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UNITED STATES v. BAILIN

February 16, 1990

UNITED STATES OF AMERICA, Plaintiff
v.
ROBERT H. BAILIN, et al., Defendants


William T. Hart, United States District Judge.


The opinion of the court was delivered by: HART

WILLIAM T. HART, UNITED STATES DISTRICT JUDGE

 Under Fed.R.Crim.P. Rule 44(c), the court is required to inquire into the propriety of counsel's joint representation of two or more defendants joined for trial. "Unless it appears that there is good cause to believe no conflict of interest is likely to arise, the court shall take such measures as may be appropriate to protect each defendant's right to counsel." Fed.R.Crim.P. Rule 44(c). In three instances, defendants have retained attorneys associated in the practice of law to represent them. Those defendants were ordered to file declarations of their knowledge of the right to separate, conflict-free representation, and to state whether or not they were willing to waive any possible conflicts of interest that might arise from being jointly represented along with a codefendant. The Government was ordered to file a statement of any facts to its knowledge that may bear upon the existence of any such conflicts. The case is presently before the court pursuant to the declarations of the defendants and the Government's consolidated response.

 I. Factual Background

 The 400-count indictment in this case names 21 traders in the Japanese Yen pit of the Chicago Mercantile Exchange ("CME") as participants in a conspiracy to conduct their affairs in the pit through a pattern of racketeering aimed at defrauding their customers in violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961 et seq. Three of the traders are also alleged to have committed substantive violations of RICO through their illegal trading practices. The predicate offenses for the RICO conspiracy and substantive RICO counts consist of alleged violations of the Commodities Exchange Act ("CEA"), 7 U.S.C. § 1 et seq., and violations of the federal statutes prohibiting mail fraud and wire fraud, 18 U.S.C. §§ 1341 and 1343, respectively. The Government is seeking forfeiture of the assets of some of the traders pursuant to the provisions of RICO. 18 U.S.C. § 1961(a).

 Five of the 21 named defendants have pled guilty to the charges against them. Presumably, these defendants will testify at trial as witnesses for the Government. Of the remaining defendants, Michael Smith and James Marren have retained two lawyers from the law firm of Cotsirilos, Crowley, Stephenson, Tighe & Streicker to represent them ("Cotsirilos, Crowley"). *fn1" Defendants Sam Cali and Michael Greenfield have retained two lawyers from the law firm of Arnstein & Lehr to represent them, *fn2" and defendants John Baker and Matthew Newberger have retained lawyers from the law firm of Jenner & Block. *fn3" Before the court may accept the waivers of the six defendants, it must review the nature of the charges against them, the extent of their understanding of the conflicts of interest that may arise, and the scope of their waivers of those conflicts.

 1. Defendants Smith and Marren

 Under the present indictment, defendants Michael Smith and James Marren are apparently coequal defendants. Smith is charged in a total of 32 counts while Marren is charged in 30. Both are named as participants in the central RICO conspiracy count. In addition, Smith is charged in 19 counts with violating the CEA, five counts of mail fraud, and seven counts of wire fraud. Marren is charged in 16 counts of violating the CEA, ten counts of mail fraud and three counts of wire fraud. Of these overall charges, Smith and Marren are alleged to have worked together in only one transaction, which is the subject of one count of mail fraud and one count of wire fraud. The Government is seeking forfeiture from both Smith and Marren. Finally, the Government does not allege that either defendant has made any incriminating statements about the other. Nor is the Government presently pursuing negotiations with either defendant.

 In their declarations pursuant to this court's order, both Smith and Marren state that they sought to retain attorneys from the law firm of Cotsirilos, Crowley because they believed that the attorneys from that firm were particularly qualified to represent them. Defendants also state that they are fully aware that the firm is representing the other and that this joint representation could result in certain conflicts of interest for their respective attorneys. Smith and Marren further state that they understand that they have a right to be represented by an attorney who is not presently representing a codefendant. In addition, Smith and Marren specifically note their understanding that the Assistant United States Attorney may attempt to negotiate with either or both of them by offering more lenient treatment in return for cooperation and information. They are both aware that such negotiations might result in a deal with the Government which might jeopardize their respective attorney-client relationships. Smith and Marren also understand that if the Government were to make such an offer, it could result in significant conflicts of interest for their attorneys. In the close of their declarations, defendants explicitly waive any possible conflicts that might arise from their joint representation by attorneys from Cotsirilos, Crowley. In support of their proffered waivers, Smith and Marren consent to "any other remedy this court might interpose so as not to delay the scheduled trial of this case as a result of the firm's joint representation."

 2. Defendants Cali and Greenfield

 Under the present indictment, defendants Cali and Greenfield are not coequal defendants with regard to their potential culpability. Cali is charged in a total of 96 counts of the indictment. He is named as a participant in the RICO conspiracy count, as well as in a separate count alleging that he violated RICO by participating in the CME's affairs through a pattern of racketeering. On the basis of this latter count, the Government is seeking forfeiture of any assets Cali earned through this conduct. Of the remaining counts, 56 allege violations of the CME, six counts involve allegations of mail fraud, and 35 counts involve allegations of wire fraud.

 Greenfield is charged in a total of 18 counts. He is named as a coconspirator in the RICO conspiracy, but is not charged with individually violating RICO. He is also charged with seven counts of violating the CME, seven counts of mail fraud, and one count of wire fraud. The Government is not seeking forfeiture from Greenfield. Cali and Greenfield are not alleged to have worked together on any of the specified transactions. Nor does the Government allege that either defendant made any inculpatory statements about the other, or that it is presently negotiating with either defendant.

 As noted earlier, Cali was already being represented by Thomas Durkin of Arnstein & Lehr when Greenfield's original counsel sought leave to withdraw and Greenfield petitioned the court to grant Kelly leave to substitute as his counsel of record. In their declarations, Cali and Greenfield state that they met with Durkin and Kelly on two separate occasions prior to filing the motion for substitution in order to discuss the potential conflicts of interests involved in their joint representation. Both defendants state that they were advised about their absolute right to be represented by an attorney free from any conflicts of interests, and that their joint representation may give rise to certain conflicts. They state that they were specifically told about their different levels of potential culpability under the indictment and how this could result in a conflict of interest for the firm during any pretrial negotiations with the Government. They were also informed of the conflicts that might arise if either of them were to testify at trial on behalf of the Government. Cali and Greenfield also state that they are aware that their joint representation may affect the strategic decisions their attorneys might make at trial. In their declarations, both defendants conclude by stating that they believe that they have been adequately ...


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