SCOTUSblog Founder Tom Goldstein Trial: Week 4

Week 4 has ended in the federal tax evasion trial of Tom Goldstein, superstar Supreme Court advocate and founder of SCOTUSblog. The prosecution’s case is coming together, and the defense has previewed some of its likely arguments. The hot issues from Week 1 remain, well, hot (Week 1 analysis here).

What’s happened in three weeks of testimony? More below the fold.

False statement allegations. The government’s false statement case has come together pretty cleanly—and may represent the least ambiguous route to a conviction. On February 4, a private lender testified that Goldstein did not disclose more than $14 million in purported debts when applying for two home loans, which the lender ultimately extended to Goldstein. The lender stated that the debts “would’ve been a material thing that we would’ve discussed.” Other testimony indicated that Goldstein also failed to disclose these debts when applying for bank loans.

But the real action was on February 5, when Judge Griggsby read excerpts from Jeffrey Toobin’s New York Times article, including Goldstein’s statement “that he ‘understated his debts’ when applying for mortgages” and the fact that Goldstein “wanted to keep [his gambling-related debts] secret from [his wife].” This mutual stipulation ends the government’s bid for Toobin to testify, which met resistance from the New York Times on press-related grounds. (This outcome also effectively resolves Griggsby’s initial ruling that the article was inadmissible.) More broadly, this stipulation takes a tough witness off the table, while shifting the trial’s emphasis to the cleaner document-driven narrative that the government sought from the beginning.

Community norms and taxable income. The tax-related counts remain challenging, notwithstanding a lot of testimony and other evidence about the quantitative aspects of Goldstein’s poker activities, business operations, and tax filings. Demonstrating criminal intent is complicated by the norms and practices of the poker world in which Goldstein participated.

For example, actor Tobey Maguire and high-stakes gambler Bob Safai testified that Goldstein directed Maguire to pay a $500,000 legal fee, owed to Goldstein’s firm, directly to Safai to satisfy a gambling debt. Goldstein allegedly did not report the fee as income. As Goldstein’s lawyers elucidated, these triangular payment arrangements are not uncommon in the high-stakes poker community (and, apparently, were not uncommon for Goldstein personally). As testimony has emphasized, debt may have different meanings and valences for this global network of people.

Common practice, of course, doesn’t necessarily negate willfulness; it’s not just that everyone’s doing something, but why that thing’s done. The prevalence of triangular payment arrangements might reflect a broader scofflaw mentality, among other things. Better exculpatory evidence might show that these triangular arrangements exist—and actually were used by Goldstein—to reinforce the community fabric among high-stakes poker players, or to show social power or authority, or to negate superstitions about debt. These motivations provide stronger grounds for structuring these types of payments on behalf of another, and something along these lines may come out in the defense’s presentation. There’s a reason why Old Colony Trust isn’t a criminal case.

What’s also interesting is how dissonant Goldstein’s poker dealings are, compared to the conventional operations of elite law firms. Although other law firms and lawyers were involved in staking Goldstein in high-stakes play, witnesses testified that these investments, um, fell outside of conventional best practices. The legal profession’s ethical norms give greater negative import to testimony about Goldstein’s commingling of business and personal funds, or offering to compensate an employee in Bitcoin—even if such practices might be normal among high-stakes poker players. It’s worth watching how the government uses this dissonance between law and poker in concluding its case.

Blaming the accountants. Testimony reinforced that in-house bookkeeping at Goldstein’s firm was less than impeccable. Goldstein’s outside accountants also didn’t look great. Mistakes were made. Communication was poor. And, at the end of the day, a lot hinges on how the jurors view these types of mutual failures—and whether the government and the defense can weave cohesive and convincing narratives from this morass.

When will the trial conclude? After a slow start and a two-day weather delay, the trial seems likely to continue through mid-February. As of the end of Week 4, the government has not yet rested.

Who will play Tom Goldstein on screen? Yes, there are plans for a rise-and-fall biopic based on a salacious article in Air Mail. It’s really too bad that DiCaprio already played Jordan Belfort.

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