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Questions Arise on Potential Alito Financial Conflicts


A few strains of ethical controversy about Samuel Alito emerged this week with the disclosure that he had failed to disqualify himself from two cases involving companies in which he had a financial interest. NPR's legal affairs correspondent Nina Totenberg reports.


In 1990, when Alito was seeking confirmation as an appeals court judge, he filled out the Senate's questionnaire asking how he would resolve potential conflicts of interest. Noting that he held substantial financial interests in Vanguard and Smith Barney mutual funds, he wrote that he would, quote, "disqualify himself from cases involving Vanguard or Smith Barney." But Alito participated in cases involving both mutual funds, eventually recusing himself in the case involving Vanguard after the plaintiff in the case objected to his participation.

The Vanguard case took place in 2002 at a time when Alito's financial disclosure forms show his holdings in Vanguard amounted to between $390,000 and just under a million, or at least half his holdings. The case was brought by a Massachusetts widow, Shantee Maharaj, who was seeking to recover retirement funds that had belonged to her husband and been frozen by Vanguard. Alito participated in the unanimous ruling of a three-judge panel against the woman. She says she then looked at his financial disclosure form.

Ms. SHANTEE MAHARAJ (Plaintiff In 2002 Case Against Vanguard): Judge Alito could not have helped but known that he had a financial interest or that his impartiality would be questioned in this case. And yet he continued to sit and make one ruling after another against me.

TOTENBERG: That caused her to file a formal motion asking that Alito be removed. In a letter to the chief judge of the appeals court, Alito said, quote, "I do not believe that I am required to disqualify myself based on my ownership of the mutual fund shares. However, it has always been my personal practice to recuse in any case in which any possible question might arise." Thus, he said, he was voluntarily recusing himself.

Yesterday, Newsday reported that in 1996 Alito failed to recuse himself from a second case involving mutual funds run by Smith Barney. The White House says Alito did nothing wrong, and that Alito had failed to recuse himself in the Vanguard case because of a computer glitch that didn't catch the possible conflict. But the computer glitch assertion is a new one. In 2002, Alito told both the chief judge and the Philadelphia Inquirer that there was no reason he should recuse. This week, after Alito's meeting with Senator Leahy, the Vermont Democrat signaled that he's not yet satisfied with any explanation.

Senator PATRICK LEAHY (Democrat, Vermont): I take the issue of recusal very, very serious. And I want to know if this was just a careless mistake or what.

TOTENBERG: Ethics experts say that the question of recusal when a judge invests in mutual funds is complicated. Normally a judge must disqualify himself if he owns even one share of stock in a company. But mutual funds have a more lenient recusal standard under the Code of Judicial Conduct unless they're structured so as to convey an ownership interest. The Judicial Conference instructs judges to disqualify themselves only when a mutual fund conveys a, quote, "ownership share." As it happens, Vanguard's literature describes its shareholders and owners as, quote, "essentially one and the same." According to the company, Vanguard shareholders own the Vanguard funds.

So did Judge Alito do something wrong? The ethics experts don't entirely agree. Deborah Rhode, director of the Stanford University Center on Ethics, says the answer is clearly yes.

Ms. DEBORAH RHODE (Director, Stanford University Center on Ethics): This looks like a violation of Judicial Ethics 101.

TOTENBERG: Northwestern University law Professor Steven Lubet says if there was a foul, it was minor.

Professor STEVEN LUBET (Northwestern University): I think it's a question of attentiveness, I think. I'm sure he just didn't know that.

TOTENBERG: And NYU law Professor Stephen Gillers says Alito did nothing that should disqualify him from a seat on the United States Supreme Court. But, he says, the contention that Alito participated in the Vanguard case because a computer failed to catch a potential conflict--`That,' he says, `is not credible.' Vanguard's name is stated clearly three times in the case title, and in the unpublished opinion that was released with only one minor change after Alito recused himself, Vanguard is mentioned three times in the first paragraph. Professor Gillers.

Professor STEPHEN GILLERS (New York University): I think the excuse is more troubling than the fact that he sat in the Vanguard case without revealing his investments to the parties in the first place.

TOTENBERG: Says Northwestern's Professor Lubet...

Prof. LUBET: I think the correct response for Judge Alito would be to say, `Oops,' you know. I mean, I think judges just sometimes overlook these things, and when they do, they should say, `Oops.'

TOTENBERG: Indeed, this week, Chief Justice John Roberts did just that.

Nina Totenberg, NPR News, Washington. Transcript provided by NPR, Copyright NPR.

Nina Totenberg is NPR's award-winning legal affairs correspondent. Her reports air regularly on NPR's critically acclaimed newsmagazines All Things Considered, Morning Edition, and Weekend Edition.
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