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United States v. Lair

February 2, 2007

UNITED STATES OF AMERICA,
v.
MICHAEL LAIR, DEFENDANT.



The opinion of the court was delivered by: Haight, Senior District Judge

MEMORANDUM OPINION AND ORDER

In this criminal action, the Government moves for an order of detention pursuant to the Bail Reform Act, 18 U.S.C. § 3142(e). The defendant, who is presently incarcerated pending trial, cross-moves for release from custody in accordance with the terms and conditions of a bail package which he has proffered.

The case came before this Court sitting in Part I during the absence from the courthouse of District Judge Casey, to whom the case has been assigned.

BACKGROUND

The indictment charges defendant Michael Lair with four counts of wire fraud, in violation of 18 U.S.C. §1343. Specifically, the Government charges Lair with orchestrating and implementing a fraudulent scheme whereby he contacted parties and attorneys involved in high profile litigation, falsely claimed to have gathered evidence relevant to that litigation and demanding up-front payments before disclosing the evidence, or falsely claiming to have been solicited by other counsel in such litigation to engage in illegal and unethical conduct, and demanding up-front payments before disclosing evidence of that contact. The indictment describes "Litigation One" and "Litigation Two." In Litigation One, the Government alleges that Lair approached counsel for a former CEO of an insurance company engaged in litigation with that company, claiming to have evidence that would assist that individual in the litigation, and demanding and receiving from the CEO's attorneys approximately $75,000. In Litigation Two, the Government alleges that Lair contacted an attorney representing a large pharmaceutical company involved in litigation with a large hedge fund, offered the attorney representing the pharmaceutical company evidence that would assist in the litigation, received from the company's attorney certain fees, was thereafter fired by the attorney, and approached a lawyer representing the hedge fund, falsely telling that attorney that the pharmaceutical company had hired Lair to use illegal and unethical investigative techniques in connection with the litigation, eventually receiving approximately $50,000 in advance of producing such evidence. The Government's theory of the case is that all of Lair's representations to these litigants and their attorneys were false, and that he never produced any of the promised evidence.

Following his arrest on December 14, 2006, Lair was arraigned before Magistrate Judge Henry B. Pitman. On December 19, 2006, Lair appeared at a retention hearing before Magistrate Judge Kevin N. Fox. Judge Fox set Lair's bail as follows: a $50,000 personal recognizance bond, co-signed by two financially responsible persons and secured by $1,500, with the additional bail conditions of strict Pretrial Services supervision, the provision by defendant of an address where he would reside when released, verification by Pretrial Services of that address, drug testing and treatment of the defendant, the defendant's abiding by a domestic order of protection referred to in the bail report, the restriction of defendant's travel to the Southern and Eastern Districts of New York and the District of Montana (where defendant maintained his home), and the surrender of travel documents.

Dissatisfied with these terms and conditions of bail, the Government moved for a detention hearing before this Court. In connection with that hearing, the Pretrial Services officer recommended Lair's release "on a moderate bond, co-signed by 2 financially responsible persons and secured by some combination of cash or property." Report of Pretrial Services Officer Jeffrey Thomas Steimel, dated January 18, 2007. In effect, Officer Steimel reiterated the bail terms and conditions imposed by Judge Fox.

Since the government contends that the bail set by Judge Fox is inadequate and unacceptable, the procedural vehicle for its motion is 18 U.S.C. § 3415(a)(1), which provides that if a person is ordered released by a magistrate judge, "the attorney for the Government may file, with the court having original jurisdiction over the offense, a motion for revocation of the order or amendment of the conditions of release . . . ." Lair resists that motion, contends that the amount of bail should remain at $50,000, states that he is in a position to post $1,500 in security and proffers two individuals, residents of Montana, as co-signers of the $50,000 personal recognizance bond.

The Government is represented by AUSA Helen V. Cantwell. Lair is represented by Leonard F. Joy, Attorney-in Chief of the Federal Defender's Office. The Court conducted two hearings at which counsel argued their positions. At the second of these hearings, AUSA Cantwell represented to the Court that further investigation by FBI agents had located some 10 or 12 additional victims of the same fraudulent scheme perpetrated by Lair in the same manner as that described with respect to "Litigation One" and "Litigation Two" in the present indictment. The Government announced its intention of superseding the indictment to include these additional facts. In response to an inquiry from the Court the Government estimated the length of its case in chief at about two weeks, and said it would call between 20 and 30 witnesses.

Having considered the oral submissions of counsel, and a more recent exchange of correspondence between them, the Court concludes that no further evidentiary hearing is necessary in the case, and that these cross-motions are now ripe for decision.

DISCUSSION

The Government's motion for a detention order is governed by 18 U.S.C. § 3142(e), which provides that a judge "shall order the detention of a person before trial" if after conducting a hearing, the judge "finds that no condition or combination of conditions will reasonably assure the appearance of the person as required and the safety of any other person and the community. . . ." In the case at bar, the Government stresses the risk of flight factor rather than the safety of the community.

The Second Circuit interprets § 3142(e) "to require a district court to engage in a two-step inquiry before ordering a defendant released or detained pending trial." United States v. Shakur, 817 F. 2d 189, 194 (2d Cir. 1987) (citation omitted). In Shakur, the court of appeals continued: First, the court must make a finding as to whether the defendant presents a risk of flight if not detained.

Second, if the court finds that a defendant is likely to flee, then the court must proceed to the second step of the inquiry, namely, whether there are conditions or a combination of conditions which reasonably will assure the presence of the defendant at trial if he is released. The burden of proof is on the ...


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