Risk Update

Judicial Recusals — Relationships and Appearances (Real and Alleged)

Posted Dan Bressler

“U.S. judge recuses himself from Archegos fraud case, citing wife’s ties to banks” —

  • “Archegos Capital Management founder Bill Hwang will get a new judge for his U.S. fraud trial, after the judge assigned to the case recused himself on Thursday due to his wife’s ties to banks that could have been caught in the investment firm’s meltdown.”
  • “U.S. District Judge Andrew Carter said in a Manhattan federal court hearing that his wife is a lawyer for Bank of New York Mellon (BK.N) and used to work for JPMorgan Chase (JPM.N), and that he would have a conflict of interest if either bank were a victim of the alleged fraud.”
  • “Archegos, which had $36 billion in assets, collapsed last year when it was caught short on highly leveraged trades, leaving global banks with $10 billion in losses. Prosecutors say Hwang lied to banks to increase Archegos’ credit lines. “
  • “Carter’s decision came amid heightened attention by lawmakers and court reform advocates to judicial recusals due to conflicts. President Joe Biden last week signed into law a bill subjecting federal judges to tougher disclosure requirements for their financial holdings and stock trades.”

“Miami-Dade Judge Steps Down From Litigation Over Attorney Fees” —

  • “Miami-Dade Circuit Judge Beatrice Butchko stepped down from a case over attorney fees and costs, hours after a litigant filed a verified disqualification motion.”
  • “Litigant Sarah Lazow claimed in a disqualification motion that her former attorney, Robert Zarco, a partner at Zarco Einhorn Salkowski & Brito in Fort Lauderdale, allegedly pitched his legal services by boasting he had a ‘very close relationship’ with Butchko, who might allegedly ‘role play as angry on the record.'”
  • “But Lazow’s opponents describe her as a ‘desperate litigant,’ ready to defame the judge and other side.”
  • “Lazow claimed in the motion that Butchko could not be impartial in the litigation, in which one of Lazow’s former attorneys sued for legal fees, stemming from a larger lawsuit involving Setai Hotel Acquisition LLC, the operator of the Setai Hotel in Miami Beach.”
  • “‘She hates you,’ Zarco allegedly said to Lazow, according to the motion for disqualification. ‘She asked me why I would get involved in this case when you have already been through six lawyers. She said you were crazy.'”
  • “Bob Jarvis, an ethics professor at Nova Southeastern University Shepard Broad College of Law, who is not involved in the litigation, said the Judicial Qualifications Commission might want to examine if the allegations are true.”
  • “‘I am not surprised that Judge Butchko granted the recusal motion,’ Jarvis said. ‘I am surprised that she waited until there was a motion. In my opinion, she should have recused herself when she first realized she had developed negative feelings toward the defendant, or, at the very latest, when she spoke with Zarco.'”
  • “However, Zarco pushed back Wednesday against what he called ‘fabricated’ allegations Lazow put forth in the motion. He said Lazow has a history of recklessly filing motions for disqualification of judges without legal basis, to forum shop a jurist more sympathetic to her case. Zarco also said he declined to refute each ‘fabricated’ statement in court.”