Texas Judge Brings Outsider View to Bankruptcy Romance Scandal

As the legal fallout of a Texas bankruptcy judge’s undisclosed romance with a local lawyer heads to mediation this week, the most influential player won’t even be in the room.

Judge Alia Moses hasn’t minced words since she took over the case this spring, citing what she called a “constellation” of misbehavior over $23 million in contested legal fees.

Moses has the authority to approve or reject any potential settlement between Jackson Walker LLP and the Justice Department’s bankruptcy watchdog, the US Trustee, which wants to claw back fees the firm collected while one of its lawyers was romantically involved with former Houston bankruptcy judge David R. Jones. She would also preside over a trial if a deal can’t be reached.

Moses, who is the chief judge for the US District Court for the Western District of Texas and holds an outsider perspective on the tight-knit world of corporate bankruptcy, has expressed deep concerns over the integrity of the bankruptcy court process and insider culture.

“If you think I’m not competent to handle these cases, then you’re terribly underestimating this court, and I would suggest you not do that,” Moses said during a May hearing.

Moses’ detachment from the bankruptcy community offers a needed perspective, Clifford White, former director of the US Trustee Program, said in an email.

“She sees the forest through the trees and will not tolerate any more of the gamesmanship and end runs that have marked these proceedings,” White said.

Fresh Eyes

The once-secret romance between onetime Jackson Walker partner Elizabeth Freeman and Jones, who resigned in 2023 after the relationship was revealed, has triggered civil litigation and a criminal probe. Freeman, who shared and owned a home with Jones, worked at Jackson Walker while Jones approved firm fees but left in late 2022.

Disputes that arise within bankruptcies are occasionally transferred to nonbankruptcy courts if a judge determines that they would be better handled elsewhere. For more than a year, the US Trustee urged various judges to move the fee litigation out of the bankruptcy court, arguing that doing so would remove the appearance of bias in light of Jones’ ties to the Houston bankruptcy bench, and be more efficient.

Moses granted that request in April and assumed control of the case.

“She’s not part of the close-knit bankruptcy world, so she can look into these matters with fresh eyes,” Nancy Rapoport, a University of Nevada, Las Vegas law professor who’s written on the Jackson Walker issues, said in an email.

Moses was nominated to the Del Rio bench near the Mexican border in 2002 by President George W. Bush. She was the first woman to be named a US federal court judge in the district, according to the website of her alma mater, Texas Woman’s University. She’s handled mostly border and immigration cases as a judge and, earlier, as a federal prosecutor.

In a 2020 column Moses wrote for Bloomberg Law, she said “stereotypes pervaded the courtroom” when she was first appointed and there was a preconception among some male litigators that she was “just another Hispanic female judge who was a token placeholder appointment for a border court and was incompetent.”

“The perception that I was mean and intolerant, instead of in control of the law, facts, and the courtroom is a perception infrequently attached to male judges,” Moses said.

As a prosecutor she was known as tough, former San Antonio federal Judge Edward Prado told the San Antonio Express-News in 2002.

“Boy, was she a fireball,” Prado told the paper at the time.

Moses’ Del Rio court calendar is heavily focused on criminal hearings on charges including illegal re-entry, conspiracy, and transportation of illegal aliens. Her civil cases often include trials and petitions for removal from the country.

She authored a 2023 opinion that found federal agencies could interfere with concertina wire meant to prevent border crossings along the Rio Grande River. But she made sure to call out the Biden administration for its “culpable and duplicitous conduct.”

In August, Moses dismissed a suit against Jackson Walker, Jones, Freeman, and Kirkland & Ellis LLP—which regularly partnered with Jackson Walker—by a shareholder of a bankrupt company that alleged they all conspired to keep the relationship under wraps.

But she said Jones “flouted” statutory and ethical requirements “whether through hubris, greed, or profound dereliction of duty.”

‘Ugly Impression’

Moses, in a May 22 hearing, sharply criticized bankruptcy professionals with overlapping ties who tap each other for roles within Chapter 11 proceedings “that may or may not be in the best interest of the estate.”

“It leaves the very ugly impression that if we don’t go outside of this small group of participants, you’re not going to have a clean and fair consideration of all the issues,” Moses said.

Moses’ comments came during a hearing on a suit brought by Morton S. Bouchard III, the ousted CEO of a petroleum barge business looking to pursue claims that the relationship resulted in improper rulings in the company’s bankruptcy.

Moses will now “look into a local mess,” said former Nevada bankruptcy judge Bruce Markell, now a Northwestern Pritzker School of Law professor. As a former prosecutor, she’s bringing a sense of reality to the allegations and “pushing aside attorneys’ arguments that common sense inferences don’t apply,” he said.

“Judge Moses is sensitive to the cliquishness of the SDTX, and how apparently one hand (judicial) washed the other (high-paid lawyers), and ensured more large cases were filed in Houston than normal venue rules would predict or policy would support,” Markell said in an email.