Blogging the Ben Kuehne argument in the 11th Circuit

I was at the oral argument in the Ben Kuehne case this morning. The issue is whether the exception in section 1957 prevents the government from indicting a criminal defense lawyer for taking payment from a client, previously discussed here. Judge Cooke found that the exception applied and dismissed that count against Ben. The government appealed. To cut to the chase up front, Judge Cooke will be affirmed. Here's what happened:

The panel consisted of Judges Barkett, Hull and Quist. Quist is a district judge from Michigan. The government was represented by Vijay Shanker from DOJ in DC. John Nields represented Ben.

The government started out its argument saying that no case supported the defense. Judge Hull jumped on that statement and said this was a case of first impression -- no case supported the government either. The government conceded that point... not a strong start. It only got worse for the government from there.

Barkett asked whether there was any need for the exception if it applied only to clean money. In other words, a lawyer can take clean money any time, so the exception obviously applied only to tainted funds. The government conceded this point and agreed that the exception concerned illegal money, but countered that only as necessary and guaranteed by the 6th Amendment.

Hull then asked whether this interpretation rendered the exception meaningless AND THE GOVERNMENT LAWYER SAID YES. It is the government's position that the words in 1956 are meaningless. Judges Hull and Barkett stuck on this point for a while... Judge Hull finally said: Listen, we have to give words meaning. Sometimes that hurts criminal defendants, but sometimes it helps.

Barkett then asked what the ordinary meaning of the statute was and the response was: whatever the Supreme Court says it means. Barkett responded: "Oh come on." Judge Quist, who seemed the most friendly to the government then asked whether he was relying on Marbury v. Madison. Answer: Yes.

The tone and atmosphere during the government's initial presentation was very hostile.

Then John Nields got up. He was calm and the tone immediately changed. There was no hostility and he received much fewer questions. The argument started: "I represent Ben Kuehne, a frequent practitioner before this Court and a leader of the Bar." Nields explained that the purpose of the statute was to allow criminal defense lawyers to take cases -- if they were afraid they were going to get indicted, they wouldn't. He explained that the exception only applied to criminal cases, not civil cases and importantly not forfeiture cases.

Quist then asked whether a lawyer could be paid with the proceeds from a bank robbery. Wouldn't that be wrong because the victims wouldn't get paid back? Nields explained, I think to the judges' satisfaction, that he couldn't be prosecuted for accepting the funds, but that they would be forfeited and that the victims would be paid back.

Nields went on to talk about the public policy choices that Congress made, and Judge Hull joked that Congress was probably just concerned with the public fisc -- it didn't want defendants with money to have to rely on public counsel.

DOJ said in rebuttal that there were only 3 cases against lawyers under 1957 and that we should just trust them to do the right thing.

Judge Hull ended the argument by explaining that they have had many Fabio Ochoa cases and knew the backdrop of what was going on. They weren't naive. But, she said, they were dealing with a very specific statute and the government had to understand that. Judge Quist responded: "I am naive."

All in all, I think there is a very strong likelihood -- based on the argument -- that Judge Cooke's decision to dismiss the 1957 count against Ben will be affirmed. This is the right and just result. I obviously am biased in the case as I filed -- along with some great lawyers from WilmerHale in DC who actually wrote it -- an amicus brief in support of Judge Cooke and Ben Kuehne on behalf of the National Association of Criminal Defense Lawyers.

The next argument dealt with the co-defendant, Gloria Flores-Velez, who was represented by Ricardo Bascuas and Henry Bell. The same DOJ lawyer argued for the government. Remember that Judge Cooke dismissed the case against this defendant based on speedy trial grounds. I will post more about it in a bit, but there was a funny moment when Rick was using the term "parallel market" instead of "black market peso exchange." The court asked what the parallel market was, and Rick said it was what the government referred to as the black market exchange. The court asked why the government used that term and Rick said "for its pejorative effect." And the judges and audience laughed. It was a good moment.

UPDATE -- Here's Curt Anderson's AP article. And here's the DBR by John Pacenti.

"You make this sound like a fraud case. This isn't Bernie Madoff."

That was Judge Kenneth Ryskamp last week on the Lin Gosman case, in which the judge sentenced Gosman to probation even though the guidelines called for substantial time in prison. I missed the case when it happened, so thanks to my peeps for sending it along. It's an interesting fact pattern. From the Palm Beach Daily News article:

Assistant U.S. Attorney Carolyn Bell, however, said Lin Gosman's admitted actions — hiding at least $400,000 in shared assets in storage buildings and receiving a $350,000 second mortgage on a Jupiter house she owns — without disclosing to the mortgage holder the $66 million bankruptcy judgment against her husband were "secretive, deliberate and dishonest. It was criminal."
"This is at the top of the heap," Bell said. "This is the type of bankruptcy fraud where everyone goes 'Oh, my goodness.' This conduct, if we don't address it, the bankruptcy system doesn't work."
Bell recounted Lin Gosman's post-indictment trips to Hong Kong, Dubai, Morocco, Paris and other spots — while allegedly conducting research for a children's book — as evidence she was spending funds that should have been reserved for her husband's creditors.
In addition, Gosman admitted filing a false tax return in 2004 and failing to file tax returns since 2005.
Bell said Gosman tried to hide $3.5 million in assets from the IRS. Gosman has already paid $350,000 in back taxes, Ryskamp said.

But the judge didn't agree with the government that Gosman should get time:

Gosman, 60, teared up and looked at her husband, Abe, as the judge pronounced the sentence.
"I'm so happy," she told him after giving him a kiss. "Why couldn't I have found someone like (Ryskamp) a long time ago?"
She could have received nearly four years in prison, according to sentencing guidelines, but the judge used his discretion and deviated from the guidelines.
Ryskamp cited Gosman's absence of a prior criminal record, her contributions of time and money to many charities and the deterioration of her physical and psychological health. Before she lied about her personal assets, Lin Gosman was a "pillar of society," he said.
The judge admonished the government's vigorous prosecution of the case.
"The U.S. Attorney's Office is hailing this like it's the crime of the century," Ryskamp said near the start of the sentencing hearing. "You make this sound like a fraud case. This isn't Bernie Madoff."
Ryskamp called the case "bizarre in many respects," adding that he has "never seen such an aggressive prosecution" of this type of case in his 23 years on the bench. Ryskamp also said he's never seen such "a lack of objectivity" on the part of the government in pursuit of a case.

Here are some more quotes from the case.

"This is probably the single most outrageous prosecution that has happened in South Florida."

That's Richard Sharpstein on the Ben Kuehne case, covered by John Pacenti here. The 11th Circuit will have oral argument this Wednesday. Judge Cooke will have Daubert hearings today and tomorrow on the government's proposed currency exchange expert.

John Pacenti also covers the Raffanello case this morning. He's the former DEA agent charged with obstruction. His lawyers had made the gutsy call to request a speedy trial, but have now dropped that motion because the government apparently gave the defense 4 million documents to review. Richard Sharpstein was added to the defense team.

I guess I should have titled the post: Sharpstein and Pacenti.

Let's get ready to rumble

Fascinating lawsuit filed by Joseph DeMaria against DOJ and American Express. Here's the Herald article and the complaint. From the article:

Sergio Masvidal, the successful scion of a once-penniless Cuban exile family, says he just wants the Justice Department to give him back his name.

Masvidal says he also wants his former employer, American Express, to pay him more than $7.5 million for ruining his career as a top global banker based in Miami.

The former chairman of American Express Bank International claims he's a ``scapegoat'' in a lawsuit filed Friday that depicts the Justice Department and his ex-employer as partners in an illegal conspiracy plotted at the same time that American Express was prosecuted for violating anti-money-laundering reporting laws.

``It's important to me that my name is cleared,'' said Masvidal, 63 who came to this country in the early 1960s under the Catholic Church's ``Pedro Pan'' relocation program. ``It's important that I don't end my career with this event defining my life.''

According to the complaint, there was a secret agreement entered into between the government and American Express that sold out Masvidal:

The August 2007 prosecution agreement between American Express Bank International and the Justice Department has caused Masvidal many sleepless nights -- but not because of the costly terms of that deal.
Masvidal has obtained evidence of what he describes as a ``secret termination agreement'' between his ex-employer and the Justice Department. It says that Masvidal and American Express Bank International's president, Simon E. Amich, would be fired after the sale of the bank, implying wrongdoing on their part. The side agreement -- an August 2007 letter signed by American Express and Justice Department lawyers -- was never disclosed to Masvidal, Amich or to U.S. District Judge William Zloch in Fort Lauderdale, who approved the so-called ``deferred'' prosecution agreement.
Under that settlement, American Express had to pay the government $65 million for its lax enforcement of compliance laws aimed at catching drug-trafficking and other tainted bank deposits. It was one of the largest fines imposed on a U.S. bank. Under the terms, the Justice Department filed criminal charges against the bank but agreed to dismiss them in one year if the international bank subsidiary strengthened its safeguards against money laundering.

I notice that John Sellers represented DOJ against American Express; he's the same prosecutor in the Ben Kuehne case.

Happy Weekend

Some Friday afternoon tunes: