United States v. Connolly, 2019 WL 2120523 (2019)

Facts

  • Gavin Campbell Black worked for Deutsche Bank AG and was connected to the bank’s USD LIBOR submissions.
  • As regulators and prosecutors investigated potential manipulation of LIBOR-related submissions, Deutsche Bank began an internal investigation and retained outside counsel, Paul, Weiss, Rifkind, Wharton & Garrison LLP (Paul Weiss), to conduct interviews and gather facts.
  • The internal investigation operated in close coordination with the federal government (and related regulators). The court found the government’s involvement significant enough that the internal fact-gathering was conducted in concert with, and in parts at the direction of, the government.
  • During the internal investigation, Paul Weiss interviewed Black multiple times. Black made potentially self-incriminating statements in those interviews.
  • Black later faced federal criminal charges and was convicted at trial for crimes tied to interest-rate manipulation (including wire-fraud-related offenses).
  • After conviction, Black moved to vacate his conviction and dismiss the indictment, arguing that his statements to Paul Weiss were effectively compelled testimony attributable to the government.
  • Black relied on Kastigar v. United States, which bars the government from using compelled testimony or anything derived from it in a later criminal case.
  • The government maintained it did not present Black’s internal-interview statements to the grand jury or at trial, did not introduce them indirectly, and did not use them to obtain other evidence.
  • The record reflected that the prosecution’s case rested on testimony from witnesses not tainted by Black’s internal statements and on documents produced by Deutsche Bank, rather than on Black’s interview admissions.

Issues

  1. Whether Black’s statements to Deutsche Bank’s outside counsel during the internal investigation were fairly attributable to the government and therefore “compelled” for Fifth Amendment purposes.
  2. If the statements were compelled, whether the government proved it made no direct or derivative use of those statements in obtaining the indictment or securing the conviction, as required by Kastigar.
  3. If there was a Fifth Amendment/Kastigar problem, whether the proper remedy was dismissal of the indictment and vacatur of the conviction.

Decision

  • The court concluded that, given the level of government involvement and coordination with the bank’s internal investigation, Black’s interviews by Deutsche Bank’s outside counsel were attributable to the government for purposes of the compulsion analysis.
  • The court treated Black’s internal-interview statements as compelled and therefore inadmissible against him.
  • The court nevertheless denied Black’s request to dismiss the indictment and vacate the conviction because the government carried its burden under Kastigar to show that it did not use Black’s statements, directly or indirectly.
  • The court found the government did not present the statements to the grand jury, did not introduce them at trial, and did not use them to shape other evidence or witness testimony; instead, the case was built from independent witnesses and documents.

Legal Principles

  • A private employer’s internal investigation can be treated as state action when the government so closely directs, pressures, or coordinates the investigation that the employer and its counsel function as government agents for Fifth Amendment purposes.
  • Statements obtained under job-loss pressure in a government-attributable interview setting can be “compelled” and may not be used against the speaker in a criminal prosecution.
  • Under Kastigar, once a defendant shows compelled testimony, the government bears the burden to prove that its evidence is derived from sources wholly independent of the compelled statements, including no derivative use for investigative leads, witness preparation, or trial strategy.
  • Even when statements are deemed compelled, dismissal of an indictment or vacatur of a conviction is not required if the government proves non-use and independent sourcing of its proof.

Conclusion

United States v. Connolly held that Black’s statements during Deutsche Bank’s internal interviews were attributable to the government and compelled, but the court denied dismissal and vacatur because prosecutors proved they made no direct or derivative use of those statements and relied on independent witnesses and documents.