Rupert Murdoch Phone Hacking Scandal: News of the World Shutting Down
Rupert Murdoch, the 80 year old Australian-American whose full name is Keith Rupert Murdoch, is said to be the most influential man in the world. As the CEO and Chairman of News Corporation, he is considered one of the world’s most powerful people with a financial worth of 6.3 billion dollars (USD).
He started his path to wealth with one very small newspaper in Adelaide, then went on to start different publications in Australia. He expanded his News Corporation to the United Kingdom, the Asian market, and the United States. In the United States, in 1986, he began the Fox Broadcasting Company.
Murdoch claims that the rumors of his empire crumbling is all lies and that he is not losing his grip on his media empire. He is the center of a phone hacking scandal that took place originally in the United Kingdom where Murdoch’s employees were involved in hacking into voice mails. In the United States they were alleged to have bribed law enforcement officials to obtain telephone numbers of families of the victims of the 9/11 terrorist tragedy.
In the United Kingdom, Murdoch apologized for the scandal that involved two of his top executives. The apology was written as a full page ad in the Wall Street Journal. He further claimed that the apology and fixing the mistakes are only the first steps. Another apology that was not signed by Murdoch offered to cooperate with the police. Chris Bryant, a British lawmaker and one who campaigns against media abuse, has stated that he feels a public relations consultant told Murdoch what to write in his apology and that it sounds more like a confession than an apology. He doubts the public will accept the apology.
This telephone hacking scandal has placed the British police under pressure for accepting money and other bribes for illegal actions. Telephone hacking was reported to the police as far back as the year 2005 but nothing was done about it. In fact, Wallis, a man that was arrested in the telephone hacking incident, was hired by the police as a consultant for a wage of 24,000 pounds for working two days a week.
The News of the World newspaper, which is owned by Murdoch and which is now closed, was said to have hacked into thousands of telephones including that of a thirteen year old girl that had been murdered. Murdoch apologized to the parents of the little girl which was akin to a confession that the News of the World had indeed hacked into the voicemails of the murdered girl. This caused Murdoch to shut the paper down.
James Murdoch, Rupert Murdoch’s successor and son, had taken over the operations in Europe of the News Corporation just when the telephone hacking scandal was beginning. James and Rupert will face a tough questioning by Britain’s Parliament.
Doral Financial Scandal: Sammy Levis Guilty of Wire Fraud
Mario S. Levis, aka “Sammy Levis,” was found guilty on securities and wire fraud charges after a five-week jury trial before U.S. District Judge Thomas P. Griesa for his role in a scheme to defraud investors and potential investors in the stock of Puerto Rico-based Doral Financial Corporation (Doral) that took place while he was the Treasurer and Senior Executive Vice President of Doral, Preet Bharara, the U.S. Attorney for the Southern District of New York, announced today. The scheme, occurring between 2001 and 2005, involved misrepresentations that Levis made regarding certain core assets of Doral. An aggregate decline in shareholder value of approximately $4 billion followed the unraveling of the scheme.
According to the superseding indictment and the evidence at trial:
Doral, with mortgage banking operations in Puerto Rico and New York City, was a leading residential mortgage lender in Puerto Rico. Between 2001 and 2005, Levis corrupted the process by which Doral determined the publicly reported value of certain non-cash assets carried on Doral’s financial books called “interest-only strips” (IOs). Doral represented to the public, in its annual financial statements, that the aggregate value of its IOs, and company earnings associated with those IOs, were increasing substantially year after year. By the beginning of 2005, Doral publicly announced a streak of 28 quarters of “record earnings” based in significant part on the stated value of its IOs.
During the same time, Doral’s stock price steadily increased from approximately $10 per share in early 2000 to almost $50 at the end of 2004. Also during this time frame, Levis and other members of his family were substantial holders of Doral securities. Between 2001 and 2004, the value of Levis’s stock in Doral tripled to over $60 million.
In its public filings with the U.S. Securities and Exchange Commission (SEC), Doral represented that the value of its IOs was based, in part, on two “outside” and “independent” expert valuations provided to Doral on a quarterly basis. According to Doral’s filings with the SEC and representations by Levis to investors, these outside independent valuators were performing the valuation using their own economic and portfolio assumptions.
In fact, however, Levis thoroughly corrupted those valuations. For example, the valuation provided by a Morgan Stanley trader in fact involved the trader merely recopying numbers provided by Levis without any other work whatsoever, and then subsequent attempts by Levis to conceal that fact from Doral’s auditors and lawyers. The other valuation from Popular Securities (Popular) actually involved Levis dictating key assumptions for Popular to use in performing its valuation analysis. In both cases, Levis failed to inform the valuators that Doral was treating their valuations as independent or citing their work in Doral’s SEC filings.
In March 2005, when an executive at Popular directly asked Levis whether Popular’s valuation was being used as an independent valuation, Levis denied that Popular was one of the independent valuations. Later, when investors pressed Levis to identify the sources of the independent valuations described in Doral’s SEC filings, he falsely told investors that he could not identify the sources due to confidentiality agreements.
Levis also materially misrepresented to the investing public — in direct communications with investors, investor representatives, and market analysts — certain specific characteristics of the Doral IO portfolio. Specifically, among other things, Levis falsely claimed provision in Doral’s loan-sale agreements called “caps,” which would purportedly function to prevent substantial write-downs of the IOs if interest rates continued to rise.
Beginning in mid-January 2005, when Doral announced an approximate $97.5 million write-down of the stated value of its IOs attributed to rising interest rates, and Levis’ scheme concerning the IO valuations began to unravel, the market price of Doral’s common stock began to drop steadily from its high of almost $50 per share. By the time Levis resigned from Doral in late August 2005, the price of Doral’s shares had fallen more than 70 percent to approximately $14.13 per share. In total, the company’s shareholders had suffered an aggregate decline in shareholder value of approximately $4 billion.
Levis was found guilty of one count of securities fraud (Count One) and two counts of wire fraud (Counts Three and Five). The jury found Levis not guilty of one count of wire fraud (Count Four), and the Court dismissed an additional count of wire fraud (Count Two). Levis faces a maximum sentence of 20 years in prison on the securities fraud count and a fine of the greatest of $5 million or twice the gross gain or loss from the offense. For each of the wire fraud counts on which he was found guilty, Levis faces a maximum sentence of 20 years in prison and a fine of the greatest of $250,000 or twice the gross gain or loss from the offense.
Levis, 46, of San Juan, P.R., is scheduled to be sentenced by Judge Griesa on Sept. 14, 2010.
U.S. Attorney Preet Bharara stated: “Senior executives of publicly traded companies have to tell the investing public the truth, even when it hurts. It’s that simple. Today, a Manhattan jury found that Mario Levis of Doral intentionally flouted this bedrock principle, causing a colossal $4 billion loss to his company’s shareholders. Our office, working more closely than ever with the FBI and the SEC, will continue to pursue corrupt professionals in the financial services industry whose greed-driven misconduct hurts honest investors and threatens our markets.”
U.S. Attorney Bharara praised the work of the FBI and thanked the SEC for its assistance in the case.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force, on which Mr. Bharara serves as a Co-Chair of the Securities and Commodities Fraud Working Group. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
The case is being prosecuted by the Securities and Commodities Fraud Task Force of the U.S. Attorney’s Office. Assistant U.S. Attorneys William J. Stellmach and Daniel A. Braun and Special Assistant U.S. Attorney Jason M. Anthony, are in charge of the prosecution.
Fighting Debt Collectors: Knowing Whether a Debt is Valid
Many people aren’t surprised when a debt collector calls. After all, they know they owe an overdue debt. But what happens when you’re taken by surprise because you didn’t realize that you owe a debt or had forgotten that you owed money? Bill collectors often spring this kind of surprise on unsuspecting people, and make people so desperate that they end up paying the bill – even when they don’t owe the money in the first place.
That’s why, if a debt collector calls, the first step you should take is to demand validation of the debt. According to the Fair Debt Collection Practices Act, a bill collector must notify you in writing within five days of contacting you via phone. In their letter, they must state the name of the creditor, the amount you owe, and the fact that you have 30 days to dispute the debt. The bottom line is that, when you receive a debt collection call, ask for documentation of the debt in writing. The FDCPA says that a debt collection agency can’t call or write you about the debt again until you receive the proof.
When you get the paperwork, don’t put off looking at it thoroughly. Even though it might be tempting to set it aside, it’s important to go through the letter line by line. You may find out that you do not owe the debt. Perhaps you paid it long ago. Perhaps you didn’t pay the debt, but it’s a very old debt.
Very old debts are often purchased by debt collection agencies for a song. These are debts that original creditors have written off as “uncollectable,” but that doesn’t mean that a debt collection agency won’t try to collect. After all, they have everything to gain and nothing to lose. You should know, though, that many states have laws saying that a debt is no longer collectible after a certain number of years. This is called the statute of limitations. Debt collection agencies count on most consumers being unaware of the statute of limitations, and go ahead and try to collect anyway. Unfortunately, more often than not, people get tricked into paying up.
If the documentation you receive lists a creditor other than the original creditor (such as a case where a debt collection agency purchased liquidated bad debt), you have the right to ask for the name and address of the original creditor – providing you do so within that 30-day window. That’s why it’s critical to review the paperwork when it comes in the mail. You don’t want to miss the window of opportunity you have to dispute the debt.
Validating the debt is an important first step in fighting debt collectors. If you don’t feel you can do it alone, by all means contact a fair debt attorney. It should be free, and having an advocate by your side can mean the difference between sleepless nights and peace of mind.
[thanks to jay tamboli and legal andrew via cc]
