A federal court in Illinois has dismissed a claim filed by the U.S. Environmental Protection Agency (EPA) under the Comprehensive Environmental Response, Compensation and Liability Act (CERCL A) against the possible owner of a contaminated site in Chicago, ruling that the claim was barred by the statute of limitations United States v. Capital Tax Corp., No. 04-4138 (N.D. Ill. 4/16/12).  

The named defendant, Capital Tax Corp., acquired the former site of a paint factory at an undisclosed time. In 2004, EPA spent more than $2 million removing hazardous substances from the site and later the same year filed a CERCL A lawsuit against Capital Tax and three individuals to recover its response costs. At trial, Capital Tax admitted owning the site.  

After the trial court found Capital Tax liable as an owner, the company appealed to the Seventh Circuit, arguing that it had reached an agreement with an individual, Marvin Dukatt, to sell the property to him, and was therefore, not the owner. Dukatt denied there was an agreement. The appeals court remanded the case for consideration of whether Capital Tax and Dukatt “entered a valid, oral agreement for the purchase” of the site, “such that an equitable conversion had occurred . . . .” In an affidavit, Dukatt said he had reached agreement with Capital Tax but had reneged after EPA became involved.  

In March 2010, the United States amended the complaint to add Dukatt as a defendant. Dukatt then moved for summary judgment, arguing that the government’s claims were time-barred. The government argued that Dukatt should be equitably stopped from asserting the statute of limitations or that the statute should be equitably tolled because Dukatt did not deny entering an agreement with Capital Tax until after the statute had run.  

Ruling for Dukatt, the court held that for equitable tolling to be appropriate, plaintiff must show “(1) that he has been pursuing his rights diligently, and (2) that some extraordinary circumstance stood in his way and prevented his filing.” For equitable estoppel to apply, the government would have to show (1) improper conduct by Dukatt; and (2) that it actually and reasonably relied on his conduct. The court ruled that equitable tolling was not factually justified and that, as to equitable estoppel, the government never asserted that it relied on Dukatt’s assertions.


AIG ex-CEO Greenberg fraud case cleared for trial

 A New York appeals court on Tuesday cleared the way for former American International Group Inc Chief Executive Maurice "Hank" Greenberg case to go to trial in the state's fraud lawsuit against him over two suspect reinsurance transactions.
The appeals panel said a lower court judge was premature to hold Greenberg and former AIG Chief Financial Officer Howard Smith liable in October 2010 for damages over an auto warranty insurance transaction with Capco Reinsurance Co, which the state called a sham that helped AIG hide more $200 million of losses, but New York State Supreme Court Justice Charles Ramos rejected the defendants' bid to dismiss claims over a better-known transaction with reinsurer General Re Corp. The state said this transaction helped AIG inflate loss reserves by $500 million without transferring risk.

General Re is a unit of Warren Buffett's Berkshire Hathaway Inc .

The unsigned 4-1 decision is the latest saga in a case dating from 2005, when then-New York Attorney General Eliot Spitzer accused Greenberg and Smith of helping to engineer the transactions to hide losses at AIG, which had been the largest U.S. insurer by market value.

These transactions led AIG to restate its 2001 to 2004 financial statements. Spitzer's successors Andrew Cuomo and Eric Schneiderman have also pursued the civil case, which invokes the Martin Act, a powerful state law to combat securities fraud.

James Freedland, a spokesman for Schneiderman, said: "We are pleased that the court has paved the way for a trial to hold the defendants accountable for perpetrating a major reinsurance scheme to defraud investors."

Greenberg and Smith plan to ask the state's highest court, the Court of Appeals, to dismiss the entire case, according to a joint statement from Greenberg's lawyers David Boies and John Gardiner and Smith's lawyer Vincent Sama.

The attorney general "failed to develop and present any proper, admissible evidence to support its allegations against Mr. Greenberg and Mr. Smith," Boies and Gardiner said.

The appeals panel said there are "triable issues of fact as to whether defendants knew of, or participated in the fraudulent aspects of the Gen Re and Capco schemes, given the nature and degree of their personal involvement in both of the challenged transactions, as well as defendants' responsibilities within the corporation."

It also said a definitive ruling on Capco was premature in light of the defendants' sworn denials that they had committed fraud, and their testimony that an AIG senior vice president had assured them that the transaction was proper.

Justice James Catterson dissented. He said that federal law preempted the state's case, and that even if it did not the General Re claims should be thrown out.

Greenberg left AIG in March 2005 after nearly four decades at the helm. AIG in 2006 paid $1.64 billion to settle federal and state probes into its business practices, and in July 2010 agreed to pay $725 million to settle a shareholder lawsuit accusing it of accounting fraud and stock price manipulation.

AIG's transaction with General Re led to five convictions and two guilty pleas of former officials of those companies. A federal appeals court threw out those convictions last August, and a new trial has been scheduled for January 2013.

The U.S. government still owns 61 percent of AIG following $182.3 billion of taxpayer-funded bailouts in 2008 and 2009.

Greenberg's company Starr International Co, once AIG's largest shareholder, is suing the government for $25 billion, calling the bailouts unconstitutional.

The case is New York v. Greenberg et al, New York State Supreme Court, Appellate Division, 1st Department, No. 5297.

(Reporting By Jonathan Stempel in New York; Editing by Phil Berlowitz) SOME MORE EDITING BY ME.

(AIG obtained the 'fraudulent reinsurance' from General Re at the same time it assumed the obligation and liability for Iron Mountain Mines Superfund cleanup; as a result, it's ratings and it's subsidiaries ratings didn't even budge in spite of their assuming potential unlimited CERCLA superfund liabilities. After it's contractor filed bankruptcy in 2002, AIG took over the daily maintenance of Iron Mountain Operations, LLC;  in 2003 it petitioned the court to be excused from finding another contractor;  the court observed that as a rule fiduciaries are prohibited from doing business with themselves as trustees and contractors, but with the DOJ's and EPA's support, the Eastern District Court's judge Levi waived the prohibition, because AIG was such a big, responsible, & triple A rated company.  Since the 2008 bailout, the federal government has owned a controlling interest in AIG. No word from the courts on the issue of a new waiver for the rule of prohibition forbidding a contractor from doing business with itself as fiduciary, trustee, and Lead government oversight agency.  Warren Buffet invested $50,000 in Iron Mountain Mines original hydropower project in 1980, but Ted Arman cancelled the deal after  Buffet tried to take over the project. ) -Ed.

Clean Cities significant obstacles: 1) Policies; 2) Barrier Reduction; 3) Safety and Training; and 4) Market Development/Outreach.

Risk. A combination of the likelihood that a negative outcome will occur and the severity of the subsequent negative consequences.

Humans at risk

Most people bitten by a mosquito carrying West Nile experience no symptoms. Twenty to 30 percent, however, will contract West Nile fever and flu-like symptoms, according to the Contra Costa Mosquito & Vector Control District. Since 1999, the U.S. has had more than 30,000 reported human cases, with 1,220 deaths.

"We could definitely see an increase in the number of human cases of West Nile virus," said Steve Schutz, scientific program manager for the Concord-based agency.

Scientists from the state's 65 vector control agencies are meeting at their annual conference in Burlingame this week to discuss the issues.

Leaders of the mosquito-abatement agencies in Alameda, Contra Costa, Santa Clara and San Mateo counties all said they believe the restrictions on fogging are unnecessary and could complicate long-term efforts to combat West Nile.

With months before the fogging season begins, mosquito control agencies are crossing their fingers and lobbying legislators to halt the regulations.

"It's the only known way to reduce adult mosquito populations," said Gary Goodman, assistant manager for the Sacramento-Yolo agency, stressing that the products are sanctioned by the EPA.

Mosquitoes already have awakened from their hibernation, and a late rain could create perfect breeding conditions for West Nile, just as a federal court ruling imposes strict regulations on the use of mosquito-abatement pesticides.

The ruling, which took effect in the fall, requires pesticide use to adhere to the Clean Water Act, meaning seasonal fogging may cease in parts of the Bay Area. That will increase the chances of humans getting infected with the potentially fatal virus, experts say. A bill that would free vector control agencies from these rules is stuck in Congress.

Meanwhile, the agencies are watching closely an infestation of the Asian tiger mosquito in Southern California. This dangerous mosquito can carry not only West Nile but also dengue fever, known as "break-bone fever" because of its accompanying joint and muscle pains. This mosquito was found in Santa Clara County six years ago but was quarantined before it could spread.

House of Representatives Bill 872, which would reduce the regulatory burdens, passed the House but has stalled in the U.S. Senate. The bill has enough votes to pass, but Sen. Barbara Boxer, D-Calif., has put a hold on it, said Sacramento-Yolo manager David Brown.