Monday, August 19, 2013

Kerr & Quiel - Denial of Post-Trial Motions - Installment #1 (8/19/13)

I have previously written on the convictions and pre-trial proceeding for Stephen Kerr and Michael Quiel.  I provide the blogs and links at the end of this blog.  Today, I write on the district court's rejection of their motions for acquittal or, alternatively, a new trial.  These types of motions are standard after a conviction.  They are usually denied.  The district court denied the motions here. See United States v. Kerr, 2013 U.S. Dist. LEXIS 116327 (D AZ 8/16/13), here.

The opinion is standard fare.  I write principally because of the range of issues presented and, for students at least, to introduce them to the issues.

The facts are:  The defendants were charged with conspiracy among themselves and Rusch, their attorney (the common count 1 of the indictment), tax perjury (relating to omission of income and false answer to the foreign account question on Schedule B) and FBAR violations.  Both defendants were acquitted of the conspiracy count.  Kerr was convicted of tax perjury and one FBAR violation. Quiel was convicted of the tax perjury charges but not the FBAR counts.

Testimony of Attorney; Attorney-client privilege.

This issue is introduced in my prior blog, titled Defendant Waives Attorney-Client Privilege by Asserting Reliance on FBAR Advice Defense (7/19/12), here.  Kerr first claimed that his and Quiel's acquittals of the conspiracy charge meant that the testimony of their lawyer, Rusch, was not admissible under the crime-fraud exception to the attorney-client privilege.  As you may have guessed (or have read in the earlier blogs), the attorney, Rusch, was their "lawyer" who helped orchestrate their machinations.  Rusch pleaded guilty earlier.  The problem with Kerr's first claim was that Rusch's testimony was not admitted under the crime-fraud exception.  Rather, it was admitted because the defendant's claimed reliance on counsel as a defense.

Kerr next claimed that the ground for admitting the lawyer's testimony -- Kerr's reliance on advice of counsel -- did not support the lawyer's testimony at trial.  The precise argument is not crisp to me, but as recited by the court it was:  "Kerr argues that the advice of counsel defense may waive the privilege "as to documents presented early on[,]" but does not waive the privilege regarding Rusch's testimony because the advice of counsel defense did not require Rusch to testify."  As articulated by the court, the problem was that there was no authority cited by Kerr for the proposition.  Certainly, the attorney-client privilege once waived is gone forever.  (This is different from the Fifth Amendment privilege which can be waived during the criminal investigation but asserted at any ensuing criminal trial.)  Kerr's claim as more refined was in effect that, although Kerr had noised about a reliance on counsel defense earlier in the proceedings, he did not actually make the defense at trial; hence, he argued, Rusch's testimony could not be justified on a reliance of counsel defense.  The problem, as found by the Court, is that Kerr indeed did assert the defense at trial:
This claim is inaccurate because Kerr presented this defense in both opening and closing arguments and requested and received a jury instruction encapsulating that defense. (See e.g. Doc. 325 at 124) ("Now this is their lawyer. This is a tax expert. They believe him. They rely upon this advice."); (Doc. 338 at 79) ("a very, very important jury instruction in the case . . . that's basically the instruction regarding the reliance on counsel"); (Doc. 287 at 35) (jury instruction for advice of counsel defense). Accordingly, the Court can find no error in the admission of Rusch's testimony, and such testimony will not be excluded when determining the sufficiency of the evidence under Rule 29(c)(2) or Rule 33(a).
Testimony as Attorney as co-conspirator

Kerr also objected that the acquittal on the conspiracy charge precluded justifying Rusch's testimony as a co-conspirator under FRE 801(d)(2)(E).  The problem with that claim, as with the previous one, was that Rusch's testimony was not admitted under this rule, but rather because the defendants had asserted reliance on counsel as a defense.  (There were more fundamental problems -- e.g., that FRE 801(d)(2)(E) is an exception to hearsay and Rusch's testimony was either not hearsay or qualified under other exceptions to the hearsay rule.)

To be Continued:

I will continue tomorrow with the second installment of dealing with issues in the opinion in this case.

JAT Comment on Reliance on Professionals:

One of the issues presented with the reliance on professionals defense is how to insure that the defense is presented at trial sufficient to form the foundation for a reliance on professional instruction to the jury.  In a strict sense, reliance depends upon the defendant's internal thought processes -- did he or she rely upon the professional.  It is hard to put that defense in play without the defendant's testimony.  (Notice I said that it was hard; I did not say it  was impossible.)  But, in the general case, the defendant will likely be reticent to testify to put this defense in play.  Hence, should the defense request a reliance instruction, he or she may find out that the foundation has not been adequately laid.

Prior Blogs on this case:

  • Convictions of U.S. Persons Related to UBS and Pictet Accounts (4/12/13), here.
  • Defendant Waives Attorney-Client Privilege by Asserting Reliance on FBAR Advice Defense (7/19/12), here.
  • 2 Taxpayers and their U.S. Lawyer Indicted re Foreign Accounts (2/1/12), here.

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