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A federal judge yesterday declined to hold World Trade Center leaseholder Larry Silverstein in civil contempt for conducting a press conference that violated the judge’s ban on out-of-court statements during the billion-dollar trial over insurance proceeds. Although Judge Michael Mukasey found Mr. Silverstein’s explanation for his March 15 statements to the press “contradictory and not credible,” the judge concluded that holding Mr. Silverstein in contempt would do more harm than good. Judge Mukasey made no direct mention of a statement he made at the outset of a contempt hearing last Thursday. The judge had said he intended to ban Mr. Silverstein from the courtroom for the remainder the trial, except, of course, when Mr. Silverstein testifies. But the judge did express his concern yesterday about the prejudicial effect of “branding Mr. Silverstein a contemnor” � a statement which might be an indication that Mr. Silverstein would not be banned. The ruling came midway through the trial over Mr. Silverstein’s bid to double his insurance recovery following the Sept. 11, 2001, terror attacks on the World Trade Center. Mr. Silverstein claims the attacks were two “occurrences” within the meaning of insurance agreements that were still being negotiated when the towers fell, and therefore he should be paid not $3.5 billion, but $7 billion. The judge said Mr. Silverstein unconvincingly testified last Thursday that he was told at a March 10 teleconference with his public relations people that the judge had lifted his ban on out-of-court statements. Mr. Silverstein was unable to say just who had made that claim. From the witness stand, Mr. Silverstein insisted he did not believe he was violating a court order when, at a March 15 press conference, he said $12 billion was needed to rebuild the World Trade Center, and $5 billion of that amount was coming in the form of federal aid. “The other $7 billion of it is money we expect to be coming from the insurers, and that’s where the battle lies,” he said at the press conference, adding that the insurers “are trying to save the money. We are trying to get them to fulfill the responsibilities that we paid for when we paid the premiums under the policies.” Floyd Abrams of Cahill Gordon & Reindel, representing Mr. Silverstein on the contempt motion, argued Thursday that the judge had never issued a formal order barring the parties from speaking out of court. But yesterday, Judge Mukasey said “there was a sufficiently clear and unambiguous order in place to bar the statements Mr. Silverstein made to the effect that $7 billion of insurance money is necessary to rebuild downtown, that this case is about getting the insurance companies to fulfill responsibilities they assumed when they accepted premiums, and that the Silverstein parties did not get insurance for their premiums and instead got litigation.” The judge called Mr. Silverstein’s testimony about the March 10 teleconference and the subsequent press conference as “at the least counterintuitive.” Mr. Silverstein, he said, had “bridled” at the restrictions on communicating with the press and had also testified that he consulted with his lawyers on an almost daily basis. “If so, it seems highly unlikely that he would not have discussed with his lawyers the lifting of a restriction at which he had bridled,” the judge said. “Moreover, even if one were to believe, credulously, that Mr. Silverstein was ignorant of the order’s continued vitality, when ignorance of a court order is itself the result of inexcusable neglect by one charged with contempt, a court will not excuse such ignorance.” Effect on the Jury However, while the threshold for finding of contempt had clearly been crossed, the judge said the cases dealing with the standard for contempt findings “usually frame contempt as a permissive finding, not a mandatory one.” Judge Mukasey said the reason for the order was to prevent undue influence on the jury � and Mr. Silverstein’s violation “does not appear to have had the adverse effect on the jury that the Silverstein parties might have wished.” The judge said he was also concerned that “branding Mr. Silverstein a contemnor could have a highly prejudicial effect in this case and in future trials when and if future phases of this litigation are tried.” Judge Mukasey declined to award fees and costs to the insurers. The judge’s statement about barring Mr. Silverstein from the courtroom came at the beginning of the hearing. But by the end of more than two hours of testimony from Mr. Silverstein and arguments from the lawyers, Judge Mukasey said he had expected to rule at the end of the hearing. Instead, the judge said he would take a few days to consider the matter.

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