Vol. 6, No. 14 As Published in the Advance Sheets on April 5, 1999
Highlights of this Issue:
U.S.S.G. and Sentencing Issues:
United States v. Scheer, 168 F.3d 445 (11th Cir. 1999) (Judge Birch)
This is not your average case of outrageous prosecutorial misconduct. It has at least four features that make it stand out as a significant case in American jurisprudence. First, A.U.S.A. Lothar Genge clearly exhibited a brand of insolence that - even for prosecutors - is astonishing. Second, the case proves beyond doubt the absolute impotence of the Justice Department's infamous Office of Professional Responsibility (OPR). Third, the case may well represent the high-water mark of, and the turning point for, an agency that has, for far too long, treated with contempt Justice Sutherland's admonition that in a criminal case it is not that the Government shall win but that "justice shall be done." (See the Quote of the Week, below). Finally, the Eleventh Circuit's courageous ruling casts an important - if oft-forgotten - light on the power of the courts to deal with abuses that undermine our confidence in the outcome of trials.
This case involved a prosecutor's dream - the continuation of a never-ending, take-no-prisoners, career- making prosecution. This case really began in the mid-1980's with the demise of the Sunrise Savings and Loan Association (Sunrise) in South Florida. The failure of that bank led to several prosecutions. The first prosecution, reported at U.S. v. Jacoby, 955 F.2d 1527 (11th Cir. 1992), involved Jacoby, who had served as the President of Sunrise, and several other bank officers. Jacoby was convicted and sentenced to five years for numerous bank fraud crimes. After he was convicted, he began to cooperate with the Government, in exchange for which he received a substantial reduction in his sentence and a grant of immunity from future prosecution.
With the assistance of Jacoby, the Government next proceeded against three partners and one associate at the Philadelphia based law firm of Blank, Rome, Comiskey & McCauley (Blank Rome), one of whom (Michael Foxman) had founded Sunrise and had served for a time as its Chairman. Before trial, District Judge Hoeveler dismissed the single count against Foxman on the grounds that he had been prejudiced by a ten-year delay between the period that he ceased to have any connection with Sunrise and the date of his indictment. That decision was affirmed by the Eleventh Circuit in a decision reported at U.S. v. Foxman, 87 F.3d 1220 (11th Cir. 1996). A.U.S.A. Genge proceeded against the other lawyer defendants. However, one of them had his case severed for medical reasons. That left Kenneth Treadwell, another partner, and Dana Scheer, an associate, at Blank Rome, who were charged with some thirteen counts of bank fraud and related crimes.
Early on, Treadwell had been granted full immunity in the hopes that he would implicate other lawyers at Blank Rome. When Treadwell failed to give Genge the information he wanted, Genge, true to form, revoked Treadwell's immunity agreement and reinstated his indictment. At the conclusion of the ensuing four-month trial, Judge Hoeveler found that Genge had nullified Treadwell's immunity agreement in bad faith and had breached the terms of that agreement. Thus, he reinstated Treadwell's immunity and dismissed the indictment against him. (Id., at 458, n. 14).
Genge was left in an embarrassing and awkward position in his case against the remaining defendants, Treadwell and Scheer. His principal witness, Jacoby, was "a witness whose credibility was central to the prosecutorial effort here" - but Genge had already called Jacoby a "brazen perjuror" when Jacoby was sentenced. (Id., at 456). Moreover, Jacoby was still on probation at the time of the trial in the instant case - a factor that became critical to this case, as will be seen.
Undaunted and unbowed, Genge proceeded with a vengeance against Treadwell and Scheer. A lengthy and highly acrimonious trial ensued; and the defendants were convicted on some - but not all - of the counts - despite the Eleventh Circuit's evaluation that the evidence "was neither uniform nor overwhelming in showing that Scheer knowingly misapplied funds." (Id., at 455).
After fifteen years of fighting, Scheer was sentenced to a term of probation; and, as noted above, Treadwell's indictment was dismissed. It is also worth noting that, immediately following the trial, Treadwell's counsel asked the OPR to investigate the allegations of prosecutorial misconduct. Typically, that investigation was quickly shot down. As the Eleventh Circuit curtly observed: "The Justice Department declined to press criminal charges against the prosecutor." (Id., at 451). [We have learned that Scheer's counsel recently won a Freedom of Information Act suit against the Justice Department to disclose the basis for its refusal to press criminal charges; and we will watch that case carefully. In the meantime, we merely ask our frequently repeated question: Are there any circumstances under which the "whitewash-everything" OPR will take action against any prosecutor?]
That bring us to the instant decision. Scheer's counsel filed a motion for a new trial, raising numerous issues concerning the fairness of the trial, several of which related to alleged prosecutorial misconduct. In his post- trial order, Judge Hoeveler set aside the conspiracy convictions, after finding a variance in the indictment and the proof adduced at trial that substantially prejudiced the defendant. (Id., at 448). He also remarked upon "multiple instances of prosecutorial overzealousness and excess" and warned "we must never, however, sanction the excesses which result [from] unchecked enthusiasm - excesses which lead to justifications of the type presented [by the prosecution] here." (Id.). However, Judge Hoeveler refused to grant a new trial, concluding that even if the Government had committed misconduct by, inter alia, suppressing evidence, the other evidence against Scheer was "sufficiently compelling to convict [him]." (Id., at 452).
The Eleventh Circuit addressed only one of the many instances of prosecutorial misconduct that were alleged. Since it reversed the convictions on that ground alone, it decided that it was unnecessary to examine or even recite the many other examples cited by the defendant and by Judge Hoeveler. The one example it focused on was a lollapalooza. It involved an instance of prosecutorial intimidation of the Government's own key witness - Jacoby. Apparently, prior to trial Genge told Jacoby that if he didn't "come through", the FBI case agent "is going to put the cuffs on you and you are going to be out of there in 45 seconds." (Id., at 449). That threat - to revoke Jacoby's probation if he didn't help convict Scheer and Treadwell - was, of course, never disclosed to defense counsel.
The Eleventh Circuit concluded that the threat had "actually occurred"; and it pointedly noted that Genge had refused to testify at the evidentiary hearing, but that the "government has never argued that the incident did not occur." (Id., at 451). Clearly, Jacoby understood the import of the threat. During the evidentiary hearing that ensued, he acknowledged that he had "embellished" his testimony to "help" the prosecutors obtain a conviction in this case. (Id., at 449). The Eleventh Circuit likewise concluded that the clear import of what Genge had "intimated" to Jacoby was that any "failure to testify in a cooperative' fashion might result in his return to prison." (Id., at 458).
The important legal significance of this case is that the Eleventh Circuit concluded that Judge Hoeveler had used the wrong legal standard in assessing both the "materiality" of the prosecutorial misconduct at issue and the "reasonable probability" of a different outcome. In short, while some instances of prosecutorial misconduct may be resolved on the basis of a harmless error "sufficiency of evidence" analysis, that is not the case when the error charged relates to the suppression of impeachment and exculpatory evidence. Citing both Kyles v. Whitley, 514 U.S. 419 (1995) and Hays v. Alabama, 85 F.3d 1492 (11th Cir. 1996), the Court held that "a showing of materiality does not require demonstration by a preponderance that disclosure of the suppressed evidence would have resulted ultimately in the defendant's acquittal" and that "undisclosed evidence can require a new trial even if it is more likely than not that a jury seeing the new evidence would still convict." (Id., at 452).
Applying those rules to this case, the Court concluded that "Scheer need not prove that Jacoby in fact changed his testimony [as a result of the threat]. Scheer is also not required to show that, had the government not suppressed this evidence, other evidence in the case standing alone would have been insufficient to convict. The relevant inquiry, rather, is whether the suppression of this information undermines our confidence in this trial. . . . Although an evaluation of whether there is a reasonable probability of a different result may necessitate an examination of the other evidence presented at trial, the Supreme Court expressly has disavowed a simple sufficiency of the evidence' test in the Brady/Bagley context [Brady v. Maryland, 373 U.S. 83 (1963) and U.S. v. Bagley, 473 U.S. 667 (1985)]." (Id., at 452) (Emphasis in original.)
In the end the Eleventh Circuit ruled: "[W]e are convinced that Scheer's knowledge of the incident . . . was material information that might have substantially undermined the critical value of Jacoby's testimony. As a result, the government's failure to communicate this information to Scheer effectively undermines our confidence in the integrity of the verdict. Had Scheer been able to use knowledge of this incident to impeach the credibility of this critically important witness, whose credibility had already been called into question by the Government, there is a reasonable probability that the outcome of the proceeding would have been different." (Id.)
Thus, some 15 years after the events in question occurred, Scheer's convictions were reversed and the case was remanded for a new trial. The unscathed Lothar Genge has resigned from the U.S. Atorney's Office. He is now a criminal defense attorney in Fort Lauderdale, Florida, resting on his statement that his threat was intended as a "joke." But his legacy lives on; and, in that connection, we are please to advise our subscribers that defense counsel is forwarding to us some of the briefs filed in this important case. Within the next two weeks those briefs will be posted on the Briefs and Motions section of our legal research center on the Internet.
United States v. Holland, 34 F.Supp.2d 346 (E.D.Va. 1999) (Judge Morgan)
In theory, this case is about the recently enacted Hyde Amendment, a statute that allows criminal defendants to recover attorneys' fees in cases where the court finds that the prosecutor acted vexatiously, frivolously or in bad faith. That statute, which is presently found at 18 U.S.C. § 3006A, Note, was discussed at some length in our review of U.S. v. Gardner, 23 F.Supp.2d 1283 (N.D.Okla. 1998), (see P&J12/28/98). While this decision does contain a meaningful review of the Hyde Amendment, it really is another example of some astonishing prosecutorial misconduct.
The case began in 1991 when Richard Holland, Jr., an officer of the Farmers Bank of Windsor (the bank), wrote a letter to the thin-skinned Regional Director of the FDIC in which he was "strident in his criticism of the FDIC in general and [the Regional Director] in particular." (Id., at 348). That criticism turned out to be a big mistake - because the Regional Director took that matter personally and, in typical power-crazed governmental style, he used the power of his office to commence a campaign of harassment and persecution against Holland and his father, who happened to be a Virginia State Senator. As Judge Morgan explained: "On December 7, 1991, one month to the day after the Holland, Jr. letter, a team of FDIC investigators . . . appeared at the bank and began an investigation, the aftermath of which lasted until April 16, 1998." (Id., at 348).
The details of that investigation are lengthy and convoluted; and they resulted, ultimately, in the return of a 31 count indictment, involving 57 separate criminal charges, against the Hollands. On April 30, 1998, Judge Morgan granted the defendants' Motion for a Judgment of Acquittal as to each count; and his lengthy opinion on the facts of this case is interspersed with comments showing why he concluded the case was "vexatious" - the critical buzzword for purposes of the Hyde Amendment. "Neither the FDIC nor the U.S. Attorney's investigation uncovered any evidence that the Hollands personally benefitted or sought to benefit" from the activities charged; and "[n]either the FDIC's nor the Prosecution's investigation uncovered any evidence of concealment on the part of the Hollands." (Id., at 349).
His conclusion was certainly bolstered by various candid admissions of some of the many players who were involved in this case. One chap, the regional attorney for the FDIC, observed that "Realistically, the U.S. Attorney's office will not prosecute this kind of case energetically unless they are attracted by some non-legal consideration, such as the prominence of the respondents." (Id., at 350). Later, the same attorney testified that he "found another way to skin these cats" by using the criminal law as the basis for seeking civil monetary penalties and restitution from the Hollands. (Id., at 350). Even the Regional Director who started the whole charade concluded, in a memorandum that he wrote, that due to "the identification of a Virginia State Senator as a primary suspect in the alleged criminal activity, it is probable that the referral will receive an active and timely review for possible prosecution." (Id.).
Judge Morgan's criticisms were not limited to the FDIC. He forcefully attacked the U.S. Attorney's Office for its puppet-like support of the FDIC Regional Director's personal vendetta. "The Prosecution expanded seven questioned loans and the bank's response to the FDIC's questions into fifty-seven criminal charges . . . . The duplications in and excessiveness of the indictment violate the Department of Justice's own guidelines." (Id, at 367). Finding that the prosecutors relied upon evidence "which it knew the FDIC deemed insufficient to pursue civil monetary penalties" and that the prosecutors "obviously had insufficient evidence upon which to find or infer specific criminal intent which is an element of each count" (id., at 365), he concluded that the prosecutors had simply "followed the in terrorem' policy of the FDIC when it obtained an indictment containing thirty-one counts." (Id., at 367).
When the counts were finally dismissed, the Hollands sought legal fees and expenses against the Government under the provision of the Hyde Amendment. Concluding that "the enormous power invested in prosecutors and government agencies may not go entirely unchecked" (id., at 360, n. 24), and that "the totality of the FDIC conduct which led to its criminal referrals was vexatious", Judge Morgan granted their motion to the tune of a whopping $570,668 - two-thirds of which he assessed against the Department of Justice and one-third of which he assessed against the FDIC. Judge Morgan's decision is a veritable guide to actions under, and the elements of, the Hyde Amendment, which could become a potent weapon in helping to control prosecutorial excesses and abuses.
Bass v. Perrin, Docket No. 96-3428 (11th Cir. 4/1/99) (Judge Tjoflat)
The great Russian novelist Fydor Mikhailovich Dostoyevsky once wrote "the degree of civilization in a society is revealed by entering its prisons." F. Dostoyevsky, The House of the Dead 76 (C. Garnett trans., 1957). Apropos that comment, the Eleventh Circuit held in this case that, while unrelieved solitary confinement does inflict "pain", the keeping of two prisoners in solitary confinement for years with no opportunity for outdoor exercise does not constitute cruel and unusual punishment under the Eighth Amendment, because the infliction of such pain was not "totally without penological justification."
QUOTE OF THE WEEK - Getting convictions by striking "foul blows."
"The United States Attorney is the representative not of an ordinary party to a controversy, but of a sovereignty whose obligation to govern impartially is as compelling as its obligation to govern at all; and whose interest, therefore, in a criminal prosecution is not that it shall win a case, but that justice shall be done. As such, he is in a peculiar and very definite sense the servant of the law, the twofold aim of which is that guilt shall not escape or innocence suffer. He may prosecute with earnestness and vigor - indeed, he should do so. But, while he may strike hard blows, he is not at liberty to strike foul ones. It is as much his duty to refrain from improper methods calculated to produce a wrongful conviction as it is to use every legitimate means to bring about a just one." Justice Sutherland in Berger v. United States, 295 U.S. 78, 88 (1934).
Scorecard of published criminal cases reviewed by our staff this year:
Cases in the Federal Reporter:
This week: 28 Year to
Cases in the Federal Supplement: This week: 13 Year to date: 325
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