Judge asked to clarify fund history
U.S. District Court Judge Manuel L. Real, who has endured a rare public censure by the federal judiciary, the threat of impeachment and removal from several cases for questionable conduct, now faces demands to account for $5 million or more in apparently missing trust funds.
Lawyers for rival Filipino groups laying claim to the seized assets of late Philippines Dictator Ferdinand Marcos have petitioned a federal appeals court to demand that Real provide a detailed accounting of $35.3 million entrusted to him nearly a decade ago as U.S. courts were pondering who should receive the money.
The appeal, made public Wednesday, does not allege wrongdoing by Real. Rather, it disparages his single page of cryptically described account activity as raising concerns about whether the full amount and any earned interest has been returned, say lawyers who filed the petition last month with the 9th Circuit Court of Appeals.
Real, 85, has been the subject of controversy since shortly after his appointment to the federal bench by President Lyndon B. Johnson in 1966. He imposed a divisive busing program on Pasadena in 1970, took on leading Scientologists in the 1980s and amassed allegations of misconduct and imperiousness in at least 70 rulings in which he refused to explain his decisions.
In November 2006, the 9th Circuit publicly reprimanded Real for improperly seizing control of a bankruptcy case involving a woman whose probation he was supervising. That case prompted a House Judiciary Subcommittee to consider his impeachment. The 9th Circuit has often overturned Real’s decisions and has removed at least eight cases from his court amid allegations of bias or misconduct.
In the challenge to his handling of Marcos’ funds, Real’s vague report on account activity over the past decade referred to $98 million in unspecified security purchases and $118 million in unspecified security sales, despite his own order against trading account assets and a 9th Circuit edict that he refrain from disbursing money until a final court judgment. It was impossible to verify whether the figures provided by Real were accurate or comprehensive.
Real has presided since the early 1990s over the protracted legal battle to recover Marcos’ misappropriated public funds.
The money entrusted to Real, which he reported in February as having a balance of $34.7 million, is sought by the Manila government, the Philippine National Bank, heirs of a dispossessed private businessman and 9,539 Filipinos who claim in a class-action suit to have suffered human rights abuses at the hands of the dictator during his 20-year reign. Marcos was forced into Hawaiian exile by a 1986 popular revolt and died there three years later.
In a 1995 trial, Real awarded $1.9 billion to the abused Filipinos, who sought to settle the judgment by tapping the portion of Marcos’ funds frozen in a Merrill Lynch account by a New York federal judge in 1987. A cascade of appeals by the other claimants last year reached the U.S. Supreme Court, which deemed the Philippines’ courts the rightful venue for determining who should get the money. Real was ordered to return the account to Merrill Lynch.
Real has met with lawyers for all sides three times since the high-court judgment but provided only a single page of unspecified receipts and payments. In only two outlays mentioned over the decade he controlled the account, Real reported $63,398 for “trustee fees” and more than $4.9 million for “other disbursements.”
Two lawyers for rival parties, who spoke on condition of anonymity because their clients had not authorized them to speak publicly, said they suspected the unaccounted-for $4.9 million might have been disbursed to the class-action claimants or their attorneys, pointing out that the judge has previously acted in favor of the victims despite 9th Circuit orders to await final judgment.
Real “doesn’t comment on things,” his clerk, William Horrell, said when The Times called the judge’s chambers for his reaction to the demand for accounting details.
In their petition, lawyers for Merrill Lynch and the Philippine National Bank told the appeals court they needed a full accounting “to determine whether the amount returned to Merrill Lynch properly reflected investment gains or losses” and to learn “for what purpose(s) a substantial portion of the assets apparently were disbursed while in the custody of the district court.”
The appeal also said Real refused to order the return of interest, if there was any, on the $35.3 million put under his control in 2000.
“We are concerned Judge Real’s purported accounting of the assets was incomplete and failed to provide us with adequate certainty that the right amount of assets was returned to Merrill Lynch,” said Kenneth S. Geller, an attorney representing the bank.
“There could be as much as $50 [million] or $60 million that hasn’t been returned,” he said.
While court escrow funds are usually invested conservatively, Geller noted, “We don’t know if it was invested in 1% interest or aggressively traded and earned a lot of money.”