Lawyer Cleared of Laundering Drug Cash,
Bribing Federal Prosecutor

By R. Robin McDonald
Daily Report
New York Lawyer
November 19, 2009

ATLANTA - A federal jury on Wednesday acquitted a Columbus criminal defense lawyer on all counts of a money laundering and drug conspiracy indictment that had also charged him with the attempted bribery of an assistant U.S. attorney.

After eight days of testimony and 12 hours of deliberation over two days, the jury found J. Mark Shelnutt not guilty, discrediting a two-year investigation of Shelnutt by the local office of the U.S. Drug Enforcement Administration and federal prosecutors in the state's Middle and Southern districts.

The case had centered on Shelnutt's acceptance of cash legal fees from Columbus drug trafficker and long-time client, Torrance "Bookie" Hill and other members of Hill's drug ring that were generated by Hill's illegal drug trade.

The trial occurred two weeks after the 11th U.S. Circuit Court of Appeals in Atlanta reiterated that lawyers who accept legal fees derived from criminal activities to pay for a criminal defense are not committing a crime, a ruling that prompted growing concern about the prosecution by U.S. District Court Judge Clay D. Land.

On Tuesday, Land informed prosecutors that their closing argument may have left jurors with the false impression that collecting legal fees in cash—even if the money was stored in desk drawers, deposit boxes and safes rather than banked—was a federal crime.

"If it is not a federal crime for a legitimate fee to come from drug money, it cannot be a crime to conceal a legitimate fee," said Land. "The fact that Mr. Shelnutt may have concealed a legitimate attorney fee is not a federal crime."

After Shelnutt's acquittal, Thomas A. "Tom" Withers, one of Shelnutt's attorneys, said Wednesday, "I think justice was done. Mark always trusted in the system and had faith that the good people of Columbus community would hear the evidence and do the right thing and they did.

"Mark was thankful to have the ability to address the rumor and innuendo from the investigation in a court where the sanitizing light of the courtroom could be shed on the case and on the investigation," Withers added.

Defense co-counsel Craig A. Gillen said, "We are all extremely happy and relieved that Mark's two-year nightmare is finally over, that after two years of facing rumors and innuendo and whispers in the shadows he had his day in court. And the jury spoke with a very clear voice."

But, Gillen added, "The larger picture of the government's theory of the case is very concerning. When boiled to its essence, the government's theory essentially was that receiving funds for legitimate attorneys fees, even though they were from an unlawful source, was somehow wrong or illegal. . . . This was an important victory for all of us who do criminal defense work. The issues in this case transcend Mark's case."

The federal appellate ruling, he said, played a significant role in the case and Shelnutt's ultimate acquittal. Assistant U.S. Attorney Joseph D. Newman of Georgia's Southern District, who sat at the prosecution table with Assistant U.S. Attorney David M. Stewart and special prosecutor Carlton R. Bourne Jr. throughout the trial, said after the verdict Wednesday, "Department of Justice protocol is to say we accept the verdict, and we do."

Asked if federal prosecutors would have done anything differently, Newman said, "Absolutely not."

Edward J. Tarver, who was sworn in last week as the Southern District's U.S. attorney, said, "We certainly stand by the verdict that was rendered by the jury. . . . The only thing I am really aware of is how hard prosecutors worked on the matter. They did the best they could, and the jury made its decision. We will abide by that decision."

Southern District prosecutors were appointed by the U.S. Department of Justice in Washington to prosecute Shelnutt after lawyers with the U.S. attorney's office in the Middle District, which includes Columbus, recused, in part because Shelnutt was accused of attempting to bribe a Middle District assistant U.S. attorney.

Middle District prosecutors had remained involved in the investigation, prosecuting and plea bargaining with accused members of Hill's drug ring, some of whom appeared as witnesses for the government against Shelnutt during the trial.

The Middle District, which was then headed by U.S. Attorney F. Maxwell Wood, initiated the investigation of Shelnutt. Wood, a Republican appointee, stepped down June 30 and is now running for Georgia attorney general on the Republican ticket.

Wood said after Wednesday's verdict that he knew that legal fees paid to Shelnutt by his drug dealer clients "was a component" of the federal investigation of the attorney. But, he said, "I'm not aware of anything involving that case that would have given me pause to recommend the investigation be stopped."

Asked if he had any concerns about investigating Shelnutt for his acceptance of legal fees given the federal law exempting lawyers from money laundering prosecutions if fees are for a criminal defense, Wood said, "I'm not going to revisit the deliberative process," adding, "I never saw anything that gave me pause."

Wood's successor, acting U.S. attorney George F. "Pete" Peterman III, said, "We live with what the jury says. That's about all I can say."

Since Shelnutt's indictment, his defense attorneys, Withers and Gillen, of Gillen, Withers & Lake, had argued that the case represented a vendetta against Shelnutt by local and federal law enforcement authorities in Columbus.

Withers, in his closing argument on Tuesday, had called the case "an attack on the system of justice."

"What happened is the system turned against him because he was an effective adversary," Withers said. "It is a scary, frightening thing. If it can happen to him, it can happen to all of us."

The 40-count federal indictment had charged Shelnutt with conspiring to launder and then laundering little more than $40,000 in drug money. Prosecutors said Shelnutt's method was making cash deposits to his wife's personal checking account and later using account funds to pay the couple's Columbus mortgage and a separate mortgage on a Florida investment property. Federal witnesses testified that the funds paid to Shelnutt from Hill's drug organization were all legal fees to defend Hill, his wife, his girlfriend and other members of the drug ring.

The grand jury also charged Shelnutt with aiding and abetting a drug conspiracy; witness tampering by allegedly attempting to influence the testimony of his legal secretary prior to her grand jury appearance; two counts of failing to file an IRS tax form required for all cash transactions over $10,000; three counts of making a false statement to an FBI agent; and attempting to bribe a federal prosecutor by offering him two University of Georgia football tickets at face value.

Before the jury heard closing arguments on Tuesday, federal prosecutors dismissed the witness tampering charge, the two IRS reporting failure charges and one of the false statement allegations.

The case against Shelnutt raised questions about the lengths to which lawyers may go in collecting legal fees to defend their criminal clients and whether the acceptance of legal fees that derive from tainted money is a prosecutable offense. Federal authorities had argued that Shelnutt had provided a list of drug dealers who owed Hill money to Hill's wife, girlfriend and others and ordered them to collect the debts and return the cash to him—an account adamantly disputed by Shelnutt's defense team who claimed Hill had directed the collections himself after he began cooperating with federal agents after his 2005 arrest.

Although a federal money laundering statute for years has permitted attorneys to accept legal fees deriving from illegal activities with impunity, a panel of the U.S. 11th Circuit Court of Appeals on Oct. 26 affirmed that criminal defense lawyers are exempt from criminal prosecution if the fees are paid as part of a defendant's Sixth Amendment right to counsel.

Land repeatedly expressed concerns with the prosecution's case as Shelnutt's defense lawyers pressed him to dismiss the money laundering counts. They cited the 11th Circuit's ruling, saying that federal law permits attorneys to take legal fees that may have derived from criminal activities to pay for a criminal defense.

According to news accounts in the Columbus Ledger-Enquirer, last Friday, Land suggested he had "concerns" about the legal basis for prosecutors' case against Shelnutt after prosecutors announced they were dismissing the witness tampering charge—which had been the basis for their opening words to the jury when the trial opened Nov. 10.

But despite his concerns, Land delayed a formal ruling on the defense dismissal motion, saying he was "not prepared to take this case from the jury."

On Monday, the judge informed prosecutors, "Just because an attorney received cash attorney fees and just because they come from drug money, it is not a crime whatsoever. ... The jury needs to know that."

He later said, according to the Columbus newspaper, "Let's not convict this man on suspicion," adding, "that is my primary concern about this case."

"I am," he said before the Monday conference ended, "troubled by a lot of this."

On Tuesday, Land instructed the jury that it is not illegal for an attorney who represents a defendant accused of a crime to accept payment of attorney fees that may have been derived from illegal activities, nor is it illegal for that attorney to accept those payments in cash.

Land also informed the jury that it is not a federal crime to conceal a legitimate attorney fees, even if it comes from illegal drug funds, and he warned them that "the mere fact a lawyer provides legal services to one or more members of a conspiracy does not in and of itself make that lawyer a member of the conspiracy."

Throughout the trial, federal prosecutors had presented a string of witnesses, including Hill and other members of his drug ring, who testified that Hill had arranged to have Shelnutt paid more than $250,000 in cash as payment for defending members of the drug ring after they were arrested in a roundup in May 2005.

Those funds trickled in to Shelnutt through Hill's girlfriends and the drug dealers who owed him money, generally in amounts less than $10,000, Hill testified, according to an account in the Columbus paper.

All of the money, Hill testified in response to a question Land posed from the bench, was to pay Shelnutt's legal fees. Said Hill, pointing to federal prosecutors, "That's what I kept telling them."

[Index to  Articles]