Secret recordings of ex-partner continue to haunt law firm Freedman Normand | Reuters

Gunnar Larson g at xny.io
Tue May 16 14:24:12 PDT 2023


https://www.reuters.com/legal/litigation/secret-recordings-ex-partner-continue-haunt-law-firm-freedman-normand-2023-05-10/



(Reuters) - The plaintiffs firm once known as Roche Freedman, now redubbed
Freedman Normand Friedland, has been ousted from another crypto class
action because of clandestine – and embarrassing — video recordings of
onetime name partner Kyle Roche.

But this time, the problem wasn’t the content of the videos, in which Roche
appears to boast of his lucrative stake in blockchain company Ava Labs Inc
and to suggest that he filed class actions against Ava competitors to boost
Ava’s prospects.

Instead, U.S. District Judge James Donato of San Francisco removed Freedman
Normand as lead counsel in a securities fraud class action against
blockchain company Dfinity USA Research LLC because he found the firm to be
so consumed with vindicating its own reputation that it could not be relied
upon to protect the interests of class members.

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Donato’s May 8 decision followed seven months of litigation that the judge
described as “a bitter war" that included "charges of personal vendettas,
deepfake videos and other events not typically encountered in securities
lawsuits.” (More on that below.)

He is the second federal judge to remove Freedman Normand as lead counsel
in a crypto case, after U.S. District Judge Katherine Polk Failla of
Manhattan booted the firm from a class action against stablecoin issuer
Tether Ltd and crypto exchange Bitfinex last October. After Failla’s
ruling, Freedman Normand voluntarily withdrew from two other crypto class
actions in Manhattan federal court.

The firm has defeated disqualification motions in several other cases,
including litigation against self-proclaimed Bitcoin inventor Craig Wright,
who unsuccessfully sought to remove Freedman Normand from the appeal of a
$143 million judgment the firm obtained for Wright’s onetime business
partner.

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The Dfinity fight before Donato was particularly heated, though, because
Freedman Normand blamed Dfinity’s founder and CEO for the entire Roche mess.

According to the firm, it was Dfinity that engaged a Norwegian businessman
with ties to international intelligence agencies to lure Roche to London to
discuss a supposed investment in a litigation funding venture. Those
meetings, according to Freedman Normand, were actually a set up: The
Norwegian operative got Roche drunk and secretly videotaped him making
intemperate remarks, including a comment that crypto class members were
“100,000 idiots out there” and that jurors are “10 idiots [who] control the
flow of all the money that happens in American class actions.”

Freedman Normand asserted that Dfinity then launched an anonymous website,
Crypto Leaks, to post the secret recordings of Roche.

The firm has espoused different positions on the authenticity of the
recordings at various points in its fight to stay in the Dfinity class
action. Early on, it acknowledged that Roche – who left the firm soon after
Crypto Leaks published the videos – had made inappropriate and inexcusable
comments. But later in the disqualification litigation, Freedman Normand
sought to file an expert report purporting to show that many of the Crypto
Leaks videos were inauthentic “deepfakes.”

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Donato noted the shift in his opinion ousting the firm. He called it a
“flipflop,” and said Freedman Normand’s renunciation of its “forthright”
acknowledgement had added to his concern that the plaintiffs firm “is
heavily invested in protecting its own interests, to the detriment of those
of the class.”

Roche, who now has his own eponymous firm, did not respond to my email
query.

Freedman Normand said in an email statement that it is "disappointed" with
Donato's order. "It criticized the firm for merely defending itself from
Dfinity’s accusations [and] did not address central aspects of our
arguments," the statement said. "The firm has never 'flipflopped.' We
continue to disavow the problematic statements in the videos, but when new
evidence indicated the videos are deepfaked and that Mr. Roche never made
those statements, we sensibly advised the court of that development."

Dfinity counsel from Cravath, Swaine & Moore and Quinn Emanuel Urquhart &
Sullivan did not deny Dfinity’s involvement in the secret recordings in
their brief responding to Freedman Normand’s assertions. Dfinity merely
said that it didn’t matter if Roche was set up because he was not coerced
into making the statements that landed him in hot water.

Dfinity’s lawyers did not respond to my email request for comment.

After initial briefing on Dfinity’s motion to disqualify Freedman Normand,
Donato ordered a deposition to determine the extent of Roche’s remaining
ties to Freedman Normand, including the extent of Roche's control of the
firm's Ava-issued tokens, which are held in a crypto wallet.

The deposition of name partner Freedman generated yet more bizarre
allegations. In a letter asking Donato to seal the deposition transcript
because it revealed confidential information about the firm’s relationship
with its now-former client Ava, Freedman Normand also told the judge that
it feared Dfinity executives would “misuse” the sensitive information to
threaten and intimidate Roche and his former colleagues. Freedman Normand
asserted that Dfinity had already “made threats on Mr. Roche’s life,
necessitating FBI involvement.”

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In Monday’s decision, Donato said he did not need to probe that claim,
which turned out to have been based on “multiple layers of hearsay.”
(Apparently, a Freedman Normand associate told the firm's in-house general
counsel that a friend, also a lawyer, reported hearing that “people
associated with Dfinity were planning to kill Mr. Roche.”)

Donato said he regarded Freedman Normand's assertion of a murder threat as
yet more evidence that the firm was so “deeply immersed in a toxic
perception of the defendants in this case” that it was not capable of
fulfilling its fiduciary obligations to the class.

Donato also said that the record showed Roche remains entangled with his
former firm. Roche’s new firm is co-counsel with Freedman Normand in three
cases – none of them class actions, according to the firm – and is still in
joint control, with Freedman, of the digital wallet containing tokens from
Ava. (Ava, according to Freedman Normand, terminated its relationship with
Roche and the successor firm after Crypto Leaks released the Roche tapes.)

It has now been six months since the Roche tapes shook up the crypto bar.
Most of the disqualification motions based on the tapes have already been
decided, so Donato’s Dfinity ruling serves as a sort of coda on the entire
fiasco.

In the end, it turns out, Freedman Normand's fight to delegitimize the
tapes seems to have only made things worse.
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