In the Courts

According to the SEC, Signore and Schumack allegedly raised $40 million from investors across the country who believed they could reap guaranteed returns of 300% to 500% from investing in the “virtual concierge” kiosks. The machines were to be placed at airports, stadiums and other locations and used by consumers to search ' and obtain coupons ' for local products and services.

The SEC explained that the defendants used videos posted to YouTube to tout the scheme. In one such video, the SEC noted, an “investor” is shown polishing a new Cadillac while an onlooker asks, “What an amazing car! How can you afford this?” The investor responds, “My Virtual Concierge.”

Glenn Gordon, associate director of the SEC's Miami regional office, said, “The defendants never told investors the most important way in which these machines resembled ATMs ' as a source of ready cash from investors that the defendants used for their own benefit.”

The alleged scam ran dry in January, the SEC noted: “The scheme collapsed in typical Ponzi fashion once new investor funds dried up.” ' Hilary Johnson, The American Lawyer

Hearing Set in Battle to Obtain Spitzer E-mails Under FOIL

A former American International Group executive who has spent nearly seven years attempting to obtain Eliot Spitzer's private e-mails has issued something of a dare to the one-time attorney general and governor: If you insist there are no such e-mails, say so under oath.

Howard Smith, AIG's ex-CFO, is challenging Spitzer to swear under oath to what he has repeatedly said publicly ' that he never used a personal e-mail account to discuss an ongoing civil fraud case against Smith and AIG's ex-CEO Maurice “Hank” Greenberg.

Smith and Spitzer are battling over records that may or may not exist, and have nothing to do with a lingering fraud case Spitzer brought against Smith and Greenberg in 2005. Smith has long alleged that Spitzer used his private e-mail account to discuss the fraud case, and has suggested that if those e-mails are made public, they could prove embarrassing to Spitzer and would betray a hostility and animus toward the defendants that could evince prosecutorial misconduct. It is not clear how Smith would know the contents or substance of the alleged e-mails.

In any case, Manhattan Supreme Court Justice Charles Ramos, who is presiding over the fraud case, People v. Greenberg , 401720/05, has held that Spitzer's private e-mails are irrelevant and inadmissible, despite speculation from Smith that they could contain exculpatory evidence.

But the sideline issue of whether the government has an obligation to retrieve public records in the hands of a private citizen, and then make them available via the Freedom of Information Law (FOIL), is generating a plethora of issues that will be argued this month before NY Supreme Court Justice Christopher Cahill.

Smith v. Attorney General , 3670-08, began when Smith submitted a FOIL request to the attorney general's office, which is prosecuting the civil fraud case. Smith demanded that the attorney general obtain and reveal any private e-mails in which Spitzer, while still in office, discussed the matter.

The current attorney general, Eric Schneiderman, like his predecessor, Andrew Cuomo, claimed that FOIL did not require him to chase down records that were not in the state's custody or control. Cahill agreed with Smith, but the matter was appealed and the Appellate Division, Third Department, sent the matter back because Spitzer, who has an obvious interest in the case, had not been included.

Now that Spitzer is in the case, the matter had been slated for argument May 2 in Kingston, NY. The two sides in Smith v. Attorney General apparently agree that Spitzer, since he is no longer in public office, is not subject to FOIL. Where they differ is whether Schneiderman has an obligation or the authority to force Spitzer to give up private e-mails.

In his latest submission, Smith suggests that if Spitzer left office with e-mails discussing public business, then Schneiderman has a responsibility ' and the power under the Tweed Law ' to return what amounts to public property to the public. He notes that an appellate court in Alaska held as much in a case involving former Gov. Sarah Palin.

Smith, represented by Vincent Sama, a Kaye Scholer partner, argues that the open-government aim of FOIL would be frustrated if “an official could simply abscond with any embarrassing records after leaving an agency to prevent those records from becoming public.” That is an argument he has made all along. But in light of a recent motion in which Spitzer claimed his private e-mails are off-limits, and noticeably did not deny their existence, Sama suggests the matter could be put to rest if Spitzer will attest under oath that he did not use personal communications to discuss public business.

“It is extremely revealing that Mr. Spitzer, who is now a party to this action and has been afforded an opportunity to address his documented use of personal e-mails as a government employee, does not deny his use of personal e- mails to conduct official state business,” Sama said in court papers.

Sama said that Spitzer, once he was joined in the case in January, “could have taken the opportunity to weigh in on this dispute and once and for all affirm under oath the disingenuous statements he has made in the press denying the use of a personal e-mail account.”

Spitzer's attorney, Andrew Celli, a partner at Emery Celli Brinckerhoff & Abady, did not address the question in papers submitted March 28, a week after Sama called on Spitzer to swear an affirmation. Rather, Celli described as “beyond bizarre” the notion that an attorney general is obligated to retrieve non-FOILable/non-discoverable records and, by taking possession, make them subject to FOIL. Celli suggests that the maneuver is an end-run by Smith to discover records which he could not otherwise obtain.

“Neither FOIL nor its Article 78 enforcement mechanism is a discovery device for a disgruntled defendant charged with fraud to obtain 'discovery' from a private individual,” Celli wrote. “[Smith's] essentially frivolous request that the [attorney general] use the Tweed Law to obtain records from a former agency employee is not transformed into one with legal merit simply because he has had the enormous resources to pursue this FOIL litigation for six years with lawyers available to file any conceivable pleading, no matter how ill-supported.”

Assistant Attorney General Adrienne Kerwin has argued that FOIL does not compel disclosure of records that are not in the possession or control of the state at the time the request is made. The A.G.'s office has not taken a position on whether the e-mails exist. ' John Caher , New York Law Journal

SEC Halts What it Calls 'Virtual Concierge Scheme'

The U.S. Securities and Exchange Commission (SEC) recently announced that it had uncovered, and halted, an alleged Ponzi scheme in South Florida that lured investors ' via YouTube videos and seminars ' into buying into “virtual concierge” ATM-like machines.

The SEC charged Joseph Signore of West Palm Beach, Paul L. Schumack II of Pompano Beach, and their respective companies, JCS Enterprises Inc. and T.B.T.I. Inc., with multiple civil fraud counts related to violations of securities laws. The agency said it has also frozen assets related to the alleged scam and is seeking “disgorgement of ill-gotten gains, prejudgment interest, and financial penalties among other relief for investors. ” (The SEC noted that the U.S. attorney's office for the Southern District of Florida has filed criminal charges against the same defendants.)

According to the SEC, Signore and Schumack allegedly raised $40 million from investors across the country who believed they could reap guaranteed returns of 300% to 500% from investing in the “virtual concierge” kiosks. The machines were to be placed at airports, stadiums and other locations and used by consumers to search ' and obtain coupons ' for local products and services.

The SEC explained that the defendants used videos posted to YouTube to tout the scheme. In one such video, the SEC noted, an “investor” is shown polishing a new Cadillac while an onlooker asks, “What an amazing car! How can you afford this?” The investor responds, “My Virtual Concierge.”

Glenn Gordon, associate director of the SEC's Miami regional office, said, “The defendants never told investors the most important way in which these machines resembled ATMs ' as a source of ready cash from investors that the defendants used for their own benefit.”

The alleged scam ran dry in January, the SEC noted: “The scheme collapsed in typical Ponzi fashion once new investor funds dried up.” ' Hilary Johnson, The American Lawyer

Hearing Set in Battle to Obtain Spitzer E-mails Under FOIL

A former American International Group executive who has spent nearly seven years attempting to obtain Eliot Spitzer's private e-mails has issued something of a dare to the one-time attorney general and governor: If you insist there are no such e-mails, say so under oath.

Howard Smith, AIG's ex-CFO, is challenging Spitzer to swear under oath to what he has repeatedly said publicly ' that he never used a personal e-mail account to discuss an ongoing civil fraud case against Smith and AIG's ex-CEO Maurice “Hank” Greenberg.

Smith and Spitzer are battling over records that may or may not exist, and have nothing to do with a lingering fraud case Spitzer brought against Smith and Greenberg in 2005. Smith has long alleged that Spitzer used his private e-mail account to discuss the fraud case, and has suggested that if those e-mails are made public, they could prove embarrassing to Spitzer and would betray a hostility and animus toward the defendants that could evince prosecutorial misconduct. It is not clear how Smith would know the contents or substance of the alleged e-mails.

In any case, Manhattan Supreme Court Justice Charles Ramos, who is presiding over the fraud case, People v. Greenberg , 401720/05, has held that Spitzer's private e-mails are irrelevant and inadmissible, despite speculation from Smith that they could contain exculpatory evidence.

But the sideline issue of whether the government has an obligation to retrieve public records in the hands of a private citizen, and then make them available via the Freedom of Information Law (FOIL), is generating a plethora of issues that will be argued this month before NY Supreme Court Justice Christopher Cahill.

Smith v. Attorney General , 3670-08, began when Smith submitted a FOIL request to the attorney general's office, which is prosecuting the civil fraud case. Smith demanded that the attorney general obtain and reveal any private e-mails in which Spitzer, while still in office, discussed the matter.

The current attorney general, Eric Schneiderman, like his predecessor, Andrew Cuomo, claimed that FOIL did not require him to chase down records that were not in the state's custody or control. Cahill agreed with Smith, but the matter was appealed and the Appellate Division, Third Department, sent the matter back because Spitzer, who has an obvious interest in the case, had not been included.

Now that Spitzer is in the case, the matter had been slated for argument May 2 in Kingston, NY. The two sides in Smith v. Attorney General apparently agree that Spitzer, since he is no longer in public office, is not subject to FOIL. Where they differ is whether Schneiderman has an obligation or the authority to force Spitzer to give up private e-mails.

In his latest submission, Smith suggests that if Spitzer left office with e-mails discussing public business, then Schneiderman has a responsibility ' and the power under the Tweed Law ' to return what amounts to public property to the public. He notes that an appellate court in Alaska held as much in a case involving former Gov. Sarah Palin.

Smith, represented by Vincent Sama, a Kaye Scholer partner, argues that the open-government aim of FOIL would be frustrated if “an official could simply abscond with any embarrassing records after leaving an agency to prevent those records from becoming public.” That is an argument he has made all along. But in light of a recent motion in which Spitzer claimed his private e-mails are off-limits, and noticeably did not deny their existence, Sama suggests the matter could be put to rest if Spitzer will attest under oath that he did not use personal communications to discuss public business.

“It is extremely revealing that Mr. Spitzer, who is now a party to this action and has been afforded an opportunity to address his documented use of personal e-mails as a government employee, does not deny his use of personal e- mails to conduct official state business,” Sama said in court papers.

Sama said that Spitzer, once he was joined in the case in January, “could have taken the opportunity to weigh in on this dispute and once and for all affirm under oath the disingenuous statements he has made in the press denying the use of a personal e-mail account.”

Spitzer's attorney, Andrew Celli, a partner at Emery Celli Brinckerhoff & Abady, did not address the question in papers submitted March 28, a week after Sama called on Spitzer to swear an affirmation. Rather, Celli described as “beyond bizarre” the notion that an attorney general is obligated to retrieve non-FOILable/non-discoverable records and, by taking possession, make them subject to FOIL. Celli suggests that the maneuver is an end-run by Smith to discover records which he could not otherwise obtain.

“Neither FOIL nor its Article 78 enforcement mechanism is a discovery device for a disgruntled defendant charged with fraud to obtain 'discovery' from a private individual,” Celli wrote. “[Smith's] essentially frivolous request that the [attorney general] use the Tweed Law to obtain records from a former agency employee is not transformed into one with legal merit simply because he has had the enormous resources to pursue this FOIL litigation for six years with lawyers available to file any conceivable pleading, no matter how ill-supported.”

Assistant Attorney General Adrienne Kerwin has argued that FOIL does not compel disclosure of records that are not in the possession or control of the state at the time the request is made. The A.G.'s office has not taken a position on whether the e-mails exist. ' John Caher , New York Law Journal