The Second Circuit yesterday became the first court of appeals to address a criminal appeal regarding the governments investigation into the manipulation of the London Interbank Offered Rate (LIBOR). Its decision in United States v. Allen reversed the convictions of two former Rabobank employees accused of using their roles in the banks LIBOR submission process to rig the global interest benchmark, and not only reversed the convictions but dismissed the operative grand jury indictment. The court concluded that the government had improperly used the defendants compelled testimony against them, holding that the Fifth Amendments prohibition on the use of compelled testimony applies even when the testimony was compelled by a foreign sovereign. The decision may well have a significant impact on the increasing number of extra-territorial investigations conducted by the United States Department of Justice (DOJ), in which it partners with foreign agencies to investigate and prosecute cross-border activity.
The pair Anthony Allen and Anthony Conti were initially investigated by the United Kingdoms Financial Conduct Authority (FCA). During the investigation Allen, Conti, and other Rabobank employees were interviewed by the FCA; Allens and Contis interviews were compelled by threat of imprisonment, though they were granted direct use immunity. The FCA later brought an enforcement action against one of their co-workers, Paul Robson, disclosing relevant evidence against him, including Allens and Contis compelled testimony. During this exchange, Robson reviewed the materials over the course of two or three successive or nearly successive days, admitting to having underlined, annotated, and circled certain passages of both Allens and Contis testimony. But, in short order, the FCA then dropped the case and the DOJ stepped in.
A grand jury returned indictments against Allen and Conti in 2014, charging both with one count of conspiracy to commit wire fraud and bank fraud, and several counts of wire fraud. Robson was the sole source of certain material information for the indictment, including the source of testimony provided by FBI agent to the grand jury that Allen and Conti had participated in rigging LIBOR.
Before trial, the defendants moved under Kastigar v. United States, 406 U.S. 441 (1972), to dismiss the indictment or suppress Robsons testimony. The Supreme Courts decision in Kastigar held that the government may compel testimony from witnesses, in spite of their invoking the Fifth Amendment privilege against self-incrimination, where it confers immunity from use of that testimony and evidence derived therefrom in a subsequent criminal case. The upshot is that the government must show in cases where such testimony is at issue that its proof rests on evidence other than the compelled statements and the fruits thereof. The district court in this case resolved that it would instead address any Kastigar concerns i.e., issues regarding the use of compelled testimony under Fifth Amendments Self-Incrimination Clause at trial.
The pair were convicted. After a post-trial Kastigar hearing, the district court held that Robsons reading, marking up, and annotating the compelled testimony, and the fact that material parts of the FBI agents grand jury hearsay testimony had been derived solely from Robson, were not enough to taint the evidence Robson provided because the government had shown an independent source for such evidence, to wit, [Robsons] personal experience.
The Second Circuit disagreed. It held first that the Fifth Amendments prohibition on government use of compelled testimony in American criminal proceedings applies, even when a foreign sovereign is the actor that compelled the testimony, noting that Amendment protects against the use and derivative use of compelled testimony against an accused in such a proceeding.
Second, it held that when the government attempts to use a witness like Robson, who has been substantially exposed to a defendants compelled testimony, it is the governments burden under Kastigar to show, at a minimum, that the witnesss review of the compelled testimony did not shape, alter, or affect the evidence used by the government.
It third held that a witnesss bare, generalized incantations that reviewing those materials did not taint his or her testimony (as was the case here via leading questions of Robson at the Kastigar hearing, which produced nothing more than bare, self-serving denials from Robson) are insufficient to meet this burden of proof.
And it lastly it had no trouble concluding that introducing testimony provided by Robson a key cooperator and prominent witness before the trial and grand jury (via a hearsay presentation) was not harmless error beyond a reasonable doubt. Robsons had been the only testimony refuting Allens and Contis central argument that they had not actually engaged in rigging the LIBOR benchmark. This finding as to testimony both at trial and before the grand jury resulted in the dismissal of the indictments against Allen and Conti.
The Court rejected the governments counterarguments, including that prohibiting the use in United States Courts of testimony compelled by a foreign authority could seriously hamper the prosecution of criminal conduct that crosses international borders, by among other things, inadvertently or negligently obstructing federal prosecutions. The court noted that this risk already exists within our own constitutional structure, and that the practical outcome of our holding today is that the risk of error in coordination falls on the U.S. Government (should it seek to prosecute foreign individuals), rather than on the subjects and targets of cross-border investigations.
Read more:
Fifth Amendment Concerns Result in Overturned Convictions in First ... - Lexology (registration)
- Fifth Amendment - The Text, Origins, and Meaning of the ... - April 26th, 2014 [April 26th, 2014]
- 5th Amendment - Revolutionary War and Beyond - April 26th, 2014 [April 26th, 2014]
- Fifth Amendment to the United States Constitution ... - April 26th, 2014 [April 26th, 2014]
- Justices suggest public employees' testimony is protected - April 29th, 2014 [April 29th, 2014]
- HST 330 fifth amendment presentation - Video - May 1st, 2014 [May 1st, 2014]
- Police not sure if Sioux City murder suspect invoked 5th Amendment rights - May 3rd, 2014 [May 3rd, 2014]
- Christie Ally Samson Refuses to Give Documents to Lawmakers - May 4th, 2014 [May 4th, 2014]
- House votes to hold ex-IRS official in contempt - May 8th, 2014 [May 8th, 2014]
- House votes to hold ex-IRS official Lois Lerner in contempt of Congress - May 8th, 2014 [May 8th, 2014]
- House holds Lois Lerner in contempt - May 8th, 2014 [May 8th, 2014]
- House votes to hold former IRS official in contempt - May 8th, 2014 [May 8th, 2014]
- Articles about Fifth Amendment - Los Angeles Times - May 9th, 2014 [May 9th, 2014]
- Former PA Chairman Samson Pleads Fifth - Video - May 9th, 2014 [May 9th, 2014]
- GOP-led House votes to hold former IRS official in contempt - May 12th, 2014 [May 12th, 2014]
- No plans to arrest Lois Lerner, John Boehner says - May 13th, 2014 [May 13th, 2014]
- Im not going to testify: Witness pleads Fifth Amendment during Bangor triple murder trial - May 13th, 2014 [May 13th, 2014]
- Attorney: Defense told Corso will take Fifth - May 16th, 2014 [May 16th, 2014]
- Spokane County workers use Fifth Amendment in back-dating case - Thu, 22 May 2014 PST - May 22nd, 2014 [May 22nd, 2014]
- Shawn Vestal: County permit clerical mishap raises eyebrows - Fri, 23 May 2014 PST - May 23rd, 2014 [May 23rd, 2014]
- Sexual abuse measure could lead to wrongful convictions, attorneys say - August 31st, 2014 [August 31st, 2014]
- 5th Amendment - Laws.com - August 31st, 2014 [August 31st, 2014]
- Wildstein takes the 5th - Video - August 31st, 2014 [August 31st, 2014]
- Fifth Amendment (United States Constitution ... - September 2nd, 2014 [September 2nd, 2014]
- New bill a powerful tool to imprison sex offenders - September 3rd, 2014 [September 3rd, 2014]
- Cristin Milioti in The Good Wife - Julianna Margulies - Video - September 4th, 2014 [September 4th, 2014]
- Kansas Supreme Court: Grand jury violated man's Fifth Amendment rights - September 6th, 2014 [September 6th, 2014]
- Attorney Gwendolyn Solomon Petitions United States Supreme Court to Review Tenth Circuits Decision in Case of the IRP6 - September 9th, 2014 [September 9th, 2014]
- Texas man's conviction overturned because of Fifth Amendment violation - September 10th, 2014 [September 10th, 2014]
- Cop Says 'You Must Be Doing Something Wrong if You Invoke Your Rights' (Video) - September 12th, 2014 [September 12th, 2014]
- Public be damned Litchfield latest example - September 14th, 2014 [September 14th, 2014]
- Volokh Conspiracy: What the posse comitatus case might mean for the future of the exclusionary rule - September 15th, 2014 [September 15th, 2014]
- Fifth Amendment - Video - September 15th, 2014 [September 15th, 2014]
- Top 5 Constitution-Related Searches at FindLaw.com - September 19th, 2014 [September 19th, 2014]
- The Fifth Amendment Eminent Domain - Video - September 19th, 2014 [September 19th, 2014]
- Apple And Google Will Force A Legal Battle Over The Privacy Of Your Passcode - September 20th, 2014 [September 20th, 2014]
- Civics- The Fifth Amendment (Sarah Hutchinson) - Video - September 20th, 2014 [September 20th, 2014]
- Google and Apple Wont Unlock Your Phone, But a Court Can Make You Do It - September 22nd, 2014 [September 22nd, 2014]
- GOP fumes over Lerner remarks - September 23rd, 2014 [September 23rd, 2014]
- Assistant to DeKalb CEO Ellis invokes 5th Amendment 30 times - September 23rd, 2014 [September 23rd, 2014]
- GOP fumes as Lois Lerner talks to press but snubs Congress - September 24th, 2014 [September 24th, 2014]
- Cry us a river, Lois Lerner - September 24th, 2014 [September 24th, 2014]
- Can You Go to Jail for Refusing to Testify? - September 25th, 2014 [September 25th, 2014]
- Fifth Amendment Projectb - Video - September 25th, 2014 [September 25th, 2014]
- The Commander Cody Band - Take The Fifth Amendment - 8/5/1977 - Convention Hall (Official) - Video - September 27th, 2014 [September 27th, 2014]
- Joey Gallo Takes The Fifth Amendment - Video - September 29th, 2014 [September 29th, 2014]
- Batavia High School teacher John Dryden retires from school district - October 3rd, 2014 [October 3rd, 2014]
- Batavia High School teacher John Dryden retires - October 4th, 2014 [October 4th, 2014]
- The Fifth Amendment Please Don't Leave Me Now - Video - October 6th, 2014 [October 6th, 2014]
- Man Denied Fifth Amendment While In Court Wearing Anti-Police Shirt, Still Won His Case (Video) - October 7th, 2014 [October 7th, 2014]
- Batavia teacher previously involved in Fifth Amendment dispute retires - October 7th, 2014 [October 7th, 2014]
- INFORMUCATE: THE FIFTH AMENDMENT - Video - October 8th, 2014 [October 8th, 2014]
- Fairholme Funds Appeals Fannie Mae and Freddie Mac Verdict - October 10th, 2014 [October 10th, 2014]
- Fresno Police Officer violated fifth amendment at a dui checkpoint. - Video - October 10th, 2014 [October 10th, 2014]
- Code cases: Police want phone access, but some pass - October 12th, 2014 [October 12th, 2014]
- Fresno Police Officer violated fifth amendment at a dui checkpoint. part 2 - Video - October 12th, 2014 [October 12th, 2014]
- Property Rights | Century Law Group - Video - October 20th, 2014 [October 20th, 2014]
- Agents questioned, Askar takes the Fifth in Trombetta hearing - October 21st, 2014 [October 21st, 2014]
- Scott and Crist have heated and personal final debate before November election - October 22nd, 2014 [October 22nd, 2014]
- Detective dodges questions about allegations made during rape investigation - October 25th, 2014 [October 25th, 2014]
- Disciplinary hearing for SB officer moved to later date - Video - October 27th, 2014 [October 27th, 2014]
- Judge Rules Suspect Can Be Required To Unlock Phone With Fingerprint - October 31st, 2014 [October 31st, 2014]
- Virginia judge: Police can demand a suspect unlock a phone with a fingerprint - October 31st, 2014 [October 31st, 2014]
- Court rules: Touch ID is not protected by the Fifth Amendment but Passcodes are - October 31st, 2014 [October 31st, 2014]
- Virginia Court: LEOs Can Force You To Provide Fingerprint To Unlock Your Phone - November 1st, 2014 [November 1st, 2014]
- Civil Rights and Civil Liberties - Fifth Amendment - Shh! The Right to Remain Silent - Video - November 1st, 2014 [November 1st, 2014]
- Your Fingerprints Belong To Us: Iphone Users Forfeit 5th Amendment - Video - November 2nd, 2014 [November 2nd, 2014]
- All Your Fingerprints Are Belong To Us: iPhone Users Forfeit Fifth Amendment - Video - November 2nd, 2014 [November 2nd, 2014]
- Log into Tax-News+ - November 4th, 2014 [November 4th, 2014]
- Editorial: Applying the Fifth Amendment in the era of smartphones - November 4th, 2014 [November 4th, 2014]
- Volokh Conspiracy: Virginia state trial court ruling on the Fifth Amendment and smart phones - November 4th, 2014 [November 4th, 2014]
- Fingerprints: iPhone Users Forfeit Fifth Amendment. - Video - November 4th, 2014 [November 4th, 2014]
- New ruling may affect police access to smartphones - Video - November 6th, 2014 [November 6th, 2014]
- Why the Constitution Can Protect Passwords But Not Fingerprint Scans - November 7th, 2014 [November 7th, 2014]
- Virginia state trial court ruling on the Fifth Amendment ... - November 7th, 2014 [November 7th, 2014]
- Is taking the fifth amendment a bad idea? - Video - November 7th, 2014 [November 7th, 2014]
- IT Security TV Show 4 November 2014 - iPhone Users Forfeit Fifth Amendment - Video - November 7th, 2014 [November 7th, 2014]
- the fifth amendment happy parody project song for connections - Video - November 8th, 2014 [November 8th, 2014]
- 13-year-olds murder conviction overturned - November 11th, 2014 [November 11th, 2014]
- Your Fifth Amendment Rights DO NOT Cover Biometrics - Video - November 11th, 2014 [November 11th, 2014]
- Philadelphia charter school officials pleaded Fifth 77 times - November 12th, 2014 [November 12th, 2014]