The BLT: The Blog of Legal Times

Morning Wrap

War Bill. In a rare moment of courting the press, Vice President Cheney blasted Congress yesterday for offering up a war-spending bill that includes timetables for withdrawal.

Lies? During whithering testimony, the family of Army Ranger Pat Tillman accused the Pentagon and the Bush administration of lying about the circumstances of the former football star's death in Afghanistan.

Paging Mr. Rove. Special Counsel Scott Bloch announced yesterday that he is creating a task force to investigate the U.S. attorney allegations that White House or Justice Department broke the Hatch Act by involving its employees in partisan politics.

Terror War. A prisoner held at Gitmo since 2002 was charged with murder.

Halberstam. There are a number of appreciation pieces, including those from Slate, NYT, and WaPo.

“What really set him apart, was that he wrote about everything, absolutely everything. Because everything interested him. He wrote about the Vietnam War, Bobby Kennedy, the Blazers, the media, the Japanese car industry, the 1949 pennant race, Bill Walton, the 1960s civil rights movement, Michael Jordan, 1950s popular culture, Bobby Knight, the 9/11 firefighters, the Korean War, the 1964 World Series … about the only thing he missed was Madonna.” - Jim Capel, ESPN

Lynne Stewart Disbarred

The New York Supreme Court's Appellate Division today voted to disbar Lynne Stewart, the outspoken defense attorney who was convicted of helping terror leader Sheikh Omar Abdel-Rahman communicate with his followers from prison. Abdel-Rahman is serving a life sentence for his role in plots to assassinate Egyptian President Hosni Mubarak and to blow up New York City landmarks. Stewart had asked to voluntarily resign from the bar, but the court's disciplinary committee voted to strip her of her license. Here's the summary from the Associated Press, courtesy of the Boston Herald.

In October, a federal judge in New York sentenced Stewart to 28 months in prison. Federal prosecutors had requested she receive 30 years.

The Cooperators

It's hardly a title to be proud of but former Republican Hill staffer Mark Zachares, 49, officially joined the ranks today of the cooperators for the Justice Department's influence peddling investigation stemming from the activities of now-convicted lobbyist Jack Abramoff.

Zachares' cooperation was announced by Judge Ellen Huvelle during his plea hearing in D.C. federal court today on one felony count of conspiracy. (For details, check here.)

As part of the plea, DOJ promises not to prosecute Zachares' wife Cynthia, who sat in the second to the last row of the courtroom with her lawyer Alan Yamamoto. That is, as long as Cynthia cooperates too.

Lawyers on both sides would not say why Cynthia, who was interviewed by federal investigators on Feb. 23, was granted immunity or what her cooperation might yield. All Zachares' attorney, Edward MacMahon would say was that she did not receive money from Abramoff.

Zachares, who has been working in sales and lives in Maryland, was released on personal recognizance. He faces 18-24 months in prison, although that may be reduced for his cooperation.

"Mr. Zachares is a good man and he's taken responsibility for all the things he did," MacMahon said after the hearing, declining to go into any detail about the extent or nature of his client's cooperation or potential liability for members of Congress who Zachares worked with.

Lawyers set a status conference in his case for Aug. 3, but if the experience of other cooperators (such as Neil Volz or Tony Rudy) is any indication, that hearing may be held off indefinitely because, as prosecutor Richard Pilger said "cooperation may be ongoing for some time now."

Deep Thoughts ...

Sixty-two percent of Americans say while shlepping to work on a Tuesday morning they want to read from their tall vanilla cappuccino Starbucks cup the reaffirming yarnings of John Zogby. Somewhere Dr. Hunter Thompson is smoking, laughing (and trying not to cry).

Thomas Recusal Mystery Solved

For the last two years, Justice Clarence Thomas has consistently recused himself in cases in which Wachovia Bank is a party -- most notably the landmark decision last week in Watters v. Wachovia Bank, a win for federal regulation of national bank subsidiaries. On Monday, Thomas stepped aside in the denial of review of yet another Wachovia case -- as well as in Turnbaugh v. National City Bank of Indiana, which did not involve Wachovia directly but raised the same issue at the Watters case.

Thomas's financial disclosure form reveals no ownership of Wachovia stock, so what gives? Thomas does not reveal his reasons for recusal in public, but we have just confirmed that Thomas's son Jamal works at Wachovia Securities, a part of Wachovia Corporation, at its headquarters in Richmond, Virginia. We haven't been able to learn his title or what area he works in, but that is almost certainly the explanation for his father's recusal.

Justices' offspring who are lawyers have long posed recusal issues; the justices even signed a statement in 1993 about how they would handle cases in which their children were involved as attorneys. But Jamal Thomas's employment at Wachovia is another sign that the issue has spread to the financial workplace as well. Justice Anthony Kennedy last month abruptly recused himself in a case Credit Suisse v. Billing. His son Gregory is a managing director at Credit Suisse.

For more details and ongoing coverage of justices' recusal practices, check our updated Recusal Report

UPDATE: We have just been informed that in fact The New York Times reported Justice Thomas's family connection to Wachovia in its story on Watters v. Wachovia Bank last week. So.. the mystery was already solved.

Legal Tender: Simple Arithmetic

The Legal Intelligencer, an ALM newspaper in Pennsylvania, has a sound article today by financial adviser William Z. Suplee IV about the "simple arithmetic" of investing.

This simple arithmetic involves the effect of investment costs on returns. Suplee cites the work of William Sharpe, a Nobel laureate in economics, that the return on the average actively managed dollar in the stock market must be less than the return on the average passively managed dollar. Investment costs from active management take a big hit: "Arithmetic tells us that the more costs we incur, collectively, the further the difference from market averages that our collective returns will fall." "The total returns for all investors have to be the returns earned in the market less their costs," Suplee writes.

Suplee notes that the better performance of index funds over actively managed funds supports Sharpe's theory. He concludes, "The great majority of active managers have failed to match their appropriate benchmarks over long periods of time. You can have a very satisfactory investment experience, among the top of all investors, by simply having a passive investment strategy and working to maximize the details" (such as tax management and periodic rebalancing).

FEMA's Foibles?

The agency has been slammed so many times you'd almost believe an allegation if it came from the boy who cried wolf. Add this one to the list: that FEMA is withholding data on the number of households which received or were denied federal housing assistance after Hurricane Katrina.

That is why the National Low Income Housing Coalition filed suit last week in D.C. federal court against the Department of Homeland Security (which houses FEMA), arguing that the agency failed to respond to its Freedom of Information Act request.

"The records requested by NLIHC are likely to provide crucial public understanding regarding the adequacy of the agency's response...as well as the current ramifications of that ongoing response," the organization's lawyer, Robert Loeffler of Morrison Foerster, wrote in the complaint.

FEMA has already faced trouble in federal court over its failure to explain why it denied thousands of Katrina victims housing assistance.

FARA Soon

The Justice Department has lagged behind in its effort to put the Foreign Agents Registration Act (FARA) database online, but that may soon change.

According to a recent report, Justice will likely have the entire database, which lists lobbyists representing foreign governments and politicians, online in three to four months.

Rep. Jean Schmidt (R-Ohio) has been arm-twisting the department for more public sunshine of its records which, currently, can only be viewed by visiting the department's reading room. If the database is not online before the second half of 2007 begins, she has threatened to reintroduce legislation that would force Justice to act expeditiously.

Scandal in Kazakhstan

Opening an office in Kazakhstan has hardly been a lucrative venture for most law firms, but these days Baker & McKenzie has its hands full in this Central Asian nation. Its client: a Moscow-based company embroiled in a scandal that put an American businessman in a Siberian prison for 10 months.

According to this account in the New York Times, Mark Seidenfeld, an American businessman, fell into trouble when he tried to hold an open auction for his company, a Kazakhstan subsidiary of the Moscow-based Golden Telecom, which is represented by Baker & McKenzie.

What followed was a string of accusations of graft against Seidenfeld from a one-time Golden Telecom employee.

As for Seidenfeld's lawyer? The article says he's a local, but it didn't name names.

Morning Wrap

War Funding. Congress put the finishing touches on its Iraq-withdraw plan, which should lead to a high publicized veto from Bush. This arrives on the same day that nine soldiers were killed and 20 more wounded in a suicide car bombing in Baghdad.

DOJ watch. Yesterday Bush stepped up and made clear what apparently was not obvious to members of either party when he said the testimony Gonzales gave “increased my confidence in his ability to do the job.” But at the same time DOJ departures continue to mount.

Loss. Pulitzer Prize winning journalist David Halberstam died yesterday in a car accident. He was 73.

Apple. Word is securities regulators plan to file civil fraud charges this week against Apple Inc.'s former general counsel over her alleged role in the company's stock options backdating scandal.

Presidential run? Newt Gingrich has hired a pollster and fundraiser. World domination to follow.