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United States v. Royce

United States District Court, M.D. Pennsylvania

October 13, 2017

DONALD ROYCE, Defendant.



         I. Introduction

         Presently before the Court is the Government's Motion to Disqualify Attorney Murdoch Walker as Counsel for Defendant. (Doc. 14). Defendant, Donald Royce, is charged with one count of mail fraud in violation of 18 U.S.C. § 1341 and eight counts of aiding in the preparation of false income tax returns in violation of 26 U.S.C. § 7206(2). (Doc. 1). On May 30, 2017, pursuant to Local Rule, Attorney Walker petitioned for special admission to practice before this Court. (Doc. 7). On June 2, 2017, this Court granted Attorney Walker leave to appear pro hac vice so that he could represent Defendant Royce. (Doc. 8). Subsequently, Attorney Christopher Powell also entered his appearance on behalf of Defendant Royce. (Doc. 11). On June 29, 2017, the Government moved to Disqualify Attorney Walker on the basis that he also represents Defendant Royce's wife, Heather Royce. (Doc. 14). Attorney Walker opposes this Motion. (Doc. 15). For the reasons that follow, this Court will grant the Government's Motion and disqualify Attorney Walker as counsel for Defendant Royce.

         II. Background

         In 2014, after selling his tax preparation business, Defendant Royce allegedly obtained a list of clients from another tax preparer and prepared 2013 tax returns for several individuals. (Doc. 1 at ¶ 2). According to the Government, Defendant Royce completed and returned accurate tax returns to his clients but then altered the returns and, using Ms. Royce's Electronic Filing Identification Number, filed the fraudulent tax returns with the Internal Revenue Service. (Id. at ¶¶ 3-4; Doc. 14-1 at 1-2). The net result was that Defendant allegedly (1) inflated some of his clients' tax refunds and kept the proceeds and (2) had other clients pay him the taxes they owed, kept the money, and then submitted tax returns indicating that the clients owed no taxes. (Doc. 1 at ¶¶ 4-5).

         In 2015, the Internal Revenue Service began investigating Defendant Royce. (Doc. 14-1 at 1). At some point in time, the investigation expanded to include Ms. Royce. (Id. at 7; Doc. 15 at 3-4). On April 22, 2016, Ms. Royce retained Attorney Walker to represent her. (Doc. 15 at 1). By that time, Defendant Royce was already being represented by a California based law firm. (Id. at 1-2). On June 3, 2016, Ms. Royce, accompanied by Attorney Walker, was interviewed by the Assistant United States Attorney assigned to this case. (Id. at 2-3). During the interview, Ms. Royce told the Government that she knew nothing about fraudulent tax returns, that Defendant Royce was mentally incapacitated at the time the tax returns were filed, and that Defendant Royce remains mentally incapacitated. (Id. at 3; Doc. 14-1 at 2-3).

         In March of 2017, Ms. Royce expressed to Attorney Walker that she did not believe that Defendant Royce's attorneys were adequately representing him and asked if she could retain Attorney Walker on her husband's behalf. (Doc. 15 at 4). After talking with the Government and making his own determination that there was no conflict of interest in representing both Defendant Royce and Ms. Royce, Attorney Walker began representing Defendant Royce on May 4, 2017. (Id. at 4-6). Less than two weeks later on May 16, 2017, a federal grand jury returned an indictment against Defendant Royce. (Doc. 1).

         III. Discussion

         The Government argues that Attorney Walker should be disqualified as counsel for Defendant Royce because his other client, Ms. Royce, remains under criminal investigation and alternatively may become a witness at Defendant Royce's trial. (Doc. 14-1 at 7-8). Attorney Walker argues that because he is pursuing what he calls the "innocent-spouse defense, " no adversarial position will develop between Defendant Royce and Ms. Royce, and, therefore, there will be no conflict of interest in representing both clients. (Doc. 15 at 13-16).

         The Sixth Amendment provides, in part, that "[i]n all criminal prosecutions, the accused shall enjoy the right... to have the Assistance of Counsel for his defence." U.S. Const, amend. VI. The Supreme Court has repeatedly "recognized that the right to counsel is the right to the effective assistance of counsel." McMann v. Richardson, 397 U.S. 759, 771 n.14, 90 S.Ct. 1441, 25 L.Ed.2d 763 (1970). In turn, "[t]he Sixth Amendment guarantee of effective assistance of counsel includes two correlative rights, the right to adequate representation by an attorney of reasonable competence and the right to the attorney's undivided loyalty free of conflict of interest." United States v. Gambino, 864 F.2d 1064, 1069 (3d Cir. 1988). "The attorney's undivided loyalty is required because the type of effective 'assistance of counsel' the Sixth Amendment guarantees a criminal defendant is that which puts the government to its proofs in an adversarial manner, and for this counsel free of conflicts of interest is necessary." United States v. Moscony, 927 F.2d 742, 748 (3d Cir. 1991).

         "However, another right is derived from the right to effective assistance of counsel, for 'the right to counsel being conceded, a defendant should be afforded a fair opportunity to secure counsel of his own choice.'" Id. (quoting Powell v. Alabama, 287 U.S. 45, 53, 53 S.Ct. 55, 77 L.Ed. 158 (1932)). Nevertheless, "while the right to select and be represented by one's preferred attorney is comprehended by the Sixth Amendment, the essential aim of the Amendment is to guarantee an effective advocate for each criminal defendant rather than to ensure that a defendant will inexorably be represented by the lawyer whom he prefers." Wheat v. United States, 486 U.S. 153, 159, 108 S.Ct. 1692, 100 L.Ed.2d 140 (1988). Thus, "[t]he right to counsel of choice... is not absolute, " United States v. Voigt, 89 F.3d 1050, 1074 (3d Cir. 1996), and the presumption in favor of allowing a criminal defendant his or her choice of counsel "may be overcome not only by a demonstration of actual conflict but by a showing of a serious potential for conflict." Wheat, 486 U.S. at 164.

         Even if a defendant waives his or her right to conflict-free representation, it "does not necessarily resolve the matter, for the trial court has an institutional interest in protecting the truth-seeking function of the proceedings over which it is presiding by considering whether the defendant has effective assistance of counsel, regardless of any proffered waiver." Moscony, 927 F.2d at 749. Further, "because district courts are required to evaluate possible conflicts in the 'murkier pretrial context when relationships between parties are seen through a glass, darkly, '" the Supreme Court has held that district courts should have "'substantial latitude' to take protective steps 'not only in those rare cases where an actual conflict may be demonstrated before trial, but in the more common cases where a potential for conflict exists which may or may not burgeon into an actual conflict as the trial progresses.'" United States v. Self, 681 F.3d 190, 198 (3d Cir. 2012) (quoting Wheat, 486 U.S. at 162, 163).

         The Third Circuit has found that "the typical scenario where disqualification becomes necessary entails an attorney's attempt to represent multiple defendants in the same prosecution." United States v. Stewart, 185 F.3d 112, 121 (3d Cir. 1999). The Circuit, however, has also "recognized that conflicts arise where a 'defendant seeks to waive his right to conflict-free representation in circumstances in which the counsel of his choice may have divided loyalties due to concurrent or prior representation of another client who is a co-defendant, a co-conspirator, or a government witness.'" Id. (quoting Moscony, 927 F.2d at 749). Indeed, "[c]onflicts of interest arise whenever an attorney's loyalties are divided, and an attorney who cross-examines former clients inherently encounters divided loyalties." Moscony, 927 F.2d at 750 (internal citations omitted).

         Finally, "representation that constitutes a breach of professional ethics need not be tolerated, " United States v. Rankin,779 F.2d 956, 958 (3d Cir. 1986), and a district court may use the applicable Code of Professional Responsibility as a guide to help determine whether disqualification is appropriate, see, e.g., Wheat, 486 U.S. at 160 ("Federal courts have an independent interest in ensuring that criminal trials are conducted within the ethical standards of the profession and that legal proceedings appear fair to all who observe them"); United States v. Dolan,570 F.2d 1177, 1184 (3d Cir. 1978) ("Accordingly, we hold that when a trial court finds an actual conflict of interest which impairs the ability of a criminal defendant's chosen counsel to conform with the ABA Code of Professional Responsibility, the court should not be required to tolerate an inadequate representation of a defendant"); United States v. ...

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