U.S. v. Hammad

Decision Date29 November 1988
Docket NumberD,No. 882,882
Citation858 F.2d 834
PartiesUNITED STATES of America, Appellant, v. Eid HAMMAD, a/k/a Eddie Hammad, and Taiseer Hammad, Defendants-Appellees. ocket 87-1513.
CourtU.S. Court of Appeals — Second Circuit

Sean F. O'Shea, Asst. U.S. Atty., E.D.N.Y. (Andrew J. Maloney, U.S. Atty., John Gleeson, Asst. U.S. Atty., Brooklyn, N.Y., of counsel), for appellant U.S.

Richard A. Greenberg, New York City (Robert Hill Schwartz, New York City, of counsel), for defendant-appellee Taiseer Hammad.

Harvey L. Greenberg, New York City (Washor, Greenberg & Washor, New York City, of counsel), for defendant-appellee Eid Hammad.

Before KAUFMAN, CARDAMONE and PIERCE, Circuit Judges.

The opinion filed May 12, 1988 at 846 F.2d 854 (2nd Cir.) is revised as follows.

IRVING R. KAUFMAN, Circuit Judge:

On November 30, 1985, the Hammad Department Store in Brooklyn, New York, caught fire under circumstances suggesting arson. The Bureau of Alcohol, Tobacco and Firearms was assigned to investigate in conjunction with the United States Attorney for the Eastern District of New York.

During the course of his investigation, an Assistant United States Attorney ("AUSA") discovered that the store's owners, Taiseer and Eid Hammad, had been audited by the New York State Department of Social Services for Medicaid fraud. The audit revealed that the Hammad brothers had bilked Medicaid out of $400,000; they claimed reimbursement for special orthopedic footwear but supplied customers with ordinary, non-therapeutic shoes. Consequently, the Department revoked the Hammads' eligibility for Medicaid reimbursement and demanded return of the $400,000 overpayment. The Hammads challenged the Department's determination and submitted invoices purporting to document their sales of orthopedic shoes. The invoices were received from Wallace Goldstein of the Crystal Shoe Company, a supplier to the Hammads' store.

On September 22, 1986, however, Goldstein informed the AUSA that he had provided the Hammads with false invoices. Government investigators, therefore, suspected the fire had been intended to destroy actual sales records, thereby concealing the fraudulent Medicaid claims. Goldstein agreed to cooperate with the government's investigation. Accordingly, the prosecutor directed Goldstein to arrange and record a meeting with the Hammads.

Some three weeks later, on October 9, Goldstein telephoned the Hammads. He spoke briefly with Eid, who referred him to Taiseer. Goldstein falsely told Taiseer he had been subpoenaed to appear before the grand jury investigating the Hammads' Medicaid fraud. He added that the grand jury had requested records of Crystal's sales to the Hammad Department Store to compare them with the invoices the Hammads had submitted. Taiseer did not deny defrauding Medicaid, but instead urged Goldstein to conceal the fraud by lying to the grand jury and by refusing to produce Crystal's true sales records. He also questioned Goldstein regarding the contents of his subpoena, which did not actually exist. Goldstein responded that he did not have the subpoena in his possession. He agreed to inquire further. One hour later, presumably after speaking with the AUSA, Goldstein telephoned Taiseer again and described the fictitious subpoena.

Goldstein and Hammad saw each other five days later. The meeting was recorded and videotaped. Goldstein showed Hammad a sham subpoena supplied by the prosecutor. The subpoena instructed Goldstein to appear before the grand jury and to provide any records reflecting shoe sales from Crystal to the Hammad Department Store. Hammad apparently accepted the subpoena as genuine because he spent much of the remainder of the meeting devising strategies for Goldstein to avoid compliance. The two held no further meetings.

On April 15, 1987, after considering the recordings, videotapes and other evidence, the grand jury returned a forty-five count indictment against the Hammad brothers, including thirty-eight counts of mail fraud for filing false Medicaid invoices. Eid was also indicted for arson and for fraudulently attempting to collect fire insurance. Taiseer faced the additional charge of obstructing justice for attempting to influence Goldstein's grand jury testimony. The case was assigned to Judge Glasser of the Eastern District of New York.

Before trial, Taiseer Hammad moved to suppress the recordings and videotapes, alleging the prosecutor had violated DR 7-104(A)(1) of the American Bar Association's Code of Professional Responsibility. The rule prohibits a lawyer from communicating with a "party" he knows to be represented by counsel regarding the subject matter of that representation. In short, Taiseer alleged that the prosecutor--through his "alter ego" Goldstein--had violated ethical obligations by communicating directly with him after learning that he had retained counsel.

A hearing was convened on September 17, 1987, to consider the suppression motion and, specifically, to ascertain whether the prosecutor knew, at the time, that Taiseer had counsel. In support of his motion, Hammad submitted affidavits from his attorney, Richard Greenberg, and his prior counsel, George Weinbaum. Weinbaum also testified at the hearing.

In essence, Weinbaum testified that, from August 1985 to June 1987, he represented Taiseer Hammad in all aspects of his Medicaid dispute. Specifically, Weinbaum recounted telephoning the AUSA in July 1986 and informing him that he "represented Taiseer Hammad and the Hammad department store." He did not comply with a request for written confirmation of his relationship with Taiseer, but did not suggest any change in his status as Hammad's attorney.

The government vigorously disputed Hammad's assertion that the prosecutor had violated ethical standards by authorizing Goldstein to approach the defendant. It argued that DR 7-104(A)(1) was irrelevant to criminal investigations. Alternatively, it claimed the rule did not apply to investigations prior to the commencement of adversarial proceedings against a defendant. In addition, the government denied that, at the time he directed Goldstein to approach Taiseer, the prosecutor knew Taiseer was represented by counsel. The government argued that the AUSA reasonably believed Weinbaum ceased representing Taiseer on September 15, 1986. Thus, the argument proceeds, Taiseer had no attorney when he met with Goldstein. The government, however, failed to present any evidence to support its factual contentions or to rebut Weinbaum's assertion that he continued to represent Taiseer. It rested on its legal contention that DR 7-104(A)(1) did not apply.

In an order dated September 21, 1987, Judge Glasser granted Taiseer's motion to suppress the recordings and videotapes. 678 F.Supp. 397 (E.D.N.Y.1987). The government, he found, "was clearly aware, by at least as early as September 9, 1986, that [Taiseer] had retained counsel in connection with this case." 678 F.Supp. at 399. He also determined that Goldstein was the prosecutor's "alter ego" during his discussions with Hammad. Accordingly, the court held that the prosecutor had violated DR 7-104(A)(1) and suppressed the recordings and videotapes secured as a result of the violation.

The government moved for reconsideration on September 28, 1987, and belatedly proffered the AUSA's affidavit responding to Taiseer's factual assertions. The district court denied reconsideration without considering the affidavit. This appeal ensued, pursuant to 18 U.S.C. Sec. 3731.

The government challenges Judge Glasser's application of this ethical precept in suppressing the recordings and videotapes of Taiseer Hammad's conversations with Wallace Goldstein. The government repeats the arguments it presented at the suppression hearing. Specifically, it argues that the Assistant United States Attorney could not have violated DR 7-104(A)(1) because the provision is inapplicable to criminal investigations under any circumstances, or, alternatively, that DR 7-104(A)(1) becomes operative only after sixth amendment rights have attached. The government also contests the district court's finding that the prosecutor knew Weinbaum represented Hammad when he dispatched Goldstein and that Goldstein was his "alter ego." Finally, the government urges that suppression is not available to remedy an ethical violation.

We decline to hold, as the government suggests, either that DR 7-104(A)(1) is limited in application to civil disputes or that it is coextensive with the sixth amendment. Nor has the government provided an adequate basis for reversing the able district judge's determination, after the suppression hearing, that the prosecutor knew Hammad had legal representation or that Goldstein was his "alter ego." We are mindful, however, that suppression of evidence is an extreme remedy that may impede legitimate investigatory activities. Accordingly, we find, in this case, that suppression of the recordings and videotapes constituted an abuse of the district court's discretion.

Rule DR 7-104(A)(1) of the American Bar Association's Model Code of Professional Responsibility governs relations between attorneys and adverse parties they know are represented by counsel. It provides:

A. During the course of his representation of a client a lawyer shall not:

1. Communicate or cause another to communicate on the subject of the representation with a party he knows to be represented by a lawyer in that matter unless he has the prior consent of the lawyer representing such other party or is authorized by law to do so.

Model Code of Professional Responsibility DR 7-104(A)(1). Accordingly, lawyers are constrained to communicate indirectly with adverse parties through opposing counsel.

This restriction is not statutorily mandated. The federal courts enforce professional responsibility standards pursuant to their general supervisory authority over members of...

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