Thread by @meghanncuniff

I’m here at the federal courthouse in Santa Ana for what could be the 19th day of testimony in Michael Avenatti’s wire fraud trial. First, Judge Selna will consider a mistrial motion over newly released and also still missing financial data. Follow this thread for updates. ⚖️🧵⚖️

I sat down in my usual spot a minute ago. Only Judge Selna and his clerk were in the courtroom. "Good morning. We should put a little name tag on that chair," the judge said after I sat down. (He's back in his chambers now. That was the extent of the discussion.)

Avenatti and prosecutors are due at 8. This @lawdotcom article from last night is a hub of all our reporting on this Tabs and mistral motion. You'll find past coverage, links to the court filings and more. bit.ly/3mrMp6l

Here are the mistrial motion filings:
Motion: bit.ly/3g5uRZX
Opposition: bit.ly/3j7zPY2
Reply to opp: bit.ly/3sP2ZhW
The most significant filing occurred last night when Avenatti filed his status report about the new searches bit.ly/2WhuVPq
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Everybody's here, including the new kid in the class: AUSA Patrick Fitzgerald, head of @TheJusticeDept taint team that reviewed Avenatti's law firm servers. But Fitzgerald has long been involved in the case. He attended pre-trial hearings with Selna related to the taint team.

This is when the massive bureaucracy that is @TheJusticeDept comes into view. Avenatti has pointed out that prosecutors love to separate themselves from other government agencies when convenient. Here, Fitzgerald is differentiating himself from prosecutors.

Under the DOJ process, AUSA Brett Sagel and case investigators were separated from Fitzgerald and the taint team aka privilege review team. All their materials came through the team, but they weren't involved in the server searches.

Sagel has been here since Day 1 (he was at paralegal Judy Regnier's home during the March 2019 search), but AUSA Alex Wyman just got on the case in February, after Julian Andre left @USAO_LosAngeles for private practice.

Judge Selna just took the bench. He's read the status report from Avenatti. "Any further supplement on the findings yesterday?" the judge asks.
Fitzgerald stands. He says he has a few clarifications.

Fitzgerald: "My understanding is at the moment we are not able to determine which of these files relate to the clients at issue in this case and which related to all the other clients... and it may be" that they need vendor software to do so.

Avenatti and taint team agreed to "modified protective order" regarding some of the new data, Fitzgerald says. All material is deemed "sensitive" info. It's for use only in this case, not for any other criminal, civil or bankruptcy proceeding "absent permission from the court."

Fitzgerald references the "Clifford litigation" and it sounds like the same prohibitions on gathering @StormyDaniels and Kavanaugh accuser Julie Swetnick client files remains.

Avenatti: Defense agrees with modifications to protective order "as Mr. Fitzgerald stated them, in their entirety." Selna wants a formal document.

Avenatti says each newly discovered Tabs file relates to clients in this case, "each Tabs file will have some relevance to the clients in this case. They're not client specific."
Regarding the volume of data, "it's going to take us a while to go through this," Avenatti says.

"There's no question that we don't have data files that were on the virtual machine but were not in Mr. Varani's data set," Avenatti says. Due to government computer malfunction, they didn't start looking at data until 4 yesterday.
"Needless to say, it's a lot of information."

Selna says he's sufficiently informed through the status report, doesn't need an exhaustive list of what's there. Asks if Avenatti would like to be heard on the mistrial motion. Avenatti calls the lectern a podium and asks if he can use it. Selna says sure.

Avenatti begins with the search of Regnier's home, and her testimony that she "probably" told investigators about Tabs on that day. Indictment issued in April 2019. In May 2019, Dean Steward asked for all Rule 16 and Brady information, including specifically servers.

Then-AUSA Julian Andre responded. Avenatti is referencing the filings as attachments in his motion. He's reading from Andre's response (and I'm kicking myself for not including these filings in this thread last night: threadreaderapp.com/thread/1429979…)

Avenatti reads from prosecutors' May 2019 filing in which they say they'll be disclosing everything as required. But the same forensic images at issue then were what the DOJ searched yesterday and found all the new info.

Avenatti references July 2019 interview with Regnier, and puts a memo of the interview on the overhead. This is where the Tabs reference comes in. (The word is in the memo, and Avenatti got the lead investigator to acknowledge that in his direct exam.)

"Tabs would be used" One month after interview, Selna rejected Avenatti's request to access servers. (This ruling is included in that thread I posted.)
"You only did so after you had been provided repeated assurances by the government that they were going to comply with Brady."

Avenatti says by then, "They were well aware of the existence and importance of the Tabs data. Despite that, it was not produced. Nothing was done to look for it."

Avenatti "Your honor, to be clear: the Tabsdata could only be exculpatory. It could never be inculpatory. It could never increase the amount of money that was owed to the clients. It would only decrease the amount of money that was owed to each of the clients by it's very nature"

"Because it did not track income or revenue. It only tracked case expense. And I would submit, your honor, that is why the government never made an effort to produce it or provide it because by it's very nature it was exculpatory," Avenatti says.

Avenatti says AUSA Brett Sagel once said there was no exculpatory evidence in this case whatsoever. But Selna's order made it "crystal clear" what needed to be produced. "No Tabs data was produced following this order."

Defense moved for contempt. "We continued to complain that we were missing information. Up until trial."
"Then in the middle of trial it was established through cross examination that the Tabs data was an integral part of providing what was owed to the clients," Avenatti says.

Avenatti says "it was the government that interjected this issue of the costs and expenses first" by introducing as exhibits two draft Tabs cost summaries for Geoff Johnson and Greg Barela's cases.

Selna: "Well, whether they did that or not, wouldn't you be entitled or bring that up?"
Avenatti says yes, he just wanted him to know the background.
"There can be little question at this point that the government considered it relevant and material. That's why they used it."

Avenatti compares his case to the Bundy case ruling the 9th Circuit in 2020. law.justia.com/cases/federal/…
"There are many parallels, your honor, between this case and the Bundy case."

Judge Selna tells Avenatti: "I think you very credibly outlined what use you could have made of that information," referring to his report last night.

Avenatti: "There is little question, your honor, we can not proceed with this trial." Need to review data, would have to recall "at least five if not seven witnesses." Expert testimony would need to be struck.
"This is not one oversight" There was repeated failure to comply.

Sagel gets to the lectern and Judge Selna immediately asks: "Wouldn't you agree that the financial data goes to the heart of the case?"

Selna: "Are you suggesting I grant relief with respect to some claims but not others" like @MichellePhan? Sagel: no. Selna says can't Avenatti question finance data used in case. Doesn't he have the right to have the "ammo" to question the financial analysis by the government?

"The point is he's entitled to the data to make the challenges," Selna says. Sagel says Avenatti had chance to search the servers, but Selna says that doesn't matter, "it's the obligation of the government to produce" discovery.

Judge Selna: "He's entitled to just sit back and wait for you to serve it on a platter. Agreed?"
Sagel: "It it's in our possession."
Selna: "Yes, and for this discussion. - 3-second pause - Go ahead."

Selna: "Don't the events of the last 72 hours suggest that there was a mechanism to determine if privilege review team had Tabs data?"
This is going to be the huge @TheJusticeDept internal fight. Taint team v. prosecution team.

Selna is reading from now-ex AUSA Julian Andre's 2019 brief about forensic image and an obligation "to go beyond what you had and to investigate this forensic copy."
Sagel says he doesn't read it that way. Andre says he'll produce it after review team follows relevant protocols.

Selna: "Does access free you under your obligations under Brady to affirmatively produce Brady material?"
Sagel starts to say something and Selna asks the same question again.
"Under these circumstances I have to believe yes," Sagel says.

Sagel's reasoning is because if it's not in prosecution's possession, they can't provide it.

Judge Selna: Assuming the taint team misses a huge amount of relevant data, "don't the sins of one part of the government - namely the taint team if my facts are accurate - fall on the prosecution team in terms of the Brady obligation?"

Sagel is disputing whether the Tabs data found yesterday shows true client costs. "These are what he's paying to Mr. Johnson after he lied to him," Sagel says.

Sagel says there is nothing in this data that shows anything exculpatory for the defendant. He's referencing the Tabs data prosecutors entered as exhibits. The cost summaries match exactly amounts Avenatti withdrew from the settlements just after he got the summaries.

Those are the exhibits I got yesterday. I've uploaded them to Google Drive.
Here's the Tabs summary for Greg Barela: bit.ly/3sHG8Vn
And here it is for Geoff Johnson: bit.ly/3B6mV2C
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Sagel: "I fully appreciate what your honor is saying. I'm not doubting any of the concerns that your honor has."
Judge Selna: "So your position is my concerns are baseless?"
Sagel: "No, I'm not saying that."

Sagel says he's just trying to establish that this is a record the judge should be OK with. The reason Avenatti never asked specifically for the Tabs data until the middle of trial is because he knows it doesn't help him.

Sagel says prosecutors disclosed everything they had.
"To compare this to Bundy...these were, in Bundy, videotapes that were in the government's possession at all times ... It's night and day to what we're talking about here," Sagel says.

Sagel says Tabs tracked costs, but they weren't directly tied to bank records. He suggests Selna review the new material in camera to analyze how it could have helped Avenatti during trial.
Selna says he plans to hear a rebuttal from Avenatti soon, "then rule."

Sagel says Avenatti's comment about how Tabs could only be exculpatory is made without reference to the actual Tabs data, which Sagel assures the judge "is not exculpatory."

Sagel is going over Avenatti insertion of the Tabs issue into the trial. "He's always known what it is and what's going on."
"He still has that opportunity" to utilize the info. Avenatti can recall government expert John Drum. Judge can grant a short recess to give him time.

Sagel says Selna "would need to have found an actual violation to get some of the remedies" Avenatti is requesting. Selna notes that "bad faith isn't necessary." Says he's not prepared to say anything was intentionally withheld by prosecutors.

Fitzgerald stands and pretty forcefully says that if "the court" thinks this is a simply Brady issue, and comparable to the Bundy case. "It's wrong on the facts, and it's wrong on the law." Says he'll start with the facts, because they inform why the court is wrong on the law.

Avenatti objects Fitzgerald. "Mr. Fitzgerald should not advocating for either side" as head of taint team.
Selna: "I agree. Mr. Fitzgerald was here to bring the facts to the court, not argue the law."
Fitzgerald: "Very well your honor. I will forgo the legal part of it."

Fitzgerald is talking about the taint team review process - "the initial filtering" and the seizure by the agents, as dictated by the search warrant, shaped the case material here.

"Was that search perfect?" Fitzgerald says he'll be first to admit, now that we know about new Tabs data, "no it was not." But there is argument "on whether this Tabs data earlier was something that had been" seized and was something that was therefor in prosecution's possession.

Fitzgerald: Court "needs to take into account that it was defendant and counsel who have seen this virtual system which is now at issue."
"They've seen it twice. The prosecution team has seen it zero."

Selna asks if Fitzgerald would have reviewed the new materials if he'd known about them earlier. Fitzgerald says if he'd found out about it, "it would have been included in what was produced."

If searching taint agents had seized it, "we would definitely have said that it A is not privileged and that B it certainly is relevant," Fitzgerald says.

After Fitzgerald finishes, Selna says thank you and calls a 10-minute recess. (That means he's going back to his chambers to sketch out what will probably be a pretty thunderous ruling.)

(Some might say that the argument that Avenatti had the chance to identify this Tabs stuff pre-trial and didn't is like complaining about him not handing over his defense plan pre-trial so prosecutors could do everything they needed to do to refute it.)

OK, Judge Selna just took the bench. "All rise, this court is again in session. Please be seated and come to order," his clerk says.

Avenatti is at the lectern again. "Your honor, I'd like to start where Mr. Fitzgerald ended."
OK, so no ruling yet. This is Avenatti's rebuttal.
Avenatti says there's "no question the data was seized. It was contained within the forensic images of the servers."

Avenatti is referencing the search warrant application, which I've posted in previous threads. (The one from Sunday night, go look.)

Avenatti directs "the court's attention" to the list of all the stuff the government was authorized to seize during the search. "If you fast forward to letter P...this is even more specific." Her's the warrant: drive.google.com/file/d/1pOcEsf…

Avenatti is disputing Fitzgerald's claim that the government never actually seized the data. If they didn't, why were they able to provide it yesterday?
"Your honor, they didn’t leave the box behind in the attic. They took all of the boxes out of the attic," Avenatti said.

"There's no question this data was relevant," Avenatti said. He references a January 2021 order from Selna about the government's discovery obligations under Brady and other doctrines. (For the legal newbies, read more about Brady here: bit.ly/3fCCPtj)

Avenatti says while it's true that he referenced the calculation in the charts in his opening statement, he's "perplexed how that helps the government." Why didn't prosecutors understand the importance of Tabs data? They should have been on notice at that point.

"There's no question that they had the ability to and in fact did" find Tabs data, as evidenced by the two Tabs exhibits (which I got from the clerk's office yesterday and tweeted earlier).

Avenatti says one thing Selna has never heard is that taint team and prosecutors weren't in constant contact.
Prosecutors happy to work closely with taint team "when it benefited the government as it related to preparation for trial."

(Underscoring this delicate, CYA nature of this prosecution team v. taint team stuff, Fitzgerald actually in the very beginning misspoke and called the taint team the prosecution team, and Judge Selna corrected him.)

Fitzgerald stands and says Avenatti misstated some stuff, but Selna says no, Avenatti is moving party so he gets last word.
Judge starts by stating the importance of financial data in this case. Expert's charts are based on that data.

Selna says government also has known of existence of Tabs data, and he references the July 2019 interview with paralegal Judy Regnier. But more significant, Selna says, is the November 2019 interview.

Paragraph 14 in the interview memo. Selna reads aloud: EA used two systems to track expenses. "The first was Quickbooks" The second system used by EA was Tabs. Selna says these interview show government "was fully on notice about the significance of the Tabs data."

Selna gets into Avenatti's direct exam of @USTreasury investigator Remoun Karlous about what Karlous did to try to find the Tabs data. (Read more from that testimony in this article: bit.ly/2W3ffQ1)

Selna says it was apparent from Karlous' testimony and Special Agent Taschyan.
"I think the significance of the Tabs data was pointed out early in the trial" when Regnier testified, the judge says.
Judge says Regnier's testimony alone is enough to establish Tabs' materiality.

Selna notes that Tabs data was used in trial, referring to those exhibits I tweeted earlier. He says, "I think it's significant" prosecution didn't have Tabs data for Gardner's case.
He also thinks Tabs could be relevant to Avenatti's defense regarding Long Tran and Michelle Phan

"It is no answer that the government is not required to prove the exact amount that Mr. Avenatti misappropriated," Selna says. But, the government put forth a number, "and I believe the defendant was entitled to challenge that number."

Could show lesser or greater, Selna says, but "I think the defendant was entitled to have that data to put that question mark there."
Selna says now the question is was there a Brady violation. He says Brady v. Maryland is enough to guide him on this disclosure question.

Selna says he finds "no willful conduct on the part of the prosecution team, I find no willful conduct on the part of the privilege-review team."
"I think the taint team has fairly acknowledged that there may have been some shortcomings in the review process," the judge says.

But, Selna says, "I find that prejudice occurred here in a number of ways."
Defendant denied opportunity to craft overall case theory and make his opening statement, and to exam witnesses, including expert John Drum.

So question now is what's the remedy? Selna says it's not adjournment. That won't address problem of Avenatti not having the info to prepare his case. And it would have to be very long to give time to review the material. We're not going to hold the jury like that.

Selna: "Shortcomings there may have been, but I find no misconduct, intentional or otherwise, on the part of the taint team."
Selna: "For all those reasons, I grant a new trial." It's official: Mistrial in Avenatti's wire fraud trial.

Selna sets a new trial date of Oct. 12, which is the current date for the second half of the case (bankruptcy and tax charges). A pre-trial is set for Sept. 2. All pending motions (motions to quash subpoenas etc) are denied as moot.

"Anything further from the government?" Selna asks
"No your honor," Sagel manages to get out as he half stands.
Avenatti asks about the jury. Selna says they're not here.

Selna says he'll send jurors "usual certificate for service," and he'll write "each one a personal letter indicating I concluded the trial could not continue, and thanking them for their service." "By and large they were on time every day," diligent "and they should be told that"

So with that, court is adjourned. Obviously a huge flurry of action and adrenaline rushes when this is happening. Avenatti and his team went down to their usual conference room. Dejected looking AUSAs Sagel, Wyman and Fitzgerald went downstairs.

With his standby counsel standing by him, Avenatti just made a statement to the press in the hallway, aka me, Gina Kim from @LADailyJournal, @ReporterCraig from @Law360 and Paul from City News Service.

“This has been an incredibly difficult journey for my family, for my children for my friends and lastly, for me. I am extremely thankful to Mr. Steward, Ms. Cummings Cefali and our entire team for standing by me and advocating tirelessly on my behalf," Avenatti said.

"Today is a great day for the rule of law in the United States of America," Avenatti said.
Then they went back to the conference room.

@threadreaderapp Unroll, please. Thank you! 🚀

Thread broke, continues here:

https://twitter.com/meghanncuniff/status/1430216948105633794

I'm in the hallway working, and I can heard Dean down the hall filling in a friend over the phone on what happened today, in his trademark folksy manner. I hope whoever he's talking to knows about the tweets! (It's all in here, I promise!)

On another note, I just sat down in an excessive force trial to basically have it as background while I work, and masks are optional in this one. But -- wait for it --- social distancing is enforced for jury, so be careful where you sit. Because that makes a lot of sense, right?

distancing that's in place for jury comes as six suits, presumably @OCSheriff guys, are in the front row on the other side of the courtroom, and they are all definitely within six feet of each other. Maybe six inches.

There was a new filing in the Avenatti case, and of course it's moot now because of the mistrial, but I feel like I should post it for old time's sake. Avenatti's law firm CPA? "That is a lie." She was NOT his CPA. bit.ly/386JPKS

Oh my. Regarding the faux social distancing in this trial, Judge Carter just said a juror was exposed to covid, but she is still in court serving on jury. They have her seated in the gallery alone. But masks are still just optional here. 🤷‍♀️ (With that, I think I’ll head out.)

My @lawdotcom "WHAT IS TABS?" article is now outdated, but it's still a good look at how this became such a huge issue during trial. Judge Selna this morning referenced a lot of the same testimony points I included in the article ... bit.ly/2W3ffQ1

Which makes @USTreasury Agent Remoun Karlous' comment to me the morning it published all the more interesting. "Good morning. Good article." I don't think government at all saw how bad Tabs stuff was about to get. Weekend search order blew everything up.

https://twitter.com/meghanncuniff/status/1428767744028119042

To be clear: I agree it was a good article. And I'm generally of belief that if you quote people accurately and in context, they (including Karlous) will recognize themselves and like the article. But there just didn't seem to be a whole lot of concern about overall Tabs issue.

We here at @lawdotcom have a hub page for our coverage of the Avenatti trial. Links to all articles. Check it out here: bit.ly/3kDaaWT

INBOX: As expected, I emailed @USAO_LosAngeles for comment on Judge Selna’s mistrial order and got this reply: “Because the matter is still pending, we have no comment on today’s ruling.”

Here is a full re-write of my earlier @lawdotcom story on the mistrial in Michael Avenatti's wire fraud case. A few details I neglected to tweet and a full synopsis of what went down in Judge Selna's courtroom today: bit.ly/3Besso1

Important: Avenatti said he wants the mistrial to be “with prejudice,” meaning prosecutors can’t retry him, but Selna said the “strong presumption” is when a mistrial is granted at the defendant’s request, a new trial is proper. But he said Avenatti can file a brief.