A federal appeals court has dismissed the latest challenge by disbarred Virginia Beach lawyer Thomas E. Smolka, who argued that he was treated unfairly by vindictive prosecutors and a biased judge. Smolka, 60, was a real estate lawyer who, in 1993, was convicted of killing his wife, Betty Anne, while vacationing in Florida. But the conviction was overturned, and Smolka was freed from prison after serving 33 months.

 

Smolka returned to Virginia and began practicing law again, but was charged in 2002 with mail and wire fraud after bilking about 17 clients out of more than $110,000. He pleaded guilty in that case but fled before sentencing. He was next arrested in Oregon after seeking monetary damages from the Portland Archdiocese by posing, under the name of a deceased man, as a sexually abused victim of a Catholic priest. Smolka was convicted of fraud and sentenced to 37 months in prison. He then was returned to Richmond and sentenced to 78 months in prison on the fraud charges plus an additional 60 months for failing to appear. In all, Smolka is serving 14-1/2 years in federal prison.

 

The 4th U.S. Circuit Court of Appeals in Richmond ruled Friday that Smolka's appeal was without merit. He argued that prosecutors pushed for additional prison time for vindictive reasons, but the appeals court said Smolka had not proven his argument. Smolka also tried to argue that the judge in the Virginia case, Robert E. Payne in Richmond, was biased. In court, Payne called Smolka an embarrassment to the legal profession and said that he preyed on weak and vulnerable victims. The appeals court dismissed that argument as well.

Aaron Pierce received a 30-day jail sentence for the death of fellow Virginia Tech student Brian Joseph McCloskey, who was run over and killed in November 2005. But Pierce's court ordeal hasn't ended. Wednesday, McCloskey's family filed a $7 million lawsuit against Pierce and the owners of the 2006 Ford Excursion that Pierce had borrowed, a vehicle that belonged to the Magic City Ford dealership in Roanoke. Aside from Pierce, the suit names Magic City Ford as a defendant, as well as owner Bill Johnson and his son Cameron, who was Pierce's roommate at the time McCloskey was killed. The suit accuses all the defendants of contributing to McCloskey's death through negligence. Pierce, 21, referred questions Wednesday to his lawyer, Tony Anderson, who declined to comment. The Johnsons could not be reached for comment. Fairfax lawyer Michael Shevlin, who filed the suit on behalf of McCloskey's mother and sister, also declined to comment Wednesday.

 

The lawsuit alleges Pierce was drinking the night of McCloskey's death, and using the Excursion to transport other underage college students who had also been drinking. It accuses him of knowingly driving off-road in a prohibited area used by pedestrians. The suit claims Cameron Johnson, his father and his father's company were negligent because they permitted Pierce to use the Excursion. The suit also claims they knew the vehicle was being used in a reckless manner. It demands $5 million in compensatory damages and $2 million in punitive damages. The evening of Nov. 4, 2005, McCloskey, an 18-year-old freshman, started walking back from a birthday party at an apartment complex in Blacksburg. That same night, Pierce was shuttling students to and from nearby parties using the Ford Excursion borrowed from his roommate. At the time, Cameron Johnson was general sales manager at Magic City Ford. The Excursion had been taken from the dealership.

 

According to court evidence, Pierce made three trips, during which he took a shortcut through a grassy area with a walking trail -- where two people discovered McCloskey lying unconscious early Nov. 5. McCloskey died five days later from his injuries. At first authorities weren't sure whether he had been beaten or run over. After Pierce learned of the incident, he became concerned he could have struck McCloskey. He shared his concerns with his roommate three weeks after McCloskey was found unconscious. Pierce spoke to police Dec. 9, 2005. He told police about the shortcut and that at one point he thought he had struck a large rock. An examination of the Excursion found a bolt pattern consistent with one found on McCloskey's body, according to court evidence.

 

In February, Pierce made an Alford plea to a charge of involuntary manslaughter. The plea allows Pierce to maintain his innocence while taking a plea agreement and acknowledging there is sufficient evidence for a conviction. Under the terms of Pierce's sentencing, the manslaughter charge will be dismissed if he stays out of legal trouble for three years. He agreed to serve 30 days in jail, perform 300 hours of community service and lose his license for a year. Pierce also paid $12,800 to the McCloskey family to cover the cost of his funeral and gravestone.

Sunrise Senior Living's former chief financial officer is firing back over his ouster from the senior housing giant. Bradley Rush has filed suit for breach of contract and defamation in Fairfax Circuit Court, claiming he was wrongly discharged in May 2007 after discovering accounting problems. Sunrise disputes the account. "Sunrise fired Mr. Rush in retaliation for his discovery and disclosure of Sunrise's improper, and in some cases fraudulent, accounting practices, and as part of Sunrise's campaign to make Mr. Rush the 'fall guy' for its improper and fraudulent behavior," Rush's lead attorney John M. Dowd said in a statement. Dowd says in a press release that Sunrise wanted Rush out of the way because the McLean company was trying to sell itself to private investors.

 

In a press release April 25, Sunrise said it had suspended Rush after the board of directors concluded that he failed to follow the company's document retention directives. He was subsequently terminated in May. At the time, the company was reviewing recent insider sales of company stock, its historical practices related to stock option grants and the facts relating to its accounting treatment for certain categories of transactions. Dowd said the only documents Rush failed to retain were personal documents that Sunrise's general counsel told him did not need to be kept. Sunrise issued a statement, calling Rush's assertions "nonsense."

 

"Sunrise has not yet been served with a copy of Mr. Rush's complaint, but has only seen his lawyer's press release. The assertion there that Mr. Rush was fired because he was trying to uncover or report financial improprieties is nonsense. "The reasons why Mr. Rush's employment as CFO was terminated for cause, including his actions inconsistent with the company's document preservation directives, as previously disclosed by the company, will be demonstrated in the litigation. Because this matter is now in the courts, Sunrise does not believe it would be appropriate to make further public comment at this time. The company, however, intends to vigorously contest this legal action."

Saadet Muslu's classmates at Langley High School in McLean will be heading to college soon, but she'll be serving a one-year jail sentence. When she gets out, a judge said yesterday, she'll spend the next 10 years talking to teenagers about the dangers of speeding and "what it's like for a young person to spend time in jail." Arlington County Circuit Court Judge Benjamin N.A. Kendrick sentenced Muslu, 18, to a year in jail for involuntary manslaughter in a high-speed crash on the George Washington Memorial Parkway last year that killed one of her passengers and seriously injured two others. "I hope to God we can save some lives," said an emotional Kendrick, who said he had struggled with the case. "Thousands of people are dying every year." Muslu, who was 17 and traveling more than 100 mph at the time of the Sept. 28 crash, tried to read a prepared statement that she had written in jail but broke down. Her attorney, Peter D. Greenspun, read the statement, in which she called her behavior "irresponsible and idiotic" and said she will forever live with the "unimaginable pain" of the death of her friend Jesse H. Little, 21, also of Great Falls. The defense contended that Muslu was being egged on by some of her passengers to go faster and faster when she lost control of the car, which belonged to her friend's mother. The car skidded more than 300 feet near the Spout Run exit, crashed into the embankment, went airborne and then slammed into a tall tree eight feet up.

 

Muslu, a senior at Langley at the time, admitted to police that she was going more than 100 mph. One of her passenger's parents testified that Muslu told her she was going as fast as 130 mph, trying to beat her friend's 123-mph record on the road, where the speed limit is 40 mph at that spot. Little, 21, was the oldest of the five people in the car. Two other teenagers were seriously injured, one of whom spent five weeks in intensive care. Both have largely recovered. Muslu and the front-seat passenger, whose mother owned the car, had minor injuries. A jury of seven men and five women convicted Muslu of involuntary manslaughter March 14. Greenspun said yesterday that Muslu was subjected not to peer pressure but to "peer idiocy." He said other teenagers in the car -- who he insisted he didn't want to blame -- had shouted "you're a baby" to try to get Muslu to step on the gas. During the trial, Greenspun painted a picture of a chaotic night among the meandering teenagers, with constant cellphone calls, text messages and brief stops across Northern Virginia. One of the teenagers testified that the front-seat passenger in the car wanted to prove that her mother's Lexus LS 430 was faster than the BMW 745 owned by Muslu's parents. He testified that there was "nothing" going on that night and that the teenagers were looking for something to do. Greenspun asked Kendrick to take all those factors into account when considering his sentence. Kendrick sentenced Muslu to five years in jail, with four years suspended. With time already served, Greenspun said his client would probably be released before the year is up. "We just want her to come home," said her older brother, Mustafa Muslu. "We feel terrible about everything that has happened."

 

Kendrick noted that Muslu was charged with a speeding offense one month before the crash. "Nonetheless, she was driving on the GW Parkway at 130 miles per hour," he said. The defense spent most of the sentencing hearing trying to show how remorseful Muslu was about her friend's death, putting three witnesses on the stand. During the trial, prosecutors depicted Muslu as a spoiled, wealthy teenager who cared more about her own fate than about the welfare of her friends, asking repeatedly at the crash scene, "What's going to happen to me?" "Sorry, sorry, sorry," said Nadya Muslu, the teenager's mother, at yesterday's hearing. "I want to say how sorry we are about Jesse. I pray for him and his family every day. We will never, ever forget our whole life," she said, breaking into sobs.

 

The apology didn't do much to ease the heartache on the other side of the courtroom. Lauren Homer, who first adopted Little and his brother Jake from Russia, cried through much of the proceedings. Harrell Little Jr. later took Jesse in as a foster child when the boy was 14 and then adopted him; Homer still has custody of Jake. "I'm disappointed she's only going to be in jail for one year," Homer said. "Her conduct was inexcusable. Our tears will never end."

In the beginning, throwing all your profits back into the business makes a lot of sense. Growth is what matters. But as your business matures and your life changes, your priorities will likely shift, too. Maybe it's time to free up some cash, or perhaps you're thinking of passing the business on to your far-flung children. But how can you increase liquidity or transfer wealth without getting hit by onerous taxes or damaging your company?

 

The simple answer is to think ahead. It's true that estate planning appears to be first and foremost about death and taxes. But a good plan is much more than that: It's really a strategy to keep your business going. An estate plan will protect your company-and family-if you or your partner die or get divorced. It will allow you to indulge your philanthropic streak and can smooth any bumps that may arise when passing your company to the next generation. "A big chunk of this is transition management," says Paul Vogel, president and CEO of the trust division for Enterprise Bank & Trust in Clayton, Mo. Estate planning starts with two basic premises. First, don't exceed the lifetime gifting exemption of $1 million ($2 million for married couples). Second, you must not fall prey to the estate tax, which can eat up 45% or more of your assets. Although most entrepreneurs won't be hit by the estate tax-it kicks in if assets total more than $2 million ($4 million for a couple)-those who know they're likely to be affected should start planning. "To a large extent, the estate tax is voluntary," says Allan Paterson, head of the estate and trust group at San Antonio law firm Cox Smith Matthews. "If you don't do anything about it, you will be taxed at the maximum amount. But with planning, you can use strategies and techniques to minimize the burden."

 

Beyond those basics, things can get pretty complex. Trust and estate planning can resemble a chess game with a finite number of pieces and nearly infinite possibilities. Preparing an estate plan with an eye to selling your business is difficult enough, but preparing to pass a business down through your family is far trickier and likely to get more complicated with each successive generation. No two scenarios are exactly alike, and estate lawyers are likely to try many variations on a few basic themes.But most experts agree it's best to stick with the tried and true. Estate tax law is thorny and complex, and you don't want to wind up lost in a judicial labyrinth with the IRS breathing down your neck. "Start with planning that is not new," says William Forsyth, senior fiduciary counsel for Bessemer Trust in New York. "Chances are no one plan will solve whatever the issue is, but you don't want to be a tax court case." Once you determine your goals, you'll need to work with your advisers-including a lawyer, financial planner, and accountant-to devise a strategy that uses an array of financial vehicles. Among them: insurance, gifting, trusts, family limited partnerships, and grantor retained annuity trusts. What's important is that you don't wait until your AARP membership card arrives to get going. "Very few privately owned businesses make it down through several generations, and one reason is the failure of the senior generation to do any planning at all until it is too late in the game, or too difficult," says Forsyth.

 

FIND SHELTER

When you're launching a company, it may seem a bit morbid to think about what could happen when you are no longer at the helm. But the unexpected does happen, as Debi Butler can attest. In the 1930s, Debi's father, John, founded Butler Gas Products, a New Brighton (Pa.) company that manufactures and distributes specialty gases for industrial and medical uses. John died of cancer in 1977, and although he had put 30% of the company stock in an irrevocable trust, protecting those shares from estate taxes, the business still owed about $200,000 on other shares. "That sounded like a lot of money to me and my sister," says Butler, then 21.

 

The family considered selling the company, but Debi's brother, Jack, who was also in his 20s and had been working at Butler Gas for a few years, decided to take the reins. He bought company stock from the trust and paid the estate tax bill with a combination of his own savings and the company's revenues. Today, John, Debi, and sister Barbara jointly own the 30-employee, $10 million business.

 

Ideally, a business owner should no longer have a controlling interest in the company when he or she dies. That ensures that the value of the business remains outside the estate. Both revocable and irrevocable trusts can be used to shelter shares in the business. And an insurance policy owned by an irrevocable trust can go along way toward easing cash needs if an owner dies unexpectedly. Another option some entrepreneurs use is to divest themselves of a controlling interest by transferring more shares in the business to a spouse.

 

Today the Butlers are planning aggressively to make sure the transfer to the next generation goes smoothly. Since business owners, like other people, can give any number of individuals $12,000 tax-free each year, the Butlers make annual gifts of nonvoting stock to their children. They have also set up additional irrevocable trusts for company shares. They hold life insurance policies to pay off estate taxes that might arise should any of them die unexpectedly.

 

SURVIVORSHIP

Insurance policies were an important facet of the plan Junab Ali and Jay Uribe made when they started Möbius Partners, a 17-employee, $25 million info-tech consultancy and computer hardware reseller. Ali, 34, and Uribe, 35, wanted to be sure that their families would be provided for if one of them died. They purchased insurance policies valued at $5 million. Each partner named the other as his beneficiary, enabling the surviving partner to buy the other's shares. In the event of Ali's death, for example, the insurance payouts would flow to his wife or to an irrevocable trust for Ali's two girls, now age 7 and 2, to fund their educations. Ali says he and Uribe also structured their buy-sell agreement so that the surviving partner would buy the other man's shares. That prevents family members who are not involved in the business from becoming partners, but ensures they get the money from the asset. Says Ali: "When you are running your day-to-day business, you tend to forget all about wills and life insurance, and it is doubly important as a small business owner, because you are responsible for all your employees and business partners and your family."

 

CASH CONCERNS

As your business thrives, you may want to unlock some of its cash, for anything from a college tuition bill to income for an aging parent, or a philanthropic cause. You may just want to reduce the value the business contributes to your overall estate. That requires juggling the cash needs of the company with those of its principals. "It is very important to establish a situation where you have the right balance between your payroll and distributions," says Brenda Newberry, the 53-year-old chairman and CEO of Newberry Group, a 135-employee IT outsourcing company in St. Charles, Mo. Newberry and her husband, Maurice, 55, who is president and chief operating officer, support several charities, including the United Way and Boys & Girls Clubs of America, and want to do more. One option is setting up a charitable remainder unified trust, which would provide Newberry with an annuity based on the amount of assets in the trust. After a predetermined number of years, the remainder plus any increase in value passes tax-free to the designated charities. Says Newberry: "A charitable trust would be one way to help protect some of the assets from the impact the heirs would have." Ken Van Tuinen, CEO of West Michigan Uniform in Holland, Mich., faced the challenge of providing for his father's retirement while keeping enough cash in the business. "The cash needs of the company have to be met during that time, keeping the business growing with cash to buy equipment, attract the right employees, and to make other improvements," says Van Tuinen. His father, Gordon, founded the company in 1963 and recapitalized the company stock just before he retired in 1983. Gordon divided the company stock into voting and nonvoting shares. Then he and his wife began giving a combined $20,000 in shares annually to each of their five children, but just two-Tom, the executive vice-president, and Ken, the only other sibling working in the company-received voting rights. To provide retirement income for his father, Ken arranged a deferred compensation plan for him. He also personally purchased the two buildings the company owned, paying for them over a 10-year period. That gave his father another source of retirement income and lowered the value of the estate.

 

NEW VISION

As the Butlers have found, succession planning gets more complicated with each generation. If a family-owned business is run by siblings, they are more likely to have common goals, probably based on their shared upbringing. But often by the next generation, cousins, spouses, and other relatives have different visions for the company.

 

Debi Butler says that because she and her brother and sister grew up in the same house, what they want for the business seems to be the same. "We knew what to expect because we were together on Easter and Christmas and for summer vacation," she says. "With the [subsequent] generations, there are a lot of different cultures and people think differently." Between them, the three Butlers have six children, two of whom have expressed interest in joining the company.Distributing wealth among siblings can be fraught with tension, especially if some children work in the company and others do not. You may have to find a way to share your assets with multiple children in a way that everyone is comfortable with. "On the one hand, you have someone who might say: 'My sibling will receive a business interest and is worth more.' And on the other hand, the person who gets the business interest may say, 'My sibling got cash and securities, and I got a job,'" says Charles Aulino, first vice-president and director of financial planning at Glenmede Trust Co. in Philadelphia.

 

WEALTH SHIFT

The Van Tuinens are now working on a plan to pass the company to the third generation, while continuing to balance the $6.5 million, 78-employee company's needs with those of the two owners. Ken owns 66% of the company, and Tom owns 14%. To fund Tom's impending retirement, the company will purchase about 6,000 of his shares during the next seven years. Tom will gift an equivalent amount to his children, Steve, vice-president of operations, and Mitch, vice-president of sales, increasing their ownership stakes. When he's 59, Ken expects a similar buyout arrangement to kick in, moving shares into the hands of his son, Patrick, currently vice-president of finance.

 

To transfer still more wealth from the business to his heirs (besides Patrick, Ken has two daughters, Emily and Elise), Ken set up three family limited partnerships, or FLPs. These trusts hold the company real estate, which Ken owns and the company rents from him. The FLP structure lets Ken retain 80% control while gifting 20% to his children, who get a tax break on their ownership since it is a minority stake. Explains John Barone, a wealth-planning strategist for Wells Fargo Bank: "It allows you to have a discount in transferring the ownership interest in the FLP, as opposed to the value that would be imposed if you were to transfer the ownership interest in the real estate itself." Right now, Tom's children own 9% of the company each, while Patrick owns 2%. Once a month, Ken and Tom take time to have frank discussions with Mitch, Patrick, and Steve about the progress they are making in the business. All three sons are required to meet performance goals and to complete self-assessments. "What the final result will look like-whether Steve, Mitch, and Patrick will own one-third, or whether Steve and Mitch will own 49% and Patrick 51%, we are just not sure," says Ken Van Tuinen.

 

Over the years, what has become clear is that an estate plan isn't done once and filed away. Aulino at Glenmede recommends a checkup with your planner at least every three to five years, and sooner if there is a significant life change or a business opportunity arises, such as the prospect of a sale that is too good to pass up. Meanwhile, the ongoing education of all family members is important. Every Tuesday from 7:30 a.m. to 9, the Van Tuinens hold a family meeting where they discuss succession issues. It's also their forum for creating a family covenant which elaborates the values they want the business, and those who own it, to embody. "We all agree we want to work together and enjoy this, so we want to know what will it take to be successful, for ourselves and the next generation," says Ken Van Tuinen. "My goal is to be able to see my two nephews and son be more successful than I was. And not just financially, but by continuing the values my dad taught me."

RICHMOND - Under Virginia's estate tax law, candy moguls Forrest and John Mars could have left the state as much as $1.6 billion each when the Northern Virginia brothers go to that big chocolate factory in the sky. But as of today, the so-called death tax is gone. The Mars brothers' personal wealth - accumulated from the sale of M&Ms, Milky Ways, Starburst and other popular food products - and the fortunes of many other well-off Virginians will not be shared with the state. The General Assembly and Gov. Timothy M. Kaine had concluded the tax is bad for business, not to mention sort of creepy. Still, they acknowledge, it wasn't easy to lose the revenue. While not every death is as bountiful for the state as the passing of a billionaire, Virginia's estate taxes have generated between $120 million and $160 million annually for the past decade. The end of the tax comes at a time when Virginia faces a budget shortfall this summer between $200 million and $300 million.

 

Weak tax collections are expected to continue over the next year, putting a pinch on Kaine's plans to expand pre-kindergarten education and land conservation programs. "I think we'll be all right," said Del. Robert Tata, R-Virginia Beach, who championed the abolition of the tax. "We'll make up the money in other ways. The people who want to expand and grow their business can do that now without the government reaching into the grave after them." However, Virginia's death tax may not stay dead. Congress is gradually phasing out the federal estate tax, but it will return full-force in 2011 unless Congress votes to extend the cut. The federal and state taxes are coupled. If the federal tax is revived in four years, the Virginia tax also could be resurrected. There is strong pressure on national and state officials to make sure that doesn't happen. The Policy and Taxation Group, a California organization with ties to the Mars family, spent $180,500 over the past four years lobbying the Virginia General Assembly to end its estate tax, according to reports filed with the Secretary of the Commonwealth. Mars Inc., the world's largest confectioner, has devoted far more lobbying resources on Capitol Hill.

 

The company has spent nearly $12.6 million lobbying Congress since 1998. The money also was used to lobby on agricultural and trade laws. Congress began weaning itself off the federal estate tax in 2001. The following year, Tata introduced a bill to repeal the state version after he received a letter from a constituent requesting the change. Tata said recently that Virginia Beach resident William Simmons, who wrote to Tata in July 2001, had not been contact with him since then. Simmons could not be reached for comment. Tata nearly succeeded in 2003 but his bill was vetoed by then-Gov. Mark Warner, who argued that the state couldn't afford to cut taxes in the aftermath of $6 billion in state budget cuts. In 2005, all three gubernatorial candidates told a gathering of farmers that they favored ending estate taxes. The following year, the legislation abolishing the tax was approved.

 

The measure was supported by the Virginia Farm Bureau Federation and the National Federation of Independent Business-Virginia. However, much of the financial muscle for the repeal effort came from the Policy and Taxation Group, based in Orange County, Calif. At various times between 2003 and 2006, the organization employed four to nine Richmond lobbyists, including former officials from the administrations of Govs. George Allen and Jim Gilmore. Patricia Soldano, a financial planner who runs the advocacy group, said she does not usually lobby outside of Congress, but she made an exception in the case of Virginia. "It was an issue of proximity if nothing else," she said. Soldano, who does not identify her clients, said she represents wealthy families in 25 states. In lobbying reports filed with Congress, she has listed Mars Inc. and Gallo Winery among her contributors. Forrest and John Mars, both in their 70s, live in McLean and Arlington respectively. Forbes magazine has estimated their net worth at $10.5 billion apiece.

 

The reclusive brothers did not respond to telephone calls and e-mails to company offices in Virginia, New Jersey and Illinois. Other billionaires, however, have made personal appeals to politicians and the public in an effort to end the tax. Robert Johnson, the founder of Black Entertainment Television and the first black billionaire, wrote a letter to Virginia legislators in 2003 asking for a repeal of the tax. "African-Americans have not accumulated wealth in past generations and were denied the opportunity to do so because of slavery, Jim Crow laws and other government institutions," Johnson, of Washington, said in a telephone interview. "They've made it, they worked hard and they feel, and I feel, we should be able to keep it." State tax analysts said super wealthy individuals like the Mars brothers or Johnson rarely pay their full taxes. They set up tax shelters and make charitable contributions to reduce the estate bill that will fall to their heirs. Farmers and small-business owners jump through similar financial and legal hoops to protect their assets. Southampton County farmer Jamie Lee and his father have spent years setting up trusts and insurance policies. But, Lee said, they could still face financial problems if they are forced to pay estate taxes.

 

"My sister and I could have to come up with a lot of money because it only covers part of it," said Lee, 37, who grows corn, wheat and soybeans on 1,400 acres. "This is not just a tax on the rich. Farmers might have a nice net worth because of their land, but they don't have a lot of money in the bank." Bob Hedrick, chairman and CEO of Sprinkle Masonry in Chesapeake, said protecting a personal fortune that is tied up in his business has been expensive. "I've spent tens of thousands of dollars on attorneys and consultants and accountants," said the 66-year-old executive, whose son Robert is a partner in the firm. "It infuriates me. How can you say to people, 'When your daddy dies we're going to tax your butt off'? It doesn't make sense." Lots of states agree. Virginia is one of 33 states that have eliminated their estate taxes in response to the congressional action, according the National Conference of State Legislatures. But because many states could re impose their state taxes if Congress revives the federal estate tax, businessmen like Hedrick won't celebrate too hard when the Virginia tax expires today. "In 2011 on Jan. 2, we could be right back in the toilet," he said.

• "Abusive drivers" fees in addition to the normal fines will be imposed for some traffic offenses. Those cited for reckless driving (a charge that can be given for multiple reasons, including speeding 20 miles per hour above the limit or driving with faulty brakes) will pay an extra $1,050; those convicted of drunk driving will pay an extra $2,250; and those caught driving without a license will pay an extra $900. These additional fees only apply to Virginia residents and not out-of-state offenders.

 

• Drivers under the age of 18 can be ticketed for using wireless devices while driving if doing so while committing some other offense.

 

• Localities with sufficient populations will be allowed to have red light cameras.

LOS ANGELES (Reuters) - The judge in music producer Phil Spector's murder trial ruled on Wednesday that famed criminologist Henry Lee recovered possible evidence from the crime scene that he hid from prosecutors. Superior Court Judge Larry Paul Fidler, who made the finding after convening a special six-day hearing into accusations of evidence-tampering in the sensational case, declined to hold Lee in contempt. But Fidler said Lee's denials under oath that he withheld evidence were not credible and ruled that, if the renowned criminologist testifies for the defense, prosecutors can raise the issue of the missing evidence -- possibly a piece of the deceased's fingernail -- before jurors. Spector, 67, is accused of shooting actress Lana Clarkson to death in the foyer of his Los Angeles-area mock-castle on February 3, 2003. His trial on murder charges is expected to last until July.

 

Former Spector lawyer Sara Caplan and private investigator Stan White testified during the hearing that Lee recovered a small white object from the pioneering rock producer's foyer. The judge said that he found Caplan's testimony the most credible. "If I have to chose between the two, I am going to choose Ms. Caplan as more credible than Dr. Lee," Fidler said. "Dr. Lee has a lot to lose if this turns out to be true." The white object has not been seen since the day that Lee supposedly recovered it from Spector's foyer, and therefore can not be entered as evidence. Prosecutors have long claimed that the defense had recovered a fragment of Clarkson's fingernail at the crime scene, which they say could help prove that Spector shot her. The defense claims that Clarkson, 40-year-old star of such films as "Barbarian Queen" and "Amazon Women on the Moon," was holding the gun herself when it went off in her mouth. Lee is best known for testifying for the defense in the O.J. Simpson murder trial, along with a number of other high-profile cases. He is sought as a guest on cable news shows for his forensic expertise.

We buy insurance to protect ourselves against catastrophes. But will coverage be there when we need it? There have been enough headlines, lawsuits and regulatory concern in recent years to give us pause. Here's just a sample:

• Nearly two years after Hurricane Katrina inflicted a record-setting $66 billion in insured losses -- more than the toll of Hurricane Andrew, the Sept. 11 attacks and the Northridge, Calif., earthquake combined -- thousands of policyholders who thought they had full coverage are still bickering with their insurers over whether wind or water destroyed their homes.
• Blue Cross and Kaiser Foundation Health Plan were both recently assessed regulatory fines for "wrongful recession" -- illegally withdrawing individual insurance coverage from people after they got sick. Critics say the companies scoured the consumers' applications for minor errors or omissions to use as an excuse for ending their coverage.
• Unum Group reached a settlement with 40 states after a flurry of lawsuits accused the disability insurance provider of unfairly denying claims. A California jury awarded a $7.67 million verdict to one of the victims, a single mother of two who lost her home and went on welfare after losing her benefits. In upholding the jury verdict, a federal judge ruled the company had used biased medical examiners and destroyed medical reports in its efforts to deny or cut off checks. A federal judge in Maryland said in a separate case that the company's behavior "bordered on fraud."
• Claims payouts by property/casualty insurers have dropped sharply in recent years, despite huge catastrophes, according a Consumer Federation of America review of figures from rating service A.M. Best. The percentage of premium dollars insurers collect that is paid out in claims fell from an average of 81% in the 1980s and 79.8% in the 1990s to just 68.3% last year, the lowest level in at least 26 years and perhaps the lowest since the 1950s. At the same time, property/casualty insurers have been posting record profits.

Insurers say they're investing smarter

The insurance industry insists policyholders aren't being systematically stiffed. Fights over payouts are the exception, said industry spokeswoman Loretta Worters, rather than the rule. For example, more than 95% of the 1.2 million homeowners insurance claims from Hurricane Katrina in Louisiana and Mississippi were settled within one year of the storm, Worters said. "Despite the attention focused on lawsuits filed following this catastrophic storm, the number of claims in litigation accounts for a very small percentage of the total number of claims filed," said Worters, vice president of the Insurance Information Institute, a trade group. "Estimates show that fewer than 2% of homeowners' claims in Mississippi and Louisiana were disputed either through mediation or litigation." Insurers say they are simply getting better at assessing risks and are using their profits to strengthen themselves against future catastrophes. "The idea that insurers are boosting profits by denying legitimate claims is a just a lot of claptrap," Worters said. "Excellent underwriting results, the substantial drop in catastrophe losses and strong investment performance enabled insurers to reinvest billions of dollars in 2006, allowing claims-paying resources to reach an all-time record high estimated at $481.5 billion."

 

Methodic lowballing

Robert Hunter understands the need for strong insurance companies and doesn't begrudge them profits. But the former Texas insurance commissioner, now insurance director for the Consumer Federation of America, believes the industry is "methodically" lowballing and denying legitimate claims in addition to overcharging policyholders, avoiding risk, trimming coverage and seeking taxpayer bailouts from catastrophe losses. Hunter and other consumer advocates want to see tighter regulation of insurance companies, including more scrutiny of their rates. I think their concerns are justified. Without strong supervision, insurers are likely to keep cherry-picking their risks. Instead of providing broad pools of protection, insurance coverage could become divided between well-covered clubs of haves and the exposed have-nots. We're already there in the health-insurance arena, with 45 million uninsured and 16 million more underinsured, or exposed to catastrophic losses because of inadequate coverage.

 

How to protect yourself and your family
We consumers also have a role. We must try to avoid companies that play hardball with their customers. One indication: a company's complaint history, which you may be able to find on your state insurance regulators' Web site. There are other things we can do to protect ourselves. When it comes to health and disability insurance, for example, we can:

• Go for an employer's group plan, if possible. Group coverage is easier to get and harder to lose than individual policies, if you can keep your job. If you need individual coverage, though
• Be scrupulously honest in your applications. This is sort of a damned-if-you-do, damned-if-you-don't proposition, since unfortunately some insurers will use minor health conditions as a reason to deny coverage upfront. But it may be better to risk that than to think you're covered, only to have the rug pulled out from underneath you when you actually make a claim. Be particularly careful to disclose any medical condition or health treatment that has a paper trail or that the insurer may uncover in your records. For example, you may not need to disclose that you smoked a single cigarette behind the barn at age 14, but if you sought medical help to stop smoking, fess up.
• Follow your policy to the letter. It's a bore, I know, but you need to read your health insurance coverage all the way through and understand the coverage and limitations. Call your health insurer before any major procedure or hospitalization to make sure you've covered and have all necessary pre-approvals. (Since individual doctors involved in a surgery may bill separately, make sure all of them are covered as well.) Keep scrupulous notes of all conversations you have with your insurer.
• Follow up. An insurer's reluctance to pay your claim can wreak havoc with your credit, as I covered in "How to survive your hospital bills." Some hospitals and medical providers are quick to turn unpaid bills over to collections. Call your insurer every time a provider sends you a bill to make sure there aren't any problems and to see if you need to provide more information. If you can't resolve the problem:
• Get help. If your claim is denied or your coverage is dropped, appeal the decision with the insurer. You also can call your state insurance regulators, although their effectiveness varies by state. A claims assistance professional also can help you navigate the system for an hourly fee; you'll find referrals at the Alliance of Claims Assistance Professionals. If you're facing huge bills or lost coverage and have run out of options, consult an attorney.
• For property insurance: Make sure you've got enough coverage. Most people don't have enough insurance to rebuild their homes, as I wrote in "Is your home underinsured? 8 key tests." Make it clear to your insurer that you want sufficient coverage and double-check its recommendations with a local contractor's estimate of your home's rebuilding costs (perhaps inflating the results by 15% to 20%, in case your home is destroyed in a widespread disaster that drives up labor and materials costs). Also, make sure you have "replacement cost coverage" not "actual cash value." The latter pays only a fraction of what your home and possessions cost to replace. For more suggestions, check out the "Do's and Don'ts" section of United Policyholders, a consumer group.
• Do your part. Inventory all your household possessions at least once a year. The easiest way is to walk around your home with a camcorder, detailing what you own. The Insurance Information Institute provides free home inventory software at KnowYourStuff.org. Keep at least one copy of these records offsite -- perhaps with an out-of-state relative. If you remodel, keep copies of plans and receipts to document the improvements. If you have a loss, make your claim promptly and document it as thoroughly as you can.
• Consider getting a home-equity line of credit. It's not a good idea to borrow against your home for most spending. But if you don't have a substantial emergency fund, having a HELOC to tap for living expenses can keep you from having to settle for a lowball offer. Also, some policies are set up to reimburse you for building expenses, rather than providing cash in advance, so you'll need a source of cash to get started.
• Get independent estimates. If you need to rebuild all or part of your house, you should get bids from at least three qualified contractors. You don't have to accept the insurance adjuster's estimate or the contractor he or she recommends, but you should work with the adjuster on the so-called "scope of work," which will be the basis for bids. The scope of work outlines the work to be done and the materials to be used.
• Don't sign releases or cash checks prematurely. Doing so can affect your right to further payment. Know your rights and insist on getting what your policy promises before you allow your insurer to close your case.
• If you can't get satisfaction, get help. Use the insurance company's appeal process, and contact your state insurance department for help. If you have a big claim, you may want the help of a "public adjuster" (someone who advocates for the insured) or an attorney who specializes in representing homeowners.