Tom Goldstein fights to sell home as tax trial looms

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  • SCOTUSblog founder faces January tax evasion trial
  • Appeal hinges on $2.65 million home financed by litigation funder
  • Goldstein says he needs real estate proceeds to pay for defense
WASHINGTON, Dec 4 (Reuters) – (Billable Hours is Reuters’ weekly report on lawyers and money. Please send tips or suggestions to D.Thomas@thomsonreuters.com, opens new tab.)

The prosecution of prominent Washington lawyer Tom Goldstein has veered into an unusual appellate showdown involving pricey D.C. real estate, the constitutional right to counsel and a high-powered litigation funding firm that is set to be a witness in the case.

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Goldstein, formerly a leading member of the U.S. Supreme Court bar and a founder of SCOTUSblog, is facing trial next month in Greenbelt, Maryland on 22 counts of tax evasion and other financial criminal charges allegedly connected to his side career as a big-money poker player.
Since August, he has been seeking court permission to sell his nearly 5,000 square-foot home in Washington’s tony Wesley Heights neighborhood to help fund his defense. That request is now before the 4th U.S. Circuit Court of Appeals, after a judge in Maryland agreed with the government, opens new tab that the house is wrapped up in the allegations against Goldstein and cannot be sold.
Goldstein, who has pleaded not guilty, has had a string of defense lawyers at the trial court but is representing himself in his appeal. He told the 4th Circuit, opens new tab he has incurred millions of dollars in legal fees and expenses, and that barring him from selling the home, which he purchased for $2.65 million in 2021, violates his rights under the Constitution.

“As a criminal defendant, I have a Sixth Amendment right to use ‘untainted’ assets that are necessary to pay the costs of my defense. The home itself is not ‘tainted,’” Goldstein said in his Nov. 26 appellate brief.

The government opposes Goldstein’s bid to sell the house, now valued at more than $3 million by real estate listing platforms Redfin and Zillow. In a brief filed Wednesday, opens new tab, prosecutors said the property is indeed tainted because Goldstein made false statements on a loan application related to its purchase.

In any case, the government told the 4th Circuit, the home is being held as collateral for an appearance bond for Goldstein, who was deemed a flight risk by U.S. District Judge Lydia Kay Griggsby.

Attorneys for Goldstein at Munger, Tolles & Olson did not immediately respond to a request for comment.

The government alleges that Goldstein falsely omitted information on two loan applications by not disclosing more than $15 million in unpaid personal debts and federal taxes. Federal prosecutors have said Goldstein won and lost millions of dollars in individual poker matches and made improper payments through his law firm to cover debts.

After getting turned down for one loan application in March 2021, Goldstein allegedly borrowed more than $5.6 million from a company that invests in litigation and used the funds to buy the Washington home. Goldstein never disclosed his personal debts to the funder, prosecutors said.

Goldstein revealed in his 4th Circuit brief last week that the funder is Parabellum Capital, a top litigation finance firm with offices in New York and Boston with more than $1.5 billion in investments as of last year. Goldstein said Parabellum placed no restrictions on the funds, which he used to buy the D.C. property and pay taxes.

Parabellum said in a statement that it is a witness in Goldstein’s criminal case and that the firm has not been accused of wrongdoing. “A minor part of the case involves small investments Parabellum made several years ago,” the firm said.

Goldstein’s bid to quickly sell the property faces an uphill battle given its connections to his bail conditions, white-collar experts said.

“The facts here are what’s going to be a problem for him,” said Michael Weinstein, who leads the white collar criminal defense practice at law firm Cole Schotz. Weinstein said he was a law school classmate of Goldstein’s at American University, but has no personal relationship to him and is not involved in the case.

“In my experience, the federal government typically prevails in cases where property is reasonably alleged to be a tainted asset,” said Arun Rao, a Mayer Brown partner and former deputy assistant U.S. attorney general.

Goldstein wants the 4th Circuit to reverse Griggsby’s ruling and allow the sale, or to order an evidentiary hearing on whether the house is a tainted asset.

A spokesperson for the Maryland U.S. attorney’s office did not immediately respond to a request for comment.

– Alphabet’s Google urged a federal judge, opens new tab in California last week to slash a request for $128.3 million in legal fees tied to a class settlement over its advertising practices, calling the demand “massively inflated.”
The plaintiffs’ lawyers in a court filing argued, opens new tab that the fee award is justified by what they called a “trailblazing” settlement. Law firm Pritzker Levine served as the lead for the consumer plaintiffs, and worked with firms Bleichmar Fonti, Simmons Hanly, DiCello Levitt, Cotchett Pitre and Bottini & Bottini.

Under the settlement, Google will add a new control allowing users to limit data shared in online ad auctions and will notify account holders via email and a dedicated webpage. The plaintiffs value these changes at $1.4 billion.

Google, which has denied any wrongdoing, counters that the lawsuit delivered minimal success. There was no settlement fund, and the company said it was implementing only modest changes largely duplicating existing privacy settings.

Google has proposed capping the fee award at about $14.3 million. The court will weigh the competing proposals at a February hearing. Google did not immediately respond to a request for comment.

Elizabeth Pritzker, a lead attorney for the plaintiffs, said Google’s filing “misstates the record and the law in an effort to diminish plaintiff’s counsel’s reasonable compensation for this significant result.”

– A federal judge in Philadelphia on Thursday rejected a bid by plaintiffs’ law firm Hagens Berman Sobol Shapiro to force his recusal from long-running litigation over the drug thalidomide.

The Seattle-based law firm argued that communications between U.S. District Judge Paul Diamond and court-appointed official William Hangley were improper, citing hundreds of hours of contacts between them.

In his ruling, opens new tab Diamond dismissed the claim as “absurd,” noting that Hangley’s appointment in 2014 allowed such communications and that they averaged less than an hour per week over 11 years. Diamond said several plaintiffs opposed his recusal and none supported the firm’s arguments.

“The law does not require a judge’s recusal because a party dislikes his rulings,” Diamond wrote.

The recusal motion followed Hangley’s 2023 report accusing the firm of dishonesty and finding that a former partner altered evidence and gave false testimony. The report said the firm’s conduct bordered “on the criminal.”
Hagens Berman has disputed the report and denied any wrongdoing. The firm also has questioned Diamond’s decision this week to refer the firm to the U.S. Justice Department to investigate its conduct in the case. Hagens Berman and the firm’s outside counsel did not immediately respond to requests for comment.

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Reporting by Mike Scarcella

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