Prosecutors: Mistakes in fraud case did not amount to misconduct

Federal prosecutors acknowledged Friday they made mistakes that led to the overturning of a New Orleans lawyer's mortgage fraud conviction in Las Vegas.

But they argued in court papers the mistakes did not amount to misconduct and the government should not have to reimburse the lawyer, David Mark, roughly $215,000 in legal fees and expenses.

Mark filed court papers earlier this month asking Senior U.S. District Judge Lloyd George to award him the fees, alleging the record in his case "shrieks of prosecutorial misconduct and fabrication, if not perjury."

The defendant was convicted in April 2013 of conspiracy and fraud charges in one of the state's largest mortgage fraud cases. He later was sentenced to three years in federal prison by now-retired Senior U.S. District Judge Philip Pro.

Mark contended at his trial and in his appeal that he was indicted after federal prosecutors falsely accused him of violating an immunity agreement to testify against the key players in the mortgage fraud scheme. He was alleged to have "feigned memory loss" shortly before the trial.

In July a federal appeals court tossed out the conviction after concluding that Pro relied on a "scant record" and inaccurate information from prosecutors about the immunity breach when he denied a defense motion to dismiss the case against Mark.

Mark's New Orleans lawyer, Michael Fawer, later alleged in court papers that Assistant U.S. Attorneys Brian Pugh and Sarah Griswold falsely told Pro the breach occurred during a July 2011 telephone conversation with the defendant.

Fawer argued Mark never had the conversation and documents eventually obtained from the U.S. attorney's office by the defense showed no record of the call.

In their written response Friday, prosecutors argued that the 9th U.S. Circuit Court of Appeals did not find misconduct on the part of Pugh and Griswold and simply concluded they were unable to prove in court that Mark had violated the immunity agreement.

Fawer maintains that Mark's case for legal fees meets the strict criteria established under a 1997 federal statute known as the "Hyde Amendment."

The statute, written by the late Illinois Rep. Henry Hyde, allows criminal defendants to recoup legal expenses when a federal judge finds that the government's conduct was "vexatious, frivolous or in bad faith."

Prosecutors, however, insisted Friday that there was no bad faith and that Mark's jury conviction proves it.

"It is true that the accounts of Mr. Pugh and AUSA Griswold of the July 2011 teleconference are not supported by documentary evidence," prosecutors wrote. "Thus while mistakes and omissions were certainly made, (Pugh and Griswold) did nothing to bring the government within the purview of the Hyde Amendment's sanctions."

George plans to set a hearing to consider Mark's request for attorney's fees.

Griswold remains with the office prosecuting mortgage fraud cases, but Pugh since has left to take a job with the federal public defender.

In November 2007 Mark gave the FBI information that led to the indictment of a prominent couple in the mortgage industry in connection with fraud that prosecutors alleged cost banks more than $52 million.

Prosecutors promised Mark immunity if he continued to cooperate against mortgage broker Steven Grimm and his ex-wife, real estate broker Eve Mazzarella.

Both defendants were convicted and given stiff prison terms and are waiting for word on their appeals.

Contact reporter Jeff German at jgerman@reviewjournal.com or 702-380-8135. Follow @JGermanRJ on Twitter.