4:17pm PT by Alex Ben Block
Federal Judge Won't Recuse Himself in David Bergstein Case
Judge Barry Russell has refused to recuse himself from the involuntary bankruptcy case involving ThinkFilm and four other companies formerly run by David Bergstein.
On Nov. 14, in federal court in downtown Los Angeles, Russell dismissed a motion asking him to step aside.
A group of creditors in the three-year-old case led by David Molner and Screen Capital International had filed court papers asking Russell to step aside from the case after a tape-recorded phone conversation between Bergstein and his former business associate Paul Parmar was made public.
In the tape, Bergstein is heard telling Parmar that he had information about the judge frequenting a prostitute and, according to the motion, "suggesting he has abused his office, and speculating as to how Bergstein can best use the information to force the court to rule in his favor."
The motion by the creditors group said it doesn't matter if the statement about Russell is true or not: "Proof of actual bias is not required for recusal." The motion quotes a statute that says only the "appearance of impartiality" is enough because of the “overriding concern with appearances."
The suit seeking the judge’s recusal said a series of rulings by Russell on June 12 marked a reversal in his previous position allowing Screen Capital International to act on behalf of the court-appointed bankruptcy trustee to try and recover assets from the bankrupt companies, including those that had been dispersed to other accounts. Screen Capital International and related parties have filed an appeal of Russell’s June 12 rulings with the federal district court.
Russell, one of the longest serving judges in the federal bankruptcy court, said in making his ruling he saw nothing that would make him step aside. He also said he never actually listened to the tape in question.
Russell also denied a request by Jeffrey Garfinkle, an attorney for Bergstein’s former business partner Ronald Tutor, to place financial sanctions on the Screen Capital International attorneys for having even brought the recusal motion.
On behalf of Screen Capital International, Molner declined to comment on the ruling. However, he said an appeal of the judge's decision is planned.
In an article on a website called Splash, Bergstein indicated that the statements heard on the tape are not true, and that he only made them because "he was giving Parmar outlandish misinformation in order to see if it would be leaked to Molner."
An attorney for Bergstein, Alex Weingarten, said he could not confirm that was his client’s intent when he spoke to Parmar.
Weingarten said Judge Russell found that the motion for recusal had been made in bad faith by Molner, who conspired with Parmar to release the tape. “The judge found no merit to any of it,” said Weingarten, adding: “Judge Russell recognized it for exactly what it was -- a desperate attempt by Molner and Aramid to salvage a losing case.”
Weingarten said the release of the tape, which he charges was illegally recorded (something Parmar disputes), was improper because there is an order in a civil case in California involving Bergstein and Molner sealing the tape, meaning it cannot be released.
Parmar is not a party to that case and has said through his attorney he is not subject to that order.
However, Parmar is a party to a separate federal case in New Jersey in which the same recorded phone conversation was entered as part of the discovery process. In that case, Bergstein sought a temporary restraining order to stop the dissemination of that tape or others.
On Sept. 26, U.S. District Court Judge Dolly Gee refused Bergstein’s request for a TRO. In a footnote to her decision, it is noted that in New Jersey “no protective order was in place,” meaning that there was no prohibition to the tape being made public.