Free Motion to Quash - District Court of Colorado - Colorado

Case 1:04-cr-00103-REB

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Criminal Action No. 04-cr-00103-REB

UNITED STATES OF AMERICA, Plaintiff, v. NORMAN SCHMIDT, et al, Defendants.

UNITED STATES' MOTION TO QUASH SUBPOENA DIRECTED TO AUSA JAMES RUSSELL

The United States Attorney General, through the United States Department of Justice, United States Attorney's Office for the District of Colorado, respectfully moves this Court pursuant to Fed. R. Crim. P. 17(c)(2) for an order quashing the subpoena directed to Assistant United States Attorney (AUSA) James Russell, and preventing AUSA Russell from testifying at the trial of the above case. In support of this motion, the United States advises as follows: 1. 2. The United States is a party to the above-captioned criminal action. On April 11, 2007, defendant Mike Smith served a subpoena on AUSA

Russell, directing him to attend and give testimony at the trial in this case on May 1, 2007. See Subpoena attached hereto as Exhibit 1. 3. AUSA Russell is an Assistant U.S. Attorney for the District of Colorado,

assigned to the Asset Forfeiture Unit. AUSA Russell represented the United States in

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connection with four civil forfeiture actions filed in 2003, all of which involved proceeds from the same fraud scheme that is at issue in this trial. Specifically, the cases were U.S. v. Redstone Castle, Case No. 03-cv-00385-REB, U.S. v. Certain Bank Accounts, Case No. 03-cv-00403-REB, U.S. v. Various Bank Accounts, Case No. 03-cv-00799REB (subsequently consolidated into 03-cv-00403), and U.S. v. Assets and Equipment of Smitty's Motorsports, Case No. 03-cv-00749-REB. In three of the four cases, Norman Schmidt, a defendant in this criminal case, filed a claim and answer. Ultimately, the cases were settled pursuant to settlement agreements under which the United States forfeited property worth approximately $18 million and returned $200,000 to Norman Schmidt. 4. 5. AUSA Russell is not counsel of record in this criminal case. As an Assistant U.S. Attorney, AUSA Russell is subject to regulations

promulgated by the United States Department of Justice which govern the testimony of its federal employees in matters in which the United States is a party, when the testimony concerns "any information acquired by any person while such person was an employee of the Department as a part of the performance of that person's official duties or because of that person's official status." These regulations are set forth at 28 C.F.R. §§ 16.21-16.28 ("Touhy" regulations). These regulations set forth the conditions under which such employees may testify and/or provide documents in proceedings such as this. 6. Where, as here, a party wishes to subpoena an employee of the

Department of Justice (including its component the United States Attorney's Office) to testify in a case in which the United States is a party, the requesting party must comply

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with the requirements of 28 C.F.R. §16.23(c). That section requires the requesting party to supply the United States Attorney with an affidavit or statement summarizing the information sought and setting forth its relevance: If oral testimony is sought by a demand in a case or matter in which the United States is a party, an affidavit, or, if that is not feasible, a statement by the party seeking the testimony or by the party's attorney setting forth a summary of the testimony sought must be furnished to the Department attorney handling the case or matter. Pursuant to 28 C.F.R. § 16.24, the United States Attorney or other responsible official within the Department of Justice will then consider the affidavit or written statement in light of the factors set forth in 28 C.F.R. § 16.26 and determine whether or not to authorize the testimony. Those factors are whether the disclosure is appropriate under the applicable rules of procedure and privilege, and whether the disclosure would violate a statute or regulation, or reveal classified information, a confidential source, investigatory records, or trade secrets. Id. 7. The United States Supreme Court has upheld the validity of this type of

federal regulation. United States ex rel. Touhy v. Ragen, 340 U.S. 462 (1951). See also U.S. v. Allen, 554 F.2d 398, 406 (10th Cir. 1977) (Department of Justice "Touhy" regulations are valid and were properly applied to prevent the testimony of an Assistant U.S. Attorney who was prosecuting a criminal case on behalf of the United States); U.S. v. Mintz, 1996 WL 666784 (D. Kan. 1996) (attached as Exhibit 2) (granting United States' motion to quash subpoena directed to Assistant U.S. Attorney, where U.S. Attorney declined to authorize the testimony pursuant to the Touhy regulations).

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8.

Counsel for defendant Mike Smith complied with the requirement to

supply a written statement summarizing the information sought. In the written statement, defense counsel Richard N. Stuckey provided the following description of the testimony he sought to obtain from AUSA Russell: During negotiations regarding some sort of claim pressed by Norman Schmidt and his attorney against the seized funds in this case, AUSA Russell, for whatever reason or reasons, agreed to allow $200,000 to be returned, or to be given over, from the corpus of the seized funds to Norman Schmidt, and possibly his wife, or the attorney, and the funds were so turned over (by government voucher, or check, or transfer, or whatever) to Norman Schmidt, or to his attorney, or his wife, or a bank account. See Stuckey Letter attached as Exhibit 3. 9. After reviewing the letter from Mr. Stuckey, United States Attorney Troy A.

Eid has declined to authorize the testimony. See Letter from Troy A. Eid to AUSA Russell dated April 23, 2007, attached as Exhibit 4. As set forth in the letter, the United States Attorney concluded that the testimony was not appropriate because "defense counsel apparently seeks testimony about [AUSA Russell's] reasons for entering into the settlement. Such testimony would be protected under the attorney work product, attorney client, and deliberative process privileges." WHEREFORE, for the reasons set forth above, the United States respectfully requests that this Court quash the subpoena issued to AUSA Russell.

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DATED this 24th day of April, 2007. TROY A. EID UNITED STATES ATTORNEY By: s/ Lisa A. Christian LISA A. CHRISTIAN Assistant U.S. Attorney 1225 17th Street, Suite 700 Denver, Colorado 80202 Phone: (303) 454-0157 Fax: (303) 454-0404 [email protected]

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CERTIFICATE OF MAILING I hereby certify that on this 24th day of April, 2007, a true and correct copy of the foregoing MOTION TO QUASH SUBPOENA DIRECTED TO AUSA JAMES RUSSELL was electronically filed and served on: [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected]

s/Annette Dolce Office of the U.S. Attorney