Judge says Fox Rothschild has conflict; allows other firm to stay on case

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SEATTLE — A federal judge on Friday told the New York law firm of Fox Rothschild that its lawyers cannot represent a Russian man charged with hacking businesses across the U.S.

U.S. District Judge Richard Jones said he understands this type of ruling is rare, but he said Fox has a conflict of interest because the firm also represented Zpizza, one of the alleged victims in the hacking scam that Roman Seleznev is charged with orchestrating. Jones said his decision was influenced by a letter he received from the president of Zpizza. In the letter, Sid Fanarof told the judge that he gave a Fox lawyer confidential information that could benefit Seleznev and said he believed the firm has a conflict.

While Fox is out, Jones said the firm of Garvey Schubert Barer will be allowed to stay on the case. Although that firm also represents another alleged victim, Grand Central Baking, Jones said the areas of practice in those two cases were different and did not create a conflict.

Garvey Schubert lawyer David Smith said after the hearing that he would meet with Seleznev to decide the next step. "It's a decision that wasn't expected, so we will need to regroup to figure out how to properly staff this case," he said.

Seleznev was indicted in 2011 on 29 counts ranging from bank fraud to hacking into business computers. Prosecutors said from 2009 to 2011, he stole credit card information that he later sold. He also faces racketeering charges in Nevada related to allegedly selling that data.

Seleznev attended the hearing in a beige short-sleeved button shirt and pants and listened to the proceedings through an interpreter. He wore his hair closely cropped and large scars were visible on his head. One sickle-shaped scar started just over his left ear and curved all the way to the top of his head. He had another large scar on the back of his head.

Robert Ray, a Fox Rothschild lawyer who attended the hearing, said he was not sure if the firm could legally appeal, and the firm had to find out if Seleznev wants to pursue an appeal.

Ray said Fox first became involved in the case because one of its lawyers, Ely Goldin, knows Seleznev's father, Valery Seleznev, who is a member of the Russian Parliament. Ray said the firm got involved in July when Seleznev was arrested in the Maldives and taken to Guam and then to Seattle. His lawyers have called his arrest an "illegal rendition."

"We were not aware of Z's involvement in the case at the time," Ray said. Zpizza was not listed in the indictment, he said. It only became an issue when one of the prosecutors learned that a Fox lawyer represented Zpizza on another matter and let the law firm know that Zpizza was an alleged victim, could be a witness and if Seleznev is convicted, could be a subject of restitution, Ray said.

"When we learned that, we put a Chinese Wall around the case" and screened off the lawyer involved, Ray said.

But Jones did not believe that was enough protection. In his ruling from the bench, he said he had to balance judicial integrity with the interest of justice.

"The court understands this is rare and only used in severe circumstances, but the court finds that severe circumstances are present," he said. "The court concludes that Fox should not be allowed to represent the defendant."

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