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June 17, 2011
NACDL's 1st Annual West Coast White Collar Conference, “Turning The Tables On The Government” – “Monsanto and More: Ethical Tactics for Getting Paid When the Government Gets There First,” Friday, June 17, 2011
Guest Blogger: Darin Thompson, Assistant Federal Public Defender, Office of the Federal Public Defender (Cleveland,OH)
John Cline began the discussion with a hypo of an indicted individual who has millions of dollars that the government believes were garnered through criminal activity. Mr. Welk presented the government’s perspective and outlined the steps taken to identify the assets the government believes can be tied to the charged crimes. Typically this involves going to the Magistrate and obtaining seizure warrants for assets and then seizing them. If it involves real property, then they will go get a lis pendens.
Mr. Cline asked about ex parte restraining orders and when and how the government uses them. Mr. Welk explained that once he obtains the restraining order, he will typically approach the counsel for the client, inform them of the order, and then set up a plan. Typically the parties sit down and work out the issues together. Mr. Welk noted that going in ex parte can be extremely disruptive to the business and that is why the defense is willing to sit down. However, there is always a concern that the assets could disappear if the government does not come in strong.
Mr. Cline then sought the defense perspective from Ms. McNamara—what steps she takes when faced with an ex parte restraining order. She would first seek out help from an experienced forfeiture lawyer. This is because this process is quite draconian and it allows the government to basically step into the defendant’s shoes. However, given the practicality of the temporary restraining order, where the government must show its cards, the parties are usually willing to come to the table and talk.
A member of the audience asked about money that the lawyer already has, such as a retainer. Mr. Welk explained that there is a wide diversity of views on how to handle this situation. He will typically sit down with the attorney and work out an arrangement, typically involving a return of a portion of the money.
Ms. McNamara noted that there has been an uptick in asset forfeiture since the Madoff case but Mr. Welk noted that it was really a coincidence of timing. Rather, he noted that the uptick was a product of at least five years of work by the Asset Forfeiture Working Group. It just happened that their work aligned with the Madoff case.
Mr. Cline then asked the panelists to discuss negotiations that frequently happen in order to avoid an evidentiary hearing. Both parties usually go in hoping to cut a deal and come out with a clear plan. Ms. McNamara explained that the government typically comes in with a pragmatic approach, but that is not always the case.
The panelists engaged with the audience on the interaction between bail and forfeiture, the potential conflict for the defense attorney in seeking to protect the client’s assets in general and specific to defense fees, and the question of government authority over third-party assets. Mr. Welk noted that while the government has authority to seize third-party assets, but the courts don’t like that.
Mr. Cline closed the panel with a discussion the potential for prosecutors to clawback fees that have been unfrozen for defense. Mr. Welk said this is rare and there are other venues to explore, one of which is a strongly worded letter to counsel explaining that it is the government’s belief that all the client’s money comes from illegal activity and thus any money accepted may be subject to forfeiture. There is serious debate over the use of these letters, but defense counsel should be aware of them and on the lookout.
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