United States v. Gorski, 2014 U.S. Dist. LEXIS 105384

Background

This is a criminal case charging Gorski with conspiracy to defraud and four counts of wire fraud related to SDVOSB eligibility representations by Legion Construction.
Legion was allegedly controlled by veterans at times, with Gorski and Steen having contested ownership percentages and a later restructuring that affected control.
Legion’s 2010 SBA/VA filings claimed 51% veteran ownership after a February 2010 restructuring; Mintz Levin assisted with the bid protest and restructuring.
The government alleges backdating and false statements to the SBA about Legion’s ownership to maintain SDVOSB status under new VA regulations that took effect February 8, 2010.
Gorski contends the stock transfers had a legitimate February 1, 2010 effective date and that retroactive documents are a common, lawful practice.
Mintz Levin represented Legion in the bid protest and the Ianuzzi affidavit; Tracy Miner began representing Gorski in the criminal matter.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether waiver of conflict relied on is knowing and voluntary	Government argues waiver was insufficient to eliminate serious conflict concerns.	Gorski argues waiver was knowingly, intelligently made and supported by independent counsel.	Waiver recognized but not broad enough; require fuller colloquy and broader waiver
Whether Mintz Levin attorneys must be disqualified	Mintz Levin conflicts could taint trial; potential witnesses and divided loyalties raise disqualification concerns.	Defendant adequately waived, and remaining conflicts can be managed; no automatic disqualification.	Denial of the disqualification motion subject to a more complete waiver colloquy
Scope of waiver as to divided loyalties	Waiver of advice-of-counsel defense may not cover loyalty conflicts.	Waiver should extend to broader conflicts given defendant’s informed consent.	Waiver not broad enough; require new colloquy and broader waiver
Whether the crime-fraud exception to attorney-client privilege applies	Mintz Levin's involvement could facilitate a crime or fraud; privilege may yield to crime-fraud.	Privilege should remain unless the crime-fraud issue is proven; current record incomplete.	To be addressed at an upcoming Zolin hearing; not resolved in this order
Whether the government’s motion for leave to file and reconsideration should be granted	Government seeks timely reconsideration to address conflicts and privilege issues.	Gorski opposes reconsideration absent a complete waiver and updated colloquy.	Motion granted to file; reconsideration denied subject to a fuller colloquy and waiver

Key Cases Cited

United States v. Morillo, 8 F.3d 864 (1st Cir. 1993) (courts may entertain timely petitions for reconsideration in criminal cases)
United States v. Healy, 376 U.S. 75 (U.S. 1964) (reconsideration and rehearing in criminal cases recognized)
United States v. Foster, 469 F.2d 1 (1st Cir. 1972) ( Foster Foster duty to warn clients about conflicts in multiple-defendant trials)
Yeboah-Sefah v. Ficco, 556 F.3d 53 (1st Cir. 2009) (waiver of conflicts must be knowing, intelligent, voluntary)
In re Keeper of Records, 348 F.3d 16 (1st Cir. 2003) (adverse effects of waiving privilege when advice is at issue)
United States v. Gonzales, 58 F.3d 506 (10th Cir. 1995) (burden on defendant to prove an advice-of-counsel defense exists)
United States v. Shinderman, 515 F.3d 5 (1st Cir. 2008) (describing entrapment-like defenses and burden of production)
In re Grand Jury Proceedings, 859 F.2d 1021 (1st Cir. 1988) (disqualification as a remedy of last resort; heavy government burden)
Fonten Corp. v. Ocean Spray Cranberries, Inc., 469 F.3d 18 (1st Cir. 2006) (unsworn witness concept and counsel’s role can affect trial dynamics)