by Kelly Phillips Erb on June 30, 2009
Bernie Madoff may have spent much of his life in luxury but he will spend the end of it a poor, broken man in federal prison. Guaranteed. Yesterday, Madoff was sentenced to an astounding 150 year prison sentence, the maximum sentence that could have been imposed. His defense attorneys had argued for a 12 year sentence.
The judge noted that he was aware that Madoff could not possibly serve his entire sentence, the largest ever for a white collar crime, but emphasized, “…the message must be sent that Madoff’s crimes were extraordinarily evil.”
In March, Madoff pleaded guilty to securities fraud and 10 other felonies. The magnitude of his losses has not been completely calculated; at least $13 billion has been documented though Madoff allegedly confessed to fraud in the order of $50 million.
Madoff’s response to the victim’s statements was odd, with a mix of apology and excuse. He characterized the scheme as a “terrible mistake” and seemed to sugarcoat what happened by claiming that he had hoped to save the securities industry - the very one that he helped bring down.
Madoff had already been ordered to turn over significant assets, totaling more than $170 million. Those assets include the couple’s $7 million apartment in Manhattan, an $11 million house in Palm Beach, a $3 million home on Long Island, a number of boats and cars.
Madoff’s wife, Ruth, will be left with $2.5 million; Madoff’s lawyers had initially asked to keep $70 million, alleging that she didn’t know anything about the fraud. Curiously, she withdrew $15.5 million just before her husband’s arrest, a move that was no doubt taken into consideration. Under the seizure agreement, which also requires that Ruth leave her New York home, it was clear that Ruth could still be the target of claims.
Proceeds from sales of the assets will be used to reimburse investors in Madoff’s scheme. Approximately $1 billion has reportedly already been recovered.
by Kelly Phillips Erb on June 30, 2009
It appears that crime does pay. Just a few months ago, Peter Sunde, Fredrik Neij, Gottfrid Svartholm and Carl Lundström, the brains behind the popular underground web site, Pirate Bay, were sentenced to jail time and ordered to pay large fine. Now, they are millionaires.
The pirates, it would seem, have gone legit. While awaiting the results of their appeal, Sunde, Neij, Svartholm and Lundström sold their company to software company Global Gaming Factory X for 60m Swedish crowns (about $7.83 million US). Any chance that the company would keep its rogue appeal has likely died as the Global Gaming agreed that Pirate Bay must comply with international copyright laws. It sounds great but not complying was more or less the point of the site.
So what gives? The former “pirates” say that a sale was necessary to preserve the site: “On the internet, stuff dies if it doesn’t evolve. We don’t want that to happen.” Hmm. By “evolve” they clearly mean “change.” What remains to be seen is whether that change is a good thing.
by Elisa Jaehner on June 26, 2009
The UNESCO, who has threatened for years to drop off the city of Dresden from its world heritage list, has made their threat reality after a hearing yesterday, making Dresden the second site to lose its world heritage status since the list was created. This is the embarrassing end of a long fight between the city of Dresden, the state of Saxony and the UNESCO. As a result Dresden will not receive any money from the 150 million UNESCO program and will likely have fewer tourists in the future.
Reason for the removal was the construction of the Waldschlösschenbrücke, a four-lane bridge across he river Elbe a mile from the city’s historic center. The dispute about the construction is almost as old as the city’s UNESCO status itself. In 2005, a year after the UNESCO awarded the city with the title for the 12 mile river stretch, the city presented the plans for the construction. The planners never consulted the UNESCO commission and were immediately put on the “red list”. The debate about the bridge - that has been called “architecturally banal” - involved several reworked plans, demonstrations, legal actions, citizens’ initiatives on both sides, and a public referendum. The majority of the people of Dresden eventually pushed the controversial construction through the public debate and outrage and though all UNESCO warnings and proved how stubborn they are when it comes to an outside interference.
Now Germany faces the embarrassment of being only the second country besides Oman to lose the UNESCO world heritage title for one of its site.
by Kelly Phillips Erb on June 25, 2009
Earlier this week, Microsoft filed suit against three members of the same family alleging online fraud. The suit, which targets Melanie Suen and sons, Eric Lam and Gordon Lam, of Vancouver, British Columbia, claims that the three engaged in what is described as “massive” click fraud.
Microsoft has asked for damages of at least $750,000 to recover from a scheme that the company alleges affected their advertising business; the company alleges that they have to return $1.5 million to its advertisers as a result of the activity. Suen and the Lams reportedly generated false clicks on their auto insurance and World of Warcraft sites.
In the online world, advertising revenue is driven by clicks on links and ads - this is sometimes referred to as “pay per click.” Many online companies offer affiliate programs and other ad-centric sites which pay based on clicks; advertisers pay for ad placement on these sites based on a number of factors ranging from site popularity to content.
Microsoft alleges that by gaming the system, Suen and the Lams lead Microsoft and its advertisers to believe that there was interest in a number of ads, when in fact, there was none.
The lawsuit, thought to be the first of its kind, is clearly meant to be a deterrent for click fraud behavior. The defendants have not yet offered any comment.
by Erica Intzekostas on June 24, 2009
COBRA is a federal law that requires employers with 20 or more employees to offer continuing health care coverage to former employees. Employees with fewer than 20 employees are exempt from COBRA. However, states are allowed to enact laws that go further than the federal law. Pennsylvania has done just that. On June 10, Gov. Edward G. Rendell signed into law a Pennsylvania “mini-COBRA” bill that will require small employers with group health plans that are not subject to the federal COBRA law (those employers with between two and 19 employees) to offer continued group health insurance to employees and qualified dependents of employees, much the same way as COBRA now requires of larger employees, for a period of up to nine months from the date of termination of employment or other qualifying event. Like COBRA, coverage will be offered at the employee’s or the qualified dependent’s expense (up to 105 percent of the normal cost of coverage). The law will exclude from continuation coverage any individual who was not covered by the employer’s group health plan for at least three months prior to the qualifying event; who is eligible for coverage under Medicare; or who is, or could be, covered by another group health insurance arrangement.
Additionally, the Pennsylvania mini-COBRA law will enable covered individuals to take advantage of the 65% premium subsidy provisions of the American Recovery and Reinvestment Act of 2009, or ARRA. However, an employee will only be eligible for the subsidy if his or her employment termination occurs after the effective date of the new law, which, according to the text of the bill, will be the 30th day after signature by the governor – or July 10 – and before Jan.1, 2010. Therefore, employers may wish to consider deferring the employment termination of an employee until the expiration of 30 days following the governor’s signature to allow the employee to receive the subsidy.
Similar to COBRA, the new Pennsylvania law includes notification requirements applicable to employers, employees and dependents, plan administrators and insurers. Additionally, each small employer’s group policy must provide notice of the new law to policyholders within 45 days of the effective date of the law. Employers in Pennsylvania who have between two and 19 employees should review the new law and revise their policies as necessary to ensure compliance.
by Erica Intzekostas on June 18, 2009
Where there is an opportunity to market a brand name, there will be those who seek to profit off of other people’s successful brand names. And so it is with Twitter. Much like its sister infringement practice cybersquatting (the practice of using someone else’s brand name, or a twist on that brand name, as a website address to generate traffic), “Twitter Squatting” as it has come to be called is the practice of using someone else’s popular brand name as a Twitter user name to generate followers.
Twitter’s Terms of Service grant Twitter the right to reclaim user names on behalf of trademark owners. Twitter also provides a mechanism by which trademark owners can report trademark violations. Anyone who has a Twitter account can report acts of Twitter Squatting through this mechanism, though it is unclear what exactly Twitter will do with these reports or how it will determine whether there is an actual trademark violation. It is one thing for Twitter to state that it has the right to reclaim usernames; policing trademark violations may not be something that Twitter really wants to get involved in. Trademark owners may need to resort to traditional avenues (from sending cease and desist letters to filing lawsuits) to stop Twitter Squatting.
by Elisa Jaehner on June 17, 2009
Spiegelonline.de and the Zeit report that several swiss banks will part from their US clients after allegations were made that the banks aided their clients with tax fraud.
UBS, who had to hand over data from 250 US-client accounts and paid over $780 million in penalties after a trial in February, is one of the first banks that cancels accounts with US ties. Until February, unwanted clients were able to withdraw their money in cash. To guarantee better transparency and traceability of the money, most of the swiss banks will now only transfer the assets to another bank account. The banks are apparently not only canceling accounts of US customers, but also of swiss nationals who live in the United States or are married to a US citizen.
UBS will most likely face another trial in Florida this year and it is expected that the bank will have to hand over data from another 52.000 accounts. The swiss government had tried to prevent this trial by offering the US government a new bilateral double taxation agreement, but the US showed no interest in withdrawing the suit against USB.
The affected customers receive a notice, asking them to find another bank within 45 days. Unwilling customers who will not withdraw their money will then receive a check.
by Erica Intzekostas on June 16, 2009
Apple is feeling the repercussions of having not adequately registered its iPhone trademark in every country where it wishes to sell its mobile phones under the brand name iPhone. In October 2002, Apple submitted a trademark application in China for its iPhone trademark, but only for use in connection with computer software and hardware. The registration application did not include mobile phones. Unfortunately for Apple, in 2004 another company, Hanwang Technology, applied to register the mark i-phone for use in connection with mobile and video phones with the Chinese trademark office. China approved the i-phone mark for registration in 2006. As a result, Apple is facing issues (including the possibility of trademark infringement claims) marketing its mobile phones in China under the brand name iPhone because of the conflict with Hanwang Technology’s i-phone mark.
