Ex-bankruptcy judge worried about prosecution, embarrassment
By Dietrich Knauth
NEW YORK, Aug 22 (Reuters) -Former U.S. bankruptcy judge David Jones confirmed he was under criminal investigation at a recent court hearing in which he tried to ward off public questions about his once-secret romantic relationship with a Houston bankruptcy lawyer.
He also really, really wanted to explain that he has never gone water-skiing while dressed as a Christmas elf, according to a transcript of an Aug. 7 hearing in Houston bankruptcy court. The transcript, initially sealed so the court could redact sensitive information, was unsealed on Wednesday.
Jones was summoned to the hearing to explain why he volunteered for an "off the record" July 18 meeting with Jackson Walker, his romantic partner Liz Freeman's former law firm, related to a legal battle over fees that the law firm earned from cases filed in Jones' Houston court.
U.S. Bankruptcy Judge Eduardo Rodriguez ultimately sanctioned Jones for offering testimony outside of the court's supervision. Rodriguez is overseeing litigation initiated by the office of the U.S. Trustee, the U.S. Department of Justice's bankruptcy watchdog, which has argued that Jackson Walker knew about the relationship and chose to keep quiet so that it could continue collecting legal fees from the cases.
According to the transcript of the Aug. 7 hearing, Jones said he wanted to discuss his relationship with Freeman in private so that he could avoid public embarrassment and legal expenses over questions that had little to do with the fee dispute.
One of the things he wanted to explain was a blurry photo that had been presented as potential evidence that Jackson Walker was aware of his relationship with Freeman.
Jones said the photo actually showed Freeman's brother on the water-skis, and he wanted to save other lawyers from going down an expensive rabbit hole to investigate.
"I can't imagine how much money's been spent on the fact that, hey, Jones is water skiing the day after Christmas and this was sent to Jackson Walker," Jones told Rodriguez. "Look, I can't water ski. And it wasn't me."
Jones and his attorney did not immediately respond to a request for comment.
Jones was once the busiest bankruptcy judge in the U.S. and had recently presided over the bankruptcies of JCPenney, Neiman Marcus, Party City and Chesapeake Energy, among many others. He resigned from the bench last October after admitting to sharing a home with Freeman.
Jones said at the August 7 hearing that he was concerned that the U.S. Trustee would ask him questions that would expose him to federal criminal charges without helping the investigation into Jackson Walker's legal fees.
"I'm under criminal investigation," Jones said. "And then the other arm of the Justice Department wants to depose me about a whole series of topics that have nothing to do with what Jackson Walker knew. ... That puts me in a horrible position."
Rodriguez expressed concern at the hearing that the legal battle could undermine judicial authority by opening up former judges and their clerks to questions about the inner workings of the courts. Rodriguez has yet to rule on what types of questions the U.S. Trustee and Jackson Walker can ask during proposed depositions of Jones and other former court employees.
Jones said he was open to discussing his divorce and marital infidelity with Jackson Walker, with the understanding that the information would not be used in any court proceeding and that no one would attribute it to him.
Jones said he worried that his answers in a formal deposition could be used to embarrass him or be taken out of context on social media.
"My relationship has been the subject of misinformation everywhere," Jones said. "It has caused, and I'm not asking for sympathy, it has caused an immense amount of embarrassment. It's affected my relationship. It's done a lot of very negative things. And most of it's simply wrong."
In addition to the criminal investigation, Jones has faced private lawsuits and a 5th U.S. Circuit Court of Appeals ethics inquiry over his failure to disclose his relationship. Other judges have chastised Jones in those cases, including one who recently wrote that Jones "ran roughshod" over legal and ethical requirements while overseeing cases where he was "obviously disqualified."
Reporting by Dietrich Knauth
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