TIMOTHY L. BROOKS, District Judge.
On August 2, 2018, the Court entered an Order announcing its intent to dissolve paragraph 4 of the Protective Order previously filed at Doc. 14, and to unseal all filings in this case that were sealed solely pursuant to that Protective Order unless they pertain to matters that were not publicized at trial or at a 3-day public hearing that was held on January 25, January 26, and February 15. See Doc. 425. In that August 2 Order, the Court gave the parties a deadline of August 9, 2018 by which to object to this proposed course of action. See id. at 2. All parties filed timely responses to the August 2 Order. Defendant Jonathan Woods stated that he has no objection. See Doc. 435. Defendants Oren Paris and Randell Shelton reasserted their prior motions to dissolve the Protective Order entirely; but alternatively, they concurred in the Court's proposed course of action while requesting that the Court also dissolve paragraphs 1-3 and 7 of the Protective Order. See Doc. 430, pp. 1-2; Doc. 434. The Government objected to dissolving paragraph 4 of the Protective Order, but consented to unsealing the filings that the Court identified in its August 8 Order, provided that certain redactions be made. See Doc. 433.
The Court has reviewed the Government's proposed redactions, and finds them to be appropriate. The Court agrees with the Government that all of those proposed redactions appear to contain either "Grand Jury information," or "other personal and sensitive information" about third parties that has no relevance to any of the Court's rulings in this case. See id. at 2. Accordingly, the Clerk of the Court will be instructed to unseal the documents previously identified in the Court's August 8 Order, but with the Government's proposed redactions, as further specified at the end of the instant Order.
The Court has also considered the parties' arguments about whether various paragraphs in the Protective Order should be dissolved. Messrs. Shelton and Paris argue that there is no longer good cause for keeping the Protective Order in place because at the aforementioned hearing and trial "the vast majority of this information has been disseminated in one form or another," and "[a]ttempting to ascertain what specific needle in the haystack of this discovery . . . has been put on public display as opposed to what has not is nearly impossible." See Doc. 430, p. 4. But while the Court agrees that good cause no longer exists to protect information that has already entered the public record, the Court does not share the idea that this is an all-or-nothing proposition. Indeed, the Court believes the task of separating the needles from the haystack has largely already been accomplished, through the Court's identification of filings to be unsealed and the Government's responsive identification of excerpts from those materials that should be redacted. And although the Court does not intend at this time to dissolve the paragraphs of the Protective Order that restrict the Defendants' ability to share discovery with third parties, see Doc. 430, pp. 2-3 (Mr. Shelton arguing that the Court should dissolve paragraphs 1 through 3 of the Protective Order), the Court believes that this Order's unsealing of numerous filings in this case will largely moot whatever concerns might otherwise weigh against lifting or easing the Protective Order's restrictions on sharing discovery materials or their contents. After all, the Government, Defendants, and all other members of the public, are free to direct anyone's attention they wish to any material that is filed on the public docket in this or any other case.
Going the other direction, the Government takes the position that the entire Protective Order should remain in place—including paragraph 4, which the Court had proposed dissolving, and which reads: "Should the Defendants include discovery materials or their contents in a pleading or other court filing, that document shall be filed under seal." (Doc. 14, ¶ 4). See Doc. 433, p. 2. The Government contends this provision remains necessary in order to act "as a continued safeguard to protect future pleadings or other Court filings that may contain certain discovery materials or their contents that should be filed under seal." See id. Given that the Court is persuaded that some of the materials it was contemplating unsealing should be partially redacted, the Court likewise agrees that there is some ongoing need for protection of materials whose contents should be filed under seal. However, as with Messrs. Paris's and Shelton's arguments above, the Court does not believe this is an all-or-nothing situation. Accordingly, and as further specified at the end of the instant Order, the Court will amend paragraph 4 of the Protective Order to exempt from its scope materials for which there is no longer any ongoing need for protection.
COMES NOW, Defendant Dr. Oren Paris III, by and through undersigned counsel, and in accordance with his rights recognized under the Fifth and Sixth Amendments of the Constitution of the United States, and pursuant to Rule 12(b)(3)(C) of the Federal Rules of Criminal Procedure, files his Motion to Suppress the Proffer Statements of Jon Woods, and the fruits thereof, including, but not limited to, clandestine audio recordings, made as a result of coercive or other improper inquisitional tactics and outrageous government conduct, for lack of conflict-free counsel, that may not be used against Dr. Paris as offending of constitutional principles, and in support whereof states and alleges as follows:
On November 11, 2015, FBI Special Agent Robert Cessario and IRS Special Agent John Munns, accompanied by United States Attorney Kenny Elser and Department of Justice Assistant United States Attorney Sean Mulryne, interviewed Arkansas State Senator Jon Woods at the office of Fayetteville attorney W.H. Taylor, Mr. Woods' retained counsel. In the course of the interview, granted under a FRCP Rule 11 proffer agreement, Woods provided information to the Government about various alleged schemes of financial impropriety involving a number of individuals, players both inside and out of the State government of Arkansas. One such scheme outlined in the Woods" proffer was that he, Woods, was involved in a "kickback scheme" regarding Arkansas General Improvement Fund ("GIF") grants to a local college whose President is Defendant Dr. Oren Paris, III. Woods proceeded to allege that Dr. Paris had full knowledge and was an active participant in said scheme.
On its face the Woods proffer is given under the most ordinary of circumstances. During an interview by Government agents in the presence of two DOJ attorneys and his own counsel, Mr. Woods seems to have voluntarily related a story consistent with the government's theory of the case. Through discovery, however, counsel for Dr. Paris has become aware of the true nature of the transaction that varies substantially from the scene taken at face value. In an audio recording made surreptitiously of a subsequent conversation between Jon Woods and Arkansas State Representative Micah Neal by Mr. Neal, Mr. Woods discussed the somewhat less than harmonious circumstances under which he gave his November 11, 2015 testimony to the government:
WOODS: So, they said "We know you got money out of that 2 million."
And I said, "the governor took a million." I said, "Rusty only got a million out of that and I don't know what he did with it."
"You're lying to us" and "you got a portion of that and we know it," and blah, blah, blah, blah, blah, blah, blah. "We know you got some." and, uh, and "we know you did" and they can't prove it so they got pissed and they got mad and whatever and I never did get anything out of the million and they think I did so they're pissed and they think I'm lying on that so they're they're threatening me with indictment, [REDACTED\]
NEAL: [REDACTED\]
WOODS: [REDACTED\]
NEAL: [REDACTED\]
WOODS: It's weak.
NEAL: Yeah.
WOODS: So W.H. says "Jon, you better fucking start telling everybody everything."
And they said, "Well, we want to talk to you about the college right now."
And I was like, "Well, what do you want to know?"
And they said, "Well, we think you got a cut out of that and we've got a paper trail from Randell to you and we think there's others involved" and blah, blah, blah, blah, blah.
And I was like, "Dude, look. I . . . I don't know what you're talking about, but any money that Randell has ever given me is a loan."
And they go, "That's bullshit."
And I said, "No." I was like, "We actually have a loan agreement where, you know, I'm paying him monthly on the money he's loaned me."
And W.H. goes "Come here!" And he gets me out in the hallway and he goes, he goes, "Quit fucking lying! Get your ass back in there, tell them the flicking truth. You embezzled money, you stole money from the State through Ecclesia, through Oren, through Randell. You're doing at least 18 months. Get your ass back in there. I'm trying to reduce it down, say even, you know, 6 months, and if you don't cooperate they're gonna, they're gonna, do you, do you, in for 10 years," and blah blah, blah, blah, blah.
So I get back in there and they're like, "Who the fuck?" And they're like, "Who else has gotten money? Who else has gotten money?"
And I was like, "Man, I don't know, I don't know."
And they're like, "Well, we think you know and we think you're, we think there's people, and we think there's others," and, urn, I'm, they never once brought your name up. Never. Not once. Ever. Ever.
And, um, and I was just like, you know, just sitting there and they're just grilling me, grilling me, grilling me, grilling me and that was our first meeting. Then we had another meeting and they're grilling me.
And they're like, you know, "What else have you seen down there?"
And now I know that they don't have anything on me because they're asking me what else, what other rumors have I heard and that kind of stuff.
NEAL: On other legislators?
WOODS: Yeah. Like, "have you heard anything at all about anything else down here while you've been here, and tell us everything you know."
And I'm like, "Man, you know, I've heard this, this, and this, but I. . . ."
And they're like, "Were you in the room?"
I was like, "No."
"Do you know when?"
I was like, "No." I was like, I. . . .
NEAL: It's hard to prove any of that shit.
WOODS: I was like, "Guys, I. . . ."
NEAL: It's all rumor.
WOODS: Yeah. I was like, "Guys, I have no. . . ."
NEAL: It's all rumor.
WOODS: "I have no idea. I have no fucking clue."
And W.H. started getting really, really mad at me. He's like, "You know, and you're not telling them."
And he's like dogging on me.
And you sign this truth for a day thing whereas nothing you say can be used against you. It's called a proffer agreement. So I signed one of those, and so nothing I say can be used against me.
And they're like. . . . I mean, they were really grilling hard. I mean, they're like, "Did you give any money to anybody at all?"
And I was like, "No."
"You swear you never gave any to anybody at all?"
"No."
And W.H. is like, "Why are you lying?" Blah, blah, blah, blah, blah.
NEAL: How does W.H. say you're lying whenever you're sitting in there?
WOODS: I know.
NEAL: Did you tell W.H. about giving money to people?
WOODS: And . . . when I met with W.H., I said . . . I said, "W.H., there are some other people that did get . . . that did get some, and they can't prove it, and I'd rather just take the fall."
And he goes, "No, you . . . you need to tell them who it all was and how and where and when," and all that sort of stuff.
And I was like, "I don't . . . why would I do that? Why would I get them in trouble?"
And he goes, "Because I'm trying to lessen your time." And nah, nah, nah, nah, nah. And he was getting really mad and really pissed at me.
And so we had this other meeting, and they kept grilling me on the college. And Oren and Randell are saying, "We've loaned Jon money, and Jon . . . Jon has loans with Randell, and it's totally legal."
And W.H. got real mad again.
From the general tenor of the conversation, it appears that Woods' legal counsel was acting less as an advocate for his client than an agent for the government. The berating of his client seems so contrary to the interests of advocacy on his behalf and so coercive, that the behavior appears agenda driven, casting significant doubt upon the veracity of every allegation contained in the resulting proffer statement. Despite the fact that Woods' signature appears on the proffer letter provided by the Government, his statements can in no way be said to be voluntary, the product of his free and unconstrained choice, and is an offense to due process. Schneckloth v. Bustamonte, 412 U.S. 218, 225-26 (1973). Not only were Woods' due process rights violated, by implication so also were the due process rights of any other person denounced in the statement resulting from the unconstitutional coercion, specifically including Dr. Paris. See, Fugate v. Gaffney, 453 F.2d 362 (8th Cir. 1971). While Dr. Paris has no standing to defend Woods' rights against self-incrimination, of course, he certainly is able to seek the sanctuary of his own 5th Amendment due process protections. United States v. House, 825 F.3d 381, 388 (8th Cir. 2016). Certainly, and without question. "It is now axiomatic that a defendant in a criminal case is deprived of due process of law if his conviction is founded, in whole or in part, upon an involuntary confession, without regard for the truth or falsity of the confession. . . ." Jackson v. Denno, 378 U.S. 368, 376 (1964). "Equally clear is the defendant's constitutional right at some stage in the proceedings to object to the use of the confession and to have a fair hearing and reliable determination on the issue of voluntariness, a determination uninfluenced by the truth or falsity of the confession." Id. Though Jackson v. Denno applied to the circumstances of a defendant's own confession and the implication on his Fifth Amendment right against self-incrimination, House applies the same analysis to a defendant seeking to challenge the confession of a witness to protect his own Fifth Amendment right to due process. House, supra.
In fairness, it cannot be categorically stated that at least some degree of prompting is sometimes used by criminal defense attorneys as a tactic to dislodge an intransigent client to engage in reasonable plea negotiations in their best interest. A plea deal fairly resulting from such negotiations cannot always be said to be coercive. In this instance, however, the totality of the circumstances including the elements of intensive questioning by government agents, the undue pressure from his own attorney and the express or implied promises of a plea deal was sufficiently coercive, outrageous and intolerable to overcome Mr. Woods' will, thus rendering the proffer involuntary. And an involuntary statement offends due process. Schneckloth, supra.
Mr. Neal raises a cogent point in questioning the propriety of Mr. Woods' own attorney accusing him of lying in front of government attorneys and agents. In the same recording, Mr. Woods alludes to a situation that may provide some degree of clarification. What follows is from the same audio recording of the conversation between Mr. Neal and Mr. Woods, though while it cannot currently be corroborated by counsel for Dr. Paris, remains curious. It is included here for whatever probative value it may have since it was produced independently in discovery by the government:
[REDACTED\] [REDACTED\]
Regardless of the substance of the allegations made by Mr. Woods against his attorney, through access to records available to the public on AOC CourtConnect, an online access portal provided by the Arkansas Judiciary available to the general public that allows access to case information, counsel for Dr. Paris has become aware of another odd circumstance affecting the proffer interview of Jon Woods and raising significant due process issues. As noted above, FBI Special Agent Robert Cessario attended the interview of Mr. Woods that was memorialized in a written report. The FBI report (the "302") of the interview was drafted and signed by Special Agent Cessario, noting that "Present during the interview was Department of Justice Assistant United States Attorney Sean Mulryne, United States Attorney, Kenny Elser, IRS-CID Special Agent John Munns and attorney representing WOODS, W.H. Taylor." A reasonable inference, therefore, is that not only was S.A. Cessario present but that he conducted part of the interview. The defense has not been provided an audio version of said interview, if one exists, though the proffer letter leaves that option open to the government. Mr. Woods' statements incriminate Dr. Paris.
Nowhere in the records, however, does the following information bearing on the propriety of the interview appear, nor has it been disclosed by the government: On the 12th day of February, 2014, Stephani Cessario filed a Complaint for Divorce in the Circuit Court of Benton County, Arkansas, Case No. DR-2014-219-4, seeking dissolution of her marriage from her then-husband, Robert Cessario. Two days later, filing an Answer and Counterclaim in the divorce action on behalf of his client, Robert Cessario, was none other than the aforementioned W.H. Taylor, Esq. The present criminal investigation was initiated by the FBI on July 24, 2014. A decree of divorce in the Cessario case was entered August 15, 2014. Fourteen months later, W.H. Taylor is representing Jon Woods in plea negotiations with the government, sitting across the same conference table, presumably, where he met with his former client, from Special Agent Robert Cessario. Oddly, W.H. Taylor also instructed Mr. Woods to meet with Special Agent Cessario two more times, without himself present, on November 20, 2015 and December 10, 2015, during which time Woods was again interviewed esulting in his being engaged as a confidential human resource, i.e., an undercover government informant. Since that time, Jon Woods has prudently retained alternate counsel.
"The right to counsel guaranteed by the Constitution contemplates the services of an attorney devoted solely to the interests of his client." Van Molte v. Gillies, 332 U.S. 708, 725 (1942), citing Glasser v. United States, 315 U.S. 60, 70 (1942). For the ethical implications of the Woods-Taylor-Cessario arrangement we must look to the law of the State since Rules of Ethics are a distinct state responsibility. The Arkansas Supreme Court has clearly expressed its opinion on even the appearance of impropriety, when it said, "[w]e have consistently taken strong positions in situations where the public's confidence in attorneys might be eroded by the appearance of conflict of interest." First American Carriers v. Kroger Company, 787 S.W.2d 669, 671 (1990). Citing the American Bar Association Committee on Professional Ethics and Grievances, Formal Opinion 282 (1950), it proceeded: "[The] essential point of ethics involved was that the lawyer so employed would represent . . . his client with undivided fidelity." Id. Can it categorically be said that Mr. Taylor's interest in advising his client was free of the influence occasioned by his attorney-client relationship with S.A. Cessario? Can a zealous and effective defense be expected of the shepherd when the wolf appears in sheep's clothing? The course of events certainly raises the appearance of impropriety. At the very least, Mr. Woods should have been advised of the potential conflict and been given the opportunity to waive said conflict in writing or seek conflict-free counsel. Rule 1.7(a) of the Arkansas Rules of Professional Conduct states that "a lawyer shall not represent a client if the representation involves a concurrent conflict of interest." The rule defines "concurrent conflict of interest" as "a significant risk that the representation of one or more clients will be materially limited by the lawyer's responsibilities to another client, a former client or a third person or by a personal interest of the lawyer. ARPC Rule 1.7(a)(2). Subparagraph (b) of the same Rule allows the lawyer to represent the client even in light of an apparent conflict if "each affected client gives informed consent, confirmed in writing." ARPC Rule 1.7(b)(4). If Jon Woods was advised that there existed a potential conflict between W.H. Taylor's representation of him and that of his former client Mr. Cessario, together with the assurance that said conflict would not deter Mr. Taylor in the zealous protection of Mr. Woods constitutional rights, specifically his rights to conflict-free counsel and against self-incrimination, his written waiver of conflict as required by the Arkansas Rules of Ethics does not appear in the record. Neither does a written waiver or any acknowledgement of the potential conflict executed or drafted by S.A. Cessario. Should either exist, the aforementioned coercive circumstances under which a waiver, written or otherwise, would have been executed or acquiesced to by Mr. Woods, would have been no less the product of such coercion or duress and the waiver no less unknowing and involuntary as the substance of the resulting proffer statements. There exists a stench of fundamental unfairness tainting the entire set of circumstances surrounding the interviews of Jon Woods by federal investigators that needs purged. The remedy is available to this Court. "Federal courts have an independent interest in ensuring that criminal trials are conducted within the ethical standards of the profession and that legal proceedings appear fair to all who observe them." Wheat v. United States, 486 U.S. 153, 160 (1988). Moreover, "[u]nless a defendant charged with a serious offense has counsel able to invoke the procedural safeguards that distinguish our system of justice, a serious risk of injustice infects the trial itself." Covey v. United States, 377 F.3d 903, 906 (8th Cir. 2004), citing Cuyler v. Sullivan, 446 U.S. 335, 343 (1980). And "if a defendant . . . can show `an actual conflict of interest [that] adversely affected the lawyer's performance' prejudice may be presumed." Id. at 907. Considering the fundamental constitutional propositions at issue regarding voluntariness and coercion, self-incrimination and due process, Mr. Taylor should have recused himself prior to the interview involving his past and present clients. That the interview proceeded regardless should trigger suppression.
There is sufficient evidence both due to the element of coercion and the absence of conflict-free counsel to render the statements contained in the November 11, 2015 proffer statement given by Mr. Woods, and the fruits thereof, inadmissible. It is the further belief of counsel for Dr. Paris that the proffer statement of Mr. Woods precipitated the entire investigation that led to the indictment of Dr. Paris, and that without said proffer statement, and the fruits thereof, the government is without sufficient evidence to proceed against Dr. Paris.
Having noted here the existence of the clandestine audio recordings of conversations between Jon Woods and Micah Neal by Mr. Neal, the propriety of those recordings begs for examination. In prior filings with the Court, Mr. Woods has challenged the admissibility of a series of audio recordings of conversations made by Micah Neal to which Jon Woods is a party in violation of his Sixth Amendment right to counsel. Doc. 63. The government responded, in part, that Mr. Neal was not acting on behalf of the government, and in support whereof asserts that "[a]lthough the government was aware of Neal's interactions with Woods, it never directed or coached Neal to conduct any recordings with him. On the contrary, the government expressly advised Neal and his attorney that the government was
Setting aside for a moment the suppression issues, the government response to Mr. Woods' Motion also raises a significant Brady material issue. The government describes the substance of a conversation between government agents and Mr. Neal and his counsel in denying that it directed Neal to engage in his undercover recordings. In so doing, it relates a conversation that appears nowhere in the records produced by the government, so defense counsel is somewhat at a loss either to admit or deny said claim. If the conversation appears in the agents' notes those notes are discoverable and should be produced.
The government here proposes a scenario in which a discussion takes place between the government, Mr. Neal and his attorney, regarding the surreptitious taping of a conversation between Mr. Neal and Mr. Woods, purportedly unprompted by the government. Eight days later the government scheduled a second interview with Mr. Neal during which time he related, and the government heartily consumed, the intelligence gathered the previous day during which matters touching on the attorney-client privilege and insight into defense strategy are disclosed. The government can deny the agency of Mr. Neal until it is blue in the face, but the totality of the circumstances dictate that this blatant violation of due process was perpetrated with the full knowledge and abiding acquiescence of investigators and attorneys for the government, as a purposeful and deliberate invasion into the thoughts and processes of the defense team in order for the government to acquire knowledge helpful to them in the prosecution of this case, conduct that is beyond outrageous. The 8th Circuit has adopted a test initially expressed in a case out of the 3rd Circuit, United States v. Voigt, 89 F.3d 1050, 1067 (3d Cir. 1996), that sets out a three-pronged test for determining whether there is a "colorable claim of outrageousness pertaining to alleged governmental intrusion into the attorney-client relationship." Williams, supra, at 686. The Voigt test requires the defendant alleging an intrusion to prove, "(1) the government's objective awareness of an ongoing, personal attorney-client relationship []; (2) deliberate intrusion into that relationship; and (3) actual and substantial prejudice." Id. Jon Woods retained W.H. Taylor on October 26, 2015, and as noted above, he was represented by Mr. Taylor during the interview by government officials on November 11, 2015. Since the clandestine audio recording contain a detailed reference to said interview, said recordings necessarily occur during the pendency of an attorney-client relationship and the government was obviously aware of the existence of that relationship, as well as a subsequent one with Mr. Benca. Deliberate intrusion in those relationships can be readily gathered from the following outtakes from the audio recording referenced above:
And a little later:
Clearly, Micah Neal intended to gain both information regarding privileged attorneyclient conversations and insight into the defense strategy of his potential co-defendants for the government's consumption and use. Both are significant enough intrusions into not just the relationship between Mr. Woods and his attorney, but with Mr. Shelton and Dr. Paris and their respective attorneys sufficient to meet the Voigt outrageousness standard. Just as clearly, the government aided and abetted Mr. Neal's misconduct. As an aside, though the government curiously argues in its denial that it neither directed nor "coached" Mr. Neal in recording his conversation with Mr. Woods, the use of distinctive terminology by Mr. Neal in assuring Mr. Woods that he only wants to know that "we're on the same page," is a recurrent theme throughout undercover recordings produced by the government, suggesting otherwise. The unique phraseology appears to be a common tactic used by "wired" government informants whenever the person being recording is not being cooperative in volunteering the desired incriminating responses, and as a means by which to stay on topic in the effort to perhaps prompt a different or more useful response. It is a phrase repeatedly used by Mr. Woods to the point of conspicuousness when he himself is wired, and undoubtedly coached, by government agents while recording conversations with Mr. Neal, et al.
Contact with persons represented by counsel is a sufficiently serious consideration that the FBI has produced a rule about it. "CDC (Chief Division Counsel) review is required before contact with represented persons. Such contact may implicate legal restrictions and affect the admissibility of resulting evidence."
The Supreme Court evaluated a similar instance of intrusive conduct in Weatherford v. Bursey, 429 U.S. 545 (1977). In that case, a state undercover agent, Weatherford, was arrested along with a defendant, Bursey, with whom he was purporting to provide assistance in a criminal endeavor so that his undercover identity would not be revealed. Subsequently, Weatherford participated in a meeting with Bursey and his defense counsel, Wise. The Court overturned the Fourth Circuit's reversal of Bursey's conviction since the government intrusion into the attorneyclient relationship failed to disclose "any details or information regarding [] trial plans, strategy, or anything having to do with the criminal action pending. . . ." Id. "There being no tainted evidence in this case, no communication of defense strategy to the prosecution, and no purposeful intrusion by Weatherford, there was no violation of the Sixth Amendment. . . ." Id. In this case we have all three. Suggesting outrageousness of the government's conduct in this case is the admonition given by Justice Marshall in his dissent in Weatherford. "I cannot join in providing even the narrowest of openings to the practice of spying upon attorney-client communications." Id., (J. Marshall, dissent, joined by J. Brennan). Further:
Further, said Justice Marshall, "In my view, the `balance of forces between the accused and his accuser' is sharply skewed in favor of the accuser if the government's key witnesses are permitted to discover the defense strategy by intercepting attorney-client communications. . . ." Id. at 563-64. Justices Marshall and Brennan were incensed by purposeful government intrusion into the attorney-client relationship for conduct less egregious than what we have here and that did involve the disclosure of defense evidence and trial strategy. As noted by the majority opinion, "unless Weatherford communicated the substance of the Burley-Wise conversations and thereby created at least a realistic possibility of injury to Bursey or benefit to the State, there can be no Sixth Amendment violation." Id. at 558. The undercover recording did so communicate, a basis upon which the majority and the dissent in Weatherford could agree.
Regarding the proposition whether Dr. Paris has been prejudiced by the foregoing outrageous behavior, USA Elser has already referenced the existence of a "joint defense agreement" in its argument to the Court during the hearing on Dr. Paris' Motion to Sever. The existence of a joint defense agreement, or lack thereof, is of no consequence to the government which was by no other means privy to that information other than from the surreptitiously recorded conversation. What is of consequence is the fact that a product of the attorney-client communications has already made its way into the prosecution strategy, laying to rest the argument that Dr. Paris has not already been prejudiced. "We need not agree . . . that whenever a defendant converses with his counsel in the presence of a third party thought to be a confederate and ally, the defendant assumes the risk and cannot complain if the third party turns out to be an informer for the government who has reported on the conversations to the prosecution and who testifies about them at the defendant's trial." Weatherford, supra at 555. While Neal was not physically present at an attorney-client conference, the effect is the same. "Nevertheless, it might be argued that Weatherford, a dutiful agent, surely communicated to the prosecutors Bursey's defense plans and strategy and his attorney's efforts to prepare for trial, all of which was inherently detrimental to Bursey, unfairly advantaged the prosecution, and threatened to subvert the adversary system of criminal justice." Id. Mr. Neal was a dutiful agent. All of the above-described government activities entail purposeful intrusion by the government, via Mr. Neal, a Sixth Amendment violation prejudicing Mr. Woods, resulting in a violation of Fifth Amendment due process protections prejudicing Dr. Paris and meeting the Voigt test for outrageousness.
WHEREFORE, Defendant Dr. Oren Paris III prays that the.Court sustain his Motion to Suppress the proffer statement given on November 11, 2015 in this case by Defendant Jon Woods to the government, and the fruits thereof, including, but not limited to, the subsequent clandestine audio recordings, as the result of outrageous government conduct, the lack of conflict-free counsel and unlawful government intrusion into the attorney-client relationship all in violation of his Fifth and Sixth Amendment rights to counsel and due process, and for any such other and further relief the Court deems just and proper.
I hereby certify that a copy of the foregoing Motion to Suppress under seal, was served by CM/ECF this 8th day of September, 2017, to the following:
Comes now the United States of America, by and through the United States Attorney for the Western District of Arkansas, and for its Response to Defendant Shelton's Motion to Compel Notice of 404(b) Evidence Forthwith (Doc. 102) submits as follows Under Seal:
This case is scheduled for a jury trial commencing December 4, 2017. The Government provided discovery containing intrinsic res gestae evidence
Rule 404(b)(2), states in pertinent part: "On request by a defendant in a criminal case, the prosecutor must: (A) provide reasonable notice of the general nature of any such evidence that the prosecutor intends to offer at trial; and (B) do so before trial—or during trial if the court, for good cause, excuses lack of pretrial notice." Fed. R. Evid. 404(b)(2). "Other than requiring pretrial notice, no specific time limits are stated in recognition that what constitutes a reasonable request or disclosure will depend largely on the circumstances of each case." Fed. R. Evid. 404 note (1991 Amendments). "Factors to consider in determining the reasonableness of the government's pretrial notice . . . include: (1) the time when the government could have learned of the availability of the evidence through timely preparation for trial; (2) the extent of prejudice to [the] defendant from lack of time to prepare; and (3) how significant the evidence is to the government's case." United States v. Green, 275 F.3d 694, 701 (8th Cir. 2001).
A majority of courts that have considered the issue of "reasonable notice" have determined that 30 days or less constitutes reasonable notice. See United States v. Lindsey, 702 F.3d 1092, 1097 (8th Cir. 2013) (notice one month before trial held to be reasonable); but see United States v. Daugerdas, 2011 WL 573587, *2 (S.D. N.Y. February 16, 2011) (notice month before trial not reasonable where defense had requested 404(b) evidence almost a year earlier).
As set forth in Section III below, the Government gives formal notice of its intent to present evidence that it asserts, other than the transaction set forth in Section III G, is admissible as intrinsic to the charged conduct in the Second Superseding Indictment, and as "evidence of a crime, wrong or other act" for the purpose of "proving motive, opportunity, intent, preparation, plan, knowledge, identity, absence of mistake, or lack of accident." Fed. R. Evid. 404(b). "Rule 404(b) is a rule of inclusion, prohibiting only evidence that tends solely to prove the defendant's criminal disposition." United States v. Shaffner, 71 F.3d 1429, 1432 (8th Cir. 1995). "To be admissible as Rule 404(b) evidence, the evidence must be `(1) relevant to a material issue; (2) proved by a preponderance of the evidence; (3) higher in probative value than in prejudicial effect; and (4) similar in kind and close in time to the crime charged.'" Id. The Government will prove the following transactions are relevant to show Woods' motive, intent, preparation, plan, knowledge, and absence of mistake in directing General Improvement Funds (GIF) money as charged in the Second Superseding Indictment to Decision Point doing business as Ameriworks and to Ecclesia College as part of a kickback scheme.
On September 10, 2013, Arkansas Health and Economic Research Inc. (AHER) was incorporated in Arkansas. On September 18, 2013, the Northwest Arkansas Economic Development District (NWAEDD) Board of Directors approved a $20,000 GIF grant for AHER which was directed and approved by State Senator Woods. On September 27, 2013, [REDACTED\] and Randell Shelton established a checking account for AHER at Arvest Bank. This occurred the same day that Shelton established an account for Paradigm Strategic Consulting LLC (Paradigm) at Arvest Bank.
In December 2013 and December 2014, State Representative Micah Neal directed and approved NWAEDD GIF grants totaling $14,198 to AHER. It is anticipated that Neal will testify that Woods influenced him in directing this funding. On March 19, 2014, the NWAEDD board approved a $5,000 grant to AHER that was directed and approved by State Senator Bart Hester. It is anticipated that Hester will testify that Woods requested that he approve this GIF grant as well as a $30,000 GIF grant to Ecclesia College as alleged in the Second Superseding Indictment. Woods sent Hester a text message on February 3, 2014 stating:
The Government anticipates that evidence will show that Shelton used the AHER money for food and gas and for purchases unrelated to the medical research.
On December 11, 2013, Shelton emailed Paris GIF grant materials for the West Central Arkansas Planning and Development District ("WCAPDD"). The WCAPDD is one of the eight planning and development districts recognized by Arkansas law and is comprised of Johnson, Pope, Conway, Yell, Perry, Montgomery, Garland, Pike, Clark, and Hot Spring counties. Dwayne Pratt was the Executive Director of the WCAPDD.
On December 12, 2013, Paris texted Shelton telling him that an Ecclesia College employee "needs the name for the app." Shelton responded, "Ok tell him him [sic] Sen. Michael Lamoureux is the name. Either u or Mike needs to call Dwayne and let him know it is being sent to him via email and it is for $50,000 — and find out if u need to also overnight the hard copy." Paris, on behalf of Ecclesia College, submitted an application dated December 12, 2013 to the WCAPDD requesting a $50,000 GIF grant. The application listed Senator Michael Lamoureux, as the sponsoring legislator.
On December 18, 2013, an email was sent on behalf of State Senator Woods, District 7 to Pratt attaching a letter written on State of Arkansas Senate letterhead and signed by Woods supporting Ecclesia College's application for a G1F grant. On that same day, Woods emailed Paris forwarding to Paris a copy of the letter of support and email to Pratt and stating, "I had to write a support letter today. Just FYI. Hope you are doing well." On or about December 20, 2013, WCAPDD check #19867 in the amount of $50,000.00 was issued to Ecclesia College. On December 20, 2013, an Ecclesia College check for $25,000 to Paradigm, was deposited into the Paradigm Arvest Bank account. On December 21, 2013, Shelton withdrew $21,000 in cash from the Paradigm Arvest Bank account.
On March 11, 2014, Shelton sent Paris a text with the address, email address, phone and fax number for Pratt at the WCAPDD. Shelton then texted Paris, "Please fax and email the app." On that same date, an employee of Ecclesia College emailed Pratt an application signed by Paris which requested a $50,000 GIF grant from WCAPDD for Ecclesia College. The application listed Senator Lamoureux, as the sponsoring legislator. On or about March 12, 2014, a letter written on State of Arkansas Senate letterhead and signed by Woods was sent to Pratt supporting Ecclesia College's application for a GIF grant.
On or about April 1, 2014, WCAPDD check #20169 in the amount of $50,000.00 was issued to Ecclesia College. On April 4, 2014, Ecclesia College issued a check for $25,000 to Paradigm which was deposited that same day into the Paradigm Arvest Bank account. Shelton made cash withdrawals from the Paradigm Arvest Bank account of $1,500 on April 5, 2014, $13,000 on April 7, 2014, and $7,000 on April 16, 2014.
On January 5, 2015, Elizabeth Newlun, an employee of Ecclesia College, emailed Woods attaching a document and stating in part, "This is the document that is holding us up on proceeding with the BSEd. (Education Degree Program)". Woods forwarded the email to Sarah Ganahl, a Legislative Attorney, at Arkansas Bureau of Legislative Research (BLR), a state agency that does work on behalf of legislators including drafting bills, stating:
Paris responded to Woods' email, "Thank you, Jon. I look forward to knowing what she says."
On January 6, 2015, Ganahl replied to Woods, explaining that the options he had available were to contact the State Board of Education to see if they would change the rule or amend the law. Woods replied, with copy to Paris, asking for a point of contact for him to call. Ms. Ganahl emailed and recommended Woods contact a person at the Arkansas Department of Education that was involved in licensure and programs.
On January 12, 2015, Woods forwarded to Paris emails from two officials at the Arkansas Department of Education stating, "Oren Congratulations! Read below." In one of the emails, the Director of the Office of Educator Licensure at the Arkansas Department of Education emailed an employee at Ecclesia College with copy to Paris and Woods stating, "After further reviewing the law, our educator licensure rules, and our policies governing educator prep programs, we will be working to align our policies with our educator licensure rules to reflect national
On August 19, 2014, Paris and Shelton opened an account at Arvest Bank for Roof Recovery and Recycle LLC, an Arkansas corporation which was incorporated on August 13, 2014. The Operating Agreement for Roof Recovery and Recycle, LLC showed Woods, Shelton, Paris and two others each held a 20% membership in the business with Paris Shelton and another member managing the company with its principal place of business at Patton House
In December 2014, Shelton, Paris and another individual formed a company called Shingle Resource Recycling, LLC, a limited liability company with its principal place of business at 8532 Carrie Smith Road, Springdale, AR 72762
On February 17, 2015, Woods sponsored Senate Bill 393 that became Act 441 of 2015. Act 441 provided for an appropriation to the ADEQ from the General Improvement Fund (GIF) in a sum not to exceed $250,000 for "a grant for a pilot program for personal services and operating expenses, research, testing, commercial plant design, equipment acquisition, site development, infrastructure costs, construction, regulatory compliance, product marketing for separating all the components that make up roofing shingles including the asphalt cement, so they can be recovered, recycled and sold to reduce the amount of material going into the waste streams and landfills."
On July 2, 2015, Woods forwarded to himself, with a blind copy to Paris, an email dated July 1, 2015 from BLR employee Mathew Miller to Woods, which attached a draft of a Senate Joint Resolution listing Woods as Sponsor regarding amending the Arkansas Constitution to permit and regulate the use of medical marijuana. Section 15(5)(A) of the resolution provided that a portion of the proceeds from the taxation would go to "The Work College Fund, to be used exclusively for grants by the Department of Finance and Administration to work colleges as defined by 42 U.S.C. § 2756(b) as existing on January 1, 2016." Ecclesia College was and is the only work college in Arkansas.
The Government anticipates offering testimony from [REDACTED\] that in the Fall of 2012, he met in person with Woods at Woods's request. At that meeting, Woods told [REDACTED\] that there was talk of redistricting the Senate districts such that Woods and [REDACTED\] would be running against each other in the Senate race. According to [REDACTED\] Woods told [REDACTED\] that Woods would be willing to move out of [REDACTED\] district if [REDACTED\] would give him $10,000 or $12,000 ([REDACTED\] could not recall the exact dollar amount). Woods told [REDACTED\] that this type of relationship happened all the time in politics and that he would need to have the money in cash. [REDACTED\] will testify that [REDACTED\] told Woods [REDACTED\] did not do business that way and left the meeting.
Based upon the Notice of Evidence contained herein, the United States respectfully requests that the Court deny as moot the Defendant's Motion to Compel Notice of 404(b) Evidence Forthwith.
COMES NOW, Defendant Oren Paris, III, by and through his undersigned counsel, and in support of his Motion for Contempt pursuant to 18 U.S.C. § 401, F.R.C.P. Rule 42, Local Rule 83.5(e), Rule IV of the Model Federal Rules of Disciplinary Enforcement annexed thereto, and Rule 33(a)(1) of the Arkansas Rules of Professional conduct, states and alleges as follows:
1. On the 8th day of September, 2017, Defendant Dr. Paris filed his Motion to Suppress (Doc. 73), alleging, inter alia, the government purposeful intrusion into attorney-client relationships and defense strategy in violation of the 5th and 6th Amendments to the U.S. Constitution.
2. On the 18th day of September, 2017, the government filed its Response (Doc. 84) in which it denied the illegal intrusion, citing its lack of active or direct involvement in the clandestine recordings of conversations between co-defendant Jon Woods and unindicted coconspirator Micah Neal, by Micah Neal, during which said information was divulged.
3. In its denial, the government references its argument contained in its Response to the July 31, 2017 filing of a Motion and Request for Hearing filed by Jon Woods, Doc. 63. (Doc, 84, p. 13).
4. In the Response to Woods' Motion, the government represented to the Court the following:
(Doc. 67, p. 3)
5. The government made said representation in support of its argument that it did not have knowledge of the contents of the recording and, therefore, the evidentiary value and the nature of the intrusion into privileged communications, since the recordings were not in their possession until November 2, 2016.
6. Dr. Paris was at the mercy of the representation made by the government in drafting both the Motion to Suppress and the Reply to the Government's Response (Doc. 90) since he could only reasonably infer from the evidence available at the time what the government knew or did not know and when they did or did not know it.
7. On October 13, 2017 the government provided to defense counsel supplemental discovery in the form of a report containing text messages between counsel for Micah Neal, Shane Wilkinson, and the government's lead investigator, FBI Special Agent Robert Cessario.
8. One such text chain, dated April 13, 2016, is as follows ("W" = Wilkinson; "C" = Cessario):
9. Counsel is mystified as to the nature of the relationship between criminal defense attorney Shane Wilkinson and S.A. Cessario, but said text refutes the government's argument that it had no foreknowledge and took no advantage of the substance of the recordings and is further evidence of intrusion by the government into defense strategy, the interrogatory this time made directly by a government actor.
10. It is the government's misrepresentation to the Court as set forth in Paragraph 4 above, however, that is the subject of this Motion.
11. In the same production of text messages between Cessario and Wilkinson is to be found the following exchange, dated May 18, 2016, four and a half months prior to the November 2, 2016 date the government represented that Shane Wilkinson provided physical copies of said recordings, its content containing some fairly distasteful, locker-room discussion of Jon Woods and a purported paramour:
12. The government had in its possession copies of the recorded conversations between Jon Woods and Micah Neal, recorded by Micah Neal, on the 16th day of May, 2016, now a clear and indisputable fact in direct contradiction of representations made to defense counsel and to the Court in its pleadings of August 10, 2017, a fact that had to be known to the prosecution team when it made said representation, it having met with Micah Neal and counsel both before May 16, 2016 and since.
13. In its Response to the Motion to Suppress, the government argues that, "the government did not instigate or influence Neal to make a consensual recording with Woods;" (Doc. 84, p. 14).
14. The following appears in a text chain between Wilkinson and Cessario dated March 8, 2016:
15. Dr. Paris is at a loss to define "quick debrief' as anything other than the government's blatant attempt to "instigate or influence" Micah Neal in his surreptitious recording activities that were ongoing, or as Merriam-Webster defines it, "to interrogate someone, usually upon return in order to obtain useful information." Res ipsa loquitor.
16. Dr. Paris incorporates herein by reference, his recitation of the dates of meetings between Micah Neal and both investigators and attorneys for the government from his Reply to the government's Response to his Motion to Suppress (Doc. 90, p. 8), two of which took place after May 16, 2016.
17. The government can no longer refute not only knowledge of the content of said recordings, but actual physical possession, and has taken no steps to correct that false statement of fact in any subsequent pleading to the Court or by notice to defense counsel.
18. Rule 3.3 of the Arkansas Rules of Professional Conduct states as follows:
19. 18 U.S.C. § 401 states as follows:
20. Based on the foregoing, the government is in contempt based on violations of 18 U.S.C. § 401, F.C.C.P. Rule 42, Local Rule 83.5(e), Rule IV of the Model Federal Rules of Disciplinary Enforcement annexed thereto, and Rule 3.3(a)(1) of the Arkansas Rules of Professional Conduct.
WHEREFORE, Dr. Paris prays for an Order of the Court requiring the government to Show Cause why it should not be held in Contempt, for the Court to impose the appropriate sanctions as its discretion allows, and for such other and further relief the Court deems just and proper.
COMES NOW, Defendant Oren Paris III, by and through his attorneys, and respectfully moves to dismiss the Superseding Indictment under Federal Rule of Criminal Procedure 12(b)(3), and in support of his Motion states and alleges as follows:
Dr. Paris is charged by Superseding Indictment dated April 18, 2017, with fourteen (14) counts of Honest Services Wire Fraud in violation of 18 U.S.C. §§ 1341, 1343 and 1346.
Federal law criminalizes payments to State officials, excluding "gifts," given in exchange for the performance, or the promise to perform, an "official act." Those acts, in order to be deemed "official," must consist of a formal exercise of government power, and not be among the myriad of unofficial or ceremonial obligations of office. The allegations contained in the Superseding Indictment, even taken as true, fail to set forth the elements of the offenses alleged, or to fairly apprise Dr. Paris of the charges against which he must defend in several instances: (1) it fails to allege that any fraudulent material representations were made in the applications for GIF monies; (2) it fails to allege that the GIF proceeds were used for something other than the use for which they were applied; (3) it fails to allege the direct exchange of anything of value between Dr. Paris and either of the public officials named, in exchange for official acts, and (4) it fails to include allegations of value conferred upon public officials for their official acts, but instead attempts to portray legitimate political consulting and lobbying activities and routine constituent services as the illegal exercise of government power on behalf of Dr. Paris. Further, the Superseding Indictment and the allegations contained therein are the product of prosecutorial misconduct and coercive government activities and should be dismissed with prejudice.
The Superseding Indictment is defective in that "by no reasonable construction" can it be said to charge an offense" against Dr. Paris. United States v. Pennington, 168 F.3d 1060, 1064-65 (8th Cir. 1999). The Defendants, according to the Government, knowingly and willfully devised and intended to devise a scheme and artifice to defraud and deprive the citizens of Arkansas of the honest services of a public official through bribery . . ." in violation of 18 U.S.C. § 1346. Superseding Indictment, ¶ 12. What the Government has attempted to do here, however, is to criminalize routine, legitimate fundraising and lobbying activities and ordinary constituent services. As portrayed by the Government, otherwise innocent communications through text and e-mail are portrayed to take on a sinister appearance and legitimate fundraising and lobbying activities are made to seem ominous and conspiratorial. The Government in this case has strayed far afield from the limits established by U.S. Supreme Court decisions curtailing the efforts of federal prosecutors to distort the ordinary.
Since the enactment of § 1346, however, while honest services fraud was to be prohibited by law, the statute failed to define what it purported to prohibit. The Supreme Court has been forced to put meat on the bones of honest services fraud a number of times and its attempts have generally followed two lines of inquiry with an eye on avoiding unenforceable vagueness. First, what loss to the injured parties, if any, by benefits conferred upon officials in the exercise of their ethical or fiduciary obligations causes a deprivation of honest services? And second, what activities of an official are considered part and parcel of their official position such that accepting payments in exchange therefore deprives the injured parties of their right to honest services?
In its deliberation, however, the Court issued not so much a distinct definition of what official acts are, but what they are not, thereby rendering the term "official acts" as yet undefined. Recalling the words of Justice Scalia in United States v. Sun-Diamond Growers of California, 526 U.S. 398 (1999), the Court observed that "setting up a meeting, calling another public official, or hosting an event does not, standing alone, qualify as an `official act.'" McDonnell, supra. Likewise, "a typical meeting, telephone call, or event arranged by a public official does not qualify as a `cause, suit, proceeding or controversy.'" Id. Moreover, to prosecute outside the limits established by Sun-Diamond, "the Government must prove a link between a thing of value conferred upon a public official and a specific `official act' for or because of which it was given." Sun-Diamond, supra at 414.
Heedless of the myriad warnings and constraints placed by the Supreme Court on federal prosecutors attempting to enforce honest services fraud cases, the Government here tries to revisit pre-McDonnell statutory interpretation. The McDonnell Court found that while "the Government concludes that the term `official act' . . . encompasses nearly every activity by a public official," it adopted a more "bounded" interpretation. McDonnell, supra. "[A]rranging meetings" for a constituent with other Virginia officials, "hosting, and . . . attending" events on behalf of the constituent's company at the Governor's mansion, and "contacting other government officials," in support of research by that company, despite the Defendant's receipt of thousands of dollars of payments, did not rise to the level of official acts by the Governor. Id. at 2365. "[C]onscientious public officials arrange meetings for constituents, contact other officials on their behalf, and include them in events all the time." Id. at 2372. Prosecutors in this case apparently disagree with the unanimous Court. The allegations contained in the instant Superseding Indictment contain activities even more benign than those evaluated in McDonnell.
Here, the Government asserts that despite Arkansas law to the contrary that requires "the operations of the economic development districts and their disbursement of funds [be] solely within the discretion and control of the local governing board of directors," the legislators named herein "exerted substantial control and authority over a specific amount of NWAEDD GIF . . . ." (Doc. 29, ¶ 11). In support of that proposition, the government alleges in Paragraph 17(c) of the Superseding Indictment that Defendant "Woods and [Micah] Neal used and agreed to use their official authority as Arkansas legislators to direct the NWAEDD to allocate GIF monies to Ecclesia;" in 17(d) that Defendant "Woods also used and agreed to use his official authority as an Arkansas legislator to advise other Arkansas legislators, including Neal, to allocate additional GIF monies either directly to Ecclesia or to another applicant in an effort to secure more GIF money for Ecclesia; and in 17(i), Defendant "Woods and Neal used their official authority as Arkansas legislators to direct the NWAEDD to allocate $200,000 of . . . GIF monies to Ecclesia." [Emphasis added]. It is the crux of the government's case that the actions of Mr. Woods and Mr. Neal, in acting to "direct," "advise," and "allocate" are sufficient to pass the smell test when it comes to evaluating the alleged "official act" element of the Superseding Indictment. However, those activities can be equated to the alleged official acts of Governor McDonnell that he "arranged meetings with government officials," was "hosting and . . . attending events at the Governor's Mansion," contacting other government officials in the Governor's Office," and "promoting Star Scientific's products and facilitating its relationships with Virginia government officials," that Chief Justice Roberts relegated to "the most commonplace requests for assistance." McDonnell, supra. Moreover, since the purpose of the GIF is to promote economic development throughout the State of Arkansas, as the McDonnell Court noted, "Economic development is not naturally described as a matter `pending' before a public official—or something that may be brought `by law' before him—any more than `justice' is pending or may be brought by law before a judge, or `national security' is pending or may be brought by law before an officer of the Armed Forces." McDonnell, supra.
Arkansas law has established eight (8) economic development districts, including the Northwest Arkansas Economic Development District (NWAEDD) with the express objective to assist local governments and private organizations to obtain funding in order to promote economic development. Each of the eight boards were to be governed by a board of directors as the "representative organization" of their respective district. To insulate the local entities charged with distributing large amounts of federal and state funds from undue influence, the law requires that:
A.C.A. § 14-166-203(c)(1). By legislative design, the districts are not to be subject to influence by members of the General Assembly. As an added measure, in order to qualify for state financial support through GIF, those economic development boards were required to consist of a group of professional people also less prone to outside influence, "a majority of whose members are elected officials of local governments and the remainder of whose members represent economic development organizations and organizations broadly representative of diverse community interests." A.C.A. § 14-166-203(b).
The practical effect of the structural independence upon which each economic development district operates, is best described by the Attorney General of the State of Arkansas, Leslie Rutledge, in a brief she filed in a Pulaski County case that sought to challenge the constitutionality of legislative appropriations from the GIF. In arguing against the Plaintiffs premise that GIF funds are granted by economic development districts at "the whim of individual legislators," Ms. Rutledge argues that:
State Defendants' Summary Judgment Brief at 21, Mike Wilson v. Larry Walther, et al., Pulaski County Case No. 60CV-16-862, June 16, 2016.
The districts themselves are attuned to allegations that legislators dictate the distribution of GIF funds and have taken pains to steer clear from what the government implies here. Following a Legislative Audit performed on the NWAEDD in 2015, Executive Director Joe Willis provided the District's management response including in his statement a sentiment entirely consistent with the position taken by the Arkansas AG, i.e., that the obligations of the District are discretionary, not ministerial. Mr. Willis described a grant wiring process that by design is insulated from outside influence by asserting that "[a]ll GIF applications undergo a rigorous review to determine eligibility with applicable rules and are presented to the full board for approval in open session. Each application presented is tracked from application through approval to closing/funding for compliance." Investigative Report dated July 15, 2105, Appendix E, Letter of Joe Willis, August 3, 2015. Nowhere in the NWAEDD literature is the representation made that recommendations from legislators are anything more than just that. Criticism from the Court to the prosecution in McDonnell focused on the fact that "[t]he Government concludes that the term `official act' . . . encompasses nearly any activity by a public official." McDonnell, supra at 2367. Justice Roberts attempted to rein in overzealous prosecutors by making the somewhat obvious observation that, "Representative government assumes that public officials will hear from their constituents and act appropriately on their concerns." Id. at 2359.
Contrary to the its theory of the case, yet consistent with the above, the government has acknowledged an instance in which independence of the NWAEDD from legislative influence is fairly evident. From p. 28, Paragraph hhhhh. of the Indictment:
It stands to reason that if the Board bears any discretion, guidance or advice received from a public official is necessarily and by definition an unofficial act, otherwise the Board would enjoy no such discretion. The significance of the act of removal from consideration of Ecclesia for GIF grant consideration by even a single board member cannot be understated in that it undermines completely the Government's position that recommendation letters from legislators were determinative. Yet it does so despite evidence to the contrary and ignoring the precepts of McDonnell. While NWAEDD board members may have considered recommendations by local legislators as a useful guide and practical form of accountancy since each legislative district was budgeted a finite amount of available funding that needed to be tracked, clearly they engaged in the deliberations necessary to make a reasoned distribution of GIF funds with the knowledge that the ultimate decision-making authority was theirs.
The government was surely made aware of their lack of a sufficient basis in their efforts to construct a case of honest services fraud post-McDonnell by this exchange with one of its key Grand Jury Witnesses, Mr. Michael Norton, former director of the NWAEDD. In his responses to questions regarding the tracking of dispersed GIF funds, taken from a previously transcribed interview with U.S.A. Kenny Elser and other members of the prosecution team, Mr. Norton advised them as to the following:
No, he's not right, and Mr. Elser's leading questions notwithstanding, the responses given by Mr. Norton in his ex parte interview describing that state senators and legislators acted only in an advisory role regarding distribution of GIF funds fundamentally undercuts the government's position that such advice entailed official legislative activities given that some legislators cared not, nor directed, where the money went regardless of whether some, or most, did. Again, the final decision, as described by Mr. Norton, was the Board's, in their discretion. The defense reasonably relies on its expectation that the same would be Mr. Norton's testimony at trial in the government's case-in-chief, which on its face does not allow the government to establish the necessary elements of honest services fraud as defined after McDonnell. That being the case, there exists no such omnipotence as is ascribed to the Arkansas public officials named herein by the government sufficient to state an offense. Their authority amounted to nothing more than typical and perfunctory non-official acts of constituent service that the public can reasonably expect from those holding elected office and from which were not therefore defrauded.
That reasoning is consistent with a line of 8th Circuit cases similarly finding a lack of intent to defraud. In United States v. McNieve, 536 F.2d 1245 (8th Cir. 1976), the Court found no scheme to defraud. Though McNieve, a municipal plumbing inspector, accepted a stream of unsolicited gratuity payments, he did not attempt either to conceal the gratuity payments or to deviate from his nondiscretionary duty of issuing permits. Id. at 1251-52. Likewise, in a case involving a Missouri state legislator, Richard J. Rabbitt, who accepted payments in exchange for his positive recommendations to state officials charged with awarding architectural contracts and for which he received a commission, the Court found no violation of the federal mail fraud statutes since the state agency awarding the contracts did so based on the merit of the applicants. United States v. Rabbitt, 583 F.2d 1014 (8th Cir. 1978). "Whether a showing of dishonesty on the part of a state official, outside his official duties, with no financial loss to the state constitutes a fraud upon the public and thereby statutory mail fraud is, in our judgment, highly questionable." Id. Though finding evidence of unethical conduct, they also found, "no evidence that Rabbitt's conduct deprived the citizens of their right to honesty and fairness in the conduct of his official duties. Rabbitt did not, in his official capacity, control the awarding of state contracts to architects." Id. In their official capacities, in the present case, neither did Jon Woods nor Micah Neal ultimately control the distribution of GIF funds.
Having considering the "official acts" portion of 18 U.S.C. § 1346 ad nauseum, it may be appropriate to inject here some discussion of the honest services to which the government deems the citizens of Arkansas are entitled and of which it alleges they have been defrauded and deprived. It may seem anachronistic given current events, but the citizens of the State of Arkansas still enjoy a reasonable expectation that their elected representatives are not breaking the law. A constituent would be rightly exorcised to learn, as the 4th Circuit put it, that "[w]hen outwardly purporting to be exercising independent judgment in passing on official matters, the official has been paid for his decisions, perhaps without even considering the merits of the matter." United States v. Mandel, 591 F.2d 1347, 1362 (4th Cir. 1979). That statement seems to be an accurate reflection of the government's argument in this case, a reasonable assessment of public expectations and a fair appraisal of the law, generally speaking. Under Arkansas law, however, said official need not necessarily remain entirely objective.
The Code of the State of Arkansas contains a provision regarding registration requirements for a lobbyist, defined as a person who receives or expends $400 or more for the purpose of communicating with public servants to exert influence on legislative or administrative action. A.C.A. § 21-8-402(11)(C). The provision, A.C.A. § 12-8-601(a)(3), contains an exemption from the statutory requirement to register as a lobbyist for one whose activities either include "[e]ngaging in lobbying exclusively on behalf of an Arkansas church which qualifies as a tax-exempt organization under section 501(c)(3) of the Internal Revenue Code,
During a previous motion hearing held on May 23, 2017, the Court inquired of the government, in its attempt to estimate length of trial, whether the government anticipated calling any expert witnesses. USA Kenny Elser, answering on behalf of the government, responded categorically, "No sir." In the age of electronics, in times when people are virtually connected on a continual basis through mobile devices including cell phones and laptop computers, pinpointing the exact location of the initiation or termination points of electronic communications, be they intra — or interstate, through use of log record analysis, IP addresses, cell tower GPS coordinates and server locations is beyond the ability or understanding of the average lay person. "Expert testimony is appropriate when it relates to issues that are beyond the ken of people or ordinary intelligence." United States v. Davis, 457 F.3d 817, 824 (8th Cir. 2006). Expert testimony is clearly required in this case, "[b]ecause knowledge of computers and internet use differ widely among lay jurors . . . ." United States v. Huether, 673 F.3d 789, 797 (8th Cir. 2012). Likewise, the electronic transmissions of bank deposits and transfers, whether they be from branch to branch of the same franchise or transfers between unrelated banks. The testimony of an individual qualified by knowledge, skill, experience, training or education would be necessary in order to establish the foundation were such evidence to be offered at trial. Considering the government's assurances, as well as its failure to identify and provide to the defense a written summary of expert testimony it intends to use under Rules 702, 703 or 705 of the Federal Rules of Evidence pursuant to Paragraph B(9) of the Court's Amended Pretrial Scheduling Order (Doc. 59), the government will be unable to establish a foundation for any of the electronic mails or electronic bank transmissions that make up Counts 1-14 of the Superseding Indictment. Those counts, therefore, should be dismissed.
This case is based in no small part on information gained by the government from a proffer statement offered by Jon Woods to the government on November 11, 2015, under circumstance that on its face appear to be coercive and, therefore, involuntary and having a significant effect on the due process rights of Dr. Paris as set forth in United States v. House, 825 F.3d 381, 388 (8th Cir. 2016). FBI Special Agent Robert Cessario and IRS Special Agent John Munns, accompanied by United States Attorney Kenny Elser and Department of Justice Assistant United States Attorney Sean Mulryne, interviewed Jon Woods at the office of Fayetteville attorney W.H. Taylor, Mr. Woods' retained counsel. In the course of the interview, granted under a FRCP Rule 11 proffer agreement, Woods provided information to the Government about various alleged schemes of financial impropriety involving a number of individuals, players both inside and out of the State government of Arkansas. One such scheme outlined in the Woods' proffer was that he, Woods, was involved in a "kickback scheme" regarding Arkansas General Improvement Fund ("GIF") grants to a local college whose President is Defendant Dr. Oren Paris, III. Woods proceeded to allege that Dr. Paris had full knowledge and was an active participant in said scheme.
Through discovery, counsel for Dr. Paris has become aware of the true nature of the government's interview. In an audio recording made surreptitiously of a subsequent conversation between Jon Woods and Arkansas State Representative Micah Neal by Mr. Neal, Mr. Woods discussed the somewhat less than harmonious circumstances under which he gave his November 11, 2015 testimony to the government:
Despite the fact that Woods' signature appears on the proffer letter provided by the Government, his statements can in no way be said to be voluntary, the product of his free and unconstrained choice, and is an offense to due process. Schneckloth v. Bustamonte, 412 U.S. 218, 225-26 (1973). Not only were Woods' due process rights violated, by implication so also were the due process rights of any other person denounced in the statement resulting from the unconstitutional coercion, specifically including Dr. Paris. See, Fugate v. Gaffney, 453 F.2d 362 (8th Cir. 1971).
While Dr. Paris has no standing to defend Woods' rights against self-incrimination, of course, he certainly is able to seek the sanctuary of his own 5th Amendment due process protections. House, supra, citing United States v. Gonzalez, 164 F.3d 1285, 1289 (10th Cir. 1999), ("Overbearing tactics violate the right of the person being interrogated to be free from coercion," subsequent use of those statements could potentially implicate defendant's due process rights.") and United States v. Dowell, 430 F.3d 1100, 1107 (10th Cir. 2005), ("It is clear that Dowell does have standing to challenge the voluntariness of a witness's confession. In doing so, however, Dowell is not seeking to vindicate the witness's Fifth Amendment right against self-incrimination, but instead is seeking to protect his own right to due process, that is, to a fair trial."). Certainly, and without question. "It is now axiomatic that a defendant in a criminal case is deprived of due process of law if his conviction is founded, in whole or in part, upon an involuntary confession, without regard for the truth or falsity of the confession . . . ." Jackson v. Denno, 378 U.S. 368, 376 (1964). "Equally clear is the defendant's constitutional right at some stage in the proceedings to object to the use of the confession and to have a fair hearing and reliable determination on the issue of voluntariness, a determination uninfluenced by the truth or falsity of the confession." Id. Though Jackson v. Denno applied to the circumstances of a defendant's own confession and the implication on his Fifth Amendment right against self-incrimination, House applies the same analysis to a defendant seeking to challenge the confession of a witness to protect his own Fifth Amendment right to due process. House, supra.
Mr. Neal raises a cogent point in questioning the propriety of Mr. Woods' own attorney accusing him of lying in front of government attorneys and agents. In the same recording, Mr. Woods alludes to a situation that may provide some degree of clarification. What follows is from the same audio recording of the conversation between Mr. Neal and Mr. Woods, though while it cannot currently be corroborated by counsel for Dr. Paris, remains curious. It is included here for whatever probative value it may have since it was produced independently in discovery by the government:
[REDACTED\] If true, however, and the government was exercising even a slight degree of leverage against Mr. Taylor, clearly the November 11, 2015 statement given to the government by Woods was not knowingly and voluntarily given but was coerced by government investigators acting in concert with his own legal counsel.
It bears repeating in this instance that pursuant to United States v. House, supra, that Dr. Paris is constitutionally entitled, i.e. has standing, and can vindicate, to protect, his own right to a fair trial, even in instances in which he must argue the government's violation of the rights of a codefendant. With that understanding, and without regard to the aforementioned allegations made by Mr. Woods against his attorney, through access to records available to the public on AOC CourtConnect, an online access portal provided by the Arkansas Judiciary available to the general public that allows access to case information, counsel for Dr. Paris has become aware of another odd circumstance affecting the proffer interview of Jon Woods that bar on his own due process rights. As noted above, FBI Special Agent Robert Cessario attended the interview of Mr. Woods that was memorialized in a written report. The FBI report (the "302") of the interview was drafted and signed by Special Agent Cessario, noting that "Present during the interview was Department of Justice Assistant United States Attorney Sean Mulryne, United States Attorney, Kenny Elser, IRS-CID Special Agent John Munns and attorney representing WOODS, W.H. Taylor." A reasonable inference, therefore, is that not only was S.A. Cessario present but that he conducted part of the interview. The defense has not been provided an audio version of said interview, if one exists, though the proffer letter leaves that option open to the government. Mr. Woods' statements incriminate Dr. Paris.
Nowhere in the records, however, does the following information bearing on the propriety of the interview appear, nor has it been disclosed by the government: On the 12th day of February, 2014, Stephani Cessario filed a Complaint for Divorce in the Circuit Court of Benton County, Arkansas, Case No. DR-2014-219-4, seeking dissolution of her marriage from her then-husband, Robert Cessario. Two days later, filing an Answer and Counterclaim in the divorce action on behalf of his client, Robert Cessario, was none other than the aforementioned W.H. Taylor, Esq. The present criminal investigation was initiated by the FBI on July 24, 2014. A decree of divorce in the Cessario case was entered August 15, 2014. Fourteen months later, W.H. Taylor is representing Jon Woods in plea negotiations with the government, sitting across the same conference table from, presumably, where he met with his former client, Special Agent Robert Cessario. Oddly, W.H. Taylor also instructed Mr. Woods to meet with Special Agent Cessario two more times, without himself present, on November 20, 2015 and December 10, 2015, during which time Woods was again interviewed, resulting in his being engaged as a confidential human resource, i.e., an undercover government informant. Since that time, Jon Woods has prudently retained alternate counsel.
"The right to counsel guaranteed by the Constitution contemplates the services of an attorney devoted solely to the interests of his client." Van Molte v. Gillies, 332 U.S. 708, 725 (1942), citing Glasser v. United States, 315 U.S. 60, 70 (1942). For the ethical implications of the Woods-Taylor-Cessario arrangement, we must look to the law of the State since Rules of Ethics are a distinct state responsibility. The Arkansas Supreme Court has clearly expressed its opinion on even the appearance of impropriety, when it said, "[w]e have consistently taken strong positions in situations where the public's confidence in attorneys might be eroded by the appearance of conflict of interest." First American Carriers v. Kroger Company, 787 S.W.2d 669, 671 (1990). Citing the American Bar Association Committee on Professional Ethics and Grievances, Formal Opinion 282 (1950), it proceeded: "[The] essential point of ethics involved was that the lawyer so employed would represent . . . his client with undivided fidelity." Id. Can it categorically be said that Mr. Taylor's interest in advising his client was free of the influence occasioned by his attorney-client relationship with S.A. Cessario? Can a zealous and effective defense be expected of the shepherd when the wolf appears in sheep's clothing? The course of events certainly raises the appearance of impropriety. At the very least, Mr. Woods should have been advised of the potential conflict and been given the opportunity to waive said conflict in writing or seek conflict-free counsel. Rule 1.7(a) of the Arkansas Rules of Professional Conduct states that "a lawyer shall not represent a client if the representation involves a concurrent conflict of interest." The rule defines "concurrent conflict of interest" as "a significant risk that the representation of one or more clients will be materially limited by the lawyer's responsibilities to another client, a former client or a third person or by a personal interest of the lawyer. ARPC Rule 1.7(a)(2). Subparagraph (b) of the same Rule allows the lawyer to represent the client even in light of an apparent conflict if "each affected client gives informed consent, confirmed in writing." ARPC Rule 1.7(b)(4). If Jon Woods was advised that there existed a potential conflict between W.H. Taylor's representation of him and that of his former client Mr. Cessario, together with the assurance that said conflict would not deter Mr. Taylor in the zealous protection of Mr. Woods constitutional rights, specifically his rights to conflict-free counsel and against self-incrimination, his written waiver of conflict as required by the Arkansas Rules of Ethics does not appear in the record. Neither does a written waiver or any acknowledgement of the potential conflict executed or drafted by S.A. Cessario. Should either exist, the aforementioned coercive circumstances under which a waiver, written or otherwise, would have been executed or acquiesced to by Mr. Woods, would have been no less the product of such coercion or duress and the waiver no less unknowing and involuntary as the substance of the resulting proffer statements. There exists a stench of fundamental unfairness tainting the entire set of circumstances surrounding the interviews of Jon Woods by federal investigators that needs purged. The remedy is available to this Court. "Federal courts have an independent interest in ensuring that criminal trials are conducted within the ethical standards of the profession and that legal proceedings appear fair to all who observe them." Wheat v. United States, 486 U.S. 153, 160 (1988). Moreover, "[u]nless a defendant charged with a serious offense has counsel able to invoke the procedural safeguards that distinguish our system of justice, a serious risk of injustice infects the trial itself." Covey v. United States, 377 F.3d 903, 906 (8th Cir. 2004), citing Cuyler v. Sullivan, 446 U.S. 335, 343 (1980). And "if a defendant . . . can show `an actual conflict of interest [that] adversely affected the lawyer's performance' prejudice may be presumed." Id. at 907. Considering the fundamental constitutional propositions at issue regarding voluntariness and coercion, self-incrimination and due process, Mr. Taylor should have recused himself prior to the interview involving his past and present clients. That the interview proceeded regardless should trigger suppression.
There is sufficient evidence both due to the element of coercion and the absence of conflict-free counsel to render the statements contained in the November 11, 2015 proffer statement given by Mr. Woods, and the fruits thereof, inadmissible, and therefore are directly relevant to the issue as to whether through their admission has can be assured of a fair hearing. It is the further belief of counsel for Dr. Paris that the proffer statement of Mr. Woods precipitated the entire investigation that led to the indictment of Dr. Paris, and that without said proffer statement, and the fruits thereof, the government is without sufficient evidence to proceed against Dr. Paris.
The circumstances related above bring to mind another case involving a similar fact pattern that presented itself to the court in context of a post-conviction motion for relief filed pursuant to 28 U.S.C. § 2255 in United States v. James W. Bolt, Case No. 5:13-CR-50085, heard by Magistrate Judge Mark Ford on September 21, 2017. In that case, Judge Ford heard evidence involving a curiously familiar fact pattern for which the defendant claimed ineffective assistance of counsel. Mr. Bolt claimed that this attorney had established a relationship with SA Robert Cessario since both had been involved in an unrelated investigation of a local business. Judge Ford denied Mr. Bolt's Motion in finding as follows:
In the present case, Dr. Paris has provided evidence both credible and substantial regarding the attorney-client relationship between SA Cessario and W.H. Taylor, his former attorney; legal authority in the form of Rule 1.7(a) of the Arkansas Rules of Professional Conduct states that "a lawyer shall not represent a client if the representation involves a concurrent conflict of interest," and Van Molte, supra. The rule defines "concurrent conflict of interest" as "a significant risk that the representation of one or more clients will be materially limited by the lawyer's responsibilities to another client, a former client or a third person or by a personal interest of the lawyer; and the lack of written waiver of conflict.
Dr. Paris couldn't care less about any ineffective assistance of counsel claims Mr. Woods may or may not have against his former counsel, and any focus on the activities of counsel is misplaced. What does concern Dr. Paris is the government's outrageous intent and subsequent acts manifested by the actions or inactions of Mr. Woods' retained counsel arising out of his relationship with SA Cessario. The all-encompassing issue here is that the government used the relationship that is flagrantly, ethically questionable to coerce Mr. Woods into an involuntary confession during which he makes incriminating statements regarding Dr. Paris. Pursuant to House, supra, he has standing to vindicate, preserve and protect his own 5th Amendment due process rights without the consent, consultation or presence of Jon Woods.
Having noted here the existence of the clandestine audio recordings of conversations between Jon Woods and Micah Neal by Mr. Neal, the propriety of those recordings begs for examination. In prior filings with the Court, Mr. Woods has challenged the admissibility of a series of audio recordings of conversations made by Micah Neal to which Jon Woods is a party in violation of his Sixth Amendment right to counsel. Doc. 63. The government responded, in part, that Mr. Neal was not acting on behalf of the government, and in support whereof asserts that "[a]lthough the government was aware of Neal's interactions with Woods, it never directed or coached Neal to conduct any recordings with him. On the contrary, the government expressly advised Neal and his attorney that the government was not directing Neal to record any conversations he had with Woods." Doc. 67, p. 9, ¶ b. Micah Neal was first interviewed by the government on January 5, 2016, according to a 302 again signed by S.A. Cessario. Present during that interview were the usual suspects, Kenny Elser, Sean Mulryne, John Munns and Mr. Cessario, though this time in the presence of Mr. Neal's attorney, Shane Wilkinson. During a second interview of Mr. Neal, he related the substance of conversations he surreptitiously recorded between himself and Jon Woods. Therefore, the discussion that took place during which the subject of secretly recording said conversation arose must have taken place in the presence of all the government actors. Two things here of note: One, the government's admission establishes knowledge of what is purported to be a proposed private search, and, two, the government does not represent that it instructed Mr. Neal
The government here proposes a scenario in which a discussion takes place between the government, Mr. Neal and his attorney, regarding the surreptitious taping of a conversation between Mr. Neal and Mr. Woods, purportedly unprompted by the government. Eight days later, the government scheduled a second interview with Mr. Neal during which time he related, and the government heartily consumed, the intelligence gathered the previous day during which matters touching on the attorney-client privilege and insight into defense strategy are disclosed. The government can deny the agency of Mr. Neal until it is blue in the face, but the totality of the circumstances dictate that this blatant violation of due process was perpetrated with the full knowledge and abiding acquiescence of the government, conduct that is outrageous. The 8th Circuit has adopted a test initially expressed in a case out of the 3rd Circuit, United States v. Voigt, 89 F.3d 1050, 1067 (3d Cir. 1996), that sets out a three-pronged test for determining whether there is a "colorable claim of outrageousness pertaining to alleged governmental intrusion into the attorney client relationship." Williams, supra, at 686. The Voigt test requires the defendant alleging an intrusion to prove, "(1) the government's objective awareness of an ongoing, personal attorney-client relationship []; (2) deliberate intrusion into that relationship; and (3) actual and substantial prejudice." Id. Jon Woods retained W.H. Taylor on October 26, 2015, and as noted above, he was represented by Mr. Taylor during the interview by government officials on November 11, 2015. Since the clandestine audio recording contain a detailed reference to said interview, said recordings necessarily occur during the pendency of an attorneyclient relationship and the government was obviously aware of the existence of that relationship, as well as a subsequent one with Mr. Benca. Deliberate intrusion in those relationships can be readily gathered from the following outtakes from the audio recording referenced above:
Clearly, Micah Neal intended to gain both information regarding privileged attorney-client conversations and insight into the defense strategy of his potential co-defendants for the government's consumption and use. Both are significant enough intrusions into not just the relationship between Mr. Woods and his attorney, but with Mr. Shelton and Dr. Paris and their respective attorneys sufficient to meet the Voigt outrageousness standard. As an aside, though the government curiously makes note in its denial that it neither directed nor "coached" Mr. Neal in recording his conversation with Mr. Woods, the use of distinctive terminology by Mr. Neal in assuring Mr. Woods that he wants to know that "we're on the same page," is a recurrent theme throughout undercover recordings produced by the government, suggesting otherwise. The unique phraseology appears to be a tactic used by government informants whenever the person being recording is not being cooperative in volunteering the desired incriminating responses, and as a means by which to stay on topic in an effort to perhaps prompt a different or more useful response. It is a phrase repeatedly used by Mr. Woods to the point of conspicuousness when he himself is wired, and undoubtedly coached, by government agents while recording conversations with Mr. Neal, et al.
Contact with persons represented by counsel is a sufficiently serious consideration that the FBI has produced a rule about it. "CDC (Chief Division Counsel) review is required before contact with represented persons. Such contact may implicate legal restrictions and affect the admissibility of resulting evidence."
The Supreme Court evaluated a similar instance of intrusive conduct in Weatherford v. Bursey, 429 U.S. 545 (1977). In that case, a state undercover agent, Weatherford, was arrested along with a defendant, Bursey, with whom he was purporting to provide assistance in a criminal endeavor so that his undercover identity would not be revealed. Subsequently, Weatherford participated in a meeting with Bursey and his defense counsel, Wise. The Court overturned the Fourth Circuit's reversal of Bursey's conviction since the government intrusion into the attorneyclient relationship failed to disclose "any details or information regarding [] trial plans, strategy, or anything having to do with the criminal action pending . . . ." Id. "There being no tainted evidence in this case, no communication of defense strategy to the prosecution, and no purposeful intrusion by Weatherford, there was no violation of the Sixth Amendment . . . ." Id. In this case we have all three. Suggesting outrageousness of the government's conduct in this case is the admonition given by Justice Marshall in his dissent in Weatherford. "I cannot join in providing even the narrowest of openings to the practice of spying upon attorney-client communications." Id., (J. Marshall, dissent, joined by J. Brennan). Further:
Further, said Justice Marshall, "In my view, the `balance of forces between the accused and his accuser' is sharply skewed in favor of the accuser if the government's key witnesses are permitted to discover the defense strategy by intercepting attorney-client communications . . . ." Id. at 563-64. Justices Marshall and Brennan were incensed by purposeful government intrusion into the attorney-client relationship for conduct less egregious than what we have here and that did involve the disclosure of defense evidence and trial strategy. As noted by the majority opinion, "unless Weatherford communicated the substance of the Burley-Wise conversations and thereby created at least a realistic possibility of injury to Bursey or benefit to the State, there can be no Sixth Amendment violation." Id. at 558. The undercover recording did so communicate, a basis upon which the majority and the dissent in Weatherford could agree. Considering House in the context of Weatherford, personal 6th Amendment considerations are subsumed by the due process right violations incurred by a third party, in this case, Dr. Paris. It is not sufficient to argue, therefore, that the absence of an adversarial proceeding or Mr. Woods failure to invoke his 6th Amendment protections leaves Dr. Paris out in the cold, his due process rights exposed. Neither is the reasonable conclusion from a reading of Weatherford and House.
Regarding the proposition of whether Dr. Paris has been prejudiced by the foregoing outrageous behavior, USA Elser has already referenced the existence of a "joint defense agreement" in its argument to the Court during the hearing on Dr. Paris' Motion to Sever. The existence of a joint defense agreement, or lack thereof, is of no consequence to the government which was by no other means privy to that information other than from the surreptitiously recorded conversation. What is of consequence is the fact that a product of the attorney-client communications has already made its way into the prosecution strategy, laying to rest the argument that Dr. Paris has not already been prejudiced. "We need not agree . . . that whenever a defendant converses with his counsel in the presence of a third party thought to be a confederate and ally, the defendant assumes the risk and cannot complain if the third party turns out to be an informer for the government who has reported on the conversations to the prosecution and who testifies about them at the defendant's trial." Weatherford, supra at 555. While Neal was not physically present at an attorney-client conference, the effect is the same. "Nevertheless, it might be argued that Weatherford, a dutiful agent, surely communicated to the prosecutors Bursey's defense plans and strategy and his attorney's efforts to prepare for trial, all of which was inherently detrimental to Bursey, unfairly advantaged the prosecution, and threatened to subvert the adversary system of criminal justice." Id. Mr. Neal was a dutiful agent. All of the above-described government activities entail purposeful intrusion by the government, via Mr. Neal, a Sixth Amendment violation prejudicing Mr. Woods, resulting in a violation of Fifth Amendment due process protections prejudicing Dr. Paris and meeting the Voigt test for outrageousness.
The Superseding Indictment purports to charge the parties for aiding and abetting a scheme of honest services fraud in violation of federal law. Not only are there no allegations contained in the indictment that any representations contained in any of the interstate communications contain fraudulent misrepresentations, there indeed are no interstate aspects of the alleged substantive underlying offenses sufficient to invoke federal subject matter jurisdiction. What the government attempts to do here is to criminalize the political activity of state public officials that involves neither an impact on federal funding nor a transaction that occurs in interstate commerce. Only one transaction contained in the indictment involving Dr. Paris is memorialized in any shape, manner or form, and that is the October 1, 2013 transfer of funds from Randell Shelton to Jon Woods that took place at Arvest Bank. (Doc. 29, ¶ oo.) As conclusive evidence that that particular transaction, representing the payment of a "bribe" set forth as the government's theory of the scheme executed by and between the parties, does not take place in interstate commerce is the government's failure to state as much. The government makes note that transactions between unaffiliated banks are different, as it relates in ¶ www. that a transfer between Arvest Bank and U.S. Bank took place "via interstate communication," a transaction that inserts itself as Count 3 of the Superseding Indictment on Page 39. Missing from page 39, however, is the Arvest to Arvest transfer noted above. Therefore, not only does the alleged underlying substantive offense, that acts as the foundation of sand upon which the structure of the remaining allegations are constructed that consist of a series of uncorroborated cash transactions, not affect interstate commerce, it predates by three days the actual settlement of the NWAEDD funds represented by the allegations contained in Count 4 on Page 39 as the "Electronic transmission received by Arvest Bank to settle Entity A's deposit of $200,000 check . . . from NWAEDD's Arvest Bank Account . . . into Entity A's Liberty Bank Account."
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[REDACTED\]This demonstration of egregious misrepresentation of evidence to the Grand Jury may just as easily been presented in earlier Section 4 above, but seemed more cogent here. Nevertheless, the conduct represents further evidence of the extent to which the government was willing to use illicit means to inappropriately persuade the Grand Jury to sign a true bill.
Further problems face the government in this attempt to enforce § 1346. The federal jurisdictional hook in this prosecution lies in the instances of interstate communications, fourteen (14) such transmissions listed beginning on page 39 of the Superseding Indictment the government deems to have been used in furtherance of the illegal scheme. Fraudulent statements or misrepresentations appear in none of them, though such allegations are to be found on page 5 of the Superseding Indictment containing descriptions of the elements of wire and mail fraud. Not only were no official acts performed in exchange for payment, there was no "material false and fraudulent pretenses, representations, and promises" made in the GIF applications, nor are any alleged. As an example, Count 1 of the Superseding Indictment consists simply of the act by Defendant Woods in forwarding to Director A of the NWAEDD of Ecclesia's GIF grant application. There is no statement that any representation made in said application is false, that it misrepresented Ecclesia's financial needs or concealed any material facts from the NWAEDD, for indeed it did not. Nor is there any allegation that the money sought was not used for the purpose for which it was requested, for it was.
All charges arise out of the use of interstate electronic communications that are incidental to the filing of grant requests for GIF funds from the NWAEDD, for transfers of funds between banks and associated transactions and those otherwise performed in the regular course of legislative business. None are made for the purpose of executing the purported fraud, nor an integral part of the execution of the alleged fraud, and are, therefore, not illegal. Kann v. United States, 323 U.S. 88 (1944). "The elements of a mail/wire fraud offense under 18 U.S.C. § 1341 are: `(1) a scheme to defraud by means of material false representations or promises, (2) intent to defraud, (3) reasonable foreseeability that the mail would be used, and (4) that the mail was used in furtherance of some essential step in the scheme. United States v. Bennett, 765 F.3d 887 (8th Cir. 2014).
In reading the indictment, one must keep in mind the fog of ambiguity surrounding § 1346 that gave even the Supreme Court fits as discussed above. The 8th Circuit refers to §§ 1341 and 1343 as the "operative offense-declaring statute[s]." See, United States v. Pennington, 168 F.3d 1060, 1065 (8th Cir. 1999.) Honest services fraud is a relatively new appellation and essentially a sub-offense of wire and/or mail fraud, and without one or the other is not interstate in nature. The term honest services fraud as it appears in § 1346 simply acts to further include within the definition of "scheme or artifice to defraud" of § 1343, an act "to deprive another of the intangible right of honest services." Put differently, the statute prohibiting honest services mail fraud would penalize, "Whoever, having devised or intending to devise any scheme or artifice to deprive another of the intangible right of honest services, transmits or causes to be transmitted by means of wire, radio, or television communication in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice . . . ." In none of the communications charged to Dr. Paris is alleged any material false pretense, representation or promise, the necessary means of wire or mail fraud. None. This even without the government's presentation to the Grand Jury of the exculpatory evidence that the GIF funds were used to finance the purchase of the real estate for which they were applied, and that Randell Shelton actually engaged in the consulting activities for which he was contracted and for which he was paid. While there is no constitutional requirement that the government provide adequate instruction, or instruction of any kind, they may not also mislead, or engage in behavior intended to improperly influence the decision making ability of the Grand Jury. Bank of Nova Scotia v. United States, 487 U.S. 250 (1988). The Superseding Indictment mis-alleges fraudulent acts solely in the attempt to invoke federal jurisdiction under purported federal criminal statutes without sufficient allegations supporting either. Failing in that effort, it should be dismissed.
Representative of the weakness of the remainder of the allegations, in the GENERAL ALLEGATIONS section of the Superseding Indictment, paragraph 3, the government alleges that Defendant Randell Shelton "purportedly" provided consulting services to Ecclesia. Yet, the Superseding Indictment lists as Count 2, the "[e]lectronic mail from SHELTON to PARIS attaching consulting agreement between Entity A and Entity B." Having thus acknowledged the existence of a consulting agreement between Ecclesia and Paradigm (a.k.a. "Entity B"), the government neglects to elucidate further whether Mr. Shelton actually performed consulting services for which he was contracted and for which he was paid, which he did. In fact, the government is in possession of several documents on which Mr. Shelton's name appears indicating his involvement in development and fundraising activities on behalf of Ecclesia College since execution of the consulting agreement. Since Mr. Shelton intended to provide the consulting services anticipated by the contract and, indeed provided those services to Ecclesia, there was no misrepresentation in that transmission, and no wire fraud. In argument to the contrary, the Superseding Indictment is silent.
The government also attempts to imply illegality for the employment by Dr. Paris of the person referred to the Superseding Indictment introductory paragraphs 17b. and 17e. as Person A, a friend of Mr. Woods, with absolutely no evidence to support that allegation. On pages 15-17, paragraphs 18.ss through zz., the government details the hiring process of Person A, introduced to Dr. Paris by Jon Woods without mentioning that she is a Gold Star parent, i.e. the mother of Sgt. John Brown, a close friend of Mr. Woods from Siloam Springs, Arkansas, who, while operating as a Special Forces medic assigned to a Navy Seals team, had been killed when the helicopter in which he was riding was shot down in Afghanistan in 2011. Person A, it should be noted, is not the only Gold Star mother that Dr. Paris has found it within his heart to employ at Ecclesia. Circumstantially, the government alleges that Person A was employed by Dr. Paris for consideration as part of an illegal scheme, not as the charitable and compassionate act of a religious leader or the legitimate business decision of the president of a college. Practical considerations that Person A was both unemployed at the time and fully qualified are subsumed by the allegation that the hiring was done as an indirect benefit to Jon Woods conferred "in exchange for WOOD's official assistance as an Arkansas senator . . ." ¶ 17e. The government again includes for inflammatory effect the cumulative salary figures of Person A for the period of August 7, 2013 to May 31, 2016 as in excess of $120,000, as if the fact that Person A earns a salary of $40,000 annually is somehow unearned, inflated or otherwise material. As of the date of the filing of this Motion, that cumulative figure has now reached $160,000 since Person A remains employed by Ecclesia as an integral part of the college's administrative staff and in a faculty position appropriate to her professional credentials.
In the government's defense, events listed on pages 27 through 34 could be considered official acts of Senator Woods. We know that because on page 27, the government states that from
In another transgression to be found in paragraphs nnnn through wwww of the Superseding Indictments (Pp. 25-27), the government enumerates facts describing a second transaction involving a GIF grant to Ecclesia. The operative paragraphs are paragraphs oooo. in which the government alleges that "On or about January 5, 2015, PARIS caused a check to be issued to Paradigm in the amount of $65,000, drawn from Entity A's Centennial Bank account ending in 0681," and Paragraph pppp in which "Also on January 5, 2015, Entity B deposited the $65,000 check from Entity A into Entity B's Arvest Bank account ending in 7761." After January 5th, 2015, the Government goes on to allege that Defendant Shelton made a number of cash withdrawals from his Arvest Bank account ending in 7761. In summation, the Government provides two statements in vvvv. and wwww, respectively, that between December 4, 2014 and approximately January 31, 2015, that both "SHELTON paid WOODS an unknown amount of money but at least several thousands of dollars in cash," an uncorroborated assertion, and that "SHELTON met Neal in person, as arranged by WOODS, and SHELTON provided Neal $18,000 in cash," a premature one. As to the first, there is no evidence of payments from Shelton to Woods during this period, an unfortunate yet inherent characteristic of cash transactions. As for the second, one supposes one would remember the date one agreed to accept $18,000 as a bribe more distinctly than an approximation of seven weeks' time, a period including reference points of both Christmas and New Year's Day. Despite the Government's smudging of the calendar in order to imply criminal acts ensnaring Dr. Paris, it appears Mr. Neal was more specific in his Grand Jury testimony:
Even before he testified in front of the Grand Jury, Neal gave a statement to Special Agent John Munns of the IRS and Special Agent Robert Cessario of the FBI, in the presence of both Attorneys for the government, Kenny Elser and Sean Mulryne. A pertinent passage reads: "NEAL thought that one of the kickbacks he received was before Christmas." Such activity is beyond the pale, even for an ex parte proceeding. No other reasonable inference can be drawn from the above except that through outrageous and egregious government manipulation in its presentation of evidence and its substantial influence, the Grand Jury voted a true bill on an indictment that did not reflect the evidence presented to it.
The statements made by Neal regarding the pre-Christmas payment are significant given the Government's allegations contained in the preceding paragraphs under the heading:
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Further, and presumably for no reason other than for public consumption, the Government makes note under the heading of General Allegations that "[f]rom approximately June 1, 2012 to approximately May 31, 2016, PARIS received more than $300,000 in compensation from Ecclesia. During the same period of time, PARIS, his immediate family members, and their spouses received in excess of $1 million in compensation from Ecclesia." Indictment, p. 2. The sum of $300,000 divided over a 4-year period is $75,000, reflecting more or less accurately Dr. Paris' annual salary. The figure of $1 million likewise allotted evenly to each of the seven (7) Paris family members who are employed in some capacity by Ecclesia equals approximately $35,000 per person, also roughly accurate, though some make more, some less. The intent to prejudice the Grand Jury is evidenced further by the fact that though the salary figures of Dr. Paris and his family are measured for a period from June 1, 2012 to May 21, 2016, a four-year period, the allegations contained in the Superseding Indictment span only from January 18, 2013 to May 11, 2015, two-and-a-half years, during which time Dr. Paris earned $187,500 from his salary and housing allowance from Ecclesia, and his seven family members $612,500. Income figures not nearly as dramatic. The prejudice to the Grand Jury is self-evident since although the government states that Dr. Paris's purpose in the scheme was to enrich himself when in fact the only material allegation contained in the Superseding Indictment is that he received one $25,000 bonus that was voted on by the Ecclesia Board of Governors. The combined facts of the purposefully omitted exculpatory evidence, the inclusion of inflammatory yet wholly immaterial evidence and the resulting substantial prejudice should be fatal to the indictment.
What facts and allegations that are included in the Superseding Indictment lies in stark contrast to the exculpatory facts that are omitted. On page 15 of the Indictment, the Government emphasizes the financial transactions detailed in Paragraphs mm. through pp., as follows:
Evidence produced through discovery clearly shows a $40,000 transfer of funds from the Paradigm Arvest Bank account to that of Jon Woods. What the government failed to disclose to the Grand Jury, however, was evidence in its possession that by check dated April 29, 2016, drawn on Jon Woods' Arvest Bank account ending in 1526, with a memo line reading "Loan Payoff," he had repaid the $40,000 to Defendant Shelton. The $40,000 was deposited into Defendant Shelton's Bank of Little Rock account ending in 8262. The FBI had already been in contact with Jon Woods by that time, so it could be said that the repayment of the loan was a none-too-subtle attempt by Woods to avoid criminal charges, but in neither instance is Dr. Paris a party. It should be noted, however, as the government does in Paragraph pp, that Jon Woods often borrowed and repaid loans. $33,000 of the $40,000 Woods received from Paradigm was used to pay back another such loan. The government alleges that on October 1, 2013, the same date as the Woods-Shelton transaction noted above, Woods also purchased a money order on the amount of $33,000 "payable to another person." ¶ pp. The other person was a local businessman by the name of Robert Srygley, the owner of several check cashing establishments throughout Arkansas, who admitted to loaning John Woods $35,000 back in 2012 when interviewed by government investigators. In 2013, Jon Woods sponsored pro-payday lending legislation by which Mr. Srygley undoubtedly benefited financially.
The Government further makes the point in Paragraph bbbb of the Superseding Indictment that another GIF grant to "Entity C" was returned to the NWAEDD by "Businessman A" soon after Businessman A was contacted by federal law enforcement officials. Of course it was. The same could be said about the $40,000 loan repayment to Randell Shelton by Jon Woods. What the government fails to inform the Grand Jury of is that loans and co-signing for loans by friends of Jon Woods was routine. Bank records produced in discovery show that Jon Woods had friends co-sign notes for him for loans from Arvest Bank on at least four separate occasions: for $7250.75 on March 5, 2012; for $30,000 on March 22, 2012; $25,150 on June 11, 2014; and $25,000 on July 21, 2014.
"Dismissal of [an] indictment is appropriate . . . `if it is established that the violation substantially influenced the grand jury's decision to indict." Bank of Nova Scotia, supra. As a result of the above omissions of relevant facts, there exists "grave doubt that [the decision of the Grand Jury] was free from substantial influence" of the Government failure to present such exculpatory evidence. Id.
If the government interpretation of § 1346 is correct, and the facts they allege in support herein are violative, the law is unconstitutionally vague and unenforceable. As applied to the facts of this case, the law is ambiguous and could not possibly put Dr. Paris on notice of what activities it prohibits. See, United States v. Cook, 782 F.3d 983, 987 (8th Cir. 2015). To provide a degree of clarity that Congress has thus far failed to incorporate into the law, the U.S. Supreme Court tried its hand in inserting "definiteness." The Court took the statute up where it lay in 2010 in Skilling, reciting that "[i]n full, the honest-services statute stated: For the purposes of th[e] chapter [of the United States Code that prohibits, inter alia, mail fraud, § 1341, and wire fraud, § 1343], the term `scheme or artifice to defraud' includes a scheme or artifice to deprive another of the intangible right of honest services." Skilling v. United States, 561 U.S. 358, 404 (2010). Attempting to provide some "definiteness," the Court exercised is prerogative in using every reasonable construction in preserving the statute, stating that "[i]nterpreted to encompass only bribery and kickback schemes, § 1346 is not unconstitutionally vague."
Assuming, arguendo, that the Government has a good faith basis for the charges it brings here, this case should be dismissed in that 18 U.S.C. § 1346 is inconsistent with the rights of due process.
Johnson v. United States, 135 S.Ct. 2551, 2556-57 (2015). Since its enactment in 1988, the Supreme Court has been struggled in taking up the mantle of the legislature in further defining honest services fraud so egregiously left broad. In its latest attempt, the Court vacated and remanded the conviction of Virginia's former-Governor Robert McDonnell, finding that the District Court overreached in its instruction to the jury defining "official acts" as "acts in furtherance of longer-term goals" or "in a series of steps to exercise influence or achieve and end." McDonnell v. United States, 136 S.Ct. 2355 (2016). Seeking some limiting principle to prevent overbreadth of the statute, the McDonnell Court left us with this:
That definition comes essentially from the federal bribery statute, 18 U.S.C. § 201(a)(3). In overturning Governor McDonnell's conviction, the Court rejected the lower court's jury instruction that the term "official act" included "acts that a public official customarily performs" or "in a series of steps to exercise influence or achieve an end." Id. at 2358. It further went on to reference the list of unofficial duties enumerated by Justice Scalia in the Sun-Diamond case, excluding such instances of conduct as "merely setting up a meeting, hosting an event, or calling another official" from the scope of impermissible activities. United States v. Sun-Diamond Growers of California, 526 U.S. 398 (1999). In fact, Justice Scalia repeatedly expressed his frustration with the ambiguity of 18 U.S.C. § 1346. "It is one thing to enact and enforce clear rules against certain types of corrupt behavior . . . but quite another to mandate a freestanding, open-ended duty to provide `honest services'—with the details to be worked out case by case." Sorich v. United States, 129 S.Ct. 1308 (2009), cert. denied, J. Scalia dissenting. In further reference to § 1346, he states that "it fails to define the conduct it prohibits,"
WHEREFORE, Defendant Dr. Oren Paris III prays that the Court sustain his Motion to Dismiss for the Government's Failure to State an Offense pursuant to Rule 12(b)(3)(13), for Prosecutorial Misconduct, for Failure to Present Exculpatory Evidence to the Grand Jury, or after a finding that 18 U.S.C. § 1346 is Void for Vagueness, for disclosure of all grand jury transcripts as requested herein, and for any such other and further relief the Court deems just and proper.
This motion arises out of unpardonable misconduct by a federal prosecutor and his prosecution team who should have known better. The factual background of the criminal case in which the misconduct occurred — a multi-defendant prosecution for honest services mail and wire fraud and conspiracy to commit honest services mail and wire fraud — has been well-documented in the numerous motions filed by Defendant Randall G. Shelton, Jr. ("Shelton") and his Codefendants,
From the day the first witnesses were interviewed over three years ago, this investigation and prosecution has been tainted by governmental misconduct, all to the prejudice of Mr. Shelton. Each instance of misconduct, taken individually, is sanctionable. When taken as a whole, the pattern of misconduct is so egregious that the appropriate outcome is dismissal with prejudice of the Second Superseding Indictment. The Acting United States Attorney and the FBI Special Agent in charge of this investigation violated the Hatch Act by pressuring Woods and cooperating witness Micah Neal to not run for elected office. In addition, the government actively interfered with defense strategy by using a cooperating witness to communicate with Woods about Defendants' strategy then passing that information along to the FBI. Further, the Grand Jury proceedings were tainted: first, because the government knew a witness had previously given false testimony under oath but nevertheless presented that witness to the Grand Jury: second, because the government actually presented false testimony to the Grand Jury; third, because the Acting United States Attorney failed to properly instruct an obviously confused Grand Jury about the charges being sought; and fourth, because the Acting United States Attorney impermissibly excused a Grand Juror. Also, the government has misled defense counsel and the Court in its communications and pleadings. Additionally, the government selectively prosecuted Mr. Shelton by failing to issue indictments against others involved in substantially similar financial dealings. Moreover, the government has engaged in ongoing, systemic discovery abuses throughout these proceedings, and unapologetically continues to do so, less than 30 days before the scheduled trial date. A timeline of events details the systemic and ongoing problems. Exhibit A. Timeline.
When looking at the government's conduct in totality, these errors are inexcusable. The prosecution of a criminal case is not a game to be played casually or thoughtlessly and the result of this proceeding is a matter of profound consequence to Mr. Shelton and to his Codefendants. The investigation, the Grand Jury presentment, and the resulting indictments are littered with misconduct and impropriety on the part of the Office of the United States Attorney for the Western District of Arkansas and the Federal Bureau of Investigation. When viewed cumulatively, the misconduct becomes even more egregious and militates in favor of dismissal of the Second Superseding Indictment with prejudice.
Berger v. United States, 295 U.S. 78, 88-89 (1935) (ordering a new trial based on "pronounced and persistent" prosecutorial misconduct with "probable cumulative effect upon the jury").
The actions of both the Acting United States Attorney and the FBI Special Agent in charge of this investigation are sufficiently egregious as to require dismissal of the Second Superseding Indictment. The objective facts in these proceedings demonstrate that the government has engaged in repeated acts of misconduct that violates settled rules governing the conduct of federal prosecutors and investigators.
To prevail on a claim of prosecutorial misconduct, a defendant must show that the prosecution's conduct was improper and that this improper conduct prejudicially affected his substantial rights. United States v. Wilkens, 742 F.3d 354, 361 (8th Cir. 2014). The test for reversible prosecutorial misconduct has two parts: (1) the prosecutor's remarks or conduct must in fact have been improper, and (2) such remarks or conduct must have prejudicially affected the defendant's substantial rights so as to deprive the defendant of a fair trial. United States v. Burrage, 687 F.3d 1015, 1022 (8th Cir. 2012); United States v. Barrera, 628 F.3d 1004, 1007 (8th Cir. 2011). The Eighth Circuit will support a dismissal of the indictment rather than a less severe sanction if the prosecutorial misconduct was flagrant and caused substantial prejudice to the defendant. See United States v. Manthei, 979 F.2d 124, 126 (8th Cir. 1992) ("Because the drastic step of dismissing an indictment is a disfavored remedy, . . . a district court may properly dismiss an indictment only if the prosecutorial misconduct (1) was flagrant, . . . and (2) caused substantial prejudice to the defendant.") (quoting United States v. Jacobs, 855 F.2d 652, 655 (9th Cir. 1988)).
The government's conduct clearly meets the heightened standard for a dismissal because it engaged in repeated acts of egregious misconduct, and the cumulative effect of its actions has resulted in substantial prejudice. In establishing prejudice for alleged prosecutorial misconduct, it becomes relevant to consider how many instances of misconduct occurred. Even if a single instance of misconduct does not require the dismissal of an indictment, the cumulative effect of a pattern of such conduct may. See, generally, Berger v. United States, 295 U.S. 78, 89 (1935) ("Moreover, we have not here a case where the misconduct of the prosecuting attorney was slight or confined to a single instance, but one where such misconduct was pronounced and persistent, with a probable cumulative effect upon the jury which cannot be disregarded as inconsequential."); United States v. Tulk, 171 F.3d 596, 599 (8th Cir. 1999) ("[f]actors to consider in assessing prejudice include the cumulative effect of any misconduct"). The government's misconduct has been systemic and flagrant. It began with the investigation, proceeded through the Grand Jury proceedings, and continued through the indictment and prosecution of this matter. The cumulative effect has resulted in considerable prejudice to Mr. Shelton, as shown below.
During the pre-indictment investigation of this case, acting United States Attorney Kenneth "Kenny" Elser ("Elser") and FBI Special Agent Robert "Bob" Cessario ("Cessario") directly interfered in two Arkansas elections — the election for Codefendant Jon Woods' seat in the Arkansas Senate, and the election for Washington County Judge, a position sought by Micah Neal.
The Hatch Act generally permits most federal employees to actively participate in partisan political management and partisan political campaigns. See, generally, 5 U.S.C. §§ 1501-08, 7321-26 (2000). Covered employees, however, are prohibited from "knowingly solicit[ing] or discourag[ing] the participation in any political activity of any person who . . . is the subject of . . . an investigation [] or enforcement action" carried out by that office. See 5 U.S.C. § 7323. Covered employees specifically include FBI agents, IRS agents, and employees of the DOJ criminal division, including United States Attorneys. See id. at § 7323(a); see also Exhibit B, Memo to DOJ Employees. The implementing regulations of the Act define "political activity" as activity directed toward the success or failure of a political party, candidate for a partisan political office or partisan political group. 5 C.F.R. § 734.101.
The Eighth Circuit has recognized that governmental integrity is threatened when government officials involve themselves in campaigns for political office. Republican Party of Minnesota v. Kelly, 247 F.3d 854, 869 (8th Cir. 2000) (citing United States Civil Serv. Comm'n v. National Ass'n of Letter Carriers, 413 U.S. 548, 563-64 (1973)). Noting that a risk of corruption exists when officials do so, the Eighth Circuit in Kelly relied on longstanding Supreme Court precedent and agreed that it is appropriate to restrain government officials' involvement in partisan political campaigns due to the inherent hazards that result:
247 F.3d at 869 (quoting Letter Carriers, 413 U.S. at 563-64).
Elser and Cessario's involvement in Woods' and Neal's political futures crossed the line into impermissible involvement in a political campaign. As background, in the fall of 2015, Woods, then an incumbent Arkansas State Senator, became aware that the was under investigation for public corruption. He hired local attorney W.H. Taylor ("Taylor") to represent him. Exhibit C, affidavit of Christina Woods. Woods was planning to run for reelection in 2016 and had already taken steps to mount a campaign. The Governor endorsed his candidacy at a fundraiser on October 20, 2015. Id. Woods had a narrow window to file for reelection, as the Republican Party filing period for that election cycle ran from November 2-9, 2015. See Exhibit D, Washington County Election Comm. 2016 Election Dates and Deadlines.
Woods and his wife met with Mr. Taylor on Saturday, October 31, 2015. Exhibit C. The three of them discussed Woods' upcoming campaign. During that meeting, Mr. Taylor told Woods and his wife that Elser told him he should not run for reelection. Id. Woods attempted to argue about Elser's instruction, but based on the information Taylor gave him, Woods decided not to seek reelection. Id. Absent Elser's intervention and coercion, Woods would have run for reelection as an incumbent and likely could have been reelected to his State Senate seat.
In addition to advising Woods not to seek reelection, the government meddled in a second Arkansas election — this time in 2016. Defense counsel did not discover this meddling until October 13, 2017, when the government provided supplemental discovery in the form of a heavily redacted 48-page print-out of text communications between Cessario and Shane Wilkinson, counsel for Micah Neal. Exhibit E, SMS messages from February 11, 2016-July 29, 2017 ("text messages"); see also Doc. 129.
In November of 2015, Micah Neal, then a sitting Arkansas State Representative, announced he would not run for reelection to that seat, but would be running for Washington County Judge. Neal filed as a candidate in the County Judge race and began his campaign. On March 1, 2016, Neal, running unopposed, won the Republican Party Primary. Exhibit F, Summary Report, 2016 Primary Official Results, Washington County, AR. Significantly, Neal's first proffer interview took place on January 5, 2016, after he had filed for the County Judge seat but before the party primary in March.
Discovery shows that on May 31, 2016, a few weeks after Neal's primary win, Cessario and Neal's attorney exchanged text messages discussing whether Neal should remain a candidate in the general election. During that text exchange, Cessario called Elser and they had a 12-minute long telephone call:
Exhibit E, text messages at pp. 14-15; Exhibit G, Cessario cellular phone records at p. 16.
A few weeks later, Neal did drop out of the Washington County Judge's race on June 29, 2017 — citing family and business reasons as his reasons for dropping out,
The text messages and phone calls between Neal's attorney, Cessario, and Elser show that the government, via members of the same investigative team and prosecutorial team,
The government impermissibly solicited and used information from alleged co-conspirator Neal to guide its charging decisions, to formulate its theory of the case, to develop investigatory leads and, ultimately, to obtain an indictment in this case. As shown below, Cessario solicited information from Neal — and potentially from others — about Defendants' trial strategy for months and passed that information along to the United States Attorney's office.
The government's interference in defense counsel's strategy violated the Sixth Amendment. The United States Supreme Court has held that a Sixth Amendment violation occurs when the government (1) intentionally plants an informer in the defense camp; (2) when confidential defense strategy information is disclosed to the prosecution by a government informer; or (3) when there is no intentional intrusion or disclosure of confidential defense strategy, but a disclosure by a government informer leads to prejudice to the defendant. See Weatherford v. Bursey, 429 U.S. 545 (1977); see also Cinelli v. City of Revere, 820 F.2d 474 (1st Cir. 1987) (by establishing that the defense strategy was communicated to detectives, defendant made a prima facie showing of prejudice); United States v. Levy, 577 F.2d 200 (3d Cir. 1978) (holding that prejudice, and thus a violation of the Sixth Amendment, will be presumed to occur when confidential defense strategy is disclosed to the government by an informer).
The government's efforts to obtain defense strategy becomes clear after reviewing a time line of events pieced together from the text messages between Cessario and Neal's attorney,
In late 2015, when the investigation was still in its early stages, the government obtained information from Woods, who at that time was represented by W.H. Taylor and who was working as a confidential human source. Taylor's representation began on or about October 20, 2015. See Doc. 63. Taylor notified Elser that Woods was represented by counsel, then on November 11, 2015, Taylor and Woods met with Elser at Taylor's law offices. Cessario, IRS Agent John Munns, and AUSA Sean Mulryne were also present. Id. Woods signed a proffer agreement during that meeting and did what was requested of him subsequent to signing the agreement.
For at least some period of time while Woods was cooperating with the government, Neal was providing information to the government as well, including information about defense strategy sent through text messages from his attorney to Cessario. Discovery indicates that Neal has been acting as a cooperating witness and government informant since his proffer interview of January 5, 2016. Shortly after Neal's proffer, Cessario began communicating with Neal's attorney, Wilkinson, via text messages. See Exhibit E. Cessario was not only keenly aware that privileged information might be disclosed during those text communications, but he actively encouraged and solicited it.
For example, Neal's attorney relayed the following details regarding who would be a cooperating witness in the following text exchange between Wilkinson and Cessario on February 11, 2016:
Exhibit E, text messages at p. 1; Exhibit G, Cessario cellular phone records at p. 5.
In mid-February, when Woods was still represented by W.H. Taylor and was cooperating with the government, Neal's attorney provided Woods' new telephone number to Cessario, who asked if Woods had recently contacted Neal from that new number. That conversation began after regular business hours on February 15:
The conversation continued in the morning of February 16, 2016:
Exhibit E, text messages at p. 1; Exhibit G, Cessario cellular phone records at p. 5.
On February 24, 2016, several redacted text messages were sent before, and possibly after, Cessario spoke to Elser. The February 24 messages were as follows:
Exhibit E, text messages at p. 2; Exhibit G, Cessario cellular phone records at p. 8.
On March 1, 2016, after Neal's attorney advised Cessario that he was with Neal, Cessario and Neal's attorney exchanged several text messages, and then Cessario called Elser:
Exhibit E, text messages at pp. 2-3; Exhibit G, Cessario cellular phone records at p. 9.
Between March 7-9, 2016, Neal's attorney provided details to the government about Defendants' alleged strategy to "close ranks," including information he had received from Woods while Woods was still represented by W.H. Taylor. During the time that Wilkinson and Cessario were exchanging texts, Elser and another Assistant United States Attorney was talking to Cessario by phone. Cessario's request for a "quick debrief' as the exchange wraps up shows the government's instructions to Neal about what information to share with — and get from — Defendants. On March 7, the text messages began after regular office hours:
The texts continued the next morning, on March 8:
Early the next morning, on March 9, Cessario received a telephone call:
Exhibit E, text messages at pp. 3-4 (emphasis added); Exhibit G, Cessario cellular telephone records, at 9.
On March II, 2016, Wilkinson notified Cessario that Neal had advised him how and where to communicate with Woods. At that time, Woods was still represented by W.H. Taylor:
Exhibit E, text messages at p. 4; Exhibit G, Cessario cellular telephone records, at 11.
On March 22, 2016, three days before Woods officially ended his attorney/client relationship with Mr. Taylor and retained his current counsel, Mr. Benca, the government already knew the details of his decision, as shown in the following text exchange:
On March 25, 2016, Cessario interviewed Neal at Wilkinson's law office. Exhibit H, FBI 302 interview. During the interview, Neal told Cessario that Woods was going to fire Mr. Taylor and hire Mr. Benca. Neal also advised Cessario that Woods told him not to talk to the FBI, and that the FBI had no evidence he had done anything wrong. Id. That same day, Cessario and Neal's attorney again discuss details of defense strategy:
Exhibit E, text messages at p. 5.
Woods had continued cooperating with the government and working as a confidential human source until late March, 2016. That "cooperation" continued until Woods retained his current counsel, Patrick Benca. When he was retained on March 29, 2016, Mr. Benca immediately notified Elser of his retention and Mr. Taylor's substitution, and advised Elser that Woods would not cooperate with the government until he could fully review the matter.
The next day, March 30, 2016, after Cessario learned Woods was no longer providing information to him, he asked if Neal could get information from Patsy Wootten, one of Woods' close friends:
Exhibit E, text messages at pp. 6-7.
It appears that shortly after Neal met with Cessario, Neal began surreptitiously recording numerous conversations with Woods and other potential witnesses. The recordings confirm that Neal was acting as an "undercover agent" at the behest of the government, and show that it was Neal's agenda to get Woods to discuss his and others' involvement in the subject matter outlined in the charges in this case and how Woods and others intended to defend those charges — the same matters discussed in detail during the time of Woods' "cooperation." See Recordings involving Jon Woods, produced April 3, 2017.
One of the earliest recordings indicates that Neal was actively looking for Ms. Wootten, which was exactly what Cessario has asked about in his text message a few days earlier. On the tapes, Neal can be heard driving around, then exiting his car and walking up to doors and knocking, while narrating his actions with comments like, "walking up to Patsy's house now. No one is home." Id. When listening to the recordings, it becomes obvious that Neal is getting instructions from someone as to how to conduct himself during the recorded statements with Woods. He acts as a narrator on the recordings prior to and subsequent to the meetings with Woods. At the end of several of the recordings, while the recorder is still on, Neal reports back to others. For example, on at least two occasions, Neal immediately calls Wilkinson and gets his voicemail. Id.
The recordings start out as random recordings of conversations, but as time progressed, they turn more and more interrogational, and eventually, Neal specifically starts asking Woods to reveal defensive strategies and specific instructions given to him by his counsel. For example, on one of the recordings, Neal asked Woods, "I've got to know what you told [Patrick Benca] . . . I have to know what you've said." Id. There are numerous variations of this request, as well as requests by Neal to know what Woods told his first attorney, Mr. Taylor. Id.
The Cessario/Wilkinson texts sent in the spring of 2016 show the government's ongoing efforts to obtain defense strategy. One text chain, dated April 13, 2016, again discusses the alleged defense strategy to "join ranks":
Exhibit E, text messages at p. 7.
As noted, in late March, Mr. Benca advised Elser that Woods would not cooperate with the government until he could fully review the matter. On May 4, 2016, Mr. Benca formally notified the government that Woods would no longer "cooperate." On June 8, 2016, shortly after being notified by Woods' current counsel that Woods would no longer cooperate or assist in the investigation, the government met with Neal and Wilkinson, his attorney, at Wilkinson's law office. Elser was present, as were AUSA Kyra Jenner, AUSA Sean Mulryne, and IRS Agent John Munns.
Without question, the text messages, telephone calls, and audio tapes show the government created a situation where Informant Neal would bait Woods into discussing defense strategy concerning, first, the impending government indictment, and later, the defense efforts postindictment. Woods then would share that strategy with his attorney, Wilkinson, who would forward the information to Cessario, who would discuss the information with Elser. The information and strategy that Neal was passing along, through Wilkinson, is at the core of Defendants' attorney-client privilege and work product doctrine.
The government deliberately intruded into Defendants' attorney-client relationships through the communications with Informant Neal. This knowledge resulted in actual and substantial prejudice to the defense, including the likelihood that key witnesses will undoubtedly be prepared for the information discussed during the text messages, thereby bolstering their credibility at trial. The government's use of Informant Neal in an undercover capacity to elicit information regarding the defense strategy in this case constitutes outrageous government misconduct warranting a dismissal of the Second Superseding Indictment.
United States v. Dionisio, 410 U.S. 1, 16-17 (1973) (internal citations and quotation marks omitted).
The government's numerous errors during the Grand Jury proceedings resulted in substantial prejudice to Mr. Shelton sufficient to dismiss the charges against him. First, the government allowed Neal to testify before the Grand Jury despite knowing that he had previously provided false testimony under oath in a related court proceeding. Also, the government misled the Grand Jury when it referred to a financial transaction as a "wire transfer" when the record shows it was not. In addition, Elser failed to properly instruct a clearly confused Grand Jury about the nature of the charges sought in order to secure an indictment against Mr. Shelton. Further, Elser impermissibly improperly excused a Grand Juror from the jury panel.
Despite knowing that Micah Neal had recently provided false testimony to the Washington County Circuit Court regarding his reasons for dropping out of the County Judge race, the government had no qualms about presenting him to the Grand Jury on February 28, 2017, where he again provided questionable testimony that fit the necessary timeline of events without regard for its credibility.
A prosecutor's knowing use of perjured testimony violates due process. See Mooney v. Holohan, 294 U.S. 103 (1935); Pyle v. Kansas, 317 U.S. 213 (1942). Certainly, a due process violation requires an automatic dismissal of the indictment, without an assessment of the prejudicial impact of the errors, because prejudice is presumed. See Bank of Nova Scotia v. United States, 487 U.S. 250, 256-57 (1988) (when "structural protections of the grand jury have been so compromised as to render the proceedings fundamentally unfair," there is a "presumption of prejudice"). "Dismissal of [an] indictment is appropriate . . . `if it is established that the violation substantially influenced the grand jury's decision to indict." Bank of Nova Scotia v. United States, 487 U.S. 250 (1988). As a result of the omission of relevant facts, there exists "grave doubt that [the decision of the Grand Jury] was free from substantial influence" of the government's misconduct here.
The government was well aware of Neal's interest in the Washington County Judge seat. Neal won the Republican primary election on March 1, 2016. In late May, through his attorney, he asked Cessario whether the government wanted him to continue as a candidate in that election. Exhibit E. On June 29, he formally announced that he was dropping out of the race.
This legal battle came to a head on August 9, 2016, when Special Judge Lineberger ruled in favor of the Republican Party following a hearing in which Neal took the stand to testify about why he dropped out of the race. He testified that he had recently moved out of Washington County — one of the statutory reasons to allow a substitute candidate — for family and business reasons. Exhibit I, transcript of Neal's Washington County testimony.
His testimony before the Grand Jury also lacked credibility. He testified about the dates that he received alleged "bribes" was crafted in such a way that made sure his testimony fit with the bank records regarding GIF grants to Ecclesia in the same way that his state court testimony neatly fit into a statutorily acceptable reason for the Republican Party to replace him on the ballot.
In paragraphs 19(ooo) through (xxx) of the Second Superseding Indictment (pp. 20-21), the government describes a transaction involving a GIF grant to Ecclesia. The operative paragraphs are paragraphs 19(ppp), in which the government alleges that "On or about January 5, 2015, PARIS caused a check to be issued to [Paradigm] in the amount of $65,000, drawn from [Ecclesia's] Centennial Bank account ending in 0681," and paragraph 19(qqq), which notes "Also on January 5, 2015, [Paradigm] deposited the $65,000 check from [Ecclesia] into [Paradigm's] Arvest Bank account ending in 7761." The government next alleges that after January 5, 2015, Mr. Shelton made a number of cash withdrawals from his Arvest Bank account ending in 7761.
The government then includes two statements in (www) and (xxx), respectively, alleging that between December 4, 2014 and approximately January 31, 2015, "SHELTON paid WOODS an unknown amount of money," and "SHELTON met Neal in person, as arranged by WOODS, and SHELTON provided Neal $18,000 in cash."
The first statement is totally uncorroborated, as there is no evidence of any payments — cash or otherwise — from Mr. Shelton to Woods during this period. As for the second, the sevenweek time frame in which Neal allegedly accepted a bribe is so vague as to be difficult to believe. However, Neal made sure this story fit in his testimony before the Grand Jury:
Exhibit J, excerpts of transcript of Neal Grand Jury testimony at pp. 56-57.
Before he testified in front of the Grand Jury, Neal gave a statement to Cessario and IRS Special Agent John Munns, in the presence of both Elser and AUSA Sean Mulryne. A pertinent passage reads: "NEAL thought that one of the kickbacks he received was before Christmas." Exhibit K, Munn's Memorandum of Conversation, Feb. 24, 2017.
The statements made by Neal regarding the pre-Christmas payment are significant given the government's allegations contained in the preceding paragraphs under the heading:
PARIS/[Ecclesia] Pay Bribes to WOODS and Neal Through SHELTON/[Paradigm] on page 20. The section starts with the allegation that Shelton proposed a $65,000 extension of the consultation agreement between Ecclesia and Paradigm in a letter dated December 30, 2015, and that Ecclesia made the payment to Paradigm on January 5, 2015.
The government had the preceding evidence when it presented this chain of events to the Grand Jury, yet proceeded to represent that a portion of the $65,000 paid from Ecclesia to Paradigm made its way into Woods' and Neal's pockets, though it had not been paid until approximately two weeks after the time Neal testified he received the "bribe" money. Either the government intentionally misrepresented to the Grand Jury the possible date range as between December 4, 2014 through January 31, 2015 though they knew the payment was made before Christmas 2014, or Neal, with suspect credibility since he was in pursuit of a plea agreement, lied to the government about receiving the payment. After all, the second $200,000 GIF grant to Ecclesia was half of a redistribution of a previous grant to Ameriworks
This commentary shows that the government had no qualms about presenting a witness to the Grand Jury who had recently given false testimony. No other reasonable inference can be drawn from Neal's statement except that the Grand Jury voted a true bill on an indictment that did not reflect the evidence presented to it as a result of the government's outrageous and egregious manipulation in its presentation of evidence and its substantial influence on the Grand Jurors.
During the Grand Jury proceedings, Elser questioned Cessario about the financial transactions between Woods and Mr. Shelton. When Elser asked if Shelton made a wire transfer" from his Paradigm account into Woods' personal account on October 1, 2013, Cessario answered under oath that Shelton did so. It appears that Elser may have asked about "wire transfer" transaction in order to make a connection for the Grand Jury sufficient to secure an indictment for "wire fraud" — although the banking records are clear that no "wire transfer" was sent between Mr. Shelton's Paradigm account and Woods' account on that day at all. Cessario's testimony substantially prejudiced to Mr. Shelton.
When a defendant demonstrates flagrant and substantial governmental misconduct during grand jury proceedings, dismissal of an indictment is proper. United States v. Wadlington, 233 F.3d 1067, 1073-4 (8th Cir. 2000) (citing United States v. Kouba, 822 F.2d 768, 774 (8th Cir. 1987) (following subsequent guilty verdict by petit jury, court refused to consider defendant's claims that grand jury was misled by prosecution's introduction of incomplete and misleading summaries of testimony that failed to include possible exculpatory evidence given to prior grand juries because guilty verdict rendered errors harmless)); United States v. Manthei, 979 F.2d 124, 126-27 (8th Cir. 1992).
[REDACTED\]
However, a review of Mr. Woods' bank records clearly indicates that a bank transfer did not occur. While a deposit was made into his account in October 1, that deposit was a teller deposit, made in person, not a "wire" or electronic transfer at all. See Exhibit M, Woods' Arvest bank statement dated October 17, 2013.
The Second Superseding Indictment, as detailed in Paragraphs 19(w) through (z), also describes the transaction between Mr. Shelton and Mr. Woods as a "transfer," as follows:
The most logical explanation for Cessario's erroneous testimony before the Grand Jury is that either Elser, who asked Cessario the misleading questions about "wire transfers" during his Grand Jury testimony, or Cessario, who answered Elser's questions in the affirmative (or both of them), thought they could more easily obtain an indictment if Cessario misstated what the bank records actually showed. Perhaps the government thought that if they tried to connect nonexistent dots by calling Woods' in-person deposit a "wire transfer," that would help explain the charge of "wire fraud" to the Grand Jurors. The government either intentionally misled the Grand Jury or did not understand what the bank records show. Either way, Cessario's testimony was incorrect, and it mislead the Grand Jury.
Elser failed to properly instruct the Grand Jurors about the charges being sought, and instead sent them off to deliberate despite their obvious confusion. This Grand Jury appears to have been particularly susceptible to undue influence by the government and its skewed and selective prosecution of its evidence.
At the very least, Mr. Shelton believes sufficient doubt exists that the government properly instructed the Grand Jurors, and as a result he should be entitled to disclosure of the government's colloquy and full instructions to the Grand Jury pursuant to F.R.C.P. Rule 6(e)(E)(ii), to determine if they exceed what meager instruction appears above in order to avoid injustice and which in this instance outweighs the further need for secrecy. In re Grand Jury Proceedings Relative to Perl, 838 F.2d 304, 306 (8th Cir. 1988). If no further instruction exists in the transcripts, the instruction, or lack thereof speak for themselves and the Second Superseding Indictment should be dismissed for improper instruction.
[REDACTED\]Significantly, Cessario was the final government witness. This exchange shows the jurors were incredibly confused about the issues they were charged with deliberating even before they left the courtroom. Elser's vague and suggestive commentary was improper. The Grand Jury asked about why charges of embezzlement and theft — basically, state court charges — were not being sought but the panel received no meaningful instruction about the charges or about the elements of the offenses contained in the Second Superseding Indictment. The Grand Jury's unresolved inquiry about why this was not a case involving embezzlement or theft may have improperly influenced its decision to indict Mr. Shelton.
Irregularities inside the Grand Jury room may have occurred that require dismissal of the indictment. Pursuant to 28 U.S.C. § 1867, if the court determines that there has been a substantial failure to properly empanel the grand jury, the court shall dismiss the indictment.
In Nears Grand Jury testimony of February 28, 2017, the record shows that a Grand Juror advised that she knew Rusty Cranford, an unindicted coconspirator. That person advised that she did not know if he or she should hear the testimony or recuse. Exhibit J, excerpts of transcript of Neal Grand Jury testimony at pp. 1-10. The record shows that Elser excused that juror on his own accord. That Grand Juror's recusal was improper. Only the Court, or the clerk as his designee, is allowed to excuse a Grand Juror. Sec Fed. R. Crim. Proc. 6(h); see also General Order 47 of the United States District Court for the Western District of Arkansas.
It is also unclear if the recusal of that grand juror left a panel of 16 people, as required. as no record was made about the existence of a quorum. See Fed. R. Crim. Pro. 6.
Overall. there were several defects in the Grand Jury proceedings. The government called as its star witness someone who is known to provide false testimony and who then provided suspect testimony involving a "bribe" arriving just in time to buy Christmas gifts. Cessario provided erroneous testimony about a "wire transfer." Elser failed to properly instruct a confused Grand Jury. And the record indicates that Elser improperly excused a Grand Juror. When viewed collectively, these defects created substantial prejudice to Mr. Shelton. and that prejudice should be fatal to the indictment.
The actions of the Acting United States Attorney are sufficiently egregious as to require dismissal of the Second Superseding Indictment. The objective facts and circumstances here demonstrate that the government engaged in a sequence of overreaching by repeated acts of misconduct that violated settled rules that govern the conduct of a prosecutor.
Arkansas Rules of Prof I Conduct. r. 3.3.
Id. r. 4.1.
Id. r. 8.4.
To illustrate the government's misleading conduct, one need look no further than the government's pleading of August 1, 2017, where the government asserts: "Moreover, Neal's recordings were conducted by Neal alone — without any direction by the government — and correspondingly violated no law or ethical rule." [Doc. 67 at p. 1]. That directly contradicts the information contained in the lengthy text exchanges between Neal, through his attorney, and Cessario. See Exhibit E, text messages. A review of those messages shows that the Court and defense counsel have been misled, as they show that the government was clearly "directing" Neal to act, as indicated in the following text exchanges:
Exhibit E, text messages at p. 4 (sent after Neal, through Wilkinson, advised Cessario that Woods was closing ranks and was telling everyone — presumably including Codefendants — to be "quite" [sic] because the government did not "have anything," and indicating that Cessario and Neal met, perhaps in person, to discuss the case and the defense strategy).
Id. (sent with a follow-up text noting "FYI," indicating that Wilkinson was relaying information from Neal about how Cessario could get in contact with Woods).
Id. at p. 6 (asking Wilkinson if Neal would meet with possible witnesses, apparently with the intent that any information from that meeting would be passed along to Cessario).
Id. at p. 7 (showing Cessario's efforts to obtain information about Woods after Woods told the government he would no longer cooperate in the investigation).
Id. at p. 12 text dated May 16, 2016 (advising Cessario that Neal was meeting with Woods and he would relay information about the meeting to him).
Id. at p. 13, text dated May 18, 2016 (indicating that the government's acquisition of audio recordings from Neal is not what they have advised the Court in this text exchange between Cessario and Wilkinson describing the alleged marital infidelity of a potential witness in these proceedings,).
Id. at p. 25 (indicating that Cessario and Neal were still meeting to discuss the case and the defense strategy in late 2016).
Id. at p. 32, text dated January 2, 2017.
And though it is unclear when the recordings actually begin and end, it is abundantly clear that, contrary to the government's position, Neal continued to relay information to the government well past the date of the initial indictment. In prior pleadings, the government has asserted that all "recordings" took place prior to the date of the original indictment on March 1, 2017.
Id. at p. 36.
And on May 23, 2017, Cessario continued to ask Neal for information:
Id. at pp. 40-41.
These text exchanges show that the government's pleadings in this case and before this Court have misled the Court and defense counsel. The rules of professional conduct require candor from the prosecution team. Certainly, the prosecutors here owe a duty of candor and honesty to the Court, as do all attorneys appearing before it. At the very least, they owe a duty not to misrepresent the facts to a judge or opposing counsel. However, the prosecuting attorneys have violated virtually every interpretation of candor in this proceeding. As noted in a recent opinion from Judge Hanen in the Southern District of Texas, "[s]uch conduct is certainly not worthy of any department whose name includes the word `Justice.'" Texas v. United States, Case 1:14-cv-00254, Doc. 347 at p. 7.
Yick Wo v. Hopkins, 118 U.S. 356, 373-74 (1886).
There is not an indictment's worth of difference between the way the government alleges the financial transactions occurred between Mr. Shelton and Woods and the way they occurred between Woods and numerous other friends and colleagues. The closest one can get to a hint of why Mr. Shelton was indicted while others were not is that perhaps this case was based on political considerations. Regardless, the government's theory of the case against Mr. Shelton (not to mention his liberty) rides on this definition without a difference. Mr. Shelton is nominally being prosecuted for allegedly being involved in a scheme involving improper GIF payments, but other individuals who engaged in the same type of conduct have not been prosecuted.
The government's aggressive pursuit of the allegations against Mr. Shelton via Codefendant Woods show that Shelton has been singled out for prosecution while others similarly situated have not been, and the decision to do so was based on political considerations. The government's investigation targeted several other members of the Arkansas General Assembly and numerous business associates throughout Northwest Arkansas. However, Elser declined to prosecute those with more overwhelming evidence against them, but charged Mr. Shelton and his Codefendants. The government's actions amount to selective prosecution and the Second Superseding Indictment must be dismissed accordingly.
"In our criminal justice system, the Government retains broad discretion as to whom to prosecute." Wayte v. United States, 470 U.S. 598, 607 (1985) (quoting United States v. Goodwin, 457 U.S. 368, 380 n.11 (1982)). By the same token, "[a]lthough prosecutorial discretion is broad, it is not unfettered. Selectivity in the enforcement of criminal laws is subject to constitutional constraints." Id. at 608 (citation and internal punctuation omitted). In particular, the decision to prosecute may not be "deliberately based on an unjustifiable standard such as race, religion, or other arbitrary classification." Oyler v. Boles, 368 U.S. 448, 456 (1962). It may also not be based on "the exercise of protected statutory and constitutional rights." Wayte, 470 U.S. at 608.
A selective prosecution claim requires a defendant to show that: "(I) people similarly situated to [him] were not prosecuted; and (2) the decision to prosecute was motivated by a discriminatory purpose." United States v. Peterson, 652 F.3d 979, 981 (8th Cir. 2011) (quoting United States v. Hirsch, 360 F.3d 860, 864 (8th Cir. 2004)). The practical result is that a defendant seeking relief on a claim of selective prosecution must show some evidence of both discriminatory effect and discriminatory intent. Mr. Shelton can show both. Mr. Shelton has been caught up in the political cross-hairs of an investigation that included a review of how politics-as-usual has been conducted in Arkansas for years. Certainly, the distinguishing characteristics of one's political affiliation can give rise to a selective prosecution claim. See, generally, United States v. Cammisano, 546 F.2d 238 (8th Cir. 1976) ("Selective prosecution . . . can become a weapon used to discipline political foe and the dissident").
Discovery documents indicate that this investigation originated with the Little Rock branch office of the FBI in July of 2014, at which time Conner Eldridge was United States Attorney for the Western District of Arkansas. Mr. Eldridge personally participated in witness interviews during the investigation's initial phases. A little more than a year later, on September 9, 2015, Mr. Eldridge announced that he was resigning the office of the United States Attorney to seek the 2016 Democratic nomination for United States Senate.
A review of discovery produced to date disclose that the government interviewed several individuals associated one way or another with Woods, including a local businessman, Bob Srygley. In a transaction that the government describes to be substantially similar to the October 1, 2013 transaction between Mr. Shelton and Woods, in 2011 Mr. Shrygley loaned Woods the sum of $35,000. This transaction is noted by inference in Paragraph 19(z) of the Second Superseding Indictment, when it states that "[a]lso on or about October 1, 2013, Woods withdrew $33,000 from his personal Arvest Bank account ending in 2553 to purchase an Arvest Bank cashier's check payable to another person." This payment is the essence of Count 17 in which Woods is alleged to have "unlawfully and knowingly engaged and attempted to engage in a monetary transaction affecting interstate commerce in criminally derived property greater than $10,000 which was derived from specified unlawful activity, that is, Woods purchased an Arvest Bank's cashier's check using funds from his Arvest Bank account ending in 2553, said funds being derived from honest services fraud . . . ."
In sum, discovery shows Mr. Shelton loaned Woods money. Bob Srygley also loaned Woods $35,000 that was subsequently repaid with the funds borrowed from Mr. Shelton. This type of transaction was apparently a common occurrence for Woods, who regularly borrowed money from friends and colleagues. The loans are virtually indistinguishable. However, the Shelton-Woods transfer of is the basis for the government's honest services fraud allegations, while the Bob Srygley-Woods transaction is merely a typical financial procedure for Woods.
Mr. Srygley, however, as reported by the Federal Election Commission, through Washington County Financial Management, an entity where he served as president, made two campaign contributions in the amounts of $2000 to "Conner for Arkansas," one on October 13, 2016 and another on December 23, 2015. Mr. Srygley, a Democrat, has also contributed to the campaigns of Blanche Lincoln and Mark Pryor as well as the 2016 presidential campaign of the Democratic ticket of Hillary Clinton and Tim Kaine.
In 2013, then-Senator Woods sponsored Senate Bill 900 that would amend the Arkansas Constitution to allow the legislature to change interest rates. The bill represented a departure from the regular course of legislative business in State of Arkansas following a 2008 decision by the Arkansas Supreme Court declaring that the high fees and interest rates charged by many payday lenders ran afoul of the State's usury laws. Mr. Srygley owns a number of payday loan and check cashing establishments in the State of Arkansas. According to news reports, Senate Bill 900 followed Woods' previous effort in 2011 when he filed a bill to "create a small loan industry in the state. The bill would have allowed loans from $250 to $5000 to be made to borrowers for terms of six months to two years."
In his interview, Mr. Srygley admitted that on September 15, 2011, he issued a check to Woods in the amount of $30,000, and on May 17, 2012, another in the amount of $5000. It is reasonable to infer that the $35,000 "loan" by Mr. Srygley to Woods was less a political favor than it was value exchanged for Woods' help as a legislator, yet Mr. Srygley was insulated by his Democratic political contributions.
Here, despite extensive evidence of financial shenanigans involving well-connected Democrats, the government has chosen to prosecute a former Republican state senator, that senator's close friend, and the president of a conservative Christian college. The government's aggressive pursuit of the allegations against Mr. Shelton as a result of his relationship with Woods shows that Mr. Shelton has been singled out for prosecution while others similarly situated have not. The distinguishing characteristics of his relationship with Woods and Woods' political affiliation are impermissible grounds for his indictment in this matter. The Second Superseding Indictment against Mr. Shelton should be dismissed for such selective prosecution.
Given the government's pattern of gamesmanship exhibited thus far, the only result that can be reached is that it has operated in bad faith to obscure, obstruct, and withhold discovery materials from Defendants. First, the government produced a "document dump" of over 4.3 million files that proved to be unsearchable. Then, several weeks later after extensive efforts by defense counsel to review those files, the government claimed that it had already produced everything it needed to produce and would not rely on files in the unsearchable document dump. Nevertheless, it continues to produce discovery materials, including over 5,000 pages of discovery produced as recently as November 6, 2017. This conduct is improper, violates this Court's scheduling order, and is sanctionable. See Doc. 91; see also Doc. 59 (requiring the government to disclose discovery documents within seven days of Defendants' request).
In addition to the government's discovery obligations under Rule 16(a), the government must also honor the defendant's constitutional rights, particularly the defendant's due process rights. See United States v. Jordan, 316 F.3d 1215, 1251 (11th Cir. 2003) (noting that Brady obligates the government to disclose favorable evidence that is material). To that end, the district court has broad discretion in imposing sanctions on parties for failing to comply with discovery orders. See Fed. R. Crim. P. 16(d)(2); see also United States. v. Davis, 244 F.3d 666 (8th Cir. 2000). In Davis, the Eighth Circuit noted that in determining a suitable and effective sanction, a court must weigh the reasons for the government's delay and whether it acted intentionally or in bad faith; the degree of prejudice, if any, suffered by the defendant; and whether any less severe sanction will remedy the prejudice and the wrongdoing of the government. 244 F.3d at 670 (citing United States v. Hastings, 126 F.3d 310, 317 (4th Cir. 1997) (holding dismissal of indictment was too severe a sanction where defendant only suffered inconvenience and slight expense of delays caused by the government's slow compliance, rather than actual prejudice); United States v. Manthei, 979 F.2d 124, 126-27 (8th Cir. 1992). The Davis court upheld the exclusion of evidence as an appropriate sanction for disregarding the court's discovery deadline by not providing DNA evidence in a timely manner, noting that the government had made "an obvious discovery violation." Id.
The government's discovery misconduct has continued, unabated, despite ongoing protests from Defendants. While the Court is aware of defense counsel's motions describing the government's conduct in detail and has ruled on several of those motions, the following examples further explain the extent of the problem. To spare the Court from a repetition of all of the government's shenanigans in this case, however, Mr. Shelton will highlight some of the most egregious.
Mr. Shelton's motion to compel was prompted by the government's production of a oneterabyte hard drive containing over 4.3 million files on September 1, 2017, just over two months before trial. The terabyte of information could not be downloaded, so on September 25, 2017 defense counsel described their unsuccessful efforts to review the electronically stored information ("ESI") and moved to compel meaningful access to discovery. [Doc. 91]. The government responded on October 3 [Doc. 103], and filed a supplemental response on October 10. [Doc. 113]. Initially, the government failed to acknowledge that there was a problem with its production of over 4.3 million ESI files and incorrectly claimed that the files had all been produced in an easily searchable format. Even after acknowledging that there was a problem, it proceeded to minimize its role in this terabyte fiasco entirely in that response or in its supplemental one. In its supplemental response, the government alerted the Court and defense counsel that it does not actually intend to offer any of the approximately 4.3 million records and documents from that hard drive into evidence, and that it would instead be sending defense counsel an encrypted hard drive that contains 398 "important emails and attachments" in this case. See Doc. 113 at ¶ 1(a).
Despite the government's assurances that it would not use any documents on the hard-drive and it had satisfied its discovery obligations, defense counsels' ethical obligations to their client to provide effective assistance of counsel and appropriate due diligence mandated that they continue their efforts to obtain the ESI the government produced. They could not simply ignore the millions of files the government produced on the hard drive. Therefore, with frustration growing and time waning, on October 4, 2017 (before the government filed its supplemental response), defense counsel purchased the Ipro Eclipse SE software recommended by the government for $1,375. See Exhibit N, Koehler affidavit and attached technical support summary. This price included the software and necessary training to use the software. Even after purchasing the software and spending hours trying to sort through the discovery, however, many of the files on the hard drive remain unreadable. Id. To date, defense counsel has spent over $1,500 in training and technical support, as more fully outlined in the memo attached to Koehler's affidavit. Id.
When added together, the government's conduct and representations to defense counsel regarding discovery are teeming with flagrant disregard for its ethical obligation to be forthcoming to opposing counsel. The government's ongoing gamesmanship and questionable conduct continues, well after the Court's stated discovery deadline and long after the government has stated that it has produced all relevant discovery.
Taking a breather from the manner and means of the government's discovery abuses. it is also important to address their timing. This Court's Scheduling Order mandates all government disclosures within seven days of Defendants' request. [Doc. 59]. There, the Court specified a process for which the government must show good cause should they fail in their Court ordered obligation. The government has not only failed to show good cause, but it has failed to even provide defense counsel the declination it was ordered to provide, should it disregard or decide not to meet its seven-day disclosure deadline.
As noted, the government advised defense counsel that it had previously disclosed all necessary discovery materials. [Doc. 113]. Despite assurances of full discovery compliance, however, the government has continued to produce encrypted discovery (and has produced hard copies of some discovery, including Cessario's text messages, which were sent via a commercial mail service despite government assertions that it can only produce encrypted discovery materials in order to comply with DOJ policy). In fact, encrypted DVD after encrypted DVD containing previously undisclosed discovery materials have arrived regularly at defense counsel's office throughout October and into early November, 2017. The government has inundated counsel at the very last minute with additional discovery, including discovery sent via FedEx on October 13, October 19, and October 26, when defense counsel received yet another encrypted DVD containing additional discovery materials, including document identifying a possible expert witness. In fact, on November 6, the government produced several thousand additional bank records.
While some of that discovery has been produced as part of its ongoing discovery obligations, the government has also produced information that they have had in their possession for a lengthy period of time but had not yet turned over to the defense, including the identification of a possible expert witness, tax records, and banking records. In addition, based on conversations with the Office of the United States Attorney, defense counsel expects to receive still further disclosures. The actions and representations to opposing counsel and their clients fly in the face of the obligation to act in the furtherance of justice and with fairness to opposing counsel. The government's claims that it has fully complied with its discovery only raises the question of what documents have not yet been produced (or that have perhaps been produced but are buried in the unsearchable hard drive containing over 4.3 million documents), that are favorable to the defense, including documents that could be the subject of motions, including motions in limine or motions to subpoena witnesses, for example.
This is not the first time the United States Attorney's office in the Western District of Arkansas has disregarded this obligation. In a Memorandum Opinion and Order from this Court in a recent case, the Court highlighted the government's obligation to comply with discovery orders, noting:
United States v. Navarette, Case 5:15-cr-50060-TLB, Doc. 99 at pp. 7-8.
As noted, the Eighth Circuit allows the Court to exclude evidence as an appropriate sanction if a party has disregarded the Court's discovery deadline. Davis, 244 F.3d at 670. Justice now requires that the government comply with those orders. Defense counsel has no confidence that the government has produced all discovery materials to date. The falsity of the government's previous assertions of full compliance begs the question of what other evidence helpful to the defense has not yet been disclosed. The discovery abuses have been ongoing and systemic. Unlike the slight inconvenience and expense of delays discussed by the Fourth Circuit in Hastings, here the pattern of discovery abuses has been ongoing, and continues today, less than 30 days before trial.
In hindsight, the government's discovery and trial preparation practices leading up to the weeks before trial indicate that the discovery violations may have been a calculated strategy. Elser's failure to produce discovery in an appropriate method in time for effective use reflects a fundamentally flawed understanding of his obligations or a reckless disregard of them. despite many years of experience as a prosecutor. The persistent recurrence of "inadvertent" violations of the discovery process indicates that the government has not properly discharged its obligation to produce discovery to Defendants. Justice requires serious repercussions directed toward the United States Attorneys' Office in this matter, in order to prevent the continual and flagrant pattern that they have now exhibited.
Given that the prosecutorial misconduct in this case was by no means isolated to a single incident, but was pronounced and persistent throughout the course of the investigation, prosecution and trial of this case, the "cumulative effect" of this substantial and sustained misconduct was more than sufficient to meet the "substantial prejudice" threshold necessary to justify dismissal of the Second Superseding Indictment under the Court's supervisory powers.
The government's conduct clearly meets the standard for a dismissal of the Second Superseding Indictment here because the cumulative effect of the government's repeated acts of egregious misconduct, as described above, resulted in substantial prejudice to Mr. Shelton. In establishing prejudice for alleged prosecutorial misconduct, it becomes relevant to consider how many instances of misconduct occurred. Even if a single instance of misconduct does not require the reversal of a conviction or the dismissal of an indictment the cumulative effect of a pattern of such conduct may. See, generally Berger v. United States. 295 U.S. 78. 89 (1935) ("Moreover. we have not here a case where the misconduct of the prosecuting attorney was slight or confined to a single instance, but one where such misconduct was pronounced and persistent, with a probable cumulative effect upon the jury which cannot be disregarded as inconsequential."); United States v. Talk, 171 F.3d 596, 599 (8th Cir. 1999) ("[f]actors to consider in assessing prejudice include the cumulative effect of any misconduct").
Here, the misconduct was flagrant and systemic. It began with the investigation, proceeded through the Grand Jury proceedings, continued through the Second Superseding Indictment (which was obtained only 82 days before the scheduled trial date) and continues through the prosecution of this matter. The cumulative effect has resulted in considerable prejudice to Mr. Shelton.
For the reasons set forth above, Defendant Randell G. Shelton respectfully requests that this Court set this matter for hearing to consider the complex facts in this case, grant his motion to dismiss the Second Superseding Indictment with prejudice, and grant all other relief the Court deems proper.
I, Chad L. Atwell, hereby certify that on this 8th day of November, 2017, I electronically filed the foregoing with the Clerk of Court using CM/ECF system, which shall send notification to the following:
This memorandum serves as our periodic reminder to all Department of Justice (Department) employees that we must be familiar with the rules governing participation in partisan political activities and ensure that politics does not compromise the integrity of our work. While always important, we should be particularly mindful of these rules in an election year. The public trusts that we will enforce the laws of the United States in a neutral and impartial manner, without the actual or apparent influence of political agendas. With that objective in mind, the purpose of this memorandum is to outline the restrictions on political activity applicable to the Department's non-career appointees.
The Hatch Act, 5 USC 7323(a) and 7324(a) generally prohibits Department employees from engaging in partisan political activity while on duty, in a federal facility or using federal property. Political activity is activity directed toward the success or failure of a political party, candidate for partisan political office, or partisan political group. The statute applies to all federal employees, with some variation in the specific restrictions that are based on an employee's position. "Less restricted" employees, which include most career employees in the executive branch, are able to participate actively in political management or partisan political campaigns, while off-duty. "Further restricted" employees are held to stricter rules that preclude similar participation in political activities. The following Department of Justice employees are "further restricted" by statute: all career Senior Executive Service (SES) employees; administrative law judges; employees in the Criminal Division, the Federal Bureau of Investigation, and the National Security Division; and criminal investigators and explosives enforcement officers in ATF.
Considering the Department's mission, the Attorney General has previously determined that, as a matter of Department policy, all political appointees (and those acting in such positions) will be subject to the rules that govern "further restricted" employees under the Hatch Act to ensure there is not an appearance that politics plays any part in the
Department's day to day operations.
Non-career appointees may not:
Passive participation in a personal capacity at a partisan event is allowed and means merely attending a fund-raising or campaign event; acceptance of a gift of free or discounted attendance may be approved if it meets an exception to the gift rules including the restrictions of the Ethics Pledge, Executive Order 13490. Passive participation, with or without gift acceptance in connection with a partisan event,
Department officials must be vigilant to prevent the appearance that any of our official duties are an effort to influence the outcome of an election. Attendance at an official event, which includes a speech, grant announcement, or appearance with a candidate for partisan office, shortly before a primary or general election may be construed as inappropriately partisan. Please consider, among other factors, the identity of the sponsor of the event, the group being addressed, the other participants, the timing of the event, and the subject of any speech to be given. Previous Attorneys General have made an effort and encouraged Presidentially-appointed officials, or those acting in such positions, to avoid making public appearances or appearances with candidates, even in non-campaign settings, shortly before a primary or general election in a state, to the greatest extent practicable. This precedent should be followed. This policy is not meant to restrict the normal, day-to-day activities of political appointees. For example, United States Attorneys may still make public appearances related to a verdict, indictment, or investigation, and should still meet with the Department's law enforcement partners as they normally would. If you have any questions whether a particular event could be construed as inappropriately partisan please consult with the Deputy Attorney General or her designee, or the Associate Attorney General or his designee.
It is important to note that the use of social media (e.g., Facebook, Linkedln, Twitter, etc.) raises particular issues when it comes to political activity, and employees who utilize social media should become familiar with the restrictions that apply. A number of recent instances of misuse of social media in connection with political activities serve as reminders that employees must be vigilant in following the rules. The U.S. Office of Special Counsel (OSC) recently confirmed that an employee who used his Twitter account to post over 30 "tweets" soliciting contributions for a partisan candidate, violated the Hatch Act. There have also been several instances of employees sending politically-charged emails to colleagues while on duty, also a violation of the Hatch Act. OSC has imposed suspensions up to 180 days for recent violations.
In order to avoid Hatch Act violations in using social media, please review the specific, detailed guidance on use of social media in connection with political activities, which is available on the Department's website. https://www.justice.gov/jmd/political-activitics
Displaying photographs of candidates for partisan office is considered partisan political activity, and therefore is not permitted in the federal workplace. There are limited exceptions to this ban, including official photographs of the President (when the President is a candidate for re-election), and for some personal photographs of a candidate which generally include the employee in the photograph. Be cautious when using photo-based social media sites such as Instagram and Tumblr, as the Hatch Act restrictions may apply to photographs posted on those sites as well (and also may apply if posted while on duty, in a government workplace, or using government equipment).
If you have candidate photographs in your office or workspace and have any question whether you may display the photographs, please contact your ethics official.
If you have questions concerning any of these rules or policies, please contact your Deputy Designated Agency Ethics Official (DDAEO), or the Departmental Ethics Office, at (202) 514-8196.
COMES NOW the Affiant, Christina Mitchell Woods, and for her Affidavit, does verily state:
1. I am over the age of eighteen and am of sound mind.
2. I am the wife of Jon Woods.
3. Jon Woods was a Senator for District 7 in the State of Arkansas from 2013-2017.
4. Although Jon knew he was under investigation for alleged public corruption, he planned on running for re-election of his seat for the 2018-2021 term.
5. At the time he was informed of the public corruption investigation, Jon hired W.H. Taylor to represent him.
6. The Arkansas Republican Primary filing period for filing for re-election was from November 2, 2015—November 9, 2015.
7. On October 20, 2015, an event was held celebrating Governor Asa Hutchinson's endorsement of Jon for re-election at the home of Philip Taldo, Governor Hutchinson's childhood best friend.
8. I was present at a meeting with Jon and Mr. Taylor on the morning of Saturday, October 31, 2015, at or around 9:30 a.m. Mr. Taylor had us park behind his office.
9. During this meeting, Mr. Taylor informed both Jon and me that Acting United States Attorney Kenneth Elser had told him (Mr. Taylor) that Jon should not run for re-election.
10. Jon argued with Mr. Taylor about this because the filing period opened in two (2) days and he had already planned to run for re-election.
11. Mr. Taylor re-iterated on several occasions that Mr. Elser said Jon should not run for re-election.
12. Based on this information, Jon did not seek re-election.
FURTHER AFFIANT SAYETH NOT.
ELECTION DATES AND DEADLINES 2016
[IMAGE]
FD-302 (Rev. 5-8-10)
MICAH NEAL (NEAL), previously identified, was interviewed at the law office of Shawn Wilkinson. After being advised of the identity of the interviewing Agent and the nature of the interview, NEAL provided the following information:
NEAL advised that JON WOODS (WOODS) was going to fire his attorney, WH Taylor and was going to hire Patrick Benca. WOODS has been contacting RANDALL SHELTON, RUSTY CRANFORD, and OREN PARIS through JANA DELAROSA and TIM SUMMERS.
WOODS told NEAL not to talk to the FBI and that the FBI had no evidence he did anything wrong.
PATSY WOOTEN is JANA DELAROSA's mother and is loyal to WOODS. WOODS is running Clint Penzo's campaign.
JEREMY HUTCHISON (HUTCHISON) has an airplane in the saline county airport. NEAL surmised HUTCHISON is trading hanger fees for GIF funds.
HUTCHISON told NEAL that he wanted to trade his GIF funds for his children's tuition at Shiloh High school.
JOHN CHEEK, owns a company called OUR HOUSE house and is very good friends with HUTCHISON. OUR HOUSE is a non profit in Saline county that receives 70K in GIF funds from HUTCHISON.
Investigation on
File #
This document contains neither recommendations nor conclusions of the FBI. It is the property of the FBI and is loaned to your agency; it and its contents are not to be distributed outside your agency.
The following is a true and correct transcript of the testimony of Micah Neal heard on August 9
BY MR. HIRSCH:
Q Mr. Neal, my name's Kent Hirsch, and I think we're acquainted. How would you 1 ____ Mr. Neal,
Micah, your — ____
A However you feel comfor ____
Q What are you comfortab ____ good?
A Whatever you're how ____ able.
2Q Okay, that's good. W ____ for the record, please, sir?
A Micah Scott Neal.
Q And where do you live, Micah?
A 615 Prairie Street. Lowell, Arkansas, 72745.
Q All right, what was your previous residence?
A 800 Fairway Circle. Springdale, Arkansas, 72764.
Q Okay, thank you.
BY MR. HIRSCH: (Resuming)
Q Fairway Circle over by the country club?
A (no audible response.)
BY MR. HIRSCH: (Resuming)
Q The court reporter didn't hear your answer,
BY MR. HIRSCH: (Resuming)
Q Was that over by the country club?
A Yes.
Q I gotcha. Thank you. All right, what's your job right now, Mr. Neal?
A I'm State Representative for the State of Arkansas District 89, and then I also manage Neal's Café in Springdale.
Q Okay, very well. How long have you been with Neal's Café?
A 20 - 20 years.
Q Thank you. Now, you were on the Republican — you were nominated as a Republican candidate for county judge this year, were you not?
A Yes, sir.
Q Okay, very well. And you were unopposed?
A Yes, sir. On the primary.
A In the primary, thank you. Your name appeared on the ballot?
A Yes, sir.
Q And you did win, didn't you?
A Yes, sir.
Q Good. Now, did you accept that nomination?
A Yes, sir.
Q Okay, all right, so that gets us where we are today. Have you read the Amended Complaint that's been discussed today?
A No, sir.
Q Hadn't seen it at all?
A No, sir.
Q Well, there have been several allegations in there. We're gonna go through some of them. And I think they're gonna be easy, but we may have to take a few minutes. Did you have a conversation with Larry Henry concerning your withdrawal for your dropping out of the race at the end of June of 2016?
BY MR. HIRSCH: (Resuming)
Q Do you want me to repeat my question?
A No, sir.
Q Okay.
A I spoke with Larry Henry, yes, sir.
Q Okay, do you remember what you told him?
A I said that I was gonna be withdrawing from the race.
Q Okay, did you tell him your reason?
A I told him some of `em, yes. I said that I was going to be withdrawing because of some things going on with my dad, that I was going to be working full-time at Neal's Café, some family, personal issues.
Q Okay, now at that time, did you say anything about moving from the county?
A I did not speak to Larry about moving from the county.
Q Okay, did you have then a conversation also with Doug Thompson about withdrawing from your nomination?
A Yes, sir.
Q At that time, did you disclose that you were dropping out to move out of the county?
A I did not disclose that to Doug Thompson.
Q Now after that, shortly after that, I think we had some newspaper articles show up. I'm sure you've read them, have you not?
A Yes.
Q And they appeared in what newspaper?
A I don't know if it was the — I guess the Democrat-Gazette.
Q That's our statewide newspaper?
A Yes, sir.
Q Okay, published here and Little Rock?
A Yes, sir.
Q And our only statewide newspaper, isn't it?
A As far as I know.
Q Okay, very well. Now, in that newspaper article, I believe there was some reference to the requirements of necessary to bring in another candidate. Do you recall that in that first newspaper article?
A I guess there probably was, so.
Q Okay, now then, there was — okay, that was on July the 1
A I have nothing to hide.
Q I know you don't, and I appreciate it. At the time that you made these statements to Mr. Thompson and to Mr. Henry, which were subsequently published, where did you live?
A At 800 Fairway Circle.
Q Okay, in Washington County, Arkansas?
A Yes.
Q Thank you. Now, did you — at that — on or about July the 1
A I had talked to a couple of different people. I couldn't tell you who exactly it was at that time.
A Okay, did you have any conversations with representatives of the local Republican Party?
A I spoke to Lance Johnson.
Q Okay, and what's his position?
A He's head of the Washington County Republican Party.
Q So that was on or about July the 1
A Around that time. I couldn't be specific.
Q Is he on the state committee?
A I assume that he is. I honestly don't know.
Q As a result of your conversation with Lance, did you then decide it necessary to move out of Washington County?
A I don't know that it was from that conversation or just from later on that I decided to do that. But I don't remember Lance, in the initial conversation that we had, talk about how that I had to move out. It seems to be that there might have been a second conversation where that — where that — said that, you know, in order for you to do that, you would have to move out of the county, so.
Q Did you have a conversation with Robin Lundstrum on or about July the 1
A I have not answered a phone call from Robin Lundstrum.
Q Okay, very well.
BY MR. HIRSCH: (Resuming)
Q Robin's on the committee, state committee, isn't she?
A I believe she's on the state committee.
Q Now, subsequently, you did make an announcement, I believe, that you were moving to Benton County.
A Yes, and I did move.
Q Yes, first announcement on or about July the 1
A Somewhere around that time, yes, sir.
Q Okay, and that was made public in the newspaper, too, wasn't it?
A I believe it was.
Q Okay, and that was given as —
BY MR. HIRSCH: (Resuming)
Q All right, did you have a conversation with Scarlet Sims?
A Yes.
Q All right, who is Scarlet Sims?
A She's a reporter.
Q Okay, what did you tell Ms. Sims?
A I don't know exactly what I told her, but I believe I told her that I was going to get out of the race and that I was moving. I can't remember.
Q Okay, did you tell her it was a long decision?
A I told her — I may have told her that it had taken some months to come up with that because of conversations that I've had with my father about working at Neal's. And there's been some tension there. And not long before I made the decision, he told me that he was getting ready to turn 65, that he was tired of running the business by himself, and that if I wanted to continue being in politics, that I needed — that we could sell the restaurant and get out of it, and I can run for it, or I can quit being in politics, and I can get in there and run the restaurant. It's a 72-year-old business. It wasn't a hard choice.
Q One of my favorite places.
A I've seen you frequently.
Q So when did this decision-making process begin concerning you running the restaurant?
A We've had conversations about, I mean, complaints about it for a long time. So — but it really got hot and heavy in — I believe June is whenever — whenever we had words about it, so.
Q Before July the 1
A We had looked in both areas, Washington and Benton County, at homes, you know. The — you know, it did weigh on my mind about being judge because I had always tried to work that out with my dad about being able to do the judge thing and still be part of the restaurant. And, you know, whenever my wife and I had looked in Benton County, I was just like, can't do that because, you know, we gotta stay within that district to do — the county to be that position. But whenever I made the decision that I wasn't gonna run anymore, that opened up everything. We looked around. We looked in Har-Ber Meadows. We looked at some condos behind the 40/29 building on 1-49, actually had a real estate agent meet us there and look through it. And then we just were driving around looking kind of in Lowell and saw this house that had a for rent sign in front of it. We looked at it. It as a one-level house that met our needs and met the rental needs. And if you start looking in the rental market in this area, rent is very high, okay? So it's not easy to get a place. And then looking for an area that I felt like would be good for me as far as getting back and forth to work, good place for my family to live and feel safe and the rental requirements, I just felt like, and my wife felt like, this house is where we wanted to be and met all those requirements. And it was one level, which is a big deal because I don't like stairs. And we've been staying with my parents there at Fairway Circle upstairs and having to go up and down the stairs and up and down the stairs, and I hate it. And the places in Har-Ber Meadows that we could afford had stairs. They were two levels. I was against that. And then of course the place over there by the 40/29 building had stairs. And so whenever this came available and we saw that, that was the best place for us, and we love it.
Q Okay, when did you see that, this place that you're talking about?
A Around the 8
Q Okay, this is after you've made your announcement?
A This is after I made my announcement that I intend to get out.
Q Okay, very well. Now, did you — you've told me you talked with the local Republican chairman, I think. Was that Lance Johnson?
A Yes, sir.
Q Okay, talked with Lance on or about the or 1
A He is the only person that I dealt with in the state party.
Q Okay. Was that the only notice you gave him?
A I think. I mean, I've talked to him once or twice, so, I mean, I think that's when I put him on notice. I mean, that's when I told him, so.
Q okay, so you don't challenge July the 1
A Somewhere in that time frame.
Q 2
A I couldn't tell — I mean, if you wanted to get my phone records and see whenever. I mean, that would be how I'd have to do because I can't look back and see — I mean, I can't tell you, yes, on the 2
Q Well, what I do have is the newspaper articles. Would those be helpful to you?
A That — I mean, if that's the day of — I mean, whenever the reporter talked to her, then it was probably — and he says that — then it would be probably the day before it came out in the newspaper.
Q Okay.
A So if it's the 2
Q Bear with me just a moment. I believe I can turn to that.
A No problem.
BY MR. HIRSCH: (Resuming)
Q I'm gonna ask if this would help you refresh your recollection if that's the right article.
A So is this the first time that — I'm trying to find the part where Lance —
Q Oh, here. This one's on the 30
A Okay, if that's the 30
Q Okay, so the 1
A Probably.
Q Okay. 1
A The only letter that I wrote was to Becky Lewallen.
Q And she is who?
A She is the county clerk.
Q Was that a requirement for the — had something to do with the election?
A Yes.
Q Okay. All right, so I've got a list of people on the Republican Committee, but I think you've already told me the only person you talked with was the Lance Johnson, and the only person you gave notice.
A As far as I remember, yes.
Q The rest of it was through social media or newspaper; is that correct?
A I believe so.
Q Okay. Did anyone suggest to you that you — that you were not — that if you were not going to run, you needed to move out of the county? The county being Washington County.
A I remember hearing that requirement, and I don't know if they suggested it, but I felt like that I needed to — if I was gonna move and I have to move, had to move out of my parents's house, that it would be best for the voters of Washington County that — to have a choice, and for that — there not to be an issue, that I would move to Benton County. And so I felt like that was the right thing to do, and I did it.
Q Okay, now, we talked about your decision, when it became public, your dealing with it, and when you notified the party. When did you actually decide to withdraw from the nomination?
A It was in June, the end of June, so, yeah.
Q Do you know when you actually resigned?
A Resigned from?
Q From the nomination.
A I'm sure you have the document in front of you that shows the date when it was handed in to Becky, so I don't have that date in front of me, but if you want to supply it to me, then I'll read it.
Q Oh, okay, I was not referring to the one to Becky, but the resignation that I would relate to the party is what I was more concerned with. But we don't have a document that you sent to the Republican Committee saying, "I resign as of the 1
A I have not sent in a document to the party that states that.
Q Okay, now when did you actually move to the Lowell location?
A The lease began on July 15
Q Okay, the lease began on July the 15
A Uh-huh (affirmative).
Q And you began moving on the weekend or —
A On Monday.
Q On Monday the 18
A Mm-hmm (affirmative).
Q Okay, would it help if I brought you a calendar?
A I trust you.
Q Okay, when did you first spend the night there in Lowell?
A Um, cable was hooked up on Tuesday, so Tuesday night. (Whereupon, laughter was heard around the courtroom.)
Q That would be Tuesday the 19
A Mm-hmm (affirmative).
Q Okay, first night. Do you have children living with you?
A Yes, I do.
Q How many?
A One full-time.
Q One full-time?
A Mm-hmm (affirmative).
Q How old?
A Three.
Q Three-year-old?
A Mm-hmm (affirmative). Unplanned, but blessing from God. (Whereupon, laughter was heard around the courtroom.)
Q All right, so first night in Benton County, 19
A Mm-hmm (affirmative).
Q You know, I've covered everything I think is relevant. But I got a couple of other things written here because I did have some of your information. I saw your tax records, and I notice that you own a 1948 Willys Jeep; is that correct?
A It was my great-grandfather's.
Q Very cool.
BY MR. EVERETT:
Q Mr. Neal, we've met. My name's John Everett. I'm not screwed into the political process as you may or may not know, so some of these questions may not be as pointed as they probably should be. Mr. Johnson, Lance Johnson, who is he?
A He's head of the Republican Party of Washington County.
Q Is he the State Committee of the Republican Party?
A No.
Q Is he on the State Committee of the Republican Party?
A I think he is.
Q The statute talks about notice to the State Committee of
the Republican Party. Mr. Johnson's not the party that — is not the person that gets that notice. Am I correct?
A I don't believe so.
Q Does the state committee have two or three people on it or several hundred people on it?
A I believe it's several.
Q Several, thank you. Now, Mr. Neal, before some time in mid-July, you and your wife and your three-year-old are living with your parents over in Springdale?
A Yes, sir.
Q Was that a permanent place that you had planned on hanging out for a spell?
A We had been there since the first of February, and — anyway, we were — I had moved there because I had some property with my ex-wife that she lived, and I was having to pay her — her rent or the house payment and some other payments, and then I had some other payments come up `cause my son was turning 16, and so I had to move in with my parents for a few months.
Q I have some ex-wives, so I have every sympathy for you.
A (Laughing)
Q Were you invited to leave your parents's house? Did your mama or somebody say, "Look, this has gone on long enough, we want you to pack your stuff"?
A My mom said that I needed to start looking for a place because they're having some family come September 1
Q That's what started the process that you ended up eventually in Benton County?
A Yes.
Q All right, now, sir, I'm gonna show you some papers here. And incidentally, is the Benton County residence a place where you intend to hang out for an indefinite period of time?
A At least a year.
Q All right.
BY MR. EVERETT: (Resuming)
Q I'm gonna show you —
(Whereupon,
BY MR. EVERETT: (Resuming)
Q Just to have it authenticated, that's the lease agreement you signed on the Lowell property?
A Yes, sir.
Q That is in Benton County?
(Whereupon,
(Whereupon,
(Whereupon,
(Whereupon, the testimony of Micah Neal heard on August 9
STATE OF ARKANSAS
COUNTY OF WASHINGTON
I, Richard Fourt, Official Court Reporter within and for the Fourth Judicial Circuit, Third Division, of Washington County, Arkansas, do hereby certify that I recorded by stenomask recording the proceedings in the matter of
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my Official Seal on this
I, Shelly Hogan Koehler, being of lawful age and being duly worn, depose and state as follows:
1. I am co-counsel for Defendant Randell E. Shelton in the above case. I am submitting this affidavit in conjunction with Defendant Shelton's Motion to Dismiss.
2. On September 25, 2017, I filed a motion to compel discovery on behalf of Mr. Shelton because the United States Government provided a one-terabyte hard-drive on August 4, 2017 containing 4.3 million documents in an unsearchable format.
3. Docket Entry 91 in this case goes into great detail about the efforts Shelton's counsel went through to review the electronically stored information ("ESC").
4. The Government responded Mr. Shelton's motion on September 28, 2017 (Docket Entry 103). In its response, the Government proposed two (2) options for reviewing the ESI. Neither of which worked for defense counsel.
5. I spent countless hours over the weekend of September 30 — October 1 attempting to review the files using the freeware program "DocFetcher" as suggested by the Government in its response.
6. On October 4, 2017, after realizing my efforts over the previous weekend had been futile, I purchased the Ipro Eclipse SE software recommended by the Government for $1,375.00. The software itself was $750.00 and then five (5) hours of training on how to use the software was $625.00.
7. I started the process of using Ipro Eclipse SE on October 6, 2017.
8. On October 10, 2017, Acting United States Attorney Kenneth Elser filed a supplemental response to my motion stating that the Government would not use any of the documents on the one-terabyte hard-drive and it believed that providing defense counsel with a list of what the Government deemed to be "important" e-mails and attachments would satisfy its discovery obligations in this case.
9. I have an ethical duty to my client to provide effective assistance of counsel. Therefore, even though Mr. Elser asserted the Government would not use any documents on the hard-drive and it had satisfied its discovery obligations, I continued in my quest to obtain the ESI on the hard-drive.
10. However, because of the way the data on the hard-drive was provided, it took an inordinate amount of time to index and many hours of tech support to trouble-shoot.
11. As a result, I have spent a total of $1,531.25 in training and technical support due to the manner the Government provided the ESI.
12. Anne Costello, the independent legal technology consultant working with me, outlined the work she performed in the attached memo, as well as the problems she discovered in the way the data was provided.
13. Thus, despite paying for software that would "presumably have obviated" the need for many wasted hours of "in-house trouble-shooting," many of the files remain unreadable due to the manner in which they were produced by the government.
FURTHER, AFFIANT SAYETH NOT.
Sworn to and subscribed before me this 8th day of November, 2017.
My Commission Expires
1. My name is Anne Costello. 1 am an independent legal technology consultant based in Illinois.
2. I was engaged by Snively, Fairrell & Koehler on October 6, 2017 through the Ipro Tech trainer and consultant program. `pro Tech matches experienced, independent trainers and consultants with customers who purchase Eclipse SE, a Windows desktop application used to manage document productions.
3. I hold the following certifications related Ipro Tech's discovery management tools:
4. In addition to my current Ipro certifications, I have 26 years of experience with legal technology and have built and/or managed discovery collections, reviews, and productions using numerous platforms, including but not limited to Ipro Tech's classic suite, Concordance, Summation Blaze, and Relativity.
5. On October 11
6. A data load file contains fielded (columnar) metadata describing each document or file to be loaded into e-Discovery applications like Ipro's Eclipse SE. Image load files associate images of documents with the appropriate document records in a database.
7. In addition to the load files, production included 385 GB of production files including images (1,840,243 files equaling 80.7 GB), searchable document text (1,149,360 files equaling 8.41 GB), and native files (1,137,818 files equaling 296 GB).
8. Ms. Kohier's computer is an HP ZBook 15 with Windows 10 Professional 64, 2.70GHz, Intel Core i7-4800MQ processor with 8 GB memory and a 256GB Solid State Drive (the "C Drive"),
9. Given that all the production files will not fit on her C drive, I recommended that we create the Eclipse SE database on the C drive of her computer and keep copies of the images and native files referred to in the production on an external USB drive.
10. On October 17
11. When all loads were complete, the resulting database contained the following:
13. Issues with the production:
Comes now the United States of America, by and through the United States Attorney for the Western District of Arkansas, and for its Response to Defendant Oren Paris III's Motion in Limine Regarding Privileged Communications with [REDACTED\] filed November 8, 2017 (Doc. 165), states:
Defendant Paris contends that he engaged in communications on October 17, 2015, with [REDACTED\] because of his legal expertise and that he (Defendant Paris) would not have engaged in this conversation with [REDACTED\] were it not for[REDACTED\]s legal expertise. Further, Defendant Paris asserts that absent a clear showing that such communications were not made for the purpose of facilitating legal advice, or that one of the privilege's other necessary elements is lacking, such communications are protected by attorney-client privilege.
Defendant Paris' Motion is without merit as the communication between Defendant Paris and [REDACTED\] on October 17, 2015 was not protected by the attorney-client privilege because it was not made by Paris for the purpose of securing a legal opinion or legal services or assistance in some legal proceeding from [REDACTED\]
On October 19, 2016, [REDACTED\] was telephonically interviewed in the presence of his attorney by the Government with respect to his relationship with Defendant Paris and their communication on October 17, 2015. [REDACTED\] stated that he was the owner and operator of [[REDACTED\] Companies, LLC] a financial planning and investment management business in Atlanta, Georgia, for over 30 years. He stated that he had known Defendant Paris and the Paris family for a long time. [REDACTED\] stated that he had joined the board of Ecclesia College in 2004 but resigned from that position via a letter sent to Paris on May 12, 2016. In the letter, [REDACTED\] stated, in pertinent part as follows:
During the telephonic interview, [REDACTED\] was asked about the resignation letter he sent to Defendant Paris. stated that he and Defendant Paris conversed on October 17, 2015, while they were both in Washington D.C. in regards to an unrelated meeting for an organization in which they both were members. [REDACTED\] stated that Defendant Paris told him that the FBI had come to the school, met with him and asked him questions. [REDACTED\] stated that Defendant Paris told him that he "hired a fundraising consultant called Paradigm and that Paradigm was paid some money for their consulting work and that Paradigm was owned, at least in part, by this Arkansas political person—Arkansas government person and the FBI was saying that that was some sort of illegal scheme."
Later in the interview, [REDACTED\] stated that Defendant Paris told him that someone named Jon was the part owner of or had an interest in Paradigm. He stated that Defendant Paris told him that Paradigm had been paid $50,000 and that Paradigm had made contact with the Walmart Foundation. He stated that he did not recall Defendant Paris saying anything about Paradigm raising General Improvement Fund (GIF) grants for the college but did say that Jon was influential in GIF money going to Ecclesia. When asked if he questioned Defendant Paris about what he was being told, [REDACTED\] stated, "I mainly listened to him, so I did not—I did not really interrogate him in any way about it. I basically was sympathetic to how the ordeal that he was under in having the FBI just show up at his office and allege wrongdoing and begin questioning him."
At no time during this October 19, 2016, telephonic interview did [REDACTED\] disclose to the Government that he served as legal counsel to Defendant Paris or that Defendant Paris sought legal advice from him. Furthermore, at no time did [REDACTED\] assert that Defendant Paris' communication with him on October 17, 2015, was made for the purpose of facilitating the rendition of legal advice or that it was protected by the attorney-client privilege. [REDACTED\] [REDACTED\]
In the frequently cited case of United States v. United Shoe Machineiy Corp., 89 F.Supp. 357 (D. Mass. 1950), the conditions under which the attorney-client privilege is applicable are as follows:
Id. at 358-59. See also Diversified Industries, Inc. v. Meredith, 572 F.2d 596, 601-02 (8th Cir. 1978).
"In order for the privilege to be applicable, the parties to the communication in question must bear the relationship of attorney and client. Moreover, the attorney must have been engaged or consulted by the client for the purpose of obtaining legal services or advice services or advice that a lawyer may perform or give in his capacity as a lawyer, not in some other capacity. A communication is not privileged simply because it is made by or to a person who happens to be a lawyer" Id. at 602, citing Wright & Miller, op. cit. p. 136 See Underwater Storage, Inc. v. United States Rubber Co., 314 F.Supp. 546, 547-48 (D.D.C. 1970).
In United States v. Usher, No. 4:13CR3057, 2014 WL 2515186, at *3 (D.Neb. Jun. 4, 2014), the court stated that, "The attorney-client privilege is not absolute. For instance, where the attorney acts as a scrivener or a business advisor; or where the client consults the lawyer to `further a continuing or contemplated criminal or fraudulent scheme' the privilege is either lost or does not attach." United States v. Horvath, 731 F.2d 557, 561-62 (8th Cir. 1984); see also United States v. Spenser, 700 F.3d 317, 320-21 (8th Cir. 2012) (citing Horvath for the proposition that an attorney serving as a business advisor is not rendering legal services.)"
While it is well established that communications between lawyer and client are privileged, and are inadmissible upon objection, it is also essential that the relation of lawyer and client must exist in order to exclude them. In Usher, the court stated that, "In the absence of a relevant federal rule, statute, or constitutional provision, federal common law governs questions of privilege in federal criminal proceedings." Fed.R. Evid. 501; United States v. Espino, 317 F.3d 788, 795 (8th Cir. 2003). Therefore, the definition of "client," as defined by the Proposed Federal Rule of Evidence 503, is: a person, public officer, or corporation, association, or other organization or entity, either public or private, who is rendered professional legal services by a lawyer, or who consults a lawyer, or who consults a lawyer with a view to obtaining professional legal services from him.
The facts do not support Defendant Paris' assertions that the Court should exclude the October 17, 2015, conversation because Defendant Paris incorrectly claims that his conversation between he and [REDACTED\] consisted of confidential communications made for the purpose of facilitating the rendition of legal advice. [REDACTED\]s relationship with Defendant Paris was as a close friend and long-term Ecclesia College board member. [REDACTED\] was in the financial planning and investment management business not a criminal defense attorney. [REDACTED\] was not licensed to practice law in Arkansas. never stated that Defendant Paris asked for legal advice or that [REDACTED\] provided legal advice to Defendant Paris during the October 17, 2015, conversation. Nor did Defendant Paris ever try to retain [REDACTED\] as an attorney to represent him in connection with the investigation.
Since Defendant Paris' communications with [REDACTED\] on October 17, 2015, were not made for the purpose of securing a legal opinion or legal services or assistance in some legal proceeding, they are not privileged communications and Paris' Motion In Limine to exclude them should be denied. While the Government does not intend to call [REDACTED\] as a witness in its case in chief, should Defendant Paris testify, the Government would cross-examine him regarding the statement made to [REDACTED\] and if Defendant Paris testified inconsistently, the Government would call [REDACTED\] as a rebuttal witness.
WHEREFORE, the Government respectfully requests this Court deny Defendant Paris' Motion in Limine Regarding Privileged Communications with[REDACTED\]
I hereby certify that on this 15th of November, 2017, I electronically filed the foregoing with the Clerk of the Court using the CM/ECF System which will send notification of such filing and email to the following:
Comes now the United States of America, by and through Kenneth Elser, United States Attorney for the Western District of Arkansas, and states:
On November 8, 2017, Defendant, Randell Shelton, filed a Reply to Government's Response to Defendant's Motion to Compel Notice of 404(b) Evidence Forthwith and Motion to Exclude Government's Notice of Evidence (Doc. 174) in which he seeks to exclude the evidence set forth in the Government's Response to Defendant Shelton's Motion to Compel Notice of 404(b) Evidence Forthwith (Doc. 109). Since this evidence is admissible, Shelton's Motion to exclude this evidence is without merit and should be denied.
As set forth in footnote one of the Government's Response to Shelton's Motion to Compel 404(b), the Government asserts that most of the evidence described in the response is admissible as intrinsic evidence and res gestae and not subject to the notice and admissibility requirements of Fed. R. Evid. Rule 404(b). In United States v. Bass, 794 F.2d 1305 (8th Cir. 1986), the Eighth Circuit stated:
Id. at 1312 (citation omitted).
"Evidence that a coconspirator participated in acts which furthered the conspiracy constitutes substantive evidence of the conspiracy's existence. Such evidence is probative of the crime charged and does not fall within Rule 404(b)'s exclusion of `other crimes, wrongs, or acts." United States v. Maynie, 257 F.3d 908, 915 (8th Cir. 2001); see also United States v. Dierling, 131 F.3d 722, 732 (8th Cir. 1997) (evidence of slaying and shooting committed during a drug conspiracy was not subject to Rule 404(b) exclusion); United States v. Grajales-Montoya, 117 F.3d 356, 363-64 (8th Cir. 1997) (evidence that drug conspirators kidnaped, interrogated, and arranged for their maid to be killed was admissible as direct evidence of a drug conspiracy); United States v. Krout, 66 F.3d 1420, 1431 (5th Cir. 1995) ("evidence of acts committed pursuant to a conspiracy and offered to prove the defendant's membership or participation in the conspiracy are not extrinsic evidence")
In United States v. Maxwell, 643 F.3d 1096 (8th Cir. 2011), the Eighth Circuit held that in conspiracy cases the government has "considerable leeway in offering evidence of other offenses." Id. at 1100. The court explained that, because in a conspiracy case the government has a burden of proving a voluntary and intentional agreement to violate the law, "additional acts of the defendants—including, in many cases, `uncharged bad acts' are `relevant to proving the charged` offense, not by way of improper propensity reasoning, but as proof of the existence of the conspiracy." Id.; see also United States v. Watkins, 591 F.3d 780, 784 (5th Cir. 2009) ("In the context of a conspiracy, evidence is intrinsic to the underlying offense `if it is relevant to establish how the conspiracy came about, how it was structured, and how the [defendant] became a member.").
"In proving a conspiracy charge, the government is not limited to establishing the overt acts charged in the indictment." United States v. Ruiz-Altschiller, 694 F.2d 1104, 1109 (8th Cir. 1982); see also United States v. Janati, 374 F.3d 263, 270 (4th Cir. 2004) ("It is well established that when seeking to prove a conspiracy, the government is permitted to present evidence of acts committed in furtherance of the conspiracy even though they are not all specifically described in the indictment.").
In United States v. Orozco-Rodriguez, 220 F.3d 940 (8th Cir. 2000), the Eighth Circuit held that evidence of prior drug dealings between a witness and the defendant was properly admitted to explain the relationship between the witness and the defendant and to explain why the witness could act as a go-between for charged drug offenses. Id. at 941. The court stated, "Keller's preliminary testimony established a relationship between Keller and Orozco-Rodriguez that helped explain why Keller could act as a go-between for illegal drug transactions between Orozco-Rodriguez and an ultimate purchaser whom Orozco-Rodriguez did not know and was not willing to meet. This was not Rule 404(b) evidence because it related to the background and circumstances of the charged crimes." Id. at 942.
In United States v. Watkins, 591 F.3d 780, (5th Cir. 2009), the Fifth Circuit stated, "In the context of a conspiracy, evidence is intrinsic to the underlying offense `if it is relevant to establish how the conspiracy came about, how it was structured, and how the [defendant] became a member.'" Id. at 784. In United States v. Wantuch, 525 F.3d 505 (7th Cir. 2008), the Seventh Circuit held that uncharged criminal activity need not be identical to the charged crime in order to be admitted as intrinsic evidence. Id. at 518. The court found that the uncharged conduct showed how the relationship between coconspirators began, its basis and structure, and how the relationship blossomed into the charged conspiracy. Id.
In United States v. Muscatell, 42 F.3d 627 (11th Cir. 1995), the Eleventh Circuit stated, "Here, it was necessary for the government to prove that the defendants intentionally devised a scheme and artifice to defraud. Other transactions connected with the offenses charged have long been used to show a general pattern, the necessary criminal intent, or the guilty knowledge of the defendant. Consequently, we conclude that the challenged testimony was intrinsic to the crimes charged." Id. at 631. (quotations omitted).
As with conspiracy charges, courts have held that in proving a scheme to defraud, the government may offer evidence of uncharged conduct to prove the scheme. In United States v. Swinton, 75 F.3d 374 (8th Cir. 1996), the defendant was charged with bank fraud involving a scheme whereby he would have friends and acquaintances take out loans to buy properties in their name often making false representations as to their qualification. Id. at 376. The buyers would then transfer the properties to Swinton. Id. at 377. Although Swinton promised to pay the loans, he defaulted resulting in a loss to the Department of Housing and Urban Development. Id.
At trial, the government introduced evidence concerning seven property transactions in which Swinton was involved but for which he had not been indicted. Id. Swinton objected that the government had failed to provide the notice required under Fed. R. Evid. 404(b). Id. The trial court ruled that the evidence was not 404(b) and admitted the evidence. Id.
The Eighth Circuit found the evidence as to all but one of the transactions was properly admitted as intrinsic evidence. The court stated,
Id. at 378 (internal citations and quotations omitted).
The court went on to state that transactions were intrinsic to the charged conduct if "(1) the collected transactions were all part of a single scheme, or (2) the uncharged transactions were so blended or connected, with the ones on trial as that proof of one incidentally involves the others." Id. (internal quotations omitted).
In United States v. Big Eagle, 702 F.3d 1125 (8th Cir. 2013), the Eighth Circuit held that kickbacks not charged in the indictment were admissible as intrinsic evidence. The court stated, "The government alleged Big Eagle conspired to receive kickbacks from Bauman and Kutz, and the testimony of Raue and McClatchey regarding other kickbacks was necessary to explain the relationship, motives, and scheme among Big Eagle, Raue, the other council members, and the contractors making kickback payments." Id. at 1131.
In United States v. Johnson, 463 F.3d 803, 808 (8th Cir. 2006), the Eighth Circuit held that kickback payments made to Johnson by clients was intrinsic evidence in a mail fraud scheme where Johnson was charged with sending fraudulent treasury warrants to these clients.
In United States v. Wilson, 788 F.3d 1298 (11th Cir. 2015), the Eleventh Circuit held that bank records relating to uncharged tax-refund checks were properly admitted as intrinsic evidence of the charged crimes which involved cashing checks from fraudulently filed tax returns. The court stated, "The records were clearly linked in time and circumstances with the charged crimes, as Wilson deposited all of the checks in his Hancock Bank account between June and September 2012. Moreover, the checks arose out of the same series of transactions as the charged offenses and exhibited the same fraudulent indicators as the checks in the charged counts." Id. at 1314.
In United States v. Bajoghli, 785 F.3d 957, 963 (4th Cir. 2015), the Fourth Circuit reversed the trial court's decision to limit the government's proof of a health care fraud scheme to only the counts charged in the Indictment. The court stated that just as all overt acts of a conspiracy need not be charged, "all executions of a scheme likewise need not be charged." Id. at 963. See also, United States v. McGauley, 279 F.3d 62, 72-73 (1st Cir. 2002) (holding that 217 refund checks other than those charged in the indictment were admissible as proof of a broader scheme to defraud retail establishments); United States v. Pless, 79 F.3d 1217, 1220 (D.C. Cir. 1996), ("[I]t is not necessary for the government to charge every single act of execution of the scheme in order to prove the whole scheme.").
As in the cases cited above, evidence regarding 1) GIF grants from the WCAPDD to Ecclesia, 2) Woods's intervention on behalf of Ecclesia College with the Arkansas Department of Education, 3) Woods's attempt to direct GIF grants to a company (Shingle Resource and Recycling LLC) owned and controlled by Shelton and Paris, and 4) Woods email to Paris attaching a Senate Resolution regarding medical marijuana that provided for state funds to go to work colleges, are all admissible either as direct or intrinsic evidence of the conspiracy and scheme to defraud. This is evident when comparing the timing and details of acts in furtherance of the scheme as set forth in Paragraph 19 of the Second Superseding Indictment and the conduct the Government seeks to admit as direct or intrinsic evidence of the conspiracy and scheme. This comparison is set forth below with the intrinsic evidence italicized.
1. During the 2013 Arkansas legislative session, which began in January, Woods and other legislators voted for laws that resulted in state funds, in the form of GIF monies, being sent to various development districts for grants to local government or non-profit entities.
2. Between August 4 and 19, 2013, Woods and Paris communicated about submitting a GIF grant application to the NWAEDD for Ecclesia. The final application requested a $200,000 GIF grant and showed Woods as the sponsor.
3. On September 18, 2013, the NWAEDD board approved the Woods sponsored Ecclesia GIF grant of $200,000.
4. Between August 26, 2013 and September 22, 2013, Shelton and Paris emailed concerning a consulting agreement between Paradigm and Ecclesia. A consulting agreement between Ecclesia and Paradigm, dated September 16, 2013, was signed by Paris and Shelton and provided that Paradigm would engage in fundraising and marketing efforts for Ecclesia for a one-year period commencing September 16, 2013, in exchange for a payment of $50,000 on or before September 27, 2013.
5. On September 25, 2013, the NWAEDD issued Ecclesia a GIF grant check for $200,000. This grant was approved and directed by Woods and came from GIF money he had appropriated for the NWAEDD.
6. On December 12, 2013, Paris texted Shelton telling him that an Ecclesia employee "needs the name for the app." Shelton responded, "Ok tell him him [sic] Sen. Michael Lamoureux is the name. Either u or Mike needs to call Dwayne[ Pratt, the Executive Director of the WCAPDD] and let him know it is being sent to him via email and it is for $50,000 — and find out if u need to also overnight the hard copy." Paris, on behalf of Ecclesia College, submitted an application dated December 12, 2013 to the WCAPDD, requesting a $50,000 GIF grant. The application listed Senator Michael Lamoureux, as the sponsoring legislator.
7. On December 18, 2013, an email was sent on behalf of State Senator Woods to Pratt attaching a letter, written on State of Arkansas Senate letterhead and signed by Woods, supporting Ecclesia College's application for a GIF grant. On that same day, Woods emailed Paris, forwarding to Paris a copy of the letter of support and email to Pratt and stating, "I had to write a support letter today. Just FYI Hope you are doing well." Woods had also called Executive Director Pratt and advised that Ecclesia would be applying for GIF money of Senator Lamouruex. Pratt confirmed with Senator Lamoureux that he approved the grant.
8. A letter agreement between Ecclesia and Paradigm dated December 19, 2013, was signed by Paris and Shelton and provided for a sixth month extension of the previous consulting contract dated September 16, 2013, in exchange for a payment of $25,000 to be made to Paradigm on or before December 31, 2013.
9. On December 20, 2013, the WCAPDD issued Ecclesia a GIF grant check for $50,000. Woods used his official position to advise and persuade state Senator Michael Lamoureux to direct and approve this grant. On December 20, 2013, an undated check for $25,000 from Ecclesia to Paradigm was deposited into Paradigm's Arvest account. On December 21, 2013, Shelton withdrew $21,000 in cash from Paradigm's account.
10. On February 3, 2014, Woods texted Arkansas Senator Bart Hester stating, "Bart, I sent over a letter with 3 GIF applications to Mike (referring to Mike Norton the NWAEDD executive director) that he should of [sic] received today. It would be fantastic if you could text him and give him the thumbs up. I prepared this below for you if this helps. `Mike, I'm helping Jon Woods out with 3 GIF requests. (1) $15k for Elkins Fire Dept (2) $5k for Arkansas Health & Economic Research (3) $30k Ecclesia College. You should of [sic] received these in an envelope today. Thanks for all your hard works (sic). Thanks, Bart."
11. On March 4, 2014, the NWAEDD issued Ecclesia a GIF grant check for $30,000. Woods used his official position to advise and persuade state Senator Bart Hester to direct and approve this grant.
12. A letter agreement between Ecclesia and Paradigm dated March 5, 2015, but which referred to a payment of $15,000 on or before March 14, 2014, was signed by Paris and Shelton. It provided for a "six (3) month extension of the September 16, 2013 consulting agreement in exchange for a payment of $15,000 to be made to Paradigm on or before March 14, 2014.
13. On March 6, 2013, Ecclesia issued a $15,000 check to Paradigm, which was deposited into Paradigm's Arvest account the same day.
14. On March 11, 2014, Shelton sent Paris a text with the address, email address, phone and fax number for Pratt at the WCAPDD. Shelton then texted Paris, "Please fax and email the app." On that same date, an employee of Ecclesia College emailed Pratt an application signed by Paris, which requested a $50,000 GIF grant from WCAPDD for Ecclesia College. The application listed Senator Lamoureux, as the sponsoring legislator.
15. A letter written on State of Arkansas Senate letterhead dated March 12, 2014, and signed by Woods was sent to Pratt supporting Ecclesia College's application for a GIF grant. Pratt again confirmed Senator Lamoureux's approval for this grant.
16. On April 1, 2014, the WCAPDD issued Ecclesia a GIF grant check for $50,000. 17. A letter agreement between Ecclesia and Paradigm dated April 2, 2014, was signed by Paris and Shelton, and provided for a sixth month extension of the previous consulting agreement "commencing April 16, 2015" in exchange for a payment of $25,000 to be made to Paradigm on or before April 14, 2014.
18. On April 4, 2014, Ecclesia issued a $25,000 check to Paradigm, which was deposited into Paradigm's Arvest account the same day. From April 4 to 16, 2014, Shelton made ATM and cash withdrawals totaling $22,100 from the Paradigm account.
19. On September 19, 2014, the NWAEDD issued Ecclesia a GIF grant check for $91,500.
20. On December 2, 2014, Woods forwarded an email to himself with a blind copy to Paris attaching a draft of a Senate bill providing for appropriation from the GIF of up to $2,500,000 to the Department of Higher Education "for a grant to a work learning college that is part of the Work College Consortium for scholarships, research, development and delivery of math and science coursework, land acquisition, equipment acquisition, infrastructure costs, including site development costs, construction improvements, landscaping, renovations, dorm renovations, major maintenance, building of roads and/or parking lots."
21. On December 5, 2014, Paris submitted a GIF grant application to the NWAEDD requesting a $200,000 GIF grant for Ecclesia and listing Woods and Neal as sponsors.
22. On or about December 8, 2014, an employee with the Arkansas Bureau of Legislative Research (BLR), an agency of the State of Arkansas that, among other duties, drafts proposed bills for legislators, sent Woods an email with the subject, "Draft General Improvement Fund Bill for Work Colleges." In the email, the BLR employee wrote: "In response to your request we have revised the GIF appropriation bills for a grant to a Work College to reference the `Work College' definition found in the United States Code. Please let me know if you need anything further." Attached to the email were two draft Senate Bills for the 2015 Legislative Session showing Woods as the sponsor and which appropriated GIF money to the Arkansas Department of Higher Education and to the Economic Development Commission for grants to a work college. On that same day, Woods forwarded the email and attachments to himself with blind copy to Paris.
23. On December 10, 2014, Shelton, Paris, and others signed an operating agreement for Shingle Resource and Recycling LLC (SRR).
24. On December 18, 2014, the NWAEDD issued Ecclesia a GIF grant check for $200,000.
25. Between January 5 and 12, 2015, Woods used his official position to influence the Arkansas Department of Education to make a rule change to benefit Ecclesia.
26. On or about February 11, 2015, Woods filed and sponsored Senate Bill 323 that became Act 417 of the 2015 Regular Session of the Arkansas General Assembly. The bill and act provided for an appropriation to the Department of Finance and Administration (DFA) from the GIF to each economic development district including the NWAEDD of up to $2 million to be used to make "grants to work colleges, as defined by U.S.C., Title 42, Section 275b, that is part of the Work College Consortium." Ecclesia was the only college in Arkansas who could receive such grants.
27. On February 12, 2015, Woods received a draft of a bill that appropriated GIF money for grants related to shingle recycling. Woods emailed this draft to Shelton, who sent it to Paris. Woods filed the draft bill on February 17, 2015 as Senate Bill 393. Woods subsequently voted for passage of this bill, which became Act 441 of 2015 on March 16, 2015.
28. On February 17 and 26, 2015 Woods texted Paris about the Woods sponsored Senate Bill 323, which appropriated GIF money to be used for grants to work colleges.
29. On February 19, 2015, Ecclesia issued a $7,500 check to Paradigm, which was deposited into Paradigm's Arvest account on February 20, 2015.
30. On or about February 27, 2015, Woods filed and sponsored Senate Bill 641, which provided for an appropriation from the GIF to the Arkansas Department of Higher Education of up to $3.5 million to be used to make "grants to work colleges, as defined by U.S.C., Title 42, Section 275b, that is part of the Work College Consortium." The bill did not become law.
As this summary demonstrates, the conduct involving the two GIF grants to Ecclesia from the WCAPDD is part of the conspiracy and scheme to defraud set out in the Second Superseding Indictment, and is therefore admissible as direct evidence of the conspiracy and scheme to defraud. The conduct was intertwined temporally with the conduct involving the NWAEDD and is the exact same conduct except that the WCAPDD, and not the NWAEDD, made the GIF grants. The modus operandi and the actions of the coconspirators were the same for both the NWAEDD and WCAPDD GIF grants: 1) Woods used his official position to assist Ecclesia in obtaining the GIF grants; 2) Shelton and Paris signed agreements calling for payments to be made to Paradigm; 3) Ecclesia issued checks to Paradigm shortly after receiving the GIF grants; 4) Shelton deposited the checks in the same Paradigm bank account; and 5) Shelton withdrew large amounts of cash from Paradigm's account shortly after depositing the Ecclesia checks.
"Where the government has introduced evidence of acts committed by the defendant or a co-conspirator, during the time frame of the conspiracy and in furtherance of it, this Court has held that such evidence is not of `other crimes,' but rather is evidence of the very crime charged." United States v. Aranda, 963 F.2d 211, 214 (8th Cir. 1992) "Where the charged offenses were not isolated acts, but rather, were part of the series of transactions involving the same principal actors, in the same roles, and employing the same general modus operandi, the various acts may be considered to constitute a single scheme. An uncharged act may not be extrinsic if it was part of the scheme for which a defendant is being prosecuted." United States v. Swinton, 75 F.3d 374, 378 (8th Cir. 1996) (internal citations and quotations omitted).
The same is true with regard to Woods using his official position to intervene with the Arkansas Education Department to effect a change in a rule that was favorable to Ecclesia. This is direct evidence of the scheme and conspiracy in that it shows Woods using his official position for the benefit of Ecclesia during the same time Ecclesia is making large payments to Paradigm.
The same is true with regard to Woods taking official action to sponsor and vote for Senate Bill 393/Act 441 of 2015, which appropriated GIF money for grants for shingle recycling. This occurred at the same time that Woods was sponsoring and voting for similar GIF appropriations bills that would benefit work colleges and during the same timeframe that Ecclesia made a $7,500 payment to Paradigm. The shingle bill and the work college bills set forth in the Second Superseding Indictment were in furtherance of the conspiracy and scheme in that they were all attempts by Woods to direct GIF money to entities controlled by coconspirators, that is, SRR and Ecclesia, for the benefit of Woods, Shelton, and Paris.
The same is true with regard to Woods sending Paris a draft of the Senate Resolution involving medical marijuana that would have directed state funds to Ecclesia, which was only approximately three weeks prior to Ecclesia issuing a $2,500 check to Paradigm. This is direct evidence of Woods and Paris acting to advance the object of the conspiracy and scheme, that is, for Woods to use his official position to attempt to direct state funds to Ecclesia.
Even if the Court were to find that the evidence of the acts discussed above was not direct evidence of the conspiracy, evidence of those acts would still be admissible as intrinsic evidence since it is so blended and connected with the evidence of the charged conspiracy as that proof of one incidentally involves the others; or explains the circumstances; or tends logically to prove any element of the crime charged. Since this evidence is either direct or intrinsic evidence of the charged offenses, Shelton's arguments challenging the validity of the 404(b) notice and challenging the admissibility of the evidence are without merit. This evidence is admissible and not subject to the notice and other requirements of Fed. R. Evid. 404(b).
Even if the Court were to find that this evidence is not admissible as direct or intrinsic evidence, it is admissible under Fed. R. Evid. 404(b), which allows the evidence of a crime, wrong or other act to prove "motive, opportunity, intent, preparation, plan, knowledge, identity, absence of mistake, or lack of accident."
"To be admissible under Rule 404(b), the evidence must be: (1) relevant to a material issue; (2) proved by a preponderance of the evidence; (3) higher in probative value than in prejudicial effect; and (4) similar in kind and close in time to the crime charged." United States v. Campbell, 937 F.2d 404, 406 (8th Cir. 1991). "The district court has broad discretion in deciding whether to admit evidence of other wrongful acts, and its decision will not be overturned without a clear showing that the requirements for admitting such evidence have not been met." Id.
In this case, the evidence regarding the GIF grants from the WCAPDD to Ecclesia, Woods's intervention with the Arkansas Education Department, the GIF appropriation act involving shingle recycling grants, and the medical marijuana resolution are all directly probative of the defendants' intent, knowledge, plan, modus operandi and absence of mistake. "Rule 404(b) permits the introduction of evidence of other criminal activity to complete the story of the crime on trial by proving its immediate context, or by explaining the circumstances of the alleged crime or the relationship between alleged conspirators." United States v. Moore, 149 F.3d 773, 780 (8th Cir. 1998) (citations and internal quotations omitted).
In addition, the conduct of Shelton and Woods relating to GIF grants to Arkansas Health and Economic Research (AHER) is also admissible under Rule 404(b) to show their intent, knowledge, plan, modus operandi and absence of mistake. In August 2013, during the same time Ecclesia is drafting and submitting a Woods sponsored GIF grant application to NWAEDD, Shelton and [REDACTED\] (Shelton's insurance agent and friend) were preparing to submit a similar Woods sponsored GIF application.
On September 26, 2013, the NWAEDD issued AHER a GIF grant check for $20,000. This grant was approved and directed by Woods and came from GIF money he had appropriated for the NWAEDD. The grant was approved during the same NWAEDD board meeting as Ecclesia's GIF grant for $200,000 that was sponsored by Woods.
On September 27, 2013, the same day that Shelton opened Paradigm's Arvest account using the $50,000 check from Ecclesia,[REDACTED\] and Shelton established an AHER account at Arvest using the $20,000 GIF grant check. It is anticipated that [REDACTED\] will testify that this and subsequent GIF grant money received by AHER from the NWAEDD was used by [REDACTED\] to purchase equipment used to provide treatment for Woods's father. It is also anticipated that [REDACTED\] will testify that Shelton used GIF grant money received by AHER for personal expenses and expenses relating, to Shelton's for-profit business.
Just as he had done with Ecclesia GIF grants, Woods used his official position to advise and persuade Senator Bart Hester and Representative Micah Neal to direct additional GIF grants from the NWAEDD to AHER as follows: a $10,000 Neal sponsored GIF grant on December 12, 2013; a $5,000 Hester sponsored GIF grant on March 4, 2014; and a $4,198 Neal sponsored GIF grant on December 18, 2014.
Woods's request to Hester for the $5,000 GIF grant to AHER was included in the same communication to Hester requesting he support the $30,000 GIF grant that Ecclesia received from NWAEDD on March 4, 2014. The $4,198 GIF grant to AHER was approved at the same time that the $200,000 Neal and Woods sponsored GIF grant was approved for Ecclesia by the NWAEDD board and this GIF grant check to AHER was delivered by the NWAEDD to Woods.
In United States v. Sw. Bus Sales, Inc., 20 F.3d 1449 (8th Cir. 1994), the Eighth Circuit held that evidence of a separate conspiracy by the defendants that was similar to the charged crime was admissible under Rule 404(b). The court stated, "[T]he evidence of the Minnesota conspiracy and the bid bonds was admissible and relevant to the issue of intent to conspire, motive, and lack of mistake. The evidence of the Minnesota conspiracy was of the exact nature of the charged South Dakota conspiracy, involving bid rigging of bus sales. Similarly, the rigged bid bonds involved the same falsification of documents and signatures as was involved in the mail fraud count and were relevant to the intent and motive surrounding the mail fraud issue." Id. at 1456. See also, United States v. Misle Bus & Equip. Co., 967 F.2d 1227 (8th Cir. 1992)(bid rigging scheme separate from charged conspiracy but similar in kind was admissible under 404(b) to show defendant's knowledge and general intent.)
In United States v. Thomas, 791 F.3d 889 (8th Cir. 2015), the Eighth Circuit held, that under Rule 404(b), evidence of a separate, subsequent scheme to defraud mortgage lenders was admissible in defendant's trial for wire fraud which involved defrauding mortgage lenders. In United States v. Sparkman, 791 F.3d 889 (8th Cir. 2015), the Eighth Circuit held that evidence of a prior instance of insurance fraud was admissible under Rule 404(b) to show intent.
The conduct of Woods and Shelton with regard to AHER occurred at the same time and used the same modus operandi as the conspiracy and scheme involving Ecclesia. The only difference between the two was that Shelton directly benefited from the AHER arrangement and Woods benefited from AHER money being used to purchase equipment to provide treatment to Woods's father. Although the evidence relates only to Woods and Shelton, it is nevertheless admissible in the joint trial as the court can instruct the jury to consider the evidence only as to Woods and Shelton.
In United States v. Garrido, 995 F.2d 808 (8th Cir. 1993), Ismael argued that the trial court erred in admitting evidence of drugs, paraphernalia and a rifle seized from the home of his codefendant, Carlos, and in refusing to give a limiting instruction that the evidence should only be considered against Carlos. Id. at 816. In rejecting the argument about admissibility the Eighth Circuit stated, "Because the district court's discretion to determine what evidence is relevant is particularly broad in the context of a conspiracy trial, we cannot say the court abused its discretion in this case. The evidence unquestionably was probative of the case against Carlos, and was relevant in the joint trial on this ground alone." Id.
In rejecting the argument about the limiting jury instruction the court stated,
Id. at 817.
In United States v. Watts, 950 F.2d 508, 513 (8th Cir. 1991), defendants, Watts and Ritcherson, claimed that they were prejudiced by the admission of evidence that focused on the activities of their co-defendant, Luter, which occurred prior to 1988, the time that they were charged with conspiring with Luter. In rejecting this argument, the Eight Circuit stated:
In this case the evidence as to AHER is strongly probative of Woods's and Shelton s knowledge, intent, plan, and modus operandi with regard to their conduct involving Ecclesia. The jury will not have any difficulty compartmentalizing this evidence particularly with the court giving them a limiting instruction that the evidence should only be considered as to Woods and Shelton.
In a similar way, the anticipated testimony of [REDACTED\] that in the Fall of 2011 Woods solicited a bribe from him would be admissible as to Woods's intent, knowledge, plan, and absence of mistake with regard to the charged conduct. During an interview on August 29. 2017, [REDACTED\] stated that he met with Woods at Woods's request in the fall of 2011. At that meeting, Woods told [REDACTED\] that there was talk of redistricting the Senate districts such that Woods and [REDACTED\] would be running against each other in the Senate race. According to [REDACTED\]. Woods told [REDACTED\] that Woods would be willing to move out of [REDACTED\]'s district if [REDACTED\] would give him $10,000 or $12,000. ([REDACTED\] could not recall the exact dollar amount.) Woods told [REDACTED\] that this type of relationship happened all the time in politics and that he would need to have the money in cash. [REDACTED\] told Woods he did not do business that way and left the meeting.
Woods's solicitation of [REDACTED\] for a bribe is similar to Woods soliciting Paris and Rusty Cranford for a kickback from the GIF grant money from NWAEDD. It is also close in time as to the charged conduct, which occurred in the Summer of 2013, approximately two years after the solicitation of [REDACTED\] for a bribe. It should therefore be admitted under Fed. R. Evid. 404(b) with a limiting instruction.
Without citation to authority, Shelton argues that the Government's 404(b) Notice is invalid because it is unclear if the Government is arguing that the evidence is res gestae at the same time that it is providing 404(b) notice regarding the same evidence. As was explained in the Government's Response to Shelton's Motion to Compel 404(b) Evidence, the Government is arguing that the evidence is admissible as either res gestae or intrinsic evidence or, in the alternative, as 404(b) evidence.
The advisory committee notes to Rule 404(b) explain that the notice requirement is intended to operate as "a generalized notice provision which requires the prosecution to apprise the defense of the general nature of the evidence of extrinsic acts" in order to "reduce surprise and promote early resolution on the issue of admissibility." Fed. R. Evid. 404 advisory committee's note. The Government's notice was more than adequate to comply with the rule as it was provided two months prior to trial, was detailed, and involved conduct about which discovery was provided in April 2017.
While Shelton complains generally about discovery, he provides no specifics as to why the Government's discovery was inadequate with regard to the 404(b) notice. As is set forth in some detail in the footnotes above, the discovery provided to Defendants on April 4, 2017, included records from the WCAPDD, records from AHER and from Arvest Bank relating to AHER, records from Shingle Resource and Recycling, Arvest Bank records relating to Roof Recovery and Recycling, and emails and text messages between Woods, Shelton, Paris, and others relating to the conduct set forth in the Government's 404(b) notice. It also included a witness statement in which [REDACTED\] discussed AHER, and witness statements discussing the WCAPDD GIF grants to Ecclesia, Woods's intervention on behalf of Ecclesia with the Arkansas Department of Education, and the fact that Paris and Shelton had a shingle recycling business.
Shelton states that he received additional discovery material on October 26, 2017, and November 6, 2017, but does not explain how this relates to the conduct referenced in the 404(b) notice. This is because the discovery received by Shelton on October 26, 2017, had nothing to do with the conduct described in the 404(b) notice. The discovery Shelton refers to as having received on November 6, 2017, were bank records produced to the Court from the Government's trial subpoena and consist almost completely of bank records, which were produced to the Defendants in the April 4, 2017 discovery.
As to any evidence which is admissible only under 404(b), Shelton and the other Defendants have had discovery regarding the conduct set forth in the Government's 404(b) notice since April 4, 2017, and the Government's 404(b) notice, provided two months before trial, was more than adequate to allow Shelton and the other Defendants to prepare regarding this evidence.
For the reasons set forth above, Shelton's Motion to Exclude Government's Notice of Evidence (Doc. 174) is without merit and should be denied.
I hereby certify that on this 15th of November, 2017, I electronically filed the foregoing with the Clerk of the Court using the CM/ECF System which will send notification of such filing and email to the following:
As has been customary in this case, the defense again accuses the government of misconduct. On November 8, 2017, Defendant Randell G. Shelton, Jr. filed under seal a motion to dismiss the Second Superseding Indictment with prejudice, on the basis of a series of supposed prosecutorial errors. [Doc. 170, "Def. Mot."]. The defendant's motion resorts to two common, well-worn themes of the defense's motion practice in this case: a reliance on rank speculation and wild conjecture, and an unceasing insistence to re-litigate issues that already have been briefed by the parties and decided by the Court. Nonetheless, Shelton's arguments, both novel and rehashed, are completely without merit, failing to show any government misconduct much less the egregious kind necessary to justify dismissal of an indictment. Therefore, the government respectfully requests that the Court deny Shelton's motion.
"[D]ismissal of an indictment for prosecutorial misconduct is an extreme sanction which should be infrequently utilized." United States v. Scott, 223 F.3d 208, 211 (3d Cir. 2000) (quoting United States v. Pabian, 704 F.2d 1533, 1536 (11th Cir. 1983)). It is permissible only if the defendant can show "flagrant misconduct and substantial prejudice." United States v. Tulk, 171 F.3d 596, 598 (8th Cir. 1999) (citation omitted). As the Eighth Circuit has observed, "[t]he Supreme Court, in addressing governmental misconduct, held `absent demonstrable prejudice, or substantial threat thereof, dismissal of the indictment is plainly inappropriate, even though the violation may have been deliberate.'" United States v. Manthei, 979 F.2d 124, 127 (8th Cir. 1992) (quoting United States v. Morrison, 449 U.S. 361, 365 (1981)). In other words, a court may entertain dismissal of an indictment only when the government's misconduct is patently egregious and the prejudice suffered by the defendant and his case is actual and severe. See United States v. Feurtado, 191 F.3d 420, 424 (4th Cir. 1999) ("[A] defendant is entitled to dismissal of an indictment only where actual prejudice is established."); United States v. Huntley, 976 F.2d 1287, 1292 (9th Cir. 1992) (dismissal of indictment "requires findings of prosecutorial misconduct and actual prejudice to the accused" (citation omitted)); United States v. McKenzie, 678 F.2d 629, 631 (5th Cir. 1982) (stating that "even in the case of the most `egregious prosecutorial misconduct,' the indictment may be dismissed only `upon a showing of actual prejudice to the accused,'" that is, "an indictment may be dismissed only where the defendant's case has been unfairly prejudiced" (citation omitted)); see also United States v. Exson, 328 F.3d 456, 459 (8th Cir. 2003) ("Dismissal due to errors in grand jury proceedings is appropriate only if the defendant shows actual prejudice.").
Because an indictment's dismissal is so rarely appropriate, less drastic or severe remedies are employed on those unusual occasions when prosecutorial misconduct has occurred and required redress. See, e.g., United States v. Santana, 6 F.3d 1, 11 (1st Cir. 1993) (noting that indictment should not be dismissed where prosecutorial misconduct "is redressable through the utilization of less drastic disciplinary tools"); see also Scott, 223 F.3d at 211 (holding that "the appropriate cure for [ ] prejudice [from invading the defense camp] was not dismissing the indictment, . . . but prohibiting the government from using any information acquired by way of that violation").
In this case, the government committed no misconduct, let alone the overtly egregious variety for which dismissal could even be considered. Consequently, neither Shelton nor either of his co-defendants suffered any prejudice, much less the actual or substantial prejudice that could justify dismissal.
Shelton first alleges that members of the government's team violated the Hatch Act by pressuring Woods to not seek reelection to the Arkansas Senate and by pressuring Neal to not run for election as a Washington County Judge. [Def. Mot. at 5-9]. No government official did any such thing. No government official directed, instructed, pressured, or requested Woods or Neal to end their candidacy for public office. Had the government made such a request, Shelton and his co-defendants still would not be entitled to dismissal of the indictment because they have suffered no actual prejudice.
Legal precedent clearly restricts an indictment's dismissal to only when a defendant and his defense suffer actual prejudice as a result of the misconduct. See, e.g., Exson, 328 F.3d at 459; Feurtado, 191 F.3d at 424; Huntley, 976 F.2d at 1292; McKenzie, 678 F.2d at 631. It is not enough that government misconduct occurred or that prejudice could potentially or theoretically arise. There must be actual prejudice not just to the defendant, but specifically to the defendant's case and defense. See, e.g., United States v. Van Engel, 15 F.3d 623, 631 (7th Cir. 1993) ("A federal judge is not authorized to punish the misconduct of a prosecutor by letting the defendant walk, unless the misconduct not only violated the defendant's rights but also prejudiced his defense, and neither condition is satisfied here." (citing Morrison, 449 U.S. at 365; United States v. Payne, 447 U.S. 727, 739 n.9 (1980))) (emphasis added); United States v. Luttrell, 889 F.2d 806, 811-13 (9th Cir. 1989) (stating that "a defendant is not entitled to be given an advantage at trial by way of remedy against government misconduct that did not infringe his rights"); McKenzie, 678 F.2d at 631 ("an indictment may be dismissed only where the defendant's case has been unfairly prejudiced" (citation omitted)).
Accepting Shelton's assertions for the sake of argument, there simply is no prejudice alleged, let alone proven, by the defense. Woods's decision about seeking reelection has no bearing on this case or any of the defendants' defenses. In other words, whether or not Woods pursued reelection has absolutely nothing to do with whether he accepted bribes from Shelton, co-defendant Oren Paris III, or others. Therefore, even if Shelton could prove conclusively his allegation that the government pressured Woods not to run—which he cannot and the government vehemently denies—neither Shelton nor any other defendant can establish that it actually prejudiced this case. Similarly immaterial to this case is whether or not Neal ran for a Washington County judgeship, and whether or not the government had anything to do with that decision. It is especially confounding how Neal's political decision to not run could prejudice Shelton and his preparation for and defense at trial, given that Neal is a cooperating witness and not a co-defendant.
Whenever someone, including a prosecutor or law enforcement agent, violates a legal precept, there may be consequences for those actions. But no such violation occurred here, and even if it did, it does not change the fact that Shelton and his co-defendants Woods and Paris were properly indicted by a grand jury and must stand trial for their crimes. The defendants' indictment and their rights to a fair trial were not, and could not have been, compromised even if Shelton's assertions here were true.
All that being said, and at the risk of inviting more baseless and meaningless attacks on its integrity,
To prove his allegation regarding Woods's decision to forego reelection, Shelton relies on an affidavit provided by Woods's wife, Christina Woods. According to Mrs. Woods, on October 31, 2015, Woods's former attorney, W.H. Taylor, informed Woods and his wife that the government did not want Woods to run for reelection. [Def. Mot. at 7]. Putting aside the inherent bias of a wife's statement in support of her husband's defense against criminal charges, Mrs. Woods's statement, if credited, shows nothing more than her recollection of what Woods's attorney told them. The government categorically denies that it ever informed Taylor that Woods should not run for office. Nor did the government ever instruct Woods personally to change his political plans.
Regarding Neal's decision to not run for a Washington County judgeship, Shelton relies again on speculation and conjecture. Shelton points to a series of text messages between Neal's attorney, Shane Wilkinson, and FBI Special Agent Robert Cessario on May 31, 2016, and the existence of a phone call that same day between Special Agent Cessario and a prosecutor, to conclude that the government must have pressured Neal to withdraw from his political race. [Def. Mot. at 8-9]. Simply put, the government never pressured Neal to not run, just as it did not pressure Woods. Moreover, the factual recitation in Shelton's own motion does not support his conclusory allegation; it undermines it. For instance, the series of text messages between Wilkinson and Special Agent Cessario, which Shelton believes is so damning, merely shows Neal and his attorney contemplating whether Neal should remain in the race. At no point in the exchange does Special Agent Cessario offer any suggestion, much less apply pressure, to Neal or Wilkinson about what Neal should do. Rather, it is Neal and Wilkinson who propose having Neal withdraw from the campaign. [See Def. Mot. at 8 ("Wilkinson text to Cessario: It's getting to the point that I'm going to have to start really campaigning . . . I will if I have to, but I'd rather drop out . . ."); id. ("Wilkinson text to Cessario: I'd keep the rep position just drop out of Judges race.")].
For at least the third time, the government is accused of using Neal to intrude into defense strategy and privileged communications. In support of his assertion, Shelton cites a litany of text messages between Special Agent Cessario and Neal's attorney, Wilkinson, and occasionally intersperses toll records of calls between Special Agent Cessario and a prosecutor. [Def. Mot. at 9-20]. In Shelton's view, this evidence amounts to definitive proof of a governmental undertaking to pierce Woods's attorney-client privilege. The government already addressed these accusations when the defense first raised them on September 8, 2017, in codefendant Paris's Motion to Suppress [Doc. 73, "Paris Mot. to Suppress," at 13-23], and again on October 19, 2017, in Paris's Motion for Contempt [Doc. 132, "Paris Mot. for Contempt," at 2-3].
There are at least four reasons why Shelton's claim must fail. First, Shelton specifically argues that Neal's interactions with Woods violates the Sixth Amendment right to counsel. [Def. Mot. at 10]. Shelton attempts to characterize this Sixth Amendment right as belonging to the amorphous notion of "defense strategy" because Shelton realizes that, even accepting the facts as he has articulated them, Neal did not violate Shelton's Sixth Amendment right to counsel. There are no allegations that during this investigation Neal ever communicated with Shelton or recorded interactions with Shelton. Likewise, there are no allegations that Neal interfered with or intruded on Shelton's privileged communications with his attorneys. Consequently, Shelton has no viable Sixth Amendment claim here, because he does not have standing to assert a Sixth Amendment claim on behalf of Woods. This Court made that clear in its November 6, 2017 Opinion:
[Doc. 154, "Nov. 6, 2017 Opinion," at 1]. No Sixth Amendment violation occurred here, but, regardless, the right at issue is personal to Woods—not Shelton, not Paris, and not some vague concept of "defense counsel's strategy." [Def. Mot. at 10].
Second, the Court has repeatedly addressed the lawfulness of Neal's interactions and recordings with Woods, observing in its November 6, 2017 Opinion:
[Id. at 2]. Shelton alleges no additional facts that should supersede or disrupt the Court's previous rulings.
Third, Neal was not a government agent. As has been thoroughly exhausted in previous filings, Neal did not act at the direction of the government. The government knew that Neal communicated with Woods, but did not instruct or coach him to question Woods. Governmental misconduct therefore could not have transpired here when the government took no action.
Fourth, Shelton's recitation of numerous text message exchanges between Special Agent Cessario and Wilkinson does not show Neal obtaining any privileged or confidential information from Woods, rendering this entire argument moot.
In a March 7, 2016 exchange, Wilkinson texted Special Agent Cessario that Woods wanted to talk with Neal and that they spoke. [Def. Mot. at 14]. The next day, Special Agent Cessario texted Wilkinson, asking, "What did they talk about in private?" [Id. at 15]. Wilkinson replied, "He has it all detailed. Jon is trying to close ranks." [Id.]. Later that day, Special Agent Cessario responded, "Can Micah be available for a quick debrief Wednesday or Thursday?" [Id.]. From this exchange, Shelton intimates that the government attempted to infiltrate defense strategy. [Id.]. However, under no reasonable conception of the attorney-client privilege can the characterization that Woods "is trying to close ranks" be considered privileged information. It does not appear to be a direct quote from Woods. And rather than be evidence of some defense strategy advised by counsel, it is more likely to be evidence that Woods was attempting to prevent, and perhaps even obstruct, witnesses from cooperating with a federal criminal investigation.
Shelton also points to a March 22. 2016 text exchange and Neal's proffer on March 25. 2016, to show that Neal told Special Agent Cessario about Woods's decision to hire new counsel days before Woods officially hired his current attorney. [Id. at 16]. The significance of this exchange for purposes of this motion is unclear. Woods's termination and retention of counsel is not privileged information. See United States r. Robinson, 121 F.3d 971, 976 (5th Cir. 1997) ("The fact of representation. or an attempt at securing it. are generally not within the privilege . . .). Moreover. Neal's accounts show that Woods shared this non-privileged information with Neal to deter him from cooperating with law enforcement and to encourage Neal to coordinate with Woods's new attorney. [See Def. Mot. at 16 C1H]e said, don't talk to fbi. talk to benca people and they'll tell you what to say." (quoting Wilkinson text to Special Agent Cessario))].
Lastly, Shelton highlights an April 13, 2016 text exchange wherein Wilkinson conveyed to Special Agent Cessario that "John [sic] is steadfast in telling Micah this scheme which consists of his. Oren s. and Randall's [sic] defense and how they joining rank, etc." [Id. at 20]. When asked by Special Agent Cessario. "What's the schemer, Wilkinson replied that it involved not cooperating with law enforcement and that "the defense will be that it was a loan." [Id.]. Once more, nothing in this exchange constitutes privileged information; after all, there is not a single reference to an attorney or any legal advice provided by an attorney.
In the end, the government cannot be said to act improperly where Woods voluntarily shared information, non-privileged or otherwise, with a third party who is not an agent of the government and who, when interacting with Woods, acted on his own accord.
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Shelton seeks to re-litigate a matter that already has been decided by the Court. Shelton alleges that the government committed misconduct by making misrepresentations to the Court. [Def. Mot. at 32-37]. The government did no such thing, as it explained when first accused of this misconduct in co-defendant Paris's Motion for Contempt [Doc. 132]. Ultimately, the Court denied Paris's motion. [See Doc. 154].
The government did not make any misrepresentations to the Court knowingly, and, to date, has no reason to believe it made any misrepresentations unknowingly. For the sake of brevity, the government asks the Court to consider its response in opposition to Paris's Motion for Contempt [Doc. 141] when addressing this matter. The government nevertheless is compelled to add the following.
The text messages. which already have been presented to the Court as part of Paris's Motion for Contempt [see Doc. 132-I (Exhibit to Paris Mot. for Contempt)], do not prove that the government directed Neal to communicate with or record his conversations with Woods. What they prove is that the government knew that Neal was communicating with Woods—a fact that the government has repeatedly acknowledged. [Cf. Nov. 6, 2017 Opinion at 3 (noting "that the Government has indeed consistently represented" that it knew that Neal was making recordings with Woods)].
Should the Court request additional briefing or argument, the government will certainly abide. But in the government's view, the law of the case has resolved this issue.
Shelton accuses the government of selective prosecution, relying on the defense's usual reserve of speculation and conjecture. Shelton surmises that the government is treating him differently from Bob Srygley, a local businessman, because, even though Shelton and Srygley both gave money to Woods, only Shelton is being prosecuted. [Def. Mot. at 39-41]. The government's purported differential treatment of Shelton and Srygley, Shelton assures the Court, is based on their different political affiliations.
To establish a prima facie case of selective prosecution, Shelton "must show: (1) people similarly situated to him were not prosecuted; and (2) the decision to prosecute was motivated by a discriminatory purpose." United States v. Hirsch, 360 F.3d 860, 864 (8th Cir. 2004). "The `evidentiary burden is a heavy one.'" United States v. Peterson, 652 F.3d 979, 981 (8th Cir. 2011) (quoting United States v. Leathers, 354 F.3d 955, 961 (8th Cir. 2004)).
Regarding the similarly situated element that he first must establish, Shelton compares himself to Srygley because, by Shelton's characterization, they each loaned money to Woods. In light of the facts alleged in the Indictment and the evidence it will present at trial, the government disputes Shelton's assertion that any of his payments to Woods was a "loan." Nevertheless, the supposed "loan" is where the similarities between Shelton and Srygley end. What Shelton conveniently omits from his comparison are that Shelton's company, Paradigm, was receiving payments from an entity who was benefiting from Woods's GIF (i.e., Ecclesia College), and that, based on the evidence to be adduced at trial, those payments were for little to no substantive work. Based on Shelton's account, Srygley was not receiving any payments predicated on GIF that Woods had directed, nor was he receiving that money through a sham company with a sham consulting agreement, as Shelton is alleged to have done in this case. Shelton thus has failed to carry his heavy burden to establish the first element of a selective prosecution claim.
Shelton's assertions concerning the discriminatory element are just as flawed and meritless. Shelton theorizes that Srygley is not being prosecuted because of his Democratic Party affiliations. [Def. Mot. at 41]. But Shelton's assertions are simply conclusory, and conclusory allegations do not make a prima facie case. See Hirsch, 360 F.3d at 864 (finding that defendant's "conclusory assertion that discrimination is `easily and readily apparent' is wholly insufficient to support his claim of selective prosecution"). The only facts Shelton marshals in furtherance of his unsupported claim is that during roughly the first year of this investigation, the United States Attorney in the Western District of Arkansas was someone who later sought the Democratic nomination for United States Senate. [Def. Mot. at 39]. That seemingly inconsequential fact is all the more innocuous and immaterial considering that no one was charged as a result of this investigation until January 2017
Shelton argues that the government committed prosecutorial misconduct by acting "in bad faith" with respect to discovery and by disregarding the Court's scheduling order. [Def. Mot. at 41-47]. Shelton, in claiming prejudice as a result of the government's August 4, 2017 production of the one-terabyte hard drive, again raises arguments that he has previously litigated [Doc. 91, Woods and Shelton's Motion to Compel], and that the Court has dismissed [Doc. 150 ("But the Court is not going to sanction the Government for giving (or trying to give) the Defendants more than they are entitled to, so long as the Government produces the information to which the Defendants are entitled in a manner that is compliant with its legal obligations and reasonable under the circumstances.")].
Setting aside the previously litigated disclosure of the one-terabyte hard drive, the government will detail what it has produced in discovery since August 4, 2017, demonstrating that it has produced discovery "in a manner that is compliant with its legal obligations and reasonable under the circumstances."
After August 4, 2017, the government's next disclosure was on October 4, 2017. The government provided an Addonics hard drive that contained the same files that had previously been provided in August, but were hardware encrypted instead of software encrypted. This was provided at the request of Shelton's counsel, but also provided to co-defendants Woods and Paris even though they did not request it. There was also an encrypted flash drive that contained additional discovery, which included 376 .pdf files, two recorded interviews, and 13 emails in native format. The government also provided an additional flash drive that contained a copy of a cellular phone in HTML format, which had already been provided to all defendants in .pdf format on April 4, 2017. The HTML copy of the cellular phone was requested by Shelton's counsel, which the government provided to Woods and Paris even though they had not requested it.
On October 10, 2017, the government provided the defendants with an additional disclosure. This disclosure included 110 emails that the government identified as "important," and included a table of contents that referenced each email's location in the pre—May 23, 2017, hearing production. This is the disclosure referenced in the government's supplemental response filed the same date. [Doc. 113]. All of these emails were provided in the government's disclosures prior to the May 23, 2017, hearing. This was an effort to aid the defendants in absence of a rule or order requiring the government to do so.
The government's next disclosure was on October 12, 2017. That disclosure contained a.pdf file that the government informed the defendants was potential Jencks or Giglio material. The government also included a report of analysis of a computer, which had been previously provided in discovery prior to the May 23, 2017, hearing. However, it was provided again because, without prompting from the defendants, the government discovered that the embedded hyperlinks in the report that had been provided to the defendants did not work. Additionally, one of the files recovered from that computer was corrupted, and was provided in printed format because it appeared differently depending on what software one used to view the file.
The government's next disclosure was on October 13, 2017. This disclosure included an interview of a witness that was conducted on October 6, 2017, as well as documents provided by that witness. In an additional effort to assist the defendants with conducting searches of discovery materials, the government also provided an encrypted thumb drive containing all of the discovery provided prior to the May 23, 2017 hearing, as well as the materials on the thumb drive provided on August 4, 2017, in searchable .pdf format.
On October 18, 2017, the government made an additional disclosure, providing the defendants with records for a single bank account.
On October 25, 2017, the government made its next discovery production. This production included four .pdf files and 941 emails in native format. The defendants were advised in an accompanying letter that the emails ". . . are not relevant, but are being provided in an abundance of caution."
The Court also has issued trial subpoenas for records at the government's request, seeking bank records relevant to the case. The government had previously obtained a majority of these records in piecemeal fashion during the investigation, which had been provided in discovery prior to the May 23, 2017 hearing. Obtaining the records by this method ensured that the relevant bank records used at trial would be complete. These records were provided to the defendants on November 3, 2017, and are the "over 5,000 pages of discovery" about which Shelton now complains. [Def. Mot. at 42].
On November 16, 2017, the government produced three recorded interviews, two pages of accounting records, three reports of interviews, and two proffer letters related to the recorded interviews. In addition to the above, the Government also produced the agents' notes of interviews of Woods and Paris, even though they are not discoverable "except by separate Order of the Court." [Doc. 59, § II.B.].
Lastly, the government is in the process of putting together another production that contains five reports of interviews and a transcript of one of the interviews produced on November 16, 2017.
In support of his request for dismissal, Shelton cites a case where the remedy was suppression. See United States v. Davis, 244 F.3d 666 (8th Cir. 2000). In Davis, the government sought to appeal the suppression of late—obtained DNA test results. Id. at 667. The government requested expedited DNA testing of evidence 10 days before trial that the lab had in its possession for over a month. Id. at 668. At a pretrial hearing, the government did not alert the defendants or the court to the request it had made just three days before, and the possibility that the imminent results may require a continuance of the trial. Id at 670. Preliminary results were obtained and provided to the defendants and the court three days after the pretrial hearing. Id. at 668. In not allowing the government to utilize the DNA evidence at trial, the trial court pointed to the delay in requesting the expedited testing, and the continuing of other cases that were set for trial to accommodate the defendant's trial when at the pretrial hearing the government knew of the possibility of delay. Id. at 670. Although it upheld the sanction of suppression in Davis, the Eighth Circuit pointed out that the trial court had "considered whether it could remedy the prejudice by granting a less severe sanction than exclusion of the evidence, that is, a continuance in order to allow the defendants time to review and rebut the DNA evidence." Id. at 672.
Shelton also cites United States v. Hastings, 126 F.3d 310 (4th Cir. 1997), in support of a remedy of dismissal. There, the Fourth Circuit, in overturning the trial court's dismissal of an indictment, stated "dismissal of the indictment against Hastings was an extreme and inappropriate sanction. When a court sanctions the government in a criminal case for its failure to obey court orders, it must use the least severe sanction which will adequately punish the government and secure future compliance." Id. at 317. In Hastings, the government misconduct was its refusal to produce discovery regarding a selective prosecution claim "until it had been ordered to do so several times." Id. The appellate court further noted that "[e]ven when the government did undertake to produce relevant evidence, it did so in an untimely fashion." Id.
Shelton uses conclusory language in describing the government's conduct with regard to discovery: "The government's discovery misconduct has continued, unabated, despite ongoing protests from Defendants." [Def. Mot. at 42-43]. Shelton further describes the government's production as "shenanigans," "gamesmanship," "questionable," and "egregious." He continues, "the government's conduct and representations to defense counsel regarding discovery are teeming with flagrant disregard for its ethical obligation to be forthcoming to opposing counsel." [Id. at 44]. Although certainly inflammatory, Shelton fails to articulate any legitimate claim that would support such descriptors. Shelton points to continuing disclosures by the government ("encrypted DVD after encrypted DVD containing previously undisclosed discovery materials have arrived regularly at defense counsel's office" [id. at 45]), and cries foul that he "expects to receive still further disclosures." But despite his protestations, the government is not withholding discovery, only to produce it later so as to gain a strategic advantage over the defendants.
The disclosures made by the government are almost entirely comprised of items that are early-produced Jencks and Giglio materials, newly discovered evidence, and evidence that was in the government's possession that it recently decided to utilize at trial. Its disclosures of those materials have been timely and proper.
Shelton bemoans the manner in which the government has engaged in discovery, but does not say in what way he has been prejudiced, which he has not. Even if he had been prejudiced, there are other, less severe sanctions. To that point, the government finds it curious that Shelton complains of phantom prejudice as a result of the discovery practice employed by the government, and at the same time objects to what would be a less severe and more proper remedy, a continuance of the trial. [See Doc. 176].
For the foregoing reasons, the United States respectfully requests that the Court deny the defendant's Motion to Dismiss With Prejudice Due to Governmental Misconduct.
I HEREBY CERTIFY that on this 17th day of November, 2017, I electronically filed the foregoing United States' Response in Opposition to Defendant Randell G. Shelton, Jr.'s Motion to Dismiss With Prejudice Due to Governmental Misconduct with the Clerk of the District Court using the CM/ECF system, which will send a notification of such filing to
On November 8, 2017, Defendant Oren Paris III filed under seal a motion to dismiss the Superseding Indictment (the "Indictment"). [Doc. 168, "Def. Mot." or "Motion"]. In doing so, Defendant Paris recycles arguments — previously asserted by him or his co-defendants — which this Court has summarily rejected. The novel arguments that Defendant Paris does advance mischaracterize both the pertinent facts of this case and applicable legal precedent governing federal bribery statutes. Defendant's arguments are without merit, and this Court should deny his Motion.
In Defendant Paris's Motion, he argues that the government's Indictment should be dismissed because it (1) fails to allege a direct exchange of items of value between Defendant Paris and Defendant Woods and Micah Neal in exchange for official acts; and (2) fails to include allegations of value conferred upon public officials for their official acts.
Federal Rule of Criminal Procedure 7 requires that an indictment "be a plain, concise, and definite written statement of the essential facts constituting the offense charged." An indictment's allegations are sufficiently pled where "it (1) contains the elements of the charged offense and fairly informs the defendant of the charge against which he or she must defend and (2) enables him or her to plead double jeopardy as a bar to further prosecution." United States v. Stands, 105 F.3d 1565, 1575 (8th Cir. 1997) (citation omitted); see also United States v. Sewell, 513 F.3d 820, 821 (8th Cir. 2008). "An indictment which tracks the statutory language is ordinarily sufficient." United States v. Tebeau, 713 F.3d 955, 962 (8th Cir. 2013) (citing Sewell, 513 F.3d at 821). In deciding a motion to dismiss, the court must limit its review to the four corners of the indictment and accept its allegations as true. United States v. Steffen, 687 F.3d 1104, 1107 n.2 (8th Cir. 2012). "An indictment returned by a legally constituted and unbiased grand jury . . . if valid on its face, is enough to call for trial of the charge on the merits." Costello v. United States, 350 U.S. 359, 363 (1956).
To prove honest services mail and/or wire fraud, the government must establish beyond a reasonable doubt:
Eighth Cir. Model Jury Instructions 6.18.1341, 6.18.1343, 6.18.1346 (2014). Where a defendant is charged with honest services wire fraud, the scheme alleged must be one of bribery or kickbacks. Skilling v. United States, 561 U.S. 358, 409 (2010).
Bribery is "the actual, intended, or solicited exchange of a thing of value for official action." Committee Comments, Eighth Cir. Model Jury Instructions § 6.18.1346 (citing United States v. Sun-Diamond Growers, 526 U.S. 398, 404 (1999)). In other words, bribery requires a quid pro quo. United States v. Kemp, 500 F.3d 257, 281 (3d Cir. 2007) (defining quid pro quo as "`a specific intent to give or receive something of value in exchange for an official act.'" (quoting Sun-Diamond, 526 U.S. at 404-05)); United States v. Ganim, 510 F.3d 134, 148 (2d Cir. 2007) (discussing a quid pro quo requirement for a bribery theory of honest services fraud). Further, the required quid pro quo can come as a "stream of benefits," by which bribes are offered for some course of official action, even if each benefit is not exchanged for a specific action. Committee Comments, Eighth Cir. Model Jury Instructions § 6.18.1346 (citing Kemp, 500 F.3d at 281-86).
In its decision in McDonnell v. United States, 136 S.Ct. 2355 (2016), the Supreme Court clarified the definition of the "official act" that a public official must agree to perform under federal bribery law. Under the bribery statute, 18 U.S.C. § 201(a)(3),
Under the first prong, the Court in McDonnell stated that the "question, matter, cause, suit, proceeding or controversy" at issue must be something similar in nature to "a lawsuit before a court, a determination before an agency, or a hearing before a committee." Id. at 2369. It also must be focused, concrete, and "relatively circumscribed—the kind of thing that can be put on an agenda, tracked for progress, and then checked off as complete." Id. Because the language of the bribery statute states that the matter may be pending or brought before any public official, the Court explained, "the matter may be pending either before the public official who is performing the official act, or before another public official." Id. at 2369. Thus, the public official accepting bribes need not be in control of the pending question or matter at issue. Id.
The second prong of the "official act" definition requires that the public official must "make a decision or take an action on that `question, matter, cause, suit, proceeding or controversy,' or agree to do so." Id. at 2372. Although merely setting a meeting, talking to another official, or organizing an event without more does not constitute an "official act," the McDonnell Court held that a public official can perform an official act by pressuring or advising another public official to do so:
Id. at 2370 (emphasis in the original). The Court in McDonnell also stated that the public official need not make or take action upon a final or ultimate government issue; rather, for example, "a decision or action to initiate a research study—or a decision or action on a qualifying step, such as narrowing down the list of potential research topics—would qualify as an `official act.' Id.
The plain language of the Indictment includes detailed factual allegations setting forth the defendants' scheme whereby Defendant Woods would send GIF monies to Entity A and then Defendant Paris would pay Woods kickbacks through pass-through payments via Defendant Shelton. See Kemp, 500 F.3d at 280 (holding an indictment sufficiently charged honest services fraud through bribery where it charged the defendants with "engaging in `a scheme to defraud the City of Philadelphia and its citizens of the right to [the] defendant['s] honest services" and incorporated factual allegations, "some of which were incorporated by reference to the allegations of the conspiracy charge," describing the things of value provided to the public official in exchange for influencing his actions); see also Committee Comments, Eighth Cir. Model Jury Instructions § 6.18.1346 (approvingly citing Kemp). Rule 7 requires nothing more. See Tebeau, 713 F.3d at 962.
Indeed, the Indictment describes in great detail Defendant Paris's involvement in an extended conspiracy and scheme to commit honest services fraud, including the things of value conferred upon the public officials, who in turn took official acts in exchange for those things of value. The Indictment alleges that pursuant to a corrupt agreement between Defendants Woods (a member of the Arkansas Senate during the relevant time period), Paris (president of Entity A, a non-profit college), and Shelton (a friend of Woods's and Paris's and incorporator of Entity B), Woods accepted thousands of dollars in bribe payments from Paris between at least August 2013 and October 2015. Indictment at ¶¶ 1, 2, 3, 15, 18(g). The Indictment also articulates the manner in which Defendants Woods, Paris, and Shelton, concealed bribe payments. Indictment at ¶¶ 18(g) (Paris would direct Entity A to write a check to Entity B; Shelton would withdraw funds from Entity B's accounts and make payments to Woods and Micah Neal, either in cash or by electronic transfer); see also ¶¶ 19(s)-19(bb); ¶¶ 19(000)-19(xxx); ¶¶ 19(fffff)-19(fffff)). It also articulates the official acts that Defendant Woods took, in his official capacity as an Arkansas Senator, in exchange for those bribe/kickback payments. These include, inter alia, that Defendant Woods: directed NWAEDD to allocate GIF monies to Entity A (II 18 (c)); advised other Arkansas legislators to allocate GIF monies they controlled to Entity A 18(d), 19(jjjj)-19(Idddc)); approved and directed a $200,000 GIF grant to Entity A (¶ 19(L), ¶ 19(fff)); secured an agreement from a NWAEDD board member not to oppose GIF grant applications from Entity A (¶¶ 19(hhhh)); requested draft legislation to send GIF money to Arkansas work colleges (¶ 19(qqqq)); and filed, sponsored, and voted on legislation that would send GIF funds to Arkansas work colleges, of which Entity A was the only college in Arkansas eligible to receive such funds (¶ 19 (ssss), ¶ 19(uuuu), ¶ 19(xxxx), ¶ 19(zzzz)).
Defendant Paris first argues that the Indictment "fails to allege a direct exchange of items of value between Defendant Paris and Defendant Woods and Micah Neal [or allege that something of value was actually conferred upon Defendant Woods and Micah Neal] in exchange for official acts." Motion at 2, 6 (arguing that government must prove a link between a thing of value and a specific official act). As an initial matter, the government does in fact allege a link between specific kickbacks paid to Defendant Woods to specific GIF funds awarded to Defendant Paris's organization (Entity A). See e.g., Indictment at ¶ 19(ppppp) (five days after Woods sponsored the Work College Act directing GIF money to Entity A, Entity B, which is alleged to have served as the pass-through for bribe payments to Woods — see ¶ 18 (g) — invoiced Entity A for a consulting fee of $7,500). However, to the extent Defendant Paris is claiming that the government must allege, and then later prove, that specific payments are tied to specific official acts, that is not the law in the Eighth Circuit or in any other. To prove a quid pro quo, it is "not necessary for the government to link any particular payment to any particular action undertaken." United States v. Redzic, 627 F.3d 683, 692 (8th Cir. 2010) (considering bribery under 18 U.S.C. § 666); see also Ganim, 510 F.3d at 137 (holding that the government was "not required to allege or to prove" a direct link between each alleged benefit the public official received and each official act performed in an honest services bribery prosecution). "The quid pro quo requirement is satisfied so long as the evidence shows a `course of conduct of favors and gifts flowing to a public official in exchange for a pattern of official actions favorable to the donor.'" Redzic, 627 F.3d at 692 (quoting United States v. Jennings, 160 F.3d 1006, 1014 (4th Cir. 1998) (affirming a contractor's conviction for paying bribes under 18 U.S.C. § 666(a)(2))); Committee Comments, Eighth Circuit Model Jury Instructions § 6.18.1346 ("[Section 1346] does cover bribery schemes involving a `stream of benefits' offered, accepted, or demanded in exchange for some official action, even if no specific official action is identified at the time the bribe is paid." (citing Kemp, 500 F.3d at 281-86)).
Defendant Paris also accuses the government of attempting to "revisit pre-McDonnell statutory interpretation" and argues that the "directing" of GIF funds from NWAEDD to Entities A and C by Defendant Woods and Micah Neal and their "advising" of legislators to "allocate" GIF funds to Entity A are not official acts. See Motion at 6-13. First, Defendant Paris completely ignores, and thereby apparently concedes, other official acts alleged in the Indictment. Indeed, as part of the Defendants' overall conspiracy and scheme to commit honest services fraud, Defendant Woods sponsored or voted on at least five pieces of legislation between August 2013 and October 2015. See e.g., Indictment 19(ssss) ("On or about February 11, 2015, WOODS filed and sponsored Senate Bill 323 that became Act 417 [the Work College Act] . . ."); ¶ 19(wwww) (Defendant Woods also sponsored "Senate Bill 641, which provided for an appropriation [of GIF funds] to be used to make grants to work colleges . . ."). This fact alone necessitates denial of Defendant Paris's Motion.
Second, Defendant Paris also ignores the Supreme Court's fulsome holding in McDonnell while seizing on only portions of the Court's opinion that Defendant Paris finds helpful to his cause. Notably, the Supreme Court held that "if a public official uses his official position to provide advice to another official, knowing or intending that such advice will form the basis for an `official act' by another official, that too can qualify as a decision or action for purposes of [the bribery statute]." McDonnell, 136 S. Ct. at 2370 (emphasis added). Here, the government has alleged that Defendant Woods's official action included, inter alia, that he "advise[d]" other Arkansas legislators to allocate GIF monies they controlled to Entity A. See ¶ 18(d) (emphasis added); see also ¶¶ 19(iiii)-19(kkkk). Defendant Paris disregards the Supreme Court's holding on this point and nevertheless argues that "acting to . . . advise" is insufficient to "pass the smell test when it comes to evaluating the alleged `official act' element." Motion at 7.
Third, Defendant Paris devotes several pages to the "legislative design" behind the Arkansas economic districts and underscores repeatedly that, "as a matter of law," the districts are to function independently. Motion at 8-12. However, as a matter of fact, and consistent with the government's Indictment, "at all times relevant to [the Indictment], legislators, in effect and in practice, exerted substantial control and authority over a set amount of GIF monies . . . appropriated for disbursement to the economic development districts" and were able to control and direct those funds wherever they wanted. Indictment at ¶ 111. While not a legislative vote on the floor of the General Assembly — which, the government also alleges occurred (¶¶ 19 (ssss)-19(zzzz)) — the ability to direct NWAEDD funds is, at a minimum, the type of "settled practice" or "qualifying step" the Supreme Court has deemed an official act. See McDonnell, 136 S. Ct. at 2370 (a decision or action on a "qualifying step" would qualify as an official act); United States v. Birdsall, 233 U.S. 223, 230-231 (1914) (defining official action for purposes of bribery as "[e]very action that is within the range of official duty," and thus need not be prescribed by statute or "prescribed by a written rule or regulation"; "[i]t might also be found in an established usage" or "settled practice").
To argue otherwise, Defendant Paris cites United States v. McNieve, 536 F.2d 1245 (8th Cir. 1976), and United States v. Rabbitt, 583 F.2d 1014 (8th Cir. 1978), to support his contention that because "neither [] Jon Woods [or] Micah Neal ultimately control[ed] the distribution of GIF funds," they did not act in their "official capacities." Motion at 13. Both cases, which pre-date Congress' passage of 18 U.S.C. § 1346 in 1988, are in apposite to this case. In McNieve, the Court found that because a plumbing inspector, who accepted unsolicited $5.00 "tips" for the issuance of plumbing permits, did not (1) deviate from the plumbing code, nor (2) conceal the gratuities (defendant McNieve voluntarily disclosed the tips); and (3) because the issuance of the permits were nondiscretionary, there was insufficient evidence to show a "scheme to defraud." McNieve, 536 F.2d at 1246-47, 1251-53. Needless to say, the facts of McNieve do not align or compare in any way with those in the present matter. In this case, Defendant Woods and Neal exercised their discretion to direct GIF money to certain districts and entities based on bribes that they were receiving. This hidden ulterior motive for their decisions defrauded the State of Arkansas of their honest services—in McNieve, the defendant exercised no discretion and made no decision at all. The Indictment further details the lengths Defendants Paris, Woods, and Shelton went to conceal the substantial bribe payments in this case. See Indictment at ¶¶ 18(g), 19(s)-19(bb), 19(000)-19(xxx), 19(ffff0-19(fffff)).
Defendant Paris's reliance on Rabbitt is also misplaced. There, the Eighth Circuit reversed one count of a Hobbs Act conviction against a councilman for accepting a fee for introducing an architectural firm to a potential state contractor. Rabbitt, 583 F.2d at 1019. The Court concluded that the government had not shown that the councilman was acting in his official capacity when he introduced the parties, because the councilman did not have the authority to award contracts, nor did the architectural firm reasonably believe he had such authority. Id. at 1028; see also United States v. Foster, 443 F.3d 978, 985 (8th Cir. 2006) (distinguishing Rabbit). As the Indictment details, and as evidence at trial will prove, Defendant Woods had the authority to award GIF funds to Entity A and Defendant Paris, who communicated extensively with Defendant Woods about applying for and receiving GIF funds, clearly believed Woods had the authority to deliver the funds he promised. See e.g., Indictment at ¶ 11; ¶ 19(kkk) (award letter accompanying $200,000 GIF grant delivered to Defendant Paris stated "funds were appropriated . . . through Acts supported by your Senator Jon Woods."); see also ¶ 19(yyy)-19(zzz) (shortly after Defendant Paris submits a GIF grant application requesting $30,000, he texts Defendant Woods stating "Should I thank [the legislator] yet? [Defendant Shelton] said the $30,000 request was sent to [NWAEDD].").
Finally, and perhaps most importantly, the McDonnell Court reaffirmed the long-standing principle that in bribery prosecutions, the question of whether a step taken by a public official constitutes an "official act" is a question for the jury. McDonnell, 136 S. Ct. at 2371 ("It is up to the jury, under the facts of the case, to determine whether the public official agreed to perform an `official act' at the time of the alleged quid pro quo.") For this reason and all of the foregoing reasons, the Indictment sufficiently alleges that Defendant Paris sought favorable official action in exchange for his repeated kickback payments, and therefore, his Motion should be denied.
Defendant Paris also takes the remarkable position that he cannot be convicted of bribery because Defendant Woods and Micah Neal were not, in fact, acting within their official capacity as state legislators when they directed NWAED to award GIF funds to Entity A — to say nothing of their passage of several related bills — but were merely acting as lobbyists. Motion at 13-14. Whether Defendant Woods was engaged in legalized lobbying as Defendant Paris posits or quid pro quo bribery is a question for the jury. McDonnell, 136 S. Ct. at 2371. Moreover, contrary to Defendant Paris's argument, Arkansas ethics codes, procurement regulations, and the Arkansas Senate Rules bar any state legislator from accepting payment to lobby the types of GIF awards distributed in this case. See Ark. Code Ann. § 21-8-801 ("no [legislator] shall [r]eceive a gift or compensation . . . other than income and benefits from the governmental body to which he or she is duly entitled . . . for the performance of the duties and responsibilities of his or her office or position"); Ark. Code Ann. § 19-11-709 (prohibiting public officials from "contemporaneous employment" with parties who are involved in receiving awards from the State); Arkansas Senate Rule 24.07(b) (Code of Ethics), available at http://www.arkansas.gov/senate/docs/2013-Senate-Rules.pdf (a Senator shall not . . . vote . . . on the floor of the Senate on any matter which the Senator knows. . . . will specifically relate to a business which employs the Senator. . . ."). To accept Defendant Paris's argument as true, is to accept that Defendant Woods broke several laws and codes of ethics regarding conflicts of interest in Arkansas.
Defendant Paris further contends that the Indictment should be dismissed because "the government will be unable to establish a foundation for any of the electronic mails or electronic bank transmissions that make up Counts 1-14," and thus be unable to prove the use of interstate wire communications. Motion at 16. Defendant Paris's prediction rests on the argument that expert testimony is "clearly" required in this case because "in the age of electronics . . . pinpointing the exact location of the initiation or termination points of electronic communications . . . is beyond the ability and understanding of the average lay person." Motion at 15-16. Defendant Paris's argument is premature in its posture and substantively and legally meritless.
At this stage of proceedings, the government need only allege that the defendants used the mail or interstate wires in furtherance of their scheme to defraud for purposes of establishing sufficient use of interstate wires or mailings under 18 U.S.C. §§ 1341, 1343, 1346. See Tebeau, 713 F.3d at 962 ("An indictment which tracks the statutory language is ordinarily sufficient."). The government has done so. See Indictment at ¶ 18(j) ("WOODS, PARIS, and SHELTON used and caused others to use interstate wire communications and mail delivered by the United States Postal Service to execute the scheme to defraud"); see also Indictment ¶¶ 22-23.
Moreover, Defendant Paris's presumptions and assertions about how and whether the government will prove the use of interstate wires — while irrelevant for purposes of a motion to dismiss — is nevertheless without merit. As stated in the simultaneously filed Government's Response to Defendant Shelton's Motion In Limine to Exclude Potential Expert Witness Testimony and Evidence, the government intends to call Mr. Gibson-Saxty in its case-in-chief to testify that electronic transactions that exchange check images involving participating "sending banks" and "receiving banks" are processed by Endpoint Exchange using servers located in Milwaukee, Wisconsin. [See Doc. 169 at 6, ¶ 2]. Mr. Gibson-Saxty's testimony will be based upon his knowledge and perception of the Endpoint Exchange system, not on the type of "scientific, technical, or other specialized knowledge" that is contemplated by Fed. R. Evid. 702; thus, he may testify as a lay witness and Defendant Paris cites no authority to the contrary. See United States v. Brosnan, 484 F. App'x 167, 168 (9th Cir. 2012) (rejecting defendant's argument that the district court admitted "improper, unnoticed expert testimony to prove the interstate wire element of wire fraud counts" because "[t]he witnesses did not offer opinions based on `scientific, technical, or other specialized knowledge,' Fed. R. Evid. 702, but facts based on their `perception' of the structure of the system, Fed. R. Evid. 701").
Mr. Gibson-Saxty's knowledge of the process of exchanging check images between participating banks through a server located in Milwaukee, Wisconsin, has been acquired through his employment and experience with Endpoint Exchange. Thus, any opinion Mr. Gibson-Saxty, or a similarly situated witness, would express is properly within the scope of Federal Rule of Evidence 701, which permits a lay witness to offer opinions that are "(a) rationally based on the perception of the witness, (b) helpful to a clear understanding of the witness' testimony or the determination of a fact in issue, and (c) not based on scientific, technical, or other specialized knowledge within the scope of Rule 702." Fed. R. Evid. 701; see also United States v. Munoz-Franco, 487 F.3d 25, 35-6 (1st Cir. 2007). Accordingly, Defendant Paris's arguments that the government will not be able to present evidence of an interstate wire without expert testimony should be rejected by this Court.
"[D]ismissal of an indictment for prosecutorial misconduct is an extreme sanction which should be infrequently utilized." United States v. Scott, 223 F.3d 208, 211 (3d Cir. 2000) (quoting United States v. Pabian, 704 F.2d 1533, 1536 (11th Cir. 1983)). It is permissible only if the defendant can show "flagrant misconduct and substantial prejudice." United States v. Tulk, 171 F.3d 596, 598 (8th Cir. 1999) (citation omitted). As the Eighth Circuit has observed, "Nile Supreme Court, in addressing governmental misconduct, held `absent demonstrable prejudice, or substantial threat thereof, dismissal of the indictment is plainly inappropriate, even though the violation may have been deliberate.'" United States v. Manthei, 979 F.2d 124, 127 (8th Cir. 1992) (quoting United States v. Morrison, 449 U.S. 361, 365 (1981)). In other words, a court may entertain dismissal of an indictment only when the government's misconduct is patently egregious and the prejudice suffered by the defendant and his case is actual and severe. See United States v. Feurtado, 191 F.3d 420, 424 (4th Cir. 1999) (IA] defendant is entitled to dismissal of an indictment only where actual prejudice is established."); United States v. Huntley, 976 F.2d 1287, 1292 (9th Cir. 1992) (dismissal of indictment "requires findings of prosecutorial misconduct and actual prejudice to the accused" (citation omitted)); United States v. McKenzie, 678 F.2d 629, 631 (5th Cir. 1982) (stating that "even in the case of the most `egregious prosecutorial misconduct,' the indictment may be dismissed only `upon a showing of actual prejudice to the accused,'" that is, "an indictment may be dismissed only where the defendant's case has been unfairly prejudiced" (citation omitted)); see also United States v. Exson, 328 F.3d 456, 459 (8th Cir. 2003) ("Dismissal due to errors in grand jury proceedings is appropriate only if the defendant shows actual prejudice.").
Because an indictment's dismissal is so rarely appropriate, less drastic or severe remedies are employed on those unusual occasions when prosecutorial misconduct has occurred and required redress. See, e.g., United States v. Santana, 6 F.3d 1, 11 (1st Cir. 1993) (noting that indictment should not be dismissed where prosecutorial misconduct "is redressable through the utilization of less drastic disciplinary tools"); see also Scott, 223 F.3d at 211 (holding that "the appropriate cure for [] prejudice [from invading the defense camp] was not dismissing the indictment, . . . but prohibiting the government from using any information acquired by way of that violation").
In this case, the government committed no misconduct, let alone the overtly egregious variety for which dismissal could even be considered. Consequently, neither Defendant Paris nor either of his co-defendants suffered any prejudice, much less the actual or substantial prejudice that could justify dismissal.
In his Motion to Dismiss, Defendant Paris hurls the same frivolous and speculative accusations involving Defendant Woods's previous counsel, W.H. Taylor, that he asserted in his Motion to Suppress. [Doc. 73]. Indeed, although this Court rejected defendant's meritless arguments wholesale and denied his Motion to Suppress — [see Doc. 154] — defendant essentially cut-and-pasted the same arguments into his Motion to Dismiss. The government hereby incorporates by reference its arguments outlined in its Opposition to Defendant Paris's Motion to Suppress, [Doc. 84], and stands by its previous arguments in response to defendant's claims:
Accordingly, this Court should once again reject Defendant Paris's arguments and deny his Motion to Dismiss. See [Doc. 154].
Defendant Paris once again alleges that Defendant Woods — not himself — suffered a violation to his constitutional right to conflict-free counsel because Woods's former attorney represented an FBI agent in a divorce proceeding more than a year before Woods proffered with the government in this criminal matter. Motion at 24-29. In doing so, Paris once again retreads covered ground and does so without acknowledging that this Court previously rejected these arguments. [Doc. 154]. The government hereby incorporates by reference its arguments outlined in its Opposition to Defendant Paris's Motion to Suppress, [see Doc. 84], and stands by its previous arguments in response to defendant's claims:
Accordingly, this Court should once again reject Defendant Paris's arguments and deny his Motion to Dismiss. [See Doc. 154].
Defendant Paris further reasserts that the government acted outrageously and intruded into Woods's attorney-client relationship because the government knew of, and did not prevent, Neal from recording his conversations with Woods. Motion at 29-39. The government once again urges the Court to summarily reject Defendant Paris's argument (Doc. 154) and incorporates by reference its arguments outlined in its Opposition to Defendant Paris's Motion to Suppress, [Doc. 84], and stands by its previous arguments in response to defendant's claims
Accordingly, this Court should once again reject Defendant Paris's arguments and deny his Motion to Dismiss. [See Doc. 154].
Defendant Paris alleges that the government made several "misrepresentations" to the grand jury in this case. [Def. Mot. at 39-53]. Contrary to Defendant Paris's opinion, the government did not make any misrepresentations to the grand jury. Defendant Paris's motion seems to betray a fundamental misunderstanding of the federal crime of honest services wire fraud, federal jurisdiction in criminal cases generally, and the role of the jury at trial as fact finder in weighing evidence and deciding factual matters. Repeatedly, Defendant Paris disagrees with the government's view of the case and its evidence, but, as explained below, that disagreement does not amount to misrepresentations having been made to the grand jury.
Defendant Paris's first two arguments focus on the validity of the Indictment's 14 counts of honest services wire fraud. Defendant Paris focuses initially on the allegation concerning Shelton's transfer of $40,000 to Woods on October 1, 2013, and suggests that this allegation exemplifies the absence of federal subject matter jurisdiction because that financial transaction did not involve an interstate element. Notwithstanding Defendant Paris's confusion, the Indictment sufficiently alleges honest services wire fraud and no misrepresentations were made to the grand jury concerning the allegation involving the $40,000 transaction.
While Defendant Paris may find a lack of an interstate nexus in the $40,000 transaction damning to the government's case, the fact is that the $40,000 transaction between Shelton and Woods does not form the basis of a single substantive count of honest services wire fraud. It is merely an allegation of an act taken in furtherance of the conspiracy and the scheme to commit honest services fraud. Consequently, it does not matter whether there was an interstate wire associated with that particular financial transaction; one has not even been alleged. What matters is whether the government can prove an interstate wire for the 14 counts of honest services wire fraud charged in the Indictment. Evidence at trial, the government submits, will establish those interstate wires, which have been sufficiently pleaded in the Indictment.
Oddly, in introducing his argument against the $40,000 transaction, Defendant Paris states: "Only one transaction contained in the indictment involving Dr. Paris is memorialized in any shape, manner or form, and that is the October 1, 2013 transfer of funds from Randell Shelton to Jon Woods that took place at Arvest Bank." [Def. Mot. at 39-40]. That observation is confusing and patently incorrect, given the numerous financial transactions alleged throughout the Indictment in which Defendant Paris caused Ecclesia College to pay Shelton and his company, Paradigm Strategic Consulting. And, as the Indictment makes clear, those transactions were allegedly undertaken by Defendant Paris as part of his bribery scheme with Woods. See Indictment at ¶¶ 18(g)-18(j); ¶¶ 19(s)-19(bb); ¶¶ 19(000)-(xxx); ¶¶ 19(fffff)-19(ffffff).
Next, Defendant Paris argues that the Indictment's 14 counts of honest services wire fraud are deficient because they do not allege that any of the interstate wire communications associated with those counts were, in fact, fraudulent or contained any misrepresentations. [Def. Mot. at 42-45]. Simply put, Defendant Paris's argument misconstrues both the element of material misrepresentations inherent to honest services wire fraud and the allegations set forth herein.
The wire communication alleged in a wire fraud need not be fraudulent itself or contain a misrepresentation, so long as the wire communication is incident to an essential part of the scheme. "While the use of mail and wire must be `a part of the execution of the fraud,' they `need not be an essential element of the scheme,' but merely `incident to an essential part of the scheme." United States v. McKanry, 628 F.3d 1010, 1017 (8th Cir. 2011) (quoting Schmuck v. United States, 489 U.S. 705, 710-11 (1989)). "A mailing or wiring `may be routine or even sent for a legitimate purpose so long as it assists in carrying out the fraud.'" Id. (citation omitted); United States v. Powers, 43 F. App'x 10, 11 (9th Cir. 2002) ("A use of the wires or mails may be in furtherance of a scheme to defraud, even where the transmission itself is not fraudulent or false, where the use serves some purpose that advances the fraud or contributes to the success of the scheme." (citing Schmuck, 489 U.S. at 710-11)). The wires alleged in this case were more than incident to elements essential to carrying out the honest services fraud scheme, because those wires included the quid (e.g., GIF payments directed by Woods to Ecclesia College) and the quo (e.g., bribe payments made to Shelton), among other things.
While the wires themselves need not be fraudulent or contain a misrepresentation, the evidence in this case will show that a number of the wire communications, indeed, were fraudulent or contained misrepresentations. For example, Defendant Paris opines that "there was no `material false and fraudulent pretenses, representations, and promises' made in [Ecclesia College's] GIF applications, nor are any alleged." [Def. Mot. at 43]. However, Ecclesia College's GIF applications, as executed by Defendant Paris, specify the purpose for which the GIF monies will be used. At no time did Defendant Paris specify that the purposes would include bribery or paying a sham consulting agreement to facilitate a kickback to a legislator, yet that is what is alleged in the Indictment and what the government intends to prove at trial.
Defendant Paris argues that the government misrepresented to the grand jury the nature of the consulting agreement between Ecclesia College and Paradigm. [Def. Mot. at 45-46]. The Indictment, however, recites agreements, invoices, payments, and communications between Ecclesia College and Paradigm. Defendant Paris's contention is premised less on the facts than on his disagreement with the government's theory of the case and what the evidence will establish. In Defendant Paris's view, "[s]ince Mr. Shelton intended to provide the consulting services anticipated by the contract and, indeed provided those services to Ecclesia, there was no misrepresentation in that transmission, and no wire fraud." [Id.].
Defendant Paris may present his view to a jury at trial. But he cannot usurp the role of the jury as fact finder. A jury at trial is entitled to consider the evidence and decide the legitimacy of Paradigm's agreement with Ecclesia College. See United States v. Rodebaugh, 798 F.3d 1281, 1296 (10th Cir. 2015) ("It is for the jury, as the fact finder, to resolve conflicting testimony, weigh the evidence, and draw inferences from the facts presented." (citation and internal quotation marks omitted)). Suffice it to say, the government disagrees with Defendant Paris's account, and that disagreement does not equate to misrepresentation by the government.
Defendant Paris argues that the government misrepresented to the grand jury the nature of Person A's hiring at Ecclesia College. [Def. Mot. at 46-47]. Specifically, he suggests that the grand jury should have been apprised of several facts related to Person A, including that she is a Gold Star parent, was unemployed when she was hired by Ecclesia College, and was "fully qualified." [Id. at 46].
To the extent those facts are at all relevant, they could be presented to a jury at trial for its consideration. That information, however, is not exculpatory and does not undermine the government's representations to the grand jury concerning Woods's relationship with Person A or his efforts to help her gain employment with Defendant Paris and Ecclesia College in exchange for directing GIF money to the college.
Defendant Paris accuses the government of failing to inform the grand jury "of the lack of evidence of payments to Woods." [Def. Mot. at 47]. However, it is unclear what exactly Defendant Paris would have liked the government to introduce, given that the parties' financial transactions, like the Indictment, speak for themselves. Once again, it seems that he simply disagrees with the government's view of the case. By the government's account, the pattern of payments made by Defendant Paris (through Ecclesia College) to Shelton (through Paradigm) coupled with a pattern of withdrawals by Shelton will establish evidence of kickbacks to Woods, in return for the GIF that he directed to Defendant Paris (at Ecclesia College). A jury will determine whether, in fact, those patterns of payments and withdrawals suffice to prove bribery and fraud. But the Indictment alleges, and the government intends to prove, that Shelton's withdrawals from Paradigm's account were part of the effort to bribe Woods. [See Second Superseding Indictment ¶ 18(g).]
Defendant Paris takes issue with the Indictment's allegations that "Between approximately December 4, 2014 and approximately January 31, 2015, SHELTON paid WOODS an unknown amount of money," and "SHELTON met Neal in person, as arranged by WOODS, and SHELTON gave Neal $18,000 in cash." [Def. Mot. at 48 (quoting Indictment)]. These allegations, Defendant Paris argues, are without evidence and crafted in a manner to "imply criminal acts ensnaring Dr. Paris." [Id.].
Apparently, Defendant Paris, like Shelton [see Doc. 170, Shelton's Motion to Dismiss, at 24-26], is troubled that Neal's recollection of when he received the bribe and when Defendant Paris caused payment to Paradigm both fit within the period alleged in the Indictment. Despite Defendant Paris's concern, the allegation set forth in the Indictment is consistent with the evidence presented to the grand jury and what will be proved at trial. Should Defendant Paris disagree that Neal or Woods could have been bribed by Shelton or himself because Paradigm was paid by Defendant Paris and Ecclesia College after Neal already received his kickback, then Defendant Paris is free to highlight and argue those facts to a jury at trial. But none of it evinces misconduct before the grand jury.
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Defendant Paris bristles at the Indictment's averments concerning the substantial compensation that he and his family members have received over the years from Ecclesia College. [Def. Mot. at 52-53]. According to Defendant Paris, the inclusion of those facts served only to prejudice the grand jury. The government disagrees. The grand jury was entitled to know of Defendant Paris and his family's financial reliance on Ecclesia College to draw from that whatever significance, if any, the jurors thought it warranted. In the government's view, the financial compensation that Defendant Paris and his family received from Ecclesia College provided a significant motive to Defendant Paris to participate in the bribery/fraud scheme with Woods and Shelton. Either way, information relating to Defendant Paris and his family's financial ties to the college is not privileged in any way, and thus, no prejudice accrued simply because it was presented to the grand jury.
Defendant Paris argues that the government did not present exculpatory information to the grand jury. Specifically, he is troubled that the government did not introduce an April 29, 2016 check from Woods to Shelton—which purported to be a "Loan Payoff' conveniently issued after Woods chose to no longer cooperate with the government's investigation—or evidence relating to Woods's apparent propensity for taking out loans. [Def. Mot. at 53-56]. In short, those facts are not exculpatory. The defense is free to argue to a jury at trial that Woods's $40,000 transaction with Shelton on October 1, 2013, was a loan; however, Woods's repayment to Shelton after refusing to continue his cooperation with the investigation and his embrace of borrowing money do not make it less likely that a crime was committed. After all, a loan can constitute a bribe. See Kemp, 500 F.3d at 285 (concluding that "a loan may constitute the quid in a bribery prosecution"). And assuming arguendo that those facts as articulated by Defendant Paris were exculpatory, the government has no legal obligation to disclose such evidence to the grand jury. See United States v. Darden, 688 F.3d 382, 387 (8th Cir. 2012) ("The government is not obligated to present exculpatory evidence in grand jury proceedings, . . . since `the grand jury sits not to determine guilt or innocence, but to assess whether there is adequate basis for bringing a criminal charge'. . . ." (quoting United States v. Williams, 504 U.S. 36, 51 (1992))).
Defendant Paris finally argues that "given the rolling definition of honest services fraud," it is "unfair" for the government to prosecute Dr. Paris under 18 U.S.C. § 1346. Motion at 59. Because the Supreme Court has "struggled . . . in further defining honest services fraud," Defendant Paris argues, the law is "ambiguous," "unconstitutionally vague," and thus "unenforceable" as applied to him because it "could not possibly put Dr. Paris on notice of what activities it prohibits." Id. at 56-57. In doing so, Defendant Paris ignores the fact that the Supreme Court, on two recent occasions, had the opportunity to strike down 18 U.S.C. 1346 as unconstitutionally vague and refused to do so, including most recently in McDonnell. See McDonnell, 136 S. Ct. at 2375 (rejecting the claim that the charges against McDonnell be dismissed because the honest services statute and the Hobbs Act were unconstitutionally vague; holding that because the Court "interpreted the term `official act' in a way that avoids the vagueness concerns raised by Governor McDonnell, [the Court] decline[d] to invalidate those statutes. . . ."); see also Skilling, 561 U.S. at 412 ("Interpreted to encompass only bribery and kickback schemes, § 1346 is not unconstitutionally vague. . . . [T]he void-for-vagueness doctrine addresses concerns about (1) fair notice and (2) arbitrary and discriminatory prosecutions. . . . A prohibition on fraudulently depriving another of one's honest services by accepting bribes or kickbacks does not present a problem on either score."). In short, since 2010, the Supreme Court has twice ruled that § 1346 is not unconstitutionally void for vagueness.
Accordingly, this Court should follow controlling precedent and deny Defendant Paris's Motion on similar grounds. Indeed, a criminal defendant "who participated in a bribery or kickback scheme" — as Defendant Paris is alleged to have participated here — "cannot tenably complain about prosecution under § 1346 on vagueness grounds." Skilling, 561 U.S. at 413.
For the foregoing reasons, the United States respectfully requests that the Court deny the defendant's Motion to Dismiss the Superseding Indictment.
I HEREBY CERTIFY that on this 17th day of November, 2017, I electronically filed the foregoing United States' Response in Opposition to Defendant Oren Paris Ill's Motion to Dismiss the Superseding Indictment with the Clerk of the District Court using the CM/ECF system, which will send a notification of such filing to
Defendant Randell G. Shelton, Jr. ("Shelton") submits the following as a Second Addendum to his Motion to Dismiss with Prejudice due to Governmental Misconduct (Doc. 170) and Addendum (Doc. 218), and in support thereof, states as follows:
Robert Cessario, the FBI Agent leading this investigation — and the government's only witness to testify before the Grand Jury to secure both the Superseding and Second Superseding Indictments — "wiped" his computer on the morning that he was to deliver it to the FBI for a forensic examination regarding possible discovery violations. By doing so, he is now facing an FBI disciplinary investigation, and he has likely obstructed justice. The forensic examination was scheduled to determine when and how Cessario obtained missing audio recordings after an in camera evidentiary hearing raised doubts about the government's claim that the recordings had "just been found," and after a review by Shelton's counsel indicated that Cessario had access to the recordings months earlier than the government advised the Court.
While Shelton's counsel does not yet know what was on the computer to make Cessario decide that his better option was to "wipe" it (and face disciplinary action and possible criminal charges) rather than deliver it to the FBI as he had been instructed, the result remains: the FBI agent in charge of this investigation intentionally destroyed evidence relevant to a pending criminal case. As a result, the entire investigation has now been tainted. And while it may be possible to reconstruct from other sources when and how Cessario obtained the evidence that was the subject of the forensic examination, it is now impossible to know what other Brady information was on the agent's computer. As a result, Mr. Shelton has been irreparably prejudiced.
In addition, by the time Cessario was instructed to turn over his computer, the prosecutors were sufficiently aware of his conduct so as to be complicate in it. What might have been mis-judgments and poor decisions about discovery by the prosecutors months ago — when the issues were first brought to their attention — have now turned into misconduct. It is no longer possible to assume that inattention to detail, forgetfulness, or a busy case load caused the prosecutors to fail to properly evaluate the information from its lead case agent. They relied on their agent to provide requested information about the investigation, including information about the missing audio recordings. Even after Shelton's counsel repeatedly voiced concerns and asked questions about numerous aspects of Cessario's investigation — and especially after they shared the results of an investigation that showed Cessario had access to the audio recordings since at least November 2016, the prosecutors never conducted or supervised a comprehensive and effective review for possible Brady information. They not only failed to look into the reported problems and concerns but actively tried to convince the Court and defense counsel that the problems did not exist. The FBI agent, unsupervised by the prosecutors, has now destroyed evidence. And the prosecutors bear some of that responsibility. As a result, prejudice to Mr. Shelton is presumed.
The prosecutors also misled the Court by filing documents indicating that they had just learned of Cessario's destruction of evidence, when they had known for almost two weeks that Cessario had a history of "wiping" his computer, and in fact had wiped on several occasions after Shelton's counsel's investigation showed that he had been given access to the missing recordings. And because a Protective Order regarding discovery remains in place well past any utility, the prosecutors are able to hide behind that order and allow the misconduct to continue without public scrutiny. Frankly, enough is enough. The conduct of the prosecution team is outrageous, and the case should be dismissed.
Despite being advised by defense counsel for several months that there were problems with discovery — and about Cessario's role in those discovery problems — the prosecutors in the Office of the United States Attorney for the Western District of Arkansas ("USAO") failed to conduct a meaningful investigation into Cessario's activities, as shown below. The failure to properly investigate those problems until the date of the pretrial conference is improper. At best, the conduct amounts to at least gross negligence or willful blindness.
1. Defense counsel began raising questions about the propriety of the discovery process in August 2017, after the USAO produced one terabyte of discovery on an unreadable hard drive. (See Doc. 170 at pp. 41-47; see also Doc. 91).
2. On August 16, 2017, The USAO admitted that surveillance photographs documented on an FBI CHS report were missing and could not be produced: "[w]hen the agent who took the photos of the meeting between Woods and Lamoureux tried to download the photos from the file where they had been saved, the file was empty so there are no photos." (See Elser email dated August 16, 2017, attached as Exhibit A). In light of what is now known about Cessario's intentional destruction of evidence on November 3, 2017 and January 7, 2018, it is not unreasonable to assume that Cessario also destroyed these surveillance photographs.
3. On October 13, 2017, the USAO produced heavily redacted text messages between Cessario and counsel for Micah Neal. Those text records indicated that Micah Neal was surreptitiously recording conversations with potential witnesses in the case with the assistance and direction of Cessario, which showed that the USAO misled the Court by advising it that all audio recordings by Neal had been done without any direction by the government (see Doc. 170 at pp. 33-37), and showed that the prosecution team tried to obtain defense strategy through these audio recordings. (See id. at pp. 11-21).
4. The next day, in light of the discrepancies in the text messages, counsel for Shelton asked the USAO to preserve all of Cessario's communications, including his telephone records. (See email dated October 17, 2017, attached as Exhibit B). To date, only heavily redacted copies of Cessario's text messages with Micah Neal's attorney Shane Wilkinson and with FBI Agent Munns have been produced, in non-native format, and the AUSO has not produced any of Cessario's telephone or email records. And while AUSA Jennen unredacted a few more of the texts between Cessario and Wilkinson and forwarded those by email to defense counsel on January 12, 2018, the majority remained redacted.
5. On January 15, 2018, the Court was advised that AUSA Jennen inadvertently forwarded an editable .pdf that allowed the redactions to be removed, and that the unredacted messages indicated that the text messages contained Brady material that had not previously been provided to defense counsel. The USAO has not requested a return of the materials.
6. The unredacted text messages between Cessario and Wilkinson confirm many of the arguments Mr. Shelton raised in his Motion to Dismiss (Doc. 170). There, for example, Mr. Shelton alleged that the government violated the Hatch Act. (See id. at pp. 5-9). One of the unredacted texts involves a conversation between Cessario and Wilkinson regarding Neal's decision to withdraw from the county judge race. Wilkinson asked for Cessario's "thoughts? Their thoughts?" about Neal's decision. Cessario responds by stating: "Let me run it by kenny." (See Cessario/Wilkinson text messages, May 31-June 13, 2016, attached as Exhibit C).
7. The unredacted text messages between Cessario and Wilkinson also show that the USAO edited or manipulated the messages before producing them. For example, Wilkinson sent a text that stated, [REDACTED\] There is no corresponding text or attachment from [REDACTED\] and the conversations above and below were not related. (See id.).
8. On November 8, 2017, Mr. Shelton filed his Motion to Dismiss with Prejudice due to Governmental Misconduct, which alleged that the prosecution team's position regarding the discovery problems was not credible, especially when viewed with other evidence. That motion showed that the numerous instances of government misconduct, when viewed cumulatively, are sufficient to support a dismissal of these proceedings with prejudice. (See Doc. 170).
9. By letter dated November 15, 2017, the USAO advised defense counsel that the government had learned earlier that evening (but did not intend to produce) 79 additional covert audio recordings by alleged co-conspirator Micah Neal. (See Doc. 218, Ex. A). Despite their obligation to review the tapes for possible Brady material, the letter advised defense counsel that the government did not intend to obtain the tapes. (Id.) Those tapes were not memorialized in any FBI 302 reports.
10. Mr. Shelton's counsel conducted an independent investigation and determined that Cessario had access to these recordings through a Dropbox account since at least November 2, 2016. (See Doc. 218). As a result, on November 29, 2017, Mr. Shelton filed an Addendum to his Motion to Dismiss in which he disputed the government's representation regarding the newly "discovered" recordings and requesting an evidentiary hearing. (See id.).
11. On November 30, 2017, while the parties were attending the Pretrial Conference, the USAO produced a hard copy of an additional 71 pages of Cessario's text messages. These text messages were also heavily redacted. The messages appear to be edited and manipulated text messages between Cessario and others, including IRS Agent John Munns, Bart Hester, a possible witness in this matter, and others. The document has been altered in numerous places so that both the sender and the recipient of the texts is listed as the same person, and so that messages are both sent and received from the same phone number. Almost all of the text messages in the first 27 pages of the document indicate that they were both sent and received by Munns, for example. (See Cessario/Munns text messages, attached at Exhibit D).
12. On November 29, 2017, following the scheduled Pretrial Conference, the Court held an in camera evidentiary hearing on the issue of the recordings. (See Doc. 225).
13. During the in camera hearing, after Shelton's counsel described their investigation into the issue, then-Acting United States Attorney Kenny Elser argued that if Cessario did have access to the missing audio recordings in November 2016, it must be the result of a "glitch" or "download error." However, the Court determined that it would be appropriate to schedule an additional hearing to determine when and how Cessario obtained the missing recordings. At that time, Elser agreed to request a forensic analysis of Cessario's computer and provide a copy of the report to defense counsel.
As shown below, the USAO has informed defense counsel that it learned of Cessario's history of "wiping" his computer soon after the pretrial conference, when Cessario was told he would have to submit his computer for a forensic analysis. Giving the government the benefit of the doubt and assuming that date is correct, the prosecutors' actions since that time have moved beyond willful blindness about Cessario's misconduct and now the office can only be described as complicit. The USAO failed to take possession of the computer to prevent any further destruction of evidence, misled the Court and opposing counsel about Cessario's destruction of evidence, and has tried to cover up Cessario's actions, as shown below. As a result of the USAO's misconduct, prejudice to Mr. Shelton is presumed. See, generally, Weatherford v. Bursey, 429 U.S. 545 (1977).
14. Either immediately after the November 30, 2017 pretrial hearing or early the next day, the USAO asked Cessario to turn over his computer for a forensic examination.
15. On December 1, 2017, AUSA Jennen emailed the FBI forensic analyst to schedule the computer analysis. That email noted that Jennen knew Cessario had already talked to the analyst about the examination, and the analyst confirmed that Cessario had already contacted him. (See Disclosure Letter and attachments).
16. On December 4, 2017, AUSA Jennen sent an email to Cessario, advising him to have someone other than himself deliver the computer to the FBI forensic office. (See id.). Despite knowing the Cessario had wiped the computer "on several occasions," the USAO did not take control of the computer or ask someone else to do so, but allowed Cessario to retain possession of it. (See id.).
17. On December 6, 2017, the Court set an evidentiary hearing for December 14, 2017 to hear testimony about the missing audio recordings. (Doc. 233). The USAO did not advise the Court through any method of communication that included notice to defendants that Cessario had "wiped" his computer several times since November 2016, when he he had access to the recordings.
18. In anticipation of the December 14 hearing, the government obtained a § 2703d Order to obtain records from Dropbox regarding Cessario's Dropbox account. (See email dated December 4, 2017, attached as Exhibit F). At that time, AUSA Jennen knew that Cessario had a history of "wiping" his computer but failed to advise the Court or opposing counsel of that history.
19. Cessario was scheduled to deliver, and did in fact deliver, his laptop computer to the FBI analyst on December 7, 2017. (See Disclosure letter).
20. Cessario "wiped" his computer the morning of December 7, 2017 before delivering it to the FBI analyst. (See id.).
21. FBI Analyst Timothy Whitlock conducted his forensic review of Cessario's computer on December 7, 2017. He spent 24 minutes and 6 seconds on the "imaging" analysis. (See Acquisition Log, attached as Exhibit G).
22. On December 7, 2017, AUSA Jennen sent emails to the Court and to defense counsel regarding the upcoming December 14 hearing, and provided information about the anticipated testimony of a witness from Dropbox. (See email dated December 7, 2017, attached as Exhibit H). At that time, AUSA Jennen knew that Cessario had a history of ``wiping" his computer but failed to advise the Court or opposing counsel about it.
23. On December 7, 2017, Shelton's counsel asked then-Acting United States Attorney Elser if the forensic analysis was limited to Cessario's laptop, or if any of Cessario's other computers would be analyzed. (See December 7-8, 2017 email chain, attached as Exhibit I). On December 8, 2017, AUSA Jennen responded, noting that Cessario's computer was "being analyzed." He failed to advise that Cessario had "wiped" his computer, although the USAO had known that information for over a week. (See id.). Shelton's counsel has repeated their inquiry, but to date, the USAO has not responded. Of course, the government's Forensic Examiner also knew that Cessario had "wiped" his computer when he conducted the scheduled forensic examination.
24. On December 8, 2017, after AUSA Jennen advised that the USAO would not accept service of a subpoena for Cessario to appear at the hearing, counsel for Shelton issued a valid subpoena for Cessario's personnel information, including his Official Personnel File (OPF) and his Office of Professional Responsibility (OPR) file.
25. On December 8, 2017, AUSA Jennen emailed Shelton's counsel and asked if Shelton "intend[s] to supplement [his addendum to the motion to dismiss,] Doc. 218 with any other specific allegations relating to the Micah Neal recordings? I know some additional issues may have been raised in chambers, but I don't see where those have ever been reduced to writing. Speaking only for myself, I don't want something new to be raised or there to be any confusion as to the Defendant's claims, and that result in the need to postpone the hearing." (See email dated December 8, 2017, attached as Exhibit J). At that time, AUSA Jennen knew that Cessario had had a history of "wiping" his computer but failed to advise the Court or advise opposing counsel about it, but was instead discussing the possibility of postponing the hearing on other grounds.
26. On December 11, 2017, AUSA Kyra Jenner advised the Court by email that the government intended to move to quash the subpoena for Cessario's personnel records. Her stated basis for moving to quash was that the subpoena had been reviewed by FBI Supervisory Special Agent and Chief Division Counsel William Ryan Kennedy (whose office is in Little Rock), who advised that Cessario's OPF file contains no Giglio material, and advised that Cessario did not at the time have an OPR file. Ms. Jenner advised the Court that because Cessario's personnel file is maintained in Washington D.C., it "cannot reasonably be obtained" in time for the December 14 hearing (although it was apparently reviewed by a FBI Supervisor in Little Rock). She also advised the Court that if the motion to quash were denied, the USAO would seek a continuance of the hearing. (See email dated December 11, 2017, attached as Exhibit K). By this time, the USAO had known for almost two weeks that Cessario had a history of "wiping" his computer, and the government had known for several days that he had once again "wiped" it before bringing it in for the scheduled forensic examination. The USAO failed to advise the Court or advise opposing counsel about Cessario's conduct, and instead revisited the possibility of postponing the hearing on other grounds.
27. On December 12, 2017, AUSA Jenner filed a motion to quash Shelton's subpoena to obtain Cessario's Official Personnel File (OP F) and Office of Professional Responsibility (OPR) file. There, the USAO advised:
(Doc. 238) (emphasis added). The motion does not explain the reason for the investigation or referral, other than to note that some urgency exists based on information it had just learned that day. The USAO had known for almost two weeks that Cessario had a history of "wiping" his computer, and the government had known for several days that Cessario had "wiped" it once again the morning that he delivered the computer for the scheduled forensic examination when it advised the Court that it had learned of information
28. In response to defense counsel's questions about the report referenced in the motion to quash, AUSA Jennen advised counsel by email that the USAO "hope[d] to have a report pushed out tomorrow. The hold up is the examinees supervisor is out, but the examiner is trying to get approval of the report from another supervisor." (See email dated December 12, 2017, attached as Exhibit L).
29. On December 13, 2017, AUSA Jenner moved for a continuance of the December 14 hearing, advising the Court that the USAO
30. On December 13, 2017, in reliance on the USAO's representation that it had not yet determined what was found on the forensic analysis of Cessario's computer, and after the USAO created an illusion that there was another reason for the requested continuance, counsel for Shelton notified the government that they would not object to a continuance of the hearing as a matter of professional courtesy. The Court terminated the hearing the same day.
31. As noted, the USAO had known for almost two weeks that Cessario had a history of "wiping" his computer and that he had wiped it on several occasions after he gained access to the missing audio recordings but failed to disclose this information to the Court when it moved to quash the subpoena for Cessario's personnel records and when it moved to continue the evidentiary hearing on Mr. Shelton's Motion to Dismiss and Addendum in order to obtain evidence regarding Cessario's access to the missing audio recordings. As a result, the USAO's Motion to Continue falsely advises the Court that it found out about the "information" on Cessario's computer that day. The USAO also failed to advise the Court what the information was, although they were fully aware of what it was.
32. On December 14, 2017, when Shelton's counsel asked the USAO to provide them with a copy of the forensic reports, AUSA Jennen advised them that his office "received the report of analysis today. Since the hearing has been continued, we plan on disclosing it once we have gathered some additional information related to it. Instead of a drip, drip, drip of information, we want to provide as much as we can all at once. I hope you understand and we really appreciate your patience." (See email dated December 14, 2017, attached as Exhibit M). At the time, the USAO had known that Cessario had a history of "wiping" his computer for almost two weeks, and the government had known for almost a week that Cessario had "wiped" his computer the morning of the scheduled forensic examination.
33. On December 15, 2017, at 4:43 p.m., the USAO finally disclosed to defense counsel that Cessario "wiped" his official FBI computer on several occasions, including on December 7, the morning of the scheduled forensic analysis by the FBI Computer Analysis and Response Team. (See Disclosure Letter signed by AUSA Jennen, attached as Exhibit D).
34. The USAO has not explained why it allowed Cessario to maintain possession of his laptop once it advised him that it intended to perform the forensic analysis.
35. The Disclosure Letter was sent only to defense counsel and the Court was not included in the distribution list. However, the government's motion to quash advised the Court that the information it had discovered "requires disclosure to the Court and the parties." (See Doc. 238). To date, the USAO has not updated the Court on the record regarding Cessario's "wipe" of his computer.
36. Also on December 15, the USAO provided a "report" of the forensic analysis. The report is only a narrative, and does not include a supervisor's signature. (See Disclosure Letter and attachments). No 302 report has been provided to date.
37. On December 18, 2017, AUSA Jennen advised counsel for Shelton that the FBI forensic examiner did not create an html report when it examined Agent Cessario's computer. (See email dated December 18, 2017, attached as Exhibit N).
38. On December 19, 2017, counsel for Shelton requested a forensic report. That afternoon, AUSA Jennen advised that the government would not request any additional examination of Cessario's computer, noting that the report "is what there is." (See email dated December 19, 2017, attached as Exhibit O). Subsequent communications with the USAO has revealed that the USAO did not ask the FBI Forensic Examiner to check Cessario's other devices or computers, and it remains unclear if the USAO has investigated whether Cessario saved evidence on alternative media prior to the alleged wiping of this particular laptop, or if the USAO has investigated Cessario's other computers.
39. By the time that the USAO was informed that Cessario had "wiped" his computer on several occasions after receiving access to the audio recordings, the office became more than negligent or "willfully blind" to Cessario's conduct. The USAO was notified months ago that there were problems with discovery, but it does not appear that the office took meaningful steps to determine if its version of the story is correct. They never took possession of Cessario's computer.
40. Despite learning that the FBI Agent in charge of this investigation had destroyed evidence on at least three separate occasions, including on December 7 prior to a scheduled forensic review of his computer by an FBI analyst, the USAO waited almost two weeks to disclose that information to defense counsel. Instead, the USAO requested a continuance for the November 14 hearing without providing full and complete information. (See Doc. 239).
41. Cessario's conduct, along with the conduct of the USAO after the pretrial hearing, illustrates that Mr. Shelton's assertions about the government misconduct are, in fact, correct. The government's actions — from Cessario's destruction of evidence, to the USAO's complicity in those actions by failing to properly investigate them, actively attempt to cover them up, and deliberately misleading the Court and defense counsel about them — are outrageous and extremely prejudicial. The cumulative effect of this misconduct, in addition to the misconduct that Mr. Shelton has previously outlined in his Motion to Dismiss and Addendum, demonstrates a cumulative pattern of misconduct that requires an immediate dismissal with prejudice of all charges in this case.
Wherefore, for the reasons set forth in this Second Addendum and in his Motion to Dismiss and Addendum, Defendant Randell G. Shelton respectfully requests that this Court allow testimony at the Pretrial Conference, grant his motion to dismiss the Second Superseding Indictment with prejudice, and grant all other relief the Court deems proper.
I, Chad L. Atwell, hereby certify that on this 16th day of January, 2018, I electronically filed the foregoing with the Clerk of Court using CM/ECF system, which shall send notification to the following:
Please call Kyra or me if you have any further questions or issues. Thanks.
Dear Counsel:
The following disclosures are considered "discovery materials" as that term is used in the Court's Order of March 27, 2017 (Doc. 14). As such, the information contained herein and the accompanying materials are subject to the protections of that Order.
After the in-chambers, off-the-record conference at the pre-trial hearing on November 30, 2017, the Government took steps to have the laptop computer used by FBI SA Bob Cessario to access the "Micah Neal" shared Dropbox folder (hereinafter "the computer") examined to determine whether it contained information related to SA Cessario's interaction with said Dropbox folder.
On Friday, December 1, 2017, SA Cessario advised he had contacted FRI CART Examiner Timothy Whitlock and left a message regarding getting the computer examined. I followed up this phone call with SA Cessario by sending an email, the same day, to Examiner Whitlock giving a brief description of the issues involved and requesting a conference call to discuss it further the following Monday. Examiner Whitlock responded later that day confirming that he had spoken with SA Cessario and advised he would be available by phone the following Monday to discuss the issues we were trying to determine.
During discussions regarding what, if any, information may be on the laptop that would assist the Government in ferreting out these issues, SA Cessario advised members of the prosecution team that the computer was designated as an undercover ("UC") computer that was used to conduct covert investigations. SA Cessario indicated that since his access of the Dropbox folder on November 2 and 3, 2016, the computer had been "wiped" on several occasions. SA Cessario also advised that it had to be wiped because it had ransomware on it. SA Cessario advised that he thought that there might be some record kept of the wiping of (he computer. SA Cessario was asked to determine if such a record existed and, if it did, to obtain a copy.
On Monday, December 4, 2017, after talking to Examiner Whitlock about having the computer forensically examined, I sent an email to SA Cessario requesting that the computer be delivered to FBI CART for an examination, and that it be delivered by another agent.
The computer was delivered to FBI CART by SA Cessario on December 7, 2017. SA Cessario advised that the examination should be completed by December 12, 2017.
In preparation for the evidentiary hearing related to the Dropbox folder on December 14, 2017, DOI Trial Attorney Sean Mulryne, IRS SA John Munns and I arranged to meet with witnesses, including SA Cessario, on December 12, 2017. That morning, SA Cessario called me, with Trial Attorney Mulryne and SA Munns present, and asked when we would want to meet with him. After sorting out the logistics of the meeting, SA Cessario was asked about the status of the examination of the computer. SA Cessario advised that the examination was complete and that nothing had been found because the computer had been wiped. SA Cessario then asked whether it was necessary for Examiner Whitlock to produce a report. SA Cessario was told that a report from Examiner Whitlock would be needed. SA Cessario was asked when the computer had been wiped, and in response, SA Cessario stated that it had been wiped the morning it had been transported to FBI CART. SA Cessario was asked who had wiped the computer, and he advised that he had. SA Cessario was asked why he had wiped the computer. In response, SA Cessario advised that he had allowed his children to download and play games on it, that it had personal information on it, and that he did not want his supervisors to know that. SA Cessario was asked about the existence of records of the prior wipes of the computer. SA Cessario advised that he had not located any such records, but that he would continue to search for them. SA Cessario was then asked to try to locate and produce the records, if they existed, at the arranged meeting that afternoon.
In the afternoon of December 12, 2017, Trial Attorney Mulryne, SA Munns and I met with SA Cessario as previously planned that morning. SA Cessario reiterated his statement made earlier that morning, that he had wiped the computer the morning it was delivered to FBI CART. When asked why he had wiped the computer, SA Cessario stated that it contained personal medical information pertaining to himself and his son that he did not want disclosed. SA Cessario stated that he was unable to locate records related to the prior wiping of the computer. SA Cessario stated that he had wiped the computer on at least three occasions since accessing the Dropbox folder on November 3, 2016: approximately March 2017 when the computer had ransom ware on it; another occasion when the computer's storage was full; and on December 7, 2017. SA Cessario was asked to continue to look for any records that are kept related to the wiping of the computer.
On the morning of December 13, 2017, SA Cessario arrived at the Fort Smith United States Attorney's Office (USAO) for a pre-arranged meeting in preparation for another hearing set for December 15, 2017. At that meeting, witnessed by USA Kenneth Elser, Trial Attorney Mulryne and 1, SA Cessario expressed regret for his action and provided additional details regarding the medical records that he had stated were on the computer. The details he disclosed related to a medical diagnosis and treatment that he stated were embarrassing and he wanted to keep private. He also disclosed details about medical records of his son that he stated he also wanted to keep private. When asked about his children downloading games, SA Cessario advised that he had allowed his children to use the laptop as he had previously stated on December 12, 2017, but the reason why lie wiped the laptop was to protect the details contained in the medical records.
Special Agent Cessario was advised that this matter had to be reported, and he stated that he was going to report the matter to his supervisor. The meeting with SA Cessario was then concluded. On December 13, 2017, the USAO advised SA Cessario's supervisor, FBI RAC Brenan Despain, of the nature of the above, and he agreed that the matter should be reported. RAC Despain later advised the USAO that SA Cessario had reported his conduct, and that per the FBI policy an investigation would be conducted.
Enclosed with this disclosure are the following: 1) the report of forensic analysis of the computer dated December 13, 2017; 2) an email from AUSA Jennen to Examiner Whitlock dated Friday, December 1, 2017, at 3:00pm; 3) an email from Examiner Whitlock to AUSA Jennen dated Friday, December 1, 2017, at 4:40pm; and 3) an email from AUSA Jennen to SA Cessario dated Monday, December 4, 2017, at 1:02pm.
On 12/04/17, Assistant US Attorney (AUSA) Aaron Jennen verbally requested the examination of the submitted item. Specifically, AUSA Jennen requested that the laptop be examined for artifacts relating to audio files which were downloaded from a Dropbox account.
On 12/07/17, SA Robert Cessario delivered LRC001445 (MacBook laptop) to the writer at the FBI Little Rock Field Office.
The SSD (LRC001446) was imaged with a forensic software tool to a CART WD Elements 1TB USB HDD. The forensic image of LRC001446 was examined with a forensic software tool. LRC001446 appears to have been erased/formatted with a file system/partition on 12/07/17 at 8:00am CDT (-6). No audio files or Dropbox artifacts were recovered from the image of LRC001446.
The image of LRC001446 was copied to a DVD identified as LRC001447. Also, the image was copied to the storage area network (SAN) shared drive identified as LR-5293758.
LRC001445 and LRC001447 will be stored at the FBI Computer Analysis Response Team (CART) lab. The CART WD Elements 1TB USB HDD will be wiped for reuse by CART.
Tim,
I think Bob called you and left a message. We have an issue in the Woods et al corruption case regarding items downloaded from Dropbox to the standalone PC at FBI (assuming at the FY office). Sean Mulryne with DOJ Public Integrity (cc'd) and I have been tasked with figuring this issue out before a hearing set for the end of week after next. Would you be available for a call Monday AM?
Thank you, sir.
Yes. I spoke with Bob about the issue. I'll do some testing and research on Dropbox this weekend. I'm out on Monday, but go ahead and call me that morning.
Tim Whitlock
ITS — Forensic Examiner
FBI Computer Analysis Response Team
Tim,
I think Bob called you and left a message. We have an issue in the Woods et al corruption case regarding items downloaded from Dropbox to the standalone PC at FBI (assuming at the FY office). Sean Mulryne with DOJ Public Integrity (cc'd) arid I have been tasked with figuring this issue out before a hearing set for the end of week after next. Would you be available for a call Monday AM?
Thank you, sir.
Bob,
My understanding is that the computer used to access Dropbox is there at FBI in FY. Can you get someone, other than you, to deliver it to FBI CART? they are going to try to determine why all the files weren't downloaded. I know it's a pain, but we need this info before the hearing the 14
Sheri,
I just spoke with a representative of Dropbox. They advise that in order to provide the information that we are requesting, that they require either a court order or search warrant. I am preparing an application for an order pursuant to 2703(d) and should have that, along with a proposed order, to the Court shortly.
Joe,
I just finished speaking with the folks at Dropbox. We anticipate calling a to-be-designated representative as a witness. At their request, I'm inquiring as to whether the Court have the ability to take that witness's testimony telephonically.
Defense counsel, if that is an option, do you object?
They are based in San Francisco, CA, and I expect that their testimony would be less than 30 minutes.
Thank you,
I appreciate it Aaron. I have head to State arraignment, but will there be any analysis of any other PC? Kenny mentioned (correct me if I am wrong Kenny) an analysis of his. work computer, so to speak. So is the Mac his government computer or is there another mac/pc that might have been used in this process?
I'm not sure I fully understand the index response, but I'll check it out when it comes in.
Again, I appreciate the responses and thank you.
Chad
Sorry for the delayed response, but it took me a bit to get answers to all your questions.
The information from Dropbox obtained pursuant to the 2703(d) order was sent to the defendants via email on 12/06.
The Mac is currently being analyzed. FBI CART has advised that they hope to have that completed by Tuesday.
As for the index, we will provide what Kenny promised at the pre-trial: an index for the location in discovery of each exhibit. You will have that, as promised during the phone conference Friday, by COB today.
Aaron,
I don't think that we have any issue stipulating to videoconference testimony. Obviously we would like to be privy to any information you have gleaned prior to the hearing; and advance notice of their position, CV and other relevant information. (it appears that a dvd/cd was sent; did you provide all information contained on what your received from dropbox?)
I also wanted to touch base on a couple of other issues with all. Kenny, you mentioned in chambers doing a forensic analysis of agent cessarios computer. Do you plan on doing it for both his Mac and for any other pc used by him; or just the mac? Will it be available prior to 12/14?
Can you have the 1TB drive index to me sometime tomorrow or this weekend. It would be very helpful.
Thank you again,
Chad
Joe,
I just finished speaking with the folks at Dropbox. We anticipate calling a to-be-designated representative as a witness. At their request, I'm inquiring as to whether the Court have the ability to take that witness's testimony telephonically.
Defense counsel, if that is an option, do you object?
They are based in San Francisco, CA, and I expect that their testimony would be less than 30 minutes.
Thank you,
Does Defendant Shelton intend to supplement Doc. 218 with any other specific allegations relating to the Micah Neal recordings? I know some additional issues may have been raised in chambers, but I don't see where those have ever been reduced to writing. Speaking only for myself, I don't want something new to be raised or there to be any confusion as to the Defendant's claims, and that result in the need to postpone the hearing.
We were notified Friday morning that counsel for Randell Shelton would be issuing a subpoena pursuant to Rule 17(c) for production of FBI Special Agent Robert Cessario's Official Personnel File (OPF), as well as his Office of Professional Responsibility (OPR) file. The subpoena was served on Special Agent Cessario on Friday and is ordered returnable to the Court on December 14 at 9 a.m. In light of the time immediacy of the subpoena return, we thought the Court and Mr. Shelton's counsel should be aware of the Government's position regarding the subpoena. Counsel for Mr. Shelton is copied on this email.
The Government is preparing a motion to quash the subpoena based on several grounds, one of which is that official personnel files for the FBI are maintained in Washington D.C. and cannot reasonably be obtained by Thursday morning. Further, FBI Supervisory Special Agent and Chief Division Counsel William Ryan Kennedy has reviewed Special Agent Cessario's file and has confirmed in writing that there is no Giglio material in the OPF file and there is no OPR file for Special Agent Cessario. A review of the file by the FBI's Chief Division Counsel is the established procedure for the Government to request and produce potential Giglio material for agents.
If the Court were to deny the Government's motion to quash and require the Government to produce Special Agent Cessario's personnel file as per the subpoena, the Government would need to seek a continuance of the hearing so that it would have sufficient time to produce the file for the hearing.
Respectfully,
Kyra Jenner
We hope to have a report pushed out tomorrow. The hold up is the examiner's supervisor is out, but the examiner is trying to get
approval of the report from another supervisor.
I'm not aware of any surveillance of defense counsel, but will make the prosecution team aware of your concerns.
Sent from my iPhone
We received the report of analysis today. Since the hearing has been continued, we plan on disclosing it once we have gathered some additional information related to it. Instead of a drip, drip, drip of information, we want to provide as much as we can all at once. I hope you understand and we really appreciate your patience.
As for the subpoena, we cannot accept service. You will need to serve the FBI.
Understood.
Will you agree to accept service of the next subpoena? We can set a date after the first of the year and before the new date, in order to give the agency time to respond; and that would be helpful to us and clearly you guys can still raise whatever arguments you choose to.
Have you been able to get the report and corresponding forensic analysis at this point? Can we expect them today? I just got back to the office from Court in Benton County and catching up on ECF notifications and reset hearing dates.
Thank you,
Chad
Chad,
Please see the below responses from Examiner Whitlock regarding the questions you had:
1) No html report was created.
2) No chain of custody. I received it on 12/7/17 at 11:30am from Bob, and it has been in my custody ever since.
3) The internal SSD of the MacBook is being stored in the FBI Little Rock CART Lab.
Chad,
Previously, we had verbally requested FBI CART preserve those items. We renewed that request this morning, both verbally and in writing. We do not believe that an order is necessary.
Also, no html report was generated. The report generated by Examiner Whitlock is what there is, and it is based on his examination.
Lastly, Examiner Whitlock advised that you had reached out to him and left him a voicemail asking him to contact you. He has requested that you submit any inquiries of him you may have to us.
Aaron,
If not html report was created, how can agent whitlock speak as to what is/was on the macbook? I take that answer to mean one of two things. 1) he generated an html report/forensic report, but did not hit 'save somewhere else'; or 2) his forensic analysis referenced in his 'process report' consisted of checking the properties of the disk visually and said it was 0 so must be it.
Are you agreeable to an order for preservation on the ssd of the macbook, ssd and forensic image?
Chad,
Please see the below responses from Examiner Whitlock regarding the questions you had:
1) No html report was created.
2) No chain of custody. I received it on 12/7/17 at 11:30am from Bob, and it has been in my custody ever since.
3) The internal SSD of the MacBook is being stored in the FBI Little Rock CART Lab.
Defendant Randell G. Shelton, Jr. ("Shelton") moves to compel various communications in this matter, as well as rough notes regarding an alleged co-conspirator and medical records that have been referenced in recent government disclosures, in preparation for the upcoming evidentiary hearing on January 25, 2018. In support thereof, Mr. Shelton states as follows:
1. In accordance with Local Rule 7.2, counsel for Shelton states that they have in good faith conferred or attempted to confer with the government's attorneys in an effort to resolve this dispute, but the government's attorneys have not responded to them regarding these issues and as a result the parties are unable to resolve their disagreement without the intervention of the Court.
2. The government has produced most of the discovery in this case electronically. Interestingly, however, two documents — both heavily redacted text messages — have been produced in hard copy.
3. The first document, produced on October 10, 2017, was heavily redacted text messages between FBI Agent Robert Cessario and Shane Wilkinson, counsel for Micah Neal, from
4. A cursory review of the two documents, side-by-side, show that there have been alterations. The two sets of text messages overlap by three days, as both include texts from Cessario from February 8-11, 2016. However, none of Cessario's texts to Wilkinson from the first set of texts appear in the second set of texts, which purports to be all of Cessario's texts during that same time frame.
5. Due to the heavy redactions in the second set
6. On several occasions, including on January 5, 2018, and again on January 17, 2018, counsel for Shelton requested that the government produce all emails that involve case agents or FBI employees in this matter, including but not limited to Robert Cessario, John Munns, and Timothy Whitlock. To date, those emails have not been produced, although the AUSO has advised Shelton's counsel that as of October 17, 2017, all of Cessario's communications had been preserved.
7. Counsel for Shelton therefore requests that this Court order the government to produce all emails from both Cessario's FBI email accounts (robert.cessario@ic.fbi.gov and robert.cessario@fbi.gov), and from his personal email account ([REDACTED\]) that are in the government's possession that refer to this matter, as well as all emails from any other case agent or government employee that references the government's investigation or prosecution of this matter, pursuant to the terms of the Protective Order in place in these proceedings.
8. In light of the evidence that has recently come to light about Cessario's destruction of evidence from his computer, counsel for Shelton requests that the Court order the government to produce all rough notes in the government's possession regarding alleged co-conspirator Micah Neal.
9. In light of the information contained in the government's "Disclosure Letter" of December 15, 2017, counsel for Shelton requests the Court order the government to produce any documents, memoranda, emails, or other communications of any kind that are in the government's possession and that reference the health information that was allegedly the basis, at least in part, for Cessario to "wipe" his computer on December 7, 2017.
WHEREFORE, premises considered, Defendant Randell G. Shelton respectfully requests that this Court grant its Motion to Compel and enter an order compelling the government to produce without further delay the un-edited, un-altered, and complete text messages that were sent to and received by Robert Cessario from February 8, 2016, to present in native or source format; produce Cessario's emails, including emails from his FBI email account and from his personal email account that are in the government's possession that reference his investigation into this matter and produce all emails that involve case agents or FBI employees in this matter, including but not limited to John Munns and Timothy Whitlock; produce all rough notes regarding Micah Neal; produce all communication in the government's possession regarding the health information referenced in its December 15 "Disclosure Letter," and requests such other and further relief that the Court deems just and proper.
I, Chad L. Atwell, hereby certify that on this 19th day of January, 2018, I electronically filed the foregoing with the Clerk of Court using CM/ECF system, which shall send notification to the following:
Comes now the United States of America, by and through the United States Attorney for the Western District of Arkansas, and for its Notice of Intent to Introduce 404(b) Evidence submits as follows under seal:
This case is scheduled for a jury trial commencing April 9, 2018. This Court's Amended Scheduling Order ("Scheduling Order") does not set a date-specific deadline for the filing of Fed. R. Evid. 404(b) notice. (Doc. 59 and 248). The Scheduling Order tracks the language in Fed. R. Evid. 404(b) of requiring "reasonable notice." (Id.). Yesterday, on March 28, 2018, the Government interviewed [REDACTED\], a former Arkansas State Representative. During that interview, [REDACTED\] related information, as detailed below, that the Government believes is admissible in this trial as 404(b) evidence.
"Other than requiring pretrial notice, no specific time limits are stated in recognition that what constitutes a reasonable request or disclosure will depend largely on the circumstances of each case." Fed. R. Evid. 404 note (1991 Amendments). "Factors to consider in determining the
As set forth below, the Government gives formal notice of its intent to present evidence that it asserts is admissible as "evidence of a crime, wrong or other act" for the purpose of "proving motive, opportunity, intent, preparation, plan, knowledge, identity, absence of mistake, or lack of accident." Fed. R. Evid. 404(b). "Rule 404(b) is a rule of inclusion, prohibiting only evidence that tends solely to prove the defendant's criminal disposition." United States v. Shaffner, 71 F.3d 1429, 1432 (8th Cir. 1995). "To be admissible as Rule 404(b) evidence, the evidence must be `(1) relevant to a material issue; (2) proved by a preponderance of the evidence; (3) higher in probative value than in prejudicial effect; and (4) similar in kind and close in time to the crime charged.'" Id.
The Government will prove the following testimony is relevant to show Defendant Woods' motive, intent, preparation, plan, knowledge, and absence of mistake in directing GIF money as charged in the Second Superseding Indictment to Decision Point doing business as Ameriworks and to Ecclesia College, so that he would receive kickbacks in the form of cash. The probative value of this evidence is greater than its prejudicial effect. Lastly, the testimony is similar in kind to acts charged in the Second Superseding Indictment and occur close in time to the criminal conduct charged therein.
The Government intends to offer the testimony from former Arkansas Representative [REDACTED\] [REDACTED\] that, in 2012, it was known to his legislative colleagues, including Defendant Woods, that he was experiencing financial hardship. [REDACTED\] is expected to testify that during 2012, Defendant Woods asked him if he "wanted to make some money." [REDACTED\] is expected to testify that in response to this question from Defendant Woods that he said "yes." [REDACTED\] is expected to testify that Defendant Woods stated that they could make extra money doing consulting work with non-profits. It is also expected that Defendant Woods stated that they could help unspecified non-profits in receiving unspecified grants in exchange for payment. It is anticipated that [REDACTED\] would testify that Defendant Woods spoke to him about this proposition on several occasions. It is also anticipated that [REDACTED\] would testify that he lost interest in this proposition once Defendant Woods advised him that they would receive payments in cash for their help in obtaining grants for non-profits. It is also expected that [REDACTED\] would testify that his conversations with Woods about this subject ended around the same time that Micah Neal took office.
I hereby certify that on this 29th day of March, 2018, I electronically filed the foregoing with the Clerk of the Court using the CM/ECF System, which will send notification of such filing and a copy was emailed, to the following:
COMES NOW, Defendant Jon Woods, by and through his counsel, and in support of his Response to Government's Notice of 404(b) Evidence states:
1. On July 13, 2017, co-defendant Randell G. Shelton (hereinafter "Defendant Shelton") requested notice of any 404(b) evidence the government intended to offer at trial. The government responded that it would "be filing a notice. . .at the appropriate time." When the government was asked what the "appropriate time" would be, it responded:
2. At some point between July 2017 and September 2017, counsel believes the government alluded that it would turn over its 404(b) notice approximately a month prior to trial.
3. On September 28, 2017, Defendant Shelton filed a Motion to Compel Notice of 404(b) Evidence Forthwith. On October 4, 2017, two (2) months prior to the original trial setting, the government provided all defendants with its notice for 404(b) evidence.
4. On or about November 30, 2017, Jonathan E. Woods (hereinafter "Defendant Woods") orally joined in all co-defendants' motions. On December 15, 2017, Defendant Woods filed a written motion to join in Defendant Shelton's motions to dismiss, in limine, and to suppress. (Doc. 246). Defendant Woods' motion to join was granted that same day (Doc. 247).
5. On March 29, 2018, the government provided its second notice of potential 404(b) evidence. This was done only ten (10) days before trial,. The notice regards potentially new evidence from a previously undisclosed witness, ex-legislator [REDACTED\] Defendant Woods now moves this Court to bar the introduction or mention of anything related to the government's new witness, and any evidence that originates from him.
6. The first hurdle a moving party has in trying to introduce an alleged prior bad act is to timely give notice to the defendant; as long as, the defendant requested timely notice of any potential 404(b) evidence; United States v. Lindsey, 702 F.3d 1092, 1097 (8
7. Second, the moving party must establish that the purported evidence is relevant pursuant to Fed. R. Evid. 401.
8. Third, the moving party must establish the act occurred. The standard of proof the moving party must establish to show that the act occurred is to show is that "there is sufficient evidence to support a finding by the jury that the defendant committed the similar act;" U.S. v. Newton, 912 F.2d 212, 214 (8
9. If the moving party meets the three burdens stated above, it then must show why the prior bad act is not being used as propensity evidence. This requires the government to show that (a) the evidence is relevant to a material issue other than the defendant's character and (b) the act is similar in kind and reasonably close in time to the acts charged; U.S. v. Ballew, 40 F.3d 936, 941 (8
10. Finally, the moving party must be able to show that the evidence's potential prejudice does not substantially outweigh its probative value; Lindsey, supra at 1098.
11. In Lindsey, the defendant argued the government's 404(b) notice that it would use his prior conviction was not timely. The trial court disagreed, because the government gave notice to the defendant one (1) year prior to trial that it knew of, and may try to use, the defendant's prior conviction against him. Additionally, one (1) month prior to trial, the government provided formal notice to the defendant that they would try to use his conviction against him; Lindsey at 1097.
12. In Green, the defendant argued the government's 404(b) notice of his prior arrest was not timely. Four (4) months prior to trial, the government provided a printout to the defendant of his previous arrest. The government also gave notice to the defendant that it had incomplete information on the defendant's arrest and would supplement the information as it received it. The government supplemented the defendant's arrest information one (1) week prior to trial and stated that it intended to use that information at trial. The court found this notice was timely because the defendant had been put on notice about that specific arrest four (4) months prior to trial, and it was only supplemental information that the government turned over to him one (1) week prior to trial; Green, supra at 701-702.
13. In the current case, the new evidence is not a simple supplementation of information Defendant Woods was already put on notice about. Here, the government gave its notice of substantive and new 404(b) evidence only ten (10) days prior to trial (Doc. 309).
14. It appears, based on the information defense counsel received, that the new 404(b) information could have been easily obtained by the government at a much earlier date. This is because: the government knew [REDACTED\] was in the Arkansas Legislature at the same time as Defendant Woods; it appears [REDACTED\] gave the information to the government voluntarily; and it appears [REDACTED\] came to the government on his own volition, and the government did not approach [REDACTED\] with questions regarding their investigation.
15. Further, to allow this testimony in, at this late date, will significantly prejudice Defendant Woods', as he will lack adequate time to prepare. This is because much information needs to be gathered on [REDACTED\]. Counsel knows that he did not seek re-election in 2016
16. Additionally, in reviewing the discovery we received, on Friday afternoon, March 30, 2018, it does not appear that the information obtained by the government will be significant in its case-in-chief. The government provided an exhibit list today with three hundred and thirty-nine (339) exhibits. Additionally, the government listed sixty-nine (69) witnesses. Out of all this information, [REDACTED\] [REDACTED\] it appears, provided three (3) sheets of paper and provided one (1) interview of uncorroborated allegations.
17. Relevant evidence is "evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence;" FED. R. EVID. 401. The evidence [REDACTED\] provides is of no relevance to the charges against any of the defendants in this case. This is because, based on the report, [REDACTED\] can not state with any specificity anything wrong that occurred. [REDACTED\] states feelings that he has, but he cannot establish anything of substance. Further, he can state that he has been contacted about aiding in the funding of Ecclesia College, but he cannot state that he was asked to do anything wrong by any of the defendants. In fact, it appears he is just speculating. Due to this, [REDACTED\]'s 404(b) testimony is not relevant.
18. The information [REDACTED\] provides the government is a bare bones accusation. The only evidence [REDACTED\] gives the government, to corroborate his accusations, is an email with one (1) voicemail attachment. The voicemail is allegedly from Defendant Paris. In the voicemail, based on the transcript provided by the government, the speaker simply asked [REDACTED\] when he will be in Northwest Arkansas, then states that they should take a tour of Ecclesia College, and that they could possibly discuss funding opportunities for the college at that time. There does not appear to be anything nefarious stemming from the voicemail. Additionally, [REDACTED\] [REDACTED\], according to the government's report, cannot say if Defendant Woods asked him to do anything illegal. [REDACTED\] can only state that he felt Defendant Woods "was trying to recruit him to do illegal activity." Even if [REDACTED\] is able to testify to specific issues or incidents, it would still be his statement without any corroborating evidence, and it appears that [REDACTED\]'s statement lacks specific times, places, or things discussed.
19. Additionally, the time frame [REDACTED\] discusses with the government is overly remote in time to the case here. [REDACTED\]s discussions with the government are about alleged events that occurred a full two (2) years prior to any of the alleged incidents stated in this case. Due to no more evidence other than the uncorroborated statement of [REDACTED\] and the remoteness in time of the allegations made in that statement, there is not adequate evidence to establish a bad act occurred.
20. Counsel does not believe there is adequate evidence of a bad act; but in the alternative, should this court decide that there is adequate evidence, it is being offered only as propensity evidence. In this case, the government wants to introduce the allegations made by [REDACTED\]. The allegations do not show motive as they are not close in time, nor do they show opportunity, intent, preparation, plan knowledge identity, or absence of mistake. This is because there is not enough articulable or verifiable information that would aid the fact finder in establishing any of that information. The evidence would merely be put on to show that if Defendant Woods acted improper with [REDACTED\] in 2011, Defendant Woods most certainly acted improper during the time frame of the current case. Due to this, and the above stated, a strong danger of undue prejudice is created against Defendant Woods, and it outweighs the probative value of any evidence [REDACTED\] can testify to or establish. Additionally, the evidence is insignificant when compared to what defense counsel believes the government's case-in-chief will entail, and the government can attempt to meet its burden through other means of proof.
WHEREFORE, Defendant Woods prays that his Response to Government's Notice of 404(b) Evidence is granted, and for any other just relief this Court sees fit.
I hereby certify that on April 02, 2018, I electronically filed the foregoing with the Clerk of Court using the CM/ECF system, which shall send notification of such filing to the following:
Id. at n. 7 (quoting In re United States, No. 15-3793, 2016 WL 1105077, at *11 (6th Cir. Mar. 22, 2016) (emphasis added)). Judge Hanan also noted that the district court there had earlier written that it questioned "whether or not the Department of Justice is doing justice." Id. (citing 2016 WL 1105077, at *5).
