Rakoff Mulls Bail For Silk Road Crook Jailed In Brooklyn

By Pete Brush
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Law360, New York (April 8, 2020, 5:11 PM EDT) -- U.S. District Judge Jed S. Rakoff pondered Wednesday whether a toy merchant-turned-drug dealer on the online Silk Road bazaar, who is doing time in Brooklyn for lying about where he got $19 million worth of bitcoins, should be released until the coronavirus abates.

During a telephone hearing, the Manhattan federal judge seemed unwilling to grant a motion for compassionate release filed by Hugh Brian Haney, who is serving a 3½-year sentence at the Metropolitan Detention Center for money laundering. But Judge Rakoff did not rule out granting bail for the 61-year-old defendant.

Haney's lawyer, Martin Cohen, said things are getting worse at the MDC, where only seven of 1,700 inmates had been tested for COVID-19 at last count, three of whom tested positive. Cohen said Haney wants to serve out his sentence after the worst of the viral outbreak is over but said his client shouldn't have to "face the potential" of dying in prison.

Judge Rakoff gave the sides more time to brief a bail request, but he called Haney's March 31 motion for compassionate release "an argument for releasing every single person in the MDC" as Haney has no serious underlying health issues.

Once a successful Westerville, Ohio, toy merchant, Haney sold oxycodone on Silk Road, the infamous online drug bazaar, before it was shuttered by the feds in 2013. He had stopped selling in 2012 and was not apprehended.

It was not until July when Haney was caught lying about the provenance of his bitcoins, which had sharply appreciated in value from less than $10,000 to about $19 million, in an attempt to cash out. Haney was arrested and jailed and pled guilty in November. He was sentenced by Judge Rakoff in February.

The Manhattan U.S. attorney's office opposes Haney's release, arguing that federal judges in New York have denied bail for other inmates, some with underlying medical conditions. Prosecutor Samuel Raymond also said prosecutors consider Haney a flight risk.

So far, New York federal courts have taken a patchwork approach as many inmates and others awaiting sentencing have pushed for bail, release or other relief, such as sentencing postponements.

For example, Nkanga Nkanga, a 67-year-old doctor imprisoned for pushing oxycodone, was set to leave MDC after being granted bail Tuesday by U.S. District Judge Jesse M. Furman. Unlike Haney, Nkanga is said to have asthma and other health challenges.

But inmates such as President Donald Trump's former lawyer Michael Cohen, who are deemed generally healthy, have had little luck in their requests for release.

Haney, who joined the hearing by telephone from the MDC after a recent demand that federal inmates get better access to the justice system, said he believes other inmates are sick with COVID-19 and have not been tested.

"There's no opportunity to get tested if I get sick," he said.

His elderly mother, Jane Swint, also appeared via telephone. Given a chance to address Judge Rakoff, Swint said she believes the disease "will eventually go straight through" the MDC, where most inmates bunk in twos.

"If he stays there, he will have a death sentence," she said.

The government is represented by Samuel Raymond and Tara La Morte of the U.S. Attorney's Office for the Southern District of New York.

Haney is represented by Martin Cohen of the Federal Defenders of New York Inc.

The case is U.S. v. Haney, case number 1:19-cr-00541, in the U.S. District Court for the Southern District of New York.

--Editing by Jay Jackson Jr.

For a reprint of this article, please contact reprints@law360.com.

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