Botched Bob Morgan prosecution causes waves in upper tiers of Justice Department

Rochester, NY. ― The Justice Department's botched prosecution of developer Robert "Bob" Morgan and his criminal co-conspirators has prompted reverberations and concerns reaching the upper tiers of the agency.

One of Morgan's attorneys, in fact, said that some of the responsive steps by federal prosecutors are nothing short of "extraordinary."

Once heralded by the Justice Department and other federal law enforcement agencies as a sweeping $500 million mortgage fraud case, the prosecution instead was resolved with mostly misdemeanor pleas and no prison time for the accused. The prosecution was derailed by multiple missteps of the handling of evidence — or "discovery" in legal parlance — by Justice Department attorneys; defense attorneys maintained the lapses were intentional misconduct while prosecutors instead insisted they were not purposeful.

A partially redacted court filing, released after legal actions by the Democrat and Chronicle, shows that in the aftermath of the plea deals, the Department of Justice has:

· Ordered a review of the prosecution that will be presented to the department's deputy attorney general.

· Is developing a plan for the the "best practices for the handling" of evidence in "future cases and investigations." This plan will also include other agencies involved in the Morgan prosecution, including the FBI.

· Working to "strengthen its mentoring program and to relieve managers from carrying caseloads so they can spend more time supervising line (prosecutors) and focus on case management."

· Apparently referred the actions of prosecutors for review by the department's Office of Professional Responsibility, which investigates possible misconduct by Justice Department lawyers.

"What's been revealed in the redacted version of the Department of Justice submission is in some ways familiar, but in some ways extraordinary," said Joel Cohen, an attorney for Morgan and a former federal prosecutor who focused on white-collar and securities fraud cases.

More:More on the mismanaged prosecution

DOJ taking missteps "seriously"

An Office of Professional Responsibility investigation is unsurprising, given the prosecutorial troubles and allegations of misconduct, but the other measures are far from routine, Cohen said.

"This suggests this has been taken very seriously at the senior-most levels to assure that these kind of errors don’t occur in the future not only in the Western District of New York, but throughout the Department of Justice," he said.

"One can hope that the changes that are necessary that prevent this from happening in the future do occur. These are remarkable steps to be taken at the senior level", said Cohen.

In its court filing, federal prosecutors wrote: "This effort is being undertaken to obtain a thoughtful and unbiased review of the Morgan case by Department experts, which the office can then use to develop internal practices and procedures to eliminate and prevent the types of discovery, management, and litigation mistakes which occurred in this case."

The Department of Justice this summer asked U.S. District Court Judge Elizabeth Wolford for permission to file documents under seal that detailed the agency's response to the mishandling of the prosecution. Some defense lawyers opposed the request, but Wolford agreed that the papers could be sealed.

The Democrat and Chronicle also made an informal request for the records to be opened, and, after Wolford refused, attorneys for the Democrat and Chronicle filed a motion asking her to reconsider. In September Wolford consented to release a version of the Department of Justice's filing, which includes about three pages of redacted information spread out among its 13 pages.

"As courts have made clear, the presumption of public access is particularly strong where judicial documents relevant to prosecutorial misconduct are concerned," said Michael Grygiel, an Albany-based attorney for the Democrat and Chronicle.

"The information that was formerly sealed pertains directly to the measures undertaken by both the Department of Justice and the US Attorney for the Western District of New York to prevent the recurrence of serious discovery violations that derailed the government's prosecution of this case," Grygiel said. "Allowing the public to judge the propriety and efficacy of these remedial steps is necessary to promote public confidence in the fair administration of the criminal justice system."

More:No prison but restitution

Training highlighted in aftermath

Training is always essential, regardless of the impetus, said Trini Ross, U.S. Attorney for the Western District of New York, in a statement to the Democrat and Chronicle.

“Training is important to all attorneys, which is why most states require Continuing Legal Education (CLE) for all members of the bar. The training provided by the U.S. Attorney’s Office is in addition to the training required by individual states.”

Many of the internal issues arose before Ross' 2021 appointment.

Morgan, once one of western New York's leading commercial and apartment developers, and some of his business colleagues were accused of swindling banks out of hundreds of millions of dollars in loans with lies about property values.

However, prosecutors made apparent misrepresentations to judges about the evidence in the case; did not, until late in the case, turn over to the defense a seized cellphone that Morgan's lawyers contended showed proof of his innocence; did not review significant amounts of digitized content from computers seized during raids of Morgan's businesses; and misplaced for a period of time other laptops taken during the searches.

Also criminally accused with Morgan were his son, Todd, who was a project manager in Morgan's commercial and real estate companies; Frank Giacobbe, a mortgage broker who also allegedly defrauded banks while working with Morgan's company; and Morgan company former director of finance, Michael Tremiti.

Robert Morgan pleaded guilty to felony fraud and agreed to pay $16 million in restitution. The others pleaded guilty to misdemeanor crimes. None received prison time.

Three other men associated with Morgan businesses earlier pleaded guilty to fraud-related crimes and were expected to testify at trial, had there been one. They all are expected to also receive sentences without prison time.

The criminal case was upended by the questionable conduct by prosecutors. Wolford once dismissed the indictment against the four, while allowing them to be indicted again, and they were.

With a new prosecution, even more questions arose about the actions of prosecutors, and Wolford ordered a hearing to air the allegations of misconduct. With that hearing approaching, prosecutors instead agreed to the plea deals with the accused.

Wolford then directed prosecutors to file papers documenting what, if anything, had been done to address how the fraud case was handled. Prosecutors responded with the sealed filing.

In initially denying the release of information in those papers, Wolford said that allegations of misconduct had been previously aired publicly and the filing contained "information about internal steps the government intended to take to remedy what went wrong in this case."

Upon a subsequent request to unseal the records, Wolford did permit release of the redacted document. The Democrat and Chronicle is now seeking the full release of the papers and arguments are scheduled before a federal appellate court.

This article originally appeared on Rochester Democrat and Chronicle: Botched Bob Morgan prosecution causes waves in Justice Department