Court Opinion

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Date Created: 2015-10-13 20:47:19.14402+00
Date Added: 2024-06-11T18:03:39.526989
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Opinions of the United
1995 Decisions                                                                                                             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Precedential or Non-Precedential: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.
http://digitalcommons.law.villanova.edu/thirdcircuit_1995/296

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        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)

                                                         1
* 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

                                                                 2
                       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

                                                                    3
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

                                                                      4
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.

                                                                    3
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-have-
               you. 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

                                                                   4
                  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.

                                                                       5
          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

                                                                    6
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

                                                                      7
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

                                                                     8
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

                                                                       9
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

                                                                    10
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.

                                                                  11