Defense Witness Immunity: Prosecutor Discretion and Compelling Testimony of a Reluctant Witness in Criminal Cases (9/6/11)

In criminal cases, the prosecutors often bring charges where third party witnesses could give testimony that might be crucial to the prosecution or the defense. For example, the prosecutors' imagination for the ubiquitous conspiracy charge will often include unindicted co-conspirators, named in the indictment or not. It is not uncommon for those witnesses to be reluctant for a number of reasons, including fear of prosecution if they were to testify or fear of some other type of retribution if they testified. The former, of course, has constitutional dimensions.

At least in the example of unindicted co-conspirators, the prosecutors may be able to use and abuse hearsay statements under FRE 801(d)(2)(E). But, prosecutors may want actually live testimony of the unindicted co-conspirator(s). The prosecutors have a powerful tool to force such testimony by conferring statutory immunity. 18 USC Section 6003 (court "shall" issue the order of statutory immunity upon request of prosecutors). If the witness is important to the prosecutors' case against the named defendants, the prosecution will have the incentive to force the witness to testify upon penalty of contempt and incarceration if he or she does not testify. The prosecutors will often not want to confer immunity if the testimony is less important to the prosecution and the prosecutors want to hold open the possibility of prosecuting the witness in the future. (Technically, the grant of statutory immunity grants only derivative use immunity, but the difficulties of the Kastigar hearing may make prosecution unlikely after the witness testifies under compulsion of statutory immunity (use and derivative use immunity). )
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Fascinating WaPo Story on the Birkenfeld Saga

The May 16 edition of the Washington Post has a fascinating article on the Birkenfeld saga. David S. Hilzenrath, Swiss banker turned whistleblower ended up with a prison sentence. Birkenfeld strived to get the holy grail of whistleblower rewards under Code Section 7623 (statute here and IRS discussion here) and immunity from prosecution.  That was a delicate dance, and he tried out several partners for the dance (DOJ Tax, SEC, IRS).  Birkenfield stepped on some toes and ended up being prosecuted.  It remains to be seen whether he will be rewarded.  If so, the amount could be huge.

I have previously blogged various aspects of the Birkenfeld saga (see here for all posts), including being named Tax Analysts Person of the year (see here).

The takeaway from Birkenfeld's experience is that, if you are going to do this dance, you must come clean and not protect either your self or others (including clients).

Some good quotes from the article:

[Karen E.] Kelly [of DOJ Tax and Walter Anderson prosecution fame] also put Birkenfeld's lawyers on notice: The Justice Department was not part of the IRS whistleblower program, "and you should act accordingly."

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[After giving DOJ Tax criminal attorneys some tantalizing information] Prosecutor Kevin M. Downing "looked at me and said, 'Oh, you watch too much TV. That's Hollywood,' " Birkenfeld recounted in an interview. Birkenfeld said he felt he was treated with "hostility and aggression."

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Meanwhile, Downing had been leading the landmark prosecution of former employees of the big accounting firm KPMG on charges of promoting fraudulent tax shelters. In that case, a court dismissed charges against 13 of the defendants after finding that the government "violated the Constitution it is sworn to defend" by in effect denying them access to counsel. The court said the prosecution's overzealousness was consistent with policies established at Justice headquarters.

* * * * *

At Birkenfeld's sentencing last year, Downing said the banker's assistance had been indispensable. "I will say that without Mr. Birkenfeld walking into the door of the Department of Justice in the summer of 2007, I doubt as of today that this massive fraud scheme would have been discovered by the United States government," Downing said.

But Downing faulted him for "failing to disclose his involvement with the fraud and the U.S. clients that he aided." If Birkenfeld had been more forthcoming about one of his own clients before the government reached a financial settlement with that client, the California real estate billionaire would have been sent to prison, Downing said.

"We cannot have people, U.S. citizens, engage in that kinds [sic] of fraud scheme, come back here, and put half the leg in the door," Downing told the court, according to a transcript.

Birkenfeld argued that if he divulged client names without a subpoena, he could have been jailed in Switzerland.

[Why do I put this last item from the article in this blog? Principally because I had an analogous experience with the esteemed Mr. Dowing while he was serving as one of the prosecutors in the KPMG individual defendant prosecution (the one noted above where the juggernaut of the prosecution fizzled because of even more egregious prosecutorial abuse).  The team, including principally Downing, insisted that my client violate U.S. federal and state law to give the prosecutors information without issuing a grand jury subpoena required by federal and state law for that type of information disclosure. (For my prior discussion of this issue, see here.)  My client refused to be bullied by the prosecution team, consistent with my client's and my understanding of the law. Dowing et al. prosecuted my client too, but fortunately the prosecution team got their come-uppance for other prosecutorial abuse, of which this relatively minor incident was a fair harbinger.]

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The head of the IRS Whistleblower Office, Stephen A. Whitlock, declined to discuss the Birkenfeld matter, citing confidentiality law. Speaking generally, he said that the whistleblower program "is not an immunity program."

"And if the person who is bringing us the information has some criminal exposure themselves," Whitlock said, "then they need to think about that."