Ex-Deutsche Bank trader fails to dismiss indictment against him in LIBOR manipulation case

Judge Colleen McMahon of the New York Southern District Court has denied a motion by Gavin Campbell Black, a former Deutsche Bank trader, to dismiss the indictment against him in a LIBOR-rigging case.

What was the rationale for the defendant’s efforts to challenge the indictment? The so-called Kastigar case. In the United States, there has been a longstanding constitutional prohibition on the use of compelled testimony against a criminal defendant because of the Kastigar case. According to Black, the US Government used his compelled testimony to the UK Financial Conduct Authority (FCA) in drafting the indictment. Thus, according to the ex-Deutsche Bank trader, the US Government violated his Fifth Amendment rights under United States v. Kastigar.

The Judge, however, has disagreed with the defendant’s allegations.

Let’s recall that, in connection with its investigation into the alleged manipulation of LIBOR by Deutsche Bank, which commenced in or around May 2012, the UK FCA exercised that power to obtain the compelled testimony of Gavin Campbell Black. Mr Black gave his compelled testimony on October 3, 2013. The list of those attending the interview includes: Black; Michael Prange, Noor Hassan and Steve Clark of the FCA; and John Bramhall, Jonathon Brogden, Dan Gitner and Drew Johnson-Skinner, all counsel for Black.

The FCA concluded its investigation into Deutsche Bank by issuing a Final Notice on April 23, 2015. The Final Notice announced the imposition of financial penalties on Deutsche Bank in the amount of €226,800,000.

The DoJ indicted Deutsche Bank employees Connolly and Black about a year later, in May 2016.

The DoJ took measures from the start of the case to ensure that its prosecution team would not be exposed, directly or indirectly, to Mr Black’s compelled testimony. The DoJ prosecution team did not attend compelled testimony sessions of any potential targets of its investigation, including Black. Furthermore, members of the DoJ prosecution team also took steps to insure that its members did not receive copies, summaries or extracts of the compelled testimony of any target, including Black.

The Judge also noted that the Government’s case relies in part on information provided by three cooperating witnesses: Michael Curtler (a trader who sometimes served as Deutsche Bank’s LIBOR submitter), James King and Timothy Parietti. However, none of them has ever received or read Black’s compelled testimony.

The Judge ruled that the US Government has proven by a preponderance of the evidence that the indictment in this case was not procured in violation of defendant Black’s Fifth Amendment right against prosecution on the basis of compelled testimony. That is why, the defendant’s motion to dismiss the indictment on the ground that it was obtained in violation of the Fifth Amendment was denied.

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