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United States v. Palivos

August 12, 2010


The opinion of the court was delivered by: Joan Humphrey Lefkow United States District Judge

(re: No. 00 CR 1065-5)


Peter Palivos has filed a motion under 28 U.S.C. § 2255 ("2255 motion") attacking his judgment of conviction of conspiracy to obstruct justice entered in this court on November 2, 2005, case number 00 CR 1065-5. The judgment was affirmed on April 10, 2007. United States v. Palivos, 486 F.3d 250 (7th Cir.).*fn1 This document concerns certain motions threshold to disposition of the 2255 motion, namely, Palivos's motion to disqualify Assistant United States Attorneys Marsha McClellan and William Hogan from representing the United States in defense of the motion (Dkt. No. 16), Palivos's motion for discovery (Dkt No. 18), Palivos's motion to amend (Dkt No. 38), the United States' motion for entry of an order finding the attorney-client privilege waived or, in the alternative, an order striking Palivos's 2255 motion (Dkt. No. 32), and Palivos's renewed motion to disqualify and for leave to take discovery (Dkt. No. 34).

A. Palivos's Motion to Disqualify

One of the claims Palivos makes in his 2255 motion is based on proffered evidence that AUSA Hogan knowingly withheld exculpatory information from him--evidence that would have proved his actual innocence--and knowingly suborned perjury at Palivos's trial. To show lack of procedural default (i.e., that the issues could not have been raised at trial, post-trial or on direct appeal), Palivos represents that the information was "recently uncovered" during an investigation launched by the United States House of Representatives, Committee on the Judiciary, into the United States Attorney's misconduct during the prosecution of Palivos. Memorandum of Law in Support of Motion Under 28 U.S.C. § 2255 ( "Palivos 2255 Memorandum") at 2. Because of these allegations, Palivos contends that Hogan and McClellan, who was co-counsel during the prosecution, should be disqualified from representing the United States in defense of the § 2255 attack because Hogan would be forced to respond to the question whether he failed to disclose exonerating evidence, placing him in a position in conflict with the interest of the government he represents.

With exceptions not relevant here, "[a] lawyer shall not represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict of interest exists if . . . there is a significant risk that the representation of one or more clients will be materially limited . . . by a personal interest of the lawyer." ABA Model Rules of Professional Conduct, Rule 1.7(a)(2); see Local Rules of Professional Conduct, LR 83.51.7(b). Magistrate Judge Schenkier concisely summarized governing law in Commonwealth Insurance Co. v. Stone Container Corp., 178 F. Supp. 2d 938, 943 (N.D. Ill. 2001):

. . "The maintenance of public confidence in the propriety of the conduct of those associated with the administration of justice is so important a consideration . . . that a court may disqualify an attorney for failing to avoid even the appearance of impropriety." International Business Machines Corp. v. Levin, 579 F.2d 271, 283 (3d Cir. 1978). At the same time, we recognize that motions for disqualification "should be viewed with extreme caution for they can be misused as techniques of harassment." Freeman v. Chicago Musical Instrument Co., 689 F.2d 715, 722 (7th Cir. 1982). For this reason, "disqualification is 'a drastic measure which courts should hesitate to impose except when absolutely necessary.'" Owen v. Wangerin, 985 F.2d 312, 317 (7th Cir. 1993) (quoting Schiessle v. Stephens, 717 F.2d 417-19 (7th Cir. 1983)). The moving party "bears a heavy burden of proving facts required for disqualification." Evans v. Artek Sys. Corp., 715 F.2d 788, 794 (2d Cir. 1983) (cited with approval in Guillen v. City of Chicago, 956 F.Supp. 1416, 1421 (N.D. Ill. 1997)).

Under Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed. 2d 215 (1963), the government must disclose favorable evidence to the accused where evidence is material to guilt or punishment. Giglio v. United States, 405 U.S. 150 (1972), confirmed that the rule applies to impeaching evidence as well evidence of the elements of the crime. See id. at 154, 92 S.Ct. at 766 ("When the reliability of a given witness may well be determinative of guilt or innocence, non-disclosure of evidence affecting credibility falls within [Brady]."). In Giglio, the prosecution had failed to produce evidence that the government had promised the critical witness he would not be prosecuted if he agreed to testify against the defendant and, to the contrary, had attested that such a promise had not been made. Because the evidence was material to the witness's credibility, the Court held the defendant's right to due process violated. Evidence is material if it has a reasonable likelihood of affecting the judgment of the jury. Giglio, 405 U.S. 150, 154, 766, 92 S.Ct. at 766, 31 L.Ed. 2d 104. "Suppressed evidence that could have been used to impeach a government witness can affect the outcome if it is not cumulative of other impeachment offered at trial." United States v Wilson, 481 F.3d 475, 480 (7th Cir. 2007). Undisclosed impeachment evidence would not produce a different result if the testimony of the witness against whom it is offered was strongly corroborated by other evidence. See Conley, 415 F.3d at 190-91. Whether omitted by design or neglect, the prosecutor bears the responsibility for non-production of such evidence. Wilson, 481 F. 3d at 480. In applying these principles, this court has endeavored to determine whether Palivos has demonstrated at least a colorable evidentiary basis for the accusations against Hogan that he failed to turn over material evidence to Palivos.

An important piece of evidence against Palivos came from cooperating witness Nicholas Black, a real estate lawyer who had represented an entity called JACPG, Inc., in the transaction the jury determined to be fraudulent. (The government offered evidence that Palivos was the "P" in JACPG). Black, who pleaded guilty pursuant to a plea agreement, testified that Palivos had participated in the creation of notes for a file that would appear to have been written in 1996 at the time of the transaction but were actually written by Black after the defendants learned they were being investigated. According to Black's grand jury testimony, he created the notes on "approximately November 14, 2000, or November 15, 2000." Exh. 7 to Palivos 2255 Memorandum at 43. Black delivered the file containing fabricated notes to the Inspector General of the Small Business Administration on November 15, 2000. Dean Kalamatianos, an attorney who worked with Black, testified that Black later told him that Palivos had asked him to prepare backdated notes. A government agent testified that Black had admitted to him that he fabricated the notes. The government also presented the testimony of a forensics expert who testified based on her examination of the documents that the notes had not been written contemporaneously with the transaction.

Palivos contends that a House Judiciary Committee investigation has demonstrated Hogan's misconduct, specifically, that the government possessed evidence conclusively proving that these notes were created prior to November 7, 2000. He states that co-defendant Peter G. Bouzanis (a fugitive who lives in Greece) and his Greek attorney had copies of the two notes on November 7, 2000, a week before Black said they were written. Palivos cites as proof materials that reached the Committee indirectly from Palivos,*fn2 which he identifies as "an affidavit from a Greek attorney attesting that he and his client [Bouzanis] . . . had these notes in their file before November 14 or 15 and that he (the attorney) mailed that file to Mr. Hogan[,]" Motion to Disqualify at ¶ 9, prior to the trial in this case.*fn3

As it turns out, the record before this court contains no affidavit of Bouzanis's attorney. It does contain a cover letter dated September 8, 2003 from Sotirios Bregiannos, who states that he is an attorney in Greece representing Bouzanis. Exh 13 to Palivos 2255 Memorandum. The letter is directed to Adam Charnes, Deputy Assistant Attorney General, in Washington, D.C., apparently conveying unspecified materials related to the case. One of the eight pages of documents in the same exhibit (although there is no authentication that these were the contents of the package, the court is only assuming so) is an affidavit of Bouzanis dated September 8, 2003. Two pages appear to be Black's backdated notes. The lawyer also states that "the attorney handling the case," presumably Hogan, refused to accept the enclosed documents unless Bouzanis agreed to cooperate. The referenced shipping documents indicate that a package was delivered to a shipper in Greece on September 9, 2003, and one of the documents bears the address of the United States Attorney in Chicago. The record contains no letter of transmittal at any time to Hogan or McClellan or the United States Attorney in this district indicating the contents of such a mailing, if there was one. Confirmation of delivery is not apparent as far as the court can discern. Exh. 11 to Palivos 2255 Memorandum. Bouzanis's affidavit states that Black gave him "the file" consisting of 73 pages on or about November 7, 2000, and he took it to Greece on November 14, 2000. His lawyer shipped this same 73-page file to Hogan on September 9, 2003. Exh. 13 to Palivos 2255 Memorandum..

In an affidavit dated January 21, 2005, which appears to have been submitted to the House Judiciary Committee and passed on to Attorney General Michael Mukasey on January 16, 2008, Bouzanis states that Black gave him a copy of the file on November 7, 2000, and that when he shipped the 73-page file to Hogan, the notes Black admitted to fabricating were within. Id., Exh. 10 at fourth page, ¶ 10. If the notes were created after Black found the file on November 3 and before he gave it Bouzanis on November 7, Palivos reasons, Black was lying about two meetings with Palivos between November 3 and the date he said he wrote the notes, November 14 or 15. Bouzanis signed another affidavit dated May 5, 2005 stating he had the notes before November 14, 2000. Exh. 14 to Palivos 2255 Memorandum.

Palivos's presentation has serious defects. First, there is no corroboration of anything Bouzanis has to say. There is no independent evidence that Bouzanis met with Black on November 7, 2000. Moreover, Bouzanis's Greek lawyer has not attested that he sent anything to Hogan, much less that he sent a copy of Black's file containing the disputed notes. The purported proof of shipping is unauthenticated and opaque as to the date of delivery or item(s) delivered. Indeed, the letter from Bouzanis's lawyer dated September 8, 2003, implied to be the cover letter for the package, is addressed to Mr. Charnes. The lawyer's letter merely contains a broad denial of Bouzanis's (not Palivos's) guilt, a conclusion resting on no admissible foundation. Palivos in reply is shocked that the government did not turn over during trial a memorandum (Exh. 1 to Gov't Response to Motion for Discovery) reflecting a telephone conversation between Hogan and Bouzanis on September 26, 2003 (during trial), but he does not specify why a memorandum that does not mention Palivos and merely professes the innocence of Bouzanis who would not become a witness at trial, was material to his defense. Without credible evidence that Hogan had information that Black gave the notes to Bouzanis by November 7, the accusation of prosecutorial misconduct fails.

Moreover, this court finds no particular reason to exalt Palivos's presentation over what it is because the House Judiciary Committee launched an investigation about prosecutorial misconduct. According to documents Palivos submits, two subcommittees of the House Committee on the Judiciary held a joint hearing on allegations of selective prosecution, and "the erosion of public confidence in our federal judicial system." Exh. 9 to Palivos 2255 Memorandum. These documents reflect that the committees were concerned about whether the Department of Justice had become "a political arm of the Bush Administration." Palivos is one among a number prosecutions concerning which the committee had received reports of prosecutions based on a defendant's Democratic political affiliation. The Palivos letters were entered into the record of the hearing. Id. at 2 of 2. At the Committee's request, the Department of Justice did review the matter and closed the file as not warranting further ...

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