Constant's pations

If it's more than 30 minutes old, it's not news. It's a blog.

Thursday, October 06, 2005

HW gets another example

It was only a frito, and then there was a lockdown.

HW likes to ignore threats of death, but some schools take frito's seriously.

[ Reader Tip: Harvard Westlake litigation articles are here in the archive. ]

* * *

Some schools see orange fritos and so something.

Looks like Harvard Westlake wanted an all out brawl on their hands before they did anything.

Too bad the court didn't dismiss the case.

Schools like Harvard Westlake appear to require WWIII as a wakeup [read ="Caplin's lawsuit"], and then they'll call their lawyer-lobbyists to put together a "really good story."

Latham only gave just over $7,000 and they get dragged into this? That's not enough money to pay for a round trip ticket, with stop over to Azerbaijan.

* * *

If a school got shut down because of a failure to respond to threats of death, would anyone care?

* * *

During a post-incident review, DoJ generally reviews the adequacy of management responses. They review the existing procedures, and consider what should have been done.

The curious things isn't simply what's in the procedures, but what a reasonable person or institution should have in place given the existing clearly promulgated statutes.

Some would like us to believe that "this was all unexpected." Strange, if you go back and look at the old files in DoJ you'll see the record is clear. There were even Congressional hearings on the matter and one of HW colleagues was invited. His son's name is Alex.

* * *

All that training, checklists, and public discussion at the PTA about safety of life issues. You'd think that parents, if they had children in school, might be concerned if the institution took a blase approach to problems.

But what would you expect form Harvard Westlake. Two months after there was a flood, one of their librarians starts sending out messages looking for guidance on what to do.

You mean the board of directors didn't have an oversight plan in place to ensure the requisite checklists for the library weren't already in place?

Apparently not. Or, there was a checklist about flood recovery which someone neglected to include in their nice binder.

* * *

Boards of directors are curious things. Especially when they have duties on other boards.

What makes the HW litigation so fascinating is that HW Board of Trustees has members from AIG.

AIG is a subsidiary of General Re, that big reinsurance company linked with both Warren Buffett and Charlie Munger, a member of the Board of Trustees at Harvard Westlake.

An AIG principal recently succombed to DoJ and AIG dutifully reported the blood bath, read ="indictment".

* * *

I'm all for directors hopping around the country and enjoying pristine hotel rooms when they partake in the travels.

I have a major problem, though with these boards of directors. They appear to face a challenge getting relatively "low risk" institutions like schools to get checklists in place and followed.

What's to be said of these boards of directors when they have to follow something a little more challenging like: Making capital allocation decisions or attesting to the veracity of their financials before the Securities and Exchange Commission?

Oh, wait . . ."That's the job of the CEO." The board is there just as a rubber stamp, I mean oversight.

"The business decision rule."

* * *

Looking for a great rate on Directors Liability Insurance?

The trick is to have the policy signed before the lawsuit gets filed.

Maybe next time.

* * *

You'd think the Enron debacles over audit committees would have been a wake up call, especially after the nice letters from Warren Buffet on the ethics obligations of the Berkshire Hathaway officers.

Warren was nice enough to include four questions in his personally-written annual report advising audit committees what to ask.

Let's be fair to Harvard Westlake. Who would expect any of the Board members from AIG to read Warrens questions.

* * *

Checklists aren't a new thing. What is new are the way that they're shredded. Andersen shred something on the order of 2,000 tons of paper.

* * *

My beef with the situation is when we find that paralegals are in a position to advise counsel of particular by laws of the San Marino City Club, but then the school wants us to believe that they did the right thing.

Last time I checked, the PTA is very vocal about the safety of life's issues. The good school webmasters have links to the PTA.

Strange, are we to believe that despite the well discussed DoJ training for parents, that the HW PTA didn't talk about safety of life issues?

* * *

Let's put yourself in the shoes of a parent. Suppose you had a child who attended another school; let's pick a random one like "Valentine Elementary".
How would parents at Valentine Elementary feel if "their children" were treated the same way the HW administration treated the Caplins, not just as parents, but as people, parents, and as aspiring, creative individuals?

Do you think it would be your job as a parent to take some interest in the PTA, make comments about schedules, and get involved?

Good parents do that. They are interested.

So the big mystery at HW was: Why did it require the catalyst of a "threat of death," to get a response?

You'd think that the PTA would have reviewed something.

* * *

At some point, the PTA would reasonably be expected to have brought in a trusted advisor, look at the existing procedures and ask, "What are our risks here?"

What makes the HW litigation issues so puzzling, though, is that the very entities that might do this review are related to Berkshire Hathaway.

Last time I checked, AIG gets paid big bucks to do risk mitigation reviews for clients, and then provide information in the form of working papers and client products, to ably advise clients how to mitigate their risks.

HW has on its board someone from AIG. What broke down?

* * *

I suspect the communication problem isn't isolated to the board.

Curiously, if we review the well written Anti-Slapp document by Mr Halket t, of Musick Peeler & Garrett LLP ["MPG"], we'll find a well researched paper.

But if we contrast what he wrote with what Neumeyer's counsel said, there's a major disconnect. Counsel would have us believe that Neumeyer was prepared to file an anti-slapp complaint.

Wait a minute. What about the deadline that Mr Halket t talked about: It's 30 to 60 days; and the statute that counsel is well versed in specifically states that the defendant [in this case, Neumeyer] could still file a claim after the plaintiff [in this case, Caplin] withdrew the claim.

But we have no complaint. Just talking. Or, talking to the Neumeyer-funded Student Press Law Center, ["SPLC"].

[For a detailed discussion of the apparent disconnects in Neumeyer-counsel's statements, go here.]

* * *

This leaves one to speculate that the communication between defense counsel isn't stellar, suggesting the defense isn't serious.

One question: If you're not serious about having a consistent message about Anti-Slapp, why not say, "We're not serious about defending the client" and encourage the defendant to settle?

* * *

Which brings us back to Musick Peeler & Garrett LLP. A former MPG attorney has apparently been working with an institution called the Rutter Group, producing videos on . . . [wait for it] hate crimes.
Don't GC's like to show these types of visual aids to the board as part of their fiduciary duty to a client; and aren't these meeting events documented in the discoverable board meeting minutes?

Interestingly, somewhat close to the UCLA Anderson school is the UCLA law school which has books about . . . [wait for it] hate crimes.
Don't GC's like to read that before they take the bar exam; or is this something on the elective list; and aren't there discoverable records of when specific books are purchased, borrowed, or acquired?

Things are in writing or on video for attorney MCLE.

Did this risk information information not get into the hands of the board, or staff like MR WEE, prompting the post-flood request in 2005?

All this information, expertise, but one small problem: When a young man needed help, where were you?

* * *

I'm not sitting here with a warm feeling that counsel, the client, and the court are necessarily on the same page.

The court is on the right page.

The question remains whether the page is full of information that is probative, or something that warrants a recycle on the workproduct.

Maybe they are, and I just don't see it.

Here's what I'd like to see:

Someone needs to review the internal management file which HW uses for its communication. I'd encourage you to look at the AIG or insurance-related questions going into the library around 21 Mar 2005.

Keep in mind, this is almost three [3] months after the HW flood was reported on or about 8 Jan 2005.

The file you're going to want to look for is located on this website: [ http://rdhw/hwmgnt ]; there may be an associated code: [ pwrm ]

For your convenience, if have provided a public source for this file here.

There is one searchable index of this file here:
1 users - Last action 6/16/2005 by tagcrawler
Tagged as: work - pwrm - management - internal - hw
rdhw/hwmgnt - View Shadow page
As you can see form this information at the link, the last time this information was known to exist was in 16 June 2005.

As you can see, the file is designated as an internal management file for Harvard Westlake. This permits them to communicate without having e-mails publicly posted on the internet.

Of note are the following key terms which specifically refer to "harvard westlake": hw.

If you click on the hw tag you will find that this is the common designation taggers or "users" use when referring to Harvard Westlake High School. This suggests the "hw" indication at the "pwrm" designation is linked to Harvard Westlake, and not some random code.

Based on information and belief, I conclude this is one of the files HW staff management uses to communicate that is private and not intended for public knowledge.

It remains unclear whether inter alia

  • A. HW has appropriately disclosed all the relevant information in the file as it pertains to MR WEE and the "flood mitigation plan"; or

  • B. There may be credible foundations to allegations that the directors and board of trustees knew, or should have known, about possible problems with internal risk compliance.

    In my view, this is an appropriate subject for the courts consideration whether to permit discovery in this area, under the supervision of an independent magistrate.

    I presume both plaintiff and defense counsel would concur the most prudent oversight of this discovery would be the capable and most excellent LA Superior Court.

    To be clear, I make no warranties or assurances that this file has any up to date information, still exists, or contains information; I merely present it as a possible option for your consideration.

    If the file did, at one time exist, but is no longer searchable, I would encourage the court to consider at its convenience Certified Fraud Examiners to determine whether there has been an communication ordering its destruction.

    * * *

    Regardless the actual system used for HW communication, there is a non-public system in place.

    The e-mail you're looking for relates to specific communications from the outside directors, board, or management to the library staff dated prior to Mr DAVID WEE's message: [ Mar 21 2005, 14:03:59 EST ].

    In the responses, Mr DAVID WEE was specifically referenced to a contingency plan located here.

    The plan is interestingly not a recent publication. Something that has been around. For a while.

    * * *

    What would explain the time delay between the publication of that document, and someone requesting general information about that topic?

    When a school hires people in the human resources department, is it clear what criteria is used to ensure personnel are adequately qualified for the positions?

    Are the requisite training programs required to bring personnel up to standard in place, reviewed, and how are "areas for improvement" monitored and tracked?

    * * *

    When you do your data discovery, you want to review all the documents that have the following words either in an outgoing, or incoming message. This is MR WEE's message [Mar 21 2005, 14:03:59 EST]:
    Does anyone have a library specific emergency plan written up that you might be willing to share? We are hoping that someone has a plan that addresses issues including, but not limited to, things like: broken pipes, damage from rain, mold infestation, etc. What supplies should we have on hand? What procedures should be followed? What are the priorities that the library staff should have in responding to emergencies? (Student safety first, then what?)

    I'm working on something, but I'm sure that I must be reinventing the wheel (and I'm sure that I'm not doing it nearly as well as the original wheel inventor-person). Ref

    The year is 2005. Harvard Westlake has been ably lead by a board of directors for many years.

    Suddenly, two months after the Jan 05 flood the call for a risk mitigation checklists goes out. Not just to a specific person, but a shot gun request for help to anyone.

    All these years, and . . .

  • A. Nobody noticed this "missing plan"?

  • B. What other plans did "someone" forget to "acquire"; or are we still not sure?

  • C. Who was responsible for doing these internal reviews to ensure sufficient risk mitigation?

  • D. How were the HW insurance rates adjusted by the insurance agent when in consultation with the HW GC and/or CFO and/or other HW personnel or members of the board of trustees?

  • E. Did anyone attest to the completeness of the risk mitigation plans to the insurance company?

  • F. Was there any interesting relationship between the HW GC, HW Board of Directors, and the personnel at AIG or other insurance companies in setting and confirming rates provided for adequate risk mitigation?

  • G. Is this inside or outside someone's job description?

  • H. What was the "big incentive" to suddenly ask for this plan in Mar 2005, almost three months after the flood reported in Jan 2005?

  • I. If the "flood never happened," why were students given the day off from school?

    * * *

    HW's problem at this point is that this record exists outside their IT control. Even if all the internal files have been wiped out, we know this communication was made.

    Burden of proof to provide information, copies, and other associated triggering documents: HW.

    Scale has just nudged in favor of Caplin.

    * * *

    Apparently, HW didn't have a plan in place to mitigate the forseeable risk of flooding.

    Why should I believe they had a credible plan in place to handle something well discussed like hate crimes?

    Scale tilting more in Caplin's favor.

    * * *

    If, by the off chance all the files at Google and the educational institution go missing, you have another discoverable source: MPG review files.

    POC: Fred Kong, MPG IT department.

    If you need confirmation of this employee at MPG, here is a picture of his car, and a close up of the strut.

    You'll find cash receipts covering the cost of the materials in his personal financial records, bank accounts, and other financial payments covering the costs of the maintenance.

    Should there be any unusual problems, I'm sure Mr Kong will be most eager to assist in lawful discovery for the benefit of the court.

    The financial documents related to this BMW can be subpoenaed from the following address:
    M B Auto Inc
    2727 Stingle Avenue
    Rosemead, California
    Phone: 626-572-3266

    Mr Kong can also provide details on the MPG communication "glitches" that may arise when their counsel has occasion to use [ Model 3.14 t-mobile ], known as a [ Jeff's 4.00.16 ]. Other markings and codes associated with the MPG communication system include [ RS 6.1x ]

    In these accounts you will also find records associated with Mr Kong's purchase of a
    2002 BMW S4 30
    Warranty: 100,000 miles
    Purchase price: $46,999
    The purchase was made on or about 14 August 2005, approximately 60 days ago using $US denominated currency. MB Auto is, or should be, in a position to provide FDIC tracing numbers to accommodate plaintiff discovery of Mr Kong's personal financial records.

    To avoid this unnecessary but possible digging, we would hope, in the interests of timely justice, that the easy answer would be truthful answers related to MR WEE's library communications.

    * * *

    Once HW management asserts under penalty of perjury in writing to the court that there [ is/is not ] anything in that file [ http://rdhw/hwmgnt ] of interest to the court in re communications on checklists, I encourage third parties to provide that information to DoJ and let the Certified Fraud Examiners [CFE] take a look.

    Just as a courtesy for the court.

    Here's a hint: There's a back-up file which HW doesn't control. If any of the files are destroyed, you can rely on the Morgan Stanley ["MS"] case in re Perlman.

    The court found that MS had failed to provide information, and that the jury could presume fraud, otherwise known as an "adverse inference."

    It remains to be understood through discovery whether HW has a similar "issue."

    I trust that this can be timely resolved in short order. We remain open and look forward to the wise judgment of the court.

    * * *

    It's time for the public to ask: What kind of system do you want at Harvard Westlake:

  • A. One that talks about creating leaders; or one that simply exercises leadership by example?

  • B. One that talks about greatness; or one that does great things, even in the smallest moment?

  • C. One that talks about compassion; or what the demonstrates it for the most vulnerable: Children.

    * * *

    I expect boards of directors to do your job. Boards of Trustees are guides of great sailing ships. But those ships can waver from well charted courses.

    If you as a director find it difficult to perform your fiduciary duty in a relatively low risk environment like a class room or institution of learning like a high school, why should I believe you're reliable in making capital allocation questions in the financial market.

    That's not a question.

    The burden of proof rests with the board: Demonstrate competence, accept responsibility.

    Then we'll talk about conferring trust in more complicated areas like insurance management and capital allocation.

    The board knows about checklists. Insurance actuaries use them all the time.

    The idea of service to a non-profit is to apply your cumulative knowledge. If someone is a webmaster, paralegal and a member of the PTA, I expect them to communicate, especially when they are producing by-laws.

    It is reasonable when discussing school concerns that members of the board and PTA would have a discussion on safety of life issues, and that counsel would review the issues with trusted advisors.

    There is far too much information floating around on the internet, at the UCLA law school, and from DoJ to credibly believe someone "didn't know" about hate crimes.

    The checklists, links, public articles, training, and public statistics go back well into the early 1990s.

    It appears all this information was not applied despite multiple Congressional hearings.

    * * *

    We have a reasonable reason to be concerned. The boards are there to lead, not use the "enormity of the issue" to feign otherwise.

    The boards were given a wakeup call in the 1990s with the SEC Blue Ribbon Committee on Audit Committee Effectiveness. Despite a clear finding that the boards were not providing enough leadership, here we are in 2005 essentially asking the same question: Where was the experienced, competent board at Harvard Westlake?

    I think the real issue is someone didn't care.

    You made a poor decision.

    If you can't handle the "simple" risk management issues like safety of life, it's reasonable to broaden the inquiry into "what other issues" the board members are not taking care of in re financial stewardship, audit oversight, and SEC compliance issues.

    This may not end at the walls of HW or at the feet of the Harvard Westlake Board of Trustees.

    Elliot Spitzer is already going through AIG files.

    We look forward to more discovery.

    * * *

    The broken windows theory explains how things continue to fester.

    Who got intimidated to be quiet about the apparent oversight problems with risk management at HW; or was someone offered a nice promotion on a cushy board if they "just played nice"?

    Curious how little can be done despite the money flows. Isn't that backwards? isn't money paid to do things.

    Then again, maybe there's a curious contract rule applied: The money goes in, and some unknown party was rewarded for doing less than what a reasonable person with equivalent position requirements would be expected to inter alia: Achieve, perform, accomplish, do, monitor, verify, ensure as an end result, make sure it gets done: Risk management issues are addressed, not explained away.

    Or was someone paid to not do or improperly do something that they reasonably knew they had the requisite duty to perform?

    What's that noise?

    It's a sea gull ["little bird," "water fowl," "bird," "creature of the sea"], making an etching on a piece of wood floating by the Santa Monica pier.

    I think the bird is saying something.

    Let's look closely, I see hints of letters.

    The little water fowl has left strange markings in the wood, reading: M A L F E A S A N C E.

    What could that possibly mean?

    I sense the little creature of the sea is trying to say two things, which I tend to believe, although the court has yet to adjudicate:

    A. Seagull suggests, "This is not a good thing, especially when dealing with corporate laws, boards of directors, and that nasty thing called fiduciary duty"; and/or

    B. Bird is implying, "But then again, that's just my personal opinion and I'm not accusing anyone of a crime. I'll wait for Elliot Spitzer to do that."

    * * *

    Oh, wouldn't it be funny if money was flowing around so quickly through the board of directors that it somehow got tangled up with Congressman Delay's problems?

    Western Area Power Authority. Strange how I keep seeing the same lobbyist names on the White House advisory committees that . . . ah, we'll let Mr Fitzgerald in Chicago make the appropriate disclosure.

    Maybe I'm getting ahead of myself. Warner Brothers prefers camera-ready scripts.