Monday, February 14, 2011

My Kingdom for a Home

Ok, it's not quite Shakespeare but the SDFLA criminal trial of former Lancer hedge fund impresario, Michael Lauer, is inching closer to DDay and love is most definitely NOT in the air. They're up to docket entry #917, which is worth the read, and Judge Jordan (who seems to get more than his fair share of big paper cases) is umpiring. It's been a rough go for Lauer who had his assets frozen in a 2003 SEC enforcement action and his Greenwich home auctioned off by the IRS. The asset freeze also cost him go-to lawyer, Norman Moscowitz (always on my speed-dial), but luckily for Lauer the Court qualified him as indigent and appointed an FPD team ably led by Chief Assistant Michael Caruso.

Lauer, now living in NYC, is trying to get the government to pay for his housing during the expected two-to-three month trial in Miami slated to begin at the end of the month or else transfer venue to SDNY. As part of his down-and-out pitch, Lauer pointed to the total asset freeze and ongoing eviction proceedings against him for failure to pay for his NYC apartment rental. Which got the government digging into gumshoe landlord-tenant terrain. In its papers, the government paints Lauer as a closet John Le Carre fan who obtained the said apartment by posing as one "Misha" or "Michal Lauer" with an identity card from, of all places, "the Republic of Poland." The pleading also contains this deadpan scholarly footnote from AUSA Harry Schimkat who gets in the Valentine's mood: According to one internet dictionary, 'Misha' is a Russian nickname for Mikhail. It also means little bear or teddy bear. If the government can prove this up, Lauer may be feeling like this when all is said and done.

But beyond the bear humor, there are real issues raised with pre-trial asset freezes. It's been more than 20 years since a 5-4 Supreme Court found, in a drug trafficking case, that depriving a criminal defendant of his ability to pay for a private attorney through an asset freeze does not violate the 6th Amendment. The majority's reasoning was that "a robbery suspect, for example, has no Sixth Amendment right to use funds he has stolen from a bank to retain an attorney to defend him if he is apprehended. The money, though in his possession, is not rightfully his." Of course, the argument presupposes guilt, prior to adjudication, and is a particularly awkward fit in many white collar cases where a defendant earns income from a legitimate financial sector job but stands accused of some type of workplace fraud. In the civil context, a defendant is not even entitled to appointed counsel leaving some once-wealthy defendants to have to go pro se against the SEC and federal regulators. And though in today's climate there is little public sympathy for those accused of financial fraud, the truth is these complex heavy-document cases require hefty resources to adequately defend. To have the Lauers of the world swallow up large amounts of taxpayer-financed indigent defense resources has never made much sense to me. Here's hoping the Supremes revisit this case law in the white collar context soon.

And then there's the added question of trial detention. To detain a defendant, who has complied with bond conditions and has been found to not be a flight risk, during a lengthy out-of-state trial because he cannot afford a hotel, seems unfairly punitive. Well, there's certainly plenty of local foreclosure vacancy. Maybe Judge Jordan will get creative.

Stay tuned . . .


Rumpole said...

Welcome. Good post.

Anonymous said...

The guy is from Eastern Europe. His name is Michael. He obtained his apartment using the name "Misha." That is diabolical.