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Case 2:18-cr-00422-DJH Document 174-3 Filed 06/06/18 Page 1 of 5
U.S. Department of Jastice

United States Attorney

District of Arizona

Two Renaissance Square Main: (602) 514-7500

40 N. Central Ave., Suile 1800 Main Fax: (602) 514-7693

Phoenix, AZ 85004-4408 Direct Fax: (602) 514-7450

May 14, 2418

Mike Prccarreta, Esq.

Piccarreta Davis Keenan Fidel PC

2East Congress. Street, Suite 1000

Tucson, AZ 85741

VIA EMAIL

Re; Your° Letter o, f .May 1, 2018

Dear Milce:

I wish ~o respond to a letter you sent on May 1, 2018, requesting the production of

cei-~ain categories of documents. t~s an initial matter, and as discussed during our May 4

meetizag, the relevance of the materials you are requestixag is unclear. The motion pending

before the Count seeks to determine whether the D~VT and HCM law fix~ms have a conflict of

interest. The materials you have requested do not, ir1 many instances, have any apparent

connection to that topic. We aye happy to provide additional considezation to your request if

you can articulate why they might be subject to discovery under the relevant rules of criminal

discovery.

I would fui-~her note that it appears, based on the nature of your requests, that you

believe it was improper for the United States to enter into a cooperatioxz-based plea agreement

with Mr. Feixer because he was a member of a joint defense agreement ("JDA") and/or you

suspect the United States has improperly obtained 3DA-protected infozmation from 1VI~. Feuer.

Tluough this letl:er, X wish to explain why neither premise is valid,

The cou~~s have recognized that a TDA participant must retain the ability to plead guilty

and cooperate and that the government has a strong, legitimate interest in considering such

teques~s. For example, in United States v..LeCr•ay, 348 F. Supp. 2d 37S (E.D. Pa. 2005), the

COUi't Tecognized that "[a] JDA is not an escape-proof prison" and that "the right of the grand

jury to ,get the facts, and the right of [a JDA participant] to decide to cooperate with the grand

jury, are paramount." ra. at 382, 386. The courts have E'ui-~her recognized that a JDA

pat~ticipant is free to disclose liability-generating matters in which he personally pa~~ticipated,

even if those matters are also the subject of JDA-related sharing and discussion. See, e.g., In

r°e Grand Jury Sicbpoena, 274 F.3d 563, 572 {lst Cir. 2001) ("[W]hat the panties calla `joint

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defense' privilege is more aptly teamed the `common interest' rule. Even when that iule

applies, howevex, a paz~:y always remains free to disclose his own comn~u~aication."); United

States v. Balsiger~, 2013 WL 3490873, *11 (E.D. VJisc. 2013) ("Balsiger and Currey cannot

stop .. ,another person .. ,from waiving its privilege as to its own communications simply

because the communication was shared with them or then counsel as part of the joint

defense."); Unr'ted States v. Belcae~~t Steel YTri~~e Copp., 1985 WL 25747, *3 {D. Md. 1.985)

(rejecting JDA-related claim whew cooperator "Neri was not called befoxe the grand jury to

answer questions about what he inay have learned tluough defense couYisel; he was called to

testify about events in which he had actively participated. ... Nexi pa~-tzcipated in seve~~al

meetings and .had an ongoi~ig relationship with the principals in the case fox• several years. It

was that information that the govexz~znent sought, not the substance of any communical:ions

between counsel.").

For these reasozas, the caur~ts have stated that, when engaging in coaperation~related

discussions with a JD~1 participant, the government should simply take reasonable steps to

prevent the receipt of any JDA-protected information. See, e.g., United S`tc~tes v. Salvagj7o,

306 F. Supp. 2d 258, 27273 (N.D.N.Y. 2004). Here, the United States has fiaken e~.tensive

efforts to do so. The United States' fnst meeting with Mr. Fei7•er did not talcs place unfiil the

morning of Ap~•il 5, 2018. The pzoffer agreement (enclosed as Exhibit A) specifically stated

that Nti•. Ferrer should not discuss JDA-protected matet•ial, this instruction vvas reiterated on

several occasions during i;he proffer, and IVI~•. Ferret's attorneys have confirmed that no such

material was discussed oii April 5. The requirement not to disclose any 7DA-protected

material was also reiterated in the cooperation addendum to Mr. Fei7 er's plea agreement

{which is cui~ently under seal but will be produced to you in t~~e future}, and N1r. Fetter's

counsel have canfumed that no JDA-protected material has been discussed during Mr. Fei7•er's

subsequent interviews by the government. Finally, the goverrunent also has notreceived a

copy of the actual JDA or any other common interest agreement (we have avoided doing so,

in an abundance of caution, precisely because we wish to avoid any grey areas).

Tui~thermore, even if (contrary to the government's best efforts} NIr. Ferret had

somehow disclosed JDA-proi:ected information during his discussions with the government,

the timing of his proffer undermines any claim of prejudice. As noted, the United States did

not meet with Mr. Fex7er, ox• receive a proffer• of information from Mr. Fener's counsel, until

Apri15, 2018. As a result, no information from Mr. Feixer was used to obtain the March 28,

2018 indictment or obtain any of the search warrants in this case. Moreover, as you know

from ol7z extensive "reverse proffer" to you in December 2017, the theory underlying the

indictment has long been transparent.

Caui~s have concluded that when (as he~~e} the government establishes that it has taken

steps to avoid the disclosure o:(' JDA-protected information, the cooperatoY•'s counsel has

avei7ed that no such disclosure has occu~~ed, and the defendant merely suspects

(notwithstanding those avowals) That he was prejudiced by an improper disclosure, there is no

entitlement to an evidentiaz~y la.earing. See, e.g., United States v, Auliczno, 44 F.3d X 102, 1117

(2d Cir. 1995) (affirming district count's denial of evidentiary hearing, where defendants

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alleged that government had obtained JDA-pzotected information from a cooperator, because

the "government presented evidence of the steps it tools to insulate the [prosecutors] from any

knowledge gained by [the caopezating witness] from his contact with the codefendants after

he agreed to cooperate" and the defendants "did not present al~y evidence to suggest that [the

cooperating witness] revealed any privileged information to the goverrunent"); Salvagno, 306

F. Sapp. 2d at 272 ("[T]he court denies defendants' motion requesting an order directing an

evidentiary hearing. Defendants have failed to allege specific facts that indicate

communication of privileged information to the Government and prejudice resulting

therefi•am. Moreover, the government avers that it neither sought nor accepted any [such]

information."); U~7.r.'ted States v. Anderson, 288 F.3d 335, 338 (7th Cis•. 2002) (affirming denial

of evidentiary hearing, where defendant alleged that cooperators shared privileged znfo~mation

with the prosecution, because the defendant had "not alleged with sufficient detail,

definitiveness, or specificity" the privileged matters that were allegedly disclosed).

Finally, to the extent your letter reflects a belief that the government's decision to file

the disqualification motion was somehow improper, that belief is incorrect. The potential

conflict-of-interest issues in this case did not even come to my attention until Apzil 8, during

a phone call with Mr. Lailcin's fori~~er attorneys (who simply inquired if the goveriunent 11ad

any concerns about the anticipated repx•esentation aixangements in the case). We did not

initially recognize the seriousness of those issues, as evidenced by the fact that the government

did not object when the HCM firm represe~sted Mr. Lacey during various hearings on the week

of April 9-13 or when various DWT lawyers filed notices of appea~•ance during the week of

Apzi19-13.

Once the conflict-of-interest issues became more apparent to us, we conducted legal

research. This research confirmed that the DWT and HCM firms were, in fact, laboring under

deep conflicts of interest. Nevertheless, due to the sensitivity of the issues, we sought to

engage in ameet-and-confer process before filing anything with the Court. Among other

things, vve mentioned our concerns to Mr. Cambria and Ms. Henze Coolc during a phone call

on Apri123, sent an email to IvI~. Cambria and Ms. Henze Coolc on April 24 identifying the

various cases and ethical mules suppoi~ing our concerns, and participated in a conference call

with you and other members of the defense team on Apri12S. Duz•ing this call, we specifically

asked if there were any written agreements ~in which Mr. Fe17•er had agreed to waive the DWT

and T-iCM firms' conflicts of interests so they could represent Messrs. Lacey and Larkin. None

were mentioned.

The case law makes clear that prosecutors should bring conflict-of-interest issues to the

Court's attention as seen as they become apparent, and courts have faulted prosecutors (and

reversed convictions) for failing to do so or waiting to do so until the eve of trial. See, e.g.,

United States v. Io~~izzo, 786 F.2d 52, 59 (2d Cir. 1986) {"We add a tmal note. The reversal

here is the direct result of the prosecution's using defense counsel's conflict of interest as a

means of affecting the evidence going befoze the jury instead of moving fay his disqualification

before the trial. ... We trust that this decision will ensure that a pretrial disposition of such

issues will occur in the future."); United States v. He»ke, 222 F.3d 633, 638 (9th Cir. 2000).

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That is simply what we have done here. Indeed, befaie filing the motzon, the United States

consulted with Mr. Ferret's counsel, prima~•ily to confirm that the factual representations

contained in the nlation were accurate. During these discussions, Mz~. Ferzer's counsel stated

that Mx, Fer7•er did not wish to be a panty to the motion. As a result, the United States filed the

motion on its own behalf, in the interest of protecting the integrity of the trial. See, e.g., rTnited

States v. Kzg1~t, 2017 C~VT.. 4619024, *13 n.19 (N.D. Ga. 2017) ("[T]he Court rejects Fight's

argument that the Government, wifhout Lanlcford's permission, is precluded from seeking

Armstrong's disqualification or that Lankford was requited to join in the Government's

Motion."}; United States v. Carlp, 934 F. Sapp. 394, 399 (M.D. Fla. 1996) (granting

government's disqualification motion and stating that defense counsel's "aigument that the

Goveznment lacks standing to raise the issue of a potential conflict gives short sluift to the

respective intez~ests of the GoveY•nment and the Court in ensuring that judgments remain intact

on appeal. . , . [Counsel's] challenges to the Government's standing betray a conception of

the intez~ests at stake in this motion which is both unduly narrow and overly simplistic.").

Sincerely,

ELIZABETH A. STRANGE

rust Assistant United States Attorney

District of Arizona

/s Kevr'n Rapp

Z~EVIN M. RAPP

Assistant U.S. Attorney

I~NIlZ/zs

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