In an unusual step, Kontogiannis' guilty plea was done in a secret, closed hearing. The plea agreement was unsealed earlier this month, and last week Burns ordered that transcripts of four hearings related to the plea also be made public.
Federal prosecutors objected in motions filed under seal last week. Yesterday, the 9th U.S. Circuit Court of Appeal ordered the documents to remain secret and scheduled a hearing for the week of Aug. 6.
Now the government is making an argument that these transcripts include classified information--an argument they apparently haven't made before.
At a hearing in federal court in San Diego yesterday, Burns said that the government invoked federal laws dealing with classified information in their papers filed last week.
He said that when the secret hearings took place four months ago, prosecutors knew that the information would become open eventually, and did not object then.
The judge appeared irked that the government was now objecting to the information becoming public and was raising the issue of classified information “for the first time ever.”
Assistant U.S. Attorney Jason Forge said government lawyers decided after the hearings that they wanted more information kept secret than they first believed was necessary.
Without going into details, Forge told Burns “the scope of the information the government viewed as non-disclosable turned out to be broader” than they originally thought.
Meanwhile, John Michael's lawyer suggests this is something more than an effort to keep classified information sealed.
Kontogiannis is expected to be a witness in the upcoming trial of his nephew, John Michael, and Poway defense contractor Brent Wilkes. Both are charged with money laundering, and Wilkes is charged with bribing Cunningham in return for lucrative defense contracts. Both have pleaded not guilty.
Ray Granger, the lawyer for Michael, criticized the switch of position by prosecutors.
“The government effectively sucker-punched Judge Burns,” he said. “I think there is more to the government's attempt to keep the record sealed than simply the protection of classified information.”
Remember, there is evidence that, before Kontogiannis' plea agreement was revealed a few weeks ago, he appears to have been cooperating with prosecutors, and that prosecution appears to have netted Michael an extra indictment on money laundering. But Kontogiannis' plea agreement leaves two things mentioned--but unexplained: the nature of the other money laundering Kontogiannis admitted to--but was not charged on, and his reason for bribing Cunningham in the first place.
The unsealed documents leave it very unclear why Kontogiannis was bribing Cunningham--the plea says he did it "because he wanted to maintain his relationship with Cunningham, a powerful public official who could assist defendant in various ways." That statement tells us nothing about what Kontogiannis got in return.
So from what has been unsealed, my best guess as to why it was sealed in the first place was to develop further charges against John Michael, Kontogiannis' nephew. Michael got an extra charge tacked on in a superseding indictment in May (though it does not appear to be directly relevant to these other fraudulent mortgages), so perhaps that's it.
In any case, I can see why Michael's lawyer would be suspicious and Burns irked--that sealed information may make it harder for Michael to defend himself, particularly since Kontogiannis appears to be the key witness at least for the additional money launder charges.
If, as many people suspect, Kontogiannis launders money for the CIA, that may explain the reason for the seal--imagine, for example, that the other money laundering in question is done for the government, yet implicates Michael in some material way.
That said, that makes the revised timing of Kontogiannis' sentencing all the more interesting. It was moved to after both the Wilkes/Michael trial and the Wilkes/Foggo trial. Which means he'll have to testify obediently to get a nice reduction in sentence. But the other defendants won't be privy to the substance of the deal Kontogiannis got.
Finally, let me remind of this detail:
One more note. Consider the timing on this. Kontogiannis signed the plea deal on February 9--several days before Lam notified Main DOJ on February 13 she was going to indict Wilkes and Foggo. But that first sealed document was filed after Lam left.
In other words, Lam may have needed Kontogiannis' cooperation to bring the first indictments against Wilkes, Michael, and Foggo. But she was gone by the time of the hearings being contested.