Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

United States of America v. John Rigas and Timothy Rigas

October 31, 2011

UNITED STATES OF AMERICA,
v.
JOHN RIGAS AND TIMOTHY RIGAS, DEFENDANTS



The opinion of the court was delivered by: Magistrate Judge William I. Arbuckle

Hon. John E. Jones III

MEMORANDUM

1. BACKGROUND

On October 6, 2005, a grand jury sitting in the Middle District of Pennsylvania returned an indictment against defendants, John Rigas and Timothy Rigas, charging each of them with a single count of conspiracy to defraud the United States in violation of 18 U.S.C. § 371 and three counts of tax evasion in violation of 26 U.S.C. § 7201. Thereafter, the grand jury returned a superseding indictment (Document # 94), charging each of the defendants with one count of conspiracy to defraud in violation of 18 U.S.C. § 371 and four counts of tax evasion covering the years 1998 to 200 in violation of 26 U.S.C. § 7201. The defendants, former chief officers of Adelphia Communications Corporation ("Adelphia"), are alleged to have participated in a conspiracy to divert funds from Adelphia, their former family business, without paying income taxes. The transactions that form the basis of the tax evasion charges generally involve purchases of Adelphia securities by the defendants between 1998 and 2000. Some of the purchases were made with funds jointly borrowed by Adelphia entities and Rigas entities pursuant to co-borrowing agreements. In addition, the defendants are alleged to have improperly diverted funds from Adelphia‟s cash management system.

In addition to the conspiracy and tax fraud charges at issue in this case, in July 2004, the Rigas‟ were found guilty of conspiracy and multiple counts of securities and bank fraud after an eighteen week jury trial in the Southern District of New York. The New York prosecution came on the heels of Adelphia‟s collapse into bankruptcy in 2002 after auditors reported that off-books companies controlled by the Rigas‟ had accumulated nearly $2.5 billion in undisclosed bank loan debt. This debt was hidden through allegedly fraudulent accounting practices.

On August 5, 2011, defendants filed a "Motion for Issuance of Subpoenas for Production of Documents in Advance of Trial Under Federal Rule of Criminal Procedure 17(c)." (Document # 166). On August 15, 2011, the United States filed its opposing brief. (Document # 170). Defendants were given an opportunity to file a reply brief by September 8, 2011, but filed it late on September 12, 2011. (Document # 180). In the interest of the administration of justice, the court will accept this late brief.

The defendants are requesting subpoenas for documents directed toward three sets of non-parties: Buchannan Ingersoll & Rooney, P.C. ("BIPC"), The Adelphia Recovery Trust ("ART"); and to a group of non-litigants collectively referred to as the "Adelphia Parties," which is comprised of the Adelphia Communications Corporation; Fried, Frank, Harris, Shriver & Jacobson LLP; Boies, Schiller & Flexner, LLP; Covington & Burling, LLP; Adelphia‟s former independent directors: Erland Kailbourne, Les Gelber, Dennis Coyle and Peter Metros; and Adelphia‟s Replacement Independent Directors: Rodney W. Cornelius and Anthony T. Kronman.

For the following reasons we will grant the motion in part and deny it in part.

2. DISCUSSION

The issuance of a subpoena is governed by Federal Rule of Criminal Procedure 17. A party may make a motion to "quash or modify the subpoena if compliance would be unreasonable or oppressive." Fed. R. Crim. P. 17(c). "Only materials that are "admissible asevidence‟ are subject to subpoena." United States v. Cuthbertson, 651 F.2d 189, 192 (3d Cir. 1981) citing Bowman Dairy Co. v. United States, 341 U.S. 214, 221, 71 S. Ct. 675, 95 L.Ed. 879 (1951). "Impeachment material, which is not admissible for any evidentiary purpose prior to trial, is not subject to subpoena under Rule 17 until after testimony at trial.

United States v. Tillman, 2009 U.S. Dist. LEXIS 96922, *2 WL CITE, (W.D. Pa. October 20, 2009) (Lancaster, J), citing Cutherbertson, 651 F.2d at 195 ("naked exculpatory material held by third parties that does not rise to the dignity of admissible evidence simply is not within the rule." Information sought for the sole purpose of impeachment is not evidentiary, and therefore not subject to pretrial disclosure under Rule 17(c). See id. "Rule 17(c) is not designed to be used as a broad discovery tool. Id. "Instead, the requesting party must show, inter alia, "that the application is made in good faith and is not intended as a general "fishing expedition." Cutherbertson, 651 F.2d at 145, quoting United States v. Nixon, 418 U.S. 683, 699-700, 94 S. Ct. 3090, 41 L. Ed. 2d 1039 (1974).

Standing to Quash

As a threshold matter, the Rigas‟ argue that the Government has no standing to quash the subpoenas. "A third party, in this case the Government, has standing to quash a subpoena if it infringes on their legitimate interests." United States v. Segal, 276 F. Supp 2d 896, 899 (N.D. Ill. August 8, 2003) (Castillo, J.), citing United States v. Raineri, 670 F.2d 702, 712 (7th Cir. 1982) (holding that the prosecution had a legitimate interest in quashing a defense subpoena directed toward government witnesses and those reasons included "preventing undue lengthening of the trial, undue harassment of its witnesses, and prejudicial over- emphasis on [the witness‟s] credibility"). "One important question that Courts have considered in deciding the issue of standing is "whether the subpoenaed party joins in the Government‟s motion to quash." United States v. Vasquez, 258 F.R.D. 68, 71 (E.D. NY May 20, 2009) (Spatt, J), quoting United States v. Nektalov 2004 U.S. Dist. LEXIS 13127, 2004 WL 1574721, at *1 (S.D. NY 2004). The government apparently has had some communication with at least some of the subpoenaed parties, but no formal motion to join in the motion to quash has been filed.

Requested subpoenas to the Adelphia Parties

We find that the government has a legitimate interest in quashing the motion directed toward the Adelphia Parties to avoid re-litigating issues already decided. Many of the documents defendants seek to subpoena are subject to a protective order issued by Judge Jones on June 14, 2011. (Document # 150). Judge Jones granted the request of the United States and ordered that no further discovery be allowed relating to the subject of the Rigas‟ Motion to Dismiss the Indictment on Fifth and Sixth Amendment grounds. (Document # 70-3). The defendants asserted in their motion to dismiss the indictment that the Government interfered with their right to counsel in the Southern District of New York prosecution by threatening Adelphia with indictment if it supported the Rigas‟ in any fashion, including payment of the Rigas‟ legal fees. Judge Jones denied the motion to dismiss, because all of the activities the Rigas‟ complained of occurred prior to the instant action, and the defendants made no argument that prosecutors interfered with the instant prosecution. In addition to denying the motion to dismiss, Judge Jones also granted a motion for protective order, stating that "no further discovery into this area is permitted." (Document # 150 at 7).

As evidenced by the government‟s "black-line‟ version of the subpoena, (Document #170, exhibit 1) much the subpoena is almost identical to the discovery request the Rigas‟ demanded of the government -- the subject of Judge Jones‟ protective order. As a result, we will grant the government‟s motion to quash the subpoena. The Rigas‟ may submit a carefully tailored new request for subpoena to ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.