Whistleblower DQ of Assistant US Attorney Denied: “United States v. Standard Chartered Bank, 18 Civ. 11117 (PAE), 6-11 (S.D.N.Y. Aug. 12, 2024)” —

• “Brutus Trading’s motion is premised primarily on the witness-advocate rule, as set forth in Rule 3.7 of the New York Rules of Professional Conduct. It provides that, subject to certain exceptions, ‘[a] lawyer shall not act as advocate before a tribunal in a matter in which the lawyer is likely to be a witness on a significant issue of fact.'”
• “In moving to disqualify AUSA Barnea, Brutus Trading contends that his continued representation of the Government in connection with the pending motion to set aside the judgment pursuant to Rule 60(d)(3) would violate New York Rules of Professional Conduct 3.7 and 1.7.”
• “In that pending motion, Brutus Trading alleges that the Government committed fraud on this Court by falsely denying that Standard Chartered Bank transacted with Iranian entities and foreign terrorist organizations after 2007.”
• “Brutus Trading contends that because AUSA Barnea represented the Government throughout the underlying litigation, he participated in the alleged fraud. It argues that AUSA Barnea would be an indispensable fact witness were the Court to conduct an evidentiary hearing in connection with the Rule 60(d)(3) motion.”
• “For several reasons, Brutus Trading’s contentions are meritless, to the point where they verge on vexatious and fii volous. They fall far short of the ‘high standard of proof’ necessary to justify disqualification.”
• “AUSA Barnea’s continued representation does not violate the witness-advocate rule embodied in New York Rule of Professional Conduct 3.7 because the Court has not scheduled- and does not have plans to schedule-a trial or evidentiary hearing in the case at which AUSA Barnea would have to testify.”
• “In relevant part, New York Rule of Professional Conduct 3.7(a) provides that a ‘lawyer shall not act as advocate before a tribunal in a matter in which the lawyer is likely to be a witness on a significant issue of fact.'”
• “As the Government rightly notes, there is no trial or evidentiary hearing scheduled in this case. Nor is there any prospect of an upcoming trial or evidentiary hearing.”
• “Quite the contrary, the case is currently closed. The Court dismissed it in July 2020 and the Second Circuit affirmed the dismissal. Brutus Trading’s current bid to reopen the case almost four years later by filing the pending Rule 60(d)(3) motion is exceptionally unlikely ever to necessitate a trial or even an evidentiary hearing.”
• “The Court expects the Rule 60(d)(3) motion to be readily resolved on the papers, without a need for an evidentiary hearing. The Court, notably, did not need to conduct an evidentiary hearing when it resolved (and denied) Brutus Trading’s October 2020 motion for an indicative ruling that, had the Court retained jurisdiction, it would have vacated the dismissal based on newly discovered evidence.”
• “Even if there were a colorable basis to project that an evidentiary hearing might be held in the future, with the Court not having scheduled one, under settled case law, it would be premature to disqualify AUS A Barnea based on Brutus Trading’s conjecture that his representation of the Government at such a hearing would breach the witness-advocate rule.”
• “That is because, at such a preliminary stage, ‘it is impossible to determine how significant [counsel] might be as a witness or whether he is likely even to be called as a witness; whether his testimony would likely hurt or help his client; or whether his testimony would or would not be cumulative of other witnesses.’ Prout v. Viadeck, 316 F.Supp.3d 784, 810 (S.D.N.Y. 2018).”
• “The Court therefore denies the motion to disqualify on the basis of the witness-advocate rule. There is no risk that AUSA Barnea’s continued participation will taint this case. In the improbable event that an evidentiary hearing is one day scheduled, Brutus Trading will be at liberty to renew such a motion, provided one can then be filed consistent with Federal Rule of Civil Procedure 11.”
• “Brutus Trading also briefly argues that disqualification is necessary under Rule 1.7(a)(2)… Brutus Trading declares that ‘[a]s an alleged participant in the fraud, Barnea should also be disqualified from representing the Government because:a reasonable lawyer would conclude that there is a significant risk that the lawyer’s professional judgment on behalf of a client will be adversely affected by the lawyer’s own … personal interests.” Relator Mem. at 8 n.2 (citing Rule 1.7(a)(2)).”
• “This argument is undeveloped and specious. For one, Brutus Trading’s allegation of fraud is wholly threadbare.”
• “But, even assuming the truth of Brutus Trading’s claim that the Government wrongly denied that Standard Chartered Bank conducted unlawful transactions post-2007, that is a far cry from meaning that AUSA Barnea or any other government attorney intentionally deceived the Court. Indeed, in its Rule 60(d)(3) motion briefing, Brutus Trading claims that ‘[w]ith the assistance of forensic data analysis, Brutus [Trading] was only recently able to reveal or ‘decloak’ countless illegal transactions that were hidden deep in the Bank’s electronic spreadsheets, which Brutus [Trading] gave to the Government.’ Dkt 102 at 1.”
• “Given the difficulty that Brutus Trading itself purports to have had in ‘decloak [ing]’ these alleged illegal transactions, there would be no reason to assume that Government counsel were aware of such misconduct by the bank, as opposed to not having investigated to a degree necessary to uncover such machinations.”
• “Brutus Trading’s allegations do not come to close to supporting the serious allegation that the Government or AUSA Barnea committed fraud on the Court by denying that Standard Chartered Bank engaged in illegal transactions. There is no basis to infer a conflict of interest between the AUSA Barnea and the Government-and Brutus Trading has done nothing to substantiate that claim.”
• “The Court denies Brutus Trading’s motion to disqualify.”

“Indicted pro-Trump lawyer is ousted as counsel for ex-Overstock CEO in Dominion case” —

• “It is exceedingly difficult to persuade a federal judge to disqualify your opponent’s chosen counsel. And for good reason: Courts are loath to interfere with the right to select one’s own lawyer and generally don’t like the disruption that ensues when a client is forced to pick a new lawyer.”
• “The disqualification test in Washington, D.C. — where Dominion Voting Systems is litigating a defamation lawsuit accusing former Overstock CEO Patrick Byrne of falsely claiming that the voting tech company tainted the 2020 presidential election — is particularly stringent. Unless one side can show that the other side’s lawyer is conflicted, Washington judges may only resort to disqualification if the targeted lawyer has engaged in ‘truly egregious misconduct likely to infect future proceedings.'”
• “U.S. Magistrate Judge Moxila Upadhyaya found all that and more in a decision on Tuesday to disqualify Michigan attorney Stefanie Lambert from serving as Byrne’s counsel in the Dominion case.”
• “Upadhyaya concluded in Tuesday’s ruling that Lambert repeatedly violated both a protective order shielding Dominion documents and subsequent court orders directing Lambert to abide by the protective order. The judge also found that Lambert engaged in a pattern of misrepresentations about her conduct.”
• “The alleged misconduct began, according to the opinion, even before Lambert first entered an appearance in the case last March. Unbeknownst to Dominion, Lambert had joined Byrne’s team a couple of months before entering that appearance, signing onto the protective order Dominion had previously negotiated with Byrne’s lawyers from McGlinchey Stafford.”
• “But at the beginning of March, Lambert disclosed protected Dominion documents. She attached some documents to a filing in a separate Michigan criminal case accusing her of election interference. She also, according to the judge, gave a right-wing Michigan sheriff confidential log-in information to allow him access to the full repository of documents Dominion produced in discovery in the Byrne case.”
• “The sheriff, Dar Leaf, subsequently posted links to more than 2,000 Dominion documents on social media sites. Leaf’s posts attracted hundreds of thousands of views, according to Upadhyaya’s opinion.”
• “Upadhyaya asked Lambert why she had not consulted the court before disclosing protected documents. Lambert said she was obligated as an officer of the court to inform law enforcement officials when she found evidence of Dominion’s crimes.”
• “‘Lambert’s misrepresentations reflect a deeply concerning pattern that does not appear to have any sign of stopping,’ the judge wrote. ‘Dominion has raised a plausible narrative that Lambert became involved in this litigation so that she could gain access to Dominion’s documents and use them for improper purposes.'”
• “Upadhyaya noted that the stringent test for disqualification is meant to insulate clients from the consequences of their lawyers’ misconduct. But that principle doesn’t apply in this case, the judge said, because Lambert’s client, Byrne, has engaged in similarly ‘egregious’ violations of the protective order. (Dominion has not yet sought sanctions against Byrne but has reserved that right.)”