by Timothy J. Burger,
Washington lawyer Robert Luskin will admit
this much: Receiving the bulk of his payment on behalf of a shady
client in the form of 45 gold bars worth a cool half million was
highly unusual. but it wasn't improper, Luskin insists. And that's
where he clashes with the Justice Department, which has taken
the rare step of demanding that Luskin and four other lawyers
turn their billings over to the government.
The department is arguing that the payments came from assets that should have been frozen and were subject to forfeiture.
Luskin, known as an engaging and colorful
character who often zooms around town on a motorcycle, says he
will resist the Justice Department's assault, thus setting the
stage for a showdown involving the difficult balance between law-enforcement
techniques and the right to counsel.
With approval from Justice, Rhode Island
U.S. Attorney Sheldon Whitehouse on Jan. 23 asked a judge to order
Luskin and four other lawyers to give the feds $1.9 million in
fees they were paid in the case of Stephen Saccoccia. In 1993,
Saccoccia was sentenced to 660 years in prison on money laundering
charges. He is now incarcerated in Indiana.
Luskin, 48, acknowledges he was paid $674,125
in fees and expenses for three years' work on behalf of Saccoccia
in the form of 45 gold bars, valued at $505,125, as well as in
Swiss wire transfers of $169,000.
Luskin, who turned to Graeme Bush of D.C.'s
Caplin & Drysdale to fight the fee forfeiture, says he believed
the money was untainted and that prosecutors had agreed not to
seek forfeiture of fees lawyers earned defending Saccoccia. "I
never have, and never would, knowingly accept a fee that was the
proceeds of illegal activities," says Luskin., a name partner
in D.C.'s Comey Boyd & Luskin. "I did not accept any
money in this case until after I had sought and obtained assurances
from reputable counsel who claimed that they were familiar with
the source of the funds."
But Whitehouse, the U.S. attorney, charges
that Luskin exhibited a "willful blindness" to the possibility
that his payments were connected to Saccoccia's illegal activity.
After all, Whitehouse notes in his motion, Saccoccia's money-laundering
operation involved precious metals trading and Swiss bank accounts.
Luskin and others in the criminal defense
bar say there is far more at stake than the money DOJ wants Saccoccia's
defense attorneys to fork over. They argue that Whitehouse's motion
before U.S. District Judge Ernest Torres of Rhode Island is a
dangerous attempt to broaden court ruling that have enabled the
government to seize fees paid to defense lawyers under some limited
In 1989, the Supreme Court held in Caplin
& Drysdale v. United States that forfeiture does not necessarily
interfere with a defendant's right to pick his lawyer. Luskin's
lawyer on the forfeiture question, Bush, was one of the attorneys
who handled the Supreme Court case for his law firm, Caplin.
"The Supreme Court as a general proposition
upheld the forfeiture of attorney fees paid to a lawyer if the
government proves that those fees were derived from tainted funds,"
says Howard Srebnick, of Miami's Black, Srebnick & Kornspan.
Srebnick has been representing Michael Abbell, the lawyer who
is in the midst of a federal criminal case stemming from his representation
of the Cali drug cartel.
"Now it sounds like the government is
taking a step into the white collar criminal arena, and it will
become increasingly difficult for lawyers to represent defendants
in criminal fraud cases because of the threat that their fees
will ultimately be the subject of forfeiture," Srebnick notes.
Other defense attorneys agree.
"It certainly has a chilling effect," says William Moffitt, first vice president of the National Association of Criminal Defense Lawyers and a name partner in the D.C. office of Asbill, Junkin & Moffitt.
"If the case gets a high profile [or]
they don't like the lawyer in it, they can immediately open this
kind of assault," Moffitt says. "If you plead your client
guilty, they're never going to go after your fee. So there's an
incentive here to give the government what it wants. [But] if
you begin to aggressively defend your client, you defend it at
the risk of your fee."
Moffitt knows something about the issue.
In 1996, his old firm, Moffitt, Zwerling & Kemler, was forced
after a court battle to cough up $103,000 in fees that a client
charged with drug offenses had paid in cash. With this and other
cases on the books, Moffitt says, "I would suspect that the government really has carte blanche right
now to literally run roughshod over the defense bar."
SEIZURES ARE RARE
To be sure, the Justice Department does not take such an action lightly. U.S. attorneys must have the tactic approved through the department's Asset Forfeiture and Money Laundering Section and the Criminal Division. Gerald McDowell, chief of the asset forfeiture section, says prosecutorial efforts to seize attorney fees are rare, coming perhaps two or three times annually in recent years.
"We wouldn't have knowingly approved
in inadequate case, but I don't think it's appropriate for me
to discuss how strong it is," says McDowell.
Coincidentally, McDowell worked with Luskin,
a former organized crime prosecutor in the Justice Department,
in the early 1980s. McDowell describes Luskin as a "heck
of a guy."
Luskin says simply that he earned his fees from Saccoccia.
The government, he says, is overreaching. "The government has been saying for
years that, although they've got the right to forfeit fees in
particular cases, their practice has been that they won't forfeit
legitimate fees," Luskin says. And while he concedes that
he never before had the experience of being paid in god bars,
he insists that the issue "is not the form of the payment.
It's the source of the funds that mattered. "Luskin's lawyer,
Bush, adds that in his view, the U.S. attorney's case is sloppy
and riddled with errors. "The government's assertion about
what happened at trial . , should not be taken at face value."
Luskin is considered by colleagues to be
one of the more colorful lawyers in D.C. He has a reputation both
for smarts and for unconventionality. A Rhodes scholar and a graduate
both of Harvard University and the Harvard Law School, Luskin
is believed to be the first man to have argued a case before the
Supreme Court while wearing an earring. (He won.)
An avid motorcyclist and terminally hip dresser,
Luskin is also a baseball fanatic. He's helped coach his son's
team, and he personally attended a Chicago White Sox fantasy camp
a few years ago. He is a stalwart of a local over-30 baseball
He's also had his share of the limelight.
He has been representing former Clinton White House aide Mark
Middleton in the campaign finance controversy, for instance. And
it was Luskin who referred the Arkansas businessman Yah Lin "Charlie"
Trie to another renowned D.C. lawyer, Reid Weingarten of Steptoe
& Johnson. Trie was indicted last month on campaign finance
allegations and pleaded not guilty.
Luskin says he was surprised that the government
decided to go after his fees in the Saccoccia case. He describes
Whitehouse's motion as "an ambush" since he first learned
of it when it was filed in court. According to Luskin, the U.S.
attorney's office had stated before Saccoccia's trial and in a
post-conviction probe of Saccoccia's assets "that they would
not seek to forfeit legitimate fees . . . I think that this is
misguided and avaricious and despicable." DOJ's McDowell
responds that "everybody was on notice when they did the
fine legal work that they did in the case that Saccoccia's funds
were encumbered. But that's what U.S. district judges are for
to make a determination on that issue."
In a Jan. 26 statement on his motion, Whitehouse,
insisted that "[t]his would not be viewed as a broad-brush
assault on defense counsel's legitimate fees. The unusual circumstances
of this case, both the existence of a court order freezing Saccoccia's
assets and the cloak-and-dagger nature of these anonymous and
surreptitious payments, make this an exceptional case."
ANONYMOUS THIRD PARTIES
Indeed, much of the money that the Saccoccia lawyers were paid ( including gold bars given to Luskin ) came from anonymous third parties, Whitehouse asserted in his motion.
"Luskin remained unaware of the identities
of these so-called donors and of any explanation for their generosity,"
Whitehouse stated. Luskin does not dispute that he does not personally
know where much of the money came from, but says other Saccoccia
lawyers told him it was clean. Whitehouse added that during Saccoccia's
trial, the government demonstrated that he had "concealed
a large portion of the proceeds of his money laundering in Austria
Yet, between December 4, 1994, and February
23, 1995, approximately 20 months after the trial, Luskin accepted
$169,170.57 in wire transfers from Switzerland." Thus, Whitehouse
charged, "Luskin had reasonable cause to know that these
funds were the proceeds of Saccoccia's money laundering activities.
Luskin, however, chose not to know the true origin of these funds."
Asked about these claims, Luskin says the prosecutors have attempted to seize millions in Saccoccia's funds form abroad without demonstrating that the money is from illegal activities. "I strongly disagree with their characterization of the evidence at trial," he declares. "More than 20 months after conviction, the government itself tried to forfeit more than $5 million of Saccoccia's assets in Austria and Switzerland as substitute assets - which the government did not claim were the proceeds of illegal activities."
Luskin's point is that Saccoccia apparently had assets sufficient to pay legal fees that even the Rhode Island U.S. attorney did not charge were ill-gotten gains.
Nonetheless, Whitehouse's filing questioned
the manner in which Luskin and other Saccoccia lawyers were paid.
Take, for example, Providence, R.I., lawyer
Kenneth O'Donnell. His "first payment of fees came in January
1993, when an envelope with $50,000 in cash was delivered to O'Donnell's
office by an individual who refused to identify himself and would only say that
the cash was money owed to Saccoccia and that it should be used
for his defense."
O'Donnell did not reply to a message left
at his office. Whitehouse alleged that another Saccoccia
lawyer, Jack Hill of San Francisco, was paid some $270,000 in
Swiss francs on a visit to Switzerland in March 1992 - from "a
Swiss bank official who represented that the money came from Saccoccia
despite the fact that Saccoccia's accounts in Switzerland were
frozen." Hill says that Whitehouse has "misstated the
facts, the evidence, and the law. Other than that, I can't really
fault him . . . You can be assured I'm going to fight it."
The other two lawyers whose fees are in jeopardy
are Stephen Finta of Fort Lauderdale, Fla. and Lawrence Semenza
of Las Vegas, himself a former U.S. attorney. Finta could not
be reached, and Semenza would not comment.
Being forced to cough up fees from some five years ago would be hard enough for Luskin's successful D.C. firm. "It would be an enormous hardship for the firm," he says.
But the assessment could actually force other
lawyers on the matter out of business, according to Luskin. That
risk underscores what Moffitt of the criminal defense lawyers'
association cites as the threat to an attorney's ability to fight
"Most of the other lawyers in this are
solo practitioners," Luskin says. [may be a short bit
of the article is missing here]
Saccoccia was arrested in Geneva in November
1991 after a major international investigation involving wiretaps,
undercover agents, and confidential informants. Some 50 people
from five states were named in indictments involving an organization
that the Justice Department alleged was laundering as much as
$60 million a month.
As a ringleader, Saccoccia was convicted
of an array of charges, and in May 1993 was sentenced to 660 years
in prison and fined $15.8 million. The government also ordered
Saccoccia to forfeit $136.3 million.
Luskin did not represent Saccoccia at trial.
He says he helped on the man's sentencing and appeals - getting
charges thrown out in California, for example - and in Saccoccia's
struggles with his frozen assets all over the world.
While seeking to determine whether Saccoccia
had any undiscovered assets that could be seized, the U.S. attorney
in August 1995 received court permission to depose various Saccoccia
lawyers "for the purpose of determining the amounts, form,
and sources of any payments made or to be made in connection with their representation,"
according to Whitehouse's Jan. 23 motion. It was through that
process that the government got the details of how Luskin and
the other lawyers were paid.
In his March 28, 1996, deposition, Luskin said he had received three Swiss wire transfers from December 1994 through February 1995. They totaled $169,000. And Luskin received the gold bars from Finta and another Saccoccia lawyer from September 1993 through October 1994. But Luskin also insisted that he knew of no connection between the fees he was paid and Saccoccia's illegal activity.
"I want to be clear," Luskin said
in his deposition. "These funds were not any of the funds
that were identified in the indictment, or in the judgment of
forfeiture, and these funds were not from any individual who was
associated with the conduct that was charged in the indictment."
The Luskin deposition itself, was a legally complex affair. While Bush and Nathan Finch of Caplin & Drysdale represented Luskin, the attorney-client privilege and other interests of Saccoccia and his wife, Donna, were represented by two other attorneys, James Moretti and William Murphy, respectively.
Donna Saccoccia was convicted of money-laundering
charges and sentenced to 14 years in prison.
Luskin says his official response to Whitehouse's
motion will be filed in about a month.
Meanwhile, if he's looking for character
references, he need go no further than the same Justice Department
that is claiming his fees. It turns out that as one arm of the
Justice Department accuses Luskin of accepting inappropriate legal
fees, another has just given him a vote of confidence. Luskin
was recently appointed by the Justice Department Organized Crime
and Racketeering Section to continue an internal probe to help
the Laborers International Union of America purge itself of corrupt
members. The Justice Department renewed the arrangement for another