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Manafort Burned Bridges by Two-Timing Mueller Plea Deal

11/29/2018 | Law360
Law360 (November 29, 2018, 9:34 PM EST) -- As a government cooperator, former Trump campaign chairman Paul Manafort went rogue when he continued to talk to the president's legal team via their joint-defense deal and may have put himself in line for additional sentencing pain even if he can salvage a deal with prosecutors, experts said.

Special Counsel Robert Mueller's assertion Monday that Manafort breached his plea agreement by lying about "a variety” of topics and the ensuing news reports that Manafort has shared information with President Donald Trump's legal team in recent weeks represent a new wrinkle in the legal saga surrounding the investigation into Russian efforts to interfere in the 2016 American presidential election.

While Manafort was likely not subject to an explicit ban on communicating with others involved in the probe, white collar and ethics experts said cooperators talking out of school after promising to assist investigators is highly unusual and a clear breach of the cooperation pact. Moreover, prosecutors tend to deal strictly with those who break those deals or commit crimes after pledging to support an investigation.

That's also true for many judges, even when a defendant does manage to get back in the government's good graces and secure a new deal for a positive sentencing recommendation.

“The nature of a cooperation agreement is supposed to be cooperation,” said white collar defense expert Adam Felsenstein of Gallet Dreyer & Berkey LLP. “To play games with prosecutors makes no sense and doesn’t avail Manafort of goodwill, and could deprive him of the sentencing relief he ultimately seeks.”

Following his August conviction by a Virginia federal jury for bank fraud and subscribing to false tax returns, Manafort was headed to a second trial in Washington, D.C., on charges of money laundering, conspiracy and acting as an unregistered foreign agent when he pled guilty to conspiracy and obstruction of justice in the case. Each count carries a maximum sentence of five years. Under the terms of his cooperation deal, Manafort was in line to get a favorable break on sentencing.

But that agreement was junked Monday when prosecutors told the D.C. federal court that Manafort’s unspecified violations of his plea deal negated “any obligations” the government had to Manafort regarding sentencing.

Trump reportedly entered into joint-defense deals with numerous figures being investigated by the special counsel, including Manafort.

As part of Monday's filing, Manafort’s defense team said he “believes he has provided truthful information and does not agree with the government’s characterization or that he has breached the agreement.”

The next day, The New York Times reported that Manafort had continued to brief Trump lawyers about his dealings with Mueller's team even after formalizing his plea and cooperation deal in September.

Legal experts variously described that as mystifying and potentially reckless, particularly because  prosecutors could look at it as grounds for pursuing additional charges against Manafort. Even under an existing cooperation deal, prosecutors “retain the ability to charge you with obstruction," Felsenstein said.

The move also carries risks to the attorney-client privilege protections that a joint-defense agreement is intended to extend over a group of investigation targets or defendants with closely aligned legal interests.

If the privilege of the Trump-Manafort joint defense deal, which predates Manafort’s plea, is ever challenged by the government, experts said a judge would look closely at any action Manafort took showing a divergent interest with others in the agreement. If such an action is found, any information shared after that point could be deemed outside of the privilege and thus subject to government subpoena.

Most courts take a strict approach to the joint defense, effectively limiting the circumstances in which information can be freely shared without triggering a waiver of privilege. But even a liberal judicial take on joint defense would deem a target's agreement to help investigators bring charges against others in the deal as a severing of the “common interest.”

Communication with other witnesses or potential defendants after a cooperation deal “is not unlawful, it’s not unethical, but it just isn’t smart if what he’s trying to do is reduce his exposure,” said legal ethics expert Deborah Rhode of Stanford Law School. “If, on the other hand, he expects to be pardoned by one of the other targets, and in this case that’s Trump, maybe it’s still tactically smart to be sharing this information.”

In an interview with the New York Post this week, Trump left open the possibility of pardoning Manafort.

“It was never discussed, but I wouldn’t take it off the table. Why would I take it off the table?” he said, according to the paper.

A Manafort representative declined to comment to Law360. Manafort has been in federal custody since June, after Mueller charged him with tampering with witnesses while on home confinement awaiting the Virginia trial. Last month, U.S. District Judge T.S. Ellis set Manafort’s sentencing hearing in that case for Feb. 8.

Manafort is not expected to appear at a Friday scheduling conference.

Jessica Masella, who joined DLA Piper in 2016 after a dozen years at the U.S. Attorney's Office for the Southern District of New York, said prosecutors can pen subsequent cooperation deals after ripping up the first, which can include a guilty plea to additional charges.

But that's only done if the balance between the cooperator’s utility in making a larger case outweighs the damage of the breach. And if the damage from a breached agreement is bad enough, the office will walk away from a cooperator even when it hurts the larger case, she said.

Masella also described the issue of cooperators who veer off the legal path, and how to respond, as particularly sensitive for federal prosecutors.

Prosecutors in the Southern District of New York have come to “rely on cooperators in almost every large case" they bring, she said.

"The judges know that. The defense bar knows it, and juries have come to know that," Masella said. "So it’s a very important topic [to federal prosecutors], not just in terms of what they do in a particular case but really about the credibility of all the cases they bring and the witnesses they put on a witness stand in court.”

But no matter what kind of a deal is struck, Masella said it was the practice of her former office to include all the details of post-cooperation deal chicanery in the defendant’s 5K1 letter — the government’s request to the court for sentence leniency based on a cooperator’s assistance.

"It's all relevant information for the judge at sentencing. So all of the conduct — the good and the bad — has to be in there,” she said.

The government is represented in the Manafort cases by Robert S. Mueller, Andrew Weissmann, Greg D. Andres and Jeannie S. Rhee of the Office of the Special Counsel.

Manafort is represented by Richard W. Westling of Epstein Becker Green, Kevin Downing and Thomas E. Zehnle.

The cases are U.S. v. Manafort et al., case number 1:17-cr-00201, in the U.S. District Court for the District of Columbia and case number1:18-cr-00083 in the U.S. District Court for the Eastern District of Virginia.

--Additional reporting by Bonnie Eslinger and Bryan Koenig. Editing by Jill Coffey and Pamela Wilkinson.