The incarcerated founder of Indiana’s first hedge fund is fighting to obtain emails that might help him show that his criminal defense was compromised by an affair his lawyer had with his wife.
The email fight raises a question few courts have addressed: whether a lawyer’s sexual relationship with the spouse of a defendant he represented created a conflict that violated the defendant’s constitutional rights.
Petitioner Keenan Hauke got the federal habeas case onto the docket in December through a petition he drafted from a prison where he was sent in 2012 to serve a 10-year sentence for securities fraud.
Hauke, who founded Indiana’s first hedge fund when he was 29, hired a prominent Hoosier to defend him: Larry Mackey, a former prosecutor who joined Indiana’s largest firm after securing convictions of the Oklahoma City bombers.
The representation didn’t last long. Hauke said he had to fire Mackey—and proceed with an overworked, “poor quality” public defender—after discovering the lawyer was having an affair with Hauke’s then-wife, Sarah.
‘Sarah, I Love You’
Hauke said Sarah’s long, after-midnight phone calls with Mackey raised suspicions, and that an incriminating email confirmed them.
“The email read, ‘Sarah, I love you and I can’t wait to see you in your underwear,’” Hauke said in his petition, which he drafted himself before the court granted his request for court-appointed counsel.
That email—and others Sarah may have exchanged with Mackey, whom she married three months after Hauke was sentenced—have now taken center stage in the habeas proceeding.
In a July 25 motion, Sarah Mackey asked the court to quash subpoenas her ex-husband has served on her email providers, Microsoft and Yahoo.
In her motion, Sarah Mackey—identified by her initials—acknowledged that her request to intervene in this case was “unusual.”
“SM is neither a party to this proceeding nor the target of the subpoenas,” the motion said. But some of the subpoenaed emails are privileged and confidential, and the parties “are not adequately representing SM’s interests,” the motion said.
The government has asked the judge to dismiss Hauke’s petition as untimely, but has not moved to quash the subpoenas. “Presumably, neither Yahoo nor Microsoft will object either,” Sarah Mackey said.
Intervening “is SM’s only available option to protect her interests,” the motion said, and “several federal courts” have found intervention appropriate under these circumstances.
Hauke has not yet responded to the motion. His lawyer did not reply to Bloomberg Law’srequest for comment. Messages to Larry Mackey, and to Sarah Mackey’s attorney, were also unanswered.
Infidelity and Disloyalty
Hauke says he was the victim of two betrayals—marital infidelity and professional disloyalty—that combined to violate his right to effective counsel.
Although he discovered the alleged affair before he was convicted, Hauke said that his wife and lawyer both told him to keep it quiet because it would harm his three young sons.
Hauke didn’t raise the affair as grounds for vacating his conviction until Dec. 2017, more than five years after he went to prison. But he said there were reasons for that delay, and those reasons bolstered his ineffective assistance claims.
Hauke said he considered “filing a complaint” in late 2012, but was dissuaded by Larry Mackey’s threats to remove financial support for Hauke’s children. “The gymnastics, clothes, vacations, everything!” Larry Mackey said, according to the petition.
The threat “paralyzed” Hauke, the petition said: “With the well being and security of his very children at stake, Petitioner does not know how he could or should have acted differently than he did.”
“Mackey’s actions are a blatant case of ineffective assistance,” Hauke wrote.
Instead of protecting Hauke’s interests, Mackey “lied to petitioner, threatened the well being of petitioner’s children, and perpetrated malpractice on a scale the likes of which has rarely been seen in American legal history.”
Rare, But Not Unprecedented
While Hauke described his lawyer’s misconduct as unprecedented, a handful of courts have considered the conflict of interest argument at the heart of his habeas petition.
Those cases suggest that Hauke will have little trouble establishing that the alleged affair created the potential for a conflict of interest—but more difficulty showing that an actual conflict existed, and that it prejudiced his defense to a degree that warrants vacating his conviction.
In a 1990 decision, a North Carolina federal court said it was “clear” that a lawyer’s sexual relationship with a client’s fiancee “constituted a breach of loyalty” and “created the potential for a conflict.”
But that court denied the defendant’s habeas petition because the record didn’t support his claim that the lawyer didn’t tell him about a favorable plea offer.
Most courts have held that defendants who raise claims like Hauke are entitled to evidentiary hearings to examine whether the conflict created by an illicit relationship prejudiced a case.
In a 1999 opinion, a Florida appellate panel said a “the illicit bond between defense counsel and defendant’s wife” created “a likelihood, so extremely difficult to prove, that his powers of persuasion, his ability as a legal logician, and his demeanor as an advocate, all declined.”
Remanding the case for an evidentiary hearing, the court said the defendant would be entitled to a new trial if prosecutors couldn’t prove their claim “that the sexual relationship may have been a ‘set up': that is, that [the wife] alone or with her husband’s consent, seduced [the lawyer] for the very purpose of creating a defense in the event of a conviction.”
"[W]e wish to assuage the concern that we are creating an escape route whereby a defendant and his or her spouse can, by the spouse’s seduction of defense counsel, create an apparent basis for reversal,” the court said at the end of its order.
“We believe that most attorneys would not be interested or, out of simple moral force, would not succumb to such offerings,” the court said. “As for those who would consider doing so, the weight of punishment by The Florida Bar and of social disapproval should be sufficient deterrence.”
“We also note that this case is only the second or third time that this situation has arisen on appeal nationwide,” the panel said.
Brent Westerfeld, Indianapolis, represents Hauke. Assistant U.S. Attorney Brian L. Reitz, Indianapolis, represents the U.S. Attorney’s Office for the Southern District of Indiana. E. Davis Coots of Coots, Henke & Wheeler P.C., Carmel, Ind., represents Sarah E Mackey.