Sebelius: Work at HHS is the 'cause of my life'

WASHINGTON — Health and Human Services Secretary Kathleen Sebelius (seh-BEEL'-yuhs) says the government is making "tremendous progress" toward fixing what she called a broken health system.

Sebelius commented Friday after President Barack Obama announced her resignation after five years in his Cabinet.

The former Kansas governor was blamed for the disastrous start to sign-ups for coverage under Obama's health care law. But the administration rebounded and exceeded expectations by getting more than 7 million people to sign up for health insurance.

Sebelius says her work at HHS is the most meaningful she's ever been a part of. She called it "the cause of my life."

There was one more glitch on her way out the door. Sebelius lost her way while reading her statement, then said: "Unfortunately, a page is missing."

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Wells Fargo's earnings rise 14 percent

First-quarter profit for Wells Fargo & Co., the biggest U.S. mortgage lender, surged 14 percent in the latest quarter as the bank continued to trim its losses on soured loans.

EARNINGS: Net income after dividends on preferred stock rose to $5.6 billion in the January-March period from $4.9 billion a year earlier, the bank reported early Friday. On a per-share basis, earnings were $1.05, well above the 97 cents forecast by Wall Street analysts. Revenue in the first quarter fell to $20.6 billion from $21.3 billion a year earlier, in line with analysts' estimates.

HOW IT HAPPENED: The rise in rates on U.S. mortgages in the latter part of last year continued to have a negative impact on Wells Fargo's mortgage business.

The San Francisco-based bank, which is the fourth-largest U.S. bank by assets, controls about a third of the U.S. mortgage market. Much of its lending business has been coming from mortgage refinancing, which was dampened by the spike in interest rates.

Wells Fargo funded $36 billion worth of mortgages in the first quarter, down sharply from $109 billion a year earlier.

At the same time, Wells Fargo slashed its losses on loans in the first quarter by 41 percent, to $825 million from $1.4 billion.

The bank trimmed expenses by $137 million compared with the fourth quarter to $11.9 billion, with lower costs for outside professional services and equipment offsetting higher employee pay and benefits.

EARNINGS ENVY: Wells Fargo's strong first-quarter results contrasted sharply with those of JPMorgan Chase, the biggest U.S. bank. JPMorgan's earnings dropped 20 percent, driven by a decline in bond trading and mortgage lending. Wells Fargo and JPMorgan were the first two big banks to report earnings for the latest quarter.

CAPITAL PLANS: The Federal Reserve last month approved Wells Fargo's plan to raise its dividend by a nickel to 35 cents per share starting in the second quarter and to boost its planned buybacks of shares. The central bank's OK was based on results of its so-called "stress tests," an annual check-up of the nation's biggest banks to determine if they have large enough capital buffers to keep lending through another financial crisis.

STOCK ACTION: Wells Fargo stock rose $1, or 2 percent, to $48.72.

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At Locke-Ober Cafe, 
a tasteful makeover

You can't eat at Boston's Locke-Ober Cafe anymore, but you can live above it.

The storied 137-year-old restaurant closed two years ago and its six connected Greek Revival-style buildings dating back to 1832 were bought by local developer Origen Ventures for $3.3 million.

The developer has just unveiled the Winter Place Residences, six large condos on the upper three floors, ranging in price from $1.75 million to $3 million.

It's taken 18 months to rehab the building into condos. Three of the units have extensive period details, and the developer created more traditional-looking condos around them.

"Our goal was to keep all the details we could," said Jim Robertson, a partner at Origen.

One of these now available is Unit 3-2, a 2,234-square-foot, two-bedroom condo for $1.75 million. Its dining/living room is called the Camus Room — named after former Locke-Ober manager Emil Camus — and features 
restored Corinthian pilasters, dentil molding and original sconce lighting. The kitchen has white Shaker cabinets, River White granite counters and Wolf, Sub-Zero and Bosch appliances.

A unit on the second floor will feature the 
restored private dining room used by the Kennedy family, including original paneling and wallpaper and the bell used to ring for service.

A downtown financial executive who was a regular at the restaurant bought a unit that listed for $2.7 million and has a 900-square-foot living room that was one of Locke-Ober's 
upper-floor dining rooms.

"The Locke-Ober name is what drew the buyer here, but what got him to buy was the square footage, the quality of construction, and direct elevator access," said Valerie Post of Meridian Property Group, co-listing broker.

The three other units feature more contemporary design, with white quartz counters and striped rosewood cabinets. The 3,357-square-foot, fourth-floor penthouse Unit 4-1, listing for $3 million, has skylights, a private roof deck and two master bedroom suites.

Condo fees will range from $531 to $740 a month. The building doesn't have parking, but owners can buy garage spaces for $75,000 at nearby Tremont on the Common.

Robertson said negotiations are underway to bring a restaurant to the historic, first-floor former Locke-Ober main dining room, which could be announced by the building's mid-May opening.

"We're insisting that the new eatery will respect the grand interior of the restaurant," Robertson said. "Our goal with the entire project is to feel like we did the building justice."

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Reps: Let Boston pay MCCA Tab

Skeptical House lawmakers from the South Coast and Western Massachusetts questioned why statewide hotel tax money should be funneled to Boston to pay for a $1.1 billion convention center expansion — and why Hub taxpayers aren't picking up more of the tab.

"From where I am, 110 miles from the State House, no one wants to keep footing the bill in Boston," said state Rep. Nicholas Boldyga (R-Southwick), one of four members of the 11-member House Committee on Bonding, Capital Expenditures and State Assets at yesterday's hearing. "They come here infrequently and they can't even get $10,000 budgeted for a cultural council."

Chairman Antonio Cabral (D-New Bedford) wanted to know why Boston isn't paying more of the expansion costs — like it did in 1997 when it shelled out $157 million to construct the Boston Convention & Exhibition Center.

"Would Boston be prepared to again be a partner since it's the city that's probably going to benefit the most out of the expansion?" asked Cabral.

"Boston feels we are partnering in this proposal and that we are a partner at that table," said John Barros, the city's economic development chief.

Barros said Boston used much of the money in 1997 to help acquire the land the Massachusetts Convention Center Authority now owns, and that Boston and Cambridge contribute 98 percent of the money in the convention center fund that will help pay for the construction.

The Herald reported this week that the state hotel tax fund could be used as collateral to secure the bonds for the convention center expansion.

But in a surprise revelation, Colin MacNaught, an assistant state treasurer, told the committee there's a high likelihood the state will have to dip into that hotel tax fund at some point to pay back bondholders.

MCCA Executive Director James Rooney disputed that.

"I would be willing to bet that if that happened, the Legislature would say, 'Wait a minute. Let's solve this another way. We're not using statewide resources for this. Let's look at those revenues that flow into the convention center today and see if we can raise those taxes instead,'" Rooney told the Herald.

Rooney told the committee the state is losing out on major conventions because the BCEC is too small and the South Boston Waterfront lacks enough hotel rooms. The proposal would expand the BCEC by 1.3 million square feet.

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Health Connector site fix far off

A long-term solution to the state's failed Health Connector website is still months away, according to the Obamacare czar Gov. Deval Patrick put in charge of fixing it.

Sarah Iselin yesterday told the Health Connector board she'll present recommendations next month for how to achieve a functional site before the Nov. 15 start of the next federal open-enrollment period.

"The clock is ticking," Iselin said, "and we've got a lot of work to do."

The possibilities include reconstructing the site, which continues to have technical problems, or trying to use technology that has worked in other states, she said. Functions that may have to be postponed until next year include the ability to pay health insurance premiums through the website after people have selected a plan.

Iselin said she intends to ask the federal government for an extension until Sept. 30 to allow all 260,877 people in subsidized Commonwealth Care and temporary coverage to keep their plans until they can be switched to Affordable Care Act-compliant ones.

Herald wire services contributed to this report.

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Boston bests Cambridge again in venture capital deals

Venture capital firms closed more deals with companies in Boston than Cambridge for the second straight quarter, and for the first time in more than a year gave more money to Internet technology companies than health care companies in the first quarter.

"You're seeing another tech renaissance," said C.A. Webb, executive director of the New England Venture Capital Association. "We had our heyday 15, 20 years ago, we're at it again."

A report released yesterday by CB Insights, a venture capital tracking firm, said funding for Internet companies accounted for 32 percent of the roughly $899 million in venture capital investments from January to March. Health care funding accounted for 30 percent.

Webb said the increase in tech money is in no way a reflection on the health care sector, but it shows how strong the tech startup industry has become.

"The entrepreneurial community on both sides continues to thrive," Webb said.

Boston companies saw 32 deals while Cambridge startups saw 17. Still, Cambridge companies raised $260 million, $54 million more than Boston companies.

"It's an expansion of the innovation community," Webb said. "It's a sign that it's truly robust and growing more."

New York also continued its streak over Massachusetts in numbers of deals, topping the Bay State for the fifth straight quarter. Still, Bay State companies raised $898.94 million compared to New York's $842.75 million. But both were far behind California, where companies raised more than $5 billion.

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BIDMC doc wants med journal to retract testosterone study

A Boston researcher is demanding a medical journal retract a study that suggests testosterone therapy comes with heart risks — a move that one pharmacy industry critic says reflects a growing trend of doctors who work with drug companies combating negative findings.

Dr. Abraham Morgentaler of Beth Israel Deaconess Medical Center and other men's health experts around the world are demanding the Journal of the American Medical Association (JAMA) retract a study they say used faulty numbers about testosterone therapy — a treatment for a range of ailments such as fatigue and erectile dysfunction.

JAMA, which has already corrected the article twice, did not respond to the Herald yesterday. The study's authors could not be reached. The article says that among two large groups of Veterans Administration heart patients with low testosterone, the incidence of heart attack and stroke was less than 20 percent in the no-testosterone therapy group, and nearly 26 percent in the testosterone therapy group.

"This has taken me by surprise. Everybody in the field was scratching their heads," said Morgentaler, who submitted a petition questioning the study's statistical analysis.

There has been a rise in both calls for retractions and actual retractions in medical journals in recent years, observers told the Herald.

"There were 10 times as many retractions in 2010 as there were in 2001," said Ivan Oransky, cofounder of the site RetractionWatch.com. "We have been seeing more retractions, and we're not sure why."

Retractions of medical articles, which generally involve fraud or misconduct, still represent less than 1 percent of all the papers published.

Meanwhile, Dr. Adriane Fugh-Berman, director of the PharmedOut project at Georgetown University Medical Center, said she believes the pharmaceutical industry has upped its demands for retractions as a defensive measure to protect products.

"There's definitely been a rise in calls for retractions. This is an intimidation tactic from industry, using third-party experts," Fugh-Berman said.

Fugh-Berman works as a paid witness in litigation involving drug company marketing. According to a ProPublica database that tracks drug company contributions to doctors, Morgentaler has received payments from pharmaceutical company giants Merck and Eli Lilly, which both sell testosterone products.

"This smells like industry influence," Fugh-Berman said of Morgentaler's retraction demand.

Morgentaler called that a "naive" argument and said he is concerned only with what he considers sloppy science in the JAMA article.

"If I give a talk to a group, they pay me for my time and my expertise," he said. "Do I gain anything if the companies sell more testosterone? No."

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Major record labels sue Megaupload for massive copyright infringement

Major record labels Warner Music, UMG, Sony and Capitol Records on Thursday followed Hollywood studios in filing a copyright infringement suit against Megaupload, accusing the site of fostering and even promoting access to pirated music.

In the suit, the labels say that Megaupload "played an active role in ensuring that it had the most popular content on its servers, that the URL links to those infringing content files were widely disseminated on the Internet, and that the links were advertised and promoted by pirate linking sites."

The record labels are seeking unspecified damages, whether that be actual damages and Megaupload's profits, or statutory damages, the maximum of which is $175,000 per case of infringement. The suit was filed in federal court in Alexandria, Va.

The suit claims that Megaupload has generated more than $175 million in "illicit profits" from copyright infringement, while "causing more than half a billion dollars in harm to copyright owners."

Also named in the suit are Megaupload founder Kim Dotcom, Mathias Ortmann and Bram van der Kolk. They are facing charges of federal criminal copyright infringement after the Department of Justice issued an indictment in January 2012. That case has been mired in proceedings to extradite Dotcom from New Zealand, where he has defended his site and even appeared on "60 Minutes" in December.

The record labels' suit, filed via the Recording Industry Assn. of America, follows the filing of a copyright-infringement suit earlier this week by the six major studios. The complaint was filed Monday by Twentieth Century Fox Film, Disney Enterprises, Paramount Pictures, Universal City Studios Prods., Columbia Pictures Industries and Warner Bros. Entertainment.

Attorney Ira Rothken, representing Megaupload, said that "the RIAA, the MPAA and DOJ are like three blind mice, following each other in pursuit of meritless copyright claims.

"The case against Megaupload is in reality an assault on cloud storage generally, as the company used copyright-neutral technology," he said. "We strongly believe that like YouTube, once the court can hear all the facts and analyze the law, Megaupload and the other defendants will prevail."

His reference to YouTube relates to the $1 billion lawsuit filed against the site by Viacom, claiming copyright infringement for videos uploaded to its site by users. A federal court judge sided with YouTube in its contention that it did not bear liability and removed the content from its site when it received takedown notices. The two sides settled the litigation earlier this year.

In its filing against Megaupload, the record companies contend that the site was "in no respect designed to be a data storage provider. Users without premium subscriptions were restricted not only in their downloading capabilities, but also in their ability to store files on the site."

Megaupload was shut down in January 2012, as authorities in New Zealand raided Dotcom's mansion near Auckland. But the operation stoked controversy as excessive, and a New Zealand judge found that the search warrants used in the raid were invalid. An appellate court ruled in February that the raid was legal, but found fault with the FBI's removal of electronic information that was seized in the raid.

An extradition hearing is scheduled for July 7 in New Zealand.

"Given that the RIAA waited over two years since Megaupload was taken down to file this lawsuit, on the eve of an extradition hearing, we believe they are assisting the U.S. Department of Jusitce in a war of attrition by trying to win the cases on economics, rather than on the merits," Rothken said.

(C) 2014 Variety Media, LLC, a subsidiary of Penske Business Media; Distributed by Tribune Content Agency, LLC

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JPMorgan's first-quarter profit falls 20 percent

NEW YORK — JPMorgan Chase, the biggest U.S. bank by assets, said Friday its first-quarter earnings fell 20 percent, driven by a decline in investment banking and mortgage lending.

EARNINGS: The bank reported net income of $4.9 billion for the first quarter, after stripping out payments to preferred stockholders. That was down from $6.1 billion in the same period a year earlier.

MISSED EXPECTATIONS: On a per-share basis, the earnings amounted to $1.28. That was worse than estimates of analysts polled by FactSet, who had been expecting $1.39.

LOWER REVEUE: Revenue, after stripping out the effect of an accounting charge for credit losses, was $23.8 billion, down 8 percent from $25.8 billion a year earlier.

FIXED INCOME TRADING: Revenues at the bank's fixed income trading business, part of its investment banking unit, slumped 21 percent to $3.8 billion. Jamie Dimon, JPMorgan's CEO and Chairman said that the business was still performing well given the market environment.

"I look at it as doing fine, it's just not that predictable a business," Dimon said. "There's nothing wrong with that, you just have to deal with it over time."

MORTGAGE BUSINESS SLOWS: The bank's mortgage business continued to slow. The increase in bond yields since last summer has caused mortgage rates to rise, which in turn has slowed refinancing of home loans. Revenue at the bank's mortgage unit was $1.6 billion, down $1.1 billion from the same period a year earlier. The bank said mortgage originations plunged 68 percent to $6.7 billion, compared with the same period last year.

The bank doesn't expect the trend to change anytime soon. Chief Financial Officer Marianne Lake told reporters on a conference call to "expect that trend to be relatively consistent."

TRIMMING COSTS: Expenses at the bank fell 5 percent to $14.6 billion in the first quarter. JPMorgan said last month that it plans to eliminate 8,000 jobs this year as its mortgage business shrinks and it aims to control costs at branches.

BRIGHT SPOTS: Revenue from private banking rose 4 percent to $1.5 billion and auto loan originations rose 3 percent to $6.7 billion. Credit card sales volumes also grew.

THE QUOTE: Even though the bank had warned investors in February that trading revenues would be weak, the decline was still bigger than expected, said Jeff Morris, head of U.S. equities at Standard Life Investments.

"These results underscore that JPMorgan is a well-managed bank, but they can't decouple from the current economic and market environment," Morris said in emailed comments.

STOCK REACTION: JPMorgan fell $1.70, or 3 percent, to $55.70 in late morning trading Friday. The bank's stock has fallen 4.7 percent this year following a 33 percent rise in 2013.

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Everett landowner resists casino disclosure pledge

BOSTON — One of the owners of land in Everett that Steve Wynn wants to buy to build a casino is refusing to sign a promise that no secret owners would profit from the sale.

Anthony Gattineri, co-owner of the site where Wynn Resorts has proposed to build greater Boston's only casino, has refused to sign the pledge even though the Massachusetts Gaming Commission says it will not approve a casino without assurances that criminals won't profit from it.

He's also refused to testify under oath to commission investigators.

"He's not signing under the advice of his criminal counsel," Daniel Doherty, who represents Gattineri in business matters, told The Boston Globe.

His refusals are fueling speculation that convicted felon Charles Lightbody is still part owner of the land, something Lightbody's lawyer denies.

"It has nothing to do with any hidden interest that anybody believes Mr. Lightbody has because he doesn't have one," attorney Timothy Flaherty said.

Wynn spokesman Michael Weaver said in an email that the company does not see Gattineri's refusal to sign the statement as an obstacle.

"We are confident that we will resolve the matter to the satisfaction of the commission prior to them making a decision and that it will not jeopardize our license approval," he said.

Wynn's proposal for a $1.3 billion casino on the former industrial site is competing with Mohegan Sun's proposal to build a resort casino on the Revere side of the Suffolk Downs horse track for the only casino license in the Boston area.

The commission's decision is expected later this year.

___

Information from: The Boston Globe, http://www.bostonglobe.com

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