Selling flak jackets in the cyberwars

SAN FRANCISCO (Reuters) - When the Israeli army and Hamas trade virtual blows in cyberspace, or when hacker groups like Anonymous rise from the digital ether, or when WikiLeaks dumps a trove of classified documents, some see a lawless Internet.

But Matthew Prince, chief executive at CloudFlare, a little-known Internet start-up that serves some of the Web's most controversial characters, sees a business opportunity.

Founded in 2010, CloudFlare markets itself as an Internet intermediary that shields websites from distributed denial-of-service, or DDoS, attacks, the crude but effective weapon that hackers use to bludgeon websites until they go dark. The 40-person company claims to route up to 5 percent of all Internet traffic through its global network.

Prince calls his company the "Switzerland" of cyberspace - assiduously neutral and open to all comers. But just as companies like Twitter, YouTube and Facebook have faced profound questions about the balance between free speech and openness on the Internet and national security and law enforcement concerns, CloudFlare's business has posed another thorny question: what kinds of services, if any, should an American company be allowed to offer designated terrorists and cyber criminals?

CloudFlare's unusual position at the heart of this debate came to the fore last month, when the Israel Defense Forces sought help from CloudFlare after its website was struck by attackers based in Gaza. The IDF was turning to the same company that provides those services to Hamas and the al-Quds Brigades, according to publicly searchable domain information. Both Hamas and al-Quds, the military wing of the Palestinian Islamic Jihad, are designated by the United States as terrorist groups.

Under the USA Patriot Act, U.S. firms are forbidden from providing "material support" to groups deemed foreign terrorist organizations. But what constitutes material support - like many other facets of the law itself - has been subject to intense debate.

CloudFlare's dealings have attracted heated criticism in the blogosphere from both Israelis and Palestinians, but Prince defended his company as a champion of free speech.

"Both sides have an absolute right to tell their story," said Prince, a 38-year old former lawyer. "We're not providing material support for anybody. We're not sending money, or helping people arm themselves."

Prince noted that his company only provides defensive capabilities that enable websites to stay online.

"We can't be sitting in a role where we decide what is good or what is bad based on our own personal biases," he said. "That's a huge slippery slope."

Many U.S. agencies are customers, but so is WikiLeaks, the whistle-blowing organization. CloudFlare has consulted for many Wall Street institutions, yet also protects Anonymous, the "hacktivist" group associated with the Occupy movement.

Prince's stance could be tested at a time when some lawmakers in the United States and Europe, armed with evidence that militant groups rely on the Web for critical operations and recruitment purposes, have pressured Internet companies to censor content or cut off customers.

Last month, conservative political lobbies, as well as seven lawmakers led by Ted Poe, a Republican from Texas, urged the FBI to shut down the Hamas Twitter account. The account remains active; Twitter declined to comment.

MATERIAL SUPPORT

Although it has never prosecuted an Internet company under the Patriot Act, the government's use of the material support argument has steadily risen since 2006. Since September 11, 2001, more than 260 cases have been charged under the provision, according to Fordham Law School's Terrorism Trends database.

Catherine Lotrionte, the director of Georgetown University's Institute for Law, Science and Global Security and a former Central Intelligence Agency lawyer, argued that Internet companies should be more closely regulated.

"Material support includes web services," Lotrionte said. "Denying them services makes it more costly for the terrorists. You're cornering them."

But others have warned that an aggressive government approach would have a chilling effect on free speech.

"We're resurrecting the kind of broad-brush approaches we used in the McCarthy era," said David Cole, who represented the Humanitarian Law Project, a non-profit organization that was charged by the Justice Department for teaching law to the Kurdistan Workers' Party, which is designated by the United States as a terrorist group. The group took its case to the Supreme Court but lost in 2010.

The material support law is vague and ill-crafted, to the point where basic telecom providers, for instance, could be found guilty by association if a terrorist logs onto the Web to plot an attack, Cole said.

In that case, he asked, "Do we really think that AT&T or Google should be held accountable?"

CloudFlare said it has not been contacted about its services by the U.S. government. Spokespeople for Hamas and the Palestinian Islamic Jihad, told Reuters they contracted a cyber-security company in Gaza that out-sources work to foreign companies, but declined to comment further. The IDF confirmed it had hired CloudFlare, but declined to discuss "internal security" matters.

CloudFlare offers many of its services for free, but the company says websites seeking advanced protection and features can see their bill rise to more than $3,000 a month. Prince declined to discuss the business arrangements with specific customers.

While not yet profitable, CloudFlare has more than doubled its revenue in the past four months, according to Prince, and is picking up 3,000 new customers a month. The company has raked in more than $22 million from venture capital firms including New Enterprise Associates, Venrock and Pelion Venture Partners.

Prince, a Midwestern native with mussed brown hair who holds a law degree from the University of Chicago, said he has a track record of working on the right side of the law.

A decade ago, Prince provided free legal aid to Spamhaus, an international group that tracked email spammers and identity thieves. He went on to create Project Honey Pot, an open source spam-tracking endeavor that turned over findings to police.

Prince's latest company, CloudFlare, has been hailed by groups such as the Committee to Protect Journalists for protecting speech. Another client, the World Economic Forum, named CloudFlare among its 2012 "technology pioneers" for its work. But it also owes its profile to its most controversial customers.

CloudFlare has hosted 4Chan, the online messaging community that spawned Anonymous. LulzSec, the hacker group best known for targeting Sony Corp, is another customer. And since last May, the company has propped up WikiLeaks after a vigilante hacker group crashed the document repository.

Last year, members of the hacker collective UgNazi, whose exploits include pilfering user account information from eBay and crashing the CIA.gov website, broke into Prince's cell phone and email accounts.

"It was a personal affront," Prince said. "But we never kicked them off either."

Prince said CloudFlare would comply with a valid court order to remove a customer, but that the Federal Bureau of Investigation has never requested a takedown. The company has agreed to turn over information to authorities on "exceedingly rare" occasions, he acknowledged, declining to elaborate.

"Any company that doesn't do that won't be in business long," Prince said. But in an email, he added: "We have a deep and abiding respect for our users' privacy, disclose to our users whenever possible if we are ordered to turn over information and would fight an order that we believed was not proper."

Juliannne Sohn, an FBI spokeswoman, declined to comment.

Michael Sussmann, a former Justice Department lawyer who prosecuted computer crimes, said U.S. law enforcement agencies may in fact prefer that the Web's most wanted are parked behind CloudFlare rather than a foreign service over which they have no jurisdiction.

Federal investigators "want to gather information from as many sources as they can, and they're happy to get it," Sussmann said.

In an era of rampant cyber warfare, Prince acknowledged he is something of a war profiteer, but with a wrinkle.

"We're not selling bullets," he said. "We're selling flak jackets."

(Reporting By Gerry Shih in San Francisco and Nidal al-Mughrabi in Gaza; editing by Jonathan Weber and Claudia Parsons)

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Watson returns as Ryder Cup captain

NEW YORK (AP) — The Americans are bringing back Tom Watson as their Ryder Cup captain with hopes of ending two decades of losing in Europe.

The PGA of America announced Watson's selection Thursday morning on the "Today." Watson, an eight-time major champion and one of the most respected figures in golf, will be 65 when the 2014 Ryder Cup is played at Gleneagles in Scotland. That will make him the oldest captain in Ryder Cup history.

He also is the first repeat captain for the U.S. team since Jack Nicklaus in 1987. Watson also was captain in 1993 at The Belfry, the last time the Americans won the Ryder Cup away from home.

Watson is beloved in Scotland, where he won four of his five British Open titles, the most of any American.

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Late BBC star Savile suspected of 199 crimes: UK police

LONDON (Reuters) – British television star Jimmy Savile is suspected of carrying out an unprecedented number of sex offences including 31 rapes, police said on Wednesday in their most comprehensive review of the scandal.

Revelations about Savile, who died last year, provoked outrage across Britain where he had been a household name since the 1960s.

News of Savile’s crimes threw his main employer the BBC into turmoil, led to resignation of the BBC’s director general just 54 days into his job and provoked awkward questions for his predecessor Mark Thompson, who recently took over as chief executive of the New York Times.

Detectives launched their inquiry 10 weeks ago following reports in a TV documentary that Savile had abused young girls on BBC premises and at hospitals where he did charity work.

Since then, 450 people had come forward with allegations about Savile, mostly dealing with sexual abuse, said police.

Savile was now a suspect in 199 crimes, the vast majority of them involving children or young people, the force added.

“These levels of reporting of sexual abuse against a single individual are unprecedented in the UK,” the police said in a statement.

Detectives have been examining three categories of alleged offences: those involving only Savile, which make up the majority of cases; those involving Savile and others; and those which had no direct link to Savile.

So far six men have been arrested and another questioned by London police.

Those quizzed include Max Clifford, Britain’s most high-profile celebrity publicist, former BBC radio DJ Dave Lee Travis and former glam-rock singer Gary Glitter.

They have all denied any wrongdoing.

“Our officers will continue to investigate allegations made against those who potentially can be brought to justice,” the police statement said. “More arrests nationally will be forthcoming.”

A one-time professional wrestler with a penchant for garish outfits, Savile became famous as a pioneering DJ in the 1960s before hosting prime-time TV shows until the 1990s.

He ran about 200 marathons for charity, raising tens of millions of pounds for hospitals, leading some to give him keys to rooms where victims now allege they were abused.

TV News Headlines – Yahoo! News

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Dozens sue pharmacy, but compensation uncertain

NASHVILLE, Tenn. (AP) — Dennis O'Brien rubs his head as he details ailments triggered by the fungal meningitis he developed after a series of steroid shots in his neck: nausea, vomiting, dizziness, drowsiness, blurred vision, exhaustion and trouble with his speech and attention.

He estimates the disease has cost him and his wife thousands of dollars in out-of-pocket expenses and her lost wages, including time spent on 6-hour round trip weekly visits to the hospital. They've filed a lawsuit seeking $4 million in damages from the Massachusetts pharmacy that supplied the steroid injections, but it could take years for them to get any money back and they may never get enough to cover their expenses. The same is true for dozens of others who have sued the New England Compounding Center.

"I don't have a life anymore. My life is a meningitis life," the 59-year-old former school teacher said, adding that he's grateful he survived.

His is one of at least 50 federal lawsuits in nine states that have been filed against NECC, and more are being filed in state courts every day. More than 500 people have gotten sick after receiving injections prepared by the pharmacy.

The lawsuits allege that NECC negligently produced a defective and dangerous product and seek millions to repay families for the death of spouses, physically painful recoveries, lost wages and mental and emotional suffering. Thirty-seven people have died in the outbreak.

"The truth is the chance of recovering damages from NECC is extremely low," said John Day, a Nashville attorney who represents several patients who have been sickened by fungal meningitis.

To streamline the process, attorneys on both sides are asking to have a single judge preside over the pretrial and discovery phases for all of the federal lawsuits.

This approach, called multidistrict litigation, would prevent inconsistent pretrial rulings and conserve resources of all parties. But unlike a class-action case, those lawsuits would eventually be returned to judges in their original district for trial, according to Brian Fitzpatrick, a law professor at Vanderbilt University Law School in Nashville.

Even with this approach, Fitzpatrick noted that federal litigation is very slow, and gathering all the evidence, records and depositions during the discovery phase could take months or years.

"Most of the time what happens is once they are consolidated for pretrial proceedings, there is a settlement, a global settlement between all the lawyers and the defendants before anything is shipped back for trial," he said.

A lawyer representing NECC, Frederick H. Fern, described the consolidation process as an important step.

"A Boston venue is probably the best scenario," Fern said in an email. "That's where the parties, witnesses and documents are located, and where the acts subject to these complaints occurred."

Complicating efforts to recover damages, attorneys for the patients said, NECC is a small private company that has now recalled all its products and laid off its workers. The company's pharmacy licenses have been surrendered, and it's unclear whether NECC had adequate liability insurance.

Fern said NECC has insurance, but they were still determining what the policy covers.

But Day says, "It's clear to me that at the end of the day, NECC is not going to have sufficient assets to compensate any of these people, not even 1 percent."

As a result, many attorneys are seeking compensation from other parties. Among the additional defendants named in lawsuits are NECC pharmacist and co-founder Barry Cadden; co-founder Greg Conigliaro; sister company Ameridose and its marketing and support arm, Medical Sales Management.

Founded in 2006 by Cadden and Conigliaro, Ameridose would eventually report annual revenue of $100 million. An NECC spokesman didn't respond to a request for the pharmacy's revenue.

While Federal Drug Administration regulators have also found contamination issues at Westborough, Mass.-based Ameridose, the FDA has said it has not connected Ameridose drugs to infection or illness.

Under tort law, a lawsuit has to prove a defendant has a potential liability, which in this case could be anyone involved in the medical procedure. However, any such suit could take years and ultimately may not be successful.

"I would not be surprised if doctors, hospitals, people that actually injected the drugs, the people that bought the drugs from the compounding company, many of those people will also be sued," said Fitzpatrick.

Plaintiffs' attorneys said they're considering that option but want more information on the relationships between the compounding pharmacy and the hundreds of hospitals and clinics that received its products.

Day, the attorney in Tennessee, said the clinics and doctors that purchase their drugs from compounding pharmacies or manufacturers could be held liable for negligence because they are in a better position to determine the safety of the medicine than the patients.

"Did they use due care in determining from whom to buy these drugs?" Day said.

Terry Dawes, a Michigan attorney who has filed at least 10 federal lawsuits in the case, said in traditional product liability cases, a pharmaceutical distributor could be liable.

"We are looking at any conceivable sources of recovery for our clients including pharmaceutical supply places that may have dealt with this company in the past," he said.

Ten years ago, seven fungal meningitis illnesses and deaths were linked to injectable steroid from a South Carolina compounding pharmacy. That resulted in fewer than a dozen lawsuits, a scale much smaller than the litigations mounting up against NECC.

Two companies that insured the South Carolina pharmacy and its operators tried unsuccessfully to deny payouts. An appellate court ruled against their argument that the pharmacy willfully violated state regulations by making multiple vials of the drug without specific prescriptions, but the opinion was unpublished and doesn't set a precedent for the current litigation.

The lawsuits represent a way for patients and their families recover expenses, but also to hold the pharmacy and others accountable for the incalculable emotional and physical toll of the disease.

A binder of snapshots shows what life is like in the O'Briens' rural Fentress County, Tenn., home: Dennis hooked up to an IV, Dennis in an antibiotics stupor, bruises on his body from injections and blood tests. He's had three spinal taps. His 11-day stay in the hospital cost over $100,000, which was covered by health insurance.

His wife said she sometimes quietly checks at night to see whether her husband of 35 years is still breathing.

"In my mind, I thought we were going to fight this and get over it. But we are not ever going to get over it," said Kaye O'Brien.

Marjorie Norwood, a 59-year-old grandmother of three who lives in Ethridge, Tenn., has spent just shy of two months total in the hospital in Nashville battling fungal meningitis after receiving a steroid injection in her back. She was allowed to come home for almost a week around Thanksgiving, but was readmitted after her symptoms worsened.

Family members are still dealing with much uncertainty about her recovery, but they have not filed a lawsuit, said their attorney Mark Chalos. He said Norwood will likely be sent to a rehabilitation facility after her second stay in the hospital rather than return home again.

Marjorie Norwood's husband, an autoworker, has taken time off work to care for her and they depend on his income and insurance.

"It doesn't just change her life, it changes everyone else's life around her because we care about her and want her to be happy and well and have everything that she needs," said her daughter, Melanie Norwood.

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'Lincoln,' gets a leading 7 Globe nominations

BEVERLY HILLS, Calif. (AP) — Steven Spielberg is bringing new glory to Abraham Lincoln.

The Civil War epic "Lincoln" leads the Golden Globes with seven nominations, among them best drama, best director for Spielberg and acting honors for Daniel Day-Lewis, Sally Field and Tommy Lee Jones.

Tied for second-place Wednesday with five nominations, including best drama are the Iran hostage-crisis thriller "Argo" and the slave-turned-bounty-hunter tale "Django Unchained."

Other best-drama nominees are the shipwreck story "Life of Pi" and the Osama bin Laden manhunt thriller "Zero Dark Thirty."

Nominated for best musical or comedy were: the British retiree adventure "The Best Exotic Marigold Hotel"; the Victor Hugo musical "Les Miserables"; the first-love tale "Moonrise Kingdom"; the fishing romance "Salmon Fishing in the Yemen"; and the lost-soul romance "Silver Linings Playbook.

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Illinois foreclosures up for 11th month

Foreclosure activity in Illinois posted the 11th straight year-over-year increase in November, but compared with a month earlier, filings are trending in the right direction, according to new data released Thursday.

RealtyTrac said the 13,520 properties within the state that received a foreclosure notice last month was a decrease of 9 percent from October but up 9 percent from November 2011. last month's activity, which equated to one out of every 392 homes in the state receiving a notice, gave Illinois the nation's third-highest state foreclosure rate, surpassed by only Florida and Nevada.

In the Chicago-area counties of Cook, DuPage, Kane, Kendall, Lake and Will, almost 11,000 homes received a foreclosure notice in November, a decrease of 10.5 percent from October's level of activity but up 1.6 percent from November 2011

Most of that activity was in Cook County, where about 2,299 homes received initial notices of default, another 2,651 homes were scheduled for court-ordered sales and 2,086 homes were repossessed by lenders.

Among the nation's metropolitan areas, Rockford and Chicago ranked 11th and 13th, respectively, in terms of their foreclosure rates.

Nationally, the number of homes that were repossessed by lenders and became bank-owned rose on a year-over-year basis for the first time  since October 2010, the company said. In November, more than 59,000 homes across the country were repossessed, an increase of 11 percent from October and 5 percent from November 2011.

"The drop in overall foreclosure activity in November was caused largely by a 71-month low in foreclosure starts for the month, more evidence that we are past the worst of the foreclosure problem brought about by the housing bubble bursting six years ago," said Daren Blomquist, a company vice president. "But foreclosures are continuing to hobble the U.S. housing market as lenders finally seize properties that started the process a year or two ago, and much longer in some cases."

mepodmolik@tribune.com | Twitter @mepodmolik

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3 dead after masked gunman opens fire at Portland mall

A suburban Portland mall remains closed while crime scene experts detail the shooting that left three people dead and one wounded and sent Santa and thousands of shoppers running.

Clackamas County sheriff's Sgt. Adam Phillips says the shooter was a man in his 20s who apparently fired at random before taking his own life at the Clackamas Town Center.

There's no known connection between the gunman and the man and woman who were killed and the young woman who was wounded.

Oregon Health & Science University Hospital in Portland says Kristina Shevchenko is in serious condition.

Phillips says Tuesday's shooting at a mall with 7,000 customers and 2,000 employees could have been much worse. Stores and police followed training from a shooting drill at the mall earlier this year.

Clackamas County Sheriff Craig Roberts said the lone gunman died from a self-inflicted gunshot wound and that law enforcement officers who descended on the scene had not fired a single shot inside the mall. A single weapon was recovered.

"The mall is supposed to be a place where we can take our families. He took the lives of two people and a young lady is at the hospital fighting for her life right now," Roberts said.

The wounded victim was taken by helicopter to a hospital where a spokeswoman said she was in serious condition.

The shooting started around 3:30 p.m. It was not clear how long it lasted, but some shoppers and employees hid in fear for at least two hours as teams of police checked to see whether there might be another shooter.A mall spokeswoman directed calls to law enforcement authorities. Clackamas Town Center is one of the Portland area's biggest and busiest malls, with 185 stores and a 20-screen movie theater.

"My thoughts and prayers are with the victims and their families," Oregon Governor John Kitzhaber said in a statement released by his office. "I appreciate the work of the first responders and their quick reaction to this tragic shooting."

Man in Santa suit: 'Hit the floor'

The mall Santa was waiting for the next child's Christmas wish when shots rang out, causing the shopping mall to erupt into chaos.

About to invite a child to hop onto his lap, Brance Wilson instead dove for the floor and kept his head down as he heard shots being fired upstairs in the mall Tuesday afternoon.

"I heard two shots and got out of the chair. I thought a red suit was a pretty good target," said the 68-year-old Wilson. Families waiting for Santa scattered. More shots followed, and Wilson crept away for better cover.

Wilson was among hundreds of horrified people who ducked or ran for cover when a gunman, dressed in camouflage and a mask and possibly wearing body armor, fired dozens of rounds.

Kayla Sprint, 18, was interviewing for a job at a clothing store when she heard shots.

"We heard people running back here screaming, yelling '911,'" she told the AP.

Sprint barricaded herself in the store's back room until the coast was clear.

Jason DeCosta is a manager of a window-tinting company that has a display on the mall's ground floor. When he arrived to relieve his coworker, he heard shots ring out upstairs.

DeCosta ran up an escalator, past people who had dropped for cover and glass littering the floor.

"I figure if he's shooting a gun, he's gonna run out of bullets," DeCosta said, "and I'm gonna take him."

DeCosta said when he got to the food court, "I saw a gentleman face down, obviously shot in the head."

"A lot of blood," DeCosta said. "You could tell there was nothing you could do for him."

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Autonomy spurs questions on looming accounting overhaul

NEW YORK (Reuters) - The scandal at Autonomy, a UK software group bought last year by Hewlett-Packard Co, has some accountants wondering about the wisdom of new, global standards in the pipeline that would change how companies account for revenue.

"Revenue recognition" is the most common type of corporate book-cooking. The Autonomy scandal, though still murky, allegedly involves a great deal of overstated revenue, or how much money was coming into the company from customers.

That allegation has been leveled by HP, which said last month it overpaid for Autonomy and accused it of "serious accounting improprieties." Autonomy has rejected such allegations and said HP is looking for "scapegoats."

The dispute comes as accounting standard setters grapple with new standards for recognizing revenue. Some accountants fear these standards, set for completion by mid-2013, could mean a step backward in fighting accounting abuses.

The goal of the new, global approach is ambitious. If completed as planned, the standards would for the first time put companies in the United States and in more than 100 other countries under the same revenue accounting rules. Inconsistency on this is widespread now and often a source of disagreements.

But critics said the new standards would discard decades of detailed U.S. accounting rules in favor of broader, principles-based international norms. That, they said, would be a mistake.

"The U.S. system was replete with details, replete with examples, and replete with precedent," said Tom Selling, author of the Accounting Onion blog.

Throwing away that level of detail would give corporate managers more room to manipulate revenues and profits, he said.

FASB-IASB EFFORT

One of the most far-reaching accounting changes in decades, the new revenue standard is a combined effort of the U.S. Financial Accounting Standards Board (FASB) and the London-based International Accounting Standards Board (IASB).

FASB manages the U.S. play book for accountants, known as the Generally Accepted Accounting Principles, or GAAP. IASB sets International Financial Reporting Standards, or IFRS, which is used in more than 100 countries, but not the United States.

For a decade now, the global accounting profession has been working on merging IFRS and GAAP, but it has been a tortuous process, with U.S. accountants often resisting change.

Some leading accounting groups are losing patience. The London-based Institute of Chartered Accountants in England and Wales (ICAEW) on Tuesday called for an end to the "convergence" project.

The new revenue standards, if implemented as planned, would supplant hundreds of pages of GAAP-style guidance, rules and examples with broader directives.

One concern is that big companies and auditors would be left to interpret the new standards on their own, creating "shadow guidance" with little input from investors, said Sandra Peters, head of financial reporting at the CFA Institute.

"Generally, the policies are very generic," said Peters, whose group represents more than 100,000 financial professionals worldwide. "The issue is, as investors, how will you know what the guidance is if it's not in the standard?"

FASB board member Russell Golden said the board is working out a mechanism to help interpret the standard. There will be enough guidance so it can be applied consistently, he said.

AUDITS A CONCERN

Joseph Carcello, accounting professor at the University of Tennessee, said it could be tougher for auditors to push back against aggressive accounting if there is no clear rule to cite as having been violated.

Finally, legal experts said it could be harder to prosecute wrongdoers under a principles-based system. Showing a GAAP violation is often a starting point for a securities lawsuit.

"Principles-based standards will indeed make liability more difficult to impose and in turn pose greater challenges to plaintiffs, including the Securities and Exchange Commission," said James Cox, a law professor at Duke University.

U.S. revenue accounting was tightened after scandals at software companies during the 1990s technology bubble. Software accounting is often subject to abuse because booking revenue involves a mix of products, maintenance, training and updates.

Autonomy was accused of mixing hardware with higher-margin sales of search software and not properly disclosing the amounts of hardware sales. It was also accused of improperly booking revenue to resellers, or middlemen, with no end users.

Autonomy has defended its accounting and said it complied with IFRS standards, which left room for interpretation.

The heads of FASB and IASB said last week they doubted major changes will be needed to the proposed revenue standards in light of the scandal at Autonomy.

Supporters said the new standards would simplify a hodgepodge of industry-specific U.S. rules with a general maxim saying that revenue should be booked when goods or services are transferred to customers.

The detailed U.S. GAAP rules have drawbacks. Companies intent on hiding their true condition have found ways to comply with the letter of the rules, while still misleading investors, said Bruce Pounder, director of professional programs at SmartPros, a firm that provides education for accountants.

Standard-setters have not set an effective date for the new standards, but they are not expected to take effect before 2016.

(Additional reporting by Sarah Lynch in Washington and Nanette Byrnes in Chapel Hill, N.C.; Editing by Kevin Drawbaugh and Tim Dobbyn)

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Player suspensions tossed out in bounty case

NEW ORLEANS (AP) — Four players embroiled for nearly 10 months in the NFL's bounty investigation of the New Orleans Saints no longer have to worry about suspensions or fines, and can try to move on with their careers on the field.

Off the field, the fallout from the dispute could endure for some time, particularly in federal court.

In a surprising rejection of his successor's overreaching punishments, former NFL Commissioner Paul Tagliabue threw out "all discipline" current Commissioner Roger Goodell had imposed on two current Saints, linebacker Jonathan Vilma and defensive end Will Smith, and two players no longer with the club, Browns linebacker Scott Fujita and free-agent defensive lineman Anthony Hargrove.

Tagliabue, appointed by Goodell to handle player appeals in the matter, essentially absolved Fujita, but agreed with Goodell's finding that the other three players "engaged in conduct detrimental to the integrity of, and public confidence in, the game of professional football."

The 22-page ruling Tuesday allowed both sides to claim victory more than nine months after the league first revealed the Saints' bounty scandal to shocked fans, describing a performance pool operated by former Saints defensive coordinator Gregg Williams that, among other things, rewarded hits that injured opponents.

The four players punished by Goodell have maintained they were innocent of taking part in bounty program from the beginning, saying they never intended to injure anyone on the field. Vilma even has filed a defamation lawsuit against Goodell in U.S. District Court in Louisiana, and his lawyers, Peter Ginsberg and Duke Williams, said they intend to continue to pursue those claims "vigorously."

"Commissioner Tagliabue's rationalization of Commissioner Goodell's actions does nothing to rectify the harm done by the baseless allegations lodged against Jonathan," Vilma's lawyers said a statement. "Jonathan has a right and every intention to pursue proving what really occurred and we look forward to returning to a public forum where the true facts can see the light of day."

While no other players have yet filed similar lawsuits, Hargrove's agent, Phil Williams, said this week that "the NFL dragged (Hargrove's) name through the mud and lied about him," costing him an entire season of his career.

Hargrove was cut by Green Bay shortly before the regular season. His agent said a number of other teams inquired about signing him, but only after they were confident that bounty matter had been resolved. That has finally happened, as far as the NFL is concerned, but there are only three weeks left in the regular season.

Vilma, suspended by Goodell for the entire current season, and Smith, suspended four games, have been playing for the Saints while their appeals were pending. Fujita who was facing a one-game suspension, is on injured reserve. Hargrove's suspension initially stood at eight games but was reduced to seven with credit for his first five games missed as a free agent, essentially reducing the ban he'd been facing to two games.

Tagliabue's ruling did nothing to vindicate Saints coaches or the organization. Rather, the former commissioner criticized the Saints as an organization that fostered bad behavior and tried to impede the investigation into what the NFL said was a performance pool designed to knock targeted opponents out of games from 2009 to 2011, with thousands of dollars in payouts.

A "culture" that promoted tough talk and cash incentives for hits to injure opponents — one key example was Vilma's offer of $10,000 to any teammate who knocked Brett Favre out of the NFC championship game at the end of the 2009 season — existed in New Orleans, according to Tagliabue, who also wrote that "Saints' coaches and managers led a deliberate, unprecedented and effective effort to obstruct the NFL's investigation."

The former commissioner did not entirely exonerate the players, however.

He said Vilma and Smith participated in a performance pool that rewarded key plays — including hard tackles — while Hargrove, following coaches' orders, helped to cover up the program when interviewed by NFL investigators in 2010.

"My affirmation of Commissioner Goodell's findings could certainly justify the issuance of fines," Tagliabue said in his ruling. "However, this entire case has been contaminated by the coaches and others in the Saints' organization."

Tagliabue said he decided, in this particular case, that it was in the best interest of all parties involved to eliminate player punishment because of the enduring acrimony it has caused between the league and the NFL Players Association. He added that he hoped doing so would allow the NFL and union to move forward collaboratively to the more important matters of enhancing player safety.

"To be clear: this case should not be considered a precedent for whether similar behavior in the future merits player suspensions or fines," his ruling said.

Tagliabue oversaw the second round of appeals by players, who initially opposed his appointment.

The former commissioner found Goodell's actions historically disproportionate to past punishment of players for similar behavior, which had generally been reserved to fines, not suspensions. He also stated that it was very difficult to determine whether the pledges players made were genuine, or simply motivational ploys, particularly because Saints defenders never demonstrated a pattern of dirty play on the field.

"The relationship of the discipline for the off-field 'talk' and actual on-field conduct must be carefully calibrated and reasonably apportioned. This is a standard grounded in common sense and fairness," Tagliabue wrote in his 22-page opinion. "If one were to punish certain off-field talk in locker rooms, meeting rooms, hotel rooms or elsewhere without applying a rigorous standard that separated real threats or 'bounties' from rhetoric and exaggeration, it would open a field of inquiry that would lead nowhere."

Saints quarterback Drew Brees commented on Twitter: "Congratulations to our players for having the suspensions vacated. Unfortunately, there are some things that can never be taken back."

The Saints opened the season 0-4 and are now 5-8 and virtually out of the playoffs after appearing in the playoffs the three previous seasons, including the franchise's only Super Bowl title to conclude the 2009 season.

Shortly before the regular season, the initial suspensions were thrown out by an appeals panel created by the NFL's collective bargaining agreement. Goodell then reissued them, with some changes, only to have them overturned.

"We respect Mr. Tagliabue's decision, which underscores the due process afforded players in NFL disciplinary matters," the league said in a statement.

"The decisions have made clear that the Saints operated a bounty program in violation of league rules for three years, that the program endangered player safety, and that the commissioner has the authority under the (NFL's collective bargaining agreement) to impose discipline for those actions as conduct detrimental to the league. Strong action was taken in this matter to protect player safety and ensure that bounties would be eliminated from football."

The players have challenged the NFL's handling of the entire process in federal court, but U.S. District Judge Ginger Berrigan had been waiting for the latest appeal to play out before deciding whether to get involved. The judge issued an order Tuesday giving the NFLPA and Vilma until Wednesday to notify the court if they found Tagliabue's ruling acceptable.

The NFLPA indicated that it was largely satisfied by how the process worked out, so some federal court claims against the NFL could be dropped on Wednesday, even as Vilma's defamation claims remain.

"We are pleased that Paul Tagliabue, as the appointed hearings officer, agreed with the NFL Players Association that previously issued discipline was inappropriate in the matter of the alleged New Orleans Saints bounty program," the NFLPA said in a statement. "Vacating all discipline affirms the players' unwavering position that all allegations the League made about their alleged 'intent-to-injure' were utterly and completely false."

NFL investigators had concluded that Vilma and Smith were ringleaders of a cash-for-hits program that rewarded injurious tackles labeled as "cart-offs" and "knockouts." Witnesses including Gregg Williams said Vilma made a $10,000 pledge for anyone who knocked Favre out of the NFC title game in January 2010. However, Tagliabue found it was not clear if the pledge was genuine or simply a motivational tactic.

"There is more than enough evidence to support Commissioner Goodell's findings that Mr. Vilma offered such a bounty" on Favre, Tagliabue wrote. "I cannot, however, uphold a multigame suspension where there is no evidence that a player's speech prior to a game was actually a factor causing misconduct on the playing field and that such misconduct was severe enough in itself to warrant a player suspension or a very substantial fine."

The NFL also concluded that Hargrove lied to NFL investigators to help cover up the program. The players have from the beginning denied they ever took the field intending to injure opponents, while Hargrove has said he never lied about a bounty program, because there wasn't one.

Goodell suspended Gregg Williams indefinitely, while banning Saints head coach Sean Payton for a full season.

Tagliabue's ruling comes after a new round of hearings that for the first time allowed Vilma's attorneys and the NFLPA, which represents the other three players, to cross-examine key NFL witnesses. Those witnesses included Williams and former Saints assistant Mike Cerullo, who was fired after the 2009 season and whose email to the league, accusing the Saints of being "a dirty organization," jump-started the probe.

Smith said he was pleased that Tagliabue vacated his suspension.

"I continue to maintain that I did not participate in a pay-to-injure program or facilitate any such program," he added. "I appreciate that Mr. Tagliabue did not rush to judgment, taking into consideration all facts presented to him, before ruling — something that was clearly not done by Commissioner Goodell in previous hearings."

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Publisher Bonnier, Flingo partner to make Smart TV Apps

NEW YORK (TheWrap.com) – Bonnier, the publisher of magazines like Savuer and Popular Science, and Flingo, the largest publisher of apps for Smart TVs, have partnered to create a series of apps extending Bonnier’s titles onto Internet-enabled TV sets and set-tops boxes like the Roku.

Together, they will release a new app for each magazine, offering videos, images and archival content for fans. Savuer has a couple of web series, including “The Test Kitchen” which helps home chefs learn how to peel garlic or dice an onion. Those videos, currently on Saveur’s website YouTube channel, will resurface in the apps, which will be distributed for free in app markets thanks to advertising and sponsors.

Though smart TVs remain a small segment of the TV market, Bonnier believes it is an ideal platform for leading media companies to extend their brand.

“This is about going after new technologies and being at the forefront,” Sean Holzman, Bonnier’s Chief Brand Development Officer, told TheWrap. “We don’t look closely at what other publishing companies may be doing. Flingo has a universe of 15 million devices and that should double in 2013.”

The emphasis will be on video since research demonstrates that it remains the top activity, even more than gaming.

Ashwin Navin, CEO of Flingo, said that while many media companies are putting secondary titles on Internet-enabled TVs, Bonnier is using its top titles.

“Major media companies aren’t putting their crown jewels on smart TVs,” Navin told TheWrap. He added that when they measure how long users spend online with certain brands, websites register just a few minutes.

“You see 10 times that in a TV app. People are more captive and less ADD.”

TV News Headlines – Yahoo! News

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