A Conflict of Interest (6 page)

Finally, three weeks after my initial meeting with Ohlig, the first meeting of the joint defense group convenes. Every lawyer is accompanied to the meeting by an associate, all of whom are women. Quick math tells you that, with ten lawyers at a blended hourly rate north of $1,000, these meetings cost more than ten grand every sixty minutes. This meeting will last about an hour, but I’m sure everyone will bill it at two, including travel and rounding up, and then the associates will all write memos recounting what happened, which the partners will review, and then the memos will never be looked at again. All in, this meeting will cost Ohlig about $40,000.

Over the past three weeks, we (and by that I mean Abby and the temps) had begun the process of collecting OPM’s documents, uploading them on to our system, and segregating them into different piles. In litigation-speak we refer to the piles as “buckets”—one for key documents, one for documents that may become key documents, one for documents required to be produced pursuant to the grand jury subpoena, one for documents that probably aren’t important, and a final category for documents we didn’t understand. Often a single document falls into more than one bucket, which increases by a factor of two or three the total number of documents in the case.

Even without the duplication, we retrieved more than two million pages of documents from OPM. More than half are trading tickets, which, thankfully, will be analyzed by an outside support firm that will give us summary information about what they mean. As for the
remaining million pages, the bucket designations will ultimately yield to a different system of classification: the key documents will be winnowed to about ten thousand and put in “hot doc” binders. In time, the hot docs will be reduced to the less than a thousand that will become our daily working file. Half of the working file will make it into the trial binders as likely exhibits, and then less than 10 percent of those will actually be introduced at trial.

The facts we’ve learned so far through the documents are not in dispute. OPM bought 185 million shares of Salminol at between a dime and a quarter a share, for a total investment of about $35 million. Before OPM started selling it, Salminol shares had dropped to ten cents, which would have resulted in a loss to OPM of more than $26 million. However, by aggressively finding buyers for the stock, OPM drove the price up, until buyers were paying just under $2 a share. The litigation support team will calculate the total profit to the penny, but my back of the envelope analysis is that Ohlig was right on—OPM earned about $150 million. When OPM was completely out of the position, no one was touting the stock any longer, and the price plummeted to zero, wiping out the investment of the poor saps who bought it from OPM.

Those facts, however, do not a crime make. The line between a bad investment and criminal fraud is breached only if Michael Ohlig knew Salminol was worthless at the time he instructed his brokers to sell it. Ohlig has assured Abby and me that was not the case, but I told him, as I have told many clients through the years, documents don’t lie, and financial fraud prosecutions are built on emails in which statements of bravado become smoking guns. Ohlig’s response was only to say that OPM employees never communicated by email.

That leaves the prosecution with two options—present a circumstantial case in which they show to the jury that Ohlig must have known that Salminol was a dog stock based on the financial statements underlying the company, a daunting prospect if ever there was one, or flip someone to testify that Ohlig said he knew Salminol was worthless.

Our top priority, therefore, is keeping everyone who can hurt Ohlig in line. As the saying goes, you want everyone in the tent pissing out.

Protocol for the joint defense meetings is that we can’t actually get down to business until the breakfast needs are met. The lawyers line up along the back of the conference room as if they are waiting at a buffet station at a wedding.

“Alex, who do I talk to about the bagel toppings?” asks Matthew Trott, a known schmoozer.

“It already looks like a deli counter in here,” I joke back.

“C’mon, Ohlig can afford to spring for some lox,” he says.

“Or at least some whitefish salad,” Joe Freeman adds.

“You guys and your smoked fish,” George Eastman says. “Take it from an old Irishman, we should meet later over some whiskey and we’d actually get stuff done.”

After the smoked fish discussion has been tabled and everyone is seated, I call the meeting to order. I’m at the head of the table. Abby is to my right and will be taking notes. The other associates sit beside their partners and will also serve solely as scriveners.

“Let’s get down to it,” I say. “I’m happy to report that, aside from the subpoena, we still haven’t heard anything from the U.S. Attorney’s Office. We’ll be in a position to produce our documents next week, so maybe that will cause them to contact us.”

“How do the docs look?” Jane McMahan asks.

McMahan is a former clerk for a U.S. Supreme Court Justice, which is the highest credential you can have as a practicing lawyer. It also means that she’s the smartest of the group, a fact of which we’re all well aware, I’m sure. Ironically, she’s representing the lowest-level employee, Ohlig’s secretary. Aaron Littman knows McMahan because he also clerked on the Supreme Court, and he made the call to have McMahan represent Shaw because, as he said, “It’s the secretary, and not the CFO, who can do the most damage.”

“So far, so good,” I say. “Since it’s been radio silence from the U.S. Attorneys’ Office for us, I thought we should go around the room and see what contact any of you have had.”

McMahan goes first. “I’m a little deeper into it than you, Alex,” she says. “The AUSA called me last week. A guy named Christopher Pavin. Anyone know him?”

“I think I’ve heard his name before,” Sheffield says, “but I haven’t encountered him on a case yet.”

By their silence on the issue, the others indicate that they also haven’t heard of him. This surprises me, but in a good way. I would have thought that Ohlig’s case was high profile enough to justify someone with significant tenure in the office leading the prosecution team. That no one in this group has heard of Pavin is a pretty good indicator that he’s new to the office, or at least to the securities division, which handles these types of cases.

“I’ll tell you,” McMahan continues, “he didn’t sound too sure of himself. There was a lot of cliché talk, like he’s playing a prosecutor from the movies. When I asked him what he could tell me, he actually used the term ‘one-way street’ and said the government wasn’t going to lay out proof of anyone’s guilt until legally obligated to do so.”

“Did you ask him about your client’s status?” Eastman asks.

“Subject,” McMahan says, with a smile of relief.

In Department of Justice parlance, being a subject means the government doesn’t have a present intention to indict. It’s the second best of the three designations. Defense attorneys want to hear their clients are witnesses, which means the prosecutor has no suspicion of culpability.

“If Ohlig’s secretary is a subject, that pretty much means the rest of us are probably subjects too,” Trott says.

“I hope that’s the case,” Eastman retorts, never one to be an optimist. “Some of our guys may be targets.”

I know that Ohlig is a target without asking, and I’m of two minds as to how I want the others to be viewed. If they’re targets then they are, at least in the first instance, more inclined to deny any wrongdoing, or else they would be incriminating themselves. It’s a fine line, however, because targets are in greater the legal jeopardy and therefore are more incentivized to cut deals and save themselves, and I have absolutely no doubt that the prosecutor won’t give a plea deal unless it’s in exchange for testimony he can use against Ohlig.

“Did Pavin invite your client in?” I ask McMahan.

“No. It was a little strange, actually. I don’t really know why he called. He said he was introducing himself and that a grand jury had
been convened. I already knew about the grand jury, but I wasn’t going to let him know that, so I just played dumb. And that was pretty much it. I told him I was just getting up to speed on the facts, and he said he was too, and he’d be back in touch. I haven’t heard from him since.”

This is the dance of criminal defense, at least in the pre-indictment stage. It’s like a mini-trial except that your adversary is also the judge. The game-within-the-game involves defense counsel trying to get information from the prosecutor without giving any up, while still presenting the veneer of cooperation.

“So, can I take it that none of you are going to let your clients talk to him?” I ask.

I scan each lawyer’s face, looking for a clue as to whether anyone is considering a plea in exchange for leniency. It’s common knowledge that the AUSA doesn’t need more than one insider to prove the case against everyone, and it’s right out of the playbook to start at the lowest rung of the food chain and work up. I’m sure Pavin will offer Allison Shaw immunity if she has anything incriminating on Ohlig. If she’s not so inclined, he’ll go up the seniority ladder, offering a similar deal until someone bites. Investment bank or mafia family, a criminal prosecution follows the same script.

“I think we’re all with you,” Eastman says. “My guy tells me that everything was on the up and up, and he should know, he’s the number two after all. He says that Salminol was a bad investment, but selling a dog stock isn’t a crime.”

I
’ve heard airline pilots describe their jobs as hours of boredom interrupted only by moments of terror. Criminal defense fits that bill too.

After the prosecutor served a subpoena on OPM, nothing happened for more than a month. We used the time to collect documents and meet with the joint defense group and, mainly, wait for the other shoe to drop.

It dropped at 5:45 in the morning, and I learn about it because Ohlig is shouting something into my cell phone that I can’t quite understand, seeing as I’m still half asleep. “What?” I say, still groggy.

“I’m standing in front of my office, and there’s a padlock on the front door. Some type of list is taped to it, I think of my files.”

“It means that the government has executed a search warrant.”

“Can they do that?”

“If they got a judge to authorize it, they can,” I say, going into lawyer mode. “I’ll be on the next flight down. In the meantime, go home. Send an email to the employees telling them the office is closed and that they’ll get another email later when it opens. Michael, this is important. That’s all the email should say. No explanations. Just that the office is closed. Understand?”

He speaks more quietly now. “There’s never going to be another email, is there?”

“Not likely,” I say.

“Who was that?” Elizabeth says when I roll over to return the phone to the holder.

“Ohlig. They’ve executed a search warrant at his office in Florida. I need to get down there right away.”

“Have you told your mother that you’re representing him?”

“No.”

“Don’t you think you should, especially if you’re going down there?”

Elizabeth is an honesty-is-the-best-policy type of person. That outlook works well in her chosen vocation: Elizabeth is an artist, a talented painter, to be specific, though she hasn’t actually painted anything since Charlotte was born. I used to joke with her that I never understood how someone with her worldview could possibly have ended up married to a lawyer. Her standard response was that she didn’t marry a lawyer; she married a man who practices law when he’s at the office.

“He’s asked me not to,” I say, and leave it at that, sparing her the blather about how my professional obligations trump any notions of honesty that exist in the non-lawyer world. “I’ll just tell my mother that I’m down there on a case. She never asks about what I’m working on.”

“Are you leaving now?” Elizabeth asks, as I roll out of bed.

“As soon as I can,” I say. “Go back to sleep. I’ll call you from Florida tonight.”

I walk into the kitchen and fill the coffeemaker before dialing Abby from my BlackBerry. She answers on the third ring. I can tell that I’ve woken her.

“Michael Ohlig just called. The FBI has apparently executed a search warrant at his office. I told him to close up shop and wait for the cavalry, and by that I mean you and me. Can you call the office and have someone book us on the earliest flight we can make to West Palm, and get us rooms at the Four Seasons?”

“Sure,” she says, the standard associate response. “How many nights?”

“One should do it, I think.”

“Okay.”

Despite the fact that we’ve already produced more than a million pages pursuant to the subpoena, the government executed a search warrant because they still think Ohlig is holding stuff back. It’s an odd anomaly about discovery in a white collar criminal prosecution—the stakes couldn’t be higher and the accused is the accused because the government believes he doesn’t follow the rules, and yet discovery is still governed, for the most part, by an honor policy. When the prosecution can persuade a judge that they have probable cause that
documents have been improperly withheld, they can do the collection themselves via a search warrant.

“Do you think there’s something we didn’t turn over?” I ask Abby.

A foolish question. If she thought there was something we hadn’t turned over, she would have asked Ohlig for it and then she would have produced it to the government. In essence, I’m asking her to tell me if she knows of something she didn’t know.

“Not unless he was holding back on us,” she says.

“I suppose that’ll be the first question we ask once we’re down there. Email me ASAP with the flight information. I’ll meet you at the gate.”

“Mind if I ask a stupid question?”

“Is this when I’m supposed to say that there’s no such thing as a stupid question?”

“What are we going to do once we’re down there? I mean, if they’ve already executed the search warrant, what can we do about that now? It’s a little like closing the barn door after the horse gets out, isn’t it?”