White Collar Defense and Compliance : New Jersey White Collar Defense Lawyer & Attorney : Fox Rothschild Law Firm : Criminal Defense, Insider Trading, RICO, Consumer Fraud : New Jersey, New York City

Alain Leibman writes:

Prosecutors love using summary witnesses, usually their case agents, at trial. As the closing, wrap-up witness, an agent can testify about summary charts which he/she prepared, nicely aligning the counts and charges with key documentary exhibits or with trial testimony, or can put into evidence the inculpatory statements made by the defendant. Put on the stand as an opening witness, an agent can trace the course of his or her investigation, describe the execution of a search, or carefully establishing the reasons that the government focused its attention on the individual now sitting at the defense table. In cases involving complex organizations, such as gang or organized crime prosecutions, an agent may judiciously describe enterprise structures and, based on the agent’s investigative experience, the roles typically played by certain sorts of individuals in those entities.

But when the agent-witness testifies first, and goes further to anticipate and summarize evidence which has not yet been admitted, then the government is on very thin ice, as the First Circuit recently emphasized in United States v. Rodriguez-Adorno, 695 F.3d 32 (1st Cir. 2012). This was a carjacking case, and the case agent from the FBI led off the government’s presentation. Unfortunately, the agent went beyond a description of his investigative efforts -- he identified the defendant as the individual depicted on surveillance tapes of the deadly episode and also testified that seven or eight witnesses would testify that the defendant was involved in the crime.

The court of appeals reiterated its concerns with overview testimony from the government early in a trial, warning that such witnesses must take care not to describe the theory of prosecution based on hearsay statements made to the agent and must not implicate the defendant in the charged offense. In this case for example, the agent repeatedly referred to the episode as a “carjacking” and a “murder” of the driver, statements which assumed the offense had been proven, and which were admitted in error. It was also error (i) to admit the agent’s testimony about the witnesses who would implicate the defendant, which was hearsay, and (ii) to have allowed the agent to identify the defendant on the video, which was an impermissible lay opinion under FRE 701, since the jury was as well-suited to identify the individual on the video, rendering the agent’s opinion unhelpful to the trier of fact.

In the end, the First Circuit deemed the errors harmless, of course, and affirmed the conviction, but the lessons are clear and the path to a well-taken objection or in limine motion illuminated.
 

(Alain Leibman, Esq., the author of this entry and a co-author of this blog, is a partner with Fox Rothschild LLP, based in our Princeton, NJ office. A former decorated federal prosecutor, he practices both criminal defense and commercial litigation in federal and state courts)

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Alain Leibman writes:

Often, the government finds itself desirous of introducing the prior civil deposition testimony of a witness who is unavailable for trial, occasionally because the witness is deceased or cannot be located. but more often because the witness has asserted a Fifth Amendment objection to his/her compelled testimony. Sometimes, though, it is the defendant who seeks to introduce such prior deposition testimony. In either circumstance, application of Federal Rule of Evidence 804(b)(1) requires a trial court to determine whether the deposition testimony is being offered against a criminal party who enjoyed in the civil case an opportunity, and a similar motive, to develop that testimony.

So, when prior deposition testimony is offered by the government against a criminal defendant who was a civil defendant in the earlier case, those elements are rather easily met. Not so when the offeror is a criminal defendant, because the United States cannot usually be said to have had an opportunity to develop testimony in a civil litigation to which it was not a party, nor can it be said that it shares a motivation with an unaffiliated civil party seeking money. That is, unless an agency of the United States was a litigant in the prior civil case.

In United States v. Sklena, 2012 WL 3608583 (7th Cir., Aug. 23, 2012), the defendant was a trader at the Chicago Board of Trade, charged with conspiring to commit fraud with another trader named Sarvey in a series of rigged trades involving Sarvey's customer accounts. Sarvey was originally charged as a co-defendant, but died before trial. Before he died, however, Sarvey was also deposed as a civil defendant in a regulatory action brought by the CFTC against both of them. In his deposition testimony, Sarvey exculpated Sklena in various respects. So, when Sklena was criminally charged and went to trial, he sought to introduce the now-unavailable Sarvey's deposition testimony in his defense, but the trial court would not permit it, and convicted Sklena in a bench trial.

The Seven Circuit held that the deposition testimony was erroneously excluded. On the first element – opportunity to have developed the earlier testimony – the Court of Appeals acknowledged that there was "very little law on the question whether two government agencies" should be considered the same party in terms of the opportunity to have developed the earlier testimony. There were, however, several factors which suggested a sufficient connectedness between the CFTC and the Department of Justice to make them the same party for purposes of the Rule: the CFTC was statutorily required to report its litigation activities to the Department; and the agencies closely coordinated their roles in enforcement. Their connection "would be even more clear if the Department had litigating authority for the agency," which it does not, but the appeals court held that this criterion was not dispositive.

As to the second element – similarity of motive – this finding turns on a number of factors, including the substantive law that each agency is enforcing; the factual overlap between the two proceedings; the type of proceeding; the potential associated penalties; and any differences in the number of issues and parties. These factors, the court held, in this case supported the conclusion that the two agencies did indeed enjoy similar motives to develop Sarvey's deposition testimony, given the same underlying conduct being investigated by both agencies with a joint objective toward taking enforcement action. The fact that the first action was civil and the second criminal did not augur a different result, since the deterrent effect of a large civil penalty would be quite similar to that of a criminal sentence.

Accordingly, the trial court should have admitted the deposition testimony, and Sklena's conviction was reversed.
 

(Alain Leibman, Esq., the author of this entry and a co-author of this blog, is a partner with Fox Rothschild LLP, based in our Princeton, NJ office. A former decorated federal prosecutor, he practices both criminal defense and commercial litigation in federal and state courts)

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Alain Leibman writes:

Normally, trial judges are vigilant in ensuring that every step in a jury's deliberative process takes place within the confines of a single location: the jury deliberation room. Jurors are abjured to do nothing outside that room which could affect their deliberations, that is, not to discuss the case with friends or family members at home, not to read news stories about the case, not to have discussions with anyone in the courthouse, not to do their own research, and not to visit any of the places mentioned during the course of the trial. That room is the sole chamber in which jurors are to discuss, reflect upon, and evaluate the evidence in the case.

That is unless the trial judge accedes to their request to do homework during deliberations. In United States v. Esso, 684 F.3d 347 (2nd Cir. 2012), the judge in the Southern District of New York, sitting in a mortgage fraud case, received a note from the deliberating jury indicating that it wanted to go home early one day and wanted to take the indictment home to read as a time-saver. The trial judge, after instructing the jurors not to discuss the indictment with anyone, agreed over objection to permit this highly unusual homework, and the subsequent conviction was upheld on appeal.

The Second Circuit was clearly uncomfortable with what the trial judge had done, indicating that it had "doubts about the wisdom of the practice and "urg[ing] caution on district courts considering it." First, the Court of Appeals noted that it was hardly standard practice to even send the indictment into the jury room, much less as a take-home, for the obvious reason that the indictment "contains a running narrative of the government's version of the facts" and "is a one-sided presentation of the prosecution's view of the case." Second, the uncontrolled environment outside the jury deliberation room only enhances the risks to a defendant's right to a fair trial, since "[s]ending trial materials home with jurors increases the chance of exposing the jury to outside influences." Third, the appeal presented an issue of "first impression… in any federal or state court." Sounds as if allowing the jurors to take the indictment home, with all of its attendant possibilities of extra-judicial communication, would be a significant error by the trial judge? Not so much.

Somehow, the Second Circuit managed to analogize allowing jurors, unsupervised and with full access to family and friends, to study the prosecution's template of the case at home to permitting jurors to take home copies of their jury instructions, for which there is precedential support. (Regardless of whether it has been held not to deprive the defendant of a fair trial, this peculiar practice, too, insensibly courts danger). The court explained that jurors may be allowed to do independent thinking about the case when at home – although acknowledging that some judges direct their jurors not to think about the case other than while deliberating together in the courthouse – so permitting them to both read the indictment and think about it while at home did not deprive Esso of a fair trial.

The Court of Appeals decision is indefensible. It makes a mockery of the elaborate protocol employed to keep the jury-deliberation process immune from outside influences and to allow the group dynamic of deliberations to function effectively – a protocol which involves physical sequestration in a closed, supervised room during deliberations; a series of redundant and emphatic directions to jurors to not discuss the case or the evidence in any other location; and a severe policing of all the circumstances attending those deliberations. The court might as well have allowed the jurors to study at home over the weekend a transcript of the prosecution's opening statement, and then concluded with utter, if unbelievable, certitude that the fairness of the resulting verdict was unaffected.

There is an unconfirmed rumor that the prosecutors in this case, upon receiving and reading the opinion upholding their conviction, immediately rushed out to buy lottery tickets.
 

(Alain Leibman, Esq., the author of this entry and a co-author of this blog, is a partner with Fox Rothschild LLP, based in our Princeton, NJ office. A former decorated federal prosecutor, he practices both criminal defense and commercial litigation in federal and state courts)

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Alain Leibman writes:

Generally, governing ethics rules permit joint representation under circumstances where, at minimum, the affected clients have full knowledge of the potential for conflict of interest and knowingly waive any such conflict. Thus, it is not rare in civil litigation for one attorney to represent multiple parties or for attorneys from the same firm to jointly represent multiple parties, as long as appropriate disclosure, consent, and waiver has been put in place. It is quite a different matter in criminal cases, though. While the Sixth Amendment does assure a defendant the right to counsel, both Supreme Court precedent and the Federal Rules of Criminal Procedure require district courts to engage in a searching examination of the potential for conflict and of the particular dangers which joint representation poses for the integrity and fairness of the proceedings.

Under Fed. R. Crim. P. 44(c), a court is required to make inquiry in cases of joint representation, regardless of the expressed wishes of the defendants themselves. The Rule establishes a rebuttable presumption that joint representation is inappropriate; it provides that "[u]nless there is good cause to believe that no conflict is likely to arise," the court must take "appropriate measures" to preserve each defendant's right to counsel. In the Supreme Court case of Wheat v. United States, 486 U.S. 153 (1988), the Court held that an individual defendant's right to counsel of choice may be overcome merely by a showing of a "serious potential for conflict."

A recent illustration of the point is presented in United States v. Self, 681 F.3d 190 (3rd Cir. 2012), in which two brothers initially retained counsel from the same, small law firm. All disclosures and waivers necessary to meet the governing ethics rule were in place. After being questioned by the district court, the lawyer for one of the brothers had a change of heart and moved to withdraw from the case, agreeing that no ethical screen could practically be established to avoid a conflict between the two brothers and their partnered lawyers. After the first attorney was allowed to withdraw, the court turned its attention to the second attorney. While the second attorney insisted that his representation of the second brother would be unfettered by his firm's former representation of the first, he had during the joint representation period curiously changed positions on an important scheduling issue involving the timing of the trial; after indicating to the court that the second brother wanted to go to trial immediately, attorney number two then told the court that he had no objection to a continuance requested by his partner, attorney number one, for the first brother.

This flip-flop on the timing of the trial led to the second attorney's being involuntarily disqualified by the district court, and led the Third Circuit to uphold the ruling. Citing Wheat's concern with the "special dangers" presented by joint representation in a criminal case, the Court of Appeals found no abuse of discretion in the disqualification of the second attorney since there remained a serious potential conflict by virtue of his loyalty to the firm's former client, the first brother. The court's opinion relied heavily on the "puzzling decision" to first insist on proceeding to trial and then failing to oppose a motion to continue the trial when that motion was brought by the partner-attorney for the first brother.
 

(Alain Leibman, Esq., the author of this entry and a co-author of this blog, is a partner with Fox Rothschild LLP, based in our Princeton, NJ office. A former decorated federal prosecutor, he practices both criminal defense and commercial litigation in federal and state courts)

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Alain Leibman writes:

In United States v. Kozeny, 667 F.3d 122 (2nd Cir. 2011), a Foreign Corrupt Practices Act prosecution, the defendants were charged with having bribed Azerbaijani officials in order to acquire a state-owned oil company. Kozeny remained an international fugitive, but co-defendant Bourke was convicted. On appeal, Bourke challenged a jury instruction which failed to require the jurors to be unanimous as to a single overt act committed to advance the charged conspiracy.

The Second Circuit addressed for the first time the question whether, beyond a general unanimity instruction, the jury was required to be told that they must agree unanimously on which one or more particular overt acts was committed by the conspirators. The court cited to decisions from the Fifth (United States v. Sutherland, 656 F.2d 1181 (5th Cir. 1981)) and Seventh (United States v. Griggs, 569 F.3d 341 (7th Cir. 2009)) Circuits in holding that a jury need not agree on a single overt act in order to sustain a conspiracy conviction. See also United States v. Jackson, 879 F.2d 85 (3d Cir. 1989). The conviction was affirmed.
 

(Alain Leibman, Esq., the author of this entry and a co-author of this blog, is a partner with Fox Rothschild LLP, based in our Princeton, NJ office. A former decorated federal prosecutor, he practices both criminal defense and commercial litigation in federal and state courts)

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Alain Leibman writes:

I have co-authored with my colleague Jana Volante, Esq. an article appearing this week in BNA's Criminal Law Reporter entitled "Attacking Eyewitness Identification Testimony."  In the article, we examine the various approaches available to defense counsel to exclude such evidence altogether, or at least to blunt its potentially devastating impact.

(Alain Leibman, Esq., the author of this entry and a co-author of this blog, is a partner with Fox Rothschild LLP, based in our Princeton, NJ office. A former decorated federal prosecutor, he practices both criminal defense and commercial litigation in federal and state courts)

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Conspiracy law historically has borne a number of common law doctrines, all developed long ago and all aimed at reducing the expansive reach and draconian implications of conspiracy charges. One thinks immediately of “Wharton’s Rule” as a classic example. Another was known as the “rule of consistency,” which provided that where all co-conspirators stand trial, the acquittal of all but one requires the conviction of the final defendant to be set aside, since the acquittals of the others negate the possibility that there could have been the necessary conspiratorial agreement between any two of them.

Courts have whittled away all such doctrinal limitations, and the “rule of consistency” is no different. Inconsistent verdicts among defendants generally offer no basis to set aside a conviction and, the Third Circuit held recently, conspiracies are treated no differently. United States v. Tyson, 2011 WL 3314942 (3rd Cir., Aug. 3, 2011). Tyson and one Morrell were charged with conspiring with each other, and with persons known and unknown, to illegally transport weapons into the Virgin Islands. Morrell testified in his own defense and was acquitted, while Tyson did not testify and was convicted of the conspiracy and other charges. On appeal, Tyson argued that the “rule of consistency” mandated reversal.

The Third Circuit assumed that the rule was applicable, notwithstanding the indictment’s reference to unidentified other conspirators, since the proof at trial focused exclusively on Morrell and Tyson. However, the court observed, every other court of appeals to have considered the rule’s viability had decided that it had none; if inconsistent verdicts were generally acceptable and understood to result from factors such as jury lenity, then the inconsistent conspiracy verdicts were acceptable, as well.

(Alain Leibman, Esq., the author of this entry and a co-author of this blog, is a partner with Fox Rothschild LLP, based in our Princeton, NJ office. A former decorated federal prosecutor, he practices both criminal defense and commercial litigation in federal and state courts)

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Lengthy trials are often problematic for prosecutors, who fear that jurors will be unable to recall testimony heard earlier in the proceedings, and for defense attorneys, who are concerned that points scored on cross-examination will wash out of the jurors’ collective memories during the long slog through the government’s case. Mid-trial summaries, then, would seem to benefit both sides by allowing them to lock in their achievements while the testimony or documentary evidence is still fresh in mind.

There is, however, little case law concerning the propriety of such mini-summations in criminal trials. The Second Circuit, in United States v. Yakobowicz, 427 F.3d 144 (2d Cir. 2005), held that argumentative mid-course summaries given after each witness has testified are unconstitutional because they favor the prosecution and unfairly ease its burden of proof. Yet, in a recent opinion distinguishing Yakobowicz, the Seventh Circuit has endorsed a modified form of the practice. United States v. McGee, 2010 WL 2813635 (7th Cir., July 20, 2010).

The trial judge in McGee, a Hobbs Act prosecution of a Milwaukee councilman, recognizing that the trial was expected to be lengthy (although it concluded in just under two weeks), allowed the prosecution and defense to each have one opportunity after the first weekend break to summarize the evidence; these were required to be brief, “non-argumentative” recaps. Apparently, the prosecutor spoke for only seven minutes, in what the Seventh Circuit called a simple “’just the facts’ recap of the sort Joe Friday would have approved.” (The opinion does not characterize the length or quality of the defense counsel’s performance). Such a fairly-applied procedure utilized once during a trial, the court of appeals held, does not present constitutional problems. Like note-taking by jurors and written jury instructions, it is a modern accommodation to the problem of the increase in the length of trials and does not entrench upon the defendant's due process rights.
 

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Federal Rule of Criminal Procedure 16(b) imposes discovery requirements on the defense which are triggered when the government complies with its own, initial disclosure obligations. Some defense counsel treat the reciprocal obligation as more or less voluntary, betting that they will be spared the district court’s wrath and will avoid the sanction of evidence preclusion due to the defendant’s transcendent Sixth Amendment rights. In at least one recent case that bet proved to be a resounding loser.

In United States v. Hardy, 586 F.3d 1040 (6th Cir. 2009), the defendant had been charged with embezzling $250,000 from her employer, a box manufacturer, by transferring funds under her control to another company. Hardy’s defense was that the transfers amounted to a repayment of loans she had earlier caused to be made to the box company, and sought to introduce at trial check stubs in her possession documenting the alleged, earlier loan. Defense counsel had not supplied the government with copies of those defense exhibits prior to trial, and explained the omission by saying that he had not intended to use them and was only obliged to do so when a duces tecum subpoena served on the box company failed to yield original documentary evidence of the loans. The government objected, and the trial court precluded use of the defense check stubs because of a failure to comply with FRCP 16(b).

The Sixth Circuit affirmed the resulting conviction. Under FRCP 16(b), the defense was required to produce in discovery papers and documents in the possession of the defense which are intended for use in the defense’s case-in-chief. Under FRCP 16(c), the obligation is a continuing one. The appeals court viewed the non-disclosure as willful, making exclusion a proper remedy. To the defense counsel’s strained argument that the requirements of FRCP 16(b) apply only to admissible records and the admissibility of the defense’s copies could only be determined when the subpoena seeking original versions proved unavailing, the Sixth Circuit had an emphatic response: the disclosure obligation exists when (a) the defense possesses the document and (b) intends to offer it, regardless of the outcome of any anticipated dispute over admissibility. The Sixth Amendment’s guaranteed right to present exculpatory evidence was not absolute, and could be overcome by the countervailing interests represented here by FRCP 16(b).

The Hardy case is a useful reminder that, while a risk-benefit analysis may justify delaying disclosure until as late in the pre-trial process as possible, that analysis may tilt unalterably against defense counsel if disclosure is not finally made at some point prior to the actual start of the trial.
 

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Typically, cross-examining a cooperator regarding the impact of the Sentencing Guidelines (e.g., its reduction of, say, a five-year exposure on each mail fraud charge in an Information to nothing more than 12-18 months in the aggregate even before a downward reduction) or the intricacies of a 5K1.1 variance motion can be dicey under the best of circumstances.  Intuitive-sounding strategies can backfire (e.g., showing a jury that a cooperator really faces only 12-18 months despite numerous charges may be intended to convey that he got a sweetheart deal, but it also educates a sharp jury to the relatively limited amount of jail time a defendant might receive, making it more palatable to convict him) and Booker/Gall/Kimbrough have diminished the importance of the 5K as the exclusive jail-cell key.

But the Seventh Circuit has made the cross-examination even harder, holding in a recent case that the Sixth Amendment right of confrontation means only that a defense attorney must be permitted to raise the subject of the Guidelines and their impact, but that the attorney need not be given a full opportunity to explore their consequences for truth-telling.

In United States v. Recendiz, 557 F.3d 511 (7th Cir. 2009), the attorney for one of the defendants had crossed a cooperator by having the witness acknowledge familiarity with the Guidelines and with his potential sentencing range, and then obtaining a concession that the witness could get a reduced sentence by testifying truthfully.  However, when counsel asked cooperator Herrera who would determine what was truthful and what "truth" really meant, the district court cut off questioning.  

On appeal, the Seventh Circuit affirmed.  While the Sixth Amendment guarantees an opportunity for effective cross-examination, the opportunity is not unlimited and the trial judge can impose reasonable restrictions.  When a core Sixth Amendment value is at stake, like the ability to expose a witness's motivation for testifying, his bias, or motive to lie, the review is de novo.  Here, the court explained, defense counsel was allowed to explore the witness's motive for testifying, so the constitutional right of confrontation was deemed not to be implicated.

Then, applying a lesser and non-constitutional abuse of discretion standard, the appeals court held that the trial judge sufficiently allowed defense counsel to explore the Sentencing Guidelines with the cooperator.  Questions about the "truth" and who determined its presence or absence were permissibly found by the trial judge to be confusing to the jury and questions of law beyond the witness's knowledge.  Although both of these rationales appear specious -- it could be said to be clarifying, not confusing, for the jury to know that the prosecutor is the sole decider of "truth" and the questions are not legal, but seek the witness's factual knowledge of the agreement he/she signed -- the Seventh Circuit found no abuse of discretion in the lower court's denial of the right to cross-examine the witness in these areas.

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Practitioners in this area are wearily familiar with the Zafiro standard for granting severance under FRCP 14: there must be a serious risk that a joint trial will compromise a specific trial right of one of the defendants, or prevent the jury from reaching a reliable verdict. The risk of spillover is not enough, because juries are presumed able to compartmentalize evidence, and inconsistent defenses are not sufficient, since the moving defendant must show that there are “antagonistic” defenses at play, which are irreconcilable and mutually exclusive. See Zafiro v. United States, 506 U.S. 534 (1993).

The Zafiro formulation, and the resulting gloss placed on it by the courts of appeal, leaves defense attorneys with a markedly poor record of successful severance motions. So, when such a motion succeeds, it is worth noting and citing in subsequent motions.

A successful severance argument was recently made in United States v. Troutman, 546 F. Supp.2d 610 (N.D. Ill. 2008). Chicago Alderman Troutman was charged in a years-long scheme under 18 U.S.C. §§ 1341, 1346 with city employee Boone to solicit and accept payments from real estate developers in exchange for various approvals. Moving defendant Gilbert was identified in the indictment as an acquaintance of the alderman.

Gilbert was not charged in the overarching first count, and in only one of fifteen counts in the indictment. Gilbert was charged with a single episode of soliciting a payment from a developer.

Granting the motion by Gilbert to sever his case from that of the other defendants, the district court held that he had shown a “gross disparity” in the evidence which would likely prejudice him despite any limiting instructions. Since Gilbert was charged only in relation to one illegal act, much of the evidence as to the other acts in the indictment would not be admissible in a separate trial for Gilbert. Finally, severance of Gilbert would only “minimally lengthen” trial time since his separate trial was not estimated to exceed eight days in length.
 

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The Insanity Defense Reform Act, 18 U.S.C. § 7 generally bars expert testimony to established a diminished capacity defense, if that lessened capacity falls short of demonstrating insanity. However, the Act, as construed by the courts, effects a bar only as to a complete defense predicated on something less than insanity; it does not bar such evidence if it serves to negate an element of the charged offense, such as mens rea. See United States v. Pohlot, 827 F.2d 889 (3d Cir. 1987), cert. denied, 484 U.S. 1011 (1988).

A recent decision illustrates the continuing vitality of expert psychological testimony in a white collar case where specific intent is an essential element of the offense. In United States v. Mister, 553 F. Supp.2d 377 (D.N.J. 2008), the defendant was charged with a Hobbs Act violation for accepting payoffs on behalf of a member of the Pleasantville board of education. The defense wished to argue at trial that Mister was not told explicitly about the nature of the payments and thought the monies he funneled to the council member were campaign contributions, not payoffs for official action.

The defense sought to introduce the testimony of a psychologist who had tested Mister to the effect that the defendant was of low intelligence and also that he was highly suggestible. Acting on the government’s in limine motion to exclude all of the testimony under the Act and Pohlot, the trial court ruled that since an element of the offense was knowledge of the unlawful purpose of the activity, Mister was entitled to rebut that proof with evidence of his low intelligence and perception. However, the court drew the line at the “suggestibility” evidence, since it was not relevant to the issue of knowledge.

The Mister case, then, confirms that there remains an open door to the admission of certain psychological expert testimony in white collar cases. The key is relating the proposed testimony to a particular knowledge or intent element, rather than offering that testimony to more generally rebut the thrust of the government’s charge.
 

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A court in the Southern District of New York recently made it easier for a defendant to secure a Rule 17(c) documentary subpoena to a third party, rejecting a more rigorous standard often employed in this circumstance. In United States v. Tucker, 249 F.R.D. 58 (S.D.N.Y. 2008), Judge Scheindlin granted a defense motion and issued a subpoena for BOP audio recordings of cooperators.

Typically, Rule 17(c) subpoenas sought by defendants are scrutinized under the standard of United States v. Nixon, 418 U.S. 683 (1974), requiring a defendant to show that the subpoenaed material is relevant, admissible, and specific (that is, something more than mere hope actuates the request). Id. at 702. In Nixon, of course, the government sought a trial subpoena to obtain third party records, and the Tucker court considered whether a defendant should in fairness be held to the same standard when he seeks third party records. The court considered the relative imbalance between the government's expansive tools for obtaining evidence and the defendant's meager opportunities to gain information through discovery from the government.

The Tucker court concluded that the Nixon standard is too restrictive when applied to a defendant's subpoena to a third party close to the trial date. In those circumstances, the defendant need only show that the subpoena is reasonable, i.e., material to the defense, and no unduly oppressive or burdensome for the responding party.

Defense counsel would be well advised to rely upon Tucker in those jurisdictions where Rule 17(c) subpoenas can be issued and made returnable before trial only upon motion, since the government invariably argues in opposing such motions that the higher, Nixon standard has not been met.
 

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Although not commonly seen in this District, it has always been understood that a defendant's attorney has the right to delay presentation of his or her opening statement until after the close of the government’s case. Advocates of the trial theory of primacy would argue that such a strategy risks denying the fact-finder an alternative view of the facts at an impressionable moment of the trial, but there is no doubt that FRE 611 gives the court the authority to allow the procedure.

In the Northern District of Ohio, it appears, the practice is more widespread, and was recently upheld over the government’s objection. In United States v. Amawi, 541 F. Supp.2d 955 (N.D. Ohio 2008), the Court rejected the government’s argument that allowing one defendant to reserve would prejudice both the government and the remaining defendants.

The trial judge observed that, in his experience, defense attorneys “more often than not” reserve opening. The only prejudice suffered by the government in the practice is the denial to the prosecutor of the opportunity to learn early in the trial what strategy the defense intends to pursue.
 

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Joseph Impastato, a municipal official in Louisiana, entered into a partnership with two business persons as a result of which certain Hurricane Katrina clean-up work was steered in the direction of their entity.  Impasto’s partners required him to provide an opinion letter setting forth the legitimacy of such a relationship, and in due course he came up with such a letter.

When Impastato was charged with violations of the Hobbs Act (18 U.S.C. § 1951),  federal program fraud (18 U.S.C. § 666), and money laundering (18 U.S.C. § 1956) for obtaining the clean-up work, he sought to offer the attorney opinion letter in his defense to negate the intent elements of the subject offenses.  However, the district court ruled that the opinion letter was inadmissible because it was not relevant.  United States v. Impastato, 543 F. Supp.2d 569 (E.D. La. 2008).

Relying on Fifth Circuit case law, the Impastato court held that the advice of counsel defense applied only to refute the “willfulness” element of an offense, that is, the requirement that an act be committed voluntarily and purposely, with the specific intent to do something the law forbids.  Id. at 574 (citing Fifth Circuit Pattern Jury Instructions).  Where a federal offense, such as mailing obscene materials, did not require that a defendant have knowledge of the illegal status of the materials, advice of counsel was not a defense. Id.

The court analyzed each of the charged offenses -- it noted that the color of official right Hobbs Act violation required only simple knowledge that the defendant had obtained a payment to which to which he was not entitled, knowing that the payment was made in return for official acts; that money laundering required only the knowledge that the proceeds were derived from some unlawful activity and knowledge that the transaction was designed to conceal the source or origination of the proceeds; and that program fraud required only “corrupt” action.  Id. at 575-578.   

Thus, in none of the charged offenses was "willfulness" an essential element.  Id.  The court concluded that the advice of counsel defense is reserved, at least in the Fifth Circuit, “mainly for violation of ‘complex’ statutes” (citing cases; including tax fraud, false subscribing of tax returns).  Id.  It is "inappropriate” for less complex crimes (citing cases; including mailing obscene materials, illegal receipt of firearm). 

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A corporation which desires to cooperate either with a civil investigative agency, such as the Securities Exchange Commission, or a prosecutive authority, such as the local U.S. Attorney’s Office, is often asked by the government to turn over the results of any internal investigation as a demonstration of its cooperative spirit and as a badge of good corporate citizenship.

Much ink has been spilled, electronically speaking, on the propriety of governmental demands for the fruits of internal investigations, demands which reached their height in the Justice Department under corporate prosecution guidelines issued in 2003 and known as the Thompson Memorandum (http://www.usdoj.gov/dag/cftf/corporate_guidelines.htm), and which continue to a lesser extent under the superseding 2006 McNulty Memorandum (http://www.justice.gov/dag/speeches/2006/mcnulty_memo.pdf).  The SEC has sought similar materials under the coercive pressure of the so-called "Seaboard Report" (Exchange Act Release No. 449969, Oct. 23, 2001).  Defenders of the attorney-client privilege have rightly argued that exacting the production to the government of the results of internal investigations as a price for non-prosecution severely undermines the privilege and exemplifies overreaching by the government. Another, corollary consequence of the compelled production of such materials has been less widely discussed: production to the government may effect a general waiver of the work product protection attaching to documents such as interview memoranda and attorney-opinion analyses, leaving them subject to discovery in related civil litigation.

Most circuit courts of appeal have been hostile to corporations seeking to preserve opinion work product in the face of disclosure to the government, holding that a disclosure – even in furtherance of cooperation or under compulsion of a subpoena – amounts to a general waiver. E.g.,  In re Quest Communications, Int’l, 450 F.3d 1179 (10th Cir. 2006); United States v. Mass. Inst. of Technology, 129 F.3d 681(1st Cir. 1997); Westinghouse Electric Corp. v. Republic of the Philippines, 951, F.2d 1414 (3d Cir. 1991); Permian Corp. v. United States, 665 F.2d 1214 (D.C. Cir. 1981).

Only the Eighth Circuit, in Diversified Indus. v. Meredith, 572 F.2d 596 (8th Cir. 1977), has applied a selective waiver approach, holding that a company’s production of internal memoranda to the SEC under compulsion of a subpoena causes the documents to retain their work product protection. The rationale of the Diversified Indus. court was that protecting such materials even after their disclosure to the government would encourage corporations to retain outside counsel to investigate corporate wrongdoing and would facilitate the disclosure of such evidence to the government.

The Second Circuit in In re Steinhardt Partners, 9 F.3d 230 (2nd Cir. 1993) stopped short of Diversified Indus., and held that no work product protection remained for documents which were voluntarily disclosed to the SEC. The Second Circuit, however, left the door to a selective waiver argument open a crack by suggesting that work product protection could be retained where the disclosing party and the government had a “common interest in developing legal theories and analyzing information” or where the SEC had explicitly agreed to maintain the confidentiality of the documents. Id. at 236.

Recently, however, that door was further closed by the district court in In re Initial Public Offering Sec. Litig., 2008 WL 400933 (S.D.N.Y., Feb. 14, 2008). There, Credit Suisse had produced to the SEC and U.S. Attorney’s Office interview summaries created as part of an internal investigation into alleged IPO allocation misconduct. But Credit Suisse only did so after securing confidentiality agreements from both agencies, expecting that by doing so it would enjoy a safe harbor under the Steinhardt analysis.

Stopping just short of rejecting entirely the selective waiver doctrine, since Steinhardt had in theory recognized the possible application of the doctrine to some hypothetical state of facts, the IPO district court concluded that “selective waiver is not in the long-term best interests of the government, the adversarial system, or litigants.” *6. The court held that a “strong presumption” existed against a finding of selective waiver, and that it should not be permitted “absent special circumstances,” id., which were not identified.

Since the Credit Suisse attorneys believed they had followed the prescription of Steinhardt, yet still found that their disclosure to the government had effected a complete waiver of work product protection, the more prudent course of action in the Second Circuit – at least until the court of appeals speaks again to the selective waiver doctrine - - is to assume that disclosure to the government constitutes a waiver as to the rest of the world.

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