Legal Times

DOJ Goes for the Gold

by Timothy J. Burger,


Washington lawyer Robert Luskin will admit this much: Receiving the bulk of his payment on behalf of a shady client in the form of 45 gold bars worth a cool half million was highly unusual. but it wasn't improper, Luskin insists. And that's where he clashes with the Justice Department, which has taken the rare step of demanding that Luskin and four other lawyers turn their billings over to the government.

The department is arguing that the payments came from assets that should have been frozen and were subject to forfeiture.

Luskin, known as an engaging and colorful character who often zooms around town on a motorcycle, says he will resist the Justice Department's assault, thus setting the stage for a showdown involving the difficult balance between law-enforcement techniques and the right to counsel.

With approval from Justice, Rhode Island U.S. Attorney Sheldon Whitehouse on Jan. 23 asked a judge to order Luskin and four other lawyers to give the feds $1.9 million in fees they were paid in the case of Stephen Saccoccia. In 1993, Saccoccia was sentenced to 660 years in prison on money laundering charges. He is now incarcerated in Indiana.

Luskin, 48, acknowledges he was paid $674,125 in fees and expenses for three years' work on behalf of Saccoccia in the form of 45 gold bars, valued at $505,125, as well as in Swiss wire transfers of $169,000.

Luskin, who turned to Graeme Bush of D.C.'s Caplin & Drysdale to fight the fee forfeiture, says he believed the money was untainted and that prosecutors had agreed not to seek forfeiture of fees lawyers earned defending Saccoccia. "I never have, and never would, knowingly accept a fee that was the proceeds of illegal activities," says Luskin., a name partner in D.C.'s Comey Boyd & Luskin. "I did not accept any money in this case until after I had sought and obtained assurances from reputable counsel who claimed that they were familiar with the source of the funds."

But Whitehouse, the U.S. attorney, charges that Luskin exhibited a "willful blindness" to the possibility that his payments were connected to Saccoccia's illegal activity. After all, Whitehouse notes in his motion, Saccoccia's money-laundering operation involved precious metals trading and Swiss bank accounts.

Luskin and others in the criminal defense bar say there is far more at stake than the money DOJ wants Saccoccia's defense attorneys to fork over. They argue that Whitehouse's motion before U.S. District Judge Ernest Torres of Rhode Island is a dangerous attempt to broaden court ruling that have enabled the government to seize fees paid to defense lawyers under some limited circumstances.

In 1989, the Supreme Court held in Caplin & Drysdale v. United States that forfeiture does not necessarily interfere with a defendant's right to pick his lawyer. Luskin's lawyer on the forfeiture question, Bush, was one of the attorneys who handled the Supreme Court case for his law firm, Caplin.

"The Supreme Court as a general proposition upheld the forfeiture of attorney fees paid to a lawyer if the government proves that those fees were derived from tainted funds," says Howard Srebnick, of Miami's Black, Srebnick & Kornspan. Srebnick has been representing Michael Abbell, the lawyer who is in the midst of a federal criminal case stemming from his representation of the Cali drug cartel.

"Now it sounds like the government is taking a step into the white collar criminal arena, and it will become increasingly difficult for lawyers to represent defendants in criminal fraud cases because of the threat that their fees will ultimately be the subject of forfeiture," Srebnick notes.

Other defense attorneys agree.

"It certainly has a chilling effect," says William Moffitt, first vice president of the National Association of Criminal Defense Lawyers and a name partner in the D.C. office of Asbill, Junkin & Moffitt.

"If the case gets a high profile [or] they don't like the lawyer in it, they can immediately open this kind of assault," Moffitt says. "If you plead your client guilty, they're never going to go after your fee. So there's an incentive here to give the government what it wants. [But] if you begin to aggressively defend your client, you defend it at the risk of your fee."

Moffitt knows something about the issue. In 1996, his old firm, Moffitt, Zwerling & Kemler, was forced after a court battle to cough up $103,000 in fees that a client charged with drug offenses had paid in cash. With this and other cases on the books, Moffitt says, "I would suspect that the government really has carte blanche right now to literally run roughshod over the defense bar."


To be sure, the Justice Department does not take such an action lightly. U.S. attorneys must have the tactic approved through the department's Asset Forfeiture and Money Laundering Section and the Criminal Division. Gerald McDowell, chief of the asset forfeiture section, says prosecutorial efforts to seize attorney fees are rare, coming perhaps two or three times annually in recent years.

"We wouldn't have knowingly approved in inadequate case, but I don't think it's appropriate for me to discuss how strong it is," says McDowell.

Coincidentally, McDowell worked with Luskin, a former organized crime prosecutor in the Justice Department, in the early 1980s. McDowell describes Luskin as a "heck of a guy."

Luskin says simply that he earned his fees from Saccoccia.

The government, he says, is overreaching. "The government has been saying for years that, although they've got the right to forfeit fees in particular cases, their practice has been that they won't forfeit legitimate fees," Luskin says. And while he concedes that he never before had the experience of being paid in god bars, he insists that the issue "is not the form of the payment. It's the source of the funds that mattered. "Luskin's lawyer, Bush, adds that in his view, the U.S. attorney's case is sloppy and riddled with errors. "The government's assertion about what happened at trial . , should not be taken at face value."

Luskin is considered by colleagues to be one of the more colorful lawyers in D.C. He has a reputation both for smarts and for unconventionality. A Rhodes scholar and a graduate both of Harvard University and the Harvard Law School, Luskin is believed to be the first man to have argued a case before the Supreme Court while wearing an earring. (He won.)

An avid motorcyclist and terminally hip dresser, Luskin is also a baseball fanatic. He's helped coach his son's team, and he personally attended a Chicago White Sox fantasy camp a few years ago. He is a stalwart of a local over-30 baseball league.

He's also had his share of the limelight. He has been representing former Clinton White House aide Mark Middleton in the campaign finance controversy, for instance. And it was Luskin who referred the Arkansas businessman Yah Lin "Charlie" Trie to another renowned D.C. lawyer, Reid Weingarten of Steptoe & Johnson. Trie was indicted last month on campaign finance allegations and pleaded not guilty.

Luskin says he was surprised that the government decided to go after his fees in the Saccoccia case. He describes Whitehouse's motion as "an ambush" since he first learned of it when it was filed in court. According to Luskin, the U.S. attorney's office had stated before Saccoccia's trial and in a post-conviction probe of Saccoccia's assets "that they would not seek to forfeit legitimate fees . . . I think that this is misguided and avaricious and despicable." DOJ's McDowell responds that "everybody was on notice when they did the fine legal work that they did in the case that Saccoccia's funds were encumbered. But that's what U.S. district judges are for ‹ to make a determination on that issue."

In a Jan. 26 statement on his motion, Whitehouse, insisted that "[t]his would not be viewed as a broad-brush assault on defense counsel's legitimate fees. The unusual circumstances of this case, both the existence of a court order freezing Saccoccia's assets and the cloak-and-dagger nature of these anonymous and surreptitious payments, make this an exceptional case."


Indeed, much of the money that the Saccoccia lawyers were paid ( including gold bars given to Luskin ) came from anonymous third parties, Whitehouse asserted in his motion.

"Luskin remained unaware of the identities of these so-called donors and of any explanation for their generosity," Whitehouse stated. Luskin does not dispute that he does not personally know where much of the money came from, but says other Saccoccia lawyers told him it was clean. Whitehouse added that during Saccoccia's trial, the government demonstrated that he had "concealed a large portion of the proceeds of his money laundering in Austria and Switzerland.

Yet, between December 4, 1994, and February 23, 1995, approximately 20 months after the trial, Luskin accepted $169,170.57 in wire transfers from Switzerland." Thus, Whitehouse charged, "Luskin had reasonable cause to know that these funds were the proceeds of Saccoccia's money laundering activities. Luskin, however, chose not to know the true origin of these funds."

Asked about these claims, Luskin says the prosecutors have attempted to seize millions in Saccoccia's funds form abroad without demonstrating that the money is from illegal activities. "I strongly disagree with their characterization of the evidence at trial," he declares. "More than 20 months after conviction, the government itself tried to forfeit more than $5 million of Saccoccia's assets in Austria and Switzerland as substitute assets - which the government did not claim were the proceeds of illegal activities."

Luskin's point is that Saccoccia apparently had assets sufficient to pay legal fees that even the Rhode Island U.S. attorney did not charge were ill-gotten gains.

Nonetheless, Whitehouse's filing questioned the manner in which Luskin and other Saccoccia lawyers were paid.

Take, for example, Providence, R.I., lawyer Kenneth O'Donnell. His "first payment of fees came in January 1993, when an envelope with $50,000 in cash was delivered to O'Donnell's office by an individual who refused to identify himself and would only say that the cash was money owed to Saccoccia and that it should be used for his defense."

O'Donnell did not reply to a message left at his office. Whitehouse alleged that another Saccoccia lawyer, Jack Hill of San Francisco, was paid some $270,000 in Swiss francs on a visit to Switzerland in March 1992 - from "a Swiss bank official who represented that the money came from Saccoccia despite the fact that Saccoccia's accounts in Switzerland were frozen." Hill says that Whitehouse has "misstated the facts, the evidence, and the law. Other than that, I can't really fault him . . . You can be assured I'm going to fight it."

The other two lawyers whose fees are in jeopardy are Stephen Finta of Fort Lauderdale, Fla. and Lawrence Semenza of Las Vegas, himself a former U.S. attorney. Finta could not be reached, and Semenza would not comment.

Being forced to cough up fees from some five years ago would be hard enough for Luskin's successful D.C. firm. "It would be an enormous hardship for the firm," he says.

But the assessment could actually force other lawyers on the matter out of business, according to Luskin. That risk underscores what Moffitt of the criminal defense lawyers' association cites as the threat to an attorney's ability to fight zealous prosecutors.

"Most of the other lawyers in this are solo practitioners," Luskin says. [may be a short bit of the article is missing here]

Saccoccia was arrested in Geneva in November 1991 after a major international investigation involving wiretaps, undercover agents, and confidential informants. Some 50 people from five states were named in indictments involving an organization that the Justice Department alleged was laundering as much as $60 million a month.

As a ringleader, Saccoccia was convicted of an array of charges, and in May 1993 was sentenced to 660 years in prison and fined $15.8 million. The government also ordered Saccoccia to forfeit $136.3 million.

Luskin did not represent Saccoccia at trial. He says he helped on the man's sentencing and appeals - getting charges thrown out in California, for example - and in Saccoccia's struggles with his frozen assets all over the world.

While seeking to determine whether Saccoccia had any undiscovered assets that could be seized, the U.S. attorney in August 1995 received court permission to depose various Saccoccia lawyers "for the purpose of determining the amounts, form, and sources of any payments made or to be made in connection with their representation," according to Whitehouse's Jan. 23 motion. It was through that process that the government got the details of how Luskin and the other lawyers were paid.

In his March 28, 1996, deposition, Luskin said he had received three Swiss wire transfers from December 1994 through February 1995. They totaled $169,000. And Luskin received the gold bars from Finta and another Saccoccia lawyer from September 1993 through October 1994. But Luskin also insisted that he knew of no connection between the fees he was paid and Saccoccia's illegal activity.

"I want to be clear," Luskin said in his deposition. "These funds were not any of the funds that were identified in the indictment, or in the judgment of forfeiture, and these funds were not from any individual who was associated with the conduct that was charged in the indictment."

The Luskin deposition itself, was a legally complex affair. While Bush and Nathan Finch of Caplin & Drysdale represented Luskin, the attorney-client privilege and other interests of Saccoccia and his wife, Donna, were represented by two other attorneys, James Moretti and William Murphy, respectively.

Donna Saccoccia was convicted of money-laundering charges and sentenced to 14 years in prison.

Luskin says his official response to Whitehouse's motion will be filed in about a month.

Meanwhile, if he's looking for character references, he need go no further than the same Justice Department that is claiming his fees. It turns out that as one arm of the Justice Department accuses Luskin of accepting inappropriate legal fees, another has just given him a vote of confidence. Luskin was recently appointed by the Justice Department Organized Crime and Racketeering Section to continue an internal probe to help the Laborers International Union of America purge itself of corrupt members. The Justice Department renewed the arrangement for another year.

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