$400 million divorce lawsuit where the lawyers get almost all of it

This New York Times story is supposed to be about the use of offshore trusts and other exotic structures to shelter assets from tax collectors, lawsuit plaintiffs, etc. A woman discovers her husband cheating (“[husband] Oesterlund’s money and his boat attracted hangers-on and women, [wife] Pursglove says”) and he sues her for divorce in Canada while she sues him for divorce in Florida (see this chapter for more on venue litigation in divorce cases). It wasn’t obvious where one spouse should have sued the other:

For Pursglove and her husband, as for many members of the global 1 percent, “residency” was an elusive and easily manipulated concept. Pursglove was a British citizen with a United States green card who now lived in Boca Raton. Oesterlund was a citizen of Finland who had also obtained a passport from Dominica. They had homes in at least four countries and spent a year living on their yacht. “These parties are global citizens of substantial means,” Judge Gillen mused from the bench. “Their situation is a blessing and a privilege for them, but for this court, their lifestyle creates a challenge.”

Before the divorce litigation, the business-owning couple had been moving profits offshore, including into Cook Islands trusts:

trusts organized in the Cook Islands, a self-governing state associated with New Zealand, are particularly difficult to investigate. Cook courts typically do not recognize American court orders, including divorce judgments. To sue a Cook trust, you have to actually fly to the Cook Islands, in the middle of the South Pacific, roughly 6,000 miles southwest of Florida. “It’s like Switzerland used to be, but squared,” Fisher told me. Once assets were hidden inside a Cook trust, he had learned, it was almost impossible to get them out.

The wife “was now receiving alimony and child support” but needed to have her lawyers unwind these offshore structures to get ready access to the $400 million. How much were the professionals getting?

[the wife’s lawyers] Fisher and Potter estimated that Oesterlund was burning through about a million dollars a month, much of it going to pay the lawyers and accountants keeping his maze of trusts and shell companies in working order.

When I spoke with Fisher by phone in February, he sounded confident. Oesterlund appeared to be running out of cash, Fisher told me; he was missing payments on the loan from C1 Bank.

In other words, the article can also be summarized as “A couple had $400 million and, by the time a divorce court could allocate the joint assets, the lawyers had obtained most of them.”

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History of Stealth Aircraft: Russian Science and American Engineering

From Skunk Works: A Personal Memoir of My Years at Lockheed (Ben Rich)…

The stealth story actually began in July 1975, about six months after I took over the Skunk Works. … The U.S. had only two defensive ground-to-air missile systems deployed to protect bases—the Patriot and the Hawk, both only so-so in comparison to the Soviet weapons. By contrast, the Russians deployed fifteen different missile systems to defend their cities and vital strategic interests. … Their early-warning radar systems, with 200-foot-long antennas, could pick up an intruding aircraft from hundreds of miles away. Those long-range systems couldn’t tell altitude or the type of airplane invading their airspace, but passed along the intruder to systems that could. Their SAM ground-to-air missile batteries were able to engage both low-flying attack fighters and cruise missiles at the same time. Their fighters were armed with warning radars and air-to-air missiles capable of distinguishing between low-flying aircraft and ground clutter with disarming effectiveness. The Soviet SAM-5, a defensive surface-to-air missile of tremendous thrust, could reach heights of 125,000 feet and could be tipped with small nuclear warheads. At that height, the Soviets didn’t worry about impacting the ground below with the heat or shock wave from a very small megaton atomic blast and estimated that upper stratospheric winds would carry the radiation fallout over Finland or Sweden. An atomic explosion by an air defense missile could bring down any high-flying enemy bomber within a vicinity of probably a hundred miles with its shock wave and explosive power.

we were subjected to a chilling analysis of the 1973 Yom Kippur War involving Israel, Syria, and Egypt. … Although the Israelis flew our latest and most advanced jet attack aircraft and their combat pilots were equal to our own, they suffered tremendous losses against an estimated arsenal of 30,000 Soviet-supplied missiles to the Arab forces. The Israelis lost 109 airplanes in 18 days, mostly to radar-guided ground-to-air missiles and antiaircraft batteries, manned by undertrained and often undisciplined Egyptian and Syrian personnel. What really rattled our Air Force planners was that the evasive maneuvering by Israeli pilots to avoid missiles—the same tactics used by our own pilots—proved to be a disaster. All the turning and twisting calculated to slow down an incoming missile made the Israeli aircraft vulnerable to conventional ground fire.

The truth is that an exceptional thirty-six-year-old Skunk Works mathematician and radar specialist named Denys Overholser decided to drop by my office one April afternoon and presented me with the Rosetta Stone breakthrough for stealth technology. The gift he handed to me over a cup of decaf instant coffee would make an attack airplane so difficult to detect that it would be invulnerable against the most advanced radar systems yet invented, and survivable even against the most heavily defended targets in the world. Denys had discovered this nugget deep inside a long, dense technical paper on radar written by one of Russia’s leading experts and published in Moscow nine years earlier. That paper was a sleeper in more ways than one: called “Method of Edge Waves in the Physical Theory of Diffraction,” it had only recently been translated by the Air Force Foreign Technology Division from the original Russian language. The author was Pyotr Ufimtsev, chief scientist at the Moscow Institute of Radio Engineering.

“Ben, this guy has shown us how to accurately calculate radar cross sections across the surface of the wing and at the edge of the wing and put together these two calculations for an accurate total.”

More: Read the book.

 

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James Mattis appointed Secretary of Magical Thinking?

The Trumpenfuhrer has appointed James Mattis, a board member of Theranos (WSJ), to a cabinet position. Should we call him the Secretary of Magical Thinking?

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Tesla X big-screen navigation

Hoping to save the planet during my annual trip to the gym, I asked my friend with a Tesla X to pick me up. The navigation system kept routing us to a dead-end suburban street from which we could perhaps plunge through backyards to get to the gym parking lot. What about from the gym parking lot itself? Tesla confidently supplied this 15-minute route to the gym:

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Flight deck integration + regulation = reduced innovation

The world of certified avionics was never characterized by rapid innovation. I’m wondering if it has gotten even slower now in our world of integrated glass cockpit aircraft, such as provided by the Garmin G1000. A friend of mine bought a new G1000-equipped Beechcraft Bonanza “G36” model. The list price on this airplane is about $800,000. The aircraft was introduced in 1947 and reached its current 6-seat form in 1968 (Wikipedia). A plane from the 1970s, virtually identical in terms of the airframe and engine, can be purchased for around $150,000. For a few years my friend enjoyed a superior pilot environment with the G1000.

This year, however, he is trying to adapt his relatively recent airplane to the FAA’s ADS-B system, development of which was begun in the last century and for which full deployment is hoped-for by 2020. It seems that there is no way to get ADS-B data into and displayed on the G1000 screens of the G36 Bonanza. Textron, which owns Beechcraft, doesn’t want to spend the money to certify the variation.

Here’s how my friend explained the situation:

Although the hardware is nearly identical in every G1000 implementation, each manufacturer has modified the software, presumably in order to create some differentiation. That software then becomes part of the aircraft type certificate, so each modification or update costs the original manufacturer $1MM+ and takes a couple of years. Just getting access to WAAS (already part of the hardware) cost me $10K. The FAA certification process clearly never anticipated anything as incomprehensible as software and, especially, software updates.

This is something that can be done on an iPad with a non-certified receiver for about $1000. It can be done on a certified panel for about $5,000 if the panel already contains a modern GPS, such as the Garmin GTN 650/750. It can’t be done on my friend’s airplane at any price!

We may find that the great era of integrated glass cockpits for private aircraft that began in the early 2000s actually ended up freezing those airplanes in a time capsule.

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Running an airliner out of fuel

Friends have been emailing me about the chartered airliner that apparently ran out of fuel just short of the destination in Colombia (see BBC for a map). How could this have happened, they wonder. I responded with the full list of gliding airliners from Wikipedia, of which United 173 was perhaps the most sobering example (three experienced pilots up in the front, one of them a flight engineer with nothing better to do than check the gauges).

This latest crash reminds us that even a professional airline crew is not immune to get-there-itis. They almost surely realized that they would be right on the margin when landing at the destination but nonetheless they pressed on with more hope than good sense.

Now that so many airplanes have Internet connectivity (at least via Iridium) I would love to see my ground monitoring idea implemented. The pilots of LaMia 2933 could then have heard a voice in their headset saying “Guys: I’m looking at the same fuel gauges that you are and you just have to divert to Bogota.” Alternatively, now that computer programs are smart enough to drive a car (sort of), why not an autonomous system with a camera mounted above the pilots’ heads? The camera can see all of the indicators that the pilots can see and speak up with “the FMS shows you going to Medellin but you barely have enough fuel to make it to Bogota with a 45-minute reserve” or “I can see the flight plan and also the datalink weather; looks like you’ll be going through an area of thunderstorms that could be avoided if you take a route that is only 10 minutes longer.”

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Vetting immigrants for terrorism potential

I recently finished Black Flags: The Rise of ISIS, and the book describes an attempt by Jordanians to sort folks by terrorism potential:

in March 1999, as the country marked the end of the official forty-day mourning period for King Hussein’s death. In a tradition dating back to Jordan’s founding, new kings are expected to declare a general amnesty in the country’s prisons, granting royal pardons to inmates convicted of nonviolent offenses or political crimes. It was a way to clean the slate and score points with important constituencies, from the Islamists to powerful East Bank tribes. To ensure the maximum political return, members of Parliament were given the task of nominating release-worthy prisoners and drafting the amnesty’s legal particulars. Their list quickly grew to five hundred names, then a thousand, then two thousand. And still lawmakers pushed for more.

“Jordan is on the threshold of a new phase of its history, which means that the government should turn a new page, especially with political detainees,” Saleh Armouti, president of Jordan’s Bar Association, told the Jordan Times as negotiations dragged on. But some of the country’s law-enforcement chiefs saw a disaster in the making. “Most of them will be repeat offenders and we will see their faces again and again,” a police official complained to the same newspaper. “Most of them are thugs who will harm people when they are free.”

In the end, the list, now with more than twenty-five hundred names, was endorsed by Parliament and sent to the palace for the final approval. The king, then just six weeks into his new job and still picking his way through a three-dimensional minefield of legislative, tribal, and royal politics, faced a choice of either adopting the list or sending it back for weeks of additional debate. He signed it. Many months would pass before Abdullah learned that list had included certain Arab Afghans from the al-Jafr Prison whose Ikhwan-like zeal for purifying the Islamic faith should have disqualified them instantly. But by that time, the obscure jihadist named Ahmad Fadil al-Khalayleh had become the terrorist Abu Musab al-Zarqawi [founder of ISIS]. And there was nothing a king of Jordan could do but berate his aides in an exasperated but utterly futile pique. “Why,” he demanded, “didn’t someone check?”

Elsewhere in the book, the Jordanians are described as having the most sophisticated and effective anti-terrorism investigative bureaucracy (the Mukhabarat). Yet, even given a common language and cultural background, they couldn’t “vet” Zarqawi. Abu Bakr al-Baghdadi, the current head of ISIS, was imprisoned by the U.S. in Iraq circa 2004 but released after a determination that he represented at most a low-level threat.

Abdul Razak Ali Artan has been in the news for going on a jihad in Ohio this week. He managed to get through the U.S.’s refugee “vetting” process in 2014. Based on a tip from the Russian government, the Tsarnaev family that blew up the Boston Marathon in 2013 had been interviewed by the FBI and cleared for terrorism potential back in 2011 (Wikipedia).

Given these failures, you might think that people would lose faith in “vetting” or at least switch to a different term. Apparently not, though. Black Flags notes that

[Secretary of State Hillary] Clinton began privately pushing for what she would call a “carefully vetted and trained force of moderate rebels who could be trusted” with American weapons [to fight in Syria].

Hope springs eternal?

[I do recommend Black Flags: The Rise of ISIS and will post about it some more. Next on my reading list is The Elementary Particles, a French novel. A few samples:

At sixty, having just retired from the factory, she agreed to look after her son’s only child. He had wanted for nothing—clean clothes, good Sunday lunches and love. All these things she had done for him. Any analysis of human behavior, however rudimentary, should take account of such phenomena. Historically, such human beings have existed. Human beings who have worked—worked hard—all their lives with no motive other than love and devotion, who have literally given their lives for others, out of love and devotion; human beings who have no sense of having made any sacrifice, who cannot imagine any way of life other than giving their lives for others, out of love and devotion. In general, such human beings are generally women.

But one statistic at the bottom of the page attracted his attention: in July–August of the previous year, sixty-three percent of visitors to the Lieu du Changement were female. That was almost two women to every man: an excellent ratio. He decided to check it out, and booked a week there in July; especially as camping would be cheaper than going to a Club Med. Of course, he could guess what sort of women went there: deranged old lefties who were probably all HIV-positive. But still, with two women to every man, he stood a chance; if he worked it properly, he might even bag two. The year had started well from a sexual point of view. The influx of girls from Eastern Europe had meant prices had dropped. For two hundred francs you could get a little personal relaxation, down from four hundred francs some months earlier.

Sexual desire is preoccupied with youth, and the progressive influx of ever-younger girls onto the field of seduction was simply a return to the norm; a restoration of the true nature of desire, comparable to the return of stock prices to their true value after a run on the exchange. Nonetheless, women who turned twenty in the late sixties found themselves in a difficult position when they hit forty. Most of them were divorced and could no longer count on the conjugal bond—whether warm or abject—whose decline they had served to hasten. As members of a generation who—more than any before—had proclaimed the superiority of youth over age, they could hardly claim to be surprised when they, in turn, were despised by succeeding generations. As their flesh began to age, the cult of the body, which they had done so much to promote, simply filled them with an intensifying disgust for their own bodies—a disgust they could see mirrored in the gaze of others. The men of their generation found themselves in much the same position, yet this common destiny fostered no solidarity. At forty, they continued to pursue young women—with a measure of success, at least for those who, having skillfully slipped into the social game, had attained a certain position, whether intellectual, financial or social. For women, their mature years brought only failure, masturbation and shame.

]

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Regulation and bureaucracy increase wage gender gap?

A Harvard economics professor, Claudia Goldin, published a paper this year about how much of the difference between what American men and women earn on a per-hour basis may be due to the fact that women, on average, work fewer hours per week. (Harvard Magazine)

Goldin doesn’t delve into why employers would prefer a 60-hour/week worker to two 30-hour/week workers.

I’m wondering if one factor is government regulation and bureaucratic compliance costs. Consider the employee who works just 5 hours per week. All of his time is taken up by team meetings, required safety and diversity training, etc. The productivity of this employee is zero and therefore the value to the employer is zero (the cost, on the other hand, will be high, especially if the employer must provide health insurance). As companies get bigger to deal with the “go big or go home” business environment created by regulation there is more time spent on coordination among employees. As government adds more regulations, there is more time spent on informing employees regarding these regulations and complying with them.

Thus while politicians walk about wanting to reduce the difference in average compensation paid to men versus women (or at least people who identify as “men” and those who identify as “women”), I wonder if it is the government itself that accounts for a large part of the gap.

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Whatever happened to Groupon?

Facebook reminds me that six years ago today I was interviewed by OPR (Obama Praise Radio) regarding our flight school’s experience with Groupon. How did things finally shake out with this form of marketing? The stock (chart) seems to have underperformed the S&P 500. Who is using Groupon and for what?

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