JURIST - Paper Chase: Saturday, April 2, 2011

[JURIST] The US Department of Justice (DOJ) [official website] announced on Friday that the former CEO of mortgage company Taylor, Bean & Whitaker (TBW) [corporate website] pleaded guilty [press release] on charges of fraud related to the Troubled Asset Relief Program (TARP) [materials; JURIST news archive]. Paul Allen pleaded guilty to making false statements and conspiring to commit bank and wire fraud for his role in a USD $1.5 billion fraud scheme that contributed to the failure of the mortgage company. Allen admitted that from 2005 through August 2009 he and other co-conspirators engaged in a scheme to defraud financial institutions that had invested in a lending facility called Ocala Funding. In an effort to cover up inadequate assets backing its commercial paper, Allen told a co-conspirator to produce fraudulent reports and knew that these reports were sent to Ocala Funding investors and other third parties. The cover-up led investors in Freddie Mac, Colonial Bank [corporate websites] and Ocala Funding to believe they had an undivided ownership interest in thousands of the same mortgage loans. Allen also admitted to making false statements in a letter to the US Department of Housing and Urban Development [official website], omitting concerns raised by an independent auditor. Five other individuals have pleaded guilty for their roles in related fraud schemes. Allen will be sentenced in June, when he faces a maximum penalty of five years in prison for each count.

A grand jury indicted [press release; JURIST report] the former chairman of TBW, Lee Farkas, in June, alleging that he and his co-conspirators engaged in a USD $1.9 billion complex fraud scheme that contributed to the failure of Colonial Bank in order to cover financial losses suffered by TBW. The federal government continues to investigate possible cases of fraud that may have played a role in the recent financial crisis [JURIST news archive]. In April 2010, the DOJ announced a criminal investigation [JURIST report] of Goldman, Sachs & Co. [corporate website] for possible securities fraud in mortgage trading. Also in April, the Securities and Exchange Commission (SEC) [official website] filed a civil suit [JURIST report] against Goldman alleging securities fraud. In November 2009, two former Bear Stearns hedge fund managers were acquitted [JURIST report] of securities-related charges. The June 2008 SEC complaint [text, PDF] alleged that the managers had taken leveraged positions in financial derivatives based on subprime mortgage-based assets and then taken steps to conceal ensuing losses from investors.

[JURIST] Germany urged the European Union (EU) [official website] on Friday to impose an export ban on a drug used for lethal injections [JURIST news archive] in several US states. Germany's human rights commissioner, Markus Loening, requested that the drug sodium thiopental be placed on the list of drugs [AP report] that require governmental consent prior to export. Sodium thiopental is one of three drugs used in the lethal injection sequence and is manufactured by three German companies that sell the drug locally for anesthesia purposes. Loening indicated that it was important that no drugs from Germany or the EU were used in US executions. US states are facing shortages of the drug following an announcement by Hospira, Inc. [official website], the sole US manufacturer of the drug, that it will cease production of sodium thiopental. The German Medical Association and the Association of Research-Based Pharmaceutical Companies [official websites] endorse the ban on sodium thiopental exports to the US. Capital punishment is prohibited in the EU.

The shortage of sodium thiopental in the US has caused several states to modify lethal injection protocol, which has lead to a number of constitutional challenges by death row inmates. In March, two Texas inmates requested stays on their executions [USA Today report] to obtain more information on the new protocol and possibly challenge the protocol as unconstitutional. Texas acknowledged that its supply of sodium thiopental had an expiration date of March 1. Arizona, Georgia and Oklahoma have faced similar challenges and are seeking to substitute the sodium thiopental used in the lethal injection "cocktail" with pentobarbital. Kentucky and Tennessee surrendered supplies of sodium thiopental [NYT report] to the Drug Enforcement Administration (DEA) [official website] after the agency seized Georgia's supply in order to investigate whether the drug was properly imported. In September, the US Court of Appeals for the Ninth Circuit [official website] ordered [text, PDF] a district court judge to reconsider the stay of execution [JURIST report] in the case of Albert Brown. The court noted that the timing of Brown's execution was influenced by the expiration of the state's supply of sodium thiopental, and stated that it was "incredible to think that the deliberative process might be driven by the expiration date of the execution drug."

[JURIST] The International Committee of the Red Cross (ICRC) [official website] on Saturday reported [press release] the deaths of at least 800 civilians in the Ivory Coast [JURIST news archive] town of Duekoue as a result of intercommunal violence that took place on Tuesday. A spokesperson for the ICRC condemned the violence, which has been ongoing in the area since last Monday: "We are shocked by the brutality and scale of this act. The ICRC condemns any and all direct attacks on the civilian population and reminds the parties to the conflict of their obligation to protect, in all circumstances, the population of the territory under their control." The ICRC stated that the death toll was calculated by field delegates and volunteers, and warned that they believe there is a risk that another mass killing could occur [AP report] in the area. A UN military spokesman indicated that the UN was aware of fighting in the region, but unaware of any reports of mass killings.

On Friday, the UN Office of the High Commissioner for Human Rights (OHCHR) [official website] urged all parties in the Ivory Coast to show restraint [JURIST report]. A spokesperson acknowledged unconfirmed reports that the Ivory Coast Republican Forces had "engaged in looting and extortion as well as serious human rights violations such as abductions, arbitrary arrests and ill-treatment of civilians" during their advance towards the country's capital of Abidjan. The violence stems from former president Laurent Gbagbo's refusal to cede power to president-elect Alassane Ouattara who won the November 28 runoff election according to international observers. Last month, the OHCHR called for an independent investigation into post-election violence [JURIST report]. In January, UN officials expressed "grave concerns" [JURIST report] regarding the post-election violence, cautioning that genocide could be imminent.

[JURIST] A judge for the US District Court for the Eastern District of Virginia [official website] on Friday denied a motion to dismiss a federal suit against former Somali prime minister and defense minister Mohamed Ali Samantar [JURIST news archive]. Lawyers for Samantar argued that the case should be dismissed [AP report] because the statute of limitations had expired and because the courts should not interfere in political matters. In addition to allowing the case to move forward, the ruling also means that Samantar can be questioned under oath [BBC report] regarding allegations that he spearheaded a campaign of ethnic repression against the northern Somali Isaaq clan during his tenure in office. Representatives for the plaintiffs indicated that they were pleased with the ruling, which will force Samantar to face his accusers. Samantar continues to deny any wrongdoing and was not present at Friday's hearing.

In February, a federal judge rules that Samantar was not entitled to legal immunity from civil lawsuits [JURIST report]. This ruling came after the US Supreme Court [official website; JURIST news archive] handed down a unanimous decision [JURIST report] in June that the Foreign Sovereign Immunities Act of 1976 (FSIA) [28 USC § § 1330, 1602 et seq. text] does not provide foreign officials immunity from civil lawsuits. The suit has been ongoing since 2004 when the plaintiffs filed a complaint seeking damages from Samantar under the Torture Victim Protection Act of 1991 [28 USC § 1350 text]. Samantar was minister of defense and later prime minister of Somalia from 1980 to 1990. Respondents claim that Samantar authorized torture and the extrajudicial killing of them and members of their family. The Isaaq clan, of which the plaintiffs are members, was subjected to systematic persecution during Samantar's time in office before the collapse of the Somali government in 1991 [DOS backgrounder]. Samantar fled Somalia before the collapse of the government and now resides in Virginia.