February 29, 2024

Ticketmaster Accuses 21 of Fraudulent Ticket Buying

In the lawsuit, filed on Tuesday at United States District Court in Los Angeles, Ticketmaster accused Joseph Shalom, a producer of live entertainment events in New York, of being the central figure in a coordinated series of attempts over the last two years to obtain large numbers of tickets and resell them at a profit.

According to the suit, Mr. Shalom and his associates used “bots,” or specialized computer programs, to bypass online features like Captchas — series of distorted letters or numbers — that test whether a potential ticket buyer is a person.

Ticketmaster, a division of Live Nation Entertainment, says Mr. Shalom and others linked to him used these systems to gain access to as many as 200,000 tickets a day ahead of the public, aiming for the most desirable tickets.The suit claimed Mr. Shalom and the others violated Ticketmaster’s terms of use, which prohibit bots and limit the number of tickets a customer may request in a single day. It also accuses them of committing several offenses as part of the ticket-buying process, including copyright infringement and the assumption of false identities.

Ticketmaster seeks unspecified damages in the suit and does not say how many tickets were bought by the 21 people. It also says the use of bots damages Ticketmaster’s reputation and harms the public.

As a result of the behavior outlined in the lawsuit, the company says, “the inventory of tickets available to consumers who do not use such devices is substantially diminished, which has led some consumers to question Ticketmaster’s ability to ensure a level playing field for the purchase of tickets.”

Bots have become a major source of consumer and industry complaints about the ticketing market. Consumers grow frustrated when concerts often sell out moments after tickets go on sale, and listings then appear for those tickets at inflated prices through online secondary markets like StubHub, owned by eBay, or TicketsNow, part of Live Nation.

The concert industry has also been frustrated at the difficulty of cracking down on the use of bots. Three years ago, federal authorities charged a group of men with using similar tactics to make $25 million in profit. But the men were sentenced to probation, which music executives say has not served as a deterrent. Concert promoters and others have said that the use of bots has become increasingly common, particularly for the most popular shows.

In a statement, Ticketmaster said: “We care about protecting fans and the integrity of our business. We are doing exactly what we have repeatedly said we do: stand up for the fans who use our site in the proper manner.”

Mr. Shalom did not respond to an e-mail requesting comment.

Article source: http://www.nytimes.com/2013/05/02/business/media/ticketmaster-targets-scalpers-in-federal-lawsuit.html?partner=rss&emc=rss

DealBook: Madoff Case Is Paying Off for Trustee ($850 an Hour)

Irving H. Picard, the trustee for the victims of Bernard L. Madoff's fraud.Ruth Fremson/The New York TimesIrving H. Picard, the trustee for the victims of Bernard L. Madof’s fraud.

Irving H. Picard, the court-appointed trustee seeking to recover funds for the victims of Bernard L. Madoff’s multibillion-dollar Ponzi scheme, has been described as a modern-day Robin Hood. For nearly four years, he has been working to pay back those who were swindled by Mr. Madoff, some who lost their entire life savings.

Yet a look at recent court filings shows Mr. Picard has had much more success collecting money for himself and a dozen law firms and consultants than any victim of Mr. Madoff’s crime.

So far, Mr. Picard’s efforts have created a whopping $554 million in legal and other fees. How much have Mr. Madoff’s victims actually received from all of the cases and motions he’s made? Only $330 million. And how much does Mr. Picard estimate the fee spigot will pour out by 2014? A mere $1 billion.

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At $850 an hour, Mr. Picard and his law firm, Baker Hostetler, are starting to look more like the princes of the Full Employment Act for Lawyers than storybook heroes.

In the last several years, Mr. Picard has brought more than 1,000 cases seeking more than $100 billion on behalf of victims, despite acknowledging that only about $17.3 billion had actually been invested by customers. (The entire Ponzi scheme has been estimated to be worth $65 billion, but much of that is the result of made-up profits recorded by Mr. Madoff.)

Mr. Picard’s admirers cheered him on as he accused banks and other financial firms of aiding and abetting Mr. Madoff or willfully turning a blind eye to evidence that he was operating a fraud. Yet look what happened to many of those cases: judges tossed out a vast majority of the claims — some $90 billion worth.

Judge Jed S. Rakoff of United States District Court in Manhattan threw out Mr. Picard’s $60 billion racketeering suit against UniCredit in February, describing some of the claims in the case as “paltry, and otherwise unexceptional.” In another ruling, Judge Rakoff rejected a case against HSBC, calling it “convoluted.” He said he was “mystified” by some of Mr. Picard’s arguments.

Another district court judge, Colleen McMahon, decided against Mr. Picard’s most aggressive claims in a $20 billion case brought against JPMorgan Chase, saying plainly: “The trustee’s theories fail.”

According to a Government Accountability Office report quoting the Securities Investor Protection Corporation, which hired Mr. Picard as the bankruptcy trustee, it is unlikely he will be able to pay back Mr. Madoff’s customers the $17.3 billion that he had said was his goal, let alone the $100 billion he originally sought. Indeed, at the rate he’s going, he would be lucky to return more than half of the $17.3 billion.

A spokeswoman for Mr. Picard did not make him available for an interview.

In fairness to Mr. Picard, he has been successful in seeking to claw back money from “net winners” — investors who walked away with more money than they started with — so he can pay the “net losers.” Among the net winners with whom he has reached settlements is the Wilpon family, which controls the New York Mets.

Thus far, he has reached settlement deals worth some $9 billion. He has delivered only $330 million to Mr. Madoff’s victims, however, because so many of those settlements are being challenged in court. It is unclear whether some of the settlements, which have been approved by a bankruptcy judge but are being challenged by others on appeal, will hold up. In a statement on the trustee’s Web site, Mr. Picard said he was “confident that the appeals on these settlements will fail, as they already have on several occasions.”

Meanwhile, the legal fees keep piling up. Although the fees have been approved by the bankruptcy court, Judge Rakoff and others have raised questions about the growing payday.

In a particularly caustic exchange in court last year, Judge Rakoff, upon seeing a group of lawyers enter the courtroom on behalf of the trustee, said: “Can I ask a question, which is, since the trustee’s fees come out of the funds that otherwise would be available for other purposes, why are there four attorneys from the trustee here in court today?”

When the lead lawyer responded that he might need to consult with his colleagues during his argument, Judge Rakoff shot back sarcastically: “If it turns out you give your argument without needing to consult with them, of course, you and your firm won’t charge for their appearance today.”

The lawyer replied: “I, your Honor, am not going to make any promises.”

Helen Davis Chaitman, a lawyer with Becker Poliakoff who has been fighting Mr. Picard on behalf of some net winners of Mr. Madoff’s crime, famously told The New York Daily News: “Picard is going to wind up being richer than Madoff.”

That may be hyperbole — Mr. Picard has personally taken home only $5.1 million, according to court documents — but the total fee numbers are staggering.

There is good news, at least sort of: the fees do not come out of the hide of the Mr. Madoff’s victims. They are paid from a fund overseen by SIPC, which provides a form of protection for investors against losses that arise when a broker-dealer fails. The nonprofit group is supported by charges paid by its broker-dealer members, but the cost of those charges is most likely passed on to customers.

“Not one penny of recovered customer money is used to pay any of the legal fees and expenses incurred by the SIPA trustee,” according to the trustee, who was referring to the Securities Investor Protection Act that mandated the SIPC system.

A spokeswoman for Mr. Picard defended his work and his fees saying: “Given the extraordinarily complex factual and legal issues confronting the SIPA trustee, his success is unmatched by any other fiduciary. That success emanates from the fact that — notwithstanding the relentless attacks by some of the world’s leading law firms supported without reservation by their deep-pocket clients — the necessary resources have been provided to the SIPA trustee via SIPC from its securities industry fund, thus allowing him to recover over $7 million a day for the victims since he was appointed SIPA trustee in December of 2008.”

That $7 million a day figure, by the way, assumes that every dollar he collected will be paid out to Mr. Madoff’s victims, which is unlikely.

Nobody is asking Mr. Picard or his legal team to do all this work pro bono. But given the amount of money at stake and the epic size of the crime, one would hope that he would have pursued a more effective legal strategy that would have made a lot more money for the victims than the lawyers.

Article source: http://dealbook.nytimes.com/2012/05/28/madoff-case-is-paying-off-for-trustee-850-an-hour/?partner=rss&emc=rss

Judge Blocks Citigroup Settlement With S.E.C.

The judge, Jed S. Rakoff of United States District Court in Manhattan, ruled that the S.E.C.’s $285 million settlement, announced last month, is “neither fair, nor reasonable, nor adequate, nor in the public interest” because it does not provide the court with evidence on which to judge the settlement.

The ruling could throw the S.E.C.’s enforcement efforts into chaos, because a majority of the fraud cases and other actions that the agency brings against Wall Street firms are settled out of court, most often with a condition that the defendant does not admit that it violated the law while also promising not to deny it.

That condition gives a company or individual an advantage in subsequent civil litigation for damages, because cases in which no facts are established cannot be used in evidence in other cases, like shareholder lawsuits seeking recovery of losses or damages.

The S.E.C.’s policy — “hallowed by history, but not by reason,” Judge Rakoff wrote — creates substantial potential for abuse, the judge said, because “it asks the court to employ its power and assert its authority when it does not know the facts.”

Judge Rakoff also refers at one point to Citigroup as “a recidivist,” or repeat offender, which has violated the antifraud provisions of the nation’s securities laws many times. The company knew that the S.E.C.’s proposed judgment – that it cease and desist from violating the antifraud laws – had not been enforced in at least 10 years, the judge wrote. 

The S.E.C. did not respond immediately to a request for comment on the judge’s decision, which was released Monday morning. A Citigroup spokesman said the company was studying the decision and had no immediate comment.

Citigroup was charged with negligence in its selling to customers a billion-dollar mortgage securities fund, known as Class V Funding III. The S.E.C. alleged that Citigroup picked the securities to be included in the fund without telling investors, claiming that the securities were being chosen by an independent entity. Citigroup then bet against the investments because it believed that they would lose value, the S.E.C. said.

Investors lost $700 million in the fund, according to the S.E.C., while Citigroup gained about $160 million in profits.

The settlement established none of those allegations as fact, thereby making it impossible for the court to properly judge whether the settlement meets the required standard of being fair, adequate and in the public interest.

“An application of judicial power that does not rest on facts is worse than mindless, it is inherently dangerous,” Judge Rakoff wrote in the case, S.E.C. v. Citigroup Global Markets. “In any case like this that touches on the transparency of financial markets whose gyrations have so depressed our economy and debilitated our lives, there is an overriding public interest in knowing the truth.”

The S.E.C. in particular, he added, “has a duty, inherent in its statutory mission, to see that the truth emerges.”

Article source: http://www.nytimes.com/2011/11/29/business/judge-rejects-sec-accord-with-citi.html?partner=rss&emc=rss

Judge Denies Madoff Trustee’s Quest for Damages From Big Banks

In a decision released Tuesday, Judge Colleen McMahon of United States District Court in Manhattan ruled that the trustee, Irving H. Picard, did not have the legal right to pursue $20 billion in combined damage claims against JPMorgan Chase Company and UBS.

JPMorgan Chase served for decades as Mr. Madoff’s banker and also created and sold derivatives pegged to his investment performance. UBS provided various banking and administrative services to a host of European investment funds that steered money into Mr. Madoff’s hands.

The ruling on Tuesday echoed the reasoning offered in July by Judge Jed S. Rakoff, also of United States District Court, when he barred the trustee from seeking a combined $8.8 billion in similar damage claims against HSBC, the London-based banking giant, and UniCredit, one of Italy’s largest banking groups.

The banks’ arguments before Judge Rakoff persuaded him to dismiss the disputed claims, Judge McMahon noted in her opinion. “I am persuaded as well,” she said.

As in the cases before Judge Rakoff, the issue before Judge McMahon was whether Mr. Picard, as the trustee for Mr. Madoff’s bankrupt estate, could sue the banks for harm they supposedly caused to Mr. Madoff’s investors, as opposed to harm inflicted on the bankrupt estate.

And like Judge Rakoff, Judge McMahon determined that when Mr. Picard sued third parties for damages, he stood in the shoes of Mr. Madoff, the Ponzi schemer, not in the shoes of Mr. Madoff’s victims. Therefore, he could sue only if the defendants had harmed Mr. Madoff, which they clearly had not done, since their banking services facilitated the flow of cash into his fraud from around the world.

Therefore, only Mr. Madoff’s creditors — his victims — have legal standing to sue the various bank defendants for damages, Judge McMahon said.

Underlying Mr. Picard’s arguments was the question of whether those victims had the practical means or the leeway under bankruptcy law to individually pursue multibillion-dollar claims against a roster of global banks.

The trustee’s lawsuits accused the defendant banks of willfully turning a blind eye to evidence that Mr. Madoff was operating a fraud, thereby allowing his scheme to continue and increasing the financial destruction it caused. Mr. Picard argued in court that federal law gave him the power to pursue those damage claims on behalf of the creditors.

Judge McMahon acknowledged that “allowing the trustee to pursue claims that belong properly to individual creditors would accrue to the benefit of all creditors by augmenting the bankruptcy estate,” the primary source from which Mr. Picard hopes to compensate the cash losers in Mr. Madoff’s scheme.

And she noted that if Mr. Picard were able to collect enough in damages, he could also make payments to those who lost only their paper profits in the scheme, although they would not receive as much as the cash losers.

But those practicalities did not tilt her ruling in favor of Mr. Picard’s legal theory.

“This theory is not supported by the statute’s text and history or by any persuasive case law,” Judge McMahon concluded. She said the points of law put forward by the trustee before her and before Judge Rakoff were “no more persuasive to me than they were to him.”

As a result of her ruling, the trustee’s claims against the two giant banks will be limited to those that fall under the terms of the federal bankruptcy code, which allows Mr. Picard to recover fictional profits withdrawn during a specific period before the collapse of the Madoff fraud in December 2008.

For JPMorgan Chase, according to the trustee’s calculations, those claims are less than $500 million, a fraction of the $19 billion Mr. Picard was seeking. However, he remains free to pursue just over half of the $2 billion he sought from UBS in the bankruptcy court.

In a statement, the trustee’s lawyers said they had appealed Judge Rakoff’s ruling and intended to appeal this latest decision as well. The trustee and his counsel “remain confident in the cases,” the statement continued.

Article source: http://feeds.nytimes.com/click.phdo?i=cbe065c65e708dbf8f8c4581e5c64d58

Economix: Legal Payday



Notions on high and low finance.

My column this week concerns a class-action lawsuit on behalf of investors damaged by the collapse of Lehman Brothers. The defendants include Lehman’s former officers and directors, as well as its auditor and 51 investment banks that underwrote Lehman securities.

I don’t know how much, if anything, the investors will eventually get, although the fact that Judge Lewis A. Kaplan of United States District Court refused to dismiss a large part of the case may make settlements more likely.

Nor do I know how much will be collected in legal fees. The plaintiffs’ lawyers are typically paid only if they prevail, but the defense lawyers are presumably being paid by the hour.

I count 42 lawyers — 12 for the plaintiffs and 30 for the defendants — who have filed appearances in the case. There may, of course, be more lawyers working on the case back at the office. You can only imagine the fees being collected when the judge holds a hearing.

For the plaintiffs:

Bernstein Litowitz Berger Grossmann (six lawyers filed appearances with the court)

Barroway Topaz Kessler Meltzer Check. (six)

For various defendants:

Allen Overy (two)

Boies, Schiller Flexner (two)

Fried Frank Harris Shriver Jacobson (two)

Kasowitz Benson Torres Friedman (two)

Simpson Thacher Bartlett (four)

Cleary Gottleib Steen Hamilton (three)

Gibson, Dunn Crutcher (three)

Willkie Farr Gallagher (one)

Proskauer Rose (four)

Dechert (three)

Latham Watkins (four)

Article source: http://feeds.nytimes.com/click.phdo?i=14be5f53444f9c630784d2d701ba2dbe

Business Briefing | Legal: Conrad Black to Return to Jail for at Least a Year

Judge Amy J. St. Eve of United States District Court in Chicago, sentenced Mr. Black to three and a half years in prison after berating, then praising him. But prosecutors said he would be given credit for more than two years already served, meaning he will go back for little more than a year.

As Judge St. Eve announced the sentence with Mr. Black standing expressionless before her, his 70-year-old wife, Barbara Amiel, fainted on a wooden courtroom bench. As she sprawled across the laps of other spectators, medics rushed in to attend to her.

In a 20-minute statement before he was sentenced, Mr. Black, 66, spoke confidently and philosophically, citing poetry and maintaining he had been falsely accused. At no point did he apologize.

His final words to Judge St. Eve were to ask for a lesser sentence.

“I never ask for mercy,” he said, standing with his hands on the podium and looking straight at her, “but I do ask for avoidance of injustice.”

Judge St. Eve had originally sentenced Mr. Black to six and a half years in prison after he was convicted in 2007 of defrauding investors in Hollinger International.

Mr. Black, whose empire once included The Chicago Sun-Times, The Daily Telegraph of London, The Jerusalem Post and small papers across the United States and Canada, served more than two years before being freed on bail to pursue what would be partly successful appeals.

Judge St. Eve said on Friday that Mr. Black had “violated the trust” of his shareholders and expressed bewilderment that someone as gifted as Mr. Black would commit such a crime.

“As you stand before me today, I still scratch my head as to why you engaged in this conduct,” she said.

Her sentence could have been far tougher. But Judge St. Eve said she rejected the option of sending Mr. Black back to prison for more than four years in part because of dozens of letters she had received from inmates saying Mr. Black had changed their lives through lectures he gave on writing, history, economics and other subjects.

Mr. Black will have to report to prison in about six weeks, though a fixed date has not been set, Randall Samborn, a spokesman for the United States attorney’s office, said.

Article source: http://feeds.nytimes.com/click.phdo?i=0990162b53f1c619b634661f27bb58dc

Judge Returns Players and N.F.L. to Mediation

Judge Susan Richard Nelson of United States District Court, who heard arguments last week in the players’ request for an injunction to stop the lockout, appointed Arthur J. Boylan, the chief federal magistrate judge in Minneapolis, as the mediator.

That is a loss for the league, which had hoped to return to George Cohen, who is the head of the Federal Mediation and Conciliation Service and oversaw 17 days of mediated negotiations before talks broke off March 11. Owners did not want negotiations conducted the way Nelson ordered because a potential deal could be overseen by the court, something they wanted to avoid.

The players had asked Nelson to have mediation in Minneapolis. They thought that Cohen was ineffective and that a return to him would create the appearance they were again operating as a union after their decision to decertify.

Representatives for the players will meet with Boylan on Tuesday; representatives of the league will meet with him Wednesday. The two sides will meet with him together for the start of formal mediation on Thursday. Nelson’s order said all communication during the mediation would remain confidential.

The players and the owners declined comment on the decision.

It is unclear how long Boylan’s efforts will last. At last Wednesday’s hearing Nelson said that it would take her a couple of weeks to decide on the injunction request, and in her order on Monday, she said that the mediation would not have the impact of a stay on the litigation and that she would issue an order “in due course.”

That means she could issue her order as soon as the middle of next week, giving Boylan’s talks just a few days to produce progress. Nelson could hold off on her ruling if she and Boylan think progress is being made.

Though Nelson can order the sides to talk, she cannot order them to agree. Boylan will have the power of Nelson behind him, but the process does not have the effect of binding arbitration.

There is little hope that this round of talks will lead to an agreement at least until Nelson issues her decision on the injunction and the appeal is decided by the Court of Appeals for the Eighth Circuit.

Nelson made several comments from the bench Wednesday that seemed to indicate she had accepted some of the players’ arguments, particularly those based on earlier decisions made by Judge David Doty, but it is the appeal that will ultimately swing leverage in negotiations to one side or the other.

The league probably views the Court of Appeals, loaded with appointees of Republican presidents and viewed as one of the most conservative courts in the country, to be more favorable to businesses.

Players emerged from Wednesday’s hearing feeling confident, but Nelson made a point that both sides were at risk.

Still, players would seem to have greater leverage now — with the threat that Nelson will grant the injunction to stop the lockout — which they may risk if they remain in court. If they win the appeal, they will have even greater leverage. If they lose the appeal, their leverage will be gone.

Nelson’s order also noted that the parties’ participation in mediation and anything said during mediation could not be used against the parties in the future.

That should assuage concerns by players that going back to the bargaining table may undermine their argument that the decertification of the union was real and not a bargaining tactic, as the league has alleged in a charge to the National Labor Relations Board.

Article source: http://feeds.nytimes.com/click.phdo?i=bde7f276fffc99f2c4b7dce5247bc3ed