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April 9, 2019

VIA ECF

The Honorable Nicholas G. Garaufis United States District Judge United States District Court Eastern District of New York 225 Cadman Plaza East Brooklyn, NY 11201

Re:

United States v. Raniere

,

et al.

, 18 Crim. 204 (NGG)

Dear Judge Garaufis: We write respectfully on behalf of Kathy Russell to respond to and clarify certain issues raised by the Court yesterday regarding Ms. Russell’s pending motion to dismiss. Specifically, in light of Your Honor’s preliminary findings that Ms. Russell was “in effect a target of the investigation” at the time of her grand jury testimony and that the government’s statements to the contrary were “misleading, at the very least” (Apr. 8, 2019 Tr. (“Tr.”) at 6-7), we now write to clarify the ways in which Ms. Russell was prejudiced by that misrepresentation, and to explain further why dismissal of the indictment is the appropriate remedy under the circumstances. The Supreme Court has made clear that dismissal of an indictment is warranted when (1) prosecutorial misconduct “substantially influenced the grand jury’s decision to indict,” or (2) “if there is grave doubt that the decision to indict was free from the substantial influence of such violations.”

Bank of Nova Scotia v. United States

, 487 U.S. 250, 256 (1988) (quoting

United States v. Mechanik

, 475 U.S. 66, 78 (1986)

).

Here, there is ample evidence in the record to satisfy the

Bank of Nova Scotia

standard. Certainly, at a minimum, the Court should conduct further inquiry into the grand jury proceedings in order to determine whether the government’s misconduct “influenced” the decision to indict. First, there is no doubt that the government’s misrepresentations and misleading conduct affected how Ms. Russell responded to the government’s questions. It is criminal defense 101 for a lawyer to determine her client’s status before any grand jury appearance.

See

American Bar Association,

Preparing a Grand Jury Witness: Sweaty Palms, Racing Heartbeat

(May 26, 2017), https://www.americanbar.org/groups/litigation/publications/litigation_journal/2010_11/su

Case 1:18-cr-00204-NGG-VMS Document 517 Filed 04/09/19 Page 1 of 5 PageID #: 5449

Hon. Nicholas G. Garaufis April 9, 2019 Page 2 mmer/preparing_grand_jury_witness/; Jay A. Brozost & Lawrence S. Goldman,

Grand Jury Investigations: A Guide for In-house Counsel

(July/August 2003), https://www.nacdl.org/WorkArea/DownloadAsset.aspx?id=19966.

For this reason, many courts presume that a witness and her counsel rely upon that information in deciding how to proceed. As the district court in

Drake

explained, any “representation by an AUSA that an individual is neither a target nor a subject, but only a fact witness in that investigation, communicates information to several parties – counsel, individuals testifying before the Grand Jury, the Grand Jury, and this court – upon which those parties rely and act.”

United States v. Drake

, 310 F. Supp. 3d 607, 621-22 (M.D.N.C. 2018). The factual record also makes clear that the government’s misrepresentations affected Ms. Russell’s conduct in the grand jury. As set forth in counsel’s sworn declaration and the corresponding motion papers (ECF No. 284 (“Harris Decl.”) ¶ 5; ECF No. 293 (“Mot.”) at 11; ECF No. 315 (“Reply”) at 2) Ms. Russell’s former attorney, William Fanciullo, learned from other counsel involved in the case that some grand jury subpoenas had been accompanied by advice of rights forms and subject or target letters, and reasonably concluded, based on the absence of such notice with Ms. Russell’s subpoena, that the government viewed Ms. Russell as only a witness. The government confirmed counsel’s conclusion as to Ms. Russell’s status when, at the outset of Ms. Russell’s grand jury appearance, it informed her – inaccurately – that she was not a target. Under these circumstances, where counsel and Ms. Russell were both deliberately duped, counsel was not able to provide effective advice. For this reason, the government’s argument that Ms. Russell was represented by counsel at the time of her grand jury testimony is hardly compelling. At any evidentiary hearing, Ms. Russell would be prepared to submit a sworn declaration – or testify – that, based on conversations with her counsel, she believed that the government viewed her

only

to be a witness, and that the prosecutor’s statements to her at the outset of her grand jury testimony provided additional assurance.

1

It is common sense that a witness who has been reassured that they are not in the government’s sights would agree to waive her Fifth Amendment rights. And the transcript of Ms. Russell’s grand jury testimony bears this out. For much of her appearance – when she believed she was merely a witness – Ms. Russell repeatedly waived her rights and gave statements on an array of topics, many of which made clear that she was close to and had knowledge of NXIVM and its operations.

2

At 4:05 p.m. –

1

At any such hearing, both parties would presumably be expected to present evidence as to whether and how the government’s misstatement impacted the grand jury’s decision to indict.

2

As the Court knows, she did not answer every question. Rather she asserted her Fifth Amendment rights approximately 50 times between the start of her grand jury testimony at 2:30 and the first break at 4:05 p.m.


Hon. Nicholas G. Garaufis April 9, 2019 Page 3 after one and a half hours of sometimes aggressive questioning on sensitive topics that seemed to implicate Ms. Russell directly – there was a break in the proceedings, and Ms. Russell had an opportunity to consult with counsel. After that break, Ms. Russell invoked the Fifth Amendment in response to nearly every question posed – 32 times in the span of just ten minutes. In other words, despite the government’s initial misrepresentations about her status, the actual questioning made her realize that she was in fact a target, and she did what any properly advised target would do – she refused to incriminate herself any further.

3

Ultimately, however, it should not be Ms. Russell’s burden to prove that the government’s affirmative misstatements in fact caused her to waive her Fifth Amendment rights more liberally. It is impossible to speculate a year after the fact whether Ms. Russell would have answered any or all of the questions differently had she been properly advised of her status as a target. Indeed, most courts recognize the danger of erroneously assuring a witness that she is neither a target or subject,

see United States v. Babb

, 807 F.2d 272, 278-9 (1st Cir. 1986) (such misrepresentation is “quite troublesome,” “unprofessional and worthy of severe condemnation”);

Drake

, 310 F. Supp. 3d at 636 (such misrepresentation is “very concern[ing]”), precisely because of the inevitable risk that such misrepresentation will impact both the lawyer’s advice and a defendant’s ultimate decision as to how to proceed.

See e.g.

, Brozost & Lawrence S. Goldman,

Grand Jury Investigations: A Guide for In-house Counsel

(July/August 2003), https://www.nacdl.org/WorkArea/DownloadAsset.aspx?id=19966 (“[T]he category in which the client is put will influence how the matter is best handled.”) Second, as set out at length in our motion papers, the prejudice to Ms. Russell and the grand jury process was twofold. Not only did Ms. Russell’s answers “furnish a link in the chain of evidence needed to prosecute” her (Mot. at 14 (citing

United States v. Drake

, 310 F. Supp. 3d 607, 635-36 (M.D.N.C. 2018)),

4

her selective invocation of the Fifth Amendment in front of the same grand jury that was ultimately asked to return an indictment against her was unquestionably damaging. In fact, standing alone, Ms. Russell’s invocation of her rights raises a “grave doubt that the decision to indict was free” from such improper influence.

Bank of Nova Scotia,

487 U.S. at 256. It is so universally accepted that jurors – whether petit or grand – will draw a negative inference from the assertion of the Fifth Amendment that curative instructions are

always

required

3

United States v. Haak

, 884 F.3d 400, 409 (2d Cir. 2018), referenced by the Court yesterday, does not concern misconduct in the grand jury, but rather decides whether statements made to law enforcement authorities in the course of a non-custodial interview should be suppressed based on coercion.

4

Ms. Russell gave statements on a variety of topics including her involvement with NXIVM since 2001, her position as proctor and coach, the various NXIVM curriculums she completed, and descriptions of NXIVM-related entities and events. (Mot. at 14). Such statements showed that Ms. Russell was close to and had knowledge of NXIVM operations, seemingly putting her closer to Keith Raniere’s “inner circle.”
