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PITTSBURGH
POST-GAZETTE
Editorial: Judging Judge Smith / He owes the
Senate an apology on Black cases
Tuesday, February 26, 2002
Today the Judiciary Committee of the U.S. Senate is scheduled to hold a
hearing on President Bush's nomination of D. Brooks Smith, the chief judge
of the U.S. District Court here, to the 3rd U.S. Circuit Court of Appeals.
A few weeks ago it looked as if the hearing would be a mere formality,
despite some overheated objections from liberal interest groups to the
confirmation of Judge Smith, who has broad support in the local legal
community.
That all changed when one of those interest groups publicized the fact
that Judge Smith was bafflingly slow to remove himself from two cases in
which a bank that employed his wife -- and in which the couple owned at
least $100,000 worth of stock -- was a major player.
The two cases, one a civil case brought by the Securities and Exchange
Commission, the other a criminal trial, grew out of a fraud perpetrated on
dozens of Pennsylvania school districts by John Gardner Black, a financial
adviser now in a federal penitentiary. According to federal regulators,
Black misled his clients and invested their funds in chancy securities.
Much of the money entrusted to Black by several school districts was
deposited at the Mid-State Bank, a prominent financial institution in
Altoona
, Judge Smith's hometown. In September 1997, after performing an audit,
the SEC began proceedings to suspend Black's securities license and to
have a court take control of the assets of his clients. The complaint
mentioned that Black used several accounts at Mid-State.
Here is where the problem arises. Not only was Judge Smith's wife,
Karen, a Mid-State officer, but also Judge Smith owned a significant
amount of stock in the bank's holding company. Nevertheless, the judge did
not immediately remove himself from the SEC case.
The Community Rights Counsel, a Washington-based public interest group
that has criticized Judge Smith on other grounds, has constructed an
elaborate explanation of how Judge Smith might have benefited financially
from an order he issued maintaining a freeze on some school districts'
assets not only in Mid-State but also in other banks. The group downplays
the fact that the terms of Judge Smith's order were suggested by the SEC
and former Gov. Dick Thornburgh, a trustee in the case.
But that's not the point. Under federal law, a judge must remove
himself from a case in which he knows that he "has a financial
interest in the subject matter in controversy or in a party to the
proceeding or any other interest that could be substantially affected by
the outcome of the proceeding." A separate provision in federal law
requires that a judge recuse -- that is, remove -- himself whenever his
"impartiality might be reasonably questioned."
Judge Smith did just that in these two cases, but belatedly. In the
civil case brought by the SEC in 1997, the judge issued more than a dozen
orders before stepping down in favor of a colleague, but without citing
his own financial interest in Mid-State Bank (which he did include in
standard financial disclosure forms). In the 1999 criminal case against
John Gardner Black, the judge complied with a request by Black's attorney
that he recuse himself, but in doing so he again did not specify his
financial interest in Mid-State.
Obviously, the Senate Judiciary Committee must question Judge Smith
about his slowness to recuse himself. It may be that the judge was simply
obtuse about appearances, or, convinced in his own mind that he would be
impartial, he hesitated to turn work over to colleagues on an understaffed
bench. Such explanations don't alter the fact that his slowness to pull
out of these matters violates the spirit if not the letter of federal law.
We hope Judge Smith acknowledges as much in his testimony before the
Judiciary Committee.
That committee and the full Senate have the responsibility not only to
scrutinize Judge Smith's conduct in these matters but also to weigh his
qualifications as a whole. As Stephen Gillers, a professor of legal ethics
at
New York
University
, told the Post-Gazette: "The fact the judge has made a mistake of
this kind is a fact the Senate should consider. But there are other
factors that go on the scale."
Those other factors include the esteem in which Judge Smith is held by
lawyers -- liberal and conservative, Republican and Democratic -- who have
appeared before him. His legal philosophy is also a legitimate subject of
inquiry, though the Judiciary Committee should be aware that lawyers in
Pittsburgh dispute the depiction of Judge Smith as a conservative in the
mold of Clarence Thomas or Antonin Scalia.
While it may have been the suspicion that Judge Smith was an extremist
that inspired the Community Rights Counsel and other critics to launch a
fishing expedition into his record, the fact is that they landed a big one
in his conduct in the John Gardner Black cases. A judge with significant
financial interest in a bank -- a bank that employs his wife -- should not
be sitting in a case in which that bank is even a peripheral actor.
Judge Smith needs to make it clear to the Senate that, in retrospect,
he realizes he should have refused from the outset to touch these matters
with a 10-foot pole.
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