[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]


 
  TO CONSIDER POSSIBLE IMPEACHMENT OF UNITED STATES DISTRICT JUDGE G. 
                     THOMAS PORTEOUS, JR. (PART II) 

=======================================================================

                                HEARING

                               BEFORE THE

                   TASK FORCE ON JUDICIAL IMPEACHMENT

                                 OF THE

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                            DECEMBER 8, 2009

                               __________

                           Serial No. 111-44

                               __________

         Printed for the use of the Committee on the Judiciary


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                       COMMITTEE ON THE JUDICIARY

                 JOHN CONYERS, Jr., Michigan, Chairman
HOWARD L. BERMAN, California         LAMAR SMITH, Texas
RICK BOUCHER, Virginia               F. JAMES SENSENBRENNER, Jr., 
JERROLD NADLER, New York                 Wisconsin
ROBERT C. ``BOBBY'' SCOTT, Virginia  HOWARD COBLE, North Carolina
MELVIN L. WATT, North Carolina       ELTON GALLEGLY, California
ZOE LOFGREN, California              BOB GOODLATTE, Virginia
SHEILA JACKSON LEE, Texas            DANIEL E. LUNGREN, California
MAXINE WATERS, California            DARRELL E. ISSA, California
WILLIAM D. DELAHUNT, Massachusetts   J. RANDY FORBES, Virginia
ROBERT WEXLER, Florida               STEVE KING, Iowa
STEVE COHEN, Tennessee               TRENT FRANKS, Arizona
HENRY C. ``HANK'' JOHNSON, Jr.,      LOUIE GOHMERT, Texas
  Georgia                            JIM JORDAN, Ohio
PEDRO PIERLUISI, Puerto Rico         TED POE, Texas
MIKE QUIGLEY, Illinois               JASON CHAFFETZ, Utah
JUDY CHU, California                 TOM ROONEY, Florida
LUIS V. GUTIERREZ, Illinois          GREGG HARPER, Mississippi
TAMMY BALDWIN, Wisconsin
CHARLES A. GONZALEZ, Texas
ANTHONY D. WEINER, New York
ADAM B. SCHIFF, California
LINDA T. SANCHEZ, California
DEBBIE WASSERMAN SCHULTZ, Florida
DANIEL MAFFEI, New York

       Perry Apelbaum, Majority Staff Director and Chief Counsel
      Sean McLaughlin, Minority Chief of Staff and General Counsel
                                 ------                                

                   Task Force on Judicial Impeachment

                  ADAM B. SCHIFF, California, Chairman

SHEILA JACKSON LEE, Texas            BOB GOODLATTE, Virginia
WILLIAM D. DELAHUNT, Massachusetts   F. JAMES SENSENBRENNER, Jr., 
STEVE COHEN, Tennessee               Wisconsin
HENRY C. ``HANK'' JOHNSON, Jr.,      DANIEL E. LUNGREN, California
  Georgia                            J. RANDY FORBES, Virginia
PEDRO PIERLUISI, Puerto Rico         LOUIE GOHMERT, Texas
CHARLES A. GONZALEZ, Texas


























                            C O N T E N T S

                              ----------                              

                            DECEMBER 8, 2009

                                                                   Page

                           OPENING STATEMENTS

The Honorable Adam B. Schiff, a Representative in Congress from 
  the State of California, and Chairman, Task Force on Judicial 
  Impeachment....................................................     1
The Honorable Bob Goodlatte, a Representative in Congress from 
  the State of Virginia, and Ranking Member, Task Force on 
  Judicial Impeachment...........................................     2

                               WITNESSES

Mr. DeWayne Horner, Special Agent, Federal Bureau of 
  Investigation, New Orleans, LA
  Oral Testimony.................................................     8
Mr. Claude Lightfoot, Attorney, New Orleans, LA
  Oral Testimony.................................................    41
The Honorable Duncan Keir, Chief Judge, United States Bankruptcy 
  Court, District of Maryland
  Oral Testimony.................................................    67

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

Material submitted by Kirsten Konar, Counsel, Task Force on 
  Judicial Impeachment...........................................    10
Material submitted by the Honorable Sheila Jackson Lee, a 
  Representative in Congress from the State of Texas, and Member, 
  Task Force on Judicial Impeachment.............................    39

                                APPENDIX
               Material Submitted for the Hearing Record

Exhibits Accompanying Statement of Alan Baron, Esq., Counsel, 
  Task Force on Judicial Impeachment.............................    83
Exhibits Accompanying Testimony of DeWayne Horner, Special Agent, 
  Federal Bureau of Investigation, New Orleans, LAName here......   112
Exhibits Accompanying Testimony of Claude Lightfoot, Attorney, 
  New Orleans, LA................................................   133


  TO CONSIDER POSSIBLE IMPEACHMENT OF UNITED STATES DISTRICT JUDGE G. 
                     THOMAS PORTEOUS, JR. (PART II)

                              ----------                              


                       TUESDAY, DECEMBER 8, 2009

                  House of Representatives,
                 Task Force on Judicial Impeachment
                                Committee on the Judiciary,
                                                    Washington, DC.

    The Task Force met, pursuant to notice, at 10:10 a.m., in 
room 2141, Rayburn House Office Building, the Honorable Adam B. 
Schiff (Chairman of the Task Force) presiding.
    Present: Representatives Schiff, Jackson Lee, Johnson, 
Sensenbrenner, Goodlatte, Lungren and Gohmert.
    Staff Present: Alan Baron, Counsel; Harold Damelin, 
Counsel; Mark H. Dubester, Counsel; Kirsten Konar, Counsel; and 
Jessica Klein, Staff Assistant.
    Also Present: Richard W. Westling, counsel for Judge G. 
Thomas Porteous, Jr.
    Mr. Schiff. This hearing of the House Judiciary Committee 
Task Force on Judicial Impeachment will now come to order. 
Without objection, the Chair will be authorized to declare a 
recess of the hearing.
    I will now recognize myself for an opening statement.
    Today the Task Force will continue its inquiry into whether 
United States District Court Judge Thomas Porteous should be 
impeached by the U.S. House of Representatives. At our last 
hearing, we focused on allegations that Judge Porteous violated 
the public trust, law, and ethical canons by presiding over the 
case In re: Liljeberg Enterprises, Inc.
    Today's hearing will focus on allegations that the judge 
violated the public trust, law, and ethical canons by making 
false and misleading statements, including the concealment of 
debts under oath and in disregard of a bankruptcy court's 
orders. The Judicial Conference, in its referral of this matter 
to Congress, noted that this conduct allowed Judge Porteous to 
obtain a discharge of his debts while continuing his lifestyle 
at the expense of his creditors.
    We will follow the same format used in our last round of 
hearings. After all the Members who wish to make an opening 
statement have been given the opportunity to do so, Task Force 
counsel Alan Baron will brief us to provide a general overview 
of the matter under consideration today. After his 
presentation, the first witness will be sworn in and questioned 
for up to 20 minutes by a Task Force counsel. After that 
initial period, Members will be recognized for questions under 
the 5-minute rule. Judge Porteous's counsel will then be 
permitted to question the witness for 10 minutes. Finally, 
Members will be permitted to ask any further questions of the 
witness. After the Task Force has concluded with one witness, 
the next will be called.
    I now recognize my colleague Mr. Goodlatte, the 
distinguished Ranking Member of the Task Force, for his opening 
remarks.
    Mr. Goodlatte. Thank you, Mr. Chairman, for continuing this 
series of hearings.
    On June 17, 2008, the Judicial Conference of the United 
States certified to the U.S. House of Representatives that 
consideration of impeachment of U.S. District Judge G. Thomas 
Porteous may be warranted. This certification was the 
culmination of an investigation and formal complaint by the 
Department of Justice, an investigation and final report by a 
special investigatory committee appointed by the Fifth Judicial 
Circuit, and consideration and vote by the Judicial Council of 
the Judicial Conference of the United States.
    The Task Force on Judicial Impeachment was then created by 
the House Judiciary Committee to further investigate the 
allegations of misconduct by Judge Porteous to determine if 
impeachment is warranted. The Task Force has been working with 
law enforcement and judicial officials, has conducted numerous 
interviews, taken depositions from key witnesses, and gathered 
evidence and transcripts from previous investigations. These 
efforts have uncovered a large amount of information, including 
new evidence that was not uncovered in previous investigations.
    We are now in the process of holding a series of hearings, 
each examining a separate aspect of alleged misconduct by Judge 
Porteous. Today's hearing will focus on the potential 
misconduct of Judge Porteous during his bankruptcy filings and 
proceedings.
    The allegations against Judge Porteous during this 
timeframe include that he filed for bankruptcy under a false 
name, that he hid income and assets from the bankruptcy court, 
that he failed to disclose certain preferential payments to 
creditors, and that he continued to incur debt in violation of 
a court order prohibiting him from incurring any new debt after 
he had filed for bankruptcy.
    We will hear from witnesses who have firsthand knowledge of 
Judge Porteous's conduct, as well as a Federal bankruptcy judge 
who has expert knowledge of bankruptcy laws and procedures.
    It is again worth noting that Judge Porteous was extended 
an invitation to come make a statement before the Task Force 
and respond to questions, but has so far declined to do so. It 
is also worth noting that the Task Force has permitted Judge 
Porteous's counsel to ask questions of the witnesses today.
    If the evidence shows that wrongdoing occurred, then the 
Task Force will make the appropriate recommendations to the 
full Judiciary Committee, and we will have more work to do. I 
look forward to hearing from the witnesses and rooting out the 
facts in an objective manner.
    Mr. Schiff. I thank the gentleman.
    Would any other Member like to be recognized?
    Seeing none, we will now hear a brief introduction to the 
factual predicate from special impeachment counsel Alan Baron. 
Mr. Baron, have a seat and please proceed.
    Mr. Baron. Thank you, Mr. Chairman.
    You may recall at the last hearing we discussed Judge 
Porteous's deteriorating financial condition during the 
Liljeberg case. As you can see, his credit card debt of $44,000 
at year-end 1996 by April of 2000 was $153,000, and his IRA 
balance had gone from $59,000 down to $12,000.
    Judge Porteous's financial condition continued to 
deteriorate from there. One year later when he filed for 
bankruptcy, Judge Porteous showed $196,246 in unsecured credit 
card debt. You can see that up on the PowerPoint.
    Judge Porteous filed for Chapter 13 bankruptcy on March 28, 
2001, in large part, it appears, because of his substantial 
gambling activities. The FBI did a partial analysis of Judge 
Porteous's credit card records and bank account records 
between--for the period July 1995 and July of 2000, and what 
that analysis showed was that approximately $66,000 in gaming 
charges appeared on Judge Porteous's credit card statements, 
and Judge Porteous wrote checks or made cash withdrawals at 
casinos for an additional $27,700, so there is a minimum total 
of $93,000 in gambling charges and related gaming expenses 
during that period.
    Now, I emphasize this analysis did not examine all of Judge 
Porteous's credit cards and other accounts, so ultimately we 
expect that the grand total of debt related to gaming for that 
period is much higher.
    In the summer of 2000, Judge Porteous retained attorney 
Claude Lightfoot as his bankruptcy counsel, and Mr. Lightfoot 
is here today and is prepared to testify later today. At this 
early stage of the representation of Judge Porteous, Mr. 
Lightfoot specifically told the judge he should not incur any 
more debt going forward. We have Mr. Lightfoot's testimony in 
the fifth circuit, where he says, ``I remember telling him at 
the workout stage, don't make the debt. If you can't afford to 
pay it, or they are not trying to solve the problem short of 
bankruptcy with us, stop paying them, but by no means incur any 
more debt at this point.''
    Now, it was Mr. Lightfoot's job to help Judge Porteous 
prepare a full and complete bankruptcy petition, but as it 
turns out, Judge Porteous was less than candid with Mr. 
Lightfoot regarding his debts and other activities. The 
testimony today will show that, among other things, Judge 
Porteous failed to tell Mr. Lightfoot about, one, the fact that 
the judge gambled or the existence of any gambling losses; two, 
that he was paying off credit cards and gambling debts at 
casinos immediately, literally the day before he filed for 
bankruptcy; third, Judge Porteous did not tell Lightfoot that 
he expected a $4,000 tax refund from the year 2000, and he did 
not disclose his increased judicial salary in 2001.
    In addition to failing to inform his bankruptcy counsel 
about these relevant facts, which have an impact on the 
veracity of the schedules ultimately filed, Judge Porteous also 
disregarded Mr. Lightfoot's advice that he should not be 
accruing additional debt.
    One specific type of debt that Judge Porteous continued to 
accrue in the months leading up to his bankruptcy and also 
after his bankruptcy was filed were casino markers. Judge 
Porteous himself--and this is important so there not be any 
dispute about this--Judge Porteous himself has acknowledged a 
casino marker is a form of debt.
    At the fifth circuit he was presented with a definition of 
what a marker is, and that is that it is credit extended by a 
gambling establishment, such as a casino, that enables the 
customer to borrow money from the casino. The marker acts as 
the customer's check or draft to be drawn upon the customer's 
account at a financial institution. Should the customer not 
repay his or her debt to the casino, the marker authorizes the 
casino to present it to the financial institution or bank for 
negotiation and draw upon the customer's bank account any 
unpaid balance after a fixed period of time.
    Judge Porteous was asked, is that an accurate definition? 
He answers, I believe that is correct. It probably was 
contained in the complaint or the second complaint. There is a 
definition contained.
    And ultimately he is asked, do you have any quarrel with 
that definition? And he says, no. That is important to keep in 
mind as we go through the history of Judge Porteous's 
activities, because there are a lot of gambling markers 
involved.
    Judge Porteous's activities in the period leading up to his 
bankruptcy demonstrate Judge Porteous's disregard for his own 
deteriorating financial condition and his desire to keep 
gambling, despite the imminent bankruptcy. For example, 
remember, he files for bankruptcy on March 28, 2001. One month 
earlier, February 27, 2001, he gambles at the Grand Casino 
Gulfport and takes out $2,000 in markers. He doesn't repay 
those markers until April 5 and 6 of 2001, after his original 
bankruptcy petition was filed. Remember, he doesn't tell his 
bankruptcy counsel about this. It is not going to be reflected 
on his bankruptcy schedules.
    On March 2, 2001, Judge Porteous requested a credit limit 
increase at the Treasure Chest Casino from $3,000 to $4,000, 
and then he takes out $3,500 in markers from the casino. He 
leaves the casino that day owing $1,500, which he repays on 
March 27, 2001, the day before he files for bankruptcy. Again, 
he doesn't tell his bankruptcy counsel about it, so it is not 
going to appear on his schedules, as well it should have been.
    Now, Judge Porteous, as I said, filed his initial Chapter 
13 bankruptcy on March 28, 2001, and as we saw from our 
hearings last time, he files the petition under a false name, 
Ortous, O-R-T-O-U-S. The initial petition also lists a P.O. Box 
address instead of Judge Porteous's normal residential address. 
This P.O. Box was opened by Judge Porteous just 8 days earlier. 
It was an intentional thing to go out and get a P.O. Box to be 
used in the filing of this initial petition.
    Now, Judge Porteous should have listed his new P.O. Box 
address in the mailing address field and should have listed his 
residential address in the street address field, but he doesn't 
do that. So anybody looking at this or reporting it in the 
press would see Ortous as the debtor who is filing and just the 
P.O. Box. You wouldn't even know where the person lived. I 
would note further that Judge Porteous signed his initial 
bankruptcy petition under penalty of perjury.
    On April 9, 2001, Judge Porteous files an amended 
bankruptcy petition. He corrects the false name, and he 
includes his residential address instead of the P.O. Box. Also 
on April 9th he files his Chapter 13 schedules and his 
statement of financial affairs. Let's look at those schedules.
    The evidence shows that Judge Porteous's Chapter 13 
schedules contain numerous, we think at least seven, false 
statements or omissions, all of which are made under the 
penalty of perjury. I am going to address just a few of them 
here.
    Schedule B is where you list personal property. Category 17 
on Schedule B required Judge Porteous to list ``other 
liquidated debts owing the debtor, including tax refunds.'' 
Judge Porteous checked none. You can see the X should be in the 
column ``none'' in response to this category. So he is saying, 
there is no tax refund I am expecting.
    However, just 17 days before filing his bankruptcy 
schedules, Judge Porteous submitted his tax return for the year 
2000 and sought a tax refund in the amount of $4,143.72. That 
tax refund was electronically deposited into Judge Porteous's 
Bank One checking account on April 13, 2001, just 4 days after 
he had filed his bankruptcy schedules. None of that is ever 
disclosed to his bankruptcy counsel, and, of course, it is 
never reflected anywhere in the bankruptcy schedules.
    Schedule I of the bankruptcy petition is supposed to list 
the current income of the individual debtor. It asks the debtor 
to list his current monthly gross wages and also his monthly 
net wages. Instead of listing his 2001 salary on Schedule I, 
Judge Porteous listed his monthly income from calendar year 
2000, which was several hundred dollars a month less than what 
he was making at the time he was filing his bankruptcy 
schedule. So, by understating his judicial income and 
concealing his tax refund, Judge Porteous concealed around 
$7,000 in 2000 alone that should have been made available to 
his creditors.
    Additionally, an FBI financial analyst determined that 
Judge Porteous's bank records from 2001 revealed yet another 
$4,600 in untraceable cash deposits. So the grand total, at a 
minimum, of concealed sources of income is about $12,000 for 
that year, which should have been available for creditors. 
Again, Judge Porteous signs his bankruptcy schedules under 
penalty of perjury. He signs it despite all of the false 
statements and omissions that are contained in those documents.
    If we turn to Judge Porteous's statement of financial 
affairs, which is another document that is filed in conjunction 
with the bankruptcy, it contained at least three false 
statements or omissions made under penalty of perjury.
    Question 3 talks about payments to creditors. It required 
Judge Porteous to list all payments of debts aggregating more 
than $600 to any creditor which were made within 90 days 
immediately preceding the commencement of the bankruptcy case. 
In response to this question, Judge Porteous writes in, 
``Normal installments.''
    You will hear from a witness what the term ``normal 
installments'' normally encompasses. But this response was 
false, because, for example, Judge Porteous made a lump sum 
payment of $1,500 to the Treasure Chest Casino on March 27, 
2001, the day before he filed for bankruptcy. It is nowhere 
listed in the schedule.
    Question 8 required Judge Porteous to list all losses, 
including specifically gambling losses, within the year 
immediately preceding the bankruptcy filing. In response to 
this question, Judge Porteous checks ``none.'' But an analysis 
of Judge Porteous's gambling in the year preceding his 
bankruptcy performed by the FBI revealed that Judge Porteous 
had a net gambling loss of $6,233.20 over the course of that 
year, and that is giving him the benefit of--actually his total 
losses were more like $12,000, but we are netting out the 
figure. It comes out to approximately $6,200. Again, Judge 
Porteous signs his statement of financial affairs under the 
penalty of perjury that all the answers in the document are 
true and correct.
    Despite the fact that Judge Porteous filed for bankruptcy 
protection and claimed to have over $350,000 in total 
liabilities, both secured and unsecured, Judge Porteous 
continued to gamble and incurred thousands of dollars in 
additional debt immediately following his bankruptcy filing. 
For example, he went on four gambling trips to casinos between 
April 7, 2001--remember, he filed for bankruptcy on March 28--
and May 7, 2001, during which he took out a total of $8,000 in 
markers.
    On April 30, 2001, roughly a month after filing for 
bankruptcy, Judge Porteous also submitted a casino credit 
application at Harrah's Casino and requested a $4,000 credit 
limit, and on the application, curiously, he puts down zero 
dollars for indebtedness, despite the fact that several weeks 
earlier he had listed his total unsecured debt as $196,246. And 
on that same day of April 30th, Judge Porteous proceeded to 
take out $1,000 in markers at Harrah's, which he doesn't pay 
back until May 30, 2001.
    Now, on May 9, 2001, a creditors meeting was held which was 
presided over by Judge Porteous's bankruptcy trustee. At that 
meeting he was given a copy of a pamphlet entitled ``Your 
Rights and Responsibilities in Chapter 13.'' Section 6 of the 
pamphlet specifically states, ``You may not borrow money or buy 
anything on credit while in Chapter 13 without permission of 
the bankruptcy court. This includes the use of credit cards or 
charge accounts of any kind.'' Also at the creditors meeting, 
the bankruptcy judge specifically told Judge Porteous he is on 
``a cash basis now.''
    Despite the clear instructions from the bankruptcy trustee 
and the language in the pamphlet that Judge Porteous should not 
be incurring any additional debt, Judge Porteous continued to 
gamble on credit, using markers. For example, he goes on three 
gambling trips to casinos between May 16, 2001, and June 20, 
2001, during which he takes out a total of $2,000 in markers.
    On June 28, 2001, the U.S. bankruptcy judge, William 
Greendyke, signed Judge Porteous's confirmation order. That 
order clearly stated the debtor shall not incur additional debt 
during the term of this plan except upon written approval of 
the trustee, and Judge Porteous admitted during his testimony 
before the fifth circuit special committee that he understood 
Judge Greendyke's order.
    He is asked: ``Are you familiar with the order signed by 
bankruptcy Judge Greendyke? It is ordered that, `going down to 
number 4,' the debtor shall not incur additional debt during 
the term of this plan except upon written approval of the 
trustee. Did I read that correctly?''
    Answer by Judge Porteous: ``You did.''
    ``Was that your understanding at the time in the order?''
    ``It was.''
    During the fifth circuit hearing, Judge Greendyke was asked 
about his decision to sign the Porteous confirmation order, and 
he provided the following testimony. He is asked: ``Given the 
sum of these events, the false filing of the name on the 
initial petition, the omission of the tax refund on the 
schedules where it should be noted, the preferred payment to 
certain creditors, given the sum of those events, had you known 
that, what would have been your course of action while you were 
the judge supervising that bankruptcy? Had you known all those 
events, what action would you have taken?''
    Judge Greendyke's answer was: ``If I had been aware of 
those items prior to the signing of the confirmation order, I 
would not have signed the confirmation order. I would probably 
have sua sponte objected on the basis of lack of good faith.''
    Then the question: ``In a bankruptcy filing, is good faith 
on behalf of the debtor one of the key elements that a judge 
and the trustee rely on?''
    Answer: ``It is a confirmation requirement.''
    Question: ``Okay. It is required the judge list all of his 
assets, bank accounts, and that his true income be listed; is 
that correct?''
    ``Yes, that is correct in any case. Truth and candor in 
connection with any bankruptcy proceeding is paramount to 
maintaining the integrity of the entire process.''
    Now, Judge Porteous was in bankruptcy for 3 full years 
after Judge Greendyke signed that confirmation order on June 
28, 2001. During the first year alone, Judge Porteous violated 
the confirmation order on at least 17 different occasions.
    For example, Judge Porteous took out 42 markers at 4 
different casinos during 14 different gambling trips. He also 
opened up a new low-limit credit card, and he used the card 
regularly throughout the bankruptcy. And he applied to increase 
his credit limit at one of the casinos where he gambled and 
thereafter utilized his increased credit line.
    You can see from the PowerPoint he took out at least 42 
markers at casinos between July 19, 2001, and July 5, 2002, for 
a total extension of credit of just under $150,000. I don't 
mean to suggest at the end of that period he owed $150,000. He 
would get the extension of credit, pay off most of it very 
often the same day, but on other occasions he left still owing 
the money. Ultimately it is all paid off, but in each instance 
he is incurring indebtedness that he should not have been doing 
and was violating the court order.
    Second, he violated the confirmation order when he applied 
for a new Capital One credit card on August 13, 2001, less than 
a month after the order was entered, and he used that card 
regularly throughout the bankruptcy period.
    Again, Judge Porteous again violated the confirmation order 
on July 4, 2002, when he applied to increase his credit limit 
at the Grand Casino Gulfport from $2,000 to $2,500, and 
immediately after this credit increase was authorized, Judge 
Porteous continued to gamble at the casino and to take out the 
full $2,500 in markers.
    Mr. Chairman, that concludes my overview.
    We have signed up three witnesses, the first of whom is the 
FBI agent, Mr. Wayne Horner.
    Mr. Schiff. Thank you, Mr. Baron.
    Our first witness is Special Agent DeWayne Horner of the 
FBI.
    Agent Horner, if you could come sit at the table.
    Agent Horner works out of the FBI's New Orleans office, 
where he is assigned to that office's Public Corruption Squad. 
He worked on the investigation of Judge Porteous and is 
testifying today as a fact witness.
    I will now swear the witness. Agent Horner, if you could 
rise and raise your right hand.
    [Witness sworn.]
    Mr. Schiff. Task Force counsel Kirsten Konar will now 
question the witness.

          TESTIMONY OF DeWAYNE HORNER, SPECIAL AGENT, 
        FEDERAL BUREAU OF INVESTIGATION, NEW ORLEANS, LA

    Ms. Konar. Agent Horner, good morning.
    Mr. Horner. Good morning.
    Ms. Konar. Where are you employed?
    Mr. Horner. I am a special agent with the Federal Bureau of 
Investigation assigned to the New Orleans Division.
    Ms. Konar. How long have you worked for the FBI?
    Mr. Horner. Approximately 14 years.
    Ms. Konar. And what division do you work in?
    Mr. Horner. I am currently assigned to a Public Corruption 
Squad in New Orleans.
    Ms. Konar. Were you one of the FBI case agents assigned to 
the Department of Justice's investigation of Judge Porteous?
    Mr. Horner. I was. The Judge Porteous investigation was 
kind of carved out of a larger investigation, but I was the 
agent who handled the Porteous investigation.
    Ms. Konar. What was your role in that investigation?
    Mr. Horner. I was the lead agent.
    Ms. Konar. Are you familiar with the documents and evidence 
which were obtained as a part of that investigation?
    Mr. Horner. I am.
    Ms. Konar. Did the FBI's investigation include an analysis 
of Judge Porteous's financial records?
    Mr. Horner. It did.
    Ms. Konar. More specifically, did the FBI analyze Judge 
Porteous's credit card debts and bank account withdrawals 
related to gambling for the 5 years preceding his 2001 
bankruptcy filing?
    Mr. Horner. Yes. We had a financial analyst that did a lot 
of financial analysis on the financial records.
    Ms. Konar. I would like to direct your attention to 
Exhibits 327 and 328. Do you recognize these documents?
    Mr. Horner. Yes.
    Ms. Konar. What are these documents?
    Mr. Horner. 327 is a schedule prepared by our financial 
analyst which reflects checks written to either casinos or 
anything associated with gambling, and also cash withdrawals at 
casinos.
    Ms. Konar. Turning to the last page of Exhibit 327, what is 
the total dollar amount that Judge Porteous either wrote in 
checks or withdrew in cash at casinos between January 1997 and 
May of 2000?
    Mr. Horner. It is at least $27,739.
    Ms. Konar. Turning to the last page of Exhibit 328, what is 
the total dollar amount charged to Judge Porteous's credit 
cards related to gambling between July 1995 and July of 2000?
    Mr. Horner. The total is $66,051.05.
    Ms. Konar. Do you know whether these charts list all of 
Judge Porteous's credit card debts and bank account withdrawals 
for this time period related to gambling?
    Mr. Horner. No, it doesn't include everything. There is 
probably some additional credit card charges that were not 
included in this time period, and there may be some additional 
withdrawals out of his bank account that were not included.
    Ms. Konar. Mr. Chairman, at this time I move to have 
Exhibits 327 and 328 made a part of the official record of 
these proceedings.
    Mr. Schiff. Without objection.
    [The information referred to follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
                               __________

    Mr. Konar. In addition to the financial analysis conducted 
by the FBI, did the FBI also review Judge Porteous's casino 
records?
    Mr. Horner. We did.
    Ms. Konar. Was that review one of your primary areas of 
responsibility?
    Mr. Horner. Yes. I think I visited every casino on the Gulf 
Coast.
    Ms. Konar. Would you please describe for the Task Force how 
you obtained Judge Porteous's casino records?
    Mr. Horner. First we would issue a subpoena to the casino, 
and then they would call and tell us that they had the records. 
I would usually drive over there and get them, or sometimes 
they would mail them. After we received the records, we would 
go over them and look at them and try to analyze them and see 
what was going on. A lot of times, not all of the time, but a 
lot of the times, the casinos have a very complicated method to 
their bookkeeping and recordkeeping, so sometimes we would have 
to go back to the casinos and have them explain the records or 
explain the abbreviations that were on the records.
    Ms. Konar. Why did the casinos have specific records for 
Judge Porteous?
    Mr. Horner. Judge Porteous was an established rated player 
at these casinos, meaning he had set up an account with the 
casinos so they could keep track of his gaming winnings and 
losses, and then in return for that, Judge Porteous would 
receive comps from the casino, which are shows, rooms, food, 
booze, things like that.
    Ms. Konar. Did the casino records that you collected and 
reviewed include listings of all of the markers that were taken 
out by Judge Porteous?
    Mr. Horner. Yes, they did.
    Ms. Konar. Did the casinos explain to you what a marker 
was?
    Mr. Horner. Yes, they did.
    Ms. Konar. What did they tell you?
    Mr. Horner. A marker just basically is an extension of 
credit by the casino to the customer. It allows the customer to 
draw down on the credit limit, and then what the casino does is 
it will draw any unpaid sums from the marker from the 
customer's bank account after some fixed period of time. The 
fixed period of time can vary by casino. They can have 3-day 
holds on the markers or 5-day holds or 30-day holds. It just 
depends.
    Ms. Konar. Did the casinos tell you whether players were 
required to fill out a credit application before they could 
obtain markers?
    Mr. Horner. What was that?
    Ms. Konar. Were gamblers required to fill out a credit 
application before they could take out markers at a casino?
    Mr. Horner. Yes, they were. It is much like probably a 
credit card application.
    Ms. Konar. Are you aware that Judge Porteous filed for 
Chapter 13 bankruptcy in March of 2001?
    Mr. Horner. I am.
    Ms. Konar. Directing your attention to Exhibit 125, which 
is Judge Porteous's initial bankruptcy petition, what is the 
name that Judge Porteous used on this petition?
    Mr. Horner. Judge Porteous used G.T. Ortous.
    Ms. Konar. Is that a false name?
    Mr. Horner. That is a false name.
    Ms. Konar. What is the address used on this petition?
    Mr. Horner. He used Post Office Box 1723, Harvey, Louisiana 
70059.
    Ms. Konar. Now, directing your attention to Exhibit 145, do 
you recognize this document?
    Mr. Horner. Yes, I do.
    Ms. Konar. What is this document?
    Mr. Horner. That is an application Judge Porteous made for 
a post office box in New Orleans shortly before he filed for 
his bankruptcy, specifically 8 days prior to his filing 
bankruptcy.
    Ms. Konar. As a part of your investigation for the 
Department of Justice, did you obtain a copy of this document?
    Mr. Horner. Yes, I did.
    Ms. Konar. Are you also aware that Judge Porteous filed his 
bankruptcy schedules on April 9th, 2001?
    Mr. Horner. I am.
    Ms. Konar. I would like to direct your attention to Judge 
Porteous's bankruptcy Schedule B. What information is asked for 
in question 17?
    Mr. Horner. Schedule B is his personal property schedule in 
the bankruptcy. Question 17 asks for other liquidated debts 
owing the debtor, including tax refunds, and then it 
specifically asks for particulars.
    Ms. Konar. What was Judge Porteous's response to question 
17?
    Mr. Horner. Judge Porteous responded he had none.
    Ms. Konar. Do you know whether that response was truthful?
    Mr. Horner. That was not truthful.
    Ms. Konar. Why was that not truthful?
    Mr. Horner. Because on March 23rd, he filed his year 2000 
tax return asking or requesting a $4,300 refund from the IRS.
    Ms. Konar. Turning your attention to Exhibit 141, is this 
the 2000 tax return you just referenced?
    Mr. Horner. Yes, it is.
    Ms. Konar. And turning to page 2 of the document, is this 
the $4,000 tax refund you just referenced?
    Mr. Horner. Yes. Specifically it is $4,143.72.
    Ms. Konar. And March 23rd was just 5 days before Judge 
Porteous filed his original bankruptcy petition?
    Mr. Horner. That is correct.
    Ms. Konar. I would now like to direct your attention to 
Exhibit 142. Do you recognize this document?
    Mr. Horner. What is the exhibit number?
    Ms. Konar. 142.
    Mr. Horner. Yes, I do.
    Ms. Konar. What is this document?
    Mr. Horner. This is a copy of Judge Porteous's Bank One 
statement.
    Ms. Konar. Did you obtain a copy of Judge Porteous's Bank 
One records as a part of your investigation?
    Mr. Horner. I did.
    Ms. Konar. Does this document contain any information 
concerning Judge Porteous's tax refund?
    Mr. Horner. Yes. This document shows that Judge Porteous 
received the $4,100 refund on April 13th of 2001.
    Ms. Konar. And April 13th was just 4 days after Judge 
Porteous had filed his bankruptcy schedules and stated that he 
was not owed a tax refund?
    Mr. Horner. That is correct.
    Ms. Konar. Turning your attention to Schedule I of Judge 
Porteous's bankruptcy schedules, what information is supposed 
to be disclosed on Schedule I?
    Mr. Horner. Schedule I is his current income he is supposed 
to provide to the bankruptcy trustee. And Judge Porteous 
provided his--well, he provided his gross income as $7,531.52, 
which really is his net income for the period.
    Ms. Konar. Was Judge Porteous's response that his net 
income was $7,531 in the year 2001 a truthful answer?
    Mr. Horner. No, because he used a pay stub from May of 
2000.
    Ms. Konar. I would like to direct your attention back to 
Exhibit 142, which you just testified was Judge Porteous's Bank 
One statement. Does this statement contain any information 
concerning Judge Porteous's 2001 income?
    Mr. Horner. It does. It shows that on April 2nd, which is 
April 2 of 2001, his Federal salary was deposited into his Bank 
One checking account, and it shows the government deposited 
$7,705.51, which is different than what he represented to the 
bankruptcy court.
    Ms. Konar. So Judge Porteous's 2001 salary was 
approximately $200 a month greater than what he disclosed on 
his Schedule I?
    Mr. Horner. That is correct.
    Ms. Konar. Are you aware that Judge Porteous also filed a 
statement of financial affairs with the bankruptcy court on 
August 9, 2001?
    Mr. Horner. I am.
    Ms. Konar. Directing your attention to question 3 on the 
statement of financial affairs, what information does this 
question ask for?
    Mr. Horner. Specifically question 3 asks for Judge Porteous 
to list all payments on loans, installments, purchases and any 
other kind of debt totaling more than $600.
    Ms. Konar. What was Judge Porteous's response to question 
3?
    Mr. Horner. Judge Porteous reported normal installments.
    Ms. Konar. What does the term ``normal installments'' mean?
    Mr. Horner. Normal installments would mean something like 
your mortgage payments, car payments, credit card payments, 
something like that.
    Ms. Konar. Do you know whether Judge Porteous's response of 
normal installments was truthful?
    Mr. Horner. It was not truthful.
    Ms. Konar. What did your investigation reveal regarding 
Judge Porteous's payments of any debts paid in the past 90 days 
preceding his bankruptcy?
    Mr. Horner. Say that again?
    Ms. Konar. What did your investigation reveal regarding 
whether Judge Porteous did, in fact, make any payments within 
the 90 days preceding his bankruptcy?
    Mr. Horner. He did.
    Ms. Konar. Did Judge Porteous make any payments to the 
Treasure Chest Casino?
    Mr. Horner. He did.
    Ms. Konar. Directing your attention to Exhibit 302, do you 
recognize this document?
    Mr. Horner. I do.
    Ms. Konar. What is this document?
    Mr. Horner. This is a part of Judge Porteous's gaming 
records from the Treasure Chest Casino, which is located in 
Kenner, Louisiana, and this is a history of some of the markers 
that he took at the casino.
    Ms. Konar. What does this document show regarding Judge 
Porteous's activities at the Treasure Chest Casino in March of 
2001?
    Mr. Horner. It shows that on March 2, 2001, Judge Porteous 
took out seven $500 markers, okay? And then on March 3rd of 
'01--which means the gambling trip probably passed over 
midnight, so that is why it is repaid on March 3rd. On March 
3rd, he repaid four of the markers with chips. And then on 
March 27th of 2001, he goes back to the casino and pays the 
remaining markers in cash. He makes a $1,500 cash payment to 
the casinos.
    Ms. Konar. So on the day before Judge Porteous filed for 
bankruptcy, he made a $1,500 cash payment to the Treasure Chest 
Casino?
    Mr. Horner. That is correct. In cash.
    Ms. Konar. Do you consider that payment to be a normal 
installment?
    Mr. Horner. No.
    He also on the 27th, I should add, deposited--he made a 
$2,000 deposit in his checking account on March 27th, $1,960 of 
which was cash also.
    Ms. Konar. Do you know the source of that cash?
    Mr. Horner. No.
    Ms. Konar. Directing your attention to question 8 on the 
statement of financial affairs, what information does this 
question ask for?
    Mr. Horner. Specifically question 8 asks for any losses 
from fire, theft, casualty, and then it specifically lists out 
gaming, within 1 year immediately preceding the bankruptcy 
application.
    Ms. Konar. What was Judge Porteous's response to question 
8?
    Mr. Horner. He stated he had no losses.
    Ms. Konar. Do you know whether that response was truthful?
    Mr. Horner. That was not truthful.
    Ms. Konar. As a part of your investigation, did you analyze 
all of Judge Porteous's gambling losses for the year 
immediately preceding his bankruptcy filing?
    Mr. Horner. We did.
    Ms. Konar. I would like to direct your attention to Exhibit 
337. Do you recognize this document?
    Mr. Horner. I do.
    Ms. Konar. What is this document?
    Mr. Horner. This is a document that shows our analysis of 
his gaming activities for the 1 year preceding bankruptcy, and 
it shows any winnings or any losses that he incurred in that 1-
year period.
    Ms. Konar. What does this analysis show regarding Judge 
Porteous's gambling losses for that year?
    Mr. Horner. Specifically it shows that he had gross gaming 
losses of $12,895.35, with a net loss of $6,233.20.
    Ms. Konar. Where did you get all the necessary information 
to determine what Judge Porteous's gambling losses were?
    Mr. Horner. We got them from the casino records.
    Ms. Konar. Do you know whether a confirmation order was 
entered in Judge Porteous's bankruptcy case?
    Mr. Horner. I do.
    Ms. Konar. Directing your attention to Exhibit 133, which 
is a copy of the Porteous confirmation order, does this order 
address whether Judge Porteous was allowed to incur any 
additional debt?
    Mr. Horner. It does.
    Ms. Konar. What does it say in that regard?
    Mr. Horner. Specifically it says, the debtor shall not 
incur additional debt during the term of this plan except upon 
written approval of the trustee.
    Ms. Konar. Did Judge Porteous continue to take out markers 
at casinos after this confirmation order was entered?
    Mr. Horner. He did.
    Ms. Konar. I would like to direct your attention to the 
summary chart prepared by Task Force staff which shows all the 
casino markers taken out by Judge Porteous after the 
confirmation order was entered up until July of 2002. How many 
total markers did Judge Porteous take out during this time 
period?
    Mr. Horner. Judge Porteous took out 42 total markers.
    Ms. Konar. What is the total dollar amount that Judge 
Porteous borrowed and then repaid in the casino for those 42 
markers?
    Mr. Horner. $149,400.
    Ms. Konar. As one example of the gambling trips listed on 
this chart, did Judge Porteous gamble at the Treasure Chest 
Casino in August of 2001?
    Mr. Horner. He did.
    Ms. Konar. Directing your attention to Exhibit 313, do you 
recognize this document?
    Mr. Horner. I do.
    Ms. Konar. What is this document?
    Mr. Horner. This is Judge Porteous's marker history from 
the Treasure Chest Casino for the time period August of 2001.
    Ms. Konar. All right. What does this exhibit show 
specifically regarding Judge Porteous's activities at the 
Treasure Chest Casino in August of 2001?
    Mr. Horner. Specifically it shows that he took out eight 
$1,000 markers for a total of $8,000 over the time period of 
August 20-August 21. So, again, the gaming trip probably 
flipped over midnight. Then he repaid five of the markers in 
chips on either August 20th or August 21st. He left owing the 
casino that night with an amount of $3,000. Then he comes back 
to the casino on September 9th, 2001, and repays two of the 
markers in cash. And then the last marker he comes back to the 
casino on September 15th, 2001, with another $1,000 in cash.
    Ms. Konar. Was it a violation of the confirmation order for 
Judge Porteous to take out these eight markers at the Treasure 
Chest Casino?
    Mr. Horner. Yes.
    Ms. Konar. Do you know whether Judge Porteous opened up any 
credit cards after the confirmation order was entered?
    Mr. Horner. He did.
    Ms. Konar. Directing your attention to Exhibit 341-A, do 
you recognize this document?
    Mr. Horner. I do. It is the Capital One credit card 
application signed by Judge Porteous.
    Ms. Konar. Was this one of the documents obtained as a part 
of your investigation?
    Mr. Horner. It was.
    Ms. Konar. What is the date on this credit card 
application?
    Mr. Horner. August 13th, 2001.
    Ms. Konar. August 13, 2001, was less than 1 month after the 
confirmation order was entered, correct?
    Mr. Horner. That is correct.
    Ms. Konar. To the best of your knowledge, is that Judge 
Porteous's signature on the credit card application?
    Mr. Horner. That is his signature.
    Ms. Konar. Directing your attention to Exhibit 341-B, do 
you recognize these documents?
    Mr. Horner. I do.
    Ms. Konar. What are these documents?
    Mr. Horner. These are the charges on the Capital One credit 
card that he applied for just previously.
    Ms. Konar. Do these charges show whether Judge Porteous 
used the Capital One credit card after the confirmation order?
    Mr. Horner. They do.
    Ms. Konar. Was it a violation of the confirmation order for 
Judge Porteous to open the Capital One credit card and 
thereafter use the card to incur new debt?
    Mr. Horner. Yes, it was.
    Ms. Konar. Do you know whether Judge Porteous applied for a 
credit limit increase at any of the casinos where he gambled 
after the confirmation order was entered?
    Mr. Horner. He did. In July, July 4, 2002, he applied to 
increase his credit limit at the Grand Casino Gulfport.
    Ms. Konar. Directing your attention to Exhibit 324, do you 
recognize this document?
    Mr. Horner. I do.
    Ms. Konar. What is it?
    Mr. Horner. This is the credit line change request that 
Judge Porteous signed on July 4th of 2002.
    Ms. Konar. Is that Judge Porteous's signature?
    Mr. Horner. It is.
    Ms. Konar. Based on your investigation, will a casino ever 
increase a gambler's credit line without the gambler 
proactively requesting that credit line increase?
    Mr. Horner. No.
    Ms. Konar. What is the normal procedure at a casino when a 
gambler requests a credit line increase?
    Mr. Horner. Usually what they will do is ask the customer 
to fill out some kind of application or some kind of change 
request, and then what they will do is run either a consumer 
credit report or what is called a central credit report, which 
is a credit report specifically used by casinos for gamblers.
    Ms. Konar. How else is a central credit report different 
from a normal commercial credit report?
    Mr. Horner. Well, the central credit report only reports 
gaming activity on a particular gambler. So what it does, it 
keeps track of the gambler's limits, what casinos they have 
applied credit at, and then it will also show or reflect any 
negative histories at the casinos, if they failed to pay a 
marker or bounced a check or something like that.
    Ms. Konar. Is it important to gamblers to keep their 
central credit reports clean of any blemishes?
    Mr. Horner. Absolutely, because if a gambler gets a 
negative history on his central credit report, what happens is 
the other casinos generally cut him off.
    Ms. Konar. Turning back to this Grand Casino Gulfport 
credit line increase, after Judge Porteous requested this 
increase, do you know whether he gambled at the casino on that 
same day?
    Mr. Horner. He did.
    Ms. Konar. Turning your attention to Exhibit 325, do you 
recognize this document?
    Mr. Horner. This is the marker history from the Grand 
Casino Gulfport which covers the time period in question.
    Ms. Konar. Does this exhibit show whether Judge Porteous 
took out markers at the Grand Casino Gulfport in July of 2002?
    Mr. Horner. It does.
    Ms. Konar. What is the total dollar amount in markers Judge 
Porteous took out?
    Mr. Horner. Twenty-five hundred.
    Ms. Konar. And $2,500 was his newly increased credit limit; 
is that correct?
    Mr. Horner. That is correct.
    Ms. Konar. So Judge Porteous applied to increase his credit 
limit at the Grand Casino Gulfport and thereafter utilized his 
new credit limit to gamble up to that limit?
    Mr. Horner. That is correct. He maxed it out as soon as he 
got it.
    Ms. Konar. Was that a violation of the confirmation order?
    Mr. Horner. It was.
    Ms. Konar. Did your investigation reveal a pattern where 
Judge Porteous favored making repayments at casinos over making 
repayments of other debts?
    Mr. Horner. It did.
    Ms. Konar. What did that pattern show specifically?
    Mr. Horner. Well, specifically it showed that Judge 
Porteous favored the casinos and a credit card company over his 
other creditors.
    Ms. Konar. Mr. Chairman, that concludes my questioning.
    Mr. Schiff. Thank you.
    Let me ask you a few questions, Agent Horner.
    What would have been the result if Judge Porteous had 
listed markers on his bankruptcy petition or defaulted on debt 
to a casino?
    Mr. Horner. Well, if he would have listed the marker on the 
bankruptcy decision, the marker would have been discharged in 
bankruptcy, or since this was a 13, the casino would have been 
treated like any other creditor and probably got--I think his 
plan was 39 cents on the dollar. So the casino would have been 
paid 39 cents on the dollar.
    Mr. Schiff. And had that happened, would the casinos have 
continued extending credit to him?
    Mr. Horner. No. If the casino had found out that he had 
filed for bankruptcy, they would not have extended credit to 
him anymore.
    Mr. Schiff. And did the judge indicate any of his casino 
debt on his bankruptcy petition?
    Mr. Horner. No. None.
    Mr. Schiff. As a result, did the casinos get paid 100 
percent of their debt whereas other creditors got maybe a third 
of their debt?
    Mr. Horner. That is exactly what happened. Treasure Chest, 
Grand Casino, Beau Rivage, they were all paid 100 percent, 
versus his credit cards, Bank of America and stuff, they got 39 
cents on the dollar, the same as there was a bank loan that he 
had that was listed in the bankruptcy which got 39 cents on the 
dollar.
    Mr. Schiff. Were the markers always paid either by cashing 
out chips or by the judge coming in later and giving cash? Or 
you mentioned the markers gave the casinos the right to tap 
into the judge's bank account. Did they ever have to use that 
mechanism, or did the judge always go and pay the marker one 
way or another?
    Mr. Horner. No. What happened in Judge Porteous's case was 
the markers were repaid, I think, one of four different ways. 
Sometimes he would pay with chips. When he was at the casino, 
he would pay it off with chips. Sometimes he would pay it off 
with cash. Other times he would write a check to the casino 
paying it off. And then the fourth way, sometimes his secretary 
wrote a check to the casino paying off the marker.
    Mr. Schiff. This was his judicial secretary?
    Mr. Horner. Yes.
    Mr. Schiff. You were showing some of the charts earlier 
that would show him gambling for a period of a day and a half; 
it would go after midnight.
    Mr. Horner. Right.
    Mr. Schiff. Some of the markers he would pay in chips, and 
some he would pay a day or so later, and some he would pay a 
week or two later.
    Mr. Horner. Right.
    Mr. Schiff. Were those at multiple casinos on the same day, 
or how is it that some were paid a day later, and some were 
paid through chips, and some were paid a week later? Were those 
all debts at the same casino? Were those visiting multiple 
casinos in the course of a single day?
    Mr. Horner. No, generally it was one casino per trip. If he 
had a stack of chips in his hand when he was done gambling, I 
suppose he would just walk to the cage and try to pay off any 
markers he had outstanding with whatever chips he had left.
    Mr. Schiff. The multiple debts that appear on some of the 
exhibits, some of which he paid out right away and some of 
which he paid out later, those would have been incurred at the 
same casino during the same day?
    Mr. Horner. Yes.
    Mr. Schiff. Does that mean he would gamble--he would get 
chips through a marker.
    Mr. Horner. Right.
    Mr. Schiff. At, say, the beginning of the evening.
    Mr. Horner. Right.
    Mr. Schiff. He would gamble and win some, lose some.
    Mr. Horner. Right.
    Mr. Schiff. Cash in chips.
    Mr. Horner. That is correct.
    Mr. Schiff. And then later in the evening borrow more 
chips.
    Mr. Horner. Yes, he did that sometimes, too. He would draw 
on a marker, gamble for a while; go back, probably lose what he 
drew down on the marker; go back, draw another marker, either 
win or lose; go back, either draw another marker or pay off the 
two previous markers or just pay off one marker if that he is 
all he had in his pocket at the time. So it just kind of 
depended upon whether he was winning or losing what would 
happen.
    Mr. Schiff. Those multiple transactions were at the same 
casino, and it just reflected the process of the evening of 
cashing in and cashing out.
    Mr. Horner. Right. Exactly.
    Mr. Schiff. But to your knowledge, the casinos never 
actually had to go and draw the money from his own accounts?
    Mr. Horner. No. They did. Sometimes they did drop the 
markers.
    Mr. Schiff. That is called dropping the markers?
    Mr. Horner. Yes. They deposited the marker to his bank 
account. I guess there is five ways that the markers were paid.
    Mr. Schiff. So sometimes they took advantage of the 
process, the link to his bank account, and actually when he 
didn't within the time period make the payment, they went and 
they drew the funds out of his account?
    Mr. Horner. That is correct.
    Mr. Schiff. Now, you did a summary of the amount of checks 
and cash he had written or paid for gaming expenses from 1997 
to 2000 that add up to $27,000, and then the number of credit 
card debts he incurred from 1995 to 2000, which was $66,000. I 
want to ask you about those two different periods. For one you 
looked at the period from 1997 to 2000.
    Mr. Horner. That is correct.
    Mr. Schiff. And the other, '95 to 2000. Why did you choose 
two different periods? Do you know what the amount of checks 
and cash from '95 to 2000 would have been?
    Mr. Horner. I don't know it off the top of my head, but I 
am sure the financial analyst that prepared the schedules, he 
would know the numbers or the answer to that question.
    Specifically, the two different time periods, those were 
the time periods that were used in the fifth circuit, I 
believe, at the fifth circuit hearing. And I don't know why 
they specified those two time periods. That was the financial 
analysts working with the fifth circuit people.
    Mr. Schiff. In your investigation, did you determine when 
the judge's gambling problem began or how long had it been 
ongoing?
    Mr. Horner. Well, he had credit at--I think the Treasure 
Chest was the first casino that he had credit established at, 
and I'm going from memory here. I think it went back to '95 or 
'92, something like that. But that is kind of an estimate, 
because I can't remember exactly how far back the Treasure 
Chest records went.
    Mr. Schiff. As far as you recall, the Treasure Chest may be 
the first casino where he became an established----
    Mr. Horner. Yes. That was his preferred--he liked to go to 
the Treasure Chest because it was real close to his house.
    Mr. Schiff. The 149,000 in markers that were taken out, 
many of which were repaid----
    Mr. Horner. Right.
    Mr. Schiff. How much was the sort of net loss from those 
markers? In other words, he goes to a casino; he takes out a 
mark; at some point, he cashes in chips to pay part of the 
mark. Was it generally or often the case that he lost and 
therefore couldn't pay off the mark at that visit and had to 
pay it off in the days or weeks that followed?
    Mr. Horner. I don't know the exact total, but in reviewing 
the records--I mean, I'm going to estimate that maybe half the 
time he lost--half the time he won, half the time he lost. 
Okay. That is just a rough estimate. But I don't know the total 
loss, net loss, or the amount of money that he owed casinos 
when he left. I don't know that number.
    Mr. Schiff. Now, the 140--was it 149,000?
    Mr. Horner. 149,000.
    Mr. Schiff. That was during the course of 1 or 2 years 
while he was in bankruptcy?
    Mr. Horner. That was for the time period after the order 
was entered through I think 2002, because our gaming records 
only went up to about 2002. I think he was discharged in July 
of '04.
    Mr. Schiff. So that amount and any amounts that he lost 
subsequent to the filing of the bankruptcy petition, that all 
postdates that 66,000 and $27,000 figure.
    Mr. Horner. That's correct.
    Mr. Schiff. At this point, you have to check. You're not 
aware of how much of the 149,000 was in that loss that 
subsequently had to be repaid?
    Mr. Horner. Right. I don't know that number.
    Mr. Schiff. Now, you say half the time he won, half the 
time he lost. Does that mean that the amounts were the same or 
that, ultimately, when you looked at a given date like the 
charge you showed us, he would win and he would lose, but at 
the end of the day there were usually markers that he did not 
have the ability to pay off?
    Mr. Horner. Usually--I'm going to say probably--and this is 
a rough estimate--40 percent of the time he left the casino 
owing money. But that is really just an estimate by reviewing 
the records.
    Mr. Schiff. Do you know, did the credit card application 
that he filled out during the pendency of the bankruptcy 
proceeding, did that credit card application ask him whether he 
had ever filed bankruptcy?
    Mr. Horner. I don't think so, because it was one of those 
quick applications where you just basically sign it and date it 
and you can get the card. And it was one of those low-limit 
cards. It was a Capital One. I think the balance was--or the 
credit limit on it was for $200. So I think it was one of those 
cards that sometimes, if you file bankruptcy, I think you might 
get the application, maybe. I don't know. But it didn't ask 
that question, not that I know of.
    Mr. Schiff. Thank you, Agent.
    I now recognize the Ranking Member of the Task Force, Mr. 
Goodlatte.
    Mr. Goodlatte. Thank you, Mr. Chairman.
    Agent Horner, are there reasons that Judge Porteous or 
anyone who may gamble frequently would want casinos to track 
their gambling patterns?
    Mr. Horner. Yes. The main benefit that--well, there is two 
reasons. One for tax purposes, for wins and losses, because 
they have to report their winnings and losings. Number two, a 
gamer or gambler would want their gaming activity rated--they 
call it rated play--because the casino will then give the 
customer food and room specials. They will give them free shows 
if they play enough. They will even give them free 
transportation to the casino.
    There is a term of art that is used, RFB. It is called 
room, food, beverage. A gambler will try to attain RFB status 
at the casino where when he walks in--or he or she walks in, 
you know, everything is paid for, including your room. So that 
is the main benefit to a gambler.
    Mr. Goodlatte. Do you know if Judge Porteous received such 
benefits?
    Mr. Horner. He did.
    Mr. Goodlatte. How many casinos did you identify where 
Judge Porteous was an established or rated player?
    Mr. Horner. Probably about 10.
    Mr. Goodlatte. All in the Gulf Coast region and New 
Orleans?
    Mr. Horner. Most of them in the Gulf Coast region, but he 
is also rated at Caesars in Vegas and Caesars in Tahoe.
    Mr. Goodlatte. You indicated that one of the reasons for 
having that tracked was the convenience in terms of completing 
your tax return. Have you had the opportunity to examine Judge 
Porteous's tax returns?
    Mr. Horner. I have.
    Mr. Goodlatte. Did you find anything unusual in those tax 
returns?
    Mr. Horner. Well, for one, he took a deduction for a gift, 
I think the first year, like a $4,200 deduction for gifts, but 
he doesn't put any gifts on the bankruptcy because there is a 
question on there for gifts given. Okay. Well, he didn't report 
that in the bankruptcy. But on the tax return, he did take a 
$4,200 deduction for gifts. If I remember right, I don't think 
there was any gaming wins or losses reported on his tax return.
    Mr. Goodlatte. Earlier in your testimony you said that you 
and the FBI analyst had attempted to add up withdrawals at 
casinos on Judge Porteous's credit cards and bank; and you 
indicated that you had come up with a chart that depicted the 
extent of those withdrawals, quote, at a minimum. Why do you 
think there may be more gambling-related charges and 
withdrawals?
    Mr. Horner. Because I think what the analyst did was he 
took kind of a narrow view of gaming withdrawals or gaming 
charges and only used withdrawals that were taken at the 
casino. But we know that there is a cash machine located right 
outside the Treasure Chest casino, 5500 Williams Boulevard, and 
Judge Porteous would frequently go to that cash machine right 
before he went to the casino, and I don't think that those 
transactions are reflected in the chart. So if you add all of 
those, the cash machines that are located around the casinos, 
that we could see he was hitting before he was going into the 
casino, the number is probably going to be bigger.
    Mr. Goodlatte. Do you have any way of calculating what that 
was based upon looking at his bank records?
    Mr. Horner. We do. But that is something that the financial 
analyst would calculate. But we do because we have got the bank 
records and we can see where the cash withdrawals are made and 
we know which cash machines are located right outside the 
casinos.
    Mr. Goodlatte. And how do you come to the conclusion that 
casinos would not extend credit to individuals in bankruptcy? 
Did you learn that from speaking with officials at the casinos 
you visited or----
    Mr. Horner. Yeah, I asked them that question.
    Mr. Goodlatte. What did they say to you?
    Mr. Horner. They said absolutely not.
    Mr. Goodlatte. Once they know somebody is in bankruptcy, 
they cut them off?
    Mr. Horner. Right. They are much--they are just like a 
bank. A bank is--you know, I shouldn't say because banks do--
don't loan money to people, and they did to Judge Porteous. He 
refinanced a loan. But, you know, casinos generally are not 
going to extend credit to people who have filed for bankruptcy.
    Mr. Goodlatte. Thank you.
    Agent Horner, when you obtained Judge Porteous's tax 
returns, did you do so under a court order?
    Mr. Horner. Yes.
    Mr. Goodlatte. Thank you very much. Those are all the 
questions I have.
    Mr. Schiff. The gentleman yields back.
    Ms. Sheila Jackson Lee.
    Ms. Jackson Lee. Thank you very much.
    Agent Horner, what do you think would have happened if 
Judge Porteous had listed an outstanding casino marker on his 
bankruptcy petition or otherwise defaulted on a debt to a 
casino?
    Mr. Horner. Well, if he had listed the casino debt on the 
bankruptcy application, the casino would have been treated like 
any other creditor. They would have participated in the plan. 
They would have been paid I think it was 39 cents on the 
dollar, just like all the other credit card companies were; and 
then that debt would have been discharged after the time 
period.
    Ms. Jackson Lee. We can also speculate that that would have 
been a real red flag on a bankruptcy petition, would it not?
    Mr. Horner. Yes. It would. It would have. It would have 
given the creditors an opportunity maybe to ask Judge Porteous 
about his gaming activity as a method to maybe to try to find 
some more funds for the bankruptcy estate.
    Ms. Jackson Lee. As an FBI agent dealing with either 
criminal failures or civil failures--and this is speculation 
and I understand that--if you were in a courtroom, you might 
assume that a judge might take note of that as well?
    Mr. Horner. I would assume that, yes.
    Ms. Jackson Lee. Do you have any evidence that Judge 
Porteous secured funds from individuals--I hate to use the term 
``loan sharks''. That may be dated. Do you have any evidence 
that he might have tried to get funds from other than credit 
card sources that seem to be part of your testimony today?
    Mr. Horner. Well, he obtained funds from other lawyers, you 
know. He had a little situation with some lawyers that, you 
know, they were paying him some funds for some curatorships. So 
he was generating funds like that back in the '90's. But as far 
as during this time period, other than--I don't know that he 
obtained money from any loan sharks. Or anything like that.
    Ms. Jackson Lee. And help me again. How far back did this 
gambling evidence suggest that he had been gambling?
    Mr. Horner. I think the records from Treasure Chest went 
back to the early to mid '90's.
    Ms. Jackson Lee. At the level of the evidence which you 
reviewed about his gambling habits, would it suggest that he 
needed to keep a constant flow of money going?
    Mr. Horner. Yes.
    Ms. Jackson Lee. And so he needed to be pretty nimble, 
pretty astute at trying to move dollars around?
    Mr. Horner. Well, what he did was, by overinflating his 
expenses in the bankruptcy and underestimating his income, what 
he was able to do was kind of create a little pot of money 
during the bankruptcy period which he could then gamble with 
that money.
    Ms. Jackson Lee. Say that again for me so that I can 
understand.
    Mr. Horner. What he did was he provided an old pay stub to 
the bankruptcy trustee which it was a low figure, okay? And so 
that created money every month for him to gamble, which was 
outside the bankruptcy estate, outside the purview of the 
trustee; and then he overinflates his expenses, okay, which 
then creates another little pot of money that he is able to 
gamble with or use however he wants to use. But those funds are 
kept outside the bankruptcy estate.
    Ms. Jackson Lee. In addition, that document is viewed as a 
Federal document or a document which would make representations 
to the Federal Government is it not, the bankruptcy petition?
    Mr. Horner. That's correct.
    Ms. Jackson Lee. Are there unique ways that casinos 
determine creditworthiness of a customer that are different 
from other typical commercial creditors?
    Mr. Horner. What a casino will do is they will have you 
fill out the credit application, and then most casinos will run 
what is called a central credit report, which is a credit 
report specifically aimed at gamblers and casinos and it tracks 
gaming activity of the casino's customers. And with the central 
credit report a casino can determine whether or not a gambler 
has a good credit history at the casinos or a bad credit 
history at casinos.
    Ms. Jackson Lee. So they do so--their inside ball game?
    Mr. Horner. That's right.
    Ms. Jackson Lee. We know you are a gambler, you might be 
selling your house, but are you good with us?
    Mr. Horner. That's right. And also casinos do--one thing I 
found out was casinos usually own numerous sister properties is 
what they call them and they have very good lines of 
communication between sister properties. So if I went to 
Harrah's in New Orleans and I bounced a check or something at 
Harrah's in New Orleans, they are immediately going to put that 
out to all casinos owned by Jazz Casino Corp., which is the 
company that owns Harrah's. So they are going to know about it 
within various casinos.
    Ms. Jackson Lee. It looks like he was focusing around the 
Gulfport region. Did he travel, though? I didn't see that. Did 
he make his way to various sites--Michigan, Las Vegas, Atlantic 
City?
    Mr. Horner. He went to Las Vegas and Tahoe, Lake Tahoe. I 
never saw anything that he gambled in Atlantic City.
    Ms. Jackson Lee. It sounds like Judge Porteous may have 
only underestimated his income by a few hundred dollars per 
month in the 2001 schedules. Is that a fair understanding of 
the evidence?
    Mr. Horner. I need to find something here. I have some 
figures that I wrote down here to show you how much difference 
there was in the paychecks, and I can't put my hands on it.
    Okay. Here it is. Well, anyway, the pay stub that he 
provides is $7,500, approximately. Well, the very next deposit 
into the Bank One checking account, the first deposit in there 
after the bankruptcy is filed is, like, $7,700. The next month, 
it goes up to--I think the next month is $7,700. The next 
month, it goes up to $7,800; and then the next month after that 
it jumps to like $8,500, because they are not with holding FICA 
and all that stuff anymore. So from August through December, 
the pay that is deposited in his account every month is about 
$8,500.
    Ms. Jackson Lee. And he only--and what--August and 
December, what year again?
    Mr. Horner. 2001.
    Ms. Jackson Lee. So you see a decided little cash hedge 
that he is able to utilize?
    Mr. Horner. Correct. And then he never did report his 
wife's income either. Which was very small. But still I think 
we found it averaged, you know, between 2 and $300 a month. But 
still--and it increased over the term of the bankruptcy. The 3-
year period of the bankruptcy her income steadily increased. So 
that was another little piece of income that he----
    Ms. Jackson Lee. That he dipped into?
    Mr. Horner. That he dipped into.
    Ms. Jackson Lee. Let me just quickly ask these last two 
questions.
    One, is it your testimony today that Judge Porteous 
committed fraud in his bankruptcy proceedings to conceal the 
extent of his gambling so he could continue gambling without 
interference; is that correct?
    Mr. Horner. Yes.
    Ms. Jackson Lee. And then, lastly, I'm still curious 
about--because when you think of gambling, certainly you can 
think of great fun and entertainment. But did you have any 
evidence of his association or having to be involved with 
unsavory characters--using an old terminology?
    Mr. Horner. No, not that I know of.
    Ms. Jackson Lee. Thank you.
    Mr. Schiff. The gentlewoman yields back.
    Without objection, all the exhibits referenced by Agent 
Horner or Mr. Baron will be made a part of the record; and now 
I will recognize Judge Porteous's attorney, Mr. Westling, for 
10 minutes to question the witness.
    Mr. Westling. Thank you, Mr. Chairman.
    Special Agent Horner, do you have the casino----
    Mr. Schiff. Counsel, could you hold off for one quick 
second?
    I'm sorry. I didn't see my colleague. Would you care to 
question the witness?
    Mr. Gohmert. Thank you, Mr. Chairman, just briefly.
    Mr. Schiff. Mr. Gohmert is recognized.
    Mr. Gohmert. Thank you.
    You have done an extraordinarily good case of just laying 
out the facts as they were found, and that really makes me 
appreciate the thoroughness of the job, and it makes our job 
easier when--as Sergeant Friday used to say, just the facts. 
But when my friend from Texas asked you about unsavory 
characters, you had a very long pause there; And so I would 
like to ask you what it is that was going through your mind. 
You clearly have a good mind and apparently you were going 
through some files and checking your directories mentally and 
I'm wondering what the hesitation was. Is there some people 
with whom he had contact that gave you cause for concern?
    Mr. Horner. Well, first, the term ``unsavory'' can mean 
probably--cover a broad number of people in New Orleans.
    Mr. Gohmert. In New Orleans?
    Mr. Horner. In New Orleans.
    Mr. Gohmert. Really. That's a shock.
    Mr. Horner. So the question really--what I was trying to 
determine is, in 14 years of public corruption investigations, 
I mean, there is a lot of people that we have investigated and 
we have come across and who could maybe fit the term 
``unsavory''. Now, you know, to try to reconcile that with 
Judge Porteous's relationship with any of these people, okay, 
I'm sure he has or knows unsavory people in New Orleans. But to 
define what the relationship is in regards to the question is a 
difficult one. So----
    Mr. Gohmert. Well--and I understand that. And so that you 
understand where I'm coming from, our Chairman of our Crime 
Subcommittee, Bobby Scott, and I were part of a hearing down in 
New Orleans a couple of years ago in which a U.S. attorney 
testified a big problem in New Orleans before Hurricane Katrina 
was graft and corruption, and it remains a big problem in New 
Orleans. And I understand that is a big problem there.
    So let me try to hone in a little more, and I really 
appreciate my friend from Texas asking the question, because it 
is important. This is a Federal judge who has tremendous power 
and control over people's future, businesses' futures. Are 
there people who have been investigated for graft or corruption 
who had personal ties to Judge Porteous?
    Mr. Horner. Yes.
    Mr. Gohmert. And are there people who have been 
investigated for graft and corruption who may have come before 
Judge Porteous as a judge who had personal ties to Judge 
Porteous?
    Mr. Horner. So the question is, if an unsavory or somebody 
who has been investigated----
    Mr. Gohmert. I'm setting aside unsavory now and trying to 
get more specific.
    So, specifically, you had indicated that there are people 
who had been investigated for graft and corruption who had 
personal ties to Judge Porteous.
    Mr. Horner. Right.
    Mr. Gohmert. So I'm taking that the next step to be even 
more exclusive. Were there people who had been investigated for 
graft or corruption who had personal ties to Judge Porteous and 
who came before him as a judge?
    Mr. Horner. Well, we had a case in New Orleans called 
Wrinkled Robe which was a large public corruption investigation 
which involved judges, lawyers, the sheriff's office, and bail 
bondsmen in Gretna, Louisiana; and you're going to hear from 
two of those--from a couple of people that were involved on the 
wrong side of Wrinkled Robe in a couple of days.
    But Judge Porteous did have a relationship with a bondsman 
named Louis Marcotte, who was later on investigated for 
corruption because he corrupted the 24th judicial system. He 
did have some dealings in front of Judge Porteous when Judge 
Porteous was on the State bench, okay, not on the Federal 
bench.
    But as far as if you're just asking for the time period of 
when Judge Porteous was on the Federal bench, I don't know of 
anybody that would fit that category.
    Mr. Gohmert. And one follow-up to that, if I might. The 
casinos obviously were extending markers, giving him credit. Do 
you know of any business that anyone associated with the 
casinos who extended him markers and credit had before his 
court?
    Mr. Horner. So the question is whether or not a casino had 
a matter before him?
    Mr. Gohmert. Or people involved with the casino 
individually had. Because it may be that the casino did not as 
the casino, but people involved with the casino who had an 
interest in the casino, pecuniary interest in the casino and 
had some business before the court.
    Mr. Horner. I don't know the answer to that question. But--
I don't know the answer to that.
    Mr. Gohmert. With the data bank that you have from your 
obviously very thorough investigation, would it be possible to 
run a cross-check between litigants before the court during the 
time he was a Federal judge and people who had a pecuniary 
interest in the casinos where he was extended credit?
    Mr. Horner. I don't think we could do that because we would 
have to know the name that we would want to run. We would have 
to know if that person also had--is an established player at a 
casino, and casinos generally don't give us that information 
unless we issue them a subpoena. So if I had the name of John 
Smith that appeared as a litigant in front of Judge Porteous, I 
would have no way of knowing whether or not John Smith has an 
account at Treasure Chest or Beau Rivage or anything like that.
    Mr. Gohmert. It may be worth following up. But, thank you, 
Mr. Chairman.
    Mr. Schiff. I thank the gentleman.
    The gentleman yields back. We will now go back to Judge 
Porteous's attorney, Mr. Westling, for his questions.
    Mr. Westling. Thank you, Mr. Chairman.
    Special Agent Horner, you have testified a bit about the 
casino credit process. I just want to make sure I understand 
some things about that. You've indicated that there is a credit 
report that is generated inside, I would put it, the casino 
system, players credited at various facilities that is often 
used in determining whether to extend a marker; is that 
correct?
    Mr. Horner. It is not really a credit system inside the 
casino system. It is a company separate and apart from the 
casinos that the casinos will subscribe to the service, the 
central credit service; and the central credit then provides 
information back to the casinos. So, you know, I don't think it 
is a part of the casinos. They just provide information to 
casinos.
    Mr. Westling. But, in essence, it is a database of 
information that relates to casino credit as compared to other 
credit?
    Mr. Horner. That's correct. And it does have some banking 
information on there, also. Like, it will show high and low 
limits of the customer's bank accounts and things like that.
    Mr. Westling. All right. Do they also typically run credit 
reports?
    Mr. Horner. Sometimes they do.
    Mr. Westling. And, obviously, had they run a credit report 
in this case, the bankruptcy would have showed up, would it 
have not?
    Mr. Horner. Yeah, it would have shown up.
    Mr. Westling. So to the extent the bankruptcy is out there, 
it is a public record like a tax lien or anything else. It is 
going to show up on a credit report, and it is available in the 
normal sources that a casino would check to determine 
creditworthiness. Is that a fair statement?
    Mr. Horner. Well--but the problem you have with Judge 
Porteous's bankruptcy is that he has got his Social Security 
number listed, and then he has also got the fake name, and then 
he has also got the real name. So when the credit report is 
issued and the bankruptcy shows up under--it is going to show 
up under his Social Security number, but it also going to show 
up under--as G. T. Orteous. So somebody reading the credit 
report doesn't know if the Social Security number is wrong or 
if the name is wrong. So it is hard to determine what is 
correct on the consumer credit report.
    Mr. Westling. But as a practical matter, a credit report 
typically lists a number of names anyone has ever been 
associated with?
    Mr. Horner. It does.
    Mr. Westling. So this isn't exactly a puzzle for people who 
are day in and day out granting credit, is it?
    Mr. Horner. No. Well--I mean, it would show up, but there 
would be a question as to whether or not--what the correct 
information is.
    Mr. Westling. But as a practical matter, the information 
would be there. They would just have to decide what value it 
had?
    Mr. Horner. Right. That's correct.
    Mr. Westling. Okay. Do you have the--there is a chart that 
was used earlier, Judge Porteous's casino markers post 
confirmation. Do you have that in front of you?
    Mr. Horner. I do. What is the exhibit number?
    Mr. Westling. I don't think it has an exhibit number. I 
think it was projected on the screen. This was the chart that 
has the total of $149,000----
    Mr. Horner. Right.
    Mr. Westling [continuing]. And 42 markers.
    Mr. Horner. Okay. I have it.
    Mr. Westling. Do you have that in front of you?
    Mr. Horner. I do.
    Mr. Westling. Okay. So I just want to quickly walk through 
the chart so that we can get a sense of what is happening here.
    On July 18, 2001 there is one marker at the Treasure Chest, 
which is then repaid in that same visit; is that correct? The 
first entry on the chart.
    Mr. Horner. I don't have that page.
    I have got it right here. Okay.
    Mr. Westling. Okay. So we are looking at--I think it is the 
first page--yeah, there we go. The July 18, 2001, visit. And 
there is a repayment of that marker on the same casino visit on 
the 19th.
    Mr. Horner. That's correct.
    Mr. Westling. Okay. And then going down to the 23rd again, 
repaid on the same visit, correct?
    Mr. Horner. That's correct.
    Mr. Westling. All right. Now, on the 20th of August and the 
21st, we see that some amount, 5,000, is repaid in the same 
visit, but there is a total of 3,000 that remains owing when he 
leaves the casino and is subsequently repaid on the 9th and 
15th of September, correct?
    Mr. Horner. Right.
    Mr. Westling. So we know that on one occasion there is 
3,000 left owing that is not liquidated the same day.
    Mr. Horner. Right.
    Mr. Westling. Now, going down to the 28th of September, 
there are two at Harrah's, $2,000 and again repaid in the same 
visit.
    Mr. Horner. Right.
    Mr. Westling. All right. Next page. We are looking at 
October 13th of '01, two markers for 1,000, again repaid the 
same visit.
    Mr. Horner. That's correct.
    Mr. Westling. October 17th and 18th, there is a total of 
nine markers for $5,900--1,500 repaid on that visit, 44 he 
leaves the casino still owing, correct?
    Mr. Horner. That's correct.
    Mr. Westling. All right. He repays that on November 9th, it 
looks like, of '01.
    Mr. Horner. Right.
    Mr. Westling. Next entry again, on the 31st and 1st, 31st 
of October, 1st of November, total of 3,000 repaid in the same 
visit?
    Mr. Horner. That's correct.
    Mr. Westling. All right. On 11/27, two markers again repaid 
the same visit.
    Mr. Horner. That's correct.
    Mr. Westling. 12/11, two markers again repaid the same 
visit. On the 20th of December of '01, one marker repaid 
subsequently. So that is another thousand he leaves the casino 
still owing.
    Mr. Horner. Right.
    Mr. Westling. 2/12 of '02, a $1,000 again repaid the same 
visit, correct?
    Mr. Horner. That's correct.
    Mr. Westling. April 1st, 2,500 repaid the same visit, 
correct?
    Mr. Horner. That's correct.
    Mr. Westling. All right. And then on May 26th, one marker, 
$1,000 repaid the same visit.
    Mr. Horner. That's correct.
    Mr. Westling. All right. Now, on 7/4 and 5 of '02, there 
were three markers, totaling $2,500. 1,200 is repaid that day, 
and he leaves the casino owing 1,300.
    Mr. Horner. Right.
    Mr. Westling. All right. So if I have got my notes right, 
there is one debt he leaves owing of 3,000, one of 4,400, one 
of 1,000, and one of 1,300. So of $149,000, 400 in markers 
total, only 9,700 were not repaid on the same date they were 
taken out; is that correct?
    Mr. Horner. That's correct.
    Mr. Westling. All right. Thank you.
    I want to direct your attention briefly to--I think it is 
Exhibit 341, which are the credit card statements that relate 
to the Capital One card that was taken out--I think it was in 
August of '01.
    Mr. Horner. Right.
    Mr. Westling. Do you have that in front of you?
    Mr. Horner. I do.
    Mr. Westling. Have you reviewed the charges on these 
statements?
    Mr. Horner. Only a couple of them.
    Mr. Westling. Okay. In general--and, again, we can go 
through them, but is it fair so say that these represent pretty 
standard meals, clothing, Breaux Mart, which is a grocery store 
in New Orleans, but kind of day-in-and-day-out living expenses? 
I mean, these are not repeating the pattern of regular 
gambling-type debt; is that correct?
    You can take your time.
    Mr. Horner. Just give me a couple of seconds here.
    Yeah, it looks like it is a lot of restaurants, shopping, 
things like that.
    Mr. Westling. All right. Thank you.
    Agent Horner, you have testified about the bankruptcy 
petitions in this case and the dates they were filed; and I 
guess there were actually two of them, if I understand all of 
this correctly. The first that was--had the name Orteous and 
then there was an amended filing, correct?
    Mr. Horner. That's correct.
    Mr. Westling. And do you know whether or not they were 
signed by Judge Porteous and his wife on the dates that they 
are dated or not?
    Mr. Horner. So your question is whether or not he actually 
signed the voluntary petition on March 28, 2001, as it is 
reflected on the form?
    Mr. Westling. Right. In other words, to the extent it bears 
that date, do you know if it was signed on that date?
    Mr. Horner. I do not know if it was actually signed on that 
date. I mean, he represents that it is, so----
    Mr. Westling. I understand. That is the date on the 
document.
    Mr. Horner. Right.
    Mr. Westling. But you don't know one way or the other 
wether he signed it and it was subsequently dated?
    Mr. Horner. Right.
    Mr. Westling. I mean, if you look at the dates--just so we 
can talk about it--they are clearly all put on there by the 
same individual, are they not?
    Mr. Horner. I don't know who put them on.
    Mr. Westling. Now, I want to go back to one final exhibit, 
and then I will move on, and I think it is the exhibit that 
shows your analysis of gambling losses and winnings. Do you 
have that? I will probably have a number for you in just a 
second, but I'm looking. Yeah, it is 337.
    Mr. Horner. Okay.
    Mr. Westling. And so for the period of 3/28/2000 to 3/28/
2001, your analysis--and this is based on your investigation; 
is that correct?
    Mr. Horner. That's correct.
    Mr. Westling. All right--indicated that there was 
approximately $6,000 in gambling losses on a net basis?
    Mr. Horner. Yeah, that's correct.
    Mr. Westling. Okay. So in about a year, he had about a 
$6,000 loss?
    Mr. Horner. That's correct.
    Mr. Westling. All right. And then the other thing is you 
were asked some questions about tax returns. There is no 
requirement of reporting gambling losses on your tax returns, 
is there?
    Mr. Horner. Well, as it--I mean, you can deduct losses 
against winnings.
    Mr. Westling. But to the extent you have more losses than 
winnings, it is a nondeductible event, correct?
    Mr. Horner. That's correct.
    Mr. Westling. So there would be no basis to report it?
    Mr. Horner. Right.
    Mr. Westling. I have no further questions, Mr. Chairman.
    Mr. Schiff. Thank you.
    Agent Horner, I just have a few follow-up questions I want 
to ask you. On the chart of casino markers, one of the dates 
was September 28th. I don't know if you have that in front of 
you. It was at Harrah's. There were two markers in the amount 
of 2,000.
    Mr. Horner. Right.
    Mr. Schiff. Now, it shows a repayment date which I think 
counsel may have assumed was the same date, but that is a month 
later, right?
    Mr. Horner. Right, it is a month later.
    Mr. Schiff. Now, is the total of the two markers 2,000, or 
is it one marker each for 2,000?
    Mr. Horner. It is two $1,000 markers.
    Mr. Schiff. So that the amount not repaid would have been 
11,000 for that period, instead of 9,000?
    Mr. Horner. Right, because he repaid it a month later.
    Mr. Schiff. Do you know, Agent Horner, whether on the dates 
where the markers showed they were repaid, whether they were 
always repaid with chips or whether they were repaid with cash 
or with check or credit card?
    Mr. Horner. It shows on the gaming records how it was 
repaid--chips, cash, checks or if they had to drop the marker.
    Mr. Schiff. And do you know in terms of the markers that 
are listed on this chart whether they were all paid with chips 
or whether some were paid in cash, check, or credit card?
    Mr. Horner. It varied. Chips, cash, checks, for the 
purposes of this chart.
    Mr. Schiff. So then we can't tell from this chart what his 
losses were. His losses may exceed the 11,000 if he paid off 
the loss the same day by a check or credit card?
    Mr. Horner. That's right. So really what the chart reflects 
is--or the losses that you can deduce from this chart would be, 
when he walks out of the casino, money owing the casino when he 
left.
    Mr. Schiff. Well----
    Mr. Horner. But as he is gambling, he could be losing, 
okay, and then he may repay some of it, lose, repay--I mean, it 
just kind of--you would have to kind of really look at the 
records if you could even determine down to that level.
    Mr. Schiff. It is more complicated than that, isn't it? 
Because the fact that he walked out of the casino having paid 
off the marker doesn't mean that he walked out without losses. 
It may mean that he lost and paid in the casino with a check 
the remaining balance, right?
    Mr. Horner. That's correct.
    Mr. Schiff. So if in the course of this period in 2001 and 
part of 2002 he had 149,000 in markers and left the casino with 
11,000 not repaid, we would know at a minimum the losses were 
11,000, but they may have been substantially greater?
    Mr. Horner. They could have been more, because you don't 
know--I guess you don't know the source of the funds that he 
repaid the markers with, the ones he repaid while he was at the 
casino.
    Mr. Schiff. Now I'm just doing some rough math. But 11,000 
out of 149,000, if it were 10 percent, it would be basically 
15,000. So we are talking about 8 percent of the total amount 
of markers he ended up losing, assuming----
    Mr. Horner. That would be money owed walking out of the 
casino, would be 8 percent.
    Mr. Schiff. Now, during the period from 1995 to 2000 and 
1997 to 2000, during that 3- to 5-year period you were able to 
total up, looking at cash, checks, and credit cards, gambling 
debts of around 100,000, right?
    Mr. Horner. Right. When you add the two figures together, 
it would be not necessarily debt but just money spent on 
gambling.
    Mr. Schiff. Money spent on gambling.
    Mr. Horner. Right.
    Mr. Schiff. So in that 3- to 5-year period you have about 
100,000 in money spent on gambling. Assuming that it was an 
entire 5-year period, this would be a conservative figure, that 
would represent about 20,000 a year in gambling expenses?
    Mr. Horner. So the question would be, did he spend--he 
spent about 20,000 a year gambling?
    Mr. Schiff. Well, my question is, conservatively, from the 
period of '95 to 2000, if there were 100,000 that he was paying 
through cash, check, or credit card for gaming, does that 
indicate on average about a $20,000-a-year expenditure on 
gambling during that period?
    Mr. Horner. It would. But the one element it doesn't take 
into consideration is he had a large amount of cash that we 
could never really trace the source of. So if he used some of 
that cash to gamble with, you know, we wouldn't know. So of 
what we can tell, the $20,000 figure would probably be fairly 
accurate. That's a problem you have with a gambler is you have 
got cash a lot of times that----
    Mr. Schiff. Okay. That concludes the questions I have.
    Would anyone else like to--Mr. Gohmert.
    Mr. Gohmert. Okay. Thank you. Yeah, some follow-up.
    First of all, following up the Chairman's questions, you 
mentioned that he may have had cash. You couldn't account for 
the source; is that correct?
    Mr. Horner. That's correct.
    Mr. Gohmert. So you don't know whether it may have been 
attorneys that were providing money for his son's college or 
something like that that ended up being used for gambling, 
correct?
    Mr. Horner. That's correct. Or could have just been gaming 
winnings that he had in his pocket and he just deposited them.
    Mr. Gohmert. We have heard testimony about cash being 
obtained for the judge or on the judge's behalf from attorney 
friends who were just trying to help him out. Have you checked 
to see if there is any time linkage between the acquisition of 
cash from attorneys who appeared before Judge Porteous and 
gambling that occurred at these casinos?
    Mr. Horner. We did. We tried to do that. And we could not 
reach a conclusion.
    Mr. Gohmert. So it is inconclusive whether that cash would 
have been used. Did you follow up like we had heard testimony 
about requests for cash because the child's tuition was coming 
due? Have you done any follow up to see if tuition was actually 
following--coming up due following that request for cash?
    Mr. Horner. Well, we didn't on the child's tuition because 
sometimes it is a little sensitive if you issue a subpoena to a 
school regarding a child. So we didn't do that, okay?
    Mr. Gohmert. Well, but you can pretty well figure out when 
tuition is due. You have a general knowledge that colleges 
usually like to have their tuition paid before they will allow 
you to attend class. I know, with my kids, we haven't been able 
to get them to allow them to go to class until their tuition 
has been paid. They may let them go a week or two, but 
eventually they get real sticky about that.
    Mr. Horner. And, you know, the financial analyst may have 
looked to see if there were checks written to the schools or 
things like that. I guess I don't know the answer to that. But 
I know that we did try to trace a lot of the cash to see how it 
was being spent, and it was very difficult.
    Mr. Gohmert. One of the things it seemed from the 
testimony--and you may be able to indicate more specifically--
but it seemed like the testimony of witnesses was, on one 
occasion we were asked for cash because the tuition was coming 
due, but they couldn't be specific on which occasion that was. 
Is that the kind of problem you ran into in trying to trace the 
cash?
    Mr. Horner. That's one of them. And the situation I'm 
referring to, another problem is that it was old, dated 
material. It was outside the statute of limitations.
    Mr. Gohmert. Okay. And I did want to follow up on a 
question asked by Attorney Westling. It was a good question 
about if the judge applied for a marker at a casino for credit 
or made application for a credit card, well, they could get his 
credit report and see that there had been a bankruptcy filed; 
and I thought that was a good question. But I wanted to do a 
follow-up to that. And it should be easy to discern this just 
from looking at the dates, the different things, the data that 
you have compiled. But since we have you here and you're the 
one that compiled the data, I will just ask you, it would be a 
lot easier to research. Was there an application for credit 
either at a casino or for a credit card that came after the 
judge filed bankruptcy under a false name but before the time 
that he corrected that name?
    Mr. Horner. That would be between March 28, 2001, and April 
9, 2001, that time period?
    Mr. Gohmert. Yes.
    Mr. Horner. I don't believe that he applied for any credit 
cards or any new casino credit during that 10-day time period.
    Mr. Gohmert. You don't believe?
    Mr. Horner. No. I know he applied for credit at Harrah's 
during the pendency of the bankruptcy, but that was outside 
your window--your question.
    Mr. Gohmert. Once the name was corrected at the bankruptcy 
pleadings, did you see--did that effect a change in a credit 
report or did it remain under the original name filed under 
which the bankruptcy was filed?
    Mr. Horner. My recollection is that, when it was first 
filed, the credit reports----
    Mr. Gohmert. They would pick that up, right?
    Mr. Horner. They didn't pick it up until it was after April 
9th, and it may have just been a function of----
    Mr. Gohmert. Yeah, it just takes time.
    Mr. Horner. To get a bankruptcy on a credit report. But it 
did eventually show up on the credit report.
    Mr. Gohmert. Under the fictitious name or under his actual 
name?
    Mr. Horner. Well, it just shows up under his credit report. 
He will see--you will see the bankruptcy. They just list the 
bankruptcy listed.
    Mr. Gohmert. Okay.
    Mr. Horner. And then it will list all of the names that he 
has used or the names that are associated with the Social 
Security number.
    Mr. Gohmert. Okay. So, by using the fictitious name, did 
that, do you think, delay the time that it appeared in his 
credit report?
    Mr. Horner. You know, that--I don't know. I guess----
    Mr. Gohmert. I see my time has run out, but I would ask 
that, if you find answers to the questions that I have asked, 
if you could submit that in writing after the hearing, we would 
appreciate it very much. Thank you.
    Thank you, Mr. Chairman.
    Mr. Schiff. The gentleman yields back.
    Ms. Sheila Jackson Lee.
    Ms. Jackson Lee. Thank you, Agent, for your testimony and 
for your diligence.
    Help me out again and tell me how long in your review did 
Judge Porteous have a gambling--participate in gambling 
activities?
    Mr. Horner. Well, that I can establish through the records, 
I would say from the early to mid '90's.
    Ms. Jackson Lee. Early to mid '90's?
    Mr. Horner. That's what the records would establish. Now he 
may have been gambling before that as an unrated or 
unestablished player, but I wouldn't know that.
    Ms. Jackson Lee. And, again, in your review of documents 
and your experience, in what you reviewed was it participation 
in gambling or did you sense a gambling habit?
    Mr. Horner. You know, he gambled a lot, okay? He gambled a 
lot. It would be hard for me to determine whether it is a habit 
or a problem, but he did gamble a lot.
    Ms. Jackson Lee. In the review of records and his gambling 
a lot, did he leave debts that ultimately came back to be paid, 
but did he have, I guess you call it a running debt, and you 
have to pay it--when he left after each time or was all his 
debts paid up or did he come back and pay debts?
    Mr. Horner. Sometimes he would leave owing the casino 
money, and then he would come back and pay the casino. Or 
sometimes, if he didn't come back and pay, that's when the 
casino deposits the marker to the bank account.
    Ms. Jackson Lee. And then they get it automatically?
    Mr. Horner. Right, they get the money automatically.
    Ms. Jackson Lee. He was nominated for the bench in I guess 
1994. Was he gambling then?
    Mr. Horner. Was he what?
    Ms. Jackson Lee. Was he gambling then?
    Mr. Horner. In '94?
    Ms. Jackson Lee. Yes.
    Mr. Horner. I would have to check the records. Specifically 
'94, I would have to check.
    Ms. Jackson Lee. Is there any records here for you to check 
or----
    Mr. Horner. No. I don't have all of the gaming records 
here, but I could check to see how far back they go.
    Ms. Jackson Lee. All right. I would appreciate if I could 
get that answer. Because I would like to ask you a question in 
particular regarding the judicial application or the 
application that one has to file. And it is a Federal form. Did 
you review his application that is called form 86--SF-86?
    Mr. Horner. I did, but it has been a while since I looked 
at it.
    Ms. Jackson Lee. I'll hold it up for you to see. There's 
fine print, but I'm going to read the language to you. And that 
is why I would like to have this question answered.
    He has to see it this way, please. Thank you.
    The language on--I think it is--it looks like it is 10(s): 
Is there anything in your personal life that could be used by 
someone to coerce or blackmail you? Is there anything in your 
life that could cause an embarrassment to you or to the 
President if publicly known? And, if so, please provide full 
details.
    So that would have been--in 1994, that question would have 
been asked.
    Mr. Horner. Right.
    Ms. Jackson Lee. And the question would be, from an FBI 
agent's perspective, would the gambling question be a relevant 
question in a question like that?
    Mr. Horner. Well, it would be relevant in the sense that if 
it is creating a financial burden, okay, because financial 
hardships by judges or anybody in public service could be used 
as a source of blackmail. And I know those are issues--when I 
was hired, they wanted to know what my financial condition was 
before they hired me. Just because if I'm in a bad financial 
way or bad financial situation, you know, I may be open for a 
bribe or blackmail or to do something, you know, that you 
shouldn't do.
    Ms. Jackson Lee. And in the review of the documents that 
you had going forward, because your memory doesn't serve you at 
this point as to what time frame, was the gambling habits of 
Judge Porteous a burden a financial burden?
    Mr. Horner. Yes, they were. It was a major factor in his 
bankruptcy.
    Ms. Jackson Lee. And you did testify today that--I think I 
asked the question--that you testified that you believed Judge 
Porteous committed fraud in his bankruptcy proceedings to 
conceal the extent of his gambling. And you testified so that 
he could continue gambling without interference. Was that 
correct?
    Mr. Horner. That's correct.
    Ms. Jackson Lee. So, therefore, anyone that would engage in 
that activity certainly was burdened by--seemingly burdened by 
those debts or burdened by those activities?
    Mr. Horner. That's correct.
    Ms. Jackson Lee. And I just want the--Mr. Chairman, I would 
like to ensure that the witness is able to give us records that 
would reflect the start, to his knowledge or his documentation, 
of Judge Porteous's gambling; and I want the record to reflect 
that this form that we believe is signed by Judge Porteous--and 
are you able to detect as to whether or not that is his 
signature?
    Mr. Horner. That looks like his signature.
    Ms. Jackson Lee. We will just have that reflected, and I 
will try to affirm the documents, and I'm not sure whether I 
can ask unanimous consent for this document to be placed in the 
record.
    Mr. Schiff. Without objection.
    Ms. Jackson Lee. And I just want the record to reflect--and 
I will read it again; and this document is dated April 27, 
1994. There is a portion or a supplement to Standard Form 86--
I'm again saying S as in Sam--SF-86. But but I will read it 
again.
    Is there anything in your personal life that could be used 
by someone to coerce or blackmail you? Is there anything in 
your life that could cause an embarrassment to you or to the 
President if publicly known? If so, please provide full 
details.
    And the answer that is reflected here is a no, and this is 
a duplicate, and I will ask that this document be submitted in 
the record.
    Mr. Schiff. Without objection.
    [The information referred to follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    

    Ms. Jackson Lee. I thank you, and I yield back.
    Mr. Schiff. I thank the gentlewoman for her questions, and 
I think the point you raised is one that applies with equal 
force to the issues we discussed in our last hearing, and 
whether those were required to be disclosed.
    Agent Horner, that will conclude your testimony.
                               __________

    Mr. Schiff. We are going to recess because we have votes 
coming up now, and they will give Members a chance to grab 
something to eat. I think we have four votes that are scheduled 
for approximately now. We will resume after the fourth vote.
    We are now in recess.
    [Recess.]
    [1:14 p.m.]
    Mr. Schiff. Our Task Force will come to order.
    Our second witness this afternoon is Claude Lightfoot, 
Esquire. Mr. Lightfoot is an attorney with a law practice in 
the New Orleans area. He is here pursuant to a subpoena.
    I will now swear the witness.
    [Witness sworn.]
    Mr. Schiff. Ms. Konar, you may now question the witness.

           TESTIMONY OF CLAUDE LIGHTFOOT, ATTORNEY, 
                        NEW ORLEANS, LA

    Ms. Konar. Good afternoon, Mr. Lightfoot. Where are you 
employed?
    Mr. Lightfoot. With my own firm, sole practioner in New 
Orleans.
    Mr. Schiff. Mr. Lightfoot, you need to pull the microphone 
close to you and make sure you have it turned on. If you hit 
the button at the base.
    Mr. Lightfoot. How about now?
    Mr. Schiff. Perfect. And I would even pull it closer to 
you.
    Mr. Lightfoot. I am a sole practioner and attorney in New 
Orleans.
    Ms. Konar. What type of law do you practice?
    Mr. Lightfoot. Bankruptcy only since about 1990.
    Ms. Konar. In the summer of 2000, were you retained by 
Judge Porteous?
    Mr. Lightfoot. I was.
    Ms. Konar. Why did he retain you?
    Mr. Lightfoot. To seek to achieve a workout of his 
financial problems and ultimately to consider bankruptcy, if 
necessary.
    Ms. Konar. What is a workout?
    Mr. Lightfoot. Well, I analyzed the assets and the debts 
that he had and came up with a plan to offer at least partial 
payment in settlement of the claims to his credit card debt.
    Ms. Konar. And is a workout something that would take place 
in lieu of a bankruptcy?
    Mr. Lightfoot. That would have been in lieu of a 
bankruptcy. That was the effort.
    Ms. Konar. Had you ever met Judge Porteous at the time he 
retained you? Had you met him prior to the time?
    Mr. Lightfoot. No, I didn't.
    Ms. Konar. Did you know who he was?
    Mr. Lightfoot. I knew who he was because some years before, 
I had a bankruptcy appeal which had been allotted to his court, 
but the appellant--I was the appellee, representing the 
appellee--dismissed the appeal, so it never went through and I 
never did meet Judge Porteous.
    Ms. Konar. But at a minimum, you did know that he was a 
Federal judge?
    Mr. Lightfoot. I knew that, yes, ma'am.
    Ms. Konar. Did you take any steps in the summer of 2000 to 
collect information from Judge Porteous?
    Mr. Lightfoot. I did.
    Ms. Konar. What did you do?
    Mr. Lightfoot. I presented him with my usual packet of 
worksheets that mimic the ultimate bankruptcy schedules to 
obtain all the information about his debts and his assets.
    Ms. Konar. Could you give us a little more specific 
information about the types of questions that appeared on your 
work sheets?
    Mr. Lightfoot. Well, every single question that appears in 
the petition, the schedules and the statements and the Chapter 
13 plan, the things that ultimately go into a bankruptcy or, 
for that matter, in a Chapter 7 bankruptcy, I have covered in 
my worksheets; just explain more simply, lots more room to 
write, asking the prospective clients to list out all of their 
debts, list all of their assets. The form is more comprehensive 
than anyone would have, but it contains everything that would 
ultimately be contained in a bankruptcy filing.
    Ms. Konar. Did the fact that you were trying to work out 
Judge Porteous's debts in the summer of 2000 as opposed to 
preparing for a bankruptcy filing in any way effect or change 
your process for how thorough you were in collecting his 
information?
    Mr. Lightfoot. No.
    Ms. Konar. Did you specifically explain to Judge Porteous 
that he needed to disclose all of his assets and all of his 
debts to you?
    Mr. Lightfoot. Yes, I did.
    Ms. Konar. Did Judge Porteous fill out the worksheets that 
you gave to him?
    Mr. Lightfoot. Yes, he did.
    Ms. Konar. Did he disclose on those worksheets that he had 
any debts owed to casinos?
    Mr. Lightfoot. No.
    Ms. Konar. Did Judge Porteous otherwise inform you in the 
summer 2000 that he had debts owed to casinos at that time?
    Mr. Lightfoot. No.
    Ms. Konar. If in fact Judge Porteous had owed debts to 
casinos at that time, should he have disclosed them to you?
    Mr. Lightfoot. I would have expected them to be listed and 
provided to me, and I would have listed them as creditors.
    Ms. Konar. Is that why it would have been important for you 
to know about the debts, because they should have been listed 
as creditors?
    Mr. Lightfoot. They are obligations to pay, so they would 
be a debt, like any other debt.
    Ms. Konar. Did you give Judge Porteous any legal advice in 
the summer of 2000 regarding whether he should or should not 
continue to incur new debt?
    Mr. Lightfoot. Yes.
    Ms. Konar. What was that advice?
    Mr. Lightfoot. Not to make any more debt.
    Ms. Konar. Is that advice you give to all of your 
bankruptcy clients?
    Mr. Lightfoot. Yes.
    Ms. Konar. Why do you give that advice to all of your 
clients?
    Mr. Lightfoot. Well, by the time someone is in a financial 
distress sufficient to be consulting about a bankruptcy, it is 
not good faith for such a person to continue making debt. So I 
always admonish them not to do it anymore, not to make any more 
credit card charges, et cetera.
    Ms. Konar. Was the workout that you attempted on behalf of 
Judge Porteous ultimately successful?
    Mr. Lightfoot. No.
    Ms. Konar. Was a decision made in approximately February or 
March of 2001 to file for a bankruptcy?
    Mr. Lightfoot. Yes.
    Ms. Konar. At that time, in approximately February or March 
of 2001, did you request that Judge Porteous provide you with 
any updated information since he had originally filled out the 
worksheets in the summer of 2000?
    Mr. Lightfoot. Well, he had a practice of providing me with 
updated credit card statements. Every so often I would get 
another collection and I would adjust the balances, because the 
accrual of interest was making them get larger. And there was a 
process of reviewing a couple of drafts of the final schedules 
and plan that were filed to make sure that everything was 
accurate.
    Ms. Konar. Did Judge Porteous tell you in early 2001 that 
at that time he had any debts owed to casinos?
    Mr. Lightfoot. No.
    Ms. Konar. Did Judge Porteous tell you more specifically 
that on February 27th of 2001 he gambled at the Grand Casino 
Gulfport, he took out $2,000 in markers and that he left the 
casino that day still owing $2,000?
    Mr. Lightfoot. No. I never knew that he gambled at all or 
had any gambling debts.
    Ms. Konar. Did he ever tell you that he owed $2,000 to the 
Grand Casino Gulfport on March 28th, which was the day that he 
filed the bankruptcy petition?
    Mr. Lightfoot. No.
    Ms. Konar. Should Judge Porteous have told you about those 
sorts of gambling debts?
    Mr. Lightfoot. Yes, so I could list them.
    Ms. Konar. During Judge Porteous's fifth circuit testimony, 
he was asked about the definition of a marker and he agreed 
that the following definition was accurate: ``A marker is a 
form of credit extended by a gambling establishment, such as a 
casino, that enables the customer to borrow money from the 
casino. The marker acts as the customer's check or draft to be 
drawn upon the customer's account at a financial institution. 
Should the customer not repay his or her debt to the casino, 
the marker authorizes the casino to present it to the financial 
institution or bank for negotiation and to draw upon the 
customer's bank accounts any unpaid balance after a fixed 
period of time.''
    Do you agree with that definition of a marker?
    Mr. Lightfoot. Yes.
    Ms. Konar. I would like to direct your attention to Exhibit 
125. Do you recognize this document?
    Mr. Lightfoot. Yes. This is the original voluntary petition 
in Chapter 13.
    Ms. Konar. Did you prepare this?
    Mr. Lightfoot. I did.
    Ms. Konar. Did you discuss the preparation of this document 
with Judge Porteous?
    Mr. Lightfoot. I did.
    Ms. Konar. Did Judge Porteous personally review this 
document before it was filed with the bankruptcy court?
    Mr. Lightfoot. He did.
    Ms. Konar. Turning to page 2 of the document, did Judge 
Porteous sign this document under penalty of perjury?
    Mr. Lightfoot. Yes.
    Ms. Konar. And what was the date the original petition was 
filed?
    Mr. Lightfoot. March 28th, 2001.
    Ms. Konar. What was the name used on the original petition?
    Mr. Lightfoot. G.T. Ortous.
    Ms. Konar. Is that a false name?
    Mr. Lightfoot. It is.
    Ms. Konar. Why was the original bankruptcy petition filed 
with a false name?
    Mr. Lightfoot. I had hoped that I could avoid him the 
embarrassment--or have him avoid the embarrassment of a big 
story in the newspaper. At that time, these filings were listed 
in the newspaper once a week. And I knew that it would be 
corrected very quickly before any notice would go out to 
creditors. And that was a mistake, and it was my suggestion, 
and I am sorry that I made that suggestion.
    Ms. Konar. After you made the suggestion to Judge Porteous 
that he file under a false name in the original petition, did 
he object to your suggestion?
    Mr. Lightfoot. No.
    Ms. Konar. Did he ever say to you, no, I refuse to file a 
document with a false name?
    Mr. Lightfoot. No.
    Ms. Konar. Did Judge Porteous definitely know when he 
signed his bankruptcy petition under penalty of perjury that it 
did contain a false name?
    Mr. Lightfoot. Yes.
    Ms. Konar. Mr. Lightfoot, approximately how many 
bankruptcies have you worked on throughout the course of your 
career as a bankruptcy attorney?
    Mr. Lightfoot. Many thousands.
    Ms. Konar. And in any other case other than Judge Porteous, 
have you ever advised or counseled one of your clients to file 
a bankruptcy petition using a false name?
    Mr. Lightfoot. No, I haven't.
    Ms. Konar. What was so special about Judge Porteous that on 
this one occasion you gave him this advice?
    Mr. Lightfoot. I felt sorry for him. I did not know him. I 
respected him as a judge. And out of compassion I tried to save 
him some embarrassment. It was a very misguided effort.
    Ms. Konar. Looking again at Exhibit 124, it also lists a 
P.O. Box address instead of a street address. Did Judge 
Porteous have a P.O. Box address in the summer of 2000 at the 
time he retained you?
    Mr. Lightfoot. I don't think so.
    Ms. Konar. Whose idea was it to use a P.O. Box address on 
the bankruptcy petition?
    Mr. Lightfoot. It was part of the same effort, just to 
obscure for the paper discovering that he had filed. It, of 
course, backfired because it came out anyway.
    Ms. Konar. So just to clarify, did you give the idea to him 
to use the P.O. Box?
    Mr. Lightfoot. Correct.
    Ms. Konar. And after you gave him the idea of using the 
P.O. Box, did Judge Porteous then himself affirmatively go out 
and open the P.O. Box?
    Mr. Lightfoot. I don't know how it came about, but I was 
provided with a P.O. Box.
    Ms. Konar. So you didn't open a P.O. Box for him?
    Mr. Lightfoot. No.
    Ms. Konar. Did you ever amend Judge Porteous's bankruptcy 
petition to correct the false name?
    Mr. Lightfoot. I did.
    Ms. Konar. Directing your attention to Exhibit 126, do you 
recognize this document?
    Mr. Lightfoot. Yes, this is the amended voluntary petition.
    Ms. Konar. Did you prepare this document?
    Mr. Lightfoot. I did.
    Ms. Konar. What are the differences between the amended 
voluntary petition and the original petition?
    Mr. Lightfoot. The name and the address are correct.
    Ms. Konar. Did Judge Porteous personally review the amended 
bankruptcy petition before it was filed?
    Mr. Lightfoot. He did.
    Ms. Konar. Turning to page 2 of the amended bankruptcy 
petition, did Judge Porteous sign this document under penalty 
of perjury?
    Mr. Lightfoot. Yes, he did.
    Ms. Konar. When was the amended petition filed?
    Mr. Lightfoot. April 9th, 2001.
    Ms. Konar. Did you file any other documents on April 9th of 
2001?
    Mr. Lightfoot. I filed the Chapter 13 schedules and 
statements and Chapter 13 plan the same day.
    Ms. Konar. Drawing your attention to Exhibit 127, do you 
recognize these documents?
    Mr. Lightfoot. I do.
    Ms. Konar. What are these documents?
    Mr. Lightfoot. These are the schedules and the plan.
    Ms. Konar. As you said, you prepared these documents 
yourself?
    Mr. Lightfoot. I did.
    Ms. Konar. How did you obtain all the necessary information 
to fill out Judge Porteous's bankruptcy schedules and his 
statement of financial affairs?
    Mr. Lightfoot. From the worksheets that I had had him fill 
out long before, and then we reviewed them at least a couple of 
times, a couple of drafts of these schedules thereafter.
    Ms. Konar. So did you rely entirely on Judge Porteous to 
provide you with all the necessary information to complete 
these documents?
    Mr. Lightfoot. I did.
    Ms. Konar. Did you specifically review both the completed 
summary of the bankruptcy schedules, the schedules themselves, 
and the statement of financial affairs with Judge Porteous 
prior to the time that they were filed with the courts?
    Mr. Lightfoot. Yes.
    Ms. Konar. How extensive was that review process?
    Mr. Lightfoot. Well, I would sit down, and I believe with 
his wife at one time as well, and we went through them to see 
that everything was accurate and there were no changes, just 
going page by page, pointing out what was there.
    Ms. Konar. Did you review these documents on more than one 
occasion before they were ultimately filed?
    Mr. Lightfoot. At least twice.
    Ms. Konar. Did Judge Porteous sign his bankruptcy schedules 
under penalty of perjury?
    Mr. Lightfoot. He did.
    Ms. Konar. Did Judge Porteous also sign his statement of 
financial affairs under penalty of perjury?
    Mr. Lightfoot. He did.
    Ms. Konar. Turning your attention to question 17 on 
bankruptcy schedule B, what does this question ask for?
    Mr. Lightfoot. This asks for a listing of the other 
liquidated debts owing to the debtor, including tax refunds.
    Ms. Konar. What is the answer given?
    Mr. Lightfoot. None.
    Ms. Konar. Did Judge Porteous ever tell you that on March 
23rd of 2001, he filed his tax return for the year 2000 and he 
requested a $4,143 tax refund?
    Mr. Lightfoot. No.
    Ms. Konar. Did Judge Porteous ever tell you that on April 
13th, 2001, which was just 4 days after his bankruptcy 
schedules were filed, that he received that $4,143 tax refund 
into his bank account?
    Mr. Lightfoot. No.
    Ms. Konar. Is the information concerning this tax refund 
that we have just discussed something that Judge Porteous 
should have disclosed to you?
    Mr. Lightfoot. I would expect a positive answer to that. 
Relative to the term ``liquidated,'' if you filed a tax return, 
you know exactly what you are entitled to. So if earlier in the 
year, let's say you are October of 2000, you can't have filed 
your 2000 return yet, the year is not even over, you don't file 
it until the following year. So if a tax return has been filed 
and there is a liquidated amount and it is owed, and you know 
that it is owed, then it should be in that answer.
    Ms. Konar. What would you have done if you had found out 
prior to filing Judge Porteous's bankruptcy schedules that he 
had filed his year 2000 tax refund and that he had claimed a 
$4,000 tax refund?
    Mr. Lightfoot. I would have amended this schedule to list 
it, had it been absent, and probably informed the trustee, 
particularly if the meeting of creditors hadn't been held yet. 
I would have mentioned it.
    Ms. Konar. Turning your attention to bankruptcy schedule I, 
what is this schedule?
    Mr. Lightfoot. This reflects his net income monthly.
    Ms. Konar. What is the dollar amount listed on schedule I 
for Judge Porteous's income?
    Mr. Lightfoot. $7,531.52.
    Ms. Konar. Did you fill out schedule I for Judge Porteous?
    Mr. Lightfoot. I put the amount that was off the tax--I 
mean the check stub, which is attached.
    Ms. Konar. And just to clarify, Judge Porteous provided you 
with the check stub dated May 31st of 2000, is that correct?
    Mr. Lightfoot. This was probably the same stub that I got 
with the worksheets when I started preparing the analysis to 
make the workout offer.
    Ms. Konar. At any later point in time, did Judge Porteous 
provide you an updated check stub?
    Mr. Lightfoot. No.
    Ms. Konar. Did Judge Porteous ever tell you that in 2001, 
his net judicial salary increased to $7,705 per month?
    Mr. Lightfoot. No.
    Ms. Konar. Did Judge Porteous ever tell you that the dollar 
amount listed on schedule I for his net worth was somewhat low?
    Mr. Lightfoot. No.
    Ms. Konar. Would it have been important for you to know 
that Judge Porteous's salary in 2001 was actually higher than 
the amount listed on schedule I?
    Mr. Lightfoot. I would have wanted to know exactly the 
correct amount for the time of filing. Afterwards, frankly, I 
didn't even think that it might change. I just thought it was a 
fixed salary, so I really wouldn't have thought to inquire 
after that point. In a Chapter 13 case, unless the trustee 
would have asked for some periodic report on income changes, I 
really wouldn't have thought of it.
    Ms. Konar. But at the time you filed, would you have wanted 
to know that his net income was not actually $7,500, but at 
that particular date it was $7,700?
    Mr. Lightfoot. I would. I would have wanted it absolutely 
accurate at the time of the filing.
    Ms. Konar. Now turning your attention to Judge Porteous's 
statement of financial affairs, what does question 3 on the 
statement of financial affairs ask for?
    Mr. Lightfoot. It asks for any payments that aggregate more 
than $600 to any creditor within the 90 days prior to the 
filing of the bankruptcy case.
    Ms. Konar. And what is the response given to question 3?
    Mr. Lightfoot. ``Normal installments,'' is what I put.
    Ms. Konar. Why did you put ``normal installments?''
    Mr. Lightfoot. Well, because so far as I knew, the judge 
had not been paying any of his credit card creditors, which was 
the bulk of this case, and that he had been paying his lease 
car payments and his two home mortgages. So ``normal 
installments'' was intended to cover the normal installments on 
his two leased cars and his two home mortgages.
    Ms. Konar. Did Judge Porteous ever tell you that he gambled 
at the Treasure Chest Casino on March 2nd, 2001; that he left 
the casino that day owing $1,500; and that he repaid that 
$1,500 in cash on the day before his original bankruptcy 
petition was filed?
    Mr. Lightfoot. No.
    Ms. Konar. Should Judge Porteous have told you about that?
    Mr. Lightfoot. Yes, that would have been the answer to 
this--that would have been included in an answer to this 
question.
    Ms. Konar. So you would have listed the payment to Treasure 
Chest in response to question 3 if you had known about it?
    Mr. Lightfoot. I would.
    Ms. Konar. Turning your attention to question 8 on the 
statement of financial affairs, what does this question ask 
for?
    Mr. Lightfoot. This asks for the listing of any losses from 
fire, theft, casualty or gambling within 1 year before the 
filing of the case.
    Ms. Konar. What is the response to question 8?
    Mr. Lightfoot. None.
    Ms. Konar. Did you check ``none'' in response to question 
8?
    Mr. Lightfoot. Did I check it?
    Ms. Konar. Yes.
    Mr. Lightfoot. Unless I put something there, it 
automatically checks it. But I was not aware of any gambling 
losses, gambling debts or any gambling.
    Ms. Konar. So just to clarify, did Judge Porteous ever 
disclose to you that he had $6,000 in net gambling losses for 
the year preceding his bankruptcy filing?
    Mr. Lightfoot. No.
    Ms. Konar. Would it have been important for you to know 
that Judge Porteous actually had over $6,000 in gambling losses 
during that year?
    Mr. Lightfoot. Yes.
    Ms. Konar. What would you have done if Judge Porteous had 
told you that?
    Mr. Lightfoot. Well, the first thing I would have thought 
of is how much gambling debts are there, because I didn't know 
about any gambling debts. So if there had been gambling losses 
that were told to me, last year there were gambling losses of 
such-and-such, then my immediate--besides listing that, my 
immediate concern would be, well, are there any gambling debts 
that you haven't told me about?
    Ms. Konar. If at any point during your representation of 
Judge Porteous he had ever told you that he had gambling debts, 
would that have caused you to ask him any other questions about 
his financial condition?
    Mr. Lightfoot. Well, I would want to know a lot more about 
the gambling debts.
    Ms. Konar. What specifically would you have asked him about 
the gambling debts?
    Mr. Lightfoot. What would I have asked?
    Ms. Konar. Yes.
    Mr. Lightfoot. I would want to know the name, the address, 
the account number, the amount due to everyone owed, because 
they are all creditors. I would want to know if there were 
incurred--if I found out in the middle of the case, then I 
would want to know if any of them were extant before the 
bankruptcy was filed. All kinds of things whenever I confront 
gambling that I would review with a client.
    Ms. Konar. Was there a bankruptcy creditors meeting held in 
Judge Porteous's case on May 9 of 2001?
    Mr. Lightfoot. Yes.
    Ms. Konar. Who presided over that meeting?
    Mr. Lightfoot. The Chapter 13 trustee.
    Ms. Konar. What is the purpose of a bankruptcy creditors 
meeting?
    Mr. Lightfoot. Well, it is to examine the debtor under oath 
regarding the petition and the schedules that have been filed. 
It affords--and creditors are invited to attend and ask 
questions if they want. They rarely do, but they are invited. 
And it is for, in the case of a Chapter 13, for the trustee to 
make sure he has no additional requirements and to put him in 
the position where he is now thoroughly familiar with the plan 
and can make a recommendation as to whether or not the plan can 
be confirmed at a later confirmation hearing in the court.
    Ms. Konar. Was Judge Porteous examined under oath at his 
creditors meeting?
    Mr. Lightfoot. He was.
    Ms. Konar. Did the trustee give any instructions to Judge 
Porteous about incurring debt?
    Mr. Lightfoot. He gives a general instruction that no new 
debts are to be created without the court's authority.
    Ms. Konar. Was Judge Porteous given any materials at the 
meeting?
    Mr. Lightfoot. The trustee either--well, he mails them out 
to the debtors along with the notice of the hearing, but also 
has a stack of them to hand out at the meeting of creditors, a 
brochure that explains all of these things, sort of like 
frequently asked questions brochure.
    Ms. Konar. Directing your attention to Exhibit 148, do you 
recognize this document?
    Mr. Lightfoot. This is his brochure.
    Ms. Konar. Specifically when you say ``his,'' who are you 
referring to?
    Mr. Lightfoot. I am sorry?
    Ms. Konar. When you say ``his brochure,'' who are you 
referring to?
    Mr. Lightfoot. The trustee's brochure, that he mails and 
provides.
    Ms. Konar. Does paragraph 6 of this pamphlet discuss 
incurring new debts?
    Mr. Lightfoot. It says you may not borrow or buy anything 
on credit while in Chapter 13 without permission from the 
bankruptcy court.
    Ms. Konar. So Judge Porteous was both told by the 
bankruptcy trustee that he couldn't incur new debt, and he was 
given a pamphlet which also told him in writing he should not 
be incurring new debt, correct?
    Mr. Lightfoot. True.
    Ms. Konar. Did Judge Porteous ever tell you that during the 
month after he attended the creditors meeting and received that 
instruction not to incur new debt, that in fact he went on 
three different gambling trips and that he took out a total of 
$2,000 in markers?
    Mr. Lightfoot. No.
    Ms. Konar. Who was the bankruptcy judge who presided over 
Judge Porteous's case?
    Mr. Lightfoot. Judge Greendyke.
    Ms. Konar. Did Judge Greendyke issue a confirmation order 
in Judge Porteous's case?
    Mr. Lightfoot. He did.
    Ms. Konar. Directing your attention to Exhibit 133, do you 
recognize this document?
    Mr. Lightfoot. This is the order confirming the plan signed 
by Judge Greendyke.
    Ms. Konar. What does paragraph 4 of this order say 
regarding incurring new debt?
    Mr. Lightfoot. The debtor shall not incur additional debt 
during the term of this plan except upon written approval of 
the trustee.
    Ms. Konar. Was Judge Porteous aware that this order was 
docketed in July of 2001?
    Mr. Lightfoot. He was. It would have been sent to him, and 
I believe I sent him a copy as well.
    Ms. Konar. So he definitely received a copy of this order?
    Mr. Lightfoot. So far as I know.
    Ms. Konar. Did Judge Porteous understand that he was not 
allowed to incur new debt unless he received the written 
permission from the bankruptcy trustee?
    Mr. Lightfoot. I think so.
    Ms. Konar. Why do you think he understood that?
    Mr. Lightfoot. Because there was an occasion that arose 
sometime later when the car leases came--expired and the 
vehicles that he had for he and his wife had to be turned in. 
So he had to get new vehicles, which meant incurring a new 
debt. And he talked to me about that, and I went immediately 
back to the confirmation order, because this is a little 
different than the way we did it in the Eastern District of 
Louisiana. We would normally file a motion with the court and 
lay it out to the judge. Of course, we are always looking to 
make sure the payment on the new vehicle is about the same as 
the old vehicle so it would be neutral to the budget, so the 
plan could be funded at the same level. And in Judge 
Greendyke's district, they let the trustee oversee that.
    So I had to--I found it in the confirmation order, I called 
the trustee and I said look, do you want me to file a motion 
anyway, as our normal practice is, or what do you want me to 
do, because the confirmation order is a little different. He 
said no, get me the information and send it to me. And then he 
wrote a letter, the trustee that is, wrote a letter back 
approving the new car leases to replace the expired car leases.
    Ms. Konar. Directing your attention to Exhibit 339, do you 
recognize this document?
    Mr. Lightfoot. Yes. This is a letter from the trustee to 
me. And until reviewing with the staff here for this hearing, I 
really had forgotten of my own memory that there was also a 
refinance on one of the home mortgages. But this is a letter 
from the trustee, and I am sure I did follow the same procedure 
and sent the information about what was--what the debt was to 
be incurred, how much, and the details, the terms, and the 
trustee wrote me back approving the entry into that refinance.
    Ms. Konar. I know your memory is a little hazier with 
regard to the home refinance, but the only reason you would 
have contacted the bankruptcy trustee to ask about refinancing 
Judge Porteous's home would have been because Judge Porteous 
had first called you and said, I need to refinance my home; how 
do I get permission?
    Mr. Lightfoot. Oh, yes. Sure.
    Ms. Konar. Now turning to Exhibit 340, do you recognize 
this document?
    Mr. Lightfoot. This is the same sort of letter from the 
trustee approving the application to him for authority for 
those new car leases.
    Ms. Konar. So because Judge Porteous asked for permission 
to obtain two new car leases and to refinance his home, is that 
why you believe he understood the confirmation order that he 
was supposed to seek permission before incurring new debt?
    Mr. Lightfoot. Yes.
    Ms. Konar. Did Judge Porteous ever tell you that he 
nevertheless continued to incur new debt after the confirmation 
order was signed?
    Mr. Lightfoot. No.
    Ms. Konar. Did Judge Porteous ever tell you that within the 
first year after the confirmation order was signed, he took out 
42 markers over the course of 14 gambling trips?
    Mr. Lightfoot. No.
    Ms. Konar. Did Judge Porteous ever tell you that he applied 
for a new Capital One credit card after the confirmation order 
was entered and he thereafter proceeded to use that card on a 
regular basis while in bankruptcy?
    Mr. Lightfoot. No.
    Ms. Konar. Did Judge Porteous ever tell you that he applied 
to increase his credit limits at a casino after the 
confirmation order was entered and that he thereafter proceeded 
to gamble at that casino and to take out markers at his new 
increased credit rate?
    Mr. Lightfoot. No, I never knew anything about any gambling 
at any time.
    Ms. Konar. If you learned that Judge Porteous had indeed 
taken those actions, would you have considered those actions to 
be a violation of the confirmation order?
    Mr. Lightfoot. They clearly would have been.
    Ms. Konar. Mr. Chairman, I have no further questions.
    Mr. Schiff. Thank you, Ms. Konar.
    Let me ask you a few questions, and then I will turn to my 
colleagues for their questions. You mentioned that you did not 
know Judge Porteous before he retained you as his bankruptcy 
lawyer, is that right?
    Mr. Lightfoot. That is correct.
    Mr. Schiff. Do you know how he came to choose you as his 
counsel?
    Mr. Lightfoot. I don't know. He just called me. And I 
imagine he checked around. I did many many and still do many, 
many cases of that type.
    Mr. Schiff. As a Federal District Judge, Judge Porteous 
would handle appeals from bankruptcy cases? I think you 
mentioned you had an appeal at one point, at least for a time, 
before Judge Porteous?
    Mr. Lightfoot. Yes, sir.
    Mr. Schiff. So he would have been familiar with bankruptcy 
law through handling appeals from bankruptcy court cases?
    Mr. Lightfoot. I don't know how many he ever had, and I 
never know--that is a hard question. Some of the district 
judges really have a background in bankruptcy, but they all get 
occasional appeals and then learn about bankruptcy. But it is 
the first level of appeal from bankruptcy to the District 
Court, and then from there to the fifth circuit.
    Mr. Schiff. How big is the bankruptcy bar in the area where 
you practice? Do you know all the other bankruptcy lawyers?
    Mr. Lightfoot. Yes, sir.
    Mr. Schiff. Do you know whether any of the other bankruptcy 
lawyers had a relationship with Judge Porteous? In other words, 
whether any of them were friends of Judge Porteous or had a 
relationship with him?
    Mr. Lightfoot. No.
    Mr. Schiff. Do you know whether you were chosen by Judge 
Porteous for the reason that you did not know about his 
gambling problem or other spending issues?
    Mr. Lightfoot. I don't know that. I have zero interest in 
gambling, so I don't ever talk with anybody about gambling or 
hear about gambling from anybody. No, I was not aware of 
anybody who was a gambling buddy of his, for example, or 
anything like that.
    Mr. Schiff. But you don't know whether you were picked by 
Judge Porteous precisely because you were unaware of his 
gambling problem?
    Mr. Lightfoot. I don't know that. No.
    Mr. Schiff. What would be the significance--there has been 
testimony that Judge Porteous paid off some of his gambling 
debts or markers prior to the filing of the bankruptcy. What 
would be the significance of his doing that?
    Mr. Lightfoot. Here is how that works. If there is a 
payment during the preference period, the 90-day period, which 
exceeds the $600, and it truly is a preference--not all 
payments that exceed $600 are preferential. They might just be 
ordinary course-of-business payments, like your house notes, 
according to the contract. But when you have an unusual series 
of payments or payment that exceeds these preference 
thresholds, in the answer to that question, in a Chapter 7 case 
it allows the Chapter 7 trustee to recover those funds as 
having been preferentially paid, bringing them back into the 
bankruptcy estate for distribution to all the creditors 
equitably.
    In a Chapter 13, the 13 trustee will consider that any--he 
will inquire maybe a little bit about them to make sure they 
are really preferential. But any payments like that would be 
considered as having been recovered in a hypothetical Chapter 
7. So the trustee would then look to, well, how much is this 
debtor paying to the creditors under this plan and does it 
equal how much they could have received from the hypothetical 
Chapter 7 if this preference were recovered.
    Mr. Schiff. Well, this was Chapter 13, right?
    Mr. Lightfoot. So in the 13 it goes toward the extent and 
the sufficiency of the plan.
    Mr. Schiff. Well, what would the effect have been if the 
bankruptcy court in this case had known that Judge Porteous had 
taken out markers and paid them off just preceding the filing 
of the bankruptcy and that the casinos were paid 100 percent of 
their markers?
    Mr. Lightfoot. Well, if you had a sort of a pattern of 
behavior like that, I suppose a creditor interested enough to 
do something might oppose confirmation and feel that the plan 
was proposed with lacking good faith. That is one possibility--
or the trustee.
    Mr. Schiff. Would there have been any opportunity as in a 
Chapter 7 to go after some of the payments made at the casino 
because they got basically 100 percent of their debts paid 
within 90 days, whereas in the bankruptcy the creditors after 
only got a portion?
    Mr. Lightfoot. It really goes to how much you are required 
to pay to the remaining creditors. That is where that 
comparison is. Because in the Chapter 13, the 13 trustee is not 
a litigator and a liquidator. He is more of an administrator of 
the funds that come in under the plan. But if a trustee 
identified preferential payments, then they would want to make 
sure that an equal amount of money was being paid, just as 
though that money had been recovered in a Chapter 7. But it 
would be paid through the plan, as opposed to obtained back 
from the preferential payees.
    Mr. Schiff. What would the effect have been if Judge 
Porteous had listed the casinos as creditors on his bankruptcy 
filing?
    Mr. Lightfoot. Well, when I have confronted--I have had 
some cases involving gambling, people who had markers, and, of 
course, they are a civil liability. It is a debt like any other 
debt in that sense. So it has to be listed. I would have listed 
and do list anybody who has a casino-type debt.
    But these markers have another feature that always brings 
me to more conversations with these clients that have that 
problem, that these markers are akin to checks, and if that 
check is negotiated and it comes back NSF, you may have a 
criminal issue with the issuance of a bad check. So it gives me 
the opportunity to have that discussion about markers.
    Mr. Schiff. But had these markers been listed, had these 
casinos been listed on his bankruptcy petition, would that mean 
that at the end of the day, depending on the bankruptcy plan 
that the trustee and court arrive on, that the casinos would 
have gotten less than 100 percent of their money back?
    Mr. Lightfoot. They would have gotten whatever--probably if 
there were more debt coming in than there was in this 
particular case, then everybody would have gotten a little less 
than they are getting now because the pool would have enlarged. 
But the casinos would have received only through the plan what 
everyone else got.
    Mr. Schiff. And do you remember what everyone got, the 
creditors got in this plan?
    Mr. Lightfoot. Well, the percentage changed, as it does. 
The creditors are all issued a bar date, a deadline, to file 
claims to which they attach their invoice or whatever is the 
proof of their debt. And it is not unusual to see through their 
own negligence that some creditors do not file claims timely; 
and those late claims, if they file them late, they are 
disallowed. And usually there are some in every case that just 
don't file a claim at all. So eventually when the bar date has 
come and gone, the trustee is able then to recalculate, well, 
this stream of money that is proposed can now go further.
    It can pay a higher percentage, because all of the 
scheduled creditors didn't end up filing claims. And that is 
what happened in this case, as it does in many of them. So the 
percentage went up. I can tell you the original percentage was 
to be--well, actually, you know, there was an amended plan that 
ultimately was confirmed. I was watching the testimony before, 
39 percent may have been correct initially, based on the 
scheduled creditors. But after all the claims came in, it went 
up considerably, another 15-20 points in terms of what the 
money actually paid with some creditors not participating.
    Mr. Schiff. When you say the amount went up, as the 
proceeding goes on and more creditors come forward, does that 
mean the amount per creditor actually goes down?
    Mr. Lightfoot. No, it is a question of--I listed all the 
creditors that I had totaling a certain dollar amount. And then 
there is a later bar date, and I project the plan based on 
that, and I say that this payment per month for this many 
months will pay X percent of that debt.
    When the claims process is over and they are given 90 days 
after the creditors meeting to file a claim, when all those 
claims are in, if you had--I think in this case there was as 
much as $75,000 worth of creditors that did not file claims, 
and so the money that I had originally proposed went a lot 
farther. It paid a much higher percentage.
    Mr. Schiff. Why would those creditors not file claims?
    Mr. Lightfoot. They just don't. I don't know why. They get 
notices, they get blank claim forms, they get notice of the 
deadline, and they just don't always file their claims.
    Mr. Schiff. Now, you mentioned that the list of those 
filings for bankruptcy is published in the paper, right?
    Mr. Lightfoot. At that time, the paper would pick up the 
names and addresses of the debtors and publish them in the 
paper once a week.
    Mr. Schiff. Now, was this, in part, as a way of letting 
creditors out in the community know who was filing for 
bankruptcy? Is that part of the reason for the public 
notification?
    Mr. Lightfoot. No. There is no requirement for any kind of 
public notice in that sense, publication notice. All of the--
and in this case, after the corrected petition and schedules 
and plan were filed, that is when the very first notice went 
out. So the only notice that ever went out to these creditors 
was--and presumably to anybody who was looking for the official 
proof of the filing, went out under the correct address and the 
correct name.
    Mr. Schiff. But the newspaper, you said, published the 
names of those filing bankruptcy?
    Mr. Lightfoot. They do and they did.
    Mr. Schiff. They had to have a reason for doing that. What 
was the reason for publishing that?
    Mr. Lightfoot. I don't know. Public information. They put 
the DWI's in the same area on another day of the week. And now 
in New Orleans, they are not publishing any of that anymore.
    Mr. Schiff. Wouldn't the purpose have been to let people 
know that maybe creditors of the person filing the petition, 
that someone is filing a petition and if they need to make a 
claim, that this is happening?
    Mr. Lightfoot. That could happen. I just don't know--I 
don't know if that is the motivation for publishing it.
    Mr. Schiff. You attempted initially to do a workout, but 
that was unsuccessful. Why was the workout unsuccessful?
    Mr. Lightfoot. I couldn't get any response, Mr. Chairman. I 
prepared the bankruptcy almost such as you see it, because I 
had to, to find out what the creditors could have expected to 
get in a Chapter 7 case.
    Mr. Schiff. When you say you couldn't get a response, you 
couldn't get a response from whom?
    Mr. Lightfoot. From all of--I wrote to every single 
creditor, with the exception of Regents Bank, which was a small 
personal loan that he felt he could handle on his own, and I 
proposed that he go to the bank, borrow money against what 
small amount of equity he had in his house, to pay them all on 
a percentage basis. I showed them with a detailed analysis all 
the creditors that there were, I gave them an appraisal of the 
house, I gave them an analysis of what would have resulted in a 
Chapter 7 case to them from all of the judge's assets. And I 
said this is how much we can pay, but we have to pay everybody 
the same. There will only be a limited pot of money.
    Mr. Schiff. So when you say it didn't work out, none of the 
creditors took you up on the proposed workout?
    Mr. Lightfoot. I sent big thick packages to all of them on 
several occasions. Every couple of weeks or so I would call, 
which was very frustrating, because you are using the 800 
number that comes on the invoice to try to get contact, and I 
just could never get to anyone with any authority to do 
anything.
    Mr. Schiff. Now, part of the reason that you go through the 
workout sheets and the workout exercise with your client is to 
determine what you can approach creditors with, what kind of an 
offer you can make; but it is also to determine what your 
client has the capacity to pay back, right?
    Mr. Lightfoot. Well, I normally don't try to do these 
workouts. Every time I have tried it, it has been an exercise 
in futility and frustration.
    Mr. Schiff. But part of the reason you go through the 
exercise with your client is you want to know what his spending 
is, what his income is----
    Mr. Lightfoot. You mean the worksheets. No, I had to have 
the complete worksheets to even analyze the information to 
prepare the workout offer.
    Mr. Schiff. And it would have been important for you in 
knowing whether your client could actually live up to a workout 
what his income and spending habits were, isn't that right?
    Mr. Lightfoot. True.
    Mr. Schiff. And you were unaware that in approximately the 
5-year period prior to retaining you, that he had spent around 
$100,000 on gambling?
    Mr. Lightfoot. Yes, sir. I didn't know a thing about that.
    Mr. Schiff. Had you known about that, that would have, I 
take it, influenced your conclusion about whether he could meet 
a workout plan?
    Mr. Lightfoot. Absolutely.
    Mr. Schiff. Is there a duty in a bankruptcy case to update 
the bankruptcy petition as circumstances change--we touched on 
this a little bit--in terms of whether your income changes? 
There is a duty to have an accurate listing of what your income 
is when you file your petition, right?
    Mr. Lightfoot. Yes, sir.
    Mr. Schiff. If your income were to change substantially 
during the course of the bankruptcy case, isn't there a duty to 
update the court on changes?
    Mr. Lightfoot. I have not seen anything in the bankruptcy 
code on that, but I have seen it come up on occasion in a 
particular case, particularly where the trustee may feel that 
the income is sporadic or it goes up and it goes down; a 
commissioned salesperson, someone who is underemployed, that 
used to make more and is looking for new employment. In those 
cases, the trustee will recommend to the court that there be 
typically a 6-month report on income so that that can be 
monitored.
    Mr. Schiff. If you have a client, though, that gets a new 
job during the pendency of a bankruptcy case where they are 
making twice the income, isn't there some obligation to let the 
court and creditors know that their income is now much greater?
    Mr. Lightfoot. There really isn't. And I may not know about 
it. When I learn there is a problem is when the clients don't 
pay their plan payments. When good things happen, they don't 
come and tell me.
    Mr. Schiff. Now, when you and Judge Porteous sat down and 
made the decision to file a bankruptcy, did the judge express 
concern about it becoming public and the public becoming aware 
he was filing bankruptcy?
    Mr. Lightfoot. I expressed it, and he expressed it too.
    Mr. Schiff. What did he tell you about it?
    Mr. Lightfoot. He was clearly despondent over having to 
have to resort to the bankruptcy, and I had told him about my 
negative experience with these workouts with credit card--if 
you have your local bank and a lawyer to deal with, you can 
really approach settlement much more effectively. But when you 
have these large institutional creditors, it is just very hard 
to get through to anybody. I was not--I went--I really made 
every effort to try to accomplish it, but it just didn't work. 
I think that he had hoped that it would work.
    Mr. Schiff. Did the judge express concern when the workout 
wasn't successful that the public would become aware that he 
was filing for bankruptcy?
    Mr. Lightfoot. No, he didn't--I mean, he was just I think 
embarrassed to have to file bankruptcy. Of course, part of that 
I guess is that people will know.
    Mr. Schiff. Tell us about the conversation you had with the 
judge where the decision was made to file under a false name. 
How did that conversation begin and how did it proceed?
    Mr. Lightfoot. Well, I explained the process by which the 
paper, the newspaper would come and get the names and would 
publish them, and also the process by which we would correct 
the false name and make sure that all creditors got the correct 
information so that none would be prejudiced, and hopefully 
that would save him the embarrassment of a big appearance in 
the paper.
    Mr. Schiff. But how did this conversation come up? Did he 
express a concern about it becoming public? Did you raise the 
issue?
    Mr. Lightfoot. I raised the issue, and I wish I hadn't, but 
I did.
    Mr. Schiff. And what made you feel that he would be ashamed 
of having the bankruptcy published in the paper?
    Mr. Lightfoot. Well, because he was a judge. I mean, I 
hadn't had a client like that before in Chapter 13. My clients 
are just regular working folks. And I knew that it would be 
very embarrassing, and I was compassionate about that.
    Mr. Schiff. Now, you said that ultimately filing under the 
false name was unsuccessful and you used a phrase I found 
striking, ``because it came out anyway.'' What did you mean by 
that? How did it come out anyway?
    Mr. Lightfoot. Well, in terms of the--there was later 
when--I don't know how I could not have thought that gossip 
would have, you know, spread like wildfire, but, of course, it 
wasn't just a listing of a name along with many, many other 
names in a column, which would have happened normally, but 
there was an article in the paper about the judge filing for 
bankruptcy, et cetera, that was a much more--larger article 
than the normal reporting of all the people who filed that 
week.
    Mr. Schiff. So when you filed the petition under the Ortous 
name, there was nonetheless in that paper an article about 
Judge Porteous? They had identified him?
    Mr. Lightfoot. Not right away, but it came out later.
    Mr. Schiff. Did it come out prior to your filing the 
petition with the corrected name?
    Mr. Lightfoot. No.
    Mr. Schiff. And during the period between filing with the 
false name and correcting the petition, did you get any 
information that there were rumors going around or other 
information about the judge filing for bankruptcy?
    Mr. Lightfoot. No.
    Mr. Schiff. When you had made the decision to file the 
petition in the false name, did you also discuss at that time 
at what point you would correct the name?
    Mr. Lightfoot. Yes, sir.
    Mr. Schiff. And tell me how that conversation went?
    Mr. Lightfoot. Well, immediately, as soon as it went in the 
paper, it had to be corrected, and I needed to correct it so 
that the notices would all go to the creditors with the proper 
name so that they could identify the accounts and file their 
claims. And the only notice that ever went out, went out with 
the proper name and address.
    Mr. Schiff. Well, tell me about the conversation. You still 
haven't relayed the conversation you had with the judge. As 
best you can, tell us the conversation where you proposed the 
false name filing and what the procedure would be, and tell us 
what the judge's reaction was and how the meeting resolved?
    Mr. Lightfoot. Well, I explained how the notices, you know, 
just the the logistics of--until you file the schedules and the 
plan----
    Mr. Schiff. If I could back up for just 1 second, was this 
at the same meeting where the decision was made to file a 
bankruptcy petition?
    Mr. Lightfoot. Yes.
    Mr. Schiff. So you had a meeting with Judge Porteous. You 
said the workout isn't working. You discussed whether to file 
and you made the decision that you needed to file.
    Mr. Lightfoot. All of that didn't happen in one meeting. 
The workout not working really came to a head because finally, 
not because of my efforts to talk to the credit card companies, 
but finally two of the credit card companies had assigned the 
debts to local collection lawyers to collect, and they had 
written demand letters or made a phone call. So initially I 
thought well, this is great. I have got someone to talk to now. 
And I sent the very same package to them that I had sent to 
their clients. And I said, I don't know if you were provided 
this--of course they hadn't been--but this is what I was 
proposing. Would you review it with your client and tell me?
    Of course, it was only two out of, you know, several--lots 
more. The workout would have needed to have at least the 
majority of them to really work. But one didn't get back to me, 
one of the lawyers, and the other lawyer said the client said 
no.
    Mr. Schiff. So you made the decision with your client to 
file a bankruptcy petition. Tell me how the conversation began 
and the full nature of the conversation you had about filing 
under a false name?
    Mr. Lightfoot. That was after the workout had failed, and 
we knew that, then the only alternative was the bankruptcy. And 
I had this idea about trying to save him the embarrassment of 
the splash in the paper, and I explained it to him and I 
explained----
    Mr. Schiff. Well, if you would, rather than telling us in 
general terms what took place with the conversation, tell us 
what the conversation was. You raised with Judge Porteous----
    Mr. Lightfoot. I said, you know, they publish these things 
in the paper, and if your name were incorrect and you had a 
P.O. Box, maybe the paper wouldn't know that it is you. And 
then as soon as it is published in the paper, we can make the 
correction immediately, make sure that all the creditors get 
the proper notice and the case goes forward as normal, and 
hopefully that will avoid you with the embarrassment of a big 
article in the newspaper.
    Mr. Schiff. And what was Judge Porteous's reaction to your 
suggestion?
    Mr. Lightfoot. I asked if he wanted that or not.
    Mr. Schiff. Did you explain to your client what the legal 
risks were of filing a petition in a false name?
    Mr. Lightfoot. I didn't really cover that.
    Mr. Schiff. And what was the judge's reaction?
    Mr. Lightfoot. He was--well, he agreed to do it.
    Mr. Schiff. And what did he say?
    Mr. Lightfoot. He said--well, I don't remember him saying 
anything other than let's do it.
    Mr. Schiff. And how did you preface the conversation? Did 
you tell him you had an idea about--once you made the decision 
to file the bankruptcy petition, hey, I have an idea about how 
to spare you some public embarrassment? How did you raise the--
--
    Mr. Lightfoot. That was exactly how I put it. I said, there 
is going to be a publication in the paper, and I imagine it 
will result in embarrassment for you. And that was the genesis 
of it.
    Mr. Schiff. Can you tell us anything more that Judge 
Porteous said in the conversation?
    Mr. Lightfoot. He didn't really say anything about it other 
than to agree to do it.
    Mr. Schiff. And the plan that you had was you file in the 
false name. Were you the one who suggested setting up the phony 
address as well?
    Mr. Lightfoot. Yes. Because without--the address and the 
name were the things published in the newspaper, in the long 
list of those who had filed.
    Mr. Schiff. And at no time you advised your client of the 
risk of making a false statement and signing under penalty of 
perjury?
    Mr. Lightfoot. It was a mistake. I rue the day that I 
thought of that. But that's the way it was.
    Mr. Schiff. And your plan was to file a subsequent 
petition, an amended petition in the correct name within a 
certain period of time?
    Mr. Lightfoot. As soon as it was in the paper, you know, 
the effort was to correct it immediately. There was no intent 
to ever have a false impression to a creditor or anyone who 
should have been paid in that case. In fact, they all got the 
correct notices with the correct name. No notices ever went out 
on the first petition. They only went out on the amended 
petition.
    Mr. Schiff. I take it the newspaper didn't publish the 
names of those filing an amended petition. Is that how you 
intended to avoid publication?
    Mr. Lightfoot. Right. Correct. Yes.
    Mr. Schiff. So any creditors that may have relied on the 
newspaper to learn about people filing bankruptcies, they would 
never have gotten notice?
    Mr. Lightfoot. If that is the only way that a creditor 
could tell, then I guess they would have found out from the 
later articles that appeared in the paper, but they wouldn't 
have found out from that incorrect name in the very first 
listing.
    Mr. Schiff. But if you had been successful and Judge 
Porteous was able to keep his name out of the paper altogether, 
creditors who rely on the paper to find out would never have 
found out?
    Mr. Lightfoot. Well, other than there were many other 
articles about him being in bankruptcy.
    Mr. Schiff. Yes. But your intention was to keep him out of 
the newspaper, right?
    Mr. Lightfoot. That's true. The only creditors that I knew 
of got an official notice with the right name because it was 
corrected before the notices went out.
    Mr. Schiff. My question, Mr. Lightfoot, is----
    Mr. Lightfoot. If anybody had relied on the newspaper, they 
might not have picked it up.
    Mr. Schiff. So if you were successful in keeping his name 
out of the paper by filing originally under a false name, any 
creditors that relied on the newspaper to learn about 
bankruptcies would not have found out about his bankruptcy?
    Mr. Lightfoot. That's true.
    Mr. Schiff. I just have a few more questions.
    You mentioned in discussion about the tax refund, that that 
would have been required to be disclosed when it was a 
liquidated asset.
    Mr. Lightfoot. Yes, sir.
    Mr. Schiff. When Judge Porteous filed the bankruptcy 
petition, he had filed for the tax refund, correct?
    Mr. Lightfoot. I don't know anything about when he filed 
his return other than being here and listening. I didn't know 
anything about that.
    Mr. Schiff. Well, let me ask you this. The bankruptcy form 
requires what to be disclosed in terms of a tax refund, whether 
they are expecting a tax refund?
    Mr. Lightfoot. The way I interpret the liquidated amount 
means you have to have prepared a return so that you know what 
the amount is.
    Mr. Schiff. Does the bankruptcy petition refer to a 
liquidated amount?
    Mr. Lightfoot. Yes, sir. All liquidated debts owing to the 
debtor, including tax refunds.
    Mr. Schiff. And if someone has applied for a tax refund 
prior to the filing, a week before the filing, would that be 
considered sufficiently liquidated to be reported?
    Mr. Lightfoot. Yes, sir.
    Mr. Schiff. Now, you had Judge Porteous review the petition 
before you filed it to make sure it was all accurate?
    Mr. Lightfoot. Yes, sir.
    Mr. Schiff. So even though you were operating on a dated 
paycheck receipt, Judge Porteous would have known that the 
salary that you had written in was in fact an inaccurate 
salary?
    Mr. Lightfoot. I certainly didn't know, but he would have 
known.
    Mr. Schiff. And he told you everything that you had filled 
out was accurate?
    Mr. Lightfoot. I didn't really know it changed much. I 
figured it was probably the same. So I didn't think to ask 
about it, but I wasn't corrected.
    Mr. Schiff. You mentioned you have other clients that have 
had gambling problems over the years that you have worked on 
bankruptcy cases with; is that right?
    Mr. Lightfoot. Yes, sir.
    Mr. Schiff. Where they have had debts to casinos, have you 
listed those debts in the bankruptcy petitions?
    Mr. Lightfoot. I have.
    Mr. Schiff. During the meeting with the trustee in which 
Judge Porteous was present and was under oath, does a trustee 
generally ask the bankruptcy petitioner whether everything in 
their bankruptcy petition is correct and accurate to the best 
of their ability?
    Mr. Lightfoot. Yes, sir.
    Mr. Schiff. And in this case in fact did the trustee ask if 
everything in here is true and correct and the judge answered 
yes?
    Mr. Lightfoot. Yes, sir.
    Mr. Schiff. So if Judge Porteous were aware that the income 
level was inaccurate in the petition, that gambling debts were 
not listed, that the tax refund was not included when he 
answered that everything in the petition was accurate, that 
would have been a false statement under oath to the bankruptcy 
trustee?
    Mr. Lightfoot. With everything that I have seen, it would 
be, yes.
    Mr. Schiff. At one point the trustee asks whether he had 
listed all of his assets, and he answered yes. In light of what 
you have seen, is that a false statement as well?
    Mr. Lightfoot. Yes.
    Mr. Schiff. The court order prohibited the incursion of 
additional debt during the bankruptcy. For someone who takes 
out additional debt in the form of markers or other debt, is 
that a violation of a court order?
    Mr. Lightfoot. Of the confirmation order in this case it 
was.
    Mr. Schiff. I have no further questions.
    Now I will recognize the Ranking Member, Mr. Goodlatte.
    Mr. Goodlatte. Thank you, Mr. Chairman.
    Mr. Lightfoot, following up on the question by the 
Chairman, how well did you know Judge Porteous before you were 
retained to help him with this problem?
    Mr. Lightfoot. I didn't know him at all.
    Mr. Goodlatte. Had you ever met him before?
    Mr. Lightfoot. I don't think I had ever met him.
    Mr. Goodlatte. Do you know of him by reputation or 
anything?
    Mr. Lightfoot. No, sir.
    Mr. Goodlatte. After he retained you to handle the workout, 
there was quite a lot of time before you finally got around to 
filing a Chapter 13 bankruptcy. Is that--about 9 months or 
something in that range? How many occasions did you have to 
converse with him during that time, either in person or over 
the telephone?
    Mr. Lightfoot. I would say periodically or maybe like every 
3 weeks or a month. He would be anxious to know was I getting 
anywhere with the workout.
    Of course, initially, I was engaged in getting the 
worksheets back, getting a fresh opinion of value on his house 
so that I could complete the workout proposal and figure out 
what creditors could expect to receive. And after that it was 
just a periodic delivery of new statements from the credit card 
companies so that I could be aware of the changes in the 
amounts that were owed.
    Mr. Goodlatte. Did Judge Porteous ever express hope that 
his circumstances would change, that he would not be required 
to continue this workout effort or that he would not ultimately 
wind up in bankruptcy?
    Mr. Lightfoot. I think he hoped that the workout would be 
successful.
    Mr. Goodlatte. But did he ever indicate that he might have 
a change of financial circumstances himself that would do that?
    Mr. Lightfoot. No.
    Mr. Goodlatte. What was your fee arrangement with him?
    Mr. Lightfoot. I told him that I would charge him--we had a 
controlled fee in our district and still do for Chapter 13s. At 
that time, it was a thousand dollars. So I told him for the 
efforts that I had made in the workout that I was going to 
charge him an extra $750. So when I filed the case, I asked for 
a fee of $1,750.
    Mr. Goodlatte. Did he pay any of that up front?
    Mr. Lightfoot. He paid just the filing fee, and the fee got 
paid through the plan.
    Mr. Goodlatte. And so the entire 1,750 was approved?
    Mr. Lightfoot. It was. The trustee objected to it initially 
because it was more than what we normally charged, but Judge 
Greendyke felt that was a fair fee, and it was approved.
    Mr. Goodlatte. And were you paid all of that fee?
    Mr. Lightfoot. As he paid the trustee, the trustee paid me 
and I was paid.
    Mr. Goodlatte. And the Chapter 13 was completed?
    Mr. Lightfoot. It was.
    Mr. Goodlatte. During the time that you were representing 
him, did you ever have any of these meetings over a meal? Did 
you meet him for lunch or dinner?
    Mr. Lightfoot. No, but usually I would go to his office 
because I was--my office was in another part of the city at 
that time and I was in court most days, which was downtown and 
in the downtown area and the bankruptcy court was in the same 
building. So it was easier for me to go meet with him in his 
office.
    Mr. Goodlatte. Bankruptcy court was in the same building as 
his office?
    Mr. Lightfoot. Correct.
    Mr. Goodlatte. All right. During your grand jury testimony, 
you refused to answer certain questions about your 
conversations with Judge Porteous based on the attorney/client 
privilege.
    Mr. Lightfoot. Yes, sir.
    Mr. Goodlatte. Why did you do that?
    Mr. Lightfoot. The judge had a lawyer and I would have to 
come out when a question was asked that might get into 
privileged material and the judge claimed through his lawyer 
the privilege and I had to go back in and say that I was 
directed not to answer.
    Mr. Goodlatte. And ultimately the court ruled that the 
attorney/client privilege that Judge Porteous was attempting to 
raise did not protect these conversations. And what was the 
reason for that?
    Mr. Lightfoot. Crime fraud exception and then I was free to 
answer all the questions.
    Mr. Goodlatte. As a result of the fact that you could not 
exercise that privilege and he could not exercise it through 
you based upon the fact that there were criminal allegations 
made regarding his conversations and regarding the filing of 
the petition and his failure to put certain things in those 
petitions, is that the crime fraud exception?
    Mr. Lightfoot. The court ruled there was a crime fraud 
exception. I don't think I really was aware of what on Judge 
Porteous's side anybody was investigating at that time. But I 
just knew that I didn't--I was now free to answer any 
questions.
    Mr. Goodlatte. And that--okay. And they did not tell you 
the reason for their----
    Mr. Lightfoot. Did they tell me----
    Mr. Goodlatte. Did they explain the crime fraud exception 
to you?
    Mr. Lightfoot. Well, I knew what it was, that there was 
something about what we may or may not have talked about, 
because I hadn't even testified yet, that could lead to the 
crime fraud exception and the court was satisfied that it 
should be applied and it was.
    Mr. Goodlatte. And it was your understanding that that 
exception meant that there was either allegations or more 
related to the activities of Judge Porteous related to his 
bankruptcy filing that were of a fraudulent or criminal nature?
    Mr. Lightfoot. Yes, sir.
    Mr. Goodlatte. Other than going to his office for his 
convenience and meeting with him, how else did the fact that 
Judge Porteous was a Federal judge impact the way that you 
dealt with him?
    Mr. Lightfoot. Well, one thing that I was clear to do early 
on when I provided the worksheet, I explained the worksheets 
and said, now, let me show you these. I want to show you how to 
fill them out. And I went to his home and sat down when he and 
his wife and explained them.
    Because many times, for example, in the budget how much is 
spent for your monthly living expenses, maybe the wife took 
care of that. I really didn't know him, so I didn't know. And I 
wanted to make sure that I sat them down and explained how to 
proceed toward filling out these worksheets equally and as 
thoroughly as I would any other client that would be in my 
office, notwithstanding the fact that he was a judge, lawyer, 
whatnot.
    Mr. Goodlatte. In fact, more thoroughly, because he was a 
judge and because you probably don't make house calls for most 
of your clients?
    Mr. Lightfoot. Well, I didn't know how much he knew about 
bankruptcy. All I knew was that I wanted to be as thorough as--
--
    Mr. Goodlatte. But you don't know how much most of your 
clients know about bankruptcy.
    Mr. Lightfoot. That's true.
    Mr. Goodlatte. It doesn't entail your visiting them in 
their homes to clarify that, in most instances.
    Mr. Lightfoot. No. Well, he lived near where my office was, 
and that particular time it was just more convenient for me to 
go there. And he suggested it, and I said that was fine.
    Mr. Goodlatte. If after the confirmation order had been 
issued and Judge Porteous had asked you whether he could take 
out casino markers, what would you have told him?
    Mr. Lightfoot. No.
    Mr. Goodlatte. Why would you have so instructed him?
    Mr. Lightfoot. Because first we had to have court 
authority, which as it turned out under Judge Greendyke's order 
was trustee authority and the kinds of debts that you're 
allowed to incur during a bankruptcy are those that are 
necessary and essential. And obviously making a marker at a 
casino is not essential.
    Mr. Goodlatte. And is there any question in your mind that 
a marker is a form of indebtedness?
    Mr. Lightfoot. No doubt at all.
    Mr. Goodlatte. And if you had known that Judge Porteous 
gambled at all, what would that have triggered other than in 
terms of other questions for inquiries by you of him?
    Mr. Lightfoot. I would want to know where are the gambling 
debts. They must be listed. You can't gamble anymore. You can't 
incur debt to gamble. Those admonitions. Have we listed all of 
the debts or do you have----
    And then I would get into the area of the markers. Because 
the markers, although they are a civil liability to pay, as you 
were explaining, they also could--if the marker is put through 
as a check and it bounces and then you have a bad check, which 
is a more serious problem.
    Mr. Goodlatte. Tell me what sorts of questions you would 
have asked him and what advice you would have given him if he 
told you he was a frequent gambler?
    Mr. Lightfoot. Well, I would have told him exactly what--do 
you have any gambling debts that you haven't told me about? If 
so, I need the name, address, account number, balance due. Are 
you doing it now? Because your budget will not work if you 
gamble. You have no authority to make any debts to gamble.
    Mr. Goodlatte. And during the entire period of the workout, 
some 9 months, and during the time that you were filing the 
Chapter 13 in the initial proceedings in the Chapter 13 and you 
had conversations with him every few weeks, did he ever at any 
time indicate to you that he gambled at at least 10 different 
casinos on the Gulf Coast and also in Nevada?
    Mr. Lightfoot. No, sir. In fact, my understanding was there 
was no debt being made. Because that is what I told him. I 
said, I can understand that we have this workout pending, but 
you shouldn't make any more debt. You're just going to get 
yourself into a deeper hole. You have got all the debt you need 
now. Don't make any more debt. Don't use any credit cards.
    Mr. Goodlatte. Did he show any interest in making more 
debt?
    Mr. Lightfoot. He said fine.
    Mr. Goodlatte. He said fine.
    Mr. Lightfoot. It was good advice. He said, fine, I won't 
make any more debt. And I said--at a certain point he was still 
continuing to make minimum payments that weren't keeping up 
with the interest, and I was getting no response at all. And I 
said, well, you know, we are at a point now where it doesn't 
look like it is working and maybe what we need to do next is, 
in addition to not making any new debt, stop paying them. Maybe 
we can get their attention. Because, ultimately, it will lead 
to bankruptcy through which they will get paid whatever they 
are going to get.
    But my understanding is no debts were being made.
    Mr. Goodlatte. And Judge Porteous totally hid all of his 
gambling activities from you?
    Mr. Lightfoot. Excuse me?
    Mr. Goodlatte. I said, Judge Porteous totally hid all of 
his gambling activities?
    Mr. Lightfoot. Oh, yeah.
    Mr. Goodlatte. You didn't even know he gambled; is that 
correct?
    Mr. Lightfoot. Oh, I don't gamble.
    Mr. Goodlatte. No. I said, you didn't even know he gambled.
    Mr. Lightfoot. I didn't know he gambled and--whatsoever.
    Mr. Goodlatte. Were you intimidated by Judge Porteous?
    Mr. Lightfoot. No.
    Mr. Goodlatte. What was your reaction to Judge Porteous and 
his gambling when you found out afterwards that he had--not 
gambled, that he had perpetrated a fraud upon the bankruptcy 
court and, in fact, had used you to help perpetrate that fraud?
    Mr. Lightfoot. Well, I don't feel so good about it. I feel 
a little betrayed. Because had I known I would have said a lot 
of things to him in the hope to prevent him from doing that. 
But it didn't happen because I didn't know.
    Mr. Goodlatte. Thank you.
    Thank you, Mr. Chairman.
    Mr. Schiff. The gentleman yields back.
    Mr. Gohmert.
    Mr. Gohmert. Thank you.
    I appreciate your testimony, and I'm a little fuzzy on my 
recollection of bankruptcy rules. But what is the length of 
time before you file bankruptcy that any transfer of assets may 
be brought back into the bankruptcy determined later?
    Mr. Lightfoot. At the time of this case, it was 1 year.
    Mr. Gohmert. It was 1 year?
    Mr. Lightfoot. Yes, sir.
    Mr. Gohmert. Okay. And you had mentioned that you had had 
some bankruptcy appeals that obviously went to a district 
court. You had never heard of Judge Porteous before he came to 
you, though?
    Mr. Lightfoot. I knew he was a judge, but I never met him.
    Mr. Gohmert. Okay. All right.
    Mr. Lightfoot. I had this one appeal that was allotted to 
his court many years before, maybe even 10 years before, and I 
was prepared to write a brief. I was the prevailing party in 
the bankruptcy court. So the appellant was going to file a 
brief, and then the appellant dismissed their appeal. So it 
never went anywhere. So I never did meet Judge Porteous.
    Mr. Gohmert. Okay. So you did know he was a judge. So that 
has got to be a pretty sincere form of flattery for a Federal 
district judge to come in and seek your services legally, 
correct?
    Mr. Lightfoot. Well, I had never had a client like that 
before.
    Mr. Gohmert. I know. But that has got to be very helpful?
    Mr. Lightfoot. Well, I guess he must have called around and 
checked me out and thought I was a good choice, and I felt good 
about that.
    Mr. Gohmert. Yeah, sure, it is flattering. And normally 
down the road it ends up being good business. People know, oh, 
this is the guy that helped the Federal judge, right? I mean, 
you had mentioned word gets around.
    Mr. Lightfoot. My typical clients aren't interested in 
that. I have just working-class people for the most part.
    Mr. Gohmert. Well, I have represented working-class people 
myself; and I find that if they hear that one lawyer was used 
by a Federal judge, or by any judge, it makes a very big 
impression. So it is good----
    But I'm wondering about, in the bankruptcy court, we have 
had the questions about, you know, his being asked the normal 
questions, put under oath and swearing to do things by the 
trustee. Did you see that he got any special treatment where 
maybe he wasn't sworn in at any of those or did they treat him 
like a normal court participate?
    Mr. Lightfoot. No, everything went usual. It is not a 
lengthy process. But I don't believe it was any different than 
any other case.
    Mr. Gohmert. Okay. So they didn't cut him any slack or just 
because he was a judge not swear him in or anything like that?
    Mr. Lightfoot. Oh, no. He was sworn.
    Mr. Gohmert. Well, I just wanted to tie those up.
    Thank you, Mr. Chairman.
    Mr. Schiff. The gentleman yields back.
    Mr. Westling.
    Mr. Westling. Mr. Chairman, we have no questions for this 
witness.
    Mr. Schiff. All right. Well, I thank you for your 
testimony.
                               __________

    Mr. Schiff. We will now call up our final witness of the 
day. Our final witness is the Honorable Duncan Keir, Chief 
Judge of the United States Bankruptcy Court for the District of 
Maryland.
    Judge Keir has served as a bankruptcy judge since November, 
1993. He is a distinguished academic, has had a distinguished 
academic legal career as well. He is the author of a chapter of 
Collier on Bankruptcy, a respected treatise on bankruptcy law.
    He has served as an adjunct faculty member of the 
University of Maryland School of Law and is a Fellow of the 
American College of Bankruptcy. From 1999 through 2002, Judge 
Keir served as Circuit Governor for the Fourth Circuit on the 
Board of the National Conference of Bankruptcy Judges.
    I will now swear the witness.
    Judge Keir, if you wouldn't mind rising and raising your 
right hand.
    [Witness sworn.]
    Judge Keir. I do.
    Mr. Schiff. Thank you. You may be seated.
    And at the outset, Judge, I want to thank you for your 
willingness to come and testify today. You're not a participant 
witness here and under no duty or compulsion, but we are very 
appreciative of your time.
    Judge Keir. You're very welcome. I'm glad to be here if I 
can be of assistance.
    Mr. Schiff. Thank you, Judge. And I will turn over to a 
Task Force counsel Harry Damelin to begin the questioning.

  TESTIMONY OF THE HONORABLE DUNCAN KEIR, CHIEF JUDGE, UNITED 
         STATES BANKRUPTCY COURT, DISTRICT OF MARYLAND

    Mr. Damelin. Good afternoon, Judge. And could you please 
tell us first, in addition to being present here this morning 
to hear all of the testimony that has been brought forth today, 
what materials have you reviewed in preparation for your 
testimony before the Task Force?
    Judge Keir. I have reviewed carefully, first of all, the 
docket which lists all of the documents filed in the bankruptcy 
case of Judge Porteous and his wife. I have reviewed the 
petition that was filed that initiated the case, the amended 
petition that was subsequently filed, the schedules that were 
filed under penalty of perjury, as well as a statement of 
financial affairs similarly sworn, the Chapter 13 plan that was 
proposed, the confirmation order that was entered, portions of 
the recorded prior testimony, the 341 meeting of Judge 
Porteous, portions of prior testimony before the fifth circuit 
of various witnesses, an outline of financial transactions 
surrounding the time frame of the filing of the bankruptcy case 
and thereafter during the duration of the case, and including 
prior testimony, I might add, of both the trustee, who is the 
Chapter 13 trustee in the case, and Mr. Lightfoot, who has just 
testified. I also saw the letter of referral from the United 
States Attorney's Office to the fifth circuit of the matter.
    Mr. Damelin. Thank you.
    Could you please start off by briefly describing for the 
Task Force what a Chapter 13 bankruptcy is?
    Judge Keir. Chapter 13 bankruptcy is sometimes referred to 
as a wage earner's plan. That is a little bit perhaps too 
narrow. It is only available to individuals who have receipt of 
a regular monthly income. Income can be unemployment. It 
doesn't really have to be only wages.
    It is in lieu of, if you will, a liquidation in bankruptcy 
and the means by which the debtor has to provide to the trustee 
and then the trustee distribute to unsecured creditors at least 
as much in value as they would have received had it been a 
liquidating Chapter 7 bankruptcy. In exchange for that 
opportunity, the debtor gets to keep property that otherwise 
would have been surrendered to the trustee for sale and 
liquidation and payout.
    The plan can be of a duration no more than 60 months.
    Mr. Damelin. In connection with a bankruptcy filing, is it 
important that a debtor be candid with the court in his or her 
filings?
    Judge Keir. It is absolutely essential to the operation of 
the case and the integrity of the system and the bankruptcy 
laws.
    The United States Supreme Court in 1934 in a somewhat 
famous case referred to as Local Loan Company v. Hunt said 
something which has been often repeated in other courts in 
numerous opinions since then; and that was that Congress 
provided the relief in bankruptcy for the honest, but 
unfortunate, individual. And honest is an essential component 
because the debtor reveals in his or her schedules all of their 
debts, all of their assets, their present income and expenses, 
and their financial history through a series of questions 
called the Statement of Financial Affairs.
    All of this information is sworn to under penalty of 
perjury. So they are taking a court oath as to all of this, and 
this provides the essential information that both the creditors 
and the trustee can then use to decide whether further 
investigation by way of the examination or take action filing 
particular action before the bankruptcy court. They investigate 
the liabilities by asking questions of other witnesses or 
seeking bank records, for example. All of this activity would 
follow on based upon what the debtor has revealed. It has to be 
complete or there is no trail for the creditors and the trustee 
to follow.
    Mr. Damelin. What is the significance of the fact that 
Judge Porteous filed his initial bankruptcy petition under a 
false name and with a P.O. Box instead of his residential 
address?
    Judge Keir. Well, Mr. Lightfoot has just testified that the 
intent was to keep secret the fact that Judge Porteous had 
filed a bankruptcy case from the general public and that it 
wouldn't be published in the local newspapers. That in itself 
violates--first of all, it violates by perjury the oath 
contained in the petition itself which states that everything 
in the petition is true and correct under penalty of perjury. 
And in six different places on the original petition, the false 
name is put down. In no place is the true name put down.
    Secondly, it is true that most of the creditors are likely 
to get the information about the existence of the case through 
the notice that the clerk's office sends out. In my district, 
that clerk's office notice would have gone out more quickly 
than it did in this particular case; and they would have gotten 
a notice that said Mr. Ortous filed, rather than Gabriel Thomas 
Porteous and his wife filed.
    But, in addition, it is not uncommon that a person that 
maybe the debtor forgot or believes they were owed having an 
interest in the proceeding will find out about it from the 
newspaper and not be in the schedule and therefore the notice--
the fact that it was corrected before the notice went out would 
not solve that problem. It kept back from the general public 
who had filed a bankruptcy case.
    The other thing it did is, for a time, it falsified the 
official record of the United States court.
    All of the courts have mechanisms they have improved over 
the years with electronics whereby parties in interest can 
contact the court by telephone, calling in to a voice system, 
now through a system called PACER, and find out if a particular 
individual has filed a bankruptcy case. You go to buy a used 
car, there are some other transactions, this is something they 
may do as a part of determining whether or not they are going 
to make you the loan or deal with you in some way that incurs 
credit. And they would have been told there is no Gabriel 
Porteous that has filed this case. And, of course, they 
wouldn't have asked about G. T. Ortous because it didn't exist. 
So it falsified the record until it was corrected.
    Mr. Damelin. Now, the evidence has shown that the decision 
to file the original bankruptcy petition under a false name was 
Mr. Lightfoot's idea, according to his testimony, and not that 
of Judge Porteous. Do you believe that Judge Porteous can claim 
advice of counsel as an excuse for filing under a false name?
    Judge Keir. No. The petition is signed under oath by the 
debtor and not--it is signed but not under oath by debtor's 
counsel. The testimony, the swearing is that of the debtor. And 
here it may be that Judge Porteous got the idea from Mr. 
Lightfoot of putting down a false statement as to his identity 
and then swearing to it. But he knew it was false. That is very 
clear from the record. He agreed to going along with it, and 
indeed he then entered into making the oath under penalty of 
perjury, that it was true and correct. So advice of counsel is 
not a defense at all.
    Mr. Damelin. Okay. Now, even though Judge Porteous filed 
his initial bankruptcy petition under a false name, this, again 
according to the testimony, was corrected several weeks later 
and Judge Porteous's listed creditors received their notices 
with the correct name. Thus, was there really any damage done 
here?
    Judge Keir. In terms of some finite amount of dollars, I 
don't think anyone here can tell. I certainly could not tell. I 
cannot tell whether anybody would have checked to see whether 
or not a bankruptcy was filed by Gabriel Porteous and done 
some----
    And I did note, however, in the record that, on April 7th 
and 8th, Judge Porteous borrowed by markers $2,000 from a 
casino. The correction of the name did not occur until April 
the 9th. I have no way of knowing whether that casino did or 
did not check to see whether this party that wanted these 
markers was in bankruptcy. If they did, they would not have 
discovered it because the record was falsified. So I don't know 
whether there was any measurable damage, because I can't tell 
enough facts.
    But if your question is would this somehow exonerate no-
harm, no-foul kind of thing--if one goes 110 miles an hour the 
wrong way down a one-way street but by good fortune doesn't hit 
anybody, they are not exonerated from their intentional 
misconduct for certain.
    Here in the United States, we strive to be a Nation of 
laws. We all know that there is not enough police officers, 
there is not enough courts and judges, so forth, to enforce 
laws if the public just decides that they can do whatever they 
want, ignoring laws, and so long as you can't measure the 
particular damage of the violation, there is no violation at 
all. That would be chaos.
    I suggest to you, particularly where this particular person 
knew the requirements of law, that this idea that you can't 
demonstrate with particularity a particular creditor or 
creditors for a particular amount that were harmed somehow 
makes it not meaningful.
    Mr. Damelin. And what is the significance of Judge 
Porteous's failure to disclose his tax refund from the year 
2000 on his bankruptcy schedules or on his statement of 
financial affairs?
    Judge Keir. Well, let me first address an answer to a 
similar question that Mr. Lightfoot gave.
    There was a question raised about what is a liquidated or 
not liquidated tax refund. I would point out that both have to 
be revealed. Question 17 about which the particular prior 
question to the prior witness was asked requires you to list on 
Schedule B of the schedules--this is the Schedule of Assets--a 
liquidated tax refund. That is including liquidated tax 
refunds. Liquidated, by the way, the legal meaning, of course, 
is that the amount is certain. It doesn't mean you have 
collected it. It means the amount is determinable to a 
certainty.
    The pain and suffering that the jury has not yet evaluated 
in a verdict is unliquidated. A tax refund that has been 
determined or at least initially determined by the tax return 
is a liquidated amount. That is what Question 17 required him 
to put down.
    But I would note that Question 20 follows on and says, 
okay, put down your unliquidated amounts that may be owed to 
you, including tax refunds. So if you didn't know because you 
hadn't yet filed your return but you had finished your tax year 
in 2000, if you had an unliquidated amount, you had to divulge 
that as well, your best estimate.
    Nothing was put down. Either question, of course.
    Now, the effect in Chapter 13 is twofold. As I said, in 
Chapter 13, one of the two measures of how much the debtor has 
to pay into a plan in order to be eligible for the plan to be 
confirmed is to deliver the same value or greater than would 
have been delivered in a hypothetical Chapter 7 liquidation. An 
asset of $4,100 would increase that amount. Because, in a 
Chapter 7, that tax refund would have gone to the Chapter 7 
trustee for distribution to creditors. So if you hide $4,100 of 
your assets, you're reducing the amount that the trustee is 
going to calculate in making a recommendation to the court as 
to how high the plan payment has to be.
    The second thing is, of course, a tax refund is effectively 
cash to put into your account. You can spend it. If you spend 
it and then your case for some reason was converted to Chapter 
7, it is not going to be available to creditors. It is gone. 
So, often, at least in my district, the trustee will take the 
position and if not agreed will file a motion asking for a 
court order that the refund be paid into the trustee upon 
receipt and, as in effect, part of the payment required into 
the plan.
    On occasion, a debtor may work out and the trustee may 
recommend that some portion be retained for some finite 
necessary living expense that the refund is needed for. But, by 
hiding it, he both falsified the amount that the plan was going 
to have to pay and took away from the trustee the opportunity 
to obtain the funds to make sure creditors got those funds.
    Mr. Damelin. Thank you.
    Isn't it true in your years of experience that debtors 
often make mistakes and have inadvertent omissions in their 
bankruptcy filings?
    Judge Keir. Yes. The keyword you have used is the same word 
that many opinions that have been written by appellate courts 
have used: ``inadvertent''. Mistakes happen. I couldn't tell 
you today, sitting here, the exact dollar figure for the payoff 
on my mortgage; and I don't know that anybody in this room is 
likely to carry that around in their hip pocket. So If the 
debtor were a few dollars off when they put down what do you 
owe to your first loan company that has your mortgage, it would 
be an inadvertent error.
    I have seen a doctor's bill left off among many other 
doctor bills that were listed, things of that nature, where an 
inadvertent minor or at least isolated omission has occurred, 
an estimate was off. But the case law has also made it clear 
that a repetitive and pattern of false statements is not 
inadvertent. It is intentional. It is fraud.
    Mr. Damelin. Is that what you see here in this case?
    Judge Keir. Very much so. There is a pervasive pattern, 
first of all, of not listing all of the debts, which says a 
couple of things.
    First, there is a credit card--I think it is Fleet--that 
was not listed. Fleet probably didn't receive notice of the 
bankruptcy because, therefore, they wouldn't be on the address 
list to whom the notice went. That means they wouldn't have cut 
off the credit that they probably would have cut off 
immediately post bankruptcy. They get a notice there is a 
bankruptcy case for their borrower on the credit card, they 
generally--my experience has been--shut that card off right 
away.
    Similarly, with a casino who doesn't get notice and 
therefore--it has already been testified--would have stopped 
allowing markers.
    In addition, in the Statement of Financial Affairs, 
question 3, he did not list any of these last-minute payments.
    Not only does that bear into this idea of recovering back 
for the estate, but it hides the fact that he did it.
    If the trustee had inquired further by making either an 
informal inquiry or formal inquiry to the casinos and so forth 
that these last-minute payments paid off, they would have known 
immediately, hey, this guy has filed a bankruptcy case. So they 
didn't know that because no one makes that inquiry to them 
because they are not listed on question 3's answer. He didn't 
put anything down there other than ordinary installments.
    So you have both sides of not listing debt, not listing 
assets, and not listing the essential pre-petition financial 
transactions the Statement of Financial Affairs requires.
    As to not listing the pre-petition payments, the Chapter 13 
trustee under the Bankruptcy Code has the authority, the 
standing to sue and recover preferences that occurred within 90 
days of the filing of the bankruptcy case which allowed a 
particular creditor to get a greater return dollar for dollar 
than unsecured creditors generally in the case. You can reach 
back a year if the creditor that has been preferred is an 
insider, whichever the time frame.
    It is true--and I think this is the reason for Mr. 
Lightwood's testimony--Chapter 13 trustees do not often avail 
themselves of that in a formal sense, by filing an adversary 
proceeding, which is a Federal lawsuit with a funny name that 
they use in a bankruptcy practice. Instead, what they do is 
they say, well, we are going to assume we would have recovered 
that in Chapter 7.
    So add that amount to this calculation the plan has to 
return to creditors. If the debtor can come up with the money 
somehow, fine. That's what the creditor is entitled to. But 
they can and on fairly rare occasion do actually launch these 
adversary proceedings to recover back from the preferred 
creditor all of the money, and then the creditor has to wait 
and get their aliquot share from distributions under the plan.
    So a bit of a long answer about inadvertent mistakes. But 
the bottom line is there is this pattern of not revealing 
essential information in a number of places: the petition, the 
Statement of Financial Affairs, and the schedules.
    Mr. Damelin. Okay. Now, are you familiar with the 
confirmation order entered in July of 2001 by Bankruptcy Judge 
Greendyke?
    Judge Keir. I have read it.
    Mr. Damelin. Now, despite Judge Greendyke's order, the 
evidence has established that Judge Porteous continued to take 
out markers at casinos. He applied to increase his credit limit 
at one casino, and he opened a new low-limit credit card, all 
without the approval of the bankruptcy trustee or of Judge 
Greendyke. Do you consider these actions by Judge Porteous to 
be a violation of the bankruptcy order?
    Judge Keir. They most certainly are a flagrant violation.
    The order is direct and straightforward in this regard. It 
orders that the debtor--in this case, debtors plural, Judge 
Porteous and his wife--not incur any new credit during the 
bankruptcy case. The order was neither appealed according to 
the record that I reviewed nor was any motion filed for relief 
from that order in any way. It simply was disobeyed. Repeatedly 
Judge Porteous went out and incurred additional credit after 
the order was entered without asking or gaining any permission 
from the trustee or the court.
    Mr. Damelin. So we have heard evidence that even though 
these numerous violations that we have discussed by Judge 
Porteous were violations of the order, he nevertheless 
satisfied his bankruptcy repayment plan. Thus, are these 
violations really just a no-harm, no-foul situation?
    Judge Keir. Well, I have already spoken about this concept 
of a no-harm, no-foul defense or exoneration. There is no such 
doctrine. There cannot be. Because the whole system demands and 
depends upon the honesty of the honest but unfortunate person 
who seeks relief.
    I would also, because I just neglected to say it, would 
like to add to my answer to the previous question; and that is 
another thing occurred to me listening to the testimony this 
morning. In obtaining credit post order in the bankruptcy 
without authority and then allowing these casinos to recover 
back either by a check or particularly by putting the marker 
into the account, the situation resulted in a violation of 
Federal law.
    Title 11, Section 362(a), is the automatic stay in 
bankruptcy. When a bankruptcy is filed, on the instant it is 
filed, there is this automatic stay that arises by statute. 
Congress has put it down. The court does not do it. And it is 
very, very strong.
    One of the things it stops is collection by a creditor from 
assets of the bankruptcy estate. It stops many other things, 
but that is the one I want to focus on.
    A creditor who becomes a creditor after the petition is 
filed is nonetheless stayed from attempting to collect from 
assets of the estate. In Chapter 13, the bankruptcy estate by 
statute specifically includes not only the property rights 
owned by the debtor on the date that the debtor filed the case 
but all after-acquired property including, and it puts it down 
with specificity, all earnings.
    So whatever money was in the checking account when the 
markers were deposited--I believe that was the agent's term for 
negotiating the marker--were undoubtedly assets of the 
bankruptcy estate. They were used to pay a creditor and by the 
action of the creditor in violation of the stay.
    If the creditor didn't know about the bankruptcy, they 
inadvertently violated the statute. But that is another damage 
done to the intent that the creditors under the plan are 
intended to have the best opportunity to be paid through a 
successful reorganization without other creditors reaching in 
and grabbing 100 cents on the dollar for themselves.
    The creditor has to go to the bankruptcy court and file a 
motion for relief from stay and convince the court there is 
some just reason why that creditor should be allowed to 
proceed. That didn't happen. They simply deposed the markers 
and took the money because of the failure to learn of the 
bankruptcy through Judge Porteous's violation of the court's 
order.
    Mr. Damelin. Okay. Now, as you look at this case, is it of 
special significance that the debtor here who engaged in this 
conduct was in fact a Federal judge?
    Judge Keir. Well, certainly there is only one statute and 
one book about 2\1/2\ inches thick of the Federal Rules of 
Bankruptcy Procedure that applies, no matter whether the 
debtors or debtor is a Federal judge or someone totally 
unassociated with any government position. So there is no 
difference in the behavior that the judge was required to do.
    There is significance, though, on two levels. One, section 
152 of title 18, which is the criminal statute, makes it a 
crime to intentionally falsify a material misstatement and also 
to intentionally falsely fail to--or falsely hide assets. So 
intent.
    Here I think the fact that the debtor was a Federal judge 
makes it rather clear that he knew what the oath penalty of 
perjury meant. And when he was signing the petition under 
penalty of perjury, signing the schedules under a declaration 
they were true and correct under penalty of perjury, signing a 
Statement of Financial Affairs under the same declaration, he 
knew he was giving a oath, he knew what the oath required, he 
knew that the violation of the oath was fraud and a crime. That 
knowledge comes with what he did in effect his position, and I 
think that goes to intent.
    The second thing is I think it brings disrepute upon the 
judiciary. Again, the public needs confidence in its leaders, 
whether they are elected or whether they sit on the bench. Here 
you have got someone who appears to have falsely participated 
in a number of ways in this bankruptcy case and, although not 
held technically to a higher standard by statute, it certainly 
is behavior which, because he is a Federal judge, I would take 
more seriously.
    Mr. Damelin. Okay. You have been a bankruptcy judge for 
approximately 19 years; is that correct?
    Judge Keir. Let us see. Who is counting? Sixteen.
    Mr. Damelin. Sixteen. Okay. My math error.
    If you had been the judge with your experience overseeing 
the Porteous bankruptcy and the facts established by the 
evidence today came to your attention, what actions, if any, 
would you have taken?
    Judge Keir. Well, a number of things would have occurred, 
fairly clearly.
    First, the case would not have led to the discharge of the 
debtor. If the information had been known to the court at the 
time that confirmation of the plan was being considered, 
confirmation would have been denied.
    It is a requirement under section 1325 that the plan be 
proposed in good faith. The plan, based upon falsehoods like 
this, is not proposed in good faith and the confirmation would 
have been denied right at that point.
    If the case had converted to a seven, undoubtedly under 
Section 727 the discharge also would have been denied. Perhaps 
the case would have been dismissed with prejudice against 
refiling.
    It is likely that the United States Trustee's Office would 
have been filing motions asking for these remedies and the 
court I think would have granted them if this is the evidence 
the court had to consider without really much question in my 
mind.
    Finally I would have been compelled under title 18, section 
3057, to refer this matter to the United States Attorney for 
investigation for prosecution of bankruptcy crimes. That 
section requires a Federal judge to make that referral where 
they see a reasonable basis that a crime may have been 
committed.
    And there is no question in my mind that this would have 
risen well beyond that level where that report would have been 
made. I mean, there was this pattern of the wrong name, false 
name in the petition under oath, creditors not all put down, 
and they were selectively not put down. The ones--the credit 
card that they wanted to use post petition omitted. Certain 
casinos to keep the relationship going with casinos omitted. 
That is on the schedules.
    The tax refund, for example, not listed as an asset keeps 
some liquidity that they could use--or Judge Porteous could 
use, not on the schedule.
    Do not reveal the last-minute payments that paid off 
certain casinos and so forth so that they wouldn't be listed as 
creditors because on the instant of the filing they were owed 
zero, but then the trustee would not notify them either because 
they were not listed on the Statement of Financial Affairs. 
Another document, false statement under oath.
    All of this and the violation of the court's order when put 
together would have been such a pervasive pattern of misconduct 
that the referral would have been made.
    Mr. Damelin. Okay. Thank you, Judge Keir.
    Mr. Chairman, I have no further questions.
    Mr. Schiff. I thank the gentleman.
    Judge, let me ask you a few follow-up questions, if I 
could.
    The practice of the newspaper in this area to publish the 
names of those filing bankruptcy, have other courts in other 
parts of the country also--or other newspapers and judicial 
communities published the names of those filing for bankruptcy?
    Judge Keir. I have certainly seen it in my district, 
although it seems to be changing. Newspapers seem to be getting 
lighter and lighter in terms of print copy.
    But it varies. A lot of jurisdictions do it. I think this 
is a bit of supposition on my part. I haven't done a study. But 
I believe it is probably more prevalent in areas where--that 
are less in the megaurban centers, where what is going on in 
the Federal courthouse may be a little bit more a part of the 
news than in some other places.
    But it is not unusual that newspapers will pick this up on 
a daily basis and print it or some it of do it by week, the 
filings of the week. I have seen columns that are headed like 
that.
    In Baltimore, for example, which is where I sit, there is a 
newspaper, the Daily Record, that contains various columns from 
various courts that are located within the city listing cases 
filed that week in the various courts.
    Mr. Schiff. These are often listed in legal newspapers, 
right?
    Judge Keir. Legal and in papers of general circulation.
    The Daily Record, which is becoming more and more a paper 
of general circulation, lists it, but I have seen it in years 
past in papers of general circulation as well.
    I don't think the Baltimore Sun paper does it anymore, but 
they used to, I believe.
    Mr. Schiff. Is part of the purpose that the legal 
newspapers and some of the papers of general circulation would 
publish a list of those filing bankruptcy so that people that 
had an interest--that either credit agencies or others that 
might want to see who is filing would know that an asset they 
had was jeopardized in a bankruptcy?
    Judge Keir. I think very clearly--this practice I believe 
goes back quite a ways, when there was less availability of 
information on an electronic basis and when it was probably the 
easiest and maybe even principal way one could ascertain what 
was going on, who had filed bankruptcy in your community. But 
it was offered to the public very clearly I think so that the 
public could use the information.
    And obviously the public had some interest in it or the 
paper would not have bothered to put it in the print. I know I 
have picked up numerous times something about someone filing 
that I would have not known about if I hadn't been reading the 
paper. Even after I have been on the bench, sometimes I will 
see a filing in--that I was unaware of that may have some 
tangential effect on a case that I have.
    Mr. Schiff. In a case like this, for example, the casinos 
would not have been notified of the bankruptcy because they 
were not listed as creditors. However, someone from the casinos 
may have seen a public notice of bankruptcy.
    Judge Keir. That's correct. I don't know whether they had a 
practice of having someone delegated to review those columns or 
not, but they certainly could have. That is why it is there.
    Mr. Schiff. Well--and let me ask you, too, assuming the 
casino credit system works like many others, if somebody is 
borrowing money and paying it back in a timely way, you 
wouldn't necessarily run a new credit check on them, would you?
    Judge Keir. I would not think so, no.
    Usually credit checks are run often by attorneys preparing 
to file bankruptcy cases to see whether there is something out 
there that their client inadvertently left off or whether there 
is some other information. But most of the time it is run by 
companies who are looking to extend additional credit, new 
credit, or renew credit.
    Mr. Schiff. So if you're a casino and you have someone who 
has filled out a credit application and has a pre-existing 
credit relationship with you and you are not notified of a 
bankruptcy because you're not listed as a creditor and it 
doesn't appear in the newspaper, you wouldn't have any reason 
to run a credit check on them if they are making their 
payments.
    Judge Keir. I would not think you would have any such 
reason to run a credit check.
    Mr. Schiff. I want to ask you one of the questions I asked 
Mr. Lightfoot to see if you had any different take on it. And 
that is, under what circumstances do you have a duty to update 
the bankruptcy court? When you have a change of income or have 
maybe new liabilities, are there any circumstances where you 
are required to update the court?
    Judge Keir. Certainly in my district there are. I know that 
all of the judges in my district hold to this idea, and I think 
it is the correct one: The schedules generally reflect assets 
and liabilities on the date of the petition. Schedule A is real 
property, B is personal property, for example, just skipping 
down a few, schedule F is unsecured debts. But schedule I and 
schedule J list income and expenses as opposed to assets and 
liabilities. In a Chapter 13, we require that a material change 
in schedule I or J during the life of the case requires an 
amended schedule. The debtor gets promoted and now has a 
significantly higher income than they had 2 years ago, and they 
are in a 5-year plan and have 3 years left to go, now their 
disposable income is significantly greater.
    The second financial component tested in the level that the 
plan has to pay, in addition to the equivalence of Chapter 7, 
is that the debtor has to pay all the debtor's disposable 
income. Now it is called ``projected disposable income.'' That 
change was in 2005. So, if the debtor's disposable income has 
increased greatly, the trustee, specifically under section 
1329, is authorized to come in and seek to modify the plan to 
require--get a court order to require that the plan now go to a 
higher level because it no longer is a plan that is receiving 
all of the disposable income of the debtor.
    The vehicle that the debtor is supposed to report that 
event to is an updated schedule I and an updated schedule J, 
where these changes have occurred. And counsel routinely seem 
to advise their clients of that. I see that.
    Mr. Schiff. In this case we have heard evidence that the 
judge filled out an application that listed his income as 
$7,500 a month, when in fact it was $7,700. Do you consider 
that a material false statement if the judge was aware he was 
in fact----
    Judge Keir. Well, I don't think that is the limit of the 
false statement there. I was listening to the testimony, and 
first of all, the schedule I is not filled in correctly, 
without regard to the numbers. The top line on schedule I is 
supposed to be your gross monthly income from wages, not your 
net. You are then required on the following lines to list what 
is taken out of your paycheck before you get your take-home 
pay. That gets your net. The net was put at the top, and 
therefore you didn't see on that schedule what was taken out.
    We already know there was a tax refund of $4,100, which 
means there was an over-withholding going on. Not only was it 
an asset that should have come in, as we already talked, but in 
effect it affects the calculation of what is disposable income. 
If you claim no dependents, no deductions, and have them take 
out extra money, you can lower that take-home pay. All you are 
doing is putting it in your own savings account, if you are 
allowed to do that. Therefore, your monthly payment is also 
going to be less under this plan calculation. And that 
information is not there. It is just this number.
    In addition, I heard the testimony that take-home pay, as 
it was put down, went up significantly just several months 
after the filing, and since, as I have already stated, that 
should have been updated; I don't think the measure is the 
$200. So I want to be careful in answering your question.
    Do I think the $200 itself is material? In amount, the 
word, first of all, ``material'' under section 152, courts have 
determined is in effect the same as ``relevant.'' It is not 
measured by dollars. It is measured by whether it bears on the 
financial affairs of the debtor, the rights of the bankruptcy 
estate and the process of bankruptcy itself. So any error is 
material in its relevancy.
    Significant? I think by itself a $200 error is on the 
borderline. It would have to--it always arises in a court case 
in the context of other facts. Is it the $200 there, but the 
debtor is probably underestimating his or her expenses a little 
bit, and you can see that because they didn't put anything down 
for home repairs, for example. A common situation.
    The $200 might be readily--you look at that and you say, it 
is going to be absorbed in legitimate expenses. They made an 
error that is not really going to be--was not intentional and 
it is not going to change the math. But if it is intentional, 
then it is material, because it is a false statement.
    Mr. Schiff. You mentioned that the form is filled out 
incorrectly; $7,500 a month is listed as gross income when in 
fact it is net income, is that right?
    Judge Keir. Yes. I have the schedule, a copy of it right 
here in front of me.
    Mr. Schiff. Is it also listed as net income later?
    Judge Keir. Yes. What it does is it says $7,531.52 on the 
top line under current monthly gross wages. Then there is 
nothing taken out until it hits the total net monthly take-home 
pay, which is the same figure. So it is readily apparent there 
is missing data here.
    Now, I can't tell whether the pay stub was attached as an 
exhibit when it was filed with the bankruptcy court or not, so 
it may be that it was attached. I don't know.
    But the lines are provided. The lines that are blank, that 
have zero, say payroll taxes and Social Security, zero. 
Insurance, zero. Union dues, zero. Other, specify, blank line, 
zero. Subtotal payroll deductions, zero. That is the 
information on the form that was filed.
    Mr. Schiff. The trustee during the hearing asked the judge, 
``According to the United States of America, you take home 
about $7,500 a month, is that right?'' And he answers, ``um-
hum,'' which I assume is an affirmative answer.
    Was that a false statement if his income was $7,700 a month 
and he was aware of it?
    Judge Keir. It was a false statement at the time that he 
made it, because what I have heard of the testimony, his
    take-home income was higher.
    Mr. Schiff. The effect of not fully disclosing the full 
extent of your income, of not disclosing the tax return refund 
you are going to get, do I understand it correctly that the 
impact of that is that you actually have more income that you 
are not obligated to provide to creditors, but you still get 
the discharge of your debts at the end of the process? So you 
still get the benefit of the bankruptcy, but you actually get 
to keep more of your assets than if the court and creditors 
were aware of the full extent of your income?
    Judge Keir. In a Chapter 13, I think I would phrase it, you 
actually get to pay less to your creditors and get your 
discharge anyway. Less than the Bankruptcy Code, which Congress 
enacted, required you to pay.
    Mr. Schiff. I take it, Judge, that the filing of a 
bankruptcy for many people, not solely for Federal judges, is 
somewhat of an embarrassing event for people. Is that a fair 
statement?
    Judge Keir. I think that is a fair statement, yes.
    Mr. Schiff. So that a great many people, whether they are 
in the lofty position of a Federal judge or any other position 
in life, might not like to see their name in the paper as 
having to file bankruptcy.
    Judge Keir. That is very true.
    Mr. Schiff. Of course, if everyone filed bankruptcy 
petitions in false names to avoid public disclosure, there 
would be serious problems with the system, wouldn't there?
    Judge Keir. That is absolutely true.
    Mr. Schiff. Is there any significance in terms of whether 
the court would consider it a mark or a debt, the speed with 
which the marker is paid off? In other words, some of these 
markers were paid off on the same day, some were paid off a 
week later, some were paid off a month later. If the judge has 
a successful day at the table and either wins money and doesn't 
report it so the creditors don't know about it, or breaks even 
and gets to pay off the marker before he leaves the casino, is 
that any less of an incurred debt while it existed?
    Judge Keir. No. The debt is incurred when the marker is 
taken. That is when the debt arises. You owe the money. And it 
is the incurrence of debt that was prohibited by the order. It 
was not qualified by saying ``unless you pay it off within the 
same day,'' or any other words, such as if you pay it off in 
the same session or something. It is the incurrence of debt. 
And, of course, when the marker was taken out, there is no way 
that Judge Porteous knew he was going to be able to or not 
going to be able to pay it from a particular source or at a 
particular time. It was gambling. There is a chance. So the 
only real event in terms of his disobedience of the order was 
the obtaining of the marker.
    There is a doctrine under section 363(b) which applies to 
debtors under section 1303 of the Code that permits a debtor to 
use assets in the ordinary course of business, which has been 
interpreted judicially as to a living, breathing individual. In 
Chapter 13, it would mean the ordinary course of living. But 
that doesn't really bear on this question of incurring a debt 
for an unusual reason, gambling. It is not necessary for your 
living expenses.
    But more importantly, a direct order saying you are 
prohibited from incurring credit, you went out and incurred 
credit; the fact you paid it back that day, there is no 
exception to that order for ordinary course of any kind by 
timing or otherwise. So I don't think it has any legal 
significance at all.
    Mr. Schiff. Last couple of questions. You were talking 
about the automatic stay. Is that only implicated when someone 
who is in bankruptcy and takes out a marker actually doesn't 
pay it back and the casino uses the marker to go into their 
bank account; or would it also be implicated where the debtor 
writes a check to the casino or otherwise pays it back?
    Judge Keir. Well, that is a somewhat complex question. I 
will take it in pieces, if I may.
    The automatic stay prohibits any act by a creditor who 
holds a pre-petition debt against the debtor's assets, the 
estate and so forth. As to a post-petition debt, it stays the 
collection from the bankruptcy estate, which, as I said in a 
Chapter 13 includes after-acquired property and earnings. But 
it is an action by creditor. Where the creditor deposits the 
marker, they are taking the action.
    Mr. Schiff. Meaning where they have to go and draw the 
money from the account?
    Judge Keir. I am borrowing the word from the testimony of 
the agent, but when they go to the bank and cash the marker out 
of the account, the creditor is collecting. That is a violation 
of the automatic stay. When the debtor hands them the check or 
hands them the chips, I think it is questionable that that is a 
creditor action. But it is still a violation of the Bankruptcy 
Code, it is just a different section.
    It is a violation of that section 363(b) that I spoke of a 
moment ago. It is a violation by the debtor, because the debtor 
is now using an asset of the estate, out of the ordinary course 
of business, without court authority. You have to file a motion 
and get a court order.
    As soon as Judge Porteous obtained the chips or had the 
money in the bank account to write the check upon, those funds 
were assets of the bankruptcy estate and his legal authority to 
use them was limited under 363(b) and 1303 to use for ordinary 
course. And he was using them for a different purpose.
    So I would believe that where he gave them the check or 
cashed the chips out against the marker, that the creditor 
didn't violate the stay in those occurrences; the debtor 
violated section 363(b) as well as, of course, the markers 
themselves violating the court order. So most of the violations 
were by Judge Porteous, except where the markers were cashed by 
the casino.
    Mr. Schiff. The last question. In the case where there is a 
confirmation order, is that an order of the trustee or is that, 
through the trustee, an order of the court?
    Judge Keir. That is an order of the court. It is entered on 
the docket. The docket reflects it is entered. It is signed by 
the judge. The process in a nutshell is the case is filed, the 
trustee, who is usually a standing trustee in a Chapter 13, 
conducts the first meeting of creditors, which lawyers 
routinely refer to as a 341 meeting because that is the section 
of the Code that requires it.
    The judge cannot by law attend that meeting. It is held in 
a meeting room somewhere, chaired by the trustee, who asks 
questions under oath to begin the process of gathering 
information. The plan is filed by the debtor as a proposed 
plan. The trustee reviews it, may have some problems with it, 
does some investigation. Oftentimes he will go back to the 
attorney for the debtor and suggest some changes that would 
obviate the objections the trustee may bring.
    If it is not resolved, the trustee will file a formal 
objection. If that is not resolved, there is a hearing. At that 
point the hearing is in front of the court. It is the 
confirmation hearing.
    At the confirmation hearing the judge listens to the 
evidence from both sides, hears the oral argument, makes a 
ruling, just as in any other court case, and enters an order 
confirming the plan, if that is what the ruling is.
    Here Judge Greendyke entered an order confirming the plan, 
which order contained various provisions, one of which is the 
provision not to incur any credit.
    Mr. Schiff. So----
    Judge Keir. The final order, by the way, is reviewable on 
appeal.
    Mr. Schiff. The court orders that the debtor not incur new 
debt, the debtor then goes on and incurs new debt, that is a 
violation of court order. What does the judge have the power to 
do when it finds that a debtor has violated an order? Does the 
court have the power to hold a debtor in contempt?
    Judge Keir. Yes. The court could hold the debtor in 
contempt. It depends on the nature of the violation. But the 
court could hold the debtor in contempt. The court could vacate 
its order of confirmation. The court could convert the case to 
a case under Chapter 7 and make it into liquidation, dismiss 
the case outright, and just in effect throw the debtor out of 
the bankruptcy case without a discharge. And, of course, in 
addition to any of those, the court, if it thought it was a 
criminal violation, should report it under Title 18, as I 
previously discussed.
    Mr. Schiff. Thank you. That concludes my questions. I now 
recognize my colleague, Mr. Goodlatte.
    Mr. Goodlatte. Thank you, Mr. Chairman. To follow up on 
that last question, it is Judge Keir?
    Judge Keir. Keir, yes.
    Mr. Goodlatte. You indicated that presented with evidence 
of a bankruptcy filer who filed under a fictitious name, using 
an inappropriate address, leaving out his spouse, and then who 
went on to incur debt in violation of the bankruptcy order and 
failed to list debts that were not inadvertent in their 
omission, that you would indeed refer such a case to the United 
States Attorney?
    Judge Keir. That is correct. And I have done so in various 
cases when it was necessary.
    Mr. Goodlatte. In evaluating the conduct at issue, is there 
particular significance in your mind that Judge Porteous was a 
Federal judge who actually presides over bankruptcy-related 
disputes?
    Judge Keir. Yes. The significance, as I stated, is he 
clearly knew what his responsibilities were when he testified 
under oath signing these documents, he testified at the section 
341 meeting orally that they were accurate and fully divulged 
his financial affairs. He knew what the testimony was, he knew 
what the responsibility requirements of penalty of perjury 
means. I would have had to say, and I would say, that therefore 
he would be found clearly to have the requisite knowledge that 
the violation was intentional and not inadvertent.
    Finally, because it occurs by a Federal judge, I think it 
has a potential effect of denigrating, if you will, the 
integrity of the court. What happens if 6 months later somebody 
has been found by a bankruptcy court to have violated these 
oaths and denied a discharge, and they appeal it, and the 
appeal goes in front of Judge Porteous? What is that argument 
going to be? You did it? I did it? It is untenable.
    Mr. Goodlatte. To put it another way, in fact in the way of 
the next question I was going to ask you, in your mind, is 
there any way that Judge Porteous could sit as a judge in a 
bankruptcy case?
    Judge Keir. Well, clearly that would not be up to me. I 
would think that counsel would have a good basis to ask for 
recusal if he in fact was doing so in a bankruptcy case.
    Mr. Goodlatte. We know that from previous hearings on Judge 
Porteous and previous cases, that Judge Porteous doesn't 
necessarily voluntarily recuse himself in matters. So what kind 
of complications would that cause if a judge didn't disclose 
that he had participated in all of this, and, notwithstanding 
that, went ahead and heard a case; and then it was later 
revealed that he had heard a case involving complaints of 
creditors in bankruptcy regarding a debtor, and went ahead and 
heard the case without having disclosed his own violations of 
the bankruptcy laws?
    Judge Keir. You are asking me what would the effect be on 
the case that was heard, and the answer is the losing party 
would have an appeal point that would be almost irrefutable 
because it was not a fair and impartial judge.
    Mr. Goodlatte. What would you say in your mind about the 
ability of Judge Porteous to sit as a judge in any case 
whatsoever, of any kind, where he must evaluate the honesty of 
a party that is in front of him?
    Judge Keir. Well, again, clearly that is not something that 
would come within my jurisdiction. But in many kinds of cases, 
criminal cases, civil cases, including but not limited to 
bankruptcy, what the trial judge in part must do is judge on 
the evidence, the candor, and the creditworthiness of the 
testimony that is being heard and determine, often, whether if 
there are inaccuracies, these are intentional or inadvertent.
    Is this fraud or was it not fraud? That is a question 
frequently that comes up, of course, in my court. Debt incurred 
by fraud is not dischargeable if the creditor can prove that it 
was incurred by fraud. Intent is one element of fraud.
    I can think of a myriad of cases in which this issue of 
honesty is an essential part of the decision, and it would 
certainly be troubling to me if the party who was to judge 
honesty himself was and had been shown not to respect honesty 
and not to obey the law in that regard.
    Mr. Goodlatte. Thank you. Thank you, Judge Keir. I 
appreciate your answering our questions.
    Mr. Schiff. The gentleman yields back. Mr. Westling.
    Mr. Westling. Mr. Chairman, we have no questions.
                              ----------                              


    Mr. Schiff. I want to thank you, Judge Keir, for your time 
today and your expertise. It is greatly appreciated. I want to 
thank all the witnesses for their testimony today.
    Without objection, the record will remain open for 5 
legislative days for the submission of any additional 
materials.
    We will now adjourn our hearing until our next hearing on 
Thursday at 10:30 a.m. Again, I thank everyone for their time 
and patience. This hearing of the Impeachment Task Force is 
adjourned.
    [Whereupon, at 3:40 p.m., the Task Force was adjourned.]




















                            A P P E N D I X

                              ----------                              


               Material Submitted for the Hearing Record


  Exhibits Accompanying Statement of Alan Baron, Esq., Counsel, Task 
                     Force on Judicial Impeachment

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

   Exhibits Accompanying Testimony of DeWayne Horner, Special Agent, 
            Federal Bureau of Investigation, New Orleans, LA

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Exhibits Accompanying Testimony of Claude Lightfoot, Attorney, 
                            New Orleans, LA

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                                 
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