A former prime chapter choose is ready to be questioned below oath subsequent month over a secret romantic relationship with a lawyer whose charges he accepted, as a number of investigations reveal the breadth of a judicial scandal that has gripped the world of distressed debt and company restructurings.
Choose Eduardo Rodriguez, now chief choose of the Southern District of Texas chapter court docket, has ordered David Jones, his predecessor, to be deposed on September 19.
Complicating issues, Jones has additionally publicly confirmed he’s below federal felony investigation, which may constrict what he discloses within the sworn interview.
The Workplace of the US Trustee, a division of the Division of Justice that oversees the federal chapter system, is in search of to claw again $18mn of authorized charges paid in additional than 30 instances to Texas regulation agency Jackson Walker, which the trustee says did not disclose the connection between Jones and its one-time companion, Elizabeth Freeman. Each the US trustee and Jackson Walker are anticipated to query the previous choose.
Latest court docket filings and hearings have revealed an intense, multi-dimensional battle over accountability for the scandal within the court docket that dominated US restructurings.
Jones presided over most of the greatest company implosions of the previous decade. He was a family identify amongst prime regulation companies and Wall Avenue homes till he abruptly resigned final fall after admitting that Freeman was his live-in romantic companion.
Whereas judges might be disciplined for his or her conduct, they hardly ever face this type of public investigation and litigation. Jones has repeatedly insisted his judicial standing supplied an immunity protect, and Rodriguez has painstakingly parsed what questions he can face with out veering into his deliberations as a choose, that are off-limits.
The US Trustee litigation is casting a large web in its efforts to nail Jackson Walker. In line with court docket filings and courtroom dialogue, it includes 33 deposition requests, together with for a number of legal professionals who aren’t affiliated with Jackson Walker. Amongst that group are legal professionals for Kirkland & Ellis, Bloomberg Regulation has reported, the nationwide agency that often appeared as co-counsel with Jackson Walker. It earned greater than $150mn in charges in instances the place Jones and Freeman have been concerned.
The US Trustee’s investigation has included the ex-spouses of each Jones and Freeman, who was first a colleague of Jones in non-public apply after which his judicial clerk earlier than she joined Jackson Walker. Freeman has already been deposed.
Three present judges within the Houston chapter court docket, together with Rodriguez, could also be witnesses due to their present respective relationships with Jones, in keeping with a Wall Avenue Journal report. Albert Alonzo, Jones’s shut pal and his former case supervisor, has additionally been ordered to seem for a deposition.
Jackson Walker, Jones, Kirkland and the US Trustee declined to remark. Freeman didn’t reply to a request for remark.
The probe has delved deep into the events’ private lives, relating Jones’s canine, his former housekeeper and even an Emory College regulation scholar whose membership had as soon as given him a lifetime achievement award. The US Trustee obtained a photograph of Freeman waterskiing with a person in an elf costume, which it first believed to be Jones however was as an alternative proven to be Freeman’s brother.
“[M]y relationship has been the topic of misinformation all over the place,” Jones mentioned throughout a listening to in August.
“It has precipitated — and I’m not asking for sympathy — it has precipitated an immense quantity of embarrassment. It’s affected my relationship [with Freeman]. It’s accomplished loads of very adverse issues. And most of it’s merely incorrect.”
Jackson Walker and Jones have every complained that such efforts have been unproductive and price tens of hundreds of {dollars} in authorized bills.
Attorneys for Jones additionally rejected any notions he’s in search of to guard Jackson Walker. “We don’t care if Jackson Walker has to disgorge all these charges,” Ben Finestone, a lawyer for Jones, advised Rodriguez at a listening to this month.
Jackson Walker contends that Freeman deceived agency administration about her relationship with Jones. Rodriguez has additionally granted Jackson Walker the appropriate to discover what the US Trustee knew concerning the relationship between Jones and Freeman — the regulation agency’s attorneys advised Rodriguez that members of the US Trustee’s Houston department could have been acquainted with Jones, attending programs he taught and even socialising with him.
The US Trustee says it stays to be decided when Jackson Walker discovered of the connection between Jones and Freeman, and that the regulation permits it to “impute” Freeman’s misconduct to her former employer. It famous that Jackson Walker has by no means amended filings in additional than 30 instances earlier than Jones to notice the connection.
Jones has mentioned that since he and Freeman weren’t married, he decided the recusal guidelines didn’t apply to him. However he has obtained little sympathy from the judges he has encountered of late.
Final month Alia Moses, the chief choose for the Western District of Texas, harshly criticised Jones in a determination that dismissed a civil racketeering case in opposition to him, Jackson Walker, Kirkland and Freeman. Whereas Moses dominated that the plaintiff, a creditor in one of many bankruptcies that Jones oversaw, didn’t state an sufficient declare, she mentioned Jones ought to have recused himself.
“Whether or not by hubris, greed or profound dereliction of obligation, Jones flouted these statutory and moral necessities by presiding over dozens of instances from which he was clearly disqualified,” Moses wrote.
Jones’s lengths to keep away from a proper deposition additionally landed him in sizzling water with Rodriguez. Jones sat for what he described as an off-the-cuff “interview” with Jackson Walker, which he mentioned was merely to present sufficient element about his relationship with Freeman to keep away from a extra formal deposition.
Rodriguez was not placated by Jones’s clarification of the interview, which had not been authorised by the court docket — and ordered Jones to take further ethics coaching, saying it had been accomplished in “dangerous religion”.
Houston, as soon as a magnet for advanced Chapter 11 instances, has seen only a handful this yr. Kirkland has taken a lot of its blockbuster apply to New Jersey.
Some collectors in instances involving each Jones and Freeman are additionally trying to reopen the proceedings, citing the battle as a motive they have been deprived within the case.
“The arrogance in that entire [Houston] court docket is at an all-time low,” mentioned Nancy Rapoport, a regulation professor on the College of Nevada, Las Vegas.
“At this level, what we’d like is discovery — we have to learn how huge this scandal has ranged. We have to know who might need been complicit.”
