Attorneys for alleged Ponzi schemer Joe Meli are asking a judge to toss testimony from a key witness in the U.S. Department of Justice’s criminal case against Meli, arguing the evidence was collected illegally.
Meli was arrested in January for allegedly bilking $95 million from 130 investors to purchase tickets to events for shows like Broadway hit “Hamilton” and “Harry Potter And The Cursed Child,” as well as concerts by Adele and Bruce Springsteen.
Attorneys for Meli say the government used a confidential informant to capture an illegally recorded admission of guilt and are accusing the U.S. Attorney’s office of violating the rules of professional conduct. In a nine-page memo to the court, Meli’s attorney Daniel Fetterman from New York firm Kasowitz, Benson and Torres say Connecticut hedge fund manager and co-defendant Mark Varacchi surreptitiously recorded Meli “outside the presence of the legal counsel that Mr. Meli had retained in connection with the Government’s investigation.”
In February, Varacchi pled guilty in Manhattan federal court on conspiracy, securities fraud and wire fraud charges, just six days after allegedly requesting a one-on-one chat with Meli that he secretly recorded outside of Meli’s attorney’s office.
“While Mr. Meli was at his attorneys’ offices seeking counsel,” Fetterman writes, “(Varacchi) called Mr. Meli to coordinate a face-to-face conversation for later that same day.”
According to the memo, Meli repeatedly told Varacchi “I would love if you came to the attorneys’ office. We could talk here quietly without any problem.” Varacchi allegedly declined the invitation and suggested Meli “just come down and meet me,” according to the memo.
“Meli dismissed (Varacchi’s) contrived rebuttal,” Fetterman says, telling him “No. Absolutely not. (Varacchi), clearly confused on how to proceed in communicating with a target who was actively meeting with his counsel, stalled and told Mr. Meli that he would call back when he was near KBT’s offices in midtown.”
“Nearly 13 minutes passed before (Varacchi) and Mr. Meli spoke again on the phone — a critical span of time in which the Government, acting directly through a team of FBI agents, was likely coaching (Varacchi) on how best to coax Mr. Meli away from his attorneys,” Fetterman writes, adding that Varacchi repeatedly tried to communicate with Meli via WhatsApp.
“Your guy’s office doesn’t make me feel good about this,” Varacchi allegedly messaged Meli, before calling him and stating “I don’t know what I’m walking into and I’m now very concerned. This makes no sense to me.”
Eventually Meli relented and left a meeting with his attorneys to speak with Varacchi outside of the lawyer’s office in his car.
“Mr. Meli promptly and unequivocally told (Varacchi) that the FBI was investigating him for fraud and that he had ‘hired a guy named Marc Kasowitz’ to represent him during the fraud investigation because he was ‘going to fight it,’” according to Fetterman. “The Government, now clearly on notice that Mr. Meli was represented by counsel in the fraud investigation, continued, via (Varacchi), to ask Mr. Meli about the investigation until Mr. Meli made a series of rambling, contradictory statements that the Government has pointed to as evidence of his guilt and flight risk.”
The recording was cited during Meli’s January arraignment, with U.S. Attorney Joshua Naftalis asking U.S. District Judge Kimba Wood to deny Meli bail after he was caught on tape telling Varacchi “I went to my house, got my passport and valuables and I’m draining my bank accounts.”
“You don’t get your valuables and drain your bank accounts just because you find out about the FBI. You do that so you can run,” Varacchi told Judge Wood, adding that the FBI were so concerned about the conversation, they arrested Meli weeks earlier than planned.
“I don’t know whether he was able to make travel arrangements but he was arrested shortly after making these comments,” Naftalis said. Lawyers for Meli say the recorded conversation was an exaggeration, that he had already surrendered his passport to his attorneys and the money he withdrew was being used for legal fees. Judge Wood granted Meli’s request to be released on bail, but in August used the same tapes to deny a request by Meli to travel to Israel to watch his son compete in a soccer tournament.
Varacchi is believed to have been recording Meli for a number of weeks — according to prosecutors, Varacchi recorded calls in December in which Meli said he was running a “shell game,” taking money from new investors to pay off old ones. Meli said he’d just gotten another $7 million from one, enough to pacify the big investor so he wouldn’t raise alarms.
“I was able to avoid it by shell-gaming it,” Meli said, according to prosecutors. “But I’m running out of that game too.”
Attorneys for Meli want the tape from Varacchi’s conversation with Meli suppressed, arguing the “Government’s contact with Mr. Meli outside the presence of his counsel was an unethical, egregious abuse of the discretion granted to prosecutors in the investigatory stages of a criminal case.”
“This Court will be hard-pressed to find a more prototypical example of misconduct,” Fetterman wrote. “The Government manipulated Mr. Meli, a known represented person, into ‘giving his case away’ within a stone’s throw of his attorneys’ offices,” calling the recordings an “intentional and flagrant interference with the attorney-client relationship, a relationship that is the bedrock of the proper functioning of the legal system.”
The motion to suppress the recordings will be considered at a hearing later this year. Meli is currently free on a $500,000 bond.