Metropolitan News-Enterprise


Friday, December 6, 2002


Page 3


Court Finds Attorney Conflict But No Constitutional Violation in Case of Lawyer Representing Ex-Client’s Co-Defendant


By a MetNews Staff Writer


A criminal defense lawyer who formerly represented his client’s co-defendant had an actual conflict of interest, but not to the point that his new client’s Sixth Amendment rights were violated, the Ninth U.S. Circuit Court of Appeals ruled yesterday.

The court upheld the racketeering and securities fraud convictions of former Teletek, Inc. President Keith Shwayder, saying Shwayder failed to show that attorney John Schlie’s conflict adversely affected  the quality of his representation.

“Schlie carried out precisely the type of representation Schwayder maintained that his trial attorney could not and did not provide because of his conflict,” Judge Marshon S. Berzon wrote for the three-judge panel.

Shwayder took Teletek, a NASDAQ-listed telephone sales and installation company, through a merger with United Payphone, a company in deep debt that was traded on bulletin boards. The controlling interest in UPAY was held by Michael G. Swan.

On completion of the merger, Swan took over as chief executive of Teletek, where he paid bribes to brokers to induce them to buy his new company’s stock. Shwayder remained active in the company, then resigned. But after the stock price collapsed and the company went bankrupt, Shwayder was indicted in November 1996 for manipulating stock prices, bribery, and other crimes. Swan and another man also were indicted.

He sought help from Schlie, who had represented Swan several years earlier in a grand jury investigation of bribery. Schlie initially refused because of his previous representation for Swan, but finally agreed after Shwayder signed a waiver that said neither he nor Schlie were aware of any actual conflict of interest.

But there was a conflict, and it grew when Swan agreed to plead guilty and testify for the prosecution.

But Berzon noted that Schlie attempted to point the finger at his ex-client and to attack his credibility.

“Moreover, even if he was conscientious about preserving confidences, Schlie was not in fact ethically restricted from questioning Swan about most of the subjects on which they had prior confidential communications,” Berzon said. “Virtually all of that information was available, independent of any lawyer/client confidences, through the indictment, the trial testimony, and the evidence provided to the defense on discovery.”

Schlie was the only one who knew that Swan had lied to him when he represented him, and he didn’t bring that out at trial. But no other lawyer would have known about the lie, so no other lawyer would have been able to bring it out at trial either, Berzon said.

The case is United States v. Shwayder, 01-10156.


Copyright 2002, Metropolitan News Company