Risk Update

Conflicts Continued — Updates on Crypto Waiver and Talc Dual-judge DQ Motion

Posted Dan Bressler

“Sam Bankman-Fried to stick with new lawyers despite possible conflict” —

  • “Sam Bankman-Fried, the jailed founder of bankrupt cryptocurrency exchange FTX, appeared in court on Wednesday for the first time since his November fraud conviction and confirmed he wanted to stick with new lawyers despite a possible conflict of interest.”
  • “Bankman-Fried, 31, in January hired defense lawyers Marc Mukasey and Torrey Young to represent him through his March 28 sentencing. He could face decades in prison after a Manhattan federal court jury found the former billionaire guilty of stealing billions of dollars from FTX customers.”
  • “At a brief hearing before U.S. District Judge Lewis Kaplan in Manhattan, Bankman-Fried said he was comfortable hiring Mukasey and Young even though they also represent the founder of bankrupt cryptocurrency lender Celsius Networks, Alex Mashinsky, who has pleaded not guilty to separate fraud charges.”
  • “Kaplan asked Bankman-Fried, who wore a tan jail shirt and chains around his ankles, to describe the possible conflict in his own words. ‘At a high level, they also represent Alex Mashinsky,’ said a clean-shaven Bankman-Fried, whose curly hair has grown longer since his monthlong trial last year.”
  • “Bankman-Fried described Celsius as ‘a firm that the firms I ran had business interactions with.'”
  • “Bankman-Fried told Kaplan he had consulted with lawyers Mark Cohen and Christian Everdell, who represented him during his trial, about Mukasey’s potential conflict. Bankman-Fried said he also had discussed it with Alexandra Shapiro, another lawyer who will handle his eventual appeal.”
  • “Mashinsky, 59, waived his right to a lawyer without any potential conflicts at a hearing on Tuesday before U.S. District Judge John Koeltl. Mukasey and Young said at that hearing that they could fairly represent both Bankman-Fried and Mashinsky.”

“Beasley Allen’s Andy Birchfield Faces Evidentiary Hearing on Disqualification” —

  • “Plaintiffs attorney Andy Birchfield will face an evidentiary hearing next month on whether to disqualify him and his firm from the talcum powder litigation.”
  • “Judges in both state and federal courts in New Jersey found that more evidence was needed to determine whether Birchfield and Beasley Allen, based in Montgomery, Alabama, should be disqualified based on an alleged conflict of interest.”
  • “‘Based on the conflicting factual information provided by all parties, this court finds that it cannot confidently decide this issue on the basis of the information contained in the papers,’ he [Atlantic County Superior Court Judge John Porto] ruled in a Jan. 31 order. ‘Therefore, the court finds that an evidentiary hearing is necessary to determine witness credibility and if the defendants met their burden regarding disqualification of Beasley Allen.'”
  • “Porto’s order said both James Conlan, a former partner at Faegre Drinker Biddle & Reath, and Birchfield must testify at the hearing. On Feb. 14, he told lawyers he needed to hold the hearing to determine the credibility of the witnesses, which could also include Johnson & Johnson’s worldwide vice president of litigation, Erik Haas, and one of its key attorneys, Barnes & Thornburg partner James Murdica, in Los Angeles.”
  • “‘I’m looking at, really, narrowing down, zoning in with a microscope, saying, I’m looking at what happened; what went on; why does Johnson & Johnson have these thoughts; what actually happened; what do we have in terms of documentation or is it just testimony; and then I need credibility,’ he said, according to a transcript.”
  • “On Feb. 9, following oral argument on the disqualification motion, U.S. Magistrate Judge Rukhsanah Singh, in the District of New Jersey, agreed that ‘more information is required to determine the issue of disqualification here… Additional information, including credibility determinations, would aid the court in determining whether such a severe remedy of disqualification is appropriate,’ he held.”
  • “The evidentiary hearing would involve both judges and take place in Atlantic City, New Jersey, where Porto is overseeing the talc multicounty litigation in New Jersey state courts.”
  • “The motions alleged that Birchfield struck a partnership with Conlan, a former lawyer with Johnson & Johnson. Conlan now runs Legacy Liability Solutions LLC, which, along with Birchfield, proposed a $19 billion deal to resolve the talc lawsuits against Johnson & Johnson.”