We are following the criminal case filed against David Stockman, the former head of OMB under President Reagan.
Among the other defendants is Paul Barnaba. The indictment describes him as "employed by [Collins & Aikman] in the Purchasing Department." Specifically, he served as the Director of Financial Analysis and eventually Vice President and Director of Purchasing for the Plastics Division. According to the indictment, the defendants inflated income by "systematically recognizing 'rebates' from C&A's suppliers before those cost reductions had in fact been earned." The rebates were price reductions provided by suppliers. Barnaba allegedly played a role in this part of the scheme.
The case has settled into the discovery phase. The government finished providing documents on Feb. 27th. The government produced somewhere around 10 million pages. Counsel for Stockman (Elkin Abramowitz of Morvillo Abramowitz) disclosed that all of the defendants had "at various times between 40 and 60 contract lawyers" working on reviewing the documents, including 30 or so employed on behalf of Stockman.
Most of the defendants were apparently wading through the morass, with one exception. At a status conference held in January 2008, counsel for Barnaba (Solomon and Adrienne Wisenberg, Wisenberg & Wisenberg) asked for a short trial date, seeking a trial in June. Counsel noted that "under the insurance policies, the money may run out by the end of 2008." In a hearing in April, counsel for Barnaba indicated that he was ready to go to trial. At the hearing, the other defendants indicated that the determination of a trial date was "premature" and indicated a need for additional time.
Counsel for Barnaba promptly filed a motion to sever. As the brief noted:
- Barnaba bases this motion on the applicable law in combination with two important facts: first, Barnaba is ready to go to trial and his Codefendants are not; and second, Barnaba’s purported involvement in the charged offenses pales in comparison to that of his Codefendants. This Motion is premised on the substantial risk that Barnaba’s speedy trial and related trial rights will be compromised if his trial is not severed.
According to the brief, Barnaba's life has been in shambles. He was "[i]mmediately fired from his job upon being indicted." He formed a consulting group "in order to feed his family" but was fired "when the customer learned of the Indictment." Moreover, the information about the indictment was easy to find.
- In the Internet Age, one Google search can reveal an indictment to any prospective employer. The detrimental publicity, disgrace, and censure resulting from the charges have only been heightened in Barnaba’s case by the prominence of Stockman, and by Stockman’s decision to comment on the case in highly public forums.
The troubles have not ended with employment. The charges created havoc in his personal life and with his finances. As the memorandum noted:
- Barnaba is going through a divorce and is down to his last $16,000.00 in savings. He has no other liquid assets and no guarantee of future employment, until these charges are resolved through trial. Once his savings run out, he will be forced to dip into his modest 401(k) pension fund. He maintains a separate residence from his soon-to-be ex-wife, and has two small children to support. The psychological and financial strains of his uncertain legal status are exacting a heavy toll. As Barnaba puts it in his sworn affidavit: “The delay in getting to trial in this case has caused, and continues to cause, excruciating stress in every aspect of my life. It is extremely difficult to exist in a state of uncertainty and limbo. The presumption of innocence may apply in the courtroom, but not in many other areas of life. I appear to be presumed guilty in the eyes of the business community, until proven innocent.”
Likewise he expressed concern with the D&O Policy, noting that "the proceeds of that policy are quickly dwindling." See also Memorandum, at 10 ("Barnaba’s legal team estimates, based on the recent burn rate, that the D&O Policy funds could easily be exhausted by the end of September and will last no longer than December 2008.").
Although acknowledging that it was ready to go to trial, the government opposed the motion to sever. The government said little about the personal issues but described the concern over the demise of the insurance proceeds as "wholly speculative and unsubstantiated." As for the argument that he played a lesser role than his codefendants, the government argued that "[r]egardless of how he attempts to characterize the charged conduct attributable to him, Barnaba cannot escape the reality of being charged together with each of his codefendants in all of the securities fraud-related counts in the Indictment." Severing would result in duplication and represent an inefficient use of the court's time.
- The Government intends to call witnesses who worked alongside Barnaba and the other codefendants, and offer documents and emails, many of which Barnaba and his codefendants created or reviewed at the time the frauds were being committed. Separate trials would therefore result in a wasteful duplication of the presentation of this evidence, and offer an unfair advantage to the second group of defendants being tried, who will have an opportunity to assess the Government's witnesses and theories beforehand. (citation omitted)
The motion is pending. Barnaba has also filed a motion to dismiss the indictment and, in the alternative, a motion to set a trial date, and a motion to recuse one of the government's lawyer in the case.