Legal News for Weds 12/11 - Kroger-Albertsons Merger, Biden Threatens Veto of JUDGES Act, Woody Allen's Chef Sues and The Onion's Bid for Infowars Thrown Out

Minimum Competence

This Day in Legal History: Bernie Madoff Arrested

On December 11, 2008, financier Bernard L. Madoff was arrested by federal authorities for orchestrating one of the largest Ponzi schemes in U.S. history. Madoff, a respected figure on Wall Street and former chairman of NASDAQ, had promised consistent high returns to investors. However, he used money from new investors to pay returns to earlier ones, rather than generating legitimate profits. The scheme unraveled during the 2008 financial crisis when panicked investors sought to withdraw funds, revealing Madoff’s inability to cover billions of dollars.

Madoff’s fraud affected a vast range of victims, including wealthy individuals, charities, and pension funds, some of which were completely wiped out. Prosecutors estimated the losses to be approximately $65 billion, though this figure included fictitious profits shown on client statements. The actual cash losses were around $17.5 billion, much of which was later recovered by a court-appointed trustee.

Madoff pleaded guilty in 2009 to 11 federal felonies, including securities fraud, wire fraud, and money laundering. He received a 150-year prison sentence, reflecting the enormous harm caused by his crimes. The case also spurred regulatory reforms, as it revealed significant oversight failures by the Securities and Exchange Commission (SEC), which had missed numerous red flags during prior investigations.

The scandal had lasting implications for the financial world, highlighting vulnerabilities in investment practices and the need for stringent oversight. Many victims continued seeking justice and compensation long after Madoff’s imprisonment, while the case remains a cautionary tale about trust and greed in finance.

A U.S. bankruptcy judge halted The Onion's planned purchase of Alex Jones' Infowars website, ruling that the bankruptcy auction did not maximize potential bids. Judge Christopher Lopez acknowledged errors in the auction process, including the trustee’s premature call for final offers, which likely left money on the table. Neither The Onion’s winning bid nor the runner-up bid from a company tied to Jones’ businesses adequately addressed Jones’ significant debts.

Jones, who declared bankruptcy in 2022, owes over $1.3 billion to families of Sandy Hook shooting victims after courts ruled he defamed them by falsely claiming the tragedy was staged. The Onion’s bid was bolstered by Sandy Hook families waiving part of their repayment to increase creditor payouts, raising its total valuation to $7 million. However, Jones argued The Onion’s bid relied on inflated calculations compared to the $3.5 million cash offer from First American United Companies.

The judge ordered a renewed auction process and called for resolving creditor disputes beforehand. While Jones celebrated the decision, The Onion expressed disappointment but reiterated its interest in turning Infowars into a parody site with less harmful content. Sandy Hook families’ attorneys criticized the delays but remained committed to holding Jones accountable.

The Onion's purchase of Alex Jones' Infowars stopped by US judge | Reuters

The Onion's Bid for Alex Jones' Infowars Rejected by Judge (1)

President Joe Biden announced his intent to veto the JUDGES Act, a bipartisan bill proposing 66 new federal trial court judgeships to alleviate case backlogs. Despite the Democratic-led Senate passing the bill in August, the Republican-controlled House delayed action until after the election, won by Republican President-elect Donald Trump. The White House criticized the timing, suggesting partisan motives, and noted Republicans' prior resistance to filling judicial vacancies under Biden.

The legislation aims to stagger new appointments over a decade to distribute appointments across three presidential administrations, addressing concerns about partisanship in judicial nominations. Republican Senator Todd Young, the bill's sponsor, and several judges emphasized the urgent need for additional resources, citing increased case filings and delays since 1990.

House Democrats, however, withdrew support, accusing Republicans of reneging on promises to pass the bill earlier. Representative Jerrold Nadler argued that granting Trump immediate judicial appointments could bolster his executive power. Biden’s veto would require a two-thirds majority in both chambers to override, an unlikely scenario. Judges advocating for the bill expressed disappointment, emphasizing its nonpartisan intent and necessity to ensure timely justice.

Biden vows to veto bill expanding US judiciary after Trump's win | Reuters

Woody Allen’s former chef, Hermie Fajardo, has filed a lawsuit accusing Allen, his wife Soon-Yi Previn, and their home manager Pamela Steigmeyer of unlawful termination due to his military obligations and complaints about improper wages. Fajardo alleges violations of the Uniformed Services Employment and Reemployment Act (USERRA) and New York labor laws, asserting that he was dismissed after raising concerns about taxless paychecks and reduced wages during his Army Reserve training.

Fajardo’s claims suggest a pattern of retaliation, including hostility from Steigmeyer and a sudden, unexplained termination shortly after a delayed return from mandatory military duty. The lawsuit challenges the defendants’ subsequent claims of dissatisfaction with Fajardo’s cooking, pointing instead to his complaints and military obligations as the true motivations for his firing.

Criticism of Allen is underscored, to say the least, by his history of abusive personal and professional behavior. Allen has faced decades of allegations, including longstanding sexual abuse claims from his adopted daughter Dylan Farrow, which have cast a well-deserved shadow over his career despite his continued denial of wrongdoing.

Woody Allen's Ex-Chef Alleges He Was Fired Over Military Service

A U.S. federal court blocked the proposed $25 billion merger between Kroger and Albertsons, marking a victory for consumers who prioritize competitive grocery pricing. Judge Adrienne Nelson ruled that the deal, which would have united the two largest traditional grocery chains, could harm shoppers by reducing competition and driving up costs. The decision aligns with the Federal Trade Commission’s (FTC) efforts to counteract inflation and protect consumers.

The FTC and state attorneys general argued that the merger would limit choices for consumers and weaken the bargaining power of unionized grocery workers. The court rejected Kroger’s claims that the deal would reduce prices and improve services through efficiencies, noting the lack of enforceable guarantees. Concerns about job losses and potential harm to small businesses were also central to the opposition.

For shoppers, the decision improves the chance that grocery prices remain as low as possible by preserving competition between major chains. With food costs already having risen by 25% in recent years, maintaining market competition is a crucial step toward affordability. This ruling reinforces the importance of competition in the economy, benefiting not only consumers but also workers and small businesses.

While Kroger and Albertsons argued that the merger was necessary to compete with giants like Walmart and Amazon, the court doubted whether their proposals to sell stores to maintain competition would succeed. Ultimately, this decision supports those who believe that strong antitrust enforcement is essential for a balanced economy.

Kroger's $25-billion deal for grocery rival Albertsons blocked by US courts | Reuters

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