IDT’s imaginary “ethics letter”

Sept 24, 2010

Last Saturday, Barron’s ran my story in which IDT CEO Howard Jonas admitted for the first time a suspect deal with then Haitian President Jean-Bertrand Aristide. He said that an IDT official in 2003 met with Aristide about a contract that would send payments due the Haitian government phone company to a law firm in the Turks and Caicos Islands. Jonas told me the company had gotten a lawyer’s “ethics letter” clearing the deal. But he wouldn’t provide it.

A day before the story was to run (datelined Sept 20 but appearing Sept 18), Barron’s got a call from a lawyer of the firm representing IDT in a lawsuit by former IDT executive D. Michael Jewett, who says the company fired him for objecting to the offshore deal. Attorney Stephen Greenberg of McElroy, Deutsch, Mulvaney & Carpenter promised to provide the ethics letter. It was the end of day, Friday. The weekly would go to press that night. Greenberg said he’d send the letter after the weekend.

Barron’s editor William Alpert overruled my objection to running a claim with no evidence. The published article said that IDT CEO Howard Jonas “told Barron’s that payments to Mont Salem were legal because the law firm McDermott Will & Emery had given IDT a clearance letter after conducting its own due diligence on the matter. The letter isn’t in public court filings, but IDT says it will provide it to Barron’s.”

After publication, Greenberg called Barron’s to say he couldn’t provide the letter because it was sealed.

That is a quite unbelievable excuse. In fact, it was a lie. A sealing order is a very difficult thing to get. It’s for records filed in court and placed under seal by the judge. The only case where such a letter could have been filed and sealed is the Jewett lawsuit in U.S. Federal Court in Newark.

So, if an ethics letter existed and was “sealed,” it would be noted in the public case docket with the reason for sealing it. However, there is no sealing order for such a letter in the docket. See the docket with sealing/unsealing requests highlighted in yellow, orders in red and “discovery confidentiality” matters in green.

Most sealing orders are IDT’s requests to seal Jewett’s complaint and Jewett’s requests to seal some personal documents. The other two deal with IDT’s request to seal interrogatories of its top executives its previous lawyer mistakenly filed publicly and a request by both sides to seal the transcript of a conversation they had. (I posted the interrogatories to this website. They are still there.) There’s nothing about a letter.

Both parties to the lawsuit are entitled to see sealed documents. In a pretrial court filing Tuesday, Jewett cited the Barron’s article and said, “The evidence will disclose there is no ‘ethics clearance letter’.” These are the sections added to pretrial motion as a result of the Barron’s article.

It turns out that Greenberg is not a lawyer on the IDT case. He is not an associate or a partner at McElroy, Deutsch, Mulvaney & Carpenter, which is defending IDT. He is “of counsel,” meaning he’s the law firm’s lawyer when it has outside legal problems. But he has a close past connection to IDT: he was formerly CEO and Chairman of IDT’s Net2Phone subsidiary.

Greenberg has not replied to a request to discuss the alleged “sealed letter.” IDT and Michael Riordan, who is IDT’s lawyer in the case, declined to comment. Barron’s editor Alpert declined to run a follow-up indicating that the “sealed letter” was never provided.

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