Risk Update

Judicial Conflicts Allegations — Crypto Meets Bankruptcy Meets Complexity, Supreme Court Conflicts Concerns over Charity Charges

Hild latches onto Sam Bankman-Fried case as sentencing looms” —

  • “There are several parallels between the criminal cases of Richmond businessman Michael Hild and that of notorious crypto king Sam Bankman-Fried. Each man is charged with various degrees of financial fraud that led to the collapse and bankruptcies of their respective firms – Hild’s Chesterfield-based Live Well Financial and Bankman-Fried’s FTX.”
  • “Both men are fighting their legal battles in federal court in Manhattan and, until late last month, both their cases were presided over by the same judge, U.S. District Court Judge Ronnie Abrams.”
  • “That was until Abrams recused herself from the high-profile Bankman-Fried case on Dec. 23, citing the fact that the law firm at which her husband is a partner had previously represented FTX.”
  • “Now, as Hild is set to go before Abrams for sentencing later this month, he and his attorney are seizing on that recusal, questioning whether the judge may have had similar personal conflicts during Hild’s case to those that led to her exit from the Bankman-Fried legal saga.”
  • “In a Dec. 28 letter to Abrams, Hild attorney Brian Jacobs claims that Abrams’ husband’s law firm, Davis Polk, may have represented several companies that were entangled with Hild’s case.”
  • “‘In the present case, as in the FTX matter, the law firm of (Davis Polk) – according to its attorneys’ online biographies – appears to have represented multiple parties whose interests are potentially adverse to Mr. Hild’s,’ Jacobs’ letter states. ‘I write to ask that the Court address whether possible conflicts in this case should have led this Court to disqualify itself… I further ask that the Court address this matter in advance of sentencing, which is currently set for Jan. 27, 2023.'”
  • “Jacobs claims that Davis Polk ‘appears to have’ represented two of Live Well’s major lenders: Industrial and Commercial Bank of China, and Mizuho Bank. Both banks are among the larger creditors in Live Well’s ongoing bankruptcy proceedings and also are among the victims and potential recipients of restitution in the Hild criminal case.”
  • “Jacobs also states that a former partner at Davis Polk appears to be a board member at ICBC. Jacobs argues that illustrates a potentially close relationship between the law firm and the lender.”
  • “While the potential conflicts cited by Hild and Jacobs would appear to be indirect, so were those referenced by Abrams in her recusal notice in the Bankman-Fried case: ‘My husband has had no involvement in any of these representations. These matters are confidential and their substance is unknown to the Court. Nonetheless, to avoid any possible conflict, or the appearance of one, the Court hereby recuses itself from this action.'”

A Charity Tied to the Supreme Court Offers Donors Access to the Justices” —

  • “The Supreme Court Historical Society has raised more than $23 million in the last two decades, much of it from lawyers, corporations and special interests.”
  • “The charity, the Supreme Court Historical Society, is ostensibly independent of the judicial branch of government, but in reality the two are inextricably intertwined. The charity’s stated mission is straightforward: to preserve the court’s history and educate the public about the court’s importance in American life.”
  • “But over the years the society has also become a vehicle for those seeking access to nine of the most reclusive and powerful people in the nation.”
  • “The society has raised more than $23 million over the last two decades. Because of its nonprofit status, it does not have to publicly disclose its donors — and declined when asked to do so. But The New York Times was able to identify the sources behind more than $10.7 million raised since 2003, the first year for which relevant records were available.”
  • “At least $6.4 million — or 60 percent — came from corporations, special interest groups, or lawyers and firms that argued cases before the court, according to an analysis of archived historical society newsletters and publicly available records that detail grants given to the society by foundations.”
  • “Of that, at least $4.7 million came from individuals or entities in years when they had an interest in a pending federal court case on appeal or at the high court, records show.”
  • “The donors include corporations like Chevron, which gave while embroiled in a 2021 Supreme Court case involving efforts by cities to hold the oil company accountable for its role in global warming.”
  • “Virtually no one interviewed by The Times, including critics of the society’s fund-raising practices, said they believed that donations to the society had any bearing on cases before the justices.”
  • “But as polls show public approval of the court at an all-time low, amid widespread concern that the institution has become increasingly politicized, even some supporters said it might be time to rethink the Supreme Court Historical Society’s reliance on secretive private donations.”
  • “One way the society attracts such corporate largess is by courting top corporate lawyers with deep attachments to the court.”
  • “Take Chevron, for instance. It began giving in 2010, the year after it hired R. Hewitt Pate, a former Supreme Court clerk and society trustee, as its general counsel. It has given every year since, for a total of $190,000, even as the Supreme Court heard a number of cases involving the company.”
  • “‘We have given to the historical society in the spirit of furthering its stated mission of preserving the court’s history,’ said a Chevron spokesman, Sean McCormack. ‘There is no other motivation.'”