Thursday, May 24, 2012
The Department of Justice yesterday announced the indictment of four Georgia residents for tax fraud. The press release (see here) stated, as is required by the ABA Fair Trial and Free Press Standards, ". . . the defendants are presumed innocent until proven guilty beyond a reasonable doubt." Nonetheless, the headline read "Georgia Tax Cheats Indicted for Conspiring to Defraud the United States," certainly not affording these defendants the presumption of innocence to which the DOJ release paid lip service.
The indictment was announced by the new Assistant Attorney General of the Tax Division, Kathryn Keneally, until recently my able and respected colleague in the New York City criminal defense bar. My assumption is that AAG Keneally neither wrote nor reviewed the headline.
Tuesday, February 21, 2012
[All of the facts in this post come from the 11th Circuit opinion in United States v. Ignasiak, publicly available on the 11th Circuit's website (here) or from PACER.]
Arthur Jordan used a counterfeit badge and posed as an on-duty U.S. Marshal in order to carry firearms onto commercial airplanes while on personal travel. He did this nine times. According to the United States Court of Appeals for the 11th Circuit, Jordan's "criminal conduct" resulted in "multiple violations" of 18 U.S.C. Sections 912 and 1001 and 49 U.S.C. Section 46505, and "could have been charged as felonies."
But Jordan wasn't even charged with a misdemeanor. He got pretrial diversion from the South Dakota U.S. Attorney's Office, paid $2,000.00, and agreed never to carry firearms on an airplane again, except while on official business.
Jordan is not your everyday citizen. He is none other than Dr. Arthur Jordan, who goes around the country testifying as an expert for the U.S. Government in Health Care Fraud/Controlled Substances Act prosecutions against pain management physicians. He charges $300 per hour and, during his November 2008 testimony in U.S. v. Ignasiak, claimed to have earned around $30,000.00 as a government expert up to that point in time. Dr. Jordan was the key government expert against Robert Ignasiak in the latter's criminal jury trial, testifying for almost three days. (Roy Black was lead defense counsel during the trial.)
But there's much more to the story. Given its reversal, and its finding that the evidence was sufficient, the 11th Circuit declined to address the other issues raised by Ignasiak on appeal--except for one.
You see, none of the Ignasiak defense attorneys knew during the trial about Dr. Jordan's "criminal conduct" or his South Dakota pretrial diversion agreement. Several months after the Ignasiak guilty verdicts, the government filed the Government's In Camera Notice to the Court ("Notice"). The Notice, and an accompanying affidavit, were filed under seal. This post-trial Notice revealed Dr. Jordan's conduct and his South Dakota pretrial diversion deal to Judge Lacey Collier and Robert Ignasiak's defense team for the first time. The government requested that the Notice be kept under seal, in order to protect Dr. Jordan's privacy interests.
In the Notice, the government also argued that its prior failure to disclose the Arthur Jordan impeachment material did not violate Brady/Giglio, because the Ignasiak prosecutor had not personally known about Dr. Jordan's conduct, or the South Dakota pretrial diversion agreement, during the Ignasiak trial.
Judge Collier summarily granted the government's request to seal the Notice, despite defense opposition. The defense filed a New Trial Motion based on the alleged Brady/Giglio violations. Much of that litigation was conducted under seal. A few documents are publicly available, but they are heavily redacted. The defense lost its New Trial Motion as well.
The 11th Circuit did not decide whether the government's failure to discover and disclose Dr. Jordan's conduct, before or during trial, violated Brady/Giglio. But it did order the government's Notice unsealed and, through its opinion, disclosed Dr. Jordan's "criminal conduct" and pretrial diversion deal to the bench and bar. This was an admirable public service.
The 11th Circuit was clearly displeased by DOJ's effort to shield Dr. Jordan. As the Court succinctly put it:
"Perhaps ironically, by arguing that there was no Brady violation in this case because the AUSA prosecuting Ignasiak was unaware of Dr. Jordan’s history, it is actually the government that most persuasively highlights the value in unsealing the Notice. Indeed, should the Notice remain sealed, the significant likelihood is that in the next CSA prosecution in which Dr. Jordan testifies as an expert, both the prosecuting AUSA and the defense counsel will again be unaware of the highly relevant impeachment evidence contained in the Notice. And in that case, as in this one, should the truth ever come to light, the government could again point to its own ignorance and claim immunity from Brady error. Stated this way, we would have expected the government to condemn, rather than condone, such a problematic outcome."
In light of the 11th Circuit's opinion, several questions present themselves.
1. Who Protected Jordan? In other words, why did he get what looks on its face like a very favorable pretrial diversion deal from the South Dakota U.S. Attorney's Office? Who approved the deal and who within DOJ was informed about it? How long did the diversionary period last? Was it unusually short and, if so, why?
2. Who Revealed or Failed to Reveal Jordan's Conduct and Pretrial Diversion Deal? The Ignasiak prosecution team, from the Northern District of Florida, purportedly did not know about Dr. Jordan's "criminal conduct" or his South Dakota pretrial diversion agreement until after trial. Why not? The South Dakota U.S. Attorney's Office is part of the DOJ and the U.S. Attorney network, and Dr. Jordan is fairly well known as a government expert in pain clinic cases. It is difficult to imagine that South Dakota prosecutors were not aware of Dr. Jordan's ongoing role as a government expert. Assuming that they were aware, why didn't this raise any red flags, and who, if anyone, made the decision to quarantine this obvious Brady/Giglio material? If this is a cover-up, how high did it go? Was Jordan's pretrial diversion completed before Ignasiak's trial? Was it still in force when Jordan traveled, as he surely must have, to Pensacola for trial prep? Wouldn't Jordan need permission from pretrial services in order to travel to Pensacola, and wouldn't he have to tell pretrial service the purpose of his trip? Did the South Dakota U.S. Attorney's Office know of the trip and its purpose? If so, why didn't it notify N.D. Florida?
3. Why Did N.D. Florida Try to Seal and Suppress Dr. Jordan's "Criminal Conduct" and Pretrial Diversion Deal? As the 11th Circuit correctly noted, the government's effort to seal its own Notice had the effect of shielding Dr. Jordan's misconduct from other federal prosecutorial offices. Even assuming, as the government argued in Ignasiak, that an AUSA in one federal district has no obligation to obtain Brady/Giglio from a fellow AUSA in another federal district, what possible justification is there for the active effort to suppress Brady/Giglio material that occurred post-trial in Ignasiak?
4. What Subsequent Prosecutions Have Been Sullied by the Ignasiak Brady/Giglio Suppression? Did the Florida AUSAs ask Dr. Jordan about any upcoming trials Jordan may have had on tap with other U.S. Attorney Offices? If so, did the N.D. Florida make an attempt to tell the other offices about Dr. Jordan? It unquestionably had an ethical duty to do so. What has been done since the Ignasiak opinion to look into this issue?
5. Does the DOJ Really Believe that Brady/Giglio Material Known Only to a Federal Prosecutor in South Dakota is not Brady/Giglio Material in any Other Federal District? What duty does DOJ impose upon its federal prosecutors to tell prosecutors in other federal districts about Brady/Giglio problems with testifying agents and expert witnesses? If there is no policy in this area, why not?
6. How Could This Happen? More to the point, how could this happen post-Stevens? The government filed its Notice in Ignasiak six months after DOJ moved to dismiss the Stevens Indictment with prejudice and six months after Judge Emmet Sullivan ordered his own investigation of Brady/Giglio violations. Apparently AG Holder's message fell on some deaf ears. And I guess the N.D. Florida never thought to re-examine its position, after the DOJ issued, to much fanfare, the Ogden Memo in early 2010. Even now, after the 11th Circuit's pointed comments, the government has not voluntarily moved to unseal the Notice, or the motions and responses from the New Trial Motion, in the Ignasiak case. Why not?
It is extremely difficult for me to believe that either AG Eric Holder or Assistant AG Lanny Breuer knew about the Arthur Jordan issue prior to last month's Ignasiak opinion. And therein lies the problem. Even an Attorney General and Criminal Division Chief publicly committed to rooting out Brady/Giglio abuses could not prevent the Arthur Jordan debacle.
What is the real lesson here? That prosecutors can't be trusted to make their own judgments about what is or is not exculpatory and material under Brady/Giglio. Disclosure must be the norm.
DOJ has done everything in its power to prevent meaningful statutory reform of Fed.R.Crim.App.16 and federal criminal discovery procedures. DOJ says that it can be trusted to prevent Brady/Giglio violations from occurring. The Ted Stevens prosecution is Exhibit 1 in the argument against DOJ. Now we have Exhibit 2. His name is Dr. Arthur Jordan.
Thursday, February 9, 2012
Here is Judge Emmet Sullivan's Memorandum Opinion ordering unredacted release of Hank Schuelke's Report on prosecutorial misconduct in the Ted Stevens prosecution. Any comments or objections to the report by the attorneys involved are due by March 8 and will be published along with the Report.
Sunday, January 22, 2012
Attorney Jack Fernandez (Zuckerman Spaeder LLP) has an interesting Essay for the the ABA's White Collar Book entitled, An Essay Concerning the Indictment of Lawyers for Their Legal Advice. It is here - Download 3533275_1 DOCX (3) (3)
Wednesday, November 30, 2011
Judge Emmet Sullivan's Order in relation to the Stevens case summarizing some of the findings of the special report by Hank Schuelke and William Shields was reported last week by my editor Ellen Podgor here and discussed in depth by my co-editor Solomon Wisenberg here. I add some thoughts on Brady violations in general.
First, as Mr. Wisenberg points out, few Brady violations are intentional. Although there are some rogue prosecutors who deliberately conceal what they know is information which would be beneficial to the defendant, the vast majority of Brady violators are well-meaning prosecutors who in their focus on their proof do not realize that certain information would be helpful to the defense.
Second, Brady is counterintuitive. Requiring a participant in any contest to provide information to his adversary which will decrease his chance of winning goes against the grain. Expecting a prosecutor who believes that such information is merely a means of enabling a guilty person to get off (since the material in question presumably has not changed the prosecutor's mind that the defendant is guilty beyond a reasonable doubt) to provide it to his opponent is even more problematical.
Third, Brady violations are not uncommon, although few are revealed. Since Brady violations are done in secret and the concealed evidence is unlikely ever to reach the light of day, most are undetectable. As Judge Sullivan's Order notes, many of the Brady violations in the Stevens case would never have been revealed but for the exhaustive investigation by the court's appointed investigators. And, this case, it should be remembered, involved a U.S. Senator represented by Brendan Sullivan, a superb, highly-respected and aggressive lawyer, and an outstanding law firm with considerable resources, not an overwhelmed court-appointed attorney with limited time and resources.
Fourth, as Mr. Wisenberg notes, prosecutors are rarely punished for Brady violations. Most judges either ignore the violations or gently chide the prosecutors. DOJ internal reviews of alleged prosecutorial misconduct are viewed by defense lawyers and many judges as whitewashes. Disciplinary committees historically have treated errant prosecutors gently in the few cases of prosecutorial misconduct of which they become aware, and prosecutions of prosecutors for obstruction of justice and the like for withholding evidence are virtually nonexistent.
Fifth, the legal standards for Brady disclosure are confused. Most prosecutors and judges think of Brady material as "exculpatory" material, that is, something that might have a significant impact on the determination of guilt, a standard that, to most prosecutors, eliminates all but a very few items of evidence. In fact, what should be disclosed is evidence "favorable" to the accused, a much broader category than "exculpatory." Additionally, many prosecutors believe that the standard used by reviewing courts to determine whether non-disclosure of Brady evidence requires reversal -- whether it is "material" -- is the proper standard to be used by a trial prosecutor in the initial disclose-or-not determination. "Materiality" in this context is essentially a "harmless error" standard of review used to decide whether the withheld evidence mandates reversal, not the standard to determine whether to disclose in the first instance. Just as a prosecutor's argument in summation may be improper, even if unlikely to result in reversal, concealment from the defense of favorable evidence is improper, even if not so serious that it later will be found "material" by an appellate court.
In sum, under current conditions, Brady just doesn't work. More explicit guidelines, as recently published by DOJ, will help, as would standing court orders making a violation contemptuous (as has seemingly not happened in Stevens) and stronger punishments for violations by judges, prosecutorial agencies, and disciplinary committees (and perhaps also a statute criminalizing deliberate and knowing Brady violations). But, in the end, the only real solution to Brady violations may just be, as Mr. Wisenberg suggests, open discovery in criminal cases.
Wednesday, November 23, 2011
My colleague Ellen Podgor recently commented here on Judge Emmet Sullivan's 11-21-11 ORDER in In Re SPECIAL PROCEEDINGS, the ancillary proceedings initiated by Judge Sullivan to investigate the multiple Brady violations committed by DOJ prosecutors in U.S. v. Theodore Stevens. The ensuing investigation was conducted, on Judge Sullivan's behalf, by veteran DC lawyers Hank Schuelke and William Shields, who have now issued a report that is, I hope, only temporarily under seal.
It is obvious from reading his Order that Judge Sullivan is still outraged. That's a good thing. Until enough federal judges get hopping mad about systemic DOJ Brady violations, we will have no real legislative discovery reform at the federal level.
In addition to the points highlighted by Professor Podgor, Judge Sullivan's Order notes the following findings and conclusions by Schuelke and Shields:
1. "[T]he investigation and prosecution of Stevens were 'permeated by the systematic concealment of significant exculpatory evidence which would have independently corroborated his defense and his testimony, and seriously damaged the testimony and credibility of the government's key witness.'"
2. "[A]t least some of the concealment was willful and intentional, and related to many of the issues raised by the defense during the course of the Stevens trial."
3. Schuelke and Shields "found evidence of concealment and serious misconduct that was previously unknown and almost certainly would never have been revealed--at least to the Court and to the public--but for their exhaustive investigation."
4. Schuelke does not recommend criminal contempt proceedings, because "in order to prove criminal contempt beyond a reasonable doubt under 18 U.S.C. [Section] 401 (3), the contemnor must disobey an order that is sufficiently 'clear and unequivocal at the time it is issued'... [but] no such Order existed in this case. Rather, the Court accepted the repeated representations of the subject prosecutors that they were familiar with their discovery obligations, were complying with those obligations, and were proceeding in good faith."
5. "Mr. Schuelke also notes that '[i]t should go without saying that neither Judge Sullivan, nor any District Judge, should have to order the Government to comply with its constitutional obligations, let alone that he should feel compelled to craft such an order with a view toward a criminal contempt prosecution, anticipating its willful violation.'"
6. "Mr. Schuelke 'offers no opinion as to whether a prosecution for Obstruction of Justice under 18 U.S.C. [Section] 1503 might lie against one or more of the subject attorneys and might meet the standard enunciated in 9-27.220 of the Principles of Federal Prosecution.'"
It is clear that most or all of this Report is going to be publicly released. It will be interesting to compare it to DOJ OPR's report, assuming that DOJ decides to release it. Two attorneys for two of the prosecutors under scrutiny have already announced that OPR's report clears their respective clients. DOJ has a long history of ignoring the critical comments of federal judges. The latest example of this took place in reference to the prosecution of former Blackwater employees. Despite Judge Ricardo Urbina's scathing factual findings regarding the conduct and credibility of the original set of prosecutors, they were treated to a laudatory/fawning DOJ press release upon reassignment. Urbina, like Sullivan, is one of the most respected federal judges in the country and his factual findings were not questioned or disputed on appeal.
Some final thoughts.
1. For every Emmet Sullivan (or Ricardo Urbina or Howard Matz) there are 10 federal judges who unquestioningly accept the Government's representations regarding Brady issues, irrespective of non-frivolous matters brought to their attention by the defense bar.
2. The defense attorney has an obligation to ferret out Brady issues through the filing of detailed, fact-specific Brady motions closely tied to the formal allegations in the case.
3. We must rapidly move toward open discovery in the federal criminal system, with appropriate safeguards in place to protect witnesses where necessary. The presumption, however, must always be in favor of open discovery. Many states have gone this route without any disastrous consequences. It is appalling that civil litigants have substantially more access to discovery at the federal level than do people who are literally fighting for their liberty.
4. In the meantime, federal prosecutors must be relieved of the burden of determining whether exculpatory information is material. DOJ already recommends this in the Ogden Memo, but it should go one step further and require it. The rule should be: IF IT HURTS MY CASE IN ANY WAY, TURN IT OVER! When a man judges himself, the verdict is always in his favor. When a federal prosecutor, in the heat of trial or pretrial battle, is deciding whether exculpatory evidence is material, the verdict will too often be that it is not. Let's end this invitation to injustice.
5. Of course, federal prosecutors do not think like criminal defense attorneys. That's okay. We don't want them to! But this is the very reason why they cannot ultimately be trusted to make the determination of what is or is not exculpatory. The competent defense attorney headed to trial or sentencing is constantly thinking about anything that will help the defense. Prosecutors are not trained or inclined to do this. Even when they are trying to fulllfil their Brady obligations, AND THE VAST MAJORITY OF FEDERAL PROSECUTORS ARE TRYING TO DO THIS, they cannot be trusted to spot the issues. This difference in outlook/inclination/thought processes really comes to the fore during the period leading up to sentencing hearings, when the prosecutor looks at the defense attorney like a deer in the headlights when reminded of his/her obligation to provide any and all mitigating evidence!
6. Please. Let's have no more: "We understand our Brady obligations and intend to abide by them." Congress should pass a statute requiring some form of detention for any prosecutor who utters this bromide.
November 23, 2011 in Contempt, Corruption, Current Affairs, Government Reports, Investigations, Judicial Opinions, Legal Ethics, Media, Obstruction, Perjury, Prosecutions, Prosecutors | Permalink | Comments (4) | TrackBack (0)
Friday, September 2, 2011
CNN has the story here. Judge Reggie Walton apparently blasted prosecutors, accusing them of deliberately violating his rulings during the truncated first trial. But Judge Walton believes that governing law prevents him from barring retrial on Double Jeopardy grounds. The leading Supreme Court case is Oregon v. Kennedy, 459 U.S. 812 (1982), which holds that a mistrial granted upon the request of a defendant, even if necessitated by government misconduct, only bars retrial on Double Jeopardy grounds if the prosecution intended to goad the defendant into moving for a mistrial.
September 2, 2011 in Celebrities, Current Affairs, Defense Counsel, Investigations, Judicial Opinions, Legal Ethics, News, Obstruction, Perjury, Prosecutions, Prosecutors | Permalink | Comments (1) | TrackBack (0)
Monday, July 25, 2011
This weekend saw something unusual in the nation's elite newspapers. Three detailed stories about white collar crime issues.
WSJ Weekend carried this in-depth and outstanding piece by Gary Fields and John R. Emshwiller about overcriminalization--the proliferation of criminal statutes, particularly at the federal level, covering more and more aspects of everyday life. The article also focused on Congress's increasing enactment of statutes that dispense with any meaningful mens rea element. Although both of these problems have been around for years, and the article makes no effort to treat the matter historically, it does a generally good job of framing the issues.
Fields and Emshwiller detail how the Idaho U.S. Attorney's Office successfully prosecuted a father and son for attempting "to take artifacts off federal land without a permit" under the Archaeological Resources Protection Act of 1979. They were out camping and looking for arrowheads, which they failed to find, and apparently did not know that the law existed. According to Fields and Emshwiller, the Act "doesn't require criminal intent." This is true of the Act on its face, but the father and son clearly intended to search for arrowheads and did not have a permit. This case is really more an example of obscure administrative criminal statutes that no normal person can be expected to master. Hence it is terribly unfair in such circumstances to apply the old saw that "ignorance of the law is no excuse." But don't tell that to Idaho U.S. Attorney Wendy Olson. She will just answer that "[f]olks do need to pay attention to where they are."
The article also details how Olson's office convicted an inventor for abandoning covered chemicals under the Resource Conservation and Recovery Act. This was after the inventor had been acquitted in an Alaskan federal court for illegally shipping the same chemicals without proper labeling. Would this have been the proper occasion for the exercise of prosecutorial discretion? Not a chance. According to Ms. Olson, her "office will continue to aggressively prosecute" such crimes.
Meanwhile, on Friday, the Washington Post's David Hilzenrath wrote a story with the headline, Quandary for U.S. companies: Whom to Bribe? The piece purported to give both sides of the FCPA debate, but I found it slanted towards the DOJ view. While discussing the recent convictions in the Lindsey Manufacturing case, Hilzenrath never mentions that the Lindsey guilty verdicts are in serious doubt post-trial, with further briefing due from the parties and a federal district judge who has questioned the case and is angry at the government. Even more amazingly, Hilzenrath nowhere references the recently concluded 10-week jury trial in D.C. against the first wave of defendants in DOJ's heavily publicized African Sting FCPA bribery case. The trial resulted in a hung jury mistrial. According to one of the defense attorneys, Todd Foster, the main theme of the defense was that the FCPA was too complicated to be understood by the defendants. Yet this trial, occurring right under the Post's nose, was not deemed worthy of mention. Hat tip to Todd for bringing the article to my attention.
Finally, the Sunday New York Times focuses on Murdoch's Unlikely Ally, former New York City schools chancellor and DOJ Antitrust Chief Joel Klein, in an article by Jeremy Peters, Michael Barbaro, and Javier Hernandez. It is a very good story and remarkable for its focus on the mechanics of News Corporation's internal investigation. Instead of following the "best practice" and hiring an outside law firm to conduct the investigation and report to an audit or special committee controlled by independent outsiders, News Corporation is employing something of a hybrid. It has appointed Lord Anthony Grabiner as the internal investigation's "Independent Chairman." But Grabiner sat behind, and presumably advised, the Murdochs during last week's parliamentary testimony. Grabiner will report to Klein, a News Corporation executive and trusted Murdoch adviser who also sat behind the Murdochs. Klein will report to Viet Dinh, "an independent director on the News Corporation board," for whom I have enormous respect. The article quotes University of Delaware corporate governance expert Charles Elson to the effect that this arrangement "is not standard practice." It may be more standard than Professor Elson realizes. It is obviously not the best practice for ensuring a truly independent investigation. Virtually by definition, there is no way that such an investigation can be wholly and truly independent.
By the way, even an investigation conducted by outside counsel and reporting to the audit committee (or a specially created independent committee) may only be independent up to a point. Let's say that the investigation is completed and outside counsel submits a report to the audit or independent committee. What happens next? Is the Board of Directors required to follow the recommendations of the independent committee? If not, then what is the point of the process in the first place? But that is a topic for another day.
Friday, June 17, 2011
NACDL's 1st Annual West Coast White Collar Conference, “Turning The Tables On The Government” – Keynote Address: Benedict P. Kuehne, Friday, June 17, 2011
Guest Blogger: Darin Thompson, Assistant Federal Public Defender, Office of the Federal Public Defender (Cleveland,OH)
The Keynote Presentation, "Standing Tall: Criminal Defense Lawyers as Constitutional First Responder s in Today’s War on Crime," was given by Benedict P. Kuehne.
Benedict Kuehne spoke regarding the important role that criminal defense attorneys play in America. He noted that criminal defense lawyers often put at risk not only their fee, but their own liberty. Because the role of criminal defense lawyers is to safeguard our constitutional rights, that role itself is threatened. Mr. Kuehne used his personal story to examine these principles. In 2004, his office was searched pursuant to a federal warrant. He was the subject of a grand jury investigation into conspiracy and money laundering. His alleged crime related to legal advice he provided another criminal defense lawyer regarding the source of his fee.
This prosecution was part of an overall trend towards the broadening of the scope of money laundering prosecutions, Mr. Kuehne suggested, noting that money laundering has replaced conspiracy as the prosecution’s weapon of choice.
Mr. Kuehne noted that this prosecution theory threatened to chill the assertion of the Sixth Amendment right to counsel and the willingness of counsel to provide legal representation to individuals facing prosecution.
Mr. Kuehne then explored the history of litigation surrounding the specific statutory exemption for criminal defense fees. For 20 years, the government persisted in attempts to convince courts that the exemption did not mean what it said. These efforts, combined with the ability to seek forfeiture of fees, had a chilling effect on that Sixth Amendment right.
His case resulted in the decision U.S. v. Velez, vindicating the criminal defense fees exemption in money laundering cases. Mr. Kuehne's story is an inspiring one that clearly demonstrates the importance of the work that we defense lawyers do everyday.
NACDL's 1st Annual West Coast White Collar Conference, “Turning The Tables On The Government” – “Monsanto and More: Ethical Tactics for Getting Paid When the Government Gets There First,” Friday, June 17, 2011
Guest Blogger: Darin Thompson, Assistant Federal Public Defender, Office of the Federal Public Defender (Cleveland,OH)
John Cline began the discussion with a hypo of an indicted individual who has millions of dollars that the government believes were garnered through criminal activity. Mr. Welk presented the government’s perspective and outlined the steps taken to identify the assets the government believes can be tied to the charged crimes. Typically this involves going to the Magistrate and obtaining seizure warrants for assets and then seizing them. If it involves real property, then they will go get a lis pendens.
Mr. Cline asked about ex parte restraining orders and when and how the government uses them. Mr. Welk explained that once he obtains the restraining order, he will typically approach the counsel for the client, inform them of the order, and then set up a plan. Typically the parties sit down and work out the issues together. Mr. Welk noted that going in ex parte can be extremely disruptive to the business and that is why the defense is willing to sit down. However, there is always a concern that the assets could disappear if the government does not come in strong.
Mr. Cline then sought the defense perspective from Ms. McNamara—what steps she takes when faced with an ex parte restraining order. She would first seek out help from an experienced forfeiture lawyer. This is because this process is quite draconian and it allows the government to basically step into the defendant’s shoes. However, given the practicality of the temporary restraining order, where the government must show its cards, the parties are usually willing to come to the table and talk.
A member of the audience asked about money that the lawyer already has, such as a retainer. Mr. Welk explained that there is a wide diversity of views on how to handle this situation. He will typically sit down with the attorney and work out an arrangement, typically involving a return of a portion of the money.
Ms. McNamara noted that there has been an uptick in asset forfeiture since the Madoff case but Mr. Welk noted that it was really a coincidence of timing. Rather, he noted that the uptick was a product of at least five years of work by the Asset Forfeiture Working Group. It just happened that their work aligned with the Madoff case.
Mr. Cline then asked the panelists to discuss negotiations that frequently happen in order to avoid an evidentiary hearing. Both parties usually go in hoping to cut a deal and come out with a clear plan. Ms. McNamara explained that the government typically comes in with a pragmatic approach, but that is not always the case.
The panelists engaged with the audience on the interaction between bail and forfeiture, the potential conflict for the defense attorney in seeking to protect the client’s assets in general and specific to defense fees, and the question of government authority over third-party assets. Mr. Welk noted that while the government has authority to seize third-party assets, but the courts don’t like that.
Mr. Cline closed the panel with a discussion the potential for prosecutors to clawback fees that have been unfrozen for defense. Mr. Welk said this is rare and there are other venues to explore, one of which is a strongly worded letter to counsel explaining that it is the government’s belief that all the client’s money comes from illegal activity and thus any money accepted may be subject to forfeiture. There is serious debate over the use of these letters, but defense counsel should be aware of them and on the lookout.
Thursday, June 16, 2011
NACDL's 1st Annual West Coast White Collar Conference, “Turning The Tables On The Government” – “Finding the Line: Ethical Considerations When Contacting and Interviewing Witnesses,” Thursday, June 16, 2011
Guest Blogger: Darin Thompson, Assistant Federal Public Defender, Office of the Federal Public Defender (Cleveland,OH)
Day One of the seminar concluded with a panel discussion of the various ethical pitfalls surrounding the interviewing of witnesses. Patrick Robbins moderated the discussion. The panel included Blair G. Brown, David Fechheimer, Nina J. Ginsberg, Marc S. Harris, and Steven Singer.
The panel first discussed hypotheticals involving a lawyer who first represents a company (through an audit committee) under investigation. Ms. Ginsberg pointed out the first potential conflict that lawyers face when interviewing employee witnesses under these circumstances is that the witness’s interests may be adverse to the company client. She further noted that such adverse interests would preclude dual representation as well. She discussed the burdens the model rules place upon lawyers interviewing witnesses. Model Rule 4.3 requires an explanation of the lawyer’s role, prior to interviewing, where the witness may be confused regarding the lawyer’s role, and that this explanation approaches that required by Miranda warnings. As Mr. Brown noted, these warnings are in the interest of the lawyer as well, as they will protect the company and the lawyer from subsequent motion, though he doubted that the warnings ever approach the standard of Miranda. The panel agreed that the overriding goal of representing the company by ferreting out information, and convincing the government that the company is being aggressive in its investigation, runs directly contrary to strong warnings. Marc Harris noted that it was common to demand cooperation from employee witnesses, upon threat of termination.
The panel discussed the problems presented by the question: “Should I get a lawyer?” Everyone agreed that the question required the lawyer to walk a fine line. The lawyer should not give the witness legal advice by opining whether a lawyer is a good idea, but must accurately answer that the witness has the option to get a lawyer.
The next hypothetical involved a lawyer advising an AUSA that he represents all current employees of the corporation and the current and former CFO and CEO, but the AUSA sends the agents to interview the employees. Mr. Brown started his response by cautioning against such blanket assertions of representation unless the facts truly warrant it. He continued by noting that the state ethics rules may provide the best barrier to this kind of conduct. The panel agreed, with Mr. Singer noted that many state ethics rules specifically include corporate employees as represented parties.
Marc Harris noted that another fine line exists when advising all employees of a company that they need not talk to agents, and that flatly advising against it may constitute obstruction of justice. Ms. Ginsberg further cautioned that it created an impression on the part of the employees that they are being represented. Mr. Brown noted that Model Rule 8.4 allows a lawyer to advise a client’s employee not to talk to an adverse party.
One questioner noted that the trend toward “hyper-co-operativity” on the part of companies has only aggravated the problems faced by the employees on the other side of the hypotheticals discussed.
Another questioner asked about government pressure to not interview government witnesses. Mr. Singer commented that such efforts to intimidate the defense must not be allowed to succeed, and discussed taking steps to protect oneself during those scenarios, i.e., having multiple people present for any interviews.
The final hypothetical involved a grand jury witness taking the 5th Amendment privilege to protect another individual and advising the lawyer he was doing so. Mr. Harris indicated that this is not problematic, but, advising a witness to do so might constitute obstruction of justice, especially if that advice was motivated by a desire for financial gain by securing further employment by the corporation at issue.
Thursday, June 9, 2011
The United Jewish Appeal-Federation of New York has a Criminal Law Group. Wow. I never knew. SEC Enforcement Director Robert Khuzami recently spoke to its members about questionable tactics routinely engaged in by white collar lawyers (and their clients) during SEC Enforcement Division proceedings. Khuzami's Speech is troubling as it reveals clearly unethical and potentially illegal behavior, including: improper signalling to witnesses regarding substantive testimonial responses, representation of multiple witnesses with clearly adverse interests, representation of multiple witnesses who adopt virtually identical and implausible explanations of events, witnesses who "don't recall" dozens of basic and uncontroverted facts documented in their own writings, scorched earth document production, suspect recantation of damaging testimony after deposition breaks, and window-dressing internal investigations that scapegoat mid-level employees. Khuzami laments these tactics and notes that they often backfire by increasing Enforcement Division skepticism of the entity or person under investigation and by damaging the future credibility of counsel who encourage such behavior. But employment of at least some of these brazen tactics should do more. The people and entities who engage in them should go straight to secondary, as they say at the border. If this had been done in Bernard Madoff's case, after he was caught red-handed lying during a regulatory examination, his fraud would have been uncovered years ago. The message from the SEC should be clear. You don't get to lie or obstruct justice during Enforcement Division investigations or SEC exams. Hat tip to Jonathan Hardt of Wilmer Hale for bringing this speech to my attention.
Saturday, April 23, 2011
The federal criminal trial involving former GlaxoSmithKline ("GSK") Vice President and Associate General Counsel Lauren Stevens commences this Tuesday in Greenbelt, Maryland. When I first read the Indictment, without knowing anything else about the facts, it struck me that the government may have overcharged. That is probably not a good sign for the feds, since the Stevens charging instrument is a classic one-sided speaking Indictment that seeks to put the United States' case in the best possible light.
The crux of the prosecution theory is that Stevens, who headed up a team of inside and outside GSK counsel responding to an FDA inquiry, withheld information about off-label marketing of Wellbutrin. Specifically, Stevens allegedly learned that several doctors, paid by GSK and speaking at GSK-sponsored events, promoted off-label (weight-loss) use of the drug. GSK's responses were part of a voluntary production pursuant to a written request from the FDA's Division of Drug Marketing, Advertising, and Communications ("DDMAC"). Stevens allegedly agreed, orally and in writing, to provide DDMA with "materials and documents presented at GSK-sponsored promotional programs, even if not created by, or under the custody or control of GSK." But, according to the Indictment, Stevens knowingly failed to produce numerous off-label promotional and presentation materials, provided to GSK by the doctors in question, with intent to obstruct an FDA proceeding. Rather than focusing entirely or primarily on this failure to produce, the Indictment lumps in many other broad statements contained in Stevens' various cover letters to the government. It seems to me that at least some of these statements are open to differing interpretations. Perhaps the government should have more narrowly honed in on the failure to turn over the presentation/promotional materials.
Part of Stevens' defense will entail her purported reliance on the advice of outside counsel in sending GSK's written responses to the FDA. The original Indictment was thrown out by Judge Roger Titus, because federal prosecutors incorrectly instructed the grand jury that reliance on the advice of counsel is only an affirmative defense. In fact, good faith reliance on advice of counsel negates the specific intent element under the federal obstruction and false statement statutes at issue in the trial.
This prosecution should strike terror into the hearts of inside and outside counsel throughout corporate America. Of particular note is that the FDA inquiry into off-label Wellbutrin marketing did not involve a compelled production and was not even quasi-criminal in nature.
Attached for our readers' benefit are some documents setting out the government's case and what are likely to be key portions of Ms. Stevens' defense.
April 23, 2011 in Arthur Andersen, Corruption, Current Affairs, Defense Counsel, Fraud, Grand Jury, Judicial Opinions, Legal Ethics, Obstruction, Prosecutions, Statutes | Permalink | Comments (0) | TrackBack (0)
Sunday, March 13, 2011
I'm calling it the Vic Kohring Catastrophe, and it should be one for the DOJ, but so far the patience of Congress and the district courts in the face of DOJ's repeated blockbuster Brady violations seems infinite. Here are the things that really stand out for me from the majority opinion. (All of the judges voted to reverse, but the dissenter would have dismissed the indictment with prejudice.)
1. The government withheld information from the defense that its star witness, Bill Allen, was under investigation by the Anchorage Police for sexual exploitation of minors. The government also possessed and withheld evidence that Allen encouraged the minors to lie and arranged for one of them to be unavailable to testify against him. In other words, he suborned perjury and endeavored to obstruct justice. It is jaw-droppingly incredible that this information was not disclosed to Kohring. It is jaw-droppingly incredible that, even after its motion to dismiss the Ted Stevens indictment, the government did not disclose this information to Kohring until his defense team asked for it and the case was remanded to the district court. As the Ninth Circuit patiently explains, this was highly relevant impeaching evidence, and the defense would have been able, at a minimum, to ask Allen questions about it. If he had lied, the government would have been obligated to correct his perjurious testimony. What could the AUSA(s) have possibly been thinking when he/she/they failed to disclose this information? That it was immaterial or cumulative? Line AUSAs have no business making such determinations. Neither do their superiors. If it hurts, turn it over. It is hard enough for the prosecutive mind set to even understand all of the information in a case that might be Brady material. If we make them the arbiters of what is material and cumulative, the answer will usually be weighted in favor of non-disclosure.
2. Many of the non-disclosed materials were FBI 302s and IRS reports of interviews with key government witnesses. I've said it many times before and will say it again. No prosecutor has any business withholding the 302 of a testifying government witness. First, the prosecutor is not as qualified to find impeaching and exculpatory material in a 302 as is the defense attorney, who is looking at the case from a defense perspective. Second, and of far more importance, the AUSA cannot sit there in court and determine on the fly, in a white collar case involving dozens or hundreds of witnesses, which of a given witness's testimonial statements are inconsistent with his myriad 302s. Yes, we know, the 302 isn't Jencks if the witness has not adopted it, but the risk is too great that it will become Brady. Almost all offices in almost districts turn these statements over before trial. Why wasn't it done here in a high-profile public corruption case?
3. The government withheld many handwritten interview notes containing exculpatory information. This points to a widespread problem. Most AUSAs in white collar cases still don't believe themselves under a duty to turn over handwritten interview notes or to reveal the exculpatory information reflected in these notes. The Ogden Memo does not fully solve this pervasive problem. Such handwritten notes can qualify as Jencks when the agent testifies and, as with 302s, may contain Brady information, either before trial starts or when an agent or another witness testifies. (It is very rare for an agent's handwritten notes to exactly match his or her final 302 report.) One of the handwritten notes that the government failed to turn over to Kohring was from an interview of Allen and indicates that: "Allen said he NEVER ASKED VIC TO DO ANYTHING IN EXCH. for cash or [unintelligible] or some benefit." Pretty important in a Hobbs Act-bribery case, no?
4, The government's failure to agree to a special verdict and/or special interrogatories clearly hurt its harmless error argument on appeal. Since the Ninth Circuit has no way of knowing what evidence, including the improperly withheld evidence, the jury might have relied on in reaching its general verdicts, the withheld evidence cannot be considered harmless. Opposition to special verdict forms and interrogatories is often short-sighted, and was clearly so in this case.
5. Finally, why wasn't all of this immediately revealed to Vic Kohring's defense team when DOJ moved to dismiss the Stevens indictment? The Stevens dismissal was obviously made at a very high level. Who knew about and failed to authorize disclosure to Kohring of this patently exculpatory material?
Thursday, September 30, 2010
NACDL's 6th Annual Defending the White Collar Case Seminar – “Prosecutors Behaving Badly: More Unethical Conduct or Just More Discovery of Misconduct?,” Thursday, September 30, 2010
Guest Blogger: Darin Thompson, Assistant Federal Public Defender, Office of the Federal Public Defender, Northern District of Ohio
Moderator: Gerald Goldstein
NACDL’s Defending the White Collar Case seminar kicked off with a panel discussion on prosecutorial misconduct. The “Prosecutors Behaving Badly” hypothetical presented the panelists with the story of a federal investigation and trial regarding kickbacks paid by a construction company to a state university in exchange for a contract. The initial criminal investigation involved the corporation, the CEO, and 2 other executives who would eventually be charged and tried. An internal investigation was simultaneously conducted by the construction company.
One set of issues discussed by the panel involved legal representation during the investigation. In the hypothetical, one law firm represented: (1) the CEO; (2) the construction company; and (3) the two executives who would eventually be charged (this representation was paid for by the construction company, and was subject to a conflict waiver). Additionally, another partner in the same firm conducted the internal investigation on behalf of the construction company. Multiple panel members commented that it would be virtually impossible to ever get an effective waiver under these circumstances. U.S. Attorney for the District of the New Jersey, Hon. Paul J, Fishman, explained how he would approach a District Court Judge and seek to disqualify any attorney attempting to provide representation under these circumstances. The prosecutor would later use admissions made to the attorney who conducted investigation against the two executives at trial.
Another set of issues involved the prosecutor’s obligation (if any) to disclose Brady material during plea negotiations. During this investigation, the prosecutor was involved in plea negotiations with a whistleblower. At first, counsel for this whistleblower indicated that he had not been present during any incriminating discussions between the two charged defendants and the CEO, and that the two charged defendants had merely told him about these discussions. After the prosecutor balked at providing a favorable plea bargain in exchange for this second hand information, counsel for the whistleblower indicated that “after serious reflection, his client does recall several occasions when he overheard direct conversations between [the two executives who would eventually be charged] and their CEO, as well as several of the College Trustees.” The panelists agreed that the prosecutor’s disclosure obligations during plea negotiations were at best not clear. The prosecutor could not deny the prior inconsistent statement existed; however, the law is unclear regarding an obligation to turn over Brady material during plea negotiations. The panel noted that U.S. v. Ruiz, 536 U.S. 622 (2002) did not answer this question with regard to exculpatory evidence. In Ruiz, the Supreme Court held only that the prosecutor had no obligation to turn over impeachment evidence, because this obligation was closely connected to trial. In light of Padilla v. Kentucky, 130 S.Ct. 1473 (2010- holding that a defendant was denied the effective assistance of counsel during plea negotiations where he was not advised of the immigration consequences of his plea of guilty) this issue appears to be ripe for litigation.
Many panelists noted that another way to address this problem is through a re-write of Criminal Rule 16. Professor Ellen Yaroshefsky expounded upon this, noting how many jurisdictions already offered complete open-file discovery. One panelist, David Markus, argued strongly that there is a seeming disconnect between the tenor of Attorney General Eric Holder’s statements in favor of openness and the undercurrent of resistance to efforts to address these problems.
This same Brady material/prosecutorial ethics issue re-presented itself during the trial of the two executives, at which time the prosecutor again failed to disclose this information. Additionally, the prosecutor did not disclose that the witness had been “reimbursed” for his out-of-pocket expenses. No specific Brady request is made by defense counsel, however, there was no doubt among the panelists that this initial description by the whistleblower’s counsel would constitute a prior inconsistent statement by this whistleblower, and had to be disclosed. Nor was there any doubt that the failure to disclose the reimbursement was also flagrantly improper.
Monday, August 2, 2010
Saturday, July 24, 2010
Here is Assistant AG Ronald Weich's letter to House Judiciary Committee Chairman John Conyers explaining DOJ's declination in the matter of former Attorney General Alberto Gonzales and the firing of U.S. Attorney David Iglesias. And here is George Terwilliger's statement celebrating the declination. Terwilliger and Bob Bittman of White & Case represented Gonzales in the investigation.
Tuesday, December 15, 2009
It is rare that a judge uses supervisory powers to correct an injustice, but sometimes it is the right action - especially when there has been government misconduct. The Hon. Cormac J. Carney used his supervisory powers to dismiss the case against former Broadcom's Henry Nicholas III, and former CFO William Ruehle, stating:
"Based on the complete record now before me, I find that the Government has intimated and improperly influenced the three witnesses critical to Mr. Ruehle's defense. The cumulative effect of that misconduct has distorted the truth-finding process and compromised the integrity of the trial."
The court noted how the government had intimated three witnesses. He includes how the government improperly leaked items to the press, put a witness through "30 grueling interrogations," pressured the company to terminate the employment of this witness, and obtained a plea from a witness for crimes he did not commit - and there were more improprieties noted by the court. The court ends with the words from the Supreme Court decision in Berger, and then states: "I sincerely regret that the government did not heed the righteous words of the Supreme Court."
Court's Order -Download RUEHLE_DEC__15
(esp)(blogging from Atlanta)
Friday, November 6, 2009
Martha Neil, ABA Jrl Law News Now, 2 Lawyers Charged in Claimed $1.1M Client Embezzlement Scheme
Vesselin Mitev, Law.com, New York Law Journal, Disbarred Attorney Pleads Guilty to Guardian Account Thefts
Linda Sandler & Carlyn Kolker, Bloomberg, Ropes & Gray Lawyer Cutillo ‘Fueled’ $20 Million Insider Scheme ; DOJ Press Release, Manhattan U.S. Attorney Charges 14 Defendants With More than $20 Million in Insider Trading- Charged Defendants Include Hedge Fund Managers, Trading Firm Executives, Lawyers, and Corporate Insiders; Five Already Have Pleaded Guilty To Insider Trading Charges
Jordana Mishory, Daily Business Review, law.com, Fla. Firm's Attorneys Rally Their Defenses as Partner Faces Fraud Allegations - FBI and IRS agents raided the law firm Wednesday, seizing 44 boxes of evidence, hard drives and trash
(esp)(blogging from Portland, Oregon)
Friday, October 2, 2009
NACDL's 5th Annual Defending the White Collar Case Seminar - "Getting Paid, Not Charged--Avoiding Indictment by Collecting Fees Ethically," Friday, October 2, 2009
Guest Blogger: Jon May, Chair, White Collar Crime Section, National Association of Criminal Defense Lawyers
Over the last ten years, and particularly as a result of the indictment of prominent Miami Attorney Ben Kuehne, criminal defense counsel have had cause to be concerned that they could be the subject of prosecution solely for taking a legitimate legal fee. In this morning’s presentation by Jane Moscowitz and Martine Pinales, lawyers found reasons to be hopeful that such fears may be overblown, at least as to potential prosecution. Forfeiture of fees, on the other hand, remain a significant concern.
The Kuehne prosecution is an instance of ideology trumping common sense. Benedict P. Kuehne is the most unlikely of government targets. As Jane Moscowitz, who is one of his attorneys observed, Ben is the best of all of us. He is not just a leader of the bar—having been the President of the Miami-Dade County Bar Association and a member of the Board of Governors of the Florida Bar—he has devoted countless hours to pro bono activities on behalf of organizations representing the interests of African-Americans, Hispanics, Gays and others. He was also one of Al Gore’s principal attorneys during the Florida recount. Not surprisingly, he was Roy Black’s choice for counsel when Roy Black needed an attorney to vet the legal fees he was to be paid to represent notorious Colombian cartel leader Fabio Ochoa.
Roy Black was ultimately paid $5 million for his representation of Ochoa. Ben Kuehne earned approximately $175,000 for vetting this fee. Ben was indicted for conspiracy to launder, what the government recognized, and the indictment stated, was a bona fide legal fee. This is despite the fact that the money laundering statute 18 U.S.C. Sec. 1957 contains a specific exemption for the receipt of funds necessary to preserve the Sixth Amendment. It was the government’s position before the District Court and just recently before the Eleventh Circuit in their appeal from the dismissal of this count, that the decision of the Supreme Court in Caplin and Drysdale nullified this exemption. The district court, however, was persuaded that it was the intent of Congress to protect counsel from prosecution, even if attorney’s fees could be forfeited. It appears from the tenor of the oral argument, which I was present to see, that the government’s theory is being met with the same level of skepticism that it received by Judge Cooke.
Martin Pinales discussed his experience dealing with government efforts to seize legal fees. Even in instances where the AUSA states that she has no intent to seize fees, counsel can be faced with a post trial effort by the government’s money laundering/forfeiture counsel to claw back those fees. Strategies were discussed for dealing with that problem. One way is to be paid by a third party from monies totally unconnected to any alleged criminal activity. Where money is obtained from the defendant, it is important to insure that the money did not come from any source named in a forfeiture count. And counsel should do due diligence even as to assets that could be later characterized as a substitute asset. It was also important to have your retainer agreement tie fees received to services provided. Where the funds are clearly substitute assets, counsel who takes these steps will have a better chance of demonstrating that they are bona fide purchasers for value in later forfeiture proceedings.
During the seminar, other important issues were raised. In many districts, counsel do not have to worry about their fees if their clients cooperate. Doesn’t that create a conflict of interest? You can charge a flat fee so long as you can demonstrate that it was earned. But don’t call it non-refundable (unless you practice in Florida, but it still has to be reasonable). The final irony, and outrage, discussed was the fact that the indictment against Ben also includes forfeiture count. The government is seeking to forfeit from Ben, the $5 million that Roy Black received.