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Wednesday, October 31, 2012

Sex Addiction And Big Bucks Are At The Heart Of a Juicy Divorce Story In The Deep South

Glen and Danielle Rollins

Perhaps the juiciest divorce case in the country is unfolding in Atlanta, and it involves one of the wealthiest families in the South--or any other region. Best we can tell, the case presents no major legal issues, but it does involve allegations of rampant misconduct against a husband who apparently suffers from a sex addiction. And, by golly, that's enough to get our attention, especially since we've written dozens of posts about the family involved.

We're talking about the divorce of Danielle Rollins--socialite, writer, and multimedia personality--from Glen Rollins, former president of Orkin Pest Control.

If those names sound familiar, it's because they are related to Ted Rollins, a central figure in the monstrous courtroom cheat job styled Rollins v. Rollins here in Alabama. In terms of legal significance, the ongoing Atlanta case almost certainly pales in comparison to the case that unfolded in my neck of the woods, Shelby County, Alabama. Danielle Rollins probably has competent attorneys and a semi-ethical judge, so she isn't likely to get screwed over by the Rollins family machine. Sherry Carroll Rollins, on the other hand, had spineless attorneys (MaryLee Abele, Conrad Fowler, etc.) and a wildly corrupt judge (D. Al Crowson), so she and her daughters took a legal thrashing.

So why is the story of Danielle v. Glen Rollins capturing public attention, including a recent item at The Daily titled "Getting rid of a pest: Wife of Orkin heir in contentious divorce with alleged sex addict hubby"? The answer probably lies in the last three words of the headline. Danielle Rollins alleges that her husband suffers from a sex addiction--and angles in divorce cases don't get much more titillating than that.

According to published reports, Glen Rollins has sought treatment, apparently without much success, at the same Mississippi sex-addiction clinic that treated golf star Tiger Woods. That means the Rollins story surely is headed for the front pages of The Globe any day now. Here's how The Daily dives into the story:

High society in Atlanta is bracing for the high-profile divorce of Glen Rollins, an Orkin Pest Control heir — whose estranged wife claims he is an abusive sex addict. 
Danielle Rollins, who has three children with Glen, declined to talk to The Daily, but she told a Georgia judge in a court hearing last May that their $7 million house was nearly foreclosed on, and she has been unable to pay her bills, which average $286,000 a month. 
“I was incredibly betrayed by Glen with the infidelity. The financial misleadings were even more devastating to me,” Danielle testified. “We had three mortgages on the house that I didn’t know we had.” 
The case is still in the discovery phase and no trial date has been set.

You need a scorecard to keep up with all of the Rollinses, so we will lay it out for you this way:

* Brothers R. Randall and Gary Rollins are the chairman and CEO/president, respectively, of Rollins Inc., the umbrella company of Orkin and other profitable enterprises. Published reports indicate each of the Rollins brothers has a net worth of more than $1 billion;

* Glen Rollins is Gary Rollins' son, and Glen was the head of Orkin until he was fired in September 2010 after he and his siblings filed a lawsuit against their father, their uncle, and various business associates, alleging mismanagement of trust accounts.

Boxwood mansion
* Danielle Rollins married Glen Rollins in 1995, and they have three children. Their mansion, called Boxwood, has hosted some of Atlanta's finest parties. The Peak of Chic blog provides an inside glimpse of one lavish Boxwood event from 2010. Danielle Rollins is the author of Soiree: Entertaining With Style, a contributing editor at Veranda magazine, and a major presence in multimedia circles.

* Ted Rollins is a cousin to Randall and Gary Rollins. In fact, Ted and Randall have done business together, starting a real-estate development company called St. James Capital that mysteriously disappeared when the Rollins v. Rollins divorce case unlawfully shifted from Greenville, South Carolina, (where the family lived, where Sherry Rollins filed for divorce, where the case was litigated for three years) to Shelby County, Alabama.

What might be coming next in the Danielle and Glen Rollins divorce case? It could involve some fascinating twists and turns. The Daily sets the stage:

[Glen] Rollins, who was the CEO of Orkin until he and his siblings sued their father in 2010 to get more money out of the family trusts, earned $19.9 million in 2011, and $13.7 million the year before. But he has been treated at two different sex-addiction facilities, including Pine Grove in Hattiesburg, Mississippi, where Tiger Woods was a patient. 
When the divorce finally does go to trial, Danielle is set to testify she first learned of Glen’s sexual addiction when she was pregnant with their youngest son, who is 10 now. “At the time she blamed herself. She thought she had problems with intimacy,” a friend said. 
Glen’s lawyer R. Scott Berryman told The Daily, “It’s a private matter. I don’t have anything to say.”

It's hard to beat a good story about sex addiction. But for real ugliness in the courtroom, it's almost impossible to top the Rollins v. Rollins case here in Alabama. After all, Birmingham resident Sherry Rollins and her daughters, Sarah and Emma, wound up on food stamps because of Ted Rollins' deceitful actions in court.

I doubt that Danielle Rollins and her children will be going hungry anytime soon.

Mysterious Fire Was The Spark That Helped Send An Alabama Woman To Jail In a Divorce Case

Bonnie Cahalane (Knox) Wyatt

An Alabama woman has been in jail for more than three months from the fallout of a divorce case, but sources tell Legal Schnauzer that her financial woes date to a fire that destroyed her home about six years ago. That means Bonnie Cahalane (Knox) Wyatt's problems might stem from an earlier divorce case, not the one for which she currently is jailed.

From 2002 to 2005, Ms. Wyatt went through a protracted divorce from Bobby Knox, the president of Shelby Concrete Inc. The company's corporate office is in Montgomery, with locations at Clanton, Alabaster, and several other sites around the state. A document from that action shows that Bobby Knox threatened to burn the marital home to the ground if his wife tried to get it in the divorce.

That document was filed in December 2002, and roughly four years later, the former Mrs. Bobby Knox did, in fact, see her house burn to the ground. She was in the process of recovering from that when she married Harold Wyatt in late 2008. The couple separated roughly 10 months later, and Harold Wyatt claims by then he had spent a substantial sum of money in an effort to get the house back into shape.

A hand-written settlement agreement, which does not appear to be final or official and was written by opposing counsel, shows that Ms. Wyatt was to pay Mr. Wyatt $165,000 for his equity share in the home. When she failed to pay that amount, Chilton County District Judge Sibley Reynolds ordered her arrest for contempt of court. She has been in the Chilton County Jail since July 26, and it appears her incarceration might last longer than did her marriage to Harold Wyatt.

Bonnie Wyatt's incarceration, at best, is highly questionable. At worst, it is bogus, utterly without basis in fact or law. One of several lawyers to represent Ms. Wyatt stated the following in a Motion to Amend the final order of divorce:

Lastly, there was no meeting of the minds as evidenced by any document adopted and incorporated into the Decree by the Court. There is also no evidence of testimony provided by either party.

Based on our review of the case file, both of those statements are true. The Final Order of Divorce stands on its own; it does not include a settlement agreement. And we see no sign that the decree was based on testimony of any kind.

So why is Bonnie Wyatt in jail? On the surface, Harold Wyatt looks like the responsible party. But we suspect Ms. Wyatt's previous husband, Bobby Knox, deserves serious scrutiny.

A host of court documents from multiple cases, in both state and federal court, suggest Bobby Knox is a wealthy guy with a habit of thuggish behavior toward his employees in general and women in particular. We will look at a number of cases in upcoming posts, but for now, let's focus on a divorce case styled Bonnie S. Knox v. Bobby L. Knox.

Did Bobby Knox act with good faith in this matter? Well, consider this: Ms. Knox filed for divorce in December 2002, and the case was jointly dismissed in September 2003, with husband and wife apparently deciding to reconcile.

What happened next? Roughly two months later, Bobby Knox sued Bonnie Knox for divorce. Did he plan this all along, once he got her to agree to dismiss her case? It sure looks that way.

We should note that Ms. Knox's lawyer in the case was William E. Swatek, of Pelham. That's the same Bill Swatek who has caused so many legal headaches for Mrs. Schnauzer and me--the same Bill Swatek who has a 30-year history of disciplinary issues with the Alabama State Bar, including a suspension of his license for acts of "fraud, dishonesty, misrepresentation, and deceit." Swatek also has a habit of screwing over his female clients in divorce cases.

Did Bill Swatek fail to take action that would have protected his client from having the tables turned on her? Our guess is that the answer probably is yes.

What kind of a guy is Bobby Knox? Consider this from a Verified Petition for Ex Parte Order that Bonnie Knox filed on December 4, 2002:

The Defendant (Mr. Knox) has further threatened the Plaintiff (Ms. Knox) stating that if she got the home of the parties, asked for the home of the parties, or was awarded the home of the parties on a temporary basis or permanently, that he would just burn the house to the ground. This comment was made in front of the parties' seven year old child, Bobby Jr., and it upset him so much that he pointed out to his father that if he burned the house down, that he (Bobby Jr.) would burn up in the house too.

Roughly four years later, after the divorce had been finalized, Ms. Knox's house did, in fact, burn down. Is that a coincidence--or did someone make it happen? And what role did the fire play in causing Bonnie Cahalane (Knox) Wyatt to become a prisoner in the Chilton County Jail?

(To be continued)

Tuesday, October 30, 2012

Robert Vance Jr. Does Not Deserve Democrats' Support for Alabama Supreme Court Chief Justice

Robert Vance Jr.

Robert Vance Jr. is Democrats' last-minute choice to challenge Republican Roy Moore in next week's election for chief justice of the Alabama Supreme Court. But one sentence in one ruling shows that Vance is a dishonest judge who does not deserve the support of Democrats--at least those who take justice issues seriously.

In fact, Vance's proven ethical shortcomings should disqualify him from the position he currently holds--circuit judge in Jefferson County. He certainly has no business serving as the top administrative official in Alabama's entire justice system.

Vance Jr. has a noble reputation because he is the son of the late Robert Vance Sr., a genuine civil-rights hero who was killed by a mail-bomb blast in 1989. But Democrats should not confuse this Vance with the one who proceeded him; they are not remotely alike.

How do I know? I filed a legal-malpractice lawsuit against Jesse P. Evans III and Michael B. Odom, the first two lawyers I hired to represent me in the bogus case filed by a criminally inclined neighbor named Mike McGarity. I could write a law-review article on the numerous ways that Evans and Odom cheated me--and how Vance Jr. unlawfully let them off the hook, proving that his No. 1 goal is to protect the interests of legal elites at all costs. But all we need to do is focus on one sentence from Vance's order granting the defendant's Motion to Dismiss.

We focused on the order in a recent post titled "Robert Vance Jr. Is Not Fit to Serve on the Alabama Supreme Court, And Here Is Why." My feelings about Vance are so strong that I have vowed to vote for Roy Moore, even though his tendency to mix religion and public service makes me extremely uncomfortable. I believe there is at least a chance that Moore will follow the rule of law and stand up for the rights of regular Alabamians against legal and corporate interests. I see no chance that Vance Jr. will take such an approach--and I come by that conviction through first-hand experience.

What about that one sentence from an order that proves Vance Jr. is crooked? Here is how it reads:

For the reasons stated in defendants' motions, the plaintiff's complaint, as amended, fails to state a cause of action for which relief may be granted.

What is wrong with that statement? We can find the first clue in my response to the defendants' Motion to Dismiss. I lay out the standard for review governing such a motion--often called a Rule 12(b)(6) motion--and you can read it on pages 1 and 2 of my opposition at the end of this post. (Vance's order denying my Motion to Amend also can be read at the end of this post; it pretty much regurgitates what he said in his original order.)

We already have quoted University of Alabama law professor Jerome Hoffman saying that "Rule 12(b)(6) motions will almost never be granted by trial courts. And those that are will almost always be reversed by appellate courts."

Law does not get much more simple than the governing standard for a Rule 12(b)(6) motion. Quoting from a case styled Nance v. Matthews, 622 So. 2d 297 (Ala, 1993), I pretty much tell you all you need to know in my opposition:

The appropriate standard of review under Rule 12(b)(6) is whether, when the allegations of the complaint are viewed most strongly in the pleader's favor, it appears that the pleader could prove any set of circumstances that would entitle [him] to relief.

This tells us two key points about review of a Motion to Dismiss:

(1) The review focuses on "the allegations of the complaint";

(2) Those allegations must be viewed most strongly "in the pleader's favor." The pleader is the plaintiff, and in this case, that was me.

A 2011 case Alabama Supreme Court case styled Scannelly v. Toxey lays it out in even more stark terms:

On a motion under Rule 12(b)(6), the [trial] court's inquiry essentially is limited to the content of the complaint.

Ah, now we've caught Robert Vance Jr. red-handed. Recall that he dismissed my case "for reasons stated in the defendants' motions." But as clearly stated in Scannelly, Alabama law limits the inquiry on a 12(b)(6) motion to the content of the complaint. The contents of the Motion to Dismiss have almost nothing to do with it.

So Vance acted in a crooked fashion in both key components of his review: (1) He unlawfully went beyond the allegations in the complaint; and (2) He unlawfully failed to view the allegations most strongly in the pleader's favor.

We know from UA professor Hoffman that defendants can cite only about three legitimate grounds for a 12(b)(6) motion:

* The complaint fails to cite a recognized cause of action. (That didn't fly here; legal malpractice clearly is a recognized cause of action.)

* On the complaint's face, it falls outside the relevant statute of limitations. (That didn't fly either, and Evans/Odom didn't even try to argue the point.)

* On the complaint's face, the defendants are protected from suit by some form of immunity. (Again, that didn't fly, and Evans/Odom didn't even try to argue the point.)

What is the No. 1 characteristic that voters of all political stripes should remember about Robert Vance Jr. on election day next week? His inquiry on my case involved the simplest law imaginable; his failure to get it right is the equivalent of a math teacher who can't count to three.

Robert Vance Jr. earned his undergraduate degree at Princeton and his law degree at Virginia, so he isn't stupid. But his actions indicate that he is an elitist snob. He thinks people like you and me are so stupid that we won't realize it when he jams us up the rear end in open court.

If you are a Democrat who treasures the Civil Rights Act, the Voting Rights Act, equal protection, due process, the rule of law, and other fundamental standards of justice . . . please take this from a liberal who has seen the real Robert Vance Jr. in action. He does not share your values, and he does not deserve your vote.

  Evans Opp. to Dismiss
Evans Vance2

Wall Street Analyst Exclaims, "Oh, My God!" When Told of Ugliness In The Past Of CEO Ted Rollins

Paula Poskon

A Wall Street analyst gasped and said, "Oh, My God!" when she was told that Campus Crest Communities CEO Ted Rollins had been investigated for possible child sexual abuse of his stepson.

Paula Poskon, of Robert W. Baird and Co., expressed concern when she learned that public records show Rollins was convicted for an assault on his stepson in 1995 in Franklin County, North Carolina. But she audibly gasped when she learned that Rollins had been investigated in 1993 for child sexual abuse involving the same stepson--a case that is reminiscent of the Jerry Sandusky scandal at Penn State, which began in roughly the same time period. (See video at the end of this post.)

"I had not heard that," Poskon said, with a tone of alarm. Her company was one of about six underwriters on a $380-million Wall Street IPO that Campus Crest Communities completed in October 2010.

Poskon describes underwriters as "the matchmakers of the financial world," pairing up investors with companies in need of capital. She also noted that investors' perceptions about a CEO--regarding both his management ability and his personal integrity--are critical. "Perception is reality for most investors," Poskon said.

If Ted Rollins withheld information about his personal history, it could present serious legal issues for his executive team. And Paula Poskon made it clear that she was unaware Rollins has a criminal record involving child abuse--and was the subject of another investigation where a child possibly was victimized.

Poskons's reaction? "Oh, my God, I was not aware of any of that. . . . It certainly sounds like I need to do a lot more digging."

The Ted Rollins story is dripping with irony. As CEO of Campus Crest Communities, Rollins leads a firm that builds, manages, and markets student housing to young people and their parents. But records show that in Rollins' personal life, young people have a way of winding up abused.

"That's what makes this so concerning," Poskon said.

Our conversation with Paula Poskon went on to take some curious twists and turns. More on that in upcoming posts.



Monday, October 29, 2012

Alabama Lawyer Jennifer Paige Clark Did Not Commit Alleged Violation That Led To Her Death

Jennifer Paige Clark

A four-year investigation of Alabama attorney Jennifer Paige Clark started because of an alleged rules violation that records show she did not commit. That calls the Alabama State Bar's motivations into question--and those questions are especially serious because Clark died on May 26, 2012, nine days after her license had been suspended on unfounded charges.

Our research shows that Clark did not violate the rule in question, and there is considerable debate in the legal community about whether the rule is appropriate. Among those taking a dim view of the rule is  the American Bar Association.

The circumstances surrounding Jennifer Paige Clark's death--and the Alabama State Bar's role in it--become even more alarming when you consider the following:

* The state bar initiated an investigation on its own; it received no complaint against Clark from the general public, or her fellow bar members, at the outset. Bar rules allow it to start an investigation on its own. But I know from personal experience that the Alabama bar routinely takes no action on citizen complaints that involve clear-cut rules violations by member lawyers. For the bar to act on its own, with no complaint filed against Ms. Clark, is wildly out of character.

* The bar only knew of Clark's alleged violation because someone copied them on a letter she had written to two lawyers in Georgia. Who copied the bar on the letter? Jennifer Clark herself. What does that say about her mindset, given that intent usually is a factor in any investigation of alleged wrongdoing. Would Jennifer Paige Clark have copied the Alabama State Bar on a letter if she thought it was violating the rules of professional conduct? Of course not. Clark clearly did not think she was violating any rule, and our investigation shows she was correct about that.

* A letter from one bar official indicates Clark was being treated as guilty until proven innocent. Clark repeatedly asked the bar for an explanation of the allegations against her. I've found nothing in the record that shows she ever received such an explanation.

Clark was subjected to a disciplinary hearing on May 16, based on allegations that she had violated Rule 3.10 of the Alabama Rules of Professional Conduct. The only apparent evidence was a letter that Clark had sent to the Alabama State Bar herself. The rule is titled "Threatening Prosecution," and here is what it says:

A lawyer shall not present, participate in presenting, or threaten to present criminal charges solely to obtain an advantage in a civil matter.

Rule 3.10 seems short and clear, but it is quite controversial in the legal field. Why is that? We will explain in an upcoming post, as part of our ongoing investigation into Jennifer Paige Clark's death. We also will provide proof that Ms. Clark did not violate the rule.

That leaves us with this troubling question: What was the Alabama State Bar's real agenda in going after Jennifer Paige Clark? Did bar officials essentially harass one of their members to death?


(To be continued)

Alabama "Anti-Gambling" Activist Gets Caught In A Lie About His Use of Funds From GOP Group

A. Eric Johnston

One of Alabama's most vocal anti-gambling activists got caught in a lie while trying to explain his use of funds from a national Republican organization.

Birmingham-based lawyer A. Eric Johnston directs Citizens for a Better Alabama (CBA), which helped lead the fight against the Sweet Home Alabama bill that would have legalized electronic bingo at several sites around the state.

Johnston recently was faced with trying to explain how his anti-gambling group came to receive $100,000 in gambling funds from the Poarch Band of Creek Indians, filtered through the Republican State Leadership Committee (RSLC). Rob Riley, the son of former Governor Bob Riley, helped land the money for CBA, and both he and Johnston claimed they had no idea the RSLC took funds from gambling sources.

Those claims ring hollow when you realize that public records show the RSLC has taken gambling money for roughly 10 years, dating at least to a 2003 donation from the Mississippi Band of Choctaw Indians.

Are Riley and Johnston bald-faced liars? Well, the evidence is clear that Johnston told at least one whopper--and that calls into question the truthfulness of all the statements he, and Rob Riley, have made on the subject. We can thank Bob Martin, editor and publisher of the Montgomery Independent, for having the keen eyes that caught Johnston in a common conservative activity--lying.

What exactly did Johnston say, and how do we know it is false. Let's allow Martin to explain, from his column last week in the Independent:

Johnston has said that the money he received went to “support advertising and lobbying activities against the Sweet Home Alabama Bill, which would have allowed voters to decide whether or not to permit electronic bingo at several locations in Alabama." 
That is an interesting comment because by the time Riley and Johnson received the contribution on June 10, 2010, the State Legislature had adjourned and the Sweet Home Alabama gambling legislation was dead. The final day of the legislative session was April 18, 2010, almost two months before the June 10 contribution.

Don't you just love it when a holier-than-thou conservative--one who wears morality on his sleeve--gets caught in an immoral act? Bob Martin nailed A. Eric Johnston with a swift uppercut of truth in this case. And we suspect Johnston still is seeing stars.

We also suspect this is further evidence that Johnston, and his benefactor Rob Riley, are lying out their fannies when they claim to have not known that the RSLC took gambling funds.

It also raises this question: If the $100,000 could not have been used for advertising and lobbying against the Sweet Home Alabama bill, where did it go? Did it go straight into the pockets of A. Eric Johnston and Rob Riley? Was it used for something else?

The full Bob Martin article from last week is not yet available on the Web, but you can check it out here:

Big chunks of Poarch Creek wampum flowed to Rileys, Strange and Bryan Taylor 
Last month I reported that the Poarch Creek Indian Tribe gave a $100,000 campaign contribution in 2010 to then State Attorney General Candidate Luther Strange by laundering the funds through three Republican entities before finally reaching Strange, who was subsequently elected as the state’s top prosecutor. 
As it turns out, that contribution was less than a third of the Poarch Creek gifts to the GOP in the state that year. Another $100,000 was sent to the Republican State Leadership Committee (RSLC) via Birmingham attorney Rob Riley and destined for a group fighting the expansion of gambling in Alabama. That organization, Citizens for a better Alabama, is run by Birmingham lawyer Eric Johnston. 
The contribution, sent on June 10, 2010, was not reported on RSLC filings with the IRS until the following August. It was then reported as a donation made on July 15, 2010. Johnston’s organization was not required to report expenditures from the $100,000. Had the $100,000 been placed in Johnston’s organization’s regular PAC, reporting of the distributions from that PAC would have been required. So where did that cash go? We know it went from Poarch Creeks to the RSLC and through Rob Riley to Eric Johnston and his Citizens for a Better Alabama group, which he controls. From there, who knows who shared in the take? 
However, campaign reports clearly show that the RSLC did receive $350,000 from the Poarch Band in 2010 and contributed in excess of $800,000 to the State Party in that same year. 
It has also been reported that the Poarch Tribe made a $3,500 contribution to the campaign of State Sen. Bryan Taylor of Prattville. So that is $203,500 which can be directly traced but that leaves a big chunk of cash remaining somewhere in the chain or distributed to other candidates or entities. 
Johnston has said that the money he received went to “support advertising and lobbying activities against the Sweet Home Alabama Bill, which would have allowed voters to decide whether or not to permit electronic bingo at several locations in Alabama." 
That is an interesting comment because by the time Riley and Johnston received the contribution on June 10, 2010, the State Legislature had adjourned and the Sweet Home Alabama gambling legislation was dead. The final day of the legislative session was April 18, 2010, almost two months before the June 10 contribution. 
Johnston has fought gambling in Alabama for a long time . . . some say by using Mississippi gambling money that was laundered through Jack Abramoff. His group, Citizens Against a Legalized Lottery (CALL), morphed into Citizens for a Better Alabama (CBA) in 2001 and played a leading role in fighting the Sweet Home Alabama plan that would have brought legalized, regulated gaming to Alabama. Johnston, a Birmingham lawyer made a failed run for the Alabama Supreme Court in 2010. 
Jack Abramoff confirmed in his recent book what many have suspected for some time: that Johnston's group is not really based on a moral objection to gambling; but rather it’s designed to protect Mississippi gaming interests. 
Johnston also served as treasurer of CALL, a group that fought Don Siegelman’s 1999 lottery campaign. Campaign finance records for the group show it received $300,000 from Americans for Tax Reform (ATR), headed by Grover Norquist, in October of 1999. 
About $300,000 was routed through ATR by the Mississippi Band of Choctaw Indians “because the Tribe wanted to block gambling competition in Alabama,” according to a 2006 Senate report concerning kickbacks lobbyist Jack Abramoff’s received from Indian lobbying money. 
Johnston, quoted in The Montgomery Advertiser last week, called Norquist a “deceptive person” and insisted CALL and Citizens for a Better Alabama were separate entities. “CALL,” he said, “was a political action committee, while Citizens for a Better Alabama was a lobbying organization. 
If all this seems confusing, I can boil it down to two words: political graft.

Friday, October 26, 2012

News Is Spreading About Mitt Romney And Other Rich Guys Who Lie Under Oath In Divorce Cases

Gloria Allred and Maureen Stemberg

The nation seems to be gripped with news about the possibility that Republican presidential candidate Mitt Romney once lied under oath to help a business partner in a divorce case. Our post on the subject--which also showed that corporate titans Ted and Randall Rollins stooped to similar criminal activity in an Alabama divorce case--is gathering momentum.

Meanwhile, a Massachusetts judge yesterday unsealed testimony in the Stemberg divorce case, and early reports indicate that Romney, at the very least, provided misleading testimony to protect his partner and Staples founder Thomas Stemberg. The goal apparently was to keep Maureen Sullivan Stemberg from receiving an equitable share of marital assets, and celebrity lawyer Gloria Allred now is fighting back on Ms. Stemberg's behalf--and it could prove to be an "October Surprise" for the GOP.

Did Mitt Romney actually commit perjury? It seems too early to say, but the public certainly appears to have grounds to question the candidate's truthfulness, even when he's under oath in a court of law.

Our post was titled "Romney Might Prove That Ted And Randall Rollins Aren't The Only Rich Guys To Lie Under Oath." The post is gaining traction on the Web, and that indicates the issue resonates with a public that perhaps has grown weary of elites who seem to think the rules don't apply to them.

Business Insider picked up on our post yesterday, with a piece by reporter Abby Rogers titled "Mitt Romney Isn't The Only Rich Guy Accused Of Lying In A Divorce."

Crooks and Liars, one of the most highly read progressive Web sites in the country, picked up on the story this morning. My piece was included in "Mike's Blog Roundup," a daily compendium of top posts from around the country.

If Romney did pull a fast one to help his business buddy save millions in divorce-related expenses, we showed that he is not alone. We cited a case styled Rollins v. Rollins that involved skulduggery that might dwarf anything present in the Stemberg case. At least Maureen Stemberg got something from her marital assets; Birmingham resident Sherry Carroll Rollins got pretty much zip.

Ted Rollins, CEO of Campus Crest Communities, stated under oath that his total income consisted of roughly $50,000 a year he made from a mortgage company in Brentwood, Tennessee--even though he was owner or partner in at least two companies and owned multiple private jets.

Randall Rollins, who is Ted's cousin, might have pulled an even bigger scam. As chairman of Atlanta-based Rollins Inc. and Orkin Pest Control, Randall Rollins' net worth is estimated at more than $1 billion. He and Ted Rollins engaged in a joint development company called St. James Capital, which was started during the time Ted and Sherry Carroll Rollins were married. Under the law, the company was a marital asset that should have been equitably divided in the divorce. But Sherry Rollins got nothing from it because Randall Rollins presented documents showing Ted Rollins had sold his interest in the company for about $85,000. This transaction supposedly took place even though documents show Ted Rollins was half owner in the company, and it started with $34 million in capital. Still more documents indicate the company had assets of at least $245 million, including 28 properties across the United States and Canada.

Does it make sense that Ted Rollins would sell his interest in such an enterprise for $85,000? No, it does not. Does it look like Randall Rollins supplied bogus documents and made false statements under oath in order to help his cousin escape a serious divorce judgment? Yes, it does.

Where is the Romney/Stemberg story headed? It's hard to say, but perhaps the best update we have so far comes from AlterNet reporter Laura Gottesdiener in a piece titled "Court Unseals Potentially Devastating Testimony--Romney Said Stocks Sold at 1/10th of Eventual Value Was 'Good Price': Romney does appear to have covered for his friend. From the AlterNet article:

The Boston Globe reports: "Mitt Romney testified under oath in 1991 that the ex-wife of Staples founder Tom Stemberg got a fair deal in the couple’s 1988 divorce, even though the company shares Maureen Sullivan Stemberg received were valued at a tenth of Staples’ stock price on the day of its initial public offering only a year later. At the time the Stembergs split, Romney suggested, there was little indication that Staples’ value would soon skyrocket. Romney’s testimony in a post-divorce lawsuit brought in 1990 by Sullivan Stemberg was unsealed on Thursday in Norfolk Probate and Family Court at the Globe’s request. Sullivan Stemberg sued unsuccessfully to amend the couple’s financial agreement after Staples went public in 1989 and closed its first day of trading at $22.50 per share, 10 times the value she had received." 
According to the Globe, Sullivan Stemberg sold 175,000 shares of Staples stock at $2.25 per share, and sold 80,000 shares at $2.48 a few months later. “In my opinion, that’s a good price to sell the securities at,” Romney testified. "But on April 28, 1989, barely a year after Sullivan Stemberg sold more than half of her shares on the premise that they were worth less than $2.50 apiece, the company made its initial public offering at $19 per share and ended its first day at $22.50," the Globe reports.

The bottom line? Mitt Romney said Maureen Stemberg got a good deal when she cashed in shares for 1/10th the value they had one year later. And Randall Rollins seemingly said his cousin, Ted Rollins, made a reasonable move by selling his share in a company for $85,000, even though it had at least $245 million in assets.

Message to the 99 Percent: Members of the 1 Percent think we are stupid, folks. Mitt Romney thinks we are stupid; Randall Rollins thinks we are stupid. Their actions in high-dollar divorce cases provides all the proof we need.

Legal Schnauzer Reaches Out And Touches Someone Who Is Close To The Oval Office

Someone at the White House is a
regular reader of Legal Schnauzer

Every now and then an acquaintance will ask me, "Roger, what kind of influence does your blog have? Do people really pay attention to it, beyond maybe a few folks here in Alabama?"

If that's the kind of queries I get from people who are more or less friends, you can only imagine the stuff I hear from enemies. That usually comes in the form of anonymous comments that go something like this: "Schnauzer, nobody reads your pathetic excuse for a blog, and nobody cares what you think. You're just a loser--in court and in life--so why don't you get a job?"

Trying to quantify the influence or impact of a blog is an inexact science. The Web features all sorts of "analytics" services that provide data about number of visitors, page views, and such. I've written before about that kind of data and what it says about Legal Schnauzer. But that still doesn't go to impact or influence or the kinds of people you are reaching. The biggest question perhaps is this: Who is your audience?

I can't answer that question with precision, but I do know our little blog reaches some influential places, including the White House--the one at 1600 Pennsylvania Avenue in Washington, D.C. And that's not all; we have visitors almost every day from dozens of law firms, government agencies (uscourts.gov, doj.gov, etc.), universities and other institutions, mainstream media outlets, the U.S. Senate, U.S. House, and so on.

But my favorite has to be when we get a visit from "Executive Office of the President," with the location of "Washington, D.C." And I would say we've had 15 to 20 visits from them in the time Barack Obama has been in office--and they seem to be drawn by all sorts of topics.

Our most recent visit came earlier this week, and it was the result of a keyword search for "karen johnson lobbyist rove." We try not to toot our own horn around here too much. But when a little braggadocio is called for, I like to pull out my "Executive Office of the President" file. Here is the latest entry. I get a kick out of showing it off:

Visitor Analysis & System Spec 
Search Referral: www.google.com — karen johnson lobbyist rove #2 
Host Name: Browser: Chrome 22.0 
IP Address: 198.137.240.197 — [Label IP Address] 
Operating System: Win7 
Location: Washington, District Of Columbia, United States
          Resolution: 1440 x 900

          Returning Visits: 0

          Javascript: Enabled

          Visit Length: Not Applicable

          ISP: Executive Office Of The President

          Navigation Path

          Date Time WebPage

          www.google.com — karen johnson lobbyist rove #2

          22 Oct - 08:24:21 - legalschnauzer.blogspot.com/2012/07/karl-rove-and-karen-    johnson-political.html

Thursday, October 25, 2012

Romney Might Prove That Ted And Randall Rollins Aren't The Only Rich Guys Who Lie Under Oath

Gloria Allred and Maureen Stemberg

Mitt Romney might have blown his chance for the presidency by lying under oath in a divorce case some 20 years ago. The ex wife of a former Romney business partner claims that the GOP candidate testified falsely about the value of a company and cost her millions of dollars in the process. Celebrity lawyer Gloria Allred represents Maureen Sullivan Stemberg and is expected to push at a hearing today for release of Romney's testimony from 1991. Some in the press have dubbed the story "Gloria Allred's October Surprise," saying Romney's candidacy could sink if it is shown he committed perjury.

Such an outcome would be ironic because we have been reporting for months about rich men who made false statements under oath in a divorce case, cheating an ex wife and two daughters out of millions in family support. Our story centers around an Alabama divorce case styled Rollins v. Rollins, which is the worst courtroom cheat job we've encountered in the civil arena. It was so grotesque that Birmingham resident Sherry Carroll Rollins and her daughters, Sarah and Emma Rollins, actually wound up on food stamps--even though ex-husband and father Ted Rollins owns multiple private planes, belongs to one of the nation's wealthiest families, and is CEO of a company (Campus Crest Communities) that completed a $380-million Wall Street IPO in 2010.

Could Gloria Allred turn her attention to Ted Rollins after she is finished with Mitt Romney and his pal Thomas Stemberg, the founder of Staples? She might want to consider it. Romney has an estimated net worth of about $250 million, while Stemberg is worth about $300 million. Add those two together and you get an impressive number.

But it pales in comparison to the Rollins family. Ted Rollins' company has received close to $450 million in total investor support, so he is doing OK. But his cousin, R. Randall Rollins, truly is in the financial big leagues. Randall Rollins is chairman of Atlanta-based Rollins Inc., the umbrella firm for Orkin Pest Control and other profitable enterprises. Published reports show that Randall Rollins' net worth is well north of $1 billion.

Randall and Ted Rollins were partners in a business called St. James Capital, which by law should have been equitably divided as a marital asset in Ted Rollins' divorce from Sherry Rollins. Instead, Randall and Ted Rollins lied their corporate fannies off, greatly reducing Ted's child-support payments and ensuring that Sherry Rollins would get nothing out of St. James Capital.

Randall Rollins
If Gloria Allred is paying attention, the wrongdoing in Rollins v. Rollins probably swamps whatever might have happened in the Stemburg case. And Randall Rollins probably is a far worse boogeyman--not to mention a much wealthier boogeyman--than Mitt Romney.

That's not to say Maureen Sullivan Stemburg didn't get the shaft. According to a report at the UK Daily Mail, Romney "pulled a Randall Rollins" on his business partner's first wife:

Mitt Romney allegedly provided testimony in the bitter divorce of his friend and staunch advocate, ex-Staples CEO Tom Stemberg, that meant his ex-wife received a poor divorce settlement. 
Sources told TMZ that Romney, whose hedge fund, Bain Capital, was an investor in Staples before it became a household name, testified in the case that the company was worth virtually nothing and that his friend was a 'dreamer'. 
He testified during the hearings in 1988 that the company's stock was 'overvalued' and that the future did not look good. Later he and Stemberg allegedly went to Goldman Sachs to cash in their stock for a massive payout, according to TMZ. 
His bitter ex-wife Maureen Stemberg claims this testimony effected how much she got from the settlement.

Rich people lying to get off easy--or help a friend or family member get off easy--in a divorce case? That might be a shocker to the general public, but it should be no surprise to folks who have followed our Rollins v. Rollins coverage. Let's review:

*  Ted Rollins stated under oath in an Alabama child-support affidavit, called a Form CS-41, that his annual income was roughly $50,000--and it all came from his work with a mortgage company in Brentwood, Tennessee. Public records show that Rollins was a partner/owner at the time in both St. James Capital and Campus Crest Communities. Rollins also was a major player in the Crescent Center, a development in Greenville, South Carolina, that offers 750,000 square feet of manufacturing, distribution, office, and retail space. He derived no income from the Crescent Center? Slightly hard to believe.

* Randall Rollins, during a deposition at his office in Atlanta, provided documents to Sherry Rollins' lawyers that are so absurd they almost produce guffaws. Randall Rollins stated that Ted Rollins had sold his interest in St. James Capital for roughly $85,000, the total of several loans that Randall had made to his cousin. But Sherry Rollins says she saw documents on Ted Rollins' computer that the company was started with $34 million in capital--$17 million from Randall Rollins and $17 million from John Rollins Sr., Ted's father. When the senior Rollins died in 2000, his shares went back into the company and Ted became half owner.

And that's not all. Sherry Rollins said records showed that St. James Capital owned 28 properties throughout the United States and Canada. An expert witness testified at the divorce trial that Ted Rollins, one month earlier, had made $1.4 million off just one of the properties.

Finally, Randall Rollins provided documents that showed St. James Capital had an interest in two particularly valuable properties--an industrial building in Greenville, South Carolina (appraised value, $9.6 million) and a San Francisco RV park that rests on a bluff overlooking the Pacific Ocean (appraised value, $7.8 million).

If St. James Capital had 26 other properties of similar value, that means it had assets of almost $245 million. But we are to believe that Ted Rollins sold his interest in such a company for $85,000? Even a graduate of the Jethro Bodine College of Business would not make that deal.

What will happen in the Stemberg divorce battle? If Mitt Romney is proven to be a perjurer, will it ensure four more years for Barack Obama in the White House? We should know more when a hearing concludes today in Canton, Massachusetts.

Meanwhile, we are putting out an alert for Gloria Allred: If she is able to ruin Mitt Romney's presidential hopes, she needs to turn her attention toward the South. The Rollins boys might not be as famous as the Romney/Stemberg pairing. But they have more money, and evidence is overwhelming that they lied under oath in an ugly divorce case.

Wednesday, October 24, 2012

Campus Crest Attracts Investors But Performs Poorly Because of Inexperience On Its Management Team

Paula Poskon

Campus Crest Communities, which has four student-housing properties here in Alabama, stumbled out of the gate as a publicly traded company because of inexperience in its executive ranks, a Wall Street analyst tells Legal Schnauzer.

Paula Poskon, of Robert W. Baird and Company, expressed confidence that new blood on the management team will help Campus Crest right the ship. But she said the company's emergence as one of the country's three publicly traded student-housing REITs (Real Estate Investment Trust) has not been without growing pains.

We have reported extensively on Campus Crest Communities, mainly because of CEO Ted Rollins' central role in an Alabama divorce case that we have deemed the worst civil cheat job in our experience. Poskon said the investment community generally is aware of, and somewhat concerned about, the nasty nature of Rollins' divorce. But that has not kept Wall Street from supporting his company to the tune of more than $400 million, including a $380-million IPO that was completed in late 2010.

Our conversation with Poskon touched heavily on the ugliness in Ted Rollins' background, and the interview went in some extremely interesting directions when that subject came up. We will provide details in a series of upcoming posts. But first we asked Poskon about Campus Crest's performance as a business entity, its place in the student-housing sector, and Robert W. Baird's role as one of about a half dozen underwriters on the IPO.

Baird is an investment bank, and Poskon is a research analyst covering Campus Crest. "I like to call investment bankers the dating service of the financial world," Poskon said. "They essentially do one of two things. When companies are in a growth mode and need capital . . . [the bankers] go find capital partners. . . . The other thing the bankers do is when companies want to buy and sell divisions or entire companies they go to the M and A departments, mergers and acquisitions. So I think of the bankers as matchmakers." (See first video below.)

Campus Crest joins two other publicly traded REITs that specialize in student housing. American Campus Communites, based in Austin, Texas, is the "best in class" player in the market, followed by Memphis-based Education Realty Trust. Campus Crest is the new presence in a market that has been in the public sector for only about a decade, with many private companies jockeying for position.

How has Campus Crest performed since going public? Well, not so great. (See second video below.) From Paula Poskon:

They had a very big series of missteps, post-IPO. They were optimistic in their projections, in their forecasting. They closed in October 2010, and their first earnings call was in March 2011--and it was a complete disaster. They missed on every line item . . . and the stock was off 25 percent. It gets back to [Mr. Rollins] not having been a public CEO before, and it's a small company . . . No matter how much advice you get, you are always amazed how consuming the IPO process is. . . . It's grueling, and if don't have lot of excess corporate bandwith on your team . . . it's easy to take your eye off running the company, and I think that's a good part of what happened.

Poskon does see hopeful signs for Campus Crest:

What they learned from that is that they needed more senior-level talent and made some key hires and revamped some processes, learned lessons about what is important to the Street, how to communicate with investors and analysts like myself. . . . I think they are in midst of turning it around. I've spent a lot of time with those guys, been out on the road. I think they are going to turn it around, but there is a lot of investor skepticism in this environment.

How does the ugliness in Ted Rollins' background sit with investors? "I am aware of the unpleasant nature of his divorce," Poskon says. "I would say he is challenged from a personal-reputation perspective. Does that matter? Sure. Perception is reality for most investors."

Poskon said she asked Rollins about his divorce and received an answer that calmed her nerves. "It's not a big concern for me at the moment," she said.

Her tone changed when I shared details that Ted Rollins has not made part of the story he shares with Wall Street.

More on that coming soon.

Note: A condensed version of this article appeared yesterday at Seeking Alpha, one of the country's top Web sites for business news.






Evidence Shows Republicans Are Lying About Their Use Of Indian Gambling Funds In Alabama

Rob Riley

Prominent Alabama Republicans this week said they did not know that funds used to fight non-Indian gaming in the state came from Indian gambling sources. A check of public records shows the Republicans almost certainly were lying.

A $100,000 check that went to an Alabama anti-gambling organization in 2010 originated with the Poarch Band of Creek Indians and was funneled through the Republican State Leadership Committee (RSLC), according to a report in the Montgomery Advertiser. The same article showed that Indian gambling money, via the RSLC, played a prominent role in the Republican takeover of the Alabama Legislature in 2010.

Three key Republicans connected to the story--Homewood attorney Rob Riley, conservative lawyer and activist A. Eric Johnston, and House Speaker Mike Hubbard--said they had no idea the RSLC took money from gambling sources. But a simple check of public documents on the Web shows the GOP trio either was lying or was stunningly out of touch.

The Alabama denials are even more hard to swallow in light of recent reports that two Las Vegas casino moguls--Steve Wynn, of Wynn Resorts, and Sherman Adelson, of the Las Vegas Sands, gave more than $625,000 to the RSLC in recent months. Another report shows that Caesars Entertainment Operating Company, of Las Vegas, has given $165,299 to the RSLC.

We are supposed to believe that Riley, Johnston, and Hubbard were utterly in the dark about RSLC's ties to gaming? It's not a new development, by the way.

Records at campaignmoney.com show that RSLC received $15,000 from the Mississippi Band of Choctaw Indians in 2003, followed by a $25,000 donation in 2005. Jack Abramoff, a former GOP lobbyist and now confessed felon, represented the Choctaws at the time. In 2006, the RSLC received $100,000 from Harrah's Casino Hotels.

We learned about this after a Web search lasting about five minutes. But Riley, Johnston, and Hubbard are not capable of learning about RSLC's ties to gaming that go back roughly 10 years? These guys can't afford Internet service?

The RSLC was founded in 2002, and we know it took gaming money in 2003. That means RSLC's roots have been fertilized with gambling cash pretty much from the outset. But GOP insiders in Alabama don't know that?

The obvious connections do not stop there. Ed Gillespie took over as RSLC chairman in 2010, and he has ties to . . . well, we will let Washington Post columnist E.J. Dionne explain it, from a 2006 column:

When journalists would raise questions about Abramoff's role as a lobbyist-fundraiser just a couple of years ago, Bush's lieutenants played down his influence peddling and proudly claimed Abramoff as one of their own. 
On an Oct. 15, 2003, CNBC broadcast, journalist Alan Murray asked Ed Gillespie, then chairman of the Republican National Committee, about fundraising by "people like Jack Abramoff, who represents Indian tribes here," and another lobbyist whose name I'll leave out because he has not been implicated in any scandals. "Are you going to sit here and tell us that their contributions to your party have nothing to do with their lobbying efforts in Washington?" 
"I know Jack Abramoff," Gillespie replied. He mentioned the other lobbyist and insisted: "They are Republicans; they were Republicans before they were lobbyists. . . . I think they want to see a Republican reelected in the White House in 2004 more than anything."

What do we know for sure?

 * Ed Gillespie, now the chair of the RSLC, was mighty happy to identify himself with Jack Abramoff in 2003;

 * Abramoff's client, the Mississippi Band of Choctaw Indians, gave money to the RSLC in 2003 and 2005;

 * The RSLC now is awash in gambling money from Las Vegas casino magnates.

We know all of this, but Rob Riley, Eric Johnston, and Mike Hubbard were clueless? Excuse me while I attempt to suppress a guffaw.

Tuesday, October 23, 2012

Legal Schanuzer Reporting On Ted Rollins Gets Picked Up At A Premier Site For Business News


Our reporting on Campus Crest Communities and CEO Ted Rollins was picked up today by one of the nation's leading Web sites for business news.

Seeking Alpha included one of our Rollins articles on its list of top articles for today, October 23, 2012. The article is titled "Wall Street Analyst Provides An Insider's View On A Student-Housing REIT."

Based on my interview with Robert W. Baird and Company's Paula Poskon, the article focuses on challenges Campus Crest Communities has faced since completing a $380-million Wall Street IPO in October 2010. Poskon also discusses changes the company has made to address problems that led to a disappointing first quarter as a public company.

The Poskon interview touches on the significant personal baggage Ted Rollins carries, and how that is viewed in the investment community. From the Seeking Alpha article:

Paula Poskon, of Robert W. Baird and Company, expressed confidence that new blood on the management team will help Campus Crest right the ship. But she said the company's emergence as one of the country's three publicly traded student-housing REITs (Real Estate Investment Trust) has not been without growing pains. 
I have reported extensively on Campus Crest Communities, partly because of CEO Ted Rollins' central role in an Alabama divorce case that was handled in an irregular fashion. Poskon said the investment community generally is aware of, and somewhat concerned about, the nasty nature of Rollins' divorce. But that has not kept Wall Street from supporting his company to the tune of more than $400 million, including a $380-million IPO that was completed in late 2010.

I'm a new contributor at Seeking Alpha, so my audience there is in the development stage. I've written several posts at what the site calls an Instablog, and you can check out the Roger Shuler Instablog here. Today's piece was the first full article I've had at Seeking Alpha.

In a way, Seeking Alpha and I are a strange fit. The site focuses heavily on stock-market news and financial analysis; investors are the prime target audience. My forte, of course, is reporting on legal issues, with a strong dose of politics and higher education on the side.

I've come to realize, however, that my reporting is focusing more and more on the business world. That certainly is the case with the Campus Crest Communities and Ted Rollins storyline. It also is the case with our reports on W & H Investments, a Birmingham firm that specializes in oil and gas investments and was embroiled in a lawsuit with the Estate of Sloan Y. Bashinsky Sr. That lawsuit, of course, involved the late CEO of one of Alabama's best-known businesses, Golden Enterprises, the maker of Golden Flake Snack Foods.

While I don't touch much on stock and investment news, I do increasingly report on general business news--and there definitely is a place for that at Seeking Alpha. What kind of presence does the site have in the business world? Nielsen Analytics found that Seeking Alpha has the leading audience of any financial news site--including Bloomberg, CNN Money, and The Wall Street Journal. From the Nielsen findings:

Seeking Alpha has the highest percentage of financial professionals (13.9%) of any major finance website. A significantly higher percentage of SA readers are decision makers or "influencers" for the purchase of financial services (13.8%) than for any other major finance website.(The closest second is WSJ.com with 9.8%.) And SA has the highest proportion of readers who are purchasers of online financial services for their own business, at 9.2%. (The closest second is Barron's with 3.6%.) We think our non-professional readers also influence financial decisions: Nielsen found that over 50% of SA's readers provide frequent advice about financial information. (The closest second is Barron's, with 28.3%.)

An expanded version of the article featuring my interview with Paula Poskon will appear soon at Legal Schnauzer.

Rob Riley Helped Funnel Indian Gambling Money To Organization That Opposed Non-Indian Gaming

Rob Riley

The son of former Governor Bob Riley was the middle man in a transaction that funneled Indian gambling money toward a campaign to fight non-Indian gaming facilities in Alabama, according to a report yesterday in the Montgomery Advertiser.

Rob Riley, a Homewood attorney, received notification from the Republican State Leadership Committee (RSLC) that it had contributed $100,000 to Citizens for a Better Alabama on June 10, 2010. Records show that the RSLC received a $100,000 check that same day from the Poarch Band of Creek Indians.

Records also strongly suggest that Indian gambling money played a major role in the Republican takeover of the Alabama Legislature in 2010, the Advertiser article states.

Finally, the $100,000 check from the Poarch Creeks involves possible tax irregularities. Reports the Advertiser:

The donation was not reported on the RSLC’s filings with the Internal Revenue Service until August 2010, when it was reported as a donation made July 15, 2010, over a month after RSLC records show the check arrived.

Rob Riley acknowledged that he was helping Citizens for a Better Alabama raise money at the time. But he claims he did not know the source of money sent to the RSLC. Reports the Advertiser:

“I have never had any contact with anyone in the Poarch Creek Indians about giving money to anyone at any time. And I certainly didn’t on this occasion,” Rob Riley said. Rob Riley and the director of Citizens for a Better Alabama said all they knew about the money was that it originated with the RSLC.

Citizens for a Better Alabama, directed by Birmingham lawyer A. Eric Johnston, lobbied against legislation that would have let voters decide whether to allow electronic bingo in certain areas of the state. Johnston acknowledged receiving money from the RSLC but insisted he had no idea it came from the Poarch Creeks:

“We were assured, and we were told at the time by Governor Riley that this money did not come from the Indians,” said Eric Johnston, the director of the group. . . . 
Rob Riley said he was not aware that the RSLC received money from gambling interests, including the Poarch Creeks. When asked if that would have affected accepting the contribution, he said the decision about that money would have been made by Johnston. 
“From everything I know from the person that ran Citizens for a Better Alabama, they took great efforts to make sure they were not getting money from gambling interests,” Rob Riley said.

A. Eric Johnston
Johnston's efforts must not have been too exhaustive because his group clearly did receive money from gambling interests in 2010. And this is not the first time it has happened. A similar effort is traced to a group called Citizens Against Legalized Lottery (CALL), which dates to Don Siegelman's term as governor:

Johnston also served as treasurer of CALL, a group that fought Gov. Don Siegelman’s 1999 lottery campaign. Campaign finance records for the group show it received $300,000 from Americans for Tax Reform (ATR), headed by Grover Norquist, in October of 1999. About $300,000 was routed through ATR by the Mississippi Band of Choctaw Indians “because the Tribe wanted to block gambling competition in Alabama,” according to a 2006 Senate report concerning kickbacks lobbyist Jack Abramoff’s received from Indian lobbying money.

As for the GOP takeover of the Alabama Legislature, that also appears to be tainted with Indian gambling money:

RSLC was heavily involved in the state’s 2010 legislative campaign, routing money from entities from Citigroup to the Greater Milwaukee Chamber of Commerce into Alabama’s campaigns. The RSLC accepted $350,000 from the Poarch Band of Creek Indians in 2010, according to 2010 forms the Republican State Leadership Committee filed with the IRS. The RSLC contributed $850,000 to the Alabama Republican Party in 2010, according to those forms filed with the IRS. 
“From the beginning, I told the RSLC in no uncertain terms that we weren’t interested in accepting any money (from gambling interests), and though gaming interests were among their hundreds of contributors, the RSLC staff assured us none of the money that came to Alabama was gambling-related,” said House Speaker Mike Hubbard, who was chairman of the Alabama Republican Party in 2010.

The Montgomery Advertiser has been on the sidelines for the past 10 to 12 years, largely ignoring signs that Alabama's capital city has become a cesspool of corruption. Why did the newspaper suddenly awaken from its slumber? We aren't sure, but it's interesting to see the paper treat this story as if it's breaking news.

We reported almost exactly one year ago on clear signs that the RSLC had funneled Indian gaming money to the GOP effort to take over the Alabama Legislature. We reported earlier this month that the RSLC played a prominent role in funneling Poarch Creek money to the campaign of Alabama Attorney General Luther Strange, who now is threatening potential competitors for the Poarch Creeks in our state.

It's nice to see that the Montgomery Advertiser finally is doing its job, but I have one question for the paper's reporters and editors: Where have you been for the past decade or so?

By the way, this is not the first time the public has heard Alabama Republicans cry, "We had no idea all that money came from gambling sources!" Johnston went so far as to claim his organization had been "hoodwinked" by the RSLC. But no one was whining louder than the former governor's son:

Rob Riley acknowledged that people have alleged that Indian gambling interests have influenced the fight against gambling in Alabama, but said “I am telling you I have never spoken with anybody who was ever involved with any Indian gaming organization and asked them to give any money to any group at any time.”

How long will the public continue to buy that line? We have no idea. But it is becoming increasingly clear that the Republican war on non-Indian gambling in Alabama has been driven by . . . Indian gambling money.

Obama And Romney Prove To Be Massive Hypocrites In Last Night's Foreign-Policy Debate

Mitt Romney and Barack Obama

The two major candidates for the U.S. presidency proved themselves to be world-class hypocrites in last night's debate on foreign policy.

Time and again, President Barack Obama and Republican challenger Mitt Romney said our country needs to promote "civil societies" overseas, especially in hot spots such as the Middle East. Not once did the candidates mention that our own civil society is rotting at its core, mainly from a justice system that creates political prisoners and tolerates grotesque corruption in its courts.

As the campaign winds down toward election day on November 6, I don't recall either candidate making a single substantive statement on matters of justice. The silence comes as former Alabama Governor Don Siegelman sits in a Louisiana federal prison for his conviction on a "crime" that does not exist under the law. It comes as Mississippi attorney Paul Minor sits in a Pensacola federal prison for his conviction in a case where the trial judge gave jury instructions that are almost 180 degrees from what the actual law says. It comes after Georgia Thompson in Wisconsin, Cyril Wecht in Pennsylvania, and more than 100 public officials across the country--almost all Democrats--endured investigations or prosecutions that smelled of political motivations during the George W. Bush years.

And that does not even count the U.S. attorneys, all Republican appointees, who were fired in 2006 for refusing to engage in political prosecutions.

Do either Obama or Romney care about justice issues in the least? Based on Obama's inaction through four years, including the appointment of the moribund Eric Holder as attorney general, the answer for him clearly is no. And Romney has given no indication that he would do anything other than coddle financial and political criminals.

Perhaps worst of all, these candidates are so shallow on justice issues that they don't even recognize the irony in their own words.

Romney said it is important to establish the "rule of law" in the Muslim world. What about in the American world? Has Romney visited a court lately, in either a federal or state jurisdiction? Is he aware that hundreds of Americans are denied due process and equal protection of the law every day? Karl Rove, "the architect" of erosion in our justice system, is raising millions of dollars for Romney's campaign. Can we seriously expect that Romney, as president, would be serious about the rule of law on our shores?

Obama emphasized the importance of promoting opportunities for women in the Muslim world, correctly noting that those countries cannot move forward when half of their populations are held back. But what about women in the United States? Lori Siegelman and Dana Siegelman have seen their husband and father incarcerated on utterly bogus grounds. Paul Minor was not allowed a release from prison to even attend his wife's funeral. These prosecutions came under Bush, but the sickening aftermath has come on Obama's watch. If the president really believes in dignity and respect for women, his justice department has a funny way of showing it.

Perhaps the most ironic moment in last night's debate came about 32 minutes into the give and take. On the subject of America's role in the world, Obama said we can't hope to rebuild other countries if we don't address our weaknesses at home. He talked about the need to rebuild our own economy, strengthen our schools, develop clean energy.

All excellent points, but the president said nothing about the need--no, the necessity--for a justice system that upholds our constitution, that undergirds our belief in right and wrong.

Both presidential candidates seem to think we can move forward at home, and on the international stage, while our justice system rots at our feet.

On that, they are sadly mistaken.

How much damage has injustice heaped upon our society? The answer best can be found in a three-part documentary titled "The Political Prosecutions of Karl Rove," which was produced by Project Save Justice. You can check out all three parts of the 2009 documentary at the following link. The piece ends with a scroll of names, spotlighting public officials who were targeted during the Bush years. You've probably never heard of many of these people or their cases. But watching their names scroll past, and listening to some of their voices and those of their family members, is one of the most sobering moments ever captured on film:


Monday, October 22, 2012

An Executive's Exit And A Daughter's Honesty Could Spell Turbulence For A Wall Street Darling

Earl Howell (left), with other members
of the Campus Crest team

The president and chief operating officer at Campus Crest Communities stepped down last week--a sign of possible instability, or perhaps progress, at the developer of student housing.

But news of a different variety definitely was alarming. It came from the daughter of CEO Ted Rollins. Young people have a way of being honest in a way that is foreign to corporate executives, and Sarah Rollins' heart-felt words about her father's ugly past should cause deep concerns for investors who have poured more than $400 million into the company.

Earl Howell hit the exits on October 20, less than two years into his tenure as a full-time executive at Campus Crest, and Robert Dann will take his spot. Howell had been the No. 3 guy on the company's depth chart, behind only CEO Ted Rollins and Co-Chairman of the Board and Chief Investment Officer Mike Hartnett. Reuters reported on Howell's departure as follows:

Mr. Earl C. Howell is no longer President of Campus Crest Communities Inc., effective October 20, 2012. He is no longer Chief Operating Officer of the Company, effective October 20, 2012. Prior to initial public offering, Mr. Howell had been providing consulting services to the company since October 2009.

A Wall Street analyst recently told Legal Schnauzer that Campus Crest performed poorly in the months immediately following its IPO, and a veteran executive came on board in a full-time capacity to right the ship. The analyst did not identify the executive, and it's not clear if Howell's departure will be seen as a step back or a step forward for the company. Both he and Dann became full-time executives at Campus Crest after the IPO.

We do know that Howell is an ex military man with extensive experience in the financial-services industry, while Dann brings more than 25 years of experience in the hospitality business. It probably is too soon to tell if the transition from Howell to Dann will be a plus for Campus Crest. (A contributor at Seeking Alpha sees positive trends.) But Sarah Rollins' words about her CEO father could not have been pleasing to the ears of Campus Crest's financial backers.

Emma, Ted, and Sarah Rollins
Ms. Rollins has an insider's knowledge about the abusive relationship between her father and his stepson (her half brother), which includes Ted Rollins' 1995 conviction in North Carolina for an assault on the stepson and a 1993 social-services investigation after a citizen complaint about possible child sexual abuse.

Now a freshman at the University of the South at Sewanee, Ms. Rollins unexpectedly called me late last winter, and we reported on that conversation in a recent series of three posts. (See here, here, and here.)

We take home three key points from what Ms. Rollins said:

* She confirmed that an investigation regarding possible child sexual abuse did target her father (from Part I);

* She confirmed that her father and half brother had "somewhat of an unusual relationship," something that she found to be "no good" (from Part I);

* She was concerned that her brother would be negatively affected by reporting on the subject. (from all three parts).

Perhaps most important is what Ms. Rollins did not say--and we will examine that closely in a moment. But first, let's look at some of her key comments. This is from Part II of our conversation:

I do respect that you are trying to help or have some sort of affirmative action. But I just know that my mom lately has been so torn up about that story about my dad and my brother. I just think this is not really a positive outcome for it to be so in the open. . . . My brother would be very, very upset. . . . 
I think he's upset because, well probably, because he knows that you know everything, because my mom talks to you a lot. He does worry . . .

This is from Part III:

"I do appreciate all your efforts about my mother and father's divorce case. But this is something that would emotionally wreck our family unit . . . I would appreciate if if you would not jump into that right now. . . . I can't tell you what to write and what not to write, but I would really appreciate it so very much if you would just keep that story to yourself because it's one my mother so seldom shares . . . 
"I've been talking to her and she's so very distraught over the whole Zac situation because she knows it would cause a huge hole between her and her son."

If you read Ms. Rollins words closely--and listen to the full conversation via videos at the end of our previous posts--she never expresses any doubt that her brother was the victim of sexual abuse at the hands of her father. She is too young to have been a first-hand witness to the events in the mid 1990s. But she has lived with a dysfunctional family environment for all of her 18 years, and her words clearly show that she believes something was seriously wrong with the relationship between her father and her brother.

The transition from Earl Howell to Robert Dann could be good or bad news regarding business operations at Campus Crest Communities. But Sarah Rollins' words go to a hole in the company's soul. And that definitely is troubling news for the company's future.

A Push for Information About Investors Preceded The Mysterious Death of Lawyer Major Bashinsky

Chip Hazelrig

Attorneys for the Estate of Sloan Y. Bashinsky Sr. filed a court document in June 2009 seeking information about other individuals who had joined Mr. Bashinsky in placing their money with W & H Investments of Birmingham.

It's not clear if the estate ever received the information, but it is clear from court documents that W & H did not want to turn over the information. How contentious was this issue in a lawsuit styled Estate of Sloan Y. Bashinsky Sr., et al v. W & H Investments, et al?

Well, almost exactly nine months later, Mr. Bashinsky's youngest son, attorney Major Bashinsky, was reported missing. And 12 days after the disappearance was reported in the press, Major Bashinsky's body was found in a golf-course water hazard on Birmingham's Southside.

Is that a coincidence? We don't know. But court records do indicate that partners Fred Wedell ("W") and William Cobb "Chip" Hazelrig ("H") were not anxious to have their list of investors scrutinized.

We contacted Chip Hazelrig prior to publication of this post in an effort to interview him about various matters connected to the Bashinsky-estate lawsuit. He declined our interview request.

Why did the parties, given what appears to have been a major sticking point, suddenly reach a settlement that was approved by the court on March 1--for the curious amount of $300,000. Was it a coincidence that Major Bashinsky went missing two days later?

We don't have the answers to those questions. But it's clear that an awful lot of money was involved in the Bashinsky Estate--and that's why the $300,000 settlement figure seems odd.

According to court documents, Sloan Bashinsky invested more than $37 million in oil and gas wells with Wedell and Hazelrig, over about a 20-year period. In a 2004 letter, written roughly one year before his death, Mr. Bashinsky tried to get information about the status of his investments. Over a roughly six-month period following his death, the estate tried to get the same information. When it wasn't forthcoming, the estate filed a lawsuit, seeking an accounting of Mr. Bashinsky's funds, plus any damages that might have been due from breach of contract, breach of fiduciary duty, etc.

If W & H handled the Bashinsky funds properly, there should have been no damages at all. If the firm mishandled more than $37 million in investments, you would expect the damages to be substantial--way more than $300,000. So why did the parties agree to that figure? It seems the damages should have been zero or in the tens of millions of dollars.

Court records indicate that W & H engaged in sloppy bookkeeping regarding its Bashinsky accounts, and in some cases, the firm claimed records had been shifted to another company. The estate responded by essentially saying, "OK, if you can't show us directly how much was due to Mr. Bashinsky, then show us information about other investors, and we can determine in an indirect manner the proper amount."

Under the circumstances, that seemed to be a reasonable request--and the court must have agreed because it granted the estate's motion to compel.

The motion to compel can be read at the end of this post, followed by the settlement agreement. The Bashinsky funds went into an oil-investment account called the Birmingham Exploration Venture (BEV) Partnerships. The key information can be found on page 2 of the motion to compel, under "B. Documents Regarding Other Investors of W & H."

Here is what the estate had been seeking since its first request for production of documents:

17. All documents showing the names and identities of other investors or persons with an interest in W & H, W & H Promoted Investments, and/or BEV Partnerships and/or other Entity.

And here was the response:

Response: Defendant objects to this request as being irrelevant and immaterial except to say Bashinsky was an investor, participant, and/or joint venturer with W & H in certain of the referenced oil and gas ventures.

Clearly, Wedell and Hazelrig were not anxious to turn over the requested information. Then we have this from the estate:

18. For all individuals or entities named in response to Request for Production No. 17 above, produce all documents relating to: 
* The amount each person or entity invested. 
* The amount of payments and distributions made to each.

Again, Wedell, Hazelrig, and their lawyers wanted nothing to do with this line of inquiry:

Response: With regards to Bashinsky and W & H, to the extent these documents exist, they are made available. The Defendant objects to the production of any documents relating to any other individuals or entities as being irrelevant and immaterial.

Here is how the estate explained the request in its motion to compel:

The purpose of requesting these documents is to provide verification of the correctness of the distributions made to Mr. Bashinsky. W & H apparently does not have complete books and records for the oil and gas projects in which it was involved with Mr. Bashinsky. The well-lease assignments list each investor and their interest by percentage in the profits. For many if not all of the wells at issue, a Bashinsky/W & H project such as BEV IV was only one investor among others who also held an interest in the well's profits. Therefore, if one has documents showing a given investor's distribution income for a particular well, it may be possible to extrapolate Mr. Bashinsky's proportionate share. This is potentially an effective means to verify the correctness of the distributions made by W & H to Mr. Bashinsky in the absence of complete books and records.

A judge apparently found this to be a reasonable approach, because the motion to compel was granted. Did Wedell and Hazelrig turn over the information? It's hard to tell from the court file. We only know for sure that a member of the Bashinsky family wound up floating in a golf course water hazard, the victim of an apparent "suicide"--even though nothing in the medical examiner's report presents solid evidence that Major Bashinsky actually shot himself.

  Bashinsky Lawsuit--Motion to Compel2
Bashinsky Lawsuit Settlement Agreement