Dismissal for Government Interference with Right to Counsel Affirmed by Second Circuit

Via Berman, the 2d Circuit has affirmed Judge Lewis Kaplan’s dismissal in U.S. v. Stein, better known as the KPMG case.  This was the case where the government threatened KPMG to stop funding the legal defense of its employees in a case that involved 22 million documents.  Naturally, the defendants couldn’t possibly mount a meaningful defense on their own without the assistance of KPMG, and you know how much the government hates a fair fight.


Defendants were indicted based on a fairly novel theory of criminal liability; they faced substantial penalties; the relevant facts are scattered throughout over 22 million documents regarding the doings of scores of people,; the subject matter is “extremely complex,”; technical expertise is needed to figure out and explain what happened; and trial was expected to last between six and eight months, As Judge Kaplan found, these defendants “have been forced to limit their defenses . . . for economic reasons and . . . they would not have been so constrained if KPMG paid their expenses.” We therefore hold that these defendants were also deprived of their right to counsel under the Sixth Amendment.

While one might think that this affirmance was a given under the egregious circumstances of this case and the heavy-handed government action to deny the defendants the ability to fight, Judge Kaplan’s dismissal at the District Court level was a huge step forward in the protection of the defendants and a major smack in the government’s kisser.  This was by no means a slam-dunk.

It’s hardly unusual in the Southern District of New York to have white collar prosecutions that involve voluminous paper, require a great deal of technical expertise and involve many witnesses.  Even defendants possessed of some wealth find themselves unable to afford an attorney for these cases, the cost of which can be quite high.  And not everyone has a corporation willing to front the fees, as here.

The government figured they had these guys by the throat, despite its novel theory, by attrition alone.  If they can’t afford to defend, then there’s nothing left but a plea.  When KPMG stepped into the breach, however, it ruined the government’s plans, since KPMG had the wherewithal to finance a vigorous defense. 

Since the kids down at 1 St. Andrews Plaza aren’t used to not getting their way, the next step was to take the fight to KPMG and let them know that financing the defendants legal fees was tantamount to mass murder as far as they were concerned.  This is where they cross the line for Judge Kaplan.

What’s interesting about this case is that it stands in stark contrast to the Circuit’s decisions on right to counsel otherwise, where the 2d Circuit has carved out more exceptions than anywhere else.  For example, the Circuit has approved the government’s pre-trial seizure of funds for forfeiture, which serves to deny the defendant the ability to retain counsel, creating a self-fulfilling prophesy.  Similarly, a defendant can be denied counsel of choice, even when he has the ability to retain him, based upon claims of conflict by the government, “for the protection of the defendant.”  Both of these rules allow the government to take affirmative steps to impair the defendant’s right to counsel, despite the fact that the defendant has yet to be convicted of anything (and hence is presumed innocent) and defendant’s choice of counsel.

So the affirmance here is a significant shift.  In this instance, Judge Kaplan’s dismissal, and the Circuit’s affirmance, are directed toward the government’s abuse of power to strip the defendant’s of a chance to fight.  It’s good to see the court concern itself with the government’s abuse, since it could just as easily have been rationalized away as it has 100 times before.

Master Conspirator Eugene over at Volokh has done a thoughtful analysis of the decision, and believes that the court arrived at the right conclusion.  He states:


Constitutional rights generally (with some exceptions not applicable here) include the rights to pay for what it takes to exercise the right — to pay for counsel, advertising space, private schooling, contraceptives, abortion, and the like.

While I agree wholeheartedly, it simply hasn’t been the case in the Second Circuit previously, where some rhetorical gymnastics are usually more than sufficient to tout the right while allowing the government to emasculate its exercise.  It doesn’t take much slight of hand to justify the legitimacy of the government’s interference, and the Circuit hasn’t been particularly reluctant to do so.

But there is one notable difference between US v. Stein and the prior cases:  These white collar defendants were with KPMG, a renown accounting firm.  Anybody want to guess the nature of the cases, and the defendants, in the Second Circuit’s prior decisions?  Sniff.