DealBook: After Decades of Public Service, Judge Jones Joins Zuckerman Spaeder

Barbara S. Jones, a federal judge and a former prosecutor, is stepping down from the bench to join the law firm Zuckerman Spaeder.

In an interview, Ms. Jones, of Federal District Court in Manhattan, said that her last day as judge was Friday and that she would start at Zuckerman Spaeder later this month.

“I’ve been in public service for more than 40 years, the last 17 on the bench,” Judge Jones said. “I’m ready to try something new.”

Judge Jones, 65, has never worked in a law firm, not even during a summer internship. A graduate of Temple University’s law school, she spent the first half of her career as a prosecutor in three offices — the Justice Department’s organized crime strike force, the United States attorney’s office in the Southern District of New York and the Manhattan district attorney’s office. President Bill Clinton, acting on the recommendation of Senator Daniel Patrick Moynihan, nominated her for a judgeship in 1995.

She presided over a wide range of cases, including the 2005 trial of Bernard J. Ebbers, the former chief executive of WorldCom, and the 1997 trial of Autumn Jackson, a woman who tried to extort millions of dollars from the entertainer Bill Cosby. Both resulted in convictions.

Judge Jones also heard the Justice Department’s lawsuit against Visa and MasterCard, finding that the companies had violated antitrust laws.

While some defense lawyers viewed the former prosecutor as pro-government, many more said that she had been evenhanded in her rulings. In November, she meted out relatively lenient sentences to three men from Mali who had pleaded guilty to terrorism charges that involved a conspiracy supporting Al Qaeda. Justifying her sentence, she noted that the men had been driven by financial motives and difficult family circumstances rather than ideology.

“Barbara is smart, dedicated and understands both the letter and objectives of the law,” said Mary Jo White, a former United States attorney in Manhattan and now a partner at Debevoise & Plimpton. “She also understands people and brings real humanity to everything she does.”

In Zuckerman Spaeder, Ms. Jones joins a law firm that has expanded its Manhattan office over the last year. A litigation boutique with headquarters in Washington, the firm recently hired three prominent lawyers for its New York presence: Steven M. Cohen, a former top aide to Gov. Andrew M. Cuomo; Andrew E. Tomback, a former partner at Milbank, Tweed, Hadley & McCloy; and Paul Shechtman, a criminal defense lawyer who, as a young prosecutor, was supervised by Ms. Jones.

The firm has about 90 lawyers and is known for its criminal defense work. William W. Taylor III, a partner in the firm’s Washington office, was part of the team that successfully defended Dominique Strauss-Kahn, the former head of the International Monetary Fund, against charges that he had sexually assaulted a hotel maid.

“Being able to attract a lawyer like Judge Jones validates what we have been doing since we relaunched the New York office,” Mr. Cohen said.

On the bench, Judge Jones was known for her efficiency, low-key manner and wry sense of humor. She is also a very popular figure around the federal courthouse, partly because of the blowout holiday party that she throws almost every year for the entire building. Judge Jones hosted her final party two weeks ago, where she could be seen dancing amid the security guards and court reporters and wearing a Santa hat emblazoned with the logo of her beloved New York Yankees.

“I’ve always been awed by the power and responsibility that comes with being a judge and don’t expect to have that ever again,” Ms. Jones said. “But I’ve never been a private citizen and am excited to go out into the world.”

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Scant Proof Is Found to Back Up Claims by Energy Drinks

Energy drinks are the fastest-growing part of the beverage industry, with sales in the United States reaching more than $10 billion in 2012 — more than Americans spent on iced tea or sports beverages like Gatorade.

Their rising popularity represents a generational shift in what people drink, and reflects a successful campaign to convince consumers, particularly teenagers, that the drinks provide a mental and physical edge.

The drinks are now under scrutiny by the Food and Drug Administration after reports of deaths and serious injuries that may be linked to their high caffeine levels. But however that review ends, one thing is clear, interviews with researchers and a review of scientific studies show: the energy drink industry is based on a brew of ingredients that, apart from caffeine, have little, if any benefit for consumers.

“If you had a cup of coffee you are going to affect metabolism in the same way,” said Dr. Robert W. Pettitt, an associate professor at Minnesota State University in Mankato, who has studied the drinks.

Energy drink companies have promoted their products not as caffeine-fueled concoctions but as specially engineered blends that provide something more. For example, producers claim that “Red Bull gives you wings,” that Rockstar Energy is “scientifically formulated” and Monster Energy is a “killer energy brew.” Representative Edward J. Markey of Massachusetts, a Democrat, has asked the government to investigate the industry’s marketing claims.

Promoting a message beyond caffeine has enabled the beverage makers to charge premium prices. A 16-ounce energy drink that sells for $2.99 a can contains about the same amount of caffeine as a tablet of NoDoz that costs 30 cents. Even Starbucks coffee is cheap by comparison; a 12-ounce cup that costs $1.85 has even more caffeine.

As with earlier elixirs, a dearth of evidence underlies such claims. Only a few human studies of energy drinks or the ingredients in them have been performed and they point to a similar conclusion, researchers say — that the beverages are mainly about caffeine.

Caffeine is called the world’s most widely used drug. A stimulant, it increases alertness, awareness and, if taken at the right time, improves athletic performance, studies show. Energy drink users feel its kick faster because the beverages are typically swallowed quickly or are sold as concentrates.

“These are caffeine delivery systems,” said Dr. Roland Griffiths, a researcher at Johns Hopkins University who has studied energy drinks. “They don’t want to say this is equivalent to a NoDoz because that is not a very sexy sales message.”

A scientist at the University of Wisconsin became puzzled as he researched an ingredient used in energy drinks like Red Bull, 5-Hour Energy and Monster Energy. The researcher, Dr. Craig A. Goodman, could not find any trials in humans of the additive, a substance with the tongue-twisting name of glucuronolactone that is related to glucose, a sugar. But Dr. Goodman, who had studied other energy drink ingredients, eventually found two 40-year-old studies from Japan that had examined it.

In the experiments, scientists injected large doses of the substance into laboratory rats. Afterward, the rats swam better. “I have no idea what it does in energy drinks,” Dr. Goodman said.

Energy drink manufacturers say it is their proprietary formulas, rather than specific ingredients, that provide users with physical and mental benefits. But that has not prevented them from implying otherwise.

Consider the case of taurine, an additive used in most energy products.

On its Web site, the producer of Red Bull, for example, states that “more than 2,500 reports have been published about taurine and its physiological effects,” including acting as a “detoxifying agent.” In addition, that company, Red Bull of Austria, points to a 2009 safety study by a European regulatory group that gave it a clean bill of health.

But Red Bull’s Web site does not mention reports by that same group, the European Food Safety Authority, which concluded that claims about the benefits in energy drinks lacked scientific support. Based on those findings, the European Commission has refused to approve claims that taurine helps maintain mental function and heart health and reduces muscle fatigue.

Taurine, an amino acidlike substance that got its name because it was first found in the bile of bulls, does play a role in bodily functions, and recent research suggests it might help prevent heart attacks in women with high cholesterol. However, most people get more than adequate amounts from foods like meat, experts said. And researchers added that those with heart problems who may need supplements would find far better sources than energy drinks.

Hiroko Tabuchi contributed reporting from Tokyo and Poypiti Amatatham from Bangkok.

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Scant Proof Is Found to Back Up Claims by Energy Drinks

Energy drinks are the fastest-growing part of the beverage industry, with sales in the United States reaching more than $10 billion in 2012 — more than Americans spent on iced tea or sports beverages like Gatorade.

Their rising popularity represents a generational shift in what people drink, and reflects a successful campaign to convince consumers, particularly teenagers, that the drinks provide a mental and physical edge.

The drinks are now under scrutiny by the Food and Drug Administration after reports of deaths and serious injuries that may be linked to their high caffeine levels. But however that review ends, one thing is clear, interviews with researchers and a review of scientific studies show: the energy drink industry is based on a brew of ingredients that, apart from caffeine, have little, if any benefit for consumers.

“If you had a cup of coffee you are going to affect metabolism in the same way,” said Dr. Robert W. Pettitt, an associate professor at Minnesota State University in Mankato, who has studied the drinks.

Energy drink companies have promoted their products not as caffeine-fueled concoctions but as specially engineered blends that provide something more. For example, producers claim that “Red Bull gives you wings,” that Rockstar Energy is “scientifically formulated” and Monster Energy is a “killer energy brew.” Representative Edward J. Markey of Massachusetts, a Democrat, has asked the government to investigate the industry’s marketing claims.

Promoting a message beyond caffeine has enabled the beverage makers to charge premium prices. A 16-ounce energy drink that sells for $2.99 a can contains about the same amount of caffeine as a tablet of NoDoz that costs 30 cents. Even Starbucks coffee is cheap by comparison; a 12-ounce cup that costs $1.85 has even more caffeine.

As with earlier elixirs, a dearth of evidence underlies such claims. Only a few human studies of energy drinks or the ingredients in them have been performed and they point to a similar conclusion, researchers say — that the beverages are mainly about caffeine.

Caffeine is called the world’s most widely used drug. A stimulant, it increases alertness, awareness and, if taken at the right time, improves athletic performance, studies show. Energy drink users feel its kick faster because the beverages are typically swallowed quickly or are sold as concentrates.

“These are caffeine delivery systems,” said Dr. Roland Griffiths, a researcher at Johns Hopkins University who has studied energy drinks. “They don’t want to say this is equivalent to a NoDoz because that is not a very sexy sales message.”

A scientist at the University of Wisconsin became puzzled as he researched an ingredient used in energy drinks like Red Bull, 5-Hour Energy and Monster Energy. The researcher, Dr. Craig A. Goodman, could not find any trials in humans of the additive, a substance with the tongue-twisting name of glucuronolactone that is related to glucose, a sugar. But Dr. Goodman, who had studied other energy drink ingredients, eventually found two 40-year-old studies from Japan that had examined it.

In the experiments, scientists injected large doses of the substance into laboratory rats. Afterward, the rats swam better. “I have no idea what it does in energy drinks,” Dr. Goodman said.

Energy drink manufacturers say it is their proprietary formulas, rather than specific ingredients, that provide users with physical and mental benefits. But that has not prevented them from implying otherwise.

Consider the case of taurine, an additive used in most energy products.

On its Web site, the producer of Red Bull, for example, states that “more than 2,500 reports have been published about taurine and its physiological effects,” including acting as a “detoxifying agent.” In addition, that company, Red Bull of Austria, points to a 2009 safety study by a European regulatory group that gave it a clean bill of health.

But Red Bull’s Web site does not mention reports by that same group, the European Food Safety Authority, which concluded that claims about the benefits in energy drinks lacked scientific support. Based on those findings, the European Commission has refused to approve claims that taurine helps maintain mental function and heart health and reduces muscle fatigue.

Taurine, an amino acidlike substance that got its name because it was first found in the bile of bulls, does play a role in bodily functions, and recent research suggests it might help prevent heart attacks in women with high cholesterol. However, most people get more than adequate amounts from foods like meat, experts said. And researchers added that those with heart problems who may need supplements would find far better sources than energy drinks.

Hiroko Tabuchi contributed reporting from Tokyo and Poypiti Amatatham from Bangkok.

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An Inquiry Into Tech Giants’ Tax Strategies Nears an End

Congressional investigators are wrapping up an inquiry into the accounting practices of Apple and other technology companies that allocate revenue and intellectual property offshore to lower the taxes they pay in the United States.

J. Scott Applewhite/Associated Press

Congressional investigators, led by Senator Carl Levin, a Michigan Democrat, have been interested in the impact on the budget deficit of offshore tax strategies.

The Senate Permanent Subcommittee on Investigations inquiry now drawing to a close began more than a year ago and involves at least a half dozen technology companies, according to people with firsthand knowledge of it, who declined to be identified.

Those people said the subcommittee had subpoenaed or otherwise asked the companies to explain methods they used to avoid domestic taxes. They said Apple had become a focus of the inquiry and was cooperating with the subcommittee, which is expected to issue wide-ranging recommendations that are likely to play a significant role in Congressional tax code negotiations.

Apple’s domestic tax bill has drawn the interest of corporate tax experts and policy makers because although the majority of Apple’s executives, product designers, marketers, employees, research and development operations and retail stores are in the United States, in the past Apple’s accountants have found legal ways to allocate about 70 percent of the company’s profits overseas, where tax rates are often much lower, according to corporate filings.

Apple, in a statement on Thursday, said the company was “one of the top corporate income taxpayers in the country, if not the largest.” The statement said the company “conducted all of its business with the highest of ethical standards, complying with applicable laws and accounting rules.”

It is unclear how broadly Senate investigators are looking into the technology industry, if any laws are thought to have been broken and how many companies are involved. The subcommittee is also known to be looking at Google, Hewlett-Packard, Microsoft and firms in such fields as biotechnology.

The subcommittee, which is overseen by Senator Carl Levin, a Michigan Democrat, has been interested in the impact on the budget deficit of offshore tax strategies. Representatives from Microsoft and Hewlett-Packard testified at a subcommittee hearing on the subject in September. Both companies were criticized sharply by Senator Levin for using intellectual property accounting rules to allocate revenue to other nations to avoid paying taxes in the United States.

“This subcommittee has demonstrated in hearings and comprehensive reports how various schemes have helped shift income to offshore tax havens and avoid U.S. taxes,” Senator Levin said at that hearing. “The resulting loss of revenue is one significant cause of the budget deficit, and adds to the tax burden that ordinary Americans bear.”Apple has long been a pioneer in developing innovative tax strategies that lessen its domestic taxes. At the September hearing, Senator Levin said the investigation indicated that Apple had deferred taxes on over $35.4 billion in offshore income between 2009 and 2011.

Tech companies are able to easily shift “intellectual property, and the profit that goes along with it, to tax havens,” said a former Treasury Department economist, Martin A. Sullivan, who has studied the company. “Apple went out of its way to try and ensure that its tax savings didn’t attract too much public attention, because tax avoidance of that magnitude — even though it’s legal and permissible — isn’t in keeping with the image of a socially progressive company.”

In its statement, Apple said it paid “an enormous amount of taxes” to local, state and federal governments. “In fiscal 2012 we paid $6 billion in federal corporate incomes taxes, which is 1 out of every 40 dollars in corporate income taxes collected by the U.S. government,” it said.In the 1980s, Apple was a pioneer of an accounting technique known as the “Double Irish With a Dutch Sandwich,” which reduces taxes by routing profits through Irish subsidiaries and the Netherlands and then to the Caribbean. Today, that tactic is used by hundreds of other corporations — some of which directly imitated Apple’s methods, say accountants at those companies. More recently, Apple has moved revenue to states like Nevada and overseas nations where the company pays less, or in some cases no, taxes.

Almost every major corporation tries to minimize its taxes. However, technology companies are particularly well positioned to take advantage of tax codes written for an industrial age and ill-suited to today’s digital economy.

Some profits at companies like Apple, Google, Amazon, Hewlett-Packard and Microsoft emerge from royalties on intellectual property, like the patents on software. At other times, products are digital, such as downloaded songs or movies. It is much easier for businesses with royalties and digital products to move profits to low-tax countries than it is, say, for grocery stores or automakers.

Although technology is now one of the nation’s largest and most highly valued industries, many tech companies are among the least taxed, according to government and corporate data. Over the last two years, the 71 technology companies in the Standard & Poor’s 500-stock index — including Apple, Google, Yahoo and Dell — reported paying worldwide cash taxes at a rate that, on average, was a third less than other S.& P. companies’, according to a New York Times analysis. (Cash taxes may include payments for multiple years.)

Companies report their cash outlays for income taxes in their annual Form 10-K, but it is impossible from those numbers to determine precisely how much, in total, corporations pay to governments.

Read More..

An Inquiry Into Tech Giants’ Tax Strategies Nears an End

Congressional investigators are wrapping up an inquiry into the accounting practices of Apple and other technology companies that allocate revenue and intellectual property offshore to lower the taxes they pay in the United States.

J. Scott Applewhite/Associated Press

Congressional investigators, led by Senator Carl Levin, a Michigan Democrat, have been interested in the impact on the budget deficit of offshore tax strategies.

The Senate Permanent Subcommittee on Investigations inquiry now drawing to a close began more than a year ago and involves at least a half dozen technology companies, according to people with firsthand knowledge of it, who declined to be identified.

Those people said the subcommittee had subpoenaed or otherwise asked the companies to explain methods they used to avoid domestic taxes. They said Apple had become a focus of the inquiry and was cooperating with the subcommittee, which is expected to issue wide-ranging recommendations that are likely to play a significant role in Congressional tax code negotiations.

Apple’s domestic tax bill has drawn the interest of corporate tax experts and policy makers because although the majority of Apple’s executives, product designers, marketers, employees, research and development operations and retail stores are in the United States, in the past Apple’s accountants have found legal ways to allocate about 70 percent of the company’s profits overseas, where tax rates are often much lower, according to corporate filings.

Apple, in a statement on Thursday, said the company was “one of the top corporate income taxpayers in the country, if not the largest.” The statement said the company “conducted all of its business with the highest of ethical standards, complying with applicable laws and accounting rules.”

It is unclear how broadly Senate investigators are looking into the technology industry, if any laws are thought to have been broken and how many companies are involved. The subcommittee is also known to be looking at Google, Hewlett-Packard, Microsoft and firms in such fields as biotechnology.

The subcommittee, which is overseen by Senator Carl Levin, a Michigan Democrat, has been interested in the impact on the budget deficit of offshore tax strategies. Representatives from Microsoft and Hewlett-Packard testified at a subcommittee hearing on the subject in September. Both companies were criticized sharply by Senator Levin for using intellectual property accounting rules to allocate revenue to other nations to avoid paying taxes in the United States.

“This subcommittee has demonstrated in hearings and comprehensive reports how various schemes have helped shift income to offshore tax havens and avoid U.S. taxes,” Senator Levin said at that hearing. “The resulting loss of revenue is one significant cause of the budget deficit, and adds to the tax burden that ordinary Americans bear.”Apple has long been a pioneer in developing innovative tax strategies that lessen its domestic taxes. At the September hearing, Senator Levin said the investigation indicated that Apple had deferred taxes on over $35.4 billion in offshore income between 2009 and 2011.

Tech companies are able to easily shift “intellectual property, and the profit that goes along with it, to tax havens,” said a former Treasury Department economist, Martin A. Sullivan, who has studied the company. “Apple went out of its way to try and ensure that its tax savings didn’t attract too much public attention, because tax avoidance of that magnitude — even though it’s legal and permissible — isn’t in keeping with the image of a socially progressive company.”

In its statement, Apple said it paid “an enormous amount of taxes” to local, state and federal governments. “In fiscal 2012 we paid $6 billion in federal corporate incomes taxes, which is 1 out of every 40 dollars in corporate income taxes collected by the U.S. government,” it said.In the 1980s, Apple was a pioneer of an accounting technique known as the “Double Irish With a Dutch Sandwich,” which reduces taxes by routing profits through Irish subsidiaries and the Netherlands and then to the Caribbean. Today, that tactic is used by hundreds of other corporations — some of which directly imitated Apple’s methods, say accountants at those companies. More recently, Apple has moved revenue to states like Nevada and overseas nations where the company pays less, or in some cases no, taxes.

Almost every major corporation tries to minimize its taxes. However, technology companies are particularly well positioned to take advantage of tax codes written for an industrial age and ill-suited to today’s digital economy.

Some profits at companies like Apple, Google, Amazon, Hewlett-Packard and Microsoft emerge from royalties on intellectual property, like the patents on software. At other times, products are digital, such as downloaded songs or movies. It is much easier for businesses with royalties and digital products to move profits to low-tax countries than it is, say, for grocery stores or automakers.

Although technology is now one of the nation’s largest and most highly valued industries, many tech companies are among the least taxed, according to government and corporate data. Over the last two years, the 71 technology companies in the Standard & Poor’s 500-stock index — including Apple, Google, Yahoo and Dell — reported paying worldwide cash taxes at a rate that, on average, was a third less than other S.& P. companies’, according to a New York Times analysis. (Cash taxes may include payments for multiple years.)

Companies report their cash outlays for income taxes in their annual Form 10-K, but it is impossible from those numbers to determine precisely how much, in total, corporations pay to governments.

Read More..

Deepwater Horizon Owner Settles With U.S. Over Oil Spill in Gulf of Mexico

The driller whose floating Deepwater Horizon oil rig blew out in 2010 to cause the nation’s biggest oil spill has agreed to settle civil and criminal claims with the federal government for $1.4 billion, the Justice Department announced Thursday.

The Deepwater Horizon exploded, burned and sank in April 2010. Eleven men were killed and millions of gallons of oil flowed into the Gulf of Mexico and fouled the shores of coastal states. The well, known as Macondo, was owned by British oil giant BP, which settled its own criminal charges and some of its civil charges in November for $4.5 billion.

While this settlement resolves the government’s claims against Transocean, that company and the others involved in the spill still face the sprawling, multistate civil case, which is scheduled to begin in February in New Orleans. In a deal filed in federal court in New Orleans, a subsidiary, Transocean Deepwater, agreed to one criminal misdemeanor violation of the Clean Water Act and will pay a fine of $100 million. Over the next five years, the company will pay civil penalties of $1 billion, the largest ever under the act.

As part of the criminal settlement, Transocean also agreed to pay the National Academy of Sciences and the National Fish and Wildlife Foundation $150 million each. Those funds will be applied to oil spill prevention and response in the Gulf of Mexico and natural resource restoration projects. The agreement will be subject to public comment and court approval. The company agreed to five years of monitoring of its drilling practices and improved safety measures.

In a statement, Transocean Ltd., the Switzerland-based parent of the rig owner, said that the company thought these were “important agreements” and called them a “positive step forward” that were “in the best interest of its shareholders and employees.” Of the 11 men killed on the rig, the company said, “their families continue to be in the thoughts and prayers of all of us at Transocean.”

The company announced in September that it had set an “estimated loss contingency” of $1.5 billion against the Justice Department’s claims.

Shares of Transocean Ltd. rose nearly 3 percent on the news, to close at $49.20.

In a statement, Lanny A. Breuer, assistant attorney general for the Justice Department’s Criminal Division, seemed to suggest that Transocean had played a subservient and lesser role in the disaster to that of BP: “Transocean’s rig crew accepted the direction of BP well site leaders to proceed in the face of clear danger signs — at a tragic cost to many of them.” He said that the $1.4 billion “appropriately reflects its role in the Deepwater Horizon disaster.”

Under a law passed last year, 80 percent of the penalty will be applied to projects for restoring the environment and economies of gulf states.

That fact was applauded by a coalition of Gulf Coast restoration groups, including the Environmental Defense Fund and the National Audubon Society. A joint statement called this “a great day for the gulf environment and the communities that rely on a healthy ecosystem for their livelihoods.”

Still, the penalty struck some experts in environmental law as somewhat light. David M. Uhlmann, who headed the Justice Department’s environmental crimes section from 2000 to 2007, praised the size of the civil settlement, which he said “reflects the scope of the gulf oil spill tragedy.”

He argued, however, that the criminal penalty should have been at least as onerous, “given Transocean’s numerous failures to drill in a safe manner, which cost 11 workers their lives and billions of dollars in damages to communities along the gulf.” The settlement, he said, should have included seaman’s manslaughter charges, which were part of the BP settlement.

As for the company’s role in following the lead of BP, he said, “following orders is not a defense to criminal charges.”

At the Environmental Protection Agency, Cynthia Giles, assistant administrator for the office of enforcement and compliance assurance, called the settlement “an important step” toward holding Transocean and others involved in the spill accountable. “E.P.A. will continue to work with D.O.J. and its federal partners to vigorously pursue the government’s claims against all responsible parties and ensure that we are taking every possible step to restore and protect the Gulf Coast ecosystem,” she said.

The multistate trial over claims in the Deepwater Horizon cases that have not been settled are scheduled to begin in February. Stephen J. Herman and James P. Roy, lawyers who represent the steering committee of plaintiffs in the cases, said that Thursday’s settlement did not change the case, and that the plaintiffs thought that BP, Transocean and Halliburton “will be found grossly negligent” at trial.

BP continued its longstanding argument that the accident, in the words of the spokesman Geoff Morrell, “resulted from multiple causes, involving multiple parties,” and that other companies had to shoulder their share of the blame.

Transocean, Mr. Morrell said in a statement, “is finally starting, more than two-and-a-half years after the accident, to do its part for the Gulf Coast.” He then turned his attention to the other major contractor on the well, and said, “Unfortunately, Halliburton continues to deny its significant role in the accident, including its failure to adequately cement and monitor the well.”

Beverly Blohm Stafford, a Halliburton spokeswoman, said that the company “remains confident that all the work it performed with respect to the Macondo well was completed in accordance with BP’s specifications for its well construction plan and instructions,” and so Halliburton, she said was protected from liability through indemnity provisions of its drilling contract.

“We continue to believe that we have substantial legal arguments and defenses against any liability and that BP’s indemnity obligation protects us,” she said. “Accordingly we will maintain our approach of taking all proper actions to protect our interests.”

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5-Hour Energy’s ‘No Crash Later’ Claim Is Disputed

The distributor of the top-selling energy “shot,” 5-Hour Energy, has long claimed on product labels, in promotions and in television advertisements that the concentrated caffeine drink produced “no crash later” — the type of letdown that consumers of energy drinks often feel when the beverages’ effects wear off.

But an advertising watchdog group said on Wednesday that it had told the company five years ago that the claim was unfounded and had urged it then to stop making it.

An executive of the group, the National Advertising Division, also said that 5-Hour Energy’s distributor, Living Essentials, had publicly misrepresented the organization’s position about the claim and that it planned to start a review that could lead to action against the company by the Federal Trade Commission.

“We recommended that the ‘no crash’ claim be discontinued because their own evidence showed there was a crash from the product,” said Andrea C. Levine, director the National Advertising Division. The organization, which is affiliated with the Council of Better Business Bureaus, reviews ad claims for accuracy.

The emerging dispute between Living Essentials and the National Advertising Division is unusual because the $10 billion energy drink industry is rife with questionable marketing. And Living Essentials, which recently cited the advertising group’s support in seeking to defend the “no crash” claim, may have opened the door to greater scrutiny.

Major producers like 5-Hour Energy, Red Bull, Monster Energy and Rockstar Energy all say their products contain proprietary blends of ingredients that provide a range of mental and physical benefits. But the companies have conducted few studies to show that the costly products provide anything more than a blast of caffeine, a stimulant found in beverages like coffee, tea or cola-flavored sodas.

The dispute over 5-Hour Energy’s claim also comes as regulatory review of the high-caffeine drinks is increasing. The Food and Drug Administration recently disclosed that it had received reports over the last four years citing the possible role of 5-Hour Energy in 15 deaths. The mention of a product in an F.D.A. report does not mean it caused a death or injury. Living Essentials says it knows of no problems related to its products.

The issue surrounding the company’s “no crash” claim dates to 2007, when National Advertising Division began reviewing all of 5-Hour Energy’s marketing claims. That same year, the company conducted a clinical trial of the energy shot that compared it to Red Bull and Monster Energy.

At the time, Living Essentials was already using the “No crash later” claim. An article on Wednesday in The New York Times reported that the study had shown that 24 percent of those who used 5-Hour Energy suffered a “moderately severe” crash hours after consuming it. The study reported higher crash rates for Red Bull and Monster Energy.

When asked how those findings squared with the company’s “no crash” claim, Elaine Lutz, a spokeswoman for Living Essentials, said the company had amended the claim after the 2007 review by the National Advertising Division. In doing so, it added an asterisklike mark after the claim on product labels and in promotions. The mark referred to additional labeling language stating that “no crash means no sugar crash.” Unlike Red Bull and Monster Energy, 5-Hour Energy does not contain sugar.

Ms. Lutz said that based on the modification, the advertising accuracy group “found all of our claims to be substantiated.”

However, Ms. Levine, the advertising group’s director, took sharp exception to that assertion, saying it mischaracterized the group’s decision. And a review of the reports suggested that Living Essentials had simply added language of its choosing to its label rather than doing what the group had recommended — drop the “no crash” claim altogether.

That review concluded that the company’s 2007 study had shown there was evidence to support a “qualified claim that 5-Hour Energy results in less of a crash than Red Bull and Monster” Energy. But it added the study, which showed that 5-Hour Energy users experienced caffeine-related crashes, was inadequate to support a “no crash” claim.

Ms. Levine said Living Essentials had apparently decided to use the parts of the group’s report that it liked and ignore others.

Companies “are not permitted to mischaracterize our decisions or misuse them for commercial purposes,” she said.

She said the group planned to notify Living Essentials that it was reopening its review of the “no crash later” claim. If the company fails to respond or provides an inadequate response, the National Advertising Division will probably refer the matter to the F.T.C., she said.

A Democratic lawmaker, Representative Edward Markey of Massachusetts, has asked that the agency review energy drink marketing claims.

Asked about the position of the National Advertising Division, Ms. Lutz, the 5-Hour Energy spokeswoman, stated in an e-mail that the “no sugar crash” language had been added to address the group’s concern.

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5-Hour Energy’s ‘No Crash Later’ Claim Is Disputed

The distributor of the top-selling energy “shot,” 5-Hour Energy, has long claimed on product labels, in promotions and in television advertisements that the concentrated caffeine drink produced “no crash later” — the type of letdown that consumers of energy drinks often feel when the beverages’ effects wear off.

But an advertising watchdog group said on Wednesday that it had told the company five years ago that the claim was unfounded and had urged it then to stop making it.

An executive of the group, the National Advertising Division, also said that 5-Hour Energy’s distributor, Living Essentials, had publicly misrepresented the organization’s position about the claim and that it planned to start a review that could lead to action against the company by the Federal Trade Commission.

“We recommended that the ‘no crash’ claim be discontinued because their own evidence showed there was a crash from the product,” said Andrea C. Levine, director the National Advertising Division. The organization, which is affiliated with the Council of Better Business Bureaus, reviews ad claims for accuracy.

The emerging dispute between Living Essentials and the National Advertising Division is unusual because the $10 billion energy drink industry is rife with questionable marketing. And Living Essentials, which recently cited the advertising group’s support in seeking to defend the “no crash” claim, may have opened the door to greater scrutiny.

Major producers like 5-Hour Energy, Red Bull, Monster Energy and Rockstar Energy all say their products contain proprietary blends of ingredients that provide a range of mental and physical benefits. But the companies have conducted few studies to show that the costly products provide anything more than a blast of caffeine, a stimulant found in beverages like coffee, tea or cola-flavored sodas.

The dispute over 5-Hour Energy’s claim also comes as regulatory review of the high-caffeine drinks is increasing. The Food and Drug Administration recently disclosed that it had received reports over the last four years citing the possible role of 5-Hour Energy in 15 deaths. The mention of a product in an F.D.A. report does not mean it caused a death or injury. Living Essentials says it knows of no problems related to its products.

The issue surrounding the company’s “no crash” claim dates to 2007, when National Advertising Division began reviewing all of 5-Hour Energy’s marketing claims. That same year, the company conducted a clinical trial of the energy shot that compared it to Red Bull and Monster Energy.

At the time, Living Essentials was already using the “No crash later” claim. An article on Wednesday in The New York Times reported that the study had shown that 24 percent of those who used 5-Hour Energy suffered a “moderately severe” crash hours after consuming it. The study reported higher crash rates for Red Bull and Monster Energy.

When asked how those findings squared with the company’s “no crash” claim, Elaine Lutz, a spokeswoman for Living Essentials, said the company had amended the claim after the 2007 review by the National Advertising Division. In doing so, it added an asterisklike mark after the claim on product labels and in promotions. The mark referred to additional labeling language stating that “no crash means no sugar crash.” Unlike Red Bull and Monster Energy, 5-Hour Energy does not contain sugar.

Ms. Lutz said that based on the modification, the advertising accuracy group “found all of our claims to be substantiated.”

However, Ms. Levine, the advertising group’s director, took sharp exception to that assertion, saying it mischaracterized the group’s decision. And a review of the reports suggested that Living Essentials had simply added language of its choosing to its label rather than doing what the group had recommended — drop the “no crash” claim altogether.

That review concluded that the company’s 2007 study had shown there was evidence to support a “qualified claim that 5-Hour Energy results in less of a crash than Red Bull and Monster” Energy. But it added the study, which showed that 5-Hour Energy users experienced caffeine-related crashes, was inadequate to support a “no crash” claim.

Ms. Levine said Living Essentials had apparently decided to use the parts of the group’s report that it liked and ignore others.

Companies “are not permitted to mischaracterize our decisions or misuse them for commercial purposes,” she said.

She said the group planned to notify Living Essentials that it was reopening its review of the “no crash later” claim. If the company fails to respond or provides an inadequate response, the National Advertising Division will probably refer the matter to the F.T.C., she said.

A Democratic lawmaker, Representative Edward Markey of Massachusetts, has asked that the agency review energy drink marketing claims.

Asked about the position of the National Advertising Division, Ms. Lutz, the 5-Hour Energy spokeswoman, stated in an e-mail that the “no sugar crash” language had been added to address the group’s concern.

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DealBook: Car Sharing Catches On as Zipcar Sells to Avis

8:51 p.m. | Updated

Last year, Lane Becker and his wife, Courtney Skott, plotted out the costs of owning a car versus renting one through Zipcar, the popular car-sharing service.

They ultimately decided to give away their car. Mr. Becker, who is 39 and lives in San Francisco, said he had few regrets, despite some difficulty securing a Zipcar on weekends, when he competes with other customers.

“It’s a lot easier to rent than to own in a city these days, and Zipcar is an easy way to do it,” he said.

But on Wednesday, Avis Budget Group, the car rental conglomerate, announced that it was buying Zipcar for about $500 million. And that has Mr. Becker and some other “Zipsters,” as Zipcar customers are known, worried that the company’s communal cachet could be tarnished by a corporate behemoth.

“Please don’t let them screw it up,” Mr. Becker said.

For Zipcar, based in Cambridge, Mass., the deal represents perhaps an inevitable evolution for a company that has been more successful as a collectivist concept than as a profit-making venture (though it announced in November that it would post an annual profit for the first time).

Zipcar, which will operate as a subsidiary of Avis, should realize significant savings on things like vehicle purchases and insurance, while being able to tap Avis’s fleet to meet demand on weekends, when it is often short of cars.

For Avis, the purchase represents a new direction in a fiercely competitive car rental market, and an about-face for Ronald L. Nelson, the company’s chairman and chief executive, who had resisted entering the car-sharing segment.

“I’ve been somewhat dismissive of car sharing in the past,” Mr. Nelson said Wednesday morning in a phone call with analysts. He said he had come to the realization that car sharing could complement Avis’s more traditional car rental business and help it unlock new business opportunities abroad and with younger consumers. Avis’s rivals, Hertz Global and Enterprise Rent-A-Car, already offer hourly rental services that compete with Zipcar.

Shares of Avis Budget Group closed up about 5 percent on Wednesday, at $20.77. Shares of Zipcar closed up nearly 48 percent, at $12.18.

Avis said it expected savings of $50 million to $70 million a year from combining the two companies.

“Avis Budget’s existing infrastructure, scale and experience with managing multiple brands make it uniquely positioned to accelerate the growth and profitability of Zipcar,” Mr. Nelson said in prepared remarks. “At the same time, we are committed to retaining the elements of the Zipcar brand and culture that have allowed Zipcar to achieve such rapid growth and success.”

Avis paid $12.25 a share in cash, a 49 percent premium over the closing price of Zipcar on Monday. (The price, however, is well below Zipcar’s value in April 2011, when it went public at $18 a share.)

Among the beneficiaries will be Zipcar’s early investors, including the tech titan Steve Case. He and his investment fund own about 19 percent of Zipcar’s outstanding shares.

The idea for Zipcar dates to 1999, when a 42-year-old woman named Robin Chase learned about car sharing from a friend who had just returned from Berlin. A mother of three with an M.B.A. from the Massachusetts Institute of Technology, Ms. Chase wrote up a business plan and secured financing. Zipcar was started in 2000.

Environmentalists have embraced the idea of car sharing from the start, but Ms. Chase marketed Zipcar more on the idea of convenience, with the slogan “Wheels When You Want Them.” The company grew quickly but fitfully, and Ms. Chase was forced out in 2003.

Her successor as chairman and chief executive, Scott Griffith, expanded Zipcar across the country and into Europe. A flat, hourly rate that covers gas and insurance for customers proved to be alluring: the service now has more than 760,000 members, with locations in 20 metropolitan areas in the United States, Canada and Europe, as well as on many college campuses.

“Since the founding, I knew that Zipcar would end up being the winning model for drivers, and that car rental companies would eventually have to come around and adopt our technology and approach,” Ms. Chase said in an e-mail on Wednesday.

She said she expected the deal to improve Zipcar’s profitability, but added, “Like all big company acquisitions of small companies, there is worry that they won’t be able to do what it takes to succeed in the new economy: more innovation, more customer participation, more thinking outside of the box.”

Zipcar fans praise its convenience, its plentiful urban locations and its friendly customer service. Victor Neufeld, a media executive who lives in Manhattan, said renting a car in New York City was always an annoyance before Zipcar came along.

“Every time I need a car for two hours, I go online and get a car within two blocks of my home,” said Mr. Neufeld, who declined to give his age. “I also like it because originally I heard about it through word of mouth. I did not learn about it through advertising or some other marketing. It was very organic.”

Maggie Marquis, 31, who lives with her husband in Chicago, said she started using Zipcar about six months ago and was generally pleased. “Just today, I decided that I wanted to run out and do some errands, and decided it would be easiest and cheapest to get a Zipcar,” she said.

But Ms. Marquis said she was surprised by “small hints of disorganization.“ The company sent her multiple membership cards and would not allow her to sign her husband up for the same account, and she said she often received text messages about her rentals even after she had returned a car.

She said she hoped the influence of a larger corporation would “take their service to a new level of sophistication.”

Several other Zipcar fans said they, too, hoped there would be benefits to the Avis deal, particularly more cars available on weekends.

Claire Frisbie, 31, who lives in Brooklyn, said she liked Zipcar for many reasons, but that one of the biggest was the ability to avoid the bureaucracy of traditional car rental companies: the waiting, the insurance, the added fees.

“I wouldn’t want it to make it more difficult,” she said of the deal. “I would be worried that the easy breeziness of it would be gone.”

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Dozens of Syrians Killed in Explosions Around Damascus

BEIRUT, Lebanon — An explosion at a gas station outside Damascus, the Syrian capital, on Wednesday turned a long line of cars waiting for rarely available fuel into a deadly inferno that killed at least 30 people sitting in their cars or on motorcycles, according to videos and reports from witnesses who blamed a government airstrike.

The violence came as the United Nations released a study showing that more than 60,000 people had been killed in Syria’s 22-month-old conflict, a number that is a third higher than estimates by antigovernment activist groups.

Also on Wednesday, the family of James Foley, a freelance reporter for Agence France-Presse, the Global Post Web site and other media outlets, announced that Mr. Foley had been kidnapped on Nov. 22 by unidentified gunmen in northwest Syria. Mr. Foley had survived detention by government forces in Libya while covering the conflict there.

A flurry of diplomatic activity by Russia, the United Nations’ special envoy and others aimed at finding a political solution in Syria has appeared to founder in recent days as neither Bashar al-Assad, the Syrian president, nor his opponents have expressed a willingness to make concessions to end the bloody conflict.

The explosion near Damascus took place in a heavily contested suburban area where scores of people had lined up at a gas station for fuel, which had just become available there after about a month, witnesses said. Videos posted by antigovernment activists showed charred and dismembered bodies.

One man, who gave only his nickname, Abu Fuad, for safety reasons, said in a telephone interview that he had just filled up his gas tank and was driving away when he heard the screech of fighter jets.

He said he was less than a quarter-mile away when he heard the explosions.

“There were many cars waiting their turn,” he said. “Yesterday, we heard that the government sent fuel to the gas station here, so all the people around came to fill up their cars.”

In a sign of the depth of distrust the conflict has spawned, Abu Fuad suggested that restocking the station was a government ruse. “They sent fuel as a trap,” he said.

In the Damascus suburb of Moadhamiya, at least six people, most of them children from a single family, were killed when a mortar shell exploded, according to video and antigovernment activists. It was unclear who had fired the shell.

In northern Syria, rebels used rockets to attack the Taftanaz military airport, a long-contested area in Idlib Province, activists reported. Rebels have also stepped up attacks on airports in the neighboring province of Aleppo, trying to disrupt the warplanes and helicopters that government forces increasingly rely on for attacks, and even for supply lines, in the north.

The United Nations study suggested that the human toll of the war was even greater than previously estimated. Two days ago, the Syrian Observatory for Human Rights, a rebel group that tracks the war from Britain, reported 45,000 deaths, mostly civilian, since the conflict began in March 2011.

“The number of casualties is much higher than we expected, and is truly shocking,” the United Nations high commissioner for human rights, Navi Pillay, said in a statement after her agency released the study.

“We must not compound the existing disaster by failing to prepare for the inevitable — and very dangerous — instability that will occur when the conflict ends,” she added.

To avoid repeating the experiences of collapsed states like Afghanistan, Iraq and Somalia, she said, “serious planning needs to get under way immediately, not just to provide humanitarian aid to all those who need it, but to protect all Syrian citizens from extrajudicial reprisals and acts of revenge.”

The study’s surprisingly high death toll reflected only those killings in which victims had been identified by their full name, and the date and location of their death had been recorded, leaving the possibility of many more dead.

Independent researchers compiled reports of more than 147,000 killings in Syria’s conflict from seven sources, including the government. When duplicates were removed, there remained a list of 59,648 people killed between March 2011 and the end of November.

Meanwhile, Michael Foley, James Foley’s brother, stressed that James was an objective journalist, and he issued a plea to his brother’s captors, or anyone with information about his kidnapping, to contact the family.

“Jim is a completely objective and innocent journalist performing his duties,” Michael Foley said. “He’s not a political figure in any way.”

James Foley, 39, is the oldest of five children from Rochester, N.H. News outlets, including The New York Times, had not reported on his disappearance until his family spoke out.

Hwaida Saad contributed reporting.

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