James McGovern – dwkcommentaries

On November 15, a group of 18 U.S. Congressmen sent a letter to President Biden “with a deep sense of urgency to request immediate action to stabilize Cuba’s energy infrastructure and provide critical humanitarian assistance. The Cuban people are currently facing widespread blackouts and an escalating energy crisis, exacerbated by the impact of Hurricane Rafael. The situation is not only causing immense suffering for the Cuban people but also poses serious risks to U.S. national security interests. If left unaddressed, the crisis will almost certainly fuel increased migration, strain U.S. border management systems, and fully destabilize the already-strained Caribbean region.”[1]

“Since 2022, over 850,000 Cubans have sought refuge in the United States—the largest exodus in the island’s history. The ongoing collapse of essential services, particularly electricity, has further exacerbated this exodus. The latest energy crisis threatens to trigger another unprecedented wave of migration, with hundreds of thousands more Cubans likely to seek entry to the U.S.”

Therefore, their letter “respectfully urge your administration to quickly take the following actions to address this urgent crisis and safeguard U.S. interests:”

“Remove the State Sponsor of Terror Designation “

“We strongly recommend removing Cuba from the State Sponsors of Terrorism (SSOT) list. This will reduce barriers to oil shipments and clarify that carriers and insurers can operate legally in Cuba, facilitating access to energy and economic relief for the Cuban people.”

“Expedite Emergency Humanitarian and Technical Assistance to the Cuban People”

“The U.S. government should immediately provide humanitarian aid, including food and medicine, while deploying technical assistance and equipment to stabilize Cuba’s electrical grid. This aid should be delivered to the Cuban people without delay, and in coordination with international partners such as the European Union, FAO, WFP, and PAHO to maximize its impact.

“Issue Safe Harbor Letters to Address Overcompliance with Sanctions”

“One key barrier to increased non-government assistance to Cuba is the fear that private businesses and non-profit organizations have of running afoul of U.S. sanctions, whether or not a General License is available from Treasury’s Office of Foreign Assets Control (OFAC). We strongly urge the provision of OFAC safe harbor letters to ensure that

humanitarian aid efforts to Cuba, including the provision of food, medicine, and technical assistance, fully comply with U.S. sanctions regulations and are protected from enforcement actions.”

“Suspend Sanctions Impeding Aid”

“We urge you to suspend sanctions that hinder the flow of humanitarian assistance, including restoring the EAR license exception to allow donations to Cuban health and humanitarian relief entities. These changes will enable quicker assistance from U.S. humanitarian organizations, religious groups, and private citizens to the Cuban people.”

“Facilitate Energy Infrastructure Repair and Modernization”

“The U.S. should fast-track the export of critical equipment needed to repair and upgrade Cuba’s energy grid. In addition, lifting Cuba-specific restrictions on oil and LPG exports will help prevent a total grid collapse.”

“Regardless of the Cuban government’s stance, it is imperative that the U.S. government demonstrates a willingness to aid the Cuban people directly. The Cuban government’s frequent attempts to blame the U.S. for the island’s problems should not deter us from offering the assistance necessary to alleviate suffering of the Cuban people and prevent further regional destabilization.”

“The escalating energy crisis in Cuba presents not just a humanitarian concern but a serious national security challenge for the U.S. If left unaddressed, the situation risks further destabilizing the Caribbean region, increasing migration flows, and straining U.S. border management systems, while strengthening the hand of malign actors in the Western Hemisphere. Acting swiftly to provide humanitarian and technical support will not only alleviate immediate suffering but also open avenues for broader diplomatic engagement. This engagement can extend to critical issues such as the release of political prisoners, human rights, and improved governance, building a foundation for more constructive dialogue between the two countries.”

“We understand that absent action from Congress, executive actions on Cuba are subject to reversal. That should not deter us from acting to avert further suffering and damage to United States interests. Even temporary relief can save lives and permit the Cuban people a chance to insulate themselves and their families from further vulnerability. We urge your administration to act swiftly to implement these measures and mitigate the growing crisis in Cuba while advancing U.S. interests in the region.”

The Congressmen who signed this letter were Barbara Lee, James McGovern, Gregory Meeks, Joaquin Castro, Pramila Jayapal, Ilhan Omar, Greg Casar, Alexandria Ocasio-Cortez, Jesus “Chuy”” Garcia, Delia C. Ramirez, Nydia M. Velazquez, Raul M. Grijalva, Zoe Lofgren, Mark Pocan, Steve Cohen, Sydney Kamlager-Dove, Jonathan L. Jackson and Jan Schakowsky.

Comments

Thanks to these Congressmen for making these suggestions to President Biden in the last weeks of his Administration. They are measure that are needed by Cuba and by the U.S., and President Biden should implement them as soon as possible. He also should ask Congress to terminate the U.S. embargo of Cuba, but that faces the obstacle of Republican (slim) control of the House of Representatives.

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[1] Press Release, Representatives Lee, McGovern, Meeks, and Castro Lead Congressional Letter to President Biden Urging Sanctions Relief for Cuba Amid Humanitarian Crisis, (Nov. 10, 2024); Press Release, US Congressmen want Biden to facilitate the repair of Cuba’s ‘energy infrastructure,’ Diario de Cuba (Nov. 20, 2024); Letter, Congressmen Barbara Lee, James McGovern, Gregroy Meeks, Joquin Castro, Pramila Jaypal, Ilhan Omar, Greg Casas, Alexandria Ocasio-Cortez, Jesus “Clay” Garcia, Delia C. Ramirez, Nydia M. Velazquez, Raul M. Grijalva, Zoe Lofgren, Mark Pocan, Steve Cohen, Sydney Kamlager-Dove, Jonathan L. Jackson and Jan Schakowsky to President Biden (Nov. 15, 2024); U.S. Congressmen ask Biden to remove Cuba from terrorist list, Granma (Nov. 19, 2024).

In June 1982, all kinds of litigation erupted in Minnesota’s federal court[1] involving Flight Transportation Corporation (FTC), a Minnesota-based company that purported to provide small-aircraft charter service.

The first case was by the U.S. Securities and Exchange Commission (SEC) against FTC, its subsidiaries, and its CEO and Chairman of the Board, William Rubin. The SEC alleged that the defendants had violated and aided and abetted violations of antifraud, reporting, and record-keeping provisions of the federal securities laws. The SEC sought an injunction prohibiting further violations by the defendants of these provisions, the appointment of a receiver to take possession of and marshal the assets of FTC and its subsidiaries, an accounting of all proceeds of FTC’s allegedly fraudulent securities offerings, and an order of disgorgement of all funds received by FTC as a result of those sales of securities. With respect to Rubin, the SEC sought a temporary freeze of most of his personal assets, an accounting of all funds received from FTC and its subsidiaries, and disgorgement of such funds.[2]

Shortly thereafter, two underwriters of FTC securities, on their own behalf and on behalf of all persons who purchased FTC’s securities in the June 1982 offerings, commenced a class action seeking, among other things, imposition of a constructive trust on the $22 million in proceeds of the offerings.

Thereafter other private lawsuits were also commenced against FTC, its officers and others, including its external auditor and the New York City law firm for the underwriters of the public offerings of FTC securities.[3]

Norwest Bank Minnesota (n/k/a Wells Fargo Bank Minnesota) had been providing working capital financing to FTC and brought a claim against FTC to collect that debt, and I was in charge of the Faegre & Benson team for Norwest. Later some of the other plaintiffs asserted claims against the Bank because its collateral review personnel had discovered certain problems at FTC; later the Bank reached a settlement over all of these claims.

Because there were so many different kinds of claims against FTC and others, the attorneys for the plaintiffs concluded that they needed to stop fighting among themselves and instead focus their collective efforts in prosecuting the claims against the defendants. As a result, the plaintiffs negotiated a complex Sharing Agreement whereby any monetary recoveries would be shared among the plaintiffs. This agreement was approved by the court.[4]

The SEC’s request for the appointment of a receiver was granted. A Minnesota attorney, Thomas Bartsch, was so appointed. I participated in many meetings with him and thought he was doing an excellent job. I, therefore, was shocked later when he was convicted of stealing money from the FTC assets under his control as receiver and then disbarred as an attorney.

At the conclusion of the private litigation, the district court awarded the various plaintiffs’ law firms $7.8 million of attorneys’ fees. The court recognized the superlative work of the lawyers that resulted in recovering $52 million for the various plaintiffs.[5]

I also was the attorney for Norwest Bank in a related case where a co-founder, outside director, shareholder and director of FTC sued the Bank for collecting and paying a check that allegedly had his forged endorsement. The district court entered judgment in favor of the Bank, and the appellate court affirmed.[6]

Finally there were criminal prosecutions of FTC’s principal officers: William Rubin, Janet Karki, Brian Miller and James McGovern. Rubin, the CEO and Chairman of the Board, was convicted on 10 counts of securities fraud and two counts of filing a false securities registration statement with the SEC and sentenced to 35 years in prison plus a $120,000 fine. There also were convictions on similar charges against Karki, the Chief Financial Officer (20 years in prison); Miller, the Financial Controller (three years); and McGovern, a Minnesota lawyer and FTC’s General Counsel (six years).[7]

I still find it difficult to believe that two fellow Minnesota lawyers with whom I had professional dealings ended up in prison as convicted felons.

Two memories of this case stand out.

At a posh Beverly Hills hotel, I participated in the deposition of Michael Milken from a FTC underwriter (Drexel Burnham Lambert). Known in the securities industry at the time as the King of Junk Bonds, Milken later pled guilty to securities fraud and tax violations and was sentenced to imprisonment. After release, he has concentrated his efforts on philanthropy, especially research regarding prostate cancer and melanoma. (Wikipedia, Michael Milken, http://en.wikipedia.org/wiki/Michael_Milken.)

I attended the criminal trial of Rubin and Karki. I was there as an attorney for a Norwest banker who was testifying about the Bank’s relationship with FTC. During her testimony two prominent Minnesota criminal defense attorneys, Ron Meshbesher[8] and Joe Friedberg, objected to the receipt into evidence of certain Bank documents because they were photocopies and thus not the best evidence. While the attorneys had a sidebar conference with the judge regarding this objection, I went to the U.S. Attorney’s table and whispered to an FBI agent that the originals were in my office and were destroyed in the Northwestern National Bank fire on Thanksgiving Day 1982. The FBI agent then went to the sidebar conference and relayed the information to the U.S. Attorney, Tom Hefflefinger.

The judge then asked me to leave the courtroom, presumably while foundation questions were asked of the banker. I assume her examination went something like this: “Do you know Mr. Krohnke? (Yes.) Was he involved in any way with the Bank and FTC? (Yes.) How was he involved? (He was an attorney for the Bank regarding litigation over FTC.) Did he have any original Bank documents in his office? (Yes.)”

I was then readmitted to the courtroom and put on the witness stand. The U.S. Attorney asked me a few questions along the same lines and established that the original documents in question were destroyed in the fire. There was no cross-examination by Meshbesher or Friedberg. The photocopies of the Bank documents were received into evidence.

[1] See Post: Minnesota’s Federal Court (June 28, 2011).

[2] SEC v. Flight Transportation Corp., 699 F.2d 943 (8thCir. 1983).

[3] Id.; In re Flight Transportation Securities Litigation, 593 F. Supp. 612 (D. Minn. 1984).

[4] In re Flight Transportation Securities Litigation, 730 F.2d 1128 (8th Cir. 1984), cert. denied sub nom. Reavis & McGrath v. Antinore, 469 U.S. 1207 (1985); In re Flight Transportation Securities Litigation, 794 F.2d 318 (8th Cir.), cert. denied sub nom. Subclass IV v. Fox & Co., 481 U.S. 1013 (1987).

[5] In re Flight Transportation Securities Litigation, 685 F. Supp. 1092 (D. Minn. 1987).

[6] Lund v. Norwest Bank, 669 F. Supp. 284 (D. Minn. 1985), aff’d, 825 F.2d 1249 (8th Cir. 1987), cert. denied, 485 U.S. 936 (1988).

[7] U.S. v. Rubin, 836 F.2d 1096 (8th Cir. 1988); U.S. V. McGovern, 822 F.2d 739 (8th Cir.), cert. denied, 484 U.S. 956 (1987). I knew McGovern; he was one of the attorneys for the Wisconsin breeders cooperative in a lawsuit in which I was an attorney on the other side of the case. (See Post: The Artificial Insemination of Cattle (Aug. 16, 2011).

[8] I once had a civil case in which Meshbesher was the opposing lawyer, and the case settled soon after I took his client’s deposition. The recent movie, A Serious Man, by Joel and Ethan Coen, takes place in the Minneapolis area. When a character needs a criminal defense lawyer, he is told to hire Ron Meshbesher. The line was inspired by the Coen brothers’ memories of growing up in St. Louis Park, Minnesota and seeing attorney ads for Meshbesher. (Wurzer, Twin Cities lawyer is a Coen brothers punch line, MPR News (Oct. 9, 2009), http://minnesota.publicradio.org/display/web/2009/10/07/meshbesher.)

Tag: James McGovern

The Flight Transportation Corporation Litigation