Another Bill O’Donnell Moment

Bill O’Donnell was the terror of my grade school, or at least from grades one through three.  He disappeared after that.  I don’t know what became of him.  I suspect he was sent to some kind of juvenile facility.

Bill O’Donnell would misbehave for no reason at all, just as a matter of principle.  His brazenness was breathtaking.  It seems that he would say anything or do anything, so long as it was something he was not supposed to do or say.  On a near daily basis some nun would take Bill into the cloakroom and whack his knuckles with a ruler.  More than one ruler was broken across his hands, which must have been made of steel.  Bill would laugh it off and go on misbehaving, a cost of doing business.  I call that a Bill O’Donnell moment.

That was back in the early 1960’s.  Fast forward to the present time.  A sociopathic corporation (is that a redundancy?) named Wells Fargo got caught doing something naughty, namely opening 2 million bank and credit card accounts in the names of individuals who never asked for those accounts to be opened.  For this indiscretion, Wells Fargo was fined $185 million.  That’s all of $9 per unauthorized account.

Can you imagine?  I’ve seen 30 year employees fired for much less.  The case comes to mind of a long time bank manager who was fired for using the bank’s Federal Express account once or twice of personal purposes (like that never happens in corporate America, right?).  The real reason she was fired was because somebody wanted to get rid of her, for illegal reasons.  Fortunately we were able to settle that case and avoid the risk of dismissal.  The bank pretended that integrity was the most critical attribute expected of bank managers.  Except when it comes to duping its own customers, apparently.  Note:  my client was not given the opportunity of paying $9 per transgression and moving on.

But that’s not what this post is about.  It’s just that there’s just so much hypocrisy in this whole Wells Fargo story that I can barely contain myself.  I tend to get sidetracked.

It has been widely reported that Wells Fargo is “clawing back” $75 million from the two wayward executives most responsible for the bank’s aberrant behavior.  For those of you naive enough to believe that this somehow foreshadows an era of executive responsibility for corporate crimes, think again.  First of all, neither of the two executives in question, former CEO John Stumpf and former Director of Community Banking (whatever that means) Carrie Tolstedt, have to dig into their own pockets.  There are no claws in the “clawback.”  All that is happening is that the bank is not letting Stumpf and Tolstedt cash in on certain stock options for 2016.  In other words, this is $75 million that they never received.  They are not paying back a dime.  They are laughing all the way to the bank, or, in their case, from the bank.

Bill O’Donnell would be proud.

A couple of facts that I learned in connection with this story blew my mind.  From 2011 through 2016, Stumpf was paid $286 million.  That’s about $47.5 million a year.  Tolstedt was paid $9 million last year, and she was due to receive $125 million when she retired.

These are fortunes.  I am not using the word in the hyperbolic or figurative sense.  These sums are literally fortunes, such that their heirs will lives of luxury for generations to come, without having to lift a finger.  

But isn’t that what capitalism and the free market is all about?  No.  These people were employees.  They never had a dime of their own money at risk, and they didn’t build a business or discover the cure for cancer.  But Wells Fargo wouldn’t pay them so much if they weren’t worth it, right?  Wrong.  They run (but do not own) Wells Fargo, so they basically set their own salaries.  What we are seeing here is organized thievery.  Whose money is being stolen?  If you are covered by a pension plan, have a 401-k or own shares in a mutual or exchange traded fund, Yours and mine, chances are pretty good that some portion of your money is invested in Wells Fargo.

There is something seriously wrong with our system.  I have no problem with executives being well compensated, even to the point where they would be considered wealthy or modestly rich (if there is such a thing).  The rules of society should be such that it’s hard and a relatively rare occurrence for a person to accumulate a fortune.  It should be a reward for doing something remarkable and beneficial to society, not bilking two million of your employer’s customers.

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Somebody Help Me Out With This

A few days ago, the Trump administration says, and I’m paraphrasing, “Assad is here to stay, deal with it.”  A few days later, Assad drops some poison gas bombs on a village and kills 100 citizens or so.  Trump launches 59 Tomahawk missiles on a Syrian air base.

The part I don’t get is this: Assad already had “gasses citizens” on his resume when Trump accepted him into the fold of recognized heads of state.  So whence the indignation when Assad does what Assad has done before?  To me, it’s like this: your wife asks you to invite your brother Harry over for Thanksgiving dinner.  You remind your wife that Harry has atrocious table manners and that she has said he is not fit to sit at anybody’s dinner table, even at a soup kitchen.  “But he’s your brother,” she says, “and I’m just going to accept that fact.”  But when Harry lets out a monster belch between courses, your wife has a fit and throws her wine glass at Harry.

So much for dealing with it.

Mind you, I’m not saying it’s a good thing or a bad thing to accept the “political reality” of Assad.  The man is clearly a monster of the first order.  But what is knocking out one airbase going to accomplish?  Back in first grade, there was a kid named O’Donnell, who was as much of a juvenile delinquent as a first grader could possibly be  The nuns used to rap O’Donnell’s knuckles with a ruler when he misbehaved, which was all the time.  He would laugh it off.  Assad must be laughing now.  Russia will give him more planes.

Destroying the airbase is like kicking the saddle because the mule won’t move.  Those six people, whoever they were, that were killed when the airbase was bombed didn’t wake up the other day and say “hey, let’s go drop some Sarin gas on such and such village!”  Assad told them to do it.  Now they are dead, and Assad is ordering new planes from Russia.  What’s the idea here, that the Syrian military is going to refuse to do the bad things that Assad tells them to do because we might send some Tomahawks their way?  Newsflash: Assad is a lot more scary than 59 Tomahawk missiles.  The missile will kill you instantly.  Assad might take weeks to kill you.  And he’ll probably kill your family too.

By the way, those missiles cost anywhere from $800,000 to $1.5 million each, depending on whom you believe.  With tax day looming, I’m reminded that I worked a whole year to pay for just part of one of those missiles.  59 launched, 6 deaths.  There’s a good chance that the missile with my name on it didn’t kill anybody.  I’d hate to think that I worked all year to kill a portion of a Syrian not named Assad.

If we really wanted to punish Assad for gassing civilians, shouldn’t we aim those missiles at his home and not some air force base?  It sobered up Qaddafi pretty quickly.

There’s something else I need help understanding.  I don’t mean to sound callous, but why is it so much worse to gas civilians than to kill them in other ways?  Assad kills hundreds of civilians every month, and we were willing to accept that as a “political reality.”  In fairness to Assad, shouldn’t we have given him a checklist?  Torture, ok.  Extrajudicial execution, ok.  Cluster bombs, ok.  Indiscriminate shelling, ok.  Landmines, ok.  Gas, unthinkable!

I shouldn’t be surprised that I don’t quite understand all this.  Nothing about the Syrian war makes any sense.  Who’s fighting whom, and for what?  We know there’s Assad, and ISIS, and Al Qaeda, and Turkey, and Russia, and Hezbollah, and a few dozen militia that go in and out of business more often than a Times Square clip joint.  For such a tiny country that doesn’t have natural resources or make anything of any significance, Syria has managed to cause outsized problems for the rest of the world.  All the rich and developed countries that are suffering a major Syrian headache are powerless to do anything about it.

It is mind boggling.

 

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Oops, sorry ‘bout that!

I guess that’s what you say to your client after it has paid you well over $4 million in fees on a case that wouldn’t have been brought, if somebody (like you, maybe?) had read the damn contract.

International Cards Co. is a company based in Jordan, and for about 15 years it was a Mastercard “Member.”  Don’t ask me what it means to be a member of Mastercard; I assume it means you can issue Mastercard Credit Cards.  Anyway, ICC and Mastercard had a contract, and the contract stated, in section 1.6.2 that:

A Customer (i.e., Member) may be terminated as a Customer by the Corporation (i.e., MasterCard). The termination is effective upon delivery, or an inability to deliver after a reasonable attempt to do so, of written or actual notice by the Corporation to the Customer.

On April 2, 2013, Mastercard delivered a letter to ICC, which stated that Mastercard had terminated the contract pursuant to Section 1.6.2.

Pretty simple, eh?  Member terminated.  Maybe it’s not a nice thing for Mastercard to do, but that was the agreement.  Shed no tears for ICC.  If you’re sophisticated enough to issue credit cards, you should be able to read a simple contract (way more simple than what is written in tiny letters on the back of my Mastercard statement).

Not so simple.  After the provision quoted above, the contract stated that Mastercard could terminate the agreement without any prior notice for a number of reasons, such as non-payment of fees.  Apparently somebody at ICC took that to mean Mastercard could terminate the contract only for one of those reasons.  Since ICC didn’t believe that any of the “without any prior notice” conditions were applicable, and it sued Mastercard for breach of contract.  That was in April, 2013.  As in four years ago.

The interpretation of a contract is a legal issue, which means that a judge, not a jury, decides.  Technically, this is only when the language of the contract is clear and unambiguous, but guess who decides whether the language is clear and unambiguous?  Yep, the judge.  You might think that when Mastercard got sued, it showed the judge the contract and said “look, Your Honor, the contract said that we could terminate a member at any time, so we can’t be sued for breach of contract.”  In legal parlance, this is done by a motion to dismiss, which can be made at the very beginning of the case, and often is in contract cases.

Not here.  For reasons unknown, Mastercard did not ask to have the case dismissed. Instead, it and ICC slugged it out for almost four years.  Then, on the very eve of trial, Mastercard pointed out that it had the right to terminate the contract just by sending a letter, and it asked for the case to be dismissed.

Why did Mastercard wait four years to ask to have the case thrown out of court?  That remains to be seen.  The judge was not amused.  Although she had no choice but to dismiss the case, she invited ICC to make a motion for the attorneys’ fees it was forced to pay because Mastercard waited so long to make its motion to dismiss.  ICC filed its motion, asking to be reimbursed its legal fees for bringing a case and losing.  Seppuku might be more appropriate.

Here’s how ICC’s motion starts off:

“Following four years of litigation and millions of dollars in unnecessary fees and expenses on both sides, the parties and the court system are all losers.”

Ahem.  Not “all” are losers.  ICC’s lawyers seem to have done just fine, having charged their client a cool $4.6 million for the extraordinary results they obtained.

Now, I don’t know about you, but I’d be kinda embarrassed taking $4.6 million from a client for bringing a lawsuit that a first year law student probably could have seen through on a contracts exam.  And not for nothing, but what’s with the fees?  Really, that is almost exactly $100,000 a month for four years.  Just for comparison purposes, I added up the time my firm put in on the crane case, which has been going on now for over eight years, included a mistrial, a trial that lasted a full year, several appeals and a bankruptcy.  Our time on that case has come out to $1.5 million, give or take a few dollars.  Admittedly, I had co-counsel, so double my time.

I don’t get paid by the hour, so I have no incentive to run up time charges or inflate bills. I’m not saying that anybody has done so here, obviously I don’t know that, but I’m just saying.  That’s a lot of legal fees.

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Friday Rant — Traitors Are Not Real Americans

You would think it an obvious point.  Not to this Trump supporter (quoted in the Washington Post):real-america

Here’s a little history lesson:  the Confederate States rebelled against the United States of America.  In other words, Confederates did not want to be Americans, in the sense of citizens of the United States of America.  They rejected this great country.  The took up arms against this great country.  Anybody who wears a Confederate uniform is idealizing traitors, traitors who killed American citizens.

Truly America?

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Friday Rant — Greed and Corruption on Long Island

You would think that after 36 years of practicing law, I would no longer be surprised, much less shocked, at the level of greed and corruption in politics and business.  What I am trying to understand is the motivation.  In this country, if you’ve got a decent brain and some education, you can have a pretty good life.  What do I mean by a good life?  Comfortable housing, adequate health care, the means to raise and educate your children, take vacations, do some traveling, pursue some cultural or avocational interests, and have a secure retirement.  Sure, nothing is guaranteed, nobody promised you a rose garden, much less a bed of roses, and there are plenty of speed bumps in life.  But by and large, you can do a little better than just get by.1)That is why I am so passionate about the work that I do — discrimination and injuries are probably the two most significant events that prevent one from realizing the promise that this great country holds

So where is the motivation for corruption, cheating, stealing and the like?  I can think of only two reasons: a twisted character (and nothing is more twisted than unmitigated greed) or gross incompetence, i.e., the inability to earn an honest living, or both.

There is a fascinating tale of greed, corruption and incompetence unfolding in Long Island.

The dope you see here is Edward P. Mangano, the County Executive for Nassau County.2)For those of you not familiar with the geography of the New York City area, Nassau County is one of two counties, outside of New York City, on Long Island, a long, narrow strip of land the extends East of the City.  Nassau County is one huge suburb of New York City.manganos  Beside him is Mrs. Dope.

Mr. Mangano has been arrested on bribery and corruption charges.  Considering that Mr. Mangano’s essentially acts as the Mayor of the 1.3 million residents of Nassau County, it’s kind of a big deal.  

The details are unfolding, but we know that Linda received over $400,000 for a no show job as “food taster” from this crook:

singh

His name is Harendra Singh and he runs, or ran, something called Singh Hospitality Group.  SHG mostly operated restaurants, including the well known Water’s Edge, once considered one of the more romantic spots to get married in NYC.  

waters-edgeIt’s now closed.  

From what I can gather, Mr. Singh allegedly masterminded the theft of a whole bunch of taxpayer money.  He obtained contracts to operate a couple of venues in Oyster Bay, a toney town on the North Shore, not far from Jay Gatsby’s old haunts, including the Woodlands, pictured below:

woodlands

Singh obtained the concession rights to operate the Woodlands in 1998 under an “emergency” RFP (Request for Proposal).  I don’t know what kind of emergency centered around the operation of a banquet hall.  Singh’s contract was extended to 2070(!).  Considering what subsequently happened, one would be excused for thinking that this “emergency” contract and the extension until forever involved some hanky panky.  Just a suspicion.

Here is where things get interesting.  Singh obtained loans of almost $20 million for improvements at the Woodlands and another facility, and the Town of Oyster Bay guaranteed those loans.  Can you guess what happened next?  Of course you can, Singh did not pay back the loans and the lenders sued the Town to collect on the guarantees.  The plot thickens, because the Town said that the guarantees, apparently signed by a town attorney, were not authorized, and it is refusing to pay.

In my opinion, Singh’s special talent is taking money and leaving others holding the bag.  Water’s Edge closed, because Singh stopped paying his employees, and after four or five weeks of working for nothing, they decided to stop working.  A lot of money is missing.  Singh owed $2 million in rent to New York City.  Oops.  More taxpayer money gone.  Deposits for weddings disappeared, and of course, five weeks of unpaid wages for a large restaurant adds up to a tidy sum.  Where did the money go?  Not hard to guess.

By the way, before this Oyster Bay stuff blew up, Singh had already been indicted for underreporting $17 million in sales and wages to the IRS, and submitting a false claim of $1 million for hurricane Sandy damage.  If I had to wager a guess as to where all this money went, I would say that it is no longer in the United States.

What you are looking at here is a mangle:

mangle

It is used to wring water out of clothes.  You put the clothes in one end, turn the rollers which put the big squeeze on the clothes.  The word for mangle in Italian is mangano.  A fitting name for a public servant who wrings bribes out of seedy businessmen.

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1. That is why I am so passionate about the work that I do — discrimination and injuries are probably the two most significant events that prevent one from realizing the promise that this great country holds
2. For those of you not familiar with the geography of the New York City area, Nassau County is one of two counties, outside of New York City, on Long Island, a long, narrow strip of land the extends East of the City.  Nassau County is one huge suburb of New York City.
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