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scandals

The jury convicted the veteran pol on all counts after a five-month trial. The case raised allegations of lawyer misconduct, and we have previously covered the bare-knuckled tactics Fumo used to protect some of his friends in the Pennsylvania courthouse machine.

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A week ago I briefly noted that now-imprisoned securities class action king Mel Weiss appeared on the list of Bernard Madoff victims (163-pp. PDF courtesy WSJ, via Christopher Fountain) and observed how ironic it seemed that someone who made great claims to expertise in sniffing out stock fraud should have been taken in by it.

According to correspondence from New York securities lawyer (and longtime Weiss critic) Howard Sirota, however, there might be to the story than that:

I wouldn’t be so quick to jump to the conclusion that Mel Weiss [fouled] up investing with Madoff.

Weiss’ wife and son Stephen A. Weiss invested with Madoff, as did [Milberg Weiss partners] David Bershad and Pat Hynes.

In addition, convicted serial Milberg plaintiff Howard Vogel invested with Madoff.

Buchbinder Tunick, Milberg’s accountants and ironically Milberg’s principal forensic accounting experts, appear on the list, although the entries may be clients of the Buchbinder firm.

Class action firms Wolf Popper and Wolf Haldenstein also appear.

Sirota believes that other persons and entities on the Madoff victims list have also served as lead plaintiffs in securities litigation or as plaintiffs in other litigation handled by class-action firms. All of which could be mere coincidence, or could suggest that either Madoff himself or others in his circle might have played some role in funneling lead plaintiffs to the class-action bar. (Particularly in the “race to the courthouse” era that preceded the Private Securities Litigation Reform Act, having a stable of cooperative repeat plaintiffs was vital to the success of many plaintiff’s firms.)

One way to check this thesis, Sirota suggests, would be to check the names on the Madoff victims list against those on the list of plaintiffs maintained by the Stanford Law School securities class action clearinghouse to see whether there are any other noteworthy matches and if so whether they follow any particular pattern. He also asks whether some of the law firms that have been organizing task forces to recruit and represent plaintiffs in the Madoff scandals — they include the Milberg firm and Wolf Haldenstein — have adequately disclosed to potential clients in their literature that their firms’ own names figure on the Madoff victims list. More: Gary Weiss, Larry Ribstein.

Further: Yet more views. And in comments, a visitor says Wolf Haldenstein is on the list because clients of the firm invested with Madoff, not because the firm itself did.

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Mississippi:

The 5th U.S. Circuit Court of Appeals on Monday upheld the conviction of Vicksburg lawyer Robert Arledge, convicted of bilking the drug company Wyeth of more than $6.7 million over the diet drug Fen-Phen….

U.S. District Judge David Bramlette sentenced Arledge to six years in prison for knowingly allowing clients to make claims of about $250,000 each for health complications although they had no legitimate reason.

Seems it was a clergy scandal as well as a lawyer scandal:

Regina Reed Green of Fayette, who pleaded guilty to tax evasion involving false Fen-Phen claims, testified Arledge knew about the scheme to defraud the drug company. She said he told her every resident of 9,740-population Jefferson County would get $1 million.

“The evidence showed that when Green became concerned that she might be caught fabricating the prescriptions and expressed a desire to stop her illegal activity, she contacted (the Rev. Gregory) Warren,” the appeals court wrote. “Warren tried to convince Green to continue fabricating the prescriptions, but Green was not assuaged.”

Green testified Arledge persuaded her to continue: “And he said … I wasn’t going to get in any trouble because like (Warren) said, they were going to box all those files up, put them away, and never be seen again.”

Earlier coverage here, here, and here (via).

January 13 roundup

by Walter Olson on January 13, 2009

  • IP turf-staking: charity tries to trademark the phrase “Congenital Diaphragmatic Hernia Awareness” [Likelihood of Confusion]
  • Bad excuses dept.: Ohio 17-year-old killed his mom but lawyers “insisted youth and video game addiction made him less responsible,” a theory judge wasn’t buying [AP/WBBM]
  • Lawsuit over Yelp review (chiropractor vs. disgruntled ex-client) settled [CNet; earlier]
  • “Can U.S. Laws Protect Online Speech from Foreign Libel Suits?” [Neuberger/PBS]
  • Coverage of Philadelphia’s Fumo scandal trial, “law firms [and some big ones] used in an alleged blackmail scheme” [Lowe, AmLaw Daily, earlier]
  • “Another wrongful-paternity case from hell” (wrong guy, but default judgment) [Balko, Reason]
  • Never trust content from “ProPublica” [Kopel @ Volokh on environmental effects of oil hydraulic fracturing, response from ProPublica, Kopel's riposte; their attack on Goldman Sachs in California and New Jersey; Carter Wood at NAM "ShopFloor"]
  • Few places have emulated San Francisco and Santa Cruz ban on discrimination based on appearance, i.e., against less attractive folks [WorkplaceProf]

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Ed Peters, the former Hinds County (Jackson) prosecutor who’s been a central figure in the still up-in-the-air Peters-DeLaughter branch of the Scruggs scandals, has turned in his law license (via) amid much Mississippi speculation that he is cooperating with prosecutors and that other developments are imminent. NMC at Folo tries to sort things out. And, just in time to be helpful, Alan Lange of YallPolitics has an article summarizing the scandal as it’s developed thus far.

The American Tort Reform Association is out with its annual ranking of the jurisdictions where it thinks civil defendants are farthest from being assured a fair trial, and they are:

  1. West Virginia
  2. South Florida
  3. Cook County, Ill.
  4. Atlantic County, NJ
  5. Montgomery and Macon Counties, Ala.
  6. Los Angeles County, CA
  7. Clark County (Las Vegas), Nev.

The list reflects the views of big-company managers and lawyers as to tort lawsuits; a poll of, say, doctors might result in different nominations (Brooklyn, Bronx, Long Island*, Philadelphia) and one of class-action or patent-infringement defendants would likely produce yet other lists.

ATRA has a supplementary “Watch List”, nicknamed by some of us “Heckholes”, of toasty but not quite infernal jurisdictions, on which it places the Rio Grande Valley and Gulf Coast of Texas, Madison County, Ill., Baltimore, Md., and St. Louis city and county and Jackson County, Mo. It also offers side essays on notable scandals among high-rolling lawyers, trial lawyer-AG alliances, and pro-plaintiff’s-bar lobbying efforts.

Some coverage of the report: Pero, ShopFloor (with this and this on AG alliances), Ambrogi, Genova, CalBizLit (“We’re Number 6! We’re Number 6!), TortsProf, Miller (Baltimore), and Turkewitz (cross-posted from Point of Law; also note this recent post).

* Commenter VMS makes a case that Long Island does not belong on such a list.

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Even after being jailed in Toronto, the litigator managed to grift $10 million from an escrow into his personal account. And he let the malpractice insurance on his law practice lapse, as his horrified colleagues are now finding out. (Alison Leigh Cowan, Charles V. Bagli and William K. Rashbaum, “Lawyer Seen as Bold Enough to Cheat the Best of Investors”, New York Times, Dec. 13).

P.S. Eric Turkewitz (Dec. 14) has a sobering analysis of possible liability exposure for the non-equity partners of Dreier LLP.

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Microblog 2008-12-13

by Walter Olson on December 13, 2008

  • Holman Jenkins on auto bailout [WSJ] Bush’s willingness to use TARP helped the unions scuttle a reasonable deal with Corker; and why exactly did CEO Wagoner commit GM to the (dubious and self-injuring) position that buyers’d abandon the company in the event of a Chapter 11? [Hodak Value h/t Ted] So that’s what dragging Detroit down — domestic partner benefits [Brayton] And Ted wonders if it might be cheaper in the long run for the government just to buy a Senate seat from Gov. Blagojevich for every auto worker;
  • Where’d Gov. Blagojevich pick up idea it was OK to sell official acts for $$$? Can’t imagine [Ribstein] Who is Advisor B? [Byron York] Sing, Rod, sing! [Coleman] “Blago’s decision to let SEIU and not AFSCME organize Ill. child-care workers” Hmmm [Freedom-at-Work, NRTW] “How do they think Chi pols talk in private when muscling some guy for cash? Like Helen Mirren playing the queen?” [John Kass, Tribune] A look at AG Lisa Madigan [PoL] Illinois pols have shaken down hospitals before, state’s “certificate of need” (permission-to-build) law is one culprit [StateHouseCall]
  • J.K. Galbraith’s best bon mot: “bezzle” = inventory of unexposed embezzlement, revealed as tide of boom recedes [Cox, Breaking Views] Fascinating memoir of why Madoff had been giving off fishy smell for years [Tokyo Cassandra] So sleazy! “Many” investors put $ with Madoff because they suspected he was crooked — but cheating someone else [Blodget] “Madoff didn’t run one of these much-maligned, unregistered hedge funds. He was registered with the SEC. Here’s his latest 13-F, which looks perfectly normal.” [Weisenthal]
  • Daily downer for media folk [@themediaisdying h/t @amyfeldman] “Remember, America, you can’t wrap a fish in satellite radio” — P.J. O’Rourke wants bailout for print [The Australian]
  • Jurors’ political leanings predict whether they’re pro-plaintiff or defendant? Not as simple as that [Wisconsin Lawyer h/t @juryvox]
  • Asbestos rise in Madison County, Illinois could signal return to “old school” tactics [MC Record h/t @icjl]
  • Sue me harder, don’t stop now: competing Fla. fetish clubs feud in court, which’ll get whipped? [ABA Journal]
  • Russian patent office grants trademark for ;-) emoticon, businessman asking royalties [BBC h/t @bodhi1 @mediadonis]
  • Arnold Kling: loan modification way oversold as remedy for housing ills [EconLog h/t @tedfrank]
  • Best line: “the goose was not our employee or our agent” [CKA Mediation h/t @vpynchon, earlier]

Dreier LLP scandal

by Walter Olson on December 10, 2008

From bad to worse: “According to a declaration by the firm’s Controller John Provenzano, millions of dollars owed to clients appeared to be missing from the firm’s accounts.” (Dan Slater, WSJ law blog; American Lawyer; earlier).

In general clients who suffer by a law firm’s defalcations, and cannot be made whole by suits against the law firm, are at risk of losing all or most of the money they’d entrusted; however, New York, where the Dreier firm is headquartered, at last report afforded broader provisions for clients than did most states. I took note four years ago of the not-especially-generous state of lawyerdom’s collective “client security” funds.

P.S. More on client security funds in comments. Larry Ribstein has thoughts on the Dreier firm’s unusual organizational structure. As for all the “dating Maxim models” stuff about the extravagance of Dreier’s personal life, that is pure tabloid-style sensationalism and will under no account be exploited in this space.

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November 23 roundup

by Walter Olson on November 23, 2008

  • In unpublished opinion, California appeals court upholds dismissal of Unruh Act challenge to baseball Angels’ Mothers Day tote giveaway [Lex Icon, earlier]. More: CalBizLit.
  • Securities class-action firm Bernstein, Liebhard & Lifshitz perhaps a less credible tribune of fiscal rectitude now that name partner Mel Lifshitz has copped felony plea to lying on federal taxes [NY Post, NYLJ, WSJ law blog] And what’s this about Lifshitz funding one of his firm’s clients? [The Street] P.S. He’s now departed the Bernstein firm, but maybe there’s an opening for him as chairman of House Ways and Means.
  • Per one lawyer, “would be a stretch” for website operator to be held liable for teen’s overdose suicide with webcam running [AP]
  • Carter Wood finishes up weeklong series of posts looking back on the great 1998 tobacco settlement [ShopFloor links to PoL]
  • Eric Holder not a reassuring Attorney General choice for gun rights [Kopel @ Volokh]
  • Law bloggers on Twitter: Anne Reed explains what the fuss is about [Deliberations; related, Michelle Golden]
  • Compulsory chapel? UC Irvine Prof. Alexander McPherson, who quit supervising students rather than submit to state-mandated sexual harassment training, explains his stand [L.A. Times] Lefty blogs once again empty a bucket over his head [Feministe, Lemieux]
  • Presumably unrelated: “Law Grad Accused of Faking E-Mail to Implicate Prof in Harassment” [ABA Journal, Florida Coastal]

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Aficionados of the John Edwards-Rielle Hunter scandal may have noticed a new attorney’s name cropping up in news reports: Lee Rohn of the U.S. Virgin Islands. From the New York Daily News:

One day before Edwards went public with the affair, Hunter and 6-month-old daughter Frances were flown to the Virgin Islands on a chartered jet, the Enquirer reported.

The $50,000 trip was paid for by friends of Edwards. The newspaper also said she stayed at the oceanfront home of another Edwards’ pal, lawyer Lee Rohn.

(Larry McShane, “John Edwards promised Rielle Hunter they’d be together – report”, Aug. 20)(via ABA Journal)(Update: Rohn vehemently denies the Enquirer story as false, saying she neither hosted Hunter nor is close to Edwards; see below). Readers may be wondering: is Rohn yet another attorney whose doings are going to make irresistible copy for a site like this, much as with Edwards chum/Democratic moneyman/perennial Overlawyered mentionee Fred Baron? To which the answer would appear to be, “you bet”:

St. Croix attorney Lee Rohn has stirred up a chorus of criticism and complaints about her professional practices both inside and outside the courtroom.

Her most vocal critics have been opposing parties or counsel in lawsuits she has filed. They have alleged a wide spectrum of professional conduct violations.

Among Rohn’s frequent targets is Innovative Communication Corp., which runs the Virgin Islands’ local telephone provider and the islands’ newspaper, and whose lawyers say they’ve lost count of how many times she’s sued them. The company’s chairman, Jeffrey Prosser, has called in vain for Rohn’s disbarment, complaining of “intolerable” and “abusive” instances of “ethical misconduct” as well as “vitriolic” public attacks: “In some cases with us, she coerced her clients to sign documents that were knowingly false [and] ignored judge’s orders on limits of discovery inquiry during depositions,” he wrote.

In 2002, Rohn publicly blasted one of the islands’ two federal district judges, Thomas Moore, accusing him of inappropriate behavior, and Moore recused himself from some of her cases citing the antipathy. Subsequently, after she moved to demand Moore’s recusal from yet another of her cases, he refused, stating in his written ruling, “I believe attorney Rohn’s personal attack on one of the two sitting judges in this jurisdiction was nothing more than a calculated litigation tactic that would be labeled ‘judge shopping’ in most places.” Moore, who has sanctioned Rohn for insulting and profane language toward witnesses and court personnel, wrote in another case, in which the Caribbean Geoffrey Fieger “sought to compel testimony from all the federal judges in the territory”:

“Nothing Lee Rohn does surprises me anymore, although subpoenaing all the federal judges in the jurisdiction is a high point of ingenuity and creativity in attempting to manipulate the system,” Moore wrote.

“I do not believe, however, that an attorney should be allowed to use her calculated personal attack on a sitting judge as a technique to prevent that judge from presiding over any of her cases, especially in a small district with only two judges.”

A few weeks ago, it may be recalled, we looked at the question of lawyers’ public denunciations of judges and whether they do or should result in recusal by those judges. (Jason Robbins and Lee Williams, “From judges to opponents, Rohn has no shortage of harsh critics”, Virgin Islands Daily News, Mar. 29, 2004 — the newspaper, it bears repeating, and its parent company have been frequent targets of Rohn’s litigation, as in this libel case arising from her airport pot bust). Death by a Thousand Paper Cuts has more, including a picture of the Rohn villa.

The National Enquirer, which keeps breaking new developments in the story, is now reporting that “a team of six more lawyers have been involved in the coverup”. They can’t all be as interesting as Baron and Rohn, can they?

Update Fri. 8:20 p.m.: the Daily News reports Rohn categorically denies the story’s truth:

The Enquirer quoted Virgin Island pol Anne Golden as saying Hunter stayed for 10 days in an oceanfront home owned by prominent St. Croix lawyer Lee Rohn.

Rohn hotly denied that to the Daily News and vowed to sue.

“It is absolutely false,” she told The News. “The Enquirer knows the story is not true as they sat on a hill above my house for a week with telephoto lenses and video cameras and had no sighting of her. The guest cottage she was supposedly staying in is under construction and has no floor.”

Rohn said that while she donated money to Edwards, she is not friends with him. Records show she gave $2,300 to Edwards a year ago and another $2,300 to Barack Obama early this year.

(Helen Kennedy, “John’s island girl Rielle fled to St. Croix on eve of cheating flap”, Aug. 21). And — hat tip to commenter Ken Floyd — the opinions of heated Rohn critic Jeffrey Prosser, the newspaper/telephone magnate, should be evaluated in the perspective of his own controversial and colorful business record, which recently culminated in high-profile bankruptcy proceedings involving his Innovative Communication empire. Some sources on that here, here, here, and here. For more background on the recusal disputes involving Rohn and Judge Thomas K. Moore, see this Moore opinion (U.S. v. Roebuck, PDF) and this Third Circuit opinion (Selkridge v. Mutual of Omaha, 360 F. 3d 155). DBKP wishes it had been a fly on the wall during an AAJ award ceremony honoring Rohn. And see commenter #7 below who seems to have been doing considerable digging.

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Via Point of Law, today’s DC Examiner has a big package of stories on trial-lawyer felon William Lerach:

The “Who lost when Lerach won?” piece quotes me.

Lester Brickman has a new must-read paper on an under-reported problem:

Lawyers obtain the “mass” for some mass tort litigations by conducting screenings to sign-up potential litigants en masse. These “litigation screenings” have no intended medical benefit. Screenings are mostly held in motels, shopping center parking lots, local union offices and lawyers’ offices. There, an occupational history is taken by persons with no medical training, a doctor may do a cursory physical exam, and medical technicians administer tests, including X-rays, pulmonary function tests, echocardiograms and blood tests. The sole purpose of screenings is to generate “medical” evidence of the existence of an injury to be attributed to exposure to or ingestion of defendants’ products. Usually a handful of doctors (“litigation doctors”) provide the vast majority of the thousands and tens of thousands of medical reports prepared for that litigation.

By my count, approximately 1,500,000 potential litigants have been screened in the asbestos, silica, fen-phen (diet drugs), silicone breast implant, and welding fume litigations. Litigation doctors found that approximately 1,000,000 of those screened had the requisite condition that could qualify for compensation, such as asbestosis, silicosis, moderate mitral or mild aortic value regurgitation or a neurological disorder. I further estimate that lawyers have spent at least $500 million and as much as $1 billion to conduct these litigation screenings, paying litigation doctors and screening companies well in excess of $250 million, and obtaining contingency fees well in excess of $13 billion.

On the basis of the evidence I review in this article, I conclude that approximately 900,000 of the 1,000,000 claims generated were based on “diagnoses” of the type that U.S. District Court Judge Janis Jack, in the silica MDL, found were “manufactured for money.”

Despite the considerable evidence I review that most of the “medical” evidence produced by litigation screenings is at least specious, I find that there is no effective mechanism in the civil justice system for reliably detecting or deterring this claim generation process. Indeed, I demonstrate how the civil justice system erects significant impediments to even exposing the specious claim generation methods used in litigation screenings. Furthermore, I present evidence that bankruptcy courts adjudicating asbestos related bankruptcies have effectively legitimized the use of these litigation screenings. I also present evidence that the criminal justice system has conferred immunity on the litigation doctors and the lawyers that hire them, granting them a special dispensation to advance specious claims.

Finally, I discuss various strategies that need to be adopted to counter this assault on the integrity of the civil justice system.

(Bumping Aug. 14 6:43 pm post to keep at the top of the page.)

In a post I made yesterday, I noted a transaction between Andrew Young and Timothy Toben that I suggested may raise the possibility of a sweetheart deal on the purchase and sale of a 5000-square-foot Raleigh home. I have since done some additional research that rules out that possibility–it turns out that Young purchased a plot of land in a different county, which explains what had otherwise appeared to be a discrepancy–but raises other interesting issues about Young’s cash flow shortly after the National Enquirer allegations first appeared. I have updated the post, and regret the error in the premise.

Update: See important update below. The Toben-Young transaction appears to be for a different parcel of land than the $1.2 million house–but the new documents reveal something else that’s interesting. More details below.

Andrew Young, who publicly claims to be the father of Rielle Hunter’s baby (though he hasn’t been heard from since John Edwards’s confession of an affair), was moved to Santa Barbara by the generosity of John Edwards’s campaign chairman, trial lawyer Fred Baron. He was paid $3,500/month to work for the Edwards campaign. Yet the Raleigh News & Observer reports that Andrew Young and his wife sold their Raleigh house to Carolyn Grissom for a jaw-dropping $1.2 million on February 14, 2007, and moved into the Chapel Hill Governors Club country-club gated community, where they rented a few doors down from Hunter. (Rentals there are available for as low as $1700/month, and home prices range from $289,000 to $2.3 million, so nothing necessarily unusual about that.)

(Update: New documents I’ve found show that the Toben-Young transaction appears to be for a different parcel of land than the $1.2 million house. More details below. This paragraph, based on the mistaken reading of the transaction that it was for the Raleigh home, is incorrect. I regret the error, but the correction reveals something else interesting about the Toben transaction; see the discussion below.) What’s more unusual is that North Carolina real-estate records on the web show that Andrew and Cheri Young purchased the 5000-square-foot house for $300,000 on September 28, 2005. (Update: this is incorrect. The house was purchased in 2001.) (The home was built in 1989, so they weren’t buying a vacant lot and building.) So either Andrew Young is a secret real-estate genius on a level not seen since Hillary Clinton’s commodities trading, and was able to flip a house for a 300% and $900,000 return in under eighteen months, or something else is going on.

It’s interesting to note that the Youngs purchased the place from North Carolina real-estate developer Timothy Toben–a long-time North Carolina Democratic fundraiser who donated $6,500 to the Edwards campaign in 2007 (which, if the FEC reports are accurate, exceeds the federal campaign limits substantially). If Toben gave Young an unusually good deal, the 2005 timing suggests that Young got the deal for some reason other than Rielle Hunter, but, if so, what?

Meanwhile, if one looks up the home on Zillow.com, one sees that Zillow is skeptical of the $1.2 million purchase price, and values the house for substantially less (though well over $300,000), because of “anomalies” in the deal, though it does not specify what those anomalies are. (I found no indication that Carolyn Grissom is anything other than an innocent homebuyer; she’s not listed in the FEC database.)

This could all be coincidence in hindsight, and there could be a perfectly innocent explanation for all of this. It could be that the $300,000 figure is wrong, though then that raises the question of how Young was able to afford a 5000-square-foot house on a $42,000/year salary. But reporters with more resources than I might want to look into whether an Edwards staffer was getting a sweetheart deal from an Edwards contributor, why, and whether campaign finance laws were violated.

And welcome Michelle Malkin readers; apologies that so many of you clicked through that you briefly crashed the site. For Overlawyered’s coverage of the Rielle Hunter scandal, see the tag, and don’t miss our years-long coverage of John Edwards and his trial-lawyer record.

(August 14: Welcome Kaus and Instapundit readers. Post was corrected August 14, because it incorrectly said “Chapel Hill” instead of “Raleigh” as the location of the $1.2 million house.)

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Baron grants an interview to the Texas Lawyer, and makes some implausible claims:

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New Jersey dental assistant Amber Arpaio found herself an asterisk-to-an-asterisk in the history of political scandals when it was reported that Ashley Dupre used Arpaio’s lost driver’s license to pass for more than 17 when she made a “Girls Gone Wild” video that later became notorious after the exposure of Dupre’s paid liaison with Gov. Eliot Spitzer. So now Arpaio is suing Dupre and Joe Francis, impresario of the “Girls Gone Wild” series. The news coverage of the lawsuit contains no indication that Arpaio suffered any damage to her credit record or other tangible interests from the affair, but she wants upwards of $10 million in cash solace for defamation and invasion of privacy, and, per her attorney, because “when someone searches her name on the Internet, pornographic material comes up.” Much better, when someone searches her name on the Internet, for intimations of litigiousness to come up. (Nancy Dillon, “Duped by Dupre: N.J. woman charges Spitzer call girl with identity theft”, New York Daily News, Jul. 17; AP/Comcast, Jul. 17)(& Prettier Than Napoleon). Plus: complaint at The Smoking Gun (h/t commenter VMS).

More 7/22: Thanks to commenter Eric Turkewitz for pointing out that Dupre had posed as Arpaio in actual news coverage, not just in the signing of film releases and the like, which makes the basis for the suit less unreasonable than I had hastily assumed.

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I was quoted at length about the Kentucky fen-phen settlement fraud scandal; the article mentions our coverage, which we’ve been engaged in since the story broke years ago.

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