Litigation and Trial - Max Kennerly : Philadelphia Trial Lawyer Max Kennerly : Business and Commercial Litigation : Civil Attorney : The Beasley Firm : Philadelphia Pennsylvania

Twitter, twitter, everywhere. My delicious morning coffee was interrupted this morning by Anne Reed, who tweeted the following on Twitter:

Another tweeting juror, in Philly Fumo trial; How Appealing posts copy of "motion for immediate voir dire", http://tinyurl.com/c74h6s

Apparently the blogging gods want to be kind to your gentle host, ensuring him an endless fountain of inspiration. The Philadelphia Inquirer summarizes:

Defense lawyers for former State Sen. Vincent J. Fumo moved late yesterday for an immediate halt in jury deliberations and the removal of one juror, contending that the juror posted oblique remarks on Facebook.com and Twitter.com - including one declaring, "Stay tuned for a big announcement on Monday everyone!"

The petition, filed on the eve of the scheduled sixth day of deliberations in Fumo's federal corruption trial, stated that there was "substantial evidence" that the juror, who was not identified, had violated admonitions not to disclose the status of deliberations.

The lawyers asked U.S. District Judge Ronald L. Buckwalter to question the juror and other members of the panel.

"An immediate suspension of deliberations and a delicate but probing judicial inquiry is warranted," lawyers NiaLena Caravasos and Peter Goldberger stated in the petition. "Depending on the results of that inquiry, it seems that one or more jurors ought to be removed and possibly replaced . . . or that a mistrial will be required."

The motion cites one case, United States v. Kemp, 500 F.3d 257, 301 (3d Cir. 2007). Here's the relevant passage:

"We review 'a trial court's response to allegations of juror misconduct for abuse of discretion.' United States v. Boone, 458 F.3d 321, 326 (3d Cir. 2006). Here, we conclude that the District Court acted within its discretion when it individually questioned the jurors.

We have recently had occasion to set forth the applicable legal standard governing the district courts' latitude to question jurors during deliberations about allegations of misconduct. In Boone, we recognized that '[i]t is beyond question that the secrecy of deliberations is critical to the success of the jury system.' Id. at 329. At the same time, we emphasized that '[i]t is also manifest, however, that a juror who refuses to deliberate or who commits jury nullification violates the sworn jury oath and prevents the jury from fulfilling its constitutional role.' Id. Attempting to reconcile these disparate values, we held that 'where substantial evidence of jury misconduct -- including credible allegations of jury nullification or of a refusal to deliberate -- arises during deliberations, a district court may, within its sound discretion, investigate the allegations through juror questioning or other appropriate means.' Id. We stressed that a district court, 'based on its unique perspective at the scene, is in a far superior position than this Court to appropriately consider allegations of juror misconduct, both during trial and during deliberations.' Id.

...

Accordingly, the legal standard is clear: a district court may investigate allegations of juror misconduct when presented with 'substantial evidence' of that misconduct.

In other words, while the District Court has ample discretion in deciding whether or not to question a juror, the Court can't just do so on a whim -- it needs "substantial evidence" of juror misconduct.

Here, however,the situation is a little different: while particular tweets (say, "he's guilty as sin, ain't nothin' gonna change my mind") might provide "substantial evidence" of "jury nullification" or "a refusal to deliberate," twittering alone isn't necessarily "substantial evidence" itself of any particular misconduct.

Sure, the jury is instructed to keep the content of deliberations secret, but it doesn't seem the juror revealed any content, other than the cryptic reference to a "big announcement" on Monday, which itself doesn't reveal any content other than the jury being close to a resolution.

Moreover, there's the bigger question of: so what? The Third Circuit still hasn't settled on a standard for removing a juror. Suffice to say it's not easy:

"While it is undisputed that in certain circumstances, district courts may discharge a juror for cause during deliberations, see Fed. R. Crim. P. 23(b), we have yet to enunciate the appropriate standard. 24 Any standard must accommodate two clashing interests. First, it is clear that 'a court may not dismiss a juror during deliberations if the request for discharge stems from doubts the juror harbors about the sufficiency of the government's evidence.' United States v. Brown, 262 U.S. App. D.C. 183, 823 F.2d 591, 596 (D.C. Cir. 1987). Any other rule would eviscerate the right to a unanimous verdict of guilt. See id. On the other hand, courts agree that a district court has the authority to dismiss a juror -- even during deliberations -- if 'that juror refuses to apply the law or to follow the court's instructions.' United States v. Abbell, 271 F.3d 1286, 1302 (11th Cir. 2001) (per curiam). That is because 'a juror who refuses to deliberate or who commits jury nullification violates the sworn jury oath and prevents the jury from fulfilling its constitutional role.' Boone, 458 F.3d at 329. While the jurisprudence discussing the discharge of jurors during deliberations has largely focused on a refusal to deliberate or jury nullification, its reasoning applies with equal force to claims of juror bias." United States v. Kemp, 500 F.3d 257, 303 (3d Cir. 2007).

Id. at 303.

Twittering a couple lines about the status of the trial doesn't come close to "refusing to apply the law." At the most, the juror arguably didn't "follow the court's instruction" with regard to secrecy, but it's hard to say such was deliberate when the juror plainly made an effort not to disclose any specific information.

It all comes back to a discussion I had with Anne Reed just last week (on Twitter, about another juror twittering case, of course):

annereed: Civil defendant wants new trial after finding juror's trial tweets; they look appropriate to me. http://ping.fm/OvHlM

phillyshortcite: @annereed re http://ping.fm/OvHlM Agreed; jurors entitled to tell others they're on a jury and to describe verdict afterwards.

 

annereed: @phillyshortcite Yes.Juror networking issues are easier than people think; q is whether it would be ok if juror said it face to face.

 

phillyshortcite: @annereed I'm surprised by depth of confusion over social media & law. "Are tweets admissible?" Yep, just like everything else.

There's nothing different here. Jurors for centuries have told their friends over the weekend "I think we've finally reached a verdict!"

We just have more "friends" these days, and, as Seth Godin would put it, everything goes on your permanent record.

So, juror, if the jury's suspended while the lawyers argue and you're reading this... stop reading this! Do what the court tells you to and stick to the evidence at trial!

But if you're done with deliberations and have entered a verdict, don't sweat it. You're not the first juror to breathe a sigh of relief after months of trial.

• Email This
• Print
• Comments (1)
• Trackbacks (2)
• Share Link

Closing arguments are the only time that trial lawyers get to be the pious, melodramatic, over the top shysters that television portrays them to be. It's where Clarrence Darrow stood against the death penalty for Leopold and Loeb, where Socrates admits the charges but not the crime.

It's the only point in the entire trial where all the facts make sense to the jury.

It's also where, for the first time, the law is revealed to the jurors and they are told what it is that they're supposed to do(warning: PDF), where it is explained, just once, that:

Proof beyond a reasonable doubt does not mean proof beyond all possible doubt or to a mathematical certainty. Possible doubts or doubts based on conjecture, speculation, or hunch are not reasonable doubts. A reasonable doubt is a fair doubt based on reason, logic, common sense, or experience. It is a doubt that an ordinary reasonable person has after carefully weighing all of the evidence, and is a doubt of the sort that would cause him or her to hesitate to act in matters of importance in his or her own life. It may arise from the evidence, or from the lack of evidence, or from the nature of the evidence.

I've often wondered if further explaining the burden of proof makes matters clearer or more confusing. The rules of evidence and the practical reality of storytelling require that each and every claim or defense be proven with at least some conjecture, speculation or hunches, exactly the sort of evidence deemed unreasonable.

My favorite instruction is this one, which has an analogue in civil trials of an instruction to the jury that the number of witnesses or length of testimony is not a relevant factor in assessing which side should prevail:

Although the government is required to prove the defendant guilty beyond a reasonable doubt, the government is not required to present all possible evidence related to the case or to produce all possible witnesses who might have some knowledge about the facts of the case. In addition, as I have explained, the defendant is not required to present any evidence or produce any witnesses.

In every trial I've seen, the lawyers promptly request the jury to disregard this instruction, after which they proceeded to "bang the empty chair," the trial lawyer's term for arguing the importance of one side's failure to call a particular witness or present particular evidence. That's already happened here, with Assistant U.S. Attorney Zauzmer calling out Dennis Cogan and Edwin Jacobs' failure to call Michael Rubin to the stand.

And it'll happen tomorrow when Cogan and Jacbos lay into Zauzmer for failing to call Litchko, whose destruction of emails and guilty plea formed the core of their obstruction of justice case.

The real question, to me, comes down to the choice between the kitchen sink or the frying pan. Do you throw all of the facts back at the jury again, including the kitchen sink? Or do you beat the jury over the head with the frying pan, making sure they really, really, really understand the most important parts of your argument?

It would be great if you could strike a balance between these two, but "striking a balance" in this context is about the same as telling someone to "keep their eye on the ball." It doesn't help and it's pointless anyway. Whatever you do, you are going to annoy some jurors with your repetition. You are still not going to reach some of them. And some of them will not interpret the facts and the issues the same way you do. Period.

As Zauzmer enters his third day of closing, it's clear he's gone with the kitchen sink, a logical choice given the way they prosecuted and presented their 141-count indictment and the simple fact that, by now, nothing remains in the jury's mind of most witnesses' testimony except some notes and a vague impression.

Cogan and Jacobs will likely take the opposite approach, poking a few holes in the prosecution's case (like with the chart of Citizens' Alliance Fumo tried to take apart on the standard) but generally sticking to their themes of intent and criminality.

Though I favor the frying pan approach -- IMHO, if the jury hasn't absorbed your alleged facts by now, they're not going to -- neither can be said to be better, it's just a question of which tool you use for the job.

There are, however, two main points to consider as the defense begins their closing and the jury deliberates.

First, what is the law? Zauzmer's closing was, in my opinion, thin on the jury instructions themselves. And that's understandible: confusion and complexity create doubt, which favors the defense, and there is little more confusing and complex than a federal charge of mail and wire fraud, the core of which is an element that mails or wire communications be used to commit the fraud so as to satisfy the constitutional requirement that the federal government is acting within its commerce clause powers in bringing the case. Such a requirement, glossed over by both jurors and lawyers in most cases, does nothing to simplify the case.

As such, expect Cogan and Jacobs to walk the jury through the finer details of the law, particularly the obstruction of justice charges and the vague "corruptly persuade" requirement of the witness tampering law.

Second, what was not said? "Show, don't tell." The same is just as true for closing arguments -- sometimes your best arguments should be left unspoken, so as to leave their inherent power in juror's minds as the jurors find the words to express the argument themselves in deliberations. This is a terribly risky strategy, one that requires considerable fortitude, as you don't want jurors to miss one of your arguments, but one that I think is underused by lawyers. Jurors don't really want to hear your arguments unless they're really novel -- don't be afraid to let them figure some things out on their own.

Cogan and Jacobs, bearing no burden of proof at all, have far more latitude to use this tactic, and so have used it far more than Zauzmer and Pease, just as I discussed way-back-when in my jury nullification post, the groundwork for which was laid heavily by Fumo's testimony, particularly the part about being a target of the Bush Administration.

Will those issues enter the deliberations?

• Email This
• Print
• Comments
• Trackbacks
• Share Link

[Ed - I originally accidentally posted an uncorrected draft with some truly interesting (and incomprehensible) voice recognition errors, hopefully now corrected below.]

And so 62 days of ugly testimony comes to its ugly end. Fumo's defense was short -- largely his own testimony -- and the prosecution's rebuttal was his lawyers, called to rebut Fumo’s testimony that he had been advised he could continue and step up his deletion policies, a rebuttal the lawyers were all too willing to give.

As one observer told me, "I did not think it was possible, but they actually got me to feel sorry for Vince Fumo." Indeed, Fumo has left this saga a pathetic figure, a wealthy and influential man with few friends, no relationship with his own child, spying on those closest to him, surrounded 24 hours a day by people paid to be there, a Citizen Kane on trial for the excesses of his last few years in power.

Which is really a shame. Far be it from me to defend Fumo's conduct on a personal or ethical level, but we don't arrest and convict people for who they are, but rather for what they have done, and Fumo is not on trial for abusing his legislative position to extract multimillion-dollar private (and secret) settlements from major industries, nor is he on trial for lying to everyone in the Philadelphia-area about his connection to Citizens Alliance, nor is he on trial for the dysfunctional and sometimes abusive way he treated his staff, friends and family.

He is on trial for fraud against three particular entities and obstruction of justice. He is on trial for what appear to have been an open secret.

Let's start with part of the Third Circuit Court of Appeals in model jury instructions for criminal fraud, the basis for what the jury was told this morning:

The first element that the government must prove beyond a reasonable doubt is that (name) knowingly devised (or wilfully participated in) a scheme to defraud (the victim) of money or property (or the intangible right of honest services) by materially false or fraudulent pretenses, representations or promises.

A ''scheme'' is merely a plan for accomplishing an object.

''Fraud'' is a general term which embraces all the various means by which one person can gain an advantage over another by false representations, suppression of the truth, or deliberate disregard for the truth.

Thus, a “scheme to defraud” is any plan, device, or course of action to deprive another of money or property (or the intangible right of honest services) by means of false or fraudulent pretenses, representations or promises reasonably calculated to deceive persons of average prudence.

…

The false or fraudulent representation (or failure to disclose) must relate to a material fact or matter. A material fact is one which would reasonably be expected to be of concern to a reasonable and prudent person in relying upon the representation or statement in making a decision (describe relevant decision; e.g., with respect to a proposed investment).

This means that if you find that a particular statement of fact was false, you must determine whether that statement was one that a reasonable person (or investor) might have considered important in making his or her decision. The same principle applies to fraudulent half truths or omissions of material facts.

In order to establish a scheme to defraud, the government must also prove that the alleged scheme contemplated depriving another of money or property (or of the intangible right of honest services).

Does that bear any relationship to what happened with the Pennsylvania Senate, Citizens Alliance and the Independence Seaport Museum?

What, really, should Fumo have told Citizens Alliance, and who would he have told? He was in constant contact with the director, who approved all of these expenses, and the board never even met until well after all of the allegedly criminal activity occurred. Same goes for the ISM – would they have done anything different if he had gone out of his way to tell each and every board member what he planned?

The Senate has a similar problem. It’s not as if Fumo wrote his own checks out of the Senate; did no one ask why he had three drivers? Have they ever asked?

Put simply, the "fraud" that occurred here doesn't bear much of a relationship to how we normally perceive fraud. Fudging the duties of politically-appointed government employees is a disreputable tradition with a long history stretching directly to the present, but only a single example of anyone in the past actually being prosecuted and convicted for it in Pennsylvania, the Habay case.

More tomorrow.

• Email This
• Print
• Comments (1)
• Trackbacks
• Share Link

As expected, Fumo's defense has gone on the "offensive," so to speak, and has done much more than merely poke holes in the prosecution's case, though they have done that, too.

They've put Vince himself up there to explain everything. And he's gone down the roads anticipated in that last post. He's proudly (some might say defiantly) admitted the secret settlements behind the PECO and Verizon suits, overworking his staffers and putting them on personal duties, and pulling the strings at Citizens' Alliance.

As predicted, he has directed his efforts at arguing what he did was not criminal, or, if it technically was, that he shouldn't be convicted anyway (an argument only made implicitly by references to the merits of political power and boogeymen like Enron, rather than explicitly, which would earn him and his lawyers a sharp reprimand).

Of course, his testimony isn't really the interesting part -- cross-examination by the US Attorneys, likely to begin tomorrow, is the interesting part.

So what's he need to do? Obviously prepare, prepare, prepare. Get his thoughts in order. A skilled trial lawyer can quickly start dragging an unprepared witness around by the nose.

But there's another, counter-intuitive piece of advice: Fumo needs to refrain from having an explanation for everything.

If there's one thing a jury hates, it's a liar. Some liars are dumb, have bad memories, or otherwise expose themselves to inconsistencies and attack. Those are the easy ones to expose.

The smart ones are harder to deal with -- they rarely offer you inherently contradictory testimony, you have to walk them into it. You have to give them enough rope to hang themselves with.

In general, a trial lawyer has a huge cognitive advantage over a witness. Whereas the witness knows what they're going to say in response to a particular question, the lawyer knows where the questions are going. Let's go back to my third Fumo post:

The two "rules" for cross examination are well-known and taught at every law school. Use leading questions only (i.e., questions with a yes or no answer), so that the witness will not have a chance to tell their story again. Do not ask any questions for which you do not already know the answer.

That is the safe option. Do that as a trial lawyer and you will not be sued for malpractice. No one will blame you when your client loses.

Do that in a difficult case -- Fumo has a very difficult case -- and you will lose.

Jurors want drama. They want a fight. Some lawyers and commentators blame television shows and movies for the jury's expectation that the criminal defense lawyer will assault the prosecution's main witnesses, but I believe the situation inherently demands drama. If the witness is calling your client a criminal, you have no choice but to call them a liar and to prove it.

How do you prove it?

Timing.

If you can understand the difference between Humpty Dumpty and Socrates, you can understand the difference between direct and cross-examination. Cross examination leads, direct examination builds.

Like Dennis Cogan and Edwin Jacobs, Robert Zauzmer and John Pease aren't amateurs, and they're not timid. They're not going to stick to scripted leading questions, not going to only ask Fumo questions to which they already know the answer.

The prosecutors are going to lead Fumo, to get him to talk. And talk, and talk, and talk.

Because they want to force Fumo to do one of three things:

1. Appear to be uncooperative. (Liar!)
2. Stumble into a contradiction and then be called out on it. (Liar!)
3. Become a used-car salesman. (Liar!)

The third is the part that most well-educated witnesses -- whether they're doctors, businessmen, lawyers, or otherwise -- fail to guard against.

Sure, everyone gets cagey and defensive when under hostile questioning, particularly when their liberty is on the line. Jurors know that. And they know he's been preparing for this for years. But at some point, a jury will not accept testimony from a witness who appears to have an answer to everything. Not even a politician.

It's certainly Fumo's biggest weakness -- just consider the tape played from the Michael Smerconish show. He just couldn't help himself. I wouldn't be surprised if the prosecutors played that for him, not just to remind the jury, but to see if they can get Fumo to start explaining it away. His liberty may depend on holding back everything he's been for thirty years and coming clean with each and every answer, the first time around.

Can Fumo do it? 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Legally, almost nothing. The burden lies with the plaintiff (or prosecutors) to prove the elements of their claims, and the defense can sit back and do nothing more than poke holes in those claims. (There’s an exception for “affirmative” defenses like Fumo’s proposed “advice of counsel” defense, discussed previously.)

Fumo’s lawyers have certainly done their share of poking holes in the prosecution’s case, with lengthy, often painful cross-examinations of the FBI agents and accountants who performed forensic examinations of the books for the State Senate, Citizens Alliance and the Independence Seaport Museum.

Although these cross-examinations are boring to most observers, even those who have followed the trial closely, their importance should not be understated. As I’ve written before, although I have seen plenty of cases in which I could not understand why the lawyer by being so excessively nitpicky – even when I was the one doing it! – I have never actually heard a juror complain about such a cross-examination, nor have I seen a jury fail to appreciate the deeper meaning of such a laborious exercise if it bears fruit.

And such nitpicking can bear fruit, as it did for Fumo: nitpicking showed the jury that the issues weren’t as simple as the prosecution contended. Since Fumo’s charged with white collar crimes, complexity plays to his advantage. Whether it be appropriate invoicing by a contractor in a white collar criminal case, or the use of a particular technique by a doctor in a medical malpractice case, or the choice between options by a manufacture in a product liability case, at some point an issue becomes so complicated that jurors will respect most any reasonable judgment made by the defendant.

But Vince Fumo can’t sit back and poke holes in the prosecution’s case.

There’s simply too much out there. Intentional or not, the prosecutors have stripped Fumo of the general sympathy and affinity most people inherently feel for one another by portraying Fumo as a thin-skinned creep whose own daughter won’t even speak to him and who spied on his ex-girlfriend’s email. The prosecutors have also shown beyond any reasonable doubt that Fumo received substantial political and personal work from his Senate-paid staff, that Citizens Alliance and Independent Seaport Museum conferred substantial pecuniary benefits on him (even if they didn’t give him any money directly) and, most importantly, that Fumo panicked when he learned of the FBI investigation, after which he took substantial steps to minimize evidence left behind.

Indeed, Fumo’s lawyers didn’t dispute most of that. They couldn’t.

They have something else in mind: they’re going to “prove” the case by framing the context and mindset of Fumo’s actions.

The first few witnesses have been directed towards that context. Surprisingly, perhaps the most revealing context came in response to questions by the prosecution posed to former Montgomery County District Attorney (and currently County Commissioner) Bruce Castor.

Under cross examination by U.S. Attorney John Pease, however, Bruce Castor admitted that he and Marrone discussed a number of political concerns during normal business hours in Castor’s office, which Castor admitted was probably inappropriate.

But Castor’s admission raises a simple question: why has Vince Fumo been indicted for using his staff for political purposes but not Bruce Castor?

Cogan tried to drive that point home with testimony by Paul S. Dlugolecki, one of Fumo’s top advisors, that other Senators frequently did the same around election time. Zauzmer called him out on it, demanding Dlugolecki “name one” who did, to which Dlugolecki demurred, but the point was made. Frankly, as open as the testimony has been, I doubt any juror expected Dlugolecki to spill the beans and I doubt they’ll hold it against him.

Over the next few days we’ll continue to see more of that context: the defense’s goal will be to create enough context to rebut the prosecution’s central assertions underlying the fraud charges, which is that Fumo had staffers and contractors on the senate payroll who did no work for the government and that Citizens Alliance and the Independent Seaport Museum were treated like shams to benefit Fumo. They don’t have to rebut everything, just paint enough context to slant everything else.

Fumo doesn’t have to do much for the fraud charges: once he shows largely legitimate explanations for what happened, and once he challenges the worst allegations – like those made by Marrone – he’ll likely earn back reasonable doubt. The jury knows the FBI dug deep for months, and they’ll expect a case that’s, if not airtight, is at least watertight. If Fumo can show that everyone saw him dipping his hand into the cookie jar, and that the FBI has mislabeled a significant number of cookies, he’ll likely create enough reasonable doubt to avoid most of the charges.

The obstruction of justice charges are harder to fight: as the context for them is an FBI investigation. As such, Fumo’s lawyers will need to show that Fumo’s mindset – his paranoia and rampant destruction of emails – long preceded the investigation, and that he had reason to believe he could continue such destruction even after he got wind of the investigation.

And that’s where the lawyers come back into play. It also presents a judgment call for Dennis Cogan and Edwin Jacobs on how they portray the mindset of the clients, who appear to have deliberately destroyed documents in the face of an FBI investigation: do they reject the prosecutor’s portrayal of the defendant’s paranoia and recast their clients as confused innocents, or do they run with the paranoia and claim the destruction was nothing unusual for them, and so didn’t reflect a guilty mindset?

The former is the safe choice, but their hands are tied by the facts.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

As the prosecution's case comes to a close, calling up supervising FBI Agents such as Vicki Humphreys to summarize and to distill the mountains of paper and weeks of testimony, it's time to take stock of what we've learned since October 2008.

We've learned, broken down into the four general categories of charges (fraud on the State Senate, fraud on Citizens' Alliance, fraud on the Independence Seaport Museum, and obstruction of justice):

Fumo lived well, financied partly by staffers and contractos paid by the Pennsylvania State Senate who performed substantial personal work for the Senator. Most everyone in the Senate apparently knew all of this, did not complain, and the Senate has not asked for Fumo for reimbursement.

Fumo received a little over $100,000 in power tools and consumer goods from Citizens Alliance, a nominally independent nonprofit set up to help out South Philadelphia neighborhoods. No one at Citizens Alliance objected to these payments, probably because the executive director, co-defendant Ruth Arnao, was the one who made the purchases, while the Board of Directors, whose job it was to oversee these things, never actually met until well after the FBI investigation started. Citizens Alliance has also not asked for any of this money back; it's also, despite being a "victim," now under investigation by the state.

Fumo took a number of voyages aboard yachts owned by the nonprofit Independence Seaport Museum without paying for them. The museum has not asked him to pay them back. It's unclear whether (and how) the museum's officers and directors were unaware that a state senator had repeatedly taken their historic yacht and its crew out for joyrides for free. The Museum was already investigated before, resulting in its director going to prison.

Fumo became extremely paranoid when he was under federal investigation and dramatically escalated efforts to destroy e-mails that he no longer needed around, including instructing his staff to delete (and thus have wiped by other programs) every e-mail to or from him. He did this in earnest up until he was actually served a subpoena, at which point he apparently continued some, but not all, of it, then stopped when his lawyers told him to. Despite these efforts, the US attorneys were able to uncover a wealth of information, including thousands of e-mails at the relevant times.
 

That is to say, we've learned about a bunch of "crimes" no one has complained about except the U.S. Attorneys, who did not subpoena Fumo's office until the second year of the investigation, long after the investigation was made public.

What are we doing here? Being greedy and paranoid is wrong, but isn't a crime. Nor is being thin-skinned, as ample evidence has shown Fumo was by his repeated efforts to retaliate against anyone who crossed his path. It's also not a crime to go on to Michael Smerconish's radio show and lie to the public about the benefits you receive from a nonprofit. It's similarly not a crime to have a horrible relationship with your daughter and her husband. It's probably illegal to hack into your ex-girlfriend's email, but Fumo wasn't charged with that. That's all just background.

It's also apparently not a crime to ask PECO and Verizon to secretly direct millions to particular nonprofits and law firms as part of a government settlement, and for them to cooperate, since the U.S. Attorney sure hasn't charged anyone with anything related to that.

What are we looking at here? A State Senator twisting the staffing rules into spaghetti in plain sight and having his luxuries paid for by two nonprofits that didn't care? That's outrageous, unseemly and greedy, but it's not criminal fraud.

Fumo's "wiping" of the computers certainly had the intent to obstruct a federal investigation, but so what? Every major corporation in America routinely scrubs their email system to obstruct later litigation, including prosecutions brought by the government. Does every CEO in America need to keep their email the moment they hear of a government investigation apparently related to their business?

We'll dive more into these issues as the defense progresses -- for now, think about the case you didn't see, the one where Fumo secretly pockets millions by abusing his government office, the "normal" corruption case.

That case was apparently so flimsy it wasn't even brought and the jury's supposed to convict on the leftovers?

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Although the defense has yet to begin its case, we have seen enough hints over the past few months so that we can sum up Fumo’s defense in two words: “it’s complicated.”

The Pennsylvania State Senate rules regarding the payment of staffers and the time they may spend on a senator’s personal or political goals are complicated. The Internal Revenue Service guidelines for transactions between non-profits and their fundraisers are complicated. Fumo’s relationship with Citizens Alliance and the Independence Seaport Museum was very complicated.

It’s a common strategy for defense lawyers, particularly in white collar criminal cases. The defense doesn’t have to prove anything at all. Their ‘burden’ is to poke enough holes in the prosecution’s case to create “reasonable doubt.”

Such, however, has made for an extraordinarily boring trial, livened up only by descriptions of Fumo’s lifestyle and evidence of the extortion and/or corruption charges never actually brought against him.

That is to say, the most interesting parts of the case have also been the least important.

That has changed. The first three sets of charges – fraud on the Senate, Citizens Alliance, and ISM – were presented by the prosecutors through a laundry list of improperly invoice expenditures, as boring as crime gets. The final set of charges, obstruction of justice, began with a $50 million secret deal with Verizon and will conclude with a desperate attempt to thwart an FBI investigation.

And we’ll finally learn how Fumo, himself a lawyer, ended up indicted for obstruction of justice while represented by legendary former prosecutor Richard Sprague.

As referenced in my last post, on September 5, 2008, the Friday before trial began, Fumo’s current lawyers sent the prosecutors a letter describing their intention to present a so-called “advice of counsel” defense to the obstruction of justice charges. As they wrote,

Specifically, at all relevant times up to February 18, 2005, when the search warrant was served, Mr. Fumo relied upon advice given to him by his long-time attorney and confidant, Richard A. Sprague, that it was permissible under federal law not to retain any document that was not under subpoena.

That was, shall we say, a surprise to the prosecutors, who had previously fought long and hard to disqualify Sprague and his firm from representing Fumo because, among other issues, they had represented the victims in the case and because their role in the facts leading up to the indictment made them potential witnesses and blurred the line between being a witness and being an advocate.

Sprague and his firm beat back the prosecutors’ attempt, in part by assuring the court that they were unaware of the “wiping” of Fumo’s computers, the destruction of evidence at the heart of the obstruction of justice charges.

So how do Fumo’s current lawyers intend to reconcile their advice of counsel defense with Mr. Sprague’s prior representations that his firm was not involved in any of the wiping? We get a hint from the September 2008 letter sent by his attorneys. The letter doesn’t reference Sprague having specific knowledge of any particular deletion or wiping, but rather implies Sprague gave Fumo generalized advice, perhaps before the investigation, that he could destroy any documents not under subpoena.

The prosecutors have filed a motion, mid-trial, to preclude Fumo from raising the advice of counsel defense. In the motion, which you can read here, the prosecutors argue that advice of counsel is only applicable to “specific intent” crimes and not “general intent” crimes like obstruction of justice.

It’s not worth going into the details; if you are interested, you can see the response from Fumo’s lawyers here. I presume the judge will deny the government’s motion and permit Fumo to raise the defense – both Judges Yohn and Buckwalter have been very permissive in allowing evidence in this trial. Both have rejected essentially every attempt to limit the scope of this trial, such as by denying the prosecutors’ motion to disqualify Sprague and denying the defendant’s motion to bifurcate the charges into separate trials.

A laissez-faire approach to evidence is generally the best way for a trial judge to avoid reversal by an appellate court; when in doubt, let the jury sort it out.

I have heard numerous theories on how this situation came to pass, with Sprague being offered up to testify regarding something he apparently previously knew nothing about.

Some have hypothesized that Sprague’s vigorous resistance to disqualification was a “sham” from the beginning, as is his “feud” with Fumo (reportedly over fees), and that Sprague and Fumo have been planning the whole time for Sprague or one of his firm’s attorneys to take the stand in Fumo’s defense.

I have also heard it hypothesized that the opposition to the disqualification and the “feud” are both real, and that the “sham” will come when Fumo claims that Sprague actually did advise him on the deletions and wiping, despite Sprague’s prior representations to the court.

It’s probably a little more complicated than that. By pure coincidence, Senator Fumo became the target of a federal investigation a year after a major change in the law relating to obstruction of justice.

Prior to 2002, obstruction of justice was criminalized by three separate federal statutes, none of which clearly prohibited the destruction of documents in anticipation of a government investigation or subpoena.

18 U.S.C. § 1503 created criminal penalties for anyone who “corruptly ... influences, obstructs, or impedes, or endeavors to influence, obstruct, or impede, the due administration of justice.” Court opinions had supplemented the statute with four essential elements that the government must prove:

(1)    a judicial proceeding which was pending when the documents were destroyed (the “pending proceeding” requirement),
(2)     the individual  had knowledge of that proceeding,
(3)    a sufficient “nexus” existed between the document destruction and the proceeding, and
(4)     the defendant acted corruptly and with an intent to obstruct or interfere with a judicial proceeding or administration of justice.

See “Anticipatory Obstruction of Justice: Pre-Emptive Document Destruction Under the Sarbanes-Oxley Anti-Shredding Statute,” 89 Cornell L. Rev. 1519, 1529-1530 (September, 2004).

These requirements are strictly applied. One of the more important Supreme Court cases interpreting § 1503 overturned a conviction of a Federal Judge for deliberating lying to FBI investigators about leaking information about a wiretap because the investigation did not have a sufficient “nexus” with an actual grand jury proceeding. United States v. Aguilar, 515 U.S. 593; 115 S. Ct. 2357; 132 L. Ed. 2d 520 (1995).

18 U.S.C. § 1505 is essentially the same as § 1503, except it applies to agency and congressional investigations. 18 U.S.C. § 1512, the third and final statute under the pre-2002 system, has a broad reach and references government investigations, but only actually criminalizes witness tampering.

That is to say, the pre-2002 obstruction of justice law was limited to situations “closely tied to a pending judicial proceeding” while the witness tampering law ironically only “made it a crime to persuade another person to destroy documents, but not a crime to actually destroy the same documents yourself.”

Don’t take my word for it – those quotes come from United States Senator Patrick Leahy, Chairman of the Committee on the Judiciary, who proposed the new and current obstruction of justice statute, the one under which Fumo has been indicted, in response to revelations of the accounting firm Arthur Andersen shredding hundreds of thousands of documents in anticipation of receiving a subpoena relating to its work for Enron. 148 Cong. Rec. S7, 419 (daily ed. July 26, 2002) (statement of Sen. Leahy). Fumo has been charged with witness tampering as well, by way of instructing other persons to destroy relevant evidence.

Sound complicated? It gets worse.

At trial, Fumo’s lawyers seem likely to argue that Sprague gave Fumo inaccurate advice, an argument hinted at in their response to the prosecution’s motion to prelude Fumo from presenting an advise of counsel defense. (Fumo’s lawyers note, correctly, that advice of counsel usually arises in cases where the advise was inaccurate, as common sense suggests that, if the lawyer’s advice had been accurate, then the defendant would not have been indicted.)

Making matters worse, it’s possible that Fumo will testify he received this general advice relating to document destruction and subpoenas at some point before July 30, 2002, the day the new obstruction of justice statute -- which has a much broader reach, covering any destruction or other tampering done with intent to obstruct a federal investigation, no matter how far removed -- became law.

As everyone knows, ignorance of the law is no defense, but it does raise reasonable doubts about a defendant’s intent.

Fumo may then end up arguing that he had the old law in mind, the one that did not criminalize anticipatory destruction, when he ordered his staff to ramp up their document destruction once he generally learned of the investigation. And who is to say his belief was unreasonable – Congress, after all, apparently thought the same thing, which is why they changed it.

The trick for Fumo’s lawyers is to present this all to the jury in a manner that makes it complicated, but not too complicated. Complicated sounds like reasonable doubt; too complicated sounds like baloney.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

If you don’t recognize the reference in the title, here’s the Warren Zevon song.

This week saw a recounting of one of the most dramatic moments in Senator Fumo's saga, testimony which brought into focus the original impetus for the FBI and the U.S. Attorneys’ Office to consider public corruption charges against Fumo.

Daniel Whelan, the former president of Verizon of Pennsylvania, testified about a meeting he had with two lawyers, David Cohen and Arthur Makadon, both then of the law firm Ballard Spahr. The context is important: Verizon is one of the most powerful corporations in Pennsylvania, with an industry position often bordering on monopoly status. Ballard Spahr, in turn, has one of the largest and most influential government relations law practice in the state; David Cohen, for example, was Ed Rendell’s Chief of Staff when Rendell was the mayor of Philadelphia.

Whelan approached Cohen and Makadon for advice regarding a settlement offered by Senator Fumo arising from the Pennsylvania Utility Commission’s proposal to split Verizon into separate retail and wholesale businesses, a change which, Whelan testified, could have cost Verizon $2 billion. Fumo, Whelan said, had demanded nearly $50 million from Verizon in the form of donations to non-profits and guaranteed billables for large law firms (not including Ballard) in the area. As the demand had nothing to do with Verizon, phone service, or the taxpayers, and had everything to do with Fumo, Whelan was concerned that he or Verizon might later be accused of bribery.

Which is understandable. As I discussed in my last post on Fumo, 18 U.S.C. 666(a)(2) makes it a federal offense to "corruptly give ... anything of value to any person, with intent to influence ... an agent of ... a State..., in connection with any business ... of such government ... involving anything of value of $5,000 or more." On the other side of the transaction, 18 U.S.C. 666(a)(1)(B) makes it a crime for any government official who “corruptly solicits or demands for the benefit of any person … anything of value from any person, intending to be influenced or rewarded in connection with any business … of such … government… involving any thing of value of $5,000 or more.”

Whelan testified that Cohen and Makadon told him to “work it out with Fumo,” which Whelan did, with the requirement that none of the money be directly tied to Fumo, and as such no work was sent towards law firms which either compensated Fumo generally or would compensate him for that particular work.

Ironically, under current law it does not seem that such a limitation would have changed Whelan’s potential criminal liability. "A quid pro quo of money for a specific legislative act is sufficient to violate the statute, but it is not necessary." United States v. Gee, 432 F.3d 713, 714 (7th Cir. 2005). That is to say, a bribery charge does not depend upon specifically offering a certain amount for a particular act, but rather merely giving anything of value to any person with the intent to influence an agent of the state. It does not matter if the money goes into Fumo’s pocket: on Whelan’s side, paying anyone with the intent to influence Fumo in connection with his government business is, by definition, public corruption, just as, on Fumo’s side, soliciting anything of value from anyone for the benefit of anyone while “intending to be influenced” is, by definition, public corruption.

Which is why the lawyers were called in.

Truth is, we only barely know what happened here, with conflicting versions having already arisen. Cohen, for instance, told The Inquirer he recommended Verizon fight the PUC in Court, not that they work out a deal with Fumo. Regarding the legal work, Whelan said that he originally meant to send work to Cozen O’Connor, but stopped when he learned they were going to pay Fumo a referral fee. Today, however, The Legal Intelligencer quoted a representative from Cozen saying that the firm did some work for Verizon, but without compensating Fumo.

We also don't know what the agreement between Verizon and Fumo really was, since it was never put into writing. As The Inquirer reported, though, when some of the Verizon contributions did not appear on time, one of Fumo’s lawyers wrote Whelan: "I understand that Senator Fumo believes that there were certain undertakings of Verizon in connection with the settlement he reached with you that have still not been fulfilled," enclosing a draft letter to the PUC. That, Whelan testified, was a reference to the payments to organizations chosen by Fumo, including Citizens Alliance.

It’s a fascinating story with considerable innuendo which brings us back to the mystery at the heart of the Fumo indictment: if the underlying crime here was Fumo’s abuse of his office to benefit himself, his allies, and his organizations, including Citizens Alliance, why was he indicted for defrauding Citizens Alliance and not indicted for corruption?

There’s a simple answer that many have reached: he had enough lawyers, guns and money to effectively conceal the corrupt deal, then destroyed everything that was left when he learned of the investigation, hence the obstruction of justice charge.

But it's not that simple; indeed, on the facts we know, it should be even more simple than that. Whelan's testimony alone supports probable cause for a corruption charge, so where is it?

Moreover, the obstruction of justice charges arise from a time when Fumo presumably would have called upon his lawyers, guns and money for assistance and guidance.

In short, how did Fumo avoid indictment for demanding over $50 million to change his legislative position but not for stepping up his office's document-destruction procedures after he learned of the investigation? People get sloppy -- it's how most criminals are caught -- but it just doesn't make sense here, not with what we know about Fumo and his heavy reliance on lawyers.

We may soon learn. Here’s the letter one Fumo’s current lawyers -- none of whom were involved prior to the indictment -- sent the Friday before trial started:

In response, the government subpoenaed over 1,200 documents from Sprague, documents which, the prosecutors have contended, contain no record of any specific advice given to Fumo regarding the "wiping" of computers, the basis of the obstruction of justice charge. That contention is consistent with Sprague's own representations, back when he represented Fumo, that he was not aware of any of the "wiping."

I'll have more on Sprague's advice -- and whether Fumo will even be allowed to testify about it, given his prior pleadings claiming there was no such advice -- next week.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

It's been a great week for fans of mail & wire fraud and public corruption. Illinois Gov. Rod Blagojevich was indicted for a raft of charges including trying to sell off his appointment for Obama's vacant Senate seat, former NASDAQ chairman Bernard Madoff gave up the ghost on the $50 billion Ponzi investment scheme he's been running for years, and Marc Dreier, sole owner of his eponymous 200-plus-lawyer NYC & LA firm, was arrested for selling millions in fake promissory notes right out of his own clients' offices.

Let's pause for a moment to laugh at their poor lawyers making steak out of scrapple. Madoff's lawyer called his client "a person of integrity." Dreier's lawyer said the charges were "relatively minor."

Blagojevich is at least $500,000 behind in paying his lawyers, so they didn't say anything at all.

Back to Fumo, now comes word about the state's investigation into Citizens' Alliance:

The Pennsylvania attorney general is investigating the charity at the heart of the federal corruption case against former State Sen. Vincent J. Fumo - an inquiry that could force the organization to shut down.

A spokesman for Attorney General Tom Corbett said the conduct of Citizens' Alliance for Better Neighborhoods "raises red flags all over the place."

Citizens' Alliance has spent hundreds of thousands of dollars in ways "that have nothing to do with the operation of a charity," said Kevin Harley, the spokesman.

He cited the nonprofit's heavy buying of tools and other items for Fumo, its luxury cars, and its secret funding of a lawsuit against a Fumo political enemy.

On Tuesday the Inquirer's editorial board called the investigation long overdue:

Citizens Alliance, the South Philly group founded by aides of former state Sen. Vincent J. Fumo, has operated as Fumo's personal piggy bank for years. There is ample evidence coming out of Fumo's federal corruption trial that the nonprofit spent lavishly on purchases that had nothing to do with charity.

Why, for example, did the charity need to purchase power tools for Fumo? Why did it pay for a lawsuit against one of Fumo's political enemies? And why has it shelled out $2 million in legal fees arising from the federal criminal probe?

Everyone "knows" the answer "why," it's part of the salacious story about Vince Fumo that has kept people fascinated, a story which goes something like this:

Vince Fumo, despite already being a multi-millionaire, systematically abused his power as an influential State Senator to send millions of dollars -- some of it directly from the state, others from corporations Fumo leveraged with state power, including titans like PECO and Verizon -- to two non-profits that he used as slush funds, "borrowing" bulldozers, yachts and gardeners, funneling money for political purposes ($50,000 towards building a statue of a dog!), and going on Home Depot shopping sprees.

That is, outrageous public corruption, abuse of political office for personal gain and, because Fumo didn't report the income on his taxes (as his accountant, Steven Kobasa, confirmed on Monday), criminal tax fraud, of the same type that got Al Capone.

That would be a huge case, a complete indictment of Fumo and the dozens of people surrounding him who either benefited themselves or let it happen for their own purposes.

But that's not the case being tried right now.

Public corruption is:

a breach of public trust and/or abuse of position by federal, state, or local officials and their private sector accomplices. By broad definition, a government official, whether elected, appointed or hired, may violate federal law when he/she asks, demands, solicits, accepts, or agrees to receive anything of value in return for being influenced in the performance of their official duties.

There's a federal statute right on point, the one that Blagojevich has been charged with violating, which provides for fines and up to 10 years in prison for any government official who:

(A) embezzles, steals, obtains by fraud, or otherwise without authority knowingly converts to the use of any person other than the rightful owner or intentionally misapplies, property that—
(i) is valued at $5,000 or more, and
(ii) is owned by, or is under the care, custody, or control of such organization, government, or agency; or

(B) corruptly solicits or demands for the benefit of any person, or accepts or agrees to accept, anything of value from any person, intending to be influenced or rewarded in connection with any business, transaction, or series of transactions of such organization, government, or agency involving any thing of value of $5,000 or more;

or

(2) corruptly gives, offers, or agrees to give anything of value to any person, with intent to influence or reward an agent of an organization or of a State, local or Indian tribal government, or any agency thereof, in connection with any business, transaction, or series of transactions of such organization, government, or agency involving anything of value of $5,000 or more;

18 USC 666(a)(1) & (2).

Fumo was not charged with public corruption. Indeed, a public corruption charge for Fumo's relationship with Citizens Alliance would be incompatible with the crimes for which Fumo has been indicted.

The 141 counts listed in the indictment did not include either public corruption or individual tax fraud. The actual violations alleged are:

18 U.S.C. § 371 (conspiracy to commit mail and wire fraud - 2 counts)
18 U.S.C. § 371 (conspiracy to defraud the United States - 1 count)
18 U.S.C. § 371 (conspiracy to obstruct justice - 1count)
18 U.S.C. § 1341 (mail fraud - 60 counts)
18 U.S.C. § 1343 (wire fraud - 41 counts)
18 U.S.C. § 1512(b)(2)(B) (obstruction of justice - 9 counts)
18 U.S.C. § 1512(c)(1) (obstruction of justice - 2 counts)
18 U.S.C. § 1519 (obstruction of justice - 21 counts)
26 U.S.C. § 7206(1) (false tax return - 2 counts)
26 U.S.C. § 7206(2) (aiding and assisting the filing of a false tax return - 2 counts)
18 U.S.C. § 2 (aiding and abetting)
18 U.S.C. § 981 (criminal forfeiture)

 Factually, there are four categories of crimes, as described previously by Judge Yohn:

(1) fraud and conspiracy to commit fraud related to the State Senate of Pennsylvania ("Senate");

(2) fraud and conspiracy to commit fraud, conspiracy to obstruct the Internal Revenue Service, and aiding and abetting in the filing of false tax returns, related to Citizens Alliance for Better Neighborhoods ("Citizens Alliance");

(3) fraud related to the Independence Seaport Museum ("ISM"); and

(4)obstruction of justice and conspiracy to obstruct justice.

 Let's focus on (2) and (3). Starting with the Citizens Alliance charges, here's part of the indictment:

4. Defendants VINCENT J. FUMO and RUTH ARNAO used funds and resources of Citizens Alliance for their personal benefit. In addition, FUMO, with ARNAO’s assistance, used funds of Citizens Alliance to support political causes he favored. All of this conduct violated Citizens Alliance’s status as a tax-exempt nonprofit organization, and deprived Citizens Alliance of funds which it could have used to carry out its charitable mission in the City and County of Philadelphia.

5. Consistent with his preference of spending “other people’s money” (“OPM”), FUMO arranged for Citizens Alliance to purchase numerous items for his personal benefit. Among many such purchases, Citizens Alliance paid for a huge number of power and other tools, equipment, and hardware costing more than $75,000, that FUMO (a tool aficionado) personally received and placed at his various residences and other properties; Citizens Alliance purchased and paid for 19 Oreck vacuum cleaners and floor machines, for more than $6,500, which went to every floor of FUMO’s Green Street mansion, his home in Florida, and other places; and it paid for shopping sprees at the Jersey shore, during the summer months, when FUMO and ARNAO went to Sam’s Club, Home Depot, and Lowe’s locations near Atlantic City to stock up on tens of thousands of dollars of goods for their summer residences.

The ISM charges are similar:

5. Consistent with his philosophy of spending “other people’s money,” and his misuse of public and nonprofit resources he controlled, defendant VINCENT J. FUMO took improper advantage of his position as a member of the board of directors of the nonprofit Independence Seaport Museum to obtain numerous, valuable pleasure cruises on the museum’s historic yachts, without paying. In addition, FUMO took other benefits from the museum, including expensive ship models he used as decorations in his offices. FUMO took all of these benefits without disclosing to his fellow directors the material fact that he did not intend to and did not pay for any of them.

The core facts there do not necessarily represent illegal conduct. The American Cancer Society spends a whopping 10% of its expenditures towards "Administration" and another 22% towards "Fundraising." 

That is, out of a billion dollars a year, 300 million of it -- including $619,551 to the CEO -- goes to people not actually "eliminating cancer as a major health problem by preventing cancer, saving lives, and diminishing suffering from cancer, through research, education, advocacy, and service." It goes to people buying plenty of power tools and trips to McDonald's.

But none of them are on trial for fraud.

The core difference, as alleged, is here:

From in or about August 1991 to in or about December 2005, at Philadelphia, in the Eastern District of Pennsylvania and elsewhere, defendants VINCENT J. FUMO and RUTH ARNAO conspired and agreed, together with each other, and with others known and unknown to the grand jury, to commit an offense against the United States, that is, to knowingly devise a scheme to defraud Citizens Alliance, and to obtain money and property of Citizens Alliance by means of false and fraudulent pretenses, representations, and promises ...

...

Between on or about January 1, 1996, and on or about April 15, 2004, defendant
VINCENT J. FUMO devised and intended to devise a scheme to defraud the Independence Seaport Museum, and to obtain money and property from the museum by means of knowingly false and fraudulent pretenses, representations, and promises.

That is to say, the trial going on right now isn't about Citizens Alliance being a "piggy bank" for Fumo's corrupt funds, it's about Fumo ripping off two genuine charities.

That's why the Citizens Alliance investigation story is so intringuing, much as the earlier Independence Seaport Museum charges were, and why we'll keep coming back to both in the weeks ahead.

Here's part of the allegations against Blagojevich, who was arrested for public corruption:

53. Capri Capital (“Capri”) was a real estate investment management firm that had a long-standing relationship with [Teachers' Retirement System, "TRS"]. In February 2004, Capri was expected to receive $220 million from TRS to manage. Levine originally acted to stall the allocation in February 2004. Eventually, however, the $220 million allocation was going to proceed until Levine, Rezko, Kelly, and Cellini conspired to extort Capri and Thomas Rosenberg, one of Capri’s owners. In short, according to Levine, Levine and Rezko agreed that if Rosenberg wanted to get the $220 million for Capri, Rosenberg was either going to have to make a $1.5 million donation to ROD BLAGOJEVICH or pay Levine and Rezko a 1% fee. According to Levine, and as confirmed on recorded conversations, both Kelly and Cellini joined the attempted extortion and played roles in the attempted extortion. As part of the extortion, Cellini informed Rosenberg that, in essence, Capri had not gotten its $220 million allocation because Rosenberg and Capri had not donated to ROD BLAGOJEVICH. Rosenberg, realizing he was being extorted, threatened to expose the extortion to law enforcement. Thereafter, Levine, Rezko, Kelly, and Cellini backed off the extortionate threats, but agreed that after the $220 million allocation, neither Capri nor Rosenberg would get any further State of Illinois business.

And here's the Inquirer's characterization of Fumo's PECO settlement:

In the late 1990s, Fumo struck a deal that extracted millions of dollars from Peco Energy in donations to Citizens' Alliance, run by Arnao and set up to improve the senator's Philadelphia district.

Acting both as a Peco customer and as a senator, Fumo asked state regulators to block Peco's business plans of the time.

But he dropped his legal challenge after Peco agreed to freeze electric rates for a decade and, in a secret side deal, make a whopping donation to Citizens' Alliance. Ultimately, Peco gave the group $17 million.

If Citizens' Alliance really was Fumo's "piggy bank," there'd be no difference between his threats against (and subsequent deal with) PECO and Blagojevich's threats against Capri Capital.

Yet, Fumo was not indicted for public corruption -- that is, enriching the Alliance to enrich himself -- but for defrauding the Alliance the enrich himself.

Now the Alliance itself is alleged to have been corrupt, based on the same facts, a simple question has been raised: how do you defraud an organization that's in on the deal?

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Last week, Fumo and Arnao joined the thin ranks of defendants not in jail who want their trial done faster, with a motion by Fumo's lawyers to split the Independence Seaport Museum charges, for which no evidence has yet been presented, into a separate trial.

Before the trial, Judge Yohn denied a similar request (though disfavored, it's a discretionary call to bifurcate a trial), which I think was the appropriate decision, given how the alleged obstructions of justice arose as a response to the totality of the circumstances, including investigations into, and press reports about, the ISM. I doubt they'll succeed now, but it's worth reviewing why they're trying.

Partly for psychological reasons, most civil and criminal defendants who don't have an immediate concern – like sitting in jail or suffering continued damage to their reputation – will use every available legal mechanism to slow down the rush to judgment. Why, then, is Fumo moving to speed up his trial? (Other than, obviously, to combat the sheer boredom of hearing weeks of testimony from every gardener and computer technician who ever worked for him.)

I see two primary issues. First, the defense wants to disarm the government's strategy of proving Fumo's intent through circumstantial evidence that his whole lifestyle was framed by the use of "OPM" for personal gain. One of the biggest weaknesses in the prosecution's case is the lack of smoking guns compared to most white collar criminal trials. Enron, for example, had Chewco, the obvious purpose of which was to hide liabilities, enabling Enron to inflate the profits it stated to investors. In the only other prosecution for a Pennsylvania legislator for misusing legislative staff, the Habay case, the facts were straightforward. Here's an example:

Rebecca Coleman testified that she was employed in the defendant's office from June 1999 through January 2000. Her first assignment was to plan a fundraiser for July 29, 1999. She spent approximately one half of her working hours on this campaign related activities. She did this work at the defendant's direction. In performing these duties, she used the office facilities provided to the defendant for his official duties. She also used the telephone, fax machine and computer located in the district office. She did the same for another fundraiser in November, 1999.

Commonwealth v. Habay, 2006 Pa. Dist. & Cnty. Dec. LEXIS 482 * 19. That's quite different from the case here, where there's no dispute that Fumo's staff usually worked well beyond the 37.5-hour workweek imposed by Senate staffing rules. Did Fumo's staff put in their 37.5-hours for the Senate every week and then, say, 13 more hours for Fumo? That wouldn't be illegal. More importantly, if the numbers became uneven at times – say, a staffer sometimes putting in only 30 hours for the Senate – can we really say that shows Fumo had the criminal intent to defraud the Senate?

The Citizens' Alliance and Independence Seaport Museum charges have similar problems, which I'll address more in-depth later. For now, consider that The Franklin Institute spends over a million dollars a year on fundraising, a perfectly respectable amount that nets it more than 20-times that in contributions. There would be nothing wrong per se with The Franklin Institute compensating a fundraiser with a wide array of telescopes and molecular models, so what's criminally wrong with Fumo's power tools?

Even the more egregious examples -- what business does a South Philly nonprofit have with dunes on the New Jersey shore? -- lose their sting in the absence of direct evidence of intent. Arnao didn't keep two sets of books or a separate account for "OPM." Fumo didn't tell the Senate staffers that they had to keep quiet about the trips to Martha's Vineyard. Thus, the prosecutors have little choice but to throw everything in the pile to arrange a bonfire by the end, a sense of inevitability that Fumo must have known the wrongfulness of what he was doing, that Fumo's "OPM" really was code for taking money belonging to others.

In that context, it's easy to see why the defense wants to keep any logs they can out of that bonfire, to prevent the prosecution from drawing what they contend is a comprehensive picture of fraud. Moreover, Fumo's life was downright embarrassing, particularly in these economic times. He made taxpayer-paid staffers work on his house while a community organization bought him half of Home Depot and a museum gave him free rides on their yacht? Citizens' Alliance paid for his trips to McDonald's? I've argued before on this blog that, in general, jurors take their duties very seriously and do not ordinarily resent (or take out their resentment on) defendants like oil companies or corporate executives, but it's always a concern nonetheless. The more of that they can keep out, the better.

Second, once a trial goes more than a week or two, the length of the trial itself becomes a variable. In the fourth week of the Fledderman trial this summer, at sidebar I started arguing an objection when the judge sharply cut me off, told me that I was misrepresenting what happened, and ruled against us. I was shocked (and offended by the accusation) so, at the next break, I went back to the transcript. Lo and behold, I saw what the judge probably had in mind. I even found it in my notes.

How did that happen?

Consider cognitive science.

For one thing, pursuing the notion of a memory as a thing has yielded a surprisingly small set of principles by which we can understand the causes of remembering and forgetting (Kihlstrom & Barnhardt, 1993):

• Elaboration: Memory improves when an event is related to pre-existing knowledge.

• Organization: Memory improves when events are related to each other.

• Time-Dependency: Memory fades with time.

• Interference: The cause of forgetting is competition among available memories, not the loss of memories from storage through decay or displacement.
  

  ...

• Schematic Processing: Memory is better for events that match our expectations than for events that are irrelevant to them, but memory is best for events that violate our expectations.

Memory, Autobiography, History, by Prof. John F. Kihlstrom, UC-Berkeley.

For lawyers, trials begin with intense organization that easily enables elaboration and schematic processing. If they're not careful, everything that happens -- no matter how garbled, incoherent, or illogical -- will appear in their own minds (but not anyone else's) to "fit" their theory of the case.

For juries, trials begin with poor elaboration, minimal organization and no schematic processing: the trial starts with a jury chosen specifically because they're barely aware of the facts and have minimal expectations, then proceeds through awkward sequential question-and-answer sessions. Making matters worse, in a criminal trial the defendant typically goes last. To put that in context, imagine watching The Sopranos not as 86 chronological episodes, but as a collection of multi-hour interviews played back to back, with a third of the witnesses intentionally misleading the jury, a third telling the truth, and a third unintentionally misleading the jury, with Tony Soprano going last.

As such, at trial the jury has to create their own context (the opening statement occurs at the worst time, when the jury has no context whatsoever in which to elaborate, organize or process what they hear), weed through interfering details, and uphold their duty not to judge until they've heard all the facts. It's a tall order. In fact, it's impossible, resulting in more failures of attention, memory and understanding than anyone wants to admit. That's part of why we have so many jurors up there, in the hopes at least one juror has picked up and properly processed each fact presented. I doubt that ever actually happens; there's too much going on.

Rarely does anyone -- judge, jury or attorney -- remember testimony verbatim, they remember themes, perceptions, and a handful of details. In time, details fade, and certain themes and perceptions become more pronounced. In the Fledderman case, I remembered the testimony in the context of our theory of the case, which did not include the parts relevant to the judge, who likely had a broader context in mind when he listened to the testimony.

As the Fumo trial drags on, the passage of time has an increasing impact on the juror's view of the case. Part of Cogan and Jacobsí concern right now is that, after enough time, details and perceptions will fade, leaving jurors with the prosecutors' themes in their mind as if they were their own. Think of Ronald Reagan erroneously recalling the climax of Wing and a Prayer as an actual WWII war story.

Another concern is simply faulty memory. By the end, Zauzmer, Cogan and Jacobs' closings will all reference facts that at least some jurors don't remember or remember differently. Most of that is worked out in deliberations - where one juror has forgotten, others usually remember, and the consensus usually wins. But the longer the trial goes, the more important these variables become, despite having nothing to do with whether Fumo is guilty or not.

Does the length of the trial inherently bias the case against Fumo? That's hard to say – there are simply too many variables to say if trial length helps plaintiffs/prosecutors or defendants, and there are plenty of long cases won by plaintiffs and defendants. But it represents an uncontrollable variable, which both sides tend to avoid. Here, however, the prosecution believes it is worth that risk given their circumstantial case; the defense, unsurprisingly, believes exactly the opposite.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

There is an old legal saying, phrased many different ways: “if you have the facts, argue the facts. If you have the law, argue the law. If you have neither, just argue.”

Vince Fumo and Ruth Arnao’s lawyers don’t have the facts. There is no denying that Fumo’s Senate-paid staffers and contractors performed extensive personal services for him or that the Citizens Alliance for Better Neighborhoods, run by Arnao, provided substantial benefits and gifts to Fumo, or that the Independence Seaport Museum allowed Fumo to use their yachts for personal and political purposes free of charge. Those are the facts and there is a mountain of evidence in support.

Having few facts on their side, Dennis Cogan and Ed Jacobs have primarily argued the law. In their opening statements, both said that much of the conduct alleged by the United States Attorneys was not illegal, and that Fumo and Arnao could, respectively, use Senate employees for personal tasks if that increased the productivity of the office and compensate Fumo for his work on behalf of Citizens Alliance by covering many of his personal expenses.

There is just one conceptual problem in arguing the law to a jury: the District Court already ruled, more than a year ago in the run-up to this trial (when Judge William H. Yohn, Jr., still had the case), that “using state legislative employees for non-legislative tasks, while compensating them with state money, wrongfully deprives the legislature of its money or property.” United States v. Fumo, 100 A.F.T.R.2d (RIA) 6902 * 23 (October 27, 2007).

There was nothing surprising or unusual about that ruling: just two weeks before Yohn’s opinion, the Pennsylvania Superior Court upheld a conviction of another legislator for “knowingly and intentionally [using] the authority of his office to derive pecuniary gain.” Commonwealth v. Habay, No. 1518 WDA 2006, 2007 Pa. Super. 303, 934 A.2d 732 (Pa. Super. Ct. Oct. 10, 2007). Similarly, the District Court also ruled over a year ago that, if Arnao failed to disclose to the board of directors of Citizens Alliance that she had authorized over $1 million of Citizens Alliance’s funds to be used for Fumo’s personal benefit, then she would have been guilty of fraudulently violating the public and charitable purposes for which the Citizens Alliance was created.

All of which raises a simple question: if the basic facts alleged by the prosecutors are not in dispute, and the law says those basic facts constitute criminal conduct, why bother having a trial at all?

Fumo and Arnao are going to stand trial for weeks, possibly months, for two reasons, the first of which has already appeared throughout the hundreds of pages filed by the lawyers in this case, the second of which the defense lawyers would never admit in a million years, but which is a part of almost every criminal trial defense, particularly for white collar crimes.

The first reason Fumo and Arnao are going to trial is quite simple: every crime consists of two elements, actus reus and mens rea, a guilty act and a guilty mind. Here, while Fumo and Arnao may admit many of the criminal acts, neither admits ever having criminal intent. Both vehemently deny intending to rip off the Senate, Citizens Alliance, the Independent Seaport Museum, or the Internal Revenue Service. The burden thus falls on the United States Attorneys to prove, beyond a reasonable doubt, that Fumo and Arnao intended to defraud these entities.

In some cases, that distinction matters, such as when a fist fight turns deadly and the defendant claims that, while they intended to hit the victim, and are guilty of assault and battery, they did not intend to kill the victim. Other times, the distinction is silly, such as in the tax evasion case brought against Fumo’s investigator Howard J. Cain, who has admitted to not filing any income tax returns for years. Cain could claim he had no intent to evade his taxes, but no one would believe him.

It’s hard to say where Fumo’s case falls between those two ends of the spectrum, which means it probably falls towards the former. Most of the lawyers with whom I have spoken consider Fumo’s intent to be a no-brainer: of course he knew it was wrong to have Senate employees working on his mansion and of course both Fumo and Arnao knew it was wrong for Citizens Alliance to arbitrarily throw money at Fumo in the form of meals and vacuum cleaners. “They even called it OPM!” the lawyers exclaim, “Fumo’s toast.” Most of the non-lawyers with whom I have spoken, however, have recognized the ambiguity in the Senate rules, the absence of any specific restrictions on the roles of Senate employees, and the general principle that a non-profit can usually spend its money however it wants.

Which brings us to the second reason this case is going on trial: jury nullification. "Nullification occurs when a jury - based on its own sense of justice or fairness - refuses to follow the law and convict in a particular case even though the facts seem to allow no other conclusion but guilt." Honorable Jack B. Weinstein, Considering Jury "Nullification": When May and Should a Jury Reject the Law to Do Justice, 30 Am. Crim. L. Rev. 239, 239 (1993).

Jury nullification has represented the best and the worst of American history. In 1735, Andrew Hamilton urged a New York jury to ignore the law of England and to acquit Peter Zenger of criminally libeling the colonial governor of New York. Under the colonial law of England, truth was not a defense to criminal libel. Andrew Hamilton, drawing upon the same ideals that would later be embodied in the First Amendment to the United States Constitution, argued that, regardless of what the law and the judge said, Peter Zenger should be acquitted in the name of justice. He was.

Jury nullification was also used frequently in the Jim Crow South to thwart the prosecutions of Ku Klux Klan members and other whites who had intimidated, attacked, and murdered blacks. Emmett Till was but one example when an all-white jury completely disregarded largely undisputed facts and clear instructions from the judge to find criminals not guilty.

Juries tracing back to ancient times have, as they felt the circumstances warranted, exercised lenity against certain defendants by finding them guilty of fewer crimes than the evidence proved or handing out lesser sentences. But the supposed "right" to jury nullification was never truly recognized by English or American courts, and in 1895 the United States Supreme Court specifically prohibited the practice by upholding a trial judge’s instructions to a jury that, even if the jury believed a defendant on trial for murder deserved lenity and should be convicted only of manslaughter, that the jury had an obligation to convict that defendant of murder if the evidence established murder. Sparf v. United States, 156 U.S. 51 (1895).

Surprisingly, despite constant requests by criminal defense attorneys to argue nullification to juries continuing even to the present (and trial courts’ constant rulings prohibiting such arguments), the United States Supreme Court has not revisited the issue of jury nullification in nearly 100 years, despite an extensive overhaul of most of the legal ideology upon which the Sparf opinion was based.

But make no mistake: criminal defendants have no right to ask the jury for nullification, and defense lawyers who do so risk judicial sanction and even criminal conviction. United States v. Renfroe, 634 F. Supp. 1536 (W.D. Pa. 1986), aff'd without opinion by U.S. v. Renfroe, 806 F.2d 255 (3d Cir. Pa. 1986).

Yet, here we are today, with Fumo’s and Arnao’s attorneys effectively telling the jury – which is supposed to apply the law given to them by the court to the facts that the jury finds – that the judge has gotten the law all wrong. How can that be?

There are three answers to that question. First, the American legal system recognizes the inherent tension between the judge and the jury, permitting each to intrude upon the other’s domain (the jury intruding upon the law and the judge intruding upon the facts) where necessary to ensure justice is done. It is undeniable that, though a judge may remove a juror from the jury if the juror appears inclined to nullify the law, a judge also may not overturn a jury’s verdict of acquittal and re-try the defendant because of jury nullification. Gregg v. Georgia, 428 U.S. 153, 200 n.50 (1976) ("The suggestion that a jury's verdict of acquittal could be overturned and a defendant retried would run afoul of the Sixth Amendment jury-trial guarantee and the Double Jeopardy Clause of the Fifth Amendment."). These two principles cannot be reconciled. Their presence together represents a delicate balance necessary for a society in which justice is dispensed by the people, not the government, but in a fair and consistent manner across all trials.

Second, permitting judges to handcuff defense attorneys to only those arguments the judge decided were “factual” would vest extensive power in the judge, at the expense of the jury, power that would likely be exercised in an arbitrary manner no matter how good the judge’s intentions. Rarely can the law be applied to a set of facts with mathematical certainty. It’s thus frequently impossible to fully divorce “legal” arguments from “factual” arguments; attempting to do so would do little more than put a façade of logic and reason on an inherently indeterminable question.

Third, we simply cannot stop juries from nullifying verdicts. Permitting a judge to restrain defense lawyers’ arguments would thus seriously hinder the defendant’s right to present a defense without actually solving the nullification problem. Indeed, it could make the problem worse, by depriving the jurors, none of whom are lawyers, of any legal arguments at all, leaving them to rely entirely on their own experience to answer questions the lawyers could put in proper context.

And so we have the Fumo trial, in which twelve non-lawyers deliberately kept from their own research – kept even from discussing the case amongst themselves until deliberations – will decide the legal question of whether Fumo and Arnao’s largely undisputed conduct was criminal.

[edited to remove a truly embarrassing typo]

• Email This
• Print
• Comments
• Trackbacks
• Share Link

• Email This
• Print
• Comments
• Trackbacks
• Share Link

• Email This
• Print
• Comments
• Trackbacks
• Share Link

White-collar trials (whether criminal or civil) are often like baseball: five minutes of glory for every two hours of boredom.

Today was no different at the Fumo trial this morning, as the jury slogged through each and every problem Christian Marrone faced as he managed the renovation of Fumo's 33-room mansion and dealt with Fumo’s neighbors. Marrone made call after call, keeping Fumo apprised via detailed “punch lists” and emails as plumbers missed deadlines, the elevator kept getting stuck, and one contractor failed to finish a wall that was adjoining a neighbor’s property. I’d estimate the jury saw a new email or memo every two or three minutes, all morning, all of which made essentially the same point: Marrone was in charge and it took him a lot of time.

Why? Because that whole time Marrone was on the Pennsylvania Senate payroll, as described in paragraph 52 of the indictment:

For the first 18 months of his employment by the Senate, Person No. 19 spent approximately 80% of his time on this job, coordinating and supervising the numerous construction contractors. He received no payment other than his Senate salary.

As a basic rule, the jury will likely believe the case is "about" the issues upon which the lawyers spend the most time. Trial lawyers thus always face a dilemma whenever they have a witness who knows a whole lot of details that are, on the surface, completely irrelevant (e.g., no one cares how many showers there are or who designed the custom cabinets) but which support a major theme of the case (that Fumo was using Senate-paid staffers for personal work).

Trial lawyers routinely overestimate the level of detail needed to “prove” a given fact and routinely underestimate the time it will take them to do so. As such, my personal preference is to give the jury the basic information and summary it needs, plus some supporting examples to bring the testimony to life, and then get it over with. I have never heard of any case in which the jury later complained that they just did not hear enough details about accounting irregularities or improperly stored emails or misappropriations of resources. After the first several dozen examples, they get the point, and put the burden on the other side to rebut it.

The difference here, which is why I believe the prosecution chose to spend several hours on these mundane details so early in the case (potentially costing them valuable momentum), is the relationship Marrone has to Fumo. Marrone is Fumo’s estranged son-in-law, and thus already exposed to multiple attacks on his credibility during cross-examination. As such, the prosecutors needed to bolster his credibility, which can be done through excessive detail.

Even if Dennis Cogan can score some hits here and there (maybe Marrone stretched his role in one or two of the incidents, and there’s ample evidence in the public record that Marrone hates Fumo and was the key witness in the investigation), it will be very hard to argue that Marrone’s testimony is not by and large the truth. There were simply too many details and too many emails for that. The afternoon session carried on the same as the morning, except that it moved from the house into more personal services and work on political campaigns (both of which are forbidden).

The big question then is where Cogan will go. My hunch is that, in addition to the normal attacks on credibility (which, even if not enough to rebut the core substance of his testimony, will at least divert attention away from the prosecution's case) he’ll turn the relationship around on Marrone, arguing that Marrone, who time has shown to have political ambition, volunteered to do all this work to please Fumo, who had just given him his first job out of college, and that Marrone also completed all of his Senate duties, which were minimal given his inexperience.

The relationship may then look exploitative, even when considering Marrone was “paying his dues” at the start of his career, but not like an illegal scheme to defraud the taxpayers. That would open the door to reasonable doubt, which is all the defense needs.

• Email This
• Print
• Comments
• Trackbacks
• Share Link