Bernard Madoff’s brother to plead guilty, U.S. says

NEW YORK, Thu Jun 28, 2012 – Peter Madoff, the brother of imprisoned swindler Bernard Madoff, is expected to plead guilty to criminal charges on Friday, the first family member to do so since the Ponzi schemer’s fraud was uncovered in December 2008.

In a letter filed Wednesday in Manhattan federal court, U.S. Attorney Preet Bharara said Peter Madoff is expected to plead guilty to charges of conspiracy to commit securities fraud and other crimes, as well as falsifying records. He agreed not to seek a sentence other than 10 years in prison.

Madoff, who had been chief compliance officer at Bernard L. Madoff Investment Securities LLC, also agreed to a criminal forfeiture of about $143.1 billion, including all real and personal property, the letter said. The amount is symbolic, being more than twice the estimated size of the fraud.

John Wing, a lawyer for Madoff, did not immediately respond to a request for comment.

Prosecutors have not said whether criminal cases are also being prepared against Bernard Madoff’s son, Andrew, who was co-director of trading, or his niece, Shana, who was a compliance officer at the firm.

Both are being sued by Irving Picard, the trustee seeking money for the Ponzi scheme’s victims. He has filed a $255 million lawsuit against them and other Madoff family members.

Martin Flumenbaum, a lawyer for Andrew Madoff, did not immediately respond to a request for comment. A lawyer for Shana Madoff could not be identified immediately.

Mark Madoff, another of Bernard Madoff’s sons, committed suicide in December 2010.

Peter Madoff is charged with one count of conspiracy to commit securities fraud and mail fraud as well as making false statements about the firm’s compliance program and investment advisory business.

A second charge accuses him of falsifying records of an investment adviser.

About a dozen people have now been implicated in criminal wrongdoing related to Bernard Madoff’s former firm.

Five have pleaded not guilty: Annette Bongiorno, Daniel Bonventre, Joann Crupi, Jerome O’Hara and George Perez.

Ex-Goldman director Gupta loses wiretap ruling

NEW YORK, Tue Mar 27, 2012 – Former Goldman Sachs Group Inc. director Rajat Gupta lost his bid to suppress wiretap evidence from his upcoming criminal insider-trading trial on charges that he leaked boardroom secrets to hedge fund founder Raj Rajaratnam.

U.S. District Judge Jed Rakoff in Manhattan issued his ruling on Tuesday ahead of Gupta’s scheduled May 21 trial.

Gupta, a one-time global head of the McKinsey & Co. consultancy, is the most prominent corporate executive charged in the U.S. government’s investigation of illicit trading on Wall Street.

The wiretaps include the same ones admitted by U.S. District Judge Richard Holwell at Rajaratnam’s insider-trading trial. Rajaratnam, founder of the Galleon Group, was convicted last May and is serving an 11-year prison term.

Rakoff ruled that the government could use the recordings at Gupta’s trial, saying that “insider trading cannot often be detected, let along successfully prosecuted, without the aid of wiretaps.”

But Gupta also won a victory as Rakoff directed the U.S. Securities and Exchange Commission, which has a separate civil case against Gupta, to turn over some materials to prosecutors. The prosecution must then turn over evidence to the defense that may help Gupta show his innocence.

Rakoff said Gupta had demonstrated a “substantial need” for such evidence that overcomes any need for the SEC to keep the materials private.

Gary Naftalis, a lawyer for Gupta, declined to comment.

Goldman to face mortgage debt class-action lawsuit

NEW YORK – Goldman Sachs Group Inc was ordered by a federal judge to face a securities class-action lawsuit accusing it of defrauding investors about a 2006 offering of securities backed by risky mortgage loans from a now-defunct lender.

U.S. District Judge Harold Baer in Manhattan certified a class-action lawsuit by investors led by the Public Employees’ Retirement System of Mississippi.

These investors claimed they lost money in the GSAMP Trust 2006-S2, a $698 million offering of certificates backed by second-lien home loans made by New Century Financial Corp, a California subprime mortgage specialist that went bankrupt in 2007.

Thursday’s decision is a setback for Goldman, which had sought to force investors to bring their cases individually.

Class certification lets investors pool resources, which can cut costs, and can lead to larger recoveries than if investors are forced to sue individually.

Goldman spokesman Michael Duvally declined to comment.

The bank is one of many accused by Congress, regulators and others of having fueled the nation’s housing crisis and 2008 financial crisis in part by having misled investors about the quality of mortgage debt they sold.

Goldman in 2010 agreed to pay $550 million to settle U.S. Securities and Exchange Commission fraud charges over a collateralized debt obligation it sold, Abacus 2007-AC1 CDO.

Court battle is looming between U.S. and AT&T, T-Mobile

NEW YORK/WASHINGTON ― The Justice Department made a bold move when it sued to block AT&T Inc’s $39 billion acquisition of T-Mobile. Now comes the hard part: going to court.

The government is asking a federal judge in Washington, D.C., to stop the deal, and will have to prove that it would mean higher prices and less competition.

“This will be the Obama administration’s line in the sand. This will be their signature antitrust event,” said University of Baltimore law school professor Robert Lande.

AT&T has said it will fight the case, and its general counsel said it plans to seek an expedited hearing from the judge. Even so, experts say, the company could decide that it is not worth the expense and uncertainty to go to trial.

An AT&T spokeswoman declined to comment.

Two big communications deals, MCI’s proposed takeover of Sprint in 1999 and EchoStar Communications Corp’s deal to buy Hughes Electronic Corp’s DirecTV in 2001 fell apart after the Justice Department challenged the deals.

“A preliminary question is whether AT&T will go to court. It’s certainly not uncommon for companies to look at this and decide that the game isn’t worth the gamble,” said David Smutny, an antitrust lawyer with Orrick, Herrington & Sutcliffe.

The case was assigned to U.S. District Judge Ellen Segal Huvelle, who also oversaw the EchoStar-Hughes antitrust court challenge. Huvelle was appointed to the bench in 1999 by then President Bill Clinton.

In pre-trial proceedings in that case, Huvelle had harsh words for the way both companies responded to regulators’ information requests, calling them “sluggish.”

Any trial in the AT&T case would be lengthy and complicated, with experts predicting that both sides would put on a parade of witnesses including consumers, economists, and possibly competitors or state regulators.

In its complaint, the Justice Department argued that AT&T has overwhelming power in the national market ― it is one of four major carriers ― and that the market for mobile telecommunications would be highly concentrated in 96 of 100 U.S. cell phone market areas.

AT&T is likely to argue that the deal would create efficiencies in terms of price, quality and innovation ― and maybe even jobs, said Lande, the Baltimore professor.

“Very few efficiency defenses work,” said Lande, who praised the Justice Department for bringing the action. “They make promises that these efficiencies could happen, but showing that in court is very difficult.”