysts, seeking to understand what Mr. Lay had conveyed to the marketplace. He was shocked to find that most of them had not bothered to look closely at Enron's securities filings and were taking Enron's statements "virtually at face value."

Mr. Hueston dug deeper into Mr. Lay's finances, dredging up records on everything from his vacation spending, to a $200,000 birthday cruise for his wife, to more than $100,000 spent on liquor in 2001. They studied Mr. Lay's lifestyle, his bank loans and his reliance on Enron credit lines.

They also focused on statements that Mr. Lay made in an online forum in which he told Enron employees that he was buying falling Enron stock without mentioning the far greater number of shares he was selling to the company itself. That omission, prosecutors believed, amounted to securities fraud. And Mr. Lay's statements allowed prosecutors to bring his stock sales to Enron — and the draining of $100 million from the company — into the case, an issue likely to influence a jury's view of his character.

On Dec. 13, 2005, about a month before the trial began, Mr. Lay fired back at the task force, and at Mr. Hueston in particular. In a speech to a Houston business group, Mr. Lay opined that the investigation had taken so long "because it is complicated to find crimes where they do not exist." He named task force members, including Mr. Hueston, and said they had yet to find any cause to indict him. It was the first public flash of the acrimony between the pursued and his pursuer, emotions that would eventually spill over at trial.

WHEN Mr. Lay's trial began, Mr. Ramsey promised that the defense would show that Mr. Lay had sold Enron stock only when the banks required him to do so. Mr. Hueston and Mr. Berkowitz, by that time the director of the task force, said they believed that that statement was the defense's first fatal blunder.

The prosecution team flip-flopped on whether to call some important witnesses. The night before Mr. Fastow was due to take the stand, Andrew Stolper, a junior lawyer on the team, visited Mr. Hueston's office. He was concerned that Mr. Fastow's admitted crimes would damage his credibility before a jury and hurt the government's case.

"Are you sure you want to do this?" Mr. Stolper asked. "We're doing well."

"That train has left the station," Mr. Hueston replied.

In the end, prosecutors said they thought Mr. Fastow's testimony turned out better than they had expected. Mr. Glisan, several jurors said later, was more convincing — and more critical to the case against Mr. Lay. During Mr. Glisan's first day on the stand, he said Enron's financial condition was "weak" when Mr. Skilling resigned in August 2001. Mr. Lay, who until then had seemed unfazed by weeks of testimony, exploded outside the courtroom.

"I have never heard so many lies in one day in my whole life," he seethed to a group of reporters.

As the sleepless nights dragged on during Mr. Lay's trial, task force members eased the tension by organizing jogs around Houston parks and tossing around Nerf footballs and baseballs in a large office room they called "the bullpen." The compact Mr. Hueston, a marathon runner, often urged colleagues agents to join him in push-ups and pull-ups to stay alert late at night.

About a week before Mr. Lay took the stand, he and Mr. Hueston found themselves on a courtroom elevator for the first time during the trial. "John's been eating red meat," Mr. Lay declared without elaboration and in a disarmingly friendly way, according to Mr. Hueston.

Mr. Hueston said that he said nothing in reply.

The night before Mr. Hueston began his cross-examination of Mr. Lay, Mr. Berkowitz went to his co-prosecutor's office and offered him a dose of motivation. "I've been reading that the entire fate of corporate criminal prosecutions rests on this cross," he told Mr. Hueston, only half-jokingly.

The next day, in the closing moments of his direct examination, Mr. Lay allowed his emotions to overwhelm him. He accused Mr. Hueston of interfering with his earlier attempts to repay a $7.5 million loan that Enron had extended to him. "It was not finalized because John Hueston blocked that deal!" he said, his voice rising. When it came time for Mr. Hueston to cross-examine Mr. Lay, the prosecutor accused him of engaging in "character assassination of witnesses."

"Are you considering yourself in that list?" Mr. Lay retorted.

"Mr. Lay, I'm an assistant United States attorney. This is my job," Mr. Hueston responded calmly. "You can call me anything you want. I'm talking about the witnesses here."

As he cross-examined Mr. Lay for four days, Mr. Hueston continually pushed to show that Mr. Lay had essentially stuck his head in the sand by repeatedly ignoring concerns in the fall of 2001 about aggressive accounting and wrongdoing at the company. Mr. Hueston also showed that Mr. Lay continued to assure employees that nothing was wrong at Enron, even as information was dribbling in to him from multiple sources that trouble was brewing. He also homed in on Mr. Lay's personal finances, arguing that Mr. Lay made choices about how to repay his bank loans that repeatedly put his interests ahead of the company he was supposed to be safeguarding.

When Mr. Berkowitz left his office at 3:30 a.m. on May 16, with the trial's final closing argument just five hours away, he looked around and saw more than a half-dozen bedraggled F.B.I. agents, several of whom had been part of the Enron investigation since it began four years earlier.

One agent's young daughter, a toddler, was so angry at her father for his long absence from home that she refused to come to the phone anymore. Still, none of the agents intended to leave the task force's offices that night. Some of them used a shower in the basement of the federal courthouse to freshen up before that last day of the trial.

DAYS after the jury began deliberating, Mr. Hueston and Mr. Berkowitz took a five-mile jog. Later, they settled into chairs on the deck of Big Woodrow's restaurant on a sweltering Wednesday night. A waitress eased her way through a rowdy crowd, delivering a bucket of crawfish and Corona beers to the prosecutors. As the surrounding crowds watched overhead televisions, cheering on the Houston Astros baseball team, the two men discussed their shared ordeal.

"We wanted to tell each other we were proud of the case we put on, regardless of the verdict," Mr. Hueston said.

"There was a sense of calm, because we felt we had done a nice job," Mr. Berkowitz said.

The next day, Mr. Lay and Mr. Skilling were both convicted of multiple fraud and conspiracy charges. The jury found that both men carried out their crimes by misleading investors and employees about Enron's performance.

In short, they decided that Mr. Lay was a liar.

    The Enron Case That Almost Wasn't, NYT, 4.6.2006, http://www.nytimes.com/2006/06/04/business/yourmoney/04enron.html

Court Turns Aside Libby's Request for Many Documents

June 3, 2006
The New York Times
By NEIL A. LEWIS

WASHINGTON, June 2 — A federal district judge dealt a severe setback on Friday to I. Lewis Libby Jr., denying him a trove of documents that his lawyers had said were crucial to his defense against charges of perjury and obstruction of justice.

The judge, Reggie B. Walton, ruled that most of the material sought by Mr. Libby, former chief of staff to Vice President Dick Cheney, was not relevant to the charges. Judge Walton said the issue in the trial would be a narrow one: whether Mr. Libby lied to both a grand jury and F.B.I. agents about his conversations with journalists concerning Valerie Wilson, an operative of the Central Intelligence Agency.

In effect, the decision blocked the defense team's bid to expand the trial into a wider forum about the reasons for going to war in Iraq and what Mr. Libby has portrayed as the Bush administration's legitimate efforts to respond to critics of the war on the merits.

Judge Walton, who last month signaled his inclination to rule against Mr. Libby, did agree with him that the statements he gave investigators were made against "the backdrop" of assertions by Ms. Wilson's husband, former Ambassador Joseph C. Wilson IV, that President Bush had twisted intelligence about Iraq to advance the case for going to war.

Mr. Wilson had gone to Niger on assignment from the C.I.A. in 2002 to look into reports that the Iraqi government had obtained uranium there to build a nuclear bomb. In July 2003, three and a half months after the invasion of Iraq, he said in an Op-Ed article in The New York Times that it was very doubtful any such transaction had ever occurred, and suggested that Mr. Bush, in his 2003 State of the Union address, had been misleading in alleging strong evidence of Iraqi efforts to obtain uranium from Africa.

The administration's critics say the disclosure of Ms. Wilson's status at the C.I.A. to journalists was retaliation against her husband.

In their request to Judge Walton, Mr. Libby's lawyers sought to obtain documents about Mr. Wilson's trip to Niger, about any efforts by other government officials to punish either of the Wilsons and about Ms. Wilson's undercover status with the agency.

But Judge Walton said that documents concerning Mr. Wilson's trip "were wholly immaterial" to the case and that almost all the other documents would not be relevant to "the preparation of the defendant's defense."

"The only question the jury will be asked to resolve in this matter," the judge said, "will be whether the defendant intentionally lied when he testified before the grand jury and spoke with F.B.I. agents about statements he purportedly made to the three newspaper reporters concerning Ms. Wilson's employment."

Mr. Libby testified under oath that he had not disclosed information about Ms. Wilson, but Judith Miller, then a reporter for The Times, and Matthew Cooper of Time magazine have testified that he did, according to court documents. The third journalist, Tim Russert of NBC News, has publicly denied Mr. Libby's assertion that it was Mr. Russert who told him of Ms. Wilson, in a phone conversation.

Judge Walton said he would not allow the trial "to become a forum for debating the accuracy of Ambassador Wilson's statements, the propriety of the Iraq war or related matters leading up to the war, as those events are not the basis for the charged offenses."

He said he would make a limited exception, however, for one of the defense's requests, by requiring the government to turn over any documents showing that Mr. Libby's conversations with reporters were "conducted solely for the purpose of refuting the accuracy of Ambassador Wilson's pronouncements."

Judge Walton said that if any such documents existed, Mr. Libby could use them in an effort to demonstrate that he had not been engaged "in a sinister effort to punish Ambassador Wilson or Valerie Plame Wilson."

    Court Turns Aside Libby's Request for Many Documents, NYT, 3.6.2006, http://www.nytimes.com/2006/06/03/washington/03libby.html

Court Rejects Evangelical Prison Plan Over State Aid

June 3, 2006
The New York Times
By NEELA BANERJEE

WASHINGTON, June 2 — A federal judge in Iowa ruled Friday that a state-financed evangelical Christian program to help inmates re-enter society was "pervasively sectarian" and violated the separation of church and state.

The decision has set the stage for an appeals process that is expected to explore more broadly the constitutionality of the Bush administration's religion-based initiative programs, according to plaintiffs, defendants and legal experts.

Prison programs run by religious groups have increased over the last decade or so, as policy makers, prison and law enforcement officials and prisoner advocates have focused on the high rates of recidivism when inmates return to society, said Robert Tuttle, a law professor at George Washington University who is an expert on religion-based initiatives. Proponents of such programs in prisons have said that the transformative experience of religion can counter recidivism.

In April, the Justice Department announced plans to begin a religious-based program, offered in a single faith, in at least a half-dozen federal prisons, according to legal analysts and critics of the program.

The case was filed more than three years ago by Americans United for Separation of Church and State against the Iowa Department of Corrections and InnerChange Freedom Initiative, an organization affiliated with Prison Fellowship Ministries. Prison Fellowship was founded by Charles W. Colson, a close ally of President Bush and an influential evangelical who went to prison for his role in the Watergate cover-up.

In his ruling on Friday, Judge Robert W. Pratt, chief judge of the Federal District Court for the Southern District of Iowa, said he was not ruling on the efficacy of religious programs in rehabilitating inmates or "the ultimate truthfulness about religion."

Instead, Judge Pratt ruled that the InnerChange program had violated the separation of church and state by using money from taxpayers to pay for a religious program, one that gave special privileges to inmates who accepted its evangelical Christian teachings and terms.

"What we had hoped to make clear was that InnerChange was pervasively religious, that it gave special benefits to inmates and that it sought to convert people to Christianity," said Barry W. Lynn, executive director of Americans United. "InnerChange denied that, but the judge backed us on all three points. It shows that government-funded religious programs don't have a place in prisons."

Judge Pratt said that the program had to be halted in 60 days and that InnerChange had to return about $1.5 million it had received from the State of Iowa.

Those penalties, however, are pending an appeal, which InnerChange plans to file next week at the United States Court of Appeals for the Eighth Circuit in St. Louis, said Mark Earley, a former attorney general of Virginia who is president of Prison Fellowship.

"I think it is an extreme decision that if allowed to stand strikes a pretty serious blow at the religious freedom of prisoners," Mr. Earley said. "And it strikes an equally destructive blow to rehabilitation efforts in the prisons of America."

Mr. Earley said he expected the decision to be reversed on appeal, either at the Eighth Circuit or in the Supreme Court.

Both sides are banking on the possibility that this case could rise through levels of appeal and set precedent about religion-based initiatives, or more significantly, about the separation of church and state, legal experts said.

Douglas Laycock, professor of constitutional law at the University of Texas in Austin, said of InnerChange's strategy: "I think they're betting on getting to the Supreme Court and that Sam Alito and John Roberts will be there. And they're betting that they have five votes to win."

Mr. Earley said in a phone interview that anyone of any faith could participate in the program. On its Web site, however, InnerChange explains that it is "anchored in biblical teaching" and "Christ-centered." It operates in six states, Arkansas, Iowa, Kansas, Minnesota, Missouri and Texas, Mr. Earley said. It is partly financed by the state in all but Texas and Arkansas, where it uses private money, he added.

Religious programs in prisons once used to be chaplaincy efforts and occasional visits by volunteers, but they have now grown into ambitious programs like InnerChange, Professor Tuttle said. He estimated that about 15 states had such programs.

    Court Rejects Evangelical Prison Plan Over State Aid, NYT, 3.6.2006, http://www.nytimes.com/2006/06/03/us/03faith.html