Magazine article American Banker

Washington People

Magazine article American Banker

Washington People

Article excerpt

Tough Judge

It read more like a novella than a court decision, spinning colorful tales of greed, corruption, and deception. And it climaxed by imposing an almost unheard-of penalty on a federal bank regulator.

So perhaps it should come as no surprise that its author, Judge Lynn N. Hughes of the U.S. District Court for the Southern District of Texas, has penned other blunt, controversial, and decidedly anti-government rulings in the past.

Two weeks ago Judge Hughes ruled that the Federal Deposit Insurance Corp. must hand over $72 million to Texas businessman Charles E. Hurwitz to cover legal fees he incurred during an epic 10-year court battle with the agency.

The judge said the FDIC's investigation of Mr. Hurwitz's role in the failure of a Texas thrift was a pretense to seize 4,400 acres of old-growth redwoods north of San Francisco that the magnate owned.

"The FDIC has lied to Charles Hurwitz, the public, and this court," wrote Judge Hughes, who was appointed to the federal bench by President Reagan in 1985. "Both inside and outside sets of FDIC minions persist in their vile posturing."

It was hardly the first time Judge Hughes had ruled -- and vented -- against federal investigators.

In 1989 he ruled that the Federal Reserve shouldn't receive preferential treatment in seeking to recover the assets from MCorp, a bank holding company in bankruptcy proceedings.

In 2003 he overturned a 20-year-old conviction of Edwin P. Wilson for gunrunning, selling explosives to Libya, and conspiracy to murder. Mr. Wilson argued he was an ex-CIA operative abandoned by the agency to the mercy of overzealous prosecutors.

Judge Hughes agreed. "In the course of American justice, one would have to work hard to conceive of a more fundamentally unfair process with a consequentially unreliable result than the fabrication of false data by the government," he wrote. …

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