Friday, February 1, 2008

Adventures in Witness Recollection

Preparing your client for a hearing is a must for every attorney.  But offering to have your client's memory fade in exchange for favors is a major problem, as illustrated in a recent SEC case.  The SEC filed an administrative action (here) to bar an attorney licensed in New York from appearing before the Commission because of what he told the attorney for a brokerage firm and its president who were being investigated.  The attorney's client came to the SEC's attention as a potential witness, and so the attorney began dealing with the investigators seeking to arrange her testimony.  At the same time, the attorney also had some conversations with the brokerage firm's lawyer that were rather revealing.  How did the SEC learn what was said, you might ask?  Well, it seems that the brokerage firm's attorney taped the conversations, as summarized in the administrative filing:

During the taped conversations, Respondent requested that Blumer [the brokerage firm's president] arrange for a "severance package" (i.e., removing his client as the co-signer on two car leases with Blumer and paying her salary) for his client. In return for this severance package, Respondent indicated that his client might not cooperate with the Commission and/or that her recollection of the relevant events might "fade." In the last of these conversations, Blumer’s attorney asked Respondent "what package" his client wanted to "not cooperate." Respondent stated, "Get her off those leases and, you know, your salary, and you can even pay it out over a year." Blumer’s attorney then asked, "what will we get if they do that, she won't cooperate or she won't remember?" Respondent stated "probably both."

New York is a one-party consent state for taping telephone calls, so there's no problem on that front.  Can't you trust the attorney you're trying to extort in exchange for having your client's memory "fade" a little bit?  It seems not, and the New York attorney may find himself in a bit of hot water with the Bar authorities who tend to take a dim view of such conduct.  Whether the U.S. Attorney's Office takes an interest in a possible obstruction of justice case remains to be seen.  Be careful what you offer in exchange for favorable testimony, it can cost you your career. (ph)

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Civil Enforcement, Investigations, Legal Ethics, Securities | Permalink

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