June 15, 2007 — Senate legislation would force Blackstone Group to pay taxes as a corporation instead of as a partnership after 2012, a move that may threaten the buyout firm’s initial public offering later this month.

The Senate Finance Committee introduced legislation to prevent hedge fund and private equity firms from using a 20-year-old tax provision that allows investors in publicly traded partnerships to pay capital gains taxes of 15 percent on income distributions. Companies pay a tax rate of as much as 35 percent.

The measure would give Blackstone five years before being required to pay the higher tax rate. It also aims to prevent rival firms such as Carlyle Group and Apollo Management from copying the strategy.

“If a publicly traded partnership makes its money by providing financial services, that active business should be taxed as a corporation,” said Finance Committee Chairman Max Baucus, a Montana Democrat.

The Senate measure, released ahead of Blackstone’s $4.75 billion initial public offering scheduled for the week of June 25, is the first major foray by the committee into overhauling tax laws that affect hedge funds and private equity firms after months of study.

“Right now, some businesses are crossing the line between reasonably lowering their tax burdens and pretending to be something they’re not to avoid most, if not all, corporate taxes,” said Iowa Sen. Charles Grassley, the top Republican on the panel.

Blackstone Chairman Stephen Schwarzman, who stands to receive perhaps as much as $449.2 million for selling some of his holdings in the IPO, interrupted a speech at the New York Stock Exchange to acknowledge the bill.

“We’re having an interesting time with this IPO,” said Schwarzman.

AN official report into forensic failures in the Damilola Taylor investigation was yesterday condemned as “lame in the extreme” by the dead child’s parents.

Richard and Gloria Taylor demanded further action against three unnamed scientists from the Government’s Forensic Science Service (FSS), whom they accused of making “basic mistakes”.

The couple said they were enormously disappointed with the “dreadful errors” exposed in an official report commissioned by the Home Office. The Taylors’ solicitor, Neil O’May, said: “The report describes the catalogue of errors as ‘extremely regrettable’ - a conclusion that the family feel is lame in the extreme.

“The Government should instead now act decisively to overhaul the quality of forensic science used in court.”

Damilola bled to death in the stairwell of a block of flats in Peckham, south London, in 2000 after suffering a single stab wound to his leg, probably from a broken bottle.

Danny and Rickie Preddie, aged 18 and 19, were convicted of Damilola’s manslaughter at a second trial in August last year, the third to be staged over the shocking killing.

The inquiry into the FSS’s mistakes found they was down to “human error.”

Conducted by forensic expert Professor Brian Caddy and top barrister Alan Rawley QC, it said three FSS experts “failed to recover crucial evidence”. Oversights by two staff meant a drop of blood on the heel of a blue Reebok trainer - said to belong to Danny Preddie - was not tested for DNA after a negative initial test.

Experts also failed to find another blood spot on a black sweatshirt.

Home Office minister Joan Ryan said: “I would like to express my sincere apologies to Damilola’s family and acknowledge the further distress this has undoubtedly caused them.”

LOS ANGELES—Four race cars barrel down a virtual track, jostling for position. Announcers shout their commentary over growling engines until a winner speeds past a checkered flag.

The frenetic race televised on DirecTV () wasn’t a NASCAR event. It was staged as part of a new video game league that aims to turn gaming into a full-fledged sport, as compelling to watch as the National Basketball Association or Major League Baseball.

The debuted last week in the U.S. and has franchises around the world that pay top players base salaries of $30,000 plus bonuses.

Organizers hope to attract an audience of the same young gamers who pushed computer and video game software sales to $7.4 billion in 2006 Д a 6 percent increase from 2005, according to the .

Advertisers are eager to reach those 18 to 24 year-old consumers.

The challenge for the league is making the on-screen action compelling enough to persuade those gamers to stop playing and start watching.

“Are those guys willing to put down their controllers and pick up their remote control to watch their television?” asked Steve Lipscomb, founder and CEO of .

Lipscomb helped turn poker into a TV hit by placing cameras under tables to give viewers a look at the cards held by each player.

He said he turned down chances to start a video game league, fearing the challenges might be too great to overcome.

“If they can find a way to translate the experience of gaming into a great spectator sport, there is an opportunity there,” Lipscomb said.

DirecTV is spending relatively little on the new league. It is one of several homegrown channels the company hopes will catch on.

“Today, it doesn’t move the needle,” said Steve Mather, an analyst at SMH Capital. “But strategically, it is in this basket of items that could develop into something. They’re in the game, at least.”

The two-hour video game matches, which began July 9, are staged twice a week on a movie sound stage in Manhattan Beach.

A studio audience of about 200 people cheers on cue while players face off in front of video screens. Team managers crouch nearby to offer encouragement.

Most games played in the league, such as “Dead or Alive 4″ or the soccer game “FIFA 07,” are one-on-one matches. Others, like “Counter-Strike Source” involve five-person teams squaring off in multiple rounds.

The key feature of the broadcasts are the multiple “in game” cameras that follow the action, making viewers feel like they are on the soccer field or peeking over the shoulder of a gun-toting mercenary. Flashy graphics help tell the story of what is happening on the screen.

“It’s got the elements of strategy, skill and the camaraderie of team sports that people love,” said Dave “Moto” Geffon, general manager of New York 3D, one of six U.S. teams in the league.

The new league has six U.S. franchises Д Chicago Chimera, Carolina Core, San Francisco Optix, Los Angeles Complexity, Dallas Venom and New York 3D.

Teams have also been created in Asia, Europe and South America. Regional winners will compete in a world championship later this year.

DirecTV owns the league with partners British Sky Broadcasting PLC () and Asian satellite broadcaster Star.

Competitive video gaming isn’t new. The Cyberathlete Professional League was formed in 1997 and hosts tournaments around the world that aren’t televised. Organized matches are also popular in Europe and Asia.

In addition, the two-year-old World Series of Video Games has a deal to air some of its matches on CBS.

The Championship Gaming Series hopes to differentiate itself by offering regular broadcasts of team competitions with high-tech showmanship.

League Commissioner Andy Reif is banking on his experience turning beach volleyball into a popular televised sport as former chief operating officer of the AVP Pro Beach Volleyball Tour.

“The trick is to make something entertaining both to the hardcore gamer and also to a mainstream audience that is either a casual gamer or not a gamer at all,” he said.

FOXNews.com is owned and operated by News Corporation, which holds controlling stakes in DirecTV and British Sky Broadcasting and is the sole owner of Star.