Judge throws out Rudy Giuliani's bankruptcy case, says he flouted process with lack of transparency

Former New York Mayor Rudy Giuliani talks to reporters as he leaves the federal courthouse in Washington, Dec. 11, 2023. (AP Photo/Jose Luis Magana, File)

New York City -

A judge threw out Rudy Giuliani 's bankruptcy case on Friday, slamming the former New York City mayor as a "recalcitrant debtor" who thumbed his nose at the process while seeking to shield himself from a US$148 million defamation judgment and other debts.

U.S. Bankruptcy Judge Sean Lane criticized Giuliani for repeated "uncooperative conduct," self-dealing, and a lack of transparency. The judge cited failures to comply with court orders, failure to disclose sources of income, and his apparent unwillingness to hire an accountant to go over his books.

"Such a failure is a clear red flag," Lane wrote.

Dismissing the case ends his pursuit of bankruptcy protection, but it doesn't absolve him of his debts. His creditors can now pursue other legal remedies to recoup at least some of the money they're owed, such as getting a court order to seize his apartments and other assets.

Giuliani is now free to also pursue an appeal of the defamation verdict, which arose from his efforts to overturn Republican Donald Trump's 2020 presidential election loss.

Lane indicated at a hearing Wednesday that he would probably dismiss the case. Giuliani's lawyer had floated other options to keep the case alive, but agreed ultimately that dismissing it was the best way forward. The dismissal includes a 12-month ban on Giuliani filing again for bankruptcy protection.

"Transparency into Mr. Giuliani's finances has proven to be an elusive goal," Lane wrote, and he "sees no evidence that this will change."

Among his concerns, the judge said, were that Giuliani funneled his income — including at least US$15,000 a month from his now-cancelled talk radio show — into companies he owned; never reported any income from those entities; failed to disclose that he had started promoting his own "Rudy Coffee" brand; and was late to disclose a contract he has to write a book.

Giuliani's spokesperson Ted Goodman — drawing a parallel to what he deemed the "grossly unfair" defamation case — said Friday that the bankruptcy matter had been "burdened with many of the same voluminous and overly broad discovery requests and other actions." Among them, he claimed, were leaks "intended to harm the mayor and destroy his businesses."

Goodman ascribed political motives to Giuliani's legal troubles, stating without evidence that they were meant to punish him for investigating President Joe Biden's son, Hunter, and "to deter anyone else from asking questions or getting to the truth." Nevertheless, he said, they're confident "our system of justice with be restored and the mayor will be totally vindicated."

Giuliani, a longtime Trump ally, filed for bankruptcy last December just days after the eye-popping damages award to former Georgia election workers Ruby Freeman and Wandrea "Shaye" Moss. The bankruptcy filing froze collection of the debt.

A lawyer for Freeman and Moss accused Giuliani at Wednesday's hearing of using bankruptcy as a "bad-faith litigation tactic" and a "pause button on his woes," and urged Lane to dismiss it so they could pursue the damages they were awarded.

"Ruby Freeman and Shaye Moss have already waited too long for justice," the women's lawyer, Rachel Strickland, said Friday. "We are pleased the court saw through Mr. Giuliani's games and put a stop to his abuse of the bankruptcy process. We will begin enforcing our judgment against him ASAP."

The other people and entities to whom Giuliani owes money wanted to keep the bankruptcy case going with a court-appointed trustee taking control of Giuliani's assets.

Earlier this month, Giuliani requested the case be converted to a Chapter 7 liquidation — in which an appointed trustee would sell off assets to help pay creditors.

Giuliani's lawyer Gary Fischoff reconsidered that idea at Wednesday's hearing and pushed to dismiss the case instead, noting that administrative fees related to liquidation would "consume if not 100 per cent, a substantial portion of the assets."

Freeman and Moss can now bring their effort to collect on the award back to the court in Washington, D.C., where they won their lawsuit. The women said Giuliani's targeting of them after Trump narrowly lost Georgia to Biden led to death threats that made them fear for their lives.

The bankruptcy is one of a host of legal woes consuming the 80-year-old Giuliani, the ex-federal prosecutor and 2008 Republican presidential candidate who was once heralded as "America's Mayor" for his calm and steady leadership after the Sept. 11, 2001, terrorist attacks.

Last week, he was disbarred as an attorney in New York after a court found he repeatedly made false statements about Trump's 2020 election loss. He is also facing the possibility of losing his law licence in Washington after a board in May recommended that he be disbarred.

In Georgia and Arizona, Giuliani is facing criminal charges over his role in the effort to overturn the 2020 election. He has pleaded not guilty in both cases.

When he filed for bankruptcy, Giuliani listed nearly US$153 million in existing or potential debts, including almost $1 million in state and federal tax liabilities, money he owes lawyers, and many millions of dollars in potential judgments in lawsuits against him. He estimated he had assets worth $1 million to $10 million.

In his most recent financial filings in the bankruptcy case, he said he had about $94,000 cash in hand at the end of May while his company, Giuliani Communications, had about $237,000 in the bank. A main source of income for Giuliani over the past two years has been a retirement account with a balance of just over $1 million in May, down from nearly $2.5 million in 2022 after his withdrawals, the filings say.

In May, he spent nearly $33,000 including nearly $28,000 for condo and co-op costs for his Florida and New York City homes. He also spent about $850 on food, $390 on cleaning services, $230 on medicine, $200 on laundry and $190 on vehicles.