Charges of Misconduct on Both Sides of the Blagojevich Case

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.

USA Today on Misconduct by Federal Prosecutors; AUSA in Senator Ted Stevens Prosecution Takes Life;

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);

The United States Attorney is the representative not of an ordinary party to a controversy, but of a sovereignty whose obligation to govern impartially is as compelling as its obligation to govern at all, and whose interest, therefore, in a criminal prosecution is not that it shall win a case, but that justice shall be done. As such, he is in a peculiar and very definite sense the servant of the law, the two-fold aim of which is that guilt shall not escape or innocence suffer. He may prosecute with earnestness and vigor -- indeed, he should do so. But, while he may strike hard blows, he is not at liberty to strike foul ones. It is as much his duty to refrain from improper methods calculated to produce a wrongful conviction as it is to use every legitimate means to bring about a just one.

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.

 

 

Mark Cuban Continues to Pursue SEC for Bad Faith in Insider Trading Investigation

Today's Wall Street Journal Law Blog reveals that Dallas Mavericks owner, Landmark Theaters owner and Chairman of HDNet Mark Cuban has gone on the offensive against the Securities and Exchange Commission. The SEC made widely publicized charges against Mr. Cuban for insider trading in selling shares of Mamma.com, an internet search technology company now known as Copernic, in 2008. Mr. Cuban disputed the charges, and a federal court dismissed the charges last year.

Not satisfied, Mr. Cuban demanded evidence regarding whether the SEC had acted in in bad faith in bringing the charges, and the SEC provided documents to his counsel. Now Mr. Cuban is attempting to force the SEC to turn over still more documents. If the court holds that the SEC acted in bad faith, it could impose sanctions and force the Commission to pay Mr. Cuban's legal fees.

Christopher Aguilar, former general counsel for a broker-dealer who did work for Mamma.com, has submitted an affidavit stating that Julie Riewe, an SEC attorney, informed him in August 2007 that she would prefer if employees of the broker-dealer did not speak to Mr. Cuban's attorneys, although Mr. Aguilar "could do what he wanted." Mr. Aguilar stated that he believed that the statement was an attempt to not make a witness available to the subject or target of an SEC investigation. Mr. Aguilar eventually allowed Mr. Cuban's counsel to speak with the employee.

Judge Dismisses SEC Complaint, Drug Charges, Against Former Broadcom Executives in Case of Prosecutorial Misconduct

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.


Defendant in Stock Option Backdating Case Requests Hearing Based on Prosecutorial Misconduct/Interference with Witnesses

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 for Evidentiary Hearing Regarding Testimony of Crucial Witnesses

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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.