The opinion of the court was delivered by: HAIGHT
MEMORANDUM OPINION AND ORDER
Defendant James Newman moves to dismiss this indictment charging him with securities and mail fraud, or in the alternative, to disqualify John S. Martin, Jr., the United States Attorney for this District, and his entire office from further involvement in the case. The motion is based upon alleged improprieties of Martin which violated the Code of Professional Responsibility promulgated by the American Bar Association ("ABA") and adopted by New York. 29 McKinney's Consol. Laws of N.Y. (1975) at pp. 351 et seq. By opinion and order dated February 25, 1982 I denied Newman any relief on the basis of the submissions then before me. 534 F. Supp. 1109. Newman has now submitted further affidavits and arguments on the point, which have triggered further responses from the Government. Accordingly the issue must again be addressed. While familiarity with my prior opinion is assumed, it may be useful to restate the underlying facts. Additional factual material is culled from the most recent submissions.
In early 1978, a grand jury for this District was conducting an inquiry into the possible illegal use of "insider" information in respect of corporate mergers and acquisitions, in violation of the securities, mail and wire fraud statutes. Newman, the present defendant, was a target of that inquiry. A time came in early 1978 when Newman and his wife, Pearl Seiden Newman, consulted Myron Rosner, Esq., an attorney with offices in Hackensack, New Jersey, with respect to the grand jury inquiry. Rosner had represented Norman Seiden, Mrs. Newman's father, in family and business matters. At this meeting Newman advised Rosner, in a general way, of the nature of the transactions underlying the investigation, and that he had become a target of it. Rosner advised Newman to retain Arthur Christy, Esq., a member of the bar of this Court experienced in criminal defense work, to represent him in the matter. Newman accepted Rosner's advice, and shortly thereafter, accompanied by Rosner, went to Christy's office for a lengthy debriefing interview of Newman by Christy.
About two weeks later, Seiden told Rosner that he (Seiden) had received a request for information from the office of the United States Attorney. As he had for Newman, Rosner determined to obtain a lawyer for Seiden more familiar with matters of this nature, and, after conversing with other lawyers in New York, arranged for Martin to represent Seiden. At that time Martin was in private practice, as a partner in a firm which did a considerable amount of criminal defense work.
Rosner describes his initial contacts with Martin as follows:
"In the course of briefing Mr. Martin as to the matter for which we required his services, I disclosed the following: I told Mr. Martin that I had interviewed Norman Seiden and was satisfied that Mr. Seiden had nothing to fear from the criminal investigation. I told Mr. Martin that Mr. Newman was Mr. Seiden's son-in-law, was a target of the investigation and that, within the bounds of law, Mr. Seiden wanted to assist Mr. Newman's defense. Because of these circumstances, I considered my communication with Mr. Martin to be clothed in the attorney-client privilege. In employing Mr. Martin, I disclosed to him in a summary way my understanding of the facts, and answered the questions Mr. Martin put to me. While I do not recall now the details of the conversation, the only facts I had at that time I had obtained from Mr. Newman in privileged communications to me. I told Mr. Martin, in substance, based upon my understanding of the facts, that Mr. Newman may very well be in trouble in the investigation. I had, I believe, two telephone conversations and one face-to-face meeting with Mr. Martin, during which I gave Mr. Martin my understanding of Mr. Newman's problem, the facts I felt Mr. Martin needed, and answered questions Mr. Martin put to me. I believe I also told Mr. Martin that Mr. Newman had retained Arthur Christy to represent him, and he should feel free to call Mr. Christy."
Returning at the end of his affidavit to his communications with Martin, Rosner states:
"I have a clear recollection that, perceiving Mr. Martin to be in effect another lawyer who would be representing the family's interests, I did disclose in a summary way what Mr. Newman had told me and my own conclusion from those facts that, while Mr. Seiden was not at risk in this investigation by reason of any of his conduct, Mr. Newman was."
While the parties differ on certain underlying facts and the proper inferences to be drawn from them, it is common ground that Martin agreed to represent Seiden, and eventually accompanied Seiden to an interview at the office of Assistant United States Attorney Lawrence Pedowitz. The time records of Martin's former firm indicate that this meeting probably occurred on July 28, 1978.
Rosner accompanied Seiden and Martin. His account of the interview appears in his affidavit at P 7:
"My recollection of the interview with the United States Attorney was that it was short and that a point of interest was a wedding list of the recently celebrated marriage of Mr. Newman and Pearl Seiden Newman. I recall that Mr. Seiden was asked the names of various persons and whether he knew those persons."
Seiden has submitted an affidavit giving his recollection "that I met with John S. Martin, Jr. only once. This was at the United States Attorney's office immediately before my interview with the government."
In an unsworn letter dated January 8, 1982 which Seiden sent to Martin (after Martin had been appointed United States Attorney and Newman had been indicted), Seiden stated that Martin had "obtain(ed) confidential and privileged information from me," and that, pursuant to Martin's counsel and advice, "I gave information and documents to the office of the United States Attorney."
Martin's account of these events appears in three documents. The first is his letter of January 15, 1982, written in response to Seiden's letter of January 8 just referred to. Martin swears to the accuracy of the account given in that letter in his affidavit of March 2, 1982, submitted in connection with these proceedings, to which a copy of the January 15 letter is attached. Martin has also furnished a supplemental affidavit dated March 4, 1982.
In his letter of January 15, 1982 to Seiden, Martin recalled that after he and Seiden had met and discussed the matter, "a decision was made that you would provide to the Assistant United States Attorney then in charge of the case any information which he requested." The letter thereafter recites Martin's recollection that "as a result of this decision there was a meeting with Assistant United States Attorney Pedowitz in which you answered whatever questions he asked you." The Martin letter continues:
"I have very little recollection of the details of that meeting and no recollection of being aware of any facts obtained during my interview with you that were not communicated to Mr. Pedowitz."
The Martin affidavits submitted in response to the present motion recite that the time records of his former firm (the only documentation which can be located at that source) indicate that Martin was engaged on the Seiden matter on only four days, all in 1978. The dates and activities as recorded are as follows: June 29-conference and phone call with Arthur Christy, one hour; June 30-phone calls with Seiden and Pedowitz, one-half hour; July 25-trip to United States Attorney's office, one hour; July 28-trip to United States Attorney's office, one and one-half hours.
Martin suggests, and I accept as plausible, that the July 25 trip reflects a trip he made alone to Pedowitz's office to discuss the investigation with him prior to bringing Seiden in for an interview, and that the July 28 trip represents the interview itself.
This was the end of Martin's representation of Seiden, or his activities in his behalf. Martin states in his affidavit of March 4 at P 6: "From the outset of that representation it was understood that he (Seiden) was in no sense a subject of the United States Attorney's office investigation."
It is apparent from the record that the investigators shared Rosner's evaluation, namely, that whereas Newman was vulnerable, Seiden was not. Seiden was neither called as a witness before the grand jury nor indicted.
As noted in the quotations from his letter of January 15, 1982, supra, Martin's recollections of what actually took place are imprecise. That subject is dealt with further in Martin's affidavits of March 2 at P 3, and March 4 at P 10, which read as follows:
"I have no recollection of any facts, privileged or otherwise, provided to me by Myron Rosner, Esq. and I had no recollection of any such facts regarding the defendant Newman as of the time I assume the normal activities of the United States Attorney in this case a week or so before the return of the indictment. I certainly did not impart any such facts or assessment of Newman's culpability to any of my Assistants at any time, nor did I recall them at the time of, or rely on them in any decision made or action taken in the above-entitled case. Indeed, until receiving Mr. Rosner's affidavit I had no recollection of ever talking with him by phone or in person."
"While, as I stated in my original affidavit, I cannot recall any specific information disclosed to me by Mr. Rosner, I do know that I never considered myself to be in possession of any information which was based on privileged communications from Mr. Newman. I never spoke to Mr. Newman. My recollection is that the only information that I did receive from Mr. Rosner or Mr. Christy (then Newman's attorney) was very generalized information concerning the nature of the investigation and the basic allegations being made by the Government. I have no recollection of receiving and am relatively confident that I did not receive any factual information from Mr. Rosner or Mr. Christy that was incriminatory of Mr. Newman. I have no recollection of receiving and I do not believe I ever received from Mr. Rosner or Mr. Christy any information that I would not have felt free to discuss with Mr. Pedowitz in the course of my conversations with him concerning the general nature of his investigation and the limited information that Mr. Seiden might have had that was relevant to that inquiry. Moreover, since it was contemplated that Mr. Seiden would tell everything he knew to the Government, and since according to my time records I could not have met with Mr. Rosner except when Mr. Seiden was present, it is inconceivable that Mr. Rosner ever disclosed any privileged information from Mr. Newman to me during any meeting I had with him, for Mr. Rosner would not have wanted Mr. Seiden to have been aware of any such information before being interviewed by the prosecutor."
Martin was appointed United States Attorney for this District on May 22, 1980. The grand jury investigation was still in progress; the original indictment, naming Newman and three other individuals (these others are fugitives) as defendants, was not filed until February 3, 1981. Martin states in his letter of January 15, 1982 that after he became United States Attorney he discussed the status of the case "briefly" with AUSA Lee Richards, then in charge of the investigation. Martin's letter continues: "In view of the fact that the matter was still in an investigatory stage, I decided not to participate in any matters relating to the case at that time." According to Martin's account, a week or so before the return of the first indictment, when the investigation relating to Newman "was basically concluded and the indictment was being prepared,"
counsel for one of the co-defendants asked for an opportunity to meet with Martin to review the decision that had been made to prosecute his client. Martin again discussed the matter with Richards, who advised Martin that Seiden would not be either a defendant or a witness in the case. In those circumstances, Martin considered that he could resume his normal activities in the case; he and Richards met with the co-defendant's lawyer, but did not consider whether or not Newman should be included in the indictment, "because well before the first such meeting the decision to indict him had already been made."
Martin also signed the indictment when it was returned, and argued the Government's successful appeal to the Second Circuit from this Court's decision dismissing the indictment on unrelated grounds. 664 F.2d 12 (2d Cir. 1981).
Richards recalls only one conversation with Martin during the pre-indictment period, that being the discussion, a week or so before the return of the first indictment, with respect to the co-defendant.
Thus Richards apparently does not recall the initial status conference concerning the case which Martin describes in his letter of January 15, 1982. I do not regard the discrepancy as having any significance.
As noted, Martin has sworn that he has never imparted "any ... facts or assessment of Newman's culpability to any of my Assistants at any time." Richards, in charge of the case at all its stages, states in his affidavit of March 2, 1982:
"At no time in the pre-indictment investigation leading up to the first indictment against Newman or thereafter did John S. Martin, Jr., United States Attorney for the Southern District of New York, ever impart to me any facts concerning James Newman or opinion about his guilt or innocence."
Newman argues that, in the foregoing circumstances, the indictment must be dismissed; or, if not, the entire United States Attorney's office for this District must be disqualified; or, at the very least, Martin must be personally disqualified from further participation in the case.
The Government, resisting all these alternatives, stresses that Martin never passed on to the prosecutors in charge of the case any information he may have acquired about Newman. Thus there is no demonstrable prejudice to Newman; and in the absence of such prejudice, the Government argues, the motion fails under the authority of United States v. Morrison, 449 U.S. 361, 365-6, 101 S. Ct. 665, 668-69, 66 L. Ed. 2d 564 (1981), United States v. Brown, 602 F.2d 1073 (2d Cir. 1979), and ...