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SDNY Grapples with Judicial Rebukes

Nov. 10, 2020, 9:00 AM

Since the onset of the Covid-19 pandemic, the U.S. Attorney’s Office (USAO) for the Southern District of New York (SDNY) has been criticized in a string of cases for failing to provide defendants with exculpatory evidence and for putting politics over substance. These court rulings have resulted in reputational setbacks and judicial rebukes for the SDNY.

Often viewed as the nation’s preeminent USAO in the country, one federal judge recently admonished that "[t]hose who stand up in court every day on behalf of that Office get the benefit of that reputation—but they also have the responsibility to maintain it.”

In response to the judge’s order and as a first step toward preventing similar occurrences, the SDNY has instituted disclosure and discovery trainings for its entire New York field office and required the office to review the judge’s memorandum. However, it remains to be seen whether this will be enough to prompt lasting change and how the acting U.S. attorney will incentivize disclosure-compliant behavior by line prosecutors.

With counsel on both sides largely still working from home and lacking in-person contact with one another, defense counsel should remain vigilant in their pursuit of exculpatory information. And as courthouses open up and criminal proceedings move forward in person, the SDNY faces the additional obstacle of overcoming these hurdles and rebuilding trust with courts and defense counsel alike.

Judge Overturns Sanctions, Rebukes Prosecutors

In September, Judge Alison Nathan issued a 34-page opinion excoriating prosecutors for violating their Brady obligations to Iranian businessman Ali Sadr Hashemi Nejad (Sadr). The court’s September opinion came on the heels of its July ruling vacating a federal jury’s verdict against Sadr.

Sadr was convicted in March of violating sanctions against Iran and fraud and money laundering-related charges in connection with a scheme to fund an infrastructure project in Venezuela. However, in June, then-U.S. Attorney Geoffrey S. Berman filed a one-page letter with the court seeking to drop its case against Sadr because “it would not be in the interests of justice to further prosecute this case.” Berman stated vaguely that the court “is familiar with disclosure-related issues that arose during the March 2020 trial as well as in pre and post-trial motion practice.”

Nathan subsequently issued an order demanding detailed information regarding the government’s alleged Brady violations. In so doing, the court rebuked the government for “a number of developments in this case that, even before [the USA’s] letter, raised serious concerns about the conduct of the Government.” Following receipt of the government’s responses, the court dismissed charges against Sadr with prejudice in July.

In the court’s September opinion, Nathan concluded that "[d]isclosure-related issues first arose shortly after this case was transferred to the Undersigned and have—disturbingly—continued unabated since.” Among other incidents, the court described the government’s failure to disclose an exculpatory letter until trial had begun, which was compounded by chats between prosecutors strategizing about “burying” the exhibit in a larger disclosure.

The court ordered all SDNY prosecutors to read her opinion and urged referral of the case to the Department of Justice’s Office of Professional Responsibility for investigation. In a court filing in October, the acting U.S. attorney admitted to the SDNY’s “substantial failures in this case” but argued that remedial measures, rather than sanctions, were warranted because the prosecutors’ conduct was not intentional.

Prosecutors Ordered to Turn Over Documents

In July, Judge Katherine Polk Failla demanded information from the government following defense counsel’s assertion that they had obtained potentially exculpatory material through a Freedom of Information Act request after their hedge fund founder client had been convicted and sentenced for fraudulently inflating the firm’s value.

The former hedge fund founder, Anilesh Ahuja, was convicted of fraudulently inflating the value of his firm by $100 million following a six-week jury trial in 2019. The government relied at trial on the testimony of portfolio manager Amin Majidi, who pled guilty to participating in the scheme.

Prior to trial, Ahuja’s attorneys subpoenaed documents from cooperator Majidi related to his plea allocution. The documents had not been produced to Ahuja as part of the government’s Brady disclosures. Ahuja’s attorneys argue that prosecutors turned over a draft of Majidi’s plea allocution only after becoming aware that Majidi intended to produce the document in response to the subpoena, and belatedly, two days into trial.

Ahuja sought to dismiss the indictment against him during trial, arguing that prosecutors had violated their Brady obligations. The court declined to do so but ordered the government to produce more documents.

Following Ahuja’s conviction, Ahuja’s attorneys filed a FOIA request on the USAO and obtained additional documents that arguably called into question whether the government edited Majidi’s plea allocution. In June, Ahuja asked the court to order the government to produce additional documents, which the court granted. It remains to be seen whether Failla will grant Ahuja’s request for an evidentiary hearing into the government’s alleged Brady failures.

Judge Orders Cohen Prison Release, Cites Prosecutorial Retaliation

In another ruling out of the SDNY challenging prosecutorial misconduct, in July, Judge Alvin K. Hellerstein ordered former President Trump’s personal attorney, Michael Cohen, released from prison to home confinement after ruling that prosecutors had improperly retaliated against him for exercising his First Amendment rights.

Cohen had been released in May to serve the remainder of his three-year sentence for tax evasion and campaign finance violations from home due to the pandemic. Following his release, Cohen publicly announced his intent to publish a book about President Trump. When he reported for an appointment with the U.S. Probation Office in July, probation officers presented him with proposed terms for his release, which prohibited him from engaging with the press or using social media. Cohen was never presented with the agreement for execution; instead, Cohen was handcuffed and remanded to prison for allegedly violating the unsigned agreement.

Following his imprisonment, Cohen’s attorneys filed a motion for a temporary restraining order (TRO) seeking Cohen’s release based on the BOP’s alleged First Amendment violation, which the USAO opposed. Hellerstein swiftly granted the TRO, stating that “he had never seen such a gag order in his 21 years on the bench.”

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

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Author Information

Lauren Briggerman is a shareholder with Miller & Chevalier in Washington, D.C., and focuses her practice on white collar defense in criminal and civil matters. She represents corporations and executives in government investigations and criminal litigation, including in the areas of criminal antitrust, money laundering, bank fraud, and government contracts fraud.

Aiysha Hussain is counsel with Miller & Chevalier in Washington, D.C., and focuses her practice on internal investigations, enforcement issues, and compliance related to white collar matters, economic sanctions, export controls, and anti-bribery.

Katherine Pappas is counsel with Miller & Chevalier in Washington, D.C., and focuses her practice on white collar and internal investigations, and complex civil litigation. She has conducted internal investigations on behalf of corporate clients stemming from allegations of fraud, anti-competitive practices, and violations of the Foreign Corrupt Practices Act.