A recent memorandum of law in support of a motion to dismiss made by her attorneys reveals how Kathy Russell went from being a “witness” to becoming a “defendant” in the case of U.S. v. Keith Raniere Et Al.
In their filing, Russell’s lawyers, Justine A. Harris and Amanda Ravich, argue that the case against Russell should be dismissed because prosecutors misled Russell into thinking she was just a witness when she was actually a target in imminent danger of being indicted when she testified before the grand jury.
In short, they argue, Russell was “lulled” into potentially giving incriminating statements. This, they argue, influenced her use of her 5th Amendment rights.
Russell was subpoenaed to appear before the Grand Jury on May 10, 2018. Ten weeks after she testified, she was indicted. The defense is asking the Court to dismiss her indictment on the basis of government misconduct.
Russell’s attorneys argue that she testified more fully than she would have otherwise because “Ms. Russell never received a ‘target’ or ‘subject’ letter – to the contrary, at the outset of her testimony, the prosecutor explicitly assured her that she was not a target..Based on the government’s questioning in the grand jury, Ms. Russell was certainly not a ‘witness’ at the time of her testimony. She was asked questions about a range of incriminating and sensitive topics, including the very conduct that formed the basis of the predicate acts with which she was subsequently charged.”
The defense is asking the Court to dismiss her indictment on the basis of government misconduct.
The government claims it developed evidence making Russell chargeable with racketeering conspiracy after her grand jury testimony.
The Superseding Indictment charged Russell in Count One, the alleged RICO conspiracy – and named her in two of the Predicate Acts. A Predicate Act is one of usually a series of acts – which, as in this case, establish the basis of the overall RICO conspiracy.
Predicate Act One alleges conspiracy to commit identity theft for the purposes of evading immigration laws and arises “out of a scheme by co-conspirators to smuggle an alien into the United States through Canada after the alien was denied legitimate entry into the United States.”
The government alleges that in 2004, “Russell drove from Albany, New York to Toronto, Canada where she met the alien and provided her with an identification card bearing the last name and birthdate of a woman who had recently died.”
Predicate Act Two was “…part of the scheme to obtain usernames and passwords of people believed to be Nxivm’s enemies so their emails could be monitored by the Enterprise.”
During her nearly two hour grand jury testimony, Russell was asked a series of questions related to the border crossing in 2004 – and the email hacking.
She was asked about the movement and storage of cash; the maintenance of tax returns for companies affiliated with NXIVM; her experiences with NXIVM, including courses she took, and her positions as proctor, coach, and bookkeeper; the general nature and philosophy of NXIVM and related entities, including JNESS, SOP, and SOP; and certain NXIVM rules, rituals, and ranking systems.
She testified she had been involved in NXVIM since 2001; that she’s taken the entire ESP curriculum, the SOP Complete curriculum, and JNESS. She described JNESS, JNESS Tracks, SOP, SOP Complete, and V-Week.
The prosecutor also engaged Russell in an extended conversation about whether she had ever asked Keith Raniere about allegations that he had sexually abused minors or raped women.
Over the course of her testimony, Russell answered many questions and selectively asserted her Fifth Amendment right not to incriminate herself in response to questions regarding her job as a bookkeeper, her role in maintaining tax returns for companies affiliated with NXIVM, cash being brought from outside the country, cash being stored at Nancy Salzman’s house, the Fernandez family, Clare Bronfman, and DOS.
Her defense writes, “The prosecutors’ conduct toward Ms. Russell, including explicit misleading statements, was fundamentally unfair and induced Ms. Russell to partially waive her Fifth Amendment rights and provide incriminating testimony to the grand jury that ultimately indicted her. Accordingly, this Court should exercise its supervisory power and dismiss the Indictment, or, in the alternative, compel the production of discovery and conduct an evidentiary hearing.”
An evidentiary hearing would be in effect a mini-trial on whether, in this case, the indictment should be dismissed based on Russell being misled. Both sides would present evidence before the judge at th eevidentiary hearing.
Russell’s attorneys include in their memorandum a “FACTUAL BACKGROUND” which gives us an insight into how Russell went from being a witness to being a defendant:
“On or about April 25, 2018, six days after the government indicted Keith Raniere and Allison Mack, Kathy Russell received a subpoena, summoning her to testify before the grand jury on May 10, 2018…The subpoena had been slipped under her apartment door, without any attachments or a cover letter. Specifically, there was no letter advising her that she was a target of the investigation, nor, in contrast to subpoenas received by other individuals, was there a letter advising her that she was a ‘subject’ and containing an ‘Advice of Rights.’
“Shortly thereafter, Ms. Russell retained William Fanciullo, Esq. Mr. Fanciullo contacted the prosecutor on April 30, 2018 to advise her of the representation…
“On May 10, 2018…Ms. Russell, accompanied by her counsel, appeared in the Eastern District of New York in response to the subpoena. At the outset of the examination, which commenced at 2:33 p.m., the prosecutor affirmatively advised Ms. Russell that she was not a target, as that term is defined by the United States Department of Justice’s U.S. Attorney’s Manual…
“Then, after advising Ms. Russell about the nature of the proceedings, her obligations to tell the truth, and her right to counsel, the prosecutor went on to make a series of statements concerning the government’s view of the scope of Ms. Russell’s Fifth Amendment rights…
“Following the prosecutor’s assurances, as well as her ‘advice’ concerning the Fifth Amendment, Ms. Russell testified for nearly two hours. She answered the prosecutor’s questions on a range of topics…
“Two and half months later, on July 23, 2018, the government indicted Ms. Russell. She was arrested the following day.”
Based on these facts, Russell’s defense argues, “…it is clear at the time of the grand jury proceeding, when the prosecutor advised Ms. Russell that she was not a target, that the government already had information about the allegations it ultimately made against her in the Indictment. During the examination, the prosecutor asked Ms. Russell a series of questions clearly related to both the alleged border crossing in 2004 and email hacking.”
There is no requirement that the DOJ advise an individual that he or she is not a target.
Yet, any “representation by an AUSA,” Russell’s attorneys argue, citing United States v. Drake “that an individual is neither a target nor a subject, but only a fact witness in that investigation, communicates information to several parties – counsel, individuals testifying before the Grand Jury, the Grand Jury, and this court – upon which those parties rely and act.”
The problem with misadvising a target that she is only a witness when she is in fact a target, her attorneys argue, is that such misrepresentation misleads her lawyer who is “prevented from intelligently rendering…advice” regarding whether the client should invoke her Fifth Amendment privilege.
The defense suggests further that the obvious reason for misrepresentations regarding Russell’s status was to induce her to waive her Fifth Amendment privilege and give helpful testimony to the grand jury.
The defense writes, “…the government’s statements regarding Ms. Russell’s status before the grand jury, as well as the erroneous legal advice concerning the scope of her Fifth Amendment rights, rendered the proceedings fundamentally unfair…at the outset of her testimony, Ms. Russell was expressly told “that she was not a target.”
The defense argues, therefore, that the indictment should be dismissed or in the in the alternative, that the Court should compel the government to produce discovery and conduct an evidentiary hearing.
In a nutshell, they argue, had Kathy Russell known she was a target of the DOJ, she might have invoked the 5th Amendment on all questions.
The defense argues further that, “If other witnesses were misinformed of the scope of their Fifth Amendment privilege, the potential unfair prejudice – as to all defendants – is twofold. First, like Ms. Russell, such witnesses could have been induced by the prosecutor’s incorrect advice to waive their rights and provide the grand jury with testimony they would not otherwise have given. Second, incorrect advice to witnesses about the scope of the Fifth Amendment privilege risks misleading the grand jury as to the meaning and significance of ‘pleading the Fifth’ – a misimpression that would be compounded were the accompanying legal instructions inaccurate or incomplete.
“This is not a fishing expedition. The government’s on-the-record statements to Ms. Russell concerning her status, combined with its inaccurate statement of the law concerning the scope of the Fifth Amendment privilege, has raised the real possibility that other witnesses were misadvised and the grand jury therefore misled. Accordingly, the government should produce those portions of the minutes relating to the Fifth Amendment warnings given to all grand jury witnesses, as well as any related legal instructions.”
In conclusion, the defense argues, “the Court should dismiss the Indictment as to Kathy Russell, or, in the alternative, compel the government to produce discovery and conduct an evidentiary hearing.”