Krebs Daily Briefing 27 May 2016

Thomas L. Krebs, Securities Litigation, Regulation and Compliance Attorney Lawyer (c)2014 Brandon L. Blankenship
Thomas L. Krebs
(205)401-2383

International

U.S. Troops 18 Miles from ISIS Capital

FATISAH, Syria — Ever since U.S. President Barack Obama decided to send 250 more Special Forces to the Syrian battlefield against the so-called Islamic State, they’ve been easy to spot on the front lines in Hasakah, Tisreen Dam, and near Raqqa, the capital of the “caliphate” that’s also called ISIS, ISIL, and Daesh. In a base close to the town of Ayn al-Issa, U.S. soldiers are not only advising, they are also assisting the Syrian Democratic Forces (SDF) very closely in targeting ISIS positions with mortars and laser guided air strikes. Now photographs have surfaced of some of the American soldiers wearing the bright red, yellow, and green patches of the Kurdish People’s Protection Units (YPG) that have proved some of the most committed and effective fighters on the ground against ISIS. Critics note the YPG has close links with the PKK, the Kurdish Workers’ Party that has waged a decades-long guerrilla war against the Turkish government and is flatly labeled terrorist by Turkish officials. A de facto alliance between the YPG and the United States-led coalition fighting ISIS became evident during the nearly 200-day siege of Kobani, a Syrian town on the Turkish border, where ISIS was finally defeated and rolled back thanks to YPG fighters on the ground and coalition airstrikes. The photographs, however, suggest a much tighter relationship, and one more perilous for American soldiers on the front lines than had been previously acknowledged by the U.S. administration. It is unclear if the pictures were taken with YPG permission. In the Kurdistan region of Iraq, coalition forces that train Kurdish Peshmerga forces do not allow journalists to shoot pictures of their faces.  More:

http://www.thedailybeast.com/articles/2016/05/26/u-s-troops-18-miles-from-isis-capital.html

Obama makes history by visit to Hiroshima bomb site

Obama and Japanese Prime Minister Shinzo Abe laid wreaths in the Hiroshima Peace Memorial Park shortly after Obama’s arrival Friday. The president did not apologize for the Hiroshima bombing or the atomic attack on Nagasaki three days later. “Seventy-one years ago on a bright cloudless morning, death fell from the sky and the world was changed,” Obama said. “Why do we come to this place, to Hiroshima? We come to ponder the terrible force unleashed in the not-so-distant past. We come to mourn the dead including over 100,000 Japanese men women and children, thousands of Koreans, a dozen Americans held prisoner,” he added. Abe said Obama’s visit opened new chapter of reconciliation for the United States and Japan. Large and seemingly supportive crowds began gathering outside the Peace Memorial Park before Obama’s arrival. “It’s going to mean a lot for people here to see him come and lay flowers and pay his respects. No one expects him to apologize — the gesture, the visit alone, is enough,” said Matt Steckling, 25, a Chicago native who has lived in Hiroshima for about a year and a half. Obama previously said he would not apologize for the bombings in Hiroshima and Nagasaki. About 80,000 were killed outright by the bombing in Hiroshima and another 60,000 died by the year’s end. About 70,000 people were killed in Nagasaki. The death toll for both bombings stands at 210,000. Japanese bomb victim organizations have long pressed for an apology, viewing the use of atomic weapons as inhumane. Many American veteran groups and former prisoners of war have opposed an apology, arguing that the Hiroshima and Nagasaki bombings hastened the end of a long and brutal conflict. “Our visit to Hiroshima will honor all those who were lost in World War II and reaffirm our shared vision of a world without nuclear weapons,” Obama said at a press conference this week. Japan surrendered on Aug. 15, 1945. Obama was awarded the 2009 Nobel Peace Prize largely on his stated goal of controlling the spread of nuclear weapons. More:

http://www.usatoday.com/story/news/world/2016/05/27/obama-visit-hiroshima-bomb-site-pledges-no-apology/85022938/?csp=breakingnews

North Korea Linked to Digital Attacks on Global Banks

Security researchers have tied the recent spate of digital breaches on Asian banks to North Korea, in what they say appears to be the first known case of a nation using digital attacks for financial gain. In three recent attacks on banks, researchers working for the digital security firm Symantec said, the thieves deployed a rare piece of code that had been seen in only two previous cases: the hacking attack at Sony Pictures in December 2014 and attacks on banks and media companies in South Korea in 2013. Government officials in the United States and South Korea have blamed those attacks on North Korea, though they have not provided independent verification. On Thursday, the Symantec researchers said they had uncovered evidence linking an attack at a bank in the Philippines last October with attacks on Tien Phong Bank in Vietnam in December and one in February on the central bank of Bangladesh that resulted in the theft of more than $81 million. “If you believe North Korea was behind those attacks, then the bank attacks were also the work of North Korea,” said Eric Chien, a security researcher at Symantec, who found that identical code was used across all three attacks. “We’ve never seen an attack where a nation-state has gone in and stolen money,” Mr. Chien added. “This is a first.” The attacks have raised alarms in the global banking industry because the thieves gained access to Swift, a Brussels-based banking consortium that runs what is considered the world’s most secure payment messaging system. Swift’s system is used by 11,000 banks and companies to move money from one country to another — one reason that it is a tempting target for criminals.

http://www.nytimes.com/2016/05/27/business/dealbook/north-korea-linked-to-digital-thefts-from-global-banks.html?ref=dealbook&_r=0

Short sellers circle Alibaba amid SEC probe

Alibaba Group Holding Ltd (BABA.N), which disclosed it is under investigation for its accounting practices, has emerged as one of the short-selling community’s favorite targets in the relatively short time it has been in the public market. Noted short-sellers Jim Chanos of Kynikos Associates and John Hempton of Bronte Capital have been raising red flags since last year about the Chinese e-commerce giant’s accounting practices. Hempton told Reuters in an email on Thursday that Alibaba, which went public in September 2014, is “a real company” but “with questionable accounts.” He added: “The ability to value it from the accounts is, thus, tricky.” Hempton said he believes shares will eventually “go down a lot – and get a takeover bid”. A takeover would require deep pockets without an extreme decline – the company is currently worth about $190 billion. Questions about Alibaba’s growth rate and its relations with affiliated companies have dogged the firm for years. The latest investigation highlights how far Alibaba has to go to improve transparency, while a continuing acquisition spree creates uncertainty over its earnings. Alibaba declined to comment beyond its statements on Wednesday that it was cooperating with the U.S. Securities and Exchange Commission, that the SEC had said a request for information did not indicate that it believed federal laws had been violated, and that the annual report delivered this week was “exactly” the type of information regulators requested. Alibaba said the SEC investigation launched earlier this year focused on the accounting for logistics firm Cainiao Network, which is around 47 percent-owned by Alibaba, accounting practices applicable to related-party transactions in general, and operating data from its annual “Singles’ Day” sale, according to Alibaba’s annual report filed on Tuesday. Shares of Alibaba recovered a bit on Thursday, closing up 3.65 percent at $78.35, after diving nearly 7 percent the day before. Some financial analysts downplayed the inquiry. “While we would never be dismissive of an SEC inquiry, we believe that investigations are sometimes launched because the SEC is unfamiliar with various” business models, Deutsche Bank wrote. Short interest in Alibaba shares doubled in the second half of 2015, shooting from fewer than 50 million shares in June to a peak of 98.1 million in early January 2016. That has dropped back to around 77.5 million shares, more than 10 percent of Alibaba’s free float, as of the last bi-monthly data from the New York Stock Exchange. Senator Bob Casey, a Pennsylvania Democrat who raised concerns about Alibaba and Chinese IPOs in 2014, applauded the investigation. “China’s financial markets remain so opaque there are serious questions about whether investors are receiving basic protections,” he said in a statement.  More:

http://www.reuters.com/article/us-alibaba-accounts-shortsellers-idUSKCN0YH2RY?feedType=nl&feedName=businessNews&utm_source=Sailthru&utm_medium=email&utm_campaign=US%20Business%20New%200900%202016-05-27&utm_term=US%20Business%200900

National

Bank of America’s Winning Excuse: We Didn’t Mean To

 Back in the late-housing-bubble period, in 2007, Countrywide Home Loans, which was then the largest mortgage provider in the country, rolled out a new lending program. The bank called it the “high-speed swim lane,” or HSSL, or, even more to the point, “hustle.”Countrywide, like most mortgage lenders, sold its loans to Wall Street banks or Fannie Mae and Freddie Mac, two mortgage giants, which bundled them and, in turn, sold them to investors. Unlike the Wall Street banks, Fannie and Freddie insured the loans, so they demanded only the ones of the highest quality. But by that time, borrowers with high credit scores were getting scarcer, and Countrywide faced the prospect of collapsing revenue and profits. Hence, the hustle program, which “streamlined” Countrywide’s loan origination, cutting out underwriters and putting loan processors, whom the company had previously deemed not qualified to answer borrowers’ questions, in charge of reviewing loan applications. In practice, Countrywide dropped most of the conditions meant to insure that loans would be repaid. The company didn’t tell Fannie or Freddie any of this, however. Lower-level Countrywide executives repeatedly warned top executives that the mortgages did not fulfill the requirements. Employees changed data about the mortgages to make them look better, sometimes increasing the borrower’s income on the forms until the loan looked acceptable. Then, Countrywide sold them to the mortgage giants anyway. At one point, the head of underwriting at Countrywide wrote an alarmed e-mail, with a list of questions from employees, such as, does “the request to move loans mean we no longer care about quality?” The executive in charge of the decision, Rebecca Mairone, replied, “So – it sounds like it may work. Is that what I am hearing?” To federal prosecutors—and to a jury in Manhattan—the hustle sounded like fraud. And in 2013, Bank of America, which had by then taken over Countrywide, was found liable for fraud and later ordered to pay a $1.27 billion judgment to the government. But this week, the 2nd U.S. Circuit Court of Appeals looked at that judgment and asked this question: If a entity (in this case, a bank) enters into a contract pure of heart and only deceives its partners afterward, is that fraud? The three-judge panel’s answer was no. Bank of America is no longer required to pay the judgment. More:

https://www.propublica.org/article/bank-of-americas-winning-excuse-we-didnt-mean-to?utm_source=pardot&utm_medium=email&utm_campaign=dailynewsletter

Court Rules Companies Cannot Impose Illegal Arbitration Clauses

A federal appeals court on Thursday ruled that companies cannot force their employees to sign away their right to band together in legal actions, delivering a major victory for American workers and opening an opportunity for the Supreme Court to weigh in. The United States Court of Appeals for the Seventh Circuit in Chicago struck down an arbitration clause that banned employees from joining together as a class and required workers to battle the employer one by one outside of court. In its opinion, the three-judge panel said that Epic Systems, a Verona, Wis., health care software provider, violated federal labor law when it required its workers to bring any disputes individually to arbitration, a private system of justice where there is no judge or jury. “The increasing use of mandatory arbitration agreements and the prohibition on workers proceeding as a class has been one of the most major developments in employment the last decade,” said Benjamin Sachs, a professor of labor law at Harvard Law School. “Most of the court decisions have facilitated this development. This is a major move in the opposite direction.” By preventing employees from joining together in a collective action, the court said, the arbitration clause ran afoul of a critical piece of the National Labor Relations Act, a landmark 1935 law that gave workers the right to unionize and engage in concerted action. The decision announced on Thursday, in Lewis v. Epic Systems, will almost certainly prove controversial because it directly conflicts with an earlier decision by an appeals court in Louisiana, a split that could prompt the Supreme Court to wade back into the fray. Similar cases are pending across the country. In a pair of decisions in 2011 and 2013, the Supreme Court blessed the widespread use of arbitration in a case pushed by a group of credit card companies. The credit card companies turned to a 1925 federal law that formalized arbitration as a means for companies to hash out their disputes with one another. Arbitration clauses have proliferated over the last 10 years. Companies have added them to tens of millions of contracts for things as diverse as cellphone service and nursing home care. Employers have argued that arbitration provides a more efficient forum for workers to resolve their disputes. That assertion has been largely anecdotal, though. But an investigation by The New York Times found that, once stripped of their ability to join together in a group, many employees simply give up. Federal and state officials have said they are concerned because the individual and closed-door nature of arbitration can obscure patterns of wrongdoing from other employees. Still, courts across the country have largely upheld arbitration clauses, deferring to the Supreme Court, which ruled that the Federal Arbitration Act, the 1925 law dusted off by the credit card companies, beats out even muscular federal laws. In a 2012 decision involving D. R. Horton, a homebuilding company in Fort Worth, the federal labor board said that employers could not prevent workers from banding together. Preventing that, the board said, violated the National Labor Relations Act, which explicitly allows for collective action. Undeterred, D. R. Horton appealed the labor board’s decision, sending the case to the appellate court in Louisiana. That court deferred to the earlier Supreme Court cases in a 2013 decision. In its decision on Thursday, the Seventh Circuit ruled that the Federal Arbitration Act did not protect all arbitration clauses. The court found that the law allows illegal arbitration clauses to be thrown out, and that Epic Systems had precisely one of those clauses. The case began when an employee, Jacob Lewis, sued Epic Systems over denying him and other employees overtime wages. Epic, citing an arbitration clause that Mr. Lewis was required to agree to, tried to get the case thrown out. The district court thwarted the company’s request. Ultimately, Epic appealed, sending the case to the court of appeals. The court was unequivocal in answering whether Epic’s arbitration clause violated the law. “The answer is yes,” the court said.

http://www.nytimes.com/2016/05/27/business/dealbook/court-rules-companies-cannot-impose-illegal-arbitration-clauses.html?emc=edit_th_20160527&nl=todaysheadlines&nlid=53476364&_r=0

U.S. sees first case of bacteria resistant to all antibiotics

U.S. health officials on Thursday reported the first case in the country of a patient with an infection resistant to all known antibiotics, and expressed grave concern that the superbug could pose serious danger for routine infections if it spreads. “We risk being in a post-antibiotic world,” said Thomas Frieden, director of the U.S. Centers for Disease Control and Prevention, referring to the urinary tract infection of a 49-year-old Pennsylvania woman who had not travelled within the prior five months. Frieden, speaking at a National Press Club luncheon in Washington, D.C., said the infection was not controlled even by colistin, an antibiotic that is reserved for use against “nightmare bacteria.” The infection was reported Thursday in a study appearing in Antimicrobial Agents and Chemotherapy, a publication of the American Society for Microbiology. It said the superbug itself had first been infected with a tiny piece of DNA called a plasmid, which passed along a gene called mcr-1 that confers resistance to colistin. “(This) heralds the emergence of truly pan-drug resistant bacteria,” said the study, which was conducted by the Walter Reed National Military Medical Center. “To the best of our knowledge, this is the first report of mcr-1 in the USA.” The patient visited a clinic on April 26 with symptoms of a urinary tract infection, according to the study, which did not describe her current condition. Authors of the study could not immediately be reached for comment. The study said continued surveillance to determine the true frequency of the gene in the United States is critical. “It is dangerous and we would assume it can be spread quickly, even in a hospital environment if it is not well contained,” said Dr. Gail Cassell, a microbiologist and senior lecturer at Harvard Medical School. But she said the potential speed of its spread will not be known until more is learned about how the Pennsylvania patient was infected, and how present the colistin-resistant superbug is in the United States and globally.

http://www.reuters.com/article/us-health-superbug-idUSKCN0YH2KT

G.O.P. Opposition to Gay Rights Provision Derails Spending Bill

WASHINGTON — A bitter dispute over gay rights on Thursday brought down a routine energy and water spending bill in the House after conservative Republicans voted against their own legislation rather than acquiesce to a bipartisan amendment banning discrimination based on sexual orientation. The bill’s failure, by a vote of 305 to 112, portends another difficult year for spending legislation and raises questions over whether the ambitions of the new House speaker, Paul D. Ryan of Wisconsin, will yield any significant results. As lawmakers headed off for a weeklong Memorial Day recess, Mr. Ryan was left to blame Democrats for the failure of a Republican bill in a chamber with its largest Republican majority since the 1920s. Mr. Ryan and Senator Mitch McConnell of Kentucky, the Senate majority leader, have staked their success on returning order to a recalcitrant Capitol. But House Republicans made clear Thursday that they were unwilling to take a difficult vote in an election year, and for the second year in a row a cultural fight torpedoed the appropriations process. In 2015, a battle over flying the Confederate flag on federal property paralyzed spending bills on the floor and dashed the promised return to an orderly process for allocating taxpayer money. ”I could not, in good conscience, vote for the  appropriations bill with this damaging amendment included,” Representative Diane Black, Republican of Tennessee, said, calling the anti-discrimination amendment a threat to religious liberty. Senator John Cornyn of Texas, the No. 2 Republican, acknowledged that the failure of the House bill set up the possibility of another major showdown over spending — or even a government shutdown — in October, when the next fiscal year begins and the election season crescendos. Regardless, he added, “it’s a terrible way to govern.” More:

http://www.nytimes.com/2016/05/27/us/politics/house-budget-gay-rights-paul-ryan.html?emc=edit_th_20160527&nl=todaysheadlines&nlid=53476364

Founder of Gawker Criticizes ‘Vindictive’ Campaign Against Company

A day after Peter Thiel explained why he had given about $10 million to fund multiple lawsuits against Gawker Media, the site’s founder published an open letter to the Silicon Valley billionaire, calling him “thin-skinned” and a “comic book villain” and challenging him to a public debate about the role of journalism in society. The letter from Nick Denton, the company’s founder and majority owner, was published Thursday on Gawker, hours after the company acknowledged that it had hired an investment banker in recent weeks to help it explore strategic options, including a possible sale. Mr. Denton harshly criticized what he said was a lengthy, unnecessary vendetta Mr. Thiel waged against not only Gawker Media but also individual journalists. “This vindictive decade-long campaign is quite out of proportion to the hurt you claim,” Mr. Denton wrote on Thursday. In the letter, Mr. Denton made it clear that he would not back down against a billionaire who showed no sign of stopping his involvement in underwriting the lawsuits, even as the future of Gawker remained in question. On Wednesday, Mr. Thiel, a co-founder of PayPal and an early investor in Facebook, acknowledged in an interview with The New York Times that he had bankrolled lawsuits against Gawker, including one by the wrestler Hulk Hogan, whose real name is Terry G. Bollea. In March, a Florida jury awarded $140 million to Mr. Bollea in his case against the company for publishing a sex tape. The company is expected to appeal the verdict. Other lawsuits against Gawker, led by the same lawyer, Charles Harder, representing Mr. Bollea, are still pending.

A spokesman for Mr. Thiel declined to comment on Thursday. In his interview with The Times, Mr. Thiel — who was outed as being gay by Gawker’s Valleywag blog nearly a decade ago — said he did not view his underwriting of the lawsuits as a business venture. “I would underscore that I don’t expect to make any money from this,” he said. In his open letter, Mr. Denton issued a play-by-play of past stories that drew Mr. Thiel’s ire and of two defamation lawsuits currently pending against Gawker, and criticized what he characterized as an inability by Silicon Valley figures to accept criticism from journalists. “I can see how tempting it would be to use Silicon Valley’s most abundant resource, a vast fortune, against the harsh words of the writers of a small New York media company,” he wrote. “We have our devices; you have yours.” Mr. Denton also assured Mr. Thiel that Gawker’s journalists would be reporting on his involvement in lawsuits against the company. “We, and those you have sent into battle against us, have been stripped naked, our texts, online chats and finances revealed through the press and the courts,” Mr. Denton wrote. “In the next phase, you too will be subject to a dose of transparency.” More:

http://www.nytimes.com/2016/05/27/business/dealbook/gawker-sale-peter-thiel.html?ref=dealbook&_r=0

Court Rules Companies Cannot Impose Illegal Arbitration Clauses

A federal appeals court on Thursday ruled that companies cannot force their employees to sign away their right to band together in legal actions, delivering a major victory for American workers and opening an opportunity for the Supreme Court to weigh in. The United States Court of Appeals for the Seventh Circuit in Chicago struck down an arbitration clause that banned employees from joining together as a class and required workers to battle the employer one by one outside of court. In its opinion, the three-judge panel said that Epic Systems, a Verona, Wis., health care software provider, violated federal labor law when it required its workers to bring any disputes individually to arbitration, a private system of justice where there is no judge or jury. “The increasing use of mandatory arbitration agreements and the prohibition on workers proceeding as a class has been one of the most major developments in employment the last decade,” said Benjamin Sachs, a professor of labor law at Harvard Law School. “Most of the court decisions have facilitated this development. This is a major move in the opposite direction.” By preventing employees from joining together in a collective action, the court said, the arbitration clause ran afoul of a critical piece of the National Labor Relations Act, a landmark 1935 law that gave workers the right to unionize and engage in concerted action. The decision announced on Thursday, in Lewis v. Epic Systems, will almost certainly prove controversial because it directly conflicts with an earlier decision by an appeals court in Louisiana, a split that could prompt the Supreme Court to wade back into the fray. Similar cases are pending across the country. In a pair of decisions in 2011 and 2013, the Supreme Court blessed the widespread use of arbitration in a case pushed by a group of credit card companies. The credit card companies turned to a 1925 federal law that formalized arbitration as a means for companies to hash out their disputes with one another. Arbitration clauses have proliferated over the last 10 years. Companies have added them to tens of millions of contracts for things as diverse as cellphone service and nursing home care. Employers have argued that arbitration provides a more efficient forum for workers to resolve their disputes. That assertion has been largely anecdotal, though. But an investigation by The New York Times found that, once stripped of their ability to join together in a group, many employees simply give up.

http://www.nytimes.com/2016/05/27/business/dealbook/court-rules-companies-cannot-impose-illegal-arbitration-clauses.html?ref=dealbook

Gawker Hires Banker to Explore Sale After Hulk Hogan Suit

Gawker Media Inc. has hired a banker to explore strategic options, including a possible sale, as the digital media company fights a potentially crippling $140 million damages award in a defamation suit brought by the former pro wrestler Hulk Hogan. Mark Patricof, managing director at Houlihan Lokey, will advise Gawker on its options amid the legal clash secretly bankrolled by billionaire investor and Facebook Inc. board member Peter Thiel, the company said Thursday. On Wednesday, a Florida judge denied Gawker’s motion for a new trial and said the $140 million jury verdict won’t be reduced, the Associated Press reported. Gawker can still appeal to a higher Florida court. “We’ve had bankers engaged for quite some time given the need for contingency planning around Facebook board member Peter Thiel’s revenge campaign,” Gawker said Thursday in a statement. “We recently engaged Mark Patricof to advise us and that seems to have stirred up some excitement, when the fact is that nothing is new.”

Gawker isn’t currently for sale and there aren’t any bidders, but that could change if it loses an appeal, according to a person familiar with the matter. The New York Post first reported Gawker had hired an investment banker to explore its options. More:

http://www.bloomberg.com/news/articles/2016-05-26/gawker-hires-banker-to-explore-possible-sale-after-hogan-appeal

The Price of Public Money

Matthew King of suburban Tacoma, Washington, is a Democrat who believes the average American should donate to presidential candidates to thwart big money’s influence. Though he is looking for work, he feels so strongly about the issues that he makes small monthly contributions to Democratic candidates and causes. “It’s democracy in action,” King says, describing his hopes for a president who will combine leftist ideals with strong Christian values. “Right now, money is our voice in politics.” Last fall, King, who is in his late 30s, was working at a local Taco Bell; he charged $20 to his credit card to support a presidential candidate, former Maryland Governor Martin O’Malley. King did not know it at the time, but his donation would help O’Malley’s campaign qualify for more than $1 million in matching funds thanks to a cumbersome bureaucratic process: a relic known as the Presidential Election Campaign Fund. O’Malley was the only one of 23 initial primary contenders in 2016 to seek public funds for his campaign. Only three candidates are still in the race, but more than $300 million remains in the fund—and no one wants to touch it. In a presidential campaign awash in money, with anticipated spending of up to $10 billion this election year, the fund is a quaint throwback to an idealistic time, before Supreme Court decisions unleashed secretive outside-spending practices and before wealthy individuals dominated campaign fundraising. The Presidential Election Campaign Fund was conceived 40 years ago to level the presidential playing field and to give political unknowns a fighting chance. To a lesser extent, the fund also engaged average citizens by allowing them to voluntarily check off a fund donation on their income taxes. At its height, the fund allowed candidates to forgo frenetic cross-country fundraising. The program boosted outsiders like Democrat Jimmy Carter and Republican Ronald Reagan, and for years, it helped limit campaign costs. But with the explosion of campaign spending, fewer and fewer candidates have embraced the program. Today, it has become irrelevant. In recent years, an ever-smaller percentage of taxpayers have checked off the box on their 1040 forms to authorize that $3 go into the fund. But, says Anthony Corrado, a Colby College professor who specializes in presidential campaigns, the fund now stands as “the last life raft of what was once the flagship of reform.” Everyone agrees the system is badly broken. Today, the question is whether it should be wheeled into the shop for a total remodeling or hauled off to the scrap yard. More:

http://www.theatlantic.com/politics/archive/2016/05/the-price-of-public-money/484223/

An Obituary Runs Seven Years After the Subject’s Death. What Happened?

It was not unusual that The Times decided to publish an obituary about Donald W. Duncan. By the newspaper’s standards, he was deserving of one. A former Green Beret master sergeant, Mr. Duncan had returned from Vietnam in 1966 disillusioned about the war and determined to join the fight to stop it on the home front. Turning down an officer’s commission, he quit the Army and became one of the war’s fiercest critics, well before the antiwar movement had gathered steam. He wrote a memoir and magazine articles and lent his voice and presence to antiwar rallies alongside other war opponents like the Berrigan brothers, the folk singer Joan Baez, the actress Jane Fonda and the novelist Norman Mailer. In sum, Mr. Duncan made an appreciable impact on the national discussion of the war; he had for a time been a newsmaker, and by The Times’s rule of thumb his death was thus newsworthy. The obituary ran online on May 6, and in the paper on May 8. What was unusual about the obituary, however, was how belated it was. Mr. Duncan had died seven years earlier, on March 25, 2009. And therein lies a tale, about a life in which notoriety gave way to its flip side, obscurity, and about a journalistic decision in which one imperative of reporting — to be timely — deferred to a greater one: to simply get the story out.

Mr. Duncan had actually been on the obituary desk’s radar for about two years. He had been brought to my attention by Jeff Roth, who oversees the Times’s “morgue” — a vast archive of newsprint clippings and photographs, housed in bank upon bank of file cabinets deep in a basement redoubt.

Mr. Roth suggested at the time that we might want to prepare an advance obituary on Mr. Duncan, something the obits desk routinely does on people of note. I agreed and we put Mr. Duncan on our “to do” list. Months went by. Finally, in late April, I got around to making the assignment. By my calculation, Mr. Duncan had just turned 86, and by that measure, I thought, we had better not wait for too much longer. If we’re going to be ready for the unforeseeable deaths of others, I have found, it is never wise to toy with Fate. More:

http://www.nytimes.com/2016/05/25/insider/an-obituary-runs-seven-years-after-the-subjects-death-what-happened.html

Boxing Promoter Offers $20 Million for Trump vs. Bernie Bout

Boxing promoter Bob Arum is getting behind the idea of a Donald Trump vs. Bernie Sanders debate. He’s even offering a minimum of a $20 million donation to charity, which is more than Trump requested.

“Top Rank, Inc. is ready to promote ‘THE HEAVYWEIGHT DEBATE: DONALD TRUMP vs. BERNIE SANDERS.’ The idea of the debate was first proposed on Wednesday night when Trump appeared on Jimmy Kimmel Live, and Kimmel asked Trump if he would consider it. Trump’s response to Kimmel was ‘We would have such high ratings and I think I should take that money and give it to some worthy charity,'” reports boxingscene.com. “Enter Hall of Fame promoter BOB ARUM.” “It’s the debate of the century between two of the top pound for pound politicians in the country — Mr. Trump, the Republican Party’s presumptive nominee and Senator Sanders, the Democratic candidate,” said Arum, CEO and Founder of Top Rank. “We have two contenders ready, willing and able to go mano a mano over the most important issues facing the United States. And I am ready to promote it.” Top Rank will negotiate a site fee from a major U.S. venue for the debate. Top Rank will produce and distribute the debate live on pay-per-view throughout the U.S. Top Rank will distribute the debate via closed-circuit to establishments in the U.S., including but not exclusive to, bars, restaurants, and movie theater chains 80% of the net proceeds will go to the charity or charities of the candidates’ choice, agreed upon in advance, with a minimum of $20 million being donated. The moderator or moderators will be subject to the approval of the candidates, though Arum has recommended Secretary Hillary Clinton, Senator Ted Cruz and Governor Mitt Romney.

http://www.weeklystandard.com/boxing-promoter-offers-20-million-for-trump-vs.-bernie-bout/article/2002587

CBS Host: Nobody at Party I Was at Last Night Cares About Clinton’s Emails

Political analysis by way of personal anecdote is almost never advisable. CBS This Morning co-host Gayle King provided a classic example Thursday while discussing Hillary Clinton’s private email scandal.

With Face The Nation moderator John Dickerson in the studio to discuss the State Department’s Inspector General report that slammed Clinton’s email conduct, King protested nobody at the party she was at the night before cared about it. In the clip flagged by media watchdog NewsBusters, King appeared perturbed that Clinton’s server was once again at the forefront. “So John, put it in perspective,” King said. “How big a deal is this really? I was at an event last night, and both Democrats and Republicans were quoting Bernie Sanders saying, ‘I’m sick and tired of hearing about your damn emails.’”

“But that was a long time ago, and he’s since changed some of that,” co-host Charlie Rose said.

“Yeah, he has, but the people at this party last night haven’t, so how big a deal is it?” King asked.

“Is this going to improve anybody’s wages? Is this going to help their kid get into a college and not be full of debt for the rest of their life? No, but it’s about judgment and character,” Dickerson said. “And we look at our presidents that way. And the challenge for Secretary Clinton is in the answers, are they going to raise new questions? “In other words, when she says it was allowed and it was fine and I’ve been transparent and then you have an Inspector General, not just a political opponent, but an Inspector General saying the opposite thing, people are getting a fresh, realtime test of whether the candidate is shooting straight with them, and that’s a challenge for any candidate.” King also let some bias slip last week on CBS when she accidentally said “we were all laughing” at the Republican Party’s chaotic primary season. She is close friends with Oprah Winfrey, the left-leaning media mogul.

http://freebeacon.com/politics/cbs-host-nobody-party-last-night-cares-clintons-emails/

State/Local

Former SPLC legal director hired to prosecute Roy Moore

The lawyer representing suspended Alabama Supreme Court Chief Justice Roy Moore said Thursday that the state commission that filed ethics charges against Moore has hired the former legal director of the Southern Poverty Law Center, the same group that filed the complaints. “In a brazen move, the Judicial Inquiry Commission (JIC) of the State of Alabama has hired John Carroll, a former Legal Director of the Southern Poverty Law Center (SPLC), to prosecute its politically motivated charges against (Moore),” according to a press release from Liberty Counsel, the legal group representing Moore. “I have almost no words for this corrupt and unjust system,” Mat Staver, Founder and Chairman of Liberty Counsel, which represents Chief Justice Moore, stated in the press release. Carroll declined comment this morning regarding the Liberty Counsel Statement. He referred any comment to the JIC. Rosa Davis, an attorney for the JIC confirmed that she and Carroll have filed a notice of appearance as co-prosecutors in the Roy Moore case. Davis noted that Carroll left the SPLC in 1984, 32 years ago, but declined comment on the case. Staver, in the press release, state that “we have said that the charges are politically motivated and that the JIC violated its own rules of confidentiality. You would think that the JIC would be astute enough to at least avoid an appearance of bias, but obvious the JIC does not care. This is a brazen act that calls into question the entire JIC process.” Carroll is a professor and former dean of the Cumberland School of Law in Birmingham. Carroll also served as interim director of the Alabama Ethics Commission prior to the current ethics commission director. Prior to coming to the law school, he served 14 years as a U.S. Magistrate Judge based in Montgomery. He also is a former professor at Mercer University. Before that, he was legal director of the Southern Poverty Law Center. Prior to his legal career Carroll served in the U.S. Marine Corps in Vietnam as a flight officer on over 200 combat missions. On May 6 the Alabama Judicial Inquiry Commission forwarded charges to the Alabama Court of the Judiciary, accusing the chief justice of violating judicial ethics in his opposition to same-sex marriage. Moore had 30 days in which to respond the charges, but had not as of Thursday morning. A date for Moore’s trial on the charges has not been set. The charges focus on Moore’s Administrative Order issued in January of this year in which he wrote that the 2015 orders of the Alabama Supreme Court telling probate judges not to issue marriage licenses to same-sex couples still remained in effect – despite the U.S. Supreme Court ruling – until that court further indicates otherwise. “The travesty of the politically motivated charges by the JIC against Chief Justice Roy Moore have become even clearer with the appointment by the JIC of a former Legal Director of the same organization that filed the charges. This is a miscarriage of justice of the highest sort,” Staver stated. Liberty Counsel describes itself as an international nonprofit, litigation, education, and policy organization dedicated to advancing religious freedom, the sanctity of life, and the family since 1989, by providing pro bono assistance and representation on these and related topics. The Southern Poverty Law Center describes itself as being dedicated to fighting hate and bigotry and to seeking justice for the most vulnerable members of our society. Using litigation, education, and other forms of advocacy, the Center works toward the day when the ideals of equal justice and equal opportunity will be a reality.

http://www.al.com/news/birmingham/index.ssf/2016/05/a_former_splc_legal_director_h.html

Gov. Bentley scandal: Rebekah Mason seeks Collier’s tax returns, medical records

Rebekah Caldwell Mason, accused by former ALEA Secretary Spencer Collier as being Gov. Robert Bentley’s romantic interest, is seeking Collier’s medical records and tax returns, among other things. Attorney for Mason’s RCM Communications – a Tuscaloosa-based consulting company – filed a request for production of documents in the wrongful termination lawsuit filed by Collier. Among the requests:

  • State and federal income tax returns from 2005 to 2015.
  • All medical records since 2009.
  • All tape and other recordings of every kind and nature on which the voice of any defendant appears.
  • Collier’s personnel file with the state of Alabama.
  • A list of all people or entities who have made complaints against Collier since 2005.

The filing also said that more requests could be added in the future. RCM Communications, as well as Mason herself, was named as a defendant in Collier’s lawsuit along with Bentley, Bentley’s re-election campaign, ALEA Secretary Stan Stabler and Alabama Council for Excellent Government. RCM Communications also filed a motion to be dismissed as a defendant from the lawsuit. Bentley, his campaign and Stabler have also filed such motions. RCM Communications state in its motion to dismiss that no claims have been adequately made against the company, among other reasons. Montgomery County Circuit Judge Johnny Hardwick has scheduled a July 26 hearing to allow oral arguments on motions filed in the case. Bentley, Stabler and RCM Communications have requested the hearing. RCM Communications also filed notice of intent to take Collier’s deposition as well as his wife, Melissa. The RCM Communication filings were submitted by Montgomery attorney Bobby Segall. RCM Communications request for documents

http://www.al.com/news/index.ssf/2016/05/gov_bentley_scandal_rebekah_ma_1.html#incart_river_home

Consultant: ‘No choice’ but to subcontract to Mike Hubbard

A Florida political consultant testified Thursday that he believed he had no choice but to subcontract Alabama Republican Party campaign printing work back to a firm owned by the party’s chairman.

The chairman at the time was Alabama House Speaker Mike Hubbard, now on trial for ethics violations. On Thursday, jurors heard that about party campaign work that was sent to Hubbard’s company, and conflicting evidence about Hubbard’s role in that. Prosecutors have accused Hubbard of using his political positions as speaker and Republican Party chairman to make money and solicit favors such as investments from lobbyists. Defense lawyers argue that the transactions were above board.

Randy Kammerdiner, co-owner of Majority Strategies, designed glossy direct mail pieces for the Republicans’ 2010 campaign to take over the Alabama Legislature. He testified that he believed party officials wanted the fliers printed at Craftmaster, where Hubbard was a co-owner. Prosecutor Matt Hart asked Kammerdiner if he felt he had any other option but Craftmaster for the printing work. “No,” Kammerdiner replied. Prosecutors also showed jurors a 2010 email from Kammerdiner to a state party employee, which said: “Per Mike, we’re printing at Craftmaster and just passing the actual charges on to you all.” However, under cross-examination by defense lawyer Lance Bell, Kammerdiner said Hubbard never directed him to use his firm. “I never had a specific conversation with Mike Hubbard saying I had to use Craftmaster.” Kammerdiner said. The political consultant also testified that the firm had previously used Craftmaster before Hubbard became party chairman and the party was probably getting a “better deal” because they avoided the normal markup Majority Strategies applies to printing costs.

http://altoday.com/archives/10613-consultant-no-choice-subcontract-mike-hubbard

Who is the man investigating Gov. Robert Bentley?

He’s taken down a high-profile member of a Mexican drug cartel, white collar criminals and Olympic Park bomber Eric Rudolph. Now, U.S. Attorney John Horn has his sights set on Gov. Robert Bentley.

Horn, the U.S. attorney for the Northern District of Georgia, was tapped by Attorney General Loretta Lynch to take over the investigation and potential prosecution of Bentley after U.S. Attorney George Beck, Jr. recused himself from the case, according to a letter by Assistant U.S. Attorney Jonathan Ross obtained by AL.com. The letter was titled “Grand Jury Investigation.” Bentley has been dogged by allegations that he had an affair with his erstwhile senior political adviser, Rebekah Caldwell Mason and claims that he has misused his office; there have also been ethics complaints filed against the governor. Bentley has maintained that he has not done anything illegal or unethical, although he did apologize in March after tapes of him making sexually explicit comments toward Mason were leaked to the media.

Horn’s investigation into Bentley isn’t the first time that the federal prosecutor is operating outside his jurisdiction. In 2012, he was tasked with assisting the Justice Department in its investigation of the U.S. attorney’s office in New Orleans, where prosecutors were found to have used the comments section of NOLA.com to undermine defendants while their cases were on trial. He also helped compile the case against Rudolph, who pleaded guilty to the bombings in Atlanta and a Birmingham abortion clinic and the killing of a Birmingham police officer in exchange for a life sentence. Among Horn’s high-profile cases are Edgar Valdez Villareal, a member of the Mexican Beltran-Leyva cartel who pleaded guilty to drug trafficking charges in Atlanta federal court in January. At the time of Valdez Villareal’s arrest, Horn called him “a prime example of the Mexican cartels’ influence over the U.S. drug trade, as truckload after truckload of his cocaine traveled across the border to Atlanta for further transport to cities throughout the eastern United States.” Horn also prosecuted the case of Dr. Philip Astin III, a Georgia doctor who was sentenced to 10 years in prison for illegally prescribing drugs to dozens of patients, including professional wrestlers.

http://www.al.com/news/index.ssf/2016/05/who_is_the_man_investigating_g.html

Hubbard Trial Day Three: Witness Changes Testimony, Shocks Prosecution

OPELIKA—A series of witnesses made it clear that Speaker Mike Hubbard was intimately involved in placing language into the Medicaid portion of the General Fund Budget that would give his client, American Pharmacy Cooperative, Inc. (APCI), a monopoly over the multi-million dollar Medicaid pharmacy business. That was until former Alabama Health Officer, Don Williamson, took the stand.

By all indications from the prosecution, Williamson’s testimony had significantly changed from what he had previously told them. Reliable sources say they learned Williamson’s testimony had been compromised. The two sources, who asked to remain anonymous, have informed APR that they knew Williamson was going to “walk back” his testimony 24 hours before he took the stand. Williamson, who is currently employed by the Alabama Hospital Association, led the State Department of Health for over 20 years with an unblemished record. However, today, during his testimony about the Medicaid language, he was challenged by Deputy Attorney General Matt Hart as to why he was suddenly changing his testimony. During direct examination by Hart, Williamson was asked to relate information about a meeting that was held in the Speaker’s Office concerning the language that had been passed in the House. Williamson said he had asked for the meeting with Hubbard because the Governor and Medicaid Commissioner Stephanie Azar had expressed an urgent need to strip the language from the Medicaid portion of the budget. He, Hubbard, Azar, Hubbard’s Chief of Staff Josh Blades, and others were present, according to Williamson. When Hart asked Williamson to tell what happened in the meeting, his answer so shocked the veteran prosecutor that he physically reacted by spinning around on his heals toward Williamson. Williamson said Hubbard agreed to help take the controversial language out of the budget, that he was angry at lobbyist Ferrell Patrick for not telling him he was working for APCI, and that Rep. Greg Wren was the one really pushing the bill. That he, Hubbard, agreed to not place Wren on the conference committee, and that Hubbard told him he had a contract with APCI, but only for out-of-state work. Hart then confronted Williamson as to why his story had changed from their previous interview. Williamson, crestfallen, just hung his head. He said if Hart would go back and look at his earlier statements, he believed he would see he had mentioned all of these things before. Hart then began treating Williamson as a hostile witness. He asked Williamson if  he had been threatened, and if, as a lobbyist, he was afraid (pointing at Hubbard) that he might have trouble in the Legislature after giving his testimony. Hart seemed to struggle to find the right question to pin down on what had caused Williamson’s sudden turn. According to APR sources, Williamson had been threatened to change his testimony by those close to Hubbard. Next on the witness stand was Medicaid Commissioner Azar, who was also with Williamson in the meeting. Her testimony contradicted Williamson’s. More:

http://www.alreporter.com/hubbard-trial-day-three-witness-changes-testimony-shocks-prosecution/

Consultant: ‘No choice’ but to subcontract to Mike Hubbard

A Florida political consultant testified Thursday that he believed he had no choice but to subcontract Alabama Republican Party campaign printing work back to a firm owned by the party’s chairman. The chairman at the time was Alabama House Speaker Mike Hubbard, now on trial for ethics violations. On Thursday, jurors heard that about party campaign work that was sent to Hubbard’s company, and conflicting evidence about Hubbard’s role in that. Prosecutors have accused Hubbard of using his political positions as speaker and Republican Party chairman to make money and solicit favors such as investments from lobbyists. Defense lawyers argue that the transactions were above board. Randy Kammerdiner, co-owner of Majority Strategies, designed glossy direct mail pieces for the Republicans’ 2010 campaign to take over the Alabama Legislature. He testified that he believed party officials wanted the fliers printed at Craftmaster, where Hubbard was a co-owner. Prosecutor Matt Hart asked Kammerdiner if he felt he had any other option but Craftmaster for the printing work. “No,” Kammerdiner replied. Prosecutors also showed jurors a 2010 email from Kammerdiner to a state party employee, which said: “Per Mike, we’re printing at Craftmaster and just passing the actual charges on to you all.” However, under cross-examination by defense lawyer Lance Bell, Kammerdiner said Hubbard never directed him to use his firm. “I never had a specific conversation with Mike Hubbard saying I had to use Craftmaster.” Kammerdiner said. The political consultant also testified that the firm had previously used Craftmaster before Hubbard became party chairman and the party was probably getting a “better deal” because they avoided the normal markup Majority Strategies applies to printing costs.

http://altoday.com/archives/10613-consultant-no-choice-subcontract-mike-hubbard

Blogs/Opinions

Trump’s New Mexico setback

The insults Donald Trump hurled at GOP New Mexico Gov. Susana Martinez at his rally in Albuquerque, N.Mex., on Tuesday night says a lot about his judgment, his temperament, his wisdom and his utter lack of discipline.  What made him think launching into a clumsy diatribe about a fellow Republican — and one who is an established star in a swing state, no less – was a good idea? What was he trying to accomplish? Does Trump think the way to get people on board is to insult them in public? Does he really think elected Republicans are his vassals?  Does he really think they need him more than he needs them? Trump’s remarks have instantly become the insult heard around the party. Martinez is exactly what the Republican Party needs more of.  She is a popular female, Hispanic, conservative leader who is currently the chairwoman of the Republican Governors Association. She is not a GOP opponent, she is not a bothersome journalist, and she certainly shouldn’t be an enemy of Trump. This Trump blunder will be harder for Republicans to forget than most of his other boneheaded remarks, simply because it reinforces so many of the concerns Republicans have about Trump. Just as something approaching calm in the Republican universe was beginning to emerge, we got another exploding cigar from Donald Trump. There is probably no more desirable surrogate who can shore up some of Trump’s weaknesses than Martinez.  It is probably safe to assume no proper public apology from Trump will be forthcoming, so I wouldn’t be surprised if she stayed on the sidelines for the duration of the campaign. The Associated Press is reporting that Trump has now secured the delegates necessary to officially become the Republican nominee, which makes it all the more imperative that Trump start to act like a president and stop attacking his fellow Republicans. Where are the adults in the Trump campaign? Who is going to stand up to Trump and tell him to stop his childish behavior?  Where is New Jersey Gov. Chris Christie, the former Republican Governors Association chairman? Is he going to come to Martinez’s defense, as many other Republicans have done?  Does he have the cojones to jerk a knot in Trump’s chain and force him to see his behavior is self-destructive and idiotic? I’m beginning to worry that Trump will not let any adult peers emerge in his campaign, even though, more than most, he needs a voice of reason he will listen to.

https://www.washingtonpost.com/blogs/post-partisan/wp/2016/05/26/trumps-new-mexico-setback/

If Mike Hubbard is the sickness in government, here’s the Pepto-Bismol

There are moments, watching the trial of Alabama House Speaker Mike Hubbard, when you wish courtrooms came with barf bags. I mean … ick. Not because of guilt or innocence, but because government is not supposed to be like this. It’s not. Call me naïve, but in the beautiful vision of Democracy lawmakers and lobbyists and political operatives are not supposed to sit around conspiring about how to hide language in the state budget that would directly benefit their clients. That’s not partisan or political. It is just appalling. Let’s just break it down. There was a moment in 2013 – according to testimony – that Hubbard and his chief of staff Josh Blades got together with then-Rep. Greg Wren, Rep. Steve Clouse, lobbyist Ferrell Patrick and lobbyist/operative John Ross to talk about ways to help American Pharmacy Cooperative Inc. (APCI) Together they agreed to add an itty bitty clause into the general fund budget that would essentially give APCI a monopoly on selling drugs to Alabama Medicaid patients. It was a goldmine for APCI. And it was good for the state, they argued. But reach for the barf bag. Because APCI was paying Hubbard $5,000 a month as a “consultant.” Patrick, who was a lobbyist for APCI, was the guy who hooked Hubbard up with the cooperative in the first place. Ross was also under contract with APCI, and Wren had a contract with a company owned by APCI. Out of six people in that room – six people meddling with the budget of the state of Alabama – four were on the APCI payroll.

Cue that queasy feeling. If there’s any relief at all, if there is a Pepto-Bismol of the Alabama politic, it is Blades. He didn’t know Hubbard was taking money from APCI, and when he found out, well at least he had the decency to be sick about it. “I was upset I didn’t know about the contract,” he testified. “I was afraid there could be legal implications for what happened. I was afraid Mike might end up in legal trouble after all this transpired.” I guess he wasn’t alone in that. Everybody but Hubbard himself seemed to realize, as the vote on the budget neared, that a line was about to be crossed. Patrick himself told Ross that Hubbard was taking money from APCI. Ross told Blades and Blades had a come-to-Jesus meeting with Hubbard. But Hubbard decided to vote on the budget anyway. The APCI language was stripped out later, after a push by the governor’s office and state Health Officer Don Williamson. But the damage was done. So reach for the bag. Listen to the testimony and it’s hard not to see that this is why politics in Alabama and across the country is so … sickening. Money runs through the system like a toxin, and politicians pretend nothing is wrong. They rationalize and justify, and all the while take what they can take and prolong the infection that ails us. Which is why Blades comes across as … medicine. He wasn’t just upset about the legal implications. He was upset, he said believably from the stand, because he knew it was important to avoid even the appearance of impropriety. “I was upset because I played a role in what transpired, and previously and unknowingly played a role,” he testified. If Hubbard and the other lawmakers felt the same way, we wouldn’t have to reach for that bag. Ethics, as Blades understood and his boss didn’t, is what you stand for. Not what you can get away with.

And he was sickened by his part in it.

http://www.al.com/opinion/index.ssf/2016/05/if_mike_hubbard_is_the_sicknes.html

Here’s why Alabama politicians keep going to jail

A decade ago, former HealthSouth CFO Aaron Beam was on the witness stand in the accounting fraud trial of Richard Scrushy, and he was explaining the difference between “aggressive accounting” and fraud. Let’s say you’re putting a business trip to Mobile on your taxes, he said, but you don’t know if Mobile is 250 miles away or 300 miles away. The key here is that you know it’s somewhere in that range, so you put 300 miles on your tax return because that works better for you. That’s aggressive accounting.

But if you never made the trip to Mobile? That’s fraud, he said. HealthSouth, Beam said, had crossed the line from aggressive accounting to fraud, and in that Tilt-a-Whirl trial, for a moment, his distinction gave jurors their feet back on the ground. At least until defense lawyer Jim Parkman asked a question about that aggressive accounting that sent everyone spinning again. Was there anything wrong with that?

Beam looked back at him cockeyed. He hadn’t understood the question. Parkman asked it a different way. Was there anything illegal about it?  No, Beam said. There wasn’t anything illegal about aggressive accounting. But those were two different questions, and the more white-collar crime and public corruption trials I’ve sat through, the more I’ve heard those two things confused — what’s legal and what’s right.

Alabama politicians would, at least, do better living by Bob Dylan’s advice: “To live outside the law, you must be honest.” But they can’t even get that right. Instead, too many try to live dishonestly inside the law, and they wind up behind bars, all the same. Since Alabama Gov. Robert Bentley got caught talking dirty to his senior political adviser/love interest Rebekah Caldwell Mason, he seems to be practicing his “not guilty” plea in every other press conference. There is nothing illegal. Yeah, and that’s why he’s under investigation now by the FBI, IRS, postal inspectors and the Alabama Ethics Commission, right? And I heard something similar again this week during the trial of Alabama House Speaker Mike Hubbard.

Tim Howe is a lobbyist in Montgomery who has had a close working relationship with Hubbard, a relationship that landed him on the witness stand. Before the jury in Lee County, he told the story about how that relationship with Hubbard dragged him toward the wrong side of the law. Howe shared a contract with another lobbyist, Ferrell Patrick, to represent the American Pharmacy Cooperative Inc., a coalition of small drug stores that wanted a monopoly on Medicaid-paid prescriptions in Alabama. Together, they had lobbied Hubbard to help them write a few lines into the Alabama General Fund budget that would give their client exactly that.  But on the night that budget was heading toward final passage in the Alabama Legislature, Howe learned from his partner that Hubbard had a contract with the pharmacy coop, too. That contract, for “consulting” work, put $5,000 a month in Hubbard’s pocket. The men scrambled to get Hubbard to step back from the budget, either by voting against it or by abstaining from the vote. A prosecutor asked Howe why. “It presented an ethics problem for all of us,” Howe said.

But here’s the thing. When Howe talked about the “ethics problem” he wasn’t talking about the difference between right and wrong. He was talking about Alabama’s ethics laws — those rules that keep lawmakers from putting their personal interests before yours and mine, those rules that, when broken, get people put in jail. In that other sense of ethics — right and wrong — Howe had no problem at all, or at least, no problem giving a damn. Not only had he taken money to limit the options of Alabama Medicaid patients buying prescription drugs, in another scheme he helped Hubbard disguise his self-dealing.  When Hubbard had been chairman of the Alabama Republican Party, he directed GOP money to his own companies. Howe had used his company as a pass-through, taking five percent off the top and rendering no services before moving that money to Hubbard. All of this was so other Republicans couldn’t see what Hubbard was doing. There wasn’t anything illegal, at least for Howe, but for Hubbard, who was legally prohibited from self-dealing as the Alabama party chairman, it was a problem — a legal problem and an ethics problem. When you live your life dancing on the line between right and wrong, eventually you slip and stumble over it, and there’s no easier way to trip than to confuse those two questions, what’s right and what’s legal. Just because you think you’re living within the law, that doesn’t mean you’re living in the right. And people who don’t care whether they’re living within the right, often find themselves living outside the law. And then they find themselves on witness stands, like Tim Howe. Or behind defense tables, like Mike Hubbard.

http://www.al.com/opinion/index.ssf/2016/05/heres_why_alabama_politicians.html

Morning Money

ECONOMY POINTS TO HRC WIN — In 2012, MM wrote about the Moody’s model that has correctly predicted each presidential election since 1980 by looking at voting trends and the direction of key economic indicators at the state level (unemployment, gas prices, wages and more). In May of 2012 the model showed President Obama would win re-election with at least 26 states and 303 electoral votes. He won 26 states and 332 electoral votes. This year, the model points to a relatively easy win for Hillary Clinton over Donald Trump, according a CNN/Money write-up of the model’s latest findings.

It’s not hard to see why. Despite all the talk of a seething national electorate, gas prices are low, unemployment is low, Obama’s popularity is back above 50 percent and economic indicators favor a Democrat in nearly all the major swing states from Florida to Ohio. Trump spends a great deal of time saying how crummy everything is in the United States and how we get crushed by China and Mexico (and even woebegone Japan!) but the facts generally do not support his argument.

The model of course has one significant limitation that could make it wrong for the first time: It does not account in any way for the candidates themselves. It simply follows voting trends and economic numbers to say whether a generic Republic or a generic Democrat will win. And 2016 is anything but generic. Trump is political dynamite and could shock the world again. Hillary Clinton could implode in scandal. But if the race even roughly conforms to past campaigns, Trump has a heavy lift ahead. CNN piece: http://cnnmon.ie/24aAWom MM’s 2012 piece: http://politi.co/1XVMc8h

DOES HILLARY NEED TO GO HARDER ON WALL STREET? — Jeff Hauser of the Revolving Door Project emails: “There was one incongruous result for Secretary Clinton in Bloomberg’s superficially reassuring poll of Midwest middle-income voters. Despite Clinton’s lead overall among this key swathe of voters, Clinton trails Trump 38-22 on who ‘would rein in the power of Wall Street.’

“One way Clinton might reverse that number and bolt down this demographic is to make specific commitments to appoint proven reformers to police Wall Street. The more her personnel plans cause Wall Street types to squawk, the more credibility Clinton will earn among currently skeptical voters.” Bloomberg poll: http://bloom.bg/1TMeAYJ

TRUMP: IF YOU AREN’T RICH, YOU SUCK — Donald Trump on Thursday formally passed the 1,237 delegates needed to win the GOP nomination on the first ballot in Cleveland. Then he promptly said this in Bismark, N.D.: “You have to be wealthy in order to be great, I’m sorry to say.” Coming soon to an attack ad near you. … Trump then got all Messianic: “I will give you everything,” he said. “I will give you what you’ve been looking for for 50 years. I’m the only one.” OK then. I’d comment on this (what about Reagan!?) but it’s the Friday before a three day weekend and really what’s the point?

DRIVING THE DAY — Packing up the car and hitting the road and shutting down Twitter and pretending none of the things that are happening are actually happening … Also: Obama becomes the first sitting president to visit Hiroshima since the atomic attack in 1945 … Second estimate of Q1 GDP at 8:30 a.m. expected to be revised up from 0.5 percent to 0.9 percent … Univ. of Michigan Consumer Sentiment at10:00 a.m. expected to rise to 95.5 from 89.0 in March.

COMING NEXT MONTH: NEW BIG BANK BOOK — On June 22nd at that Nat’l Press Club, MIT’s Simon Johnson, former N.C. congressman Brad Miller, Univ. of MD’s Rena Steinzor and AFR’s Marcus Stanley will celebrate the publication of Public Citizen’s new book by Bart Naylor: “Too Big: The Mega-banks are Too Big to Fail, Too Big to Jail, and Too Big to Manage.” http://bit.ly/1YW3PDf

MUSK TAKES ON LOCKHEED AND BOEING — Breakingviews’ Gina Chon: “Elon Musk’s SpaceX just broke the monopoly on military satellite launches enjoyed by an alliance between Lockheed Martin and Boeing. Congress may help the pricey joint venture, however, by allowing it to buy more sanctions-tainted Russian rocket engines. That’d be a strike against efficiency and innovation.” http://reut.rs/1NQZosZ

G-7: BREXIT A SERIOUS GLOBAL RISK — Reuters: “A British exit from the European Union would be a serious risk to global economic growth, Group of Seven leaders said in a summit declaration on Friday, although German Chancellor Angela Merkel said the issue had not been discussed. … The statement will be welcomed by the British government, which has made a series of warnings about the domestic cost of leaving the bloc at a June 23 referendum on EU membership.

“‘A UK exit from the EU would reverse the trend towards greater global trade and investment, and the jobs they create, and is a further serious risk to growth,’ G7 leaders said, in the only reference to the vote in a 32-page declaration. Brexit was listed alongside geopolitical conflicts, terrorism and refugee flows as a potential shock of a ‘non-economic origin.’” http://reut.rs/1TZBnMM

GOLDMAN CHANGES EMPLOYEE RATING SYSTEM — WSJ’s Lindsay Gellman and Justin Baer: “Goldman Sachs Group Inc. is shaking up performance reviews for its roughly 36,500 workers. The Wall Street bank will no longer rate staff on a scale of one to nine in employee reviews starting next month, and this fall will experiment with an online system through which employees can give and receive continuous feedback on their performance. …

“While subtle, the changes mark a softening of Wall Street’s typically tough, numbers-driven management culture, and is the latest in a wave of changes at big banks intended to make finance jobs more welcoming to younger employees. … Goldman, which announced the changes in a pair of companywide memos, isn’t doing away with annual performance reviews. Instead, the bank will focus on giving employees specific directives on improving their work” http://on.wsj.com/1U9RI18

TRUMP LOVES FOSSIL FUELS — POLITICO’s Andrew Restuccia: “Donald Trump outlined an ‘America first’ energy agenda Thursday that includes eliminating a slew of environmental regulations, expanding fossil fuel development, killing the Paris climate deal and ending U.S. reliance on OPEC — with the aim of creating what he called ‘complete American energy independence.’ …

“The presumptive GOP presidential nominee said he’ll repeal President Barack Obama’s climate regulations for power plants, as well as the Waters of the U.S. Rule, an EPA regulation that has drawn fierce resistance from the energy and agriculture industries. And he declared that he would ‘cancel’ the Paris climate deal, while blocking climate-related funding to the United Nations.” http://politi.co/1sSjNEB

BANK ATTACKS TIED TO NORTH KOREA — WSJ’s Nicole Perloth and Michael Corkery: “Security researchers have tied the recent spate of digital breaches on Asian banks to North Korea, in what they say appears to be the first known case of a nation using digital attacks for financial gain. In three recent attacks on banks, researchers working for the digital security firm Symantec said, the thieves deployed a rare piece of code that had been seen in only two previous cases: the hacking attack at Sony Pictures in December 2014 and attacks on banks and media companies in South Korea in 2013. …

“On Thursday, the Symantec researchers said they had uncovered evidence linking an attack at a bank in the Philippines last October with attacks on Tien Phong Bank in Vietnam in December and one in February on the central bank of Bangladesh that resulted in the theft of more than $81 million … The attacks have raised alarms in the global banking industry because the thieves gained access to Swift, a Brussels-based banking consortium that runs what is considered the world’s most secure payment messaging system” http://nyti.ms/25lnIr3

POWELL: RATE HIKE SOON(ISH) — FT’s Sam Fleming: “A continued strengthening in US economic data could clear the way for a second increase in short-term interest rates ‘fairly soon,’ a senior Federal Reserve policymaker has said, as speculation intensifies about the outcome of this summer’s rate-setting meetings. … Jerome Powell, a member of the Fed’s Board of Governors, said the US still faces a range of risks overseas, including the forthcoming referendum on Britain’s membership of the EU, uncertainties about China’s exchange rate policy, and ‘stubbornly low’ growth and inflation for most US trading partners. …

“The vote in the UK could in particular be a factor favouring caution at the June 14-15 meeting, Mr Powell added. However, he said in a speech in Washington on Thursday that the US economy had still made ‘substantial progress’ as it remains on track to reach the Federal Open Market Committee’s dual mandate of stable prices and maximum employment. … A number of Fed policymakers have said the central bank should be prepared to lift interest rates by another quarter-point at its June meeting” http://on.ft.com/1OQx2Kb

NOT GOOD: SUPER BUG HITS U.S. — WP’s Lena H. Sun and Brady Dennis: “For the first time, researchers have found a person in the United States carrying bacteria resistant to antibiotic of last resort, an alarming development that the top U.S. public health official says could signal ‘the end of the road’ for antibiotics. The antibiotic-resistant strain was found last month in the urine of a 49-year-old Pennsylvania woman. …

“Defense Department researchers determined that she carried a strain of E. coli resistant to the antibiotic colistin … The authors wrote that the discovery ‘heralds the emergence of a truly pan-drug resistant bacteria.’ … Colistin is the antibiotic of last resort for particularly dangerous types of superbugs, including a family of bacteria known as carbapenem-resistant Enterobacteriaceae, or CRE, which health officials have dubbed ‘nightmare bacteria.’ In some instances, these superbugs kill up to 50 percent of patients who become infected” http://wapo.st/25p2oVi

ROYCE ON THE TPP MOVE — Rep. Ed Royce (R-Calif.), Chairman of the House Foreign Affairs Committee: “This proposal is a positive step, but further action is necessary. We must push forward with a strong Trade in Services Agreement and side deals with the four TPP countries not in those talks. I am optimistic that we can create a level playing field for the financial services sector.”

TEACHING KIDS ABOUT TRADE — Per release: “HSBC and Junior Achievement are teaching American children about virtues of global trade and cultures. Launching today is JA Global Marketplace — a digital curriculum that will introduce hundreds of thousands of middle school students nationwide to such topics as international business, the global job market, trade barriers, currency exchange and business ethics.”

GAWKER HIRES BANK; EYES OPTIONS — Bloomberg: “Gawker Media Inc. has hired a banker to explore strategic options, including a possible sale, as the digital media company fights a potentially crippling $140 million damages award in a defamation suit brought by the former pro wrestler Hulk Hogan. … Mark Patricof, managing director at Houlihan Lokey, will advise Gawker on its options amid the legal clash secretly bankrolled by billionaire investor and Facebook Inc. board member Peter Thiel, the company said Thursday.” http://bloom.bg/1WYMfRY

POTUS Events

9:00 am || Attends a G7 meeting on energy and climate; Shima Kanko Hotel, Shima City, Japan
10:00 am || Attends a G7 session one; Shima Kanko Hotel, Shima City, Japan
11:50 am || Attends G7 session two; Shima Kanko Hotel, Shima City, Japan
3:50 pm || Delivers remarks; Marine Corps Air Station Iwakuni, Hiroshima, Japan
5:40 pm || Participates in a wreath laying ceremony; Hiroshima Peace Memorial, Hiroshima, Japan
7:00 pm || Departs Japan
10:15 pm ET || Arrives White House after a refueling stop in Alaska

Except as noted, all times Japan Standard Time, which is 13 hours ahead of U.S. Eastern

Floor Action

Zero.