Many, perhaps most, readers will not recognize the name David Rivkin. Rivkin was one of the original 19 defendants on the superseding indictment in United States v. Stein arising from KPMG's tax shelter activity. The indictments included both KPMG personnel (15, including Rivkin and David Greenberg, although he was an outlier) and the outside implementers (attorney (1) and the principals (3) with the financial firm helping devise the strategies and implement the trading for them). (For previous posts on Stein, see here.) The superseding indictment charged all defendants with one count of conspiracy and 40 counts of tax evasion. Additional counts were charged to separate defendants. Focusing on the common conspiracy and 40 counts of tax evasion, under Pinkerton and Guidelines relevant conduct concepts, all defendants on these common counts were at risk of maximum Guidelines base offense levels which would place their sentencing levels in the 25+ year range with expected upward adjustments. Relatively early in the drawn out proceedings in the case, the Government made offers to some of the defendants that included a 2 5-year felony count plea (conspiracy and one count of evasion) with the assertion (untrue in retrospect) that it just won't get any better than that. All of those to whom this offer was made declined, except Rivkin. Therein lies the drama.
This case -- United States v. Stein -- will go down in legal history as the case in which the prosecutors unconstitutionally forced KPMG to quit paying legal fees for persons who would not cooperate with the prosecutors during the grand jury investigation, including the proffer sessions incident thereto. (For more of my blogs on the Stein case, see here.) Having lived through the prosecutors' abuse as to what was cooperation, it appears that by cooperation they meant admission of guilt and anyone who declined to admit guilt was not cooperating. At any rate, that is how I saw the case from my client's perspective, and I think other attorneys involved felt the same. So, during the grand jury phase controlled by these prosecutors, KPMG routinely cut off legal fees to those persons the prosecutors deemed not to be cooperating, would fire those still with KPMG, and would refuse to give those persons even the minimal assistance of providing the documents KPMG was rolling out to the Government digitally and could have easily made available to the these individuals. (It is still unclear to me how the prosecutors could have told KPMG they were not cooperating consistent with the mandates of FRCrP Rule 6(e), but going further down this trail would be distracting in this blog.) It is unclear whether any such signal to KPMG was given for Rivkin during the grand jury investigation, but it appears clear that once Rivkin was indicted, KPMG did the Government's bidding of terminating his attorneys fees and any other litigation assistance. Ultimately, in the Stein case, the district court held and was affirmed on appeal, that the Government's action in forcing KPMG to terminate legal fee assistance was unconstitutional and required dismissal of the indictments against those defendants that were affected by the abuse.
Those affected, of course, included Rivkin because his fees were terminated at least by the time of indictment. But, before the Government's unconstitutional abuse had surfaced in the proceedings as a viable issue, Rivkin had to face the question of whether he would accept the prosecutors' plea offer (2 5-year felony counts). As is recounted in the plea agreement, his personal and professional life was falling apart as a result of the investigation and indictment and he clearly did not have the resources to handle the mass criminal trial (5-7 months and perhaps 25 million pages of discovery and hundreds of witnesses). Other defendants who received the offer were in varying degrees similarly affected, but some clearly had more resources than Rivkin had. I am not sure exactly why Rivkin decided to accept the plea rather than continue the fight, but I suspect that it was in part driven at least significantly by the withdrawal of financial support from KPMG. I cannot speak to the issue of whether he would have pled had he continued to have that support, but it is hard to imagine that his consideration would not have been affected.
At any rate, his plea came too early. Had he declined the plea as the others who received a similar plea did, he would surely have been among the dismissed defendants. (He also would likely have received another lesser plea offer later in the process before the dismissal that would have required only a plea to one 5-year felony count, the conspiracy count; which only goes to show that you can't always trust prosecutors who tell you their opening offer is as good as it gets, but this particular set of prosecutors were not to be trusted for a host of reasons, including the economies with the truth that they took in trying to avoid discovery of their having forced KPMG to terminate the legal fee support.) At any rate, the only KPMG defendant left as a defendant after the dismissal was Greenberg, and he was ultimately acquitted at trial. In his sentencing memorandum, Rivkin asserts plaintively that he was the least culpable of all the defendants that were dismissed and yet is the only one that will be convicted and sentenced. He says:
Ironically and somewhat inequitably, David Rivkin stands before the court as the only person from KPMG who will ever be sentenced for their participation in what the Government has claimed is the largest tax fraud ever perpetrated in the history of the United States. Of all the KPMG defendants originally indicted, Mr. Rivkin played the smallest part in that conspiracy. Scores of equally or more culpable people from KPMG were not and will never be indicted. So, of all the people that conceived, created, reviewed, approved, implemented and were critical to the success of BLIPS or any of the other phony tax shelters KPMG sold to its wealthy clients, only one of the many salesmen, David Rivkin, faces sentencing.
Thus, the title of this blog - A Plea Too Early.
As a postscript, I do wonder why Rivkin did not seek to have his plea and conviction withdrawn based on the same unconstitutional conduct that affected the other dismissed defendants. It is hard for me to imagine that his plea was not affected in material part by the prosecutors' unconstitutional behavior that made his potential defense difficult if not impossible. I have not traced out all of the legal considerations of withdrawing a plea, but readers may recall that, in a not wholly dissimilar circumstance, David Duncan, the Arthur Andersen engagement partner on the Enron account, was allowed to withdraw his plea after the conviction of Arthur Andersen was reversed by the Supreme Court. If, indeed, the prosecutors' unconsitutitional pressure upon KPMG to terminate fees was even a significant factor in Rivkin's plea, it is outrageous that his conviction stands. Again, I caution in making that remark that I do not have all the underlying facts -- particularly what bearing the termination of fee support played in the plea.
I have a related blog here dealing with the possibilities that a strictly cost / benefit analysis of continuing the fight might cause even the innocent defendant to convince himself of his plea sufficient to support a plea allocution of guilt. I also have other blogs on the Stein case generally here.