On Saturday, January 6, 2007, the Firm served and filed in the “night filing” box a Motion to Quash 1

the subpoena. The instant Motion is intended as a response to the Motion to Quash. Because the Motion

to Quash was not filed electronically, the Government is attaching hereto as Exhibit A a copy of that Motion.

IN THE UNITED STATES DISTRICT COURT FOR

THE MIDDLE DISTRICT OF ALABAMA

NORTHERN DIVISION

UNITED STATES OF AMERICA )

)

v. ) CR. NO. 2:06cr202-WKW

)

EUGENE CLECKLER and )

KIM CLECKLER )

UNITED STATES’ MOTION TO ENFORCE SUBPOENA ISSUED TO BRADLEY

ARANT ROSE & WHITE LLP

The United States of America, by Leura G. Canary, United States Attorney (the

“Government”), hereby moves to enforce a trial subpoena issued to Bradley Arant Rose & White

LLP (the “Firm”).1

I. STATEMENT OF FACTS

At a hearing on this issue, the Government would be prepared to prove the following:

In 1996, the Internal Revenue Service (“IRS”) began auditing the 1994 and 1995 tax returns

Eugene Cleckler (“Eugene”), Kim Cleckler (“Kim,” and, together with Eugene, the “Clecklers”)

Gene’s Marine Sales (“Gene’s”), and Ezy-Ryder, Inc. (“Ezy,” and, together with the Clecklers and

Gene’s, the “Client”). Gene’s (a partnership owned by the Clecklers) and Ezy (a corporation owned

by Eugene) were in the business of selling and repairing boats. The audit was assigned to Revenue

Agent Frank Brand.

In February 1999, Brand advised the Client of proposed adjustments to the returns. At issue

here is the adjustment shifting to Gene’s certain revenue that Ezy had declared on its tax returns, thus

increasing Gene’s taxes. Because Gene’s was a partnership, the tax consequences would have

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flowed through to the Clecklers. Brand’s theory was that certain deposits into an Ezy bank account

actually represented sales by Gene’s.

In Spring 1999, the Clients hired attorney Edward Selfe of the Firm to represent them in the

audit. In October 1999, Selfe wrote to the IRS, taking issue with the proposed adjustments and

requesting that an IRS appeals officer consider the issue. In February 2000, the appeals officer

returned to the matter to Brand for further review.

One way that the Client could challenge the proposed adjustment would be to demonstrate

that the deposits in question represented sales by Ezy. Selfe asked Eugene if Ezy had sales to third

parties (as opposed to sales to the related party Gene’s). Eugene lied to Selfe, telling Selfe that there

were such sales, when in fact there were not. Selfe told Eugene that it would be helpful if they could

document such sales.

Eugene (with the assistance and participation of Kim) put his employees to work on a

document creation project, having them alter deposit tickets and create invoices out of whole cloth

purporting to show sales transactions that in fact never occurred. These deposit tickets and invoices

were produced to Brand beginning in August 2000.

When Brand received the first batch of false documentation, he challenged Selfe, asking why

such documents had never been produced before and requesting further back-up. Selfe reported this

to Eugene, who in turn directed an employee to create handwritten job proposals to match the fake

invoices already provided. By the end ofJanuary 2001, all of the fraudulent invoices, deposit slips,

and job proposals had been provided to Brand.

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The Government agreed to take Selfe’s testimony in the form of a deposition (rather than grand jury

2

testimony) in order to facilitate the assertion of privileges. The Clecklers stipulated that the transcript of

Selfe’s deposition would be treated for evidentiary purposes as if it were grand jury testimony.

A copy of Judge Fuller’s Order is attached hereto as Exhibit B. 3

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II. PROCEDURAL BACKGROUND

During the course of the grand jury investigation, the Government subpoenaed Selfe and the

Firm for both testimony and documents. Although cross-motions to quash and to compel were filed,

the parties were able to amicably resolve most issues. However, the parties litigated on the merits

issues related to the scope of Selfe’s testimony. In particular, during his initial deposition, the 2

Clecklers objected to questions related to Selfe’s communications with the Clecklers concerning the

production of documents. In moving to compel, the Government argued, among other things, the

applicability of the crime-fraud exception to the attorney-client privilege. Judge Fuller agreed, ruling

that “[t]he court finds that the Government has made the showing required to establish the

applicability of the crime-fraud exception. . . . The Government is entitled to have Selfe testify

about who he communicated with about the document production and the substance of those

communications.” (Order, 7/31/2006) The Clecklers did not appeal, the Government completed 3

the deposition, and Selfe testified to his communications with Eugene as described above.

III. THE FIRM HAS HAS FAILED TO ESTABLISH THE APPLICABILITY OF ANY

PRIVILEGE

A. The Privilege Log in Question Is Insufficent to Enable the Government to

Challenge the Asserted Privilege

“The person invoking the privilege [bears] the burden of proving its existence.” In re Grand

Jury Investigation (Schroeder), 842 F.2d 1223, 1226 (11th Cir. 1987); see also Bogle v. McClure,

332 F.3d 1347, 1358 (11th Cir. 2003) (“The party invoking the attorney-client privilege has the

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A copy of the Log is attached hereto as Exhibit C. The April 21, 2000 notes are described in the 4

final entry, Cleckler-0891-0909.

The billing records are described in the Log at Cleckler-0880-0886, although the Government would 5

expect that there would be additional bills for the period in question.

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buden of proving that an attorney-client relationship existed and that the particular communications

were confidential.”). The normal way of asserting such a privilege is through a privilege log. See

In re Grand Jury Subpoena (Newparent), 274 F.3d 563, 575-76 (1st Cir. 2001). Thus, the “party

who asserts a claim of privilege [must] do the best that he reasonably can to describe the materials

to which his claim adheres.” Id. at 576.

In this case, the Government seeks handwritten notes dated April 21, 2000 and billing and

time entries for the period February 1, 2000 through January 31, 2001 (representing the time the case

was returned from the appeals officer to the time the last of the fraudulent documents were

produced). With respect to the notes, the Privilege, Work Product, and Redaction Log (the “Log”)

clams the work product protection, and identifies only the date of the notes and their author, Selfe.4

With respect to the billing records, the Log claims both attorney-client privilege and work product

5

protection, describing the subject matter of the document as “legal services.” These descriptions are

clearly insufficient to allow the Government “to assess the applicability of the privilege or

protection,” cf. Fed. R. Civ. P. 26(b)(5), and therefore the Court should enforce the subpoena.

B. The Client Cannot Establish the Applicability of the Attorney-Client Privilege

To demonstrate the applicability of the attorney-client privilege, the Client must establish:

(1) the asserted holder of the privilege is or sought to become a client;

(2) the person to whom the communication was made

(a) is [a] member of a bar of a court, or his subordinate and

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(b) in connection with this communication is acting as a lawyer;

(3) the communication relates to a fact of which the attorney was informed

(a) by his client

(b) without the presence of strangers

(c) for the purpose of securing primarily either

(i) an opinion on law or

(ii) legal services or

(iii) assistance in some legal proceeding, and not

(d) for the purpose of committing a crime or tort; and

(4) the privilege has been

(a) claimed and

(b) not waived by the client.

In re Grand Jury Proceedings, 899 F.2d 1039, 1042 (11th Cir. 1990) (citations and quotation

omitted).

Here, while the Government concedes that Mr. Selfe was a lawyer, everything else is

disputed. By way of example only:

1. Selfe’s Communications With the Client for Purposes of Gathering

Documentation Were Not Made in his Capacity as an Attorney

Communications with an attorney for purposes of preparing a tax return are not privileged.

See In re Grand Jury Investigation (Schroeder), 842 F.2d 1223, 1224 (11th Cir. 1987) (adopting

majority rule that “preparation of tax returns does not constitute legal advice within the scope of the

privilege”). Thus, information the taxpayer transmits to the lawyer “for the purpose of preparing his

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tax returns, including the sources of his income, is not privileged information.” Id. at 1225.

Depending on the circumstances, this rule can extend to tax audits:

An audit is both a stage in the determination of tax liability, often leading to the

submission of revised tax returns, and a possible antechamber to litigation. When a

revenue agent is merely verifying the accuracy of a return, often with the assistance

of the taxpayer’s accountant, this is accountants’ work and it remains such even if

the person rendering the assistance is a lawyer rather than an accountant. . . . If,

however, the taxpayer is accompanied to the audit by a lawyer who is there to deal

with issues of statutory interpretation or case law that the revenue agent may have

raised in connection with his examination of the taxpayer’s return, the lawyer is

doing lawyer’s work and the attorney-client privilege may attach.

United States v. Frederick, 182 F.3d 496, 501 (7 Cir. 1999) (emphasis added). th

On the specific matter at issue here–the provision of the Ezy-Ryder documents–the Client

was using Selfe to help verify the accuracy of their previously filed returns. Therefore

communications with Selfe regarding this subject fall outside the attorney-client privilege.

2. The Time and Place of Conversations Between the Client and Selfe is Not

Privileged

The Government does not dispute that in certain circumstances, a time sheet entry could be

privileged to the extent it would reveal privileged information. The absence of detail in the Log

makes it difficult for the Governement to respond. At a minimum, that documents that would reflect

the date, place, and time of meetings or conversations with a client would not be privileged. See In

re Grand Jury Proceedings (Twist), 689 F.2d 1351, 1352-53 (11th Cir.1982).

C. The Client Cannot Establish the Applicability of the Work Product Protection

The work product protection applies in criminal litigation. See United States v. Nobles,

422 U.S. 225, 236 (1975); United Kingdom v. United States, 238 F.3d 1312, 1321 (11 Cir. 2001). th

The extent of work product protection will depend upon whether the material is “opinion” work

product, which enjoys the highest level of production, or other work product, which may be ordered

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The crime fraud exception “applies to work-product in the same way that it applies to the attorney- 6

client privilege. Cox v. Administrator United States Steel & Carnegie, 17 F.3d 1386, 1422 (11 Cir. 1994).

th

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produced if the party demonstrates a substantial need for the information. See United Kingdom, 238

F.3d at 1322. The Log’s meager description makes it impossible to tell whether the notes and billing

records reflect work product at all, let alone opinion work product. Therefore, since the Client bears

the burden of proof on this issue, the Court should enforce the subpoena.

D. The Crime-Fraud Exception is Applicable

Even if the Client could establish that its communications with Selfe would ordinarily be

privileged or protected, because the Client used Selfe to provide fraudulent documents to the IRS,

the crime-fraud exception to the attorney-client privilege and work product protection is applicable. 6

Because the attorney-client privilege works to “withhold[] relevant information from the

factfinder, it applies only where necessary to achieve its purpose.” Fisher v. United States, 425 U.S.

391, 403 (1989). Thus, while the attorney-client privilege protects clients who make full disclosure

to counsel about “past wrongdoings,” the privilege does not apply when the clients utilize the

attorney’s services in connection with a future or ongoing crime. United States v. Zolin, 491 U.S.

554, 562-63 (1989); see Clark v. United States, 289 U.S. 1, 15 (1933) (“The privilege takes flight

if the relation is abused.”).

Courts have consistently found the crime-fraud exception applicable in situations where the

attorney unwittingly plays a role in a client’s obstruction of a judicial or administrative proceeding.

Thus, courts have required attorneys to testify concerning:

• advice to a client relating to a government subpoena for documents, when the client

destroyed emails after receiving the attorney’s advice, see In re Grand Jury

Case 2:06-cr-00202-WKW-CSC Document 78 Filed 01/08/2007 Page 7 of 11
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Investigation, No. 06-1474, 445 F.3d 266 (3d Cir.), cert. denied, 127 S. Ct. 538

(2006),

• false statements by the client to the attorney concerning the location and existence

of records responsive to an IRS summons, which false statements the attorney relayed

to the IRS, see United States v. Laurins, 857 F.2d 529, 540-41 (9 Cir. 1988), and th

• the circumstances under which client provided attorney with forged letters that were

either submitted or intended to be submitted to the court, see United States v. Collis,

128 F.3d 313, 321 (6 Cir. 1997); Lahr v. State, 731 N.E.2d 479, 481-84 (Ind. Ct.

th

App. 2000).

The results in these obstruction cases are perfectly consistent with the Eleventh Circuit’s twopronged test for determining the applicability of the crime fraud exception:

First: there must be a prima facie showing that:

a. the client was engaged in criminal or fraudulent conduct when he sought the

advice of counsel;

b. the client was planning criminal or fraudulent conduct when he sought the

advice of counsel; or

c. the client committed a crime or fraud subsequent to receiving the benefit of

counsel’s advice.

Second: there must be a showing that:

a. the attorney’s assistance was obtained in furtherance of the criminal or

fraudulent activity; or

Case 2:06-cr-00202-WKW-CSC Document 78 Filed 01/08/2007 Page 8 of 11
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b. the attorney’s assistance was closely related to the criminal or fraudulent

activity.

See In re Grand Jury (G.J. No. 87-03-A), 845 F.2d 896, 897 (11 Cir. 1988); In re Grand Jury

th

Investigation (Schroeder), 842 F.2d 1223, 1226 (11 Cir. 1987). th

Here, the Government has satisfied both elements. With respect to the first prong, the

Government’s burden is to produce “evidence that, if believed by a trier of fact, would establish the

elements of some violation that was ongoing or about to be committed.” Schroeder, 842 F.2d at

1226. Here, the Government’s evidence, if believed, would establish that the Client caused false

documents to be submitted to the IRS through Selfe.

With respect to the second prong, “the requirement that legal advice must be related to the

client’s criminal or fraudulent activity should not be interpreted restrictively.” Id. at 1227.

Moreover, the determination of whether the second prong is satisfied “must take into account that

the government does not know precisely what the material will reveal or how useful it will be.” Id.

Here, the Client produced fraudulent documents to the IRS using Selfe as a conduit. All billing

entries and notes related to the subject of the sales by Ezy and the records that would document such

sales would therefore be related to the criminal activity. Accordingly, the Government has made the

showing required to establish the applicability of the crime-fraud exception, and the Court enforce

the subpoena.

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CONCLUSION

For the reasons set forth above, the United States requests that the Court grant its motion to

enforce the subpoena and deny the Firm’s Motion to Quash. 

Respectfully submitted this the 8 day of January, 2007. th

LEURA G. CANARY

UNITED STATES ATTORNEY

s/Andrew O. Schiff

ANDREW O. SCHIFF

Assistant United States Attorney

One Court Square, Suite 201

Montgomery, AL 36104

Phone: (334) 223-7280

Fax: (334) 223-7135

E-mail: andrew.schiff@usdoj.gov

Bar ID 43641

Case 2:06-cr-00202-WKW-CSC Document 78 Filed 01/08/2007 Page 10 of 11
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IN THE UNITED STATES DISTRICT COURT FOR

THE MIDDLE DISTRICT OF ALABAMA

NORTHERN DIVISION

UNITED STATES OF AMERICA )

)

v. ) CR. NO. 2:06cr202-WKW

)

EUGENE CLECKLER and )

KIM CLECKLER )

CERTIFICATE OF SERVICE

I hereby certify that on January 8, 2007, 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:

George Beck, Esq., and Ronald Brunson, Esq. A copy will also be forward by email to: Jack W.

Selden, Esq. and Robert E. Poundstone, IV, Esq. 

Respectfully submitted,

s/Andrew O. Schiff

ANDREW O. SCHIFF

Assistant United States Attorney

One Court Square, Suite 201

Montgomery, AL 36104

Phone: (334) 223-7280

Fax: (334) 223-7135

E-mail: andrew.schiff@usdoj.gov

Bar ID 43641

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