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.
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.
Wednesday, August 24, 2016
Criminal defense lawyers in federal courts in this nation on an average plead 35 defendants guilty for every one they take to trial. Accordingly, many criminal defense lawyers are not much more "trial lawyers" than the many big firm "litigators" who have never selected a jury or cross-examined a trial witness. However, one area in which federal defense lawyers have plenty of experience is crafting the expressions of remorse made at sentencing by virtually every criminal defendant (save those who were convicted after trial and intend to appeal and do not wish to make any sort of admission because it might later be used against them). The expression of remorse, a near uniform ritual in every federal sentencing proceeding, is made in order to ensure that the court grant a reduction in the Sentencing Guidelines level of two or three levels for "acceptance of responsibility" (USSG Sec. 3E1.1) and to demonstrate that the defendant is truly sorry and contrite for having committed criminal acts, a factor many judges consider in the sentencing determination.
To be sure, the incantation of remorse is often less than fully sincere, and the defendant is actually only sorry that he was caught and is now facing punishment. An astute defense lawyer will counsel her client that the expression of remorse should reflect his realization of and sorrow for the wrong he has done and harm he has caused to his victims and to society in general, and not only to his family and friends, and not to excuse or justify his acts, or minimize the damage. She will counsel her client not to use weak words like "regret" or stiff ones like "remorseful." Thus, it is difficult for a judge to distinguish the absolutely genuine shame and sorrow some defendants feel from the false impression of remorse others present.
Some judges do suspect or realize that the expression of remorse is not genuinely sincere, but feel that the mere expression of remorse is itself a step forward. Others, while perhaps doubtful of the defendant's sincerity, accept the expression of remorse without comment or much consideration. Some judges accept the apology at face value and credit it. Some few listen carefully and skeptically, and, if they detect a false note, sometimes comment on the defendant's lack of genuine remorse to justify, in part, a severe sentence (which they had probably decided beforehand to impose in any case). I have not heard of a judge who denied an acceptance of responsibility reduction solely because of the defendant's presumed insincerity. (I wonder whether such a determination would be upheld on appeal; I suspect, depending on the facts, that it might.)
Last week, two notable men, presidential candidate Donald Trump and Olympic swimmer Ryan Lochte (neither of course criminal defendants) made widely-publicized "apologies" of sorts. Both "apologies" would trouble a judge considering whether to credit the speakers for "acceptance of responsibility" or genuine remorse.
Mr. Trump. who in the course of his campaign has insulted the parents of a heroic soldier who died in action, a woman Fox television commentator, a federal judge of Mexican ancestry, a U.S. Senator who was a prisoner of war for five years, a disabled reporter, and, generically, Mexicans and Muslims, chose to use the word "regret" rather than "sorry" or "apologize." And his "regret" was for an inadvertent slip of the tongue, rather than a deliberate slur, and without any specificity of what statements he regretted or whom he may have harmed and no direct admission that they did harm anyone. He said, "Sometimes in the heat of debate, and speaking on a multitude of issues, you don't choose the right words or say the right thing. I have done that, and, believe it or not, I regret it, I do regret it, particularly where it may have caused personal pain."
Mr. Lochte, in a television interview and at least one social media post, presented a fictitious account of robbers in police uniforms pulling over a taxi he and fellow swimmers were in and robbing them at gunpoint. This account received widespread publicity (perhaps to Mr. Lochte's surprise)and was a great international embarrassment for Brazil, a country which with its many troubles appeared to have demonstrated competence and provided adequate safety for the Olympics. In fact, as Mr. Lochte's swim team colleagues later admitted, they were drunk, urinated on a wall, and vandalized the gas station, and that the guns were drawn by security guards who demanded they pay compensation for the damage before they left. Faced with the contradictory statements by his colleagues, Mr. Lochte then said, "I want to apologize for my behavior last weekend - for not being more careful and candid in how I described the events of that early morning." He went on to excuse himself even for that minor transgression by seemingly claiming he was victimized: "It's traumatic to be out late with your friends in a foreign country - with a language barrier - and have a stranger point a gun at you and demand money to let you leave." While Mr. Lochte did use the word "apologize," his apology minimized his misbehavior by describing it as lack of carefulness and candor rather than lying, and omitted any mention of the intoxication, urination and vandalism.
Similar "apologies" by criminal defendants would both cause scrutiny and little impress federal sentencing judges. Mr. Trump's was limited by the use of the wishy-washy word "regret." Both Mr. Trump's and Mr. Lochte's played down their own seeming misbehavior. And, both contained defenses or excuses to justify or mitigate the limited degree of impropriety they admitted. Defense lawyers should keep copies of these "apologies" to show their clients how not to do it.
Were Mr. Trump or Mr. Lochte criminal defendants who had offered "apologies," a federal judge might have some difficulty finding, even if they had pleaded guilty, that they had "clearly demonstrate[d] acceptance of responsibility for the offense." USSG Sec. 3E1.1(a).
Tuesday, August 23, 2016
In June 2016, the U.S. District Court for the District of Maryland (Judge George Levi Russell III, presiding) granted Reddy Annappareddy a new trial on the grounds that the prosecutors presented false evidence to the jury at his first trial and that the outcome might have been different without the false evidence. This ruling is part of a remarkable turnaround for Mr. Annappareddy, whose case appeared to be over after the first trial ended in December 2014.
The case is captioned as United States v. Annappareddy, No.1:13-cr-00374 (D. Md.). The prosecutors’ main allegation during the first trial was that Mr. Annappareddy’s chain of pharmacies, known as Pharmacare, committed health care fraud by billing government insurance programs for prescriptions that were never picked up or delivered. The most significant evidence that the prosecutors offered in support of this allegation was a calculation of the purported “loss” from the alleged fraud. Mr. Annappareddy’s current counsel, Mark Schamel and Josh Greenberg of Womble Carlyle, began working on the case in the spring of 2015. In September 2015, they filed a Supplement to the one-and-a-half-page Motion for New Trial filed by Annappareddy's original trial counsel. The Supplement and a Reply in support of it argued, among other things, that the prosecutors presented materially false evidence to the jury on a number of important subjects in violation of the Due Process Clause.
After many months, during which the parties took depositions of trial counsel and Greenberg and Schamel filed extensive additional briefs raising troubling issues, the Court scheduled a hearing for June 3 on Annappareddy's Motion for New Trial. On the afternoon of June 2, the prosecutors filed a letter with the Court conceding that the "inventory analysis" it presented to the jury, in an effort to prove purportedly enormous losses caused by Annappareddy, was in "substantial error", rendering its own evidence "wrong", and violative of Due Process. The Government effectively joined Annappareddy's Motion for New Trial, which was granted the next day by Judge Russell during a status conference.
Judge Russell scheduled a second trial – to last eight weeks, three weeks longer than the first trial – to begin on September 19. Last month, the Court entered an Order denying the Government's motion to delay the second trial. The Order emphasizes that the Court granted a new trial because the prosecutors presented “significant material and false testimony” at the first trial and that the delay they sought “would be fundamentally unfair” to Mr. Annappareddy.
While government admissions of error are always welcome, one of the striking things about this case has been the prosecution's reluctance to admit that the evidence it presented to the jury was not just wrong or in error--it was false.
The defense recently filed a motion calling for dismissal with prejudice. Check this space for further details. The multiple briefs filed by Greenberg and Schamel since they entered their appearances represent outstanding work.
Here are some relevant documents pertaining to the case: a partial transcript from the U.S. v. Annappareddy 6-3-16 Status Conference; Judge Russell's 7-6-16 Order Denying Gov't's Motion for Modification of Trial Schedule; and the Government's Letter to Court Conceding that New Trial is Warranted.
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 21, 2016
Elkan Abramowitz, one of the best and most-respected white collar crime defense practitioners in the nation, last week received the Robert Louis Cohen Award for Professional Excellence from the New York Criminal Bar Association. At the dinner at which he received the award, Mr. Abramowitz spoke thoughtfully about the pernicious effect of prosecutions of corporations, particularly on the rights corporate employees.
The recent focus on perceived corporate wrongdoing, he said, "has seriously impeded the rights of individual employees caught up in the web of ... corporate investigations." He pointed out that the "simple threat"of a corporate investigation has forced corporations "to conduct internal investigations upon any suspicion of wrongdoing" and, because corporations rarely, if ever, can risk going to trial, they will end up disclosing alleged criminality to the prosecutors to work out the best deal they can. The results as to the corporations themselves are non-prosecution or deferred prosecution agreements "which typically give the prosecutors much more power over the corporation than [they] would have if the corporation were actually convicted of a crime in court." The results as to corporate employees are at the insistence of prosecutors as a condition for a deal with the corporation that "the heads of individual employees be handed to them on a silver platter."
Mr. Abramowitz made a distinction between investigations by prosecutors who "hopefully most of the time" investigate without bias toward a particular result and corporations which in an internal investigation "are incentivized to find out and expose criminality." Thus, corporate employees are explicitly made to understand that if they refuse to testify they will be terminated and often told that their legal fees will not be paid if they chose to defend themselves." And, since these individuals accordingly sometimes choose not to hire counsel and to talk to internal investigators, the information presented to prosecutors by corporations often provides "more ammunition" than an investigation conducted by the FBI, police or another federal agency.
The results are, Mr. Abramowitz said, cases against individuals "that might never have been brought without the corporation's coercion." Thus, he believes, "Whatever social utility is believed to be served by this system,..this outsourcing of a purely governmental function is extremely dangerous and [causes] great injustices to individuals working in companies under investigation."
Mr. Abramowitz's observations of the systemic changes, most obviously the role of corporations and their special prosecutors (who, interestingly, he did not mention specifically) as quasi-prosecutors, are right on the mark. And, he is quite correct that the prosecution of individuals coerced into giving up their rights to silence and to counsel in response to their employer's demands "flies in the face of the restraining values of our society as expressed in the Bill of Rights." However, I suspect that most prosecutors and many others (including those liberals and others who like Bernie Sanders are still complaining that no individuals from the big institutions involved in the 2008 financial crisis were jailed) would not say that on balance the addition of corporations to those ferreting out financial crime is a negative one. After all, that addition presumably has or will result in more indictments, convictions, and jail sentences of individuals who have committed financial crimes. While I too bemoan the incursion into fundamental individual rights as a result of corporate prosecutions, I suspect Mr. Abramowitz and I are in the minority.
Monday, June 13, 2016
A few weeks ago, in United States v Nesbeth (15 CR-18, EDNY, May 24, 2016) Judge Frederic Block wrote an important opinion on the effect of post-conviction collateral consequences on one convicted of a felony, and as a result of such consequences imposed a one-year probation sentence on a woman convicted of importing cocaine. He wrote that "sufficient attention has not been paid at sentencing by me and lawyers - both prosecutors and defense counsel - as well as by the Probation Department to the collateral consequences facing a convicted defendant." He went on to a history of collateral consequences, efforts at reform, and the breadth of post-conviction statutory and regulatory collateral consequences. He noted the "broad range of collateral consequences that serve no useful purpose other than to punish criminal defendants after they have completed their court-imposed sentences."
The opinion is a call for reform, for mitigation of sentences because of such additional punishment, and for increased awareness of collateral consequences by all participants in the sentencing process. Judge Block specifically called for probation officers "to assess and apprise the court, prior to sentencing, of the likely collateral consequences facing a convicted defendant."
Judge Block recognized an apparent Circuit split as to whether collateral consequences may be a mitigating factor in sentencing. The Sixth, Seventh, Tenth and Eleventh Circuit seemingly have found that collateral consequences may not be considered, while the Second and Fourth Circuits appear to have found that they may. I believe that under 18 USC 3553(a) they may, especially when atypical, be considered.
White-collar defendants obviously face not only the usual collateral consequences applicable to all convicted felons, but often also special ones such as loss of licenses or other professional bars. I personally have had limited success in appealing to judges to mitigate sentences against white-collar defendants because of collateral consequences. Many judges feel that that to consider those factors would favor the rich and well-educated over the poor and less-educated. To be sure, as Judge Block's opinion demonstrates, the poor and less-educated too suffer from such collateral consequences.
Defense lawyers should, as Judge Block writes, be aware of such consequences in order to set them forth as mitigating factors at sentencing. Such knowledge is also necessary to inform defendants of these consequences so that they may make an educated decision whether to plead guilty. As indicated by the flurry of defendants who have claimed they were unaware that their guilty pleas would subject them to deportation, lawyers historically may not have focused on collateral consequences.
Wednesday, May 4, 2016
As every veteran litigator knows, who the trial judge is not only a major determinant in the ultimate result of a case, but a major factor in how unpleasant and difficult the lawyer's life will be. There are judges, I suspect fewer than in the past, who are so biased to defendants and hostile to their lawyers, more often to defense lawyers than prosecutors, that the case is a nightmare for the lawyers (and obviously their clients). Reversals of judges for intemperate and biased conduct toward lawyers, or even the generally meaningless criticisms in cases that are not reversed, are rare. Defense lawyers, therefore, rejoice when one of those decisions is issued by an appellate court.
Last week, the Ninth Circuit in an unpublished opinion, United States v. Onyeabor, 13-50431 (April 27, 2016), reversed a conviction by a jury before Central District of California Judge Manuel Real primarily because the judge's remarks "devastated the defense, projected an appearance of hostility to the defense, and went far beyond the court's supervisory role" so that they "revealed such a high degree of antagonism as to make fair judgment impossible." This is not the first time the court has admonished Judge Real, who in 2006 was the subject of a Congressional investigation which considered but did not vote impeachment.
Almost every state has a judicial conduct commission which on occasion removes unfit judges. These commissions generally consist of a combination of judges, lawyers, and laypeople. There is no direct federal analog, although there is a somewhat clumsy apparatus whereby the judiciary itself may impose sanctions and recommend that Congress consider impeachment. Sanctions on federal judges for abusing lawyers and litigants are, to my knowledge, virtually non-existent. Although a federal judge apparently may be removed for beating a spouse (as Alabama District Judge Mark Fuller likely would have, had he not resigned) , he or she will likely not be sanctioned at all for beating up lawyers and defendants.
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.
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.
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.
Saturday, December 5, 2015
Congratulations to the defense team members and their client in U.S. v. Bajoghli. After a 16 day trial, the dermatologist defendant was acquitted on all counts--over 40. Dr. Bajoghli was represented by Peter White and Nicholas Dingeldein of Schulte Roth & Zabel and Kirk Ogrosky and Murad Hussain from Arnold & Porter. The jury was out a day and a half.
There was some interesting motion work during the pre-trial phase, for those of us interested in government efforts to affect witness testimony. Six weeks before the original trial date, the government sent "victim impact notification" letters to several of Dr. Bajoghli's patients. Dr. Bajoghli complained that the patients, many of whom were scheduled to be defense witnesses, were not victims and that the letter was intended to prejudice the patients against him. Judge Gerald Lee granted the motion and issued a corrective letter. Here are the relevant papers: Bajoghli Motion in Limine Seeking Corrective Witness Instructions, Exhibit A Ogrosky Letter to DOJ, Exhibit B to Bajoghli Motion, Order Granting Motion for Corrective Witness Instruction, Court's Corrective Witness Letter.
Thursday, December 3, 2015
Not Guilty on Two Counts and Conviction on a Misdemeanor Count in CEO's Case Following Deadly Mining Accident
It is interesting to see the headlines from the NYTimes - Former Massey Energy C.E.O. Guilty in Deadly Coal Mine Blast and Politico - Coal baron convicted for mine safety breaches. Both headlines focus on the conviction of the CEO. The Wall Street Journal headline says - Jury Convicts Former Massey CEO Don Blankenship of Conspiracy - but does say in smaller print below this headline "Former executive found not guilty of securities-related charges after deadly West Virginia mining accident."
Yes, it is important to note that a CEO was convicted here of workplace related safety violations and this was after a deadly accident. But what is also important is that CEO Blankenship was found not guilty of the serious charges that he initially faced. What started as a 43 page indictment by the government (see here), ended as a misdemeanor conviction on one count. William W. Taylor, III of Zuckerman Spaeder LLP was the lead on this defense team.
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.
Remaining in this case is a single misdemeanor charge following the court's dismissal of homicide charges against a BP engineer on the Deepwater Horizon oil rig. (see here) Eleven charges were dismissed by the government in 2014 premised on the statute not applying to the operator of a drilling ship and eleven other charges were now dismissed by the court as the "government agreed" to this dismissal of charges of "'involuntary homicide' based on lack of evidence and other arguments. Initially, this individual faced 22 felony homicide charges, plus one misdemeanor charge of water pollution. The remaining misdemeanor charge is scheduled for a February trial. David Gerger from Quinn Emanuel represented the accused. See also Smyser, Kaplan & Veselka, LLP lawyers David Isaak, Shaun Clarke, and Dane Ball's role in this case (see here).
Tuesday, June 9, 2015
Three years ago, I wrote a lengthy blog piece about U.S. v. Daguerdas, a case in which a SDNY judge ordered a new trial for three of four defendants because of juror misconduct. ("Lying Juror Requires New Trial in Tax Fraud Case," July 12, 2012). The judge denied a new trial for the fourth defendant, Parse, because his lawyers, said the judge, knew or should have known of the juror's misconduct and chose not to report it to the court, and thus Parse waived the misconduct. On appeal to the Second Circuit, U.S. v. Parse (13-1388, June 8, 2015)), the Court, with Judge Amalya Kearse writing the majority opinion, reversed Parse's conviction and remanded for a new trial as to him also.
The Court spent a considerable time reviewing the record to conclude that the district court's factual findings (by Judge William Pauley) that prior to the verdict the lawyers knew about the misconduct or failed to exercise due diligence to determine whether it had occurred was "clearly erroneous" and "unsupported by the record." This ruling, with which Judge Chester Straub, while concurring in the reversal, disagreed, I am sure gave some measure of relief to the trial lawyers, from the firm of Brune and Richard, whom Judge Pauley had chastised. Those lawyers appeared to have been faced with the difficult dilemma of whether and when a lawyer is obliged to report suspected misconduct by a trial participant that is likely to be favorable to her client and to have chosen not to report something that would have diminished his (and their) chance of winning. (It is also possible that during the heat and travail of trial the lawyers never focused on the reporting issue.)
This ethical/practical dilemma arises, for instance, when an attorney suspects or believes - but lacks actual knowledge - about trial misconduct, whether minor misconduct such as a juror engaging a defendant in casual conversation outside a courtroom despite a court admonition, or major misconduct such as a witness or defendant perjuring himself. Reporting the misconduct would likely result in removing a potentially favorable juror in the first example and in striking favorable testimony and severely limiting the defense in the second, in both cases lessening the client's (and attorney's) chance of a favorable outcome.
The Court declined to adopt a general rule, as requested by the defendant and amicus New York Council of Defense Lawyers, that lawyers (including prosecutors presumably) need not bring juror misconduct to the attention of the court unless counsel actually knew that such misconduct had occurred. Nonetheless, I suspect lawyers will cite the case for that specific proposition and the broader proposition that lawyers need not report any trial misconduct unless they have actual knowledge.
Interestingly, the extensive, case-specific factual analysis about the extent of the attorneys' knowledge of the juror's misconduct was unnecessary to the Court's decision, as both the two-judge majority and concurring opinions demonstrated. Even assuming the district court was correct in its negative evaluation of the attorneys' conduct, the Court found the denial to Parse of his basic Sixth Amendment right to an impartial jury by the improper presence of the lying juror was so significant that it could not be, as the district court had found, "waived" by the lawyers' conduct, and warranted reversal.
Tuesday, June 2, 2015
Yesterday I skimmed through the FIFA indictment referred to by my colleague Lucian Dervan on May 26, 2015 ("FIFA Officials Facing Corruption Charges"), primarily to determine how the government justified jurisdiction over alleged criminal activities that largely, seemingly almost entirely, occurred in other nations, a complaint made by none other than Vladimir Putin. Upon review, I believe the indictment, apparently drafted with that question in mind, facially makes a reasonably strong case for U.S. jurisdiction, based largely, although not entirely, on money transfers through U.S. financial institutions.
There remains, however, the question whether the U.S. Department of Justice should assume the role of prosecutor of the world and prosecute wrongs, however egregious, that were almost wholly committed by foreigners in foreign nations and affected residents of those foreign nations much more than residents of the United States. Our government's refusal to submit to the jurisdiction of the International Criminal Court is arguably inconsistent with our demand here that citizens of other nations submit to our courts.
On another subject, what struck me as just wrong was a minor part of the indictment, the obstruction of justice charge against Aaron Davidson, one of the two United States citizens indicted (the other, a dual citizen, is charged with procuring U.S. citizenship fraudulently). While the obstruction of justice count itself (count 47) is a bare bones parsing of the statute, the lengthy 112-page preamble to the actual recitation of counts (to me in clear violation of Fed. R. Crim. P. 7(c), which says the indictment "must be a plain, concise and definite written statement")(emphasis added) describes Davidson's allegedly criminal conduct as follows: "Davidson alerted co-conspirators to the possibility that they would be recorded making admissions of their crimes."
Such advice is provided as a matter of course - absolutely properly and professionally, in my opinion - by virtually every white-collar or other criminal lawyer representing a target of a criminal investigation. Since lawyers are given no special treatment different from others, if these facts justify a criminal conviction, a lot of white-collar lawyers will be counting the days until the five-year statute of limitations has passed since their last pre-indictment stage client meeting.
The obstruction of justice statute is so vague that it gives the government the opportunity to charge virtually any effort by lawyers or others to advise persons under investigation to exert caution in talking with others. The applicable statute, the one used against Davidson, prescribes a 20-year felony for "whoever corruptly...obstructs, influences, or impedes any official proceeding, or attempts to do so..." 18 U.S.C. 1512(c)(2). That catch-all statute, which follows one proscribing physical destruction of tangible evidence, to me is unconstitutionally vague, but courts have generally upheld it and left the determination of guilt to juries on the ground the word "corruptly," which itself is subject to many interpretations, narrows and particularizes it sufficiently. I hope that the presiding judge in this case, the experienced and respected Raymond Dearie, does not allow that count to get to the jury.
Tuesday, April 14, 2015
Earlier this month, the Second Circuit, as expected (at least by me), denied Southern District of New York U.S. Attorney Preet Bharara's request for reargument and reconsideration of its December 2014 ruling in United States v Newman which narrowed, at least in the Second Circuit, the scope of insider trading prosecutions. I would not be surprised if the government seeks certiorari, and, I would not be all that surprised it cert were granted.
In Newman, the defendants, Newman and Chiasson, were two hedge fund portfolio managers who were at the end of a chain of recipients of inside information originally provided by employees of publicly-traded technology funds. The defendants traded on the information and realized profits of $4 million and $68 million respectively. There was, however, scant, if any, evidence that the defendants were aware whether the original tippors had received any personal benefit for their disclosures.
The Second Circuit reversed the trial convictions based on an improper charge to the jury and the insufficiency of the evidence. Specifically, the court ruled that:
1) the trial judge erred in failing to instruct the jury that in order to convict it had to find that the defendants knew that the corporate employee tippors had received a personal benefit for divulging the information; and
2) the government had indeed failed to prove that the tippors had in fact received a personal benefit.
Thus, at least in the Second Circuit, it appears that the casual passing on of inside information without receiving compensation by a friend or relative or golf partner does not violate the security laws. "For purposes of insider trading liability, the insider's disclosure of confidential information, standing alone, is not a breach," said the court. Nor, therefore, does trading on such information incur insider trading liability because the liability of a recipient, if any, must derive from the liability of the tippor. To analogize to non-white collar law, one cannot be convicted of possessing stolen property unless the property had been stolen (and the possessor knew it). Those cases of casual passing on of information, which sometimes ensnared ordinary citizens with big mouths and a bit of greed, are thus apparently off-limits to Second Circuit prosecutors. To be sure, the vast majority of the recent spate of Southern District prosecutions of insider trading cases have involved individuals who have sold and bought information and their knowing accomplices. Although Southern District prosecutors will sometimes now face higher hurdles to prove an ultimate tippee/trader's knowledge, I doubt that the ruling will affect a huge number of prosecutions.
The clearly-written opinion, by Judge Barrington Parker, did leave open, or at least indefinite, the critical question of what constitutes a "personal benefit" to a provider of inside information (an issue that also might impact corruption cases). The court stated that the "personal benefit" had to be something "of consequence." In some instances, the government had argued that a tippee's benefit was an intangible like the good graces of the tippor, and jurors had generally accepted such a claim, likely believing the tippor would expect some personal benefit, present or future, for disclosing confidential information. In Newman, the government similarly argued that the defendants had to have known the tippors had to have received some benefit.
Insider trading is an amorphous crime developed by prosecutors and courts - not Congress - from a general fraud statute (like mail and wire fraud) whose breadth is determined by the aggressiveness and imagination of prosecutors and how much deference courts give their determinations. In this area, the highly competent and intelligent prosecutors of the Southern District have pushed the envelope, perhaps enabled to some extent by noncombative defense lawyers who had their clients cooperate and plead guilty despite what, at least with hindsight, seems to have been a serious question of legal sufficiency. See Dirks v. S.E.C., 463 U.S. 646, 103 S.Ct. 3255 (1983)(test for determining insider liability is whether "insider personally will benefit, directly or indirectly"). As the Newman court refreshingly said, in language that should be heeded by prosecutors, judges, and defense lawyers, "[N]ot every instance of financial unfairness constitutes fraudulent activity under [SEC Rule] 10(b)."
As I said, I would not be shocked (although I would be surprised) if Congress were to enact a law that goes beyond effectively overruling Newman and imposes insider trading liability on any person trading based on what she knew was non-public confidential information whether or not the person who had disclosed the information had received a personal benefit. Such a law, while it would to my regret cover the casual offenders I have discussed, would on balance be a positive one in that it would limit the unequal information accessible to certain traders and provide a more level playing field.