Drummond shows that none of Collingsworth's three expert witnesses would say that his witness payments were either e...
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FILED 2015 Oct-13 PM 07:19 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
DRUMMOND COMPANY INC.’S RESPONSE TO DEFENDANT COLLINGSWORTH’S POST-HEARING BRIEF REGARDING CRIME-FRAUD EXCEPTION
William Anthony Davis, III (ASB-5657-D65W) Sara E. Kropf H. Thomas Wells, III (ASB-4318-H62W) LAW OFFICE OF SARA KROPF PLLC Benjamin T. Presley (ASB-0136-I71P) 1001 G St. NW, Suite 800 Washington, DC 20001 STARNES DAVIS FLORIE LLP P.O. Box 59812 (202) 627-6900 Birmingham, AL 35259 (205) 868-6000 fax: (205) 868-6099 Attorneys for Drummond Company, Inc.
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TABLE OF CONTENTS TABLE OF AUTHORITIES.................................................................................................................. iii ARGUMENT .......................................................................................................................................1 I.
COLLINGSWORTH’S BRIEF SHOULD NOT BE CONSIDERED BY THE COURT BECAUSE IT VIOLATES THE COURT’S ORDER AS TO THE SCOPE OF POST-HEARING BRIEFING.........1
THREE EXPERTS TESTIFIED TO HYPOTHETICAL FACTS AT THE SANCTIONS HEARING AND DID NOT JUSTIFY THE FRAUD ON THE COURT OR THE OTHER CRIMES COMMITTED HERE.. ...........................................................................2
IN CAMERA REVIEW AND THE SECOND PRONG OF SCHROEDER ..................................8 A.
At an absolute minimum, there is sufficient evidence to warrant in camera review under Zolin. ......................................................................................8
All documents “related to” the crimes and fraud at issue are discoverable under the crime-fraud exception. ...............................................................12
CONCLUSION...................................................................................................................................14 CERTIFICATE OF SERVICE ...............................................................................................................16
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TABLE OF AUTHORITIES Cases
Brady v. United States, 373 U.S. 83 (1963)...............................................................................................................5 Cox v. Adm’r U.S. Steel & Carnegie, 17 F.3d 1386 (11th Cir.) opinion modified on reh’g, 30 F.3d 1347 (11th Cir. 1994) .......15 Craig v. A.H. Robins Co., 790 F.2d 1 (1st Cir. 1986)..................................................................................................12 Giglio v. United States, 405 U.S. 150 (1972).............................................................................................................5 Hamilton v. Southland Christian Sch., Inc., 680 F.3d 1316 (11th Cir. 2012) ...........................................................................................2 In re Grand Jury Investigation (Schroeder), 842 F.2d 1223 (11th Cir. 1987) .....................................................................................8, 14 In re Grand Jury Subpoenas, 144 F.3d 653 (10th Cir. 1998) ...........................................................................................12 U.S. v. Levenite, 277 F.3d 454 (4th Cir. 2002) ...............................................................................................3 United States v. Thornton, 1 F.3d 149 (3d Cir. 1993) ....................................................................................................5 U.S. v. Wilson, 904 F.2d 656 (11th Cir. 1990) .............................................................................................5 United States v. Zolin, 491 U.S. 554 (1989)...........................................................................................................10
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Defendant Collingsworth’s post-hearing brief merely rehashes the hundreds of pages of existing briefing about the crime-fraud exception. The Court did not order briefing on this topic, and Collingsworth’s brief should therefore be stricken as improperly filed. Even if the Court considers it, Collingsworth’s arguments against the crime-fraud exception should be rejected because the evidence presented at the sanctions hearing firmly establishes its application here. ARGUMENT I. COLLINGSWORTH’S BRIEF SHOULD NOT BE CONSIDERED BY THE COURT BECAUSE VIOLATES THE COURT’S ORDER AS TO THE SCOPE OF POST-HEARING BRIEFING.
The parties have filed hundreds of pages of briefing on whether the crime-fraud exception applies here. On the last day of the sanctions hearing, the Court precisely defined four issues to be briefed: 1.
If the Court “decide[s that] the crime-fraud exception applies with respect to Mr. Collingsworth, what steps should [the Court] take after that.” Doc. 391 (Sept. 1-3 Hrg. Tr.) at 753:19-21.
Again assuming that the crime-fraud exception is imposed against Collingsworth, has Drummond “met a lower threshold requirement . . . to require[e] some type of in camera inspection of records” of Conrad & Scherer and “what should that in camera inspection look like.” Id. at 754:5-15.
Assuming the crime-fraud exception applies to either or both Defendants, “how does that affect the assertion of work product privilege or attorneyclient privileged communications in . . . other cases.” Id. at 754:16-23.
Drummond’s response to Defendants’ assertion that the alleged crimes or frauds are “over and fixed” or ongoing. Id. at 769:16-18.
The Court did not order the parties to (re)brief the application of the crime-fraud exception. Yet Collingsworth’s brief ignores the Court’s order and does just that. See Doc. 392 generally. Because the Court’s order does not authorize this brief, and because it does not address any of the issues defined above, the brief should be not be considered by the Court.
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Hamilton v. Southland Christian Sch., Inc., 680 F.3d 1316, 1319 (11th Cir. 2012) (refusing to address case law cited in unrequested supplemental notice of authority). II. DEFENDANTS’ THREE EXPERTS TESTIFIED TO HYPOTHETICAL FACTS AT HEARING AND DID NOT JUSTIFY THE FRAUD ON THE COURT OR THE COMMITTED HERE.
THE SANCTIONS OTHER CRIMES
Even if the Court considers Collingsworth’s brief, its arguments should be rejected. Collingsworth first argues that the witness payments were “necessary, legal, ethical and morallyrequired.”
Doc. 392 at 3.
He claims that the opinions of the three defense experts are
“unrebutted and highly credible” and that their opinions support his argument. Id. As an initial matter, as the Court explained at the sanctions hearing, it is “more focused in on the nondisclosure and misrepresentations about these payments” and is not convinced that it must “mak[e] any ruling on propriety of the payments at this particular time.” Doc. 391 (Sept. 13 Hrg. Tr.) at 709:2-8. The Court need not decide whether these payments were appropriate to apply the crime-fraud exception; Defendants’ non-disclosure of those payments is a fraud on the court sufficient to apply the crime-fraud exception.1 And contrary to Collingsworth’s assertion, the opinions offered by these three experts were not “unrebutted and highly credible.” The relevance and reliability of the opinions offered by all three experts were called into serious question during cross examination and through the
Collingsworth repeatedly asserts that Drummond has not presented a prima facie case of any fraud or crime. Doc. 392 at 1, 2, 3 & 8. Drummond does not respond herein to this familiar and false contention for two reasons: First, this issue has been briefed and argued ad nauseum since July 2014. See Docs. 348-2, 348-3, 348-4, 348-5, 348-6, 348-7 & 355. This Court, therefore, is well aware of Drummond’s position with respect both the law and the facts as they relate to whether the crime-fraud exception applies to both Defendants based on witness bribery, suborning perjury and perpetrating a fraud on the Court. Second, Collingsworth’s argument is not even remotely responsive to the specific questions identified by this Court on September 3rd for supplemental briefing.
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documentary record 2, and some of the most important testimony they offered actually strongly supports the conclusion that Defendants’ witness payments were unethical and illegal. Javier Peña. Mr. Peña worked for the DEA in Colombia long before the witness payments at issue here. Doc. 390 (Sept. 1-3 Hrg. Tr.) at 286:3-5, 288:4-7 (in Colombia from 1988 to 1994 and 1999 to 2001). Mr. Peña offered the opinion that it was legal for the DEA to provide witness payments in Colombia in specific circumstances and subject to strict protocols. Id. at 304:4-8. This opinion, however, does not support Collingsworth’s argument for several reasons. First, Mr. Peña testified that (1) the DEA payments to confidential informants were “legally authorized,” and (2) that larger payments were approved by someone at the “headquarters level” of the federal government. Id. at 313:7-13. Defendants’ witness payments were neither authorized by statute nor approved by anyone in the federal government. See U.S. v. Levenite, 277 F.3d 454, 460-464 (4th Cir. 2002) (extensively discussing the government’s authority to make payments to confidential informants and witnesses, holding “there are several statutes that allow the government to pay informants and witnesses for their cooperation, services and testimony”). Second, Mr. Peña knows nothing about the actual payments that were made by Defendants, such as their size, timing or justification. Nowhere in Mr. Peña’s testimony or his declaration (Defendants’ Exhibit 295) does Mr. Peña offer the opinion that the payments made by the Defendants were legal. Mr. Peña’s opinion that payments by the DEA are legal does not
For example, Drummond offered as an exhibit the declaration of expert witness R. Bernard Harwood. See Plaintiff’s Hearing Exhibit 44 (also filed with the Court as Doc. 88-6). Justice Harwood was provided with information about the witness payments here and offers the opinion that these payments were unethical. Id. Justice Harwood’s report demonstrates that these experts’ testimony was not “unrebutted.” Notably, Justice Harwood reached this conclusion even before the massive fraudulent concealment with respect to the payments to Blanco, Samario and El Tigre was uncovered.
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answer the question of whether the payments by Defendants were ethical or legal. In fact, when Mr. Peña was making statutorily-authorized payments to confidential informants in Colombia, see Doc. 390 (Sept. 1-3 Hrg. Tr.) at 309:7-10, the AUC did not even exist. Third, it is undisputed in this case that Mr. Collingsworth published the identity, testimony and, in most cases, location, of each of the witnesses that were paid on IRAdvocates’ website.
See Ex. 1 (IRAdvocates website screenshot).
When asked if he would ever do
something like that with respect to people that he was protecting, Mr. Peña’s answer was an emphatic “no”: Q When you were working with confidential informants back in the late ‘80s, early ‘90s, you mentioned that the confidentiality of their identity was of utmost importance? A Yes, sir. Q How many times have you posted the identities of your confidential informants on the Internet? A I have never done that. Q That wouldn’t be something you would do, would you? A Of course not. Q How about the names of their family members? A I would never do that either. Q How about the testimony that they’re going to be providing against the person that may be allegedly trying to threaten them? A That is all confidential. Those reports are locked in very secure places. Q You would never put that on the Internet? A No, sir. Doc. 390 (Sept. 1-3 Hrg. Tr.) at 309:7-24.
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Fourth, Mr. Peña’s testimony was about the legality of payments to confidential informants, not about payments to trial witnesses. This is a crucial distinction with respect to disclosure. The confidential informants Mr. Peña described provided the DEA with information about criminal organizations in Colombia3 but were not witnesses at trial. The government must disclose information that affects the credibility of its witness at trial, including witness payments. Giglio v. United States, 405 U.S. 150, 154 (1972) (“When the ‘reliability of a given witness may well be determinative of guilt or innocence,’ nondisclosure of evidence affecting credibility falls within this general rule.”); Brady v. United States, 373 U.S. 83 (1963); United States v. Thornton, 1 F.3d 149, 158 (3d Cir. 1993) (“It is evident that the information [about DEA payments to witnesses] that was not disclosed fell within the Brady rule, and should have been disclosed by the government.”); U.S. v. Wilson, 904 F.2d 656, 659 (11th Cir. 1990) (holding that the government “must not deliberately use, or encourage the use of, perjured testimony . . . there must be a complete and timely disclosure of the fee arrangement . . . there must be adequate opportunity to cross examine regarding the fee arrangement, and . . . a defendant is entitled to a special cautionary instruction on the credibility of an accomplice or government informant”). Stephen T’Katch. Mr. T’Katch worked in the Department of Justice’s Witness Security Program. Doc. 390 (Sept. 1-3 Hrg. Tr.) at 352:1-3. Like Mr. Peña, Mr. T’Katch testified only about the statutorily-authorized practices of federal law enforcement officers in criminal investigations to protect witnesses or informants.
He explained that there was a rigorous
approval process including involving the “criminal division of the Department of Justice, the United States Marshals Service, and the Federal Bureau of Prisons.” Id. at 370:3-7. Mr.
In Mr. Peña’s words, informants would provide information about “what they were up to, what they were planning, for example, trafficking routes . . . where the stash sites were at, where the cocaine labs were at.” Id. at 294:16295:1.
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T’Katch also described how the prosecutor would generally “turn [information about witness payments] over to the court and then to the defense attorney.” Id. at 364:4-17. Sometimes, the Department of Justice would request that the information be deemed attorneys’ eyes only and “not shared with the defendant.”
He testified, however, that the “fact of subsistence
[payments]” would always be disclosed by the government to the court. Id. at 378:6-10. Like Mr. Peña, Mr. T’Katch knew nothing about the actual witness payments made here, testifying that “I have not delved into the facts, the underlying facts, of this case.” Id. at 375:5-8. As a result, he did not offer an opinion about the legality of the witness payments here, and his opinion does not support Collingsworth’s argument. If Defendants actually had evidence of the supposed threats against these witnesses or their families or evidence of security measures provided to the witnesses or families, then one would expect Mr. Peña or Mr. T’Katch to opine on the seriousness of the threats and the appropriateness of the security measures provided to the witnesses. Their failure to provide such analysis speaks volumes as to the lack of that evidence here. Charles Wolfram. Professor Wolfram purported to offer an expert opinion as to whether Defendants’ witness payments were ethical. He opined that, in general, payments for security could be ethically made. However, he admitted that he could not offer an opinion as to whether the specific payments here were reasonable,4 because he “didn’t have even remotely enough facts to reach a conclusion.” Id. at 343:9-21. Therefore, Professor Wolfram does not offer an opinion that the actual payments made by Defendants were ethical, and his opinion does not
Professor Wolfram’s report offers four “guidelines” for this analysis: (1) whether the cost of testifying (without reimbursement) would dissuade a witness from testifying; (2) the size of the payment as compared to the “witness’ role of giving testimony” and not compared to the testimony’s value to the party paying the witness; (3) the size of the payment should reflect “actual costs” to the witness; and (4) the size should not be “unreasonably large or exorbitant.” Defendants’ Hearing Exhibit 322, ¶ 19. However, Professor Wolfram does not offer an opinion about the results of any analysis of these guidelines applied to the facts of this case.
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support Collingsworth’s contention that they were. In addition, Professor Wolfram admitted that witness payments should be disclosed “before [the witnesses] give their trial testimony so that they can . . . be cross-examined about that.” Id. at 344:21-345:1.5 Professor Wolfram’s opinions do not justify Defendants’ actions. First, he made clear that any such payments must be disclosed before trial testimony. Defendants, of course, did not do so in Balcero. With respect to Gelvez, Charris, and Duarte, they affirmatively withheld this information until after they obtained trial testimony and after discovery had closed. Doc. 280 at ¶ 93. And they never disclosed the payments to El Tigre, Samario and Blanco. Id. at ¶ 94. Second, Professor Wolfram does not offer the opinion that Defendants’ witness payments here were ethical because, again, he was not provided “enough facts” by Defendants to reach this conclusion. Because none of these three experts analyzed the actual payments at issue to determine if they were either legal or ethical, their opinions have no relevance here. They do not support Collingsworth’s argument that the payments made by Defendants were “necessary, legal, ethical and morally-required.” Doc. 392 at 3. In fact, their testimony supports Drummond’s argument that Defendants committed a fraud on the court by failing to disclose the payments before these witnesses offered trial testimony. Moreover, Collingsworth’s argument that these payments were “necessary, legal, ethical and morally-required” relies entirely on a self-serving and one-sided set of facts. Collingsworth even asserts that “[t]here is no dispute that the record is now complete, and all outstanding, responsive information regarding witness assistance was provided to Drummond in compliance
Professor Wolfram also offered the remarkable opinion that it is permissible to affirmatively misrepresent to the court and other parties the existence witness payments in an “extreme” case. Doc. 391 (Sept. 1-3 Hrg. Tr.) at 343:22-344:11. This opinion is nowhere supported by any rule of ethics, bar opinion or even common sense, and it seriously calls Professor Wolfram’s credibility into question.
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with the Court’s October 15, 2014 Order.” Doc. 392 at 2. That contention is simply not true. The record is nowhere close to “complete.” Defendants have withheld hundreds of documents relating to witness payments as privileged, refused to answer questions based on privilege, and spoliated several years’ of Collingsworth’s email, all of which would allow Drummond to further contradict Defendants’ characterization of these payments. Indeed, if it were “undisputed” that the record was “complete,” the parties would not be litigating the applicability of the crime-fraud exception. In any event, this Court does not need to conclusively hold that the payments at issue were bribes for the crime-fraud exception to apply, which is the issue presently before this Court. Rather, all that Drummond is required to do is present evidence that, if believed by a trier of fact, In re Grand Jury Investigation (Schroeder), 842 F.2d 1223, 1226 (11th Cir. 1987), could cause a reasonable person to believe that Defendants’ witness payments were not for “security,” but rather to purchase testimony. Drummond has met this burden. III. IN CAMERA REVIEW AND THE SECOND PRONG OF SCHROEDER A.
At an absolute minimum, there is sufficient evidence to warrant in camera review under Zolin.
Collingsworth’s final argument is that Drummond has not made a sufficient showing that the documents it seeks are “in furtherance of” the fraud on the court. Doc. 392 at 8-14. Specifically, Collingsworth argues that “there cannot be an in camera inspection because Drummond has not shown evidence that documents in furtherance of any alleged fraud on the court exist.” Id. at 13.6
But this Court has already stated its intention to conduct such a review
to determine the “related to” prong of the crime-fraud analysis. Doc. 390 (Sept. 1-3 Hrg. Tr.) at
In his supplemental crime-fraud brief filed just a few weeks ago, Collingsworth argued just the opposite. He contended that “[i]n order to determine whether the communication was ‘in furtherance of’ a crime or fraud, the Court must review the communication at issue in camera.” Doc. 353 at 13 (emphasis added). Collingsworth should not be permitted to change course merely because he now realizes the likelihood that the crime-fraud exception will be applied against him.
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471:13-19 & 473:13-474:3.
Additionally, Collingsworth’s arguments regarding in camera
review ignore entirely this Court’s directions regarding post-hearing briefing, which made clear that the parties were to assume that the crime-fraud exception applied to Collingsworth. More importantly, there are mountains of documentary evidence of Collingsworth’s direct involvement in witness payments and Defendants’ fraudulent concealment thereof. See Doc. 293 at 10-11; Doc. 355 at 14-22 & 28-29. Indeed, Drummond identified and discussed nine categories of documents or information that are “in furtherance” of the crimes or fraud, including answers to deposition questions about Ivan Otero, documents related to the “deps in the can” email, communications with counsel related to the improper redaction of the Blanco payment documents and communications related to drafting pleadings that misrepresented the number of witnesses being paid. Doc. 311 at 6-25. Drummond has made its showing that these categories of documents and communications are directly “related to”—and “in furtherance of”—the crimes and fraud on the Court here. 7 C&S similarly argues that that there is only “innuendo and speculation” of its involvement in the crimes and fraud at issue, Doc. 395 at 25, and therefore in camera review of documents is not warranted. But Drummond has presented volumes of evidence consisting of documented correspondence involving every member of the management team at the firm, as well as its CFO, firm business records, firm bank records, and regular monthly emails involving numerous C&S partners and employees involved in the processing and sending of witness payments. See Doc. 393 at Sections I & II. This evidence proves that countless representations
Many of the documents and communications that would be “related to” or “in furtherance of” the crimes and fraud perpetrated by Defendants postdate January 2013, and have neither been logged nor submitted for in camera review by the Defendants. As explained infra on pages 10-11, at the time this Court entered its October 15, 2014 “Order on Privilege Logs” (Doc. 151), Defendants were blatantly misrepresenting the scope, nature and extent of their witness payments to both Drummond and the Court, and had not yet disclosed that Samario, El Tigre and Blanco had all been paid.
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made by both Defendants to Drummond and this Court are unequivocally false, is far more evidence than courts have found sufficient to apply the crime-fraud exception, and is multitudes more than has been required to justify in camera review under Zolin. Moreover, as this Court stated, “you can’t look at it as those facts in a vacuum. You look at the entire case.” Doc. 390 (Sept. 1-3 Hrg. Tr.) at 470:15-16. Thus, when determining whether there is a prima facie case of witness bribery or fraud on the court, this Court should look not just at the payments themselves, but also other factors such as (1) the fraudulent concealment of those payments, (2) the shifts in the witnesses’ testimony associated with those payments, (3) the lack of objective documentation showing that the money was actually used for “security,” and (4) Defendants’ act of publishing witness identities and testimony on the Internet, which is something their own expert admitted was totally inconsistent with protecting a witness. In light of the above evidence, Defendants cannot legitimately argue that Drummond has failed to set forth evidence that is “sufficient to support a reasonable belief that in camera review may yield evidence that establishes the exception’s applicability.” United States v. Zolin, 491 U.S. 554, 574-75 (1989) (emphasis added); see also Doc. 393 at Section II-C (collecting cases). Significantly, none of Defendants’ communications with their counsel have yet been logged or produced to the Special Master, as Defendants contend they do not fall within the scope of this Court’s October 15, 2014 Order. Doc. 151. But at the time the parties were negotiating the privilege log obligations in September 2014, and at the time this Court ultimately entered its October 15, 2014 “Order on Privilege Logs,” Defendants were blatantly lying regarding the true nature, scope and extent of Defendants’ witness payments. Indeed, just five days before Drummond submitted its proposed privilege log limitations, Ex. 2 (Sept. 17, 2014 Wells Ltr.), Defendants sent a letter to Drummond and the Special Master that contained
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numerous misrepresentations regarding their witness payments, including the blatantly false representation that “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 p. 7 of 8. This was nearly three months after Billy Scherer had printed out and forwarded the “deps in the can” email to both Bill Scherer and counsel in this defamation case. Yet, Defendants did not disclose their payments to El Tigre and Samario until over two months later, on November 17, 2014, see Doc. 174-6, and did not disclose the payments to Blanco until January 9, 2015. Doc. 174-2. Accordingly, Drummond was unaware that all of Defendants’ prior representations that only “three witnesses” had been paid were categorically false. Obviously, had Drummond known the true state of the facts, Drummond would have insisted on Defendants logging and producing in camera their communications with their counsel in this case. Defendants should not be allowed to benefit from their fraudulent misconduct. As stated previously, “Drummond respectfully submits that this Court’s in camera review should include communications between Defendants’ and any of their counsel between January 1, 2013 and January 9, 2015, and requests entry of an order directing the Defendants to produce those communications to the Special Master for his review.” Doc. 393 at 22. For the reasons explained in both prior briefing and herein, those communications are critical evidence that will bear directly on, inter alia, the issues of (1) who knew about the misrepresentations made to this Court, (2) when they knew it, (3) why the May 2014 redactions (which concealed the payments to El Tigre and Samario) were made and by whom, (4) whether Mr. Collingsworth truly “forgot” about witness payments, and (5) the veracity of Defendants’ contention that they “moved Heaven
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and Earth” to disclose the true scope, nature and extent of their witness payments just as soon as they could. B.
All documents “related to” the crimes and fraud at issue are discoverable under the crime-fraud exception.
C&S and Collingsworth both argue that the crime-fraud exception “does not apply to communications regarding past or completed frauds.” Doc. 395 at 27; Doc. 392 at 10-12. While that language can be found in the case law, Defendants’ interpretation of it misses the mark. For example, a criminal defendant is entitled to have privileged discussions with his attorney in furtherance of his defense against charges for a criminal offense. But this principle does not apply to circumstances where there is the initial criminal and fraudulent conduct (payment of witnesses and the concealment of the same in Balcero), and then an ongoing fraudulent cover-up of those payments as occurred throughout this case. See, e.g., In re Grand Jury Subpoenas, 144 F.3d 653, 660 (10th Cir. 1998) (crime fraud exception “does apply if the assistance was used to cover up and perpetuate the crime or fraud.”); Craig v. A.H. Robins Co., 790 F.2d 1, 4 (1st Cir. 1986) (“[C]ontinuing fraudulent misrepresentation and cover-up vitiates not only any attorneyclient privilege but also any work product immunity.”). That type of cover-up is precisely what happened here.8 So Defendants cannot plausibly argue that “communications Conrad & Scherer had with Collingsworth or its outside counsel in this case in June 2014 would not be ‘in furtherance of’ the completed fraud on the court. Nor would Conrad & Scherer’s internal privileged communications or communications with its outside counsel in the [Wichmann] Florida state court case.” Doc. 395 at 28; see also Doc. 392 at 12 (“any work product that could be subject to production to Drummond as a result of application of the crime-fraud exception would have to 8
Moreover, Defendants are still paying Charris, El Tigre and Samario. Doc. 280 at ¶¶ 29 & 71. The crime of witness bribery, at least as it relates to these three witnesses, is ongoing.
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be communications before Mr. Collingsworth’s statements to the Court [on April 14, 2014]”). Not only does that assertion ignore the fact that a cover-up of past crimes or frauds is sufficient to invoke the crime-fraud exception, it also relies on the demonstrably false assumption that Defendants’ fraud on this Court was “completed” by June 2014. In reality, their fraud was far from “completed” in June 2014. In July 2014, both Defendants submitted to this Court briefs on the crime-fraud exception which included some of the most forceful (and categorically false) representations regarding their witness payments, and also attacked Drummond and its counsel. See Docs. 174-13 & 17414. This briefing and their arguments at the July 23, 2014 hearing misled the Special Master into believing that all witness payments had been fully disclosed. Doc. 283-23 (Mar. 24, 2015 Hrg. Tr.) at 137:25-138:10. Also in July 2014, Defendants submitted a “supplemental” privilege log that completely omitted the “deps in the can” email, which, had it been logged and provided to the Special Master, would have instantly revealed Defendants’ crime-fraud briefing to be, itself, a massive fraud. Doc. 280 at ¶ 381. It is now known that over two weeks before that privilege log was served, Billy Scherer had located, printed out, and provided to both Bill Scherer and Defendants’ counsel in this case the “deps in the can” email. Docs. 389 & 390 (Sept. 1-3 Hrg. Tr.) at 195:7197:12; 397:22-398:12; 407:5-408:6. In August 2014, Collingsworth perjured himself in a sworn declaration regarding the scope, nature and extent of his witness payments. Doc. 280 at ¶¶ 440-451. In September 2014, Defendants again made misrepresentations in the Wichmann case regarding their witness payments, id. at ¶¶ 438-451, as well as in correspondence sent to Drummond and the Special Master. Id. at ¶¶ 424-437. And in November 2014, Defendants
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served joint interrogatory responses falsely swearing that there was merely a discussion about paying Jaime Blanco. See Doc. 174-7. They did not disclose those payments until January 9, 2015. Doc. 174-2. Both Defendants have represented to this Court that they acted in good faith in disclosing their witness payments as soon as possible after they learned that Samario, El Tigre and Blanco were paid. See Doc. 395 at 31 (“When Conrad & Scherer learned that misstatements may have been made and incorrect information provided to the Court, it ‘moved Heaven and Earth’ to correct the problem.”). Neither this Court nor Drummond is required to accept that contention at face value, and Defendants cannot be allowed to manipulate privilege and work product to hamstring Drummond in its efforts to test this contention. Defendants’ communications amongst themselves, and with any outside counsel, relating to the true facts of their witness payments (and the disclosure of the same) are unquestionably “related to” the fraud on this Court, as they will bear directly on who knew what, when they knew it, and what prompted the Defendants to make the undisputed misrepresentations they did.9 CONCLUSION Even if the Court considers the arguments in Collingsworth’s improperly-filed brief, each fails. Defendants’ three expert witnesses did not provide testimony to support Collingsworth’s argument that these payments by Defendants in Balcero were ethical or legal, nor did they offer testimony to address the overwhelming evidence that Defendants improperly concealed these
C&S bizarrely argues that the crime-fraud exception “is not a discovery device to obtain communications and information that would relate to a crime or fraud.” Doc. 395 at 28. That assertion is contradicted by the plain language of Schroeder: “The second prong is satisfied by a showing that the communication is related to the criminal or fraudulent activity established under the first prong.” 842 F.2d at 1227 (holding that, where there was a prima facie case of tax fraud, the crime-fraud exception allowed discovery of “any legal assistance Schroeder received in generating income he did not intend to report” and “any legal assistance Schroeder received in disposing of income he did not intend to report”, as both were “related to his tax evasion”); see also id. at 1228 (“any communications Schroeder made in connection with legal advice Kliston may have provided that was related to Schroeder’s tax evasion would not remain privileged”).
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payments from Drummond and the Court. payments, if made, must be disclosed.
In fact, Defendants’ experts agreed that such
Their uniform opinion on this point renders the
Defendants’ nondisclosure of their witness payments all the more damning. 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 v. Adm’r U.S. Steel & Carnegie, 17 F.3d 1386, 1402 (11th Cir.) opinion modified on reh’g, 30 F.3d 1347 (11th Cir. 1994). Likewise, Drummond has made a sufficient showing that the requested documents are “related to” the crimes and fraud at issue, and may yield additional evidence of those crimes and fraud.
/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) STARNES DAVIS FLORIE LLP P.O. Box 59812 Birmingham, AL 35259 (205) 868-6000 fax: (205) 868-6099
/s/ Sara E. Kropf 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.
Case 2:11-cv-03695-RDP-TMP Document 401 Filed 10/13/15 Page 19 of 19
CERTIFICATE OF SERVICE I hereby certify that on October 13, 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: 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]
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 Percy 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)