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An attorney for one of several defendants in a multimillion-dollar insurance fraud prosecution has been disqualified because the government plans to call him as a witness. Eastern District of New York Judge Joanna Seybert also ruled that Islandia, N.Y., attorney John P. Bracken can be compelled to testify under the crime fraud exception to the attorney-client privilege in United States v. McDonald, 01-CR-1168. Bracken represented defendant David J. Blake, who last year was among seven people charged with several offenses arising from an alleged conspiracy to defraud Nassau County on insurance contracts following the county’s decision to change its employee health coverage from a state plan to a self-insurance plan. Bracken allegedly helped incorporate a shell entity called DJB Co. Inc., which the government contends was designed to funnel illegal commissions to Blake, his father, former Suffolk County Republican leader William Michael Blake, and his uncle, John Blake. Others indicted in the scheme included former Nassau County Deputy Executive Robert J. McDonald and the Blakes’ accountant, Robert F. Friemann. In addition to forming DJB Co. Inc., the government alleges that Bracken negotiated a consulting agreement for the Blakes that gave them about $100,000 per month over the three-year life of one of two contracts with Nassau County. Prosecutors argued that Bracken’s disqualification was mandated because his testimony before an Eastern District grand jury inculpated David Blake, as well as his former clients, William and John Blake. The government also contended that Bracken faced an ethical conflict under Disciplinary Rule 5-102(B), which requires an attorney to withdraw as counsel where he or she might be called as a witness “on a significant issue other than on behalf of the client … or that the testimony is or may be prejudicial to the client.” “Based on his representation of David Blake in this action, his prior representation of Blake family members named in the indictment and Bracken’s involvement with DJB’s incorporation, the Court finds serious potential conflicts which warrant disqualification,” Judge Seybert said. “Furthermore, the government’s plan to call Bracken as a witness provides a compelling basis for disqualification.” Moreover, Seybert said that Bracken’s testimony is not covered by the attorney-client privilege under the crime fraud exception, and that Bracken can testify as to communications between himself and Blake. SECOND CIRCUIT LAW Under the case law of the 2nd U.S. Circuit Court of Appeals, Seybert said, the government need only show that it is “more likely than not that the defendants engaged in a scheme to defraud and that the communications [between the attorney and his client] were in furtherance of the fraud.” The government’s proffer in this case, she said, “supports the conclusion that DJB was formed for the purpose of providing a conduit for and concealing the payment of commissions to those other than” the party with whom the county contracted. “Contrary to defendants’ assertions, the evidence shows that there is probable cause to believe that DJB was formed for an improper purpose, particularly in view of David Blake’s testimony that DJB had no other customers … ,” Seybert said. Assistant U.S. Attorney Joseph R. Conway represented the government. Linda U. Margolin of Bracken & Margolin in Islandia, N.Y., represented David J. Blake for this motion.

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