The opinion of the court was delivered by: ARTHUR SPATT, District Judge
MEMORANDUM OF ORDER AND DECISION
This case involves charges of fraud, among other things. The
Government moves to disqualify Attorney Paul Shechtman
("Shechtman" or "counsel") of Stillman & Friedman (the "Firm")
from representing defendant Herman Niederman ("Niederman")
because of Shechtman's prior representation of co-defendant Nat
The superceding indictment ("Indictment") alleges that
Schlesinger and Niederman devised and executed a scheme to
defraud creditors and various lien and judgment holders of a
publicly traded company known as Private Brands ("PB"). The
Indictment charges the defendants with engaging in a series of
fraudulent business transactions to give the false appearance to
creditors that title to PB's assets had been conveyed to C.C.
Calabria ("Calabria") and thereafter to defendant Goodmark
Industries ("Goodmark"), and that both were independent entities
unrelated to PB. According to the Government, the actual nature
of these transactions was to conceal the true ownership of PB's
assets. Niederman's alleged participation in the overall scheme
involved opening bank accounts and signing letters to PB's
creditors as "secretary" of Goodmark to give creditors the
impression that PB and Goodmark were unrelated entities by
representing that Goodmark had taken over PB's business.
The Indictment alleges that one of the creditors defrauded by
Schlesinger's scheme to defraud was the New York State Department
of Taxation and Finance ("NYS Tax"). Counts 22-24 of the
Indictment allege that, in February 2000, NYS Tax found
Schlesinger "a responsible person" of PB and personally assessed
him for taxes owed by PB to New York State.
To reverse the tax assessment and contest the finding that he
was responsible for PB's unpaid taxes, Schlesinger retained
Shechtman and his Firm. As evidenced by correspondence with NYS
Tax on behalf of Schlesinger, both Shechtman and his partner
James Mitchell ("Mitchell") represented Schlesinger. The
Government has obtained five letters to NYS Tax between March
2000 and December 2001 written by Mitchell, and one letter to NYS
Tax, dated November 22, 2000, written by Shechtman. In
Shechtman's letter, he referred to prior correspondence between
Mitchell and NYS Tax, which evinces his familiarity with the
history of communications between the parties regarding the
assessment. The Shechtman letter referred to Schlesinger as "my
client" and commented on the "numerous" phone calls "we" had made
to NYS Tax. The Government contends that the letter indicates
that Shechtman was fully apprised of the facts of Schlesinger's
case. The Government also claims that, based upon false
information provided by Schlesinger, the Firm was able to reverse
the assessment. In addition, the Government states that the
Firm's submissions to NYS Tax falsely represented that
Schlesinger did not have any responsibility or role in the
financial or tax related affairs of PB.
The Government states that NYS Tax was one of the lien and
judgment holders of PB and that it will prove that NYS Tax is a
charged victim of the creditor fraud. In addition, the Government
asserts that its evidence will show that Schlesinger provided
several NYS Tax judgments to an attorney attempting to negotiate
a settlement of a bankruptcy judgment against PB. The Indictment
alleges that Schlesinger submitted these "for the purpose of
delaying enforcement of the Bankruptcy Judgment against Private
Brands and Bali Jewelry until SCHLESINGER could complete the
fraudulent transfer of title to the PB Collateral to Calabria."
The Government claims that Schlesinger retained the Firm as part
of his overall scheme to defraud PB creditors, and that letters
written by Shechtman and Mitchell on Schlesinger's behalf were in
furtherance of the charged mail fraud conspiracy.
A. The Right to Conflict-Free Counsel
The Sixth Amendment guarantees that "in all criminal
prosecutions, the accused shall enjoy the right . . . to have the
Assistance of Counsel for his defense." U.S. Const. amend. VI.
However, a defendant's right to be represented by the counsel of
his own choice is not absolute. Wheat v. United States,
486 U.S. 153, 159, 100 L. Ed. 2d 140, 108 S. Ct. 1692 (1988); United
States v. Locascio, 6 F.3d 924, 931 (2d Cir. 1993). As the
Supreme Court explained, "[t]he essential aim of the Amendment is
to guarantee an effective advocate for each criminal defendant
rather than to ensure that a defendant will inexorably be
represented by the lawyer whom he prefers." Wheat,
486 U.S. at 159.
Included in the Sixth Amendment right to assistance of counsel
is the right to be represented by counsel who is free of
conflict. United States v. Schwarz, 283 F.3d 76, 90 (2d Cir.
2002). Thus, while a defendant's choice of counsel is
presumptively favored, "such presumption will be overcome by a
showing of an actual conflict or a potentially serious conflict."
United States v. Jones, Nos. 01-1001, 01-1668, 2004 U.S. App.
LEXIS 17878, at *10 (2d Cir. Aug. 23, 2004). Once the district
court has been informed of the possibility of conflict of
interest, it has a duty to "to investigate the facts and the
details of the attorney's interest to determine whether the
attorney in fact suffers from an actual conflict, a potential
conflict, or no genuine conflict at all." United States v.
Levy, 25 F.3d 146, 153 (2d Cir. 1994).
An attorney has an actual conflict of interest if his "and the
defendant's interests `diverge with respect to a material factual
or legal issue or to a course of action,' or when the attorney's
representation of the defendant is impaired by loyalty owed to a
prior client." Jones, 2004 U.S. App. LEXIS 17878, at *11
(quoting United States v. Feyrer, 333 F.3d 110, 116 (2d Cir.
2003)). A potential conflict of interest exists if "the interests
of the defendant may place the attorney under inconsistent duties
at some time in the future." United States v. Kliti,
156 F.3d 150, 153 n. 3 (2d Cir. 1998).
If the court determines that counsel has a conflict of
interest, it must eliminate it through either disqualification or
waiver. Id. at 153. Where an actual or severe conflict is so
strong that "no rational defendant would knowingly and
intelligently desire the conflicted lawyer's representation," the
court is obligated to disqualify the attorney. Levy,
25 F.3d at 153. Such conflicts are unwaivable. Kliti, 156 F.3d at 153. If
a lesser actual or potential conflict exists, a district court
may accept the defendant's knowing and intelligent waiver of his
right to a non-conflicted lawyer. United States v. Perez,
325 F.3d 115, 125-28 (2d Cir. 2003). In obtaining a defendant's
waiver, a district court follows the procedures outlined in
United States v. Curcio, 680 F.2d 881, 888-90 (2d Cir. 1982).
However, if the attorney's conflict jeopardizes the integrity of
the judicial proceedings, the district court has "substantial
latitude in refusing waivers of conflicts of ...