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Law School Case Brief

United States v. Blaszczak - 308 F. Supp. 3d 736 (S.D.N.Y. 2018)

Rule:

While the prosecution is obliged to disclose exculpatory information to a criminal defendant in a timely manner, the principle known as the Brady obligation actually is somewhat more nuanced and limited.

Facts:

Defendant Robert Olan, one of four defendants in this alleged insider trading case, sought an order requiring the prosecution to review for Brady material certain information in the possession of the Securities and Exchange Commission (SEC). Three months after initiating an informal inquiry into the conduct underlying this case, the SEC opened a formal investigation in November 2013. Between July 2013 and November 2014 it issued around 56 subpoenas and regulatory demands for documents. In November 2014, the SEC referred this matter to the United States Attorney's Office (USAO) for criminal investigation. The USAO then started to investigate, and an FBI investigation began in January 2015. Once the criminal investigation began, the USAO and SEC conducted 39 witness interviews in tandem. The USAO and SEC representatives told the witnesses who were interviewed simultaneously by both that the agencies' investigations were separate and that the interviews were conducted together only as a matter convenience. The agencies told each witness also that, if there were to be a proffer agreement, the witness would enter into a separate agreement with each agency. In addition, the USAO and FBI interviewed or contacted witnesses around 21 times without SEC involvement. The SEC provided the USAO with all the documents it obtained during its investigation, but the USAO acquired additional documents through grand jury subpoenas that were not shown to the SEC. At the conclusion of the investigations, neither the USAO nor the SEC requested the other to bring particular charges or to sue or charge a particular defendant, although each advised the other of its intentions. The USAO sought and obtained a grand jury indictment that charged Olan and others. The SEC, after receiving an action memorandum from the enforcement staff, authorized and filed a civil enforcement action against all of the defendants in this case except Olan. Its complaint, filed the day after the indictment was unsealed, alleged violations of the securities laws. The indictment charged Olan and his co-defendants not only with securities fraud, but also with conversion of government property and wire fraud.

Issue:

Was defendant’s motion to compel the USAO to review the SEC's action memorandum and "any similar SEC documents" for Brady material meritorious? 

Answer:

No.

Conclusion:

Defendant's motion for an order directing the United States Attorney's Office to review certain material in possession of fire Securities and Exchange Commission for Brady material was denied in all respects. The court could not say that the failure of the prosecution to review or turn over all or any part of the SEC's action memorandum, even assuming that the prosecutors had the ability to do so, would breach the prosecution's Brady obligations as it was too soon to tell. The SEC's role did not bring it within the arm of the prosecutor refinement of Brady.

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