CLEMENS ACQUITTED ON ALL COUNTS

A federal jury in Washington, DC today found star baseball pitcher Roger Clemens not guilty of all charges in the federal criminal prosecution of him for perjury and related crimes arising from Congressional hearings on the use of performance-enhancing drugs in professional sports.  Clemens was charged with two counts of perjury, one count of obstruction of Congress, and three counts of making false statements in depositions, all stemming from sworn testimony before a Congressional committee in which the seven-time Cy Young Award winner denied having used PEDs during his major league baseball career.  Federal prosecutors asserted that the testimony was false.  After a trial that lasted for nearly nine weeks and involved scores of prosecutors and supporting federal agents, the jury deliberated for just over ten hours before finding Clemens not guilty on all counts.

As reported here previously, in an earlier trial on the same charges a year ago, the judge, Reggie B. Walton, declared a mistrial based on findings of prosecutorial misconduct.  However, Walton refused to dismiss the case completely so as to prevent Clemens from being re-prosecuted for the charges.  Thereafter the Justice Department did choose to prosecute Clemens again, that case culminating in today’s verdict.

The second trial, like the first, was based substantially on the testimony of two key witnesses:  Clemens’s former strength coach, Brian McNamee, who testified that he had injected Clemens with PEDs, and Clemens’s former Yankee teammate, Andy Pettitte, who testified that Clemens had admitted using PEDs to him.  Both witnesses were greatly undermined by Clemens’s lawyers, Rusty Hardin and Michael Attanasio.  Pettitte, who has not said he ever saw Clemens use any PEDs, finally acknowledged in questioning by Attanasio that there was a 50% possibility that he misunderstood even the alleged admission by Clemens.

Even more dramatically, McNamee, the only prosecution witness who claimed to have directly seen Clemens use any PEDs, was subjected to a withering fifteen-hour cross examination over three days by Hardin in the course of which McNamee acknowledged making false statements or at least exaggerations on various earlier occasions, and appeared to be fabricating assertions even during his testimony in this case.  Finally, the defense lawyers produced McNamee’s estranged wife as a witness, who flatly contradicted critical parts of the strength coach’s testimony.

Clemens faced the possibility of thirty years of imprisonment if convicted on all counts.  The duration of the deliberations was very short after such a lengthy trial.  Whatever the verdict on Clemens may be in the (non-criminal) court of public opinion, the quick verdict clearly indicates a complete failure—or defeat—of the Government’s case in the eyes of the jury.

That acquittal comes in the wake of the largely failed federal prosecution of baseball star Barry Bonds for obstruction of justice and three counts of perjury in connection with his testimony before a federal grand jury regarding PED use.  Bonds, who, like Clemens, faced lengthy imprisonment if convicted on all counts, was convicted of only one, the jury deadlocking and failing to reach a verdict on the remainder.  Bonds was sentenced to house arrest and probation.

 Among other defenses, the Clemens legal team placed substantial focus on Congress itself, arguing that with its subject hearings Congress had no real intention of eliminating PED use in professional sports, but instead were merely seeking publicity and political gain for members, so that any misstatements that might have been made would not have been material to any serious Congressional initiatives in any event.

Congressmen Henry Waxman and Tom Davis were the top Democrat and Republican members, respectively, of the Committee that conducted the hearings involving Clemens and then jointly referred Clemens to the Justice Department for prosecution.  After the complete acquittal of Clemens today, both men reportedly insisted on the validity of their committee’s referral of the matter to Justice.  Davis reportedly expressed doubts about the wisdom of the Justice Department in bringing the prosecution that Davis’s committee had referred to it.

FEDERAL CRIMINAL COUNTERFEITING CASE RESOLVED AGAINST WILSON CLIENT

A federal criminal counterfeiting case against a Roger C. Wilson client was resolved recently, with the dismissal of the majority of the charges.  The client was one of several defendants charged in multi-count federal indictments in Atlanta with allegedly producing nearly a million dollars in counterfeit currency.  The Wilson client was charged with three counts, carrying maximum possible punishments of more than twenty years of imprisonment and hundreds of thousands of dollars in fines.  Another defendant charged in connection with the matter tried the case to a jury, was found guilty on all charges, and was sentenced to imprisonment.  In contrast, a resolution of the case with respect to the Wilson client was reached in the course of plea bargaining between Wilson and federal prosecutors.  As a part of that resolution, two of the three counts against the Wilson client were dismissed along with a plea by the Wilson client to the remaining count.  That count too carries a statutory maximum of twenty years’ imprisonment.  However, in sentencing proceedings culminating in a hearing before United States District Judge Charles A. Pannell, Jr., the Wilson client was sentenced to 41 months of imprisonment, with no fine.  This favorable sentencing was obtained in substantial part as a result of negotiations between and joint recommendations to the Court by the defense and prosecutors.

FEDERAL JUDGE REJECTS $285 MILLION SEC/CITIGROUP SETTLEMENT AS TOO LENIENT

A federal Judge has rejected as unduly lenient a $285 million settlement reached between the U.S. Securities and Exchange Commission and Citigroup to resolve civil litigation by the SEC against the financial services giant for various alleged abuses, including some types widely thought to have materially contributed to the financial and real estate market collapses.  Judge Jed S. Rakoff of the U.S. District Court for the Southern District of New York refused to accept the settlement, finding it inadequate in multiple respects, including the amount of the payment to be required of Citigroup and the fact that Citigroup would not be required to acknowledge any wrongdoing. 

The SEC civil suit is based principally on Citigroup’s actions in marketing collateralized debt obligations (CDOs) to its customers as good investments while at the same time selling such instruments short itself (a technique essentially constituting a bet that the investment would drop in price in the future), and after having secretly included in the CDOs a great amount of highly undesirable assets, in order to unload those assets from its own books or accounts.

The proposed settlement is embodied in a consent decree providing for disgorgement of $160 million in profits by Citigroup and payment of $30 million in interest and $95 million in penalties, as well as the adoption by the conglomerate of internal controls designed to hold company officials responsible for signing public statements regarding the worthiness of the investments marketed by the company.

Judge Rakoff wrote in his opinion that in deciding whether to grant the judicial approval that is prerequisite for such consent decrees involving injunctive relief, federal judges are required by US Supreme Court precedent to consider the public in relation to the decree.  “[R]egretfully”, Judge Rakoff wrote, the proposed Citigroup consent judgment “is neither fair, nor reasonable, nor adequate, nor in the public interest."  He noted that, while

[p]urely private parties can settle a case without ever agreeing on the facts . . .when a public agency asks a court to become its partner in enforcement by imposing wide-ranging injunctive remedies on a defendant, enforced by the formidable judicial power of contempt, the court, and the public, need some knowledge of what the underlying facts are: for otherwise, the court becomes a mere handmaiden to a settlement privately negotiated on the basis of unknown facts, while the public is deprived of ever knowing the truth in a matter of obvious public importance.

The judge expressed particular concern about the SEC practice of allowing companies to enter such consent judgments without admitting or denying the underlying allegations, which, he wrote, deprived the court of critical facts by which to assess the activities involved and the relief or punishment to be imposed.

Particularly in this context Judge Rakoff criticized the payment amounts provided in the settlement:

It is harder to discern from the limited information before the Court what the S.E.C. is getting from this settlement other than a quick headline. By the S.E.C.'s own account, Citigroup is a recidivist . . . , and yet, in terms of deterrence, the $95 million civil penalty that the Consent Judgment proposes is pocket change to any entity as large as Citigroup.

Consequently, Rakoff rejected the proposed consent judgment, consolidated the case with a separate, related case against an Citigroup official individually, and “direct[ed] the parties to be ready to try this case on July 16, 2012.”

This is the latest in a series of criticisms or refusals by Judge Rakoff to approve proposed settlements by the SEC with Wall Street corporate alleged wrongdoers.  As another example, in 2009 he refused for months to approve a proposed settlement with Bank of America relating to alleged disclosure deficiencies in connection with its acquisition of Merrill Lynch.  He only approved that settlement early the following year after the penalties against the company were increased from $33 million to $150 million and safeguards were added to inhibit such conduct in the future. He also stoutly criticized a settlement of backdating claims that the SEC reached with Vitesse Semiconductor earlier this year, decrying the same SEC practice of permitting the corporation to avoid admitting any wrongdoing.  He stated, "The disservice to the public inherent in such a practice is palpable."

It is likely that the SEC will appeal Judge Rakoff’s rejection of the Citigroup settlement.  But his reputation seems now established as a firebrand judge determined not to be used by the US Executive Branch as a rubber stamp for consent judgments that he considers to be mere slaps on large, powerful corporate wrists.

PROSECUTOR MISCONDUCT DERAILS ROGER CLEMENS TRIAL

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In a dramatic turn of events the federal judge presiding in the perjury prosecution of star baseball pitcher Roger Clemens declared a mistrial for prosecutorial misconduct early in the government’s presentation of its case in chief against Clemens.  Clemens is being prosecuted for allegedly making false statements in testimony before a Congressional committee investigating the use of performance-enhancing drugs in major league sports.  He faces a maximum of 30 years imprisonment if convicted.  Judge Reggie B. Walton of the United States District Court for the District of Columbia, where Clemens was being tried, issued his mistrial ruling when the prosecution displayed to the jury evidence that the judge had specifically ruled was inadmissible in the trial.   It remains to be seen whether or not Clemens may and will be re-tried.

In his sworn testimony before the Congressional Committee Clemens denied using PEDs.  Federal prosecutors allege that this testimony was false, and they indicted Clemens for perjury and related offenses.  The Government is relying substantially in the case on the testimony of former Clemens friend and teammate, Andy Pettitte, who has alleged that Clemens admitted to him that he had used PEDs, in contradiction of Clemens’s Congressional testimony.  The disputed evidence at trial was an affidavit (a written sworn statement) submitted by Pettitte’s wife in which she stated that Petttite had told her of the alleged admission to him by Clemens.

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Before the trial began the judge had agreed with Clemens’s defense lawyers, Rusty Hardin and Michael Attanasio, that the statement by Pettite’s wife was hearsay and as such was inadmissible in the criminal trial.  Accordingly, the judge had forbidden not only the introduction of that affidavit at trial but also any mention of it to the jury. The judge also had granted earlier defense requests to bar any prosecution reference to other prominent athletes using PEDs, agreeing that such references would threaten to make the jury more likely to convict Clemens, invalidly, from guilt by association.  Yet prosecutors did refer to such other alleged PED users in their opening statement.  That drew a rebuke from Judge Walton, but he allowed the trial to continue after delivering a cautionary, corrective instruction to the jury.

THE FINAL STRAW

However, when the Government violated Walton’s second ruling, regarding the affidavit of  Pettitte’s wife, the judge angrily stopped the proceedings, discussed the matter with counsel outside the presence of the jury, and then declared a mistrial and dismissed the jury, ending this prosecution of the case.  He stated, “I think Mr. Pettitte’s testimony is going to be critical as to whether [Clemens] goes to prison”.  Judge Walton, an appointee of President George W. Bush, complained that "government counsel [should not] do just what government counsel can get away with doing.”  He stated that “a first-year law student” would know not to do what the Government did here, and stated, “we’ll never know what impact that has had on how this jury ultimately decides this case when we’ve got a man’s liberty at interest.  I’m very troubled by this.  I mean, we have expended a lot of government money to reach this point. * * * I don’t see how I can un-ring the bell.”

Walton rebuffed the prosecutors’ request to submit written briefs on the issue:

You’re not going to be able to convince me.  Because if this man got convicted from my perspective, knowing how I sentence, he goes to jail.  And I’m not going to, under the circumstances, when this has happened,, put this man’s liberty in jeopardy.  He’s entitled to a fair trial; in my view he can’t get it now.  And that was caused by the government.

POSSIBLE IMPLICATIONS

Judges often refuse to order a mistrial in such circumstances but instead often provide a cautionary instruction to the jury (e.g. to “ignore” the improperly introduced evidence) and then allow the trial to proceed.  Such cautionary instructions are often criticized based on the perceived improbability that jurors can truly disregard such matter in their deliberations once they have heard or seen it—or, as Judge Walton put it, that they can “un-ring the bell” of the introduction of the evidence.  Walton’s ordering of a mistrial seems clearly to indicate a substantial irritation by him with this the second major misstep of prosecutors at the outset of the trial.  One could also wonder whether it may suggest a skepticism of or dissatisfaction by Walton with the quality of the underlying government's case more broadly.

RETRIAL?

The Government-caused mistrial comes after three years of preparation of the case against Clemens (and at least seven years after the larger investigation began) a process involving scores if not hundreds of Government personnel.  It now leaves the issue of whether Clemens may and will be tried again under the indictment or whether he now may escape ultimate prosecution altogether, e.g., on the basis of the Constitutional doctrine of “double jeopardy”.  That doctrine arises from the Fifth Amendment of the U.S. Constitution, which provides that "[no person shall] be subject for the same offense to be twice put in jeopardy of life or limb".  Walton explicitly wondered about its application in this case and set a hearing on the matter for September.  While it is said that “jeopardy attaches”, to start the application of this doctrine, when the jury is sworn and seated in a criminal jury trial, the application of the doctrine is uncertain where a prosecution ends not in a verdict but in a mistrial.  It is possible, though perhaps not likely, that Judge Walton will conclude that the government actions were intentional and therefore will bar a retrial of Clemens.  It is also possible, though probably even less likely, that the Justice Department will seek to prevent the federal prosecutors from re-trying the case against Clemens.  Probably the most likely result is a retrial.

ROGER C. WILSON represents clients in federal and state criminal and civil trials trials, and in other and federal enforcement matters.  He has represented an individual testifying before Congress in connection with the savings and loan situation, and he has participated in the representation of a foreign government in connection with a Congressional subpoena for sensitive documents provided by that government to the United States Executive Branch in a cooperative law enforcement activity concerning the scandal-ridden Bank of Credit and Commerce International or BCCI.

WILSON PARTICIPATES IN SUCCESSFUL DEFENSE OF FEDERAL SECURITIES FRAUD PROSECUTION

Roger C. Wilson recently participated with lead counsel from the Federal Defender Program, Inc. in the defense of a former Chief Financial Officer in a multi-defendant criminal securities fraud prosecution in federal district court in Atlanta. United States v. Darryl Horton, et al., No. 1:11-cr-00268-TCB-1.  The client, Darryl Horton, of Michigan, former CFO of Conversion Solutions Holdings Corp., a Georgia company, was charged along with the former CEO and the former Chief Operations Officer in a seven-plus-count federal indictment involving alleged securities fraud, wire fraud, and conspiracy.  In addition to those counts against all three defendants, the CEO was charged under the federal Sarbanes-Oxley law with falsely certifying corporate financial statements.  The indictment involved alleged misstatements in corporate financial filings and in corporate press releases regarding the nature and valuation of various firm assets.  The trial lasted two full weeks. Near the end of the trial, the former CEO, Rufus Harris, fled the jurisdiction, leading to a national manhunt for him by federal law enforcement agencies.  At the start of the trial, Harris had chosen to waive his right to counsel, then representing him, and to represent himself in the trial.  After Harris's flight the trial continued to completion in his absence. The federal jury convicted Harris (captured a week later in Utah) of all eight counts charged, and it convicted the former COO on most counts, each of those counts involving possible sentences of 20-years or more imprisonment and very large fines.


However, the former CFO, Mr. Horton, was acquitted on three counts and the jury was hung on the remaining four counts against him, when defense counsel and federal prosecutors resolved the remainder of the case against him.   Substantial testimony and other evidence was presented to the jury that Mr. Horton was at most peripherally and unknowingly involved in the particular events underlying the indictment, in contrast with the other two defendants.  Roger Wilson participated in the defense of Mr. Horton with Jake Waldrop and Thomas Hawker, both attorneys with the Federal Defender Program in Atlanta.


Roger C. Wilson has represented and advised many individuals and companies in connection with governmental investigations and enforcement activity involving alleged or possible violations of federal laws and regulations in the areas of export controls, foreign assets controls, the Foreign Corrupt Practices Act, import regulation and customs laws, and federal banking and mortgage fraud statutes.  In addition to representation of clients in federal and state trials, he has represented such clients before federal agencies, including in resolving possible violations prior to the initiation of government enforcement activity, by voluntary disclosures and similar methods.  He also has advised and assisted companies in designing and implementing corporate compliance programs designed to assist the corporations and their personnel in avoiding possible violations of federal laws in many of these areas.

COLUMBUS LAWYER ACQUITTED OF FEDERAL CRIMINAL CHARGES

In a tremendous defense victory, a Columbus, GA lawyer has been acquitted by a federal jury of money-laundering, bribery, drug conspiracy, and other charges brought against him by federal prosecutors, after a six-day trial and twelve hours of jury deliberations in a Columbus federal court.  The jury acquitted the lawyer, Mark Shelnutt, a Columbus criminal defense lawyer, of all thirty-six charges included in the indictment, which were brought against him by prosecutors in connection with his representation of a defendant in an earlier drug case.  Mr. Shelnutt was represented by Savannah lawyer Tom Withers of the Atlanta and Savannah law firm Gillen, Withers, & Lake. See here for a full description of the case and trial. The acquittal occurred just several weeks after the Eleventh Circuit U.S. Court of Appeals ruled in favor of a defendant lawyer in similar circumstances in the case U.S. v. Velez.