Federal Criminal Defense Blog : Georgia Federal Criminal Defense Lawyer & Attorney : Gillen Withers & Lake Law Firm : White Collar Crime, RICO, Trial : Atlanta, Savannah, GA

As set forth in the official DOJ Blog yesterday, Deputy Attorney General David W. Ogden issued three Memorandum to DOJ prosecutors no doubt intended to remedy some of the setbacks the Department suffered last year as a result of discovery violations. The subject of one of the Memos is “Guidance for Prosecutors Regarding Criminal Discovery.” The second Memo reference is “Issuance of Guidance and Summary of Actions Taken in Response to the Report of the Department of Justice Criminal Discovery and Case Management Working Group.” Finally, a separate Memo is address to all DOJ litigating components and all U.S. Attorneys.

Taking the "Memo to the U.S. Attorneys and DOJ Components" first, Odgen summarizes that he had convened a working group to address DOJ policies and practices regarding criminal discovery issues. Odgen references that he is sending to all DOJ trial attorneys and AUSAs a memo containing Guidance For Prosecutors Regarding Criminal Discovery that prosecutors should follow to ensure that discovery obligations are met in all future cases. Interestingly, Odgen directs that each U.S. Attorney’s Office develop a discovery policy consistent with the law and local rules and practices. That policy must be in place by March 31, 2010.

The “Guidance For Prosecutors Regarding Criminal Discovery” Memo sets out detailed steps prosecutors are to follow regarding discovery. The six page Memo first advises that the prosecutors must determine who is a member of the “Prosecution Team” for the purpose of determining what documents must be reviewed for disclosure.

The Guidance Memo then directs that the discovery review should cover the following: 1) the investigative agency’s files, 2) Confidential Informant/Witness/Source files, 3) Evidence and Information Gathered During the Investigation, 4) Documents or Evidence Gathered by Civil Attorneys and/or Regulatory Agencies in Parallel Civil Investigations, 5) Substantive Case Related Communications, 6) Potential Giglio Information Relating to Law Enforcement Witnesses, 7) Potential Giglio Information Relating to Non-Law Enforcement Witnesses and Fed.R.Evid. 806 Declarants, 8) Information Obtained in Witness Interviews, a) Witness Statement Variations and the Duty to Disclose, b) Trial Preparation Meetings With Witnesses and c) Agent Notes.

The Guidance Memo then directs that although prosecutors may delegate the process of review to others, they “should not delegate the disclosure determination itself.”

The Guidance Memo reminds prosecutors that discovery within DOJ is covered by the U.S. Attorney’s Manual Section 9-5.001, which is broader than what the law requires and that if a prosecutor chooses to follow that broader course, “defense counsel should be reminded that the prosecutor is electing to produce discovery beyond what is required . . .” The Memo then addresses the scope, timing and form of discovery disclosures, but cautions that, “[p]rosecutors should never describe the discovery being provided as ‘open file.’”

Finally, the Guidance Memo counsels that the prosecutor should make a good record regarding the disclosures.

The “Issuance of Guidance and Summary of Actions Taken in Response to the Report of the Department of Justice Criminal Discovery and Case Management Working Group” Memo reminds prosecutors of the words of Justice Sutherland that it is the prosecutor’s duty is “that justice shall be done.” Berger v. United States, 295 U.S. 78, 88 (1935). This Memo informs prosecutors of the establishment of the Guidance Memo set out above and that each U.S. Attorney’s Office shall have a “discovery coordinator.” In addition, DOJ has:
 

• Created an online directory of resources pertaining to discovery issues that will be available to all prosecutors at their desktop;
• Produced a Handbook on Discovery and Case Management similar to the Grand Jury Manual so that prosecutors will have a one-stop resource that addresses various topics relating to discovery obligations;
• Implemented a training curriculum and a mandatory training program for paralegals and law enforcement agents;
• Revitalized the Computer Forensics Working Group to address the problem of properly cataloguing electronically stored information recovered as part of federal investigations;
• Created a pilot case management project to fully explore the available case management software and possible new practices to better catalogue law enforcement investigative files and to ensure that all the information is transmitted in the most useful way to federal prosecutors.
 

No doubt much will be written in coming days and weeks regarding these Memoranda and what I’ve set out here is strictly an overview. Every criminal practitioner in federal court should read, study and be familiar with these Memoranda.

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As the final hours of 2009 were running out on New Years' Eve, U.S. Supreme Court Chief Justice John Roberts issued the Chief Justice's Year-End Report on the Federal Judiciary, available here, a tradition begun by Chief Justice Warren Burger in 1970 to address the most critical needs of the federal judiciary. The Chief Justice has used the Year-End Report in the past to call for salary increases for federal judges. However, this year, the Report merely states that the federal courts are operating soundly, citing the hardships experienced by the nation in 2009.

The Appendix to the Report surveys the workload of the federal courts in 2009. It notes that the total number of cases filed in the Supreme Court decreased by about 6.1% from 2007 to 2008, however the Court hear more cases argued and issued more signed opinions in 2008 than 2007. Filings in the Federal Circuit Courts of Appeals also declined 6% to 57,740, mostly due to a drop in appeals from the Board of Immigration Appeals.

The Year-End Report notes, however, that criminal case filings in federal district courts rose 8% to 76,655, and the number of defendants climbed 6% to 97,982, surpassing the previous record for the number of defendants, 92,714, set in 2003, and reached its highest level since 1932. Filings relating to immigration, fraud, marijuana trafficking, and sex offenses increased. The number of mmigration cases and defendants reached record levels, as a result of illegal re-entries and visa or entry permit fraud. Most of the increase was in five federal districts near the southwestern border. The Report also observes that, as of September 30, 2009, the number of persons under post-conviction supervision was 124,183, an increase of 3% from the previous year. Supervised release cases and pretrial services cases also rose by several percent.

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National Century Financial Enterprises Case (NCFE), a healthcare financing company, collapsed in 2002, resulting in a loss of $2.9 billion to investors, including the world’s largest bond fund manager, Pacific Investment Management Co., Pimco and Credit Suisse Group. The failure also hastened the bankruptcies of some 275 hospitals and healthcare providers. A dozen NCFE executives and employees were indicted in the Southern District of Ohio in 2003 on charges of conspiracy, mail and wire fraud, securities fraud and money laundering, including NCFE’s former Executive Vice President, Mr. James K. Happ. NCFE, which purchased accounts receivables from healthcare providers at a discount, was alleged to have advanced $2.2 billion to six companies in which its Chief Executive, Lance K. Poulsen, owned stakes, and to have charged NCFE’s clients for the advances. NCFE’s fraud is considered the largest by a private company in U.S. history, and case has received nationwide media attention.

Several of the NCFE defendants pled guilty, and the remaining defendants were convicted in three trials on all counts. In particular, Poulsen was convicted in July for obstruction, and in October, on a total of 17 counts. Poulsen has already been sentenced to 10 years imprisonment on four of the counts, and faces a sentence of 30 years to life in prison on the remaining counts. NCFE co-founder Rebecca Parrett was convicted of 9 counts in March, but disappeared in March when she was given leave by the Court to return to Arizona to tend to her personal affairs.

Mr. Happ, who was charged with counts of conspiracy, money laundering conspiracy and three counts of wire fraud, was to be the seventh NCFE executive tried and the fourth and final NCFE trial. The case was presided over by the Honorable Algenon Marbley, United States District Judge. Mr. Happ was represented in the proceedings by the Columbus, Ohio, law firm of Kravitz, Brown & Dortch, LLC, and by the Atlanta, Georgia, law firm of Gillen Withers & Lake, LLC. Eminent attorney Max Kravitz, founding member and managing partner of Kravitz, Brown & Dortch and professor of law since 1976 at Capital University Law School, represented Mr. Happ until Mr. Kravitz’s untimely passing in August 2007. Representing Mr. Happ at trial were founding member and managing partner of Kravitz, Brown & Dortch, attorney Janet Kravitz, and attorney Craig A. Gillen, founding member and managing partner of Gillen Withers & Lake, serving as lead counsel. Mr. Zach Kravitz, Mr. and Mrs. Kravitz’s son, who is a recent graduate of the University of Florida School of Law, also served as counsel.

During the three-week trial, the defense argued that Mr. Happ was not involved in any wrongdoing and never lied to NCFE’s investors. The prosecution attempted to allegedly connect Mr. Happ to the fraud through witness testimony, including from NCFE Executive Vice-President Sherry Gibson and Frank Magliochetti, Jr., Chief Executive Officer of Med Diversified. The defense impeached the witnesses’ statements against Mr. Happ, and argued that while Mr. Happ advanced monies to healthcare companies, he did so merely as part of NCFE’s legitimate business, that the advances to companies had been occurring for eight years prior to Mr. Happ’s joining NCFE in 2000, and that Mr. Happ was not involved in the creation of any false investor reports or financial documents.

At the close of the trial, the prosecution urged the Court to instruct the jury on intent and “deliberate ignorance” or “willful blindness,” the concept that a defendant may still be found guilty of a crime where the defendant deliberately closes his or her eyes to criminal conduct. The defense responded that the jury could not be instructed on both intent and deliberate ignorance/willful blindness, citing an unpublished decision by the Sixth Circuit Court of Appeals, United States v. Ramos, 38 F.3d 1217 (6th Cir.1994) (unpublished per curiam), in which the Court held that “[t]he deliberate ignorance instruction should not be used where the evidence points to ‘either actual knowledge or no knowledge at all of the facts in question.’” Id. at *4 (quoting Sanchez-Robles, 927 F.2d at 1074; quoting United States v. Perez-Padilla, 846 F.2d 1182, 1183 (9th Cir. 1976)). The Judge found that a deliberate ignorance/willful blindness instruction could not be given where the government attempts to prove a defendant’s intent through direct evidence, pursuant to Ramos, and denied the prosecution’s proposed instruction. The jury subsequently found Mr. Happ not guilty on all counts. Jurors who were questioned following the verdict informed the media that they felt that the government did not prove its case. Mr. Happ is the only NCFE defendant to be acquitted. The acquittal has been widely reported in the national media.

Gillen Withers & Lake LLC are white collar and corporate criminal defense attorneys with an outstanding reputation and track record, handling cases throughout Georgia and the nation. Call our Atlanta, Georgia, office at (404) 842-9700 or our Savannah, Georgia, office at (912) 447-8400.

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