Saturday, April 9, 2005

Can a Lawyer Plead Ignorance of the Law As a Defense?

David Tedder was a lawyer who helped two clients set up an off-shore gambling business and created a company to funnel money to them, in violation of 18 U.S.C. Sec. 1084 (here), which prohibits the use of wire communications for the purpose of wagering or betting.  Tedder created a company called Clear Pay to move money to the off-shore betting business, Gold Medal Sports, that operated out of Curacao.  The Florida Attorney General warned Western Union not to wire money to Gold Medal Sports, so Tedder set up Clear Pay to get around that restriction.  Unfortunately, Tedder's clients were caught and, not surprisingly, turned on their former lawyer by testifying against him.  His conviction was upheld by the Seventh Circuit (United States v. Tedder here), and Judge Frank Easterbrook described Tedder's trial defense:

Although he was a lawyer, knew about §1084, and even knew about criminal prosecutions of similar ventures (after which he whipped up still more layers in a futile attempt to shield his clients), Tedder told the jury that he thought that Gold Medal Sports and Clear Pay were upstanding businesses operated in compliance with all laws. This was essentially the tax protester’s defense that he just didn’t think that the law, however clear, applied to his endeavors. See Cheek v. United States, 498 U.S. 192 (1991). The district judge gave appropriate instructions to the jury, which did not believe Tedder’s professions of ignorance and convicted him. Tedder maintained that he drew his understanding of federal law from observing conduct —Gold Medal Sports was not the only offshore gambling enterprise—as if the existence of bank robberies shows that it is lawful to steal money at gunpoint. Testimony about this curious approach to legal "research" did more to demonstrate Tedder’s mendacity than to make out a defense. His multifarious endeavors to hide the source and disposition of Gold Medal Sports’ funds revealed his true beliefs.

Courts have generally held lawyers to a higher standard regarding knowledge of the illegality of conduct, and Tedder's conduct shows how a lawyer who gets involved in his client's wrongdoing will end up the target of the criminal prosecution. The Seventh Circuit upheld the conviction, and remanded to the district court to reconsider the sentence in light of the discretion granted by Booker.  The original sentence was 60 months (!!!), at the high end of the Guidelines range, and I would not be surprised if Tedder is looking the same amount of time, at a minimum. (ph)

Judicial Opinions, Legal Ethics | Permalink

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