Government rarely charges lawyers over fees

With so much evidence against them, the prosecution of attorneys James L. White and A. Mark Vanderveen was a relatively easy call for the U.S. Attorney's office.

Even the defendants must have seen the writing on the wall: On the same day last summer that the government filed felony charges against them, White and Vanderveen each pleaded guilty to a count involving money they received in a drug case.

It's rare for the government to criminally charge attorneys in connection with their fees, or to try to seize those fees through forfeiture actions. In Western Washington, veteran prosecutors cannot recall a similar case involving members of the state bar over the past 20 years.

In deciding whether to seek charges against attorneys, the U.S. Justice Department must weigh the rights of defendants to have legal counsel with its responsibility to root out criminal activity. It can mean walking a tightrope, and it can poison relations between prosecutors and defense attorneys — who need to cooperate for the justice system to work.

On the one hand, attorneys who are party to financial transactions involving ill-gotten gains — including knowingly accepting "dirty" money as a retainer — are subject to criminal prosecution for money-laundering, said Stefan Cassella, deputy chief of the asset forfeiture and money-laundering section at Justice Department headquarters in Washington, D.C.

However, Cassella said prosecutors are sensitive to a defendant's right to counsel and to the legal limits on what charges the government can bring against lawyers.

To help make the right call, Cassella says the Justice Department turns to a set of nonbinding guidelines meant to help prosecutors clarify whether the services an attorney provided, and the money used to pay him or her, were legitimate.

For example, one guideline states the mere fact that an attorney has received a forfeitable asset as legal payment isn't sufficient for the government to grab the asset. Prosecutors must also have reasonable cause to believe the asset was transferred for the purpose of blocking the government's ability to seize it.

Legal fees can be seized when a defense attorney knows from the start that it was tainted money, prosecutors said. But otherwise, "there should be some proof that a scheme existed to maintain the client's interest in the asset or ability to use it to his / her benefit" before the government goes after the fees, the guideline states.

White received $100,000 in cash from drug dealer Robert Kesling, and then gave $20,000 of it to Vanderveen to represent one of Kesling's drug runners. Neither White nor Vanderveen recorded the money on their books.

Setting aside the fact that White knew the money was tainted, he became a relatively easy target because he concealed the money, said Assistant U.S. Attorney Ron Friedman. "It would have been a lot harder case," the prosecutor added, "if White had declared the money" as required by law.

Defense attorneys make themselves vulnerable when they turn a blind eye to strong evidence that their clients are paying them with money or property derived from criminal activity, prosecutors said. But some defense attorneys contend they can go only so far in questioning a potential client about his finances without wrecking a relationship.

John Wesley Hall, a prominent criminal defense attorney based in Little Rock, Ark., said the "presumption of innocence" that is a cornerstone of U.S. jurisprudence should apply to the defendant's money as well as to the defendant.

Some defendants, he and other defense attorneys noted, carry cash for legitimate reasons, and just because a client pays an attorney with cash isn't necessarily a sign of wrongdoing.

Hall said he once represented a professional gambler who was detained at an airport after a security guard discovered he was carrying $160,000 in a briefcase. The government seized it on the grounds that his client had to have been a drug dealer.

The Drug Enforcement Administration eventually agreed to give almost all the money back, Hall recounted, but only after a federal judge hinted he might strike down the seizure law as unconstitutional.

There are some cases in which it may be clear that money is tainted, said Hall, who serves as chairman of the ethics advisory committee of the National Association of Criminal Defense Lawyers and has written a book on legal ethics. But a defense lawyer should not be required to conduct a full-scale investigation into the source of a client's funds, Hall added, because doing so could lead to "ratting out" the client by making too many inquiries.

The fallout from the White-Vanderveen case is still unraveling.

At the sentencing last month of Douglas Spink, another Kesling drug runner who got a special deal for helping the government, Friedman, the assistant U.S. attorney, disclosed that his office has an ongoing investigation involving other members of "our bar." He said the focus was on those lawyers' obligations to their clients and to the court, including an attorney's duty to give his or her undivided loyalty to the client.

Friedman contends the buzz the case has spawned within the legal community is healthy because it "serves as a reminder to us all that we all have our jobs to do, that is, the prosecution and the defense. But we need to make sure that we're all doing our jobs, you know, in an ethical way."

Friedman said his office is mindful of the risk it runs by turning lawyers into criminal targets for the work they're doing as attorneys. It's a sensitive area because it touches on attorney-client relations and because it could lead to the perception that prosecutors are engaged in a pitched war with the defense bar.

Reaction among the local defense bar appears relatively muted thus far, though there is some concern that the government could overreach, or use unreliable sources to build a tenuous case.

In fact, one criminal defense attorney, who didn't want to be named because she has a client in federal detention who might be such a source, said she finds the current atmosphere "exceedingly unsettling."

By contrast, Rick Troberman, a former president of the Washington Association of Criminal Defense Lawyers, said he does not see the cases of Vanderveen and White "as an opening salvo in a war against the defense bar," but rather as isolated incidents that left the government no choice.

Friedman insists that his bottom line is to ensure a level playing field. It's important, he said, that lawyers "play by lawfully prescribed rules" because the game of law "breaks down when the criminal net starts to contain the defense attorneys."

Peter Lewis: 206-464-2217 or plewis@seattletimes.com