US v. Mozer, S1 93 Cr. 0006(PNL).

• Decision Date: 29 July 1993
• Docket Number: No. S1 93 Cr. 0006(PNL).,S1 93 Cr. 0006(PNL).
• Citation: 828 F. Supp. 208
• Parties: UNITED STATES of America, v. Paul W. MOZER, Defendant.
• Court: U.S. District Court — Southern District of New York

828 F. Supp. 208

UNITED STATES of America, v. Paul W. MOZER, Defendant.

No. S1 93 Cr. 0006(PNL).

United States District Court, S.D. New York.

July 27, 1993.

As Amended July 29, 1993.

Matthew E. Fishbein, Acting U.S. Atty. S.D. New York, New York City (Laurie Brecher, John W. Auchincloss, II, Asst. U.S. Attys., of counsel), for U.S.

Chadbourne & Parke, New York City (Stanley S. Arkin, Robert J. Hausen, Anthony M. Supino, Randy J. Amster, Barry S. Pollack, of counsel), for defendant.

OPINION AND ORDER

LEVAL, District Judge.

This is a motion by the defendant in a criminal case seeking specific performance of a plea agreement he made with the United States Attorney's Office for the Southern District of New York. Specifically, he seeks to be allowed to plead guilty in accordance with the terms of the agreement and to receive its benefits. The Government opposes the motion.

The Government contends first that the plea bargain agreement was nothing more than an offer of unilateral contract and as such did not impose any binding obligations on the Government until the defendant "accepted" by his timely entry of a guilty plea; the Government argues that until the defendant's entry of a plea under the agreement, the Government was free to withdraw its offer at any time for any reason. Second, the Government contends that because the time allowed for the defendant's "acceptance" under the agreement has expired, he can no longer do so, and the court cannot resuscitate the lapsed agreement. Finally, the Government contends that the defendant breached the terms of the plea agreement and thus repudiated it. The Court finds to the contrary that it is the Government that acted inconsistently with the terms of the plea agreement and that the defendant is entitled to the relief he seeks.¹

Background

Defendant Paul Mozer was a managing director of Salomon Brothers Inc., a New York investment bank, and was the head of Salomon's Government Trading Desk. As a primary dealer in U.S. Treasury securities, Salomon regularly purchased such securities in the Treasury's auctions. Under Treasury rules, one entity may purchase no more than 35% of the total amount of securities offered in an auction, and may bid for no more than 35% of the amount at auction at any one yield level.

In the fall of 1992, the Department of Justice, at the instance of the Treasury Department, was investigating whether Salomon had violated these Treasury rules in a February 1991 auction by submitting multiple 35% bids in dummy names and thus, after proration of the bids, receiving aggregate allocations that exceeded the maximum of 35% allowed. Separate investigations were being conducted by the Office of the United States Attorney for the Southern District of New York ("SDNY") and the Antitrust Division of the Department of Justice. It appears that Mozer cooperated with SDNY's investigation and negotiated for a plea agreement.

On November 19, 1992, after his cooperation and following extensive negotiations, Mozer entered into a plea agreement with the SDNY Office (the "Agreement"). The Agreement provided that the SDNY Office "will accept" a guilty plea from Mozer, entered "no later than December 3, 1992," to an information charging him with two counts of "making, and aiding and abetting the making of, false statements within the jurisdiction of an agency of the United States," in violation of 18 U.S.C. §§ 1001 and 2; and that in return for such plea, he would not be further prosecuted by SDNY for any crimes he committed related to his participation in Treasury auctions during a specified period. It went on to specify certain agreements as to application of the Sentencing Guidelines and to provide that the Government would move under § 5K1.1 of the Guidelines for a downward departure in Mozer's sentence by reason of the defendant's prior cooperation. The Agreement also emphasized in customary language that the undertaking that Mozer would not be prosecuted further bound only the SDNY office and did not bind "other federal, state or local prosecuting authorities." It then added an unusual provision, as follows:

The parties understand that Paul Mozer intends to claim that certain other prosecuting authorities are barred from further prosecuting him for conduct relating to U.S. Treasury securities by alleged prior agreements between Paul Mozer and such authorities. Although the Office believes that such a claim is without merit, the parties agree that nothing in this Agreement should be construed so as to prevent Paul Mozer from raising such a claim in any future proceedings brought by such other prosecuting authorities.

The Agreement also included a conventional integration clause.² Nothing in the plea agreement addressed the specific form or content of the information to which Mozer would plead.

On December 3, 1992, the last day provided for Mozer to enter his plea under the Agreement, the parties signed an amending letter, extending the Agreement "to provide that Paul W. Mozer will enter ... guilty pleas on or before January 7, 1993."

Sometime in the weeks after that letter was signed, disputes arose between the SDNY Office and Mozer. On January 5, 1993, when Mozer's counsel, Stanley Arkin, Esq., first saw SDNY's draft of the information to be filed against Mozer, he objected to certain language in the draft. His objection had two prongs, as follows. Section 1001 of Title 18 covers three categories of conduct: (1) falsification, concealment, and covering up by any trick, scheme, or device; (2) making a false or fraudulent statement; and (3) making or using a false writing. The information as drafted charged Mozer with all three theories. The plea agreement referred to only one of the three — "making ... false statements." Arkin contended that the information charging all three theories of § 1001 violated the agreement that he would plead to an information "charging him ... with making ... false statements ... in violation of ... Section 1001...." Second, Arkin protested the inclusion in the information of narrative language asserting that Mozer had attempted to cover up Salomon's false bids after the February 1991 Treasury auction. The SDNY Office refused to remove this language from the information, or to limit its charges to the false statements branch of § 1001.

On the evening of January 6, 1993, with Mozer's arraignment on the two-count information scheduled for the next day, Mozer's attorneys telecopied to the SDNY Office copies of Mozer's draft Motion for Expedition and Motion to Strike and for Specific Performance, with supporting affidavit and memorandum of law. The motion for specific performance contended that the information drafted by SDNY was not consistent with the Agreement; it sought to enforce the terms of the Agreement. The accompanying letter stated that, "Mr. Mozer stands ready and willing to perform his obligations under the Plea Agreement."

On January 7, 1993, the SDNY Office filed the two-count information including the language to which Arkin had objected. Mozer was arraigned before a magistrate judge and waived his right to prosecution by indictment. The case was assigned to Judge Robert P. Patterson. At this time, representatives of the SDNY Office apparently told Mozer's counsel that if Mozer did not wish to plead to the information as filed, the Office would treat this as his repudiation of the Agreement and would proceed to present an indictment going beyond the limited immunity conferred by the Agreement.³

The parties proceeded to Judge Patterson's chambers, with Mozer apparently intending to enter a plea of guilty to the two-count information. However, because Judge Patterson was occupied in another matter, the parties were told to come back on January 11, 1993.

On January 8, 1993, Mozer filed his Motion for Expedition and a Motion to Strike and for Specific Performance; the SDNY filed responsive papers. A conference was held before Judge Patterson on January 11.

At the first part of the conference on January 11, 1993, Judge Patterson expressed concern that Mozer's objections concerning the content of the filed information indicated that the parties did not really have "a meeting of the minds" concerning the plea. He stated that the parties would "have to be in agreement as to what this agreement means or we take no plea." Several times during the colloquy, the defendant made clear that, despite his motion to strike language in the information, he was willing to plead to the information as drafted and to make a legally sufficient allocution. The Assistant United States Attorney responded that the Government would accept a legally sufficient allocution.

However, the judge then raised a question as to what would happen in the event of a future prosecution of Mozer for antitrust violations if Mozer contended that such a prosecution was barred by the Agreement. Mr. Arkin first noted, and the Assistant agreed, that in the Agreement the parties had essentially agreed to disagree on this issue: as quoted above, the Agreement stated that Mozer was free to argue that other governmental authorities were barred from prosecuting him by reason of other agreements.

Arkin then stated that, should an antitrust prosecution of Mozer occur in the future, he might call Assistant U.S. Attorneys as witnesses to support the contention that Assistants might have carried messages on behalf of the Antitrust Division that conveyed the making of an agreement with the Antitrust Division. The Assistant U.S. Attorney asserted that the defendant had no right to do so under the Agreement and stated that, given Arkin's contention, there was no meeting of the minds and therefore no plea agreement. The Assistant stated that, in light of Arkin's contention, the SDNY Office would proceed against Mozer by way of indictment.

As the day's proceedings concluded, Judge Patterson was persuaded by the Government's arguments to doubt whether there...