U.S. v. Zolin

• Decision Date: 20 June 1990
• Docket Number: 85-6105,Nos. 85-6065,s. 85-6065
• Citation: 905 F.2d 1344
• Parties: -5965, 91-1 USTC P 50,147, 30 Fed. R. Evid. Serv. 44 UNITED STATES of America, Petitioner/Appellee/Cross-Appellant, v. Frank S. ZOLIN, Respondent/Appellee, and Church of Scientology of California and Mary Sue Hubbard, Intervenors/Appellants/Cross-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1344

905 F.2d 1344

66 A.F.T.R.2d 90-5965, 91-1 USTC P 50,147,

30 Fed. R. Evid. Serv. 44

UNITED STATES of America, Petitioner/Appellee/Cross-Appellant, v. Frank S. ZOLIN, Respondent/Appellee and Church of Scientology of California and Mary Sue Hubbard Intervenors/Appellants/Cross-Appellees.

Nos. 85-6065, 85-6105.

United States Court of Appeals Ninth Circuit.

June 20, 1990.

Gary R. Allen, Tax Div., Dept. of Justice, Washington, D.C., for petitioner/appellee/cross-appellant.

Eric M. Lieberman, Rabinowitz, Boudin, Standard, Kninsky & Lieberman, New York City, for intervenors/appellants/cross-appellees.

Frederick Bennett, County Counsel, Los Angeles, Cal., for respondent/appellee.

On Remand from the United States Supreme Court.

Before GOODWIN, Chief Judge, BROWNING and FARRIS, Circuit Judges.

FARRIS, Circuit Judge:

The facts of this case are set forth in our previous opinion, United States v. Zolin, 809 F.2d 1411 (9th Cir.1987), aff'd in part and vacated in part, --- U.S. ----, 109 S.Ct. 2619, 105 L.Ed.2d 469 (1989). We now resolve whether tapes of two meetings of the Mission Corporate Category Sortout project are admissible under the crime-fraud exception to the attorney-client privilege in light of the Supreme Court's ruling in United States v. Zolin, --- U.S. ----, 109 S.Ct. 2619, 105 L.Ed.2d 469 (1989). We hold that the tapes are admissible.

"To invoke the [crime-fraud] exception successfully the party seeking disclosure ... must make out a prima facie case that the attorney was retained in order to promote intended or continuing criminal or fraudulent activity." United States v. Hodge & Zweig, 548 F.2d 1347, 1353, 1354 (9th Cir.1977). The Government has presented the following evidence of intended illegality: (1) Agent Petersell's Supplemental Declaration of March 8, 1985, (2) Petersell's Supplemental Declaration of March 15, 1985, and (3) partial transcripts of the tapes themselves. ¹

In our first Zolin opinion we examined only the independent evidence presented--items one and two above--and held that "while not altogether insubstantial, [this evidence] is not sufficient to make out the requisite prima facie showing of intended illegality." 809 F.2d at 1419. In its decision, the Supreme Court held that

evidence that is not "independent" of the contents of allegedly privileged communications--like the partial transcripts in this case--may be used not only in the pursuit of in camera review, but also may provide the evidentiary basis for the ultimate showing that the crime-fraud exception applies.

Zolin, 109 S.Ct. at 2632 n. 12. We must therefore examine the transcripts and determine whether they, along with the independent evidence already reviewed, demonstrate sufficient evidence of intended illegality to establish that the tapes are within the crime-fraud exception. We hold that they do.

The partial transcripts demonstrate that the purpose of the MCCS project was to cover up past criminal wrong-doing. The MCCS project involved the discussion and planning of future frauds against the IRS, in violation of 18 U.S.C. Sec. 371. See, e.g., United States v. Carruth, 699 F.2d 1017, 1021 (9th Cir.1983), cert. denied, 464 U.S. 1038, 104 S.Ct. 698, 79 L.Ed.2d 164 (1984). The figures involved in MCCS admit on the tapes that they are attempting to confuse and defraud the U.S. Government. The purpose of the crime-fraud exception is to...