A judge, his fiancé and allegations of impropriety

By Dan Christensen, BrowardBulldog.org

G. Steven Fender

John K. Olson

South Florida’s chief federal judge will hold a hearing this month to decide whether a Fort Lauderdale bankruptcy judge should be kicked off a case. It has been alleged the proceedings are tainted because one side’s law firm hired the judge’s fiancé in the middle of the litigation.

Federal rules require judges to disqualify themselves in any case where their impartiality might reasonably be questioned.

But U.S. Bankruptcy Judge John K. Olson refused to step aside this summer when he was challenged for not disclosing that his fiancé had gone to work a year ago as a bankruptcy lawyer for Fort Lauderdale-based Ruden McClosky.

The law firm represents the court-appointed trustee for Trafford Distributing Center, who is suing to recover about $300,000 from a trio of adversary defendants who are seeking Olson’s removal. Trafford, which filed for Chapter 7 liquidation in 2008, was a Florida corporation that ran a warehousing and fulfillment business in Pennsylvania. It was controlled by one of the defendants, Barbara Wortley of Boca Raton.

In his Aug. 30 order, Olson denied any bias and said he didn’t need to disclose because his fiancé was not involved in the case and was not an equity partner entitled to a direct share of fees earned. Under such circumstances, he said, disclosure would be “pointless.”

“No well-informed, thoughtful, and objective observer would argue that a sitting federal judge should recuse himself from every matter in which his spouse’s firm represents a party,” Olson wrote.

Still, attorneys for Wortley and the others are asking U.S. District Chief Judge Federico Moreno to remove Olson, saying his actions indicate at least “the appearance of impropriety” and violate the U.S. Code of Judicial Conduct.

“It appears that the judge’s office may have been used to obtain special treatment or favor for the judge’s fiancé, or, alternatively, that counsel curried favor with the court in this manner,” wrote Miami defense lawyers Douglas C. Broeker and Robert Sweetapple in their request to Moreno.

Moreno has set an Oct. 22 hearing.

Federico Moreno

The lawyers said they learned of the judge’s personal relationship this summer, a year after Olson issued “a series of adverse rulings” that began as Fender was negotiating with Ruden McClosky for a job. 

In court filings, they contend that Ruden McClosky and bankruptcy partner Michael Bakst – the trustee’s lawyers – did “an enormous favor for the court” by hiring Orlando lawyer G. Steven Fender in August 2009. The job allowed Fender to move to South Florida and “live with the judge as, essentially, the judge’s spouse.”

Fender is employed in the firm’s West Palm Beach office under Bakst’s supervision. “None of this was ever disclosed,” Broeker said.

In an Aug. 26 hearing, Olson acknowledged the relationship, confirmed he had not disclosed it and stipulated that “Mr. Fender is the equivalent of a spouse.”

With the admission, Olson became, apparently, the first openly gay federal judge in Florida.

Olson and Fender plan to marry Nov. 20. A copy of their Bloomingdale’s gift registry was included in defense court filings as evidence of the nature of their relationship.

Olson was a veteran bankruptcy lawyer in Tampa before his 2006 appointment to a 14-year term as a bankruptcy judge in South Florida by a majority of the judges on the U.S. court of appeals in Atlanta. Fender was a bankruptcy and commercial litigator in Orlando for 14 years before he joined Ruden McClosky.

Olson’s order states that his fiancé is not “directly involved in these proceedings,” and has no financial interest. But his ruling specifically precludes the defense from independent legal discovery to verify it.

Broecker and Sweetapple contend Fender “has a substantial interest in the outcome.” Bakst, they argue, has sought approval from the court for more than $500,000 in fees, and that the profitability of Ruden McClosky’s small bankruptcy practice – and perhaps even Fender’s job – is on the line.

Bakst, like Olson, has denied that Fender had a financial interest in the case.

“They’re trying to go on a fishing expedition. They’ve not presented the grounds. They’re just unhappy with the court’s ruling,” said Bakst, according to a transcript of the Aug. 26 hearing.