2010-01-14 D1109 Mtn to Dismiss Indictment for Pros Misconduct

UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF TEXASHOUSTON DIVISION

UNITED STATES OF AMERICAv.DANIEL BAYLY andROBERT S. FURST§§§§§§§ Cr. No. H-03-363 (Werlein, J.)DEFENDANT ROBERT S. FURST’SMOTION TO DISMISS INDICTMENT FOR PROSECUTORIAL MISCONDUCTHEARING REQUESTED

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TABLE OF CONTENTS

I. SUMMARY OF MOTION................................................................................................1II. BACKGROUND...............................................................................................................3A. The First Trial........................................................................................................31. The Barge Transaction...............................................................................32. The ETF’s Stated Theory of the Case........................................................43. The Defense Made Repeated Requests for theProduction of

Brady

Material, Including Some of theSpecific

Brady

Evidence Which Was Withheld........................................84. The ETF Made Sparse

Brady

Disclosures in the FirstTrial............................................................................................................9a. The April 22, 2004 Brady Letter..................................................10b. The June 1, 2004 Brady Letter.....................................................10c. The July 30, 2004 Brady Letter...................................................115. The ETF’s Representations to this Court.................................................12B. Hundreds of Pages of

Brady

Material Were Produced YearsAfter Furst was Tried, Sentenced, and Imprisoned..............................................131. In September 2007, the Government Produced TwoPartial Composite 302s for Andrew Fastow WhichRevealed Exculpatory Information Withheld from theDefense at Trial........................................................................................142. In December 2007, the Government Produced 302s forKatherine Zrike and Others Which RevealedExculpatory Information Withheld from the Defense atTrial..........................................................................................................153. The ETF’s

Brady

Misconduct in the

Skilling

CaseResulted in the Compelled Production of theHandwritten Notes Underlying the Fastow Composite302s..........................................................................................................16

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III. EXAMPLES OF EGREGIOUS AND MATERIAL

BRADY

VIOLATIONS.................................................................................................................17A. The ETF Withheld Exculpatory Evidence That Nullified ItsCase......................................................................................................................181. ETF (Mis)Representation #1: Did Fastow Actually

Guarantee

that Enron Would Repurchase the Barges, orSimply Obligate Enron to Use its “Best Efforts” to HelpMerrill Lynch Remarket the Barges?.......................................................182. ETF (Mis)Representation #2: Contrary to theAllegations in the Indictment, Fastow Expressly DeniedPromising to Repurchase the Barge Investment......................................223. ETF (Mis)Representation #3: To Prove an OralGuarantee Where None Existed, the ETF SponsoredTestimony from Fastow’s Subordinates Who the ETFKnew Were Misinformed about the Nature of Enron’sObligations to Merrill Lynch...................................................................234. ETF (Mis)Representation #4: Fastow Expressly DeniedObligating Enron to Repurchase the Barge Investment...........................265. ETF (Mis)Representation #5: The ETF WithheldExculpatory Statements by Katherine Zrike WhichProved the Barge Transaction was a “Best Efforts” Deal........................28a. Katherine Zrike’s exculpatory 302 was withheldfrom the defense...........................................................................28b. Katherine Zrike’s exculpatory SEC testimonywas withheld from the defense....................................................29IV. LEGAL AUTHORITY....................................................................................................35A. The Government is Constitutionally, Ethically, and as a Matterof Department Policy Bound to Disclose Exculpatory Evidenceto the Defense......................................................................................................36B. This and Other Courts Have Dismissed Indictments for

Brady

Violations Substantially Less Severe Than Those in This Case..........................38C. The Egregious Pattern of Withholding and Manipulation of Exculpatory Evidence Mandates Dismissal of the Indictment............................41V. CONCLUSION................................................................................................................42

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