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United States v. Connolly

United States District Court for the Southern District of New York

May 2, 2019, Decided; May 2, 2019, Filed

No. 16 Cr. 0370 (CM)

Opinion

MEMORANDUM DECISION AND ORDER DENYING DEFENDANT [*2]  GAVIN BLACK'S MOTION FOR KASTIGAR RELIEF

Black moves for relief under United States v. Kastigar, 406 U.S. 441, 92 S. Ct. 1653, 32 L. Ed. 2d 212 (1972), on the basis that statements obtained by his employer, Deutsche Bank AG ("Deutsche Bank"), in the course of what purported to be an internal investigation into the possible manipulation of the London Inter-Bank Offered Rate ("LIBOR"), are fairly attributable to the Government within the meaning of Garrity v. New Jersey, 385 U.S. 493, 87 S. Ct. 616, 17 L. Ed. 2d 562 (1967). Black argues that, in light of Deutsche Bank's close relationship with the Government, two conclusions follow:

First, that his prosecution was predicated on and infected by those statements, such that the indictment against him must be dismissed, pursuant to the Second Circuit's ruling in United States v. Allen, 864 F.3d 63 (2d Cir. 2017).

Second, the Court's earlier Kastigar decision—in which it determined that statements compelled by the United Kingdom's Financial Conduct Authority ("UK FCA") did not taint the Government's grand jury presentation—was erroneous because it was predicated on incorrect information about the relationship between Deutsche Bank and the Government entities investigating it, and so raises the specter that other evidence used by the Government was tainted.

Black has made a rather convincing showing that Deutsche Bank and its outside counsel, Paul [*3]  Weiss, Rifkind, Wharton & Garrison LLP ("Paul Weiss"), were de facto the Government for Garrity purposes; more important, the Government has made an utterly unpersuasive case in rebuttal. There remain holes in the record, however, and a full-bore Garrity hearing would be a fascinating exercise—especially because there are profound implications if the Government, as has been suggested elsewhere, is routinely outsourcing its investigations into complex financial matters to the targets of those investigations, who are in a uniquely coercive position vis-à-vis potential targets of criminal activity. See, e.g., Abbe David Lowell & Christopher D. Man, Federalizing Corporate Internal Investigations and the Erosion of Employees' Fifth Amendment Rights, 40 Geo. L. J. Ann. Rev. Crim. Proc. iii (2011). The Court is deeply troubled by this issue.

But the Court is not eager to put the parties through a purely academic exercise. And in this case, holding a Garrity hearing would be a purely academic exercise because, even if Deutsche bank and Paul Weiss were agents of the Government, Black's Kastigar rights were not violated. The motion is, therefore, denied.

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2019 U.S. Dist. LEXIS 76233 *; 2019 WL 2120523

UNITED STATES OF AMERICA, v. MATTHEW CONNOLLY and GAVIN CAMPBELL BLACK, Defendants.

Prior History: United States v. Connolly, 2017 U.S. Dist. LEXIS 36759 (S.D.N.Y., Mar. 2, 2017)

CORE TERMS

interviews, LIBOR, cooperation, indictment, harmless, email, exculpatory, termination, Curtler, nexus, self-incrimination, outsourcing, talking, updates, incriminating, investigatory, manipulation, entities, automatically, articulation, interactions, non-evidentiary, Memorandum, tangential, indirect, messages, proffer, traders, target, Reply