Thursday, June 10, 2010

New England Pellet Case Settled By Blumenthal

Attorney General Richard Blumenthal and the Hoffmans have reached a settlement on the three-year-old case. Blumenthal’s press release following the settlement is written in his usual triumphant mode.

The case was a losing proposition for Hoffmans going in, and it is instructive to ask why.

The final settlement, reached after years of litigation, demonstrates that the forces arrayed against the Hoffmans – which include, by the way, a compliant media – could not be overcome. Never-the-less, some battles are worth fighting, if only to make a record that would not exist when one chooses simply to lie down in the path of an irresistible force.

In the Hoffman case – and more strikingly in the New England Pellet (NEP) case – some of Blumenthal’s questionable methods were closely scrutinized by this blog. The attorney general’s methods are as simple and effective as those employed in 15th century by the Grand Inquisitor Tomás de Torquemada, who was inclined to settle matters of religious doctrine by showing those who stubbornly disputed nice theological points the instruments of torture. In those dark days, it was not always necessary to apply the instruments to religious disputants; much of the time it was enough to show them the torture instruments to wring an abject confession from them.

In the Hoffman case, Blumenthal finally, after much tortuous litigation, proposed a settlement that could have been reached much earlier by a negotiator intent on providing relief to those he supposed had been injured by Hoffman. In dollars, the final settlement was less than half of what had been offered at the beginning of the case by Hoffman to satisfy the litigous attorney general.

There are no racks and thumbscrews in Blumenthal’s office, merely an assortment of barking assistant attorneys general intent on protecting the sterling reputation of Blumenthal as an efficient prosecutor who steadfastly seeks to measure up to the media persona he himself has created during the course of his 20 year run as attorney general.

When Hoffman offered very early on a settlement that would have provided refunds to EVERYONE who had issued complaints, regardless of the validity of their claims, against her business, she was told by a thuggish assistant attorney general that a previous offer that might have settled the case had been withdrawn -- because she had embarrassed the attorney general. Blumenthal’s blush of embarrassment often proves to be mighty expensive: His office demanded more than a million dollars from a home based tea and herb vendor.

While Blumenthal’s carefully nurtured public reputation rests on his prosecution of Big Business, the backlog of cases in his office demonstrates that the attorney general is quite efficient in using his litigious instruments to wring money from small “main street” vendors like the Hoffmans and the owners of New England Pellet. Blumenthal’s most recent financial report shows his office had 36,495 cases pending at the end of 2008-09, a 40 percent increase over 1995-96.

By bringing into his suit Hoffman’s husband, a Maine contractor, Blumenthal considerably over-reached his statutory authority. In a Maine action, years after Blumenthal had released to Connecticut papers a lurid account of Hoffman’s putative illegalities, the attorney general chose not to contest the charges made by the Hoffmans against his office, one of which was that the affidavit used to impound the assets of both husband and wife, was fatally defective. Instead, Blumenthal armored himself by claiming absolute immunity from prosecution.

The trial judge in found that the affidavit used by Blumenthal to seize the Hoffman’s assets was fatally defective. Blumenthal, naturally, appealed the order. Immunity sometimes corrupts; absolute immunity corrupts absolutely. In the Maine litigation, Blumenthal was not given absolute immunity, which must have been frustrating for him; this may explain why he folded his tent and retreated from the battlefield.

In the Hoffman case, the Connecticut Supreme Court decided an assistant attorney general was a proper affiant because he had read a number of depositions, although he himself was not a direct witness to any of the events he attested to in the affidavit.

Astonishingly, the court did not decide that asseverations made by the assistant attorney general in his affidavit were improper because they were hearsay; instead, the court made a distinction between a) a determination of whether an affiant is competent, and b) a determination of whether evidence supplied in an affidavit is hearsay and therefore inadmissible at trial. The determination of b) the Supreme Court left to the trial court, but the case was settled before the trial court could make that determination. The distinction and the court's finding is somewhat tortured because the admissibility of evidence presented in an affidavit at trial is crucial in determining whether the affidavit is proper, as is demonstrated by the court's own citations in its judgment. The Supreme Court did not decide whether assertions made in the affidavit were defective; it left that decision to a trial court. However, that decision will not be made because Blumenthal settled the case for an amount of money considerably less than he originally demanded.

The reasoning of the court is both dazzling and befuddling. It was intended to be so. It seems to have been the ambition of this court to plow a way through an ocean of legal commentary – the sole point of which is to defend the liberty of the citizen against an overweening state – in order to make a way through such legal detritus for those who wish to strip the citizen of his liberties and leave behind a naked slave. It is a sad decision, little more than a parlor game played by lawyers for their own amusement. The court could have boldly defended the constitutional liberties of the citizen to be secure in his property; it chose to satisfy an ambitious attorney general.

In another case Blumenthal lost, an action against Computer Plus – another “main street” company Blumenthal prosecuted, also employing a defective affidavit – the attorney general neatly wrapped himself in absolute immunity; a jury, which examined the affidavit used to impound the assets of the company’s owner, found against him and awarded the company $18 million. Blumenthal is, of course, appealing the case, which appears as a line item in a list of cases requested from the judicial department showing the number of cases in which a defendant appeared in court as a result of an action brought by Blumenthal. That list, covering four years, runs to 36 pages.

A brief examination of the Computer Plus case may be found here.

There are serious constitutional problems arising from Blumenthal’s use of defective affidavits in ex parte judgments. The part played by a defective affidavit used to secure a judgment permitting Blumenthal to impound assets necessary to a proper defense is as perfidious as any thumbscrew used to force a confession from a putatively heretical defendant of the Inquisition.

Blumenthal’s misuse of affidavits is most glaringly apparent in the New England Pellet case, treated in some detail here.

An ex parte proceeding is one in which the accused is not permitted to contest before a judge in a timely manner the charges that have been brought against him by a prosecutor or attorney. The charges are simply presented to a judge in an affidavit. On the strength of the affidavit alone, the judge, in the absence of protestations from the accused party, then may invest Blumenthal with the authority to impound assets. In the NEP case, the single charge in Blumenthal’s affidavit that permitted a judge to invest Blumenthal with the authority to impound the business assets of a company newly started by Stephen Zaczynski, later joined by Jason Tynan, was the charge that Zaczynski either had or was about to fraudulently transfer assets, so as to put them out of reach of Blumenthal prehensile claw.

Interestingly enough, ex parte proceedings are constitutional – and never mind that the constitution provides for timely due process. However, the way Blumenthal misused an ex parte proceeding in the NEP case should bring a blush to the cheek of any honest lawyer connected to his office who is concerned with justice, the constitution, and even the Magna Carta, the great charter of English liberties that prevented King John from simply seizing the property of English barons without affording them an opportunity to contest the charges brought against them by a “court” – in fact, a tax hungry King -- that unjustly deprived them of the use of their property.

While the Magna Carta provided justice only to the barons of England, there is in the great charter and fountainhead of English liberties (chapter 39 in the original document) a single sentence that flows down the ages and waters the liberties of all western nations, including the United States, a freshet that provided an essential liberty to all “free-men” of England:

“No Free-man shall be taken, or imprisoned, or dispossessed, of his free tenement, or liberties, or free customs, or be outlawed, or exiled, or in any way destroyed; nor will we condemn him, nor will we commit him to prison, excepting by the legal judgment of his peers, or by the law of the land – To none will we sell, to none will we deny, to none will we delay right or justice.”

In the 18th century, the greatest interpreter of the common law, Sir Edward Coke, equated the promises in this passage with the guarantee of due process.

The authority to impound assets through ex parte proceedings depends – in the literal meaning of the word – on judicious affidavits; which is to say, on affidavits containing charges that may be presented at trial and are sufficient to lead to a just finding. The test of a sufficient affidavit lies in the admissibility of the charges at trial. By that test, the affidavit used to put NEP out of business failed spectacularly.

In the absence of the opportunity of the accused immediately to answer charges on the basis of which his property may be hindered by the state and made unavailable to the property owner, the affidavit MUST be perfect. It cannot contain a charge that is patently false.

The affiant in the NEP case, the putative author of the signed and sworn affidavit was an investigator in Blumenthal’s office, since retired for health reasons. In the affidavit used by Blumenthal to impound the business machinery and other assets of New England Pellet, the investigator swore under oath he had reason to believe that Mr. Zaczynski, one of the owners of New England Pellet, either had or was about to fraudulently transfer assets, the sole charge on the basis of which a judge, in an ex parte proceeding, authorized Blumenthal to impound the newly formed company’s business equipment, effectively putting it out of business and, at the same time, generating more complainants that the attorney general’s office might use to increase penalty fees against the principals of NEP should they choose to settle the case.

A serious problem arose when the lawyer representing NEP, Jim Oliver, deposed Blumenthal’s investigator. A detailed account NEP case may be found here, including an account of the deposition of Blumenthal’s investigator.

Deposed and under oath, the investigator admitted that he had never read Connecticut’s Fraudulent Transfer Act and that he had not examined the bank records of NEP to determine whether those accused of fraudulently transferring assets in the affidavit had, in fact, fraudulently transfer assets. He acknowledged he was not the author of the affidavit he signed. And finally, he admitted in the sworn deposition that he never had reason to believe that the principals of the company had fraudulently transferred assets.

That smelled like perjury to one of the principals of NEP, who visited state police barracks and swore out an arrest complaint, still kicking around somewhere in a system clotted by Blumenthal’s overly aggressive and sometimes defective prosecutions.

The NEP case was brought to a screeching halt at the end of February, when the attorney general’s office dropped all claims for civil penalties, injunctive relief, entry of a judgment and legal fees in the case. Before Blumenthal entered the case, NEP had already supplied $110, 000 in refunds to its customers after the company had been shorted by its supplier. Meeting with the attorney general’s office before the law suit, NEP had proposed to put in escrow $200,000  to insure that all its customers were refunded. At a minimum, Blumenthal’s withdrawal from the case, points to a defective prosecution and an alarming waste of state resources. At points during the case, before the office agreed to withdraw, more than five attorneys general were actively involved in the case. Though has claimed in a summary press release that the case has been resolved in favor of consumers, it is impossible to put lipstick on this pig. Blumenthal’s faulty prosecution, which relied on defective affidavits, was, in fact, a bar that prevented NEP customers from receiving timely refunds a full year ago, before the attorney general, now running for the U.S. Senate, decided to enter the case. The waste of money involved in this case and others like it does not figure in a final accounting of the cash Blumenthal “earns” for the state, which is dumped into the general fund.

There was a good deal of evidence in e-mails that passed between NEP and its supplier that NEP’s supplier had shorted the company on pellets, precipitating the shortage that occasioned the complaints against NEP, because the supplier wanted the owners of NEP to surrender to it valuable territories NEP had developed in New York and New Jersey. That information, strongly suggesting extortionate activity on the part of NEP supplier, was made available to Blumenthal after he had begun his suit. Had Blumenthal sued the wrong parties?

None of these little details were mentioned in Blumenthal’s cookie-cutter media release following the settlement of the NEP case. Connecticut’s media is quite used to swallowing Blumenthal’s narrative of events without following up on the cases as they proceed through the litigatory maze that allows Blumenthal to appear in the media as the dragon slayers of large law averse companies used in Blumenthal’s self serving media releases to cast an heroic luster upon himself.

Given the abuse of affidavits employed by Connecticut’s Torquemada to enhance his own personal reputation – and also to replenish the state’s dwindling tax resources -- perhaps what is needed is a set of people outside the attorney general’s office to do a “justice audit” of the many cases Blumenthal has prosecuted during his twenty years as the nations “worst attorney general,” a plaudit given to him some years ago by the Competitive Enterprise Institute.

Blumenthal, now the Democratic nominee for U.S. Sen. Chris Dodd’s seat, lately has received some well deserved lumps for lying about his service record. The record of his lying to select groups has been well established by the national media. After the story concerning Blumenthal’s lies had been exposed by the New York Times, with an assist from Linda McMahon’s campaign, some Connecticut papers began to examine their own records for other instances in which Blumenthal had falsely claimed to have served in Vietnam, a claim that in the past has proven fatal for other politicians in the business of stealing valor from Vietnam veterans.

“There are at least 5 other direct quotes from Blumenthal” Jamie Shufflebarge wrote in the National Journal, “stating that he ‘wore the uniform in Vietnam’ or ‘returned from Vietnam.’ His campaign material and official biography all clearly state that he was in the reserves during the war and never served abroad.”

Five is two more than three, which is as many strikes as are needed to call Blumenthal out, at least on the question of lying.

Blumenthal’s response to getting caught with his hand in the cookie jar is precious: “Dick has been asked and has answered questions about his military service thoroughly and extensively,” one of his campaign flack said. “Now his focus is to move on to the real problems and issues that concern the people of Connecticut. Dick recalls seeking to help and support Mr. Hine but that is his only memory of a conversation that occurred many, many years ago.”

The “Mr. Hine” mentioned in Blumenthal’s press release is about to be gone over with rubber truncheons. If he has spat on the sidewalk in the last 20 years, that spitting will tell against him – although his claim that Blumenthal, in an excess of extravagant compassion, lied to him concerning his service in Vietnam is entirely credible. When former Rep. Chris Shays stepped forward to say he recalled instances in which Blumenthal had shamelessly padded his war record, he too was gone over. Shays, it was recalled, was a conscientious objector during the Vietnam era.

Bad Shays!

Hine, the doubtful Rick Green of the Hartford Courant is quick to remind us, was suspended without pay by Blumenthal and written up on a couple of occasions. And way back in the day, he had a problem  with prescription medicine. So that’s it then -- a disgruntled employee, nurturing revenge in his shrunken breast for 20 years now steps forward to denounce his blameless boss.

The businessmen, more than 30,000 strong hanging on hooks in Blumenthal’s litigatory hell for years, are used to the truncheons. One of the principals of NEP -- He attempted suicide after Blumenthal had despoiled him of his property and his good name -- has felt the truncheon on his vitals. He spent considerable time recovering from the blows, unvisited by Connecticut curious yellow reporters.

And so it goes. Blumenthal has his defenders among Connecticut’s media, only a few of whom are practiced in the art of discomforting the comfortable.

They deserve each other.
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