Krebs Daily Briefing 18 December 2015

Thomas L. Krebs, Securities Litigation, Regulation and Compliance Attorney Lawyer (c)2014 Brandon L. Blankenship
Thomas L. Krebs
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International

Navy SEALs, a Beating Death and Claims of a Cover-Up

The three Navy SEALs stomped on the bound Afghan detainees and dropped heavy stones on their chests, the witnesses recalled. They stood on the prisoners’ heads and poured bottles of water on some of their faces in what, to a pair of Army soldiers, appeared to be an improvised form of waterboarding. A few hours earlier, shortly after dawn on May 31, 2012, a bomb had exploded at a checkpoint manned by an Afghan Local Police unit that the SEALs were training. Angered by the death of one of their comrades in the blast, the police militiamen had rounded up half a dozen or more suspects from a market in the village of Kalach and forced them to a nearby American outpost. Along the way, they beat them with rifle butts and car antennas. A United States Army medic standing guard at the base, Specialist David Walker, had expected the men from SEAL Team 2 to put a stop to the abuse. Instead, he said, one of them “jump-kicked this guy kneeling on the ground.” Two others joined in, Specialist Walker and several other soldiers recounted, and along with the Afghan militiamen, they beat the detainees so badly that by dusk, one would die. The four American soldiers working with the SEALs reported the episode, which has not previously been disclosed. In a Navy criminal investigation, two Navy support personnel said they had witnessed some abuse by the SEALs, as did a local police officer. Separately, an Afghan detained with the man who died provided a detailed account of mistreatment by American troops and Afghan militiamen in an interview with The New York Times. The SEAL command, though, cleared the Team 2 members of wrongdoing in a closed disciplinary process that is typically used only for minor infractions, disregarding a Navy lawyer’s recommendation that the troops face assault charges and choosing not to seek a court-martial. Two of the SEALs and their lieutenant have since been promoted, even though their commander in Afghanistan recommended that they be forced out of the elite SEAL teams. “It just comes down to what’s wrong and what’s right,” Specialist Walker said in a recent interview. “You can’t squint hard enough to make this gray.” More:

http://www.nytimes.com/2015/12/17/world/asia/navy-seal-team-2-afghanistan-beating-death.html?emc=edit_na_20151217&nlid=53476364&ref=headline

Pope Francis just recognized Mother Teresa’s second miracle. Now she will become a saint.

Mother Teresa, the Catholic nun famous for her work among the poor in Calcutta, India, is going to be made a saint, the Vatican has announced. The Vatican must recognize two miracles in order to canonize a saint, and Mother Teresa was put on a fast track toward sainthood after her death in 1997. Pope John Paul II recognized the first miracle, required for beatification, in 2003; Pope Francis has now recognized a second. The miracle, according to the church, is that a Brazilian man whose family prayed to Mother Teresa was miraculously cured of brain tumors in 2008, while he was in a coma and about to enter surgery. The first miracle attributed to Mother Teresa also dealt with the disappearance of a tumor, this one of a woman in India. Mother Teresa will probably be canonized in September as part of the pope’s Jubilee Year of Mercy. Sainthood for Mother Teresa is hardly a surprise — even in her lifetime, she was called a “living saint” for devoting her life to the poor and to people living in slums. She won the Nobel Peace Prize in 1979. But after her death, the narrative about her life has become more complicated. Her letters, published in 2003, revealed that she suffered a crisis of faith for decades, which James Martin described in the New York Times as “almost unparalleled in the lives of the saints.” Other critics, most prominently Christopher Hitchens, have questioned her alliances with the rich and unethical, such as Haitian dictator Jean-Claude Duvalier, from whom she raised funds; the conditions in her home for the dying; and her opposition to birth control. Mother Teresa viewed suffering as ennobling, and critics argue she did not do enough to relieve patients’ pain. “She had most of the attributes of sainthood: a dauntingly selfless life, devotion to a higher cause, rude single-mindedness, a thick skin, and a capacity to wring the withers of the rich and powerful,” the Economist wrote when she died in 1997.

http://www.vox.com/2015/12/18/10567314/mother-teresa-pope-francis-saint

National

House approves massive government spending bill

WASHINGTON — The House approved a massive government spending bill Friday morning, setting up Senate votes later in the day that are expected to send that measure and a package of tax breaks toPresident Obama for signing. Friday’s House vote to pass the $1.1 trillion catch-all spending bill was 316-113House lawmakers passed the $622 billion package of tax breaks on Thursday. Both measures will now be combined into one bill and sent to the Senate for final approval, ending legislative business for the year. The White House said Obama would sign the legislation. The tax and spending package contains a mix of conservative and liberal priorities that was generally viewed as an acceptable compromise. The tax package, which includes new and renewed tax cuts for individuals and businesses that are especially popular with Republicans, passed the House 318-109 with 77 Democrats voting in favor. It permanently extends the enhanced child tax credit and earned income tax credit that were boosted by the 2009 economic stimulus, and extends through 2019 a popular corporate tax break that allows companies to more quickly depreciate the value of new equipment. “This legislation prevents tax increases, creates more job opportunities, and makes it easier for Americans to do their taxes,” said House Ways and Means Chairman Kevin Brady, R-Texas. “That’s a great gift, an overdue gift, for American taxpayers.” Republicans are less enthusiastic about the 2,000-page government funding measure, which combines separate fiscal 2016 spending bills for every federal agency into one massive bill. GOP lawmakers wanted to add provisions blocking Obama’s policies on immigration, wetlands rules, armor-piercing bullets and other issues, but those didn’t make the final cut. The measure does, however, give Republicans a major win by lifting the 40-year ban on crude oil exports. It also removes the threat of a government shutdown for the rest of the fiscal year. House Democratic Leader Nancy Pelosi, D-Calif., described the spending bill as a major victory for Democrats but said she “didn’t want to advertise it too much” before Friday’s votes for fear Republicans would try to change it She urged her colleagues late Thursday to support the measure. Pelosi called the end of the oil export ban “atrocious policy” but applauded the extension of tax credits for solar and wind energy projects. She said that in exchange for lifting the ban on oil exports, Republicans dropped their demands for defunding Planned Parenthood — a key GOP goal for much of the fall —  and for blocking Syrian refugees, rolling back gun rules and other issues. “I feel almost jubilant about what is in this appropriations bill,” she said. Sen. John Cornyn, R-Texas, offered fainter praise for the deal, calling it “the antithesis of perfect.” “But In the end, nothing passes Congress and gets signed into law by the president without some level of bipartisan cooperation and both chambers of Congress working together with the executive branch,” Cornyn said.. “And this legislation does include several wins for the American people.” Lawmakers seemed motivated to avoid a political meltdown over the fiscal 2016 budget that would further sour the public’s view of Congress. The tax breaks and spending provisions cover everything government does — and limit how federal money can be spent. For example, the legislation bars Obama from closing the Guantanamo Bay detention facility or spending money on a new facility to house terrorists. It also bars the U.S. from implementing the United Nations Arms Trade Treaty. But it does not include provisions barring implementation of Obama’s plan to defer deportations for children brought to the U.S. illegally and some of their family members. The combined bill bars the government from listing the sage grouse as an endangered species, but it does not include Republican-backed provisions to prohibit theEnvironmental Protection Agency from regulating air emissions related to global climate change. It does not prohibit the administration from resettling Syrian refugees in the U.S., as many Republicans and some Democrats had hoped, but it does include new anti-terrorism limits on visitors from 38 countries who can travel to the U.S. without a visa. There was plenty to irk opponents of the legislation, especially the decision not to allow amendments. “This is a recipe for corruption,” said Sen. John McCain, R-Ariz. “A handful of people behind closed doors worked and then 48 hours or whatever before the vote, presented it to us as take it or leave it.” McCain complained that the legislation includes money for ships that the Navy said it didn’t need, and a huge increase in medical research paid for out of Pentagon funds. “I’m not proud of this. In fact, I’m a bit ashamed,” he said. Democratic leaders labeled the tax package a gift to powerful special interests that isn’t paid for, meaning it will add to the federal debt. But they largely embraced the idea of a government funding bill that lasts more than a few weeks or months. “No one — as it never happens — is going to get everything they want or prevent everything they oppose from being included,” said House Minority Whip Steny Hoyer, D-Md. “Businesses and workers across our country deserve the certainty that comes from ensuring that our government remains open and serving the American people.”

http://www.usatoday.com/story/news/politics/2015/12/18/congress-poised-pass-spending-tax-measures/77495592/?csp=breakingnews

 

Senate panel wants Defense chief’s email

The Senate Armed Services Committee has asked for copies of Defense Secretary Ash Carter’s personal emails after Carter acknowledged he had used a personal email account earlier this year. “With all the public attention surrounding the improper use of personal email by other Administration officials, it is hard to believe that Secretary Carter would exercise the same error in judgment,” Sen. John McCain, an Arizona Republican and committee chairman, said in a statement.. “The Senate Armed Services Committee has requested copies of the emails and will be conducting a review to ensure that sensitive information was not compromised.” Carter told CBS News in Baghdad Thursday that using the personal email was a mistake. “It’s a mistake, and it’s entirely my own,” Carter said, adding that “I stopped” when it was clear the practice was against policy. Carter acknowledged using the account to conduct official business during his first few months as Pentagon chief, the Defense Department said in a statement released Wednesday. The statement followed a New York Times article saying it had obtained 72 of Carter’s work-related emails that he sent or received from a personal email account. The Timessaid it was given the emails in response to a Freedom of Information Act request. “After reviewing his email practices earlier this year, the secretary believes that his previous, occasional use of personal email for work-related business, even for routine administrative issues and backed up to his official account, was a mistake,” the statement from spokesman Peter Cook said. “As a result, he stopped such use of his personal email and further limited his use of email altogether.” More:

http://www.usatoday.com/story/news/politics/2015/12/17/ashton-carter-presonal-email/77468396/?csp=dailybriefing

 

Funding deal hits backlash over increase in foreign worker visas

The $1.1 trillion omnibus funding bill includes language that would dramatically increase the number of visas available for foreign workers, setting off alarm bells among conservatives and labor unions. Congressional leaders quietly slipped the provision into the 2,009-page funding bill, with rank-and-file lawmakers only discovering it Wednesday morning. The move immediately sparked protests from across the political spectrum. The provision could more than triple the number of H-2B visas for foreign workers seeking jobs at hotels, theme parks, ski resorts, golf courses, landscaping businesses, restaurants and bars. The move is intended to boost the supply of non-agricultural seasonal workers. “These foreign workers are brought in exclusively to fill blue collar non-farm jobs in hotels, restaurants, construction, truck driving, and many other occupations sought by millions of Americans,” said Sen. Jeff Sessions (R-Ala.), an outspoken critic of President Obama’s immigration policies, in a statement. “The GOP-led Congress is about to deliver Obama a four-fold increase to one of the most controversial foreign worker programs. The result? Higher unemployment and lower wages for Americans,” he said. Sessions estimates the number of H-2B visas will soar from 66,000 to 250,000 because of the language in the omnibus. He took to the Senate floor Wednesday afternoon to protest the maneuver. Chris Chmielenski, a spokesman for NumbersUSA, a group that advocates for less immigration, criticized Speaker Paul Ryan (R-Wis.) for allowing the provision into the omnibus after pledging to look out for American workers in his first speech to the House after taking the gavel. Ryan called on Congress to look after working-class families after he won election to the Speaker’s office in October. More:

http://thehill.com/homenews/senate/263529-funding-deal-hits-backlash-over-increase-in-worker-visas

 

Neighbor of San Bernardino Attackers Faces Terrorism Charges

 RIVERSIDE, Calif. — Enrique Marquez, who supplied the assault rifles used to kill 14 people in a massacre in San Bernardino, Calif., this month, was arrested Thursday and charged with crimes including conspiring to support terrorists. Court papers show that he and one of the attackers had steeped themselves for years in radical and violent Islamist propaganda, including the teachings of the extremist cleric Anwar al-Awlaki and bomb-making techniques from an Al Qaeda magazine. Mr. Marquez, 24, has told investigators that he and an attacker, his longtime friend and neighbor, Syed Rizwan Farook, had been discussing radical Islam since 2007. They made plans in 2011 and 2012 to launch deadly attacks on the college they had attended and on a busy California freeway. Mr. Marquez bought not only the guns used in the San Bernardino shooting but also the smokeless powder that Mr. Farook used to build pipe bombs, according to documents filed in Federal District Court here on Thursday. In addition to the terrorism charge, he faces a count of lying on gun purchase forms to conceal that he was really buying them for Mr. Farook, and one of defrauding the immigration system by entering into a sham marriage with a Russian immigrant. The court papers filed on Thursday offered the first picture of how Mr. Farook, an American-born Muslim whose parents are from Pakistan, became radicalized — long before the rise of the Islamic State — and who his influences were. The documents offer previously unreported details about his actions and attitudes, including his disdain for American Muslims who went into the military and killed other Muslims, along with the specifics of the attacks he and Mr. Marquez had plotted and the weaponry they amassed. They paint a vivid picture of Mr. Farook’s efforts to radicalize Mr. Marquez, urging him to listen to speeches by a Qaeda leader and read a magazine published by a Qaeda affiliate that provided bomb-building instructions.

http://www.nytimes.com/2015/12/18/us/san-bernardino-enrique-marquez-charges-justice-department.html?emc=edit_na_20151217&nlid=53476364&ref=cta&_r=0

Shkreli, CEO slammed over drug prices, $5M bond

The reviled poster boy of drug price hikes perpetuated a Ponzi scheme on investors in hedge funds and a pharmaceutical company he founded and previously led, federal prosecutors and regulators alleged Thursday. Martin Shkreli, a pharmaceutical industry entrepreneur previously criticized for raising the price of life-saving drugs such as those used to fight HIV and cancer, was arrested early Thursday in New York City and charged on criminal and civil charges of securities fraud. Shkreli’s arrest was not related to drug prices, but instead stems from allegations by federal prosecutors that he illegally took stock from Retrophin — a biotechnology company he started in 2011 and was ousted from in 2014 — to pay off unrelated business debts. More:

http://www.usatoday.com/story/money/2015/12/17/martin-shkreli-arrested/77469752/?csp=breakingnews

Shelby to oppose spending bill he loaded with goodies

Sen. Richard Shelby loaded up the $1.1 trillion spending bill with pet provisions, including one measure worth hundreds of millions to a rocket manufacturer with operations in his home state. The cagey lawmaker also fought hard for language protecting red snapper fisheries on Alabama’s Gulf Coast, even issuing a news release bragging about his efforts. “That is why I fought tirelessly for several provisions to be included in the omnibus appropriations bill that I believe will help respond to the serious challenges facing anyone who wants to fish for red snapper in the Gulf,” Shelby said in the release. But in an only-in-Congress twist, Shelby, a very senior member on the Appropriations Committee, still plans to vote against the sprawling omnibus package. He’s citing the lack of language to restrict Syrian refugees as the reason. The move, however, could make the Republican senator the unofficial chairman of the “hope yes, vote no” caucus on Capitol Hill. It also demonstrates the potency of immigration as an electoral issue in Alabama and the power of Shelby’s fellow home-state senator, Republican Jeff Sessions, over the controversial topic in the Southern state. GOP insiders note that Alabama’s Republican primary is on March 1, and Shelby is loath to do anything that would create distance between him and Sessions on immigration before that date. Sessions, the hardest of hard-liners on immigration issues, has warned that passage of the omnibus is part of a plan by President Barack Obama — with the tacit acceptance of Speaker Paul Ryan (R-Wis.) and Senate Majority Leader Mitch McConnell (R-Ky.) — to resettle tens of thousands of potentially dangerous Syrian refugees in the United States. Sessions says the White House is using the threat of a government shutdown to force Republicans to back down on any effort to block refugees from entering the country, or increase vetting for those who do. “If you don’t vote for it [the spending bill], you shut the government down and you’re a bad guy,” Sessions told Breitbart last week. “And that’s the way it’s been year after year after year.” So Shelby is voting against the omnibus package, despite his extensive and successful work to shape its contents. “While I support the inclusion of several conservative priorities and key provisions critical to Alabama in this year’s omnibus bill, I oppose the overall bill because it gives a blank check to President Obama to continue his dangerous Syrian refugee resettlement plan,” Shelby said in a statement Wednesday. “During this increasingly uncertain time in our nation, we simply cannot allow the president — who is more focused on gun control and climate change than national security — to unilaterally determine who can enter our country.” The Alabama Republican has already angered Sen. John McCain (R-Ariz.) and Georgia Republicans over what he included in the bill. McCain was infuriated at Shelby for inserting a provision into the 2,000-page bill allowing defense contractor United Launch Alliance — a joint venture of Boeing and Lockheed Martin that builds rockets in Alabama — to continue purchasing Russian rocket engines. The measure would reverse language that McCain included in the annual defense authorization bill that limited ULA to purchasing nine engines from Russia. McCain complained that Shelby never spoke to him first about the provision. “Of course not, of course not, of course not. That’s not the way Sen. Shelby does business,” McCain told POLITICO on Wednesday. Shelby also included nonbinding language in the omnibus that affects a long-running water dispute between Alabama and Georgia officials, a matter that’s already in federal court.  More:

http://www.politico.com/story/2015/12/richard-shelby-oppose-sepnding-bill-216904#ixzz3ueFk40Ju

U.S. Chief Justice Roberts Overlooked Stock Conflict in Case

Chief Justice John Roberts overlooked a conflict of interest when the U.S. Supreme Court rejected two appeals in an environmental-cleanup case earlier this year. Roberts took part in the court’s Oct. 5 disposition of the case even though he or a close family member owned stock in Texas Instruments Inc., one of the companies that sought review. The oversight represents the second time in the court’s current term that a justice has participated in a case while having a stake in a company involved in the litigation. Roberts is one of three justices who have stock interests in at least a dozen companies, according to their annual financial disclosure reports. “There was a conflict that should have been caught but was not,” Kathy Arberg, the Supreme Court’s spokeswoman, said in an e-mail. She attributed the mistake to “human error.” Justice Stephen Breyer’s holdings created an issue Oct. 14 when he heard arguments in an energy regulation case that involved a Johnson Controls Inc. unit. At the time, Breyer’s wife held $33,000 worth of that company’s stock, but the justice hadn’t made the connection. She sold her shares the following day, after a reporter inquired. By all indications, neither conflict affected the outcome of the case. Still, the oversights are giving ammunition to those who say the justices should shed their individual stock holdings or put them in blind trusts. “The institution is in dire need of policy changes on recusals and stock ownership,” said Gabe Roth, executive director of Fix the Court, which first noticed the Roberts conflict. He suggested blind trusts as a way to “ensure these oversights do not continue to happen and that our most antiquated government body starts to comport with modern expectations of transparency.” Under the court’s rules, litigants are required to list all the parties to the case, and businesses must disclose any publicly traded parent company. Each of the nine justices’ chambers has its own system for checking for conflicts. Roberts or a family member owns from $100,001 to $250,000 in Texas Instruments, according to his 2014 disclosure report. By law, the justices can’t participate in a case when they own stock in a company that is a party to a case.

http://www.bloomberg.com/politics/articles/2015-12-18/u-s-chief-justice-roberts-overlooked-stock-conflict-in-case

Police Probe Threats to Judge Who Took Oath on Quran

The backlash against a New York City judge who was administered the oath of office using a Quran has become a police matter. The New York Police Department hate-crimes unit is investigating threats made to newly elected Brooklyn Civil Court Judge Carolyn Walker-Diallo. According to the New York Post: Judge Carolyn Walker-Diallo got two calls at 11:30 a.m. Tuesday at the courthouse on Schermerhorn Street, law enforcement sources said on Wednesday. “You are not an American because you got sworn in on a Koran,” a male caller said. “You’re a terrorist; we are going to get you,” a woman said in the second call…The phone threats followed a backlash on Facebook and Twitter after the judge posted a video of her swearing-in ceremony last Thursday on Facebook. “Hate Crimes Task Force is investigating threats made to a Brooklyn Civil Court judge. There are no new updates at this time,” an NYPD spokesperson told Law Blog Thursday. Ms. Walker-Diallo is believed to be Brooklyn’s first Muslim judge. The former compliance officer for a Brooklyn non-profit was elected to the bench last month as a Democrat. A spokesman for the state court system, David Bookstaver, told the Post that incoming judges aren’t required to use religious texts when they take an oath to uphold the law. Most, he said, don’t use a religious text in the ceremony, and he couldn’t recall another instance of a judge using the Quran. Those who swear in on a religious text generally put a hand on a copy of the Bible or the Talmud, the compilation of oral Jewish law. Mr. Bookstaver declined to comment on the threats or the police investigation.

http://blogs.wsj.com/law/2015/12/17/police-probe-threats-to-judge-who-took-oath-on-quran/

House Approves Bill to End Tax-Free Real Estate Spinoffs

Wall Street may have to come up with a new strategy to replace a type of deal that has been popular among activist investors and companies. On Thursday, the House of Representatives approved legislation including provisions that would remove the tax advantages of spinning off corporate real estate into a separate, publicly traded real estate investment trust. The end of such tax-free spinoffs will generate $1.9 billion in additional tax revenue in the coming years, the Joint Committee on Taxation has estimated. Hilton Worldwide may end up being the last big company to reap the benefits of this type of deal. The company, which the Blackstone Group took public about two years ago, is working on a plan to spin off its hotels into a REIT, according to a person briefed on the matter. The hotel operator has requested that the Internal Revenue Service deem the transaction tax-free. These spinoffs have been a popular tactic of activist investors who have pushed companies to unlock cash by separating themselves from their real estate holdings. Publicly traded REITs own property or mortgages and are not taxed so long as they pass most of their income on to shareholders. Companies that own a lot of real estate — mall operators, restaurant chains and even casinos — have looked at a spinoff to a real estate investment trust as a way of getting a higher value for those properties and using the cash to pay off debt. There have been 15 tax-free REIT spinoffs since 2010, including five last year and three this year, for a total of $21.6 billion, according to FactSet. This summer, Darden Restaurants completed the $747 million spinoff of Four Corners Property Trust. Even before Thursday’s vote, regulators and lawmakers signaled their intention to shut off the spigot. The I.R.S. said in September that it would not give any more private approvals on these kinds of spinoffs while it studied the matter more closely.

http://www.nytimes.com/2015/12/18/business/dealbook/house-approves-bill-to-end-tax-free-real-estate-spinoffs.html?ref=dealbook

Congress Gives Americans a Tax Gift for Christmas

Congress’s Christmas-tree tax bill contains surprising presents: permanent extensions of tax benefits for individuals that have long been temporary. The Protecting Americans from Tax Hikes Act of 2015, or PATH, is expected to pass in current form by the middle of next week. The bill’s passage will end a frustrating cycle for millions of taxpayers. In the past, lawmakers have enacted popular temporary provisions, such as deductions for schoolteachers’ supplies or state sales taxes, and then left taxpayers hanging until the last minute as to whether the provisions would be renewed. For example, the provision allowing IRA charitable transfers—a highly popular measure that helps charities and lowers taxes for many older Americans—has been renewed five times since 2006, with four of them coming after Thanksgiving. The nadir was 2012, when the break wasn’t re-enacted until early in 2013, and many donors were confused by rules for making retroactive 2012 gifts. The current bill doesn’t permanently extend all popular breaks. Tax relief for mortgage-debt forgiveness, “bonus” depreciation, and a credit for alternative-fuel vehicles expire in 2016.  Here are notable benefits slated to become permanent:

http://www.wsj.com/articles/congress-gives-americans-a-tax-gift-for-christmas-1450434600/?mod=e2fb

Virginia Schools Shut Down After Islam Is Included in World Religion Lesson

Be careful what you write — or what you ask high school children to write — in parts of Virginia. Apparently, having a go at the centuries-old skill of Arabic calligraphy by copying out the Islamic statement of faith could do funny things to your brain. Parents of pupils at Riverheads High School in Augusta County managed to get themselves so worked up when their children were taught something about Arabic culture — during a World Geography class when they learn about different cultures — that schools across the district had to be closed down. During a section where students learn about different world religions, teacher Cheryl LaPorte decided to demonstrate the intricacies of Arabic calligraphy, the earliest form of which dates back to the end of the 7th century, by asking the students to try to copy the shahada — the Islamic statement of faith, a basic proclamation that is one of the five Pillars of Islam. The students were “not asked to translate the statement or to recite it,” said Augusta County Superintendent Eric Bond in a statement. Rather, the teacher aimed to give students an “idea of the artistic complexity of calligraphy.” The exercise was taken from a teacher workbook called World Religions. However some of the students objected, refused to do the calligraphy, and alerted their parents who claimed LaPorte had tried to “indoctrinate” their children. And if you’re going to indoctrinate students into a religious faith, then it had better be the right one. “She gave up the Lord’s time. She gave it up and gave it to Muhammad,” said Kimberly Herndon, a mother who organized a protest at a school meeting. The meeting was held on Tuesday at Good News Ministries church in Greenville near Riverheads High School, reported News Leader, with police officers present and everyone searched on entry.

https://news.vice.com/article/virginia-schools-shut-down-after-islam-is-included-in-world-religion-class?utm_source=vicenewsfb

State/Local

Don Siegelman released from solitary, says son

Joseph Siegelman said Thursday his father, governor of Alabama from 1999 to 2003, returned to the general population at a federal prison in Oakdale, La. on Dec. 11, about a day after his family said the governor was in solitary. But Don Siegelman’s communication privileges will remain limited until Dec. 30. “He still cannot call or have any visitors, where my mom and sister are concerned, and friends and family will not have the opportunity to speak with him over the holidays,” Joseph Siegelman said. Gov. Siegelman went to the facility’s Special Housing Unit following a phone interview on the Thom Hartmann Program, a liberal talk show, on Oct. 15. Officials limited Siegelman’s communications to written correspondence. The family said they had not been able to speak with him or received an explanation for his confinement. Joseph Siegelman said Thursday they were still uncertain on the reasons. Officials appeared to impose the limits on his telephone and visitation privileges on Oct. 29. Corrections officers use solitary confinement for anything from protection of an inmate to punishment for breaking prison rules. Prison administrators make those determinations. Oakdale declined to comment on Siegelman’s status last week. Joseph Siegelman, who serves as one of Gov. Siegelman’s defense attorneys, spoke to his father on the phone Wednesday. He said the governor was glad to be out of solitary. “He’s going to start to eat better,” he said. “He had to eat whatever they put through the door or window they have. Hopefully things will get back to normal as far as life in prison is concerned.”

http://www.montgomeryadvertiser.com/story/news/politics/southunionstreet/2015/12/17/don-siegelman-released-solitary-says-son/77478244/

 

Pension committee member says RSA recommendations coming

 MONTGOMERY — One of the leaders on a panel of lawmakers that has been studying the Retirement Systems of Alabama said Thursday he thinks the committee is looking at some potentially major changes to the system.

“To be honest with you, I don’t think we can continue on without some changes,” said Rep. Lynn Greer, R-Rogersville. He’s co-chairman of the Legislature’s committee on public pensions, which was created this spring.

Greer wasn’t ready to discuss details of possible changes, but said he thinks legislation will be ready by the start of the 2016 legislative session in February. The committee has vowed not to change the benefits of current retirees or employees and teachers. The committee is expected to meet again in mid-January. Sen. Arthur Orr, R-Decatur, on Thursday said the group possibly could recommend changes on a few issues, including RSA governance and retiree health insurance. Orr is the other co-chair of the study committee. The group has been looking at what other states do in their pension systems. Orr said he wants to know more about whether any changes “would move the needle” in terms of reducing the state’s risk in the system. Some states have gone from a defined benefit plan such as RSA’s, where retirees have a fixed monthly income benefit based on their age at retirement, years of service and salary, to a hybrid plan. Hybrids include a reduced defined benefit plan, along with a 401(k)-type plan. RSA’s December newsletter shows in 2015, both the teachers’ and public employees’ retirement systems earned about 1 percent in returns. The three-year average is about 9 percent. RSA is requesting $961 million from the state for the 2016-17 budget year. The growing annual contribution from the state has been a concern for lawmakers. Meanwhile, the system’s funded rate is about 67 percent. RSA chief David Bronner blamed the 1 percent return on the stock market.

“Most of the loss that was recognized on Sept. 30 has already been made up,” he said Thursday. He and other RSA officials at an Employees’ Retirement System meeting Thursday said they didn’t know what sort of proposals may be coming. Greer said the committee is looking at what’s been done in a handful of states, including California and Kentucky. Kentucky a few years ago moved to a hybrid cash-balance pension system. That state was advised by the Pew Charitable Trusts, which also is advising lawmakers in Alabama. Bronner on Thursday said those hybrids don’t always save money and can mean lesser benefits for retirees. Bronner also said he thinks most lawmakers will leave the system alone if they hear from state employees and teachers. Asked if he was going to rally members to contact their legislators, he said he may write in the next monthly newsletter that, “I’ve done my job, now I need some help from you guys to make sure that you have teachers in the future and that you have state employees.” Greer said many in the state don’t fully understand how the pension system works or the state’s liability. “I think the time has come. We have to get our heads out of the sand and address the problem,” Greer said.

http://www.decaturdaily.com/news/local/pension-committee-member-says-rsa-recommendations-coming/article_db06fd26-e198-5bb5-bd80-d1193acaf44b.html

 

$18,000 in taxpayer cash goes to one council member’s cell phone bill

Birmingham City Council President Johnathan Austin – already known for roaming the nation and the world on the city dime — ran up thousands of dollars in international roaming fees on his city cell phones and other devices in the first 10 months of the year, according to city records. Fees for his city issued cell phone, iPad and mobile hotspot pushed his bills so far this year to $18,255, or more than seven times anyone else’s in the offices of the mayor or council. His usage bill alone was three times higher than the week-long taxpayer-paid trip he took to Germany in December for the Hamburg Aviation Forum. The bills – which city workers say could have been minimized if Austin had contacted the information management department in advance, allowing them to negotiate a better temporary rate with the service provider– dwarf all others in the officers of the council and mayor. Second in charges was mayoral spokeswoman April Odom, with $2,600 in charges. Next was Austin’s assistant Courtney Hunter, with $2,200. The mayor’s bill – like almost all members of council and the staffs, was less than $1,000. Only Austin, Odom, Hunter, Austin staffer Kamilah Gray, Councilman Jay Roberson, Councilman Marcus Lundy and Council Administrator Cheryl Kidd had bills over $1,000. Austin said he was surprised by the amount of the bills, saying he had never been notified of the amounts. He said he was unaware of any policy requiring employees to notify the city of their international travel. He said he will not stop using his devices because “I am an elected official 24-7 whether I am in the city or not. Elected officials have to stay in constant contact.” More:

http://www.al.com/opinion/index.ssf/2015/12/18000_in_taxpayer_cash_goes_to.html#incart_river_home

University of Alabama quietly testing fraternity brothers for drugs

Every week, several members of the University of Alabama’s Sigma Nu fraternity chapter are randomly chosen to report to a cluster of dingy offices on the bottom floor of the school’s Russell Hall and urinate in a cup. Though the compulsory exercise sounds like a rush-season hazing ritual, it is in fact a central component of a strict new anti-drug effort launched at the start of the fall semester. Beginning this academic year, UA has been quietly drug-testing active members of multiple Greek organizations, including the Alabama chapters of the prominent Sigma Nu and Sigma Alpha Epsilon (SAE) fraternities, in the first run of a mandatory screening regime that some experts say is the boldest and most extensive in the nation. Six current and former members of the impacted chapters told AL.com over the past month that they now require their members to submit to periodic urinalysis at a UA facility in order to maintain good standing with the organizations and the school. The university confirmed that it is drug-testing members of some Greek organizations, though it declined to say how many or which ones. In addition to testing urine, the university has played a role in testing samples of some fraternity members’ hair for evidence of drug use over a period of months. The mandatory drug testing has generated controversy among fraternity members who say that it invades their privacy, unfairly targets Greek organizations and drives abuse of risky, hard-to-detect drugs like Xanax.

http://www.al.com/news/index.ssf/2015/12/university_of_alabama_quietly.html#incart_river_home

Trial Judge Quashes Hubbard Motion

MONTGOMERY—On Wednesday, Judge Jacob Walker, III ruled that Speaker Mike Hubbard had improperly handled a subpoena and ordered the information sealed. He also added that the information was not relevant to the case. Court filings state the defense improperly used subpoenas by disregarding Rule 17.3, to gather documents, records and interviews. According to the State’s latest motion, “On October 14, 2015, Hubbard had the Clerk issue a subpoena to Administrative Office of Courts AOC seeking the production of records identifying the AlaCourt users that accessed the publicly filed documents in this case. AOC filed a motion to quash the subpoena on October 21, 2015. At the hearing on October 28, 2015 and again on November 9th the State objected to these documents. AOC and the defense later reached an agreement about the production of some of the subpoenaed records.” The State said, this was another example of Hubbard’s legal team mounting a fishing expedition to gather information, confusing the issue, and delaying the legal process. The hearing showed that Hubbard’s lawyers not only used the Court’s subpoena power to obtain documents for themselves, which prevented the Court from determining whether or not the parties should receive the documents, they also contacted at least one individual named in the AlaCourt records and questioned that person about accessing the Hubbard court file. Court Watcher said Judge Walker was swift and decisive during the hearing, so much so, that Hubbard’s criminal lawyer, J. Mark White was stutteringly, saying, “Yes, Sir, Yes, your Honor,” rather than employing his usual whining tone. Several who attended the hearing commented on Hubbard’s demeanor and appearance, saying he looked sullen and greatly overweight. Reportedly, Hubbard has incurred over $1.5 million in legal fees, is in arrears on payments to his defense attorneys, and is having difficulty raising money. Hubbard has primarily financed his criminal defense by using campaign contributions. According to those with knowledge of Hubbard’s fundraising scheme, third parties are calling around the State to prop-up his legal defense fund. The latest orders coming from the trial judge are not falling in Hubbard’s favor. He is set to stand trial on March 28, 2016, almost two years after his indictment.

http://www.alreporter.com/trial-judge-quashes-hubbard-motion/

Blogs/Opinions

 

Morning Money

THE LAMENT OF THE BANK LOBBYISTS — Financial firm lobbyists are getting an earful from industry executives all over the country for failing to get much of anything into the omnibus (more on which from Zach Warmbrodt below). No big CFPB changes, no SIFI threshold changes, no DOL fiduciary rule slow-down. No nothing really. “We are hearing from some very disappointed and PO’d bankers,” one lobbying group official emailed. Another in his DC office earlier this week: “We don’t know what’s in this thing but it doesn’t look like good.” The anger among bankers is understandable but the political reality is that slipping Wall Street (or even Main Street) banking riders into must-pass bills is a good way to kill those bills these days. The omnibus needs a hundred or so Democrats to get through the House and that just would not happen with any significant Dodd-Frank rollbacks.

The days of these measures slipping through unnoticed are simply over. One comment from Sen. Elizabeth Warren and it’s off to the races. So while banking executives think many of the changes they are pushing are common sense relief that would benefit more than just their own bottom lines, most Democrats (and even many Republicans) simply don’t see it that way. It’s not so much a failure of the lobbyists (though they still get the incoming fire) as it is a complete shift in both the way the sausage gets made and the politics surrounding the banking industry. And Obama’s final year in office — with Hillary Clinton on the campaign trail — is not going to be the time for bankers to win big Dodd-Frank changes.

OMNIBUS OFF-TRACK? — POLITICO’s Jake Sherman, John Bresnahan and Lauren French: “The House overwhelmingly approved a $680 billion package of tax cuts even as the White House and House leaders in both parties scrambled to round up support for a $1.1 trillion spending bill scheduled for a vote Friday morning. … The tax package passed 318-109, with 241 Republicans — virtually the entire GOP Conference — voting yes. But the dynamics on the spending bill are far different, and at this time, passage is far from assured.

“The Capitol isn’t in full panic yet, but there does appear to be a rising level of concern on the Democratic side of the aisle that they will be short the votes needed to pass the omnibus spending bill. Liberals are angry that the bill includes language to lift the longstanding ban to export U.S. oil, and is silent on the debt crisis in Puerto Rico and other Democratic priorities … Should the measure fail — which many doubt it will — Congress would likely stay in session over the weekend. Government funding runs out on Dec. 22” http://politi.co/1Icr0pA

LEW LOOKS TO REASSURE DEMS ON PUERTO RICO — In a statement last night, Treasury Secretary Jack Lew: “The Administration has been clear that the fiscal situation in Puerto Rico is urgent. Congressional Democrats have worked to find a solution, and Speaker Ryan’s direction to the relevant Committees of the House of Representatives to work on a legislative solution reflects the need for Congress to act quickly.

“Any solution must include both independent oversight and an orderly process to restructure the Commonwealth’s debt. Providing restructuring authority to the people of Puerto Rico will require Congress to confront difficult interests and tough issues, but it is essential to protect the 3.5 million Americans who live in the Commonwealth. The Administration remains committed to working with Congress to address this crisis.”

SHELBY LARDS UP BILL … ONLY TO OPPOSE IT — POLITICO’s John Bresnahan: “Sen. Richard Shelby loaded up the $1.1 trillion spending bill with pet provisions, including one measure worth hundreds of millions to a rocket manufacturer with operations in his home state. … But in an only-in-Congress twist, Shelby, a very senior member on the appropriations committee, still plans to vote against the sprawling omnibus package. He’s citing the lack of language to restrict Syrian refugees as the reason.

“The move, however, could make the Republican senator the unofficial chairman of the ‘hope yes, vote no’ caucus on Capitol Hill. It also demonstrates the potency of immigration as an electoral issue in Alabama and the power of Shelby’s fellow home-state senator, Republican Jeff Sessions, over the controversial topic in the Southern state. GOP insiders note that Alabama’s Republican primary is on March 1, and Shelby is loath to do anything that would create distance between him and Sessions on immigration before that date” http://politi.co/1Pa4vB4

CRUZ: OBAMA WINS THE STIMULUS — Sen. Ted Cruz (R-Tex.) in POLITICO: “It’s Christmastime in Washington, D.C., and that can mean only one thing: Congress is once again playing Santa Claus. The names at the top of its list are the Washington Cartel: The big businesses and lobbyists who get in bed with career politicians to do nothing but grow government. And left off the list: the American taxpayer. … Before long, Republican leaders in the Senate and House intend to join hands with a majority of Congressional Democrats to pass a bill that funds President Barack Obama’s disastrous agenda well into 2016” http://politi.co/1YltUiK

GOOD FRIDAY MORNING — Congrats on completing another week that lasted 19 days. Email me on bwhite@politico.com and follow me on Twitter @morningmoneyben

DRIVING THE DAY — Chances are good that Congress will clear the omnibus and skip town for two weeks but it’s not a lock … President Obama holds a news conference at 1:50 p.m., presumably to celebrate the omnibus but possibly to chide Congress for not getting it done … . After the news conference, Obama flies to San Bernadino, Calif., to meet with families of the victims of the terrorist attack. Following the meeting, Obama flies to Honolulu for vacation … Lew will conduct meetings in New York City

OBAMA PREPS FOR FINAL YEAR — POLITICO’s Edward-Isaac Dovere: “Hillary Clinton, Donald Trump and a loudly ticking clock aren’t explicitly mentioned in an internal White House memo mapping out President Barack Obama’s plan for 2016. But they’re defining it. The very calendar-conscious memo, according to White House aides, leans heavily on using the ‘conversations’ that have defined Obama’s recent media approach to push his own agenda. But he’ll also use them to subtly, then not-so-subtly, make the case for the Democratic nominee, whom Obama and everyone else in the White House assume (but won’t yet say out loud) will be Clinton.

“On Friday, Obama will use his annual year-end press conference to take a victory lap after what he and his aides gloat was an expectation-defying 2015, but also lay the groundwork for an eighth year that they insist will be different from any other. … Acknowledging privately that he flubbed his initial response to the Paris attacks, Obama’s aides are hoping to add more theater to his counterterrorism response. The actual strategy isn’t changing much. But with White House aides saying they feel like Americans are more worried about the immediate threat of terrorism in the wake of Paris and San Bernadino than at any point since 9/11” http://politi.co/1OaNL9x

FED HIKES … SOME RATES DROP — WSJ’s Katy Burne: “On the day the Federal Reserve implemented its plan to raise interest rates, driving up overnight borrowing costs, broader market forces conspired instead to drive other U.S. interest rates down. The Fed increased its overnight target rate for lending between banks early Thursday, hitting 0.35 percent. But yields on Treasurys — from one-month bills to 10-year notes — fell as demand from investors drove prices higher. … It is a conundrum that Fed officials have grappled with for months leading up to the decision to end seven years of near-zero rates.

“While the Fed can orchestrate a rise in its overnight target rate, buying and selling by investors worldwide largely dictate the movement of yields in the $12.8 trillion Treasury market, a forum that effectively sets the borrowing rates for everything from mortgages to corporate loans. Strong global demand for U.S. Treasurys, which tends to push down yields, is potentially creating a conflict with the central bank’s plans to raise U.S. interest rates. Treasurys are being sought out by numerous sources now, thanks to soft global growth, regulatory changes that increase interest from banks and money-market funds, among other institutions, and investors and banks boosting cash holdings” http://on.wsj.com/1JfwTx7

CORPORATE BONDS TAKE A HIT — FT’s Eric Platt: “Investment grade bond funds in the US have been hit with a record wave of redemptions, a week after two high-yield funds announced they would shutter and another barred withdrawals as the credit market showed further cracks … Investors withdrew $5.1bn from US mutual funds and exchange traded funds purchasing investment grade bonds — those rated triple B minus or higher by one of the major rating agencies — in the latest week, according to fund flows tracked by Lipper. The figures, the largest since Lipper began tracking flows in 1992, accompanied another week of $3bn-plus withdrawals from junk bond funds.

“Lipper put the total investor withdrawals from taxable bond funds in the week to December 16 at $15.4bn. The ructions in credit markets have been exacerbated by the closure of funds managed by Third Avenue and Lucidus, as well as the decision to bar redemptions from a Stone Lion credit fund. The figures underscore the skittishness in the US corporate bond market headed into the final days of the year. Analysts and portfolio managers have warned that defaults are likely to climb in 2016, as the slide in oil and other commodity prices weighs on the energy and materials industries”
http://on.ft.com/1Qwim7W

YELLEN DRAWS PRAISE — Larry Fink on Bloomberg TV: “I think she nailed it. It was not too hot, not too cold, right down the center. I think it was a very well scripted conference … And the most important thing, what she gave the market is clarity. I think the opportunity they missed in September, why the markets were so unsettled because we had no clarity on their actions. And in this case they really expressed exactly what they’re looking for.” http://bloom.bg/1Oyl1YQ

MORGAN STANLEY TO TRIP STOCK-TRADING — WSJ’s Justin Baer and Jenny Strasburg: “Morgan Stanley plans to trim as many as 5 percent of its stock-trading employees early in 2016, part of an annual exercise to cull some of its less critical staff … The cuts will affect about 100 people globally and are based solely on performance … They aren’t related to the Wall Street firm’s recent decision to slash about 25 percent of its debt traders and salespeople. Morgan Stanley’s executives expect to end 2016 with roughly the same number of equities employees the firm will have at the start of the year …

“Morgan Stanley isn’t alone in pruning its workforce annually, in both good and slower years, with rival Goldman Sachs … expected to shed some 5 percent of its employees in early 2016 as well. Across big banks, executives are looking for ways to cut costs, reducing headcount and travel budgets. Earlier this month, Morgan Stanley said it would take a $150 million charge related to cuts of 1,200 people firm wide, about 2 percent of the company’s overall workforce. That move included the elimination of about 470 fixed-income and commodities jobs for salespeople and traders. Those cuts reflect a slump in debt-trading revenue that set in during the summer months, and that now threatens to extend into 2016”

PHARMA BRO SHACKLED — NYT’s Julie Creswell, Stephanie Clifford and Andrew Pollack: “It has been a busy week for Martin Shkreli, the flamboyant businessman at the center of the drug industry’s price-gouging scandals. He said he would sharply increase the cost of a drug used to treat a potentially deadly parasitic infection. He called himself ‘the world’s most eligible bachelor’ on Twitter and railed against critics in a live-streaming YouTube video. After reportedly paying $2 million for a rare Wu-Tang Clan album, he goaded a member of the hip-hop group to ‘show me some respect.’

“Then, at 6 a.m. Thursday morning, federal authorities arrested Mr. Shkreli, 32, at his Murray Hill apartment. He was arraigned in Federal District Court in Brooklyn on securities fraud and wire fraud charges. In a statement, a spokesman for Mr. Shkreli said he was confident that he would be cleared of all charges. … Federal officials described his crimes as a quasi-Ponzi scheme in which he used money from his company to pay off money-losing investors in his hedge funds. An F.B.I. official called his business schemes a ‘securities fraud trifecta of lies, deceit and greed.’”http://nyti.ms/1mqRE43

NYSE/NASDAQ TEAM UP ON MARKET STRUCTURE — Bloomberg’s Robert Schmidt: “Two of the largest U.S. exchanges are forming a trade group to weigh in on market structure issues in Washington, moving to present a united front as regulators review complex and controversial issues that could have wide impact on how stocks are traded. The New York Stock Exchange and Nasdaq Inc. have brought on two veteran lobbyists to run the Equity Markets Association: Mike Ferguson, who served in the House as a New Jersey Republican, and Michael Williams, a Democrat who worked in the White House during the Clinton administration. …

“The organization will begin by focusing more on educating the public, agencies and lawmakers on policy issues but will lobby as well, Williams said in an interview. The association also plans to reach out to other exchanges to see if they want to join, he said. … Securities and Exchange Commission Chair Mary Jo White has said she wants to undertake a ‘holistic review’ of U.S. market structure. That is likely to include issues ranging from the regulatory responsibilities of exchanges to whether there is too much trading taking place in dark pools”

POTUS Events

1:50 pm EST || Holds a press conference; Briefing Room
5:15 pm EST || Departs for Hawaii vacation
7:55 pm PST || Arrives in San Bernardino, California
7:55 pm PST || Obama and First Lady Michelle Obama visit privately with families of victims of the terrorist attack; San Bernardino
9:35 pm PST || Departs San Bernardino
1:05 am HST || Arrives in Honolulu, Hawaii

Live stream of Obama press conference at 1:50 pm

Floor Action

The House is scheduled to gavel in at 9 a.m. with a vote – on the government spending bill – set for around 9:15 a.m. The Senate’s scheduled depends on when the House passes the omnibus.