Thursday, October 29, 2009

Stevens Embezzlement Case To Test Spousal Privilege For Gay Couples

Phyllis Stevens is facing criminal and civil charges in a federal district court in Des Moines, Iowa for allegedly embezzling $5.9 million from her former employer, Aviva. Her spouse, Marla Stevens, is a defendant in the civil action brought against the couple by Aviva to recover the embezzled funds. Marla and Phyllis were married in a civil union in Toronto Canada in 2005. Marla's attorneys are asserting that she cannot be questioned in a deposition about communications she had with Phyllis because of the spousal privilege. Aviva's lawyers say they only want to ask Marla questions concerning the whereabouts of the couple's assets. Iowa courts legalized gay marriages in April; however, the proceedings in question are being brought under federal law. The federal Defense of Marriage Act does not recognize same-sex marriages. The Des Moines Register's Tom Witosky has more:

Marla Stevens is asserting that she cannot be required to give a deposition in a lawsuit filed by her partner's former employer, Aviva USA, partially because Iowa law says "neither husband nor wife" can be questioned in a legal proceeding about any communication that took place between them.

Same-sex marriages have been legal in Iowa since April when the Iowa Supreme Court ruled unanimously that a state law defining marriage as only between a man and a woman was unconstitutional.

However, the federal Defense of Marriage Act defines marriage as between a man and a woman and arguably prohibits Marla or Phyllis Stevens from claiming a spousal privilege, some legal experts said.

They also said few cases exist outlining whether all legal rights afforded to partners in heterosexual marriages are also available to same-sex couples in states where the marriages are legal.

"Legal questions regarding spousal rights in same-sex marriages are there because there is little case law," said Brian Moulton, legislative counsel for the Human Rights Campaign, a national gay rights legal group.

"The essential question is whether a same-sex married couple in a state where marriage is legal is entitled to the same rights of any married couple both state and federally."

Laurie Doré, a Drake University law professor, agreed that even in Iowa where same-sex marriage is legal, questions about spousal privilege need to be clarified.

"There is not a lot of Iowa law about it right now," she said. "This is an area that will be looked at as it goes along."

Michael Burdette, Marla Stevens' lawyer, also said in a legal brief that his client cannot be compelled to give a deposition because "potentially Marla Stevens remains at risk of being indicted on some offense arising out of the allegations that Phyllis Stevens has embezzled."

A hearing on whether Marla Stevens can be compelled to give a deposition in the Aviva lawsuit is today before U.S. Magistrate Judge Ross Walters.

Lawyers for Aviva, in a motion filed Wednesday, said neither the 5th Amendment privilege against self-incrimination nor the spousal privilege are available legally to Marla Stevens.

The company's lawyers said Aviva is only seeking information concerning the whereabout of assets that the defendants "may attempt to dissipate."
Legal experts argue that federal law will control in this case and no spousal privilege can be claimed. Witosky writes:

Of the spousal privilege, Mark Weinhardt, Aviva's lawyer, wrote that same- sex marriages are not recognized by federal law.

"This is a case pending in federal, not state, court and it is governed by federal rules," he wrote.

He also questions whether Marla Stevens can claim to be a resident of Iowa since she has said in court documents that she had not lived in the state from 2004 until Oct. 1, 2009.

Phyllis Stevens has pleaded not guilty to an 18-count indictment accusing her of wire fraud, money laundering, embezzlement, computer fraud and aggravated identity theft in the embezzlement of $5.9 million from Aviva.

Marla Stevens has not been charged. But Burdette said that she is under federal investigation.

In one motion, Burdette said Marla Stevens has been contacted by a relative, who was questioned by an agent for the Federal Bureau of Investigation under a threat of being subpoenaed before a federal grand jury in Iowa.

The relative is not identified, but Kevin Kohler, an FBI agent, testified Tuesday that he had interviewed a sister of Marla Stevens, who also served as trustee of a Stevens family trust that paid up to $90,000 to Marla Stevens over a period of years. Daryn Beringer of Purchase, N.Y. is Marla Stevens only full sister.
Witosky's story notes there are efforts in Congress by some Democrats to repeal the Defense of Marriage Act. Laying that aside, this case could be groundbreaking in determining what the federal law means in states that have legalized gay marriages. Witosky adds new information on Marla's income sources in today's story. He says a family trust paid her $90,000 over a period of years. The story also cites Aviva's lawyers as claiming that Marla never lived with Phyllis after she moved to Iowa in 2004.


Don Sherfick said...

I guess I had assumed that they had also been married in Iowa after the decision there. Apparently not.

Gary, is the spousal priviledge something that is enshrined in federal statutory law or simply a federal court traditional recognition of a common law matter? And if the latter is true, can it be argued that the federal courts could defer to a particular jurisdiction's definition? Maybe put in simpler fashion, does DOMA limit the federal judiciary in the matter or could, for example, the federal courts say that to the degree the relationship involved is sufficiently "like" marriage, the privilege could apply?

Advance Indiana said...

Don, Those are good questions but the law is not set in stone at this point in this area. In the absence of DOMA, I think they would have a better shot at asserting the privilege. Aviva's lawyers will certainly argue that DOMA ties the hands of the judiciary on this. There have been cases challenging the constitutionality of DOMA.