United States v. Farkas

• Decision Date: 01 March 2016
• Docket Number: 1:10–CR–200 (LMB)
• Parties: United States of America, Plaintiff, v. Lee Bentley Farkas, Defendant.
• Court: U.S. District Court — Eastern District of Virginia

149 F.Supp.3d 685

United States of America, Plaintiff,

v.Lee Bentley Farkas, Defendant.

1:10–CR–200 (LMB)

United States District Court, E.D. Virginia, Alexandria Division.

Signed March 1, 2016

Charles Connolly, Emily Mintz, Karen Ledbetter Taylor, Paul Nathanson, Nicole Grosnoff, United States Attorney's Office, Alexandria, VA, Plaintiff.

Nina J. Ginsberg, Dimuro Ginsberg PC, William Bruce Cummings, William B. Cummings PC, Alexandria, VA, Patrick R. Blasz, Law Office of Patrick Blasz LLC, Reston, VA, for Defendant.

MEMORANDUM OPINION

Leonie M. Brinkema

, United States District Judge

Before the Court is Lee Bentley Farkas' (“Farkas” or “defendant”) Motion for Judge Brinkema to Recuse or Disqualify Herself Pursuant to 28 U.S.C. § 455(a)

[Dkt. No. 519], Nov. 19.2015 (“§ 455 Motion”). This motion has been supplemented with additional affidavits, see Supplemental Motion for Recusal [Dkt. No. 529], Jan. 8, 2016 (“Supp.Motion”), and the government has filed its opposition, see Gov't's First Resp. to Def.'s Mot. To Disqualify Judge Pursuant to 28 U.S.C. § 455 [Dkt. No. 531], Jan. 21, 2016 (“Gov't Opp'n”), to which Farkas has replied. See Def. Farkas' Rebuttal to Gov't's First Resp. to Def.'s Mot. To Disqualify Judge Pursuant to 28 U.S.C. § 455 [Dkt. No. 532], Jan. 28, 2016 (“Farkas Reply”). For the reasons that follow, this motion will be DENIED.

I. BACKGROUND

On April 19, 2011, a jury found Farkas guilty of all fourteen counts charged in relation to the perpetration of a massive financial fraud during his tenure as chairman and principal owner of Taylor, Bean & Whitaker (“TBW”), a large mortgage firm. See Jury Verdict [Dkt. No. 263], Apr. 19, 2011, Specifically, Farkas was convicted of one count of Conspiracy to Commit Bank Fraud, Wire Fraud, and Securities Fraud in violation of 18 U.S.C. § 1349

; six counts of Bank Fraud in violation of 18 U.S.C. §§ 1342 and 1344 ; four counts of Wire Fraud in violation of 18 U.S.C. §§ 1342 and 1343 ; and three counts of Securities Fraud in violation of 18 U.S.C. §§ 1342 and 1348. On June 30, 2011, he was sentenced to 360 months imprisonment, three years of supervised release, and a special assessment of $1,400. J. as to Lee Bentley Farkas [Dkt. No. 301], June 30, 2011. In addition, the Court required Farkas and his co-defendants to pay restitution in the amount of $3,507,743,557 jointly and severally to twenty victims of their financial fraud. Restitution J. [Dkt. No. 351], Sept. 26, 2011.

Farkas unsuccessfully appealed his conviction to the Fourth Circuit, which found no reversible error and affirmed the judgment. Unpublished Opinion of the USCA decided 06/20/2012 as to Lee Bentley Farkas at 1 [Dkt. No. 403], June 20, 2012. On September 19, 201 Farkas filed a Motion Under 28 U.S.C. § 2255

to Vacate, Set Aside, or Correct Sentence by a Person in Federal Custody [Dkt. No. 430], which was subsequently amended after he retained counsel. Both the original and amended § 2255 motions complained of ineffective assistance of counsel at both the trial and appeal stages as well as Brady violations. See Memorandum Opinion [Dkt. No. 462], July 18, 2014. In dismissing the motion, the Court issued a lengthy Memorandum Opinion addressing each ground raised. Id. The Fourth Circuit denied Farkas a certificate of appealability and summarily dismissed his appeal. See Judgment of USCA as to Lee Bentley Farkas [Dkt. No. 480], Feb. 5, 2015.

On October 9, 2015, Farkas filed a Motion to Disqualify Judge Pursuant to 28 U.S.C. § 144

[Dkt. No. 494] along with a supporting affidavit [Dkt. No. 493]. As Farkas recounts in his affidavit, this motion was prompted by a package his habeas counsel received from Janice Wolk Grenadier (“Grenadier”), a civil litigant in unrelated actions assigned to the Court, who had ruled against her. Affidavit for Disqualification of Honorable Judge Leonie M. Brinkema ¶ [Dkt. No. 493], Oct. 9, 2015 (“Disqual.Affidavit”); see also

Grenadier v. BWW Law Group, et al., No. 1:14–CV–827 (E.D.Va. July 29, 2013). Included in that package were copies of the Court's Financial Disclosure forms from 2004 through 2014. Id. In his § 144 Motion, Farkas argued that the Court should be disqualified because she suffered a decline in the value of her investment portfolio as a result of the global economic crisis, to which Farkas alleges he substantially contributed. Disqual. Affidavit ¶¶ 5, 10, 11.

On November 6, 2015, the Court denied Farkas' § 144

Motion, reasoning,

Now, if [the Court] owned real estate in Orlando, Florida, that had been directly affected by what [Farkas] did, that might be a logical and proper connection between his conduct and the Court's personal finances. You don't have that here. You have a judge owning ... mutual funds which invest in all sorts of different stuff, and you have the whole economy tanking because of multiple, multiple players, and as I said, because of the way the world works, I would be amazed if you would be able to find a federal judge who wouldn't have the same kind of situation.

Tr. of Proceedings Held on 11/06/2015 at 9:20–10:4 [Dkt. No. 517], Nov. 13, 2015. An appeal of that ruling is currently pending. See Notice of Appeal [Dkt. No. 522], Nov. 24, 2015.

On November 19, 2015, Farkas filed the pending § 455

Motion. In the Memorandum in Support of the § 455 Motion, Farkas largely restated the arguments raised in his § 144 Motion, which were rejected by the Court; however, he also provided additional declarations to support this motion.

II. DISCUSSION

Farkas argues that the acts of fraud for which a jury convicted him “had a direct and substantial impact on the nation's financial crisis and economic downturn,” and as a result, the Court has a disqualifying appearance of partiality under § 455(a)

due to the personal financial losses she suffered as a result of the global financial crisis. § 455 Mot. at 1 (incorporating by reference Disqual. Affidavit)); see also Def. Farkas' Br. in Supp. of Mot. for Judge Brinkema to Recuse or Disqualify Herself Pursuant to 28 U.S.C. § 455 at 5 [Dkt. No. 520], Nov. 19, 2015 (“Farkas Br.”). To support this argument, Farkas marshals statements about the gravity of his fraudulent conduct made by Department of Justice officials during the course of his prosecution. Farkas Br. at 6–7. In addition, Farkas points to a statement by the Court at his sentencing hearing that, “[t]he victims here, many of them were investors.” Id. at 7. Farkas contends that because the Court was an investor, she was necessarily his victim, which means she is obligated to recuse herself. Id. In response, the government asserts that the instant motion is no different than the motion under 28 U.S.C. § 144 that was denied on November 6, 2015. Gov't Opp'n at 3. In addition, the government asserts that this motion is both untimely and insufficient as a matter of law. Id. at 3–4.

A. Standard of Review

Section 445(a) provides that a judge “shall disqualify himself in any proceeding in which his impartiality might reasonably be questioned.” 28 U.S.C. § 455(a)

. To preserve the integrity of the judicial branch, “a judge must possess neither actual nor apparent bias against a party,” United States v. Cherry, 330 F.3d 658, 665 (4th Cir.2003) (internal quotation marks omitted); accordingly, “[d]isqualification is required if a reasonable factual basis exists for doubting the judge's impartiality.” In re Beard, 811 F.2d 818, 827 (4th Cir.1987). When considering a motion to recuse brought under 28 U.S.C. § 455(a), a court must apply the objective standard of whether a reasonable observer “with knowledge of all of the circumstances might reasonably question the judge's impartiality.” Id. ; see also

Cheney v. U.S. Dist. Court for D.C., 541 U.S. 913, 924, 124 S.Ct. 1391, 158 L.Ed.2d 225 (2004) (stating that the “recusal inquiry must be made from the perspective of a reasonable observer who is informed of all the surrounding facts and circumstances.” (internal quotation marks omitted)).

The Fourth Circuit has held that judges need not recuse themselves under § 455(a)

because of attenuated relationships to proceedings. Cherry, 330 F.3d at 665 ; see also

United States v. DeTemple, 162 F.3d 279, 287 (4th Cir.1998) (explaining that § 455(a) “does not require a judge to recuse himself because of unsupported, irrational, or highly tenuous speculation.” (internal quotation marks omitted)). Indeed, a decision in favor of recusal that lacks a factual basis satisfying the requisite objective inquiry is improper; “[a] judge is as much obliged not to recuse himself when it is not called for as he is obliged to when it is.” In re Drexel Burnham Lambert Inc., 861 F.2d 1307, 1312 (2d Cir.1988) ; United States v. Glick, 946 F.2d 335, 337 (4th Cir.1991). The delicate balance entailed in “recusal decisions reflect[s] not only the need to secure public confidence through proceedings that appear impartial, but also the need to prevent parties from too easily obtaining the disqualification of a judge, thereby potentially manipulating the system for strategic reasons, perhaps to obtain a judge more to their liking.” Belue v. Leventhal, 640 F.3d 567, 574 (4th Cir.2011) (internal quotation marks omitted).

B. Propriety of the Court Ruling on the Instant Motion

As an initial matter, Farkas seems to argue in passing that a disinterested judge should consider his § 455

claim. Farkas Br. at 4. Nevertheless, this Court will reach the merits of this motion, rather than referring it to another judge. “[U]nder § 455(a), ‘[d]iscretion is confided in the district judge in the first instance to determine whether to disqualify himself because the judge presiding over a case is in the best position to appreciate the implications of those matters alleged in a recusal motion,’ particularly when ‘the district court judge has presided over (i) an extraordinarily complex litigation (ii) involving a multitude of parties (iii) for an extended period of time.’ ” United States v. Ciavarella, 716 F.3d 705, 720 (3d Cir.2013) (quoting ...