DOJ opposes ex-Deutsche Bank trader motion to separate trials

The United States Government had to act quickly on Sunday in an effort to rebuff a motion by Matthew Connolly – one of the defendants in a LIBOR-rigging case, to have his trial severed from that of his alleged co-conspirator Gavin Black.

Let’s recall that the Indictment alleges that Matthew Connolly and Gavin Campbell Black engaged in a scheme to cause Deutsche Bank AG to submit false and fraudulent USD LIBOR submissions to the British Bankers’ Association (BBA) for inclusion in the calculation of USD LIBOR. Connolly stresses that the Indictment does not allege any manipulation, collusion, or fraud related to the submission of LIBOR rates based on communications between the defendants and traders at any other bank.

The Government had said that it intends to present evidence that Black was communicating with a derivatives trader at Rabobank. In his motion to sever, Connolly argued that the introduction of this allegation at trial would cause substantial prejudice to him, as he was not a participant in any of the alleged discussions that could give rise to this claim and he was not aware that allegations of collusion were part of the government’s case against his co-defendant. Because this is a serious allegation that has a significant likelihood of substantial prejudice, and is not part of the charges against Connolly, he argues that severance is appropriate.

On Sunday, the Government filed their opposition with the New York Southern District Court. The Department of Justice (DOJ) insists that the Connolly motion is meritless and that the eleventh-hour motion to sever – filed at 7:00pm on the last business day before trial – is “a transparent delay tactic designed to divert the government’s resources and preclude admissible evidence that he has known about for a very long time”.

The DOJ notes that just because evidence will be presented that one co-conspirator took an action that another co-conspirator did not, this does not mean there would be any prejudice and especially that it would rise to a level requiring a severance.

Furthermore, the Government notes that it had warned on many instances that the communications with other Libor submitters would be used during trial. On May 31, 2016, for example, the indictment was read. It included the following statement: “At times relevant to this Indictment, Black and his co-conspirators discussed USD LIBOR submissions and manipulation with individuals at other Contributor Panel banks, including, but not limited to, Cooperatieve Centrale Raiffeisen – Boerenleenbank B.A. (“Rabobank”).”

The communications are seen as important as they depict defendant Gavin Black’s intent. In 2008, for example, Black complained that LIBOR was ‘such shite,’ to which Rabobank’s Tony Allen Allen responded that the BBA ‘are a bunch of clueless cvnts’.

Gavin Black’s communications with Lee Stewart and Tony Allen at Rabobank are clearly admissible as evidence of relevant to his knowledge, intent, and state of mind during the charged conspiracy, the DOJ says.

Here is another example:

Stewart says “What you boys going l’s Libor?… Farkin imbeciles on the cash!”

and Defendant Black responds “Yep its a nonsense”

The list of examples continues:

Allen states “They sent a letter the other day saying that yeah, they’re looking into it, and do we understand the implications of LIBOR, it’s a massive benchmark” to which Defendant Black responds “Who’s this bloke who’s always in the paper, John ‘Ass Cheeks,’ whatever his name is, saying he’s aware of, lah-di-dah-di-dah and then just goes back to another committee meeting.” Allen then responds “And it’s just – and it’s sad because it’s such an important benchmark, and everyone’s tied into it. I mean — I pissed my pants actually, you think someone on the CME is trading front contracts in Eurodollars and nobody’s got a fucking clue in the cash market. Sixteen banks in London are dictating what you can do, and they’re all out on the fucking piss”.

In conclusion, the Government stresses that the evidence is not unfairly prejudicial nor does it provide a level of potential prejudice that necessitates an eleventh-hour trial severance.

The case is captioned USA v. Connolly (1:16-cr-00370).