Sneaking Suspicions |
 |
Sneaking Suspicions |
|
|
|
This page includes posts from March 23-29, 2003 in the usual reverse
order. Each posting on the home page is perma-linked to these
archive pages.
March 29, 2003 Some journalistic conventions really do try one's patience sometimes. A headline this morning did it today:
I know there are legal reasons why the media has to refer to this guy as a "suspect", but geez. And in other news, investigators in nearby woods discovered a steaming pile of manure suspected of originating from a black bear in the area, and the sun is alleged to have risen in the east this morning.
March 29, 2003 Walter J. Hoyt III set up a whole bunch of tax shelter partnerships over the course of about 25 years, beginning in 1971. The shelters set up a series of cattle and sheep breeding interests in which the partners invested. The arrangement gave the people involved a pleasant package of tax deductions and other offsets against their federal income tax obligations. There was only one problem. The sheep and cattle didn’t exist. Eventually the IRS caught up to the scam, and nailed Hoyt for mail fraud, bankruptcy fraud, and money laundering charges. The other shoes remained to drop, however. The IRS staffers had to figure out from Hoyt’s morass of partnership papers how to audit the taxes that should have been paid by the partners in each of the shelters. Eventually they hit upon a plan. The IRS sent each partner Notices of Final Partnership Administrative Adjustment (FPAA) forms, with separate estimated allocations of partnership items, under an approach dubbed
The audited investors naturally took a dim view of this method of recouping taxes from them. A large group of ex-partners decided to attack the IRS proceeding, by claiming that the agency violated Federal law prohibiting disclosure of personal tax information to others. This collateral attack didn’t work, either in the District Court or on appeal to the Ninth Circuit. Both courts recognized that the same statute prohibiting the disclosure also included a specific exception that fit this administrative enforcement proceeding very nicely, thank you. Of course, the IRS assessment could still be challenged by the investors. They just have to produce the appropriate records to support the validity of the tax returns they filed. Based on the facts outlined in the Circuit opinion, however, I imagine many of these investors will be losing sleep over that prospect. By the way, for those who believe it pays to increase their Word Power, I recommend the full text of this Circuit opinion, authored by Judge Ferdinand F. Fernandez. It includes these uncommon terms, which should give many folks a few moments of fun with a really good dictionary:
March 28, 2003 Yesterday the Fourth Circuit Court of Appeals issued a strongly worded opinion that reversed a district court, upheld a rational decision-making process by the Corps of Engineers, and supported what appears to be a practical smart growth strategy by a local government. Not a bad combination, when it’s warranted. Hanover County, Virginia is just north of Richmond. It’s experiencing a bit of a boom in residential and other uses, a significant change from its predominantly rural characteristics. The expansion of the county’s population had predictable effects, especially with respect to certain, ah, infrastructure fundamentals—such as sewer capacity. A wastewater transfer deal with neighboring Henrico County handled up to 5.4 million gallons per day, while Hanover’s own plants dealt with the rest. Even so, long term projections showed a need to expand sewer capacity, especially in the area designated for concentrated development called the “Suburban Service Area” (SSA). The SSA is a part of Hanover’s strategy to handle the demand for those seeking to live there, while preserving about 80% of its rural countryside. An extensive planning process led to a decision to build a new treatment plant, a long pipeline, and a discharge structure into the Pamunkey River. Inevitably, the project affected a small amount of wetland acreage (this is the mid-Atlantic, after all), which therefore brought the Corps of Engineers into the picture. The Corps issues wetlands permits under the Clean Water Act, and after its own extensive review the Army gave Hanover permission to build the project. Unfortunately, the new sewer system became hung up by an attack from local landowners unhappy with the project’s proximity to their property. These owners found a sympathetic ear in the Federal district court, which told the Corps it had to revisit its consideration of the project. Hanover County officials then went back and revised their plans. The changes were substantial, included the elimination of the part of the project that was the focus of the original litigation. Among other amendments, the new version of the project reduced the impacted wetlands by several acres. The Corps of Engineers showed how to handle this matter properly, especially after Hanover filed its new permit application. The Army assigned a whole new staff to conduct the review. It also obtained public comment, conducted field studies, obtained comments from other federal and state agencies, and eventually created a 6,000 page administrative record to support its eventual decision to grant a permit for the new concept. The original plaintiffs remained unsatisfied, and challenged the Corps’ findings. In response, the Corps investigated the new claims, but concluded that the new allegations were insufficient to block the new permit. Once again the landowners turned to the Federal district court, and once again the trial judge took their side. The judge ruled that the Corps’ decision was arbitrary and capricious, and remanded the matter back to the Corps for yet another review, complete with specific instructions. This time the County appealed, with support from other local governments. The Fourth Circuit’s reversal can’t be read as anything less than an admonishment to the lower court for its flawed review of the administrative agency decision. It first referred to the normal deferential standard in considering whether an agency acted arbitrarily in dealing with a complex regulatory scheme. It then reminded the district court that it should not substitute its own judgment for that of the agency. If the agency decision appears to be the reasonable product of ordered minds, the judicial inquiry ends at that point. That’s not what happened here. After deciding that the Corps’ review of the two projects reached virtually the same result, the lower court
The appellate panel noted the significant differences between the two projects, the fact that two entirely different sets of Corps employees reviewed them, and the extensive administrative record showing careful consideration of the eventually approved project. On these facts, there were no legitimate grounds for all the second-guessing that occurred. In another part of the extensive opinion, the Circuit Court noted a few certainties about some of the issues in the case:
As a government attorney, the last segment of the Circuit Court’s opinion was frankly refreshing to read. I can well imagine how the Hanover County attorneys and their clients must have felt when they read the following conclusion:
For Hanover County’s sake, let’s hope this is the last time this project sees the inside of a federal courtroom. Update--At least from the initial response, it looks like I was a bit optimistic. According to the Richmond Times-Dispatch story on the decision, one of the plaintiffs gave the following quote:
Sigh.
March 27, 2003 This week an Ohio bank robber provided yet more proof that this particular type of criminal comes from the shallow end of the gene pool. John Gladney robbed a bank, stuffed the bag of money into his pants, and fled. The explosive dye in the bag then did its job, resulting in a painful groin injury and his easy capture shortly thereafter. Gladney is probably red with more than embarrassment right now.
March 26, 2003 The Seventh Circuit yesterday issued a fairly blunt opinion that reminds potential litigants that there is a price to be paid for burdening the Federal judiciary with frivolous cases and even more frivolous appeals. Sandra Schmitt filed for divorce against Kim Schmitt in the Illinois court system. Somehow she couldn’t obtain the normal service of process on her soon-to-be ex-husband. The court therefore granted a motion which permitted a private detective to serve three parties the Court agreed could be substituted for actual service upon Kim—an attorney who’d represented Kim in another matter, an employee of Kim’s brick company, and the law firm of the attorney. That move got Kim’s attention. He then filed papers in state court contesting the service of process. He lost, and the court added to his indignation by ordering him to pay maintenance, landscaping, travel, and attorney’s fees. Kim also received an order blocking the disposition of any assets without notice to Sandra and her counsel. Kim then lost his interlocutory appeal to the Illinois Appellate Court. At this point, Kim’s litigation strategy took a wrong turn. Instead of appealing to the Illinois Supreme Court and then (potentially) the U.S. Supreme Court about the alleged flaws in serving his divorce papers, he filed a separate action in federal court challenging what the Illinois courts had done. Not surprisingly, the district court dismissed his case for lack of jurisdiction, and then imposed sanctions for filing a frivolous lawsuit on Kim, his company, and his attorneys. The penalties included Sandra’s attorneys’ fees and costs in the federal case. The three sanctioned parties didn’t take the hint. They appealed that decision to the Seventh Circuit. Not smart. Judge Evans let his readers know immediately what the appellate panel thought about this case:
The panel then discussed the facts briefly, and provided a simple outline of the limits of federal jurisdiction in a case like this one. Judge Evans then detailed the court’s dim view of Kim’s legalistic antics:
The Court also gave notice that there would be an additional charge for wasting the Circuit’s time with this case:
Mo’ money, mo’ money, mo’ money, and all because some folks decided to do something really stupid and pointless. Cases like this one remind me again why I have never had any significant interest in a family law practice.
March 25, 2003 Compared to the run-up for the war against Hussein, things at Dover AFB have lately seemed a bit quiet. That could be because the real action at the Base occurs at night now, and not during the day when I'm in the vicinity. In any event, this morning the bodies of the first dead soldiers from the war were flown into DAFB, the country's largest military mortuary and a primary C-5 installation. The nearby presence of this support service on the Base is among the reasons I'm troubled by the unthinking triumphalism of some of the war's supporters. By the same token, knowing that within a mile of where I work is a place where soldiers, sailors, and airmen come back to America after their final sacrifice for the country is also why I have trouble taking seriously the unthinking opposition within the anti-war contingent. These dead deserve far more than sloganeering. Fortunately, most folks know this, and will give the propagandists on both sides the attention they truly deserve.
March 25, 2003 Last week the Third Circuit Court of Appeals issued a nicely practical land-use decision that also reminds litigants that there really are limits to one’s standing to sue in Federal Court. Point Pleasant Beach, New Jersey is a small seaside community about 40 miles due east from Trenton. As with most New Jersey municipalities, it has a zoning code. In June 2000, the Borough adopted limits on certain uses within two zoning classifications. The new law effectively barred any more rooming or boarding houses within one zone and hotel/motel uses within another zone. As is common to many similar ordinances, the new law did not outlaw any such existing uses in these areas. Nonetheless, any property owner in the new “nonconforming use” condition the new ordinance created is now forced to seek variance approvals before making any significant changes in the property. Of course, there are no guarantees of obtaining these variances. Under some conditions, some landowners would be fine with these changes. Their new zoning status would increase the value of their property, as potential competition for similar uses in the same area is now diminished or eliminated. Under other conditions, the change could have the opposite long-term effect. Anthony and Frank Storino were among the unhappy landowners after the Borough adopted this ordinance. They sued in Federal Court asserting a variety of legal claims based on federal and state law. After losing in the District Court, they appealed to the Third Circuit. They fared no better before the appellate panel, for good reasons. First, nothing really happened yet, at least as to their property:
Second, there’s no current threat of anything happening:
Third, the Storinos couldn't argue on behalf of “low and moderate income" Borough residents. They weren’t in that income category themselves, and since they didn't allege any real injury to themselves, they couldn't make their case fit within the very limited universe of third-party standing that might have provided a jurisdictional basis for their lawsuit. Finally, since there was no federal jurisdiction, there was no basis for retaining jurisdiction over any remaining state law claims. If a real controversy comes up involving the new ordinances, the state courts can handle them. In directing the District Court to dismiss the entire case for lack of jurisdiction, the Third Circuit provided a useful reminder to similarly situated potential litigants:
In other words, the voting booth should be the first place to seek relief from a duly enacted law with which folks disagree, especially when there are no obvious legal flaws with how that law operates. This decision might help others understand that point.
March 24, 2003 From 1988 through 1995 Vincent Lane was the head of the Chicago Housing Authority. Lane also used to be a real estate developer. Thanks to a Seventh Circuit decision issued today, he will now be a guest of the Federal corrections system. Prior to attaining his august position at the Housing Authority, Lane tried his hand at commercial real estate deals in Texas and Illinois. In one of his excellent Texas adventures, his personal guarantee on a hefty loan came back to bite him. Although he tried to negotiate his way out, in 1994 the lender gave up and filed the $2.4 million Texas judgment against Lane in Illinois. In the meantime, Lane also became involved in a series of loan transactions concerning a Chicago shopping center. There were several lenders, including the City of Chicago, American National Bank (ANB), and others. Lane personally guaranteed payment to ANB, and assured the bank in writing that he had no outstanding debts that would impede his ability to pay off the loan. Lane also sought and obtained money from South Shore Bank for a refinancing of three loans involving a Springfield Office Partnership. Somehow in all the excitement Lane didn’t mention to either South Shore or ANB that he had a $2.4 million judgment against him at the time Lane signed the loan papers. That’s not good. In fact, there are laws about that kind of non-disclosure. Eventually Lane faced a series of federal charges. The jury hung on a few of them, but the facts outlined above were sufficient for guilty verdicts relating to these transactions. The appellate opinion affirming the trial court’s handling of the case ranges over a variety of issues in its 38 pages. One of the best segments deals with Lane’s claim for a reduced sentence, based on his intentions:
Whoops. It’s just that sort of critical distinction that some people overlook, to their eventual disappointment—or in some cases, conviction.
March 24, 2003 During last night’s Oscar ceremony, Michael Moore received an Oscar for “Bowling for Columbine,” and proceeded to distinguish himself during his remarks: I happen to agree with Moore on several of the points he made. Moore said,
How true. “Bowling for Columbine” is fictitious, for example, as pointed out by Spinsanity, Forbes, and The American Prospect. Moore’s inability to keep to the facts to make his argument in this "documentary" thus managed to unite center, right, and left-wing opinion, a rare achievement. Moore said,
How true. According to the news account I read, many of the Hollywood types in the audience booed Moore loudly, as is their perfect right, when Moore intemperately attacked the current Administration and the military assault on the Butcher of Baghdad. I thought that was a perfect example of Americans speaking their mind about a foolish man saying foolish things. Moore said,
How true. I have rights of free speech. I can say that I believe Moore is at best a careless “documentary” maker, if not a man who knows how to mislead with a camera. I can tell others that I believe Moore has an admitted flair for marketing himself, but that Moore possesses no more credibility on matters involving the security of this country than my dog. Moore’s right. It’s a great country.
March 23, 2003 Mark Kleiman posted a short piece today commenting on a stirring British essay by a former “human shield”. A Newsweek photographer writes about how his eyes were opened to the real evil of the Hussein dictatorship, by his exposure to an Iraqi who set him straight. In classic blogger fashion, Kleiman learned about the piece by a link Orin Kerr provided at The Volokh Conspiracy to an Instapundit pointer. Kleiman appreciated the writer’s honest re-appraisal and openness to correction with facts that ran against his preconceived notions. Kleiman also noted his own irritation with those who stake out their positions without regard to facts:
For the most part, I agree with Kleiman. It’s among the reasons I tend to avoid reading some of the more strident bloggers and media columnists, no matter their position along the political continuum. For those untroubled by the need to rely on facts to support their position, I’m equally untroubled by any inclination to take their arguments seriously. Facts are messy. Facts are inconvenient. They frequently upset comfortable assumptions and beliefs. As I see it, that prospect provides all the more reason to rely upon facts to make critical adjustments, both in how one deals with others and in devising ways to contribute to the common good. The only quibble I have with Kleiman’s note is that he says he becomes “unreasonably upset” at the dishonest writings of others. I’d say his anger is an entirely reasonable, understandable, and appropriate reaction instead.
March 23, 2003 John F. Burns reported the following in a NYT piece today:
Based on this report, it sounds like Hussein’s most senior henchmen have reached at least the first stage of coping with loss—denial. One hopes that within the next few days, whoever remains of these same officials will also go through the remaining stages of bargaining, anger, despair, and acceptance. That should help end the conflict, so that the process of repairing the decades of damage caused by Hussein can begin. Fortunately, it appears that thousands of Iraqi soldiers have already quickly passed through all five stages, in some cases within minutes of first contact with the forces of the Coalition of the Willing. By the way, I love that phrase. It is both truthful and a source of annoyance to those who would rather talk than take effective action against Hussein. |
Contact Information: Fritz Schranck fschranck-at-
Home Page |
|||
Official small print disclaimer: This is, after all, a personal web site. Any opinions or comments I express here are my own, and don't necessarily reflect the official position of my work as a government attorney or any of my clients. That fact may become obvious later on, but it needs to be said here anyway. © Frederick H. Schranck 2002-2003 |