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NY appeals court decision details suit...

NY appeals court decision details suit alleging kickback scheme involving Jim Hood’s outside counsel

By: Magnolia Tribune - March 28, 2016

On February 29, an article in Forbes came out with an article detailing a US 2nd District Court opinion that involved Mississippi litigation outsourced by Jim Hood that involved a lawsuit involving an alleged kickback scheme.

The case involved PERS litigation prosecuted by NY law firm and Hood campaign contributor Bernstein Litowitz (BLB&G). First, it’s important to note that Bernstein Litowitz’s partners have donated over $100,000 in campaign contributions to Jim Hood since 2005. The firm was engaged on litigation on behalf of PERS in this particular instance in a case involving Satyam.

The dispute stems from one of BLB&G’s lawyers, Bruce Bernstein, suing his law partners over being forced out of his law firm after blowing the whistle on what he believed to be unethical conduct of their firm engaging Vaterria Martin (sister in law of the late Precious Martin and wife of then Assistant Attorney General Deshun Martin). When contacted, both the Attorney General’s office and Ms. Martin refused any comment in the matter.

Since I can’t really do a better job than the opinion of laying out the facts of the underlying case, here are the facts according to the 2nd circuit decision.

In September 2010, BLB&G partner Steven Singer informed Bernstein that a solo practitioner based in Jackson, Mississippi, Vaterria Martin, would act as “local counsel” and “occasionally check on the status of the case for MPERS, even though BLB&G was already providing this information directly” to the AG’s Office. In December 2010, the lead plaintiffs in the Satyam class action reached an agreement in principle to settle with Satyam for $125 million. On February 16, 2011, Satyam and the lead plaintiffs executed a stipulation setting forth the terms of the agreement.

On March 1, 2011—after the agreement in principle with Satyam had been reached and the stipulation had been executed another BLB&G partner, Max Berger, “assigned two unnecessary legal research projects” to Martin. Bernstein protested the assignment, but his concerns were dismissed, with Singer saying, “Do you ever want us to work with Mississippi again?” Martin ultimately produced an eighteen?page memorandum on April 26, 2011, several weeks after the case was settled in principle. Singer and Berger agreed with Bernstein that the memorandum “addressed the wrong pleading,” “contained no meaningful analysis,” and was “ridiculous.” Martin reported a total of 207 hours’ work on the case, primarily spent producing the useless memorandum.

After the settlement became final, Bernstein learned from BLB&G’s comptroller that the firm had paid Martin $112,500 from the proceeds of the Satyam class settlement. BLB&G did not disclose the payment to the court in its August 1, 2011 fee petition.

According to the decision, Bernstein smelled a rat and found out that Vaterria Martin was a 5th year lawyer that, just coincidentally, was married to an attorney in the AG’s office. He went so far as to report it to the US Attorney’s office. Bernstein was told by his partners there was “local pressure on the Mississippi AG” to use “local firms,” told him “you need to drop this,” and made a veiled threat to “blackball” Bernstein if he became “a whistleblower.”

Come to find out, in fact, that not only did BLB&G pay Martin, $112,500 – but so also did Grant and Eisenhoffer, the other retained firm on the case. So that’s $225,000 to the wife of a then AG staff attorney for work, according to the decision, was substandard and generally unnecessary – in just that one case.

The original Bernstein complaint against BLB&G alleged RICO violations and that BLB&G “regularly engage(d) in a kickback scheme with the Mississippi Attorney General’s Office, a public entity whose constituents might otherwise be in the dark about the arrangement.”

The cherry on top was that Assistant Attorney General George Neville, after hearing about the dispute, penned a letter to Bernstein’s lawyer. It ordered them, according to the opinion, to “keep the existence of the alleged kickback scheme private by writing: ‘As counsel for the State of Mississippi . . . and on behalf of the State of Mississippi and its agency MPERS, I am directing [Bernstein] not to disclose any confidential information he learned as counsel to Mississippi and its agency MPERS.'” But for the 2nd Circuit Court’s decision, the AG’s office doesn’t appear as if it would have ever provided the existence of the lawsuit or these details publicly.

For its part, the Court made its impressions known about the matter.

Of course the information may be seriously embarrassing to counsel, (BLB&G and the AG’s office) but not to the client, MPERS. Indeed, it is counterintuitive to suggest that MPERS was somehow complicit in an alleged kickback scheme that caused it to pay legal fees for unnecessary work.

Satyam Decision.pdf by yallpolitics

As for the firm’s relationship with Jim Hood, let’s just Hood and Bernstein Litowitz go back aways. A good long ways. Not to mention BLB&G featured Jim Hood at a conference in Dublin, Ireland in 2008.

For her part, Vaterria Martin appears to have had no discernible track record of high stakes securities litigation (according the PACER searches in both NY and MS and google searches) before the two cases she’s been engaged (Satyam and McGraw Hill) with for the AG or since. Again, she would not comment. Most of the cases she’s worked on according to federal court PACER searches and local Hinds County records appear to be personal injury, employment disputes or medical malpractice related.

Now, I put all of that in the public domain to say this. When I found this two weeks, ago, I was candidly shocked that no other Mississippi media outlet picked this up (#not). But because we at Y’allPolitics were busy with other things, I just wanted to see if any of our mainstream media members would pick up on this. This was, after all, featured in Forbes. Just on the off chance they didn’t see it, I posted the decision and tweeted it to them just to make absolutely sure they saw it.

Predictably, not a word has been written nor a column inch consumed on the matter in Mississippi newspapers. Not one. It did not even get a blurb. For anyone else, this would be above the fold headlines for days on end.

I can say the following without fear of contradiction – if the underqualified spouse of a staffer of Phil Bryant or Stacey Pickering or Tate Reeves or Delbert Hosemann received a contract to do “ridiculous” work because a contractor felt compelled to do so as the only way to get work (yielding millions of tax payer dollars) thereby potentially serving as a backdoor method to enrich staffers in offices doling out the work, you can bet that news presses in the state would clog for all of the ink they’d spill on the subject. There would be news helicopters hovering overhead with news people dangling from rappelling ropes as they literally fought each other for the story. It’s unclear whether the mainstream media is scared of Hood, doesn’t understand the issue, has just accepted this sort of nonsense or simply doesn’t care, but whatever the case, it appears pretty clear that some agenda is in place.

The fact that Martin got work indirectly (through another law firm) as a result of the AG’s office farming out work really isn’t the issue here. That, in fact, is probably technically legal (though it stinks to high heaven and EVERYONE involved ought to have the home training to know better). According to the decision, she was essentially tasked with makework after the settlement had essentially been brokered. But the optics of having hundreds of thousands of dollars of taxpayer dollars paid to the spouse of a then-agency employee that was, according to the people doling out the work was neither technically proficient in the matter nor added value (according to the complaint), brings up serious ethical and legal questions. Fortunately for all of us, the head of the State Ethics Commission is, in fact, the brother of Jim Hood, Tom Hood, so I’m sure that he will get to the bottom of this in short order. Could this be construed as a backdoor payment method for a staffer to “get their dollars up”? At the very least, as we’ve said on other occasions, the optics look horrible, and everyone ought to have known better.

We’ll see if anyone in the major media rises to the challenge to take this to the next level. I will candidly be betting against it.

Oh yeah. And PERS has been real quiet about this, too.

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Magnolia Tribune

This article was produced by Y'all Politics staff.