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  Case Updates for 2005

Prior Case Updates for:  2012—2011—2010—2009—2008—2007—2006—2005—2004—2003—2002—2001
 

Posted: 12/12/05

 

The Attorney General approval of this tax settlement came on November 16, 2005. There are other matters that need to be decided by the FDIC before a motion can be made to the Federal Court in the District of Columbia to set the Fairness Hearing and review the FDIC determinations.

I had hoped that these matters would be on the FDIC Board agenda for the monthly meeting of December 2nd but this was not possible. Benj. Franklin will be on the FDIC Board agenda for January 10, 2006. Final FDIC approval of the tax settlement is routine since the government has accepted the FDIC offer of a $50 million tax payment, leaving a balance in the Receivership of $43 million (up from the $42 million due to receipt by FDIC for interest on Receivership funds.)

These are the remaining issues:

    (1.)  Although the FDIC Board has previously approved the early payment of the claim of the Benj. Franklin Shareholders Litigation Fund for repayment of the shareholder contributions, it will decide at this meeting about paying interest on this money. We have submitted a written brief showing that we believe the law is on our side on this issue but FDIC has to decide, subject to Court review.

    (2.)  At this meeting the Board will set fees and costs for attorneys, CPAs, and consultants who have helped reduce the IRS tax claim from $1.2 billion to $50 million.  The Board has before it detailed itemization of work done broken down by description of work, date performed, and time spent. The FDIC and us have previously agreed that these fees and costs are subject to Court approval, so the views of the shareholders can be considered by the Judge.

    (3.)  The detailed motion for the Court Fairness Hearing and the proposed detailed notice to the shareholders have previously been worked out by the FDIC staff and us and FDIC Board approval of these documents should be routine.

We are anxious to get the Motion for the Fairness Hearing submitted immediately after FDIC Board approval so the notices can be sent out to the shareholders and the Court hearing held in February (alas, not January). We have turned over to FDIC our shareholder list and are constantly updating it as we get more current information from you.

The government (IRS) is as anxious for speedy action as we are, since the $50 million cannot be paid to IRS until the Federal Court approves, and the government is losing interest on this money.

Please make sure that our information about each shareholder, your current address and your number of shares, is up-to-date in our files.

Posted: 11/17/05

 

Three and a half years ago the government sued FDIC as Receiver of Benj. Franklin for $1.2 billion in claimed taxes.  On November 16th (yesterday) the Associate Attorney General gave final approval to the $50 million of taxes settlement with a favorable allocation of this amount between principal and interest. We tried very hard to reach agreement on a smaller amount for taxes, but the $50 million is the best we could do. This leaves about $42 million in the Receivership for payment of certain small FDIC expenses, return of shareholder contributions to the Litigation Fund, payment of attorneys’ fees in an amount not yet determined, and distribution of the balance to the shareholders.

 

Now comes a Fairness Hearing before the District of Columbia Federal Court with advance notice to the shareholders. We will try to get the Court to pick a date in January, 2006 for this hearing. Assuming Court approval, repayment of contributors to the Litigation Fund and thereafter a partial distribution to the shareholders, should follow soon.

 

I will now file a motion with the Claims Court to remove the stay that was imposed by Judge Smith when the tax suit was filed, so the Motion for Reconsideration filed by the government 3 ˝ years ago against our $35 million judgment, can be resolved and a probable appeal follow.

 

This is a solid victory and I am very pleased.

Posted: 10/25/05

 

The appropriate Assistant Attorney General has approved the proposed tax settlement. It now goes to an Associate Attorney General for the final approval. I do not know how long this will take but I hope it will be soon. The Government functions at glacial speed. Over the last 13 months the proposed tax settlement has been approved by the Trial Division of the Department of Justice, the IRS, the Tax Division Review Committee, and the Assistant Attorney General in charge of the Tax Division. We also know that FDIC staff are finalizing the motion that will be filed with the U.S. District Court seeking the fairness hearing before the Court will be asked to give final approval to the tax settlement. We continue to do everything appropriate to expedite the process. 

Posted: 9/17/05

 

It has been almost two months since we were notified that the Review Committee of the Tax Division of the Department of Justice had approved a $50 million settlement of the tax claim with a favorable allocation to interest and tax. Although we knew that the signatures of the Assistant Attorney General and the Associate Attorney General were still required, we were given every indication that these final approvals would be coming soon. The government tends to work slowly in the period before Labor Day and the terrible Katrina hurricane undoubtedly diverted the attention of many government officials. But we are still waiting and doing everything we can to expedite early consideration by these two top government officials.

In the meantime, we have been reminding shareholders that they should do everything possible to get paperwork in order so that, assuming final approvals and a relatively early partial distribution to the shareholders, everything will proceed smoothly.  

Here are suggestions to you:  

1) Respond now, if you have not already done so, to our request that you provide us with your name, current address, and the number of shares you hold so that we have the most up-to-date information in our database. At the request of FDIC, we have forwarded them a copy of the data base as it now exists, but will be periodically updating it with any corrections we receive from you.

2) Find your stock certificate. If you cannot find it, try to find whatever other evidence is available that indicates you own stock.

3) If the owner of the stock has died, the stock has to be legally transferred to children or heirs.  If this has been done, send us copies (not the originals) of the court documents which make the transfer, along with your name, address, and number of shares.  If this has not already been done, please contact your own personal attorney immediately, and ask for his or her help. Or, if your stock is held in “street name” by a broker, contact your broker and make sure the broker responds to our request for the name in which the stock is held (usually the broker’s) plus your name as the beneficial owner of the stock, plus the address to which we should correspond, and the number of shares.

4) There were originally about 6,500 shareholders. Some of the shareholders have died and we need to know the information about who now owns the stock. Many of you have moved without forwarding addresses, and if you read this website, please make sure that we have your correct address. Many of you have sold your stock and we urgently need the names of the current owners, addresses, from whom they bought their stock and the number of shares. FDIC is leaning heavily upon us to help make the database current and complete, but we can only do this with your help.

We continue to work closely with the FDIC so that hopefully all of the paperwork that must be filed in court, along with the Motion for a Fairness Hearing, is ready to be filed as soon as we get the final approvals that we hope will come very soon.

Posted: 07/27/05

 

Yesterday, July 26, 2005, the Review Committee of the Department of Justice Tax Division approved FDIC Receiver’s final offer of $50 million for taxes, interest, and penalties with the final $3 million of this total allocated to interest. With approximately $92 million in the Receivership, this means that the balance of $42 million minus certain costs and expenses, which I have previously discussed in detail, belongs to the shareholders.

 

We first tried to settle the tax claim for $40 million and then for $45 million. The Trial Division of the Department of Justice insisted on $47 million, but we bargained for 75 percent to be allocated to interest. This was approved by the Internal Revenue Service, and we thought we were done.

Recently, the Review Committee of the Tax Division of the Department of Justice (which makes recommendations to the Assistant Attorney General), to our surprise, insisted upon a $3 million increase, making a total of $50 million, with all of this increase allocated to interest. Interest payments to the IRS can be used to offset taxes paid after 2002, including taxes upon the Claims Court Judgment, which has not yet been finalized.

 

The Plaintiffs, after much thought, reluctantly agreed to this $50 million figure. Reducing the $1.2 billion IRS claim against the Receivership to $50 million, plus a favorable allocation to interest, is not as good as we thought we had, but it is as good as we could do.

 

The decision of the Tax Review Committee is still subject to the approval of an Assistant and an Associate Attorney General of the United States, which we hope will come very soon.

 

We are now helping the FDIC with the paper work necessary to file the request for a Fairness Hearing before the United States District Court for the District of Columbia, as soon as an Assistant and an Associate Attorney General approve. Please see my earlier reports about the Fairness Hearing. We are not yet finished with our tax negotiations, but we are getting very close.

 

From the Lead Plaintiffs

The exciting news above indicates that the final steps of our long walk towards justice is at hand. It is imperative that as we close in on the final settlement, all Ben Franklin shareholders are identified and receive their fair and just compensation.

After 15 years of litigation, finding each shareholder remains a daunting task, but one we are are compelled to complete. In so doing, we must ask each of you to contact your broker and confirm that each of their clients with an interest in Benj. Franklin are aware of this website. It is your broker's fiduciary responsibility to make sure all clients who own Ben Franklin in his firm have this news and are aware of the upcoming fairness hearing to be held in Washington, D.C.

We are working a system to allow Portland area residents to participate in the hearings via closed circuit TV and/or telephone. However, on our very limited budget, we may not afford to do this. We continue our plea for contributions. It seems the new stockholders are still waiting for the "other guy" to carry on our cause.  You WILL be reimbursed for your help.

TO ALL SHAREHOLDERS OF BENJ. FRANKLIN FEDERAL SAVINGS AND LOAN OF PORTLAND, OREGON:

After all these years, things are getting to the point where we must update our records.  It is extremely important that we are able to contact each of you with urgent information. Therefore, please send us now a separate email with your name, address, phone number, and number of shares owned. We want to make sure our records are up-to-date.

Send your email message to: Information@benfranklinoregon.org

Now we must ask a favor. When the RTC closed Benj. Franklin, they also terminated the transfer agent. However, there have been many electronic transactions in our stock since that date. Because of that, we have no record of those who bought stock since then. We are asking each of you to call your stock broker and ask whom we may contact at his or her firm, in order that we may be able to make ALL Benj. Franklin shareholders aware of this website.

We understand the privacy laws and ask only that the broker provide clients with the website address. We will cooperate with the broker firm in any way we can and will respect client privacy.

This website is the only way we can communicate with each of you. Please help us to be able to reach more of our new shareholders.

Posted: 07/06/05

 

Since the June 9, 2005 website report, we have had a meeting with FDIC in Washington, D.C. and a follow up meeting by telephone conference call. Another conference call is scheduled for this week. We are working together on the preparation of documents to be submitted to the Federal Court in the District of Columbia once the Associate Attorney General's probable approval of the settlement is obtained.  These include a motion, a memorandum supporting a proposed order for a Fairness Hearing, proposed detailed notification to be sent to the shareholders of the issues involved in the proposed tax settlement; an application to reimburse the shareholder contributions to the Benj. Franklin Shareholders Litigation Fund (we are working on a memorandum to FDIC about the proposed additional interest payment); and applications for fees and expenses, which will be subject to approval as fair and reasonable by the Federal Court, and go through the FDIC claims procedure.  We are also starting the process of updating and broadening our shareholder list so FDIC can proceed with the shareholder notification process when approved by the Federal Judge.  Please carefully read the following notice to shareholders from the Plaintiffs about ways in which you can help.

We are also discussing with FDIC what appropriate measures we can take to encourage speedy consideration of the proposed tax settlement by the Associate Attorney General.    

Posted: 06/09/05

 

This website was created to keep the shareholders informed, but because it is public, I know that it is also read by the Department of Justice and the Benj. Franklin Receiver, the Federal Deposit Insurance Corporation (FDIC). Indeed, the Department of Justice recently attached copies of some of our website reports to a brief filed with Senior Judge Loren Smith of the Claims Court. Therefore, I must be careful in what I report to the shareholders and I, of course, have always strived to be accurate but careful in what I report.

 

I believe that consideration of the proposed tax settlement offer is now in the Tax Division of the Department of Justice, which is headed by the Assistant Attorney General who will make the final decision. If this is correct, we have previously cleared the litigation staff of the Department of Justice and, more recently, cleared review by its client, the Internal Revenue Service. But the Department of Justice will not tell us exactly where we are, so we are diligently trying to obtain this information from other sources. I do not understand why this information has been kept secret from us.

 

The proposed tax settlement reduces the tax on the Benj. Franklin Receivership from $1.2 billion to $47 million, so the government needs to act carefully.

 

You will recall that the proposed tax settlement was agreed upon by the FDIC and by me (and the shareholders I represent) in September 2004. The wording was discussed with the Department of Justice for two months until it was formally submitted on September 19, 2004. I was originally given an estimate of three to six months for the government review, but have always recognized that this is a complex matter.

 

If, in fact, the consideration of the tax settlement is now at the final stage of the Justice Department, we are making progress. But with our shareholders now dying more frequently after fifteen years of waiting for justice, I wish the government would move faster than glacial speed.

 

In the meantime, our work continues. We have been working hard on the documents that will need to be presented to the U.S. District Court for the District of Columbia and sent to the shareholders before the settlement is considered at a Fairness Hearing held by that Court. I hope the FDIC and us will agree on the form of these documents soon, so everything is ready for presentation to the Federal Judge once we receive the anticipated approval of the Assistant Attorney General. We communicate regularly with the FDIC, and we hope to meet with FDIC staff very soon to discuss these documents.

 

We have also recently submitted two carefully researched briefs to the Claims Court in connection with the relationship between the proposed tax settlement and the $35 million Claims Court Judgment (which has still not been finalized by Claims Court Judge Smith due to the pending tax claim). In these briefs we argue, I believe persuasively, that the two sums of money are independent of each other.

 

Many shareholders tell me that they are frustrated by the delay and so am I. Please be assured that my colleagues and I are doing everything that can be done on your behalf.

Posted: 03/11/05

 

The government is taking its time in approving the settlement that has been recommended by its staff attorneys.  As I previously reported, the Associate Attorney General of the United States needs to approve the settlement and then it needs to be approved as a fair and reasonable settlement by a Federal Judge with the opportunity for all shareholders to be heard.  We are doing everything reasonable to expedite the government approval.

 1.    On February 21, 2005, which is the 15th anniversary of the seizing of Benj. Franklin, I wrote a long letter to the Department of Justice asking for the earliest possible action on the proposed settlement. In the meantime, we are doing all of the work that can be done now, so that assuming the Associate Attorney General approves, we have the papers for the Fairness Hearing ready to go out. 

 

2.    In connection with the Tax Court proposed settlement, we have submitted detailed paperwork to the FDIC in connection with the return of the shareholder contribution plus interest. We are working now on a draft of the detailed report that will go to the Federal Judge, assuming approval by the Associate Attorney General, which once approved by the Federal Judge will go to all the shareholders. This will provide the shareholders detailed information about the proposed settlement. Once the Judge approves the packet of information, it will be sent to all shareholders and a time set for a hearing at which the Federal Judge will determine, after receiving shareholder comments, whether the settlement is fair and reasonable.

 

3.    As you know the Claims Court matter has been stayed by Judge Smith for 2 ˝ years, pending the results of the tax settlement.  We have asked Judge Smith for permission to file a new written brief summarizing all the reasons why the $35 million dollar Judgment in the Claims Court should be separate and distinct from the balance of the money in the Receivership.  This brief is due on March 25, 2005, and Judge Smith will hold a status conference by telephone on April 12, 2005.  At the April 12, 2005 status conference, we will be asking Judge Smith to do everything possible so that the pending government Motion for Reconsideration in the Claims Court case can be disposed of as quickly as possible after the tax settlement.  As you know, the government has appealed all of the savings and loan cases and will undoubtedly appeal this one, and we of course will be asking the Appeals Court to increase the amount of the $35 million Judgment.

The work continues, but there is light at the end of the tunnel.

Posted: 01/05/05

  1. We are doing everything we can to hasten the process of gaining Deputy Attorney General approval of our proposed tax settlement.

  2. Technical questions have arisen since the November 19,2004 tax settlement proposal and we have been involved in their resolution.

  3. We are working now with the FDIC on plans for the court fairness hearing on the tax settlement, so there will be no delay once we obtain the hoped for Deputy Attorney General approval.

  4. We have submitted to the FDIC in draft our detailed application to repay all Shareholder contributions to the Benj. Franklin Shareholders Litigation Fund plus interest, once the hoped for Deputy Attorney General and Court approvals are obtained.

  5. There is a second status telephone conference with Judge Smith of the Claims Court on January 25, 2005. The Judge has now stayed the Claims Court case for two and a half years pending completion of the tax negotiations. We will try to convince him that the proposed tax settlement, although not completed, is sufficiently far along that he should release the stay so a Claims Court judgment can be entered and the appeal process started.

  6. Many Shareholders have contacted me about what proof of ownership will be needed to participate in any partial distribution out of the proposed tax settlement. FD1C will make that distribution and will set the rules. You can avoid further delay in your distribution by getting everything in order now. Here are some suggestions. Make sure you have your stock certificate in your name. If you cannot locate your stock certificate you should start looking now for any other evidence of ownership. If the certificate is in the name of a person who is deceased, you need to make sure that the title can be legally transferred to you. I suggest you contact your own attorney or stockbroker for advice.

 

I am trying to keep everyone informed by this website. There are thousands of Shareholders and it is very time consuming and expensive to answer individual inquiries. My focus must be on matters that relate to the Shareholder group as a whole.

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Last modified: February 13, 2012