Categories
Law

Nomura, RBS mortgage misrepresentations ‘enormous,’ court rules

If you’ve ever wondered about the magnitude of deception that caused the financial crisis of 2008, read no further than a recent ruling by a federal court in New York that orders Nomura Holdings and Royal Bank of Scotland to pay a combined $806 million in damages to the government-owned mortgage agencies for misleading them about the quality of securities backed by residential mortgages.

The ruling, by the U.S. District Court in Manhattan, resolves one of 17 lawsuits filed by the Federal Housing Finance Agency (FHFA) in September 2011 against some of the nation’s biggest banks to recover losses on behalf of Fannie Mae and Freddie Mac, the government-sponsored entities that purchased residential mortgage-backed securities (RMBS) in the run-up to the financial crisis.

The lawsuit, which FHFA filed in its role as conservator of Fannie Mae and Freddie Mac, charged Nomura and RBS with misrepresenting, among other things, the underwriting and origination of the loans that backed the RMBS, the variation between the value of houses that secured the loans and the amounts of indebtedness, compliance with standards of appraising the properties, occupancy of the homes themselves and the assessments of the securities by ratings agencies.

The trial presented the court with a straightforward question. “Did defendants accurately describe the home mortgages in the offering documents for the securities they sold that were backed by those mortgages?” U.S. District Judge Denise Cote wrote in a 361-page opinion that instructs readers on practices that prevailed at Nomura and RBS. “Following trial, the answer to that question is clear. The offering documents did not correctly describe the mortgage loans. The magnitude of falsity, conservatively measured, is enormous.”

The ruling leaves little question about the extent of the deception that occurred among lenders that originated mortgages, the firms that appraised loans and the financial institutions that bundled the loans for sale to investors. Though by now the financial crisis has been well chronicled, few accounts rival Cote’s for its description of the failures, abuses and outright fakery that occurred.

It’s not as if no one warned of the crisis, which led to the longest recession since the Great Depression. As Cote recounts, 90% of real estate appraisers in a national survey fielded in late 2006 said they felt pressure from lenders to inflate values.

A year later, 11,0000 licensed and certified appraisers petitioned Congress and the Federal Financial Institutions Examinations Council to ask for assistance in ending pressure on appraisers to match or top a predetermined value on properties. “We believe that this practice has adverse effects on our local and national economies and that the potential for great financial loss exists,” the court quotes the group as warning. “We also believe that many individuals have been adversely affected by the purchase of homes which have been over-valued.”

FHFA charged that over a two-year period starting in 2005 the GSEs had purchased seven sets of RMBS underwritten by one or both of the defendants that had an unpaid principal balance of roughly $2.05 billion.

The court found that the group within Nomura that the company charged with reviewing the quality of the loans that the firm bought “was too small to do an effective job” and “lacked independence” from traders at the firm who held sway.

“The Diligence Group was too leanly staffed to do any careful review of the data,” according to Cote. “Over and over again, it simply ‘waived in’ and purchased loans its vendors had flagged as defective.

The group also was beholden to Nomura’s trading desk, which “was seemingly oblivious to the very serious risks associated with some of its decisions,” wrote Cote. “For example, it proposed that Nomura purchase loans whose files were missing critical documents… and enter a side-letter agreement allowing the seller to produce the missing forms later.”

The problem was greed or, more specifically, the pressure to compete in a market that had become a free-for-all. That led to Nomura buying mortgages from such firms as The Mortgage Store, which originated loans that failed consistently to comply with Nomura’s guidelines. As Cote explained:

The reason for Nomura’s lackluster due diligence program is not hard to find. Nomura was competing against other banks to buy these subprime and Alt-A loans and to securitize them. As its witnesses repeatedly described and as its documents illustrated, Nomura’s goal was to work with the sellers of loans and to do what it could to foster a good relationship with them. Given this attitude, it is unsurprising that even when there were specific warnings about the risk of working with an originator, those warnings fell on deaf ears.

Similar problems plagued RBS. “Its due diligence team had no role in reviewing the accuracy of representations in prospective supplements and did not understand that its work was in any way connected to the representations that would be made in prospectus supplements,” according to Cote. “As was true for Nomura, there was no one at RBS who acted to ensure that the representations in the prospectus supplements that are at issue in this case were truthful.

At trial, Nomura and RBS charged that the loans they underwrote constituted a relatively small share of RMBS sold in the years that preceded the meltdown. The firms also contended that factors in the larger economy—from government policies to fluctuations in housing market—also fueled losses that Fannie and Freddie incurred.

The court rejected those assertions. Instead, it tied the practices that prevailed at the underwriters directly to the crisis that ensued. As Cote explained:

The evidence at trial, including expert testimony, as well as common sense drive a single conclusion. Shoddy origination practices that are at the heart of this lawsuit were part and parcel of the story of the housing bubble and the economic collapse that followed when that bubble burst.

While that history is complex, and there are several contributing factors to the decline in housing prices and the recession, it is impossible to disentangle the origination practices that are at the heart of the misrepresentations at issue here from these events. Shoddily underwritten loans were more likely to default, which contributed to the collapse of the housing market, which in turn led to the default of even more shoddily underwritten loans.

Thus, the origination and securitization of these defective loans not only contributed to the collapse of the housing market, the very macroeconomic factors that defendants say caused the losses, but once the collapse started, improperly underwritten loans were hit hardest and drove the collapse even further. The evidence at trial confirms the obvious: Badly written loans perform badly. In short, defendants could not propound a cause unrelated to the alleged misrepresentation.

That’s the financial crisis in a nutshell. “While the vulnerabilities that created the potential for crisis were years in the making, it was the collapse of the housing bubble—fueled by low interest rates, easy and available credit, scant regulation, and toxic mortgages—that was the spark that ignited a string of events, which led to a full-blown crisis in the fall of 2008,” the Financial Crisis Inquiry Commission concluded in a report published in January 2011.

Yet while others have chronicled the causes of the crisis. Cote’s decision shows, in the case of two financial firms, the extent of the wrongdoing that occurred.

As the court noted, during the two years beginning in 2003, the number of subprime loans nearly doubled, to 1.9 million. By 2005, subprime loans made up one fifth of all new mortgages. According to Cote:

The ability of originators to quickly sell and shift the risk of subprime loans off their books reduced their incentive to carefully screen borrowers. They approved loans that did not comply with stated underwriting guidelines and they misrepresented the quality of those loans to purchasers. Appraised values were overstated, owner occupancy was misreported, credit risk was hidden, and second liens were undisclosed. In short, these shoddy practices contributed to the housing price boom.

Though prospectuses told investors that the loans that backed the securities at issue were underwritten in conformity with the originators’ standards, the prospectuses failed to inform investors that the originators has disregarded their own standards. “In sum,” wrote Cote, “notice that loans were not being extended to borrowers who had a less-than-perfect credit history through the adoption of relaxed underwriting guidelines was not notice that originators would ignore even those guidelines.”

That, as the court concluded, shows the problem that led to liability for at least two financial firms that sold securities that turned out to be toxic.

Cote noted that in the middle of the Great Depression, Congress passed the Securities Act, which obligates issuers of securities to disclose fully information that a reasonable investor might rely on in deciding whether to invest. “Now, in the aftermath of our great recession, FHFA seeks to vindicate those principles,” writes Cote. “For the reasons stated here, it is entitled to judgment.”

For its part, Nomura said in a statement that it “will review the judgment and consider all options, including appeal,” and that the judgment would have an “insignificant” impact on the company’s performance. RBS said in a securities filing that “it intends to pursue a contractual claim for indemnification against Nomura with respect to these damages.”

Categories
Law

NSA phone records case shows the power of standing

Like many things, legal arguments can have an elegance about them.

Look no further than the arguments advanced by the plaintiffs in the lawsuit that led a federal appeals court to rule last week that the government’s collection of information about the telephone calls of Americans violates the USA Patriot Act.

The decision, which was reported widely, marks the first time an appeals court has declared the surveillance program that the National Security Agency has used to harvest telephone numbers and other details of calls made or received in the US for at least the past nine years to be illegal.

Besides invalidating the bulk collection of so-called metadata, the decision reveals some terrific lawyering by the American Civil Liberties Union, which filed the lawsuit on June 11, 2013, six days after The Guardian, reporting on leaks by former government contractor Edward Snowden, published an order from the FBI to Verizon directing the company to hand over metadata for all calls on its network that either began or ended in the US.

Under the Constitution, federal courts only have the power to resolve actual disputes between real parties. Thus, to sue, a plaintiff must show a concrete personal stake in the outcome of the case, a requirement known as standing. It’s not enough to dislike a law. You have to show injury.

For its lawsuit, the ACLU needed a Verizon customer whose phone records had been collected by the government. A customer who might claim that the government’s collecting his or her phone records harmed the plaintiff in some way. For that, the ACLU looked no further than its own offices.

As the ACLU charged in court papers, the organization was itself a customer of Verizon, which provided the ACLU with landline, Internet and wireless services throughout the period covered by the order. The NSA’s harvesting of the ACLU’s metadata exceeded the government’s authority and constituted a seizure in violation of the Fourth Amendment, the group charged.

In court papers, the ACLU described its standing as follows:

The information collected includes plaintiffs’ numbers, the numbers of their contacts, the time and duration of every single call they placed or received, and the location of plaintiffs and their contacts when talking on mobile phones. This information could readily be used to identify those who contact plaintiff for legal assistance or to report human-rights or civil liberties violations, as well as those whom plaintiffs contact in connection with their work. The fact that the government is collecting this information is likely to have a chilling effect on people who would otherwise contact plaintiff.

In other words, the ACLU communicates with people about matters that are sensitive or privileged and who depend, as the group noted, “on their ability to keep even the facts of their discussions” with the ACLU confidential.

The trial court determined that the ACLU had standing to file the lawsuit.

On appeal, the government took issue with the ruling, charging that the ACLU had failed to demonstrate that the NSA had reviewed any of the metadata collected from the group. Thus, the government charged, the ACLU had failed to allege an injury sufficiently concrete to support standing.

The US Court of Appeals for the 2nd Circuit disagreed, noting that the ACLU had alleged injury from the very collection of metadata, regardless whether the government reviewed the information.

“Whether or not such claims prevail on the merits, appellants surely have standing to allege injury from the collection, and maintenance in a government database, of records relating to them,” wrote US Circuit Judge Gerard Lynch for the majority. “Appellants’ records (among those of numerous others) have been targeted for seizure by the government; the government has used the challenged statute to effect that seizure; the orders have been approved by the [Foreign Intelligence Surveillance Court]; and the records have been collected.”

The appeals court observed that the government admitted that when it searches its database its computers search all of the information stored in it. That means the government searches the ACLU’s records, which are among the millions of records stored in the database, electronically.

Finally, the court noted that the ACLU also had standing to challenge a violation of its right to freedom of association guaranteed by the First Amendment. As the court observed, the government’s forcing a group that’s engaged in advocating for the civil liberties of its membership to disclose its members can itself violate the right to associate freely.

“When the government collects appellants’ metadata, appellants’ members interests in keeping their associations and contacts private are implicated, and any potential ‘chilling effect’ is created at that point,” Lynch added.

Categories
Life

Unlocked

(Photo by superstrikertwo, Wikimedia Commons)
(Photo by superstrikertwo, Wikimedia Commons)

It’s Sunday, about 1:30 pm, and I’ve been to three wireless stores since noon.

The journey has taken me from 125th St. in Harlem to 86th and Broadway to 71st Street.

Reason for my trip: to activate an iPhone 4 that I’ve had for the past four-and-a-half years, the last two of which it occupied a shelf above my desk.

My girlfriend is visiting from South Africa. She uses a US phone on this side.

She had a phone that ran on Verizon—one of those clamshell designs—that she lost on a recent visit. She kept the number, which her sister paid for monthly. My girlfriend says she has no attachment to the number except that her boss knows it. He calls her on it.

For a week she went without a phone. To reach her, I texted her via Skype to her MacBook. But today she’s off to Boston, which her employer calls home.

She needs a phone that works. Cue the iPhone 4, which I charged in anticipation of her visit.

I misremembered that I had bought the phone from AT&T, thinking instead that it came from Verizon Wireless. That mistake explains everything that ensued.

The saga began a day earlier, at a T-Mobile store at 96th and Broadway. We brought the iPhone there to buy a SIM card that would activate the phone on T-Mobile’s network, where we—or more accurately T-Mobile—would carry over my girlfriend’s number from Verizon.

The sales representative at T-Mobile snapped a new SIM card off from credit card-sized piece of plastic, inserted it into the phone and turned on the device. We brightened momentarily before realizing the phone would not work.

“It’s locked by Verizon,” the representative told us, repeating the misinformation I had supplied inadvertently. “There’s nothing we can do. You have to take it to Verizon.”

“What’s the lowest-priced phone you have?” my girlfriend asked him. He showed her a phone that runs on Android and cost $20.

“I’ll take it,” my girlfriend said. At least she would have a phone, no matter how little it resembled a phone that she might want.

At home Saturday night, my girlfriend’s sister, a different sibling than the one who preserved the phone number, and I researched how to unlock a phone from Verizon.

On Sunday morning, equipped with the information, I called Verizon. The first representative I reached told me that Verizon cannot unlock a smartphone that ran on its network. That didn’t seem right.

I called again. A different representative gave me two six-digit codes that he said I could use to unlock the phone. “These will cost you money if you go online to sites that sell unlocking,” he offered before directing me to an article in Gizmodo about how to unlock an iPhone 4.

That didn’t help either.

I decided to take the phone to the Verizon Wireless outpost on 125th St. The place opened at noon. I resolved to be first in line.

I arrived at the store, located at the corner of 125th St. and Adam Clayton Powell Jr. Blvd, about 10 minutes early. While I waited, I met AGR, a rapper who was hawking “King of the Industry,” his latest disc. “I’m working with RZA of Wu-Tang,” AGR told me, without commenting on the symmetry between the number of initials in their monikers.

For $10, I could own a copy of AGR’s latest, which, he explained to me, contains no references to sex or drugs. “But aren’t drugs and sex subjects for art too?” I asked him.

“Yes, but what am I going to do, rap to the kids about using crack?” he replied. Rather than press the point, I forked over $10 in exchange for the disc, which AGR autographed to my girlfriend.

I hope she likes it.

By then it was noon and I saw the manager at Verizon Wireless kneel to unlock the double doors to the store. I construed the gesture as a metaphor for what awaited my phone.

I bounded inside. She asked how she could help.

“I’d like to ask you to please unlock a Verizon phone that I haven’t used in at least three years,” I explained. “I used to have a contract but that was then. I think you can unlock it now.”

“We can’t unlock the phone unless you are on Verizon,” she replied.

“Isn’t the point of unlocking the phone so that I don’t have to be on Verizon?” I asked. “Besides, refusing to unlock a phone unless I’m on Verizon sounds illegal.”

I imagine the last thing someone who works at a Verizon store on Sundays wants to hear is that what they’re doing is unlawful.

“Companies do it all the time,” she said.

As if that would persuade me.

“Tell you what, maybe you can confirm that the phone is a Verizon phone,” I offered. “Maybe my recollection is wrong.”

“But you told me it’s a Verizon phone,” she said.

“Yes, I did, but perhaps my memory is faulty,” I answered. “It can happen to any of us,” I added, gesturing toward the pedestrians on the street outside.

I held up the phone to her while pressing an icon on the display that flashes the phone’s International Mobile Station Equipment Identity (IMEI number), the 15-digit number that identifies most mobile phones.

The manager gave a look that signaled a mixture of annoyance and resignation. “Please, just confirm that this is a Verizon phone,” I pleaded.

The manager gazed at the number. “It’s a Verizon phone,” she said. “That’s our number, it begins 040.”

I looked at the IMEI, which began 0240.

“Are you sure?” I asked, repeating back to her the digits. “I’m sure,” she replied. “Verizon phones start with 0240.”

I noted her confusion but attributed it to her wanting to be rid of me.

I thanked her and plopped down on a bench at the entrance to the store to map out my next move. I approached the counter again to ask another representative how much it would cost to activate the phone on Verizon’s network.

“That would be $45 a month, for unlimited talk and texts, plus one gigabyte of data,” he told me, looking up from his smartphone.

“Will the number remain in effect if my girlfriend only uses the service a few times a year when she’s in the states?” I asked.

“No,” he said. “The number cancels out at the end of 30 days unless you renew it.”

By now it was 12:15 pm. I had promised my girlfriend I would be home by 3:00 pm with a phone that worked and that she could take with her to Boston later that afternoon.

At 125th St. and Adam Clayton Powell, I hailed a taxi to take me to the Apple Store at 66th and Broadway. I would buy a new iPhone 6 and give my girlfriend my iPhone 5c. I’ve dithered about whether to go with a larger phone. Now seemed like the time.

As the taxi rolled along Central Park West, I gazed out at the buildings on my right. At 102nd St., we passed an apartment building where seven years ago I took guitar lessons from a musician who lived there. He once played in the band for the show “Rent.” He also liked to play tennis and would regale me with stories about matches he played on the red-clay courts in Riverside Park.

At around 96th Street a better idea came to me. Rather than buy a new phone, I would return to Verizon and activate the iPhone 4 on the carrier’s network. My girlfriend could bring both the T-Mobile phone and the iPhone with her to Boston. She would have to tote two phones but at least one of them appealed to her.

After her business trip, I would hold onto the iPhone 4. That way I could have a phone to use for calls and another—my iPhone 5c—for podcasts, music and all the rest of the things we do with those devices. All for $45 a month, which, while not free, beat the cost of a new phone.

I asked the driver to let me out at 86th and Broadway. Rather than return to Harlem and the manager whom I was persuaded hated me, I would find a Verizon Wireless store on the Upper West Side.

First, I had to use the restroom. I walked north along Broadway, expecting to find one of the Starbucks locations that litter Broadway what seems like every five blocks. Sure enough, I found one after about three.

Inside, a man who appeared to be about 60 years old waited for the restroom, the door to which displayed the red dial that signaled it was occupied. He had close-cropped silver hair and wore shorts and a t-shirt with something that I couldn’t decipher printed on it.

“You’re in line, right,?” I offered.

“I am,” he answered smiling, seemingly appreciating my checking with him.

After about 30 seconds I spoke up.

“The city needs more public restrooms,” I said. “It’s ridiculous that we all wait on line in Starbucks.”

The man brightened.

“I agree,” he said. “You wonder what people do in there. The guy who was in line before me gave up and left.”

“I don’t get why people take so much time,” I volunteered. “The last place I want to be is holed up is in a bathroom at Starbucks.

By then another gentleman, an African-American man who appeared to be about 50, had joined the line.

“We think someone’s taking a shower in there,” I said to him

“It’s terrible,” he said. “The way some people stay in there so long.

“Right, that’s what we were just discussing,” I replied, gesturing to the man ahead of me in the queue.

The three of us waited silently for about five minutes. Then the African-American man walked forward and rapped solidly on the door. No reply.

“Maybe someone should check to see if the person inside is conscious,” I offered.

“This is ridiculous,” said the man, returning to the queue.

“Have you seen the public restroom they installed recently on the east side of Union Square,” I asked them, proud of my offering some information that might be of value in the future. “We need more of that. Or like the restrooms at Bryant Park. Standing in line at Starbucks is hardly a substitute.”

Both men nodded in agreement.

I was on a roll. “I should run for City Council on a platform to add restrooms across the city,” I said.

“You’d have my vote,” said the man in front of me.

Just then we heard the handle of the bathroom door rattle. A woman, about 50 emerged, looking pale and exasperated.

She shook her head and looked at the man in front of me, as if he alone had interrupted her stay.

“I’ll be fast,” he told me.

“I’ll be fast too,” I told the man behind me.

The man kept his promise. He was in and out in what seemed like 20 seconds. I did the same.

“Take care, man,” I said to the African-American gentlemen as I left.

“You too,” he said, cementing our bond.

I stepped outside and onto Broadway, where Google Maps told me there was a Verizon Store at 80th St.

I walked south, glad to be outside on a mild spring afternoon. It was early enough that people seemed happy it was Sunday. They had yet to retreat to their apartments to steel themselves for the week.

A man passed me walking north, carrying an air conditioner that he had purchased at P.C. Richard & Sons, judging by the box. A block later, a young woman drifted over to a shelf of books that a bookseller had pushed onto the sidewalk to attract browsers.

As I approached 80th St., I saw the Verizon store on the opposite side of Broadway. Inside the store, the greeter asked for my name, which he logged on an iPad before telling me that I would be next in line.

I sat down on what I later realized to be the same style of bench that stood near the door at the Verizon store in Harlem. It’s hardly news that parts of Manhattan are being overrun by banks, nail salons and mobile phone stores. I shuddered as I realized that I had experienced the phenomenon from the inside.

In about 10 minutes, a man whose name tag read Jordan sat down next to me, smiled and asked how he could help.

“I would like to sign up for some prepaid Verizon wireless,” I told him, holding out the iPhone 4.

“Great, how do you anticipate using the phone?” he asked.

“For calls, mostly, I think,” I answered, feeling happy that we seemed to be getting somewhere.

Jordan told me the best plan would be one that costs $45 a month. Of course, I knew that already, but I thanked him anyway. By now it was nearly 1:00 pm and I began to calculate how much time I had left before I had to get back to my girlfriend in Harlem.

“May I see your ID?” Jordan asked.

I handed him my driver’s license and hoped that concluding the purchase would be as easy as his swiping my credit card.

“Is this your home address,” Jordan asked, holding the license.

“Yes, it is,” I replied, feeling satisfied with my deciding to update my license after moving last year.

Jordan excused himself to speak with a co-worker, whom I imagined to be a supervisor. I watched the men huddle for about a minute before Jordan returned.

“You say this is a Verizon phone?” he asked me. “Because as far as I can tell it’s not one of ours.”

“But the manager at your other store tells me it’s Verizon,” I replied.

“I’m sorry but it’s not,” he said. “Have you checked with T-Mobile, or with any other carrier. Maybe it’s AT&T or Sprint.”

Suddenly, I remembered.

“Oh, wow, it’s AT&T,” I said as the realization dawned. “Look, Jordan, you know that I wanted to buy Verizon service—you know that I was ready to sign up for prepaid wireless—but if I can unlock this my girlfriend can use her T-Mobile SIM with this phone.”

Jordan said he understood, and that he was happy to help. I wanted to run to the AT&T store, but I paused long enough to thank him again. We shook hands.

Back on Broadway, I headed south, past the Apthorp and Fairway, across the street at Gray’s Papaya, to 71st St., where an AT&T store occupies the northeast corner.

I entered to find two representatives helping customers at the counter while two ladies sat on a window ledge in the far corner of the store that faced the street.

“I imagine you’re waiting,” I said to them, smiling.

“I’ve been waiting for about 30 minutes,” said the younger of the two.

“Have they taken your names?” I asked.

“We think so,” said the other woman.

I approached the counter. “How do we register our visit?” I asked one of the two representatives. She wore a powder-blue polo shirt emblazoned with an AT&T.

She looked up at me distractedly. Just then, a representative in a royal blue polo shirt—a manager I hoped—emerged from the back room.

“How do we register for our visit?” I repeated, this time to him. “There are four of us back here,” I said, motioning to the two women. “We’re wondering.”

“There aren’t four of you,” said the manager.

“I count four—those women, me and this gentleman, here,” I said, gesturing toward a 60-something man hunched over some kind of self-service terminal.

“Have you registered?” I asked a 20-something man whom I had seen when I entered.

“I have,” he said in a European accent, smiling. “Thank you.”

I felt like an organizer. After three wireless stores in 90 minutes, the  bureaucracy and procedures started to make sense to me.

The manager asked my name, which he entered into an iPad.

I retreated to the corner to take my place alongside the two women in the queue.

My turn came about 15 minutes later. A 20-something representative—she wore a navy polo shirt, the shades of blue seemed to darken with each representative—approached and asked how she could help.

“I would like to unlock this iPhone 4 that I got from AT&T several years ago,” I told her. “The contract has long lapsed. I don’t even have a phone number of it.”

“You have to put in a request online to do that,” she replied.

“What?” I replied, set back.

“This is the third wireless store I’ve visited today, and now you’re telling me I have to go online? Please, can’t we do this from here?” I implored.

The representative hesitated. Then she escorted me over to an iPad and punched up an online site at AT&T for unlocking phones.

“Go ahead and enter your information here,” she instructed.

I entered the IMEI, my name and email address. Three times I mistyped the captcha, which seemed especially tough to transpose.

After three tries, the representative nudged me aside and entered the phrase.

That produced a message telling me to check my in-box for an email that would confirm the unlocking.

I opened the email on my phone. “Click ok,” the representative told me, enrolling now.

I clicked. A second email arrived telling me that my request for an unlocked phone would be processed within two days.

“They say two days but it can be much faster,” said the representative. “Mine was unlocked the same day.”

That meant I might not be able to unlock the phone for my girlfriend in time for her trip but that eventually we’d get the phone working.

After thanking the representative and leaving the store, I imagined I could ship the phone to my girlfriend in Boston as soon as it worked.

On Broadway, I flagged a taxi to take me home. It was 1:45 pm and I didn’t want to risk the vagaries of weekend subway service.

As the taxi made its way up the West Side Highway, I happened to check my in-box, to see a third message from AT&T, this one congratulating me on my phone being unlocked.

According to the message, to complete the unlocking I needed to connect the phone with its original SIM card to iTunes.

Problem was, I no longer have the original SIM card.

Damn, I thought. Three stores and all that energy and I still may be unable to unlock the phone.

I resolved not to stress about it and to enjoy the ride along Riverside Park on a lovely day.

I called my sister to wish her happy Mother’s Day. I listened to a report by the BBC World Service about the new leader of South Africa’s main opposition.

I settled into the taxi, feeling assured by my effort and the initiative of the driver, who suggested a route that I knew made sense.

At home, my girlfriend gazed up from her work when I entered the apartment. I had stopped at a salad place and brought us both lunch.

I told her that I felt we were close to unlocking the phone, that I needed to try one more thing at the computer.

I went to my desk, inserted my girlfriend’s SIM card from T-Mobile into the iPhone and attached the phone to my computer. I double-clicked on iTunes. A message popped up to tell me that new settings from the carrier were available for download.

That seemed like a good sign. A few seconds after I accepted the settings a screen appeared. “Congratulations, your iPhone is unlocked,” it read.

I ejected the phone, adjusted the brightness of the display and walked into the living room to where my girlfriend sat on the couch, typing on her MacBook.

“Here’s your iPhone,” I said, handing the device to her.

She stood and embraced me. A breeze came through the window

Categories
Sports

Alex Rodriguez passes Willie Mays on home run list

Say what?
Say what?
Alex Rodriguez said so long to the Say Hey Kid.

The Yankees slugger bashed a two-run homer in the third inning against Baltimore on Thursday, passing Willie Mays to claim sole possession of fourth place on baseball’s all-time home run list.

The home run, which came in the third inning against Baltimore, marks the 661st of A-Rod’s career. Rodriguez had been tied with Mays, who turned 84 on Wednesday, since hitting his 660th last Friday against Boston.

Only Barry Bonds (762), Hank Aaron (755) and Babe Ruth (714) have hit more.

After Rodriguez returned to the dugout, fans continued to cheer, eliciting a curtain call from the slugger, who sat out last season after being suspended by the league for using performance-enhancing drugs. As the Daily News’ John Harper observes:

The way the fans roared for the curtain call, you’d have thought Derek Jeter had hit home run No. 661. OK, well, that may be a stretch, but you get the idea. The same fans who never really warmed up to A-Rod over the years are suddenly showering him with affection, and that may be more remarkable than his comeback itself.

The Yankees have said they would forego the option A-Rod’s contract gives them not to pay Rodriguez a $6 million bonus in return for the rights to market the achievement.

As one who attended Thursday’s game, I can report that the team is upholding its end of the pact. Had you not known A-Rod’s home run tally, you might have missed the moment. The LED display that fills the stadium above center field said nothing of A-Rod’s chase or the significance of the moment.

“The Yankees could have added to the excitement had they told fans that Rodriguez was poised to overtake Mays,” my girlfriend commented afterward.

Instead, we walked back over the bridge to Manhattan on a lovely May night, talking about why a player as gifted as Rodriguez had used PEDs and whether he had already alighted in the helicopter that we imagined whisks him home.

Categories
Sports

Happy Birthday, Willie Mays

Willie Mays turned 84 years old on Wednesday.

Over a career that spanned 22 years beginning in 1951, the “Say Hey Kid” amassed a .302 batting average and 3,283 hits, the fifth most of all time in the National League and 11th overall in baseball.

Mays smacked 600 home runs, third best in the league and tied for fourth best of all time.

According to Leo Durocher, who managed the Giants during Mays’ first four years with the club:

He could do the five things you have to do to be a superstar: hit, hit with power, run, throw, and field. And he had that other magic ingredient that turns a superstar into a super superstar. He lit up the room. He was a joy to be around.

As one who lives five blocks from the site of the former Polo Grounds, I feel a connection to Mays, who played the first six seasons of his professional career there before the Giants decamped to San Francisco.

On autumn days, one can imagine the crowd spilling out of the Polo Grounds in 1951, after Bobby Thomson’s walk-off home run to win the National League pennant. Or “The Catch,” Mays’ over-the-shoulder grab in deep center field in the first game of the 1954 World Series.

Mays, who was inducted into the Hall of Fame in 1979, also logged:

1,903 runs batted in, fourth best in the league and 10th best of all time

2,062 runs, fourth best of all time in the league and seventh best of all time

1,323 extra base hits, fourth best of all time in the league and fifth best of all time

2,992 games, fourth best of all time in the league and ninth best of all time

10,881 at bats, fourth best of all time in the league and 12th overall in baseball

6,066 total bases, third best of all time in both the league and in baseball

12,493 plate appearances, sixth best of all time in the league and 12th best of all time

11 consecutive NL Rawlings Gold Glove seasons starting in 1958

Mays also holds the record for hitting home runs in the most different innings.

On July 15, 2009, Mays accompanied President Obama aboard Air Force One for a flight to St. Louis, where the president threw the first pitch for the All-Star game.

“I’m so proud,” Mays told the president, referring to Obama’s election. “I didn’t go to bed until maybe 7:15 that morning. I just want to thank you.”

“Let me tell you, you helped us get there,” the president replied. “If it hadn’t been for folks like you and Jackie [Robinson], I’m not sure I would get elected to the White House.”

Categories
Law

Group behind Prophet Muhammad cartoon contest can run ad, court rules

A group run by the woman who organized the Prophet Muhammad cartoon contest that sparked a shooting last weekend in Texas has a right to display an anti-Muslim advertisement on city buses, a federal judge in Manhattan has ruled.

The Metropolitan Transportation Authority cannot refuse to run an ad submitted by the American Freedom Defense Initiative (AFDI), an advocacy organization headed by Pamela Geller, a New York blogger who took to denouncing Islam following the 9/11 attacks.

The ad, which began with a quote from “Hamas MTV” and stated “Killing Jews is worship that draws us closer to Allah. That’s his Jihad. What’s yours?” qualifies as speech protected by the First Amendment, according to the court, which held that the MTA cannot decline to run it based solely on a fear that the ad might incite violence.

“While the court is sensitive to the MTA’s security concerns, the defendants have not presented any objective evidence that the Killing Jews advertisement would be likely to incite imminent violence,” wrote U.S. District Judge John Koeltl in a ruling published Friday. “The defendants have restricted it based on its content without a compelling interest or a response narrowly tailored to achieving any such interest.”

The ad at issue was among at least four advertisements that the group submitted to the MTA last summer for display on buses and at subway entrances. The agency approved three of the ads but rejected the “Killing Jews” ad, concluding that it advocated attacks on Jews and that it was reasonably foreseeable the ad would provoke violence.

AFDI sued, claiming that the ad parodied an advertising campaign carried out in 2012 and 2013 by the Council on American-Islamic Relations, a civil rights advocacy group that sought to depict Muslims with positive messages, including “#MyJihad is to build friendships across the aisle. What’s yours?”

In court papers, MTA acknowledge that AFDI’s ad had appeared on buses in Chicago and San Francisco in 2013 without triggering acts of violence. Still, MTA’s director of security testified that although the likelihood of incitement was “hard to quantify in percentages” the ad—particularly the line “What is yours?—could spur people to act violently.

In determining whether the ad constitutes constitutionally protected speech, the court rejected the MTA’s contention that the content fell into the category of so-called fighting words—words that the US Supreme Court has found that by their very utterance tend to incite an immediate breach of the peace or to inflict injury—and therefore are not protected by the First Amendment.

The court also concluded that the ad was unlikely to produce so-called imminent lawless action that would authorize the government to forbid the ad as harmful.

According to the court, the MTA failed to present evidence of a threat to public safety sufficient to justify the restriction of the ad based on its content. “There is no evidence of any violent response to this same advertisement when it ran in Chicago and San Francisco, or even to any similar ad in any city,” wrote Koeltl.

“In order to show that the Killing Jews ad falls outside of the First Amendment’s protection, the defendants must make some objective showing that this ad is directed at producing and likely to product such violent actions,” he added. “The defendants have made no such showing.”

Geller, who achieved notoriety five years ago for battling a mosque and Islamic cultural center that its founders planned to build in Lower Manhattan, has a record of courting controversy. The Southern Poverty Law Center lists AFDI as an active anti-Muslim group.

For its part, AFDI says it aims to preserve “freedom of speech, freedom of religion and equal rights for all.”

Categories
Sports

NBA announces first-ever exhibition in Africa, South Africa sport minister condemns xenophobia

The news that the NBA will stage its first-ever exhibition game on the continent in South Africa later this year comes amid a wave of anti-immigrant violence that is engulfing the republic.

At roughly the same time Wednesday that the league announced a matchup to be played this August in Johannesburg, President Jacob Zuma vowed to deal with the “underlying issues,” including a jobless rate that hovers around 25%, that have contributed to attacks on foreigners.

The NBA didn’t comment on the attacks, which have left at least seven people dead and forced thousands of immigrants from Malawi, Zimbabwe and elsewhere to seek shelter in camps.

But Fikile Mbalula, South Africa’s minister of sport, who attended the NBA’s announcement, condemned the xenophobia and mistreatment of migrants.

“We have here in South Africa coexisted with people who have oppressed us for more than 300 years,” said Mbalula. “And yet there are criminals who can’t tolerate their own blood, and their own brothers and sisters. And we say, as South Africa, not in our name.”

The exhibition is slated to feature a contest between a squad composed of African players and an outfit made up of players from the U.S. and elsewhere. Luol Deng, a forward for the Miami Heat who was born in South Sudan, will captain Team Africa. Chris Paul of the L.A. Clippers will skipper Team World.

Categories
Law

Court accelerates review of Garner grand jury case

A state appeals court will accelerate review of a trial judge’s decision not to unseal grand jury records in the case of Eric Garner.

Briefs by the New York City Public Advocate, The Legal Aid Society of New York, the New York Civil Liberties Union, the Staten Island branch of the NAACP and The New York Post will be due May 5, the Appellate Division, Second Department, said in an order released Monday.

The reply brief from the Staten Island District Attorney will be due by May 26, with any responses due June 5.

“Very pleased our motion was granted,” tweeted Public Advocate Letitia James. “The public has the right to know what happened behind closed doors.”

On April 14, James filed papers seeking expedited appeal of a decision by Judge William E. Garnett, who ruled last month that the parties who sought release of grand jury minutes in the Garner case had failed to establish a sufficient need for the disclosure.

Eric Garner died on July 17 following a confrontation with police officers. Video of the confrontation, which included an officer placing Garner in a chokehold, circulated widely and led to protests calling on the district attorney to open the grand jury records.

By law, grand juries in New York State operate in secret, in part to protect witnesses and jurors. “In addition, those who were not charged by the grand jury have a reputational stake in not having their conduct reviewed again after the grand jury had already exonerated them,” Garnett wrote in an order released March 19.

According to Garnett, one who seeks release of grand jury minutes must show a compelling need for the material and explain the purpose for which that person seeks access to the minutes.

Categories
Law

Warrant that police did not know about no defense against false imprisonment claim, New York court rules

The police cannot rely on a warrant they did not know about to later provide a legal basis for an arrest, a New York State appeals court has ruled.

The appeal arose in connection with the arrest of Malvin Omar Urena, who was arrested without explanation nearly two years ago while standing with friends in the courtyard of his apartment building in the Bronx.

Police later charged Urena with interfering with a so-called buy-and-bust operation by shouting “Police, police, police.” He was detained for more than a day before the District Attorney’s office declined to prosecute, citing a lack of probable cause for his arrest.

Urena later sued the city for false arrest and imprisonment. A trial judge dismissed the claims, finding that a warrant issued in December 2011 for Urena’s arrest provided a basis for police to apprehend him.

Not so, says the court’s appellate division.

“Since the police were unaware of the warrant when they arrested plaintiff, the arrest cannot be found to have been based on the warrant,” wrote a panel headed by Associate Justice Angela Mazzarelli in a decision published Friday.

“Plaintiff correctly argues that the warrant that had been issued for his arrest in December 2011 does not render his May 2013 arrest ‘privileged’ so as to preclude his claims,” the panel added.

In general, the law permits police to arrest suspects without a warrant provided the police have probable cause. That means there’s a reasonable basis for finding that a crime has been committed.

Categories
News

From Runnymede to North Charleston, reflecting on the rule of law

Protesting the death of Eric Garner, who died after a police officer put him in a chokehold.
Protesting the death of Eric Garner, who died after a police officer placed him in a chokehold.

A terrific piece by Jill Lepore about the Magna Carta that appears in the latest issue of The New Yorker traces that charter’s contribution – both real and imagined – to the advent of the rule of law and leaves me reflecting on the idea of due process in the wake of shootings of unarmed black men by police in North Charleston, Ferguson and elsewhere.

Due process underpins constitutional law and, as Lepore notes, has factored heavily into U.S. Supreme Court decisions ranging from Roe v. Wade, the 1973 ruling that affirmed a woman’s right to terminate her pregnancy by abortion, and Lawrence v. Texas, a 2003 ruling that struck down state laws against sodomy.

But the idea of due process has been on display more recently in connection with the fatal shooting of Walter Scott by a police officer in North Charleston, South Carolina and the killing of Michael Brown by a police officer in Ferguson, Missouri last August.

As Lepore, a professor of American History at Harvard, recounts, the Magna Carta was sealed by King John in Runnymede, a meadow along the Thames about 23 miles southwest of London, 800 years ago this May. The King was there to meet with barons who had rebelled against his despotic rule, which included levying taxes higher than any monarch had before and holding hostage the sons of noblemen who fell into debt.

The barons presented the King with a series of demands, including one that read, in relevant part, “No free man is to be arrested or imprisoned…save by the lawful judgment of his peers or by the law of the land.”

Over the centuries, the Magna Carta has come to be viewed by as a bedrock of liberties, even if, as Lepore explains, the reality is that the charter “is on occasion, taken out of the closet, dusted off, and put on display to answer a need.”

Still, Lepore notes, “Such needs are generally political. They are very often profound.”

One of those needs has been the development of due process, or the idea that before taking a citizen’s life, liberty or property the state must follow fair procedures.

Dispossession factors heavily into land and property, of course. With his powers unchecked, the King could seize someone’s estate for any reason. But dispossession also factors into life and liberty, as in, the state has dispossessed you of your liberty, or your life, without due process. The Fifth Amendment of the U.S. Constitution provides, in relevant part:

“No person shall be held to answer for a capital, or otherwise infamous crime, unless on presentment or indictment of a grand jury…nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself nor be deprived of life, liberty or property, without due process of law; nor shall private property be taken for public use, without just compensation.”

The Fifth Amendment, together with the 14th Amendment, which applies the Bill of Rights to the states, reflects, as Lepore explains, “a revision of the twenty-ninth Article of the Barons,” which had been adopted by a series of states both before and after 1868, when the 14th Amendment became law.

Fast forward to North Charleston, where Scott, a 50-year-old black man, was shot and killed by Patrolman Michael Slager, a 33-year-old white police officer, following a traffic stop on April 5. Slager was charged with murder after a cellphone video showed him shooting Scott eight times in the back as Scott ran away.

During the week that ensued, supporters of Scott and his family rallied against racial injustice although they praised the rapid response by law enforcement in the matter. In a statement, Reverenced Jesse Jackson, addressed due process:

The punishment for traffic violation is not death. Police officers are sworn to serve and protect…not to act as judge and jury in the street…We should also release internal affairs records of proven police misconduct and reform tort laws to make it easier to obtain civil judgments against cities that retain officers known to violate citizens’ right to due process and equal protection under the law.

Similarly, The St. Louis Post-Dispatch, two days after the fatal shooting of Michael Brown in Ferguson last August, editorialized:

“Michael Brown didn’t get due process. The still unnamed police officer who shot the 18-year-old black teenager dead in Ferguson will get plenty of it. This is the root of the frustration that is driving the African-American community to the streets in north St. Louis County over yet another senseless killing of a young black man.”

As it turned out, a lack of due process factored heavily into the fatal shooting of Michael Brown but in ways that may be less apparent than the encounter between Brown and Officer Darren Wilson that ended in Brown’s death suggests. According to the Department of Justice, the City of Ferguson’s focus on generating revenue via its courts led to a pattern of unconstitutional policing and procedures that disproportionately harm African-Americans and undermine public safety.

“The large number of municipal court requirements being issued, many of which lead to arrest, raises significant due process and equal protection concerns,” DOJ found in a report published in March, quoting from decisions by the U.S. Supreme Court in several cases. “In particular, Ferguson’s practice of automatically treating a missed payment as a failure to appear – thus triggering an arrest warrant and possible incarceration – is directly at odds with well-established law that prohibits ‘punishing a person for his poverty.’”

Of course, the use of force by police officers in the absence of behavior that doesn’t pose a threat also contravenes due process. “Officers often use force in response to behavior that may be annoying or distasteful but does not pose a threat,” DOJ writes, quoting from a 2002 ruling by the U.S. Court of Appeals for the 9th Circuit. (“The Due Process clause protects pretrial detainees from the use of excessive force that amounts to punishment.”)

What’s more, the idea of due process extends to protestors. Writing in Slate, Dalia Lithwick and Daria Roithmayr noted that mass arrests of protestors who assembled last summer in Ferguson violated more than their rights to freedom of speech and assembly guaranteed by the First Amendment.

“We’ve seen very little coverage of the use of tear gas and rubber bullets as constitutional violations,” wrote Lithwick and Roithmayr (emphasis in original). “But the due process clause bans the police from using excessive force even when they are within their rights to control a crowd or arrest a suspect.”

As Lepore observes and as the protests in North Charleston, Ferguson, New York City and elsewhere remind us, the conception of due process may have a foundation in the Magna Carta but that doesn’t mean it was cemented there. Lepore notes the contradiction between the Supreme Court’s citing the Magna Carta in a 2008 ruling finding that detainees at Guantanamo Bay had been imprisoned unlawfully and the reality today in the U.S., where one in every hundred and ten people is behind bars.

“Due process is a bulwark against injustice but it wasn’t put in place in 1215,” concludes Lepore. “It is a wall built stone by stone, defended, and attacked, year after year.” The deaths of Scott, Brown and others demonstrate as much.