Archive for the 'Law' Category

Way too much time on their hands

Friday, April 11th, 2014

According to CNBC, the DOJ and FBI are investigating Herbalife, an MLM company, so, knowing that, you’re already forewarned as an investor. The company’s auditor is PWC, which we’ve used and found to be straightforward and highly professional. And we’re also a decade removed from Enron and Arthur Andersen, so one presumes the toleration of shoddy accounting practices in controversial companies is not common in what were once the Big 8. Finally, storied investors are on all sides of the Herbalife trade.

We were introduced to cash flow and revenue recognition problems in the ancient case of Stirling Homex‘s bankruptcy, which featured something called “unbilled long-term receivables.” Points for creativity, Mr. Stirling! In the case of Herbalife, it would be very interesting to know the length of the cash cycle from product creation to payment by the final consumer of the product, not just one or two L’s in the MLM. (Herbalife’s auditor is a successor to that of Stirling Homex.) So there is plenty of history to such issues and plenty of real experts on the case; hence it seemed an odd use of time for additional federal employees. Then again. Hmmmm.

Scenes from the nineties

Friday, April 4th, 2014

A company says it

believes both in equality and freedom of speech. Equality is necessary for meaningful speech. And you need free speech to fight for equality. Figuring out how to stand for both at the same time can be hard.

A guy mentioned by Roger Simon:

If the spring of popular government in time of peace is virtue, the springs of popular government in revolution are at once virtue and terror: virtue, without which terror is fatal; terror, without which virtue is powerless. Terror is nothing other than justice, prompt, severe, inflexible; it is therefore an emanation of virtue

There certainly are a lot of angry people in the upper crust today. There are many reasons to dislike corporations, government, and crowds of all sorts.

Low, going lower

Monday, March 24th, 2014

In a world where this is considered normal, this is what you get. They sow not; neither do they reap. But they sure can complain and lecture.

Lighter side: Moonglow and a scene from Picnic.

How countries die

Thursday, January 9th, 2014


intentional discrimination occurs when a school has a discipline policy that is neutral on its face (meaning the language of the policy does not explicitly differentiate between students based on their race), but the school administers the policy in a discriminatory manner or when a school permits the ad hoc and discriminatory discipline of students in areas that its policy does not fully address. Such intentional discrimination in the administration of student discipline can take many forms. The typical example is when similarly situated students of different races are disciplined differently for the same offense. Students are similarly situated when they are comparable, even if not identical, in relevant respects. For example, assume a group of Asian-American and Native-American students, none of whom had ever engaged in or previously been disciplined for misconduct, got into a fight, and the school conducted an investigation. If the school could not determine how the fight began and had no information demonstrating that students behaved differently during the fight, e.g., one group used weapons, then the school’s decision to discipline the Asian-American students more harshly than the Native-American students would raise an inference of intentional discrimination. Selective enforcement of a facially neutral policy against students of one race is also prohibited intentional discrimination. This can occur, for example, when a school official elects to overlook a violation of a policy committed by a student who is a member of one racial group, while strictly enforcing the policy against a student who is a member of another racial group. It can occur at the classroom level as well. The Departments often receive complaints from parents that a teacher only refers students of a particular race outside of the classroom for discipline, even though students of other races in that classroom commit the same infractions. Where this is true, there has been selective enforcement, even if an administrator issues the same consequence for all students referred for discipline. Intentional discrimination also occurs when a school adopts a facially neutral policy with the intent to target students of a particular race for invidious reasons. This is so even if the school punishes students of other races under the policy. For example, if school officials believed that students of a particular race were likely to wear a particular style of clothing, and then, as a means of penalizing students of that race (as opposed to as a means of advancing a legitimate school objective), adopted a policy that made wearing that style of clothing a violation of the dress code, the policy would constitute unlawful intentional discrimination.

Yes, we heard from Amy Chua that the fight above was about getting extra adderall so some could study a full 26 hours a day. Seriously, common sense is all but illegal in this country; Larry elder explains. HT: PL

All is well, comrades

Sunday, January 5th, 2014

The NSA says that Congressmen are just as unsurveilled as any other American:

NSA’s authorities to collect signals intelligence data include procedures that protect the privacy of U.S. persons. Such protections are built into and cut across the entire process. Members of Congress have the same privacy protections as all U.S. persons

Comforting, yes? It’s nice when left and right can agree. Meanwhile, the author of the Looming Tower asks other disturbing questions about NSA surveillance and government competence. Our POV: if 4 of the 9-11 hijackers were in the US on expired visas, and even NPR notes that half of vias holders overstay their legal welcome, wazzup with collecting massive data on every American when there are so many people left to do illegal things on a daily basis?

Insane and not easily fixable

Friday, January 3rd, 2014

Take the top 14 companies in the Fortune 500. These include such diverse names as GM, GE, Wal-Mart, AT&T, Exxon, McKesson, Fannie Mae, and CVS. Imagine that some government genius came up with a clever scheme that you can sign up online to access services from all these companies, and that the companies will be able to seamlessly communicate with each other, and that this will all be done through a centralized government hub linking diverse federal departments, and done all at once without beta testing. Yes, it’s an imperfect analogy to the ACA, but apt in that the combined sales of these corporate behemoths approximates the size of the broadly defined US healthcare industry.

So the insane scheme would be a gigantic disaster in the regular corporate world and its proponents would be run out of town on a rail, or more likely in prison for multiple frauds and other felonies. And it’s a disaster that naturally metastasizes as the initial screw-ups propagate much more complex screw-ups down the line, and the improvised attempts at fixes create the impossibility of stability and long-term planning that are critical to running any enterprise. So at the moment the tiny problems only include doctors with scalpels aready unable to get authorization to operate, people are leaving ER’s due to cost uncertainties, and babies that can’t be added to coverage in the simple old ways. (Note in the linked US pieces that the MSM are still covering for these idiots.)

Stay tuned for worse. The many errors and omissions will continue to propagate faster than they can be fixed, since (among other things) the whole edifice was built on the frauds that (a) the young will subsidize the old by buying illogical, expensive products; and (b) the thousands of errors in the Rube Goldberg machine will cease propagating new and novel errors that we can’t even imagine today. Centralization simply can not keep up with the billions or trillions of individual decisions made by hundreds of millions of people in a swiftly moving technology and IT environment.

Centralization can do some things well, as Cuba, the USSR, North Korea, Mao’s China, and so on have demonstrated over the last hundred years. It can grind things to a halt and create chaos, which is what is happening. The really bad news is that once all the existing, stable systems (as awful and imperfect as they have often been) are disabled, and professional routine and the collective knowledge of doing things according to habit have been lost, all you’ve got is Humpty Dumpty.

Curious Numbers

Saturday, December 28th, 2013


only 26 percent with divorced parents move up, compared with 42 percent born to unmarried mothers…and 50 percent who grow up with two married parents…Daniel Patrick Moynihan, then–assistant labor secretary, won fame — and vicious criticism — for his report lamenting that 24 percent of black births were to unmarried mothers. By 2009, that rate had risen to 72 percent — and the rate of unmarried births to all American mothers was 41 percent…Go back…to the years around 1900, and Americans were marrying later, and larger percentages than today never married at all.

We find the 42% number above to be curious. However, at a recent family gathering, we learned that, despite years of trying and locating volumes of documents, no one has been able to find any proof that grandma and grandpa were married. We figure it was a shotgun wedding without the wedding, with grandma moving from MA to RI just ahead of the stork. If they never actually married, it was a well kept secret.

In this way the 42% makes sense, if a substantial number of the children of unmarried mothers are growing up with 2 parents. We agree with Charles Murray that the numbers look awful, but it would be very interesting to know how many unmarried 2 parent households there are today.

Quote of the day

Thursday, December 12th, 2013

AP via ABC:

Thamsanqa Jantjie said in a 45-minute interview with The Associated Press that his hallucinations began while he was interpreting…”What happened that day, I see angels come to the stadium…I start realizing that the problem is here. And the problem, I don’t know the attack of this problem, how will it come. Sometimes I get violent on that place. Sometimes I will see things chasing me,” Jantjie said. “I was in a very difficult position,” he added. “And remember those people, the president and everyone, they were armed, there was armed police around me. If I start panicking I’ll start being a problem. I have to deal with this in a manner so that I mustn’t embarrass my country.” Asked how often he had become violent, he said “a lot” while declining to provide details.

It could have been a lot worse for him. He could have been a six year old in today’s USA.

All is well comrades

Sunday, December 8th, 2013


Robert Blatt, a technology consultant in Ventura County, said he didn’t appreciate receiving an email Thursday from a local agent asking him about his unfinished application with Covered California. He said it violates his privacy, and he wondered what other details on his application were shared with the agent. “You can’t do this,” Blatt said. “For a government agency to release this information to an outside person is a major issue.” In the email Blatt received, the local agent said, “your contact information was provided to me by Covered California since your application is not yet finalized, however, you have been determined as eligible by Covered California.” Blatt said he wasn’t interested in getting coverage through the exchange anymore

There’s no need for hackers when the government will just give out your information.

Exhibit A

Wednesday, November 27th, 2013

Bob Laszewski

California is cancelling another 1.1 million people…Through mid-November, Covered California has enrolled about 80,000 people.

Let’s see. 80,000 “enrolled” though there have been no actual invoices or payments, versus 1,100,000 cancelled. You’re going to need a high number of good news stories to deal with a ratio like that. Ah yes, but the MSM have a lot invested in their fantasy world.

“Incorrect” news from the NYT

Thursday, November 14th, 2013


The split between lawmakers and the White House reflects the dilemma the president finds himself in as he seeks to follow through on last week’s acknowledgment about his incorrect promise on health care coverage. Hundreds of thousands of people have received cancellation notices from health insurance companies

The interesting thing about this is that it’s a news story, not an editorial. The editorial board used the word misspoke. Imagine the discussions among the editors and reporters to come up with “incorrect promise,” a phrase that apparently has never made it into the Times before. Good fun!

More of the same

Tuesday, November 12th, 2013


neither the federal insurance exchange nor the federal subsidies paid to insurance companies on behalf of low-income people are “federal health care programs.” The surprise decision, disclosed last week, exempts subsidized health insurance from a law that bans rebates, kickbacks, bribes and certain other financial arrangements in federal health programs, stripping law enforcement of a powerful tool used to fight fraud in other health care programs, like Medicare.

Surprise decision? Apparently the NYT hasn’t been paying attention to the MO of these characters.

Another little problem

Sunday, November 10th, 2013


the caller sounded so official that she agreed to meet him the next day at her home in Sherman Oaks, Calif. He told her the law meant she would have to update her Medicare card. Ms. Mirzayans, a retired small-business owner, was grateful that the government was taking such interest in her insurance coverage. Over glasses of pomegranate juice last month, Ms. Mirzayans divulged to her visitor crucial Medicare, Social Security and personal information.

Not to worry. Such things affect 5% of Americans at most.

Can silence be evidence of a conspiracy to commit fraud?

Saturday, November 9th, 2013

Andrew McCarthy:

Fraud is a serious federal felony, usually punishable by up to 20 years’ imprisonment — with every repetition of a fraudulent communication chargeable as a separate crime. In computing sentences, federal sentencing guidelines factor in such considerations as the dollar value of the fraud, the number of victims, and the degree to which the offender’s treachery breaches any special fiduciary duties he owes…

Justice Department guidelines, set forth in the U.S. Attorneys Manual, recommend prosecution for fraud in situations involving “any scheme which in its nature is directed to defrauding a class of persons, or the general public, with a substantial pattern of conduct”…

For a fraud prosecution to be valid, the fraudulent scheme need not have been successful. Nor is there any requirement that the schemer enrich himself personally. The prosecution must simply prove that some harm to the victim was contemplated by the schemer. If the victim actually was harmed, that is usually the best evidence that harm was what the schemer intended.

To be more illustrative, let’s say our schemer is the president of a health-insurance company, and that it was clearly foreseeable to him that his company’s clients would lose their current insurance plans if the company adopted his proposal of a complex new health-insurance framework…

The concept of fraudulent deception, like the concept of perjury and other forms of actionable false statement, often entails not only affirmative lies — e.g., the general manager who tells a baseball player, “I will not trade you if you sign the contract,” and then proceeds to trade the player after he signs; the concept also commonly involves the omission of material facts (what’s called “material omission”)

McCarthy’s piece has a political slant, but there’s potentially another, if we’re reading him correctly. By the middle of 2010, the CEO’s of publicly traded insurance companies must have known that up to tens of millions of their customers would be canceled by their companies. Arguably, the willful concealment of this information affected the price of their stock. Was their silence about material facts affecting share prices and their own compensation permissible under SEC disclosure rules? We don’t know. Just asking.

Spending and corruption

Thursday, November 7th, 2013

In 1959, the federal government spent $92 billion, of which $40 billion was military spending. President Eisenhower warned of the corruption danger inherent in the military industrial complex with that $40 billion in spending.

Now federal spending is around $3.5 trillion, and half a trillion of that is defense. So we’ve gone from $50 billion in 1959 to $3000 billion today in federal non-military spending.

The corruption is rampant and it is bi-partisan. James DeLong gives many nasty details about how healthcare policy and lobbying work. Peter Schweizer describes how DC politicians with modest salaries become rich through practices that are legal for them but would get businessmen thrown in jail. That’s the government today.

Pants on fire yet?

Tuesday, October 29th, 2013

Jonah Goldberg:

Say I like my current car. The government says under some new policy I will be able to keep it and maybe even lower my car payments. But once the policy is imposed, I’m told my car now isn’t street-legal. Worse, I will have to buy a much more expensive car or be fined by the IRS. But, hey, it’ll be a much better car! Why, even though you live in Death Valley, your new car will have great snow tires and heated seats. This is what the government is saying to millions of Americans who don’t want or need certain coverage, including, for instance, older women — and men — who are being forced to pay for maternity care.

Meanwhile: “The White House and State Department signed off on surveillance targeting phone conversations of friendly foreign leaders.” Meanwhile, you can still keep your insurance. The good news is that in the parallel universes of reality and BS, it’s getting really hard to ignore the BS, even for the biggest fanboys and girls.

When you don’t know what you don’t know

Sunday, October 13th, 2013

What happens when you put a guy with zero e-commerce experience in charge of the healthcare equivalent of Amazon? You get a disaster that even the NYT is forced to notice. And the spin is made funnier in that it is so divorced from reality. This was entirely predictable of course. The faculty lounge doesn’t care much for the businessman, and they think they know better to boot. We suspect these nincompoops were genuinely surprised by the failure of reality to conform to their airy-fairy dreams.

Cuts and subsidies

Thursday, October 10th, 2013


Here are the number of pages published on certain recent days in the Register: 498 pages on September 11, 193 on September 17, 369 on September 20, and 401 on September 30…The 401 pages on September 30 included such proud bureaucratic work as: a proposed Agricultural Marketing Service rule to increase assessment rates for blueberry promotion, a notice from the Federal Motor Carrier Safety Administration about exemptions for commercial vehicle operators with diabetes, and a proposal from the Fish and Wildlife Service to provide threatened status for the bird known as the rufa red knot.

The good news is that the funds saved by furloughing the Federal Register employees has been used to pay overtime to Park Rangers so that they can stand guard at formerly unguarded open-air memorials to shoo their owners away.

Welcome to the future…..maybe

Thursday, September 26th, 2013

Henninger and Geraghty:

Big labor unions and smaller franchise restaurant owners want out. UPS dropped coverage for employee spouses. Corporations such as Walgreens and IBM are transferring employees or retirees into private insurance exchanges…the Cleveland Clinic has announced early retirements for staff and possible layoffs. The…Achilles’ heel is technology. The software glitches are going to drive people insane. Creating really large software for institutions is hard. Creating big software that can communicate across unrelated institutions is unimaginably hard…software has to communicate—accurately—across a mind-boggling array of institutions: HHS, the IRS, Medicare, the state-run exchanges, and a whole galaxy of private insurers’ and employers’ software systems…

Anthem Blue Cross and Blue Shield will no longer be selling new individual insurance policies in 41 Wisconsin counties, including Dane, Eau Claire, La Crosse, and Rock. Whether its through the exchanges or not, individuals will only be able to buy new policies in 31 out of 72 counties…insurance plans bought by individuals will end in 2014…Regence BlueCross BlueShield of Oregon customers appear to be the first to receive their notices this week. Three customers contacted The Oregonian complaining that they face premium hikes of between 30 and more than 100 percent if they stay with Regence…The state Office of the Insurance Commissioner (OIC) says it has received dozens of phone calls and emails from Washington residents upset by letters from their health-insurance carriers informing them their current health plan will be discontinued at year’s end

Running a business is hard work and very complicated, whether it’s a $2 million revenue restaurant or a $200 million complex industrial company in a highly technical field. You have to take great care when you make incremental changes, and enormous training is necessary when you implement things like a new ERP software system to control the guts of the business — from production planning and control to managing supply chain issues. 18 months or so of detailed careful planning and training at all levels of our industrial company.

Health care has elements of both kinds of business above, and by the way, it’s a company with revenues of $3,000,000 million or so. Healthcare Inc is 15,000x bigger than the industrial company above, and that understates its complexity, since it spans technology, finance, manufacturing, and the delivery of complex services on a variable timetable whose planning horizon can be as low as zero minutes. The young are the only group that supports the insane restructuring of the largest industry in the country all at once at 12:01 am next week. And of course the joke’s on them, since they are the group that subsidizes everyone else. With a little luck, the Julias will not be low information voters very much longer

Some reading and a little on defunding

Friday, September 20th, 2013

Strange times these. Without getting into the substance of most of the following, here are some interesting pieces. Daniel Henninger‘s shows why even MoDo is using the word “weird.” Jeremy Rabkin raises both historical and legal questions about Syria. J.R. Dunn dives right in, and the more controversy the better as far as he’s concerned.

Finally, wrt Karl Rove’s taking issue with the ACA defunding tactic, we wonder why the hawks don’t settle for this: yes, we are going through some motions, and no, there’s not going to be a government shutdown, which would be a PR nightmare. But we want the other guys to own the ACA, and so we’re going through this kabuki so you will remember in 2014 that it wasn’t us who sold you the fantasies that the ACA would generate $2500 savings per family, while you keep your doc, and will create 4 million jobs while saving $1.3 trillion dollars. Perhaps you’ll know better next time not to believe rubbish. BTW, how are those 30 hours a week jobs working out for you young voters? We’re with the crew that says, don’t stand in front of an impending train wreck, photograph it from every angle as it happens and replay it, over and over again in slow motion.