U.S. v. Giffen

• Decision Date: 08 December 2006
• Docket Number: Docket No. 05-5782-CR.
• Citation: 473 F.3d 30
• Parties: UNITED STATES of America, Appellant, v. James H. GIFFEN, Defendant-Appellee.
• Court: U.S. Court of Appeals — Second Circuit

Page 30

473 F.3d 30

UNITED STATES of America, Appellant, v. James H. GIFFEN, Defendant-Appellee.

Docket No. 05-5782-CR.

United States Court of Appeals, Second Circuit.

Argued: January 25, 2006.

Decided: December 8, 2006.

William J. Schwartz, Kronish Lieb Weiner & Hellman LLP (Steven M. Cohen, Matthew E. Beck, Kevin Galbraith, of counsel), New York, NY, for Defendant-Appellee.

Peter G. Neiman, Assistant United States Attorney, Southern District of New York (Stephen J. Ritchin, Celeste L. Koeleveld, Assistant United States Attorneys, Michael K. Atkinson, Fraud Section, Criminal Division, United States Department of Justice, of counsel; Michael J. Garcia, United States Attorney, on the brief), New York, NY, for Appellant.

Before: WALKER, LEVAL, SOTOMAYOR, Circuit Judges.

LEVAL, Circuit Judge:

The government brings interlocutory appeal from an order of the United States District Court for the Southern District of New York (William H. Pauley III, J.) denying the government's motion in limine to preclude defendant James H. Giffen from advancing a public authority defense at trial. We dismiss for lack of appellate jurisdiction.

Background

I. The Indictment

Giffen, a United States citizen, was indicted on August 4, 2003, by a grand jury in the Southern District of New York.¹ Giffen is the Chairman of the Board, Chief Executive Officer, and principal shareholder of Mercator Corporation, a merchant bank based in New York. From 1995 to 1999, Giffen and Mercator advised the Republic of Kazakhstan on oil and gas deals, and negotiated several major deals on the Republic's behalf. The indictment charges Giffen with bribing Kazakh officials in violation of the Foreign Corrupt Practices Act ("FCPA") 15 U.S.C. § 78dd-2; defrauding the Republic of Kazakhstan in violation of the mail and wire fraud statutes, 18 U.S.C. §§ 1341, 1343, and 1346; money laundering to further and conceal the bribery and fraud, in violation of 18 U.S.C. §§ 1956 and 1957; and tax-related offenses in violation of 26 U.S.C. §§ 7206 and 7212, and 18 U.S.C. § 371.

The indictment alleges that Giffen paid more than eighty million dollars in bribes to the President of Kazakhstan and two other Kazakh officials. The indictment alleges that Giffen created Swiss bank accounts in the names of offshore companies owned by the officials or members of their families. According to the indictment, Giffen made payments into those accounts from fees that he and Mercator received in oil deals they brokered for the Republic, as well as from escrow accounts holding payments due the Republic from oil transactions. According to the indictment, these deposits were bribes, disguised in some cases as loans or as payments of the fees of consultants who had helped negotiate oil deals for Kazakhstan. The indictment alleges that funds in these accounts were used to pay personal expenses of Kazakh officials and their families, such as tuition, jewelry purchases, vacations, and credit card bills. The indictment also alleges that Giffen "purchased luxury items, including fur coats, jewelry, speed boats, and snowmobiles, and provided those items free of charge to senior Kazakh officials," and that he "spent a portion of the funds diverted from the oil transactions on luxury items, including millions of dollars in jewelry."

The indictment asserts that by these acts Giffen violated the FCPA and also defrauded the Republic of Kazakhstan. The theory of the fraud allegations is that the money used to bribe the Kazakh officials belonged to Kazakhstan, and that Giffen participated in a fraudulent scheme to divert these moneys to the personal enrichment of the Kazakh officials. The indictment further alleges that Giffen engaged in money laundering to further and conceal the bribery and fraud. Finally, the indictment alleges that Giffen conspired to defraud the United States of its rightful tax revenues by concealing from the Internal Revenue Service ("IRS") moneys he received, and by helping other United States taxpayers to conceal income from the IRS.

In March 2004, Giffen moved under Federal Rule of Criminal Procedure 16(d)(2)(a) to compel the government to produce documents in the possession of certain government agencies that discussed Giffen and Mercator. Giffen asserted that he had been in regular contact with personnel of those agencies and wished to explore a public authority defense to the charges in the indictment. On July 2, 2004, the district court granted Giffen's motion to compel, reasoning that Giffen "provides sufficient details from publicly available sources that describe his involvement in Kazakhstan on behalf of the United States government" to entitle him to discovery. The district court noted the government's acknowledgment "that it reviewed documents relating to Giffen and Mercator" at government agencies "during the course of its investigation," and the district court stated that "Giffen is entitled to review those classified documents to assess the viability of a public authority defense."

II. The Classified Information Procedures Act

On July 28, 2004, the government invoked the Classified Information Procedures Act ("CIPA"), 18 U.S.C. app. 3, which governs the handling of classified information in district court proceedings. CIPA § 3 authorizes the district court, upon motion by the United States, "to protect against the disclosure of any classified information disclosed by the United States to any defendant in any criminal case in a district court of the United States." CIPA § 4 regulates the discovery of classified materials:

The court, upon a sufficient showing, may authorize the United States to delete specified items of classified information from documents to be made available to the defendant through discovery under the Federal Rules of Criminal Procedure, to substitute a summary of the information for such classified documents, or to substitute a statement admitting relevant facts that the classified information would tend to prove.

Under CIPA § 5(a), a defendant who intends to disclose classified information at trial must give notice to the government of the information he or she intends to disclose:

If a defendant reasonably expects to disclose or to cause the disclosure of classified information in any manner in connection with any trial or pretrial proceeding involving the criminal prosecution of such defendant, the defendant shall, within the time specified by the court or, where no time is specified, within thirty days prior to trial, notify the attorney for the United States and the court in writing. Such notice shall include a brief description of the classified information.

CIPA § 6 prescribes the procedures to be followed by the district court when determining the admissibility of classified information. Section 6(a) requires the district court, upon motion by the government, "to conduct a hearing to make all determinations concerning the use, relevance, or admissibility of classified information that would otherwise be made during the trial or pretrial proceeding." Under Section 6(c)(1), if the court authorizes the disclosure of classified information, the United States may move that, instead of disclosure, the court order "the substitution for such classified information of a statement admitting relevant facts that the specific classified information would tend to prove" or "the substitution for such classified information of a summary of the specific classified information." Section 6(c) provides that "[t]he Court shall grant such a motion of the United States if it finds that the statement or summary will provide the defendant with substantially the same ability to make his defense as would disclosure of the specific classified information." If the court declines to permit such a substitution, and the government objects to disclosure of the classified information, the presumptive remedy is dismissal of the indictment. If the court concludes, however, that "the interests of justice would not be served by dismissal of the indictment" the court may take other steps, such as dismissing certain counts in the indictment, finding against the United States on particular issues to which the classified information is related, or precluding the testimony of witnesses. CIPA § 6(e)(2). Finally, of particular relevance to this appeal, CIPA § 7(a) provides for interlocutory appeal by the United States "from a decision or order of a district court in a criminal case authorizing the disclosure of classified information, imposing sanctions for nondisclosure of classified information, or refusing a protective order sought by the United States to prevent the disclosure of classified information."

III. Giffen's Proffer and the Government's Motion to Preclude

Pursuant to CIPA § 4, the government began to provide sets of classified government documents to the court for in camera and ex parte review. In some instances the court ordered the government to turn over classified materials to Giffen. In other instances, the court permitted the government to turn over to Giffen redacted versions or summaries of the documents some of which were still classified.² The district court also set a pretrial schedule for determining what classified information, if any, would be admissible at trial. It instructed Giffen to submit a CIPA § 5 proffer of the classified evidence he hoped to introduce at trial. According to the district court's scheduling order, that proffer would also include the defendant's notice of a public authority defense as required by Federal Rule of Criminal Procedure 12.3.³

On January 10, 2005, Giffen submitted a proffer of the classified information he wished to reveal at trial in support of his public authority defense. In support of the Rule 12.3 notice, Giffen asserted that he acted "with the intention of furthering the national interest of the United States and in reliance on his ongoing communications with" government agencies, and ...