Key count kicked in case against former head of DEA

Magistrate Judge Robin Rosenbaum recommended (in a 43-page order*) that an obstruction count be dismissed against Tom Raffanello, the former DEA chief and then head of security for Allen Stanford. The Herald has the details here:

Two months after one of Miami's most celebrated drug cops was charged in the Allen Stanford financial scandal, a federal magistrate is recommending that one of the key charges be thrown out.
Judge Robin Rosenbaum said prosecutors failed to prove Tom Raffanello -- head of security for Stanford's worldwide enterprise -- interfered with a federal investigation by ordering the destruction of reams of company documents.
The former Drug Enforcement Administration chief, who left the agency to join Stanford's security force in 2004, was charged with ordering the shredding of records just days after federal agents shut down Stanford's empire in a massive fraud case in February.
Though prosecutors said Raffanello defied a court order by destroying the documents, Rosenbaum said the government failed to show he impeded the U.S. Securities and Exchange Commission's probe.
The magistrate fell short of rejecting the entire case, however, saying prosecutors were able to show the former drug cop destroyed records in the course of a federal investigation. Her recommendation will be taken up by presiding Judge William Zloch later this month.

You can always count on Sharpie for a good quote:

Raffanello's attorney, Richard Sharpstein, said he was pleased with Rosenbaum's recommendation.
``We hope Judge Zloch not only agrees with Judge Rosenbaum, but throws out the entire case,'' he said.
Lead prosecutor Paul Pelletier could not be reached on Monday. However, prosecutors have argued in prior hearings that Raffanello and co-defendant Bruce Perraud were aware of a judge's order to preserve all company documents when they called a shredding truck to the company's Fort Lauderdale security bunker on February 25.

UPDATED -- Here's the DBR article by John Pacenti.

*Even though it's not 90 pages, Judge Marcus would still be proud.

Blogs crush main stream media

At least on legal stories, no? Take for example the story of Scott Rothstein and his firm Rothstein, Rosenfeldt and Adler. This weekend a story exploded about Rothstein travelling to Morocco amid allegations of fraud. And the Daily Pulp and the BrowardBeat were all over it. MSM limped in on Monday morning with this story, citing to the blogs as breaking it:

The Daily Pulp, a blog by the Broward Palm Beach New Times, reported over the weekend that money is missing from investors. Rothstein could not be reached for comment on his cellphone or by e-mail Sunday.
***
Browardbeat.com, a political blog, reported that several lawyers had been laid off from the firm.
The blog also reported that the firm plans to go to court Monday to ask that a receiver be appointed.

Those two blogs are definitely worth checking out... They are all over this very interesting story. Rothstein has retained firm lawyer Mark Nurik to represent him, and the firm has hired Kendall Coffee.

Happy Halloween

So, Judge Cooke sentenced a cooperting UBS guy to probation the other day, and today Judge Cohn sentenced a similarly situated co-defendant to 3 months in prison. Curt Anderson has the details:

A federal judge Friday rejected a plea for probation from a New York businessman who admitted concealing $8 million in secret Swiss bank accounts, imposing instead a three-month prison term in the high-profile tax evasion case.
U.S. District Judge James I. Cohn said toy salesman Jeffrey Chernick deserves credit for his cooperation in the broad U.S. probe of Swiss bank UBS AG. But he said allowing Chernick to avoid prison for filing a false tax return "sends the wrong message" in a case that has made international headlines.
"If the court issues a slap on the wrist, to me the notoriety becomes negative," Cohn said. "It essentially informs the public that you can cheat on your income taxes and get away with probation."
Chernick, 70, had faced between 18 months and two years under federal sentencing guidelines. Prosecutors asked Cohn for a nine-month prison term, noting that Chernick's disclosures led directly to the indictments of a Swiss banker and Swiss lawyer on conspiracy charges as well as charges against other UBS clients in the U.S.

Interesting to see the differences in the judges' comments and the ultimate sentence.

Anyway, I'll leave you all with this video, wishing you all a Happy Halloween:

"I needed a defibrillator."

That was Chief Judge Federico Moreno on how he reacted when he realized that Roberto Martinez was asking for an $11 million bonus, and not $1.1 million. Vanessa Blum has all the details here.

From the intro:

Then Chief U.S. District Judge Federico Moreno first read the final fee request for the Mutual Benefits fraud receivership, he thought lawyers were seeking $1.1 million, not $11 million. Then he realized there was no decimal point, the judge recounted Thursday at a hearing in Miami. “I needed a defibrillator,” he joked. “We’re talking about a lot of money.” It is up to Moreno to resolve a simmering dispute over how richly to compensate lawyers for five years of work on one of the largest scams in South Florida history. Roberto Martinez, the court-appointed receiver, is seeking the $11 million bonus to split between his law firm, Colson Hicks Eidson, and primary counsel Kozyak Tropin & Throckmorton. To date, the two Coral Gables firms have jointly collected about $4 million. Moreno did not say when he would rule on the request. Robert Levenson, regional trial counsel for the Securities and Exchange Commission, argued against any fee enhancement, saying it would reduce payments to bilked investors and award lawyers a windfall equivalent to more than $800 per hour.
Receivers should be viewed as public servants and be paid moderately in fairness to victims, he said. “The investors are only going to recover a fraction of their losses,” Levenson said. “These aren’t corporate, market-rate clients.”

Apprently the investors weren't happy either:

No investors spoke at the hearing. In an Oct. 15 letter to Moreno, one investor said he was “appalled” by the receiver’s request. “Please, let’s get these funds back where they belong — in the hands of the investors — and away from greedy hands,” wrote Ronald Meyers of Sanibel Island.

But there is a strong counter-argument:

But Michael Hanzman, of counsel with West Palm Beach-based Ackerman Link & Sartory, who represented defrauded investors in class action litigation, told Moreno the receivership lawyers “deserve a significant fee enhancement.” He did not specify an amount. “If you want to attract the best and the brightest people to take these cases, you have to pay a reasonable fee,” Hanzman said. “This is not a pro bono case.”

That might be overstating it a bit -- the lawyers made an average of $265/hour. The question is whether they should be paid about $800 hour (which is higher than their typical hourly rates) for what everyone agrees was excellent work or whether receivers should make less than their hourly rates because the goal is to return money to the victims.

What say you dear readers?

News & Notes

1. There's a new blog in town -- The BrowardBulldog, run by excellent reporter Dan Christensen, with help from Buddy Nevins and Julie Kay. It'll be a regular read, for sure. The first post is about Jerry Frank Townsend, who was falsely imprisoned for murder and rape. He sued in federal court and recovered $2 million. It's an unbelievable story.

2. God Cares Inc. is alleged to have committed Medicare fraud.

3. Stefan R. Seuss (no relation to the Dr.) has been charged in a huge money laundering conspiracy in connection with a hedge fund investigation.

4. Big trial win for David Howard and Scott Sakin before Judge Cooke. Jay Weaver has the story here:

Seventeen defendants pleaded guilty to drug and other charges before trial, but the remaining two, a fired Miami-Dade police officer and his brother, took their chances with a jury -- and won.
Antonio and Glenn Roberts were acquitted of conspiracy charges Tuesday after a two-week federal trial in which prosecutors alleged they participated in a cocaine-selling ring. They also claimed that veteran cop Antonio Roberts, 48, tipped off the ringleader -- a childhood friend -- that he was under investigation.
Last year, the Roberts brothers were arrested in a sweep of drug and gambling organizations. Another Miami-Dade officer, Michael King, 43, and former Miami-Dade jail officer, Marvin ``Cone Head'' Coney, 43, were among those arrested.
King pleaded guilty to federal obstruction charges for tipping Coney off to a law enforcement investigation, and to state racketeering charges for placing bets on pro basketball games. He was sentenced to five years in prison. Coney, the lead drug defendant who grew up with the Roberts, pleaded guilty to federal narcotics trafficking offenses and was sentenced to 10 years.
The FBI-led investigation, involving almost 10,500 recorded phone conversations, failed to convict the brothers because jurors found they played no roles in the North Dade drug network, their lawyers said.
Antonio Roberts was acquitted of four drug-related conspiracy and obstruction charges. Glenn Roberts was found not guilty of conspiring to possess more than five grams of cocaine with intent to distribute.
Antonio Roberts' lawyer, David Howard, said his client, who served as a county police officer for 26 years, was trying to help his friend Coney get his life back on track.

First UBS sentencing

Judge Cooke sentenced Steven Michael Rubinstein to probation based on his extensive cooperation with the feds. From the AP's Curt Anderson:

Rubinstein will be on probation for three years, including the year of house arrest with electronic monitoring and travel restrictions. He also must pay a $40,000 fine. Prosecutors had sought a year of prison time, even as they stressed Rubinstein's ongoing importance to the broader UBS investigation.
"The defendant has provided complete and truthful information," said Assistant U.S. Attorney Jeffrey Neiman.
Rubinstein, a Boca Raton resident who is also a citizen of South Africa, said he was "embarrassed and ashamed" by his actions. He pleaded guilty in June to filing a false tax return and has been providing evidence ever since.
"I've tried to make amends as best I can," Rubinstein told Cooke. "I will continue to assist the government in any manner requested."
Outside the courtroom, as Rubinstein hugged his wife, Pamela, his attorney Robert Panoff called it a "fair and just sentence."

Slow

You know it's a little slow when SFLawyers reaches back into the Iqbal well and Rumpole is wishing happy birthday to Teddy Roosevelt. If that's not your thing, you can check up on legal research and writing at UM. Not doing it for you? How about Adam Lambert's new album cover. At least Glee is on tonight:


UPDATE -- no Glee tonight. It's the World Series instead. I dislike both teams, but I'm sure I'll tune in to see the pitching matchup. Too bad I don't have DirecTV as Friday Night Lights starts up tonight, only on satellite...

Judge Cooke affirmed for dismissing count against Ben Kuehne

Great news! Here's the opinion by Judge Barkett.

She starts off discussing the plain language:

Section 1957(a) prohibits knowingly engaging or attempting to engage “in a monetary transaction in criminally derived property that is of a value greater than $10,000 and is derived from specified unlawful activity.” 18 U.S.C. § 1957(a). However, the statute exempts “any transaction necessary to preserve a person’s right to representation as guaranteed by the sixth amendment to the Constitution.” 18 U.S.C. § 1957(f)(1). Thus, the plain meaning of the exemption set forth in § 1957(f)(1), when considered in its context, is that transactions involving criminally derived proceeds are exempt from the prohibitions of § 1957(a) when they are for the purpose of securing legal representation to which an accused is entitled under
the Sixth Amendment. Accordingly, the exemption is limited to attorneys’ fees paid for representation guaranteed by the Sixth Amendment in a criminal proceeding and does not extend to attorneys’ fees paid for other purposes.

Barkett then makes short work of the government's argument:

The Government argues that the exemption in § 1957(f)(1) has been “nullified” or “vitiated” because, shortly after the provision was enacted, the Supreme Court held in Caplin & Drysdale, Chartered v. United States, 491 U.S. 617, 626 (1989) that the Sixth Amendment right to counsel does not protect the right of a criminal defendant to use criminally derived proceeds for legal fees. However, Caplin & Drysdale, which addresses a different statute governing the civil forfeiture of criminally derived proceeds, has no bearing on § 1957(f)(1) and indeed supports the conclusion that such proceeds have been statutorily exempted
from criminal penalties. The Government has pointed to no principle of statutory construction—nor indeed to any legal principle—that supports the conclusion that
a statutory provision may be “nullified” by a Supreme Court decision on a completely different issue, absent any indication that Congress intended such a result.

As Kuehne's legal team has been saying from the start, the government's interpretation yields an absurd result:

As the Government concedes, accepting its interpretation of § 1957(f)(1) would read all meaning out of the exemption. Section 1957 criminalizes only transactions involving criminally derived proceeds. It would therefore make little sense—and would be entirely superfluous—to read § 1957(f)(1) as an exemption from criminal penalties for non-tainted proceeds spent on legal representation, as those funds can always be used for any legal purpose. We do not believe Congress intended such an absurd result, which nullifies the provision and divorces it from its statutory context, thereby violating basic canons of statutory construction.

And congrats to Judge Cooke, who was "eminently correct":

The district court was eminently correct in holding that Defendants are not subject to criminal prosecution under § 1957(a), because the plain language of § 1957(f)(1) clearly exempts criminally derived proceeds used to secure legal representation to which an accused is entitled under the Sixth Amendment.

Now let's see if the government does the right thing and dismiss the rest of the indictment against Ben...