David Ganek’s Valiant Effort to “Fight the Power” Fizzles—Where’s the Remedy When Law Enforcement Lies?

Fist pileI’ve written several times before about hedge fund owner David Ganek’s groundbreaking lawsuit against federal agents and prosecutors in New York. See my posts here and here.

As I described the case:

The plaintiff is David Ganek, the former head of now-defunct hedge fund Level Global. The government executed a search warrant for his office and personal devices. As a result of extensive publicity about the investigation and raid, Level Global went out of business. Even though Mr. Ganek was never charged with insider trading, he lost his business.

The government’s main defense was that the defendants—all federal employees—were protected by the doctrine of qualified immunity. Qualified immunity protects law enforcement officers from money damages imposed based on performance of their official duties. It’s a very high barrier to this type of civil lawsuit.

The district court rejected this argument in part, concluding that some of Mr. Ganek’s claims could proceed. Specifically, it allowed his Fourth Amendment claims to continue because Mr. Ganek had alleged that defendants made a deliberate or reckless misstatement of a material fact when they sought a warrant to search his property. It also refused to dismiss his Fifth Amendment claim based on the defendants’ alleged fabrication of evidence against him, as well as refused to dismiss some of the claims based on supervisory liability.

The defendants filed an interlocutory appeal. It took a few months, but the Second Circuit issued its opinion in October 2017. (I know, I know, I’m a little late to the party. But thanks to a busy late-year trial calendar, I’m a bit behind in my posts.)

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Posted in Appeal, civil case, DOJ policy and practice, Search warrant | Leave a comment

What Happens If Your Client Dies While the Appeal Is Pending? (Hint: Appeals Matter)

Alone on a jettyDavid Brooks apparently lived a rather lavish lifestyle. As the head of a successful body armor company, he was rumored to have thrown a $10 million bat mitzvah party for his daughter that included performances by 50 Cent and Aerosmith.

In 2007, the fun came to an end. Mr. Brooks was named in a superseding indictment on charges stemming from his participation in several alleged schemes to the fraud shareholders and obstructing an SEC investigation. He was also charged with tax fraud.

After his guilty plea (on some counts) and conviction (on other counts), he was sentenced to substantial prison time. While in prison, he passed away. In an appeal before the Second Circuit, his family and estate challenge the status of his criminal convictions as well as the very large restitution order against him.

So, what does happen if your client dies during a criminal case? We hope we never have to reach this issue, but the Brooks opinion gives some helpful guidance.

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Posted in Appeal, Criminal Forfeiture, Restitution | Leave a comment

Government Wins Finders Keepers: Criminal Forfeiture Cannot Be Used to Repay a Las Vegas Debt

business concept. money with handWhat happens if a defendant’s cash is subject to forfeiture but he also owes someone else money? Who gets the forfeited cash?

In a recent case out of the First Circuit, the court applied the forfeiture statutes to deny a general creditor payment of the defendant’s debt.

This holding (an issue of first impression for the court) has implications whether you represent someone who is owed money by a defendant or the defendant himself.

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Posted in Appeal, Criminal Forfeiture | Leave a comment

Should a Court Erase a Prosecutor’s Name from an Opinion about Brady Violations?

I was perusing recent opinions from the courts of appeal for possible blog post ideas when I came across an odd-looking errata sheet. Here’s an excerpt:

Spencer errata

That’s odd, I thought. I took a look at the original opinion in the case.

The First Circuit wrote an opinion published August 23, 2017. In it, the court of appeals affirmed the district court’s finding that there had not been a Brady violation when the prosecutor failed to disclose that he had talked with the chemist who analyzed the drugs and corrected a key date on her report.

The USAO then asked the First Circuit to remove the AUSA’s name because it might

suggest to the public that the Court found that the government in fact committed prosecutorial misconduct and that its actions were so egregious as to require rebuke.

Apparently, the Court agreed and it deleted the prosecutor’s name from the opinion.

Given the facts of the case, this is an unnecessary effort to protect a prosecutor who was found to have “willfully” withheld evidence favorable to the defense. It’s certainly not a courtesy extended to defendants who are ultimately found not guilty.

What gives?

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Posted in Appeal, Brady violations, Discovery/Brady, Prosecutorial misconduct | Leave a comment

Hell Hath No Fury Like a Misled Judge: The Aaron Schock Case

danger thin iceElected officials under government investigation try to avoid indictment like any other white-collar client. They know that if charged with a crime, it will be nearly impossible to win re-election.

Once indicted, though, they fight back, and fight back hard. There’s nothing to lose at that point.

An elected official loves his reputation as someone who will “fight for you in Washington.” And the Department of Justice loves to take down a public official.

The criminal case against former Representative Aaron Schock is no exception to this narrative.

He was charged in November 2016 with wire and mail fraud for misusing public funds, along with false statements. The indictment includes such *really troubling* allegations like false mileage reimbursement and using official money for personal uses such as buying camera equipment, sports tickets (Da Bears), cars and so forth. He also apparently spent too much money remodeling his office.

It’s a ticky-tack public corruption case for DOJ. If I were reading the tea leaves, I’d guess that this bus was driven by the USAO alone. Main Justice appears nowhere on the pleadings.

The docket makes clear that this has been a pitched battle on both sides. Most recently, the court entered an order explaining that the government has

admitted that a previous claim made by Assistant United States Attorney Timothy Bass was misleading, if not simply false.

The court ordered the government

to review all claims and statements made in its current filings to ensure that there are no more false or misleading claims.

How did we get here?

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Posted in Grand jury, Prosecutorial misconduct, Public Corruption | Tagged | Leave a comment

Is DOJ Changing Its Practice on Press Releases after Dismissal or Acquittal?

Metal Wheel ConceptI’ve written about vented several times (see here and here) about DOJ’s practice of leaving press releases announcing indictments on its website even after the defendant has been acquitted of the charges or after the charges have been dismissed. DOJ’s website ranks high in search results. So, if you search a defendant’s name, it’s very likely that DOJ’s press release will be the first hit.

This practice is unfair to defendants who have had the charges against them dismissed or were acquitted at trial.

Has this practice changed? Maybe.

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Posted in Dismissal of charges in indictment, DOJ policy and practice, SEC policy and practice | Leave a comment

Speedy Trial Act Strategy in White-Collar Cases (Part II)

Retro alarm clock on wooden table, vintage styleA few months ago, I wrote Part One of this series about Speedy Trial Act strategy in a white-collar criminal case. This post is going to go into a bit more detail about the pros and cons of invoking the speedy trial right.

As a very brief (and over-simplified) refresher, the Speedy Trial Act requires that a defendant’s trial begin 70 days after indictment, but there are several time periods that are excluded from this calculation.

The Pros of Invoking the Right

First, trial happens more quickly. (Hence the name of the act.) A quicker trial generally means fewer attorney’s fees. It also means the torment of being under criminal investigation will end sooner. These are not insubstantial benefits for most people.

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Posted in Speedy Trial Act, Trial preparation | Leave a comment

Fourth Circuit Finally Concedes that the Government Cannot Take Your Stuff Before Trial

business concept. money with handA few months ago, I wrote a blog post predicting that the Fourth Circuit would stop allowing federal prosecutors to seize untainted assets before conviction.

(Buffing fingernails on shirt.)

And now it has.

Okay, my prognostication was not exactly out of left field. After all, the Department of Justice had indicated that this was the right result. The Supreme Court in Luis v. United States, 578 U.S. ___ (2016), had already limited pretrial seizure of untainted assets when the defendant wanted to use untainted funds to hire counsel.

In United States v. Chamberlain (No. 16-4313), issued August 18, 2017, the Fourth Circuit held that

We overrule our precedent construing Section 853 and other identically phrase restraint provisions allowing the pretrial restraint of substitute assets.

There are two wonderful parts of this opinion. First is the holding itself, which is a huge victory for criminal defendantsi in the Fourth Circuit and everyone else. We shouldn’t have to fear the government taking our assets before trial. Second, you can’t help but be amused by the fact that the Fourth Circuit had to admit that even though it previously held that the plain language of the forfeiture statute allowed this type of seizure, it was wrong about that.

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Posted in Appeal, Continuing education | Leave a comment

Fight the Power, Part IV: The Government Backs Off Absurd Claims of “Witness Tampering”

Fist pileA defendant has a constitutional right to prepare a defense to criminal charges. In a white-collar case, contacting potential witnesses is as important as reviewing the document trail.

Why does the government feel threatened when we do our jobs?

I have had a prosecutor express surprise—in a tone suggesting that I had done something wrong—when I contacted a witness who had testified before the grand jury against my client. In a case in the Eastern District of New York, the judge issued an order preventing defense counsel from contacting potential witnesses or their counsel.

This is stunning.

Luckily for the defendant, his counsel fought back, and the judge reversed herself. I’m including this as Part IV of my previous series on “Fight the Power.”

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Posted in Discovery/Brady, Obstruction | Leave a comment

Can a Defendant Get Attorney’s Fees If He’s Acquitted and There’s Prosecutorial Misconduct?

unfair to fair on white paperIn a civil case, a defendant cannot recover attorney’s fees from a plaintiff, even if the defendant wins. There are a few exceptions to the “American rule,” such as a when there’s a statute governing the case or the contract between the parties allows it. But for the most part, the defendant is out of luck.

But what about in a criminal case? What if you are indicted and win? What if the prosecutors committed misconduct along the way, such as a Brady violation? Can you get back all the attorney’s fees you paid to defend yourself?

Short answer: It’s possible but extremely unlikely.

Just the fact that it’s a possibility may come as a surprise to some people. The Hyde Amendment to the Equal Access to Justice Act, 18 U.S.C. § 3006A note, permits criminal defendants to recover reasonable attorney’s fees (a) if they are acquitted, and (2) “if the position of the United States was vexatious, frivolous or in bad faith.”

Good luck proving that last part.

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Posted in DOJ policy and practice, Prosecutorial misconduct | 1 Comment