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Christopher Black Law Office of Christopher Black, PLLC 1111 Hoge Building 705 Second Avenue Seattle, WA 98104 206.623.1604 Attorney for Defendant, Michael Spitzauer

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF WASHINGTON UNITED STATES OF AMERICA, Plaintiff, v. MICHAEL SPITZAUER, Defendant. Hearing: March 13, 2014, 11:30 a.m. Yakima Courthouse Defendant, Michael Spitzauer, by his attorney, Christopher Black, submits DEFENDANTS REPLY TO GOVERNMENTS RESPONSE TO MOTION FOR APPOINTMENT OF COUNSEL No. CR-13-6071-FVS

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this memorandum in reply to the Governments response to his motion for appointment of counsel (ECF 48). I. Justice Requires Appointment of Counsel in this Case.

The Government, relying on 18 U.S.C. 3006A(c), suggests that even if

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Mr. Spitzauer is financially unable to afford counsel, the Court should not appoint counsel at this stage of proceedings because the Court has discretion as to whether
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or not to make a mid-case appointment under 18 U.S.C. 3006A(c), and may choose to deny Mr. Spitzauers request for appointment, if it finds that justice so requires. This argument is precluded by the Ninth Circuits decision in United States v. Rivera-Corona, 618 F.3d 976, 982 (9th Cir. 2010). In that case, the

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defendant retained private counsel, but could no longer pay him and sought to have new counsel appointed under the Criminal Justice Act for sentencing, after he had already pleaded guilty. See id. at 978. The district court denied his request for appointment of counsel, citing as concerns the expense to the public and the

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fact that the only remaining stage of proceedings in the district court was sentencing. See id. at 978. The Ninth Circuit reversed, holding that requiring retained counsel to continue to represent the defendant even if the defendant cannot pay him . . . is no substitute for appointed counsel paid with public funds and so could not, without more, be in the interests of justice. See id. at 982. The Court went on to hold that: the district court erred in summarily rejecting [the defendants] request for appointed counsel to replace retained counsel simply because of the expense and the stage of proceedings. Id. The Court of Appeals then remanded the case, stating: On remand, the district court must appoint counsel if [the defendant] is financially eligible. See id. at 983.

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Mr. Spitzauer, like all other criminal defendants in federal district court, is entitled to be represented by appointed counsel at every stage of the proceeding from initial appearance through appeal, if he is unable to pay for representation. See Fed. R. Crim. P. 44(a). And, while 3006A(c) does contain a discretionary

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component, it is plainly apparent based upon the Ninth Circuits holding in Rivera-Corona, that the interests of justice would not be served by denying Mr. Spitzauers motion for appointment of counsel. Mr. Spitzauer has declared that he cannot afford to pay retained counsel,

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and retained counsel has advised the Court that he has not received any payment from the defendant subsequent to the filing of charges in this case. The only payments that undersigned counsel has received from Mr. Spitzauer were made for pre-charge investigation and negotiations with the United States. Those funds have long ago been exhausted. Given the relatively early stage of Mr. Spitzauers criminal proceedings, it would be a violation of Mr. Spitzauers right to counsel to deny appointment of counsel and to force counsel into an involuntary pro bono arrangement for the remainder of Mr. Spitzauers criminal prosecution in this Court. See Rivera-Corona, 618 F.3d at 982. Further, United States v. Haas, 623 F.3d 1214 (8th Cir. 2010), the out-ofcircuit case relied on by the Government, is inapposite. In Haas, the defendant

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was able to afford the costs of legal representation during the pretrial and trial
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stages of the case, but ran out of funds at sentencing and asked the Court to appoint retained counsel for sentencing. See Haas, 623 F.3d at 1221. This is completely different from Mr. Spitzauers situation, where the defendant has advised the Court relatively early in the criminal proceedings that he is unable to

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pay retained counsel. The Governments reliance on United States v. Herbawi, 913 F. Supp. 170, 172 (W.D.N.Y. 1996), is also misplaced. In Herbawi, the defendant, in fact, paid a portion of private counsels retainer fee, but failed to pay the remained of the retainer fee. Id. Recognizing, that The Criminal Justice Act

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is not a form of federal fee insurance guaranteeing payment to counsel, the court also acknowledged that the CJA specifically contemplates occasional need for retained counsel to withdraw upon the indigence of the defendant, and went on to hold that provisional appointment of retained counsel was proper on the facts before it. Id. In summary, there are no facts before this Court that would require a discretionary denial of Mr. Spitzauers motion for appointment of counsel, if the Court finds that Mr. Spitzauer financially qualifies for appointment. The case is still in its early stages. Counsel has received no payment for his services There is no indication that Mr.

subsequent to the filing of the indictment.

Spitzauers motion for appointment of counsel was filed for the purpose of
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delaying the proceedings. To the contrary, the interests of justice require that the
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issue of appointment of counsel be addressed as soon as possible, to avoid potential conflicts and delays later in proceedings. See Rivera-Corona, 618 F.3d at 982 (discussing potential delays and conflicts of interest that frequently arise in cases where the defendant is unable to pay retained counsel).

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II.

Any Hearing Regarding Mr. Sptizauers Financial Ability to Retain Counsel should be held In Camera and the Financial Documents Filed by Mr. Spitzauer should Not be Disclosed to the Government.

Relying on United States v. Kodzis, 225 F. Supp. 2d 1140, 1145 (S.D. Cal. 2003), the Government further contends that the hearing on Mr. Spitzauers ability to pay for legal representation should not be held in camera. But, Kodzis did not

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involve a hearing on the defendants ability pay for representation, and simply held that the information that the defendant had already filed with the Court did not need to remain under seal because there was no appreciable Fifth Amendment risk to the defendant that could result from its disclosure. See id. Further, in

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Kodzis, the court recognized that ex parte filing and sealing of financial documents is appropriate where there is a real and appreciable hazard that the defendants Fifth Amendment rights would be affected. Id. Mr. Spitzauers case is distinguishable from Kodzis. The Government concedes that it appreciates the Fifth Amendment concerns raised by Mr. Spitzauer, especially in light of the ongoing investigation in this case. Governments Response to Motion to Appoint Counsel (Response) at 19.
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Indeed, it cannot seriously be contended that an open evidentiary hearing on Mr. Spitzauers financial assets and how those assets have been spent over the years does not pose a serious threat to Mr. Spitzauers Fifth Amendment rights. As explained in Mr. Spitzauers opening brief, most courts to consider the issue have

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held that where there is a real risk of self-incrimination, hearings on eligibility for appointed counsel should be held in camera and financial documents should be filed ex parte and under seal. See United States v. Hickey, 997 F. Supp. 1206, 1209 (N.D. Cal. 1998) (collecting cases). Moreover, the Ninth Circuit has

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approved in camera hearings on the propriety of appointing counsel where the defendants Fifth Amendment rights are at issue. See United States v. Ellsworth, 547 F.2d 1096, 1098 (9th Cir. 1976). Because disclosure of financial documents and an open hearing on Mr. Spitzauers financial ability to retain counsel would expose Mr. Spitzauer to a real and appreciable threat of self-incrimination, any hearing on Mr. Spitzauers eligibility for appointment of counsel should be held in camera and all documents submitted in support thereof should be filed ex parte and under seal. See Hickey, 997 F. Supp. at 1209. III. Mr. Spitzauer is Eligible for Appointment of Counsel.

A large portion of the Governments response is devoted to discussing

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funds and assets the Government believes to be in the possession of Mr. Spitzauer,
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his family, or legal entitites with which Mr. Spitzauer is affiliated.

But, as

discussed in Mr. Spitzauers opening brief and explained below, many of the assets cited by the Government simply do not exist or have been exhausted, while others should not be considered in determining Mr. Spitzauers eligibility for

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appointment of counsel. A. Mr. Spitzauer does not have access to large cash reserves. First, the Government accuses Mr. Spitzauer of potentially concealing approximately $228,000 in cash, or some portion thereof, from the Court.

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However, in his declaration, which has been filed ex parte and under seal, Mr. Spitzauer includes a detailed list of his expenditures in 2013. Mr. Spitzuauer submits that his declaration more than sufficiently accounts for the $228,000 in cash identified by the Government. Mr. Spitzauer is prepared to provide further testimony in support of his declaration at an in camera hearing should that become necessary. The cases cited by the Government are also inapposite. In United States v. ONeill, 118 F.3d 65, 74 (2d Cir. 1997), the defendant was at liberty during the pendency of criminal proceedings, running a profitable business, and represented to the Court that he had the resources to hire counsel, but simply could not afford the attorney that he wanted. Similarly, in United States v. Parker, 439 F.3d 81, 88

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(2d Cir. 2006), the district court refused to appoint counsel to a detained defendant
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while he was still receiving significant checks from his previous employer, but appointed counsel under the CJA retroactively to the date that the defendant stopped receiving his salary. Unlike the defendants in ONeill and Parker, Mr. Spitzauer has not received

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any income since he was taken into custody in December, 2013. Furthermore, Mr. Spitzauers business, Green Power Energy, Inc., has all but ceased to operate. In determining Mr. Spitzauers eligibility for appointment of counsel, this Court is required to consider the liquidity of the individuals finances, his personal and

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familial needs, or changes in his financial circumstances. Museitef v. United States, 131 F.3d 714, 716 (8th Cir. 1997). Courts must also take into account the defendants debts and financial obligations. United States v. Barcelon, 833 F.2d 894, 897 (10th Cir. 1987). Mr. Spitzauer was operating a corporation that

required significant annual outlays. Mr. Spitzauer is also liable for numerous civil judgments. Mr. Spitzauer has provided evidence to this Court establishing that he has exhausted all of his resources. Because Mr. Spitzauer has no current income and no liquid assets, he is entitled to appointment of counsel. B. Melissa Spitzauer does not have any available assets. The Government contends that the recent activities of Melissa Spitzauer, Mr. Spitzauers wife, indicate that Mr. Spitzauers family has access to financial

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resources that have not been disclosed to the Court. In support of this proposition,
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the Government has submitted evidence that Mrs. Spitzauer made a $20,000 mortgage payment for the family home on December 16, 2013. Mrs. Spitzauer asserts in her sworn declaration that the Spitzauers have had no income since Mr. Spitzauer was incarcerated last year. See Exhibit (Ex.) A at 2. She further

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explains that she obtained the $20,000 that she used to pay the familys mortgage from a friend for the specific purpose of paying the mortgage. Id. Mrs. Spitzauer also asserts that times have been very difficult for the family since Mr. Spitzauer was incarcerated, and that they are subsisting on assistance from friends. Id.

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Even if Mrs. Spitzauer did have access to resources independent of Mr. Spitzauers previous earnings, it would be improper for the Court to consider such resources. The case law makes clear that a spouses separate property is not to be considered when determining the defendants eligibility for appointment of counsel under the CJA. See United States v. Lexin, 434 F. Supp. 2d 836, 841 42 (S.D. Cal. 2006); U.S. v Konrad, 730 F.3d 343, 349 (3d Cir. 2013) (quoting 7A Guide to Judiciary Policy 210.40.50 ([E]ligibility should be made without regard to the financial ability of the persons family unless the family indicates willingness and financial ability to retain counsel promptly.). And, although the Government correctly points out that joint bank accounts shared with a defendants spouse may properly be considered in determining a defendants

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eligibility for appointment of counsel, community property such as jointly held

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real property, where both spouses are obligated to consent to the encumbrance, disposition or transfer of the property should not be considered in determining a defendants financial ability to retain private counsel. Lexin, 434 F. Supp. 2d at 843; Konrad, 730 F.3d at 350 (Funds are available only where a defendant has

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control over their disposal.). The financial information submitted to the Court establishes that there are no joint bank accounts shared by Mr. and Mrs. Spitzauer with sufficient funds to disqualify Mr. Spitzauer from eligibility for appointed counsel.

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C. The cars held by Prarex International Limited are not relevant to the inquiry under the CJA. The Government makes much of the fact that Mr. Spitzauer previously represented to the Court that he could post the titles to vehicles owned by Prarex International Limited as bond if the Court authorized his pretrial release. However, Mr. Spitzauers previous offer to post the vehicles as bond is not

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inconsistent with the position that the vehicles should not be sold off to pay for Mr. Spitzauers defense. The titles to the vehicles could have been posted as bond with the Court to ensure Mr. Spitzauers appearance at Court proceedings without the requirement that the vehicles be sold. Under such an arrangement, the family could have remained in possession of the vehicles and continued to use them. The family would only be required to sell the vehicles in the event that Mr. Spitzauer failed to appear for trial. Indeed, that is the reason the defense made the proposal
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it did, rather than selling the cars and offering to post cash. On the other hand, if the family is required to sell the vehicles to pay Mr. Spitzauers attorneys fees, the family will be completely deprived of the use of the vehicles. Mr. Spitzauers family lives in a rural area, and uses the vehicles for transportation on a daily

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basis. The needs of Mr. Spitzauers family must be taken into account. Museitef, 131 F.3d at 716 (noting that the defendants familial needs should be The defense further

considered in analyzing his ability to retain counsel).

maintains that because the vehicles are not held in Mr. Spitzauers name, they are
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the property of a third party and are not available assets for purposes of the CJA. See Bracewell, 569 F.2d at 1200 (citing United States v. Bursey, 515 F.2d 1228 (5th Cir. 1975)). The defense reiterates that even if the Court orders the sale of the vehicles, it is by no means certain that the vehicles can be sold at market value, as the Government suggests. Moreover, there is no telling how long it will take to sell the vehicles, while delaying the appointment of counsel undoubtedly be prejudicial to Mr. Spitzauers defense. D. Mr. Spitzauers family is not splurging on luxury items. Throughout this litigation, the Government has repeatedly pointed to personal property owned by Mr. Spitzauers family members as evidence that Mr.

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Spitzauer has access to financial resources. However, the vast majority of the
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personal property identified by the Government was purchased long before Mr. Spitzauers incarceration. The Jordan athletic shoes gifted to Zachary Spitzauer for his birthday, were actually purchased by his brother Michael Spitzauer, Jr. approximately two years ago. See Ex. B (Declaration of Michael Spitzauer Jr.) at

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2.

The Walter Jones memorabilia posted on Michael Spitzauer Jr.s Twitter

account has been owned by him for two to three years. See id. The X-Box game downloaded by Michael Spitzauer, Jr. on January 17, 2014, was a free download offered by the games designer to platform users who agreed to participate in

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game testing. Id.; Ex. C (Email regarding game) As for the new Apple iPhones obtained by Mrs. Spitzauer for herself and her children, Mrs. Spitzauer explains in her declaration that the phones were acquired as part of a promotion when she changed cellular service providers. See Declaration of Melissa Spitzauer at 2. In fact, Mrs. Spitzauer spent approximately fifty dollars on the entire transaction. See id.; Ex. D (Sprint receipt). The reason they changed carriers was because the new carrier offered a more economical plan. See Ex. A at 2. Mr. Spitzauer has met the burden of establishing that he is entitled to appointment of counsel under the CJA, and the Government should not be allowed to rely on personal property acquired years ago by Mr. Spitzauers family

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to prove that Mr. Spitzauer has access to liquid resources.

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IV.

CONCLUSION

For the foregoing reasons and for the reasons submitted previously in this matter, the Court should appoint counsel in Mr. Spitzauers case. Any hearing regarding Mr. Spitzauers eligibility for appointment of counsel should be held ex

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parte and any documents produced at the hearing should be sealed and not disclosed to the Government. DATED this 28th day of February, 2014. Respectfully submitted,

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LAW OFFICE OF CHRISTOPHER BLACK, PLLC

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s/ChristopherBlack
Christopher Black Attorney for Michael Spitzauer

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CERTIFICATE OF SERVICE I hereby certify that a copy of the foregoing was served on the below-noted date, via the CM/ECF system, upon the parties required to be served in this action. DATED this 28th day of February, 2014. Respectfully submitted,
LAW OFFICE OF CHRISTOPHER BLACK, PLLC

s/ChristopherBlack
Christopher Black Attorney for Michael Spitzauer

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