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When Government Misconduct is Worse Than the Crime They’re Investigating

William Walters, a big-time professional sports gambler, was convicted after a trial in New York of extremely substantial insider trading. There wasn’t much question about Walters’ guilt, and the District Court sentenced him to serve five years in jail, forfeit some $25 million, pay restitution of approximately $9 million, and pay a fine of $10 million. The Second Circuit Court of Appeals just this month remanded the case to the trial judge to reconsider the restitution computation. But that was all. Walters’ prison sentence remained fixed at 60 months – 5 years!  

The principal claim by Walters on appeal was not about innocence or guilt. Rather, as below, he argued that the entire case should be dismissed – outright – because of “extraordinary government misconduct.” That is, an FBI special agent leaked confidential grand jury material about the case to the Wall Street Journal and The New York Times. Other government personnel may have been complicit as well, particularly in not candidly addressing it.  To be sure, there isn’t much question about the leak or that it constituted serious, maybe even illegal, conduct. 

Still, the climb for a defendant to gain an indictment’s dismissal on account of government misconduct is almost vertical. It is, indeed, virtually impossible, particularly if the defendant was not prejudiced by the conduct, as may have been the case here.  There are other, albeit less harsh deterrents – public discipline, termination from employment, financial penalties, and so on.  But let’s face it.  Criminal defendants and their lawyers don’t care one whit if the offending official is fired or if the government is embarrassed in a harshly worded opinion by a court – they only want to undo the prosecution or soften the punishment.

So maybe there’s a hint of something worthwhile to come out of the Walters case alluded to in a perfectly brief concurring opinion by Circuit Judge Dennis Jacobs:

Walters’s crime was the illegal leaking of confidential information, which is why he is going to jail for five years.  The arresting feature of this case is that the supervisor of the FBI investigation was likewise involved in the illegal leaking of confidential information; and the leak of grand jury testimony is in some respects more egregious than anything Walters did – the FBI supervisor took an oath to uphold the law and was acting in a supervisory capacity to discharge an important public function.

The district court had discretion to forgo a hearing on what happened still, without a hearing, it is unknown how far or where the abuse reached.  The FBI depends on the confidence of the public, jurors and judges.  That confidence is critical to its mission; so this kind of thing is very bad for business.

In just two paragraphs, Judge Jacobs seamlessly articulated the irony here.  The FBI’s conduct may actually have been worse than the defendant’s.  Let that sink in for a second.  Should that fact alone have played into Walters’ sentence?  The federal sentencing guidelines have not been mandatory since 2005.  That said, doesn’t a sentencing judge then have the right, maybe an obligation, in determining the appropriate sentence, to take into account the government’s misconduct in having leaked confidential information?  Yes, dismissing a case outright and giving Walters a “windfall” may be too extreme a remedy and the Supreme Court has basically denied defendants the remedy of dismissal; but a reduction of sentence is hardly the same thing.  

Although Walters didn’t raise it at sentence or on appeal (probably for tactical reasons, lest it undermine his argument seeking outright dismissal), it is noteworthy that the probation department, the trial court’s neutral representative, recommended a sentence of only 366 days in its pre-sentence report (PSR). Despite that lenient recommendation, the government recommended that the trial judge impose a “guidelines sentence”, which could have gone as high as ten years. Given the government’s misconduct, however – pervasive in the view of the defense; the conduct of “one rogue agent” as the government saw it – shouldn’t the government have been penalized in some way for the conduct that lay at its doorstep in a manner that might benefit the defendant? 

There was a time that dismissal based on government misconduct was a remedy more easily available to a defendant. No longer. The Supreme Court has essentially eliminated that remedy in all but the most extreme of cases. Put the legal procedural spin on it that you want – maybe, one might argue, the government should essentially be estopped from arguing for a harsh sentence when faced with its own offending, perhaps even “more egregious” conduct, as Judge Jacobs put it.  But at bottom, if one purpose of sentencing is to promote respect for the law, why then should the government be permitted to demand a sentence at the high end of the guidelines (and potentially eight years more than recommended by the probation department) when there is a serious question regarding the government agent’s (or arguably the government’s) respect for the law?  And shouldn’t the concept of deterrence in sentencing work both ways? 

While not quite the same thing, a number of federal judges in Chicago were faced with indictments arising from undercover “stash house” investigations in which mostly minorities were essentially entrapped into committing drug robberies. In addressing sentences based on guilty pleas in the cases and addressing the government’s offensive conduct that “undermined legitimate law enforcement efforts in this country,” Judge Robert Gettleman noted that one of the primary purposes of the sentencing statute is to “promote respect for the law”:

Respect for the law begins with respect for people and institutions that are sworn to enforce and protect the law. In fashioning the sentence for each of the defendants in this case, this court will be mindful of that directive. (emphasis added).

Given any view of the misconduct in question, shouldn’t a defendant, whether or not prejudiced by the government’s misconduct, receive a sentencing break – even if perhaps he doesn’t necessarily deserve it – if the purpose is to teach the government a lesson?  Wouldn’t that be a good mechanism to promote respect for the rule of law?

Members of the bench and bar may respond to this by challenging the notion that defendants should receive a sentencing “perq” by virtue of government misconduct that had nothing to do with a defendant’s conduct that warranted a significant sentence – that the need for appropriate punishment has nothing whatsoever to do with the government’s misdeeds.  There is, though, a long tradition in our constitutional history where the worst reprobates have benefitted, even by outright dismissal of indictments, if the evidence or confession was obtained illegally.    

We are hard-wired to believe that such dismissals promote respect for the rule of law.  Shouldn’t demanding that the government act in accordance with law – with a real-time penalty at its doorstep – do the same?

Joel Cohen, a former prosecutor, practices white collar criminal law at Stroock & Stroock & Lavan LLP and is the author of Blindfolds Off: Judges on How They Decide. Dale J. Degenshein of Stroock assisted in the preparation of this article.

[Image via Scott Olson/Getty Images]


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