Judge gives Reggie Fowler 45 days to find new defense counsel

A New York district judge agreed to allow Reginald Fowler’s defense team to withdraw from their client’s case due to nonpayment. He then gave Fowler 45 days to seek a new attorney. 

(Update on Feb. 9: The judge has given Fowler three more weeks. Fowler now has until Feb. 25 to retain new counsel, according to the latest court filing.)

Judge Andrew L. Carter

Fowler is the former NFL minority owner linked to hundreds of millions of dollars in missing Tether and Bitfinex funds. Tether is the company that has so far issued $20 billion worth of stablecoins, and Bitfinex is a crypto exchange. Both companies are operated by the same individuals.

In a telephone status conference today, Judge Andrew L. Carter agreed to allow Fowler’s defense counsel—Hogan Lovells and Rosenblum Schwartz & Fry—to step down. They claim their client owes them more than $600,000.

However, while the government agreed to letting the lawyers withdraw, it was opposed to an adjournment of the April 28 trial, arguing that the situation was of Fowler’s own making. After all, his lawyers had been warning him since February they were planning to quit. The trial has already been postponed twice.

“We believe the almost four months until trial is sufficient time for a new counsel to prepare for trial,” U.S. Assistant Attorney Jessica Greenwood told the judge.

Judge Carter disagreed. That assumes Fowler’s new attorneys have already been retained and are on the case today, he said, stressing that it may take time for Fowler to find a new lawyer—especially given that his current lawyers are seeking to withdraw because he hasn’t paid them.

“That usually doesn’t make the defendant a very attractive client to a subsequent law firm,” Carter said.

The judge then explained to Fowler—who was on the call, joined by his defense team—that if he was unable to afford a new attorney, the court would provide him one free of charge. However, he would need to fill out a financial affidavit for the court to make that determination.

Although Fowler would not admit to whether he could afford an attorney, he did say he wished to try and hire one who would be more willing to work with him given his “current condition.” 

“The government has seized all my assets,” he said, starting to sound a bit angry. “The government has asked me to put the properties that I have that are free and clear up for bail. The government has handcuffed me. They have shut me down. They have locked down my family,” he said—though it’s not clear what he meant in saying his family was “locked down.”

“I can’t even get a bank account. My business has been shut down since COVID, so we don’t have any income. We do have assets. We can’t get to the assets because the government has tied them all up, so what I want to do, respectfully, is to try to find a firm that will work with me, understanding that we have assets that are tied up by the government, i.e., the properties that have me set for bail, or whatever you call it.”

Fowler, now living in Chandler, Arizona, is free on $5 million bail. Five properties were put up for lien in order to secure his bond.

He called it “ludicrous” that the government forced him to put up “nearly $2 million worth of nearly free-and-clear properties” for bond. (A quick look on Zillow puts the properties’ value at around $1.4 million.)

Fowler said if he could not find an attorney to work with him, he would ask the court for assistance.

The judge stressed that Fowler has a right to be represented by an attorney, and gave him until Feb. 2, 2021, to find one on his own. A new trial date will be set after that time, the judge said.

Hogan Lovells also represents Fowler in a class-action complaint against Tether and Bitfinex, in which Fowler is named. They are seeking to withdraw from that case as well.

Related stories:
Reggie Fowler owes lawyers $600,000
Reggie Fowler, man linked to missing Bitfinex funds, hoodwinks his own defense team
Confirmed: Reggie Fowler can’t pay his lawyers

If you like my work, please consider supporting my writing by subscribing to my Patreon account for as little as $5 a month. 

Reggie Fowler owes lawyers $600,000

Reggie Fowler, the former NFL minority owner linked to missing Tether and Bitfinex funds, owes his defense team more than $600,000, according to a new court filing on Tuesday. 

Fowler’s lawyers want to drop out of the case due to nonpayment, but they need to get permission from the court first. 

Last we left off, U.S. District Judge Andrew Carter ordered attorneys at law firm Hogan Lovells—also representing defense lawyer Scott Rosenblum at Rosenblum Schwartz & Fry—to file three versions of a sealed letter dated Nov. 18.

The public version—redacting what should not be revealed to the government or the public—discloses more details on the lawyers’ frustrations with a client who perpetually strings them along. 

Hogan Lovells attorneys James McGovern and Michael Hefter initially asked for a $25,000 retainer in late 2018 when they first met with their client. Fowler only ever paid the retainer, and two years later, he now owes them $600,000.

His defense team believed all the stories he told them that he was swimming in money, so they weren’t too concerned—at first.

“From the very inception of this matter, we have been led to believe that Mr. Fowler is a high net worth individual with substantial assets, which would allow him to pay his legal bills with little hardship,” the lawyers said in their letter to the judge.

Hogan Lovells started working with Fowler on October 18, 2018. They had their first meeting with him on Nov. 8, 2018, around the time Fowler was initially contacted by the FBI.

“When we agreed to represent Mr. Fowler, it was our understanding that he had been targeted by cryptocurrency businessmen seeking to take advantage of Mr. Fowler’s personal balance sheet as a means of transacting cryptocurrency transactions without drawing the attention of bank compliance officers or regulators,” they said.

Fowler was later arrested in Chandler, Arizona, on April 30, 2019. (DoJ press release and indictment.)

After his release in May on $5 million bail, Fowler hired Scott Rosenblum to join the defense team. Rosenblum asked for a $275,000 retainer and an additional $85,000 per week retainer, if the case went to trial. Rosenblum received a partial retainer of $100,000, which Hogan Lovells notes that Fowler paid “while he had several unpaid, overdue invoices for legal services issued by Hogan Lovells.” 

Additionally, Fowler paid another lawyer (unnamed) in Portugal in full for her services. He also paid international law firm Reed Smith LLP for services rendered in 2018.

“The fact that other attorneys had received payments from Mr. Fowler for their services led us reasonably to believe that Mr. Fowler’s representations to us that he would pay our bills was truthful,” the lawyers said.

In the second half of 2019, the lawyers were diligent about contacting Fowler for money. Each time they reached out, he told them payment was imminent and that “transactions or business deals that would fund the payment of our fees were in process”—but he never paid him. 

In February, following a plea bargain that went awry and a superseding indictment, the defense team realized the case would likely go to trial, requiring a substantial amount of work, and still no check from their client.

Fowler has ample funds, they said, including “$10 million in real estate that is unencumbered and could have been liquidated or monetized at any point during the past two years.” His refusal to pay, the lawyers added, has “led to a breakdown in the attorney-client relationship.”

The government has till Dec. 8 to respond and replies are due Dec. 11.

If you like my work, please consider supporting my writing by subscribing to my Patreon account for as little as $5 a month.

Reggie Fowler hoodwinks his own defense team

Reginald Fowler, the Arizona businessman tied to hundreds of millions of dollars of Tether and Bitfinex’s missing money, appears to have conned his own defense team. 

As I explained in a previous post, Fowler’s lawyers are seeking to withdraw from his case due to nonpayment. (The US government is accusing Fowler of operating a shadow banking operation for cryptocurrency exchanges.) But the details are privileged and confidential, so the judge overseeing the case agreed to allow them to file an ex parte sealed letter.

Judge Andrew Carter has now received the letter—from Hogan Lovells on behalf of itself and Rosenblum Schwartz—reviewed it, and filed a response. As I had suspected, Fowler appears to have hoodwinked his own defense team. Here is the judge’s eight-page opinion and order.

“Money isn’t everything,” the SDNY district judge writes. “But in this case, it is the only thing.” [Emphasis mine.]

According to Carter, Fowler’s jilted defense team recounted several conversations with their client in which Fowler promises to pay, but does not, effectively stringing them along.

“Mr. Fowler assured his attorneys he could pay, referring to planned business transactions, real property and bank accounts,” the judge said.

The defense counsel apparently understood that many of Fowler’s assets were frozen, but the hope was that Fowler could unfreeze certain assets by demonstrating that the assets had no connection to case.

However, during the time Fowler’s lawyers had been pressing him for payment and Fowler telling them he did not have the available funds, the lawyers learned that Fowler had plenty to pay his other lawyers—a large international law firm (name withheld) and an unnamed lawyer.

I’m not sure what exactly this means (a tip-off that Fowler had funds hidden away somewhere?) but Carter said: “The anonymous lawyer gave defense lawyer advice regarding Fowler’s ability to pay legal fees from funds that might not be related to criminal activity.”

So why did Fowler’s lawyers wait this long before asking the court if they could dump their client when the troubles with getting paid started back in February?

According to Carter’s retelling, they thought the case would have been resolved with a guilty plea in January. However, the plea bargain blew up when Fowler learned it would require him to forfeit $371 million.

Recall that after that, federal prosecutors responded with a superseding indictment that added a fifth charge, which would have required a lot of additional (unpaid) work from the defense team.

Fowler’s defense team “decided they would continue representing him even though they had been owed a great deal of money for several months,” Carter said. “But largess shrinks when confronted by the prospect of additional, unpaid hours dedicated to trial preparation.”

What next?

There is still the issue of whether Fowler’s defense team should be allowed to withdraw from the case. But federal prosecutors needs to know more about their reasons for seeking withdrawal, so they can respond.

Some information in Hogan Lovells’ sealed ex parte needs to be made public and some needs to remain sealed, Carter said. Certain information about Fowler’s assets should remain sealed. Any information about plea negotiations needs to remain sealed as well.

However, details about the amount and timing of Fowler’s payments to the defense counsel is “highly relevant and should be made public.”

The name of the large international law firm should also be made public, Carter said, stating that “the size and nature of the firm is relevant to the fact that Mr. Fowler paid something to that firm—but did not fully pay Hogan and Rosenblum—and whether Hogan’s and Rosenblum’s acceptance of relatively low retainers was reasonable.”

Low retainers? This may be a sticky point, and something federal prosecutors make a big issue with in their next response.

The judge ordered Fowler’s defense team to file three versions of their letter—a public version redacting what should not be revealed to the government or the public; a sealed version, redacting what must not be disclosed to the government; and a third ex parte sealed version with no redactions.

All filings need to be completed by Dec. 1; the government has until Dec. 8 to respond. Replies are due by Dec. 11.

Nov. 24: Updated to clarify a few details, like what Fowler is being accused of and to emphasize that the retainer issue will likely come up again in the government’s response.

If you like my writing, please consider supporting my work by subscribing to my Patreon account for as little as $5 a month.

Reginald Fowler’s lawyers want to quit. Did he neglect to pay them?

Reginald Fowler, the Arizona, businessman allegedly linked to hundreds of million of dollars in missing Crypto Capital funds, is about to lose his defense team. Did he neglect to pay them?

And knowing who their client was, did his lawyers ask for a large enough retainer in the event that something unexpected like, say, a superseding indictment might extend their work?

Crypto Capital is the payment processor that Tether and Bitfinex—and several other cryptocurrency firms—used to shuttle money around the globe as a workaround to the traditional banking system. Fowler allegedly helped out by opening up a network of bank accounts for them.

We can only guess the real reason Fowler’s lawyers are keen to drop their client at the moment, but court docs may offer clues. Here is the backstory:

Earlier this week, Fowler’s attorneys—James McGovern and Michael Hefter of Hogan Lovells US LLP—asked a New York judge for permission to withdraw from the case. (Here is their motion to withdraw filed on Nov. 9.)

(Fowler is also represented by Scott Rosenblum of Rosenblum Schwartz & Fry PC, though Rosenblum’s name is not on the motion.)

The lawyers claim they initially told Fowler their reasons for wanting to quit on February 26—coincidentally, just five days after the government added a fifth charge against Fowler in its superseding indictment and a month after Fowler forfeited on a reasonable sounding plea bargain.

In the months follower, the legal team informed Fowler both “orally and in writing on multiple occasions” of their grounds for wanting to withdraw. Now, after much back and forth, they have had enough: they are asking the court for permission to drop him.

McGovern and Hefter don’t offer a specific reason for wanting to quit in their motion, citing attorney-client privileged. But they argue the case has had “limited pertinent discovery,” Fowler has had ample time to find new counsel, and essentially, the case should go on just fine without them.

Federal prosecutors are not convinced. In a letter addressed to Andrew Carter, the Southern District of New York judge overseeing the case, they argue the defense counsel has’t presented enough facts for the court to decide on the motion. (Here is their response filed on Nov. 12.)

Specifically, they dispute the “limited pertinent discovery” claim, saying the government has so far produced over 370,000 pages of discovery, much of which they have already discussed in detail with the defense counsel.

Further, they argue that if this is about a “fee dispute,” the court needs to weigh other factors, such as “nonprivileged facts” about the fee arrangement, including whether a “more careful or prudent approach to the retainer agreement might have avoided the current problem”—i.e., McGovern and Hefter should have insisted on more money up front.

Finally, they claim that if Fowler’s lawyers’ leaving further delays the trial, the court should not allow it. After two postponements, the trial is currently scheduled for April 12, 2021. (It was originally slated to begin on April 28, 2020, and then got moved to January 11, 2021, before the current trial date.)

“Now, approximately five months before the current trial date, defense counsel seeks to withdraw from this matter based on facts they claim were discussed with the defendant as early as February 26, 2020—nearly nine months ago and before both prior adjournments in this case,” federal prosecutors said. “The current motions should be denied if allowing counsel to withdraw at this late stage would further delay trial.”

Read Part II: “Confirmed: Reggie Fowler can’t pay his lawyers

And Part III: Reggie Fowler, man linked to missing Bitfinex funds, hoodwinks his own defense team

(This story was updated on Nov. 13 to note that Fowler is also represented by Scott Rosenblum.)

Reginald Fowler, man tied to missing Bitfinex funds, out on $5M bail

Screen Shot 2019-05-02 at 1.33.58 PMReginald Fowler, the ex-NFL owner arrested in connection with operating a “shadow bank” that processed hundreds of millions of dollars of unregulated transactions on behalf of crypto exchanges, is out on $5 million bail.  

The U.S. Government previously argued that Fowler should be detained without bail. The government thought he was too much of a flight risk due to his overseas connections and access to bank accounts around the world. But for the time being, at least, Fowler is a free man, albeit, with restrictions.

Order and letter

The order setting conditions of release was filed with the District Court for the District of Arizona on May 9. A letter of motion, submitted by U.S. Attorney Geoffrey Berman and addressed to Judge Andrew Carter of the District Court of Southern New York, was entered on May 8.

Copies of the letter went to defense attorneys James McGovern and Michael Hefter, partners at Hogan Lovells in New York. Fowler’s arraignment is set for 4:30 p.m. on May 15 at the Southern District Court of New York. 

Fowler was arrested in Arizona on April 30. The bond is being posted in New York, because the District of Arizona does not include secured bonds in bail packages. 

According to conditions set forth in the bond, Fowler cannot travel outside of the Southern District of New York, the Eastern District of New York, and Arizona. He also had to surrender his travel documents and his passport. 

The properties and the wealthy friends

Fowler’s $5 million personal recognizance bond is secured by two unnamed “financially responsible” co-signers and the following properties: 

  • 3965 Bayamon Street, Las Vegas, Nevada
  • 8337 Brittany Harbor Drive, Las Vegas, Nevada
  • 4670 Slippery Rock Drive, Fort Worth, Texas
  • 4417 Chaparral Creek Drive, Fort Worth, Texas
  • 8821 Friendswood Drive, Fort Worth, Texas

A quick look on Zillow indicates the properties are cheap investment houses, worth perhaps $1.5 million in total, if that. This would mean that the additional $3.5 million is secured by Fowler’s wealthy friends, whoever they are.

The LLC on the five properties is Eligibility LLC, 4939 Ray Road, #4-349 Chandler, Arizona 85226. The mailing address points to a UPS store, so it is basically a P.O. Box.

Global Trading Solutions LLC, a company linked to Fowler’s shadow banking operation, had the same mailing address for a time, but the address was later changed.

Indictment

On April 11, Fowler and Ravid Yosef, an Israeli woman who lived in Los Angeles and is still at large, were indicted on charges of bank fraud. Fowler was also charged with operating an unlicensed money services business. 

Fowler’s company—or one of his companies—was Global Trading Solutions LLC, which provided services for Global Trade Solutions AG, the Switzerland-based parent company of Crypto Capital Corp.

Cryptocurrency exchanges used Crypto Capital as an intermediary to wire cash to their customers. The firm is allegedly withholding $851 million on behalf of Bitfinex, a crypto exchange that is currently being sued by the New York Attorney General.  

# # #

Thanks to Nic Weaver for locating the court documents. He spends his beer money on PACER, so you don’t have to.