David Aufhauser, then the Treasury Department GC, speaks with reporters at the Treasury Department, Oct. 14, 2003. (AP Photo/Evan Vucci)

David Aufhauser has a pretty sterling resume: general counsel of the Treasury Department official; former general counsel for UBS AG’s investment bank; partner at Williams & Connolly; graduate of elite schools (Wesleyan, Penn Law, Harvard MBA). Today, that resume picked up a bit of a smudge: a settlement with New York AG Andrew Cuomo over allegations of insider trading in the auction-rate securities market. Here’s the story from the WSJ.

Aufhauser, who stepped down from his post at UBS in August, was one of seven UBS executives Cuomo alleged in a complaint to have sold auction rate securities with inside and early knowledge of the problems in that market. He is the only top executive to settle with regulators over his actions. A representative from the attorney general’s office says it is still investigating the other executives.

Aufhauser has agreed to pay to the state of New York his entire 2008 incentive compensation package from UBS of $6 million plus a $500,000 penalty. He has also agreed to be barred from the securities industry for two years, barred from being an officer or director of a public company for two years, and barred from practicing law in New York for two years, according to the settlement agreement signed by Aufhauser, his attorney and an attorney in Mr. Cuomo’s office. He neither admits nor denies wrongdoing.

“We are pleased to have reached this amicable agreement and avoided a potentially lengthy litigation,” a spokesman said on behalf of Aufhauser in a statement.

Just in case you were wondering what he learned in law school, there’s this, from the Penn Law Web site: “Penn’s broadband view of a lawyer’s role in civil society gave a lot of us the courage - and commitment - to pursue careers that could lead a trial lawyer to be a counselor to a President, and then to help run enterprises of enormous dimension and impact. One of my great fortunes in life was to have attended the School.”

From time to time, companies must confront unwanted advertising. Take the Italian eatery Olive Garden. As reported in this WSJ front-pager, the restaurant has been none too pleased with the “deep love” that Kendra Wilkinson — “a Playboy cover model, television star and one of Hugh Hefner’s three live-in girlfriends” — professes for the family-friendly chain.

Pfizer is dealing with a similar situation involving its Viagra drug. Today, Pfizer’s outside trademark attorneys appeared before the SDNY’s Judge William Pauley to argue a preliminary injunction in the company’s battle against a man named Arye Sachs and his company, JetAngel.com. Frankly, it’s not totally clear to us what Sachs’s business plan entails, though his Web site says the company specializes in out-of-door advertising on military equipment. “Our goal is to re-commission these aircraft in order to share the excitement of jet flight. . . In doing so, we can also provide a new venue for national advertisers and sponsors that has no equal in reaching consumer attention.”

That’s where Viagra comes in. According to Pfizer’s complaint, on September 8 Sachs’s Jet Angel company “transported through Manhattan, and even brought to Pfizer’s world headquarters on 42nd Street, a replica missile prominently bearing Pfizer’s VIVA VIAGRA mark and logo on its side in the same color and distinctive lettering style used in Pfizer’s own VIVA VIAGRA advertisements.” (We pulled the above picture from Jet Angel’s Web site. Apparently, the court has since ordered Sachs to remove the Viagra logo. Hence, the Viva Viagra has since been replaced with “Censored by a Federal Court”.)

The following day, according to the complaint, Sachs & Co. sent an e-mail to Pfizer indicating their plans to return. The e-mail reportedly said:

A call to Jet Angel was not returned. A Pfizer spokeswoman said, in a statement, “While we do not comment on pending litigation – we do feel it is important to protect the integrity of our medicines.”

While Sachs is appearing pro se in the case, Pfizer is being repped by Kaye Scholer’s Paul Llewellyn and Patricia Ryder. According to Pfizer’s reply memo, the situation has become a bit tense.

Yesterday, speaking to a gathering of the Federalist Society, President Bush, according to the New York Times, reminded Americans that he has lived up to his promise to appoint more judges like Thomas and Scalia. He also — wrote the NYT — made “the case, if only obliquely, that so would John McCain.”

Members of the U.S. Supreme Court sit for a group portrait, March 3, 2006. (AP Photo/J. Scott Applewhite)

Indeed. Back in May, during his Wake Forest speech on the judiciary, McCain, in what appeared to be a clear embrace of states’ rights and a jurisprudence of restraint, expressed disdain for federal judges who “issue rulings and opinions on policy questions that should be decided democratically.” He said Roberts and Alito “would serve as the model” for his nominees.

In today’s WSJ, Supreme Court reporter Jess Bravin, in two articles (here and here), takes a look at how the judicial philosophies of McCain and Barack Obama could shape the future of the Court.

The exercise is more than a mere parlor game. As Robert Barnes points out in the Washington Post, Obama, supported by a strongly Democratic Senate, could be presented with three openings during his first term: Justices Stevens, 88, Ginsburg, 75, and Souter, 69, might step down in the next four years if Obama were elected. (On the other hand, justices typically don’t leave court when they’re going to be replaced by an ideological foe.) But this also means that, given the relative ages of the justices — Scalia, at 72, is the oldest conservative — the potential for actually shifting the court on issues like abortion and affirmative action, rather than simply switching out one liberal or one conservative for another, could go to McCain.

The WSJ’s Bravin reports that while McCain, in recommending candidates for home-state judgeships, has historically deferred to Arizona’s junior senator, Obama, a former Con law prof, possesses a deeper understanding of constitutional history.

Though some might prefer less knowledge to a living Constitution. Obama has “a vision of the Supreme Court that I think is deeply wrong,” said Edward Whelan of the Ethics and Public Policy Center and a former Scalia clerk. “I see that as a graver danger than someone who might be less knowledgeable about the court.”

We try not to give undue coverage to the Ted Stevens trial. We really do. But the case, with its myriad oddities, has become a blogger’s dream.

The latest: U.S. District Judge Emmet Sullivan has accused a lawyer, Dorsey & Whitney’s Robert Bundy, of trying to send secret signals to his client, the government’s star witness, former Veco CEO Bill Allen, during Allen’s cross-examination. Here’s an AP story.

”He’s fortunate he went out that door and not the back door with the marshals,” an angry Judge Sullivan reportedly said about Bundy (pictured), who was sitting in the public gallery yesterday facing his client.

Allen, who pleaded guilty to bribing state lawmakers and agreed to testify against Stevens in exchange for immunity for his family and a possible break at sentencing, resumed testifying today. But before allowing Allen to start, Judge Sullivan and Stevens’s defense team — led by Williams & Connolly’s Brendan Sullivan (no relation) — both say they saw Bundy making signals to Allen while defense lawyer Sullivan was questioning the witness.

Apparently, the judge had questioned Bundy about this yesterday, notes the AP, and said he was thinking about questioning him again this morning, calling it ”borderline obstruction of justice.” But Bundy didn’t come to court today. According to his partner, Creighton Magid, Bundy didn’t think he’d be welcome. ”He is torn up about this,” said Magid, who also said Bundy ”vehemently denies” making any signals to Allen.

Magid said he would represent Allen if needed during the resumption of his testimony Tuesday.

The makers of the film “Expelled: No Intelligence Allowed” have won a reprieve from litigation brought by Yoko Ono and EMI Records. On its face, the outcome looks like a win for the filmmakers at Premise Media: After both state and federal courts rejected attempts by EMI and Yoko to enjoin the film, both plaintiffs dropped their suits against Premise Media. (Yoko dropped her federal suit last month; EMI dropped its state suit yesterday.)

Yet, as Premise’s lawyer, Stanford’s Tony Falzone, writes on his blog, “the right result came far too late. The mere pendency of these cases caused the film’s DVD distributor to shy away from releasing the full film — the version that includes the Imagine segment. So the film goes out on DVD on October 21 in censored form, illustrating the damage that even an unproved and unsupported infringement claim can do.”

Here’s the legal backstory on the ‘Expelled’ saga: The film, starring journalist and actor Ben Stein (Columbia, ‘66; Yale Law, ‘70), tries to make the point that American academia discriminates against people who espouse “intelligent design” theory — an alternative to evolution. In the course of ridiculing what they see as an academic world dominated by secular views, the filmmakers use a 15 second clip of John Lennon’s song “Imagine” (”Nothing to kill or die for/And no religion too”). The purpose of using the clip, according to Stanford’s Falzone, is to criticize the song’s “overtly anti-religious message” as “dangerously naive.” (Past LB coverage of the case here, here and here.)

Yoko was repped by Jonas Herbsman, of Shukat, Arrow, Hafer, Weber & Herbsman. EMI was repped by Richard Mandel at Cowan, Liebowitz & Latman.

LB Movie Suggestion: We haven’t seen “Expelled” yet, though we find its premise intriguing. For those of you who sympathize with the opposite view — that religion is dangerous — we can recommend Bill Maher’s “Religulous.”

While the parties have called a temporary truce in the three-front legal battle for Wachovia, Lehman Bros. is facing a three-front assault — at least — from the U.S. attorney offices in Manhattan, Brooklyn and New Jersey.

As the WSJ reports, the issues being investigated relate to a central question: Was Lehman saying publicly that its financial condition was sound while acknowledging behind the scenes that its situation was dire? Click here for WSJ reporter Susanne Craig’s story on former Lehman chief Dick Fuld’s congressional testimony yesterday.

Lehman declined to comment, but in congressional testimony yesterday, Lehman CEO Richard Fuld said the firm didn’t mislead investors. Here’s how the battle lines have been drawn:

Big day in the Ted Stevens trial: Judge Emmet G. Sullivan is scheduled to hold a hearing today on whether evidence allegedly withheld by the prosecution merits a mistrial. Meanwhile, the show continued yesterday, with the prosecution playing three taped conversations between Stevens and former Veco CEO Bill Allen. Stevens reportedly didn’t know that Allen, who faced evidence that he’d tried to bribe lawmakers, had agreed to cooperate with the Feds. Here are reports from the LAT and NYT.

Stevens is facing charges that he accepted and failed to report more than $250,000 in gifts — including home renovations — from Veco, an oil-services company.

Here are some of the more notable (and non-chronological) moments from the tapes:

Chief Justice John Roberts, July 13, 2006. (AP Photo/Nick Ut)

It’s been some time since we chronicled the efforts of John Roberts, Chief Justice of the Supreme Court, to win a pay hike for judges. (Though the topic was all the rage in 2007.) As far as we know, there’s still nothing to report on that front — a fact that apparently accounts for the following bit of news.

Senior U.S. District Judge James T. Giles says prospects for judicial pay raises don’t look good. And he’s had enough. Citing “financial reasons,” Judge Giles (Amherst, Yale Law), who served a seven-year term as chief judge of the Eastern District of Pennsylvania from 1999 to 2006, is returning to Pepper Hamilton, where he worked for 11 years before winning an appointment in 1979. Here’s the story from the Legal Intelligencer.

Giles, 65, told the Legal Intelligencer that he would’ve stayed on the court if a “meaningful” judicial pay raise had been passed by Congress. The federal judiciary hasn’t had a salary hike in more than a decade, Giles said, and the cost-of-living increases it did get were “insufficient.” “If there’s not some movement on the salary front, more senior judges will leave,” Giles said.

According to the Legal Intelligencer, federal district court judges are currently paid $169,300 a year (putting them just beyond the typical base pay for first-year law firm associates), appellate judges $179,500, associate Supreme Court justices $208,100, and the chief justice $217,400. All are permitted to earn an additional $21,000 a year for teaching.

Giles said that he was at one point hopeful that Roberts’ lobbying efforts would pay off, but that he ultimately realized that the issue was too “politicized” and that judicial salaries were likely to remain stagnant.

Law Blog Extra: Fourth U.S. Circuit Court of Appeals Judge William W. “Billy” Wilkins is also returning to private practice. Wilkins (Davidson, U. of South Carolina law) will join the Greenville office Nexsen/Pruet, one of the largest law firms in the Carolinas. As far as we know, he has not cited financial reasons as a factor in his retirement decision.

When Michelle Bruce (pictured), a Georgia politician, ran for re-election last year did she mislead voters by allegedly failing to disclose that she used to be a Michael?

Yesterday, in a huge victory for Bruce and the transgender community, the Georgia Supreme Court ruled that she did not mislead voters by running for office as a woman. The court dismissed a suit filed by two of Bruce’s opponents — Georgia Fuller and Stan Harris, who also lost — alleging that Bruce disguised her sex while seeking re-election last year to the Riverdale Council. The court ruled unanimously that Bruce’s use of the name Michelle on ballots did not “cast doubt on the results of the election.” Here are reports from the AJC and NYT. Click here for the opinion.

“This is a great victory for me and anyone who believes in equality,” Bruce said in a statement. “It gives me hope that the Georgia Supreme Court did what was right and did not buy into hate-based politics.”

Cole Thaler, a lawyer with Lambda Legal, a gay rights organization, told the NYT, “Accusations of fraud only show the accusers’ ignorance of transgender lives,”

But Michael B. King, the plaintiffs’ lawyer, said Bruce had received an unfair advantage by running as a woman in a heavily female district. “We maintain that Mr. Bruce misled the voters into believing that he was a female,” he said. “He got more female votes than he would have if he hadn’t used a fictitious name.”

Photo: AP

It wasn’t the biggest news of the day, but it likely moved the needle up at Verizon’s Manhattan headquarters. The phone giant suffered a setback in its dogged pursuit of patent infringers today as a jury decided that cable TV company Cox Communications didn’t infringe on patents related to Internet phone service. Click here for a Reuters story, here for a walk-up in today’s WSJ by Amol Sharma.

Verizon has ramped up efforts to enforce its Internet phone technology even though it doesn’t push the service to its own customers. Last year, Verizon scored a victory in a patent case against Internet phone provider Vonage. A federal jury ruled that Vonage had infringed on some Verizon patents. The companies later reached a settlement in which Vonage agreed to pay Verizon $117.5 million.

But today’s verdict might make it tougher for Verizon, which is battling cable companies to provide customers with TV, phone and Internet hook-ups, to go after other cable TV companies for patent issues.

“Despite the decision, we believe our patents were infringed,” Verizon said in a statement. “We will continue to innovate and protect our intellectual property.” Verizon said it has not decided whether to appeal the decision.