1995 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

11-28-1995

Securities and Exchange Commission v. Antar

Precedential or Non-Precedential:

Docket 95-5283

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Recommended Citation

"Securities and Exchange Commission v. Antar" (1995). 1995 Decisions. Paper 296.

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1 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

 

No. 95-5283 

 

IN RE: SAM M. ANTAR, 

 Petition-Defendant 

SECURITIES AND EXCHANGE COMMISSION, 

 Plaintiff-Respondent 

v. 

SAM M. ANTAR, ALLEN ANTAR, and 

BENJAMIN KUSZER, 

 Defendants 

and 

RORI ANTAR, SAM A. ANTAR, MICHELLE ANTAR, 

ADAM KUSZER, SAM KUSZER, SIMON KUSZER, 

ROSE ANTAR and SAM M. ANTAR, 

 Relief Defendants 

HON. NICHOLAS H. POLITAN, 

UNITED STATES DISTRICT JUDGE 

FOR THE DISTRICT OF NEWARK, 

 Nominal Respondent 

 

On Appeal from the United States District Court 

for the District of New Jersey 

(D.C. Civil Action No. 93-cv-03988) 

 

 Argued August 2, 1995 

 Before: MANSMANN, HUTCHINSON* and ROTH, Circuit Judges

(Opinion Filed November 28, 1995) 
2 

 

* The Honorable William D. Hutchinson participated in the oral 

argument and decision in the above case but died before the 

Opinion could be filed. 

Kathryn Keneally, Esq. (Argued) 

Linda Donahue, Esq. 

Kostelanetz & Fink, LLP 

230 Park Avenue 

New York, New York 10169 

 Attorneys for Petitioner-Defendant Sam M. Antar 

Randall W. Quinn (Argued) 

Senior Litigation Counsel 

Eric Summergrad 

Principal Assistant General Counsel 

Catherine A. Broderick 

Counsel to the Assistant General Counsel 

Securities and Exchange Commission 

450 Fifth Street, N.W. 

Washington, DC 20549 

 Attorneys for Respondent Security Exchange Commission 

Gerald Krovatin, Esq. 

Lowenstein, Sandler, Kohl, Fisher & Boylan 

65 Livingston Avenue 

Roseland, NJ 07068 

 Attorney for Respondent Allen Antar 

Marvin Gersten, Esq. 

Gersten, Savage, Kaplowitz & Curtin 

575 Lexington Avenue 

New York, NY 10022 

 Attorney for Respondents Benjamin Kuszer, 

 Adam Kuszer, Sam Kuszer, Simon Kuszer, 

 Rose Antar and Sam M. Antar 

 
3 

OPINION OF THE COURT 

 

ROTH, Circuit Judge: 

 This Petition for Writ of Mandamus raises the delicate 

and difficult issue of judicial disqualification. Petitioner, 

Sam Antar, is the defendant in a civil action brought by the 

Securities and Exchange Commission ("SEC"). He is also the 

father of Eddie and Mitchell Antar, who were convicted of 

conspiracy to commit securities and mail fraud. On appeal, the 

sons' convictions were overturned and the district judge was 

disqualified because of a statement of purpose made by the 

district judge which we found to be at odds with the judge's 

constitutionally mandated goal of ensuring fair trial. United 

States v. Antar, 53 F.3d 568 (3d. Cir. 1995) ("Antar II"). In 

the course of the criminal proceedings, the district judge also 

remarked on the involvement in the conspiracy of the Antar family 

as a whole and of Sam Antar in particular. 

 The same judge who presided over the criminal 

proceedings now presides over the SEC action. SEC v. Antar, 

Civil No. 93-3988 (D.N.J.). Sam Antar has filed this petition 

seeking to have the district judge removed from that action. 

 We must determine what effect the earlier recusal 

should have on our resolution of the present petition--

particularly when that recusal is considered along with 

additional comments by the judge on family involvement in the 

conspiracy. We concluded in the criminal action that the judge 
4 

had created an appearance of prejudice toward Eddie Antar and 

members of the Antar family, an appearance manifested by a 

statement which a "reasonable observer" would interpret as 

indicating that the judge had the goal in the criminal trial of 

recovering substantial funds from Eddie and Mitchell Antar. Antar 

II, 53 F.3d at 577. In light of this earlier holding, considered 

together with the judge's further comments, we conclude that 

disqualification is also required in the closely related SEC 

proceeding against Antar family members, a proceeding which 

similarly seeks to recover substantial funds from the Antar 

family. 

I. 

 In our consideration of this petition for mandamus, we 

will focus on only a small portion of the facts surrounding the 

"decades-long rise and fall of an electronics retail chain called 

Crazy Eddie." Id. at 570. According to the government's 

allegations, the Crazy Eddie saga involved a sophisticated 

family-run conspiracy that netted its principals millions of 

dollars through a series of fraudulent misrepresentations and 

financial disclosures that duped the general public into 

investing heavily in the company. See id. at 570-71. Against 

this background, we focus on our decision in Antar II and the 

comments of the district judge. 

 In the criminal action, the government had obtained 

convictions against Eddie and Mitchell Antar, the two leading 

players in the Crazy Eddie epic. In Antar II, we overturned 

their convictions and remanded the case for a new trial, finding 
3 

that the district judge had improperly failed to recuse himself 

because of an appearance of bias. Id. at 579. The principal 

defendant in the SEC civil suit and the petitioner in the matter 

before us is Sam Antar, the father of Eddie and Mitchell Antar.1

The SEC charges Sam Antar with a variety of acts relating to his 

participation in the alleged Crazy Eddie conspiracy, making the 

underlying factual background indistinguishable from Antar II. 

 Sam Antar argues that this appearance of impermissible 

judicial bias that tainted his sons' convictions also forces the 

same judge's recusal from the SEC action. The evidence of bias 

consists of the judge's comments on the record in the criminal 

proceedings. 

 First, Sam Antar relies on statements made by the judge 

in a hearing on the disposition of money posted during the 

criminal proceeding for Mitchell Antar's bail. United States v. 

Mitchell Antar, Crim. No. 92-347 (D.N.J. Sept. 22, 1994) ("Antar 

I"). Following his criminal conviction, Mitchell Antar was 

sentenced to four years incarceration and ordered to pay 

$3,000,000 in restitution. At the September 22 hearing, the 

district judge considered whether the trustee/receiver, 

overseeing the restitution, could execute on the $50,000 that had 

been posted as bail for Mitchell Antar. Sam Antar opposed the 

trustee's efforts, claiming an ownership interest in the fund and 

 

1 Sam Antar is joined in his petition by co-defendants 

Allen Antar and Benjamin Kuszer, and by eight other family 

members named as relief defendants. These additional defendants 

raise no additional arguments or grounds for relief. For 

simplicity, we will refer only to petitioner, Sam Antar. 
4 

arguing that he was not involved in the conspiracy. The judge 

declined to rule at that time on Sam's rights to the bail money. 

 We reproduce the relevant colloquy: 

THE COURT: . . . I realize there is a little delay on your 

part. I understand there will be a delay--perhaps 

a delay of a month or two or six. You may or may 

not prevail ultimately. But I'm not going to pick 

this thing apart piece by piece or make little 

discrete pieces. All part of one puzzle. When 

the puzzle is together, I'll decide. 

COUNSEL: It is just frustrating to me because [Sam Antar], 

my client, was not part of the majority of the 

proceedings that has been before this Court. We 

are a latecomer to the proceeding. 

THE COURT: Right now he's being charged with certain activity 

relative to the Crazy Eddie stock in connection 

with the SEC proceeding. So he is part of it. 

Moreover, there was testimony in the record, 

whether the statute of limitations has run or not, 

about his carrying millions of dollars across the 

sea to Israel strapped to his body, and what-haveyou. There are all sorts of things. 

 Sam does not come in here with a halo on his head 

based upon the testimony I heard in this case. I 

can't close my eyes to it or put blinkers on. Sam 

is not some innocent bystander. The innocent 

bystanders laying out there are the public. The 

public are the innocent bystanders. Not the Antar 

family. No one in the Antar family was an 

innocent bystander. That is what I'm saying. 

 So until we unravel the portions of the puzzle, I 

think the discrete issue here is execution. That 

is the discrete issue. In connection with the 

execution, when there has been full discovery to 

the execution, I'll decide who gets the money and 

who doesn't get the money. 

 I'm concerned. I don't want this money withheld 

from [Sam Antar] if it belongs to him. 

Notwithstanding my previous comments. I want to 

give everybody what they're entitled to, but we're 
5 

not playing three-card Monte on Broad Street or 

Broadway, New York. This is not a three-card 

Monte game. This is not a shell game. This is 

the law. This is a legal proceeding. Before we 

do anything, I want it all out on the table. 

COUNSEL: Your Honor, I need to state for the record some of 

your statements concerning Petitioner having gone 

before this Court I'll not answer now. That date 

will come whenever that date is. 

THE COURT: I'm telling you what the testimony was by his 

brother. His brother testified to that. 

COUNSEL: I accept your statements your Honor. 

THE COURT: I haven't made a factual finding on it. I'm 

telling you the Court is aware, having sat through 

the trial, that his brother got on the stand and 

testified. His nephew got on the stand and 

testified. 

 These were things which were said about your 

clients. Your client obviously was not a party to 

that proceeding. He did not have to respond to 

that proceeding. What I'm saying to you is this 

Court cannot put blinkers on and say I never heard 

that. I heard it. If I hear it, I know there is 

a lot of interrelationships between these people 

and a lot of money floating around. I just want 

to make sure when I give money back I give it back 

properly in accordance with all the facts. You 

may win. I'm not saying you'll not win. 

 I'm not prejudging this in the least. I'm saying 

fundamental fairness. 

Antar I, Transcript of Proceedings at 20-23 (D.N.J. Sept. 22, 

1994). Sam Antar alleges that these comments create the 

appearance that the judge had predetermined the scope of Sam's 

involvement in the Crazy Eddie saga, based on evidence heard in 

the prosecutions of Eddie and Mitchell Antar. 
6 

 Second, Sam Antar relies on the statement made by the 

judge in the course of sentencing Eddie Antar: "My object in 

this case from day one has always been to get back to the public 

that which was taken from it as a result of the fraudulent 

activities of this defendant and others." 53 F.3d at 573. In 

Antar II, we held this statement dispositive in overturning the 

convictions of Eddie and Mitchell Antar, finding that it created 

the appearance of prejudice. Id. at 576. Although the statement 

pertained to Eddie directly, we also reversed the conviction of 

Mitchell Antar because 

we cannot distinguish reasonably between Eddie and 

Mitchell in this respect, as they were charged with 

offenses arising from the same circumstances. 

Furthermore, the judge indicated that he intended to 

recover what 'this defendant,' meaning Eddie, and 

'others' had taken by fraudulent activities. Clearly, 

Mitchell was among the others. 

Id. at 579. Sam Antar alleges that as Eddie and Mitchell's 

father, he is among the "others," making the judge's statement 

of purpose applicable to him as well. 

II. 

 We have jurisdiction over a Petition for Writ of 

Mandamus under the authority conferred upon us by the All Writs 

Act, 28 U.S.C. § 1651(a). Although we are justifiably hesitant 

in granting writs of mandamus, see In re School Asbestos Litig., 

977 F.2d 764, 772 (3d Cir. 1992), it is the settled law of this 

circuit that mandamus "is a proper means for this court to review 

a district court's refusal to recuse from a case pursuant to 28 

U.S.C. § 455(a)." Alexander v. Primerica Holdings, Inc., 10 F.3d 

155, 163 (3d Cir. 1993); see generally School Asbestos, 977 F.2d 
7 

at 774-78 (discussing relevant precedent, judicial procedure, and 

policy implications). Where, as here, a party has made a 

challenge to the judge's failure to recuse, we review the judge's 

decision to hear the case on an abuse of discretion standard. 

Antar II, 53 F.3d 568, 573 (3d Cir. 1995); United States v. 

Dalfonso, 707 F.2d 757, 760 (3d Cir. 1983). 

 Because we seek to protect the public's confidence in 

the judiciary, our inquiry focuses not on whether the judge 

actually harbored subjective bias, but rather on whether the 

record, viewed objectively, reasonably supports the appearance of 

prejudice or bias. Antar II, 53 F.3d at 574; United States v. 

Bertoli, 40 F.3d 1384, 1412 (3d Cir. 1994); Alexander, 10 F.3d at 

162; Haines v. Liggett Group, Inc., 975 F.2d 81, 98, (3d Cir. 

1992). In making this determination, we remain ever mindful that 

attacks on a judge's impartiality may mask attempts to circumvent 

that judge's anticipated adverse decision. Alexander, 10 F.3d at 

162. We are also cognizant that our rulings in these matters 

keenly affect the conduct of judges and parties in all disputed 

matters before the district courts. Bertoli, 40 F.3d at 1414; 

Dalfonso, 707 F.2d at 761. Accordingly, we undertake with 

caution the "sensitive question of assessing all the facts and 

circumstances in order to determine whether the failure to 

disqualify was an abuse of sound judicial discretion." Alexander, 

10 F.3d at 162. 

III. 

 Sam Antar appears to invoke the broadest of the federal 

recusal provisions, 28 U.S.C. § 455(a). He fails to mention any 
8 

other statutory basis for disqualification, such as the specific 

conditions set forth in 28 U.S.C. § 455(b). Moreover, we have 

previously determined that mandamus is not a proper method for us 

to review a challenge under the other federal recusal statute, 28 

U.S.C. § 144. In re School Asbestos Litig., 977 F.2d 764, 776 

(3d Cir. 1992); Green v. Murphy, 259 F.2d 591 (3d Cir. 1958) (in 

banc). For these reasons, we will analyze this case under 

§455(a). 

 Section 455(a) imposes a general duty on a federal 

judge to recuse whenever there is an appearance of judicial 

partiality: "Any justice, judge, or magistrate of the United 

States shall disqualify himself in any proceeding in which his 

impartiality might reasonably be questioned." 28 U.S.C. §455(a). 

The Supreme Court most recently addressed the application of this 

provision in Liteky v. United States, ___ U.S. ___, 114 S.Ct. 

1147 (1994). We have subsequently interpreted and applied the 

provision in Blanche Road Corp. v. Bensalem Township, 57 F.3d 253 

(3d. Cir.), cert. denied, ___ U.S. ___, 1995 WL 500513 (Oct. 10, 

1995), Antar II, 53 F.3d 568 (3d Cir. 1995), and United States v. 

Bertoli, 40 F.3d 1384 (3d Cir. 1994). These precedents guide our 

inquiry. 

 In Liteky, the Supreme Court made clear that the 

ultimate issue for recusal is the appearance of a wrongful or 

inappropriate bias or prejudice. 114 S.Ct. at 1157. The Court 

stressed the importance of the extrajudicial source doctrine in 

assessing a judge's unfavorable disposition toward a litigant. 

Although the Court provided a lengthy discussion of that 
9 

doctrine's significance, the Court ultimately concluded that the 

extrajudicial source is not outcome determinative. The most 

critical factor is not the source of the judge's prejudicial 

knowledge or bias, but rather the judge's "inability to render 

fair judgment." Id. at 1155. 

 Justice Kennedy in his concurrence in Liteky stated the 

same principle, but from a different point of view, that of a 

judge abiding by his oath: "Judges, if faithful to their oath, 

approach every aspect of each case with a neutral and objective 

disposition." Id. at 1160. 

 We find that our decision in Antar II controls the 

application of this principle to the petition before us. We 

determined in Antar II that the judge's statement as to his 

"object in this case from day one" revealed a goal that "was 

something other than what it should have been and, indeed, was 

improper." 53 F.3d at 576. This indicates that the judge's 

purpose was at odds with his judicially mandated responsibility 

to provide a fair trial and impartial forum for the litigants 

before him. See Haines, 975 F.2d at 98 ("The right to trial by 

an impartial judge 'is a basic requirement of due process.'") 

(quoting In re Murchison, 349 U.S. 133, 136 (1955)). The comment 

therefore manifested an improper bias or prejudice against Eddie 

and Mitchell Antar and "others" in the family. We reject out of 

hand the contention that Sam Antar might not be one of these 

"others." 

 This same improper bias or prejudice against the Antar 

family is relevant to the SEC proceeding. The SEC is asking that 
10 

the Antars be required to disgorge funds gained through the 

securities fraud conspiracy. We conclude therefore that the 

district judge's comments rise to the level of "wrongful" bias 

and require his disqualification in the SEC proceeding. The 

comment we made in reversing the criminal conviction has a 

similar bearing to the SEC action: 

It is difficult to imagine a starker example 

of when opinions formed during the course of 

judicial proceedings display a high degree of 

antagonism against a criminal defendant. 

After all, the best way to effectuate the 

district judge's goal would have been to 

ensure that the government got as free a road 

as possible towards a conviction, which then 

would give the judge the requisite leverage 

to order a large amount of restitution. 

53 F.3d at 576. 

 When the district judge announced that his goal in the 

criminal action was to recover for the investing public the funds 

which they had lost through the Antars' schemes, he also created 

the appearance that he had allied himself with the SEC in the 

civil action. The judge "display[ed] a deep-seated favoritism 

or antagonism that would make fair judgment impossible." Liteky, 

114 S.Ct. at 1157; Bertoli, 40 F.3d at 1412 (quoting Liteky). 

 In reaching this result, we need not debate alternative 

characterizations of the judge's comments nor quibble over 

whether his opinions were based on extrajudicial or judicial 

sources. Taken together, his statement of purpose in Eddie 

Antar's sentencing hearing and his comments on Sam Antar in 
11 

Mitchell Antar's bail proceeding create an appearance of bias 

that meets the required thresholds in both character and degree.2

 It suffices to say that on the facts before us, our precedents 

require recusal. 

IV. 

 For these reasons, we will grant the Petition for Writ 

of Mandamus, requiring that further proceedings in SEC v. Antar, 

Civil No. 93-3988, be held before a different district judge to 

be selected by the Chief Judge of the District of New Jersey. 

 

2 We expressly decline to consider whether, absent our 

determination in Antar II that Judge Politan must be disqualified 

because of his statement at the sentencing hearing, we would draw 

the same conclusion from the statements in Mitchell Antar's bail 

proceeding alone.