The U.S. district judge also denied a defense motion to allow two obstruction charges to be tried separately
Accused racketeering boss Michael J. Miske will retain at least one of his original criminal defense attorneys after a federal judge decisively rejected an attempt by federal prosecutors to disqualify Miske’s two lead counsels, Thomas Otake and Lynn Panagakos, due to alleged legal conflicts of interest.
In a court order filed in Honolulu’s U.S. District Court Tuesday morning, Judge Derrick K. Watson ruled the government had failed to back up its generalized and “speculative” allegations about supposed conflicts, and failed to provide evidence of any actual conflict.
In a second order filed the same morning, Watson denied a motion by Miske, and supported by other defendants, that sought to split off two charges of obstruction of justice to be tried separately.
The judge’s order concerning Panagakos repeatedly characterized the government’s allegations about conflicts as speculative at best, and ruled the government “has not come close” to establishing the existence of a disqualifying conflict of interest.
The decision means Panagakos is free to continue to represent Miske, as she has since mid-2017. Watson’s ruling also applies to Otake, although he recently withdrew from Miske’s case on other grounds.
Otake filed a motion to step away from the case on Jan. 13, after being informed two prior clients are expected to be called as government witnesses in the trial of Miske and six remaining co-defendants. Otake’s motion was initially denied by Magistrate Judge Kenneth Mansfield, but Mansfield later reversed himself and granted the motion after reconsideration.
However, a footnote in Watson’s order makes clear it applies to both attorneys despite Otake having already taken himself off the case. This appears to leave the door open to a further appeal, potentially allowing Otake to be reinstated.
“Although the instant motion with respect to Otake may therefore be moot, given the potential for further litigation with respect to the Magistrate Judge’s termination decision and the fact that the arguments in the motion to disqualify with respect to Otake mirror the ones against Panagakos on the matter of the ‘fraudulent’ character letters, the Court’s decision herein should be construed as applying equally to Otake,” Watson wrote in his order.
The dispute over whether legal entanglements created conflicts for Panagakos and Otake began in mid-January, when prosecutors filed a motion asking the court to disqualify Panagakos and Otake, arguing “each have multiple, significant conflicts requiring their disqualification.”
Earlier discussions between prosecutors and Miske’s defense attorneys that had started back in August led to no agreements. However, they did apparently prompt the addition of Reno, Nevada-based Michael Kennedy, a former federal defender-turned-prominent defense counsel, to Miske’s high-powered defense team.
In their 40-page motion, prosecutors point to two sources of conflict. First, according to prosecutors, both attorneys “are percipient and material witnesses to the genesis, receipt, filing, and use of two fraudulent character letters submitted to this Court in support of Mike’s motion for pretrial release, and in the case of Ms. Panagakos, she directly dealt with Miske and his subordinates in the filing of these letters.”
Their “distinct and unmatched firsthand knowledge about key events” will be at issue in the trial and requires their disqualification “under the longstanding prohibition that attorneys representing a client at trial cannot also be a witness in that same trial,” prosecutors said.
Prosecutors cited an additional conflict on the part of Panagakos, pointing to a string of WhatsApp texts from February 2018, in which Miske told an associate he had been at the “doctor’s office,” a code word referring to his attorney’s office, where he was shown documents indicating another insider, Lance Bermudez, appeared to have “flipped” and could no longer be trusted. Miske warned his associate not to take calls from anyone “inside” because Miske could “guarantee” they were recorded, and included a photo of an office door showing the office number, which is the address of Panagakos’ office.
Although criminal defendants have a constitutional right to the attorney of their choice, prosecutors argued that right is “not unfettered,” and had to be balanced against other interests. They argued that “based on the totality of the circumstances,” disqualification of both attorneys was required.
Panagakos spent 13 years as a criminal trial attorney for the Department of Justice, then opened a criminal defense law practice in 2003, taking cases solely in federal court. She is considered a top-tier defense lawyer, and currently represents former Honolulu Corporation Counsel Donna Leong, who is awaiting trial on charges of conspiracy and lying to FBI investigators. She also represents Wayne Inouye, a former top city plans examiner who has pleaded guilty to accepting more than $100,000 in bribes in exchange for providing special treatment and expedite processing of plans, and is now awaiting sentencing.
Panagakos reacted strongly to the government’s motion, branding the claim she was the “doctor” referenced in Miske’s exchange of text messages as “false,” and blasting prosecutors for failing to note her denial in their motion to disqualify. She further alleged prosecutors intentionally concealed information they “knew would corroborate Ms. Panagakos’ denial.”
Further, Panagakos said the allegedly fraudulent reference letters did not require disqualification since neither she nor Otake can be considered a “likely” or a “necessary” witness at trial “because the court can take judicial notice of the filing of the letters and the email supplies the chain of custody for admissibility.”
Even if the defense attorneys were “necessary” witnesses, their disqualification would be such a “substantial hardship” for their client that the balance of interests would weigh in their favor, she said.
Although Panagakos raised a number of additional issues, Watson found it unnecessary to go beyond the basics.
“First, other than speculative possible conflicts that may arise in the future, the government has presented no actual conflict that presently exists between Miske and his counsel with respect to the alleged ‘fraudulent’ character letters,” Watson wrote in his order.
Further, “despite several opportunities to explain why, the government has failed to identify how either Panagakos or Otake are ‘necessary’ – rather than merely percipient – witnesses” requiring removal from the case. The government, Watson said, had provided no evidence of any real conflict beyond speculative “what if” scenarios.
With regard to prosecutors’ allegations about Miske’s meeting with his “doctors,” Watson said he “is not convinced that Panagakos is one of the ‘doctors’ referenced.” Even if she were, Watson wrote in his order, Miske’s subsequent text messages do not create a conflict between Panagakos and Miske, or anyone else, “let alone one that should result in Panagakos being disqualified, even if the government is correct in representing that the communication depicts a piece of how Mike allegedly controlled his associates.”
Watson’s second order denied a motion by Miske’s attorneys to sever the two obstruction of justice charges involving the allegedly false character reference letters. The two obstruction charges against Miske were added to the case by a third superseding indictment filed in December.
The idea of splitting two counts off to a separate trial had been raised, at least in part, in an effort to mitigate any alleged legal conflicts involving the letters. If those conflicts were found to require the disqualification of either or both of Miske’s attorneys who had represented him since at least 2017, severance of the two charges would allow them to continue to handle the bulk of the charges in a separate trial.
In response, the government said the charges are “inextricably intertwined” with the racketeering conspiracy charged in Count 1 of the indictment, and severing them would not remove the legal conflicts.
Watson largely sided with the government, ruling the fraudulent letters “are part of the ‘same series of acts or transactions’ that make up the charged racketeering conspiracy,” and that “there is a ‘logical relationship’ between the alleged racketeering activities and Mike’s alleged attempt to evade pretrial detention for those activities.”
Having taken issue of disqualification off the table, Watson concluded maintaining a single trial on all of the indictment’s 22 counts would not create any prejudice against the defendants, and certainly not the “manifest prejudice” necessary to justify severance of the obstruction charges.
It remains to be seen whether an appeal of Otake’s removal from the case will be forthcoming.
The two rulings appear to have cleared the way for the case to continue toward trial, which is currently scheduled to start in September.
However, a pending motion asks for the trial to be moved to another location, such as Las Vegas, where few jurors have likely ever heard of Mike Miske, avoiding any problem with prejudice potential jurors might have against him and other defendants associated with him.
A hearing on the change of venue motion is scheduled in Watson’s courtroom on March 24.