Monday, September 28, 2020
Saturday, September 26, 2020
Friday, September 25, 2020
Thursday, September 24, 2020
Wednesday, September 23, 2020
Exclusive: Isai Scheinberg of PokerStars Gets Time Served and $30000 Fine In Socially Distanced SDNY
By Matthew Russell Lee, Exclusive Patreon
BBC - Decrypt - LightRead - Honduras - Source
SDNY, Sept 23 -- When Isai Scheinberg, after being indicted in 2011 and recently returning from Switzerland voluntarily though following an extradition request appeared in U.S. District Court for the Southern District of New York on February 20, the mood was strangely cordial.
Now on September 23 he has received a sentence of time served and a $30,000 fine. More on Patreon, here.
SDNY Judge Lewis A. Kaplan set a trial date, of October 19 - but told the defendant's well known counsel Paul Shechtman he expected the case reach a disposition before then, and that he'd assign the plea to the Magistrates Court.
On March 25, Inner City Press was there in the Mag Court, relocated due to Coronavirus to large courtroom 24B, when Scheinberg came to plead guilty. He told Magistrate Judge Sarah L. Cave he has a masters degree in mathematics, and that he had taken a test for the virus.
His letter from the US Attorney's Office, dated March 3, put his guideline sentences at twelve ot eighteen months.
Now on September 23, Scheinberg was sentenced by Judge Kapan, with both wearing masks. Inner City Press was again there, and masked too, as the only media present.
Shechtman described Scheinberg's good works, and making-whole of the victims of other online poker platforms. (He said a clerk in the SDNY arraignment's part had thanks Scheinberg for that).
Scheinberg's wife of 52 years Dora was in the courtroom too. Scheinberg read a statement, how he built his life in Israel then Canada, and that the felony conviction will haunt him forever.
The Assistant US Attorney said that there had been red flags as to Federal law, but that online poker had clearly been illegal under the laws of many states including New York.
Judge Kaplan said, I don't condone what you did but the world is made of fallible people. It was a big mistake but should not ruin what remains of your life.
Judge Kaplan asked Scheinberg to rise, and imposed a sentence of time served and a $30,000 fine. He added the $100 special assessment and said he would work tomorrow on help get Mr. Scheinberg's passport back to him.
It all relates back to so-called "Black Friday" in April, 2011 whic saw indictments involving Scheinberg's PokerStars, as well as Full Tilt Poker, Ultimate Bet, and Absolute Poker.
Scheinberg spent years living both in Canada and on the Isle of Man. SDNY prosecutors started extradition proceedings during a visit by Scheinberg to Switzerland. He was released on one million dollars bail.The case is US v. Scheinberg, 10-cr-336 (Kaplan).
Monday, September 21, 2020
On Manafort Lender Calk Illinois Maybe Off Quarantine List But Still Dec Trial Issues US Says
By Matthew Russell Lee, Exclusive Patreon
Honduras - The Source - The Root - etc
SDNY COURTHOUSE, Sept 17 – Steven M. Calk of FDIC-regulated Federal Savings Bank was presented and arraigned on May 23 in the U.S. District Court for the Southern District of New York for financial institution bribery for corruptly using his position with FSB to issue $16 million in high-risk loans to Paul Manafort in a bid to obtain a senior position with the Trump administration, namely Undersecretary of the Army.
On April 23 SDNY Judge Lorna G. Schofield held an oral argument, by telephone with Calk himself on the line from Chicago. Inner City Press covered it, below.
On July 2, Judge Schofield held a proceeding. Inner City Press live tweeted it, below.
On September 4 a trial date was set, after review by the SDNY assignment committee made up of Judges J. Paul Oetken and P. Kevin Castel and White Plains-based District Judge Vincent L. Briccetti: "ORDER as to Stephen M. Calk. It is hereby ORDERED that the parties are advised that jury trials will resume, and the jury trial in this action shall commence on December 2, 2020."
But on September 11, the US Attorney wrote to Judge Schofield to put on the record the Illinois has been added to New York's (and the SDNY's) 14 day quarantine list, and says it may significantly impact the feasibility of a December trial. On September 17 Judge Schofield held a proceeding on this, and Inner City Press live tweeted it, here:
AUSA Zolkind: We made proposals to the defense to make a December trial feasible, but there is no agreement.
Defense: We don't agree to virtual witnesses. But it is not clear the quarantine won't continue. We don't want to give up the December slot.
Judge Schofield: The Illinois numbers seem to be trending down. So I would propose we keep the trial date and see how things develop. Maybe the quarantine won't be in place in December. What control date shall we have, as the drop dead date?
Defense: Mid-October.
AUSA Zolkind: We prefer early October. We think there will be logistical difficulties even if Illinois comes off the list. We have witnesses in other states like Florida and Indiana. It seems there will be no vaccine by December
Judge Schofield: I've done a video trial and it worked. But here, the defense would have to consent. We'll have to convene again and decide what we do. Let's re-convene Oct 15. I'll leave all dates in place.
Watch this site.
In August, the US Attorney's office acknowledged to Judge Schofield more discovery "oversights," even as they are grilled by Judge Alison Nathan in US v. Nejad (another banker) and by Judge Katherine Polk Failla in US v. Ahuja and Shor. On Calk they say: "Additional New Material from SCO’s Discovery Productions to Manafort The discovery of the 30,000 uncategorized Manafort-related files described above also led the Government to further review SCO’s discovery productions to Manafort to ensure that no additional materials had been inadvertently overlooked. The Government had previously understood, based on extensive communications with members of the SCO team and its own review of the SCO’s file storage system, that, with several immaterial exceptions, the SCO discovery productions to Manafort were drawn from the sources that the Government had independently searched, including the FBI’s files as described above. However, after further reviewing the SCO’s discovery transmittal letters and copies of certain of the SCO’s productions, the Government has realized that certain discovery that had been produced to Manafort was apparently not contained within the sources the Government had searched in this case... We currently expect to transmit these materials to the defense within the next week.8 The Government regrets that the materials described above were not identified and produced at a much earlier stage of this case and, as detailed herein, is taking extensive steps now to ensure that no additional documents from the Manafort Materials have been inadvertently overlooked." Another "the Government regrets." We'll have more on this.
Back on July 2: Assistant US Attorney Paul Monteleoni rattled off COVID bad news, to request trial later in 2021. He says Broadway is closed through 2020, indoor dining pushed back, possible outbreak in Rockland County.
AUSA Monteleoni floats the idea of a witness having to go into 2 week quarantine. Notes that incarcerated defendants will get first trials. US Attorney does not want December 2020.
Judge Schofield: This is complex. There are 26 active judges, and senior judges, many trials waiting. So, I think what I'll do at the moment is set a December trial date with the understanding that we all need to talk with each other. We'll take the earliest date. I'll set it for Tuesday, December 1. Take it with a grain of salt. I won't schedule a conference now. Let's move on to the motions that are at issue. The motions to compel...
AUSA: They've asked us for a document and we're working on it.
Judge Schofield: Let's move on to the issue of sanctions.
Calk's lawyer: Government wrote to you in August, for six weeks to give documents from the Special Counsel's office. They took longer; we did not complain. But in March we learned of millions of more pages. We only got the documents in April - but the government learned about them in December. We felt this was unfair, given the government an unfair tactical advantage for trial.
Calk's lawyer: "The government has put on its witness list Mr. Manafort, Gates and Kushner."
Judge Schofield: The defendant's motion for sanctions for US discovery violations is denied. Court's examine the culpability and prejudice to the defendant. Miranda, 2d Cir, 1975. Here, the government was untimely, the argument goes. But it was not intentional.
Inner City Press will stay on this.
On June 16 Judge Schofield ruled, "WHEREAS the parties have fully briefed Defendant’s motion for an order compelling the government (i) to identify its anticipated trial exhibits, any Brady material and trial witnesses; and (ii) to certify to the Court that its discovery production is now complete, and for any other relief as the Court may deem just and proper. It is hereby ORDERED that the parties appear for oral argument on July 2, 2020 at 10:50 a.m. The parties are advised that the Court may issue an oral ruling following argument." Some pre Fourth of July fireworks. Watch this site.
Calk's lawyer said the loan to Manafort was at 7.25%, a subprime rate.
Judge Schofield asked the government, There were certain interviews done that never made their way into any corrective affidavit to get the search warrant.
The Assistant US Attorney replied, It's hard for me to check my handwritten notes which are in my office and I don't have access to...
Judge Schofield continued, The warrant was signed on June 26 and was supposed to be executed on the 27th, but wasn't until the 28th?
AUSA: We at SDNY didn't get any detailed download of the interviews with the bank officials until days later. One interview was in California; we were involved in coordinating Federal Saving Bank approaches. The plan was to extract Mr Calk's phone.
Judge Schofield concluded, on this, Why don't you get me a sworn statement, in two weeks. I assume we are all in our homes.
Calk's lawyer said, We want your Honor to look at the Grand Jury material, in camera. Because we understand that Mr Manafort told the Grand Jury he proposed Mr Calk for the job not because of the loan but on the merits. This is a very unusual case
Judge Schofield concluded, I will reserve decision. I will issue a short order about what I'd like from the government. Is everyone available September 3rd for trial? Motions in limine July 27, voir dire on August 3; Final Pre Trial Confernce on August 27 - depending on your vacations, of course.
AUSA Paul Monteleoni intoned, We do not plan vacations in August, we are not sure it will be safe to travel. But we're not sure about this time, given social distancing requirements.
Judge Schofield: I'll be cognizant of that, safety. We're adjourned. Inner City Press will continue to cover this case.
Back on Friday, November 8 Calk filed a motion to move the case to his hometown of Chicago, arguing in part that his "business" there will be disrupted if the case is not transferred. He says he "remains an owner of TFSB." But as Inner City Press noted on November 8, he ignores the New York connections of his Manafort loans.
Now on February 12, Calk's motion to move the case has been denied: "OPINION AND ORDER as to Stephen M. Calk: As the location of the Defendant is the only factor that weighs in favor of transfer, and that factor is not dispositive, Platt, 376 U.S. at 24546; accord Parrilla, 2014 WL 1621487, at *14, Defendant's motion for transfer is DENIED.The Clerk of Court is respectfully directed to close the motion at Docket No. 33. (Signed by Judge Lorna G. Schofield on 2/12/2020)." Inner City Press will continue to follow this case.
An August 26 filing in the case says that the SDNY prosecutors have as discovering "produced in excess of 1.2 million pages to date, the majority of which were from files of this Office" - in New York.
Perhaps in response the SDNY prosecutors will more directly link Calk's case to wider Trump inquiries? Inner City Press, which has followed this case and the weak regulation of for example of Comptroller of the Currency Joseph Otting, will continue on this case. Watch this site.
In these documents, more details of rogue banker Calk's pursuit of the "SECARMY" job have become public. They put the loose regulation of FRB by U.S. Comptroller of the Currency Joe Otting - how did he get that job, by the way? - into focus.
On Dec. 5, 2016 Calk e-mailed Manafort, “President Elect Trump will be in Michigan on Friday. Should we arrange a meeting while he is near by? Do you think we are making any progress re: SECARMY?” Manafort shot back, “He is not doing meetings on the road on these types of matters. I will be calling you later today with updates.”
A cynic made add, to what was found in Calk's iPhone, "Oh and give me another loan" (under Otting's wink and nod).
Calk wrote to Jim, presumably Mattis, that "I believe that Steve Bannon will be speaking to you again about me today." Then two days after a 10 January 2017 interview at Trump Tower Calk wrote to Mattis' assistant, "I know that Anthony Scaramucci and others will be reaching out on my behalf as well.”
One can only imagine Calk's communications to his regulators at the OCC - literally, only imagine since the OCC under Otting now reflexively denied and hinders FOIA requests from Inner City Press.
Back on May 23 SDNY Magistrate Judge Debra Freeman in the U.S. District Court for the Southern District of New York accepted the government's proposal of $5 million bond with no co-signer (although that is usually required for moral suasion) and travel allowed throughout the United States (though more defendants are usually confined to the Southern and Eastern District of NY and one other district). Money talks.
Afterward in front of the SDNY courthouse Inner City Press asked Calk's lawyers Daniel Stein and Jeremy Margoles about Manafort saying he had misstated his financial situation to get the FSB loans. When did Calk know? They did not answer. Video here, Facebook video here. Inner City Press' Alamy photos here.
Now in May 28 letter to District Judge Lorna G. Schofield, the government has requested the motions directed of their indictment of Calk be filed by July 12. Judge Schofield granted it only in part, saying that by June 21 Calk "shall file a pre-motion letter with a briefing description of any motion(s) he intends to file."
As of the morning of June 25, there is nothing in the docket in the case before SDNY Judge Schofield (who, as Inner City Press has noted and is inquiring into, unilaterally seals such proceedings as criminal sentencings, here.)
While the OCC has yet to sufficiently answer, and is trying to hinder Inner City Press' reporting, we will stay on this case.
On May 23, still from the SDNY courthouse covering other cases including one involving the death penalty, Inner City Press reported finding no U.S. Home Mortgage Disclosure Act data for "Federal Savings Bank." But there's more.
The Federal Savings Bank's website, while providing a generic link to the FDIC, and a statement "Member FDIC," has no link for the U.S. Community Reinvestment Act. (Nor does it mention the indictment of Stephen Calk, simply listing his brother John Calk now as CEO and Vice Chairman. Who is the chairman?)
It lists a loan production office on Avenue J in Brooklyn, and two deposit taking braches in Illinois. Did it see some exemption from the CRA and other consumer protection laws? From fair lending laws?
Earlier on the morning of May 24 Inner City Press asked the FDIC, "Having covered yesterday's arraignment of the Chairman of The Federal Savings Bank in the SDNY courthouse, including the FDIC's involvement, I checked the bank's website and found "Member FDIC" but no mention of the Community Reinvestment Act."
The FDIC's spokesperson David Barr, to his credit, responded quickly, writing to Inner City Press: "The Federal Savings Bank, Chicago, is regulated by the Office of the Comptroller of the Currency. They would be responsible for CRA and regulatory oversight. You should contact the OCC for more information."
Now the OCC under Comptroller Joseph Otting has done everything possible to block the release of information, denying FOIA fees waivers and expedited treatment, refusing comments. But for now online the OCC has said this about The Federal Savings Bank: "While TFSB originated a substantial majority of its loans outside of its AAs; the bank’s business strategy is to operate as a mortgage banking entity with a nationwide presence and market place. Taking the bank’s business strategy into consideration the bank’s performance under this lending criterion is deemed reasonable." Reasonable? Bribery, too, seems to have been part of its business strategy, right under the nose of the OCC of Otting.
Before 2 pm on May 24 Inner City Press in writing asked Otting's OCC: "This is a Press question for the OCC, from Inner City Press... Please confirm that The Federal Savings Bank is subject to HMDA, and/or if it is below a threshold, as I can find no data in its name on FFIEC.gov. Also, please today provide as an OCC response to the Press this OCC-regulated bank's CRA public file and other information in the OCC's possession concerning the bank's CRA and fair lending performance. Is it normal for a bank not to mention these things on its website, nor to provide any link to its actual regulator, the OCC, but only to the FDIC? Please explain what steps the OCC is taking beyond Stephen Calk no longer being the CEO. What about his brother?"
More than three hours later, even to the questions at the end, the OCC had only provided this: "We are reviewing your questions, but we may not be able to respond by your deadline. Regards, Stephanie Stephanie Collins Manager, Media Relations Public Affairs Operations Office of the Comptroller of the Currency." This is the same OCC which has delayed FOR MONTHS providing basic information about a merger it has now already rubber stamped.
On the morning of May 28 Inner City Press received from the OCC a statement that The Federal Savings Banks is subject to HMDA - how they are listed in the HMDA database remains a question - and this: "Question: Is it normal for a bank not to mention these things [CRA and HMDA] on its website, nor to provide any link to its actual regulator, the OCC, but only to the FDIC? [OCC answer:] This question is best directed to the bank."
So wait: Otting's OCC leaves it entirely up to the banks it ostensibly regulates whether to mention on their website and presumably branches CRA, HMDA or even the OCC where consumers could complain? We'll have more on this.
Stephen Calk was quoted, at least in 2012, opposing regulation: "As Mr. Stephen Calk writes in the September 7, 2012 edition of Origination News: “Basel III is designed to level the playing field among major banking institutions that operate internationally. Force-feeding these same rules to community banks in the United States is unnecessary and in fact counter-productive, particularly in the current economic environment.” Basel III is one thing. But no Community Reinvestment Act?
The Federal Savings Bank lists locations - and bankers - in Arizona - Scottsdale California - Irvine Colorado - Fort Collins Delaware - Selbyville Florida - Sarasota Illinois - Chicago Illinois - Lake Forest Illinois - Oak Brook Illinois - Park Ridge Indiana - Bloomington Indiana - Indianapolis Kansas - Overland Park Louisiana - Laplace Maryland - Annapolis Maryland - Timonium CD Massachusetts - Lawrence New Jersey - Hackensack New Jersey - Lakewood New York - Brooklyn New York - Melville New York - New York New York - Queens North Carolina - Raleigh Ohio - Columbus Rhode Island - South Kingstown Tennessee - Nashville Virginia - Alexandria Virginia - Fredericksburg Virginia - Newport News Virginia - Richmond Virginia - Vienna Virginia - Warrenton... We'll have more on this.
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Annie Doe Questioning George Floyd Protests Got Suspension From Bronx College But Still There
By Matthew Russell Lee, Exclusive Patreon
BBC - Guardian UK - ESPN - Doe Podcast
SDNY COURTHOUSE, Sept 17 – Annie Doe - not her real name - while a student at the College of Mount Saint Vincent in Riverdale in the North Bronx posted on Instagram criticism of protests to the alleged murder of George Floyd.
She wrote, "Just because one black guy dies doesn't mean the entire world should act like untamed apes." More on Patreon, here.
She was charged with harassment, and issued a two year suspension and a referral to a homeless shelter.
She sued - and "has not left the premises."
On September 17 U.S. District Court for the Southern District of New York Judge Valerie E. Caproni held a lengthy proceeding. Inner City Press covered it - and ended up live tweeting, here.
Annie Doe's lawyer conceded it is not a First Amendment case, since College of Mount Saint Vincent is a private school. But he attacked the disciplinary process Annie Doe was put through.
His complaint noted Annie Doe's support of Trump and MAGA, and the negative reactions these drew from other CMSV students. He sued for sex discrimination, retaliation and most intriguingly, breach of contract. The College of Mount Saint Vincent lawyer said "the optics are bad," parents who pay tuition are asking why Annie Doe is still on campus. Her "electronic card access to the front door has been canceled" - but she has not left.
Judge Caproni, past 5 pm, asked about dog whistles. Inner City Press, three hours into the hearing, began live tweeting.
At 6 pm, Judge Caproni denied Annie Doe's requested injunction. She told the CMSV lawyer he has until October 2 to oppose - presumably, to make a motion to dismiss.
She offered the services of SDNY Magistrate Judge Stewart D. Aaron, if both parties want it. There is a related case - Inner City Press will continue to follow and report on this, watch this site. More on Patreon, here.
***
Your support means a lot. As little as $5 a month helps keep us going and grants you access to exclusive bonus material on our Patreon page. Click here to become a patron.
Feedback: Editorial [at] innercitypress.com
SDNY Press Room 480, front cubicle
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Turkey Halkbank in SDNY Cites Immunity But US Points to Noriega Case and 2012 Email
By Matthew Russell Lee, Patreon, Thread Video
Honduras - The Source - The Root - etc
SDNY COURTHOUSE, Sept 18 – Turkey's Halkbank has officially given up its strategy of refusing to official appear in the US criminal case against it, and on February 25 appeared and agreed to be indicted. Inner City Press live tweeted it here.
On September 10 Judge Berman scheduled a September 18 oral argument on Halkbank's motion to dismiss. Inner City Press live tweeted it, here:
Halkbank's lawyer: The government claims that a handful of discussions with Treasury officials constitutes doing business in the US. We disagree. These statements to Treasury can't be used to bring in the non-US activities in the UAE and elsewhere.
Halkbank's lawyer: Under the commercial activities exception, the non-US activity must have a direct effect in the US. There was the supposed pool of money traded oversea. 95% of that money never even made it to the US.
Halkbank's lawyer: Post-pool, in Turkey and Dubai, the US dollar transactions were not the product of Halkbank's activities. So, this court has not subject matter jurisdiction. As to personal jurisdiction, this will be quick - you have indicated how you will rule.
Halkbank's lawyer: As to bank fraud, our indictment differs from Zarrab's. To prove conspiracy to violate IEEPA, they must prove conspiracy to violate primary, not secondary sanctions. Thank you your honor.
Judge Richard M. Berman: I got it.
Assistant US Attorney Sidhardha Kamaraju: While Halkbank claims the Attila decision required us to change our allegations, it's not true. The indictment contains 81 paragraphs. Halkbank wants you to look at one sentence in Paragraph 6.
AUSA: But the next sentence says, used to make payments on behalf of Iran, in dollars, passing through the US, in violation of US sanctions laws. And look at Paragraph 33, which makes clear a knowing scheme to route the funds from the US. A June 20, 2012 email...
AUSA: The email says, these gold deposits can be used for international payments... Bank Melli, Bank Sedarat, Bank Mellat in Turkey. So, the bank knowingly participated in enabling Iran's access to the US financial system. Then there's the slush fund in Dubai...
AUSA: Their argument is essentially, What's a billion dollars among friends? Except that their friend is the world's largest state sponsor of terrorism.... Halkbank tries to apply civil law to this criminal case, in which acts are attributable to all conspirators
AUSA, cites US v. Noriega then says Halkbank is asking Judge Berman to save it from the US Executive Branch's decision it should not have immunity, as it decided with regard to Noriega. Judge Berman: Five minute warning.
Judge Berman says he'll be asking for a copy of the transcript to Chambers. He'll take it under advisement. "We can be adjourned."
On July 14, Halkbank filed its motion to try to recuse Judge Berman. They said he chaired a panel entitled "The Rule of Law in Turkey" - and that he was "the only American judge who spoke at the event," along with European Parliament MP Marietje Schaake.
As such, Halkbank argues, Judge Berman "took sides on factual issues that are core to this case."
They have a 33 page declaration from Richard E. Flamm, and another from Michael A. Reynolds.
On August 4 Williams & Connolly in reply added more, about Judge Berman's comments "criticiz[ing] the conduct of Zarrab's counsel" and having cited not judicial sources but instead "the New York Times."
Now on September 8, the government has opposed any stay of the case pending Halkbank's appeal to the Second Circuit. Watch this site.
On March 31 in a telephone conference Inner City Press also live tweeted, here, Halkbank dropped King & Spalding and swapped in as its counsel Robert Cary of Williams and Connolly. On Halkbank's behalf he pled not guilty to all counts of the indictment.
Cary said he wants to travel to Turkey for a third time to discuss with Halkbank whether or not to file a motion for recusal of U.S. District Court for the Southern District of New York Judge Richard M. Berman.
On June 30 Judge Berman held a proceeding. Inner City Press live tweeted it:
Halkbank's new lawyer, Robert Cary of Williams and Connolly, got on late. Blames it on his "help desk." Judge Berman: You need a 13 year old there with you. Is Halkbank waiving physical presence in an SDNY courtroom? Cary: Yes, Your Honor.
Judge Berman: I'm within the Second Circuit, but I'm outside of the Southern District of New York. Does Halkbank waive my physical presence in the District for this proceeding? Cary: Yes. AUSA: The government, too.
Judge Berman: At the March 30 conference, former counsel for Halkbank withdrew and Mr. Cary appeared. Now, let's talk about next steps. On June 2, I told parties to be ready to discuss expedited motion schedule today. Has defense met and conferred?
Cary: We have some disagreement. For a short window we could have gotten to Turkey. We didn't. We've worked from home. We have a stipulation on a protective order, but not on translations. (A beat). We will be filing a recusal motion, and could by July 21.
Cary: We would file other motion four weeks after the ruling on the recusal motion. We'd file a motion for a bill of particulars three months after we get the discovery. We believe it will be months before we can travel safely. So discovery on a secure platform.
Cary: The rest of the discovery will be on a one terabyte hard drive, from Amazon if you can believe it. The stipulation on translations is that we are not allowed to rely on the government translations, we'll hire our own translators.
Cary: The vast majority of witnesses are overseas. We'll have to use MLATs to get their testimony. Given that and #COVID19, we suggest trial in March 2022. Did you say March 2022? Cary: Yes. Judge Berman: You would need a year to do trial prep?
Cary: Yes. Judge Berman: AUSA Lockhart?
AUSA Lockhart: We disagree on trial date. We think the motions can be scheduled now, without regard to recusal.
AUSA Lockhart: If the Court grants recusal, then the newly assigned Judge would have the benefit of the other motions. Judge Berman: So you'd say all motions at once?
AUSA Lockhart: Perhaps all motions by July 28. Or recusal by July 21 and the others just after.
AUSA Lockhart: On the trial date, we think March 2020 is too far away. It would be much sooner, like the beginning of 2021. February, depending on the court's schedule. We are not starting from scratch. Halkbank has been responding to investigation since Oct 2017.
AUSA Lockhart: Halkbank has interviewed its own officers. So it chose to change counsel. But Halkbank has had time to prepare. Trial prep can take place under current circumstances. The main question is whether people can participate in the trial. Early 2021.
Judge Berman: Rob, did you want to respond? Cary: My struggles getting on this call is an example. Communication is not what it should be. To work with the client, on which motions to file, too fast is not fair and appropriate. We need much more time.
Cary: We think personal jurisdiction should be considered first. Judge Berman: I can understand recusal being 1st. But I see no reason for the other motions to be separate. Cary: Representing an entire bank is difficult, our defense will be different than Atilla's.
Cary: We believe there will be Classified Information Procedures Act issues - it was testified to in Congress, Turkish deals to be reviewed only in a secure facility. There are also a lot of translations. We think 2022 makes sense.
Judge Berman: Let's move quickly. File the recusal motion by July 14, reply by August 4. While that's pending, the facial motion with several branches should be filed August 10. Responded to by August 31, reply by Sept 7. Then I'd like to think through the trial concerns.
Judge Berman: Mr Cary, will your foreign witnesses be mostly Turkish? Cary: There will be witnesses from other jurisdictions. Judge Berman: Leave with me the question of trial date. And as to when to have oral argument. Sound workable? Cary: We will make that work
AUSA Lockhart: Would it make sense to schedule a conference in September?
Judge Berman: Do we need oral argument on recusal? Cary: I would want to discuss that with my client. I'm not able to take a position on that today. [This question was foreseeable. Delay.]
Judge Berman: If oral argument on recusal, it would be in August. Which would be an occasion to refine the schedule, if it needs to be refined. The facial motion, resolvable on the papers?
Cary: I need to check with the client.
Judge Berman: I won't set date now. Send me a note about your vacations. I'll work around them. I think that's it for today. On tech, we could send you Chelsea. We'll talk again soon. I'll see what I can put together for the schedule, excluding time to Sept 7 on consent.
On May 29, this: "Re: United States v. Türkiye Halk Bankasi A.Ş., S6 15 Cr. 867 (RMB) At the arraignment on March 31, the Court requested that we advise the Court after approximately 60 days whether we had been able to meet with our client in person. Due to the ongoing COVID-19 crisis, we have not been able to meet with our client. As of today, non-Turkish citizens are still prohibited from entering Turkey, and all international flights on Turkish Airlines are cancelled. We are hopeful that this will change in the next 45 days. Accordingly, Halkbank respectfully requests that the status conference currently set for June 9 be adjourned for 45 days. Of course, Halkbank waives all speedy trial rights during the requested adjournment. I have conferred with counsel for the government, who object to this request. Respectfully, Robert M. Cary."
On June 2, Judge Berman extended it: "ORDER as to Turkiye Halk Bankasi A.S. Based upon the submissions of Defense, dated May 29, 2020, and the Government, dated June 1, 2020, the Court determines as follows: 1- The June 9, 2020 conference is adjourned to June 30, 2020 at 9:00 am; 2- Counsel should be prepared to set an expedited motion schedule, if motions are being made, and a trial date at the June 30, 2020 conference; 3- The Court anticipates that the conference will be an AT&T teleconference. The parties will receive by email the dial in information prior to the conference; 4- The public is entitled and welcome to attend the conference and the dial in information will be publicly available prior to the conference; 5- Time is excluded, pursuant to the Speedy Trial Act (18 U.S.C. § 3161) until the June 30, 2020 conference for the reasons set forth in the Defense letter dated May 29, 2020, and the Government letter dated June 1, 2020, including preventing any miscarriage of justice, facilitating communications between Defense counsel and their client, and ensuring preparation by counsel for the Government and the Defense. Time excluded from 6/2/2020 until 6/30/2020." Watch this site.
Judge Berman previously proposed a compromise: the next conference, probably by phone, in 70 days, on June 9 at 10 AM. Both sides agreed, with the proviso that Cary might write the Court in 60 days and ask for 20 more days. Inner City Press will continue to cover this case.
Back on February 25, Judge Berman entered at 10:15 am, and saying that his courtroom deputy "Christine has handed up a notice of appearance by King & Spalding. Does that mean Halkbank wishes to appear in these proceedings?"
K&S: "That is correct, your Honor."
Judge Berman: And is willing to be arraigned?
K&S: Yes.
And so they began conferring to pick a date and time for arraignment. When they returned, Judge Berman asked if King and Spalding has written authorization. No, oral.
Judge Berman asked or directed them to get written proof of authorization given the history of the case including Halkbank's legal department refusing service of process. So the next day in March 3. Inner City Press tweeted:
K&S: Why don't we set a control date in a week?
Judge Berman: March 3 at 11 am, does that work?
K&S: Yes, Your Honor. We are comfortable to proceed with oral authorize but will get a writing if the court so directs.
Judge Berman: I so direct. See you March 3.
Inner City Press will be there. Sometimes losing an appeal has consequences, and quickly. Watch this site.
Halkbank was indicted for Iran sanctions violations and money laundering on October 15 in the U.S. District Court for the Southern District of New York. On October 21, Turkey named convicted former Halkbank executive Hakan Atilla as the new managing director of Borsa Istanbul.
On December 26 SDNY Judge Richard M. Berman issued an order "respectfully denying" Halkbank's attempt to stay the proceedings before him.
But as released at 7:47 am on February 3, the Second Circuit Court of Appeals issued an administrative stay pending expedited referral to and review by a three-judge panel.
Now on February 21, this Second Circuit three judge panel has denied Halkbank's requests: "Present: Amalya L. Kearse, Richard J. Sullivan, Joseph F. Bianco, Circuit Judges. Petitioner seeks a writ of mandamus and moves for a stay of the district court’s criminal proceeding pending decision on the mandamus petition. Upon due consideration, it is hereby ORDERED that the petition is DENIED because Petitioner has not demonstrated that it lacks an adequate, alternative means of obtaining relief, that its right to the writ is clear and indisputable, or that granting the writ is appropriate under the circumstances. See Cheney v. U.S. Dist. Ct. for D.C., 542 U.S. 367, 380–81 (2004); see also United States v. McLaughlin, No. 19-308, 2019 WL 7602324 (2d Cir. Dec. 30, 2019) (reviewing de novo, on appeal from final judgment, district court’s determination that it had personal jurisdiction over criminal defendant)," etc.
Back on December 19, the US Attorney's Office wrote to Judge Berman: "The Government respectfully submits this letter in response to a motion by Turkiye Halk Bankasi, A.S. (“Halkbank” or the “defendant”) to stay all proceedings in this matter (the “Motion” or “Mot.”). Halkbank asks for a stay because it filed a petition for a writ of mandamus in the Court of Appeals on December 17, 2019, seeking an order directing this Court to allow Halkbank to enter a special appearance to challenge personal jurisdiction and to seek recusal of the presiding District Judge. The stay request is at the very least premature, and in any event unnecessary to prevent irreparable harm, and the Government opposes a stay. The Government does, however, ask that the briefing schedule in connection with the show-cause hearing currently scheduled for February 10, 2020 be adjourned as described below to allow additional time for the Circuit’s response to the petition. the Government does request a modest adjournment of the briefing schedule in connection with the February 10 hearing. Though the Circuit could deny the petition without further briefing, the Circuit may also order the Government to respond to the petition. Id. Because Halkbank did not file its petition until the week before the holidays, the Circuit may not issue its response to the petition before the Government’s brief is due on January 3, 2020. Accordingly, we ask that the briefing schedule be adjourned in order to provide additional time for the Circuit’s response. The Government requests that the schedule be adjourned as follows: the Government’s brief and related filings to be filed by January 17, 2020; Halkbank’s opposition (if any) due by January 31, 2020; and the Government’s reply due by February 5, 2020. In the event of changed circumstances arising out of the Court of Appeals’ response to the petition, they can be addressed at that time."
There was a footnote: "Halkbank’s contention about “a negative impact on the bilateral relationship between the United States and the Republic of Turkey” is irrelevant. Whatever impact Halkbank’s own contumacious refusal to comply with the summonses may have on diplomatic relations does not favor providing Halkbank with further opportunities to evade this Court’s jurisdiction. Moreover, the Supreme Court has cautioned against courts “impinging on the discretion of the Legislative and Executive Branches in managing foreign affairs.” Kiobel v. Royal Dutch Petroleum Co., 569 U.S. 108, 116 (2013) (quoting Sosa v. Alvarez-Manchain, 542 U.S. 692, 727 (2004)). Purported foreign affairs implications do not alter the application of clear law or warrant treating Halkbank differently from any other party before the Court." How might this apply to the total impunity of the UN? Watch this site.
On December 5 Judge Berman issued a more detailed order denying the application by King & Spalding to make a "special appearance" in this criminal case. Judge Berman last month in his courtroom asked if there is any Second Circuit Court of Appeals precedent. On December 5 he wrote and ruled:
"The Second Circuit recognizes that a defendant may become a fugitive when, “having learned of charges while legally outside the jurisdiction, [the defendant] ‘constructively flees’ by deciding not to return.” See United States v. Catino, 735 F.2d 718, 722 (2d Cir. 1984); see also United States v. Blanco, 861 F.2d 773, 779 (2d Cir. 1988) (“A person can be said to be a fugitive when, while abroad, they learn that they are under indictment and make no effort to return to the United States to face charges.”). It appears to the Court that this is what Halkbank – which is an important institution in Turkey – has done so far in this case. “The primary purpose of the fugitive disentitlement doctrine—promoting mutuality of litigation—is served both when a defendant flees the United States and when he chooses to remain outside the United States.” Miller, 166 F. Supp. 3d at 348; see also Martirossian, 917 F.3d at 890 (where the Court confirmed that “a defendant need not be Case 1:15-cr-00867-RMB Document 581 Filed 12/05/19 Page 26 of 27 27 present in and leave a jurisdiction to become a fugitive; the mere refusal to report for prosecution can constitute constructive flight”). Halkbank has failed to appear following the service of two summonses, with full knowledge and notice of the charges in the Indictment and of the related Atilla and Zarrab cases. See pp. 3–5 above. Halkbank has also been represented by U.S. legal counsel, Mr. Hruska of King & Spaulding LLP, for at least two years in connection with the U.S. criminal investigation of Halkbank’s alleged Iran sanctions evasion. See Gov. Letter, dated Nov. 4, 2019, at 1.
And, this Court has found that “Halkbank has willfully and knowingly disobeyed the Court’s order in the First Summons to appear at the First Conference.” Order, dated Oct. 23, 2019, at 3. The fugitive disentitlement doctrine exists to encourage compliance with the law and to protect against entities that “‘attempt to invoke from a safe distance only so much of a United States court’s jurisdiction as might secure . . . a dismissal while carefully shielding [itself] from the possibility of a penal sanction.’” Hayes, 118 F. Supp. 3d at 625–26 (brackets omitted) (quoting Collazos v. United States, 368 F.3d 190, 200 (2d Cir. 2004)); see also Niemi v. Lasshofer, 728 F.3d 1252, 1255 (10th Cir. 2013).
IV. Conclusion & Order For the reasons stated above, the Court denies Halkbank’s application, dated November 19, 2019, to make a special appearance."
Back on November 26 the US Attorney office opposed the special appearance, noting "Halkbank participates in a U.S. Department of Agriculture program that provides guaranteed financing for certain buyers of U.S. agricultural exports. In order to shield its access to these essential U.S. financial markets and facilities, Halkbank went to extraordinary lengths to conceal the scheme from Treasury officials. Because of Halkbank’s relationships with the Central Bank of Iran, NIOC, and other Iranian government and private entities, sanctions against the Government of Iran had particular significance for Halkbank and Treasury believed Halkbank was at particular risk of Iranian sanctions-evasion efforts. Accordingly, Treasury officials maintained continuous and in-depth communications with Halkbank’s top executives. These included in-person meetings held in Treasury’s Washington, D.C. offices and Halkbank’s Turkey offices; telephone calls between Halkbank executives in Turkey and Treasury officials in the United States; and letter and email correspondence." We'll have more on this.
King & Spalding's Andrew C. Hruska wanted to file by ECF without making a notice of appearance. Judge Berman said he believes a notice of appearance is required, and would not give legal advise on what should be written on it. King and Spalding said they will file on paper, presumably meaning their briefing.
Of this lawless attempt to escape the court's reach, Inner City Press asked the UN which has made worse arguments for impunity for bringing cholera to Haiti for its comment (Turkish state media were present in the SDNY on November 5). There has been no answer from the UN.
This case is US v. Turkiye Halk Bankasi A.S., 15-cr-867 (Berman)
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