Monday, September 12, 2016
I agree with my colleague Prof. Podgor that DOJ made the "right decision" to drop the prosecution of former Virginia governor Robert McDonnell. Under the narrow definition of "official act" given by the Supreme Court a re-prosecution was doomed. I further agree with Prof. Podgor that McDonnell's legal team, led by Hank Asbill and Noel Francisco, deserves plaudits for its determined and outstanding lawyering.
I do not, however, criticize DOJ for bringing this case. McDonnell's acts - accepting $175,000 in money and gifts in exchange for favorable treatment for the donor - although ultimately determined not to be "official acts" and thus not criminal, were unseemly and corrupt. That the Commonwealth of Virginia, in its wisdom or lack of it, chose not to criminalize such activity to me was a reason for federal prosecution, not for abstention. To be sure, the government should have been aware that there was Supreme Court case law arguably undermining its position. On balance, the egregiousness of McDonnell's conduct, I believe, justified a prosecution, even if it "pushed the envelope."
The McDonnell decision will allow federal prosecutions of politicians accepting things of value for favorable votes or actions on legislation or favorable decisions awarding governmental appointments, contracts and benefits, the areas within which most corruption cases fall. It will, however, eliminate or preclude almost any prosecution for payments to officials for access, referrals and introductions, allowing donors an advantage over non-payers. "Pay-for-play" systems do not guarantee winning a contract, but do allow one to be among those considered - a giant and necessary step. Thus, the decision will, like Citizens United, most benefit the rich, powerful and politically-connected.
I, like many others, was surprised by the unanimity of the court. Although I am no expert on Supreme Court internal politicking, I suspect some justices might have gone along with the decision to prevent a broader decision which would have greatly limited, or even eliminated, federal prosecutions of state and local corruption, either by finding the term "official acts" constitutionally void for vagueness, or on federalism grounds. In his opinion, Chief Justice Roberts mentioned, but did not rule on, both considerations.
I cannot dismiss an undiscussed "elephant in the room," alluded to by Prof. Podgor. The American election system commonly allows campaign contributions to be rewarded by at the least access to elected and appointed officials. It is extremely doubtful whether McDonnell would have been prosecuted for accepting campaign contributions and rewarding the donor with access to state officials. It seems to me extremely difficult to make a lawful/unlawful distinction between situations involving gifts to politicians for their personal use, as in McDonnell, and those involving gifts to politicians for campaign purposes. Absent such a distinction, an affirmance of McDonnell might have led to cases concerning campaign contributions, which might have led to an upheaval in campaign financing practices generally accepted in America. Thus, it is not surprising that a host of former Counsels to the President and Attorneys General submitted amicus briefs in support of McDonnell, a fact noted with apparent respect in the opinion.
Lastly, I wonder whether the Court was wary of allowing federal prosecutors expansive power to prosecute political officeholders. There is always a danger - at least theoretical - that a prosecutor will misuse her power to indict political opponents, as is not infrequently done in foreign nations, and perhaps occasionally done in the United States. It may well be that the case should be considered primarily as a limitation of prosecutorial and executive branch power.
Thursday, September 8, 2016
It's now official. Former Virginia Governor Robert McDonnell and his wife Maureen will not be retried and all charges are to be dropped. The Washington Post has the story here. It is unclear whether Main Justice overruled the EDVA or caused that office to change its mind regarding proceeding to a second trial. More analysis to come.
Wednesday, September 7, 2016
Finally, as promised, here is the U.S. v. Reddy Annappareddy 9-1-16 Motion to Dismiss Hearing Transcript. At the conclusion of that hearing Judge George Levi Russell dismissed the Indictment with prejudice. Judge Russell's rationale for his ruling can be found at pages 49-62 of the transcript. This was a health care fraud case and a core government theory was that Mr. Annappareddy received Medicaid reimbursement for pills that were never given to patients. The government sought to prove its theory by showing that Mr. Annappareddy's pharmacies billed for more pills than they received. The most significant evidence that the prosecutors offered in support of this allegation was a calculation of the purported “loss” from the alleged fraud. The following factors were key to the Court's finding that the government committed due process violations that shocked the conscience and rendered it impossible to put Mr. Annappareddy back on an even footing with the government: 1) the government violated Brady by failing to disclose loss calculations from its initial auditing team that were significantly smaller (in total and with respect to two key pharmacies) than the calculations of a subsequent government auditor who testified at trial; 2) the government violated Brady by failing to disclose the risk of double-counting errors in the loss calculations; 3) the government presented false testimony regarding the loss calculations due to double counting errors; 4) the government presented false testimony by a government agent, based on her examination of the wrong set of phone records, that Mr. Annappareddy had NOT made any calls to a key individual in response to a material email from that individual, when in fact Annappareddy had several phone contacts with the individual within minutes of the material email; and 5) the government destroyed potentially key exculpatory evidence without a court order or the defense's permission. The Court also sent a not so subtle warning to the government: "In the event that my record is not clear or exercise of my discretion too broad, this Court will conduct an extensive time-consuming and costly hearing as to these matters and the other grounds supporting the motion to dismiss and other motions which have already been filed. To that end, the balance of all other motions in this case are denied as moot." Translation: If you appeal this ruling and I am reversed, we will delve in detail into the other grounds of error raised by the defense. And it will not be a pleasant process. Hat Tip to David Debold of Gibson Dunn for sending along the transcript.
Thursday, September 1, 2016
The case against Reddy Annappareddy is over. The Government's case has been dismissed with prejudice by U.S. District Court Judge George Russell because of a pattern of government misconduct that shocks the conscience. As soon as I obtain a copy of today's hearing transcript we will post it. Congratulations are in order for Mr. Annappareddy and his Womble Carlyle defense team of Mark Schamel and Josh Greenberg. Greenberg's relentless motions work over the past 11 months has been particularly brilliant. Anybody who does white collar work in the federal courts knows how difficult it is to obtain a result like this, post-trial. This is a magnificent victory.
As we write this post U.S. District Court Judge George Russell is holding a hearing on Defendant's Motion to Dismiss with prejudice. I have previously discussed this case here and here. The motion is bottomed on various alleged prosecutorial errors and misdeeds. In a bad omen for the Government, Judge Russell only set arguments on the Motion to Dismiss (despite the pendency of other motions) and summarily denied the Government's motion to delay the hearing. The Government wanted a delay in the wake of an onslaught of defense motions, authored by Womble Carlyle's Josh Greenberg, alleging additional Government misbehavior, including destruction of potentially exculpatory evidence at a time when the Defendant's Motion for New Trial was filed and awaiting a decision. The Government later joined in the Motion for New Trial after admitting that it presented false material testimony to the jury. Meanwhile, in a filing that can only be described as stunning, the Government yesterday attempted to defend its admitted document destruction. Here lies the Government's Response Re Document Destruction.
Tuesday, August 30, 2016
The Supreme Court decision in McDonnell v United States, decided June 27, has given several politicians whose corruption convictions are on appeal both a cause for optimism and freedom on bail pending appeal. Last week SDNY District Judge Valerie Caproni granted former New York Assembly Speaker Silver's request for bail pending appeal on the grounds that there was a "substantial question" whether the court's instruction defining "official act" passed muster in light of the narrow definition of that term announced in the later Supreme Court decision.
Judge Caproni made it clear that she had little doubt about Silver's guilt of the major accusations against him, stating, "There is no question that Silver took a number of official acts - most obviously passing legislation and approving state grants and tax-exempt financing - as part of a quid pro quo scheme." These acts would clearly fall within the Supreme Court definition of "official act." But the judge recognized that there were other acts committed by Silver that were presented to the jury by the government, such as holding a meeting or arranging an internship, that might not fall within the narrow Supreme Court definition of "official acts." The jury was thus presented with instructions which may have permitted it to find Silver guilty for actions that were not criminal even if bought and paid for.
18 USC 3143(b)(1) allows a convicted defendant to be granted bail pending appeal if, inter alia, there is "a substantial question of law or fact likely to result in (i) reversal [or] (ii) an order for a new trial...." Finding the existence of a "substantial question," despite the literal language of the statute, does not mean that the judge believes there is a likelihood of reversal, only that if there were a substantial question which if decided in the defendant's favor would bring such relief. United States v. Miller, 750 F2d 19 (3d Cir 1985). Appellate courts deal with a lot of "substantial questions" that have led to bail pending appeal, but rarely reverse trial convictions.
Here, it appears that under the instructions it was given, the jury could have convicted Silver based on acts not within the statute as limited by the Supreme Court.. But that is not the end of the analysis. The appellate court will also consider, and the decision is likely to turn on, whether the evidence is considered so strong that the jury would have undoubtedly convicted Silver under a proper charge - in other words, whether the erroneous instruction constituted "harmless error."
I hesitate to predict the outcome of the appeal. Cases of political figures, as demonstrated by McDonnell, are scrutinized by appellate courts more carefully than, for instance, cases of drug dealers. I believe it is likely, and will appear likely to the appellate court, that Silver would have been convicted upon a proper instruction. How likely is the issue. Is it so likely that the court will find the error "harmless?" What is "harmless error' is in many ways just a visceral judgment by the judges putting themselves in the role of jurors. Harmless error analysis, thus, arguably deprives an accused of his basic constitutional right to a determination by a properly-instructed jury of peers and I believe should be applied rarely.
Other factors the appellate court will probably consider include whether the defense proposed an instruction in accord with the standard set forth in McDonnell, and whether the defense specifically objected to the definition given by the trial court as too broad. Another factor that may conceivably affect the decision, although unlikely to be mentioned, is whether the judges believe the 12-year prison sentence imposed on the 72-year old Silver is excessive. And, of course, there may be other, unrelated issues raised. In any case, based on the "official act" issue issue alone, a reversal will likely not give Silver a dismissal, but only a new trial, presumably with proper jury instructions.
One lesson that lawyers - both prosecutors and defense lawyers - might learn from this situation is to be aware and up-to-date on cases for which the Supreme Court has granted cert and, if any concern issues that might arise in a pending case, to craft requests to charge in anticipation of the possible result of the Supreme Court case. Another lesson - for judges and prosecutors more than defense lawyers - is to adjourn a pending case that might be affected by a pending Supreme Court case until after that decision. A third lesson - for prosecutors - is to analyze all aspects of their prospective case and discard legally or factually questionable ones when there are strong aspects.
Monday, August 29, 2016
Things are getting personal in U.S. v. Annappareddy. I posted here last week about this District of Maryland case in which the Government ultimately admitted to having presented false evidence to the trial jury, and grudgingly joined Defendant's new trial motion--granted the next day by Judge George Russell. Now the Government has admitted to "disposal" of certain documents while defendant's New Trial Motion was pending in March 2015. Annappareddy's current trial team was not notified of the disposal until August 19, 2016, and claims, in Defendant's Motion for Extension of Time to File Motions In Limine, that some of the destroyed documents were exculpatory in nature. No court order authorized the destruction at the time it was accomplished.
The DOD/OIG Evidence Review Disposal Sheet from March 11, 2015 states that AUSA Sandy Wilkinson determined that the items in question "were not used as exhibits in trial and would not be used in future proceedings against Annaparreddy." In other words, Wilkinson acted unilaterally, apparently consulting no one on the defense team before making her decision. The Government's response to the allegation is a footnote stating in part that "in early March 2015, after the trial, the government began to clean up papers and documents not used from the Washington Blvd collection and store the trial exhibits post- trial. The government began purging the contents of several unused boxes. These were items Defendant and his own attorneys had reviewed at length and were never marked as exhibits or used in any way by them at trial. Yet they couch their complaint again in the most accusatory of tones. "
Well, yes. Destruction of potential evidence prior to final judgment on appeal is quite rare, if not unheard of, in federal criminal practice. That an AUSA would do it on her own is remarkable. The Government's Response to Annappareddy's Motions to Limit Government Evidence complains further that Annappareddy's new lawyers don't play nice in the sandbox, unlike the original trial lawyers--you know, the ones who lost after the Government presented false testimony. That's right, Ms. Wilkinson. Lawyers tend to get angry when false testimony is put in front of the jury and potentially exculpatory evidence is destroyed.
The case is far more involved, and the issues more complex, than I can do justice to here. Annappareddy has moved to dismiss with prejudice and a hearing on that motion is set for September 1. Failing that, the defense wants to limit the Government's evidence at a new trial to the evidence presented at the first trial. One thing absent from the Government's papers that I have had an opportunity to review is any recognition of the emotional, financial, and strategic harm suffered by defendants when the Government screws up, forcing a new trial. It's as if Ms. Wilkinson wants a cookie and a pat on the back for deigning to agree that Reddy Annappareddy gets to go through the whole damn thing again.
Thursday, July 7, 2016
The declination to prosecute Hilary Clinton and the public announcement of that decision by FBI Director Comey, were, in my opinion, wholly proper. When an investigation of a public figure receives widespread notice, it should be incumbent on the prosecuting agency to make public a decision not to prosecute.
However, the severe criticism of Ms. Clinton by Director Comey was inappropriate. I do not know enough to assess the accuracy or fairness of his report and do not challenge it. However, the FBI (either acting, as here, as the surrogate prosecutor, or otherwise) should not, in the absence of sufficient evidence to recommend charges, issue a public declaration of fault in any case, let alone one that affects a presidential election. By his pronouncement, Comey, obviously knowingly, did so. That he had no business doing.
The Department of Justice is also at fault. Attorney General Lynch should never have agreed to meet with Bill Clinton, the husband of the target of a criminal investigation under her supervision, even if he were a past President and even just to exchange pleasantries. I do understand how Attorney Lynch, a classy and courteous person, would have been reluctant to refuse to meet a past President, but propriety should have trumped gentility. Worse, she never should have abdicated the responsibility of the Department of Justice to determine whether to prosecute. If she felt she were or appeared to be personally tainted by the meeting, she should at most have recused herself and left the decision to her deputies, not have turned it over to an investigating agency.
The American system of justice essentially places the responsibility of investigation on the investigators and the decision to prosecute based on the results of that investigation to the prosecutors. Effective prosecution often involves an integration of and input from both agents and prosecutors, but the prosecutors still should be the sole and final deciders of whether to prosecute. There is an inherent bias on the part of investigators, wanting a positive and public result of their work, in favor of arrest and prosecution. The prosecutors, more knowledgeable about the law and the workings of the court system than the investigators, should act as a buffer and, giving regard to the investigators, make the determination whether to prosecute. That is an important check in the criminal justice system's checks and balances. I hope this unusual situation does not serve as a precedent.
Wednesday, June 29, 2016
I received the McDonnell decision with mixed feelings. Initially, I was happy for my colleague Hank Asbill, one of the nation's top criminal defense attorneys, for a great victory. Asbill and his co-counsel litigated this case the "old-fashioned way" - they fought it, and fought it, and then fought it. Their tenacity, dedication and skill make me proud to be a defense lawyer.
Not having read the briefs of the parties, or of the amici, or heard the oral arguments, I am hesitant to criticize the opinion, especially an opinion by a brilliant chief justice for a unanimous court (I suspect due to a compromise by potential dissenters, possibly to avoid an outright dismissal). Indeed, the opinion makes a strong case that the decision was required by precedent. However, I do question several aspects of the opinion. First, I find questionable Justice Roberts' Talmudic crucial narrowing of the definition of "official act" by virtually eliminating the broad catch-all words "action" and "matter," largely by resort to the Latin word jurisprudence that is often an indication that the interpretation is on shaky ground.
Second, while I am less troubled than the Court about the federal assumption of power to monitor the conduct of state officials for purportedly violating their offices, there is something bothersome about federal officials by criminal prosecutions in effect setting ethical standards for state officials. However, as a practical matter it appears that with rare exceptions local prosecutors lack the will and/or the resources to prosecute high state officials. In New York City, for instance, U. S. Attorney Preet Bharara has in recent years prosecuted about ten state legislators on corruption charges, while New York's five district attorneys combined have not prosecuted any.
Third and most importantly, I am concerned by the decision's enablement of business-as-usual pay-to-play practices. By narrowing the definition of "official act, the Court has legalized (at least federally) the practice of paying a government executive to set up a meeting with a responsible official. By doing so, the Court has given such "soft" corruption a green light. Under the opinion, a businessperson does not violate federal bribery law by paying a governor, mayor - or even the President - tens of thousands of dollars to make a phone call to a purchasing official asking or directing her to meet with the businessperson. And that call, however innocuous that actual conversation may sound, will have real consequences - otherwise, why would the businessperson pay for it? Even absent a verbal suggestion that the executive wants the official to do business with the caller, the official cannot but think that the executive would like that she do business with that person. I imagine a New Yorker cartoon with a governor sitting at a phone booth with a sign saying, "Phone calls, official meetings. $10,000 each."
To be sure, the law concerning bribery - not alone among federal statutes - vests too much power in the government. At argument government counsel conceded (candidly but harmfully) that a campaign contribution or lunch to an official could constitute the quid in a quid pro quo. That is frightening, but the problem is in the quid, not in the quo - about which this case is concerned. (I applaud Chief Justice Roberts statement in response to the standard "Trust me, I'm the government" argument that "We cannot condone a criminal statute on the assumption the government will use it responsibly.") And, certainly, if this case were to apply to campaign contributions - and not, as in this case personal receipt of money and goods-in the words of the amicus brief of former White House counsel - it would be "a breathtaking expansion of public corruption law." Indeed, a distinction should be made between personal and campaign contributions. But this case applied to the quo - what the governor did in exchange for $175,000 worth of goods and money. And, in my view he took "action" as the governor on a "matter" by "official acts" - hosting an event at the official mansion, making calls and arranging meetings.
Tuesday, June 28, 2016
McDonnell v. United States and Arthur Andersen v. United States are remarkably similar Supreme Court reversals. In both cases, aggressive federal prosecutors pushed obviously dubious jury instructions on all-too-willing federal district judges. In Arthur Andersen, Enron Task Force prosecutors convinced Judge Melinda Harmon to alter her initial jury charge, defining the term "corruptly." Judge Harmon's charge was right out of the form book, based on the approved Fifth Circuit Pattern Criminal Jury Instruction. The Government's definition allowed conviction if the jury found that Andersen knowingly impeded governmental fact-finding in advising Enron's employees to follow Enron's document retention policy. The 5th Circuit Pattern's requirement that the defendant must have acted "dishonestly" was deleted by Judge Harmon and the jury was allowed to convict based on impeding alone. Thus, at the government's insistence, knowingly impeding the fact-finding function replaced knowingly and dishonestly subverting or undermining the fact-finding function. This effectively gutted the scienter element in contravention of the standard Pattern definition. Local observers were not surprised by Judge Harman's ruling. Her responses to government requests are typically described as Pavlovian. Judge James Spencer, the trial judge in McDonnell, is also an old pro-government hand. Generally well regarded, he was a military judge and career federal prosecutor prior to ascending the judicial throne. In McDonnell, the government's proposed jury instructions regarding "official act" flew in the face of the Supreme Court's Sun Diamond dicta. They were ridiculously expansive, with the potential to criminalize vast swaths of American political behavior. In both cases, Andersen and McDonnell, the Supreme Court unanimously reversed. In both cases, careful attention to the law, even-handedness, and a willingness to stand up to the government would have saved taxpayer dollars and prevented human suffering. Careful attention to the law, even-handedness, and a backbone. That's what we expect from an independent federal judiciary.
Monday, June 13, 2016
When I first read the Baylor University Board of Regents FINDINGS OF FACT, it was immediately obvious that these were not factual findings at all, not in any sense that lawyers would recognize. They were normative conclusions almost completely unsupported by detailed facts, particularly with respect to the individuals who have been publicly shamed by the Board. Say what you will about Pepper Hamilton's report on the Penn State Jerry Sandusky debacle, that report at least contained a detailed, chronological factual narrative. Not so with Baylor's findings, which were promulgated by the Regents under Pepper Hamilton's guidance. Want to find out what Ken Starr did to warrant removal? His name is nowhere mentioned in the findings. Is Starr mentioned by title? Yes, the President and Chancellor are referenced exactly three times. "A Special Committee of the Board of Regents, on behalf of the University, accepted the President and Chancellor’s recommendation to engage Pepper in order to ensure objectivity, and Pepper was provided with unfettered access to personnel and data." Wow. What an indictment! It was Starr who recommended, almost immediately after learning about Baylor's problems, that Pepper Hamilton be hired in the first place. "Pepper interviewed witnesses across multiple departments, including the President’s Office..." There you go! Fire the bastard! Pepper Hamilton was given unfettered access to his office. How about Coach Art Briles? Surely his dastardly deeds would be dealt with in the findings. But Briles is not mentioned by name or by his Head Coach title. There are six references to "coaches" in the Findings, but no way of telling if Briles is one of them or even knew or approved of what the others did.
So I was all set to call for releasing the real report, the Pepper Hamilton Report of Internal Investigation. You know what I'm talking about, right? The report that law firms produce after conducting internal investigations of purported misconduct for companies and other entities? The kind of report that companies typically do NOT release except to DOJ, but that universities, such as Penn state, do? But then I read the Board of Regents' Statement posted on Baylor's website and realized that there is no report! That's right folks, the Board met with Pepper Hamilton from time to time and was "updated" with factual findings. "Over the course of the investigation, a special committee of the Board of Regents was periodically updated on Pepper's work. Additionally, in early May, Pepper presented their findings of fact and recommendations to Board leadership in Philadelphia and was onsite to brief the full Board during its May meeting in Waco. While no written report has been prepared, the Findings of Fact reflect the thorough briefings provided by Pepper and fully communicates the need for immediate action to remedy past harms, to provide accountability for University administrators and to make significant changes that can no longer wait." Translation: the Pepper Hamilton investigation was structured in such a way that no written report would be generated. This was obviously done for reasons of litigation and public relations strategy.
Now the Baylor Board can pretend that it has issued detailed findings admitting its sins in the interest of transparency. It isn't true. There is not one fact in the findings justifying the firing of Starr, or even Briles for that matter. There isn't any information about any improprieties that may or may not have been committed by Board members themselves. The conflict of interest here is palpable, as the Board is currently being sued and can probably expect more suits in the future. Do we really think that no member of the Board ever intervened in any manner in Baylor's athletic programs?
There is only one action the Baylor Board can take to assure its students and alumni that the full facts of the scandal, and the justifications for the Board's actions and inactions in the wake of its findings, are set out for all to see. Release the factual materials actually presented to the Board and/or its subcommittee by Pepper Hamilton, with appropriate redactions to protect any victims. Release all interview summaries. Release all PowerPoint presentations. In the alternative, Pepper Hamilton can be directed to draft the report it should have done in the first place. Only then can the Baylor Board say that it has come clean.
Wednesday, April 20, 2016
Judge Valerie Caproni, the Southern District of New York judge presiding over the case of convicted former New York State Assembly Speaker Sheldon Silver, has unsealed papers submitted by United States Attorney Preet Bharara alleging that the convicted politician had affairs with two women who allegedly received favorable treatment from him in his professional capacity. The women, whose names were redacted from court papers (but identified, with accompanying photos, by the New York Daily News) were allegedly a prominent lobbyist who dealt regularly with Silver in his official capacity and a former state official whom Silver allegedly helped get a state position.
The government, whose efforts to introduce evidence of the relationships at trial were rebuffed by the judge, argued it should be able to provide such evidence at sentencing, purportedly to demonstrate that these relationships and favors provided by Silver demonstrated a pattern of abuse of power and possibly to rebut any evidence, including Silver's 50-year marriage, of Silver's good character. The judge seemed to accept the first argument, stating that she viewed this information "as a piece with the crimes for which Mr. Silver stands convicted," although "not exactly the same since no one is suggesting a quid pro quo, but of a piece of a misuse of his public office, and that's why I think it is relevant."
Generally, a federal judge has a right to consider virtually any information on sentencing, but I am uneasy about the injection of information of extramarital affairs of a defendant into the sentencing decision. If "no one is suggesting a quid pro quo," as Judge Caproni said, I question its relevance. Unless there is some basis that Silver did something favorable for these women because of their alleged sexual relationships - which I would call a "quid pro quo - I wonder whether his alleged actions constitute a "misuse of public office."
There, of course, is a difference between allowing a party to present evidence or argument at sentencing and factoring that information into the sentencing decision, and, absent specific facts, I am hesitant to say the material should not be considered. I am troubled, however, by the possibility that a defendant's alleged marital infidelity will become a regular part of a prosecutor's sentencing toolbox.
I am relatively sure that my first boss, from almost fifty years ago, Frank Hogan, the legendary and exemplary longtime District Attorney of New York County, would not have proffered such evidence, but Mr. Hogan was a man with a perhaps old-fashioned notion of fair play in a perhaps gentler age in which prosecutors rarely took aggressive (or even any) positions on sentencing (and the press did not publicize the dalliances of public officials).
(I note that Mr. Silver, whom I never met or spoke with, or contributed to, appointed me three times (and failed to reappoint me a fourth) to serve on the New York State Commission on Judicial Conduct).
Saturday, April 9, 2016
The New York Times reported on Tuesday, April 5 that Donald Trump, contrary to his asserted practice of refusing to settle civil cases against him, had settled a civil fraud suit brought by disgruntled purchasers of Trump SoHo (New York) condos setting forth fraud allegations that also were being investigated by the District Attorney of New York County ("Donald Trump Settled a Real Estate Lawsuit, and a Criminal Case Was Dismissed"). The suit alleged that Trump and two of his children had misrepresented the status of purchaser interest in the condos to make it appear that they were a good investment.
What made this case most interesting to me is language, no doubt inserted by Trump's lawyers, that required as a condition of settlement that the plaintiffs "who may have previously cooperated" with the District Attorney notify him that they no longer wished to "participate in any investigation or criminal prosecution" related to the subject of the lawsuit. The settlement papers did allow the plaintiffs to respond to a subpoena or court order (as they would be required by law), but required that if they did they notify the defendants.
These somewhat unusual and to an extent daring conditions were no doubt designed to impair the District Attorney's investigation and enhance the ability of the defendants to track and combat it, while skirting the New York State penal statutes relating to bribery of and tampering with a witness. The New York statute relating to bribery of a witness proscribes conferring, offering or agreeing to confer a benefit on a witness or prospective witness upon an agreement that the witness "will absent himself or otherwise avoid or seek to avoid appearing or testifying at [an] action or proceeding" (or an agreement to influence his testimony). Penal Law 215.11 (see also Penal Law 215.30, Tampering with a Witness). Denying a prosecutor the ability to speak with prospective victims outside a grand jury makes the prosecutor's job of gathering and understanding evidence difficult in any case. Here, where it is likely, primarily because of a 120-day maximum residency limit on condo purchasers, that many were foreigners or non-New York residents and thus not easily served with process, the non-cooperation clause may have impaired the investigation more than it would have in most cases.
A clause requiring a purchaser to declare a lack of desire to participate, of course, is not the same as an absolute requirement that the purchaser not participate. And, absent legal process compelling one's attendance, one has no legal duty to cooperate with a prosecutor. It is questionable that if, after one expressed a desire not to participate, his later decision to assist the prosecutor voluntarily would violate the contract (but many purchasers would not want to take a chance). The condition of the contract thus, in my view, did not violate the New York statutes, especially since the New York Court of Appeals has strictly construed their language. People v. Harper, 75 N.Y.2d 373 (1990)(paying victim to "drop" the case not violative of statute).
I have no idea whether the settlement payment to the plaintiffs would have been less without the condition they notify the District Attorney of their desire not to cooperate. And, although the non-cooperation of the alleged victims no doubt made the District Attorney's path to charges more difficult, the facts, as reported, do not seem to make out a sustainable criminal prosecution. Allegedly, the purchasers relied on deceptive statements, as quoted in newspaper articles, by Mr. Trump's daughter Ivanka and son Donald Jr. that purportedly overstated the number of apartments sold and by Mr. Trump that purportedly overstated the number of those who had applied for or expressed interest in the condos, each implying that the condos, whose sales had actually been slow, were highly sought. A threshold question for the prosecutors undoubtedly was whether the statements, if made and if inaccurate, had gone beyond acceptable (or at least non-criminal) puffing into unacceptable (and criminal) misrepresentations.
Lawyers settling civil cases where there are ongoing or potential parallel criminal investigations are concerned whether payments to alleged victims may be construed by aggressive prosecutors as bribes, and often shy away from inserting restrictions on the victims cooperating with prosecutors. On the other hand, those lawyers (and their clients) want some protection against a criminal prosecution based on the same allegations as the civil suit. Here, Trump's lawyers boldly inserted a clause that likely hampered the prosecutors' case and did so within the law. Nonetheless, lawyers seeking to emulate the Trump lawyers should be extremely cautious and be aware of the specific legal (and ethical) limits in their jurisdictions. For instance, I personally would be extremely hesitant to condition a settlement of a civil case on an alleged victim's notifying a federal prosecutor he does not want to participate in a parallel federal investigation. The federal statutes concerning obstruction of justice and witness tampering are broader and more liberally construed than the corresponding New York statutes.
Wednesday, March 16, 2016
By now, every reader knows that President Obama has appointed D.C. Circuit Chief Judge Merrick Garland to the Supreme Court. On the merits, Garland appears to be a sterling appointment with impressive credentials and moderately liberal views on most issues and moderately pro-government views on criminal issues, positions that approximate those of the President. As a political matter, he, of the named contenders for the Supreme Court, is the one most likely to overcome the Republicans' stated refusal to approve any nominee until the next President is in office. I predict that Garland will be confirmed, but not until 2017, in the first term of President Hilary Clinton.
Garland, I also predict, will be a middle-of-the-road justice on criminal justice issues and generally pro-government on white-collar crime issues, somewhat like Justice Elena Kagan. He will, at least on white-collar issues, be far less pro-defense than his predecessor, Justice Antonin Scalia. Scalia, although painted by liberals as an arch-conservative (as indeed he was on some social issues, like abortion and same-sex marriages) had pro-defense views on many issues, such as the right to confront witnesses, the right to trial by jury, and overcriminalization. Not only did he often vote in favor of the defendant, he sometimes authored opinions with innovative interpretations that became established law.
At a bar affair at which I was introduced to Justice Scalia as the president of the National Association of Criminal Defense Lawyers, he said, absolutely deadpan, "Why don't you guys give me an award? I'm the best justice you have." The NACDL never did, nor was it to my knowledge ever seriously considered, no doubt because of his overall conservative reputation and record. It may to some seem far-fetched, but I would not be surprised if a few years ago from now, white-collar defense lawyers will be lamenting the loss of Justice Scalia.
Monday, March 7, 2016
What do Bill Cosby and Whitey Bulger have in common? Both have lost challenges to criminal accusations based on the claim that their prosecutions were barred because they received oral, informal grants of immunity from prosecutors.
Last week, the First Circuit denied the appeal of Joseph (Whitey) Bulger, the notorious Boston mobster who was on the lam for 17 years until his 2011 arrest in California. Bulger was convicted after trial in 2013 for racketeering for participating in eleven murders and other crimes, and was sentenced to two life sentences plus five years. He is now 86.
Bulger's primary claim on appeal was that he was denied his constitutional rights to testify and to present an effective defense by the refusal of the trial judge to allow him to testify before the jury that he was granted immunity for both past and future crimes by a now-deceased high-ranking DOJ prosecutor. Interestingly, Bulger claimed that that the purported immunity grant was not in exchange, as one might suppose, for his providing information to or testifying for the prosecutor, but for his protecting the prosecutor's life. He insisted, contrary to widely-accepted reports, that he was not an informant.
The Court of Appeals upheld the district court's rulings that whether the prosecution was barred because of immunity was to be determined prior to trial by the judge, and not by the jury, and thus Burger could not present to the jury testimony about the purported immunity promise . Although the appeals court ruled that Burger had waived consideration of the issue on the merits by his failure to present the trial judge with any evidence, but only with a "broad, bald assertion from defense counsel lacking any particularized details," it reviewed the judge's merits determination on a "plain error" standard, and found that the judge was not "clearly wrong" in deciding that Bulger had failed to demonstrate either that the promise had been made, or, that if it had been made, that the promising prosecutor had authority to make it..
The government described Bulger's claim that the prosecutor promised him immunity "frivolous and absurd." What did give Bulger's contention an infinitesimally slight possibility of credibility, however, was that there was a demonstrated history (although not presented at the trial) that the Boston FBI had for years ignored Bulger's criminal acts when he served as an informant for them.
To be sure, the similarities between the Cosby and Bulger situations are limited. In the Cosby case the then District Attorney, the prosecutor who, if anyone, had authority to grant immunity, testified that he did promise not to prosecute Cosby. Here, there was no corroboration whatsoever of the purported promise by a now-dead prosecutor, and the Department of Justice strongly contended that even had such a promise been made, the prosecutor had no authority to make it. However, the decision, made by a respected appellate court (although under a different set of procedural rules and no binding or other authority over a Pennsylvania state trial court) does squarely hold that whether a prosecutor has granted immunity is not a jury question. And, should Cosby try to re-litigate the immunity issue before his jury, the decision will likely be cited by the District Attorney.
Friday, March 4, 2016
New England Patriot quarterback Tom Brady did not get the reception he wanted at the oral argument of the appeal of the National Football League (NFL) of a district court decision overturning his four-game suspension in the so-called Deflategate case. Brady has been accused of conspiring with Patriot employees to deflate footballs so that they were easier for him to throw in a game in cold weather. The appellate court spent a considerable amount of time questioning Brady's counsel about Brady's destruction of his cellphone shortly before he was to appear before NFL investigator Ted Wells.
In my view the evidence concerning whether the footballs were deflated was equivocal and, even if they were deflated, the evidence that Brady was knowingly involved was largely speculative, and in total, absent an inference of wrongdoing from the unjustified destruction of evidence, probably not sufficient to meet even the minimal 51-49 "more probable than not" standard used in the NFL and most other arbitrations. Evidence of the suspiciously timed destruction of the cellphone, and the lack of a convincing justification for it, however, for me pushes the ball over the 50-yard line and may be the linchpin of an appellate decision upholding the suspension. As Judge Barrington Parker stated at oral argument, "The cellphone issue raised the stakes. Took it from air in a football to compromising a procedure that the commissioner convened." He asked Brady's counsel,"Why couldn't an adjudicator take an inference from destroying a cellphone?," then stated that Brady's explanation - that he regularly destroyed cellphones for privacy reasons - "made no sense whatsoever."
Courts are understandably especially sensitive (sometimes too sensitive and too punitive, in my view) to acts like perjury or destruction of evidence which obstruct investigations or prosecutions. Our justice system relies, at least theoretically, on the basic (although somewhat erroneous) principle that, at least generally, witnesses will not violate the oath to tell the truth. It is therefore no great surprise that the court focussed on Brady's destruction of evidence and his purportedly lying about it. Indeed, Judge Parker appeared to accept that even if Brady had not been involved in tampering with the footballs, his destruction of evidence would justify Goodell's decision. "Let's suppose a mistake was made and the footballs weren't deflated, and then a star player lies in his testimony and destroyed his phone. An adjudicator might conclude the phone had incriminating evidence. Why couldn't the commissioner suspend Brady for that conduct alone?"
Of course, it would be rather perverse if Brady's suspension were upheld when in fact he had actually not been involved in deflating footballs and had destroyed his cellphone as an excuse for not producing it and lied about it for reasons unrelated to the deflating issue, such as that the phone contained wholly unrelated embarrassing information or that he possesses an Apple-like principled view of privacy rights. It calls to mind Martha Stewart, who was convicted and jailed for lying to federal agents and prosecutors in a proffer session even though the underlying insider trading allegation about which she was questioned, was not prosecuted. On the other hand, it would not be perverse if in fact the destroyed cellphone did contain incriminating conversations.
Sometimes a client under investigation asks his lawyer what the client should do with incriminating evidence he possesses. As much as the lawyer in his heart may want the evidence to disappear, he cannot ethically or legally advise the client to conceal the evidence. (The specific advice will vary depending on the facts and circumstances.) The lawyer should frankly explain his ethical and legal obligations. However, generally the client doesn't give a hoot about them. The lawyer should explain that destruction, tampering and concealment of evidence, if discovered by the prosecutor, will undoubtedly eliminate the possibility of non-prosecution, lessen the possibility of a favorable plea deal, strengthen the prosecution's case at trial, and, if there is a conviction, undoubtedly cause a more severe sentence. Just as lawyers sometimes invoke the Stewart case to caution about the danger of voluntary interviews with prosecutors, so might they invoke the Brady case to caution about the danger of destruction of evidence.
The Brady case highlights the danger of destruction of evidence and lying to investigators.
Wednesday, February 24, 2016
This morning the Texas Court of Criminal Appeals put the final nail in the coffin of former Governor Rick Perry's criminal case. The indictment was returned to the trial court to be dismissed. Here is the majority opinion in Ex Parte Rick Perry.
Thursday, February 4, 2016
The decision by a Philadelphia suburban trial court that a previous prosecutor's publicly announced promise not to prosecute Bill Cosby was not enforceable has virtually no precedential value anywhere, but it may affect how prosecutors, defense lawyers, defendants and targets act throughout the nation. The rule of law from this case seems to be that a former prosecutor's (and perhaps a current prosecutor's) promise not to be prosecute, at least when not memorialized in a writing, is not binding, even when the target relies on it to his potential detriment. That promise can be disavowed by a successor prosecutor, and perhaps by the prosecutor himself.
Occasionally, cases arise where defense lawyers contend that prosecutors violated oral promises made to them and/or their clients. Such situations include those where a prosecutor, it is claimed, promised a lawyer making an attorney proffer that if his client testified to certain facts, he would not be prosecuted or would be given a cooperation agreement and favorable sentencing consideration. Often these instances result in swearing contests between the adversary lawyers: the prosecutor denies making any such promise and the defense lawyer says he did. In most instances, in the absence of a writing, the court sides with the prosecutor. With respect to plea agreements, some courts have set forth a black-letter rule that promises not in writing or on-the-record are always unenforceable.
The Cosby case is very different. There the (former) prosecutor in testimony avowed his promise, which was expressed in a contemporaneous press release, although there was no formal writing to defense counsel or a court, and expressly testified he did so in part in order to deprive Cosby of the ability to invoke the Fifth Amendment in a civil case brought by the alleged victim, he also said that he believed his promise was "binding." Cosby, according to his civil lawyer, testified at a deposition because of that prosecutorial promise. (Generally, prudent prosecutors, when they announce a declination to prosecute give themselves an "out" by stating that the decision is based on currently-known information and subject to reconsideration based on new evidence).
To a considerable extent, the criminal justice system relies on oral promises by prosecutors (and sometimes judges) to defense lawyers and defendants, especially in busy state courts. And, in federal courts, while immunity agreements are almost always in writing, federal prosecutors (and occasionally, but rarely, federal judges) often make unrecorded or unwritten promises. Sometimes such prosecutorial promises are made in order to avoid the time-consuming need to go through bureaucratic channels; sometimes they are made by line assistants because they fear their superiors would refuse to formalize or agree to such a promise; sometimes they are made to avoid disclosure to a defendant against whom a benefiting cooperator will testify. Based on the Pennsylvania judge's decision, some defense lawyers (and some defendants) will believe that prosecutors' oral promises are not worth the breath used to utter them, and, perhaps, since there appears to be no dispute that such a promise was made here, that written promises are barely worth the paper they are written on.
Defense lawyers are frequently asked by their clients whether they can trust the prosecutor's word in an oral agreement. My usual answer is that they can: most prosecutors are reliable and honest. Defense lawyers are then sometimes asked a variant question about what will happen if the promising prosecutor leaves the office or dies. My usual answer is that if there is no disagreement as to whether the promise was made, it will be honored. The Cosby decision has made me reconsider that response.
There are certain highly-publicized cases of celebrities of little precedential or legal value that have a considerable effect on the practice of law by both prosecutors and defense lawyers. The case of Martha Stewart, who was, on highly disputed testimony, convicted of 18 USC 1001 for lying in a voluntary proffer to prosecutors investigating her purported insider trading (which, assuming it occurred, was most likely not a crime), is still invoked by prosecutors in cautioning witnesses not to lie to them and by defense lawyers in cautioning witnesses about making a voluntary proffer. The Cosby case will likely be cited by defense lawyers and their clients concerning the uncertain value of oral agreements with prosecutors. The skepticism of many defense lawyers about the reliability of agreements with the government and trustworthiness of prosecutors will grow. I suspect the sarcastic refrain of some defense lawyers, "Trust me, I'm the government," will be said more often.
I assume that the decision will be appealed, and also that a motion will be made to exclude Cosby's deposition because it was a consequence of the promise. That latter motion is likely to be denied based on the judge's decision on the issue discussed here, although since the judge failed to set forth any reasoning for his decision, there may be room for distinguishing that issue from the one decided.
Although the judge's ruling has no doubt pleased those clamoring for Cosby's conviction and those desiring a decision on the merits, it may have a considerable negative effect on the perceived integrity and reliability of prosecutorial non-memorialized promises and the actual practice of criminal law. And it reveals once again how celebrity cases often make bad law.
Tuesday, December 8, 2015
Not surprisingly, New York County District Attorney Cyrus Vance's office has announced it will after a hung jury retry, albeit in slimmed-down form with fewer defendants and counts, the criminal case involving the defunct firm of Dewey & LeBoeuf's alleged misrepresentations in seeking financing during its desperate dying days. Prosecutors rarely admit defeat in big cases after a single hung jury. Double jeopardy does not apply.
The major defendant, against whom (as often happens with the highest-ranking officer) there is the least evidence, Steven H. Davis, its former chair, has been pared from the case and apparently will receive a deferred prosecution. "Deferred prosecutions" are rarely, if ever previously, given to individuals by New York state prosecutors, at least by that name. Although the terms have not been announced, this disposition, I suspect will essentially be just a dismissal dressed up so that the prosecutor can save some face and not admit a total loss.
The prosecutor, as is a custom in New York County, announced publicly on the record his plea offers to the three defendants remaining. I find this custom repugnant and sometimes in return I announce the defendant's terms for a final disposition - such as, a dismissal, an apology by the prosecutor and a testimonial dinner in the defendant's honor.
The plea offers here were a felony plea with a one-to-three year jail term to Joel Sanders, a felony plea with 500 hours of community service to Stephen DiCarmine, both of whom spent six months at the trial that ended in a hung jury, and a misdemeanor plea with 200 hours of community service, to Zachary Warren, who was severed and has not yet gone to trial. I would not be surprised if these cases were settled before trial, not necessarily at the offered price.
Thursday, December 3, 2015
The New York Times reported today (Goldstein, "Witness in Insider Trading Inquiry Sentenced to 21 Days, see here) what it called a "surprising" 21-day prison sentence imposed by Judge P. Kevin Castel upon a felony conviction broke "what has been the standard practice" in insider trading cases in the Southern District of New York. Anyone not familiar with the customs of that court's prosecutors and judges might think that such a sentence was out-of-the-ordinary lenient. However, as the article makes clear, that sentence, for a major cooperator, was apparently considered out-of-the-ordinary harsh.
The defendant, Richard Choo-Beng Lee, was a California hedge-fund owner who, after being approached by FBI agents with evidence that he (and his partner, Ali Far, who was later sentenced to probation by a different judge) had broken securities laws, cooperated with the government by recording 171 phone calls with 28 people, including Steven A. Cohen, DOJ's no. 1 target, who has not been indicted (although his firm, SAC Capital Advisers, was and pleaded guilty and paid a multi-billion dollar fine).
New York City is the cooperation capital of the world. As the Times article indicates, cooperators in white-collar (and other) cases in the Southern District of New York are given considerable benefits for cooperating (far greater than in most jurisdictions) and the default and almost uniform sentence for them is probation and not jail. To be sure, cooperators make cases, and many of those cases and the individuals charged would go undetected without cooperators looking to provide assistance to the government to lessen their own potential sentences.
However, the cooperation culture in New York has many deleterious consequences. To the extent that deterrence is achieved by jail sentences (and I believe it is in white-collar cases, but not in many other areas), its effect has been minimized. The clever white-collar criminal (and most but not all are intelligent) knows that he has in his pocket a "get-out-of-jail card," the ability to cooperate against others and get a non-jail sentence. The mid-level financial criminal can commit crimes, enjoy an outrageously lucrative, high-end life style, and, when and if caught, cooperate, stay out of jail and pay back what assets, if any, remain from his wrongdoing.
Knowledgeable white-collar defense attorneys are well aware of the benefits of cooperation. It is often good lawyering to urge cooperation, at times even in marginal cases, to avoid jail sentences. Indeed, more than a a trifling number of those who plead guilty in white-collar cases are actually innocent, often because they lack the requisite mens rea (a difficult, even when accurate, defense). And sometimes, at the urging of their lawyers, they admit guilt and tailor their stories and testimony to what the prosecutors and agents (who usually see only the dark side of equivocal facts and circumstances) believe actually occurred so that others actually innocent are convicted (or also choose to plead guilty and perhaps cooperate against others). The bar for indictment and conviction has been lowered. The adversary system has been turned sideways, if not upside-down.
To many, probably most, lawyers, cooperation is personally easier than going to trial. Cooperation avoids the stress of battle and the distress of (statistically probable) defeat at trial. No longer do lawyers walk around with "no-snitch" buttons. The white-collar bar has become generally a non-combative bar. To the extent it ever had one, it (with notable and not-so-notable exceptions) has lost its mojo. The first (and often only) motion many lawyers make upon being retained is to hail a taxi to the prosecutor's office.
I write about the role of the bar as a lament more than a criticism. I too represent cooperators when I think cooperation is to their benefit. There is a great penalty (or, to put it gently, "loss of benefit") for not cooperating. Those accused who choose not to cooperate, or those whose own scope of criminality and knowledge of wrongdoing of others is so limited that they cannot, receive (in my opinion sometimes, but far from usually, appropriate) severe jail sentences. Those who cooperate, except for the unfortunate Mr. Lee, almost always avoid jail.
Lawyers and professors talk about the "trial penalty," the extra, often draconian, prison time one receives for exercising his right to trial. The principal "penalty" in white-collar cases is not the trial penalty, but the "non-cooperation penalty." Even those who choose not to go to trial and plead guilty are punished much more severely than those who cooperate.