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SCOTUSblog founder faces January tax evasion trial

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Appeal hinges on $2.65 million home financed by litigation

funder

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Goldstein says he needs real estate proceeds to pay for

defense

By David Thomas and Mike Scarcella

WASHINGTON, Dec 4 (Reuters) - (Billable Hours is

Reuters' weekly report on lawyers and money. Please send tips or

suggestions to .)

The prosecution of prominent Washington lawyer Tom Goldstein

has veered into an unusual appellate showdown involving pricey

D.C. real estate, the constitutional right to counsel and a

high-powered litigation funding firm that is set to be a witness

in the case.

Goldstein, formerly a leading member of the U.S. Supreme Court

bar and a founder of SCOTUSblog, is facing trial next month in

Greenbelt, Maryland on 22 counts of tax evasion and other

financial criminal charges allegedly connected to his side

career as a big-money poker player.

Since August, he has been seeking court permission to sell his

nearly 5,000 square-foot home in Washington's tony Wesley

Heights neighborhood to help fund his defense. That request is

now before the 4th U.S. Circuit Court of Appeals, after a judge

in Maryland agreed with the government that the house is wrapped

up in the allegations against Goldstein and cannot be sold.

Goldstein, who has pleaded not guilty, has had a string of

defense lawyers at the trial court but is representing himself

in his appeal. He told the 4th Circuit he has incurred millions

of dollars in legal fees and expenses, and that barring him from

selling the home, which he purchased for $2.65 million in 2021,

violates his rights under the Constitution.

"As a criminal defendant, I have a Sixth Amendment right to use

'untainted' assets that are necessary to pay the costs of my

defense. The home itself is not 'tainted,'" Goldstein said in

his Nov. 26 appellate brief.

The government opposes Goldstein's bid to sell the house, now

valued at more than $3 million by real estate listing platforms

Redfin and Zillow. In a brief filed Wednesday, prosecutors said

the property is indeed tainted because Goldstein made false

statements on a loan application related to its purchase.

In any case, the government told the 4th Circuit, the home

is being held as collateral for an appearance bond for

Goldstein, who was deemed a flight risk by U.S. District Judge

Lydia Kay Griggsby.

Attorneys for Goldstein at Munger, Tolles & Olson did not

immediately respond to a request for comment.

The government alleges that Goldstein falsely omitted

information on two loan applications by not disclosing more than

$15 million in unpaid personal debts and federal taxes. Federal

prosecutors have said Goldstein won and lost millions of dollars

in individual poker matches and made improper payments through

his law firm to cover debts.

After getting turned down for one loan application in March

2021, Goldstein allegedly borrowed more than $5.6 million from a

company that invests in litigation and used the funds to buy the

Washington home. Goldstein never disclosed his personal debts to

the funder, prosecutors said.

Goldstein revealed in his 4th Circuit brief last week that the

funder is Parabellum Capital, a top litigation finance firm with

offices in New York and Boston with more than $1.5 billion in

investments as of last year. Goldstein said Parabellum placed no

restrictions on the funds, which he used to buy the D.C.

property and pay taxes.

Parabellum said in a statement that it is a witness in

Goldstein's criminal case and that the firm has not been accused

of wrongdoing. "A minor part of the case involves small

investments Parabellum made several years ago," the firm said.

Goldstein's bid to quickly sell the property faces an uphill

battle given its connections to his bail conditions,

white-collar experts said.

"The facts here are what's going to be a problem for him,"

said Michael Weinstein, who leads the white collar criminal

defense practice at law firm Cole Schotz. Weinstein said he was

a law school classmate of Goldstein's at American University,

but has no personal relationship to him and is not involved in

the case.

"In my experience, the federal government typically prevails

in cases where property is reasonably alleged to be a tainted

asset," said Arun Rao, a Mayer Brown partner and former deputy

assistant U.S. attorney general.

Goldstein wants the 4th Circuit to reverse Griggsby's ruling

and allow the sale, or to order an evidentiary hearing on

whether the house is a tainted asset.

A spokesperson for the Maryland U.S. attorney's office did

not immediately respond to a request for comment.

- Alphabet's Google urged a federal judge in California last

week to slash a request for $128.3 million in legal fees tied to

a class settlement over its advertising practices, calling the

demand "massively inflated."

The plaintiffs' lawyers in a court filing argued that the fee

award is justified by what they called a "trailblazing"

settlement. Law firm Pritzker Levine served as the lead for the

consumer plaintiffs, and worked with firms Bleichmar Fonti,

Simmons Hanly, DiCello Levitt, Cotchett Pitre and Bottini &

Bottini.

Under the settlement, Google will add a new control allowing

users to limit data shared in online ad auctions and will notify

account holders via email and a dedicated webpage. The

plaintiffs value these changes at $1.4 billion.

Google, which has denied any wrongdoing, counters that the

lawsuit delivered minimal success. There was no settlement fund,

and the company said it was implementing only modest changes

largely duplicating existing privacy settings.

Google has proposed capping the fee award at about $14.3

million. The court will weigh the competing proposals at a

February hearing. Google did not immediately respond to a

request for comment.

Elizabeth Pritzker, a lead attorney for the plaintiffs, said

Google's filing "misstates the record and the law in an effort

to diminish plaintiff's counsel's reasonable compensation for

this significant result."

- A federal judge in Philadelphia on Thursday rejected a bid

by plaintiffs' law firm Hagens Berman Sobol Shapiro to force his

recusal from long-running litigation over the drug thalidomide.

The Seattle-based law firm argued that communications between

U.S. District Judge Paul Diamond and court-appointed official

William Hangley were improper, citing hundreds of hours of

contacts between them.

In his ruling Diamond dismissed the claim as "absurd," noting

that Hangley's appointment in 2014 allowed such communications

and that they averaged less than an hour per week over 11 years.

Diamond said several plaintiffs opposed his recusal and none

supported the firm's arguments.

"The law does not require a judge's recusal because a party

dislikes his rulings," Diamond wrote.

The recusal motion followed Hangley's 2023 report accusing the

firm of dishonesty and finding that a former partner altered

evidence and gave false testimony. The report said the firm's

conduct bordered "on the criminal."

Hagens Berman has disputed the report and denied any

wrongdoing. The firm also has questioned Diamond's decision this

week to refer the firm to the U.S. Justice Department to

investigate its conduct in the case. Hagens Berman and the

firm's outside counsel did not immediately respond to requests

for comment.

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