Category Archives: Fifth Amendment

The Colorado Springs man who police say held three men at gunpoint last summer on Independence Pass has denied the allegations in response to a lawsuit.

In addition to the denials, Brolin McConnell, 31, also maintains his Fifth Amendment rights, which guard against self-incrimination.

McConnell faces criminal charges of attempted murder, first-degree kidnapping and menacing, among other counts. He has been in jail ever since his arrest on July 27, 2016, following what the alleged victims said was a terrifying and frightening ordeal on Lincoln Creek Road.

Its unclear why McConnell, a Front Range real estate agent, allegedly held the men hostage and made bizarre statements and demands, including one for $100 million. Law enforcement initially suspected he was on methamphetamine, but a drug screen showed only a trace of marijuana in his blood.

He shot twice near one hostage, including a bullet that whizzed by the mans ear, causing hearing damage, according to the lawsuit and police reports. That man and two others were able to escape, and McConnell surrendered after being rushed by sheriffs deputies and an Aspen police officer at gunpoint. He has been held in jail on a $500,000 bond ever since.

In June, the three men sued him in Pitkin County District Court, claiming assault, battery, false imprisonment, extreme and outrageous conduct and negligent infliction of emotional distress.

The criminal case has halted after the district attorneys office appealed a judges dismissal or reduction, in February, of three felony counts, including attempted murder after deliberation, though a charge of attempted murder with extreme indifference was upheld. The disputed charges are now in the hands of the Colorado Court of Appeals.

McConnell has yet to speak in court or enter a plea; his first attorney waived advisement of the charges. At a preliminary hearing in January, in which a judge upheld some of the charges and dismissed or reduced others leading to the appeal Sarah Oszczakiewicz said the current bond was appropriate to protect the public. She cited jail recordings of conversations McConnell had with family members that show him instructing relatives to sell all his possessions to pay for legal representation. That includes multiple firearms, including AR-15 and AK-47 rifles, she said, adding that McConnell told his family he wanted to go live in the woods and forgo society.

On July 24, McConnells attorney, Scott Mikulecky of Colorado Springs, answered the lawsuit with a filing in which all of the allegations are denied.

The plaintiffs claims are barred or reduced by failure to mitigate their damages, the answer says, employing standard, boiler-plate legalese. Defendant expressly reserves all Fifth Amendment rights and privileges.

On Tuesday, Mikulecky moved to stay the lawsuit.

Defendant contends that in order to avoid undue prejudice against him, and to allow him and his counsel to prepare for the criminal trial, this court should stay these civil proceedings until the criminal trial has been completed, says the motion to stay the civil proceeding.

It says that McConnell, during the criminal proceeding, will be advised by his attorneys to invoke the Fifth Amendment in relation to the lawsuit.

And not until the criminal trial is concluded, and any appeals exhausted, will defendant be instructed by counsel that he will no longer have the ability to invoke these Fifth Amendment rights, Mikulecky wrote.

The motion, which the plaintiffs attorney, Ryan Kalamaya of Aspen, did not oppose, was approved by a judge on Wednesday.

chad@aspendailynews.com

Go here to read the rest:
Independence Pass defendant denies multiple allegations - Aspen Daily News

A U.S. District Judge in Connecticut, writing a 104-page decision, on Tuesday ruled that the 1996 Defense of Marriage Act violates the 5th Amendment to the U.S. Constitution.

The ruling by U.S. District Judge Vanessa Bryant, named to the federal bench by President George W. Bush, is the latests of several court ruling against DOMA.The law, which denies federal health and other benefits to same-sex couples, is headed to the U.S. Supreme Court.

Bryant ruled in a case brought by six same-sex couples and a widower, all legally married in the New England states of Connecticut, New Hampshire and Vermont. Marriage equality is now legal in six states and the District of Columbia.

Section 3 of the law violates the 5th Amendments guarantee of equal protection, ruled Bryant, in that it obligates the federal government to single out a certain category of marriages as excluded from federal recognition, thereby resulting in an inconsistent distribution of federal marital benefits.

A U.S. District judge in Connecticut ruled that a federal law defining marriage as only between a man and a woman is unconstitutional because it denies tax, health and other benefits to married gay couples in her state and others.

Judge Vanessa L. Bryant, who was appointed to the bench by former President George W. Bush, ruled today that the marriage restriction contained in the 1996 Defense of Marriage Act violates the Fifth Amendment right to equal protection.

Bryant wrote that the restriction obligates the federal government to single out a certain category of marriages as excluded from federal recognition, thereby resulting in an inconsistent distribution of federal marital benefits.

She also said many courts have concluded that homosexuals have suffered a long and significant history of purposeful discrimination.

Several courts across the country have made similar rulings. The Obama administration has asked the U.S. Supreme Court to settle the issue.

The ruling came in the case of six married same-sex couples and a widower who sued after being denied federal benefits. The plaintiffs are from Connecticut, New Hampshire and Vermont.

Among the plaintiffs are Joanne Pedersen and her spouse, Ann Meitzen.

Im thrilled that the court ruled that our marriage commitment should be respected by the federal government just as it is in our home state of Connecticut, Pedersen said in a statement after the ruling was released.

She and Meitzen, of Waterford, Conn., were married in December 2008. Pedersen, a retired civilian employee of the U.S. Navy, is enrolled in the Federal Employees Health Benefits Program. She sought to get Meitzen covered under the plan, but her request was denied.

Meitzen has a chronic lung condition that affects her ability to work and wants to retire, but she cant because of the cost of her health insurance, Bryants ruling said.

Read the original here:
Bush-appointed judge finds federal marriage ban unconstitutional - Wisconsin Gazette

The court vacates LIBOR convictions with significant implications for US criminal cases involving cross-border investigations.

Key Points: The Fifth Amendment also limits the use a defendants statements compelled by a foreign power. The government bears the heavy burden of showing all evidence is derived from a source

wholly independent of a defendants statements compelled by a foreign power. The governments reliance on tainted evidence before a grand jury was not harmless and

warrants dismissal of indictment.

Introduction Parallel investigations involving the US Department of Justice (DOJ) have been a part of the white-collar landscape for half a century. When financial or similar crimes are involved, the target of a grand jury investigation can also face peril from multiple civil agencies, like the US Securities and Exchange Commission (SEC), the US Commodities Futures Trading Commission (CFTC), or other federal and state regulators. Over time, DOJ and civil agencies have developed procedures that allow those proceedings to advance simultaneously and to share information consistent with the important protections imposed by the Federal Rules of Criminal Procedure, such as the grand jury secrecy requirement of Rule 6(e), and constitutional protections, such as the Fifth Amendments protection against self-incrimination.1

DOJ involvement in parallel or cross-border investigations that involve coordination with foreign financial regulators has risen dramatically in the past decade. Many of the most significant DOJ investigations in the past several years involved parallel investigations by foreign regulators, and that trend only seems to be accelerating. As was the case for parallel civil-criminal proceedings in the US, parallel DOJ- international investigations require DOJ to develop procedures for cross-border investigations that adequately protect key statutory and constitutional protections when working with foreign counterparts, many of whom have very different models of investigation and prosecution.

The Second Circuits decision in United States v. Allen highlights the challenge the prosecution of crimes transcending US borders can pose for DOJ.2 In Allen, the Second Circuit vacated two LIBOR-related convictions and dismissed the underlying indictments based on a cooperating witness exposure to the defendants statements compelled by a UK regulatory authority.3 The Second Circuit held that, pursuant to the Fifth Amendment, where a defendant has been compelled to provide testimony by a foreign power, the government bears the heavy burden of proving that it has not relied on that testimony.4

Latham & Watkins July 31, 2017 | Number 2188 | Page 2

The LIBOR Investigations Allen is the first criminal prosecution in the US related to the London Interbank Offered Rate (LIBOR) manipulation scheme to reach a US Court of Appeals.5 Beginning in 2011, the US and UK were investigating banks for manipulating their LIBOR submissions to benefit themselves in LIBOR-tied transactions.6 As widely reported, and as noted by the Allen court, by 2012, DOJ and the UK Financial Conduct Authority (FCA) had begun to investigate the bank then known as Coperatieve Centrale Raiffeisen-Boerenleenbank B.A. (Rabobank) for LIBOR manipulation.7

The bank was a LIBOR contributor for the US Dollar (USD) and Japanese Yen (JPY). One of the Allen defendants, Allen, was responsible for the banks USD LIBOR submissions and the supervision of other LIBOR-responsible personnel. The other defendant, Conti, was also responsible for USD submissions. A third trader, Robson, was responsible for JPY LIBOR submissions.8 FCA interviewed Allen, Conti and Robson. The FCA interviews were compulsory, as witnesses faced imprisonment if they refused to testify. Recognizing the Fifth Amendment risks associated with these compelled statements, DOJ and FCA implemented a wall between their respective investigations, and DOJ conducted interviews prior to the FCA.9

The FCA brought an enforcement action against Robson and, following normal FCA procedure, disclosed relevant evidence, including Allen and Contis compelled testimony. Robson reviewed, annotated and took handwritten notes regarding that testimony. The FCA thereafter stayed its enforcement action in favor of Robsons criminal prosecution in the US.

Indictment, Trial, and Kastigar Hearing A grand jury in the Southern District of New York (SDNY) returned an indictment charging Robson with, inter alia, wire fraud. Robson pleaded guilty and signed a cooperation agreement with DOJ. Thereafter, the government charged Allen and Conti with conspiracy to commit wire and bank fraud, and substantive wire fraud. Robsons testimony, which an FBI agent presented to the grand jury, was the grand jurys sole source of material evidence regarding Allen and Contis alleged role in the LIBOR manipulation scheme.10

Prior to trial, defendants moved to dismiss the indictments and suppress Robsons testimony based on Kastigar v. United States.11 In Kastigar, the Supreme Court held that, when a witness has invoked his or her Fifth Amendment privilege, the government can compel that witness testimony only by granting immunity against both direct and derivative use of that testimony.12 When an immunized witness later becomes a defendant, a hearing is held in which prosecutors are required to establish that the governments case is not based on the compelled testimony. This burden of proof ... is not limited to a negation of taint; rather, it imposes on the prosecution the affirmative duty to prove that the evidence it proposes to use is derived from a legitimate source wholly independent of the compelled testimony.13

At trial, Robson testified and (again) was the sole source of material evidence regarding Allen and Contis role in the alleged scheme. Allen and Conti were convicted of all charges.14 The Court then held a two- day hearing on the defendants Kastigar motions.15 The extent of Robsons exposure to Allen and Contis compelled statements was disclosed by the government, but Robson testified that his trial testimony was not impacted by that exposure.16 The government argued, inter alia, that the Courts ruling in United States v. Balsys,17 which held that the Fifth Amendment did not foreclose the government compelling testimony that might incriminate the witness in a foreign criminal prosecution, likewise permits the governments use of testimony compelled by a foreign power.18 The government further argued that Kastigars independent source doctrine19 applies only to testimony compelled by US federal or state authorities, not foreign powers.20 Finally, the government emphasized the steps that DOJ and FCA took to ensure that FCA-compelled testimony would not taint DOJs investigations, including a DOJ

Latham & Watkins July 31, 2017 | Number 2188 | Page 3

presentation to FCA representatives on the Fifth Amendment, Kastigar, and the importance of maintaining a wall between their investigations.21 DOJ also obtained written assurances from UK investigators that they would not share information derived from compelled testimony, and established a day one/day two approach for interviews by which DOJ would interview Rabobank personnel prior to FCA.22 The District Court denied the Kastigar motions, assuming that even if the Fifth Amendment applied to statements compelled by a foreign power, the government had satisfied its burden under Kastigar.23

The Second Circuit Decision Allen and Conti appealed arguing, inter alia, that the District Court erred in denying the Kastigar motion. The Second Circuit agreed, finding that the governments reliance on Robsons testimony necessitated vacatur of defendants convictions and dismissal of their indictments.24

The Second Circuit held that the Fifth Amendment precludes the governments reliance on a defendants testimony compelled by a foreign power at trial.25 When such testimony exists, the government bears the heavy burden of proving that all of the evidence it proposes to use was derived ... from a legitimate source wholly independent of the compelled testimony.26 In Allen, this required the government to prove that Robsons exposure to Allen and Contis compelled statements did not shape, alter, or affect the information that [Robson] provided and that the Government used.27 The Second Circuit found that Robsons conclusory denials at the Kastigar hearing were insufficient to carry that burden in light of the fact that Robsons pre-exposure FCA testimony was materially inconsistent with his post-exposure testimony before the grand jury and at trial.28 The Second Circuit further stated, in dicta, that the most effective way for the government to carry this burden would be by demonstrating that [the witness] testimony was unchanged from comparable testimony given before the exposure.29

The Second Circuit further found that the governments reliance on Robsons testimony was not harmless, thus necessitating that defendants convictions be vacated.30 Reliance on tainted evidence is harmless, and a conviction will survive, when a court is persuaded beyond a reasonable doubt that the jury would have reached the same verdict without consideration of the tainted evidence.31 The Second Circuit refused to find that reliance on Robsons testimony was harmless when he was the unique source of particularly significant and incriminating evidence.32

The Court further found that defendants indictments required dismissal based on the governments reliance on Robsons testimony before the grand jury.33 In doing so, the Second Circuit held that if the government has presented immunized testimony to the grand jury, the indictment should be dismissed unless the government established that the grand jury would have indicted even absent that testimony.34 The Court could not conclude the grand jury would have indicted but-for Robsons testimony, because that testimony was not merely material, but essential, and provided the grand jury with definitive, clear-cut testimony that Allen and Conti had directly participated in the scheme.35 The Second Circuit further refused to maintain those indictments based on documentary evidence presented to the grand jury, when such evidence was available prior to Robsons cooperation but DOJ chose to charge Allen and Conti only after obtaining Robsons post-exposure testimony.36

Significance of the Allen Decision In Allen, the Second Circuit has sent a strong signal that it will guard the procedural protections afforded all defendants in the US, even if both DOJ and its foreign counterparts acted in good faith and lawfully in their respective jurisdictions when conducting the investigation. In so doing, the Court has placed the onus on DOJ to continue to develop procedures for working with DOJ foreign counterparts to ensure evidence developed in foreign investigations does not compromise prosecutions in the US.

Latham & Watkins July 31, 2017 | Number 2188 | Page 4

The consequences of DOJ and its foreign counterparts developing the additional procedures give rise to new risks, however. The possibility that statements from a parallel proceeding may trigger a Fifth Amendment violation will likely lead to still closer and earlier collaboration between DOJ and its foreign counterparts, ex ante. This may force DOJ to bring its resources and expertise to bear at an earlier stage of cross-border investigations to minimize the risk of adverse consequences in those multiple jurisdictions, ex post. As the Court noted in Allen, this kind of deeper collaboration has already begun, as evidenced by the recent placement of DOJ prosecutors with Eurojust in The Hague and INTERPOL in France, and the detailing of DOJ anti-corruption prosecutors to the UKs Serious Fraud Office (SFO) and FCA.37

Defense counsel, in particular US lawyers representing individuals under scrutiny in cross-border investigations, should consider coordinating closely with counsel in each jurisdiction to gain a complete understanding of the processes and risks attendant to each parallel investigation. Counsel should also note the Second Circuit panels skepticism regarding the governments decision to prosecute these defendants in the US. At oral argument, Judge Jos A. Cabranes asked both sides to explain why Main Justice had brought charges against two UK nationals who were young, relatively low-level employees working at a Dutch bank in London.38 Judge Cabranes described the circumstances as a puzzlement.39 Appellant counsel noted that a critical witness, whose exonerating testimony would have been available in the UK, proved unavailable to defendants because the government opposed, and the District Court denied, their motion to order that witness deposition.40 Judge Gerard E. Lynch questioned whether this resulted in the jury ... not [being] permitted to hear all of the evidence that bears on the question of whether defendants had engaged in unlawful conduct.41 Through this prism, the Second Circuit then considered whether the governments use of defendants FCA-compelled testimony ran afoul of the Fifth Amendment.

The Allen opinion also highlights DOJs need to maintain sufficient procedural protections when private US industry regulators, such as the Financial Industry Regulatory Authority (FINRA), conduct parallel investigations of a criminal defendant. The Fifth Amendment does not preclude private self-regulatory organizations (SRO) like FINRA from compelling testimony from its members,42 and typically, the government can use that testimony in US criminal proceedings.43 But, the Second Circuit has stated, in dicta, that the Fifth Amendment could limit use of SRO-compelled testimony in criminal proceedings if there is a sufficiently close nexus between the State and the challenged action of the SRO.44 Based on Allen, where such nexus exists and the SRO has compelled a defendants testimony, the government likely will bear the burden of satisfying Kastigars wholly independent standard. Thus, much like its foreign counterparts, DOJ must consider carefully how to avoid triggering a Fifth Amendment violation due to use, even indirectly, of a defendants compelled statements from a parallel SRO proceeding. Whether they involve foreign jurisdictions, domestic regulators, or both, the increasing occurrence of investigations pursued in multiple jurisdictions and simultaneously under administrative, regulatory, and criminal procedures requires careful handling and a thorough understanding of the issues and risks involved.

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Second Circuit: Fifth Amendment Bars Testimony Compelled by Foreign Governments - Lexology (registration)

It isnt any secret that Robert Reich would love to see President Donald Trump leave office. Now he saysRepublicans would, too.

In apost on his websiteand Facebook page, Reich shared a transcript ofa conversation he said he had with aformer GOP member of Congress, in which the unnamed lawmakersaid Trump is fritzing out.

The economist and former Labor secretary under President Bill Clinton, has an active social media presence, often sharing his opinions on the Trump administration through blog posts and videos. In the post shared Monday, Reich saidRepublicans are afraid Trump will hurt them in the 2018 midterm elections as well as in 2020.

The ex-GOP lawmakerdidnt hold back in his assessment of Trumps administration, calling it a banana republic, according to Reich.

Reichs anonymous source alluded to a Republican Partythat regrets aiding Trump.

They planned to use Trumps antics for cover, to get done what they most wanted big tax cuts, rollbacks of regulations, especially financial, the source said. Theyd work with Pence behind the scenes and forget the crazy uncle in the attic.

Republicans are upset about Trumps behavior, especially his tweets about Attorney General Jeff Sessions and his hiring of Anthony Scaramucci as communications director, the former lawmakersaid. (The transcript was posted before Scaramuccis removal was announced Monday.)

The source also saidRepublicans are maneuvering behind the scenes to put up another candidatefor president in 2020.

Meanwhile, Trump is worried his Cabinet is plotting against him, according to the transcript.

Twenty-fifth amendment!, the ex-lawmaker toldReich. Read it! A Cabinet can get rid of a president whos nuts. Trump thinks theyve been preparing a palace coup. So one by one, hes firing them.

But the source made clear that Trumps Cabinet will not overthrow him.

Its ludicrous, he said. Sessions is a loyal lapdog. [Secretary of State Rex] Tillerson doesnt know where the bathroom is. Thats my point. Trump is fritzing out. Having manic delusions. Hes actually going nuts.

The former GOP lawmakersaid it is only a matter of time before it becomesapparent to everyone that Trump is off his rocker.

Thats where the twenty-fifth amendment really does comes in, he added.

And it could come sooner than predicted, the source added.

My betting is hes out of office before the midterms, hesaid. And Pence is president.

Reich has posted conversation transcripts with a sourcehe identified as aformer Republican member of Congressin the past, including one in the days leading up to the 2016 election. In that post, the unnamed lawmakercalled Trump a maniac and said most Republicans thought hewas deplorable.

But theyre not gonna speak out, the source said at the time. Some dont want to end their political careers. Most dont want to risk their lives. The Trump crowd is just too dangerous. Trump has whipped them up into a g*ddamnfrenzy.

Get breaking news alerts and more from Roll Call on your iPhone or your Android.

Continued here:
Reich Says Former GOP Congressman Said Trump is 'Fritzing Out' - Roll Call

On July 19, 2017, the Second Circuit vacated the convictions and dismissed the indictments of two individuals accused of playing a role in the manipulation of the London Interbank Offered Rate (LIBOR). United States v. Allen, No. 16-898-cr, Slip Op. at 3 (2d Cir. July 19, 2017). The ruling was based on the Fifth Amendment to the US Constitution, which provides that [n]o person... shall be compelled in any criminal case to be a witness against himself. US Const. amend. V. The Second Circuits decision clarifies that this protection against self-incrimination is an absolute trial right that applies to all criminal defendants in US courts (including non-citizens) and to all compelled testimony (including testimony given during a foreign governments investigation). United States v. Allen, No. 16-898-cr, Slip Op. at 55. The courts clarification of the Fifth Amendments scope has important implications for US antitrust enforcers prosecuting international cartels and for individuals ensnared in cross-border criminal investigations alike.

The charges against the defendants in United States v. Allen stemmed from government investigations by the United States, the United Kingdom and others, concerning allegations that several banks had manipulated the LIBOR, a benchmark interest rate for short-term inter-bank loans that is also used as a reference rate for a variety of globally traded financial instruments. The defendants were initially investigated by the United Kingdoms Financial Conduct Authority (FCA) and made self-incriminating statements during compulsory interviews with FCA officials. The FCA provided transcripts of defendants compelled testimony to a third individual under investigation, Paul Robson, who reviewed the transcripts in detail. For reasons unknown, the FCA then dropped the charges against Robson, and his case was picked up by the United States Department of Justice (DOJ). Robson pleaded guilty and then cooperated with the DOJ by providing information about the defendants that led to their indictment and by testifying against them at trial.

On appeal, the Second Circuit threw out both defendants convictions and dismissed their indictments, holding that the Fifth Amendments prohibition on the use of compelled testimony in American criminal proceedings applies even when a foreign sovereign has compelled the testimony. Slip Op. at 80. The Fifth Amendments protection against self-incrimination is an absolute trial right that applies in any American criminal proceeding, and so the defendants status as non-citizens did not alter the courts analysis. Id. at 37-38. In short, the court explained, compelled testimony cannot be used to secure a conviction in an American court. This is so even when the testimony was compelled by a foreign government in full accordance with its own law. Id. at 38.

Cross-border government investigations into price-fixing and other matters of international scope are becoming increasingly common, and United States v. Allen serves as an important reminder that many jurisdictions outside the United States do not have the procedural safeguards in place that the United States Constitution demands. A foreign investigation that does not satisfy these safeguards may produce evidence that does not hold up in court. Where criminal proceedings have a foreign origin, discovery should be taken to reveal potential evidentiary shortcomings, such as witnesses who are tainted by exposure to compelled testimony. Consideration should also be given to the effect of such shortcomings, if any, in potential follow-on civil suits, where standards can be less demanding.

2017 McDermott Will & Emery

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Second Circuit Clarifies Fifth Amendment Law, with Implications for US Prosecution of International Cartels - The National Law Review

This article first appeared on the Just Security site.

It emerged late last week that President Trump has reportedly queried his lawyers regarding the nature and scope of his authority to pardon individuals including himself.

Over the weekend, Trump tweeted a nothing to see here message while asserting his pardon power was complete, presumably meaning absolute.

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While not limitless, the authority of the President to pardon is undeniably substantial. The President cannot pardon for prospective crimes or violations of state criminal law. There is a strong argument that he cannot pardon himself and certainly cannot insulate himself or others from the conviction of impeachment, as expressly stated in the Constitution.

But other than these and perhaps other narrow limitations, a Presidents pardon powers is vast. Indeed, the Presidents power to pardon others including his family members for past federal crimes, even without evidence of specific criminal investigation or prosecution, is arguably plenary in nature.

Not surprisingly in the context of the investigation into Russian interference in our election, Trumps reported interest in pardons has generated an avalanche of commentary exploring the legal limits of presidential pardon authority.

Donald Trump walks along the West Wing colonnade with his daughter Ivanka Trump and his son-in-law and Senior Advisor to the President for Strategic Planning Jared Kushner, March 17, 2017 in Washington, DC. Chip Somodevilla/Getty

Less attention, however, has been paid to why President Trump has not exercised his pardon authority yet, especially with so many of his confidants caught in a web of a criminal inquiry. This is the issue I focus on here.

Some may argue that if Trump were to pardon close confidants say his campaign manager Paul Manafort, the Trump-identified foreign policy advisor Carter Page, Senior Advisor and son-in-law Jared Kushner or his National Security Advisor Michael Flynn the optics would be undesirable and the political fallout substantial.

This is undoubtedly true, President Gerald Ford arguably never recovered politically from the pardoning of President Richard Nixon. But given Trumps record, I am highly skeptical that these political concerns are a sufficient deterrent to exercise his authority.

Unpleasant optics because of his flagrant norm violations thus far have hardly served as significant inhibitions for this President.

He did not release his tax returns as every president has for half a century. He ignored anti-nepotism laws. He discussed on the campaign trail imprisoning his political opponent. He ignores the Emoluments Clause of the Constitution.

The norm transgressions are so substantial that t he Just Security site has a section dedicated to it. There is an outcry. But that outcry and the optics simply do not seem to bother this President or his most ardent supporters. Nor do they seem sufficient to alienate him from almost all of the elected Republicans in Congress, at least so far.

It must be something else. Most likely the President has been informed of one important fact about his pardon power, anyone he pardons is no longer under criminal jeopardy for federal crimes and, accordingly, Fifth Amendment protection for self-incrimination evaporates.

Manafort, Page, Kushner, and Flynn at this point pre-pardon need not answer any questions from Robert Mueller, Congress or anybody. The Fifth Amendment of the United States Constitution provides no person shall be compelled in any criminal case to be a witness against himself.

Once pardoned, however, there is no legal jeopardy for past federal crimes. Therefore, the Fifth Amendment can no longer be a shield and permit Trumps pardoned associates from refusing to answer questions under penalty of perjury.

This creates a paradox for President Trump. When he pardons an individual, they are free from possible prosecution but they are also uncloaked of their most robust constitutional protection.

This may well be why President Trump has not pardoned Flynn, for example. Given the reported substantial contacts between Flynn and Russian government emissaries, given Flynns patent falsities including on federal forms completed under penalty of perjury, Flynns only protection presently from being compelled to testify including possibly against the President and others is the Fifth Amendment self-incrimination clause.

Imagine if that was no longer a shield. Grand Jury, FBI Agents, Congress all could drill Flynn under oath. Any material prevarication would be punishable as perjury. At that point Flynns personal interest will be to tell the truth, even if that truth incriminates the President who fired him.

So the pardon of presidential associates is a double-edged sword. On the one hand, he will ensure they are not prosecuted if they committed crimes in furtherance of the Presidents interest. On the other, once pardoned, the interest of the pardoned associates likely diverges from the President.

If crimes were committed that implicate the President and his family and I do not believe we have sufficient evidence to answer that conclusively at this time prior to being pardoned, a Trump associate is 100 percent within their rights to simply say nothing. But not afterwards.

One caveat worth noting is that because the Presidents pardon power is limited to federal crimes, the Fifth Amendment may offer protection if the pardoned individual is still under jeopardy for state crimes.

However, I do not see this as a substantial issue at this point because in the main, the possible criminal liability of which we are presently aware in the Russia probe seem distinctly federal in nature, e.g., the Computer Fraud and Abuse Act, failure to complete federal disclosure forms truthfully, false statements to the FBI, or obstruction of justice in a federal case, for example.

It is true that we cannot be certain where the investigation will go and it could probe violations of state law. This seems most likely with financial crimes. Money laundering, for example, is illegal both under federal law and New York state law (the most likely state jurisdiction relevant here). And in such fairly circumscribed cases, the pardoned individual would still enjoy Fifth Amendment protection in discussing facts of relevance to those cases.

But I dont think this wrinkle should distract from the main point: The Presidents exercise of his pardon power is not a panacea. There are political costs to be sure. Many will ask, why do you need a pardon if no crime was committed similar to how President Trump discussed a grant of immunity: If youre not guilty of a crime, what do you need immunity for?

It will thereafter be a political cudgel and add to the narrative of a President hell-bent on covering up crimes he committed or that others committed on his behalf.

He fires Comey because of the Russia probe as President Trump himself made clear in the Lester Holt interview. He has confirmed his upset with Sessions because his recusal self-neutered the Attorney Generals ability to defend the President. He attacks Mueller in an attempt to discredit any future findings of wrongdoing. And if he pardons, the story will surely and understandably be that it is another attempt to evade accountability.

These political restraints, as in so many other areas, will not be sufficient to deter this President. However, the realization that anyone he pardons, unless also under jeopardy of state law prosecution, has lost the right against self-incrimination and can be compelled to testify truthfully under pain of contempt and perjury, may well explain this Presidents failure to pardon anyone thus far and may prove a continuing reason not to pardon associates in the future.

In this way, if the President exercises his pardon power down the road, it may signal a certain desperation. It may mean that the investigation is getting close. It will mean he has calculated that whatever the pardoned individual is compelled to testify under oath is less damaging to him and his interests than if the individual was not pardoned but squeezed by prosecutors. It will mean that the political weight of nothing to see here has been overcome by the legal weight of personal and family legal jeopardy.

Keith Harper is a Partner at Kilpatrick, Townsend & Stockton LLP. From 2014 to 2017, he served as United States Ambassador and Permanent Representative to the U.N. Human Rights Council.

More:
Why Hasn't Trump Already Pardoned Kushner, Flynn, Page and Manafort? - Newsweek

On July 19, 2017, the U.S. Court of Appeals for the Second Circuit overturned the convictions of two former London-based traders for conspiracy and wire fraud in connection with the manipulation of the interest rate benchmark known as LIBOR. The Second Circuit ruled that the use of compelled testimony in a U.S. criminal proceeding even when a foreign government has compelled the testimony constitutes a violation of the Fifth Amendment. This decision has potentially significant consequences for U.S. criminal cases that involve related investigations or prosecutions in foreign countries.

Facts and Procedural History

According to the charges, the two defendants were cash traders at the Dutch bank Rabobank and were directly involved in the bank's submissions for the London Interbank Offered Rate (LIBOR), a reference interest rate for the interbank borrowing market. In 2013, the U.K.'s Financial Conduct Authority (FCA) compelled the two defendants to testify about their involvement in the LIBOR submissions. Both individuals were given direct use immunity meaning their statements could not be used directly against them but not derivative use immunity meaning their statements could be used to derive other evidence that could be used against them in exchange for their testimony. Under U.K. law, they faced imprisonment if they refused to testify under such circumstances, whereas in the U.S., the government can only compel testimony by providing the witness with both direct and derivative use immunity.

Shortly thereafter, the U.S. Department of Justice began its own criminal prosecution. In October 2014, a grand jury returned an indictment charging the defendants with wire fraud and conspiracy. The defendants' compelled U.K testimony was utilized against them at trial, and both were convicted on all counts.

Second Circuit's Decision

The defendants appealed, arguing that the government "violated their Fifth Amendment rights when it usedtheir own compelled testimony against them." The Second Circuit agreed and held that "the Fifth Amendment's prohibition on the use of compelled testimony in American criminal proceedings applies even when a foreign sovereign has compelled the testimony."

The Second Circuit adopted the defendants' position that, to be admissible in a criminal case, a witness's statements including those made to foreign law enforcement must have been made voluntarily. The court emphasized that this requirement stems directly from the text of the Constitution; voluntariness is assessed under both the Self-Incrimination Clause of the Fifth Amendment and the Due Process Clause of the Fourteenth Amendment.

Furthermore, the Second Circuit rejected the government's argument that foreign governments are analogous to private employers, which may question employees under threat of termination without running afoul of the Fifth Amendment. The court also rebuffed the government's assertion that the Fifth Amendment applies only if the same sovereign is both compelling and using the testimony against the defendant, also known as the "same sovereign" rule.

In addition to rejecting the government's arguments, the Second Circuit focused on the consequences of the government's position, namely that a defendant's compelled testimony might be introduced directly against the defendant in a criminal prosecution, in effect an end-run around the defendant's Fifth Amendment rights. The court hypothesized that the government's argument could lead to a situation in which the government proffers, "Your honor, we offer Government Exhibit 1, the defendant's compelled testimony." Notably, the government did not dispute this potential result.

The Second Circuit also rejected the government's concern that ruling for the defendants would allow foreign powers to inadvertently or negligently interfere with U.S. criminal prosecutions, noting that that "the risk of error in coordination falls on the U.S. governmentrather than on subjects and targets of cross-border investigations."

Ultimately, the Second Circuit reversed both convictions, holding, inter alia, that the use of compelled testimony was not harmless error.

Impacts/Conclusion

This decision reinforces Fifth Amendment protections against the use of compelled testimony. Moreover, the Second Circuit now joins the Fourth, Fifth, Ninth, and Tenth Circuits in holding that "inculpatory statements obtained overseas by foreign officials must have been made voluntarily" in order to be admissible in U.S. courts.

Barring an appeal, DOJ will have to proceed with caution in its cross-border prosecutions where overseas testimony has been compelled by foreign governments. Mere compliance with the foreign sovereign's laws may not be sufficient to guarantee the admissibility of the evidence in U.S. criminal proceedings. Across the table, defense attorneys should continue to analyze the circumstances of foreign testimony, and in doing so, pay particular attention to any evidence of compulsion that might limit further use of that testimony against their clients.

Read the original post:
Convictions Overturned: Fifth Amendment Prohibits Use of Testimony Compelled by Foreign Governments - Lexology (registration)

This article first appeared on the Just Security site.

On Monday night, the leaders of the Senate Judiciary Committee issued a subpoena to compel Paul Manafort, the former chairman of the Trump presidential campaign, to testify at a public hearing on Wednesday.

The subpoena came as a surprise because just days earlier, Manafort and Donald Trump Jr. had reached a deal with the panel where they would provide records and be interviewed privately (versus in open session) in order to avoid being subponeaed at that time.

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Paul Manafort, former Trump's campaign manager, at the Mayflower Hotel April 27, 2016 in Washington, DC. Chip Somodevilla/Getty

According to the statement from Senate Judiciary Committee Chairman Chuck Grassley and Ranking Member Dianne Feinstein, negotiations with Manafort broke down over who in Congress would be able to access his transcribed interview:

Mr. Manafort, through his attorney, said that he would be willing to provide only a single transcribed interview to Congress, which would not be available to the Judiciary Committee members or staff. While the Judiciary Committee was willing to cooperate on equal terms with any other committee to accommodate Mr. Manaforts request, ultimately that was not possible.

To better understand this latest development, I turned to Andy Wright, Just Security s in-house expert on congressional investigations, to help explain it.

Manafort made demands that the committee, and likely the broader Congress, could not accept.

The committee wanted to get a transcribed interview of Manafort and Trump, Jr. before any subsequent public hearing. Sen. Grassley, as committee chair, had threatened to issue subpoenas for a public hearing, and used that leverage to obtain agreements to voluntarily appear for transcribed interviews.

However, unlike a hearing under subpoena compulsion, someone who voluntarily appears can seek to extract some procedural concessions from the investigating committee. For example, witnesses might seek commitments on the duration, format, legal representation, and transcript access (so the witness can review for error).

Once negotiations broke down, the committee reverted to its compulsory subpoena power.

First, Manafort wanted to do only one transcribed interview before all of Congress.

From his perspective, one interview minimizes the risk that differences in his answers, whether semantic or material, would be used as a perjury trap.

However, its a terrible deal for Congress. A single shot would mean that other committees, including the Senate Intelligence Committee, the House Intelligence Committee, and the House Oversight Committee would all have to rely on the Senate Judiciarys single transcript.

More important, they would have had to rely on Senate Judiciarys questions. Other committees have different jurisdictions, different interests, and different memberships that may want to take questioning in other directions. Also, it might risk losing the opportunity to get Manafort on the record about facts we learn later.

It appears from the statement that the Senate Judiciary Committee was open to trying to play the pool reporter role for the other committees. I cant imagine any other committee would agree without being able to participate in the questions, and Senate Judiciary has no authority to extinguish other committees interests, especially in the House.

Perhaps Senate leadership could engage in deconfliction, but the House has its own prerogatives and constitutional role.

Second, Manafort sought to get an agreement that Grassley and Feinstein would restrict committee staff and member access to the interview transcript. That was a bridge too far. The transcript would then be of little utility to the investigators. Im not convinced that the committees or Senates rules would allow restrictions on Member access to non-classified materials, especially other committee members.

Confining Manaforts interview transcript within one committee would significantly hamper Congresss investigations.

Committees have different jurisdictions, interests, and agendas. For example, the Senate Intelligence Committee has interests in counterintelligence and Russian election interference. They have access to intelligence products that the Senate Judiciary Members do not.

Naturally, Senate Intelligence will have different questions for Manafort than Senate Judiciary. And those questions are critical to the overall inquiry.

Adding to the confusion, Manafort met with the Senate Intelligence Committee on Tuesday.

It is not unusual for witnesses to make requests that their transcripts, or certain topics covered, be kept confidential by a congressional committee. However, Congress almost never agrees. The problem here isnt that Manafort made the request, but that his legal team believed it was gettable.

Under both House and Senate rules, congressional subpoenas can command two things: production of documents and appearance to testify at a formal hearing or deposition. The rules do not permit compelled transcribed interviews.

That is why Congress uses its subpoena power threat, which raises the specter of public shaming, to extract agreements to sit for nonpublic transcribed interviews. That was the process here, but it apparently went off the rails.

Those negotiations would be separate, although Im sure his legal team is acutely monitoring these developments. We still dont know the terms of Trump, Jr.s interview.

If they dont strike a last-minute bargain, Manafort will need to appear at the hearing ready to testify on Wednesday. If he does not show, the Committee could find him in contempt.

I would not be surprised if Manafort pleads the Fifth at this point. However, given his meeting with the Senate Intelligence Committee, Manafort may have waived the Fifth at this point.

If he does show and testify, I anticipate he will get extremely rough treatment by members of both parties.

Kate Brannen is the deputy managing editor of Just Security and a nonresident senior fellow at the Brent Scowcroft Center on International Security at the Atlantic Council.

Andy Wright is a professor at Savannah Law School and former Associate Counsel to the President in the White House Counsels Office.

Go here to see the original:
Will Manafort claim the Fifth Amendment? Where does this leave Donald Jr.? - Newsweek

The Second Circuit held in United States v. Allen, an appeal arising from the first U.S. prosecution in connection with the LIBOR manipulation scandal, that it violates a defendants Fifth Amendment privilege against self-incrimination to present an investigating grand or a trial jury with testimony that the defendant was compelled to give to foreign officials, regardless of whether the compelled testimony was presented directly or through another witness.

On July 19, the U.S. Court of Appeals for the Second Circuit vacated the conviction of two former London-based bankers, Anthony Allen and Anthony Conti, who were convicted in October 2015 on multiple counts of bank and wire fraud in connection with a scheme to manipulate the London Interbank Offered Rate (LIBOR). See United States v. Allen, Crim. No. 16-939 (2d Cir. July 19, 2017). Witnesses for the U.S. Department of Justice (DOJ) before both the grand and trial juries had been exposed to inculpatory testimony that the defendants were compelled to give against themselves by the UK government pursuant to UK law, and the Court of Appeals held that using that compelled testimony violated the defendants Fifth Amendment right against self-incrimination. The Second Circuit further held that the DOJ failed to carry its heavy burden under the U.S. Supreme Courts decision in United States v. Kastigar, 406 U.S. 441 (1972), to show that the testimony introduced before the grand and trial juries did not derive from the defendants compelled testimony. Because the prosecution failed to carry its Kastigar burden, and using the compelled testimony was not harmless error, the Second Circuit reversed the convictions and dismissed the indictments.

Alleged LIBOR Manipulation

Allen and Conti worked at Coperatieve Centrale RaiffeisenBoerenleenbank B.A. (Rabobank), a Dutch bank. During the 2000s, Rabobank was one of 16 banks that submitted its borrowing rates for U.S. dollars and Japanese yen on a daily basis to the British Bankers Association (BBA), the entity that calculated the LIBOR. The LIBOR is a series of daily benchmark rates at which banks can borrow funds in various currencies for various time periods. For each currency for which it calculated the LIBOR, the BBA accepted rates the banks submitted, discarded certain high and low submissions, and averaged the remaining submissions. Many financial transactions, including interest rate swaps, are tied to the LIBOR on a particular date, and those transactions are either profitable or not depending on the LIBOR in the relevant currency for the relevant time period on the relevant date, called the fixing date.

Allen and Conti each had, at various times and with varying frequency, responsibility for Rabobanks rate submissions to the BBA. Neither Rabobank nor the UK government had any policies concerning the submission of rates used to derive the LIBOR. Like a number of other banks that submitted their borrowing rates to the BBA, Rabobank was a party to a large number of LIBOR-tied transactions.

The prosecutions evidence at trial, which the Court of Appeals reviewed in detail, showed that the defendants received requests from Rabobank traders who had taken LIBOR-tied positions in transactions that would either make or lose money for the bank depending on the LIBOR. The Court of Appeals wrote, The Governments theory of the case was that these trader requests were dictated by the traders (and thus Rabobanks) interest in having LIBOR be higher or lower on particular dates based on the transactions that the trader had entered or positions they held.

The defendants conceded that it was inappropriate to base Rabobanks LIBOR submissions on rates that would benefit Rabobank, rather than on market-based evidence of the range of reasonable rates that fairly represented the rate at which Rabobank could borrow in dollars or yen for various intervals on that day. The defendants position at trial was that, although they received requests from traders for higher or lower submissions to the BBA, they did not honor those requests.

Financial Conduct Authoritys Investigation and Aborted Prosecution

The UKs Financial Conduct Authority (FCA) worked in parallel with officials from the DOJ to investigate allegations of LIBOR manipulation and to interview individuals, including the defendants, in 2013. It was undisputed in the proceedings before the Court of Appeals that defendants Allen and Conti were compelled, on pain of imprisonment, to testify before the FCA. The FCA offered the defendants direct use immunity for their compelled testimony, but not derivative use immunity, according to the court. In other words, the FCA could not use the defendants statements against them at trial (i.e., no direct use), but could introduce evidence against them that it obtained based on their compelled statements (i.e., derivative use).

In contrast, when the DOJ seeks to compel a witness to testify over the witnesss invocation of his or her Fifth Amendment privilege against self-incrimination, the immunity order that is entered confers both direct and derivative use immunity. To avoid having the DOJs LIBOR investigation tainted by compelled testimony, the DOJ and the FCA interrogated witnesses on different days, with the DOJ interviewing first.

The FCA and the DOJ also investigated a Rabobank employee with rate submission responsibilities, Paul Robson, whom the FCA later charged with criminal conduct for his role in manipulating the LIBOR. As part of its pre-trial process in the UK, the FCA disclosed to Robson the compelled testimony that Allen and Conti had given. The Second Circuit stated that Robson closely reviewed that testimony, annotating it and taking several pages of notes. The FCA later abandoned its prosecution of Robson, and the DOJ picked up where the FCA left off.

In April 2014, a grand jury in the Southern District of New York indicted Robson and two other individuals but not Allen and Conti charging them with wire fraud, among other things. Robson proffered, signed a cooperation agreement, and pled guilty in summer 2014. Although Robson did not testify before the grand jury, information he provided to the DOJ was presented to the grand jury through an FBI agent. The grand jury subsequently indicted Allen and Conti, charging them with wire and bank fraud charges.

Allen and Conti waived extradition and filed a motion under Kastigar to suppress Robsons testimony at trial. The trial court deferred the Kastigar hearing until after trial. Robson testified at trial, and the jury convicted the defendants on all charges.

At the post-trial Kastigar hearing, Robson explained that he had been exposed to the defendants compelled testimony before the FCA. The trial court found, however, that Robsons statement that he had independent knowledge of the facts he presented at trial (and that had been presented to the grand jury through an FBI agent) was an independent source within the meaning of Kastigar.

Court of Appeals Holds Fifth Amendment Self-Incrimination Privilege Applies to Foreign-Compelled Testimony

The Court of Appeals held that the Fifth Amendments privilege against self-incrimination requires that a defendants statement to a foreign government official be voluntary before it can be admitted in a U.S. trial. The Second Circuit emphasized repeatedly that the self-incrimination privilege is a personal trial right that is absolute. As a result, in the courts opinion, the self-incrimination privilege applies to bar the admission in U.S. trials of a defendants compelled statements to a foreign government official even when, as in this case, the foreign government official acted pursuant to the foreign nations legal process in obtaining those statements. In short, if a sovereign power compelled the defendant to testify under the cruel trilemma of self-accusation, perjury or contempt, the statement cannot be used in a U.S. court to indict the defendant or obtain a conviction. The Court of Appeals was unwilling to countenance the DOJs position in the case, which would remove all impediment to introducing the defendants foreign compelled testimony, as in, the court wrote, Your honor, we offer Government Exhibit 1, the defendants compelled testimony.

The Second Circuit considered misplaced the U.S. governments concern that a foreign government might attempt to sabotage U.S. prosecutions by compelling and then broadcasting a defendants testimony to potential witnesses. The court quoted a speech by former Assistant Attorney General for the Criminal Division Leslie Caldwell, who spoke of the DOJs efforts to coordinate with its counterparts abroad in investigating and prosecuting crime. The court noted that the DOJ was aware of its burden to avoid using compelled testimony as reflected by the interview scheduling system used in this case. The court also left open the possibility that there may be a different result if the foreign power appeared to be attempting to undermine a U.S. prosecution, noting that it would call into question whether the testimony obtained was really involuntary.

Having defined the defendants Fifth Amendment rights, the court concluded that the government violated their privilege against self-incrimination by introducing Robsons testimony at trial and to the grand jury through an FBI agent. Relying on Kastigar, the court explained that the privilege against self-incrimination applies not only to the testimony itself but to evidence derived from that testimony. The court noted that, when a defendant has been compelled to testify and is later prosecuted, the trial court will convene a hearing, a so-called Kastigar hearing, at which the prosecution must carry the heavy, albeit not insurmountable, burden that the evidence it will introduce was derived from legitimate independent sources. Typically, the prosecution meets this burden with canned testimony, that is, testimony the witness gave before he or she was tainted by exposure to the compelled testimony.

At the Kastigar hearing before the trial court in the Allen case, the exact opposite happened: Robson admitted that his testimony to the FCA was very different from the testimony he gave in the United States after reviewing the testimony of Allen and Conti. The Second Circuit held that the Kastigar hearing actually proved Robson had been tainted by the defendants compelled testimony to the FCA. The court concluded that the presentation of the tainted evidence to the grand and trial juries was not harmless, and it both vacated the conviction and dismissed the indictment against the defendants.

Implications

The Second Circuit explained that cross-border prosecutions are on the rise and observed that the DOJ is detailing its prosecutors to foreign investigators, including INTERPOL and the FCA. The court understood that, in the governments view, witness testimony is often the key to unraveling international financial crime. Although the court would not presume to know exactly what this brave new world of international criminal enforcement will entail, it was certain that these developments abroad need not affect the fairness of our trials at home.

Indeed, earlier this year, the DOJs Antitrust Division issued a Division Update, explaining that international cooperation on investigations of cartels was a top a priority and it was exploring bi-, tri- and multilateral agreements to foster greater international cooperation. Additionally, at a recent speech in Brazil, Acting Principal Deputy Assistant Attorney General for the Criminal Division, Trevor N. McFadden stated that cooperation with our foreign partners has become a hallmark of our work and observed that reciprocity in information sharing is a vital tool in the modern prosecutors toolbox.

Indeed, recent settlements and investigations show that the DOJ is actively coordinating its efforts with the FCA and other foreign investigators. For example, earlier this year, State Street Corporation announced that it had reached a settlement with the DOJ concerning allegations it overcharged certain clients, an allegation first disclosed to the FCA in 2011. Also, in April, it was reported that the DOJ and the FCA are collaborating in an investigation into whether individuals at Barclays Bank engaged in civil or criminal misconduct in attempting to unmask a whistleblower. And the U.S. Attorneys Office for the Southern District of New York, the office that prosecuted Allen and Conti, announced late last year that it had charged several individuals with wire and securities fraud, identify theft and computer hacking following an investigation conducted in concert with Lahav 433, the cyber unit of the Israeli National Police, which, like the FCA, can legally compel witness testimony.

This international cooperation also is occurring among government regulators with civil remedies at their disposal. For example, when the SEC announced the filing of a Foreign Corrupt Practices Act complaint against executives at investment firm Och-Ziff Capital Management Group in January 2017, the SEC thanked the FCA and financial regulators in Guernsey, Jersey, Malta, Cyprus, Gibraltar and Switzerland for assisting in the investigation that led to the complaint.

Given the increase in cross-border investigations involving cooperation between U.S. and foreign law enforcement and regulatory authorities, practitioners representing defendants who have been interrogated abroad should investigate the possibility that compelled testimony was disseminated to witnesses the DOJ put before the grand jury or will call at trial. While the fact pattern in Allen is somewhat unique, there is a significant tactical advantage to identifying whether any witnesses were exposed to the compelled testimony and forcing the prosecution to carry its heavy burden under Kastigar of showing its evidence is untainted.

Link:
Fifth Amendment Prohibits Use of Compelled Foreign Testimony in US Criminal Trials - Lexology (registration)

Creating a potential new impediment for collaboration between UK and US investigators, the Court of Appeals for the Second Circuit in New York recently held that evidence derived from compelled testimony cannot be used in a criminal case in the United States, even if the testimony was lawfully obtained in the foreign jurisdiction. In overturning the convictions of two former Rabobank traders charged with manipulation of the London Interbank Offered Rate, the Second Circuit in United States v. Allen[1] adopted a broad view of the Fifth Amendment right against involuntary self-incrimination as it applies to statements made to foreign regulators and law enforcement. The decision will make it more likely that compelled statements made to investigators in the UK and elsewhere will be inadmissible against criminal defendants in the US.

The case arose out of parallel investigations conducted by the UKs Financial Conduct Authority (FCA) and the US Department of Justice (DoJ) into alleged manipulation of the London Interbank Offered Rate (LIBOR) by employees of Rabobank.

In 2013, two former Rabobank traders and UK citizens, Anthony Allen and Anthony Conti, were interviewed by the FCA pursuant to its statutory authority to compel interviews (when such power is exercised the individual under investigation may be subject to a fine and/or imprisonment for non-compliance).[2] Each provided statements regarding their roles in setting LIBOR while at Rabobank, and the FCA showed their testimony transcripts to a third trader, Paul Robson. The FCA ultimately stayed its investigation and any enforcement action of Rabobank employees, including Robson, while the DoJ pursued criminal charges against them.

The following year, Robson was indicted in the US on wire fraud charges. He subsequently pled guilty and entered into a cooperation agreement with the DoJ, providing evidence and testimony against other Rabobank employees. Several months later, Allen and Conti were indicted on multiple counts of wire fraud and conspiracy to commit wire fraud and bank fraud based on evidence Robson had provided to US authorities.

At trial, Allen and Conti sought to supress Robsons testimony under the US Supreme Courts ruling in Kastigar v. United States,[3] which found that if a witness is compelled to testify, he must be granted immunity from use of the compelled testimony in subsequent criminal proceedings (so-called direct use immunity) and immunity from use of evidence derived from the testimony (so-called derivative use immunity). The DoJ contended that, in constructing the case against the defendants, the prosecution took steps to avoid the direct use of their compelled testimony, including conducting interviews independent of those conducted by the FCA. The district court sided with the prosecution, finding that Robsons review of Allen and Contis testimony to the FCA did not taint the evidence that he later provided because the DoJ had demonstrated an independent source for such evidence namely, Robsons personal experience and observations.[4] Allen and Conti were each convicted and sentenced, respectively, to two years and one year and a days imprisonment.

On appeal, Allen and Conti argued that their Fifth Amendment rights were violated when the DoJ used tainted evidence from Robson which was, in essence, derived from their own compelled testimony to the FCA. The DoJs position was that the Fifth Amendment did not apply to testimony compelled by a foreign government, which was the equivalent of statements made to a private sector employer under the threat of termination. Alternately, the DoJ argued that the evidence provided by Robson was untainted by the compelled testimony of Allen and Conti. The Second Circuit rejected the DoJs positions and unanimously reversed the convictions, holding that in order to be admissible, incriminating statements obtained by foreign officials must have been made voluntarily and cannot have been compelled, even if obtained in full compliance with the laws of the foreign government.

The protection against self-incrimination in the US is generally broader than that pertaining in the UK. The Fifth Amendment to the US Constitution states, No person...shall be compelled in any criminal case to be a witness against himself.... Courts in the US do not require every procedural step to be adhered to in order to ensure the admissibility of statements for example, foreign police officers are not required to provide Miranda warnings to inform defendants overseas of their constitutional right to remain silent.[5] However, the Second Circuits decision in Allen reinforces the decision already reached by several other circuits throughout the US that a statement must be voluntary and cannot be compelled if it is to be admissible in a criminal trial. This requirement applies regardless of whether the statement was compelled in accordance with the laws of the foreign country. In the words of Judge Jos Cabranes, who wrote the unanimous opinion in Allen, the right not to testify against oneself at trial is absolute.

In the UK, the common law and statutory protection of the privilege against self-incrimination protects a person from being compelled to produce documents or provide information which may incriminate the individual in criminal proceedings or expose him to a penalty for commission of a crime (akin to direct use immunity in the US).[6] However, this protection is not absolute; it is common for regulators to exercise their statutory investigatory powers to conduct interviews which may lead to a person being compelled to disclose incriminating information. Compelled statements obtained by the FCA may not be directly used as evidence against the accused in certain types of criminal proceedings, but this does not mean that the individual is shielded from providing the requested information, or from declining to answer questions.[7] Rather the FCA is restricted in dealing with the information in certain ways.

In addition, information derived from such compelled statements may be admissible in criminal proceedings in limited circumstances including where the accused asks a question in relation to, or adduces evidence in relation to, the compelled evidence. The FCA may also provide a copy of the transcript of a compelled interview to a co-defendant in a criminal prosecution (which is not unusual and indeed occurred when Robson was provided with the transcripts of Conti and Allens interviews), and use such a transcript to cross-examine the co-defendant. Failure to comply with an FCA statutory request for an interview or to cooperate and answer questions may be dealt with as if the individual were in contempt of court, and the penalty may include a term of imprisonment, a fine, or both.[8] Answering questions in such an interview with deliberately false or misleading information is also a criminal offence.[9]

The UKs Serious Fraud Office also has the power to compel individuals to answer questions pursuant to section 2 of the Criminal Justice Act 1987. However, answers provided during such interviews are generally not admissible against the interviewee in most types of criminal proceedings.[10]

The Second Circuits decision in Allen introduces several new obstacles that must be considered when US and overseas investigators and prosecutors seek to collaborate. US federal prosecutors will need to carefully coordinate investigative approaches with overseas regulators, and be wary of any compelled testimony obtained by foreign governments. If foreign testimony is compelled, US prosecutors will need to meet the heavy burden under Kastigar to demonstrate that evidence it seeks to use in a criminal proceeding was clearly derived from independent sources. Time will tell how significant a burden the Allen decision places on the trend in recent years for US, UK, and other international investigators to work together, particularly on cross-border white collar prosecutions.

[1] United States v. Allen et al., No. 16-898 (2nd Cir. July 19, 2017).

[2] Pursuant to section 171 of the Financial Services and Markets Act 2000 (FSMA) an investigator of the FCA (as defined in section 167 of FSMA), has the power to compel a person under investigation, or any person connected with the person under investigation, to attend an interview before the investigator or otherwise produce information required for the investigation. If a person so compelled fails to comply with such a request, the investigator may seek that the request be certified to the court, after which the court may sanction that person as if in contempt of court for non-compliance (provided there was no reasonable excuse for non-compliance). The penalty for contempt of court may include a term of imprisonment, a fine, or both. See section 177 of FSMA.

[3] 406 U.S. 441 (1972).

[4] Under Kastigar, where a witness who has invoked the Fifth Amendment is nonetheless compelled to testify, a Kastigar hearing is conducted at which the prosecution must demonstrate its case is not based on tainted compelled testimony.

[5] See, e.g., United States v. Martindale, 790 F.2d 1129, 1131-32 (4th Cir. 1986) (holding that defendants statement to British officers at Scotland Yard was admissible despite the officers failure to provide Miranda warnings).

[6] See section 14(1) of the Civil Evidence Act 1968, which applies to incrimination and penalties for domestic criminal offences only. However, an English court may exercise discretion and apply the protection where there is a risk of incrimination under foreign criminal law. See Arab Monetary Fund v Hashim [1989] 1 WLR 565as referred to inCompagnie Noga v Australia and New Zealand Banking Group Ltd [2007] EWHC 85 (Comm).

[7] See section 174 of FSMA.

[8] See section 177 of FSMA.

[9] See section 177(4) of FSMA, which provides that a person who knowingly or recklessly provides false or misleading material information to a regulator pursuant to a FSMA statutory request to provide information, will be guilty of an offence, and liable on summary conviction to a term of imprisonment not exceeding six months or a fine not exceeding the statutory maximum, or if convicted on indictment he or she will be liable to a term of imprisonment not exceeding two years, or a fine, or both.

[10] See section 2(8) of Criminal Justice Act 1987.

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US Second Circuit Finds Testimony Compelled by UK Regulators to ... - The National Law Review