GWG Bankruptcy Turmoil: Trustee Resigns and Judge Recused Over Relationship Scandal

The fallout from an ethics scandal involving former U.S. Bankruptcy Judge David Jones and former Jackson Walker partner Elizabeth C. Freeman has now reached the GWG Holdings, Inc. bankruptcy. On November 5, 2025, Elizabeth Freeman resigned as Trustee of the GWG Wind Down Trust, just days after the United States Bankruptcy Court for the Southern District of Texas granted a motion to recuse Judge Marvin Isgur from presiding over the GWG case.

The developments mark yet another impediment for GWG L Bond investors, who are already facing minimal recoveries from the GWG Wind Down Trust—estimated at just 2%–4% of their original investment.

Judge Recusal and Freeman’s Resignation

According to the Court’s order, the GWG bankruptcy is “one of many tainted by the undisclosed intimate relationship between former United States Bankruptcy Judge David Jones and his former law clerk-turned-Jackson Walker partner, Elizabeth Freeman.” The order states that Mr. Jones and Ms. Freeman deliberately concealed their relationship and “concocted to receive millions in attorneys’ fees for their own benefit.”

The Court further noted that the GWG case was assigned to Judge Isgur as part of the Jones–Freeman scheme—though Judge Isgur himself was unaware of the arrangement. To avoid even the appearance of impropriety, the Court recused him from the case.

Judicial recusals occur when a judge’s impartiality might reasonably be questioned. The recusal and Freeman’s resignation underscore the far-reaching impact of the scandal on several high-profile Texas bankruptcy cases.

Impact on GWG L Bond Investors

For GWG L Bond investors, the resignations raise additional uncertainty about the oversight and administration of the Wind Down Trust, which is responsible for liquidating GWG’s assets and distributing proceeds to investors.

As previously reported, the Wind Down Trust confirmed that investors are expected to recover only 2%–4% of their principal—or roughly $26.94 to $34.46 for every $1,000 invested. The distributions are not likely to occur until 2026. No additional distributions have been announced.

Given the near-worthless recovery from bankruptcy, FINRA arbitration claims against the brokerage firms that sold GWG L Bonds remain the most viable path for investors seeking meaningful compensation.

See also:

• GWG L Bonds Investor Recover Center
• GWG L Bond Investors Alert: DOJ Charges Former GWG CEO with Securities Fraud — What This Means for Investors (November 5, 2025)
• GWG L Bonds Update (August 2025): Wind Down Trust Recovery Outlook for Investors (August 18, 2025)

About Iorio Law PLLC

Iorio Law PLLC is a New York-based securities arbitration and investor-advocacy law firm representing clients nationwide in cases involving stockbroker misconduct, unsuitable investment recommendations, and violations of FINRA and SEC rules.

The firm’s founder and managing attorney, August M. Iorio, has already recovered more than $3.8 million for GWG L Bond investors through FINRA arbitration claims and continues to represent clients nationwide in claims against brokerage firms that sold the product.

If you purchased GWG L Bonds through Emerson Equity, Western International Securities, Arete Wealth Management, Aegis Capital Corp—or any other broker-dealer—contact us for a free, confidential case evaluation.

Our firm is dedicated to holding brokerage firms accountable and helping investors recover their losses.