Court filings in California AG’s cease and desist order against three charities

Image courtesy of Adobe Stock.

I’m reading through the filings for the AG’s cease and desist order against MAP International, Catholic Medical Mission Board, and Food for the Poor. The hearing on the order is underway this week. It will continue for the next two weeks, according to the schedule.

Although the filings are public information, they are not available on the Internet. Instead, they must be obtained directly from the state. It took several phone calls, and getting forwarded to another office, but I did reach the person responsible for responding to media requests. When I finally reached the right person, she was extremely helpful and very prompt.

So, I now have a huge amount of reading to do.

As time is available over the next few days and weeks I will comment on different things visible in the filings.

 

A few preliminary thoughts.

This is a major battle. The charities are responding accordingly.

There are some big names listed as expert witnesses. Don’t know what their billing rates are because I choose to avoid public companies and litigation work like the plague, but will make a wild guess the string of experts have billing rates far above $500 an hour.

There are a lot of litigators listed as representatives of the charities. Once in a great while I have the fortune (misfortune?) of seeing legal invoices from my clients who are in a mess of some sort. In less severe cases rates might run north of $300. In this situation, I’ll make a wild guess the supporting staff attorneys are billing out at those rates with the lead litigators billing far higher than that.

Anyone want to share their guesses at what the billing rates are for litigators and expert witnesses at that level?

There are also going to be some CPA firm partners on the stand during the hearings. If my first glance through is close to correct, there are three partners from CapinCrouse and one partner from Marks Paneth that are in LA today ready to testify. (Note to practicing CPAs – how would you like to be 13 years out of college and on deck to testify in a case like this about your audits 3 to 6 years ago?)

 

Pro Hac Vice – Now there is a term I’ve never heard before.

It means for or on this occasion only. An attorney who is not licensed to practice in a state can receive permission to work on a specific case. This concept means the charities are bringing in out-of-state litigators to handle their case.

One of the two attorneys for FftP is appearing pro hac vice.

Three of the four attorneys for MAP are appearing pro hac vice. Two of them were reminded by the administrative law judge on 8/22/18 that they were not licensed in the state and were advised they could not appear again unless they receive permission to do so.

Oops. Does that mean they were practicing law without a license? They gained such special dispensation by the time they filed prehearing disclosures on 10/30/18.

Of the four attorneys for CMMB, three have California licenses. The fourth has a New York license but is not listed as pro hac vice. I don’t know how that works.

That means there are ten named litigators lined up for the three charities. I’ll guess that means there will be somewhere between 6 and 10 in court for the hearings. I’ll also guess each of the charities will also be represented by two or three or more staff attorneys in the court to help out.

If you start doing the math in your head, keep in mind the hearings are scheduled to run 15 days, with my guess of 6 hours a day, with all three charities having their full team in court all the time. If you really want to extend out the math, make a guess on the massive preparation time needed for a major trial.

 

Yet another in a long list of things I’ve learned: The prehearing disclosures list the witnesses and give their background. There is also a paragraph or so describing what their testimony will contain, basically where they will go on the stand. Even for little ol’ me, that provides an outline about the overall plan for each of the charities. Fascinating stuff.

Oh, and all exhibits that will be used in court need to be provided in advance of the hearing in a three-ring binder. Four sets must be submitted, with a copy for the ALJ, counsel for each side, and any witness who will be on the stand.

 

Consolidation and bifurcation. (Hey, now how often does a CPA get to actually use those words? In public?)  On 9/21/18, the Presiding Administrative Law Judge ruled that the three cases would be consolidated and that the combined case would be bifurcated, as requested by each of the three charities in their appeals. This means all three cases are now combined and the GAAP compliance issue will be addressed first. If the AG does not sustain their argument that the accounting is contrary to GAAP, the case is over. If the AG does sustain their position, then the remaining issues will be heard.

There are a lot of filings arguing about the consolidation and bifurcation on the docket. I am not going to read through those filings, mainly because the end result of the paper flurry is the case is proceeding on the basis of being consolidated and bifurcated.

Will post more as I have time.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: