Thursday, April 7, 2011

Madonna's Malawi Disaster: Is Kabbalah to blame?

When NEWSWEEK asked the center’s tax attorney Shane Hamilton how the Kabbalah Centre and Raising Malawi divided the money that was raised for Malawi, he replied: “I don’t know if they have a structure.”

Madonna's Malawi Disaster
Is Kabbalah to blame?
by Wayne Barrett
April 03, 2011

One year ago, Madonna squatted in the rust-colored dirt of a sprawling empty lot outside Lilongwe, the capital of Malawi, one of the poorest countries in the world. With curious villagers and invited photographers crowding around, she laid the ceremonial first brick for a planned $15 million girls’ academy, a noble mission in a nation where only 27 percent of girls attend secondary school. In a blog post on the website of her Raising Malawi foundation, she wrote that the brick, inscribed with the words “Dare to Dream,” was “not just the bedrock to a school—it is a foundation for our shared future.”

Last week it was announced that the future would not be built. Despite the fundraising success of Raising Malawi, which collected a reported $18 million in donations and spent $3.8 million on the planned academy, the girls’ school has been abandoned and the Raising Malawi foundation has imploded...

The explanation prompts more questions than it answers.

If the center was holding millions in Raising Malawi funding since 2006, why didn’t it transfer the funds when Raising Malawi ran deficits in 2009 and 2010?

And what about 2008, when the foundation had its best fundraising year, finishing with a half-million-dollar surplus, yet the center listed a $1.8 million liability from Raising Malawi on its IRS filings? How could there be a liability if it was the center that in fact owed Raising Malawi the millions it had collected over the prior two years?

When NEWSWEEK asked the center’s tax attorney Shane Hamilton how the Kabbalah Centre and Raising Malawi divided the money that was raised for Malawi, he replied: “I don’t know if they have a structure.” This fluid “intercompany debt,” as one Neilson aide described it, reinforces the charges made by critics that the center used Malawi as a fundraising tool, and that there is no way to independently determine what was really done in the name of its orphans...

Wednesday, April 6, 2011

DC. lawyer charged in multimillion-dollar insider trading scheme

DC. lawyer charged in multimillion-dollar insider trading scheme
By David S. Hilzenrath
Washington Post
April 6, 2011

By mid-March, as the government tells it, Matthew H. Kluger knew the FBI was closing in.

As a lawyer for three of the nation’s premier corporate law firms, most recently in the Washington office of Wilson Sonsini, he had allegedly stolen secrets that yielded tens of millions of dollars of insider trading profits. Now he was trying to eliminate the evidence.

Out went his computer, and his iPhone.

“Those are gone. I mean history,” he allegedly told a friend and co-conspirator.

But he was still worried.

“If they start looking at me and look at my bank records and all that other stuff . . . it could get ugly,” he said.

Sure enough. On Wednesday, the government dispatched any notion that law firms are always bastions of probity and discretion, charging that since the mid-1990s Kluger had tapped into his firms’ computer networks to extract and trade on confidential information about deals involving such blue-chip companies as Oracle, Intel and Hewlett-Packard.

Along with the financial crimes, he and a New York trader named Garrett D. Bauer are accused of engaging in a panicked cover-up that they discussed at length in telephone conversations with a third, unnamed conspirator, the alleged middleman.

In a March 17 phone call, according to a transcript of a recording, Kluger implored the middleman to get rid of a mobile phone that linked the two of them.

“I really would like to see this phone go bye-bye ASAP,” he said. “Do you want this to be our undoing?”

Worried that his fingerprints were on $175,000 in cash, Bauer allegedly urged the middleman to burn the money.

The middleman suggested that they launder the money instead — in a washing machine.

Kluger, 50, of Oakton, Va., and Bauer, 43, a New Yorker, were arrested Wednesday.

Kluger appeared in federal court in Alexandria and was being detained until a bail hearing Friday, said Rebekah Carmichael, a Justice Department spokeswoman. Bauer was being held in Newark.

An attorney for Bauer said it was too early to say how Bauer would respond to the charges. William J. Davis of Scheichet & Davis described him as “quite a pleasant fellow, very nice, quite gentle,” adding that Bauer “is in a bit of a difficult situation right now.”

Government officials were unable to identify an attorney for Kluger, and no one returned a message left at his home.

The two face criminal prosecution by the U.S. attorney for New Jersey and civil charges from the Securities and Exchange Commission.

A spokeswoman for Wilson Sonsini Goodrich & Rosati, the law firm where Kluger was until recently employed as a $290,000-a-year senior associate, said the firm was shocked to learn of the charges. The firm is giving its full support to the investigation, spokeswoman Courtney Dorman said in a statement.

The charges were the latest in a federal crackdown on insider trading that has nabbed hedge fund traders, management consultants, a former board member at Wall Street powerhouse Goldman Sachs and, recently, a Food and Drug Administration chemist accused of trading on advance knowledge of drug approvals.

The new case alleges that secrets were pilfered from the high priesthood of corporate law firms, including the New York-based firms Cravath Swaine & Moore and Skadden, Arps, Slate, Meagher & Flom...