Articles Posted in Expert Witness News

In The New Frontier of Negative Rates and Banking, business expert witness Douglas E. Johnston writes:

How Are Other Financial Institutions Responding to Ultra Low and Negative Rates?

Eurofi, a European-based think tank chaired by former IMF Director Jacques de Larosiere which carries the support of ECB President Mario Draghi, has the stated goal of ‘fostering growth in a highly indebted EU environment.’ In remarks prepared for the April 23-25 Eurofi High-Level Seminar and delivered on behalf of the Basel-based Bank for International Settlements (often known as the central banks’ central bank), 20-year BIS veteran and Deputy General Manager Herve Hannoun recently addressed the growing phenomenon of negative interest rates among a ‘Who’s Who’ of central bankers, international banks, insurance companies, financial market makers, rating agencies and regulators. Eurofi’s many activities have included the pursuit of a possible new Capital Markets Union (CMU) under the recent leadership of Lord Hill of London. Among its initiatives, Eurofi is addressing the technological and regulatory framework for new growth-oriented lending and capital market mechanisms across Europe. Given the recent emergence of crowd-funding, P2P (Peer-to-Peer) financial activities, and promising new technology and delivery platforms, one possibility before Eurofi is to reconsider the traditional role of how commercial banks have functioned as intermediaries between depositors and business borrowers. With negative rates, the linkage between expanded business lending activity, increased monetary velocity and broad economic growth now appears clearly to be a higher priority for European central banks and regulators.

As the BIS’ Hannoun noted in his published remarks, “An experiment is under way in continental Europe to test the ‘boundaries of the unthinkable’ in monetary policy…The main aim of an ultra-low interest rate policy is to deter saving and encourage borrowing.” Interested US-based banks and institutions were amply represented at the Eurofi Seminar, and they will no doubt give due consideration to growth mandates and possible banking developments on this side of the Atlantic as well. As noted, the full implications of negative rates are still unfolding. For the present, one result may be that banks do more than ever before to enhance economic growth. Institutions, private investors and those interested in alternative investments around the world will be following this story, and to assess where to invest. As NYT best-selling economist and author Jim Rickards has recently noted, “in a world of negative interest rates, gold (becomes) a ‘high yield’ asset.” An environment of negative interest rates, if it continues, seems likely to produce other emerging issues.

Doug Johnston (through Five Management, LLC) is an expert witness in banking/lending and an investigative business consultant specializing in Commercial Banking & Lending, Private Equity, and International Banking.

On June 4, 2015, the Forensic Expert Witness Association (FEWA) will present the webinar Lawyers and Experts: Beware of Daubert, Robinson, and Kuhmo in 2015.

The presentation will be an in-depth review of motions to strike. Topics that will be covered include the following:

Motion to strike actual filing Expert’s affidavit in response to motion to strike Examples of over 25 actual motions to strike and subsequent rulings 2015 update on Daubert, Robinson and Kuhmo

The presenter is Dallas FEWA member EJ Janik, CPA, CFE, CFF. Mr. Janik is President of Janik Forensics, PC, a certified public accounting and consulting firm. Mr. Janik’s 33 years of professional experience includes but is not limited to: financial audits, compilations and reviews, consulting / commercial litigation / antitrust matters, engineering and construction matters, real estate, and bankruptcy / business reorganizations for Fortune 500 companies, public, and private entities in a variety of industries. He holds a Master of Science in Accounting from Louisiana State University and a Bachelor of Commerce from Rice University.

The webinar will be held at 1pm PDT/4 pm EDT. More information here.

Founded in 1994 in Orange County, California, the Forensic Expert Witness Association (FEWA) is dedicated to the professional development, ethics, and promotion of forensic consultants in all fields of discipline. FEWA brings together a diverse group of professionals sharing common goals related to forensics. The association offers to its members the opportunity to enhance their knowledge and techniques required to perform in an effective manner.

Over the last twenty years, FEWA membership has grown and expanded with the following chapters. FEWA Chapters provide great value to members as they provide continuing education offerings and networking with fellow forensic consultants and attorneys at local meetings. FEWA currently has nine active chapters that are governed by a local chapter Board of Directors as subsidiaries of the FEWA National Office and National Board of Directors.

In The New Frontier of Negative Rates and Banking, business expert witness Douglas E. Johnston writes:

While financial market observers in the US remain focused on the timing and magnitude of the Fed raising target interest rates over the months ahead, European bond markets have begun to experience just the opposite – the never-before-seen phenomenon of actual negative bond market interest rates. Since the Global Crisis of 2008, which saw both the Fed and foreign central bankers seeking both to calm markets and to encourage growth by reducing rates to the ‘zero bound,’ interest rates for bellwether German bonds and across Europe in late 2014 crossed into negative territory, and for the first time in world history. As noted recently by iconic market veteran Art Cashin, now Director of NYSE Floor Operations for UBS Financial Services, over 30% (approximately $2.2 Trillion) of the highest-rated sovereign debt in Europe now bears a stated negative interest rate. Over 70% of all German government bonds now carry negative stated rates, and there are indications these conditions may become even more wide-ranging and spill over to US markets. After more than six years of various central bank ‘Quantitative Easing’ (QE) stimulus programs including scheduled open-market bond purchases, negative interest rates now clearly constitute the ‘new frontier’ of central bank monetary policy. Numerous other policy implications regarding negative rates are still unfolding in an uncharted scenario, which even the founder of modern monetary theory, John Maynard Keynes, did not foresee.

In an environment of ultra-low and negative rates, non-interest-bearing asset classes including commodities should become more attractive. Therefore, one major historical disincentive to buying oil and gold, for example, may have been removed. Stated differently, increasingly negative interest rates should be positive for commodities, because the imbedded math suggests that an investor is effectively paid to hold them, as compared to holding negative-rate financial instruments.

Negative Rate Policies Have Major Implications for Commercial Banks
On the surface, negative interest rates represent a confusing and counter-intuitive ‘new math’ which can be difficult to grasp. Stated plainly, at least $2.2 Trillion of European bond investors are now paying for the guaranteed right actually to lose principal, and to receive back less than they have invested. This highly unusual scene seems to tell us that at least some sophisticated institutions are perhaps embracing the loss of some principal by investing with various sovereign governments, rather than face the loss of even more principal by making other types of investments. Viewed from a slightly different but equally important commercial bank perspective, negative rate monetary policy also seems very plainly to encourage far more aggressive commercial bank lending activity. Negative rates may serve to penalize banks which do not lend, or at least which do not lend to businesses in sufficient volumes to promote desired growth.

Bank lending to businesses has long been regarded as the grease of the wheels of commerce and growth since the days of Adam Smith. Unfortunately, for today’s central bank growth advocates, many commercial banks have been more reluctant to lend into the slowing-growth economies of the US and Europe, where lending activity has been essentially flat over much of the past five years, as compared to the higher-growth economies of the BRICS and other countries. Risk-averse banks have, in a way, preferred to lend their surplus funds to low-risk governments rather than to higher-risk businesses, yet now they may be penalized and urged to shift out of the lower-risk status quo. By adding a mathematical penalty to banks in the form of negative interest rates, the new paradigm thus has added implications which appear to run directly opposite to the risk-averse Basel I-III bank capitalization and risk guidelines which were introduced in 1985. The Basel Accords now carry the effective weight of core bank regulatory guidelines around the world. They are already well known and widely followed by and among the FDIC and metropolitan banks, as well as by virtually all community banks across the US. Changing the risk focus of central bank lending guidelines which have been built steadily and by global consensus over the past thirty years is certainly no small thing to consider.

Doug Johnston (through Five Management, LLC) is an expert witness in banking/lending and an investigative business consultant specializing in Commercial Banking & Lending, Private Equity, and International Banking.

Slip, trip and fall expert witnesses may testify and provide reports regarding railings, barriers, slip and fall accidents, slippery conditions, stairs, and more. Architect and expert witness Randy Atlas is presenting the CEU program Slips, Trips, and Falls: The Architect’s Role in Mayhem on May 20th in Pembroke, Pines FL. Mr. Atlas is the President/Owner of Atlas Safety & Security Design. Sponsored by AIA Fort Lauderdale, the program description is as follows:

Have you ever been brought into a lawsuit as a result of a slip and fall at one of the building’s you designed? Randy Atlas, President and Owner of Atlas Safety & Security Design, will show you how to reduce the opportunity for mishaps in your designs in such areas as level changes and miscommunications in pedestrian path of travel. He will also go over the consequences of careless design with case studies of projects where mistakes led to litigation.
More information here.

Zoloft MDL presiding Judge Cynthia M. Rufe, E.D. Pa., granted the plaintiffs motion to present a new pharmaceutical expert witness. Hundreds of Zoloft birth defect lawsuits have been filed. The antidepressant manufactured by Pfizer is tied to an increased risk of defects like persistent pulmonary hypertension in infants. Other serious side effects include seizures, heart defects, autism, and malformations of the skull or brain.

U.S. District Court, Eastern District of Pennsylvania website: About MDL 2342.
This Multidistrict Litigation (“MDL”) was created by Order of the United States Judicial Panel on Multidistrict Litigation (“MDL Panel”) on April 17, 2012. The typical case involves claims by a plaintiff from anywhere in the United States against defendant Pfizer, Inc., and may name other defendants as well.

In its April 17, 2012 Order, the MDL Panel found that the actions in this MDL “involve common questions of fact, and that centralization in the Eastern District of Pennsylvania will serve the convenience of the parties and witnesses and promote the just and efficient conduct of the litigation.”

The MDL Panel noted that the actions “involve allegations that Zoloft, a prescription medication approved for the treatment of depression and other ailments, causes birth defects in children when their mothers ingest the drug while pregnant.” Pfizer and the other defendants deny these allegations. The Panel further found that “[c]entralization will eliminate duplicative discovery; prevent inconsistent pretrial rulings; and conserve the resources of the parties, their counsel and the judiciary.”

Official contacts are as follows:

Presiding Judge: The Honorable Cynthia M. Rufe Secretary/Civil Deputy: Velma T. White Courtroom Deputy: Erica Pratt United States District Court Eastern District of Pennsylvania Courtroom 12A James A. Byrne U.S. Courthouse 601 Market Street Philadelphia, PA 19106 Telephone: (267) 299-7490 Fax: (267) 299-5077
Plaintiffs’ Liaison Counsel: Stephen A. Corr, Esq.
Stark & Stark, P.C.
777 Township Line Road Suite 120 Yardley, PA 19067-5559 Telephone: (267) 759-9684 Fax: (267) 907-9659 E-mail: SCorr@Stark-Stark.com
Defendants’ Lead and Liaison Counsel: Mark S. Cheffo, Esq.
Quinn, Emanuel, Urquhart & Sullivan, LLP 51 Madison Ave.
22nd Floor New York, NY 10010 Telephone: (212) 849-7000
Plaintiffs’ Steering Committee Co-Lead Counsel:
Dianne M. Nast, Esq.
NastLaw LLC 1101 Market Street Suite 2801 Philadelphia, PA 19107 Telephone: (215) 923-9300 Fax: (215) 923-9302
Mark P. Robinson, Jr., Esq.
Robinson Calcagnie Robinson Shapiro Davis, Inc.
19 Corporate Plaza Drive Newport Beach, CA 92660 Telephone: (949) 720-1288 Fax: (949) 720-1292

Food safety expert witnesses may consult on food borne illnesses, food handling, restaurant industry standards, and food poisoning. This week Bidart Bros. expanded an apple recall to include all granny smith and galas shipped from its Shafter, Calif., facility after two strains of Listeria monocytogenes were confirmed in the apple processing plant. The bacteria are believed to be the same ones associated with the 2014 outbreak that killed seven people and sickened many more. The recall first targeted packaged caramel-coated apples but the recall has been broadened to all shipments of Bidart Bros. Granny Smith and Gala apples.

On 1/10/15 CDC.gov posted:

CDC is collaborating with public health officials in several states and with the U.S. Food and Drug Administration (FDA) to investigate an outbreak of Listeria monocytogenes infections (listeriosis) linked to commercially produced, prepackaged caramel apples. Listeria can cause a serious, life-threatening illness.

People at higher risk for listeriosis include adults 65 years or older, people with weakened immune systems, and pregnant women.

On January 6, 2015, Bidart Bros. of Bakersfield, California voluntarily recalled Granny Smith and Gala apples because environmental testing revealed contamination with Listeria monocytogenes at the firm’s apple-packing facility.

On January 8, 2015, FDA laboratory analyses showed that these Listeria isolates were indistinguishable from outbreak strains by pulsed-field gel electrophoresis (PFGE).

Listeria isolates from whole apples produced by Bidart Bros., collected along the distribution chain, were also indistinguishable from outbreak strains by PFGE.

Consumers should not eat any recalled Granny Smith and Gala apples produced by Bidart Bros., and retailers should not sell or serve them.

Consumers who are buying or have recently bought Granny Smith or Gala apples can ask their retailers if the apples came from Bidart Bros.

Consumers should not eat commercially produced, prepackaged caramel apples that were recalled or made with Bidart Bros. apples, and retailers should not sell or serve them.

Happy Apples, California Snack Foods, and Merb’s Candies each announced a voluntary recall of commercially produced, prepackaged caramel apples after hearing from Bidart Bros. that there may be a connection between Bidart Bros. apples and this listeriosis outbreak.

Consumers who are buying or have recently bought commercially produced, prepackaged caramel apples can ask their retailers if the apples came from Bidart Bros.

Consumers who are unable to determine whether their commercially produced, prepackaged caramel apples were made with Bidart Bros. apples should throw them away.

As of January 10, 2015, a total of 32 people infected with the outbreak strains of Listeria monocytogenes had been reported from 11 states.

Thirty-one ill people have been hospitalized, and seven deaths have been reported. Listeriosis contributed to at least three of these deaths.

In Malpractice Premiums Drop for 6th Straight Year, oncology expert witness Dr. Judy L. Schmidt writes:

86% of Rates Decreased or Did Not Change
The MLM survey analyzes malpractice insurance rates charged by carriers in markets that range from entire states to single counties. The publication asks insurers to quote their standard rates for policies with limits of $1 million for an individual claim and $3 million in any given year for all claims. Rates published by MLM, effective as of July 1, are not necessarily what physicians pay, because insurers apply a variety of credits, debits, and other factors that raise or lower the dollar amount.

Insurers lately have been liberal with credits, reducing rates for physicians who take a risk-management seminar or use an electronic health record system, said Karls. Such credits probably have lowered rates by an additional 2 or 3 percentage points in 2013.

MLM collected hundreds of premium quotes that represent 65% to 75% of the medical liability insurance market. In a virtual replay of 2012, 57.6% of the 2013 quotes remained the same from the year before, 28.8% decreased, and 13.7% increased, usually by less than 10%.

The survey includes rate information for 7 states with patient compensation funds designed to lower the cost of malpractice coverage. Every physician in the state pays a surcharge into the fund in addition to buying minimal coverage from a private insurer, said MLM editor Michael Matray. Acting essentially as a reinsurer, the compensation fund boosts the coverage – in some states to the $1 million/$3 million level. The rates that MLM reports for these states are the sum of physician surcharges and premiums.

Rates for Internists Range From $3375 to $47,707
As in previous years, the MLM report reveals where malpractice litigation is red hot and where it is blue-green cool. Premium rates, after all, are based on an insurer’s claims experience in a given locale.

The most expensive premiums for a $1 million/$3 million policy for internists once again turned up in Miami-Dade County, Florida. There, the Doctors’ Company quoted a rate of $47,707. The nation’s lowest rate for internists was $3375, quoted by ProAssurance Wisconsin Insurance for the entire state of Minnesota.

The New York counties of Nassau and Suffolk on Long Island are home to the highest rates for obstetrician-gynecologists – $227,899 from Physicians’ Reciprocal Insurers. On the low end is a quote of $16,240 from Cooperative of American Physicians (CAP) for ob/gyns in mid-California. The quote is on top of CAP membership dues of $440 each year.

For general surgeons, quoted rates range from $190,829 from the Doctors’ Company for Miami-Dade County to $10,868 from MMIC Group for Wisconsin.

Information on prognostic risk and a treatment for advanced RCC A self-guided learning program will discuss profiles adapted from actual poor-risk patient cases, clinical trial data, and resources for you and your patients.

Read more: Quality Cancer Care

At the Safe Havens International website, school crisis preparedness expert witness Michael S. Dorn writes on school attack plots. Dorn is Executive Director of Safe Havens International, a non-profit school safety center.

School Attack
A Minnesota teen revealed to police the extent of his plans for a school attack. His plan was to “destroy everyone”. He planned on entering Waseca Junior and Senior High School, throwing Molotov cocktails and pipe bombs. When the SWAT team arrived, he planned on killing himself.

He planned on killing his family as well, as he “wanted as many victims as possible”. He acknowledged that they had done nothing wrong, that he had not been bullied, and claimed mental illness as the source of his violent fantasies. He worked to hide them from others, especially his family.

School Attack Analysis
Here we see another school attack plot based upon Columbine, the unholy gift that keeps on giving. Like other school attacks, the perpetrator was going to kill himself at the first sign of armed opposition. Like other school attacks, the plan was to involve explosives, seeking a high body count.

According to audio tapes of his interrogation, the attacker hid his plans from everyone, yet there were You Tube videos posted showing him playing with knives and experimenting with homemade explosives. This is called leakage, and is one of the warning signs to look for…

Schools should be training their staff to look for these warning signs, and should have multidisciplinary threat assessment teams to evaluate students that exhibit clusters of signs. The US Department of Education has created a great tool, along with the U.S. Secret Service. Schools can conduct a threat assessment inquiry, in which the school seeks to assist the student. They can also conduct a threat assessment investigation, for those times in which a threat has been made.

In either case, the goal is to get as many qualified, trained minds working on the assessment as possible. This assessment requires a working relationship with local first responders. It also requires a lot of coordination.

Plan well, plan ahead.

Read more: safehavensinternational.org.

Pyramid scheme expert witness Dr. William W. Keep was in the news this week urging SEC chief Mary Jo White to intensify the investigation of Herbalife. The FTC recently closed pyramid scheme BurnLounge, the New York City online music store and Dr. Keep, business dean of the College of New Jersey, recommended that multilevel marketing companies submit their enforcement policies to regulators every five years. Herbalife is a global nutrition company founded in 1980. The company has over 7,400 employees worldwide, and its shares are traded on the New York Stock Exchange with net sales of $4.8 billion in 2013.

Herbalife.com commented on the recent ruling by the Ninth Circuit Court of Appeals in its decision in FTC v. BurnLounge, Inc. Herbalife issued the following statement:

Today’s decision by the United States Court of Appeals for the Ninth Circuit in the FTC v. BurnLounge, Inc. validates product consumption by participants as a legitimate measure of demand for multi-level marketing companies and rejects Bill Ackman’s fundamental thesis against Herbalife. This ruling from one of the country’s most influential courts is consistent with Herbalife’s position that the widespread demand Herbalife has demonstrated for its products, by members and non-members alike, confirms that it is a multi-level marketing company with proper business practices.

SEC.gov describes pyramid schemes:

In the classic “pyramid” scheme, participants attempt to make money solely by recruiting new participants into the program. The hallmark of these schemes is the promise of sky-high returns in a short period of time for doing nothing other than handing over your money and getting others to do the same.

The fraudsters behind a pyramid scheme may go to great lengths to make the program look like a legitimate multi-level marketing program. But despite their claims to have legitimate products or services to sell, these fraudsters simply use money coming in from new recruits to pay off early stage investors. But eventually the pyramid will collapse. At some point the schemes get too big, the promoter cannot raise enough money from new investors to pay earlier investors, and many people lose their money. The chart below shows how pyramid schemes can become impossible to sustain.

Perhaps the most publicized pyramid/Ponzi scheme is that of Bernard Madoff who made an admission to his sons that his investments were “all one big lie.” As of December 2008 the losses were estimated to be $65 billion, making it the largest investor fraud in history.

Explosions expert witnesses may consult regarding dust explosions, flammable materials, combustion, and associated matters. On Monday, an explosion at the International Nurtrition animal feed processing plant in Omaha caused part of the facility to collapse and sent more than ten employees to the hospital. OSHA writes:

The grain handling industry is a high hazard industry where workers can be exposed to numerous serious and life threatening hazards. These hazards include: fires and explosions from grain dust accumulation, suffocation from engulfment and entrapment in grain bins, falls from heights and crushing injuries and amputations from grain handling equipment.

Grain dust explosions are often severe, involving loss of life and substantial property damage. Over the last 35 years, there have been over 500 explosions in grain handling facilities across the United States, which have killed more than 180 people and injured more than 675.