United States District Court, D. Utah, Central Division
J. Shelby District Judge.
MEMORANDUM DECISION AND ORDER
M. WARNER Chief United States Magistrate Judge.
Judge Robert Shelby referred this matter to Chief Magistrate
Judge Paul M. Warner pursuant to 28 U.S.C. §
636(b)(1)(A). Before the court is Defendant Claud R.
Koerber's (“Mr. Koerber”) Motion for Order to
Show Cause and to Disqualify Federal Prosecutors and Federal
Agents. Having reviewed the parties' briefs
and the relevant law, the court renders the following
Memorandum Decision and Order.
case involves a long and complex procedural history. Relevant
to the present motion, on May 26, 2009, Mr. Koerber was
indicted in Case No. 2:09-cr-302 (“Koerber I”)
before District Judge Clark Waddoups. Following the original
indictment, the government obtained two superseding
indictments on November 10, 2009, and September 29, 2011.
These indictments were litigated over the course of five
years and ultimately resulted in Judge Waddoups dismissing
the case with prejudice for Speedy Trial Act
(“STA”) violations. See United States v.
Koerber, No. 2:09-cr-302, 2014 WL 4060618, at *1 (D.
Utah. Aug. 14, 2014). The government appealed, and the Tenth
Circuit reversed and remanded. See United States v.
Koerber, 813 F.3d 1262, 1286-87 (10th Cir. 2016). The
Tenth Circuit held that Judge Waddoups failed to properly
weigh the STA factors in dismissing the case with prejudice.
remand, Judge Waddoups recused and the case was reassigned to
District Judge Jill N. Parrish. On a motion to dismiss filed
by Mr. Koerber, Judge Parrish dismissed the case without
prejudice for STA violations. See United States v.
Koerber, No. 2:09-cr-302, 2016 WL 4487742, at *1 (D.
Utah. Aug. 25, 2016). As a result, on January 18, 2017, the
government obtained the instant eighteen count indictment
charging Mr. Koerber with securities fraud, wire fraud, money
laundering, and tax evasion (“Koerber
Koerber has filed several pretrial motions that rely, in
part, on relief Mr. Koerber was granted in Koerber
For example, in February of 2009, government agents conducted
two interviews with Mr. Koerber without Mr. Koerber's
counsel present. United States v. Koerber, 966
F.Supp.2d 1207, 1213 (D. Utah 2013). Judge Waddoups held that
the interviews violated Rule 4.2 of the Utah Rules of
Professional Conduct because at the time of the interviews,
the government's posture towards Mr. Koerber “had
shifted from investigatory to prosecutorial . . . .”
Id. Therefore, Judge Waddoups suppressed the 2009
interviews and “all fruits” derived therefrom
(“Suppression Order”). Id. at 1245.
response to an IRS subpoena, Mr. Koerber inadvertently
produced what he claimed was privileged material to the
government, including a July 20, 2005 “To Our
Lenders” letter (“2005
Letter”). United States v. Koerber, No.
2:09-cr-302-CW, 2011 WL 2174355, at *1 (D. Utah June 2,
2011). After extensive litigation, Judge Waddoups determined
that the 2005 Letter was privileged and the court ordered the
government to destroy the government's copies of the
letter (“Privilege Order”). Id. at *10.
the court is bound by the evidentiary rulings in Koerber I
presented a threshold question for the court. Therefore, the
court ordered the parties to submit supplemental briefing
addressing the applicability of rulings made in Koerber I on
Koerber II. Relying primarily on the issue preclusion
doctrine, Mr. Koerber argued that the parties should be
prohibited from re-litigating Judge Waddoups' evidentiary
rulings. Judge Shelby held that the outcome of the
Suppression Order had no bearing on the court's decision
to dismiss Koerber I without prejudice for STA
violations. Therefore, Judge Shelby found that the
Suppression Order does not have preclusive
effect. Furthermore, Judge Shelby held that he
was not inclined to accept Judge Waddoups' legal
conclusions that a Rule 4.2 violation occurred, that it
constituted a due process violation, and that suppression was
warranted. Judge Shelby, however, did not address
the preclusive effect or the merits of the Privilege Order.
Koerber's motion seeks an order to show cause why the
United States Attorney's Office for the District of Utah
should not be sanctioned and held in contempt for its
continued possession of the 2005 Letter. Additionally,
Mr. Koerber moves to disqualify Assistant United States
Attorney Stewart Walz, FBI Agent Cameron Saxey, IRS Agent Ron
Marker, and “other prosecutors and agents previously
assigned to the team” for their alleged pattern of
misconduct, conflict of interest, and exposure to Mr.
Koerber's privileged information.
reasons that follow, Mr. Koerber's motion is denied. The
court finds nothing improper or suspect about the
government's unintentional retention of the 2005 Letter.
Furthermore, Mr. Koerber fails to identify a single ethical
violation attributable to the prosecution that would entitle
Mr. Koerber to the extraordinary sanction of
disqualification. It appears to the court that Mr. Koerber
improperly labels the government's rigorous advocacy as a
conflict of interest.
Mr. Koerber's Request for an Order to Show Cause
Koerber argues that the court should issue an order to show
requiring the government to explain why it should not be
sanctioned and held in contempt for continuing to possess a
copy of the 2005 Letter. After the Privilege Order was issued
in Koerber I, the government appointed a filter team to find
and destroy any copies of the 2005 Letter. After
extensive search of the government's records, the filter
team notified the court that it had examined the Bates
numbers identified by Mr. Koerber and the court to ensure the
privileged information had been destroyed. The filter
team further stated: “To the extent some items may have
been missed due to inadvertence, the filter team has
instructed the trial team, and the relevant agents as to the
prohibited evidence, and instructed them to immediately
destroy any versions of the evidence they may encounter in
Koerber II, the government reproduced the government's
discovery to Mr. Koerber.On May 30, 2017, Mr.
Koerber's counsel notified the government that a copy of
the 2005 Letter still remained in the government's
discovery. In response, the government immediately
deleted the copy of the letter and reviewed its discovery to
ensure all versions of the 2005 Letter were
destroyed. The government maintains it
inadvertently retained copies of the 2005 Letter and that the
government's case does not rely on the
letter. Conversely, Mr. Koerber argues that the
government's continued possession of the 2005 Letter was
not inadvertent and that the government should be held in
contempt and sanctioned for violating the Privilege
Order. Mr. Koerber's request is denied for
in light of Judge Shelby's ruling on the applicability of
the Suppression Order, it is likely the Privilege Order does
not provide Mr. Koerber a basis for sanctions. Indeed, any
privilege attributable to the 2005 Letter had no bearing on
whether the STA was violated in Koerber I. Therefore, like
the Suppression order, the Privilege Order likely does not
have preclusive effect. See Bobby v. Bies, 556 U.S.
825, 835 (2009) (finding that issue preclusion bars
successive litigation where the issue was “essential
to” or “necessary to the ultimate outcome of a
prior proceeding”); Mabry v. State Bd. of Cmty.
Colleges & Occupational Educ., 813 F.2d 311, 316
(10th Cir. 1987).
the purpose of the Privilege Order was to prevent the
government from using the 2005 Letter to seek a conviction.
Mr. Koerber has not been denied this remedy. The government
states: “The indictment contains no reference to the
letter; it will not be used in opening statements; it will
not be an exhibit; the trial team will not ask any witness
about it; and it will not be used in closing
argument.” Therefore, at this point, Mr.
Koerber's complaints are merely academic.
the court finds nothing nefarious about the government's
possession of the 2005 Letter. The government's discovery
encompasses over 300, 000 documents. The recently discovered
copies of the 2005 Letter were stamped with different Bates
numbers than the Bates ranges identified by the Mr. Koerber
and the court in Koerber I. Tellingly, Mr. Koerber has had
access to the government's discovery for many years and
Mr. Koerber did not find the copy of the 2005 Letter until
May 30, 2017. Moreover, once the government was notified of
its error, the copy was immediately destroyed and the
government worked in good faith to ensure that any remaining
copies in its possession were destroyed.
on the foregoing, the court finds that Mr. Koerber has failed
to demonstrate that the government has engaged in
sanctionable conduct. Therefore, Mr. Koerber's request
for an order to show cause is denied.
Mr. Koerber's Motion to Disqualify
Koerber offers three grounds for disqualifying members of the
prosecution team. First, Mr. Koerber argues that the
“AUSA Walz, the other AUSAs and federal agents who have
participated under his direction” have demonstrated a
pattern of misconduct that requires their
disqualification. Second, Mr. Koerber argues that
unspecified members of the prosecution team have a
“personal conflict” of interest that prohibits
them from participating in this case.Finally, Mr.
Koerber claims that the government's exposure to his
privileged information requires that the court neutralize the
“taint” of the government's misconduct
disqualification of government counsel is a “drastic
measure and a court should hesitate to impose it except where
necessary.” United States v. Bolden, 353 F.3d
870, 878-79 (10th Cir. 2003) (citation omitted). Indeed,
courts have granted disqualification of government counsel in
limited circumstances. Id. (collecting cases). For
instance, disqualification is warranted when a prosecutor has
an actual conflict of interest, see Young v. United
States ex rel. Vuitton et Fils S.A., 481 U.S. 787, 807
(1987), or where a prosecutor has the potential to act as a
witness at trial, see United States v. Prantil, 764
F.2d 548, 552-53 (9th Cir. 1985). However, a violation of a
rule of professional conduct does not automatically require
disqualification. Beck v. Bd. of Regents of State of
Kan., 568 F.Supp. 1107, 1110 (D. Kansas 1983)
(“[T]he court should not act unless the offending
attorney's conduct threatens to taint the underlying
trial with a serious ethical violation.” (quotations
and citations omitted)). Indeed, the Tenth Circuit has held
that disqualification is only appropriate if the ethical
violation results in “the erosion of public confidence
in the integrity of the bar and of the legal system.”
United States v. Collins, 920 F.2d 619, 627 (10th
Cir. 1990) (quotations and citations omitted) (addressing
disqualification in the context of a defendant's Sixth
Amendment right to counsel).
the sanction of “disqualification of counsel . . .
should be measured by the facts of each particular case as
they bear upon the impact of counsel's conduct upon the
trial.” Parkinson v. Phonex Corp., 857 F.Supp.
1474, 1476 (D. Utah 1994). To determine if disqualification
is required, the court generally weighs “[t]he
egregiousness of the violation, the presence or absence of
prejudice to the other side, and whether and to what extent
there has been a diminution of effectiveness of
counsel.” Id. With these standards in mind,
the court will address each of Mr. Koerber's grounds for
Government's Alleged Misconduct and
Koerber claims that members of the prosecution should be
disqualified for a pattern of repeatedly violating ethics
rules, federal law, and the “clear limits” set by
the United States constitution. In support, Mr. Koerber
relies on the Suppression Order, the litigation surrounding
the Privilege Order, and the government's purported
refusal to “admit its misconduct.” The court has
carefully reviewed Mr. Koerber's allegations and finds
that none of the evidence cited by Mr. Koerber warrants
The Suppression Order
Koerber argues that the ethical violations outlined in the
Suppression Order mandate that the court disqualify Mr. Walz
and members of the prosecution team working at his direction.
Judge Shelby held that the legal conclusions in the
Suppression Order do not bind this court.Furthermore,
Judge Shelby declined to accept Judge Waddoups' findings
that a Rule 4.2 violation occurred, that it constituted a due
process violation, and that suppression was