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A question about appropriate ethical standards for lawyers
Warning - This post comes with my usual - I am not a lawyer - caveat. I am not asking about the legal duties of lawyers in the US - rather about the ethical standards that should apply to them.
I once put on my blog – without comment – a letter to clients written by Francesco Rusciano of the Ponta Negra fund.
I did not think it made sense because the stated returns were not possible with the strategy described. I asked my readers for their views. Bluntly, on just reading two of their letters I thought fraud was a fair guess and so did a fair number of my readers.
That was only marginally interesting to me – this financial market is riddled with fraud and Ponta Negra was only small. What was interesting to me was that Ponta Negra was housed in the same office, shared a phone number and marketing agent with Paradigm Global – a fund of hedge funds owned by Hunter and James Biden. Hunter and James are the Vice President’s son and brother respectively.
Since then Ponta Negra has been closed by a Federal Judge, and is facing civil charges. Francesco Rusciano is facing wire fraud charges. The SEC and Federal Prosecutors are alleging a fraud that I could only guess at. The Biden’s lawyer has stated that Ponta Negra were subtenants. I have summarised the issues surrounding Paradigm Global in this post.
That however is not my purpose today. When I wrote the original post I received threatening letters from Ponta Negra’s lawyers. Douglas R Hirsch, a partner at Sadis Goldberg asked me to destroy all documents I had from Ponta Negra and “certify in an affidavit” that I had done so. This was only a few weeks before charges were laid against Ponta Negra – and almost certainly whilst investigations were ongoing.
Now if Ponta Negra’s lawyers did not have any reason to suspect that investigations were going on into Ponta Negra then I guess the request I got was not obstruction of justice. But this would mean that Douglas Hirsch is hopelessly naïve – because the letters looked prima-facie suspect. Besides Douglas Hirsch read the letters on my blog and thought that I was alleging fraud – which means he thought that I thought the letters were suspect.
So (at a minimum) a lawyer asked me to destroy a document that he thought might be evidence in something he thought that I thought was a crime.
Even if he thought that there was no investigation and that no crime existed doesn’t that constitute an ethical lapse?
I once put on my blog – without comment – a letter to clients written by Francesco Rusciano of the Ponta Negra fund.
I did not think it made sense because the stated returns were not possible with the strategy described. I asked my readers for their views. Bluntly, on just reading two of their letters I thought fraud was a fair guess and so did a fair number of my readers.
That was only marginally interesting to me – this financial market is riddled with fraud and Ponta Negra was only small. What was interesting to me was that Ponta Negra was housed in the same office, shared a phone number and marketing agent with Paradigm Global – a fund of hedge funds owned by Hunter and James Biden. Hunter and James are the Vice President’s son and brother respectively.
Since then Ponta Negra has been closed by a Federal Judge, and is facing civil charges. Francesco Rusciano is facing wire fraud charges. The SEC and Federal Prosecutors are alleging a fraud that I could only guess at. The Biden’s lawyer has stated that Ponta Negra were subtenants. I have summarised the issues surrounding Paradigm Global in this post.
That however is not my purpose today. When I wrote the original post I received threatening letters from Ponta Negra’s lawyers. Douglas R Hirsch, a partner at Sadis Goldberg asked me to destroy all documents I had from Ponta Negra and “certify in an affidavit” that I had done so. This was only a few weeks before charges were laid against Ponta Negra – and almost certainly whilst investigations were ongoing.
Now if Ponta Negra’s lawyers did not have any reason to suspect that investigations were going on into Ponta Negra then I guess the request I got was not obstruction of justice. But this would mean that Douglas Hirsch is hopelessly naïve – because the letters looked prima-facie suspect. Besides Douglas Hirsch read the letters on my blog and thought that I was alleging fraud – which means he thought that I thought the letters were suspect.
So (at a minimum) a lawyer asked me to destroy a document that he thought might be evidence in something he thought that I thought was a crime.
Even if he thought that there was no investigation and that no crime existed doesn’t that constitute an ethical lapse?
Read more at John Hempton's Weblog
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Yes.
May 31, 2009 1:03 AM | Reply | Permalink
I think you're overstating things a little bit.
While I agree with you that the lawyer's tactics are on the aggressive side (and the thinly veiled threat of a libel action is a bit overheated, to the point that it reaches "lady doth protest too much" status), asking you to destroy the letter is potentially defensible for the following reasons:
(1) He appears to have had a good-faith belief that you received the document in violation of a confidentiality agreement between his client and an investor. In that circumstance, it's not crazy for him to insist that you destroy copies of a document that (in his view) you should not have in the first place.
(2) I don't think it matters much whether he thought you thought they committed fraud. It would probably be a different story if he thought they committed fraud, or if you were some kind of regulator.
(3) It's probably true that at a certain point, if you are the subject of (or about to be the subject of) an investigation, you have an obligation not to destroy pertinent documents. But asking you to destroy a document that he has a good-faith belief you received in violation of a confidentiality agreement between his client and their investor is quite different from destroying the only existing copy of pertinent documents in an investigation, particularly if, for instance, you yourself have preserved a copy of the document.
May 31, 2009 1:32 AM | Reply | Permalink
Dr. Bluman, a letter from an investment service to a client analyzing its strategy and naming a bizarre rate of return is somehow "confidential?" Bullfeathers! No effing way!
There are two crimes here. One is fraud, if the courts find that to be true.
The other is a barbarous assault on the English language. Reading that letter is like trying to decipher the Japanese code. The author apparently resorted to insider's lingo and impossible sentences so he couldn't be pinned by anything so crass as the truth.
May 31, 2009 7:34 PM | Reply | Permalink
Anytime one starts a post with a caveat such as yours:
"Warning - This post comes with my usual - I am not a lawyer - caveat. I am not asking about the legal duties of lawyers in the US - rather about the ethical standards that should apply to them."
We should immediately ignore everything that comes after.
a) Lawyers (and judges) already have a formal set of ethical and professional standards (upon which we are thoughly tested before we can become members of the bar) and we are subject to sanctions, fines and the loss of our licenses not to mention malpractice.
b) what are the ethical and legal standards of investment bankers and stock exchange brokers?
Look to your own!
May 31, 2009 8:36 AM | Reply | Permalink
What, John should not even ask the question because he is not a lawyer? What about the attorneys who advised the previous administration that waterboarding and other acts were legal? Can a reporter not ask questions about all that because lawyers are already subject to a formal set of ethical and professional standards?
May 31, 2009 9:49 AM | Reply | Permalink
Faroff, you're right.
dwg, where are that vaunted "formal set of ethical and professional standards (upon which we are thoughly tested before we can become members of the bar)"? Who is even investigating Yoo, Gonzales, and the many others who created the torture memos to effectively eviscerate the laws against applying torture to prisoners?
If the Bush administration lawyers are "subject to sanctions, fines and the loss of our licenses not to mention malpractice" then when does the process start? Like the many criminal-acting lawyers in Texas who at most get an occasional and very rare slap on the wrist for stealing client funds and such, I see absolutely no movement by the legal community to enforce your vaunted "ethical and professional standards."
Those "standards" are a chimera laid over the profession to protect its members and their incomes. They are rarely investigated and even more rarely enforced in the most egregious cases, generally on the less politically powerful attorneys.
May 31, 2009 1:55 PM | Reply | Permalink
If we only allow lawyers to criticize lawyers we are in deep, deep doo.
May 31, 2009 7:36 PM | Reply | Permalink