U.S. v. Urutyan

• Decision Date: 07 May 2009
• Docket Number: No. 08-4295.,08-4295.
• Citation: 564 F.3d 679
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Gagik URUTYAN, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fourth Circuit

564 F.3d 679

UNITED STATES of America, Plaintiff-Appellee, v. Gagik URUTYAN, Defendant-Appellant.

No. 08-4295.

United States Court of Appeals, Fourth Circuit.

Argued: March 24, 2009.

Decided: May 7, 2009.

ARGUED:

James Fred Sumpter, Midlothian, Virginia, for Appellant. Laura Colombell Marshall, Office of the United States Attorney, Richmond, Virginia, for Appellee.

ON BRIEF:

Chuck Rosenberg, United States Attorney, Alexandria, Virginia, Richard D. Cooke, Assistant United States Attorney, Office of the United States Attorney, Richmond, Virginia, for Appellee.

Before DUNCAN and AGEE, Circuit Judges, and DAVID A. FABER, Senior United States District Judge for the Southern District of West Virginia, sitting by designation.

Affirmed by published opinion. Judge DUNCAN wrote the opinion, in which Judge AGEE and Senior Judge FABER joined.

OPINION

DUNCAN, Circuit Judge:

Gagik Urutyan ("Urutyan") challenges his conviction for bank fraud, conspiracy to commit bank fraud, and aggravated identity theft.¹ Urutyan's sole claim on appeal is that the district court deprived him of his Sixth Amendment right to counsel by disqualifying one of his attorneys. Because the district court did not abuse its discretion in concluding that continued representation by the attorney in question posed a serious potential for conflict of interest, we affirm.

I.

Urutyan was convicted of participation in a bank fraud scheme that involved the theft of personal identity information. The evidence adduced at trial reflects the following sequence of events. In August 2006, Urutyan took a job at a gas station in Mechanicsville, Virginia, in order to gain access to the gas station's Verifone Pin Pad 2000, the device on which customers swipe their debit cards and enter their pin numbers. Urutyan was able to compromise the device and use it to steal the debit card and pin numbers of hundreds of customers. On December 12, 2006, Urutyan quit his job at the gas station and, along with at least five coconspirators, utilized the stolen data to conduct fraudulent withdrawals from ATMs in Virginia, Maryland, Delaware, Pennsylvania, and New Jersey. Over a sixteen-day period, Urutyan and his coconspirators stole more than $600,000 from the accounts of more than 500 victims, all of whom had used their debit cards at the Mechanicsville gas station. The stolen money was wired to recipients in Russia and Armenia.

Urutyan was arrested on January 12, 2007, and a federal public defender was appointed to represent him. On February 6, 2007, Urutyan replaced his appointed counsel with attorney Elliot Bender. On March 7, 2007, William Graysen, a California attorney, was admitted pro hac vice to represent Urutyan.

On June 5, 2007, a federal grand jury returned a second superseding indictment naming Urutyan and five coconspirators. Urutyan was charged with one count of conspiracy to commit bank fraud in violation of 18 U.S.C. §§ 1344 and 1349, two counts of bank fraud in violation of 18 U.S.C. § 1344, and two counts of aggravated identity theft in violation of 18 U.S.C. § 1028A.

On August 2, 2007, the government sent a letter to Graysen asking for information about his fee arrangement with Urutyan and the source of funds for Urutyan's representation. Graysen responded that he was retained on or about February 1, 2007, with a fee of $25,000. JA at 1022. Graysen said the fee was paid in cash by a man named David who declined to give his last name, phone number, or address. Id. Graysen said that there was no written fee agreement and that, rather than deposit the cash in any bank account, he kept it for "personal use." Id. Graysen said that he intended to include the income on his tax return and to report receipt of the cash with the Internal Revenue Service on or before January 31, 2008 (approximately one year after receipt). Id.²

On August 24, 2007, the government filed a Motion for Conflict of Interest Inquiry to determine whether Graysen was being paid by a third party to represent Urutyan. In support of its motion, the government provided transcripts of several telephone conversations between Urutyan and a female coconspirator who had not yet been arrested at the time of the call, but who later became a codefendant. The calls had been recorded January 22, 2007, and were translated from Russian. During one call, the codefendant told Urutyan "Well, they said to write you and let you know that you have a lawyer.... Someone from California." JA at 965. In another call, Urutyan asked, "So what, is it an expensive lawyer? ... More than forty?" JA at 980. The codefendant replied, "Yes. It will be even more than that." Id. And, in yet another call, the codefendant said she "gave it all to them ... [a]nd that they will sort of pay for the lawyer ... they will give it back to you and the remains will be paid to the lawyer." JA at 978.

The district court held a hearing on September 17, 2007, to determine whether Graysen could continue as counsel for Urutyan. In addition to the foregoing facts, the district court heard evidence that, although Graysen had previously stated his intention to file a Form 8300 with the IRS, he failed timely to do so. It also emerged that David paid Graysen an additional $60,000 in cash to secure representation for three of Urutyan's codefendants. Graysen said he used the money to hire separate counsel for the codefendants at a cost of $18,000 each and kept a $6,000 referral fee for himself.

Graysen offered several explanations for the somewhat unusual nature of the arrangements. Graysen said that David, like Urutyan, was Armenian and had raised the money from family and friends. Graysen suggested that it was not uncommon for members of the Armenian community to use only their first names when "dealing with the law, civil or criminal." JA at 997. Regarding his failure to deposit the initial $25,000 in a bank account,³ Graysen argued that he was not required to deposit the cash in a bank account because, under California's so-called "true retainer" rule,⁴ the cash constituted a fee earned upon receipt. JA at 1044. Regarding his failure timely to file a Form 8300 with the IRS, Graysen said he was mistaken about the applicable deadline. And when asked by the district court why there had been no written retainer agreement with David, Graysen replied, "I have an explanation for that, too. Where two Armenians trust each other, or two people, one being Armenian and one being American, trust each other, there is no need for a retainer. It is something of an insult. They believe a man's word is his bond." JA at 1043.

During the hearing, the government informed the district court that Graysen was a "subject" of its ongoing criminal investigation. Although Graysen had not been indicted, the government argued that Graysen's status as a "subject" of investigation created a potential conflict of interest separate from any conflict arising from Graysen's being paid by a third party.

Based on this evidence, the district court disqualified Graysen as counsel on the ground that his continued representation of Urutyan would pose "a serious potential conflict based on two grounds[:] (1) the great likelihood that Mr. Graysen was paid by a third party who is a member of the alleged criminal enterprise and (2) the Government's characterization of Mr. Graysen as a subject in their investigation." JA at 1070.

With respect to the third-party payment arrangement, the district court explained that the recorded telephone conversations "strongly indicate that Mr. Graysen was paid with proceeds illegally gained by a member of the alleged fraud conspiracy." JA at 1071. Further, the district court found that the "facts that Mr. Graysen did not deposit the $25,000 ... nor file the appropriate IRS forms and that `David' refuses to give his last name all support the inference that David is a member of the alleged fraud scheme and that the cash received by Mr. Graysen is the fruit of the alleged illegal activity." JA at 1071. The district court reasoned that "not only is it possible that Mr. Graysen is acting as an agent of a third party who has interests which are potentially in conflict with those of his client, but this fee arrangement may also discourage Urutyan from considering a plea because more than likely a co-conspirator has paid his legal fees." JA at 1072. Further, the district court noted the possibility that "the Government may choose to establish the fraud conspiracy by showing the payment of $85,000 in cash to Mr. Graysen, which would result in Mr. Graysen becoming a potential witness against his client." Id.

With respect to Graysen's having been characterized as a "subject" of the government's ongoing investigation, the district court noted the potential conflict of interest posed by an attorney who is distracted from providing effective representation by "his concern to avoid his own incrimination." JA at 1072-73 (citation omitted). The district court then evaluated the evidence, reasoning that "Mr. Graysen's extensive interaction with David, the strong likelihood that the $25,000 Mr. Graysen received was proceeds from the alleged fraudulent scheme, and Mr. Graysen's complete failure to deposit the funds and file the appropriate IRS forms are sufficient to support the Government's identification of Mr. Graysen as a subject in their investigation." JA at 1075.

Graysen was thus disqualified, and Urutyan went to trial, still represented by Elliot Bender.⁵ Urutyan was convicted by a jury on all counts. Judgment was entered against him on January 22, 2008. Urutyan filed a notice of appeal with the district court March 4, 2008. The notice was not timely. Appellate Rule 4(b)(1)(A) imposes a ten-day deadline on the filing of a notice of appeal in criminal cases, and Urutyan never requested an extension of that deadline. Prior to oral argument, the government expressly waived any objection based on the timeliness of Urutyan's notice of appeal.

Urutyan's sole...