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United States v. Beasley
Citations: 27 F. Supp. 3d 793; 2014 U.S. Dist. LEXIS 79768; 2014 WL 2616900Docket: Case No. 12-20030
Court: District Court, E.D. Michigan; June 12, 2014; Federal District Court
Defendants Stewart and Zajac filed motions to dismiss and suppress evidence, citing conflicts of interest involving their attorneys, which were denied by the court. The case stems from an extensive investigation into corruption and fraud related to Detroit's General Retirement System (GRS) and Police and Fire Retirement System (PFRS). The investigation began due to concerns over two questionable investments, leading to the discovery of broader misconduct by investment sponsors and Pension Board staff. Over three years, over 120 witnesses testified before the Grand Jury, with extensive documentation reviewed. In 2009, the PFRS Board retained Attorney Martin Crandall from Clark Hill as Special Counsel for the Grand Jury investigation, later extending similar representation to GRS. Crandall and his colleague, Joseph Turner, represented numerous witnesses, including Trustees and staff, without objection from the defendants regarding multiple representations. Zajac, who served as General Counsel for both retirement systems, was initially interviewed for his knowledge of investment proposal procedures and was later subpoenaed to testify before the Grand Jury. On September 3, 2010, a proffer letter agreement regarding Zajac's testimony was signed by Attorney Crandall, Zajac, and AUSAs Cares and McCarthy. The agreement allowed the government to use any evidence derived from Zajac's statements against him. Zajac subsequently testified before the Grand Jury on September 8 and 15, 2010, discussing the procedures of the Pension Boards and the role of third-party marketers, as well as a $20 million investment proposal known as the "CROCI deal." During his testimony, Zajac was questioned about allegations that Pension Board Trustees demanded free travel in exchange for supporting the CROCI deal, to which he expressed offense at the suggestion. Following Zajac's testimony, investigators uncovered evidence indicating his involvement in facilitating cash gifts to Pension Board Trustees from investment sponsors, including soliciting $10,000 in cash for Trustees Stewart and Bandemer. Notably, these actions were not disclosed during Zajac’s Grand Jury appearances. In January 2011, the government informed Attorneys Crandall and Turner that Zajac had become a target of the investigation, prompting them to cease representation. Zajac then hired Christopher Andreoff, who represented him until May 2014 when new counsel was substituted. Zajac was indicted on March 20, 2013, in the Fifth Superseding Indictment. Paul Stewart, initially viewed as a potential cooperative witness in the investigation of the Pension Boards' activities, eventually became a target due to revelations of false testimony regarding cash payments received from the investment sponsor of a controversial deal known as the ICG Leaseback. Stewart, a 25-year veteran of the Detroit Police Department, initially opposed the ICG deal and was not considered a target during the early stages of the investigation. His status shifted from witness to target after his Grand Jury testimony on September 29, 2010, when the government discovered discrepancies in his statements. This led to the cancellation of his scheduled Grand Jury appearance on January 5, 2011, and notification to his attorneys, Crandall and Turner, to cease representation. Prior to his Grand Jury appearance, Stewart had been interviewed about the ICG deal while represented by Crandall and Turner, who had anticipated he would not incriminate others involved. However, concerns arose when Stewart mentioned receiving something inappropriate due to his position. Crandall sought a proffer letter agreement to protect Stewart's interests, which was signed by all parties involved, indicating that at that time, Stewart was not yet classified as a 'subject' or 'target' of the investigation. This sequence of events highlights the evolving nature of Stewart's involvement and the investigative process. Crandall, a defense attorney with extensive experience representing grand jury witnesses, testified at an evidentiary hearing about his representation of Defendant Stewart. He aims to secure a proffer letter agreement to facilitate cooperation in exchange for protection from prosecution, contingent on the witness providing truthful information. On September 28, 2010, the government issued a proffer letter to Stewart, which outlined the necessity for him to provide a complete and truthful account regarding the investigation. Crandall ensured Stewart understood the importance of honesty and the potential legal repercussions of false testimony, including perjury and obstruction of justice. At the June 3, 2014 hearing, Crandall described Stewart as articulate and strong-willed, asserting that Stewart did not raise any questions about the proffer letter. Under the agreement, Stewart committed to fully answering questions before the Grand Jury, with the government agreeing not to use his statements in prosecution unless he failed to provide truthful information. Stewart confirmed his understanding of the Fifth Amendment rights and the terms of the proffer letter before testifying under oath on September 29, 2010. During his testimony, he discussed Pension Board investments and mentioned a birthday party organized by co-defendant Zajac, where Zajac allegedly gave Stewart $5,000 in cash as a gift. The government indicated that this testimony was the first time they learned about the birthday party. Crandall was absent during Stewart's Grand Jury testimony, while Turner was present. At a June 3, 2014 evidentiary hearing, Turner stated that no one directed Stewart to lie or withhold information regarding the January 2007 birthday party for Defendant Beasley or the August 2007 birthday party for Stewart and Bandemer. Stewart confirmed this during his Grand Jury testimony, stating he was never advised to conceal the party's existence and that he was prepared to disclose it if asked. Before leaving the Grand Jury, Stewart was warned that false testimony or omission of material facts could lead to prosecution but affirmed that he had nothing to change in his testimony. After Stewart testified, Crandall learned of inconsistencies in Stewart’s statements about undisclosed funds. Following discussions with Stewart, Crandall contacted the U.S. Attorney’s office and was assured that Stewart was not a "target" at that time, which he communicated to Turner. Crandall and Turner continued to represent Zajac, Stewart, and Bandemer without issues raised by the government regarding their concurrent representation. In November 2010, Bandemer had a pre-Grand Jury interview with the government, during which Crandall and Turner represented him. They discussed potential conflicts with the U.S. Attorney's office and concluded there were none, as Bandemer was not identified as a target then. Throughout their representation, Turner and Crandall routinely explored potential conflicts and relied on the government to notify them of any issues, which did not occur until early January 2011. Up until that point, they had no indication of any conflicts, with only Defendant Beasley identified as a target before January 5, 2011. Stewart was scheduled to testify again on January 5, 2011, regarding two additional investments. Turner testified that shortly before Stewart's January 5, 2011 Grand Jury testimony, Stewart and Zajac, along with Turner and Crandall, visited the U.S. Attorney’s Office to review their previous Grand Jury testimonies. Zajac extensively reviewed his transcripts, while Stewart did not get the opportunity to review his. On the day of Stewart's testimony, after another witness provided information that suggested Stewart had been less than truthful and had greater criminal involvement than previously acknowledged, the government reclassified Stewart from a 'witness' to a 'target.' Consequently, Stewart was prohibited from testifying. Assistant U.S. Attorney Cares informed Crandall and Turner that representing Stewart, Zajac, and Bandemer created a conflict of interest, necessitating that they seek separate counsel. Crandall expressed surprise at this development, and both attorneys ceased representation, leading Stewart to retain Jeffrey Collins, followed by Elliott Hall, and Zajac to hire Christopher Andreoff, later replaced in May 2014. Turner, who began his role as Special Counsel for the PFRS in 1994 and was paid $225 an hour, testified about his attendance at social events for individuals involved in the case. He attended birthday parties for Beasley and a joint party for Stewart and Bandemer, contributing $500 and $1,000 respectively, at Zajac's request. Turner characterized these events as typical fundraisers and denied any intent to gain favors, asserting that he did not consider his contributions or attendance as criminal conduct. He noted a salary increase from $225 to $300 an hour in October 2007, stating he did not see a connection between his contributions and the raise, as the funds were solicited by Zajac. The individual viewed the birthday party as another fundraiser and did not request or expect a raise. In 2009, the PFRS Board appointed the Clark Hill law firm to represent Board members and staff as fact witnesses in an ongoing government investigation based on Zajac's recommendation. Crandall was appointed lead counsel due to his criminal law experience, with Turner assisting him for his knowledge of Pension Board and investment issues. After Zajac was identified as a target in January 2011, both Zajac and Turner continued their roles with PFRS until Zajac's indictment in March 2013. Turner became General Counsel in June 2013, charging $300 per hour, with a 15% discount. Clark Hill's services included civil litigation, investment advice, and other legal matters, billing approximately $3 million in 2012 alone. During a June 3, 2014 evidentiary hearing, Turner and Crandall testified that Turner was subpoenaed to the Grand Jury in early 2011, after they had terminated representation of several individuals. Turner was not informed of any criminal investigation against him and was approached as a fact witness afterward. Crandall stated he had ongoing dialogues with prosecutors, which likely included discussions about Turner's testimony. On March 16, 2011, Turner testified before the Grand Jury regarding Board meetings and specific deals, without inquiries about the birthday parties. He returned for further questioning on March 23 and April 6, 2011, focusing on the birthday parties and other related topics. On March 20, 2013, the Grand Jury issued a Fifth Superseding Indictment against Zajac, Stewart, and others for conspiracy to commit mail and wire fraud. On April 16, 2014, a Special Grand Jury issued a Seventh Superseding Indictment, correcting a typographical error, adjusting font size per court rules, amending bank account details in Count 13 against Defendant Dixon, and removing "illegal gratuities" from the caption of Counts 7 through 9 in response to Defendant Beasley’s motion to strike. Defendants Zajac and Stewart filed motions to dismiss, claiming their attorneys, Crandall and Turner, had debilitating conflicts of interest during their September 2010 Grand Jury appearances, violating their constitutional rights. They argued that (1) an actual conflict existed because Turner, and potentially Crandall, were subjects or targets of the same investigation while representing Zajac and Stewart, and (2) these conflicts adversely affected their representation. Defendants contended that Crandall and Turner failed to: (a) negotiate favorable deals for them compared to another client, Bandemer; (b) inform them of their Fifth Amendment rights against self-incrimination; (c) pursue negotiations for full immunity before their Grand Jury testimony; and (d) engage in plea negotiations that could have benefitted them. They claimed these failures stemmed from concerns that favorable deals for Zajac or Stewart could implicate Turner or other clients in criminal activities. The Court denied the motions, asserting that there is no constitutional right to conflict-free counsel pre-indictment and rejecting the claim of constitutional violations due to conflicts of interest. Consequently, the Court dismissed the requested remedies, which included declaring their proffer letter agreements void, granting full immunity protections, suppressing their Grand Jury testimony, and dismissing the charges in the Seventh Superseding Indictment due to alleged unconstitutional conflicts. The Court also addressed the argument that the government had a duty to report any conflicts of interest at the pre-indictment stage. Defendants Stewart and Zajac claim they are entitled to relief due to the government's alleged failure to disclose conflicts of interest at the pre-indictment grand jury stage. They assert that even without a constitutional violation, the Court should grant their requested remedies. However, the Court dismisses these claims. The defendants cite case law where the government successfully disqualified a grand jury witness's retained counsel due to conflicts of interest. Notably, in *In re Gopman*, the Fifth Circuit upheld the disqualification of a defendant’s counsel, ruling that it did not infringe on the defendant's Fifth Amendment rights and that public interest allowed such disqualification, despite the First and Sixth Amendment claims. Similarly, in *In re Investigation Before February, 1977, Lynchburg Grand Jury*, the Fourth Circuit addressed the disqualification of attorneys representing multiple witnesses, emphasizing potential conflicts when attorneys may face testimony against their own interests. The court noted that the attorneys’ continued representation could compromise their clients' ability to testify truthfully, warranting disqualification. The district court disqualified Messrs. Whitehead's and Rosen's representation of clients despite their signed waivers of potential conflicts of interest, determining that both a potential and actual conflict existed due to their representation of multiple Grand Jury witnesses, particularly as Mr. Whitehead was a target of the investigation. The Fourth Circuit upheld this decision, referencing prior case law, and outlined conflicting principles: witnesses' entitlement to legal representation in Grand Jury proceedings versus the Grand Jury's right to pursue its investigative functions and the courts’ authority to manage their attorneys. The court concluded that when a conflict of interest threatens the Grand Jury’s function and public access to testimony, the district court may act to eliminate the conflict, even if it results in a witness losing a specific lawyer. The Fourth Circuit emphasized that their ruling does not deny witnesses the right to counsel or imply that multiple representation is inherently disqualifying. They affirmed the district court's discretion in this matter. In the current case, no disqualification motion was made by the government, and the defendants' arguments misinterpret the relevant case law. They claimed that the government's failure to seek disqualification of their pre-indictment counsel violated their rights, which lacks supporting legal authority. The government has a pre-indictment obligation to notify the court of any potential conflicts of interest, and failure to fulfill this duty could justify the extensive relief sought by Defendants Stewart and Zajac, including the invalidation of their proffer letter agreements, suppression of their Grand Jury testimony, and dismissal of the Indictment against them. However, the Court found no legal basis for the Defendants' claims of a constitutional violation and declined to grant the broad relief requested. The Court acknowledges its responsibility to investigate potential conflicts of interest that arise after adversarial judicial proceedings have commenced. This was demonstrated during evidentiary hearings held on June 3, April 29, and May 15, 2014. The relevant case law, particularly the Sixth Circuit's decision in Moss v. United States, illustrates this duty. In Moss, the court addressed claims from petitioners Moss and Kohn regarding alleged conflicts of interest stemming from their joint representation by defense counsel. The district court had ruled that no joint representation existed post-arraignment, as separate attorneys represented each petitioner. The petitioners contended that their joint representation led to ineffective assistance of counsel due to the inability to secure independent plea agreements. Despite acknowledging deficiencies in defense counsel's performance, the Sixth Circuit upheld the district court's ruling, stating that the petitioners did not demonstrate that the alleged conflicts adversely affected counsel's performance. The Moss court emphasized that its ruling should not be viewed as an endorsement of the defense counsel's actions, which challenged the limits of professional conduct. The court concludes that the defense counsel's alleged lack of professional conduct did not render the proceedings fundamentally unfair. It distinguishes the current case from Moss by noting that the defendants' claims of conflict of interest stem from their counsel's joint representation during the pre-indictment grand jury stage, with no post-indictment representation involved. In Moss, the Sixth Circuit evaluated whether joint representation post-indictment created a conflict that compromised counsel's effectiveness. Key issues included Attorney Murphy’s successive representation and potential payment of legal fees by one petitioner to another, which raised concerns about conflicts of interest affecting performance. The court highlighted the trial court's duty to investigate conflicts of interest when known or should be known, referencing Supreme Court precedents. However, it noted that trial courts can assume no conflict exists in multiple representations unless special circumstances arise. Furthermore, the Moss court referenced the Supreme Court’s ruling in Mickens, which rejected the notion of automatic reversal for failure to inquire about conflicts if they did not affect counsel's performance, emphasizing that such a rule lacks rationale. The trial court's recognition of a potential conflict of interest does not imply that the performance of counsel was significantly compromised or that the verdict was unreliable. According to Justice Kennedy's concurring opinion, the constitutional issue hinges on whether the trial counsel's conflict impaired representation, not on the trial judge's diligence in preventive measures. An evidentiary hearing was conducted on June 3, 2014, regarding the raised conflict issue, which means the defendants cannot claim entitlement to broad relief due to a failure from the court to hold this hearing. During the hearing, the court assessed the testimonies of Crandall and Turner to determine if their pre-indictment representation created a conflict that adversely impacted the defendants’ constitutional rights. The court concluded that there is no constitutional right to conflict-free counsel prior to indictment. The defendants' assertion of a pre-indictment right to counsel leading to Fifth and Sixth Amendment violations due to an actual conflict is incorrect. The Sixth Amendment right to counsel does not apply at the pre-indictment stage, and the Fifth Amendment due process right cited does not pertain to pre-indictment representation. The precedent set in *Wood v. Georgia* indicates that a constitutional right to counsel correlates with a right to representation free from conflicts, but the Sixth Circuit has established that the right to counsel does not attach during pre-indictment grand jury proceedings, as seen in *United States v. Myers* and *United States v. Fowler*. The right to effective assistance of counsel is contingent upon the existence of an adversarial judicial proceeding, as established by the Sixth Amendment. Without such a proceeding, there is no basis for claiming ineffective assistance of counsel. This principle was applied in cases like Moss, Smith, and Fowler, where actions taken by defense counsel during the grand jury phase, prior to formal charges, did not constitute grounds for an ineffective assistance claim. The court rejected similar claims in United States v. Latouf, where a defendant's motion to suppress testimony based on alleged bad advice was denied because she was not indicted and lacked the right to effective counsel. Furthermore, in Radford, the court dismissed a defendant's ineffective assistance claim related to pre-indictment representation, affirming that no Sixth Amendment rights apply prior to indictment. Defendants cannot invoke their Fifth Amendment privilege against self-incrimination to support claims of ineffective assistance related to conflicts of interest, as demonstrated in Radford and Myers, which clarified that pre-indictment conditions do not equate to custodial interrogation, and thus do not necessitate a right to counsel. Lastly, the argument for a Fifth Amendment due process right to conflict-free representation, despite the absence of a Sixth Amendment right pre-indictment, is challenged as lacking substantial support from precedent, particularly referencing Wood v. Georgia. The excerpt addresses the distinction between a pre-indictment constitutional right to conflict-free counsel and the facts of the case in Wood v. Georgia. In Wood, the Supreme Court highlighted concerns over due process violations related to conflicts of interest arising from the fact that the petitioners were represented by a lawyer paid by their employer, who was also involved in the alleged criminal activities. The Court noted that the petitioners did not pay for their legal representation and relied on their employer for financial support, which raised questions about the potential for conflict of interest. Specifically, the employer's failure to pay fines as promised created a situation where the employer's interests might conflict with those of the petitioners. Although the Court acknowledged the inherent dangers of third-party financing of legal representation, it ultimately did not support the argument that defendants have a Fifth Amendment due process right to conflict-free counsel prior to or during grand jury testimony, asserting that such reasoning requires an improper extrapolation from the Wood case. Petitioners, who were employees carrying out routine tasks, faced significant fines on the assumption that their employer would cover these costs. They now risk imprisonment due to the employer's failure to pay, despite being represented by a lawyer hired by that employer. This situation raises serious concerns about possible violations of their federal rights under the Due Process Clause of the Fourteenth Amendment. The Wood Court noted the difficulty in assessing a conflict of interest but highlighted that the potential for such a conflict was evident during the revocation hearing, prompting a duty for further inquiry. The State explicitly raised the conflict issue, reinforcing the court's obligation to address it. Consequently, the Court vacated the lower judgment and remanded the case to state court to investigate the existence of an actual conflict of interest during the probation revocation. If confirmed, a new hearing must be conducted without the influence of any conflicting representation. In contrast, the Sixth Circuit's ruling in Gordon v. Norman does not bolster Stewart's argument regarding a Fifth Amendment due process violation. While the Gordon case referenced Wood concerning conflicts of interest, it did not endorse a blanket rule against such conflicts. Instead, it relied on the Supreme Court's ruling in Cuyler v. Sullivan, which asserts that prejudice is presumed only when a defendant shows that their counsel represented conflicting interests that adversely impacted their performance. The Gordon court concluded that the defendants did not demonstrate adverse effects from the alleged conflict, nor did it imply any ethical violations or malpractice liability by the attorney in question. Additionally, defendants' reliance on a footnote from In re Taylor is deemed misplaced. Defendants argued for a constitutional right to counsel during their grand jury appearance, citing the Fifth, First, and Sixth Amendments. However, their reliance on *In re Taylor* was deemed misplaced. The Second Circuit reiterated that a grand jury witness does not have a constitutional right to insist on being represented by counsel. While a witness may consult with their attorney outside the grand jury room, the court emphasized that imposing counsel against a witness's will undermines their due process rights. *In re Taylor* involved Mr. Taylor's appeal against a district court decision that prevented him from retaining attorney William Erlbaum due to an alleged conflict of interest concerning other targets of a grand jury investigation into federal offenses related to day care centers in New York City. The government sought to disqualify Erlbaum without disclosing the basis for the conflict, citing grand jury secrecy, and requested the court to conduct an in camera review of evidence. The appeal centered on whether this review and the resulting order violated Taylor's constitutional right to choose his counsel. The Second Circuit reversed the district court's decision, deeming it premature as the appellant had not yet appeared before the grand jury, had not indicated an intention to invoke self-incrimination privilege, and had not been formally offered immunity under 18 U.S.C. § 6002. The court stated that the issue regarding Mr. Erlbaum's conflict of interest in representing the appellant would only arise after the grand jury proceedings reached a certain stage, particularly if the appellant refused to answer questions on counsel's advice. Furthermore, the in camera examination deprived both the appellant and Mr. Erlbaum of the opportunity to challenge the government's claims about the appellant's rights to counsel and legal representation. The court found it improper for the district court to impose its views on an attorney's ethical responsibilities based solely on these private proceedings without a compelling public interest. In a related 2012 decision, the Second Circuit noted that the holding in In re Taylor was questionable due to the Supreme Court's ruling in Wheat v. United States, which emphasized that the right to counsel of choice is not absolute and must be balanced with the right to effective assistance of counsel, free from conflicts of interest. The Cain case reinforced that, while defendants generally have the right to choose their counsel, this right can be overridden by the need for undivided loyalty from their attorney in cases of per se conflicts that cannot be waived. The court emphasized that the fundamental aim of the Sixth Amendment is to ensure effective advocacy rather than mere representation by a preferred lawyer. The Cain court analyzed the Supreme Court’s ruling in Wheat, which addressed a district court's denial of a defense counsel substitution due to an unwaivable conflict stemming from the substitute attorney's representation of co-defendants. Despite the defendants waiving their rights to conflict-free counsel, the district court found the conflict unwaivable, a decision ultimately upheld by the Supreme Court. The Court emphasized that the Sixth Amendment guarantees effective advocacy and maintains federal courts' ethical standards. It recognized that defendants' waivers of conflicts may be problematic, particularly when potential conflicts could escalate during trial. Thus, the Court granted trial judges significant discretion in determining whether a conflict is serious enough to warrant disqualification, ultimately concluding that the district court acted within its discretion in denying the substitution. Applying this reasoning, the Cain court found no abuse of discretion in the district court's decision to disqualify the defendant’s counsel due to the risk of the attorney becoming a witness against the client. Defendants argued that their constitutional rights were violated because the government failed to ensure conflict-free counsel pre-indictment and that their attorneys had actual nonwaivable conflicts affecting their representation. However, the court noted that prior decisions did not support the extent of the defendants' claims. Defendants claim that Attorneys Crandall and Turner violated ethics rules due to conflicts of interest, arguing these violations constitute a breach of their constitutional rights. The Court rejects this argument, noting that Defendants did not report these alleged ethical breaches to the Attorney Grievance Board. It cites United States v. Kilpatrick to distinguish between a Sixth Amendment violation and a breach of professional responsibility, emphasizing the need for proof of an actual conflict adversely affecting counsel's performance. The Court refers to precedents, including Burger v. Kemp and Hoffman, to reinforce that ethical concerns do not automatically imply a violation of the right to conflict-free representation. The Court also addresses Defendants’ request for a per se approach to conflicts of interest, which the Sixth Circuit has previously rejected, requiring evidence of an actual conflict impacting representation. Ultimately, the Court concludes that Defendants have not demonstrated that any alleged conflict adversely affected Crandall's or Turner's pre-indictment representation. Defendant Zajac's attempt to distinguish the case of Taylor is addressed, noting that the Sixth Circuit has rejected a blanket rule regarding conflicts of interest. In Thomas v. Foltz, the same attorney represented three defendants, all of whom consented to this joint representation. Ultimately, they pleaded guilty, with Thomas asserting his plea was influenced by the necessity for all defendants to plead and by pressure from his attorney and the trial judge. Although unsuccessful in direct appeals, Thomas later succeeded in a habeas corpus petition, claiming ineffective assistance of counsel due to the joint representation. The Sixth Circuit's appeal focused on whether Thomas was denied effective assistance because of a conflict of interest stemming from the joint representation and an “all or nothing” plea agreement, which Thomas was hesitant to accept but was persuaded to do so by his counsel. The court affirmed that the attorney's actual conflict adversely affected Thomas’ decision to plead guilty, resulting in a deprivation of effective assistance. The court referenced the standards set forth in Cuyler v. Sullivan, which presumes prejudice when an attorney has an actual conflict of interest that impacts representation. It highlighted the obligation of counsel to avoid conflicts and noted that presumed prejudice applies when a defendant shows that counsel actively represented conflicting interests, affecting performance. The Sixth Circuit also dismissed a related argument in Moss concerning counsel being investigated alongside the client, clarifying that a per se rule does not apply in such situations without proof of adverse impact from a conflict. The Moss court evaluated Kohn's claim of a separate conflict of interest related to the government's investigation into Attorney Murphy's potential involvement in soliciting a co-conspirator to bribe a witness. The court noted that a conflict can arise if defense counsel is under criminal investigation, citing Taylor v. United States. However, it rejected Kohn's claim, determining he could not establish a conflict since the government did not accuse Murphy of any wrongdoing or investigate him. Furthermore, the court dismissed Kohn's assertion that Murphy's fear of investigation constituted an actual conflict, emphasizing that no legal precedent supports this notion. Even hypothetically accepting this premise, Kohn's claim still failed as he could not demonstrate any adverse effect or prejudice resulting from the alleged conflict. Kohn's argument relied on speculation rather than direct evidence, and the court found no basis to infer that Murphy's supposed conflict hindered his representation. In applying these principles, the court highlighted that the defendants in the current case similarly lacked authority to argue that their counsel's fear of investigation created a conflict. The court reiterated that, under Sixth Circuit precedent, defendants must prove that any actual conflict adversely impacted their counsel’s performance, as established in the Thomas decision. The standard for identifying an actual conflict of interest requires a defendant to demonstrate factual inconsistencies in interests and show that the attorney made a decision between conflicting actions that could benefit one client while harming another. If no such choice was made, the conflict remains hypothetical and not legally significant. Joint representation of co-defendants does not inherently indicate ineffective assistance due to a conflict, but such a conflict can hinder an attorney from exploring plea negotiations or witness agreements that may benefit one defendant over others. In the case of Thomas, the court identified an actual conflict of interest because the attorney, Campbell, acknowledged he would not consider allowing Thomas to testify against his co-defendants for a better plea deal, deeming it unfair. This decision indicated a tangible conflict, as Campbell's dual representation limited his ability to advocate for Thomas's interests effectively. While the presence of an actual conflict does not automatically imply ineffective assistance, the court noted that it must also be shown that this conflict adversely affected the voluntariness of Thomas's guilty plea. The court clarified that it is not necessary to demonstrate prejudice in the conventional sense; rather, if a defendant can show that a conflict impacted the voluntariness of their plea, prejudice is presumed. The court observed that the detrimental nature of Campbell’s conflict arose when his co-defendants pled guilty, compelling him to refrain from advising Thomas against a plea to preserve the collective plea agreement. Consequently, Campbell's conflict negatively affected Thomas’s representation. The court also referenced the Moss v. United States case, indicating that the Sixth Circuit would further apply the Supreme Court's conflict analysis. The Moss Court examined three key issues: (1) whether defense counsel's representation of petitioners Moss and Kohn together post-indictment constituted an unconstitutionally inadequate performance due to a conflict of interest; (2) if Attorney Murphy's successive representation of Moss pre-indictment and Kohn post-arraignment, along with Moss's payment of some of Kohn's legal fees, adversely affected his post-arraignment performance; and (3) whether Kohn's counsel's concern regarding a government investigation of his conduct created an actual conflict of interest that impaired his performance. Regarding joint representation, the court upheld the district court's finding that there was no joint representation by Attorney Murphy. Joint representation, defined as a single attorney representing multiple co-defendants, was not present since Attorney Morreale later entered an appearance for Moss. Moss and Kohn argued that Murphy's overlapping representation prevented him from adequately exploring plea options, but the court noted that joint representation does not inherently lead to ineffective assistance, though it poses significant risks of prejudice, as emphasized by the Supreme Court. The court reiterated that the potential for conflict in joint representation could inhibit an attorney's advocacy, particularly in plea negotiations and sentencing. Following an evidentiary hearing, the district court concluded that Murphy did not engage in joint representation, supported by testimony indicating that he did not intend to represent Moss at trial and was present at the arraignment only due to Morreale's absence. Attorney Murphy was confirmed to represent Kohn, while Attorney Morreale represented Moss. The Moss court affirmed the district court's finding that there was no joint representation, noting that although the exact moment of separate representation was not recorded, it was evident to those involved early in the proceedings. The court then analyzed whether a conflict of interest arose from Murphy’s successive representations of Moss and Kohn. Although Murphy did not intend to represent Moss at trial, he had established an attorney-client relationship with Moss during the pre-indictment phase, which ended shortly after arraignment. This relationship was significant because it led to the question of whether Murphy's dual representation constituted an actual conflict of interest. The court indicated that proving an active representation of conflicting interests is more challenging in cases of successive representation compared to simultaneous representation. The concern in such cases lies in the potential for an attorney to inadequately cross-examine a former client due to fears of disclosing privileged information. However, in this instance, no claims of successive representation were made, and thus, no conflict of interest arose from that concern. Instead, the claims focused on an actual conflict stemming from the joint representation of defendants and witnesses during pre-indictment grand jury proceedings, particularly regarding the potential inhibition of plea negotiations. The court referenced the two-prong test from Cuyler v. Sullivan to assess the situation. It determined that Murphy’s successive representations and evidence of financial links between Moss and Kohn’s legal fees justified the application of this test, particularly focusing on the first prong concerning the existence of an actual conflict of interest due to Murphy’s dual roles. Petitioners must demonstrate a conflict of interest by identifying specific instances in the record indicating an actual conflict or impairment of interests, as established in Cuyler v. Sullivan. They are required to show inconsistent interests and that their attorney made choices between alternative actions that could benefit one client at the expense of another. A mere hypothetical conflict does not constitute a constitutional violation. Establishing ineffective assistance of counsel necessitates proof that the attorney actively represented conflicting interests. In the case of Moss and Kohn, they argued that Attorney Murphy's successive representations created a conflict of interest that impaired his ability to secure plea agreements. However, the government had not extended plea offers to them, leading the Sixth Circuit to conclude that without an offer, Attorney Murphy could not act on divided loyalties. The Moss court further held that a conflict of interest could arise if defense counsel failed to explore plea negotiations due to joint or successive representation of co-defendants. The Supreme Court's decision in Holloway limited conflict claims based on counsel's failure to pursue plea negotiations, requiring proof that the government was willing to negotiate. In Moss, it was uncontested that the government was open to plea negotiations with Kohn and that Attorney Murphy's conflict arose from the requirement for Kohn to cooperate against Moss. In contrast, during the evidentiary hearing concerning Crandall and Turner, it was stipulated that the government did not offer plea negotiations before the indictment. However, once Stewart became a target and retained new counsel, plea negotiations were offered but ultimately declined. Stewart and Zajac had over two years from January 2011, when they retained new counsel, until their indictment in March 2013, during which time their new counsel did not negotiate a pre-indictment plea. The Moss court addressed the petitioners' burden to demonstrate that Attorney Murphy's conflicts of interest had a constitutional impact, referencing Cuyler v. Sullivan. The court emphasized that petitioners must show that these conflicts adversely influenced counsel's performance, rather than merely indicating a theoretical division of loyalties. It noted that a conflict must affect strategic decisions, such as the ability to argue relative culpability among clients. Petitioner Kohn claimed Attorney Murphy's successive representations hindered his ability to pursue plea negotiations because any plea would require him to testify against co-defendant Moss. Kohn argued that this failure precluded him from obtaining a plea deal similar to another co-conspirator, Jaeger, who received a significantly lighter sentence. However, the district court rejected this argument, stating that Murphy’s hesitance stemmed from Kohn’s insistence on maintaining his innocence and unwillingness to testify against Moss. The Moss court further clarified that a nexus must be demonstrated between the conflict of interest and the purported adverse effect on counsel's performance. Kohn's additional claim regarding erroneous sentencing advice linked to Murphy's conflicts was also dismissed for lack of evidence connecting the advice to the alleged conflict. Ultimately, the court affirmed the district court's ruling, concluding that Kohn failed to show that Attorney Murphy’s successive representations adversely affected his ability to negotiate a plea, attributing the lack of negotiations instead to Kohn's own stance on his innocence and refusal to testify against Moss. Kohn did not establish that his counsel's conflict of interest compromised his constitutional right to effective assistance. Similarly, Moss claimed that Attorney Murphy's prior representations negatively impacted his defense, specifically citing Murphy's failure to negotiate pleas. However, the court dismissed Moss's claim, noting that Murphy ceased representing him shortly after the arraignment and that Moss did not assert adverse effects during Murphy's representation. The defendants contended that an actual conflict of interest existed due to Crandall's and Turner’s simultaneous representation of them and other witnesses before the Grand Jury, particularly since they were aware that Turner was under investigation for the same offenses. During the June 3, 2014, evidentiary hearing, testimony revealed that Turner was aware the birthday parties were mentioned during Grand Jury testimony but did not recognize them as part of the criminal investigation. He did not believe his attendance at these events constituted a conflict affecting his representation. Turner also stated he was unaware of any conflict until January 2011, after which the government identified Stewart, Zajac, and Bandemer as targets. Crandall expressed uncertainty regarding when he learned about the birthday parties but acknowledged concerns about a potential conflict, which he discussed with the government, though he could not recall if he specifically raised these issues with his clients. Zajac was aware of Turner’s attendance at the parties. Stewart and Crandall did not express any objections to Turner being involved in their legal representation, despite the possibility that Turner could be a Grand Jury witness. Crandall testified that he informed his clients about potential conflicts, their right to separate counsel, and their ability to waive conflicts, which resolved potential issues and allowed him to continue with their representation. He clarified that the proffer letter agreement sought on September 28, 2010, was not intended to protect Turner but was to safeguard Stewart due to concerns arising from Stewart's disclosures about inappropriate information received in his role on the PFRS Board. Crandall did not believe Stewart's actions constituted bribery and sought the proffer letter solely for Stewart’s protection. During a June 3, 2014 evidentiary hearing, it was stipulated that the government did not offer plea negotiations while Stewart was not identified as a target and was represented by Crandall and Turner, but did extend such offers once Stewart was identified as a target and represented by Jeffrey Collins. The Court found Crandall and Turner credible, rejecting the defendants' claims of an actual conflict of interest stemming from Turner's representation prior to their identification as targets in January 2011. Citing the Sixth Circuit's ruling in Moss, the Court noted that there was no legal authority indicating that an attorney's fear of investigation could create a conflict of interest. Defendants failed to demonstrate at the evidentiary hearing that Turner had any such fears during his representation. Turner testified he was not informed of any investigation against him and viewed his attendance at events as ordinary fundraisers, not criminal activities. Throughout their representation, neither Stewart nor Zajac indicated that Turner's potential witness status posed a conflict, and Crandall reaffirmed that the proffer letter was not for Turner's benefit. Stewart obtained a proffer letter agreement from the government for protection. The Court dismissed Zajac's and Stewart's claims of an actual conflict of interest resulting from Attorneys Crandall's and Turner's simultaneous representation of them and other Pension Board Trustees during the pre-indictment phase. Citing the Sixth Circuit's ruling in *Thomas*, the Court noted that joint representation does not automatically imply ineffective assistance of counsel due to a conflict. To establish an actual conflict, a defendant must demonstrate inconsistent interests and show that the attorney made a detrimental choice between alternative actions. Mere hypothetical conflicts are insufficient for a violation. Even if an actual conflict was present due to Crandall's and Turner's joint representation or Turner being a target of the Grand Jury's investigation, Zajac and Stewart did not prove that these conflicts adversely impacted their representation. They claimed that the conflicts prevented Crandall and Turner from: a) securing the same deal for them as for another client, Bandeiner; b) informing them of their Fifth Amendment rights; c) negotiating for full Kastigar immunity before Grand Jury testimony; and d) pursuing plea negotiations where they could cooperate against other clients. The Court found these arguments flawed, emphasizing that there is no constitutional right to conflict-free pre-indictment counsel. Furthermore, it stated that the representation by Crandall and Turner ended in January 2011, once Stewart and Zajac were identified as targets of the investigation, undermining claims regarding plea negotiations. During the pre-indictment period, Crandall and Turner, representing Zajac and Stewart, did not pursue plea negotiations with the government, as no such offers were made. The lack of negotiations cannot be attributed to a conflict of interest. Once Stewart was identified as a target and retained new counsel, the government did offer plea negotiations, indicating that new counsel had ample opportunity—over two years—before the indictment to negotiate a pre-indictment plea or cooperation agreement. The government argued that Stewart and Zajac's inability to secure favorable deals stemmed from their failures to provide truthful testimony during a September 2010 grand jury session regarding financial dealings related to the ICG Leaseback deal. The government emphasized that honesty in prior testimonies is crucial for effective negotiations and that obtaining a proffer letter is typically a precursor to a cooperation agreement. Crandall testified to securing proffer agreements for other witnesses who were not indicted. The defendants claimed ineffective assistance of counsel based on alleged conflicts of interest, asserting that Crandall and Turner failed to inform them of their Fifth Amendment rights and improperly advised them to enter proffer agreements instead of seeking full immunity. However, these claims were unsupported, as both attorneys acknowledged they never sought full statutory immunity for Zajac, Stewart, or Bandemer, and the defendants' arguments relied on speculation rather than concrete evidence of adverse effects on their representation. No evidence suggests that Attorneys Crandall or Turner advised clients Stewart or Zajac to invoke their Fifth Amendment privilege as a negotiation strategy for immunity before testifying before the Grand Jury. Both attorneys acknowledged that a conflict of interest would arise from their joint representation, as one client's immunity could enable them to testify against another. Despite these admissions, the defendants failed to demonstrate that the government would have offered full Kastigar use and derivative use immunity instead of the proffer letter agreements signed. The government maintained that if a witness refuses to testify, it can obtain an ex parte compulsion order, which diminishes the likelihood of receiving a cooperation or plea deal. The defendants' claims that conflicts of interest led to their failure to seek full immunity are based on speculation, which does not meet the Cuyler test's second prong. Quoting the Supreme Court in Mickens, the Moss court emphasized the necessity for petitioners to show that conflicts impacted counsel's performance rather than merely indicating divided loyalties. Defendants did not prove that Crandall and Turner intentionally avoided pursuing full immunity, opting instead to protect their interests by signing proffer letter agreements. Crandall clarified that his strategy involves securing cooperation through full disclosure to obtain protective agreements, which was the approach taken in this case. The defendants’ predicament stems from their own choice to withhold information during their grand jury testimony, not from any misconduct by their counsel. There is no evidence that the attorneys advised the defendants to lie or withhold information to protect other clients or themselves, and testimony indicated that Attorney Turner was present at a party related to the defendants, further undermining claims of conflicting interests. Defendants acknowledged their rights before testifying before the grand jury, confirming their understanding of the right not to answer questions and the terms of their proffer letter agreements with their counsel. Paul Stewart explicitly stated he understood his Fifth Amendment right against self-incrimination during his testimony, affirming that he had reviewed and comprehended the terms of his proffer agreement prior to signing. He was also made aware of his right to consult with his attorneys outside the grand jury room. Similarly, Robert Zajac, an experienced attorney, confirmed his understanding of his rights and the implications of his proffer agreement during his grand jury appearance. He acknowledged the potential legal consequences of false testimony and the protections afforded by his agreement, which was explained to him in detail. Both defendants were informed that their testimony could be used against them if they were untruthful or omitted material facts. The Fifth Amendment privilege against self-incrimination is applicable in grand jury proceedings, as established by precedent. Defendants were made aware of their Fifth Amendment right against self-incrimination but did not invoke it, which is their responsibility. Relevant case law, including United States v. Fromin, emphasizes that it is both the duty and right of a witness to assert this privilege. The Court evaluated the Defendants' claim of unintelligent waiver of their Fifth Amendment rights by considering the totality of circumstances, including their understanding of these rights during Grand Jury testimony, their failure to invoke the privilege at that time, and their professional backgrounds—Defendant Stewart being a long-serving police officer and Defendant Zajac being an experienced attorney. Consequently, motions to dismiss based on alleged conflicts of interest were denied. Defendants referred to their proffer letter agreement as a Kastigar letter, which was incorrect; it is categorized as an informal proffer agreement that permits the government to use information provided without the protections of statutory immunity. The Court rejected claims for an evidentiary hearing under Kastigar v. United States, as the proffer letters signed by the Defendants prior to their Grand Jury appearances did not grant statutory immunity. Citing case law, the Court reaffirmed that without a formal grant of immunity, the Defendants had no right to a Kastigar hearing. The document further clarifies that an "actual conflict of interest" necessitates both a conflict and an adverse effect. Following precedents, including Thomas v. Foltz and Mickens, the Court highlighted that establishing an actual conflict requires demonstration of both elements, which the Defendants did not adequately show. The "actual conflict of interest" necessary for the first prong of the court's test requires the petitioner to show a genuine conflict rather than a hypothetical one. This right to conflict-free representation stems from the Sixth Amendment, which guarantees effective counsel, and such claims typically arise in habeas petitions. There are two primary methods for asserting a conflict of interest claim: under Strickland, where the petitioner must demonstrate a potential conflict that prejudiced their defense, and under Cuyler, which imposes a lighter burden, requiring the petitioner to show that an actual conflict adversely affected counsel's performance, with prejudice presumed if this is established. An actual conflict occurs when defense counsel prioritizes their interests over the client's, particularly evident when facing the need to cross-examine a former client. The Sixth Circuit mandates proof of an actual conflict, rejecting any per se rules on the matter. Arguments claiming that Hall v. United States contradicts this standard are dismissed, as Hall reflects the Seventh Circuit's standards and not those of the Sixth Circuit, as clarified in Moss.