Subsection 455(b)(4) requires disqualification where a judge “knows that he, individually or as a fiduciary, or his spouse or minor child residing in his household, has a financial interest in the subject matter in controversy or in a party to the proceeding, or any other interest that could be substantially affected by the outcome of the proceeding.” Section 455(d)(4) defines “financial interest” for the purposes of section 455(b), and provides specific exemptions, such as investment in a mutual fund or ownership of government securities. Note that, apart from such exemptions, even the smallest financial interest (e.g., ownership of a single share of stock) requires recusal. It is a judge’s duty to keep abreast of all of his or her financial interests.
Te above text from Recusal: Analysis of Case Law Under 28 U.S.C. §§ 455 & 144 found at the Federal Judicial Center has provided us with a treasure trove of information. As is often the case what appear to be unrelated events in Louisiana there are often common roots. My research on the landmark recusal case I cited yesterday on Jim Brown’s Common Sense, Liljeberg v Health Services Acquisition Corporation led to this post which is also one heck of a story, one that will bring us from that case in the 1980s to the current impeachment of disgraced Louisiana Eastern District Court Federal Judge Tom Porteous and several points in between.
We need to catch our readers up to a key concept that we’ve highlighted several times here on Slabbed in the concept of control in politics and the judiciary. Many times those that run for office or nominated for judgeships are mere lackeys for monied interests. A very wealthy South Mississippian that is well respected in the business community told me something long ago that introduced me to the concept:
Some people want money. Some people want the power. I always wanted money because money rents power.
We’ve seen that concept play out time and again since Nowdy and I began this endeavor called Slabbed in December 2007 from Mississippi monied interests sponsoring a corrupt, toe sucking former Mississippi Governor for the US Senate in one Ronnie Musgrove to our profile of George Bush’s original nominee for the LAED US Attorney Fred Heebe, despite credible allegations of alcoholism and wife beating against him. Heebe’s family also happens to own the River Birch landfill which is now the focus of a federal criminal investigation. These people are inserted into positions of power because they can be controlled, via a concept auditors call an “unshareable need”, which traces its roots to the pioneering work of criminal sociologist Donald Cressy. (Google makes us blush with their recognition of our work).
With that bit of background in place let’s backtrack to where this story began with the severely ethically challenged Judge Martin Feldman and the news Friday that Feldman did indeed have a clear financial stake in the outcome of his ruling which merited his recusal from the recent drill moratorium action so our readers can start this saga on the same page:
Exxon Mobil was among the companies using drilling rigs whose operations were suspended under the administration’s moratorium, according to Exxon spokeswoman Cynthia Bergman.
According to federal law, federal judges are required to step aside from cases that present financial conflicts.
Judge Feldman says in a Wednesday letter to the administrative office that he sold his shares at the opening of the stock market on Tuesday, “prior to the opening of a court hearing on the spill moratorium case.”
However, the hearing took place on Monday. A secretary for Judge Feldman said he was not available to explain the discrepancy.
My research on the topic of recusal led me to the Federal Judicial Center and their 91 page document on the subject that I highlight above. As I read the document this blurb on PDF page 10 stood out to me for its clarity:
Judges should keep in mind that sections 455(a) and (b) provide separate (though substantially overlapping) bases for recusal. The former deals exclusively with the appearance of partiality in any circumstance, whereas the latter pertains to conflicts of interest in specific instances. Thus, the existence of the facts listed in section 455(b) requires recusal, even if the judge believes they do not create an appearance of impropriety.
The paragraph ended with a footnote that including a case cite with a sur name I recognized in Liljeberg v Health Services Acquisition Corp. which has its roots in the late 1970s. Following that link coupled with an assist from a reader brought it all home for me because this case originated from the same Federal Courthouse Judge Feldman currently occupies and is it evidently of the landmark variety. In this case Federal District Court Judge Robert Collins refused to recuse himself despite a clear conflict of interest. Let’s visit with the US Supreme Court and hear what they had to say about the case:
In 1977, pursuant to a plan to construct and operate a hospital in Kenner, Louisiana, petitioner formed a corporation (St. Jude) to apply for the necessary state “certificate of need.” During the next two years, petitioner negotiated with Loyola University over a proposal to purchase as the hospital site a portion of Loyola’s Kenner land for several million dollars, coupled with a plan to rezone Loyola’s adjoining land to greatly increase its value. Federal District Court Judge Robert Collins was a member, and regularly attended the meetings, of Loyola’s Board of Trustees, whose minutes indicated regular discussions of the negotiations’ progress and reflected the fact that Loyola’s interest in the project was dependent on the issuance of the certificate.
There were problems between St Jude, owned by the Liljeberg brothers and their business partners and this case highlights the first of many such problems as we continue:
On November 30, 1981, respondent filed suit in the District Court seeking a declaration of ownership of St. Jude. Judge Collins, sitting without a jury, tried the case on January 21 and 22, 1982, immediately announcing his intention to rule for petitioner. On January 28, 1982, at a meeting which Judge Collins did not attend, the Loyola Board discussed the terms of an agreement of sale with petitioner, which provided, inter alia, that it would be void if petitioner failed to satisfy certain conditions, the fulfillment of which depended on his retention of control over the certificate. Judge Collins did not read the minutes of that meeting until March 24, 1982. In the meantime, on March 16, he entered judgment for petitioner, crediting petitioner’s version of crucial, disputed conversations. Ten months after the Court of Appeals affirmed that judgment, respondent, having just learned that Judge Collins was associated with Loyola while petitioner and the University were engaged in negotiations concerning the hospital site, moved pursuant to Federal Rule of Civil Procedure 60(b)(6) to vacate the judgment on the ground that Judge Collins was disqualified under 28 U.S.C. § 455(a). Judge Collins denied the motion, but the Court of Appeals reversed and remanded to a different judge, who also denied the motion on the ground that, although the evidence gave rise to an appearance of impropriety, Judge Collins lacked actual knowledge of Loyola’s interest in the litigation during the trial and prior to the filing of the judgment. The Court of Appeals again reversed, ruling that the appearance of impropriety is a sufficient ground for disqualification under § 455(a). Moreover, the court ruled that vacatur was an appropriate remedy in these circumstances.
The Supreme Court upheld the 5th Circuit’s vacatur as Judge’s Collin’s conflict of interest stunk to high heaven. I noticed the decision was 5-4 with Rehnquist, White, Scalia and O’Connor in dissent. Hindsight reveals they were protecting a criminal judge in Robert Collins with their blind acceptance of the smoke screen he made which is clear from any reasonable reading of the case facts. Worth noting here is Judge Feldman often cites his close friendship with Nino Scalia as a relationship he is especially proud. With rulings like these it is easy to why. Did I say criminal judge in describing Robert Collins? I sure did. Let’s with Carl Bernofsky over at Tulanelink to get the skinny on Collins:
Gary Young was indicted in April, 1990 for his involvement in airlifting three loads of marijuana totaling more than 2,500 pounds from Belize to Louisiana between May, 1985 and January, 1986. The marijuana was air-dropped into Whiskey Bay, southwest of New Orleans, and recovered by ship for distribution.
Young, then 36, had previously served more than a year in prison on a 1981 cocaine charge and was now facing 15 years on marijuana charges and 5 years on interstate travel.
In the mid-1980s, after being released from prison, Young became involved in the newly-rebuilt Bart’s Seafood Restaurant and Bar, located on the Lakefront in New Orleans’ West End, on land leased from the Orleans Levee Board. At the time of his indictment, he was general manager of Bart’s and a business associate of its former owner, John Yemelos, a Jefferson Parish land developer.
One of Yemelos’ acquaintances was John H. Ross, who had served on several politically-appointed boards for more than 10 years. Ross was vice president of the Orleans Levee Board, a member of the New Orleans Aviation Board and a consultant for the Regional Planning Commission. Ross was also a longtime friend of Judge Robert Collins of the U.S. District Court for the Eastern District of Louisiana and had boasted about his access to the judge and ability to influence him.
Ross knew how to get things done in New Orleans. Young testified that in 1986 or 1987, he paid Ross $12,000 to get a reduction in Bart’s lease payments to the Levee Board, and in 1987 he paid him $10,000 to have the Levee Board build a parking lot for Bart’s.
Young also testified that on September 14, 1989, he met with Ross and floated the idea of offering a bribe to get leniency from Collins, who Young believed would be adjudicating his marijuana case. Young did not pursue the issue with Ross for the next few weeks, but his wheels kept turning.
On September 27, 1989 Young signed a plea agreement with federal prosecutors and agreed to work as an informant to help build drug cases against others. Young subsequently met with Yemelos to discuss the possibility of bribing Collins through Ross. Federal authorities were then alerted, and the machinery was set into motion that would lead to the eventual indictments of Ross and Collins on charges of bribery, obstruction of justice, and conspiracy.
As expected, Young was indicted in April, 1990, the case went to Collins, Young pleaded guilty before the judge that May, and on August 8, 1990, Collins sentenced Young to 3-1/2 years in prison. Prosecutors had argued for a prison term of 8 years.
Young had been given $100,000 in marked bills by the FBI to pass to Ross, which Young did over the 10-month period of September 29, 1989 to August 10, 1990 while wearing a wire to tape his conversations with the unsuspecting Ross. Those taped conversations provided the story line of the government’s case against Ross and Collins while the marked cash recovered from their possession provided the smoking gun.
According to court testimony, Collins had received more than $17,500 of which $16,500 was largely found in his chamber’s locked credenza. About $70,000 was recovered from Ross’ real estate office, and about $12,000 was unaccounted for.
So Collins was clearly bribed and eventually resigned. I always wondered about the inordinate amount of publicity accorded Dickie Scruggs’ attempted bribe of a small time state court judge when such things were routine in New Orleans but that is another post. And who took Collins place on the bench? Soon to be impeached Judge Thomas Porteous thats who! Coincidentally one of the main charges in Porteous impeachment proceedings involves the mass bankruptcy of the Liljeberg brothers’ St Jude hospital project so let’s circle back to a post Nowdy did back in February where she embedded the transcript of the House of Representatives Judicial Committee’s Task Force on Judicial Impeachment. These quotes are from the transcript itself:
Now, in June 1993, the so-called Liljeberg case—the case, actually, is Lifemark Hospitals of Louisiana v. Liljeberg Enterprises— is filed in the U.S. District Court for the Eastern District of Louisiana and assigned to a Judge Livaudais. This is 1993. Porteous is not even a Federal judge yet.
Very briefly, without going into much detail, it is a complex case. It involves foreclosures on a hospital property. It involves bankruptcy issues, real estate issues, contract issues, as to who had the right to run the pharmacy in the hospital. It is a complex case……….
In January of—he is now on the Federal bench. In late 1994, Amato and Creely pay for some or all of a party to celebrate Judge Porteous’s swearing in as a Federal judge. And on January 16, 1996, the Liljeberg case is now assigned to Judge Porteous. Trial is scheduled for November 4, 1996.
On September 19, 1996, Mr. Jacob Amato and Mr. Levenson enter their appearance as co-counsel on behalf of the Liljebergs. Now, this is about 6 weeks before the scheduled trial date of a very complex case that has been around for several years. And I think it is fair to say that, although they are experienced trial lawyers, a case of this complexity was not normally the kind of case they handled. They did a lot of personal injury work, divorce work. I am not saying they weren’t capable of handling it, but it certainly wasn’t their type of case, and it is just 6 weeks until trial is supposed to come on.
Sometime between 1996 and 1999—we couldn’t pin down the exact date—Mr. Levenson goes on some hunting trips with Judge Porteous, but we couldn’t figure out exactly when.
Now, Lifemark—now, they come in for Liljeberg. Amato and Levenson are in for Liljeberg. The attorney for Lifemark was a Mr. Joe Mole, who will also—he is here to testify. He is very concerned about this late appearance of Amato and Levenson on behalf of Liljeberg. He knows just from word of mouth around town that they are very close cronies of the judge. He also knows this is—this makes—this just really doesn’t make a lot of sense that they would be coming in just 6 weeks before the trial is supposed to start. He files a motion to recuse. Essentially, he is saying, ‘‘Judge, you should not sit in this case because of your close relationship with these lawyers, who have just gotten into the case.’’ He doesn’t know anything about the money situation that we know about.
This encapsulates the concept of “just us” justice Nowdy has frequently mentioned here on Slabbed and is how business is conducted routinely down south. The fix is put in, the other party to the matter finds out about the fix is in so they attempt to negate the first fix with their own. Meantime the same, recurring set of hogs at the trough make their money regardless as we continue:
I want to set the scene. Mole has filed a motion to ask the judge to get off the case. Now, of course, Porteous knows, if anybody does, about the relationship that he has with Amato and Creely. Well, we will go into what he says.
Amato is in the courtroom. He doesn’t say anything, never opens his mouth, but, of course, he knows that—about paying the money to Porteous and the whole curatorship scheme. Mole doesn’t know. Levenson, who argues on behalf of the Liljebergs, has been interviewed, and he says—he denies that he knew about the monetary relationship and basically feels he was used. We can’t prove to the contrary, so we will just accept that.
We see here that Levenson and Amato are in. And I think it is worth going through what happens at that recusal hearing in a little
bit of detail……….
The court again, ‘‘Yes, Mr. Amato and Mr. Levenson are friends of mine. Have I ever been to either one of them’s house? The answer is a definitive no. Have I gone along to lunch with them? The answer is a definitive yes. Have I been going to lunch with all the members of the bar? The answer is yes.’’
No mention by Judge Porteous of what really is the issue, that is, that he has been getting all this thousands of dollars from Amato and Creely. Mr. Mole, at a great disadvantage, says, ‘‘The public perception is that they do dine with you, travel with you, they have contributed to your campaigns,’’ and Porteous pounces on this. ‘‘Well, luckily, I didn’t have any campaigns, so I am interested to find out how you know that. I never had any campaigns, counsel. I have never had an opponent. The first time I ran, 1984, I think is the only time they gave me money.’’ Now, this is, again, with full knowledge of all the other thousands of dollars that he has received from them.
The court goes on to say, ‘‘You haven’t offended me, but don’t misstate. Don’t come up with a document that clearly shows well in excess of $6,700 with some innuendo, that means they gave that money to me. If you would have checked your homework, you would have found that that was a Justice For All program for all judges in Jefferson Parish, but go ahead. I don’t dispute I received funding from lawyers.’’ And, again, he never reveals the real funding that should have been on the table.
It is worth noting at this point that Poteous was on the bench for one reason and one reason alone: He could be controlled. The man has a gambling problem and had rung up huge gambling debts. Little different from an alcoholic or drug addict people with such problems will stop at nothing to get their fix and Porteous has a piggy bank in those unethical lawyers Amato and Creely that are scuddabeans of monumental proportions as we continue:
From June 16 to July 23, 1997, Judge Porteous held a non-jury trial, no jury, but he sits on—after the conclusion of the evidence, he doesn’t decide the case for nearly 3 years. He doesn’t decide it until July—I am sorry, until April of 2000, just short—2 months short of 3 years. The next slide shows that, during this period, while the Liljeberg case is under advisement, his financial condition is deteriorating.
You see here, year end 1996, this is around the time of the recusal motion. He is in credit—got credit card debt of $44,000 and an IRA balance of $59,000. In June 1997—this is during the trial in Liljeberg—his credit card debt has risen to $69,000. His IRA balance is now down to $20,000. In June 1999—and we will get into this—he asks Amato while the case is pending for money, because he said he needed it to pay for his son’s wedding expenses. By this time, his credit card debt is up to $103,000. His IRA balance is down to $9,500.
In April of 2000, when he decides Liljeberg, his credit card debt is up to $153,000, and his IRA has gone up to $12,000. Now, you might ask, what was the nature of this credit card debt? We have analyzed it, and in large measure, these are money advances at casinos.
It is clear that Judge Porteous is a heavy gambler, and that that is where he has run up much of this debt, in the casinos.
So the Liljeberg brothers put in the fix and Porteous rules in their favor despite such clearly not following any semblance of the law. This case, like the Liljeberg case involving Judge Collins ends up at the Fifth Circuit and the Porteous impeachment transcript gives a great synopsis of their take as we continue: (Those interested in all the gory details should visit the 5th Circuit’s website on the case which can be found here.)
On August 28, 2002, the fifth circuit reversed Judge Porteous’s decision in Liljeberg. That in and of itself is not that big a deal, except when you look at the language employed by the appellate court in reviewing and analyzing Judge Porteous’s decision. Understand, this is the decision he makes in favor of Amato—the Amato- Creely law firm, where they stand to make a fee of anywhere from $500,000 to $1 million………
‘‘The extraordinary duty the district court imposed on Lifemark who loaned the money to build the hospital and held the mortgage is explicable. This is a mere chimera, existing nowhere in Louisiana law. It was apparently constructed out of whole cloth.’’
He said—finds—this has another finding. The court says it ‘‘borders on the absurd,’’ ‘‘clearly erroneous,’’ ‘‘this is not the law.’’ Again, on the next page, ‘‘comes close to being nonsensical.’’ And, of course, they reverse. For people who have read appellate opinions even when they reverse a judge, this is really amazing language. There was—his opinion was simply, utterly, totally indefensible.
We have more to tie in on the impeachment of G. Thomas Porteous ahead but with that last quote we are at an ideal point to wrap up this post.
Slabbed was formed in the aftermath of the Dick Scruggs indictment for bribing a small time judge in Oxford and some the events of that case are extraordinary, especially how State Farm was able to use it to absolutely pillar the unrelated policyholder cases against them almost 400 miles away on the Mississippi Gulf Coast. For instance, for the first time in history in the annals of American Jurisprudence a state grand jury target in State Farm successfully sued in Federal Court to halt that investigation. Even more telling is that as we speak, a conservative political consultant has been joined by three TV stations that are owned by Blue Cross to have the resulting confidential settlement unsealed just as the False Claims Act case against State Farm here on the coast enters a crucial pre trail phase with no opposition from State Farm. Meantime State Farm uses the Federal Court system here on the coast to cram confidential settlements down the throats of the policyholders they defrauded almost 5 years ago.
Nowdy and former Slabbed author Bellesouth were derided in the Scruggs blogosphere for daring to see beyond the surface of that prosecution and while we in no way shape or form condone the criminal conduct of Dick Scruggs in the Oxford fee case such did not justify assisting a corporate predator’s continued rape of the ordinary people on the Gulf Coast who lost everything they owned to Katrina.
This brings us back to Judge Martin Feldman and a post Nowdy did on an insurance case that Feldman heard that was reversed on appeal because it was flagrantly wrong in Versai v Clarendon. Insurance law is a specialized niche for certain but 2 non lawyers in Nowdy and I can recite it chapter and verse despite never having attended a day of law school. That case was extraordinary in how Feldman attempted to screw the plaintiffs as one of our readers commented to me via email which I then posted to the comments:
“When necessary to dismiss the insured’s claims, Judge Feldman failed to apply the law that requires courts to apply the terms of an insurance policy as written. He required the insured to produce additional documentation in support of its property damage claims “where the insurance policy created no such obligation” in order to dismiss those claims (p. 6), while at the same time he relied on strict interpretations of other policy provisions in order to dismiss the insured’s claims for replacement cost and cost of code compliance (pp. 8-9). Judge Feldman also failed to apply Louisiana’s bad faith statutes as written in order to dismiss the insured’s bad faith claims–he required the insured to demonstrate “reasonable reliance” on the insurer’s misrepresentation where the statute imposes no such requirement, and he allowed the insurer more time to make payment than the law allows (pp. 11-14) Judge Feldman thus applied the law–and failed to apply it–in whatever manner was necessary in order to dismiss each and every one of the insureds’ claims, to the great relief of the insurance companies.”
Such has been the experience of the Slabbed where the attorney that does virtually all the legal defense work for the National Flood Insurance Program represents one of the insurers accused of defrauding same without so much as a second look for anyone in involved and where almost half of the judges in the LAED seem incapable of rendering rulings based in the law on basic insurance coverage cases. Sadly that’s a better percentage than here on the Mississippi Gulf Coast because there is only one judge in the MSSD that consistently follows the law on the insurance cases.
For all the reasons cited in this post plus a multitude I left out is why the public has little confidence in our court system where the fix is seemingly always in. Despite the intense public interest in the drill moratorium case Martin Feldman felt as though he could operate under a business as usual mode holding himself above the law. These judges don’t follow the law in their rulings for a myriad of reasons all of which erode public confidence in our courts.
So why didn’t Judge Feldman recuse himself? Like with Judge Robert Collins and Tom Porteous before him I recommend following the money. Feldman’s rulings as a whole are suspect as we illustrated with Versai v Clarendon and there may very well be good rea$on$ why he ruled the way he did in those policyholder cases.
An appropriate postscript to this post revolves around the concept of the voters being their own worst enemy. The Liljeberg brothers are dirty to the core so what do the voters in Jefferson Parish do with such miscreants? They elect the son of one of the brothers that played a key role putting in the fix with 2 now disgraced federal judges to the local courts that’s what! In the ultimate irony, googling his name leads to a Times Picayune story where ol Hans refuses to recuse himself from a case where he exhibited obvious bias against the defendant.
I end this post with one of my favorite quotes by Amrbose Bierce from his appropriately titled The Devil’s Dictionary: