Shelley A. Marcus, a nominee for a Superior Court judgeship, endured tough cross-examination over her role as an attorney for 21 women’s "gifting table" clients who paid her and The Marcus Law Firm over $50,000 for civil representation.
She and her father, Edward Marcus, were both subpoenaed and testified Monday in the federal pyramid scheme trial of two Guilford women, Jill Platt and Donna Bello, that is now unfolding before U.S. District Judge Alvin Thompson in Hartford.
Edward Marcus is the firm owner and a former state Democratic Party chairman. He said the firm limited its focus to the state’s civil pyramid investigation, which then-Attorney Richard Blumenthal was pursuing in 2008.
Shelley Marcus was a reluctant prosecution witness in the federal fraud trial, over so-called "gifting tables."
These were a social, philanthropic and financial scheme in which members give $5,000 contributions at the "appetizer" level, in hopes of reaching a top "dessert" level with a payout of $40,000. When she saw the group’s documents explaining how it worked, Marcus said, "it looked like a pyramid scheme."
Assistant U.S. Attorney Douglas Morabito introduced the manual for the gifting tables group as an exhibit, and questioned Marcus about it.
The document proclaims the program is safe and legal, and relied on the $12,000 per year that can be given as tax-free gifts, without incurring income tax. When Shelley Marcus questioned the scheme, she said her clients said "No, no, no, no, we’ve been told by many lawyers and accountants that it’s perfectly legal."
When Platt came to the firm in 2009, said Ed Marcus, she had been participating in the gifting tables programs for three years. "She wasn’t just a little bit pregnant. She’d had triplets."
Shelley Marcus repeatedly testified that she never told her clients the program was legal – or illegal. After research between November and December 2009, she said she ascertained that the state pyramid scheme statute was not squarely on point with the "gifting tables" system, and said the women might have a valid defense.
She said she also warned them that state gambling laws and securities laws may be implicated. In the firm’s retainer letter with Bello and others, it listed fees of $400 per hour for lawyers and $125 per hour for paralegals and law students.
The retainer letters, signed by Edward Marcus, said the Blumenthal investigation might proceed on "dual tracks" and involve civil prosecution and possible injunctive relief, or be turned over to the State’s Attorney for criminal prosecution. In the latter case, the $5,000 retainer would have to be "renegotiated."
Bethany defense lawyer Norman Pattis, representing Bello, was fiercely critical of Shelley Marcus for not advising her clients that they faced potential criminal liability.
He painstakingly questioned her about the minimum "issue spotting" skills of a lawyer who has just passed the bar, and after a struggle, got her to concede that she had not warned her clients to protect themselves from criminal exposure.
Marcus said she was told by the clients that they had lawyers and judges participating in the gifting tables themselves, but when she asked for names, wasn’t told specifics. "Is it the practice of your office to engage in don’t ask, don’t tell?" He said he couldn’t believe she didn’t confer with other lawyers, even the ones who participated or approved the "gifting tables" as legal. "The legal profession is a fairly collegial one," Pattis said, when we’re not engaged in cross examination.
He later asked, "If you really thought a client was doing something against the law, you would have to ask them to stop, isn’t that right? Yes or no?"
Marcus began answering with a different explanation, as she frequently did. Pattis stopped her. "You’ve been where I am before [examining a witness] and you know I am entitled to a yes or no."
Pattis tried again, "If your client is engaging in unlawful conduct, you could be charged as well, right?"
"I don’t think so," said Marcus.
"No further questions," said Pattis. Shelley Marcus stepped down.