"There are some things that happened at the trial that I find very bothersome," Judge Thomas Meskill observed during the Oct. 23 oral arguments in the appeals of E. Robert Wallach and two co-defendants.
"Bothersome” is putting it mildly.
The closer the three-judge panel of the U.S. Court of Appeals for the 2nd Circuit-looks, the more likely it is to throw the case out as a travesty-conceived in unchecked prosecutorial zeal, compounded by a patently unfair trial, and dedicated to the proposition that criminal statutes mean whatever a prosecutor says they mean.
Some former prosecutors have a word-"Rudyism"-to describe the brand of overweening prosecutorial hardball that flowered under former U.S. Attorney Rudolph Giuliani of Manhattan. This was a case of Rudyism run amok.
Wallach, the bumptious personal-injury lawyer from San Francisco who made a new career in the 1980s out of his friendship with Edwin Meese III, was convicted on fraud, racketeering, and conspiracy charges in August 1989. His 16-week trial, together with Rusty London and Wayne Chinn, centered on their work for the Wedtech Corp., the scandal-ridden, now-defunct Bronx defense contractor.
Wallach was clearly guilty of sleaziness in the first degree for shamelessly trading on his relationship with the former White House counselor and attorney general. That’s why Giuliani’s prosecutors bent so many laws and made so many deals to get him, after trying in vain to get him to turn on Meese.
But sleaziness is not a crime. Lots of people parlay it into wealth, power, and status. Wallach’s brand was strangely mixed with a kind of egomaniacal idealism and an ardent belief (at least at first) that Wedtech, like his pro bono work in San Francisco and his efforts to free Soviet Jews, was a noble cause. Indeed, in 1981 and 1982, the Bronx native represented the minority-owned (or so he thought) company for free.
More to the point, the lawyers pressing Wallach’s appeal-led by Robert Bork, who (Wallach being broke) took the case pro bono-have made a powerful case that he was proven guilty of no crimes.
Even the prosecution admits it could find nothing illegal in the work Wallach did for Wedtech, including his insistent lobbying of Meese to help the company get defense contracts.
So how did Assistant U.S. Attorneys Baruch Weiss and Elliott Jacobson get the jury to convict Wallach on fraud, racketeering, and conspiracy charges?
Among other things, they stretched statutes to the breaking point to criminalize conduct they considered unethical. (If Wallach’s convictions survive other challenges, Bork may have a good shot at Supreme Court review with his argument that Wallach’s case shows that the Racketeer Influenced and Corrupt Organizations act is unconstitutionally vague.)
The prosecutors also gave sweetheart deals to two Wedtech executives who had -looted the company to provide the crucial testimony against the conspicuous but far less culpable Wallach. They turned a blind eye to compelling evidence that former Wedtech president Anthony Guariglia, their star witness, had lied on the stand. And they impugned Wallach’s and Meese’s characters and "corrupt" relationship with heaps of highly prejudicial irrelevancies.
Prosecutor in Robes
Weiss and Jacobson got a big assist from District Judge Richard Owen, a righteous former prosecutor who ran the trial as though he were still one.
Judge Owen engaged in a running battle with chief Wallach trial lawyer Gary Naftalis of Kramer, Levin, Nessen, Kamin & Frankel, one of New York’s most respected white-collar defense specialists. He let the prosecution roam far afield from the issues in the case. He blocked defense lawyers from putting before the jury their most telling evidence of Guariglia’s perjury, their full rebuttal of the prosecution’s attacks on Wallach’s character, and their own most powerful character witness. He adopted in his jury instructions the prosecution’s sweeping interpretation of the relevant statutes, pointing straight toward conviction. And he radiated contempt for Wallach at the sentencing, while slamming him with six years in prison and $675,000 in fines and forfeitures.
The most dangerous of the theories the jury was told to apply was that any lawyer who accommodates a request by a corporate client’s management to send a letter or invoice mischaracterizing his services is guilty of criminally defrauding the corporation; if he does it twice, he is guilty of a "pattern of racketeering."
Three of the four counts on which Wallach was convicted-two for transporting Wedtech checks obtained by fraud in interstate commerce and one for racketeering-boil down to proof that he complied with requests by Wedtech executives to send them two letters, one in 1983 and one in 1984, falsely describing the services for which he was being paid.
The executives’ apparent motives were to avoid a written acknowledgment that Wallach was being paid (quite legally) to lobby Meese to help Wedtech get defense contracts, and to allow the company to treat Wallach’s fees of $125,000 in 1983 and $300,000 in 1984 as capital expenses, thus inflating its reported earnings by a few cents a share.
The undisputed evidence that Wedtech’s top executives and board members were not deceived by the letters, and knew full well what, they had paid Wallach for, was no defense, Judge Owen told the jury, in an instruction more appropriate to a stockholder’s derivative suit than a RICO prosecution.
As Bork put it, "According to this remarkable charge, the submission of a false or simply incomplete letter by any provider of services-a lawyer, doctor, accountant, plumber, gardener, and so on-is a per se violation" of federal criminal law, assuming the payment-crosses state lines.
The fourth count on which Wallach was convicted was conspiring to violate a conflict-of-interest law by promising, in exchange for the $300,000 payment in 1984 to lobby for Wedtech from inside the Justice Department as soon as he could get a high-level appointment.
The prosecution’s theory of this charge prompted Judge Meskill to ask at the oral argument whether he and his law clerk would be guilty of conspiracy if he agreed to write a letter of recommendation in exchange for the clerk’s promise that he would someday become president of the United States and would then reward the judge with a high administration job.
While Wallach did have grandiose hopes for a big job in the Justice Department, he never got one-and Wedtech never asked for its $300,000 back.
Moreover, the most critical testimony that Wallach had promised to help Wedtech from inside the government-which he denied-came from the not very trustworthy Guariglia.
One of the trial’s most revealing episodes came when the prosecutors refused to credit-and Judge Owen barred the defense from showing to the jury-unmistakable evidence that Guariglia had lied in other testimony at the same trial.
The former Wedtech president, who was marinated in fraud, was sentenced to only five months in a halfway house in consideration of his help convicting other, more peripheral figures, mainly Wallach.
His alleged perjury at the Wallach trial came when prosecutor Weiss sought to pre-empt attacks on his credibility by eliciting testimony that he had stopped his compulsive gambling (with other people’s money) by the summer of 1988.
On cross-examination, Naftalis introduced records from an Atlantic City casino showing that Guariglia had borrowed money there to buy $15,000 in chips on Sept. 18, 1988, and $50,000 in chips on Oct. 26, 1988.
Guariglia implausibly explained on redirect that, on the first date, he had simply cashed in the chips and taken the money and, on the second date, had given the chips to a friend who had gambled with them.
Then Naftalis sought to introduce more casino records, kept by "pit bosses," that obliterated Guariglia’s story. They showed that he personally had gambled both in September and in October and detailed the times he was at the blackjack tables, his average bets, and the amounts he had lost (more than $43,000 in all).
But the jury never saw those records: Judge Owen excluded them at the prosecution’s request because they only went to Guariglia’s credibility. And the prosecutors, far from acknowledging Guariglia’s lie. touted him to the jury in closing arguments as a "credible" witness.
Months after Wallach’s conviction, the prosecutors were presented with still more evidence of gambling by Guariglia-this time in Puerto Rico, in November 1988. They finally conceded he had lied at the Wallach trial, and he was indicted for perjury.
But Jacobson told the 2nd Circuit during the Oct. 23 argument that these belated admissions should do Wallach no good and insisted "there was no basis for us to believe at the time that Mr. Guariglia was perjuring himself."
A low snicker rippled through the courtroom audience as Jacobson described how he and Weiss had concluded that Guariglia was telling the truth: "Ws grilled him intensively," he said, "made other [unspecified] inquiries"-and checked his story with his gambling buddies. Now that’s detective work.
During the 1989 trial, Judge Owen raised eyebrows even among some prosecutors by bending the rules of evidence to let the prosecution dump before the jury one-sided accounts of Wallach’s questionable conduct in matters unrelated to the charges against him.
Chief among these was the prosecution’s mini-trial of Wallach for taking $150,000, which was laundered through Chinn, to lobby Meese to help Swiss businessman Bruce Rappaport promote a proposed pipeline from Iraq through Jordan to the Gulf of Aqaba.
Judge Owen also let prosecutors impeach Meese, who testified for Wallach, by putting in a report by the Justice Department’s internal ethics watchdog criticizing Meese for unethical behavior regarding the pipeline and other Wallach-related matters, as well as a press release misleadingly suggesting that Attorney General Richard Thornburgh had publicly embraced the report’s findings.
Judge Owen barred the defense, however, from subpoenaing Thornburgh or introducing other rebuttal evidence. "I am not going to have a mini-trial of what is an irrelevant issue," Judge Owen said, after letting the prosecutors take their shot.
In effect, Wallach was tried and pilloried at length in closing argument- though never indicted-for the non-crimes of having a "corrupt relationship" with Meese and being a shady character.
But when Wallach’s most powerful character witness, Avital Sharansky, flew in from Israel to praise him for tireless efforts to free her husband, Soviet refusenik Natan Sharansky, from a Soviet concentration camp, the prosecutors objected and the judge stopped her cold.
Mrs. Sharansky had to return to Israel that night because her mother was dying. Despite being told this, Judge Owen deferred ruling on the admissibility of her testimony until the next day. He also refused to allow the defense to take a taped deposition to preserve her testimony.
"Maybe the fact is she ought to go back," the judge told the stunned defense lawyers, "and maybe the fact is she never should have come in the first place." By the time the judge ruled that Mrs. Sharansky could give her opinion of Wallach’s character, she had left for Israel.
"Taken separately, each of these rulings would require reversal," as Bork put it in his brief for Wallach. "Taken together, they produced a trial that cannot be countenanced."