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Deja vu all over again, again. This question: “Should a Federal Prosecutor Fictionalize a Cooperating Witness and Leave a Judge in the Dark?”, seems either rhetorical or easy enough to answer. But in the District of Massachusetts, many simple questions generate complex, incomplete, or surprising answers. Wild answers may have been heard, with more yet to come.
Take for example, the same AUSA who sat on a board of a penny stock company while investigating a penny stock company that used the same outside counsel, described in part 1 of this 3 part series, and the same AUSA who facilitated conflicts of interest with a recent FBI retiree described in part 2. Wild as it may seem, so many simple questions come to mind. Is it wrong, if the AUSA’s choice of a cooperating witness admitted perjuring himself at the start of an investigation, for the AUSA to represent to a federal sentencing judge: “So his cooperation was from the very beginning, it was immediate, and to the sense of the government it has been full and cooperative in each vein”? Is it wrong for an AUSA, when addressing the sentencing judge, to describe the cooperating witness as someone who engaged in only modest stock sales, while leaving out about $749,000 worth of problematic sales from the calculation? Is it wrong for an AUSA, when addressing the sentencing judge, to omit that the cooperating witness claimed to forget details about that $749,000 stock sale because he smoked too much marijuana at the time? Is it wrong for an AUSA, when addressing the sentencing judge, to withhold that, at a Massachusetts Securities Division deposition, the cooperating witness had testified falsely under oath over several hours? Is it wrong for an AUSA, when addressing the sentencing judge, to label the cooperating witness “essential” to the government’s ability to indict, when other witnesses had already provided the government with the roadmap to the offense? Is it wrong for an AUSA, when addressing the sentencing judge, to omit the fact that the cooperating witness used the identification of a deceased man for various personal purposes and gave the fake identification to a family friend (a friendship through law enforcement connections) to start his life over and escape a criminal history? It is one thing for an AUSA to disregard ambiguous evidence to provide leniency for a deserving defendant. When an AUSA is essentially buying testimony from a cooperating witness, however, fact bargaining becomes more problematic because of fundamental rights of other targets. If it reaches a point that the AUSA recommends a 2 year sentence, but through the fictionalization process a federal judge imposes a mere 6 month sentence on the cooperating witness, has the government created a fictional witness who may appear more credible than he should to a jury hearing a case later against another target? Putting simpler questions aside, under such circumstances, who is more fictional, the family friend with the fake identification or the cooperating witness as portrayed by the federal prosecutor for the eyes of a federal judge? Wild as it seems, something is obviously more than a bit unjust about placing a federal judge in the position of sentencing an essentially fictional defendant who may testify later against others.
As if this complex web of fictionalizing a government witness were not enough, prior to this sentencing, the AUSA’s potential conflicts of interest had been called to the attention of his front office. Yet United States Attorney Carmen Ortiz still permitted the AUSA to handle the sentencing, at which the AUSA seemed challenged to describe the cooperating witness in a non-fictional way. Wow. Or should I say: Wild.
These and related issues have been elevated to OIG, OPR, Attorney General Eric Holder, Senator John Cornyn of Texas, and Congressman Darrell Issa of California. Back to my original question: “Should a Federal Prosecutor Fictionalize a Cooperating Witness and Leave a Judge in the Dark?” Stay tuned for answers. Wild or normal.
As for a final rhetorical or simple question: Under these circumstances, can folks respect an AUSA or the United States Attorney for the District of Massachusetts the way such offices may deserve to be respected?
Deja vu all over again. This question: “Should a Federal Prosecutor Facilitate Conflicts of Interest Contrary to 18 U.S.C. 207? ”, seems either rhetorical or easy enough to answer. But in the District of Massachusetts, many simple questions generate complex, incomplete, or surprising answers.
Take for example, the same AUSA who sat on a board of a penny stock company, described in part 1 of this 3 part series. According to emails and invoices obtained during the limited discovery in a criminal case, within weeks after his retirement from the FBI, a former national supervisory agent met with both FBI case agents and the AUSA, people the recent FBI retiree knew directly or through connections. In a July 15, 2009 email, the recent FBI retiree stated in pertinent part: “I will meet with the FBI next week in an effort to have the Supervisor (who I know very well, move the case along).” In a July 29, 2009 email, he stated “the meeting with the FBI went very well yesterday” and at the next meeting the FBI agents would “bring the AUSA along.” Then, in an August 6, 2009 email, he stated that the “[m]eeting went well today at the AUSAs office.” (emphasis added) The FBI retiree submitted bills to the subject company reflecting his meetings with the FBI and U.S. Attorney’s Office in July and August 2009 (within a few months of holding his official FBI position), including such time entries as “meeting with FBI Boston office re” targets and “emails/phone calls to set up meeting with FBI/US Attorneys’ office.” (emphasis added) The memorandum of interview of a former board member of the company confirmed that the FBI retiree met with FBI case agents and the AUSA during the restricted time period under 18 U.S.C. 207. A July 29, 2009 email reflects the participation of a lawyer who served alongside the AUSA as a co-fiduciary to Evermedia. In an email dated July 23, 2009, the FBI retiree indicates his willingness to turn the FBI on an investor adverse to the subject company: “Then I might be able to get the FBI interested in (the investor) for at least a peak into them.”
As if this complex web of 18 U.S.C. 207 conflict-of-interest issues were not enough, the AUSA served on a board of a different penny stock company alongside the same outside counsel working with the FBI retiree. Wow. Yet when called to the attention of United States Attorney Carmen Ortiz, the AUSA was still permitted to handle portions of an ensuing prosecution. Wow.
These and related issues have been elevated to OIG, OPR, Attorney General Eric Holder, Senator John Cornyn of Texas, and Congressman Darrell Issa of California. Back to my original question: “Should a Federal Prosecutor Facilitate Conflicts of Interest Contrary to 18 U.S.C. 207?” Stay tuned for answers.
This question: “Should a Federal Prosecutor Sit on a Penny Stock Board?”, seems either rhetorical or easy enough to answer. But in the District of Massachusetts, many simple questions generate complex, incomplete, or surprising answers.
Take for example, an AUSA who wears a public hat when investigating penny stock companies, while sporting a private hat when his name appears on Yahoo! message boards and the like as a director of a penny stock company known as Evermedia Group (EVRM). This AUSA’s status as a federal prosecutor has appeared on investor message boards (e.g., Yahoo! Finance, InvestorsHub, and Raging Bull) to tout the credibility of Evermedia’s management team. A July 25, 2009 post on InvestorsHub identified the AUSA as “Board Member” who “currently serves as a federal prosecutor in Boston.” A post on InvestorsHub dated September 15, 2009, responded to another post suggesting Evermedia was a scam and, referring to the fact that a board member was a federal prosecutor, stated: “u think [the AUSA] would be involved in a scam now?” On September 26, 2009, one post on InvestorsHub stated in pertinent part: “don’t u love having a federal prosecutor on your board of directors.” A December 30, 2010 post on Yahoo! Finance listed the AUSA as “Board Member” and a “Federal prosecutor in Boston,” and stated: “I think the bashers are going to have a tough time calling these folks crooks.” A post as recent as September 9, 2011 on Yahoo! Finance pointed out that the Boston address for EVRM (which announced a relocation to Boston to be closer to its professional advisors) is a residential building, and anticipated leadership “dumping the stock into oblivion and then doing a reverse split and then…doing it again.”
The Executive Office of United States Attorneys (EOUSA) has not produced any documents reflecting the approval of an expanded role by the AUSA on an actual Board of Directors for a publicly traded company, let alone approval of his official position being used to tout the value of Evermedia penny stock. Arduous efforts at FOIA requests concerning these potential conflicts-of-interest, as well as appeals from blanket refusals to produce anything, ultimately resulted in the production by the EOUSA of a single but interesting document. This document reflected a conditional and limited approval of a request by the AUSA to serve for compensation in an “advisory” position for a “privately-held” company while remaining a federal prosecutor. The EOUSA conditioned its approval on the AUSA serving in only an “advisory” capacity for a specific “privately-held” company, no use of government resources, and a requirement to advise the EOUSA if any circumstances would change that could affect his service. After that limited approval, the company merged into a publicly–traded Pink Sheets company and, according to its website and other websites, the AUSA assumed a full-fledged position on the publicly-traded parent company’s Board of Directors. It is not entirely clear the extent to which Evermedia described the AUSA’s role accurately, but the description the company used remained publicly available for more than a year, leading investors and potential investors to believe that an AUSA was part of the management team, as posted on message boards.
As if this complex web of public and private roles were not enough, the AUSA was investigating officers of a different penny stock company (including a client of this firm) that used the same outside counsel as Evermedia. Wow. Yet when called to the attention of United States Attorney Carmen Ortiz, the AUSA was still permitted to handle portions of an ensuing prosecution. Wow.
These and related issues have been elevated to OIG, OPR, Attorney General Eric Holder, Senator John Cornyn of Texas, and Congressman Darrell Issa of California. Back to my original question: “Should a Federal Prosecutor Sit on a Penny Stock Board?” Stay tuned for answers.
A recent First Circuit decision raises three important sentencing issues. While framed as a decision about the right of defendants to learn the identities of confidential informants, last week’s United States v. Mills opinion impacts not only that issue, but also the fairness of the United States Sentencing Guidelines’ penchant for driving up sentences dramatically based on uncharged conduct, and the use of “reasonable estimates” as the bases for sentence enhancements.
Two days before the First Circuit’s Mills decision, Judge Jed Rakoff of the Southern District of New York, an outspoken critic of the United States Sentencing Guidelines, urged the “scrapping” of the Guidelines’ use of formulaic upward adjustments of sentencing ranges based on the amount of loss a court calculates from the crime. Judge Rakoff has previously written of “the utter travesty of justice that sometimes results from the guidelines’ fetish with abstract arithmetic, as well as the harm that guideline calculations can visit on human beings if not cabined by common sense.” United States v. Adelson, 441 F. Supp. 2d 506, 512 (S.D.N.Y. 2006).
Just as Judge Rakoff was lamenting the arithmetical absurdity that the Guidelines produce, the First Circuit in Mills affirmed a sentence of 108 months’ imprisonment based on upward adjustments under the Guidelines that increased the sentence from just 24 months – based entirely on conduct for which the defendant was never even charged, let alone convicted.
The First Circuit was addressing calculations of drug quantities, which function similarly to the loss calculations in white-collar cases that Judge Rakoff criticized, in that both produce skyrocketing Guidelines ranges as the numbers grow. Whether loss amounts or drug quantities, the numbers used for Guidelines purposes are calculated by a judge, not a jury; can be based on mere “reasonable estimates”; can be “proven” through evidence that would not be admissible at trial, including hearsay; and are not subject to the proof-beyond-a-reasonable doubt standard. In Mills, the defendant was caught smuggling 104 eighty-milligram and five forty-milligram oxycodone pills into the country from Canada. The defendant pled guilty to the one count with which he was charged, without a plea agreement. At sentencing, the court imposed an enhancement to the Guidelines calculation based not on the 109 pills with which the defendant was caught and for which he was charged, but rather based on 2,637 eighty-milligram pills. This enormous increase resulted from uncharged conduct – prior smuggling trips that the defendant was theorized to have made, but for which he was not convicted, or even charged.
Worse still, the government supported its request for a sentence based on this uncharged conduct with information from three confidential informants. It did so while refusing to identify the informants to the defense. The defendant argued to the First Circuit that the increase from 109 eighty- and forty-milligram pills to 2,637 eighty-milligram pills added seven unexpected years to his sentence.
In one sense, Mills is routine in allowing the government to rely on hearsay and a sentencing court to make an “estimate” that drives up a sentence. Here, however, the resulting sentence that was 450% of what the defendant expected before the effect of the “estimate” essentially convicted him of multiple offenses instead of just the one to which he pleaded guilty, without the many safeguards that would have accompanied an effort by the government to actually convict him of the other conduct.
The Mills court’s analysis, while giving prosecutors extensive room to use untested and untestable “evidence” to support huge increases in sentences, nonetheless provides some guidance for what defendants and defense counsel can do or should not to do in sentencings in which an extreme “estimate” is challenged and the identities of confidential informants are sought.
First, Mills was critical of the defense’s reliance on what the court viewed primarily as speculation about the questions it would ask and the ways in which it would impeach the informants. Ironically, the sentencing judge rejected the defense’s alternative explanation for large sums of money (which the defense said came from money-laundering activities, unrelated to oxycodone smuggling) because the defense refused to identify the person for whom the money was being laundered, “leaving no way to verify his claim.” This reasoning seems inconsistent with allowing the government to hide the identities of informants, other than on a theory that the government is more trustworthy. Putting aside the inherent challenge a defendant faces in specifying the line of attack he will use when he is not permitted to even know the identities of the witnesses against him, nothing in the opinion suggests that the defendant attempted to ask the agents who drafted the memoranda of interview questions about the reliability of the unnamed witnesses.
Second, the defendant had posted portions of the informants’ reports on Facebook, and others involved with the defendant were found carrying documents from the case, which arguably threatened disclosure of the witnesses as “snitches.” In light of these facts, the First Circuit appears to have given significant weight to the serious consequences that might befall the government’s informants (although says little about the serious consequences – years more in prison – that the defendant faced). There appears to have been no request for, or consideration of, a protective order that would allow the defense, or perhaps even defense counsel alone in light of the Facebook posts, to learn the witnesses’ identities without the identities being made public.
Third, the opinion relies on an implicit assumption that government agents are to be trusted merely because their statements come with the imprimatur of the government – an assumption that defense counsel must be willing to contest. While describing the informants’ statements as more akin to corroborating evidence than essential evidence, the opinion repeatedly relied on the statements and repeatedly noted that they were generally consistent with one another and with the government’s theories. As it was government agents who were presenting that hearsay evidence as consistent with the government’s theories, one might reasonably question the reliability of the reported consistency – exactly the type of concern that cross examination and hearsay rules are designed to address.
Finally, absent from the opinion is any discussion of an argument that more reliable evidence should be required to support the purported “reasonable estimate” used for Guidelines purposes when the result is both a de facto conviction of multiple uncharged crimes and a sentence that is a multiple of what it would likely have been in the absence of those other crimes for which the defendant was neither charged nor convicted. What might be reasonable to support a modest increase should not necessarily be deemed reasonable for a dramatic one. Defendants should insist upon a form of sliding-scale burden, meaning the need for a higher and better-quality evidentiary basis for an estimate being deemed “reasonable” where that estimate has such dramatic effects on a sentence.
Mills is perhaps unremarkable under the state of the law in the First Circuit. But the combination of the government’s ability to rely on sources it refuses to identify – and other evidence that it could not have admitted at a trial – the Guidelines’ acceptance of “reasonable estimates” drawn from such inherently unreliable evidence, and the harsh consequences that flow from mathematical Guidelines calculations linked to such evidence and estimates, should undermine faith we might have in the fairness of the Guidelines-driven sentencing process and should support calls such as Judge Rakoff’s that they be “scrapped.” But while they remain in place, defense counsel should use the room that the reasoning of the First Circuit’s opinion and similar decisions provide to bust the “reasonable estimates” that the government offers and the “tattlers privilege” that it uses to conceal its evidence.
On February 19, 2013, the Supreme Court decided Chafin v. Chafin, holding that an appeal in a case under the Hague Convention on the Civil Aspects of International Child Abduction does not become moot merely because the child has been returned. The Supreme Court noted that many of these cases are taking two years to resolve even though the Hague Convention requires a prompt return of children. Respondents may seek to buy time in some cases, but ultimately might be hit with awards of mandatory attorneys fees against them that grow dramatically during delays.
In Chafin, the Court concluded:
Importantly, whether at the district or appellate court level, courts can and should take steps to decide these cases as expeditiously as possible, for the sake of the children who find themselves in such an unfortunate situation. Many courts already do so. See Federal Judicial Center, J. Garbolino, The 1980 Hague Convention on the Civil Aspects of International Child Abduction: A Guide for Judges 116, n. 435 (2012) (listing courts that expedite appeals). Cases in American courts often take over two years from filing to resolution; for a six-year-old such as E. C., that is one-third of her lifetime. Expedition will help minimize the extent to which uncertainty adds to the challenges confronting both parents and child.
The Hague Convention and federal law help left-behind parents recover children from the United States in part by mandating an award of fees and costs incurred pursuing the return of the children unless deemed “clearly inappropriate.” Those fees and costs can add up, particularly when multiple forums are involved. In Chafin, the majority opinion explained “courts ordering children returned generally must require defendants to pay various expenses incurred by plaintiffs, including court costs, legal fees, and transportation costs associated with the return of the children”.
The more the forums, the greater the award of attorneys fees and recovery costs respondents may risk. A recent Hague Convention lawsuit alleged a wrongful retention of a girl in Massachusetts by her father, godmother, and Children’s Hospital Boston, where the child had been admitted after taking certain medicine belonging to her godmother. The father and godmother initially convinced a probate court to appoint the godmother as a temporary guardian on an ex parte basis. The probate court also appointed a lawyer to represent the child, and that lawyer quickly chose to work with the godmother’s and father’s counsel, without even interviewing the mother. Spinning the girl’s condition, lawyers convinced a federal trial court to dismiss the case on the pleadings. Do these sorts of apparent irregularities result in part from inherent prejudices against foreigners? Perhaps, but those and other irregularities were effectively cured through an expedited federal appeal and subsequent bench trial. See Felder v Wetzel, 696 F.3d 92 (2012). After six months, finally the young girl was heard from directly instead of only indirectly through the father’s and godmother’s lawyers, and the girl asked to go home to Switzerland. The matter was resolved near the end of a trial by way of a settlement agreement and stipulation entered as an Order of the United States District Court for the District of Massachusetts calling for the child’s return to the mother’s custody in Switzerland and a $175,000 payment from the father to the mother to cover a portion of her attorneys fees and costs incurred in pursuing the Hague Convention action.
A lesson from this recent case is clear: taking non-meritorious legal positions in multiple forums can buy some time, particularly with busy family courts pressed with other business, but ultimately doing so may cost a litigant significant money because of the additional attorneys fees and costs incurred after an appeal and full Hague Convention proceedings. In other words, buying time can be expensive.
At a Senate Judiciary Committee hearing last week, Attorney General Eric Holder defended the prosecutors’ conduct in the prosecution of Aaron Swartz, calling the manner in which plea negotiations were handled a “good use of prosecutorial discretion.” The questioning of Holder arose, of course, from the widespread criticism of the way in which the prosecution was conducted by the Office of United States Attorney for the District of Massachusetts Carmen Ortiz. The prosecution forced internet activist Swartz to choose between a guilty plea and exercising his constitutional right to a trial, which would have exposed him to the possibility of a lengthy prison sentence if convicted. Swartz ultimately committed suicide, avoiding that choice. Holder justified his subordinates’ conduct on the ground that the plea offers called for prison time of only up to six months, claiming at one point that there was “never an intention for him to go to jail for longer than a three, four, potentially five month range” (Holder’s testimony has been posted by C-Span, with the exchange concerning Swartz starting at around 39 minutes into the video). Holder even went so far as to criticize media coverage that raised the possibility of decades in prison.
Compared to the widespread coverage of the Swartz case generally, this disturbing defense at the highest level of the Justice Department was relatively lightly covered. But more concerning than the fact that Holder is standing by his prosecutors in this matter is his willingness to do so by distorting what happened. “Never an intention for him to go to jail” for more than a few months? Here’s a line right from the press release that Ortiz’s office put out following the Swartz indictment: “If convicted on these charges, SWARTZ faces up to 35 years in prison, to be followed by three years of supervised release, restitution, forfeiture and a fine of up to $1 million”. Is there really any doubt that an official statement about facing 35 years in prison gives the government unfair leverage in plea negotiations? The constitutional right to go to trial is unquestionably burdened when prosecutors publicly threaten the severest of consequences should a defendant chose to exercise that right rather than accepting a guilty plea.
Holder’s defense of the government misconduct here also fails to appreciate that cases do not end with plea offers. If a defendant wishes to put the government to its proof, the plea offer, of course, goes away. A defendant who chooses to exercise his constitutional right to go to trial cannot count on a judge doing what Judge Woodlock recently did. Contrary to Holder’s testimony, a truly “good use of prosecutorial discretion” would involve not just refraining from such inappropriate threats, but often also involves a decision not to charge or to charge something less than what broad, vaguely worded felony statutes with severe penalties permit.