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UNITED STATES v. FRIEDLAND

December 10, 1980

UNITED STATES of America, Plaintiff,
v.
David FRIEDLAND and Jacob Friedland, Defendants



The opinion of the court was delivered by: MEANOR

This is a motion by defendants, members of the bar of this court and members of the New Jersey bar, to vacate an order temporarily suspending them from the practice of law in this court. The suspensions were imposed following the imposition of sentence as a consequence of each having been convicted of the commission of seven federal felonies. *fn1"

Defendants were named in seven counts each of a nine count indictment returned in this court on January 28, 1980. Count I charged them with engaging in a conspiracy, in violation of 18 U.S.C. § 371, to violate 18 U.S.C. § 1954. The gist of the charge was that they conspired with one Barry Marlin and others to take "kickbacks" in connection with loans from Teamsters Local 701 Pension Fund (Pension Fund), of which they were counsel. Count II charged that defendants had accepted from Barry Marlin a "kickback" of $ 315,000 in connection with a loan of $ 3.5 million made by the Pension Fund to an enterprise controlled by Marlin. Count III charged the receipt of a "kickback" of $ 45,000 in connection with a similar loan of $ 500,000. Since the payoff of $ 315,000 as charged in Count II had taken place in the Bahamas, Count IV charged a violation of the Travel Act, 18 U.S.C. § 1952, in that David Friedland traveled there to receive $ 315,000 in currency. Count V was predicated upon a violation of 18 U.S.C. § 1503 in that the defendants attempted to obstruct justice by suborning perjury by one Kate Edelman, estranged wife of Barry Marlin, before a United States Grand Jury.

 Counts VI and VII charged David and Jacob Friedland, respectively, with violating 26 U.S.C. § 7206(1) in that they each filed a false and fraudulent income tax return for the calendar year 1975, omitting to state therein the receipt of a total of $ 360,000 as "kickback" income from Barry Marlin during that year.

 Counts VIII and IX also alleged the commission of crime in violation of 26 U.S.C. § 7206(1). It appeared that the defendants in 1975 maintained a joint Swiss bank account with a balance of $ 1,050,000. In that year, in an effort to obtain greater interest, this money was moved into two certificates of deposit of $ 525,000 each issued by two different London banks, and held in the name of a bank chartered in the Grand Cayman Islands which was controlled by Marlin. When the immense fraudulent empire constructed by Marlin appeared to be collapsing in 1976, these certificates of deposit were broken prematurely and the funds returned to the Swiss account, with an additional $ 60,000. Presumably this sum represented earned interest on the certificates, and the crimes charged in Counts VIII and IX were that their 1976 income tax returns were filed without showing the receipt of this earned interest as income for that year.

 As will be discussed below, it has been the practice in this court since 1975 to suspend upon sentence any attorney convicted of a federal crime who is a member of the bar of this court. The suspension is until further order of the court pending the conclusion of disciplinary proceedings arising out of the conviction or the facts underlying it. Normally, an attorney defendant is informed upon the acceptance of a guilty plea or the rendition of a guilty verdict that suspension will follow immediately upon sentence. In this case, the courtroom scene following the discharge of the jury was rather emotionally charged, and I did not make the usual announcement at that time. Instead, I sent counsel a letter, dated April 11, 1980, the contents of which are set forth below, informing them that their clients would be suspended after imposition of sentence. *fn2" Accordingly, orders were entered June 6, 1980, by Chief Judge Fisher suspending each defendant from the practice of law in this court "until further order of the court."

 Since defendants are members of the New Jersey bar, this court, as is its usual practice in cases involving the conviction of an attorney, notified the Administrative Office of the New Jersey Courts of the convictions. The Disciplinary Review Board *fn3" then recommended to the New Jersey Supreme Court that the defendants be subjected to a correlative suspension from the New Jersey bar. My understanding is that the present motion grew out of events that transpired at oral argument before that court, and that the New Jersey Supreme Court intends to await the outcome of the motion to vacate this court's suspensions before taking action. It is clear that the defendants are not greatly concerned over their inability to practice in this court, but desire strongly to preserve their right to practice before the New Jersey courts until the criminal proceedings and any disciplinary action arising therefrom finally have been concluded.

 Defendants now make two basic attacks upon their suspensions. The primary argument is that it is beyond the power of this, or any court, to suspend temporarily on account of a conviction until exhaustion of appellate processes. The defendants have, of course, appealed their convictions and at this writing the government's brief is not yet due. The second line of attack is that the procedure that led to their suspensions deprived them of procedural due process and, in any event, was not in accord with the Local Rules of this court.

 I

 Heavy reliance is placed on In re Ming, 469 F.2d 1352 (7th Cir. 1972). That case involved the misdemeanor convictions of an attorney for failing to file income tax returns for four consecutive years, in violation of 26 U.S.C. § 7203. Solely on the basis of the fact of those convictions, Ming was suspended from the practice of law by the United States District Court for the Northern District of Illinois. Ming appealed both his convictions, which were affirmed, United States v. Ming, 466 F.2d 1000 (7th Cir.), cert. denied, 409 U.S. 915, 93 S. Ct. 235, 34 L. Ed. 2d 176, rehearing denied, 409 U.S. 1051, 93 S. Ct. 514, 34 L. Ed. 2d 504 (1972), and his suspension from the practice of law. The Seventh Circuit reversed the order of suspension. The Court denied the power to suspend on account of a conviction until the conviction had become absolutely final through exhaustion of the appellate process. It said:

 469 F.2d at 1354 (footnote omitted).

 Since the convictions of Ming, in the view of the Court, could not be used to establish the facts on which suspension was based until appellate exhaustion, it followed that if Ming were to be suspended before finalization of his convictions, an independent hearing would be required to establish the facts upon which suspension was to be predicated. It is clear, however, that if the convictions alone could have formed a valid basis for suspension, a further hearing would have been superfluous.

 Ming and the other decisions in accord with it *fn4" by no means exemplify a uniform pattern of judicial authority. Perhaps, the leading recent case at war with the Ming decision is Mitchell v. Association of Bar of City of New York, 40 N.Y.2d 153, 386 N.Y.S.2d 95, 351 N.E.2d 743 (1976). John N. Mitchell, a former Attorney General of the United States, was convicted in the United States District Court for the District of Columbia of conspiracy, obstruction of justice, two counts of making false declarations under oath before a Grand Jury, and perjury. While his appeal from these convictions was pending in the United States Court of Appeals for the District of Columbia, his name was stricken from the rolls of those authorized to practice before the courts of the State of New York. This action was taken solely because of Mitchell's federal convictions and he, like these defendants, contested the power of a court to suspend or disbar solely on the basis of felony convictions which had not been finalized by appellate exhaustion. A unanimous New York Court of Appeals held to the contrary. The Court posed the issue before it as follows:

 
The single issue raised on this appeal is whether it is constitutionally permissible to disbar an attorney when the sole predicate for such a disbarment, a conviction of a felony, is still subject to appellate review.

 40 N.Y.2d at 155, 386 N.Y.S.2d at 96, 351 N.E.2d at 745.

 In its analysis, the Court acknowledged that the requisites of procedural due process must be satisfied before an attorney may be excluded from practicing his profession. It pointed out, however, that when dealing with attorney discipline the primary concern is protection of the public. Balancing that concern against the right of a convicted attorney to continue in practice pending appeal, the Court emphatically concluded that the public interest presented the paramount consideration. It stated:

 
To permit a convicted felon to continue to appear in our courts and to continue to give advice and counsel would not "advance the ends of justice", but instead would ...

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