The Talented Mr. Madoff

Abstract: TO some, Bernard L. Madoff was an affable, charismatic man who moved comfortably among power brokers on Wall Street and in Washington, a winning financier who had all the toys: the penthouse apartment in Manhattan, the shares in two private jets, the yacht moored off the French Riviera. Although hardly a household name, he secured a longstanding role as an elder statesman on Wall Street, allowing him to land on important boards and commissions where his opinions helped shape securities regulations. Along the way, he snared a coveted spot as the chairman of a major stock exchange, Nasdaq. And his employees say he treated them like family. There was, of course, another side to Mr. Madoff, who is 70. Reclusive, at times standoffish and aloof, this Bernie rarely rubbed elbows in Manhattan’s cocktail circuit or at Palm Beach balls. This Bernie was quiet, controlled and closely attuned to his image, down to the most minute details. He was, for instance, an avid collector of vintage watches and took time each morning to match his wedding ring — he owned at least two — to the platinum or gold watch band he was wearing that day. Per his directives, the décor in his firm’s New York and London offices was stark. Black, white and gray — or “icily cold modern,” as one frequent visitor to the New York operation described it. Despite nurturing a familial atmosphere in his offices, he installed two cameras on the small trading floor of the firm’s London operations so he could monitor the unit remotely from New York. This Bernie also ran a money management business on the side for decades that he kept hidden far from colleagues, competitors and regulators. While he managed billions of dollars for individuals and foundations, he shunned one-on-one meetings with most of his investors, wrapping himself in an Oz-like aura, making him even more desirable to those seeking access. So who was the real Bernie Madoff? And what could have driven him to choreograph a $50 billion Ponzi scheme , to which he is said to have confessed? An easy answer is that Mr. Madoff was a charlatan of epic proportions, a greedy manipulator so hungry to accumulate wealth that he did not care whom he hurt to get what he wanted. But some analysts say that a more complex and layered observation of his actions involves linking the world of white-collar finance to the world of serial criminals. They wonder whether good old Bernie Madoff might have stolen simply for the fun of it, exploiting every relationship in his life for decades while studiously manipulating financial regulators. “Some of the characteristics you see in psychopaths are lying, manipulation, the ability to deceive, feelings of grandiosity and callousness toward their victims,” says Gregg O. McCrary, a former special agent with the F.B.I. who spent years constructing criminal behavioral profiles. Mr. McCrary cautions that he has never met Mr. Madoff, so he can’t make a diagnosis, but he says Mr. Madoff appears to share many of the destructive traits typically seen in a psychopath. That is why, he says, so many who came into contact with Mr. Madoff have been left reeling and in confusion about his motives. “People like him become sort of like chameleons. They are very good at impression management,” Mr. McCrary says. “They manage the impression you receive of them. They know what people want, and they give it to them.” As investigators plow through decades of documents, trying to decipher whether Mr. Madoff was engaged in anything other than an elaborate financial ruse, his friends remain dumbfounded — and feel deeply violated. “He was a hero to us. The head of Nasdaq. We were proud of everything he had accomplished,” says Diana Goldberg, who once shared the 27-minute train ride with Mr. Madoff from their homes in Laurelton, Queens, to classes at Far Rockaway High School. “Now, the hero has vanished.” If, in the end, Mr. Madoff is found to have been engaging in fraud for most of his career, then the hero never really existed. Authorities say Mr. Madoff himself has confessed that he was the author of a longstanding and wide-ranging financial charade. His lawyer, Ira Lee Sorkin, declined to comment. During the decades that Mr. Madoff built his business, he cast himself as a crusader, protecting the interests of smaller investors and bent on changing the way securities trading was done on Wall Street. To that end, like a burglar who knows the patrol routes of the police and can listen in on their radio scanners, he also actively wooed regulators who monitored his business. “He once mentioned to me that he spent one-third of his time in Washington in the early 1990s, late 1980s,” says a person who has known Mr. Madoff for years but requested not to be identified because he does not want to be drawn into continuing litigation. “He was very involved with regulators. I think they used him as a sounding board and he looked to them like a white knight.” “He was smart in understanding very early on that the more involved you were with regulators, you could shape regulation,” this individual adds. “But, if we find out that the Ponzi scheme goes back that far, then he was doing something much smarter. If you’re very close with regulators, they’re not going be looking over your shoulders that much. Very smart.” MR. MADOFF spent his early years in Laurelton, a close-knit, Jewish enclave where he and his friends ate ice cream at the local five-and-ten and attended activities at the community center. “It was an idyllic place to grow up in,” recalls Vera Gitten, who attended elementary school with him. She remembers him as “very thin,” a good student and extremely outgoing. She recalls a musical skit that he and his best friend wrote, rehearsed and performed for the class when they were in fifth or sixth grade. “It was a broad company, sort of a ‘Sheik of Araby’ kind of thing where they wore costumes, which were their parents’ bedsheets, that made them look like they were desert sheiks,” Ms. Gitten says. “They would have us rolling.” None of Mr. Madoff’s former elementary school friends could recall what his parents, Ralph and Sylvia, did for a living. According to Securities and Exchange Commission documents from the 1960s, it appears that his mother had a brokerage firm called Gibraltar Securities registered in her name with an address in Laurelton. In 1963, the S.E.C. began investigating whether a number of firms, including Ms. Madoff’s, had failed to file financial reports and whether that required revoking their registrations. Early the next year, Ms. Madoff withdrew her registration and the S.E.C. dropped its proceedings against her. While Mr. Madoff’s friends remember little about his parents, they all clearly recall his childhood sweetheart, and future wife, Ruth Alpern, a pretty, bubbly blonde who was voted “Josie College” by her Far Rockaway High School class. Mr. Madoff, after graduating from high school in 1956, spent a year at the University of Alabama, where he joined Sigma Alpha Mu, a Jewish fraternity. A year later, he transferred to Hofstra University, where he graduated in 1960 with a degree in political science. He later became a Hofstra trustee, but the university never invested with him. Mr. Madoff spent the next year at Brooklyn Law School, attending classes in the morning and running his side business — installing and fixing sprinkler systems — in the afternoon and evening, recalled Joseph Kavanau, who attended law school with Mr. Madoff. When Mr. Kavanau married his wife, Jane, who was Mrs. Madoff’s best friend from Queens, Mr. Madoff was the best man. “Bernie was very industrious,” Mr. Kavanau explains. “He was going to school and working at the same time.” Mr. Madoff was never interested in practicing law, Mr. Kavanau says. Instead, Mr. Madoff left law school and, using $5,000 saved from being a lifeguard and from his sprinkler business, joined the ranks of Wall Street in the 1960s. “For many years when we were first married, my wife and I would go to their house or we would all go out to dinner, maybe a couple of nights a month,” said Mr. Kavanau, who says that the first home Mr. Madoff shared with his bride was a modest, one-bedroom apartment in Bayside, Queens. Over the years, however, the two couples drifted apart. From time to time, Mr. Kavanau said he turned on the television and caught a glimpse of Mr. Madoff — now a successful financier — being interviewed, realizing that he had made his mark on Wall Street. “The last time I saw him, we had run into him and Ruth on Worth Avenue in Palm Beach,” Mr. Kavanau recalls. “We were definitely aware of how well he was living.” When asked if he can understand what happened, what may have motivated or prompted Mr. Madoff to eventually take such risks after building up a seemingly successful business, Mr. Kavanau paused. “There is no way to. I can’t make it add up. It doesn’t make sense,” he says, growing increasingly frustrated. “I cannot take the Bernie I knew and turn him into the Bernie we’re hearing about 24/7. It doesn’t compute.” WHEN Mr. Madoff arrived on Wall Street in the 1960s, he was an outsider. His small firm, Bernard L. Madoff Investment Securities, got its start by matching buyers of inexpensive “penny stocks ” with sellers in the growing over-the-counter market. This hardscrabble market was made up of stocks that were not listed on the tonier New York Stock Exchange or American Stock Exchange. In the O.T.C. market, it was common practice — and completely legal — for firms like Mr. Madoff’s to try to attract big trades to their shop by offering to pay clients a penny or two for every share they traded. His firm would make money by pocketing the difference in the “spread,” or the gap between the offering and selling price for the stocks. During the mid-1970s, when changes in the rules allowed his firm and others like it to trade more expensive and more prestigious blue-chip stocks, Mr. Madoff began gaining market share from the Big Board. “He was a man with a good idea who was also a terrific salesman,” says Charles V. Doherty, the former president of the Midwest Stock Exchange. “He was ahead of everyone.” While completely legitimate, the practice of paying for trading orders was entirely distasteful to blue bloods on the established exchanges who saw the actions, ultimately, as a threat to their livelihood. Around this time, Mr. Madoff began cultivating key relationships with regulators. “He was the darling of the regulators, without question. He was doing everything the regulators wanted him to do,” says Nicholas A. Giordano, the former president of the Philadelphia Stock Exchange. “They wanted him to be a fierce competitor to the New York Stock Exchange, and he was doing it.” Current and former S.E.C. regulators have come under fire, accused of failing to adequately supervise Mr. Madoff and being too cozy with him. Arthur Levitt Jr., who served as S.E.C. chairman from 1993 to early 2001, has acknowledged that he occasionally turned to Mr. Madoff for advice about how the market functioned. But Mr. Levitt strongly denies that Mr. Madoff had undue influence at the S.E.C. or that the agency’s enforcement staff deferred to him. Mr. Levitt said that he was unaware that Mr. Madoff even ran an investment management business, and that Mr. Madoff never had special access to him or other S.E.C. officials. He also noted that he and Mr. Madoff opposed one another on several key industry issues. “The notion that Madoff came to my office many times is a fiction,” Mr. Levitt says. “And the notion that he did my bidding is so fantastic that it defies belief.” Mr. Madoff’s firm was an early adopter of new trading technologies. And, during the early 1990s, he served three one-year stints as head of the Nasdaq, an electronic exchange that has competed vigorously and won market share from brick-and-mortar exchanges like the Big Board. Despite this flair for the experimental, Mr. Madoff routinely told his employees to adopt the mantra “KISS,” or “keep it simple, stupid.” He was, after all, a man of precise and controlled habits. He smoked Davidoff cigars and, in London, tailored his suits at Kilgour on Savile Row and bought many of his watches at Somlo Antiques. Associates and others acquainted with him said his punctilious ways sometimes veered into obsessive-compulsive behavior. His office, for example, always had to be immaculate. According to a former employee, who requested anonymity because of continuing litigation and because, he said, regulators have told Madoff employees not to speak to the media, Mr. Madoff scouted the office for potential filth. Once, when he spotted an employee eating a pear at his desk in New York, this person said, Mr. Madoff spied some juice dripping onto the gray carpet. “What do you think you are doing?” this person recalls Mr. Madoff demanding. Eating a pear, the employee replied. Mr. Madoff ripped the soiled carpet tile from the floor, then rushed to a closet to retrieve a similar swatch to replace it. Julia Fenwick, who was the office manager for Mr. Madoff’s London operation from 2001 until the unit was shuttered in December, said that “everything had to be perfect” and that “you never left paper on your desk — ever.” Although he visited the London office only a couple of times a year, usually on the way to his vacation home in France, Mr. Madoff still reveled in micromanaging everything there, including the office décor. The London unit recently finished spending about $700,000 for a refurbishment that recreated the black and gray palette of Mr. Madoff’s New York office and his private jet, Ms. Fenwick says. The result was office furniture made from black ash, black trimming on gray walls, black computers, black mouse pads and even a black refrigerator on the trading floor. But former employees and friends say Mr. Madoff’s obsession with order and control of his environment never led them to believe that deeper problems were afoot. “He appeared to believe in family, loyalty and honesty,” said one former Madoff employee, who asked to remain anonymous because of the continuing litigation and investigations. “Never in your wildest imagination would you think he was a fraudster.” Despite all of the easy money that rolled into Mr. Madoff’s firm for much of its existence, financial pressures began to emerge there during the last several years after Wall Street changed the way securities were priced and as new competition emerged. In his asset management business, however, Mr. Madoff continued to haul in fresh rounds of money from unsuspecting investors hungry for the predictable and handsome returns he booked year after year, without missing a beat. Employees who were veterans in the New York and London offices were even allowed to invest with Mr. Madoff, according to people who worked at the firm. Some employees are said to have given Mr. Madoff a large portion of their life savings — all of which now appears to be gone. Like so many others who invested with him, his employees weren’t lured to his funds simply by a promise of outsize returns. Rather, they say, they sought the security of investing with a man they knew and trusted. The Bernie they thought they knew. Mr. Madoff’s confidence reminds J. Reid Meloy, a forensic psychologist, of criminals he has studied. “Typically, people with psychopathic personalities don’t fear getting caught,” explains Dr. Meloy, author of a 1988 textbook, “The Psychopathic Mind.” “They tend to be very narcissistic with a strong sense of entitlement.” All of which has led some forensic psychologists to see some similarities between him and serial killers like Ted Bundy. They say that whereas Mr. Bundy murdered people, Mr. Madoff murdered wallets, bank accounts and people’s sense of financial trust and security. Like Mr. Bundy, Mr. Madoff used a sharp mind and an affable demeanor to create a persona that didn’t exist, according to this view, and lulled his victims into a false sense of security. And when publicly accused, he seemed to show no remorse. Television footage of Mr. Madoff entering his apartment building on East 64th Street at Lexington Avenue after federal authorities charged him with fraud in December doesn’t seem to show a man exhibiting any sorrow or regret. With a battery of reporters asking him whether he felt remorse, he declined to respond and pushed his way into his building. (Thus far, his only public apology has apparently been in letters left in his lobby for fellow tenants who suffered through the media circus outside their building.) To some extent, analysts of criminal behavior say, defining Mr. Madoff is complicated by the wide variety of possible explanations for his scheme: a desire to accumulate vast wealth, a need to dominate others and a need to prove that he was smarter than everyone else. That was shown, they say, in an ability to dupe investors and regulators for years. Like the former F.B.I. agent Mr. McCrary, Dr. Meloy cautions that he has not met Mr. Madoff and can’t make a clinical diagnosis. Nevertheless, he says individuals with psychopathic personalities tend to strongly believe that they’re special. “They believe ‘I’m above the law,’ and they believe they cannot be caught,” Mr. Meloy says. “But the Achilles’ heel of the psychopath is his sense of impunity. That is, eventually, what will bring him down.” He says it makes complete sense that Mr. Madoff would have courted regulators, even if he ran the risk of exposing his own actions by doing so. “In a scheme like this, it’s very important to keep those who could threaten you very close to you,” Dr. Meloy explains. “You want to develop them as allies and shape how they go about their business and their attitudes toward you.” INDEED, if it is shown that Mr. Madoff fooled regulators for decades, that would have been a “heady, intoxicating” experience and would have fueled a sense of entitlement and grandiosity, Mr. McCrary says. And by reeling in people from the Jewish community, from charities, from public institutions and from prominent and relatively sophisticated investor networks worldwide, Mr. Madoff wreaked havoc on many lives. That’s why Mr. McCrary says it’s not too far-fetched to compare Mr. Madoff to serial killers. “With serial killers, they have control over the life or death of people,” Mr. McCrary explains. “They’re playing God. That’s the grandiosity coming through. The sense of being superior. Madoff is getting the same thing. He’s playing financial god, ruining these people and taking their money.”

Ponzi Schemes
Madoff Bernard L
Frauds and Swindling


Discoveries Challenge Beliefs on Humans’ Arrival in the Americas

Abstract: SERRA DA CAPIVARA NATIONAL PARK, Brazil — Niede Guidon still remembers her astonishment when she glimpsed the paintings. Preserved amid the bromeliad-encrusted plateaus that tower over the thorn forests of northeast Brazil, the ancient rock art depicts fierce battles among tribesmen, orgiastic scenes of prehistoric revelry and hunters pursuing their game, spears in hand. “These were stunning compositions, people and animals together, not just figures alone,” said Dr. Guidon, 81, remembering what first lured her and other archaeologists in the 1970s to this remote site where jaguars still prowl. Hidden in the rock shelters where prehistoric humans once lived, the paintings number in the thousands. Some are thought to be more than 9,000 years old and perhaps even far more ancient. Painted in red ocher, they rank among the most revealing testaments anywhere in the Americas to what life was like millenniums before the European conquest began a mere five centuries ago. But it is what excavators found when they started digging in the shadows of the rock art that is contributing to a pivotal re-evaluation of human history in the hemisphere. Researchers here say they have unearthed stone tools proving that humans reached what is now northeast Brazil as early as 22,000 years ago. Their discovery adds to the growing body of research upending a prevailing belief of 20th-century archaeology in the United States known as the Clovis model, which holds that people first arrived in the Americas from Asia about 13,000 years ago. “If they’re right, and there’s a great possibility that they are, that will change everything we know about the settlement of the Americas,” said Walter Neves, an evolutionary anthropologist at the University of São Paulo whose own analysis of an 11,000-year-old skull in Brazil implies that some ancient Americans resembled aboriginal Australians more than they did Asians. Up and down the Americas, scholars say that the peopling of lands empty of humankind may have been far more complex than long believed. The radiocarbon dating of spear points found in the 1920s near Clovis, N.M., placed the arrival of big-game hunters across the Bering Strait about 13,000 years ago, long forming the basis of when humans were believed to have arrived in the Americas. Image Researchers at Serra da Capivara National Park unearthed stone tools last year that they say prove that humans reached what is now northeast Brazil as early as 22,000 years ago. Their discovery adds to the growing body of research upending a prevailing belief of 20th-century archaeology in the United States known as the Clovis model, which holds that people first arrived in the Americas from Asia about 13,000 years ago. 1 / 6 More recently, numerous findings have challenged that narrative. In Texas, archaeologists said in 2011 that they had found projectile points showing that hunter-gatherers had reached another site, known as Buttermilk Creek, as early as 15,500 years ago. Similarly, analysis of human DNA found at an Oregon cave determined that humans were there 14,000 years ago. But it is in South America, thousands of miles from the New Mexico site where the Clovis spear points were discovered, where archaeologists are putting forward some of the most profound challenges to the Clovis-first theory. Paleontologists in Uruguay published findings in November suggesting that humans hunted giant sloths there about 30,000 years ago . All the way in southern Chile, Tom D. Dillehay, an anthropologist at Vanderbilt University, has shown that humans lived at a coastal site called Monte Verde as early as 14,800 years ago. And here in Brazil’s caatinga, a semi-arid region of mesas and canyons, European and Brazilian archaeologists building on decades of earlier excavations said last year that they had found artifacts at a rock shelter showing that humans had arrived in South America almost 10,000 years before Clovis hunters began appearing in North America. “The Clovis paradigm is finally buried,” said Eric Boëda, the French archaeologist leading the excavations here. Exposing the tension over competing claims about where and when humans first arrived in the Americas, some scholars in the dwindling Clovis-first camp in the United States quickly rejected the findings. Gary Haynes, an archaeologist at the University of Nevada, Reno, argued that the stones found here were not tools made by humans, but instead could have become chipped and broken naturally, by rockfall. Stuart Fiedel, an archaeologist with the Louis Berger Group, an environmental consulting company, said that monkeys might have made the tools instead of humans. “Monkeys, including large extinct forms, have been in South America for 35 million years,” Dr. Fiedel said. He added that the Clovis model was recently bolstered by new DNA analysis ancestrally connecting indigenous peoples in Central and South America to a boy from the Clovis culture whose 12,700-year-old remains were found in 1968 at a site in Montana. Such dismissive positions have invited equally sharp responses from scholars like Dr. Dillehay, the American archaeologist who discovered Monte Verde. “Fiedel does not know what he is talking about,” he said, explaining that similarities existed between the stone tools found here and at the site across South America in Chile. “To say monkeys produced the tools is stupid.” Having their findings disputed is nothing new for the archaeologists working at Serra da Capivara. Dr. Guidon, the Brazilian archaeologist who pioneered the excavations, asserted more than two decades ago that her team had found evidence in the form of charcoal from hearth fires that humans had lived here about 48,000 years ago. While scholars in the United States generally viewed Dr. Guidon’s work with skepticism, she pressed on, obtaining the permission of Brazilian authorities to preserve the archaeological sites near the town of São Raimundo Nonato in a national park that now gets thousands of visitors a year despite its remote location in Piauí, one of Brazil’s poorest states. Dr. Guidon remains defiant about her findings. At her home on the grounds of a museum she founded to focus on the discoveries in Serra da Capivara, she said she believed that humans had reached these plateaus even earlier, around 100,000 years ago, and might have come not overland from Asia but by boat from Africa. Professor Boëda, who succeeded Dr. Guidon in leading the excavations, said that such early dates may have been possible but that more research was needed. His team is using thermoluminescence, a technique that measures the exposure of sediments to sunlight, to determine their age. At the same time, discoveries elsewhere in Brazil are adding to the mystery of how the Americas were settled. In what may be another blow to the Clovis model of humans’ coming from northeast Asia, molecular geneticists showed last year that the Botocudo indigenous people living in southeastern Brazil in the late 1800s shared gene sequences commonly found among Pacific Islanders from Polynesia. How could Polynesians have made it to Brazil? Or aboriginal Australians? Or, if the archaeologists here are correct, how could a population arrive in this hinterland long before Clovis hunters began appearing in the Americas? The array of new discoveries has scholars on a quest for answers. Reflecting how researchers are increasingly accepting older dates of human migration to the Americas, Michael R. Waters, a geoarchaeologist at Texas A&M University’s Center for the Study of the First Americans, said that a “single migration” into the Americas about 15,000 years ago may have given rise to the Clovis people. But he added that if the results obtained here in Serra da Capivara are accurate, they will raise even more questions about how the Americas were settled. “If so, then whoever lived there never passed on their genetic material to living populations,” said Dr. Waters, explaining how the genetic history of indigenous peoples links them to the Clovis child found in Montana. “We must think long and hard about these early sites and how they fit into the picture of the peopling of the Americas.”

Serra da Capivara
Brazil
Niede Guidon
Archaeology


Martha Stewart’s Magazines to Outsource Business Side to Meredith

Abstract: Martha Stewart Living Omnimedia, which has been struggling to make its award-winning magazines profitable, is outsourcing its advertising, circulation and printing operations to the Meredith Corporation, the magazine giant that owns titles like Family Circle and EatingWell. The move is a first for Meredith, which says it will absorb all the business-side employees of Martha Stewart’s magazines, Martha Stewart Living and Martha Stewart Weddings. As of Nov. 1, Meredith will include those two titles among its 14 magazines in its advertising pitches to attract brands like Crest, L’Oréal and Bed Bath & Beyond, while taking over the entire business-side operation. The deal is a significant step back for Ms. Stewart, freeing her from the many financial burdens and complications that come with trying to find profits in an increasingly competitive media market so she can focus on perfecting recipes like her latest pumpkin cheesecake pie with gingersnap crust. Ms. Stewart will keep her magazines’ editorial operations in her West Chelsea headquarters. By aligning with Meredith, she no longer will have to compete with larger magazine companies like Hearst and Condé Nast to attract advertisers. According to Martha Stewart Living Omnimedia’s most recent earnings report, the company’s publishing division lost $1.75 million in the second quarter of 2014. In a release about the latest deal, the company estimated that the relationship with Meredith would improve its annual operating income by $10 million to $15 million. “Our editorial team can focus entirely on what we do best: the creation of inspirational, original, practical, useful and trusted content for our superb publications and digital properties,” said Ms. Stewart, the company’s founder and nonexecutive chairwoman, in a statement. Stephen M. Lacy, Meredith’s chairman and chief executive, said he welcomed the new partnership because the company, which dominates the content market for mothers, can now extend its reach to women who are about to be married. “Now, we hope to be able to reach her at the wedding stage,” Mr. Lacy said in an interview. “That gives us a new business we can build and expand over time.” Meredith has an established track record with turning around troubled magazines. It made Every Day With Rachael Ray profitable since it purchased the magazine in 2011, said the Meredith spokesman, Patrick Taylor. Since Meredith bought EatingWell in 2011, the magazine has nearly tripled its advertising rate base to more than one million. Last month, Hearst also started a division to help consumer magazines with their publishing. Magazine industry insiders familiar with both brands recognize that the only challenge may be with how Meredith and Martha Stewart approach spending. Meredith is known for its cost-conscious approach to publishing. Martha Stewart is better known for sparing no expense on the perfect Halloween photo shoot. But as part of the deal, public filings show that Ms. Stewart reached an agreement with Meredith that the quality of the magazines will not be altered, meaning Meredith cannot even print the magazines with a lower-quality paper stock. “The change will be invisible to the consumer,” Mr. Lacy said in a news release. “And strengthen the Martha Stewart brand in the advertising marketplace.”

Martha Stewart
Magazine
Outsourcing
Meredith
Martha Stewart Living


ITT College Chain Barred From Enrolling Students With U.S. Aid

Abstract: The federal Department of Education imposed strict new rules on Thursday on one of the nation’s largest for-profit education companies, ITT Educational Services, barring it from enrolling new students who use federal financial aid and ordering it to pay $153 million to the department within 30 days to cover student refunds if its schools close down. John B. King Jr., the secretary of education, said the department took action to protect both ITT’s students and the taxpayers who are on the hook for losses when students default on their federal aid. “Looking at all of the risk factors, it’s clear that we need increased financial protection and that it simply would not be responsible or in the best interest of students to allow ITT to continue enrolling new students who rely on federal student aid funds,” Mr. King said in a statement. The action threatens the viability of the beleaguered company, which like most for-profit education entities relies heavily on government financial aid programs for students to fund its operations. As of June 30, according to a regulatory filing, ITT had only $78 million in cash on its balance sheet. An email message requesting comment from an ITT spokeswoman late Thursday night was not immediately returned. ITT operates 137 campuses in 39 states, providing career-oriented programs to 43,000 students at ITT Technical Institute and Daniel Webster College locations. ITT was once a highflying stock, trading above $75 a share in 2012. On Thursday, its shares closed at $1.40. Dept. of Education's Letter to ITT Federal officials announced a series of actions against ITT that could threaten the survival of the chain, which has been the subject of investigations focusing on its recruiting and accounting practices. The company has been under increased scrutiny by the Education Department since 2014 and has been accused by both federal and state regulators of misleading students about the quality of its programs and their employment potential upon graduation. The Consumer Financial Protection Bureau filed a lawsuit against ITT two years ago, accusing the college chain of predatory student lending. In addition to the enrollment restrictions imposed by the Education Department, ITT is also prohibited from awarding raises to employees, paying bonuses to its executives or paying special dividends without department approval. In recent years, ITT has not paid bonuses to its executives. Still, Kevin Modany, its chief executive, received total compensation of $1.4 million last year, the company’s proxy statement shows. The Education Department also required ITT to develop “teach-out” plans for current students, allowing them to finish their programs at other colleges if ITT shuts down. ITT, based in Carmel, Ind., must also inform its students that its accreditor, the Accrediting Council for Independent Colleges and Schools, has determined that the institution is not in compliance with its criteria. That determination was made this month. Earlier this year, ITT said it believed its schools were in compliance, but it also acknowledged that if the schools lost the accreditation, they would no longer have access to government loan programs. Those programs are the lifeblood of ITT and other for-profit education companies. Federal aid accounted for almost 70 percent of ITT’s $850 million in revenues last year, the Education Department said. Consumer advocates praised the department’s action against ITT. “We applaud the Department of Education for taking real action to prevent ITT from recruiting more students to take on federal student loan debt to attend an institution that was found by its accreditor not to fully satisfy even minimal standards in critical areas,” Abby Shafroth, a staff attorney for the National Consumer Law Center’s Student Loan Borrower Assistance Project, said in a statement. Students currently enrolled in an ITT school can continue their studies, the Education Department said. But students who decide to pause their studies will probably be able to discharge their federal loans if ITT closes down before they finish their programs.

For-profit education
ITT Educational Services
Federal Aid
US Department of Education


U.S. Team Veteran Returns to M.L.S.

Abstract: Defender DaMarcus Beasley returned to Major League Soccer by joining the Houston Dynamo. Beasley, 32, began in M.L.S. with Chicago as a teenager before leaving in 2004. His career has taken him to the Netherlands, England, Scotland, Germany and, most recently, Mexico. Beasley, the only American to play in four World Cups, started all of the United States’ games in the 2014 Cup in Brazil, but he may not be the biggest name to join M.L.S. this week. New York City F.C. said that on Thursday it would announce a “major player signing,” believed to be the veteran Chelsea midfielder Frank Lampard. N.Y.C.F.C. will begin play in 2015.

DaMarcus Beasley
Soccer
MLS
US Men's Soccer Team
Houston Dynamo Soccer Team


Chinese Companies to Invest Billions on Cambodia Projects

Abstract: PHNOM PENH — Two Chinese companies have reached a deal to build a 400-kilometer rail line, a steel plant and a seaport in Cambodia, worth a combined $11.2 billion, in what would be by far the impoverished country’s biggest-ever investments. Cambodia Iron & Steel Mining Industry Group has hired China Railway Group to build the 250-mile railroad to link a steel facility in Preah Vihear Province, in the northern part of the country, to a port on the southern commercial island of Koh Kong, Zhang Chuan Li, the Cambodia Iron & Steel chairman, said Wednesday. The rail link and port are expected to cost $9.6 billion and the steel plant $1.6 billion. The deal is the latest sign of China expanding its footprint in the frontier economies of a booming Southeast Asia as the United States vies for influence in the region. Loans and investment have won China some useful political allies in the 10-member Association of Southeast Asian Nations, which is set to become an integrated trade community by 2016. All three projects in Cambodia will start this year and will take as long as four years to complete, Mr. Zhang said. “There is an important demand for transport of mined materials for export to China and to the world,” he said. Cambodia Iron & Steel is a Chinese company based in Phnom Penh and established in 2006. The agreement was made Monday and came three days after Sinomach China Perfect Machinery Industry and Cambodian Petrochemical announced that they would jointly build a $2.3 billion oil refinery, Cambodia’s first, capable of processing five million metric tons of crude oil a year. Chinese companies are also planning to build a separate $7 billion, 400-kilometer high-speed railroad through the neighboring country of Laos and are trying to win contracts to build new lines in Thailand. Mr. Zhang did not provide details on where the billions of dollars for the Cambodian rail, steel and port projects would come from. Mr. Zhang said that a groundbreaking ceremony for the railroad would take place by the end of this month and that construction of the steel plant in Preah Vihear Province would start in July. A three-kilometer bridge will connect an island in the southern coastal province of Koh Kong with the mainland, and the project is expected to bolster the economies of the four provinces the link will pass through, the company said in a news release. Peter Brimble, senior country economist at the Asian Development Bank, said he was surprised by the size of the rail project. “It must be the largest-ever project in Cambodia,” said Mr. Brimble, who has been involved in the bank’s rehabilitation work on 650 kilometers of disused railroad lines in Cambodia. “Perhaps it’s easier to build a new one. Let’s wait and see.”


Afghanistan Bomb Kills 6 Americans

Abstract: ZHARE, Afghanistan — Six American soldiers were killed and more than a dozen American and Afghan troops were wounded on Sunday morning when a van packed with explosives was detonated at a new jointly operated outpost in southern Afghanistan. The soldiers were inside a small mud-walled building near the village of Sangsar, north of the Arghandab River, when the bomber drove up to one of the walls and exploded his charge around 9 a.m. The blast could be heard eight miles away, and it sent a dusty cloud towering over the surrounding farmland. The explosion blasted a hole in the thick wall, causing the roof to collapse on the soldiers inside. Others quickly arrived and clawed and pulled at the waist-deep rubble to free the buried troops. The building had been occupied by the Americans and Afghans for only a few days, an American official said, and was beside a narrow road. It was not immediately clear how the van managed to get so close without being challenged or stopped. Gen. Abdul Hameed, a commander in the Afghan National Army, said in a telephone interview that his soldiers had tried to stop the van, but that its driver ignored them and rammed the vehicle into the building. After the van exploded, the field beside the ruined building became a busy landing zone, with four medical evacuation helicopters arriving to shuttle the victims to two military hospitals in nearby Kandahar. The Taliban swiftly claimed responsibility for the bombing. “We have killed numbers of Americans and Afghan soldiers and wrecked and ruined their security checkpost,” a Taliban spokesman, Qari Yousuf Ahmadi, said by telephone. “We will carry out similar attacks in the future.” In addition to the six Americans who were killed, four American soldiers were wounded, but their injuries were not considered life-threatening, according to officials familiar with their conditions. The names of the victims were being withheld pending the notification of their families. American fatalities in Afghanistan have risen steadily for five years, with 479 American soldiers killed so far in 2010, according to icasualties.org , an independent Web site that compiles battlefield data. That is more than three times the 155 American casualties in 2008. Despite the Taliban’s claim, it appeared that no Afghan soldiers had been killed in the attack. There were conflicting official reports of the number of Afghans wounded. Some reports said 11 Afghan soldiers had been wounded; others put the number as high as 14. At least one Afghan soldier, who was seen by two journalists aboard a medical evacuation helicopter, had a head injury and appeared to be gravely wounded. Most of the other Afghans who were injured were walking on their own and appeared to have suffered cuts and shrapnel wounds. A medical official said they were all expected to survive. The attack occurred in an area where the Americans and Afghans have maintained a heavy military presence this fall, when NATO and Afghan forces flowed into Taliban-controlled territory of Kandahar Province in an effort to clear it of insurgents and bring the area under the control of the government in Kabul. The Arghandab River Valley, a belt of irrigated fields and small villages, is now dotted with a network of American and Afghan outposts. Patrols crisscross the region each day, and new positions — like the outpost that was attacked on Sunday — are being built. Fighting has subsided in recent weeks as the weather has cooled and the leaves have fallen, making it more difficult for insurgents to hide. But the Taliban has continued to plant bombs and send suicide bombers, and American and Afghan soldiers are wounded or killed in the province almost every day .

United States Defense and Military Forces


Leadership on View in ‘Art Walk’ Near West Point

Abstract: Under a tree in Ladycliff Park in Highland Falls, three life-size concrete women sit together, their knees jutting up toward their chests. Featureless, armless, their rough-hewed bodies face one another as if engrossed in conversation. This is Jo-Ann Brody ’s “Dialog,” part of “ The Highland Falls ArtWalk: Leadership and Wisdom ,” a mile-long stretch of 18 large-scale sculptures lining the Orange County town’s Main Street. Nearby, John BonSignore ’s “Toe Dancer #3” gracefully extends its stainless-steel limbs, while the colorful, 28-foot-tall PVC tubes in David Provan ’s “The Fifth Noble Truth” shift gently in the breeze. Image “Dialog” (2013), by Jo-Ann Brody. Credit Nicole Shea Midway between Bear Mountain State Park and Storm King Art Center and steps from the United States Military Academy at West Point, the sculpture walk offers a new destination for a warm-weather outing. It is the brainchild of Nicole Shea, executive director of the Eisenhower Leadership Center at West Point, an independent educational enterprise that provides programs led by West Point faculty members teaching national and international clients how to apply military principles to business ventures. For Ms. Shea, art is integral to the curriculum. “We believe that the arts stimulate creativity and adaptability in business,” she said. For help curating the art walk, she turned to Collaborative Concepts , a nonprofit, based in Putnam County, that was founded in 1999 to support and exhibit professional art. This wasn’t the first collaboration between the organizations. Last year, Ms. Shea coordinated the participation of students from the Storm King School in Cornwall-on-Hudson in Collaborative Concept’s “Farm Project,” an annual outdoor sculpture exhibition on the 140-acre Saunders Farm in Garrison, that will celebrate its 10th anniversary this year. To select sculptures for the art walk, the two groups assembled a curatorial committee that invited nearly 50 artists to submit proposals and selected 17, who range in age from their 30s to their 80s. All of the sculptures reflect themes of leadership and wisdom. Image “Julie (and Friends),” by Barney Hodes. Credit Nicole Shea In creating his majestic bronze “All-Services Guardian Angel,” Greg Wyatt responded to those themes from the perspective of war and peace, enduring subjects in his extensive body of work. Among his renowned public art commissions are “ The Price of Freedom ” at Arlington National Cemetery and “Peace Fountain” at the Cathedral Church of Saint John the Divine in Manhattan, where the artist is sculptor-in-residence. Evoking elements of both of those pieces, his 10-foot-tall “All-Services Guardian Angel” is installed directly across the street from the West Point Visitors Center. When viewed from one side, the sculpture suggests the surging debris of an explosion. From the other side it reveals an angel, her powerful wings outstretched, her arms clutching a lifeless body. “It’s the dichotomy of the outer battle and the inner vision,” Mr. Wyatt said. “You have the destruction and pain of war, and then you have the peace that the guardian angel brings to warriors. It is an image that veterans say comes to them in combat. Here, the angel is the invisible made palpable and tactile for visitors to see and perhaps feel.” “All-Services Guardian Angel” is one of three site-specific sculptures along the art walk. Another is Susan Buroker ’s “One in Part; Whole in Being,” an array of jigsaw-like mahogany forms arranged within a three-dimensional stainless-steel grid. The work is Ms. Buroker’s interpretation of leadership as the integration of individual experiences. Image “Equal Justice” (2014), by Tom Holmes. Credit Nicole Shea “The steel represents the strength of the leader,” Ms. Buroker said. “The wood represents the organic experiences that create that strength.” Of the sculpture’s composition, she said: “At first, the sections don’t seem to have any interrelationship. But when you step back, it transforms into an entirety and the intentional design of oneness is visible.” Art walk strollers will encounter two sculptures, Ben Birillo ’s “America Rising” and “Ahriman Crowned,” by Joseph Jaskolka , displayed in allocated parking spots that have been adorned with plantings and converted into what Ms. Shea called “micro parklets.” The parklets, she said, “are another way of beautifying the town.” Image “All-Services Guardian Angel” (2015), by Greg Wyatt. Credit Nicole Shea Nevertheless, “Ahriman Crowned” has sparked controversy. Some parishioners from the Sacred Heart of Jesus Church, located on Main Street opposite the sculpture, find the massive stone figure, with its right arm extended and a finger pointing forward, threatening. “They think it is some kind of statue of the devil put in front of the Catholic church,” the Rev. Joseph Tokarczyk, the church’s administrator, said. “I have had a lot of phone calls from my people asking me, ‘What kind of art is that?’ ” Mr. Jaskolka said the sculpture, named for the Zoroastrian spirit of destruction , was a personification of the negative forces of materialism in 21st-century society. “Our culture is dominated by these influences,” he said. “ ‘Ahriman Crowned’ symbolizes the loss of spirituality and individualism within the human soul.” Visitors can hear the artists discuss their work by downloading the Otocast mobile audio guide app and selecting the desired sculpture. Along the route, they can stop at the Eisenhower Leadership Center gallery. There they will find, in addition to displays by established artists, an “ArtWalk”-related exhibition that features student artworks and a model for a never-realized glass and aluminum monument designed by Colin Greenly in 1970. The artist died before he was able to develop his contribution to the art walk. More student work is on view in the community room of the Highland Falls Library across the street. The organizers hope that in addition to inspiring viewers, the art walk will help to revitalize the village of Highland Falls, which is often overlooked by tourists visiting West Point. “People drive in, then they drive out,” said Herman Roggeman , a founder of Collaborative Concepts, member of the “ArtWalk” curatorial committee and participating sculptor. “By putting art here, we are encouraging them to pull over, get out of their cars to take a look and then have lunch or a cup of coffee.” When they do, perhaps they will discuss the sculptures around them. “Whether people like it or dislike it,” Mr. Roggeman said, “art leads to dialogue.”

Art
Collaborative Concepts
Highland Falls NY
Westchester


Police Seek Uncle After Child’s Body Is Found in Passaic River

Abstract: A body believed to be that of a 3-year-old girl was found Saturday morning in the Passaic River in New Jersey , about three hours after her uncle angrily told her family to “watch the 6 o’clock news tonight” and drove off with her, the authorities said. A relative of the toddler, Janiay Rievas, called 911 about 6:30 a.m. to report that the girl and her uncle, Juan Mendez, 21, were missing and that his car had been found abandoned on the Gregory Avenue bridge that connects Passaic and Wallington, the police said. The police searched the river and surrounding areas for Mr. Mendez, who lived about 15 blocks south of the bridge in Passaic, N.J., with the child, her mother and her older sister. The river search was called off at 2 p.m. Detective Andy White of the Passaic Police Department said Mr. Mendez was believed to have been using crack cocaine for the past week. He said the police had not positively identified the child’s body. The family told the authorities that Mr. Mendez stormed out of the house with Janiay about 6 a.m. Relatives said that he told them he was going to get something to eat at a Burger King, and that family members soon began searching for him and the girl. Varun Patel, 23, who lived next door to Mr. Mendez on Scher Place, described him as well mannered and friendly. He recalled talking with him about getting together to play basketball. Lucy Guenther, who lives near the child’s home, said: “They minded their own business. They were good neighbors. Never known any trouble, but I’ve seen the little girl playing in the yard.” Police and rescuers from Passaic and Wallington, as well as Bergen County K-9 units and scuba teams, were involved in the search for Mr. Mendez.

New Jersey
Violence
Children and Youth
Passaic (NJ)


Youth Trend on the Track Takes a Detour

Abstract: In looking for a driver to replace the injured Felipe Massa at the European Grand Prix in Valencia, Spain, this weekend, the Ferrari team turned first to the 40-year-old Michael Schumacher. After the German bowed out because of a weak neck from a recent motorcycle accident, the Italian team settled on its 38-year-old test driver, Luca Badoer. Badoer will not simply be the oldest driver in the race, he will be double the age of the youngest driver, Jaime Alguersuari, 19, of Spain, who is the youngest driver ever to race in the series. While Formula One has had a trend of breaking records of youthfulness, older drivers have still been able to prove their worth, and that is why age was certainly not a criterion in Ferrari’s choice. According to drivers, coaches, team owners and others in the series, the key to success is not so much physical as mental. Although these days most drivers are in their twenties, there were plenty of 50-year-olds in Formula One in the 1950s, the oldest ever being the 55-year-old Louis Chiron, in 1955. The oldest winner was Luigi Fagioli, who won in 1951, at 53. More recently, Nigel Mansell returned at 41 after a season and a half away from the series in 1994, when he won a race. The current young-driver trend began in the early 2000s — and included Massa, who started at age 20 in 2002. Between 2003 and 2006, Fernando Alonso set the records for the youngest driver to score pole position, race victory, world title, then two world titles. Lewis Hamilton beat Alonso’s youngest title winner record last year at 23. Sebastian Vettel, at 21 at the Italian Grand Prix at Monza last September, beat Alonso’s records for youngest driver to score a pole position and to win a race. Just as Vettel extended his achievements by winning two more races, he has lately been outperformed by a teammate 10 years his senior. In fact, Mark Webber, 32, has outperformed all drivers in the past four races, winning one race, finishing second in two and third in another. He also set the record at the German Grand Prix last month for the driver who had been in the most races — 130 — before winning his first race. Unlike in the early days of the sport, today’s drivers began racing in go-karts at 8 or younger. So by the time they reach Formula One, they are seasoned professionals. When asked how he won so soon in Formula One, Alonso said he had been doing the same all his life. “I was beating the records of young drivers always, because I started very young,” he said. “All of my steps in my whole career I was three or four years younger than my main competitors.” But there are advantages to every age. Top physical condition is essential for drivers to concentrate for the race length of up to two hours at high speed while the body undergoes a physical battering under rapid acceleration and braking. But the real differences lie elsewhere. Nico Rosberg, 24, a driver at the Williams team, said it took time to develop the knowledge of driving a Formula One car because of the plethora of electronic controls on the steering wheel. Experience brings the ability to quickly pinpoint what is wrong with a car, according to Jarno Trulli, who is 35 and in his 13th season. But Peter Windsor, who is owner and director of the USF1 team, which will start racing next year, and who also owns a driver coaching business, said there were also disadvantages to experience. “Young drivers come in to Formula One and get in and drive the car and do what the car is telling them to do, and they manipulate the car more naturally, rather than doing what they know,” he said. “An experienced driver will think, ‘This worked for me in the past when I was at Ferrari or wherever it was, and therefore it will work for me at McLaren.’ That attitude actually is quite damaging.” A younger driver, therefore, can get faster times from a car with its imperfections rather than requiring the team to improve the car to suit his habits. Franz Tost, the director of the Toro Rosso team, which hired Alguersuari, said that the younger drivers’ attitude was also an advantage, for it makes them easier to work with and good for the atmosphere on the team in general. Alguersuari said a younger driver could bring more motivation than an older driver. “My target as a young kid was always to reach Formula One and to be world champion,” he added. The drivers both young and old, and team owners and others, all agree that motivation is the real key. “I still have some targets here, something to achieve, and I don’t want to end up in my life having something left,” said Trulli. “What is driving me mad is that I haven’t had a chance yet. And I don’t want to give up. I know that I have got the talent, because when I had the car I was able to do it. So I don’t see the reason why I should step out at the moment.” Jacques Villeneuve, 38, is looking for a race seat next year after a two-year absence from the sport. “It’s not really age that’s the problem,” he said. “It’s how fatigued you are. If you’ve done the same thing for 15 years, day in, day out, you reach a point where you just wake up in the morning and it’s a drag. It’s, ‘Aw, not another day at the office.’ “I’ve had two years’ holiday and the only thing I can think of is getting on my motocross, getting on the go-kart, racing cars. The passion, the desire, the hunger is there.” David Coulthard, who quit racing last year at 37, had another take. “To be involved in a professional sport at this level takes a blinkered approach to life,” he said. “And I think at different points in different people’s lives the blinkers come off. And the moment they come off, you bet it doesn’t change your ability to drive, your ability to make decisions, your ability to take risks. But you just see more things in life and that leads to opportunity and it leads to different decisions.”

Formula One
Automobile Racing
Valencia (Spain)


Start-Ups Aim at Overlooked Demographic: The Unbanked

Abstract: Last summer Jimmy Chen walked the streets of San Francisco trying to do simple financial transactions without a bank account, a task millions of Americans face. It cost him $4 to cash a $20 personal check and $5 to send $30 to a relative — activities that would have been free with a bank account. When he needed to retrieve a money transfer, the process of verifying his identity took so long he almost gave up. These are the sorts of problems that might seem ripe for new financial technology to address — providing cheaper, faster ways to do basic financial services for some of the nine million or so American households without a bank account . But most hot start-ups in fintech, as it is known, are more focused on wealthy customers. Mr. Chen was in San Francisco as part of a new program trying to change that imbalance. The Financial Solutions Lab picked Mr. Chen’s company, Propel , and eight other start-ups for its first class last year, all of them aimed at “building solutions for financial health.” In Mr. Chen’s case, Propel is working on an app to make it easier to get access to the federal food stamp system. The relative lack of new entrants trying to address problems faced by the less wealthy is caused, in no small part, by the lack of familiarity with these problems among young, largely affluent entrepreneurs like Mr. Chen, a 28-year-old former engineer at Facebook. Image Jeff Kaiser of Propel with Sandra Johnson in Cobble Hill, Brooklyn. Credit Nicole Craine for The New York Times “It’s hard to solve a problem you don’t understand,” he said. The companies in the Financial Solutions Lab first gathered last July. Mr. Chen and the other start-ups in the lab went out into San Francisco on a sort of scavenger hunt to experience the expensive financial services that are the only option for many low-income Americans. In the months after, the companies gathered several more times to get guidance on how to build affordable financial services while still adhering to the manifold regulations that fall on the financial industry. The nine start-ups also got $250,000 to finance their efforts. The lab was started by a financial nonprofit group in Chicago, the Center for Financial Services Innovation , in partnership with JPMorgan Chase’s philanthropic foundation, which provided $30 million and lots of connections for the companies that entered the lab. The lab has had to strike a difficult balance of finding start-ups that want to serve low-income people without overcharging them and making their problems worse. Many payday lenders and prepaid card suppliers say they exist to help their clients, but end up preying on their financial vulnerability. Ryan Falvey, the director of the lab, said that among the 300 applicants to the program last year, many did not meet the Center for Financial Services Innovation’s guiding principles of encouraging inclusion, upward mobility and positive consumer behavior. “There are a lot of products out there that are at odds with the consumer,” he said. “They can make a lot of money, and the consumer can find themselves in worse and worse shape.” But Mr. Falvey said it was not hard to find start-ups that genuinely seemed to want to help their customers improve their financial health. He pointed to one of the lab’s most successful start-ups, Ascend , which was founded in part by a member of the Consumer Financial Protection Bureau’s consumer advisory board, Steve Carlson. Ascend provides loans of a few thousand dollars to borrowers who fall between the prime and subprime categories. The loans start with an annual interest rate around 30 percent, but it can drop to 14 percent if borrowers take steps like saving money or limiting credit card spending. Image Jimmy Chen, left, with his team in Propel’s Brooklyn office. Credit Nicole Craine for The New York Times The business model has been promising enough that venture capitalists have put $1.5 million into Ascend. Another participant in the lab was a nonprofit from Manhattan that is trying to build a mobile phone app, PayGoal, to help clients make better financial decisions. Justine Zinkin, the chief executive of the nonprofit that created PayGoal, Neighborhood Trust Financial Partners , said she went into the program somewhat skeptical of JPMorgan’s involvement and “the cynical possibilities of a large bank claiming to care about the little consumer.” But she said the bank executives involved in the program went above and beyond to provide her and the other lab participants with resources and connections to help them improve their products. Mr. Chen said Chase executives spent hours helping him and his two co-founders understand the entire route a payment travels after a customer swipes a card at a store. But for Propel the biggest lessons have come from going to poor neighborhoods where people use food stamps. These lessons led his team to change the focus of Propel from helping people sign up for food stamps to making it easier to check the balance in a food stamp account, something that had been virtually impossible from a smartphone. The lessons learned on the street are just the sort of thing that Mr. Falvey, who is now choosing the second class of lab participants, is hoping he can push more young entrepreneurs to pursue. “I think that there is a huge disparity between how most consumers live their financial lives — quickly, on the edge and with a significant degree of stress, and a lot of distrust of financial service providers — and the world that many of our financial products were designed for,” he said.


Brewers Lose to Cardinals Amid Cheers for Braun

Abstract: MILWAUKEE — Ryan Braun says he has something to prove, but he is not concerned about detractors who think he used a banned substance that led to a positive test for elevated levels of testosterone during the 2011 playoffs. Instead, he says he wants to show his fans he can be just as productive as when he won the National League Most Valuable Player award last season. “It’s not so much about proving anybody wrong” as much as it is proving it to “the people who all believed in me and supported me,” Braun said Friday before Milwaukee’s opening day. “I’m definitely excited,” he said. “And motivated.” He was not able to do much in the Brewers’ 11-5 loss to the St. Louis Cardinals, going 0 for 5 with a strikeout. The game was a rematch of the N.L. Championship Series, won by St. Louis. As for the positive test that would have led to a 50-game suspension had an arbitrator not ruled in his favor, Braun did not have to convince many of the 46,086 fans of his innocence. He received the loudest and longest ovation of any player introduced during the pregame ceremonies, and the fans chanted “M.V.P.” as soon as he jogged to left field before the first inning. While playing catch with center fielder Carlos Gomez, Braun acknowledged the chants by turning to the fans in the bleachers and raising his right fist. “It really means a lot to me,” he said. “Unfortunately, we couldn’t reward them with a win.” Commissioner Bud Selig told WTMJ Radio on Thursday: “I think Ryan will be treated very well here and should be. On the road? Well, when you go to Chicago or Philadelphia, as we all know, and a lot of other places, they are going to do what they do. But he’s a great player and he will not let that bother him.” D’BACKS 5, GIANTS 4 Home runs by Chris Young and Paul Goldschmidt staked the host Diamondbacks to a 3-0 lead in the first inning against San Francisco’s Tim Lincecum. Lincecum, a two-time Cy Young Award winner, took a loss on opening day for the second straight season. (AP) ROCKIES 5, ASTROS 3 With the game tied, 3-3, in the eighth, pinch-runner Eric Young stole second and scored on a wild throw by catcher Jason Castro, one of host Houston’s four errors. Troy Tulowitzki hit a home run in the ninth for Colorado. (AP) RANGERS 3, WHITE SOX 2 Colby Lewis struck out nine in his first opening-day start, and Ian Kinsler homered for host Texas. With the Rangers leading, 2-0, Adam Dunn led off the sixth with a home run for the White Sox, tying a record with his eighth opening-day homer. Frank Robinson and Ken Griffey Jr. also hit eight homers in openers. The loss spoiled the managerial debut of Robin Ventura, who before the game visited cordially with Nolan Ryan, the Rangers’ president. The meeting was their first since Ventura charged the mound 19 years ago against Ryan. (AP) ORIOLES 4, TWINS 2 Jake Arrieta, in his first start since having elbow surgery in August, pitched seven scoreless innings for Baltimore on the 20th anniversary of the opening of Camden Yards. (AP) DODGERS’ BANKRUPTCY The Los Angeles Dodgers, who filed for bankruptcy last June, filed documents Friday looking to get out for good by the end of the month. But almost no specifics are revealed in the paperwork about the purchase of the team and Dodger Stadium for $2 billion by a group led by Magic Johnson but financed primarily by Guggenheim Partners, a private financial services firm. The group is paying an additional $150 million for half the land surrounding Dodger Stadium, including the parking lots, in a joint venture with Frank McCourt, the team’s outgoing owner. The few details of the team’s sale include the Guggenheim-Johnson group’s agreement to pay about $1.6 billion in cash and to assume $412 million in debt. A confirmation hearing on the team’s plan to leave bankruptcy is scheduled for April 13 in Federal Bankruptcy Court in Wilmington, Del. RICHARD SANDOMIR TICKET PRICES FLATTEN The average Major League Baseball ticket price rose by 1 cent this year, to $26.92, according to a survey by the Team Marketing Report. (AP)

Baseball
Milwaukee Brewers
St Louis Cardinals
Braun Ryan


U.S. Chess Federation Lawsuit Becomes Criminal Issue

Abstract: A dispute among board members of the United States Chess Federation that has prompted several lawsuits has now become a criminal matter. A member of the federation was arraigned Friday in Federal District Court in San Jose, Calif., and charged with identity theft and breaking into the e-mail account of a federation board member. According to the indictment, the accused, Gregory Alexander of Everett, Wash., accessed the e-mail account of the board secretary, Randall Hough, at least 34 times. The federation has alleged in a lawsuit that Mr. Alexander read messages between Mr. Hough and an outside counsel hired by the federation, the governing body of chess. The counsel, Karl S. Kronenberger, had been hired to investigate accusations that two federation members posted thousands of obscene and defamatory messages on Internet bulletin boards under the name of a board member in order to get themselves elected to the board. A woman who answered the phone at Mr. Alexander’s residence declined to comment early Friday evening. The two members, Susan Polgar and Paul Truong, who are married, were elected in July 2007. Ms. Polgar, who was the women’s world champion from 1996 to 1999, is the oldest of three highly successful Hungarian-born chess-playing sisters. The youngest, Judit, is the only woman ever to be ranked in the top 10 players in the world. Many of the messages were posted in the name of Samuel H. Sloan of the Bronx, who lost in his bid for re-election to the board in 2007. Mr. Sloan filed a lawsuit over the postings in 2007, naming Ms. Polgar, Mr. Truong, the federation and others as defendants. That case was dismissed in August 2008. But before it was, the federation hired Mr. Kronenberger to look into Mr. Sloan’s claims. Mr. Kronenberger concluded that Mr. Truong was responsible for the Web postings. The federation subsequently filed a lawsuit to have Ms. Polgar and Mr. Truong removed from the board. Ms. Polgar filed her own suit against the federation last August, claiming libel, slander and “business disparagement.” In the course of Mr. Kronenberger’s investigation, Ms. Polgar quoted on her chess Web site some of the e-mail messages he exchanged with other board members. In an interview last year, Ms. Polgar said, “the messages were public knowledge; they were on the Internet.” In June 2008, the federation, contending that the e-mail messages had been stolen, filed yet another lawsuit seeking to force Internet service providers to turn over the protocol addresses that had been used to gain access to the board’s e-mail accounts. Based on the responses it received to the subpoenas, the federation amended its suit in October, naming as defendants Ms. Polgar and Mr. Alexander, who has managed Ms. Polgar’s chess discussion Web site.

Chess
United States Chess Federation
Suits and Litigation
Alexander Gregory
Identity Fraud
Hough Randall
Electronic Mail
Boards of Directors


Jets Consider Adding Reed at Safety

Abstract: Coach Rex Ryan said he was pleased with the Jets’ safeties. Pleased enough to pass up a chance to add perhaps the best safety ever, Ed Reed? Ryan acknowledged discussing Reed, who became a free agent on Wednesday after clearing waivers, with General Manager John Idzik, but it is unclear whether there will be a reunion. Ryan coached Reed in Baltimore, where Reed played 11 seasons before signing with the Texans, who cut him on Tuesday. He endorsed a pursuit of Reed, saying, “yes, I’d like him on our team,” before citing several other former players whom he would also like to coach again. Reed, 35, is a diminished player in the latter stages of his career. But Ryan has always held him in esteem and could view him as an asset in a young secondary that has recorded only three interceptions this season. OPTIMISM ON HOLMES Rex Ryan thinks Santonio Holmes will return for the Jets this weekend after missing five games with a hamstring injury. Holmes was limited in practice Wednesday, but he seemed on his way back to the field after being injured at Tennessee in Week 4. (AP) BOWE TO START DESPITE ARREST Kansas City Chiefs wide receiver Dwayne Bowe spent Wednesday preparing for Sunday’s A.F.C. West showdown against Denver, a game he is expected to start despite being accused last weekend of speeding and marijuana possession. Coach Andy Reid said, “We’ll abide by the rules and regulations.” (AP) UNFILLED SEATS The N.F.L. is again posting stellar television ratings but is having trouble filling seats in some markets. Jacksonville, St. Louis, Oakland, Pittsburgh, Arizona and the Jets have all seen attendance dips this season. The Steelers drew just over 60,000 fans to Heinz Field for Sunday’s 23-10 win over Buffalo, about 5,000 short of capacity. (AP) VIKINGS’ SIMPSON TO PLAY Minnesota plans to play receiver Jerome Simpson against Seattle this weekend, although he faces drunken-driving charges. Simpson was picked up Saturday and was charged with third-degree driving while intoxicated for refusing to submit to a chemical test and fourth-degree driving while intoxicated. The Vikings are limited by the collective bargaining agreement on the discipline they can levy. (AP) MANNING MISSES PRACTICE With the undefeated Chiefs next on the schedule, Denver Broncos quarterback Peyton Manning sat out the week’s first practice to give his tender ankles a rest. (AP)

Jets
Rex Ryan
Ed Reed
Peyton Manning
Football
Sam Hurd


Alabama to End Isolation of Inmates With H.I.V.

Abstract: A federal judge on Friday ordered Alabama to stop isolating prisoners with H.I.V. Alabama is one of two states, along with South Carolina, where H.I.V.-positive inmates are housed in separate prisons, away from other inmates, in an attempt to reduce medical costs and stop the spread of the virus, which causes AIDS. Judge Myron H. Thompson of the Middle District of Alabama ruled in favor of a group of inmates who argued in a class-action lawsuit that they had been stigmatized and denied equal access to educational programs. The judge called the state’s policy “an unnecessary tool for preventing the transmission of H.I.V.” but “an effective one for humiliating and isolating prisoners living with the disease.” After the AIDS epidemic of the 1980s, many states, including New York, quarantined H.I.V.-positive prisoners to prevent the virus from spreading through sexual contact or through blood when inmates tattooed one another. But most states ended the practice voluntarily as powerful antiretroviral drugs reduced the risk of transmission. In Alabama, inmates are tested for H.I.V. when they enter prison. About 250 of the state’s 26,400 inmates have tested positive. They are housed in special dormitories at two prisons: one for men and one for women. No inmates have developed AIDS, the state says. H.I.V.-positive inmates are treated differently from those with other viruses like hepatitis B and C, which are far more infectious, according to the World Health Organization . Inmates with H.I.V. are barred from eating in the cafeteria, working around food, enrolling in certain educational programs or transferring to prisons near their families. Prisoners have been trying to overturn the policy for more than two decades. In 1995, a federal court upheld Alabama’s policy. Inmates filed the latest lawsuit last year. “Today’s decision is historic,” said Margaret Winter , the associate director of the National Prison Project of the American Civil Liberties Union, which represented the inmates. “It spells an end to a segregation policy that has inflicted needless misery on Alabama prisoners with H.I.V. and their families.” Brian Corbett, a spokesman for the Alabama Department of Corrections, said the state is “not prejudiced against H.I.V.-positive inmates” and has “worked hard over the years to improve their health care, living conditions and their activities.” “We will continue our review of the court’s opinion and determine our next course of action in a timely manner,” he wrote. During a monthlong trial in September, lawyers for the department argued that the policy improved the treatment of H.I.V.-positive inmates. Fewer doctors are needed if specialists in H.I.V. focus on 2 of the 29 state’s prisons. The state spends an average of $22,000 per year on treating individual H.I.V.-positive inmates. The total is more than the cost of medicine for all other inmates, said Bill Lunsford, a lawyer for the Corrections Department. South Carolina has also faced legal scrutiny. In 2010, the Justice Department notified the state that it was investigating the policy and might sue to overturn it.

Alabama
Prisons and Prisoners
Acquired Immune Deficiency Syndrome
Thompson Myron H
Discrimination


Suns and Beasley Agree to End Contract

Abstract: The Phoenix Suns and Michael Beasley reached an agreement to terminate his contract. The move will cost the franchise $7 million, a $2 million savings from what Beasley would have been due had he simply been waived. Beasley was arrested a month ago on charges of felony marijuana possession and possession of drug paraphernalia.


Accident Changed Corzine, Not His Political Agenda

Abstract: PRINCETON, N.J. — Gov. Jon S. Corzine swears that he wears his seat belt now, and reminds others to do the same. He says he feels so blessed to be alive that he takes far better care of himself now. And he says he is touched when people wish him well, even if they do not care for his policies. But when it comes to day-to-day governing, ask almost anybody who works for, with or against Mr. Corzine to explain the difference between the governor before the accident and the governor after the crash, and the answer is remarkably consistent. What difference? “He’s the same,” the state treasurer, David Rousseau, said on Monday. “If I took out the period of April 12 to Labor Day, you wouldn’t know that the accident happened, at least from the work side. I think he’s totally engaged, wanting to know everything about everything, wanting to get into the weeds.” It was on April 12 that Mr. Corzine was seriously injured when the state vehicle in which he was traveling at 91 miles per hour crashed into a guardrail on the Garden State Parkway. He was not wearing a seat belt. With the first anniversary approaching, Mr. Corzine decided to accommodate a crush of media requests by holding a news conference on Monday at Drumthwacket, the governor’s mansion. It had all the trappings of a made-for-television retrospective as Mr. Corzine was peppered with questions about what he remembered and whether he had an epiphany afterward. Mr. Corzine obliged, to a degree, saying that while his entire convalescence remained a blur, he had a deeper appreciation for his family and friends, and for the fragility of life. But after sustaining 18 fractures and losing half of his blood, “he’s had a complete recovery,” said Dr. Robert F. Ostrum, the chief trauma orthopedist at Cooper University Hospital in Camden. Indeed, Mr. Corzine said that he was probably in better shape now than before the accident because he carved out more than an hour each day to exercise. More telling was Mr. Corzine’s statement that he did not feel the need to approach issues or policies or his agenda any differently. Perhaps he had lost some time because of the accident and his rehabilitation, he conceded, but he would still have pursued his controversial plan to reduce the state’s debt and finance transportation projects by significantly raising highway tolls. He said he would still have proposed an austere budget that reduces overall spending by $500 million, one that has enraged farmers, environmentalists, educators and just about every interest group in Trenton. “I don’t think it’s changed my understanding of what the needs of fixing the finances are,” Mr. Corzine said. This is not to say that Mr. Corzine did not apply some personal lessons to the public-policy realm. He became a forceful advocate for driver safety, participating in a public-service announcement on television that began with him stating bluntly: “I’m New Jersey Gov. Jon Corzine, and I should be dead.” And last month, Mr. Corzine embraced the findings of a commission on teenage drivers that he had appointed. It recommended that all passengers in the back seat, regardless of age, be required to buckle up. For several months after the accident, Mr. Corzine would joke that it was good to be here — “it’s good to be anywhere” — but these days, the quips are gone and it is right down to business. Sometimes, Mr. Corzine has acted as if he wants to make up for lost time. His public schedule has been crammed of late; he spoke to six groups on Friday through Sunday, crisscrossing the state. Bradley I. Abelow, his chief of staff, says that while Mr. Corzine has always displayed an incredible intensity in tackling problems, his intensity was by necessity “episodic” for a few months after the accident, as the governor focused primarily on rehabilitation. But now, Mr. Abelow said, Mr. Corzine has returned to his former self as a thorough and exacting boss. William G. Dressel Jr., executive director of the New Jersey State League of Municipalities, has been among Mr. Corzine’s fiercest critics because of proposed cuts to towns in the budget. But he marveled at Mr. Corzine’s energy. “Here was a man who was literally on his deathbed, and he probably has one of the most overtly ambitious agendas of any governor that I can recall in my 34 years; he makes the Energizer Bunny pale in comparison,” Mr. Dressel said. “But as far as his day-to-day operations and his philosophy of how he wants to move the state, I don’t think he has changed one iota.” Still, some administration officials and others say that Mr. Corzine’s political skills — hardly the best to begin with — have not exactly improved in the aftermath of the accident.

Corzine Jon S
Governors (US)
Trenton (NJ)
Budgets and Budgeting


Russia Reinstates a Reporter It Had Expelled

Abstract: MOSCOW — A week after a British journalist was expelled from Russia , the authorities allowed him to return on Saturday night — all but acknowledging that they had made a mistake that had harmed the country’s effort to improve its image abroad. The Russian Foreign Ministry issued a new visa to the journalist, Luke Harding of The Guardian, to replace the one that border guards summarily annulled after he landed at the airport in Moscow on Feb. 5. Mr. Harding had arrived from London, was detained and put on the next plane back, without explanation. On Sunday night, Mr. Harding wrote on his Twitter account , “Yes, I’m back in Moscow.” The Foreign Ministry did not offer any immediate comment. The expulsion of Western correspondents based in Moscow was not unusual in the Soviet era but has been relatively rare since the collapse of Communism. Mr. Harding’s editors suggested that he was being punished for reporting on terrorism, corruption and other provocative issues. Mr. Harding was also one of the reporters for The Guardian who wrote about the WikiLeaks cache of American diplomatic cables, including some that had harsh assessments of the Russian government under Vladimir V. Putin, the prime minister and former president. The Foreign Ministry at first would not say why it had taken action against Mr. Harding, then said he had broken rules for journalists . It provided one example that did not seem especially plausible: It said that Mr. Harding was deported because he had forgotten to pick up a press credential card the last time that he was in Moscow. Other Russian officials speculated that the Foreign Ministry had been blindsided by the F.S.B., the main domestic successor to the Soviet-era K.G.B., which controls border security and might have put Mr. Harding on a blacklist without notifying the Foreign Ministry. Whatever the case, the expulsion came as the Kremlin under President Dmitri A. Medvedev has been pursuing a policy of modernization that hinges in part on attracting foreign investment and specialists to Russia. Last week, the Foreign Ministry, repeatedly questioned about whether the expulsion had damaged the country’s reputation, indicated that it would give Mr. Harding another visa .

Classified Information and State Secrets


Deutsche Bank to Pay $2.5 Billion Fine to Settle Rate-Rigging Case

Abstract: They called each other “dude,” “mate” and “amigo,” suggesting a certain innocence to their friendship. And yet at the center of their dispatches, United States and British authorities say, was actually a collusive effort to manipulate worldwide interest rates. “I’m begging u, don’t forget me,” one Deutsche Bank trader wrote in an online chat to an employee at a rival bank, seeking to influence rates. “Pleassssssssssssssseeeeeeeeee ... I’m on my knees ...” The messages captured the scheme at Deutsche Bank, which on Thursday became the latest big bank to settle accusations that it manipulated interest rates that underpin trillions of dollars in mortgages, student loans and other debt. To settle the case, the bank agreed to pay $2.5 billion in penalties, a record for the interest rate cases, which have already stung the likes of Barclays and UBS. Deutsche Bank — Germany’s largest financial institution and, at least for now, a problem child in the eyes of regulators — also agreed to accept a criminal guilty plea for the British subsidiary at the center of the case. It is the most significant banking unit to accept a criminal plea in the long-running investigation into the manipulation of the London interbank offered rate, or Libor. While the deals require Deutsche Bank to dismiss certain employees, no one at the bank has been criminally charged, though in at least one previous Libor case, prosecutors charged individuals after reaching a settlement with the bank itself. “Today’s resolution of the Libor investigation with Deutsche Bank is in some respects the most significant one yet,” said Leslie R. Caldwell, head of the Justice Department’s criminal division, which handled the case along with authorities in Washington, London and New York, where the state’s financial regulator, Benjamin M. Lawsky, joined a Libor settlement for the first time. The case spotlighted the collusive elements of Wall Street trading desks, where rival banks have occasionally joined forces to manipulate financial benchmarks. It also foreshadows looming actions against banks suspected of teaming up to manipulate the price of foreign currencies, people briefed on the matter said, with the Justice Department planning to announce guilty pleas from at least four banks — Barclays, JPMorgan Chase, Citigroup and the Royal Bank of Scotland — by next month. Tracking the Libor Scandal Abuse of interest rates and the failure to address the problem is one of the most expensive scandals to hit Wall Street since the financial crisis. “Financial markets function properly only if customers and competing banks have confidence that they are untainted by fraud and collusion,” said William J. Baer, the head of the Justice Department’s antitrust unit, adding that “the unprecedented size of the penalty” demonstrates just “how far from that bedrock principle Deutsche Bank and its traders strayed.” As the foreign exchange negotiations heat up, the Libor cases are drawing to a close. In the final chapter of the case, the authorities will continue to scrutinize three American banks — JPMorgan, Citigroup and Bank of America — though it is unclear whether those investigations will result in criminal cases. Mr. Lawsky will continue to investigate foreign banks suspected of Libor manipulation through their New York branches, according to two of the people briefed on the matter. Mr. Lawsky is also investigating the foreign currency manipulation. The Libor investigation, which began seven years ago with a single investigator at the Commodity Futures Trading Commission, has spread to criminal and regulatory agencies around the globe. In addition to the Justice Department’s criminal and antitrust divisions, Deutsche Bank settled with Mr. Lawsky’s office, the trading commission and the Financial Conduct Authority of Britain. As part of the deals, the bank will install an independent monitor, the first such requirement in a Libor case. More broadly, the authorities ordered the bank to dismiss seven managers suspected of involvement in the wrongdoing, all but one of whom are in London. They were among 29 employees suspected of playing a role, most of whom have already left the bank. The settlement is something of a mixed bag for Deutsche Bank. In agreeing to the deals, the bank closes a sordid chapter in its history. But the terms announced on Thursday will be costly to shareholders, and could do further damage to the bank’s already battered reputation. “We deeply regret this matter but are pleased to have resolved it,” Jürgen Fitschen and Anshu Jain, the co-chief executives of Deutsche Bank, said in a statement on Thursday. “The bank accepts the findings of the regulators.” The size of the fine is particularly hard to swallow for the bank, which had hoped to pay less than $2 billion, one of the people briefed on the matter said. And while the deals will provide some closure to Deutsche Bank, they will not end the bank’s legal problems. It is also ensnared in the foreign exchange investigation. And it is suspected of violating United States sanctions against countries like Iran. Reports From the Libor Investigations Reports and settlements from a global investigation into whether big banks had improperly set key interest rates. The size of the Libor fine, which eclipsed the $1.5 billion UBS agreed to pay in 2012 , reflected in part the breadth of wrongdoing that the authorities uncovered. The authorities also denounced the bank for lax oversight of traders and a failure to respond to warning signs of misconduct. The bank, the authorities said, also dragged its feet in providing information, taking two years to provide audio recordings requested by investigators and accidentally destroying some evidence. The wrongdoing at Deutsche Bank lasted from 2005 to 2011 and touched employees in London, Frankfurt, New York and Tokyo, the authorities said. “Markets do not just manipulate themselves,” Mr. Lawsky said in a statement. “It takes deliberate wrongdoing by individuals.” Manipulation of Libor, an average of how much banks say they would pay to borrow from one another, struck a nerve with government authorities. As a benchmark for trillions of dollars in credit-card loans and other financial instruments, Libor is a cornerstone of the financial marketplace. “Today’s action against Deutsche Bank reflects the C.F.T.C.’s unwavering commitment to protect the integrity of critical, global financial benchmarks from profit-driven traders,” Aitan Goelman, the head of the trading commission’s enforcement division, said in a statement. Besides serving as a guidepost to set rates, the benchmarks are a barometer of the broader health of the financial system. If banks are paying more to borrow from one another, it can be a sign that they are unstable, a concern at the heart of the message in which the Deutsche Bank trader begged a competitor to submit a lower rate. Other times, Deutsche Bank employees would use their submissions to push reference rates up or down to suit their own financial needs. In 2005, a Deutsche Bank trader contacted a colleague who was making rate submissions, to ask, “can we have a high 6mth libor today pls?” The colleague replied, “sure dude, where wld you like it mate?” Inside Deutsche Bank, there was widespread recognition of the problem, the authorities said. In 2009, for example, a Deutsche Bank vice president wrote to a trader that the Tokyo interbank rate “is a corrupt fixing and D.B. is part of it!”

Deutsche Bank
Fines
Germany
Libor
Banking and Finance
Competition law
Securities fraud


Roman Herzog, Germany’s President in 1990s, Is Dead at 82

Abstract: Roman Herzog , who as Germany’s second president after reunification called for “confidence and joie de vivre” during a time of economic malaise, died on Tuesday in Bad Mergentheim, Germany. He was 82. The death was announced by the current president, Joachim Gauck. “His forward-looking courage was combined with a charming skepticism,” Mr. Gauck said. “This combination was as unmistakable as his independent spirit and his love of direct speech.” Like his predecessor, Richard von Weizsäcker , Mr. Herzog used the presidency, which is largely a ceremonial post, to serve as a moral guardian for liberal and democratic values. He spoke often about Germany’s moral responsibility for the crimes of its past. But at home, Mr. Herzog was best known for a 1997 speech in Berlin in which he spoke with striking candor about the structural reasons for economic malaise. “In Germany, anyone who shows initiative or — above all — wants to do things differently is in danger of drowning in a morass of well-intentioned regulations,” he said, adding that “the German mania for red tape” meant it was much more expensive to build a single-family home in Germany than in the neighboring Netherlands, even though wage levels were comparable. “A society plagued by fear becomes incapable of reform and can no longer shape its future,” he said. “Fear stifles the spirit of invention, the courage to go it alone, the hope that problems can be overcome. The German word angst has actually entered the vocabulary of the Americans and the French as symbolic of our mind-set.” He declared, “What will decide our fate is our ability to innovate.” He criticized “special interests” that he blamed for hobbling overhauls. And he faulted elites, a message that might resonate today as Western democracies confront a wave of populist anger. “Our political, business, media and social leaders may recognize what is right,” Mr. Herzog said. “But I do not have the sense that they are able or willing to put their insights into practice.” He called for overhauls of the labor market, the taxation system, health insurance and the management of public works; reductions in regulations; and reducing unemployment among low-wage workers. “The world is on the move; it will not wait for Germany,” he said. “Germany needs a jolt.” Noting the country’s many strengths — its well-educated populace, its infrastructure and capital, and “an almost unparalleled degree of social security, freedom and justice” — Mr. Herzog called for a Germany “that is making a comeback, one full of confidence and joie de vivre, a society of tolerance and personal commitment.” Image Roman Herzog, left, with Chancellor Helmut Kohl in 1994. As president, Mr. Herzog often discussed Germany’s past crimes. Credit Chaperon/ullstein bild, via Getty Images The remarks — now seen by many in Germany as prescient — gave a short-term lift to Chancellor Helmut Kohl , a fellow Christian Democrat, who nominated Mr. Herzog in 1994 for the job of president. But ultimately it was Mr. Kohl’s successor, Gerhard Schröder , who pushed through some of the most unpopular measures: cuts in unemployment and pension benefits, combined with labor market overhauls and reductions in the income tax rate. The changes have been credited with a boom that has transformed Germany, which during Mr. Herzog’s presidency was often called the “sick man of Europe,” into one of the most robust economies of the developed world. Roman Herzog was born in Landshut, Bavaria, on April 5, 1934, the son of an archivist. He studied law at Ludwig Maximilian University from 1953 to 1957 and later taught law and politics at the University of Munich, the Free University of Berlin and the University of Administrative Sciences, in Speyer. He joined the Christian Democratic Union in 1970. He served as its chairman from 1978 to 1983. From 1973 to 1978, he represented the state of Rhineland-Palatinate in Bonn, the West German capital, and from 1978 to 1980 he was minister of culture and sports in the state of Baden-Württemberg. From 1980 to 1983 he was a member of the Baden-Württemberg Legislature. As the state’s interior minister, he developed a hard-line reputation by introducing the use of rubber bullets and forcing arrested demonstrators to pay police costs as a condition of their release. As a judge on the Federal Constitutional Court in Karlsruhe, which he joined in 1983, Mr. Herzog upheld the right of protesters who had converged on a nuclear power plant in Brokdorf, in northern Germany. He became the court’s president in 1987. He was not especially well known when Mr. Kohl nominated him to succeed Mr. von Weizsäcker , who had been president of West Germany since 1984 and served on after reunification in 1990 . Mr. Kohl’s original choice, Steffen Heitmann, pulled out after he was criticized for making impolitic comments about foreigners, the role of women in the work force and Germany’s past. At a number of historic anniversaries, Mr. Herzog recalled Germany’s painful past. At a ceremony remembering the 50th anniversary of the 1944 Warsaw Uprising, he laid a wreath and said: “I ask for forgiveness for what Germans did to you. What we need is trust and understanding, and that can only grow when our peoples put the dark aspects of their recent history completely into the open.” The next year, Mr. Herzog attended a ceremony commemorating the 50th anniversary of the Allied firebombing of Dresden, which killed thousands of people and nearly leveled a city once renowned for its beauty. His decision to attend was controversial , but he told an interviewer, “For me, Dresden is an occasion to radically reject war.” Among the other painful episodes that Mr. Herzog publicly addressed were the massacre of the Herero tribe of modern-day Namibia by German soldiers in the first decade of the 20th century, an episode that Germans have recently begun to acknowledge as a genocide ; the 1937 aerial bombardment of the Basque town of Guernica, during the Spanish Civil War; and Kristallnacht , the pogrom against German Jews on Nov. 9 and 10, 1938. He decried far-right violence, including an arson attack on a home for asylum-seekers and the destruction of the gravestone of a German Jewish leader. Mr. Herzog stepped down from the presidency in 1999 and was succeeded by Johannes Rau, a moderate Social Democrat. In 2002, Mr. Herzog helped found the Roman Herzog Institute , which works to improve public policy. A Protestant and long active in the Evangelical Church of Germany, Mr. Herzog took part in biotechnology debates, defending embryonic stem-cell research and lamenting that a lack of domestic support for the biotechnology industry had caused a brain drain from Germany. Mr. Herzog’s first wife, the former Christiane Krauss, died in 2000. He is survived by his second wife, Alexandra Freifrau von Berlichingen; two sons; and several grandchildren.

Roman Herzog
Germany
Obituary
Christian Democratic Union Germany