Ceglia v. Zuckerberg et al

Filing 638

REPLY/RESPONSE to re 630 Response in Opposition to Motion filed by Paul D. Ceglia. (Attachments: # 1 Exhibit, # 2 Certificate of Service)(Argentieri, Paul)

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Arraignment
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
------------------------------x
UNITED STATES OF AMERICA,
v.

12 CR 876 (ALC)

PAUL CEGLIA,
Defendant.
------------------------------x
New York, N.Y.
November 28, 2012
2:50 PO
Before:
HON. ANDREW L. CARTER, JR.,
District Judge
APPEARANCES
PREET BHARARA,
United States Attorney for the
Southern District of New York
JANIS M. ECHENBERG
CHRISTOPHER D. FREY
Assistant United States Attorneys
FEDERAL DEFENDERS OF NEW YORK
Attorneys for Defendant
DAVID PATTON

SOUTHERN DISTRICT REPORTERS, P.C.
[phone]

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Arraignment

(In open court)
THE DEPUTY CLERK: Criminal cause for an arraignment
in Case No. 12 CR 876. United States v. Paul Ceglia.
Counsel, please state your appearance for the
government.
MR. FREY: Good afternoon, your Honor.
Christopher Frey and Janis Echenberg for the
government.
THE DEPUTY CLERK: For the defendant?
MR. PATTON: Good afternoon, your Honor.
David Patton for Mr. Ceglia.
THE COURT: Good afternoon.
Good afternoon, Mr. Ceglia.
THE DEFENDANT: Good afternoon, your Honor.
THE COURT: Is this Mr. Ceglia's first appearance in
this district?
MR. FREY: It is, your Honor.
THE COURT: Okay.
And Mr. Ceglia was arraigned on a complaint in a
different district; is that correct?
MR. FREY: That's correct, your Honor.
The defendant was arrested on October 26th and
presented in the Western District of New York on that day.
At that time, bail was set for the defendant. The
government, when I sought detention, sought to have the bail
SOUTHERN DISTRICT REPORTERS, P.C.
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determination stayed until it could be appealed to a judge in
this district. It was appealed to Judge McMahon, who was
sitting in Part 1. A bail appeal hearing was heard on October
31st, and Judge McMahon did set stricter bail conditions for
this defendant. And the defendant satisfied those conditions
and was released on November 9th of this year.
THE COURT: Okay. Thank you.
Since this is Mr. Ceglia's first appearance in this
district, first appearance on the indictment, we'll go ahead
and go through some of the other preliminary matters that may
have been covered in the Western District of New York just in
an abundance of caution.
Mr. Ceglia, since that's the case, there are two
purposes for the proceedings today:
First, I want to make sure that you understand your
rights and the nature of the charges against you. And I
believe the issue of bail has already been dealt with, but we
can deal with that again, if necessary.
Do you understand, Mr. Ceglia?
THE DEFENDANT: I do, your Honor.
THE COURT: First, regarding your rights, Mr. Ceglia,
you have the right to remain silent, do you understand?
THE DEFENDANT: I do.
THE COURT: Anything that you say can be used against
you, except what you say in private to your attorney.
SOUTHERN DISTRICT REPORTERS, P.C.
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Do you understand?
THE DEFENDANT: I do.
THE COURT: You don't have to make any statements to
the government. Even if you've previously made statements to
the government, you don't have to continue making statements to
the government.
Do you understand?
THE DEFENDANT: I do, your Honor.
THE COURT: In addition, Mr. Ceglia, you have the
right to be represented by an attorney.
Do you understand?
THE DEFENDANT: I do.
THE COURT: If you cannot afford to hire an attorney,
the Court will give you an attorney for free.
Do you understand?
THE DEFENDANT: I do, your Honor.
THE COURT: Toward that end, you filled out a
financial affidavit. Is this, in fact, your signature on this
financial affidavit, Mr. Ceglia?
THE DEFENDANT: Yes, it is.
THE COURT: Okay.
Based on the information provided in the financial
affidavit, I find that you qualify for court-appointed counsel.
So I will appoint David Patton, Federal Defenders of New York,
to represent you for today's purposes and all future purposes.
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]
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Do you understand, Mr. Ceglia?
THE DEFENDANT: I do, your Honor.
THE COURT: And, again, Mr. Ceglia, you have the right
to be represented by an attorney at every stage of this
criminal litigation.
Do you understand?
THE DEFENDANT: I do.
THE COURT: And I have appointed counsel to represent
you at every stage of this litigation free of charge.
Do you understand?
THE DEFENDANT: I do, your Honor.
THE COURT: Let's turn to the charges in this case.
Mr. Ceglia, have you received a copy of the indictment
that's been filed against you in this case?
THE DEFENDANT: I have.
THE COURT: And have you reviewed it with your
attorney?
THE DEFENDANT: I have, your Honor.
THE COURT: And do you feel that you understand what
you've been charged with?
THE DEFENDANT: Yes, I do.
THE COURT: I'm not going to read the entire
indictment, but I will summarize it for you.
There are two criminal counts in the indictment; do
you understand, Mr. Ceglia?
SOUTHERN DISTRICT REPORTERS, P.C.
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THE DEFENDANT: Yes, your Honor.
THE COURT: The indictment is based on an allegation
of fraud overall.
Do you understand?
THE DEFENDANT: Yes, your Honor.
THE COURT: The government claims in the indictment
that you devised or intended to devise a scheme to defraud.
Do you understand?
THE DEFENDANT: Yes.
THE COURT: And the government claims in the
indictment that this scheme to defraud had a couple of primary
elements. The first element was an allegation that you
doctored or altered a contract.
Do you understand?
THE DEFENDANT: I do understand.
THE COURT: Also, another element of this overall
scheme that the government alleges that you devised was to file
a civil lawsuit.
Do you understand?
THE DEFENDANT: Yes, your Honor.
THE COURT: And the government claims that, again,
this scheme was a scheme to defraud in order to obtain money
and other things of value that you otherwise would not be
entitled to.
Do you understand?
SOUTHERN DISTRICT REPORTERS, P.C.
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THE DEFENDANT: Yes.
THE COURT: The government claims that in order to
carry out this scheme to defraud, that you engaged in two kinds
of conduct. The first type of conduct is contained in Count
One, the mail fraud count.
Do you understand?
THE DEFENDANT: I do.
THE COURT: And the government claims that in order to
carry out this scheme to defraud, you placed or caused to be
placed into a post office or authorized depository items with
the intention that those items would be delivered by the postal
service.
Do you understand?
THE DEFENDANT: I do.
THE COURT: In Count Two you're charged with wire
fraud.
Do you understand?
THE DEFENDANT: Yes.
THE COURT: The government claims in order to carry
out this overall scheme to defraud, that you transmitted or
caused to be transmitted by means of wire communication in
interstate and foreign commerce writings, signs, signals,
pictures, and sounds for the purpose of carrying out this
overall scheme to defraud.
Do you understand?
SOUTHERN DISTRICT REPORTERS, P.C.
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THE DEFENDANT: I do, your Honor.
THE COURT: There are also forfeiture allegations in
the indictment. Have you seen those?
THE DEFENDANT: Yes, I have.
THE COURT: And have you reviewed those with your
attorney?
THE DEFENDANT: I have.
THE COURT: Counsel for the government, have I
adequately summarized the charges in the indictment?
MR. FREY: Yes, your Honor.
THE COURT: Counsel for the defense, is there anything
you'd like me to add?
MR. PATTON: No, your Honor.
THE COURT: So, again, that's the summary of the
charges against you in the indictment, Mr. Ceglia.
Do you understand the charges against you?
THE DEFENDANT: I do, your Honor.
THE COURT: And, Mr. Patton, you've gone over the
indictment with Mr. Ceglia?
MR. PATTON: I have.
THE COURT: And in your opinion, does he understand
the nature of the charges against him?
MR. PATTON: He does, your Honor.
THE COURT: Mr. Ceglia, how do you plead, guilty or
not guilty?
SOUTHERN DISTRICT REPORTERS, P.C.
[phone]
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THE DEFENDANT: Not guilty.
THE COURT: So now we can deal with the issue of bail.
My understanding is that the issue of bail has been
dealt with already by Judge McMahon. Is there anything else
that the parties are asking me to do considering bail at this
point?
Counsel for the government?
MR. FREY: Not at this time, your Honor.
THE COURT: Counsel for the defense?
MR. PATTON: Not at this time, your Honor.
THE COURT: Okay. All right.
So Mr. Ceglia has now been arraigned on the
indictment. He's been informed of his rights; he's been
informed of the charges against him. He pleaded not guilty.
Bail will stay in place.
How do the parties wish to proceed at this point?
MR. FREY: Your Honor, the government can provide an
update as to its plans for production of discovery. I don't
know if your Honor wants to also set a motion calendar at this
time.
But with respect to discovery, the government intends
to begin a rolling production of discovery hopefully this week.
There are two components of discovery that are going
to slow the government's full production of discovery slightly;
one being that there's a significant amount of electronic
SOUTHERN DISTRICT REPORTERS, P.C.
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evidence that the government has gathered that will need to be
turned over to defense counsel. We already had some initial
conversations with defense counsel about that, and we just need
to work out the logistics. But the government's copy of that
material is currently outside of our own offices with an expert
witness who's been retained.
And second, there is some discovery material that the
government believes should be subject to a protective order.
We intend to provide defense counsel with a proposed protective
order or draft protective order this week. Hopefully, we'll be
able to reach agreement and submit a proposed protective order
to the Court later this week or early next week, and then that
will allow us to continue with our rolling production of those
materials.
I'll also note that the government currently has a
number of grand jury subpoenas disseminated and is awaiting
grand jury subpoena returns. And a lot of that material will
then need to be produced to defense counsel, as well.
The government anticipates that it will have
substantively completed its production of discovery within four
weeks' time.
THE COURT: Counsel for the defense, how do you wish
to proceed?
MR. PATTON: Your Honor, the discovery schedule is
fine by us.
SOUTHERN DISTRICT REPORTERS, P.C.
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It's hard for me to lay out all of our motions and
what sort of time we would need at this point, given the
government has suggested that discovery may be fairly
voluminous.
But there's one motion that I anticipate that I don't
think is terribly dependent on the discovery, and that is a
venue motion. And I think that we could probably go ahead and
set a schedule for that. There's sort of a laundry list of
factors that goes into a venue motion. I think it can
sometimes be affected in some ways by the discovery, but I
don't think it should affect the motion significantly.
THE COURT: Let's do this: At this point, the
government anticipates that it can substantially produce the
bulk of the discovery within four weeks; is that correct?
MR. FREY: That's correct, your Honor.
THE COURT: And Mr. Patton intends to file, at least
at this point, a motion to dismiss for lack of venue.
MR. PATTON: Or, to clarify, your Honor, to transfer.
THE COURT: To transfer.
And it certainly might be appropriate to make sure
that Mr. Patton has reviewed some of the discovery before
making that motion.
So why don't we do this: What is six weeks from now,
Tara?
THE DEPUTY CLERK: Six weeks from today, Judge?
SOUTHERN DISTRICT REPORTERS, P.C.
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THE COURT: Yes.
THE DEPUTY CLERK: That is January the 9th.
THE COURT: Okay. So if the discovery will be
complete in four weeks, let's set the motion filing date for
two weeks after that, which takes us to January 9th. Would
that be enough time to file your motion, Mr. Patton?
MR. PATTON: Yes, your Honor.
THE COURT: And then we'll give the government three
weeks to respond should be sufficient. That takes us to
January the 30th. And any reply should be filed by, I would
say, February the 8th. Is that a day of the week, Tara?
THE DEPUTY CLERK: Yes, it is, Judge. It's a Friday.
THE COURT: And then let's have a return date for,
let's say, two weeks after that, I believe.
Are we available on February 23rd?
THE DEPUTY CLERK: That's a Saturday.
The 22nd. Yes, we are.
THE COURT: February 22nd?
THE DEPUTY CLERK: 10 a.m.?
MR. PATTON: Your Honor, I'm afraid I'm out of town
between the 20th and 22nd. If we could push it to the
following week.
THE COURT: Okay. That's fine.
How is March 1st? Are we available then?
THE DEPUTY CLERK: No.
SOUTHERN DISTRICT REPORTERS, P.C.
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THE COURT: How about earlier that week? The next
week? How about March 4th for a return date. Is anyone
available then?
MR. PATTON: Your Honor, I apologize. The 4th and 5th
are bad for me, as well. The 6th through the 8th are wide
open.
THE COURT: Okay.
THE DEPUTY CLERK: March 6 at 10?
THE COURT: How about March 6th at 10 o'clock?
MR. PATTON: Thank you.
THE COURT: And what's the parties' position regarding
the Speedy Trial Act between now and then?
MR. FREY: Your Honor, the government moves to exclude
time under the Speedy Trial Act between today and March 6, 2013
so that the government may produce discovery, defense may have
an opportunity to review that discovery, and make whatever
motions, including the motion to transfer venue, that defense
counsel deems appropriate. And the parties can brief that for
the Court.
THE COURT: Mr. Patton, anything to add?
MR. PATTON: No objection to the speedy trial.
Just want to clarify. We may ask for more time for
motions other than the venue motion?
THE COURT: Okay. That's fine.
All right. So, Mr. Ceglia, ordinarily the government
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has 70 days from the date of your indictment to take your case
to trial.
Do you understand?
THE DEFENDANT: I do, your Honor.
THE COURT: If I enter this order of excludable delay,
I'm essentially calling a timeout from today until March the
6th; that time will not count toward that 70-day period.
Do you understand?
THE DEFENDANT: I do.
THE COURT: And ordinarily if the government failed to
take your case to trial within that 70-day period, you could
ask this Court to dismiss your indictment.
Do you understand?
THE DEFENDANT: Yes.
THE COURT: So by excluding this time, you could not
use the time from today until March 6th for a motion to dismiss
the indictment for lack of speedy trial.
Do you understand?
THE DEFENDANT: Yes, your Honor.
THE COURT: And I'm going to enter this order of
excludable delay from today's date to March 6th for the reasons
stated on the record so that the government can provide
discovery, and so that Mr. Patton can review the discovery and
make his anticipated motion to transfer.
I find that it's in the interest of Mr. Ceglia and in
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the interest of justice to enter this order of excludable
delay; and I find that the interest of justice and the interest
of Mr. Ceglia outweigh the public's interest in a speedy trial.
And I will enter an order to that effect.
Is there anything else from the government today?
MR. FREY: Your Honor, just a point of clarification.
On the return date, will your Honor be prepared to
hear oral argument?
THE COURT: Well, I anticipate that I will, but it
may -- we will certainly check in and see. It may be, from
what Mr. Patton has indicated, since he doesn't have the
discovery yet, it may be that once the discovery is produced,
it may be that he wishes to file another motion. But at this
point, I feel that I would be ready for oral argument if oral
argument is necessary. I'm not sure oral argument will be
necessary. If I intend to listen to oral argument, I will let
the parties know. I doubt oral argument will be necessary.
Anything you need to add to that, Mr. Patton?
MR. PATTON: No, your Honor.
I do have one other separate issue.
THE COURT: Okay. Certainly. What's that?
MR. PATTON: I understand -- and I don't know all of
the details -- but I understand that Mr. Ceglia's civil
attorney, Paul Argentieri, has been subpoenaed by the
government. And one of the requests is that he turn over -SOUTHERN DISTRICT REPORTERS, P.C.
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the contract at issue indicates that both the civil and
criminal case, the contract, the government is alleging, is
fraudulent and is the subject of the civil suit.
My understanding -- and, again, I don't know all of
the details personally -- but my understanding as of this
moment is that that's been the subject -- the custody of that
contract has been the subject of some -- I don't know whether
there has been debate, but discussion in the civil suit about
how it should be maintained.
And so I would just request that to the extent that
the government is seeking that contract, that we be allowed to
interpose any objections in terms of it being produced to the
government. Perhaps a middle ground could be that it would be
produced to the Court and held in the court filing with your
Honor. But I don't want it to impact whatever arrangements
have been made in the civil suit for it to essentially be out
of the parties' possession.
THE COURT: Government have any position on that at
this point?
MR. FREY: May I have a moment, your Honor?
THE COURT: Sure.
(Pause)
MR. FREY: Thank you, your Honor.
Obviously the government is not a party to the civil
lawsuit. However, the government's understanding is that after
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the parties in the civil lawsuit had an opportunity to inspect
the contract, it was returned to whatever format the parties
had agreed it should be returned to, and was given to
Mr. Argentieri, who was one of the attorneys for Mr. Ceglia, to
return to a safe-deposit box for safekeeping.
The government's investigation has revealed that the
contract is not currently in that safe-deposit box. And so the
government did serve a grand jury subpoena upon Mr. Argentieri
for production of the contract. That return date has not yet
passed; however, the government assumes that Mr. Argentieri
will comply with the subpoena and will produce the contract to
the government.
The government sees no reason for anything to be done
with the contract, other than what would normally be done in
the normal course with the production of documents in response
to a grand jury subpoena. Once the government has it and
maintains custody of it, we will certainly make it available to
defense counsel for inspection. But, other than that, I'm not
quite sure what Mr. Patton has in mind in terms of special
arrangements or considerations being taken.
THE COURT: Mr. Patton.
MR. PATTON: Unfortunately, from my perspective, this
is a fairly complicated scenario, because the government has
come in with criminal charges while there's still a motion
pending in the civil suit about the nature of this contract.
SOUTHERN DISTRICT REPORTERS, P.C.
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That is, there is at this moment a motion to dismiss, which is
essentially a summary judgment motion, because they've had
deposition and reports from experts about the nature of this
contract. And the judge has yet to rule on the authenticity or
not of the contract and whether or not the civil suit can move
forward.
My concern is only that should they need the contract
for any of those proceedings in the civil suit, that we have
access to it, and that it be available, and that we be sure to
comply with whatever requirements were laid down in the civil
suit about how it was maintained.
I'm not aware of the specifics of where it's being
held or how it was supposed to be held. But I just would like
to make sure that it doesn't interfere with whatever
proceedings are going on on the civil side; and that should the
parties need access to it, that they have access to it.
THE COURT: Let me just make sure I'm understanding
what your concern is.
Your concern is not that the government might share
the contract with opposing counsel on the civil matter; your
concern is more that if the government gets the contract, the
contract may not be available to Mr. Ceglia to use in the civil
matter; is that really what the concern is?
MR. PATTON: Well, I suppose both are concerns. I
mean the fact is I think that the government has been working
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with attorneys for Facebook and sharing information. So to the
extent that there would be sharing of information that would
somehow be unfair to Mr. Ceglia in the civil suit, I suppose
that would be a concern. The latter was what I was primarily
thinking about, that it just be maintained in a way that is
accessible to both parties should they, under whatever
arrangements have been made in the civil suit.
THE COURT: And, again, I'm not aware of all the
different permutations of what's going on in terms of the
allegations in the civil suit.
Is your understanding that a copy of the contract, of
this contract that's at issue, would not suffice; that there's
this one original contract that is really what's at dispute,
and a copy will not suffice; is that essentially it?
MR. PATTON: The allegation by the defendants in the
civil suit and by the government here is that there was, in
fact, a contract between Mr. Ceglia and Mark Zuckerberg, but
that it has been doctored.
And so, yes, the expert depositions and reports and
everything that have gone on have been highly technical about
the ink, the paper, about the specifics of the document itself.
THE COURT: One possible suggestion that might
alleviate everyone's concerns based on what the government has
indicated and what Mr. Patton has indicated is that it might be
possible, since the government is going to be requesting a
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protective order for certain documents in this case and certain
electronic discovery, it may make sense for the parties to -I'm not going to try to force the parties to do this, but it
may make sense for the parties to come up with some sort of
protective order for this contract in which the parties make
plain their intention that, for example, the government is not
going to share this contract with third parties or other
individuals involved in the lawsuit; and that the defendants
would do the same; and that the government and defense would
have equal access to this contract, however that would be
worked out. And then the parties can work out amongst
themselves how the contract is returned to Mr. Ceglia's lawyer
in the civil suit.
That's just a suggestion.
It may make sense for the parties to have some
negotiations amongst themselves, and to come to some agreement.
And, if not, you can come back to me.
But, at first blush, how does that suggestion sound to
the government?
MR. FREY: Your Honor, I think that's fine. I think
the parties can talk amongst themselves and see if we can
resolve the issue.
I would just note at the outset, however, that it is
not the case that currently the contract is available to both
parties in the civil suit. It was made available on a limited
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basis for inspection; it was then returned to counsel for
Mr. Ceglia.
I think if and when the parties in the civil suit need
access again to the contract, that is something that we
certainly could deal with. I don't know that this issue
necessarily is ripe at this time, but we are happy to speak
with defense counsel to see if we can negotiate some sort of
resolution at the outset.
I'd also just like to take a moment, your Honor, if I
may, to respond to something which Mr. Patton said, which is
that the government has been sharing information with the
attorneys for Facebook.
This has been a secret grand jury investigation. The
government has shared only what is publicly available at this
time with counsel for Facebook, nothing else.
THE COURT: Okay. Thank you.
But, I guess, again, especially with what the
government just indicated, that the height of Mr. Patton's
concern is if there is obviously litigation going on, revolving
around this contract. And obviously there have been some
rulings by the judge in that case regarding the safekeeping of
that contract. And I think it's clear that we know what
Mr. Patton is concerned about. If both sides of the civil
matter do not have equal access to that contract, and if that
lack of equal access is due to a ruling by the judge in the
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civil case, it would seem to frustrate the purposes of the
civil action and that judge's ruling. And I don't want to step
on that judge's ruling in the civil case by making it easier
for the defendants in the civil case to gain access to this
contract that they otherwise wouldn't have access to as a
result of this criminal prosecution.
So, again, I urge the parties to see if they can come
to some sort of agreement. And if the parties can't come to
some sort of agreement, then obviously write me. And perhaps
what we ought to do -- and in an abundance of caution -- just
go ahead and set a date for the parties to submit a joint
status report regarding this issue.
When is the return date of that subpoena? Counsel
knows?
MR. FREY: December 3rd, your Honor.
THE COURT: Let's have the parties try to reach an
agreement. If not, let's have the parties file a joint status
report by Friday, just indicating that the parties have come to
an agreement or the parties have not come to an agreement so
that we can deal with this issue.
MR. FREY: Just to be clear, your Honor, this Friday
or next Friday?
THE COURT: Well, this Friday, since December 3rd -you indicated the return date is December 3rd, which I believe
is Monday; correct?
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MR. FREY: Correct, your Honor.
THE COURT: So this Friday.
MR. FREY: Thank you, your Honor.
THE COURT: Because I think next Friday will be too

late.
MR. FREY: Thank you.
THE COURT: And, again, that's not a court appearance.
Mr. Ceglia would not need to appear in court; the attorneys
would not need to appear in court. Just file a joint status
report just letting the Court know if, in fact, the parties
have come to some resolution; and, if not, what the issues
still are.
Anything else, Mr. Patton?
MR. PATTON: Your Honor, I just want to clarify in
case I misspoke.
I was not suggesting that the government was engaging
in anything untoward. But I do think there's been -- I don't
think it's disputed that there's been information sharing
between the government and Facebook's lawyers on the civil
side. There are obvious examples of that.
So I wasn't suggesting that there were breaches of
grand jury secrecy. I just want to be clear I'm not making any
allegations along those lines.
THE COURT: That's fine.
Anything else from the government today?
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Nothing from the government.

MR. FREY:
Thank you.
THE COURT: Anything else from the defense today?
MR. PATTON: No, your Honor.
THE COURT: Okay. Thank you very much.
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