The Crime of Sheila McGough.

• Author: Landsman, Stephan
• Position: Review

THE CRIME OF SHEILA MCGOUGH. By Janet Malcolm. New York: Alfred A. Knopf. 1999. Pp. 161. $22.

1. ONCE UPON A TIME -- THE ALLEGEDLY SAD TALE OF SHEILA MCGOUGH

   As Janet Malcolm(1) tells it, Sheila McGough was a middle-aged single woman living at home with her parents and working as an editor and administrator in the publications department of the Carnegie Institute when she decided to switch careers and go to law school. She applied and was admitted to the then recently accredited law school at George Mason University. After graduation, she began a solo practice in northern Virginia that involved a significant amount of state-appointed criminal defense work.

   In 1986, approximately four years after her graduation from law school, McGough received a call requesting assistance from an incarcerated arrestee named Bob Bailes. From the very start, McGough's assistance to Bailes was unorthodox. Immediately upon meeting him at the Fairfax County, Virginia, lockup, she decided that his apparent poor health warranted her taking the unusual step of personally signing as guarantor for his bail. McGough said of this decision:

   What I did was something lawyers never, never do. I didn't go out of my way to tell anybody I had done that. It was just so unprofessional.... I would not have committed crimes for my clients. But anything that was just risking my time and my money -- if I had it -- I would not hesitate to do. [p. 34] McGough thereafter began preparing to represent Bailes at his upcoming federal court trial(2) on charges that he had provided false information to secure a bank loan and used a false social security number in that transaction.

   While Bailes was awaiting trial, he conducted a number of business transactions out of McGough's office. These involved negotiations to sell certain allegedly still valid nineteenth-century insurance company charters that were claimed to excuse the holder from the constraints of state regulation or review.(3) On June 18, 1986, two men named Frank Manfredi and Francis Boccagna agreed, through their attorney, Alan Morris, to buy two of the charters for $900,000 each with a down payment of $75,000 for both. They were not really the principals in this deal but were "brokers"(4) for an investment banker named Kirkpatrick MacDonald. The down payment was wired into Sheila McGough's attorney trust account. McGough immediately drew the funds out of that account, transferring $70,000 to Bailes and keeping $5,000 for herself. Although Malcolm does not explore the matter in detail, other transactions involving the sale of charters also took place at around the same time.

   In the late summer of 1986, Bailes, represented by McGough, went on trial in the bank fraud case. He was convicted and sentenced to five years in federal prison.(5) The story, however, was far from over. McGough redoubled her efforts on Bailes's behalf. She sought his release from prison by a variety of means. These included what one federal district judge found to be a frivolous attack on the sentence imposed upon Bailes(6) as well as the instigation of a bankruptcy proceeding. In the bankruptcy action, one set of corporations owned by Bailes sought bankruptcy protection while another set of his shell companies requested that the court release him from prison so he could facilitate the payment of their alleged claims. Although it would appear these claims were nothing but shams, McGough worked tirelessly to effectuate the scheme.

   Bankruptcy Court Judge George Benson eventually consented to Bailes's release. This, however, could only be accomplished if a federal district court judge would agree to enter an order setting the defendant at liberty. The first judge McGough approached, Judge Charles Richey, agreed to the release on condition that the United States Attorney's office assent. The United States Attorney was then preparing a second, much more serious case against Bailes(7) and apparently would have opposed freeing the prisoner. Rather than accept this decision or enter negotiations with the United States Attorney's office, McGough approached a second federal district court judge, Stanley Harris, concerning the matter. McGough did not inform Judge Harris of Judge Richey's prior ruling, and Harris issued an order releasing Bailes into McGough's custody. Judge Harris rescinded this order as soon as he learned of the prior, undisclosed Richey ruling. Judge Harris was so disturbed by McGough's behavior that he sought to have her disciplined by the District of Columbia Bar for her conduct.

   In 1988, Bailes was tried in a North Carolina federal court for his efforts to sell insurance company charters.(8) The government's case proved so strong and Bailes's defense so weak that in midstream he shifted to an insanity plea. That claim was rejected by the jury, and, upon conviction, Bailes was sentenced to twenty-five years in prison. In the meantime, a number of those either injured or affronted by McGough's behavior during her efforts on Bailes's behalf began civil proceedings against her. The first to proceed was the investment banker, MacDonald, who had lost $75,000 in the escrow deposit incident in June 1986. He brought suit against McGough in 1987 to recover his lost funds. Included as a defendant in this action was the insurer that had provided McGough with Errors and Omissions insurance. Shortly before trial, in the fall of 1988, MacDonald settled with the insurance company, receiving $75,000. One remarkable event in the civil action was the proffer of apparently forged documents by the defense immediately before the case was to go to trial. Who had forged the documents never became clear, but the most likely candidate was Bailes. Later disclosures, however, suggested that McGough may have been involved, at least insofar as seeking to get the forgeries notarized long after their alleged execution date.

   In October of 1988, MacDonald took the next step in his campaign against McGough by seeking her disbarment in Virginia. Other bar-related complaints were then being processed, including that made by Judge Harris. The United States Attorney's office in Alexandria, Virginia, responded to all this by initiating a grand jury inquiry into McGough's conduct. The grand jury proceedings resulted in McGough's being indicted on fifteen felony charges.

   McGough's criminal trial took place in 1990, and addressed charges related to the withdrawal of funds from her escrow account, her behavior in the bankruptcy proceedings, and a number of other matters.(9) The federal prosecutor, Mark Hulkower, subpoenaed more than fifty witnesses for the case (although not all were called to testify). Among those who gave evidence against McGough were four judges, including federal district court judges Richey and Harris, who had been entangled in the bankruptcy scheme.

   At the heart of the case against McGough was the withdrawal of the $75,000 MacDonald deposit from her trust account. The "brokers" Manfredi and Boccagna, as well as their attorney, Morris, all testified that this withdrawal was in direct violation of their understanding with McGough that the funds would be held in escrow until the two $900,000 deals were consummated. The credibility of these three witnesses was open to question since each was serving or had served time in prison, and two (Manfredi and Morris) were disbarred attorneys. Moreover, as Malcolm notes, but as McGough's defense counsel failed to observe, the key telephone conversation concerning the escrow arrangement lasted but one minute -- a suspiciously short time to conduct all the business the government witnesses claimed was handled. MacDonald appeared for the government and reiterated many of his charges against McGough. These were amplified upon by Michael Wyatt, MacDonald's lawyer in the 1987 civil action involving McGough and her Errors and Omissions insurer. Wyatt described the events surrounding the proffer of the forged documents on the eve of the civil trial.

   Prosecutor Hulkower's overarching theory was that Sheila McGough had joined Bailes in a series of illegal scams designed to benefit both the attorney and her erstwhile client. In the government's case, however, the motive for McGough's choosing to forsake the role of honest attorney and join forces with her con man client was never made entirely clear. There was some evidence (albeit thin) of a romantic attraction as well as the more prosaic suggestion that the motive might have been greed.

   The defense strategy was to attack the credibility of the prosecution's key witnesses and to argue that McGough had done no more than act as a zealous lawyer on behalf of her client, Bailes. This may not have been a particularly effective defense, but counsel were impeded from any other choice by McGough's refusal to take the stand in her own defense or sanction any sustained attack on Bailes. Her justification for these choices was an assertion that she owed Bailes a continuing duty of loyalty and confidentiality.(10) The defense called a series of lawyers to testify in an effort to demonstrate that McGough had acted appropriately in her dealings with Bailes. Among those who testified was McGough's attorney in the 1987 civil proceedings, Kenneth Labowitz. He believed that his client had acted honestly. However, after McGough's criminal conviction, he emphatically asserted that McGough had shown extremely poor judgment in her relations with Bailes, a con man who Labowitz thought had taken advantage of her lack of legal experience, training, and supervision. Three lawyers who had dealings with Bailes also appeared but were not asked whether Bailes had ever tried to swindle them or use their offices and trust accounts for his schemes. (Several would later tell Malcolm that Bailes had done so.)

   The jury did not buy the defense's arguments and on November 21, 1990, one day before Thanksgiving, convicted McGough on fourteen of the fifteen felony charges. Of the...