Fraud suspect Michael Carlow targets prosecutors in case


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Michael Carlow is asking a federal judge to disqualify everyone in U.S. Attorney David Hickton's office from prosecuting him, arguing that he disclosed confidential details about his defense strategy to an attorney who later joined Mr. Hickton's office and was assigned to the entrepreneur's tax case.

Mr. Carlow's attorneys made the request in a motion filed Friday. The same day, Assistant U.S. Attorney Tonya Goodman notified the court she was withdrawing from the federal government's case against Mr. Carlow, who was indicted in April 2011 on tax and related charges.

Prior to joining Mr. Hickton's staff in April, Ms. Goodman was an attorney at Reed Smith. Mr. Carlow's attorneys said while she was at the Downtown firm, Ms. Goodman attended a meeting where Mr. Carlow discussed with Reed Smith partner Efrem Grail the possibility of the firm representing him.

Mr. Carlow disclosed "confidential information related directly to his actual and potential defenses" at the meeting, according to the motion. Mr. Carlow did not hire Mr. Grail or Reed Smith. He is being represented by Martin Dietz and Tina Miller.

Mr. Hickton's office declined comment.

Mr. Grail said he would not discuss the matter until after a court hearing on the issue.

Attorneys say judges rarely disqualify an entire prosecutor's office from trying a case. If that were to happen, Mr. Carlow's case could be assigned to an outside prosecutor appointed by the U.S. Department of Justice or it could be transferred to another federal court, Mr. Dietz said.

U.S. District Court Judge David Cercone gave Mr. Hickton's office until July 2 to respond to the disqualification motion.

Mr. Carlow and Elizabeth Jones, his longtime companion, were charged last year with conspiring to defraud the Internal Revenue Service of millions of dollars.

The indictment alleges Mr. Carlow nominally put Ms. Jones in charge of a string of companies he was involved with following his release from federal prison in 2002. It further alleges that Mr. Carlow underreported his income from those companies and failed to report assets and income he was required to disclose to federal authorities as part of a 1996 plea agreement.

Following the indictment 14 months ago, Mr. Carlow is free on a $25,000 bond and is awaiting trial.

Ms. Jones pleaded guilty to conspiracy in August and is awaiting sentencing. She remains free on a $25,000 bond.

Mr. Carlow pleaded guilty to bank and tax fraud charges in 1996 and served six years in prison in connection with masterminding a $31 million check-kiting scheme that victimized PNC Bank.

In a separate motion, Mr. Carlow asked that a provision of his release agreement be changed to allow him to have contact with Ms. Jones. Judge Cercone last month denied Mr. Carlow's and Ms. Jones' request to travel to North Carolina for a granddaughter's birthday, ruling that Ms. Jones was a potential witness in Mr. Carlow's case.

Mr. Carlow's attorneys argue the provision is too broad. According to the motion, the couple have raised seven children -- four of Mr. Carlow's and three of Ms. Jones' -- since 1990. Mr. Carlow poses no threat to Ms. Jones and they should be allowed to travel to birthdays, graduations, marriages and other "important milestones in their lives," their motion stated.

Judge Cercone had approved a request allowing Mr. Carlow and Ms. Jones to travel to Asheville, N.C., for Easter.

businessnews

Len Boselovic: lboselovic@post-gazette.com or 412-263-1941. First Published June 19, 2012 4:00 AM


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