United States v. Hamma

858 F.2d 834 (2nd Cir. 1988)

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Nature of the Case

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Facts

The Hammad Department Store caught fire under circumstances suggesting arson. An AUSA discovered that the store's owners, Taiseer and Eid Hammad (Ds), had been audited by the New York State Department of Social Services for Medicaid fraud. Ds had bilked Medicaid out of $400,000; they claimed reimbursement for special orthopedic footwear but supplied customers with ordinary, non-therapeutic shoes. Ds 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 Ds' store. Goldstein informed the AUSA that he had provided Ds with false invoices. Goldstein agreed to cooperate with P's investigation. The prosecutor directed Goldstein to arrange and record a meeting with Ds. Goldstein falsely told Ds he had been subpoenaed to appear before the grand jury investigating the Medicaid fraud. Ds urged Goldstein to conceal the fraud by lying to the grand jury and by refusing to produce Crystal's true sales records. Goldstein and D saw each other five days later. The meeting was recorded and videotaped. Goldstein showed D 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. D spent much of the meeting devising strategies for Goldstein to avoid compliance. After considering the recordings, videotapes and other evidence, the grand jury returned a forty-five count indictment against Ds. Ds moved to suppress the recordings and videotapes, alleging the prosecutor had violated DR 7-104(A)(1). The rule prohibits a lawyer from communicating with a 'party' he knows to be represented by counsel regarding the subject matter of that representation. A hearing was convened and Ds presented evidence of their representation by counsel and P's knowledge of that representation. P argued that DR 7-104(A)(1) was irrelevant to criminal investigations and that the rule did not apply to investigations prior to the commencement of adversarial proceedings against a defendant. Ds' motion to suppress the recordings and videotapes was granted. The court determined that Goldstein was the prosecutor's 'alter ego' during his discussions with D. P appealed.