Risk Update

Conflicts and Recusals — Judge Calls Move “Almost Insane,” Convicted CEO Says Conflict Crushed Defense

Posted Dan Bressler

“‘Almost Insane’: Judge Criticizes Call for Recusal in Handling Amazon Case” —

  • “A federal judge overseeing a lawsuit filed by Amazon, and who recently disclosed his wife held stock in the company, said claims he should recuse due to a conflict of interest are ‘almost insane’ and ‘100% flawed.'”
  • “During a hearing Thursday, O’Grady slammed arguments from WDC Holding’s attorneys that his impartiality is reasonably in question as a result of his wife’s stockholding and that he knew of the conflict.”
  • “‘The argument that even as you suggest, I had to have known about the Amazon stock holdings or put my head in the sand over the last 10 years, is wrong,’ he said. ‘But also the underlying basis for it is absurd. The idea that I would steer this case in Amazon’s favor because I felt that my wife’s $22,000 investment in Amazon’s stock would be at risk if I didn’t is almost insane.'”
  • “‘Amazon is a multi-billion dollar company and this case in no way could ever affect the stock price in Amazon’s stock and nothing I could ever do in this case would have an impact. So the underlying basis for my impartiality being questioned is 100% flawed,’ he continued.”
  • “In defending his impartiality, O’Grady pointed to a counterfeiting suit against Amazon he presided over in which he denied summary judgement for the company, writing “this is simply not a case where Amazon can avoid liability.” The case, Maglula v. Amazon, recently settled. ‘I think that clearly demonstrates my neutrality in handling cases involving Amazon,’ O’Grady said.”

(On first read of the headline, I missed the colon.)

“Ex-CEO Says Barnes & Thornburg Conflict Hurt His Defense” —

  • “An Indiana nursing home chain’s former CEO urged the Seventh Circuit on Thursday to vacate the 10-year prison sentence he received for participating in a $16 million kickback scheme, arguing that Barnes & Thornburg LLP’s failure to disclose significant conflicts harmed his defense.”
  • “During oral arguments, James Burkhart, the former CEO of American Senior Communities, urged a three-judge panel of the U.S. Court of Appeals for the Seventh Circuit to help correct the ‘unprecedented’ circumstance in which 14 Barnes & Thornburg lawyers who defended him against federal fraud charges and convinced him to plead guilty never disclosed that the firm had also been representing the Health and Hospital Corporation of Marion County, the victim of his scheme.”
  • “For instance, it prevented his counsel from disclosing powerful impeachment evidence that could have disrupted the portrayal of Health and Hospital as a harmless victim, and it dissuaded his lawyers from sufficiently developing the defense that he never intended to defraud the hospital system, Byrne argued.”
  • “Circuit Judge Diane Sykes pushed back on the argument, saying there seems to be a missing link between Burkhart’s plea and the pre-existing attorney-client relationships he’s targeting. His plea instead appears to have been motivated by certain co-defendants’ decisions to plead guilty and cooperate in the government’s case, including his brother Joshua Burkhart and the nursing home chain’s former chief operating officer Daniel Benson, Judge Sykes said.”
  • “‘We can’t even get to causation without correlation, but we don’t even have correlation,’ she said. ‘The fact that one standing hospital client avoided a risk by your client’s guilty plea has no connection to the plea, in terms of the advice that was given.'”
  • “But Circuit Judge Ilana Rovner pushed back, telling Linder that while she acknowledges all the things the firm did to defend Burkhart, she is ‘very concerned about the one thing they did not do, and that was reveal their representation’ of Health and Hospital Corp. ‘Mr. Burkhart essentially had an office at Barnes & Thornburg,’ she said. ‘He was involved in the smallest minutiae of trial planning, but he didn’t know about the elephant in the room.'”