MEDIA

September 12, 2003

On Ineffective Assistance of Counsel, SEC’s Overreaching

Published in: New York Law Journal | volume 230
Written by: Peter R. Schlam and Harvey M. Stone

In the U.S. District Court for the Eastern District of New York, amid a slew of newly issued decisions by Judge Jack B. Weinstein denying habeas corpus relief to petitioners challenging state convictions, Judge Weinstein granted the writ in two cases where the record showed ineffective assistance of counsel–in one case, for failing to call an important witness; in another, for failing to use medical evidence as impeachment. In a decision critical of the Securities and Exchange Commission’s (SEC) overreaching, Judge Thomas C. Platt granted the SEC’s motion for damages, but limited the recovery to one dollar.

Effective Assistance of Counsel

In Batten v. Griener, 97 CV 2378 (EDNY, Aug. 26, 2003), Judge Weinstein granted a writ of habeas corpus based on ineffective assistance and Brady violations. Faulting counsel’s failure to call a particular witness who could have provided exculpatory testimony, Judge Weinstein held that, despite the witness’ reluctance to testify and her possible hostility to the defense, counsel could have avoided any risk by forcing her to testify first out of the jury’s presence.

In 1984, petitioner was convicted in state court of second-degree murder. The evidence against him came almost solely from a single eyewitness, an employee of a furniture store who was present when two men entered, demanded money and killed the owner. No one else was in the store at the time. The entire incident took place over 15 minutes, from about 11:30 to 11:45 a.m.

Petitioner testified in his own defense. He said that he had spent the morning with some acquaintances until about 11:55 a.m. and then visited his godfather at an elementary school where his godfather taught. The godfather and one of the acquaintances testified as alibi witnesses.

The defense at trial was mistaken identity. In summation, counsel emphasized discrepancies between the eyewitness’ description of the shooter (‘clean-shaven" with a "little mustache" and no beard or goatee) and petitioner’s appearance in the arrest photograph taken only three days after the incident (showing prominent sideburns, mustache and goatee). The prosecutor, in his summation, emphasized that the eyewitness had 10 or 15 minutes to observe the shooter and that no one contradicted the witness’ testimony.

The jury never learned of certain other pieces of evidence. For example, a Ms. Clark had told the prosecution that she was in the store with her aunt just before the shooting, and left when a "Spanish man with an Afro" came in who "looked suspicious." Some three minutes later, she heard commotion and soon saw police arrive. Ms. Clark viewed a lineup with petitioner in it, but did not recognize him.

Ms. Clark, who had nightmares about the case, did not honor separate subpoenas by the defense and prosecution. In her words, rather than testifying, she would "take 25 to life myself." Given the opportunity to have her produced through New York’s material witness statutes, defense counsel refused on the ground that, if forced to testify, Ms. Clark could be hostile to his client.

Judge Weinstein stated:

Trial counsel’s efforts to secure Clark’s testimony were inadequate and cannot be excused as reasonable trial strategy. Clark’s testimony would potentially have established that the prosecution’s lone eyewitness … did not observe the perpetrator of the crime for a lengthy period of time, as he contended in his statements at trial. …

It is of no moment that Clark might have been hostile to the defense for dragging her into court pursuant to a material witness order. Having failed to honor duly executed subpoenas, Clark would not have been allowed to testify by the trial court before being questioned by counsel and the court at a hearing outside of the presence of the jury. Petitioner could in no way have been prejudiced by such testimony. … (Slip op. 15-16)

Counsel’s performance therefore fell below a "reasonable professional standard.’

Beyond this, several exculpatory police reports were apparently not turned over to the defense. Whether the problem is treated as a Brady violation or incompetence of counsel, the result would be the same. As Judge Weinstein observed, "if counsel had in fact seen the reports and failed to use them, his representation of petitioner would not have met minimum constitutional standards." (Slip op. 26)

In Harris v. Artuz, 97 CV 2135 (EDNY, Aug. 26, 2003), Judge Weinstein granted a writ of habeas corpus where defense counsel had "sealed petitioner’s fate" by failing to introduce critical impeachment evidence.

Petitioner was convicted of murdering a man whose shearling coat he allegedly tried to take and shooting another man in the hand during the same incident. The evidence against petitioner was primarily the testimony of four eyewitnesses, including the man who was purportedly shot in the hand. Medical records in possession of the defense indicate that the man had been stabbed in the hand and not shot. These records contradicted the testimony of all four eyewitnesses, strongly suggesting their possible collusion in framing petitioner for a crime that one of them committed.

Counsel did not seek to impeach the witnesses with the medical records and at no time referred to them during trial.

Counsel’s failure could not reasonably be dismissed as strategic. As Judge Weinstein stated, "there was no downside to introducing the medical evidence for impeachment purposes," and by not doing so, "counsel was forced to make concessions that were not only counterfactual, but also had the effect of making petitioner’s conviction almost inevitable." Slip op. 16-17. On this record, Judge Weinstein found it "exceedingly unlikely" that counsel was even aware of the evidence.

The court was not persuaded by respondent’s attempts to downplay the prejudice with the usual "overwhelming evidence" refrain. Had the jury understood that the hand wound was caused by a stabbing rather than a gunshot, the prosecution case would have seemed suspect. As Judge Weinstein noted, "Even without further guidance from skillful defense counsel, any reasonable juror would be forced to ponder how four friends managed to testify to the same, physically impossible details." (Slip op. 18)

SEC Suit: Nominal Damages

In Securities and Exchange Commission v. Smath, 99 CV 0523 (EDNY, Aug.18, 2003), Judge Platt awarded damages of only $1 to the SEC in its civil action against Joseph Falcone, who had been convicted of insider trading in an underlying criminal case. Citing a host of factors, including the statutory stretch necessary to consider Mr. Falcone guilty in the criminal case, Judge Platt’s view was, "Enough is enough.’

The SEC moved for disgorgement totaling $5,354.38 in profits and commissions, plus prejudgment interest and penalties three times greater than profit. As revealed in the criminal case, an employee for a distributor of Business Week faxed to a broker the names of companies to be listed in that publication’s "Inside Wall Street" column. The broker relayed the information to Mr. Falcone, then a broker at Prudential Securities.

Judge Platt, who had been "reluctant" to affirm the conviction, agreed with the defense here that Mr. Falcone was not a true insider and the information obtained was nonpublic. The court also noted (among other factors) that: (1) while any profit might be owing to the victims in this case, there is no basis "to reward the SEC for spending tens of thousands of taxpayer dollars" in pursuing this claim; (2) the SEC’s efforts were "punitive and vindictive’; (3) Mr. Falcone has already been severely punished by the conviction, $75,000 in legal fees, and his loss of license (he now works as a manager at a Dunkin’ Donuts chain); and (4) the U.S. Court of Appeals for the Second Circuit conceded, in upholding the government’s "misappropriation" theory to sustain the conviction, that Mr. Falcone’s actions did not fall within the traditional confines of insider trading. For these reasons the SEC was entitled to no more than nominal damages.

Peter R. Schlam and Harvey M. Stone are partners at Schlam Stone & Dolan.

[This article is reprinted with permission from the September 12, 2003, issue of the New York Law Journal. Copyright © 2007 ALM Properties, Inc. All rights reserved. Further duplication without permission is prohibited.]