Lowering the Bar

Joe Francis Pleads Guilty, Avoids Jail in Tax Case

"I'm happy to finally be able to redirect my attention to the business at hand, which is to provide quality entertainment," said Joe Francis after his guilty plea was accepted on September 23.  "Quality" is not really the first adjective that comes to mind in connection with "Girls Gone Wild," the entertainment he was referring to, but I suppose ten months in jail does not expand a man's vocabulary.  According to the plea agreement, Francis will be sentenced to time served plus a year of supervised release, and will pay $250,000 in restitution.

Francis was facing ten years on two counts of filing false tax returns, which prosecutors had said included over $20 million in fake deductions.  He was allegedly deducting all the expenses of a home in Mexico, where Francis said he entertained celebrities.  Ordinarily you can't deduct the cost of doing that, I was saddened to find out.  (Clooney told me you could, but I guess he was just trying to get me to pick up the check for everybody again.  Deadbeat.)  But Francis argued that the government "didn't understand his business model," which he said required providing expensive entertainment for celebrity guests, just like Hugh Hefner does.  I don't think the feds bought that, but it is also true that in the agreement Francis admitted to underreporting only $563,000, which is a lot, but a lot less than $20 million.

He also pleaded guilty to the third charge against him, bribing workers at the Nevada jail where he's been residing.  He seems to have done this in order to get better food.

Francis would have gone to trial in August, but the government's case has been weakening steadily.  Francis has claimed that former employees set him up, and whether or not that is true the main government witness, Francis's former accountant, apparently did admit to stealing money from Francis.  That undermined his credibility a bit, and the case was also hurt by the government's failure to turn over thousands of emails between Francis and the accountant.  The judge reportedly suggested that prosecutors should consider accepting a plea, which they did this week.

Francis will be formally sentenced on November 16, and at the end of yesterday's hearing the judge told him to "stay out of trouble" until then.  "I'll try to stay out of nightclubs," Francis replied, according to a story in the Daily Journal.

In the hallway a few seconds later, according to the same story, he told reporters he would be hosting a bachelor party tonight at a nightclub.

Link: MSNBC

Dancing With the Indicted

Link: ABC

Emu Tased

On Sunday, police in Scott County, Mississippi, finally cornered and subdued one of the emus that have apparently been threatening motorists on Interstate Highway 20 for the last few days.

If you are traveling in the area, please be aware that an Emu Alert has been declared for Scott and surrounding counties until further notice.

Motorists on I-20 near the town of Forest had been calling 911 since Friday to report at least two large flightless birds running around on or near the highway.  More calls on Sunday led police to an on-ramp where they found one of the emus loitering (knowing emus, it was probably panhandling).  They were able to surround it, but were forced to tase the bird when it refused to surrender peacefully.  Police then handcuffed the emu and took it into custody.

The whereabouts of the bird's accomplice remain unknown.

Emus, which are not at all attractive but reportedly taste good, can reach six feet in height and weigh as much as 140 pounds.  Though they are native to Australia, according to the USDA the birds are now raised in 43 of the 50 states (presumably including Mississippi), and there may be as many as one million emus in the country.  Most, of course, are law-abiding.

As of September 20, police had not been able to identify the bird's owner or the farm, if any, from which it might have escaped.

Link: WLBT 3 (Jackson, Miss.)
Link: "Emu" (Wikipedia)

UPDATE: State High Court Will Not Review Burning Man Case

On September 16, the California Supreme Court refused to hear the appeal of Anthony Beninati, who blamed promoters of the Burning Man festival for injuries he sustained in 2005.  Its decision affirmed that of the Court of Appeal, which ruled against Beninati earlier this summer.  See "Man Burned at Burning Man Assumed Risk of Being Burned by Burning Man, Says Court," Lowering the Bar (July 2, 2009).

As you may recall, Beninati had walked in among the remnants, some still burning, of the Burning Man, the 60-foot wooden effigy that is burned at the end of the festival every year.  Beninati then tripped over something and fell into the fire.  He sued Black Rock LLC for his injuries, saying it had negligently allowed people - including himself - to approach the fire (or even, let's say, walk inside it) without safe pathways. By applying the "assumption-of-the-risk" doctrine, however, the Court of Appeal held, essentially, that the risks of walking inside a giant bonfire are sufficiently obvious that others have no duty to protect against them.

Link: San Francisco Chronicle
Link: Boing Boing
Link: Overlawyered

A Sentence Rarely Found in Legal Pleadings

Link: Brant v. The Chop Shop, Inc., Civ. No. 09-3464 (E.D. Pa. filed Aug. 31, 2009) (PDF)
Link: On Point News

Great Wall Warnings

I guess the bottom sign might be asking that others assist heart patients who may be trying to ascend the Great Wall, rather than a warning to the latter not to do so.  It's hard to say.

There seems little question, though, that speaking cellphone is strictly prohibited when thunderstorm.

Link: The Inquisitr

"Some Rumors Should Rest Untested"

Here's an opinion by the Minnesota Court of Appeals that is unpublished, but should not go unread.  Below are the first two sentences of the court's opinion - I have reversed the order for slightly greater comedic effect:

Four teenage girls aimlessly driving in Windom[, Minnesota,] ten days before Halloween recalled rumors about a "scary house" that, "if you honked your horn at the property," the crazy owner "would come out and shoot at you."

Some rumors should rest untested.

Arguably, that rumor was not quite true, because nothing happened when the girls drove by the house.  But then "one of the girls remembered that the specific rumor was that 'if you came back around the second time, they would shoot at you.'"

Some rumors should rest untested twice.

No one was injured, even though the gunshot panicked the driver, who promptly drove into a ditch.  Police in fact found a bullet lodged in the door of the car, but the owner of the scary house, Gary Weidner, denied having anything to do with it.  He did admit to police, though, that it was "possible" the bullet would match one of the 20 guns he owned.  But if his theory of the case was that someone shot a bullet from one of his guns, retrieved it, and then later threw it at the car, he was unable to prove that.

It also did not help that a "short parade of witnesses" testified to other incidents showing that Weidner generally engaged in an "armed, terroristic, property-patrolling pattern of intimidation."  The main legal issue in the case was whether these were sufficiently similar to be admissible, and the court held that most of them were.

Also, of course, there was the testimony of the young ladies.  The court credited the testimony of one of them in particular, who said she had heard the bullet hit the car as they drove by the house.  When the court said she "had a rather unique perspective about the sound of the bullet hitting the car," I thought this would be because she had been sitting nearest to the door that was hit.  But there was more to it:  "She explained that she could identify that sound because she remembered hearing the same sound when she accidentally shot her father's truck."

The court affirmed Weidner's conviction.

Link: Minnesota v. Weidner, No. A08-1707 (Minn. Ct. App. Aug. 25, 2009) (unpublished).

Attorney Crashes Party at Courthouse Groundbreaking

A new federal courthouse is being built in Austin, Texas, and a groundbreaking ceremony was held on September 2 that attracted numerous dignitaries.  The group assembled for the ceremonial portrait below included two district judges, two magistrate judges, four U.S. representatives and a former mayor.

There was also this guy:

This is George Lobb, a graduate of the University of Houston Law School.  George passed the Texas bar, got his license in May 2008, and has since been doing (among other things) criminal-defense work.  He has handled a number of federal cases by appointment, and also has cases pending in state court.  George can be seen in the group picture on the far right, wearing a white hardhat.

He had no official role in the ceremony whatsoever and had not been invited to be in the picture.

The ceremony, which appears to have been open to the public, was attended by about two hundred people, according to the Austin American-Statesman.  A tent was set up, speeches were made, and the dignitaries then moved to the site of the future courthouse for the formal groundbreaking.  So did George.

You may be speculating that, moved by the speeches, George was caught up in the moment and impulsively decided to participate.  You would be wrong, because he brought his own equipment.  The reason no one else is wearing a hardhat is that George brought his own.  He also brought his own shovel, though not the one he is pictured with above.  (His was painted orange and white, and he asked the judges to sign it.)  When an organizer saw him with that shovel, she apparently assumed he was an official dignitary and handed him one of the beribboned gold shovels that were to be used in the picture.  "She didn't know who he was," said U.S. Magistrate Judge Andy Austin, "and didn't want to risk offending him by asking."  Probably for the same reason, nobody said anything when George lined up for the picture.

Judge Austin soon realized there had been an interloper.  "The night after the groundbreaking," he was quoted as saying, "I was watching the news and I saw a shot of the group.  I was like, 'What the hell was he doing in there?' . . . It was almost like this Forrest Gump thing."  He was not amused.  "I was annoyed that he did it.  It's going to be the photograph that you kind of look back on."  (It is certainly going to be the photograph George looks back on.)  Judge Austin went so far as to alert the authorities to the possibility that George may have kept his ceremonial shovel -- which, as you will recall, he was given by an official -- and it appears that he had.  Agents were dispatched to retrieve it.

There was no indication as to whether other dignitaries were offended or amused by the party crasher.  Judge Austin was the only one quoted as being in the former category.  Public comments to the piece on the Statesman's website are unanimously supportive of George.  Several said they thought he had earned the golden shovel and should get it back.  Also, this is a public building, said another, so "any citizen [who] showed up with a shovel should have been allowed to line up and dig in."  The worst thing any commenter suggested was rubbing George out with Photoshop.  And of course "Kanye West" was there:  "YO GOLD SHOVEL DUDES, I KNOW YOU JUST BROKE GROUND AND ALL, AND IMMA LET YOU FINISH, BUT OBAMA HOLDING A LIGHTSABER WAS THE BEST PHOTO-OP OF ALL TIME!"  He's commenting on everything these days.

George, meanwhile, has been keeping a low profile.  Hopefully, all the judges will see the humor in this.  Around here, we always tell new lawyers to "take some initiative," "be a self-starter," and so on.  Here's one that actually did it.  He may be getting some interesting appointments from the court in the near future, but that might be a small price to pay for, one day, practicing law in a courthouse that you actually sort of helped build.

Link: Austin Legal (an Austin American-Statesman blog)

Big Firm Rocked by Tab-Divider Scam

In what is believed to be the largest tab-divider scam yet perpetrated on a large American law firm, three men are accused of defrauding Wilson Sonsini Goodrich & Rosati out of $1 million by charging it for tab dividers that were never delivered.  All three men, one of whom was formerly a purchasing specialist for the firm, were indicted last week by a federal grand jury.

Authorities alleged that John Tashiro would place large orders for tab dividers with cronies at Attorney's Printing Supply (APS), a printing business in San Francisco.  Though some of the orders were legitimate, Tashiro would also send fake orders to his APS contact, who would then send invoices back that Tashiro approved on behalf of the firm.  The accounting department then cut checks for the invoices, unaware that the tabs listed on the bogus invoices would never be delivered.

Whether or anyone should have noticed this scheme, which went on for at least four years, is hard to say.  There is no indication that any attorneys at Wilson were forced to go tab-less or that any important appendices remained untabbed.  On the other hand, we are talking about a lot of tab dividers.  The indictment listed examples of a purchase order in April 2003 for 49,475 tab dividers, and another in May 2006 for 81,500 tab dividers.  Now, I am a little nervous getting into any sort of math, having been called out recently by a Ph.D. for screwing up some simple multiplication, but here we go.

Assuming that these were the sort of tabs that come in sets of 25 - which I want to point out is a highly conservative assumption - and that the indictment was actually intended to refer to individual "tab dividers" and not sets of them, then the 81,500 tab dividers ordered in May 2006 represented 16,300 sets for that month.  For comparison, our firm's accounting department, after some prodding, told me that Shook, Hardy and Bacon has ordered 18,147 "sets of tabs" so far this year (through the end of August).  Our firm is roughly the same size as Wilson, and so assuming we have a similar rate of tab consumption, these guys ordered, but failed to deliver, up to eight times as many tabs as the Wilson firm needed per month.

The indictment also says the scam cost Wilson $1 million.  Based on that, and the fact that a pack of 25 tabs costs about $5 at Office Depot (although you would probably get a price break with orders this big), Wilson paid for five million tab dividers that it did not get.  If laid end-to-end, five million tab dividers would stretch for approximately 868 miles, or roughly the distance from Wilson's office in Palo Alto, California, to its office in Seattle.  Perhaps more importantly, a tragic and heartbreaking loss of five million individual tabbing opportunities for the paralegals of one of America's great firms.

Link: WSJ Law Blog

Sex Fees Not Deductible Medical Expenses, Tax Court Rules

Therapeutic?  Probably.  Deductible?  No.

So ruled the U.S. Tax Court yesterday in the case of William Halby, a New York tax attorney who claimed that the amounts he spent on, let's call them personal-gratification-related books and materials, and also numerous professional intimate-therapy service providers, were "medical expenses" that he could deduct under Section 213 of the Internal Revenue Code.  Sure, at first glance this may seem entirely reasonable.  Section 213(d)(1) defines "medical care" as amounts paid not only for diagnosis and treatment of disease but also "for the purpose of affecting any structure or function of the body."  Although I would prefer not to think about it too much, it seems very likely that the reported activity would have affected one or more of Mr. Halby's structures or functions.  So, case closed?

Not quite.  Partly because you have to document these things.  Under IRS regulations, the court noted, "[t]o substantiate these expenses, the taxpayer must furnish the name and address of each payee and the date and amount of each payment."  If requested, he must also "furnish a statement or itemized invoice identifying the payment, the type of service rendered, and the specific purpose of the expense."  Now, if you think this requirement posed a problem for Mr. Halby, you would be right, but maybe not for the reason you think.  Mr. Halby did, remarkably, keep track of his expenses in a therapy journal in which he even documented his visits to his numerous "service providers."  He did not, however, have itemized invoices for many of the services provided, and failed to provide specific descriptions of said costs by means of an appropriate attachment to his Schedule A.

Also, turns out that paying for sex is actually illegal, at least in New York, and that IRS regs do not allow deductions for "any illegal operation or treatment."  The court ruled that Halby's payments in this regard "were personal expenses not prescribed by a doctor and not intended to treat a medical condition," and that he therefore could not deduct the more than $100,000 he was claiming for that purpose.

TaxProfBlog also notes that Mr. Halby made a similar claim in a 2008 state case in which he sought to deduct $322,000 for the same reason, and with the same results.

Link: TaxProfBlog (with links to the court decisions)