MONTH IN REVIEW: JUNE 2006

MONTH IN REVIEW: JUNE 2006 Travis McDonough and Kyle Eiselstein, Miller & Martin PLLC Zedner v. United States No. 05-5992 (U.S. S. Ct. June 5, 2006) The Supreme Court unanimously ruled that defendants cannot prospectively waive the application of the Speedy Trial Act of 1974 (the Act ), 18 U.S.C. 3161-74. Generally, under the Act, federal criminal trials must begin within seventy days after a defendant is charged or makes an initial appearance. And the Act is not without teeth: if the trial does not begin on time, absent applicable exclusions, and if the defendant moves to dismiss before the trial starts or before entering a guilty plea, the district court must grant the motion, although the court has discretion to dismiss the charges with or without prejudice. Recognizing that many criminal trials cannot (and should not) begin within the seventy-day period, the Act contains numerous exclusions that justify certain periods of delay. At issue in Zedner was the ends-of-justice continuance, pursuant to which a court can grant a continuance based upon the defendant s need to ensure effective representation by counsel. See 3161(h)(8). In the Zedner case, the petitioner was indicted on April 4, 1996, on seven counts of attempting to defraud financial institutions. After the district court granted two ends-of-justice continuances, on November 8, 1996, at a status conference, the petitioner requested, and the court granted, a third

continuance to January 1997. The district court conditioned the continuance on the petitioner waiving his right to a speedy trial. The petitioner and petitioner s counsel signed a preprinted form that waived any and all rights to make a motion to dismiss the indictment... against me for failure of the Court to give me a speedy trial and that [waived] all such rights to a speedy trial and to make such a motion or motions for all time. Slip Op. 3. The trial was delayed over the next several years because of, in part, the withdrawal of petitioner s counsel; the litigation surrounding the petitioner s attempts to subpoena the President, the Chairman of the Federal Reserve Board, the Attorney General, the Secretary of State, and the late Chinese leader Chiang Kai-shek; and multiple competency determinations, one of which was followed by the hospitalization and treatment of the petitioner. Slip Op. 4-5. More than seven years after the petitioner was indicted, the petitioner s trial began. A jury found him guilty on six counts of attempting to defraud a financial institution. The Second Circuit affirmed the conviction and held that the Act was not violated, relying primarily on the fact that the petitioner s conduct caused or contributed to the period of delay. Slip Op. 5. The United States Supreme Court reversed, holding that Petitioner s waiver for all time was ineffective. The Court, focusing on the language of the Act and legislative history, reasoned that [i]f the Act were designed solely to protect a defendant s right to a speedy trial, it would make sense to allow a defendant to waive the application of the Act. But the Act was

designed with the public interest firmly in mind. Slip Op. 9-10 (citing 18 U.S.C. 3161(h)(8)(A) (to exclude delay resulting from the continuance even when granted... at the request of the defendant the district court must find that the ends of justice served... outweigh the best interest of the public and the defendant in a speedy trial). Indeed, the Court noted that in many cases defendants may welcome delay to remain on pretrial release, and that often the court, prosecution, and defendant may all be happy to opt out of the Act. Slip Op. 11. The Court emphasized that the Act was designed not only for defendants benefit, but also to serve the public interest by, for example, reducing defendants opportunity to commit crimes while on pretrial release and preventing extended pretrial delay from impairing the deterrent effect of punishment. Slip Op. 11. Based upon public interest considerations, the Court held that defendants cannot prospectively waive application of the Act. Link to case: http://www.supremecourtus.gov/opinions/05pdf/05-5992.pdf. United States v. Rattoballi No. 05-1562-CR (2d Cir. June 15, 2006, amended June 21, 2006) After James Rattoballi, charged with antitrust violations, entered into a plea agreement with the government, the District Court for the Southern District of New York sentenced him to one year of home confinement and five years probation and required Rattoballi to pay $155,000 in restitution. On appeal by the government, the Second Circuit vacated the non-guidelines sentence, finding that it was unreasonably lenient.

Rattoballi co-owned a printing brokerage firm and also served as a commission sales representative for graphic services companies. Throughout the 1990 s, Rattoballi obtained business from advertising agencies by giving substantial kickbacks to executives, including Mitchell Mosallem at Grey Global Group, Inc. ( Grey ). The kickbacks included cash, clothing, meals, airline tickets, and a $55,000 diamond and platinum watch. Rattoballi also submitted inflated cover bids to Grey to help Mosallem create the illusion of competition among potential suppliers to a lucrative client account. Slip Op. 4. In 2002, Rattoballi was charged with conspiracy to violate the Sherman Act and conspiracy to commit mail fraud, both counts relating to Rattoballi s dealings with Mosallem. Pursuant to a plea agreement, Rattoballi agreed to cooperate with the government, and if Rattoballi provided substantial assistance in any investigations or prosecutions, the government would file a Section 5K1.1 letter on Rattoballi s behalf at sentencing. Slip Op. 5-6. The government interviewed Rattoballi five times over two years, and Rattoballi admitted that he gave Mosallem clothing and additional goods and services. Rattoballi denied, however, giving Mosallem cash or any other items of significant value. Slip Op. 6. As Mosallem s trial approached, the government came to question Rattoballi s forthrightness, and it confronted Rattoballi. Rattoballi admitted, for the first time, that he had given cash and the diamond and platinum watch to Mosallem. Rattoballi also admitted that

he had spoken with Mosallem about the investigation, and had agreed not to mention the cash or the watch to the government. Slip Op. 6. At sentencing, the district court determined Rattoballi s adjusted offense level as 18, providing for a Guidelines range of 27 to 33 months of imprisonment. After considering the evidence, the district court stated that it had a problem with giving Rattoballi a prison sentence. Slip Op. 8. The court sentenced Ratttoballi to a non-guidelines sentence of one year of home confinement and five years probation. The court also ordered Rattoballi to pay $155,000 in restitution. The district court based the lenient sentence on: (1) despite the difficulty and delay in coming clean, Rattoballi eventually admitted to all wrongdoing and pled guilty; (2) Rattoballi suffered significant punishment based on the fact that he was charged and stood convicted of two federal crimes; (3) a term of imprisonment would end Rattoballi s business; and (4) Rattoballi s unlawful conduct was brought about, in part, by Mosallem s insatiable appetite for luxurious goods and services. Slip Op. 20. The Second Circuit firmly rejected the district court s reasoning. In its review of the sentencing decision for reasonableness, the Second Circuit recognized that the Sentencing Guidelines were no longer mandatory, but emphasized that district courts were still under a duty to consider them, along with the other factors set forth in 18 U.S.C. 3553(a). Slip Op. 12-13 (citing Booker, 543 U.S. at 261 and Crosby, 397 F.3d at 110.) Additionally, the Second Circuit explained that in reviewing sentences for reasonableness, it

would continue to seek guidance from the considered judgment of the Sentencing Commission as expressed in the Sentencing Guidelines and authorized by Congress, Slip Op. 14, and consider any pertinent policy statements issued by the Sentencing Commission or the Congress, Slip Op. 16-17. The Second Circuit warned that a non-guidelines sentence that a district court imposes in reliance on factors incompatible with the Commission s policy statements may be deemed substantively unreasonable in the absence of persuasive explanation as to why the sentence actually comports with the 3553(a) factors. Slip Op. 17-18. Turning to district court s stated reasons for imposing a non- Guidelines sentence, the Second Circuit noted five problems: (1) the district court erroneously relied, in part, on factors common to all defendants; (2) the district court s stated reasons failed to take into account the Commission s view that alternatives such as community confinement be used to avoid imprisonment of antitrust offenders ; (3) the record did not support the district court s finding that a term of imprisonment would cause Rattoballi s business to absolutely end ; (4) the district court s reliance on Rattoballi s acceptance of responsibility was unwarranted, particularly since Rattoballi had already received a two-level reduction under the Guidelines; and (5) the district court s finding of Rattoballi s lesser culpability as compared to Mosallem could not justify a sentence that did not include a term of imprisonment. Slip Op. 21-24. Based upon its review of the record, the Second Circuit ruled that the district court s failure to impose a term of

imprisonment was unreasonable, and accordingly, it vacated the sentence and remanded for resentencing. Additionally, the Second Circuit held that 3553(c)(2) required district courts, when imposing a sentence outside the Guidelines, to (1) state in open court the specific reason for the imposition of the sentence, and (2) state the reasons for the sentence with specificity in the written order of judgment and commitment. Slip Op. 28. The Second Circuit left open for now whether the failure to abide by these requirements would provide an independent cause for remand where the district court imposes a non- Guidelines sentence outside the advisory Guidelines range. Slip Op. 29. Link to case: http://www.ca2.uscourts.gov:8080/isysnative/rdpct3bpbnnct1boxda1lte1njity3 Jfb3BuLnBkZg==/05-1562- cr_opn.pdf#xml=http://10.213.23.111:8080/isysquery/irlfb82/1/hilite United States v. Stein No. S1 05 Crim. 0888 (S.D.N.Y. June 26, 2006) On June 26, 2006, in the accounting fraud case against former KPMG partners ( KPMG Defendants ), Judge Lewis Kaplan of the District Court for the Southern District of New York found that the Thompson Memorandum and the actions of the United States Attorney s Office ( USAO ) pressuring KPMG not to pay the legal fees of the KPMG Defendants violated the defendants constitutional rights. The January 20, 2003 Thompson Memorandum, which is binding on all federal prosecutors, requires all United States Attorneys... to consider

the advancing of legal fees by business entities, except such advances as are required by law, as at least possibly indicative of an attempt to protect culpable employees and as a factor weighing in favor of indictment of the entity. Slip Op. 5-6. Related to the instant case, in its efforts to avoid indictment, KPMG ultimately decided, after some interaction with the USAO, not to pay the legal fees of its former partners. After briefing, limited discovery by the parties, and a three-day evidentiary hearing, Judge Kaplan found that the Thompson Memorandum caused KPMG to consider departing on its long-standing policy of paying legal fees and expenses of its personnel in all cases and investigations even before it first met with the USAO ; that the USAO reinforced the threat inherent in the Thompson Memorandum ; that the government conducted itself in a manner that evidenced a desire to minimize the involvement of defense attorneys an objective, the Court noted, that was arguably inherent in the Thompson Memorandum itself; and that KPMG s decision to cut off all payments of legal fees and expenses to anyone that was indicted and to condition such payments prior to indictment upon cooperating with the government was the direct consequence of the pressure applied by the Thompson Memorandum and the USAO. Slip Op. 32-33 Indeed, Judge Kaplan concluded that absent the Thompson Memorandum and the actions of the USAO, KPMG would have paid the legal fees and expenses of all its partners and employees both prior to and after indictment, without regard to cost. Slip Op. 33.

Based upon these findings, the court ruled that the Thompson Memorandum and the USAO s actions violated the Fifth and Sixth Amendments by interfering with the defendants constitutional rights to a fair trial and to the effective assistance of counsel. Slip Op. 83. Concerning the Due Process Clause, the court concluded that a criminal defendant has the fundamental right to obtain and use in order to prepare a defense resources lawfully available to him or her, free of knowing or reckless government interference. Slip Op. 47. With respect to the defendants Sixth Amendment right to have the assistance of counsel, the court stated that it protects, among other things, an individual s right to choose a lawyer or lawyers he or she desires and to use one s own funds to mount the defense that one wishes to present. Slip Op. 55. The court found that the Thompson Memorandum discourages and, as a practical matter, often prevents companies from providing employees and former employees with a financial means to exercise their constitutional rights to defend themselves. Slip Op. 59. In closing and after stating that some of the USAO s actions, in resisting the defendants motion asserting the government s unconstitutional interference with the advancement of attorneys fees, were inappropriate Judge Kaplan reminded the government of its role: As a unanimous Supreme court wrote long ago, the interest of the government in a criminal prosecution is not that it shall win a case, but that justice shall be done. Justice is not done when the government use the threat of indictment a matter of life and death to many companies and therefore a matter that threatens the jobs and security of blameless employees to coerce companies into depriving their present and even former employees of the

means of defending themselves against criminal charges in a court of law. If those whom the government suspects are culpable in fact are guilty, they should pay the price. But the determination of guilt or innocence must be made fairly not in a proceeding in which the government has obtained an unfair advantage long before the trial even has begun. Slip Op. 82 (quoting Berger v. United States, 295 U.S. 78, 88 (1935)). In the end, the court denied the KPMG Defendants motions to the extent they sought monetary relief from the government. But, the court strongly suggested that KPMG volunteer to pay the legal costs of its former partners, and even suggested that the government assert its influence over KPMG to ensure such a result. Indeed, the court had the clerk open a civil docket number to accommodate the claims of the KPMG Defendants if such became necessary. The court reserved ruling on whether it would grant additional relief, e.g. dismissal of the indictment, and commented that it may do so in the future if KPMG does not, for one reason or another, advance defense costs. Slip Op. 82. Link to case: http://www.nysd.uscourts.gov/rulings/05cr888_6272006_0835ts.pdf