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Winning A Criminal Case


By Donald V. Watkins ©Copyrighted and Published on November 30, 2018


Yesterday’s indictment of my son and me on federal fraud charges provides an excellent opportunity to educate the public on how to win a criminal case. My experiences as a former prosecutor and defense attorney have been invaluable in teaching me the skills necessary to win criminal cases.


While winning the case is important, it is not the most important goal. The primary goal is to win a criminal case in a way that allows the trial judge to award the defendant reasonable attorneys' fees after he is tried and acquitted. This effort starts long before an indictment has been issued.


Developing Hyde Amendment Evidence


In a federal criminal case like mine, the Hyde Amendment (Pub. L. 105-119, § 617, Nov. 26, 1997, 111 Stat. 2519, codified as a note following 18 U.S.C. § 3006A), allows a federal court to assess attorneys’ fees and costs against the Government if “the court finds that the position of the United States was 'vexatious, frivolous, or in bad faith’.”

 

In my case, we sent a Hyde Amendment notice to the Government on November 28, 2018. The notice warned that criminal charges in my case could only come from “vexatious, frivolous, or bad faith conduct” on the part of the Government.


Upon receiving notice in February 2018 that I was the designated “target” in a federal criminal probe in Birmingham, I provided the Government with a March 14, 2018 memorandum that presented the true factual context for the financial transactions that form the basis for the charges now specified in the November 29, 2018 indictment. I also voluntarily subjected myself to grand jury appearances in April and September and answered every question asked without invoking my 5th Amendment rights. Finally, I produced over 4 terabytes of business records that supported the factual presentation outlined in the pre-indictment memorandum.


I have only one version of the truth in this case and it has been tested in multiple venues, including: (a) a private "securities fraud" lawsuit in 2013 in New Jersey, which the plaintiff voluntarily dismissed with prejudice four years later, (b) a New Jersey federal grand jury proceeding in 2015 that was led by the Chief of the Economic Crimes Division, which was closed in 2016 with no criminal charges filed, and (c) a 2016 lawsuit that was filed by the U.S. Securities and Exchange Commission in which the SEC requested in July 2018 that the trial judge dismiss $4 million of its $6 million in “securities fraud” claims.


Yesterday’s indictment represents the fourth test of the so-called “fraud” claims in five years.


My record of success in defending against the same "fraud" charges in different forums affords me a unique opportunity to approach the pending criminal case in a way that qualifies for a Hyde Amendment judicial finding after my acquittal. This is why the Government’s motivation in bringing the charges matters a lot.

The personal and political baggage of the investigators matters, as well. This is particularly true in a case like mine where case agents actually bragged about how they were going to taking me down.


Exculpatory Evidence Matters in “Fraud” Cases


Fortunately, the corporate governance documents and investment agreements detail the nature, scope, and context of every financial transaction at issue in this case. These documents and agreements define the business relationships and are easy to understand. I either abided by the terms of the business agreements signed by the parties, or I did not.

It is important to remember that the Government’s indictment is nothing more than a prosecutor’s “spin” on the case. Grand jurors do not draft indictments; prosecutors do. The Government’s own press release in my case says: “The charges in the indictment are merely allegations, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.” 


One of the keys to determining whether the Government acts in good faith while pursuing criminal charges against a defendant is whether prosecutors willingly present all pertinent evidence to grand jurors, whether favorable or unfavorable to the Government’s position. In my case, it did not do so. When prosecutors consistently withhold exculpatory evidence from grand jurors, there is a problem with fundamental fairness in the criminal justice system.


For example, prosecutors did not disclose to the grand jury that I worked for my companies and their stakeholders full-time for 12 years without taking any of the salary the “fraud” victims authorized for my CEO position. Likewise, prosecutors did not disclose that my direct investment in these companies exceeded the aggregate investment of all other stakeholders combined. Furthermore, prosecutors did not advise grand jurors that every financial transaction that was characterized as an act of “fraud” was specifically authorized in binding corporate governance documents (that were written many years before I became CEO), all of which the stakeholders in question agreed in writing to honor. I disclosed all of these exculpatory facts to prosecutors last March.


Instead, the Government presented carefully scripted witness testimony to the grand jury in a way that portrayed me as a "crook" who invested no money in my companies and who used stakeholder money for personal expenses. Of course, this portrayal is grossly misleading.


Because of the enormous amount of time prosecutors spend with grand jurors in a tightly controlled environment, grand jurors typically give prosecutors “presumed” credibility and generally follow their lead. Grand jurors almost never question a prosecutor’s personal background or political animus.

In today’s political environment where law enforcement organizations routinely launch criminal investigations against people they do not like, this area of inquiry is fertile ground for developing a Hyde Amendment record.


A Speedy Trial


After five years of closed-door federal agency investigations and two separate federal grand jury proceedings, I am looking forward to developing and introducing my Hyde Amendment evidence in this case. The Government’s conduct throughout my case is dripping with Hyde Amendment facts.


I will also invoke my Speedy Trial Act rights at the appropriate time. We are ready for trial and have been ready for the past five years. The core facts in this case will not change no matter how well the Government coaches its witnesses or cherry-picks documents.


We have finally made it to the point where prosecutors and defense counsel will enter into a gladiator arena where litigation skills, trial experience, defense strategies, and exculpatory evidence will rule the day. This is when, where, and how the Government’s “vexatious” conduct in my case will be exposed and stopped.


Winning my criminal case matters, but how we win it matters the most.


PHOTO: Former Congressman Henry J. Hyde (R-IL) authored and sponsored the 1997 Hyde Amendment.

 

© 2020 by Donald V. Watkins, P.C.