by Pam Martens and Russ Martens, Wall St On Parade:
In 2017, Simon & Schuster released the book, The Chickenshit Club, by the Pulitzer-prize winning public interest writer, Jesse Eisinger. The title derives from the premise that the prosecutors at the U.S. Department of Justice are too worried about losing a case or harming their ability to get those seven-figure pay packages at the big Wall Street law firms to do their jobs properly as prosecutors. Aside from that narrative, which is brilliantly analyzed by Eisinger, the book reveals a stunning fact about Manhattan federal district court Judge Jed Rakoff – a man who has gone out of his way to portray himself with the media as the protector of the public interest.
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Eisinger writes this:
“Karp, sixteen years younger, and Rakoff began having dinner every several months, often with their wives and other lawyers, at restaurants around Manhattan: Il Gattopardo, the Leopard, Telepan.”
Brad Karp, Chairman of Paul Weiss
“Karp” in that sentence refers to Brad Karp, the Chairman since 2008 of the Big Law firm, Paul, Weiss, Rifkind, Wharton & Garrison LLP. Karp’s law firm is best known for getting recidivist lawbreakers on Wall Street, like Citigroup and JPMorgan Chase, off the hook.
Federal law requires federal judges to avoid even the appearance of a conflict of interest. How could a former federal prosecutor and long-tenured federal judge like Rakoff think it would be appropriate to be dining with the top dog of the law firm whose partners are regularly in his courtroom asking him to dismiss cases against their Wall Street clients?
Rakoff’s wife, Ann, may also have had financial conflicts in the past. According to Judge Rakoff’s financial disclosure forms and his wife’s LinkedIn profile, from September 2006 through August of 2015, a span of almost nine years, Ann Rakoff was the Executive Director of the Corporate Law Center at the Fordham University School of Law – notwithstanding the fact that she never went to law school or had a law license. (The current Executive Director does have a law degree.)
The following law firms that practice before Rakoff are listed on the Fordham Law website as having made donations of $100,000 to $249,000 to the law school over a number of years: Wachtell Lipton, Kirkland & Ellis, Skadden Arps, Davis Polk, along with several anonymous donors.
Ann Rakoff’s salary is not disclosed, and is not required to be disclosed, on Judge Rakoff’s financial disclosure forms.
U.S. District Court Judge, Jed Rakoff, of the Southern District of New York
Judge Rakoff’s chummy dinners with Brad Karp of Paul Weiss came to mind last week when Rakoff dismissed a major case against Board Members of JPMorgan Chase that Paul Weiss lawyers urged Rakoff to dismiss. Rakoff issued a 1-1/2 page order dismissing the case, using the very argument that Paul Weiss suggested he should use, while failing to issue a reasoned decision – which Rakoff says will be forthcoming at a future date. (What was the big hurry to give Paul Weiss this good news, other than so it could immediately brag about it?)
The case before Rakoff is one of three separate lawsuits – all assigned to the same Judge – where the largest federally-insured bank in the United States, JPMorgan Chase, is charged with looking the other way for years and failing to file the legally-mandated Suspicious Activity Reports (SARs) with law enforcement as the craven sex trafficker of underage girls, Jeffrey Epstein, laundered his illegal bounty through his accounts at the bank while sending lucrative clients to the bank in return. The other two cases were brought by victims of Epstein and by the Attorney General of the U.S. Virgin Islands where Epstein owned a private island compound.
In the case just dismissed last week by Rakoff, Paul Weiss is defending Board Members of JPMorgan Chase in a shareholders’ lawsuit brought by two pension funds. The lawsuit charges that specific Board Members, together with Chairman and CEO, Jamie Dimon, and a former executive (Jes Staley), failed to carry out their fiduciary duties by ignoring the activities of Epstein during the more than 15 years that he carried out money laundering in his accounts at the bank.
The lawsuit dropped a new bombshell, documenting that some Board Members were actually involved in business dealings with Epstein.
Rakoff’s order states that he’s dismissing the case because the “plaintiffs have failed to make pre-suit demand on the board of directors of JPMorgan or adequately allege that doing so would be futile.”
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