United States District Court, D. Massachusetts
For Richard Weed, Defendant: J. W. Carney, Jr., LEAD ATTORNEY, Samir Zaganjori, J.W. Carney, Jr. & Associates, Boston, MA.
For USA, Plaintiff: Eric A. Forni, Sarah E. Walters, LEAD ATTORNEYS, United States Attorney's Office MA, Boston, MA.
MEMORANDUM OF DECISION AND ORDER ON GOVERNMENT'S MOTION FOR AN ORDER AS TO THE APPLICABILITY OF THE CRIME FRAUD EXCEPTION
Judith Gail Dein, United States Magistrate Judge.
The defendant, Richard Weed, is charged in an Indictment with conspiracy in violation of 18 U.S.C. § 371, securities fraud in violation of 15 U.S.C. § § 78j(b) and 78ff, and nine counts of wire fraud in violation of 18 U.S.C. § 1343. The Indictment charges Weed with conspiring with co-conspirators 1 and 2 (" CC-1" and " CC-2" )
to manipulate the value of stock in various publicly traded companies. This matter is before the court on the Government's Motion for an Order as to the Applicability of the Crime Fraud Exception (Docket No. 31). By this motion, the government is seeking an order that the crime fraud exception to the attorney-client privilege applies to documents it received from CC-1, which reflect communications among the defendant, who is an attorney, CC-1 and CC-2, both of whom have waived the attorney-client privilege, and a third person, Individual A, who has not been approached by the Government and has not waived any potential claim of privilege. According to the co-conspirators, these communications relate to the manipulation of the shares of Company A, an entity which is not identified in the Indictment. The Government is seeking permission to review and produce these documents to the defendant. By its motion, the Government is also seeking leave to proceed without giving notice to Individual A.
After careful consideration of the parties' written submissions and oral argument, this court finds that the Government has established " that there is a reasonable basis to believe that the lawyer's services were used by the client[s] to foster a crime or fraud." In re Grand Jury Proceedings, 417 F.3d 18, 23 (1st Cir. 2005). Specifically, I find that the Government has made a prima facie showing (1) that the clients were " engaged in (or [were] planning) criminal or fraudulent activity when the attorney-client communications took place; and (2) that the communications were intended by the client[s] to facilitate or conceal the criminal or fraudulent activity." In re Grand Jury Proceedings (Gregory P. Violette), 183 F.3d 71, 75 (1st Cir. 1999). Therefore, the crime-fraud exception applies, and the Government's motion (Docket No. 31) is ALLOWED. Moreover, I find that the Government may proceed without giving notice to Individual A. See id. at 79.
II. STATEMENT OF FACTS
The Government has submitted evidence to the effect that CC-1 and CC-2 have admitted to engaging the legal services of the defendant for the purpose of facilitating criminal activity in the form of manipulating the value of shares of stock in CitySide Tickets, Inc., as alleged in the Indictment. The co-conspirators have pleaded guilty to charges arising out of the so-called " CitySide Scheme." In addition, CC-1 and CC-2 have waived any attorney-client privilege with respect to communications regarding the CitySide Scheme, and those documents have been produced to the defendant.
The co-conspirators have also admitted to engaging the legal services of the defendant for the purpose of a similar scheme relating to Company A, which is not referenced in the Indictment. CC-1 and CC-2 have waived any attorney-client privilege with respect to communications regarding this scheme as well. However, this scheme also allegedly included Individual A, who participated in the attorney-client communications with the defendant. CC-1 and CC-2 have attested that they, along with Individual A, engaged the defendant to facilitate or conceal their fraudulent activity in ...