U.S. v. White
| Decision Date | 06 December 1991 |
| Docket Number | No. 90-3073,90-3073 |
| Citation | 950 F.2d 426 |
| Parties | 34 Fed. R. Evid. Serv. 604 UNITED STATES of America, Plaintiff-Appellee, v. Richard L. WHITE, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Deborah J. Daniels, U.S. Atty. (argued) and Linda S. Chapman, Asst. U.S. Atty., Office of the U.S. Atty., Indianapolis, Ind., for plaintiff-appellee.
Royal B. Martin, Jr. (argued), Hope L. Flack, Silets & Martin, Chicago, Ill. and Susan W. Brooks, McClure, McClure & Kammen, Indianapolis, Ind., for defendant-appellant.
Before CUMMINGS, CUDAHY and KANNE, Circuit Judges.
Richard White and his wife Judith were both convicted of bankruptcy fraud in violation of 18 U.S.C. § 152, and they appealed. In our opinion found at 879 F.2d 1509 (7th Cir.1989), cert. denied, 494 U.S. 1027, 110 S.Ct. 1471, 108 L.Ed.2d 609 (1990), we reversed Mrs. White's conviction. As to Mr. White, we remanded his case for further proceedings. We asked the district court to determine, first, whether the government procured or was otherwise complicit in any violation of Mr. White's attorney-client privilege and, second, if so, whether such conduct resulted in the introduction of evidence sufficiently material and adverse to Mr. White that the failure to exclude it denied him his basic procedural rights. After an evidentiary hearing, the district court determined that the government was not complicit in any violation of Mr. White's attorney-client privilege, nor did any of the evidence introduced against Mr. White deny him his procedural rights.
In late 1984, Mr. and Mrs. White filed a personal bankruptcy petition. The petition was prepared by or under the direction of the Whites' attorney, Mark Center. At that time, Mr. Center was a partner of a law firm which represented White Petroleum, Inc., a corporation in which Mr. White and his brothers were involved. The corporation had become bankrupt in 1983. Richard and Judith White were discharged in their personal bankruptcy in May 1985.
In October 1985, the Federal Bureau of Investigation began investigating White Petroleum, together with some associated companies and individuals, including Mr. and Mrs. White, for possible bankruptcy fraud. In the course of the investigation, an FBI agent uncovered various transactions related to Mr. White that appeared to involve fraudulent activity with regard to the Whites' personal bankruptcy petition. The agent discovered what appeared to be assets not disclosed on the Whites' personal bankruptcy petition. They included an investment in stock, a security interest in Twin Flags Trucking protecting a $10,000 loan, a mortgage on Mr. White's real estate held by Ray Hart, and two large individual life insurance policies owned by Mr. and Mrs. White.
Meanwhile, the Whites' attorney, Mark Center, was convicted of bankruptcy fraud in an unrelated case involving a real estate development scheme called "Foxcliff." On April 1, 1987, while awaiting sentencing, Mr. Center's attorney, Forrest Bowman, was contacted by then-United States Attorney John Tinder who asked whether Mr. Center would like to tell the government anything about the Foxcliff case. The U.S. Attorney also broached the subject of the White Petroleum bankruptcy, telling Mr. Bowman that the government additionally would like some information from Mr. Center regarding that case. The district court found, however, that the government did not make any promise that could be interpreted as an exchange with respect to Mr. Center's sentencing for the information he was providing.
Mr. Center agreed to cooperate and his attorney, Mr. Bowman, met with the U.S. Attorney, two FBI agents, and a number of Assistant United States Attorneys to respond to questions previously posed by the U.S. Attorney regarding various matters, including the White Petroleum bankruptcy. Mr. Center also agreed to share nonprivileged information concerning Mr. and Mrs. White. The applicability of the attorney-client privilege was discussed at the meeting and the government noted it had no waiver of the privilege from Mr. White. Mr. Bowman gave general information regarding Mr. Center's firm's handling of the White Petroleum bankruptcy case, the decision for the corporation to file under Chapter 11, and who worked on the case at the firm. Mr. Bowman discussed some of the individual bankruptcies of Mr. White and his brothers and identified some of the creditors of White Petroleum. He also discussed Twin Flags Trucking, and indicated that a conversation had taken place between Mr. Center and Nancy Dison, a paralegal at the firm. Later the government learned that during this discussion, Ms. Dison revealed to Mr. Center that she had prepared a mortgage release at Mr. White's request and improperly notarized it. She also told Mr. Center that she had been romantically involved with Mr. White for several years.
On April 30, 1987, Mr. Center was sentenced to one year imprisonment, with all but four months suspended. An appeal followed.
In investigating the White brothers, the FBI drafted a list of questions to be posed to Mr. Center to determine whether he was victimized, was complicit in the fraud, or was "a poor lawyer." The district court found that by this time the investigation of Richard and Judith White was essentially completed and the government had conducted all interviews and collected all the documents necessary for submitting the case to the grand jury, namely the life insurance records, the $10,000 loan records, the bank stock records, and the Hart mortgage information.
On August 26, 1987, two FBI agents met with Mr. Center and his attorney. Mr. Center described how he handled bankruptcy matters in general, and standard procedures at his former firm for processing bankruptcies. Later, Mr. Center stated that Ms. Dison probably collected the information contained in the bankruptcy schedules and that he probably reviewed the schedules after completion.
The district court found that by September, 1987 the only issues in need of resolution were whether the Whites had in fact provided information about the undisclosed assets to Mr. Center in his capacity as their attorney (in which case he might be complicit in the fraud), or whether there had been some legal decision to omit the assets from the bankruptcy schedules.
On September 8, 1987, Mr. Bowman met with Assistant United States Attorney Jackie Bennett and the FBI agents and told them that he wanted to see copies of the schedules Mr. Center had prepared and filed with the bankruptcy court. Mr. Bowman also indicated that prior to testifying before the grand jury Mr. Center wanted to review the files at his former law firm--particularly the drafts of bankruptcy schedules, the Ray Hart mortgage release, and notes and other information gathered by him to prepare the various petitions filed by the Whites.
During Mr. Center's visit to the law firm's offices, he discussed the attorney-client privilege with one of the firm's partners and assured the partner that the privilege attached to information that was confidential and that he would continue to recognize it. He also explained that he had consulted with Mr. Bowman regarding the privilege. While there Mr. Center openly reviewed the relevant files in the firm's library and members of the firm wandered through the library and engaged in conversation with him. Mr. Center had the files copied by a firm employee and chatted with firm members while he waited. After Mr. Center and Mr. Bowman determined that the photocopied documents did not contain privileged information, they gave the copies of the documents to AUSA Bennett. 1 Mr. Bennett was surprised that Mr. Center had copied the documents because he thought Mr. Center intended simply to review the files to refresh his recollection.
On September 24 and October 22, 1987, Mr. Center appeared before the grand jury and authenticated the documents he had copied and produced. He also testified about his former firm's procedures for handling bankruptcies in general and about the Whites' personal bankruptcy. Ms. Dison also testified before the grand jury. An indictment was returned on December 16, 1987 against Mr. and Mrs. White.
We turn now to the matters raised by Mr. White on remand, that his attorney-client privilege was violated, that the government was complicit in this violation, and that the government engaged in outrageous misconduct.
These are serious issues, and care and caution are always called for in inquiries or disclosures of this sort. This court has adopted the general principles of the attorney-client privilege as outlined by Wigmore:
(1) Where legal advice of any kind is sought (2) from a professional legal adviser in his capacity as such, (3) the communications relating to that purpose, (4) made in confidence (5...
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