Fair Game: New York Fed Agreed to Testify for Bank of America

A.I.G., which is suing Bank of America to recover losses it suffered on those securities, has calculated the value of the fraud claims at $7 billion.

Late on Thursday, a copy of the actual agreement came to light. It was filed by Bank of America in a California court that is hearing the matter of who owns those fraud claims — A.I.G. or the New York Fed. The agreement was also filed by the New York Fed in a related lawsuit in the Southern District of New York, where the New York Fed asked that the court keep the agreement under seal.

A reading of the document makes it clear why.

The agreement spells out the terms of a deal in which the New York Fed received $43 million from Bank of America’s Countrywide unit. The money changed hands to settle a narrow dispute involving cash flows on several mortgage securities held by an investment vehicle, known as Maiden Lane II. That vehicle was created by the New York Fed as part of the rescue of A.I.G., which had held the Countrywide securities. The previously confidential agreement released Bank of America from all litigation claims on the securities held by Maiden Lane II.

But in exchange for that $43 million, the New York Fed did something else for Bank of America. It agreed to testify on behalf of the bank in its legal battle against A.I.G. over fraud claims.

In that matter, Bank of America has argued that A.I.G. has no right to sue it for fraud because A.I.G. sold the securities to Maiden Lane II and so transferred the litigation rights to the New York Fed. A.I.G., however, maintains that the Maiden Lane agreement never specified the transfer of the right to sue for fraud and that an explicit transfer is required by New York law, which governs the agreement. The New York Fed provided Bank of America with two affidavits supporting the bank’s view of who owned the mortgage securities’ fraud claims.

Two weeks ago, it was unclear why the New York Fed gave Bank of America the affidavits. But now, its promise to testify “as needed,” shown in the formerly confidential settlement, addresses that oddity. It was a contractual obligation.

Interestingly, the New York Fed did not tell the California court that its affidavits came about because of its deal with Bank of America. The affidavits came from James M. Mahoney, a vice president at the New York Fed, and Stephanie A. Heller, its deputy general counsel.

But those affidavits differ from the position taken earlier by Thomas C. Baxter Jr., the New York Fed’s general counsel. In a letter to A.I.G. in October 2011, Mr. Baxter said that he and his colleagues “agree that A.I.G. has the right to seek damages” under securities laws for the instruments it sold to Maiden Lane II.

Michael Carlinsky, A.I.G.’s lawyer at Quinn Emanuel Urquhart & Sullivan, said on Friday that he found it “disturbing” that the New York Fed made a contract to “assist Bank of America in its defense of A.I.G.’s lawsuit.”

Also on Friday, I asked the New York Fed why it had included this promise of legal support for Bank of America in the settlement agreement. Jack Gutt, a spokesman, said in a statement that the New York Fed had intended to hold the litigation rights and that the declarations were true.

“The New York Fed did not agree to provide the declarations to benefit B. of A., but rather because doing so helped the New York Fed obtain the best possible settlement” for Maiden Lane II, Mr. Gutt said. “In agreeing to this provision as part of what the New York Fed believed was a favorable settlement agreement, the New York Fed was concerned exclusively with advancing the taxpayer interest.”

I also asked a Bank of America spokesman whether the bank had paid more in the settlement because of the New York Fed’s promise to testify. He declined to answer that question, saying, “Countrywide provided fair value for a complete release of claims by the Federal Reserve Bank of New York, and the Fed agreed to provide testimony standing behind what it had formally represented to Countrywide regarding the assignment of claims from A.I.G.”  

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Bell jurors ordered to begin anew after panelist is dismissed

After nearly five days of deliberations, jurors in the Bell corruption trial were ordered Thursday to begin anew after a member of the panel was dismissed for misconduct and replaced by an alternate.

The original juror, a white-haired woman identified only as Juror No. 3, told Los Angeles County Superior Court Judge Kathleen Kennedy she had gone onto a legal website to look up jury instructions and then asked her daughter to help find a definition for the word "coercion."

Although all but one defense attorney requested that the woman stay, Kennedy said the juror needed to be removed. "She has spoken about the deliberations with her daughter, she has conducted research on the Internet, and I've repeatedly, repeatedly throughout this trial — probably hundreds of times — cautioned the jury not to do that," the judge said.

The removal came after jurors notified the judge that they were deadlocked and that continued deliberations seemed fruitless.

It was unclear how to interpret the day's events, whether the dismissed juror had been a lone holdout or an indication of a fractured jury.

The juror started to tell the judge which way she was leaning in the case, saying she had gone online "looking to see at what point can I get the harassment to stop.... How long do I have to stay in there and deliberate with them when I have made my decision that I didn't think there was —"

Kennedy cut her off before she could finish.

The woman clasped her hands over her mouth and said, "I'm sorry."

Two defense attorneys thought she was leaning toward acquittal and wanted her to stay. "I would have preferred the deadlock to a guilty verdict," said Alex Kessel, the attorney for George Mirabal, one of six former council members charged with misappropriation of public funds.

The council members are charged with inflating their salaries in what prosecutors contend was a far-reaching web of corruption in which fat paychecks were placed ahead of the needs of the city's largely immigrant, working-poor constituents.

When attorneys and defendants were summoned to the courtroom Thursday morning, they were initially told that the jury appeared to be deadlocked.

"Your honor, we have reached a point where as a jury we have fundamental disagreements and cannot reach a unanimous verdict in this case," read a note signed by two jurors, including the foreman, that was given to Kennedy.

A note from another juror alerted the judge that Juror No. 3 had consulted an outside attorney. That did not appear to be the case, but her other actions were revealed under questioning from the judge.

The same juror made a tearful request Monday to be removed from the panel because she felt others were picking on her. Kennedy told the woman that although discussions can get heated, it was important to continue deliberating.

On Thursday, however, the juror again broke into tears and said she had spoken with her daughter about "the abuse I have suffered." She said her daughter told her, "Mom, they're trying to find the weak link."

The woman said she had turned to the Internet to better understand the rules about jury deliberations and came across the word "coercion." After her daughter helped her look up the word's definition, she wrote it down on a piece of paper and brought it with her to court. When the judge asked to see the paper she went into the jury room to retrieve it.

The woman later left the courtroom in tears.

With an alternate in place, Kennedy told the panel to act as if the earlier deliberations had not taken place. The alternate had sat in the jury box during the four-week trial but did not take part in deliberations.

Former council members Luis Artiga, Victor Bello, George Cole, Oscar Hernandez, Teresa Jacobo and Mirabal are accused of drawing annual salaries of as much as $100,000 a year by serving on boards that did little work and seldom met, part of a scandal that drew national attention to the small city in 2010.

Prosecutors said that Bell's charter follows state law regarding council members' compensation. In a city the size of Bell, council members should be paid no more than $8,076 a year.

The trial began in late January, and the case went to the jury last Friday.

As the jury resumed deliberations in downtown Los Angeles, the verdict was clearly in on the streets of Bell.

One resident unfurled old protest banners and signs from the days when the pay scandal was first exposed and then called former members of an activist group that had led the charge for reform in the city.

"We're holding our breaths and waiting," Denise Rodarte, a member of the grassroots group Bell Assn. to Stop the Abuse, said in regard to a verdict.

"It's cut and dry: Local elected officials were supposed to make a certain amount of money, and they made a lot more."

corina.knoll@latimes.com

jeff.gottlieb@latimes.com

Times staff writer Ruben Vives contributed to this report.

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Exclusive Clip: Relive Napster's Big Break in the Documentary <em>Downloaded</em>

If the 1990s had a baby, it might look something like the documentary Downloaded. For one, it’s about the rise and fall of Napster, complete with plaid-heavy video of the young Sean Parker and Shawn Fanning. For another, it’s directed by Alex Winter, aka Bill S. Preston, Esq. from the Bill & Ted movies. Combined they’re the bookends of the decade that launched web culture.

And yet everything about the documentary is so relevant to today’s tech industry it’s unnerving.

“The movie is trying to say, ‘We’ve come really far and we’ve really gone backwards at the same time,’” Winter said in an interview with Wired. “Napster is a really good way in to that kind of examination of the culture, because of when it existed but also because both of the guys stayed in the game and are still relevant in the tech world.”

Relevant for a reason. In a way that makes it feel like ancient history yet entirely prescient, Downloaded chronicles how Parker, Fanning, and their fellow coders met online and started a digital revolution — and then got decimated in the legal morass Napster created. Yet, as Winter notes, the documentary comes at a time when everything that Napster stood for and enabled — connecting like-minded people through the web, easy access to data, listening to music through computers — has all become part of our daily lives, even if it confused the newscasters interviewing Fanning and Parker at the time. WikiLeaks, iPods and Megaupload didn’t exist when they were building their file-sharing network, and in retrospect it’s clear to see just how far ahead of the curve they were.

Downloaded, which will be premiering at the South By Southwest Film Festival, also provides an amazing amount of insight into how they got ahead of the curve — by coding their fingers off. A seminal moment, previewed exclusively above, came when they were able to scale Napster up so that everyone could use it. “It was all about making small, incremental wins with the code and with the technology,” Ali Aydar, Napster’s one-time senior director of technology, says in the clip. Once they did that they reached 20 million users in almost no time.

“That little moment really sums up for me why I wanted to make the movie,” Winter said of the clip, adding that watching it feels like witnessing history. “[It's like] if you could be a fly on the wall watching Edison crack [the problem of] the incandescent bulb — that’s the closest me as a geek will ever get to watching the actual birth of the digital revolution.”

Downloaded will premiere at the South By Southwest Film Festival on March 10.

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Cellar victim Kampusch raped, starved in film of ordeal

VIENNA (Reuters) – A new film based on the story of Austrian kidnap victim Natascha Kampusch shows her being repeatedly raped by the captor who beat and starved her during the eight-and-a-half years that he kept her in a cellar beneath his house.

Kampusch was snatched on her way to school at the age of 10 by Wolfgang Priklopil and held in a windowless cell under his garage near Vienna until she escaped in 2006, causing a sensation in Austria and abroad. Priklopil committed suicide.

Kampusch had always refused to respond to claims that she had had sex with Priklopil, but in a German television interview on her 25th birthday last week said she had decided to reveal the truth because it had leaked out from police files.

The film, “3,096 Days” – based on Kampusch’s autobiography of the same name – soberly portrays her captivity in a windowless cellar less than 6 square metres (65 square feet) in area, often deprived of food for days at a time.

The emaciated Kampusch – who weighed just 38 kg (84 pounds) at one point in 2004 – keeps a diary written on toilet paper concealed in a box.

One entry reads: “At least 60 blows in the face. Ten to 15 nausea-inducing fist blows to the head. One strike with the fist with full weight to my right ear.”

The movie shows occasional moments that approach tenderness, such as when Priklopil presents her with a cake for her 18th birthday or buys her a dress as a gift – but then immediately goes on to chide her for not knowing how to waltz with him.

GREY AREAS

Antonia Campbell-Hughes, who plays the teenaged Kampusch, said she had tried to portray “the strength of someone’s soul, the ability of people to survive… but also the grey areas within a relationship that people don’t necessarily understand.”

The British actress said she had not met Kampusch during the making of the film or since. “It was a very isolated time, it was a bubble of time, and I wanted to keep that very focused,” she told journalists as she arrived for the Vienna premiere.

Kampusch herself attended the premiere, looking composed as she posed for pictures but declining to give interviews.

In an interview with Germany’s Bild Zeitung last week, she said: “Yes, I did recognize myself, although the reality was even worse. But one can’t really show that in the cinema, since it wasn’t supposed to be a horror film.”

The movie, made at the Constantin Film studios in Bavaria, Germany, also stars Amy Pidgeon as the 10-year-old Kampusch and Danish actor Thure Lindhardt as Priklopil.

“I focused mainly on playing the human being because… we have to remember it was a human being. Monsters do not exist, they’re only in cartoons,” Lindhart said.

“It became clear to me that it’s a story about survival, and it’s a story about surviving eight years of hell. If that story can be told then I can also play the bad guy.”

The director was German-American Sherry Hormann, who made her English-language debut with the 2009 move “Desert Flower”, an adaptation of the autobiography of Somali-born model and anti-female circumcision activist Waris Dirie.

“I’m a mother and I wonder at the strength of this child, and it was important for me to tell this story from a different perspective, to tell how this child using her own strength could survive this atrocious martyrdom,” Hormann said.

The Kampusch case was followed two years later by that of Josef Fritzl, an Austrian who held his daughter captive in a cellar for 24 years and fathered seven children with her.

The crimes prompted soul-searching about the Austrian psyche, and questions as to how the authorities and neighbors could have let such crimes go undetected for so long.

The film goes on general release on Thursday.

(Reporting by Georgina Prodhan, Editing by Paul Casciato)

Movies News Headlines – Yahoo! News

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Think Like a Doctor: The Man Who Wobbled

The Challenge: Can you solve the medical mystery of a man who suddenly becomes too dizzy to walk?

Every month, the Diagnosis column of The New York Times Magazine asks Well readers to try their hand at solving a medical mystery. Below you will find the story of a 56-year-old factory worker with dizziness and panic attacks. I have provided records from his two hospital visits that will give you all the information available to the doctor who finally made the diagnosis.

The first reader to offer the correct diagnosis gets a signed copy of my book, “Every Patient Tells a Story,” and the satisfaction of solving a case that stumped a roomful of specialists.

The Patient’s Story:

The middle-aged man clicked his way through the multiple reruns of late-late-night television. He should have been in bed hours ago, but lately he hadn’t been able to get to sleep. Suddenly his legs took on a life of their own. Stretched out halfway to the center of the room, they began to shake and twitch and jump around. The man watched helplessly as his legs disobeyed his mental orders to stop moving. He had no control over them. He felt nauseous, sweaty and out of breath, as if he had been running some kind of race. He called out to his wife. She hurried out of bed, took one look at him and called 911.

The Patient’s History:

By the time the man arrived at Huntsville Hospital, in Alabama, the twitching in his legs had subsided and his breathing had returned to normal. Still, he had been discharged from that same hospital for similar symptoms just two weeks earlier. They hadn’t figured out what was going on then, so they weren’t going to send him home now.

The patient considered himself pretty healthy, but the past year or so had been tough. In 2011, at the age of 54, he had had a mild stroke. He had no medical problems that put him at risk for stroke — no high blood pressure, no high cholesterol, no diabetes. A work-up at that time showed that he had a hole in his heart that allowed a tiny clot from somewhere in his body to travel to the brain and cause the stroke. He was discharged on a couple of blood thinners to keep his blood from making more clots. He hadn’t really felt completely well, though, ever since. His balance seemed a little off, and he was subject to these weird panic attacks, in which his heart would pound and he would feel short of breath whenever he got too stressed. Mostly he could manage them by just walking away and focusing on his breathing. Still, he never felt as if he was the kind of guy to panic.

And he had always been quick on his feet. The first half of his career he had been in the steel business — building huge metal trusses and supports. He and his team put together 60-plus tons of steel structures every day. For the past decade he had been machining car parts. After his stroke, work seemed to get a lot harder.

The Dizziness:

A few weeks ago, he stood up and wham — suddenly the whole world went off-kilter. He felt as if he was constantly about to fall over in a world that no longer lay down flat. His first thought was that he was having another stroke. He went straight to his doctor’s office. The doctor wasn’t sure what was going on and sent him to that same emergency room at Huntsville Hospital. After three days of testing and being evaluated by lots of specialists, his doctors still were not sure what was going on. He hadn’t had a heart attack; he hadn’t had a stroke. There was no sign of infection. All the tests they could think of were normal.

The only abnormal finding was that when he stood up, his blood pressure dropped. Why this happened wasn’t clear, but the doctors in the hospital gave him compression stockings and a pill — both could help keep his blood pressure in the normal range. Then they sent him home. He was also started on an antidepressant to help with the panic attacks he continued to have from time to time.

You can read the report from that hospital admission below.

You can also read the consultation and discharge notes from that hospital visit here.

He had been home for nearly two weeks and still he felt no better. He tried to go back to work after a week or so at home, but after driving for less than five miles, he felt he had to turn around. He wasn’t sure what was wrong; he just knew he didn’t feel right. Then his legs started jumping around, and he ended up back in the hospital.

The Doctor’s Exam:

It was nearly dawn by the time Dr. Jeremy Thompson, the first-year resident on duty that night, saw the patient. Awake but tired, the patient told his story one more time. He had been at home, watching TV, when his legs started jumping on their own and he started feeling short of breath. His wife sat at the bedside. She looked just as worried and exhausted as he did. She told the resident that when he spoke that night at home, his speech was slurred. And when the ambulance came, he could barely walk. He has never missed this much work, she told the young doctor. It’s not like him. Can’t you figure out what’s wrong?

The resident had already reviewed the records from the patient’s previous hospital admissions. He asked a few more questions: the patient had never smoked and rarely drank; his father died at age 80; his mother was still alive and well. The patient exam was normal, as were the studies done in the E.R.

The first E.R. doctor thought that his symptoms were a result of anxiety, culminating in a full-blown panic attack. The resident thought that was probably right. In any case he would discuss the case with the attending in a couple of hours during rounds on the new patients. Till then, he told the worried couple, they should just try to get a little sleep.

An Important Clue:

Dr. Robert Centor was definitely a morning person. His cheerful enthusiasm about teaching and taking care of patients made him a favorite among residents. At 7:30 that morning, he stood outside the patient’s door as Dr. Thompson relayed the somewhat frustrating case of the middle-aged man with worsening dizziness and panic attacks. Then they went into the room to meet the patient. He was a big guy, tall and muscular with the first signs of middle-aged thickening around his middle. His complexion had the look of someone who spent a lot of time outdoors. Dr. Centor introduced himself and pulled up a chair as the rest of the team watched. He asked the patient what brought him to the hospital.

“Every time I get up, I get dizzy,” the man replied. Sure, he had had some balance problems ever since his stroke, he explained, but this felt different – somehow worse. He could hardly walk, he told the doctor. He just felt too unstable.

“Can you get up and show us how you walk?” Dr. Centor asked.

“Don’t let me fall,” the patient responded. He carefully swung his legs over the side of the bed. The resident and intern stood on either side as he slowly rose. He stood with his feet far apart. When asked to close his eyes as he stood there, he wobbled and nearly fell over. When he took a few steps, his heel and toes hit the ground at the same time, making a strange slapping sound.

Seeing that, Dr. Centor knew where the problem lay and ordered a few tests to confirm his diagnosis.

You can see the review report and notes for the patient’s second hospital visit below.

Solving the Mystery:

What tests did Dr. Centor order? Do you know what is making this middle-aged man wobble? Enter your guesses below. I’ll post the answer tomorrow.

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Rules and Regulations: Post your questions and diagnosis in the Comments section below. The correct answer will appear tomorrow on Well. The winner will be contacted. Reader comments may also appear in a coming issue of The New York Times Magazine.

Friday March 1, 1:21 p.m. | Updated Thanks for all your responses! You can learn the correct diagnosis at “Think Like a Doctor: The Wobble Solved!”

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Detroit Car Sales Climb Again

DETROIT – Sales of new vehicles in the United States rose modestly in February, as consumers continued to buy more fuel-efficient cars and as businesses replaced aging pickup trucks with newer models.

Auto executives said overall industry sales for the month would improve about 2 percent over the strong results reported in the same period a year ago.

The seasonally adjusted annual sales rate – a closely watched indicator for the industry – is expected to total about 15.5 million vehicles for February.

That seasonal rate bodes well for the industry going forward, as automakers ratchet up production to meet demand for their new products.

The Detroit auto companies all posted positive results during the month.

General Motors, the largest American automaker, said it sold 224,000 vehicles in February, a 7 percent increase from the same month in 2012.

All of G.M.'s domestic brands – Chevrolet, Cadillac, GMC and Buick – had higher year-over-year sales. Cadillac led the way with a 20 percent gain, primarily because of healthy sales of the new ATS compact sedan.

G.M. also reported increases in sales of its newest small cars, like the Buick Verano and the Chevrolet Spark. But its most prominent gains were in pickup trucks.

The company said that sales of the Chevrolet Silverado pickup rose 29 percent, and the GMC Sierra increased 25 percent. Executives attributed the performance to a surge in housing starts and the need for construction companies to replace older pickups.

“A significant tailwind for our industry is new home construction, which is creating jobs and fueling the demand for pickups,” said Kurt McNeil, G.M.'s vice president of United States sales operations.

The Ford Motor Company, the second-biggest Detroit auto company, said it sold 195,000 vehicles during the month, a 9 percent gain from a year ago.

Ford said that many of its gains came from sales of sport utilities such as the Escape and Explorer. The company’s redesigned midsize sedan, the Fusion, also had a good month, with a 28 percent improvement over last year.

Like G.M., Ford also benefitted from the surging demand for pickups. Ford said that it sold 54,000 F-series trucks during the month, a 15 percent increase from February of 2012.

Chrysler, the smallest of the Detroit automakers, saw its growth rate slow somewhat after several months of reporting double-digit increases.

The company said that it sold 139,000 vehicles in February, a 4 percent improvement over a year earlier. That is a smaller increase than Chrysler has reported in previous months.

“In spite of a cautious ramp-up of some of our most popular products, which limited inventory last month, we still managed to record our strongest February in five years,” said Reid Bigland, head of United States sales for Chrysler.

Chrysler’s best performers during the month were passenger cars such as the new Dodge Dart. Sales of its Ram pickup increased 3 percent, while sales of its Jeep SUVs dropped 16 percent.

The big Japanese automakers were to report results later Friday. Analysts expected Toyota and Honda to continue their steady comeback from inventory disruptions because of the earthquake and tsunami in Japan two years ago.

Volkswagen, the German automaker that is rapidly expanding its American operations, said it sold 31,000 vehicles in February, a 3 percent increase from a year earlier.

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Jury in Bell corruption trial may be deadlocked

A court spokeswoman said Thursday the jury in the Bell corruption case appears to be deadlocked.

“The jurors may be at an impasse,” said Patricia Kelly, a spokeswoman for L.A. County Superior Court.

Jurors sent a note to the judge Thursday morning, and all the attorneys in the case were called in.

Six former Bell City Council members are accused of stealing public money by paying themselves extraordinary salaries in one of Los Angeles County’s poorest cities.

Luis Artiga, Victor Bello, George Cole, Oscar Hernandez, Teresa Jacobo and George Mirabal are accused of misappropriation of public funds, felony counts that could bring prison terms.

They were arrested in September 2010 and have been free on bail.

The nearly $100,000 salaries drawn by most of the former elected officials are part of a much larger municipal corruption case in the southeast Los Angeles County city in which prosecutors allege that money from the city’s modest general fund flowed freely to top officials.

The three defendants who testified painted a picture of a city as a place led by a controlling, manipulative administrator who handed out enormous salaries, loaned city money and padded future pensions. Robert Rizzo, the former adminstrator, and ex-assistant city manager Angela Spaccia are also awaiting trial.

The four-week trial of the former council members turned on extremes.

Deputy Dist. Atty. Edward Miller said the council members were little more than common thieves who were consumed with fattening their paychecks at the expense of the city’s largely immigrant, working-poor residents.

Miller said the accused represented the “one-percenters" of Bell who had “apparently forgotten who they are and where they live."

Defense attorneys said the former city leaders -- one a pastor, another a mom-and-pop grocery store owner, another a funeral director -- were dedicated public servants who put in long hours and tirelessly responded to the needs of their constituents.

Jacobo testified that Rizzo informed her she could quit her job as a real estate agent and receive a full-time salary as a council member. She said she asked City Attorney Edward Lee if that was possible and he nodded his head.

"I thought I was doing a very good job to be able to earn that, yes," Jacobo said.

Cole said Rizzo was so intimidating that the former councilman voted for a 12% annual pay raise out of fear the city programs he established would be gutted by Rizzo in retaliation if he opposed the pay hikes.

The defense argued that the prosecution failed to prove criminal negligence -- that their clients knew what they were doing was wrong or that a reasonable person would know it was wrong.

The attorney for Hernandez, the city’s mayor at the time of the arrests, said his client had only a grade-school education, was known more for his heart than his intellect and was, perhaps, not overly “scholarly.”

Prosecutors argued that the council members pushed up their salaries by serving on city boards that rarely met and, in one case, existed only as a means for paying them even more money.

Jurors were also left to deal with the question of whether council members were protected by a City Charter that was approved in a special election that drew fewer than 400 voters.

Defense attorneys say the charter allowed council members to be paid for serving on the authorities.

But the prosecutor argued that the charter -- a quasi-constitution for a city -- set salaries at what councils in similar-sized cities were receiving under state law: $8,076 a year. Because council members automatically serve on boards and commissions, the district attorney said the total compensation for all of each council member's work was included in that figure.

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Good Eggs Aims to Be the Amazon of Local Food

Good Eggs, which launched last summer as the Etsy of local food, is expanding in a bid to become the Amazon of local food.

The San Francisco-based company launched a new web platform Thursday that lets users select items from local vendors and farmers and combine them in a single order ready for delivery or pickup. That’s transforming Good Eggs from a web stand for multiple vendors to a central hub for purchasing and delivering local food.

“We actually had the inventory for an awesome grocery store, but the missing piece was some kind of central distribution, some way for you place an order across all of these vendors and get a single pickup or delivery,” co-founder Rob Spiro told Wired. “We were experimenting with offices and pickup spots…. The model we found working well was very operational. You end up getting into the logistics game to provide a high quality of service.”

Unlike the traditional CSA (community-supported agriculture) deliveries, Good Eggs lets you customize what you want, to include specific amounts of fruits and veggies, fresh fish, prepared food, baked goods and more. You still pick from what’s in season, but if you hate potatoes, you don’t get potatoes.

To support its newfound operation, Good Eggs is moving into a giant warehouse where it can aggregate all of its vendors’ product and put together its made-to-order boxes of food. Spiro says that they’ve been running test routes throughout the San Francisco Bay Area to figure out which are most efficient, and naturally, the former Googler says that all routes are “optimized algorithmically.”

Delivery does, however, cost an extra $4, whereas pickups at various locations (there are seven in San Francisco) are free.

Unlike Farmigo, another online food startup, Good Eggs caters to the individual rather than the community. Farmigo CEO Benzi Ronen told Wired in December that his company opted out of home delivery because of high costs. Good Eggs’ Spiro says that isn’t so much a concern for him.

“We’re taking the challenge head on,” Spiro said. “We have all these producers already running their businesses through Good Eggs…. You place your orders, it goes directly to the producer, then it goes to this one warehouse…. The long-term goal is to build out hubs in hundreds of areas.”

Good Eggs is already in the process of signing vendors up in Brooklyn, New York City, and plans to expand to several other cities.

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Study Finds Genetic Risk Factors Shared by 5 Psychiatric Disorders

Their study, published online Wednesday in the Lancet, was based on an examination of genetic data from more than 60,000 people world-wide. Its authors say it is the largest genetic study yet of psychiatric disorders. The findings strengthen an emerging view of mental illness that aims to make diagnoses based on the genetic aberrations underlying diseases instead of on the disease symptoms.

Two of the aberrations discovered in the new study were in genes used in a major signaling system in the brain, giving clues to processes that might go awry and suggestions of how to treat the diseases.

“What we identified here is probably just the tip of an iceberg,” said Dr. Jordan Smoller, lead author of the paper and a professor of psychiatry at Harvard Medical School and Massachusetts General Hospital. “As these studies grow we expect to find additional genes that might overlap.”

The new study does not mean that the genetics of psychiatric disorders are simple. Researchers say there seem to be hundreds of genes involved and the gene variations discovered in the new study only confer a small risk of psychiatric disease.

Steven McCarroll, director of genetics for the Stanley Center for Psychiatric Research at the Broad Institute of Harvard and M.I.T., said it was significant that the researchers had found common genetic factors that pointed to a specific signaling system.

“It is very important that these were not just random hits on the dartboard of the genome,” said Dr. McCarroll, who was not involved in the new study.

The work began in 2007 when a large group of researchers began investigating genetic data generated by studies in 19 countries and including 33,332 people with psychiatric illnesses and 27,888 people free of the illnesses for comparison. The researchers studied scans of peoples’ DNA, looking for variations in any of several million places along the long stretch of genetic material containing three billion DNA letters. The question: Did people with psychiatric illnesses tend to have a distinctive DNA pattern in any of those locations?

Researchers had already seen some clues of overlapping genetic effects in identical twins. One twin might have schizophrenia while the other had bipolar disorder. About six years ago, around the time the new study began, researchers had examined the genes of a few rare families in which psychiatric disorders seemed especially prevalent. They found a few unusual disruptions of chromosomes that were linked to psychiatric illnesses. But what surprised them was that while one person with the aberration might get one disorder a relative with the same mutation got a different one.

Jonathan Sebat, chief of the Beyster Center for Molecular Genomics of Neuropsychiatric Diseases at the University of California, San Diego, and one of the discoverers of this effect, said that work on these rare genetic aberrations had opened his eyes. “Two different diagnoses can have the same genetic risk factor,” he said.

In fact, the new paper reports, distinguishing psychiatric diseases by their symptoms has long been difficult. Autism, for example, at was once called childhood schizophrenia. It was not until the 1970s that autism was distinguished as a separate disorder.

But, Dr. Sebat, who did not work on the new study, said that until now it was not clear whether the rare families he and others had studied were an exception or whether they were pointing to a rule about multiple disorders arising from a single genetic glitch.

“No one had systematically looked at the common variations,” in DNA, he said. “We didn’t know if this was particularly true for rare mutations or if it would be true for all genetic risk.” The new study, he said, “shows all genetic risk is of this nature.”

The new study found four DNA regions that conferred a small risk of psychiatric disorders. For two of them, it is not clear what genes are involved or what they do, said Dr. Smoller. The other two, though, involve genes that are part of calcium channels, which are used when nerves send signals in the brain.

“The calcium channel findings suggest that perhaps – and this is a big if – treatments to affect calcium channel functioning might have effects across a range of disorders,” Dr. Smoller said.

There are drugs on the market that block calcium channels – they are used to treat high blood pressure – and researchers had already postulated that they might be useful for bipolar disorder even before the current findings.

One investigator, Dr. Roy Perlis of Massachusetts General Hospital, just completed a small study of a calcium channel blocker in 10 people with bipolar disorder and is about to expand it to a large randomized clinical trial. He also wants to study the drug in people with schizophrenia, in light of the new findings. He cautions, though, that people should not rush out to take a calcium channel blocker on their own.

“We need to be sure it is safe and we need to be sure it works,” Dr. Perlis said.

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DealBook: For S.E.C., a Setback in Bid for More Time in Fraud Cases

The Supreme Court on Wednesday delivered a swift and decisive rejection of the Securities and Exchange Commission’s argument that it should operate under a more forgiving statute of limitations in pursuing penalties in fraud cases.

As a result of the decision, the agency will have to find a long-term solution to give itself more time to investigate cases.

In Gabelli v. Securities and Exchange Commission, Chief Justice John G. Roberts Jr. wrote in the unanimous decision rejecting the S.E.C.’s argument that a federal statute that limits the government’s authority to pursue civil penalties should commence when a fraud is discovered, not when it occurred.

The S.E.C. was hoping that the court would apply what is known as the “discovery rule.” In 2010, the Supreme Court endorsed this rule in a private securities fraud class-action suit, Merck & Co. v. Reynolds, stating “that something different was needed in the case of fraud, where a defendant’s deceptive conduct may prevent a plaintiff from even knowing that he or she has been defrauded.”

The discovery rule is an exception to the protection afforded by a statute of limitations, which puts an endpoint on potential legal liability for conduct. Unlike most cases, when fraud is involved, it may not be apparent to the victims that they were harmed because the primary goal of deceptive conduct is to keep it from being exposed.

In the Gabelli case, the S.E.C. filed fraud charges in 2008 against the mutual fund manager Marc Gabelli and a colleague, Bruce Alpert, saying they had violated the Investment Advisers Act of 1940 for permitting an investor to engage in market timing. Ten years ago, a major scandal erupted when it came to light that some advisers had permitted select investors to buy shares at favorable prices to take advantage of pricing disparities in the securities held by mutual funds.

In its complaint, the S.E.C. sought civil monetary penalties based on market timing that it claimed had taken place from 1999 to 2002, and resulted in the preferred investor purportedly reaping significant profits while ordinary investors suffered large losses. The defendants denied the charges and filed a motion to dismiss the case because it was not brought in time.

A federal statute, 28 U.S.C. § 2462, provides that “an action, suit or proceeding for the enforcement of any civil fine, penalty, or forfeiture, pecuniary or otherwise, shall not be entertained unless commenced within five years from the date when the claim first accrued.” The provision dates to 1839, and applies to any government agency.

A decision by the United States Court of Appeals for the Second Circuit in Manhattan allowed the case to proceed by applying the discovery rule to a governmental action. Coincidentally, that decision was written by Judge Jed S. Rakoff, who despite being an occasional thorn in the S.E.C.’s side, accepted the agency’s argument to avoid a strict application of the five-year statute of limitations.

The Supreme Court, however, saw things differently. This week, it issued its opinion less than two months after it heard oral argument in the case in January, a clear sign the justices found no merit in the S.E.C.’s contention that the agency should be treated the same as private plaintiffs in trying to get around the statute of limitations.

According to the Supreme Court, victims in securities fraud cases should have a longer period to file a claim – from when the fraud was discovered. “Most of us do not live in a state of constant investigation,” the court wrote. “Absent any reason to think we have been injured, we do not typically spend our days looking for evidence that we were lied to or defrauded.”

Chief Justice Roberts explained that “the S.E.C. as enforcer is a far cry from the defrauded victim the discovery rule evolved to protect.” One of the reasons the agency exists is to detect and penalize violations, with tools that the ordinary investor simply does not have, like the authority to compel testimony and the production of documents. The message is simple. When it’s your job to investigate fraud, you cannot argue that your failure to do so is a justification for not meeting a statute of limitations.

The Supreme Court’s decision puts increased pressure on the S.E.C. to pursue its investigations with greater alacrity and not let them gather dust, which can occur as a result of staff turnover or other pressing issues. The market timing case is a good example of how an investigation might get lost in the shuffle as corporate accounting frauds at large companies like Enron and WorldCom, which also came to light in 2002, strained the S.E.C.’s investigative resources.

There are a couple of options to deal with this issue in the long run, apart from a substantial increase in the agency’s budget – an unlikely prospect in the face of the looming federal budget sequestration deadline.

The S.E.C. can obtain an agreement to stop the statute of limitations, known as tolling, from those it is investigating, something it has done in the past. For example, in its insider trading and securities fraud case against Samuel E. Wyly, his now deceased brother, Charles J. Wyly Jr., and two other defendants, the S.E.C. got an agreement that let it pursue claims beyond the normal five-year limitations period.

A permanent solution would be to seek legislation from Congress that would give the S.E.C. a longer window to complete its investigations. The statute of limitations is not a constitutional protection, so Congress can amend it as it sees fit, which it has done in other areas involving fraud.

The limitations period for banking crimes, for example, was extended to 10 years during the savings and loan crisis because of the crush of cases that made it difficult to finish investigations in the five-year window to initiate criminal prosecutions. The Fraud Enforcement and Recovery Act of 2009 added mail and wire fraud affecting a financial institution to the list of crimes that get the benefit of the 10-year limitations period, again because of fear that cases would be lost because of the number of investigations taking place after the financial crisis.

The issue of the statute of limitations may even come up at the confirmation hearings of Mary Jo White, who has been nominated to be chairwoman of the S.E.C. That could be an early indicator of whether she would be willing to push for relief from the effect of the Gabelli opinion to help out the enforcement division.

In the short run, the Supreme Court’s decision will cause defendants in government enforcement actions to examine whether they might be able to take advantage of the five-year limitations period. Given how slowly the government has been known to move on occasion, it may be that some cases will fall by the wayside because of the Gabelli decision.

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