Filed: Jul. 19, 2017
Latest Update: Mar. 03, 2020
Summary: 16-898-cr (L) United States v. Allen In the United States Court of Appeals for the Second Circuit AUGUST TERM 2016 Nos. 16-898-cr (Lead) 16-939-cr (con) UNITED STATES OF AMERICA, Appellee, v. ANTHONY ALLEN AND ANTHONY CONTI, Defendants-Appellants.* On Appeal from the United States District Court for the Southern District of New York ARGUED: JANUARY 26, 2017 DECIDED: JULY 19, 2017 Before: CABRANES, POOLER, and LYNCH, Circuit Judges. * The Clerk of Court is respectfully directed to amend the capti
Summary: 16-898-cr (L) United States v. Allen In the United States Court of Appeals for the Second Circuit AUGUST TERM 2016 Nos. 16-898-cr (Lead) 16-939-cr (con) UNITED STATES OF AMERICA, Appellee, v. ANTHONY ALLEN AND ANTHONY CONTI, Defendants-Appellants.* On Appeal from the United States District Court for the Southern District of New York ARGUED: JANUARY 26, 2017 DECIDED: JULY 19, 2017 Before: CABRANES, POOLER, and LYNCH, Circuit Judges. * The Clerk of Court is respectfully directed to amend the captio..
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16‐898‐cr (L)
United States v. Allen
In the
United States Court of Appeals
for the Second Circuit
AUGUST TERM 2016
Nos. 16‐898‐cr (Lead) 16‐939‐cr (con)
UNITED STATES OF AMERICA,
Appellee,
v.
ANTHONY ALLEN AND ANTHONY CONTI,
Defendants‐Appellants.*
On Appeal from the United States District Court
for the Southern District of New York
ARGUED: JANUARY 26, 2017
DECIDED: JULY 19, 2017
Before: CABRANES, POOLER, and LYNCH, Circuit Judges.
* The Clerk of Court is respectfully directed to amend the caption as set forth above.
This case—the first criminal appeal related to the London
Interbank Offered Rate (“LIBOR”) to reach this (or any) Court of
Appeals—presents the question, among others, whether testimony
given by an individual involuntarily under the legal compulsion of a
foreign power may be used against that individual in a criminal case
in an American court. As employees in the London office of
Coöperatieve Centrale Raiffeisen‐Boerenleenbank B.A. in the 2000s,
defendants‐appellants Anthony Allen and Anthony Conti
(“Defendants”) played roles in that bank’s LIBOR submission process
during the now‐well‐documented heyday of the rate’s manipulation.
Defendants, each a resident and citizen of the United Kingdom, and
both of whom had earlier given compelled testimony in that country,
were tried and convicted in the United States before the United States
District Court for the Southern District of New York (Jed S. Rakoff,
Judge) for wire fraud and conspiracy to commit wire fraud and bank
fraud.
While this appeal raises a number of substantial issues, we
address only the Fifth Amendment issue, and conclude as follows.
First, the Fifth Amendment’s prohibition on the use of
compelled testimony in American criminal proceedings applies even
when a foreign sovereign has compelled the testimony.
Second, when the government makes use of a witness who had
substantial exposure to a defendant’s compelled testimony, it is
required under Kastigar v. United States, 406 U.S. 441 (1972), to prove,
2
at a minimum, that the witness’s review of the compelled testimony
did not shape, alter, or affect the evidence used by the government.
Third, a bare, generalized denial of taint from a witness who
has materially altered his or her testimony after being substantially
exposed to a defendant’s compelled testimony is insufficient as a
matter of law to sustain the prosecution’s burden of proof.
Fourth, in this prosecution, Defendants’ compelled testimony
was “used” against them, and this impermissible use before the petit
and grand juries was not harmless beyond a reasonable doubt.
Accordingly, we REVERSE the judgments of conviction and
hereby DISMISS the indictment.
MICHAEL S. SCHACHTER (Casey E. Donnelly,
on the brief), Willkie Farr & Gallagher LLP,
New York, NY, for Defendant‐Appellant
Anthony Allen.
Aaron Williamson, Tor Ekeland, P.C.,
Brooklyn, NY, for Defendant‐Appellant
Anthony Conti.
JOHN M. PELLETTIERI (Leslie R. Caldwell,
Assistant Attorney General; Andrew
Weissman, Carol Sipperly, Brian R. Young,
Sung‐Hee Suh, and Michael T. Koenig,
3
Fraud Section, on the brief), Criminal
Division, United States Department of
Justice, Washington, D.C., for Appellee.
JOSÉ A. CABRANES, Circuit Judge:
This case—the first criminal appeal related to the London
Interbank Offered Rate (“LIBOR”) to reach this (or any) Court of
Appeals—presents the question, among others, whether testimony
given by an individual involuntarily under the legal compulsion of a
foreign power may be used against that individual in a criminal case
in an American court. As employees in the London office of
Coöperatieve Centrale Raiffeisen‐Boerenleenbank B.A. (“Rabobank”)
in the 2000s, defendants‐appellants Anthony Allen and Anthony
Conti (“Defendants”) played roles in that bank’s LIBOR submission
process during the now‐well‐documented heyday of the rate’s
manipulation.1 Allen and Conti were, for unrelated reasons, no
Problems with LIBOR were noted at least as early as a decade ago.
1
“Beginning in 2007, regulators and market observers noted that LIBOR had failed
to behave in line with expectations given other market prices and rates.” David
Hou & David Skeie, LIBOR: Origins, Economics, Crisis, Scandal, and Reform, Federal
Reserve Bank of New York Staff Report No. 667, at 1 (Mar. 2014); see Michael S.
Derby, Fed Aware of Libor Problems in Fall 2007, Wall St. J. (July 13, 2012),
https://www.wsj.com/articles/SB10001424052702303919504577524830226504326;
Andy Verity, Libor: Bank of England Implicated in Secret Recording, BBC (Apr. 10,
2017), http://www.bbc.com/news/business‐39548313 (“The 2008 recording adds to
evidence the central bank repeatedly pressured commercial banks during the
4
longer employed at Rabobank by 2008 and 2009, respectively. By
2013, they were among the persons being investigated by
enforcement agencies in the United Kingdom (“U.K.”) and the
United States for their roles in setting LIBOR.
The U.K. enforcement agency, the Financial Conduct Authority
(“FCA”),2 interviewed Allen and Conti (each a U.K. citizen and
resident) that year, along with several of their coworkers. At these
interviews, Allen and Conti were compelled to testify and given
financial crisis to push their Libor rates down . . . . The Bank of England said Libor
was not regulated in the UK at the time.”).
Concerns with LIBOR were also publicly reported. See Carrick
Mollenkamp & Mark Whitehouse, Study Casts Doubt on Key Rate, Wall St. J. (May
29, 2008), https://www.wsj.com/articles/SB121200703762027135; Carrick
Mollenkamp, Bankers Cast Doubt on Key Rate Amid Crisis, Wall St. J. (Apr. 16, 2008),
https://www.wsj.com/articles/SB120831164167818299.
These reports were eventually followed by criminal and regulatory probes
by domestic and international enforcement agencies into banks’ LIBOR
submissions. See Carrick Mollenkamp & David Enrich, Banks Probed in Libor
Manipulation Case, Wall St. J. (Mar. 16, 2011), https://www.wsj.com/articles/
SB10001424052748704662604576202400722598060 (stating in March 2011 that the
“probe began about a year ago with informal inquiries”). As of February 2, 2017,
the DOJ has entered into criminal resolutions with six banks: “Barclays, UBS AG,
Royal Bank of Scotland, Rabobank, Lloyds Bank, and Deutsche Bank.” Gov’t Ltr.,
Docket No. 94, at 1 & n.1. Each of these agreements includes a “Statement of
Facts,” in which each bank has admitted to its misconduct with respect to LIBOR.
The U.K. has also reached resolutions with these banks.
2 The FCA replaced the U.K.’s Financial Services Authority (“FSA”) in
April 2013. Because the distinction is irrelevant for purposes of this opinion, we
refer to both entities simply as the “FCA.”
5
“direct use”—but not “derivative use”—immunity.3 In accordance
with U.K. law, refusal to testify could result in imprisonment. The
FCA subsequently decided to initiate an enforcement action against
one of Defendants’ coworkers, Paul Robson, and, following its
normal procedures, the FCA disclosed to Robson the relevant
evidence against him, including the compelled testimony of Allen
and Conti. Robson closely reviewed that testimony, annotating it and
taking several pages of handwritten notes.
For reasons not apparent in the record, the FCA shortly
thereafter dropped its case against Robson, and the Fraud Section of
the United States Department of Justice (the “DOJ”) promptly took it
3 The difference between direct use and derivative use immunity is
substantial. See United States v. Plummer, 941 F.2d 799, 803 (9th Cir. 1991) (“If the
government granted [the witness/defendant] use and derivative use immunity, it
would be required to have derived all the information on which the subsequent
prosecution was based from a source wholly independent of the statements made
in the interview. In contrast, if the government granted only direct use immunity,
it would not be able to use the interview statements directly against [the
witness/defendant] in a subsequent prosecution, but would be allowed to use
information derived from the statements.” (citations omitted)).
Under American constitutional law, if a witness is compelled to testify, he
must be granted use and derivative use immunity. See Kastigar v. United States, 406
U.S. 441 (1972). Pursuant to 18 U.S.C. §§ 6002–05, “the United States Government
may compel testimony from an unwilling witness, who invokes the Fifth
Amendment privilege against compulsory self‐incrimination, by conferring on the
witness immunity from use of the compelled testimony in subsequent criminal
proceedings, as well as immunity from use of evidence derived from the testimony.” Id.
at 442 (emphasis added).
6
up.4 Robson soon pleaded guilty and became an important
cooperator, substantially assisting the DOJ with developing its case.
Ultimately, Robson was the sole source of certain material
information supplied to the grand jury that indicted Allen and Conti
and, after being called as a trial witness by the Government, Robson
provided significant testimony to the petit jury that convicted
Defendants.
In October 2014, a grand jury returned an indictment charging
Defendants with one count of conspiracy to commit wire fraud and
bank fraud, in violation of 18 U.S.C. § 1349, as well as several counts
of wire fraud, in violation 18 U.S.C. § 1343.5 Following a trial held in
October 2015 in the United States District Court for the Southern
District of New York (Jed S. Rakoff, Judge), a jury convicted on all
counts. The District Court sentenced Allen principally to two years’
4 In connection with its investigations into LIBOR manipulation, the
Government submits that it has charged more than a dozen individuals
(including Allen and Conti) with criminal conduct. Gov’t Ltr., Docket No. 94, at 1–
2. Only Allen and Conti have gone to trial in the United States, but two other
individuals have pleaded not guilty and proceedings against them remain
pending. Id. at 2. Charges were dismissed against four defendants, six defendants
pleaded guilty and there are additionally two fugitives. Id. The Government
further submits that the “United Kingdom has to date charged 19 individuals
with LIBOR‐related crimes and is seeking to extradite four additional individuals
for prosecution. One individual was convicted upon pleading guilty and four
were convicted after trial. Six individuals were acquitted after trial. Cases against
the others remain pending.” Id.
See Joint Appendix (“JA”) 41–76. Ultimately, pursuant to a superseding
5
indictment returned on June 23, 2015, Allen was charged with eighteen counts of
wire fraud, and Conti was charged with eight counts of wire fraud. See JA 77–112.
7
imprisonment and Conti to a year‐and‐a‐day’s imprisonment.6
Agreeing that Defendants had raised a “substantial issue” for appeal,
the District Court granted bail pending appeal.7
In their appeal, Allen and Conti challenge their convictions on
several grounds. We address only their Fifth Amendment challenge,
however, and conclude as follows.
First, the Fifth Amendment’s prohibition on the use of
compelled testimony in American criminal proceedings applies even
when a foreign sovereign has compelled the testimony.
Second, when the government makes use of a witness who has
had substantial exposure to defendant’s compelled testimony, it is
required under Kastigar v. United States, 406 U.S. 441 (1972), to prove,
at a minimum, that the witness’s review of the compelled testimony
did not shape, alter, or affect the evidence used by the government.
Third, a bare, generalized denial of taint from a witness who
has materially altered his or her testimony after being substantially
exposed to a defendant’s compelled testimony is insufficient as a
matter of law to sustain the prosecution’s burden of proof.
6 The District Court imposed mandatory special assessments of $1,900 for
Allen and $900 for Conti but did not impose any supervised release or any fine on
either Defendant. Special Appendix (“SPA”) 68–71, 74–77.
JA 714 (“[T]he Kastigar issue is not without some appellate interest.”).
7
8
Fourth, in this prosecution, Defendants’ compelled testimony
was “used” against them, and this impermissible use before the petit
and grand juries was not harmless beyond a reasonable doubt.
Accordingly, we REVERSE the judgments of conviction and
hereby DISMISS the indictment.
I. BACKGROUND8
A. LIBOR
Some journalists and bankers have called LIBOR the world’s
most important number.9 It is a “benchmark” and “reference”
interest rate meant to reflect the available borrowing rates on any
given day in the “interbank market”—in which banks borrow money
from other banks. The so‐called LIBOR fixed rates, as published
8 Because Allen and Conti “appeal from judgments of conviction entered
after a jury trial, we draw the facts from the evidence presented at trial, viewed in
the light most favorable to the government.” United States v. Vilar, 729 F.3d 62, 68
n.2 (2d Cir. 2013).
9 See, e.g., Gavin Finch & Liam Vaughan, The Man Who Invented the World’s
Most Important Number, Bloomberg Markets (Nov. 29, 2016),
https://www.bloomberg.com/news/features/2016‐11‐29/the‐man‐who‐invented‐
libor‐iw3fpmed; Liam Vaughan & Gavin Finch, Libor Scandal: The Bankers Who
Fixed the World’s Most Important Number, Guardian (Jan. 18, 2017),
https://www.theguardian.com/business/2017/jan/18/libor‐scandal‐the‐bankers‐
who‐fixed‐the‐worlds‐most‐important‐number; Juliet Samuel & Chiara Albanese,
No Fix for Libor: Benchmark Still Broken, Regulators Say, Wall St. J. (July 7, 2015)
https://www.wsj.com/articles/libor‐reform‐has‐not‐gone‐far‐enough‐says‐
regulator‐1436195584 (stating LIBOR is “known as ‘the world’s most important
number’”).
9
daily, are regularly incorporated into the terms of financial
transactions entered into across the globe, and the overall value of
these LIBOR‐tied transactions reaches (measured in U.S. dollars) into
the hundreds of trillions.10
Throughout the time period relevant to this case, LIBOR rates
were administered by a private trade group, the British Bankers’
Association (“BBA”). As summarized by a New York Federal Reserve
staff report:
LIBOR’s origination has been credited to a Greek banker
by the name of Minos Zombanakis, who in 1969
arranged an $80 million syndicated loan from
Manufacturer’s Hanover to the Shah of Iran based on the
reported funding costs of a set of reference banks. In
10 According to a New York Federal Reserve staff report:
LIBOR serves two primary purposes in modern markets: as a
reference rate and as a benchmark rate. A reference rate is a rate
that financial instruments can contract upon to establish the terms
of agreement. A benchmark rate reflects a relative performance
measure, oftentimes for investment returns or funding costs.
LIBOR serves as the primary reference rate for short‐term floating
rate financial contracts like swaps and futures. At its peak,
estimates placed the value of such contracts at upwards of $300
trillion. Variable rate loans, primarily adjustable rate mortgages [ ]
and private student loans, are also often tied to LIBOR. As a
benchmark rate, it is also an indicator of the health of financial
markets. The spreads between LIBOR and other benchmark rates
can signal changing tides in the broad financial environment.
Hou & Skeie, note 1, ante, at 2–3 (citation and footnote omitted).
10
addition to providing loans at rates tied to LIBOR, banks
whose submissions determined the fixing had also
begun to borrow heavily using LIBOR‐based contracts
by the mid‐1980s, creating an incentive to underreport
funding costs. As a result, the [BBA] took control of the
rate in 1986 to formalize the data collection and
governance process. In that year, LIBOR fixings were
calculated for the U.S. dollar, the British pound, and the
Japanese yen. Over time, the inclusion of additional
currencies and integration of existing ones into the euro
left the BBA with oversight of fixings over ten currencies
as of 2012.11
During that period of time, there was no direct governmental
regulation of LIBOR submissions.12
11 Id. at 1 (citation omitted). According to a Wall Street Journal report in
2007:
The Libor became popular because in the 1980s the world needed a
short‐term rate on which to benchmark the costs for loans between
banks. At the time, the interest rates banks charged other banks
and big companies lacked a universally accepted basis. British
bankers’ stab at one took hold faster than others, and it is now a
benchmark for many globally traded debt securities.
Ian McDonald & Alistair MacDonald, Why Libor Defies Gravity: Divergence of a Key
Global Rate Points to Strain, Wall St. J. (Sept. 5, 2007), https://www.wsj.com/articles/
SB118891774435316875.
In 2012, Martin Wheatley, who was then managing director of the FSA
12
and slated to become the first Chief Executive of the soon‐to‐be‐established FCA,
conducted a review of potential reforms to LIBOR (the “Wheatley Review”). This
review culminated in the issuance of a final report. See The Wheatley Review of
LIBOR: Final Report (the “Wheatley Report”) (Sept. 2012) https://www.gov.uk
11
For each of the world’s major currencies, the BBA assembled a
panel of banks—typically established institutions that were active in
the interbank market in that currency and had a large presence in
London. The LIBOR panels for the U.S. Dollar (“USD”) and Japanese
Yen (“JPY”) consisted of 16 banks, including Rabobank, a Dutch
bank.13 As explained below, these panel banks submitted the figures
that the BBA used to calculate a currency’s official LIBOR rates.
According to the LIBOR “definition” on the BBA’s website
during the relevant time period, each panel bank, every day at
around 11 a.m. London time, was to “contribute the rate at which it
could borrow funds, were it to do so by asking for and then accepting
/government/uploads/system/uploads/attachment_data/file/191762/wheatley_revi
ew_libor_finalreport_280912.pdf. That report recommended “comprehensive
reform of LIBOR,” id. at 7–8, noting, among other things, that “there is no directly
applicable specific regulatory regime covering [LIBOR submissions],” id. at 11. In
April 2013, several reforms were enacted, including “statutory regulation of the
administration of, and submission to, LIBOR; an Approved Persons regime; and
both civil and criminal enforcement.” ICE Benchmark Administration, Roadmap
for ICE LIBOR (Mar. 18, 2016), https://www.theice.com/publicdocs/ICE
_LIBOR_Roadmap0316.pdf. In February 2014, ICE Benchmark Administration
replaced the BBA as the administrator of LIBOR, now known as “ICE LIBOR.” Id.
13 Rabobank is a “co‐operative owned bank, which is the Netherlands’
biggest lender,” and “which was formed [over a century ago] to serve Dutch
farmers and later branched into international and investment banking.” Laura
Noonan & Pan Kwan Yuk, Rabobank To Cut 9,000 More Jobs and Shrink Balance
Sheet, Financial Times (Dec. 9, 2015), https://www.ft.com/content/38a8afea‐9e9f‐
11e5‐b45d‐4812f209f861.
12
inter‐bank offers in reasonable market size just prior to 1100.”14 Each
panel bank typically designated a particular employee to be
principally responsible for submitting that bank’s LIBOR
contributions generally or for a particular currency or set of
currencies. That employee, a so‐called LIBOR submitter, would
submit multiple rates within each currency that varied based on the
hypothetical loan’s “tenor,” or duration (pursuant to the basic
proposition that the interest rate of a loan will vary based, among
other things, on the loan’s duration). There were fifteen tenors
ranging from overnight to one year—e.g., one month (or “1M”), three
months (or “3M”), and so forth.
After receiving submissions from each panel bank, the BBA
would, within each tenor of each currency, sort the submissions from
lowest to highest, disregard the lower and upper quartiles, and
average the remaining submissions. The resulting number became
the LIBOR fixed rate and was released to the public daily (through
Thomson Reuters, acting as the BBA’s agent).15 Accordingly, for
sixteen‐bank panels like the USD and the JPY panels, each day, and
with respect to each tenor, the BBA would disregard the highest four
and lowest four submissions from the panel, and then average the
14 JA 528; see JA 517–32 (LIBOR definitions—substantially the same—from
2002 to 2008).
15 The individual submissions of each contributor panel bank were also
released simultaneously. One of the reforms to LIBOR, proposed by Wheatley and
later enacted, now requires a three‐month delay in the release of banks’
individual submissions. See Wheatley Report, note 12, ante, at 13.
13
remaining eight submissions to produce that day’s LIBOR fixed rate
in each tenor of USD and JPY–e.g., the 1M USD LIBOR rate.
As noted, LIBOR fixed rates, as published every day shortly
after 11 a.m. London time, are incorporated into the terms of financial
transactions—such as so‐called “interest rate swaps”—throughout
the world.16 An interest rate swap, to take one example of a LIBOR‐
based financial instrument, is an agreement between two parties in
which one agrees to pay a fixed interest rate on some agreed‐upon
notional amount, while the other party agrees to pay a floating rate
(usually tied to the LIBOR) on that same amount. The two sides agree
to exchange payments on agreed‐upon dates over the course of an
agreed‐upon time period. The date on which the floating rate is set
(or reset) is often called the “fixing” or “fixing date.”17 If the floating
rate references LIBOR, the relevant LIBOR rate on a fixing date
determines how much or how little that party pays. Put simply, one
party bets that interest rates (using LIBOR as the reference) will
See generally Hou & Skeie, note 1, ante; see, e.g., Gelboim v. Bank of Am.
16
Corp., 823 F.3d 759, 765 (2d Cir. 2016) (“The LIBOR‐based financial instruments
held by the appellants included: (1) asset swaps, in which the owner of a bond
pegged to a fixed rate pays that fixed rate to a bank or investor while receiving in
return a floating rate based on LIBOR; (2) collateralized debt obligations, which
are structured asset‐backed securities with multiple tranches, the most senior of
which pay out at a spread above LIBOR; and (3) forward rate agreements, in
which one party receives a fixed interest rate on a principal amount while the
counterparty receives interest at the fluctuating LIBOR on the same principal
amount at a designated endpoint. These examples are by no means exhaustive.”).
See, e.g., Government’s Supplemental Appendix (“GSA”) 103–08 (swap
17
agreement between Rabobank and Citibank).
14
increase, and the other bets that interests rates (again, based on
LIBOR) will decrease.
In effect, and in short, money changes hands as LIBOR rates
change. And the panel banks, the joint controllers of LIBOR rates,
themselves entered and were parties to large‐volume LIBOR‐tied
transactions as a matter of course.
B. LIBOR Submissions, and Their Manipulation, at Rabobank
As relevant here, Rabobank was a contributor panel bank for
USD LIBOR and JPY LIBOR. Allen joined Rabobank in 1998 as a cash
trader and was the bank’s USD LIBOR submitter until 2005, when he
became Rabobank’s Global Head of Liquidity and Finance. In that
new role, which he held until being laid off when Rabobank closed
its London branch in late 2008, he was responsible for supervising
other cash traders. One of those cash traders was Conti, who
assumed primary responsibility for USD LIBOR submissions starting
in 2005 and continuing through 2009, when he quit shortly after his
job was moved to Utrecht.18 Another cash trader, Paul Robson
While LIBOR has been called the world’s most important number, it is
18
not clear that anyone would call Allen and Conti “masters” of the LIBOR
universe. Cf. Tom Wolfe, Opinion, Greenwich Time, N.Y. Times (Sept. 27, 2008),
http://www.nytimes.com/2008/09/28/opinion/28wolfe.html (discussing the
author’s term “Masters of the Universe,” which referred to “ambitious young men
(there were no women) who, starting with the 1980s, began racking up millions
every year—millions!—in performance bonuses at investment banks like Salomon
Brothers, Lehman Brothers, Bear Stearns, Merrill Lynch, Morgan Stanley and
Goldman Sachs”). According to the presentence reports, Allen earned an annual
income at Rabobank of $190,000 (though the PSR does not list his bonus range)
15
(whose testimony is central to the issue before us), was primarily
responsible for Rabobank’s JPY LIBOR submissions during the
relevant time period. Others, including Allen himself, would
sometimes submit USD LIBOR rates or JPY LIBOR rates when Conti
or Robson were unavailable. According to the “Final Notice” issued
to Rabobank by the FCA for its LIBOR‐related misconduct,
“Rabobank did not explicitly have a policy in place to address LIBOR
submissions procedures until 30 March 2011, and certain LIBOR‐
related compliance risks were not addressed until August 2012.”19
and Conti had an annual income of $141,583 with an annual bonus ranging from
$50,000 to $186,000.
19 U.K. FCA, Final Notice to Rabobank (Oct. 29, 2013), at ¶ 2.3,
https://www.fca.org.uk/publication/final‐notices/rabobank.pdf. As already
explained, there were likewise no governmental regulations of LIBOR during the
relevant time period, see note 12, ante, leaving oversight to the BBA, but see note
38, post.
One of the issues that Defendants raise in this appeal relates to the District
Court’s denial of their request to depose John Ewan, the LIBOR Manager at the
BBA during the relevant time period. A U.K. resident and citizen, Ewan declined
to appear at Defendants’ trial in the United States, but he testified in LIBOR‐
related trials in the U.K. that ended in acquittals for certain individuals and
convictions for others. Defendants suggest that Ewan’s testimony would have
been material because it would have directly rebutted the Government’s theory of
fraud. They argue that the District Court therefore erred in refusing to grant them
permission to depose Ewan and to use his deposition testimony at trial. The
Government, however, contests whether, based on Ewan’s equivocal testimony in
the United Kingdom, Ewan’s hypothetical deposition testimony in this case
would have helped Allen’s and Conti’s defense. Given our disposition of this
appeal, we need not reach the question and intimate no final view of the issue.
16
In addition to LIBOR submitters, Rabobank also employed
derivatives traders who would regularly enter into interest rate swap
agreements. It was a routine practice of these derivatives traders to
submit requests to Conti and Robson (or, at times, their stand‐ins) for
higher or lower LIBOR submissions. The Government’s theory of the
case was that these trader requests were dictated by the traders’ (and
thus Rabobank’s) interest in having LIBOR be higher or lower on
particular dates based on the transactions that the trader had entered
or positions they held. Allen and Conti, the Government alleged,
honored those requests in lieu of making good‐faith estimates of
Rabobank’s projected borrowing rates.
One USD derivatives trader, Lee Stewart (nicknamed the
“Ambassador”), sat in the same line of desks at Rabobank’s London
office as did Allen and the cash traders—including Conti, the
principal USD LIBOR submitter. Stewart testified at trial that he
offered LIBOR requests “out loud,” “in front of everyone,” and never
used “code” or “tr[ied] to hide what [he] was talking about.”20
Robson testified that every morning before 11 a.m., Conti led, and
Allen participated in, a “gather[ing]” and “discuss[ion]” of the best
way to influence LIBOR, prefaced by the shout, “right, LIBOR
times[!]”21
20 JA 213–14 (Trial Tr. 259–60).
21 Id. at 224 (Trial Tr. 324).
17
By contrast, those derivatives traders located in other offices,
like USD derivatives trader Christian Schluep (located in New York)
or JPY derivatives trader Takayuki Yagami (located in Tokyo), would
more often submit their LIBOR requests in writing. Thus there are
numerous arguably incriminating written exchanges between the
latter traders and the LIBOR submitters. Schluep and Conti had
several exchanges regarding the setting of USD LIBOR22—for
example:
On July 17, 2006, Schluep asked Conti, “IF ANY
CHANCE, A HIGH 3MTH TODAY PL!” Conti
replied, “[o]k matey . . . high one today.”23
On October 31, 2006, Schluep sent Conti a message
discussing market activity and then stated, “SMALL
FAVOUR AS USUAL, LOW 2S HIGH 3S IF
POSSIBLE MATEY,” meaning he wanted a low two‐
month LIBOR and a high three‐month LIBOR. Conti
responded to the earlier parts of Schluep’s message
and added, “[w]ill do matey on the libors.”24
On August 13, 2007, Schluep sent a message to Conti,
requesting “HIGH 3S AND 6S PLS TODAY MATE
(ESP 6MNTHS!!) IF U WOULD BE SO KIND . . [sic]
GOTTA MAKE MONEY SOMEHOW!” Conti
22 During the roughly three‐year time period, Conti received seventeen
written LIBOR requests.
23 GSA 26.
24 Id. at 116.
18
responded simply, “cool,” to which Schluep replied,
“CHEERS TC.. [sic] EVERY LITTLE HELPS!”25
Schluep also had exchanges with Allen26—for example:
On October 6, 2006, Schluep sent a message to Allen
stating, “HELLO SKIPPER, CAN U PUT 3S AT 37
FOR ME TOMORROW PLS. . . MANY THANKS.”
Allen replied, “NEVER IN DOUBT!”27
On November 29, 2006, Schluep sent a message to
Allen asking for a “LOW 1S HIGH 3S LIBOR PLS!!!”
Allen replied “OK MATE, WILL DO MY BEST . . .
SPEAK LATER.” Schluep later thanked Allen,
because the submissions were “BANG ON THE
MONEY!” Allen replied, “NO WORRIES” and joked
that he “HAD TO WORK MY WAY OUT OF AN
AMBASS HEADLOCK TO GET THOSE IN!”28
On December 1, 2006, Schluep sent a message to
Allen stating, “APPRECIATE 3S GO DOWN, BUT A
HIGH 3S TODAY WOULD BE NICE.” Allen
responded, “I AM FAST TURNING INTO YOUR
LIBOR BITCH!!!!” Schluep replied, “JUST FRIENDLY
ENCOURAGEMENT THAT’S ALL, APPRECIATE
25 Id. at 13.
26 During the roughly three‐year time period, Allen received thirteen
written LIBOR requests. Allen responded in writing to five of those requests.
27 Id. at 8.
28 Id. at 6; see JA 233–34 (Trial Tr. 403–04).
19
THE HELP.” Allen replied, “NO WORRIES MATE,
GLAD TO HELP[.]”29
There were similar, if perhaps more explicit and thus arguably more
incriminating, exchanges between Yagami and Robson regarding the
setting of JPY LIBOR—for example:
On September 21, 2007, Robson told Yagami that
market information supported a submission of 0.85
for the one‐month JPY LIBOR. Yagami asked for a
higher rate, specifically 0.90. Robson agreed, even
though he would “probably get a few phone calls,”
telling Yagami that there were “bigger crooks in the
market than us guys!”30
On March 19, 2008, Yagami told Robson “[w]e have
loads of 6mth fixings today” and—conveying a
request from another trader—asked Robson to submit
1.10 for the six‐month yen LIBOR. Robson responded
that market information supported a 1.03 submission
for the six‐month LIBOR but that he would submit
1.10 as asked, even though it would likely prompt “a
phone call.” Robson added that it “will be quite
funny to see the reaction” to his submission at
Yagami’s requested rate.31
29 GSA 10.
30 Id. at 18–19.
31 Id. at 109–10.
20
Whether Allen and Conti did, in fact, accommodate trader
requests by adjusting their LIBOR submissions was an issue that
Defendants contested at trial. Although Allen and Conti claim they
ignored the trader requests, the Government presented evidence at
trial purporting to show that these trader requests were
accommodated. For instance, on August 13, 2007, Schleup e‐mailed
Conti and said: GONNA NEED A FRICKIN HIGH 6 MTH FIX
TOMORROW IF OK WITH U ..... 5.42?”32 The next day, Schluep sent
a reminder and Allen informed another trader that the six‐month
LIBOR submission would be 5.42 because “i think thats [sic] what
[C]hristian [Schluep] needs.”33 The Rabobank submission for six‐
month USD LIBOR that day was 5.42.34
To be clear, Defendants did not argue at trial that it was
permissible to accommodate such requests. Allen and Conti agreed
with the Government that making submissions based on the interests
of Rabobank’s traders was not permitted.35 And Defendants and the
Government further agreed—putting aside whether, in the end,
Allen and Conti honored or ignored trader requests—that the process
for submitting LIBOR involved collecting “market information” in
the morning, typically from brokers who would canvass the rates
32 Id. at 15.
33 Id. at 17.
34 Id. at 47.
See Trial Tr. 1277–78 (“Q. Would you have considered it impermissible at
35
that time to take a trader’s position into account? A. Yes.”); id. at 1289; id. at 1303.
21
that might be on offer in the market. There was further agreement
that, as “estimates,”36 LIBOR submissions were necessarily imprecise
even when there was decent market information, such that, at any
given time, there existed a “range” of reasonable LIBOR
submissions.37 This imprecision was exacerbated during periods of
illiquidity in the interbank market, such as the financial crisis in
2007–2008. In a September 26, 2008 phone call, for example, the
BBA’s LIBOR Manager, John Ewan, told Allen that LIBOR is “just a
line in the sand. What’s it based on? Nothing.”38 At the same time,
however, the Government presented evidence that Defendants
understood that it was improper to take Rabobank’s traders interests
into account in determining their submissions, and that their proper
role was to give an honest estimate of Rabobank’s borrowing costs.
Where Defendants and the Government parted ways on the
facts was whether the traders’ requests were honored. While Conti
did not take the stand at trial, Allen testified that he never actually
36 Gov’t Br. 11; Defs.’ Br. 13–14.
37 See JA 225 (Trial Tr. 333–34).
Id. at 507. The Government’s witnesses, Robson and Stewart, echoed this
38
assessment. Robson testified that he had viewed the LIBOR submission process as
“nonsense” and as “a charade,” and that he eventually “decided not to spend
much time worrying about it.” Id. at 249 (Trial Tr. 518). When Robson first met
with prosecutors in July 2014, he “told them that [by 2007] LIBOR in general was
absolute garbage.” Id. at 251 (Trial Tr. 553). At the time, Stewart referred to LIBOR
as a “made‐up number,” though at trial he clarified that an “[e]ducated guess
would probably be more appropriate.” Id. at 217 (Trial Tr. 274–75).
22
accommodated such requests.39 On direct examination by the
Government, by contrast, Robson—Rabobank’s JPY LIBOR
submitter—explained that LIBOR’s lack of precision allowed him to
accommodate trader requests without raising eyebrows:
[Robson]. I would ask the broker where he felt the
LIBORs would be. They would then give us—for
example, three months they would give us a number of
submissions or possible rates where the three months
could be depending on credit rates and stuff like that. So
there would be kind of a range of two or three numbers
where LIBOR could possibly be.
Q. Before I ask about trader positions, let’s say no trader
request was made. What would you do with that
information?
[Robson]. I would go straight down the middle as much
as I could. So, for example, if the broker came on and
said, three months I think I’m hearing might be 80,
might be 85, might be 90, but probably 75, I would go
down the middle.
Q. Now, let’s say you, in fact, had a trader request where
a trader wanted you to submit a LIBOR to favor their
position. What would you do?
[Robson]. So given those circumstances, if one of the
traders had contacted and said three months, if I needed
a higher three months, I would have moved it higher at
39 See, e.g., id. at 300–01 (Trial Tr. 1222, 1227).
23
his request. I would have moved it towards the 90 level
or set 90.
Q. Was that permissible?
[Robson]. No, it wasn’t.40
Moreover, Robson proffered to the Government that Conti likewise
accommodated trading positions when making LIBOR submissions.41
And Robson was the sole source of trial and grand jury testimony
that Allen specifically directed and instructed others in this scheme.42
The scheme was established by May 2006 and continued
through early 2011; as noted previously, however, Allen and Conti
left Rabobank in 2008 and 2009, respectively.
40 Id. at 225 (Trial Tr. 333–34).
By contrast, Stewart acknowledged that Conti “was free to ignore [his]
41
preferences.” Id. at 215 (Trial Tr. 266–67) (“Q. Generally, after you express
preferences like this there was no follow‐up conversation, is that right? A. No, not
really. Q. It was ultimately up to [Conti] to decide what rate he would submit? A.
Yeah. Q. [Conti] was free to ignore your preferences? A. Yeah.”). Yagami, a JPY
trader, did not testify about a single instance in which Conti was responsible for a
JPY LIBOR submission.
Id. at 980 (Transcript of Kastigar Hearing (“Kastigar Hearing Tr.”), at 253)
42
(“Q. Isnʹt it a fact that there is not a single witness that told you that Mr. Allen
instructed them to accommodate trader requests, other than Paul Robson? [Agent
Weeks]. That’s correct.”). By contrast, Stewart agreed that Allen had never given
him a “directive to try to influence the LIBOR rate.” Id. at 210 (Trial Tr. 192). And
Yagami never discussed the LIBOR submission process with Allen. Id. at 262
(Trial Tr. 703) (“Q. Sir, you have never spoken to Tony Allen about the LIBOR
submission process, have you? [Yagami]. No.”).
24
C. Investigation and Indictment
By 2013, the British and American authorities had commenced
LIBOR‐related investigations into Rabobank and other institutions.
As part of their investigations, the U.K. FCA and the U.S. DOJ began
conducting interviews.
The FCA’s interviews were compulsory; they were conducted
under a grant of direct (but not derivative) use immunity,43 and a
witness’s failure to testify under such terms could result in
imprisonment.44 In order to avoid potential problems under Kastigar,
the DOJ took care to conduct their interviews wholly independently
of the FCA’s interviews and their fruits. Specifically, the FCA agreed
to procedures to maintain a “wall” between its investigation and the
DOJ’s investigation, including a “day one/day two” interview
procedure in which the DOJ interviewed witnesses prior to the FCA.
In accordance with that protocol, the FCA interviewed Robson (on
January 17, 2013), Conti (on January 25, 2013), and Allen (on June 20
and 21, 2013), among others. Robson, in his compelled testimony to
the FCA, denied any improper conduct at Rabobank.
43 On the differences between direct and derivative use, see note 3, ante.
There is no dispute that Defendants were compelled to testify. See, e.g.,
44
Gov’t Br. 25 (discussing “Robson’s exposure to testimony by defendants that was
compelled by regulatory authorities in the United Kingdom”); id. at 131, 132, 137,
138 (quoting with approval the District Court’s reference to Allen’s and Conti’s
FCA testimony as “the defendants’ compelled testimony” or their “compelled
statements”).
25
In November 2013,45 the FCA initiated an enforcement action
against Robson and, following its normal procedure, disclosed to
Robson the relevant evidence against him, including the compelled
testimony of Allen and Conti. Robson’s attorney instructed him to
review the materials sent by the FCA in preparation for a meeting
between Robson and his attorney. Robson “reviewed the materials
over the course of two to three successive or nearly successive days
sometime in or about November and/or December of 2013.”46 During
this review, Robson underlined, annotated, and circled certain
passages of both Allen’s and Conti’s compelled testimony.47 Robson
also took roughly five pages of handwritten notes. Before Robson
had the chance to discuss this material with his attorney, however,
the FCA stayed its regulatory proceeding in favor of a criminal
prosecution of Robson by the DOJ. On instruction from his lawyer,
45 The prior month, on October 29, 2013, the DOJ entered into a deferred
prosecution agreement (“DPA”) with Rabobank. See United States v. Allen, 160 F.
Supp. 3d 684, 689 (S.D.N.Y. 2016). The essence of the DPA bargain is that in
exchange for its cooperation, the Government refrains from prosecution. See, e.g.,
United States v. HSBC Bank USA, N.A., ‐‐‐ F.3d ‐‐‐, 2017 WL 2960618, at *2–3 (2d
Cir. July 12, 2017). “Under a typical DPA with a corporate defendant, the
defendant admits to a statement of facts, submits to the filing of criminal charges
against it on the basis of those facts, and agrees to a forfeiture or fine and to
institute remedial measures. In exchange, the government agrees to defer
prosecution and to ultimately seek dismissal of all charges if the defendant
complies with the DPA. If the government determines that the defendant has
breached the DPA, however, the government may rip up the agreement and
pursue the prosecution.” Id. at *2.
46 Kastigar Hearing Tr. 20.
47 See JA 742–851.
26
Robson placed the FCA materials in a box, put them in his attic, and
did not review them further.48
On April 28, 2014, a grand jury in the United States District
Court for the Southern District of New York returned an indictment
charging Robson (Rabobank’s JPY submitter) and two JPY
derivatives traders, Paul Thompson and Tetsuya Motomura, with,
inter alia, wire fraud. The Government had not requested that the
grand jury indict Conti or Allen.49
In mid‐July 2014, the DOJ first interviewed Robson at a so‐
called proffer session.50 On August 5, 2014, Robson signed a
48 Kastigar Hearing Tr. 6–7; see also id. at 76–88.
49 Id. at 227.
50 One typically “participate[s] in a proffer session in the hopes of
obtaining a cooperation agreement.” United States v. Oluwanisola, 605 F.3d 124, 127
(2d Cir. 2010). Such proffer sessions are typically conducted pursuant to an
agreement in which the government may use the interviewee’s statements at the
proffer session only as rebuttal evidence, and the defendant waives any objection
to such use. See United States v. Velez, 354 F.3d 190, 196 (2d Cir. 2004) (“[A]
defendant remains free to present evidence [at trial] inconsistent with his proffer
statements, with the fair consequence that, if he does, the Government is then
permitted to present the defendant’s own words in rebuttal.” (internal quotation
marks and alterations omitted)); see, e.g., Oluwanisola, 605 F.3d 124 at 127–28
(discussing an agreement that the government would not use any statements
except “as substantive evidence to rebut, directly or indirectly, any evidence
offered or elicited, or factual assertions made, by or on behalf of [the interviewee]
at any stage of a criminal prosecution”). There is no guarantee that proffers will
give rise to a cooperation agreement. See, e.g., id. at 128 (“The government
determined that Oluwanisola was not fully truthful regarding the scope of his
involvement with the conspiracy and did not offer him a cooperation
27
cooperation agreement and shortly thereafter pleaded guilty. At
Robson’s plea hearing, the prosecutor informed the District Court
that “there is . . . a chance that we would seek a superseding
indictment in light of information that has come to light from our two
cooperators”51 and that there was “a distinct possibility” the new
indictment would “involve[ ] other individuals.”52
So it did. On October 16, 2014, the grand jury returned a
superseding indictment charging two new individuals—Allen and
Conti—with one count of conspiracy to commit wire fraud and bank
fraud as well as several counts of wire fraud. It is not disputed that
the Government’s presentation of evidence to the grand jury that
indicted Defendants relied on evidence that Robson had provided.53
While Robson did not himself testify, the new information he gave
was relayed to the grand jury through FBI Special Agent Jeffrey
agreement.”). While the statements made by the would‐be cooperator at a proffer
session are granted “use immunity,” they are not granted “derivative‐use
immunity.” See United States v. Christian, 111 F. Supp. 3d 287, 305 (E.D.N.Y. 2015).
That means that the statements can be used by the Government to develop further
information that could be used against the defendant in the event that the case
does go to trial. See United States v. Ramos, 685 F.3d 120, 127 (2d Cir. 2012) (“An
individual who makes self‐incriminating statements without claiming the [Fifth
Amendment] privilege is deemed not to have been ‘compelled’ but to have
spoken voluntarily.”).
Yagami had previously agreed to cooperate with the U.S. government
51
and, on June 10, 2014, pleaded guilty to conspiracy charges.
52 JA 903.
53 See Allen, 160 F. Supp. 3d at 697; see also Kastigar Hearing Tr. 238–42.
28
Weeks, who did testify.54 And Weeks’s testimony to the grand jury
on certain matters derived exclusively from Robson.55 In particular,
Robson was the only source for Weeks’s testimony that Allen
“instructed, specifically instructed, LIBOR submitters in London to
consider the positions and the requests of Rabobank traders and
adjust their submissions for LIBOR and various currencies based on
the means of those traders,”56 and that “Mr. Robson said that sitting
near Mr. Conti he was aware that Mr. Conti set U.S. dollar LIBOR
rates in which he considered his own positions as appropriate reason
or justification for setting the rates.”57
D. Trial and Post‐Trial Kastigar Hearing
Allen and Conti each waived his right to contest extradition
from the U.K. and appeared voluntarily. Prior to trial, they moved
under Kastigar to dismiss the indictment or suppress Robson’s
testimony, but the District Court opted to address any Kastigar issues
after trial “in accordance with prevailing practice in the Second
54 Kastigar Hearing Tr. 238–42.
55 Id.
56 JA 907.
57 Id. at 910.
29
Circuit.”58 Trial thus commenced on October 14, 2015, and lasted
approximately three weeks.
At trial, the Government’s case‐in‐chief consisted of
documentary evidence (e.g., e‐mails, “instant chats,” and phone calls
involving Allen, Conti, or their alleged co‐conspirators) and
testimony from eight witnesses, including three cooperators: Stewart,
Yagami, and Robson.59 In addition to cross‐examination of the
Government’s witnesses, Allen and Conti each offered an expert
witness,60 and Allen testified in his own defense. On November 5,
2015, the jury returned a verdict of guilty on all counts (nineteen
counts, in total, for Allen and nine for Conti).
Defendants’ Kastigar challenge remained pending, however.61
Beginning on December 16, 2015, the District Court held a two‐day
58 JA 921. We offer no opinion here regarding the merits of such a practice
or whether such a practice prevails. This decision by a district court is an exercise
of its discretion.
59 The Government also called an expert who explained LIBOR and its
connection to derivative transactions, see Trial Tr. 115–61; an FBI accountant, see
id. at 843–960; and three “counterparty” witnesses (i.e., individuals who were at
one time employed by an entity that had entered into a derivatives transaction
with Rabobank during the relevant time period), see id. at 494–510, 822–43.
60 Conti’s expert analyzed the effect of Rabobank’s LIBOR submissions on
the trading books of certain Rabobank derivatives traders, and Allen’s expert
compared Rabobank’s LIBOR submissions with the contemporaneous borrowing
conditions in the London interbank market. See Trial Tr. 981–1029, 1034–1156.
Defendants also filed post‐trial motions, pursuant to Federal Rules of
61
Criminal Procedure 29(c) and 33(a), for acquittal or for a new trial, respectively,
30
hearing on Kastigar issues at which Robson and Agent Weeks
testified. During this hearing it came to light that Robson had not
only read but also marked up, and drafted notes regarding,
Defendants’ compelled testimony, and that material parts of Agent
Weeks’s testimony to the grand jury derived solely from Robson.62
Following subsequent Kastigar briefing from the parties, the
District Court denied Defendants’ motion by written opinion. The
District Court held that, assuming Kastigar applies to testimony
compelled by a foreign power, there had been no Kastigar violation.63
In its ruling, the District Court explicitly declined to apply case law
of the United States Court of Appeals for the District of Columbia
Circuit (“D.C. Circuit”) on the legal standards applicable when a
which the District Court denied. See United States v. Allen, 160 F. Supp. 3d 698
(S.D.N.Y. 2016).
While Robson’s marked‐up copies of Defendants’ compelled testimony
62
were produced and are in the record, Robson asserted attorney‐client privilege
over his handwritten notes. See Kastigar Hearing Tr. 82–88. Defendants’ motion to
compel production of those notes was denied. See United States v. Robson et al.,
1:14‐cr‐00272‐JSR (S.D.N.Y.) (“District Court Docket”), Docket No. 206. The
annotated transcripts suggest areas in which Robson’s testimony was affected by
his reading. For example, during his FCA interview, Robson said he “really [did
not] know” the particulars of how the bonuses were structured because Allen was
the one who “made the decisions” about that. JA 727–28. In reviewing Allen’s
compelled testimony, he circled sections concerning bonus structures. Id. at 744–
45. When he testified at the Defendants’ trial, he testified about the “bonus pool”
in accord with how Allen had described the system in his compelled testimony to
the FCA. Id. at 234 (Trial Tr. 407).
63 See Allen, 160 F. Supp. 3d at 690 n.8.
31
government witness has previously reviewed a defendant’s
compelled testimony.64 Looking to Second Circuit precedent, the
District Court concluded that Robson’s review of Defendants’
compelled testimony did not taint the evidence he later provided,
because the Government had shown an independent source for such
evidence, “to wit, [Robson’s] personal experience and
observations.”65
II. DISCUSSION
Although Defendants raise a number of substantial issues on
appeal, we reach only their Kastigar challenge. Defendants contend
that the Government violated their Fifth Amendment rights when it
used—in the form of tainted evidence from Robson—their own
compelled testimony against them. Specifically, they argue that the
District Court applied the wrong legal standard in assessing whether
the evidence provided by Robson was tainted by his review of their
compelled testimony. They also assert that, properly assessed, the
Government cannot meet its burden of showing that Robson’s
evidence was not tainted, and that the prosecution’s use of tainted
evidence from Robson was not harmless beyond a reasonable doubt.
Id. at 691 n.9 (“While the Court is of the view that the Government
64
would likely meet its Kastigar burden under the standards of the D.C. Circuit,
especially in light of U.S. v. Slough, 641 F.3d 544 (D.C. Cir. 2011), the Court sees no
reason to discuss this matter further, as the Court is obligated to apply the
standards set by the Second Circuit.”).
65 Allen, 160 F. Supp. 3d at 697.
32
The Government takes a different view. It submits, as a
threshold argument, that testimony compelled by a foreign sovereign
and used in a U.S. criminal prosecution “do[es] not implicate the
Fifth Amendment.”66 In the event that the Fifth Amendment does
apply, the Government argues that the District Court employed the
correct legal standard to determine, properly, that evidence provided
by Robson was untainted. In the alternative, the Government argues
that any use of tainted evidence was harmless.
For the reasons that follow, we conclude that Defendants
prevail on each point.
A. Applicability of the Fifth Amendment
In arguing that Fifth Amendment protections apply in this
case, Defendants rely on our cases pertaining to foreign and cross‐
border law enforcement, which have consistently held that “in order
to be admitted in our courts, inculpatory statements obtained
overseas by foreign officials must have been made voluntarily.”67 In
66 Gov’t Br. 118.
67 In re Terrorist Bombings of U.S. Embassies in E. Africa, 552 F.3d 177, 200 (2d
Cir. 2008); see id. at 208 (noting that “statements obtained under . . .
circumstances” where suspects were “forced to speak” to the agents of a foreign
state “could not be admitted in a U.S. trial if the situation indicated that the
statements were made involuntarily”); United States v. Yousef, 327 F.3d 56, 124, 145
(2d Cir. 2003) (“[T]he law is settled that statements taken by foreign police in the
absence of Miranda warnings are admissible if voluntary.” (emphasis added));
United States v. Welch, 455 F.2d 211, 213 (2d Cir. 1972) (“Whenever a court is asked
to rule upon the admissibility of a statement made to a foreign police officer, the
court must consider the totality of the circumstances to determine whether the
33
so holding, we joined our sister circuits that have considered the
issue.68 Defendants contend that these cases are sufficient to resolve
the present dispute regarding whether compulsion by a foreign
power implicates the Fifth Amendment. We agree.
1. The Requirement of Voluntariness
The Supreme Court has “recognized two constitutional bases
for the requirement that a confession be voluntary to be admitted
into evidence: the Fifth Amendment right against self‐incrimination
and the Due Process Clause of the Fourteenth Amendment.”69 Of
statement was voluntary. If the court finds the statement involuntary, it must
exclude this because of its inherent unreliability, as in Bram v. United States, 168
U.S. 532 (18[9]7).”).
68 See United States v. Abu Ali, 528 F.3d 210, 232 (4th Cir. 2008) (“When
Miranda warnings are unnecessary, as in the case of an interrogation by foreign
officials, we assess the voluntariness of a defendant’s statements by asking
whether the confession is the product of an essentially free and unconstrained
choice by its maker. If it is, it may be used against him.” (citation and internal
quotation marks omitted) (emphasis added)); Brulay v. United States, 383 F.2d 345,
349 n.5 (9th Cir. 1967) (“[I]f the statement is not voluntarily given, whether given
to a United States or foreign officer[ ]—the defendant has been compelled to be a
witness against himself when the statement is admitted.”); United States v. Mundt,
508 F.2d 904, 906 (10th Cir. 1974) (analyzing admissibility in terms of
“voluntariness”); Kilday v. United States, 481 F.2d 655, 656 (5th Cir. 1973) (citing
Bram). Nevertheless, our Court, along with the Fifth Circuit—each of which has
explicitly held a voluntariness test applies—could be read to have elsewhere
suggested that a “shocks the conscience” standard applies. That is discussed
below, as is the Ninth Circuit’s dictum in United States v. Wolf, 813 F.2d 970, 972
n.3 (9th Cir. 1987).
69 Dickerson v. United States, 530 U.S. 428, 433 (2000).
34
these two potential “constitutional bases,” our precedents applying
such a requirement to confessions procured by foreign law
enforcement have been grounded in the Self‐Incrimination Clause
and Bram v. United States, 168 U.S. 532 (1897).70 This constitutional
footing is significant.
The freedom from self‐incrimination guaranteed by the Fifth
Amendment is a personal trial right of the accused in any American
“criminal case.”71 To that end, “a violation of the Fifth Amendment’s
right against self‐incrimination occurs only when a compelled
statement is offered at trial against the defendant.”72 Whatever may
70 In Bram, the Supreme Court reversed a conviction that stemmed from a
confession procured abroad by a Canadian official, and explained that “[i]n
criminal trials, in the courts of the United States, wherever a question arises
whether a confession is incompetent because not voluntary, the issue is controlled
by that portion of the fifth amendment to the constitution of the United States
commanding that no person ‘shall be compelled in any criminal case to be a
witness against himself.’” 168 U.S. 532, 542 (1897).
71 U.S. Const. amend. V.; see United States v. Patane, 542 U.S. 630, 637 (2004)
(plurality opinion) (“[T]he core protection afforded by the Self–Incrimination
Clause is a prohibition on compelling a criminal defendant to testify against
himself at trial.” (emphasis added)). One commentator has observed that
“[p]rovisions in the Bill of Rights that have been interpreted as ‘trial rights’
protect all defendants, regardless of alienage, during their trials in the United
States,” and noted that “[t]his point is so widely accepted and practiced that
courts rarely feel the need to state it.” Mark A. Godsey, The New Frontier of
Constitutional Confession Law—The International Arena: Exploring the Admissibility of
Confessions Taken by U.S. Investigators from Non‐Americans Abroad, 91 Geo. L.J. 851,
873–74 & n.126 (2003).
72 In re Terrorist Bombings, 552 F.3d at 199 (emphasis added).
35
occur prior to trial, the right not to testify against oneself at trial is
“absolute.”73 Even a negative comment by a judge or prosecutor on a
defendant’s silence violates that defendant’s constitutional right.74
These features of the Self‐Incrimination Clause distinguish it
from the exclusionary rules attached to unreasonable searches and
seizures and to otherwise‐valid confessions given without Miranda
warnings. As the Supreme Court has explained, the Fourth
Amendment’s exclusionary rule “is a judicially created remedy
designed to safeguard Fourth Amendment rights generally through
its deterrent effect, rather than a personal constitutional right of the
party aggrieved.”75 So too with the exclusionary rule buttressing
Miranda warnings, which “were primarily designed to prevent
United States police officers from relying upon improper
interrogation techniques.”76 Such exclusionary rules “have little, if
any, deterrent effect upon foreign police officers.”77 Accordingly, we
Salinas v. Texas, 133 S. Ct. 2174, 2179 (2013) (internal quotation marks
73
omitted).
74 See Griffin v. California, 380 U.S. 609, 613–15 (1965).
75 United States v. Calandra, 414 U.S. 338, 348 (1974); see also id. at 347 (“[T]he
rule’s prime purpose is to deter future unlawful police conduct.”).
76 Welch, 455 F.2d at 213.
77 Id. (emphasis added).
36
do not apply the strictures of our Fourth Amendment and Miranda
jurisprudence to foreign authorities.78
The Supreme Court has taken care, however, to distinguish
extraterritorial applications of the Fourth Amendment from those of
the Self‐Incrimination Clause of the Fifth Amendment.79 The Fourth
Amendment “prohibits unreasonable searches and seizures whether
or not the evidence is sought to be used in a criminal trial,” such that
“a violation of the Amendment is fully accomplished at the time of
an unreasonable governmental intrusion.”80 By contrast, in the case of
the Fifth Amendment’s Self‐Incrimination Clause, “a constitutional
violation occurs only at trial,” even if “conduct by law enforcement
officials prior to trial may ultimately impair that right.”81 In light of
that distinction, “it naturally follows that, regardless of the origin—
See United States v. Verdugo‐Urquidez, 494 U.S. 259, 264 (1990) (Fourth
78
Amendment); In re Terrorist Bombings, 552 F.3d at 202–03 (Miranda (citing cases)).
79 See Verdugo‐Urquidez, 494 U.S. at 264.
80 Id. (internal quotation marks omitted) (emphasis added).
81 Id. (emphasis added); see also Chavez v. Martinez, 538 U.S. 760, 767 (2003)
(plurality opinion) (“[I]t is not until [a compelled statement’s] use in a criminal
case that a violation of the Self‐Incrimination Clause occurs.” (emphasis added));
Deshawn E. ex rel. Charlotte E. v. Safir, 156 F.3d 340, 346 (2d Cir. 1998) (“Even if it
can be shown that a statement was obtained by coercion, there can be no Fifth
Amendment violation until that statement is introduced against the defendant in
a criminal proceeding.”).
37
i.e., domestic or foreign—of a statement, it cannot be admitted at trial
in the United States if the statement was ‘compelled.’”82
Thus, the Self‐Incrimination Clause’s prohibition of the use of
compelled testimony arises from the text of the Constitution itself,
and directly addresses what happens in American courtrooms, in
contrast to the exclusionary rules that are crafted as remedies to deter
unconstitutional actions by officers in the field.83 Its protections
therefore apply in American courtrooms even when the defendant’s
testimony was compelled by foreign officials.
Moreover, for much the same reasons, the Clause applies in
American courtrooms even where, as here, the defendant’s testimony
was compelled by foreign officials lawfully—that is, pursuant to
foreign legal process—in a manner that does not shock the conscience
or violate fundamental fairness. The Clause flatly prohibits the use of
compelled testimony and is not based on any matter of misconduct
or illegality on the part of the agency applying the compulsion.
In short, compelled testimony cannot be used to secure a
conviction in an American court. This is so even when the testimony
was compelled by a foreign government in full accordance with its
own law.
82 In re Terrorist Bombings, 552 F.3d at 199 (quoting U.S. Const. amend. V).
See United States v. Kurzer, 534 F.2d 511, 516 (2d Cir. 1976) (“[T]he
83
principal function of the Fourth Amendment exclusionary rule is to deter
unlawful police conduct . . . . The Fifth Amendment, in contrast, is by its terms an
exclusionary rule . . . .”).
38
It is true that, with respect to statements taken abroad by
foreign agents, we have often referred to the Fifth Amendment’s
prohibition against illicit use as encompassing “involuntary,” rather
than “compelled,” statements. But this semantic distinction does not
bear significant, much less dispositive, weight.84 Accordingly, we
agree with Defendants that our cases applying a voluntariness test in
84 As a general matter, courts’ descriptions of statements as “compelled”
(invoking the text of the Self‐Incrimination Clause) and/or “involuntary”
(invoking, arguably, the Due Process Clause) are often used interchangeably and
the words often treated synonymously. See, e.g., Berkemer v. McCarty, 468 U.S. 420,
433 n.20 (1984) (“We do not suggest that compliance with Miranda conclusively
establishes the voluntariness of a subsequent confession. But cases in which a
defendant can make a colorable argument that a self‐incriminating statement was
“compelled” despite the fact that the law enforcement authorities adhered to the
dictates of Miranda are rare.” (emphases added)). Although the Supreme Court
has clarified that the standard for voluntariness Bram offered is not correct, see
Arizona v. Fulminante, 499 U.S. 279, 285 (1991), the `Court has never overruled
Bram’s use of a voluntariness test grounded in the Self‐Incrimination Clause.
Relying on Bram, the Supreme Court proclaimed—albeit, in 1924, before Brown v.
Mississippi, 297 U.S. 278 (1936)—that ”a confession obtained by compulsion must
be excluded whatever may have been the character of the compulsion, and
whether the compulsion was applied in a judicial proceeding or otherwise.” Ziang
Sung Wan v. United States, 266 U.S. 1, 14–15 (1924) (Brandeis, J.). In Dickerson v.
United States, the Supreme Court acknowledged that it has “recognized two
constitutional bases for the requirement that a confession be voluntary.” 530 U.S.
at 433. And Dickerson declined to abandon Miranda as a Self‐Incrimination‐Clause
doctrine applicable to police questioning while simultaneously explaining that the
Court has “never abandoned [its] due process jurisprudence, and thus continue[s]
to exclude confessions that were obtained involuntarily.” Id. at 433‐34. More
recently, in Chavez v. Martinez, the Supreme Court appeared to assume that both
the Self‐Incrimination Clause and the Due Process Clause applied to the coercive
police questioning at issue in that case. 538 U.S. at 773.
39
the context of physical coercion extend to the present context of
lawful compulsion.
2. The Government’s Counterarguments
The Government’s three principal counterarguments are
unpersuasive. The Government first questions the validity of our
precedents on the basis of Colorado v. Connelly85 and subsequent cases
involving foreign and cross‐border law enforcement that have relied
on Connelly. That case concerned a mentally ill defendant who sought
out police and confessed to a murder. Despite the absence of any law
enforcement misconduct, the Colorado Supreme Court affirmed the
suppression from evidence of Connelly’s statements because they
were “’involuntary’”—that is, not “‘the product of a rational intellect
and a free will.’”86 In reversing, the Supreme Court held “that
coercive police activity is a necessary predicate to the finding that a
confession is not ‘voluntary’ within the meaning of the Due Process
Clause of the Fourteenth Amendment.”87
We are not persuaded that Connelly requires reconsideration of
our precedents. For one thing, Connelly is explicitly a Due Process
Clause case, whereas the precedents we rely on today were grounded
in the Self‐Incrimination Clause—which, by its terms, is an
exclusionary rule grounded in the very text of the Constitution and
85 479 U.S. 157 (1986).
86 Id. at 162 (quoting 702 P.2d 722, 728 (Colo. 1985)).
87 Id. at 167.
40
designed to protect a defendant at trial.88 For another, Connelly did
not concern cross‐border investigations or foreign government
conduct (and accordingly, the majority did not even mention Bram).89
And the final reason we do not believe Connelly renders our
precedents invalid stems from an important acknowledgment the
Government makes on appeal.
Specifically, the Government submits—in a footnote pregnant
with meaning—that “there may be some other constitutional doctrine
apart from the Fifth Amendment right against self‐incrimination that
For that same reason, we believe that the Ninth Circuit’s dictum in
88
United States v. Wolf, 813 F.2d 970 (9th Cir. 1987)—proclaimed without the benefit
of “argu[ment] or brief[ing]”—questioning “[t]he continuing vitality of [its prior]
holding in [Brulay v. United States]” in light of Connelly was mistaken. Id. at 973
n.3. Brulay’s holding, like those of our cases, was grounded in the Self‐
Incrimination Clause. See Brulay, 383 F.2d at 349 n.5.
89 In that regard, the Government places too much weight on our decision
in United States v. Salameh, 152 F.3d 88 (2d Cir. 1998), a cross‐border confession
case that relied on Connelly. In Salameh, we rejected the defendant’s challenge to
the admission at trial of two comments he made after being placed in U.S.
custody, “informed that he was under arrest,” and “advised . . . of his
constitutional rights.” Id. at 117. The defendant asserted that his two comments
“were given involuntarily and without a valid Miranda waiver because they
followed ten days of incarceration and torture in Egypt.” We explained, however,
that these concerns would only be relevant if the defendant was being coerced
when the two comments were elicited by U.S. officials. Id. And, indeed, the
defendant did “not contend that federal agents either mentally or physically
coerced his remarks during that interrogation.” Id. The Government misreads
Salameh as a foreign coercion case when, in fact, our holding turned on the
absence of any “coercive activity of the State” during the relevant interrogation.
Connelly, 479 U.S. at 165. Our reading of Salameh is confirmed by the fact that the
decision ignored Bram and our own binding precedent of Welch.
41
would require exclusion of a confession coerced by foreign officials,
such as a due process violation based on conduct that ‘shocks the
judicial conscience.’”90 That could only be so, however, if the Due
Process Clause applied in some degree to the conduct of foreign
officials—the very proposition that the Government otherwise
contends Connelly rejected. By dangling a “shocks the conscience”
test in this footnote, the Government implies that it takes issue not
with whether confessions procured by foreign officials can be
excluded from American trials based on our Constitution, but with
the standard our courts should apply in evaluating admissibility.
90 Gov’t Br. 122 n.22 (quoting Yousef, 327 F.3d at 146). In Yousef, which the
Government quotes, we explained, first, “that statements taken by foreign police
in the absence of Miranda warnings are admissible if voluntary.” 327 F.3d at 145
(emphasis added). We then characterized the “shocks the conscience” test as an
exception to the rule of admitting voluntary confessions. The import of this
passage in Yousef is thus that even voluntary statements resulting from foreign
government conduct that shocks the judicial conscience—however unlikely it may
be that conscience‐shocking circumstances would produce a “voluntary”
confession—will be rendered inadmissible. Admittedly, the far‐fetched nature of
this scenario did not help clarify the confusion created by the “shocks the
conscience” test sometimes lingering in our Fifth Amendment jurisprudence. See
United States v. Karake, 443 F. Supp. 2d 8, 53 n.74 (D.D.C. 2006) (explaining that
“the Second Circuit case most often cited in support of the ‘shock the conscience’
test [United States v. Nagelberg, 434 F.2d 585, 587 n.1 (2d Cir. 1970)] in fact . . .
relied solely on Brulay, which . . . applies a straightforward voluntariness test in
determining the admissibility of statements obtained by foreign officials”). As
explained by the Karake Court, the “shocks the conscience” test has generally been
developed in the search and seizure context. See id. Our discussion makes clear
that self‐incrimination is different.
42
The Government’s second counterargument extends from the
premise that foreign governments are on the same footing as private
employers when it comes to compelled testimony. In particular, the
Government points to the fact that private employers may question an
employee under threat of discharge without Fifth Amendment
consequence,91 whereas in certain circumstances courts have found
that the same threat by an American government employer rendered
an employee’s testimony “compelled” and excludable under the Fifth
Amendment.92 “For purposes of the Fifth Amendment,” the
Government submits, “the British government is on the same footing
as a private entity such as the New York Stock Exchange.”93 We
disagree.
Only sovereign power exposes “‘those suspected of crime to
the cruel trilemma of self‐accusation, perjury or contempt.’”94 Only
the U.K. government could have immunized Defendants (neither of
whom were employed by Rabobank at the time), compelling them to
testify or go to jail. To the extent there may be an “official/private
91 Gov’t Br. 123 (citing United States v. Solomon, 509 F.2d 863, 867‐71 (2d Cir.
1975)).
92 Id. (citing Garrity v. New Jersey, 385 U.S. 493, 496 (1967)).
93 Id.
94 Murphy v. Waterfront Commʹn of N.Y. Harbor, 378 U.S. 52, 55 (1964); see
also In re Martin‐Trigona, 732 F.2d 170, 174 (2d Cir. 1984) (“The primary purpose of
the self‐incrimination privilege is to avoid confronting the witness with the ‘cruel
trilemma’ of self‐accusation, perjury or contempt.”).
43
action spectrum,”95 when foreign authorities compel testimony they
are acting in the quintessence of their sovereign authority, not in their
capacity as a mere employer, and thus their compulsion is cognizable
by the Fifth Amendment (when testimony so compelled is used in a
U.S. trial). The Supreme Court’s decision in Garrity v. New Jersey—
like Connelly—does not foreclose constitutional review of a foreign
sovereign’s threats to deprive an individual of his liberty. If our
Constitution is to prohibit the use in American trials of confessions
coerced or compelled by a foreign sovereign under some
circumstances, as the Government suggests “may be” the case, it
cannot be the case that compulsion by a foreign authority ipso facto
ends the constitutional inquiry.96
95 Geoffrey S. Corn & Kevin Cieply, The Admissibility of Confessions
Compelled by Foreign Coercion: A Compelling Question of Values in an Era of Increasing
International Criminal Cooperation, 42 Pepp. L. Rev. 467, 476 (2015).
96 One pair of commentators assessed Connelly’s import as follows:
Setting reasonable boundaries, so that private actors cannot
intentionally or unintentionally destroy criminal investigations or
impede on the governmentʹs right to protect its citizens against
dangerous individuals, makes sense.
Given that premise, it certainly would not be unreasonable to
conclude that the link between a coercive act and some sort of state
action is stronger when foreign government officials act than when
private action is solely responsible for a coercive act. And certainly,
allowing admission of foreign coerced evidence is much more
offensive to basic notions of fairness in the pursuit of justice than
when pure private action is responsible.
Id. at 481 (footnote omitted).
44
Finally, the Government’s third counterargument is that
testimony is only “compelled” for purposes of the Self‐Incrimination
Clause if the compelling sovereign is bound by the Fifth
Amendment. Here, too, we disagree. The Government’s argument
relies on the so‐called “same‐sovereign” principle, under which Fifth
Amendment protections apply only if the same sovereign (or, at
least, a Fifth‐Amendment‐bound sovereign) both compelled and
used testimony.97 This “same‐sovereign” principle has never been
fully abandoned; it still applies, for example, where the prosecuting
sovereign is not bound by the Fifth Amendment (i.e., where the
prosecuting authority is a foreign government).98 But where, as here,
97 In particular, its argument relies on cases decided prior to the
application of the Fifth Amendment to the States in Malloy v. Hogan, 378 U.S. 1
(1964), and the Supreme Court’s decision in Murphy v. Waterfront Commʹn of N.Y.
Harbor, 378 U.S. 52 (1964), that immediately followed Malloy. In United States v.
Murdock, 284 U.S. 141 (1931), the Supreme Court held that the federal government
could compel a witness to give testimony that might incriminate him under state
law. Complementing Murdock, the Court held in Knapp v. Schweitzer, 357 U.S. 371
(1958), that a State could compel a witness to give testimony that might
incriminate him under federal law. The decision most relevant here came between
Murdock and Knapp, in Feldman v. United States, 322 U.S. 487 (1944). In Feldman, the
Supreme Court held that a statement compelled under a grant of immunity by an
American state (then not bound by the Fifth Amendment) could be used in a
federal criminal case.
In United States v. Balsys, 524 U.S. 666 (1998), the Supreme Court relied
98
on Murdock in holding that individuals being questioned by the U.S. government
may not invoke the Fifth Amendment privilege based on fear of foreign
prosecution. Balsys is notable because the Supreme Court had overruled Murdock
(as well as Knapp and Feldman) in its 1964 decision in Murphy. But the Balsys Court
understood Murphy as having overruled Murdock not because the “same‐
sovereign” principle was inherently wrong in that context, but rather because the
45
the prosecuting sovereign is bound by the Fifth Amendment, the
“same‐sovereign” principle no longer has force. As already
explained, it is now clear that the Fifth Amendment is a personal trial
right—one violated only at the time of “use” rather than at the time
of “compulsion.”99 Accordingly, the Government’s reliance on the
Court had just extended the Fifth Amendment to bind the states in Malloy. “[I]t
would therefore have been intolerable,” the Balsys Court explained, “to allow a
prosecutor in one or the other jurisdiction to eliminate the privilege by offering
immunity less complete than the privilegeʹs dual jurisdictional reach.” Id. at 682.
In overruling Feldman (and its counterparts), the Murphy Court expressly
99
stated that its “decision today in Malloy v. Hogan . . . necessitate[d] a
reconsideration of” its precedents. 378 U.S. at 57. In an accompanying footnote,
however, the majority in Murphy suggested that it had been reluctant to cure the
“whipsaw” problem because of the lack of clarity regarding when a Fifth
Amendment violation occurs. See id. 57 n.6 (“In every ‘whipsaw’ case, either the
‘compelling’ government or the ‘using’ government is a State, and, until today,
the States were not deemed fully bound by the privilege against self‐
incrimination. Now that both governments are fully bound by the privilege, the
conceptual difficulty of pinpointing the alleged violation of the privilege on
‘compulsion’ or ‘use’ need no longer concern us.”).
The concurring opinion in Murphy of Justice Harlan (who simultaneously
dissented in Malloy) is instructive. Justice Harlan argued that the exercise of the
Courtʹs “‘supervisory power’ over the administration of justice in federal courts,”
rather than the Fifth Amendment itself, was a proper basis for the exclusion from
a federal criminal trial of testimony compelled by state agents. Id. at 80‐81
(Harlan, J., concurring) (relying on Elkins v. United States, 364 U.S. 206 (1960)). He
explained in part that “[i]ncreasing interaction between the State and Federal
Governments speaks strongly against permitting federal officials to make
prosecutorial use of testimony which a State has compelled when that same
testimony could not constitutionally have been compelled by the Federal
Government and then used against the witness.” Id. at 91. Justice Harlan’s
perspective is entirely consistent with the Supreme Court’s subsequent decision in
Balsys and accords with its subsequent case law emphasizing that the core of the
46
“same‐sovereign” principle in the circumstances of this case is
unavailing.100
3. The Consequences of Our Holding
The Government also asserts that a prohibition on its use in
U.S. courts of testimony compelled by a foreign authority “could
seriously hamper the prosecution of criminal conduct that crosses
international borders.”101 In particular, the Government submits:
A foreign government could inadvertently scuttle
prosecutions in the U.S. by compelling testimony and
Fifth Amendment is a trial right violated only when compelled testimony is used
in an American tribunal. We believe that Justice Harlan’s views apply with
equivalent force to the current case and the interaction between the U.S. and the
U.K. authorities, and thus conclude that the application of the supervisory power
of the federal courts over the administration of criminal justice would likewise
compel the outcome here: the exclusion of Defendant’s compelled statements
from use against them at trial.
To be clear, we do not hold or suggest that the Clause applies where the
100
prosecuting authority is not bound by the Fifth Amendment (i.e., where the
prosecuting authority is a foreign government). That is, we do not question the
rule in Balsys and Murdock.
Nor, of course, do we hold or suggest that the Defendants in this case had
a right under the U.S. Constitution not to testify in England before the U.K.
Financial Conduct Authority out of a concern with U.S. prosecution. That is, we
do not question the rule in Knapp.
Rather, we merely conclude that testimony compelled by the U.K.
authorities may not be used in a U.S. criminal trial.
Gov’t Br. 123.
101
47
then making the testimony available to potential
witnesses or the public. Worse yet, a hostile government
bent on frustrating prosecution of a defendant would
have to do no more than compel [that defendant102] to
testify and then publicize the substance of that
testimony, unilaterally putting the United States to its
heavy Kastigar burden.103
The Government’s first concern—that foreign powers could
inadvertently or negligently obstruct federal prosecutions—fails to
account for the fact that this risk already exists within our own
constitutional structure. In our system—composed of “State and
National Governments,”104 with the latter government further
divided into separate co‐equal branches—the DOJ does not control
the granting or handling of witness immunity by the States or by the
U.S. Congress.105 Similarly, and “[f]or better or for worse, we live in a
world of nation‐states in which our Government must be able to
‘function effectively in the company of sovereign nations.’”106
For clarity, we have taken the liberty of emending the Government’s
102
original use of “a witness” to “that defendant,” because self‐incrimination, by
definition, is only a concern when the defendant was the witness.
Id. at 123.
103
Younger v. Harris, 401 U.S. 37, 44 (1971).
104
See United States v. North, 920 F.2d 940, 942 (D.C. Cir. 1990)
105
(“[W]itnesses’ exposure to immunized testimony can taint their trial testimony
irrespective of the prosecution’s role in the exposure.”); see also 18 U.S.C. § 6005.
Verdugo‐Urquidez, 494 U.S. at 275 (quoting Perez v. Brownell, 356 U.S. 44,
106
57 (1958)).
48
We are confident the Government is able to do so. Indeed, in a
March 2016 address that specifically discussed the immunity issue in
this case, Leslie Caldwell, then‐Assistant Attorney General for the
Criminal Division, observed that
as we and our [foreign] counterparts work together
more frequently and better understand our respective
systems, we are having . . . conversations [about double
jeopardy and Fifth Amendment protections] earlier, so
that individuals are much less likely to be caught in the
middle of last minute turf battles over where and by
whom a prosecution should be brought.107
In the present case, the Government was plainly aware from the
outset—well before the FCA transmitted the Defendants’ compelled
testimony to Robson—of the need for close coordination of its efforts
with those of the U.K. authorities. The practical outcome of our
holding today is that the risk of error in coordination falls on the U.S.
Government (should it seek to prosecute foreign individuals), rather
than on the subjects and targets of cross‐border investigations.
As to the Government’s concerns that a hostile foreign
government might hypothetically endeavor to sabotage U.S.
prosecutions by immunizing a suspect and publicizing his or her
Leslie R. Caldwell, Remarks at American Bar Association’s 30th Annual
107
National Institute on White Collar Crime (Mar. 4, 2016),
https://www.justice.gov/opa/speech/assistant‐attorney‐general‐leslie‐r‐caldwell‐
speaks‐american‐bar‐association‐s‐30th.
49
testimony—that, of course, is not this case.108 This case raises no
questions regarding the legitimacy or regularity of the procedures
employed by the U.K. government or the U.K. government’s
investigation more generally. We thus need only say here that should
U.S. prosecutors or judges face the situation suggested by the
Government, our holding today would not necessarily prevent
prosecution in the United States. That is true not only if the U.S.
prosecution navigated any resulting Kastigar issues by meeting its
burden or by not using exposed witnesses. It is true for another
reason as well. Specifically, should the circumstances in a particular
case indicate that a foreign defendant had faced no real threat of
sanctions by his foreign government for not testifying, then that
defendant’s testimony might well not be considered involuntary.109
In short, the situation hypothesized by the Government is not before
108 Hostile foreign governments could, of course, simply refuse to extradite
a suspect to prevent his prosecution in the U.S., rather than attempt the elaborate
means of sabotage suggested here. See, e.g., In re Terrorist Bombings, 552 F.3d at 208
(“[I]t is only through the cooperation of local authorities that U.S. agents obtain
access to foreign detainees.”).
See Hoffa v. United States, 385 U.S. 293, 304 (1966) (“[A] necessary
109
element of compulsory self‐incrimination is some kind of compulsion.”). In
assessing whether the testimony in such a case was compelled by an actual threat,
it would be relevant to consider whether the underlying investigation appeared to
be bona fide; a sham investigation concocted to bestow immunity on “suspects”
in exchange for their “compelled” testimony is unlikely to have produced
testimony that was actually compelled, and thus actually involuntary—i.e.,
backstopped by the credible threat of imprisonment. The circumstances of the
foreign government’s “publiciz[ing],” Gov’t Br. 123, the defendant’s supposedly
compelled testimony would obviously be an important factor in evaluating a
purportedly bona fide investigation.
50
us today, and our resolution of this case on the facts that are before
us leaves open the issue of foreign efforts to sabotage a U.S.
prosecution.
On the other hand, the Government nowhere responds to the
troubling consequences of accepting its argument. As conceded at
oral argument, the Government’s rule would remove any bar to
introducing compelled testimony directly in U.S. prosecutions
similar to this one—as in, ʺYour honor, we offer Government Exhibit
1, the defendant’s compelled testimony.ʺ110 To be sure, the
Government did not introduce Defendants’ compelled testimony
directly and appears to have generally sought in good faith to respect
the principles underlying the Fifth Amendment. But it is well
See the following exchange at oral argument before us:
110
MR. PELLETTIERI: . . . [W]e don’t think we had to meet our
burden under Kastigar. We only did it out of an abundance of
caution because there was no compulsion. There was no
compulsion by a sovereign bound by the Fifth Amendment.
JUDGE LYNCH: Well, if that’s true, then it would have been OK,
would it not, for you to introduce the transcript of Conti’s [or
Allen’s] testimony at this trial. You didn’t do that.
MR. PELLETTIERI: Under the Fifth Amendment. But we were
being cautious, your Honor.
Oral Arg. Tr. 55–56. According to the Government’s brief, “there may be some
other constitutional doctrine apart from the Fifth Amendment right against self‐
incrimination that would require exclusion of a confession coerced by foreign
officials, such as a due process violation based on conduct that ‘shocks the judicial
conscience,’” but it submits that “no such doctrine has been—or could be—
claimed to apply in this case.” Gov’t Br. 122 n.22 (quoting Yousef, 327 F.3d at 146).
51
established that a defendant’s “preservation of his rights” does not
turn “upon the integrity and good faith of the prosecuting
authorities.”111 We cannot entertain a rule that discards the most
basic Fifth Amendment right simply because prosecutors can be
expected to respect its objectives generally.
The concerns that we express here are not idle. However
unusual this particular prosecution may prove to be, so‐called cross‐
border prosecutions have become more common.112 Such
Kastigar, 406 U.S. at 460; cf. United States v. Stevens, 559 U.S. 460, 480
111
(2010) (“[T]he First Amendment protects against the Government; it does not
leave us at the mercy of noblesse oblige.”); Ullmann v. United States, 350 U.S. 422,
428 (1956) (“Having had much experience with a tendency in human nature to
abuse power, the Founders sought to close the doors against like future abuses by
law‐enforcing agencies.”).
The rise in non‐prosecution agreements and deferred‐prosecution
112
agreements between the U.S. and foreign entities for misconduct occurring abroad
attests to this new reality. In addition to LIBOR, there have recently been
agreements arising out of investigations into the manipulation of certain foreign
exchange rates, see DOJ, Press Release, Five Major Banks Agree to Parent‐Level Guilty
Pleas (May 20, 2015), https://www.justice.gov/opa/pr/five‐major‐banks‐agree‐
parent‐level‐guilty‐pleas; agreements arising out of investigations into U.S. tax
evasion at Swiss banks, see DOJ, Swiss Bank Program,
https://www.justice.gov/tax/swiss‐bank‐program (last visited July 18, 2017); and
of course agreements arising out of FCPA enforcement, see DOJ, FCPA‐Related
Enforcement Actions: 2017, https://www.justice.gov/criminal‐fraud/case/related‐
enforcement‐actions/2017 (last visited July 18, 2017). While a rise in individual
prosecutions of foreign defendants may not be as evident, the DOJ has expressed
a clear preference that, as a matter of general prosecutorial policy, where there is a
resolution with an institution, there should be a prosecution of a responsible
individual (or individuals) as well. See Sally Quillian Yates, Memorandum,
Individual Accountability for Corporate Wrongdoing (Sept. 9, 2015),
https://www.justice.gov/dag /individual‐accountability.
52
prosecutions necessarily entail intimate coordination between the
United States and foreign authorities. As then‐Assistant Attorney
General Caldwell put it in the address to which we referred earlier,
“[c]ollaboration and coordination among multiple regulators in
cross‐border matters is the future of major white collar criminal
enforcement.”113 Perhaps the most striking development in
cooperative conduct is the embedding of U.S. prosecutors in foreign
law enforcement. According to Caldwell, the DOJ “recently placed
Criminal Division prosecutors with Eurojust in The Hague and
INTERPOL in France” and was “exploring the possibility of
embedding prosecutors with other foreign law enforcement as
well.”114 In a more recent address, Acting Principal Deputy Assistant
Attorney General Trevor N. McFadden announced that DOJ will be
detailing one of its anti‐corruption prosecutors to work at the U.K.
FCA—“the first time the Criminal Division . . . will detail a
prosecutor to work in a foreign regulatory agency on white collar
crime issues.”115
Caldwell, note 107, ante.
113
Id.
114
115 Trevor N. McFadden, Remarks at American Conference Institute’s 7th
Brazil Summit on Anti‐Corruption (May 24, 2017), https://www.justice.gov/opa/
speech/acting‐principal‐deputy‐assistant‐attorney‐general‐trevor‐n‐mcfadden‐
speaks‐american. We also note that the U.K. government recently announced the
creation of an “International Anti‐Corruption Coordination Centre (IACCC),
hosted by the UK’s National Crime Agency,” the members of which “include
agencies from Australia, Canada, New Zealand, Singapore, the UK and the USA,
with Interpol scheduled to join later this year,” as part of an effort to “bring[ ]
53
One area in particular where intimate cooperation and
coordination will be needed between U.S. prosecutors and foreign
authorities (or, perhaps, between U.S. prosecutors and U.S.
prosecutors on detail to foreign authorities) is the securing of witness
testimony. As the Government explained in a letter to the District
Court in this case, “large scale economic crime conspiracies that harm
U.S. markets, such as LIBOR rigging and the manipulation of the
foreign exchange spot, often occur, in large part, overseas and
successful prosecutions of these matters frequently rely on evidence provided
by witnesses who live in foreign countries.”116 And as this case illustrates,
foreign authorities may conduct compulsory witness interviews,
including interviews of those who end up being—or are already—the
targets of U.S. prosecution.
We do not presume to know exactly what this brave new
world of international criminal enforcement will entail. Yet we are
certain that these developments abroad need not affect the fairness of
our trials at home.117 If as a consequence of joint investigations with
together specialist law enforcement officers from multiple jurisdictions into a
single location to tackle allegations of grand corruption.” U. K. National Crime
Agency, Press Release, International Partners Join Forces To Tackle Global Grand
Corruption (July 5, 2017), http://www.nationalcrimeagency.gov.uk/news/1138‐
international‐partners‐join‐forces‐to‐tackle‐global‐grand‐corruption.
District Court Docket, Docket No. 264 (Gov’t Sentencing Submission as
116
to Paul Robson), at 4 (emphasis added).
See Balsys, 524 U.S. at 700 (Stevens, J., concurring) (“The primary office
117
of the Clause at issue in this case is to afford protection to persons whose liberty
54
foreign nations we are to hale foreign men and women into the
courts of the United States to fend for their liberty we should not do
so while denying them the full protection of a “trial right”118 we
regard as “fundamental”119 and “absolute.”120
Accordingly, we adhere to our precedent in assessing the
voluntariness of inculpatory testimony compelled abroad by foreign
governments. In the instant appeal, there is no question that the
Defendants’ testimony was compelled and, thus, involuntary. We
therefore conclude in this case that the Fifth Amendment prohibited
the Government from using Defendants’ compelled testimony
against them.
B. Whether Defendants’ Rights Were Violated
We thus turn to the parties’ arguments under the doctrines of
the Fifth Amendment and the seminal case of Kastigar.121 The Fifth
has been placed in jeopardy in an American tribunal. The Courtʹs holding today
will not have any adverse impact on the fairness of American criminal trials.”).
Patane, 542 U.S. at 641 (emphasis in original) (internal quotation marks
118
omitted).
Verdugo‐Urquidez, 494 U.S. at 264.
119
Salinas, 133 S. Ct. at 2179.
120
We note that, under our Fifth Amendment jurisprudence, it is not clear
121
whether all involuntary statements or all compelled statements should be
subjected to the strong medicine prescribed in Kastigar, or whether some other
doctrine should govern in certain circumstances. Compare, e.g., United States v.
Ghailani, 743 F. Supp. 2d 242 (S.D.N.Y. 2010) (rejecting the applicability of Kastigar
to coerced and uncounseled statements made to agents of the U.S. Central
55
Amendment provides that “[n]o person . . . shall be compelled in any
criminal case to be a witness against himself . . . .”122 Like the
privilege itself, the lawful compulsion of testimony under a grant of
immunity has “historical roots deep in Anglo‐American
jurisprudence.”123 In Kastigar, the Supreme Court upheld the
constitutionality of compelling testimony in exchange for “use and
derivative use” immunity under 18 U.S.C. § 6002, because the scope
of the protection afforded was “coextensive with the scope of the
[Fifth Amendment] privilege.”124 Thus, the scope of the constitutional
privilege and use and derivative use immunity are two sides of the
same coin, and we therefore seek guidance from cases interpreting
either.
Intelligence Agency and finding an attenuation analysis applied, while at the
same time concluding that the “core application” doctrine was inapplicable due to
the Fifth Amendment’s self‐incrimination clause), with, Chavez, 538 U.S. at 769–70
(2003) (“[O]ur cases provide that those subjected to coercive police interrogations
have an automatic protection from the use of their involuntary statements (or
evidence derived from their statements) in any subsequent criminal trial. This
protection is, in fact, coextensive with the use and derivative use immunity
mandated by Kastigar when the government compels testimony from a reluctant
witness.” (citations omitted)). We need not resolve such questions in this case. The
Government makes no argument on behalf of applying something other than
Kastigar—instead posing the Fifth Amendment question we answered above as
“all or nothing,” see Gov’t Br. 118 (asserting that foreign compulsion “do[es] not
implicate the Fifth Amendment” whatsoever)—and any argument to that effect
has therefore been waived.
122 U.S. Const. amend. V.
123 Kastigar, 406 U.S. at 445.
124 Id. at 453.
56
In its holding, the Kastigar Court emphasized the breadth of
use and derivative use protection. Such protection bars “use of
compelled testimony, as well as evidence derived directly and
indirectly therefrom.”125 And it “prohibits the prosecutorial
authorities from using the compelled testimony in any respect, . . .
therefore insur[ing] that the testimony cannot lead to the infliction of
criminal penalties on the witness.”126 As the Kastigar Court observed,
“[t]his total prohibition on use provides a comprehensive safeguard,
barring the use of compelled testimony as an investigatory lead, and
also barring the use of any evidence obtained by focusing
investigation on a witness as a result of his compelled disclosures.”127
Because this “very substantial protection[] [is] commensurate with
that resulting from invoking the privilege itself,” it “leaves the
witness and the prosecutorial authorities in substantially the same
position as if the witness had claimed the Fifth Amendment
privilege.”128
Kastigar also established a doctrine to enforce this protection.
When a witness has been compelled to testify relating to matters for
which he is later prosecuted, the government bears “the heavy
burden of proving that all of the evidence it proposes to use was
Id.
125
Id. (emphasis in original).
126
Id. at 460 (internal quotation marks and footnote omitted).
127
Id. at 461–62.
128
57
derived from legitimate independent sources.”129 This burden is “not
limited to a negation of taint; rather, it imposes on the prosecution
the affirmative duty to prove that the evidence it proposes to use is
derived from a legitimate source wholly independent of the
compelled testimony.”130
We interpreted the teaching of Kastigar a mere four years after
the Supreme Court’s decision, noting that
[w]hile this formulation repeats rather than defines the
word ‘derived,’ it places a significant gloss upon it by
putting the burden firmly on the prosecution to
demonstrate that an indictment [and/or conviction] is
the product of legitimate rather than tainted evidence,
and by insisting that legitimate evidence be from a
source wholly independent of the compelled testimony.131
In United States v. Hubbell, the Supreme Court rejected the
government’s attempt to shift this burden because doing so would
“repudiat[e] the basis for . . . Kastigar.”132 The Government must
Id.
129
Id. at 460.
130
131 United States v. Kurzer, 534 F.2d 511, 516 (1976) (Feinberg, J.) (emphasis
in original) (internal quotation marks omitted).
530 U.S. 27, 45–46 (2000).
132
58
prove it has met this heavy, albeit not insurmountable, burden by a
preponderance of the evidence.133
1. Was Evidence from Robson Tainted?
With the foregoing principles in mind, we consider whether
any evidence from Robson used in Defendants’ prosecution was
tainted. To be clear, there is no dispute that the Government “used”
evidence from Robson: he was a key cooperator and a prominent trial
witness. The less straightforward question is whether any evidence
supplied by Robson (to the government, to the grand jury, or at trial)
was tainted by his earlier review of the testimony of Defendants
compelled in the United Kingdom under U.K. law.
Our Court apparently has never encountered the circumstance
in which a government trial witness had, prior to testifying, reviewed
a defendant’s compelled testimony. The D.C. Circuit, however, has
addressed the applicable legal standards in a pair of high‐profile
cases arising out of the Iran‐Contra affair.134 In those cases, that Court
held that “the use of immunized testimony by witnesses to refresh
their memories, or otherwise to focus their thoughts, organize their
testimony, or alter their prior or contemporaneous statements,
133 United States v. Nanni, 59 F.3d 1425, 1431–32 (2d Cir. 1995).
134 See United States v. North, 910 F.2d 843, 861 (D.C. Cir. 1990) (“North I”);
United States v. North, 920 F.2d 940, 942 (D.C. Cir. 1990) (“North II”); United States
v. Poindexter, 951 F.2d 369, 373 (D.C. Cir. 1991); see also United States v. Slough, 641
F.3d 544, 549–50 (D.C. Cir. 2011).
59
constitutes” an impermissible use of the defendants’ compelled
testimony.135
Despite briefing from both parties that cited the standards
used by the D.C. Circuit, the District Court in this case relegated any
mention of those precedents to a footnote that indicated that it would
look only to Second Circuit precedent, of which there is none directly
on point. As a result, it is unclear precisely what standards the
District Court applied to determine whether the evidence supplied
by Robson was tainted by his study of the Defendants’ compelled
testimony. What is clear, however, is that the District Court
impermissibly lowered the bar when it determined that the
Government had satisfied its heavy Kastigar burden based on the
135 North I, 910 F.2d at 856; accord Poindexter, 951 F.2d at 373 (“[A]
prohibited use occurs if a witness’s recollection is refreshed by exposure to the
defendantʹs immunized testimony, or if his testimony is in any way shaped,
altered, or affected, by such exposure.” (citation and internal quotation marks
omitted)).
There is potential for semantic confusion surrounding the term “use.” The
federal immunity statute, like the Fifth Amendment, provides protection from
direct and derivative use—meaning that the testimony itself and evidence derived
from the testimony cannot be used. In other words, there is no meaningful
distinction between the testimony itself and evidence derived from the testimony.
Separately, our precedents recognize that certain alleged uses are without
constitutional significance. See, e.g., United States v. Mariani, 851 F.2d 595, 600 (2d
Cir. 1988) (“To the extent that [United States v. McDaniel, 482 F.2d 305 (8th Cir.
1973),] can be read to foreclose the prosecution of an immunized witness where
his immunized testimony might have tangentially influenced the prosecutor’s
thought processes in preparing the indictment and preparing for trial, we decline
to follow that reasoning.” (emphases added)).
60
mere fact that Robson himself asserted that his testimony was not
tainted by his review of Defendants’ compelled testimony and the
fact that there was corroborating evidence for Robson’s trial
testimony.136
In apparent agreement with both parties on appeal,137 we
conclude that the legal standards set forth by the D.C. Circuit in
North I are helpful here. We need not, in this case, decide whether the
Government is required to demonstrate that Robson’s review of
Defendants’ compelled testimony did not in any manner subtly
“refresh his memory, focus or organize his thoughts,” or in some
other traceless way influence his state of mind. At a minimum,
however, we agree with the D.C. Circuit that the Government is
required to prove that his exposure to the compelled testimony did
not shape, alter, or affect the information that he provided and that
the Government used.
The most effective way to demonstrate that a witnessʹs
testimony was untainted by exposure to a defendantʹs immunized
testimony is by demonstrating that his or her testimony was
unchanged from comparable testimony given before the exposure.
Thus, typically, the prosecution can meet its burden by
136 We review de novo whether the legal standard applied by a district court
was in error. See Highmark Inc. v. Allcare Health Mgmt. Sys., Inc., 134 S. Ct. 1744,
1748 (2014).
See Defs.’ Br. 102‐107; Gov’t Br. 138‐140 (arguing that the District Court
137
“performed the analysis required by the D.C. Circuit”); see also id. at 126‐128.
61
memorializing (or “canning”) the witness’s testimony prior to his or
her exposure.138
In the present case, Robson did testify to the FCA regarding
Rabobank’s submission and alleged manipulation of LIBOR rates, as
well as the roles of Allen and Conti, prior to Robson’s exposure to
Defendants’ compelled testimony. But what Robson’s “canned”
testimony preserved is toxic to the Government’s case; it omits or
contradicts in material parts the testimony Robson later provided
indirectly to the grand jury and directly to the petit jury. At the
Kastigar hearing held by the District Court, Robson agreed that “the
testimony that [he] gave to the [FCA] and the testimony that [he]
gave before the jury in this trial were very different.”139 For instance,
Robson testified to the jury about an altercation between Stewart and
Damon Robbins, an alternate submitter for USD LIBOR, on
Rabobank’s London desk. But Robson did not testify about this to the
FCA, and the Kastigar hearing raised questions about whether he had
even seen the incident at all or merely read about it in the compelled
testimony.140 Far from rebutting the presumption that Robson’s trial
testimony was tainted, his pre‐exposure testimony actually evidences
See North II, 920 F.2d at 942–43 (explaining that, absent canned
138
testimony, it may be “extremely difficult for the prosecutor to sustain its burden
of proof”).
Kastigar Hearing Tr. 25.
139
Id. at 51–58.
140
62
such taint through its material differences with Robson’s post‐
exposure trial testimony.
As Robson’s FCA testimony hurts rather than helps its cause,
the Government appears to contend on appeal that it satisfied its
burden solely through Robson’s “‘persuasive[ ]’” testimony at the
Kastigar hearing.141 We conclude, however, that Robson’s testimony
at the hearing falls far short of satisfying the demands of Kastigar. As
explained below, the Government adduced, at bottom, nothing more
than bare, self‐serving denials from Robson to meet its heavy burden.
We hold that such conclusory denials are insufficient as a matter of
law to sustain the prosecution’s burden of proof under Kastigar in the
face of materially inconsistent pre‐exposure testimony.142
141 Gov’t Br. 128 (quoting Poindexter, 951 F.2d at 376 (“[W]here a
substantially exposed witness does not persuasively claim that he can segregate the
effects of his exposure, the prosecution does not meet its burden merely by pointing
to other statements of the same witness that were not themselves shown to be
untainted.” (emphasis added))).
142 However difficult or easy it may be, precisely, for the prosecution to
sustain its burden of proof in the absence of any canned testimony or with the aid
of materially consistent canned testimony—questions we need not answer or
discuss in detail here—it is, at a minimum and without a doubt, extremely
difficult for the prosecution to sustain its burden of proof in the face of materially
inconsistent canned testimony. Cf. North II, 920 F.2d at 942–43 (explaining that,
absent canned testimony, it may be “extremely difficult for the prosecutor to
sustain its burden of proof”). In order to be “materially” inconsistent, the
witness’s account of events before exposure must be significantly different, and
less incriminating, than the testimony ultimately used against the defendant.
63
By the Government’s own count, 27 of the 58 topics discussed
by Robson during his trial testimony had an antecedent in Allen’s
compelled testimony, and 18 of those 58 topics had an antecedent in
Conti’s compelled testimony.143 Yet at no time during the Kastigar
hearing did Robson claim that he could “segregate the effects of his
exposure” with respect to each, or any, of those topics.144 Notably, the
Government never asked Robson whether his memory was, or might
have been, substantially refreshed by his review of Defendants’
compelled testimony—or, to put a finer point on the inquiry, whether
Robson could testify under oath at the Kastigar hearing that his
memory had not been refreshed.
Robson was asked by the Government several times in various
generalized, leading ways whether his review of the compelled
testimony “inform[ed] . . . in any way” his cooperation or testimony
and he responded, without qualification, “no.”145 Despite Robson’s
unqualified assertions in response to those leading questions, we are
mindful that memory remains “a mysterious thing,”146 and its
mysteries were on full display at the Kastigar hearing in the District
Court. Perhaps most mysterious was what, exactly, Robson
remembered of the compelled testimony of Allen and Conti that he
See JA 923–64.
143
Poindexter, 951 F.2d at 376.
144
See, e.g., Kastigar Hearing Tr. 126.
145
North I, 910 F.2d at 860 (alteration omitted).
146
64
had reviewed. For instance, Robson was asked if he had “any specific
recollection of the materials that [he] had reviewed,” and he
answered “[n]o, not specifically.”147 But sometimes Robson did have
specific recollections:
Q. But when you read Mr. Conti’s F[C]A transcript, you
saw that he acknowledged that Lee Stewart made
requests that were intended to benefit his derivative
positions. Do you recall that?
A. Yes, I do.148
Similarly, the Government asked Robson if he “learn[ed] any
new facts from reviewing those materials,” to which he answered
“[n]o, I didn’t.”149 But it later became apparent that he had learned,
through reviewing the compelled testimony of Allen and Conti, of
specific communications in which he had not been an original
participant—and that Robson had discussed such communications
with the DOJ when he began cooperating.150 This particular
147 Kastigar Hearing Tr. 8.
Id. at 119–20; cf. id. at 52 (“Q. [Y]ou recall that [information about the
148
dispute between Stewart and alternate LIBOR submitter Damon Robbins] was
contained in Mr. Allen’s compelled testimony, right? Right? A. I have a vague
recollection. I can’t remember the specifics.”).
Id. at 8; see also, e.g., id. at 15 (Q. Did you learn any specific facts about
149
[the co‐defendants who pleaded guilty] from [Allen’s and Conti’s] FCA
testimony? A. Not that I recall, no.”).
150 See, e.g., id. at 124, 179–80, 182, 185; see also id. at 143–44.
65
inconsistency eventually led to the following colloquy between
Robson and the District Court:
THE COURT: I just want to be sure I am clear on the
chronology. You reviewed [Allen’s and Conti’s FCA
testimony] when?
THE WITNESS: Towards the end of November 2013.
THE COURT: That was before you had begun
cooperating with the government?
THE WITNESS: Yes, it is.
THE COURT: Some of the things you saw in this
transcript were references to conversations that you had
not been a party to yourself, yes?
THE WITNESS: Yes, your Honor.
THE COURT: And they were conversations that you did
not know about until reading the transcripts, true?
THE WITNESS: Yes, your Honor.
THE COURT: So when you said, in answer to
government counsel’s question, that you were already
familiar with various things, you weren’t referring to
these conversations, you were referring to some of the
other things?
THE WITNESS: Sorry, your Honor?
THE COURT: A few minutes ago you said that you
hadnʹt underlined or circled things that you didn’t
already know, or words to that effect, if I remember
correctly.
66
THE WITNESS: I underlined and circled things that I
believe were things that I knew from my personal
experiences at Rabobank.
THE COURT: But not the specific conversations?
THE WITNESS: No, your Honor.
THE COURT: Is it your testimony that you did not bring
any of those conversations to the attention of the
government?
THE WITNESS: No, I didn’t, your Honor.
THE COURT: Now, you testified yesterday that in
preparation for your testimony, the government, after
you began cooperating, showed you some of the e‐mails
involving conversations between two third‐parties that
you were not a party to, yes?
THE WITNESS: Yes.
THE COURT: But you knew about them because you
had seen references to them in the transcripts of Mr.
Allen or Mr. Conti, yes?
THE WITNESS: Some of them I had, yes.
THE COURT: When they showed them to you, did you
say to the government, I have seen that before?
THE WITNESS: I don’t recall, sir.
THE COURT: Did you say, I haven’t seen them before?
67
THE WITNESS: I think there were a couple I hadn’t seen,
which I might have mentioned I hadn’t seen.151
Even Robson’s more generalized recollection of the transcripts
appeared to wax and wane depending on the month (or even the
day) in which he was asked. At one point during the Kastigar hearing,
defense counsel directed Robson’s attention to an August 5, 2015
declaration—in which Robson had declared, “I recall that I did not
agree with or believe everything reflected in transcripts of Messrs.
Allen and Conti . . . ”152—and the following exchange ensued:
Q. So did you recall when you signed this on August 5,
2015[,] not agreeing or believing with everything in Mr.
Conti’s transcript?
A. Yes.
Q. Do you recall now [on December 16, 2015,] not
agreeing at the time that you read the transcript with
everything Mr. Conti said?
A. I don’t recall. Sorry.153
151 Id. at 220–22.
152 Id. at 110.
153 Id. (emphasis added). But see, e.g., note 62, ante (providing an instance in
which Robson circled material in the transcript that he later provided to the jury
at trial, but that he earlier had told the FCA he did not know).
68
Adding another wrinkle, Robson would, during the next day of
testimony at the Kastigar hearing, explain his various purposes for
annotating, underlining, or circling various passages of the
compelled testimony of Allen and Conti as including the “circl[ing
of] anything that I felt was untrue.”154
Even putting aside such mnemonic curiosities, Robson’s
testimony at the Kastigar hearing with respect to his ability to
“segregate the effects of his exposure” amounts to nothing more than
simply replying “no” in a conclusory fashion to generalized leading
questions from the Government.155 We have found the sorts of bare,
self‐serving denials given by Robson, when given by a prosecutor
(i.e., an officer of the court), to be insufficient to satisfy the demands
of Kastigar,156 and the Government supplies no convincing reason
why the same rule should not apply here.157 In light of the foregoing
154 Id. at 185–86.
155 See, e.g., id. at 11–14.
See Nanni, 59 F.3d at 1432; United States v. Tantalo, 680 F.2d 903, 908 (2d
156
Cir. 1982); United States v. Nemes, 555 F.2d 51, 55 (2d Cir. 1977). In Tantalo, we
explained that “the heavy burden cast upon the Government . . . is not satisfied by
the prosecution’s assertion that immunized testimony was not used” and that
“[s]uch disclaimer provides an inadequate basis for the denial of a motion to
dismiss an indictment.” 680 F.2d at 908.
The weakness of Robson’s denials is particularly troubling given the
157
nature of his review of the immunized testimony. Robson was not merely a
witness who was exposed in some tangential way to Defendants’ immunized
testimony. He was a subject of the same investigation, who later became a
government cooperator, who was provided by his lawyer with the transcripts of
their statements, and made, as instructed by his lawyer, a careful review of those
69
discussion, moreover, it seems clear to us that the same rule should
apply.
Accordingly, we hold that a bare, generalized denial of taint
from a witness who has materially altered his testimony after being
substantially exposed to a defendant’s compelled testimony is
insufficient as a matter of law to sustain the prosecution’s burden of
proof under Kastigar that that witness’s testimony was derived from
a wholly independent source.
In view of our holdings, the District Court’s conclusion that the
prosecution had met its heavy burden under Kastigar to show that the
evidence supplied by Robson was untainted cannot stand. Moreover,
a remand for a further factual hearing on the question of taint would
be futile. For one thing, Robson was again shown, and he again
reviewed, critical portions of Defendants’ compelled testimony
during the Kastigar hearing.158 And what Robson did repeatedly
claim at the hearing—an inability to recall clearly much of
anything—establishes that he lacked the ability “to separate the
wheat of [his] unspoiled memory from the chaff of [Defendants’]
transcripts, at a time when he had a substantial motive to examine that testimony
and either conform his own statements to, or protect himself against, what he
found there.
At a side bar during the Kastigar hearing, the parties reached an
158
agreement in which defense counsel would be permitted to use the transcripts of
Defendants’ FCA testimony during cross‐examination of Robson. See Kastigar
Hearing Tr. 38–39.
70
immunized testimony.”159 Notably, the Government does not even
request a remand on this question or otherwise suggest it has some
plausible alternative means of sustaining its burden of proof.
In sum, the Government did not, and cannot, meet its burden
under Kastigar. We therefore conclude that the Government’s use of
evidence provided by Robson violated the Defendants’ Fifth
Amendment rights.
2. Was the “Use” Harmless?
Even where a prosecution runs afoul of Kastigar’s strict
standards, we will not vacate or reverse a conviction where the error
was harmless.160 We thus turn to whether the admission of Robson’s
tainted testimony constituted harmless error.
a. Use at Trial
When tainted evidence is presented at trial, we will deem the
error harmless if we are “persuaded beyond a reasonable doubt that
the jury would have reached the same verdict even without
consideration of the tainted evidence.”161
Upon review of the trial record, we have no trouble concluding
that this error was not harmless beyond a reasonable doubt. While
159 North I, 910 F.2d at 862.
160 See Nanni, 59 F.3d at 1443.
161 Id.
71
two other cooperating witnesses testified, Robson was the unique
source of particularly significant and incriminating evidence. Robson
was the only LIBOR submitter to testify on behalf of the government,
and he testified—contrary to the Defendants’ central argument for
acquittal—that, pursuant to a scheme at Rabobank, he in fact took
trading positions into account when making submissions.162 And
Robson was also the only witness the Government ever interviewed
who said that Allen “directed” Rabobank’s submitters to account for
trading positions when setting LIBOR.163 Indeed, absent Robson’s
testimony that Allen issued “instructions” to him,164 Allen likely
would not have been charged, much less convicted, of the nine
counts relating to specific JPY LIBOR submissions, because Allen
never submitted LIBOR estimates for that currency.165 Well aware of
the substantial litigation risk under Kastigar of using a witness who
not only had been exposed to Defendants’ compelled testimony but
who dramatically changed his own story after such exposure, the
Government nevertheless chose to call Robson to the witness stand,
JA 225 (Trial Tr. 333–34).
162
See Kastigar Hearing Tr. 253.
163
JA 908 (Agent Weeks testifying before the grand jury that Robson
164
informed him that Allen issued “instructions” pertaining to “both yen and dollar”
LIBOR manipulation).
See id. at 301 (Trial Tr. 1225–26) (stating Paul Butler was the backup JPY
165
submitter when Robson was unavailable).
72
underscoring the significance of his testimony to the Government’s
case.166
Accordingly, we conclude that the admission of Robson’s trial
testimony was not harmless. This error requires that Defendants’
convictions be vacated and that they be awarded a new trial wherein
any tainted statements are suppressed.167 Defendants also argue,
Outside the context of this appeal, the Government itself has explicitly
166
attested to its significance. In a letter regarding Robson’s cooperation, submitted
to the District Court pursuant to Section 5K1.1 of the Sentencing Guidelines, the
Government argued in favor of “a downward departure [from Mr. Robson’s
applicable Sentencing Guidelines range] in light of [the] substantial assistance
provided by Mr. Robson.” District Court Docket, Docket No. 264 (Gov’t
Sentencing Submission as to Paul Robson), at 1. The letter explained that
Mr. Robson provided substantial assistance to the government in
two meaningful ways. First, he assisted in the prosecution of
Anthony Allen and Anthony Conti by providing compelling
testimony at their trial in October 2015 . . . . Mr. Robson was an
effective witness. He was candid about his culpability and helped
the jury to understand dozens of communications laced with lingo
and technical trading language. Mr. Robson’s explanations for how
the scheme worked and why it was dishonest were persuasive.
Id. at 2–3 (emphasis omitted).
Pursuant to the parties’ agreement in this case, see note 158, ante, such a
167
retrial might have resulted in the Government being permitted (should it so
choose) to read into the record the portions of Robson’s trial testimony that did
not have any overlap with Allen’s and Conti’s compelled testimony. Cf. Slough,
641 F.3d at 550 (reasoning that “elements of [an exposed witness’s] testimony
[which] have no antecedent in the immunized statements . . . cannot be tainted
(unless somehow the statements caused [the exposed witness’s] testimony in
some subtler way)”).
73
however, that the use of Robson’s tainted evidence, conveyed to the
grand jury through Agent Weeks’s testimony, requires dismissal of
the indictment. We thus turn to that argument.
b. Use in the Grand Jury
Our precedents establish that an indictment is subject to
dismissal if it was procured on the basis of tainted evidence. In
United States v. Hinton,168 the same grand jury that had heard a
witness’s immunized testimony later returned an indictment against
that witness. We dismissed the indictment, explaining in part that
“the fact that none of Hinton’s immunized testimony was introduced
at the trial does not resolve the question, for [the federal immunity
statute] speaks to any use of the immunized testimony against the
witness in any criminal case, and so prohibits its use not merely at
trial, but in the grand jury proceedings as well.”169 Our holding in
United States v. Tantalo was to the same effect,170 and in United States
v. Nanni we explained that “if the government has presented
immunized testimony to the grand jury, the indictment should be
dismissed unless the government establishes that the grand jury
would have indicted even absent that testimony.”171
168 543 F.2d 1002 (2d Cir. 1976)
169 Id. at 1009.
680 F.2d 903, 908–09 (2d Cir. 1982) (“[I]t was error to deny the
170
appellant’s motion to dismiss the superseding indictment.”).
171 59 F.3d 1425, 1443 (2d Cir. 1995).
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The Government’s reliance on our 1990 decision in United
States v. Rivieccio172 is misplaced. To whatever extent Rivieccio may
have accurately described the law in our Circuit, at the time it was
decided,173 it has been overtaken by the Supreme Court’s subsequent
decision in United States v. Hubbell.174 The defendant in Hubbell had
been forced to produce documents to the grand jury, which, the
Supreme Court held, violated his Fifth Amendment right pursuant to
the act‐of‐production doctrine.175 The Supreme Court further held
172 919 F.2d 812 (2d Cir. 1990).
173 In Rivieccio, we stated that when the Government uses “immunized
testimony before a grand jury, generally the remedy for the violation is the
suppression of the tainted evidence at trial, not a dismissal of the indictment.” Id.
at 186. In a footnote, Rivieccio characterized Hinton and Tantalo as falling in one of
“two narrow exceptions to th[is] general rule”—applicable when the same grand
jury that heard the immunized testimony returned the indictment. Id. at 816 n.4.
The other exception Rivieccio identified was when “the indictment rests almost
exclusively on tainted evidence.” Id. (citing United States v. Tane, 329 F.2d 848, 854
(2d Cir. 1964)). Rivieccio did not offer a rationale for this “general rule” and its
“narrow exceptions.”
In addition, Rivieccio offered a confusing holding with respect to whether
United States v. Mechanik, 475 U.S. 66 (1986), applies to Kastigar errors in the grand
jury. Compare Rivieccio, 919 F.2d at 817 (stating that “any misuse of the immunized
testimony which may have occurred before the indicting Grand Jury was
rendered harmless” because at trial “the Government did not use, either directly
or indirectly,” any immunized testimony before the convicting petit jury), with id.
at 817 n.5. (purporting not to “express any opinion” regarding whether the petit
jury’s guilty verdicts had rendered harmless any error in the grand jury pursuant
to United States v. Mechanik, 475 U.S. 66 (1986)).
174 530 U.S. 27 (2000).
175 Id. at 40–46.
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that dismissal of the indictment was required despite the fact that it
“assume[d] that the Government is . . . entirely correct in its
submission that it would not have to advert to respondent’s act of
production in order to prove the existence, authenticity, or custody of
any documents that it might offer in evidence at a criminal trial.”176
In fact, the Government had “disclaim[ed] any need to introduce any
of the documents produced by respondent into evidence in order to
prove the charges against him.”177 Nevertheless, the Supreme Court
held that the government had made use of compelled testimony and
that dismissal of the indictment was required.178
Accordingly, in view of Hubbell, our precedents, and the
general principle that harmless error review applies to violations of
non‐structural constitutional rights,179 “if the government has
Id. at 41.
176
Id.
177
Id. at 45 (“Kastigar requires that respondent’s motion to dismiss the
178
indictment on immunity grounds be granted unless the Government proves that
the evidence it used in obtaining the indictment and proposed to use at trial was
derived from legitimate sources ‘wholly independent’ of the [immunized
testimony].”).
179 “The Supreme Court has distinguished two kinds of errors that can
occur at, or in relation to, a criminal proceeding: so‐called ‘trial errors,’ which are
of relatively limited scope and which are subject to harmless error review, and
‘structural defects,’ which require reversal of an appealed conviction because they
‘affect[ ] the framework within which the trial proceeds.’” United States v.
Feliciano, 223 F.3d 102, 111 (2d Cir. 2000) (quoting Arizona v. Fulminante, 499 U.S.
279, 307–10 (1991). The Supreme Court has “recognized that ‘most constitutional
errors can be harmless.’” Neder v. United States, 527 U.S. 1, 8 (1999) (quoting
76
presented immunized testimony to the grand jury, the indictment
should be dismissed unless the government establishes that the
grand jury would have indicted even absent that testimony.”180
“[E]xploration of the question of taint can be made . . . by review of
the prosecution’s evidence and of the grand jury transcript.”181
Upon review of the evidence and testimony presented to the
grand jury in this case, we cannot conclude beyond a reasonable
doubt that the grand jury would have indicted Allen and Conti
without the evidence supplied by Robson. As the District Court itself
acknowledged, “material parts of [Agent Weeks’s] grand jury
testimony derived exclusively from Mr. Robson.”182 Specifically,
when Agent Weeks testified that Allen was the scheme’s leader who
Fulminante, 499 U.S. at 306). By the same token, the Supreme Court has “found an
error to be ‘structural,’ and thus subject to automatic reversal, only in a ‘very
limited class of cases.’” Id. at 8 (quoting Johnson v. United States, 520 U.S. 461, 468
(1997)). “[I]f the defendant had counsel and was tried by an impartial adjudicator,
there is a strong presumption that any other [constitutional] errors that may have
occurred are subject to harmless‐error analysis.” Rose v. Clark, 478 U.S. 570, 579
(1986); see also United States v. Dhinsa, 243 F.3d 635, 659 (2d Cir. 2001) (“It is
beyond cavil that most constitutional errors occurring during trial may
[potentially] be deemed harmless and, thus, not require automatic reversal of a
conviction.”).
Nanni, 59 F.3d at 1433; see also Poindexter, 951 F.2d at 377. Because we
180
have already concluded that Defendants’ convictions at trial must be vacated, we
need not and do not consider whether United States v. Mechanik, 475 U.S. 66 (1986)
extends to Kastigar error. See note 173, ante.
181 Hinton, 543 F.2d at 1010 n.10.
182 Allen, 160 F. Supp. 3d at 697.
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had “instructed, specifically instructed, LIBOR submitters in London
to consider the positions and the requests of Rabobank traders and
adjust their submissions for LIBOR,” his testimony derived
exclusively from Robson’s proffer.183 And when Agent Weeks
testified that Mr. Conti “adjusted his U.S. dollar LIBOR rates . . . for
his own benefit and the benefit of the other traders,”184 he based his
testimony exclusively upon Mr. Robson’s proffer, telling the grand
jury that “Mr. Robson said that sitting near Mr. Conti he was aware
that Mr. Conti set U.S. dollar LIBOR rates in which he considered his
own positions as appropriate reason or justification for setting the
rates.”185
These statements were not merely “material.” They were
essential—especially (as already noted) with respect to the JPY‐
related charges against Allen.186 More broadly, they provided the
grand jury with definitive, clear‐cut testimony that Allen and Conti
had directly participated in the scheme.
Seeking to downplay the importance of the evidence supplied
by Robson, the Government emphasizes the extent of its
documentary evidence. But all of this documentary evidence was
available prior to Robson’s cooperation and the Government did not
JA 907; see also id. at 909.
183
Kastigar Hearing Tr. 253–54.
184
JA 910.
185
See text at note 165, ante.
186
78
attempt to indict Allen and Conti on the basis of it. Said differently,
the fact that the Government did not charge Allen and Conti until
Robson became a cooperator (“flipped,” in the argot of law
enforcement) further signifies the importance of his evidence to the
indictment. Indeed, at Robson’s plea hearing, the Government
informed the District Court explicitly that “there is . . . a chance that
we would seek a superseding indictment in light of information that
has come to light from our two cooperators” and that there was “a
distinct possibility” the new indictment would “involve[] other
individuals.”187 We cannot discount as unreasonable the possibility
that, without the evidence supplied by Robson and conveyed to the
grand jury by Agent Weeks, the grand jury would not have returned
an indictment charging Allen and Conti.
Neither did the District Court suggest that the evidence
conveyed from Robson, through Agent Weeks, to the grand jury, was
harmless; instead, the District Court concluded that the Government
had met its burden to prove Robson’s evidence was untainted.188 As
explained above, that conclusion was in error. Because we cannot
conclude that the Kastigar errors before the grand jury were harmless,
the indictment must be dismissed.
187 JA 903 (emphasis added). As already noted, the other cooperator,
Yagami (a JPY trader located in Japan), never discussed LIBOR with Allen and at
trial never testified about a single instance in which Conti (the principal USD
LIBOR submitter) was responsible for a JPY LIBOR submission. See notes 41–42,
ante.
Allen, 160 F. Supp. 3d at 696–97.
188
79
III. CONCLUSION
To summarize:
(1) The Fifth Amendment’s prohibition on the use of compelled
testimony in American criminal proceedings applies even
when a foreign sovereign has compelled the testimony. To be
clear, we do not purport to prescribe what the U.K. authorities
(or any foreign authority) may do in their witness interviews
or their criminal trials. We merely hold that the Self‐
Incrimination Clause prohibits the use and derivative use of
compelled testimony in an American criminal case against the
defendant who provided that testimony.
(2) When the government uses a witness who has been
substantially exposed to a defendant’s compelled testimony, it
is required under Kastigar v. United States, 406 U.S. 441 (1972),
to prove, at a minimum, that the witness’s review of the
compelled testimony did not shape, alter, or affect the evidence
used by the government.
(3) Where, as here, the witness’s account of events before
exposure was significantly different, and less incriminating,
than the testimony ultimately used against the defendants, the
witness’s bare, generalized denial of taint—here, the witness’s
conclusory responses to the Government’s leading questions
during the Kastigar hearing—is insufficient as a matter of law
to sustain the prosecution’s burden of proof.
80
(4) In this prosecution, Defendants’ compelled testimony was
“used” against them through evidence provided by a tainted
witness, a key cooperator and prominent witness both at trial
and (via a hearsay presentation) before the grand jury. This
tainted testimony was significant both at trial and in the grand
jury, because it provided the only first‐hand eyewitness
account that refuted the Defendants’ central argument for
acquittal, and was therefore not harmless beyond a reasonable
doubt.
For the foregoing reasons, we REVERSE the judgments of
conviction and hereby DISMISS the indictment.
81
