State v. Cornick

2014 Ohio 2049

• Court: Ohio Court of Appeals
• Decided: May 15, 2014
• Docket: 99609
• Status: Published

Opinion

[Cite as State v. Cornick, 2014-Ohio-2049.]

Court of Appeals of Ohio EIGHTH APPELLATE DISTRICT COUNTY OF CUYAHOGA

JOURNAL ENTRY AND OPINION No. 99609

STATE OF OHIO

PLAINTIFF-APPELLANT

vs.

PHILLIP R. CORNICK, ET AL. DEFENDANTS-APPELLEES

JUDGMENT: REVERSED

Criminal Appeal from the Cuyahoga County Court of Common Pleas Case No. CR-12-563092-B

BEFORE: Stewart, J., Keough, P.J., and E.T. Gallagher, J.

RELEASED AND JOURNALIZED: May 15, 2014 ATTORNEYS FOR APPELLANT

Timothy J. McGinty Cuyahoga County Prosecutor

BY: Christopher D. Schroeder Daniel M. Kasaris Matthew E. Meyer Assistant County Prosecutors The Justice Center 1200 Ontario Street, 8th Floor Cleveland, OH 44113

ATTORNEYS FOR APPELLEES PHILLIP CORNICK, RICHARD UPCHURCH, P & E TECHNOLOGIES, INC. AND VS2 WORLDWIDE COMMUNICATIONS, L.L.C.

Donald J. Malarcik The Gothic Building 54 E. Mill Street, Suite 400 Akron, OH 44308

Mark E. Schamel Cathy A. Hinger Joshua D. Greenberg Womble, Carlyle, Sandridge & Rice, L.L.P. 1200 Nineteenth Street, N.W., Suite 500 Washington, DC 20036

ATTORNEY FOR APPELLEE GEORGE GEORGEKOPOULOS

David G. Phillips 17921 Lakeshore Boulevard Cleveland, OH 44119

ATTORNEY FOR APPELLEE PETE GEORGEKOPOULOS

Edward A. Heffernan Skylight Office Tower 1660 West 2d Street, Suite 410 Cleveland, OH 44113

ATTORNEY FOR APPELLEES CHRISTOS KARASARIDES, JR., CKARE CORP., AND ELITE ENTERTAINMENT, INC. DBA VS2 MARKETING GROUP

Brian Pierce The Gothic Building 54 East Mill Street, Suite 400 Akron, OH 44308

ATTORNEY FOR APPELLEE MICHAEL KOTY

Gregory S. Robey Robey & Robey 14402 Granger Road Maple Hts., OH 44137

ATTORNEYS FOR APPELLEE NEIL SARCYK

Clare C. Christie Roger M. Synenberg Synenberg & Associates, L.L.C. 55 Public Square, Suite 1200 Cleveland, OH 44113 MELODY J. STEWART, J.:

{¶1} In the midst of a pretrial hearing in a prosecution against multiple defendants

accused of operating internet cafes and using sweepstakes software in violation of

gambling and conspiracy laws, James D. May, the assistant prosecuting attorney on the

case, appeared before an Ohio senate committee in support of a bill that would outlaw

internet cafes. May’s testimony mentioned that internet cafes used sweepstakes software

written by VS2 Software Systems, Inc., one of the defendants in the criminal prosecution.

When the hearing resumed, the court learned that May’s testimony had been arranged

and facilitated by lobbyists representing casino interests supporting legislation to shut

down internet cafes. The court also learned that May brought the lead investigative

agent in the prosecution to testify before the senate committee. That agent was not only

a witness in the hearing, but had been on the witness stand when the pretrial hearing was

interrupted to allow May to testify before the senate committee. The court granted a

motion to disqualify May over the state’s objection, finding that May had appeared to

“publicly suggest[ ] the Defendants were guilty as charged.” In the court’s view, May’s

actions created “at least the appearance of impropriety and warrant disqualification,” lest

the public lose confidence in the fairness and integrity of the proceedings.

{¶2} The state argues that the court erred by applying an improper standard when

deciding whether to grant the motion to disqualify. It maintains that the “appearance of

impropriety” standard used by the court is one that applies solely to judges, not to

lawyers. The state also argues that before the judiciary can interfere with the prosecutorial function by disqualifying a prosecuting attorney, there must be a showing of

actual prejudice for disqualification. It maintains that even had the court applied the

correct standard, it acted precipitously by disqualifying May in order to avoid even the

appearance of an impropriety, without bothering to determine whether any impropriety

actually existed.

I

{¶3} We should state at the outset that May’s testimony before the senate

committee was not a good idea, although in fairness to May, the idea was not his. A

lobbyist for the casino industry contacted the Cuyahoga County prosecuting attorney to

inquire whether he would testify before the senate committee in support of legislation to

outlaw internet cafes. The prosecuting attorney expressed his interest in supporting the

legislation, but said that his schedule did not permit him to testify. May was told to go

instead.

{¶4} May should have pointed out to his superiors that he was in the middle of a

hearing conducted pursuant to Franks v. Delaware, 438 U.S. 154, 98 S.Ct. 2674, 57

L.Ed.2d 667 (1978) (“Franks hearing”) to determine if material misrepresentations made

in an affidavit submitted in support of a search warrant were made knowingly or in

reckless disregard for the truth, thus rendering the search unreasonable. The witness

May called to support the reasonableness of the affidavit was the same agent he took to

Columbus. With May’s testimony arranged and facilitated by lobbyists for casino

interests who wished to ban gambling competition (one lobbyist arranged the testimony; a second lobbyist met May and the agent at the statehouse and provided logistical help), it

is difficult to see how May could not have considered that his testimony would provoke

an outraged response from the criminal defendants. With an ongoing case involving the

same issue about which he was testifying, May had no upside in going to Columbus. He

simply invited the motion to disqualify.

II

{¶5} The court utilized the wrong standard in concluding that May’s senate

testimony gave the appearance of an impropriety.

{¶6} Rule 1.2 of the Ohio Code of Judicial Conduct states: “A judge shall act at

all times in a manner that promotes public confidence in the independence, integrity, and

impartiality of the judiciary, and shall avoid impropriety and the appearance of

impropriety.” That same standard used to apply to lawyers, too, under Canon 9 of the

Code of Professional Responsibility. EC 9-6; Columbus Bar Assn. v. Plymale, 91 Ohio

St.3d 367, 371, 745 N.E.2d 413 (2001).

{¶7} The Code of Professional Responsibility, however, has been superseded by

the Ohio Rules of Professional Responsibility. The most recent version of the rules for

the professional conduct of lawyers, effective January 1, 2012, contains no such limitation

on a lawyer’s conduct. In fact, the word “impropriety” does not appear in the rules of

professional conduct (it appears once in the comments to Rule 1.11 relating to special

conflicts of interest for former and current government officers and employees). The court’s application of the code of judicial conduct as the touchstone for May’s conduct

was error, and the order of disqualification can be reversed on this basis alone.

III

{¶8} Even had the court used the correct standard for disqualifying an attorney, the

facts would not support an order of disqualification.

{¶9} A lawyer’s conduct in pretrial proceedings is governed by Rule 3.6(a) of the

Rules of Professional Conduct:

A lawyer who is participating or has participated in the investigation or litigation of a matter shall not make an extrajudicial statement that the lawyer knows or reasonably should know will be disseminated by means of public communication and will have a substantial likelihood of materially prejudicing an adjudicative proceeding in the matter.

{¶10} May made a public statement when he testified before the senate committee;

the questions before us concern the content of his statement and whether that statement

had a substantial likelihood of materially prejudicing the trial of VS2 and its principals,

defendants Phillip Cornick and Richard Upchurch.

A

{¶11} When ruling on the motion to disqualify May, the court noted that it did not

have a transcript of his testimony before the senate committee. It summarized May’s

testimony as highlighting the prosecution of the criminal case against VS2, Cornick, and

Upchurch, and that May’s testimony “publicly suggested the Defendants were guilty as

charged.” {¶12} We granted the state’s motion to supplement the record on appeal with a

transcript of May’s testimony before the senate committee. VS2 argues that we cannot

consider that transcript because the court did not have the transcript when ruling on the

motion to disqualify.

{¶13} A court of appeals “cannot add matter to the record that was not part of the

trial court’s proceedings and then decide the appeal based on the new matter.” McAuley

v. Smith, 82 Ohio St.3d 393, 396, 696 N.E.2d 572 (1998), citing State ex rel. Brantley v.

Ghee, 80 Ohio St.3d 287, 288, 685 N.E.2d 1243 (1997). The flipside of this law is that

the court ruled on the motion to disqualify without knowing exactly what May said to the

committee. To be sure, VS2 cross-examined the agent who accompanied May and who

listened to May’s testimony. But there can be no doubt that a transcript of May’s

testimony would have been preferable to the recollection of a person who admittedly was

not listening closely to May’s testimony (the agent said he heard “bits and pieces”).

{¶14} It is unclear why the court did not order May’s testimony transcribed,

particularly when its order of disqualification came nearly two months after May’s senate

appearance. The court’s decision to disqualify would have been better informed if it was

able to know precisely what May testified to as opposed to taking it on faith of a witness

to that testimony who said that he “heard some of it.” On this basis, we could find that

the court acted arbitrarily and thus abused its discretion.

B

1 {¶15} The agent agreed that May spoke “publicly” about the case, but nothing in

the transcript of the agent’s testimony (the court did not question May) leads to the

conclusion that May “suggested” that the defendants were guilty.

{¶16} The agent said that he recalled only two instances in May’s senate testimony

in which he mentioned VS2. The first was that May “made a reference to a dollar

amount that had been associated with this case, 47 or 48 million dollars.” The second

was when May referenced testimony by an economist retained by VS2 — the agent

thought that May “made a good point” by noting that the economist spoke only about

VS2’s “expenses but not profits * * *.”

{¶17} There was no question that VS2 was the subject of some of May’s

testimony, but if we limit our review of the court’s order solely to the agent’s testimony as

argued by VS2, we find nothing in the agent’s testimony that would permit us to conclude

that May suggested that VS2 was guilty. The takeaway from the agent’s testimony was

that May countered VS2’s expert by focusing on VS2’s profits. Profits are not proof of

illegality any more than the lack of profit would be proof of legitimacy. The court

reached its conclusion that May publically commented on the VS2’s guilt by inferring

beyond what the actual record before it showed.

{¶18} Even if there had been some proof that May publically suggested that the

defendants were guilty, that suggestion would not establish actual prejudice. {¶19} It is an unremarkable proposition that a prosecuting attorney would

publically declare that he believes that a defendant under indictment for a criminal

offense is guilty. Rule 3.8(a) of the Rules of Professional Conduct states that the

prosecutor in a criminal case shall not “pursue or prosecute a charge that the prosecutor

knows is not supported by probable cause.” In this context, the term “probable cause”

means more than just what is needed to obtain an indictment — it means that the

prosecutor is “satisfied [he] will be able to establish the suspect’s guilt beyond a

reasonable doubt.” United States v. Lovasco, 431 U.S. 783, 791, 97 S.Ct. 2044, 52

L.Ed.2d 752 (1977).

{¶20} All criminal prosecutions thus carry the implied understanding that the state

believes a defendant is guilty. May publicly stated the prosecutor’s belief in the strength

of the prosecution.

{¶21} To the extent that May “suggested” that the defendants were guilty, that

sentiment was one shared by the Cuyahoga County prosecuting attorney when

announcing the indictments issued in this case. The prosecuting attorney issued a press

release titled “Illegal Internet Café’s Will No Longer Exist In Cuyahoga County” and

stated:

The individuals and companies named in today’s indictment are operating, or working in close cooperation with the owners of an intricate internet gambling system known as “VS2” that is controlled by a computer server in the New Jersey headquarters of VS2 Worldwide Communications, LLC.

The Ohio Investigative Unit of the Ohio Department of Public Safety, working with the U.S. Secret Service, have identified the principal operators and account holders of the VS2 gaming system as Phillip Cornick, Edward Kaba, and Richard Upchurch. Over the last four years, these individuals have perpetuated the expansion of their VS2 gaming system into Ohio with the assistance of Ohio-based distributors and marketers of the system: George Georgekopoulos, Pete Georgekopoulos, Christos Karasarides, and Christopher Maggiore. These individuals have convinced many small business owners in Cuyahoga County that VS2 internet café gaming system operates as “sweepstakes,” which are not illegal and unregulated in Ohio.

***

Since February 2008, VS2 has profited from illegal gambling to the tune of over $48 million. Their profit of over $48 million represents only 25% of the proceeds from the illegal Internet gambling cafés in our County.

{¶22} The prosecuting attorney clearly branded the internet cafes as “illegal.”

That statement is not different from saying that the defendants are guilty, yet it does not

appear that VS2 complained about the press release. May’s testimony before the senate

committee simply affirmed his belief that the state had sufficient evidence to prove that

VS2 and the individual defendants were guilty of violating the gambling laws.

{¶23} It is important to note that May’s statements were not made at trial, when it

would have been improper for him to express his opinion on the defendants’ guilt. See

State v. Smith, 14 Ohio St.3d 13, 14, 470 N.E.2d 883 (1984). And since no jury had been

selected, VS2 cannot argue that May’s statements deprived it of its right to an impartial

jury. In any event, the record shows that since the order of disqualification, VS2,

Cornick, and Upchurch have all pleaded guilty. By pleading guilty, these defendants

have waived their right to trial, including any claimed error that the state’s actions tainted

the jury pool. See State v. Fitzpatrick, 102 Ohio St.3d 321, 2004-Ohio-3167, 810 N.E.2d

927, at ¶ 77. Those defendants who did not plead guilty (Christos Karasides,CKare Corp., and CKare L.L.C.) have not appeared in this appeal, so they are barred from

arguing that May’s statements caused them actual prejudice.

IV

{¶24} We opened this opinion by noting that May should not have testified before

the senate committee when he was in the midst of a pretrial hearing, nor should he have

gone to testify in the company of a government agent who was the primary witness in that

hearing. The court’s concern that May’s actions created an appearance of impropriety

were misplaced because the actual standard for disqualification is one of actual prejudice,

not avoiding the appearance of impropriety. There was no evidence of actual prejudice,

in part, because the court did not consider May’s actual testimony. The evidence the

court did have of what transpired at the senate hearing did not show that May suggested

the defendants were guilty. Even if May did publically suggest the defendants were

guilty, that statement would not cause actual prejudice because all criminal prosecutions

carry the implied understanding that the state believes that a defendant is guilty. In any

event, all of the defendants who are a party to this appeal have since pleaded guilty in this

case, so as a matter of law they have waived the right to complain of May’s conduct and

there is no prejudice.

{¶25} This cause is reversed to the trial court for further proceedings consistent

with this opinion.

It is ordered that appellant recover of appellees its costs herein taxed.

The court finds there were reasonable grounds for this appeal. It is ordered that a special mandate issue out of this court directing the Cuyahoga

County Court of Common Pleas to carry this judgment into execution. A certified

copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of

Appellate Procedure.

MELODY J. STEWART, JUDGE

KATHLEEN ANN KEOUGH, P.J., and EILEEN T. GALLAGHER, J., CONCUR