The Anatomy of a Wrongful Conviction

Email Print
FacebookTwitterShare

When Rudy Giuliani was a federal prosecutor in New York 20 years ago, his staff members used to play a game in which they would pick a high-profile and popular person like Mother Teresa and figure what federal crime they could pin on her or him. No one could escape and in the end, no person that they named was able to slide away without having committed at least one crime for which a stretch in prison was in order.

This game was immensely helpful as they sought to find ways to charge Michael Milken, the successful investment banker, and prosecutors found that leaks to the press served as a great weapon in their favor. Leaking grand jury information is a felony punishable up to five years in prison, but prosecutors don’t indict themselves, and the New York Times was more than eager to aid and abet a felony, especially when prosecutors needed all of the favorable press they could obtain.

Milken ultimately went to prison, pleading guilty to a set of six "charges of crimes" that prosecutors had never brought against anyone before, and have not again since Milken pleaded 19 years ago. (Prosecutors had told Milken that unless he would plead guilty, they would go after all his family members and imprison as many as they could.)

Most Americans never have seen a federal court, much less have found themselves in the federal dock, and they are not familiar with how the system works. Indeed, when they read of another federal guilty plea or see a federal conviction in the news, they usually assume that the person was guilty of something, otherwise, he or she would not have been charged in the first place.

Thus, it was that on April Fool’s Day earlier this year, a federal jury in Charlotte, North Carolina, convicted real estate attorney Victoria Sprouse of a number of charges related to alleged mortgage fraud. Local television reporters declared that she was convicted of "forging documents" and helping to "mastermind" schemes to defraud lenders. It was the lead story on the Six O’Clock News in Charlotte, and the triumphant prosecutor, Matthew Martens, told TV cameras that the jury had sent the message that Charlotte "would not tolerate mortgage fraud."

Not surprisingly, the TV and print journalists got it wrong. The government never charged Sprouse with forging documents, and, in fact, Sprouse herself says that she did not know that the documents that she signed were forged until one of the prosecution witnesses told the jury he had forged them. Yet, the local newsies still promoted the Big Lie that Sprouse had forged documents — even after the trial was over.

It is not unusual for journalists to get it wrong in federal crimes. Most journalists I know have no idea of the legal structure of federal law and they really don’t care, anyway. They love to get illegal leaks from prosecutors, and they enjoy covering the "perp walks" and experiencing all of the trappings of "justice" that come from covering the federal courts, and they love receiving those "leaks" from the prosecution and federal law enforcement that tell the world, "I am important. The Big Cheeses in the Government talk to Me!"

The federal courts have become an American version of the "Bread and Circuses" routine that once kept the Romans happy as the government around them became increasingly tyrannical and arbitrary. Caligula might have written his edicts in tiny print on signs placed so high that no one could read them, but as long as the gladiators were fighting in the arena and "free" wheat was available at the granary, they really did not care.

Americans today are much like the Romans, who reveled in cruelty; they are happiest when they can watch others suffer, and if they can help inflict the pain, all the better. From hapless people in Iraq to the people raped in prison, Americans enjoy the show — as long as these things are happening to others and not themselves. Let these things happen to them, however, and they cry bloody murder.

I make these comments as I revisit the Sprouse conviction. When I wrote the first time about it, I received a score of nasty "f*ck you" emails and others, while not obscene, that made fun of Sprouse. She was charged, so she was guilty. Others told me that they followed the case and also were convinced of her guilt, so I could not know of what I speak. After all, they read the Charlotte Observer and watched local TV news, so and who can argue with the Great Wisdom of a local talking head?

Given that, I am going to lay out what happened and how it happened and why I am convinced — utterly convinced — that this was a wrongful prosecution and conviction. I am not alone; real estate professionals in Charlotte supported her, and I also have heard from attorneys and other professionals intimately familiar with the case who have agreed wholeheartedly with my assessment.

However, one asks, how was she convicted? If I am inferring — "insisting" is a better word — that she was victimized by a wrongful conviction, and I did not sit throughout the trial, then how is it that I believe that jurors abandoned their duty and served as little more than a Greek Chorus for the prosecution? Am I simply listening to one side of the story and forgetting that Sprouse was accused of participating in multi-million-dollar fraud scheme? The key to understanding this case is not necessarily knowing the testimony that backed the prosecution; it is in knowing how the prosecution effectively rigged this trial.

The prosecution, led by Martens, convinced a jury that Sprouse knowingly signed forged and fraudulent documents and other legal papers that had false information which would permit the buyers of houses and property to obtain those things without having the required income or down payments or other things that the lender required one must have. The buyers were planning to "flip" the properties, that is, sell them quickly and make a profit.

In bringing these charges, Martens and his staff agreed that Sprouse had received no payoffs or other quid pro quo compensation, her office receiving only the standard $500 fee for closing (with perhaps $40 to $50 actually accruing to Sprouse as income after she paid her staff and other office expenses). However, that fact did not stop Martens from repeatedly telling the jury and the press that Sprouse "made millions" from illegal sales, although even the most optimistic prosecution math did not come close to that figure.

(I should add that the Charlotte journalists, both print and broadcast, repeated Martens’ claims as though they were ex cathedra and never once thought to question the prosecutor’s fuzzy math. When I emailed some of them about the monetary discrepancies, they reacted as though I wanted to do away with the First Amendment. How dare I question their worship of the prosecutor!)

It is important to understand, however, that the outcome was fixed long before the trial, and not by any criminal or regulatory violations on behalf of Sprouse. Martens arranged for the government to forbid Sprouse from selling, disposing, or mortgaging any of her property in order to raise money to pay for her attorney, Pete Anderson. Because all her assets were forbidden to be sold or mortgaged she did not have any other funds by which to pay, the judge declared her "indigent" and then permitted a maximum of $25,000 for her legal fees.

The prosecution’s strategy was obvious. If Sprouse could be denied adequate counsel, as $25K is not going to buy anything more than an attorney who wants to plead out right away, then a conviction was as good as done.

What happened afterward is most important — and sealed the outcome. Anderson told the judge at a hearing in which she petitioned to have one of her properties sold so she could raise legal fees that he still wanted to represent Sprouse, given his knowledge of the case. That is where Martens dropped a bombshell.

Martens told the judge that it would take four-to-six weeks to present the government’s case. Anderson argued that since it would take his firm five months to prepare for trial with another month to six weeks in a trial would mean his firm would have to spend six months for a relatively tiny fee, which the firm could not afford. Thus, he begged off the case and the judge appointed two attorneys who then tried to force Sprouse to plea to a deal that would have given her 20 years. Sprouse, believing she had not committed any crimes and wanting her Constitutional day in court, refused, and from then on, she and her counsel were at odds.

There are a number of reasons why this development was significant, and why Martens had orchestrated it. First, and most important, when Martens actually presented the "evidence" during the trial, he took less than four days. One does not boil four-to-six weeks of material into four days; instead, Martens — an officer of the court and one who is bound to tell the truth while carrying out his duties — had not told the judge the truth.

Second, one asks why Martens was hell-bent on eliminating Anderson. The main reason was that Martens had put Rick Graves on trial two years ago on tax fraud charges, and a federal jury did something remarkable: it acquitted him. Graves’ attorney was none other than Pete Anderson, and he easily demolished Martens’ weak case.

In the Sprouse situation, Martens did not want to face a well-respected attorney who believed in the innocence of his client — and who already had bested Martens before in a case involving flimsy charges. Thus, he got rid of the competition and was able to play a role in the appointing of attorneys who clearly wanted to curry favor with the prosecution.

(Most court-appointed attorneys plead out their clients, bill hourly, and pocket the money. The key is cutting deals with prosecutors and letting the court know that the defense is not going to be a problem and will “play ball” with the prosecution. Sprouse’s court-appointed attorneys fell into that category.)

A key issue in this case was whether or not Sprouse knew the documents were fraudulent and that she was knowingly signed off on transactions that were different than what was on the paper. The only prosecution witness to declare that Sprouse "must have known" about the fraud stated in a deposition under oath in a civil case saying that he never told Sprouse about what he was doing because he believed she was honest and would have refused to sign anything she thought was fraudulent and stopped the closings.

Now, one would think that this would be a key piece of evidence in the trial, and that is correct. The key was to make sure that this document never would be presented during trial, and Martens and Sprouse’s court-appointed attorneys did just that.

First, the man who made that original statement under oath was a key witness for the prosecution. In exchange for leniency (Martens offered him a plea bargain to serve two years in prison), the man gave very different testimony in Sprouse’s trial than what he had given before. (Of course, in the earlier testimony, there was no coercion from a prosecutor, so if one is going to choose which statements to believe, instinct tells us that the first set of statements is going to be truthful.) He never said that he knew for sure, since he did not tell her as such, and he knew of no one else who had done it, but that was enough to convince the jury.

Obviously, this leads one to ask why the original deposition was not entered into testimony, as it contained vital exculpatory information. The reason, as noted before, is that Sprouse had a pair of attorneys who deferred to the prosecution. They were angry with her because she would not plead out, as neither of them was experienced in white-collar criminal trials. The extra time spent in court would be an added expense and would destroy any potential profitability they could get from their $25,000 payment.

Even though Sprouse begged to participate in her defense, her counsel said no. She wrote the judge begging that she at least be permitted to participate in her defense, as her counsel was refusing to file motions and even review the evidence, but the judge was not inclined to grant her request.

Why would the attorneys be so passive, especially in the fact of a prosecutor who clearly was railroading someone? To fight would not be to seen as "cooperative" with the prosecution, and the opportunity to gain easy money by cutting future deals with Martens and his staff.

Sprouse even pointed out the information from the deposition to her attorneys. Excited, she showed it to her counsel, but they were noncommittal, and it was clear that the document meant nothing to them. It never was presented in court or presented as defense evidence, and neither attorney cross-examined the witness as to his earlier exculpatory statement made under oath, never using material from that deposition at all.

In the end, Martens’ main piece of "evidence" was the fact that Sprouse had signed the documents, something Sprouse agreed she had done. However, Martens then claimed that because Sprouse had signed the incriminating documents, then that was proof that she must have known they were fraudulent. If one thinks this is a non sequitur, one is correct.

There were other incidents of outright incompetence and worse. The counsel did not interview their own witnesses until just before trial, they rarely objected to anything, and they pretty much let Martens run the proceedings. During the breaks, Martens’ investigators harassed defense witnesses and threatened them, but Sprouse’s attorneys did not object or tell the judge.

Martens clearly enjoyed himself. During one session, he asked his investigator how she felt about investigating Sprouse. The transcript said she "enjoyed it," and that exchange drawing a rebuke from the judge.

Then there was the jury. One elderly juror slept much of the time and it was clear that many did not understand the complexities of the case. Federal "crimes" are like that in that most of them are "derived" from other acts. Unlike in state courts, where jurors are aware that a law clearly has been broken and that the person charged is accused of having committed the crime, in federal court, all parties generally agree with what was done, but the jury is supposed to interpret the law as to whether or not the act or acts were criminal.

This clearly favors the prosecution, as it does not take long for the jurors’ eyes to glaze over and for them to assume that the person on trial has to be guilty; otherwise there would be no charges in the first place. Thus it was with Victoria Sprouse.

In summary, the prosecution managed to make sure that Sprouse could not have the representation she wanted, an attorney who saw through the tactics of the prosecution and believed strongly in the innocence of his client. Martens falsely told the judge that the presentation of the evidence would take four-to-six weeks when it did not even take six days.

Martens used a witness who had testified under oath in a civil case that Sprouse did not know that the documents in question that she signed were fraudulent. To get past this obvious problem, Martens was able to use the prospect of a lighter prison sentence to entice the witness to change his testimony. To put it another way, Martens suborned perjury and the jurors swallowed the lies whole, as did the local media.

Lest anyone think I am too hard on Matt Martens, perhaps it would be helpful for the readers to know that his mentor in the federal government was Michael Chertoff, who served as the secretary of the Department of Homeland Security. Chertoff is a man who favors the use of torture and other "enhanced interrogation techniques" in order to pry words out of recalcitrant prisoners and is not concerned with anything as "trite" as "legal ethics."

When she learned she had been indicted, she and her first attorney, Anderson, made arrangements with the U.S. Marshals Service to turn herself in at 9 a.m. At 6 a.m. on the morning she was to turn herself in, Martens sent heavily-armed federal agents to her house and they pounded so hard on the door that they almost broke it. Included in the government’s Big Show arrest to grab an unarmed person who already was getting ready to turn her in were two Mecklenburg County police, two federal marshals, two FBI agents, the IRS investigating agent, the postmaster investigating agent, and the North Carolina Department of Insurance investigating agent.

After the trial, Sprouse asked to be free on bond pending her sentencing and appeal. Martens objected, telling the judge, "Your honor, she is going to spend a better part of the rest of her life in prison, so she should start serving her time now." He also declared that she was a risk to flee because her boyfriend had a German passport, and that perhaps she might even commit suicide, given that she had wept on the stand and had the temerity to say that the government had "ruined her life."

Chertoff’s star student has learned his craft very well. Unfortunately, most Americans today do not care that people who practice such cruelty are in positions of power. Perhaps most Americans don’t realize — and maybe they really don’t care — that men like Matt Martens and his mentor, Michael Chertoff, would gladly have prosecuted the late Mother Teresa herself had they believed they could have benefited from their actions.

Giuliani’s lieutenants were playing a simple parlor game, but it enabled them to find ways to prosecute people on Wall Street who had not committed crimes. Today’s federal prosecutors, however, have gone even one step beyond that, and one can be sure that because they are immune to any legal challenges, their quest to incarcerate innocent people will proceed unencumbered, as federal prosecutors seek political and personal gain and to maintain the all-important "numbers" in their offices.

The prosecution of Victoria Sprouse was a "selective prosecution." As the prosecutors’ parlor game demonstrated, the name of the game is selecting beforehand who to prosecute and convict and then manipulate the law and juries to give them what they want.

Harvey Silverglate, one of the country’s finest civil libertarian attorneys, has noted in his forthcoming book Three Felonies a Day that much of current federal criminal law much more closely mirrors the law of the former Soviet Union than it does anything we have inherited from Great Britain. Indeed, one wonders why Martens and Chertoff don’t have busts on their desks of Stalin’s secret police head, Laverty Beria, who famously declared: "Show me the man, and I will find you the crime."

July 8, 2009

William L. Anderson, Ph.D. [send him mail], teaches economics at Frostburg State University in Maryland, and is an adjunct scholar of the Ludwig von Mises Institute. He also is a consultant with American Economic Services. Visit his blog.

The Best of William Anderson

Email Print
FacebookTwitterShare
  • LRC Blog

  • LRC Podcasts