Opinion
Case No. 90-80941-01; 96-40376.
April 30, 2004
REPORT AND RECOMMENDATION
Petitioner Patrick Rugiero filed a motion to vacate, set aside, or correct his sentence pursuant 28 U.S.C. § 2255. This motion was referred for report and recommendation pursuant to 28 U.S.C. § 636(b)(1)(B).
For the reasons stated below, the petitioner's motion to vacate his criminal sentence pursuant to § 2255 should be GRANTED.
I. BACKGROUND
Petitioner asserts that because his attorney N.C. Deday LaRene was under investigation by a federal grand jury in Detroit during the course of Petitioner's pre-trial investigation, prosecution, and appeal to the Sixth Circuit Court of Appeals, LaRene was acting with an actual conflict of interest which interfered with his ability to provide adequate representation.
A. LaRene Investigation
On December 14, 1990, the Detroit Organized Crime Strike Force began investigating N.C. Deday LaRene, his client Vito Giacalone, and others, for possible extortion ( 18 U.S.C. § 1951), money laundering ( 18 U.S.C. § 1956 1957), and conspiracy ( 18 U.S.C. § 371) violations (Special Agent Frank Scartozzi's Special Agent Report ("SAR"), T.L. Ex. 75, pg. 5). The investigation obtained evidence showing that LaRene assisted Giacalone in evading the payment of taxes on $410,000.00 of income obtained from Albert Allen, and that LaRene conspired with Giacalone and others to impede, obstruct and defraud the Internal Revenue Service in the collection of past tax debt owed to the JRS ( Id. at 3-11). The Government believed that Giacalone, with LaRene acting as a go between, extorted these funds from Mr. Allen, Apparently, Allen's partner in Home Juice Company, Fred Gilaty, incurred large gambling debts to Vito Giacalone. In settlement of these debts, Mr. Giacalone received Mr. Gilaty's interest in Home Juice Company. Vito Giacalone and his brother, Anthony Giacalone, thereafter purportedly became vice-presidents of Home Juice Company in the early 1960's. The United States Senate Subcommittee on Investigations under Senator John McClellan in 1963 identified the Home Juice Company as being owned, infiltrated or influenced by members of organized crime. The Home Juice Company franchiser in Chicago expressed concerns and threatened terminating Mr. Allen's Detroit franchise if Mr. Giacalone was not disassociated from the franchise. In August of 1966, Mr. Allen made arrangements for Home Juice Company to buy out all of Vito Giacalone's stock interest for $564,000, and he and his brother ceased their employment at this company. Each was given a car and an additional $150,000 for Covenants not to Compete. The August 26, 1966, General Release signed by Vito Giacalone discharged Home Juice Company from all claims by him from "the beginning of the world" to date. The capital gain on this sale was reported on Vito Giacalone's 1966 tax return. In the early 1970's, Home Juice Company of Detroit changed its name to Everfresh Juice Company because of the bad publicity tied to its former name. In 1978, Mr. Allen spun off Everfresh Juice Company from Home Juice Company in Chicago.
Throughout this report and recommendation, "T.L. Ex." refers to Petitioner's "Time Line Exhibits" (bound separately and numbered 1-50 and 51-100) and "C.B. Ex." refers to Petitioner's "Comprehensive Brief Exhibits" (bound separately and numbered 101-150).
For reasons stated in the Memorandum Opinion and Order of April 30, 1999, which order was upheld by the Court on November 2, 1999, disclosures of certain grand jury information covered by FED. R. CRIM P. 6(e) is required in this Report and Recommendation as relevant to a conflict of interest claim involved in this petition. The need for disclosure in this judicial proceeding is greater than the need for continued secrecy. This is particularly true because most of this grand jury information in a copy of a stolen report of an IRS Special Agent summarizing it appears to have been available to Petitioner's attorney at critical times relevant to issues in Petitioner's criminal case. The names of certain witnesses and entities are not specified. The underlying grand jury matters have been resolved over a dozen years ago and no further investigations related thereto are likely. Disclosure will not impede any ongoing criminal investigation. The primary witness involved, Albert Allen, is deceased.
The amount sought in the transactions was $410,000, but Mr. Allen inadvertently paid an additional $10,000 which he never sought back.
Years after the August 1966 buyout, in July of 1970, while Vito Giacalone was in state custody, Anthony Giacalone and his lawyer (not Mr. LaRene) approached Mr. Allen saying he owed "Billy some money and that he was unhappy." Mr. Allen said he thought he had paid for the buyout but their position was that he owed money to Vito Giacalone for the 1966 sale of the Home Juice Company. Nonetheless, Mr. Allen signed a July 6, 1970, agreement to pay Vito Giacalone or his heirs half of any profits from a future sale of Home Juice Company in excess of the $564,000 already paid. It appears that no legal consideration was provided to Mr. Allen to induce him to sign this note. When asked before the Grand Jury in October 1991 why he signed away half of his company 21 years earlier, he said he did not know why he signed it (SAR, pg. 14; April 30, 1999 Memorandum and Order, note 10 Appendix A, T.L. Ex. 85). He acknowledged knowing of Mr. Giacalone's reputation and that he was fearful. He later admitted that Mr. Giacalone did not deserve the payoff of this 1970 agreement. (SAR, pg. 62).
Vito Giacalone was also known as "Billy Jack".
The 1970 Agreement was first discovered by the Government when it served a subpoena on Mr. LaRene. Thereafter the original was obtained from Mr. Allen. This was after Mr. Allen had produced no records when asked regarding payment of the $410,000 and had initially indicated that the payments were on horse race gambling debts. When first subpoenaed him before a grand jury in July 1990, he asserted his Fifth Amendment privilege. After a September 13, 1990, order required him to give testimony before the grand jury and at trial under a grant of immunity, he unsuccessfully sought delays because of stress and cardiac problems. In his appearances before the grand jury on October 30, 1990, August 7, October 23, October 30, and November 20, 1991, he gave hesitant and incomplete information. He disappeared for a period of time to avoid a subpoena to testify at the trial of Giacalone and LaRene, Allen was indicted on September 14, 1993. AUSA Corbett prosecuted Mr. Allen and he was sentenced on February 9, 1995, to 180 days of home confinement and $110,000 costs for criminal contempt in violation of 18 U.S.C. § 401(3) and FED. R. CRIM. P. 42. United States v. Allen, 73 F.3d 64 (6th Cir. 1995).
In September of 1985, Mr. Allen called his lawyer and told him he had received a phone call from Deday LaRene regarding his client's desire to settle the 1970 Agreement. Mr. Allen's lawyer had seen this 1970 Agreement about five years earlier and thought it was unenforceable due to lack of any legal consideration being provided to Mr. Allen. On September 23, Mr. Allen's lawyer called Mr. LaRene, and later received a copy of the 1970 agreement from him. On September 27, he had another conversation with Mr. LaRene and later received a "note" that was discussed. In October of 1985, Mr. Allen's lawyer prepared and sent to Mr. LaRene a proposed settlement agreement in which Mr. Allen would pay Mr. Giacalone $500,000 to settle forever all claims in connection to the 1970 Agreement. He received no response from Mr. LaRene, but later, Mr. Allen called and said he would "handle the matter in the future." (SAR, pg. 46-47.) The following May 10, Mr. Allen called his lawyer and said he settled the matter for $30,000 on a Note and $410,000. Counsel told Mr. Allen to be sure to get the note returned marked "paid in full" and signed, obtain the 1970 Agreement marked cancelled and terminated and signed, and if possible obtain a release of claims.
An October 31, 1991, subpoena to Mr. LaRene produced an October 10, 1969, interest free note between Albert Allen and Anthony and Vito Giacalone for $86,000 to be paid by December 31, 1971. The investigation also revealed that Allen signed a July 16, 1986, interest free Promissory Note for $410,000 to Vito Giacalone to be paid by December 31, 1986, in settlement of the 1970 Agreement. Mr. Allen said that prior to signing the July 1986 note, he paid Mr. LaRene $30,000 to cancel the October 10, 1969, note. He claimed that he had borrowed money from the Giacalones periodically, though he did not know how much. He said he paid the $30,000 even thought he was not sure he owed it. Mr. Allen noted that he was "turned . . . over" to Mr. LaRene in 1982. Mr. LaRene's records revealed receipts for collections from Mr. Allen of $2,000 between December 31, 1977, and August 13, 1982, then $7,000 on August 13, 1982, $4,000 on November 17, 1982, $4,000 on May 17, 1983, $4,000 on August 11, 1983, $5,000 on May 8, 1984, $4,000 on September 6, 1984, and $3,000 on December 17, 1984 (SAR, pg. 49).
After the July 1986 meeting and note signing, Mr. LaRene directed Mr. Allen to make payments to him initially in cash and later by 33 checks. The cash payments included $100,000 on August 15, 1986, and $50,000 on September 25, 1986 that were made to Mr. LaRene at Mr. Allen's office. Receipts purportedly signed by Vito Giacalone were provided.
Mr. LaRene's appointment book revealed meeting notations regarding Mr. Allen on August 8 and November 13, 1985. LaRene also noted seeing Allen on the following dates in 1986; April 5, May 23 and 29, July 3 and 16, August 15 and 27, September 25, October 10, 13, 20 and 23, November 11 and 14, and December 9 (SAR, pg. 57). It showed meetings with Vito Giacalone on August 10, 1985, October 9, 1986 and November 18, 1986. A torn off manila older flap contained notations "8-15-86 100k" and "9-25-86 50k" ( Id. at 58). Also obtained by subpoena were a December 3, 1986, receipt for $260,000 from Mr. Allen, and September 23 and 27, 1985 letters to Mr. Allen's attorney, and that attorney's October 10 letter with a "proposed Agreement" settling the 1970 Agreement for $500,000, and a copy of the cancelled July 16, 1986 note for $410,000 ( Id.).
Mr. Allen stated in his grand jury testimony that the structuring of the agreement in 33 checks under $10,000.00 each, as well as the cash payments totaling $150,000.00, were all at the direction of Mr. LaRene. After LaRene initially received $150,000.00 in cash from Allen, he directed Allen that the remaining amount could be paid by check but that Allen must only write him checks in amounts under $10,000 or "some sort of form" would have had to have been filled out with the bank. In total, Allen wrote LaRene 33 checks made payable to "Cash" for a total of $270,000. (SAR, pgs. 3, 5, 68). The amounts ranged from $7,500 to $9,000. Because the amounts of the checks were less than $10,000, no Currency Transaction Reports, IRS Form 4789, were prepared by the financial institution involved.
As noted in footnote 3, he inadvertently paid $10,000 more than was requested.
These checks were deposited on December 9, 1986, into the bank account of Shoppers Market. On December 12, 1986, $270,000 in $100 bills was withdrawn from this account and a Currency Transaction Report, Form 4789, noted the transaction was completed identifying Shoppers Market was involved in the transaction.
Emmet Denha, the owner of Shoppers Market, was indicted in May 21, 1991, and later pled guilty to aiding and abetting a RICO charge involving alleged money laundering along with Vito Giacalone's son, Jack Vito Giacalone, who pled guilty to an illegal gambling conspiracy count.
Frank Scartozzi was a Special Agent with the Internal Revenue Service working with Assistant United States Attorney ("AUSA") Keith Corbett, head of the Organized Strike Force in the Detroit Office of the United States Attorney. He was central in the investigation into LaRene and Giacalone. He testified in his deposition that he believed LaRene knew he had engaged in illegal activities involving extortion regarding the payments from Allen. (Scartozzi Nov. 8, 2000, Deposition, C.B. Ex. 101, pgs. 21-22).
While this investigation was going on, the Government began investigating whether LaRene received clients' fees in cash and failed to file IRS Forms 8300 or to report them on his income tax returns. There were also questions about the accuracy and completeness of 1990 financial statements Mr. LaRene filed with the IRS regarding his assets concerning the tax debt he owed to the IRS. The Government subsequently obtained LaRene's tax records from the IRS and bank records in order to investigate possible tax evasion violations and failures to file From 8300 on cash transactions. (Transcript of February 2, 2000 telephonic hearing before the undersigned, C.B. Ex. 112, pg. 35). In addition to these documents, Agent Scartozzi testified that he "remember[ed] trying to speak to several of [LaRene's] clients" regarding their method of payment (Scartozzi May 21, 2002, Deposition, C.B. Ex, 102, pg. 50). The investigation into the cash payments revealed that LaRene had on one occasion been paid with valuable gold coins (Scartozzi Nov. 8, 2000, Deposition, C.B. Ex. 101, pg. 71). In addition, the investigation found that even though LaRene had represented Vito Giacalone for many years on various criminal charges, there was no evidence to show that LaRene had ever received any legal fees from Mr. Giacalone ( Id. at 51). Agent Scartozzi indicated that one of the reasons the Government thought LaRene concealed his cash transactions was due to his own existing tax problems and his installment payment agreement with the IRS on his "significant" unpaid back taxes ( Id. at 45).
Mr. LaRene represented Vito Giacalone on various criminal matters, including a 1977 Felon in Possession charge for which he was sentenced by this Court to 2 years, a 1978 Extortion charge for which he was sentenced in 1979 to 3 three years custody to run concurrent with the prior sentence, a 1986 RICO gambling charge to which he pled guilty in 1987 and sentenced to five years served in part at a Federal Medical Facility until his release in January 1992 to a half way house in Detroit.
In 1986 Vito Giacalone acknowledged federal tax liability of $184,558 for years 1969-1985. (SAR, pg. 29). According to the IRS his tax liability and penalties were in excess of $340,000 through tax year 1985, ultimately reduced to judgment by this Court in March of 1989. Mr. LaRene knew or had reason to know of Mr Giacalone's tax debt to IRS. In August of 1977 and again in May of 1979 and in June of 1987 in representing Vito Giacalone, Mr. LaRene resisted making disclosures necessary to complete Mr. Giacalone's net worth statement for the Probation Department, asserting that the IRS had a civil and/or criminal investigation against him for tax years 1972-74, and thus disclosure was not appropriate (SAR, pgs. 25-26, 32, 67).
In addition to the above, the investigation also included LaRene's use of a former client and prominent bail bondsman in Detroit, Charles Goldfarb, as a nominee in purchasing, among other things, a $230,000 home on Walnut Lake in West Bloomfield in 1985 and a $81,000 Porsche in May 1990. The Porsche purchase was shortly before LaRene entered into an installment agreement to pay approximately $270,000 in unpaid taxes for years 1982 through 1989, and provided the IRS with a personal financial statement related to this. (Scartozzi May 21, 2002, Deposition, C.B. Ex. 102, pgs. 41, 44; Letter from Stephen Markman and Keith Corbett to Benjamin McMakin, Chief, Criminal Investigation Division of the IRS (Sep. 30, 1992), T.L. Ex. 81; Request for Grand Jury Investigation, T.L. Ex. 82). LaRene also used Goldfarb to purchase many luxury cars in the 1980's, including an Alpha Spider, several Ferraris, and a BMW, in addition to the 1990 Porsche. The arrangement involved LaRene buying the cars in Goldfarb's name and, upon selling the cars, repaying Goldfarb. It was suspected that LaRene may have used Goldfarb and others as nominees in order to conceal his true assets from the Government (Letter from Stephen Markman and Keith Corbett to Benjamin McMakin, Chief, Criminal Investigation Division of the IRS (Sep. 30, 1992), T.L. Ex. 81; Request for Grand Jury Investigation, T.L. Ex. 82, pg. 7). For example, before Goldfarb obtained a $60,000 cashier's check on May 14, 1990, for the Porsche purchase by LaRene, there was a May 11 Currency Transaction Report showing Goldfarb's brother deposited $61,180 into that Goldfarb Bonding Agency account used to purchase the cashier's check. (Letter from Stephen Markman and Keith Corbett to Benjamin McMakin, Chief, Criminal Investigation Division of the IRS (Sep. 30, 1992), T.L. Ex. 81, pg. 2). The suspicion was that LaRene provided those funds in cash to avoid disclosure of his assets to the IRS. In his deposition, Agent Scartozzi stated that "it was my belief then that to try and conceal his assets he [LaRene] had Mr. Goldfarb as his nominee" (Scartozzi Nov. 8, 2000, Deposition, C.B. Ex. 101, pgs. 22-23). Thus, when LaRene entered into his agreement with the IRS in order to pay his back taxes, having hidden his assets under Goldfarb's name, he lied to the IRS about what he actually owed (Letter from Stephen Markman and Keith Corbett to Benjamin McMakin, Chief, Criminal Investigation Division of the IRS (Sep. 30, 1992), T.L. Ex. 81; Request for Grand Jury Investigation, T.L. Ex. 82, pg. 2).
LaRene represented Goldfarb in a 1979 case where Goldfarb ultimately pled guilty and received a three year sentence for hiding his ownership interest in the Aladdin Hotel that it was suspected he and another co-conspirator ran for Vito Giacalone (Request for Grand Jury Investigation, T.L. Ex. 82, pg. 4).
Other examples include LaRene's March 13, 1990 receipt of $200 thousand from the sale of one of his Ferrari's back to the Sports Car Exchange, where he had purchased it (using a nominee to hide his identity) for $135 thousand. (Request for Grand Jury Investigation, T.L. Ex. 82, pg. 3). On May 21, 1990, there was a $200 thousand deposit at Comerica Bank which the Government also investigated as part of its examination of LaRene's use of nominees. On March 21, 1991, LaRene bought a 1991 BMW from Bavarian Motor Village, again using a nominee to conceal his ownership. ( Id. at 7).
The Government also suspected that LaRene conspired with Goldfarb to convert the refunds on bail bonds posted through Goldfarb's bond agency into cash income which LaRene did not report. AUSA Corbett was heading up the investigation of LaRene and Giacalone. He noted at a hearing in this case that "we had questions about, when a check was returned by the Goldfarb Bonding Agency, whether he got all that money back, whether he got some of that money back, or whether it went to Mr. LaRene" (Transcript of May 23, 2000, Telephonic Hearing, C.B. Ex. 114, pg. 27-28). Corbett also noted that "the Government was investigating the possibility that some money posted as bonds for defendants with the Goldfarb Bonding Company was given to Mr. LaRene after the bond was refunded without a record of such transfer having been kept" (Corbett June 5, 2000, Declaration, C.B. Ex. 119). Agent Scartozzi also testified that he suspected "that somehow when bond money was returned that [LaRene] would benefit in some fashion" (Scartozzi Nov. 8, 2000, Deposition, C.B. Ex. 101, pg. 58).
Finally, the investigation into LaRene's criminal conduct also dealt with his possible involvement with the theft of a Special Agent's Report ("SAR," included as T.L. Ex. 75). While investigating LaRene, Special Agent Scartozzi drafted a 1200 page report detailing the Government's proposed charges against LaRene and his client Vito Giacalone related to the funds obtained from Albert Allen. The SAR contained "transcripts from grand jury proceedings; names, addresses and, in some cases, telephone numbers of witnesses who had testified before the grand jury; a summary of the Government's theory for the prosecution of the case; and a discussion of potential defenses to the prosecution." United States v. Forman, 71 F.3d 1214, 1215 (6th Cir. 1995). After Agent Scartozzi completed the SAR he forwarded it to the U.S. Department of Justice's fax Division in Washington, D.C. Tax prosecutions in local federal districts require the review and approval of the Tax Division criminal enforcement section.
The case was assigned to attorney Curtis Nash in the Tax Division. Theodore Forman, a trial attorney prosecuting criminal tax cases in the enforcement section, shared an office with Nash. Mr. Forman was a Detroit Native and boyhood friend of Paul Corrado, son of Anthony Corrado, a reputed member of the Detroit organized crime syndicate. United States v. Forman, 71 F.3d 1214, 1216 (6th Cir. 1995). Forman's mother had incurred substantial gambling debts to the syndicate. She was serving a prison term for narcotic trafficking engaged in partly in order to raise money to pay off her gambling debts. Pressure was being put on Forman's invalid father for his wife's debts. In 1992, Forman sought Paul Corrado's help to protect his father. The exchange was Forman's help in getting the SAR on Giacalone and LaRene. On a weekend in April of 1992, Forman obtained the SAR from Nash's file and photocopied it and drove to Detroit to deliver it to Corrado. Id. at 1217. Execution of an October 1992 federal search warrant in a separate investigation seized this stolen copy of the SAR from the office of Vito Giacalone on October 19, 1992 (Forman trial transcript, Nov. 16, 1993, T.L. Ex. 44, pg. 68). Fingerprints of both Forman and LaRene were found on the document.
B. Petitioner's Criminal Prosecution
The facts of this case have been well documented. On November 7, 1990, as a result of an investigation led, in part, by AUSA Keith Corbett (Grand Jury transcript cover sheets and Use Immunity Agreement signed by Corbett, T.L. Ex. 1), a grand jury returned an eight-count indictment against Petitioner and others. The indictment named Petitioner in five counts alleging conspiracy to distribute narcotics and related offenses. (Indictment against Petitioner filed November 7, 1990, T.L. Ex. 2). Two days later, Petitioner was arraigned. (Docket Report, T.L. Ex. 3, pg. 4).
Five weeks later, on December 14, the Detroit Organized Crime Strike Force opened an investigation into possible extortion, money laundering, and conspiracy violations committed by Deday LaRene, LaRene's client Vito Giacalone, and others. (SAR, T.L. Ex. 75, pg. 5). It is undisputed that LaRene was aware of the Government's criminal investigation of his activities before Petitioner's trial.
AUSA Corbett stated, "By at least the — the summer of '91, long before the Rugiero trial, he [LaRene] knew the government was looking at him." (Transcript of February 17, 1999 telephonic hearing, C.B. Ex. 109, pg. 62). On August 8, 1991, the Government subpoenaed LaRene for handwriting exemplars, photographs, and fingerprints. The Government subpoenaed numerous records including records from financial transactions from 1986 and 1987 between LaRene and Giacalone, or conducted on behalf of Giacalone. Records of any legal fees charged or received from or on behalf of Vito Giacalone from 1986 through 1989 were sought, including any retainer agreements, records of meetings on behalf of Vito Giacalone in 1986, and all records sent to the U.S. Probation Department or Pretrial Services on behalf of Vito Giacalone during 1977-1989 (subpoenas, T.L. Ex. 74). LaRene responded on August 21, 1991 (SAR, pg. 6). On October 1, 1991, the Government subpoenaed LaRene's banking records from First of America to examine financial dealings and cash transactions with clients including Petitioner (Scartozzi Declaration, T.L. Ex. 87). On October 17, 1991, the Government sought records of LaRene's May 14, 1990 purchase of a Porsche using Goldfarb as a nominee ( Id.). On October 24, 1991, the Government subpoenaed banking records from the Porsche purchase ( Id.). On October 31, 1991, the Government sought additional records relating to Giacalone which LaRene provided on November 6, 1991 (SAR, pg. 6). The Government also sought various banking and phone records (Scartozzi Declaration, T.L. Ex. 87).
On February 29, 1991, LaRene filed his formal appearance as co-counsel for Petitioner to work alongside attorney William Bufalino. (Appearance cover letter from N.C. Deday LaRene, to Richard Delonis (Feb. 28, 1991), T.L. Ex. 4). At the time, some considered LaRene one of "the most prominent criminal defense attorneys in the Detroit area." (Transcript of June 17, 1992 news broadcast on WDIV-TV, T.L. Ex. 11). He was also the primary defense counsel for Petitioner, with William Bufalino playing a far lesser role.
After nine postponements, Petitioner's trial commenced on May 5, 1992. LaRene was unwilling to pursue plea negotiations on behalf of Petitioner, despite the fact that the Government was willing to negotiate a plea and had offered and discussed pleas with all of Petitioner's co-defendants. Government counsel in argument at the hearing on this petition noted that Mr. LaRene had a reputation that if he entered plea negotiations for a client, he would never include client cooperation as part of the deal. While this may be disputed, there is no evidence of any effort to achieve a negotiated plea for Mr. Rugiero with or without his cooperation.
On June 17, 1992, while the Rugiero trial was in its final days, WDIV-TV in Detroit reported that one of defendant's trial counsel was the subject of a federal criminal investigation involving "the attorney's dealings with a client who has been tied to organized crime." (Transcript of June 17, 1992 news broadcast on WDIV-TV, T.L. Ex. 11). The 6 p.m. newscast specifically identified Deday LaRene as one of "the most prominent criminal defense attorneys in the Detroit area" allegedly being involved in a business deal in which "a substantial amount of money was hidden from the Internal Revenue Service" for his client Vito "Billy Jack" Giacalone, "long tied to gambling and organized crime" who recently was released from federal prison. ( Id.) The newscast noted that: "The investigation [of LaRene] is completed . . . the feds are just now waiting until Deday LaRene finishes up with a trial now going on here in federal court" referring without name to Petitioners's trial. ( Id.) The news story noted LaRene also represented Vito Giacalone's son, Jackie Giacalone who recently pled guilty in a sports betting case. ( Id.) The story concluded that "LaRene [had] contacted a high-powered law firm in Washington D.C. famous for its criminal defense work." ( Id.) On the 11 p.m. Nighbeat program on the same station a shorter version of the story was broadcast but added that "La[R]ene has represented a large number of alleged organized crime figures. . . ." ( Id.)
The next morning, the Court and the parties met in chambers for the purpose of discussing how to proceed in light of the publicity. United States v. Rugiero, 804 F. Supp. 925, 927 (E.D. Mich. 1992). The Court inquired into the impact on the deliberating jurors and it was determined that the deliberations should continue and there was no showing the jury had been prejudiced by the news report.
The following day, June 19, Petitioner was convicted of Count 1 and, as a result of the individual polling of the jurors by the Court, it was determined that the jury had not reached a unanimous decision on Count 2. During this polling of each juror individually and outside the presence of others, voir dire questions were also asked by the Court and counsel regarding the news coverage and its impact, if any, on their decisions. LaRene, rather than recuse himself from asking questions about effects of reports of his own alleged wrongdoing, conducted portions of the voir dire for Petitioner. There was no finding of any prejudice by the news report, and the jury reconvened to deliberate further on Petitioner's Count II. On June 23, the jury returned a guilty verdict on Count 2. Petitioner was acquitted on Counts 3, 5 and 6 which included a charge of distribution of a large quantity of heroin, a charge an intimidating and threatening a witness, and a charge of using and carrying a firearm during and in relation to a crime of violence.
On July 28, 1992, LaRene filed on Petitioner's behalf a New Trial Motion under FED. R. CRIM. P. 33. (Docket Report, T.L. Ex. 3, pg. 12). On September 11, 1992, LaRene filed objections to Petitioner's Presentence Report (Objections to Presentence Report, T.L. Ex. 14).
On September 16, 1992, LaRene was formally indicted by the Government. (Indictment, T.L. Ex. 39). His indictment was the subject of a news release by U.S. Attorney Stephen Markman and stories in both the Detroit News and Free Press (Department of Justice news release (Sept. 16, 1992); Response to Media Inquiry by Robert Morgan; William Kleinknecht, Alleged Mafia Leader Indicted, DETROIT FREE PRESS, Sept. 17, 1992, at A1; Robert Ankeny, Giacalones, Lawyer to Face Tax Charge, DETROIT NEWS, Sept. 17, 1992, at B1; T.L. Ex. 38).
On October 6, 1992, this Court heard oral arguments and denied Petitioner's New Trial Motion and sentenced Petitioner as a first-time drug offender with no prior felony convictions to a term of imprisonment of three-hundred sixty months (Sentence report cover sheet, T.L. Ex. 15). On October 13, LaRene filed Petitioner's Notice of Appeal (Docket Report, T.L. Ex. 3, pg. 13). On November 30, LaRene filed his formal appearance as Petitioner's counsel in the direct appeal to the Sixth Circuit (Docket Report, T.L. Ex. 16, pg. 4). On December 9, LaRene appeared before the Sixth Circuit panel considering Petitioner's direct appeal for oral arguments ( Id. at 7).
On December 21, 1993, LaRene pled guilty (David McKay, Glacalone, Lawyer Plead Guilty to Tax, Conspiracy Charges, DETROIT FREE PRESS, Dec. 22, 1993, at 7B; Allan Lengel, Giacalone, Lawyer Plead Guilty in Plot to Swindle IRS, DETROIT NEWS, Dec. 22, 1993, at 3B; T.L. Ex. 69).
On February 7, 1994, LaRene submitted to the Sixth Circuit Court of Appeals a motion to withdraw as counsel in the matter of Petitioner's direct appeal. LaRene noted "that an anticipated change in undersigned counsel's professional status will make it impossible for him to continue to represent defendant/appellant herein" (Motion to Substitute Counsel for Defendant-Appellant, C.B. Ex. 125). The following week, on February 14, LaRene filed a motion for Domnick Sorise to act as substitute counsel in Petitioner's direct appeal (Docket Report, T.L. Ex. 16, pg. 7). At no time during Mr. LaRene's representation did Petitioner have a hearing on his attorney's conflict of interest, its potential adverse consequences on his representation, and the obtaining of Petitioner's informed and express consent to continue with the representation by Mr. LaRene.
On March 22, 1994, the Sixth Circuit affirmed Petitioner's conviction and sentence in a two-to-one decision. United States v. Rugiero, 20 F.3d 1387 (6th Cir. 1994).
On May 4, 1994, N.C. Deday LaRene was sentenced to a twelve month term of imprisonment for his criminal conduct. (Brenda Ingersoll, The Rise and Fall of Deday LaRene, DETROIT NEWS AND FREE PRESS, May 8, 1994, at A1; T.L. Ex. 70). The next day, Petitioner's petition for a Panel Rehearing in the Sixth Circuit was denied. United States v. Rugiero, 20 F. 3d 1387 (6th Cir. 1994), reh'g denied, May 5, 1994. On October 3, 1994, the Supreme Court of the United States denied Mr. Rugiero's petition for writ of certiorari. Rugiero v. United States, 513 U.S. 878 (1994).
C. 2255/Discovery Proceedings
Following the U.S. Supreme Court's refusal to reconsider his conviction, on October 17, 1996, Petitioner filed a § 2255 motion based on the conflict of interests that he alleged burdened LaRene throughout Petitioner's criminal proceedings. Thus began a long course of proceedings including repeated Government resistence, if not intransigence, in providing requested discovery materials.
On June 9, 1997, Petitioner's new counsel filed a Motion for Production of Documents and Statement of Interrogatories for this § 2255 petition. The discovery requests sought information regarding the investigation and prosecution of Petitioner, including LaRene's representation and the facts and circumstances of the Government's criminal investigation and prosecution of LaRene.
On July 31, 1997, the first of numerous hearings was conducted on discovery requests and on grand jury secrecy. During the ensuing six years, twenty discovery hearings were held, many seeking to counter the Government's recalcitrance to provide discovery.
Central to the Government's refusal to comply with its legal obligations was the matter of the file(s) regarding the investigation/prosecution of LaRene. Initially, the Government claimed that it could not locate the LaRene file (Letters from Jeffrey Bogart, to the Undersigned (Oct. 30, 1997, Nov. 13, 1997); C.B. Ex. 140), then announced that the file was missing (Letter from David Schoen, to the Undersigned (July 17, 1998), C.B. Ex. 138, pg. 2; Letter from David Schoen, to the Undersigned (Jan. 4, 1999), C.B. Ex. 139, pg. 2), and failed or delayed revealing alternative sources for reconstructing the information contained in the "missing LaRene file(s)" (Letter from David Schoen, to the Undersigned (Apr. 4, 2000), C.B. Ex. 145, pgs. 6-7; Letter from David Schoen, to the Undersigned (May 22, 1999), C.B. Ex. 146, pgs. 1-2) even though directed and ordered to do so by the Court. The Court issued several Orders in which it noted the unnecessary burden placed on the Court and Petitioner because of the Government's refusal to fulfill its discovery obligations. Id.
As was ultimately determined, the Government's initial posture regarding the "missing LaRene file(s)" was misleading. The Government attorneys had denied an ability to provide Petitioner with alternative sources for reconstructing the "missing LaRene file(s)." (Letter from David Schoen, to the Undersigned (Jan. 5, 2001), C.B. Ex. 148). Yet, after the Court had reviewed in camera weeks of grand jury testimony in an effort to reconstitute the contours of the case against Mr. LaRene and to determine issues of grand jury secrecy, the SAR of IRS Agent Scartozzi was discovered. This SAR was a duplicative summary of these hours of Court grand jury review. Because this SAR was a central piece of evidence in the Theodore Forman prosecution following his 1992 theft of this SAR, AUSA Corbett must have known of its existence from that case as well as his close work with Agent Scartozzi who prepared it so Mr. Corbett could pursue prosecution of Mr. LaRene and Giacalone for a conspiracy to defraud the IRS and tax evasion. Later, the LaRene/Giacalone investigative materials from Special Agent Scartozzi's file cabinets were made available to Petitioner's counsel and he submitted to two depositions. On November 8, 2000, Petitioner deposed Scartozzi who revealed that throughout Petitioner's discovery proceedings, he had retained considerable files concerning the extensive investigation into LaRene's criminal conduct. The existence of those files were known to AUSA Corbett who regularly saw Agent Scartozzi and whose office was nearby on the same hall.
D. FOIA Proceedings
In addition to the discovery efforts in this habeas proceeding, on June 5, 1995, Petitioner filed Freedom of Information Act ("FOIA") requests with various federal Government agencies. On July 30, 1997, Petitioner filed a complaint for declaratory and injunctive relief. After a lengthy procedural history, Rugiero v. U.S. Dept of Justice, 35 F. Supp. 2d 977 (E.D. Mich. 1998), rem'd, Rugiero v. U.S. Department of Justice, 257 F. 3d 534 (6th Cir. 2001); Rugiero v. U.S. Department of Justice, 234 F. Supp. 2d 697 (E.D. Mich. 2002) (Gadola, J.), this Court on April 30, 2003, ordered the defendant agencies to turn over to Petitioner 107 pages of previously withheld material (Opinion and Order, C.B. Ex. 144, pg. 22).
II. LEGAL STANDARDS
The Sixth Amendment guarantees defendants a right to counsel in all criminal prosecutions. Defendants have a "correlative right to representation that is free from conflicts of interest." Wood v. Georgia, 450 U.S. 261, 271 (1981). Yet, even if defense counsel has a conflict, a court may permit the attorney to continue with the representation if the defendant makes a voluntary, knowing, and intelligent waiver. See Wheat v. United States, 486 U.S. 153, 163 (1988) (district courts have substantial latitude in declining to grant waivers); Holloway v. Arkansas, 435 U.S. 475, 483 n. 5 (1978) (a defendant may waive his right to representation when it is "unhindered by a conflict of interests"). The aim of a trial court's inquiry into a potential conflict is to "evaluate the conflict and ensure it is either eliminated or waived." United States v. Rogers, 209 F.3d 139, 146 (2d Cir. 2000). When courts do not obtain a waiver to conflict-free counsel (and even sometimes when they do), defendants may challenge the representation on appeal by bringing an ineffective assistance claim. See Wheat, 486 U.S. at 162.
In the context of counsel representing co-defendants — the most common type of conflict — this inquiry in federal courts should include an on-the-record discussion of the representation with the defendant. See FED. R. CRIM. P. 44(c) ("[T]he court shall promptly inquire with respect to such joint representation and shall personally advise each defendant of the right to the effective assistance of counsel, including separate representation").
A. The Right to Counsel — Effective Assistance
The constitutional right to counsel was first noted in Johnson v. Zerbst, 304 U.S. 458, 462 (1938), where the Supreme Court wrote:
[The assistance of counsel] is one of the safeguards of the Sixth Amendment deemed necessary to insure fundamental human rights of life and liberty. . . . The Sixth Amendment stands as a constant admonition that if the constitutional safeguards it provides be lost, justice will not still be done.
In United States v. Cronic, 466 U.S. 648, 653 (1984), the Court observed that the Sixth Amendment right to assistance of counsel is essential. The Court wrote, "An accused's right to be represented by counsel is a fundamental component of our criminal justice system. Lawyers in criminal cases `are necessities, not luxuries.'" The Court went on to note:
"Of all the rights that an accused person has, the right to be represented by counsel is by far the most pervasive for it affects his ability to assert any other rights he may have." Id. at 654.
Courts have made considerable efforts to delineate this right. A defendant's "right to counsel is the right to effective assistance of counsel." McMann v. Richardson, 397 U.S. 759, 771 n. 14 (1970). In Wheat v. United States, 486 U.S. 153, 159 (1988), the Supreme Court wrote, "The essential aim of the [Sixth] Amendment is to guarantee an effective advocate for each criminal defendant." An "effective advocate" is a "zealous" and "active" advocate. Powell v. Alabama, 287 U.S. 45, 58 (1932). In Cronic, 466 U.S. at 656, the Court held that, "Unless the accused receives the effective assistance of counsel, `a serious risk of injustice infects the trial itself,'" quoting Cuyler v. Sullivan, 446 U.S. 335, 343 (1980).
The Sixth Circuit has construed effective assistance to mean the assistance of counsel as "reasonably likely to render and rendering reasonably effective assistance." Beasley v. United States, 491 F.2d 687, 696 (6th Cir. 1974). Under Beasley, the defense attorney must perform at least as well as an attorney "with ordinary training and skill in the criminal law and must conscientiously protect his client's interests, undeflected by conflicting consideration." Id.
The Supreme Court, in the seminal case of Strickland v. Washington, 466 U.S. 668, 694 (1984), held that generally, a defendant alleging ineffective assistance of counsel must demonstrate "a reasonable probability that, but for counsel's unprofessional errors, the result of the proceedings would have been different." Yet, as demonstrated below, an important caveat to this general rule is that "in certain Sixth Amendment contexts, the court will discharge the defendant's Strickland obligation to demonstrate a probable effect on the outcome and instead presume such prejudice. . . . The presumption of prejudice . . . arises where the defendant demonstrates that his attorney actively represented conflicted interests." Moss v. United States, 323 F.3d 445, 455 (6th Cir. 2003).
B. Ineffective Assistance — Conflicts of Interest and the Prejudice Requirements
The Supreme Court has developed the standard for determining ineffective assistance of counsel based on conflicts of interests in cases beginning with Glasser v. United States, 315 U.S. 60 (1942), and continuing with Holloway v. Arkansas, 435 U.S. 475 (1978), Cuyler v. Sullivan, 446 U.S. 335 (1980), and Wood v. Georgia, 450 U.S. 261 (1981).
In United States v. Cronic, 466 U.S. 648, 662 n. 31 (1984), the Supreme Court made clear that a defendant need not demonstrate prejudice in the context of a conflict of interest claim. The Cronic Court, citing Cuyler, wrote, "[w]e have presumed prejudice when counsel labors under an actual conflict of interest, despite the fact that the constraints on counsel in that context are entirely self-imposed." In Glasser, 315 U.S. at 75-76, the Court stated, "The right to have the assistance of counsel is too fundamental and absolute to allow courts to indulge in nice calculations as to the amount of prejudice arising from its denial."
The Cuyler Court also addressed the issue of "prejudice" when it wrote, "[a] defendant who shows that a conflict of interest actually affected the adequacy of his representation need not demonstrate prejudice," 446 U.S. at 349. This less onerous standard, dispensing with the prejudice requisite, has been applied in certain ineffective assistance cases based upon an alleged conflict of interest on the part of defense counsel. In a case where the conflict of interest emanated from the joint representation of defendants, the Supreme Court held that "a defendant who shows that a conflict of interest actually affected the adequacy of his representation need not demonstrate prejudice in order to obtain relief." Cuyler, 446 U.S. at 349-50.
In deciding a case involving an alleged conflict of interest the Sixth Circuit has said that such assertions do not per se demonstrate a Sixth Amendment violation and the defendant:
has the burden of demonstrating that counsel's activity represented conflicting interests and that an actual conflict of interest adversely affected his lawyer's performance. (Citations omitted.) This court specifically has rejected a per se rule as to conflicts of interest and requires proof of an actual conflict.Taylor v. United States, 985 F.2d 844, 846 (6th Cir. 1993). Thus, a petitioner has the burden to show (1) an actual conflict of interest and, (2) that the conflict of interest had an adverse impact upon his lawyer's performance.
In Taylor, the Sixth Circuit listed three factors relevant to a determination of whether an actual conflict of interest existed. First, the Court determined that no nexus existed between the defendant's criminal charges (fraudulent prescriptions for controlled substances) and the charges against his attorney (marijuana conspiracy). Second, the Taylor court considered the fact that the crimes were not prosecuted by the same office. Finally, in considering whether counsel actually breached his duty of loyalty, the court relied upon the deferential standard of review and broad discretion accorded counsel's strategic choices and rejected defendant's claims of ineffective assistance of counsel. Id.
This Court has applied the modified Cuyler conflict of interest test, consistent with other courts, in the following manner:
First, a defendant must establish that his attorney had an actual conflict of interest. A defendant then must establish that this conflict of interest adversely affected his attorney's performance in representing him.Tyler v. United States, 78 F. Supp. 2d 626, 632 (E.D. Mich. 1999) (citing Strickland, 466 U.S. at 692; Thomas, 818 F.2d at 480).
Tyler defined the standard for determining the existence of an actual conflict. Petitioner must "point to `specific instances in the record to suggest an actual conflict or impairment of [his] interests.'. . . . [Petitioner] must make a factual showing of inconsistent interests and must demonstrate that the attorney "made a choice between possible alternative courses of action. . . .'" Id. at 632 (quoting Thomas 818 F.2d at 481 (quoting United States v. Mers, 701 F.2d 1321, 1328 (11th Cir. 1983)).
Riggs v. United States, 209 F.3d 828, 831 n. 1 (6th Cir. 2000), stated that "this circuit applies the Cuyler analysis to all Sixth Amendment conflict-of-interest claims. One exception, not applicable here, is in those cases where the trial court was informed by counsel or the defendant of a potential conflict of interest but failed to inquire into that conflict: in such cases, prejudice is presumed and reversal is automatic." The Sixth Circuit affirmed both Riggs and the application of Cuyler v. Sullivan to conflicts cases in Harris v. Carter, 337 F.3d 758 (6th Cir. 2003). In Whiting v. Burt, 266 F.Supp. 2d 640, 644-45 (E.D. Mich. 2003), the district court once again applied Cuyler to conflicts cases.
C. Standard of Review
Title 28 of the United States Code section 2255 states
A prisoner in custody under sentence of a court established by Act of Congress claiming the right to be released upon the ground that the sentence was imposed in violation of the Constitution or laws of the United States, or that the court was without jurisdiction to impose such sentence, or that the sentence was in excess of the maximum authorized by law, or is otherwise subject to collateral attack, may move the court which imposed the sentence to vacate, set aside or correct the sentence. . . .
To prevail in a section 2255 motion a petitioner "must allege one of three bases as a threshold standard: (1) an error of constitutional magnitude; (2) a sentence imposed outside the statutory limits; or (3) an error of fact or law that was so fundamental as to render the entire proceeding invalid." Weinberger v. United States, 268 F.3d 346, 351 (6th Cir. 2001).
III. DISCUSSION AND ANALYSIS
Petitioner raises several issues in his petition. He argues: 1) that there was an actual conflict of interests due to the investigation and prosecution of LaRene; 2) that the Government's knowledge, concealment, and resulting interference with Petitioner's Fifth and Sixth Amendment rights require a reversal of the conviction; 3) the court's knowledge of the conflict and failure to fulfill its independent inquiry obligation mandates an automatic reversal of the conviction; 4) structural error due to Petitioner's exclusion from an inchambers hearing requires automatic reversal; and 5) LaRene's actual conflict adversely affected Petitioner's representation and requires reversal. The three middle arguments — the Government's knowledge and inaction, structural error and automatic reversal — need not be addressed, because there are adequate reason to grant the petition on conflict of interests issues 1) and 5) alone.
Other of LaRene's clients were informed of the potential conflict of interests. Jack Giacalone was informed of the conflict and chose to continue with the representation (Transcript experts of telephonic hearings, T.L. Ex. 94). LaRene client Timothy Peoples signed a conflict waiver which was filed on August 12, 1993 (Waiver and transcript of hearing regarding waiver, T.L. Ex. 57). A similar waiver and hearing was held for client Kenneth Christunas (Waiver and transcript of hearing regarding waiver, T.L. Ex. 49). Regarding LaRene's representation of Ronnie Hudson, on June 18, 1993 the Government submitted a Motion for Inquiry Regarding Conflict of Interest which gave the Court notice about LaRene's conflict and "request[ed] that this Honorable Court conduct an inquiry regarding a conflict of interest involving defense counsel N.C. Deday LaRene." (Motion for Inquiry Regarding Conflict of Interest, T.L. Ex. 55). The Government did not call the Court's attention to the conflict and need for a waiver, but this is not addressed as the reasons given are adequate to grant Petitioner's motion.
A. Conflict of Interests — Actual Conflict Cuyler held that when a defendant does not object to a possible conflict and the trial judge is not otherwise alerted to such a conflict, the defendant "must demonstrate that an actual conflict of interest adversely affected his lawyer's performance," Cuyler, 446 U.S. at 348. Only certain situations presenting potential conflicts will trigger a trial court's duty to inquire. For example, Cuyler teaches that even multiple representation, without more, does not trigger this duty. Id. at 346-47. Petitioners "must point to specific instances in the record that suggest an actual conflict or impairment of [their] interests." Thomas, 818 F.2d at 481 (citations and internal quotations omitted).
Here, Petitioner alleges that the conflict arose where his lawyer, LaRene, was being investigated by the same United States Attorneys Office behind his prosecution before, during, after his trial and during his appeal. The criminal investigation against LaRene eventually led to his guilty plea and conviction on charges of income tax evasion and conspiracy to defraud the United States.
Several circuit courts have found an actual conflict of interest in analogous situations, emphasizing the fact that the same office was prosecuting or investigating both the attorney and client. See, e.g., Armienti v. U.S., 234 F.3d 820, 824-25 (2d Cir. 2000) (remanding § 2255 petition to the district court for evidentiary hearing on whether actual conflict adversely affected counsel's performance where defense counsel was being investigated by same U.S. Attorney's Office behind petitioner's own prosecution); United States v. Levy, 25 F.3d 146, 156 (2d Cir. 1994) (finding actual conflict for several reasons, including attorney's prosecution on unrelated charges by same office prosecuting defendant); Thompkins v. Cohen, 965 F.2d 330, 332 (7th Cir. 1992) (presuming that an actual conflict may arise when defendant's lawyer is under criminal investigation by the same prosecutor's office, but finding no adverse effect); United States v. McLain, 823 F.2d 1457, 1463-64 (11th Cir. 1987) (finding actual conflict where attorney was under investigation by the same United States Attorney's office prosecuting the defendant and attorney had interest in prolonging the trial to delay his own indictment), overruled on other grounds as recognized by United States v. Watson, 866 F.2d 381, 385 n. 3 (11th Cir. 1989); Briguglio v. United States, 675 F.2d 81, 82 (3d Cir. 1982) (holding that where trial counsel was under investigation by same United States Attorney's office that was prosecuting counsel's client, evidentiary hearing was required to determine if "counsel labored under an actual conflict of interest, whether any such conflict may have affected the adequacy of his representation, or whether [the client] was prejudiced by his counsel's difficulties").
The Government cites Taylor v. United States, 985 F.2d 844 (6th Cir. 1993), which examined actual conflicts by looking at the nexus between a defendant's and attorney's criminal charges, whether the crimes were prosecuted by the same office, and whether counsel breached the duty of loyalty to the client. Most of Taylor's analysis of the nexus issue focused on the distinction that the defendant and his counsel were pursued and eventually charged by different authorities — the petitioner by the federal authorities and his attorney by state officials. Id. at 846.
The nexus prong is met in this case. LaRene was investigated for his own suspected tax evasion as well as assisting the tax evasion of Mr. Giacalone. The Government suspected, among other things such as use of nominees to acquire property for him, that Mr. LaRene was taking cash payment from clients and not reporting those payments to the IRS. The Tax Division of the Justice Department was investigating how clients paid LaRene. Petitioner in this case, like other clients, paid LaRene in cash. LaRene even falsified his own records by recording that two payments were made by check payments from Petitioner, although Petitioner only paid in cash. LaRene recorded checks from Petitioner in amounts under $10,000, presumptively to avoid the reporting requirements of IRS form 8300. The cash payment(s) Petitioner did actually make (as well as the two fictitious checks) are subject to an 8300 filing, which requires "each person engaged in a trade or business who, in the course of that trade or business, receives more than $10,000 in cash in one transaction or in two or more related transactions" to file the 8300 form. At oral argument, the Government contended that any payments Petitioner would have made to LaRene would not have been due until the following April tax filing date, with a possible extension until August, and as such there would not have been interest in a form which was not yet due.
At the hearing on this motion, Petitioner's counsel indicated LaRene always insisted on cash payment. LaRene charged $150,000 if the payment is made by check, but only $80,000 if paid by cash. LaRene charged $60,000 for an appeal. Petitioner always paid in cash, paying $80,000 before the trial.
It appears that the Government is wrong on this. Form 8300 is not filed with normal income taxes in April. Instead, the form states, "[f]ile Form 8300 by the 15th day after the date the cash was received." Form 8300's instructions make it clear that intentional failure to file can subject the individual to a $25,000 penalty and criminal charges involving a 5 year sentence and $250,000 in fines. Thus, it is reasonable that LaRene would believe the U.S. Attorneys would, in dealing with Petitioner, inquire into his payments to LaRene, meeting the nexus requirement, particularly because LaRene knew and was upset that the Government had talked to other of his clients (Scartozzi Nov. 8, 2000, Deposition, C.B. Ex. 101, pg. 72).
Regarding the authorities involved in Petitioner's and LaRene's cases, some decisions regarding the prosecutions of Petitioner and LaRene were made in Washington in two different divisions of the Justice Department, namely the Tax and Organized Crime divisions. Nonetheless, the eyes and ears of this case were the Assistant U.S. Attorneys in the Eastern District of Michigan: Mr. Delonis in Rugiero's case, and Mr. Corbett in the LaRene investigation. At the very least, both Mr. Delonis and Mr. Corbett had input regarding any plea proposals and bargains, as noted below in Mr. Corbett's involvement in May 1992 in nixing a 15-year plea deal for Mr. Rugiero. Mr. Corbett played a critical role in the LaRene investigation, and clearly would have been seen by LaRene as not just a local but a primary player. He played a lesser role in the Petitioner's case, although it appears to have been an Organized Crime Strike Force case in which Mr. Corbett was involved in early Grand Jury proceedings involving Petitioner, (Grand Jury transcript cover sheets and Use Immunity Agreement signed by Corbett, T.L. Ex. 1) and signed the indictment (Indictment against Petitioner filed November 7, 1990, T.L. Ex. 2). While one cannot say how much, and what, LaRene knew about Mr. Corbett's attitude toward him, there is evidence to believe that he was concerned that it was negative and would not want to make it worse. This is because Mr. Corbett was the individual with whom LaRene would have to deal to make any plea arrangement that would minimize his exposure regarding the investigations (Rule 11 Plea Agreement, showing Corbett's signature on the 1994 plea agreement with Albert Allen arising out of is 1993 charges for avoiding a subpoena for the LaRene/Giacalone trial, T.L. Ex. 67). Corbett was also involved in the Forman prosecution (Transcript of Oct. 3, 1994 Forman proceeding, T.L. Ex. 66). LaRene was also aware that AUSA Delonis, although not handling LaRene's case, saw AUSA Corbett on a regular basis. Additionally, Corbett was involved in Petitioner's case: he was Delonis' supervisor, he signed immunity agreements for witnesses in both LaRene's and Petitioner's cases, he brought witnesses to the grand jury in both cases, and signed the indictment in both cases.
LaRene knew that Corbett — as Chief of the Organized Crime Task Force — was the power factor determining his future as a lawyer. The focus of the conflict of interests analysis is not the historical fact of whether Delonis actually would speak unkindly about LaRene to his colleague Corbett if LaRene was troublesomely zealous in his handling of Petitioner's case, nor the historical fact of whether Corbett would seek himself or through Delonis to debrief Petitioner on how he was paying LaRene in order to assist in Corbett's tax investigation. The question is whether there is a conflict of interest in the mind of LaRene — whether he has certain needs, concerns, goals and aspirations which conflict with the best interest of the Petitioner. Even if the conflict is exaggerated by perceived risks that perhaps would not have occurred, it could still have an adverse effect on LaRene's representation of Petitioner. This would establish an actual conflict of interest for Sixth Amendment analysis. Unlike Moss, where the AUSA in the case "immediately clarified on the record that he was not accusing [the petitioner's attorney] of any impropriety," and "the U.S. Attorney's Office did not launch an investigation into [the attorney's] activities," LaRene was not only the subject of an active investigation, but would eventually serve time for his crimes and have his license to practice law suspended. Moss, 323 F.3d at 472-73.
LaRene's behavior indicates that he did have the concerns listed above, creating a conflict. Mr. LaRene never told Petitioner about the investigation into his own dealings. Petitioner was not aware that there was any investigation into any suspected wrongdoing by his attorney (Affidavit of N.C. Deday LaRene, C.B. Ex. 118, para. 7). This runs counter to the professional standard noted in McLain, quoting to the Model Code of Professional Responsibility: "A lawyer should not accept proffered employment if his personal interests or desires will, or there is a reasonable possibility that they will, affect adversely the advice to be given or services to be rendered the prospective client." McLain, 823 F.2d at 1463 (emphasis added by court). This is, however, exactly what happened when LaRene would not participate in plea negotiations in Petitioner's case. A negotiated plea involving debriefing and cooperation of Petitioner ran a substantial risk that Petitioner would discover the investigation at least regarding cash payments by clients and LaRene's suspected failure to file 8300's.
The Sixth Circuit has held that "an attorney provides ineffective assistance where joint representation compels the attorney to forgo plea negotiations on one client's behalf," Moss, 323 F.3d at 456 (citing to United States v. Hall, 200 F.3d 962, 966 (6th Cir. 2000), in which the court stated "Foregoing plea negotiations is proof of an actual conflict of interest."). It is axiomatic that if a conflict arises because an attorney chooses to represent the interests of one client over another, it also constitutes a conflict when an attorney chooses to place his own livelihood and other interests over the interests of his client. Cf. United States v. Fulton, 5 F.3d 605, 609 (2d Cir. 1993) ("A situation in which the attorneys own interests diverge from those of the client presents the same core problem presented in multiple representation cases: the attorney's fealty to the client is compromised. Therefore, courts have held that the presumption of prejudice set forth in Cuyler applies as well to situations where the personal interests of the attorney and the interests of the client are in actual conflict.")
The Government attempts to use Mickens v. Taylor, 535 U.S. 162, 174 (2002) for the proposition that Cuyler would be stretched too far in Petitioner's case. First of all, in Mickens, the Court explicitly limits its holding:
Lest today's holding be misconstrued, we note that the only question presented was the effect of a trial court's failure to inquire into a potential conflict upon the [ Cuyler v. Sullivan] rule that deficient performance of counsel must be shown. The case was presented and argued on the assumption that (absent some exception for failure to inquire) [ Cuyler v. Sullivan] would be applicable — requiring a showing of defective performance, but not requiring in addition (as Strickland does in other ineffectiveness-of-counsel cases), a showing of probable effect upon the outcome of trial.
In hinting about the overbroad application of Cuyler, the Court states, as the Government quotes, "They have invoked the [ Cuyler v. Sullivan] standard not only when (as here) there is a conflict rooted in counsel's obligations to former clients, [citations omitted] but even when representation of the defendant somehow implicates counsel's personal or financial interests . . ." Id., (quoted in Government's Answer, pg. 9). Yet, the list of situations that the Court then cites from previous cases, which the Government fails to note, is quite telling: a book deal, employment with the prosecutor's office, the teaching of classes to Internal Revenue Service agents, a romantic "entanglement" with the prosecutor, and fear of antagonizing the trial judge. Id. at 174-75. All of these personal lawyer situations pale in comparison to a case where the attorney is subject to criminal imprisonment and losing his license to practice law — where one type of conduct leading to these consequences (taking cash payment for legal services and not reporting it — either to avoid paying taxes on it or avoiding it being available to the IRS for collection of the attorney's past tax debts) is the type of conduct that the attorney engaged in with the client. Unlike the list provided by the Court in Mickens of rather minor conflicts, the situation here is more like the level of conflict raised in joint representation cases. Given how profound and interwoven LaRene's own interests were, the conflict here is likely greater than those raised in joint representation cases because here a self-serving bias is present in each instance in which the lawyer must balance and determine which client or whose interest should be preferred. In addition to wanting to keep his client's lips sealed on method of payment, Mr. LaRene, with his asserted lack of funds, and his significant financial obligations to pay his top flight attorneys in Washington and Detroit, would not want to jeopardize — and possibly could not repay — the fees he had collected from Petitioner.
It is found that during the representation of Petitioner, and particularly during (and possibly just before) Petitioner's May/June 1992 trial — after Mr. LaRene had possession in April or May of 1992 of a stolen copy of Agent Scartozzi's SAR outlining the potential charges against him and Mr. Giacalone — Mr. LaRene knew and/or clearly had reason to know that he faced possible federal criminal charges involving conspiracy to assist in tax evasion, conspiracy to defraud the IRS, failure to file 8300's for receipt of cash payments, receipt of stolen property, obstruction of justice, and filing false financial disclosure statements with the IRS. He also had reason to know the Government was aware of his earlier involvement in illegal structuring of financial transactions, possible money laundering on converting the Allen checks into cash and extortion. While as an experienced criminal defense attorney, he knew many of these charges would be difficult for the Government to make and the statute of limitation had run on others, that same experience would make it apparent to bring down a "big name" defense lawyer who had a reputation of representing members of organized crime, the Government would pursue any lead on any possible charge, and was not beyond "overcharging" in an indictment. While it was not until later during his defense of the September 1992 indictment against him that he would know the depth of intensity and tenacity of the efforts of Mr. Corbett — who twice called Mr. LaRene's conduct in the Allen matter "despicable" (Letter from Gerald Feffer, to Stephen Markman (June 26, 1992), T.L. Ex. 29, pg. 4) and Mr. LaRene's DC Counsel described Corbett's characterization of LaRene's conduce as "morally reprehensible" (Letter from Gerald Feffer to Curtis Nash (July 21, 1992), T.L. Ex. 37, pg. 20) — Mr. LaRene knew during his representation of Petitioner, that the Head of the Organized Crime Strike Force in Detroit was pursuing the investigation of him, and given his years of experience as a criminal defense lawyer doing federal practice in Detroit, Mr. LaRene had reason to know this was like having Victor IIugo's Inspector Jarvet trying to catch him. While extortion charges were not part of the SAR recommendation it was clear that the investigators had no doubt that Mr. LaRene was a central agent in extorting $410,00 from Mr. Allen in the summer and fall of 1986. On all of these facts, it is found that Mr. LaRene had an actual conflict of interest with his client Patrick Rugicro while representing him.
Given Mr. LaRene's close relation and repeated criminal representation of Vito Giacalone and also his son, after Theodore Forman copied and stole the SAR in April of 1992 and brought it to Mr. Corrado in Detroit, it was likely a matter of hours, or at most days, before Mr. LaRene was leaving his fingerprints on that SAR as he reviewed it for himself and his client Vito Giacalone. Even if he was not told the details of the SAR's odyssey from Washington, it is also inconceivable that he would not have recognized it as having been obtained improperly.
B. Conflict of Interests — Adverse Effects
As noted above, conflict of interest for an attorney must result in adverse effect on the quality of legal representation, but that effect need not be demonstrated to rise to the level of actual prejudice to constitute a Sixth Amendment violation as is required for most claims of ineffective assistance of counsel. Cuyler, 446 U.S. at 349-50. Instead, once adverse effect is shown "prejudice is presumed when counsel is burdened by an actual conflict of interest." Strickland v. Washington, 466 U.S. 668, 692 (1984). This presumption means that a defendant need not show a reasonable probability that he would not have been convicted but for choices his lawyer made because of conflicting loyalties. Cuyler, 446 U.S. at 349-50.
An example of the necessary showing might involve failure to cross-examine a witness whose testimony favored one defendant in a joint representation over the other, or failure to resist the presentation of arguably inadmissible evidence that helped one client but not another Id. (discussing Glasser v. United States, 315 U.S. 60, 72-75 (1942)). Also, the "lapse in representation adversely affecting the defendant's interest can be demonstrated not only by what the attorney does but by what he refrains from doing." Holloway, 435 U.S. at 489-90; Smith v. Anderson, 689 F.2d 59, 66 (6th Cir. 1982).
Explaining the proper application of this test and its justification, the Second Circuit has stated:
This is not a test that requires a defendant to show that the alternative strategy or tactic not adopted by a conflicted counsel was reasonable, that the lapse in representation affected the outcome of the trial, or even that, but for the conflict, counsel's conduct of the trial would have been different. Rather, it is enough to show that a conflict existed that "was inherently in conflict with" a plausible line of defense or attack on the prosecution's case. Levy, 25 F.3d at 157. Once such a showing is made, Strickland's "fairly rigid" presumption of prejudice applies.
The test is a strict one because a defendant has a right to an attorney who can make strategic and tactical choices free from any conflict of interest. An attorney who is prevented from pursuing a strategy or tactic because of the canons of ethics is hardly an objective judge of whether that strategy or tactic is sound trial practice. Counsel's inability to make such a conflict-free decision is itself a lapse in representation.
We do not exclude, of course, the possibility that a foregone strategy or tactic may be so insubstantial that even the most ardent and talented, conflict-free advocate would likely have avoided it. Nor do we exclude the possibility that the foregone strategy or tactic might be so clearly against the defendant's interest that unconflicted counsel would never pursue it. Under such circumstances, we would conclude that no lapse of representation occurred.U.S. v. Malpiedi, 62 F.3d 465, 469 (2d Cir. 1995). Applying these standards, the court found an actual conflict of interest where defense counsel failed to cross examine a witness whom he represented in an earlier grand jury proceeding. Rejecting defense counsel's testimony at a post-trial hearing suggesting that the cross-examination was unnecessary, the Second Circuit stated, "Even the most candid persons may be able to convince themselves that they actually would not have used that strategy or tactic anyway, when the alternative is a confession of ineffective assistance resulting from ethical limitations." Id. at 470.
Determining whether an actual conflict and adverse effect exists requires a factually intensive inquiry that turns on "the particular[s] of the case at hand." Perillo v. Johnson, 205 F.3d 775, 782 (5th Cir. 2000) (citing Maiden v. Bunnell, 35 F.3d 477, 481 (9th Cir. 1994)). Nevertheless, a review of the cases finding an adverse impact provides guideposts for analyzing the showing Petitioner must make.
The Sixth Circuit found an adverse impact resulted from a conflict where counsel pressured the client to accept a plea to protect the interests of others, including counsel. See Thomas v. Foltz, 818 F.2d 476, 482-83 (6th Cir. 1987. The Sixth Circuit in Foltz stressed that the petitioner was not required to show that but for the conflict Foltz would not have pleaded guilty because this would be tantamount to requiring a showing of prejudice under the traditional Strickland test. Id. at 483. The only requirement was a showing that the conflict had an impact on counsel's actions and the defendant's choices. Id.
In Anderson, 689 F.2d at 66 n. 9, the Sixth Circuit determined that it was not necessary to reach the issue of adverse effect because the writ of habeas corpus was warranted on the trial court's failure to inquire into the possible conflict alone. The petitioner's counsel timely objected to consolidation of trial because it would cause a conflict, but the judge overruled the objection. In a footnote, however, the Anderson court determined that counsel's representation of two defendants at the same trial had an adverse impact on the petitioner, defendant Smith. Smith's defense was that he did not know his co-defendant and that he was not present when the robbery occurred. While only one witness identified Smith, several identified his co-defendant. Against his will, Smith was forced to sit at the same counsel table with his co-defendant, who had admitted being present at the store when it was robbed. Counsel spoke for both defendants in a single opening and closing statement and during cross-examination. Counsel was unable to highlight the relative dearth of evidence against Smith due to his obligation to Smith's co-defendant. Id. at 66 n. 9.
The Fifth Circuit in Perillo v. Johnson, 205 F.3d at 803-04, found an adverse effect where counsel represented a murder defendant Perillo after representing a robbery defendant Fletcher in an earlier trial arising from the same factual situation. The robbery defendant had originally been charged with the same murders as Perillo, and the representation of the robbery defendant prominently featured the denigration of Perillo. Id. Counsel was forced to choose between exposing the robbery defendant to perjury charges and vigorously pursuing her impeachment during Perillo's trial, during and after which it was apparent that counsel maintained a continuing relationship with the robbery defendant. Id.
In Tyler v. United States, 78 F.Supp. 2d 626, 633 (E.D. Mich. 1999), this Court found an adverse effect where counsel was wilfully absent during plea negotiations with his client due to his fear that his prior representation of a former suspect who was associated with his client would affect his client's ability to provide information to the Government agents. In Levy, 25 F.3d at 157-58, the Second Circuit found that defense counsel forewent the viable strategy of portraying the co-defendant as the primary offender due to the risk of: 1) breaching his legal and ethical obligations to his other client, 2) uncovering his own possible misconduct, and (3) exposing himself to being called as a witness during his client's trial. Mannhalt v. Reed, 847 F.2d 576, 578 (9th Cir. 1988), involved several adverse impacts. Defendant Mannhalt was represented at trial by Kempton. During the course of discovery, Kempton learned that a key Government witness, Morris, would testify that lawyer Kempton had purchased stolen goods from Mannhalt. Id. As might be expected, Kempton discovered that he also was under investigation by the authorities. Id. Morris did present this negative testimony regarding lawyer Kempton at Mannhalt's trial. Id. The Ninth Circuit found that Morris's accusation against Kempton adversely affected Mannhalt's representation in several respects: 1) Kempton's failure to testify to rebut Morris' allegations; 2) Kempton's cross-examination of Morris, which appeared to be motivated by Kempton's personal concerns about the allegation against him and during which Kempton became furious; 3) Kempton's failure to question Mannhalt on direct about the allegations; and 4) the probability that given Kempton's status as the target of an investigation, he would not pursue a plea bargain in which Mannhalt would agree to testify against Kempton. Id. at 581-83. With respect to the last point, the court emphasized that an adverse impact was present even though it was impossible to speculate what the prosecution would have done if Mannhalt had not retained Kempton because Kempton failed to pursue a plea bargain. Id. at 583. Thus, an adverse effect involving a failure to plea bargain does not require court inquiry into whether or what plea bargains may have been available — again these inquiries relate more to a prejudice test than an adverse effect test.
1. Failure to Negotiate a Plea United States v. McLain, 823 F.2d 1457, 1464 (11th Cir. 1987), which was cited by the Sixth Circuit in Taylor, is revealing on the issue of plea agreements in Petitioner's case. In McLain, as in the case at bar, defense counsel and his client were being prosecuted by the same U.S. Attorney's Office. The Eleventh Circuit found an adverse impact where defense counsel failed to pursue and explore plea negotiations adequately where going to trial benefitted counsel in that there was substantial evidence that the U.S. Attorney would not indict counsel until after the trial. Id.
Exploring possible plea negotiations is an important part of providing adequate representation of a criminal client, and this part is easily precluded by a conflict of interest. Although the Justice Department's response to this possible action on [client's] behalf is uncertain, the fact that [client] was neither informed of [attorney's] conflict of interest, nor counseled towards this avenue of plea negotiations should be weighed in [client's] favor. [Attorney's] failure to advise [client] of this possibility due to his conflicting interest of saving this tactic for his own criminal defense deprived [client] of a fair trial.Id. The McLain court also noted that counsel failed to "go over the U.S. Attorney's head" to the Department of Justice, as he later did when he was indicted, due to his conflicting interest of saving this tactic for his own defense. Id. Finally, the Eleventh Circuit emphasized that the uncertainty of the Government's responses to these potential tactics did not preclude a finding of adverse effect. Id.
Just as in McLain, LaRene's failure to pursue a plea in this case constitutes an adverse effect of the conflict of interest. Just as the client in McLain hired his defense counsel "for his sterling reputation," id., Petitioner hired LaRene because he had a reputation as one of the most "prominent criminal defense attorneys in the Detroit area" (Transcript of June 17, 1992 news broadcast on WDIV-TV, T.L. Ex. 11). Indeed, the Government's pleadings in response to Petitioner's claims abounds with praise for LaRene's skill.
It is undisputed that the Government was willing to enter into a plea agreement with Petitioner. (Affidavit of Mr. Delonis, Gov't Answer Ex. B). Plea agreements were offered to all of Petitioner's co-defendants. Before LaRene entered his appearance, Petitioner's attorney, Mr. Bufalino, discussed the Government's willingness to negotiate a plea involving 15 years without cooperation and less if Petitioner cooperated (Bufalino Declaration, Petitioner's Reply Ex. 154). A co-defendant received ten years for cooperating. ( Id.) Even on the first day of trial, Mr. Bufalino raised the plea discussion with AUSA Delonis who said ten years was out but explored a fifteen year deal. Yet, Mr. Corbett, as head of the Organized Crime Strike Force, nixed any plea concession by the Government. This is where Mr. LaRene's conflict of interests has perhaps the most profound effect. LaRene knew that prosecutors investigating both him and his client's cases — AUSA Delonis and AUSA Corbett — were colleagues who spoke regularly. LaRene knew why he was being investigated — unreported client fees, income tax evasion, defrauding the IRS, violating the cash reporting requirements of 18 U.S.C. 8300 — based on some the exact same type of monetary dealings — large cash payments — in which he asked Petitioner to engage. He also knew the Government was aware of his likely earlier involvement in money laundering, extortion, and illegal structuring of financial transactions. Mr. LaRene's interest in pursuing a plea bargain for Petitioner was compromised by his concerns that a plea that best served his client's interest might involve Petitioner cooperating with the Government, exposing certain of Mr. LaRene's own dealings. Indeed, Mr. LaRene not exploring any possible plea bargaining for Petitioner before trial may have induced Mr. Corbett's rigid rejection of the Bufalino-Delonis deal on the first day of Petitioner's trial.
It appears that Mr. Larene saved his plea bargaining and cooperation for himself to get a one year sentence. He did not pursue plea negotiations for Petitioner who was sentenced to thirty years. Petitioner paid a price having a lawyer representing him who had conflicting interest and personal concerns. Others in the Petitioner's case entered plea arrangements. Petitioner did not, and he is the only person from the original case who is still incarcerated.
2. Trial Delay
In United States v. Novaton, 271 F.3d 968, 1013 (11th Cir. 2001), the court cited to McLain in stating that when the U.S. Attorney "would not attempt to indict [the attorney] until [his client's] trial ended, . . . this created an incentive for the attorney to forego plea bargain negotiations and to prolong the trial" (internal quotation deleted). As the evening news reported regarding LaRene's case, "the investigation is completed and . . . the feds are just now waiting until Deday LaRene finishes up with a trial now going on here in federal court" (Transcript of June 17, 1992 news broadcast on WDIV-TV, T.L. Ex. 11). The trial that the news report alludes to was Petitioner's. Not only did LaRene's refusal to pursue a plea agreement (in addition to acquiescing in 13 postponements of trial after he entered his appearance) delay the trial, but during the delay the Government substantially strengthened its case against Petitioner through the information gathered by cooperating co-defendants. This, again, was an adverse effect of the conflict of interests.
3. Failure to Pursue Government Misconduct
The Government, at the oral argument on September 04, 2003, questioned the order of testimony. Petitioner addresses this issue in its submission on the record to this Court filed November 7, 2003. Petitioner straightens out the issue and shows that, in fact, Ahmed testified before meeting with Milewski. The Government admitted that Petitioner was correct in a hearing held on January 30, 2004.
During the course of the trial, an order of sequestration was violated. The court in United States v. Rugiero, 20 F.3d at 1392-93 explains the facts:
The district court directed sequestration of witnesses upon this defendant's motion. During cross-examination of Thomas Wyman, who defendant describes as a "key government witness," Keith Milewski, who had been subpoenaed by the government, entered the courtroom and heard part of Wyman's testimony for some forty-five minutes. Over two weeks later, the government called Milewski as a witness and he was permitted to testify over Rugiero's objection. . . .
The fact that Milewski also spoke to co-defendant Jamil Ahmed, with the government's cooperation, while the latter was in the course of his testimony, presents a more difficult problem. Milewski indicated in his direct testimony that he had changed his mind about implicating himself and Rugiero in drug activities after talking to co-defendant Ahmed and speaking with his lawyer. We recite the pertinent portions of the government's brief in this regard:
"The prosecutor explained that he had planned to have Milewski meet with Ahmed before Ahmed testified, but Milewski failed to appear. The prosecutor did not consider his actions to be a circumvention of the sequestration order. When Milewski finally showed up, the prosecutor planned to demonstrate to Milewski that he had a witness who could implicate Milewski in an effort to persuade Milewski to seek counsel before making any decisions. The prosecutor explained that he was present during the discussion with Ahmed, and that the discussion did not include the fact that Ahmed had testified. . . . As he explained, "The representations made by Ahmed, while they were made after his testimony, could have been said the day before, the week before, the month before. There was no review of Ahmed's testimony."
Milewski's description of his meeting with Ahmed demonstrated that its purpose was not to inform Milewski of the testimony that had occurred in the trial, but to help him understand his potential criminal liability so as to encourage him to obtain legal counsel before making any decisions that might lead to perjury charges.
In the fifteen to twenty minute conversation with Ahmed, Ahmed reminded Milewski that they had met before. He then told Milewski "[Y]ou're in this now, the only way that you're going to get out of this is by telling them the truth, tell them what happened with you and Pat, and what happened with me and you." Ahmed told him to tell the truth or he cold [sic] get caught for perjury. . . . Milewski asked Ahmed if he had been caught with dope. Ahmed responded "no" and explained to him how conspiracy law worked. Milewski explained that prior to Ahmed's explanation he had believed he could not be charged unless he was actually caught with dope. At that point, Milewski asked for legal counsel, all questioning stopped, and the prosecutor instructed him on how to obtain free legal counsel.
Although ruling against Petitioner, the Sixth Circuit judges who wrote the majority opinion stated, "[b]ringing witnesses together in this fashion, especially without the court's consent, comes very close to a per se violation of this ancient and important rule of sequestration." Id. at 1394. This issue was enough to convince Judge Merritt to dissent and write, "[t]his is such an obvious and notorious violation in this case that I would reverse and remand for a new trial." Id. at 1395.
Petitioner alleges that LaRene "could not help but avoid opportunities to discredit the prosecutor, needing to curry that same prosecutor's office's favor for his own benefit." (Pet. Brief at 101). Indeed, it appears that some currying of favor did occur. For example, when dealing with the sequestration violation, LaRene stated, although also voicing that the violation required a mistrial, "I should add, I suppose in fairness to Government Counsel, that I don't impute any ill purpose or bad motive in his actions" (Trial transcript, C.B. Ex. 126 pg. 9). LaRene seems to have been attempting to walk a fine line such as not to be so obvious in his actions that he appeared to have abandoned zealous advocacy, but not be so zealous as to alienate the Government. The Sixth Circuit stated, "[n]either are we satisfied by the government's self-serving explanation and claimed justification for bringing Milewski and Ahmed into face-to-face contact." Rugiero, 20 F.3d at 1394. The Court of Appeals seems more critical and skeptical of the Government than Petitioner's defense counsel.
The Government's current position regarding adverse effects of Mr. LaRene's possibly currying favor is called into question given the Government's earlier Motion for Inquiry Regarding Conflict of Interests in another case in which LaRene served as defense counsel. In United States v. Hudson, Criminal case number 92-90018 (E.D. Mich. 1993), AUSAs Cares and Yates wrote, "because both the defendant and Mr. LaRene have been charged by the United States Attorney for the Eastern District of Michigan, Mr. LaRene's representation of defendant creates at least the appearance that he could be attempting to `curry favor' for himself at defendant's expense. In addition, as in McLain, it could be perceived to be in the attorney's interest to postpone his own trial by forgoing plea negotiations on behalf of his client." (Brief in Support of Motion for Inquiry Regarding Conflict of Interest, T.L. Ex. 55, pg. 3).
LaRene was expected to engage in a vigorous cross-examination on the sequestration issue. As the Sixth Circuit opinion showed, that issue alone could have led to reversal or mistrial. But rather than vigorously defend his client, LaRene appears to have "pulled his punches" somewhat in what appears an attempt to curry favor with attorneys from the Organized Crime Strike Force with whom he and his several attorneys were negotiating.
4. Newsleak and Jury Issues
As noted above, during jury deliberations, WDIV's 6 p.m. and 11 p.m. newscasts on June 17, 1992, contained a story that LaRene was under investigation in a case involving LaRene's "dealings with a client who has been tied to organized crime." (Transcript of June 17, 1992 news broadcast on WDIV-TV, T.L. Ex. 11). Although the jurors had been instructed not to watch or read any news coverage regarding the case, the jurors became aware of the newscast, either through having seen it directly or hearing about it from others.
After the verdict had been announced, the jurors were individually polled by the clerk concerning his or her agreement on each of the verdicts and also questioned by the Court and attorneys about any exposure to the broadcast, news or discussions of the broadcast, and any effect the broadcast or discussions about the broadcast may have had on his or her verdicts. During this voir dire on the latter issue, LaRene was not only present in the courtroom, but actually conducted some of the questioning.
Such a voir dire is difficult in the best of circumstances — urging jurors after a lengthy trial to disclose what they may have heard that they may feel they should not have heard, who discussed the matter and how, and what effects it may have had on their thinking and decisions — again a subject most jurors after a verdict was rendered would be reluctant to acknowledge. A subtle, cautious but thorough and authoritative interrogation of jurors — often looking for tacit non-verbal clues to follow-up on — can be critical to the success of such a voir dire. Adding to this the fact that newscast linked "organized crime" to a defendant's lawyers, and the defendant's name was "Rugiero" does not make the task easier. Having the attorney who was the target of the newscast not only present during the questioning, but having him asking the jurors some of these questions makes the equation uniquely complicated and its reliability more problematic.
During the voir dire, ten of the twelve jurors admitted to hearing about the newscast in some shape or form, and one of those saw a portion of it herself. The ten jurors heard about the broadcast in several different places — most in the jury assembly room, two during lunch, one while walking with another juror to his car, and one stated that the topic was discussed in the jury deliberation room itself. Six of the ten jurors stated that they heard about the broadcast from the foreperson. One juror explained that the foreperson heard news of the story from her husband, and then shared what she had heard. When questioned, the foreperson acknowledged that she had heard about the news broadcast from her husband. After that, however, she appears not to have been totally truthful. She testified that she never spoke about the news to any other juror. Six jurors said otherwise, although three or these jurors had heard the news from another source as well. It is too late to determine what other misstatements and incomplete responses were involved in the process.
Some jurors seemed understandably reluctant to testify about the issue. Some needed a bit of pressing for specific answers before they would admit to hearing about the newscast. They were obviously very reluctant to reveal that they had outside knowledge. One of the jurors that required such pressing was the foreperson who another juror described as somewhat "excited" to discuss the matter. Only one of the jurors admitted that the topic was broached in the jury deliberation room itself, most recalled comments in the jury assembly room or at lunch. One juror stated that the foreperson asked the others about what they had seen on the news, where several admitted to having seen the story, and the foreperson recounted what she knew about an investigation and charges against LaRene. One juror noted that there was uncertainty as to whether they were permitted to discuss the topic and there was no further discussion on the matter. Many of the jurors did not seem to know much about the facts of the newscast — one even thought LaRene faced an embezzlement charge. Yet, even the relatively more informed jurors did not volunteer much about what they thought the newscast stated or what they thought about it. To a question on whether the newscast affected their verdict each said it had not.
While the newscasts included references to Vito and Jackie Giacalone, their alleged ties to organized crime, LaRene being a prominent Detroit attorney who represented "a large number of alleged organized crime figures," and that Mr. LaRene himself had "contacted a high-powered law firm in Washington D.C. famous for its criminal defense work," none of the voir dire questions inquired if the individual jurors had any information or recalled anything concerning these items. The only discussion involved investigation and possible charges against Mr. LaRene. Midway through the jury polling and voir dire it was apparent there was not a unanimous verdict on Count II against Petitioner, and the jury was going to have to return to deliberate. Thus, asking such question concerning organized crime, the reputations of Mr. LaRene's clients, or his feeling a need to hire a "high-powered" criminal defense law firm in Washington would risk tainting further deliberations or further tainting deliberations if that had already occurred.
Yet, when the jurors without specific prompting and questioning had not mentioned any such significant issues from the news broadcast, further questioning might have revealed more about what the juror knew, suspected or thought. Prior to their recommencing deliberations on Count II, jurors could have been asked if they recalled whether the newscast involved anyone in addition to Mr. LaRene, and if so who was that? They could have been pressed to think a moment about any other detail or assertion that they might have heard was in the broadcast. If this progressive questioning revealed more information then the juror could have been asked what (s)he thought about such information, followed up with more specific questions. If any juror indicated a belief that Mr. LaRene represents organized crime figures, is accused of hiding money for one of them from the IRS, and that Pat Rugiero may be part of an organized crime family, it is not likely that the Court would have sent the jury back for any further jury deliberations on Count II and would have declared a mistrial which would surely have been requested by any counsel for Petitioner who did not have a conflict of interest.
Yet, even if such revelations were not initially discovered, a zealous defense attorney might ask the court to reserve more specific questioning for after the reconvened deliberations because of the dilemma of not being able to ask about many critical specifies in the news broadcast without risking those questions prejudicing further deliberations. Thus, if no facts warranting a mistrial were disclosed in the initial voir dire, an attorney might seek a follow up voir dire after the final verdict that could ask less screened, open-ended and camouflaged questions. The most effective questions in voir dire as in cross examination often need to be leading and specific, and need to be asked in a manner that allows the responder to feel it is permissible and understood by the questioner for the person questioned to respond affirmatively.
Regardless of what, if anything, was said in the jury room, the assembly room or at lunch, it is obvious that the jurors knew about the LaRene investigation and possibly other potentially prejudicial information from the newscast prior to delivering their initial verdicts. While they all claimed that it had no effect on their ultimate verdicts, there is evidence demonstrating that at least one of the jurors — indeed the foreperson — was not fully truthful in her responses. In an October 1, 1992, letter from AUSA Delonis to Petitioner's counsel, it was noted other peculiar matters occurred to certain jurors during the trial who talked with him after the trial's conclusion. One had a prospective juror who was not selected for this trial tell him he knew the Rugiero family and criticized the Government's prosecution of the Rugiero brothers. Another noted a car driving slowly down his street as if looking for an address. Another occasion involved a juror driving home after court seeing persons related to the trial in a car on the freeway (Letter from Richard Delonis, to James Howarth and Deday LaRene (Oct. 1, 1992), C.B. Ex. 73, (the identifies of jurors and passengers involved are redacted in this exhibit)). While it is unclear what to make of certain jurors being solicited to favor one side or seeing various strange cars or occupants, it is clear that more information about the jurors would likely have been available at the voir dire had Mr. LaRene not been present, not been an interrogator for Mr. Rugerio, and had not been burdened by a conflict of interest.
If the issue of the exposure had been elaborated further, it might have disclosed some bias or prejudice in a juror's mind which was triggered or exacerbated by the story. There is a natural human reluctance to admit that which was sought, yet, it might have come out with a different combination of those present and those questioning. Had that bias been revealed that led to a mistrial, that likely would lead to more and broader publicity. This would have worked against Mr. LaRene's interest which was not served by a mistrial in Petitioner's case being caused by his alleged criminal activity with reputed members of organized crime.
The jurors were told not to watch or read news regarding Petitioner's case. They were, in a manner, themselves under investigation in the voir dire. When suspected and questioned about breaking the rules, there is a natural human defensiveness and reluctance to admit it. This voir dire was conducted after the jury had reached most of its verdict creating psychological incentives for jurors to defend its procedural fairness and their self image.
This was a critical inquiry in this case. Had even one juror said that the newscast affected his or her verdict, there would have been a mistrial. Yet, it was in LaRene's interest not to succeed in this voir dire of the jury, which interest was directly in conflict with that of the Petitioner. As in the other areas noted above, here again Mr. LaRene's conflict of interest had an adverse effect on his representation of the Petitioner.
IV. CONCLUSION
Circuit Judge Merritt in his dissent in this case earlier raised the dilemma that many judges face and the public does not understand:
We are always reluctant, as we should be, to set aside a verdict on a technicality when it is fairly clear that the defendant is guilty and may have been convicted anyway.Rugiero, 20 F.3d at 1395.
That question is answered by this Court when it noted:
While it may be popular for detractors to criticize the courts for granting relief based on apparent "technicalities," defenders of our system of justice know that the rights guaranteed by the Constitution are never mere technicalities.Tyler v. United States, 78 F. Supp. 2d 626, 633 (E.D. Mich. 1999). Here, there was a conflict of interest which adversely effected Petitioner's representation. He was convicted nearly a dozen years ago and all of the others involved are now free. At long last, his petition to vacate his sentence should be granted.
V. RECOMMENDATION
Accordingly, IT IS RECOMMENDED that Petitioner's motion to vacate his sentence be GRANTED. Any objections to this Report and Recommendation must be filed within ten (10) days of its service. 28 U.S.C. § 636(b)(1); E.D. Mich. LR 72.1(d)(2). Failure to file objections within the specified time constitutes a waiver of any further right of appeal. Thomas v. Arn, 474 U.S. 140 (1985); Ivey v. Wilson, 832 F.2d 950, 957-58 (6th Cir. 1987); United States v. Walters, 638 F.2d 947 (6th Cir. 1981). Pursuant to E.D. Mich. LR 72.1(d)(2), a copy of any objections is to be served upon this Magistrate Judge.
Within ten (10) days of service of any objecting party's timely filed objections, the opposing party may file a response. The response shall be not more than twenty (20) pages in length unless by motion and order such page limit is extended by the Court. The response shall address specifically, and in the same order raised, each issue contained within the objections.