Opinion
98 Cr. 974 (MBM).
November 17, 2000.
MARY JO WHITE, ESQ., United States Attorney for the Southern District of New York, JOANNA C. HENDON, ESQ., Assistant U.S. Attorney, New York, NY.
ROBERT M. SIMELS, ESQ., (Attorney for Defendant) New York, N.Y.
OPINION AND ORDER
Defendant Cameron Yost was convicted of conspiracy to commit securities fraud and wire fraud, and to violate the Travel Act, in aid of a scheme to commit commercial bribery, and convicted as well of one substantive count of securities fraud and three of wire fraud, following an 11-day jury trial in December 1999. The charges were based on his participation in a scheme during 1996 to create demand for the stock of Banyan Corporation, a company he controlled, by paying cash bribes to stock brokers who would purchase the stock for their customers. A codefendant, Murray Goldenberg, was convicted at trial of participating in a similar scheme to create demand for the stock of First Colonial Ventures, Ltd., a company Goldenberg controlled.
Yost has moved to set aside the guilty verdict, and for a new trial, on the principal ground that one of his two lawyers, Roger Fidler, rendered ineffective assistance due to a conflict of interest between Yost and Paul Syracuse, allegedly another. of Fidler's clients. Yost argues that the government was aware of the conflict and failed to disclose it to the court. Yost notes as well, in his reply papers, that since the trial, Fidler has been indicted in this district for securities fraud, also involving a broker bribery scheme (Simels 9/8/00 Aff. ¶ 2), and suggests without actually arguing so explicitly that the investigation and subsequent indictment of Fidler also gave rise to a conflict of interest.
For reasons explained below, Yost's motion is denied.
I.
The legal principles that control here are not complex. However, it is useful to review them at the outset before stating the underlying facts, because Yost's papers include many factual assertions that are only marginally relevant to the issue of whether Fidler labored under a conflict of interest that requires setting aside the conviction.
"A claim that counsel is conflicted is in essence a claim of ineffective assistance of counsel." United States v. Stantini, 85 F.3d 9, 15 (2d Cir. 1996) (citation omitted) Although a defendant generally must show prejudice in order to prevail on a claim of ineffective assistance of counsel, "when counsel is burdened with an actual, as opposed to a potential, conflict of interest, a `fairly rigid' presumption of prejudice applies." Id. (quotingStrickland v. Washington, 466 U.S. 668, 692 (1984)). However, that presumption controls "only if the defendant demonstrates that counsel `actively represented conflicting interests' and that "an actual conflict of interest adversely affected his lawyer's performance.'" Strickland, 466 U.S. at 692 (quotingCuyler v. Sullivan, 446 U.S. 335, 348, 350 (1980)). When the claim of conflict arises from multiple representation, "an attorney has an actual, as opposed to a potential, conflict of interest when `during the course of the representation, the [represented parties'] interests . . . diverge with respect to a material factual or legal issue or to a course of action.'"United States v. Fulton, 5 F.3d 605, 609 (2d Cir. 1993) (quoting Cuyler, 446 U.S. at 356 n. 3).
The adverse effect on counsel's performance that must be shown when an actual conflict exists is a "`lapse of representation'" resulting from the conflict. United States v. Iorizzo, 786 F.2d 52, 58 (2d Cir. 1986) (quoting Cuyler, 446 U.S. at 349). To prove such a lapse, the moving party must prove "that some plausible alternative defense strategy or tactic might have been pursued" and was not, and that "the alternative defense was inherently in conflict with or not undertaken due to the attorney's other loyalties or interests." Winkler v. Keane, 7 F.3d 304, 309 (2d Cir. 1993) (quoting and adopting the standard in United States v. Gambino, 864 F.2d 1064, 1071 (3d Cir. 1988)).
On the other hand, if the conflict is only potential and not actual, the defendant must prove actual prejudice rather than merely adverse effect. A showing of actual prejudice requires that a defendant demonstrate that "but for counsel's unprofessional errors, the result of the proceeding would have been different." Fulton, supra, 5 F.3d at 609.
II.
In this case, it is also important to distinguish even the relevant factual contentions Yost advances in support of his motion, from the facts as disclosed by the record, including the facts proved at trial and those contained in affidavits submitted to the court. The two categories are not congruent.
Yost contends that Fidler actively represented him and Syracuse at the same time, in 1998 and 1999, although there is no indication in Syracuse's affidavit as to the nature of the representation other than that Syracuse "requested and obtained legal advice from Mr. Fidler with respect to matters under investigation by the United States Attorney's Office including the request of [Assistant U.S. Attorney] Patrick Smith for an interview." (Syracuse Aff. ¶¶ 2, 3; Yost Aff. ¶ 2)
Although Yost's papers include several assertions that Smith asked Fidler to arrange an interview with Syracuse, those papers include no evidence of such a request because Fidler did not submit an affidavit, and any assertions in Syracuse's affidavit or in Yost's to that effect are merely hearsay reports of what they were told by Fidler, and thus inadmissible. Fed.R.Evid. 802. The only evidence on that subject comes from Smith, who avers that it was Fidler who offered at one point to bring Syracuse in for an interview of indeterminate content, and that Smith told Fidler both that he thought Syracuse was represented by another lawyer who had contacted Smith earlier, and that he would in any event refuse to meet with Syracuse in Fidler's presence because Fidler was representing Yost. (Smith Aff. ¶ 7)
Yost asserts that Fidler had an actual rather than a potential conflict stemming from "Syracuse's involvement with the defendants." (Yost Mem. p. 8) According to Yost, Syracuse's "involvement" was testified to at trial by a cooperating codefendant, Clyde Feyrer, and consisted of Syracuse's participation, while at a firm called Churchill Securities, in bribing brokers to sell both Banyan stock, in aid of the scheme designed to benefit Yost, and First Colonial stock, in aid of the scheme designed to benefit codefendant Murray Goldenberg. He argues that this evidence was "significant to establishing Yost's guilt." (Yost Mem. pp. 2-3)
Yost's papers seek to present the following scenario of how Syracuse's "involvement" as described above, coupled with Fidler's representation of both Syracuse and Yost, led to a conflict that hurt Yost: Syracuse had information that would exculpate Yost, and wished to testify in Yost's behalf. Fidler led Yost to believe that he could present Syracuse as a witness who, along with other witnesses, would exculpate Yost, and induced Yost to go to trial rather than pleading guilty and perhaps seeking to cooperate with the government. After the trial commenced in December 1999, Syracuse contacted Smith at the U.S. Attorney's office through another lawyer, Thomas Scholblum of Philadelphia, to notify the government that he was considering testifying in behalf of Yost. Smith told Scholblum that if Syracuse testified for Yost, the government would seek to prosecute Syracuse for his activities. Syracuse then had no choice but to say that if called he would assert his Fifth Amendment rights, and thereby to make himself unavailable as a defense witness. Fidler, because of his conflicting loyalties, did not explore the possibility of asking the court to confer immunity on Syracuse so that he could be compelled to testify. Alternatively, Yost relied on the availability of Syracuse's testimony as the keystone of a defense that never materialized at trial, and did not pursue the possibility of pleading guilty and seeking to cooperate. As a result of Syracuse's unavailability, the whole structure of the defense case collapsed, and Yost neither testified nor called any other witnesses.
For this spelling, I am relying on the declaration of Patrick J. Smith (Smith 6/13/00 Aff. ¶ 8), who reports that the spelling he adopts is phonetic. Simels renders the name "Sholblum." (Simels 6/13/00 Aff. ¶ 10) Syracuse renders it "Scholbum." (Syracuse Aff. ¶ 8) Even though Syracuse was at one time the client of this lawyer, his version of the name looks less likely to my eye than Smith's.
The scenario depicted in the above paragraph is in the nature of a composite sketch, based on assertions in Yost's memorandum, Fidler's unsworn letter, and the affidavits of Yost, Syracuse and Simels. However, certain of those documents cannot serve as sources of fact. Assertions in memoranda are not evidence and cannot substitute for evidence. See Department of Economic Devel. v. Arthur Andersen Co., 924 F. Supp. 449, 471 (S.D.N.Y. 1996). Fidler's letter is unsworn, and cannot be evidence of the assertions contained in it. Simels was not a direct participant in the events that relate to whether Fidler had a conflict of interest. Simels' initial affidavit consists principally, if not exclusively, of descriptions of what he was told by Fidler, Syracuse and Yost. Which is to say, on the issue of whether Fidler had a conflict of interest, Simels reports only hearsay, which is not admissible. Fed.R.Evid. 802. Simels' reply affidavit is no more weighty. Other than argument, it consists simply of a report that Fidler was overheard saying that Yost was convicted because a government threat deprived him of a defense (Simels 9/8/00 Aff. ¶ 3), and numerous sub-paragraphs reciting what Syracuse allegedly told Simels he would have testified to had he been called (Id. ¶ 12(a)-(v)) . Yost's affidavit as well, to the extent it deals with the nature of Fidler's relationship with Syracuse, what Scholblum — the lawyer who contacted Smith at the U.S. Attorney's Office on Syracuse's behalf — was told by Smith, and what potential defense witnesses, including Syracuse, would have said, simply recounts statements by Fidler to Yost, offered for the truth of those statements. Which is to say, as to the relevant issues, Yost's affidavit simply reports hearsay. On one issue as to which Yost could have provided first-hand evidence — his willingness to have pleaded guilty and offered cooperation — Yost's affidavit is loudly silent.
That leaves Syracuse's affidavit, which describes the affiant's relationship with Fidler only as one in which Syracuse had "requested and obtained legal advice from Mr. Fidler with respect to matters under investigation by the United States Attorney's Office including the request of Patrick Smith for an interview." (Syracuse Aff. ¶ 3) Syracuse describes as follows the testimony he would have contributed to Yost's defense, but for Smith's alleged threat:
. . . independent testimony demonstrating the falsity of a number of Mr. Feyrer's statements at trial. These false statements included statements about me directly, Mr. Yost's knowledge and involvement in certain matters with me and more generally about Mr. Yost's reaction when I had disclosed certain facts to Mr. Yost regarding Mr. Feyrer's activities which reaction indicated to me that Mr. Yost had no clue as to what methods Mr. Feyrer had been using to dispose of Banyon [sic] Corporation stock.
(Syracuse Aff. ¶ 11) All that is presented from Syracuse's own pen is that he would have testified to unspecified false statements by Feyrer, and that he drew a conclusion about Yost's state of mind based on how he perceived Yost's reaction to "Feyrer's activities." It is impossible to evaluate the significance of the alleged false statements by Feyrer because Syracuse does not disclose what they were. As to Syracuse's proffered view of Yost's state of mind, that testimony, if it had been offered, would have been inadmissible. See Hester v. BIC Corp., 225 F.3d 178, 184-85 (2d Cir. 2000) (barring lay opinion testimony in employment discrimination action that amounts to "naked speculation concerning . . . motivation")
Not only is there no evidence to support Yost's scenario, but also the facts of record are inconsistent with it. First, Yost distorts the significance of the trial testimony about Syracuse, which was peripheral to the testimony about Yost himself. The principal evidence against Yost consisted of the testimony of two witnesses, Richard Wolff and Clyde Feyrer, backed by extensive documentary evidence. Both men testified to a meeting at the Caesar's Palace hotel in Las Vegas, attended by them, by Yost and codefendant Murray Goldenberg, and by Scott Symons. The conferees discussed a scheme for bribing brokers to buy stock in corporations controlled by Yost and Goldenberg. for the accounts of their clients. In particular, Wolff and Symons suggested that they be given free stock so that they could use it to pay brokers employed at their firm, Symons Financial Group. In return, the brokers would buy stock in the companies involved — First Colonial Ventures, Ltd. in the case of Goldenberg, and Banyan Corporation in the case of Yost — for the accounts of their clients.
Wolff testified not only about the meeting at Caesar's Palace (Tr. 125-29). but also about eventual payments to Symons brokers to sell Banyan stock (Tr. 203-07) and about an agreement with Yost for an option to buy Banyan stock at $.10 per share as a way to funnel money to a market maker to hold the price on Banyan stock (Tr. 217-20). Even Yost has not suggested any impact that Syracuse's testimony would have had on Wolff's evidence.
Further, to the extent that the government elicited testimony from Feyrer on direct examination about dealings with Syracuse in the stock of Banyan, or First Colonial, that testimony contained no suggestion that either Yost (in the case of Banyan) or Goldenberg (in the case of First Colonial) was aware of those dealings. Thus, Feyrer testified to having deposited Banyan and First Colonial shares in accounts at Churchill Securities in order to raise the firm's net capital, as part of a plan to purchase the firm, with no suggestion that he was acting on anyone's behalf but his own (Tr. 699-704), although he thought he may have mentioned his plan to Yost. (Tr. 699) and Then, he and Syracuse sold First Colonial stock from those accounts without telling Goldenberg (Tr. 732-33). Further, although Feyrer testified that he and Syracuse bribed brokers at another firm, Hemisphere Securities, to buy First Colonial and Banyan stock, he said specifically that he could not recall whether he had disclosed that bribery to Yost. (Tr. 729) The government did not elicit any statements attributed to Syracuse that could be regarded as evidence against either Yost or Goldenberg.
On cross-examination, Feyrer testified further about his and Syracuse's efforts to bribe brokers at Hemisphere to promote Banyan stock (Tr. 841-42), as well as transfers by Feyrer and Syracuse of Banyan stock first to Churchill — with Yost's knowledge (Tr. 983-85) — and thence to Symons, with eventual return of the stock to Banyan. (Tr. 983-85; 1020-26)
Feyrer testified as well to his and Yost's efforts in October 1996 to retrieve a block of Banyan stock from someone who had promised to retail it but had not, and to arrange terms for paying Symons brokers to retail the stock. Both efforts were unsuccessful, and Yost eventually wrote to Feyrer asking that he stop telling people he was authorized to speak in behalf of Banyan. (Tr. 734-48; GX 137)
From the above facts, it appears that Syracuse's role in the underlying events, as portrayed at trial, was peripheral, that Syracuse could not have offered any testimony to undercut Wolff's incriminating account of his dealings with Yost and the brokers at Symons Financial, and that it was defense counsel (Simels. not Fidler) who elicited Feyrer's testimony about efforts to bribe brokers at Hemisphere in order to promote Banyan stock.
Although Yost's papers make repeated reference to an alleged threat by Smith if Syracuse testified as a defense witness — ranging from the relatively mild suggestion that Smith said it would not be in Syracuse's "best interest" to testify (E.G., Yost Mem. p. 4), to the harsher suggestion that Smith had "warned" Syracuse not to testify in Yost's behalf (Yost Aff. ¶ 14), to the explicit assertion in Syracuse's affidavit that "Mr. Smith had indicated that if I showed up at trial on Mr. Yost's behalf I would be sorry because the government would come after me, whereas if I stayed away Mr. Smith would not bother me" (Syracuse Aff. ¶ 10) — all those references report merely what others understood Smith had said to Scholblum, Syracuse's attorney in Philadelphia. At best, they are statements of what Scholblum told others Smith had said, which Yost now offers to prove that Smith in fact said what is attributed to him. Which is to say, they are hearsay, and inadmissible. Fed.R.Evid. 802. Notably, there is no affidavit from Scholblum. The only evidence, properly speaking, of any conversation Smith had with Scholblum is Smith's affidavit. Smith avers that in December 1999, Scholblum called and told Smith that he represented Syracuse and that Syracuse had been contacted by the defense about giving testimony. According to Smith, Scholblum wanted to know "about the case and how Syracuse fit in," presumably so that Scholblum could advise Syracuse about the risks of testifying. (Smith Aff. ¶ 8) Based on Smith's awareness of Syracuse's activities in connection with this case, and another investigation Smith had been pursuing, Smith told Scholblum that he "did not think that Syracuse could give truthful testimony and not incriminate himself." (Id.)
Finally, although Yost suggests that the indictment of Fidler in this district after Yost's trial concluded provided an additional source for conflict, there is no evidence that Fidler was aware at any time before the trial concluded that he was under suspicion or investigation by the U.S. Attorney's Office, or any other agency.
III.
Applying the legal principles set forth in section I above to the facts, as opposed to the assertions, set forth in section II, yields the following conclusions. First, it is not entirely clear that Fidler provided "active" representation to Syracuse,Strickland v. Washington, 466 U.S. 668, 692 (1984), as would be required to trigger a claim of conflict of interest. The evidence on that subject consists of Syracuse's statement that he "requested and obtained advice from Mr. Fidler with respect to matters under investigation by the United States Attorney's Office" (Syracuse Aff. ¶ 3), with no specification of what those "matters" were, and Smith's statement that Fidler at one point offered to bring Syracuse in for an interview. (Smith Aff. ¶ 7)
Assuming without deciding that on this record Fidler could be found to have provided active representation to Syracuse, and there being no doubt that he provided active representation to Yost, the next issue is whether there was a conflict — i.e., whether Syracuse and Yost had interests that diverged "`with respect to a material factual or legal issue or to a course of action.'" United States v. Fulton, 5 F.3d 605, 609 (2d Cir. 1993) (quoting Cuyler, 446 U.S. at 356 n. 3). Yost's papers do not so much argue as assume this conflict, and so I am left to my own resources to find it. On this record, there is no legal or factual issue apparent to me on which Yost and Syracuse had interests that diverged, let alone a "material" one. A "material" legal or factual issue is one that, if resolved in Yost's favor, would have enabled Yost "significantly to alter the quantum of proof in his favor." United States v. Maniktala, 934 F.2d 25, 28 (2d Cir. 1991) (discussing materiality as it relates to the requirement in Fed.R.Crim. p. 16 that the government disclose information "material to the preparation of the defendant's defense"). However, their interests apparently did diverge with respect to a "course of action" — whether Syracuse should testify — and Fulton places no requirement of materiality on a divergence with respect to a "course of action."
Assuming that Fidler provided active representation to Syracuse, and because he also provided active representation to Yost, and the interests of the two men diverged on the subject of whether Syracuse should testify as a defense witness even without immunity, it becomes necessary to determine whether a "`lapse of representation'" resulted from the conflict. United States v. Iorizzo, 786 F.2d 52, 58 (2d Cir. 1986) (quoting Cuyler, 446 U.S. at 349). Here, Yost is required to show both that "some plausible alternative defense strategy or tactic might have been pursued" and was not, and that "the alternative defense was inherently in conflict with or not undertaken due to [Fidler's] other loyalties or interests." Winkler v. Keane, 7 F.3d 304 309 (2d Cir. 1993). Yost has suggested two alternative strategies or tactics — pleading guilty and seeking to cooperate, and compelling immunity for Syracuse. Even assuming that a guilty plea could be characterized as a "defense strategy or tactic," it would seem a prerequisite to the plausibility of such a strategy or tactic that Yost was willing to plead guilty. However, there is no evidence in the record that pleading guilty and seeking to cooperate was ever an option for Yost because Yost does not aver that he was willing to do that, let alone what information he could have provided and how he could have prevailed on the government to accept his cooperation.
The alternative "defense strategy or tactic" of seeking immunity for Syracuse is obliquely suggested in Yost's affidavit when he refers to the possibility of compelling Syracuse's testimony. (Yost Aff. ¶ 14) Only in exceptional circumstances can a defendant can compel the government to grant immunity to a defense witness, and there has been no showing that those circumstances exist here.
We apply a three-part test for determining whether there are exceptional circumstances warranting a directive that the government grant immunity to a defense witness. [citations omitted] First, the district court must find that the government, through its own overreaching, has forced the witness to invoke the Fifth Amendment or, that the government has engaged in discriminatory use of grants of immunity to gain a tactical advantage; second, the witness' testimony must be material, exculpatory and not cumulative; and third, the defendant has no other source to obtain the evidence.United States v. Diaz, 176 F.3d 52, 115 (2d Cir. 1999). As set forth below, the facts here do not meet any part of that test.
First, there is no evidence of overreaching. Despite Yost's repeated suggestions of impropriety, the only evidence of what Smith, the Assistant U.S. Attorney, told Scholblum, Syracuse's Philadelphia attorney, is that Smith, based on his awareness of Syracuse's involvement in this and other matters, could not see how Syracuse could testify truthfully without incriminating himself. (Smith Aff. ¶ 7) That is not overreaching.
Second, there has been no showing that Syracuse could have offered evidence that would have enabled Yost "significantly to alter the quantum of proof in his favor." Maniktala, 934 F.2d at 28. On this question, the only evidence is Syracuse's vague avowal that he would have contradicted Feyrer's testimony about Syracuse in some unspecified way, and that he would have given what sounds like inadmissible speculation about what Yost knew based on his perception of Yost's reaction to Feyrer's activities. (Syracuse Aff. ¶ 11) That is not material evidence.
Third, there has been no showing that such evidence was unavailable from any other source, including most obviously from Yost himself.
Even if one were to assume arguendo that there was some tactic or strategy that would have been open to Yost and that in some way depended upon or related to Syracuse, there has been no showing that that tactic or strategy became unavailable to Yost because of Fidler's conflict of interest, assuming that the conflict existed. Yost has not even averred that he was willing to plead guilty, let alone that he could have proffered valuable information in aid of cooperation. Syracuse's unavailability as a witness did not result from any joint representation by Fidler with a resulting conflict. It resulted from Syracuse's apparent involvement in the underlying facts, an involvement that did not come about as the result of anything Fidler did or neglected to do, but only as the result of Syracuse's own conduct.
Finally, Yost has cited Fidler's post-trial indictment in this district and suggested that it provides a source for a conflict of interest. He does not articulate how such a conflict would arise, and the only basis for conflict that occurs to me would require that Fidler have been aware before or during Yost's trial that he was under investigation. Arguably, such awareness would create an incentive for Fidler to ingratiate himself with his pursuers by being less aggressive in his defense of Yost than he might otherwise have been. However, this argument too fails for want of evidence — here, evidence that Fidler actually was aware during or before Yost's trial that he was under investigation in this district.
As appears above, Yost has failed to show that a purported actual conflict caused a lapse of representation, as that concept is known to the law. It follows that even if one assumes there was a potential conflict in Fidler's representation of Yost and Syracuse, there has been no showing that Yost suffered actual prejudice as a result, such that the outcome of the trial would have been different but for this potential conflict. Fulton, 5 F.3d at 609.
* * *
For the above reasons, Yost has failed to establish that Fidler was laboring under an actual or a potential conflict of interest that justifies setting aside the jury verdict. Accordingly, his motion is denied.