White Collar Crime Prof Blog

Materiality and the Flynn Prosecution

Title 18, United States Code, Section 1001, criminalizes certain false statements or omissions made to the federal government. The statute requires that the false statement be material to a matter within the jurisdiction of a federal agency or department. Materiality is an element of the offense that must be alleged and proved beyond a reasonable doubt. It is usually a fairly easy element for prosecutors to establish.

General Michael Flynn was charged with violating Section 1001 in a one count Criminal Information that tracked a portion of the statutory language. The Information was filed in federal court on December 1, 2017, by prosecutors in Special Counsel Robert Mueller's office. Those prosecutors charged Flynn with lying to the FBI during the course of a White House interview conducted on January 24, 2017. The January 24 interview concerned late December 2016 conversations between Flynn and Russian Ambassador Vitaly Kislyak during the post-election Presidential transition period.

A federal court cannot accept a guilty plea without a Factual Basis, sometimes referred to as a Factual Statement or Statement of the Offense. It is typically filed along with the Plea Agreement or is incorporated into the Plea Agreement itself. According to the Statement of the Offense filed in General Flynn's case:  "Flynn's false statements and omissions impeded and otherwise had a material impact on the FBI's ongoing investigation into the existence of any links or coordination between individuals associated with the Campaign and Russia's efforts to interfere with the 2016 presidential election." We now know this wasn't true. Flynn's statements, whether false or not, had no effect on the Russian Collusion investigation.

Crossfire Hurricane, launched on July 31, 2016, was the name given to the FBI’s counterintelligence investigation into possible collusion, witting or unwitting, between members of Trump’s campaign team and Russians attempting to influence the 2016 election. Crossfire Hurricane was not begun based on any allegations related to General Michael Flynn.  Instead, the Bureau authorized Crossfire Hurricane after it learned, third-hand, that Russia may have “suggested” assisting the Trump campaign by anonymously releasing dirt on Hillary Clinton. An FBI subfile was created on Flynn, not because of any allegations against him, but because of Flynn’s known contacts with Russia. Such contacts would hardly be surprising for a former Director of the Defense Intelligence Agency who was a Trump advisor rumored to be Trump’s choice for National Security Director if he won the election. The subfile investigation of Flynn was known as Crossfire Razor.

FBI officials Jim Comey, Andy McCabe, Peter Strzok, and Lisa Page each knew, well before Flynn's January 24 interview, that the General had no involvement whatsoever in any improper or illegal coordination with Russia regarding the 2016 election. Flynn had already been completely cleared in Crossfire Razor by January 4, 2017. A draft Closing Communication, documenting the complete lack of evidentiary support for Flynn's involvement in, or knowledge of, 2016 election collusion, was prepared on January 4 by the Crossfire Razor team. But the decision to close the file had been made even before January 4. Such a draft Closing Communication would never have been commenced unless the case agents had received prior approval from their FBI Supervisor, and Former FBI Director Comey testified that he authorized the closing of Crossfire Razor by December 2016. 

But none of this exculpatory information regarding materiality was shared at any time with the original defense attorneys representing Flynn, either before or after he entered his December 1, 2017 guilty plea. (Nor was it shared with Deputy Attorney General Rod Rosenstein, who was by then the Acting Attorney General for purposes of the Mueller Investigation and had final authority over Mueller's charging decisions.) The knowledge that Flynn's January 24, 2017 interview responses did not influence and were arguably incapable of influencing the Crossfire Hurricane investigation was relevant both to Flynn's guilt and punishment. While there is some uncertainty in the law as to whether Brady material must be turned over to the defense prior to a guilty plea, there is no uncertainty about Judge Emmet G. Sullivan's standing Discovery Order that he enters in every criminal case, and entered in Flynn's. It directs the government "to produce to defendant in a timely manner any evidence in its possession that is favorable to defendant and material either to defendant's guilt or punishment. This government responsibility includes producing, during plea negotiations, any exculpatory evidence in the government's possession."

Flynn had already pled guilty when his case was transferred to Sullivan's court, but he was still awaiting punishment. After the case was transferred, and Sullivan entered his Standing Order, Mueller's team produced voluminous additional documents to Flynn's team. Why did they do this when, under the terms of the Plea Agreement, Flynn was no longer allowed to request additional documents from the government? Because Mueller's prosecutors knew the significance of Sullivan's Standing Order and the additional burden it placed on them. Moreover, Sullivan had Flynn reaffirm his original plea colloquy, under oath, in December 2018. There is thus no question that the information discovered by Eastern District of Missouri U.S. Attorney Jeffrey Jensen, and publicly released for the first time last month at the direction of Bill Barr, should have been produced by Mueller's team to Flynn. What we don't know yet is whether any prosecutor on Mueller's original team, or on the post-Mueller team handling the Flynn case, knew about the recently disclosed documents. 

And one more thing. You can ignore commentators like Chuck Rosenberg, who recently listed here, in the Washington Post, all the folks (Trump, Pence, Priebus, etc.) who presumably thought Flynn's allegedly false statements were material. Chuck is relying on the general public's ignorance of federal criminal law. The only materiality at issue in U.S. v. Flynn is the materiality of the January 24, 2017 statements Flynn made to high-ranking FBI Supervisory Agents, which statements formed the basis of Michael Flynn's guilty plea and Statement of the Offense. Those post-inauguration statements about post-election conversations with Ambassador Kislyak, were clearly immaterial to an investigation of election-related collusion that had already cleared Flynn.

(wisenberg)

NACDL Coronavirus Resources

NACDL created a resource page to assist criminal defense attorneys here.

(esp)

Jeffrey Epstein: The Unanswered Questions

1. Who in DOJ made the ultimate decision to drop the proposed felony indictment of  Jeffrey Epstein and to cap the Non-Prosecution Agreement ("NPA") sentence at two years--later reduced to 18 months? The 6-2-17 affidavit of AUSA Ann Marie Villafaña, the lead prosecutor on the original federal criminal case, largely supports Alex Acosta's account of certain key events in this week's press conference. Keep in mind, however, that her affidavit was filed as part of the Jane Doe 1 and Jane Doe 2 litigation in SDFL, which resulted in Judge Marra's ruling that SDFL violated the Crime Victim's Rights Act ("CVRA") by failing to notify Epstein's victims about the NPA.  At the time it was filed, the affidavit was focused on the effort to convince Marra that SDFL had not violated the conferral/right to be heard provisions of CVRA. On pages 8 and 9 of her affidavit, Villafaña attests that: "Prior to the Office making its decision to direct me to engage in negotiations with Epstein's counsel, I discussed the strengths and weaknesses of the case with members of the Office's management and informed them that most of the victims had expressed significant concerns about having their identities disclosed. While I was not part of the final decision-making at the Office that arrived at the two year sentence requirement, I was part of the discussions regarding sex offender registration and the restitution provision. It is my understanding from these and other discussions that these factors, that is, the various strengths and weaknesses of the case...together with the Office's desire to obtain a guaranteed sentence of incarceration for Epstein, the equivalent of uncontested restitution for the victims, and guaranteed sexual offender registration...were among the factors that informed the Office's discretionary decision to negotiate a resolution of the matter and to ultimately enter into the NPA." Translation: Villafaña disagreed with dropping the indictment and was not part of the group that made the ultimate decision to go for an NPA with a two year state prison cap. If she was even present at the meeting where the decision was made, she disagreed with the decision and was thus not "part of the final decision-making process." It is unusual, but not unheard of, for the lead prosecutor to be overruled on a case. It is very unusual to go from a 50-plus page multi-count felony sex trafficking indictment to an NPA with no federal charges, particularly when your lead prosecutor wants to go to trial. Villafaña was and is a respected career AUSA. Apparently DOJ's Office of Professional Responsibility ("OPR") is looking into how the case was handled.  OPR will want to see Villafaña's  original pros memo in the case, will seek to interview all government participants in the negotiations, and will want to know every DOJ person involved in the ultimate decision to drop the indictment.
2. Why was DOJ's standard language making it explicitly clear that the NPA bound only the SDFL not included in the NPA? Such language is employed every day by U.S. Attorneys' Offices throughout the United States and has been for years. It goes like this: "The defendant understands that this agreement is binding only on the U.S. Attorney's Office for the ________ District of _______." Why wasn't that done in Epstein's case? Epstein is now arguing that the SDFL NPA prevents his prosecution in SDNY. He will probably lose, given Second Circuit case law, but why even leave the possibility of challenge open? The NPA does not even include a standard integration clause. This is strange.
3. Why was the entire NPA placed under seal? I understand the Government's desire to protect the identity of Epstein's victims, but this could have been done through a redacted version of the NPA, and indeed this has been done in the subsequent litigation.
4. Why weren't all of Epstein's known victims notified of the NPA and its terms in a timely fashion? Acosta and Villafaña have explained that they did not want the victims to see the civil damages portion of the NPA before SDFL was certain that Epstein would be pleading to the Florida felony, because they did not want the victims to be cross-examined about having seen those provisions in the event the deal broke down and SDFL took Epstein to trial. Epstein signed the Florida plea papers only a few days before he actually pled guilty and there was not enough time to notify all the victims. I understand the explanation, and assume no bad faith on SDFL's part, but it doesn't cut the mustard. If Judge Marra is correct, CVRA required notification. And either the NPA or Florida plea deal could have been structured to prevent the fiasco of having to locate and confer with victims over a weekend. Marra ruled that SDFL affirmatively hid the NPA from the victims and essentially deceived them into thinking that the office was still investigating Epstein well after the NPA was signed. That scenario should have been avoided.
5. Why were Epstein's lawyers allowed to lobby Main Justice after the NPA was signed? I understand going to Main Justice and arguing to overturn an individual office's charging decision. Not every lawyer obtains such access and these efforts to overturn are rarely successful. But they almost always occur BEFORE an indictment has been returned. Why was Epstein's team allowed to lobby for several months AFTER the NPA was signed. The original NPA was signed by attorneys on both sides in September 2007. An addendum was signed by the attorneys in October 2007. Epstein signed in December 2007. The Oosterbaan letter, explaining why federal involvement was legitimate, was not signed until May 15, 2008. This is weird.

I do not believe that the Epstein deal was "dirty" in any way. I have heard from multiple sources that Acosta is a person of high integrity, who was well regarded within the office. I was impressed with Acosta's handling of the press conference. I don't think he should have resigned. I don't know how easy or hard it would have been for SDFL to achieve a victory at trial or how many victims would have been further traumatized by a trial. I do know that SDFL has a long history of aggressively prosecuting these types of cases--child sex trafficking and kiddie porn. And I do believe SDFL should have conferred with the victims before NPA was inked. Acosta had no criminal trial experience when he became U.S. Attorney. Was he was out-negotiated here, or overawed by the team of big name defense lawyers representing Epstein? His First Assistant Jeffrey Sloman, a veteran prosecutor who was deeply involved in the negotiations and signed the NPA, has denied this and has publicly defended both Acosta and the deal.

Still, the questions I and others have posed are legitimate and deserve answers. Perhaps we will get them from the OPR investigation.

Here are some additional documents. The first three were made available by Acosta in connection with his press conference in order to help support his explanation of the NPA. Next is the Jeffrey Sloman op-ed defending Acosta and the deal. The final three documents are the most recent filings in the SDNY case and all deal with the government's effort to detain Epstein pending trial.

 Villafana Declaration

 Kuyrkendall Second Affidavit

 Acosta Letter to Starr

 Sloman Op-Ed

 Epstein-Original Government Letter Requesting Detention

Epstein-Letter Motion for Pretrial Release

Epstein-Government Response to Bail Motion

(wisenberg)

U.S. v. Manafort: Judge Ellis Rules on Prosecution and Defense Motions in Limine

For all of you Manafort junkies out there, here is Judge T.S. Ellis, III's July 24 2018 Order, resolving most of the outstanding prosecution and defense motions in limine in U.S. v. Manafort, due to be tried next week in Alexandria.

It is abundantly clear, based on these rulings and the charges in the EDVA Superseding Indictment, that this case will be presented to the jury by the government, as much as possible, as a relatively straightforward bank fraud, concocted by the defendant in order to hide the amount and source of improperly derived offshore income. Manafort and Rick Gates (now a cooperating witness) allegedly created phony loans from offshore nominee entities in order to conceal lobbying income derived from their work as unregistered agents on behalf of, among others, the Government of Ukraine and former Ukrainian President Victor Yanukovych. Later, when Yanukovych lost power and the money source dried up, Manafort and Gates allegedly inflated the value of Manafort's real estate holdings (and/or lied about the nature and use of said real estate) in order to obtain new loans and maintain a lavish lifestyle. The jury will hear and see evidence regarding Manafort's lavish lifestyle, his failure to register as a foreign agent, and his failure to disclose foreign bank accounts that he controlled. But the jury will not see or hear anything pertaining to the Trump campaign's purported collusion or interaction with Russia.

It is becoming fairly obvious to me that Mueller has no criminal collusion case to bring against the President or anyone in the President's entourage absent: 1) bombshell disclosures from Michael Cohen; 2) Manafort flipping after conviction; or 3) Manafort testifying through a post-conviction compelled immunity order issued by a federal court pursuant to 18 U.S.C. §§ 6002 and 6003. The Manafort case was never about Manafort. It was always about Trump. The law unquestionably allows Mueller to operate in this manner. It is what it is.

(wisenberg)

Taint Teams

Guest Blogger - Josh Greenberg

Biggest-Ever Health Care Fraud Case Jeopardized By Prosecutors’ Failure To Implement A Taint Team After Seizing Documents From Defendant’s Personal Attorney, In Contrast To The Practices Advocated By Their Counterparts (And The President!) In The Analogous Case Of The Search Of The Office Of Michael Cohen

In the summer of 2016, Philip Esformes was indicted in the U.S. District Court for the Southern District of Florida for what the government describes as the biggest health care fraud case in U.S. history. The indictment alleges that Mr. Esformes ran a network of skilled nursing facilities and assisted living facilities that defrauded Medicare and Medicaid of $1 billion.  Remarkably, after Mr. Esformes was indicted, the government did not create a taint team to review privileged documents seized from the office of one of his attorneys.  The prosecution is in jeopardy as a result.

On the same day the indictment was filed, the prosecution team applied for a warrant to search an assisted living facility named in the indictment. Several cooperating witnesses had informed the prosecution team that Mr. Esformes’s personal attorney maintained his law office at that facility and did legal work for Mr. Esformes on matters relating to the allegations in the indictment.  The application for the warrant did not disclose these facts.  Moreover, the U.S. Attorney’s Manual imposes strict conditions on applications for warrants to search the offices of an attorney who, as with Mr. Esformes’s personal attorney, is a subject of an investigation.  Before applying for such a warrant, federal prosecutors must both obtain “the express approval of the United States Attorney or pertinent Assistant Attorney General” and “consult with the Criminal Division.”  The prosecutors in Mr. Esformes’s case, who are based in D.C., evidently did neither.

A magistrate judge issued the warrant without being told that the facility to be searched included an attorney’s office. One day after the indictment was filed, agents executed the warrant and seized over 170,000 pages of documents – including many privileged documents, a number of which addressed matters relating to the allegations in the indictment.  By this point, even though Mr. Esformes’s Sixth Amendment right to counsel had attached, no taint attorney was assigned to the search.  Instead, one of the agents was tasked with taking the lead in identifying and segregating potentially privileged documents.  But the agent was not given the information needed to do so, such as the names of the attorneys and law firms defending Mr. Esformes.  Of the documents the agents seized, only ten were put in a box marked “Taint.”  The rest were put in 69 boxes – one of which was labeled “Carlton Fields,” the name of the law firm then defending Mr. Esformes – and given to the prosecutors.  In addition, agents who executed the warrant remained or later became part of the prosecution team.   

During the search, Marissel Descalzo, one of the attorneys from Carlton Fields, informed agents at the scene orally – and the lead prosecutor via email – that Mr. Esformes’s personal attorney represented Mr. Esformes, that the agents were seizing privileged materials, and that Mr. Esformes objected to these seizures. Whereas the lead prosecutor assured Ms. Descalzo that a taint team was in place, the same prosecutor began reviewing privileged documents in the 69 boxes on the next business day.  The documents the lead prosecutor reviewed included notes and spreadsheets prepared at Ms. Descalzo’s request by a legal assistant for Mr. Esformes’s personal attorney.  Later, despite learning that the notes and spreadsheets were privileged, the lead prosecutor, another prosecutor, and case agents from several different agencies questioned the legal assistant about those documents and learned the defense strategies reflected therein.  The prosecutors decided not to notify either Mr. Esformes or the court of their review of the privileged documents or their interrogation of the legal assistant.

In April 2017, Mr. Esformes’s defense team – Roy Black, Howard Srebnick, and Jackie Perczek of Black Srebnick Kornspan & Stumpf and Ms. Descalzo, now of Tache, Bronis, Christianson and Descalzo – moved to dismiss the indictment or disqualify the prosecution team. A lengthy evidentiary hearing ended earlier this year and the motions are fully briefed.

 The prosecution team’s approach in Mr. Esformes’s case stands in sharp contrast to the positions taken by the U.S. Attorney’s Office for the Southern District of New York (the “USAO-SDNY”) and by President Donald Trump in the case of Michael Cohen, the President’s personal attorney. Following  the search of Mr. Cohen’s office, before any law enforcement official reviewed a single seized document, the USAO-SDNY sought the court’s permission to implement a “rigorous” taint team protocol, as is “common practice in th[at] District,” after Mr. Cohen sought a temporary restraining order.  (This protocol is also the norm in other districts, including the Southern District of Florida.)  Under the protocol, attorneys walled off from the prosecution team identify potentially privileged documents and “confer with counsel for the privilege holder” before sharing such documents with the prosecution team.  To the extent that the privilege holder’s counsel objects, the taint team seeks a judicial determination as to privilege by submitting the documents under seal so that each side can present its arguments.  A narrow exception allows ex parte review in “extraordinary cases” if “absolutely necessary,” such as where explaining the government’s position “would jeopardize a covert aspect of [an] investigation.”  (Even under that exception, the privilege holder still receives judicial review.  Mr. Esformes received no protection whatsoever.) 

President Trump objected to a taint team, insisting that attorneys from the same office prosecuting Mr. Cohen cannot be trusted to decide which documents are potentially privileged and cannot fairly make such decisions. President Trump sought far greater protections, contending that his attorneys should decide which documents relating to him are withheld on the basis of privilege from the prosecution team.  Ultimately, the court ruled that the USAO-SDNYs position was correct as a matter of law, but that it would appoint a former judge as a special master to avoid even an arguable appearance of bias given the politically charged nature of the case.

In Mr. Cohen’s case, recognizing the importance of protecting the attorney-client privilege even before an indictment, the USAO-SDNY sought to follow accepted taint team procedures rather than risk disqualification or dismissal in a potential future prosecution. The prosecution team in Mr. Esformes’s case, however, did not take such prophylactic measures when searching his personal attorney’s office after Mr. Esformes was indicted.  Even if due to mere negligence, such exposure to privileged information – the very harm that a proper taint team prevents – cannot be undone.  It is difficult to see how Mr. Esformes could have a fair trial against a prosecution team that learned his defense strategies long in advance.  Courts have disqualified prosecutors who even inadvertently encountered far less significant privileged information.  Insofar as the prosecutors recklessly or deliberately reviewed privileged materials that reveal his trial strategy, Mr. Esformes may also have a strong argument that his case should be dismissed.  In the Eleventh Circuit, dismissing an indictment is appropriate where a Sixth Amendment violation caused “demonstrable prejudice.” United States v. Ofshe, 817 F.2d 1508, 1515 (11th Cir. 1987).  That standard may be met when a post-indictment failure to establish a taint team results in prosecutors, and perhaps their supervisors as well, obtaining particularly sensitive privileged information without any judicial review. 

(JG)

U.S. v. Olga Hernandez: A Smashing Victory For Bill Reid

Congratulations to my old friend and colleague William T. Reid IV (aka Bill Reid) of Reid Collins & Tsai (see Bill's bio here) who recently won a complete acquittal for his client Olga Hernandez in San Antonio federal court. Hernandez, a longtime San Antonio Independent School District ("SAISD") Trustee, had been charged with conspiracy to commit honest services wire fraud and conspiracy to violate 18 U.S.C. 666--the infamous mark of the beast statute. The case was brought by the U.S. Attorney's Office for the Western District of Texas, which happens to be my old district and Bill's as well. The government maintained that Hernandez received an excessive and inappropriate amount of travel and entertainment ("T&E") from several people involved in insurance bid rigging.  Its theory was that these bid riggers in essence bought Ms. Hernandez’s vote through the excessive T&E. The government, as is par for the course, offered 5K1.1 deals to the alleged co- conspirators in exchange for their testimony against Olga Hernandez.  There was ample proof of the gifts and each of the alleged co-conspirators testified against Hernandez. 

The defense theory of the case was that Ms. Hernandez was in fact friends with the conspirators and their wives.  She accepted substantial gifts of T&E from the conspirators, but she did so out of friendship.  With respect to the rewarding of insurance contracts by SAISD, Hernandez simply voted (along with all other trustees) consistent with staff recommendations by SAISD's Risk Management director. Olga had no idea that bribes were being paid and never got involved in the RFP Process that led to the various insurance contracts in question. 

As often happens in honest services cases, the government relied heavily on Olga's purported violation of SAISD's conflict of interest/gift disclosure policy. Although violation of such policies is not in itself a crime, the government loves to merge or bootstrap such violations into the charged offense. The argument goes like this: "If the defendant is really innocent, why didn't she disclose these gifts in accordance with the school district's policy?" But the prosecutors had a problem in Olga's case.

According to Reid, "the biggest mistake the government made was using the wrong, inapplicable gift/conflict policy (that post-dated the conduct in question) to argue that Olga’s failure to disclose the T&E was evidence of her culpability.  When, though a great deal of effort, we located the truly applicable policy we were able to prove that none of the gifts required disclosure. The government looked stupid. "

Reid now a high-end, high-stakes civil attorney who splits his time between Austin and Manhattan had not tried a criminal case since he left the U.S. Attorney's Office in 2000.  Perhaps the most impressive thing about Bill's victory is that he took and tried the case pro bono, as a favor to his old friend (and mine), legendary San Antonio criminal defense attorney Alan Brown. (See Alan's bio here.) Bill tried the case with his partner Brandon Lewis and with Alan.

He told me that the case, "was by far the most rewarding case of my career.  We were successful in defending Olga because of the hard work that our team put in to understand the evidence and hold the government accountable for trying to use the wrong gift disclosure policy.  We also, explored the details of the process that led to the insurance contracts in question very closely so that we could demonstrate how minimally involved Olga was and thereby break the connection between gifts and any official act.  This case was a stark example of how the government can obtain a wrongful conviction if defense counsel does not do his or her homework. "

Reid's Closing Argument, which focused on confirmation bias, was outstanding. Here are some additional stories on the case from the San Antonio Express-News, Law Dragon, and the Rivard Report.

https://www.mysanantonio.com/news/local/article/Fate-of-SAISD-trustee-now-in-jury-s-hands-12441813.php

http://www.lawdragon.com/2017/12/24/lawyers-christmas-story/

https://therivardreport.com/former-saisd-trustee-found-not-guilty-of-federal-bribery-charges/

(wisenberg)

 

The Giuliani Problem: He's Rusty, Not Rudy.

Here is Jonathan Turley's latest column for The Hill discussing the emerging "legal strategy" of Team Trump. It is clear that the hiring of Rudy Giuliani and Emmet Flood was part of a concerted effort to smear Team Mueller while preparing the public for Trump's invocation of Executive Privilege and/or his Fifth Amendment Privilege against self-incrimination. The new strategy buys time and kills two birds with one stone--both avoiding a Trump interview and allowing a sustained and withering attack to weaken Mueller. Like so much of the Trump approach, it uses the Clinton Playbook, the one employed by President Clinton at the urging of Dick Morris. Deny, delay, attack, weaken. Of course, Trump and his surrogates have been going after Mueller for awhile, but drafting Giuliani, a presumed legal heavyweight, was supposed to add stature, heft, and gravitas to the project.  The problem was in the execution. It turns out Rudy Giuliani should change his name to Rusty Giuliani. He is rusty on the facts of his client's case, rusty on the law, and rusty on the ethical duties of an attorney. Virtually every one of his appearances has been marked by inaccuracies (factual and legal) and buffoonery. Rudy seems to be running on fumes and celebrity status.  Here are just a few samples of his deft touch:

Mueller, the FBI, and the DOJ respect him, even though they are running a "garbage investigation" using "storm trooper tactics." (Do you think they still respect you?)

Presidential immunity from indictments and subpoenas was written right into the Constitution by the Framers. (This must be the long lost Alexander Hamilton Invisible Ink draft.)

There is definitely no campaign finance violation, because Trump reimbursed Cohen from personal funds. (The purpose of the payment, among other factors, must also be examined.)

Clinton was only questioned by Team Starr for 2.5 hours. (It was 4 hours. Not a huge point perhaps, but Rudy still had it wrong a week later. Does he have a researcher?)

Judge Ellis criticized the search of Michael Cohen's office. (Ellis did not mention the search at all.)

The President knew about the payments to Stormy Daniels. The President didn't know. I was talking about myself. I'm still learning the facts. Maybe I shouldn't be discussing privileged conversations I had with my client.

I make payments for my clients all the time without them knowing about it. (This presumably caused Greenberg Traurig to sever its relationship with Giuliani at the end of the week, with the law firm publicly denying that it engages in such conduct.)

The most disheartening thing about Rudy's performance has been his apparent refusal to sit down,  learn the case, and refresh himself on the law.

Whatever the Grand Plan was supposed to be in wheeling Giuliani out, there is no Grand Plan involved in his performance to date. 

(wisenberg)

49 Questions All In A Line. All Of Them Good Ones? All Of Them Lies?

The leak and publication of 49 questions for President Trump, orally given to President Trump's lawyers by Robert Mueller's team and then transcribed by Jay Sekulow, has unquestionably damaged Team Mueller's reputation. Why? Many of the questions are incredibly broad, incredibly stupid, and/or incredibly intrusive forays into core functions of the Executive Branch. But whose questions were they? The original New York Times story indicated that the questions were revealed orally in a meeting between Team Trump and Team Muller and then transcribed by Team Trump. Next we were informed by other media sources that Sekulow was the scrivener and that the 49 questions may be more in the nature of a Team Trump moot court briefing book, based upon a smaller set of inquires/topics broached by Team Mueller. For example, the AP reported that a "person familiar with the matter, who insisted on anonymity to discuss ongoing negotiations, said Trump’s lawyers extrapolated a list of expected questions based on conversations with Mueller’s team. The questions contained in a document posted online by the Times on Monday night reflected questions that defense lawyers anticipated rather than verbatim queries that Mueller’s team provided, the person said."  The subsequent clarifications have been all but forgotten on the Internet and cable news shows and it is still widely assumed that the 49 questions are a verbatim rendition of those directly relayed by Team Mueller to Team Trump.

But the difference between the two versions is significant. If these are the literal questions from Mueller's team, they reflect (in addition to the flaws noted above) a dangerously elastic view of criminal obstruction of justice. If they are mere briefing book questions, intended to prepare the President for every possible question Team Mueller may ask, they should be of much less concern to Team Trump and to observers attempting to fairly critique the Mueller operation. Finally, if these are briefing book questions that were deliberately leaked and packaged to the media by Team Trump as if they were Team Mueller's literal proposed interview questions for President Trump, this says something disturbing about the Trump legal operation.

(wisenberg)

That's Entertainment: Judge Ellis and the Hearing on Manafort's Motion to Dismiss

Attached is the transcript of  yesterday's hearing in the Eastern District of Virginia on Paul Manafort's Motion to Dismiss the Indictment against him: USA v PAUL J MANAFORT JR - 5-4-2018 Hearing on Motion to Dismiss. The hearing was before Judge T.S. Ellis III and was characterized by Judge Ellis's typically blunt and withering wit.

Here are some takeaways:

1. Despite the headline worthy comments of Judge Ellis, the Court will reject Manafort's argument that the Indictment should be dismissed because the Order appointing Mueller is broader than the Special Counsel regulation allows. DAG Rod Rosenstein's  August 2 2017 Letter Re The Scope of Investigation and Definition of Authority makes clear that Mueller had the authority from the first day of his appointment, on May 17, 2017, to investigate Manafort for colluding with Russian officials during the 2016 election in violation of U.S. laws and for crimes arising out of payments Manafort received from former Ukrainian President Victor Yanukovych. Judge Ellis indicated that he considered this to be the government's strongest argument. Unless Judge Ellis believes that Rosenstein's August 2 letter was an after-the-fact sham, the letter puts an end to Manafort's central claim. Judge Ellis may also find, although this is not as certain, that the Special Counsel regulation creates no personal rights for Manafort that are enforceable in a judicial proceeding. In other words, this is a non-justiciable intra-branch matter within the Department of Justice.  
2. It was striking to me that Michael Dreeben, who spoke for the government, did not lead with the argument that Rosenstein's August 2 letter resolves the question of whether Mueller is acting within his authority. Why not? Is it because, Mueller does not want a detailed factual inquiry on this point? During the motions hearing, both sides referenced Rosenstein's December 13, 2017 House Judiciary Committee testimony. Here are relevant Excerpts from that testimony, in which Rosenstein stated under oath that "the specific matters are not specified in the [May 17] order. So I discussed that with Director Mueller when he started, and we've had ongoing discussion about what is exactly within the scope of his investigation." (Rosenstein could not say with 100% certainty what parts of Mueller's investigation were an expansion and what parts were a clarification of Mueller's original mandate. He promised to get back to the House Judiciary Committee on this point.] Dreeben told Judge Ellis that the "specific factual  [August 2] statement, as [DAG] Rosenstein described in his Congressional testimony, was conveyed to the special counsel upon his appointment in ongoing discussions that defined the parameters of the investigation that he wanted the special counsel to conduct." So which is it? Was the scope of the investigation crystal clear on March 20, 2017 or on May 17, 2017, or did it have to be hammered out in ongoing discussions. Rod Rosenstein's May 17 2017 Order Appointing Robert S. Mueller III clearly states that Mueller has the authority to conduct the investigation confirmed by former FBI Director Comey in his March 20, 2017 Congressional testimony. Manafort's attorney, Kevin Downing, wanted to see any memos written by Rosenstein leading up to Mueller's appointment to help determine the scope of Mueller's authority. When Judge Ellis asked Downing how he knew such memos existed, Downing, who worked under Rosenstein for five years, replied: "Mr. Rosenstein is a stickler for memos being written, for there to be a written record for the actions of the Department of Justice." Downing argued that if Rosenstein exceeded his authority in appointing Mueller, Mueller "does not have the authority of a U.S. Attorney." In that event, according to Downing, any indictment procured from the grand jury by Mueller's operation would presumably be null and void.
3. Fox News's assertions that Judge Ellis accused the Mueller team of "lying" and using "unfettered power" to target Trump are not supported by the record. Judge Ellis did express extreme skepticism regarding one of the government's arguments and made the undoubtedly true statement that the government was using Manafort to go after Trump.
4. The non-justiciable, intra-branch dispute argument by Mueller's people could end up biting them in the butt in another context. Expect President Trump to use a similar argument if he is subpoenaed, asserts Executive Privilege, and is challenged on this point by Mueller. Trump will argue that Mueller, as an inferior officer within the President's DOJ, lacks regulatory authority to contest Executive Privilege, and that the entire matter is a non-justiciable, intra-branch dispute. Contrary to general assumptions, U.S. v. Nixon does not settle this issue. The Supreme Court in Nixon rejected President Nixon's justiciability argument, but did so on the basis that Special Prosecutor Leon Jaworski had the explicit authority to contest assertions of Executive Privilege pursuant to the terms of the federal regulation that governed his appointment. As far as I can tell, Special Counsel Mueller has not been given explicit authority to contest issues of Executive Privilege.

(wisenberg)

Of Course Michael Cohen is Taking the Fifth

Everyone is reporting that Michael Cohen is taking the Fifth Amendment (see here and here). This is no surprise.  For the government to get a search warrant, probable cause is needed.  Further when there are parallel proceedings - with both possible civil liability and criminal prosecution, lawyers are quick to request a stay of the civil proceeding pending a resolution of the criminal action. When an individual is a target or subject of an ongoing investigation, not talking is about the best a lawyer can advise to their client. Perhaps the only monumental aspect of this case is that the individual taking the 5th Amendment happened to be the President's lawyer.

(esp)

Michael Cohen's Attorney Speaks - No Need For a Search

Playing the press has become an important component in handling a white collar case.  In the past, one might remain silent and let the case be resolved prior to making any statements, especially press-related statements.  With the speed of the internet, it often becomes necessary for attorneys to respond to allegations to provide a level playing field.  It, therefore, was no surprise to see Michael Cohen's attorney, Stephen M. Ryan, issuing a press release. (see here).  He calls the US Attorneys Office "completely inappropriate and unnecessary."  He argues that his client "has cooperated completely with all government entities, including providing thousands of non-privileged documents to the Congress and sitting for depositions under oath."

It is interesting to see the use of a search here as opposed to a subpoena.  The downside of the government using a search is that it is more expensive, not secret like the grand jury process, requires probable cause, and if the probable cause is later found lacking the entire search can be invalidated. The upsides of a search are surprise, getting the material immediately without having to wait for the grand jury, obtaining items that might be found in plain view, and also receiving possible incriminating statements from individuals while performing the search, this latter one mostly applicable in the corporate or business context. One can argue obstruction of justice either way.  On one hand you get the items in question before there is any possibility of them being destroyed.  On the other hand if documents were destroyed, prosecutors would have a "short-cut offense" to charge of obstruction of justice.

In my Article, White Collar Shortcuts, forthcoming in the Illinois Law Review, I note how prosecutors are using investigative and charging "short-cuts" more frequently in white collar cases.  Whether the use of a search warrant was a "short-cut" here, remains to be seen.  

(esp)

Mueller: What Could He Do And When Could He Do It?

Monday night, in the U.S. District Court for the District of Columbia, Special Counsel Robert Mueller filed his Response [Government's Response in Opposition to Motion to Dismiss] to Paul Manafort's Motion to Dismiss the Superseding Indictment. Manafort's Motion to Dismiss is bottomed on the alleged invalidity of Acting AG Rod Rosenstein's May 7 2017 Order Appointing Robert S. Mueller III as Special Counsel and defining Mueller's jurisdiction. As part of his Response, Mueller referenced and filed Attachment C, a redacted version of Rosenstein's  August 2 2017 Letter Re The Scope of Investigation and Definition of Authority.

Before Monday night there was no public knowledge of this August 2 letter, which sets out in detail, among other things, the specific matters already under investigation before Mueller came on board.  According to the August 2 letter, the May 7 Order had been "worded categorically in order to permit its public release without confirming specific investigations involving specific individuals." The private August 2 letter, in contrast, "provides a more specific description of your authority." Recall that the May 7 Appointment Order authorized Mueller to "conduct the investigation confirmed by then-FBI Director James B. Comey in testimony before the House Permanent Select Committee on Intelligence on March 20, 2017, including...(i) any links and/or coordination between the Russian government and individuals associated with the campaign of President Donald Trump; and (ii) any matters that arose or may arise directly from the investigation; and (iii) any other matters within the scope of 28 C.F.R § 600.4(a)." The August 2 letter unequivocally states that "[t]he following allegations were within the scope of the Investigation at the time of your appointment and are within the scope of the Order:

[Redacted]

• Allegations that Paul Manafort:

    º Committed a crime or crimes by colluding with Russian government officials with respect to the     Russian government's efforts to interfere with the 2016 election for President of the United States, in     violation of United States law;

 º Committed a crime or crimes arising out of payments he received from the Ukrainian     government  before and during the tenure of President Viktor Yanukovych;

[Redacted]"

In other words, FBI Director Comey was already investigating Manafort for possible criminal collusion with the Russians and for payments Manafort received from Yanukovych, before Mueller came into the picture. By including the Yanukovich payments in his probe of Trump, Comey displayed an aggressiveness sadly absent from the investigation of Ms. Clinton's email server.

What is odd is that Rosenstein's August 2 letter was sent almost three months after Mueller began his inquiry. You would think that such a specific private memo detailing the scope of Mueller's investigative authority would have been issued contemporaneously with the May 7 Order. That it wasn't suggests there were disagreements in defining the outer boundaries of Mueller's charter or that Mueller or Rosenstein began to perceive problems with the wording of the May 7 Order and foresaw the possibility of just the sort of Motion to Dismiss ultimately filed by Manafort.

Rachel Stockman at Law and Crime notes here that the more specific delineation of authority laid out in the August 2 letter came one week after the raid on Manafort's home. Mueller may have wanted written reassurance that the search and seizure were within his authority ab initio, or, as we say in Texas, from the get-go.

(wisenberg)

Dowd Resigns From Trump Legal Team

The Washington Post has the story here.

(wisenberg)

Point of Personal Privilege: Means & Ends In the War Against Trump

News is coming in fast and furious, since Friday night's firing of Former FBI Deputy Director Andrew McCabe.

First, there was McCabe's own defiant and somewhat poignant statement, seriously marred by his ludicrous suggestion that the career professionals at DOJ-OIG and FBI-OPR, appointed respectively by Obama and Mueller, were only doing Donald Trump's bidding.

Second, came President Trump's mean spirited tweet celebrating McCabe's firing.

Third out of the box? Trump Lawyer John Dowd's nutty call for Rod Rosenstein to shut down Mueller's probe. What else?

Brennan's tirade against Trump amid reports that McCabe has given notes of his conversations with Trump to Mueller. (Who hasn't done that?)

Jonathan Turley suggests here that McCabe's full statement poses potential problems for Comey, because McCabe claims that his conversation with the WSJ was authorized by Comey. This arguably contradicts Comey's sworn statement to Congress that he did not leak or authorize the leak of Clinton investigation details to the press. Turley also believes that McCabe's firing may embolden Trump to fire Mueller if McCabe, unlike Flynn, isn't prosecuted for lying to investigators. To top things off, there is the growing consensus that DOJ-FBI's original probe, taken over by Mueller after Comey's firing, was marred from its inception by the FISA affidavit's over-reliance on the Steele Dossier, made worse by the failure to disclose (to the FISA judges) that the dossier was bought and paid for by the DNC and Clinton's campaign. 

Some things to keep in mind. The ends almost never justify the means. Whatever McCabe thought of Trump, he had no business leaking classified law enforcement information to a WSJ reporter in order to protect the Bureau's image surrounding its handling of the Clinton email and Clinton Foundation investigations. And of course McCabe had no right to lie about it to investigators, under oath or otherwise.

In the rush to hate Trump at all costs, care must be taken not to compromise the criminal law, investigative norms, or the Constitution. Trump may be unfit in many ways to serve as President of the United States. But he won the election. I see no substantive evidence on the public record now before us that he did so unlawfully. There is a difference between his repeated violations of decades-long institutional norms, regardless of how repulsive those violations may be, and impeachable or criminal offenses. Failure to recognize this difference, or bending the rules to get Trump, will have disastrous consequences in the long run.

(wisenberg)

Senator Robert Menendez Jury Hangs: Mistrial Declared

Here is a story from Max Greenwood of The Hill and another from Bill Wichert of Law 360. Make no mistake about it, this was a great and hard-fought victory for Menendez's lead defense attorneys Abbe Lowell and Raymond Brown and for the entire defense teams of Bob Menendez and Salomon Melgen. Despite all of the speculation concerning the impact of the Supreme Court's McDonnell decision, I doubt that it materially impacted the jury's work. It is obvious that Senator Menendez performed official acts on behalf of his co-defendant Salomon Melgen. It appears instead that some of the jurors bought the defense's theory that the Senator's actions were taken based on his close and long-time friendship with Melgen. This bodes well for Senators who accept expensive gifts and do political favors for old friends. The key here is to make friends with the right solons earlier in their careers. Then you can become an old friend. 

(wisenberg)

Is the Schock Case Unraveling?

It's not every day that a federal district judge accuses the government of misleading the Court and demands corrective action. But it's happening in the Urbana Division of the Central District of Illinois. I posted here in March regarding the federal case against former Congressman Aaron Schock. Among other items of alleged government misconduct, the defense maintained that prosecutors improperly commented to grand jurors on Schock's failure to testify, in violation of his Fifth Amendment Privilege Against Self-Incrimination. The defense relied in part on an affidavit by a dismissed grand juror. After unequivocally denying the grand juror's allegation, the government clarified the record, more than six months later, admitting that government counsel "commented on or addressed Mr. Schock's testifying or decision not to testify before the grand jury" on eleven occasions. U.S. District Judge Colin Bruce was not amused, and ordered the government to review each of its previous filings "to ensure that no more false or misleading claims were made." Judge Bruce also gave the government 14 days to file a memo "detailing any further misrepresentations or misleading statements." Here is Judge Bruce's Order Requiring Government Memorandum re Misrepresentations. The government responded yesterday, denying that it had misrepresented anything to the Court, asking the Court to reconsider its finding regarding misrepresentation, and representing further that it had not intentionally made any materially misleading statements in its prior filings. Here is the Government's Compliance with the Court's October 3 Order and Motion to Reconsider. Schock, represented by George Terwillliger, Bob Bittman, Benjamin Hatch, Nicholas Lewis, and Christina Egan of McGuire Woods in DC and Chicago and by Jeffrey Lang of Lane & Waterman in Davenport, Iowa, wasted no time, not even a day, in firing back. Here is Schock's Motion to Strike or in the Alternative Leave to File a Response. Here as well is Schock's Proposed Response to Government's Compliance. In a future post, I will examine the nature of the government's comments to the grand jurors.

(wisenberg)

Preston L. Pugh Joins Miller & Chevalier

Attorney Preston Pugh joined Miller & Chevalier Chartered in the litigation Department. (see here). Preston "Pugh counsels and defends clients in complex civil and criminal litigation, internal investigations, and government investigations. His practice includes matters involving the U.S. Foreign Corrupt Practices Act (FCPA), the False Claims Act (FCA), government contracts, and corporate ethics and governance."  He participated als0 has been an instructor in the NACDL White Collar Criminal Defense College at Stetson.

(esp)

ABA White Collar Crime Conference - Title IX

This is the first time the ABA White Collar Crime Conference had a panel focused on "Due Process on Today's Campus: Handling IX Abuse and Harassment Cases."  Moderating this conference was Marcos Hasbun.  Panelists were Carolina Meta, Thomas C. Shanahan, and Hon. Nancy Gertner.  Many may think this is outside the scope of white collar criminal matters, but attorneys in the white collar area are often involved in the internal investigations for schools and criminal defense counsel can be called on in representation of clients - both individuals accused and victims.

Hon. Nancy Gertner noted that this was initially regulation guidance that was not issued with notice and comment.  It has had earth shattering consequences, as described by Hon Nancy Gertner. The preponderance of the evidence standard being used was noted. But unlike ordinary civil cases, you don't have discovery.  The panel discussed the "Dear Colleague" letter. She also noted the mandated procedures is how it has played out. Thomas Shanahan discussed the parallel proceedings that can occur with law enforcement and the university disciplinary proceeding.

It was noted that the university is under a mandate to move things along in 60 days. It was also noted that case lines are developing on two different tracks, including those arguing the denial of due process rights by the university.

Some argued that the process is focused on due process rights of the individuals making the accusation.  But it was also noted that some states, like North Carolina, permits counsel during the proceedings for the respondent.  It was noted it can be beneficial for counsel for the respondent to get the outside lawyer involved.

(esp)

U.S. Attorney Wifredo A. Ferrer Joins Holland & Knight as Head of Global Compliance and Investigations Team

Holland & Knight has announced that Wifredo A. Ferrer, U.S. attorney for the Southern District of Florida, will join the firm as a partner in its Miami office. Mr. Ferrer will lead the firm's Global Compliance and Investigations Team, which focuses on corporate compliance and government investigations within the firm's White Collar Defense Practice.  Read more here.

(esp)

Josh Greenberg, U.S. v. Annappareddy Hero, Opens New Firm.

Readers of this Blog are no doubt familiar with United States v. Reddy Annappareddy, the District of Maryland case in which a guilty verdict was overturned (and new trial granted) with the grudging, belated concurrence of government prosecutors, because the government presented false testimony to the jury. The indictment was then dismissed with prejudice, over government objection, due to the government's destruction of potentially relevant evidence and the trial court's finding of prosecutorial misconduct.  All of this was the result of the tireless and brilliant work of Annappareddy's post-trial attorneys, Josh Greenberg and Mark Schamel of Womble Carlyle.  See my prior posts here, here, here, here, and here. Since my last post, the government moved to withdraw its appeal, the Fourth Circuit granted the motion, and the mandate has issued. 

Now, Josh Greenberg, who played a key role in devising and implementing the post-trial strategy, has decided to open his own shop, focusing on white collar criminal defense, civil litigation, and appeals. Congratulations to Josh. We wish him the best.

(wisenberg)