Shapiro Arato Bach Files Petition for Certiorari in FBI Leaking Case

On May 3, 2019, Shapiro Arato Bach filed its petition for certiorari to the United States Supreme Court on behalf of Las Vegas businessman William Walters seeking review of the Second Circuit’s decision affirming his conviction for insider trading.  The petition asks the Supreme Court to clarify whether its decision in Bank of Nova Scotia v. United States, 487 U.S. 250 (1988), established that a systematic and pervasive pattern of government misconduct that violates Federal Rule of Criminal Procedure 6(e) relating to grand jury secrecy is a structural error creating a presumption of prejudice warranting dismissal of an indictment.  If the answer to this question is no, the petition presents the question whether a criminal defendant who makes a prima facie showing that the government violated Rule 6(e) is entitled to discovery or an evidentiary hearing that would assist the district court in assessing prejudice and fashioning a remedy.

In Mr. Walters’ case, at least one high-ranking FBI agent supervising the investigation (and likely others within the government) leaked grand jury secrets to major news outlets in order to revive what the agent described as a “dormant” investigation.  The leaders of the New York FBI and U.S. Attorney’s Office were made aware of the leaks, but nonetheless categorically denied any misconduct to the district court and spuriously denied that the government was responsible for the leaks.  The government only acknowledged the leaks after the district court ordered a hearing, and then disclosed only six of thousands of documents it reviewed relating to wrongdoing the government admitted was “reprehensible,” “deplorable,” “astonishing” and “outrageous.”  Nonetheless, the district court canceled the hearing and refused to grant any relief, and the Second Circuit affirmed that decision despite characterizing the government misconduct as “serious” and “indeed, likely criminal” in its opinion.

The petition points out that similar leaks occurred in a number of other high-profile insider trading investigations and that the recent OIG report about investigations related to the 2016 presidential election documents a “culture of unauthorized media contacts” pervading all levels of the FBI.  Accordingly, the petition argues, Supreme Court review is needed to ensure that there is some remedy for such pervasive misconduct, and that government officials are adequately deterred from violating the the very laws they are charged with enforcing.

Alexandra A.E. Shapiro, Eric S. Olney, and Jacob S. Wolf co-authored the petition, which is available herePress coverage of the petition is available here and here.