Excellent Decision for D.C. District Court on Brady Disclosures in Mass Document Dumps (1/24/20)

Some of the more high profile tax crimes cases, like the broader category of white collar crime, have large document sets that the Government must produce to the defense team.  This has led to mass document disclosures (sometimes open file discovery) which, the Government claims, includes all Brady and Giglio material, but the Government insists the defense team must ferret that out to make it useful.  Defense lawyers believe that mass disclosures in large data set cases violates the intent of Brady and Giglio.  I have written on this subject before, and include links in the Comments below.

In United States v. Saffarinia, 2020 U.S. Dist. LEXIS 6735 (D. D.C. 2020), CL here, the court dealt with that issue in a general white collar crime context (not a tax crime context).  (See Slip Op. 72-95.)  I include certain excerpts leading to the Court’s conclusion to order the Government to identify the known Brady material and then offer that conclusion (cleaned up):

[*74]
Between June and August 2019, the government made five productions of documents to Mr. Saffarinia, which included, among other things, nearly all of the FBI's investigative case file, interview reports (i.e. FD-302s), agent notes, and witnesses' statements pursuant to the Jencks Act, 18 U.S.C. § 3500. A large portion of the electronic data consists of electronic communications, including 264,800 e-mails and over 223,000 documents from the FBI's case file, that span roughly a four-year period. And the government's production includes hard drives from two different computers allegedly owned by Person B, which contain 394 [*75] gigabytes of data. . The discovery here, consisting of more than one million records and 3.5 million pages of documents, is massive. 

The government produced the documents to Mr. Saffarinia with production logs, Bates-stamping, and metadata in an electronic and searchable format that is accessible through "Relativity," an electronic database.  The government included a cover letter with each production and a basic, one to two page chart summarizing the Bates-stamped [*78]  numbers covered in each production. And the government represents that it explained its theory of the case to Mr. Saffarinia and defense counsel at two reverse proffer sessions. 

* * * *
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Opinion on Discovery in Tax Evasion Case of Reliance on Counsel Documents (1/26/18)

In United States v. Scali, 2018 U.S. Dist. LEXIS 8137 (S.D. N.Y. 2018), here, the defendant was (bold=face supplied by JAT):

charged in a ten-count indictment with (1) mail fraud in violation of 18 U.S.C. § 1341; (2) structuring to evade currency transaction reports in violation of 31 U.S.C. § 5324(a)(3); (3)—(4) false statements in violation of 18 U.S.C. § 1001; (5) corruptly endeavoring to obstruct and impede the due administration of the Internal Revenue Laws in violation of 26 U.S.C. § 7212(a); (6) tax evasion for the year 2011 in violation of 26 U.S.C. § 7201; (7) tax evasion for the year 2012 in violation of 26 U.S.C. § 7201; (8) obstruction of justice in violation of 18 U.S.C. § 1503; (9) perjury in violation of 18 U.S.C. § 1623; and (10) mail fraud in violation of 18 U.S.C. § 1341.

The Court acted on the Government's motion in limine on a number of issues.  The only issue and its resolution that interested me is the "Advice of Counsel Defense."  The discussion is short, so I excerpt it in full:

V. Advice of Counsel Defense 

The Government's motion for an order compelling Defendant to provide prompt notice and to produce all discovery relating to any advice of counsel defense he intends to advance at trial is granted in part. The question of whether the Defendant will assert an advice of counsel defense with regards to the two tax evasion counts is moot because the Defendant unequivocally admitted to it in his pleadings. (Def. Mot. 25 ("Scali intends to demonstrate that he is not guilty of tax evasion because, for the years in question, he followed counsel's advice and provided his complete books and records to the IRS").) See Royal Park Investments SA/NV v. United States Bank National Association, 14 Civ. 2590 (VM), 2017 U.S. Dist. LEXIS 157986, 2017 WL 4174926, at *9 (S.D.N.Y. Aug. 28, 2017) ("[A] defendant must clearly elect whether it will raise an advice-of-counsel defense before the close of discovery and in time to allow for such discovery") (citation and quotations omitted). As a result, the Defendant should have made pertinent disclosures during discovery, absent special considerations. See id; see also United States v. Wells Fargo Bank, N.A., 2015 U.S. Dist. LEXIS 84602, 2015 WL 3999074, *1 (S.D.N.Y. June 30, 2015) ("[T]he burden is on the party who intends to rely at trial on a good faith defense to make a full disclosure during discovery and the failure to do so constitutes a waiver of that defense") (quotations and citations omitted); Arista Records LLC v. Lime Grp. LLC, No. 06 CV 5936(KMW), 2011 U.S. Dist. LEXIS 42881, 2011 WL 1642434, at *2 (S.D.N.Y. Apr. 20, 2011) ("[A] party who intends to rely at trial on the advice of counsel must make a full disclosure during discovery; failure to do so constitutes a waiver of the advice-of-counsel defense.") (citations and quotations omitted); United States v. Hatfield, No. 06-CR-0550 (JS), 2010 U.S. Dist. LEXIS 4026, 2010 WL 183522, *13 (E.D.N.Y. Jan. 8, 2010) ("This disclosure should include not only those documents which support [the] defense, but also all documents (including attorney-client and attorney work product documents) that might impeach or undermine such a defense"). 

The parties contest whether the Defendant made full disclosure. Therefore, the Court orders as follows: (1) the Defendant produce all discovery relating to any advice of counsel defense he intends to advance at trial by January 23rd, 2018; and (2) that the parties address whether the Defendant has proffered the factual prerequisites of an advice of counsel Defense at the scheduled status conference on January 19, 2018. n4
   n4 The Government suggests that the Defendant may be precluded from asserting an advice of counsel defense, but does not make the argument forthright. Guided by efficiency and judicial economy, it behooves the Court to address this issue before trial. See United States v. Paul, 110 F.3d 869, 871 (2d Cir. 1997) ("[I]t is appropriate for a court to hold a pretrial evidentiary hearing to determine whether a defense fails as a matter of law").

Third Circuit Rejects Media's Right to Names of Unindicted Co-Conspirators (9/7/16)

As Judge Easterbrook famously lamented in United States v . Reynolds, 919 F.2d 435, 439 (7th Cir. 1990), a tax case, conspiracy charges in criminal cases are “inevitable because prosecutors seem to have conspiracy on their word processors as Count I; rare is the case omitting such a charge.”  That is hyperbole, but not much.  One favorite trick of prosecutors charging conspiracy counts is to allege that there are unindicted co-conspirators who are unnamed.  For example, in the Enron prosecution, the Government asserted that there were up to 114 unindicted co-conspirators not named in the indictment.  See Mary Flood, Names of Some Enron Co-Conspirators Can be Released (Houston Chronicle 12/10/2004), here. Also, in the large scale tax shelter prosecutions in the Southern District of New York beginning in 2005, unindicted co-conspirators were ubiquitous.  The naming of unindicted co-conspirators in large cases with many culpable actors reflects the truism that all of the potential co-conspirators could not be indicted, at least in the early rounds of indictments, if ever.   (Perhaps the naming of some or even legions of unindicted and unnamed co-conspirators adds some appearance of gravitas to the case that it might not otherwise have.)

Why are unindicted co-conspirators not named?  DOJ's policy, here, is:

9-11.130 - Limitation on Naming Persons as Unindicted Co-Conspirators 

In the absence of some significant justification, federal prosecutors generally should not identify unindicted co-conspirators in conspiracy indictments. The practice of naming individuals as unindicted co-conspirators in an indictment charging a criminal conspiracy has been severely criticized in United States v. Briggs, 514 F.2d 794 (5th Cir. 1975). 

Ordinarily, there is no need to name a person as an unindicted co-conspirator in an indictment in order to fulfill any legitimate prosecutorial interest or duty. For purposes of indictment itself, it is sufficient, for example, to allege that the defendant conspired with "another person or persons known." In any indictment where an allegation that the defendant conspired with "another person or persons known" is insufficient, some other generic reference should be used, such as "Employee 1" or "Company 2". The use of non-generic descriptors, like a person's actual initials, is usually an unnecessarily-specific description and should not be used. 

If identification of the person is required, it can be supplied, upon request, in a bill of particulars. See USAM 9-27.760. With respect to the trial, the person's identity and status as a co-conspirator can be established, for evidentiary purposes, through the introduction of proof sufficient to invoke the co-conspirator hearsay exception without subjecting the person to the burden of a formal accusation by a grand jury. 

In the absence of some significant justification, federal prosecutors generally should not identify unindicted co-conspirators in conspiracy indictments. See USAM 9-16.500; 9-27.760.

With that background, the Third Circuit today issued an interesting decision in a case involving media access to the names of unindicted co-conspirators in the so-called Bridgegate scandal involving the prosecution of Chris Christie's cronies appointed to positions at the Port Authority of New York where they could take out political retribution.  North Jersey Media Group Inc. v. United States, ___ F.3d ___ (3d Cir. 2016), here.  As usual, the conspiracy count in the indictment named unindicted co-conspirators.  The prosecutors identified the unindicted co-conspirators to the defense in a letter that was not part of the public record.  The media wanted to know access to the list naming the unindicted co-conspirators.  The media intervened and  moved for disclosure.  One of the unindicted co-conspirators -- identified as "John Doe" -- intervened and objected to disclosure.  The district court ordered disclosure.  John Doe appealed.  The Court of Appeals reversed.

Essentially, the holding is that list of the names of the co-conspirators was disclosed by the prosecutors to the defense as part of the discovery obligations rather than as a bill of particulars that normally would be part of the public record.  Criminal discovery is generally not on the public record.  Hence, there is no right to access to that list at this stage of the case.  Of course, those names may "out" during some later public part of the criminal proceeding, but they are not publicly available at this stage.

The Court framed the issue as follows:

Although the appeal arises out of a matter of high public interest, the issue presented is basic and undramatic. We must decide whether the letter is more akin to a bill of  particulars or to a discovery disclosure in a criminal case. That distinction is dispositive, because the former is subject to a recognized right of public access while the latter has historically been kept from public view. See United States v. Smith, 776 F.2d 1104 (3d Cir. 1985). Because we conclude that the letter in question is a part of the general discovery process, it is not subject to any First Amendment or common law right of public access, and we will vacate the District Court’s order insofar as it requires the letter to be publicly disclosed. 

Then, after analysis, the Court concludes:

III. CONCLUSION 

Public access to judicial documents and court proceedings is a respected tradition and important legal principle, but it has bounds. “[D]iscovery traditionally has been conducted by the parties in private and has not been publically available.” Wecht, 484 F.3d at 208. That is so even in a case affected by heightened public interest. The time may come, perhaps at trial, when the information in the Conspirator Letter ought to be made public, but that time is not here yet. Because neither the First Amendment right of access nor the common law right of access applies to the Conspirator Letter, we will vacate the District Court’s order insofar as it requires disclosure of the Letter.

Court Rules on Pretrial Motions for Venue, Evidence and Other Matters (12/25/15)

In United States v. Barrett, 2015 U.S. Dist. LEXIS 171727 (ED NY 2015), here, the defendant was charged with submitting false claims to the U.S., money laundering, tax perjury at the individual and corporate levels, and aiding and assisting at the corporate level.  The principal locus of the non-tax offenses was the Eastern District of New York (EDNY).  The defendant resided and filed his tax returns from the Southern District of New York (SDNY) and his tax return preparer did his work from SDNY.  The tax omissions related to the income allegedly at the center of the nontax crimes.  Asserting improper venue in EDNY, the defendant initially moved to transfer the tax counts to SDNY, and then moved to dismiss the tax counts.  In this opinion, the Court rejects the venue assertions as, on the facts, premature at this stage and deals with some other issues related to the evidence and bill of particulars.  I will address certain points here.

Prior to moving to the issues, there is an interesting cryptic statement of the nature of the allegations based on an undercover operation with respect to certain drug stores defendant directly or indirectly owned.  The indictment charge the defendant ""submitted and caused the submission of claims for reimbursement to Medicare and Medicaid for drugs purportedly dispensed from [the drug stores] which were in fact never dispensed to Medicare or Medicaid beneficiaries."  A key part of the evidence:

Three undercover patients entered Economy Drug with prescriptions that [4]  also allowed for refills. (Id.; see also Gov't Resp. at 2.) After defendant properly filled and billed the initial subscriptions, the undercover agents did not request or receive refills of their prescriptions. (Indictment P 25.) The government contends that defendant nevertheless billed Medicaid for the additional refills. (Id.)

1.  Venue.

Venue for tax crimes is generally where the defendant resides, signs the return or files the return.  However, 18 USC § 3237(b), here, provides that, where venue

is based solely on a mailing to the Internal Revenue Service, and prosecution is begun in a judicial district other than the judicial district in which the defendant resides, he may upon motion filed in the district in which the prosecution is begun, elect to be tried in the district in which he was residing at the time the alleged offense was committed.

But, the provision further provides that the motion must be filed within 20 days after arraignment.  That was the first problem with the motion.  It was filed five months after arraignment on the initial indictment.

The second problem was that venue was not based solely on mailing to the IRS as expressly required for the provision to apply.

Usefulness of Government ESI Disclosures in Criminal Cases (6/16/12)

Readers might be interested in this guest blog at the White Collar Crime Prof Blog - Rochelle Reback, New Trial Ordered for ESI Discovery Violation - Electronic Evidence Must be Usable (6/6/2012), here.  She provides a succinct summary of the issue with electronically stored information ("ESI") and a recent decision in United States v. Stirling (SD FL No. 11-20792-CR-Altonaga), here.


I have previously discussed some issues related to mass document dumps, including in electronic format.   See, The Mass Document Dump and the Prosecutors' Brady Obligations (2/11/11), here, and Brady and Third Party Records / Databases (8/20/11), here.

Criminal Discovery - A Lighter Blog (1/21/12)

Discovery is a significant part of criminal tax practice and criminal practice in general.  FRCrP 16, here, allows limited discovery, sometimes reciprocal.  In addition, there are certain constitution disclosure requirements, such as Brady, Giglio and Jencks Act.  Brady v. Maryland, 373 U.S. 83 (1963); Giglio v. United States, 405 U.S. 150 (1972); and 18 USC 3500, here.  Some, perhaps most, USAO offices have an open file policy in criminal tax cases -- at least the run of the mill tax cases -- which will disclose everything the Government has in terms of raw data (generally not mental processes related to the investigation and prosecution, but some of that can be reasonable inferred from the data in the files).  Most of the time that works to put the defendant on notice of the Government's case.  And, because of the work performed by the time of indictment, the files will not only put the defendant's counsel on notice, but will paint a sufficiently devastating picture that it will induce a plea in most cases (because most federal tax crimes cases, like most federal crimes cases, result in a plea)..

I don't plan on writing a tome on criminal tax discovery here.  Looking for a lighter nuance on the problem of criminal discovery, I refer to that famous legal movie, My Cousin Vinny (see Wikipedia here), dealing with informal discovery in a state criminal case -- the murder at the Sac O' Suds.  The prosecutor -- Jim Trotter III -- in a small Alabama town had invited his adversary, the defense counsel, the inimitable Vincent Laguardia Gambini, to a hunting jaunt to take his mind off the defense.  Vinny took him up on the offer, hoping to get some informal discovery by schmoozing with the prosecutor.  So here is the dialog with some digression by Mona Lisa Vito:

Grand Juries Are Not for Trial Preparation After Indictment

The Government properly uses grand juries to investigate and prepare cases for trial. But, what happens if the Government to continue using the indicting grand jury same or even some other grand jury (new or continuing) to tie up the loose ends in the indicted case? Most of us understand instinctively that that is a problem because it circumvents the discovery rules allowed in criminal cases.

This is, of course, not usually even a significant risk in most tax crimes cases. But, in the larger cases it could be an issue.

Reminder on Reciprocal Discovery Rule

In United States v. Hardy, ___ F.3d ___ (6th Cir. 2009), the defendant was convicted of twelve counts of bank fraud and five counts of evasion arising out of an embezzlement from her employer. On appeal, the defendant asserted that the court had improperly denied her the right to use evidence in her defense. The circumstances were that the defendant had the evidence but delayed providing it to the Government under the reciprocal discovery rule in FRCrP 16 which gives the district court some discretion in fashioning the remedy for violation of that rule.

The trial judge imposed the most severe trial sanction -- exclusion of the evidence -- because defense counsel had no adequate explanation for the delay in disclosing. The court of appeals, as had the trial judge, made some stern statements -- e.g., "Defendant and her counsel had access to the copies of the check stubs at least one week prior to trial, but wilfully and purposefully chose not to disclose those documents to the government, in clear violation of Fed. R. Crim. P. 16(c)." The court rejected defendant's argument that, until it had a trial subpoena return for the originals, it did not know that it was going to introduce the copies into evidence and therefore had no obligation to turn over the documents. The court responded:

Disclosure under Rule 16 does not depend on the admissibility of the evidence at trial, particularly because decisions on admissibility of evidence are entirely within the province of the court, not the parties, so the parties would not be able to accurately determine prior to trial whether certain evidence would be admissible without a ruling from the court. If the defendant has control over a document, as Defendant did in this case, and plans to use that document in the defendant's case-in-chief, as Defendant attempted to do in this case, and the defendant has already received discovery from the government, then the defendant is required to disclose the document to the government as soon as the defendant learns of it, subject only to the narrow exceptions in Rule 16, none of which is applicable here. Fed. R. Crim. P. 16. Defendant clearly chose not to comply with Rule 16, and thus suffered the consequences provided for in the Rule.

The Court also had some interesting statements which, taken out of the whole context, might be troublesome. For example, quoting an earlier case, the Court said [a]lthough the right of a defendant to present exculpatory evidence is fundamental, it is not absolute." The Court did go through some interests of justice qualification, but the statement itself is a tough one.

The Court ended its discussion with its assessment that the defendant would have been found guilty anyway (the old harmless error dodge). "The government's case against Defendant was overwhelming and at trial Defendant admitted all of the elements of each offense." Even if that were true, I don't know that it justifies making about what the jury would have done had it had all the evidence relevant to a defense.

There may be two casualties in this case -- the client in the case in chief who was convicted if the evidence might have led to acquittal and the lawyer in the aftermath of the case unless the lawyer can prove that the client participated in the decision to violate the reciprocal discovery rule.