Greg Anderson, the former personal trainer for San Francisco Giants slugger Barry Bonds, will be called back to testify before the new grand jury being scheduled to be empaneled on July 27 to take up the perjury investigation where the prior panel left off. The earlier grand jury’s term expired on July 20, at which time Anderson was released from his civil contempt for refusing to testify about possible steroid use by Bonds. With a fresh panel in place, Anderson could be held for up to eighteen months if he refuses to testify again, as he has asserted he plans to do. While he is likely to land back in jail, the issue will be whether the civil contempt has any possibility of driving him to testify. If it appears that he will simply continue to refuse to answer questions, at some point the court will have to let him go, although federal district judges have fairly broad discretion in determining when the coercive effect of the civil contempt has become fruitless. An AP story (here) discusses the next step in Anderson’s merry-go-round life with the grand jury and the local federal lockup. (ph)
Category: Grand Jury
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In the usual case in which a grand jury issues a subpoena for documents, the recipient determines what is responsive and, if necessary, asserts any attorney-client privilege and work product protection claim by refusing to turn over the records. At that point, the ball is in the government’s court to either challenge the claimed privilege or protection, or to assert the crime-fraud exception to undermine the claim. A recent decision by the Sixth Circuit in In re Grand Jury Subpoenas 04-124-03 and 04-124-5 (here) essentially follows that model when a third party held the documents and was willing to turn them over to the government despite a privilege claim by the target of the investigation.
The investigation concerns Venture Holdings and possible looting of the company by its former owner, Larry Winget, before it went into bankruptcy. As a result of the bankruptcy, new ownership took control of Venture (called "New Venture" in the opinion), and when a grand jury investigation began regarding questionable transactions at Venture, New Venture received a subpoena for documents that it was more than happy to comply with, including waiving any corporate attorney-client privilege. At this point, Winget stepped in and claimed that records held by New Venture included documents covered by his personal attorney-client privilege. The district court accepted the government’s suggestion that a "taint team" made up of a prosecutor and investigator with no connection to the case — behind the so-called "Chinese Wall" — review the documents and determine which ones were subject to a privilege claim. Under the government’s proposal, if the taint team determined that a document was not privileged, it would go straight to the personnel assigned to the grand jury investigation without a chance for Winget to challenge that decision, at least not until after disclosure of the document.
It was this step in the process that cause the Sixth Circuit to reject the taint team and instead permit the privilege claimant to make the initial determination on the privileged nature of the documents, as if the subpoena were served directly rather than on a cooperative the third party. The court expressed some hesitation about the fairness of the proposed government review, stating:
It is reasonable to presume that the government’s taint team might have a more restrictive view of privilege than appellants’ attorneys. But under the taint team procedure, appellants’ attorneys would have an opportunity to assert privilege only over those documents which the taint team has identified as being clearly or possibly privileged. As such, we do not see any check in the proposed taint team review procedure against the possibility that the government’s team might make some false negative conclusions, finding validly privileged documents to be otherwise; that is to say, we can find no check against Type II errors in the government’s proposed procedure. On the other hand, under the appellants’ proposal, which incidentally seems to follow a fairly conventional privilege review procedure employed by law firms in response to discovery requests, the government would still enjoy the opportunity to challenge any documents that appellants’ attorneys misidentify (via the commission of Type I errors) as privileged. We thus find that, under these circumstances, the possible damage to the appellants’ interest in protecting privilege exceeds the possible damage to the government’s interest in grand jury secrecy and exigency in this case. Therefore, we reverse the district court, and hold that the use of a government taint team is inappropriate in the present circumstances. Instead, we hold that the appellants themselves must be given an opportunity to conduct their own privilege review; of course, we can presently make no ruling with respect to the merits of any claimed privilege that may arise therefrom.
Government taint teams have been used primarily in law office search cases in which documents seized are within the government’s control, and there has been quite a bit of controversy about them because the same incentives identified by the Sixth Circuit are present. While In re Grand Jury Subpoenas is a subpoena case, so the court is merely putting the privilege claimant in the same position he would have been in if the he received the subpoena directly, the court’s rationale regarding taint teams could be applied to challenges to searches involving privileged documents. (ph)
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[Note: The following is a corrected post in light of updated media
reports] The investigation of San Francisco Giants slugger Barry Bonds
will shift to a new grand jury so that prosecutors can continue to
determine whether to indict him on perjury and tax evasion charges.
The grand jury panel that had been hearing evidence against Bonds
related to his 2003 grand jury testimony as part of the investigation
of steroids distribution by Balco (Bay Area Laboratory Cooperative)
expired on July 20 at the end of its 18-month term of service. By
empaneling a new grand jury, prosecutors will not have to race any
deadlines in deciding whether to seek charges. I suspect prosecutors
decided to hold off for now rather than risk running afoul of the adage
"act in haste, repent in leisure." Bonds is unlikely to even consider
a plea offer, and the statute of limitations is not a concern, so it is
better to wait until the case is clear — one way or the other —
than to rush something through a grand jury on its last day and then
have to clear up the mess later. That is especially the case with tax
counts, which require approval from the Tax Division in Washington, D.C.The downside to shifting to a new grand jury is that evidence heard
by the prior panel must be presented again to the new set of grand juros, which includes
reading transcripts to them, a process that can be deadly dull. A new
grand jury allows prosecutors to subpoena Bonds’ former personal
trainer, Greg Anderson, to appear once again. In June, Anderson refused to
testify and the district court ordered him to jail on July 6 for civil
contempt, but he only served the two weeks until the prior grand jury’s term
expired. His time on the outside may be fairly short, however,
depending on when prosecutors subpoena him to testify, which most
likely will trigger another refusal to testify and another trip to
jail.While Bonds has dodged an indictment at this time, and probably
for the next few months, the U.S. Attorney’s Office stated that its investigation has not ended. Pulling out a well-worn aphorism, an AP story (here) quotes Michael Rains, an attorney for Bonds, as saying, ""They don’t even have enough to indict a ham sandwich, much less Barry Bonds." I’m not sure what a ham sandwich could do that would trigger federal charges, but it’s probably not perjury or tax evasion. (ph) -
A Wall Street Journal article (here and Law Blog entry here with access to the article) discusses the response of major law firms to the current spate of SEC and grand jury investigations of companies related to the timing of their options awards. Not surprisingly, the firms have viewed this as a marketing opportunity, informing current and potential clients that the best strategy is, of course, to consult with competent counsel. For example, national law firm Latham & Watkins is touting its "Options Timing Working Group" that comes complete with a page on the firm’s website (here) and offers missives written by Jim Barrall in The Executive Comp Insider that tout, again not surprisingly, the need to obtain legal counsel. The burgeoning investigations have already touched over fifty companies, and that’s just the ones publicly disclosing pending investigations. The number of companies conducting their own internal reviews is much higher than that, and we will see more disclosures of problems in the coming months. With all the lawyers getting involved in these cases, the interesting question will be whether firms are conflicted out of certain representations, either because they were involved in the drafting of the stock option agreements or their conduct of an internal investigation means they cannot defend individual officers or directors in subsequent cases. As Peter Lattman notes in the WSJ article, this is another instances of lawyer full employment — not that there’s anything wrong with that. (ph)
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The personal attorney for San Francisco Giants slugger Barry Bonds, Laura Enos, expects her client will be indicted in the next week on perjury and tax evasion charges. An AP story (here) quotes Enos as stating, "We are very prepared . . . We have excellent tax records and we are very comfortable that he has not shortchanged the government at all." The federal grand jury in San Francisco investigating Bonds is set to expire in the near future, perhaps as early as Thursday, July 20, so any indictment must be returned by then barring a six-month extension of its term. Bonds’ former personal trainer, Greg Anderson, remains in jail for civil contempt for refusing to testify before the grand jury, and the Ninth Circuit denied his motion for bail while he appeals the contempt or, more likely, waits for the clock to wind down — a witness is released from civil contempt once the grand jury’s term expires. A lot of people will be watching for signs of an indictment on July 20, when the Giants will be home playing the division-leading San Diego Padres. (ph)
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Media reports (see here) indicate that federal prosecutors may seek a grand jury indictment of San Francisco Giants slugger Barry Bonds, probably this month, on perjury and tax evasion charges. The perjury relates to his testimony before a grand jury in 2003 regarding his use of steroids received from Balco (Bay Area Laboratory Cooperative) in which he is reported to have denied knowing that two substances provided by his personal trainer, Greg Anderson, contained steroids. Anderson, Balco founder Victor Conte, and two others entered guilty pleas in 2005 to drug charges related to the creation and distribution of so-called designer steroids — which had nicknames like "the clear" and "the cream" — that were undetectable until the recent development of new drug tests.
A U.S. District Court judge recently sent Anderson to jail for civil contempt because he refused to testify before the grand jury investigating Bonds. He has filed a motion with the Ninth Circuit for bail while he appeals the contempt citation, but the grand jury is ending soon, perhaps at the end of the month, and it’s unlikely he will be released before it expires or Bonds is indicted (see AP story here). From earlier reports about the appearance of witnesses, it appears that this is a "Thursday Grand Jury" that meets once each week, so any indictment is likely to come on that day.
The perjury case against Bonds looks to be based on the testimony of a former business partner involved in selling memorabilia autographed by Bonds and a former girlfriend who claims, among other things, that Bonds gave her $80,000 in cash. The tax charges likely relate to memorabilia sales that may not have been reported as income. If there is an indictment, I suspect any tax count is part of a "Liar, Liar" approach in which the government will try to show that Bonds was deceptive in other areas of his life to bolster the theory that he was not truthful in the grand jury about his use of steroids. The amount of income involved is unlikely to be significant for someone with Bonds’ salary and ability to generate additional income through appearances and autograph sessions, so any tax charge looks to me to be part of a broader strategy to call into question his truthfulness. Moreover, if there is a basis for tax evasion charges, that would make it more difficult for Bonds to take the witness stand to explain his earlier testimony. If that is the case, the defense will focus on trying to undermine the credibility of the government’s witnesses.
Mark you calendars for Thursdays during July, because something more than hot pennant races may be of interest. (ph — sorry for the headline, I couldn’t resist)
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Greg Anderson, the former personal trainer for San Francisco Giants slugger Barry Bonds, will be spending at least a few weeks in jail for refusing to testify before a federal grand jury in San Francisco investigating whether Bonds committed perjury in the Balco (Bay Area Laboratory Cooperative) steroids investigation. Anderson first refused to testify a week earlier because he believed that his plea agreement did not require him to do so and the government was acting improperly. U.S. District Judge William Alsup held Anderson in civil contempt and ordered him sent to jail, rejecting a request by Anderson’s attorney, Mark Geragos, for bail while he appeals the contempt.
An AP story (here) notes that the grand jury is set to expire in a few weeks, and a civil contempt only lasts as long as the grand jury is authorized, which is usually eighteen months. Geragos noted — or perhaps boasted — that there were things in refrigerators with a longer shelf-life than the grand jury investigating Bonds. That may be, although under Federal Rule of Criminal Procedure 6(g) a grand jury "may serve more than 18 months only if the court, having determined that an extension is in the public interest, extends the grand jury’s service. An extension may be granted for no more than 6 months, except as otherwise provided by statute." Therefore, if the particular grand jury hearing evidence of possible perjury by Bonds has not been extended once, the court could push its service out another six months and Anderson could be held during the extended term. Similarly, there is nothing that would prevent prosecutors from transferring the case to a new grand jury once the current one’s term expires and resubpoenaing Anderson to testify, leading perhaps to another civil contempt, although if the judge believes jailing him is futile then Anderson would have to be released.
Given the grand jury’s short remaining term, assuming no extension or transfer, then we are likely to learn in the next few weeks whether Bonds will be indicted on perjury charges, and perhaps other violations identified during the investigation. Just in time for the dog days of August when the pennant races tighten considerably. (ph)
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For those of you keeping score over the long holiday weekend, add two more Silicon Valley companies to the list of those who have received grand jury subpoenas from the Northern District of California in the ever-widening stock options-timing probe. Maxim Integrated Products, Inc. — not to be confused with the magazine — and Zoran Corp. disclosed (here and here) that they were served with the grand jury subpoenas and, as usual, will cooperate in the criminal investigation, in addition to providing documents to the SEC in its informal investigation of the issuance of the stock options. On top of Apple’s recent disclosure of possible problems in the grant of options in the 1990s to its executive, including Steve Jobs, these latest subpoenas show that the investigation is still in its growth phase. Given the near-addiction high tech firms have for stock options, look for more announcements of the receipt of grand jury subpoenas and pledges of cooperation. (ph)
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Greg Anderson, the former personal trainer for San Francisco Giants slugger Barry Bonds, refused to testify before a federal grand jury in San Francisco investigating whether Bonds committed perjury in 2003 when he testified about his lack of knowledge in taking steroids. Anderson was connected to Victor Conte’s drug lab, Balco (Bay Area Laboratory Cooperative), and provided Bonds with a then-undetectable steroid called "the clear." Bonds testified during the Balco investigation that he did not know the substance Anderson gave him contained steroids. Anderson plead guilty to drug charges and served a three-month prison term, and prosecutors subpoenaed him to testify about Bonds’ steroid use.
Anderson did not assert the Fifth Amendment, which may not have been available because of his guilty plea or, in the alternative, prosecutors may have been willing to grant him immunity. Instead, the basis for his refusal was that prosecutors wanted to examine him about a tape-recording in which he discusses Bonds using the clear in 2003 to avoid major league baseball’s drug-testing program. Anderson’s attorney, Mark Geragos (from the Scott Peterson murder case), argued that the tape was made illegally, but an AP story (here) notes that a federal district court judge decided that the government was not involved in the taping so prosecutors could use it to examine Anderson. By refusing to testify, Anderson faces a civil contempt proceeding and may be sent to jail if he continues to refuse to testify, at least for the term of the grand jury. If the court holds him in contempt, he could then appeal to the Ninth Circuit, although it is hard to see how he can avoid testifying about other matters unless her asserts the Fifth Amendment.
While Anderson is unlikely to be a particularly strong witness in any prosecution of Bonds, the tape recording could be important contemporaneous evidence used to link him to knowing steroid use near the time of his grand jury testimony. It certainly appears that, as the pennant races heat up, so is the investigation of Bonds. (ph)
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As if the investigation of Barry Bonds for perjury wasn’t keeping the U.S. Attorney’s Office in San Francisco busy enough, two more grand jury subpoenas have been issued by the Office to companies as part of the ever-widening options-timing investigation. Intuit Inc. and Equinix, Inc., both headquartered in the district, disclosed that they have received grand jury subpoenas dated June 26, 2006, and continuing a pattern seen in numerous other such disclosures, they promise to cooperate in the investigation. Intuit’s press release (here) actually goes a small step further by pointing out that a number of other companies have also been subpoenaed, similar to the playground tactic of blending into the crowd when the principal suddenly appears to investigate the broken window:
On June 26, 2006, Intuit Inc. (Nasdaq: INTU) received a subpoena from the United States Attorney for the Northern District of California requesting documents related to the company’s historical stock option practices. It is our belief that similar subpoenas have been served on many of the companies named in a recent report from the Center for Financial Research and Analysis (CFRA). As disclosed on June 9, 2006, Intuit received an informal request from the Securities and Exchange Commission for information on historical stock option practices. We will fully cooperate with the U.S. Attorney’s office.
Equinix takes the straightforward approach, stating in its 8-K (here) that "it received a grand jury subpoena from the U.S. Attorney for the Northern District of California and that it intends to cooperate fully with the U.S. Attorney’s Office in connection with this subpoena. The subpoena requests documents relating to Equinix’s stock option grants and practices."
The issuance of subpoenas has become almost routine now, and the interesting question is if any cases will move beyond the investigatory stage and result in plea agreements that might lead to additional prosecutions. (ph)
MattBray.net 