# United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 14, 2004 Decided December 17, 2004

No. 03-5234

S ECURITIES AND E

XCHANGE C OMMISSION

, A PPELLEE

v.

L OVING S PIRIT F OUNDATION I NC

. AND

P UMA F OUNDATION

, L TD

., A PPELLANTS

P AUL A. B ILZERIAN

, ET AL

., A PPELLEES

Appeal from the United States District Court

for the District of Columbia

(No. 89cv01854)

David A. Maney

, pro hac vice

, argued the cause for

appellants. On the brief was G. Michael Nelson

.

Charle s B. Wayne argued the cause and filed the brief for

appellee Deborah

Meshulam, in her capacity as receiver of the

Securities and Exchange Commission v. Paul A. Bilzerian, et al.

, Civil Action No. 89-1854 (SSH) Receivership Estate.

Before: S ENTELLE

, H ENDERSON

, and T ATEL

, C ircuit2

Judges

.

Opinion for the Court filed by Circuit Judge T ATEL

.

T ATEL

, Circuit Judge : In this case, we consider challenges

to a pair of district court orders: one defines the obligations of

a court-appointed receiver, and the other denies a motion to

recuse the district judge. Finding error in neither ruling, we

affirm in all respects. Also, because appellants’ lawyers, G.

Michael Nelson and David A. Maney, may have violated ethical

obligations binding on attorneys practicing in the federal courts,

we will order them to show cause why sanctions should not be

imposed.

I.

I n 1989, a jury sitting in the United States District Court for

the Southern District of New York convict ed Paul A. Bilzerian

of securities fraud and con spiracy to defraud the United States.

See United States v. Bilzerian

, 926 F.2d 1285, 1289-91, 1294

(2d Cir. 1991) (opinion of Cardamone, J. ) (affirming the

conviction). Bilzerian was sentenced to four years

imprisonment and fined $1.5 million. I d

. Following his

conviction, the Securities and Exchange Commission filed a

civil suit against Bilzer

ian in the United States District Court for

the District of Columbia. That court ordered Bilzerian to

disgorge over $62 million, representin g profits from his

fraudulent activities and prejudgment interest. S EC v. Bilzerian

, 814 F. Supp. 116 (D.D.C 1993) (orde ring disgorgement of

profits), aff’d 29 F.3d 689 (D.C. Cir. 1994); SEC v . Bilzerian

, No. 89-1854, 1993 WL 542584 (D.D.C. June 25, 1993) (setting

value of interest). Seven years later, with the judgment still

unpaid, the district court found Bilzerian in contempt of the

disgorgement order, S

EC v. Bilzerian

, 112 F. Supp. 2d 1 2

(D.D.C. 2000), aff’d 2003 WL 22176183 ( D.C. Cir. Sept. 22,

2003), established a rec eivership estate “for the purpose of

identifying, marshalling, receiving, and liquidating his assets,”3

SEC v. Bilzerian, 127 F. Supp. 2d 232 , 232 (D.D.C. 2000)

, appointed appellee De borah Meshulam as receiver, i d

., and sent

Bilzerian back to prison for continued noncompliance, SEC v.

Bilzerian , No. 89-1854 (D.D.C. Jan. 12, 2001).

Appellants Puma Foundati o n and Loving Spirit Foundation

are nonprofits dir ected by Bilzerian’s wife, Terri Steffen. When

the receiver discovered that Bilzerian had a financial interest in

the two foundations, which shared an address with the BilzerianSteffen residence in Tampa, Florida, the district court froze the

foundations’ assets and ordered them turned over to t he court.

SEC v. Bilzerian

, No. 89-1854 (D.D.C. May 11, 2001 ) (order

granting ex parte temporary asset freeze and other relief); S EC

v. Bilzerian

, No. 89-1854 (D.D.C. June 1, 2001) (order granting

preliminary possession).

Later, in December 2001, the receiver entered into a consent

agreement with Steffen, Puma, Loving-Spirit, and several other

Bilze rian-related entities pursuant to which many of the funds

and assets they once held (and that were then in the court’s

regist ry) were to be transferred to the receiver. One such asset

was a large block of stock in Cimetrix, Inc., a publicly traded

company once run by Bilzerian. The agreement also called for

the sale of the Bilzerian-Steffen residence pursuant to the terms

of a separate “Joint Marketing Agr eement.” Steffen and the

receivership estate would split the proceeds o f the sale evenly.

Finally, the consent agreement provided t hat once the IRS

relea s ed the two foundations’ tax liabilities, their assets would

be donated to the Salvation Army.

C e ntral to this case, one paragraph in the consent agreement

called for the sett

ling parties to execute a series of liability

releases. Steffen, a trust, and several holding entities agreed to

execute releases in favor of Cimetrix. The agreement also

provided t

h at Cimetrix, though neither a party to the litigation

nor a signatory

to the agreement, would “execute a release in

favor of Steffen, the Entities, th e Foundations, and [another4

Bilzerian-related entity] in form acceptable to them.” After the

parties signed the agreement, Cimetrix exe cuted releases in

f avor of various Bilzerian-related entities—but not Puma or

Loving Spirit.

Along with the consent agreement, the parties executed an

escrow agreement. Under that agreement, the receiver’s law

firm, as escrow agent, would hold all documents not filed wi t h

the court until

entry of the consent judgment. Once the court

entered a final judgment, the escrow agent would transfer certain

documents, including the “third party releases involv ing . .

. Cimetrix” to “counsel for the released parties.”

A cting pursuant to the consent agreement, the district co urt

entered judgment in January 2002. S EC v. Bilzerian

, No. 89-

1854 (D.D.C. Jan. 16, 2002). The judgment incorporated the

consent agreement b y reference, making its provisions orders of

the court. I

d

., slip op. at 10. Finding the disgorgement agreed

to by the parties sufficient to purge Bilzerian’s contem pt, the

court released him from prison. Id

.

The consent agreement and judgment, how ever, failed to

bring the receivership proceeding to a close. Over a year after

entry of the judgment, in March 2003, Puma and Lovin g Spirit

sued Cimetrix in t

h e United States District Court for the Middle

District of Florida, alleging breach of contract a nd securities

fraud. Cimetrix raised several counterclaims, making its failure

to release the founda

t ions a matter of immediate concern to

them. In a letter to receiver Meshulam, Steffen asserted that the

consent agreement requir ed the receiver to procure the

unexecuted releases and demanded to know by the end of

business that day w hether the receiver would do so. Reiterating

her demand two days later, Steffen added that “[t]ime is of the

essence because Puma and Loving Spirit Foundati o n will be

required to incur substantial additional leg al fees in the event I

do not receive assurance from you by close of business today

that the requested releases will be forthcoming shortly.” Hours5

later, Steffen emailed an attorney for the receiver, threatening

that “if I do not receive the Cimetrix releases by the close of

business tomorrow, I will be forced to take drastic a ction.”

Stef fen added that she would “at the very least, be forced to

assume that the entire settlement was the result of fraud on the

part of the Receiver and the SEC and that the entire agreement

should be rescinded.” Id

.

In response, receiver Meshulam filed a “mot ion to enforce,”

asking the district court to clar ify whether she had any

obligations with regard to the unexecuted releases an d warning

that Steffen had a history of obstruction tha t made her threat of

“drastic action” particularly serious. Fearing that Steffen might

use the releases as an excuse to imp ede the sale of the Florida

pro perty, the receiver also sought an order forbidding Steffen

from obstructing marketing effor ts in certain specified ways.

The two foundations responded that the consent agreement,

pro perly interpreted, required the receiver to obtain the releases.

Ac ting alone, Puma also moved to recuse the district judge, the

Honorable Royce C. Lamberth. Puma sought recusal under both

28 U.S.C. § 144, which provi des that a judge with “personal

bias” sh a ll cease presiding over a case when a party documents

the bias in an affidavit, and 28 U.S.C. § 455(a), which provides

that a judge “shall disqualify himself” when “his impartiality

might reasonably be questioned.”

J udge Lamberth denied Puma’s motion to recuse. He found

the section 144 motion untimely and concluded t hat the section

455(a) motion fell short of the legal standard r equired for

recusal. SEC v. Bilzerian , No. 89-1854 (D.D.C. June 11, 2003).

Judge Lamberth als o granted the relief receiver Meshulam

requested, observing that nothing in the co nsent agreement gave

the receiver an

y obligation to procure releases from Cimetrix.

SEC v. Bilzerian

, No. 89-1854, slip op. at 3-5 (D.D.C. July 17,

2003). As the agreement explicitly assigned other obligations

to named individuals and entities, Judge Lamberth added, it6

would have been equally explicit about the receiver’ s obligation

to obtain releases from Cimetrix had the parties actually

intended to assign her that task. Id . at 4.

Puma and Loving Spirit now appeal, arguing that the

receive r lacked standing to bring her motion to enforce. On the

merits, they argue that the district court incorrectly interpreted

the consent agreement’s provision concernin g the Cimetrix

releases. Puma challenges Judge Lamberth’s decision not to

recuse himself. We address each contention in turn.

II.

“Nowhere in the Motion to Enforc e,” Puma and Loving

Spirit argue, “does Meshulam identify any provision of the

Consent Judgment that t

he Foundations violated.” Appellant’s

Br. at 7. According to the two foundations, the receiver filed the

motion “solely because the Foundations threaten e d to take

action.” I

d

. “Allegations of possible future injury,” they

conclude, “do not satisfy the requirement of Article III.” I d

. at

8 (quoting Whitmore v. Arkansas, 4 95 U.S. 149, 158 (1990))

. This argument is frivolous.

To begin with, Steff

en’s threats to take “drastic action,”

inclu ding rescinding the consent agreement if the receiver failed

to procure the releases immediately, easily satisfy Article III’s

requi rement that “alleged harm . . . be actual or imminent, not

‘conjectural’ or ‘hyp othetical.’” W hitmore

, 495 U.S. at 155

(internal citations omitted). More important, we think the

receiver did not even need Article III standing to pursue her

m otion to enforce. Neither a plaintiff nor a defendant, the

receiver functions as an arm of the court, P helan v. Middle

States Oil Corp. , 154 F.2d 978, 991 (2d Cir. 1946), appointed to

ensure that prevailing parties can and will obtain the relief it

orders, see generally 13 James Wm. Moore et al., Moore’s

Federal Practice ¶ 66.03[3] (3d ed. 2000). A “receiver’s

authority,” therefore, “is defined solely by the order of the7

appointing court,” id

. ¶ 66.04[1][b], which may “pro vide for the

administration of the receivers hip in any way it sees

appropriate.” I

d

. ¶ 66.0 6[4][a]. The district court, moreover,

retains “equitable power to review the actio n s of [a] receiver.”

Fed. Home Loan Mortgage Corp. v. Spark Tarrytown, Inc

. , 829

F. Supp. 82, 85 (S.D.N.Y. 1993) (interna l quotation marks and

citations omitted).

In this case, receiver Meshulam’s motion to enforce sought

clarification of responsibilities imposed upon her by the district

court in the 2002 consent judgment, a judgment that kept “[t]he

Receivership Orders

. . . in full force and effect,” S

EC v.

Bilzerian

, No. 89-1854, slip op. at 10 (D.D.C. Jan. 16, 2002).

When Steffen thre atened to withdraw from the court-approved

settlement agreement if t

he receiver failed to obtain the Cimetrix

r eleases, the receiver, seeking to preserve the agreement, aske d

the court for

guidance on whether she had any obligation to

obtain the rel

e ases. In doing so, the receiver was fulfilling her

obligation to protect and preserve the receivership estate—an

action that implicates no Article III co nsiderations. In ruling on

the motion, mor

eover, the district court exercised its “extremely

broad” supervisory

power over an ongoing receivership

proceeding. SEC v. Hardy , 803 F.2d 1034, 1037 (9th Cir. 1986).

We thus turn to the foundations’ challenge to the district court’s

interpretation of the consent agreement.

III.

Reviewing the district court’s decision de novo, Richardson

v. Edwards

, 127 F.3d 97, 101 (D.C. Cir. 1997) (explaining that

we review the interpretation of a consent agreement de novo),

we agree that the receiver has no obligation to procure the

releases from Cimetrix. The agreement discusses releases only

once, in paragraph t

hirteen. With respect to the specific releases

at issue here, paragraph thirteen provide s: “Cimetrix will

execute a release in favor of Steffen, the Entities, [and] the8

Foundations

. . . in form acceptable to them.” As the district

court suggested, this l

anguage is unambiguous. S EC v.

Bilzerian

, No. 89-1854, slip op. at 3-5 (D.D.C. July 17, 2003).

The clause says only that “Cimetrix will execute” t he releases.

Nowhere does it say that the receiver must procure the releases.

In fact, even though other provisions of paragraph thirteen

impose specific obligations on the receiver, the provision

relating to the Cimetrix releases makes no reference to the

receiver at all. At oral argument, counsel for the foundations,

Mr. Maney, admitted as much: “As a matter of fact,” he

explained, “there’s nothing [in the text of the agree ment] that

requires the receiver to get the rel ease.” Tr. of Oral Arg. at 23.

In addition to ru

nning counter to the agreement’s text, the

foundations’ interpretation makes no sense. Receiver Meshulam

rightly points out that, “as a fiduciary to the District Court and

the Receivership E state, there is no reasonable basis to presume

that the Receiver could represent, in any capacity, the interests

of the Foundations, entities she had been i nvestigating and as to

which she was adverse.”

Appellee’s Br. at 20. Moreover,

“nothing in the record

. . . suggest[s] that the Receiver would

have any understanding of the form, breadth and scope of

releases the Foundations wanted from Cimetrix.” Id . at 22.

Faced with these fac ts, the foundations offer four arguments

for their interpretation of the agreement, none of which merits

serious consideration. First, because nothing in the consent

agreement requires them to release Cimetrix, they ask, “with

what did the district c ourt expect the Foundations to ‘negotiate’

with Ci metrix?” Appellant’s Br. at 10. A release, however, is

n ot the only consideration the foundations could offer in

exchange for the release they seek. In any event, the

foundations’ doubts about whether they can obta in a release fall

far short of the evidence they wo uld need to overcome the fact

that nothing in the agreement requires the r eceiver to obtain it.

Second, claiming that the receiver was Cimetrix’s controlling9

shareholder, the founda

tions argue that “she was . . . in a

p osition to cause the releases to be signed by Cimetrix.” I d

. at

10-11. In the district court, however, the foundations offered no

evidence to supp ort this claim, and the receiver tells us that “[i]n

fact, the Receiver is not a ‘controlling shareholder’ of Cimetrix.”

Appellee’s Br. at 21. Insisting otherwise, the foundations attach

Cimetrix’s April 15, 2003 proxy statement to their reply brief,

asking us to “take judicial notice of” it. Appellant’s Reply Br.

at 9. This argument is doubly waived: not only did the

foundations fail to present the pro xy statement to the district

court, see United States v. Thomas

, 114 F.3d 228, 250 (D.C. Cir.

1997) (noting that when an “a rgument was not raised below, we

conside r it waived”), but as counsel should know, this court does

not consider arguments fir st offered in a reply brief. S ee Power

Co. of Am., L.P. v. FERC , 245 F.3d 839, 845 (D.C. Cir. 2001).

The foundations’ final two arguments—that they could not be

obliged to procure the releases because the escrow agreement

provides that the receiver’s “law firm (not t h e Foundations) was

responsible for delivering the Cimetrix Releases to counsel for

the Foundations,” Appellant’s Br. at 11, a nd that the district

court should have conducted an evidentiary heari ng—are

likewise waived. In the district court, the foundations neither

relied on the es c row agreement nor pointed to any other

extrinsic evidence that would have required an e videntiary

hearing. S ee SEC v. Bilzerian

, No. 89-1854, slip op. at 4

(D.D.C. July 17, 2003) (noti ng that “no extrinsic evidence has

been offered to support” the foundations’ interpretation of the

consent agreement).

IV.

This brings us to Puma’s motion to recuse. According to

Puma, a series of Judge Lamberth’s rulings, beginning over two

years before t

he foundation filed its motion, show “personal

bias,” re quiring recusal under 28 U.S.C. § 144. Puma also

contends that the rulings would lead a reasonable person to10

question Judge Lamberth’s impartialit y

, thereby requiring

recusal under 28 U.S.C. § 455(a).

28 U.S.C. § 144

To recuse a judge under section 144, a litigant must submit,

along with its motion, an affidavit statin g “the facts and the

reasons for the beli ef that bias or prejudice exists.” 28 U.S.C. §

144. The affidavit, which “shall be accompanied by a certificate

of couns el of record stating that it is made in good faith,” must

be “timely.” I

d

. Crucial to the integrity of the judicial process,

the timeliness requirement ensures that a party may no t wait and

decide whether to file based on “whether he like s subsequent

treatment that he receives.” In re United Shoe Mach. Corp ., 276

F.2d 77, 79 (1st

Cir. 1960).

Puma submitted its motion in June 2003, together with an

affidavit from Terri Steffen and a cer tificate from attorney G.

Michael Nelson. Observing that approximately eight months

had passed since the last of the rul i ngs complained of, Judge

Lamberth dismissed the motion as untimely. S EC v. Bil zerian

, No. 89-1854 (D.D.C. July 11, 2003).

This C ircuit has never articulated the standard by which it

will review denial of a

section 144 motion to recuse. Most

circuits review

for abuse of discretion. S ee, e.g., Jones v. Pittsburg Nat’l C orp. , 899 F.2d 1350, 1356 (3d Cir. 1990);

United States v. Owen s, 902 F.2d 1154, 1157 & n.2 (4th Cir.

1990). Others review de novo. S ee, e.g., United States v. Sykes

, 7 F.3d 1331, 1339 (7th Cir. 1993)

. In this case, we need not

decide which standard to adopt, for even revie wing de novo we

can easily sustain Judge Lamberth’s decision.

Although section 144 requires the affidavit to be filed “not

l ess than ten days before the beginning of the term at which the

proceeding is to be heard, [unless] good cause shall be shown,”

the stat ute says nothing about what the timeliness requirement11

means where, as in this case, the recusal motion rests on events

occurring afte

r proceedings began. In such circumstances, some

courts have required the affidav it to be filed “at the earliest

moment.” E.g., Sykes

, 7 F.3d at 1339 (citations omitted); James

v. District of Columbia , 191 F. Supp. 2d 44, 47 (D.D.C. 2002)

(quoting Sykes

, 7 F.3d at 1339). In the cited Seventh Circuit

decision, an aff

idavit filed two months after the allegedly

prejudicial statement was considered untimely. S ee Sykes

, 7

F.3d at 1339. Sitting en banc, this court expressed “serious

doubt” about the timeliness of an affidavit based on remarks the

judg e made “more than two weeks before” and a law review

a rticle he published “more than a year” earlier. S muck v.

Hobson

, 408 F.2d 175, 183 (D.C. Cir. 1969) (en banc). We have

found no case, n

or has Puma cited one, permitting a delay as

l ong as the one in this case, where Puma waited two years after

the first order it complains of and over six months after the last.

During its long delay, mo reover, Puma made over a dozen

filings in the proceedings before Judge Lamberth, and consistent

with the policy underlying the timeliness req uirement, courts

have observed t

hat filing motions between the events

complained of and submission of th e affidavit weighs heavily

against a finding of timeliness. E .g., Smith v. Danyo

, 585 F.2d

83, 86 (3d Cir. 1978). Indeed, during the period of time at issue

i n this case, Puma consented not only to have judgment entered

against it, but also to the district court’s continuing jur isdiction.

Why, then, did Puma wait s o long to file its motion and

affidavit? Was it waiting to see “whether [it] like[d] the

subsequent treatment that [it] receive[d]”?

Puma offers two entirely unconvincing expl a nations for its

tardiness. First, it tells us that it could not seek recusal earlier

for want of a law

yer—a situation it blames on the district court’s

asset freeze. Yet Puma had counsel at various times between the

events described in the Steffen affidav it and the time it filed the

affidavit. Its assets, moreover, were not frozen during the five12

mo nths immediately preceding the filing of the recusal motion.

Second, Puma alleges that the receiver’s motion to enforce

initiated a new proceeding, and that it moved to recuse as soon

as that proceeding began. As we explained, however, the

motion was part of the same re ceivership proceeding that had

been ongoing for several years. Supra at 7. Given these

circumstances, the motion and affidavit were plainl y untimely.

28 U.S.C. § 455(a)

Section 455 (a) permits a litigant to seek recusal of a judge

“in any proceeding i

n which his impartiality might reasonably

be questioned.”

In assessing section 455(a) motions, this circuit

applies an “objective” standard: Recusal is required when “a

reasonable and informed observer wou ld question the judge’s

impartiality.” Unite d States v. Microsoft Corp. , 253 F.3d 34,

114 (D.C. Cir. 2001) (en banc) (per curiam). Because a judge

must “form judgments of the actors in those court-house dramas

called trials” and “render decisions” based on them, rulings

resting on record evidence “almost never constitute a valid basis

for a bias or partiality motion.” Liteky v. United States , 510 U.S.

540, 551, 555 (1994) (internal quo tation marks and citations

omitted). “[O]nly in the rarest circumstances,” the Supreme

Court has warned, will rulings “evidence the degree of

f avoritism or antagonism required” to warrant recusal. Id

. at

555. Finding that Puma identified no bias approaching the level

required for recusal, Judge Lamberth denied the foundation’s

motion. We review a district judge’s refusal to recuse under

section 455(a) for abuse of discretion. U nited States v. Pollard

, 959 F.2d 1011, 1031 (D.C. Cir. 1992).

In support of its claim that an “objective observer” would

“reasonably question Judge Lamberth’s impartiality,”

Appellant’s Br. at 21-22, Puma points only to the judge’ s

rulings. The foundation alleges neither that Judge Lamberth

relied on something other than the evidence before him, nor that13

the rulings reflect the kind of “extreme” bias that could provide

a basis for recusal. S ee Liteky

, 510 U.S. at 551. Moreover, as

Puma’s counsel conceded at oral argumen t, the foundation never

appealed the decisions it now claims are so biased. Tr. of Oral

Arg. at 30-31. Given this, we have no basis for concluding that

Judge Lamberth abused his discretion in denying the motion to

recuse. Quite to the contrary, as we shall now explain, his

rejection of Puma’s effort to recuse under both secti ons 455 and

144 was fully justified.

V.

Rule 11 of the Federal Rules of Civil Procedure provides

that i n submitting motions and other pleadings, or defending

them before the district court, att orneys vouch that “the claims,

defenses, and other l

egal contentions therein are warranted by

existing law or a nonfrivo lous argument for the extension,

modification, or reversal of existing law or the establishment of

new law.” Fed. R. Civ. P. 11(b)(2). Attorneys also warrant that

“the allegations and other factual contentions [therein] have

evidentiary sup port.” Fed. R. Civ. P. 11(b)(3). Federal Rule of

Appellate Procedure 38 provides th at if the court determines that

an appeal is “frivolous,” it may award “just damages and single

or double costs to the appellee.” Under Federal Rule of

Appellate Procedure 46, courts of appeals h a ve authority to

discipline attorneys who engage in “conduct unb ecoming a

member of the bar”; if the attorney is a member of the court’s

bar, the court has authority to suspend or disbar the attorney for

such conduct. In filing the motion to recuse and appealing

Judge Lamberth’s denial of it, we believe that attorneys G.

Michael Nelson, who represented th e foundations in the district

court and who wrote and filed the appe llate briefs, and David A.

Maney, who ar gued the case before us, may have run afoul of

one or more of these rules.

To begin with, both the motion to recuse a n d this appeal are14

f rivolous in two respects. First, as we have shown, the motion

was not only untimely , but blatantly so. S upra at 10-11. The

case law, moreover, is cl

ear enough that any reasonably diligent

attorney should have known this. As we pointed out, no case we

know of permitted a de lay even remotely as long as the one at

issue here. S ee supra at 11. Given this, we cannot imagine how

attorne ys Nelson and Maney could have thought that the delay

in filing the motion was at all defensible.

Second, the motion rests entirely on judicial rulings , which

virtually never provide a

basis for recusal. S ee supra at 12-13.

Indeed, we have foun

d no case where this or any other federal

court re c used a judge based only on his or her rulings. At oral

argument, Mr. Maney conceded that he too knew of n o such

case. Tr. of Oral Arg. at 30. The absence of such case law is

h ardly surprising, for if disqualification were required “merel y

as a result of counsel's disa greement with judicial conclusions

reached in the course of litigation, the judicial system w o uld

grind to a halt.” Barnett v. City of Chicago , 952 F. Supp. 1265,

1269 (N.D . Ill. 1997). Indeed, even if a particular ruling or a

series of rulings revealed bias, we doubt very much that a

recusal motion w ould be proper where, as here, the movant

could have appealed the challenged decisions but fai led to do so.

“Almost invariably,” the Supreme Court h as admonished,

adverse judicial decisions give “proper grounds fo r appeal, not

recusal.” Liteky , 510 U.S. at 555.

In addition to being frivolous, Puma’s motion to recuse and

its appellate brie f

s—filed by attorney Nelson and defended in

this cou rt by attorney Maney—contain false statements. For

example, the motion states that, “without ever having m et Ms.

Steffen, without Ms. Steffen ever having been accused of any

wrongdoing, without a shred of contradictory evidence or

testimony, Judge Lamberth unilate rally announced that he would

not believe any of Ms. Steffen’s swo rn testimony.” Puma

Foundation’s Mem. in Supp. of Its Mot. for Recusal at 3-4. This15

accusation, reiterated virtually word for word in Puma’s brief to

this court, Appellant’s Br. at 16, relates to Judge Lamberth’s

treatment of an af

fidavit Steffen filed in support of Bilzerian’s

motion to purge his contempt. Denying that motion, Judge

Lamberth explained:

“The Court does not find . . . the affidavit

of Ms. Terri L. Steffen, filed with defendant’s Certificate, to be

credible. .

. . [T]he wording used by Ms. Steffen . . . leaves much

open to interpretation as to whether there are other documents

that have not been turned over.” SEC v. Bilzerian , No. 89-1854,

slip op. at 3 (D.D.C. June 28, 2001) (order denying m otion to

certify full compliance). Contrary to Puma’s allegations, then,

Judge Lamberth did not say that he woul d “not believe a ny of

Ms. Steffen’s sworn testimony” (e m phasis added). He

questioned only the credibility of the affidav it Steffen “filed

with defendant’s certificate.” Nor did Judge Lamberth make

this finding without “a shred of evidence.” “The wording used

by Ms. Steffen,” the Judge explaine d, “leaves much open to

interpretation.”

Equally false are two state ments about a temporary

restraining order: “On November 8, 2002, without notice,

without a hearing, and without providing Puma an opportunity

to be heard, Judge Lamberth unilaterally extended [an existing]

TRO until November 18, 2002.” “On November 18, 2002, in

violation of R

ule 65(b), which prohibits a TRO from being

extended more than once

. . . Judge Lamberth entered yet a third

TRO.” Puma Foundation’s Mem. in Supp. of Its Mot. for

Recusal at 9; see also A ppellant’s Br. at 21 (repeating the

allegations in vir

tually identical language). The facts, however,

are quite different. In the November 8 order, Judge Lamberth

exp lained that an existing TRO, entered a week earlier, would

expire on November 18, noted that the receiver had moved to

extend the TRO, and ordered th at Puma file any response by

November 15. SEC v. Bilzerian

, No 89-1854 (D.D.C. Nov. 8,

2 002) (order setting time to respond). When Puma failed to

respond , Judge Lamberth extended the TRO on November 18.16

SEC v. Bilzerian

, No 89-1854 ( D.D.C. Nov. 18, 2002) (order

extending TRO). So contrary to Puma’s allegations, Judge

Lamberth did not “extend[]” the TRO on November 8, did not

act “unilaterally,” did not act “without notice,” did not act

“without providing Puma an opp ortunity to be heard,” and did

not “enter[] yet a third TRO.”

Both in its motion to recuse and initial brief to this court,

Puma represented that it “has never been a party to th is action.”

Puma Foundation’s Mem. in Supp. of Its Mot. for Recusal at 2;

A ppellant’s Br. at 13. This assertion is false. Through the

consent agreement, i

ncorporated by reference into the consent

judgment , Puma agreed to: “(i) enter a general appearance; (ii)

consent to the Court’s jurisdiction over [it] and the subject

matter of this action and waive any objections as to venue; (iii)

consent to entry of t

h e Final Judgment; (iv) waive findings of

fact and conclusio ns of law; and (v) waive any right to trial by

jury; (v i) waive any right to appeal from the Final Judgment;

and (vii) consistent with 17 C.F.R. 202.5(f), waive an y claim of

double jeopardy based on settlement of this action.” Given all

this, we cannot understand h o w a reasonably diligent lawyer

could have signed a p leading stating that the foundation “has

never been a party to this action.”

According to Puma, Judge Lamberth confiscated its assets

“without n otice.” Puma Foundation’s Mem. in Supp. of Its Mot.

for Recusal at

4; Appellant’s Br. at 13. Referring to an order

requiring Puma to d eposit its Cimetrix securities in the court’s

registry, SEC v. Bilzerian

, No 89 -1854 (D.D.C. June 1, 2001)

(order granting preliminary possession), this claim is also false.

Judge Lamberth’s order followed an earlier order issued by

Judge Stanley Harris, who presided over the case prior to Judge

Lamberth. Responding to a voluminous filing by the receiver,

J udge Harris froze Puma’s assets, ordering it and others to show

cause b y May 29 why the court should not grant the receiver’s

request for preliminary p ossession. SEC v. Bilzerian

, No 89-17

1854 (D.D.C. May 11, 2001) (order granting ex parte temporary

asset f reeze and other relief). On June 1, three days after the

May 29 deadline had passed, Judge Lamberth, having taken over

t he case from Judge Harris, entered the order requested by the

receiver. Contrary to Puma’s allegations, therefore, Judge

Lamberth did not act “without notice.”

While it is troubling enough that attorney Nelson included

these false statements i

n both the Motion to Recuse and

Appellant’s Brief, and that attorney Maney defended these

documents in this court, the statem ents are particularly serious

because th

ey also appear (either expressly or by reference) in

Steffen’s section 144 affida vit—an affidavit that, pursuant to

section 144, Nelson certified as “made in good faith.”

Certifying a section 144 affidavit containing obvious falsehoods

constitutes extremely serious misconduct, as the attor ney’s

certificate plays a cr itical role in the recusal process. In order to

prevent a truly biased judge from bl ocking an attempt to recuse,

the judge, in deciding whether to grant the recusal mo tion, must

accept the affidavit’s factua l allegations as true even if the judge

knows them to be false. B erger v. United States

, 255 U.S. 22,

35-36 (1 921). But to guard against the removal of an unbiased

judge through the filing of a false affidavit, see United States v.

Haldeman

, 559 F.2d 31, 134 (D.C. Cir. 1976) (en banc), the

statute require s the attorney presenting the motion to sign a

certificate stating that both the motion a nd declaration are made

in good faith, s ee Bhd. of Locomotive Firemen v. Ba ngor &

Aroostook R.R. , 380 F.2d 570, 578 n.17 (D.C. Cir. 1967) (noting

general recognitio n that the certificate must attest to good faith

behind bo th the motion and declaration). Hence, when an

affidavit contains statements the attorney should know to be

false, or wh

en the attorney should know that the motion is

baseless , certification undermines the integrity of the recusal

process. Yet in this case, notwithstanding the motion’s

frivolousness and the affidavit’s false statements, attorney

Nelson certified both.18

Given Nelson’s conduct, he should co nsider himself

fortunate that

Judge Lamberth did not impose Rule 11 sanctions.

Rules 38 and 46 of the Federal Rules of Appellate Procedure,

however, give us ind e pendent authority to ensure compliance

with ethical standards in this court. Under Rule 38, lawyers

have been sanctioned for filing appeals less frivolous than this

one. E.g., Tareco Properties, Inc. v. Morriss, 3 21 F.3d 54 5

, 548-50 (6th Cir. 2003) (finding sanctions appropriate where a

plaintiff’s attorneys appealed denial of a motion for relief from

ju dgment based on “oversight or omission, mistake,

inadvertence, or excusable neglect” but iden t ified no legitimate

“mistake, inadvertence, surprise, or excusable neglect”); Nagle

v. Alspach , 8 F.3d 141, 144-46 (3d Cir. 1993) (finding sanctions

against an attorney appropriate wher e the appeal challenged only

two of fou

r conclusions used to support summary judgment,

hence dooming the appeal even if the challenges were

successful). Lawyers whose briefs contain false statements or

who file frivolous appeals have been sanctioned under Rule 46

for behavior “unbecoming a member of the bar.” D CD

Programs, Ltd. v. Leighton , 846 F.2d 526 (9th Cir. 1988) (false

statements); In re Solerwitz , 848 F.2d 1573 (Fed. Cir. 1988) (en

b anc) (frivolous appeals). Given the importance of the

attorney’s certificate as a check on abuse of the recusal process,

the Supreme Court has suggested that disbarment may be

appropriate for lawyers who certi fy false section 144 affidavits.

Berger , 255 U.S. at 35.

In view of these standards and Nelson’s and Maney’s

behavior, we

will order them to show cause why they should not

b e sanctioned or otherwise disciplined. Specifically, they will

be directed to show

cause why they should not be required to

reimburse the receiver for fees and expenses i ncurred in

defending this appeal, referred to the bars of the states in which

they are licensed to practice law, and/or re ferred to this court’s

Committee on Admissions and Griev a nces for investigation and

a recommendation as to whether a disciplinary sanction is19

warranted.

A final point:

This is not the only time that attorney Nelson

has represented a client tr

ying to recuse Judge Lamberth. In the

fall o f 2002, Ernest B. Haire III, another party to the

receivership proceeding s in the district court, filed a p ro se

motion to recuse Judge Lamberth, alleging not only that he

(Haire) had “filed with the United States Department of Justice

a verified criminal compl

aint against Judge Royce C. Lamberth

for several violations of federal law,” but also that he had file d

“formal com

plaints with the Senate Subcommittee on

Administrative Oversight and the Cou rts and the Senate

Judiciary Co m

mittee requesting that Judge Lamberth be

removed from his position as a federal judge because he is

dishonest, has no respect for the l aw or the Constitution, and is

unfit to serve in any judicial capacity.” Mem. in Supp. of Ernest

B. Haire’s Mot. For Recusal at 1, 3, SEC v. Bilzerian, N o. 02-

1221 (D.D.C. Nov. 15, 200 2). Denying the motion, Judge

Lamberth ruled that Haire could not “manufacture” grounds for

recusal by filing complaints. S EC v. Bilzerian

, No. 02-1 221

(D.D.C. Dec. 4, 2002). Attorney Nelson, having been retained

by Haire, petitioned this court for a writ of mandamus directing

Judge Lamberth to recuse himself. We rejected the p etition,

concluding that Judge Lamberth had not abused his discretion in

denying the motion. I

n re Haire

, 2003 WL 1873948, (D.C. Cir.

Apr. 2, 2003) (per curiam). Undaunted, attorney Nelson filed a

n otice of appeal, again seeking Judge Lamberth’s re cusal.

Again we rejected his effort s, reminding Nelson that our

previous decision “is the law of the case.” Bilzerian , 378 F.3d

a t 1102 n.1. In other words, before this appeal, Nelson brought

a “manufactured” mo t ion to recuse Judge Lamberth before this

court not once, but twice.

VI.

Sections 144 and 455(a) play a critical role in protecting the20

integrity of the judicial system. As Judge Jerome Frank

observed: “Democracy must, indeed, fail unless our courts try

case s fairly, and there can be no fair trial before a judge lacking

in impartiality and dis interestedness.” In re J. P. Linahan, Inc.

, 138 F.2d 650, 651 (2d Cir. 1943). Abuse of these statutes,

however, is another matter.

The district court’s orders are affirmed in all respects.

Attorneys G. Michael Nelson and David A. Maney are ordered

to show cause within 30 days why th ey should not be sanctioned

for the conduct described in this o pinion. Attorneys Nelson and

Maney are ordered to show cause why they should not be held

liable for single or double costs and attorneys’ fees incurred by

the receiver in defending Puma Foundation’s ap peal from denial

of the motion to recuse. They are further ordered to show cause

why they s hould not be referred 1) to the bars of the states in

which t h ey are licensed to practice law and/or 2) to this court’s

Committee on Admissi

o ns and Grievances for investigation and

a recommendation

as to whether a disciplinary sanction is

warranted.

So ordered

.