Sunday, April 29, 2007

NACDL White Collar Crime Conference - Part II

Stephanie Martz, White Collar Crime Project Director at the National Association of Criminal Defense Lawyers (NACDL), guest blogs a six part series on the recent White Collar Crime Track at the NACDL Cincinnati Conference:

Panel II was on "Parallel Proceedings." Barry Pollack of Kelly Drye Collier Shannon LLP, also an NACDL board member, moderated.

He started with the issue of the government’s using a parallel proceeding as a stalking horse. Chuck Ross, of Charles A. Ross & Assoc, LLP in NY, addressed this issue – can you smoke out whether there is a prosecutor involved? United States v. Stringer, a case two years ago from Washington state, does give you some guidance as to questions you can pose as defense counsel. You can craft formal requests of the out-front civil regulatory body, such as, do you intend to do (any of the stuff that the court in Stringer ultimately found so offensive). One does, however, need to be careful that you don’t invite scrutiny that you don’t have already. Might be a difference among agencies – the SEC tends to work more hand-in-glove with prosecutors than, say, the FEC.

Critical question: Once you have parallel proceedings in the open, do you move to stay the civil proceeding? Jack Fernandez, of Zuckerman Spaeder in Tampa, FL, said there are two schools of thought. In a civil proceeding, you could get discovery that you wouldn’t otherwise get. But you need to get protection for what you don’t want to disclose, namely, your client’s testimony. It might boil down to whether your client can afford to take the Fifth. In most cases your client really needs to take Five; this militates in favor of a stay. Seek a stay if you have a client who literally can’t afford to take Five (would lose legal fees) or is a high-profile or public figure.

Can you even get a case stayed during the criminal investigatory stage, pre-charging? Fernandez: Seek it especially if it’s private civil litigation, but you probably won’t get it. Ross said he recently did get a stay in such a case (private class action suits brought against client, stayed during criminal investigation – a knowledgeable and conscientious magistrate judge).

Interesting twist on an evergreen topic: What is the impact of the McNulty Memo/pressure to waive on parallel proceedings? Carol Elder Bruce, a partner at Venable in Washington, DC (and former independent counsel in the Bruce Babbitt case – as Pollack noted, one of the few to decide there was not evidence to warrant an indictment), answered this question. She began by noting that for years, lawyers for corporations (including herself) felt compelled to tell corporations to waive if they could – for notes of witness interviews, etc. -- because of the incentives built into DOJ policy. The key to the whole waiver process is that the government gets individual statements that it might not otherwise get. But beyond that, "selective waiver" – the obvious antedote to the parallel proceeding issue – has rarely been accepted by courts because it violates the sword/shield principle behind the privilege. In re Qwest Communications in the 10th cir. is a recent example.

(sm/ links and posting by esp)

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