By Dave Daley

of the Journal Sentinel staff February 27, 1998

A top federal bankruptcy court official testified Thursday that the "alarm bell" would have gone off if the court had known that a law firm representing the Bucyrus-Erie Co. in 1994 bankruptcy proceedings also was working for one of Bucyrus-Erie’s major creditors.

U.S. Bankruptcy Trustee John Byrnes said the news that the Milbank, Tweed, Hadley & McCloy law firm had not disclosed that they also represented a New York investment fund owed millions by Bucyrus was a "bombshell."

Byrnes' testimony came in the fourth day of the criminal trial of Milbank, Tweed's lead attorney in the Bucyrus bankruptcy, John G. Gellene, charged with three counts of lying under oath by not disclosing his law firm^ts conflict of interest in representing Bucyrus and one of Bucyrus^’ creditors.

Byrnes testified Thursday that once he learned of Milbank, Tweed's representation of both Bucyrus and a major bankruptcy creditor, he asked the bankruptcy judge to order the law firm to return "every penny" in legal fees paid it by Bucyrus.

Byrnes, who oversees part of bankruptcy proceedings, testified that he also asked U.S. Bankruptcy Court Judge Russell Eisenberg to sanction Milbank, Tweed and Gellene for filing false documents with the court by not disclosing the conflict.

Milbank, Tweed, a prestigious Wall Street law firm with about 375 attorneys, returned $1.9 million in fees late last year but in a public apology, the firm blamed Gellene for the failure to disclose the conflict and fired him.

Gellene^ts criminal attorney, Mark Rotert of Chicago₁ argued Monday to a federal court jury in Milwaukee that Gellene made a mistake in not disclosing that his law firm also was representing Mikael Salovaara, a Wall Street financier who provided $35 million in funding to Bucyrus-Erie.

But Rotert emphasized that the failure to disclose was not intentional, and he has repeatedly underscored the complicated nature of bankruptcy proceedings

In the Gellene case, prosecutors alleged specific facts about what Gellene said or failed to say in bankruptcy court constituted periury, but the press reports he has seen of Clinton's statements in the Jones case make Clinton's role "vague and blurred," Gimbel said.

"These two cases are apples and oranges -- it seems like he (Starr) would get very little out of the Gellene case," Gimbel added.

But Starr, after the dismissal of the Jones case April 1, was quoted as drawing distinctions between Jones' civil case and accusations of perjury and obstruction of justice. "If you lie under oath, if you intimidate a witness, if you seek otherwise to obstruct the process of justice, it doesn't matter who wins and loses in the civil case," Starr said.

Chief U.S. District Judge J.P. Stadtmueller, who presided over Gellene's trial last month, said his staff handled Starr's request routinely.

Stadtmueller's staff supplied Starr's office with a copy of the indictment in the Gellene case, as well as the judge's instructions to the jury, the verdict form and an order rejecting Gellene's arguments that prosecutors had not proved intent.

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