Legal Briefing: More Plead Guilty to Cheating Municipalities


A daily look at legal news and the business of law:

Another Person Pleads Guilty to Cheating Municipalities

Yesterday I noted the federal government has been recouping money from several companies that overcharged it after winning contracts by paying kickbacks. A different cheat-the-government scandal involves companies who paid kickbacks to win contracts to underpay municipalities.

When a municipality sells bonds to, say, build a bridge, it can't spend all those dollars at once, so it invests them and uses them as needed. Investment companies are supposed to bid for that business, ensuring that municipalities get competitive interest rates. But some companies were rigging the auctions and paying municipalities less interest. Less interest ultimately means higher taxes for those in the municipality. It can also mean higher taxes for everyone, as the municipalities sometimes pay federal taxes on the interest, notes Bloomberg.

An ongoing investigation of the bid-rigging scheme, which involves over 200 deals with some 160 municipalities, has netted two more guilty pleas, reports Bloomberg. Douglas Lee Campbell, a former Bank of America (BAC) employee, and Adrian Scott-Jones, of an unnamed company, became the sixth and seventh people to plead guilty. Campbell participated in the bid-rigging scheme from at least 1998 through 2005, and Scott-Jones from 1999 through 2006, announced the Justice Department. Three other people are facing trial on related charges.

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Alaska Sues U.S. Over Offshore Drilling

The federal government has in effect banned new offshore drilling in Alaska by declining to issue permits, charges a lawsuit filed by Alaska. The feds counter that since they have not issued a formal ban, Alaska has no basis to sue. According to Bloomberg, the feds say they're merely taking a cautious approach to new Arctic drilling, and the need for more information on spill risks and response capabilities -- not a ban -- underlies the delay in issuing a permit.

California Public Schools Sued For Failing to Provide a Free Education

Public school is supposed to be free (except of course for taxes), but that hasn't stopped California schools from charging lots of fees. Not just fees for elective, extra-curricular activities, but fees for such essentials as textbooks and taking required courses. The New York Times reports that the American Civil Liberties Union is filing suit today to stop the practice and restore access to free public education.

Don't Ask Don't Tell Violates Constitution, Judge Rules

The military's policy of expelling soldiers who reveal that they are gay violates the Federal Constitution's First and Fifth Amendments, ruled District Judge Virgina A. Phillips of the Central District of California. Judge Phillips may issue an order blocking the practice later this month, but that order would likely be stayed pending appeal, reports the New York Times. As a result, no practical impact appears imminent.

Stem-Cell Funding Ban On Hold

The Court of Appeals for the D.C. Circuit has issued a temporary stay blocking Judge Royce Lamberth's decision to invalidate all federal funding of embryonic stem cell research. The temporary stay merely gives the court time to consider the merits of the federal government's appeal, and may not last, notes the National Law Journal. However, it does allow federally funded experiments to continue, possibly long enough to generate results, reports the New York Times.

Tattoos Protected by First Amendment

The Ninth Circuit Court of Appeals has ruled that tattoos are protected free speech, and thus Southern California's Hermosa Beach can't ban tattoo parlors within its bounds, reports the Recorder.