Bankruptcy Case Judge Refuses to Remove Himself : Litigation: Jurist hangs in despite claims of bias made by Jacqueline Walters, wife of Silverado Savings figure Bill L. Walters.
A federal bankruptcy judge refused Monday to remove himself from deciding a lawsuit against Jacqueline Walters, the wife of Silverado Savings figure Bill L. Walters, despite claims that he is biased against her.
Jacqueline Walters claimed in court papers that U.S. Bankruptcy Judge John J. Wilson told her in an off-the-record conversation that he thought she wasn’t telling the truth sometimes and didn’t approve of the Walterses’ lavish lifestyle.
Bankruptcy trustee R. Neil Rodgers has sued Jacqueline Walters in an effort to recover more than $20 million in assets he says Bill Walters transferred to her before his Chapter 7 bankruptcy.
Jacqueline Walters said in an affidavit that Wilson said “he did not believe or trust me or believe or trust my counsel. . . . He suspected I had hidden assets and I had not given up all of my files or information concerning cash resources to the trustee.”
She also claimed Wilson said she “was going to have to change my lifestyle. . . . He assumed that my life would be drastically changed, and he told me that I was going to have to do it on his or the trustee’s level.”
Bill Walters came to the public’s attention last summer after it was disclosed that he was dividing his time between a $1.9-million Newport Beach estate, a $1-million desert retreat and a Laguna Beach home despite claims before Congress that he was broke. Those and other assets were transferred to Jacqueline Walters as part of a 1986 prenuptial agreement, according to her attorneys. Bill Walters, once one of Denver’s most prominent developers, recently filed for Chapter 7 bankruptcy.
Wilson on Monday denied some of the statements attributed to him by Jacqueline Walters and said there were plenty of on-the-record decisions he made that could be construed as being in her favor.
The judge said he had gone off the record with Jacqueline Walters for a few moments after her lawyer requested it.
“Despite my efforts to accommodate her, that little bit of generosity has come back to haunt me,” Wilson said during the two-hour hearing.
Ron Rus, lawyer for the bankruptcy trustee, said Jacqueline Walters’ lawyers were simply trying to find a judge more sympathetic to her case.
“This motion was filed with one purpose--to shop for a judge,” Rus said.
Kenneth Chiate, Jacqueline Walters’ lawyer, said his client simply wanted a fair and impartial hearing. Chiate revealed Monday that the Federal Deposit Insurance Corp. has decided to provide the bankruptcy trustee with $100,000 for legal fees in exchange for $500,000 of any assets recovered from the Walterses.
In her frequent appearances in bankruptcy court, the fashionably dressed Jacqueline Walters has weathered a barrage of criticism against her and her husband. A Denver Post columnist recently took Walters to task in a column after she fired her lawyers.
“Move over, Ivana Trump,” The Post said. “Colorado’s former first lady of financial infamy, Mrs. Bill L. Walters, is ready to grab some headlines.”
Dressed Monday in a checkered blazer and black skirt, Jacqueline Walters remained cool Monday when Rus said her public image is one that hardly denotes poverty.
“Mrs. Walters has hardly cut the perfect image of martyrdom,” Rus said.
Citing the contentiousness of the case, Wilson said jokingly that maybe he should give it to someone else.
“The objective person might wonder why I would want to keep the case,” he said.
