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United States v. Collins

March 4, 2010


The opinion of the court was delivered by: Robert P. Patterson, Jr., U.S.D.J.


On December 4, 2009, Defendant Joseph P. Collins moved pursuant to Rule 33 of the Federal Rules of Criminal Procedure for a new trial on the grounds of newly discovered evidence. The newly discovered evidence consists of documents, emails and handwritten notes of Weil, Gotshal & Manges LLP ("Weil Gotshal") attorneys to which Weil Gotshal's client, Thomas H. Lee Partners ("T.H. Lee"), waived privilege in civil litigation presently being litigated in another part of this Court. On December 28, 2009, the Government submitted its memorandum of law in opposition to Defendant's motion for a new trial ("Gov't Mem."). On January 7, 2010, Defendant submitted a letter in further support of his motion for a new trial ("Def. Reply"). Defendant having waived his right to oral argument on this motion by letter dated January 20, 2010, no oral argument was heard. For the reasons discussed herein, Defendant's motion is denied.

I. Legal Standard

A motion for a new trial based on newly discovered evidence should be granted "only upon a showing that the evidence could not with due diligence have been discovered before or during trial, that the evidence is material, not cumulative, and that admission of the evidence would probably lead to an acquittal." United States v. Alessi, 638 F.2d 466, 479 (2d Cir. 1980). In order for Defendant to prevail on his motion, there must be "a real concern that an innocent person may have been convicted." United States v. Canova, 412 F.3d 331, 349 (2d Cir. 2005). In evaluating a Rule 33 motion based on newly discovered evidence, a court must "exercise great caution" and order a new trial "only in the most extraordinary circumstances." United States v. Zagari, 111 F.3d 307, 322 (2d Cir. 1997) (quoting United States v. Spencer, 4 F.3d 115, 118 (2d Cir. 1993)) (emphasis in originals). Here, the Government does not contend that Defendant could have discovered the new evidence before or during trial. Therefore, the outcome of Defendant's motion turns on whether the newly discovered evidence is material and whether its admission would probably have led to an acquittal.

II. Discussion

Defendant's counsel contends that "[h]ad the defense been equipped with this evidence at trial, it would have been able to establish that (1) the conversation [between Jay Tabor and Defendant] took place in April [2004] not in March, (2) Collins's credibility as a whole was affirmed, not undermined by his direct contradiction of Tabor on this point, and (3) the chronology corroborates Collins's principal defense theme that he had what he believed to be a principled basis for not disclosing the Proceeds Participation Agreement when he spoke to Tabor in April." (Memorandum of Law in Support of Joseph P. Collins's Motion for a New Trial ("Def. Mem.") at 9.) The Proceeds Participation Agreement ("PPA") (Government Exhibit ("GX") 1504) was a July 2002 Agreement between Refco Group Ltd., LLC ("Refco") and D.F. Capital, Inc. ("DFC"), an affiliate of BAWAG Overseas, Inc. ("BAWAG"), which was a member of Refco and owner of ten percent of Refco's equity.

A. The newly discovered evidence is not material because it does not cast doubt on the reliability of Mr. Tabor's testimony.

Defendant's newly discovered evidence supporting its Motion for a New Trial consists of complete copies of Tabor's handwritten notes as well as emails sent and received by attorneys at Weil Gotshal. (Declaration of Kathleen E. Cassidy dated Dec. 4, 2009, Exs. A, E-O.)*fn1 They are not sufficient support to grant the motion.

First, review of the handwritten notes of Mr. Tabor shows nothing inconsistent with his testimony at trial. The notes consist of an assemblage of generally undated to do lists, notes of telephone conferences dated March 23, 2004 and March 30, 2004, scratch sheets and telephone memos from the period December 2003 to August 2004, covering a wide variety of fact and legal issues which Weil Gotshal was investigating as part of its due diligence of Refco and of its negotiation and closing of an Equity Purchase and Merger Agreement whereby Weil Gotshal's client, T.H. Lee, acquired a majority interest in Refco. (Cassidy Decl., Ex. A.)

On their face, the notes establish very little and certainly not that the conversation took place in April not March or that Defendant's credibility was affirmed or corroborated. Nor in the light of the doubts raised by defense counsel during cross-examination of Tabor's recollection of his conversation with Defendant in March, 2004, would the handwritten notes be further reason to "raise grave doubts about the reliability of any dates inscribed on his notes" as the defense asserts. (Def. Mem. at 9.) Indeed the dating of the conversation with Defendant, about which Tabor testified, was a fact issue raised by the defense during cross-examination.

The remaining new evidence submitted by Defendant consists of emails, principally between attorneys at Weil Gotshal relating to separate aspects of the due diligence issues being investigated at Weil Gotshal, and do not contradict Mr. Tabor's testimony about his telephone conversation with Defendant on March 23, 2004. Defendant testified that the conversation in which he did not disclose the PPA occurred in April because Philip Bennett, CEO of Refco, told him he did not want the PPA disclosed in April.*fn2 Neither in the handwritten notes nor in the emails is there any other mention of Defendant in March 2004. But the emails do not, as defense asserts, "make clear that Tabor had no conversations with Collins in March 2004" or that the deal "was at a virtual stand-still" with no due diligence taking place (Def. Mem. at 9), nor do they show that "to the extent that any further requests for information were being considered during this period, the requests were to be made directly to Refco's General Counsel, Dennis Klejna, or to Refco's Investment Bank, Credit Suisse First Boston ("CSFB")." (Id. at 9.) Tabor testified on direct examination that he did not remember the exact date of his telephone conversation with Defendant but did remember it was one of two conversations in March and preceded a March 30, 2004 conversation which was reflected in Tabor's billing records (Defense Exhibit ("DX") 301)*fn3 as well as in his own handwritten notes of that conversation.

Defense counsel cross-examined Tabor extensively at trial about the date of his March 2004 conversation with the Defendant, pointing out that for each entry in his billing records (DX 301) for the month of March 2004, Tabor had made no entry for the alleged conversation with the Defendant. (Trial Transcript (hereinafter "Tr.") at 1459-70.) Tabor was also confronted with a government agent's notes of a pretrial interview with him referencing "possibly March 04" as to a telephone call with Collins about due diligence. (Cassidy Decl., Ex. P; Tr. at 1476-77.) Defense counsel also cross-examined Tabor suggesting that his testimony was motivated by Weil Gotshal's and his own possible liability in civil litigation over Refco's demise. (Tr. at 1451-59, 1649-52.) Although the cross-examination raised doubts about Tabor's memory that the alleged conversations took place in March, it did not cause him to change his testimony and the Government was able to admit his notes of the conversation dated March 23, 2004 as a prior consistent statement. (GX 700; Tr. at 1604.)*fn4

Tabor's day notes contained in Weil Gotshal billing records to T.H. Lee, which were available to the defense at trial, reflect for each day the nature of Tabor's interaction with representatives of his client, T.H. Lee, other lawyers at Weil Gotshal, representatives of CSFB and other persons and law firms questioned during the course of due diligence and other preparations for the proposed transaction. (DX 301.)

Contrary to defense contentions, the newly discovered emails do not provide evidence that the March 23, 2004 telephone conversation did not take place, nor would these emails have enabled the defense to establish that the conversation took place in April not on March 23, 2004, as defense asserts (Def. Mem. at 9).

It is true, as defense argues, (i) that there is no evidence showing that the Defendant set up the March 30, 2004 call with Dennis Klejna and others (Def. Reply at 2); (ii) that Tabor, on March 26, 2004, informed Jim Westra, the partner at Weil Gotshal in charge of the potential transaction, that when Max Strasberg of T.H. Lee called Dan Gerwitz of Weil Gotshal to determine how much more due diligence Weil Gotshal would have to do and how long it would take, Gerwitz had reminded Strasberg that Weil Gotshal needed to have a conversation with Refco's general counsel (Klejna) to go through Weil Gotshal's due diligence list (Def. Mem. at 12-13; see Cassidy Decl., Exs. K, L); and (iii) that on March 27, 2004, Strasberg told Tabor he would arrange such a call after Tabor reminded Strasberg that Weil Gotshal needed to have a conversation with Dennis Klejna in order to go through the standard due diligence list and confirm any materials that were missing from the data room (Cassidy Decl., Ex. M). But the newly discovered emails do not contradict Tabor's notes dated March 23, 2004, showing that, during his conversation with Defendant, Tabor also asked Defendant to set up such a call with Klejna. The fact that Tabor asked others to arrange a call with Klejna does not preclude Tabor having made a similar request of the Defendant on March 23, 2004, as reflected in Tabor's notes from that date. The newly discovered emails merely corroborate Weil Gotshal's need, as of March 27, 2004, to have a conversation with Refco's general counsel (Klejna) "which [Weil Gotshal] discussed with the Lee guys a couple of weeks ago." (Id., Ex. L.)

Defense counsel in their reply letter also maintain that the emails (Id., Exs. H, I) show that on March 22, 2004, Tabor delegated the follow-up on the discussion of the pending SEC inquiry to Conrad Balke of Weil Gotshal (See also Id., Exs. J, L, M) and argue that if Tabor had raised the issue on March 23, 2003 with Defendant, one would expect that fact to appear in these emails. (Def. Reply at 3.) This argument loses sight of several pertinent observations. First, the fact that Tabor delegated responsibility to Balke for a follow-up does not mean he would not make a similar request of Defendant the following day. Second, Tabor's responsibilities in the transaction involved far more than the follow-up discussion of the SEC inquiry. Weil Gotshal's billing records reflect that Tabor acted as quarterbackto the Weil Gotshal team. He recorded twice the time on the matter than any other attorney and was engaged in many other aspects of the proposed transactions. (See DX 301 at 2-4.) Westra testified that "[Tabor] is somebody who took the laboring oar on a number of important parts of this transaction and to whom I delegated a lot of responsibility" which included meetings and conversations with Mr. Collins, which Westra was not a part of. (Tr. at 1778-79.)

Next, the emails do not constitute the full extent of Tabor's or other Weil Gotshal's attorneys' communications. Review of Weil Gotshal billing records reflect that in March 2004, Tabor principally used telephone calls, not emails, to report to Westra as well as to contact other Weil Gotshal attorneys, CSFB and T.H. Lee executives. (DX 301.)

Furthermore, Westra testified that Dennis Klejna was not the lawyer working on the proposed transaction but was responsible for regulatory compliance and litigation. (Tr. at 1658.) And, Tabor's notes of the conversation with Defendant on March 23, 2004 are consistent with inquiries of a lawyer working on different aspects of the proposed transaction than merely litigation and regulatory compliance. DX 301 reflects that on March 9 and 10, 2004, Tabor and Westra began their review of the Defendant's draft Transaction Documents. Weil Gotshal's billing records reflect that on March 9 2004, Tabor began his review of draft Transaction Documents drafted by the Defendant (See GX 1616 (dated March 4, 2004); DX 301 at 19-20 (records for 3/10/04)), and beginning on March 17, Tabor worked on Debt Financing Structure, a structure memorandum for inclusion in the draft Letter of Intent (DX 301 at 25 (records for 3/17/04)). Tabor's notes of the alleged March 23, 2004 conversation with Defendant are consistent with separate inquiries primarily relevant to those aspects of the transaction which do not explore regulatory and litigation inquiries. (Cassidy Decl., Ex. C.) Tabor's March 23, 2004 notes state on the first page "Joe will to push to get responses to our open requests" and then covered the next numbered categories pertinent to aspects of the proposed transaction, separate from litigation and regulatory compliance, under headings such as "debt," "customer Ks" (contracts), "JV" (joint ventures), "Ks / arrangements with Phil/RGHI," "non-competes," etc. and, on the last page, state "Joe to arrange for call with Dennis K. and Rob T. as well to go over remaining diligence q[uestion]s -- To be scheduled separately." (Id.) Tabor's notes of a March 30, 2004 telephone call with Dennis Klejna, Rob Trosten and Phillip Bennett cover essentially the same topics and the SEC inquiry. (Gov't Mem., Ex. C.) Thus, the inquiries covered by the notes dated March 23 were separate and apart from the regulatory and litigation inquiries to be made of Klejna, and on March 30, with Bennett present, there were responses to many of the inquiries that Tabor had previously raised with Defendant, as recorded in Tabor's March 23 notes.

For the reasons stated, contrary to defense's assertion, the newly discovered emails and handwritten notes do not represent material new evidence inconsistent with the March 23, 2004 date appearing on Tabor's notes of a call with Defendant, nor are they inconsistent with Tabor's trial testimony about the date of his call with Defendant.

B. The newly discovered evidence would have been merely cumulative in light of other Government evidence and would not have led to an aquittal

Review of the trial transcript leads to the conclusion than any cross-examination by the defense based on the newly discovered evidence would be merely cumulative of the cross-examination previously conducted and would lead to no different conclusion. More importantly, the timing of the Defendant's conversation with Tabor (i.e., whether it occurred in March or April 2004) was not the significant point in the trial that defense counsel contends. (Def. Mem. at 9.) Indeed, the Defendant's oral statement to Tabor would have the same effect on the jury's evaluation of the Government's evidence of the Defendant's intentional non-disclosure of the PPA (GX 1504) and a side letter agreement between the parties on the same date (GX 1503) regardless of whether Defendant's oral statement was made in April or in March 2004.

The evidence which led principally to Defendant's conviction was his admitted intentional determination to not disclose the existence of the PPA, based on his claim it was an "upstream" agreement of Refco Group Holding, Inc. ("RGHI"), which, until the closing of the T.H. Lee deal in August 2004, owned a 90% interest in Refco. Defendant as outside corporate counsel to Refco, was the lawyer mainly responsible for the negotiation and drafting of T.H. Lee's agreement to acquire a majority interest in Refco from RGHI. Pursuant to the PPA, DFC (an affiliate of Refco's other owner, BAWAG), had made two significant cash infusions into Refco totaling $467 million at the end of Refco's fiscal year on February 28, 2003 and in the Fall of 2003, causing DFC to become entitled to receive 27.2% of the proceeds of any sale of Refco. (Tr. at 482, 490-91; GX 1503; GX 1504.) In Article 11 of the PPA, Refco ...

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