Attorney Sanctioned For Advancing "Strawman" Argument

07/05/12

On Monday, U.S. District Judge Nicholas Garaufis said in an opinion that attorney Alan Futerfas had advanced a frivolous argument holding that, “Not only was the divestiture argument utterly frivolous, but the court finds that Futerfas knew the argument was baseless and raised it anyway for improper reasons.” The judge slapped a sanction of $500 on the criminal defense attorney with a practice of over 24 years. However, Futerfas said that he would be appealing and denied making any frivolous argument. He drew attention to the fact that he was in practice for a long period of time, and also the fact that his co-counsel on the case had supported the argument.

So what incensed the judge? Apparently, the federal judge in Brooklyn held that Futerfas' argument was “totally unsupported by case law or common sense” and involved advancing a “straw man” argument that the court had been divested of its authority to enforce subpoenas, as there were already two pending appeals challenging the subpoena. That did not sit well with the district court. That an attorney had the cheek to challenge the authority of the court, just because two appeals were already pending on the issue, was of course devoid of “common sense.” Apparently according to the court, it can keep on issuing serial subpoenas on the same matter though appeals against earlier subpoenas on the issue remain pending.

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However, despite being sanctioned, Futerfas was civil enough to say, “I regret the court would think that I would make an argument in bad faith … This is a very contentious case, and that may have played a role.” The case involved the divorce of a former stock promoter who has been convicted of conspiracy to commit securities fraud.

The issue arose from a 2011 application filed in Brooklyn federal court in the case compelling discovery for divorce proceedings in the Cayman Islands. The applicant was Debbie Gushlak, the wife of Myron Gushlak who is currently serving a 6-year prison term after pleading guilty to conspiracy to commit securities fraud and money laundering.

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The court had ordered Futerfas on April 30 to show cause why he should not be sanctioned for arguing that the court had no authority to use its “contempt power” to enforce the subpoenas. Futerfas represented the husband who's in jail. The same subpoenas, which are known as Section 1782 subpoenas, are also used by U.S. district courts to compel discovery in foreign proceedings.

Admitting that it would be tricky to sanction the attorney under the current interpretations of Section 11 (c) (3) of the Federal Rules of Civil Procedure, the judge created a new standard terming it “frivolous-plus” to add reason to his order. The order noted, “It is not sufficient to find that a legal argument is frivolous … There must be either direct or circumstantial evidence that counsel knew that the argument was without merit.”

The case is In re Application of Debbie Gushlak, in the U.S. District Court for the Eastern District of New York, No. 11-218.