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

Two years ago, Western Titanium was indicted in the U.S. District Court for the Southern District of California on 19 counts, including mail fraud and conspiracy, for allegedly selling substandard titanium to the government to use in aerospace equipment and engine mounts for military jets and allegedly falsely certifying that the metal met technical specifications, according to an article on San Diego Signon. Also indicted were Western Titanium's CEO, Daniel Schroder, and three other current and former executives. The "titanic" prosecution involved some 900 docket entries, extensive pretrial hearings and finally an 11 week trial.

However, the trial terminated last week with Western Titanium pleading guilty to a single count of mail fraud for causing an alleged loss of $51,350 and the charges against the executives being dismissed under deferred prosecution agreements. The reason for the abrupt end was the defense's accusations that the prosecution had withheld thousands of pages of documents favorable to the defense showing that the titanium was not substandard. Counsel for the defendants claimed that the government did not disclose the materials until approximately six weeks into the trial in an act of intentional prosecutorial misconduct.

The U.S. Attorney's Office has denied that the prosecution acted in bad faith.

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The Blog commented back in October about the investigative report by USA Today on the alleged prevalence of governmental misconduct in Federal criminal cases. Well, the Department of Justice has responded to the allegations through DOJ spokesperson Tracy Schmaler, who released a statement on Friday, published in USA Today, calling the paper's story a "selective review" of a "handful" of cases over the past 18 years. Ms. Schmaler claimed that DOJ  has conducted an internal review of the 90,000 cases brought annually and found prosecutorial misconduct in only a small fraction of them. Ms. Schmaler claimed that the Department corrects any mistakes as quickly as possible, and emphasized its priority to prevent mistakes before they occur. She cited the fact that Attorney General Eric Holder has instituted a comprehensive training curriculum for all Federal prosecutors, and has made discovery training for all prosecutors mandatory. Ms. Schmaler also stated that the DOJ Office of Professional Responsibility has recently caught up on a four year backlog of cases.

The Main Justice blog reports that Attorney General Holder made statements on Friday following a meeting with European officials that the “overwhelming majority” of DOJ attorneys act appropriately.

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Allegations of misconduct are flying in the case of former Illinois Governor Rod Blagojevich. According to the Chicago Tribune, Blagojevich's attorneys have accused the prosecution of misconduct during their investigation of the former Governor. Now the prosecution has struck back and charged that Blagojevich and his counsel lied.

The jury deadlocked on 23 of 24 counts against Blagojevich during his trial this summer. Blagojevich has moved to throw out his conviction on the remaining count of lying to the FBI. His counsel alleged that a "plethora of errors" caused his conviction on the count.

The government has called the claims of prosecutorial misconduct "baseless," especially claims that the government lied about the contents of secret recordings of Blagojevich. It also contends that the defense falsely suggested that the government put improper pressure on the witnesses against Blagojevich, including Antoin "Tony" Rezko. The prosecution has also objected to Blagojevich's alleged estimate that a retrial would cost $25 to $30 million.

Blagojevich may be retried as early as January.

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USA Today ran a lengthy piece on prosecutorial misconduct on September 22. The article states that, since 1997, federal courts have determined that Department of Justice attorneys violated laws or ethical rules in some 201 cases, including the duty expressed by Supreme Court Justice George Sutherland over 70 years ago in Berger v. United States, 295 U.S. 78 (1935);

Most of the cases of misconduct involved concealment of favorable or impeaching evidence from the defendant and presenting false testimony to the jury. In the cases found by the reporters as part of a six month investigation, the misconduct by the prosecution was so egregious that courts dismissed the charges against the defendants or overturned the defendants' convictions. The story states that investigations of prosecutorial misconduct by the Department of Justice prompted by complaints from judges rose to 61 last year, from 42 in 2001. The Department's Office of Professional Responsibility has reported that it has completed more than 750 investigations over the past decade, and that it has found intentional violations in 68 cases. Reporters found that only one prosecutor had been barred from practicing law, even temporarily, in the past 12 years. In one rare exception, in 2007 the Department prosecuted Richard Convertino, a former Assistant U.S. Attorney, for allegedly obstructing justice in his handling of a Detroit terrorism case. Convertino was acquitted.

The story cites the case of Nino Lyons, who was alleged to have been a drug trafficker, and allegations that prosecutors concealed evidence which would have discredited the witnesses against him, many of whom were incarcerated convicted felons. The prosecution was alleged to have withheld from Mr. Lyons' defense promises made to the witnesses to reduce their prison time, and the failure of one key witness to even identify Mr. Lyons. The concealed evidence came to light only after it was suggested in a government filing after Mr. Lyons had already been incarcerated for three years. The U.S. District Court for the Central District of Florida overturned Mr. Lyons' conviction and declared him innocent.  The ordeal also cost Mr. Lyons his home and his business. U.S. District Judge Gregory Presnell wrote in his order that prosecutors engaged in "a concerted campaign of prosecutorial abuse" including covering up evidence and letting felons lie to the jury. Judge Presnell further said that prosecutors "brazenly" defied court orders and presented witnesses who were "allowed, if not encouraged, to lie under oath." As small compensation, the Justice Department paid $150,000 of Mr. Lyons' legal bills in a confidential settlement. The story states that the Department of Justice has paid nearly $5.3 million in legal bills for wrongly accused defendants.

The article noted the heavy caseload and lack of supervision of many federal prosecutors as a possible causes of misconduct. In response to the article, Acting Deputy Attorney General Gary Grinder wrote a letter to the editor, which may be read here, in which he defended that the number of cases of prosecutorial misconduct is actually "minuscule," given the fact that the Department of Justice prosecuted more than 720,000 cases and more than 1 million defendants in the time period covered by the study, suggesting that serious prosecutorial misconduct only occurs in approximately 1 in 3,600 cases.

In related news, following the dismissal of the prosecution of late Alaska Senator Ted Stevens, the Department of Justice commenced an investigation of several Department attorneys for potential prosecutorial misconduct. Senator Stevens was killed in a plane crash on August 9, 2010. One of the attorneys under investigation was Assistant U.S. Attorney Nicholas A. Marsh. Marsh, aged 37, committed suicide late last month, as reported in the Louisville Courier-Journal.

U.S. District Judge Emmet Sullivan appointed a special prosecutor to investigate what he called the worst misconduct he had seen in nearly 25 years on the bench. Marsh's attorney issued statements to the media following his death that Marsh was fearful of the investigation preventing him from continuing to work at the Department of Justice, and indicated that Marsh and investigators were actually "on the verge of a successful resolution." The Department has expressed its condolences to Marsh's family, as does the Blog.

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Yesterday, a federal judge dismissed alleged drug charges against Henry Nicholas, the former Chief Executive of Broadcom Corp., a manufacturer of integrated circuits for broadband communications. In a related civil action, the judge, U.S. District Judge Cormac Carney of the U.S. District Court for the Central District of California, also ordered the Securities and Exchange Commission to amend alleged fraud charges against Mr. Nicholas and other former Broadcom executives within seven days, stating that he found "serious problems of proof" with the SEC's complaint against the former executives and inquired as to what proof the SEC had against them, as reported by The National Law Journal. The court had previously dismissed the SEC's complaint without prejudice.

Last month, during the trial of Mr. Nicholas and former Broadcom Chief Financial Officer William Ruehle, the court had granted Nicholas' and other defendants' motions to dismiss charges of backdating stock options based on prosecutorial misconduct and entered judgments of acquittal. Judge Carney found that the government "distorted the truth-finding process" and infringed on the defendants' due process rights to a fair trial. The court also questioned the evidence supporting the charges, noting that there was "considerable debate" regarding certain accounting practices used by Broadcom and many other major companies, including Microsoft and Apple.

The defendants made their prosecutorial misconduct claims after the court granted immunity to former Broadcom executives David Dull and Henry Samueli at the request of counsel for Mr. Ruehle so that the witnesses would not refused to answer based upon their Fifth Amendment privilege against self incrimination. Mr. Ruehle wanted Mr. Dull and Mr. Samueli to testify in order to rebut the testimony of Nancy Tullos, former Broadcom Chief of Human Resources, a witness for the government who had pled guilty in 2007 to obstruction of justice charges. The court found that the prosecution had improperly influenced Dull's, Samueli's and Tullos' testimony. Judge Carney also reprimanded the government for leaking misleading information regarding the grand jury proceedings to the news media. It set a hearing for the government to show cause as to why the narcotics case against Mr. Nicholas should continue.

At trial, he court also set aside Mr. Samueli's plea of guilty to making alleged false statements to the SEC following his testimony in Mr. Ruehle's and Mr. Nicholas' trial, stating that he had difficulty finding how Mr. Samueli had committed any crime. Judge Carney found that the government had pressured Broadcom into terminating Mr. Samueli, calling the government's treatment of him "shameful."

The court furthermore criticized the government for leaving Mr. Dull "hanging in the wind" for two years, treating him as an alleged co-conspirator but not charging him. The prosecution had entered a nonprosecution agreement with Mr. Dull after threatening to charge him with perjury based upon statements which Mr. Dull intended to make in his testimony in the Ruehle/Nicholas trial.

The extensive allegations of prosecutorial misconduct in the case against Mr. Nicholas and the other defendants included an allegation by the defense that the government had used Mr. Nicholas' 13 year-old son to gather evidence against his father.

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As reported by Law.com, Bruce Karatz, Chief Executive Officers of KB Home, a home construction corporation based in Los Angeles, California, was indicted in the action of U.S. v. Nicholas, 2:09-cr-00203-ODW (C.D.Ca. 2009), on 20 counts of fraud for defrauding the company and its shareholders of millions of dollars in undisclosed backdated stock option over a period of seven years, and concealing the fraud from KB Home's  directors, compensation committee and shareholders. Karatz's trial in the U.S. District Court for the Central District of California is scheduled to begin on February 23.

Karatz's attorneys have requested a hearing regarding whether prosecutorial misconduct has tainted the government's case against Karatz. Karatz contends that two witnesses for the government--James Johnson, former Chairman of the Board of Directors' Compensation Committee for KB Home, and Gary Ray, former Vice President of Human Resources--initially believed that the stock options grant practice was lawful, but changed their position following contacts with the prosecution. Karatz's lawyers want to examine Johnson regarding why he denied allegedly defending KB Home's option granting process during an internal investigation by the company's outside counsel in his statements to prosecutors. 

The defense also wants to question Ray, who has pled guilty to obstruction of justice and is cooperating with the government, regarding why he had allegedly previously maintained that the process was "lawful and proper." Following is a link to

.

Karatz's motion is based on an order in December by U.S. District Judge Cormac Carney in the action of U.S. v. Nicholas, SACR 08-00139 CJC (C.D.Ca. 2008), another backdating case, in which the Court dismissed the government's indictment against co-founder of Broadcom Corp., Henry Nicholas, and former Broadcom Chief Financial Officer William Ruehle, blasting the prosecution for "distorting the truth-finding process" by intimidating and improperly influencing key witnesses. Karatz also relies on the Ninth Circuit Court of Appeals' overturning last August of the conviction of former Chief Executive Officer for Brocade Communication Systems, Inc., Gregory Reyes, for backdating based on false statements by the prosecution in closing arguments that Brocade's finance department didn't know about backdating. A hearing on Karatz's motion has been scheduled for February 8.

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As reported in the Macon Telegraph, Dwight "Malachi" York, former leader of the United Nuwaubian Nation of Moors who was indicted and convicted on over 100 counts of child molestation in April 2004 and setenced to 135 years, has filed a motion in the U.S. District Court for the Southern District of Georgia to vacate his sentence. York, who has been a minister and a musician, is best know as the founder of "Nuwaubianism," an unorthodox religious sect established in the 1970s. In 1993, York moved the Nuwaubians from upstate New York to a compound in Putnam County, Georgia, near Eatonton. York was arrested for sexually molesting dozens of children in 2002. The charges against York were truly astounding and hideous in their magnitude--author Bill Osinsky, in the fact sheet for his book Ungodly, reveals that state prosecutors literally had to cut back the number of counts listed in the indictment from well over 1,000 to slightly more than 200 because "they feared that a jury simply would not believe the magnitude of York's evil."

York has now filed a motion alleging that Federal Bureau of Investigation agents threatened witnesses to give perjured testimony against him, as well as alleging that the prosecution used unauthenticated tapes of York having sex with minors to taint the jury. The motion attached affidavits from witnesses in York's trial, including one by a witness who alleges that FBI agents took him from his family and transported him to a home in Milledgeville and pointed guns at him until he agreed to give information against York. York is currently incarcerated at the supermax prison in Florence, Colorado.

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A highly disturbing instance of governmental misconduct has come to light in the Southern District of Florida in the form of a gross and unwarranted invasion of the defense camp and the attorney-client relationship by the government. The case of United States v. Shaygan, Case No. 08-20112-CR, was a prosecution of a physician on 141 counts of allegedly unlawful dispensing of controlled substances in violation of 21 U.S.C. § 841(b)(1)(C). Dr. Shaygan received excellent representation by the law firms of David Oscar Markus and Mark David Seitles, P.A., and on March 12, 2009, the jury acquitted Dr. Shaygan on all counts at the conclusion of trial.

            However, as revealed by a motion to dismiss the indictment for governmental misconduct or for evidentiary hearing filed by the defense on March 1, relations between the prosecution and the defense became strained when counsel for Dr. Shaygan stated that the defense intended to file a motion to suppress a post-arrest interview of Dr. Shaygan by a DEA agent based upon Dr. Shaygan’s statement that he had invoked his Sixth Amendment right to counsel during the interview. The Assistant United States Attorney informed defense counsel before several witnesses that filing such a motion to suppress would result in a “seismic shift in the prosecution.”

            Irrespective of these rumblings by the prosecution, the defense filed a motion to suppress. Overtly, the government retaliated by obtaining a superseding indictment adding more than 100 additional counts. In addition, without informing the Department of Justice, the court or the defense, the prosecution also approached two fact witnesses and directed them to tape record their communications with defense counsel. The witnesses’ recordings of defense counsel without counsel’s knowledge were revealed to the defense only when one of the witnesses testified that he possessed a recording of a conversation with counsel during trial. Despite this disclosure, the defense’s motion alleges that it was not until one week later when a member of the prosecution team told a member of the defense team that he had been recorded by the witness without his knowledge.

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In a fascinating case out of the District of Nevada, the Ninth Circuit (opinion available here, 2008 WL 1946744) has affirmed the district court’s dismissal of the indictment against three defendants who were charged in a 64 count indictment with, among other things, wire fraud, securities fraud, and money laundering. The government’s case revolved around what the Ninth Circuit described as a “box job” scheme where a small number of individuals control a corporation’s stock through strawmen officers, directors and shareholders. One of the core allegations was that the defendants allegedly made more than $12 million, which was laundered through the law firm of two of the defendants.

The Motion to Dismiss filed in the district court, available here, outlines a litany of what the district court called “unconscionable” conduct by the government that including Brady and discovery violations as follows: 1) failing to provide the defense with Jencks materials relating to the case agent, 2) failing to disclose the rap sheet and prior convictions of one of the government witnesses, 3) failing to produce notes a witness had provided to the investigating agent, 4) failing to disclose that the investigating agent had countenanced the continued unlawful activity of a cooperating witness, 5) failing to produce documents essential to the “box job” allegation, 6) failing to disclose memoranda that contradicted witness testimony, and 7) producing some 650 pages of documents, including rap sheets, during trial. The motion to dismiss was filed during the third week of trial. In declaring a mistrial, the district court noted that the AUSA in charge of the prosecution had acted “flagrantly, willfully, and in bad faith.” 2008 WL 1946744, *4.

In an excellent discussion of the applicable law dealing with dismissal of an indictment for prosecutorial misconduct and whether that ultimate sanction was required here, the Ninth Circuit, noted that the government even conceded that a mistrial was an appropriate remedy, for the government’s violations of “its constitutionally imposed discovery obligations.” Id., *12.  Both the district court and, apparently, the Ninth Circuit, were concerned that any sanction short of dismissal, would have countenanced the government's unlawful conduct.

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The fur continues to fly in the Wecht case in the run up to the retrial, currently scheduled for May, 27 2008. 

As I have previously stated in this blog, it is my hope that this blog will raise the standard of the criminal defense bar by posting pleadings that can be accessed and then used in one’s own practice. In that respect, the filings by Wecht’s counsel provide us with an excellent standard to emulate:

•             The defense has recently filed a Motion to Dismiss for Prosecutorial Misconduct (the brief is available here), alleging that the investigating agent and the lead AUSA have committed prosecutorial misconduct which infected the search warrant affidavit and the trial by suggesting that the movement of certain evidence occurred on one day in an effort at concealment, when, in fact, it occurred on a different day, such that no concealment could have occurred. This post trial motions practice is of an exceptionally high quality and brings to light some very disturbing allegations related to the prosecution’s handling of this troubling case.
•             The defense has Renewed its Motion for Verdict of Acquittal under Federal Rule of Criminal Procedure 29 alleging that the government failed to prove any misrepresentation or concealment. It is particularly interesting how interwoven these pleadings are because the Renewed Motion for Verdict of Acquittal ties in nicely with the prosecutorial misconduct motion and the government contention of concealment of evidence, which, is at the very least mistaken.  
•             And, finally, the defense has raised a Double Jeopardy claim related to the manner in which the mistrial was declared (this is no doubt a long shot, but generally a litigant is entitled to a direct appeal from the denial of a double jeopardy claim), and now seeks to appeal the trial judge’s denial of that motion.

Wecht is being capabably represented. These pleadings provide all of us in the defense bar with exceptional post judgment guides.

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