BULLETIN: Nevada’s 8th Judicial District Court dismisses all charges against LSI title officers.
LAS VEGAS — New evidence bearing on allegations that Attorney General Catherine Cortez Masto and her top deputies engaged in repeated and systemic prosecutorial misconduct to indict two Lender Processing Services employees is scheduled to go before Nevada’s Eighth Judicial District Court today.
Defense attorneys for the employees say photographs now submitted to the court provide “potent proof” of the falsity of sworn testimony by Masto’s former chief deputy and head criminal prosecutor in the case, John P. Kelleher — as well as the falsity of assurances that Masto’s office gave to the court.
Gary Trafford and Gerry Sheppard, two LPS title officers, were indicted by a Clark County grand jury in November 2011 on charges of so-called robo-signing “forgery,” having authorized certain LPS employees they supervised to sign the title officers’ names to legal documents.
Although Nevada law actually appears to permit “surrogate signing,” Kelleher, say the defense attorneys, got the indictments by misleading the grand jury “on the legal requirements for the crimes charged” and by using “inflammatory hearsay.” Then, “when grand jurors attempted to probe the factual basis for this testimony, the prosecutors improperly precluded any questioning on the subject.”
Last November, the defense team filed a new brief, based on new information, saying another reason why the indictments of Trafford and Sheppard should be dismissed had come to light:
Since the parties submitted their first supplemental briefs last month, Trafford has discovered that the reach of misconduct in this case by the Nevada Attorney General’s Office (“AG”) extended even further than previously known, as Trafford has learned that the lead prosecutor had a serious, undisclosed, disabling conflict of interest tied directly to Trafford.
Defense counsel wrote that they had only inadvertently learned of Kelleher’s conflict of interest in October, when they discovered online an 8NewsNow story from earlier in the year. That Colleen McCarty report revealed that Kelleher had resigned from the attorney general’s office in April after Masto, in March, had replaced him as head of the office’s 23-person criminal unit.
“Cortez Masto ordered the move based on what she called a conflict of interest surrounding Kelleher’s personal foreclosure crisis,” reported McCarty. (Emphasis added.)
The defense brief then told the court that Deputy Attorney General Robert Giunta in April had concealed from the defense team the highly relevant information of Kelleher’s conflict of interest and his re-assignment:
On March 30, 2012, Trafford’s counsel sent a letter to Mr. Kelleher, as the lead prosecutor on this case, requesting that the AG honor its obligation to produce certain discovery materials….
Mr. Kelleher did not respond to the March 30 letter from Trafford’s counsel. Instead, on April 16, 2012, Deputy Attorney General Robert Giunta responded and advised that there had been a “re-alignment” in the AG’s office and that “Mr. Kelleher is no longer handling this matter.” Mr. Giunta’s letter did not disclose that Mr. Kelleher had been re-assigned due to a conflict of interest.
In their November 2012 brief, defense counsel argued that, “on the law, there can be little dispute that Mr. Kelleher’s conflict rendered him an unauthorized person in the grand jury room,” and cited legal precedents under which “Mr. Kelleher’s intrusion into the grand jury proceedings … voids the indictment, even without a showing of prejudice,” and thus the indictment should be dismissed.
Responding to the defense brief, Attorney General Masto’s office called Kelleher’s apparent conflict of interest an “irrelevant issue,” and told the court — citing a sworn affidavit by Kelleher — that the attorney general’s top criminal prosecutor had not known until December 2011 that his personal foreclosure documents had been processed by Trafford’s employer. Said Kelleher, under oath:
I personally did not learn that our loan had been transferred to Bank of America or that it was being handled by LSI Title until the week after Tracey Lawrence’s death. While I have been told that the Defendants submitted a Notice of Default prior to that time, I never personally saw such notice until approximately December 2011, when I was gathering together documents for my upcoming mortgage mediation.
The attorney general’s office also argued that to “allege that Kelleher had a vendetta against LSI as early as September 2011, when Kelleher was wholly unaware of LSI’s involvement until December is unsupportable by the facts of the case.”
What attorneys for Trafford and Sheppard have now produced, however, in their latest supplemental brief, are photographs showing the Notice of Default taped to the front door of Kelleher’s residence, along with a Sept. 7, 2011 affidavit by an employee of Vegas Legal Support Services, Inc.:
On 9/7/2011 at approximately 5:53 PM, I personally posted a copy of the Notice of Default on the property in the manner prescribed pursuant to NRS 107.087, in a conspicuous place on the property, upon information and belief, not later than 3 business days after the Notice of Default and Election to Sell was recorded…
I declare under penalty of perjury under the law of the State of Nevada that the foregoing is true and correct.
On the “Notice of Breach and Default,” “LSI Title Agency Inc.” is the name clearly listed as the “requestor” entity that, the previous day, Sept. 6, 2011, had paid the $216 recording fee to Clark County.
The next day, the Sept. 7, 2011 date of the notice’s posting, would have been just one day before the attorney general’s chief investigator descended upon the home of Lender Services underling Tracy Lawrence, says the recent defense brief:
The next morning, on September 8, 2011, Kelleher sent his investigators to the home of Tracy Lawrence on “short notice.” …As soon as he stepped in the door, investigator [Todd] Grosz said that he was “under the gun” and was “being pressed” by the AG’s office. …Grosz also threatened Ms. Lawrence with arrest if she did not assist in the AG’s attempt to make a case against Trafford, telling her: “We have a prosecutor who is pissed. He wanted us to hook you up today. … He wanted us to arrest you now.” …The AG’s investigators then proceeded to “interview” Ms. Lawrence for information to use against Mr. Trafford.
The brief doesn’t mince words describing Masto’s office, claiming her office “intentionally misled and submitted false testimony,” and that her office’s conduct “threatens to seriously damage public confidence in the integrity of the Nevada Attorney General’s Office:”
Given the AG’s efforts to conceal and downplay Kelleher’s personal interest and misconduct in this case, and given the facts now known to Mr. Trafford, there should be little doubt that the AG and Kelleher pursued a case in which the lead prosecutor had a conflict of interest, failed to disclose the conflict to the defendants or the Court, misled Mr. Trafford’s counsel about the reason for Kelleher’s removal from this case, and submitted a false or misleading affidavit to the Court. This misconduct threatens to seriously damage public confidence in the integrity of the Nevada Attorney General’s Office.
The brief also details how Masto and Kelleher had “every opportunity” to clarify this conflict of interest but failed to provide adequate information:
The AG and Kelleher have had every opportunity to give Mr. Trafford and the Court the complete facts and explanation concerning Kelleher’s conflict of interest. But they have not been forthcoming. They refused to even respond to Mr. Trafford’s good faith attempt to obtain information from the AG about circumstances AG Masto personally called a “conflict of interest surrounding [Kelleher’s] personal foreclosure crisis.” They omitted to tell the Court about the NOD posted on Kelleher’s house before he made his grand jury presentation. They omitted to tell the Court about the NOD sent to Kelleher by certified mail before he made his grand jury presentation. And they omitted any explanation for how it is that Kelleher supposedly and conveniently did not “personally” see his own NOD until just after the grand jury returned its indictment and Ms. Lawrence passed away — more than three months after the NOD was posted on Kelleher’s front door and mailed to him.
Kelleher defended himself, telling Nevada Journal the conflict-of-interest allegations are “false.” Kelleher also provided Nevada Journal with a draft of his affidavit submitted to the court, in which he says he was a victim of mortgage fraud in 2009, and that the attorney general’s office had declined to prosecute his own consumer complaint to avoid a conflict of interest:
After reviewing my consumer complaint, the Attorney General’s office declined to investigate and prosecute my consumer complaint because they did not want to create a conflict of interest, as I was the Chief of their mortgage fraud unit. I spoke with prosecutors at the US Attorney’s office as well, but at that time, they were inundated with ongoing cases and did not have the manpower available to take on a new investigation.
Kelleher’s affidavit also references a letter from Saxon Mortgage on behalf of GMAC dated Jan. 5, 2011, informing Kelleher his almost-$500,000 home was going into foreclosure. That was nine months prior to the September 2011 official notice of default.
He chose to pursue the case against Trafford and LSI, writes Kelleher, due to “tens of thousands” of fraud filings at the Clark County Recorder’s office and not due to a personal grievance against them:
As an officer of the Court, I attest and declare that my decision to investigate and prosecute the subject matter case was due solely and exclusively to the fact that the Attorney General’s office had uncovered tens of thousands of fraudulent filings with the Clark County Recorder’s office, a large majority of which involved LSI Title and falsified notarizations made at the direction of the Defendants, which potentially could have undermined the public’s reliance on the credibility and integrity of the County’s public recordings.
John Hueston, an attorney representing Trafford, told Nevada Journal he still thinks the evidence against Masto and Kelleher gives the judge a “menu of options” for dismissal.
“Aside from showing a notice of default taped to Kelleher’s forehead, I’m not sure how much more compelling the evidence could be that he labored under a direct conflict of interest,” said Hueston.
Hueston, whose extensive career includes being the lead prosecutor against Kenneth Lay and Jeffrey Skilling during the Enron trial, declined to make “broader comments” about Masto’s office, but said the examples of conflict of interest displayed by her office were some of the worst he’d seen.
“Overall, these actions are some of the most egregious I’ve seen in my career, which includes 13 years as a prosecutor,” Hueston said.
Masto’s office declined comment for this story, citing policy that she doesn’t comment on pending litigation.
Nancy Rapoport, the interim dean at the University of Nevada, Las Vegas’ Boyd School of Law and a legal ethics expert, provided an affidavit that Trafford’s counsel has given the court. She also believes that Kelleher had a conflict of interest:
It is my opinion that Mr. Kelleher’s personal foreclosure situation presented a conflict of interest. In such a situation, [sic] Mr. Kelleher’s presentation to the grand jury to seek an indictment, and his prosecution of the case, was inappropriate. No one could have faulted Mr. Kelleher for choosing to step aside and ask one of his colleagues to take this case, but Mr. Kelleher did not choose that route.
Rapoport further wrote that she was not implying Kelleher “deliberately set out to ignore his conflict of interest,” but ultimately concluded, “Nonetheless, that risk is clear and should have triggered a change in Attorney General personnel in terms of who worked on this case.”
If proven, Kelleher’s actions would seem to contradict several American Bar Association standards. Standard 3-1.3(a), for example, states: “A prosecutor should avoid a conflict of interest with respect to his or her official duties.” and Standard 3-1.3(f) states: “A prosecutor should not permit his or her professional judgment or obligations to be affected by his or her own political, financial, business, property, or personal interests.”
As Nevada Journal previously reported, both Kelleher and Masto’s actions appear to violate over a half-dozen Nevada Rules of Professional Conduct for attorneys, including Rule 3.4, “Fairness to Opposing Part and Counsel,” which prohibits an attorney from concealing “material having potential evidentiary value.”
As stated in Nevada Journal’s previous report, both Kelleher and Masto concealed Kelleher’s conflict of interest from grand jurors, a move noted by Hueston, who told Nevada Journal that Kelleher “cut off [grand jury] questioning when they were about to discover he had, in fact, given false, inflammatory stories.”
According to Hueston, if the judge doesn’t dismiss the case outright, the defense will request an evidentiary hearing to “get to the bottom of Kelleher’s conflict of interest.”
Update (Feb. 25, 2013 11 a.m.): The 8th Judicial District Court this morning dismissed all 306 felony counts of indictment brought by the Office of Nevada Attorney General Catherine Cortez-Masto against two Lender Services title officers, Gary Trafford and Gerry Sheppard. Their attorney, John Hueston, called the court’s comprehensive rejection of the State of Nevada’s case a “complete embarrassment” for the Attorney General’s office.
Kyle Gillis is a reporter for Nevada Journal, a publication of the Nevada Policy Research Institute. Steven Miller contributed to this report. For more in-depth reporting, visit https://nevadajournal.com/ and http://npri.org/.