4.Rule 807 Hearing on the Reported Karpeles Offer

THE COURT: You know, I think now is a good time to take our mid-afternoon break so that we can take up this evidentiary matter while you folks stretch your legs.

So let's take our mid-afternoon break. We'll come back in about -- probably about 12 minutes. I want to remind you not to talk to each other or anybody else about this case. Thank you.

And you could take a break, too.

THE COURT: All right. Let's all be seated.

So, of course, you folks know a lot more about the facts than I do, and so I'm learning about this as I hear it and don't have the background that you folks have.

The residual exception of the hearsay rule is Rule 807. That is the rule that Mr. Dratel has cited. And since I know he knows the rules well, I assume that that is the one he intended to cite.

THE COURT: All right. And why don't you folks -- I mean, as I understand the issue and as I have been hearing the issue, the issue is that the witness allegedly learned something only by virtue of being told it, that it is being offered for the truth; namely, that this particular offer was in fact made and that the offer had the terms that Mr. Dratel has in his questioning suggested.

Am I right about what the problem is from the government's perspective?

THE COURT: All right. So so far so good.

And, Mr. Dratel, tell me where you are going with this. I mean, I understand generally the issue with Mr. Karpeles. I had followed that, I think. I think it is pretty clear where you are going with that. But tell me why you need this point through this witness in this way, as opposed to after learning whatever he learned about the Baltimore investigation with Karpeles, what did you do next. That would be the typical way to avoid the hearsay issue.

THE COURT: It is not really, not when you've got an investigation that's been going on for years. I'm sure you have been involved in situations.

Let's not deal with the volume because I don't want there to be some takeaway point that is not relevant to our discussion about the procedures that we used. I think we followed the appropriate procedures for the 3500.

THE COURT: I just want to get the issues on the table to deal with them as a group.

Mr. Turner, why don't you address your position on this.

THE COURT: Explain to me the different levels of hearsay because I am not familiar with how this conversation occurred.

Is it, Mr. Dratel, your view that this occurred from the attorney himself who was making the offer to this witness, or was it through one attorney to another attorney -- well, originating with the client to the attorney to another attorney to the witness?

THE COURT: All right. Let's take this piece by piece. Let's take it from -- because the way the hearsay rule, as you all understand, is you evaluate it at each step.

Would you agree, Mr. Turner, that the initial statement from the attorney for Mr. Karpeles, that his client was offering to divulge information in exchange for some form of leniency, that that is not in and of itself hearsay; that would be offered for the fact that that statement was made?

THE COURT: I understand. He can't, and you can go back on cross how he has no idea if this was true, false. All he knows is that he was told this, and he has no idea if it was in fact made.

But what I'm trying to figure out is have there been other aspects of the Baltimore investigation which you have found to be unreliable in some way, which leads you to believe it is unreliable? And in terms of these particular A.U.S.A.s who were involved, let's put it that way -- and I don't need to know their names because I don't want to --

THE COURT: If he says not always, that may lead us down a different path. If he says -- I don't know. You do what you want to do.

But here's my -- is there something else you wanted to say, Mr. Turner?

THE COURT: I would rather you complete your examination so we at least know where you are ending.

Are you proposing to hold yours open? I don't want to hold yours open.

THE COURT: Well, if you're going to go to 5 o'clock, what I'll do is we'll end before you get to this issue. Don't go back to it right now. I will hold on whether or not we -- what we do with it because you both will then have had time to consider it, so will I, over the weekend, and we can then come back to it on Tuesday morning. So let's do it that way. It sounds like it's sufficiently important to you.

Let me tell you my thinking on it without giving a ruling on it, and this is an issue which, in light of the defendant's interest in this, we'll hold it open until Tuesday morning. All right? So the government will not with Mr. Der-Yeghiayan be able to do the redirect until Tuesday morning, for which I apologize, but that will be the way it is. So that witness will have to just come back.

THE COURT: I'm thinking that there are indicia of truth to this for 807 purposes, but I do want to consider it further and will be able to do so in light of the additional time that we will have. Having a proffer from a lawyer is not a particularly unusual type of act -- in fact, it is quite common -- and, therefore, it is a reasonable thing that a thought might occur which is that if there is any information which a potential target of an investigation has, that they might attempt to consider exchanging that for leniency. So the story that is going along with this has indicia of something which could well have happened.

And the fact that it is between two A.U.S.A.s or one or more A.U.S.A. in terms of the hearsay portion, because the first portion with the lawyer is not a hearsay statement, but the fact that an offer was made -- is being offered for the truth, there are cases which suggest that sometimes indicia of reliability can come from the position of a person. That would be the kind -- and there are cases and I believe, actually, it is in the form of an attorney, not necessarily an A.U.S.A., if I am recalling my Second Circuit cases. I don't have a name but you will be able to find them.

So I think that there is enough here that I am not prepared right now if we are going to be falling over into Tuesday anyway to make a definitive ruling on this. We'll let you folks noodle around with it some, and the government can then have the notice that it otherwise would have had under the rules.

And in the future we will try to head these off a little earlier.

THE COURT: Then we will figure out where to go from there.

Yes, Mr. Turner.

THE COURT: I want to state one matter before we bring in the jury. As it turns out, the Post was active yesterday on a story other than this case. And it appears from information that the courthouse has obtained that there was a red-bearded Post reporter who looks like somebody actually here who approached juror no. 2 and was in the process of writing an article about man-spreading, apparently a new phenomenon of which I was unfamiliar.

In any event, that was the topic about which he was going to approach. He was not assigned to this case. So it was just really a happenstance. So I just wanted to make that clear, that nobody on this case that we are aware of has then been approached by anyone.

Let's bring out the jury. I will look forward to reading the article by the Post.

THE COURT: We'll all be seated. We have to get the witness out here. Witnesses also take a break during the breaks for the jury. Here we go.

Mr. Dratel, you may proceed.