Corporate Governance

The United States' Response to Barnaba's Motion to Dismiss

By William McEachron

The claims of Paul C. Barnaba and the problems with the discovery process have delayed prosecution of United States v. Stockman, 07-0220 (S.D.N.Y. filed Mar. 21, 2007) . On April 8^th, Paul C. Barnaba filed a motion to dismiss the conspiracy to commit securities fraud, wire fraud, and bank fraud in the United States v. Paul C. Barnaba, 07-0220 (S.D.N.Y. filed Mar. 21, 2007) . Barnaba argued for dismissal based on violations of his statutory and constitutional rights under the Speedy Trial Act and the 6^th Amendment. This post outlines the United States’ memorandum to reject Barnaba's motion. Previously on the Race to the Bottom we discussed the initial indictment and selection of counsel for the defendants.

Barnaba was the CFO of Collins & Aikman, Inc., (“C&A”) during the period of the accused fraud. The charges center on a conspiracy between the Board of Directors to defraud C&A’s creditors. The complex nature of the fraud and the subsequent collapse of C&A generated over 10 million documents.

The staggering number of documents prompted the parties to support the creation of an internet based search system. Barnaba and the other defendants consistently rejected offers for hard copies of the documents. Barnaba is the only defendant to file a motion to dismiss based on a violation of his right to a speedy trial.

The Speedy Trial Act requires that a trial commence within seventy days after filing or first appearance, whichever occurs last. The statute contains automatic and discretionary exclusion periods that prevents the seventy days from running against the prosecution. Unique or complex cases often trigger these exclusions to promote the interests of justice. Barbana’s own motions triggered some of the automatic exclusions.

The Speedy Trial Act permits discretionary exclusions when necessary to: (a) organize and prosecute an unusual or complex case; (b) provide the defense with enough time to prepare their case; (c) and prevent injustice. These exclusions do not require the consent of the defendant and are at the judge’s discretion. Discretionary exclusions for one defendant apply to all the defendants when prosecuting multiple defendants or a conspiracy.

Barnaba argued the discretionary exclusions violated the Speedy Trial Act. The United States responded by describing the unique and complex nature of the case. The millions of documents, the complex conspiracy, and the collapse of C&A all make the case difficult to prosecute. In addition, the development of the internet search system proved more challenging and time consuming than initially anticipated. The defendants were aware of this delay, but continued to deny hard copy documents at each of the status meetings. The United States contended they were diligent in developing the system and the discretionary exclusions were reasonable.

The United States then responds to Barnaba's 6^th Amendment argument. The United States argued the delay was reasonable due to the amount of the discovery and the complex nature of the case. Barnaba ’s own motions and the development of internet based search system caused the delays in the trial. The United States was not responsible for the delays in the trial.

Barnaba argued the delays depleted the defense’s coffers, thus creating a situation where he could no longer afford to defend himself. The United States’ was unimpressed. For the United States, Barnaba’s argument appeared speculative because he failed to state any precedence supporting his position. The United States requested that the court reject Barnaba’s motion to dismiss because he failed to show a violation of his rights under either the Speedy Trial Act or the 6^th Amendment.

On July 24^th, United States District Judge Barbara S. Jones denied Barnaba’s motion. The Judge followed the United States’ lead in finding the complexity of the case, Barnaba’s own motions, and the defendants’ continued denial of hard copy discovery caused the delays in the case. These delays failed to trigger the Speedy Trial Act or infringe on Barnaba’s rights under the 6^th Amendment.

The primary materials for this post are available on the DU Corporate Governance web site .

Full post as published by The Race to the Bottom on October 27, 2008 (boomark / email).