Giuliani's Bankruptcy Strategy Challenged in $148M Defamation Case: Cannot "Escape Accountability for His Actions"

Former Mayor of New York, Rudy Giuliani’s effort to utilize bankruptcy to dodge a substantial $148 million defamation penalty has been countered by legal action from Ruby Freeman and Wandrea’ ArShaye “Shaye” Moss, as stated in a Friday court filings.

Escaping Financial Liability

Rachel C. Strickland, an attorney specializing in bankruptcy restructuring, launched an adversary proceeding in New York’s bankruptcy court, challenging Giuliani’s attempt to escape financial liability through bankruptcy.

Basis of Defamation Claims

Following the 2020 presidential election, Giuliani was found to have defamed Freeman and Moss by falsely accusing them of electoral fraud.

Judgment Against Giuliani

Illustration. Image by Depositphotos.com

The accused filed a lawsuit against the former mayor, and judgment was issued in their favor after Giuliani ignored the lawsuit and engaged in what the court termed a “willful shirking of his discovery obligations.”

Court Judgement

Illustration. Image credit: Depositphotos

A trial was held to determine compensatory and punitive damages. Jurors issued their verdict, and the court entered a final judgment order on December 18.

Law License Suspended

Image by thenews2.com via Depositphotos.com

Due to his efforts to aid Trump in retaining power, Giuliani’s law license was suspended. Currently, he only receives paychecks for his radio show and some podcast work, as reported by the New York Times.

Bankruptcy as a Legal Shield

Shortly after the defamation judgment, Giuliani filed for Chapter 11 bankruptcy, a move now contested by the plaintiffs who argue against the misuse of bankruptcy to evade consequences.

Undermining Judicial Process

The legal filing explains, “Since Plaintiffs initiated the underlying lawsuit, Mr. Giuliani has treated the judicial process and its rules as something that does not apply to him.”

Hiding Behind Bankruptcy

Illustration. Image credit: thenews2.com via Depositphotos

The filing added, “He is wrong. Causing willful and malicious injury to others has consequences. Mr. Giuliani cannot hide behind bankruptcy to escape those consequences and accountability for the devastating impact his actions caused.”

Core Legal Argument

The plaintiffs argue that Giuliani’s actions were intentionally harmful, making his debts from the defamation case non-dischargeable under bankruptcy laws.

Malicious Actions

The judgment against Giuliani, issued on December 18, highlighted his actions as “intentional, malicious, wanton, and willful.”

Cannot Escape Accountability

The filing noted, “Giuliani cannot use bankruptcy to escape accountability for his actions,” and “All of the facts necessary to reach that conclusion have already been decided — and even conceded.”

Punitive Damages

A stipulation from the case states: “It is hereby DECLARED pursuant to 28 USC § 2201(a), as between Plaintiffs and Defendant: that Defendant’s conduct was intentional, malicious, wanton, and willful, such that Plaintiffs are entitled to punitive damages,” affirming the judgment’s foundation on agreed facts.

Seeking New Trial

Strickland’s filing seeks a definitive court ruling on the dischargeability of Giuliani’s debt amidst his attempts to appeal the defamation verdict and seek a new trial to mitigate damages.

Other Cases

Giuliani’s former lawyer, Robert Costello, sued him in September for almost $1.4 million in unpaid legal fees. He also faces pending cases filed by electronic voting machine companies Smartmatic and Dominion.

Dominion’s Big Win

Dominion previously sued Fox News and secured a significant $787 million settlement over false allegations related to the 2020 election. The lawsuit also resulted in the dismissal of its star host, Tucker Carlson, from the network.

Committee Raised Money

Due to Giuliani’s mounting financial challenges, his political action committee, partially managed by his son, raised over $725,000 in the final five months of 2023. Nearly half of this amount came from a single donor.

Most Money Spent

Illustration. Image credit: Shutterstock

Giuliani’s PAC has already allocated over half a million of the funds raised to cover the former mayor’s legal fees. As of the beginning of 2024, only $180,000 remained.

Trump promised Help

Last year in August, Giuliani also visited former President Donald Trump seeking assistance. Although Trump agreed to help the former mayor, he did not commit to any specific amount or timeline.