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UNITED STATES v. PERLMUTTER

June 30, 1986

UNITED STATES OF AMERICA,
v.
HERMENA PERLMUTTER, Defendant



The opinion of the court was delivered by: SWEET

SWEET, D.J.

Defendant Hermena Perlmutter ("Perlmutter") has moved for an immediate trial on Counts Nine and Ten, the only Counts presently remaining of the initial ten count indictment. She maintains also that pursuant to Rule 8 and 14, Fed.R.Cr.P., these counts were improperly joined and have prejudiced her. For the reasons set forth below, the motion is granted.

Prior Proceedings

 By opinion of May 20, 1986, this court dismissed Counts One through Eight of the nine count superseding indictment filed April 17, 1986, holding that these counts were facially insufficient, an opinion which is presently on appeal. Counts One through Eight related to financial services which Perlmutter, an attorney, performed in connection with her legal representation of clients, and concerned bank deposits and withdrawals which allegedly violated the Currency Transaction Reporting Act, 31 U.S.C. § 5311 et seq. and other disclosure statutes.

 Count Nine, which was not the object of a facial challenge, charges Perlmutter with inducing her former secretary Laura Nadal ("Nadal") to make false or misleading statements to a Grand Jury in January, 1983 with regard to Perlmutter's preparation of tax returns for a client Daniel Washington ("Washington"), in violation of 18 U.S.C. § 1503. On June 11, 1986, the government returned a second superseding indictment adding a tenth count against Perlmutter, charging that she wrongfully concealed material facts and made false statements to the Internal Revenue Service regarding her possession of bank records related to financial transactions performed for Washington. Count Ten alleges that in May, 1984, Perlmutter denied possessing bank statements and checks which related to the withdrawal of $120,000 from a bank account, and thereby violated 18 U.S.C. § 1001 which prohibits false statements to the government.

 Discussion

 Perlmutter seeks a trial of the pending Counts Nine and Ten as improperly joined under Fed.R.Cr.P. Rule 8 with the first eight and because a delay in order to resolve the government's appeal would prejudice Perlmutter within the meaning of Fed.R.Cr.P. Rule 14. Although distinct offenses may be properly joined under Rule 8, the district court in its discretion may order separate trials or grant a severance under Rule 14 if it appears that a defendant will be prejudiced by the joinder. United States v. Werner, 620 F.2d 922 (2d Cir. 1980). Rule 14 provides in relevant part:

 If it appears that a defendant or the government is prejudiced by a joinder of offenses . . . in an indictment or information or by such joinder for trial together, the court may order an election or separation of trials of counts . . . or provide whatever other relief justice requires.

 In determining the existence of prejudice and the need to order separate trials, courts of this district have balanced the prejudice to the moving defendant against the prejudice to the public interest caused by the time, expense, delay and duplication of trials. United States v. Abrams, 543 F. Supp. 1184, 1192 (S.D.N.Y. 1982) (and citations therein). In the case at bar, these considerations tip decidedly in Perlmutter's favor.

 Perlmutter has waived her right to a jury trial on all ten counts, a waiver which also is consented to by the government. By this waiver, Perlmutter has eliminated the time and expense required for impaneling two juries, which would have incurred in the event that the Court of Appeals reinstated Counts One through Eight of the indictment. Furthermore, it appears that little testimony, if any, will be duplicated if Counts Nine and Ten proceed to trial, as they are only tangentially related to the real estate transactions which underlie Counts One through Eight of the indictment. Indeed these episodes are separated by as much as three years, as the events comprising Counts One through Eight occurred between March, 1981 and October, 1982, the alleged grand jury obstruction occurred in January, 1983, and the alleged false statement to the IRS occurred in May, 1984. Finally, in a bench trial any relevant evidence relating to the latter transactions need not be repeated in any subsequent trial. The existing record will be applicable where relevant.

 In contrast, the prejudice to Perlmutter resulting from a protracted trial delay is apparent. Perlmutter is an attorney and seeks to resolve her capacity to practice law. To defer a trial on Counts Nine and Ten pending a Court of Appeals ruling might prove needless if the dismissal of the first eight counts is upheld on appeal. On the other hand, a resolution of the pending Counts might determine her status.

 Perlmutter has also noted her intent to call the government's trial counsel, Assistant United States Attorney John McEnany ("McEnany") as a witness to testify about prior conversations with Nadal concerning her grand jury testimony which is the subject of Count Nine, and about his prior prosecution of Daniel Washington, a client of Perlmutter's for whom she allegedly concealed bank records and checks from the IRS as charged in Count Ten of the indictment.

 It is her belief that new government counsel should be obtained for Counts Nine and Ten as the "advocate-witness" rule codified in the Code of Professional Responsibility (the "Code") DR 5-101(b) *fn1" and DR 5-102 *fn2" provides generally that an attorney who will be called to testify as to disputed facts should withdraw from trial participation and therefore urges a separate trial on the pending counts on this basis.

 However, the case authorities interpreting the ethical guidelines of the Code do not provide for per se disqualification as counsel for Perlmutter suggests. First, although the Code sets guidelines for professional conduct among attorneys appearing before the federal bar, including federal prosecutors, 28 CFR § 45.735, this court is not under a statutory duty to apply the Code as enacted by the American Bar Association. International Electronics Corp. v. Flanzer, 527 F.2d 1288, 1293 (2d Cir. 1975). Disqualification of an attorney therefore remains in the sound discretion of the trial court. Cinema 5, Ltd. v. ...


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