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Why to have an attorney to review a proffer agreement

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June 18, 2013
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Why to have an attorney to review a proffer agreement

The very short answer is “Because the devil is in the details”—and because what you state in a proffer session with the government can be used against you, unless the proffer agreement is carefully drafted to protect you.

The importance of having an attorney review a proffer agreement can be illustrated in a recent case—McKnight v. Torres, 563 F.3d 890, 893 (9th Cir. 2009).

  1. Illustration: The McKnight case

Even though the McKnight case did not involve tax matters, it did involve a proffer agreement, so it is still relevant for criminal tax purposes.

In McKnight v. Torres, 563 F.3d 890, 891 (9th Cir. 2009), 14 individuals were charged with various offenses, including the importation of an illegal drug known as Ecstasy from France to the United States. One of the 14 individuals charged, McKnight, agreed to cooperate with the U.S. government. In return, the U.S. government agreed that it would not use any of his statements against him if they later decided to prosecute him. The government gave him a proffer agreement to sign. McKnight promptly signed it and gave the government information.

That agreement provided that the U.S. government would “not offer into evidence in its case-in-chief or for the purpose of any sentencing hearing, any statements made by [McKnight] at the meeting.” Naturally, during the proffer session, the defendant made various incriminating statements, chief among them was that he mentioned that he helped recruit young American women to help smuggle the drugs into the United States.

Shortly after the proffer session, the French authorities sentenced McKnight for various crimes related to his drug trafficking. The French prosecutor used evidence from an “investigation report concerning the deposition” of McKnight by United States authorities. In other words, it was McKnight’s own proffer statements to the U.S. Attorney that they used! The U.S. gave information to the French so the latter could prosecute him. There was nothing in the proffer agreement that expressly prohibited this so the U.S. government figured, “Well, why not?” and gave the information to the French authorities.

McKnight must have been both blindsided and beside himself to learn of this. He had agreed to cooperate with the United States government, and this is what they do to him?—they, essentially, turned him over to the French authorities. Presumably, McKnight would never have agreed to work with the United States if they were going to do that.

And that was (basically) McKnight’s response in a lawsuit against the U.S. government. He argued that his proffer agreement with the government implicitly contained a provision that the U.S. government would deal with him fairly and in good faith.

But would the Ninth Circuit Court of Appeals read such an implicit contract law based promise into the proffer agreement? McKnight would have no such luck; the court opted for a “wooden” reading of the proffer agreement. Quoting from the case:

McKnight . . . argues that the implied duty of good faith and fair dealing supplement[s] the [proffer] agreement, incorporating his “reasonabl[e] expect[ation] that the [U.S. Attorney] would . . . not facilitate his proffer being used by another jurisdiction [i.e. France]. In his view, the government’s disclosure “frustrated” the “promise” of “protection” made to him by the U.S. Attorney.

The court rejected McKnight’s implied duty of good faith argument “because it presumes away the dispute—i.e., that the ‘protection’ offered by the U.S. Attorney included protection from prosecution abroad. This broad construction of the ‘protection’ offered simply is not reflected in the clear language of the agreement.”

The “unambiguous words of the agreement are the end of the story,” the court said, and there was nothing in the government’s agreement saying it could not share McKnight’s incriminating statements with the French authorities.

  1. Practical Significance

What are the lessons to be learned here? Probably two: First, the government is your “friend” only to the extent that it is forced to be by a written contract. Here, McKnight’s proffer agreement with the government did not specifically state that the government was required to be his “friend” by not turning over information to the French authorities for them to prosecute him. Second, every word of a proffer agreement counts! Your attorney should review the agreement to make sure you are protected as much as possible.

  1. Other risks of a proffer agreement: Accidental Use of Proffer Statements as Only a “Harmless Error.”

There are other risks of proffering statements to the government. Sometimes you might offer statements to the government during a proffer session but the government later uses those statements against you “accidentally” in court. Sure, you might otherwise be sufficiently protected by a proffer agreement—but once the prosecutor uses these statements against you “accidentally” it is up to the judge to decide whether a sentence should be reduced or not on the basis that the introduction of the proffer statements in court was a “harmless error.”

Sometimes a proffer agreement may be violated if the violation is deemed “harmless” because the court would have imposed the same sentence even if the proffer statements were not given to the court. This issue was illustrated in United States v. Farmer, 543 F.3d 363 (7th Cir. 2008) and U.S. v. Bennett, 708 F.3d 879 (7th Cir. 2013).

Bennett first discussed United States v. Farmer, 543 F.3d 363 (7th Cir. 2008) before distinguishing it. Farmer involved a poorly drafted proffer agreement that was (arguably) ambiguous.

In Farmer, one of the defendants (Compton) entered into a proffer agreement with the U.S. government. The agreement provided that the government would not use the proffer information in its case-in-chief. However, one of the provisions of the agreement provided that “the government would be free to provide” information from the proffer session to “any United States District Court” if Compton pled guilty or was found guilty at trial. Now, that provision contradicted or, at the very least, was “in tension” with a different provision of the agreement which provided that “no self-incriminating information given by Compton be used to enhance the Offense Level” recommended during sentencing.

Well, sure enough, the government included certain of Compton’s proffer statements in court. The court struggled to interpret the proffer agreement. It made a distinction between (1) “providing information” and (2) “using information.” It said that under the proffer agreement, “the government could provide Compton’s proffer statements to the district court, but it could not per se recommend that the court increase Compton’s offense level based on that information.”

Thus, the government breached its promise not to use Compton’s statements because the government relied on protected statements to increase the offense level.

Unlike Farmer, Bennett found that the government’s use of the defendant’s proffer statements was a “harmless error” because there was, in the court’s view, already sufficient evidence for the sentence that the defendant received. Bennett is summarized here by one of the Federal Public Defenders:

  1. Practical Significance

But query: Suppose the evidence were not so “overwhelming” and it became a matter of the judge’s discretion whether the use of your statements made during a proffer session with the government was “harmless.”

As a practical matter, it is possible those statements could be used against you but, retrospectively, it is asserted that “Sure, the government was not allowed to use those statements against you—but, you were guilty either way and your punishment/fine would have been the same.” But is that true? Maybe things would have turned out differently if the statements had not been introduced. In the end, it becomes the judge’s discretion—and that is one of the risks of entering into proffer sessions with the government. You should (always!) discuss with your attorney whether entering into a proffer session with the government is a good idea. Sometimes it can be because a proffer sessions “may facilitate plea discussions, convince the government to forego prosecution in favor of cooperation, or cause the government to decline further investigation.” But, sometimes not. See: