Money Laundering CaseInvolves LSD Factory,Moscow Interrogation.
When a case involves such spectacles as a fashion heir charged with money laundering, not to mention a former missile silo converted into an LSD factory, the legal fireworks usually live up to the occasion.
And so San Francisco Bay Area attorneys for Stefan Wathne, international socialite and indicted heir to the Wathne sportswear and accessory fortune, supplied their own holiday explosions last week.
Cristina Arguedas of Arguedas Cassman & Headley and solo practitioner Karen Snell accused the feds - specifically former Assistant U.S. Attorney-turned-Fenwick & West partner Christopher Steskal - of prosecutorial misconduct, saying he did not tell grand jurors that evidence they were considering had been obtained in Russia through coercive means.
In this instance, though, some legal observers think it will be difficult for the defense motion to succeed.
Northern District of California prosecutors accuse Wathne of laundering money on behalf of Leonard Pickard, who at one point worked as the assistant director of the University of California at Los Angeles' Drug Policy Analysis Program, according to court filings. But Pickard also ran a side business: constructing an LSD factory in Kansas in an old missile silo. Pickard is serving two life terms.
An Icelandic citizen, Wathne lived in New York and Moscow. His family leads the kind of life whose details are salaciously reported by the New York Post : Wathne's mother and two aunts were known in haute couture circles as the "triplets" because of their tendency to wear the same outfit to fashion shows.
Wathne met Pickard through a mutual friend, who eventually ratted them out. According to defense filings, the government's theory is that Pickard funded his own $140,000-a-year position at UCLA by giving the money to Wathne, who passed it through Russian businessmen, who in turn sent it to the university as "donations."
Steskal and a team of agents traveled to Moscow in 2003 to interrogate Wathne and other witnesses. They got help from the Russian police, the defense says.
In the motion to dismiss, the defense lists the constitutional protections that are lacking in Russia. And because Steskal sat in on interrogations in which the witnesses could be criminally prosecuted if they refused to cooperate, the defense argues that Steskal had a duty to disclose those circumstances to grand jurors.
Though Arguedas acknowledges she cannot cite a case directly on point, she says it is because these facts are so unique.
"We are not aware of any other case where the United States has relied on the Russian security apparatus to this extent, where the U.S. instigated, and stood by, and benefited from this level of prosecutorial misconduct," Arguedas said in an interview.
Steskal declined to comment, and a spokesman for the U.S. Attorney's Office did not respond to a request for comment. Assistant U.S. Attorney S. Waqar Hasib is now assigned to the case.
Given the current environment regarding terrorist threats, judges have been more likely to defer to prosecutors on the behavior of foreign authorities, said Stanford Law School's Mariano-Florentino Cuellar.
"This whole fabric of law - what is coercive - is becoming more permissive for the government," said Cuellar, who teaches international criminal law.
In addition, this defense doesn't involve allegations of torture, which may make the Russian tactics seem less extreme for a judge.
But the case is before Chief Judge Vaughn Walker, who in his rulings on warrantless wiretapping has shown his willingness to buck the Justice Department.
Wathne was on the lam for more than two years after the grand jury indicted him in 2005, and he was arrested while traveling in India last year. As part of the deal to bring him to the United States, Arguedas preserved the right to challenge the validity of the extradition, which she is doing. All of the motions to dismiss are scheduled for hearing before Walker next month, which will feature, via video conference, a former chief judge of India's supreme court as a defense expert.
This article originally appeared in The Recorder, a publication of Incisive Media. *
Source Citation:"Money Laundering CaseInvolves LSD Factory,Moscow Interrogation." The Legal Intelligencer (July 9, 2008)