Parties Failed to Provide A Legitimate Reason for Keeping Court Records Under Seal
WASHINGTON, D.C. – A company in which Acting White House Chief of Staff Mick Mulvaney is a principal investor should not be allowed to continue to conceal the details of a 2007 land deal gone wrong, Public Citizen has argued in a motion to unseal records in a case in the South Carolina Court of Common Pleas. Mulvaney’s company sued to foreclose on a piece of property he had jointly invested in with other private investors.
The motion arose from Mulvaney’s role in a failed 2007 real estate deal in Indian Land, S.C., involving more than $6 million in bank and investor loans. The deal was facilitated by two limited liability companies in which Mulvaney was a part owner. Over the next decade, the proposed land development never materialized, and the land lost its value. By 2016, the companies faced the prospect of missing bank payments, defaulting on loans and heading to a foreclosure.
The companies took the extraordinary step of forming a new company, in which Mulvaney was also a principal, and taking out a loan in that company’s name to pay off the original loan. The new company then foreclosed, cutting private investors out of any chance at repayment of the millions of dollars they were owed on the original deal. Those investors then sued.
To keep the factual details of the case from the public, the parties to the lawsuit asked the judge to keep sealed some of the briefs and the evidence so they would be inaccessible to the public. The judge agreed.
However, under both the First Amendment and the South Carolina Constitution, the public has a right of access to the court records. In seeking to seal the court papers, the parties made no showing of the need for secrecy, and the court’s ruling in favor of sealing made no findings on the need for secrecy or the inadequacy of alternatives to sealing. The effort to keep the court records under seal without evidence of need raises significant legal issues for public servants conducting business in U.S. courts.
“Judicial proceedings and court records are presumptively open to the public under common law, the First Amendment of the U.S. Constitution and the Open Courts provision of the South Carolina Constitution,” said Paul Levy, attorney for Public Citizen. “This case has implications beyond South Carolina because Mr. Mulvaney stated during his 2017 confirmation hearings that the land controversy was in the past and not disputed.”
Read the motion here.