Legal News

Facebook Wins Case

Facebook has a won $873 million judgment against a Canadian man who bombarded the popular online hangout with sexually explicit "spam" messages.

The victory, sealed with a judge's order issued last Friday, probably won't yield a windfall for privately held Facebook Inc., whose revenue this year is expected to range between $250 million to $300 million.

Court records indicate the alleged spammer, Adam Guerbuez of Montreal, has been difficult to find since Facebook sued him four months ago.

But Facebook is hoping the size of the judgment will scare off other spammers who might be tempted to target the Palo Alto, Calif.-based company's audience of more than 120 million users.

"Everyone who participates constructively in Facebook should feel confident that we are fighting hard to protect you against spam and other online nuisances," Max Kelly, Facebook's director of security, wrote Monday on the company's blog.

Efforts to reach Guerbuez for comment on Monday were unsuccessful.

The case against Guerbuez and his business, Atlantis Blue Capital, illustrates how Internet rogues can manipulate Facebook's communications system to unleash massive marketing blitzes.

According to Facebook, Guerbuez fooled its users into providing him with their usernames and passwords. One method was the use of fake Web sites that posed as legitimate destinations.

After Guerbuez gained access to user's personal profiles, he used computer programs to send out more than 4 million messages promoting a variety of products, including marijuana and penis enlargement products, during March and April of this year, Facebook said.

"Despite the resources dedicated to spam eradication, current available technology does not permit Facebook to completely prevent the transmission of spam on its site," the company's lawyers wrote in the case against Guerbuez.
From lixisONE

Jury Awards Spanish Radio Station $553,000

A Ventura County jury on Thursday awarded $553,000 to a Spanish-language radio station after finding that a bigger competitor intentionally interfered with its customers, advertisers and musical performers in an attempt to undercut its business.

The jury awarded the judgment to Gold Coast Radio LLC and a promoter, Universo Musical, as damages in their lawsuit against Oxnard-based Lazer Broadcasting.

The plaintiffs' lawyer, Gary Schwartz, had told the jury during opening statements that this was a David-versus-Goliath case. He said Goliath had bullied David, and David decided to fight back.

"It is important to the community because it shows that big companies can't compete unfairly against the little guys," Schwartz said in an interview Thursday. "You still have got to let the little guys do business in the community."

Lazer Attorney Greg Ramirez said in an interview that he plans to file a motion on Monday asking the judge to set aside the judgment because, he said, there is no evidence to support the verdict.

"I am shocked," Ramirez said.
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Former UBS Division Director Pleads Guilty to Tax Conspiracy

Bradley Birkenfeld, in a gray pinstripe suit and with a polite demeanor and upper-class accent, exuded the persona of international banker as he stood in front of a Fort Lauderdale, Fla., judge Thursday to plead guilty in a tax conspiracy. Birkenfeld told U.S. District Judge William Zloch that a large salary with incentives from Swiss banking giant UBS lured him into a scheme to help the bank's wealthiest customers in the United States avoid taxes on funds in overseas accounts. At one point, he even smuggled diamonds in a toothpaste tube for a client, according to his confession detailed in a court document.

He has an incentive to cooperate: trimming time from a federal prison sentence. His cooperation promises to lead the Internal Revenue Service up the chain at UBS and to clients who benefited from his commitment to saving them millions of dollars in tax liability.

"Our position is that Mr. Birkenfeld was working at UBS when people knew exactly what was going on," his attorney, Danny Onorato of Schertler & Oronato in Washington, D.C., said after the plea. "Mr. Birkenfeld had numerous U.S. clients, and a number of them have been reaching out to U.S. authorities as a result of Mr. Birkenfeld's case."

For his part, Birkenfeld, the former director of the UBS private banking division, didn't say much in open court. When asked by Zloch if he knew what he was doing was wrong while with UBS from 2001 to 2006, he said, "I did have doubts about that."

His case has garnered international attention. The courtroom was filled with journalists, many representing news agencies in Switzerland and elsewhere in Europe. Also in attendance was U.S. Attorney Alex Acosta. He left without talking to reporters but issued a statement.

"It is sad that individuals with wealth and access to offshore accounts would abuse their advantages and use schemes to evade tax obligations," the release said.

UBS has acknowledged the Justice Department and the Securities and Exchange Commission are examining its cross-border services to determine whether the bank's advisers helped wealthy Americans evade taxes.

The case first bubbled to the surface in April when senior UBS employee Martin Liechti, head of the bank's wealth management business in the Americas, was temporally detained by the IRS in Miami as a material witness. UBS released a statement after Birkenfeld's plea, saying it was "working diligently with both Swiss and U.S. government authorities."

Onorato seemed to question that commitment when asked whether the bank had linked managers and other bankers to the tax fraud.

"If UBS turned these names over, obviously this case would be much bigger," the attorney said.

Onorato said his client is committed to helping U.S. authorities expand their knowledge of UBS operations in an unprecedented investigation of a Swiss bank.

UBS had plenty of incentive to hide its clients' money, according to prosecutors and a "statement of facts" signed by Birkenfeld in his plea deal.

"This was done to prevent the risk of losing the approximately $20 billion of assets under management in the United States' undeclared business, which earned the bank approximately $200 million per year in revenues," according to a Justice Department release.

Birkenfeld admitted he and others came up with a scheme to hold the assets in nominee or sham companies in Liechtenstein, the Bahamas and elsewhere.

The 43-year-old American who lives in Geneva faces a maximum five-year prison sentence under the statute, but federal guidelines would be lower, and he would be eligible for even less time by cooperating. He remains free on $2 million bail and under house arrest at his parent's home in Boston pending sentencing Aug. 13.

A co-defendant, Lichtenstein financier Mario Staggl, remains a fugitive. Staggl is accused of helping set up sham companies for UBS as vehicles for U.S. clients to hide ownership and avoid paying taxes.

Hiding big money in Swiss bank accounts to avoid taxes, criminal prosecution or an ex-spouse is old hat. But that changed in 2001 when UBS agreed to identify customers who received reportable income. The bank's wealthy client base in the United States didn't appreciate the change, according to Acosta's office.

Birkenfeld and other bank managers traveled to the United States to solicit new clients interested in avoiding taxes, according to plea papers. He told prosecutors that UBS trained bankers to avoid detection by falsely stating on customs forms that they were traveling for pleasure. Once in the United States, Birkenfeld told prosecutors the bankers advised UBS clients how to conceal their Swiss bank accounts by placing cash and valuables in Swiss safety deposit boxes, purchasing jewels and artwork, and misrepresenting the receipt of funds from UBS as a loan.

This was how Birkenfeld, at a request of a U.S. client, purchased diamonds through the client's Swiss account and smuggled them into the United States in a toothpaste tube. He also said he and Staggl accepted bundles of checks from American clients and deposited them at Swiss, Liechtenstein and Danish banks.

The case broke when the IRS caught up with billionaire Igor Olenicoff -- a Birkenfeld client referred to as I.O. in the April indictment. The real estate mogul is worth an estimated $1.7 billion, making his money on 11,000 apartments and more than 6 million square feet of commercial space primarily in Florida, California, Nevada and Chicago. Olenicoff's latest address in court documents was Lighthouse Point in a tax return filed in 2005.

The 65-year-old admitted lying to the IRS when he said he had no foreign bank accounts after stowing money in secret accounts in Switzerland and elsewhere.He agreed to pay $52 million to the government under a plea deal that called for probation. Birkenfeld and Staggl were charged with helping Olenicoff hide $200 million in secret accounts to help evade $7.2 million in taxes.

"Our role is to assist the U.S. authorities to bring people to justice," Onorato said.
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