John Doe v. Kirstjen M. Nielsen , 883 F.3d 716 ( 2018 )


Menu:
  •                                 In the
    United States Court of Appeals
    For the Seventh Circuit
    ____________________
    No. 17-2040
    JOHN DOE,
    Plaintiff-Appellant,
    v.
    KIRSTJEN M. NIELSEN, Secretary of the
    U.S. Department of Homeland Security;
    JAMES W. MCCAMENT, Deputy Director,
    U.S. Citizenship and Immigration
    Services; and NICHOLAS COLUCCI, Chief,
    Immigrant Investor Program Office,
    U.S. Citizenship and Immigration Services,
    Defendants-Appellees.
    ____________________
    Appeal from the United States District Court
    for the Northern District of Illinois, Eastern Division.
    No. 15-cv-01387 — John Z. Lee, Judge.
    ____________________
    FEBRUARY 26, 2018
    ____________________
    Before RIPPLE, MANION, and SYKES, Circuit Judges.
    SYKES, Circuit Judge. Plaintiff John Doe seeks lawful per-
    manent residence in the United States under the
    2                                                    No. 17-2040
    Employment-Based Immigration: Fifth Preference category
    (“EB-5”). This visa program requires applicants to demon-
    strate that they have invested or are currently investing
    capital in a “new commercial enterprise” within the United
    States. 
    8 U.S.C. § 1153
    (b)(5)(A). To that end, Doe invested
    $500,000 in Elgin Assisted Living EB-5 Fund, LLC. That
    entity then loaned funds to Elgin Memory Care, LLC, so it
    could build and operate a memory care facility in Elgin,
    Illinois.
    Despite this investment, the U.S. Citizenship and Immi-
    gration Services (“USCIS”) denied Doe lawful permanent
    resident status. The USCIS expressed particular concern that
    the Elgin memory care center had not been built since it was
    first proposed in 2011. Doe objected to the decision and filed
    a lawsuit against the USCIS alleging that the denial of his
    application violated the Administrative Procedure Act.
    
    5 U.S.C. §§ 701
     et seq. The district court entered summary
    judgment in the government’s favor and Doe appealed.
    Doe is represented in this appeal by the Kameli Law
    Group, LLC. The law firm has three attorneys. John R. Floss
    is one of two associates and also Doe’s counsel of record.
    Taher Kameli is the firm’s principal. TAHER KAMELI LAW
    GROUP, Our Attorneys, http://www.kamelilawgroup.com/
    our-attorneys/ (last visited Feb. 14, 2018). Illinois records list
    Kameli as the sole manager of the LLC. OFFICE OF THE ILL.
    SEC’Y OF STATE, http://www.ilsos.gov/corporatellc/.
    While briefing in this appeal was underway, the Securi-
    ties and Exchange Commission brought a civil action against
    Kameli for violating the Securities and Exchange Acts.
    Complaint, SEC v. Kameli, No. 17-cv-04686 (N.D. Ill. June 22,
    2017). The agency filed an amended complaint late last
    No. 17-2040                                                     3
    month. First Amended Complaint, Kameli, No. 17-cv-04686
    (N.D. Ill. Jan. 29, 2018). The SEC accuses Kameli of defraud-
    ing at least 226 immigrant investors who participated in the
    EB-5 immigrant investor program. 
    Id.
     ¶¶ 1–2. More specifi-
    cally, the SEC alleges that Kameli solicited over $88 million
    to invest in a number of new commercial enterprises, only to
    squander and misappropriate some of those funds. 
    Id.
     ¶¶ 9–
    11.
    There is significant overlap between the SEC’s claims
    against Kameli and the facts in this case. Kameli is alleged to
    have misappropriated funds that were invested in the Elgin
    memory care center. 
    Id.
     ¶¶ 159–167, 169. This supposedly
    left the project in debt and unfinished. 
    Id.
     ¶¶ 195–96, 200–01.
    The SEC alleges that Kameli’s actions have “jeopardized
    investors’ chances at obtaining permanent U.S. residency
    through the EB-5 visa program.” 
    Id. ¶ 13
    . Doe is one of those
    investors. This raises a serious question of conflict of interest.
    Accordingly, we ordered the parties to submit supple-
    mental briefs regarding the possible conflicts of interest the
    Kameli Law Group may have in representing Doe. The briefs
    are now in. We conclude that disqualification is appropriate.
    It is our duty to “maintain public confidence in the legal
    profession and assist[] in protecting the integrity of the
    judicial proceeding.” Freeman v. Chi. Musical Instrument Co.,
    
    689 F.2d 715
    , 721 (7th Cir. 1982). Disqualifying conflicted
    counsel is “a drastic measure” toward this end, but we must
    take this step when necessary to “protect[] the attorney-
    client relationship.” 
    Id.
     The facts of this case force our hand.
    The Illinois Rules of Professional Conduct prohibit repre-
    sentation if “there is a significant risk that the representation
    4                                                        No. 17-2040
    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.” ILL. R.
    PROF’L CONDUCT R. 1.7(a)(2). Client consent can sometimes
    resolve such a conflict, but it is not a panacea. See Owen v.
    Wangerin, 
    985 F.2d 312
    , 317 (7th Cir. 1993). The lawyer must
    always “reasonably believe[] that [he] will be able to provide
    competent and diligent representation to each affected
    client.” ILL. R. PROF’L CONDUCT R. 1.7(b)(1). Put slightly
    differently, representation is prohibited notwithstanding
    informed client consent if the court “cannot reasonably
    conclude that the lawyer will be able to provide competent
    and diligent representation.” 
    Id.
     cmt. [15].
    This case presents at least two concurrent conflicts of in-
    terest, neither of which can be waived by informed client
    consent. 1 No lawyer could reasonably continue the represen-
    tation under these circumstances.
    First, a conflict of interest arises when an attorney has an
    incentive to reject lines of inquiry or argument that might
    help his client’s case. See, e.g., United States v. Algee, 
    309 F.3d 1011
    , 1014 (7th Cir. 2002) (finding conflict when “ethical
    constraints would prohibit [counsel] from cross-examining
    [witnesses] in any meaningful way”); People v. Taylor,
    
    930 N.E.2d 959
    , 971–72 (Ill. 2010) (“[T]he defendant must
    point to some specific defect in his counsel’s strategy tactics,
    or decision making attributable to the conflict.”) (internal
    1 In response to our order for supplemental briefing, the Kameli Law
    Group submitted an affidavit from Doe purporting to waive any conflict
    of interest. As we explain, the two conflicts at issue here are not wai-
    vable.
    No. 17-2040                                                    5
    quotation marks omitted). Kameli has precisely this motiva-
    tion. He and Doe might share an interest in proving that the
    Elgin investment was not a sham, but that is where their
    alliance begins and ends. Kameli would not advise Doe to
    litigate his case any other way, such as by alleging fraud and
    seeking reconsideration of the USCIS’s decision. It therefore
    strains credulity to think that Kameli would be diligent in
    Doe’s case. Indeed, a diligent lawyer must take “whatever
    lawful and ethical measures are required to vindicate a
    client’s cause or endeavor.” ILL. R. PROF’L CONDUCT R. 1.3
    cmt. 1 (emphasis added). Kameli’s self-interest inhibits him
    from carrying out this duty.
    Second, a lawyer owes his client a duty of “undivided
    fidelity.” Pelham v. Griesheimer, 
    440 N.E.2d 96
    , 100 (Ill. 1982).
    Having a duty to someone else obviously “interfere[s] with
    the undivided loyalty [that] the attorney owes his client”
    and ultimately “detract[s] from achieving the most advanta-
    geous position for his client.” 
    Id.
     Kameli’s divided obliga-
    tions to his various investors and clients put him in precisely
    this position. The SEC alleges that Kameli “has remained in
    total control” of the relevant EB-5 projects he created. First
    Amended Complaint, ¶ 12, Kameli, No. 17-cv-04686. Many of
    these projects evidently “lack money to complete construc-
    tion,” id. ¶ 196, meaning Kameli must decide which projects
    to shore up with the limited funds he has. His duty of loyal-
    ty to Doe would require him to complete the Elgin project
    because that would best position him to obtain lawful
    permanent residence. His obligations to his other investors,
    on the other hand, require him to invest in their respective
    enterprises. This catch-22 is the epitome of divided loyalty
    and thus makes Kameli’s continued representation untena-
    ble.
    6                                                 No. 17-2040
    Having identified the relevant conflicts of interest, we
    have the final issue of whether Kameli’s conflicts can be
    imputed to his associate and Doe’s counsel of record, John
    Floss. The Illinois rules provide that no lawyer associated in
    a firm “shall knowingly represent a client when any one of
    them practicing alone would be prohibited from doing so by
    Rules 1.7 or 1.9.” ILL. R. PROF’L CONDUCT R. 1.10(a). This
    language on its own would bar Floss from representing Doe.
    An exception arises, however, when “the prohibition is
    based on a personal interest of the prohibited lawyer and
    does not present a significant risk of materially limiting the
    representation of the client by the remaining lawyers in the
    firm.” Id. Kameli’s conflict is plainly personal to him—he
    alone is in the SEC’s crosshairs—so we must determine
    whether Kameli’s civil case presents a significant risk of
    materially limiting Floss’s continued representation of Doe.
    We conclude that it does. As discussed, the Kameli Law
    Group is a small law firm with just three attorneys. Kameli is
    the only principal, so Floss reports directly to him. This
    presents an unacceptably high risk of materially limiting
    Doe’s representation. There is virtually no chance Floss
    would do anything to upset Kameli’s case. In fact, Floss’s
    briefing on the conflict-of-interest issue suggests that he
    would champion Kameli’s cause. The brief goes out of its
    way to describe the allegations against Kameli as “sala-
    cious.” It also lauds the district judge in the SEC’s civil
    action for “denying the SEC’s motion for a preliminary
    injunction” against Kameli. None of this is relevant to Doe’s
    case, and unfortunately, it suggests that Floss’s priority
    would be to protect Kameli.
    No. 17-2040                                               7
    It is therefore ORDERED that the Kameli Law Group is
    disqualified from representing Doe in this case. The appeal
    will be held in abeyance for 60 days to permit Doe to secure
    substitute counsel.