Friday, June 02, 2006

MASON LAW SCHOOL IN SPOTLIGHT --
As the controversy regarding judicial junkets intensifies, one prominent law school is finding itself at the center of the commotion.

The Law and Economics Center at George Mason University School of Law is one of the biggest sponsors of judicial educational programs—“not junkets,” according to the school’s dean—and has earned the law school wide recognition because of the hundreds of judges who have attended its programs.

But a recent report released by a public interest law firm and pending legislation seeking to curb the expense-paid trips may be giving the school more attention than it wants.
TRACKING WHITE COLLAR CRIME -- It could be down, depending on your definition.
ENRON RECOVERS FROM IT LAWYERS -- "Enron Corp.'s former outside law firm, Vinson & Elkins LLP, has agreed to pay the company $30 million to settle claims of contributing to the failed energy giant's 2001 collapse by signing off on fraudulent or shaky deals."
NOT LOOKING GOOD FOR SAFAVIAN -- It is hard to detect a defense strategy:

It took prosecutors six days to present to a U.S. District Court jury hundreds of e-mails between Abramoff and Safavian, plus the testimony of a convicted partner of the lobbyist, the Senate investigator and several officials from GSA, the property management agency where Safavian was chief of staff when he took the trip to Scotland and London.

But Safavian's lawyer, Barbara Van Gelder, hoped to conclude her case Friday with testimony from one or two close friends of her client.

The testimony Friday of her first witness, federal contracting expert Anthony Anikeef, was truncated when U.S. District Judge Paul Friedman restricted his testimony after government objections.
WHERE ARE THEY NOW? -- Enron's former directors: "After enduring widespread public criticism and congressional scrutiny in 2001 and 2002 for failing to spot or stop Enron's mounting financial troubles, most of the board members have largely gone underground. Many of them resigned from -- or did not run again for seats on -- a number of corporate boards, and those who are still in the public eye have largely removed references to Enron from their biographies."
CONGRESS BRUSHING-BACK DOJ -- That's what EJ Dionne suggests those Congresisonal raid hearings were about: "But Rep. James Sensenbrenner's committee was really sending a message as the House confronts a far-reaching corruption investigation: Nice little Justice Department you have there, Mr. Attorney General. Too bad if anything were to happen to it. Stop messing with us before we mess with you."
MAINTAINING WEB RECORDS -- The idea is to have companies to maintain data so that it is there when prosecutors obtain subpeonas or warrants:

The Justice Department is asking Internet companies to keep records on the Web-surfing activities of their customers to aid law enforcement, and may propose legislation to force them to do so.

The director of the Federal Bureau of Investigation, Robert S. Mueller III, and Attorney General Alberto R. Gonzales held a meeting in Washington last Friday where they offered a general proposal on record-keeping to a group of senior executives from Internet companies, said Brian Roehrkasse, a spokesman for the department. The meeting included representatives from America Online, Microsoft, Google, Verizon and Comcast.
NASD DROPS CHARGES -- This is a significant development in a case that has been dragging on for some time:

Frank P. Quattrone, the most prominent banker in Silicon Valley during the 1990's technology boom, won a third major legal battle yesterday as securities industry regulators dropped all charges against him.

The decision comes just two months after a federal appeals court overturned his conviction on charges of obstruction of justice and the Securities and Exchange Commission reversed a decision to ban him for life from the securities industry.

If prosecutors decide against retrying Mr. Quattrone, speculation is already rife that he could return to deal making in the Valley, where he helped companies like Cisco Systems and Amazon.com go public.

Yesterday's decision by NASD, which polices the brokerage industry, to dismiss its own case is notable because it was the accusations in the case — that he illegally doled out hot initial public offerings to corporate clients in exchange for business — that prosecutors later cited in his criminal trial to suggest that he was trying to cover up that activity and obstruct justice.

The dismissal is also notable because Mr. Quattrone's former firm, Credit Suisse First Boston, now Credit Suisse, paid $100 million to settle similar charges against the firm with the NASD in 2002.

Still, Mr. Quattrone faces the possibility that prosecutors could bring the obstruction of justice case against him again. But some legal experts suggested that with the dismissal of the NASD's 2003 case, momentum might be building for the criminal case to be extinguished, too.

Thursday, June 01, 2006

OHIO GUILTY PLEA -- "More than two years after investigators began probing Tom Noe’s vaunted political fund-raising ability, he admitted yesterday that he used friends and colleagues to illegally pour thousands of dollars into the effort to re-elect President Bush."
TALE OF TWO BANKERS -- An investment banker meets a central banker:

One reached the pinnacle of wealth and prestige as a dealmaker on Wall Street. The other was an academic superstar, brilliant but somewhat shy and more at ease in Bermuda shorts than suits.

But now they find themselves side by side in confronting a stiff new test: helping to guide the economy from a period of fast growth and cheap money through one of higher interest rates, jittery markets and a falling dollar.
HIGH PRAISE FOR KEVIN DRUM -- An explanation for the spate of corruption investigations since 2004:

The one commentator who got it exactly right was Kevin Drum, who runs the [The Washington Monthly] magazine's blog. "What do we have to look forward to if George W. Bush is elected to a second term?" he asked. "One word: scandal."

History backed that forecast. Almost every reelected president in modern times has been victimized by scandal, from Eisenhower's losing his chief of staff, who resigned over the gift of a vicuña coat, to Clinton's facing impeachment.

But Drum found additional reasons that led him to conclude that Bush and the Republicans might be particularly susceptible. For one thing, he said, "both Bush and the current Republican Party leadership have already demonstrated a ruthlessness and disregard for traditional political norms." He cited the lengthy roll calls in the House of Representatives during which arms were twisted to produce favorable votes; the redistricting in Texas to gain five Republican House seats; and the hard-line secrecy imposed by the White House on executive decisions.

Second, he said, the culture of lax supervision of executive agencies by the Republican Congress encouraged misbehavior on Capitol Hill -- and made it likely the malfeasance would reach aromatic heights before it was finally detected. Look at the time it took for the Jack Abramoff-Tom DeLay network to be exposed, the number of times the House ethics committee flinched from fully exposing it -- and you see how right Drum was.

And, finally, he said, the lack of major policy initiatives would leave a vacuum in the news that would make scandal look like the most prominent feature of the political landscape. The near-impasse in Iraq, the painfully long and ultimately unproductive debates about Social Security and immigration, the impasse on energy and health care, and the unwillingness to come to grips with budget deficits -- all this background noise makes the stories of Duke Cunningham's Rolls-Royce and William Jefferson's freezer full of marked bills that much more vivid.

Drum concluded his essay by saying that 2006 would be likely to provide "the perfect breeding ground for a major scandal, and George Bush is exactly the right guy, with exactly the right personality, to step right into it."

So far, the scandal has not involved the president personally, but the stench of corruption is all around the city -- too close for comfort.
SAFAVIAN TRIAL UPDATE -- "Three ethics watchdogs have testified that Bush administration executive David Safavian omitted key details of his dealings with Republican influence-peddler Jack Abramoff. Now, prosecutors want a Senate investigator to describe efforts to learn from Safavian about a golfing trip arranged by the disgraced lobbyist."

Prosecutors are expected to rest their case today.
REID REVERSES HIMSELF ON BOXING TIX -- "Senate Democratic leader Harry Reid's spokesman acknowledged Wednesday night that Reid misstated the ethics rules governing his acceptance of free boxing tickets and has decided to refrain from taking such gifts."
D.C. SCHOOLS CORRUPTION -- "The FBI raided the office and home of the D.C. school board's executive director of charter schools yesterday as part of an investigation into the possible misuse of hundreds of thousands of dollars in federal and city funds, school board officials and law enforcement sources said."
TRYING TO FIT THE GENIE BACK IN THE BOTTLE AT THE V.A. -- "The sensitive personal information of 26.5 million veterans that was stolen from a Department of Veterans Affairs data analyst last month was stored in a format that could make it difficult for thieves to use, according to an internal VA memo."

But: "Personal information on 26.5 million veterans that was stolen from a Veterans Affairs employee this month not only included Social Security numbers and birthdates but in many cases phone numbers and addresses, internal documents show."
SHAREHOLDER DEFIANCE -- "Exxon officials said they believed it was the first time in the company's history that a resolution had been adopted over the objections of the company, and it was seen as a sign of anger over the board's decision to award outgoing chief executive Lee Raymond a final-year pay package of $69.4 million and a retirement lump sum of $98.4 million."

Although, at least the board showed up. Compare the Home Depot annual meeting.
ENRON BROADBAND VERDICT -- The jury returned a split verdict, convicting Kevin Howard and exonerating Michael Krautz. "Howard and Krautz were accused of participating in a small piece of that overall fraud in a scheme to manufacture earnings for Enron's flailing broadband unit in late 2000. Dubbed 'Project Braveheart,' the deal involved selling an interest in future revenue of a video-on-demand venture that disintegrated a few months later." The case had resulted in a hung jury last year.
MORE SPORT CORRUPTION -- "The FBI has opened an investigation into a fledgling San Diego sports marketing firm that tried to recruit Heisman Trophy winner Reggie Bush, the attorney for the football star's family told The Associated Press Wednesday."
REPORTER SUBPOENAS CRITICIZED -- "Subpoenas issued last month to reporters for The San Francisco Chronicle were criticized yesterday by a former chief spokesman for Attorney General John Ashcroft as a 'reckless abuse of power.'"

The reporters were subpoenaed in the ongoing Bay Area steroid probe. Prosecutors were seeking information on the reporters' confidential sources.
DECLINE OF BANKERS AS CIVIC LEADERS -- "The numbers tell part of the story: there are now about 7,600 commercial banks in the United States, down from 13,000 in 1980. But this decline, as big as it is, underestimates the impact on civic leadership, since the consolidations have been greatest among the larger banks that once led their communities. Today, the top three banks in Chicago, Dallas, Denver, Houston, Los Angeles, Washington and scores of other cities are owned by companies headquartered elsewhere. (In New Orleans, only one of the top three is owned locally.) Even Mr. Powell's old bank, First National of Amarillo, was bought in the 1990's, first by Boatsmen's Bancshares, then by NationsBank (now Bank of America)."
TENNESSEE CORRUPTION TRIAL -- First day of trial against a state legislator who is alleged to have taken bribes during the Tennessee Waltz political corruption probe:

Even before Operation Tennessee Waltz, state legislators were trading their influence for cash, prosecutors say.

In one instance, legislators shook down the lobbyist for a dental clinic in Memphis, which was trying to earn favor with politicians so that it could get reimbursed for treating children enrolled in TennCare.

One of those lawmakers was then-Sen. Roscoe Dixon, who was paid $6,000 in 2003 to help Children's Dental Clinic become part of TennCare, according to federal prosecutors.

That was the beginnings of one of the largest public corruption investigations launched in the Volunteer State — soon to be known as Operation Tennessee Waltz.
ANOTHER BACKDATING SUIT --
A second shareholder has filed suit against Caremark Rx Inc. executives and board members over questions about the timing of stock option grants to senior executives.

Pirelli Armstrong Tire Corp. Retiree Medical Benefits Trust accuses them of breaching their fiduciary duties, as well as "abuse of control, gross mismanagement, waste of corporate assets and unjust enrichment" by backdating stock options to senior executives.

Caremark has denied backdating any options.

Last month, the Nashville-based disease management company said it had received a federal grand jury subpoena and a letter of informal inquiry from the Securities and Exchange Commission concerning its stock option grants. It said the SEC also wanted information related to the company's relocation program.

Pirelli's lawsuit notes that Caremark granted 1.25 million stock options to senior executives on March 1, 2005, which coincided with the stock's low price for the year.
There will be many more suits of this kind. Boards would be wise to get ahead of the curve.
GUESS WHO PAYS -- Someone writes you a check. You deposit it. The bank tells you the check has "cleared." You withdraw funds. The check turns out to be fraudulent. Apparently, you are liable for the funds:

Federal rules require banks to release funds from a consumer's deposit quickly, usually within one to five business days, depending on the kind of check. However, it can take weeks before a bank discovers a check is fraudulent.

So when a teller says "the check has cleared," the teller is "usually thinking in terms of bank rules, that the hold time is over, and the consumer now has access to the funds," said Susan Grant, director of the National Fraud Information Center.

But the average consumer thinks that phrase means "the check is not fraudulent," Grant added.

When that happens, it is depositors who are responsible for the money, she said. As the American Bankers Association explains in a "Fraud Alert!" statement insert it distributes to banks to send to customers: The consumer is the one dealing directly with the person who sent the money and therefore is "in the best position to determine how risky the transaction is."
Sheesh.
ARMSTRONG CLEARED -- "A Dutch investigator appointed by the International Cycling Union cleared Lance Armstrong on Wednesday on charges of doping during the 1999 Tour de France, the first of seven he won consecutively, and strongly criticized international anti-doping authorities."
TELECOMMUNICATIONS FRAUD -- "Lawyers for famed money manager Mario Gabelli are in talks (sub. req.) with the Justice Department to resolve civil-fraud claims arising from alleged use of sham small-business affiliates in federal auctions of cellphone spectrum."

More: "The government and defendants are involved in serious settlement negotiations, said Lanny Breuer, an attorney for Lynch Interactive Corp. and other Gabelli affiliates."

Wednesday, May 31, 2006

DEBATING DEFERRED PROSECUTION -- "The legal debate over the Justice Department's aggressive prosecution of businesses has been reignited after the recent indictment of securities class-action law firm Milberg Weiss, plus an ongoing court battle between prosecutors and former KPMG executives indicted on fraud charges."

For a scholarly approach to the subject, read this.
SAFAVIAN TRIAL -- Ney aide testimony: "In the first public testimony by a member of Jack Abramoff's inner circle, a former congressional aide told a federal jury yesterday how the disgraced lobbyist identified his 'champions' in government and then showered them with favors to get inside information and help for his clients."

More: "A Congressional aide-turned-lobbyist testified on Tuesday that he had prepared a travel disclosure statement for a Republican House member that intentionally understated the cost of the lawmaker's lavish 2002 golfing trip to Scotland with the now-disgraced lobbyist Jack Abramoff."
WHISTLEBLOWER DECISION -- The analysis has been a little muddled, suggesting the decision lacks some clarity, consider:

Charles Lane: "The Supreme Court yesterday bolstered the government's power to discipline public employees who make charges of official misconduct, ruling that the First Amendment does not protect those who blow the whistle in the course of their official duties."

NYT editorial: "It suggested the attorney would have had more protection if he had embarrassed his office publicly than by working quietly through the system. But the bigger problem is that the ruling rolls back government workers' rights to speak out against possibly illegal actions."

Linda Greenhouse: "But Daniel P. Westman, a lawyer with the firm of Morrison & Foerster who advises employers on whistle-blower issues, said in an interview that the decision did little more than affirm the status quo by "rejecting a very overreaching opinion" by a federal appeals court. He said "smart employers" would now be sure to encourage the use of internal complaint mechanisms to deter employees from taking their complaints public and thus enjoying the prospect of greater constitutional protection."

Marty Lederman: "So, it appears that if one's duties are to expose wrongdoing in the workplace, such exposure is entitled to no constitutional protection, but that if an employee whose duties do not involve such whistleblowing makes the exact same complaint, then Pickering/Connick analysis still applies. A somewhat odd result, at least on first glance. And odder still: Under today's opinion, if Mr. Ceballos had written a newspaper article complaining about the wrongdoing in question, rather than taking the matter to his supervisor, he would at least be entitled to whatever constitutiional protection Pickering/Connick offers."
PUBLISHER SETTLES WITH SEC -- Slap on the wrist, but leads to stock buy-back:

Tribune Co., the second-largest U.S. newspaper publisher, settled an investigation by the Securities and Exchange Commission that accused the company of reporting false circulation figures.

The SEC said Tribune inflated the reported circulation for two of its papers, Newsday and Hoy, a Spanish-language daily, in financial reports and press releases, from January 2002 through March 2004.

The settlement resolves an SEC probe of Tribune circulation claims that led to criminal charges against nine former employees and contractors of the two papers. All pleaded guilty in federal court. The SEC said in a statement that Tribune lacked sufficient internal controls to uncover the inflated circulation figures, which allowed the company to boost revenue by charging higher advertising rates.

"We launched an extensive internal investigation immediately after allegations of circulation improprieties were made regarding Newsday and Hoy," Dennis J. FitzSimons, Tribune's chairman and chief executive, said. "We gave the SEC and other federal, state and local authorities our full cooperation and began communicating with our advertisers from the outset."

Tribune announced yesterday that it will buy back a quarter of its outstanding shares for more than $2 billion. The company's stock rose $2.01, to close at $29.90. Shares rose by as much as 9.1 percent yesterday, the most in more than six years.

In closing its inquiry, the SEC ordered Tribune to "cease and desist" from violating laws related to its record-keeping and reporting, the company said in a statement. Newsday and Hoy circulation-related records were inaccurate "due to practices uncovered by the company," according to the statement, which said no fines or other sanctions were imposed by the SEC.

Tribune, which consented to an SEC administrative order, neither admitted nor denied wrongdoing, according to the agency.
CHECKING PAULSON NOMINATION BOXES -- From NYT: The profile. The "masterstroke" editorial. From WaPo: The profile. The "good nomination" editorial.
CAPTIOL RAID HEARING -- "Judiciary Committee Chairman F. James Sensenbrenner of Wisconsin said Tuesday's hearing marked only the beginning of an inquiry titled 'Reckless Justice: Did the Saturday Night Raid of Congress Trample the Constitution?'"

And Bruce Reed detects a political motive in Congress: "And now conservatives have chosen Congress over Justice, and the rights of lawmakers over law and order. In their haste to run away from Bush, House Republicans have run themselves into a dark and very expensive forest. Voters may not be constitutional experts, but when it comes to the separation of powers, they have a very simple theory: A fool and his powers are soon separated."

And DOJ responds with more allegations: "The Justice Department yesterday vigorously defended the recent weekend raid of Rep. William J. Jefferson's Capitol Hill office as part of a bribery investigation, asserting that the Democratic lawmaker attempted to hide documents from FBI agents while they were searching his New Orleans home last August."

We're in for a long, hot summer.
YOU JUST KNEW IT WAS COMING -- The first of what is likely to be many suits against the V.A.:

Former congressional candidate Paul Hackett sued the U.S. government Tuesday on behalf of the 26.5 million veterans whose personal information was stolen this month.

Hackett, an Iraq war veteran and Indian Hill lawyer, accuses the Department of Veterans Affairs of failing to safeguard crucial personal data, including Social Security numbers.

The federal lawsuit asks a court to order Veterans Affairs to pay damages of about $1,000 per veteran and to cover the cost of credit monitoring services.

Tuesday, May 30, 2006

S. CT. CURBS CIVIL SERVANT SPEECH --

The Supreme Court on Tuesday made it harder for government employees to claim they were retaliated against for going public with allegations of official misconduct.

By a 5-4 vote, justices said the nation's 20 million public employees do not have carte blanche free speech rights to disclose government's inner-workings. New Justice Samuel Alito cast the tie-breaking vote.
ENRON'S IMPACT -- Some question whether corporate America has changed in the wake of corporate scandals:

But despite the aggressive prosecutions and tough new laws designed to prevent a repeat of the deception that cost shareholders, investors and employees billions of dollars, fraud in the workplace is alive and well in the post-Enron era. From the mailroom to the boardroom, employees are still busy stealing from their employers and shareholders.

“We're not seeing a tremendous reduction in the amount of fraud out there,” said Bruce Dubinsky, a forensic accountant based in Bethesda, Md.

There is no question that tougher laws and more aggressive enforcement have had an impact on corporate accounting. Among other measures, the 2002 Sarbanes-Oxley Act, motivated by the Enron collapse and other scandals, required companies to set up comprehensive internal controls and established a new federal board to oversee auditors. It also demanded that top executives sign off on their companies’ financial statements — holding them personally liable if it was later found that someone else had cooked the books.


Update -- Having said that, apparently the verdict is good for investors because it signals that corporate execs, when caught, are held accountable.
A POST-ABRAMOFF ERA -- Jeffrey Birnbaum explores the possibilities.
CORPORATE SPYING -- "In a bizarre case of airline espionage, WestJet Airlines has apologized to Air Canada and will pay $15.5 million to end a lawsuit that accused WestJet of hacking Air Canada’s employee Web site to obtain confidential information."
NEW TREASURY SECRETARY -- Bush nominates Henry Paulson, Goldman Sachs chair/CEO, to replace Snow.
TECHNOLOGY AND DATA SECURITY -- "Browsing a government Web site, he pulled up a local divorce document listing the parties' names, addresses and bank account numbers, along with scans of their signatures. With a common software program and some check stationery, the document provided all he needed to print checks in his victims' names — and it was all made available, with some fanfare, by the county recorder's office. The site had thousands of them."

More needs to be done to recognize that data security must keep up with technological development. There must be a shift in how the way we think about technogical development to ensure greater emphasis on data security.
HOUSE RAID BLOWBACK -- WSJ opines, "With the separation of powers, the Founders created a system with inevitable tension between Congress and the executive. Congress has been the biggest offender in stealing power from the executive in the modern era, but the May 20 FBI raid on the legislative office of William Jefferson (D., La.) seems a case in which the Justice Department has gone overboard, and even been insubordinate."

Update: More commentary here.
HAND IN THE COOKIE JAR? -- "Senate Democratic Leader Harry M. Reid (Nev.) accepted free ringside tickets from the Nevada Athletic Commission to three professional boxing matches while that state agency was trying to influence him on federal regulation of boxing."

Update: Josh Marshall thinks not, "Sen. Reid (D-NV) voted against state boxing commission after accepting the commission's boxing tickets which Senate rules say he was allowed to accept."
OVERSEAS -- "A Seoul court on Tuesday sentenced the founder and former chairman of collapsed conglomerate Daewoo to 10 years in prison for a range of charges including embezzlement and accounting fraud."
STUDY IN CONTRASTS -- Ruth Marcus on the Safavian trial taking place in the shadow of Congress:
A former General Services Administration official, Safavian is accused of lying to investigators about whether Abramoff had business before the agency when he invited Safavian along for the ride. Also on board, and shown to the jury in a photograph that captured him reading the newspaper in a plush captain's chair, was Rep. Bob Ney (R-Ohio).

A few blocks away, the purveyors of business as usual known as the United States Congress were killing lobbying reform in the way Washington does best: with the silent stiletto of procedure.
15 MINUTES OF INFAMY -- Newsweek profiles the man at the middle of the Congressional bribery probe(s):
Brent Wilkes has flown in a private Gulfstream jet, lived in a huge house (once occupied by former San Diego Chargers quarterback Stan Humphries) in a gated community, smoked expensive cigars on the best golf courses and sponsored good works and charities, like the "Tribute to Heroes Gala," which raised hundreds of thousands of dollars for a children's hospital and a military charity called the Air Warrior Courage Foundation.

What paved the road to riches and beneficence for Wilkes? Once a lowly CPA in southern California, Wilkes became a fabulously successful defense contractor. He carefully cultivated friends in high places, personally handing out some $800,000 in campaign contributions, not counting the donations of a political action committee controlled by his company. He was a Republican "Pioneer," which means he raised at least $100,000 for the GOP. And he has long been known for showering favors on congressmen and national-security officials, playing poker with them at fancy Washington hotels and flying them in a jet he partly owned.

Monday, May 29, 2006

AFTER THE STORM -- San Diego tries to turn things around:
In the past 18 months, San Diegans have witnessed City Council members on trial for taking bribes from a strip club operator, other officials facing charges of enriching themselves by manipulating the city's pension funds and Wall Street refusing to underwrite any borrowing by the city because it cannot provide credible financial statements.

The city has had two nasty mayoral elections since 2004, and the city attorney is essentially at war with the City Council and the pension fund board. And perhaps most frightening to many residents, the once-inexorable rise in real estate values has leveled off, and prices may be starting to drop.
"DISCLOSURE CHALLENGED" SAYS S.E.C. CRITIC --
In a world where truly independent stock research is a valuable and rare commodity, SEC Insight is even more unusual. The firm makes its calls after poring through correspondence and other internal S.E.C. documents it secures by filing requests under the Freedom of Information Act. Ever since John P. Gavin, a former money manager and chartered financial analyst, founded SEC Insight six years ago in Plymouth, Minn., he has prided himself on its ability to sniff out regulatory trails like a corporate bloodhound.

During the last two years, however, Mr. Gavin says, his snooping and his ability to send early warning signals to clients have been stymied by an unlikely adversary: the S.E.C. itself. The agency, overshadowed by aggressive prosecutors like Eliot Spitzer, the New York attorney general, has gone to great lengths recently to reassert itself as Wall Street's top cop. But the S.E.C. has made it nearly impossible for Mr. Gavin to round up documents it once routinely provided to his firm. Mr. Gavin's experience, he says, suggests that the agency, which bills itself as the investor's advocate, is less than forthcoming about what it actually finds at the companies it polices.

"In this post-Enron era, as the S.E.C. demands record levels of disclosure from public companies, it's a shame that the agency itself has become disclosure-challenged," Mr. Gavin said.

It is a troubling paradox, Mr. Gavin says. The S.E.C., which requires public companies to make full disclosure of all meaningful facts, has stopped granting most of Mr. Gavin's requests for regulatory correspondence. For his part, Mr. Gavin has sued the agency in federal district court in Minnesota, seeking to compel compliance with federal disclosure laws.
Read the whole thing.
MORE ON THE CAPITOL HILL RAID -- GOP split: "Senator Bill Frist, the majority leader, on Sunday defended the raid by federal agents on a Democratic lawmaker's Capitol Hill office, breaking with senior House Republicans who had said the search was unconstitutional."

He's considering a presidential run.

Meanwhile, Rep. Jefferson, the subject of the raid, has something of a reputation:
Representative William J. Jefferson has always liked to talk about growing up in an impoverished farm community, picking cotton for $3 a day and hitting the books hard enough to win his ticket out — a scholarship to Harvard Law School.

But even as Mr. Jefferson built a reputation as one of Louisiana's brightest, most effective leaders, a less flattering view began to emerge, one signified by his nickname in political circles, "Dollar Bill."

Early in his career, as a state legislator, he was criticized for enriching his law firm with contracts from state and local agencies. He also ran stores that rented appliances by the month to poor residents, owned dilapidated apartment buildings and was sued by federal regulators over a defaulted loan.
And just when it seems the fight is about high constitutional principles, we find out the emperor has no clothes:
Speaker J. Dennis Hastert is moving publicly to put his constitutional showdown with the Justice Department in the past, but many on Capitol Hill believe that the bitter confrontation will resonate in the coming months.

Lawmakers and senior officials say Mr. Hastert's determined challenge to the Justice Department's court-authorized search of a Congressional office arose as much from frustration at missteps and slights by high-level administration officials as it did from outrage over what he saw as a gross violation of Congressional turf.

He and other Republicans were already upset at the Treasury Department for what they saw as the botched handling of the Dubai ports deal. And they held John D. Negroponte, the national intelligence director, responsible for what they considered the humiliating dismissal of Porter J. Goss, the popular former House member who was forced out as director of the Central Intelligence Agency.

The F.B.I. demand for access to the Rayburn House Office Building suite of Representative William J. Jefferson, a Louisiana Democrat under investigation in a corruption case, was seen as the last straw by Republican leaders worried about holding their majority in the House in the November elections, particularly with President Bush's flagging popularity.