Category: Legal Issues – Specific Litigation

Digital Gold

The Book of the Week is “Digital Gold– Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money” by Nathaniel Popper, published in 2015.

This ebook is about Bitcoin, a bookkeeping system used on various websites that distributes, records and stores the value of units called Bitcoins.

The system was created in 2009 by a computer geek who called himself Satoshi Nakamoto. His vision was to create a worldwide means-of-exchange to be used online that would be:

  • a decentralized network of users so that no one central authority has the majority of power over the system– unlike the current situations in the world; in other words, place power in the hands of the users, rather than the economic royalists. (Nevertheless, the irony is that Bitcoin has largely stayed in the realm of the wealthy computer geeks- so there has basically been redistribution of wealth among the wealthy);
  • created and maintained by users of the system on a consensus basis rather than by the powers-that-be, whose political campaigns are funded by financial institutions, and who stay in power by doing their will;
  • anonymous (like cash– no third parties acquire the information of buyers and sellers);
  • secure (no one point of failure would mean vulnerability for the whole system, plus have protections against identity theft, malware, counterfeiting etc.); and
  • offered at a lesser cost than the current system (avoiding financial institutions with their fees).

However, no utopian vision is perfect. Various tech-startups around the world have been created to store and exchange Bitcoins. That is all well and good. In the last seven years or so, a “remarkably engaged online community” has sprung up to discuss the ideology and all the different issues attendant to the new system. Even the major American financial institutions, fearing competition, have begun to rethink the security of their online dealings, and so have assembled task forces to research how to harness Bitcoin’s loss-prevention technology.

Bitcoins are acquired by computer users who log on to a specific site on the Internet. The users get the virtual “coins” for free, but might have to pay to store them elsewhere to keep them secure.

Bitcoins are more like a security than a means of exchange like cash because:

  • The system distributing Bitcoins is like a combination slot machine and a financial market where instruments are bought and sold, and the value of Bitcoins fluctuates.
  • There’s an inherent unfairness in the system in that– technologically astute users of the system have banded together to create devices that mine Bitcoins at a significantly faster rate than individual users.
  • People can acquire a national currency such as the American dollar in many more ways than they can Bitcoins, most of them honestly– earning, borrowing, begging or stealing.

Anyway, the purpose of Bitcoins as a means of exchange has yet to catch on among mainstream consumers of industrialized countries. There is no sufficiently compelling reason for consumers to start to buy things online with Bitcoins rather than credit cards. “Why should they trust a digital code that had nothing backing it but the computers of some libertarian nerds?”

Argentina is one country where Bitcoins have been useful. The super-speedy inflation of the peso there has meant people must spend their Argentinian money the minute they acquire it or risk the inability to buy anything because they wouldn’t be able to afford it– even food. In China, Bitcoin is popular because the government regulates the yuan exchange rate in order to stem “capital flight” and sell more of its own goods to the world.

As with all human-created systems that rely on the honor system, ALL users must act ethically. One American Bitcoin-processor in particular created a drug-distribution entity called Silk Road that was deemed illegal according to U.S. law.

Another bad actor hacked into a company called Mt. Gox in Japan. All users of that service suffered. “Bitcoin users eventually went to government authorities that Bitcoin had been designed, at least partly, to obviate.”

Besides, the Treasury Department’s Financial Crimes Enforcement Network has been examining the legal aspects of Bitcoin as a virtual currency. Homeland Security is concerned about the fact that Bitcoins could be anonymously sent to terrorist cells overseas.

Read the book to learn much more about the good and bad consequences of the creation of Bitcoin.

Simon Says

The Book of the Week is “Simon Says” by Kathryn Eastburn, published in 2007. This is the true story of a triple murder that occurred in the small town of Guffey in Colorado in early 2001.

The mastermind behind the criminal act was a teenager, Simon Sue, who convinced others that he was part of an anti-governmental group in Guyana. He and his father collected guns for their investment value. They had a humongous collection. The younger Sue believed that theft of firearms from other households in the neighborhood was acceptable if their owners were racist or dealt illegal drugs.

Sue ran a terrorist training camp of sorts for three other high schoolers he had befriended. Read the book to learn the details of the heinous atrocities committed by them, how they got caught, and their fates.

 

The CBS Murders

The Book of the Week is “The CBS Murders” by Richard Hammer, published in 1987. This is the true story of the murders of two women, and three men who were by-standing CBS employees– in a parking lot in midtown Manhattan’s far west side in April 1982.

The ugly crime was the culmination of a white-collar crime spree committed over a number of years by a family named Margolies, in the jewelry business. The major perpetrator of the crimes, Irwin, schemed to blame the company bookkeeper, but complications arose.

The case was unusual in that criminals like Irwin generally do not hire a hitman, but only hire fancy attorneys to weasel out of legal trouble. Irwin and his wife Madeleine behaved like a dictatorial couple, like the Perons, Caucescus or the Marcoses. Read the book to learn the details of this suspenseful business story.

Tomorrow You Go Home

The Book of the Week is “Tomorrow You Go Home” by Tig Hague, published in 2008. This is the suspenseful story of how Russian authorities severely punished an Englishman for a minor indiscretion in the summer of 2003.

Hague had forgotten he had left a tiny amount of hashish in his jeans pocket before boarding a flight to Moscow. He was detained at the airport. His naivete led to his arrest and imprisonment. He was denied what is, in Western nations, due process. However, he was less deprived than other prisoners because he received care packages from the British Embassy and his family– consisting of noodles, biscuits, cigarettes, coffee, chocolate and warm clothing. The odds were stacked against him at his court hearings. The Russian prison authorities played a petty power game via bribery, to hang onto contraband and inside information from the hapless prisoners– some of whom were there because they had been framed– awaiting release.

Read the book to learn of Hague’s trials and tribulations, suffered at the hands of a corrupt, arbitrary system.

Judgment Ridge

The Book of the Week is “Judgment Ridge” by Dick Lehr and Mitchell Zuckoff, published in 2003.  This is the shocking, true, suspenseful story of the murder of two Dartmouth professors in early 2001.

The perpetrators had a history of petty criminal behaviors but there were no serious consequences for them. One of the killers was a controlling psychopath, and his unnaturally close friend’s blind obedience engendered a dangerous combination. The reason the murders were hard to foresee was that the killers revealed only small pieces of themselves to different people in their lives. No one knew them well, not even their parents. Thus, no one individual saw the big picture– that the sons were going to commit the gruesome act that they did.

The killers’ parents– the would-be authority figures in their lives, had no knowledge of their whereabouts, and neither checked up on their activities, nor took an interest in them. Arguably, the parents allowed their sons too much freedom, and not enough supervision. The killers’ families lived in an unconventional surburban community. The school system accommodated their bids for attention, rather than punishing them for their disruptiveness.

Read the book to learn of other factors that allowed the deaths to occur and the details of the aftermath.

Indefensible

The Book of the Week is “Indefensible” by David Feige, published in 2006. This is an autobiographical account of a public defender; an attorney who represents indigent people accused of street crime, who were assigned to him by the court.

Feige described his experiences with the people in the criminal justice system in the New York City of the 1990’s. He had to deal with the homeless, mentally ill, addicts, gang members, good people who were wrongly accused– and their family members; judges and other court personnel, and fellow attorneys. There were personality types he saw over and over again– the poorly educated jailed people trapped in the poverty cycle due to their bad choices, bad luck and a series of circumstances out of their control; good, fair judges; and unsympathetic and sadistic judges.

Feige was overworked, underpaid and his anecdotes smacked of the proverb, “Good to know the law, better to know the judge.”

Read this depressing book to get an intimate picture of the inner-city downtrodden, and the difficulties of keeping them from being jailed, even when they are innocent, due to the odds against them.

The Strange Case of the Mad Professor

The Book of the Week is “The Strange Case of the Mad Professor” by Peter Kobel, published in 2013. This ebook recounts the sordid story of a petty, vengeful university professor who was passionate about his field of study, lemurs.

Professor John Buettner-Janusch (aka “B-J”), of German and Austrian descent, was born in 1924. He grew up in the United States, but went to jail for evading the draft during WWII. “His desire for attention was enormous, and he never seemed to care much whether that notice was admiration, disdain, or loathing.”

B-J eventually rose through the ranks of higher education while collecting a menagerie of lemurs that were subjected to primate research. People either loved him or hated him. He was like a “Dr. Jekyll and Mr. Hyde”. It became apparent that he was also a sociopath.

Starting in the late 1970’s, he was charged with serious crimes. “…But much of B-J’s pretrial testimony formed a farrago of lies and half-truths, of the incredible or incomprehensible.”

Read the book to learn what became of this colorful character.

Mule

The Book of the Week is “Mule, My Dangerous Life as a Drug Smuggler Turned DEA Informant” by Chris Heifner, published in 2012.

This suspenseful ebook is a personal account of someone who drove truckfuls of marijuana across state lines for tens of thousands of dollars per trip. In a college class, the author happened to meet a guy who ran a large smuggling operation. In the late 1990’s, this illegal business was booming in Texas, partly because some members of the Mexican army were accomplices. One time, when Heifner drove a load to Mexico, he witnessed the crash of a prop plane. The military rushed over to remove its contraband cargo before attending to the injured pilot.

Drug smuggling is a heartless business in which no one completely trusts anyone. Initially, the fear of getting caught was hard to stomach for the author because the punishment was so harsh, but the lure of the vast quantity of easy money was addictive. Read the book to learn what transpired when he did get caught.

Why I Left Goldman Sachs

The Book of the Week is “Why I Left Goldman Sachs” by Greg Smith, published in 2012.

This career memoir details how the author experienced the change for the worse in corporate culture of stock brokerage Goldman Sachs (GS) over the course of a little more than a decade, from 2000 to early 2012. The company lost its way in terms of its mission and values, which embodied fiduciary duty and integrity.

In 2000, the author completed the selective, elitist, highly coveted summer internship program at the brokerage. He saw how principled the money managers were in recommending truly suitable transactions to their clients; not necessarily the most profitable ones.

When he began working there as a full-fledged staff member the following year, he took to the work, possessing the right combination of talents, skills and abilities to focus for long hours on conferring with clients and doing what was financially best for them. The goal was to build trust in order to foster a long-term relationship. It stands to reason that that is a more profitable course of action than seeking to rake in maximum money in the short term– which would provoke disloyalty from the client, when the client realizes he’s been taken advantage of.

Smith writes that a gradual change was occurring at his workplace around the start of 2005. At the time, he admittedly was “drinking the Kool Aid” like everyone else. The megabucks were multiplying because conflicts of interest were increasing betwen the brokerage and the government and other entities with which the brokerage was associated in various ways. The CEO and COO of GS were all for it. Their yearly letter to shareholders reasoned that such conflicts were inevitable, and were a sign that business was good. A telling example: GS netted approximately $100 million when it helped its client, the New York Stock Exchange merge with publicly traded, electronic exchange Archipelago in a $9 billion deal.

In the early 2000’s, one trend in the securities industry that would contribute to huge financial losses for the big firms including GS, was automated trading via software. The autotraders of the different firms were programmed to engage in largely the same behavior. They sought to trade in obscure, off-the-beaten path investments in markets in which it was difficult to find a buyer when it came time to sell. And they were all trying to sell at the same time. That was not a condition the autotrader creators had anticipated.

Another aspect of the big picture was that the people selling the financial products– more specifically, derivatives– did not themselves, understand what they were selling. It might be recalled that a derivatives debacle plagued the securities industry in 1994. Apparently, in 2007-2009, the greedy people involved in this rerun of a financial catastrophe failed to read their history, or had short memories. And governments of entire countries like Libya, were suffering losses of billions of dollars, thanks to GS, in 2007.

Read the book to learn much more about the outrageous occurrences borne of avarice witnessed by the author and the world during what became for him, an ordeal, characterized by the saying, “The fish rots from the head down.”