District Court Revokes Bail and Orders Pretrial Incarceration in Tax Crimes Case Because of Violations of No Contact Requirement (12/19/24)

Added at 12/21/24 9:00pm: I enclose below a ChatGPT summary of this blog. I encourage readers to take a look. Pretty good summary.

We don’t usually see revocation of bail in tax crimes cases, but the case today is not the normal tax crimes case. In United States v. Edelman, ___ (D. D.C. No. No. 24-239-1 Dkt 53 Memo Opinion 12/11/24), CL here and GS here, the Court opens the opinion (Slip Op. 1, footnote omitted):

            Defendant Douglas Edelman is alleged to have orchestrated one of the largest tax-evasion schemes in American history. Following his arrest in Spain, Edelman was transferred to the United States and released to the supervision of the Pretrial Services Agency. Later, the Government moved for revocation of Edelman’s release on the basis of pretrial violations. After a hearing, and upon consideration of the parties’ submissions, the relevant legal authority, and the entire record before it, 1 the Court orally ordered that Edelman’s release be revoked and that Edelman be detained pending trial. See Min. Order (Dec. 11, 2024). The Court summarized on the record the factual findings and legal conclusions underlying that order. This Memorandum Opinion relates those findings and conclusions in further detail.

 The Court recounts the following relevant facts under Outline Level II:

A. Edelman’s Alleged Conduct (Slip Op. 2-3);

B. Edelman’s Arrest and Release (Slip Op. 3); and 

C. Alleged Violations and Procedural History (Slip Op. 4-6)

            Pretrial Services first alleged that Edelman had contacted an individual, identified as Co-Conspirator 3, in violation of the conditions of release and requested that the court issue a judicial directive to comply with the conditions of release. The Government thereafter alleged another violation of that condition with another individual, identified as Co-Conspirator 4. In each case, screenshots of the communications by apps (first WhatsApp as to Co-Conspirator 3 and then Signal as to Co-Conspirator 4 set to make the message disappear after 1 day) were submitted. Pretrial Services took no position after the Government’s submission. The Government then submitted a motion for revocation of release.

The Court then outlines the legal standard (Outline Level III Slip Op. 6-8) under 28 USC § 3148(b), here. The Court starts with the general rule that ““In our society[,] liberty is the norm, and detention prior to trial or without trial is the carefully limited exception,” citing United States v. Salerno, 481 U.S. 739, 755 (1987). The Court then discusses the requirements of § 3148(b). The Court then applied, as § 3148(b) requires, a clear and convincing standard under § 3148(b)(1)(B)that the defendant has violated the condition of release and then applied a preponderance of the evidence standard as to whether it is “unlikely” that Edelman will abide by the conditions under § 3148(b)(2)(B).

The Court recounts (Slip Op. 9-14) the substance of the communications, particularly with Co-Conspirator 4 identified as Robert Dooner who has had a long relationship with Edelman but who had entered a “public cooperation” agreement with the Government in 2023. The latter communication involved an offer to help secure a financial windfall for Dooner and thus “curried favor with that witness in the process.”  (I do not recount here the precise nature of the “financial windfall” but just point instead to the discussion at Slip Op.9-14.)

The Court then makes the relevant findings as to why Edelman is unlikely to comply with the conditions of release regarding no contact with the individuals that the Government had previously identified to Edelman’s counsel. The Court says (Slip Op. 15):

Worse still, Edelman committed these violations while subject to one of the most restrictive possible forms of pretrial release: High Intensity Supervision with home detention. See Release Order at 2. Edelman’s nearly immediate, repeated, and consistent disregard for the Release Order in the face of close supervision by Pretrial Services leaves the Court with a firm conviction that he is unlikely to be deterred from further violations moving forward.

The Court further found (Slip Op. 15) that the no contact condition was “a central condition of his release tailored specifically to the unique circumstances of his case” and that the conversations with Dooner “discussing subjects integral to the case and promising Dooner financial assistance—strike at the core purpose of his release condition: avoiding any possibility that he could influence potential witnesses against him.” Further, the Court (Slip Op. 16) was particularly concerned about Edelman’s use of the messaging application Signal because of its encryption and automatic deletion features.

The Court questioned (Slip Op. 16-17) Edelman’s demeanor, credibility and trustworthiness on a promise to abide in the future.

Finally, I offer a long excerpt of the Court’s discussion (Slip Op. 18-19) of Pretrial Service’s High Intensity Supervision Program since this is highly unusual in tax crimes cases and why that program was inadequate for the concerns raised by Edelman’s violations:

            Finally, the present record shows that Edelman’s initial release conditions and his proposed additional conditions cannot ensure his future compliance. Edelman was subject to monitoring under the High Intensity Supervision Program. But even that was insufficient to detect his violations. Dooner and Co-Conspirator 3—not Pretrial Services or Edelman—brought those violations to the Government’s and the Court’s attention. To be clear, this is no indictment of the efforts or diligence of Pretrial Services. Rather, as Pretrial Services explained at the hearing on the Government’s motion, Pretrial Services lacks the capacity to monitor defendants’ phones and online activity. Even if Pretrial Services could inspect Edelman’s phone, his use of encrypted messaging applications would likely frustrate their supervision.

            Moreover, merely seeing the messages is not enough to assess the extent of the violation or make recommendations to the Court. It took two hearings and hundreds of pages of submissions from the parties for this Court to evaluate the context and import of Edelman’s messages to Dooner. And Pretrial Services has reported that the complexity of Edelman’s violations and this case have inhibited their supervisory efforts.

            Edelman proposes that the Court adopt four additional conditions in lieu of detention: (1) that he delete all encrypted messaging apps from his phone and computer; (2) that he delete the contact information of all alleged co-conspirators; (3) that he receive random screenings of his [*19] phone by Pretrial Services; and (4) that he meet with Pretrial Services weekly to ensure his compliance. Def.’s Opp’n at 23. But those conditions would also be insufficient to ensure that Edelman does not contact his alleged co-conspirators.

            As explained, Pretrial Services lacks the capacity to monitor Edelman’s electronic devices and thus cannot determine whether he is using encrypted messaging applications or with whom he is texting. At the December 11 hearing, Edelman’s counsel conceded that Pretrial Services could not remotely monitor Edelman’s online activity but suggested that physical inspections of Edelman’s devices during his supervisory visits would be a sufficient alternative. The Court disagrees. Edelman could delete any prohibited application or contact to avoid detection during his visits and reinstall them later. And even if Edelman presented Pretrial Services with compliant devices, it would be impossible to determine whether Edelman was violating his release condition on some other device. Pretrial Services lacks the capacity to conduct home visits, monitor who enters Edelman’s residence, or determine what devices are available to him. For that reason, even confining Edelman to his residence at all hours of every day could not guarantee that Edelman does not receive a different device with the prohibited applications and contacts. Further, Edelman met with Pretrial Services weekly under his initial release conditions, and those meetings proved insufficient to detect and deter Edelman’s violations. See Def.’s Opp’n at 23.

            Given the constraints on Pretrial Services’ resources and capacity, Edelman’s proposed conditions boil down to a request that the Court trust him to comply. But Edelman has already abused this Court’s trust. Therefore, and for all the reasons stated, the Court finds that Edelman “is unlikely to abide by any condition or combination of conditions of release.” 18 U.S.C. § 3148(b)(2)(B). On the present record, the Court concludes that nothing short of detention can ensure that Edelman will not contact his alleged co-conspirators.

For the D.C. District's Pretrial Services High Intensity Supervision Program, see here.

Added 12/21/24 9:00pm: I asked ChatGPT to summarise the foregoing blog entry. I offer here the summary and have to say that it does a pretty good job. Had I fed it through ChatGPT before writing it, I would have made my offering substantially shorter (although adding some nuance not captured by ChatGPT).

Here is the ChatGPT Summary:

On December 19, 2024, the District Court revoked the bail of Douglas Edelman, a defendant in one of the largest tax-evasion schemes in U.S. history, due to violations of his pretrial release conditions. After his arrest in Spain and transfer to the U.S., Edelman was released under strict supervision, but he violated conditions by contacting co-conspirators, including using encrypted messaging apps to communicate with Co-Conspirator 4, who had agreed to cooperate with the government. The court found that Edelman’s actions, particularly using the Signal app which deletes messages, showed his disregard for the conditions designed to prevent witness tampering.

Despite being under the High Intensity Supervision Program, which involves home detention, Edelman repeatedly violated the no-contact condition. The court noted that this program was insufficient, as Pretrial Services could not monitor his encrypted communications or detect violations in real-time. Edelman’s proposed additional conditions, such as deleting certain apps and submitting to random checks, were deemed inadequate because they couldn't ensure compliance, particularly given Pretrial Services' limited capacity.

Ultimately, the court concluded that Edelman could not be trusted to abide by release conditions and ordered his detention until trial.

Blog Comments

I encourage readers to comment as they deem appropriate using the Comment feature, titled “Post a Comment” at the end of this blog entry. For Guides as to Comments, please see the page titled “Guides to Use and Posting of Comments (9/26/24)”),  here. (Note that, as with blog entries, the date in the parenthesis is the last date the item was changed.) Thank you.