JEFFERSON STRIPPED -- "Democrats voted last night to strip Rep. William J. Jefferson (La.) of a plum committee assignment while he is embroiled in a federal bribery investigation."

The vote was not binding on Jefferson, but if he refuses, the Democrats would seek a floor vote to force him out.

Have there been similar moves among Republicans against their members similarly implicated in scandals? TPM is asking.

CORPORATE ACT OF CONTRITION -- "Mortgage finance giant Fannie Mae is changing its corporate culture, eager to work with lawmakers to fashion a new regulator and is making progress toward an anticipated financial restatement, Chief Executive Daniel Mudd told a Senate committee Thursday."

HOUSTON MONEY PIT --

To the list of employees, investors and businesses who suffered financial misfortune in Enron Corp.'s demise, add this one: the law firm defending former chief executive Jeffrey K. Skilling.

Los Angeles-based O'Melveny & Myers LLP, which has represented Skilling on both civil and criminal charges since 2001, collected what in a typical case would be a fat payday: $23 million from its client and $17 million more from his insurance policies.

But, true to form, Enron is still destroying financial expectations. Even before the trial began in January, Skilling's team of more than 20 lawyers, paralegals and support staff burned through those funds, leaving the law firm holding the bag for "multiple tens of millions" of dollars in unpaid fees and expenses racked up during the four-month trial, Skilling's lead defense lawyer said. While Daniel M. Petrocelli declined to provide an exact tally, one source put the price tag at more than $25 million on top of the $40 million O'Melveny already collected.

GENERAL COUNSEL TO THE HOUSE -- "There was a time — four weeks ago, for instance — when the Office of the General Counsel for the House of Representatives was just another nearly invisible government agency, working about as far from public notice as is possible on Capitol Hill."

That certainly changed following the raid on Rep. Jefferson's office.

EXPORTING EXEC COMPENSATION --

Along with hip-hop and Hollywood movies, Europeans are eagerly importing another American phenomenon: soaring pay packages for chief executives.

For decades, Europeans were far more restrained than Americans when it came to rewarding the boss. Now, executives overseas are less inhibited about asking for American-style compensation. And often they are getting their wish.

Investors are resistant. One wonders whether they are concerned about the scandals that have often accompanied monster pay packages.

WIFE ON THE POLITICAL PAYROLL --

The pathetic state of Congressional ethics is that such nepotic profiteering is deemed legal so long as the compensation is "consistent with the market rate." Questions have gone unanswered about whether Julie Doolittle [wife of Rep. John Doolittle (R-Calif.)] has any real experience in the field. Professional fund-raising associations have condemned payment by commission as unethical, but Mr. Doolittle's office defends it as legal and based on "tireless and effective work."

Mr. Doolittle offered an amendment to kill all public financing of political campaigns, which raised the ire of the NYT ed board.

LIMOS, DHS, & DUKE CUNNINGHAM -- "A limousine company linked to a congressional bribery investigation offered its services to the Department of Homeland Security more than three months before the agency sought bids for a transportation contract, and eventually won contracts worth $25 million over six years, congressional investigators disclosed yesterday."

And the hole deepens. See also TPM.

IN THE BEGINNING THERE WAS MICROSOFT -- WSJ Law Blog provides a history of back-dating. Part One:

In his mega-seller “The Tipping Point,” Malcolm Gladwell writes, “The best way to understand the dramatic transformation of unknown books into bestsellers, or the rise of teenage smoking, or the phenomena of word of mouth or any number of the other mysterious changes that mark everyday life, is to think of them as epidemics. Ideas and products and messages and behaviors spread just like viruses do.”

As the Law Blog suggested last week, Gladwell’s thesis seems to apply to the backdating of options, all the more so with today’s WSJ news that Microsoft once practiced a variation of options backdating.

Of course!

FINANCIAL DISCLOSURES --

More than a dozen lawmakers reaped book royalties ranging to millions of dollars last year, according to their annual financial disclosure reports, released yesterday. And when they weren't at their writing desks, some were at gambling tables or lottery kiosks, netting a few thousand dollars from casinos or winning tickets.

Meanwhile, scores of House and Senate members and their spouses traveled the world as guests of think tanks and corporations, even though recent lobbying scandals have prompted some to curb their wanderlust.

The question here is whether any of this really means anything. Perhaps it looks bad politically to accept gifts, but is it actually illegal? Perhaps the disconnect between actual illegality and the appearance or suspicion that creates political problems is the result of the rather high bar for official misconduct cases. Should the legal bar be so high? Should the political bar be so low? See, e.g., The Appearance of Impropriety (discussing impact of appearance standards compared with substantive standards regulating ethical behavior) (co-authored by Instapundit).

FMR. NYSE CHIEF TOOK FIFTH --

Richard A. Grasso, the former chief executive of the New York Stock Exchange, faced questions from federal regulators about whether he prodded traders to support the American International Group's share price while he was head of the exchange and its regulatory unit, government documents released yesterday disclosed.

During Mr. Grasso's deposition, given before the Securities and Exchange Commission in June 2005, he repeatedly invoked his Fifth Amendment right against self-incrimination, in spite of warnings from S.E.C. lawyers that doing so could be used against him in a civil case.

FANNIE MAE HOT SEAT STILL HOT -- "The top two executives of Fannie Mae will appear before Congress as pressure mounts on the mortgage giant from government officials seeking to rein in its growth in the wake of an $11 billion accounting scandal."

Also: "A key House member has asked federal prosecutors to investigate whether former Fannie Mae chairman and chief executive Franklin D. Raines and former chief financial officer J. Timothy Howard lied to Congress two years ago about the company's accounting practices."

TEXAS-SIZED CHURCH SCAM -- "The former top executive of an import-export company was found guilty today of cheating hundreds of ministers and churchgoers out of $65 million by promising huge profits for doing God's work."

RBS FRAUD --

A squad of fraudbusters is monitoring senior managers at the Royal Bank of Scotland (RBS) after an employee perpetrated the biggest fraud in Scottish legal history.

The 15-strong team has been appointed to work full-time to prevent any repeat of the Donald MacKenzie case, where £21m disappeared in a maze of fake loan accounts.

MacKenzie, 45, from Edinburgh, is facing a lengthy jail term after setting up the fake accounts and then shifting money between them to cover up his tracks.

Around £10m is still missing and some of that may never be recovered.

The fraud was discovered by chance as a result of a major IT upgrade. RBS insiders admit the firm - the UK's second-biggest bank - has been severely embarrassed by the case and is determined to stop it happening again.

MORE COMMENT ON FUND CONFLICT RULE --

In court papers, the Securities and Exchange Commission said it would give interested parties 60 days to file comments about the rule, which requires fund boards to have independent chairmen. The rule also requires 75% of a fund's board to have no ties to management.

Passed by the SEC for the second time last June, the rule has been challenged in federal court by the U.S. Chamber of Commerce, a business trade group. The U.S. Court of Appeals for the D.C. Circuit handed it back to the SEC in April after ruling the agency didn't allow comment on the estimated costs of complying with the rule.

GOVERNMENT TISSUE FRAUD -- "A senior government scientist pocketed hundreds of thousands of dollars as a drug company consultant in exchange for human tissue samples that cost the federal government millions to acquire, congressional investigators said yesterday."

MORE FANNIE, FREDDIE FALLOUT -- "The Bush administration yesterday increased the pressure on Fannie Mae and Freddie Mac to curtail their growth, announcing Cabinet-level studies of the companies' holdings and whether they can be reined in using existing law and regulatory powers."

REGULATORS GET TOUGH ON BACK-DATING -- "The Securities and Exchange Commission is to issue a statement, possibly as early as next month, clarifying the agency's view of when current law allows backdating of stock options -- picking a date when the stock was at a low point to be the date of the award, thereby immediately guaranteeing a profit. Companies need the permission of directors, consistent with company policy, and full disclosure to investors, including properly counting the added costs against earnings."

This issue has received a significant amount of attention (and has been discussed in this File). Interestingly, much of the reporting has discussed civil suits (some even suggest criminal probes). The SEC's action suggests that the law on back-dating is murky. Does that seem to undercut plaintiffs' (or prosecutors') efforts?

MOLLOHAN ADMITS 'MISTAKES' -- "Rep. Alan B. Mollohan (D-W.Va.), under federal investigation for blending his commercial investments with his duties as a congressional appropriator, acknowledged yesterday that he misstated more than a dozen transactions on his financial disclosure forms."

TENACITY TURNED ABUSIVE --

White-collar defense lawyer Nancy Luque's long been known for tenaciously representing controversial clients such as convicted Israeli spy Jonathan Pollard and, more recently, former Washington Teachers' Union official Gwendolyn Hemphill.

Though that fervor has won her acclaim from clients, it recently came back to haunt Luque, who not long ago was appointed co-chair of the white-collar practice at the D.C. office of DLA Piper Rudnick Gray Cary.

Six DLA Piper support staffers lodged a formal grievance with D.C. managing partner Ann Ford on April 24, citing Luque's "erratic, unpredictable and turbulent behavior" as making them uncomfortable and creating "a hostile work environment," according to a copy of the letter obtained by Legal Times.

See also WSJ Law Blog.

KATRINA FRAUD REPORT LEADS TO HEARINGS --

A U.S. House panel will hold a hearing on a report that the Federal Emergency Management Agency paid out as much as $1.4 billion in hurricane disaster assistance for expenditures such as massages and vacations.

The improper payments, which the Governmental Accountability Office report estimated ranged from $600 million to $1.4 billion, included funds sent to people who used United Parcel Service stores, post-office boxes and cemeteries as their addresses. FEMA also provided millions of dollars of housing aid to prison inmates, the GAO says in the report.

See also NYT (discussing the GAO report); WaPo.

ROVE VICTORY LAP -- "The decision by a special prosecutor not to bring charges against Karl Rove in the C.I.A. leak case followed months of intense behind-the-scenes maneuvering between the prosecutor, Patrick J. Fitzgerald, and Mr. Rove's lawyer, lawyers in the case said." See also WSJ editorial.

REMOVING JEFFERSON FROM WAYS & MEANS -- "Last week, the steering committee of the Democratic Caucus voted to temporarily remove Jefferson from the Ways and Means Committee while federal investigators determine whether he broke the law while trying to help a Kentucky company launch a high-tech business in Africa."

This was a little-noticed, but significant, move to isolate Rep. Jefferson by members of his own party. I don't think any similar moves have been made against other members currently under investigation.

TO THE JURY -- "The trial of former federal procurement official David H. Safavian went to the jury yesterday, as a prosecutor in closing arguments accused him of lying to federal investigators to conceal the fact that he was 'doing Jack Abramoff's bidding.'"

Update: Concerns about a juror's outside conversations have been raised by the government. See also TPMMuckraker.

WISC. STATE EMPLOYEE CONVICTED -- "A state employee faces sentencing in September after being convicted of fraud for steering a travel contract to a company with political links to Gov. Jim Doyle - and a prosecutor says the investigation isn't over yet."

CRIME STATS ON THE RISE -- "Violent crime in 2005 increased at the highest rate in 15 years, driven in large part by a surge of killings and other attacks in many Midwestern cities, the FBI reported yesterday." See also NYT.

ROVE BREATHES EASY -- Karl Rove, the presidential adviser, has been told he will not be indicted for any conduct related to the CIA leak investigation. See also Instapundit.

SAFAVIAN TRIAL NEARING END -- "Toppled from his White House post last year, Safavian's fate is about to be placed in the hands of a jury that has heard a week of testimony about two pieces of government real estate the lobbyist wanted for himself or his clients."

Trial set to conclude today.

POLITICAL SUPPORT -- "The embattled securities class-action law firm Milberg Weiss Bershad & Schulman received some political backing late last week with the release of a statement signed by four Democrats from the House of Representatives condemning last month's indictment of the firm on criminal charges."

Apparently, the politicians believe the DOJ is targetting trial lawyers because trial lawyers tend to support Democrats.

WATCH YOUR BACK WITH THESE GRANNIES --

Ms. [Olga] Rutterschmidt, 73, and another woman, Helen Golay, 75, pleaded not guilty last week to federal charges of mail fraud and submitting false insurance applications. According to the authorities, the two women extended helping hands to two homeless men, getting them off the streets and putting them up in apartments, while at the same time plotting their deaths.

Posing as aunts, fiancées or cousins, they took out numerous life insurance policies on the men, Paul Vados and Kenneth McDavid, with themselves as the beneficiaries, collecting over $2.2 million after the men died in separate hit-and-run traffic cases, the authorities said.

TAKING A BITE OUT OF THE BIG APPLE -- With the largest Medicaid program in the nation at more than $45 billion a year, New York should be doing a vastly better job of making certain that so much money does not go astray. But according to a scathing report from the federal government released last week, 'New York's anti-fraud efforts over the last several years have not been proportionate to its vulnerability.' Even in the spongy bureaucratic language of Washington, that means that New York's efforts to weed out Medicaid fraud have been a disgrace.

IN THE WAKE OF STOLEN DATA -- "As the public discovered that Social Security numbers and other personal information from 26.5 million retired and active U.S. military personnel were on a laptop stolen from the home of a Department of Veterans Affairs analyst last month, workers who were hoping to pitch their boss on a telecommuting option probably felt their hopes crash."

VEGAS JUSTICE -- LA Times is working on three-part series on the apparent ethical difficulties certain members of the judiciary are having in Nevada.

From Part One: "When Judge Gene T. Porter last ran for reelection, a group of Las Vegas lawyers sponsored a fundraiser for him at Big Bear in California. Even by Las Vegas standards, it was brazen. Some of the sponsors had cases before him. One case was set for a crucial hearing in four days."

From Part Two: "In this town, people speak reverently of having juice, or an 'in,' and [U.S. District Judge James] Mahan — bearded, likable but sometimes caustic — has made it a striking feature in his courtroom. First as a state judge and now as a federal judge, he has approved more than $4.8 million in judgments and fees during more than a dozen cases in which a recent search of court records found no statement that he disclosed his relationships with those who benefited from his decisions."

From Part Three:

One Nevada judge was nearly indicted on blackmail charges. Another ruled repeatedly for a casino corporation in which he held more than 10,000 shares. Still another overruled state authorities and decided in favor of a gambling boss who was notorious as a mob frontman, and whose casino did the judge a $2,800 favor.

Yet the Nevada Supreme Court has conferred upon these judges a special distinction that exempts them from some of the common rules of judicial practice and reduces their accountability. They are among 17 state judges whom the high court has commissioned as senior judges.

Sheesh. See also WSJ Law Blog.

STRINGS ATTACHED -- "Barry Bonds wants to cooperate with special investigator George Mitchell, but will only talk to him if he is assured the information won't be given to federal prosecutors." See also WCC Prof Blog.

ANOTHER HILL PROBE -- TPM and TPMMuckraker have a series of reports on Rep. Jerry Lewis, two individuals, and a firm who are all reportedly under investigation for official corruption related to earmarks.

Basics are here.

More details here and here.

Finally, here is Harper's with even more. See also TPMMuckraker.