Saturday, November 30, 2013

Great story by Gretchen Morgenson

from nytimes


A Trusting Couple, Now Thrown for Two Loops

For most of their 38-year marriage, Ivor Rose and Rita Starr lived relatively modestly in Miami Beach, buying and renting commercial and residential properties there. Mr. Rose, 79, was a child of parents who lived through the Depression, and he embraced their thrifty values and their strong distaste for debt, said Ms. Starr, 63. The couple never borrowed money to buy the six warehouses and eight homes that, by 2006, had a value of around $15 million and made up the bulk of their assets.
Angel Valentin for The New York Times
The lawyer for Rita Starr, 63, and her husband, Ivor Rose, 79, says a Miami businessman, Michael A. Stern, forged their signatures on loan documents, leaving them on the hook for tens of millions of dollars in mortgages they didn’t know existed.

Fair Game

Gretchen Morgenson writes the Fair Game column for the Sunday Business section.
But then along came Michael A. Stern. A Miami businessman, Mr. Stern rented space from Mr. Rose in 2000 to open a Foot Locker store. Over the next four years, Mr. Stern, now 53, gained the trust of Mr. Rose and Ms. Starr, and they began investing in properties with him.
In addition to the investments that the couple knew about, Mr. Stern was also secretly taking out mortgages on other of the couple’s properties, according to a 2012 federal indictment. Their lawyer said he found that Mr. Stern had forged their signatures or cut and pasted them from other documents. Mr. Rose and Ms. Starr, who never received a nickel from the loans taken out on their properties, the records show, were on the hook for tens of millions of dollars in mortgages they didn’t know existed.
In early 2009, Mr. Rose and Ms. Starr started receivingforeclosure notices from institutions claiming to hold mortgages on properties the couple had owned outright. They thought it was some kind of mistake.
If only. Mr. Stern, who had left Florida for Uruguay, had stopped paying on the mortgages. Now the banks were coming after them. “Michael Stern was smooth and we’re not that perceptive,” Ms. Starr said. “He played us.”
In October, Mr. Stern was sentenced to five years in prison for swindling Dwight Freeney, a linebacker for the San Diego Chargers, out of $3 million. In California, Mr. Stern went by the name of Michael Millar. He will soon face prosecution in the Florida matter, said the prosecutor in California.
But the federal indictment didn’t end the troubles for the couple. They could lose all their properties and also be on the hook for millions of dollars. This is because Stewart Title, the company that insured the fraudulent mortgage loans — and whose policies require it to cover all the losses on the loans arising from forgeries and other defects — has refused to make a settlement on most of the properties.
And Stewart Title is doing this at the same time it is asserting, in another court venue, that one of its agents helped Mr. Stern secure bogus loans. It is suing that agent.
So how did this situation take such a twist?
First, it helps to understand the role of a title insurer. When a borrower applies for a mortgage on a property, the prospective holder of the note — usually a bank or investor in a mortgage trust — pays a title insurer to guarantee that the property’s title is free of defects, such as previous liens or taxes owed. Title insurance also protects a noteholder from loss if the lien created by the mortgage is invalid or unenforceable. Forgery, for one noteworthy example, invalidates a lien.
Stewart Title, a unit of Stewart Information Services, is based in Houston and is among the larger companies in the business. It is prospering, generating almost $2 billion in revenue last year, up 17 percent from 2011. Revenue in its title insurance unit rose 14.6 percent last year, while the money put aside to cover future losses declined $2 million, to $140 million.
Title insurers like Stewart hire agents to sell insurance policies to lenders and to handle mortgage closings. Court documents show that Stewart signed a contract in 2003 with Arlene Raijman to represent it as a title agent and lawyer. She collected title insurance premiums and was authorized to issue policies up to $500,000.
According to a lawsuit that Stewart filed against her, Ms. Raijman breached her duties at more than two dozen loan closings, issuing title insurance even though loan documentation was improper. Fifteen of those closings were for properties belonging to Mr. Rose and Ms. Starr.
Chief among the improprieties, the documents show, was her disbursement of loan proceeds to Mr. Stern rather than to the couple, as the loan documents required.
Stewart’s own court filings state, “Stern, with the assistance of Raijman, systematically induced Rose and Starr to use their property as security for loans for which they received no benefit and which benefited Stern, Raijman and the Raijman family entities.”

Thursday, November 28, 2013

Microsoft, Yahoo Upgrades Shows Snowden Won, Obama Failed

from bloomberg

Former U.S. National Security Agency contractor Edward Snowden succeeded where PresidentBarack Obama couldn’t -- getting Microsoft Corp. (MSFT), Google Inc. and Yahoo! Inc. (YHOO)to upgrade computer security against hackers.
The companies are adopting harder-to-crack code to protect their networks and data, after years of largely rebuffing calls from the White House and privacy advocates to improve security. The new measures come after documents from Snowden revealed how U.S. spy programs gain access to the companies’ customer data -- sometimes with their knowledge, sometimes without -- and that’s threatening profits at home and abroad.
“These companies actively fought against numerous mechanisms that would have mandated far more secure data,” Sascha Meinrath, director of the Open Technology Institute at the New America Foundation in Washington, said in a phone interview. “Now they are paying the literal price.”
While Google (GOOG), Yahoo, Microsoft and Facebook Inc. (FB) provide data to the government under court orders, they are trying to prevent the NSA from gaining unauthorized access to information flowing between computer servers by using encryption. That scrambles data using a mathematical formula that can be decoded only with a special digital key.
The NSA has tapped fiber-optic cables abroad to siphon data from Google and Yahoo, circumvented or cracked encryption, and covertly introduced weaknesses and back doors into coding, according to reports in the Washington Post, the New York Times and the U.K.’s Guardian newspaper based on Snowden documents. He is now in Russia under temporary asylum.

‘Government Snooping’

Microsoft is the latest company considering measures to ensure the protection of customer data and strengthen security “against snooping by governments,” according to Brad Smith, general counsel for the Redmond, Washington-based company.
Microsoft’s networks and services were allegedly hacked by the NSA, the Washington Post reported Nov. 26. Documents disclosed by Snowden suggest, without proving, that the NSA targeted Microsoft’s Hotmail and Windows Live Messenger services under a program called MUSCULAR, the newspaper said.
“These allegations are very disturbing,” Smith said in an e-mailed statement. “If they are true these actions amount to hacking and seizure of private data and in our view are a breach of the protection guaranteed by the Fourth Amendment to the Constitution.”
Smith didn’t provide details about what the company is considering doing.

Technology Laggards

Microsoft lags behind other major companies when it comes to protecting “users against extralegal attacks on its networks to obtain user data without a warrant,” said Kurt Opsahl, senior staff attorney for the digital-rights group Electronic Frontier Foundation, based in San Francisco.
The nonprofit has compiled a report providing a side-by-side comparison of the encryption measures companies have adopted.
“We have asked companies to implement encryption on every step of the way for a communication on its way to, or within, a service provider’s systems,” Opsahl said in an e-mail. “The news about the NSA’s MUSCULAR program served as a wakeup call, and it’s encouraging to see so many companies working to ensure that user data is not stolen out the backdoor.”
Internet companies resisted efforts to be included under an executive order Obama issued in February to better secure vital U.S. computer networks.
The Feb. 12 order said the government can’t designate “commercial information technology products or consumer information technology services” as critical U.S. infrastructure. That exempted services like Mountain View, California-based Google’s Gmail, Microsoft’s Windows and Cupertino, California-based Apple Inc. (APPL)’s iPhone software.

Money Talks

The difference now is the companies are responding to market pressure, said James Lewis, director of the technology and public policy program at the Center for Strategic and International Studies, a Washington nonprofit.
“They’ve got to do something to show the foreign customers they’re protecting them from surveillance,” Lewis said in a phone interview. “The administration was looking for incentives and it appears they found one.”
The Obama administration and members of Congress say cybersecurity legislation is still needed to secure the networks of power grids, banks and pipelines, which haven’t been affected by the Snowden disclosures. Legislation has been proposed in the Senate to establish voluntary cybersecurity standards for companies, while the House passed a bill that would give companies legal protections for sharing hacking threat data with each other and the government.

‘Serious Damage’

News about the spy programs has “great potential for doing serious damage to the competitiveness” of U.S. companies, Richard Salgado, Google’s director for law enforcementand information security, told a U.S. Senate panel Nov. 13.
Revelations of NSA spying may cost the U.S. cloud industry as much as $35 billion by 2016, according to the Information Technology Industry Council and the Software Information Industry Association, two Washington trade associations.
Even after the NSA revelations to date, it isn’t clear whether the agency bypassed or received cooperation from companies that provide the fiber-optic cables and other equipment that make up the Internet’s backbone, such as Broomfield, Colorado-based Level 3 Communications Inc. (LVLT) and Sunnyvale, California-based Juniper Networks Inc. (JNPR)
The NSA collects “the communications of targets of foreign intelligence value, irrespective of the provider that carries them,” agency spokeswoman Vanee Vines said in an e-mail.

Legal Liability

Level 3 is constantly “monitoring, testing, adapting and improving our security measures to protect against the ever-evolving threat landscape,” Dale Drew, the company’s chief security officer, said in an e-mailed statement.
“Our top priority remains to protect our customers and our network infrastructure -- the source of an attack is immaterial,” he said.
Juniper products are “designed to meet the high security and privacy standards that users require” and the company has “multiple layers of security, including the right policies, protocols and technologies to counter a variety of security risks and vulnerabilities,” spokeswoman Cindy Ta said in an e-mailed statement.
Meinrath, with the Open Technology Institute, said companies that claim to secure data while allowing it to be intercepted due to lax security should face legal liabilities.
“The smartest minds in these companies completely fell down on the job in terms of identifying risks to these business models,” Meinrath said. “The fact that the Snowden revelations can act as a catalyst to implement best practices for secure communications and data integrity is a great outcome.”
To contact the reporter on this story: Chris Strohm in Washington at
To contact the editor responsible for this story: Bernard Kohn at

Wednesday, November 27, 2013

Legalize all drugs? The man behind loosening pot laws in US eyes new goal

from nbcnews

John Brecher / NBC News
Ethan Nadelmann, founder and executive director of the Drug Policy Alliance, at home in New York City on Monday, Nov. 18.
When the ball drops this New Year’s Eve, America’s first aboveboard cannabis markets will rise in Colorado and Washington. Uruguay is expected to follow as the first country to legalize the one-time devil weed. But what unites these efforts — along with 20 states that allow marijuana as medicine — isn’t only an evolved approach to drugs. It’s one man: Ethan Nadelmann, the world’s roving prime minister of pot. 
The ginger-hued, Harvard-educated son of a rabbi is a relative unknown to most Americans, but his work in the last two decades is liable to end up in their children’s history books. The 56-year-old or his organization — the Drug Policy Alliance — has authored, aided, or helped fund every progressive pot law in the Americas, from California’s breakthrough medical marijuana law in 1996 to the historic reforms going live in 2014. 
“I think we’ve hit the tipping point with marijuana,” Nadelmann told a cheering, two-finger-whistling conference crowd last month in Denver. “Two states down, 48 to go, and hopefully one country down, 200 to go.” 
While marijuana remains illegal under federal law, the culture is changing rapidly, and Nadelmann is poised for perhaps his most influential year yet. He’s not a pot-smoker himself, nor an evangelist for drug-taking in general, but he believes that drug policy should make users safer and not criminalize them.    
That means embracing over-the-counter sales of marijuana and accepting a boom in pot’s popularity. In August, the Justice Department allowed Colorado and Washington’s experiments in free-market pot to go forward, pledging a backseat approach, assuming certain benchmarks for control are maintained. Now, at least 11 states are considering their own legal weed laws.
“The momentum is huge,” says Nadelmann, who oversees 65 employees, offices in five states, and a $13 million dollar war chest.
A vision that goes far beyond pot
But Nadelmann has much more than just legalized weed riding on the success of Colorado and Washington. In recent speeches and a series of exchanges with NBC, he laid out a more progressive long game, a vision for drug policy reform that goes far beyond pot. 
At a standing-room-only talk at Princeton’s Woodrow Wilson School of Public and International Affairs earlier this month, Nadelmann delivered an antic hour-long stump speech for broader legalization.
“I’m always telling my marijuana reform allies, when they say we need to legalize marijuana and get tougher on the other drugs, ‘shut the hell up,’” he said, returning to form as the Princeton professor he was before turning to drug policy two decades ago. “We don’t need to end one discrimination and prohibition to double down on another.”
“It’s absolutely pivotal,” he continued, “for building a broader movement for freedom and justice that we treat this thing as of-a-piece.” 
The whole, of course, is safe and legal access to all drugs. Cocaine. Heroin. Hash. Ecstasy. You name it, Nadelmann wants people to have the right to get it, hold it, use it and even pass it in small quantities. The only country that comes close to such a program is Portugal, which in 2001 decriminalized the getting, having, and taking of a 10-day supply of any drug. 
But Portugal doesn’t go far enough for Nadelmann, personally, because while it allows use, it prohibits distribution, denying people a way to get high without navigating the twilight economy of illicit dealing. He wants to move drug-users out of the criminal justice system entirely, relocating them in the realm of public health.
He often says he represents everything from decriminalization to outright legalization. While the terms are subject to scribbles and tweaks, the former usually means making drug-use a finable civil offense, akin to jaywalking only with counseling involved. The latter is Colorado and Washington — only for all drugs.    
At a minimum, Nadelmann tells NBC, “people should not be punished for possessing a small amount of any drug.” He doesn’t rule out the full-blown legalization of everything, although he remains more skeptical than some of his libertarian allies. He sees drug policy along a continuum, from “lock’em up, hang’em, pull out their fingernails, Singapore, Saudi Arabia” all the way down to “essentially no controls whatsoever, maybe a little for kids.”
Right now, he says, American drug policy is way too close to the hang’em end of the spectrum. The Obama administration has won plaudits for its “public health” approach to drug policy, including more spending on prevention and treatment. But Nadelmann says it’s mostly smoke and mirrors, an attempt to co-opt the rhetoric of reform without adopting the policies.
For Nadelmann, the fight is personal
As clear as he is about his end game, Nadelmann is still mulling the details of implementation. He calls for “legal access,” but doesn’t say whether it should be provided by doctors, delivered by mail, doled out in private cooperatives, or administered by the government, among untold options.
Last fall, when Colorado and Washington voted to regulate marijuana like alcohol, few are likely to have connected a vote for legal cannabis with a vote in the direction of legal everything. Nadelmann himself sees the campaigns as parallel public education efforts. In the pot world, he’ll fight to spread legalization. He’ll work to refine current law, lowering the age of access to 18, and clearing a job path for veterans of the black market, including felons from the old days of the drug war.
The wider push for decriminalization remains a political and social nonstarter. But the Portugal model has been deemed a public health success story in that country, and Nadelmann is hard to doubt in this one. He looks like a surf board in profile with fading hair and a spring caterpillar of a mustache. But he’s a captivating stage performer, a sharp elbowed political operator, and a peerless egghead. With a resume that includes three Harvard degrees (B.A., J.D., Ph.D.), a consulting jag at the State Department and seven years as a professor of politics and public affairs Princeton, he’s also impossible to tar as a mere activist. 
But make no mistake: this fight is personal for Nadelmann.
His father escaped the Nazis and his grandfather did not, and what he sees as the persecution of responsible drug users pricks his Jewish consciousness. He recognizes a similar “demonization of a minority,” he says, the same “great fear” of being forced to live like the rest of society or face destruction. 
Growing up he wanted to be a policeman on horseback, an artist and then a professor, which he became and might have stayed if not for President Ronald Reagan’s War on Drugs — when Congress considered sending users to a remote prison in Alaska and the drug czar argued that “marijuana leads to homosexuality, the breakdown of the immune system, and therefore to AIDS.”
'The problem here is prohibition' 
One day in June 1987, Nadelmann found himself on a drug policy panel at Bolling Air Force Base in Washington, D.C., sitting with the head of enforcement at the FBI and some other Reagan hands, and he flipped.
“Look, let’s face it,” he remembers saying. “The problem here is prohibition. You’re essentially no different from the Prohibition agents of the 1920s.”
Most of Nadelmann’s debate points are standard issue: Prohibition is bad, and drugs are here to stay, so let’s focus on harm reduction. But he plants his flag in the highest possible ground, consistently making grander, more fantastic connections. He ties decriminalization to “freedom of consciousness,” and then to same-sex marriage and abortion rights, and ultimately to the rights of the First Amendment. 
“If you look at the fears about broader legalization,” he says, “the fears are almost identical to the fears that were expressed by authority figures and others if you were allowed freedom of speech two hundred years ago.”  Other times he compares drug hysteria to the fears of letting women vote, or abolishing slavery. For Nadelmann, the right to take drugs isn’t a fringe issue for the party set but the issue beneath all others — and now, more and more, the issue is connecting with a big tent of reformers. 
Many of them seemed to be in the audience of his Princeton talk, where a woman in pearls sat next to a man with a tie-dye beard. In the days that followed, Nadelmann traveled to Atlanta, where he strategized with former President Jimmy Carter, lectured at Emory’s School of Public Health, advised the governor’s office, addressed a theological school and pitched cable ideas to Sanjay Gupta at CNN. 
“We’re the people who love drugs, the people who hate drugs and the people who don’t give a damn about drugs,” Nadelmann likes to say of his movement. These days, however, he always comes back to his continuum of drug policies, directing people to the sliver between decriminalization and outright legalization. That’s Nadelmann’s sweet spot.
With every sale of cannabis in Colorado and Washington that sweet spot will grow, pushing America toward Portugal, if the new markets work, or dragging it back toward Singapore and Saudi Arabia, if the new markets fail.
“I’ll know I’ve succeeded,” says Nadelmann, the day the debate between decriminalization and legalization becomes the national debate, “and I’ll look forward to stepping back and watching all my allies take out their knives and fight with each other over the details.” 

This story was originally published on 

Tuesday, November 26, 2013

Ninth Circuit: Domestic Partnerships Fail To Provide Equal Benefits To Same-Sex Couples


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"Ninth Circuit: Domestic Partnerships Fail To Provide Equal Benefits To Same-Sex Couples"
Ninth Circuit (3x2)
The Executive Committee of the Ninth Circuit Judicial Council has ruled that a federal law clerk in Oregon who was denied health benefits for her same-sex domestic partner was discriminated against and must be compensated. Margaret Fonberg will receive back pay to offset the discrimination she experienced for the years since she applied for the benefits in 2010.
The decision navigates the confusing conflict between how states and the federal government recognize same-sex relationships since the Supreme Court overturned the Defense of Marriage Act (United States v. Windsor). Oregon does not offer marriage, but does recognize and provide benefits to same-sex domestic partners. The federal government now recognizes same-sex marriages performed in states where they are legal, but the Office of Personnel Management (OPM) does not recognize civil unions or domestic partnerships. The ruling indicates that this conflict creates fault on both ends: Oregon is discriminating by not providing Fonberg with marriage and the federal government is discriminating by limiting what they’ll recognize to relationships called “marriages”:
Fonberg and her partner are treated different in two ways. First, they are treated differently from opposite-sex partners who are allowed to marry and thereby gain spousal benefits under federal law. This is plainly discrimination based on sexual orientation, which the District of Oregon’s EDR Plan prohibits. They are also treated unequally vis-à-vis same-sex couples in other states in the circuit, who may marry and thus gain benefits under Windsor. This violates the principle that federal employees must not be treated unequally in the entitlements and benefits of federal employment based on the vagaries of state law. Here, Oregon law suffers from precisely the same deficiency that the Supreme Court identified in Windsor with respect to the Defense of Marriage Act. Both these forms of discrimination are prohibited under the Oregon EDR Plan.
Unfortunately, this decision does not have have any clear implications for current ongoing litigation, but could impact future challenges that pit domestic partnerships or civil unions against marriage.
The Ninth Circuit previously issued a similar opinion for Karen Golinski, a California attorney for the Ninth Circuit Court of Appeals who applied for health benefits for her same-sex partner and was denied. Chief Judge Alex Kozinksi, who was also on the panel in Fonberg’s decision, ruled that Golinski was entitled to benefits and could sue OPM. That suit was ultimately dismissed after DOMA was overturned.