Referee Ignores Judicial Findings, Recommends That Steven Donziger Be Re-Admitted To Bar

Forbes - Michael I. Krauss 27/02/2020

Yesterday Mr. John R. Horan, a New York State bar-appointed referee, filed a non-binding recommendation with the New York Appellate Division, First Department, which oversees bar disciplinary proceedings and has final authority to impose attorney sanctions. Mr. Horan recommended that suspended attorney Steven Donziger be restored to the practice of law but required “to account to the [Attorney Grievance] Committee for his treatment of client funds.” (p. 35) The report follows a hearing held in September and October, 2019, to which Chevron was not a party. 

The referee’s recommendation is not binding, and the Appellate Division has previously rejected the referee’s rulings in this matter. Indeed, Mr. Horan was previously admonished to apply the factual findings I detail below by the very same court that will decide on Donziger’s law license. The Appellate Division has taken previous action that indicates it takes his long history of unlawful activity seriously, Mr. Horan’s decision to ignore the court’s admonition notwithstanding. A final decision may take years. In the meantime Donziger is trying to use this recommendation to inaccurately reframe perceptions of his situation.

Any attorney guilty of even one of unlawful acts the court found that Donziger committed - extortion, wire fraud, money laundering, obstruction of justice, witness tampering and Foreign Corrupt Practices Act violations – would certainly be disbarred.

The Appellate Division had required the referee to accept as binding the voluminous findings by Judge Kaplan of the United States District Court in New York, one of the nation's most respected federal judges, after a several-week-long trial. Previous editions of this column have exhaustively detailed those findings. In brief, Donziger was found to have committed racketeering activity including extortion, mail fraud, wire fraud, money laundering, witness tampering, obstruction of justice, and violations of the Foreign Corrupt Practices Act. Judge Kaplan found that Donziger and his associates had obtained a $9.5 billion judgment against Chevron in Ecuador through fraud and racketeering. Among the acts the federal district court found Donziger and his cohorts perpetrated were: bribing an Ecuadorian judge to permit Donziger and his team to secretly ghostwrite the multi-billion dollar judgment against Chevron; attempting to intimidate a judge; encouraging the Ecuadorian government to file criminal charges against Chevron personnel to extort a civil settlement; and ghostwriting reports by a supposedly independent court expert. Donziger did not challenge Judge Kaplan’s factual findings on appeal, and the judge’s nearly 500-page opinion was affirmed by a unanimous panel of the United States Court of Appeals for the Second Circuit. The Supreme Court then denied review.  The federal case is closed.

New York’s First Department has twice held that the District Court findings have binding collateral estoppel effect concerning Donziger’s misconduct. [Collateral estoppel means the factual findings already made against Donziger are binding on him in subsequent proceedings. He is barred from arguing otherwise, as he did here in these state disciplinary proceedings.] In a January, 2019 order, the First Department prohibited Mr. Horan from reexamining a July 2018 determination that Donziger had committed misconduct. Despite this prohibition, Donziger was allowed to call 15 witnesses at the recent hearing, where he also testified personally. Unlike the dozens of witnesses at the seven-week trial before the District Court, almost none of Donziger’s witnesses had personal knowledge of the underlying bad acts for which he was held responsible. Indeed, many of Donziger’s witnesses had financial interests in the corrupt Ecuadorian judgment, which the referee’s report does not mention.  One “character witness,” musician Roger Waters of Pink Floyd, termed his payments to Donziger not as purchases of shares of the Ecuadorean judgment but as “donations,” though Waters admitted that his bookkeeping on the matter was not “careful.” [Waters is an odd character witness. He makes no effort to hide his anti-Zionism and anti-Semitism. He says he's not anti-Israel or biased against Jews, yet Rabbi Abraham Cooper, associate dean of the Simon Wiesenthal Center, observed of him, “Forget Israel/Palestine. Waters deployed a classic disgusting medieval anti-Semitic caricature widely used by both Nazi and Soviet propaganda to incite hatred against Jews": a huge, inflatable pig he hangs off the rafters during his performances, replete with stars of David and dollar signs.]

Even though he did not challenge the District Court’s findings before the Second Circuit Court of Appeal, Donziger argued that “new evidence” presented during a Bilateral Investment Treaty arbitration “exonerated” him. Yet the international arbitral tribunal in The Hague—which included an arbitrator appointed by Ecuador—considered the exact forensic and other evidence Donziger now touts, and unanimously found that the Ecuadorian judgment against Chevron was the product of fraud and corruption and that Donziger had actively participated in obtaining it. Indeed, the panel concluded, “Short of a signed confession by the miscreants . . . the evidence establishing ‘ghostwriting’ in this arbitration ‘must be the most thorough documentary, video, and testimonial proof of fraud ever put before an arbitral tribunal.’”  Donziger’s and the Ecuadorian plaintiffs’ attempts to enforce the fraudulent judgment have been rejected in Argentina, Brazil, and Canada. Mr. Horan’s report does not mention any of this.

In its December, 2019 post-hearing brief, the Attorney Grievance Committee of New York stated that “nothing short of disbarment is appropriate” in the face of Donziger’s “egregious and pervasive” misconduct. Donziger has been and remains suspended from the practice of law in New York State. Mr. Horan’s report to readmit him is merely a recommendation. It is a single step in one of several ongoing legal processes involving Donziger. He faces federal criminal contempt charges arising from his refusal to comply with multiple orders of the District Court in the civil case in which Chevron established Donziger’s criminal conduct. He has been released on bail and subjected to electronic monitoring pending the outcome of the criminal contempt trial, which is scheduled to commence before Judge Loretta Preska in June. Donziger is also subject to a federal civil contempt proceeding before Magistrate Judge Robert Lehrburger, based on his failure to comply with Judge Kaplan’s orders. Donziger has been held civilly liable to Chevron for more than $4.7 million. He is subject to a constructive trust imposed by the District Court for Chevron’s benefit, on all property traceable to the Ecuadorian judgment.  He will never be able to keep either funds from enforcement of the Ecuadorian judgment against Chevron or proceeds from selling shares in the Ecuadorian award to investors.

Mr. Horan’s non-binding recommendation — flying in the face of an admonition by the very court that will consider it — should not prevent justice from being done.