You are on page 1of 102

Case: 06-20885 Document: 0051330792 Page: 1 Date Filed: 11/20/2006

U . S . C nr tP-j- OF
APPEALS
Do Not Remove ~ .- 7 n
From Record Room
06-20885
cr1a,RLEs 0. 11
UN ITED S TAT ES COU RT OF APPEALS
FOR THE FIFTH CIRCUIT

UNITED STATES OF AMERICA,


Plaintiff-Appellee,

V.

JEFFREY K . SKILLING, /
Defendant-Appellant .

APPENDIX OF EXHIBITS IN SUPPORT OF~EFENDANT-APPELLANT


JEFFREY K. SHILLING MOTION
FOR RELEASE ON BAIL PENDING APPEAL

EXHIBITS 34-35 FILED UNDER SEAL

On Appeal From The United States District Court


For The Southern District Texas, Houston Division
Crim. N,d. H-04-25 (Lake, J .)

Daniel M . Petrocelli Ronald G . Woods


M. Randall Oppenheimer 5300 Memorial, Suite 1000
Mark Holscher ~ Houston, TX 77007
O'MELVENY & M~RS LLP Office : (713) 862-9600
1999 Avenue of the,/Stars, 7th Floor Facsimile : (713) 864-8738
Los Angeles, CA,.90067
Office : (310) 5 53-6700
Facsimile : (3,10) 246-6779

AT/JTORNEYS FOR DEFENDANT-APPELLANT JEFFREY K . WILLING


Case: 06-20885 Document: 0051330792 Page: 2 Date Filed: 11/20/2006

UNITED STATES DISTRICT COURT


SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION

UNITED STATES OF AMERICA,


Crim. No . H-04-25 (Lake, J :)
Plaintiff,
TO BE FILED UNDER SEAL
V.

RICHARD A . CAUSEY, JEFFREY K . ) REQUEST FOR IMMEDIATE .ORDER-


SKILLING, and KENNETH L . LAY, ) REGARDING EVIDENCE IN
CONNECTION WITH MOTION.
Defendants. ~

DEFENDANTS' JOINT MOTION TO DISMISS, OR FOR ALTERNATIVE RELIEF,


BASED ON PROSECUTORIAL MISCONDUCT ; MEMORANDUM IN SUPPORT
THEREOF; DECLARATION OF MICHAEL E . TIGAR ; DECLARATIONS OF
ATTORNEYS A-F (SUBMITTED IN CAMERA AND UNDER SEAL) ; [PROPOSED]
ORDERS (2) ; REDACTED VERSIONS OF DEFENDANTS' MEMORANDUM IN
SUPPORT OF THEIR MOTION AND DECLARATION OF MICHAEL E . TIGAR

Defendants Jeffrey Skilling, Kenneth Lay, and Richard Causey move pursuant to the .

Fifth and Sixth Amendments to the .United States Constitution ; United States v. Scroggirrs,-3.79

Fad 233, 239 (5th Cir . 2004) ; United States v. Goodwin, 625 F .2d 693, 703 (5th Cir. 1980),

United States v. Hammond, 598 F .2d 1008, ] 012 (5th Cir . 1979) ; United States v. Clemones, 577

F .2d 12.47, 1251-52 & n .3 (5th Cir . 1978) ; United States v. Henricksen, 564 F .2d 197, 198 (5th

Cir. 1977); United Sates v. Vavages, ] 51 F .3d 1185, 1188 (9th Cir. 1998) ; United States V.

Foster, 128 F .3d 949, 953 (6th Cir . 1997) ; United Sates v . Smith, 478 F .2d 976, 979 (D .C . Cir .

1973) ; United States v. Leung, 351 F . Supp . 2d 992, 998 (C .D . Cal . ; 2005) ; United States v.'.Peter

Kiewit Sons ' Co. ; 655 F . Supp . 73, 77 (D . Colo. 1986), aff' d United States v. Carrigan, 804 F .2d

599 (l Oth Cir. 1986) ; the Federal Rules of Criminal Procedure ; and the Court's inherent

supervisory powers, for an Order dismissing with prejudice the Indictment in this case on the

ground that the Enron Task Force has engaged in deliberate, systematic prosecutorial misconduct .
Case: 06-20885 Document: 0051330792 Page: 3 Date Filed: 11/20/2006

that has irreparably harmed defendants' ability to prepare for trial and present a defense and that

cannot be cured by lesser sanctions . A proposed order is submitted herewith .

Defendants also request an immediate order providing for disclosure of evidence relevant

to this motion . A second proposed order is submitted in . connection with this request .

Defendants finally request a hearing in connection with this motion at which they can

present oral argument and evidence .

Pursuant to Local Rule 12 .2, counsel for defendants have conferred with the Enron Task

Force, and it opposes the relief sought in this motion . _

Dated : August 31, 2005

Respectfully submitted,

By : .

Of Counsel : Daniel M . Petrocelli


M Randall Oppenheimer
.
Ronald G . Woods Mark Holscher .
Texas State Bar No . 21964000 O'MELVENY & MYERS LLP
Federal Bar No . 657 1999 Avenue of the Stars, 7 h Floor
5300 Memorial, Suite 1000 Los Angeles, . CA 90067
Houston, TX 77007 Office : (310) 553-6700
Office: 713-862-9600 Facsimile : (310) 246-6779
Facsimile : 713-864-8738 Attorneys in Charge for Jeffrey K Skilling

B y: /47 '

Michael Ramsey
Chip Lewis
River Oaks/Welch Building
2120 Welch
Houston, TX 77019
Office : (713) 227-0275
Facsimile : (713) . 523-7887
Attorneys in Charge for Kenneth. L . Lay
Case: 06-20885 Document: 0051330792 Page: 4 Date Filed: 11/20/2006

Reid Weingarten
Mark Hulkower
Matt Stennes
STEPTOE & JOHNSON
1330 Connecticut Avenue, N.W.
Washington, D .C . 20036-1795
Office : (202) 429-8074
Facsimile: (202) 261-0648
Attorneys in Charge for Richard A . Causey

'
Case: 06-20885 Document: 0051330792 Page: 5 Date Filed: 11/20/2006

TABLE OF CONTENTS
PM e
I. INTRODUCTION ... ... ...... ... ...... . ... . ... ........ ... .... ........ . . . ...... ... ... ....... . .. . .........:............ ....... .: 1
II. DEFENDANT S HAVE BEEN UNABLE TO MEET WITH WITNESSES ..:.....:.. : .... ... . 5
III . THE TASK FORC E HAS VIOLATED DEFENDANTS ' CONSTITUTIONAL
RIGHTS BY INTIMIDATING WI TNESSE S INTO NO T MEETING WITH
THEM AND NOT T E STIFYING ON THEIR BEHALF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
A. Defendants ' Burden of Proof . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . .. . . . . . . . . . . . . . 8
B. The Task Force Has Improperly Instructed Witnesses Not To Meet with
Defendant s . .. . . . . . . . : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . :. . . . . 9
1. Examples of Improper Instructions and Threats . . . . . . . . . . . . . . . . . . . . . . . . .: . . . . . . . . . . . . . . 9
a. Instruct Your Law yer to Stop Meeting With Skilling or
"Get Rid" of Him . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . : . . . . . . . . 9
b. Don ' t Talk to Defendants , "They Are Bad News ." . . . . . . . . . . .. . . . . . . . . . 11
c. It' s Not a " Good Idea" To Speak With Defendants . . . . . . . . : . :. . . . . . . . . . 12
d. Don 't Talk to "Anybody" and "Take the Fifth," If
Necessary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . : . . . . . . . . . : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
e. Witnesses Will 'Tay" if They Cooperate with
Defendants . . . . . . . . . . . . : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . .. . . . . . . . . . . . . . . . . . . 13
f. If You Co operate With Defendants, We ' ll "Go After"
You . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . .. . . . . . . . . . . . . . . . . . . .. . . . . . . . : . 1 3
2. The Task Force ' s Actions Violate Defendants ' Constitutional
Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . : . . . . . . . . . . : . . . . . . . . . . . . . . : . . . . . . . . . . . . . . . .. . . . . . 14
3 . Newby Is No Substitute for Private Interviews , Nor Does It Excuse
the Task Force ' s Misconduct . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . . . . . . . . . . . .. . . . 18
C. The Task Force Has Harassed Defense Witnesses Expected to Provide
Exculpatory Testimony at Enron Trials . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . : . . : . . . . . . . . . 20
1. Examples of Improper Threats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... . . . . . .. . . . .. . . 20
a. Testifying Is `Dangerous" and "Not in Your Best
Interest . . . . . . . . . . . . . . . . . . . . .. . .. . . .. . . . . . . . . . . . . . . . . . . . : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 .
b. You Are Now a Target and Will Be Prosecuted
for P erj ury . . . . . . . . .. . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
c. "You ' re a Target," Don ' t Testify . . . . . . . . . . . . . . . . . . . . . . . .. . . . .. . . . . : : . . . .. . . . . . . . . 22
i 2. The Task Force ' s Threats Violate Defendants ' Constitutional
R ights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . : . . . . . : . . . . . . . . . . . . . . . . . . 23
D . The Task Force Is Usin g Plea Agreemen ts A s Means To D eny Defendants
Acces s T o Witnesses And To Enforce Its Version Of The "Truth. " . . . . . . . . . . . .. . . . . . . 27
1. Defining the "Truth " and Quelling Any Dissent . . . . . .. . . . . . . . . . . . . . . . . : . . . . . . . . . . . . . 27

i
Case: 06-20885 Document: 0051330792 Page: 6 Date Filed: 11/20/2006

TABLE OF AUTHORITIES
(continued)
Page

2. Creating a Right t o Intrude on Defense Witness Interviews . . . . . . . . . . . . . . . . . . . . 32


3. Forbidding Who l e S ubj ect Are as of Inquiry, Interview, and
Disc uss i o n . : . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
E. Other Actions of the Task Force Have Prejudiced Defendants . .. . . . . . . . . . . .. . . . . . . . . . . . . 41
N. THIS CASE MUST BE DISMISSED . . . . . . . . . . . . . . . . . . . . . . . . . : . . . . . . . . . . . . . . : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . 43
A. Only Dismissal Is Appropriate ; Lesser R emedies Have Failed to Deter the
Task Force ' s Misconduct . ., 43

B. If the Court I s Inclined to Grant Any Sanction Other than Dismissal, .


Defendants Would Like the Opportunity to Brief and Discuss What
Remedies Are Most Appropriate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . .. 50
C. Defendants Seek a Hearing in Conn ection with this Motion . . . . . . . . . . . . . . . . . . . : . . . . . . . . . .. 51
D. Defendants Seek Ev idence in Connection with this Motion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 51
V. CONCLUSION..... ... ...... .......... .... .... ... .... ... . ... . ... .... ... ......... ... ...........:.. . ... .................. . . .. . .. 53

ii
Case: 06-20885 Document: 0051330792 Page: 7 Date Filed: 11/20/2006

TABLE OF AUTHORITIES
Page
Cases

Berger v. United States,


295 U . S . 78 (1935) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . : . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Brown v. Cain,
104 F. 3d 744 (5th Cir . 1997) . . . . . . . . . . . . . . : . . .. . . . . . . . . . . . . . . . . . . . . . . . . : . . . . : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Coppolino v. Helpern,
266 F . Supp. 930 (S . D . N. Y . 1967) . . . . . . . . . . . . . . . . . . . . : . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . 17
Gregory v. United States,
369 F . 2d 185 (D . C . Cir. 1966) . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . .. . . . : . . . . . passim
In re United States,
878 F . 2d 153 (5th Cir. 1989) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 50,51
United States v. Bell,
506 F . 2d 207 (D . C . Cir. 1974) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . .: . . . . . : . . . . . . . . . . . . . . . . . . . . . . . . : . . :. . . . . . . . . . : . . . . . . 27
United States v. Bieganowski,
313 F . 3d 264 (5th C ir. 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
United States v. Black,
767 F. 2d 1334 (9th Cir . 1985) . . . . . . . . . . . . . . . . .: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . 39
United States v. Blackwell,
694 F. 2d 1325 (D. C . Cir. 1982) . . . . . . . . . . . . . . : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
United States v. Blanche,
149 F . 3d 763 (8th Cir . 1998) . . . . . . . . . . . . . . . . . . . . . . : . . . . . . . . : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . 50
United States v. Campa,
Fad , Case No . 01 - 17176 , 2005 WL 1866323 (11th Cir. Aug. 9, 2005) . .. . . . . . . . . . . . . . :. . . . . . . 49
United States v. Carrigan,
804 F .2d 599 (10th Cir. 1986) ...:... ......... .... ..... . . . . . . . . . . . . . . . .. . . . . . . . . . . . . : . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . .. . . . . Passim
United States v. Clemones,
577 F . 2d 1247 (5th Cir. 1978) . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . 1, 17, 36
United States v. Davis,
974 F . 2d 182 (D . C . Cir. 1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . : . . . . . . . . . . . . . . . . . 23
United States v. Doe,
125 F . 3d 1249 (9th Cir . 1997) . : . . . . . :. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . : . . . . . . . . . . . . . . . . . . . . .. . .. . . . . . . . 43
United States v. Dupre,
117 F. 3d 810 (5th Cir. 1997) .: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . : . . .. . . . . . . . . . . . . . . . . . . . . . . . . : . . . . . . . : . .. . .. . . 23
United States v. Fischel,
686 F . 2d 1082 (5th Cu. 1982) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
United States v. Follin,
979 F .2d 369 (5th Cir . 1992) ... .... ................ . ....... ...... ....... ... ............. ............... ....... ..........
..:.... .... .... 50
United States v. Foster,
128 Fa d 949 (6th Cir. 1997) . . . . . . . . . . . . .. ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 , 9 , 25
( . United States v. Fricke,
684 F.2d 1126 (5th Cir . 1982 ) .. .................... .............. . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
United States v . Fulmer,
722 F .2d 1192 (5th Cir . 1983) ...... . ... ...... .... . . . . .... ... ..... . ... ..... .. . ...... ............... . ..... ....... ... ....... .... .... .
Case: 06-20885 Document: 0051330792 Page: 8 Date Filed: 11/20/2006

TABLE OF AUTHORITIES
(continued)
Pa e

United States v. Garrett,


238 Fad 293 (5th Cir. 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . 51
United States v. Golding,
168 F . 3d 700 (4th Cir . 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . .. . . . . . . . . . . 25
United States v. Goodwin,
625 F . 2d 693 (5th Cir . 1980) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . .. . . . passim
United States v. Hammond,
598 F .2d 1008 (5th Cir. 1979) ........ ....... . .................... ... ... ............. . ...... . . . .... .. . . ..................
....... . . passim
United States v . Hatch,
926 F .2d 387 (5th Cir. 1991) .... .... ..................... ...... ...... . ...... ........... . ... ............ .... ........ . 15, 26, 27
United States v. Henao ,
652 F .2d 591 (5th Cir . 1981) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,26
United States v. Henricksen,
564 F. 2d 197 (5th Cir . 1977) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . passim
United States v. Jackson,
935 F . 2d 832 (7th Cir . 1991) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
United States v. Kojayan,
8 F. 3d 1315 (9th Cu. 1993) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . :. . . . . . . . . . .. . . . . . . 47
United States v. Leung,
351 F. Supp . 2d 992 (C . D . Cal . 2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . passim
United States v. MacCloskey,
682 F. 2d 468 (4th Cir . 1982)
. . . . . . . . . . . . : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . 24
Un ited States v. Morrison,
535 F . 2d 223 (3d Cir. 1976) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,50
United States v. Opager,
589 F .2d 799 (5th Cir. 1979) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . 14
United States v. Peter Kiewit Sons ' Co. ,
655 F. Supp . 73 (D . Colo . 1986) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . passim
United States v. Rodgers,
624 F . 2d 1303 (5th Cu . 1980) . . . . . . . . . . : . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . : . .. . . . . . . . . . . . . . . . . . . . . . . .: . . .. . . . . . . . 32
United States v. Scroggins,
379 F .3d 233 (5th Cir. 2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . passim
United States v. Smith,
478 F . 2d 976 (D .C . Cir. 1973 ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
United States v. Soape,
169 Fad 257 (5th Cir. 1999) . . . . . . . . . . . . . . . . .:. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8, 32
United States v. Thevis,
665 F .2d 616 (5th Cir . 1982) ...... ... .: . ...... .............. .. .. ...... ... . ..... ..... . . ....... ..... .. . .... .... .. .. . . .. . .......... 50
United States v. Thoma s,
488 F . 2d 334 (6th Cir . 1973) . . . . : . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . : . . . . . . 26 ; 49
United States v. Vavages,
151 F. 3d 1185 (9th Cu. 1998) . : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . passim
United States v . Viera,
839 F. 2d 1113 (5th Cir. 1988) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . .. . . . . . 23

IV
Case: 06-20885 Document: 0051330792 Page: 9 Date Filed: 11/20/2006

TABLE OF AUTHORITIES
(continued)
Page

United States v. Weddell,


800 F . 2d 1404 (5th Cir. 1986) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . : . . . : . . . 14,26
United States v. Welbron,
849 F . 2d 980 . (5th Cir. 1988) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . : . . . . . . . . . . . . . . : . . . ... . . . . . : . : 43
United States v. Whittington,
783 F.2d 1210 (5th Cir . 1986) . . . . . . . . . . . . . . . . . . . . . :. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . : . . . . . . . . . . . . . 23
Rules

FED. R CRtNt . P. 16(d) .... . ... ........ . ........... ...... .... ......... .... .... .... . ... ... . .......... ... .... ....... ...... .:..... ....... ... 50
Other Authorities

AMERICAN BAR ASSOCIATION'S STANDARDS FOR CRIMINAL


JUSTICE § 3 -3 . 1(d) (3d. ed . 1996) . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . :: . . 18,34
BENNETT L. GERSHMAN , PROSE CtrroxInr. MISCONDUCT §§ 14 : 9-10 (2d . ed . 2004) . . . . . . . . . . . . . : . . . . . . 51
Robert G. Morvillo & Robert J . Anello, Government Attempts to Shield Its
Witness from the Defense, 231 NEw YORK LAw JOURNAL 3 (Feb . 1, 2005) . . . . . . . . .. . . . . . . . . . . . . . . . .. . . 8
RESTATEMENT (THIRD) OF LAW GOVERNING LAWYERS § 116 (2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

CC1 : 714957

1
~~

V
Case: 06-20885 Document: 0051330792 Page: 10 Date Filed: 11/20/2006

I . Introduction

Defendants move to dismiss the Indictment in this case because actions of the Enron Task

Force have deprived them of their constitutional rights both to secure and confront witnesses,

thereby stripping defendants of their ability fully and fairly to prepare for and defend themselves

at trial . Put simply, witnesses are afraid to talk to us . Defendants have sent hundreds of letters

and made innumerable calls to witnesses and their counsel asking only for the opportunity to

meet with witnesses about the issues in this case . Not only have the witnesses refused to talk to

us, so have their lawyers . Those very few witnesses willing to give us any assistance have

insisted, almost without exception, on doing so covertly. As we show in this motion, this

unprecedented circumstance exists because the Enron Task Force has intentionally obstructed

our access to witnesses .l

This is an uncommon and gravely serious charge . But the facts are what they are, they

compel us to bring this motion, and they demand immediate, decisive, and final relief .

Forty years ago, Judge J . Skelly Wright observed, in the seminal witness access case,

Gregory v. United States, 369 F .2d 185, 188-89 (D .C . Cir. 1966) :

A criminal trial, like its civil counterpart, is a quest for truth . That quest will
more often be successful if both sides have an equal opportunity to interview the
persons who have the information from which the truth may be determined . The
current tendency in the criminal law is in the direction of discovery of facts before
trial and the elimination of surprise at trial . A related development in the criminal
law is the requirement that the prosecution not frustrate the defense in the
preparation of its case . . . . Witnesses . . .are the property of neither the
prosecution nor the defense . Both sides have an equal right and should have an
equal opportunity to interview witnesses . . . .

The Enron Task Force has not honored this fundamental principle, endorsed by every court in the

Consistent with the discussion on the record at the July 29, 2005 scheduling conference, see Ex .
42 (Hr'g Tr . at 17 :18-20 :15), and to preserve confidences and protect sources from reprisals, we
submit the Declarations of Attorneys A-F in camera and under seal for the Court's review .
Incidents identified in the declarations are recounted in this memorandum in detail, but without
disclosing information identifying attorneys or witnesses . The factual information in this
memorandum provides the Task Force with ample notice and ability to address the issues.
Unless specifically identified, this motion refers to all attorneys and witnesses by male pronouns,
regardless of actual gender.
Case: 06-20885 Document: 0051330792 Page: 11 Date Filed: 11/20/2006

country, the American Bar Association, the Restatement, and Congress in drafting the federal

criminal "witness obstruction" statutes .

This is not a case involving a handful of witnesses with unsavory backgrounds. Far from

it, this case implicates untold numbers of potential witnesses, who are law abiding citizens with

good families and established track records . They were employed not only by Enron, but by

some of the finest institutions and firms in the world . More so, many are people with whom

defendants enjoyed close and longstanding relationships, both professional and personal. Given

these facts, it is inconceivable that so many of them would all at once refuse to lend any

assistance or information to their friends and colleagues now on trial for their lives . There is no

innocent explanation for this . It has happened only because the Task Force has the power-and

elected to abuse its power-to make it happen .

Without Court intervention, there is only so much we can do to illuminate the Task

Force's actions for the Court . To date, and in spite of the wall of silence confronting us, we have

established that the Task Force has :

1 . Delivered an email to counsel for Ken Rice, a critical cooperating witness, instructing
that Mr. Rice prohibit his attorney from communicating with Skilling's lawyers or
else "get rid" of him . 2 .
2. Warned an important material witness, with percipient knowledge of transactions
targeted in the Indictment, not to "talk with" defendants Skilling or Lay or their
lawyers because "they are bad news."3
3 . Told Rex Shelby, when his status was as a "witness" with knowledge about EBS
issues, that while the decision was his, it was not a "good idea" to speak with defense
counsel .4
4 . Ordered a witness, over threats of reprisal, not to talk to anybody concerning Enron
matters or disclose what he had discussed with the Task Force, and if deposed in a
civil matter or called to testify in other proceedings, to invoke his Fifth Amendment
'rights .'
5 . Made clear to attorneys that it would "go after" or "make pay" any witnesses who

z Exhibit ("Ex .'s 24 (Email from Andrew Weissmann to William Dolan of May 3, 2005) .
3 Decl . of Atty. E ¶ 11 .
4 Ex. 5 (Typewritten notes of Rex Shelby dated Sept . 2, 2002).
5 See Decl. of Atty. D 1125-35 .

2
Case: 06-20885 Document: 0051330792 Page: 12 Date Filed: 11/20/2006

cooperated with defendants, discussed Enron matters with them, or "lied" by


disagreeing with the Task Force's positions . b
6 . Cautioned counsel for a witness, four separate times in one month leading up to his
possibly testifying for the defense in a related Enron case, that it was "dangerous" and
"not in the witness' interest" to testify for defendants, a warning the attorney deemed
a "veiled threat . "'
7 . Reminded counsel for Dr. Larry Ciscon, a defense witness in the EBS trial, three
times in the two weeks leadinp up to his taking the stand that he was a "target" and
could be indicted at any time .
8 . Changed at the eleventh hour the status of former Arthur Andersen accountant Kate
Agnew from witness to target and threatened to bring what an experienced criminal
attorney called a "patently meritless" perjury charge in a "blatant, horrible, awful,"
but successful attempt to dissuade Ms . Agnew from testifying and contradicting one
of the Task Force's key theories of its case.9
9 . Secured plea agreements with two banks, Merrill Lynch and CIBC, that prohibit the
banks, as well as their employees and agents, from testifying in this case in any
manner that would contradict the Task Force's allegations in this case about the
Nigerian Barges and FAS 125/140 transactions to which these banks were parties .10
10 . Procured from these same banks plea conditions . entitling the Task Force to attend
meetings between the bank's employees and defense counsel, despite clear case law,
including Judge Wri ght's opinion in Gregory, holding that defendants have a right to
meet with witnesses alone and ruling that even a "suggestion' 'that a prosecutor must
be present is. improper
11 . Obtained plea agreements from cooperating witnesses that bar witnesses and their
counsel from disclosing to defendants any information gleaned from meetings with
the Task Force, as well as historical facts known to witnesses about events and
transactions relevant to this case . 12
12 . Violated three separate court orders prohibiting interference with access to witnesses
and misrepresented its conduct and position to the Courts, us, and others by assuring

6 See Decl. of Attys . D ¶¶ 60-70, C ¶¶ 6-8 .


7 Decl . of Atty. B .
'Ex . 39 at 8429 :3-13 (June 9, 2005 EBS Trial Tr.) ; Ex. 40 at 8935 :22-8936 :22 (June 10, 2005
EBS Trial Tr .) .
9 Decl . of Atty . D 1171-8 1 ; Ex . i at 2 (Letter from R . Hardin to M . Chertoff of May 9 ; 2002) .
Io See Exs. 14 ¶ 8 (Enron Task Force-CIBC Settlement Agreement of Dec
. 22, 2003); 8 117
(Enron Task Force-Merrill Lynch Settlement Agreement of Sept . 17, 2003) .
11 See Exs. 8, 14, 16-18 .
12 See Decl. of Atty. D 1131, 52; Exs . 45-58 (cooperators' plea agreements) ; 30 (Letter from J
.
Dowd to M . Ramse y, D . Petrocelli , R. Weingarten of May . 10 , 2005) .

3
Case: 06-20885 Document: 0051330792 Page: 13 Date Filed: 11/20/2006

full adherence to the rule that witnesses were free to speak with whomever they
wish."

Courts, including those in this Circuit, have dismissed indictments, reversed convictions,

and ordered other substantial relief, such as suppression of evidence and court-ordered

depositions, in cases involving far less pervasive misconduct.1 4 In this case, we respectfully .

submit that dismissal is the only appropriate remedy . The Task Force's actions have not .been

accidental or isolated in time . They have been prolonged and widespread, and they continue to

this day. Just the evidence we have marshaled-let alone the vast evidence unavailable to us-

spans several years and involves top Task Force lawyers . Mr. Weissmann's email, for example,

was a deliberate, considered directive delivered by the highest official of the Task Force

responsible for setting the policies and agenda for this prosecution team .

Any sanction less than dismissal will only be a half measure . Three court orders (one

from this Court and two in other Task Force cases) making clear the Task Force may not engage

in exactly this type of conduct have not been respected . When this Court and others have

addressed the issue with the Task Force in open court, the Task Force has not been candid about

13 See Exs . 7, 13, 35 (three court orders) ; 9, 12, 31, 33, 34 (Task Force representations) ; infra
Section IV .A (discussing these orders and representations) .
to See, e.g. , United States v. Goodwin, 625 F.2d 693, 703 (5th Cir. 1980) (
"f hreats against
witnesses are intolerable . Substantial government interference with a defense witness' free and
unhampered choice to testify violates due process rights of the defendant . ") ; United States v.
Hammond, 598 F . 2d 1008, 1013 (5th Cir . 1979) ("[A]gent Peisner's comments constituted a
`substantial interference' with defense witness Parson's `free and unhampered choice to testify.
We therefore conclude that this governmental interference deprived the defendant of his due
process right to present his witnesses .") ; United States v. Henricksen, 564 F.2d 197, 198 (5th Cu .
1977) ("Prior to trial, a codefendant, whose testimony would have tended to exonerate
Henricksen, plea bargained with the Government . As part of his plea, he had to agree not to
testify in any manner regarding Henricksen . . . . The Government . . .has now confessed error
on this point and has requested that we reverse the conviction and remand for a new trial .") ;
United States v. Leung, 351 F . Supp . 2d 992, 998 (C . D . Cal . 2005) (dismissing indictment
because "government decided to make sure that [defendant] and her lawyers would not have
access to [a key witness]") ; United States v. Peter Kiewit Sons' Co., 655 F . Supp . . 73, 77 (D .
Colo . 1986), a, fj"d United States v. Carrigan, 804 F . 2d 599 (10th Cu. 1986) ("In fairness, the
government should not be allowed to cut off defense access to witnesses who, but for
prosecutors' advice, would be willing to speak with defense representatives .") .

4
Case: 06-20885 Document: 0051330792 Page: 14 Date Filed: 11/20/2006

its actions . Indeed, misrepresentations about this issue were made to this Court just two weeks
Is
after Mr . Weissmann's May 3 email was sent, with Mr . Weissmann present in court .

H. Defen dants Have B een Unable To M eet With Witn esses.

Defendants are men with long, successful careers, impeccable backgrounds, and strong

ties to the community and the witnesses in this case . Ken Lay was Enron's Chairman of the

Board and, except for six months in 2001, also served as Chief Executive Officer . Jeff Sldlling

was Enron's President and Chief Operating Officer and, between February and August 2001,

was its CEO. Richard Causey was the company's Chief Accounting Officer, and before that a

manager at Arthur Andersen. Defendants had been part of Enron and its culture for more than a

decade and, with others-some of whom are now government cooperators-were the chief

architects of Enron's transformation from sleepy pipeline company to massive, high-tech energy

conglomerate with nearly 20,000 employees and, at its peak, a market capitalization of $60

billion .

As one might expect, over the course of more than a decade, defendants developed strong

bonds, professional relationships, and personal friendships with many people in and out of the

Enron organization . Indeed, the Task Force contends defendants and more than 100 other

individuals were so closely knit they were able, for years, to pull off the most massive, far-

reaching white collar conspiracy in the history of American business. Yet now, defendants have

no meaningful access to these people . In contrast, the Task Force enjoys private interviews with

hundreds of them, not to mention all of those subpoenaed to provide sworn testimony before the

grand jury.

Faced with this extreme disparity in access to witnesses-- especially important witnesses

such as the alleged co-conspirators-defendants sent 144 letters directed to counsel for witnesses

requesting the opportunity to meet with their clients who possess relevant and potentially

exculpatory information. 16 Two accepted our request .' Nearly 90% of our requests were

1 5 See Ex. 34 at 21 :12-18 (Hr'g Transcript of Scheduling Conf . of May 18, 2005) .
ib See Decl . of Atty. D 119-10.

5
Case: 06-20885 Document: 0051330792 Page: 15 Date Filed: 11/20/2006

denied, including more than three-quarters of the recipients who failed to send any response

whatsoever. 1 8

A few attorneys with whom we spoke off-the-record "empathized" with our situation but

were not surprised, acknowledging the Task Force made it clear to them and others, through

explicit comments or implicit threats, that a witness who cooperated with defendants did so at his

peril.

We brought these concerns to the Court's attention . On May 27, 2005, over the Task

Force's objection, the Court signed an Order advising potential witnesses that the decision

whether to meet with defendants or defense counsel is "entirely up to the witness," and that if the

witness chose to meet with or assist defendants, "the government will not view [this] as any lack

of cooperation . . . or usesuch [information] as a basis for decisions regarding prosecution . s 19

We sent a second round of 138 letters to attorneys representing witnesses who did not

accept our initial request to meet, this time attaching a copy of the Court's order . We wrote : "As

a follow-up to our earlier letter, we still wish to interview your client . We are updating our

previous request because Judge Lake entered an Order which specifically prohibits the Task

Force from retaliating against those who cooperate with us ."20 Our second request fared no

better. Two more witnesses agreed to meet with us (a total of four from nearly 300 letters) .21

17 See id. ¶ 10 .
18 See id. ¶¶ 10-11 . Twelve witnesses, through attorneys, refused to meet with us, but said they
might meet in the future or might answer written questions submitted to them . See id . Given the
provisions in several plea and cooperation agreements requiring witnesses to share information
with the Task Force, see infra Section III .D, we are concerned that our written questions, and our
case theories, would be forwarded to the Task Force .
19 Ex . 35 (Court order of May 27, 2005) .
20 Decl . of Atty. D 1116-17.
21 See Decl. of Atty. D 111 8-19 . Four witnesses, through their attorneys, refused to meet with
us, but said they might meet in thee future or answer written questions submitted to them . See id.

6
Case: 06-20885 Document: 0051330792 Page: 16 Date Filed: 11/20/2006

Roughly 95% of our follow-up requests were denied, with seven out of 10 recipients sending no

response .22

To be sure, we recognize that in criminal or civil cases witnesses sometimes choose not

to speak to one side or the other . However, for defendants, who are not charged with violent

crimes, to be stripped of any contact with so many former friends and co-workers goes far

beyond the realm of normal experience .23 Our expert, venerated criminal law attorney- Michael

Tigar, concurs .
In my experience, this level of silence is not normal . While witnesses
have every right not to consent to an interview, and some do not consent, in my
experience, many witnesses are willing to meet with the defense because they are
friends, have personal relationships, used to be co-workers with defendants, have
respect or admiration for defendants, believe the defendants have been wrongfully
charged, feel that if they met with the government they should show the defense
the same courtesy, or simply feel, in the criminal justice system, the most
important thing is for the truth to be told . . . .
[B]ased on nearly forty years of experience practicing, teaching, and
studying criminal law, I have never seen defendants in a major public trial,
especially a white collar trial, so completely ostracized by witnesses with
pertinent information . . . .
Even in the domestic terrorism cases I have defended, where national
security and American lives are at stake, I have not seen such a wholesale refusal
to meet with the defense .
In this case, given the wholesale silence of witnesses, the scores of
witnesses who would logically possess relevant percipient knowledge, and the
examples of prosecutorial abuse reported in defendants' motion and in the press, I
can only conclude that many witnesses who might otherwise have met with
defendants are not doing so because they fear government reprisals . . . .
To put it another way, and to answer a question this Court asked defense
counsel at a May 18, 2005 hearing in this case, defendants' dire inability to
interview witnesses or secure promises that they will testify on their behalf at, trial
is "unusual." Cf. Tr . of May 18, 2005 Hr'g at 20 :17-21 (Mr. Petrocelli : . . . [e
intend to file a motion] [d]ealing with the unavailability of witnesses, generally,
and our inability to prepare this case for trial . Nobody will talk to us . The Court :
Well, is that unusual in this type of case?") .24

22 See id. To date, none of the witnesses who has pled guilty to crimes or settled SEC
enforcement actions and is expected to testify at defendants' trial-individuals such as Andrew
Fastow, Michael Kopper, Ben Glisan, David Delainey, Wes Colwell, Paula Rieker, Tim Despair,
and Christopher Calger-has met with defendants .
23 See Decl. of Attys . A, C, E .

24 Decl . of Michael Tigar ("Tigar Decl .') 1116, 3, 17-18, 4 .

7
Case: 06-20885 Document: 0051330792 Page: 17 Date Filed: 11/20/2006

Defendants are not dangerous men . They have no ability to intimidate witnesses, nor is

there any claim to such effect. They are men who were highly respected, appeared on magazine

covers lauding their brilliance and management skills, and were touted for powerful government

posts . They pose no risk of witness tampering. Cf. Robert G . Morvillo & Robert J. Anello,

Government Attempts to Shield Its Witness from the Defense, 231 NEW YoRc LAW 3ouRNnL . 3

(Feb . 1, 2005), available on Westlaw at 2/1/2005 NYLJ 3, (col . 1) ("While the government has,

in some instances, legitimate fears of obstruction of justice and witness intimidation, these issues

arise far less frequently in white-collar cases . Attempts to conceal government witness identities

and the substance of their testimony, while tactically advantageous [to the government], can

impair the fairness of criminal cases .' .

YII . The Task Force Has Violated Defendants' Constitutional Rights By Intimidating
Witnesses Into Not Meeting With Them And Not Testifying On Their .Behalf

A. Defendants' Burden of Proof .

It is defendants' burden to show "by a preponderance of the evidence" that the Task

force's actions "interfered substantially" with witnesses' "free and unhampered" choice to meet

with defendants or testify on their behalf. United States v. Scroggins, 379 F .3d 233, 239 (5th

Cir . 2004) ; United States v. Bieganowski, 313 F.3d 264, 291 (5th Cir . 2002) ; United States v.

Hammond, 598 F .2d 1008, 1012 (5th Cir . 1979); accord United States v . Yavages, 151 Fad

1185, 1188 (9th Cir. 1998) .

The substantial interference inquiry is fact-specific and requires a careful examination of

the evidentiary record . See Scroggins, 379 F.3d at 239 ; Bieganowski, 313 F .3d at 291 ; Yavages,

151 Fad at 1190 . In judging the "coercive impact" of the government's alleged instructions or

warnings to witnesses not to cooperate with defendants, courts consider (1) the timing and

manner in which the government communicates with the witness ; (2) the language of the

instruction, warning, or statement ; and (3) whether the prosecutor has a legitimate "basis in the

record" for instructing the witness not to meet with or testify for defendants . Vavages, 151 F .3d

at 1190 ; see also United States v. .Soape, 169 Fad 257, 270 (5th Cir . 1999) (permissible for

8
Case: 06-20885 Document: 0051330792 Page: 18 Date Filed: 11/20/2006

government to warn witnesses about meeting with defendant when defendant shows propensity

for harassment) ; Hammond, 598 F .2d at 1012 (reversing conviction where law enforcement

agent told witness if he testified for defense, he would have "nothing but trouble" in unrelated

criminal investigation) ; United States v. Foster, 128 F .3d 949, 954 (6th Cir . 1997) ("[T]he

government's `warning' to [the witness'] attorney, a few days before Foster's trial, was at best

ill-advised and at worst a possible attempt to intimidate [the witness] .' .

Despite limited access, defendants have been able to identify a number of instances of

misconduct by the Task Force, as more fully explained in Sections 111 .13 through III.D that

follow . These sections evidence acts of the Task Force (i) thwarting defendants' ability to

interview witnesses before trial ; (ii) obstructing defendants' right to secure witness testimony at

trial ; (iii) extracting coercive and unconstitutional terms in pleaa agreements ; and (iv) fostering an

atmosphere of fear against which all these actions must be judged .

To be clear, these incidents do not reflect the full extent of the Task Force's actions .

Rather, they serve to demonstrate and corroborate that it is the Task Force's conduct -and not

mere happenstance--that is depriving defendants of access to witnesses in this case .

B. The Task Force Has Improperly Instructed Witnesses Not to Meet with
Defendants .

Summarized below are instances of misconduct showing that the Task Force explicitly or

implicitly suggested that witnesses not meet with defendants or their counsel . The examples,

which occurred between 2002 and 2005, are improper under the relevant case law, professional

standards, and criminal statues .

Examples of Improper Instructions and Threats .

Instruct Your Lawyer To Stop Meeting With Skilling Or "Get Rid " Of Him . Ken Rice is a

former high-level executive at Enron . After facing indictment on a number of counts, Mr . Rice

agreed to plead guilty to a single count of securities - fraud (with a sentencing range of between

zero and 10 years)) and "cooperate" with the government in exchange for the Task Force's

promise to dismiss all other charges and, assuming Mr . Rice "fully cooperates," recommend a

9
Case: 06-20885 Document: 0051330792 Page: 19 Date Filed: 11/20/2006

lenient sentence, including possibly probation . As with other cooperation agreements, the Task

Force retains "sole and exclusive discretion" to determine whether Rice "fully cooperated" and

thus earned a favorable sentencing recommendation, or whether he should be reindicted . 25 Rice,

like every other cooperator, is completely at the Task Force's mercy .

Imagine the pressure Mr . Rice's lawyers felt when, on May 3, 2005, they received an

email from Andrew Weissmann, the then-director of the Task Force, expressing his extreme

displeasure at hearing "reports" that one of Rice's lawyers, Dan Cogdell, was seen talking to

Daniel Petrocelli, Mr. Skilling's lead trial counsel . The email, which was produced in response

to the Rule 17(c) subpoenas we served and is attached hereto as Exhibit 24, states in full :

-art saal Nea!s~e ----


8t~a~ + Aadrev Slai/+~sm~7YU~do~ 9a~v I~aailC.o; 11s~a~t ifesemsti4ii29usdejge~el
ss~at . ^rwaaxy Isiy. 03 ~ 1 EI os 4 : as Pw

., Etub~ect r CagdeY3 -~nc~;: Pi"stzo.

8epow ta axe ftrx4t and. CO-We", aft hltidd Uag tog efihax t~qucaEly, iTa :aide ,
g~yisog to . :to -got to the bottom Of ' Cbi!N bacati1e4 kiC! 4&S' 4L 5ih
cel D om Ai« 7m mM +6oyt '-., Ll 3a7 His 16e waived, aay ceh!`Uc c such tha t ht wi nl* his;
r +o~ ~9 !tfth S? si l l i tFg'~: _ .aid - e-n~t that . If cn,ere .tn_ no knowing
.qdi ver anGd it in haxd to sea = what there would De one - What do you t`
~Iutfon as Iran think of two: 111 :H3CS" imetructs hf,a LavyRZa wb0 -Oh,
hi"
moo ' they cannot t (2) he de tr „s~*~,•~ rhat tea , acr~rae~ fir; set" tn' 1Ri
nees~ses Avid Sets rid ,•: of hiao . All of that is zlicc'a~ d~fa~eu . a~~:: inti ft . at tli4 vSxY
Aasat, is m inlciug ours that &,p _an bgAp .efEc~ive ~esintaiiica nt ,c~imsa3 ; G'the ' 6tiC
aestt atta~as

]plow : Call has At-,Your e41 sat ccaVsA .aat .w: Ks un ; discuss this .

; ll~de~ ! tefs j.
t)iscear
Enrori 'TaeGk PoYCti

Statements like this are rarely put in writing . We have never seen anything like this

email, nor has our expert Mr. Tigar .26 Mr. Weissmann's message was unmistakable: Rice was

putting himself in harm's way if his counsel talks to Skilling . The harm, of course, was the

reprisal Rice could expect from the Task Force at the time of his sentencing or if the Task Force

decided he breached his plea agreement and should be re-indicted . Insisting the Task Force

would now "have to get to the bottom of this," Mr . Weissmann made clear Rice had two options :

25 Ex . 54 ¶¶ 1, 7, 10, 13 (Rice Plea Agreement, dated July 30, 2004) .


26 See Tigar Decl. ¶ 21 .

10
Case: 06-20885 Document: 0051330792 Page: 20 Date Filed: 11/20/2006

instruct Mr . Cogdell to stop talking to Skilling's lawyer or "get rid of him ." Not an option was

that Rice was "free to talk to whomever he wanted," as the Task Force had assured this Court

and three others that witnesses were free to do .27 Given his client's predicament, it is no wonder

that, after receiving Mr. Weissmann's email, Mr. Cogdell concluded he had no choice but to stop

communicating with Skilling's counsel . 28 To date, Mr. Rice has not met with defendants . How

could he or any witness ever meet with us if their counsel cannot speak with us, even to set up a

witness interview, without being reprimanded, silenced, or fired?29

Don't Talk To Defendants, "They Are Bad News . " During 2004, the Task Force

debriefed "a person who is viewed by the Enron Task Force and the defense as an important

material witness in the instant indictment ."30 This witness is an alleged co-conspirator and has

percipient knowledge regarding key transactions specifically mentioned in the Indictment . The

27 See infra Section N .A (detailing promises made to this. Court and Judges Gilmore, Werlein,
and Hoyt) .
28 See Ex . 28 (Letter from D . Cogdell to A. Weissmann of May 10, 2005) ("I will not .speak to
Mr . Petrocelli further during the pendency of the EBS trial(s) or sentencings .") .
29 Mr . Weissmann's professed concern in his email for Rice's Sixth Amendment right to
effective counsel was purely pretextual. As Mr. Weissmann knew, Mr. Cogdell is a highly
experienced criminal trial lawyer who won an acquittal for Enron defendant Sheila Kahanek in
the Nigerian Barges case . Mr. Weissmann had no conceivable basis to question Mr . Cogdell's
representation of Rice merely for speaking to Mr . Petrocelli in the courthouse . Indeed, as his
email indicates, Mr . Weissmann did not even know whether Rice was aware of his counsel's
interaction with Skilling's counsel . Nor did Mr. Weissmann have any idea what was said
between Messrs . Cogdell and Petrocelli .
What infuriated Mr . Weissmann and no doubt prompted his email is that theday before,
on Monday, May 2, Rice conceded during testimony in the then-on-going EBS trial that a video
(the so-called "Shelby 2 video") was not played at a critical January 2000 Analyst Conference,
contrary to his earlier testimony and the Task Force's claim in its Indictment and opening
statements in the EBS case . Rice testified that the only reason he had believed (wrongly) that the
Shelby 2 tape had been played was because the Task Force told him it had during one of many
interviews. See Ex . 23 . These revelations were highly damaging to the Task Force ; they
undercut Mr . Rice's credibility, refuted a key allegation in the Task Force's case, and showed the
Task Force was giving its witnesses (knowingly or not) false evidence implicating defendants .
The Task Force knew Skilling's counsel played a major role exposing the Shelby 2 fiasco . Soon
after media accounts came out reporting how the Shelby 2 revelation greatly undermined the
Task Force's case, Mr . Weissmann delivered his email .
30 Decl . of Atty. E 119-11 .

11
Case: 06-20885 Document: 0051330792 Page: 21 Date Filed: 11/20/2006

interview was "contentious ." Near the end of the session, the Task Force asked whether the

witness "had been talking to lawyers for Skilling or Lay." When the witness said the defense

had tried to reach him but he had not met with them, a Task Force agent responded : "You don't

want to talk to those guys . They are bad news ." This statement was not interpreted by the

witness orhis counsel as a joke, but as a threat not to meet with defense counsel or in any way

assist them absent reprisals . 31 To date, this "important material witness" has not met with

defendants, though we know his testimony would be exculpatory based on our analysis of the

record, and though he has intimate knowledge of key facts our clients do not possess .

It's Not A " Good Idea " To Speak With Defendants . In late 2002, the Task Force

interviewed Rex Shelby who, at the time, was considered a "witness" to EBS-related charges .

(Subsequently, the Task Force indicted and tried Shelby and others in the EBS case ; he was

acquitted on several charges with the jury hanging on the remainder .) Shelby took notes of his

interview . Early in the meeting, Shelby informed the Task Force that counsel for EBS defendant

Joe Hirko had left a message while Shelby was on vacation . Shelby asked the agents whether he

should return counsel's call . The Task Force agents informed Shelby that it was his decision

whether to talk to defense attorneys, "but that they did not think it was a good idea ."32 To date,

Shelby has not met with defendants, and is awaiting the Task Force's decision whether to retry

him.

Don't Talk To `Anybody "And "Take The Fifth, " If Necessary . The Task Force told an

attorney representing a witness with information material to this case that the witness may not

talk to "anybody" except the Task Force about Enron matters . This same witness and his

31 See id.
32 _Ex . 5
(Typewritten notes of Rex Shelby dated Sept. 2, 2002) ; see also Exs . 10 (Affidavit of .
David Angeli, defense counsel in EBS case for Joe Hirko, who had attempted to contact Shelby
¶ S ("In at least ten other instances, witnesses or counsel for these witnesses informed me that
they did not want to communicate with me, as a representative of a defendant in this action . In
at least five of those instances, the witnesses or their counsel specifically cited their concern
about how such a meeting might affect the witness's standing with the government . ") (emphasis
added) ; 11 (Affidavit of Edwin Tomko (Shelby's lawyer) ¶ 4 (attesting to similar facts)) .

12
Case: 06-20885 Document: 0051330792 Page: 22 Date Filed: 11/20/2006

counsel were instructed that if the witness is subpoenaed to give a deposition in an Enron-related

civil case or in other proceedings, he is to invoke his Fifth Amendment right against self-

incrimination . 33 To date, and despite our request, this material witness has not met with

defendants . This witness' lawyer has refused to answer our questions about his client's views

regarding our clients, hi storical facts in the case, and whether the Task Force intends to call the

witness to testify in our case and on what subjects, citing the Task Force's instruction and a fear

that the Task Force will seek retribution against his client if he or his client cooperates with

defendants . 34

Witnesses Will "Pay" If They Cooperate With Defendants . Counsel for several witnesses

with information related to specific transactions challenged in the Indictment and Statement of

Compliance refused to let any of his clients meet with defendants here because, in his words, the

Task Force "made it clear" it would "make them pay" if witnesses assisted defendants .35 Unable

to gain access to the witnesses themselves, we asked the attorney if he would discuss the

witnesses' understanding of certain transactions or their recollections of interactions with

defendants and other witnesses . Counsel refused, stating the witnesses had discussed those

transactions and events with the Task Force . We emphasized we were seeking not what the Task

Force told these witnesses, but what the witnesses knew, understood, and believed at the time of

the transactions or events in question . The attorney still declined, stating that the witnesses

discussed these topics with the Task Force and his clients and he had been instructed not to

discuss them with anybody else .36

If You Cooperate With Defendants, We'll "Go After" You . Another attorney representing

an important witness with knowledge of a transaction in the Indictment advised his client not to

meet with defendants because doing so could result in Task Force reprisals . When we informed

33
See Decl . of Atty. D 1125-35 .
34
See id.
3 5 Id. ¶ 36-54 .
36 See id.

13
Case: 06-20885 Document: 0051330792 Page: 23 Date Filed: 11/20/2006

the attorney of this Court's May 27, 2005 Order prohibiting the Task Force from retaliating

because a witness met with defendants, the attorney responded that notwithstanding the Order,

he did not "trust' ' the Task Force, and especially its director (then Mr . Weissmann), because he

had seen them "go after" any witness who met or cooperated with defendants or challenged

publicly the Task Force's alleged version of the facts . Another lawyer for a witness to the same

transaction said that, while there were many people with equal knowledge about the transaction,

only those individuals who chose to defend the transaction got indicted and prosecuted . Neither

counsel would agree to allow their clients to be interviewed .37

2 . The Task Force's Actions Violate Defendants' Constitutional Rights .

Each example cited above-and there are no doubt many more-is highly improper and

violates defendants' right to meet with material witnesses free from governmental interference .

"To make [due process protection] fully meaningful it has been extended to proscribe the

government's making a witness unavailable and thereby preventing a defendant from

interviewing the witness . . . ." United States v. Henao, 652 F .2d 591, 592 (5th Cir. 1981) ; see

also Soape, 169 Fad at 270 ("Witnesses . . . to a crime are the property of neither the

prosecution nor the defense . Both sides have an equal right, and should have equal opportunity,

to interview them."); United States v. Opager, 589 F .2d 799, 804 (5th Cir. 1979) ("The

importance to a litigant of interviewing potential witnesses is undeniable .") .

Interference with defendants' access to witnesses violates their constitutional rights under

the Fifth and Sixth Amendments, including their rights to due process, compulsory process of

witnesses, and effective assistance of counsel . See United States v . Weddell, 800 F.2d 1404,

1410 (5th Cir . 1986) ("Federal courts must take special care to assure that prosecutorial conduct

in no way impermissibly infringes on specific guarantees of the Bill of Rights, such as the right

to counsel or the privilege against compulsory self-incrimination . The Sixth Amendment

guarantees an accused the right to present his own witnesses to establish a defense . This court,

37 See id. ¶¶ 60-70 .

14
Case: 06-20885 Document: 0051330792 Page: 24 Date Filed: 11/20/2006

moreover, has held that [s]ubstantial government interference with a defense witness' free and

unhampered choice to testify violates due process .") ; United States v . Scroggins, 379 F .3d 233,

239 (5th Cir . 2004) ("'The Sixth Amendment guarantees a defendant the right to presentt

witnesses to establish his defense without fear of retaliation against the witness by the

government . Further, the Fifth Amendment protects the defendant from improper governmental

interference with his defense."); United States v. Hatch, 926 F .2d 387, 395 (5th Cir . 1991) ("If

the government did in fact prevent [a witness] from testifying at [defendant's] trial, he has a

valid argument under both the Fifth and Sixth Amendments.") ; Henao, 652 F .2d at 592 & n.l

("[T]he Sixth Amendment . . . guarantees a defendant the right to compulsory process for

attendance of witnesses. To make this right fully meaningful it has been extended to proscribe

the government's making a witness unavailable and thereby preventing a defendant from

interviewing the witness and determining whether he will subpoena and call the witness in his

defense. . . . Many of the witness unavailability cases are approached on due process grounds .") ;

(all internal quotations and citations omitted) .

The case most close l y on point is United States v. Peter Kiewit Sons ' Co. , 655 F . Supp.

73 (D . Colo . 1986), of j"'d United States v. Carrigan, 804 F .2d 599 (10th Cir. 1986), but even it

pales in comparison . In Peter Kiewit, three material witnesses, who had "given multiple

interviews to the government," refused to meet with the defense . When asked why they would

not meet with the defense, the witnesses reported that even though no one said "not to talk to the

defense," the government did tell them they "probably shouldn't ." Id. at 75 . Likewise, the

witnesses' attorney said the government never expressly instructed the witnesses not to speak

with the defense, but they made it "obvious . . . they would prefer . . .the witnesses not be

interviewed ." Id. at 76 . The witnesses were "bright people," and their attorney felt "they too

had drawn this clear inference from the prosecutors' statements and conduct ." Id.

The district court found the government's statements infringed defendants' due process

rights . "[T]the witnesses got the clear mental impression or message that the prosecutors

preferred that these witnesses not talk to defense representatives . . . . [T]his prosecutorial

15
Case: 06-20885 Document: 0051330792 Page: 25 Date Filed: 11/20/2006

attitude was communicated to the witnesses by words, implication, or non-verbal conduct ." Id.

at 77 . These witnesses "were particularly vulnerable to suggestion and anxious not to offend the

prosecutors," given that their former business associates and friends had been indicted on six

white-collar felony charges "not through action of any local official or familiar United States

Attorney in Colorado or New Mexico, but by the Justice Department itself reaching from

Washington D .C . into their lives ." Id.

That the witnesses' counsel advised his clients not to meet with the defense did not undo

or cure the government's misconduct . "[I]n advising his clients not to speak with defense

representatives, attorney Thompson was strongly influenced by the inference he had drawn from

the prosecutors' words and conduct that the government did not want these witnesses,

Thompson's clients, talking to the defense ." Id.

[The witnesses] apparently were concerned that if defendants could be indicted so


could they be. . . . [W]hen [the defense] asked them for interviews, and when
they testified on these motions, they were anxious to please the government
because, in their minds at least, they were walking the tightrope of prosecutorial
discretion from the threat of imprisonment to the hope of freedom . Id.
The parallels between Peter Kiewit and this case are obvious . In both cases, (a) the

prosecutors were not local authorities but rather members of a special Task Force dispatched

from out of town by the Department of Justice ; (b) the prosecutors, in a highly public manner,

indicted the witnesses' former co-workers and friends on serious federal charges and warned

others might follow ; (c) the witnesses in question were "bright" individuals represented by

capable counsel who, based on conversations and interactions with the government, advised their

clients not to meet with the defense, or else risk angering the government ; and (d) the witnesses

did not meet with the defense, even after the defense informed them it was their right to do so .

In Peter Kiewit, the government told witnesses it could not prohibit them from meeting

with the defense, but thought the witnesses "probably shouldn't ." That is, for example, the same

message the Task Force gave Rex Shelby-it is your decision to talk to the defense, but we don't

16
Case: 06-20885 Document: 0051330792 Page: 26 Date Filed: 11/20/2006

think it is a "good idea . ,38 This statement "strongly implied that the witnesses should decline the

requested defense interviews" and, by itself, constituted substantial interference with defendants'

constitutional rights. Peter Kiewit, 655 F . Supp . at 78 .

The Enron Task Force did not stop there, however. It instructed other witnesses not to

discuss with "anybody" the subjects, topics, or transactions they discussed with Task Force .39

The Task Force "made it clear" to experienced attorneys that it would "go after" their clients and .

"make [them] pay" if witnesses assisted defendants in any way or publicly challenged the Task

Force's allegations and stated version of the "truth .i40 A material witness was told he should not

speak with defendants because "they are bad news ."41 And then there is the audacious May 3

email, in which the then-Director of Task Force severely reprimanded counsel for Ken Rice, a

crucial witness in this case, merely for chatting with a single defense lawyer in a public

courtroom, preposterously claiming it raised a "conflict of interest ." And if that were not clear

enough, the email directed that Rice either stop his lawyer from talking or "get rid" of him .42

This case should be dismissed based on this single email . "A trial is a search for the

truth. [It] is not a sporting game in which one side tries to outwit the other ." Coppolino v.

Helpern, 266 F . Supp . 930,935-36 (S .D .N .Y . 1967) . When seeking to "interview[] a

prospective prosecution witness, our constitutional notions of fair play and due process dictatee

that defense counsel be free from obstruction, whether it come from the prosecutor or from a

state official ." Id. The Fifth Circuit stands firmly behind this principle. In United States v.

Clemones, 577 F.2d 1247, 1251 (5th Cir . 1978), for example, the district court found it improper

and ordered corrective measures because "[t]he [prosecutor] handling the case instructed some

30 to 35 witnesses appearing before the grand jury that the proceedings were secret and that they

38 Ex . 5 (Typewritten notes of Rex Shelby dated Sept. 2, 2002) .


39 Decl. of Atty . D 1 29 .
40 Id. 1136-54, 60-70 ; Decl . of Atty . C 116-8 .
al Decl. of Atty . E ¶¶ 9-11 .
42 Ex . 24 (Email from A . Weissmann to W. Dolan of May 3, 2005) .

17
Case: 06-20885 Document: 0051330792 Page: 27 Date Filed: 11/20/2006

should not discuss their testimony with anyone other than their attorneys or government agents ."

As the American Bar Association has put it : "A prosecutor should not discourage or

obstruct communication between prospective witnesses and defense counsel . A prosecutor

should not advise any person or cause any person to be advised to decline to give the defense

information which such person has the right to give ." AMERICAN BAR ASSOCIATION'S

STANDARDS FOR CRIMINAL JUSTICE § 3-31(d) (3d . ed. 1996) ; id. at 50 ("Prospective witnesses

should not be treated as partisans . . . . It is improper for a prosecutor . . . or anyone acting for

[his] aide to suggest to a witness that the witness not submit to an interview by opposing

counsel") (emphases added) .43 The Restatement is in accord . See RESTATEMENT (THIRD) OF

LAW GOVERNING LAWYERS § 116 (2) (2000) ("A lawyer may not unlawfully obstruct another

party's access to a witness.") ; id . § 116(3) ("A lawyer may not unlawfully induce or assist a

prospective witness to evade or ignore process obliging the witness to appear to testify.") .

3 . Newby Is No Sub s titute for Private Interviews, Nor Does It Excuse the
Task Force ' s Mi s conduct

That some witnesses are being deposed in the Newby civil litigation in no way permits or

excuses prosecutorial misconduct. We are entitled to same the opportunity to speak with

witnesses, privately and free from interference, as is the Task Force . See United States v. Soape,

169 F .3d 257, 270 (5th Cir. 1999) ("[W]itnesses, particularly eye witnesses, to a crime are the

property of neither the prosecution nor the defense . Both sides have an equal right, and should

have an equal opportunity, to interview them .") (quoting Gregory v. United States, 369 F.2d 185,

188 (D .C . Cu . 1966)) . We could not, for example, threaten witnesses with litigation if they

agree to meet with the Task Force, and then argue the Task Force has no right to complain

because it has access to witnesses through the grand jury process . See Coppolino, 266 F . Supp ,

at 935-36 ("[I]f a trial is to be a meaningful quest for the truth both sides must have a fair

43 The Task Force is fully aware of these rules . It cited and attached them as an exhibit to a brief
in the Nigerian Barges case . See Ex. 16 at 5 (Govt .'s Opp . to Bayly's Mot. to Dismiss or For an
Order Directing the Govt. to Withdraw a Witness Request (filed May 7, 2004)) .

18
Case: 06-20885 Document: 0051330792 Page: 28 Date Filed: 11/20/2006

opportunity in the preparation of its case . Presumably in the instant case the prosecutor can

interview witnesses . . .unencumbered. The same right should be available to defense

counsel .")

Furthermore, Newby has not provided open access to important witnesses :

•. As of three months ago, some 56 witnesses, including several government

cooperators, had asserted their Fifth Amendment right against self-incrimination and

refused to give depositions .44 Indeed, we have been told by at least one counsel that

the Task Force instructed his witness to "take the Fifth" if subpoenaed in Newby . 45

• Another 19 times, the Task Force has moved to postpone a Newby deposition when a

witness it deems important or intends to call at our trial is scheduled for a deposition .

Just two weeks ago, for example, the Task Force moved to stay the deposition of self-

described Enron "whistleblower" Sherron Watkins because "[t]he government intends

to call Ms . Watkins as a witness at trial to discuss her memorandum, related

documents, and meetings with Kenneth Lay and others regarding her concerns .s46

Finally, when witnesses give depositions in Newby, they are precluded by court order

from testifying about "the areas of his or her anticipated testimony at a criminal trial, or the

content of meetings . . .with any other agencies investigating the criminal conduct surrounding

the collapse of Enron ."A ' Lawyers defending Newby witnesses enforce this order to prevent such

material information from being adduced at these depositions . 8

44 Ex . 36 at 28 & n .118 (Reply In Support of Def. Jeffrey Skilling's Mot . To Compel Production
of Exculpatory And Rule 16 Materials (filed June 22, 2005)) .
as Decl . of Atty. D 1 29 .
46 Ex . 43 (Govt .'s Mot . For a Limited Stay of the Deposition of Sherron Watkins (filed Aug . 19,
2005)) . We have opposed this motion.
47 Ex . 19 (June 1, 2004 Order at 4 .)
48 See Ex. 20 (Mot . of the Official Committee of Unsecured Creditors of Enron Corp . for
Clarification of the Court's June 1, 2004 Discovery Order at 1-8 (filed under seal Dec . 3, 2004)) .

19
Case: 06-20885 Document: 0051330792 Page: 29 Date Filed: 11/20/2006

C . The Task Force Has Harassed Defense Witnesses Expected to Provide


Exculpatory Testimony at Enron Trials .

The Task Force's impermissible interference has not stopped at preventing pre-trial

interviews . It has also extended to witnesses who agreed to testify on a defendant's behalf, as

the examples below demonstrate .

1 . Examples of Improper Threats .

Testing Is "Dangerous " And "Not In Your Best interest .', The defense in one of the

Enron-related trials subpoenaed a witness who was prepared to refute several of the Task Force's

key allegations . Four times directly prior to the witness' expected testimony, the Task Force

called or met with the witness' attorney . In what the witness' experienced defense attorney

interpreted as "veiled threats," the Task Force persisted that it would be "dangerous" and not in

the witness' "best interests" to testify for the defense . 4 9 This witness has direct and important

evidence relevant to this case .

You Are Now A Target And Will Be Prosecuted For Perjury . Kate Agnew was a manager

at Arthur Andersen and a percipient witness to a key Andersen meeting at which the Task Force

claimed Andersen executives instructed subordinates to destroy documents . Importantly, Agnew

is a percipient witness to numerous transactions and accounting decisions challenged in this case .

To date Agnew has not met with defendants .

She did meet voluntarily with the Task Force in April 2002, and was told she was a

"witness," not a target or subject . Agnew had taken handwritten notes of a critical Andersen

meeting regarding its document retention policies, which later became the subject of the

Andersen criminal trial . Her notes included references to "clean up documentation" and "SEC ."

The Task Force theorized Andersen ordered its employees to "clean up documentation," a

euphemism to destroy documents, to obstruct an imminent "SEC" investigation . During her

April 2002 interview, however, Agnew contradicted that theory . Agnew reported that her "SEC"

and "clean up documentation" notes had nothing to do with each other ; the "clean-up

49 Decl . of Atty. B .

20
Case: 06-20885 Document: 0051330792 Page: 30 Date Filed: 11/20/2006

documentation" referred to certain "concurring partners" arriving from Chicago to review

Andersen's Houston document protocol . The reference to the SEC meant it was important to get

Andersen's files in order to assist any impending SEC investigation, not impede it 50 The Task

Force told Agnew it did not believe her explanation .

Roughly 10 days before the Andersen trial, knowing Agnew might testify for the defense

and refute one of its core theories of the case, the Task Force's lead prosecutor, Andrew

Weissmann, called Agnew's lawyer and, for the first time, informed him that Agnew's status had

changed from "witness" to "target . " The Task Force added that, if Agnew testified consistent

with her previous statements, she would be prosecuted for perjury . After conferring with his

client, Agnew's attorney informed the Task Force she would invoke her Fifth Amendment

privilege against self-incrimination. 51 As a result, Ms . Agnew did not testify, to the great ,

detriment of the defense . 52

One attorney with first-hand knowledge of Ms . Agnew's situation described the

prosecution's actions as "patently meritless," another as "blatant, horrible, - and awful .s53 One of

so
See Ex . 2 at 4991 :10-21 (Andersen Trial Tr. May 29, 2002) .
51 Despite Agnew's offer to provide an affidavit to this effect, the Task Force subpoenaed Agnew
and compelled her to endure what the Task Force itself acknowledged was the "stigmatizing"
experience of asserting her rights in front of the national press . The Task Force did not require
this of other witnesses . Andersen's lead lawyer, Rusty Hardin, asked the Department of Justice
to investigate the Task Force's treatment of Ms . Agnew . See Ex . I at 2 (Letter from R . Hardin to
M . Chertoff of May 9, 2002) . The Department submitted Mr . Hardin's allegation to the Office
of Professional Responsibility. See Ex. 4 at 1 (Letter from M . Chertoff to R. Hardin of June 26,
2002) . We are not aware of the results of this investigation .
52
See Decl . of Atty. D ¶¶ 71-81 . Having convinced Agnew not to testify, the Task Force thenn
used her notes to argue to the jury in closing that they established the very thing Agnew said they
did not-an incriminating link between the "SEC" and the "clean up documentation" instruction
from management . Ex . 3 at 6435 :11-19 (Andersen Trial Tr. June 5, 2002) . At the same time, the
Task Force successfully prevented Andersen from introducing notes of the FBI's interview of
Agnew, during which she explained the exculpatory meaning of her notes . See Decl. of Atty. D
1171-81 .
53
Decl . of Atty . D 1171-81 . Another attorney said that based on what he has seen with Agnew
and other witnesses, the Task Force takes the view that so long as any "conceivable, non-
sanctionable" basis exists for giving a witnesses a target or perjury warning, it will repeatedly

21
Case: 06-20885 Document: 0051330792 Page: 31 Date Filed: 11/20/2006

these same lawyers attested that after the Agnew episode, several witnesses who had been

prepared to testify for the defense in the Andersen case suddenly and without explanation backed
,.
out.54

"You're A Target, "Don't Testify . Long before the recent EBS trial, the Task Force

informed Dr. Larry Ciscon, a potential defense witness, that he was a "target" of its

investigation . As with so many of its "targets," the Task Force had not proceeded to indictment

against Ciscon-despite years investigating the case, an active grand jury, and other related

indictments .55 Based on its previous interviews with him, the Task Force knew that Ciscon's

testimony would corroborate defendants' contention that critical EBS technologies were

operational, refuting the Task Force's claims to the contrary .

Upon learning that Ciscon was slated to testify, the Task Force contacted his attorney,

Charles Blau, to "remind" Blau that his client was a "target" and could be indicted any moment . .

The Task Force called Blau two more times in the week leading up to trial, ostensibly to

"remind" Blau that Ciscon was a target .56 Based on the timing, repetition, and tone of the calls,

Blau stated on the record he felt he was being "reminded perhaps to pressure [Ciscon] not to

testify. . . .i57 Blau reported his conversations to Ciscon, who also interpreted the Task Force's

calls as a "warning," a "threat that [he] could be prosecuted" if he were to testify for the

defense .5 8 Judge Gilmore acknowledged the potential abuse in this tactic :

"remind" witnesses of these warnings, even if the witness is represented by counsel, and even if .
the obvious and intended effect is to dissuade witnesses from testifying . See id .
sa See id.
Another lawyer for several witness in this case shared information concerning the Task
Force's communications with potential defense witnesses in the EBS case . He indicated that,
"when witnesses told the Task Force that crimes had not been committed by the charged
defendants, or that events or transactions in dispute may have been lawful, counsel for those
witnesses were told that prosecutors were concerned that the witnesses were committing
perjury." This lawyer, not surprisingly, will not make any of his clients available to meet with
us . Decl. of Atty. C ¶¶ 6-8 .
ss Ex . 39 at 8429 :3-13 (June 9, 2005 EBS Trial Tr .) .
s6 Ex. 40 at 8935 :22-8936 :22 (June 10, 2005 EBS Trial Tr.) .
57 Ex. 39 at 8429 :3-13 .
58 Ex . 40 at 8935 :22-8936 :22 .

22
Case: 06-20885 Document: 0051330792 Page: 32 Date Filed: 11/20/2006

So then what happened, sort of like for the rest of this man's life he's just kind of
sort of like a target of the government's investigation and he never gets indicted
and he never knows what his status is and he never gets to know, you know,
whether or not he's going to get dragged into this case and so you just kind of
issue target letters to whoever you want to and then that puts you-all in the
position of sort of eliminating people as potential witnesses or how does that
work?"

2. The Task Force's Threats Violate Defendants' Constitutional Rights .

"Threats against witnesses are intolerable ." United States v. Goodwin, 625 F.2d 693, 703

(5th Cir . 1980) . While "[a] prosecutor is always entitled to attempt to avert perjury and to punish

criminal conduct," United States v. Viera, 839 F .2d 1113, 1115 (5th Cir . 1988) (en banc), he

"may not intimidate a witness into invoking the Fifth Amendment in order to interfere with a

criminal defendant's right to compulsory process," Brown v. Cain, 104 F.3d 744, 749 (5th Cir.

1997) (citing United States v. Whittington, 783 F .2d 1210, 1219 (5th Cir. 1986)) ; accord United

States v. Blackwell, 694 F .2d 1325, 1334 (D .C. Cir . 1982) ("It is not improper per se for . . . a

prosecuting attorney to advise prospective witnesses of the penalties for testifying falsely . But

warnings concerning the dangers of perjury cannot be emphasized to the point where they

threaten and intimidate the witness into refusing to testify .") .

As another Fifth Circuit panel said, no due process violation exists in investigating or

communicating with a potential witness "so long as the investigation of witnesses is not

prompted by the possibility of the witness testifying, and so long as the .government does not

harass or threaten them . " United States v. Dupre, 117 F. 3d 810, 823 (5th Cir . 1997) (quoting

United States v. Whittington, 783 F .2 d 1210, 1219 (5th Cir . 1986)) ; United States v. Goodwin,

625 F .2d 693, 703 (5th Cir . 1980) ("Substantial government interference with a defense witness'

free and unhampered choice to testify violates due process rights of the defendant . . . . [I]f

proven such violations of due process would require automatic reversal .") ; accord United States

v. Davis, 974 F .2d 182, 187 (D .C . Cir . 1992) ("[A defendant's] rights are not trenched upon by

mere information or advice about the possibility of a perjury prosecution, but by deliberate and

59 Ex. 39 at 8427 :10-18 (emphasis added) .

23
Case: 06-20885 Document: 0051330792 Page: 33 Date Filed: 11/20/2006

badgering threats designed to quash significant testimony.") .

Determining whether an admonition constitutes harassment or a threat is a matter of

intent and degree , and courts look to the "totality of circumstances'!--here, all the Task Force's

actions-to decide whether the line was crossed. See United States v. Vavages, 151 F.3d - 1185,

1188 (9th Cir. 1998) ("Where, under the totality of circumstances, the substance of what the

prosecutor communicates to the witness is a threat over and above what the record indicates is

necessary, and appropriate, the inference that the prosecutor sought to coerce a witness into

silence is strong .' .

The Task Force has clearly crossed the line . In United States v. Hammond, 598 F .2d

1008, 1012 (5th Cir . 1979), Parsons, a defense witness, had been indicted in Colorado . During a

recess in defendant Hammond's trial, FBI Agent Peisner told Parsons he "knew about the

`situation in Colorado,"' and warned Parsons if he "continued on," he would have "nothing but

trouble ." Id. The government's warning violated defendant's constitutional rights :

[I]t was certainly reasonable for defense witness Parsons to interpret agent ,
Peisner's comments as threats to retaliate if Parsons continued to testify . . . .
[W]e find that agent Peisner's comments constituted a `substantial governmental
interference' with defense witness Parson's `free and unhampered choice to
testify . Id.

In United States v. MacCloskey, 682 F .2d 468, 475-79 (4th Cir . 1982), on the eve of an

important defense witness' testimony, the prosecutor called the witness' lawyer to warn him if

the witness testified, she could be indicted on charges that previously had been dropped . . When

the witness' attorney asked if the prosecutor comments were intended as "a threat," the

prosecutor responded, "it was not, but [the witness would] best be advised of what the Fifth

Amendment is" and "she'd best be advised that if she made any statements that she was subject

to being reindicted . " Id. at 476 n. 16 . The court (with the agreement of the government lawyers

handling the appeal) found this comment "ill-advised" and "possibly improper ." Id. at 479.

Here, the same warnings were given, only worse . After learning that a key witness was

designated to testify for the defense in an Enron-related trial, the Task Force contacted his

24
Case: 06-20885 Document: 0051330792 Page: 34 Date Filed: 11/20/2006

counselfour times-to warn him that his client's testifying would be "dangerous" and not in

his "best interests ."60 Dr. Ciscon labored under similar warnings when preparing to testify in the

EBS case .61 Ms . Agnew62 and several other witnesses63 were accused of perjury not because

they had contradicted prior sworn testimony, but simply because they disagreed with the Task

Force's version of events . Cf. Vavages, 151 F .3d at 1191 (where proposed trial testimony

"would have been entirely consistent with [witness'] own prior statements and would not have

conflicted with any past testimony, the prosecutor lacked [a] substantial basis for believing

[defense witness] would perjure herself' ; reversing conviction because of this perjury threat and

other threats made to witness); see also United States v . Foster, 128 F .3d 949, 953-54 (6th Cir .

1997) (similarly improper perjury warnings) . Compounding the misconduct, having deterred

witnesses like Ms . Agnew from testifying, the Task Force then exploited her absence when

arguing its case to the jury .64 Cf. United States v. Golding, 168 F.3d 700, 702-05 (4th Cir. 1999)

(prosecutor threatened defendant's key witness with prosecution if she gave testimony

supporting defense theory : "The government did not stop with the threat . Instead, the prosecutor

further abused her power by using the very situation she had created against the defendant in

closing argument.") .

Like the witnesses in Hammond, MacCloskey, Vavages, Foster, and Golding, it is

"certainly reasonable" for witnesses and their counsel in this case to interpret the Task Force's

persistent "target" reminders and perjury admonitions "as threats to retaliate" if the witnesses

were to testify. Hammond, 598 F.2d at 1012. These types of warnings, given their source,

timing, manner, and repetition have a plainly coercive effect . 65 Such a "`barrage of warnings"'

made to a potential defense witness deprives defendant of his right to compulsory process, his

60 Decl . of Atty. B .
61 See Exs . 39, 40 .
62 See Decl. of Atty . D 1171-81 .
63 See Decl. of Atty. C 116-8 .
64 See Ex . 3 ; Decl . of Atty. D 171-8 1 ; supra note 52 .
65 See Decls . of Attys . A-F ; Tigar Decl . ; Ex
. 39, 40 (Ciscon testimony) .

25
Case: 06-20885 Document: 0051330792 Page: 35 Date Filed: 11/20/2006

right to effective assistance of counsel, and his due process rights . T/avages, 151 F .3d at 1189

(quoting United States v. Morrison, 535 F .2d 223, 228 (3d Cu . 1976)); see also United States v.

Weddell, 800 F .2d 1404, 1410 (5th Cir. 1986) ; United States v. Scroggins, 379 F.3d 233, 239

(5th Cu. 2004) ; United States v. Henao, 652 F .2d 591, 593 & n.l (5th Cir . 1981); United States

v. Hatch, 926 F.2d 387, 395 (5th Cir . 1991).

As the Fifth Circuit observed, "[t]he government does not usually follow about those it is

investigating, reminding them of their fifth amendment rights," much less constantly and

repeatedly doing so with an increasingly menacing tone . United States v. Fricke, - 684 F .2d 1126,

1130 n .6 (5th Cir . 1982) . A prosecutor acting in good faith might do what the prosecutor did in

United States v. Jackson, 935 F . 2d 832, 846 -48 (7th Cir. 1991) . Witness Bennett was scheduled

to provide helpful testimony for the defendant . When Bennett, who was not represented by

counsel, arrived at court, he was taken to the judge's chambers . In the presence of the.. court and

three defense lawyers, the prosecutor informed Bennett once that he was a target of an ongoing

investigation and that questions touching on that investigation could arise if he were to testify.

See id. at 847 . The prosecutor's actions did not constitute improper interference . . Bennett was

not accompanied by counsel and the prosecutor advised him of the dangers in the presence of the

court and defense counsel, "a setting which limited the potential for threats and overreaching ."

Id. ; cf. United States v. Thomas, 488 F .2d 334, 335-36 (6th Cir. 1973) ("[T]he actions of the

Assistant U .S . Attorney, through the secret service agent, in seeking out the prospective witness

and on an ex parse basis gratuitously admonishing him cannot be viewed as serving any valid

purpose , even accepting the assertions of good faith . ") (emphasis added).- More importantly, the

words used by the prosecutor were neither "excessive in number," "badgering .in tone or .

phrasing," or "obviously threatening ." Jackson, 935 F .2d at 847 ; see also Vavages, 1 5 1 F .3d at

1193 ("It is imperative that prosecutors and other officials maintain a posture of strict neutrality

when advising witnesses of their duties and rights . ") .

26
Case: 06-20885 Document: 0051330792 Page: 36 Date Filed: 11/20/2006

D. The Task Force Is Using Plea Agreements As Means To Deny Defendants


Access To Witnesses And To Enforce Its Version Of The "Truth ."

Another form of prosecutorial misconduct resulting in the denial of our access to

witnesses is found in the Task Force's agreements with its cooperators . As written, and as

applied, these agreements severely restrict witnesses' ability to testify on our behalf in this case

or even to meet with us, and are unconstitutional . See, e .g., United States v. Bell, 506 F .2d 207,

223 (D .C . Cir . 1974) ("Inarguably, governmental impairment of the accused's ability to call

witnesses in his behalf' by, for example, conditioning a plea agreement on a "commitment to

refrain from testifying in [defendants'] behalf, . . . cannot be tolerated."); see also United States

v. Hatch, 926 F.2d 387, 395 (5th Cir. 1991) .

Such provisions, as well as threats to declare a witness in breach of his cooperation '

agreement if he assists the defense, are so inimical to due process that courts and the Department

of Justice do not hesitate to reverse convictions and dismiss cases where such plea terms have

been misused. See, e.g., United States v. Henricksen, 564 F .2d 197, 198 (5th Cir. 1977)

(reversing conviction where plea agreement, on its face, prevented witness from providing

exculpatory testimony for defendant) ; United States v. Vavages, 151 F .3d 1185, 1191 (9th Cir.

1998) (reversing conviction where prosecutor threatened to declare witness in breach of plea

agreement if she provided alibi testimony for defendant) ; United States v. Leung, 351 F. Supp .

2d 992, 993-98 (C .D . Cal. 2005) (dismissing prosecution where plea agreement, as drafted and

as applied, prevented witness from assisting defendant in preparing her defense) .

1. Defining the "Truth " and Quelling Any Dissent

In late 2003, the Task Force entered into cooperation agreements with two banks,

Canadian Imperial Bank of Commerce ("CIBC") and Merrill Lynch ("MerrilP'), each of which

27
Case: 06-20885 Document: 0051330792 Page: 37 Date Filed: 11/20/2006

had entered into a variety of business transactions with Enron over the relevant time period . .'

Employees of both banks were accused in the agreements, the Indictment in this tease, and the

Statement in Compliance of conspiring with defendants and others to misstate Enron's earnings .

CIBC employees were accused of conducting a series of fraudulent "FAS 125/140" transactions

with Enron. Merrill employees were accused of fraud in connection with the Nigerian Barges

deal . All these transactions were allegedly fraudulent because of "secret oral side-deals" Andrew

Fastow purportedly made, in which he is said to have guaranteed the banks that their ".equity" in

these deals would not be at risk and that, in all instances, Enron would make the banks whole . 67

By their clear terms, the Task Force's cooperation agreements with the banks prevent .

CIBC, Merrill, and their employees from defending the legitimacy of these transactions and

disputing the Task Force's "oral side-deal" allegations . Paragraph 8 of the CIBC cooperation

agreement could not be more explicit :

CIBC further agrees that it will not, through its attorneys, board of directors,
agents, officers or employees, make any public statement, in litigation or
otherwise, contradicting any of the facts set forth in Appendix A . Any such
contradictory statement by CIBC, its attorneys, board of directors, agents, officers

66 See Exs . 14 (CIBC agreement ; executed Dec


. 22, 2003 (page 1) ; expires Dec. 22, 2006 (1 14)),
8 (Merrill agreement ; executed Sept. 17, 2003 (page 1) ; expired June 30, 2005 (¶ 13)) .
67 See Ex . 14 at 7 ¶ 6 (Appendix A to CIBC deal : "CIBC provided the `equity' stake only
because Enron's senior management first orally promised CIBC that the `equity' would be repaid
at or before maturity at par plus an agreed-upon yield . CIBC sought and obtained such promises
from Enron's senior management in connection with its three percent equity investment in
Projects Leftover, Nimitz, Alchemy, Discovery and Hawaii 125-0 :' ) ; Indictment 146 ("As
CAUSEY knew, Enron executives provided [CIBC] with a secret oral promise that it would not
lose its three percent purported equity in a vehicle known as `Hawaii 125-0,' which was used by
Enron repeatedly to move assets off-balance sheet and record earnings . As CAUSEY knew, this
oral commitment violated the accounting rules because CIBC's `equity' was not sufficiently at
risk to qualify the vehicle as separate from Enron .") ; . Statement in Compliance at 38-41 (listing
alleged fraudulent CIBC deals, including Leftover, Nimitz, Alchemy, Discovery and Hawaii
125-0) ; id. at 44 (listing alleged CIBC co-conspirators) ; Ex . 8 at 1-2 ¶¶ 1-2 &n.1 (Merrill deal;
challenging Merrill's "temporary `purchase"' of the Nigerian Barges and subsequent sale) ;
Indictment 1139-40 (asserting that "secret oral side-deal" made accounting treatment of Barges
deal fraudulent) ; Statement in Compliance at 45 (listing alleged Merrill co-conspirators) .

28
Case: 06-20885 Document: 0051330792 Page: 38 Date Filed: 11/20/2006

or employees shall constitute a breach of this Agreement, and CIBC thereafter


would be subject to prosecution . . . . 8

The CIBC agreement affords the Task Force "sole discretion" to determine whether "any

provision of this Agreement" has been violated, as well as "sole discretion" to decide whether it

may prosecute CIBC for a wide range of crimes .69 The Merrill agreement contains identical

terms.70

These provisions are abhorrent . They seek to contractually obligate Merrill, CIBC, and

their agents and employees to support the Task Force's theories in this case-even though these

witnesses have crucial testimony exculpatory to defendants . Cases like Bell, Hatch, Henricksen,

Vavages, and Leung make abundantly clear the Task Force has no legitimate right to secure such

commitments and that dismissal is the only way to remedy this abuse .

To take one stark example, a few months before the Task Force entered into its

agreement with CIBC, the very CIBC employee to whom Mr . Fastow allegedly gave his oral

guarantee, Ian Schottlander, sat for a deposition before the Enron Bankruptcy Examiner . During

this deposition, Schottlander repeatedly and emphatically denied the making of an alleged oral

guarantee or other "side deal ."71 Yet under the terms of the CIBC cooperation agreement, no

CIBC employee can provide or corroborate this critical exculpatory testimony in our trial

68 EX . 14 at 3 ¶ 8 (CIBC agreement) (emphasis added) ; see also id. at 1-2 ¶ 2 (same) .


69 Id. at 4 11 1 ; see also id. at 4-S ¶1 1 2 -13 .
70 Ex . 8 at 3 ¶ 7 ("Merrill Lynch further agrees that it will not, through its attorneys, board of
directors, agents, officers or employees, make any public statement, in litigation or otherwise,
contradicting Merrill Lynch's acceptance of responsibility set forth above . Any such
contradictory statement by Merrill Lynch, its attorneys, board of directors, agents, officers or
employees shall constitute a breach of this Agreement, and Merrill Lynch thereafter would be
subject to prosecution . . . .") ; id . 4 11 10-12 (Task Force has "sole discretion" to declare Merrill
in breach of agreement, to determine whether to initiate prosecution against Merrill, and to
determine whether any statement made by any individual `will be imputed to Merrill Lynch forr
the purpose of determining whether Merrill Lynch has violated any provision of this
Agreement").
71 See Ex . 6 at 199-207 (Mar. 14, 2003 Schottlander deposition) .

29
Case: 06-20885 Document: 0051330792 Page: 39 Date Filed: 11/20/2006

without subjecting CIBC to the risk of ruination by the same sort of criminal prosecution that

destroyed Arthur Andersen and over 20,000 jobs . The only way for CIBC potentially to avoid

this result under its agreement with the Task Force would be to "publicly repudiat[e]" the

"contradictory statement" its employee or agent made-whatever "publicly repudiate" means

(e.g., firing the employee, taking out an advertisement in the Houston Chronicle saying he was

lying, giving testimony in our trial that the employee was perjuring himsel fl . 7 Z Even then, since

it has sole discretion to determine whether CIBC is in breach, the Task Force could conclude

CIBC's denunciation was not "good enough ."73 The Task Force's unfettered ability to void a

plea agreement in this way is an obvious and dangerous weapon for witness coercion . See

Vavages, 151 F .3d at 1191 (reversing conviction even though it was unclear if the prosecutor

could declare a breach in his sole discretion ; noting that, if he could, the case for reversal would

be even stronger) .

Courts like Vavages have rightly reversed convictions where witnesses are prevented

from testifying for the defense because of onerous and abusive plea agreements . In Henricksen,

564 F.2d at 198, it took the Fifth Circuit one page of a per curiam opinion to reverse defendant's

conviction where her co-defendant had signed a plea agreement with the government, pursuant to

72 Ex . 14 at 3 ¶ 8 (C1BC agreement) (emphasis added) .


73 If Schottlander were to provide this testimony, CIBC might argue he is not an "agent or
employee" of C1BC, because he left the company on October 31, 2002 . See Ex . 6 at 11 (Mar .
14, 2003 Schottlander deposition) . But, again, it would be solely in the Task Force's discretion
to judge that argument . Moreover, the Task Force appears to have accounted for such a claim,
expanding "employee or agent" to include "any individual" whom it deems in its sole discretion
is speaking for CIBC . Paragraph 13 of the CIBC agreement provides : "The decision whether
conduct and statements of any individual will be imputed to CIBC for the purpose of
determining whether CIBC has violated any provision of this Agreement shall be in the sole
discretion of the [Task Force] ." Ex. 14 at 5 113 (emphasis added); see also Ex . 8 at 4 1 12
(Merrill deal ; same) . We have contacted Schottlander's counsel ; he refused to make his client
available for an interview or to testify in our trial . Schottlander also refused to give testimony in
Newby by asserting his Fifth Amendment right .

30
Case: 06-20885 Document: 0051330792 Page: 40 Date Filed: 11/20/2006

which he agreed not to give testimony exonerating defendant . If he breached this agreement by

testifying for the defendants, his plea agreement would be void and he would be prosecuted .

Such plea terms so obviously "violate due process" that even the government lawyers on appeal,

as well as the Justice Department and the trial judge, all confessed error and requested

defendant's conviction be reversed. See id.

Here, the Task Force has effectively silenced not just one witness with exculpatory

testimony, but all CIBC and Merrill employees, as well as their agents and , outside advisors who

have exculpatory evidence. For example, one of Merrill's outside lawyers on the Barges deal,

Alan Hoffman of Winston & Strawn, is included on the Task Force's list of alleged co-

conspirator in this case, as a Category 4 co-conspirator .7 4 By virtue of the cooperation

agreement between the Task Force and Merrill, a witness such as Hoffman faces two powerful

reasons not to speak to us or testify on our behalf : fear of personal reprisals; and fear of reprisals

against his employer and client. Even if Hoffman were willing to expose himself personally and

agree to testify for us, the Merrill agreement puts him in an unthinkable conflict .7 5

It is not surprising, therefore, that so few Merrill employees or representatives would

agree to testify for or even speak to the Barges defendants-despite having worked together for

years, and despite admissions from the Task Force that many such witnesses possessed arguably

exculpatory information . 6 Nor should it come as a surprise that these same witnesses with

exculpatory information, as well as their C1BC equivalents, would not talk to us, let alone testify

for defendants in this case .

7 4 See Statement in Compliance at 45 .


75 See Ex . 8 at 3 17, 4 1110-12 (Merrill agreement) .
76 See Ex . 17 at 2-3 (Def. Bayly's Notice of Joinder and Mem . in Further Support of Def. Furst's
(1) Mot . to Compel Expert Witness Disclosure, and (2) Mot . to Reconsider Brady/Giglio Mot .
(filed May 18, 2004)) .

31
Case: 06-20885 Document: 0051330792 Page: 41 Date Filed: 11/20/2006

2 . Creating a Right to Intrude on Defense Witness Interviews .

The Merrill and CIBC agreements contain another provision aimed at impeding witness

access. As explained in Gregory v. United States, 369 F . 2d 185, 188-89 (D . C . Cir. 1966), and its

progeny in this circuit, see, e.g., United States v. Soape, 169 F .3d 257, 270 (5th Cir. 1999), since

witnesses do not belong to the government (or the defense), the government may not "suggest"

to witnesses, much less "advise" or require them under a plea agreement, "not to talk to anyone

unless . . .the prosecutor [is] present," Gregory, 369 F.2d at 188 ; United States v. Rodgers, 624

F .2d 1303, 1311 (5th Cir . 1980) (prosecutors improperly "suggested" that witnesses ` .`speak with

defense lawyers only if [government] lawyers were also present") . Defendants have every right

to interview witnesses on their own and determine "what the eye witnesses to the events [intend]

to testify to [at trial] or how firm they [are] in their testimony" without government lawyers

being present . Gregory, 369 F .2d at 189 ; Rodgers, 624 F . 2d at 1311 ("Obstruction of access to

witness is serious"; to remedy mere suggestion that witnesses only meet with defense counsel if

government representatives were present, the court granted a two-month continuance, ordered

the government to "inform [witnesses] that if they wished, they were free to talk with the

defense"; conviction only affirmed because defendants were thereafter able to interview ,

witnesses) .

Despite these rules, the Merrill and CIBC agreements provide the Task Force with

unlimited access, whenever it wishes, to Merrill's and CIBC's "facilities, documents and

employees ."77 Failure to comply with this provision is a total breach . Once again, the Task

Force has the sole discretion to determine whether a breach has occurred and whether it may

77 Exs
. 8 at 2 ¶¶ 4-5 (Merrill agreement) (emphasis added) ; 14 at 2-3 ¶¶ 4-5 (CIBC agreement) .

32
Case: 06-20885 Document: 0051330792 Page: 42 Date Filed: 11/20/2006

prosecute the banks on account of the breach . 78

In the Nigerian Barges case, the Task Force used this "employee access" provision to

monitor and restrict .defendants' access to key Merrill witnesses . As the Task Force conceded, as

soon as "the defendants [in the Barges] case were indicted, the government asked counsel for

Merrill Lynch if it would notify the government if any of the defendants . . .attempted to contact

Merrill Lynch employees through Merrill Lynch counsel about matters relating to the

government's investigation."79 After the Task Force made its Brady witness disclosures (which

included several Merrill employees), counsel to one of the Barges defendants contacted Merrill

seeking to interview these witnesses . In response, Merrill's counsel informed defense counsel

about the Task Force's request to be present at all defense interviews of Merrill's employees .80

Defense counsel called the Task Force to complain that its position violated defendants'

rights . The Task Force refused to withdraw the request or confirm "whether Merrill Lynch was

free to ignore the request . . .without consequence," and instructed defense counsel to seek court

relief if it disagreed with the Task Force's position .81 Defendants filed a motion in which they

challenged the Task Force's interference with their ability to conduct private witness

interviews .82

In opposing the motion, the Task Force claimed Andrew Weissmann orally conveyed to

Merrill it could refuse the Task Force's request without violating its cooperation agreement .83

78 See Exs . 8 at 4 110 (Merrill agreement)


; 14 at 4 111 (CIBC agreement) .
7 9 Ex . 16 at 2 (Govt .'s Opp . to Bayly's Mot . to Dismiss or For an Order Directing the Govt . to
Withdraw a Witness Request (filed May 7, 2004)) .
80 See id.
81 Id.
82 See id. We are informed the motion was denied, but can find no record of the ruling .
83 See Ex . 16 115-7 (Affirmation of David Hennessy (signed Apr . 9, 2004)) ; Ex . 18 at 1-2 (Def.
Daniel Bayly's Reply in Further Support of His Mot. to Dismiss, or Alternatively, For. an Order

33
Case: 06-20885 Document: 0051330792 Page: 43 Date Filed: 11/20/2006

Rather than risk that the Task Force might nonetheless exercise its right to declare Merrill in

breach, Merrill hired individual counsel for its employees and informed the Barges defendants to

direct interview requests to the witnesses' individual counsel ." The straightforward route to

Merrill witnesses was thus effectively shut down-even to Merrill's former high-ranking

executives on trial in the Barges case--and remains shut down to defendants here . 85

3 . Forbidding Whole Subject Areas of Inquiry, Interview, and


Discussion .

As the Fifth Circuit observed in United States v. Fischel, 686 F. 2d 1082, 1092 (5th Cir.

1982), "[flew defense counsel - would wish to learn a witness' story for the first time when the

witness is on the stand at trial . To attempt to interview a prospective witness before trial is the

usual and better practice . . . . The desirability of calling . . . a witness, or at least interviewing

him in preparation for trial is a matter for the accused rather than the government to decide ."

(Emphasis added.) The Task Force has taken that choice out of our hands, and has done so with

respect to the most critical witnesses in the case-its legions of cooperators . The Task Force's

cooperation agreements contain strict prohibitions on what information these witnesses may

share with defendants ; many have notice requirements allowing the Task Force to monitor any

attempts to interview what it clearly (and improperly) believes are "its" witnesses . Cf.

AMERI CAN B AR ASS OCIATION ' S S TANDARDS FOR CR IMIN AL J USTICE § 3-3 . 1 (d), at 50 (3d. ed .

Requiring the Govt. to Withdraw Its "Request" to Merrill Lynch to Attend Interviews of Its
Employee Witnesses Conducted by Defense Counsel (filed May 21, 2004) . Mr. Weissmann did
not submit a declaration attesting to this version of events . Nor did the Task Force produce a
writing memorializing its alleged agreement with Merrill that Merrill was free to reject . its
request . Such a writing was never produced even though Merrill is a sophisticated firm and
would have been aware of paragraph 14 of its cooperation agreement, which provides, "This
Agreement may not be modified except in writing signed by all the parties ." Ex . 8 at 5 1 14 .
84 See id . ¶8 .
85 Defendant Bayly was one of the highest-ranking, most well-respected executives at Merrill,
and Merrill was paying the cost of his defense ; thus, he had every reason to believe his former
firm would cooperate in providing access to Merrill witnesses .

34
Case: 06-20885 Document: 0051330792 Page: 44 Date Filed: 11/20/2006

1996) ("Prospective witnesses should not be treated as partisans .")

Andrew Fastow's plea agreement, for example, provides :

Defendant agrees not to reveal any information derived from his cooperation to
any third party without prior consent of the Department, and to instruct his
attorneys to do the same . Defendant agrees to inform the Department of any
attempt by any third party to interview, depose, or communicate in any way with
him regarding this case, his cooperation, or any other information related to Enron
or transactions involving Enron.86

Many other plea agreements contain similar clauses . 87

These provisions, operating with other provisions giving the Task Force unfettered

discretion to decide whether the cooperators rendered sufficient "assistance" to convict

defendants,88 arm the Task Force with complete dominion and control of its cooperators . The

per se ban on witnesses' disclosing "any information derived from [their] cooperation"-e .g.,

what happened or what was said during meetings and interviews with the Task Force-is on its

face unconstitutional . As the Task Force itself argued when trying to justify its presence at

defense witness interviews of Merrill employees in the Nigerian Barges case :

If [defendant] Bayly were to interview Merrill Lynch employees with a


government representative present, the witness would still be free to talk with
whomever he or she saw fit, including government counsel, about what transpired
at the interview. Thus, the very presence of the witness himself or herself would

86 Ex . 511 7(c) (Fastow plea agreement) .


87 See Exs . 45-58 (collecting various plea agreements) (Mark Koenig ¶ 7(c) ("Except as required
by law, Defendant agrees not to reveal any information derived from his cooperation to any third
party (other than his counsel) without prior consent of the Department, and hereby instructs his
attorneys to do the same . Defendant agrees to inform the Department of any attempt by any third
party to interview, depose, or communicate in any way with him regarding this case, his
cooperation, or any other information related to Enron or transactions involving Enron .") ; Lea
Fastow ¶ 7(c) ; Paula Rieker ¶ 6(c) ; Kevin Hannon ¶ 7(c) ; Tim Belden ¶ 9(fl ; Jeffrey Richter
¶ 8(f) ; John Forney ¶ 8(e) ; David Duncan I 3(c) ; Michael Kopper ¶ 3(f); Larry Lawyer ¶ 3(e)) .
88 See Exs. 45-58 (Fastow ¶ 9(c), Rice ¶ 6(d), Delainey ¶ 6(c), Koenig ¶ 7(c) ; Lea Fastow 17,
Rieker ¶ 6(c), Hannon ¶ 7(d), Belden ¶ 9(f), Richter ¶ 9( f) , Forney 18 ; Duncan 16 ; Michael
Kopper 16 ; Larry Lawyer 16).

35
Case: 06-20885 Document: 0051330792 Page: 45 Date Filed: 11/20/2006

pierce any work-product privilege that Bayly might have .89

In the way the Task Force has rigged the flow of information, information may flow in

only one direction-to the Task Force . Witnesses not only may divulge to the Task Force what

happened at meetings with defense counsel, they must keep the Task Force apprised of all

contacts . Yet, if cooperators like Andy Fastow, Paula Reiker, Mark Koenig, or even their

lawyers were to tell defendants here about their meetings with the Task Force, or what their

testimony or the testimony of others is likely to be, these cooperators will have violated their

plea agreements . Rather than face zero, five, or 10 years in jail, they risk getting life sentences .

This monumental disparity in access to evidence robs defendants of due process and a fair trial .

Cf. United States v. Clemones, 577 F .2d 1247, 1251 (5th Cir. 1978) (district court held it

improper for "assistant United States Attorney handling the case [to] instruct[] some 30 to 35

witnesses appearing before the grand jury that the proceedings were secret and that they should

not discuss their testimony with anyone other than their attorneys or government agents' .

This disparity cannot be discounted . For example, as was exposed in the EBS trial, the

Task Force showed cooperator Ken Rice the so-called "Shelby 2" videotape when meeting with

him. The Task Force wrongly told him the videotape had been played at a 2000 analyst

conference, and later presented false testimony by Rice at the EBS trial, together with a playing

of the videotape .90 Rice's plea agreement forbids him from telling defendants the Task Force

showed him this video and told him it was played at the analyst conference, even though the

89 See Ex . 16 at 7 (Govt.'s Opp . to Bayly's Mot. to Dismiss or For an Order Directing the Govt .
to Withdraw a Witness Request (filed May 7, 2004)) .
90 See Ex . 32 at 43-46 (Def. Jeffrey Skilling's Mot. to Compel Production of Exculpatory and
Rule 16 Materials (filed May 17, 2005)) ; Ex . 36 at 11 (Reply in Support of Def. Jeffrey
Skilling's Mot . to Compel Production of Exculpatory and Rule 16 Materials (filed June 22,
2005)) .

36
Case: 06-20885 Document: 0051330792 Page: 46 Date Filed: 11/20/2006

supposed playing of the tape is a criminal act for which defendants are charged in this case .91

David Delainey, who also was a former close colleague of defendants, is now a key

cooperator for the Task Force, and is expected to testify regarding Enron's wholesale business,

asset valuations, retail energy unit, and Schedule C reserves . Delainey has declined our

interview request, in part, because : "Mr . Delainey is restricted by his agreement with the United

States from disclosing certain information to third parties, and he intends to honor fully the spirit

and letter of this agreement ."92 Mr. Delainey's plea agreement provides : "Defendant agrees not

to reveal his cooperation, or any information derived therefrom to any third party without prior

consent of the Department, and to instruct his attorneys to do the same ."93

To be very clear, and as Mr. Delainey's allusion to honoring the "spirit and letter" of his

agreement suggests, thee information stranglehold extends well beyond information "derived

from [witnesses'] cooperation" with the Task Force . Witnesses and their counsel have

interpreted this provision as imposing an outright ban on even discussing the historical facts at

issue in this case, including the substance of transactions, why certain business decisions were

made, and the character for truthfulness of other witnesses.

As set forth in our in camera submissions, lawyers for a number of the witnesses with

cooperation agreements have confirmed this view, expanding upon the conclusion contained in

the letter of Mr. Delainey's counsel .

• One attorney called his client's information-sharing agreement "unconscionable," said it

placed his client "over a barrel," and reported that, given this provision and the . Task

91 See Ex. 54 ¶ 7(d) (Ken Rice plea agreement


: "Except as required by law, Defendant agrees not
to reveal any information derived from his cooperation to any third party (other than his counsel)
without prior consent of the Department, and hereby instructs his attorneys to do the same .") .
9Z Ex . 3 0 at 2 (May 10, 2005 letter from Delainey's counsel, John Dowd, to M . Ramsey, D .
Petrocelli, R. Weingarten) (emphasis added) .
93 Ex . 50 ¶ 3(c) (emphasis added) .

37
Case: 06-20885 Document: 0051330792 Page: 47 Date Filed: 11/20/2006

Force's unilateral ability to invalidate his clients' plea deal, there was no way he could
risk his client's meeting with defendants .94

• Another lawyer agreed to field general questions about the case . When asked his client's
views on a specific transaction targeted in the Indictment, the lawyer said he and his
client were prohibited from discussing any subject they had discussed with the Task
Force. When asked only for his client's recollections about the transactions at issue-not

what the Task Force may have said about them-the lawyer said his client's agreement
with the Task Force prohibited either of them from answering questions about historical
facts . When asked about the basis for these prohibitions, the lawyer cited conversations
with two Task Force prosecutors, whom he mentioned by name . 95

When we asked yet another lawyer for an interview with his client, as well as general
questions about anything his client might say about defendants at trial, the lawyer .
likewise said his client's agreement with the Task Force prohibited discussing such
information, including anything his client had to say about defendants . 96

• Finally, when we spoke to another lawyer and asked whether his client could share
recollections of conversations with defendants, the lawyer said his client intended to give
testimony supporting the Task Force's allegations, but was prevented from discussing the
substance of it with us at the present time .97

The Task Force's conduct is unlawful . United States v . Leung, 351 F . Supp . 2d 992

(C .D . Cal . 2005), is on point and consistent with United States Supreme Court and Fifth Circuit

precedent regarding access to witnesses . In Leung, two defendants-Leung and Smith-were

charged with grave crimes implicating national security. See id . at 992, 996 . After some time,

Smith, like many of the cooperators here, pled guilty and signed a cooperation agreement with

the government . The agreement included a clause mandating that Smith :

94 Decl. of Atty. D 1182-83 .


95 See id. ¶¶ 36-54.
96 See id. ¶¶ 25 - 35 .
97 See id. ¶¶ 5 5 -59 .

38
Case: 06-20885 Document: 0051330792 Page: 48 Date Filed: 11/20/2006

Withdraw from any joint defense agreement (written or oral) relating to this
case . . .and . . .have no further sharing of information relating to this case with
Leung, counsel for Leung, or the employees of counsel for Leung . In particular,
defendant, counsel for defendant, and the employees of counsel for defendant
agree not to disclose to Leung, counsel for Katrina Leung, or the employees of
counsel for Katrina Leung any information which they learn as a result of
defendant's potential cooperation with the government .

Id. at 993 (emphasis in original) . On learning of this clause, Leung moved to dismiss the charges

against her, contending that the government had prohibited Smith from talking to her attorneys,

thereby "obstructing her right of access to a critical witness in her case," in violation of the "veil

established" principle that "the government may not interfere with defense access to witnesses .

United States v. Black, 767 F .2d 1334, 1337 (9th Cir . 1985) ." Id .

The government filed court pleadings flatly denying that it was obstructing Leung's

access to Smith . It argued the language in the plea agreement did not "prohibit Smith from being

interviewed by Leung's attorneys" ; that it "never intended to restrict Smith's freedom to consent

to an interview by Leung's attorneys if he wished to do so" ; and that it "cured the problem by

writing to Smith's attorneys and explaining there was no such restriction ." Id.

The Leung court rejected these denials, holding that the plea provision was unambiguous

and had "only one reasonable interpretation : Smith is being told not to talk to Leung or her

attorneys ." Id. at 993 . The clause was so offensive, and the government's efforts to defend it so

disingenuous, the court ruled it had no option but to dismiss the case . See id. at 998 .

As in Leung, overzealous plea provisions are denying us access to the most material of

witnesses, our chief accusers . Though different from the clause in Leung, the plea provisions

here are equally impermissible . As in Leung, the "intent" of the provisions here is to restrict

cooperators' freedom to consent to interviews, particularly when "reminded by Assistant United

States Attorneys that [they are] to discuss the case only with the investigating [Task Force]

agents or [their] attorneys and [are] to tell anyone else who inquire[s] about the case that '[they

39
Case: 06-20885 Document: 0051330792 Page: 49 Date Filed: 11/20/2006

are] not at liberty to discuss it ." Id. at 993-94 . As in Leung, the cooperators here have much to

lose if they discuss the case with their former close friends and colleagues . The Task Force can

unilaterally rescind these witnesses' highly favorable deals, which spare them decades in prison

and preserve for some of them millions of dollars in personal property . Or the Task Force can

refuse to recommend downward departures for these witnesses when they are sentenced ; and

none of them is set to be sentenced until well after this case is over.

The Leung court explained the overriding leverage this gives the government over its

witnesses :

Here, Smith was facing trial on five serious felony charges alleging
deprivation of honest services, wire fraud, and removal of national defense
information . Conviction could have resulted in a sentence of many years in
federal prison . He was also, according to his e-mail to his former coworkers,
facing the loss of his federal pension . Pursuant to the terms of his plea agreement,
he anticipates that he will be placed on probation, stand convicted of a relatively
minor offense, and will not lose his pension . Smith, of course, has not yet been
sentenced, and if routine practices are followed, he will not be sentenced until
after Ms . Leung's trial . Suspended over his head, like the proverbial Sword of
Damocles, is the sure knowledge that if he violates any of the terms of his plea
agreement, the deal is canceled, and his future returns to its former bleak state .
In considering the impact of the government's letter to Smith's counsel
[saying he could meet with Leung, despite what the plea agreement said], the
Court cannot turn a blind eye to the realities of this case. Mr . Smith knows what
is expected of him, and the possibility that he would now feel free to be
interviewed on behalf of Ms . Leung is ephemeral at best . Of course, we do not
know if he would have consented to such an interview in the absence of the 'no-
information-sharing' clause . The government . argues that this establi shes there is
no substantial prejudice to the defense .
But, as the defense points out, this is Ms . Leung's main witness . He
worked with her for eighteen years, knows details of the kind of work she did,
whether her work was of assistance to the United States, whether she was
trustworthy and loyal to this country-all issues that go to the heart of the defense
of Ms. Leung . And according to Smith's e-mail, he believed he had ample reason
to trust and believe in Ms . Leung during the years they worked together.
Additionally, Smith and Leung had an intimate relationship for many years . All
of thee foregoing supports the likelihood that Smith would have been willing to
talk to Ms . Leung's attorneys but for the prohibition .

40
Case: 06-20885 Document: 0051330792 Page: 50 Date Filed: 11/20/2006

This case is, therefore, significantly different from the reported decisions
in this area : the witness is critical to the defense ; the witness has everything to
lose by defying the government's wishes with respect to Ms . Leung's case ; the
admonition against talking to the defense was not just an instruction from the
prosecutor, but was made a condition of what the defense has accurately
described as his "sweetheart deal ."
The Court finds the defendant has suffered substantial prejudice as a result
of the prosecutor's due process violation .

Id. at 996-97 .

Almost all of the Task Force's cooperators, including Andrew Fastow, have important,

exculpatory testimony on many key issues .98 Were it not for the Task Force's abuse of

overreaching plea agreements, we would have a fair opportunity to explore and discuss these

issues in private interviews with these witnesses, especially given defendants' long-standing

professional or personal friendships with them .

E . Other Actions of the Task Force Have Prejudiced Defendants .

Beyond specific threats, improper plea deals, and excessive control of cooperators, the

Task Force has engendered, fostered, and exploited an atmosphere of fear throughout . the

extensive community of Enron related witnesses . This has operated to induce potential

witnesses-whether specifically threatened or not -to refrain from assisting defendants in any

way . Perhaps the biggest contribution to this reign of fear is the Task Force's 117-person list of

alleged co-conspirators in this case . Experienced defense counsel all agree that a list of this

magnitude is unprecedented, especially in a case of this sort . 9

98 See, e.g., Decls . of Attys. A, B, D, E; Ex . 21 (Brady witness letter in Barges case, disclosing
highly exculpatory testimony Mr . Fastow could give about the Barges transaction ; appellate brief
submitted by Barges defendant Robert Furst explaining the same at 2-5, 19-20, 41-46) .
99 See Tigar Decl. ; Decls . of Attys . A, C, E, F . Defendants in related Enron prosecutions faced
similarly overwhelming lists, but even they paled in comparison . See, e.g., Ex . 18 at 3 n .2 (Def.
Daniel Bayly's Reply in Further Support of His Mot . to Dismiss, or Alternatively, For an Order
Requiring the Govt . to Withdraw Its "Request" to Merrill Lynch to Attend Interviews of Its
Employee Witnesses Conducted by Defense Counsel (filed May 21, 2004) ("[0]n April 22,
2004. . . . the government sent Defendants' attorneys a letter identifying, without factual support,
29 alleged unindicted co-conspirators, essentially ensuring that those individuals-many with
exculpatory and/or highly relevant information in this action-would decline to talk to defense
counsel, much less testify at trial on the Defendants' behalf . That number has now been reduced

41
Case: 06-20885 Document: 0051330792 Page: 51 Date Filed: 11/20/2006

Moreover, the Task Force has endeavored to keep the names on this list shrouded in

mystery. Over defendants' objections, many of the 114 co-conspirators (other than defendants)

are in what the Task Force labels "Category 4," meaning these witnesses do not know, and we

cannot tell them, if they are or are not on "the list ." (We do not know the exact number of

Category 4 co-conspirators, because the Task Force refuses to update its list until October 14,

2005 .) Although it contends more than 110 people conspired to commit crimes, the Task Force

has formally charged only 30 or so individuals . That means 80 or more people worry each day if

they will be indicted . Worse yet, because no one knows who is included in Category 4, any

witness remotely associated with Enron fears he or she may be on the list, thereby chilling access

to an indiscriminate number of potential witnesses .

Compounding the panic, the Task Force makes sure there is a special Enron grand jury

working at all times . Even though the alleged crimes being "investigated" are more than four

years old, many statutes of limitations have run, and not a single new indictment has issued in

the last year, the Task Force re-upped the grand jury for what will be its fifth full year of

operation. The Task Force then publicized this fact to all would-be defense witnesses :

"We're not done . . . .The Enron task force is still in full operation ; there are other
spinoff cases that we will eventually get to . We're working them now, but the
fraud was so massive that we had to cut out different schemes ."loo

This situation is hardly typical ; it is extreme-even for high-profile investigations

involving complex allegations .101 Mr. Tigar, with over 40 years of experience practicing and

teaching criminal law, agrees .' 02

unilaterally by the government to 28-demonstrating that the designation is not a `real'


indication of any culpability but rather strategic .")) .
1 0° Ex . 26 ("FBI Says It Is Still Pursuing Enron-Related Cases" by Siobhan Hughes, Dow Jones
News Wires, May 4, 2005 (quoting Assistant Director of the FBI's Criminal Division Chris
Swecker)) .
lot Decl . of Atty . C ¶ 9 ("I am not aware of any federal task force or U .S . Attorney's office that
has kept a grand jury running for several years while it has identified over 100 key witnesses as
coconspirators against whom it claims to have evidence of criminal conduct, but most of whom
have never been charged .") .
102 See Tigar Decl
. 113-4, 17-21 .

42
Case: 06-20885 Document: 0051330792 Page: 52 Date Filed: 11/20/2006

IV . This Case Must Be Dismissed.

Dismissal is a severe remedy, but the only one appropriate here . In cases involving

systematic prosecutorial misconduct, courts recognize they have no way to protect defendants'

rights other than to order a dismissal . In determining the appropriate remedy in response to a

motion such as this one, courts consider whether the government acted in bad faith and whether

lesser sanctions have been or are likely to be effective . See, e.g., United States v. Welbron, 849

F .2d 980, 985 (5th Cir . 1988) (court can dismiss indictment under supervisory authority "where

the government's misconduct has prejudiced the defendant") ; United States v. Fulmer, 722 F.2d

1192, 1195 (5th Cir. 1983) (same); United States v. Doe, 125 F .3d 1249, 1253 (9th Cir . 1997)

("The district court may dismiss an information based on outrageous government conduct if the

conduct amounts to a due process violation .'; United States v . Leung, 351 F . Supp . 2d 992, 997

(C .D . Cal. 2005) (dismissing case because lesser remedies would be ineffective : "[T]he Court

cannot turn a blind eye to the realities of the case . [The witness] knows what is expected of him,

and the possibility that he would now feel free to be interviewed on behalf of Ms . Leung is

ephemeral at best .") .

The Task Force's transgressions have not been isolated, inadvertent, or minor . It has

engaged in a sustained pattern of witness interference ranging from instructions to "get rid" of

lawyers who talk to the defense ; to contractually obligating what witnesses may say at trial ; to

threatening counsel and their clients not to cooperate with defendants ; to violating court orders ;

to misrepresenting its conduct .

A . Only Dismissal Is Appropriate ; Lesser Remedies Have Failed to Deter the


Task Force's Misconduct.

Lesser remedial measures have been imposed by three courts, including this Court. None

has worked. In September 2003, in response to claims of denial of access to witnesses in the

Andrew Fastow case, Judge Hoyt issued an order, stating :

The government shall file with the Court on or before March 19, 2004, that it has
affirmatively informed its witnesses that defense has a "right" to speak with them
about the case . The government shall also inform each witness that whether any
witness speaks with the defense is a matter of the witness' choosing and no

43
Case: 06-20885 Document: 0051330792 Page: 53 Date Filed: 11/20/2006

repercussions will flow from the witness' choice decision to do so or not do so . 103

It is unclear whether the Task Force ever provided this formal notice to witnesses ; it reached a

plea agreement with Mr. Fastow on January 14, 2004 .104 To our knowledge, no certification of

compliance with the Court's order was filed .

Around the same time of Judge Hoyt's order, defendants in the EBS case sought a similar

ruling, citing five or more instances where witnesses refused to speak to them citing fear of

reprisals . 105 The Task Force opposed the motion, stating :

The law in this area is very clear and makes it quite clear that witnesses can make
the decision to choose to talk to whomever they want, Government or defense
counsel . 106

The government has not told, informed, instructed, or suggested to any witness or
third party, whether individual or corporate, that a decision to speak with the
defendants or their representatives would be viewed negatively by the
government . . . .
At no time has the government instructed witnesses that they must not talk to
defense counsel or that a decision to do so would be viewed negatively by the
government . 107

This was not true . Roughly one year earlier, the Task Force told Rex Shelby that it was

not a "good idea" for him to communicate with EBS defense counsel .108 Over the Task Force's

objections, Judge Gilmore signed, on September 30, 2003, an order much like Judge Hoyt's . It

informed witnesses : "Whether or not you wish to talk to the attorneys or representatives of

either party in this case is entirely up to you . . . . Should you elect to provide information to

'03 Ex . 7 at 3 ¶ G (Order entered Sept . 4, 2003) (emphasis added)


.
104 Ex . 51 (Andrew Fastow's plea agreement) .
105 See Ex . 10 (Affidavit of David Angeli ¶ S ("In at least ten other instances, witnesses or
counsel for these witnesses informed that that they did not want to communicate with me, as a
representative of a defendant in this action . In at least five of those instances, the witnesses or
their counsel specifically cited their concern about how such a meeting, might affect the witness's
standing with the government .") ; 11 (Affidavit of Edwin Tomko ¶ 4 (same)) .
lob Ex . 12 at 47 :10-13 (Hr'g Tr . of Sept
. 29, 2003 oral argument on motion ; statements of Task
Force) (emphasis added) .
107 Ex . 9 at 3, 7 (Govt.'s Opp . to Defs .' Mot . to Provide Instructions (filed Sept . 24, 2003))
(emphasis added) .
108 Ex . 5 (Typewritten notes of Rex Shelby dated Sept . 2, 2002) .

44
Case: 06-20885 Document: 0051330792 Page: 54 Date Filed: 11/20/2006

representatives of the defense, the government will not view your election as any lack of

cooperation with the government ."109

The defendants in the Barges case moved to dismiss based on interference with their

rights to meet privately with witnesses .l'o The Task Force opposed the motion, reiterating,

"[t]he decision whether to be interviewed by the defense, with or without government presence,

remains and has always remained within the sole discretion of the witness ."' 1 1 This was not

true . Among other things, during a debriefing with "an important material witness," the Task

Force asked whether the witness had been contacted by counsel for Skilling or Lay . When he

said not yet, but were trying, the Task Force instructed the witness not to meet with Skilling and

Lay because "they are bad news .s112 This statement also clearly violated the Orders issued by

Judges Hoyt and Gilmore months earlier .

On May 3, 2005-ironically, the same day Mr . Weissmann emailed his directive to

Mr. Rice's counsel-we wrote a letter to the Task Force asking it to "acknowledge, in writing,

that [it] will not hold against any witness (e .g., by initiating a prosecution, refusing to provide the

witness immunity, or seeking a lengthier sentence) the fact that he or she met with defense

counsel in this case and/or cooperated with their investigation ."' 13 Receiving no response, we

sent a second letter on May 9 .114 On May 11, eight days after Mr . Weissmann had sent his email

and one day after Skilling filed a bail modification motion raising witness access issues,' 15 the

Task Force responded :

It is up to each witness as to whether to speak voluntarily with defense counsel in


this matter . To the extent there is a concern about whether the government

l09 Ex
. 13 (Order dated October 1, 2003) .
"" Ex . 15 at 1-7 (Bayly's Motion to Dismiss, filed April 26, 2004) .
't . Ex. 16 at 3 (Govt .'s Opp . to Bayly's Mot. to Dismiss (filed May 7, 2004)) (emphasis added) .
112 Decl . of Attorney E 119-11 .
113 Ex . 25 (Letter from D
. Petrocelli to Task Force of May 3, 2005) .
lta Ex
. 27 (Letter from D . Petrocelli to Task Force of May 9, 2005) .
"s Ex . 29 (Def. Jeffrey Skilling's Mem . in Support of His Mot. to Modify Bail Condition 7(j))
(filed May 10, 2005)) .

45
Case: 06-20885 Document: 0051330792 Page: 55 Date Filed: 11/20/2006

intends to hold a witnesses' [sic] individual decision to meet with you against the
witness, be assured that the government does not view the mere act of a witness
meeting with you as a lack of cooperation with the government . 16

In its May 18 opposition to the bail modification motion, the Task Force expanded upon

this "assurance" and reiterated that witnesses and their "sophisticated counsel" were "free" to

decide whether to meet with us :

Defendant's counsel, investigators and agents are free to contact witnesses and to
seek pretrial interviews . Likewise, these witnesses are free to meet with
defendant's counsel or not, as is their desire . Indeed, in this case, many of the
witnesses are represented by sophisticated counsel who can advise their clients on
the pros and cons of such meetings .' 17

The same day, at a status conference (Mr . Weissmann was in attendance in the

courtroom), the Task Force gave yet another unqualified assurance that it was doing nothing

whatsoever to impede witnesses' "free" choice to be interviewed :

THE COURT : Okay . Now, you mention some kind of motion you were going to
file -
MR . PETROCELLI : Yes .
THE COURT : -- dealing with Mr. Skilling's right to talk to people?
MR . PETROCELLI : No . Dealing with the unavailability of witnesses, generally,
and our inability to prepare this case for trial . Nobody will talk to us .
THE COURT : Well, is that unusual in this type of case?
MR . PETROCELLI : I don't know because I've never had this kind of a case
before, but I think it's unusual in the sense that, Your Honor, I mean, there's
hundreds of witnesses and we can't get to anybody, and we need some relief
We asked the Government, for example, if we would, at least, get an order
from Your Honor, like Judge Gilmore did, telling folks that, if they talked to us,
that there won't be any reprisals from the Government ; and they've declined to
agree to such an order .
They've indicated that's their position in a letter, but we think at least at
this point, if we had the formality of an order that we could show to people that
there are no problems if they talk with us, that would at least help us .
THE COURT : Has the Government taken that position informally?
MR. BERKOWITZ : Judge, they sent us a letter asking us to make certain
representations. We - saying if we weren't willing to make such representations,

116 Ex
. 31 (Letter from Task Force to D . Petrocelli of May 11, 2005) (emphasis added) .
117 Ex . 33 at 2 (Task Force Opp . to Skilling's Mot . Seeking to Modify Bail Conditions (filed May
18, 2005)) (emphases added) .

46
Case: 06-20885 Document: 0051330792 Page: 56 Date Filed: 11/20/2006

they'd seek an order from the Court . We wrote back and said that our position
was that witnesses, many of whom are represented by sophisticated counsel, are
free to talk to whomever they want . 118

This assertion was not sincere . Certainly, Mr . Weissmann, sitting in the courtroom when these

statements were made, knew they were untrue, given his email 15 days earlier .

On May 27, over the Task Force's objections, this Court issued an order similar to those

issued by Judges Hoyt and Gilmore . The order was explicit that the Task Force could not

interfere with defendants' access to witnesses or use the fact that a witness cooperated with

defendants "as a basis for decisions regarding prosecution ."' 19 Nonetheless, and despite the Task

Force's repeated assurances, shortly after the May 18 conference and May 27 order issued,

Dr. Ciscon began receiving warnings and threats, as he prepared to testify for the defense in the

EBS triaL12o

On July 5, 2005, we sent a letter to the Task Force requesting that it conduct an internal

investigation into instances of witness interference and asking for the voluntary disclosure of

evidence . 121 In a response sent the same day, the Task Force categorically refused, professing it

was "unaware of [the] nature of the purported `witness access issue,"' and asserting, falsely, in

our view, that "there is no basis in fact" for the allegations of misconduct we had made .122 Cf.

United States v. Kojayan, 8 F .3d 1315, 1318 (9th Cu . 1993) (Kozinski, J .) ("Anyone can make a

mistake . Words uttered spontaneously sometimes come out wrong ; the exigencies of trial may

make it hard to consider all the implications of a particular assertion . The mere fact of a

misstatement to the jury therefore isn't the end of the matter . In determining the proper remedy,

we must consider the government's willfulness in committing the misconduct and its willingness

to own up to it .') :

lls Ex . 34 at 21 :12-18 (Hr'g Tr. of Scheduling Conf. of May 18, 2005) (emphases added) .
119 Ex . 35 ¶ 3 (May 27, 2005 order) .

1 20 See Exs. 39, 40 .


121 See Ex . 37 (Letter from D . Petrocelli to Task Force of July 5, 2005)
.
122 Ex . 38 at 1 (Letter from Task Force to D . Petrocelli of July 5, 2005) .

47
Case: 06-20885 Document: 0051330792 Page: 57 Date Filed: 11/20/2006

Denials or not, the fact remains that the Task Force has thoroughly blocked our access to

witnesses in this case . Or as our expert, Mr. Tigar, evocatively explains :

In this case, given the wholesale silence of witnesses, the scores of


witnesses who would logically possess relevant percipient knowledge, and the
examples of prosecutorial abuse reported in defendants' motion and in the press, I
can only conclude that many witnesses who might otherwise have met with
defendants are not doing so because they fear government reprisals .
Let me be clear about how and why I come to this conclusion, and in
doing so use the following analogy : I have been counsel in, for example, antitrust
cases, in which economics experts have looked at market behavior and concluded
that a given market has been rigged, or else it would not function as it does .
These experts look at such things as trade association behavior, elasticity of
demand and its relationship to price movements, and so on . In this case, having
reviewed thousands of pages of material, I conclude that the government has
rigged the market in information . A clear example of "rigging" appears in, for
example, the May 3, 2005 Weissmann email and the many plea agreements that
have been shown to me . The government overtly takes the position that "its"
witnesses are subject to "its" control . Of course, the witnesses donot own their
recollections, nor can the government lawfully assert dominion over those
recollections . Equal access to witnesses is the most basic principle of criminal
justice, based on the colonists' experience with English political trials .
It is true that I have seen prosecutorial misconduct and litigated about it .
However, in all my years handling criminal cases, and in all my experience
teaching and working with other lawyers, I have never seen all of these unfair
pressures brought to bear on the adversary system in a single case . 123

In the face of similar, but far less pervasive, misconduct, the court in United States v :-------

Leung, 351 F . Supp . 2d 992, 997-98 (C .D . Cal . 2005), concluded it had no choice but to dismiss

a high-stakes, national security case that had dominated headlines in Los Angeles and elsewhere

for months . The court identified two sources of power to do so and several reasons for reaching

this conclusion .
The district court may dismiss an information based on outrageous
government conduct if the conduct amounts to a due process violation . Even if
the conduct does not amount to a due process violation, a court may nonetheless
dismiss charges under its supervisory powers . The court may exercise its
supervisory powers to remedy a constitutional or statutory violation ; to protect
judicial integrity by ensuring that a conviction rests on appropriate considerations ;
or to deter future illegal conduct .
Certainly the sanction of dismissal is an extreme remedy, which should
not be imposed if any lesser sanction will serve . In this case, no other sanction
could remedy the harm done . An instruction to Smith from the Court that he was

123 Tigar Decl . 1119-21 .

48
Case: 06-20885 Document: 0051330792 Page: 58 Date Filed: 11/20/2006

free to talk to Leung's counsel would, under the circumstances of this case, be no
more effective than the prosecutor's letter . It does not appear to the Court that
any other sanction would remedy the due process violation suffered by
. 114
defendant
The Court also believes that this is an appropriate case to dismiss under
the Court's inherent supervisory powers . Exercise of supervisory powers is an
appropriate means of policing ethical misconduct by prosecutors. We also have
expressly recognized the authority of the district court to dismiss actions where
government attorneys have willfully deceived the court, thereby interfering with
the orderly administration of justice .
As detailed above, the government has misrepresented to the Court its
purpose and intent in creating the "no-further-sharing " clause in the plea
agreement. While a certain amount of shading of thee truth maybe tolerated, even
in judicial proceedings, prosecutors are subject to constraints and responsibilities
beyond those which apply to other lawyers . A prosecutor's first obligation is to
serve truth and justice, and assure that those accused are given a fair trial . In this
case, the government decided to make sure that Leung and her lawyers would not
have access to Smith. When confronted with what they had done, they engaged in
a pattern ofstone-walling entirely unbecoming to a prosecuting agency . . . .
Defendant's Motion to Dismiss is granted .

Id. at 997-98 (emphases added ; citations omitted) .

A prosecutor's constitutional duty is as much "to refrain from improper methods

calculated to produce a wrongful conviction as it is to use every legitimate means to bring about

a just one." Berger v. United States, 295 U .S . 78, 88 (1935) . As the Eleventh Circuit recently

observed in reversing the convictions of alleged Cuban spies :


One of our most sacred freedoms is to be tried fairly in a noncoercive atmosphere .
The court is cognizant that its judgment today will be received by [our] citizens
with grave disappointment, but is equally confident of our shared commitment to
scrupulously protect our freedoms . . . . Included in those values are the rights of
the accused criminal that insure a fair trial . Thus, in the final analysis, we trust that
any disappointment with our judgment in this case will be tempered and balanced
by the recognition that we are a nation of laws in which every defendant, no matter
how unpopular, must be treated fairly . Our Constitution requires no less .

United States v. Campa, _ F .3d ,Case No. 01-17176, 2005 WL 1866323, at *25 (llth Cir

Aug . 9, 2005) (reversing conviction for failure to transfer venue in light of prejudicial publicity) .

.124 See also United States v. Carrigan, 804 F .2d 599, 604 (10th Cir . 1986) (lesser sanction was
ineffective : "An order merely to cease such interference, after the fact, might be insufficient
because the witnesses' free choice might have been already perverted and the witnesses likely to
refuse voluntary interviews .") ; United States v. Thomas, 488 F .2d 334, 336 (6th Cir . 1973) ("The
Government's statement that it would forego prosecution [of witness for misprision of felony]
will not serve to wipe out the prejudicial effect of the event .") .

49
Case: 06-20885 Document: 0051330792 Page: 59 Date Filed: 11/20/2006

B. If the Court Is Inclined to Grant Any Sanction Other than Dismissal,


Defendants Would Like the Opportunity to Brief and Discuss What
Remedies Are Most Appropriate .

If the Court declines to order dismissal, defendants respectfully request the opportunity to

address and brief alternative remedies . Toward that end, and based on the record submitted

herein, we ask the Court to make findings of fact regarding the Task Force's misconduct .

There are lesser remedies, none of which we believe would fully redress the prejudice to

defendants in this case, but all of which would be appropriate in the absence of dismissal . They

include :

1 . Dismissing the indictment (at trial) unless the Task Force grants testimonial immunity
125
to witnesses who refuse to meet with us and voluntarily testify on our behalf,

2 . Permitting defense depositions of witnesses who refuse to meet with us ;126

3 . Prohibiting the Task Force from calling at trial witnesses under its control who refuse

to meet with the defense or sit for a deposition, or other similar evidentiary
127
sanctions-,

4 . Compelling the Task Force to disclose immediately all Jencks, Giglio, and oral Brady

i Z5 See United States v. Follin, 979 F. 2d 369, 374 (5th Cir. 1992) (citing United States v. Thevis,
665 F .2d 616, 640 (5th Cir. 1982)) ("[J]udicially ordered immunity may be sanctioned to stem
governmental abuse.") ; United States v. Morrison, 535 F .2d 223, 227 (3d Cir. 1976) (granting
testimonial immunity to defense witnesses) ; United States v. Vavages, 151 F. 3d 1185, 1193 (9th
Cir. 1998) (recognizing remedy) ; United States v. Blanche, 149 F.3d 763, 767 (8th Cir . 1998)
(same) .
126 See United States v. Peter Kiewit Sons' Co. , 655 F. Supp . 73, 78 (D . Colo . 198 (ordering
such depositions take place), aff'd Carrigan, 804 F. 2d at 604 ; accord In re United States, 878
F .2d 153, 157 (5th Cir . 1989) ("We have recognized, however, that in certain limited instances
the district court in a criminal case may order discovery not provided for by statute or the Federal
Rules of Criminal Procedure . . . . This power was recognized by the Tenth Circuit in Carrigan,
where it refused the government's requested mandamus to set aside the district court's order for
the discovery deposition of two government witnesses, the district court having found, on
adequate evidence, that the government had wrongfully interfered with the witnesses' freedom to
talk with defense counsel .") .
127 See FED . R. Cum
. P . . 16(d) (empowering court to impose evidentiary sanctions) ; In re Un ited
States, 878 . F.2d 153, 157 (5th Cir. 1989) (recognizing district courts may impose sanctions for
prosecutorial interference with pretrial access to witnesses) .

50
Case: 06-20885 Document: 0051330792 Page: 60 Date Filed: 11/20/2006

materials, including target letters for all witnesses in the case, not just those the Task

Force's intends to call at trial ;' 28 and/or

5 . Fashioning and giving jury instructions concerning the Task Force's misconduct and

the prejudice to defendants .

C . Defendants Seek a Hearing in Connection with this Motion .

Defendants request the right to present argument and evidence at a hearing on this

motion . Courts properly afford defendants this right when, as here, defendants have made a

credible showing of misconduct . See Peter Kiewit, 655 F . Supp . at 75 (district court held a pre-

trial "evidentiary hearing on defendants' motion" to dismiss based on government misconduct) ;

In re United States, 878 F,2d 153, 158 (5th Cir. 1989) (defendants' moved to dismiss indictment

and suppress evidence alleging government misconduct ; "evidentiary pretrial hearing . . . is the

appropriate vehicle to resolve those issues") .

D. D e fen d a n ts See k Evidence in Co n nection with thi s Mo ti o n .

Finally, as in Leung, 351 F . Supp . 2d at 992, 994 n.l, defendants seek the disclosure of

evidence in the Task Force's possession and control relevant to the issues raised in this motion .

First, given the existence of the Weissmann email, we seek an order requiring the Task Force,

the Department of Justice, the FBI, and the SEC (all the agencies working on this case), to

disclose within the next 30 days any similar correspondence with third parties within these

agencies' possession, custody, or control . This would include all documents reflecting

communications between the Task Force, DOJ, SEC, or FBI and any witness or counsel about

whether the witness or counsel should communicate with defendants or their lawyers in Enron-

related cases or testify on behalf of defendants at trial . Such communications would be defined

to include any "target" letters sent to witnesses, plea and cooperation agreements, and

lz8
See United States v. Garrett, 238 F .3d 293, 296 (5th Cir . 2000) (Giglio and Brady materials)
(district court ordered government to produce "all correspondence with any individuals, not just
correspondence related to testifying witnesses" ; suppression of testimony of 25 government
witnesses too severe because government had not acted in "bad faith") ; see also BENNETT L .
GERSHMAN, PROSECUTORIAL MISCONDUCT §§ 14 :9-10 (2d . ed. 2004).

51
Case: 06-20885 Document: 0051330792 Page: 61 Date Filed: 11/20/2006

correspondence related to any plea or cooperation agreement the Task Force, DOJ, SEC, . or FBI

has secured.

Second, and again as in Leung, we seek internal government communications regarding

interference with access to witnesses . In view of the Weissmann email, the Task Force's

misrepresentations to the Court and defense counsel, and all the other evidence discussed herein,

good cause exists to issue an order requiring the Task Force, DOJ, SEC, and FBI to disclose

within the next 30 days, initially for the Court's in camera review, internal correspondence or

correspondence among these agencies (i) about whether the witness or counsel should

communicate with defendants or their lawyers in Enron-related cases or testify on behalf of

defendants at trial ; and (ii) defendants' allegations in the various Enron prosecutions regarding

witness interference and whether and how these agencies would respond to those allegations,

including whether the claims were accurate . Having reviewed these documents in camera, the . .

Court can then determine which documents are appropriate to be turned over to defendants .

In Leung, defendant served a subpoena seeking, among other things :

• "All correspondence between the United States Attorney's Offi ce and Mr . . Smith or

his counsel regarding the Smith plea agreement, including drafts of the plea

agreement, drafts of the November 24, 2004, letter from AUSA Rebecca Lonergan to

Mr . Smith's counsel, and drafts of any declaration by John Cline [Smith's counsel]" ;

• "All other drafts of the Smith plea agreement" ; and

• "All communications between the United States Attorney's Office in Los Angeles

and the Department of Justice regarding the plea agreement ."129

The court ordered these documents produced and reviewed the latter collection of documents in

camera . See Leung, 351 F . Supp . 2d at 992, 994 n . 1 . The evidence produced was cited

throughout the court's opinion . Among the internal communications produced, the court found

what it deemed perhaps the most damning piece of evidence of prosecutorial misconduct-an

129 Ex . 22 (Subpoena in Leung case) .

52
Case: 06-20885 Document: 0051330792 Page: 62 Date Filed: 11/20/2006

email between two government lawyers that made clear the prosecution was lying to the court

and defendants and had indeed interfered with Ms . Leung's access to Agent Smith . See id: at

994-95 .

Defendants submit along with this motion a proposed order requiring the disclosure of

these materials . We request, upon the Court's review of this motion, issuance of this order .

V. Co n clu s ion

Defendants' motion should be granted and the Indictment dismissed . Pending final

consideration and disposition of this motion, defendants' request for evidence should be granted .

Dated : August 31, 2005

Respectfully submitted,

By: ~

Of Counsel : Daniel M . Petrocelli


M . Randall Oppenheimer
Ronald G . Woods Mark Holscher
Texas State Bar No . 21964000 O'MELVENY & MYERS LLP .
Federal Bar No . 657 1999 Avenue of the Stars, 7h Floor
5300 Memorial, Suite 1000 Los Angeles, CA 90067
Houston, TX 77007 Office: (310) 553-6700
Office : 713-862-9600 Facsimile : (310) 246-6779
Facsimile : 713-864-8738 Attorneys in Charge for JeffreyK. Skilling .

By:
Michael Ramsey
Chip Lewis
River Oaks/Welch Building
2120 Welch
Houston, TX 77019
Office : (713) 227-0275
Facsimile : (713) 523-78$7
Attorneys in Charge for Kenneth L . Lay

53
Case: 06-20885 Document: 0051330792 Page: 63 Date Filed: 11/20/2006

By : `\

Reid Weingarten
Mark Hulkower
Matt Stennes
STEPTOE & JOHNSON
1330 Connecticut Avenue, N .W.
Washington, D .C. 20036-1795
Office : (202) 429-8074
Facsimile: (202) 261-0648
Attorneys in Charge for Richard A . Causey

f !

54
Case: 06-20885 Document: 0051330792 Page: 64 Date Filed: 11/20/2006

UNITED STATES DISTRICT COURT


SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION

UNITED STATES OF AMERICA,

Plaintiff, Crim. No. H-04-25 (Lake , J.) .

V.

RICHARD A. CAUS EY , JEFFR EY K.


SKILLING , and KENNETH L. LAY,

Defendants . ~

[PROPOSEDI ORDER

Having considered Defendants' Motion To Dismiss, Or For Alternative Relief, Based on

Prosecutorial Misconduct, the supporting evidence, the papers filed in response thereto,

defendants' reply, all other argument on the motion, and the entire record in this case, it is hereby

ORDERED that the Indictment in the above-captioned case is hereby DISMISSED WITH

PREJUDICE .

SIGNED on the day of 2005 .

UNITED STATES DISTRICT JUDGE


Case: 06-20885 Document: 0051330792 Page: 65 Date Filed: 11/20/2006

UNITED STATES DISTRICT COURT


SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION

UNITED STATES OF AMERICA,


Crim. No. H-04-25 (Lake, J .)
Plaintiff,

V.

RICHARD A . CAUSEY, JEFFREY K.


SKILLING, and KENNETH L . LAY,
Defendants .

[PROPOSED] ORDER

Having considered Defendants' Motion To Dismiss, Or For Alternative Relief, Based on

Prosecutorial Misconduct (hereinafter "Defendants' Motion', all other argument on the motion,

and the entire record in this case, it is hereby ORDERED that the Enron Task .Force, the

Department of Justice, the Federal Bureau of Investigation, and the Securities and Exchange

Commission (hereinafter "the Government') shall produce to defendants Jeffrey Skilling,

Kenneth Lay, and Richard Causey, no later than September 30, 2005, the following categories of

documents :

(1) Any correspondence with third parties (including but not limited to letters,

memoranda, emails, and transcriptions of voicemails or voice recordings) within the

Government's possession, custody, or control, concerning whether witnesses or their counsel

should or should not meet with any of the defendants or targets in any Enron Task Force or

Enron-related prosecution or investigation or should or should not testify in an Enron Task Force

or Enron-related trial ;

(2) All correspondence with third parties (including but not limited to letters, memoranda,

emails, and transcriptions of voicemails or voice recordings) within the Government's


Case: 06-20885 Document: 0051330792 Page: 66 Date Filed: 11/20/2006

possession, custody, or control sent by the Government to any , witness or counsel in connection

with any Enron Task Force or Enron-related investigation or prosecution informing the witness

that he or she is a target or subject, or not a target or subject, of an Enron Task Force or Enron-

related investigation or prosecution ;

(3) All plea agreements, cooperation agreements, and non-prosecution agreements

between the Government and a defendant or witness (whether an individual or a corporate entity)

in any Enron Task Force or Enron-related investigation or prosecution, as well as any and all

correspondence regarding the same .

The Government is further ORDERED to produce by September 30, 2005, to this Court

for its in camera review, the following categories of documents :

(4) All internal Government communications, including emails and transcriptions of

voicemails or voice recordings concerning (a) whether witnesses or their counsel should or

should not meet with any of the defendants or targets in any Enron Task Force or Enron-related

prosecution or investigation or should or should not testify in any Enron Task Force or Enron-

related trial ; or (b) allegations made by defendants, targets, or subjects in any Enron Task Force .

or Enron-related prosecution or investigation that the Government was interfering with

defendants ' or targets' ability to interview witnesses or secure their testimony at trial .

SIGNED on the day of , 2005 .

UNITED STATES DISTRICT JUDGE

i
I~

2
Case: 06-20885 Document: 0051330792 Page: 67 Date Filed: 11/20/2006

CERTIFICATE OF SERVICE

This is to verify that true and correct copies of the following documents

1) Defendants' Joint Motion To Dismiss, Or For Alternative Relief, Based On


Prosecutorial Misconduct ; Memorandum In Support Thereof; Exhibits And Table Of
Exhibits ; [Proposed] Orders (2) ;
2) Redacted Versions Of Defendants' Memorandum In Support Of Their Joint Motion
To Dismiss, Or For Alternative Relief And The Declaration Of Michael E . Tigar,
3) Defendants' Joint Motion For Leave To Exceed Page Limit In Support Of Motion To
Dismiss, Or For Alternative Relief, Based On Prosecutorial Misconduct ; And
4) Declaration Of Michael E . Tigar In Support Of Defendants' Joint Motion To Dismiss,
Or For Alternative Relief, Based On Prosecutorial Misconduct

have been served on this 31st day of August, 2005 on counsel listed below . The Declarations of
Attorneys A-F in Support of Defendants' Joint Motion to Dismiss, or for Alternative Relief,
Based on Prosecutorial Misconduct have been filed in camera and under seal, and have not been
served on counsel listed below . ~

William Stev

Sean Berkowitz
Kathy Ruemmler
John Hueston
Robb Adkins
Leo Wise
Enron Task Force
DOJ Criminal Division
1400 New York Avenue, NW
10th Floor
Washington, D .C . 20530
Facsimile : (202) 353-3165
Case: 06-20885 Document: 0051330792 Page: 68 Date Filed: 11/20/2006

UNITED STATES DISTRICT COURT


SOUTHERN DISTRICT OF TEXAS ,
HOUSTON DIVISION

UNITED STATES OF AMERICA ,


Crim . No . H-04-25 (Lake, J.)
Plaintiff,
TO BE FILED UNDER SEAL '
V.

RICHARD A . CAUSEY, JEFFREY K .


SKILLING, and KENNETH L . LAY,

Defendants .

REPLY MEMORANDUM IN SUPPORT OF DEFENDANTS' JOINT MOTION TO


DISMISS OR FOR ALTERNATIVE RELIEF, BASED ON PROSECUTORIAL
MISCONDUCT ; DECLARATIONS OF WENDELL ODOM, MARK HOLSCHER,
M . RANDALL OPPENHEIMER, AND MATTHEW T . KLINE

' Consistent with the Court's orders, defendants file this brief under seal The Task Force argues
defendants seek to obscure the truth by sealing portions of their motion papers . See Opp . at 2
n. 1 . This is untrue . We have sought to shield attorneys and witnesses from further Task Force
reprisals (which has not worked, as shown below) and to comply with the Court's . protective
orders regarding certain materials, such as Task Force emails (which the Task Force refuses to
unseal) . See Mot. at I n .1 ; Reply Ex . 11 (Sept . 6, 2005 Task Force email) . Defendants will file a
redacted version of our reply papers with the Clerk's office .
Case: 06-20885 Document: 0051330792 Page: 69 Date Filed: 11/20/2006

TABLE OF CONTENTS
Pale

L INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . : . . . . . . . . . . . : . . . . . . . . . . 1
II . THE UNDISPUTE D FACTS BEFORE THE COURT JUSTIFY A FINDING OF
MIS CONDU C T AND THE RELIEF DEFENDANTS SEEK . . . . . . . . . . . . . . . . . . . . . ;. . . . . . . . . . . . . : . . . . . . 2
A. Threats Made to EBS - Relat ed Witness es . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
B. Plainly Un con s titution al Plea Agreemen ts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
III . ON THE DISPUTE D EVIDENC E, DEF ENDANTS STAND BY EVERY ONE
OF OUR FACTUAL ALLEGATIONS AND REQUEST AN EVIDENTIARY
HEARING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . : . . . . . . . . . : . . . . . . 12
A. Th e Written E vid e ntiary R ecord Al one Es tabli s hes Ta sk Force
Misconduct B y a Pr eponderance o f Evide nce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . : . . . . . . . . . . . . : . . . . . . 13
B. D e fenda nts Are Entitled t o an Evidentiary Hearing to Res olve Any
Di s pute s the C ourt Cann o t Resolve on the Written Record . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
IV . DEFENDANTS ARE ENTITLED TO SIGNIFI CANT RELIEF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
A. D i smi ssal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . : . . . . . . : . . . . . 28
B. Alte rnativ e Re li e f. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . : . . . . . . . . . 29
V. CONCL U SION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . : . : . . . . . . . . . . . . . . 30
Case: 06-20885 Document: 0051330792 Page: 70 Date Filed: 11/20/2006

TABLE OF AUTHORITIES
Page

Cases

D emjanj uk v. Petrovsky,
10 F . 3d 338 (6th Cir . 1 993) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Greg ory v. United States,
369 F .2 d 1 85 (D .C . C ir. 1966) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
In re United States,
878 F. 2d 153 (5th Cir . 1989) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
United States v. Bieganowski,
313 F. 3d 264 (5th Cir . 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
United Stat es v. Cle mo n es,
577 F. 2d 1247 (5th Cir . 1 978 ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Unit e d States v. Hammond,
598 F.2d 10 08 (5 th C ir. 1 979) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,28
Unit ed Stat es v. Hendric ksen ,
564 F . 2d 197 (5th C i r . 1 97 7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 , 10,11
Unite d States v . Koj ay an ,
8 F . 3d 1315 (9th C ir . 1 993 ) . . . . . . . . . . . . . . . . . . . . . . . . . : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Unite d States v . Leung,
351 F . Supp . 2d 992 (C . D . Cal . 2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . pass im
United States v. Ma cCloskey,
682 F . 2d 468 (4th Cir. 1982 ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
United States v . Mandujan o,
425 U . S . 564 (19 76 ) . . . . . . . . . . : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
U nited St ates v. Pe te r Kiewit Sons' Co .,
655 F . Supp . 7 3 ( D . Col o . 19 86 ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . pass im
United States v. Scroggins,
379 F . 3d 233 (5th Cir . 2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
United States v. Soap e,
169 F a d 257 (5th C ir . 1 999 ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
United States v. Vavages,
151 F . 3d 1185 ( 9 th C ir . 1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . : . . . . . . . . . . . . . . . . . . :. . . . . . . . . . . . . . . . . . . . . . . 13
United States v . Wallach,
935 F . 2d 445 (2d Cir . 199 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . : . . . . . . . . . . . . . . . . . . . . 12
Rules

FED . R CwNt . P . 16(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

11
Case: 06-20885 Document: 0051330792 Page: 71 Date Filed: 11/20/2006

I . Introduction

If there were ever any doubt, it no longer exists . Witnesses refuse to meetwith

defendants . The Court's witness access letters, which generated only one positive response in

38, are insufficient to remedy the situation . Witnesses invariably provided no explanation why

they will not meet with us, and a few others gave self-serving responses meant to engender good

will with the Enron Task Force . But there is, and can only be, one true reason why hundreds of

defendants' colleagues and friends, having percipient knowledge and information directly

relevant to this case, will not agree to a simple meeting . Fear . They and their lawyers are afraid

what the Task Force can and will do to them if they remotely cooperate with the defense .

No one can doubt the Court's duty and determination to assure a fair trial . Yet a fair trial

cannot occur when one side has no access to witnesses . The Court is not powerless to remedy

the situation. Defendants believe dismissal of this case is the only truly appropriate remedy .

Short of dismissal, we have requested other necessary and important relief. Our motion met the

burden required by law, and we urge the Court to grant relief .

The Task Force's opposition to our motion advances three main arguments : first,

defendants have not shown "actual prejudice" or "outrageous conduct" sufficient to justify

certain forms of relief they seek (the Task Force fails to address several of our requested

remedies) ; second, some-but by no means all or even most-of defendants' factual assertions

are untrue ; and third, the Court's witness access letters to counsel for 38 witnesses have cured

any prejudice and thereby mooted defendants' motion Each of these arguments is erroneous :

• Even if the Court were to look only at instances of witness interference the Task Force
does not dispute occurred, the relief defendants seek is more than warranted. See Part II .
• As forr the disputed instances, the evidence supplied by the Task Force and its cooperators
is hardly surprising . In other witness access cases, intimated witnesses and their counsel
have similarly recanted claims of abuse, and courts have discounted these coerced
counter-confessions for obvious reasons . See, e .g., United States v . Peter Kiewit Sons
Co ., 655 F . Supp . 73, 76-78 (D . Colo . 1986) . Moreover, contemporaneous evidence of
these abuses flatly contradict the recantations the Task Force elicited . See Part III.
• Finally, the Court's witness access letters were a welcomed step, but they failed to break
through the pervasive fear and anxiety crippling witnesses . See Part IV .
Case: 06-20885 Document: 0051330792 Page: 72 Date Filed: 11/20/2006

Put simply, defendants' inability to reach witnesses-which the Task Force has

engendered and exacerbated-remains unchanged and imperils the integrity of this trial The

government's stranglehold on witnesses must be broken, and broken now .

II. The Undisputed Facts Before The Court Justify A Finding Of Misconduct And
Warrant Relief.

The Task Force's opposition leaves unrebutted significant evidence of unconstitutional

witness interference-all of it entitling defendants to relief. This unrebutted evidence, which

clearly . satisfies our burden of proving witness interference "by a preponderance of the

evidence ," Mot. at 8 (collecting cases), includes highly publicized threats made to witnesses in

the EBS trial (before and after the Task Force represented to this Court and others that no such

conduct was occurring , s ee Mot . at 46-47) ; abusive terms contained in plea agreements

hindering , if not barring , our access to witnesses ; and systemic fear the Task Force has cultivated

among witnesses based on implicit threats and sharp calculated practices .

A. Threats Made to EBS Witnesses

EBS-related allegations form a major part of this case . See, e . g. , Indictment 1149-53, 63-

73 . Most of the Task Force's interference with EBS witnesses documented in our motion is

unchallenged . - The Task Force does not dispute that its agents told Rex Shelby, prior to his being

indicted, that it was not a "good idea" for him to meet with counsel for EBS defendant Joe Hirko .

The Task Force does not dispute that its agents repeatedly called counsel for Mark S . Palmer and

Larry Ciscon on the eve of their testimony in the EBS trial to urge them not to testify forr

defendants, reminding the m~ among other "dangers" of doing so, that they were targets and

might be prosecuted . Compare Mot. 12, 20, 22-23, Decl . of Atty . B, with Opp . at 9-10, 14-15 .

The Task Force does not dispute that witnesses and their counsel interpreted these reminders and

target warnings as "threats ." Id . Nor does it challenge Judge Gilmore's observation that these

target reminders put the Task Force in the "position of sort of eliminating people as

witnesses . . . ." Mot . at 23 .

Instead, the Task Force dismisses the threats as "irrelevant ." Opp . at 8, 14 . They can be

2
Case: 06-20885 Document: 0051330792 Page: 73 Date Filed: 11/20/2006

ignored, it says, because (i) the EBS case is a different case ; (ii) the conclusion of experienced

counsel, such as Charley Davidson, that the Task Force was threatening his client, Mr . Palmer, is

inconsequential absent explicit threats ; (iii) Task Force agents are free to tell witnesses, such as

Mr . Shelby, that it would be a bad idea to talk to defendants ; (iv) Mr . Palmer and Dr. Ciscon

fought through the threats and testified in the EBS case (and might be willing to do so here) ; and

(v) Dr . Ciscon and Mr. Shelby were not among the 38 witnesses to whom the Court was asked to

send witness access letters, betraying defendants' view that they are not important witnesses .

See Opp . at 9-10, 14 . These arguments are specious .

1 . The EBS Case Is a Large Part of this Case . Given the on-going, oft-touted Special

Enron Grand Jury investigation, the alleged-but secret-list of 100-plus co-conspirators, and

the Task Force's well-publicized vow that its "investigation continues" and new indictments can

and may still issue, see Mot . at 41-42, counsel representing Enron-related witnesses pay close

attention to the Enron criminal trials . That defense witnesses were threatened in the EBS case,

testified about those threats at trial, and those threats were reported by the Houston Chronicle

and other news sources, obviously influences counsel and witnesses in this case not to help

defendants . See Reply Ex . 5 (collecting news coverage) . Much though it tries, the Task Force

cannot cabin the impact of its threats to the confines of any single trial Threats made in any

Enron-related case directly impact this case .

2 . Recipients' Interpretations of Government "Warnings " Are Probative Evidence .

Charley Davidson , counsel for EBS witness Mark S . Palmer, submitted a declaration describing

how a Task Force agent contacted him four times in 30 days after the government learned

Mr . Palmer .planned to testify for the EBS defendants at trial . Mr. Davidson described how

Special Agent Jensen suggested it would be "dangerous and not in Mark Palmer's best interest to

testify" and how Mr. Davidson "considered these statements to be veiled threats ." Palmer Decl .

Failing to address and unable to distinguish clear law establishing the impropriety of this

conduct, the Task Force argues the Court should ignore Mr . Davidson's clear belief that his

client was threatened , because only explicit threats of reprisal count . See Opp . at 9 ("[T]he

3
Case: 06-20885 Document: 0051330792 Page: 74 Date Filed: 11/20/2006

agent's actions, even if accurately reported by Mr . Davidson, do not rise to the level of

misconduct .") . None of the witness access cases we cited (and with which Task Force took no

exception, save for Leung, see Opp. at 27 n . 17) requires that a prosecutor explicitly threaten a .

witness with reprisals for misconduct to be found . Prosecutors rarely make threats explicit or put

them in writing . For that very reason courts treat as highly probative the subjective views of

counsel and witnesses who felt they were threatened : .

In Peter Kiewit, 655 F . Supp . at 76, for example, Attorney Neil Thompson testified "that
nothing was said in his presence by the government attorney to indicate that Jett should
not speak with defense counsel . [However,] the government attorneys made it `obvious'
that they preferred that Jett not discuss the case with the defense ." Thompson added that .
Jett "too, had drawn this clear inference from the prosecutors' statements and conduct."
Id . Despite the absence of an explicit threat, the court "conclude[d] . . . that the witnesses
got the clear mental impression or message that the prosecutors preferred that these
witnesses not talk to the defense ." Id. at 77 . "This prosecutorial attitude was
communicated to the witnesses by words, implication, or non-verbal conduct ." Id.
In United States v . Leung, 351 F . Supp . 2d 992 , 993-94 (C . D. Cal . 2005), Attorney John
Cline testified that, though he could not remember the specific words the government
used , "government attorneys expressed concern about whether [his client] Smith would
grant an interview to Leung's attorneys . " Id. It was Mr. Cline's "understanding" the
government "did not want Smith to consent to an interview . " Reply Ex . 3 . at 22 : 5-17 .
Despite Mr. Cline's inability to cite a specific threat, his "understanding"-based on
years of experience-was crucial . In the court ' s words , his testimony "absolutely
belie[d]" the government's claim that "it never intended to communicate" that
Messrs . Cline and Smith not meet with the defense . Leung, 351 F . Supp . 2d at 993-94 .
In United States v. Hammond, 598 F .2d 1008, 1012 (5th Cir . 1979), Special Agent
Peisner told potential witness Parsons that he knew about Parson's legal "situation' and
that Parson's would have "nothing but trouble" if he testified for the defense . - Despite no
direct instruction not to testify, nor an explicit threat, the Court concluded "it was
certainly reasonable for defense witness Parsons to interpret agent Peisner's comments as
threats to retaliate if Parsons continued to testify ." Thus, the court held that "agent
Peisner's comments constituted a `substantial governmental interference' with defense
witness Parson's `free and unhampered choice to testify ."' Id. 2

In the Task Force's view, the Court should disregard these cases and all evidence other than

2 See also United States v . MacCloskey, 682 F .2d 468, 476, 479 (4th Cir . 1982) (court holds and
government concedes that warning made by prosecutor about dangers of testifying need not be
an explicit threat for it to be "ill-advised" and "possibly improper") .

4
Case: 06-20885 Document: 0051330792 Page: 75 Date Filed: 11/20/2006

explicit threats, even though the counsel who complained of threats are, in the words of the Task

Force, "all experienced members of the bar ." Reply Ex . 12 . Endorsing such a myopic rule

would condone and encourage exactly the type of behavior the witness-access rules are meant to

condemn . See Gregory v. United States, 369 F.2d 185 (D .C . Cir . 1966) .3

3 . The Task Force Does Not Own Witnesses . Given this wrong-headed view of the law,

it comes as no surprise that the Task Force felt free to advise then-witness, Rex Shelby, that

speaking with defense counsel was a bad idea . See Opp . at 14-15 . But, witnesses are not the

"property" of the prosecution, Gregory, 369 F .2d at 188-89, and the Task Force may not treat

them as "clients ." Cf. Opp . at I S (arguing Task Force could warn witnesses not to talk to

defense because attorney might give same advice) .

The Task Force says it is free to tell witnesses that defense counsel might obtain

statements that can be used in cross-examination Cf. id. at 5-10, 15 . Such advice is plainly

improper and serves to mislead witnesses into thinking they must fear speaking with the defense .

See Peter Kiewit, 655 F . Supp . at 76-77 . It also wrongly assumes the witnesses can only support

the government's case, will not be called by the defense, and cannot be cross-examined by the

Task Force . These assumptions underlie the Task Force's basic view and approach that it owns

and controls the witnesses and the testimony in this case . Cf. Leung, 351 F . Supp . 2d at 998 ("A

prosecutor's first obligation is to sere truth and justice . . . . In this case, the government

decided to make sure that Leung and her lawyers would not have access to Smith . When

confronted with what they had done, they engaged in a pattern of stone-walling entirely

unbecoming to a prosecuting agency .' .

4. Dr. Ciscon and Mr. Palmer Are the Tip of the Iceberg . The Task Force says any

3 The Task Force argues that implicit threats directed towards attorneys Mitch Lansden, Ron
Minkoff, and Richard Lawler, and their various clients, which were recounted in the declarations
of Ron Woods and Matthew Kline, may be discounted for the same reasons-i .e., because they
represent attorneys' subjective reasons for not cooperating with defendants . See Opp . at 10-14 .
Again, that is not the law . These lawyers' fears that the Task Force will indict or punish their
clients for cooperating with the defense are sincere, widespread, and well founded .

5
Case: 06-20885 Document: 0051330792 Page: 76 Date Filed: 11/20/2006

threats against Dr. Ciscon and Mr . Palmer were of no consequence, since both witnesses decided

to testify for defendants in the EBS case . See Opp . at 9-10, 14 . This misses the point . The

willingness of Dr. Ciscon and Mr . Palmer to assume great personal risk in testifying , does not

mean they were not threatened . 4 Nor does it mean other witnesses have not been threatened . If

the Task Force had conceded these were isolated threats by a - rogue agent, and were

inappropriate, that would be one thing . Instead, it treats these threats as standard practice.

Perhaps that is why the Task Force felt no need to tell the Court or us that such threats were

being made at the very same time we were pressing the witness access issue with the Court, and

the Court was issuing an order prohibiting this very conduct . See Mot. at 46-47 .

The accounts of Dr . Ciscon and Mr. Palmer are only the tip of a massive iceberg . We

cannot know all the witnesses who were .wrongly pressured in the Andersen, Barges, Fastow, or

EBS cases . Nor can we in this case . What we do know is that pressure has been exerted and has

produced an unprecedented number of witnesses fearful of helping us . To accept the Task

Force's suggestion that only Dr. Ciscon and Mr . Palmer were threatened, or that thosee threats

were immaterial because every witness should have the fortitude to withstand them , would be to

adopt the logic of the captain of the Titanic, who thought because he had steered past the tip of

an iceberg, he had avoided the hulking mass of ice underneath

5. There Are More than 38 Important Witnesses . The Task Force claims defendants

"apparently have no interest" in meeting with witnesses like Dr . Cscon or Mr . Shelby and that

they are "irrelevant to this case," because they were not among the 38 witnesses selected to

receive the Court's letter . Opp . at 11, 14-15 . This is disingenuous . As the Task Force is well

aware, to accommodate the Court's request, we endeavored to limit our list of recipients to a

relatively small number of witnesses ; even them the Task Force urged that our 38 names be cut

by 23 .5 The Task Force knows there are many more key witnesses in this case-its own list of

4 To date,, neither witness has agreed to testify in this case .


5 See Reply Ex . 10 at 28 :13-25 (Sept . 1, 2005 Hr'g Tr .) ; Govt.'s Response to Defs .' Joint
Submission Re Procedure to Facilitate Defense Access to Witnesses at 1-3 (filed Sept . 7, 2005) .

6
Case: 06-20885 Document: 0051330792 Page: 77 Date Filed: 11/20/2006

al leged conspirators exceeds ] 00 people . After seeing this argument repeated throughout its

opposition, we asked the Task Force if it would stipulate to asking the Court to send its letter to

100 or so additional important witnesses . The Task Force refused, saying there was "no lega l

justification "6

B. Plainl y Un c on st itutional Pl e a Ag ree m e nts

The Task Force does not and can not defend most of the onerous terms in its p l ea

agreements that cut off our access to witnesses and prevent us from eliciting defense testimony at

trial. These plea provisions operate to define Task Force's allegations as 'true" and quell any

testimony to the contrary ; empower the Task Force to intrude upon defense witness interviews ;

and forbid whole subject areas ' of inquiry by defense counsel See Mot . 27-41 . Unable to

support such provisions ; the Task Force points to the Court's letters, as well as its own

statements that it will not seek reprisals, to say these "are sufficient to rectify any misperceptions

generated by the government's plea agreement." Opp . at 26-27 . As explained below, this

position is untenable .

1 . The Task Force Takes Away as Much as It Purports to Give . After insistently

representing that "witnesses are free to discuss whatever they choose with defense counsel,"

Opp . at 26-27 (emphasis added), the Task Force now concedes that is not entirely true . In its

6 Compare Reply Ex . 14 (Oct . 17, 2005 email exchange with Task Force), wi th Opp . at 14. The
Task Force makes this spurious claim throughout its opposition, arguing that clear evidence of
witness interference can simply be ignored whenever the witness in question is not among the
list of 38 . See, e .g., Opp . at 8, 10-11, 14-15, 21-22 (making argument generally and specifically
as to Alan Hoffman, Gary Dolan, and Tim Belden) .
Scores of important witnesses were omitted from the list of 38 . For example, Mr. Dolan
was identified by the Task Force as a Brady witness, see Reply Ex . 1, and like the EBS
defendants, Skilling has been charged with making false and misleading statements about EBS's
network control software .. See Indictment ¶ 51 ; United States v. Hirko, et al ., Fifth Superseding
Indictment ¶ 17 . Dr. Ciscon, Mr . Palmer, and Mr . Shelby, three accomplished software
engineers who worked closely on EBS's network control software, testified unequivocally that
EBS's network control software could perform the functions described by Skilling and others at
the 2000 Analyst Conference . See Reply Ex . 4 (EBS Trial Tr . at 8341 :20-8342 :5, 8485-96
(Ciscon) ; Tr. at 7919 :1-7923 :23, 8074-79 (Palmer) ; Tr . at 9442 :22-9446 :12 (Shelby)) . Messrs .
Belden and Hoffman have testimony relevant to the EES and Nigerian Barges charges,
respectively .
Case: 06-20885 Document: 0051330792 Page: 78 Date Filed: 11/20/2006

opposition, the Task Force confirms that witnesses may not share with defendants information

they learned in the course of interviews with the Task Force, including what parts of the case

"the - government believes to be important," "what pieces of evidence [were] discusse[d]" at the

meetings, or any information related to the Task Force's "trial strategy ." Id. at 27-28 .

This limitation operates to significantly chill witnesses from talking to us, for fear they

might unwittingly say something in violation of their agreement with the Task Force . Robert .

Sussman, counsel for cooperator Larry Lawyer, confirmed that this "prohibition" precludes he

and his clients from "discussing information gained from the government in debriefing sessions ."

Opp . Ex . 13 . Not only does the limitation run afoul of the law, 7 it is directly contrary to the Task

Force's position in the Barges case . As noted in our motion, see Mot . at 35-36, the Task Force

argued that no part of a defense witness interview is privileged from the Task Force, and

witnesses are "free" to share with the Task Force what they learn in defense interviews,

including defense attorney's mental impressions and views on strategy and important evidence .

Bayly's contention that the government's request [to be present at all his counsel's
interviews with Merrill Lynch witnesses] somehow intrudes his counsel's work-
product privilege is similarly unfounded . If Bayly were to interview Merrill Lynch
employees without a government representative present, the witness would still be
free to talk with whomever he or she saw fit, including government counsel, about
what transpired at the interview. . . [TJhe very presence of the witness himself or
herself would pierce any work product privilege that Bayly might have!

While saying nothing about having made this argument in the Barges case, the. Task

Force now urges to this Court that its conversations with witnesses are sacrosanct, and we

"plainly" have "no right" to know what was discussed . Opp . at 27-28 . Such conyersations . are

not privileged, as the Task Force successfully maintained in the Barges case . Under principles of

' See, e.g., United States v. Clemones, 577 F .2d 1247, 1251 (5th Cir. 1978) (district court held it
improper for "assistant United States Attorney handling the case [to] instruct[] some 30 to 35
witnesses appearingg before the grand jury that the proceedings were secret and that they should
not discuss their testimony with anyone other than their attorneys or government agents") ; Mot .
at 17-18, 27, 32, 34, 36, 39-40 (collecting cases) .
8 Ex. 16 at 7 (Govt .'s Opp . to Bayly's Mot . to Dismiss or For an Order Directing the Govt . to
Withdraw a Witness Request (filed May 7, 2004) (emphasis added)) .
Case: 06-20885 Document: 0051330792 Page: 79 Date Filed: 11/20/2006

judicial estoppel and fundamental fairness, the Task Force cannot assert the contrary position

here . It does not own the witnesses in this case . See United States v . Soape, 169 F .3d 257, 270

(5th Cir . 1999). The Task Force has "no right" to say we have "no right" to know what

witnesses have said and have been told . We have every right to the same complete access that

the Task Force has .

2 . The Task Force May Not Define the Truth . Case law in this circuit and every other

jurisdiction prohibits plea agreements that prevent witnesses from giving testimony favorable to

the defense . See United States v . Hendricksen, 564 F .2d 197, 198 (5th Cir . 1977) . Central to the

Task Force's prosecution in this case is the claim that Andrew Fastow made binding oral

guarantees to CIBC and Merrill Lynch See, e .g., Indictment 11 39-40, 46 . The Task Force's

cooperation agreements with CIBC and Merrill effectively bar witnesses associated with these

firms from denying that such oral guarantees were made . I f they say the guarantees did not exist,

CIBC and Merrill face the very prosecution and financial ruin that wrongfully destroyed Arthur

Andersen See Mot . at 27-31 .

The Task Force attempts to defend these plea provisions with two arguments . Both lack

merit . First, it claims that defendants "willful[ly] misread[]" the plea provisions, and that the

agreements only prohibit CIBC and Merrill, "`through [their]"' agents, from "taking an official

position that is inconsistent with facts that they have solemnly agreed are accurate ." Opp . at 25

(quoting plea agreements ; emphasis and alteration in original) . The Task Force says that agents

of CIBC and Merrill are free to contradict the facts recited in the agreements were they to testify

at trial ; thus, we are not prejudiced. See id. at 25-26 .

Language from the agreements selectively overlooked by the Task Force belies this

contention To begin with, the sentence immediately following the one quoted by the Task Force

prohibits not only CIBC qua CIBC, and Merrill qua Merrill, from making contradictory

statements `through [their]" agents, but also prohibits CIBC's and Merrill's "attorneys, board of

directors, agents, officers, or employees" themselves from making such statements "in litigation

9
Case: 06-20885 Document: 0051330792 Page: 80 Date Filed: 11/20/2006

or otherwise ." If they do so, CIBC and Merrill are in breach . 9 In addition, as explained in our

motion and ignored in the opposition, see Mot . at 29-30 nn.70 & 73, the agreements give the

Task Force "sole discretion" to decide "whether conduct and statements of any individual will be

imputed to CIBC for the purpose of determining whether CIBC has violated any provision of this

Agreement . "10 These provisions could not be more clear in their purpose and effect, . or more

prejudicial to defendants' ability to secure favorable testimony from Merrill and CIBC witnesses .

Any witness related to either firm who says anything to controvert the Task Force's allegations

subjects the firm to draconian circumstances .

To support its view that these provisions do not chill CIBC and Merrill witnesses, the

Task Force points to the testimony of Ian Schottlaender in the Enron bankruptcy proceeding .

There, Mr. Schottlaender says Fastow gave no oral guarantee to CIBC, and the Task Force did

not punish CIBC as a result . See Opp . at 26 . What the Task Force fails to mention, however, is

that Mr . Schottlaender gave his testimony refuting the Task Force's "side deal" theories on

March 14, 2003-i.e., eight months before CIBC signed its agreement on December 22, 2003 .

Compare Ex. 6, with 14 at 1 . Since CIBC signed its deal, Mr . Schottlander invoked his Fifth

Amendment right not to testify at his September 30, 2004 Newby deposition and has refused to

meet with us or agree to testify for defendants . See Reply Esc . 2 ; Mot. at 30 n .73 .

The CIBC and Merrill plea agreements, which former Task Force Director Andrew

Weissmann not only negotiated, but touted in press releases upon resigning, see Reply Ex . 8, are

abhorrent . They no less infringe defendants' rights than the plea deal the . Fifth Circuit held

violated due process in Hendrickson . The only difference is that in Hendrickson the government

9 Ex . 14 at 3 ¶ 8 (CIBC agreement) ("CIBC further agrees that it will not, through its attorneys,
board of directors, agents, officers or employees, make any public statement, in litigation or
otherwise, contradicting any of the facts set forth in Appendix A . Any such contradictory
statement by CIBC, its attorneys, board of directors, agents, officers or employees shall
constitute a breach of this Agreement, and CIBC thereafter would be subject to prosecution .")
(emphasis added) ; see also . id. at 1-2 ¶ 2 (same) ; Ex . 8 at 3 ¶ 7 (Merrill Lynch agreement) . This
second sentence would not reference both statements "by CIBC" or "its attorneys," etc ., if the
agreement was meant only to bind CIBC qua CIBC .
10 Ex . 14 at 5 ¶ 13 (emphasis added) ; see also Ex . 8 at 4 112 (Merrill deal ; . same) .

10
Case: 06-20885 Document: 0051330792 Page: 81 Date Filed: 11/20/2006

.conceded the plea agreement wa s indefensible , see 564 F . 2d at 198 , while here the Task Force

argues that equally pernicious provisions are vital and valid .

3. The Task Force's Promises Ring Hollow. The Task Force insists its assurances that

witnesses are free to speak to the defense, as reiterated in the Court's letters , remedy all our

concerns . See Opp . at 26-27 . This is untrue for a variety of reasons .. First, the Court's letters

were sent to only 38 witnesses , a list not even including most of the Task Force's cooperators .

Indeed, we do not even know who all the cooperators are, as the Task Force refuses to say .

Second, no matter what the Task Force says publicly about its plea agreements, each

agreement we have seen contains terms giving the Task Force unfettered discretion to declare a

cooperator in breach of the agreement for any reason , without having to state any justification,

and without any provision for judicial review . See Mot . at 35 n . 88 (citing relevant plea terms) .

At the same time , witnesses and their counsel are well aware of the Task Force ' s hard stance in

discouraging the defense access to witnesses . The email to Ken Rice's attorneys and threats to

Dr . Ciscon and Mr . Palmer attest to this . In response to defense complaints , Judges Hoyt and

Gilmore issued orders addressing access to witnesses . This Court has issued such an order, in

addition to sending letters to 38 .witnesses . See id. at 43-47 . This issue has received attention in

the press and gained real currency when Dr. Ciscon publicly testified in the EBS trial about thee

threats . See Reply Ex . 5 . Witnesses and their lawyers know this is a matter of great sensitivity

to the Task Force .

As our expert, Mr. Tigar, has explained, the market for witnesses is "`rigged"' in this

case . He has "never seen all these unfair pressures [employed by the Task Force] brought to bear

on the adversary system in a single case ." Mot . at 48 . No matter what assurances the Task Forcee

may give witnesses now, the damage cannot be undone . As in Leung, given the threats that have

been made, and given how much cooperators have to lose, if they are declared in breach of their

plea agreements, the "possibility that [witnesses and cooperators] would now feel free to be

interviewed [by defense counsel] is ephemeral at best ." 351 F . Supp . 2d at 997 . On the

undisputed evidence, which the Court can judge on its own without resolving credibility disputes

11
Case: 06-20885 Document: 0051330792 Page: 82 Date Filed: 11/20/2006

or holding an evidentiary hearing, defendants are entitled to substantial relief See infra Part IV

(discussing remedies) . i '

III . On T h e Di s pu ted Evi d e nce, D efend a n ts Sta nd By Every One Of Ou r Fac tual
A ll egatio n s And Req u est An Evi d e ntia ry Hea rin g. .

The Task Force isolates seven of defendants' many factual accounts, calls them false,

misleading, or taken out of context, and suggests all of defendants' proo f should be disbelieved .

See Opp . at 17-25 . To support its challenge, the Task Force submits evidence from a select few

counsel for witnesses identified in our motion and from two, but not all, of the Task Force,

members accused of misconduct . See id . Exs . 7-15 . 12

We unequivocally stand behind our factual assertions and respond below to each claim

11 The Task Force attacks Mr. Tigar's credibility and qualifications, arguing he has "never been a
prosecutor," often opposes the government in "controversial" cases, has litigated prosecutorial
misconduct claims in other cases, and has "no basis" to opine about the way the Task Force has
used the special grand jury . Opp . at 4-5 n.4, 16-17 n . 12 . The Task Force's attacks on Mr. Tigar
are unfounded :
• Mr. Tigar has taught criminal law for decades, been consulted by prosecutors and assisted
them in complex cases in this country and others, aryl written about grand jury abuse, see,
e.g., United States v . Mandujano, 425 U .S . 564, 595 1785 n .12 (1976) (Brennan, J .,
concurring) (citing article authored by Mr . Tigar on prosecutors' misuse of grand . juries) ;
• Mr. Tigar has four decades of experience representing cooperating witnesses and victims of
crime, and working with prosecutors in those capacities, and has become intimately familiar
with the way grand juries are supposed to work, and of the legitimate and illegitimate ways
in which prosecutors collect evidence, find witnesses, and prepare for trial ; and
• Mr. Tigar's opinions on prosecutorial misconduct issues are perhaps the most well grounded
of any expert in the country, as several of the misconduct cases he has litigated have resulted
in findings of misconduct, see, e.g ., Demjanjuk v. Petrovsky, 10 F .3d 338 ; 355-56 (6th .Cir :
1993) ("judgments were wrongly procured as a result of prosecutorial misconduct that
constituted fraud on the court" ; government displayed "`win at any cost"' attitude and
engaged in misconduct by failing to disclose exculpatory information) ; United States v.
Wallach, 935 F .2d 445, 457 (2d Cir . 1991) (reversing convictions where prosecutors
suborned perjured testimony and "consciously avoided" confirming whether testimony was
false because of importance of testimony to case) .
12 As noted above, the government submitted no evidence to refute most of our accusations,
including, for example, that FBI Special Agent Jeff Jensen called and met with Mr. Palmer's
lawyer, Mr . Davidson , four times in the month leading up to Mr . Palmer's defense testimony in .
the EBS trial and made repeated statements Mr . . Davidson interpreted as "veiled threats" to keep
Mr. Palmer from testifying for the defense . . It also submitted no declarations disputing the
threats and warnings made to Mr . Shelby and Dr. Ciscon .

12
Case: 06-20885 Document: 0051330792 Page: 83 Date Filed: 11/20/2006

the Task Force disputes . In assessing the competing versions of events, three principles are

critical :

• First, defendants need not prove misconduct beyond a reasonable doubt or even by clear
and convincing evidence . Under Fifth Circuit law, it is our burden to show misconduct
only by a preponderance of evidence . See United States v . Scroggins, 379 F .3d 233, 239
(5th Cir . 2004) ("Scroggins bore the burden of proving, by a preponderance of the
evidence, that the government substantially interfered with his witnesses .") ; accord
United States v . Bieganowski, 313 F .3d 264, 291 (5th Cir . 2002) .
• ' Second, while by necessity we must address each allegation the Task Force disputes, the
"fact-specific" inquiry this motion requires ultimately rests on "the totality of the
circumstances ." United States v . Vavages , 151 F . 3d 1185, 1190 (9th Cir . 1998).
• Third, it must be kept in mind that witnesses and their counsel already cowered by the
government or fearing prosecution or unfavorable sentencing recommendations have
every incentive to deny or recant claims of witness interference . For this reason, courts
regularly discount such coerced claims of nor-interference . See Peter Kiewit, 655 F.
Supp . at 76-78 ; Leung, 351 F . Supp . 2d at 993 .

A. T h e Wr i tte n Evi d entia r y R eco rd A l o ne Estab l is h es Tas k Fo r ce M i sco ndu ct


B y a Prepo nd e r a n ce of Ev id e n ce .
1 . The Weissmann Email. The Task Force confesses no error with respect to

Mr. Weissmann's May 3, 2005 email . It describes Mr. Weissmann's conduct as "proper" and

"discharge [ing] " the government's "obligation" to ensure that criminal defendants are

represented by conflict-free counsel . Opp . at 18 . This position, perhaps more than any other,

evinces the Task Force's bad faith and disregard for defendants' rights .

According to the Task Force, the May 3 email had "little or nothing to do with

defendants' access to witnesses ." Rather, it says it had everything to do with an alleged conflict

of interest resulting from Mr. Cogdell's simultaneous representation of Ken Rice, a government

cooperator, and Jeff McMahon and Sheila Kahanek, targets of the Enron investigation as well as

unidentified public statements of Mr. Cogdell critical of the Task Force alleged to be contrary to

Mr. Rice's interests . See Opp . Ex . 7 115-7 . Mr . Weissmann swears he was concerned not with

Mr . Cogdell speaking to Mr . Petrocelli generally, but that Mr . Cogdell was "speaking to Mr .

Petrocelli in order to further the interests of Mr . McMahon, and not the interests of Mr . Rice ."

Id . ¶ 7 . These explanations are false and misleading .

13
Case: 06-20885 Document: 0051330792 Page: 84 Date Filed: 11/20/2006

First, Mr. Weissmann does not explain, nor could he , how Mr . Cogdell ' s exercising his . . .

free speech rights to be critical of government prosecutors or their special investigation could be

contrary to the interest of his client Ken Rice-unless, of course, Mr . Cogdell should have

known the Task Force would react with reprisals against his client . That Mr . Weissmann took

such issue with Mr. Cogdell's public statements proves the very point of our motion . 13

Second , accusing an attorney of furthering the interests of one client at the expense of .

another is a grave charge . It strains credulity to suggest that the director of the go vernment's

most prominent white-collar task force reasonably or appropriately would address such a charge

in an email laced with intemperate phrases like "huddling with Petro" and "get rid of him ." , If

Mr . Weissmann were truly concerned that Mr. Cogdell abdicated his duties to Mr . Rice (and

raising the conflict issue was not a pretext to engage in blatant witness intimidation), he would

have prepared and sent an appropriate communication directly to Mr. Cogdell, not his friend

Mr . Dolan-a point Mr. Cogdell made in his response to Mr . Weissmann's email . See Ex. 28 .

Third, if Mr . Weissmann were truly taking the "necessary first step toward discharging

the government's obligations to protect the record by raising the issue with the Court," Opp : at , .

19, one would expect Mr . Weissmann to have copied or otherwise apprised Judge Gilmore of the

gravity of the situation, especially given that, as Mr . Weissmann attests, he had raised the issue

with Mr . Cogdell several prior times without success .

Fourth, Mr . Weissmann claims his "email by its very terms did not address Mr. Rice's

choice to meet or not meet with defense counsel ." Opp . Ex . 7 at ¶ 8 (emphasis added) . We are

at a loss to understand how Mr . Weissmann can say this . His email states : "Has [Mr . Rice] : .

waived any conflict such that he wants his own counsel speaking with Skilling's lawyers? I —

would doubt that ." Ex . 24 . Mr. Weissmann adds : "If there is no knowing waiver - .and . it is hard

13 Mr. . Weissmann says he is "skeptical" that Mr . Rice would want his attorney speaking with .
Mr . Petrocelli after Mr . Petrocelli was reported in the press as saying Mr . Rice gave "false
testimony" in the EBS trial . Opp . Ex. 7 at 17 . Mr . Weissmann fails to acknowledge, however,
that Mr. Rice conceded giving false testimony and, fully consistent with Mr . Petrocelli's
statements , testified that it was the Task Force that had led him to believe false facts .

14
Case: 06-20885 Document: 0051330792 Page: 85 Date Filed: 11/20/2006

to see that there would be one - what do you think the appropriate solution is? I can think of

two. (1) Rice instructs his lawyers who they can speak to and who they cannot ; (2) he determines

that his attorney has not acted in Rice's best interests and gets rid of him ." Id. (emphasis

added) . If these sentences do not "address Mr . Rice's choice to meet or not meet with defense

counsel," we can think of none that would .

Fifth, Mr . Weissmann's professed concern that Mr . Cogdell was deviating from his

ethical duties and putting Mr . McMahon's interests ahead of Mr . Rice's defies logic .

Mr. Cogdell is an experienced lawyer-one who Mr . Weissmann knows is quite capable given

that Mr. Cogdell secured the lone acquittal in the Nigerian Barges trial . Indeed, when we

complained about witnesses refusing to speak to us, the government responded that witnesses,

like Mr . Rice, were represented by sophisticated counsel fully capable of advising their clients,

about what is and what is not in their interests . See Exs . 33, 34 . That, we now know, means in

the eyes of the Task Force . Mr. Weissmann apparently believed that Mr . Cogdell and Mr .

Dolan, himself a criminal lawyer for more than 30 years, needed multiple admonitions about

how to represent their clients .

Sixth, Mr. Weissmann concedes he was nowhere near the alleged "huddling" and had no

knowledge of what Mr. Cogdell and Mr. Petrocelli had discussed . As Mr . Cogdell's May 10

letter explains, his conversations with Mr. Petrocelli were brief, personal, and unrelated to

Mr. Rice or Mr . McMahon . See Ex . 28 . They occurred in public view : Mr. Weissmann had no

reasonable basis for concluding otherwise, nor did he have any conceivable basis for believing

that Mr. Cogdell and Mr . Petrocelli, who were both in court to witness Mr . Rice's testimony in

the EBS trial, were discussing Mr . McMahon, who was not implicated or involved in any way in

the EBS case . Not surprisingly, despite Mr . Weissmann's contention that he feared Mr . Cogdell

was placing Mr . McMahon's interests ahead of Mr . Rice's, Mr . McMahon's name appears

nowhere in the May 3 email or Mr. Cogdell's response . See Eats . 24, 28 .

Finally , Mr . Weissmann states that , "until defense counsel herein sought to transmogrify .

the Sixth Amendment email into an instruction by the government to a witness not to speak with

15
Case: 06-20885 Document: 0051330792 Page: 86 Date Filed: 11/20/2006

defense counsel, neither Mr . Rice nor his attorneys suggested as much to the government ." Opp.

Ex . 7 at ¶ 8 . Yet as Mr. Weissmann was well aware, Mr . Cogdell's May 10 response to

Mr. Weissmann concluded : "I will not speak to Mr . Petrocelli further during the pendency of the .

EBS trial(s) or sentencings ." Ex . 28 at 3 . To our knowledge, after receiving Mr . Cogdell's

letter, Mr . Weissmann never wrote or called Mr . Cogdell back to say he had misunderstood the

email and there was no intent to restrict his right to speak to Mr . Petrocelli .

In sum, the plain language of Mr . Weissmann's email, Mr . Cogdell's contemporaneous

response to it, the utter implausibility and inconsistencies of Mr . Weissmann's professed

justification, and above all, common sense establish by more than a preponderance of evidence

that the Task Force wrongfully and deliberately interfered with defendants' access to a critical

witness in this case . That the Task Force so disingenuously defends-this noxious email and

refuses to concede error only underscores the willfulness of its misconduct . Cf. United Statess v . .

Kojayan, 8 Fad 1315, 1318 (9th Cir . 1993) ("Anyone can make a mistake . . . . In determining

the proper remedy, we must consider the government's willfulness in committing the misconduct

and its willingness to own up to it .') . 14

2. Tim Belden /Attorney Julie Salamon . Defendants' motion included a declaration from

Matthew Kline, one of Mr . Skilling's lawyers . Mr . Kline's declaration recounted his May 6,

2005 conversation with Julie Salamon, a former law school colleague, now an attorney for

government cooperator Tim Belden . Ms . Salamon told Mr. Kline that the Task Force instructed

14 Mr . Weissmann's declaration conspicuously does not address or defend three otherr instances
of misconduct we identified . He says nothing of (1) his demand that Task Force members be
present at any interviews that Merrill Lynch employees granted the Nigerian Barges defendants,
see Mot . at 32-34 ; Exs . 8, 14, 16-18 ; (2) his eleventh-hour threats to dissuade former Arthur
Andersen accountant, Kate Agnew, from disputing at the Andersen trial key allegations in the
Task Force's case, see Mot . at 21 ; Kline Decl . ¶ 72(e) ; or (3) his having negotiated plea terms . in
the Merrill Lynch and CIBC settlement agreements that greatly interfere with our access to
witnesses, see supra Section II .B . The Task Force submits no declarations or other evidence to
dispute the first or third charge ; to dispute the second charge, it submits the declaration of Mr .
Weissmann's former colleague at the U .S . Attorney's office, Catherine Palmer, who has no
percipient knowledge of the events in question . See Infra Section III .A .4 . Mr. Wessmann's
silence in response to these three charges is deafening .

16
Case: 06-20885 Document: 0051330792 Page: 87 Date Filed: 11/20/2006

Mr. Belden not talk to anybody except the Task Force about Enron matters and to invoke his

right not to testify if subpoenaed in an Enron-related case or proceeding. See Mot . at 12-13 ;

Kline Decl . ~¶ 25-35 .

In its opposition, the Task Force suggested Mr . Kline could not even recall the date this

conversation occurred, see Opp . at 22, and submitted a declaration from Ms . . Salamon saying that

"[n]o attorney or agent with the Enron Task Force has ever told me that Mr . Belden should not

speak with any defendant, or that Mr . Belden should invoke his Fifth Amendment rights if

subpoenaed to give a deposition. I never told Mr . Kline that Mr. Belden should not speak with

any defendant , or that Mr . Belden should invoke his Fifth Amendment rights if subpoenaed to

give a deposition . " Opp . Ex . 12 at ¶ 3 .

The two declarations are irreconcilable . If there were nothing more than Mr . Kline's lone

recollection of the five-month old conversation against Ms . Salamon's, that would be one thing .

However, Mr . Kline took contemporaneous notes of the May 6, 2005 conversation, which,

shortly after hanging up the phone, he recounted in an email to members of Mr . Skilling's

defense team . That email reads in part:

I just spoke with Julie Salamon, one of Tim Belden's lawyers . . . . Julie and I
went to law school together and the conversation was fairly frank .
I asked Julie if we could meet with she and/or Tim to talk about the case . She
said she had been told by the Task Force that Tim was not allowed to talk to
anybody, give any depositions (he'd been told to take 5 if noticed), and that the
TF even told her not to let Tim talk to a California state regulatory agency . I
pressed Julie and said I wasn't aware of any legal authority that allowed the Task
Force to foreclose us from meeting with witnesses in this way. She said she
wasn't either, but that the TF had made very clear that Tim should not cooperate ,
with defendants . If he does so, she fears they will not recommend a lenient
sentence . She said, given this, there is no upside in Tim talking to us . I told her
we had written the Task Force a letter asking that it confirm, in writing, that it
would not use in any way the fact that a witness talked to us against that witness .
I asked her if she would be willing to advise Tim to talk to us iff we could secure
such a writing. She said she'd be willing to reconsider her position, but would
fear reprisal from the TF nonetheless .
I asked Julie whether Tim was being asked to play a role in our case . . .and she
said she had no idea . I asked if the TF had been talking to Tim of late, and she
said she could not discuss her or Tim's conversations with the TF . . . .

17
Case: 06-20885 Document: 0051330792 Page: 88 Date Filed: 11/20/2006

Julie told me they' re s omewhat fearful about what will happen to Tim because all .
th e TF pros e cutors with whom Tim and hi s lawyers met and cut a deal have gone
back into private practice . She says the new TF lawyers are .forgetting all the
goodwill Tim built up by pleading early .
Julie said the West Coast members of the Task Force were good and reasonable to
work with . She says the East Coast part of the team is seen as the group using the
harshest and most aggressive tactics . Kline Supp . DecL ¶ 4 (emphasis added), is

It is entirely possible either that Ms . Salamon does not recall the specifics of her

conversation with Mr. Kline, or that her recollection is being influenced by her appreciation of

the Task Force's carte blanche power to determine whether Mr . Belden fully cooperated and

thus deserves a lenient sentence . Ms . Salamon and Mr . Belden are, as one court described a

lawyer and client in an identical situation, walking the "tightrope of prosecutorial discretion from

the threat of imprisonment to the hope of freedom ." Peter Kiewit, 655 .17 . Supp . at 77 ; see also

Leung, 351 F . Supp . 2d 996-97 ("Suspended over his head, like the proverbial Sword of

Damocles, is the sure knowledge that if he violates any of the terms of his plea agreement, the

deal is canceled, and his future returns to its former bleak state .') . Mr. Kline's initial declaration

and contemporaneous notes, in contrast with Ms . Salamon's and Mr . Belden's strong motivation

to assist the government, establish by a preponderance of evidence that the Task Force

improperly interfered with defendants' access to Mr . Belden and his lawyers .

3 . Wade Stu661efield, Rodney Faldyn, Larry Lawyer /Attorney Robert Sussman . The

Task Force makes two arguments about Mr. Sussman and his several clients : . . First, it challenges .

Mr. Kline's sworn testimony that Mr . Sussman "responded orally" to defendants' letter to Mr.

Sussman requesting to interview his clients by saying "he might field questions from the defense, .

but he would not let his clients meet with us for fear . the Enron Task . Force will ask if they met

with us . " Kline DecL 1 49 . The Task Force questions Mr . Kline's account of Mr. Sussman's

15 A redacted version of Mr. Kline's email is included with his supplemental declaration . The
unredacted email includes mental impressions and trial strategy of counsel, as well as statements
not relevant to this . motion By submitting redacted forms of this or other internal emails or
memoranda, we do not waive, and expressly reserve and assert our attorney-client, work-product,
joint-defense , and all other privileges . If the Court requests it, we will submit unredacted
versions of our privileged materials for its in camera review .

18
Case: 06-20885 Document: 0051330792 Page: 89 Date Filed: 11/20/2006

oral response to defendants' letter, because Mr . Kline's declaration did not identify with whom

Mr. Sussman allegedly spoke . That person was Chip Lewis, one of Mr . Lay's attorneys . Mr.

Sussman called Mr . Lewis on May 9, 2005 . Shortly after the call, Mr. Lewis wrote an email to

members of our joint defense group stating, in pertinent part : "Bob will take questions from us if

there are any, but will not let client meet for fear that the Task Force will ask if he met with us ."

Kline Reply DecL ¶ 5-6 .

Mr. Kline's declaration goes on to describe a face-to-face meeting that he and another

member of Mr . Skilling's defense team, M . Randall Oppenheimer, had with Mr. Sussman on

April 22, 2005 . During that meeting, Mr . Sussman reported that certain members of the Enron

Task Force, namely Andrew Weissmann and Linda Lacewell, made clear to him that if witnesses

help or meet with defendants, the Task Force would make them pay . Mr . Sussman also stated

that, other than discussing generalities, he could not talk about the transactions at issue in the

indictment becausee the Task Force instructed he and his clients not to discuss with anybody

anything they had discussed with the government . See Mot. at 13 ; Kline Decl . ¶¶ 51-52 .

The Task Force has submitted a letter from Mr . Sussman that it suggests refutes Mr .

Kline's account . It does not. To begin with, Mr. Sussman concedes that the Task Force has

directly limited he and his client from "discussing information gained from the government in

debriefing sessions ." Opp . Ex . 13 . Without "commenting directly on Matt Kline's affidavit,"

Mr. Sussman does say that "neither Linda Lacewell nor Andrew Weissmann threatened reprisals

should my clients speak with defense counsel ." Id. The Task Force argues this statement

"responds directly" to Mr . Kline's declaration and suggests it should end the inquiry . Opp . at 23 .

It does not . We never claimed that Mr . Sussman was overtly threatened with reprisals .

Rather, like Mr . Davidson, Mr. Odom, Dr. Ciscon, Mr. Shelby, many other counsel and

witnesses in this case, and the witnesses and counsel in the reported cases we have cited, see

supra Section II .A .2, the Task Force made clear to Mr . Sussman that witnesses and counsel

should be concerned about assisting the defense . The Task Force argues anything short of a

direct threat is irrelevant ; the law, of course, is directly contrary . See Part IL

19
Case: 06-20885 Document: 0051330792 Page: 90 Date Filed: 11/20/2006

Mr . Sussman's letter does not dispute that the Task Force clearly implied that witnesses

and their counsel who assist the defendants do so at their peril . Nor could he . Indeed, he noted

that the on-going and seemingly never-ending grand jury investigation-and of course, by

implication, the Task Force's deliberate failure to inform his clients if they would or would not

be prosecuted-gave him great pause in meeting with or assisting defendants . 16 Moreover, Mr.

Kline took contemporaneous notes of the conversations with Mr . Sussman, which confirm what

he said. Shortly after the meeting , on the very same day, Mr . Kline conveyed the substance of .

his conversation with Mr . Sussman in an email to the Skilling defense team . The email reads in

pertinent part :
We asked if the TF had threatened Larry or Bob directly with a reprisal if they
helped us out . Bob said he was prohibited , per Larry's plea agreement from
disclosing his communications with the TF, but suggested that Andy W and Linda L
hav e made it clear to him and others that ifyou help defendants, the TF . will make
y ou pay . Kline Supp . Decl . ¶ 10 (emphasis added); accord Oppenheimer Decl :

If there were any doubt about Mr . Sussman's views, we spoke with him again shortly

after the Court issued its order allowing us to subpoena witnesses' counsel seeking evidence of

witness interference. Below is an excerpt from the transcript of a voicemail Mr . Kline left for his

colleagues soon after his discussion with Mr . Sussman :


Hey, it's Matt with a message to Dan, Randy and David . I had a very long
talk with Bob Sussman this evening . I'll report on everything we talked about .
First, Bob is intimately familiar with what's been going on the last couple of
days with respect to the witness access issues . He said Sean Berkowitz has been
trying to reach him to give him what's called a "courtesy call" about what's
going on about the subpoena issues in our case . Apparently, Bob ran into Kathy
Ruemmler and Ben Campbell at court on another matter today and they said,
"Oh, Sean wanted to give you a call, the judge is issuing this order, he's just
going to give you a courtesy call and kind of explain what's going on ." . .
Bob said we're not going to get anything in writing from him in which
the Task Force explicitly says "don't go talk to anybody .". . .
He said that he thinks that in terms of really nasty threats and really
nasty stuff potentially in writing we're probably going to have better luck
with people who actually have not been indicted yet, and that one of the
problems about the relief we're seeking is we're going after people who

1 6 See Opp . Ex. 13 (Mr . Sussman acknowledging that he is "well aware that the Task . Force still
considers my clients subjects of the still active grand jury investigation and that potential threat,
to me, is concern enough to be circumspect with both sides of your U.S. v. Lay case") .

20
Case: 06-20885 Document: 0051330792 Page: 91 Date Filed: 11/20/2006

have already cut deals . He said, in his mind, most of those people who have
already cut deals are already doing everything they can to please the
government. So he thought it would be the rare circumstance where the
Task Force would be really lashing out and making threats to those people .
He found that they are making more of the threats to the unindicted folks .
We talked about whether Rodney Faldyn and Wade Stubblefield would
be willing to meet with us and whether they're feeling pressured not to meet
with us . He said both of them probably have good things to say for us, if
they didn't feel like they were under the gun. Kline Supp . Decl . ¶ 11 .

Mr . Kline's declarations and contemporaneous notes, in contrast with Mr . Sussman's

understandable concern about crossing the government, establishes by a preponderance that the

Task Force improperly interfered with defendants access to witnesses .

4. Kate Agnew / Tim Evans / Catherine Palmer . Mr . Kline's declaration also recounted

conversations between Mr . Skilling's attorneyss and Tim Evans, who represented former Arthur .

Andersen accountant Kate Agnew . Mr. Evans told Mr . Skilling's attorneys :

(a) Ms . Agnew met voluntarily with the Task Force in April 2002 and was told she was a
"witness," not a target or subject ;
(b) During that interview, Ms . Agnew provided info rmation that undercut a central allegation
of the government's case against Andersen ;
(c) The Task Force told Ms . Agnew it did not believe her explanation ;
(d) Neither Ms . Agnew nor Mr . Evans heard from the Task Force for one month ;
(e) Days before the Andersen trial Andrew Weissmann called Mr . Evans to inform him, for
the first time, that Ms . Agnew ' s status had been changed from " witness" to "target" and
added that, if Ms . Agnew testified for Andersen consistent with her previous statements ,
she would be prosecuted for . perjury ;
(f) Mr. Evans asked the Task Force why it changed Ms . Agnew ' s status, but Mr. Weissmann
declined to. answer;
(g) Mr . Evans expressed his belief to the Task Force that perjury claim was meritless and
designed to dissuade Ms . Agnew from testifying in the Andersen trial ;
(h) Although Ms . Agnew had been prepared to provide exculpatory testimony on behalf of
Andersen, after much deliberation, she elected to invoke her Fifth Amendment rights ; .
(i) Mr . Weissmann, departing from typical practice, forced her to leave her new job, fly to
Houston, and endure the stigma of asserting her rights in front of a courtroom packed
with press; and lastly
(j) Mr . Evans was instructed not to assist defendants with this motion by Andersen's civil
counsel, Matthew Harrison of Latham & Watkins, because Andersen now wanted to do
everything it could to cooperate with the Task Force . See Kline Decl . ¶¶ 71-81 .

The Task Force did not submit any rebuttal evidence from Ms . Agnew, Mr. Evans,

Mr. Weissmann, or Mr. Harrison Instead, it submitted a letter and declaration from one of

21
Case: 06-20885 Document: 0051330792 Page: 92 Date Filed: 11/20/2006

Arthur Andersen's civil counsel, Catherine Palmer, a former colleague of Mr . Weissmann who

claims that she and her firm represent Ms . Agnew and every other former Andersen employee in

connection with this case .' 7 Ms . Palmer's declaration does not address most of Mr . Kline's

declaration concerning Ms . Agnew. Ms . Palmer disputes, however, that Ms . Agnew's status was

changed from "witness" to "target" and that Ms. Agnew was ever threatened with a possible

perjury prosecution . See Opp . Ex. 10 at ¶¶ 9-13 .

Ms . Palmer did not represent Ms . Agnew in 2002 during the time of the events described

in Mr . Kline's declaration, nor did she represent Andersen at its criminal trial Mr . Evans

represented Ms . Agnew, and he was the one who attended her debriefing and received the call

from Mr . Weissmann shortly before the Andersen trial . If the Task Force truly wanted to expose

defendants' claims to "adversarial testing," Opp . at 2-3 n . 1, it would have secured a denial from

Mr . Weissmann, Mr . Evans, or the three Andersen criminal attorneys referenced in Mr. Kline's

declaration . See Kline Decl . ¶¶ 74-77 . The Task Force either chose not to approach these

attorneys or was unable to secure the evidence it warrted .

Furthermore, Ms . Palmer's declaration does not describe how she learned the information

to which she swears . For instance, after quoting certain portions of Mr. Kline's declaration,

Ms . Palmer avers : "These statements are not true . Ms . Agnew was near advised by the Enron

Task Force or Mr. Evans that she was identified as a `target .' Similarly, Ms . Agnew was never

told that the Task Force had said she might be prosecuted for perjury ." Opp . Ex . 10 111 . Since

Ms . Palmer has no percipient knowledge and did not disclose the basis of her assertions, her

statements should be stricken or, at least, given little weight .

Mr : Kline's declaration, in contrast, explains precisely how he acquired the information

in his declaration and is supported by independent contemporaneous evidence . Rusty Hardin

was lead criminal counsel for Andersen in 2002 when the Task Force prosecuted the . company

for obstruction of justice . On May 9, 2002, Mr. Hardin wrote a letter to the Department of

17 When we reached Mr. Evans earlier this year, he said had not spoken to Ms . Agnew for some
time, but believed he still represented her in connection with Enron matters .

22
Case: 06-20885 Document: 0051330792 Page: 93 Date Filed: 11/20/2006

Justice concerning what he believed was outrageous government conduct perpetrated by

Mr. Weissmann vis-a-vis Ms . Agnew . This letter was attached as Exhibit 1 to our motion .

About Ms . Agnew, Mr . Hardin wrote :

Regrettably for this witness, it appears that what she said in the interview was not
helpful to the Government . Accordingly, approximately a week and a half before
trial, we believe that the Assistant United States Attorneys informed the witness's
attorney that her status had changed from `witness' to `subject .' Despite repeated
requests from her attorney, the Government apparently refused to explain what
she said that caused the Government to view her differently . [¶] Because the
Government changed her status from witness to subject following the voluntary
interview, the witness, through her counsel, informed the Government that she
would exercise her constitutional right not to testify . Ex . 1 at 2.

To our knowledge, neither Mr . Weissmann nor the Task Force ever disputed Mr . Hardin's

recitation of these events, a recitation that closely tracks Mr. Kline's declaration :' g

In addition to Mr. Hardin's letter, Mr . Evans reported to Mr . Kline and his colleague

David Marroso that he had taken careful notes of his conversation with Mr . Weissmann,

including Mr . Weissmann's statement that Ms . Agnew would be subject to a perjury prosecution

if she testified consistently with her prior statements . Mr. Evans remembered this vividly,

because he viewed Mr . Weissmann's statements as highly inappropriate and a transparent

attempt to chill Ms . Agnew from testifying . 19

18 There is one inconsistency between Mr . Hardin's 2002 letter and Mr . Kline's declaration.
Whereas the Kline declaration claimed Ms . Agnew's status had been changed from "witness" to
"target," based on what we had been told by counsel, Mr . Hardin reported Ms . Agnew went from
"witness" to "subject ." Although "target" and "subject" obviously mean different things in a
criminal investigation, for purposes ofthis motion, the distinction is without a difference . ' The
Task Force changed Ms . Agnew's status from percipient witness to someone who was under
government suspicion on the eve of her giving exculpatory testimony at the Andersen trial . If
Ms . Palmer knew Ms . Agnew's status had beenn changed from witness . to subject (or target), her
declaration is, at best, extremely misleading, because it calls Mr . Kline's sworn statements "not
true" and gives the false impression Ms . Agnew's status was never changed and had nothing to
do with her decision not to testify . If Ms . Palmer was not aware that the government changed
Ms . Agnew's status (which Mr . Hardin's contemporaneous letter confirms), this would only cast
more doubt over her declaration .
1 9 Mr . Evans did not show us a copy of his notes, citing attorne} - client and work product
privileges . That Mr. Evans refused to produce to us his notes on privilege grounds is ironic,
given Ms . Palmer's unsubstantiated and erroneous conjecture that "Mr . Evans may have
provided privileged and/or confidential information . . . to Defendants' counsel ." Opp . Ex . 10

23
Case: 06-20885 Document: 0051330792 Page: 94 Date Filed: 11/20/2006

Mr . Kline's specific declaration and Mr . Hardin's contemporaneous and unrebutted May

2002 letter, in contrast with Ms . Palmer's lack of knowledge, failure to identify the bases for her

factual assertions, and her admitted and extensive cooperation with the Task Force, establishh by a

preponderance of evidence that the Task Force improperly threatened Ms . Agnew and chilled her

from testifying at the Andersen trial .20

5. Attorney Philip Hilder. Our motion included a declaration from Mark Holscher,

another of Mr . Skilling's lawyers . The declaration recounted Mr . Holscher's conversation with

Philip Hilder, an attorney for numerous Enron witnesses, including severall alleged co-

conspirators . Mr . Hilder informed Mr. Holscher that "many threats had been made against .

witnesses in the EBS prosecution" and that `when witnesses told the Task Force that crimes had

not been committed by the charged defendants, or that events or transactions in dispute mayy have

been lawful, counsel for those witnesses were told that prosecutors were concerned that the

witnesses were committing perjury . " Mot . at 22 n . 54 ; Holscher Decl . 17 .

In opposition, the Task Force submits an unsworn letter from Mr . Hilder, who. concedes

that it "came up in conversation that the government charged witnesses that proffered, but they

believed were not truthful ." However, Mr. Hilder disputes that he ever "sa[id] or indicate[d] that

many threats had been made against witnesses in EBS prosecution ." Opp . Ex. 11

113 . To be clear, and to repeat what Mr . Kline . stated in his original declaration : "Mr . Evans did
not divulge the specifics of any conversation he had with his client ." Kline Decl : ¶ 72(g) .
20 To the extent any doubt remains about what happened with respect to Ms . Agnew, we
respectfully request that the . Court direct Mr . Evans to submit for in camera review a copy of his
notes and order that his production will not waive any attorney-client or work product privileges .
The Task Force and Ms . Palmer also argue that Ms . Agnew is now scheduled to provide a .
Newby deposition and suggest that cures any prejudice . We did not know that her deposition had
been scheduled at the time we filed our motion, but had we, it would have provided us no
comfort. The Task Force has successfully moved to stay several Newby depositions of Andersen ,
witnesses, and when their efforts to do so have failed, Ms . Palmer has obstructed the depositions
to such a degree as to preclude meaningful evidence from being adduced . See Reply Ex. 13 ;
Def Jeffery Skilling's Reply Mem . In Support Of His Mot To Compel Immediate Production
Of All Exculpatory Materials Ex. B (filed Oct . 11, 2005) . The Task Force and Ms . Palmer also
suggest we never asked to interview Ms . Agnew. Again, untrue . We requested an interview
from Mr . Evans .

24
Case: 06-20885 Document: 0051330792 Page: 95 Date Filed: 11/20/2006

Again, this dispute does not simply pit one person's memory against another's . Within a

day or two after his conversation with Mr . Hilder, Mr . Holscher documented the conversation in

an email to members of Mr . Skilling's defense team . Mirroring his declaration, Mr . Holscher

reported that Mr . Hilder "indicated to me that many of the witness threats in EBS were made to

counsel and that the initial lawyers on EBS thought every witness was lying to them and told that

to their attorneys ." Holscher Supp . Decl . 16 . Mr . Holscher's declarations and contemporaneous

email, in contrast with the motivations of Mr . Hilder and his clients not to upset the government,

not to mention that Mr . Hilder's submission is an unsworn letter, prove our account by a

preponderance of evidence .

6. Kevin Hannon /Attorney Reid Figel. Mr. Kline's declaration also recounted a

conversation he and Mr . Holscher had with Reid Figel, a former colleague of Mr . Holscher who

represents government cooperator Kevin Hannon . Mr . Kline's declaration accurately recited that

Mr . Figel stated he had not received explicit threats not to meet with defendants, saying instead

the government had been "very careful" with him . However, when Mr . Kline asked if Mr. Figel

would discuss Mr. Hannon's anticipated testimony, Mr. Fige I responded that he was

"prevented . . . at this time" from doing so . Mot. at 38 ; Kline Decl . 1 58 .

In opposition, the Task Force submitted a declaration from Mr . Figel clarifying what he

meant when he said the Task Force had been "careful" with him . Mr. Figel also stated that his

and Mr . Hannon's decision not to discuss the substance of Mr . Hannon's testimony with defense

counsel was not influenced by the Task Force. See Opp . Ex . 14 11 .6-8 .

Mr . Holscher submits a supplemental declaration in support of thi s reply . Mr . Holscher

confirms that Mr . Figel's "description of that single [August 2005] conversation is technically

accurate ." However, it does not "fully set out [Mr . Figel's] views of the conduct of the Task

Force prosecutors" as conveyed to Mr . Ho lscher in multiple other conversations they had . In

those other conversations Mr. Figel confirmed his belief that Task Force prosecutors engaged in

sharp tactics summarized in Mr . Holscher two declarations . Holscher Supp . Decl. ¶ 8-9 .

7. Michael Andersen . Defendants' motion included a declaration from Michael Ramsey

25
Case: 06-20885 Document: 0051330792 Page: 96 Date Filed: 11/20/2006

recounting a conversation with Wendell Odom, an attorney representing witness Michael

Andersen. Mr . Odom described a July 2004 debriefing in which Special Agent Paula Schanzle

told witness Michael Andersen , in the presence of Mr . Odom, "you don't want to talk to . [lawyers

for Skilling or Lay . ] They are bad news . " Mot . at 12 ; Ramsey DecL ¶ 1 L

The Task Force argues Mr. Ramsey's declaration is entitled to little weight because he .

was not present at the July 2004 debriefing ; defendants failed to submit a declaration from

Messrs . Andersen or Odom ; and Special Agent Schanzle submitted a declaration denying

making the statement . See Opp . at 25 ; Opp . Ex . 15 1 4 .

Mr . Ramsey drafted his declaration shortly after his conversation with Mr . Odom in .

which Mr . Odom described the July 2004 debriefing . Before executing the declaration,

Mr. Ramsey read it over the phone to Mr . Odom to make sure he agreed with what the

declaration said . Mr . Odom confirmed the declaration's accuracy then to erase any lingeringg

doubt, Mr . Odom has submitted a declaration in which he swears that Mr . Ramsey's description

of the events in question is correct . See Odom DecL

Mr. Odom has nothing to gain by submitting his declaration . His client, Mr. Andersen,

underwent a contentious debriefing in July 2004 in which the Task Force told Mr . Andersen and

Mr . Odom they did not like what they . were hearing . See Mot . at 11-12 . To date , Mr. Andersen

has not been charged with any crimes, but Mr. Odom knows very well the Enron grand jury is

still seated . Special Agent Schanzle, in contrast, has strong motivation to deny making the

statements attributed to her . Government agents know they may not tell witnesses not to speak

to the defense because they are "bad news . " Mr . Ramsey's declaration, corroborated by Mr .

Odom's declaration , establishes by a preponderance of evidence that the Task Force improperly

interfered with defendants' right of access to . Mr . Andersen .

B . Defendants Are Entitled to an Evidentiary Hearing to Resolve Any Disputes


the Court Cannot Resolve on the Written Record .

As explained in Part II, defendants are entitled to the relief they seek based solely on the

undisputed evidence before the Court . As explained in the previous Section, defendants have

26
Case: 06-20885 Document: 0051330792 Page: 97 Date Filed: 11/20/2006

established by a preponderance of evidence extensive Task Force interference with defendants'

access to witnesses, even where the evidence is disputed .

However, to the extent the Court is unable to resolve credibility disputes on the written

record, defendants are entitled to and respectfully request an evidentiary hearing at which

individuals, including witnesses, their attorneys, government agents, government attorneys, and

defendants' attorneys may be questioned and subjected to cross-examination . See In re United

States, 878 F .2d 153, 158 (5th Cir . 1989) (defendants' moved to dismiss indictment and suppress

evidence alleging government misconduct ; "evidentiary pretrial hearing . . . is the appropriate

vehicle to resolve those issues') .

In Peter Kiewit, a case described in our motion as "most closely on point," Mot . at 15

(and to which the Task Force offered no response), the court was unable to resolve all factual

disputes on the written record and ordered such an evidentiary hearing . See 655 F . Supp . at 75 .

In the recent Leung case, the government argued, as does the Task Force here, that an evidentiary

hearing was unnecessary because the government already cleared up any "misunderstandings"

by telling the allegedly intimidated witness that he was free to meet with defendants and because

that witness was "represented by quite able counsel ." Reply Ex . 3 at (Dec . 9, 2004 Hr'g . Tr .

from Leung) . Over these objections, the court held an evidentiary hearing at which both sides

were able to question the "able counsel" about his understanding of a critical provision in his

client's plea agreement and about conversations he had with prosecutors concerning the

provision. See id. The court relied heavily on the lawyer's testimony and his understanding of

what the government expected of him and his client in dismissing the indictment based on

prosecutorial misconduct . See Leung, 351 F . Supp . 2d at 997-98 .

If the Task Force . means what it says-that "[e]xposed to the light of day," defendants'

factual submission contains false, misleading, unreliable, and inaccurate information, Opp . at 2

n .1-it should welcome the opportunity to present its witnesses, cross-examine ours, and prove

once and for all to defendants, the Court, and the public, that it is not threatening witnesses . We

believe the evidence shows, and will show, just the opposite .

27
Case: 06-20885 Document: 0051330792 Page: 98 Date Filed: 11/20/2006

IV. D e fendants Ar e E ntitl e d To S i gnifi c ant Re li e f.

A. Dis mi ss al

No relief short of dismissal could tru ly remedy the damage the Task Force has caused .

Nor have the Court's witness access letters mitigated the dire situation defendants face-only

one of the 38 witnesses the Court wrote has agreed to speak with us, and he is the same person

brave enough to testify in the EBS case :

Confronted with less egregious and systematic misconduct than has occurred here, and

rejecting arguments that letters from the government or the court cure the problem, the Leung

court held it had no choice but to dismiss the case . "In this case, no other sanction could remedy

the harm done . An instruction to Smith from the Court that he was free to talk to Leung's

counsel would, under the circumstances of this case, be no more effective than the prosecutor's

letter ." Leung, 351 F . Supp . 2d at 997 (emphasis added) .

Similarly, in United States v. Hammond, 598 F .2d 1008 (5th Cir . 1979), when the Fifth

Circuit confronted threats made to a witness, that he would "have nothing but trouble" if he

testified for the defense, the court rejected the notion that half measures-such as reading a

stipulation to the jury as to what the witness would have said-cured the prejudice . See id. at

1Q13 ("[L] ive testimony can have more impact than a statement read to the jury . A stipulation is

static and deprived of vitality . It is a synthetic substitute for the oracular declarations of a

witness . The written word with its depersonalization can be no equal to verbalization, and

compelling circumstances to the contrary, the defendant must not be deprived of the oral

word.") .

Reading to the jury Dr. Ciscon's or Mr. Palmer's exculpatory testimony from the EBS

trial or reading exculpatory portions of Brady witnesses' FBI 302s or grand jury and SEC

testimony (assuming the Task Force or Court grants us access to them), though steps in the right

direction, would also only be "synthetic substitutes ." And for witnesses for whom we have no

prior statements to read to the jury, we have no substitute at all . The Task Force will be free, as

it was with Ms . Agnew, to twist the facts knowing she would not testify and refute them . See

28
Case: 06-20885 Document: 0051330792 Page: 99 Date Filed: 11/20/2006

Mot. at 21 n .52 . The witness access problem in this case is intractable .

B. A l te rn a tive Reli ef

Should the Court be unwilling to dismiss the case, significant and immediate alternative

relief is required .

1 . Depositions and Grants of Immunity . The Task Force concedes the Court has the

power to order defense depositions of government witnesses and to grant witnesses immunity,

but argues we have not made a predicate showing of misconduct, and that witnesses cannot be

forced to give depositions or meet with us . See Opp . at 32-33 . We disagree . ' We have more than

satisfied our burden of showing misconduct Moreover, all of the Task Force's cooperators are

beholden to the government and are bound by contract to meet or not meet as the Task Force

directs, and to give testimony when, where, and in whatever proceeding the Task Force says . 21

If the Court were to issue an order requiring the Task Force to make its cooperators available for

interviews or depositions, the witnesses, pursuant to the terms of their plea agreements, would

have no grounds to object . If the Task Force failed to produce such witnesses, or the witnesses

themselves objected, the Court would have the power to prohibit the Task Force from calling

them as witnesses at trial .22 This would be eminently fair and reasonable, since the Task Force

controls these witnesses and intends to call them at trial .

As for the non-cooperators, we have been told by their counsel that the one circumstance

in which they would assist defendants would be if they were granted immunity . Given that this

21 See, e.g., Ex . 45 ¶ 3a (Cooperation Agreement of David Duncan) ("The defendant agrees to be


fully debriefed and to attend all meetings at which his presence is requested by the Department ,
concerning his and participation in and knowledge of all criminal matters . ") ; id. ¶ 3d
("Defendant agrees to testify at any proceeding in the Southern District of Texas, or elsewhere as
requested by the Department.") (emphases added) ; Ex . 50 ¶¶ 3a, 3d (David Delainey) ; Ex. 46
¶¶ 3a, 3d .(Michael Kopper); Ex. 47 ¶ 3c (Timothy Belden) ; Ex . 48 ¶¶ 3a, 3d (Lawrence Lawyer) ;
Ex . 49 ¶¶ 3c (Jeffrey Richter) ; Ex . 51 ¶¶ 3a, 3d (Andrew Fastow) ; Ex . 53 ¶¶ 3a , 3d (Paula
Rieker) ; Ex . 54 ¶¶ 3a, 3e (Ken Rice) ; Ex . 55 ¶ 3c (John Forney) ; Ex . 56 ¶¶ 3a, 3d (Mark
Koenig) ; Ex . 57 ¶N 3a, 3e (Kevin Hannon) ; Ex. 58 ¶¶ 3a, 3d (Christopher Calger) .
2 2 See FED . R CRIM . P . 16(d) ; In re United States, 878 F . 2d 153, 157 (5th Cir . 1989) (district
courts may impose sanctions for prosecutorial interference with pretrial access to witnesses) .

29
Case: 06-20885 Document: 0051330792 Page: 100 Date Filed: 11/20/2006

investigation is almost four years old and the statute of limitations every day excludes Enron

transactions from possible prosecution, key witnesses should be able to testify with an order

from the Court and binding assurances from the Task Force making clear they will not be

prosecuted . Critical exculpatory evidence in the hands of these witnesses should not be withheld

from defendants and the trial .

2 . Early Production of Jencks and Giglio, Jury Instructions, and Disclosure of Evidence . .

The Task Force offers m response to three other forms of relief we requested . Each is important

and warranted . First, if we cannot meet with witnesses because of the Task Force's interference,

we should at least have the same written materials the Task Force hass for every witness in the

case-not just those the Task Force's intends to call at trial . This would includeall Jencks,

Giglio, and oral Brady source materials ; all FBI 302s, SEC and grand jury testimony, and other

interview notes and transcripts ; target and subject letters sent to all witnesses ; written or recorded

proffers from witnesses ; and all cooperation or non- prosecution agreements .

Second, the jury should be instructed that the Task Force has engaged in misconduct by

interfering with our access to witnesses-both to level the playing field and to help jurors

understand why there will be so few percipient witnesses testifying for defendants .

Third, as explained in our motion, we have made a prima facie showing establishing a

right to evidence in connection with the motion, including source materials like the Weissmann

email . The Task Force goes so far as to say such communications are proper . If that is the case,

it should have no objection to disclosing all such communications . The documentary evidence is

highly probative, because it is not susceptible to "he said, she said" debates . To the extent it

exists, it is the best evidence of what the Task Force has or has not said to restrict defendants'

access to witnesses .

V. Conclusion

When recently confronting evidence of blatant government misconduct and efforts to

cover up that misconduct, Judge Charles Breyer observed :

30
Case: 06-20885 Document: 0051330792 Page: 101 Date Filed: 11/20/2006

Every citizen, every taxpayer, every member of the military, and every voter has a
right to assume that, under our Constitution, the administration of Justice comports
with due process . This is what taxpayers pay for, what voters vote for, and what
our military servicemen and women sometimes are asked to give their lives for .
Unless we have integrity in our judicial process and unless this integrity is publicly
demonstrated, we severely jeopardize the liberty to which we are all entitled . . .23

Misconduct has been uncovered in this case, and due process has been subverted . The

Task Force's investigation , which has cost taxpayers, by some estimates, close to $100 million ,

not only shakes to its core the integrity of our judicial process, but threatens the same perilous

consequences that Judge Breyer intervened to prevent . Se e id. at 14 : 12-13 (government's actions

"could have resulted . .. . in the death of an innocent person") . The Task Force has already

enforced the corporate death penalty in wrongly prosecuting and convicting Arthur Andersen It

now seeks to imprison defendants for the rest of their lives . 24

Absent relief, defendants cannot have a fair trial . Dismissal of the indictment is

warranted . Alternatively, the Court should grant the other forms of relief defendants request .

Pending final consideration and disposition of this motion, defendants' request for evidence

should be granted .

23 United States v. Al-Mamfari, Case . No . CR-04-0376-CRB (Breyer), N .D . Cal ., Aug . 22, 2005
(Reply Ex . 9 at 18 :24-19 :8 .) .
24 After dismantling Arthur Andersen, only to have the criminal conviction against the firm
overturned 9-0 by the U .S . Supreme Court, the Task Force now holds out Andersen (an alleged
arch criminal only months before) as a victim of Enron's fraud, because the Task Force believes
that characterization will help it in this case. Judge Lynn Hughes, for one, noted the utter
disingenuousness of this reversal . See Reply Ex. 7 . Andersen and its civil counsel clearly want
to see such a result, as it would help the firm shirk blame in the Newby case and related civil
proceedings ; hence, the declaration from Ms . Palmer and the other support she provides .

31
Case: 06-20885 Document: 0051330792 Page: 102 Date Filed: 11/20/2006

Dated : October 26, 2005

Respectfully submitted,

By :

Of Counsel : Daniel M . Petrocelli


M . Randall Oppenheimer
Ronald G. Woods Mark Holscher
Texas State Bar No . 21964000 O'MELVENY & MYERS LLP
Federal Bar No . 657 1999 Avenue of the Stars, 7`h Floor
5300 Memorial, Suite 1000 Los Angeles, CA 90067
Houston, TX 77007 Office : (310) 553-6700
Office : 713-862-9600 Facsimile : (310) .246-6779
Facsimile: 713-864-8738 Attorneys in Charge for Jeffrey K Skilling

Michael Ramsey
Chip Lewis
River Oaks/Welch Building
2120 Welch
Houston, TX 77019
Office : (713) 227-0275
Facsimile : (7l'))523-7987 -
Attorneys in Charge for Kenneth L . Lay

1
Reid WeingarGen
Mark Hulkower
Matthew Stennes
STEPTOE & J OIIl, ISGIJ
1330 Connecticut Avenue, N .W .
Washington, D .C . ?0036-179
Office : (202) 429-8074
Facsimile : (202) 261-0648
Attorneys in Char ge for RicJzard A. Causey