Gratitude III

In “Gratitude I” I expressed gratitude for my educational and professional mentors. In “Gratitude II” the subject was gratitude for my wife, children and grandchildren, my spiritual journey and my financial ability to retire at age 62. Here are some other things to add to my list for thankfulness.

Malcolm Gladwell’s Outliers emphasizes the importance of an individual’s family and place and date of birth as determinants of success. Warren Buffett, the great investor from Omaha, frequently says how fortunate he is to have won the ovarian lottery by having been born born in the U.S. in the 1920′s. They remind me to be grateful for having been born in the U.S.A. It is indeed a great country and provided me with opportunity after opportunity.

I am also grateful that I was born at the end of the Great Depression-era and as a result am a member of a relatively small age-cohort. This has meant that I faced less competition for many of the opportunities I have had. This also meant that I entered the labor force, after all of my university-level education, in 1966 when there was strong demand in the U.S. for new law graduates with good records. Today I read the many stories in the press about the difficulties of contemporary law graduates in finding good jobs, and this is confirmed by the law students I know at the University of Minnesota Law School. I am grateful I was not in that predicament when I was starting out.

Contemporary law graduates and other young people today often finish their student days with large student debts, further exasperating their situation in this difficult job market. Because of the full-tuition scholarships I had over nine years at Grinnell College and the Universities of Oxford and Chicago, I did not have any student debt and did not face this problem. For this I am also grateful.

This last point also uncovers another reason for gratitude. The three scholarships I had were the result of businessmen (George F. Baker and Cecil Rhodes) and lawyers who were financially successful in capitalist systems and who had philanthropic motivations to give back and encourage others.

Elizabeth Warren, a Harvard Law School Professor and a candidate for the Democratic nomination for the U.S. Senate from Massachusetts, is absolutely correct when she says:

• “There is nobody in this country who got rich on his own. Nobody. You built a factory out there? Good for you. But I want to be clear: you moved your goods to market on the roads the rest of us paid for; you hired workers the rest of us paid to educate; you were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that   marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did.”
• “Now look, you built a factory and it turned into something terrific, or a great idea? God bless. Keep a big hunk of it. But part of the underlying social contract is you take a hunk   of that and pay forward for the next kid who comes along.”

The same thought is expressed many times and many ways in the Bible. Here is what the letter to the Hebrews says. “[S]ince we are surrounded by so great a cloud of witnesses, let us also lay aside every weight and the sin that clings so closely, and let us run with perseverance the race that is set before us, looking to Jesus the pioneer and perfecter of our faith.” (Hebrews 12: 1-2.) “Let mutual love continue. Do not neglect to show hospitality to strangers, for by so doing that some have entertained angels without knowing it. Remember those who are in prison, as though you were in prison with them; and those who are being tortured, as though you yourselves were being tortured.” (Hebrews 13: 1-3.)

For all of these blessings, I give thanks to God and to those named and unnamed individuals who helped me along the way.

Gratitude II

A prior post expressed my gratitude for teachers, professors and professional colleagues who have helped me. But that hardly exhausts my reasons for gratitude.

I was blessed for having met and married Mary Alyce. An intelligent, attractive woman, she gave birth to our two sons, Alan and Brian, and bore the major responsibility for raising them to adulthood. All of us have been healthy without major accidents, another blessing. There have been problems along the way, of course, but we have managed to confront and surmount them. I am grateful.

For 24 years, 1957 through early 1981, I had no religious or spiritual life. I clearly suffered from the sin of pride. Yet I give thanks for those years. They gave me a strong sense of what it is like to be without a spiritual grounding as well as an understanding and appreciation for intellect, logic and reason. I am grateful.

In May 1981 I had a major turning when I could admit to myself and others that I did not have all the answers to life and when I joined Minneapolis’ Westminster Presbyterian Church. I am now in my 31st year of active membership at this church, and it has been and continues to be a major blessing in my life. I lament the way that Christianity is often presented to the rest of the world today, especially in my home state of Iowa over their recent Republican caucuses. I, therefore, strive to present in my own way an intelligent person’s understanding of the faith. I am grateful.

I now have four grandchildren. They are wonderful, intelligent, curious, polite and healthy human beings. I am now concerned to do what I can to help them go to college and achieve all that they can be. I am grateful.

My practice of law provided an excellent income, and my wife and I were able to save for our retirement, making it possible for me to retire at age 62. As I read the many stories in the press about so many people today unexpectedly not being able to retire for financial reasons, I know that I am privileged. I am grateful.

I am also glad that I decided to retire from lawyering early at age 62 in order to have time, energy and good health to do things I wanted to do. Similarly I am glad I retired at the end of 2011 from my part-time job of law school teaching and from volunteering as an arbitrator for the Financial Institutions Regulatory Authority in order to create time for writing and doing things I wanted to do. I am grateful.

For all these blessings, I give thanks to God and to those named and unnamed individuals who helped me along the way.

Gratitude I

It is so easy to credit all of your successes to your own talents and hard work. I know that I too often do that.

Lately, however, I am pausing to acknowledge the many blessings in my life.

My mother and father, Marian Frances Brown and Ward Glenn Krohnke, were directly responsible for endowing me with good genes. They also were loving and nurturing, especially in my early years, and supporting my many activities through college and beyond. Although of modest financial circumstances, my parents were able to afford many of the creature comforts of American middle class life as I was growing up. I did not have to work to provide financial support for the family although in junior and senior high school I had part-time jobs to earn spending money and saving for college. My parents and I were in good health as I grew up with no major illnesses or accidents. I am grateful.

The public schools in my small Iowa home town of Perry did not provide many of the curricular and extra-curricular activities of private schools or large, prosperous suburban school districts in the rest of the country. Yet I had many excellent teachers who did not let me coast through school. The teacher I remember most fondly for this nurturing and challenging was Emma Hepker, who taught speech and English Literature. I also participated in speech contests, football, baseball, track and concert and marching band playing the e-flat alto saxophone. I often focused on the limitations of growing up in this small town far away from where things were really happening. But I can now see that there were benefits from this protective environment. I am grateful.

Grinnell College, the next stop on my educational journey, was challenging and enriching. My major was history with a lot of political science and economics. The professors were excellent, especially Joe Wall, Alan Jones, Samuel Barron, Richard Westfall and George Drake in history, Harold Fletcher in political science and Philip Thomas and John Dawson in economics. As a student at a small college I had the opportunity to participate in many activities, including intercollegiate baseball and football and student government. I am grateful.

In the midst of my Grinnell experience, I had one semester at American University on the Washington Semester Program. The focus was seminars and meetings with politicians, government officials and others as we learned about American government in our nation’s capitol. Professor Louis Loeb was the excellent leader of our group. Each of us also did independent research for a paper. My topic was the participation of political interest groups in the U.S. Supreme Court’s consideration of contempt of Congress cases, mostly coming from the House Un-American Activities Committee, which I thought itself was un-American. I spent a lot of time in the Supreme Court Library reading briefs of the parties and of amici curiae (friends of the court), usually the American Civil Liberties Union and the American Association of University Professors, and then comparing their arguments with the Court’s decisions. This was also the first time I had lived in a major city, and I thoroughly enjoyed its many cultural attraction. I am grateful.

After Grinnell, I had the tremendous privilege and honor of being a student for two years at the University of Oxford. There I studied or, as they say, “read” Philosophy, Politics and Economics. During the three eight-week terms of the academic year, each week I read suggested readings on two topics or issues and prepared essays for two tutorials, usually by myself, but sometimes with one other student. The tutors, especially John Sargent and Roger Opie in economics and Michael Hinton in philosophy, were warm and encouraging while pressing me onward. During the terms you could also attend university-wide lectures in the subjects while over the vacations or “vacs” you were expected to continue your readings in the three fields. At the end of my two years, I had university-wide examinations or “Schools” as they were given in a building called “The Examination Schools.” There were six required examinations (two each in the three disciplines) plus two optional subjects (mine were public finance and currency and credit). Each examination was three hours long, and you had to answer four questions from a printed list of about 12 questions. Your answers were then read and graded by a university-wide committee, and your overall grade or results were posted on the Oxford bulletin boards and published in the London Times. I am grateful.

I then returned to the U.S. for three years at the University of Chicago Law School. Whereas there was great student independence at Oxford, Chicago like most law schools had large classes with daily assignments, usually with professors grilling the students with questions about the cases or statutes we were studying. At the end of the semester there was the familiar practice of the course’s professor giving the final examinations. There were great professors at Chicago: Harry Kalven, Walter Blum, Francis Allen, David Currie, Philip Kurland, Phil Neal, Bernard Meltzer, Soia Mentschikoff and Kenneth Dam to name a few. I am grateful.

In 1966 I commenced practicing law with the Wall Street firm of Cravath, Swaine & Moore, probably the preeminent law firm in New York City. In my four years there as a junior associate, I worked on many interesting cases, usually with the “grunt” work. The senior lawyers for whom I worked helped me to “learn the ropes” of practicing law. Jack Hupper and Tom Barr were the most significant in that regard. I am grateful.

In 1970 my family and I moved to Minneapolis where I commenced what turned out to be a 31-year career with the law firm of Faegre & Benson (now Faegre Baker Daniels). Here too I worked with excellent lawyers who helped me develop my legal skills. I think especially of John French, Norman Carpenter, Larry Brown and Jim Loken; Jim is now a Judge of the U. S. Court of Appeals for the Eighth Circuit. I am grateful.

After my retirement from Faegre in 2001, Professor David Weissbrodt at the University of Minnesota Law School asked me to help teach the international human rights course. I accepted the offer and did so for nine years (2002-10). I learned much more about this field of law and met many interesting students and faculty. I am grateful.

For all of these blessings, I give thanks to God and to those named and unnamed individuals who helped me along the way.

Litigating Against Scientology

RTC logo

Arnoldo Lerma

In the mid-1990s one of my partners in the Denver office of Faegre & Benson was retained to represent Arnoldo Lerma, who had been sued by the Religious Technology Center, an affiliate of the Church of Scientology. The complaint alleged copyright infringement and misappropriation of trade secrets by Lerma’s posting certain Scientology documents on the Internet.

The case was brought in the federal district court in Alexandria, Virginia, near where Lerma lived. At the time this court was known as “The Rocket Docket” because it put civil cases on a fast track to complete discovery and go to trial. As a result, our Denver office needed help on the case, and I volunteered.

My major task in the case was to represent Mr. Lerma at a deposition that the plaintiff was taking in Fort Lauderdale, Florida of a former Scientologist who previously had posted certain Scientology documents on the Internet. The deposition, in my opinion, was a very unpleasant professional experience.

I am glad that I had no other significant involvement in the case. From the Internet I believe that the district court eventually determined that Mr. Lerma had committed a small number of non-willful copyright violations and imposed a small fine. The Internet also reports that the court apparently dismissed claims by the Religious Technology Center against the Washington Post for articles it had published about the case.

U.S. District Court Alexandria, VA

Judge Leonie Brinkema

The judge in the case, by the way, was U.S. District Judge Leonie Brinkema. After 9/11, she presided over the criminal trial of Zacarias Moussaoui, who was convicted for conspiring to kill U.S. citizens in the 9/11 attacks.

Racing to Court for Sports Car Racing

Brainerd International Sppedway

On short notice I was retained to be the lawyer for a professional sports car driver. The mission was to obtain an injunction to prevent the Sports Car Club of America (the Club) from excluding him from a weekend race at the Brainerd (Minnesota) International Raceway approximately 130 miles northwest of Minneapolis.

1986 VW Scirocco

The driver was Eddie Wachs, who was racing a Volkswagen Scirocco in a series of races operated by the Club. Because of the alleged illegal modification of his car at a prior race, the Club was threatening to not permit Wachs to race at Brainerd.

I prepared the appropriate papers and met Wachs at the Brainerd airport, as I recall. We then flew in his private airplane to a lake in northern Minnesota where he was going to obtain the necessary certification for flying a float plane. After staying that night at a resort at the lake, we flew the next morning in his plane to Brainerd.

Somehow I served the papers on an official of the Club. I do not remember if we went to court and obtained the injunction or if the Club agreed to let Wachs participate in the race. But participate he did. I do not recall how he did in the race, but I do remember being in the pit for his car. (I did not attempt to do anything to assist the pit crew. I would just get in the way.)

Paul Newman & Eddie Wachs

Long after my brief encounter with Wachs, in 2005 he joined with the famous actor Paul Newman to form Newman Wachs Racing to operate their auto racing team.

2011 Annual Report for dwkcommentaries

This blog started on April 4, 2011, and the blogger made 190 posts for the year plus 26 comments to previous posts.

WordPress reports there were 9,190 views for the year. The busiest day was October 25th with 131 views while December 27th had 113. Most of the viewers were from the U.S.A. with the United Kingdom and Canada not far behind.

Again according to WordPress the following were the most popular posts:

• International Criminal Court: Four People Recommended for Election as ICC Prosecutor (Oct. 25, 2011)
• My Grinnell College years (Aug. 27, 2011)
• Celebrating the Rhodes Scholarships Centennial (June 21, 2011)
• The Personal Jurisdiction Requirement for U.S. Civil Lawsuits (Aug. 8, 2011)
• The IBM Antitrust Litigation (July 30, 2011)
• My Years at the University of Chicago Law School (Dec. 27, 2011)

As indicated in detail on Page: Topical List of Posts and Comments to dwkcommentaries, the posts and comments for 2011 fell into the following categories:

• Personal
• Oxford
• Religion/Christianity
• Lawyering (practice of law)
• U.S. Politics
• Cuba
• El Salvador
• Human Rights Treaties
• International Criminal Justice
• International Criminal Court
• Refugee and Asylum Law
• Alien Tort Statute & Torture Victims Protection Act

The blogger would appreciate receiving substantive comments on his posts, including corrections and disagreements.

 

Accounting for Horses, Cattle and Catfish

The Faegre & Benson law firm developed a significant practice of representing accounting firms that had been sued for accounting malpractice. For example, I represented four of what were known as The Big Five accounting firms: Arthur Anderson, Coopers & Lybrand (Coopers), Deloitte & Touche and KPMG Peat Marwick. Another partner had primary responsibility for the other Big Five firm–Arthur Young & Co.

One of the most interesting of these accountants liability cases was the Australian KPMG Peat Marwick firm’s battle with Sentry Insurance of Stevens Point, Wisconsin.[1]

The other accounting case I remember most vividly was for Coopers. It had been sued in the federal district court in Minnesota[2] for alleged securities law violations and common law fraud. The plaintiff was an Argentine company that had invested and lost $35 million in a Minnesota company (Interfund Corporation). Interfund’s main business was financing the purchase and sale of Arabian horses, but it also helped to finance a company in Missouri that was breeding cattle and operating a catfish farm. The plaintiff alleged that in making its investments it had relied upon Interfund’s audited financial statements that allegedly were materially overstated.

The plaintiff because of its large investment, however, had one of its own people on the Interfund board of directors and thus was privy to all of its financial information far beyond what was in the audited financial statements. As I recall, this was the primary undisputed issue of material fact that was the basis for Coopers’ successful motion for summary judgment that I brought after the conclusion of pre-trial discovery. There was no appeal.

This case required several trips to New York City to consult with Coopers’ in-house general counsel, to inspect the plaintiff’s documents and to depose its personnel. In my spare time, I attended concerts and Broadway shows.

New York Public Library

Rose Main Reading Room, New York Public Library

I also spent time on these trips in the famous New York City Public Library at Fifth Avenue and 42nd Street doing research about an ancestor, W.C. Brown, who was President of the New York Central Railroad in the early 20th century. [3]

Grand Central Terminal

Grand Central Terminal

Two blocks east of the Library on 42nd Street sits Grand Central Terminal that was built while Brown was the Railroad’s President.

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[1]  See Post: Battling Australian and Wisconsin Courts (Aug. 12, 2011).

[2]  See Post: Minnesota’s Federal Court (June 28, 2011).

[3] See Post: Adventures of a History Detective (April 5, 2011).

Employer’s Lawsuits Against Former Employees

Employers frequently get involved in lawsuits with former employees. That was not the primary focus of my legal practice, but I did represent former employees in two interesting cases. One was brought by  Green Tree Acceptance, Inc. of St. Paul, Minnesota. The other, by Surgidev Corporation of Goleta, California, already has been discussed.[1]

John Wheeler was an employee of Green Tree from 1977 through October of 1984. At the time, Green Tree was the largest U.S. company in the business of mobile home financing. Wheeler towards the end of his career with the company was its executive vice president and a member of its board of directors. In 1983 he entered into a written employment agreement and noncompetition agreement with the company, but in October 1984 he and the company agreed to a termination of his employment and, he testified, a release from the noncompetition agreement. In May 1986 Wheeler became the president and CEO of another company based in San Diego, California that was involved in financing mobile homes.[2]

In September 1986 Green Tree sued Wheeler for breach of the noncompetition agreement in Minnesota’s federal court.[3] In October 1986 the court denied the plaintiff’s motion for a preliminary injunction barring Wheeler from working for his new employer. The next month (November 1986) the case went to trial before Judge James Rosenbaum and a jury. The jury’s special verdict found that the noncompetition agreement had terminated before Wheeler went to work for his new employer. Accordingly the district court denied Green Tree’s motion for a new trial or judgment notwithstanding the verdict and entered judgment in favor of Wheeler.[4]

Green Tree then appealed, and in October 1987 the appellate court reversed the judgment because of its conclusion that the district court erroneously had submitted to the jury the issue of whether the noncompetition agreement was still in effect. Accordingly the appellate court remanded the case to the district court for a new trial.[5] Soon thereafter the case settled.

This was one of those unfortunately rare cases in which the opposing lawyers were professionally civil with each other while simultaneously vigorously contested the case. I, therefore, commend Green Tree’s lawyers, Peter Hendrixson and David Lauth of the Dorsey & Whitney law firm and Rick Evans, Green Tree’s General Counsel.

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[1] See Post: Intraocular Lenses Litigation (Aug. 18, 2011).

[2] Green Tree Acceptance, Inc. v. Wheeler, 832 F.2d 116 (8th Cir. 1987).

[3]  See Post: Minnesota’s Federal Court (June 28, 2011).

[4]  832 F.2d 116.

[5]  Id.

Intraocular Lenses Litigation

IOL example

Intraocular lenses or IOLs are artificial lenses implanted by ophthalmologists in the human eye to correct vision loss resulting from removal of the eye’s natural crystalline lens during cataract surgery. Since at the least the mid-1950′s, IOLs have been an acceptable mode of treatment.[1]

As of 1985 there were 17 to 20 manufacturers of IOLs with the six largest having over 80% of the market. One of the leading competitors was Surgidev Corporation of Goleta, California near Santa Barbara.[2]

In 1985 five key employees of Surgidev left the company and soon thereafter organized a new company, (Eye Technology, Inc. (ETI)), to manufacture IOLs and compete with Surgidev and other such manufacturers.

Litigation ensued. Surgidev sued its former employees and ETI in Minnesota’s federal court.[3] It asserted claims for unfair competition, misappropriation of trade secrets, breach of contract, breach of fiduciary duty, conversion and wrongful interference with contractual relations and prospective economic advantage.[4]

The defendants retained Faegre & Benson to defend the case, and I was in charge of the team at the law firm.

We answered the complaint by denying its material allegations and asserting counterclaims for alleged wrongful interference with ETI’s public offering of securities, abuse of process, malicious prosecution, and defamation. The district court granted Surgidev’s motion to dismiss the counterclaim for abuse of process, but otherwise denied the motion, holding that the counterclaims were not a “sham” and were protected by Noerr-Pennington privilege from tort liability for filing suit and the defamation claim was one for “slander per se” rather than “trade libel,” and thus, special damages did not have to be pled.[5]

The parties later returned to the district court for a combined hearing and trial on Surgidev’s motion for preliminary and permanent injunction. The court concluded that there was no breach of the former employees’ contractual non-compete and non-disclosure provisions. [6] But the court held that they had engaged in wrongful interference with certain Surgidev agreements and, therefore, enjoined them from attempting to solicit through December 31, 1986, any Surgidev employees from joining ETI, from having four named doctors doing any work for ETI and from soliciting certain Surgidev customers to become ETI customers.[7]

The granting of the injunction was affirmed by the appellate court.[8]

I have three extraneous memories from this case.

Some of the depositions were taken in Santa Barbara and San Diego, California, and I remember opposing counsel and I split the cost of a rental car to drive to San Diego. I was the driver, and it was a harrowing drive on a very dark and very rainy night on Interstate 5.

Boston was the location for other depositions. On a day off in the midst of a heavy snow storm I had lunch in a Russian restaurant near Harvard Square with a Grinnell College contemporary to talk about our mutual interest in El Salvador.

The last memory is lunch at a Minneapolis hotel with an ophthalmologist who was involved in the case and who, out of the blue, offered to perform laser surgery on my eyes to correct my nearsightedness. I declined the offer.

In 1998 ETI was merged into Star Tobacco and Pharmaceuticals Inc. which was focused on developing a new, “less-harmful” cigarette. Now known as Star Scientific, Inc., it still is pursuing this cigarette goal and apparently no longer manufactures IOLs.[9]

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[1]  Surgidev Corp. v. Eye Technology, Inc., 648 F. Supp. 661, 669 (D. MInn. 1986).

[2]  Id. at 671-73.

[3]  See Post: Minnesota’s Federal Court (June 28, 2011).

[4]  Surgidev Corp. v. Eye Technology, Inc., 625 F. Supp. 800, 801 (D. Minn. 1985).

[5]  Id.

[6] Surgidev Corp. v. Eye Technology, Inc., 648 F. Supp. 661, 696-99 (D. MInn. 1986).

[7] Id. at 700-04.

[8]  Surgidev Corp. v. Eye Technology, Inc., 828 F.2d 452 (8th Cir. 1987).

[9] Jones, Star Moves Toward Stock Market.  Eye Technology Deal Prepares Petersburg Company To Go Public, Richmond Times-Dispatch (Feb. 10, 1998); Star Scientific, Corporate Policy Statement, http://www.starscientific.com/about-star/corporate-policy-statement.

The Flight Transportation Corporation Litigation

In June 1982, all kinds of litigation erupted in Minnesota’s federal court[1] involving Flight Transportation Corporation (FTC), a Minnesota-based company that purported to provide small-aircraft charter service.

The first case was by the U.S. Securities and Exchange Commission (SEC) against FTC, its subsidiaries, and its CEO and Chairman of the Board, William Rubin. The SEC alleged that the defendants had violated and aided and abetted violations of antifraud, reporting, and record-keeping provisions of the federal securities laws. The SEC sought an injunction prohibiting further violations by the defendants of these provisions, the appointment of a receiver to take possession of and marshal the assets of FTC and its subsidiaries, an accounting of all proceeds of FTC’s allegedly fraudulent securities offerings, and an order of disgorgement of all funds received by FTC as a result of those sales of securities. With respect to Rubin, the SEC sought a temporary freeze of most of his personal assets, an accounting of all funds received from FTC and its subsidiaries, and disgorgement of such funds.[2]

Shortly thereafter, two underwriters of FTC securities, on their own behalf and on behalf of all persons who purchased FTC’s securities in the June 1982 offerings, commenced a class action seeking, among other things, imposition of a constructive trust on the $22 million in proceeds of the offerings.

Thereafter other private lawsuits were also commenced against FTC, its officers and others, including its external auditor and the New York City law firm for the underwriters of the public offerings of FTC securities.[3]

Norwest Bank Minnesota (n/k/a Wells Fargo Bank Minnesota) had been providing working capital financing to FTC and brought a claim against FTC to collect that debt, and I was in charge of the Faegre & Benson team for Norwest. Later some of the other plaintiffs asserted claims against the Bank because its collateral review personnel had discovered certain problems at FTC; later the Bank reached a settlement over all of these claims.

Because there were so many different kinds of claims against FTC and others, the attorneys for the plaintiffs concluded that they needed to stop fighting among themselves and instead focus their collective efforts in prosecuting the claims against the defendants. As a result, the plaintiffs negotiated a complex Sharing Agreement whereby any monetary recoveries would be shared among the plaintiffs. This agreement was approved by the court.[4]

The SEC’s request for the appointment of a receiver was granted. A Minnesota attorney, Thomas Bartsch, was so appointed. I participated in many meetings with him and thought he was doing an excellent job. I, therefore, was shocked later when he was convicted of stealing money from the FTC assets under his control as receiver and then disbarred as an attorney.

At the conclusion of the private litigation, the district court awarded the various plaintiffs’ law firms $7.8 million of attorneys’ fees. The court recognized the superlative work of the lawyers that resulted in recovering $52 million for the various plaintiffs.[5]

I also was the attorney for Norwest Bank in a related case where a co-founder, outside director, shareholder and director of FTC sued the Bank for collecting and paying a check that allegedly had his forged endorsement. The district court entered judgment in favor of the Bank, and the appellate court affirmed.[6]

 

Finally there were criminal prosecutions of FTC’s principal officers: William Rubin, Janet Karki, Brian Miller and James McGovern. Rubin, the CEO and Chairman of the Board, was convicted on 10 counts of securities fraud and two counts of filing a false securities registration statement with the SEC and sentenced to 35 years in prison plus a $120,000 fine. There also were convictions on similar charges against Karki, the Chief Financial Officer (20 years in prison); Miller, the Financial Controller (three years); and McGovern, a Minnesota lawyer and FTC’s General Counsel (six years).[7]

I still find it difficult to believe that two fellow Minnesota lawyers with whom I had professional dealings ended up in prison as convicted felons.

Two memories of this case stand out.

At a posh Beverly Hills hotel, I participated in the deposition of Michael Milken from a FTC underwriter (Drexel Burnham Lambert). Known in the securities industry at the time as the King of Junk Bonds, Milken later pled guilty to securities fraud and tax violations and was sentenced to imprisonment. After release, he has concentrated his efforts on philanthropy, especially research regarding prostate cancer and melanoma. (Wikipedia, Michael Milken, http://en.wikipedia.org/wiki/Michael_Milken.)

I attended the criminal trial of Rubin and Karki. I was there as an attorney for a Norwest banker who was testifying about the Bank’s relationship with FTC. During her testimony two prominent Minnesota criminal defense attorneys, Ron Meshbesher[8] and Joe Friedberg, objected to the receipt into evidence of certain Bank documents because they were photocopies and thus not the best evidence. While the attorneys had a sidebar conference with the judge regarding this objection, I went to the U.S. Attorney’s table and whispered to an FBI agent that the originals were in my office and were destroyed in the Northwestern National Bank fire on Thanksgiving Day 1982. The FBI agent then went to the sidebar conference and relayed the information to the U.S. Attorney, Tom Hefflefinger.

The judge then asked me to leave the courtroom, presumably while foundation questions were asked of the banker. I assume her examination went something like this: “Do you know Mr. Krohnke? (Yes.) Was he involved in any way with the Bank and FTC? (Yes.) How was he involved? (He was an attorney for the Bank regarding litigation over FTC.) Did he have any original Bank documents in his office? (Yes.)”

I was then readmitted to the courtroom and put on the witness stand. The U.S. Attorney asked me a few questions along the same lines and established that the original documents in question were destroyed in the fire. There was no cross-examination by Meshbesher or Friedberg. The photocopies of the Bank documents were received into evidence.

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[1] See Post: Minnesota’s Federal Court (June 28, 2011).

[2]  SEC v. Flight Transportation Corp., 699 F.2d 943 (8thCir. 1983).

[3]  Id.; In re Flight Transportation Securities Litigation, 593 F. Supp. 612 (D. Minn. 1984).

[4] In re Flight Transportation Securities Litigation, 730 F.2d 1128 (8th Cir. 1984), cert. denied sub nom. Reavis & McGrath v. Antinore, 469 U.S. 1207 (1985); In re Flight Transportation Securities Litigation, 794 F.2d 318 (8th Cir.), cert. denied sub nom. Subclass IV v. Fox & Co., 481 U.S. 1013 (1987).

[5]  In re Flight Transportation Securities Litigation, 685 F. Supp. 1092 (D. Minn. 1987).

[6] Lund v. Norwest Bank, 669 F. Supp. 284 (D. Minn. 1985), aff’d, 825 F.2d 1249 (8th Cir. 1987), cert. denied, 485 U.S. 936 (1988).

[7] U.S. v. Rubin, 836 F.2d 1096 (8th Cir. 1988); U.S. V. McGovern, 822 F.2d 739 (8th Cir.), cert. denied, 484 U.S. 956 (1987). I knew McGovern; he was one of the attorneys for the Wisconsin breeders cooperative in a lawsuit in which I was an attorney on the other side of the case. (See Post: The Artificial Insemination of Cattle (Aug. 16, 2011).

[8] I once had a civil case in which Meshbesher was the opposing lawyer, and the case settled soon after I took his client’s deposition. The recent movie, A Serious Man, by Joel and Ethan Coen, takes place in the Minneapolis area. When a character needs a criminal defense lawyer, he is told to hire Ron Meshbesher. The line was inspired by the Coen brothers’ memories of growing up in St. Louis Park, Minnesota and seeing attorney ads for Meshbesher. (Wurzer, Twin Cities lawyer is a Coen brothers punch line, MPR News (Oct. 9, 2009), http://minnesota.publicradio.org/display/web/2009/10/07/meshbesher.)