When Federal Prosecutors Break Bad – Federal Judge Orders Investigation of Prosecutors’ Misconduct in Criminal Sanctions Case

Michael Volkov
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The Volkov Law Group

Federal prosecutors take an oath to execute their duties faithfully. Yet, like all professions, some federal prosecutors have violated this oath. For years, prosecutorial misconduct has come under heightened scrutiny.  Do not get me wrong – most prosecutors (except for a small number) may engage in misconduct.  There are numerous high-profile cases where misconduct has been egregious and troublesome (e.g. Senator Ted Stevens prosecution).

I may be naïve but throughout my career, federal prosecutor misconduct was rare – frankly, there was too much to lose, a law license, a reputation and the potential for earning a living.  A law license is too valuable to lose. As a federal prosecutor representing the United States in court, we were committed to “doing the right thing with integrity” in recognition of the extraordinary power we exercised as prosecutors.

The importance of prosecutorial ethics has been underscored by recent events surrounding the prosecution of a criminal sanctions case in the Southern District of New York.  Federal judge Alison Nathan issued a decision criticizing the actions of two federal prosecutors and their handling of a criminal sanctions cases.  In a critical opinion, the judge lambasted two prosecutors for covering up the mishandling of evidence and their attempt to use evidence inappropriately collected by the FBI.

The government’s criminal case against Ali Sadr Hashemi Nejad was a high-profile sanctions case with allegations that Nejad used a sophisticated scheme to evade U.S. sanctions against Iran and launder money. 

After a lengthy trial, the jury convicted Nejad.  Prior to sentencing, the U.S. Attorney’s Office and the defendant jointly moved to dismiss the case.  The government moved to dismiss because its prosecution was “marred by repeated failures to disclose exculpatory evidence and misuse of search-warrant returns.”

The Court focused on one of many documents that was not properly disclosed to the defense – a letter from Commerzbank to the Office of Foreign Assets Control, which was exculpatory.  Federal prosecutors shared the letter during the trial.

Once the government realized its disclosure obligation, it did not forthrightly disclose the document to the defense; instead, prosecutors buried it in a list of previously disclosed documents and sought to turn it over to the defense without drawing any attention to its late disclosure.

The Court ordered prosecutors to submit declarations providing explanations of when they learned about the document,  their disclosure obligations and handling of the issue.  Even after they filed the declarations, the prosecutors learned they had to provide additional information.

The Court was troubled by the prosecutors’ failure to promptly investigate its disclosure violations, including the one exculpatory letter to OFAC.  In the Court’s view, the delay in disclosure, along with other misconduct, demonstrated a “systemic disregard of their disclosure obligations.  The Court noted that “[p]rosecutors then compounded these missteps through a sustained pattern of refusing to fess up.” The Court, however, did not conclude that any of the prosecutors “knowingly withheld exculpatory information or intentionally misrepresented facts to the Court.”

The Court recommended a “full investigation” by the Department of Justice’s Office of Professional Responsibility.  The government represented that it is implementing new training protocols for prosecutors and FBI case agents and improving the infrastructure for data management.

The Court recounted in detail that the federal prosecutors’ failure to disclose the Commerzbank to OFAC letter was the last in a long line of disclosure missteps.  The government’s misstatements about the document followed other misstatements about the handling of evidence collected by the investigation conduct initially by the NY District Attorney’s Office.

The Commerzbank letter was part of a voluntary disclosure by the bank to OFAC.  Commerzbank was the intermediary involved in the $29 million payment.  The prosecutors did not confirm whether the letter was ever disclosed to the defense until after the trial began.  The Court found that the prosecutors should have identified the document earlier and made sure it was disclosed to the defense in advance of the trial.  The document undercut the government’s case because it suggested that the manner in which the transaction structured the transactions was neither intended to nor likely to obstruct OFAC enforcement.

The Court noted that prosecutors also failed to produce several categories of documents because they did not adequately communicate with the FBI about the materials in its possession.  On one occasion, a prosecutor learned of an undisclosed document and considered asking a supervisor if it should be produced, but then failed to take any further steps.  Prosecutors also failed to communicate with the FBI about its searches and returns from the NY District Attorney, which caused the prosecutors to make numerous misstatements in representations to the Court.

The Court ordered public disclosure of all the filings so that “sunlight” would result in accountability.  The government obtained a guilty verdict and then moved to dismiss the case in light of the misconduct.  The Court stated “[t]he reasons it did so bear on the accountability of public officials and on public confidence in the administration of justice.”  The Court further noted that “it is the Court’s hope and belief that DOJ leadership has and will take steps to ensure that these mistakes are not repeated.”

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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