Shelley Marcus, a Connecticut lawyer who was recently nominated for a state judgeship by Governor Malloy, involvement in a gifting table scheme has raised questions about her worthiness to serve as a judge in Connecticut. Below is our take on the issue.
I. Shelley Marcus
Shelley Marcus is a practicing attorney at the
Marcus Law Firm located in North Branford, Connecticut. Ms. Marcus has been practicing law since 1977, approximately 36 years. She is a graduate of Albertus Magnus College in 1974, and the University of Connecticut School of Law in 1977, both with honors. Her areas of practice include: "Bank and Tax Foreclosures, Municipal Law, Governmental Law, Civil Litigation, Workouts, family Law and Domestic Relations, Commercial and Residential Real Estate Transactions, including reverse mortgages." She is a member of the board of trustees of the Connecticut Chapter of National Multiple Sclerosis, and Chairman of the Women Against MS Luncheon. She has previously served as a member of the Branford Democratic Town Committee, Deputy Commissioner of the Department of Mental Retardation, Executive Assistant to the Connecticut Commissioner of Economic Development, and Chief Counsel, Democratic Leadership, of the CT House of Representatives.
Ms. Marcus practices with her father, Edward Marcus, former Democratic Party chairman. Ms. Marcus has a clean disciplinary record and has a very good reputation throughout the state.
II. The Gifting Table Trial
Donna Bello and Jill Platt are currently on trial before Judge Alvin Thompson in federal court related to their role in an allegedly illegal pyramid scheme known as the gifting table. The women have been charged with conspiracy to defraud the IRS, filing false tax returns, wire fraud, and conspiracy to commit wire fraud. The women's main defense is ignorance of the table's illegality and participation for philanthropic purposes.
The gifting table has been described as follows by the NH Register:
The scheme has run rampant on the Shoreline and even spread to other areas; tables with their own hierarchies and members have been operating around the state simultaneously. Participation is by invitation only, and women have often been invited by trusted friends and told they would be entering a “sisterhood.”
New participants entered on the bottom leg of the table, called the “appetizer” level, while those on the second peg were the “soup and salad level,” and those higher were “entrees.” The woman at the pyramid’s top was the “dessert” level.
To join, members each contributed a $5,000 cash “gift” to the woman at the top. Once that woman received money from eight members — giving her $40,000 total or a profit of $35,000 — lower members would move up and eventually reach the profitable dessert level. But eventually as there are fewer recruits and therefore less money coming in, members can’t move up levels and lose their initial investment.
According to the indictment, Bello, Hopkins and Platt hosted parties, meetings and conference calls for new recruits and existing members, misrepresented the gifting tables and omitted facts. It goes on to say they told recruits the $5,000 gifts were legally considered “tax-free” and not to report the money on their tax returns. The document adds that they recommended women not deposit the money into bank accounts unless it was less than an amount banks report to the government.
The indictment includes excerpts of emails the women sent to others. In one, Bello allegedly told a participant she “believe[d]” the woman would make $80,000 within a year, and in another Bello allegedly wrote, “My goal was to come up with 80k GREEN BEANS this year. It is going to happen, it could also be 120k, who knows. This is awesome!” She also allegedly typed in an email to Hopkins, “keep bringing in new blood.”
Platt allegedly wrote in an email, “It’s sort of a joke that I refer to our freezer as the ATM.” Hopkins also allegedly emailed Platt and Bello, saying, “We need to keep silent and under the radar.”
III. Shelley Marcus' Role in Gifting Table
Ms. Marcus was called as a key witness in the federal trial. In 2009, Platt and Bello met with Ms. Marcus to obtain legal advice after the state Attorney General's office launched a civil investigation of the gifting tables. Ms. Marcus ended up representing 21 women who participated in the gifting tables and made more than $50,000 in legal fees.
Ms. Marcus' testimony did not come off as someone worthy of a judgeship. Her testimony was defensive, self-serving, and defiant. Below are some inadequacies with Ms. Marcus' representation that were exposed on cross-examination.
A. Failure to Advise Clients as to Criminal Consequences
Ms. Marcus testified on several occasions that she never advised her clients whether the club was legal or illegal because that was not the purpose of the representation. She continuously defended herself by stating the the representation was limited to the civil investigation.
Defense Attorney Pattis pointed out how Ms. Marcus never informed her clients that the scope of the representation was limited to the civil investigation and pointed out that the only mention of this was a sentence in the retainer agreement stating that she would need more money if there was a criminal investigation or criminal charges.
Ms. Marcus' continued to reiterate the limited scope of her representation. She claimed that Bello and Platt had informed her that they had criminal attorneys and accountants that advised them that the gifting table was legal. Yet Ms. Marcus, despite the fact that she testified that she thought it looked like a pyramid scheme, never asked who the attorneys or accountants were that advised Bello and Platt of the legality of the gifting tables. She never consulted with criminal attorneys or accountants, and never advised her clients to do so. It would be fair to say that she turned a blind eye to the possible criminal consequences of the gifting tables. Indeed, she testified that she didn't even advise her clients as to whether or not they should continue with the gifting tables.
This serves as a potential violation of CT Rules of Professional Conduct Rule 1.2(c) and (d), regarding scope of representation.
(c) A lawyer may limit the scope of the representation if the limitation is reasonable under the circumstances and the client gives informed consent.(d) A lawyer shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent, but a lawyer may discuss the legal consequences of any proposed course of conduct with a client and may counsel or assist a client to make a good faith effort to determine the validity, scope, meaning or application of the law.
Clearly, Marcus failed to obtained informed consent limited the scope of the representation. Informed consent is defined as follows:
denotes the agreement by a person to a proposed course of conduct after the lawyer has communicated adequate information and explanation about the material risks of and reasonably available alternatives to the proposed course of conduct.
B. Failure to Research the Law
Attorney Pattis also pointed out the inadequacies of Ms. Marcus' legal representation, including failing to look to U.S. Supreme Court precedent discussing pyramid schemes. Marcus was asked: "You didn't research any federal law though, right?" Her response: "No, I didn't research any of the federal statutes." Basically all that Ms. Marcus did was look up the Connecticut pyramid scheme statute, a civil statute, and read one case cited in the statute. She didn't look to federal law or the law of other states, despite the fact that she thought the statute was ambiguous and despite the fact that she had questions as to whether her clients' activities fell within the purview of the statute. She failed to consult with any criminal attorneys or accountants for advice, and failed to refer her clients to criminal attorneys or accountants.
This was a potential violation of CT Rules of Professional Conduct Rule 1.1, regarding competence:
A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.
C. Failure to Advise Clients of Potential Conflicts of Interest
Attorney Pattis finally pointed out Ms. Marcus's failure to advise her clients of potential conflicts of interest. Ms. Marcus failed to tell the 21 women that there could be a conflict because they were representing women who might testify against them and that they had the right to get the opinion of another lawyer. Ms. Marcus testified that she didn't believe there was a conflict, but she should have advised her clients as to the potential for a conflict, as is required by the CT Rules of Professional Conduct.
This serves as a potential violation of CT Rules of Professional Conduct Rule 1.7, regarding conflicts of interest with current clients:
(a) Except as provided in subsection (b), a lawyer shall not represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict of interest exists if:
(1) the representation of one client will be directly adverse to another client; or
(2) there is a significant risk that the representation of one or more clients will be materially limited by the lawyer's responsibilities to another client, a former client or a third person or by a personal interest of the lawyer.
(b) Notwithstanding the existence of a concurrent conflict of interest under subsection (a), a lawyer may represent a client if:
(1) the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client;
(2) the representation is not prohibited by law;
(3) the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or the same proceeding before any tribunal; and
(4) each affected client gives informed consent, confirmed in writing.
Again, Marcus failed to obtained informed consent from her clients.
D. Ms. Marcus' Overall Testimony
Last, but not least, Ms. Marcus' testimony calls into question her fitness to serve as a judge. She refused to answer several of Attorney Pattis' questions, forcing him to remind her that Governor Malloy would be reviewing the transcript to determine her candidacy for a judge position. Yet she continued to refuse many of Pattis' questions which called for yes or no answers.
Governor Malloy will have a tough decision to make. Yet there are definitely questions as to whether Ms. Marcus is qualified to serve as a judge in Connecticut, and indeed, she likely has engaged in conduct that is not consistent with the
CT Code of Judicial Conduct.
