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United States v. Hammad

September 23, 1988


Appeal from an order of the United States District Court for the Eastern District of New York (Glasser, J.), suppressing recordings and videotapes of conversations between the appellant, Taiser Hammad, and an informant, Wallace Goldstein, as obtained in contravention of Rule DR 7-104(A)(1) of the American Bar Association Code of Professional Responsibility. Reversed.

Kaufman, Cardamone and Pierce, Circuit Judges.

Author: Kaufman

KAUFMAN, Circuit Judge:

On November 30, 1985, the Hammad Department Store in Brooklyn, New York, caught fire under circumstances suggesting arson. The Bureau of Alcohol, Tobacco and Firearms was assigned to investigate in conjunction with the United States Attorney for the Eastern District of New York.

During the course of his investigation, an Assistant United States Attorney ("AUSA") discovered that the store's owners, Taiseer and Eid Hammad, had been audited by the New York State Department of Social Services for Medicaid fraud. The audit revealed that the Hammad brothers had bilked Medicaid out of $400,000; they claimed reimbursement for special orthopedic footwear but supplied customers with ordinary, non-therapeutic shoes. Consequently, the Department revoked the Hammads' eligibility for Medicaid reimbursement and demanded return of the $400,000 overpayment. The Hammads challenged the Department's determination and submitted invoices purporting to document their sales of orthopedic shoes. The invoices were received from Wallace Goldstein of the Crystal Shoe Company, a supplier to the Hammads' store.

On September 22, 1986, however, Goldstein informed the AUSA that he had provided the Hammads with false invoices. Government investigators, therefore, suspected the fire had been intended to destroy actual sales records, thereby concealing the fraudulent Medicaid claims. Goldstein agreed to cooperate with the government's investigation. Accordingly, the prosecutor directed Goldstein to arrange and record a meeting with the Hammads.

Some three weeks later, on October 9, Goldstein telephoned the Hammads. He spoke briefly with Eid, who referred him to Taiseer. Goldstein falsely told Taiseer he had been subpoenaed to appear before the grand jury investigating the Hammads' Medicaid fraud. He added that the grand jury had requested records of Crystal's sales to the Hammad Department Store to compare them with the invoices the Hammads had submitted. Taiseer did not deny defrauding Medicaid, but instead urged Goldstein to conceal the fraud by lying to the grand jury and by refusing to produce Crystal's true sales records. He also questioned Goldstein regarding the contents of his subpoena, which did not actually exist. Goldstein responded that he did not have the subpoena in his possession. He agreed to inquire further. One hour later, presumably after speaking with the AUSA, Goldstein telephoned Taiseer again and described the fictitious subpoena.

Goldstein and Hammad saw each other five days later. The meeting was recorded and videotaped. Goldstein showed Hammad a sham subpoena supplied by the prosecutor. The subpoena instructed Goldstein to appear before the grand jury and to provide any records reflecting shoe sales from Crystal to the Hammad Department Store. Hammad apparently accepted the subpoena as genuine because he spent much of the remainder of the meeting devising strategies for Goldstein to avoid compliance. The two held no further meetings.

On April 15, 1987, after considering the recordings, videotapes and other evidence, the grand jury returned a forty-five count indictment against the Hammad brothers, including thirty-eight counts of mail fraud for filing false Medicaid invoices. Eid was also indicted for arson and for fraudulently attempting to collect fire insurance. Taiseer faced the additional charge of obstructing justice for attempting to influence Goldstein's grand jury testimony. The case was assigned to Judge Glasser of the Eastern District of New York.

Before trial, Taiseer Hammad moved to suppress the recordings and videotapes, alleging the prosecutor had violated DR 7-104(A)(1) of the American Bar Association's Code of Professional Responsibility. The rule prohibits a lawyer from communicating with a "party" he knows to be represented by counsel regarding the subject matter of that representation. In short, Taiseer alleged that the prosecutor--through his "alter ego" Goldstein--had violated ethical obligations by communicating directly with him after learning that he had retained counsel.

A hearing was convened on September 17, 1987, to consider the suppression motion and, specifically, to ascertain whether the prosecutor knew, at the time, that Taiseer had counsel. In support of his motion, Hammad submitted affidavits from his attorney, Richard Greenberg, and his prior counsel, George Weinbaum. Weinbaum also testified at the hearing.

In essence, Weinbaum testified that, from August 1985 to June 1987, he represented Taiseer Hammad in all aspects of his Medicaid dispute. Specifically, Weinbaum recounted telephoning the AUSA in July 1986 and informing him that he "represented Taiseer Hammad and the Hammad department store." He did not comply with a request for written confirmation of his relationship with Taiseer, but did not suggest any change in his status as Hammad's attorney.

The government vigorously disputed Hammad's assertion that the prosecutor had violated ethical standards by authorizing Goldstein to approach the defendant. It argued that DR 7-104(A)(1) was irrelevant to criminal investigations. Alternatively, it claimed the rule did not apply to investigations prior to the commencement of adversarial proceedings against a defendant. In addition, the government denied that, at the time he directed Goldstein to approach Taiseer, the prosecutor knew Taiseer was represented by counsel. The government argued that the AUSA reasonably believed Weinbaum ceased representing Taiseer on September 15, 1986. Thus, the argument proceeds, Taiseer had no attorney when he met with Goldstein. The government, however, failed to present any evidence to support its factual contentions or to rebut Weinbaum's assertion that he continued to represent Taiseer. It rested on its legal contention that DR 7-104(A)(1) did not apply.

In an order dated September 21, 1987, Judge Glasser granted Taiseer's motion to suppress the recordings and videotapes. 678 F. Supp. 397 (E.D.N.Y. 1987). The government, he found, "was clearly aware, by at least as early as September 9, 1986, that [Taiseer] had retained counsel in connection with this case." 678 F. Supp. at 399. He also determined that Goldstein was the prosecutor's "alter ego" during his discussions with Hammad. Accordingly, the court held that the ...

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