U.S. v. Agosto

• Decision Date: 09 April 1982
• Docket Number: Nos. 82-1057,s. 82-1057
• Citation: 675 F.2d 965
• Parties: UNITED STATES of America, Appellee, v. Joseph Vincent AGOSTO, Appellant. UNITED STATES of America, Appellee, v. Deil Otto GUSTAFSON, Appellant. UNITED STATES of America, Appellee, v. Joan Lorrain NORRIS, Appellant. to 82-1059.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 965

675 F.2d 965

UNITED STATES of America, Appellee, v. Joseph Vincent AGOSTO, Appellant.

UNITED STATES of America, Appellee, v. Deil Otto GUSTAFSON, Appellant.

UNITED STATES of America, Appellee, v. Joan Lorrain NORRIS, Appellant.

Nos. 82-1057 to 82-1059.

United States Court of Appeals,

Eighth Circuit.

Submitted Feb. 9, 1982.

Decided April 9, 1982.

Stanley I. Greenberg, a Law Corp., Los Angeles, Cal., Peter J. Thompson, Delaney, Thompson & Solum, Minneapolis, Minn., for appellant Joseph Vincent Agosto.

Joe A. Walters, Robert A. Brunig, William E. Flynn, Wood Kidner, O'Connor & Hannan, Minneapolis, Minn., for appellant Deil Otto Gustafson.

James M. Rosenbaum, U. S. Atty., Douglas A. Kelley, Thorwald H. Anderson, Jr., Asst. U. S. Attys., D. Minn., Minneapolis, Minn., for appellee.

Stephen Stein, Las Vegas, Nev., and Douglas W. Thomson, St. Paul, Minn., for appellant, Norris.

National Ass'n of Criminal Defense Lawyers, Inc., California Attorneys for Criminal Justice by Judd C. Iversen, Nina Wilder, San Francisco, Cal. (Alan Ellis, Co-Chairman, NACDL, Amicus Curiae Committee, Philadelphia, Pa., of counsel), for amicus curiae.

Before HEANEY, STEPHENSON ^* and ARNOLD, Circuit Judges.

HEANEY, Circuit Judge.

On November 5, 1981, six defendants were named in a 32-count indictment charging mail fraud, wire fraud, misapplication of bank funds, false entries on bank records and conspiracy. The defendants were arraigned on November 6. On November 20, the government filed a motion for inquiry concerning possible conflicts of interest of certain defense counsel. After a hearing, the district court, 528 F.Supp. 1300, disqualified three defense counsel. The defendants represented by those three defense counsel, and one defense counsel appeal. ¹

We affirm in part and reverse in part, and remand for further proceedings.

The indictment charged that the defendants used a check floating scheme to improperly obtain interest-free loans from Summit National Bank of St. Paul (Summit Bank-St. Paul) and Summit State Bank of Richfield (Summit Bank-Richfield) for the benefit of two business entities: the Tropicana Hotel and Country Club (Tropicana), a Las Vegas hotel and gambling casino, and Production and Leasing, Ltd. (P & L), a Nevada corporation that produced and provided the Folies Bergere floor show for the Tropicana.

The alleged participants in the scheme included:

(1) Deil Otto Gustafson, owner of a substantial interest in the Tropicana and owner of the Summit Banks.

(2) Joseph Vincent Agosto, owner of P & L.

(3) Joan Lorrain Norris, Agosto's executive secretary.

(4) Ralph Edwin Bruins, president of Summit Bank-Richfield and a consultant to Summit Bank-St. Paul.

(5) Roger Frank Newstrum, officer and employee of various Gustafson-owned companies, a corporate officer of the Tropicana, and a vice-president and director of the Summit Bank-Richfield.

(6) James Louis Bacigalupo, vice-president and cashier of Summit Bank-St. Paul.

The Tropicana allegedly received improper loans from Summit Bank-St. Paul by use of the bank as its depository bank for the Tropicana employees' federal withholding taxes. P & L allegedly did so by use of both banks as its depositories for federal taxes and by the opening of commercial checking accounts. The Tropicana and P & L made deposits to these accounts in the form of nonsufficient fund (NSF) checks. The banks treated the deposits as good and used bank funds to pay the Tropicana and P & L taxes and other obligations. When the checks were returned as dishonored, the banks would accept new NSF checks to replace them. The replacement checks would in turn be replaced by other NSF checks and the process would continue until, upon the intervention of one or more of the defendants, the checks would be paid.

Each defense counsel represented only one defendant at the time of his disqualification. The district court's disqualification orders were based upon defense counsel's earlier representation of multiple defendants and grand jury witnesses who would likely be trial witnesses. The district court found that there was a substantial possibility that conflicts of interest existed or would arise during trial with regard to each defendant involved and that the defendants did not effectively waive their right to counsel unimpeded by conflicts of interest. The court concluded that disqualification was required both under prevailing case law and the Code of Professional Responsibility.

I

The district court is charged with the responsibility of supervising the members of its bar. Cohen v. Hurley, 366 U.S. 117, 123-124, 81 S.Ct. 954, 958, 6 L.Ed.2d 156 (1961); Coffelt v. Shell, 577 F.2d 30, 32 (8th Cir. 1978); Central Milk Producers Co-op v. Sentry Food Stores, Inc., 573 F.2d 988, 992 (8th Cir. 1978); Fred Weber, Inc. v. Shell Oil Co., 566 F.2d 602, 605 (8th Cir. 1977), cert. denied, 436 U.S. 905, 98 S.Ct. 2235, 56 L.Ed.2d 403 (1978). Among the factors to be considered in exercising this responsibility are the ABA Code of Professional Responsibility, ² the court's duty to maintain public confidence in the legal profession and its duty to insure the integrity of the judicial proceeding. In criminal cases, its power of supervision is guided by, and in some respects, limited by, a defendant's Sixth Amendment rights. See United States v. Armedo-Sarmiento, 524 F.2d 591, 592-593 (2d Cir. 1975).

The Sixth Amendment of the United States Constitution guarantees each defendant the "assistance of counsel for his defense." This guarantee includes the "right to 'the assistance of an attorney unhindered by a conflict of interest'." Cuyler v. Sullivan, 446 U.S. 335, 355, 100 S.Ct. 1708, 1722, 64 L.Ed.2d 333 (1980) (Marshall, J., concurring in part and dissenting in part) (quoting Holloway v. Arkansas, 435 U.S. 475, 483, n.5, 98 S.Ct. 1173, 1178, 55 L.Ed.2d 426 (1978)).

The Sixth Amendment also gives some protection to a criminal defendant's selection of retained counsel. As this Court stated in United States v. Cox, 580 F.2d 317, 321 (8th Cir. 1978), cert. denied, 439 U.S. 1075, 99 S.Ct. 851, 59 L.Ed.2d 43 (1979):

In general defendants are free to employ counsel of their own choice and the courts are afforded little leeway in interfering with that choice. United States v. Valenzuela, supra, 521 F.2d at 416, United States v. Garcia, 517 F.2d 272 (5th Cir. 1975); United States v. Wisniewski, 478 F.2d 274, 285 (2d Cir. 1973).

Cf. Faretta v. California, 422 U.S. 806, 95 S.Ct. 2525, 45 L.Ed.2d 562 (1975).

A facet of the right to counsel of choice is the defendant's ability to waive his right to the assistance of counsel unhindered by a conflict of interest, provided that waiver is knowing and intelligent. Holloway v. Arkansas, supra, 435 U.S. at 483, n.5, 98 S.Ct. at 1178; Glasser v. United States, 315 U.S. 60, 70, 62 S.Ct. 457, 464, 86 L.Ed. 680 (1942); United States v. Lawriw, 568 F.2d 98, 104 (8th Cir. 1977), cert. denied, 435 U.S. 969, 98 S.Ct. 1607, 56 L.Ed.2d 60 (1978).

Thus, in assessing the merits of a disqualification motion, the court must balance:

individual constitutional protections, public policy and public interest in the administration of justice, and basic concepts of fundamental fairness.

United States v. Garcia, 517 F.2d 272 (5th Cir. 1975).

Most conflict of interest issues in criminal cases are raised at the post-conviction stage, where the inquiry focuses on whether the defendant has made a showing of harm sufficient to require reversal of his conviction. See, e.g., Cuyler v. Sullivan, supra, 446 U.S. at 350, 100 S.Ct. at 1719 (no objection made at trial; the Supreme Court held the defendant must demonstrate that "an actual conflict adversely affected his lawyer's performance"); United States v. Lawriw, supra, 568 F.2d at 101 (showing of actual conflict or evidence pointing to substantial possibility of conflict); United States v. Valenzuela, 521 F.2d 414, 416 (8th Cir. 1975), cert. denied, 424 U.S. 916, 96 S.Ct. 1117, 47 L.Ed.2d 321 (1976).

Here, we are concerned with the power of the district court to disqualify counsel before conflict results in ineffective assistance of counsel. At this stage in the proceedings, there is of necessity less certainty as to whether conflicts will actually arise and as to the nature of those conflicts. This is particularly so where the government files a motion for disqualification early in the proceedings.

Because the task of assessing the potential for conflict well in advance of trial is such a difficult one, the standards applicable to making that assessment must be flexible. We find such flexibility in F.R.Cr.P. 44(c), which requires that in cases of multiple representation (where an attorney simultaneously represents two or more defendants), the district court shall conduct an inquiry prior to trial to determine the potential for conflicts of interest. Rule 44(c) provides in pertinent part that

(u)nless it appears that there is good cause to believe no conflict of interest is likely to arise, the court shall take such measures as may be appropriate to protect each defendant's right to counsel.

The Advisory Committee Note, 77 F.R.D. 507, 600-601 (1978), states that

Rule 44(c) does not specify what particular measures must be taken. It is appropriate to leave this within the court's discretion, for the measures which will best protect each defendant's right to counsel may well vary from case to case.

Although this is a case of successive representation (where an attorney representing a defendant has previously represented codefendants or trial witnesses), we find that Rule 44(c) also establishes a suitable framework for the district court's exercise of responsibility in assessing possible conflicts here. ³ The goal of Rule 44(c) is the protection of the defendant's right to counsel. As we noted above, protection of that right extends to the selection of retained counsel. ⁴ Thus, the chosen method for dealing with a potential conflict, in...