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Anti-Kerry Film Showing Canceled
October 19, 2004 — The Big Story on Action News is a politically motivated film furor Tuesday night in Jenkintown. Supporters of George Bush and John Kerry went nose to nose Tuesday night in Montgomery County, and neither side had any intention of backing down. Nerves are fraying at the edges, and there are still two weeks before Election Day.
The emotion of this politically charged presidential election got the best of some people. People who came out to see the anti-Kerry film, "Stolen Honor" were already upset that management of the Baederwood Theater cancelled the showing after threats of civil disturbances. Ultimately the anger reached a higher level when Bush supporters clashed with Kerry supporters.
Sinclair execs guilty of insider trading?
Top Democrat attorney demands investigation, threatens lawsuit
WASHINGTON- Adding fuel to the fire of controversy over Sinclair Broadcast Group's decision to air a documentary critical of presidential candidate John Kerry, powerhouse attorney and Democratic party donor William S. Lerach sent a letter today to the news company calling the broadcast plan "reckless," alleging insider trading by officers and threatening a shareholder lawsuit.
Citing Sinclair's "dismal performance" over the past year, Lerach noted that the stock lost 50 percent of its value and substantially under-performed the Nasdaq and Broadcasting and Cable TV indexes.
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Since Lerach publicized his letter, Sinclair issued a statement saying it will not run the anti-Kerry document in its entirety.
The letter of demand, obtained by WND, stated, "In light of the collapse of Sinclair's stock price and the apparent insider trading of senior executives and board members, we are also dismayed at the company's seemingly politically motivated determination to air a program that from all reports is a politically partisan criticism of one of the candidates for president."
The letter warned of additional stock decline and additional damage to the company's reputation and success.
"Our clients are more interested in the success of the company than they are in the political views of Sinclair's executives or Board of Directors," Lerach wrote, "and we are extremely concerned at the firestorm Sinclair has ignited – especially the boycott of Sinclair's advertisers as indicated at www.boycotsbg.com and www.stopsinclair.org."
Lerach called a press conference today and public relations firm Fenton Communications provided a graph showing sales of over 1.3 million shares at a value of over $18.6 million by the three Smith brothers, who are contributors to the Republican Party. The shares were sold between Dec. 23, 2003, and April 7. Lerach wrote that most of the sales took place near the stock's 52-week high of almost $15.50 per share. The letter also stated that for Sinclair Director Robert E. Smith and Vice President J. Duncan Smith the sales respresented almost 100 percent of their Sinclair holdings. Vice President Frederick Smith's sales were stated as 15 percent of his total holdings.
When asked what inside knowledge the officers allegedly were trading on, Bill Hamilton of Fenton Communications said, "I don't think the lawyers would be willing to speculate publicly at this point, but if/when the case gets to depositions it is a point they likely would press."
On behalf of Sinclair shareholders, Lerach is demanding that the company commence legal proceedings against the Smiths for breaches of fiduciary duties, including allegedly causing the company to issue false statements, and for engaging in insider selling, "exposing the company and its shareholders to tens of millions of dollars in potential liability."
Lerach also referenced the move by Wachovia and Bear Stearns to downgrade the stock and the share price.
"Surely, this is not in the shareholders' best interests, and this reckless use of company assets – air time – should be abandoned to prevent further harm to Sinclair's reputation and its advertisers," Lerach wrote.
Calling the move to air "Stolen Honor" "reckless," Lerach warned that the decision should be abandoned to prevent further harm to Sinclair's reputation and its advertisers.
"The expense and impact of this scandal will surely be the topic of many questions from analysts on the Nov. 4th call and we are extremely concerned that it will lead to additional downward pressure on Sinclair's stock price, as well as additional damage to the company's reputation and success," Lerach wrote.
When asked how many shareholders were preparing to sue, Hamilton replied, "[T]he demand letter needs only a single shareholder or group of shareholders," adding, "The named client is 1199 SEIU Greater New York Pension Fund, which is supported by the 150,000 hospital and health-care employees who belong to the union, plus thousands of retirees. … Lerach said they had other clients – public pension funds and private Taft-Hartley retirement systems – that hold millions of shares of Sinclair shares who are not, at this point, ready to be pubic about their involvement. As you may know, the demand letter is a precursor to a probable shareholder derivative lawsuit which would have to be brought, if and when it happens, on behalf of specific shareholder groups."
New York Comptroller Alan Hevesi also sent a letter expressing concern to Sinclair Broadcast Group on behalf of the state's pension fund. The AP quoted Hevesi's letter: "Given the stock's already poor performance, it would seem that any bad news would risk reducing investor interest and, thus, risk a lower stock price." Hevesi's letter was sent on behalf of the state's $115 billion New York State Common Retirement Fund, which holds 256,600 shares of the company.
"Some critics suggest that Sinclair management is more interested in advancing its partisan political views than in protecting shareholder value," Hevesi wrote, "They say Sinclair's partisan agenda also risks alienating viewers, advertisers and regulators."
"By appearing to tie the future prospects of the company so closely to the outcome of a national election, are you adding political risk to the normal economic and business risks that face your company?" Hevesi asked.
In February Hevesi, a Democrat, voiced support for Kerry's presidential campaign, saying, "John Kerry is an incredibly smart, tough, caring and courageous American. Because of his experience, judgment and his ability to work under fire, Kerry will make a great president. Most important, he is the Democrat best able to defeat George Bush, and it is imperative we retire Bush in order to save our economy."
Kerry acknowledged Hevesi's support, saying, "I am grateful and energized to have the support of Sheldon Silver, Alan Hevisi and Betsy Gotbaum. They all are respected and accomplished figures in New York, always working for the best interest of working families.
"New Yorkers are fortunate to have strong leaders committed to improving our schools and growing the state's economy. I am honored to have them by my side in this campaign."
Lerach was named in Mother Jones magazines' MoJo Top 400 of 1996, as the No. 2 top political contributor to Democratic causes.
Reporter W. John Moore noted that four days after President Clinton and Lerach schmoozed at a private White House dinner on Dec. 15, 1996, the president vetoed the Securities Litigation Reform Act. The bill, which was designed to make it more difficult for shareholders to sue their own companies for securities fraud, enjoyed wide bipartisan support, Moore noted, but Clinton startled his party with a last-minute veto. (In late December, Congress overrode the veto.)
Lerach's law firm, Milberg Weiss, is the acknowledged leader in shareholder class-action litigation and secures annual settlements estimated at $225 million from such suits.
Lerach is one of "the most loathed men in Silicon Valley," Moore wrote, "where vacillating stock prices open the door for shareholders to sue companies if executives make incorrect predictions of corporate success. Milberg Weiss has filed such suits agains the likes of Apple, Silicon Graphics, and Intel (five times in 1994 alone)."
Author of "Why Insiders Get Rich and the Little Guy Loses," Lerach has been chief counsel in many of the largest and highest profile securities class-action and corporate derivative suits in recent years, including Enron, Dynegy, Qwest and WorldCom.
He was honored by Clinton with an appointment to the United States Holocaust Memorial Council.
At the end of Lerach's press conference, Fenton Communications went immediately into Deborah and Andrew Rappaport's press conference detailing their "outrage" and offer to Sinclair of over a million dollars to air "Going Upriver," a pro-Kerry film that has been described by the Associated Press and Scripps Howard News Service as a partisan campaign ad for Kerry.
Imagine if Republicans or people like myself stooped to this level when fat-asses movie came out?? Then again, this is good for the President...the more they make an issue out of this the more it will turn against kerri...sort of like having people from England send Americans in Ohio & Florida letters stating they must vote for kerri.