970 F.2d 328 (7th Cir. 1992), 91-3429, United States v. White

Docket Nº91-3429.
Citation970 F.2d 328
Party NameUNITED STATES of America, Plaintiff-Appellee, v. Daniel A. WHITE and Judith A. White, Defendants-Appellants.
Case DateAugust 03, 1992
CourtUnited States Courts of Appeals, Court of Appeals for the Seventh Circuit

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970 F.2d 328 (7th Cir. 1992)

UNITED STATES of America, Plaintiff-Appellee,

v.

Daniel A. WHITE and Judith A. White, Defendants-Appellants.

No. 91-3429.

United States Court of Appeals, Seventh Circuit

August 3, 1992

Argued Feb. 27, 1992.

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Deborah J. Daniels, U.S. Atty. (argued), Office of the U.S. Atty., Indianapolis, Ind., for plaintiff-appellee.

Richard Kammen (argued), McClure, McClure & Kammen and Zoe U. Weiss,

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Indianapolis, Ind., for defendants-appellants.

Before COFFEY and MANION, Circuit Judges, and SHABAZ, District Judge. [*]

MANION, Circuit Judge.

On April 19, 1988, a jury convicted Daniel A. White and his wife, Judith A. White, 1 of one count of bankruptcy fraud under 18 U.S.C. § 152 for concealment of various assets in their 1984 bankruptcy filing. After the district court entered judgment, Daniel and Judith appealed to this court. Among other things, Daniel and Judith argued that the government had procured a breach of their attorney-client privilege by obtaining information from their former bankruptcy attorney, Mark Center. Even if none of Center's information was introduced into evidence, Daniel and Judith claimed that it may have provided leads to evidence that the prosecution did use and that the breach therefore implicated their Fifth and Sixth Amendment rights. Finding potential merit in this claim, this court remanded the case to the district court on September 7, 1989 in an unpublished order with the following instructions:

We do not want to decide a constitutional issue unless we have to, and we may not have to, since the government may have made no use of privileged documents in this case. We would prefer to resolve the issue on a full record. To resolve the threshold factual questions the case must be remanded for appropriate proceedings in the district court to determine, first, whether the government procured or was otherwise, complicit in a violation of the attorney-client privilege and, second, if so, whether the violation resulted in the introduction of evidence sufficiently material and adverse to [the] White[s] that the failure to exclude it denied [them their] basic procedural rights.

United States v. White, Nos. 88-2065 and 88-2066, unpublished order at 4-5 (Sept. 7, 1989) [886 F.2d 1318 (table) ] (quoting United States v. Judith E. White and Richard L. White, 879 F.2d 1509, 1514 (7th Cir.1989), cert. denied, 494 U.S. 1027, 110 S.Ct. 1471, 108 L.Ed.2d 609 (1990) (Richard White I )). On remand, the district court held an evidentiary hearing on the attorney-client privilege issue and also considered Daniel and Judith's argument that the government failed to reveal exculpatory information requested pursuant to Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215 (1963). The district court determined that there was no violation of the attorney-client privilege, that even if there was a violation, the government had not procured it, and that the government did not withhold any materials to which the defendants were entitled under Brady. Daniel and Judith appeal the district court's determination. We affirm.

I. Facts

Daniel was a principal shareholder in White Petroleum, Inc. ("White Petroleum"), a corporation that declared bankruptcy in 1983. On June 11, 1984, after the conclusion of the corporate bankruptcy, Daniel and Judith filed a joint Chapter 7 Bankruptcy Petition. Mark Center, a partner at the law firm of Bamberger & Feibleman, represented Daniel, his brothers and their wives in their bankruptcies and was assisted by Nancy Dison, a paralegal.

In October 1985, the Federal Bureau of Investigation (FBI) began investigating the White brothers and their wives as part of an investigation of potential criminal activity by White Petroleum. In the spring of 1987, the FBI agent assigned to the case, Special Agent Michael V. Guio, informed Royal B. Martin, an attorney for Daniel and Judith, that a criminal investigation was in progress and that the government sought certain records belonging to Daniel and Judith. Martin advised the FBI that Daniel and Judith would not voluntarily assist in the government's investigation.

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Meanwhile, Center was indicted in the Southern District of Indiana on charges of bankruptcy fraud involving Foxcliff, Inc. ("Foxcliff"), a corporation unrelated to White Petroleum. Following a bench trial, Center was convicted in March 1987. In April 1987, Center's partnership with Bamberger & Feibleman terminated.

Following Center's conviction but prior to his sentencing, the United States Attorney for the Southern District of Indiana, John Tinder, contacted Forrest Bowman, Jr., who was representing Center in the criminal proceedings. Tinder inquired whether Center would be interested in cooperating in the White investigation and whether Center wished to add anything regarding the Foxcliff matter now that he had been convicted of criminal conduct. After receiving permission from Center, Bowman met with Tinder, Guio and others on April 1, 1987 and compiled a list of specific information that the government wanted. Guio was interested in determining whether Center was complicit in the Whites' fraud or was a victim of the Whites. With regard to Daniel and Judith White, Guio wanted to know whether Center had inadvertently failed to schedule some of the Daniel and Judith's assets.

Bowman testified before the district court that, at the time that Tinder approached him, Bowman thought that Center was being set up to take responsibility for the criminality of the White brothers and their wives. Therefore, Bowman thought it was important for Center to demonstrate his lack of culpability with regard to anything the Whites did by disclosing whatever information he had to exculpate himself and to help identify those who were culpable. However, Bowman testified that he had no reason to think that Center's cooperation would affect Center's sentence for his recent conviction because Center provided no further information on the Foxcliff matter. Furthermore, Center's sentencing was scheduled to occur soon after Center agreed to assist the government, and, as Bowman put it, "[t]hese things don't get squared away all that quickly." (Tr. II at 145).

Bowman met with Center to discuss the government's request. He learned from Center that shortly after Richard White's discharge in bankruptcy, Nancy Dison had prepared a release of mortgage for Richard and notarized it in blank. The document, which appeared to be prepared by Center, purported to release Richard from his obligation to repay a mortgage allegedly held by Ray Hart, a private individual. Center told Bowman that when he found the falsely prepared release, he had contacted Richard and instructed him not to use the improperly notarized release of mortgage. This information from Center supported Bowman's theory that Dison would commit criminal acts on behalf of Richard and strengthened his belief that Dison and the Whites could be setting Center up.

On April 17, 1987, Bowman met with Tinder, Jackie M. Bennett (an Assistant United States Attorney) other Assistant United States Attorneys, Guio and Special Agent Dimitri Friedrich (Guio's assistant) to discuss Center's responses. Bowman answered general questions regarding the White Petroleum bankruptcy, including questions about Center's use of forms and schedules and Center's reliance on Nancy Dison. Bennett's notes from that meeting indicate that the attorney-client privilege was discussed. According to those notes, Bowman indicated to Bennett: "If we get a waiver or court order, Mark Center will testify." No waiver was ever requested from Daniel or Judith. No waiver was ever offered. No court order was ever issued.

On April 30, 1987, Center was sentenced to one year in prison on the Foxcliff conviction, but was ordered to serve four months. While the remainder of the sentence was suspended, Center was supposed to remain on probation for its duration.

On September 8 or 9, 1987, the government met with Bowman and gave him three typewritten pages of questions regarding the Whites' personal bankruptcies. By this time, Guio and Friedrich had collected documents necessary to submit the case to the Grand Jury and had identified the assets that had not been listed in Daniel

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and Judith's bankruptcy petition. However, based on Center's responses to the questions that Guio compiled, the government sought to determine whether Daniel and Judith had disclosed to Center or Dison information about those assets that did not appear on their bankruptcy schedules. The assets not included in the bankruptcy petition included checks drawn on Judith's Eli Lilly Company employee savings plan; a parcel of land in Florida that Daniel had purchased on land contract; Daniel's various life insurance policies on himself and his children; and an account receivable owed to Daniel by R.H. Hunning and the Vita Chlor Corporation. On September 10, Bowman, Center and Bennett met again. Bennett's handwritten notes from that meeting include an entry that reads: "Re disclosure, nobody disclosed anything to M.C. that wasn't on schedule."

The district court found that Bennett's meeting notes reflected that the government discussed the issue of attorney-client privilege with Bowman. From Bennett's notes, the district court concluded that Bowman had offered a tri-part analysis on the attorney-client question: First, disclosure from a client to an attorney of specific information intended to be transmitted to third parties was not privileged. Second, failure to disclose information upon being asked was possibly privileged. Third, false information given to an attorney was not privileged.

The district court found that in the course of the September meetings, someone indicated a desire to see additional information drafts or schedules pertaining to Daniel and Judith's personal bankruptcy that had been...

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