Rudy Giuliani can't even fall out of bankruptcy right
His tumble at the RNC was bad. His legal problems are even worse.
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If Rudy Giuliani simply would’ve walked into the sunset after his 2008 presidential bid, he’d probably have airports named after him by now. Instead, the years he spent debasing himself for Donald Trump — and in particular his pushing of the Big Lie and farcical efforts to overturn Trump’s 2020 election loss — have demolished whatever was left of his reputation and sent him spiraling toward rock bottom.
Giuliani went viral this week for tipping over at the RNC (emphasis on tipsy). And while he’s been in Milwaukee, his antics have resulted in a bankruptcy judge warning that “a lot of bad things” are about to happen to him unless he somehow gets it together.
The latest chapter in the self-inflicted tragedy of Rudy Giuliani began last December 15, when a jury in Manhattan ordered him to pay $148 million in damages to Ruby Freeman and Shaye Moss, the Atlanta poll workers he defamed with false accusations that they tabulated thousands of fraudulent ballots. Just six days later, Giuliani filed for bankruptcy in Manhattan.
The entire purpose of this exercise has always been to evade the consequences of lies told to promote a political agenda, heedless of the damage to ordinary people. This was the strategy deployed by Alex Jones in an effort to fend off the Sandy Hook parents; and the right-wing site Gateway Pundit is trying it now, hoping to halt a separate case by Freeman and Moss through their own filing.
Jones recently tapped out, dismissing the corporate bankruptcy filing, and converting his personal bankruptcy from a Chapter 11 reorganization to a Chapter 7 liquidation. But he was able to extract two years’ delay from the process, during which time his father had time to set up “Dr. Jones’ Naturals” as an alternate beet juice supplier for Infowars fans who want to ensure that the Sandy Hook parents don’t get any money.
But Giuliani lacked the organizational skills, not to mention the cash, to execute such a maneuver. At this point, he’ll be lucky to escape from bankruptcy without getting sanctioned.
Very soon, America’s Mayor will lose his homes in New York and Florida, and a return to Gracie Mansion seems … unlikely.
The judgment
Giuliani, who ran the US Attorney’s Office in the Southern District of New York in the 1980s, likes to tout himself as the consummate lawyer. But long before he leaked hair dye on camera while promising to overturn the results of the 2020 election, it was clear that something had gone very wrong.
He spent much of 2019 traipsing around Eastern Europe in the company of a kook from One America News named Chanel Rion, soliciting dirt on Joe Biden from a host of dodgy characters and Russian agents, while claiming to be pursued by octogenarian philanthropist George Soros.
After Trump’s loss at the polls, Giuliani traveled from landscapers’ parking lots to state legislatures to Fox News studios flogging a raft of fantastical lies about widespread election fraud. His only courtroom appearance, in which he tried to convince a federal judge in Pennsylvania to throw out all absentee ballots, resulted in a withering smackdown from the court. It also led to his disbarment.
One of his most insidious lies involved Freeman and Moss, who halted and then resumed counting ballots on election night, as their supervisor fielded reports of a water main leak at the State Farm Arena. Giuliani seized on video of them pulling a regulation box of ballots out from under the table as evidence that they’d stolen the election, dogwhistling about them passing a thumb drive (which was actually a roll of mints) as if it were a “vial of heroin” and describing Freeman as a “ballot hustler.”
Freeman and Moss faced harassment and death threats and were forced to flee their homes. Trump himself mentioned Freeman 13 times on the call where he pressured Georgia Secretary of State Brad Raffensperger to “find” enough votes to steal the state’s 16 electoral votes.
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In December 2021, Freeman and Moss sued Giuliani for defamation in federal court in DC. Rudy, whose lifestyle includes multiple country club memberships and hefty alimony payments, squandered both his time and his reputation working for Trump pro bono. He could barely afford lawyers to represent him, much less the bookkeepers and accountants required to comply with document-intensive litigation. After 18 months where he more or less refused to participate in discovery and appears to have willfully failed to preserve his communications, Judge Beryl Howell imposed a default judgment on him in August of last year.
“Donning a cloak of victimization may play well on a public stage to certain audiences, but in a court of law this performance has served only to subvert the normal process of discovery in a straight-forward defamation case, with the concomitant necessity of repeated court intervention,” she wrote, castigating him for turning over little more than “blobs of indecipherable data,” even as Rudy huffed that he’d been practicing law for 50 years and certainly knew what he was doing.
The only question left for trial was how much he’d have to pay Freeman and Moss in damages. And the answer was, A LOT.
The bankruptcy
A bankruptcy filing imposes an automatic stay of court proceedings against the debtor. Alex Jones made strategic use of this, filing three separate times — once to halt the trial, once to get his company classified as a “small business” before the verdict was imposed, and once to stop the Sandy Hook plaintiffs from collecting on the judgment.
Rudy had neither the cash nor the discipline to behave strategically. Instead, he stumbled into court and demanded that the judge maintain the stay on collecting damages, while still allowing him to appeal to the DC Circuit. But Giuliani was no more “together” in bankruptcy court than he’d been at trial, utterly failing to comply with mandatory reporting and disclosure requirements.
US Bankruptcy Judge Sean Lane refused to allow him to prosecute the appeal, noting that if Rudy didn’t have the bandwidth to fill out his monthly debtor’s reports, then he certainly didn’t have time to take on an intensive appellate case.
The bankruptcy shambled along for almost a year and a half, during which time the creditors spent hundreds of thousands of dollars chasing down Giuliani’s assets. In May they requested that the court appoint a trustee — essentially a receiver — to sort out Rudy’s books and stop him from diverting his earnings through his businesses instead of using them to pay his debts.
Rudy’s lawyers submitted a bonkers response in which they conceded that he was “operating through an alter ego LLC” but insisted that routing income through a corporation is “usual and customary and is not fraud or deceit.” They insisted that Giuliani had been “primarily and justifiably focused on prosecuting the appeal” — despite the fact that the court repeatedly barred him from doing so — and admitted that his mandatory monthly filings from March contained grievous errors, but fewer than the January filing, which they called “a positive improvement.”
At a hearing in June, Judge Lane expressed astonishment at Giuliani’s failure to hire an accountant or take any steps to comply with his disclosure and discovery obligations. He sharply rebuffed further attempts to relitigate the stay of the Freeman-Moss appeal and announced that he was “extremely concerned” about Giuliani’s total failure to comply with his obligations in the bankruptcy he’d voluntarily filed.
Seeing the writing on the wall, Giuliani pivoted again. First, in a blatant effort to avoid the trustee, he moved to convert his case from a Chapter 11 reorganization to a Chapter 7 liquidation. But then, less than two hours before the hearing on his motion, he moved to dismiss the bankruptcy entirely. This had the effect of fracturing his creditors, because cutting him loose would necessarily pit them against each other in a scramble to seize his assets.
Freeman and Moss, with their $148 million judgment, are obviously the largest creditors. But they are also in the advantageous position of having already had their claims litigated. Rudy is also being sued by: Dominion Voting Systems, for defamation; a former employee named Noelle Dunphy, who alleges sexual assault and various labor violations; his lawyer Robert Costello, for unpaid fees; and a Staten Island man who was charged with assault after patting Giuliani on the back at a grocery store. Giuliani owes money all over town, but the only litigation plaintiffs able to collect their judgments today are Freeman and Moss.
Giuliani’s smaller creditors, many of whom have pending lawsuits against him, begged the court to keep Giuliani in Chapter 11, under the thumb of a trustee. But lawyers for Freeman and Moss countered that continuing in bankruptcy would eat up Rudy’s remaining assets on administrative fees — the bill for the forensic accountant alone is more than $400,000. They also warned that the bankruptcy court would be looking at criminal referrals for what they described as Giuliani’s ongoing “fraudulent” financial claims.
Last week, citing his “continued failure to meet his reporting obligations and provide the financial transparency required of a debtor in possession,” Judge Lane agreed to boot the case. He acknowledged that cutting Rudy loose would inevitably result in a proverbial “race to the courthouse,” but concluded that “forcing creditors to wait years while they are prevented from pursuing their rights for, at best, a modest distribution seems inequitable and ill-advised.”
Judge Lane ordered the parties to hammer out a dismissal order that would deal with the administrative costs and come back to him on Wednesday of this week with their plan. All that Rudy had to do was hand over his cash to pay the toll, and he could be on his way.
But …
Rudy being Rudy
With the court washing its hands of the matter, Judge Lane’s only concern is ensuring that the administrative expenses get paid. Toward that end, Freeman and Moss proposed that Giuliani should hand over “all funds in his savings and checking accounts as of July 11, 2024, not to exceed $350,000” to pay the forensic accountant. Giuliani called that plan “onerous, punitive, and overreaching,” suggesting instead that the accountant should take a lien against the future sale of his Manhattan apartment.
At the Wednesday hearing, Judge Lane was irate.
“I have to deal with the administrative expenses now,” he said incredulously, dispatching the parties to sort out their issues over the lunch recess and come back with a workable plan.
During the break, Rudy’s lawyers were able to track him down at the RNC. But the only information they were able to shake loose was an account statement showing that their client had spent $30,000 of the $60,000 in one account since the last hearing.
At that point, Judge Lane moved from irritated to incensed, calling Rudy’s behavior "unbelievable and uniquely unhelpful.” Giuliani is still under the supervision of the court, and he cannot dissipate money which should properly go to pay the administrative expenses associated with the bankruptcy.
"If your client persists in this course of action, which is to contest this expense, there are a lot of bad things that will happen,” the judge seethed, threatening to haul Giuliani in and put him on the witness stand to explain under oath exactly where all his money is and how so much of it managed to wander off without the court’s authorization.
"I'm going to ponder what i'm going to do, and you should ponder what you're going to do. And you're going to give me an update tomorrow,” the judge continued, instructing Rudy’s lawyers to tell him by “high noon” on the following day exactly how their client plans to satisfy his obligations to the court.
But at 12, there was simply a three-sentence letter to the court describing “extensive negotiations” and expressing the hope that “a joint resolution will be forthcoming shortly.”
That is very much not what the court had in mind. And while Judge Lane has made it clear that he will not be revisiting his decision to dismiss the case, he could put Giuliani through some exquisitely unpleasant moments on his way out the door.
Toward that end, Giuliani has a new gig working for pillow CEO Mike Lindell, who’ll distribute Rudy’s podcast through the Frank Speech platform. Giuliani was recently fired from a gig at WABC, reportedly because the station owner feared getting sued for defamation. Lindell is apparently unworried, although he is himself a defendant in multiple defamation suits arising out of his lies about election fraud.
Lindell is also running out of cash. He recently bragged about his patriotic decision to quit paying his lawyers to save his company, and, for the second time this year, his company faces eviction for failing to pay rent on warehouse space. It seems fairly likely that he’ll join his fellow travelers in the land MyBankruptcy one of these days.
But, as Alex Jones discovered, malicious torts are not dischargeable — that is, you can’t shrug them off like other debts. And ruining someone’s life or business with lies is pretty definitionally malicious. Also, bankruptcy involves a lot of very unpleasant paperwork that can’t be BS-ed like a podcast appearance. Giuliani and Jones both found the entire experience rather less pleasant than they’d hoped. But at this point, Rudy seems to be living his life stumbling from one bad decision to the next.
That’s it for this week
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Thanks for reading, and have a great weekend.
He’s just like Trump. 75-80 years old. Not a lot of mileage left in the tank so to say…. He’s just going to keep kicking the can down the road until he himself kicks the proverbial bucket. There needs to be some major fundamental changes to our law system…. Major.
What is the man thinking? I guess that is the point...he isn't thinking. He is shooting from the hip and hopes he finds his target. It really is embarrassing to watch his bumbling and he is probably being avoided by many he had hoped to get help from. Even Trump has sidelined him. It is difficult to feel bad for him since as this newsletter points out it is all of his own making.