UAB's Shirley Salloway Kahn Tried to Use Official Position to Boost Her Husband's Hotel Business

Shirley Salloway Kahn

The top fundraising officer at the University of Alabama at Birmingham (UAB) regularly tried to use her official position for personal gain, a source tells Legal Schnauzer.

Shirley Salloway Kahn, vice president for development, alumni and external affairs at UAB, regularly encouraged university colleagues to house visitors at the former Pickwick Hotel on Birmingham's Southside. The facility, now called the Hotel Highland at Five Points South, is owned by Kahn Properties. Dr. Donald Kahn is the president of Kahn Properties, and he is married to Shirley Salloway Kahn.

Alabama ethics law states that no public official or public employee is to use her official position for personal gain, for herself or a family member.

Our source says Shirley Kahn also has been seen apparently working with her husband at a site in English Village where one of his properties is being renovated. This activity took place about 2:30 p.m. in midweek, during the standard UAB work day. Was Kahn working on personal business while on the public clock? According to our source, it certainly looked that way.

How much business has Shirley Salloway Kahn actually sent to a hotel that her husband owns? We raised that question via a phone message and an e-mail to Kahn, with a copy to Dale Turnbough, UAB's associate vice president for public relations and marketing. They have not responded to our query.

The Kahn story comes on the heels of a recent report that two top fundraisers at the University of North Carolina stepped down amid an investigation that they had charged the university for personal travel. Matt Kupec, UNC's vice chancellor for university advancement, resigned on September 9. Tami Hansbrough, a fundraiser in the university's division of student affairs, resigned on September 12.

The dominoes did not stop falling there. UNC Chancellor Holden Thorp announced on Sept. 17 that he will step down at the end of the academic year. This came after The Charlotte Observer asked in an editorial: "How Many Chances Should Thorp Get?" As the editorial points out, Thorp had been dealing with a number of fires on the Chapel Hill campus, including some in athletics. But the announcement of his plan to step down did not come until after the fundraising scandal had sparked banner headlines.

That indicates it was the fundraising embarrassment that finally drove the chancellor from office. It also indicates more bad news might be coming on that front.

UNC's controversy arose after press inquiries about trips that Kupec and Hansbrough, who were romantically involved, took to see Hansbrough's son, Ben, play basketball at Notre Dame. Audits showed the trips were charged to university accounts. An investigation is ongoing, even though Kupec and Hansbrough already have resigned their positions.

I worked at UAB for 19 years, long enough to learn two maxims of the higher-education world:

(1) Mixing official business with personal pleasure is a bad idea;

(2) Using your official position for personal gain might be an even worse idea.

What would an audit show about UAB visitors staying at The Hotel Highland at Five Points South--and how many of them were directed there by Shirley Salloway Kahn? Our investigation is ongoing, but it seems clear that Kahn and UAB's chief spokesperson are not anxious to answer questions about it.

Alabama Woman Winds Up In Jail Over a Divorce Settlement That Looks Shaky On Paper

Bonnie Cahalane (Knox) Wyatt

An Alabama woman is about to finish her 11th week in jail, based on a handwritten divorce settlement that looks anything but official.

Bonnie Cahalane (Knox) Wyatt challenged the validity of the agreement, but Chilton County Circuit Judge Sibley Reynolds denied her motion. We can find nothing in the court file that identifies the grounds Reynolds cited to uphold the agreement--and we certainly can find no formal version of the agreement. To top it off, the Final Order of Divorce was written by opposing counsel.

The bottom line? Bonnie Wyatt has been in jail for almost 11 weeks because of her efforts to end a marriage in which the parties lived together as husband and wife for only about 40 weeks. Will Ms. Wyatt's period of incarceration wind up being longer than her marital relationship with Harold Jay Wyatt? In Chilton County divorce court, it seems anything is possible.

According to the Final Order of Divorce, Ms. Wyatt was to pay Mr. Wyatt $165,000 to satisfy a debt on the marital residence to Regions Bank, and he then was to convey his interest in the real estate to her. Court records show the property belonged to Ms. Wyatt before the marriage, so it's hard to figure how she came to owe a large amount of money because of a husband-wife relationship that lasted such a short time.

Harold Wyatt told us in an interview that the house was in a state of disrepair when he entered the picture, and he invested a substantial sum to whip it into shape. Ms. Wyatt, however, disputes the amount in a Motion to Alter, Amend or Vacate that is dated June 10, 2011, and was prepared by Prattville attorney Chip Cleveland, of the firm Cleveland and Riddle. (See document at the end of this post.) From the Motion to Amend:

Based upon representations made to (the Wife) during the discovery process and mediation negotiations, she opines she was not given legitimate proof of monies (the Husband) claims he spent on the marital home. Additionally, detailed documentation was not shown to her of how the loan proceeds against the marital home were used. Therefore, she objects to the payment of monies to (the Husband) as part of the purported mediated agreement as related to the equity issues in the marital property. 

(The Wife) feels information was withheld from her and (she) would never have agreed to any settlement or signed any papers at mediation if she had known the truth.

In a Motion to Enforce Final Decree and Mediated Settlement Agreement, prepared by attorney Chris Speaks, Harold Wyatt argues that nothing was concealed and the settlement was legitimate. (See document at the end of this post.)

Who is right? We can't give a definitive answer to that question. But Ms. Wyatt seems to have several  important points in her favor. In her Motion to Amend, she states the following:

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.

The only sign of a settlement agreement is the scribbled, one-page document that is attached to Harold Wyatt's Motion to Enforce as "Exhibit A." But based on his own words, Attorney Speaks apparently did not fulfill his duty to the court. From item "e" in the Motion to Enforce:

At the conclusion of the mediation, a Mediated Settlement Agreement was executed by the parties with a formal Agreement to follow. A copy of said agreement is attached hereto as Exhibit 'A.'

Speaks says a formal agreement is to follow, but we have one question: Where is it? Does that barely legible, handwritten note pass as a formal agreement in Chilton County?

What about the motivations of Judge Reynolds. Rule 58 of the Alabama Rules of Civil Procedure allows judges to grant or deny motions with no explanation. That rule is one of many reasons our courts are riddled with corruption. Abuse of that rule is particularly troubling when one party or another winds up in jail for 10 weeks--and counting.

Is Bonnie Wyatt without fault in this matter? Based on our conversations with several individuals close to the situation, the answer probably is no.

Are there legitimate grounds for her incarceration, especially for almost 11 weeks? The answer to that question also appears to be no.

At the core of this curious divorce case seems to be this question: How did Bonnie Wyatt's property come to be in such a state of disrepair that Harold Wyatt felt a need to sink major dollars into it?

We will focus on that question as our investigation continues.


Wyatt Divorce--Motion to Amend

Wyatt Divorce-Motion to Enforce

Alabama AG Luther Strange Appears To Be Bought and Sold By the Poarch Creek Indians

Luther Strange

Alabama Attorney General Luther Strange received a $100,000 campaign contribution from the Poarch Creek Indians in 2010 and now seems to be making sure that the tribe's investment pays off.

Strange's office in late July seized electronic-bingo machines in Houston County and threatened similar raids on VictoryLand if it reopens in Macon County. In a not-so-subtle way, Strange seems to be wiping out the Poarch Creek's competition. And that raises this question: Are Strange and the tribe engaged in an illegal quid pro quo ("something for something" deal) that would be a violation of federal bribery laws.

The cozy relationship between Strange and the Poarch Creeks is at the heart of recent articles in The Montgomery Independent, and Editor/Publisher Bob Martin suggests a multi-pronged investigation is needed. From Martin's September 27 editorial:

A question which has been circling around Goat Hill in recent weeks is whether or not the State Ethics Commission or the U.S. Attorney's office will initiate a probe into the documented evidence that the Attorney General Luther Strange campaign received a $100,000 donation from the Poarch Creek Indians in 2010 and is now facing pay-back time. 

The suspected quid pro quo is that the attorney general would lay waste to the Poarch Creek gambling competition in Alabama. Sure enough, in recent months Strange has conducted raids closing electronic bingo operations in Houston County and continues to threaten the reopening of VictoryLand in Macon County.

Substantial cash took a roundabout trip from the Poarch tribe to the Strange campaign in 2010. Martin spells it out in a September 6 article:

Some have suggested that Strange, in going after the non-Indian gambling houses in Alabama, is attempting to give the Poarch Creek Indian gambling operation the ability to further monopolize gaming in our state. Indeed, the Poarch Creek tribe laundered $100,000 to the Strange Campaign for Attorney General in 2010.

The money trail for that $100,000 contribution went like this: from the Poarch Leadership Committee to the Republican Leadership Committee on July 15, 2010; from the Republican Leadership Committee to the Alabama Republican Party on July 22, 2010, then from the Alabama Republican Party to the Luther Strange Campaign on August 4, 2010.

Bribery, money laundering, ethics violations? All apparently involving the man who is supposed to act as Alabama's chief law-enforcement officer?

The contribution to the Strange campaign took a circuitous route, much like the one described in the Don Siegelman/Richard Scrushy criminal prosecution. The U.S. Eleventh Circuit Court of Appeals broke with legal precedent in the Siegelman case and found that a jury could "infer" an illegal quid pro quo, based on the fact a campaign contribution took an indirect route from donor to recipient.

In fact, Siegelman currently sits in a Louisiana federal prison because of this novel interpretation of federal bribery law--and the U.S. Supreme Court's refusal to review the ruling.

If that version of the law applied to Don Siegelman, it surely applies to Luther Strange.

The Alabama Attorney General's office is emitting a foul smell under Luther Strange. The stench will grow even stronger if the U.S. Justice Department and the Alabama Ethics Commission fail to investigate.

Ted Rollins' Daughter Knew of her CEO Father's "Unusual Relationship" With His Stepson

Sarah Rollins (right) with her father, Ted,
and sister, Emma

The oldest daughter of Campus Crest Communities CEO Ted Rollins says she was aware that her father had "somewhat of an unusual relationship" with his stepson.

When I asked Sarah Rollins if she was referring to the investigation in North Carolina of possible child sexual abuse involving her father, she said, "Yes, that's what I'm referring to."

Sarah Rollins joins her mother, Birmingham resident Sherry Carroll Rollins, in confirming that an investigation took place. Referencing what she apparently understands to have gone on, Sarah Rollins says she worries about the impact such revelations might have on her half brother.

"I certainly think that is something that is no good, but I just know that (my half brother) would not want it to be known to anybody who decided to look it up one day," Sarah Rollins says. "He has a family, and he's very private . . . "

My conversation with Sarah Rollins came when she unexpectedly called me at home one evening. She was nearing the end of her senior year at Mountain Brook High School and now is enrolled as a freshman at the University of the South at Sewanee. Other than one brief followup message via Facebook, this is the only interaction I've had with her.

Sarah Rollins comes across as a bright, articulate young woman who has had to find her way through a turbulent family situation--one that has been made much worse by the gross injustice inflicted upon her mother in the divorce from her father. That divorce, which Sherry Rollins initiated in South Carolina (where the family lived at the time) and saw it litigated in Greenville for three years, was unlawfully moved to Shelby County, Alabama. And that's where Circuit Judge D. Al Crowson issued a divorce judgment that was so grossly unjust--and one-sided in Ted Rollins favor--that it caused Sherry Rollins and her two daughters (Sarah and Emma) to wind up on food stamps.

We have written extensively about Rollins v. Rollins, a case I call the worst courtroom cheat job I've encountered in the civil arena. Sarah Rollins has a unique perspective on all of the issues involved. She was an infant, being held on her mother's hip, when Ted Rollins severely beat his stepson in 1995. In fact, Sherry Rollins had to sit her daughter down before trying to drag Ted Rollins off her son and finally calling 911 for assistance.

Sarah Rollins, her mother has told me, was an early talker. But witnessing the beating disturbed her so much that she stopped talking for quite a while.

We think Sarah Rollins has a valuable perspective on family turmoil--and the courtroom injustice that can make it infinitely worse. We will share her thoughts in a series of upcoming posts.

Failure To Stand Up For the "Law" Comes Back to Bite Obama In Last Night's Presidential Debate

President Barack Obama, by almost all accounts, lost last night's presidential debate--and it was not because of an outstanding performance by Republican challenger Mitt Romney. The former Massachusetts governor did little more than unleash an avalanche of misstatements, contradictions and blatant falsehoods--and Obama let him get away with many of them.

But that's not why the president lost the debate. The reason can be traced to a statement from early January 2009, just a couple of weeks before Obama took office. That's when ABC's George Stephanopoulos asked the president-elect about the possible appointment of a special prosecutor to investigate apparent crimes of the George W. Bush administration. Obama replied by saying that he was inclined to "look forward as opposed to looking backwards," indicating he was willing to give Bush criminals a free pass.

In so many words, Obama said that his administration was not going to be concerned with enforcing the law. It wasn't going to exert much effort to ensure that citizens from all walks of life play by the rules. Obama appeared to take that approach into last night's debate, and it's the reason he got soundly defeated.

Don Siegelman in Alabama, Paul Minor in Mississippi, Cyril Wecht in Pennsylvania, and other victims of Bush-era political prosecutions know what it's like to get chewed up in a court of law where no one abides by the rules. They know the frustration of facing prosecutors, judges, and juries that "go rogue"--making up their own rules as they go along and forcing them down the throats of society. Obama got a slight taste of what that is like last night.

Romney made it clear in the debate's first few minutes that he was not going to follow the ground rules. When Romney started to respond to one of Obama's early points, moderator Jim Lehrer tried to remind him that he did not have time under the rules for a rebuttal. Romney kept right on talking, Lehrer did not take control of the situation, and neither did Obama.

The leader of the free world could have said something like: "Jim, all parties to this debate agreed in advance to the ground rules, and it appears that two of us--you and I--are willing to follow them. Governor Romney, on the other hand, is determined to ignore the rules and do as he pleases. The viewers out there deserve better than that; you and I deserve better than that. Everyday Americans are expected to obey rules, big and small, in all aspects of their lives. Governor Romney should do the same."

Obama, in his first term as president, has little experience with making sure rules are enforced. So it should be no surprise that he failed on that front last night. It gave Romney a debate victory he did not deserve. And it probably tightened a race that Obama should have had wrapped up long ago.

If Obama had given his OK for the U.S. Department of Justice to unmask Bush-era criminals, Democrats probably would have held the House in 2010, giving Obama's policies more support and putting the country on the road to a stronger recovery.

Instead, the president-elect signaled that he would be timid on fundamental matters of right and wrong, and he took the same approach in last night's debate. Because of that, the outcome of November's election is very much in doubt.

Rob Riley's Performance Group LLC Faces Allegations That It Committed Medicare Fraud

Rob Riley

Birmingham attorney Rob Riley faces allegations in a federal whistleblower lawsuit that his physical-therapy company has engaged in Medicare fraud and other unlawful behavior.

That's the same Rob Riley whose father served two terms as Alabama governor, claiming all the while that he and his associates were a highly ethical bunch. That's also the same Rob Riley who represented investors claiming to be victims of health-care fraud connected to Birmingham's HealthSouth Corporation.

Riley, an avowed Republican, joined hands with Haskell Slaughters's G. Douglas Jones, a supposed Democrat, to walk away with a healthy chunk of the roughly $50 million in attorney fees that were generated in the HealthSouth case.

Is this story dripping with irony? Riley got paid for "fighting" health-care fraud at the same time he faced charges of engaging in health-care fraud, via a company called Performance Group LLC. Does it help to be the son of a white, conservative governor in a Deep South state, or what?

And that brings us to the subject of race--and this story might be dripping with more racism than it is irony. If you read The Birmingham News in its dying days as a daily newspaper, you noticed that reporter Mike Oliver fired off regular dispatches about misconduct involving a Birmingham health-care executive named Jonathan Dunning. You can check out the News' most recent piece on Dunning here, along with links to its previous installments.

We've read the entire Dunning series, and while it is filled with numerous slings and arrows, it's never clear exactly what he has done wrong. Oh, the most recent report (unless I've missed one) goes into allegations of sexual harassment, which were brought by a woman who reportedly had an extramarital affair with Dunning, producing two children. (Question: How can you sexually harass a woman who has produced two of your children? Hasn't such a relationship kind of gone beyond the sexual-harassment stage?)

But if Jonathan Dunning has broken any laws, it's hard to tell from the News' reports. Meanwhile, the federal court file on the Performance Group LLC case offers ample evidence of unlawful behavior involving Riley and his associates. (See document at the end of this post.)

So why has The Birmingham News produced a six-part series (and counting) about Jonathan Dunning's transgressions while it hasn't published a single word about Rob Riley's ties to Medicare fraud?

Did we mention that Rob Riley is white and Jonathan Dunning is black? Did we mention this is Alabama, in 2012?

What is Rob Riley doing in the physical-therapy business? Is it because the durable medical equipment business is ripe for Medicare fraud? Riley's company, Performance Group LLC, is based in Birmingham and treats patients here and at several other locations around Alabama, including Cullman and Albertville.

A Birmingham woman named Ingrid Awtrey Law filed the whistleblower complaint, called a qui tam case under the U.S. False Claims Act, after working at Spinal Rehab Associates from March 2005 to July 2006. Spinal Rehab began operating under the Performance Group name in January 2006.

The complaint states that Rob Riley is an owner and operator of Performance Group, along with Francois Michel Blaudeau, a gynecologist and lawyer who is affiliated with UAB and also is with the Homewood law firm of Riley and Jackson. Other key executives with Performance Group were David Marshall and Thomas Spurlock, a chiropractor who was affiliated with the UAB Department of Neurosurgery.

Law states that, throughout her employment, she was instructed to provide physical therapy services, even though she was not licensed to do so. She states that many of procedures and services she performed were billed to Medicare. The complaint describes a fraud scheme that involved:

* Forgery of physician signatures;

* Billing for services not rendered or not medically necessary;

* False claims for unnecessary medical equipment;

* Prohibited referrals; and

* False billings for services provided by an unlicensed therapist.

Why has Rob Riley not been held accountable for an apparent scheme to defraud the government? Why has The Birmingham News ignored the story?

And here is something curious: The Jonathan Dunning story involves allegations from a number of individuals with ties to UAB. The first installment in the series states that several UAB departments had entered into contracts with Dunning and his company, Birmingham Health Care, from 2003 to 2009, but the relationship eventually ended. The article included critical statements about Birmingham Health Care from UAB physician Stefan Kertesz.

The most recent installment in the series states that a woman named Sharon Waltz had filed a sexual-harassment lawsuit against Dunning. Waltz is a clinical psychologist who is affiliated with UAB's Department of Psychiatry.

UAB, and individuals affiliated with it, appear to be attacking a black man who heads a health-care company. Meanwhile, the university does not seem remotely concerned about a white man who heads a health-care company that reportedly has ties to Medicare fraud--and that firm has included at least two officers (Spurlock and Blaudeau) who have past or current affiliations with UAB.

What is up with that? Is a taxpayer-supported university going out of its way to attack Jonathan Dunning while happily ignoring alleged wrongdoing connected to Rob Riley? Is UAB operating with racist motives?

We will examine those questions, and more, in upcoming posts.


Ingrid Awtrey Law--Qui Tam

Karl Rove & Co. Are Planning An "October Surprise" To Turn the Election in Romney's Favor

Republican operatives are preparing to unleash an attack that will portray President Obama as weak on national security, according to a report at Salon. The plan is based in part on new intelligence related to the September 11 attacks in Libya that killed U.S. Ambassador Chris Stevens.

GOP insiders reportedly are calling the plan the "Jimmy Carter Strategy" or the "October Surprise." That is a reference to the Iranian hostage crisis that handcuffed incumbent Jimmy Carter in the 1980 presidential election against Ronald Reagan. The insiders hope the strategy will be a game changer as Obama and Mitt Romney prepare for Wednesday night's first presidential debate.

Craig Unger, author of the just-released Boss Rove: Inside Karl Rove's Secret Kingdom of Power, wrote the Salon piece. Unger does not mention Rove by name in the Salon article, but there is little doubt that Rove would be involved in such a high-level Republican plan. From Salon:

According to a highly reliable source, as Mitt Romney and President Barack Obama prepare for the first presidential debate Wednesday night, top Republican operatives are primed to unleash a new two-pronged offensive that will attack Obama as weak on national security, and will be based, in part, on new intelligence information regarding the attacks in Libya that killed U.S. Ambassador Chris Stevens on Sept. 11. 

The source, who has firsthand knowledge of private, high-level conversations in the Romney camp that took place in Washington, D.C., last week, said that at various times the GOP strategists referred to their new operation as the Jimmy Carter Strategy or the October Surprise. 

He added that they planned to release what they hoped would be “a bombshell” that would make Libya and Obama’s foreign policy a major issue in the campaign. “My understanding is that they have come up with evidence that the Obama administration had positive intelligence that there was going to be a terrorist attack . . . ”

Such a plan is dripping with irony, of course. The strategists likely were connected to the George W. Bush administration, which repeatedly ignored warnings about the terrorist attacks of September 11, 2001. The Bushies apparently are not concerned about concepts such as irony or hypocrisy, Unger reports:

The source described the Republicans as chortling with glee that the Obama administration “definitely had intel” about the attack before it happened. “Intelligence can be graded in different ways,” he added, “and sometimes A and B don’t get connected. But [the Romney campaign] will try to paint it to look like Obama had advance knowledge of the attack and is weak on terrorism.” 

He said they were jubilant about their new strategy and said they intended to portray Obama as a helpless, Jimmy Carter-like president and to equate the tragedy in Libya with President Carter’s failed attempt to rescue American hostages in Iran in 1980. “They are so excited about it,” he said. “Over and over again they talked about how it would be just like Jimmy Carter’s failed raid. They feel it is going to give them a last-minute landslide in the election.”

A "last-minute landslide in the election"? Could that really happen? Craig Unger has become an expert on the postmodern machinations of Karl Rove--and his sources say GOP insiders are trying to pull it off.

Alabama Woman Is In Jail Based On a Divorce Order That Was Written By Her Ex Husband's Lawyer

Bonnie Cahalane (Knox) Wyatt

A central Alabama woman has been in the Chilton County Jail for more than nine weeks because of an order that was written by the opposing attorney in her divorce case.

I'm not making this up. And because the notion is so outrageous, I will repeat: Bonnie Cahalane (Knox) Wyatt, age 46, of Clanton, has been deprived of her freedom for more than two months--and it's based on an order that was written by the other side's lawyer in her divorce case.

How do we know? Well, the first clue came when an alert Legal Schnauzer reader noted that the "Final Order of Divorce" in the case styled Bonnie Sue Wyatt v. Harold Jay Wyatt looks like it came from an IBM Selectric typewriter out of the early 1980s. (See document at the end of this post.) My reader was right; the document does not look like it came from a judge's office in the semi-modern era. And that's when I realized the document didn't come from a judge's office at all.

Upon closer inspection of the handwritten scribbles that pass for a "settlement agreement" in Wyatt v. Wyatt, I realized the truth. (See document at the end of this post.) Near the bottom of the agreement, right above the signatures, is this sentence:

Husband's attorney will draw up the warranty deed and final order.

To borrow a phrase from the culture of online chats . . . WTF? And you might want to blurt out a double  "WTF" when you realize that this order had profound consequences: It landed Bonnie Wyatt in jail for nine-plus weeks--and her ex husband's lawyer wrote it!

Sibley Reynolds was the judge in Wyatt v. Wyatt, and a reasonable citizen might assume that he writes all orders for his cases. But it appears the citizen would be wrong. And that raises a veritable plethora of troubling questions:

* Why does Sibley Reynolds allow lawyers from either side to write orders for him?

* Did Judge Reynolds even review the order in Wyatt v. Wyatt before it was issued under his name?

* Do other judges engage in this practice?

* If so, why are certain judges sitting on the bench when they aren't willing to do work the position requires?

* If an order has Sibley Reynolds' name on it, but it was written by someone else, why is that not a fraud on the court?

In a recent post, we unveiled one of the legal profession's innumerable ugly secrets--that clerks often write opinions for federal judges. Now we learn that one side's lawyer--a decidedly partial individual--can write an order for a supposedly impartial state judge. And I strongly suspect this nasty practice is not limited to Chilton County--or even Alabama.

Who was the "husband's attorney" who apparently wrote the order that landed Bonnie Wyatt in jail? That would be Chris Speaks, of the Clanton firm Speaks and Speaks. Mr. Speaks was duty bound in this case to zealously represent his client, Harold Jay Wyatt. He had a duty to achieve as strong an outcome as possible for his client--at the expense of the other party, Bonnie Wyatt.

How would you like to be in jail because of an order the other guy's lawyer wrote? Would you consider that to be a fair outcome? Would you take on faith that the order was accurate and correct under the law? I sure wouldn't, and that's based on lots of personal experience. Heck, I wouldn't trust my own lawyer in a case like this, much less the other guy's.

Speaking of Ms. Wyatt's own lawyer, it was a woman named Amanda Baxley, of Clanton. She supposedly was looking out for Ms. Wyatt's best interests at the time this so-called settlement agreement was reached--and opposing counsel Chris Speaks was writing the final order. Did Ms. Baxley object to any of this, did she speak up at all, was she stupefied from an overdose of Xanax?

And what about the mediator, Clanton lawyer Wayne Cordery? Does he think it's fair that one party's lawyer could write an order that helps land the other party in jail? Was he stupefied from an overdose of Xanax on mediation day?

Are Chris Speaks, Amanda Baxley, or Wayne Cordery at all concerned about what has happened to Bonnie Wyatt? Is such an absurd result considered part of "the way things are done" in Chilton County, Alabama?

We will be examining those questions as our research continues on the story of Bonnie Cahalane (Knox) Wyatt.

Wyatt Divorce Decree
Wyatt Divorce Settlement

CEO of High-Tech Company Resigns In the Wake of Reports About His Criminal History

OCZ Technology

A Wall Street analyst, in response to questions about the criminal history of Campus Crest Communities CEO Ted Rollins, said investors would be very concerned about such revelations.

Paula Poskon, a senior research analyst at Robert W. Baird and Co., made the remarks a few weeks back in an interview with Legal Schnauzer. Events in the investment world since then indicate Poskon knew exactly what she was talking about.

Investors, it seems, do care deeply about ugly events in a CEO's background. Ryan Petersen resigned on September 17 as CEO of OCZ Technology, a Silicon Valley company that is a leader in solid-state storage technology. Petersen founded OCZ, and the company is on the leading edge of a computing transition from hard drives to solid-state drives (SSDs). But that did not prevent his unceremonious exit after the market learned of unsavory events in his past--and his failure to disclose them.

How did these events come to light? The answer to that question speaks to the growing power of the non-traditional press.

A story broke in April 2011 on seekingalpha.com that Petersen and the company's underwriters had failed to disclose information about the CEO's criminal record. The story specifically broke with Copperfield Research, a contributor at the Seeking Alpha site, and then made its way into the mainstream business press.

A little more than a year later, Ryan Petersen is out as CEO.

What is Copperfield Research? It's a pseudonym for a research team that focuses on publicly traded equities. The researchers publish under anonymous status because of concerns about retaliation from corporate management. The names behind Copperfield Research might not be known, but their work obviously carries weight.

A number of factors might have played into Ryan Petersen's resignation at OCZ Technology. Press reports indicate the company had made a number of business missteps, but the downward slide seemed to start with Copperfield Research's reporting.

Revelations about the CEO's criminal history almost certainly helped stunt the company's performance and put a cloud over its future. Bloomberg produced a story titled "OCZ Technology Plunges After Reports of CEO's Criminal Record."

What was Petersen hiding in his personal closet? From the Copperfield Research report:

OCZ and the underwriters did not disclose material background information on the CEO's criminal record. While we are sympathetic to mistakes made in the past, we believe the importance of the CEO's credibility is essential given the extreme reliance investors and analysts have placed on his story. A national criminal records search shows the CEO was arrested and/or charged in various Courts for: Grand Theft, Forgery, Unlawful Entry Motor Vehicle, Theft-1, Drug Violations, and Traffic in Stolen Property.

Gulp! I can't imagine why investors would be concerned about all of that.

What do we learn from this story? For one, Seeking Alpha now is a powerful force in business journalism. According to Nielsen Analytics, Seeking Alpha has the leading audience of any financial Web site--including Bloomberg, CNN Money, and The Wall Street Journal.

Two, we learn that investors become displeased when they learn that details about a CEO's criminal record have been kept from them. From the Bloomberg article about OCZ's stock plunge:

OCZ Technology Group Inc. (OCZ), the maker of solid-state disk drives, plunged for a second day in Nasdaq trading following a report that the company didn’t disclose its chief executive officer’s criminal record. 

The shares of the San Jose, California-based company fell 74 cents, or 9 percent, to $7.49 as of 4 p.m. New York time, after dropping 14 percent yesterday. . . . 

“The criminal record makes investors nervous,” said Aaron Rakers, an analyst at Stifel Nicolaus and Co. “There were people out there that were not fully aware of the aspects of the deal and that put pressure on the stock.” Rakers has a “buy” rating on the shares.

What does this mean for Ted Rollins and Campus Crest Communities? It's hard to say, but our guess is that Ryan Petersen would still be CEO of OCZ Technology if Copperfield Research had not done its homework-- and Seeking Alpha had never existed. Here is a video report on the Ryan Petersen story from Cory Johnson of Bloomberg:

Wall Street Analyst Was Unaware of the Serial Ugliness in CEO Ted Rollins' Background

Paula Poskon

A Wall Street analyst says she was unaware that Campus Crest Communities CEO Ted Rollins has been convicted for an assault on his stepson and investigated for possible child sexual abuse of the same stepson.

"Oh, my God, I was not aware of any of that . . . ," Paula Poskon said. "It certainly sounds like I need to do a lot more digging."

Poskon is a senior research analyst at Robert W. Baird and Co., which is one of about six underwriters on the $380-million IPO that Campus Crest Communities completed in late 2010.

In his role as CEO, Rollins markets student housing to young people and their parents. So it is grimly ironic that he has a history of abusive actions toward young people. That irony was not lost on Paula Poskon. "That's what makes this so concerning," she said.

How much did Wall Street investors and analysts know about Ted Rollins' background before supporting his company to the tune of several hundred million dollars? Well, Poskon said quite a few of them knew about the nasty nature of his divorce case, which was unlawfully completed in Shelby County, Alabama, even though it started and was litigated for three years in Greenville, South Carolina.

Poskon said concerns about the divorce case were strong enough that she asked Rollins about it--and he apparently supplied answers that she found satisfactory. But based on the conversation I had with her, it sounds like Poskon might be rethinking that.

Do investors care only about making money, or do they also care about the personal activities of those who run public companies? Is a conviction for assault and an investigation for possible child sexual abuse enough to give investors pause?

Here is how Poskon addressed those questions: "I think the broad question you're asking is: Hypothetically speaking, in any public company CEO situation, where a CEO was accused or convicted of these kinds of things, how concerning would that be to investors? The answer is it would be very concerning."

We have much more coming on Paula Poskon's reaction to news about troubling events in Ted Rollins' background. Ms. Poskon deserves credit for being willing to take questions about Ted Rollins and Campus Crest. We've already shown that Vick Seth of Raymond James, the chief underwriter on the Campus Crest IPO, ran for cover when confronted with such questions.

Meanwhile, recent reports indicate that investors do care about ugly events in a CEO's background. Ryan Petersen resigned on September 17 as CEO of OCZ Technology, a Silicon Valley company that is a leader in solid-state storage technology. Petersen founded OCZ, and the company is on the leading edge of a computing transition from hard drives to solid-state drives (SSDs).

The Petersen story speaks to the power of the non-traditional press. A story broke in April 2011 on seekingalpha.com that Petersen and the company's underwriters had failed to disclose information about the CEO's criminal record. The story specifically broke with Copperfield Research, a contributor at the Seeking Alpha site, and then made its way into the mainstream business press.

A little more than a year later, Ryan Petersen is out as CEO. Could a similar fall be in Campus Crest Communities' future? It's probably too early to say. But it does appear that Ryan Petersen and Ted Rollins have some unpleasant characteristics in common. How similar are they? For that, we need to learn more about Ryan Petersen. And that is coming in our next post.