HOUSTON — R. Allen Stanford’s relationship with the chief regulator of his Antigua bank was closer than most.

At a meeting in 2003, they became blood brothers, cutting their wrists and mixing their blood in a “brotherhood ceremony� that Mr. Stanford’s chief financial officer said promoted an elaborate scheme to hide a multibillion-dollar fraud from American and other regulators.

The assertion that the two took a “blood oath� was laid out in a plea agreement signed by the officer, James M. Davis, and filed Thursday. After the pact, Leroy King, Antigua’s chief banking supervisor, called Mr. Stanford “Big Brother.� He received Super Bowl tickets, valued at thousands of dollars, for himself and his girlfriend. And he accepted regular bribe payments from a secret Swiss bank account that Mr. Davis said he was told to handle by Mr. Stanford.

The unusual twist to the case, in which Mr. Stanford is accused of operating a multibillion-dollar Ponzi scheme, was disclosed by Mr. Davis as he pleaded guilty on Thursday to fraud and conspiracy in Federal District Court in Houston. Mr. Davis, who oversaw the movement of vast sums of money at Stanford International Bank, also said in a plea agreement that Mr. Stanford ordered him to report false revenue and false investment portfolio balances to banking regulators as far back as 1988, when Mr. Stanford ran an offshore bank on the Caribbean island of Montserrat.

“I did wrong. I’m sorry. I apologize. And I take responsibility for my actions,� Mr. Davis said after the hearing.

Mr. Stanford was also supposed to appear in court on Thursday, but he was hospitalized in the morning after his pulse rate soared, his lawyer said.

While he has repeatedly denied accusations that he ran a Ponzi scheme involving certificates of deposit issued by Stanford International Bank, he has also insisted that if anything illegal did happen, it must have been Mr. Davis’s fault.

Mr. Davis, who had been a friend of Mr. Stanford’s since they were roommates at Baylor University in Waco, Tex., started his own church in Mississippi and led prayers before bank business meetings. His lawyer, David Finn, said Mr. Davis was now working on a family farm in Michigan doing manual labor for $10 an hour as an expression of penance. He now faces up to 30 years in prison.

“He had a very heavy heart,� Mr. Finn said. “He was very contrite, and not all of my clients are.�

The plea agreement and a court presentation on Thursday by prosecutors repeated many facts that were outlined in June in an indictment of Mr. Stanford, several Stanford aides and Mr. King. Mr. Stanford and others are accused of defrauding 30,000 investors of $7 billion, filing false reports to regulators and investors, diverting more than $1.6 billion into undisclosed personal loans to Mr. Stanford, and conspiring to obstruct an investigation by the Securities and Exchange Commission.

But the plea agreement offered an assortment of new details, particularly about the relationship between Mr. Stanford and Mr. King, who ran Antigua’s Financial Services Regulatory Commission for much of the last decade. He has been arrested in Antigua and is awaiting extradition to the United States.

Shortly after their 2003 blood-brother ceremony, which also included a second, unnamed Antiguan regulator, Mr. Stanford complained that two Antiguan regulators who worked for Mr. King were “becoming aggressive and suspicious in their examination� of the Stanford bank on the island, the plea agreement said. Both employees “soon thereafter were reassigned or replaced,� Mr. Davis said in the plea agreement.

To show appreciation for Mr. King’s services, Mr. Stanford paid $8,000 for tickets to the 2004 Super Bowl game in Houston so the regulator could take his girlfriend to the event. The next year, in June, Mr. King showed Mr. Stanford a confidential letter he had received from the S.E.C. seeking information about the Stanford bank’s certificates of deposit investment portfolio, stating that the agency had evidence to suggest the bank was engaged in a “possible Ponzi scheme.� Mr. Stanford and an unnamed aide then drafted “a false and misleading response� to the S.E.C., according to the plea agreement.

In September 2006, Mr. King tipped Mr. Stanford off to another letter from the S.E.C. Mr. Stanford, Mr. Davis and others proposed various responses designed to mislead the American regulators, which Mr. King was expected to transmit back to the S.E.C.

Mr. King also helped mislead regulators of the Eastern Caribbean Central Bank when they began raising questions about Mr. Stanford’s bank, the plea agreement said. He faxed a proposed response to the Caribbean regulators to an unnamed lawyer working for Mr. Stanford. In it, Mr. King joked in a handwritten note: “Please do not bill me (laugh), Thanks a million, Lee.� The note was taken as an oblique reference to bribes already paid, according to the agreement.

Mr. King, who holds American and Antiguan passports, is reviewing legal documents and has not yet publicly responded to the charges against him, according to Attorney General Justin Simon of Antigua and Barbuda. In an interview in February, just after Mr. Stanford’s offices in Houston were raided by federal authorities, Mr. King said, “I am absolutely sure that my banking system is clean.�

Times Topics: Robert Allen StanfordMr. Simon said in an interview that he had become aware of the blood-brotherhood ceremony from his own sources. “It is believable,� he said. “As far as how many people are involved, we are still investigating.�

By the middle of 2008, the agreement asserts, Mr. Stanford, Mr. Davis and others were scrambling “desperately� to hide the details of their fraud by inflating the value of their assets on the books with “bogus real estate.� The conspirators “designed a real estate transaction wherein they would falsely inflate and convert an approximate $65 million real estate transaction in Antigua into a purported $3.2 billion dollar asset,� according to the agreement. But by January the S.E.C. was moving in fast, and when Mr. Davis met with Mr. King, “King appeared very stressed� and wondered if they could still hide their secrets. Mr. Davis tried to reassure him.

In an interview in April, Mr. Stanford said he gave Mr. Davis broad responsibilities to oversee investments. “If bad things were happening, he never brought them to my attention,� Mr. Stanford said. “He did his job and I stayed out of his hair.�

Mr. Finn acknowledged after Thursday’s plea hearing that Mr. Stanford would attempt to discredit his client during a future trial. “The only way he walks is if he can convince a jury that my client is the mastermind,� he said. “Allen Stanford uses people. Did my client allow himself to be used? Absolutely.�

Mr. Finn said it would be strange for his client to have run a fraudulent scheme to pay for Mr. Stanford’s lavish lifestyle when he was getting paid relatively little for his efforts. He said Mr. Davis had earned between $5 million and $6 million after taxes over the last decade, and was now virtually penniless.

Mr. Stanford’s lawyer, Dick DeGuerin, has asked for court permission to quit the case because his client can not assure that he will be paid. Mr. Stanford was supposed to appear in court for a hearing on whether he could retain a new legal team. Mr. Stanford has asked to be represented by two other lawyers, but they also have said they need assurances that they will be paid.

Mr. Stanford’s assets and his companies’ assets have been frozen.

After pleading guilty on Aug. 27 to three criminal charges that could put him in prison for 30 years, James M. Davis, the former chief financial officer for Stanford Financial Group and Stanford International Bank Ltd., expressed remorse for his actions that contributed to the downfall of the bank and began more than a decade ago.

“I did wrong. I’m sorry. I apologize,” the silver-haired, 60-year-old former banker told reporters outside the federal courthouse in Houston following his re-arraignment in U.S. District Judge David Hittner’s court.

David Finn, Davis’ criminal-defense attorney, told reporters that Davis, unlike most of his clients, fessed up to his wrongdoing from the first moment he came to his Dallas office.

“He had a heavy heart the first time I met him. He was very contrite,” Finn, a partner in Milner & Finn in Dallas, recalled from their initial meeting earlier this year. “James Davis came in and said, ‘I know I did wrong.’ ”

The very next day, Davis met with investigators for the U.S. Securities and Exchange Commission, Finn said.

Finn said “greed” may explain Davis’ actions.

“Why does anyone do anything that’s wrong? . . . Frankly, my guy allowed himself to be used by Allen Stanford,” Finn said.

According to the factual basis of Davis’ plea deal, prosecutors allege Davis started making false accounting entries beginning in 1988, when he started a job as controller of a bank owned by R. Allen Stanford in Montserrat, and he continued, while in various executive positions with Antigua-based Stanford International Bank, to create “false books and records” that overestimated the value of the bank’s investments, and helped prepare fictitious investment reports about the bank that were provided to securities regulators in Antigua. By the end of 2008, the prosecutors allege in the factual basis for plea, financial documents put SIB’s assets at more than $7 billion, when they were actually less than $2 billion.

Davis also helped Stanford obtain money from a Swiss bank account that Stanford used to bribe at least two employees of the securities regulation agency in Antigua and an outside auditor, the government alleges in the factual basis of the plea deal.

Davis pleaded guilty to one count of conspiracy to commit mail, wire and securities fraud; one count of mail fraud; and one count of conspiracy to obstruct SEC proceedings. He faces up to five years in prison on the two conspiracy charges and up to 20 years in prison on the mail fraud charge. He also faces a fine of up to $250,000 on each charge.

In the plea agreement Davis signed, he agreed to cooperate with the government in its investigation of the alleged $7 billion conspiracy to defraud. As part of the plea deal, he agreed to a $1 billion forfeiture judgment. The government reserves the right to ask for a “downward departure” from the sentencing guidelines if it determines his cooperation rises to the level of “substantial assistance.”

Finn said Davis expects to receive “stiff punishment.”

The charges against Davis were included in United States v. James M. Davis, an information unsealed on June 19. Also on June 19, several other individuals, including Stanford, chairman of Houston-based Stanford Financial Group, were indicted, and each has pleaded not guilty to the criminal charges.

Stanford, who is being held in a federal prison in Conroe, was supposed to appear in Hittner’s court on Aug. 27 for a hearing on who will represent him, but Hittner announced in court that Stanford was taken by ambulance to a hospital at 5:30 a.m. because of an irregular electrocardiogram and a high pulse rate.

Stanford’s attorney, Dick DeGuerin of DeGuerin & Dickson in Houston, has asked to withdraw as his lawyer because he wants assurance that he will be paid. Hittner said the hearing on whether to allow DeGuerin to withdraw will be reset. Stanford announced earlier this month that his new legal team includes Patton Boggs, but Hittner will not allow DeGuerin to withdraw unless another firm enters the case unconditionally. [ See "Between a Rock and a Hard Case," Texas Lawyer, Aug. 10, 2009, page 6. ]

After Davis’ hearing, DeGuerin said he believed stress may have caused Stanford to have medical problems on Aug. 27. Finn said it’s not serendipitous that Stanford was ill on the day Davis was scheduled to plead guilty to criminal charges.

“It had everything to do with my client and me and the government getting together in this courtroom,” Finn said.

Hittner scheduled Davis’ sentencing for Nov. 20. But Finn said it is doubtful Davis will be sentenced before Stanford’s trial is finished. Finn said Davis has been cooperating with the FBI, the U.S. Department of Justice and the SEC and he will continue to do so. Finn noted that Davis came to Houston on Aug. 26, the day before his re-arraignment, and met with the FBI and federal prosecutors.

Finn says his client’s cooperation is important to the government, but the fraud alleged in the indictment is relatively unsophisticated.

“You can just follow the money,” Finn said.

Finn said Davis’ cooperation has extended to assisting the government with a search for evidence in a pond on his property in Mississippi. Finn would not say what the divers were looking for in the pond. When asked if it was money, Finn replied, “I wish.”

Finn said that because the government has seized Davis’ assets through a civil suit filed by the SEC that is pending in the U.S. District Court for the Northern District of Texas, Davis is living with family in Michigan and is working for $10 an hour on a family farm to raise some money to pay his lawyer.

Finn said there is no way Davis has the money to cover the $1 billion forfeiture order. He said Davis made $5 million to $6 million over the past few years.

DeGuerin said it remains to be seen how Davis’ cooperation will impact the criminal case against Stanford and the other defendants.

“Mr. Davis seems to be the center of their case, and we will have to see what happens,” DeGuerin said.

Finn told reporters that the government’s allegations in the factual basis of the plea deal suggest that others may be indicted. The factual basis mentions but fails to identify by name two attorneys and SIB Executive A.

“Not all shoes have dropped yet,” Finn said.

At the government’s request, Hittner continued the terms of Davis’ bond.

Held: Police may search the passenger compartment of a vehicle incident to a recent occupant’s arrest only if it is reasonable to believe that the arrestee might access the vehicle at the time of the search or that the vehicle contains evidence of the offense of arrest.

This is an important case, imo.

Native Texan R. Allen Stanford told ABC News that fraud allegations against him and his Stanford Financial Group companies are “baloney,� according to a report aired Monday.

In what the network said was Stanford’s first media interview since the Securities and Exchange Commission filed the civil fraud complaint, Stanford also denied the SEC’s allegation that he and codefendants operated a Ponzi scheme — in which early investors are paid with money from later ones.

“I would die and go to hell if it’s a Ponzi scheme,� Stanford said in what appeared to be an unplanned run-in with the television crew. “It’s not a Ponzi scheme. If it was a Ponzi scheme, why are they finding billions and billions of dollars all over the place?�

In February the SEC filed a civil suit against Houston-based Stanford Financial Group, Antigua-based Stanford International Bank and three top executives including Stanford, alleging an $8 billion fraud. Accounts and assets tied to the brokerage, bank and individuals were frozen by court order throughout the U.S. and overseas.

The separate court-appointed receivers for the Stanford companies in the U.S. and Antigua have said there appears to be less than $1 billion in assets tied to the bank based on the property and bank accounts they’ve recovered so far.

Stanford, who so far only faces a civil complaint, also told the network that he expects to be indicted within the next two weeks, but intends to challenge the allegations. “I’m going to fight this with everything in me,� he said.

‘He lost his temper’

Dick DeGuerin, a Houston criminal defense lawyer Stanford hopes to hire, said he has not seen the ABC interview, which he said occurred at a Houston hotel last week.

“It was a chance encounter, and he lost his temper. He felt bad about that and trying to make up for it, he went on and on,� DeGuerin said.

He said he’s not as sure as Stanford that an indictment is imminent.

“It could go quickly, but if they really examine what happened, there will be no indictment,� DeGuerin said.

DeGuerin said Stanford was emotional in the ABC interview, in which he sometimes was tearful, because of his anger over what’s happened to the business he built up for 20 years.

“The SEC caused a run on his banks, they caused banks to be nationalized in other countries,� DeGuerin said. “The SEC has done more damage to the Stanford companies than the stock market crash did.�

In other action in the case Monday, a London court granted the SEC an extended freeze on U.K.-based assets tied to Stanford Financial Group, including more than $100 million in equities and cash.

A freeze order

The High Court in London signed an order freezing the assets through April 27, which according to court documents include about $105 million in assets held in Credit Suisse accounts and another $5 million in accounts at HSBC.

Court-appointed receivers have been searching all over the world for assets tied to the Stanford bank in Antigua. A lawyer representing Stanford Chief Financial Officer James Davis, who also was named in the SEC suit, says his client has been helping the SEC and the Department of Justice in their dealings with European banks.

“We are hopeful that additional assets, particularly with a Swiss flavor, will be located to help compensate the investors,� attorney David Finn said.

According to court papers, Credit Suisse has Stanford accounts with about $97.5  million in hedge fund investments, $1 million in cash, $5.4 million in Swiss franc shares and other assets.

The HSBC accounts contained another $5 million in euros, English pounds, Swiss francs and U.S. dollars.

Credit Suisse had instructions to liquidate the entire London portfolio in early February, just before the SEC filed its case, according to court papers, and on Feb. 12 received an order to wire $17 million to Stanford International Bank accounts in Houston.

According to the court documents, the bank didn’t carry out the orders.

tom.fowler@chron.commary.flood@chron.com

 

IF AN OFFENSE IS A MISDEMEANOR UNDER THE FOLLOWING CHAPTERS, THEN A DEFENDANT MAY FILE A PETITION FOR NON-DISCLOSURE IMMEDIATELY AFTER COMPLETION AND DISMISSAL OF THE DEFERRED ADJUDICATION COMMUNITY SUPERVISION:

 

Chapter 16      Criminal Instruments, Interceptions of Wire or Other Oral communication, and Installation of Tracking Device

            16.01 Unlawful Use of Criminal Instrument

            16.04 Unlawful Access to Stored Communications

            16.05   Illegal Divulgence of Public Communications

            16.06 Unlawful Installation of Tracking Device

           

Chapter 28      [] Criminal Mischief, and other Property Damage or Destruction

            28.03 Criminal Mischief if loss less than $1500

            28.04 Reckless Damage or Destruction

            28.07 Interference w/ Railroad Property

            28.08 Graffiti: If Pecuniary Loss is Less than $1500

 

Chapter 30      Burglary and Criminal Trespass

            30.03 Burglary of Coin-Operated or Coin Collection Machines

            30.04 Burglary of Vehicles

            30.05 Criminal Trespass          

            30.06 Criminal Trespass by Holder of License to Carry Concealed Handgun

 

Chapter 31      Theft

            31.03 Theft

            31.04 Theft of Services (less than $1500.)

            31.11 Tampering with Identification Numbers

            31.12 Theft of or Tampering with Multichannel Video or Information Services

            31.13 Manufacture, Distribution, or Advertisement of Multichannel Video or Information           Services

            31.14 Sale or Lease Multichannel Video or Information Service Device

            31.15 Possession, Manufacture, Distribution of Certain Instruments used to Commit      Retail Theft

 

Chapter 32      Fraud, Forgery, Credit Card Abuse, IBC, SEDD, ID Theft, etc.

            Forgery

            32.21 Forgery

            32.22 Criminal Simulation

            32.23 Trademark Counterfeiting

            32.24 Stealing or Receiving Stolen Check or Similar Sight Order

            Credit

            32.32 False Statement to Obtain Property or Credit

            32.33 Hindering Secured Creditors

            32.34 Fraudulent Transfer of Motor Vehicle

            32.35 Credit Card Transaction Record Laundering

            Other Deceptive Practices

            32.41 Issuance of a Bad Check

            32.42 Deceptive Business Practices

            32.44 Rigging Publicly Exhibited Contest

            32.441 Illegal Recruitment of an Athlete

            32.45 Misapplication of Fiduciary Property or Property of Financial Institution

            32.46 Securing Execution of Document by Deception

            32.47 Fraudulent Destruction, Removal, or Concealment of Writing

            32.48 Simulating Legal Process

            32.49 Refusal to Execute Release of Fraudulent Lien or Claim

            32.50 Deceptive Preparation and Marketing of Academic Report

            32.52   Fraudulent, Substandard, or Fictitious Degree

           

Chapter 33      Computer Crimes, Telecommunication Crimes

            33.02 Breach of Computer Security

            33A.02 Unauthorized Use of Telecommunications Service

            33A.04 Theft of Telecommunications Service

            33A.05 Publication of Telecommunications Access Devise

 

Chapter 35      Insurance Fraud

            35.02 Insurance Fraud

            35A.02 Medicaid Fraud

 

Chapter 36 [] Corrupt Influence

            36.03 Coercion of Public Servant or Voter

            36.04 Improper influence

            36.07 Acceptance of Honorarium

            36.08 Gift to Public Servant by Person Subject to his Jurisdiction

            36.09 Offering Gift to Public Servant

 

Chapter 37      Perjury and Other Falsification

            37.02 Perjury

            37.08 False Report to Police Officer or Law Enforcement Employee

            37.081 False Report Regarding Missing Child or Missing Person

            37.09   Tampering with or Fabricating Physical Evidence

            37.10 Tampering with Governmental Record

            37.101 Fraudulent Filing of Financing Statement

            37.12 False Identification as a Peace Officer; Misrepresentation of Property

            37.13 Record of Fraudulent Court

 

Chapter 38      Obstructing Governmental Operations

            38.02 Failure to ID

            38.03 Resisting Arrest, Search, or Transportation

            38.04 Evading Arrest or Detention

            38.05 Hindering Apprehension or Prosecution

            38.06 Escape

            38.07 Permitting or Facilitating Escape

            38.10 Bail Jumping and Failure to Appear

            38.111 Improper Contact with Victim

            38.114 Contraband in a Correctional Facility

            38.12 Barratry and Solicitation of Professional Employment

            38.123 Unauthorized Practice of Law

            38.13 Hindering Proceedings By Disorderly Conduct

            38.15 Interference with Public Duties

            38.151 Interference with Service Animals

            38.16 Preventing Execution of Civil Process

            38.17 Failure to Stop or Report Aggravated Sexual Assault of Child

            38.171 Failure to Report a Felony

            38.18 Use of Accident Report Information & Other Information for Pecuniary Gain

            38.19 Failure to Provide Notice and Report of Death of Resident of Institution

 

Chapter 39      Abuse of Office

            39.02 Abuse of Official Capacity

            39.03 Official Oppression

            39.04 Violation of Civil Rights of Person in Custody

            39.05 Failure to Report Death of Prisoner

            39.06 Misuse of Official Information

 

Chapter 43      Public Indecency: Prostitution, Obscenity

            Prostitution

            43.02 Prostitution

            43.03 Promotion of Prostitution

            Obscenity

            43.22 Obscene Display or Distribution

            43.23 Obscenity

            43.24 Sale, Distribution, or Display of Harmful Material to Minor

            43.251 Employment Harmful to Children

           

Chapter 47      Gambling

            47.02 Gambling

            47.03 Gambling Promotion

            47.04 Keeping a Gambling Place

            47.05 Communicating Gambling Information

            47.06 Possession of Gambling Device, Equipment, or Paraphernalia

           

Chapter 48      Conduct affecting Public Health

            48.01 Smoking Tobacco

            48.015 Prohibitions Relating to Certain Cigarettes

            48.02 Prohibition of the Purchase of Sale of Human Organs

 

Chapter 49      Intoxication & Alcoholic Beverage Offenses

            49.02 Public Intoxication

            49.031 Possession of Alcohol in a Motor Vehicle

            49.04  Driving While Intoxicated**

                        [**DWI offenses are not eligible for deferred – art. 42.12, § 5]

            49.065 Assembling or Operating an Amusement Ride while Intoxicated

           

Chapter 71      Organized Crime

            71.021 Violation of Court Order Enjoining Criminal Activity

 

AND MISDEMEANOR OFFENSES UNDER THE CONTROLLED SUBSTANCE ACT §§ 481.001 et seq.

 

IF AN OFFENSE IS A MISDEMEANOR UNDER CHAPTERS 20, 21, 22, 25, 42, & 46 A DEFENDANT MAY FILE A PETITION FOR NON-DISCLOSURE TWO (2) YEARS AFTER THE COMPLETITION OF THE DEFERRED ADJUDICATION COMMUNITY SUPERVISION AND DISMISSIAL OF THE INFORMATION:

 

Chapter 20      [] Unlawful Restraint

            20.02 Unlawful restraint

           

Chapter 21      Sexual Offenses

            21.06 Homosexual Conduct [Unconstitutional]

            21.07 Public Lewdness

            21.08 Indecent Exposure [2nd offense results in a conviction, the Defendant is required to         register as a sex offender, and thus, he is NOT eligible]

 

Chapter 22      Assaultive Offenses

            22.01 Assault [But not against police officer, family member or member of household]

            22.05 Deadly Conduct

            22.07 Terroristic Threat

            22.08 Aiding Suicide

            22.10 Leaving a Child in a Vehicle

           

Chapter 25      Offenses Against the Family

            25.01 Bigamy

            25.04 Enticing a Child

            25.06 Harboring a Runaway Child

            25.071 Violation of Protective Order Preventing Offense Caused by Bias or    Prejudice  [§ 25.07 Regular Violation of Protective Order is NEVER eligible]

            25.09 Advertising for Placement of Child

 

Chapter 42      Disorderly Conduct and Related Offenses

            42.01 Disorderly Conduct

            42.02 Riot

            42.03 Obstructing of Highway or Other Passageway

            42.05 Disrupting Meeting or Procession

            42.055 Funeral Disruption

            42.06 False Alarm or Report

            42.062 Interference with Emergency  Telephone Call

            42.07 Harassment

            42.08 Abuse of Corpse

            42.09 Cruelty to Livestock Animals

            42.091 Attack on Assistance Animals

            42.092 Cruelty to Non-Livestock Animals

            42.10 Dog Fighting

            42.11 Destruction of Flag

            42.12 Discharge of Firearm in Certain Municipalities

            42.13 Use of Laser Pointers

            42.14 Illumination of Aircraft by Intense Light

           

Chapter 46      Weapons

            46.02 Unlawfully Carrying Weapons

            46.035 Unlawful Carrying of Handgun by License Holder

            46.04 Unlawful Possession of a Firearms

            46.05 Prohibited Weapon

            46.06 Unlawful Transfer of Certain Weapons

            46.08 Hoax Bombs

            46.13 Making a Firearm Accessible to a Child

 

***FOR ALL FELONY OFFENSES NOT EXCLUDED FROM ELIGIBILITY UNDER 411.081(e), A CRIMINAL DEFENDANT IS NOT ENTITLED TO FILE A PETITION FOR NON-DISCLOSURE UNTIL FIVE (5) YEARS AFTER THE COMPLETITION OF THE DEFERRED ADJUDICATION COMMUNITY SUPERVISION AND DISMISSIAL OF THE INDICTMENT.

 

 

A CRIMINAL DEFENDANT IS NOT ENTITLED TO FILE A PETITION FOR NON-DISCLOSURE FOR ANY OFFENSE IF THAT DEFENDANT WAS PLACED ON DEFERRED ADJUDICATION COMMUNITY SUPERVISION FOR OR HAS PREVIOUSLY CONVICTED OR PLACED ON ANY OTHER DEFERRED ADJUDICATION FOR:

            (1) An offense requiring sex offender registration under Chapter 62;

            (2) An offense under § 20.04 (aggravated kidnapping);

            (3) An offense under 19.02 (murder), 19.03 (capital murder), 22.04 (injury to a child or elderly person), 22.041 (abandoning or endangering child), 25.07 (violation of protective order), or 42.072 (stalking); or

            (4) any other offense involving family violence as defined by § 71.004 Family     Code.

 

§ 71.004. Family Violence

 

“Family violence� means:

(1) an act by a member of a family or household against another member of the family or household that is intended to result in physical harm, bodily injury, assault, or sexual assault or that is a threat that reasonably places the member in fear of imminent physical harm, bodily injury, assault, or sexual assault, but does not include defensive measures to protect oneself;

(2) abuse, as that term is defined by Sections 261.001(1)(C), (E), and
(G), by a member of a family or household toward a child of the family
or household; or

(3) dating violence, as that term is defined by Section 71.0021.

 

Tex. Fam. Code Ann. § 71.004 (Vernon 2002).

 

§ 71.0021. Dating Violence

(a) “Dating violence� means an act by an individual that is against another individual with whom that person has or has had a dating relationship and that is intended to result in physical harm, bodily injury, assault, or sexual assault or that is a threat that reasonably places the individual in fear of imminent physical harm, bodily injury, assault, or sexual assault, but does not include defensive measures to protect oneself.

(b) For purposes of this title, “dating relationship� means a relationship between individuals who have or have had a continuing relationship of a romantic or intimate nature. The existence of such a relationship shall be determined based on consideration of:

            (1) the length of the relationship;

            (2) the nature of the relationship; and

            (3) the frequency and type of interaction between the persons    involved in the relationship.

(c) A casual acquaintanceship or ordinary fraternization in a business or social context does not constitute a “dating relationship� under Subsection (b).

 

Tex. Fam. Code Ann. § 71.0021 (Vernon 2002).                  

 

 

 

COMPREHENSIVE REFORM STILL CRITICALLY NEEDED TO PROTECT
ATTORNEY-CLIENT PRIVILEGE AND EMPLOYEE LEGAL RIGHTS
In response to growing concerns raised by Congressional leaders, former Justice Department officials, and many in the legal and business communities, the Department of Justice replaced the 2006 “McNulty Memorandum� in August 2008 with new corporate charging guidelines that direct U.S. Attorneys and Assistant U.S. Attorneys not to coerce companies and other organizations to waive their attorney-client privilege or work product protections, or to pressure their individual employees to waive their own legal and constitutional rights during investigations in return for cooperation credit. The Securities and Exchange Commission subsequently issued a new Enforcement Manual in October 2008 that provides additional guidance on its privilege waiver policy outlined in the 2001 “Seaboard Report.� Though helpful,  the SEC’s new language still contains numerous loopholes and does not provide adequate protection for the privilege and employee legal rights.

In November 2007, the House overwhelmingly approved comprehensive legislation known as the “Attorney-Client Privilege Protection Act� (H.R. 3013). Many of the bill’s reforms were later adopted by the Justice Department in its new corporate charging guidelines. But unlike the limited scope of the DOJ policy, the reforms in the House bill—sponsored by Representatives John Conyers (D-MI), Bobby Scott (D-VA), and Lamar Smith (R-TX)—would apply to all federal agencies. A Senate companion bill, S.
3217, sponsored by Senators Arlen Specter (R-PA), (Vice President-elect) Joseph Biden (D-DE) and 12 other Senators from both parties, was also introduced in the 110th Congress but failed to receive a vote.

While the new Justice Department policy is a welcome and important improvement over its previous policy outlined in the McNulty Memorandum, a comprehensive solution to the ever-widening problem of government-coerced waiver is still critically needed. Therefore, the Coalition strongly supports the adoption of a Presidential Executive Order to all federal agencies requiring them to adopt effective DOJ-type reforms or the enactment of comprehensive federal legislation like the Attorney-Client
Privilege Protection Act (ACPPA) for the following reasons:

• The new DOJ policy, standing alone, does not provide a comprehensive solution to the problem of government-coerced waiver. Under the Justice Department’s new policy, companies will be required to provide all relevant facts to government investigators in order to receive full cooperation credit, but they cannot be asked or required to waive their attorney-client privilege or work product protections. In addition, where DOJ is the only investigating agency, the policy specifically bars prosecutors from pressuring companies, as a condition for receiving cooperation credit, not to pay their employees’attorneys fees or to take other unfair actions to undermine their employees’ rights and ability to mount a legal defense. Although these reforms are promising and constitute a significant improvement over DOJ’s previous policy, the new policy is limited to just the Department’s prosecutors and does not alter the
harmful waiver policies adopted by the SEC, the EPA, HUD, and many other agencies.

• The new SEC Enforcement Manual also contains many loopholes and fails to solve the governmentcoerced waiver problem. Although Section 4.3 of the SEC Manual states that agency staff should not directly ask companies to waive the attorney-client privilege or work product, it permits the staff to demand waiver if approved by a supervisor. The SEC Manual also pressures companies to “voluntarily� waive the privilege—and to take punitive actions against employees who decline to waive their legal rights—in return for full cooperation credit. Thus, the new Manual cannot be viewed as a substantialdeparture from past SEC policies and practices that have led to widespread government-coerced waiver.

• Government-coerced waiver has become a multi-agency problem that requires a multi-agency solution. In addition to the SEC, many other federal agencies have adopted policies that erode the attorney-client privilege, the work product doctrine, and employee legal rights. For example, the EPA’s “Audit Policy,� like the Justice Department’s previous McNulty Memorandum, authorizes agency officials to pressure companies to waive their attorney-client privilege and work product protections
during investigations. In addition, HUD and the Treasury Department’s Office of Foreign Asset Control(OFAC) have adopted policies that threaten to erode not only the attorney-client privilege and the work product doctrine, but also employees’ Sixth Amendment right to counsel and Fifth Amendment right against self-incrimination. As more and more federal agencies adopt similar waiver policies, broad
administrative or legislative reform is still needed to protect these fundamental rights and reverse the “culture of waiver.�

• A Presidential Executive Order applying reforms like the Justice Department’s recent reforms to all federal agencies—or new comprehensive legislation like ACPPA—would protect fundamental attorney-client privilege, work product, and employee constitutional rights during investigations. By applying the new DOJ reforms to the SEC, HUD, the EPA, and all other federal agencies, a Presidential executive order should prevent the agencies from pressuring companies to waive their attorney-client privilege and work product protections in order to receive full cooperation credit during investigations. Such an order also would help protect employees’ Sixth Amendment right to counsel and Fifth Amendment right against self-incrimination by preventing federal prosecutors from pressuring companies not to pay employees’ legal fees during investigations, to fire employees for not waiving their rights, or to take other punitive measures against the employees before their guilt has been established under law. Enactment of comprehensive legislation like S. 3217 and H.R. 3013 would offer similar benefits to a Presidential order, with the added advantage of making these critical reforms permanent and enforceable in a court of law.

• A Presidential executive order or comprehensive legislation would both strike the proper balance between effective law enforcement and the preservation of essential attorney-client privilege, work product and employee legal protections. Adoption of the Presidential order—or passage of legislation like the ACPPA—would prevent all agencies from forcing companies and employees to waive their fundamental legal rights while preserving the ability of prosecutors and other agency officials to obtain the important, non-privileged factual materials they need to punish wrongdoers and enforce the law.
<a href=”http://www.dallascriminallawyer.com”target=”_”>David Finn</a>

Holder Should Support Executive Order
On Attorney-Client Privilege

WASHINGTON, DC — The Coalition to Preserve the Attorney-Client Privilege issued the following statement on the Senate Judiciary Committee confirmation proceedings scheduled for January 15, 2009 on the nomination of Eric H. Holder Jr., to be Attorney General of the United States:

“The Coalition to Preserve Attorney-Client Privilege urges Attorney General Nominee Eric Holder to support a Presidential Executive Order requiring all federal agencies to adopt reforms of agency policies on attorney-client privilege similar to those adopted by the Department of Justice last August. The Coalition also encourages Mr. Holder to support the enactment of comprehensive federal legislation like the Attorney-Client Privilege Protection Act (ACPPA) that would stop the ever-widening problem of government-coerced waivers of privilege and employee legal rights.
“The Justice Department’s new corporate charging guidelines, which have been incorporated into the “U.S. Attorney’s Manual� are limited to just the Department’s prosecutors and do not alter the harmful forced waiver polices currently in use at the Securities and Exchange Commission, the Environmental Protection Agency, the Department of Housing and Urban Development and many other agencies.
“A Presidential Executive Order applying reforms similar to those at the Justice Department to other agencies—or new comprehensive federal legislation like ACPPA—will protect fundamental attorney-client privilege, work product doctrine and employees’ constitutional rights during investigations.�

The Coalition to Preserve the Attorney-Client Privilege members include the American Chemistry Council, American Civil Liberties Union, Association of Corporate Counsel, Business Civil Liberties, Inc., Business Roundtable, Financial Services Roundtable, Frontiers of Freedom, Lawyers for Civil Justice, National Association of Criminal Defense Lawyers, National Association of Manufacturers, Retail Industry Leaders Association and the U.S. Chamber of Commerce.
CONTACT: Joan Gartlan
(202) 419-3249
(202) 309-2022
<a href=”http://www.dallascriminallawyer.com”target=”_”>David Finn</a>

 

Case Law and Statutory Changes

 

- Just the Highlights –

 

 

Larissa T. Roeder

Assistant District Attorney

Dallas County, Texas

214/653-3627

Fax: 214/653-3643

July 17, 2008

CASE LAW

 

State v. Beam, 226 S.W.3d 392 (Tex. 2007)

     

      On June 1, 2007, the Texas Supreme Court issued an opinion upholding the line of cases, which required the expiration of the statute of limitations as a condition precedent to the expunction of arrest records in all cases where the arrested person was NOT charged by indictment with the commission of a felony offense.

·        Dallas County Dist. Attorney’s State v. Bhat, 127 S.W.3d 435 (Tex. App.–Dallas, 2004, no pet.) (holding evidence legally sufficient to support order granting expunction of misdemeanor arrest for assault where statute of limitations had not expired, in case where charges were never filed and victim refused to file a complaint)

·        Collin County Criminal Dist. Attorney’s Office. v. Dobson, 167 S.W.3d 625 (Tex. App.–Dallas 2005, no pet.) (holding evidence legally insufficient to support expunction of misdemeanor arrest where statute of limitations had not expired)

·        State v. L.T., No. 05-04-00759-CV, 2004 Tex. App. LEXIS 11610, *1 (Tex. App.–Dallas, Dec. 22, 2004, no pet.) (reversing order granting expunction where petitioner was arrested for assault, case filed with court, but later dismissed after the petitioner completed an anger management course, and the petitioner did not prove statute of limitations had expired).

·        Collin County Criminal Dist. Attorney’s Office v. Russell, No. 05-04-00100-CV, 2005 Tex. App. LEXIS 105, at *1 (Tex. App.–Dallas, 2005, no pet.) (not designated for publication) (providing proof that statute of limitations expired is element of expunction in case where petitioner was arrested for a Class C misdemeanor offense).

·        Collin County Crim. Dist. Attorney’s Office v. Winger-Bearskin, No. 05-05-00924-CV 2006 Tex. App. LEXIS 1725 (Tex. App. Dallas Mar. 6, 2006) (reversed order granting expunction where the District Attorney’s office rejected the case before filing – petitioner was arrested for misdemeanor assault and the statute of limitations had not expired).

·        Dallas County Dist. Attorney’s Office v. Hoogerwerf, NO. 2-05-034-CV, 2005 Tex. App. LEXIS 10424, * 8 (Tex. App.– Fort Worth, 2005 no pet) (reversing order granting expunction where the defendant was arrested but never indicted for sexual assault and where the statute of limitations had not expired).

 

Rules for expunctions after Beam

 

I.          DO NOT FILE A PETITION FOR EXPUNCTION ON A  MISDEMEANOR CASE, other than one resulting in an acquittal,  UNTIL THE STATUTE OF LIMITATIONS HAS EXPIRED.

            This rule applies to:

1.                  Memo agreement dismissals

2.                  Dismissals after completion of a Divert Program

3.                  Dismissals after completion of BIPP

4.                  Cases dropped before being filed

5.                  Cases where the victim filed an affidavit of non-prosecution

6.                  “Friendly� dismissals

7.                  Dismissals based on payment of restitution

8.                  Dismissals based on the defendant’s enlistment in military service

 

            The State of Limitations on a misdemeanor offense is two (2) years from the date of the offense. Tex. Code Crim. Proc. Ann. art. 12.02 (Vernon Supp. 2007).  However “The time during the pendency of an indictment, information, or complaint shall not be computed in the period of limitation.� Tex. Code Crim. Proc. Ann. art. 12.05(b) (Vernon Supp. 2007) (emphasis added).  The Texas Department of Public Safety applies the Article 12.05 tolling provisions when calculating a petitioner’s eligibility for expunction, with limited exception.

             Tolling provisions are currently applied as follows:

1.        Where a person is arrested and no charges are filed, the statute of limitations is computed from date of offense to date of filing.

2.        Where charges are filed and later dismissed, the statute of limitations runs from the offense date until the date the case is filed, and then starts running again the date the case is dismissed.

3.        Exception: In cases where the defendant pleads to a lesser-included offense under the original information or indictment, a tolling objection will generally not apply and thus, the statute of limitations – calculated for the originally charged offense – is calculated from the date of offense. 

 

II.                 EXPIRATION OF THE STATUTE OF LIMITATIONS APPLIES TO ALL UNINDICTED FELONY OFFENSES. 

      What this means:

1.                  A person arrested for the commission of a felony, BUT NEVER CHARGED, must wait the statute of limitations before filing a petition for expunction.

2.                  A person charged by indictment with the commission of a felony and whose case has been dismissed after indictment, must wait the statute of limitations, TOLLING PROVISIONS CONSIDERED, before filing a petition for expunction unless he can prove the dismissal was based on an absence of probable cause.  See III.

3.                  A person arrested for a felony whose case is presented to the grand jury and results in a “no bill� MAY be eligible for an expunction before the expiration of the statue of limitations.                                                                                                                                             

** A grand jury “no bill� may serve as a judicial determination of no probable cause, but, if the arresting or prosecuting agency considers the investigation to be active, the petitioner will not be able to establish that the case is “no longer pending,� and thus, will not be able to establish eligibility for expunction under Article 55.01(a)(2)(B).

4.                  In cases where a person charged by indictment with the commission of a felony offense, pleads to a lesser-included Class C offense under the felony indictment, and subsequently has his case dismissed after completion of a deferred adjudication probation, that person must prove the expiration of the statute of limitations for the original felony offense. 

5.                  Dismissal based on trial court’s granting of a writ of habeas corpus -  A person who is convicted or receives a deferred adjudication probation and subsequently has his case dismissed after the “trial court� grants a writ of habeas corpus, is probably NOT eligible to receive a petition for expunction because he cannot establish eligibility under 55.01(a)(1) – convicted and pardoned,  55.01(a)(2)(B) – no conviction or community supervision, or 55.01(c) – convicted and acquitted “by the court of criminal appeals.�

 

**Reminder, when establishing eligibility for expunction under Article 55.01(a)(2), the petitioner must establish his eligibility under all three sub paragraphs, 55.01(a)(2)(A), (B), and (C).

 

III.             EXPIRATION OF THE STATUTE OF LIMITATIONS APPLIES TO INDICTED FELONY OFFENSES UNLESS THE PETITIONER CAN PROVE THE INDICTMENT WAS DISMISSED BECAUSE THE ORIGINAL INDICTMENT WAS ISSUED BASED UPON A MISTAKE OF FACT, FALSE INFORMATION, OR OTHER SIMILAR REASON INDICATING AN ABSENCE OF PROBABLE CAUSE AT THE TIME OF THE DISMISSAL TO BELIEVE THE PERSON COMMITTED THE OFFENSE. . . .

Where a petitioner seeks to expunge a “dismissed� felony case and the statute of limitations has not run, the petitioner must show both, that mistake, false information or other similar reason caused the indictment to be presented and that the fact of wrongful or mistaken presentment caused the dismissal.  A finding that the presentment was made because of false information or mistake requires proof that the grand jury based its decision to indict on erroneous facts. 

 

Things that generally DO NOT show an absence of probable cause include:

1.                              Proof that an indictment was dismissed because the evidence was insufficient to support a conviction does not establish an absence of probable cause. Harris County Dist. Attorney’s Office v. M.G.G., 866 S.W.2d 796 (Tex. App.–Houston [14^th Dist.] 1993, no pet.).

2.                              Showing a case was dismissed after the court granted a motion to suppress evidence – inadmissible confession, illegally seized evidence, etc. – does not establish that the factual underpinnings to the presentment and indictment of the offense were incorrect. An absence of probable cause to effect a valid search and seizure “does not vitiate the probable cause necessary for a grand jury to believe that a defendant is guilty of an offense.â€?  Harris County Dist. Attorney’s Office v. Pennington, 882 S.W.2d 529 (Tex. App.–Houston [1^st Dist.] 1994, no pet.); Kendall v. State, 997 S.W.2d 630 (Tex. App.–Dallas, 1998, no pet.). 

3.                              A dismissal based on the State’s inability to locate the victim or a witness at the time of trial will generally not establish an absence of probable cause. Texas Dep’t of Pub. Safety v. Mendoza, 952 S.W.2d 560 (Tex. App.–San Antonio 1997, no pet.).

4.                             A dismissal based on a victim’s refusal or inability to testify at trial does not establish that the case was dismissed because of false information, mistake, or other information indicating a lack of probable cause.  Barker v. State, 84 S.W.3d 409 (Tex. App.–Fort Worth 2002, no pet).

STATUTORY CHANGES

Service to governmental agencies via electronic transmission

            Article 55.02, §§ 2(c)(2)(c) and 3(c) now authorizes the District Clerk to serve governmental agencies via “secure electronic mail, electronic transmission, or facsimile transmission.�

1                    Attorney’s should change petitions and proposed orders to include service in accordance with these statutory changes. 

Private entities that sell criminal history record information are now subject to orders granting expunction.

What to do:

1.      List any private entities that sell criminal history record information purchased from DPS in your petition – as a party to be served by DPS.  The District Clerk’s Office will not serve private entities or governmental agencies not located in this state.

2.      If you know of a private company that continues to release information after an order of expunction is granted – DO NOT CONTACT ME.  Notify the private entity and/or the Texas Department of Public Safety.

Applicable provisions:

1.      A petitioner should now list in his petition, “private entities that compile and disseminate for compensation criminal history record information that the petitioner has reason to believe have information related to records or files that are subject to expunction.�  Tex. Code Crim. Proc. Ann. art. 55.02 § 2(b)(C) (Vernon Supp. 2007).

2.      When an order of expunction is final, “The Department of Public Safety shall also provide, by secure electronic mail, electronic transmission, or facsimile transmission, notice of the order to any private entity that is named in the order or that purchases criminal history record information from the department.�  Tex. Code Crim. Proc. Ann. art. 55.02 § 3(c-2) (Vernon Supp. 2007) (emphasis added).

3.      Government Code § 411.0851 provides: Duty of Private Entity to Update Criminal History Record Information; Civil Liability

(a)   A private entity that compiles and disseminates for compensation criminal history record information shall destroy and may not disseminate any information in the possession of the entity with respect to which the entity has received notice that:

            (1) an order of expunction has been issued under Article             55.02, Code of Criminal Procedure; or