Recently in the Plea Bargaining category:
The NYSACDL is holding its Fall Federal Criminal Practice Seminar tomorrow at the Southern District courthouse from 2:00 to 5:00 p.m. With presentations on proffers, restitution and forfeiture, and innovative approaches to sentencing (not to mention 3 CLE credits), it promises to be an afternoon well-spent. More information is available here. To tie in with that program, I wrote an article for the NYSACDL's newsletter on the pitfalls of proffers. You can access that here.
Facts
The defendant, Frederic Bourke, was charged with violations of the FCPA for allegedly making payments to Azeri officials to encourage the privatization of the State Oil Company of the Azerbaijan Republic and to permit him and others to participate in that privatization. He moved in limine to preclude the government from introducing at trial evidence of corruption in Azerbaijan to prove his knowledge of the bribes at issue. Under the FCPA, knowledge of a circumstance may be established by evidence that “a person is aware of a high probability of the existence of such circumstance, unless the person actually believes that such circumstance does not exist.” The evidence the government sought to introduce included “that Azerbaijan was known to be a corrupt nation, that the post-Communist privatization processes in other countries have been tainted by corrupt practices, that SOCAR was a strategic asset of Azerbaijan, and that Kozeny [Bourke’s co-defendant] was notorious as the ‘Pirate of Prague.’”
Conscious Avoidance and the FCPA
Agreeing with the defendant that the government may not introduce background evidence of corruption to show that he “should have known” that Azeri officials were being bribed, Judge Scheindlin held that here, however, the purpose of the evidence was to show that “a person of Bourke’s means, who was considering making a large investment in a venture in Azerbaijan, would have at least been aware of the high probability that bribes were being paid.” As such, it was relevant and admissible.
Defendant and Attorney Proffers
Critically, the court found no prejudice because the government would be able to establish the necessary factual basis for a conscious avoidance instruction. In fact, the government’s factual basis rested on the defendant’s own admissions in proffers to the government. Upon learning that he was the subject of a government investigation, Mr. Bourke appeared for a proffer session with the prosecutor, and admitted that he had been “warned by his counsel that Azerbaijan was the ‘Wild West’ and that doing business in Azerbaijan was like the movie ‘Chinatown,’ where there are ‘no rules.’” For good measure, one of his lawyers had turned over a recording of a conversation between Bourke, another investor and their attorneys in which Bourke revealed his knowledge of the dark side of business in Central Asia, e.g. “Do you think business is done at arm’s length in this part of the world?” (There are some intriguing waiver issues here, but the decision doesn’t explore them, only to note that everyone appeared to agree that the defendant had waiver his attorney-client privilege in his proffer.)
Imputing Others’ Knowledge to Defendant
Finally, the decision addresses another unusual and important issue: the circumstances under which the government may introduce and impute to the defendant evidence of a third party’s knowledge. Here, this knowledge could be imputed to Bourke based on his travels in a private jet with Viktor Kozeny (the alleged mastermind behind the SOCAR investment)and Bourke’s friendliness with Kozeny's “inner circle.” “Based on these [close business] relationships the jury has a fair basis to infer that the knowledge of these individuals can be imputed to Bourke.”
Comment
Much ink will be spilled on the conscious avoidance doctrine in an FCPA prosecution. But a lesson we can all (re)learn from this case is that proffers to the government in criminal cases can have a huge downside and should not be entered into lightly. There may have been compelling strategic reasons for Bourke's proffer in this case, but it always astonishes me how often and easily lawyers will escort the clients in for meetings with the prosecutors, instead of proceeding by attorney proffer or asserting the right to remain silent. As a wily criminal defense lawyer once said to me, “nothing is often the perfect thing to say and an excellent thing to do.”
Lawyers: Harold Haddon and Saskia Jordan, Haddon Morgan Mueller Jordan Mackey & Foreman P.C., John Cline and K.C. Maxwell, Jones Day LLP, Dan Webb, James Reich, Jr. and Christopher Paolella, Winston & Strawn LLP (defendant); AUSA Harry Chernoff
Acknowledging that “[a] consensus has developed that the federal cocaine sentencing laws should be reassessed,” the Department of Justice has announced plans to establish a working group to formulate a complete elimination of the crack-cocaine disparity in the sentencing laws. This disparity is “difficult to justify based on the facts and science, including evidence that crack is not an inherently more addictive substance than powder cocaine,” Lanny A. Breuer, the new Chief of DOJ’s Criminal Division, explains in his prepared remarks to Congress. He elaborates:
[W]e think that the best way to address drug-related violence is to ensure the most severe sentences are meted out to those who commit violent offenses. However, increased penalties for this conduct should generally be imposed on a case-by-case basis, not on a class of offenders, the majority of whom do not use any violence or possess a weapon.
For the time being, nothing will change: “Until a comprehensive solution – one that embodies new quantity thresholds and perhaps new sentencing enhancements – can be developed and enacted as legislation by Congress and as amended guidelines by the Sentencing Commission, federal prosecutors will adhere to existing law.” Recognizing, however, “federal courts have the authority to sentence outside the guidelines in crack cases or even to create their own quantity ratio,” federal prosecutors “will inform courts that they should act within their discretion to fashion a sentence that is consistent with the objectives of 18 U.S.C. § 3553(a) and . . . will bring the relevant case-specific facts to the courts’ attention.”
So, in the meantime, what can practitioners do? Well, for one thing, try to get plea agreements based on a 1:1 ratio. DOJ’s new policy involves achieving crack-cocaine parity with regard to both mandatory minimums and the guidelines. While the Department has not yet formally implemented any changes, its plans to try to eliminate the disparity support a less hard-line approach in plea-bargaining crack cases, especially cases involving non-violent offenders. And of course, DOJ’s commitment to an elimination of any disparity, coupled with its acknowledgement of a sentencing court’s powers to develop whatever ratio it chooses, are additional ammunition in the arsenal of reasons why a sentencing court should not wait for Congress to act, but should utilize a 1:1 crack-cocaine ratio right now.
In an interesting decision from Judge Larimer in the Western District of New York, United States v. Nix, 07 CR 60221 (DGL), 2008 WL 4757301 (W.D.N.Y. October 28, 2008), he rejected the government's effort to limit his power to depart below both mandatory minimum sentences called for by the defendant's two counts of conviction. The government had purported to move for a substantial assistance departure under Count One, and not Count Two (which charged a violation of 924(c) and carried a mandatory consecutive five year sentence).
Citing the defendant's "extensive and extraordinary" cooperation, the court sentenced Nix to consecutive sentences of 24 months on each count, for a total of 48 months.
Interpreting the government's departure motion as applying to both counts, the court found the plea agreement to be ambiguous so that Nix could not anticipate that his cooperation would only be rewarded with a downward departure motion as to one count only. (The language of the plea agreement is not quoted in the decision.) He points out: "The Plea Agreement is, of course, a contractual obligation and the Government is obligated to comply with the terms of that contract. Since the Government is the principal author of the document and has virtually complete control over its content, any confusion or ambiguity must be held against it."
Lawyers: Donald Thompson and Lawrence Kasperek for the defendant; AUSA Robert Marangola
The government’s obligation to disclose Brady material encompasses not only oral, unrecorded statements of a cooperating witness that are favorable to the accused, as held in Rodriguez, previously discussed here, but also exculpatory statements communicated to the government by the witness’s lawyer, the Second Circuit held in United States v. Triumph Capital Group, Inc., 2008 WL 4349318 (2d Cir. September 25, 2008).
Brady Material Includes Notes of Witness’s Attorney’s Proffer
In Triumph, the defendant had been convicted after trial of racketeering, bribery, fraud and obstruction of justice, arising out a scheme to bribe the Deputy Treasurer of the State of Connecticut. The bribee was the key cooperating witness at trial, but after the trial, he cooperated with the defense, and, no doubt to the dismay of the prosecutors, provided copies of notes he had made that had been communicated to the government in an attorney proffer as part of his initial plea negotiations. These notes differed from his trial testimony in key respects. While the government never had custody of the witness’s actual notes, it did have in its possession the notes an agent took of the attorney proffer. It withheld these from the defense, however, until the defense made its motion for a new trial arguing suppression of exculpatory evidence. The district court denied the motion, finding that the notes were not materially different from the witness’s trial testimony.
The Second Circuit disagreed. In a decision authored by EDNY Judge Gleeson sitting by designation, the Court carefully analyzed the differences between the notes and the trial testimony, demonstrating that the notes “provided scant if any support for the inference that [the defendant] possessed the requisite intent to bribe or defraud.” Finding the withholding of the agent’s notes of the attorney proffer “inexplicable,” the Court concluded that “the government deprived [the defendant] of exculpatory evidence going to the core of its bribery case against him,” as well as impeachment material that had a “real enough possibility to undermine confidence in the verdict.” Accordingly, the Court reversed the racketeering, bribery and fraud convictions.
Destruction of Documents Likely to Be Subpoenaed by Grand Jury is Obstruction
Also of note in this decision is the Court’s analysis of the evidence supporting the obstruction of justice conviction. The defendant had deleted certain documents from his laptop when he became aware that a grand jury investigation had commenced, albeit documents that were, at the time, not the subject of an outstanding subpoena. On appeal, the defendant argued that there was insufficient evidence to prove that he knew the documents would later be, or were likely later to be, requested by the grand jury, analogizing himself to the defendant in United States v. Aguilar, 515 U.S. 593 (1995), whose obstruction conviction was reversed because he could not be expected to have known that the false statements he made to an F.B.I. agent would be communicated to a grand jury.
This time, the Second Circuit disagreed with the defendant. There was a “crucial distinction” between Aguilar and this case: statements made to investigating agents may not necessarily be communicated to a grand jury, but grand jury subpoenas for documents are necessarily broad and sweeping. Here, the Court concluded that “the inference that the grand jury would issue a subpoena for [the deleted documents] was quite strong, perhaps inescapable.” Moreover, there was evidence of the defendant’s “awareness of the comprehensive nature” of subpoenas typically issued in grand jury investigations, that his company’s lawyers anticipated future subpoenas, and that the defendant had received advice from a former prosecutor that the grand jury would be likely to inspect the data on his laptop. The obstruction conviction was therefore affirmed, although the Court remanded for resentencing, in the event the convictions on the reversed counts had influenced the length of time imposed on that count of conviction.
“Queen for a day” (proffer) agreements – bare your soul to prosecutors in exchange for some limited protections – usually benefit the government more than the defendant. For one thing, in these agreements, the defendant gives up any additional protections he may be entitled to under Fed.R.Evid. 410, which precludes admission at trial of ”statements made in the course of plea discussions with a [prosecutor].”
Not that defendants get much choice about whether to sign the agreement. Most prosecutors will not agree to listen to a proffer without one. But what if a proffer does in fact proceed without any proffer agreement: does the defendant automatically get the benefit of Rule 410? Or should the defense lawyer do something more to invoke the rule’s protections? That is the interesting question presented but not answered in United States v. Galestro, 06-CR-285 (ARR), 2008 WL 2783360 (E.D.N.Y. July 15, 2008), where the defendant, in his lawyer’s presence, spoke without a proffer agreement to prosecutors several days prior to the unveiling of an indictment charging him with death-eligible murder.
The Scope of Fed.R.Evid 410
The Second Circuit has held that statements made by a defendant to prosecutors are not “plea discussions” under Rule 410, unless the defendant, “in some way, express[es] the hope that a concession to reduce the punishment will come to pass.” United States v. Levy, 578 F.2d 896, 901 (2d Cir.1978). The Levy Court expressly left open the question of whether statements made in a less formal “de facto process of plea bargaining” can be “plea discussions” for purposes of Rule 410 protections.
In Galestro, the defense proposed that Levy’s void be filled with a two-tier analysis that focuses on whether at the time of the discussion, the defendant showed a subjective expectation to negotiate a plea, and whether that expectation was reasonable under the circumstances. The government, argued alternatively, that there are no “plea discussions” if the meeting was at the defendant’s behest, he “sought to avoid indictment altogether rather than to plead,” and no plea deal was offered or ever made.
Invoking Rule 410 Protection
In the end, the Galestro court did not have to decide the issue, because here, it was undisputed that Galestro’s attorney announced at the beginning of the proffer meeting that he considered it to be “in furtherance of settlement negotiations, pursuant to Fed.R.Evid. 410 and Fed.R.Crim.P. 11,” and the prosecutors present said nothing in response. As the court concluded: “permitting the government to frustrate a defendant’s reasonable, explicit understanding of the nature of a discussion by simply remaining silent would not only be inconsistent with the rationale in Levy, but would undermine the very rationale of Rule 410 – to ‘promote plea negotiations by permitting defendants to talk with prosecutors without sacrificing their ability to defend themselves if no disposition agreement is reached’” (citation omitted).
Comment
Here, Galestro's lawyer's prescient statement at the beginning of the proffer meeting saved the day. Without it, the government might have prevailed on the argument that this wasn’t a plea negotiation at all - it was a (misleading) innocence proffer, in which the defendant wasn't seeking to reduce his punishment, he was seeking to eliminate it. Which begs another interesting question: whether innocence proffers are exempt from Rule 410 protection, since their goal is not a plea bargain but a dismissal.
Innocence proffers, however, as the Second Circuit has pointed out elsewhere, are often preludes to plea negotiations. In other words, they are part of the de facto process of plea bargaining, which runs the gamut of mindsets from denial to acceptance. It makes no sense, and surely undermines the rationale of Rule 410, to carve out of the plea bargaining process (also known as the coming-to-terms process) any discussions where the defendant professes innocence. Moreover, the government, with its oft-described “awesome advantages in bargaining power,” knows full well how to obtain a waiver of Rule 410 protections prior to an innocence proffer, and it should not be rewarded for its failure to do so.
Adding to a spate of recent decisions yielding divergent views of the propriety of the government’s conduct in plea bargaining and sentencing (see here, here and here), United States v. Wyatt, 06-cr-782 (DLI), 2008 WL 2433613 9E.D.N.Y. June 12, 2008), should serve as a warning to prosecutors, and a reminder to the Second Circuit that the government’s good faith in the plea bargaining process and at sentencing is not a given.
Facts
In Wyatt, the defendant pled guilty to being a felon in possession of a weapon, with a standard EDNY plea agreement, that estimated his guideline level at 31 to 41 months, and promised that “based on the information known to [it],” the government will not argue for a specific sentence, whether within or above the guideline range determined by the court. In the presentence report, the defendant’s guideline range was calculated at 63-78 months, enhanced by virtue of a youthful offender conviction, unknown to the government and defense counsel at the time of the plea.
In response to the defendant’s mitigation claim that he had been victimized, the government filed a sentencing memorandum highlighting Wyatt's criminal history, and also gratuitously advising the court that in a racketeering trial of the notoriously violent “Folk Nation” street gang, a cooperating witness testified that the defendant had supplied the weapon to commit a murder. The government even helpfully appended a copy of the relevant transcript. There was no dispute that this information was in the government's possession at the time of the plea. Probation promptly revised its report, cross-referencing with the murder guidelines, and calculated the defendant’s guideline at 120 months, which but for the statutory cap on the offense of conviction, would have been 360 months to life.
At a sentencing conference, when the court queried why the government had provided the Folk Nation information, the prosecutor cited his “obligation to bring to the court all of the information that was known to it about this defendant” and so that the court could consider it under 18 U.S.C. §3553(a) and “for whatever other purpose or effect it might have.” The prosecutor emphasized that he was not advocating for anything above the 78-month high-end of the applicable guideline range.
Holding
The court first held that she would not consider the Folk Nation information because it was unreliable. The transcript provided by the government did not clearly identify the Wyatt as the source of the murder weapon, much less, that he provided it with knowledge that it would be used in a murder. Since the government refused to provide additional corroborative evidence, the court disregarded it, citing the defendant’s “due process right to receive a sentence based on accurate and reliable information.”
Next, she addressed the “potentially prejudicial conduct by the government” in disclosing the unsolicited Folk Nation information. Noting that the government may breach a plea agreement by simply making comments that amount to an argument for an upward departure, she concluded that the disclosure here “altered the parties’ original understanding of their plea agreement.” She explains: “The government knew or should have known that disclosing this information at sentencing could raise the defendant’s sentence.” Moreover, this conduct “is not fully shielded by [the government’s] obligation to inform the court of information relevant to sentencing” because, here, the government “crossed the line from informing the court to improper advocacy” when it advocated the use of the Folk Nation information as part of the court’s §3553(a) consideration, or for any particular sentence within the applicable guideline range, in particular, a sentence at the high end of 78 months.
However, in light of the fact that the defendant did not seek to withdraw his plea, and since the court had disregarded the objectionable information as unreliable, the breach did not require any remedy. The court would adopt the guideline range of 63-78 months, but advised the parties that she might still impose a sentence above that range based on factors other than the Folk Nation information.
Comment
To her credit, Judge Irizarry recognized that the Folk Nation information was both unreliable and provided in breach of the plea agreement, and has therefore resolved not to consider it in imposing sentence. The problem is that the genie is now out of the bottle. It may implicitly inform the sentence ultimately imposed, and even if it doesn’t, it may be perceived to have influenced that decision. In fact, were this before the Circuit, the case would be reassigned to a new sentencing judge (which is what it does in every case where it finds that the government breached the plea agreement).
The case is a stark reminder to defense lawyers that negotiating a favorable plea agreement is only one aspect of the plea-bargaining process. Defense counsel would be well advised to try to obtain advance assurances about the scope of the information the government will provide to the sentencing court regarding the defendant’s conduct, whether directly or by using the Probation Department as a surrogate. In particular, in some cases it may be appropriate to preview one’s sentencing arguments with the prosecutor, and determine in advance which arguments will trigger the revelation of additional damaging information to the court.
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