From the Sidebar - Trial, Litigation and The Practice of Law

By Hayes Hunt and Jeffrey Monhait

Last month, the U.S. Court of Appeals for the D.C. Circuit in United States v. Ring, No. 11-3100 (D.C. Cir. Jan. 25, 2013), upheld a conviction for bribery under the public sector honest-services fraud statute, expanding the definitions of "corrupt payments" and "official action," and thus making it easier for federal prosecutors to secure convictions under this statute. The court, in an opinion by Judge David Tatel, held: (1) implicit quid pro quo is sufficient for a bribery conviction, and no actual agreement by the public official is necessary; (2) there is "official action" when a lawyer in the Justice Department emails a secretary with the Immigration and Naturalization Service requesting expedited review of a visa application; and (3) the trial court did not abuse its discretion under the First Amendment or Federal Rule of Evidence 403 in allowing the jury to draw an adverse inference from a defendant's history of lawful campaign contributions.

The Facts

The defendant, Kevin Ring, worked as a lobbyist for Jack Abramoff. His role included fundraising for campaign contributions and developing and maintaining relationships with public officials to serve the lobbying firm's clients. Although campaign contributions were the primary means of accessing public officials, Ring treated these individuals to dinners, drinks, travel, concerts, sporting events and other forms of entertainment. A 2004 federal investigation of Abramoff ultimately led to the prosecution of Ring. At trial, he was convicted on three counts of honest-services fraud, one count of paying an illegal gratuity, and one count of conspiracy to pay an illegal gratuity, and sentenced to 20 months in prison, the opinion said.

Lawful Lobbying vs. Corrupt Bribery

The court noted that "lobbying has been integral to the American political system since its very inception." It is an enormously influential political machine. As of 2008, there were more than 14,000 registered Washington lobbyists, and lobbying expenditures on Congress and federal agencies exceeded $3 billion. "Lobbyists serve as a line of communication between citizens and their representatives, safeguard minority interests and help to ensure that elected officials have the information necessary to evaluate proposed legislation," the opinion said.

To achieve these ends, lobbyists develop personal relationships with officials, through campaign contributions and events including, for example, dinners, drinks, concerts and sporting events. As long as gifts do not constitute bribery, lobbyists are free to use them to "curry political favor," the opinion said. The line dividing legal lobbying from corrupt bribery is crossed when a gift is tied to a particular act. (See United States v. Sun-Diamond Growers of California, 526 U.S. 398, 405-08 (1999).) In Ring, the court commented that although the "distinction between legal lobbying and criminal conduct may be subtle ... it spells the difference between honest politics and criminal corruption."

The Supreme Court set the scene for Ring in Skilling v. United States, 130 S. Ct. 2896, 2907 (2010), in construing the public sector honest-services fraud statute to cover "only bribery and kickback schemes."

'Implicit' Quid Pro Quo Is Sufficient

Ring challenged the jury instructions underlying his bribery conviction for three flaws in stating: "(1) that an explicit quid pro quo was required; (2) that the official must agree to the exchange; and (3) that, at the very least, a corrupt payment must be offered." The court rejected all three challenges.

Ring claimed McCormick v. United States, 500 U.S. 257 (1991), required an explicit quid pro quo. There, the Supreme Court required an explicit quid pro quo to criminalize campaign contributions under the Hobbs Act. Ring urged the court to extend that holding to other things of value, but the court found that, in addition to the fact that it is unclear what an explicit quid pro quo requirement would look like in practice, campaign contributions are distinguishable from other things of value. In a world where political campaigns are privately funded, public officials must solicit contributions. Free lobster tails and Rolling Stones tickets simply do not serve this same purpose. Thus, there was far less concern about "criminalizing politically necessary activity or chilling constitutionally protected speech" and the court declined to impose an explicit quid pro quo requirement.

Ring also claimed the prosecution was required to prove that the public official accepted the offer. Based on Skilling's conclusion that honest-services fraud covers only bribery and kickbacks, the federal bribery statute, 18 U.S.C. §201(b), provides background for honest-services bribery. The court commented that the bribery statute "defines two separate crimes: the act of offering a bribe and the act of soliciting or accepting a bribe." Because bribery does not require that the official accept the bribe, neither does honest-services bribery. The key to bribery is intent — the intent to affect a quid pro quo, and the intent to influence an official act. Thus, the statute is satisfied by proof beyond a reasonable doubt of "intent to offer or solicit an exchange of official action for personal gain."

Ring's final challenge to the instructions was that they failed to require that the defendant intended to offer a quid pro quo exchange. Both sides agreed this element was necessary, and the court found that the jury was properly instructed as to this element. Instructions must require, and these did, "a specific intent to influence official acts, an intent that the official realize or know that the corrupt exchange is being proposed, and a showing that the gifts were conditioned upon the official act or agreement." The court concluded that the mens rea element, rather than the conduct itself, distinguishes legal lobbying from corrupt bribery. 

Continue Reading

By Hayes Hunt and Michael Zabel

How much evidence is enough to establish the crime-fraud exception to attorney-client privilege? With its recent opinion in In re Grand Jury, Nos. 12-1697 & 12-2878 (Dec. 11, 2012), the U.S. Court of Appeals for the Third Circuit addressed the issue in the context of subpoenas issued to the former in-house counsel of a company subject to a grand jury investigation. According to the precedential opinion, a party seeking to challenge attorney-client privilege by means of the crime-fraud exception must produce evidence demonstrating a "reasonable basis to suspect" that the elements of the crime-fraud exception have occurred. This newly announced standard clarifies Third Circuit precedent and at the same time serves to highlight the split among the federal courts of appeals over how to construe the "prima facie evidence" standard for the crime-fraud exception first articulated by the U.S. Supreme Court in Clark v. United States, 289 U.S. 1 (1933).

Every good lawyer knows, of course, that the attorney-client privilege does not offer absolute protection of his or her communications with a client. One important exclusion from the realm of attorney-client privilege is the crime-fraud exception, which, in the words of the Supreme Court, "assures that the seal of secrecy ... between lawyer and client does not extend to communications made for the purpose of getting advice for the commission of a fraud or crime." (See United States v. Zolin, 491 U.S. 554, 109 S. Ct. 2619, 2621, 105 L. Ed. 2d 469 (1989).) A party seeking to overcome attorney-client privilege through the crime-fraud exception must introduce prima facie evidence that (1) the client was committing or intending to commit a fraud or crime, and (2) the attorney-client communications were in furtherance of the alleged fraud or crime.

Federal circuit courts have offered differing articulations and conclusions over what constitutes prima facie evidence. Some courts have held that the evidence proffered must be sufficient to allow the court to require the privilege holder to come forward with an explanation for the evidence offered against the privilege. (See, e.g., United States v. Boender, 649 F.3d 650, 655 (7th Cir. 2011).) Other courts, such as Grand Jury, look for evidence that, if believed by a fact-finder, would establish the elements of an imminent or ongoing crime or fraud. A third group of circuit courts requires a reasonable basis in the evidence to believe that the attorney's services were used by the client to foster a crime or fraud. (See, e.g., In re Grand Jury Proceedings, 417 F.3d 18, 23 (1st Cir. 2005).)

In adopting the "reasonable basis" standard, the Third Circuit acknowledged that its own past pronouncements of what constitutes prima facie evidence under the crime-fraud exception had been "not particularly helpful." In Grand Jury, however, the court took care to define the contours of the "reasonable basis" standard. "It is intended to be reasonably demanding, neither speculation nor evidence that shows only a distant likelihood is enough," the court wrote. "At the same time, the party opposing the privilege is not required to introduce evidence sufficient to support a verdict of crime or fraud or even to show that it is more likely than not that the crime or fraud occurred."

The factual circumstances of Grand Jury present additional items of interest for in-house counsel. In the case, ABC Corp. (a pseudonym used by the court) and two of its principals were subjects of an ongoing grand jury investigation into an alleged criminal tax scheme. As part of its investigation, the federal government served subpoenas on three former in-house attorneys of ABC Corp. Both ABC Corp. and its former employees asserted attorney-client and work-product privileges, and the government invoked the crime-fraud exception in response. The district court then ordered the former in-house counsel to comply with the subpoenas.

Although the order was not directed at ABC Corp., the company sought immediate appeal under the Perlman doctrine, a rule established in Perlman v. United States, 247 U.S. 7 (1918), which allows a privilege holder to immediately appeal an adverse disclosure order without being held in contempt first by the court when the privileged information is in the possession of a disinterested third party, who will likely disclose the information rather than be held in contempt of court. The Third Circuit found that the former in-house attorneys were indeed disinterested third parties who would likely be unwilling to be held in contempt to protect ABC Corp.'s privilege. Applying the Perlman rule, the court therefore found jurisdiction to hear ABC Corp.'s appeal. 

Continue Reading

By Hayes Hunt and Thomas O'Rourke

On Wednesday, Rajat Gupta, former director of Goldman Sachs, will be sentenced for conspiracy and securities fraud in connection with insider trading.  Gupta is requesting a non-custodial sentence, based on his lifetime of good work and humanitarian efforts.  The prosecution is seeking 8-10 years of incarceration.  Over 200 character letters have been submitted to the sentencing judge, Jed S. Rakoff, on Gupta’s behalf. 

When the Wall Street Journal reported this outpouring of support for Gupta, people sent letters to the Court in response, seeking stiff punishment.  According to the WSJ Law Blog, Kenneth Lehrer, a former adjunct professor of finance at the University of Houston, wrote on “behalf of his former students” and to inform Judge Rakoff that “granting Mr. Gupta a very light or reduced sentence for his despicable actions would not truly balance the scales.”  Another letter came from Brian D. Walker, the founder of an executive search firm, demanding punishment and noting that “whether or not Gupta is a ‘Good Man’ is irrelevant.”

Continue Reading

by:  Hayes Hunt and Brian Kint

Federal prosecutors in Roger Clemens’ perjury trial may have made a costly error after Andy Pettitte testified that he was “50-50” about a conversation he had with Clemens regarding his use of human growth hormone.

Under questioning from prosecutors, Pettitte testified that Clemens had told him he had used HGH.  He later testified that he might have misunderstood Clemens, and Clemens actually might have said it was his wife who had used the substance.  When asked on cross-examination if he was “50-50” that he had misunderstood Clemens, Pettitte replied, “I’d say that’s fair.”

In light of Pettitte’s “50-50” comment, the defense moved to strike the portion of his testimony regarding his conversation with Clemens as insufficiently definitive – essentially that it is too uncertain to prove anything.  Pettitte’s testimony is relevant if (a) it has any tendency to make a fact more or less probable than it would be without the evidence; and (b) the fact is of consequence in determining the action. (FRE 401)

Here, the fact of consequence is Clemens’ use of HGH.  Therefore, the substance of the conversation would be relevant and admissible if Clemens had admitted that he used HGH himself, but irrelevant if he was talking about his wife’s HGH use.  In other words, relevance – and thus admissibility – turns on the fact of whose HGH use Clemens discussed with Pettitte. 

Continue Reading

By Thomas G. Wilkinson, Jr. and Lindsey E. Wilkinson

It has become common practice for lawyers to mine social media pages of parties and witnesses for discovery purposes.   But can the urge to dig up dirt on opposing parties cause lawyers and their staff to overstep the line into 'risky business' practices or even  potential for lawyer disciplinary consequences?  

Continue Reading

How to deal with unexpected testimony on direct examination -Part 1 - Refreshing Recollection

You call your last witness and things are going great. A verdict in your client's favor will be soon to follow.  All you have to do is establish that there was moonlight. 

Counsel: Was there moonlight at the time you saw the accident?

Opposing Counsel: Objection.  Leading and lacks foundation.

Court:  Overruled.

Witness: It was the sun.

Counsel:  Are you sure?

Opposing Counsel: Objection.  Asked and answered and leading.

Court:  Sustained. 

The witness had previously said there was moonlight.  Invariably, your next question is “didn’t you testify that” and before you can finish the question your adversary stands up and objects.  The objection is sustained followed by deafening courtroom silence.  Before you say another word, you need to decide whether the witness:  (1) forgot that there was moonlight or; (2) believes it is the sun.

• Rule 612 •

If you decide your witness has made a mistake as a result of poor memory, you merely need to follow Rule 612 of the Federal Rules of Evidence and refresh the witness’s recollection in this order:

1.  Establish that the witness’s memory is exhausted on the specific issue or event.

You:  Do you remember whether or not there was moonlight?

2.  Establish that the witness’s memory may be refreshed by a specific document.

You: Would your memory be helped by reading the signed statement you gave to the police an hour after the accident?

You: Your Honor, if I may, I’d like to mark this as Exhibit X.  Showing opposing counsel Exhibit X.  

3.  Give the witness the document.

You: I’m giving you your signed statement.  Please read the third paragraph to yourself.

4.  Allow the witness to review the document.

You:  Have you had a chance to read the signed statement you gave to the police immediately following the accident?

5.  Ask the witness if her memory has been refreshed.

You: Is your memory refreshed regarding the accident?

6.  Take the document away from the witness.

You:  May I have Exhibit X, Witness.  Thank you. 

7.  Pause and ask your original question again.

You:  Now, Witness. Was there moonlight at the time of the accident?

Witness: YES!  Absolutely.  I’m sorry, I got nervous and forgot.  

Now that the witness has reviewed her statement, she apologizes to the jury for her mistake, smiles in embarrassment and is completely forgiven by the jury.  The moon is bright and your client’s case is back on track.  Don’t wait for re-direct/rehabilitation since a strong advocate would not ask a single question on cross. 

Part II next week.  Impeachment on Direct.