Judge throws out major sweepstakes fraud case, orders new trial for three defendants

In a major setback for federal prosecutors, a U.S. district judge said Friday he is going to order a new trial in the case of three South Florida men who were found guilty four years ago of swindling millions of dollars from thousands of elderly people in an old-fashioned sweepstakes scheme.

U.S. District Judge Darrin Gayles said he found misconduct by prosecutors in their handling of a cooperating witness who secretly gathered evidence on the three defendants after the witness had already agreed to plead guilty and help the government.

Gayles said during a hearing Friday that the prosecutors “knowingly invaded the defense camp, which is improper” and “they did it on several occasions, thus receiving confidential information” to use against the three defendants at trial.

“But the most egregious thing is, [the prosecutors] lied to the court about it,” the judge said.

Gayles told both sides that he would issue a written order overturning their convictions and scheduling a new trial in Miami federal court.

The U.S. Attorney’s Office declined to comment on the judge’s ruling, but the office is considering whether to appeal it.

The three defendants, who were convicted of a mail fraud conspiracy by tricking the sweepstakes victims into thinking they had to pay a $50 fee to redeem a big prize, were supposed to go to prison in early 2018.

But they caught a break.

Gayles put their incarceration on hold after finding that two assistant U.S. attorneys had done something wrong before the trial and not owned up to it. The prosecutors had flipped the fourth defendant, who effectively acted as a spy by infiltrating the inner sanctum of the defendants while they discussed legal strategies — without disclosing he was no longer on their side.

Before trial, the judge said he was reluctant to dismiss the indictment or disqualify the original prosecution team, largely because he was unaware of the depth of the prosecution’s alleged betrayal. After a hearing in 2016, Gayles let the $25 million sweepstakes fraud case go to trial — although without testimony by the government’s tainted cooperating witness.

Legal teams for the three defendants, armed with stronger evidence of potential misconduct by prosecutors that was disclosed after the trial, prevailed on Friday when the judge made what is considered a rare announcement during a routine status conference.

Since their trial, Matthew Pisoni, 48, of Fort Lauderdale, Marcus Pradel, 44, of Boca Raton, and Victor Ramirez, 41, of Aventura, have been free on bond while facing their prison sentences.

“Prosecutors shouldn’t be able to cheat,” said Miami attorneys Mona Markus and David Oscar Markus, who represented Pisoni only on his appeal, focusing on the alleged prosecutorial misconduct. “This was the right and just decision. But doing the right and just thing isn’t always easy. That’s why it’s so important to have smart, independent, and thoughtful judges like Judge Gayles.”

Miami lawyers Marc Seitles and Ashley Litwin represented Pradel on his appeal, and Miami attorney Richard Klugh represented Ramirez on his appeal.

As Gayles probed into the allegations of prosecutorial misconduct in the sweepstakes case, the judge ordered that dozens of previously sealed documents in the case be made public. That boosted the defense teams’ prospects of overturning the convictions.

Perhaps the most striking evidence disclosed by prosecutors after trial was that they had provided inaccurate information to the judge about the cooperating defendant, John Leon, 53, of Wilton Manors, just before the three other defendants were to be sentenced in January 2018.

Contrary to previous assertions that Leon gave them no evidence, federal prosecutors H. Ron Davidson and Elijah Levitt admitted in documents that they had obtained handwritten notes from Leon during the period when he was secretly invading the defense camp. Leon had given the notes to an IRS agent during a debriefing in February 2016 when he began his cooperation.

To the defendants, Leon had double-crossed them after he had joined them in a Joint Defense Agreement, an agreement where all four defendants extended the attorney-client relationship among them to share privileged information. But the other three defendants didn’t learn that Leon had broken ranks with them until his plea deal was publicly disclosed in April 2016. Until then, he had been a mole for the prosecution, the three defendants claim.

With the post-trial disclosures, the two prosecutors, Davidson and Levitt, were removed from the case in 2018. Both prosecutors faced internal Justice Department investigations by the Office of Professional Responsibility, and the defendants’ sentencings were put on hold by Gayles, the judge. (Since his removal from the case, Levitt left the U.S. Attorney’s Office and was appointed as a Miami-Dade County judge in 2018 by then-Gov. Rick Scott.)

In a federal court filing, Davidson argued there was nothing sinister about the prosecution’s relationship with Leon. “His cooperation was kept covert because Leon was cooperating with the government against a non-charged defendant,” Davidson wrote. “Moreover, the government specifically instructed Leon not to share privileged information.”

But the appellate lawyers countered that was a lie, arguing that the prosecution team violated the constitutional rights of the three defendants, who have a right to privacy in preparing their case and a right to a fair trial.

The three defendants convicted at trial in 2017 remained free on bond. Pisoni and Ramirez were sentenced to seven years in prison, and Pradel to 6 1/2 years. The fourth defendant, Leon, who cut a plea deal, served 3 1/2 years.

This story was originally published July 16, 2021 at 2:18 PM.