Securities & Exchange Commission v. Loving Spirit Foundation Inc.

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 14, 2004 Decided December 17, 2004

No. 03-5234

SECURITIES AND EXCHANGE COMMISSION,
APPELLEE

v.

LOVING SPIRIT FOUNDATION INC. AND
PUMA FOUNDATION, LTD .,
APPELLANTS

PAUL A. BILZERIAN, ET AL.,
APPELLEES

Appeal from the United States District Court
for the District of Columbia
(No. 89cv01854)

David A. Maney, pro hac vice, argued the cause for
appellants. On the brief was G. Michael Nelson.

Charles B. Wayne argued the cause and filed the brief for
appellee Deborah Meshulam, in her capacity as receiver of the
Securities and Exchange Commission v. Paul A. Bilzerian, et al.,
Civil Action No. 89-1854 (SSH) Receivership Estate.

Before: SENTELLE, HENDERSON, and TATEL , Circuit
 2

Judges.
Opinion for the Court filed by Circuit Judge TATEL.
TATEL, Circuit Judge: In this case, we consider challenges
to a pair of district court orders: one defines the obligations of
a court-appointed receiver, and the other denies a motion to
recuse the district judge. Finding error in neither ruling, we
affirm in all respects. Also, because appellants’ lawyers, G.
Michael Nelson and David A. Maney, may have violated ethical
obligations binding on attorneys practicing in the federal courts,
we will order them to show cause why sanctions should not be
imposed.
I.
In 1989, a jury sitting in the United States District Court for
the Southern District of New York convicted Paul A. Bilzerian
of securities fraud and conspiracy to defraud the United States.
See United States v. Bilzerian, 926 F.2d 1285, 1289-91, 1294
(2d Cir. 1991) (opinion of Cardamone, J.) (affirming the
conviction). Bilzerian was sentenced to four years
imprisonment and fined $1.5 million. Id. Following his
conviction, the Securities and Exchange Commission filed a
civil suit against Bilzerian in the United States District Court for
the District of Columbia. That court ordered Bilzerian to
disgorge over $62 million, representing profits from his
fraudulent activities and prejudgment interest. SEC v. Bilzerian,
814 F. Supp. 116 (D.D.C 1993) (ordering disgorgement of
profits), aff’d 29 F.3d 689 (D.C. Cir. 1994); SEC v. Bilzerian,
No. 89-1854, 1993 WL 542584 (D.D.C. June 25, 1993) (setting
value of interest). Seven years later, with the judgment still
unpaid, the district court found Bilzerian in contempt of the
disgorgement order, SEC v. Bilzerian, 112 F. Supp. 2d 12
(D.D.C. 2000), aff’d 2003 WL 22176183 (D.C. Cir. Sept. 22,
2003), established a receivership estate “for the purpose of
identifying, marshalling, receiving, and liquidating his assets,”
 3

SEC v. Bilzerian, 127 F. Supp. 2d 232, 232 (D.D.C. 2000),
appointed appellee Deborah Meshulam as receiver, id., and sent
Bilzerian back to prison for continued noncompliance, SEC v.
Bilzerian, No. 89-1854 (D.D.C. Jan. 12, 2001).
Appellants Puma Foundation and Loving Spirit Foundation
are nonprofits directed by Bilzerian’s wife, Terri Steffen. When
the receiver discovered that Bilzerian had a financial interest in
the two foundations, which shared an address with the Bilzerian-
Steffen residence in Tampa, Florida, the district court froze the
foundations’ assets and ordered them turned over to the court.
SEC v. Bilzerian, No. 89-1854 (D.D.C. May 11, 2001) (order
granting ex parte temporary asset freeze and other relief); SEC
v. Bilzerian, No. 89-1854 (D.D.C. June 1, 2001) (order granting
preliminary possession).
Later, in December 2001, the receiver entered into a consent
agreement with Steffen, Puma, Loving-Spirit, and several other
Bilzerian-related entities pursuant to which many of the funds
and assets they once held (and that were then in the court’s
registry) were to be transferred to the receiver. One such asset
was a large block of stock in Cimetrix, Inc., a publicly traded
company once run by Bilzerian. The agreement also called for
the sale of the Bilzerian-Steffen residence pursuant to the terms
of a separate “Joint Marketing Agreement.” Steffen and the
receivership estate would split the proceeds of the sale evenly.
Finally, the consent agreement provided that once the IRS
released the two foundations’ tax liabilities, their assets would
be donated to the Salvation Army.
Central to this case, one paragraph in the consent agreement
called for the settling parties to execute a series of liability
releases. Steffen, a trust, and several holding entities agreed to
execute releases in favor of Cimetrix. The agreement also
provided that Cimetrix, though neither a party to the litigation
nor a signatory to the agreement, would “execute a release in
favor of Steffen, the Entities, the Foundations, and [another
 4

Bilzerian-related entity] in form acceptable to them.” After the
parties signed the agreement, Cimetrix executed releases in
favor of various Bilzerian-related entities—but not Puma or
Loving Spirit.
Along with the consent agreement, the parties executed an
escrow agreement. Under that agreement, the receiver’s law
firm, as escrow agent, would hold all documents not filed with
the court until entry of the consent judgment. Once the court
entered a final judgment, the escrow agent would transfer certain
documents, including the “third party releases involving . . .
Cimetrix” to “counsel for the released parties.”
Acting pursuant to the consent agreement, the district court
entered judgment in January 2002. SEC v. Bilzerian, No. 89-
1854 (D.D.C. Jan. 16, 2002). The judgment incorporated the
consent agreement by reference, making its provisions orders of
the court. Id., slip op. at 10. Finding the disgorgement agreed
to by the parties sufficient to purge Bilzerian’s contempt, the
court released him from prison. Id.
The consent agreement and judgment, however, failed to
bring the receivership proceeding to a close. Over a year after
entry of the judgment, in March 2003, Puma and Loving Spirit
sued Cimetrix in the United States District Court for the Middle
District of Florida, alleging breach of contract and securities
fraud. Cimetrix raised several counterclaims, making its failure
to release the foundations a matter of immediate concern to
them. In a letter to receiver Meshulam, Steffen asserted that the
consent agreement required the receiver to procure the
unexecuted releases and demanded to know by the end of
business that day whether the receiver would do so. Reiterating
her demand two days later, Steffen added that “[t]ime is of the
essence because Puma and Loving Spirit Foundation will be
required to incur substantial additional legal fees in the event I
do not receive assurance from you by close of business today
that the requested releases will be forthcoming shortly.” Hours
 5

later, Steffen emailed an attorney for the receiver, threatening
that “if I do not receive the Cimetrix releases by the close of
business tomorrow, I will be forced to take drastic action.”
Steffen added that she would “at the very least, be forced to
assume that the entire settlement was the result of fraud on the
part of the Receiver and the SEC and that the entire agreement
should be rescinded.” Id.
In response, receiver Meshulam filed a “motion to enforce,”
asking the district court to clarify whether she had any
obligations with regard to the unexecuted releases and warning
that Steffen had a history of obstruction that made her threat of
“drastic action” particularly serious. Fearing that Steffen might
use the releases as an excuse to impede the sale of the Florida
property, the receiver also sought an order forbidding Steffen
from obstructing marketing efforts in certain specified ways.
The two foundations responded that the consent agreement,
properly interpreted, required the receiver to obtain the releases.
Acting alone, Puma also moved to recuse the district judge, the
Honorable Royce C. Lamberth. Puma sought recusal under both
28 U.S.C. § 144, which provides that a judge with “personal
bias” shall cease presiding over a case when a party documents
the bias in an affidavit, and 28 U.S.C. § 455(a), which provides
that a judge “shall disqualify himself” when “his impartiality
might reasonably be questioned.”
Judge Lamberth denied Puma’s motion to recuse. He found
the section 144 motion untimely and concluded that the section
455(a) motion fell short of the legal standard required for
recusal. SEC v. Bilzerian, No. 89-1854 (D.D.C. June 11, 2003).
Judge Lamberth also granted the relief receiver Meshulam
requested, observing that nothing in the consent agreement gave
the receiver any obligation to procure releases from Cimetrix.
SEC v. Bilzerian, No. 89-1854, slip op. at 3-5 (D.D.C. July 17,
2003). As the agreement explicitly assigned other obligations
to named individuals and entities, Judge Lamberth added, it
 6

would have been equally explicit about the receiver’s obligation
to obtain releases from Cimetrix had the parties actually
intended to assign her that task. Id. at 4.
Puma and Loving Spirit now appeal, arguing that the
receiver lacked standing to bring her motion to enforce. On the
merits, they argue that the district court incorrectly interpreted
the consent agreement’s provision concerning the Cimetrix
releases. Puma challenges Judge Lamberth’s decision not to
recuse himself. We address each contention in turn.

II.
“Nowhere in the Motion to Enforce,” Puma and Loving
Spirit argue, “does Meshulam identify any provision of the
Consent Judgment that the Foundations violated.” Appellant’s
Br. at 7. According to the two foundations, the receiver filed the
motion “solely because the Foundations threatened to take
action.” Id. “Allegations of possible future injury,” they
conclude, “do not satisfy the requirement of Article III.” Id. at
8 (quoting Whitmore v. Arkansas, 495 U.S. 149, 158 (1990)).
This argument is frivolous.
To begin with, Steffen’s threats to take “drastic action,”
including rescinding the consent agreement if the receiver failed
to procure the releases immediately, easily satisfy Article III’s
requirement that “alleged harm . . . be actual or imminent, not
‘conjectural’ or ‘hypothetical.’” Whitmore, 495 U.S. at 155
(internal citations omitted). More important, we think the
receiver did not even need Article III standing to pursue her
motion to enforce. Neither a plaintiff nor a defendant, the
receiver functions as an arm of the court, Phelan v. Middle
States Oil Corp., 154 F.2d 978, 991 (2d Cir. 1946), appointed to
ensure that prevailing parties can and will obtain the relief it
orders, see generally 13 James Wm. Moore et al., Moore’s
Federal Practice ¶ 66.03[3] (3d ed. 2000). A “receiver’s
authority,” therefore, “is defined solely by the order of the
 7

appointing court,” id. ¶ 66.04[1][b], which may “provide for the
administration of the receivership in any way it sees
appropriate.” Id. ¶ 66.06[4][a]. The district court, moreover,
retains “equitable power to review the actions of [a] receiver.”
Fed. Home Loan Mortgage Corp. v. Spark Tarrytown, Inc., 829
F. Supp. 82, 85 (S.D.N.Y. 1993) (internal quotation marks and
citations omitted).
In this case, receiver Meshulam’s motion to enforce sought
clarification of responsibilities imposed upon her by the district
court in the 2002 consent judgment, a judgment that kept “[t]he
Receivership Orders . . . in full force and effect,” SEC v.
Bilzerian, No. 89-1854, slip op. at 10 (D.D.C. Jan. 16, 2002).
When Steffen threatened to withdraw from the court-approved
settlement agreement if the receiver failed to obtain the Cimetrix
releases, the receiver, seeking to preserve the agreement, asked
the court for guidance on whether she had any obligation to
obtain the releases. In doing so, the receiver was fulfilling her
obligation to protect and preserve the receivership estate—an
action that implicates no Article III considerations. In ruling on
the motion, moreover, the district court exercised its “extremely
broad” supervisory power over an ongoing receivership
proceeding. SEC v. Hardy, 803 F.2d 1034, 1037 (9th Cir. 1986).
We thus turn to the foundations’ challenge to the district court’s
interpretation of the consent agreement.

III.
Reviewing the district court’s decision de novo, Richardson
v. Edwards, 127 F.3d 97, 101 (D.C. Cir. 1997) (explaining that
we review the interpretation of a consent agreement de novo),
we agree that the receiver has no obligation to procure the
releases from Cimetrix. The agreement discusses releases only
once, in paragraph thirteen. With respect to the specific releases
at issue here, paragraph thirteen provides: “Cimetrix will
execute a release in favor of Steffen, the Entities, [and] the
 8

Foundations . . . in form acceptable to them.” As the district
court suggested, this language is unambiguous. SEC v.
Bilzerian, No. 89-1854, slip op. at 3-5 (D.D.C. July 17, 2003).
The clause says only that “Cimetrix will execute” the releases.
Nowhere does it say that the receiver must procure the releases.
In fact, even though other provisions of paragraph thirteen
impose specific obligations on the receiver, the provision
relating to the Cimetrix releases makes no reference to the
receiver at all. At oral argument, counsel for the foundations,
Mr. Maney, admitted as much: “As a matter of fact,” he
explained, “there’s nothing [in the text of the agreement] that
requires the receiver to get the release.” Tr. of Oral Arg. at 23.
In addition to running counter to the agreement’s text, the
foundations’ interpretation makes no sense. Receiver Meshulam
rightly points out that, “as a fiduciary to the District Court and
the Receivership Estate, there is no reasonable basis to presume
that the Receiver could represent, in any capacity, the interests
of the Foundations, entities she had been investigating and as to
which she was adverse.” Appellee’s Br. at 20. Moreover,
“nothing in the record . . . suggest[s] that the Receiver would
have any understanding of the form, breadth and scope of
releases the Foundations wanted from Cimetrix.” Id. at 22.
Faced with these facts, the foundations offer four arguments
for their interpretation of the agreement, none of which merits
serious consideration. First, because nothing in the consent
agreement requires them to release Cimetrix, they ask, “with
what did the district court expect the Foundations to ‘negotiate’
with Cimetrix?” Appellant’s Br. at 10. A release, however, is
not the only consideration the foundations could offer in
exchange for the release they seek. In any event, the
foundations’ doubts about whether they can obtain a release fall
far short of the evidence they would need to overcome the fact
that nothing in the agreement requires the receiver to obtain it.
Second, claiming that the receiver was Cimetrix’s controlling
 9

shareholder, the foundations argue that “she was . . . in a
position to cause the releases to be signed by Cimetrix.” Id. at
10-11. In the district court, however, the foundations offered no
evidence to support this claim, and the receiver tells us that “[i]n
fact, the Receiver is not a ‘controlling shareholder’ of Cimetrix.”
Appellee’s Br. at 21. Insisting otherwise, the foundations attach
Cimetrix’s April 15, 2003 proxy statement to their reply brief,
asking us to “take judicial notice of” it. Appellant’s Reply Br.
at 9. This argument is doubly waived: not only did the
foundations fail to present the proxy statement to the district
court, see United States v. Thomas, 114 F.3d 228, 250 (D.C. Cir.
1997) (noting that when an “argument was not raised below, we
consider it waived”), but as counsel should know, this court does
not consider arguments first offered in a reply brief. See Power
Co. of Am., L.P. v. FERC, 245 F.3d 839, 845 (D.C. Cir. 2001).
The foundations’ final two arguments—that they could not be
obliged to procure the releases because the escrow agreement
provides that the receiver’s “law firm (not the Foundations) was
responsible for delivering the Cimetrix Releases to counsel for
the Foundations,” Appellant’s Br. at 11, and that the district
court should have conducted an evidentiary hearing—are
likewise waived. In the district court, the foundations neither
relied on the escrow agreement nor pointed to any other
extrinsic evidence that would have required an evidentiary
hearing. See SEC v. Bilzerian, No. 89-1854, slip op. at 4
(D.D.C. July 17, 2003) (noting that “no extrinsic evidence has
been offered to support” the foundations’ interpretation of the
consent agreement).

IV.
This brings us to Puma’s motion to recuse. According to
Puma, a series of Judge Lamberth’s rulings, beginning over two
years before the foundation filed its motion, show “personal
bias,” requiring recusal under 28 U.S.C. § 144. Puma also
contends that the rulings would lead a reasonable person to
 10

question Judge Lamberth’s impartiality, thereby requiring
recusal under 28 U.S.C. § 455(a).

28 U.S.C. § 144
To recuse a judge under section 144, a litigant must submit,
along with its motion, an affidavit stating “the facts and the
reasons for the belief that bias or prejudice exists.” 28 U.S.C. §
144. The affidavit, which “shall be accompanied by a certificate
of counsel of record stating that it is made in good faith,” must
be “timely.” Id. Crucial to the integrity of the judicial process,
the timeliness requirement ensures that a party may not wait and
decide whether to file based on “whether he likes subsequent
treatment that he receives.” In re United Shoe Mach. Corp., 276
F.2d 77, 79 (1st Cir. 1960).
Puma submitted its motion in June 2003, together with an
affidavit from Terri Steffen and a certificate from attorney G.
Michael Nelson. Observing that approximately eight months
had passed since the last of the rulings complained of, Judge
Lamberth dismissed the motion as untimely. SEC v. Bilzerian,
No. 89-1854 (D.D.C. July 11, 2003).
This Circuit has never articulated the standard by which it
will review denial of a section 144 motion to recuse. Most
circuits review for abuse of discretion. See, e.g., Jones v.
Pittsburg Nat’l Corp., 899 F.2d 1350, 1356 (3d Cir. 1990);
United States v. Owens, 902 F.2d 1154, 1157 & n.2 (4th Cir.
1990). Others review de novo. See, e.g., United States v. Sykes,
7 F.3d 1331, 1339 (7th Cir. 1993). In this case, we need not
decide which standard to adopt, for even reviewing de novo we
can easily sustain Judge Lamberth’s decision.
Although section 144 requires the affidavit to be filed “not
less than ten days before the beginning of the term at which the
proceeding is to be heard, [unless] good cause shall be shown,”
the statute says nothing about what the timeliness requirement
 11

means where, as in this case, the recusal motion rests on events
occurring after proceedings began. In such circumstances, some
courts have required the affidavit to be filed “at the earliest
moment.” E.g., Sykes, 7 F.3d at 1339 (citations omitted); James
v. District of Columbia, 191 F. Supp. 2d 44, 47 (D.D.C. 2002)
(quoting Sykes, 7 F.3d at 1339). In the cited Seventh Circuit
decision, an affidavit filed two months after the allegedly
prejudicial statement was considered untimely. See Sykes, 7
F.3d at 1339. Sitting en banc, this court expressed “serious
doubt” about the timeliness of an affidavit based on remarks the
judge made “more than two weeks before” and a law review
article he published “more than a year” earlier. Smuck v.
Hobson, 408 F.2d 175, 183 (D.C. Cir. 1969) (en banc). We have
found no case, nor has Puma cited one, permitting a delay as
long as the one in this case, where Puma waited two years after
the first order it complains of and over six months after the last.
During its long delay, moreover, Puma made over a dozen
filings in the proceedings before Judge Lamberth, and consistent
with the policy underlying the timeliness requirement, courts
have observed that filing motions between the events
complained of and submission of the affidavit weighs heavily
against a finding of timeliness. E.g., Smith v. Danyo, 585 F.2d
83, 86 (3d Cir. 1978). Indeed, during the period of time at issue
in this case, Puma consented not only to have judgment entered
against it, but also to the district court’s continuing jurisdiction.
Why, then, did Puma wait so long to file its motion and
affidavit? Was it waiting to see “whether [it] like[d] the
subsequent treatment that [it] receive[d]”?
Puma offers two entirely unconvincing explanations for its
tardiness. First, it tells us that it could not seek recusal earlier
for want of a lawyer—a situation it blames on the district court’s
asset freeze. Yet Puma had counsel at various times between the
events described in the Steffen affidavit and the time it filed the
affidavit. Its assets, moreover, were not frozen during the five
 12

months immediately preceding the filing of the recusal motion.
Second, Puma alleges that the receiver’s motion to enforce
initiated a new proceeding, and that it moved to recuse as soon
as that proceeding began. As we explained, however, the
motion was part of the same receivership proceeding that had
been ongoing for several years. Supra at 7. Given these
circumstances, the motion and affidavit were plainly untimely.

28 U.S.C. § 455(a)
Section 455(a) permits a litigant to seek recusal of a judge
“in any proceeding in which his impartiality might reasonably
be questioned.” In assessing section 455(a) motions, this circuit
applies an “objective” standard: Recusal is required when “a
reasonable and informed observer would question the judge’s
impartiality.” United States v. Microsoft Corp., 253 F.3d 34,
114 (D.C. Cir. 2001) (en banc) (per curiam). Because a judge
must “form judgments of the actors in those court-house dramas
called trials” and “render decisions” based on them, rulings
resting on record evidence “almost never constitute a valid basis
for a bias or partiality motion.” Liteky v. United States, 510 U.S.
540, 551, 555 (1994) (internal quotation marks and citations
omitted). “[O]nly in the rarest circumstances,” the Supreme
Court has warned, will rulings “evidence the degree of
favoritism or antagonism required” to warrant recusal. Id. at
555. Finding that Puma identified no bias approaching the level
required for recusal, Judge Lamberth denied the foundation’s
motion. We review a district judge’s refusal to recuse under
section 455(a) for abuse of discretion. United States v. Pollard,
959 F.2d 1011, 1031 (D.C. Cir. 1992).
In support of its claim that an “objective observer” would
“reasonably question Judge Lamberth’s impartiality,”
Appellant’s Br. at 21-22, Puma points only to the judge’s
rulings. The foundation alleges neither that Judge Lamberth
relied on something other than the evidence before him, nor that
 13

the rulings reflect the kind of “extreme” bias that could provide
a basis for recusal. See Liteky, 510 U.S. at 551. Moreover, as
Puma’s counsel conceded at oral argument, the foundation never
appealed the decisions it now claims are so biased. Tr. of Oral
Arg. at 30-31. Given this, we have no basis for concluding that
Judge Lamberth abused his discretion in denying the motion to
recuse. Quite to the contrary, as we shall now explain, his
rejection of Puma’s effort to recuse under both sections 455 and
144 was fully justified.

V.
Rule 11 of the Federal Rules of Civil Procedure provides
that in submitting motions and other pleadings, or defending
them before the district court, attorneys vouch that “the claims,
defenses, and other legal contentions therein are warranted by
existing law or a nonfrivolous argument for the extension,
modification, or reversal of existing law or the establishment of
new law.” Fed. R. Civ. P. 11(b)(2). Attorneys also warrant that
“the allegations and other factual contentions [therein] have
evidentiary support.” Fed. R. Civ. P. 11(b)(3). Federal Rule of
Appellate Procedure 38 provides that if the court determines that
an appeal is “frivolous,” it may award “just damages and single
or double costs to the appellee.” Under Federal Rule of
Appellate Procedure 46, courts of appeals have authority to
discipline attorneys who engage in “conduct unbecoming a
member of the bar”; if the attorney is a member of the court’s
bar, the court has authority to suspend or disbar the attorney for
such conduct. In filing the motion to recuse and appealing
Judge Lamberth’s denial of it, we believe that attorneys G.
Michael Nelson, who represented the foundations in the district
court and who wrote and filed the appellate briefs, and David A.
Maney, who argued the case before us, may have run afoul of
one or more of these rules.
To begin with, both the motion to recuse and this appeal are
 14

frivolous in two respects. First, as we have shown, the motion
was not only untimely, but blatantly so. Supra at 10-11. The
case law, moreover, is clear enough that any reasonably diligent
attorney should have known this. As we pointed out, no case we
know of permitted a delay even remotely as long as the one at
issue here. See supra at 11. Given this, we cannot imagine how
attorneys Nelson and Maney could have thought that the delay
in filing the motion was at all defensible.
Second, the motion rests entirely on judicial rulings, which
virtually never provide a basis for recusal. See supra at 12-13.
Indeed, we have found no case where this or any other federal
court recused a judge based only on his or her rulings. At oral
argument, Mr. Maney conceded that he too knew of no such
case. Tr. of Oral Arg. at 30. The absence of such case law is
hardly surprising, for if disqualification were required “merely
as a result of counsel's disagreement with judicial conclusions
reached in the course of litigation, the judicial system would
grind to a halt.” Barnett v. City of Chicago, 952 F. Supp. 1265,
1269 (N.D. Ill. 1997). Indeed, even if a particular ruling or a
series of rulings revealed bias, we doubt very much that a
recusal motion would be proper where, as here, the movant
could have appealed the challenged decisions but failed to do so.
“Almost invariably,” the Supreme Court has admonished,
adverse judicial decisions give “proper grounds for appeal, not
recusal.” Liteky, 510 U.S. at 555.
In addition to being frivolous, Puma’s motion to recuse and
its appellate briefs—filed by attorney Nelson and defended in
this court by attorney Maney—contain false statements. For
example, the motion states that, “without ever having met Ms.
Steffen, without Ms. Steffen ever having been accused of any
wrongdoing, without a shred of contradictory evidence or
testimony, Judge Lamberth unilaterally announced that he would
not believe any of Ms. Steffen’s sworn testimony.” Puma
Foundation’s Mem. in Supp. of Its Mot. for Recusal at 3-4. This
 15

accusation, reiterated virtually word for word in Puma’s brief to
this court, Appellant’s Br. at 16, relates to Judge Lamberth’s
treatment of an affidavit Steffen filed in support of Bilzerian’s
motion to purge his contempt. Denying that motion, Judge
Lamberth explained: “The Court does not find . . . the affidavit
of Ms. Terri L. Steffen, filed with defendant’s Certificate, to be
credible. . . . [T]he wording used by Ms. Steffen . . . leaves much
open to interpretation as to whether there are other documents
that have not been turned over.” SEC v. Bilzerian, No. 89-1854,
slip op. at 3 (D.D.C. June 28, 2001) (order denying motion to
certify full compliance). Contrary to Puma’s allegations, then,
Judge Lamberth did not say that he would “not believe any of
Ms. Steffen’s sworn testimony” (emphasis added). He
questioned only the credibility of the affidavit Steffen “filed
with defendant’s certificate.” Nor did Judge Lamberth make
this finding without “a shred of evidence.” “The wording used
by Ms. Steffen,” the Judge explained, “leaves much open to
interpretation.”
Equally false are two statements about a temporary
restraining order: “On November 8, 2002, without notice,
without a hearing, and without providing Puma an opportunity
to be heard, Judge Lamberth unilaterally extended [an existing]
TRO until November 18, 2002.” “On November 18, 2002, in
violation of Rule 65(b), which prohibits a TRO from being
extended more than once . . . Judge Lamberth entered yet a third
TRO.” Puma Foundation’s Mem. in Supp. of Its Mot. for
Recusal at 9; see also Appellant’s Br. at 21 (repeating the
allegations in virtually identical language). The facts, however,
are quite different. In the November 8 order, Judge Lamberth
explained that an existing TRO, entered a week earlier, would
expire on November 18, noted that the receiver had moved to
extend the TRO, and ordered that Puma file any response by
November 15. SEC v. Bilzerian, No 89-1854 (D.D.C. Nov. 8,
2002) (order setting time to respond). When Puma failed to
respond, Judge Lamberth extended the TRO on November 18.
 16

SEC v. Bilzerian, No 89-1854 (D.D.C. Nov. 18, 2002) (order
extending TRO). So contrary to Puma’s allegations, Judge
Lamberth did not “extend[]” the TRO on November 8, did not
act “unilaterally,” did not act “without notice,” did not act
“without providing Puma an opportunity to be heard,” and did
not “enter[] yet a third TRO.”
Both in its motion to recuse and initial brief to this court,
Puma represented that it “has never been a party to this action.”
Puma Foundation’s Mem. in Supp. of Its Mot. for Recusal at 2;
Appellant’s Br. at 13. This assertion is false. Through the
consent agreement, incorporated by reference into the consent
judgment, Puma agreed to: “(i) enter a general appearance; (ii)
consent to the Court’s jurisdiction over [it] and the subject
matter of this action and waive any objections as to venue; (iii)
consent to entry of the Final Judgment; (iv) waive findings of
fact and conclusions of law; and (v) waive any right to trial by
jury; (vi) waive any right to appeal from the Final Judgment;
and (vii) consistent with 17 C.F.R. 202.5(f), waive any claim of
double jeopardy based on settlement of this action.” Given all
this, we cannot understand how a reasonably diligent lawyer
could have signed a pleading stating that the foundation “has
never been a party to this action.”
According to Puma, Judge Lamberth confiscated its assets
“without notice.” Puma Foundation’s Mem. in Supp. of Its Mot.
for Recusal at 4; Appellant’s Br. at 13. Referring to an order
requiring Puma to deposit its Cimetrix securities in the court’s
registry, SEC v. Bilzerian, No 89-1854 (D.D.C. June 1, 2001)
(order granting preliminary possession), this claim is also false.
Judge Lamberth’s order followed an earlier order issued by
Judge Stanley Harris, who presided over the case prior to Judge
Lamberth. Responding to a voluminous filing by the receiver,
Judge Harris froze Puma’s assets, ordering it and others to show
cause by May 29 why the court should not grant the receiver’s
request for preliminary possession. SEC v. Bilzerian, No 89-
 17

1854 (D.D.C. May 11, 2001) (order granting ex parte temporary
asset freeze and other relief). On June 1, three days after the
May 29 deadline had passed, Judge Lamberth, having taken over
the case from Judge Harris, entered the order requested by the
receiver. Contrary to Puma’s allegations, therefore, Judge
Lamberth did not act “without notice.”
While it is troubling enough that attorney Nelson included
these false statements in both the Motion to Recuse and
Appellant’s Brief, and that attorney Maney defended these
documents in this court, the statements are particularly serious
because they also appear (either expressly or by reference) in
Steffen’s section 144 affidavit—an affidavit that, pursuant to
section 144, Nelson certified as “made in good faith.”
Certifying a section 144 affidavit containing obvious falsehoods
constitutes extremely serious misconduct, as the attorney’s
certificate plays a critical role in the recusal process. In order to
prevent a truly biased judge from blocking an attempt to recuse,
the judge, in deciding whether to grant the recusal motion, must
accept the affidavit’s factual allegations as true even if the judge
knows them to be false. Berger v. United States, 255 U.S. 22,
35-36 (1921). But to guard against the removal of an unbiased
judge through the filing of a false affidavit, see United States v.
Haldeman, 559 F.2d 31, 134 (D.C. Cir. 1976) (en banc), the
statute requires the attorney presenting the motion to sign a
certificate stating that both the motion and declaration are made
in good faith, see Bhd. of Locomotive Firemen v. Bangor &
Aroostook R.R., 380 F.2d 570, 578 n.17 (D.C. Cir. 1967) (noting
general recognition that the certificate must attest to good faith
behind both the motion and declaration). Hence, when an
affidavit contains statements the attorney should know to be
false, or when the attorney should know that the motion is
baseless, certification undermines the integrity of the recusal
process. Yet in this case, notwithstanding the motion’s
frivolousness and the affidavit’s false statements, attorney
Nelson certified both.
 18

Given Nelson’s conduct, he should consider himself
fortunate that Judge Lamberth did not impose Rule 11 sanctions.
Rules 38 and 46 of the Federal Rules of Appellate Procedure,
however, give us independent authority to ensure compliance
with ethical standards in this court. Under Rule 38, lawyers
have been sanctioned for filing appeals less frivolous than this
one. E.g., Tareco Properties, Inc. v. Morriss, 321 F.3d 545,
548-50 (6th Cir. 2003) (finding sanctions appropriate where a
plaintiff’s attorneys appealed denial of a motion for relief from
judgment based on “oversight or omission, mistake,
inadvertence, or excusable neglect” but identified no legitimate
“mistake, inadvertence, surprise, or excusable neglect”); Nagle
v. Alspach, 8 F.3d 141, 144-46 (3d Cir. 1993) (finding sanctions
against an attorney appropriate where the appeal challenged only
two of four conclusions used to support summary judgment,
hence dooming the appeal even if the challenges were
successful). Lawyers whose briefs contain false statements or
who file frivolous appeals have been sanctioned under Rule 46
for behavior “unbecoming a member of the bar.” DCD
Programs, Ltd. v. Leighton, 846 F.2d 526 (9th Cir. 1988) (false
statements); In re Solerwitz, 848 F.2d 1573 (Fed. Cir. 1988) (en
banc) (frivolous appeals). Given the importance of the
attorney’s certificate as a check on abuse of the recusal process,
the Supreme Court has suggested that disbarment may be
appropriate for lawyers who certify false section 144 affidavits.
Berger, 255 U.S. at 35.
In view of these standards and Nelson’s and Maney’s
behavior, we will order them to show cause why they should not
be sanctioned or otherwise disciplined. Specifically, they will
be directed to show cause why they should not be required to
reimburse the receiver for fees and expenses incurred in
defending this appeal, referred to the bars of the states in which
they are licensed to practice law, and/or referred to this court’s
Committee on Admissions and Grievances for investigation and
a recommendation as to whether a disciplinary sanction is
 19

warranted.
A final point: This is not the only time that attorney Nelson
has represented a client trying to recuse Judge Lamberth. In the
fall of 2002, Ernest B. Haire III, another party to the
receivership proceedings in the district court, filed a pro se
motion to recuse Judge Lamberth, alleging not only that he
(Haire) had “filed with the United States Department of Justice
a verified criminal complaint against Judge Royce C. Lamberth
for several violations of federal law,” but also that he had filed
“formal complaints with the Senate Subcommittee on
Administrative Oversight and the Courts and the Senate
Judiciary Committee requesting that Judge Lamberth be
removed from his position as a federal judge because he is
dishonest, has no respect for the law or the Constitution, and is
unfit to serve in any judicial capacity.” Mem. in Supp. of Ernest
B. Haire’s Mot. For Recusal at 1, 3, SEC v. Bilzerian, No. 02-
1221 (D.D.C. Nov. 15, 2002). Denying the motion, Judge
Lamberth ruled that Haire could not “manufacture” grounds for
recusal by filing complaints. SEC v. Bilzerian, No. 02-1221
(D.D.C. Dec. 4, 2002). Attorney Nelson, having been retained
by Haire, petitioned this court for a writ of mandamus directing
Judge Lamberth to recuse himself. We rejected the petition,
concluding that Judge Lamberth had not abused his discretion in
denying the motion. In re Haire, 2003 WL 1873948, (D.C. Cir.
Apr. 2, 2003) (per curiam). Undaunted, attorney Nelson filed a
notice of appeal, again seeking Judge Lamberth’s recusal.
Again we rejected his efforts, reminding Nelson that our
previous decision “is the law of the case.” Bilzerian, 378 F.3d
at 1102 n.1. In other words, before this appeal, Nelson brought
a “manufactured” motion to recuse Judge Lamberth before this
court not once, but twice.

VI.
Sections 144 and 455(a) play a critical role in protecting the
 20

integrity of the judicial system. As Judge Jerome Frank
observed: “Democracy must, indeed, fail unless our courts try
cases fairly, and there can be no fair trial before a judge lacking
in impartiality and disinterestedness.” In re J. P. Linahan, Inc.,
138 F.2d 650, 651 (2d Cir. 1943). Abuse of these statutes,
however, is another matter.
The district court’s orders are affirmed in all respects.
Attorneys G. Michael Nelson and David A. Maney are ordered
to show cause within 30 days why they should not be sanctioned
for the conduct described in this opinion. Attorneys Nelson and
Maney are ordered to show cause why they should not be held
liable for single or double costs and attorneys’ fees incurred by
the receiver in defending Puma Foundation’s appeal from denial
of the motion to recuse. They are further ordered to show cause
why they should not be referred 1) to the bars of the states in
which they are licensed to practice law and/or 2) to this court’s
Committee on Admissions and Grievances for investigation and
a recommendation as to whether a disciplinary sanction is
warranted.
So ordered.