In four separate filings, GWG bondholders this week spoke out forcefully against requests from Jackson Walker, Porter Hedges, David Jones and Elizabeth Freeman to dismiss racketeering claims against them, doubling down on allegations that each party was enriched by keeping secret a “live-in, intimate relationship” between then-bankruptcy judge Jones and bankruptcy lawyer Freeman.
Across 182 pages on Wednesday, the fiery responses argued to the court that Freeman had “corrupted the United States bankruptcy system for over five years and in more than two dozen cases,” that Jackson Walker “has a problem telling the truth,” that Jones engaged in years of “obfuscation and cover-up” and that Porter Hedges failed to present any “meritorious” arguments that dismissal is appropriate.
Individual defendants in the lawsuit that was filed in June include Jones, who resigned the bench in October 2023, and Freeman, the former Jackson Walker bankruptcy partner with whom Jones shared a relationship and a home. Law firms named as defendants include Jackson Walker, Porter Hedges and Freeman’s new law firm.
The bondholders allege that Porter Hedges — where Jones and Freeman practiced before Jones was named to the bench and Freeman became his law clerk — also knew about the relationship because Freeman’s ex-husband, a partner at the firm, was aware of it, and his “knowledge of the continuing relationship is imputed to Porter Hedges.” Porter Hedges also served as counsel to the bondholders committee.
Jackson Walker has become the target of actions by the U.S. trustee to claw back millions in fees awarded to the firm in 33 bankruptcy proceedings where Jones served as judge or mediator.
GWG, a Dallas-based financial services firm that sells bonds backed by life insurance policies, filed for Chapter 11 bankruptcy in April 2022. Judge Marvin Isgur was assigned to the case, and Jones was appointed to serve as mediator.
The first motion to dismiss came from Freeman in late August, characterizing the suit as full of “conclusory allegations” that mirror those put forth in a related lawsuit that has already been dismissed by Chief U.S. District Judge Alia Moses.
Quoting Yogi Berra, Freeman told the court that the allegations in this suit probably feel like “déja vu all over again.”
“The déja vu is caused by the complaint which is nearly identical to the complaint filed by plaintiffs’ counsel in Michael D. Van Deelan v. David R. Jones, et al, and Morton S. Bouchard, III, et al v. David R. Jones, et al,” referencing the lawsuit that first made public allegations about the romance scandal in October 2023 and a subsequent lawsuit filed in February 2024 by a bankruptcy petitioner who alleged he was wronged as a result of the secret relationship.
“Thus, much of the argument and briefing in this motion mirrors Freeman’s arguments and briefing in those two earlier filed cases,” Freeman’s motion continues. “The plaintiffs’ complaint rests primarily on the conclusory allegations that Jones and Freeman were in a romantic relationship during the time GWG’s bankruptcy was pending, and no one disclosed the existence of the romantic relationship. This is not enough to maintain the plaintiffs’ causes of action against the Freeman defendants.”
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The Van Deelan case was dismissed by Chief Judge Moses in August 2024, Freeman told the court, and this lawsuit contains the same claims “based on the same conclusory allegations.”
The GWG bondholders on Wednesday wrote that if the case is giving Freeman déja vu it’s because since 2018 she “repeatedly leveraged her secret, live-in, intimate relationship with the former Chief Bankruptcy Judge to enrich the couple, her law firm, and others.”
“In the process, she and her cohorts wiped out a lifetime of savings for GWG bondholders like Plaintiffs John and Jaquetta English,” they argue.
In response to Jackson Walker’s motion to dismiss, the bondholders told the court that for years the firm represented to clients and courts “that it was disinterested and had no conflicts with bankruptcy judges in the Southern District when the firm knew that was false.”
“It knew its key restructuring partner Elizabeth Freeman was in a long-term, live-in relationship with Chief Bankruptcy Judge David Jones,” the response argues. “The firm kept the relationship secret from those interested in the bankruptcies because the relationship allowed it to build a prominent bankruptcy practice and bring in millions of dollars.”
Jones filed his motion to dismiss last month, arguing that judicial immunity completely bars the claims against him. The GWG bondholders told Judge Moses those arguments from Jones are “misplaced.”
“There can be no genuine dispute that Jones is entitled to absolute immunity from civil lawsuits arising from his role as a judicial mediator in the GWG bankruptcy cases under applicable law,” Jones’ motion reads. “Likewise, Judge Isgur’s final and non-appealable order makes it clear that Jones is entitled to all privileges and immunities as a judicial mediator enjoyed by a sitting bankruptcy judge. This case should be immediately dismissed with prejudice.”
“As Jones concedes, there is no judicial immunity for conduct committed outside of the judicial function or where that conduct was committed without jurisdiction to act,” they argue in response. “In considerable detail, the complaint alleges that Jones committed acts and omissions that statutorily stripped him of any authority to continue to serve as mediator, acts and omissions falling well outside any reasonable definition of a ‘judicial act.’”
The bondholders argue that “there can be little debate that maintenance and concealment of an intimate relationship with a practicing attorney who appears regularly before the judge, is not a normal function of a United States Bankruptcy Judge, even when mediating a case.”
Taking aim at Porter Hedges’ motion to dismiss, the bondholders claim that the law firm, just like the other three defendants in this case, “chose to remain silent” despite “knowledge that
this conduct violated numerous ethical rules, procedural rules and laws.”
“The complaint clearly pleads proximate and but/for causation for any damages — had Porter Hedges simply made the required disclosures consistent with their fiduciary duties to the Bondholders Committee and the constituency of bondholders, Jones would not have been mediator, Freeman would not have been Wind Down Trustee, and the perpetrators of the scheme would not have looted GWG,” they argue.
Jones is represented by David Boies and Tyler Ulrich of Boies Schiller Flexner.
Freeman is represented by Matthew Probus of The Probus Law Firm.
Jackson Walker is represented by Rusty Hardin and Emily Smith of Rusty Hardin & Associates.
Porter Hedges is represented by Scott P. Drake, Anna C. Cosby, Bryan Lauer and Stephen McConnico of Scott, Douglass & McConnico.
The plaintiffs are represented by Mikell Alan West of Bandas Law Firm in Corpus Christi.
The case number is 4:25-cv-02761.