Legal News

Bear Duo Wins Discovery Ruling; Judge Kozinski on Fairness

By Dan Slater

Remember Ralph Cioffi and Matt Tannin? There were a few days, around mid-June, when we turned our attention to the two former Bear Stearns fund managers whom federal prosecutors allege misled investors when their fund was in peril, lied about their financial interest in the portfolios and destroyed evidence in the investigation. Since Judge Frederic Block was assigned to the case not much has happened, aside from some speculation that Cioffi and Tannin got a good draw in Judge Block.

Today, we marshal some more evidence in favor of that proposition. The Eastern District of New York prosecutors moved to stay discovery in the parallel SEC case — civil litigation — and Judge Block denied the motion. (Here’s the ruling.) Basically, prosecutors argued that permitting the defendants to proceed with discovery in the civil case would prejudice the government in its prosecution of the criminal case. But Judge Block said the court was skeptical of claims of prejudice by the government when, after all, it’s the government who’s responsible for the simultaneous proceedings in the first place.

So good news for Tannin (pictured) and Cioffi. But equally interesting, perhaps, as the ruling, is the transcript of the motion hearing and some light banter back and forth between Judge Block and Tannin’s lawyer, Susan Brune of Brune & Richard.

MS. BRUNE: Your Honor, as you think about the delay argument that the government has made — and, frankly, it’s one that utterly mystifies me, I want to say this to you –

THE COURT: Does it mystify you or utterly mystify you?

MS. BRUNE: Utterly mystifies me. The government is enormous. Surely they have the resources to litigate these important cases they brought. We’re small but mighty, we’re ready, and I’m not going to say to you that the civil case is a basis for delaying the criminal trial, I’m simply not going to do that.

THE COURT: In an effort to make some sort of a comedic comment here to sort of break the ice, when you mentioned the word “utterly,” I had the interesting experience of sitting on a panel in the Circuit Court when Judge Kozinski was presiding. You can just picture the situation, it was at the end of a wonderful oral argument by a very capable young attorney, and just to punctuate he was doing very, very well and he wanted to end with a real nail-down of his case and he said, Members of the court, in sum, it just simply is not fair what the government is doing. And Judge Kozinski — and I don’t know whether you know him, he has this Romanian accent, he sounds like Dr. Frankenstein when he talks — he said, Fair? What do you mean by the word fair? I have been wondering my whole life what fair means. I’ve been thinking about it, I have been going to write books about it, and this poor guy never said another word.

So I was sitting here now and I heard the word “utterly” and if I were Judge Kozinski, I would probably say, What do you mean by the word “utterly”?

Full post as published by Law Blog - WSJ.com on October 27, 2008 (boomark / email).