[Plura-list] One of America's most corporate-crime-friendly bankruptcy judges forced to recuse himself

Mon Oct 16 07:11:10 EDT 2023

Read today's issue online at: https://pluralistic.net/2023/10/16/texas-two-step/

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Today (Oct 16), I'm in Minneapolis to give the keynote at the 26th ACM Conference On Computer-Supported Cooperative Work and Social Computing:

https://cscw.acm.org/2023/index.php/keynotes/

Thursday (Oct 19), I'm in Charleston, WV to give the 41st annual McCreight Lecture in the Humanities:

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And on Friday (Oct 20), I'm at Charleston's Taylor Books from 12h-14h:

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Today's links

* One of America's most corporate-crime-friendly bankruptcy judges forced to recuse himself: Judge David Jones rigged the 'Texas Two-Step' cases his secret girlfriend argued in his court.

* Hey look at this: Delights to delectate.

* This day in history: 2003, 2008, 2013, 2018, 2022

* Colophon: Recent publications, upcoming/recent appearances, current writing projects, current reading

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🤐 One of America's most corporate-crime-friendly bankruptcy judges forced to recuse himself

"I’ll believe corporations are people when Texas executes one." The now-famous quip from Robert Reich cuts to the bone of corporate personhood. Corporations are people with speech rights. They are heat-shields that absorb liability on behalf of their owners and managers.

But the membrane separating corporations from people is selectively permeable. A corporation is separate from its owners, who are not liable for its deeds - but it can also be "closely held," and so inseparable from those owners that their religious beliefs can excuse their companies from obeying laws they don't like:

https://clsbluesky.law.columbia.edu/2014/10/13/hobby-lobby-and-closely-held-corporations/

Corporations - not their owners - are liable for their misdeeds (that's the "limited liability" in "limited liablity corporation"). But owners of a murderous company can hold their victims' families hostage and secure bankruptcies for their companies that wipe out their owners' culpability - without any requirement for the owners to surrender their billions to the people they killed and maimed:

https://pluralistic.net/2023/08/11/justice-delayed/#justice-redeemed

Corporations are, in other words, a kind of Schroedinger's Cat for impunity: when it helps the ruling class, corporations are inseparable from their owners; when that would hinder the rich and powerful, corporations are wholly distinct entities. They exist in a state of convenient superposition that collapses only when a plutocrat opens the box and decides what is inside it. Heads they win, tails we lose.

Key to corporate impunity is the rigged bankruptcy system. "Debts that can't be paid, won't be paid," so every successful civilization has some system for discharging debt, or it risks collapse:

https://pluralistic.net/2022/10/09/bankruptcy-protects-fake-people-brutalizes-real-ones/

When you or I declare bankruptcy, we have to give up virtually everything and endure years (or a lifetime) of punitive retaliation based on our stained credit records, and even then, our student debts continue to haunt us, as do lawless scumbag debt-collectors:

https://pluralistic.net/2023/08/12/do-not-pay/#fair-debt-collection-practices-act

When a giant corporation declares bankruptcy, by contrast, it emerges shorn of its union pension obligations and liabilities owed to workers and customers it abused or killed, and continues merrily on its way, re-offending at will. Big companies have mastered the Texas Two-Step, whereby a company creates a subsidiary that inherits all its liabilities, but not its assets. The liability-burdened company is declared bankrupt, and the company's sins are shriven at the bang of a judge's gavel:

https://pluralistic.net/2023/02/01/j-and-j-jk/#risible-gambit

Three US judges oversee the majority of large corporate bankruptcies, and they are so reliable in their deference to this scheme that an entire industry of high-priced lawyers exists solely to game the system to ensure that their clients end up before one of these judges. When the Sacklers were seeking to abscond with their billions in opioid blood-money and stiff their victims' families, they set their sights on Judge Robert Drain in the Southern District of New York:

https://pluralistic.net/2021/05/23/a-bankrupt-process/#sacklers

To get in front of Drain, the Sacklers opened an office in White Plains, NY, then waited 192 days to file bankruptcy papers there (it takes six months to establish jurisdiction). Their papers including invisible metadata that identified the case as destined for Judge Drain's court, in a bid to trick the court's Case Management/Electronic Case Files system to assign the case to him.

The case was even pre-captioned "RDD" ("Robert D Drain"), to nudge clerks into getting their case into a friendly forum.

If the Sacklers hadn't opted for Judge Drain, they might have set their sights on the Houston courthouse presided over by Judge David Jones, the second of of the three most corporate-friendly large bankruptcy judges. Judge Jones is a Texas judge - as in "Texas Two-Step" - and he has a long history of allowing corporate murderers and thieves to escape with their fortunes intact and their victims penniless:

https://pluralistic.net/2021/08/07/hr-4193/#shoppers-choice

But David Jones's reign of error is now in limbo. It turns out that he was secretly romantically involved with Elizabeth Freeman, a leading Texas corporate bankruptcy lawyer who argues Texas Two-Step cases in front of her boyfriend, Judge David Jones.

Judge Jones doesn't deny that he and Freeman are romantically involved, but said that he didn't think this fact warranted disclosure - let alone recusal - because they aren't married and "he didn't benefit economically from her legal work." He said that he'd only have to disclose if the two owned communal property, but the deed for their house lists them as co-owners:

https://www.documentcloud.org/documents/24032507-general-warranty-deed

(Jones claims they don't live together - rather, he owns the house and pays the utility bills but lets Freeman live there.)

Even if they didn't own communal property, judges should not hear cases where one of the parties is represented by their long term romantic partner. I mean, that is a weird sentence to have to type, but I stand by it.

The case that led to the revelation and Jones's stepping away from his cases while the Fifth Circuit investigates is a ghastly - but typical - corporate murder trial. Corizon is a prison healthcare provider that killed prisoners with neglect, in the most cruel and awful ways imaginable. Their families sued, so Corizon budded off two new companies: YesCare got all the contracts and other assets, while Tehum Care Services got all the liabilities:

https://ca.finance.yahoo.com/news/prominent-bankruptcy-judge-david-jones-033801325.html

Then, Tehum paid Freeman to tell her boyfriend, Judge Jones, to let it declare bankruptcy, leaving $173m for YesCare and allocating $37m for the victims suing Tehum. Corizon owes more than $1.2b, "including tens of millions of dollars in unpaid invoices and hundreds of malpractice suits filed by prisoners and their families who have alleged negligent care":

https://www.kccllc.net/tehum/document/2390086230522000000000041

Under the deal, if Corizon murdered your family member, you would get $5,000 in compensation. Corizon gets to continue operating, using that $173m to prolong its yearslong murder spree.

The revelation that Jones and Freeman are lovers has derailed this deal. Jones is under investigation and has recused himself from his cases. The US Trustee - who represents creditors in bankruptcy cases - has intervened to block the deal, calling Tehum "a barren estate, one that was stripped of all of its valuable assets as a result of the combination and divisional mergers that occurred prior to the bankruptcy filing."

This is the third high-profile sleazy corporate bankruptcy that had victory snatched from the jaws of defeat this year: there was Johnson and Johnson's attempt to escape from liability from tricking women into powder their vulvas with asbestos (no, really), the Sacklers' attempt to abscond with billions after kicking off the opioid epidemic that's killed 800,000+ Americans and counting, and now this one.

This one might be the most consequential, though - it has the potential to eliminate *one third* of the major crime-enabling bankruptcy judges serving today.

One down.

Two to go.

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🤐 Hey look at this

** Shitposting, Shit-mining and Shit-farming https://programmablemutter.substack.com/p/shitposting-shit-mining-and-shit (h/t John Naughton)

* Quest at the Museum http://questatthemuseum.com

* Marked by Stars Agrippa’s Occult Philosophy https://publicdomainreview.org/essay/agrippa-occult-philosophy/

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🤐 This day in history

#20yrsago Enron’s email laid bare https://www.salon.com/2001/11/09/enron/

#20yrsago Identity thief steals sex-offender’s name https://web.archive.org/web/20031002192428/http://www.sexcriminals.com/news/15382/

#15yrsago Librivox free audiobook library now has 365 days’ worth of continuous listening material https://librivox.org/2008/10/15/365-days-of-librivox-audio/

#15yrsago Canada elects 34 copyfighters to Parliament https://web.archive.org/web/20081018165923/https://www.michaelgeist.ca/content/view/3450/125/

#15yrsago BART directors to management: stop using terrorism “fearmongering” https://www.sfgate.com/bayarea/article/bart-debates-allowing-drinks-on-trains-3266010.php

#15yrsago Wedding Ring Cipher contest winners https://memex.craphound.com/2008/10/15/wedding-ring-cipher-contest-winners/

#15yrsago McCain-Palin campaign calls for respect for fair use https://www.eff.org/deeplinks/2008/10/mccain-campaign-feels-dmca-sting

#15yrsago Fafblog brings us the real Obama facts https://fafblog.blogspot.com/2008/10/barack-obama-black.html

#15yrsago Scientist who did groundwork for Chemistry Nobel now works for $10/h at a Toyota dealership https://web.archive.org/web/20081014042957/http://www.capecodonline.com/apps/pbcs.dll/article?AID=/20081011/NEWS/810110328

#15yrsago US Constitution in graphic novel form https://memex.craphound.com/2008/10/14/us-constitution-in-graphic-novel-form/

#10yrsago Snowden: US lets NSA liars go; stops at nothing to bust those who tell the truth https://www.techdirt.com/2013/10/14/what-does-it-say-when-us-wont-prosecute-official-lying-to-congress-will-stop-nothing-to-persecute-someone-telling-truth/

#10yrsago South London school bans “slang” https://memex.craphound.com/2013/10/15/south-london-school-bans-slang/

#10yrsago Why email services should be court-order resistant https://freedom-to-tinker.com/2013/10/15/a-court-order-is-an-insider-attack/

#10yrsago EFF to Comic-Con: protect our secret identities! https://www.eff.org/deeplinks/2013/10/open-letter-comic-con-organizers-protect-our-secret-identities

#10yrsago Homlessness and technological literacy: the Tenderloin Technology Lab https://www.wired.com/2013/10/homeless-but-wired/

#5yrsago Epson is teaching the internet not to install security updates https://www.vice.com/en/article/pa98ab/printer-makers-are-crippling-cheap-ink-cartridges-via-bogus-security-updates

#5yrsago Printer refuses humor magazine because “Christian owners” want to protect “the kids” https://www.patreon.com/posts/good-evening-21990238

#5yrsago Parkland kids’ Rube Goldberg machine illustrates the aftermath of school shootings https://www.youtube.com/watch?v=Mue3N5a9NQE

#5yrsago A sensible, free guide to negotiating book contracts https://www.authorsalliance.org/wp-content/uploads/2018/10/20181003_AuthorsAllianceGuidePublicationContracts.pdf

#5yrsago Wannacry ransomware cost the British National Health Service £92m ($121m) https://web.archive.org/web/20181015161904/https://www.theinquirer.net/inquirer/news/3064515/wannacry-attack-cost-cash-strapped-nhs-an-estimated-gbp92m

#5yrsago What would a “counterculture of AI” look like? https://www.opendemocracy.net/en/rethinking-ai-through-politics-of-1968/

#5yrsago Bruce Sterling on the next 50 years of climate-wracked maker architecture https://www.youtube.com/watch?v=-p4DV80xrm8

#5yrsago China’s panicked upper middle class are easy picking for offshore real estate scams https://www.scmp.com/economy/china-economy/article/2167731/desperate-chinese-middle-class-take-big-risks-move-money-and-themselves

#5yrsago Blame billionaires for climate change https://www.gq.com/story/billionaires-climate-change

#5yrsago Georgia Senator, asked about voter suppression, mugs constituent for his phone https://www.cnn.com/videos/politics/2018/10/14/david-perdue-snatch-phone-voter-suppression-sot-nr-vpx.cnn

#5yrsago A dating website for Trump supporters leaked its customers’ data ON DAY ONE https://techcrunch.com/2018/10/15/donald-daters-a-dating-app-for-trump-supporters-leaked-its-users-data/

#5yrsago Canada Pension Plan is long on US private prisons and immigrant detention centers https://www.theguardian.com/world/2018/oct/12/canada-pension-fund-invests-in-us-immigration-detention-firms

#5yrsago The Congressional Progressive Caucus is (still) awash in corporate money https://theintercept.com/2018/10/14/congressional-progressive-caucus-corporate-pac-money/

#5yrsago Capitalism torched the world, fascism rose from the ashes https://web.archive.org/web/20181014161843/https://eand.co/how-capitalism-torched-the-planet-and-left-it-a-smoking-fascist-greenhouse-fe687e99f070?gi=f85bd26fe222

#5yrsago Obama’s policy on Bush’s crimes is how Kavanaugh got to the Supreme Court https://theintercept.com/2018/10/09/brett-kavanaugh-supreme-court-bush-administration/

#1yrsago Billionaire dilettantes vs good Democrats https://pluralistic.net/2022/10/14/competitors-critics-customers/#billionaire-dilletantes

#1yrsago Medieval Times invents a modern union-busting tactic https://pluralistic.net/2022/10/14/competitors-critics-customers/#ip

#1yrago How lawyers became sadists https://pluralistic.net/2022/10/15/lex-sadist/#incentives-matter

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🤐 Colophon

Today's top sources: Super Punch (https://www.superpunch.net).

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https://cscw.acm.org/2023/index.php/keynotes/

* 41st annual McCreight Lecture in the Humanities (Charleston, WV), Oct 19
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* Seizing the Means of Computation (Edinburgh Futures Institute), Oct 25
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* "The Internet Con": A nonfiction book about interoperability and Big Tech (Verso) September 2023 (http://seizethemeansofcomputation.org). Signed copies at Book Soup (https://www.booksoup.com/book/9781804291245).

* "Red Team Blues": "A grabby, compulsive thriller that will leave you knowing more about how the world works than you did before." Tor Books http://redteamblues.com. Signed copies at Dark Delicacies (US): and Forbidden Planet (UK): https://forbiddenplanet.com/385004-red-team-blues-signed-edition-hardcover/.

* "Chokepoint Capitalism: How to Beat Big Tech, Tame Big Content, and Get Artists Paid, with Rebecca Giblin", on how to unrig the markets for creative labor, Beacon Press/Scribe 2022 https://chokepointcapitalism.com

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Upcoming books:

* The Lost Cause: a post-Green New Deal eco-topian novel about truth and reconciliation with white nationalist militias, Tor Books, November 2023

* The Bezzle: a sequel to "Red Team Blues," about prison-tech and other grifts, Tor Books, February 2024

* Picks and Shovels: a sequel to "Red Team Blues," about the heroic era of the PC, Tor Books, February 2025

* Unauthorized Bread: a graphic novel adapted from my novella about refugees, toasters and DRM, FirstSecond, 2025

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