Friday, November 17, 2017

1 DAY. 2 MISTRIALS. 3 ETHNICITIES. A BAD DAY FOR PROSECUTORS

A Jew, a Black and a Hispanic walked out of court yesterday. Sounds like the beginning of a joke, doesn't it? Well it isn't a joke. It actually happened on November 16, 2017 in New York and New Jersey. In the first case, Senator Bob Menendez, a Cuban walked out of Federal Court when a jury could not reach a verdict on an Honest Services case that took close to 10 weeks. In the second case, Norman Seabrook, an African American and Murray Huberfeld, a Jew, walked out of Federal Court in Manhattan when a jury could not reach a verdict on whether Huberfeld bribed Seabrook, the former head of the prison guard union in New York City, to invest union money in his hedge fund. I cannot remember a time in recent history, when the champagne was corked simultaneously with Hip Hop, Salsa and shouts of L'chaim! in the background. OK, maybe I am injecting a few racial stereotypes here, but you get the point. Yesterday was a bad day for the prosecutors. A very bad day.

I guess because I ultimately pled to similar charges, I have gotten quite a few phone calls for my opinion on both these cases. I did however get significantly more call on the Huberfeld-Seabrook case but that was for a host of other reasons that I will touch upon later. The real question that I asked myself last night if my opinion changed that for the most part defendants are better off taking a deal than going to trial. How is it that not one, but two juries were unable to convict in such high profile cases. Of course, I do not have enough information to answer those questions. I have no idea what plea deals, if any, were offered to any of these men. I have no idea  if they actually had to pay the legal fees out of personal funds. In other words, I don't have any of the information to give an educated answer. I do, however, have opinions on both of these cases as in my view, both avoided conviction (for now) for two entirely different reasons.

In the first case, that of Senator Menendez, it came down to Honest Services. Without going too much into detail, Honest Services fraud is where someone with a duty to others, for example am elected official, receives monies which may influence his action and therefore deprives his constituents to an intangible right of "Honest Services". In other words, if the mayor of the town receives an undisclosed payment from a  sanitation company  to hire them to pick up the city's trash, he has violated honest services. This applies even if the company hired was the best and the cheapest. The crime applies to payor the giver as well as the recipient of the money. Since this law was enacted it has been sort of a catch all for prosecutors and in 2010 the Supreme Court narrowed the scope. The Supreme Court further narrowed the scope in 2016 when it vacated Governor Bob McDonnell's conviction for Honest Services Fraud. This resulted in convictions for a few other politicians being overturned because the jury instructions did not conform to the current definition. In other words, it is much harder to prove a quid pro quo for purposes getting and Honest Services conviction.

Menendez had the good fortune of going to trial under the new narrow scope of Honest Services. The crux of the case was that he was accused of receiving cash and other benefits from a friend of his to arrange for visas and other benefits. The jury was left to determine if Menendez received gifts from a friend and also helped him out of if there was an explicit arrangement that the favors were in return for the cash and under benefits. Aside from the obvious problem that a jury has to be fairly sophisticated to understand all of these nuances, in the absence of a "smoking gun" it is hard to convict. So after 10 weeks of trial and $4.5 million in legal fees, the jury could not agree on the nature of these gifts and a mistrial was declared. There is no question, in my non lawyer opinion, that had this gone to trial two years ago, when the standard was much lower, he would have been convicted. However, based on what has happened elsewhere he would simply have had the verdict thrown out and would be awaiting a second trial anyway.

Huberfeld and Seabrook represent an entirely different scenario. FULL DISCLOSURE. While I have never met Murray in person, I have spoken to him on the phone. He is not one of my favorite people as it was his firm that got me into the situation that landed me in prison. I believed eight years ago as I do now that they deliberately withheld information from me. In my book, which will hopefully be out during 2018, I dedicate a few pages to Murray, his history, many facts that never made it into the press or into this case. My assessment of the man is not favorable. For all of the details you will all just have to wait for the book. However, with all that, I was rooting for Murray to avoid prison time. Perhaps it is because we share a faith or perhaps I don't think that prison itself serves much of a for all but the most egregious white collar crimes, or maybe it was just my overall distaste for the system, but I was rooting for him.

The case against Huberfeld and Seabrook was pretty simple. The alleged crime was that Huberfeld paid a cash bribe in the neighborhood of $60 thousand to Seabrook so that Seabrook would invest $20 million of pension fund money into Platinum Partners, a fund that Huberfeld sort of ran. Incidentally, Platinum has since gone bankrupt a three members of the firm  have been indicted in a case separate from Huberfled's. Clearly, if the money was paid to Seabrook then even under the new narrowed definition of Honest Services, a crime was certainly committed. Now I have no idea if this bribe actually took place. Based on my experience with Huberfeld as well as is less than stellar reputation, it would not surprise me but again, I wasn't there.

The case against Huberfeld and Seabrook essentially rested solely on the testimony of an amateur con man named Jona Rechnitz, another member of the tribe who claims to be a religious person. Well Jona tried to become a big man in New York and threw around a lot of money to buy influence. From what I have read, Jona was basically a rich kid from LA with little if any actual business intelligence. Jona is also a notorious liar. Well Jona got himself into quite a few difficult situations while in New York, all of which could and probably will land him in prison. Jona decided that rather than fight, he will simply snitch on everyone who he claims was involved in these crimes with him. It is quite possible that he decided to fabricate stories of illegal activities in the hopes that by securing convictions he will avoid prison time. Yes, Jona is a low life scumbag piece of garbage who would sell out his mother if it served a purpose. I really have no use for snitches, particularly those who testify in court against their own people. There is a special place in hell for people like Jona. He will probably have a space not far from Harvey Weinstein and Kevin Spacey.

The problem for a case the rests solely on the testimony of a liar is that the case ends of being about the witness and not about the defendants. And that is exactly what happened. Six days of testimony were dedicated to Jona, his illegal activities and many of the lies he told. From what I am told, it was a complete circus.  Whereas there are more professional liars and con men who are able to ingratiate themselves in the hearts of the jury and even convince the jury they are repentant, Jona is quite the opposite. It seems the jury hated him. The problem for the prosecution was that they needed to jury to take Jona at his world that Huberfeld asked Jona to deliver a cash bribe to Seabrook. Well the problem with cash is that it is untraceable so there really was no tangible proof that this actually happened. Sure there was some corroborating evidence, but in the end it came down to Rechnitz's testimony. As I was watching this case head to trial, it was unfathomable to me that any prosecutor would allow his case to be totally dependent on such a bad witness. I was sure they had other information to bolster their case. In the end, I was wrong. In the end the jury was unable to reach a verdict on either count simply because it really came down to whether a juror could believe what Rechnitz was spewing. The rule is simple, if you can't believe everything, you cant believe anything. It is interesting that on one count all but two jurors voted for conviction and on the other all but one voted for acquittal.

In the end all three of these men will be retried and how it pans out is anybody's guess. In spite of our history, I am still rooting for Huberfeld and hope his family does not have to go through what mine went through. I happen to think they will get Menendez on the next round, but I have been wrong before. For all I know all three of these men will take deals this time around. I do often ask myself if I would have gone to trial under the new definition of Honest Services, and with the benefit of knowing that I only did serve 11 months I still think I made the right decision. Aside from the cost that I would have incurred to actually go to trial, the amount of time I would have served in the event I was convicted would certainly have been longer even if I would have had it overturned on appeal. These men live to fight another day and that day will come. But for now, there is plenty of dancing to hip hop, salsa, and lots of l'chaims!

Tuesday, November 14, 2017

ANYTHING YOU HAVE WRITTEN CAN AND WILL BE USED AGAINST YOU

Email is a wonderful tool. It makes business more efficient and allows us to communicate with our friends and family faster. I often marvel that there was a time, not that long ago, that business functioned without the use of email. Once upon a time if a document needed to be executed, it had to be sent via overnight mail to the recipient, and then sent back for a total of two working days. And that was if the recipient actually got it and opened it the day it was received. Now, that entire operation takes all of five minutes. We also communicate via email to iron out business transactions instead of sitting on the phone for hours ironing out those very details. Often times email is simply used to follow up on what was previously discussed on a phone.

One pitfall of our reliance on email is the sheer number of emails contained in our mailbox. In just one of my email accounts, I have 26,946 emails and most of them are from within the last eight years. Keep in mind that I delete a lot of my emails and for a period of 11 months I was not able to send an email. To be sure, most of them can probably be deleted but our email accounts have become our de facto memory books. Doesn't everybody need to remember who they went to the movies with in 2012?

The other pitfall is that emails never disappear and can be taken out of context. When documents related to a business are subpoenaed by the government or even by a lawyer on the opposite side of a lawsuit, the courts have generally ruled that emails are not protected under the 5th amendment's right no not incriminate oneself. Just turn on the TV and we can see how many of the Trump campaign members are being forced to hand over emails to the special prosecutor. During the financial crisis, emails were used to indict and in some cases convict Wall Street bankers for financial fraud. Could this have even been an issue 30 years ago? Of course not. That's not to say any evidence of illegal activity is contained in these emails but the fact that they are being handed over to an adversarial party puts the author of the email at risk.

The real problem with anything written and in particularly as it relates to emails is the ability to take any email out of context. Imagine a phone call where a colleague agrees to advocate for you at a company meeting. Following the phone call you send him an email that says "love you man you are the best." Or imagine you take a client to dinner and the next day he sends you an email thats says "last night was fun, lets do it again!" Obviously to both the author and the recipient the email was in response to a phone call or a business dinner. Now imagine that the author of those emails is going through a nasty divorce. The attorney on the other side can easily take those emails and allege infidelity. True this may seem extreme but as someone who has had his emails dissected by prosecutors, opposing lawyers and even the press, I can tell you that this is precisely what takes place.

The sad truth is that any email can be taken out of context by an unscrupulous lawyer furthering an agenda as well as by a prosecutor trying to prove a crime. Obviously only a fool is going to document his crimes in an email (although I am amazed how many seemingly intelligent people seem to do so). However even the typical business owner or employee using email in the normal course of business has to be increasingly careful that anything he writes cannot be interpreted incorrectly out of context. This becomes increasingly difficult as even emails are increasingly informal and are written in a manner more akin to casual conversation.

I will give a personal example of an email that was taken out of context by multiple parties between the year on 2009 and 2015. As the perpetrator of the crime was hiding we in Miami were all panicking as we had investors to whom we were accountable. On Friday, October 30, 2009 was coming to a close,  I sent an email asking for some clarification immediately because "otherwise we are all done". Those five words were used over and over against me as "proof" that  knew I was involved in a major fraud and knew I would be going to prison. The problem was that everyone who read that email either decided to deliberately use it out of context for their own agenda or simply would not look at the 50 emails that led up to that email. Does ""done" mean prison or does "done" mean out of business. Well anyone who can read would have gone through my emails and concluded that this was an email sent in a state of sheer panic because I simply had no idea what was going on. And yet, over and over again it was used as "irrefutable proof" that a was a knowing and active participant in a fraud.

Here is another example. Scott Rothstein, narcissist that he was liked to be told that he was loved. He would insist that anyone that sent him an email closed with some variation of "love u!" Well, when all of my emails got into the hands of other lawyers, I was asked if Scott and I were in a sexual relationship. Now if someone is gay, that's their business, but personally, guys don't do it for me. The very notion that I would be involved in a homosexual affair was so ludicrous that I actually started laughing when I was asked. And yet, to the unknowing reader and taken way out of context, it was a plausible question. I can go on with so may examples where my emails were taken way out of context but the point has been made.

Being careful with what is put in an email is practical advice for everyone. Even if emails are not forced to be handed over in the legal context, there is the constant fear that email accounts can be hacked. Once an email has been sent, it can and will be used against you in a court of law or at the very least the court of public opinion.

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