United States District Court, W.D. North Carolina, Charlotte Division
J. Conrad, Jr., United States District Judge
MATTER is before the Court on the government's
Notice of Appeal, (Doc. No. 19), of the magistrate
judge's denial, (Minute Order, Oct. 3, 2019), of its
Motion on Status of Counsel, (Doc. No. 16). I. BACKGROUND The
defendant was indicted on June 20, 2019, for offenses related
to alleged tax preparation fraud. (Doc. No. 3). The
Indictment also included one count of destruction of records
(Count Thirty-Five) resulting from the alleged arson at one
of the defendant's business locations after she had been
served with an IRS summons. (Id. at 2-3, 7-8). She
was appointed counsel from the Federal Public Defender's
Office at her initial appearance. (Oral Order, June 26,
Indictment was superseded on August 22, 2019. (Doc. No. 13).
An additional charge of obstruction of justice (Count
Thirty-Six) is based, in part, on alleged false statements
under oath before the Grand Jury on February 19,
2019. (Id. at 4, 9). After the
defendant was arraigned on the Superseding Indictment on
September 5, 2019, current counsel entered his appearance on
September 9, 2019. (Doc. No. 15).
government filed the underlying motion on September 16, 2019,
seeking a hearing on whether counsel has an impermissible
conflict of interest. (Doc. No. 16). Pursuant to 28 U.S.C.
§ 636(b)(1)(A), a magistrate judge was designated to
hear and determine the government's motion. (No.
3:05-mc-268, Doc. No. 1: Referral Order at 1). After
conducting an evidentiary hearing, the magistrate judge found
that the matter was subject to interpretation and denied the
government's request to disqualify counsel from further
representation of the defendant. (Minute Order, Oct. 3,
2019). On October 10, 2019, the government filed the instant
Notice of Appeal seeking disqualification of counsel,
claiming he is a fact witness who provides substantive
evidence of the defendant's alleged false testimony
before the grand jury. (Doc. No. 19 at 1).
STANDARD OF REVIEW
Rule of Criminal Procedure 59(a) allows a district judge to
refer to a magistrate judge for determination any matter that
does not dispose of a charge or defense. When a party objects
to a magistrate judge's order on a nondispositive matter,
a district judge must determine whether the order is contrary
to law or clearly erroneous.
a criminal defendant has the right to hire the counsel of her
own choosing, the presumption in favor of retained counsel
“may be overcome not only by a demonstration of actual
conflict but by a showing of a serious potential for
conflict.” United States v. Basham, 561
F.3d 302, 323-24 (4th Cir. 2008) (quoting Wheat v. United
States, 486 U.S. 153, 164 (1988)) (emphasis in
original). A district court has 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.'”
Id. at 323 (quoting Wheat, 486 U.S. at
160). Thus, “‘a district court has an obligation
to foresee problems over representation that might arise at
trial and head them off beforehand.'” Id.
(quoting United States v. Howard, 115 F.3d 1151,
1155 (4th Cir. 1997).
retained counsel is a member of the North Carolina Bar. (Doc.
No. 15: Entry of General Appearance). By appearing in this
District, attorneys submit themselves to the Court's
enforcement of the North Carolina Rules of Professional
Conduct. LCrR 44.1 (incorporating LCvR 83.1(a)). Revised Rule
3.7 of that code provides:
(a) A lawyer shall not act as advocate at a trial in which
the lawyer is likely to be a necessary witness unless:
(1) the testimony relates to an uncontested issue;
(2) the testimony relates to the nature and value of legal
services rendered in the case; or (3) disqualification of the
lawyer would work substantial hardship on the client.
witness's testimony is ‘necessary' within the
meaning of the rule when it is relevant, material, and
unobtainable by other means.” State v. Smith,
749 S.E.2d 507, 510 ( N.C. Ct. App. 2013) (internal quotation
marks and citation omitted). However, an attorney who is
disqualified from advocating at trial may represent his
client on non-trial matters absent a showing of other
conflict of interest under Rules 1.7 or 1.9, such as
involving other current or former clients. Cunningham v.
Sams, 588 S.E.2d 484, 487 ( N.C. Ct. App. 2003).
government has demonstrated that retained counsel is likely
to be a necessary witness if the case proceeds to trial.
First, counsel's testimony would be relevant and material
to the contested issue of whether the defendant made false
statements before the grand jury. According to the
transcript, the defendant testified on February 19, 2019,
that she provided records responsive to a grand jury subpoena
to counsel on a USB, which she expected to be forwarded to
the grand jury. (Doc. No. 19-1, Exhibit 1 at
2-4).However, in an e-mail message sent to the
government on February 20, 2019, counsel stated, “I
don't have any records that would be responsive to the
subpoena, on a thumb drive or otherwise. Ms. Smith seems to
think I do, however, I do not!” (Doc. No. 19-2, Exhibit
2 at 2). Before the magistrate judge, counsel
explained that the defendant had provided some other kind of
drive without anything on it and that records were ultimately
produced, including a whole computer. Even so, the government
intends to call counsel as a ...