Washington Post Cancels Lobbyist Event Amid Uproar Over Spa

Thursday 02 July 2009

by: Mike Allen and Michael Calderone / Politico

Washington Post Publisher and Chief Executive Officer Katharine Weymouth.

Washington Post Publisher and Chief Executive Officer Katharine Weymouth said today she was cancelling plans for an exclusive "salon" at her home where, for as much as $250,000, the Post offered lobbyists and association executives off-the-record, nonconfrontational access to "those powerful few": Obama administration officials, members of Congress, and even the paper's own reporters and editors.

The astonishing offer was detailed in a flier circulated Wednesday to a health care lobbyist, who provided it to a reporter because the lobbyist said he felt it was a conflict for the paper to charge for access to, as the flier says, its "health care reporting and editorial staff."

With the newsroom in an uproar after POLITICO reported the solicitation, Weymouth and Executive Editor Marcus Brauchli both said they were not aware of the flier.

"This should never have happened," Weymouth told Post media reporter Howard Kurtz. "The fliers got out and weren't vetted. They didn't represent at all what we were attempting to do. We're not going to do any dinners that would impugn the integrity of the newsroom."

Brauchli told Kurtz he was "appalled" by the plan."It suggests that access to Washington Post journalists was available for purchase," Brauchli told Kurtz. The proposal "promises we would suspend our usual skeptical questioning because it appears to offer, in exchange for sponsorships, the good name of The Washington Post."

Earlier this morning, Brauchili said in a staffwide e-mail that the newsroom would not participate in the first of the planned events - a dinner scheduled July 21 at the home of Katharine Weymouth. Brauchli,was named on the flier as one of the "Hosts and Discussion Leaders."

The offer - which essentially turns a news organization into a facilitator for private lobbyist-official encounters - was a new sign of the lengths to which news organizations will go to find revenue at a time when most newspapers are struggling for survival.

And it's a turn of the times that a lobbyist is scolding The Washington Post for its ethical practices.

"Underwriting Opportunity: An evening with the right people can alter the debate," says the one-page flier. "Underwrite and participate in this intimate and exclusive Washington Post Salon, an off-the-record dinner and discussion at the home of CEO and Publisher Katharine Weymouth.... Bring your organization's CEO or executive director literally to the table. Interact with key Obama administration and congressional leaders."

Kris Coratti, communications director of Washington Post Media, a division of The Washington Post Company, said: "The flier circulated this morning came out of a business division for conferences and events, and the newsroom was unaware of such communication. It went out before it was properly vetted, and this draft does not represent what the company's vision for these dinners are, which is meant to be an independent, policy-oriented event for newsmakers.

"As written, the newsroom could not participate in an event like this. We do believe there is an opportunity to have a conferences and events business, and that The Post should be leading these conversations in Washington, big or small, while maintaining journalistic integrity. The newsroom will participate where appropriate."

In his e-mail to the newsroom, labeled "Newsroom Independence," Brauchli wrote: "Colleagues, A flyer was distributed this week offering an 'underwriting opportunity' for a dinner on health care reform, in which the news department had been asked to participate. The language in the flyer and the description of the event preclude our participation.

"We will not participate in events where promises are made that in exchange for money The Post will offer access to newsroom personnel or will refrain from confrontational questioning. Our independence from advertisers or sponsors is inviolable. There is a long tradition of news organizations hosting conferences and events, and we believe The Post, including the newsroom, can do these things in ways that are consistent with our values."

The flier says: "Spirited? Yes. Confrontational? No. The relaxed setting in the home of Katharine Weymouth assures it. What is guaranteed is a collegial evening, with Obama administration officials, Congress members, business leaders, advocacy leaders and other select minds typically on the guest list of 20 or less...."

Offered at $25,000 per sponsor, per Salon. Maximum of two sponsors per Salon. Underwriters' CEO or Executive Director participates in the discussion. Underwriters appreciatively acknowledged in printed invitations and at the dinner. Annual series sponsorship of 11 Salons offered at $250,000 … Hosts and Discussion Leaders ... Health-care reporting and editorial staff members of The Washington Post ... An exclusive opportunity to participate in the health-care reform debate among the select few who will actually get it done.... A Washington Post Salon ... July 21, 2009 6:30 p.m. ...

"Washington Post Salons are extensions of The Washington Post brand of journalistic inquiry into the issues, a unique opportunity for stakeholders to hear and be heard," the flier says. "At the core is a critical topic of our day. Dinner and a volley of ideas unfold in an evening of intelligent, news-driven and off-the-record conversation.... By bringing together those powerful few in business and policy-making who are forwarding, legislating and reporting on the issues, Washington Post Salons give life to the debate. Be at this nexus of business and policy with your underwriting of Washington Post Salons."

The first "Salon" was titled "Health-Care Reform: Better or Worse for Americans? The reform and funding debate."


Click on title above to visit article original @ Politico

http://www.truthout.org/070209R?n

BOA Makes $hitiBanks Hall of Shame

Bank of America accused of anti-consumer practices - Makes $hitiBanks Hall of Shame;

Click on title above to go there;
http://fraudulenttransactions.blogspot.com/2009/07/bank-of-america-accused-of-anti.html

White House Reform Chief Was On Boards of Health Companies With Suspect Practices

Jul 02, 2009

Before taking her job as the White House health reform director, Nancy-Ann DeParle earned more than $6 million serving on the boards of major health care corporations, some of which were accused of fraud, mismanagement and regulatory violations during her tenure, the Investigative Reporting Workshop at American University reports on MSNBC.com. Some critics say the corporate relationships could be a conflict of interest for DeParle. Also, while there's no evidence DeParle was involved in or aware of allegedly fraudulent activities, in three cases, she served on board committees overseeing the companies' legal and regulatory compliance.

For instance, while serving as a director, and compliance committee member at DaVita Inc., a chain of dialysis centers, the company was the "subject of several government probes into its billing and drug-prescribing practices." While DeParle served a similar role at Guidant, it was revealed that the medical equipment supplier knew of cases in which its devices failed, but didn't disclose the information.

"The investigations and lawsuits are at odds with DeParle’s reputation in Washington as a progressive, highly respected health policy analyst," the Investigative Workshop Reports. "During the late 1990s, when she ran Medicare, she pushed hard to raise medical quality standards and to clamp down on fraud and waste in the massive federal health plan for the elderly" (Schulte, 7/2).


http://www.kaiserhealthnews.org/Daily-Reports/2009/July/02/DeParle.aspx

Calif. Hedge Fund Exec Ran $15M Ponzi Scheme, SEC Says

July 1, 2009

By MATTHEW C. MCNALLY, ESQ., Andrews Publications Staff Writer

A California hedge fund manager bilked investors of nearly $15 million in a Ponzi scheme involving purported options trading, the Securities and Exchange Commission alleges in San Diego federal court.

In a Ponzi scheme investors get bogus dividends drawn from money contributed by newer investors.

In a complaint filed in the U.S. District Court for the Southern District of California, the SEC alleges that Moises Pacheco, 41, of Chula Vista, and his hedge fund firms Advanced Money Management Inc. and Business Development & Consulting Co. raised the money from more than 200 investors over a 42-month period beginning in January 2005.

Pacheco allegedly told investors that he used a covered-call options trading strategy through five hedge funds: AP Premium Value Funds I through IV and Capital Partnership Group.

In a covered call an investor owns shares of stock and sells a corresponding amount of call options. The holder of the call option pays a premium for the right to buy the underlying shares at a set price on a specific date. The option is "covered" because the seller already owns the shares.

Pacheco claimed that the funds exclusively relied on this strategy to generate trading profits ranging from 30 percent to 48 percent per year, the suit says.

Instead he used investors' money to pay purported returns until the scheme collapsed.

The hedge funds generated trading profits of only $367,000 but paid investors about $10 million in purported returns, according to the SEC.

The agency says most of the investors live in the Chula Vista area and know Pacheco, one of his friends or family members, or another investor.

The defendants are accused of violating various federal securities laws.

To comment, ask questions or contribute articles, contact West.Andrews.Editor@ThomsonReuters.com.


--------------------------------------------------------------------------------

Securities and Exchange Commission v. Pacheco et al., No. 09-CV-1355, complaint filed (S.D. Cal. June 24, 2009).
Derivatives Litigation Reporter
Volume 15, Issue 17
06/30/2009

Futures Fund Manager Pleads Guilty in $20 Million Scam

June, 2009

By ROBERT WOODMAN MCSHERRY, Andrews Publications Staff Writer

The operator of a suburban Philadelphia investment fund that promised returns of up to 18 percent trading stock-index futures contracts has admitted that he defrauded investors of $20 million.

Joseph S. Forte, 54, pleaded guilty in the U.S. District Court for the Eastern District of Pennsylvania to running a Ponzi scheme out of his Broomall home from 1996 to 2008.

During that time he allegedly raised $80 million from investors and stole $20 million of it, according to a criminal information filed in the Philadelphia federal court.

The court filing says he used money from new customers to pay "returns" to existing investors, lost millions of dollars trading stock futures, and diverted millions more to his own personal use.

Forte allegedly kept his investors in the dark by sending them bogus account statements that showed their money was safe and growing. Some statements showed that the fund had $154 million when it was actually worth less than $150,000, the criminal information says.

Forte also used some of the money to buy a seashore vacation home in New Jersey and to make donations to several Philadelphia-area schools, according to federal prosecutors.

The criminal information further accuses him of defrauding Commerce Bank on a $500,000 personal loan by telling the bank that his company had $3.5 million when he knew its account was empty.

"While paying himself millions of dollars, this defendant created scores of victims - the innocent investors, the unsuspecting financial institutions and the unwitting recipients of stolen money that he laundered," Philadelphia U.S. Attorney Laurie Magid said in a statement.

Forte turned himself in to authorities in December and confessed to misrepresenting his investment company's trading performance, according to prosecutors.

At that time, he was charged with mail fraud in a criminal complaint filed in the District Court.

The recent criminal information charged him with two counts of mail fraud, one count of bank fraud and one count of money laundering.

Plea documents filed in the case were blocked from online inspection and are apparently under seal.

Prosecutors said Forte faces an 80-year sentence, a $1.75 million fine, $20 million in restitution and forfeiture of all proceeds traceable to the fraud, including his home in Broomall and shore house in Sea Isle City, N.J.

Sentencing is set for Oct. 2 before U.S. District Judge Jan E. Dubois.

To comment, ask questions or contribute articles, contact West.Andrews.Editor@ThomsonReuters.com.


--------------------------------------------------------------------------------

United States v. Forte, No. 09-CR-00304, guilty plea entered (E.D. Pa., Phila. June 5, 2009).
White Collar Crime Reporter
Volume 23, Issue 10
06/12/2009

Chase, WaMu Illegally Froze Home Equity Credit, Suit Says

By CATHERINE TOMASKO, ESQ., Andrews Publications Staff Writer

Chase Bank and its recently acquired division Washington Mutual Bank have been illegally freezing customers' home equity lines of credit across the country, a California woman alleges in a federal court lawsuit.

The class-action complaint, filed in the U.S. District Court for the Southern District of California, says Chase and WaMu intentionally used faulty formulas that undervalued customers' homes, providing a false basis for lowering credit limits.

Federal law prohibits banks from reducing home equity credit limits without a "sound factual basis" for concluding that the home has significantly declined in value, the complaint says.

The suit was filed by Michell Kimball, a small-business owner in Escondido, Calif., who took out a $500,000 home equity credit line but later learned that Chase had frozen her account.

When she contacted the bank's customer service department, a representative said her property value had dropped to about $731,000 and that a value of at least $812,700 was necessary to reinstate her credit line, the complaint says.

Kimball obtained an appraisal valuing the property at $1.15 million, well over Chase's valuation, and the bank eventually restored her credit line, the suit says.

Kimball filed the suit on behalf of herself and other Chase and WaMu customers whose home equity credit lines have been reduced or suspended based on "dubious" valuation formulas.

According to the complaint, the companies have sent form letters to thousands of home equity credit line customers saying their credit lines were being suspended because of a decline in the value of their homes.

The letters said the determination was based on a "proven valuation method" but gave no details of the banks' calculations, the complaint says.

As a result, the defendants have "denied their customers access to hundreds of millions of dollars worth of credit at a critical time," the suit says.

The credit reductions are "unconscionable," given Chase's receipt of $25 billion in government bailout funds to allow it to continue to lend money, Kimball says.

She is seeking unspecified damages, interest and attorney fees.

To comment, ask questions or contribute articles, contact West.Andrews.Editor@ThomsonReuters.com.

Kimball is represented by Alan Himmelfarb of Kamber Edelson in Los Angeles and Jay Edelson and Steven L. Lezell of the firm's Chicago office.


--------------------------------------------------------------------------------

Kimball v. Washington Mutual Bank et al., No. 3:2009-cv-01261, (S.D. Cal. June 9, 2009).
Bank & Lender Liability Litigation Reporter
Volume 15, Issue 04
06/24/2009


Copyright 2009
FindLaw, a Thomson Reuters business. A

Pawning Off Troubled Assets: A New Player in the Game

June 30, 2009

Colony Financial REIT Files $500M IPO
By Bob Howard

CENTURY CITY, CA-A new REIT called Colony Financial Inc. that will buy distressed assets has filed a registration statement for a $500 million initial public offering and will be managed by a subsidiary of Thomas Barrack Jr.'s Colony Capital, which has a long history of investing in troubled assets. Colony Financial officials were unavailable to comment on the filing because the company is in a quiet period under SEC regulations, but Los Angeles-based analyst Craig Silvers, president of Bricks & Mortar Capital, tells GlobeSt.com that the timing appears right for such an offering and that a public offering will open up investing in distressed assets to investors who otherwise might not have the opportunity.
Colony Financial, which will be managed by a wholly owned subsidiary of Colony Capital, plans to acquire, originate and manage performing and sub-performing commercial mortgage loans, and other commercial real estate-related debt, including CMBS. The company has not made any investments as of the filing of the registration statement.

Silvers, whose Bricks & Mortar Capital invests in REITs and other publicly held real estate companies, says that this is probably a good time to raise money to acquire distressed debt because the slow economy is causing vacancy rates to rise and causing financial distress among property owners, who have debt maturities they have to meet. Colony Financial says something similar in its SEC filing, citing Property and Portfolio Research estimates that more than $1.8 trillion of commercial real estate debt will mature over the next four years, with more than $400 billion maturing in each year from 2010 through 2013. "In particular, we believe that the FDIC will provide attractive investment opportunities in mortgage loans through its liquidation of the assets of failed depository institutions for which it is appointed receiver," the Colony Financial filing states.

Silvers notes that distressed asset funds are often open only to accredited investors or qualified institutional investors. "This way, the general public can get in on it," he says. In addition, he says, private funds are generally limited as to their number of investors, but there is no limit to the number of investors in a public company.

The share price of the Colony offering has not been established, according to the SEC filing. The target assets it expects to acquire include whole mortgage loans and portfolios of mortgage loans, CMBS, mezzanine loans, loan-to-own mortgage loans (those acquired with the intent of foreclosing), lender REO, debtor-in-possession loans, junior pieces of first mortgages, bridge loans and minority equity ownership interests in commercial banks or other financial institutions whose primary assets are mortgages or REO.

The new REIT will be looking at debt secured by office buildings, industrial or warehouse properties, hotels, retail properties and apartments. It may also originate whole mortgage loans for commercial property owners and developers, the filing says.

Colony Financial arrives with a broad and deep background in acquiring distressed assets. Barrack founded privately held Colony Capital LLC in 1991 as one of the pioneers in buying distressed assets from the Resolution Trust Corp., the federal agency that was formed to dispose of the assets of failed savings and loans. Later, Colony expanded to Europe and Asia, growing to 14 offices in 10 countries.

Colony Financial may be the first publicly traded REIT to be formed for the specific purpose of acquiring distressed assets. At least one non-traded REIT has been formed to buy distressed residential land and projects, but sources interviewed by GlobeSt.com said that offhand, they knew of no other publicly traded REIT formed for the express purpose of buying distressed assets.

The $500 million figure in Colony Financial's SEC filing could be just a starting point, depending on how the markets turn and how investors perceive the offering, according to Silvers. "If they raise this $500 million and get it to work quickly, they might want to come back to the market and raise more," the Bricks & Mortar Capital president says.