Potential conflict of interest disqualifies co-conspirators’ counsel

A federal court has disqualified an attorney from representing two defendants in a drug distribution and firearms trafficking conspiracy because it found a conflict prevented him from providing comprehensive advice to one client where it may be detrimental to another client.

The attorney maintained that both defendants had waived the conflict and had no desire to cooperate with the government. The court said that his disqualification was appropriate to protect the integrity of the judiciary and to avoid the appearance of impropriety.

“The prudent decision, and the only correct decision is for a lawyer to decline representation of closely related co-conspirators,” U.S. District Judge Robert S. Ballou held in United States v. McCoy (VLW 026-3-005).

Matthew Felty of Abingdon, the attorney disqualified from representing the defendants in this case, told Virginia
Lawyers Weekly that he consulted with the state bar as soon as the conflict was brought to his attention.

“Both of my clients were adamant that I continue with the representation and signed waivers in open court waiving any conflict,” Felty said. “I complied with all of my ethical obligations to my respective clients and to the court.”

Despite his compliance with ethical rules and his clients’ written waivers after consultation, Felty said the court “applied a different, more expansive rule in a case where there was no actual conflict, but only potential, hypothetical or theoretical conflicts.”

“I am confident that none of those theoretical conflicts would have turned into actual conflicts,” he said. “I respect the court’s decision and have complied with my ethical obligations in ending my representation of both clients.”

The U.S. Attorney’s Office declined to comment on the case.

Co-conspirators

Gerald McCoy was charged in a federal prosecution of a drug distribution and firearms trafficking conspiracy. Felty
was appointed to represent McCoy, who pled guilty to distribution and faced life imprisonment with a 10-year minimum sentence.

Felty explained to McCoy before the plea that his sentence could be reduced if he provided substantial assistance in the investigation or prosecution of another.
McCoy repeatedly refused to cooperate and asked Felty to stop raising the issue.

The government later charged Terry Headen for involvement in the drug conspiracy and appointed counsel, who withdrew once Headen retained Felty. Headen faced a similar sentence to McCoy, and they were alleged to have a close relationship in furtherance of the conspiracy.

When the government advised him of the potential conflict in representing both McCoy and Headen, Felty maintained that both understood the conflict, that they did not want to cooperate in any manner with the government or be adverse to each other and that both wanted Felty as counsel.

The Virginia State Bar later advised Felty that the conflict appeared to be more theoretical than actual, since his clients did not want to cooperate against one another, but said he should inform them he may be conflicted out of both representations if the situation changes.

‘Prudent decision’

Whereas he undertook representation of two closely related co-conspirators charged in separate criminal complaints, Felty owed a duty to each client to advise them regarding their legal jeopardy, their liberty interests and those factors which could affect their potential sentences.

Ballou pointed out that factors which could affect the clients’ sentences included “providing substantial assistance in the investigation or prosecution of others for their criminal activity and the acceptance of responsibility if pleading guilty.

“This duty does not end,” he continued, “upon a client refusing at some point during the representation to cooperate with the government in its investigation or prosecution of others or a client deciding not to acknowledge relevant conduct.”

Under federal sentencing guidelines, “a client who accepts responsibility for his criminal activity must truthfully admit the conduct comprising the offense of conviction and additional relevant conduct for which the client is accountable. …

“A lawyer representing intimately intertwined co-conspirators has a conflict that prevents the lawyer from providing comprehensive advice to one client where it may be detrimental to another client,”
Ballou held.

Therefore, the judge said, a lawyer should decline representation of closely related co-conspirators.

Division of loyalties

The Sixth Amendment’s right to conflict-free representation “extends to cases of an actual conflict of interest or a potential conflict of interest,” Ballou said, adding that the presumption in favor of chosen counsel may be overcome by an actual conflict or a serious potential for conflict.

“A conflict of interest ‘occurs in circumstances where a lawyer’s interests are such that it is reasonable to believe that she or he would be tempted to act in a manner inimical to the client’s best interests,’” the judge said.

Further, Ballou wrote, “Compliance with an ethical rule may not satisfy the Sixth Amendment, just as the breach of an ethical rule may not definitively show a denial of the Sixth Amendment right to counsel.”

Citing United States v. Tatum, the judge said an actual conflict occurs when an attorney actively represents competing interests and has acted on behalf of one of those interests.

Alternatively, a potential conflict of interest exists when an attorney actively represents competing interests, but litigation is not progressed to place the attorney in the position of acting adversely to one client.

“A potential conflict may exist before it affects council’s performance but is rather a ‘theoretical division of loyalties,’” the judge said.

Conflicting interests

Ballou disagreed with Felty’s argument that there was no conflict of interest where both defendants adamantly refused to cooperate with the government.

“The obligation to advise a client of their legal options does not end when a client decides not to cooperate,” he wrote. “Once Felty took Headen as a client, he could no longer advise McCoy to take a position adverse to Headen or even advise it as a possibility.

“Because both defendants may receive sentencing benefits if they cooperate with the government through providing substantial assistance, seeking the protections of the safety valve provision, or accepting responsibility for their criminal conduct, Felty cannot fulfill his duties to each client because of the conflict,” Ballou found.

Here, the government agreed that Headen may be eligible for a lower sentence under a safety valve provision, but not if he was considered an organizer, manager or supervisor of others in the offense.

“By representing both defendants in this conspiracy, Felty will have difficulty arguing the relative roles of the defendants, i.e. that one client occupied a ‘mitigating role’ compared to the other,” the judge explained.

Additionally, a safety valve eligible defendant must truthfully provide the government with all information and evidence concerning the offenses that were part of the same course of conduct, common plan or scheme.

“If either defendant provided ‘all information’ about the scheme, it would undoubtedly implicate the other defendant,” Ballou said. “Therefore, Felty cannot advise Headen to take advantage of this provision without running afoul of his obligations to McCoy.”

Similarly, Felty had a continuing duty to advise his clients of their eligibility for reduced sentences if they provide substantial assistance within a year following sentencing.

“In both instances, Felty is forced to ‘pursue conflicting interests’ as to each client and therefore cannot provide effective assistance of counsel,” Ballou wrote.

Adverse action

Despite the absence of facts showing adverse action, Ballou said that “failure to advise either defendant fully as to their legal options in a case may constitute adverse action in this case,” even if both of Felty’s clients refused to cooperate with the government.

While “it is difficult to pinpoint an actual conflict without the benefit of hindsight,” the judge said that advising each client to implicate the other when they refuse to do so was likely an actual conflict.

“Failure to advise a client of the opportunity to cooperate may create an actual conflict of interest because it would be ‘inimical’ to each client’s interest,” he said. “By advising McCoy to cooperate, Felty has acted in a manner adverse to Headen’s interests, and vice versa.”

Ballou then found that the alleged criminal activity of Felty’s clients was “intimately intertwined making it abundantly clear that Felty has a conflict representing both defendants,” and those “antagonistic interests” presented an actual conflict.

Independent obligation

Even if this case presented only a potential conflict waivable by the defendants, Ballou said the court must “determine ‘whether the proceedings are likely to have the requisite integrity if a particular lawyer is allowed to represent a party,’” citing United
States v. Williams.

“The court’s interest in avoiding the appearance of impropriety and protecting the integrity of the judiciary may outweigh the defendant’s Sixth Amendment right to counsel of their choice,” the judge said, adding that the court “must ‘foresee problems over representation that might arise at trial and head them off beforehand.’”

Whereas the Sixth Amendment right to counsel of one’s choice is not absolute, and district courts have broad latitude to guarantee effective counsel for criminal defendants, this potential conflict raised serious doubts about Felty’s ability to effectively advocate for his clients.

“I find that disqualification of Felty as counsel for both defendants is appropriate to assure that each has an attorney unburdened by the conflict of representing co-conspirators in order to effectuate their right to have the assistance of counsel as guaranteed by the Sixth Amendment, to protect the integrity of the judiciary and to avoid the appearance of impropriety,” the judge held.