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Kirkland & Ellis has been sued for allegedly profiting from an undisclosed romantic relationship between a Houston bankruptcy judge and a local bankruptcy lawyer, a relationship that ultimately caused the judge to resign, Reuters reported. Plaintiff Michael Van Deelen, whose October lawsuit led former U.S. Bankruptcy Judge David Jones to publicly acknowledge a romantic relationship with bankruptcy attorney Elizabeth Freeman, expanded his lawsuit Thursday to add Freeman, her former law firm Jackson Walker, and Kirkland & Ellis as defendants. Van Deelen alleged that Kirkland profited from Jones and Freeman's relationship by frequently teaming up with Jackson Walker, which served as local counsel, to represent debtors in Jones' court, knowing that Jones would give favorable treatment to the law firm that employed his girlfriend. Van Deelen said that Kirkland and the other defendants "deliberately concealed" the relationship in order to continue placing their cases in front of a friendly bankruptcy judge. Kirkland said Friday that Van Deelen's allegations against the firm were "baseless and false."

The Justice Department is objecting to a Texas bankruptcy judge’s recommendation that his court maintain control of a case challenging fees a former fellow judge approved to a law firm while he was involved in an undisclosed romantic relationship with a lawyer there, WSJ Pro Bankruptcy reported. The U.S. Trustee, a division of the DOJ that scrutinizes the nation’s bankruptcies, is instead pushing for a federal district court to take over the legal proceeding. Former bankruptcy judge David R. Jones resigned last year after a circuit court of appeals filed a complaint stating it found probable cause of misconduct. Southern District of Texas chief bankruptcy judge Eduardo Rodriguez in December recommended his court handle the proceeding, in which the trustee is challenging roughly $13 million of fees former bankruptcy judge David R. Jones approved for law firm Jackson Walker across 26 bankruptcy cases. Jones resigned last year after the Fifth Circuit Court of Appeals started an investigation and filed a complaint stating it found probable cause of misconduct surrounding Jones’ relationship with Elizabeth Freeman. She had been a Jackson Walker partner while he approved those fees, and had herself billed hours in 17 of the cases. The trustee argued in an objection filed on Thursday that “alleged years-long, intentional, and repeated ethical failures,” by Jones, Freeman, and Jackson Walker “have raised widespread and legitimate concerns about the fairness and impartiality of proceedings in the Bankruptcy Court for the Southern District of Texas.”

A bankruptcy attorney appeared in U.S. District Court in St. Louis on Wednesday to answer charges accusing him of defrauding the state of Missouri and lending institutions, according to DOJ press release. Michael Toscano was indicted on Dec. 20, 2023, in U.S. District Court in St. Louis on three counts of mail fraud and one count of wire fraud. He turned himself in yesterday and pleaded not guilty to the charges. The indictment alleges that from roughly April 1, 2018, though Dec. 19, 2023, Toscano devised a scheme to defraud the state of Missouri and lending institutions by falsely claiming bankruptcy filers’ vehicles had been abandoned, and then selling some through his used car dealership. Toscano also obtained referrals from other bankruptcy attorneys whose clients sought to surrender their vehicles to creditors rather than to continue to pay their vehicle car loans, according to statements made in court on Wednesday. Toscano told debtors to deliver their vehicles to his office in Creve Coeur or to a St. Charles County storage facility, the indictment says. He also picked up some vehicles that were inoperable, it says. Toscano then mailed documents to the Missouri Department of Revenue and the holders of liens on the vehicles falsely claiming that they had been abandoned and that he’d incurred towing and storage fees, the indictment says. He demanded payment, writing that he would seek an abandoned motor vehicle title or mechanic’s lien if the fees were not paid within 30 days, the indictment says. In some cases, Toscano delayed notifying lienholders for as long as 45 days, causing storage fees to exceed $2,300, the indictment says. If payment was not made, Toscano submitted false and fraudulent documents to the contract license offices of the DOR seeking the issuance of abandoned vehicle titles or mechanic lien titles and then offered the vehicles for sale through his used car dealership, the indictment says.