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Court Rules Ellison Must Donate $100M to Charity

Posted by CowboyNeal on Fri Dec 02, 2005 03:36 AM
from the forced-benevolence dept.
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PokeyPenguin writes "As part of a settlement for insider trading allegations, a California judge has ordered that Larry Ellison donate $100 million to charity. CNet reports, 'The charity payments are an unusual way to settle such a case. Typically, settlement payments would go directly to the company, in this case Oracle. "But with Mr. Ellison owning a quarter of Oracle's stock, much of such a direct payment, in effect, would have gone to him."'"
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  • September 12 was, erm, over six weeks ago--this news about the ending of the so-called "derivative law suits" was dealt with [sys-con.com] by Java Developer's Journal (and tens of dozens of other major technology publications) long ago. [from the article] "Unusual Settlement Arrangement Would End Derivative Lawsuits Once and For All, and Avoid a Trial"

    • Re:JDJ Had This News 6 Weeks Ago (Score:5, Informative)

      by boingyzain (739759) on Friday December 02 2005, @04:21AM (#14164453)
      From TFA: ...the terms of which were approved on Tuesday by a California judge. Of course, Tuesday being November 22nd, the day this article was run. So, if you were to RTFA, you would find that this lists the newest developments in this case, not the stuff from six weeks ago.

    • Basic math and stupid decision (Score:5, Insightful)

      by goombah99 (560566) on Friday December 02 2005, @10:16AM (#14165782)
      The logic here is strange and the share holders defrauded by the judge. If the goal is to make ellison 100 million poorer then this is simple:
      x-0.25*x = 100 million
      x = 133 million
      So ellison should pay 133 million, he'll get 25% back in the book value of his stocks, and on paper be out 100 million.

      On the otherhand if the idea is that oracle was defrauded 100 million, well then it's simple. He should give 100 million to oracle, regardless of his percent ownership since any injury he caused oracle came out of his pocket book too!.

      Stupid decision.

  • Tax Break (Score:3, Insightful)

    by thedogcow (694111) on Friday December 02 2005, @03:38AM (#14164348)
    Won't he get a tax break therefore saving money in the long run?
    • Maybe, at least the state won't have to pay for his trip to club fed.

    • Re:Tax Break (Score:5, Funny)

      by Frankie70 (803801) on Friday December 02 2005, @03:49AM (#14164372)
      Won't he get a tax break therefore saving money in the long run?

      Why don't you donate all your money to charity & save money using this
      ruse?
    • Sure, he'll get a tax break, but he's only gonna get a little fraction of that back, and undoubtedly the judge in the case was aware of this. He'll still lose tens of millions of dollars/

    • No Tax Break (Score:5, Informative)

      by David Hume (200499) on Friday December 02 2005, @04:30AM (#14164470) Homepage
      Ellison won't get a tax break. Although the payment is being made to a charity, it is not a charitable contribution. He is receiving legal consideration [thefreedictionary.com] for the payment -- i.e., he is settling and discharing a debt. It would similar to the situation where you bought a used car from the charity, and paid them money in exchange. Your payment would not be a charitable contribution

      More precisely, the charity is a third party beneficiary [thefreedictionary.com] of a contract between the plaintiff(s) and Ellison to settle the case. It would be more like a case where "Seller" sells a car to you but, feeling charitable, writes the contract so you pay the money to the charity. In that case, if anyone got a deduction it would be "Seller" and not you.

  • I've got just the charity! (Score:3, Funny)

    by Anyd (625939) on Friday December 02 2005, @03:46AM (#14164368)
    It's called "Feed the Anyds." Seriously though, I'm hungry!

  • At press time, charity unreachable (Score:5, Funny)

    by AEton (654737) on Friday December 02 2005, @03:53AM (#14164386)
    Representatives from Ellison's selected charity - the little-known 'Human Fund' - were unavailable for comment.

  • why not pay the shareholders? (Score:3, Insightful)

    by atari2600 (545988) on Friday December 02 2005, @03:54AM (#14164388)
    Obviously i am no business genius but why does the payment be in a form that will add to the stock value? Can't the judge order Ellison to write out checks to the ones who suffered?
    Also, the timestamp on the news.com.com site shows that this news is about 2 weeks old. Isn't that like a lifetime in the Internet age or is this a dupe post :(

  • $17 Billion Dollars? (Score:5, Interesting)

    by el_womble (779715) on Friday December 02 2005, @04:07AM (#14164419) Homepage
    So the settlement was for 0.6% of his personal worth? Or bearly equivalent to a speeding ticket to a guy on $30,000 and he gets 5 years to pay it and no criminal record?

    That's justice right there.
    • The rich and powerful can only be penalized by a slap on the wrist, unless, of course, they cause massive damage to an entire state like California (Keep crying, Mrs. Lay; I'm loving every tear).

    • The Slashdot School of Law has failed you (Score:5, Informative)

      by kajoob (62237) on Friday December 02 2005, @05:09AM (#14164551)
      1.) Only $100 million?

      That's because no California court has ever awarded punitive damages in a derivative suit. Derivative suits, like this one, are about equity - not punishment.

      2.) No criminal record?

      Derivative suits are civil, not criminal.

        • All true - but kind of funny that Larry pulls out his change purse and Martha wears the shackles. Is it just me, or do other people think Larry might actually have a man purse?

          Not that I'm defending Larry, but Martha wore the shackles for lying to the Feds, not the insider trading. I'm sure if she hadn't been so arrogant and just 'fessed up front, she would have received similar treatment.
          • In fact, she was convicted of claiming to be innocent of insider trading.

            She was innocent of insider trading - at least the charges were dropped - but that didn't give her the right to claim it. You see, by denying it, she was revealing information that affected the price of her company's stock, and she didn't go through the right channels to do it, which is a crime.

    • Re:$17 Billion Dollars? (Score:5, Insightful)

      by XaXXon (202882) <(xaxxon) (at) (gmail.com)> on Friday December 02 2005, @05:23AM (#14164577) Homepage
      You want the real justice?

      The people who lost out on this -- the shareholders who's stock lost extra value because he devalued their stock unfairly -- get nothing other than a mildly warm and fuzzy feeling that a company that they own some very small part of gave a sizable charitable donation somewhere.

      The lawyers, on the other hand, get $24 million in cash money.

      • Re:$17 Billion Dollars? (Score:5, Insightful)

        by symbolic (11752) on Friday December 02 2005, @10:39AM (#14165966)
        I believe that with lawyers being the only ones who are really "remedied" in a class-action suit, it's almost not worth it to pursue them any more. While you may end up with a judgement against the offending party, you, a member of the class that was harmed, often get nothing. This could be a real problem, as class-action suits can be an effective tool for keeping people like Ellison in line. But then, if I get nothing out of it save to contribute to some greedy law firm's bottom line (in a siginificant way, mind you), why bother?
        • This is why reform is needed for class-action lawyer fees. The lawyers need to get a percentage of the actual money the class-action lawsuit participants get. If the lawyers negotiate some crap deal where the class-action results in coupons to the participants, the lawyers should only get fees based on the percentage of coupons used or redeemed. Also, class action should be reserved for egregious acts by corporations with disregard for the safety or health of the public. If a class action suit can be sh

  • Great Solution (Score:5, Interesting)

    by Anonymous Coward on Friday December 02 2005, @04:09AM (#14164423)
    Why not just exclude his stock from the distribution of the settlement. That way the people he screwed could still benefit from this settlement.

  • Favorite Charity. (Score:5, Funny)

    by Rick Richardson (87058) on Friday December 02 2005, @04:10AM (#14164424) Homepage

    Mr. Ellison's favorite charity: LINUX !!!!!

  • New Ellison Business Plan (Score:3, Funny)

    by trurl7 (663880) on Friday December 02 2005, @04:26AM (#14164461)
    Larry Ellison's new business plan:

    1) Change Oracle's status to "Charity"
    2) Donate $100B to the Oracle Charity Fund
    3) Change Oracle's status back to "For Profit Corporation"
    4) Profit!!!

    There's something wrong up there though.... what could it be ??????

  • In other news (Score:5, Funny)

    by FidelCatsro (861135) * <fidelcatsro.gmail@com> on Friday December 02 2005, @04:27AM (#14164464) Journal
    Me Ellison recently announced a $400M Dividend to be paid to shareholders

  • No wrongdoing? (Score:5, Interesting)

    by sh0dan (762382) on Friday December 02 2005, @04:35AM (#14164480) Homepage
    From TFA:
    Ellison offered in September to settle the case with $100 million in charitable donations and without admitting wrongdoing.
    I'm really puzzled about this. Can someone explain to me, how you can pay yourself out of a wrongdoing?

    To - you have either done nothing wrong, and you are free, or you have done something wrong and have to pay for it. Maybe I'm just naiive, but how can it be "nothing wrong" and paying back money?

    • Re:No wrongdoing? (Score:4, Interesting)

      by vidarh (309115) <vidar@hokstad.com> on Friday December 02 2005, @05:07AM (#14164547) Homepage Journal
      It it's not "nothing" wrong and paying back money. It's "you claim I've done something wrong, and I claim I haven't, but I think it's worth it (for whatever reasons) to accept X as punishment right now if it will make the case go away without wasting either of our times with a protracted court case"

      Of course you'd stand a better chance getting a settlement accepted if you admit wrongdoing, but often what the other party is after is mainly the punishment, and they couldn't care less if you admit doing anything wrong if you're willing to pay.

      One reason for being prepared to take the punishment without accepting wrongdoing may be if you worry that being convicted may leave you open to lawsuits from other parties related to what you'd admit to.

    • See the Nixon pardon (Score:5, Interesting)

      by mangu (126918) on Friday December 02 2005, @05:31AM (#14164593)
      how can it be "nothing wrong" and paying back money?


      He admits nothing, but other people believe he did something wrong. As Gerald Ford said when he granted Nixon's pardon: "I am compelled to conclude that many months and perhaps more years will have to pass before Richard Nixon could obtain a fair trial by jury", and "To procrastinate, to agonize, and to wait for a more favorable turn of events that may never come or more compelling external pressures that may as well be wrong as right, is itself a decision of sorts"

      .
      For someone like Ellison, paying $100 million is nothing compared to waiting years for a trial, even if he were considered "not guilty" in the end.

  • Charitable contributions (Score:3, Funny)

    by $RANDOMLUSER (804576) on Friday December 02 2005, @04:37AM (#14164484)
    I hear most of it is going to Ellison's own Diplomas are for losers [satirewire.com] campaign.

  • ... Larry Ellison should have to put the $100M into a non-profit foundation that pays developers to improve PostgreSQL. Properly managed, that kind of money would easily fund a team of 50 developers for decades.

  • Here is a suggestion: the PosgreSQL project [postgresql.org].

  • Judgement Doesn't Make Sense to Me (Score:5, Insightful)

    by putko (753330) on Friday December 02 2005, @04:53AM (#14164520) Homepage Journal
    The judgement doesn't make sense to me.

    Typically, if someone does something bad to someone, the person doing the bad has to compensate the harmed person.

    So if Ellison did something bad to the shareholders, he should pay the shareholders.

    The fact that Ellison is a shareholder too doesn't matter -- all it means is, in the big scheme of things Ellison did something bad to the minority shareholders.

    So Ellison could just as easily compensate only the minority shareholders -- but only as much as he hurt them.

    It doesn't make sense for the judge to say, "Oh my! This case is so complex, let's just have Larry flush some money down the toilet or give it to charity, and we'll call it even."

  • $100 million or $100 million of Oracle software? (Score:5, Interesting)

    by DrXym (126579) on Friday December 02 2005, @04:55AM (#14164524)
    Not the same thing at all, though it doesn't stop the likes of Bill Gates mixing up the two. Seriously though if Ellison has to stump up the cash, he should strategically give it to open source projects where it would be the most benefit to Oracle.

  • I'm not sure (Score:2, Insightful)

    by Anonymous Coward
    but I think he won more than 100 million $ doing this insider trade. Small guys which steal 2 TVS get prison, he stole over 100 million and gets nothing.

  • And the lawyers get richer (Score:4, Insightful)

    by Ogemaniac (841129) on Friday December 02 2005, @05:24AM (#14164578)
    No one on earth benefits from this lawsuit except the sharks. In the long run, Ellison would have donated the money to someone anyway. He can't and won't spend it all, and will just decrease his future donations by the same amount he was forced to donate.

    The stockholders do not benefit, the charities do not benefit, Ellison does not benefit...

    What a waste. The problem is that law schools are deliberately over-supplying the market with lawyers (we have several times as many as other nations, per capita). This results in not enough legitimate suits to go around. Stupid suits are the obvious result.

    Perhaps we should sue the law schools for creating a "nuisance"...

    • At least the lawyers are happy... (Score:5, Informative)

      by mangu (126918) on Friday December 02 2005, @05:39AM (#14164609)
      From TFA, at first the judge didn't approve the settlement because the Oracle company would have to pay $24 million in legal fees. It was only when Ellison agreed to pay an extra $22 million to the lawyers that the settlement was approved.


      From the article: "This provision makes an excellent settlement even better," Joseph Tabacco, the attorney who brought the case, said in a statement. Wow, who would have guessed it, a lawyer is happy to get $22 million!?

  • Simple solution (Score:3, Insightful)

    by ThinWhiteDuke (464916) on Friday December 02 2005, @06:00AM (#14164662)
    Court wants Ellison to pay 100m to other Oracle shareholders.

    Problem : Ellison owns 25% of Oracle.

    Solution : Order him to pay 133m to Oracle.

    This whole charity thing does not make sense.

  • here's a little high school math problem for you (Score:5, Insightful)

    by penguin-collective (932038) on Friday December 02 2005, @06:35AM (#14164744)
    L.E. owns 25% of a company; this means that 25% of every payment to the company will therefore, in effect, go to L.E. The other 75% of the company's owners are supposed to receive $100m a penalty for wrongdoing by L.E. How much money must L.E. pay to the company so that the other 75% of the owners receive their $100m?

    Apparently, the court found this little problem too hard to solve.

  • Two justice systems (Score:3, Insightful)

    by SimianOverlord (727643) on Friday December 02 2005, @06:54AM (#14164788) Homepage Journal
    One for the rich, one for the poor. Steal an TV, and you get locked up. Steal millions of dollars, and you get a fine. Kill some bozo, and you get executed. Kill a million bozos with Apache helicopters and white phosphorus, and you get an unfavourable poll rating.

    It's one rule for the rich, and one rule for the poor.

  • Larry Versus Martha (Score:3, Interesting)

    by adsl (595429) on Friday December 02 2005, @10:03AM (#14165682)
    Martha is investiated for "insider trading" and it's judged she did ZNOT do it. But because she lied to a Federal Officer she is now convicted felon and served 6 months in jail. The court here finds Larry is guilty of "insider teading" and he apparently settles w/o a Felony conviction and with no jail time. Doesn't make any sense to me.

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