U.S. Department of Justice

Two Renaissance Square

40 N. Central Ave., Suite 1800

Phoenix, AZ 85004-4408

May 14, 2018

Mike Piccarreta, Esq.

Piccarreta Davis Keenan Fidel PC

2East Congress Street, Suite 1000

Tucson, AZ 85701

Re: YouY Letter of May 1, 2018

Dear Mike:

United States Attorney

District of Arizona

Main: (602) 514-7500

Main Fax: (602) 514-7693

Direct Fax: (602) 514-7450

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

certain categories of documents. As an initial matter, and as discussed during our May 4

meeting, the relevance of the materials you are requesting is unclear. The motion pending

before the Court seeks to determine whether the DWT and HCM law firms have a conflict of

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

connection to that topic. We are happy to provide additional consideration to your request if

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

discovery.

I would further note that it appears, based on the nature of your requests, that you

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

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

suspect the United States has improperly obtained JDA-protected information from Mr. Ferrer.

Through this letter, I wish to explain why neither premise is valid.

The courts have recognized that a JDA participant must retain the ability to plead guilty

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

requests. For example, in United States v. LeCroy, 348 F. Supp. 2d 375 (E.D. Pa. 2005), the

court recognized 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." Id. at 382, 386. The courts have further recognized that a JDA

participant is free to disclose liability-generating matters in which he personally participated,

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

re Grand Jury Subpoena, 274 F.3d 563, 572 (lst Cir. 2001) ("[W]hat the parties calla `joint

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

applies, however, a party always remains free to disclose his own communication."); United

States >>. Balsiger, 2013 WL 3490873, *11 (E.D. Wisc. 2013) (`Balsiger and Currey cannot

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

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

defense."); United States v. BekaeYt Steel Wire Coy-p., 1985 WL 25747, *3 (D. Md. 1985)

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

answer questions about what he may have learned through defense counsel; he was called to

testify about events in which he had actively participated. ... Neri participated in several

meetings and had an ongoing relationship with the principals in the case for several years. It

was that information that the govermnent sought, not the substance of any communications

between counsel.").

For these reasons, the courts have stated that, when engaging in cooperation-related

discussions with a JDA participant, the government should simply take reasonable steps to

prevent the receipt of any JDA-protected information. See, e.g., United States v. Salvagno,

306 F. Supp. 2d 258, 272-73 (N.D.N.Y. 2004). Here, the United States has taken extensive

efforts to do so. The United States' first meeting with Mr. Ferrer did not take place until the

morning of April 5, 2018. The proffer agreement (enclosed as Exhibit A) specifically stated

that Mr. Ferrer should not discuss JDA-protected material, this instruction was reiterated on

several occasions during the proffer, and Mr. Ferrer's attorneys have confirmed that no such

material was discussed on April 5. The requirement not to disclose any JDA-protected

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

(which is currently under seal but will be produced to you in the future), and Mr. Ferrer's

counsel have confirmed that no JDA-protected material has been discussed during Mr. Ferrer's

subsequent interviews by the government. Finally, the government also has not received 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).

Furthermore, even if (contrary to the government's best efforts) Mr. Ferrer had

somehow disclosed JDA-protected 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. Ferrer, or receive a proffer of information from Mr. Ferrer's counsel, until

April 5, 2018. As a result no information from Mr. Ferrer was used to obtain the March 28,

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

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

indictment has long been transparent.

Courts have concluded that when (as here) the govermnent establishes that it has taken

steps to avoid the disclosure of JDA-protected information, the cooperator's counsel has

averred that no such disclosure has occurred, and the defendant merely suspects

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

entitlement to an evidentiary hearing. See, e.g., United States v. Aulicino, 44 F.3d 1102, 1117

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

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

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

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

lie agreed to cooperate" and the defendants "did not present any evidence to suggest that [the

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

F. Supp. 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

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

information."); United States v. Anderson, 288 F.3d 335, 338 (7th Cir. 2002) (affirming denial

of evidentiary hearing, where defendant alleged that cooperators shared privileged information

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 govermnent'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 April 8, during

a phone call with Mr. Larkin's former attorneys (who simply inquired if the goveminent had

any concerns about the anticipated representation arrangements 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 represented Mr. Lacey during various hearings on the week

of April 9-13 or when various DWT lawyers filed notices of appearance during the week of

Apri19-13 .

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, we mentioned our concerns to Mr. Cambria and Ms. Henze Cook during a phone call

on April 23, sent an email to Mr. Cambria and Ms. Henze Cook on April 24 identifying the

various cases and ethical rules supporting our concerns, and participated in a conference call

with you and other lneinbers of the defense team on April 25. During this call, we specifically

asked if there were any written agreements in which Mr. Ferrer had agreed to waive the DWT

and HCM firms' conflicts of interests so they could represent Messrs. Lacey and Larkin. None

were mentioned.

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

Court's attention as soon 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. Iorizzo, 786 F.2d 52, 59 (2d Cir. 1986) ("We add a final 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 before the jury instead of moving for 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. Henke, 222 F.3d 633, 638 (9th Cir. 2000).

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That is simply what we have done here. Indeed, before filing the motion, the United States

consulted with Mr. Ferrer's counsel, primarily to confirm that the factual representations

contained in the motion were accurate. During these discussions, Mr. Ferrer's counsel stated

that Mr. Ferrer did not wish to be a party 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., United

States v. Kight, 2017 WL 4619024, *13 n.19 (N.D. Ga. 2017) ("[T]he Court rejects Kight's

argument that the Government, without Lankford's permission, is precluded from seeking

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

Motion."); United States v. Culp, 934 F. Supp. 394, 399 (M.D. Fla. 1996) (granting

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

Government lacks standing to raise the issue of a potential conflict gives short shrift to the

respective interests of the Government and the Court in ensuring that judgments remain intact

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

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

Sincerely,

ELIZABETH A. STRANGE

First Assistant United States Attorney

District of Arizona

/s Kevin Rapp

KEVIN M. RAPP

Assistant U.S. Attorney

KMR/zs

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