Text-Sex Scandal, Hillary: The Movie, and Other Legal News

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Law Blog headquarters was bombarded with legal news this afternoon. Here’s an afternoon roundup of the best:



“Even Children Understand That Lying is Wrong” Those were the words of Wayne County Prosecutor Kym Worthy, who today announced that 12 criminal charges — including obstruction of justice, misconduct and perjury — were filed against Detroit Mayor Kwame Kilpatrick and his former Chief of Staff Christine Beatty in connection with their alleged affair, a/k/a the “text message scandal.”

Here’s the story, and here’s a press release detailing the charges.

“Our investigation has clearly shown that public dollars were used, peoples lives were ruined,” said Worthy, downplaying the arguments of those who claimed that the mayor’s alleged affair with his chief of staff was a “private matter.” Worthy’s been investigating claims they lied under oath during a whistle-blower trial last summer when they denied having a romantic relationship. Published excerpts of sexually explicit text messages left on Beatty’s city-issued pager in 2002 and 2003 appear to contradict their testimony.

“I look forward to complete exoneration once all the facts surrounding this matter have been brought forth,” Kilpatrick said in a prepared statement.



“Hillary: The Movie” Back in January, we blogged on a fun little lawsuit about whether a 90-minute movie excoriating Hillary Clinton was a campaign advertisement, or not. If it is, the film would have to contain a disclaimer about its funding and restrictions on its broadcast. In the case, heard before a federal three-judge panel that hears campaign-finance cases, Citizens United, a conservative group, argued that “Hillary: The Movie” and related TV ads are not political spots, even though she’s a presidential candidate.

James Bopp, the lawyer for Citizens, argued the movie should be considered “issue-oriented” speech. But he failed to convince the panel that viewers aren’t urged to vote for or against the Democrat. The panel ruled that the film ran afoul of McCain-Feingold.

Today, our colleagues over at WSJ’s Washington Wire are reporting that the Supreme Court decided it didn't have jurisdiction to hear Citizens United's appeal. Campaign finance law allows a direct appeal to the Supreme Court on some constitutional issues but the court, save for Justice Stephen Breyer, decided that it didn't apply in this case.



XM-Sirius Merger Gets Half-way Home: The DOJ approved the merger of satellite radio companies Sirius and XM, a deal that was signed up more than a year ago and still requires approval from the FCC. While it’s unlikely that the FCC will go against Justice’s ruling, this WSJ story reports that it has the power to impose conditions that might make the merger slightly more palatable to the groups lined up against it. A ruling from the FCC is expected in coming weeks.

But while the FCC deliberates on XM-Sirius, it will not be seeing payment any time soon of a $91,000 indecency fine it levied recently against Fox television for a 2003 episode of “Married by American,” which featured strippers and whipped cream. In a statement, Fox said it believes the FCC’s decision that the show in question was indecent was “arbitrary and capricious, inconsistent with precedent, and patently unconstitutional.” Last week, the Supreme Court announced it will take up a challenge of the agency’s indecency authority — marking the first time in 30 years that the Court has addressed the issue of broadcast indecency.



Veiled Accounting at Biovail? Today, the SEC charged the Canadian pharma company, and some of its top execs, with accounting fraud, reports the WSJ. Biovail agreed to pay $10 million to settle the matter without admitting or denying the claims. The SEC claimed Ontario-based Biovail overstated earnings and hid losses to deceive investors and meet quarterly and annual earnings targets. When that failed, the SEC said, “Biovail actively misled investors and analysts about the reasons for the company’s poor performance.”

According to a statement, the SEC’s civil complaint alleges that Biovail engaged in three different accounting-fraud schemes between 2001 and 2003, including shifting $47 million of R&D expenses from its books; using a phony bill-and-hold transaction to record $8 million of revenue; and deliberately understating foreign-exchange losses. Former CEO Eugene Melnyk, and former CFO Brian Crombie, are contesting the charges, as are Biovail finance chief Kenneth Howling and Controller John Miszuk.