Drummond Crime Fraud Exception Brief

FILED

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2015 Aug-31 PM 03:42 U.S. DISTRICT COURT N.D. OF ALABAMA

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ALABAMA SOUTHERN DIVISION DRUMMOND COMPANY, INC., Plaintiff , vs. TERRENCE P. COLLINGSWORTH, individually and as agent of Conrad & Scherer, LLP; and CONRAD & SCHERER, LLP, Defendants .

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Case No. 2:11-cv-3695-RDP-TMP Contains information designated as “Confidential Information” under the Protective Order.

DRUMMOND COMPANY, INC.’S MEMORANDUM OF LAW REGARDING THE CRIME-FRAUD EXCEPTION

William Anthony Davis, III (ASB-5657-D65W) H. Thomas Wells, III (ASB-4318-H62W) Benjamin T. Presley (ASB-0136-I71P) STARNES DAVIS FLORIE LLP P.O. Box 59812 Birmingham, AL 35259 (205) 868-6000 fax: (205) 868-6099

Sara E. Kropf LAW OFFICE OF SARA KROPF PLLC 1001 G St. NW, Suite 800 Washington, DC 20001 (202) 627-6900

Attorneys for Drummond Company, Inc.

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TABLE OF CONTENTS TABLE OF AUTHORITIES.................................................................................................................. iii ARGUMENT .......................................................................................................................................1 I.

THE CRIME-FRAUD EXCEPTION APPLIES TO ILLEGAL OR FRAUDULENT CONDUCT COMMITTED BY LAWYERS. ......................................................................................1

II.

DRUMMOND SHOULD BE ENTITLED TO EXPLORE THESE AREAS REGARDLESS OF WHETHER THE CRIME-FRAUD EXCEPTION APPLIES.....................................................2

III. THE CRIME-FRAUD EXCEPTION AS APPLIED TO THIS CASE. .........................................4 A.

The Legal Framework .................................................................................4

B.

The first prong – a prima facie case.............................................................6

C. IV.

1.

Witness bribery and suborning perjury............................................8

2.

Fraud on the Court .........................................................................12

The second prong - “related to” the crime or fraud ...................................13

DEFENDANTS’ “REBUTTAL” ...................................................................................21 A.

Defendants were already afforded the opportunity to provide a “reasonable explanation” for their conduct, and they utilized that opportunity to perpetrate another fraud on this Court. ......................................................22

B.

Defendants’ “explanation” for their conduct is insufficient as a matter of law and contradicted by a mountain of documentary evidence.................26

CERTIFICATE OF SERVICE ...............................................................................................................30

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TABLE OF AUTHORITIES Cases

Page(s)

1100 West, LLC v. Red Spot Paint and Varnish Co., Inc., No. 1:05-cv-1670-LJM-JMS, 2009 WL 232060 (S.D. Ind. Jan. 30, 2009).........................6 AKH Co. v. Universal Underwriters Ins. Co., No. 13-2003-JAR-KGG, 2014 WL 2991130 (D. Kan. July 3, 2014) reconsideration denied, No. 13-2003-JAR-KGG, 2014 WL 4097602 (D. Kan. Aug. 20, 2014)..................6 Blanchard v. EdgeMark Fin. Corp., 192 F.R.D. 233 (N.D. Ill. 2000)...........................................................................................6 Chambers v. NASCO, Inc., 501 U.S. 32, 111 S. Ct. 2123 (1991)....................................................................................4 Chevron Corp. v. Donziger, No. 11 Civ. 0691(LAK), 2013 WL 1087236 (S.D.N.Y. Mar. 15, 2013).......................1, 27 Chevron Corp. v. Donziger, 974 F. Supp. 2d 362 (S.D.N.Y. 2014)..................................................................................1 Chevron Corp. v. Salazar, 275 F.R.D. 437 (S.D.N.Y. 2011) .........................................................................................1 Cleveland Hair Clinic, Inc. v. Puig, 968 F. Supp. 1227 (N.D. Ill. 1996) ......................................................................................6 Gutter v. E.I. Dupont De Nemours, 124 F. Supp. 2d 1291 (S.D. Fla. 2000) ......................................................................5, 7, 21 Handgards, Inc. v. Johnson & Johnson, 413 F. Supp. 926 (N.D. Cal. 1976) ......................................................................................3 In re Grand Jury (G.J. No. 87-03-A), 845 F.2d 896 (11th Cir. 1988) ...........................................................................................13 In re Grand Jury Investigation (Schroeder), 842 F.2d 1223 (11th Cir. 1987) .......................................................................4, 5, 6, 13, 14 In re Grand Jury Proceedings, 87 F.3d 377 (9th Cir. 1996) .................................................................................................7 In re Grand Jury Proceedings, 492 F.3d 976 (8th Cir. 2007) .............................................................................................27

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In re Impounded Case (Law Firm), 879 F.2d 1211 (3d Cir. 1989)...............................................................................................1 In re Katrina Canal Breaches Consol. Litig., No. CIV.A. 05-4182, 2008 WL 4401970 (E.D. La. Sept. 22, 2008) ...................................7 In re Murphy, 560 F.2d 326 (8th Cir. 1977) ...............................................................................................2 In re Sealed Case, 676 F.2d 793 (D.C. Cir. 1982) .........................................................................................5, 7 JTR Enterprises, LLC v. An Unknown Quantity of Colombian Emeralds, Amethysts & Quartz Crystals, 297 F.R.D. 522 (S.D. Fla. 2013)..................................................................................21, 22 Major Tours, Inc. v. Colorel, No. CIV 05-3091(JBS/JS), 2009 WL 2413631 (D.N.J. Aug. 4, 2009) ............................21 Matter of Feldberg, 862 F.2d 622 (7th Cir. 1988) ...............................................................................................7 Moody v. I.R.S., 654 F.2d 795 (D.C. Cir. 1981) .............................................................................................2 Miccosukee Tribe of Indians of Fla. v. United States, 516 F.3d 1235 (11th Cir. 2008) .........................................................................................20 Nix v. Whiteside, 475 U.S. 157, 106 S. Ct. 988 (1986)....................................................................................9 Rambus, Inc. v. Infineon Tech. AG, 220 F.R.D. 264 (E.D. Va. 2004) ........................................................................................21 Sheehan v. Mellon Bank, N.A., No. CIV. A. 95-2969, 1996 WL 243469 (E.D. Pa. Apr. 23, 1996) .....................................6 Stern v. O’Quinn, 253 F.R.D. 663 (S.D. Fla. 2008)..........................................................................................3 United States v. Bradberry, 466 F.3d 1249 (11th Cir. 2006) ...........................................................................................8 United States v. Jacobs, 117 F.3d 82 (2d Cir. 1997)...................................................................................................1

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Universal Oil Products Co. v. Root Refining Co., 328 U.S. 575, 66 S.Ct., 1176 (1946)....................................................................................4 Wachtel v. Guardian Life Ins., No. CIV 01-4183 FSH, 2007 WL 1752036 (D.N.J. June 18, 2007)..................................21 Statutes and Rules

Page(s)

18 U.S.C. § 201(c) .............................................................................................................4, 8, 9, 27 18 U.S.C. § 1622..............................................................................................................................8 31 U.S.C. § 5316(a)(1).....................................................................................................................8 31 U.S.C. § 5324..............................................................................................................................8 Ala. Code 13A-10-121(a).........................................................................................................4, 8, 9 Ala. R. Prof. Cond. 3.3(a) ................................................................................................................8 Other Authorities

Page(s)

Wright & Miller, Fed. Prac. and Proc. § 2026 (Supp. 1994) ...........................................................3 4 J. Moore, Federal Practice Proc. § 26.64(4), at 26-447 (2d ed. 1975)..........................................3

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I.

THE CRIME-FRAUD EXCEPTION APPLIES TO ILLEGAL OR FRAUDULENT CONDUCT COMMITTED BY LAWYERS. To the extent Defendants argue that the crime-fraud exception is inapplicable because the

Balcero plaintiffs were either unaware or uninvolved in Defendants’ crimes and frauds, their argument is unavailing.

“[T]he crime-fraud exception to work product protection and the

attorney-client privilege is established where there is ‘probable cause to believe that a fraud or crime has been committed by someone and that the communications in question were in furtherance of the fraud or crime.’” Chevron Corp. v. Donziger, No. 11 Civ. 0691(LAK), 2013 WL 1087236, at **3, 28 (S.D.N.Y. Mar. 15, 2013) (quoting United States v. Jacobs, 117 F.3d 82, 87 (2d Cir. 1997)) (crime-fraud exception applied where there was probable cause that Steven Donziger1 and two of his Ecuadorean local counsel engaged in criminal or fraudulent acts). Thus, “even though the privilege belongs to the client, it may be pierced by wrongdoing of the attorney, even without the knowledge or intent of the client.” Chevron Corp. v. Salazar, 275 F.R.D. 437, 452 (S.D.N.Y. 2011) (collecting cases standing for the proposition that crimes or frauds committed by attorneys trigger the exception). The fact that Defendants are a lawyer and a law firm does not render the crime-fraud exception inapplicable. Nor does the fact that their unwitting clients in Balcero did not participate in their crimes and frauds. Other federal courts agree. In re Impounded Case (Law Firm), 879 F.2d 1211, 1213-14 (3d Cir. 1989) (collecting cases and holding “[i]t is not apparent to us what interest is truly served by permitting an attorney to prevent this type of investigation of his own alleged criminal conduct by asserting an innocent client’s privilege with respect to documents tending to show

1

American lawyer Steven Donziger was recently found liable in a highly publicized civil RICO case premised on his efforts to obtain a fraudulent judgment against Chevron through bribery and falsification of evidence in Ecuador. Chevron Corp. v. Donziger, 974 F. Supp. 2d 362 (S.D.N.Y. 2014). He is one of Mr. Collingsworth’s fellow “human rights” lawyers, from whom Mr. Collingsworth has solicited funds for litigation against Drummond. Doc. 118-2 (IRA “Launch Party” email).

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criminal activity by the lawyer. On the contrary, the values implicated, particularly the search for the truth, weigh heavily in favor of denying the privilege in these circumstances.”); Moody v. I.R.S., 654 F.2d 795, 800 (D.C. Cir. 1981) (“It would indeed be perverse, as appellant contends, to allow a lawyer to claim an evidentiary privilege to prevent disclosure of work product generated by those very activities the privilege was meant to prevent. […] An attorney should not be able to exploit the privilege for ends outside of and antithetical to the adversary system any more than a client who attempts to use the privilege to advance criminal or fraudulent ends.”); In re Murphy, 560 F.2d 326, 336 n.19 (8th Cir. 1977) (“a court may conclude that opinion work product is not immune if it contains inculpatory evidence of the attorney’s own illegal or fraudulent activities”). II.

DRUMMOND

SHOULD BE ENTITLED TO EXPLORE THESE AREAS REGARDLESS OF WHETHER THE CRIME-FRAUD EXCEPTION APPLIES.

At the evidentiary hearing, the issue is what was done by the Defendants, their lawyers, or both, in the course of repeatedly misrepresenting the facts to this Court. Drummond’s motion to compel set forth 9 areas of questioning relevant to this issue. Doc. 311 at 6-25. This Court explained that “with respect to . . . dealings with I think those are not attorney/client privilege. Those would be work product privilege. So we have to adapt In Re: Grand Jury to deal with a work product assertion of privilege.” Doc. 341 (Aug. 26, 2015 Hrg. Tr.) at 38:13-19. This Court’s analysis should begin with the fact that work-product is discoverable in situations where there is no allegation that an attorney or law firm engaged in criminal or fraudulent activity. In fact, the Court need not reach the crime-fraud exception to conclude that the requested information is discoverable. It is hornbook law that information “that would

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otherwise be protected must be produced if the knowledge, mental impressions, opinions, and advice of a lawyer or law firm are at issue in a litigation to which the lawyer or law firm is a party.” Wright & Miller, Fed. Prac. and Proc. § 2026 (Supp. 1994). Stated differently, “when the activities of counsel are inquired into because they are at issue in the action before the court, there is cause for production of documents that deal with such activities, though they are ‘work product.’” 4 J. Moore, Fed. Prac. Proc. § 26.64(4), at 26-447 (2d ed. 1975). Federal courts across the country agree. Stern v. O’Quinn, 253 F.R.D. 663 (S.D. Fla. 2008) (lawyer sued for defamation required to produce, over his objections and claims of workproduct, documents bearing on his subjective belief in the truth of the statements at issue); Handgards, Inc. v. Johnson & Johnson, 413 F. Supp. 926, 931 (N.D. Cal. 1976) (“Plaintiff's success in the instant action depends upon a showing that defendants pursued the prior suits knowing they would be unsuccessful on the merits. Since the lawyers who managed and supervised the former litigation for the defendants are being called as witnesses to express their opinions as to the merits of the prior suits and the validity of the underlying patents, plaintiff has a particularized and compelling need for the production of the relevant work product of these attorneys. Without discovery of the work product, plaintiff will be unable to ascertain the basis and facts upon which the opinions of these witnesses are based.”). Here, the “knowledge [and] mental impressions” of Defendants and their counsel, Wright & Miller, Fed. Prac. and Proc. § 2026, are directly at issue at the sanctions hearing. Defendants have utilized their counsel to file fraudulent pleadings and discovery responses, and to alter documents to conceal evidence of witness payments. As this Court stated, the issue is “ ” Doc. 311-2 (Collingsworth Dep.) at 351:22-25. Defendants cannot obstruct Drummond’s efforts to find out

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the answer to these questions by claiming they acted in good faith, and then hide behind the work-product doctrine when Drummond tries to test that claim. III.

THE CRIME-FRAUD EXCEPTION AS APPLIED TO THIS CASE A.

The Legal Framework

The Eleventh Circuit employs a two-part test when applying the crime-fraud exception: First, there must be a prima facie showing that the client was engaged in criminal or fraudulent conduct when he sought the advice of counsel, that he was planning such conduct when he sought the advice of counsel, or that he committed a crime or fraud subsequent to receiving the benefit of counsel’s advice. Second, there must be a showing that the attorney’s assistance was obtained in furtherance of the criminal or fraudulent activity or was closely related to it. In re Grand Jury Investigation (Schroeder), 842 F.2d 1223, 1226 (11th Cir. 1987).2 The parties agree that the crime-fraud exception is triggered by statutory crimes and offenses, including witness bribery under 18 U.S.C. § 201(c) and Ala. Code § 13A-10-121.3 Egregious fraud on the Court, which is what Drummond alleges Defendants have perpetrated in both Balcero and in this case (see Docs. 174 & 190), also triggers the crime-fraud exception.4 Defendants’ argument contravenes the overwhelming weight of authority. Those cases establish that a fraud on the court triggers the crime-fraud exception and allows discovery 2

Defendants do not dispute that the crime-fraud exception applies to both the attorney-client privilege and the workproduct doctrine. Doc. 353 at 3 (“The crime-fraud exception is one of the ways in which otherwise undiscoverable attorney-client communications and work product can become discoverable.”); see also Cox v. Adm’r U.S. Steel & Carnegie, 17 F.3d 1386, 1422 (11th Cir.) opinion modified on reh'g, 30 F.3d 1347 (11th Cir. 1994) (“The exception applies to work-product in the same way that it applies to the attorney-client privilege.”).

3

Drummond has consistently cited these statutes in its crime-fraud briefing since July 2014. See, e.g., Doc. 348-2 (Drummond’s Crime-Fraud Brief) at 13 (“Under both Alabama and federal law, it is a crime to offer, promise or give anything of value to a person testifying in a legal proceeding with the intent of influencing the testimony of that person. See 18 U.S.C. § 201 and Ala. Code § 13A-10-121(a).”). 4

In addition to the crime-fraud exception, it is well settled that “a court has the power to conduct an independent investigation in order to determine whether it has been the victim of fraud.” Chambers v. NASCO, Inc., 501 U.S. 32, 44, 111 S. Ct. 2123, 2132 (1991) (citing Universal Oil Products Co. v. Root Refining Co., 328 U.S. 575, 580, 66 S.Ct., 1176, 1179 (1946)). A litigant cannot frustrate a Court’s use of its inherent power by improperly cloaking evidence of its fraudulent conduct with the attorney-client privilege or work-product doctrine: “The power to unearth such a fraud is the power to unearth it effectively. Accordingly, a federal court may bring before it by appropriate means all those who may be affected by the outcome of its investigation.” Universal, 328 U.S. at 580.

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of all information relating to that fraud. Indeed, the doctrine is called the “crime-fraud exception,” not the “crime exception.” In re Sealed Case, 676 F.2d 793 (D.C. Cir. 1982), one of the cases cited by the Schroeder court when enunciating the Eleventh Circuit’s prima facie standard, 842 F.2d at 1226, held that “[t]he possibility that Company’s chairman lied to or attempted to mislead the IRS with his affidavit is enough to” create a prima facie showing and invoke the exception. Although it may “not be sufficient to convict Company’s chairman or anyone else of any crimes, . . . [a]ll that is required is that the likelihood of a violation be sufficient as a prima facie matter to warrant abridging any work product privilege that would normally attach to documents relating to the possible violation.” In re Sealed Case, 676 F.2d at 815-16 and n.92. The Gutter v. E.I. Dupont De Nemours case, cited extensively by Defendants, see Doc. 174-13 at 12-14 & 19-20, is also illustrative. 124 F. Supp. 2d 1291 (S.D. Fla. 2000). The Gutter court cited, discussed and applied Schroeder, finding that the crime-fraud exception applied where DuPont, through its attorneys, misrepresented the existence of certain documents in prior litigation. 124 F. Supp. 2d 1291. In particular, the Southern District of Florida noted that DuPont and its attorneys made “deceptive representations and privilege logs,” “intentionally failed to accurately respond to three motions to compel,” “misrepresented the status of the Alta documents,” engaged in a “pattern of concealment,” and “had ‘a common practice of nonproduction’ that extended over the totality of the discovery process” in earlier litigation, thereby justifying the application of the crime-fraud exception. Id. at 1313. Like the DuPont defendants, Mr. Collingsworth and Conrad & Scherer engaged in a pattern of concealment in Balcero and in this case, repeatedly making knowingly false representations in pleadings, affidavits, correspondence, and open court, and employing a pattern

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of non-production with respect to their payments to witnesses and their relationship with Ivan Otero. See Doc. 243 at ¶¶ 1-458. That is a massive fraud on this Court, and it is independently sufficient to invoke the crime-fraud exception.5 B.

The first prong – a prima facie case

Schroeder teaches that “the first prong is satisfied by a showing of evidence that if believed by a trier of fact, would establish the elements of some violation that was ongoing or about to be committed.” Doc. 341 (Aug. 26, 2015 Hrg. Tr.) at 25:10-13 (quoting In re Grand Jury Investigation (Schroeder), 842 F.2d at 1226). The Eleventh Circuit described the evidence in Schroeder that met this prong as follows: Here there is no doubt that the first prong of the test is satisfied. The government submitted a summary of the evidence as well as an I.R.S. Special Agent’s summary of the testimony Schroeder provided in an interrogation by that agent. Those submissions reveal that Schroeder reported a moderate income from 1978 to 1984, that he possessed cash in amounts grossly disproportionate to his reported income, and that he purchased assets with values grossly exceeding his reported income. For example, during one of the years under investigation, Schroeder purchased a house with a value approximately ten times his reported income for that year. He paid the entire purchase price of the house with a cashier's check that he had purchased with cash. On the basis of those facts, the district court did not abuse its discretion in finding that the government had established a prima facie showing that Schroeder willfully made false statements on his income tax returns by failing to report all of his income.

5

Numerous courts have analyzed and applied the crime-fraud exception in situations involving frauds perpetrated on courts. See Cleveland Hair Clinic, Inc. v. Puig, 968 F. Supp. 1227, 1241 (N.D. Ill. 1996) (invoking the crime-fraud exception where “the wrongful scheme included deceptive conduct in this Court violative of Rules 11 and 37 and 28 U.S.C. § 1927, and sanctionable pursuant to this Court’s inherent powers”); Blanchard v. EdgeMark Fin. Corp., 192 F.R.D. 233, 241 (N.D. Ill. 2000) (collecting cases where the crime-fraud exception has been applied to attorneys’ conduct that is unprofessional or unethical, an intentional tort, or sanctionable); 1100 West, LLC v. Red Spot Paint and Varnish Co., Inc., No. 1:05-cv-1670-LJM-JMS, 2009 WL 232060 (S.D. Ind. Jan. 30, 2009) (crime-fraud exception applied where defendants perpetrated a fraud on the court by misrepresenting the existence of responsive documents); Sheehan v. Mellon Bank, N.A., No. CIV. A. 95-2969, 1996 WL 243469, at *2 (E.D. Pa. Apr. 23, 1996) (crime fraud exception applies where a litigant “perpetrate[s] a fraud on the court”). See also AKH Co. v. Universal Underwriters Ins. Co., No. 13-2003-JAR-KGG, 2014 WL 2991130, at *18 (D. Kan. July 3, 2014) reconsideration denied, No. 13-2003-JAR-KGG, 2014 WL 4097602 (D. Kan. Aug. 20, 2014) (“These facts, taken as a whole, establish a prima facie case sufficient to invoke the crime-fraud exception to the attorney-client privilege—false representations made by Plaintiff as to a material fact or the suppression of facts which Plaintiff was under a legal or equitable obligation to communicate and ‘in respect of which [it] could not be innocently silent....’”).

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Id. at 1227. As the Schroeder opinion illustrates, Drummond need not prove, and this Court does not have to find, that Defendants are guilty of a crime or fraud beyond a reasonable doubt. “The question here is not whether the evidence supports a verdict but whether it calls for inquiry.” Matter of Feldberg, 862 F.2d 622, 625-26 (7th Cir. 1988). Courts uniformly hold that whether a crime has actually been committed “is not the test for piercing the privilege,” rather “all that is required now is the much lower threshold of establishing a prima facie case.” Gutter, 124 F. Supp. 2d at 1304 (quoting the Special Master); see also In re Sealed Case, 676 F.2d at 815-16 & n.92 (it is not necessary to “convict Company’s chairman or anyone else of any crimes, . . . [a]ll that is required is that the likelihood of a violation be sufficient as a prima facie matter to warrant abridging any work product privilege”); In re Grand Jury Proceedings, 87 F.3d 377, 381 (9th Cir. 1996) (a party “is not obliged to come forward with proof sufficient to establish the essential elements of a crime or fraud beyond a reasonable doubt”); In re Katrina Canal Breaches Consol. Litig., No. CIV.A. 05-4182, 2008 WL 4401970, at **10-11 (E.D. La. Sept. 22, 2008) (stating that “[t]he burden of establishing a prima facie case of crime for this purpose in the civil discovery context is not great and is certainly less than the standard that a district attorney or other prosecutor would use in pursuing criminal charges” and holding that “Lafarge’s investigators admittedly entered into homes intentionally and took something of value without the consent of the owners of the buildings or the timepieces. Their intent to keep the timepieces permanently could be inferred from their actions, which includes having kept the timepieces for almost three years without any attempt to locate or notify the rightful owners. Centanni’s declaration that his investigators did not intend to keep the timepieces permanently may be disregarded, according to the well established Fifth Circuit law cited above. His denial of such an intent would certainly be a defense, but would be subject to a

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credibility determination by the factfinder.

At this stage, that credibility fact dispute is

inadequate to defeat the inference of criminal intent necessary to establish a prima facie case of simple burglary or theft.”). 1.

Witness bribery and suborning perjury 6

This Court has already stated that “ .” Doc. 341 (Aug. 26, 2015 Hrg. Tr.) at 22:5-7. Under both Alabama and federal law, it is a crime to offer, promise or give anything of value to a person testifying in a legal proceeding with the intent of influencing the testimony of that person. See 18 U.S.C. § 201 and Ala. Code § 13A-10-121(a). Both statutes proscribe any payments to witnesses that exceed actual costs incurred as a result of testifying. “Subornation of perjury consists in procuring or instigating another to commit the crime of perjury.” “It is essential to subornation of perjury that the suborner should have known or believed or have had good reason to believe that the testimony given would be false; that he should have known or believed that the witness would testify willfully and corruptly, and with knowledge of the falsity; and that he should have knowingly and willfully induced or procured the witness to give such false testimony.” United States v. Bradberry, 466 F.3d 1249, 1254 (11th Cir. 2006) (citations omitted). See also 18 U.S.C. § 1622; Ala. R. Prof. Cond. 3.3(a). The Bradberry court went on to hold that “[b]y knowingly facilitating the presentation of false testimony before the court, a defendant does more than just allow a witness to give perjured testimony; rather, he acts in a manner that obstructs the 6

Drummond limits its discussion of criminal violations in this brief to witness bribery and suborning perjury, as those are the crimes that bear directly on the specific questions on which Drummond moved to compel responses. In prior crime-fraud briefing, Drummond set forth evidence of other crimes committed by Defendants, including illegally structuring currency transactions in violation of 31 U.S.C. §§ 5316(a)(1) & 5324, as well as harboring a fugitive from justice. See, e.g., Doc. 348-2 at 19-20. For example, Defendants structured a $20,000 cash payment to a fact witness in violation of reporting requirements. Docs. 118 at 6-7; 109-1. Drummond does not discuss those crimes herein, as the answers to the questions posed to Mr. Collingsworth during his deposition arguably do not “relate to” these particular crimes. Drummond’s omission of any discussion of those two crimes, or of any other crimes or frauds, should not be construed as any type of tacit admission that there are not other crimes or frauds perpetrated by the Defendants that are also sufficient to trigger the crime-fraud exception.

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administration of justice.” Id. at 1255. “An attorney who aids false testimony by questioning a witness when perjurious responses can be anticipated risks prosecution for subornation of perjury.” Nix v. Whiteside, 475 U.S. 157, 169, 106 S. Ct. 988, 995 (1986). Blanco, El Tigre, Samario, and Charris are “fact” witnesses, and they all received payments from Defendants’ litigation team amounting to hundreds of thousands of dollars. See Docs 243 at ¶¶ 21-74. As this Court already noted, those payments generally fall into one of three categories:

Doc. 341 (Aug. 26, 2015 Hrg. Tr.) at 17:3-13. It is also undisputed that all of those witnesses provided sworn testimony against Drummond in Balcero. These undisputed facts, on their face, establish a prima facie case that these criminal statutes have been violated. 7 Even within the last week, there have been critical developments in Colombia that conclusively establish a prima facie case of witness bribery and suborning perjury. As this Court knows, in May and June of this year, Defendants strenuously objected to Drummond’s

7

The undisputed evidence establishes beyond a reasonable doubt that the payments to Blanco violate 18 U.S.C. § 201(c) and Ala. Code § 13A-10-121. At least $120,000 was paid to Blanco, Docs. 174-2, 174-20 & 342-20, and Mr. Collingsworth testified that these payments were ” for his testimony against Drummond. Doc. 174-7 at 11. Mr. Collingsworth also admits that Blanco Doc. 174-2 at 6. That is precisely what the plain language of 18 U.S.C. § 201(c) defines as a felony: “Whoever . . . directly or indirectly gives, offers or promises anything of value to any person, for or because of the testimony under oath or affirmation, given or to be given, by such person as a witness . . . shall be fined or imprisoned up to two years, or both.” Accordingly, even if this Court were to take the unprecedented step of requiring Drummond to conclusively prove beyond a reasonable doubt that every element of a criminal offense is satisfied in order to meet the first prong of the crime-fraud exception, Drummond has made that showing with respect to the Blanco payments.

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emergency request that it be allowed to provide the Colombian Fiscalia with evidence of Defendants’ witness payments. After receiving letter briefs, ordering the parties to meet and confer, holding an emergency telephonic hearing, and an in-chambers conference, Docs 237 & 238, this Court entered an order on June 4, 2015 that allowed Drummond to provide information to the Colombian Fiscalia. Doc. 239. Last Tuesday, the Colombian Fiscalia released a 50 page order, finding that there was insufficient evidence to arrest Mr. Araujo for the union leader murders. Ex. 1 (August 25, 2015 Fiscalia Opinion) at 49. Particularly relevant for purposes of this brief, the Fiscalia’s August 25th opinion sets forth in detail the contradictions in the sworn testimony provided by Defendants’ “fact” witnesses to Colombian authorities with the testimony they have submitted to this Court. The Fiscalia describes Defendants’ “fact” witnesses as “wind vanes gyrating depending on how the wind blows.” Id. at 17. The opinion also repeatedly notes how the contradictions in the witnesses’ testimony coincides with their contact with Mr. Collingsworth and his firm: It has caught the eye of this prosecution office, how [Blanco’s] statements have been changing radically throughout his different procedural declarations, finding that, as the defense has pointed out, his statements changed from the moment he was contacted by the U.S. attorneys, who seek to obtain diverse evidence to present to the U.S. courts. [. . .] [Charris] omitted to state that he was contacted by U.S. attorneys, who seek to obtain different evidentiary means to argue in U.S. court and which have seemingly been paying him monthly sums of money through Western Union, on behalf of GILMA YINETH BAEZA ACOSTA, who worked as an assistant to the attorneys trying the case in U.S. courts. . . . These contradictions and omissions are very serious, and they detract from the credibility of his declarations, given that there is no consistency in what he reports, . . . The foregoing is compounded by the fact that the collaboration provided by JAIRO DE JESUS CHARRYS, who in the beginning seemed selfless and sincere, now seems suspicious, because his purpose could be the securing of economic benefits, as asserted by the defense

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[. . .] As such, [Duarte’s] testimony also lacks credibility, since it seems like coming out of the blue, and he is a witness without backing or mention by the other declarants, who reports on aspects and circumstances that were proven untrue by other evidence. [. . .] As seen, these versions have varied substantially, and every time, they are richer in details, but at this time, the prosecution office questions [Samario’s] credibility, since, just like with the previous declarants, his narration has varied to the extent his relation with the U.S. attorneys has become closer, and coincides with the payments made by such law firm from the United States, to the family of the declarant, since 2009, approximately. . . . Dr. IVAN ALFREDO OTERO MENDOZA was [Samario and El Tigre’s] defense attorney in this process, which attorney works in coordination with the counterpart of DRUMMOND in the U.S. proceedings, as acknowledged by the law firm of Collingsworth. Otero works with them since December 2008 and helps them in the case against Drummond in the United States, in exchange for a success fee. . . . In this regard, this prosecution office must mention that it shares the belief of the defense in the sense that they variation in the testimony of [Samario] is suspect. He now appears as a very suspicious witness, because his version is not selfless, but instead, corresponds to a compensation or arrangement with the attorneys of the U.S. law firm. [. . .] [I]t catches the eye of this prosecution office the fact that from the moment in which civil proceedings were begun in the United States against Drummond, most of the persons involved in this process began to render testimonies to submit them as evidence in those proceedings, changing their initial statements but now these new statements become biased, suspect and detached from reality. Id. at 21, 25, 27, 35, 40. The August 25th Fiscalia opinion also totally eviscerates Defendants’ story that their witness “security” payments are simply business as usual in Colombia. Indeed, rather than endorsing those payments, the Colombian Fiscalia has ordered an investigation: To hear, in an expansion inquiry, the declaration of JAIME BLANCO MAYA, LIBARDO DUARTE, ALCIDES MANUEL MATTOS TABARES, JAIRO DE JESUS CHARRIS CASTRO, JOSE ARISTIDES PEINADO, OSCAR DAVID PEREZ VERTEL, JHON JAIRO ESQUIVEL CUADRADO alias

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EL TIGRE, to inform everything related to the alleged sums of money they have received from the U.S. attorneys who have filed suit against Drummond in the United States. Id. at 49. In light of the above evidence, Defendants cannot seriously argue that their selfserving statements “disperse any inference” that a crime or fraud has been committed. Doc. 341 (Aug. 26, 2015 Hrg. Tr.) at 39:24-25. 2.

Fraud on the Court

In its Proposed Findings of Fact, Drummond set forth over 50 specific misrepresentations relating to the scope, nature and extent of their witness payments, as well as their relationship with Ivan Otero, the criminal lawyer for most of Defendants’ “fact” witnesses. See Doc. 243 at ¶¶ 1-458. One of those misrepresentations was made in open court in response to a direct question from this Court.

Doc. 123 (Apr. 21, 2014 Hrg. Tr.) at 30:1-31:19.

Critically,

Defendants do not dispute that those representations were made and, for the vast majority, concede that they are

” See, e.g., Doc. 282 at ¶¶ 278-281 (

” or

). As this Court has already recognized, there is ample evidence that Defendants repeatedly and knowingly made false statements to this Court and Drummond in an effort to fraudulently conceal the scope, nature and extent of their witness payments:

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Ex. 2 (May 21, 2015 Hrg. Tr.) at 21:9-23:1 (emphasis added). Defendants’ conduct is not “ .” Id. at 22:22-23. It is prima facie evidence of a fraud on the Court, and it warrants the invocation of the crime-fraud exception. C.

The second prong - “related to” the crime or fraud

“[A] party can satisfy the second prong of Schroeder by ‘showing that the communication is related to the criminal or fraudulent activity established under the first prong.’” In re Grand Jury (G.J. No. 87-03-A), 845 F.2d 896, 898 (11th Cir. 1988) (citation omitted). Whether a document or communication is “related to” a crime or fraud should not be interpreted “restrictively.” Schroeder, 842 F.2d at 1227. The Schroeder case is once again instructive, and illustrates how the crime-fraud exception applies to allow a litigant full discovery into the crime or fraud. The crime at issue there was the defendant’s failure to accurately report income on his tax returns. In affirming the district court’s application of the crime-fraud exception, the Eleventh Circuit rejected the defendant’s argument that the district applied the crime-fraud exception too broadly:

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Schroeder argues also that the material requested-the source of his income-is unrelated to the matter being investigated-his failure to report income. He argues that only the amount of his income, not its source, is relevant to showing the failure to report income. To the extent Schroeder places this argument under the relatedness prong of the crime-fraud exception, he is mistaken. That prong requires only that the communication be related to the crime or fraud the client seeks to perpetrate. 842 F.2d at 1228. The Schroeder court went on to hold that the crime-fraud exception applied and that “any legal assistance Kliston may have provided Schroeder in generating income or in disposing of income was related to Schroeder’s failure to report income.” Id. at 1227. Schroeder recognizes that a litigant must be allowed full discovery into all surrounding facts and circumstances in order to discover the true extent and purpose of a crime or fraud. As this Court stated on August 17, 2015, in rejecting Defendants’ contention to the contrary,

Doc. 311-2 (Collingsworth Dep.) at 355:14-356:7. Drummond reiterates8 below how each of the specific topics on which Mr. Collingsworth was instructed not to answer “relate to” the crimes or frauds at issue within the meaning of the crime-fraud exception. 8

Drummond’s Motion to Compel Answers to Deposition Questions set forth in detail the questions posed on each of these topics, Defendants’ counsel’s instructions not to answer, the reasons why Drummond’s questions directly bear on the issues at the evidentiary hearing, and an explanation of how the answers to those questions are “related to” crimes or frauds. Doc. 311 at 6-25. See also Doc. 341 (Aug. 26, 2015 Hrg. Tr.) at 34:18-23 (stating that Drummond was “quite specific about 7 or 8 specific things in their briefing between pages 6 and 25, I think, where they lay out what they want to go into, what the question that the privilege was asserted with respect to, and why what they are asking goes to the fraudulent or criminal behavior or as related to it.”). Accordingly, Drummond will not belabor the Court with a full recitation of those arguments here.

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1.

2.

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3.

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4.

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5.

9

Drummond has served a subpoena duces tecum on Defendants’ counsel, Mr. Smith, and his firm, Clark, Hair & Smith, P.C. Ex. 3. That subpoena commands their attendance at the September 1 evidentiary hearing, and also requires them to bring all of their communications with the Defendants. Id. As Drummond has made clear to Defendants’ counsel, it is not presently seeking to view those communications itself. Rather, Drummond has requested that those communications be available to this Court for in camera review. What those communications ” email and who all knew about it. state is critical: they will show exactly what was said about the “

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6.

7.

”

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8.

9.

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IV.

DEFENDANTS’ “REBUTTAL” Drummond’s research uncovered no Eleventh Circuit case holding that a party opposing

the crime-fraud exception is entitled, as a matter of law, to present rebuttal evidence once a prima facie showing of a crime or fraud is made. Drummond acknowledges, however, that district courts within the Eleventh Circuit have employed this burden shifting procedure to the crime-fraud exception in the civil context. See, e.g., JTR Enterprises, LLC v. An Unknown Quantity of Colombian Emeralds, Amethysts & Quartz Crystals, 297 F.R.D. 522, 527 (S.D. Fla. 2013) (“Once the movant has made these showings, the burden of persuasion shifts to the party invoking the privilege to provide a reasonable explanation of the conduct or communication to rebut the prima facie showing.”) (citing Gutter, 124 F. Supp. 2d at 1307). Drummond is also cognizant of this Court’s stated intent to allow Defendants to utilize September 1st as an opportunity to rebut Drummond’s prima facie showing. As this Court stated, “

” Doc.

341 (Aug. 26, 2015 Hrg. Tr.) at 39:24-25. Defendants must present evidence showing that their conduct was legal and not fraudulent: “If the court does not find the evidence is sufficient to rebut the prima facie case, then the prima facie case still exists and the privilege is lost. In order 10

The crime-fraud exception allows discovery of “communications and work product used in furtherance of the spoliation of evidence.” Wachtel v. Guardian Life Ins., No. CIV 01-4183 FSH, 2007 WL 1752036, at *2 (D.N.J. June 18, 2007) (citing Rambus, Inc. v. Infineon Tech. AG, 220 F.R.D. 264, 283 (E.D. Va. 2004)). Also, “[a]lthough in general hold letters are privileged, the prevailing view, which the Court adopts, is that when spoliation occurs the letters are discoverable.” Major Tours, Inc. v. Colorel, No. CIV 05-3091(JBS/JS), 2009 WL 2413631, at *2 (D.N.J. Aug. 4, 2009) (collecting cases).

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to carry its burden of persuasion, the party seeking to invoke the privilege has to show by a preponderance of the evidence that the prima facie showing that the crime/fraud exception applies should not be accepted.” JTR Enterprises, LLC, 297 F.R.D. at 527. For the reasons that follow, Defendants’ “rebuttal” does not defeat the application of the crime-fraud exception. A.

Defendants were already afforded the opportunity to provide a “reasonable explanation” for their conduct, and they utilized that opportunity to perpetrate another fraud on this Court.

The parties first briefed the crime-fraud exception in July 2014. Drummond specifically cited and discussed the crime of witness bribery as justifying the application of the crime-fraud exception. Doc. 348-2 at 13-20. At that time, Drummond and this Court only knew about the payments to Halcon, Duarte, Gelvez and Charris. In their crime-fraud briefing, Defendants represented the following to this Court:

Doc. 174-13 (Defendants’ July 9, 2014 Crime-Fraud Br.) at 6 & 14-15. The Special Master made it abundantly clear that Defendants’ briefing and their arguments to the Court at the July 23, 2014 hearing on the crime-fraud exception misled him into believing that all of Defendants’ witness payments had been disclosed:

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Doc. 243-23 (March 24, 2015 Hrg. Tr.) at 137:25-138:10. Nowhere in their briefing or at the hearing did Defendants disclose, much less provide a “reasonable explanation” for, the payments to El Tigre, Samario and Blanco. In other words, Defendants’ “reasonable explanation” of their criminal and fraudulent conduct was itself a fraud. Not only was Defendants’ crime-fraud briefing fraudulent on its face, but recently ” email proves that Defendants’ “reasonable

discovered evidence regarding the “

explanation” was, without a doubt, an intentional fraud. Indeed, Defendants had unequivocal documentary proof that El Tigre and Samario had been paid before any of their demonstrably false crime-fraud briefing was submitted to this Court. The timeline of that fraud is as follows: Date(s)

Event

May 22, 2011

May 23, 2011 July 5, 2011

Mr. Collingsworth signs a sworn interrogatory response in Balcero. The interrogatory called upon him to disclose “anything of value offered or

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Date(s)

Event given by Plaintiffs, or anyone acting on Plaintiffs’ behalf including counsel, to any person disclosed on Plaintiffs’ Rule 26 disclosures, any former paramilitary or any other potential witness in this litigation.” Mr. Collingsworth’s sworn response states “Plaintiffs have provided Duarte with hamburgers and other food on several occasions, which were served during meetings to discuss the facts in his February 2011 Declaration. Additionally, Plaintiffs are providing reasonable transportation, food, and lodging costs for Plaintiffs who will be deposed in Alabama between July 18-23, 2011. Plaintiffs have paid to relocate Plaintiff Claudia Balcero and her family after she and her family received death threats as a result of participating in this lawsuit.” Doc. 88-4. There is no disclosure of any payments to Charris, Gelvez, Duarte, Samario or El Tigre, all of which had received payments from the Defendants.

July 5, 2011 through the close of discovery in Balcero in July 2012

Defendants submit pleadings and continue to serve sworn interrogatory responses in which they fraudulently conceal their payments to witnesses. See Doc. 174-21 (Balcero Pltfs’ Nov. 8, 2011 Brief) at 9; Doc.88-5 (May 16, 2012 Balcero Plfs’ Irog. Resp.). Conrad & Scherer’s Managing Partner, Bill Scherer, was counsel of record in Balcero and admitted in his deposition testimony that those interrogatory responses were false. Doc. 348-9 (Scherer Dep.) at 186:5-20. Defendants elicit false testimony from witnesses regarding whether they had been paid. Balcero Doc. 396-15 (Blanco Dep.) at 16-17. Mr. Collingsworth represents to the Court that Llanos Oil has “no relationship” to Balcero, Doc. 174-23 (Mar. 8, 2012 Hrg. Tr.) at 8:20-9:7, despite the fact that Albert van Bilderbeek had already paid $95,000 to Jaime Blanco in exchange for his testimony against Drummond. Docs. 342-20; 174-20. The payments were made at Mr. Collingsworth’s request, and he confirmed every single one of them. Id. Defendants make these misrepresentations despite the fact that this Court ordered them on March 8, 2012 to disclose those payments. Doc. 174-22 (Mar. 8, 2012 Balcero Mem. Opinion) at 6-7. Defendants never disclose the payments to Charris, Duarte, Gelvez, Samario, El Tigre or Blanco.

August 2012 and January 2013

After discovery closes in Balcero, and after all of Defendants’ “fact” witnesses have provided letters rogatory testimony, Defendants produce documents reflecting payments to Halcon, Charris, Duarte and Gelvez. There is no disclosure of the payments to El Tigre, Samario and Blanco.

July 1, 2013

Drummond files its motion to compel (Doc. 43), arguing that Defendants

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Date(s)

Event should be compelled to produce all information and documents relating to witness payments.

July 2013 through April 2014

Defendants repeatedly represent to this Court in pleadings, sworn discovery responses, affidavits and in open court that they have disclosed all of their witness payments. Defendants seek sanctions against Drummond in other federal courts for serving subpoenas for documents relating to witness payments, calling those subpoenas duplicative and representing that Drummond is an abusive litigant that is demanding the production of information they have already disclosed. See Doc. 243 (Drummond’s Proposed Findings of Fact) at ¶¶ 115-342.

April 2, 2014

Drummond moves for sanctions against the Defendants after third parties start producing documents relating to witness payments that Defendants previously represented did not exist. Doc. 101.

April 14, 2014

Defendants file their response, calling Drummond’s motion “maliciously false” and representing that “[t]here is absolutely no issue of the propriety of Defendants’ searches or the completeness of their production.” Doc. 114 at 1.

April 21, 2014

In response to a direct question from this Court asking what witnesses had been paid, Mr. Collingsworth volunteers to answer, prefacing his response with “the shortest way to the truth is to ask me the question.” He then lies and states that “exactly three” witnesses were paid. Doc. 123 (Apr. 21, 2014 Hrg. Tr.) at 30:1-31:19.

May 22 and 27, 2014

Defendants produce documents that have been redacted to hide the $2,700 monthly payments to El Tigre and Samario. Docs. 174-10, 174-11, 17418 & 174-19.

June 25, 2014

July 9, 2014

Defendants file their Principal Crime-Fraud Brief, falsely representing that only three witnesses were paid and claiming that they have provided a “reasonable explanation” in response to Drummond’s prima facie case of witness bribery. Doc. 174-13.

July 18, 2014

Defendants file their Crime-Fraud Reply Brief. The phrase “three witnesses” appears nine times in that brief. They again falsely represent

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Date(s)

Event that only three witnesses were paid, claiming that they have provided a “reasonable explanation” in response to Drummond’s prima facie case of witness bribery. Doc. 174-14.

September 12, 2014

In a letter copying the Special Master, Defendants represent as follows: “Defendants have done its [sic] best to produce or log all responsive documents which evidence or refer to security payments to witnesses associated with the human rights cases against Drummond.” Doc. 243-24 (Sept. 12, 2014 B. Smith Ltr.) at 5.

September 23, 2014

Conrad & Scherer submits a filing in Florida state court styled “Conrad & Scherer’s Memo Re: Document Production and Privilege Logs”, attaching the sworn declaration of Mr. Collingsworth. Docs. 243-25 & 243-26 (Conrad & Scherer’s Sept. 23, 2014 Brief in the Wichmann case). In that sworn declaration, Doc. 243-25 at pp. 152-164 of 170, Mr. Collingsworth testifies that Charris, Gelvez, Duarte, Halcon and Claudia Balcero have been paid. He falsely testifies that Claudia Balcero is “the final individual who received security measures.” Id. at p. 159 of 170.

October 9, 2014

Parker Waichman, LLP produces to the Special Master for in camera inspection the documents it has withheld on privilege grounds. Included in those documents is the “ ” email,

November 17, 2014 at 11:17 p.m.

Defendants produce the “ ” email to Drummond, as well as other documents that had been produced in May 2014 that have now been unredacted to reveal the $2,700 monthly payments to El Tigre and Samario.

The above timeline speaks for itself and proves that both Conrad & Scherer and Collingsworth were intimately involved in perpetrating a fraud on this Court. Defendants cannot cite law from any jurisdiction that permits a party to attempt to rebut a prima facie showing of a crime or fraud by knowingly committing an additional fraud, and when that fails, be allowed additional bites at the apple. Defendants’ conduct is unconscionable. They lied to the Court in a hearing on a motion for sanctions about lying to the Court. Then, after this Court ordered the parties to brief the crime-fraud exception, Defendants knowingly submitted briefing to the Court that was itself a massive fraud. The question then becomes: how many chances do Defendants get?

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B.

Defendants’ “explanation” for their conduct is insufficient as a matter of law and contradicted by a mountain of documentary evidence.

This Court has already acknowledged that “[t]here is evidence that if believed by the trier of fact would establish the elements of bribery and subornation of perjury.” Doc. 341 (Aug. 26, 2015 Hrg. Tr.) at 22:5-7. Defendants’ rebuttal argument – that the payments to El Tigre, Samario, Gelvez, Charris and Duarte were for “security” – is supported by their self-serving statements, and nothing else.11 Defendants have not produced any objective documentation supporting their claim that these payments were for “security,” such as invoices from security companies to the witnesses showing the provision of protection services, contracts between the witnesses and any security company, or even emails with the witnesses outlining what protection will be provided. Defendants have never disclosed any communications with or approval from any Bar Association or any other authority regarding these payments. Moreover, there are no police reports or other complaints or requests to Colombian authorities regarding the need for “security” assistance. The only evidence that these payments were for “security” are Defendants’ self-serving statements. When this Court directly asked what evidence the Defendants had that their payments were for “security,” Defendants agreed that “the evidence would be [Mr. Collingsworth]’s stated purpose for why the payment was made.” Doc. 123 (Apr. 21, 2014 Hrg. Tr.) at 26:2-9. For purposes of the crime-fraud exception, however, “a finding of probable cause is not negated by ‘an innocent explanation which may be consistent with the facts alleged.’” Chevron Corp. v. Donziger, 2013 WL 1087236 at *25 (citations omitted); see also In re Grand Jury Proceedings, 492 F.3d 976, 984-85 (8th Cir. 2007) (affirming application of the crime-fraud exception where

11

The payments to Blanco had nothing to do with “security” and, as explained supra in note 6, violate 18 U.S.C. § 201(c).

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“[t]he client’s rebuttal evidence appears to consist primarily of statements by the client and others that essentially convey the client’s innocent explanations for his conduct”). Defendants’ self-serving explanation of why they paid members of a terrorist group who testified against Drummond hundreds of thousands of dollars is inadequate. Indeed, if a party’s self-serving explanation were sufficient to defeat the crime-fraud exception, it would be meaningless. Moreover, Defendants’ “reasonable explanation” is contradicted by a mountain of documentary, objective evidence that shows those payments had nothing to do with “security,” but rather were made to procure false testimony against Drummond. See Doc. 341 (Aug. 26, 2015 Hrg. Tr.) at 18:10-19:10; 20:25-22:9 (citing evidence showing that Defendants’ witness payments constitute bribery and suborning of perjury). That evidence includes the following: 

Rather than disclosing these payments or their relationship with Ivan Otero, Defendants fraudulently concealed them. See Doc. 243, generally; see also pages 24-27, supra. As stated by the Eleventh Circuit, “[a] jury could find it strange that those who insist that their conduct was proper and their intent pure went to such great lengths to hide it all from the light of day. From such secrecy much may be inferred.” Cox, 17 F.3d at 1402;



Collingsworth told his cohorts that Defendants needed to pay El Tigre and Samario until they get the “ ” Doc. 174-6;



Collingsworth stated to other lawyers that Jaime Blanco would say “Drummond had nothing at all to do with it” if he was not paid. Doc. 101-15;



The payments to Jaime Blanco had absolutely nothing to do with “security,” but rather were made “ ” for his testimony. Doc. 174-7 at 11. Defendants admitted that Blanco . Doc. 174-2 at 6;



There is documentary evidence that Defendants have a pattern and practice of paying “fact” witnesses in Colombia for the substance of their testimony. See Doc. 109-1 (Collingsworth discussing paying a fact witness $20,000 in cash and stating that “if we don’t like what we see, we don’t pay”);



Collingsworth knowingly elicited perjured testimony from Blanco on the subject of witness payments, asking him “Have you had any benefits or gifts provided to you?”, to which Blanco responded “No. No kind whatsoever.” Doc. 243 at ¶¶ 106-108;

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

Paul Wolf’s testified that he was

Doc. 62-5 (Wolf Decl.) & Doc. 174-3 (Wolf Dep.) at 40:1346:21; 

Defendants’ own internal documentation describes the purpose of their witness payments as for “support” or “ ,” payments for “fieldwork,” a payment for “the initial draft of the information,” or a “monthly allowance.” Docs. 62-3, 88-7, 109-1, 44-10, & 174-8;



there are serious questions regarding the “reasonableness” of the amounts paid to these witnesses. According to statistics compiled by DANE, Colombia’s statistics agency, in 2009 almost half of Colombia’s population lived below the poverty line, which is defined as earning less than $143 per month. The average Colombian household in 2009 earned $287 (or 560,409 Colombian pesos) per month. In the United States, by contrast, the average household income for 2009 according to the U.S. Census Bureau was $6,152 per month.12 So, for example, when Defendants promised to pay Charris’s family 1,500,000 Colombian pesos per month, it was the promise of a salary approximately 2.68 times that of the average household in Colombia. Offering the same deal to a witness in the United States would roughly equate to a tax-free salary of $16,487.36 per month (or almost $200,000 per year).



As discussed more fully above is § III-B-1, and Ex.1, before they started receiving money from Mr. Collingsworth and his team, these witnesses have told different stories, under oath, to Colombian authorities.13

Respectfully submitted,

/s/ H. Thomas Wells, III William Anthony Davis, III (ASB-5657-D65W) H. Thomas Wells, III (ASB-4318-H62W) Benjamin T. Presley (ASB-0136-I71P) 12

/s/ Sara E. Kropf Sara E. Kropf LAW OFFICE OF SARA KROPF PLLC 1001 G St. NW, Suite 800

Available at http://www.census.gov/content/dam/Census/library/publications/2014/demo/p60-249.pdf.

13

Drummond fully expects that many of the 13,000 documents Defendants have withheld on claims of “privilege” or “work product” and which are presently being reviewed in camera by the Special Master will further contradict their story to this Court that their witness payments were for “security.”

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STARNES DAVIS FLORIE LLP P.O. Box 59812 Birmingham, AL 35259 (205) 868-6000 fax: (205) 868-6099

Washington, DC 20001 (202) 627-6900

Attorneys for Drummond Company, Inc.

CERTIFICATE OF SERVICE I hereby certify that on August 31, 2015, I electronically filed the foregoing with the Clerk of the Court using the CM/ECF system which will send notification of such filing to the following: Bradley J. Smith, Esq. Eric D. Bonner, Esq. Clark, Hair & Smith, P.C. 1000 Urban Center Drive Suite 125 Birmingham, Alabama 35242 Christopher S. Niewoehner Kendall Enyard Savannah E. Marion STEPTOE & JOHNSON, LLP 115 S. LaSalle Street Suite 3100 Chicago, IL 60603 Tel: (312) 577-1240 Special Master T. Michael Brown, Esq. Ms. Carly Miller, Esq. Bradley Arant Boult Cummings, LLP One Federal Place 1819 Fifth Avenue North Birmingham, Alabama 35203 [email protected] [email protected] Kenneth McNeil SUSMAN GODFREY 1000 Louisiana, Suite 5100 Houston, Texas 77002-5096 [email protected]

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Robert Spotswood William K. Paulk SPOTSWOOD SANSOM & SANSBURY, LLC One Federal Place 1819 Fifth Avenue North, Suite 1050 Birmingham, Alabama 35203 [email protected] [email protected] Walker Badham, III Badham & Buck, LLC 2001 Park Place, Suite 500 Birmingham, AL 35203 [email protected]

/s/ H. Thomas Wells, III H. Thomas Wells, III (ASB-4318-H62W)

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