Ex-Deutsche Bank Trader Says U.K. Questioning Taints Case
(Bloomberg) -- A former Deutsche Bank AG trader said he shouldn’t have to face a criminal trial in the U.S. over allegations of Libor-rigging because he was coerced in the U.K. into making statements that implicated him.
Gavin Black claims the U.S. case is fatally tainted by a U.K. investigation in which he was forced to testify -- evidence that can’t be used in an American courtroom because of the Constitution’s ban on compelled testimony. Separately, he’s seeking to prevent prosecutors from relying on statements he made in a Deutsche Bank internal investigation, claiming the government was effectively in control of the probe and that he had no choice but to answer questions while employed at the bank.
Black, a U.K. citizen who was based in London, and Matthew Connolly, a former Deutsche Bank supervisor in New York, are charged in the U.S. with providing false Libor submissions to try to rig the benchmark rate underlying trillions of dollars of loans and other financial products. They are accused of conspiracy and fraud.
Last year, a New York-based federal appeals court overturned the convictions of former Rabobank Groep traders Anthony Allen and Anthony Conti, saying their forced testimony before the U.K.’s Financial Conduct Authority tainted the U.S. case.
That prompted U.S. District Judge Colleen McMahon to question whether the government could prove its case against Black and Connolly. At a July hearing in Manhattan, she said the implications of the appeals court ruling were “huge” and that the Black and Connolly prosecution was in “uncharted waters.”
McMahon on Tuesday resumed a hearing into whether she will block or limit the U.S. prosecution.
Michael Prange, an investigator from the U.K.’s Financial Conduct Authority who questioned Black in his agency’s investigation, was called as a witness by a "taint team" of government lawyers. That group is separate from the trial team, which isn’t permitted to look at Black’s testimony. The taint team lawyers are trying to establish that Black’s testimony wasn’t shared with U.S. investigators.
Prange was cross-examined by Seth Levine, a lawyer for Black who is trying to show that the U.S. investigators used information from compelled questioning of Black and others in their Libor investigation. The judge didn’t rule on this -- or on a second issue pending before her.
Black is seeking to bar prosecutors from using statements he made to lawyers from the New York firm Paul Weiss Rifkind Wharton & Garrison LLP, which was hired by Deutsche Bank to conduct an internal investigation of its Libor rate-submission practices.
Black claimed he was interviewed by the lawyers on multiple occasions, fearing he’d be fired if he refused to cooperate. He argued that the questioning stems from pressure the government put on the bank.
"The tremendous pressure placed on Deutsche Bank to avoid indictment led Deutsche Bank to cooperate and act on behalf of the prosecutors in conducting its internal investigation," Black’s lawyers argued in a court filing.
Deutsche Bank declined to comment. A Paul Weiss representative didn’t have an immediate comment.
The case is U.S. v. Connolly, 16-cr-00370, U.S. District Court, Southern District of New York (Manhattan).
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