Case 3:09-cr CRS Document 75 Filed 07/06/10 Page 1 of 16 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF KENTUCKY AT LOUISVILLE

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1 Case 3:09-cr CRS Document 75 Filed 07/06/10 Page 1 of 16 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF KENTUCKY AT LOUISVILLE UNITED STATES OF AMERICA PLAINTIFF vs. CRIMINAL ACTION NO. 3:09-CR-85-S KAREN CUNAGIN SYPHER DEFENDANT TRIAL MEMORANDUM In compliance with this Court's Order entered March 22, 2010 (DN 48), the United States tenders this Trial Memorandum. I. STATUTES INVOLVED AND ELEMENTS Counts 1, 2 and 3: Threatening Communications with the Intent to Extort Counts 1 and 2 charge the defendant with violations of 18 U.S.C. 875(d), and Count 3 charges a violation of 18 U.S.C. 876(d). Both Sections 875 and 876 criminalize threats to harm reputation or accuse a person of a crime if made with extortionate intent. Though both sections prohibit threatening communications, Section 875 concerns threats made in interstate commerce and Section 876 concerns threats made via the mail. Counts 1 and 2 also charge that the defendant committed this offense by willfully causing another person to make the threatening communications, in violation of 18 U.S.C. 2. Count 1 charges that Karen Sypher, with the intent to extort money or other thing of value, willfully caused another person to transmit in interstate commerce a communication that threatened to harm Rick Pitino s reputation and that threatened to accuse him of a crime. The

2 Case 3:09-cr CRS Document 75 Filed 07/06/10 Page 2 of 16 factual basis underlying this charge is that Karen Sypher, with the intent to extort Rick Pitino, directed Lester Goetzinger to make calls to Rick Pitino that threatened to harm his reputation and accuse him of a crime. Count 2 charges that Karen Sypher, with the intent to extort money or other thing of value, willfully caused another person to transmit in interstate commerce a communication that threatened to harm Rick Pitino s reputation and that threatened to accuse him of a crime. The factual basis of this charge is that Karen Sypher, with the intent to extort Rick Pitino, directed her son and husband to deliver a communication to Rick Pitino that threatened to harm his reputation. Count 3 charges that Karen Sypher, with the intent to extort money or other thing of value, knowingly and intentionally caused a communication to be mailed to Rick Pitino that threatened to harm his reputation and to accuse him of a crime. The factual basis of this charge is that Karen Sypher, with the intent to extort Rick Pitino, caused her attorney, Dana Kolter, to mail a letter to Rick Pitino threatening to harm his reputation and accuse him of a crime. The elements of a Section 875(d) offense are: 1. That the defendant knowingly sent a message in interstate commerce containing a true threat to damage the reputation of another, or to accuse another of a crime; and 2. The defendant sent or transmitted that communication with intent to extort money or other thing of value. 2

3 Case 3:09-cr CRS Document 75 Filed 07/06/10 Page 3 of 16 As stated above, the Section 875(d) charges in Counts 1 and 3 allege that Karen Sypher willfully caused another to transmit the threatening communications, so an instruction under 18 U.S.C. 2 is also being submitted. The elements of a Section 876(d) offense are: 1. The defendant knowingly caused to be deposited in the mail, for delivery by the Postal Service, a communication containing a true threat to injure the reputation of another person or accuse another person of a crime; and 2. The threat was made with the intent to extort money or something of value. Counts 4 and 5: Making a False Statement in a Matter Within the Jurisdiction of the United States Counts 4 and 5 charge the defendant with violations of 18 U.S.C This section makes it a crime to knowingly and willfully make materially false statements in a matter within the jurisdiction of the executive branch of the United States. Count 4 alleges that Karen Sypher violated Section 1001 by falsely telling FBI agents that she did not know who made the extortionate telephone calls that are the subject of Count 1. Count 5 alleges that Karen Sypher violated Section 1001 by falsely telling FBI agents that her relationship with a subject of the extortion investigation was strictly business. The elements of a Section 1001 offense are: 1. The defendant made a statement; 2. That statement was false or fictitious; 3. That statement was material; 4. The defendant acted knowingly and willfully; and 3

4 Case 3:09-cr CRS Document 75 Filed 07/06/10 Page 4 of The statement pertained to a matter within the jurisdiction of the executive branch of the United States government. Count 6: Retaliation Against a Victim Count 6 charges the defendant with a violation of 18 U.S.C. 1513(e). This section criminalizes taking harmful actions against a victim with the intent to retaliate against the victim for providing truthful information to a law enforcement officer about the commission of a federal offense. The factual basis for this charge is that Karen Sypher made a criminal complaint against Rick Pitino to the Louisville Metro Police Department with the intent to retaliate against him for reporting the extortion attempt against him. The elements of a Section 1513(e) offense are: 1. That the defendant knowingly took action harmful to a witness by filing a false report with the police; and 2. The defendant acted with the intent to retaliate against that other person for providing truthful information to a law enforcement officer relating to the commission or possible commission of a federal offense. II. UNRESOLVED SUBSTANTIVE ISSUES OF LAW 1. The United States must prove that the threat was wrongful as an element of the threatening communication charges. In Counts 1 and 3, the United States charges that Karen Sypher threatened to harm Rick Pitino s reputation by threatening to make public claims that he raped her, that he impregnated 1 her, and that he forced her to have an abortion. It is well settled that the truth of allegations 1 The threat in the list of demands charged in Count 2 was not explicit, but implicit: If all is accepted, I will protect Rick Pitino s name for life. 4

5 Case 3:09-cr CRS Document 75 Filed 07/06/10 Page 5 of 16 underlying an extortionate threat to one s reputation here, allegations of rape, pregnancy and a forced abortion is not a defense to a charge of extortion. See United States v. Von der Linden, 561 F.2d 1340, 1341 (9th Cir. 1977) (citing cases). In other words, even if Sypher s allegations were true, that truth would not constitute a defense to the charges. Because the truth or falsity of those allegations are irrelevant to any defense to extortion charges, the United States could seek to have evidence related to the underlying rape, pregnancy and abortion allegations excluded. This exclusion of proof by the trial court regarding the truth or falsity of the underlying allegations was upheld on appeal in the Von der Linden case. Id. However, evidence demonstrating the truth or falsity of the underlying allegations may be introduced as proof that the threat charged was wrongful. In United States v. Jackson, 180 F.3d 55, (2d Cir. 1999), remand rev d upon rehearing, 196 F.3d 1999 (2d Cir. 1999), the Second Circuit Court of Appeals held that the jury must be instructed as to the wrongfulness element of extortion and remanded the case for a new trial. The Second Circuit explained that a threat is inherently wrongful where it has no nexus to any plausible claim of right. Id. Upon rehearing, the Court of Appeals reversed the remand and upheld the extortion conviction, finding that the failure to instruct on wrongfulness was harmless error. 196 F.3d at 389. But the significance of the undisturbed initial holding that wrongfulness is an element of a charge under 18 U.S.C. 875 is that the truthfulness of any allegations underlying a threat potentially become relevant as proof that the threat had no nexus to any plausible claim of right. While the anonymous nature of the phone calls charged in Count 1 may circumstantially establish their wrongfulness, the proof of the falsity of the allegations of rape and forced abortion become more significant as to Count 3 (in which the March 22, 2009 letter signed by both Sypher and her attorney are charged as a 5

6 Case 3:09-cr CRS Document 75 Filed 07/06/10 Page 6 of 16 threatening communication). As to Count 3, proof that the underlying allegations of rape and a forced abortion were false demonstrate wrongfulness by establishing that Sypher had no plausible claim of right. To this extent, then, the truthfulness of the claims of rape may be placed at issue with respect to the extortion charges. The United States has proffered jury instructions that require wrongfulness to be proved for the threatening communication charges. 2. The United States must prove that Sypher s rape complaint to police was false as an element of the retaliation charge. As to Count 6, the retaliation charge, the falsity of the rape complaint to the police should be treated as a necessary element of proof. Although Count 6 does not allege that Karen Sypher s criminal complaint to LMPD was false, the Court may rule that a criminal complaint to police may not be criminally actionable as retaliation unless the underlying complaint is false. There are many instances where criminal complaints are made by victims with revenge in mind possibly even retaliation for reporting the victim for a separate crime but complaints by legitimate victims should be encouraged regardless of the victims motives. Thus, as a matter of law and policy, the Court should rule that only false complaints can constitute a criminal offense. In making such a ruling, the Court would likely include an instruction that the jury must find that Karen Sypher s complaint to LMPD to have been false. Such a ruling would make the truth or falsity of the rapes an element of proof. The United States has proffered jury instructions that require the falsity of the criminal complaint to be proved for the retaliation charge. 6

7 Case 3:09-cr CRS Document 75 Filed 07/06/10 Page 7 of The "threat to accuse of a crime" language in 18 U.S.C. 875(d) and 876(d) does not require proof that the defendant specifically threatened to report a crime to authorities, but requires only proof of a generalized threat to make a public accusation of a crime. Sections 875(d) and 876(d) of Title 18 both criminalize any threat to accuse... any... person of a crime with the intent to extort. The statutes do not indicate whether criminal offenses are limited to threats to report a crime to police or other law enforcement authorities. There appears to be no federal case law imposing any such limits in section 875 or 876 cases. However, at least two courts have interpreted state criminal blackmail or extortion statutes that forbade the making of threats to accuse another of a crime. People v. Watson, 11 NW 2d 926, 928 (Michigan, 1943) explicitly held that the state statute cover[s] a threat merely to publicly accuse another of a crime and that it does not require a threat to file formal complaint and instigate a criminal prosecution. In Watson, a woman who falsely claimed to her victim that she was pregnant as a result of adulterous sex with the victim extorted the victim to keep quiet about the sex and her alleged abortion. The Watson court held that a threat to make a public accusation and a threat to file legal proceedings accusing the extortion victim of a crime was sufficient to violate the statute. Similarly, in a Vermont case, the court interpreted statutory language criminalizing threat[s] to accuse another of a crime or offense with the intent to extort. State v. Harrington, 260 A. 2d 692 (Vermont, 1970). In Harrington, the threatener was an attorney representing a wife in a divorce case, and in attempting to get a good divorce settlement, he threatened to disclose in the divorce action the husband's criminal acts of adultery which the attorney had arranged and 7

8 Case 3:09-cr CRS Document 75 Filed 07/06/10 Page 8 of 16 photographed. In holding that the state extortion statute included threats to make public accusations, the court observed: Id. at 698. a threat of any public accusation is as much within the reason of the statue as a threat of formal complaint, and is much easier made, and may be quite as likely to accomplish its [the threat's] purpose. There is nothing in the statute that requires such a restricted meaning of the word accuse ; and to restrict it thus, would well nigh destroy the efficacy of the act. The language in sections 875 and 876 can be profitably contrasted with the language in the federal blackmail statute (18 USC 873). In Sections 875(d) and 876(d), Congress criminalized any threat to accuse the addressee or any other person of a crime. In contrast, in Section 873, Congress criminalized threat of informing... against any violation of any law of the United States. The Sixth Circuit, in a case involving blackmail against a bootlegger during prohibition, construed Section 873 to require proof of a threat of informing federal officials. Farkas v. United States, 2 F.2d 644, 646 (6th Cir. 1924). Where the proof against one defendant only involved a threat to report threats to state officials (and also threats concerning violations of state laws), the conviction could not be sustained. Thus, courts have interpreted the 873 language ( threat of informing... against any violation of any law of the United States ) more narrowly than the more general language of Sections 875(d) and 876(d) ( any threat to accuse... any... person of a crime ). Since Sections 875(d) and 876(d) are also constructed to protect generally against threats to reputation, this broader construction to include threats of public accusations of crimes is consistent with the overall scope and purpose of the statutes. The first statutory predecessor of 18 U.S.C. 875 was enacted after the courts had interpreted the threat of informing language of 18 U.S.C The predecessor, codified as 8

9 Case 3:09-cr CRS Document 75 Filed 07/06/10 Page 9 of U.S.C. 408d, was enacted on May 18, United States v. Heller, 579 F.2d 990, 995 (6th Cir.1978). Thus, had Congress intended to limit the scope of Sections 875(d) and 876(d) to threats to disclose to authorities, Congress could readily have employed the language of the blackmail statute. Instead, the distinctive threat to accuse language was chosen language that courts have interpreted to include public accusations. 4. The defendant need not have known or intended that the threatening communication crossed state lines to violate 18 U.S.C. 875(d). A conviction under 18 U.S.C. 875(d) requires proof that the charged threatening communication was transmitted in interstate commerce. However, Section 875 does not require proof that a defendant knew or intended that the threatening communication cross state lines. See, e.g., United States v. Darby, 37 F.3d 1059, 1067 (4th Cir. 1994); United States v. Kelner, 534 F.2d 1020 (2d Cir.1976); United States v. Kammersell, 7 F.Supp.2d 1196, 1202 (D.Utah 1998). 5. The fact that Dana Kolter rather than Karen Sypher may have authored the March 22, 2009 letter charged as a threatening communication in Count 3 of the Superseding Indictment is not a defense to the 18 U.S.C. 876(d) charge. The March 22, 2009 letter charged as a threatening communication in Count 3 of the Superseding Indictment was signed by both Karen Sypher and her attorney, Dana Kolter. Karen Sypher s signature on the letter was notarized. Evidence will show that Dana Kolter authored the letter, though all of the factual recitations in the letter came from Karen Sypher, who also read and approved its contents. The Sixth Circuit has joined other circuits in holding that a defendant may be convicted of a threatening communication under 18 U.S.C. 876 even if he or she did not write the communication. U.S. v. Blankenship, 870 F.2d 326, (6th Cir. 1988); see also United 9

10 Case 3:09-cr CRS Document 75 Filed 07/06/10 Page 10 of 16 States v. Johnson, 965 F.2d 460, 468 (7th Cir. 1992) (court noting the emerging consensus supporting the rule that authorship is not an essential element of 18 U.S.C. 876 offenses ). Thus, the fact that Karen Sypher did not author the March 22, 2009 letter is no defense to the charge of causing a threatening communication to be mailed with the intent to extort. III. EVIDENTIARY ISSUES WHICH MAY BE RAISED AT TRIAL 1. Waiver of Attorney-Client Privilege Dana Kolter is expected to testify at trial. He formerly represented Karen Sypher in her divorce case and in connection with negotiations with Rick Pitino. Karen Sypher waived any attorney-client privilege between her and Dana Kolter on April 20, The waiver, signed by Karen C. Sypher and witnessed by FBI Special Agent David Beyer, reads: The undersigned Karen Sypher hereby waives any attorney-client privileged communications between her and Dana Kolter, Attorney, insofar as the Federal Bureau of Investigation seeks to learn about communications between her and Dana Kolter. Karen Sypher further agrees to waive any attorney-client privilege with respect to any documentation in Dana Kolter s possession and expressly agrees to permit Mr. Kolter to provide any such documentation to the Federal Bureau of Investigation. Pursuant to this waiver, the Federal Bureau of Investigation obtained Mr. Kolter s client file for Ms. Sypher. A copy of that file has been provided to the defendant. As of the date of the filing of this Trial Memorandum, the defendant has not raised any objection to the United States use and possession of this material. The United States does not anticipate any objection or the assertion of any privilege at trial. However, in the event the defendant argues that the waiver only extends to the FBI, this argument should be rejected. The Sixth Circuit Court of Appeals has conclusively rejected the 10

11 Case 3:09-cr CRS Document 75 Filed 07/06/10 Page 11 of 16 notion that a client can selectively waive her privilege as to some persons yet keep the waiver th intact as to others. In In re Columbia/HCA Healthcare Corp., 293 F3d 289, 304 (6 Cir. 2002), the Sixth Circuit held, after an extensive review of the various approaches taken by the sister circuits, we reject the concept of selective waiver, in any of its various forms. Karen Sypher has waived her privilege, and any documents and communications formerly within the scope of the privilege are no longer privileged. 2. Rule 404(b) Evidence Pursuant to Federal Rule of Evidence 404(b), the United States intends to introduce evidence that Karen Sypher previously made a false accusation against another man, Leonard LeGrande, of sexual assault in order to obtain money from him. Though there are some differences between the two situations, the similarities are striking, and evince a common motive, scheme, pattern, intent and plan. Karen Sypher met Rick Pitino in 2003 and had consensual sex with him the night they met. Approximately three and one-half weeks later, Ms. Sypher came to him to tell him she was pregnant. She told him that she could take a pill to terminate the pregnancy, but that she had probably waited too long. The identity of the man who inseminated Karen Sypher is unknown, but she terminated her pregnancy by abortion. Years later, when Ms. Sypher anticipated financial difficulties, she accused Rick Pitino of rape and falsely characterized the consensual sex between them. She then engaged an attorney, Dana Kolter, to pursue her false claims. The circumstances involving Leonard LeGrande are strikingly similar in important respects. Leonard LeGrande met Karen Sypher in late Though not well acquainted with him, she agreed to travel with him from Louisville to Atlanta, where he was attending a 11

12 Case 3:09-cr CRS Document 75 Filed 07/06/10 Page 12 of 16 conference. In a shared hotel room in Atlanta, according to LeGrande's sworn deposition testimony, he and Karen Sypher had consensual sex. After returning to Louisville, LeGrande arranged for Karen Sypher to be hired at a business that he owned but did not manage. A short while after that, Karen Sypher contacted LeGrande to tell him she was pregnant, and insinuated that the pregnancy was caused by LeGrande. She also told him she could take pills to terminate the pregnancy. Because Karen Sypher was married and had another boyfriend at the time, LeGrande terminated the relationship. Karen Sypher's employment at LeGrande's business was troubled, filled with conflict and disputes. Eventually, she was terminated. She engaged an attorney who sued LeGrande and his company. In a lawsuit, she accused LeGrande of sexual harassment and falsely characterized the consensual sex between them. She said that LeGrande had been sexually aggressive in the Atlanta hotel room, but she had rebuffed his advances. As with Richard Pitino, Ms. Sypher told Mr. LeGrande that she was pregnant, then falsely characterized their consensual sexual encounter, then engaged an attorney to pursue claims against him based upon those false characterizations as part of a scheme to obtain money. The United States will offer this evidence as proof of Ms. Sypher's motive, intent and plan. The United States will offer a portion a portion of the February 13, 2002 deposition of Leonard LeGrande, taken in the case Karen Wise v. Auto Glass and More, Inc. and Leonard LeGrande. As Mr. LeGrande is deceased, his deposition will be offered under Federal Rule of Evidence 804(b)(1). The deposition will likely be offered in conjunction with the testimony of another employee of LeGrande's business. 12

13 Case 3:09-cr CRS Document 75 Filed 07/06/10 Page 13 of Out-of-Court Statements of Karen Sypher The United States intends to introduce various recorded statements made out of court by Karen Sypher. Offered against a party, the statements are not hearsay. Fed.R.Evid. 801(d)(2)(A). The defendant may not, however, offer her own statements, even statements from the same recording from which the United States obtained her statements. Self-exculpatory statements made in an interview are not admissible even though inculpatory statements made during the same interview have been introduced by the prosecution. U.S. v. Shaver, 89 Fed.Appx. 529 (6th Cir. 2004); United v. McDaniel, 398 F.3d 540 (2005). The doctrine of completeness does not require the admission of exculpatory statements because the hearsay rule is not trumped by the rule of completeness. Id. at 533. Thus, there is no requirement that the United States offer any exculpatory statements made by Ms. Sypher in any statement or interview, nor may Ms. Sypher herself introduce any such statements. Notwithstanding these principles, the United States intends to introduce the entire body of recordings made when Karen Sypher falsely reported her rape allegations to the LMPD. These recordings include Karen Sypher's videotaped visits to the LMPD and telephone calls Karen Sypher made to the investigating detective that were audiotaped. Because those visits and telephone calls constitute the crime itself, the recordings will be introduced and played in their entirety. 4. Out of Court Statements of Jacob Wise The United States intends to introduce various recorded statements made out of court by Jacob Wise, the son of Karen Sypher. On or about April 14, 2009, Jacob Wise attempted to negotiate a settlement between Rick Pitino and Karen Sypher. He consulted with Karen Sypher 13

14 Case 3:09-cr CRS Document 75 Filed 07/06/10 Page 14 of 16 and reported her latest demands to Tim Sypher. In an attempt to persuade Tim Sypher that a settlement would benefit Rick Pitino, he explained to Tim Sypher how Karen Sypher would cooperate to insure that the scandalous allegations about Pitino could be suppressed if she was paid the money she demanded. Jacob Wise's statements are admissible under Fed.R.Evid. 801(d)(2)(C) and (D). Rule 801(d)(2) describes several categories of statements that may be offered against a party as nonhearsay under certain circumstances. Statements made within the scope of agency by the agent of a party are not considered hearsay when offered against that party. Fed.R.Evid. 801(d)(2)(D). Similarly, statements made by a person authorized by a party to make a statement are not hearsay when offered against that party. Fed.R.Evid. 801(d)(2)(C). Here, the United States will introduce portions of April 14, 2009 telephone conversations between Tim Sypher and Jacob Wise. Tim Sypher was employed by Rick Pitino and still married to Karen Sypher in April Jacob Wise is Karen Sypher s son from a previous marriage. Karen Sypher authorized Jacob Wise to negotiate with Rick Pitino through Tim Sypher. During those negotiations, Jacob Wise made a number of statements that the United States will introduce. Statements authorized by a party or statements made within the scope of an agency relationship created by a party have been treated as non-hearsay in extortion cases, even where the agency relationship exists, as here, to advance the extortion. For example, in United States v. Jones, 766 F.2d 412, 415 (9th Cir.1985), abrogated on other grounds, Hilao v. Estate of Marcos, 103 F.3d 767, 775 (9th Cir.1996), the out-of-court statements made by individuals who had attempted to pick up extortion money for the defendant were admissible under Rule 801(d)(2)(D) as statements made by agents concerning matter within scope of their agencies. See also United 14

15 Case 3:09-cr CRS Document 75 Filed 07/06/10 Page 15 of 16 States v. Rioux, 97 F.3d 648, (2d Cir. 1996). The Sixth Circuit has approved the introduction of a broad range of statements made in the course of an agency relationship. In United States v. Branham, 97 F.3d 835, 851 (6th Cir. 1996), the Court of Appeals approved the introduction of [w]hatever [the declarant] said during these conversations... in furtherance of that goal [of building trust], and thus within the scope of the existing agency. Id. Here, Jacob Wise was authorized by Karen Sypher to persuade Tim Sypher and Rick Pitino to pay her money. The broad range of statements made by Jacob Wise in the course of attempting to secure an agreement to pay Karen Wise money were within the scope of that agency and should therefore be admitted. IV. POTENTIAL TRIAL PROBLEMS Potential trial problems anticipated by the United States have already been foreseen and addressed by the Court. V. JURY INSTRUCTIONS The United States has submitted its proposed jury instructions by separate filing. VI. PROPOSED VOIR DIRE The United States has submitted a proposed questionnaire to be completed by each member of the jury pool. That questionnaire was developed to elicit information about possible juror bias and media exposure. Once the questionnaires are returned, the Court and the parties 15

16 Case 3:09-cr CRS Document 75 Filed 07/06/10 Page 16 of 16 will complete voir dire with further questioning of the prospective jurors, based upon their responses to the questionnaires. Respectfully submitted, DAVID J. HALE United States Attorney s/ John E. Kuhn, Jr. John E. Kuhn, Jr. Marisa J. Ford Assistant United States Attorneys 510 West Broadway, Tenth Floor Louisville, Kentucky (502) CERTIFICATE OF SERVICE I hereby certify that on July 6, 2010, I electronically filed the foregoing Trial Memorandum with the clerk of the Court by using the CM/ECF system, which will send a notice of electronic filing to James Earhart, counsel for the defendant, Karen Cunagin Sypher. s/ John E. Kuhn, Jr. John E. Kuhn, Jr. Assistant United States Attorney 16