The Trump White House feels besieged by near-constant leaks. The divulged inside stories have ranged from the trivial, such as rumors that President Trump enjoys watching the news in his bathrobe, to the more consequential, such as revelations connecting Trump advisers to Russian intelligence. The resulting atmosphere of suspicion culminated in Trump’s tweets earlier this month alleging that former President Obama ordered the “tapping” of then-candidate Trump’s “wires” at Trump Tower during the Presidential election.
Although little to no support has been offered for the wiretapping allegation, the vehemence of Trump and his supporters on this issue may be a reaction to the increasing prevalence of leaks regarding the new administration’s activities and the naturally resulting distrust. A number of commentators have noted with amusement the juxtaposition between Trump’s recent anger about White House leaks with then-candidate Trump’s frequent gleeful reference to leaked information about Hillary Clinton posted on WikiLeaks during the campaign – ironically at the hand of the Russians with whom Trump’s advisers are alleged to have conspired.
Politicians and candidates, however, are not the only victims of leaked information. Rather, government leaks are a persistent and wide-ranging problem. Unfortunately, when this problem arises within the context of a criminal investigation, courts have few remedies at their disposal to punish or deter such conduct. That essentially was the conclusion reached recently by Judge P. Kevin Castel in the Southern District of New York.
In , Judge Castel contemplated the significance of leaks to media outlets by a government agent of details regarding a government investigation in a highly-publicized insider trading case. The defendant in that case, Billy Walters, a businessman and prominent sports gambler, moved to dismiss the insider trading indictment against him after the government conceded that an FBI special agent leaked information regarding the investigation to the and .
The leaks, characterized by now-former United States Attorney Preet Bharara as “outrageous and harmful,” were published nine months before an indictment was handed down by the grand jury. The indictment charged multiple counts of wire and securities fraud stemming from a series of 2012 stock trades in dairy company Dean Foods. The investigation also targeted golfer Phil Mickelson, who was not criminally charged but disgorged over $1 million of ill-gotten gains to the SEC, and a former executive of Dean Foods, Thomas Davis, who pled guilty.
Walters sought to dismiss the indictment alleging that because Federal Rule of Criminal Procedure 6(e) regarding the secrecy of grand jury proceedings had been violated, the court should use its supervisory authority to dismiss the indictment or, in the alternative, find that in light of the government’s misconduct, continued prosecution would violate due process.
Among the information leaked by the FBI agent were the subjects of the investigation, particular stock trades and tipping chains, potential illegal trading profits, and the use of particular investigative techniques. This information repeatedly was divulged by the agent over the course of at least 14 months and possibly as long as 28 months. The government acknowledged that some of the information leaked by the agent may have come from confidential information, including trading and phone records, gathered by the government pursuant to grand jury subpoenas. If so, the information’s release violated Rule 6(e), which provides that government attorneys and their agents “must not disclose a matter occurring before the grand jury.”
In , a case in which the author represented the petitioners, the Supreme Court ruled that in exercising their supervisory authority to remedy government misconduct, courts should dismiss an indictment only if the violation substantially influenced the grand jury’s decision to indict or if “grave doubt” exists that the decision to indict was free from the substantial influence of such violations. The bar set by the Supreme Court is a high one – absent a showing of influence from leaks, the case should move forward.
Because Walters could not satisfy this standard by showing he was prejudiced by the leaks or demonstrating a pattern of prosecutorial misconduct, the Court declined to exercise its supervisory powers to dismiss the indictment. The Court further found that the continued prosecution of Walters did not violate due process. The trial began this week.
Perhaps frustrated with the lack of remedies available to him, Judge Castel took the unusual and legally dubious step of ordering the government to provide him with written updates every two weeks about its investigation of the FBI agent who confessed to feeding reporters information about Walters. He wrote that such conduct merited “the full measure of the Department of Justice’s investigative and, if appropriate, prosecutorial resources. The Court trusts that these resources will be devoted to this matter.”
In reality, leaks by government agents rarely have consequences and whether this case will have a deterrent effect on others remains to be seen. For this reason, the decision in , depending upon how the investigation of the apparently wayward agent transpires, may leave the impression that government agents have a free pass in terms of leaking information to the press.
In the political context, leaks can be a double-edged sword – President Trump denounces those who leak information about contacts between his administration and the Russians while using leaked information to assail his opponents. Leaks made by government agents in furtherance of a criminal investigation should never be permitted or perceived as run-of-the-mill. Such conduct destroys the secrecy attendant to the grand jury system which was designed to protect both witnesses and targets.
From The Insider Blog: White Collar Defense & Securities Enforcement.