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Court Upholds Securities Lawyer's Conviction But Slams Prosecutors for 'Discovery Abuse'

Tuesday, September 3, 2013
By Yin Wilczek

The U.S. Court of Appeals for the Fourth Circuit Aug. 23 affirmed the conviction and sentence of former securities attorney Gregory Bartko on mail fraud related to the sale of fraudulent investments, but issued a scathing rebuke to the U.S. Attorney's Office for the Eastern District of North Carolina for “discovery abuse” (United States v. Bartko , 4th Cir., No. 12-4298, 8/23/13).

The court--in an opinion authored by Judge Henry Floyd--rejected several procedural and due process arguments Bartko raised to support his bid for a new trial, finding that the omitted evidence, if disclosed, would not have produced a different result.

However, the court added that Bartko's claims of prosecutorial misconduct “adds to the list” of prior cases involving “discovery abuse” by the U.S. Attorney's office. “Mistakes happen,” the court said. “Nevertheless, the frequency of the 'flubs' committed by this office raises questions regarding whether the errors are fairly characterized as unintentional.” 

Holder Notified

The Fourth Circuit urged the U.S. Attorney's office to meet with the U.S. District Court for the Eastern District of North Carolina to “discuss improvement of its discovery procedures.” The court also served copies of its opinion on Attorney General Eric Holder's office, and the Department of Justice's Office of Professional Responsibility.

U.S. Attorney Thomas Walker Aug. 28 told BNA that his office is taking the complaint seriously. “I do not believe the record in this matter shows that there was any intentional misconduct” by prosecutors, he said in an interview. “So we will welcome any review by OPR.”

Meanwhile, Bartko's attorney--Amanda Clark Palmer, Garland, Samuel & Loeb PC, Atlanta--said she was “disappointed” with the decision. “We obviously hoped the court was going to overturn his conviction based on the fact that the jury did not get all the relevant evidence in the case,” she said.

Clark-Palmer said the jury was not made aware of prosecutors' tolling and proffer agreements with key witnesses that directly implicated the witnesses' credibility. “We do plan to file a petition for reconsideration with the Fourth Circuit,” she said.

Bartko, a former securities attorney and investment banker, and the former chief executive officer of registered broker-dealer Capstone Partners LC, was convicted in November 2010 of four counts of mail fraud and one count of selling unregistered securities. The conviction related to the sale of hundreds of thousands of dollars of fraudulent investments in Capstone Private Equity Bridge and Mezzanine Fund LLC and other funds Bartko controlled.

The defendant was sentenced to 276 months in prison, and fined more than $886,000. The Securities and Exchange Commission--in response to the conviction--barred Bartko from the securities industry in August 2012. 


Bartko appealed to the Fourth Circuit, arguing that he was entitled to a new trial because, among other reasons, the government withheld discoverable evidence and failed to correct a witness's false testimony during the trial of his case.

The defendant also filed a Freedom of Information Act in the U.S. District Court for the District of Columbia against the SEC, DOJ, OPR, and other federal agencies alleging that they failed to respond to his requests for records related to his conviction (148 SLD, 8/1/13). In his FOIA complaint, Bartko asserted that “there has been a pattern of tainted prosecutions arising from the Eastern District of North Carolina … which have included similar prosecutorial misconduct.”

In its opinion, the Fourth Circuit said the U.S. Attorney Office's response to court queries regarding its practices have been “less than satisfactory.” “Faced with such behavior, we must conclude that this office is uninterested in placating concerns about its practices,” it said.

The court also stressed that although it affirmed Bartko's conviction in this case, problematic conduct on the part of prosecutors is “anything but harmless.”

“[I]f this sort of behavior continues in subsequent cases, this Court may wish to require that the United States Attorney for the Eastern District of North Carolina, as well as the trial prosecutor, be present at oral argument so that the panel can speak directly to him or her about any alleged misconduct,” the court added. “Sanctions or disciplinary action are also options.” 

Addressing Concerns

Walker--who was named U.S. Attorney in 2011, after some of the alleged misconduct occurred--told BNA that the Fourth Circuit's concerns surfaced in May, during oral argument of Bartko's case.

“We heard the concerns at that time, and have, and will continue to, work to address them,” Thomas said. “Any time there is alleged misconduct on the prosecutor's part, it must be taken seriously.” He added that his office has referred the matter to OPR.

Thomas declined to comment on Bartko's FOIA case, noting that it is ongoing litigation.

The district court overseeing the FOIA lawsuit Aug. 26 gave the DOJ and the other federal agencies a 30-day extension--until Sept. 30--to respond to Bartko's complaint. DOJ attorneys requested the extension, saying they needed the extra time to consult with the FOIA department of each agency.

The Fourth Circuit's opinion is available at

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