UNPUBLISHED

UNITED STATES COURT OF APPEALS 

FOR THE FOURTH CIRCUIT 

No. 08-4816

In Re: GRAND JURY INVESTIGATION 

-------------------------------- 

UNITED STATES OF AMERICA, 

 Petitioner - Appellee, 

 v. 

UNDER SEAL, 

 Movant – Appellant, 

JOHN DOE A01-246, 

 Respondent. 

Appeal from the United States District Court for the Eastern 

District of Virginia, at Alexandria. Gerald Bruce Lee, District 

Judge. (1:08-mc-00003-1) 

Argued: September 23, 2009 Decided: November 20, 2009 

Before TRAXLER, Chief Judge, WILKINSON, Circuit Judge, and 

Margaret B. SEYMOUR, United States District Judge for the 

District of South Carolina, sitting by designation. 

Affirmed by unpublished per curiam opinion. 

ARGUED: Douglas S. Laird, POLSINELLI SHALTON FLANIGAN SUELTHAUS, 

PC, Kansas City, Missouri, for Appellant. Gordon D. Kromberg, 
OFFICE OF THE UNITED STATES ATTORNEY, Alexandria, Virginia, for 

Appellee. ON BRIEF: Dana J. Boente, Acting United States 

Attorney, Steven P. Ward, Special Assistant United States 

Attorney, OFFICE OF THE UNITED STATES ATTORNEY, Alexandria, 

Virginia, for Appellee. 

Unpublished opinions are not binding precedent in this circuit. 

2 
3 

 

PER CURIAM: 

This is an appeal from the district court’s order granting 

the Government’s motion to compel compliance with a subpoena 

duces tecum issued by a grand jury in the Eastern District of 

Virginia. The district court granted the Government’s motion to 

compel ruling that the Government had established a prima facie 

case that the crime-fraud exception to the attorney-client 

privilege applied and that the documents in question were not 

privileged. For the reasons set forth herein, we affirm.1 

I. 

The Corporation, a nonprofit, was incorporated in 1983. 

Counsel provided legal advice to the Corporation from 1983 to 

2000. 

In 1997, the president of the Corporation established 

another entity in the Isle of Man (“the Isle of Man Entity”). 

Two of the Corporation’s three directors, one of which is the 

Corporation’s president, were directors of a corporation also 

established in the Isle of Man (“the Isle of Man Corporation”), 

 1 The documents and briefs in this case have been filed 

under seal to protect the secrecy of the ongoing grand jury 

investigation. We therefore refer to the parties by generic 

names to avoid the disclosure of their identities and do not 

reveal more facts than are necessary to our analysis. 
4 

which is the trustee of the Isle of Man Entity. Between 1997 and 

2000, the Corporation transferred $22,523,478 of its assets to 

the Isle of Man Entity. In 2000, the Corporation dissolved after 

filing Articles of Termination and Articles of Dissolution with 

the proper state authorities. 

Prior to the Corporation’s dissolution and continuing 

thereafter, the Internal Revenue Service (IRS) conducted an 

audit of the Corporation. During the audit, the Corporation’s 

president told the IRS that the transfers from the Corporation 

to the Isle of Man Entity were made pursuant to opinion letters 

from several law firms that these transfers were legal. One such 

letter, which was written by Counsel, was provided to the IRS. 

Counsel’s letter stated that a qualified United States 

charitable corporation can legally make a grant to a charitable 

organization in another country so long as the funds are used 

for charitable purposes. The IRS audit of the Corporation 

concluded with a finding of “no issue raised.” 

In 2006, a grand jury convened in the Eastern District of 

Virginia to investigate the monetary transfers from the 

Corporation to the Isle of Man Entity. The grand jury issued 

subpoenas duces tecum to various entities, including the 

Corporation, seeking documents related to the transfers. When 

the Corporation failed to have a representative appear before 
5 

the grand jury, the court granted the Government’s motion to 

hold the Corporation in contempt. 

The grand jury then issued a subpoena duces tecum to 

Counsel requesting “any and all documents relating to [the 

Corporation].” Counsel produced some documents and withheld 

others on the ground that they were protected by the attorneyclient privilege. The Government moved to compel the production 

of the withheld documents, arguing both that the attorney-client 

privilege does not protect the communications of dissolved 

corporations and that, if the attorney-client privilege does 

apply, the crime-fraud exception to the attorney-client 

privilege allows access to the withheld documents. 

The district court granted the Government’s motion to 

compel finding that the attorney-client privilege does not 

protect the communications of a dissolved corporation when there 

is no authorized officer available to validly assert the 

privilege. Counsel timely appealed this decision (No. 07-2024). 

In ruling on this initial appeal by Counsel, this court vacated 

the district court’s decision and remanded the case, instructing 

the district court to consider the Government’s argument that 

the crime-fraud exception to the attorney-client privilege 

applies to the withheld documents. See In re Grand Jury Subpoena 

#06-1, 274 F. App’x 306, 309 (4th Cir. 2008). 
6 

 

On remand, the Government argued that it had established 

the applicability of the crime-fraud exception to the withheld 

documents based on violations of both 26 U.S.C. § 7206(1) (1982) 

and 18 U.S.C. § 371 (1994). In addition, the Government argued 

that the Corporation had waived the attorney-client privilege 

with respect to the withheld documents. 

The district court conducted an in camera hearing to 

examine the Government’s ex parte submission of the grand jury’s 

evidence against the Corporation and Counsel’s privilege log. 

The privilege log details for each withheld communication, the 

type of document withheld and the date on which it was written. 

Thereafter, the district court conducted a hearing on the 

applicability of the crime-fraud exception and held that the 

Government had made out a prima facie case for a violation of 26 

U.S.C. § 7206(1).2 The district court specifically found that the 

2

 Section 7206(1) makes it a violation of the Internal 

Revenue Code for any person to “willfully make or subscribe any 

return, statement or other document which contains or is 

verified by written declaration that is made under penalties of 

perjury and which he does not believe to be true and correct as 

to every material matter.” The elements of a prima facie case 

for a violation of § 7206(1) are: 1) a tax return was filed 

containing a written declaration, 2) the tax return was made 

under penalties of perjury, 3) the defendant did not believe the 

return to be true and correct as to every material matter; and 

4) the defendant acted willfully. United States v. Aramony, 88 

F.3d 1369, 1382 (4th Cir. 1996). 
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Corporation impermissibly represented that it had no 

relationship with the Isle of Man Entity “when in fact this was 

false.” The court based this finding on the Corporation’s 

response of “none” on line 22 of Form 990 of its tax returns, 

which required the Corporation to disclose a relationship with a 

donee if the donee was an individual. In addition, the district 

court found that the withheld documents bore a close 

relationship to the alleged violation of § 7206(1) because 

Counsel’s advice was used to “cloak the Corporation’s transfers 

to the Isle of Man Entity in legitimacy.” The district court 

thus found that the crime-fraud exception vitiated the attorneyclient privilege and again granted the Government’s motion to 

compel. The district court incorporated its initial holding that 

the attorney-client privilege does not protect the 

communications of dissolved corporations into its decision for 

the purposes of appeal. The district court declined to address 

the Government’s waiver arguments because they were outside of 

the scope of the court’s mandate on remand. Counsel timely 

appealed. 

II. 

 This court has previously acknowledged that the invocation 

of a recognized privilege is grounds for refusing to comply with 
8 

a grand jury subpoena. See In re Grand Jury Proceedings # 5, 401 

F.3d 247, 250 (4th Cir. 2005). The attorney-client privilege is 

one such recognized privilege that protects confidential 

communications between attorney and client. Id.

However, under the crime-fraud exception to the attorneyclient privilege, “when a client gives information to an 

attorney for the purpose of committing or furthering a crime or 

fraud,” the privilege is lost. United States v. Under Seal, 102 

F.3d 748, 750-51 (4th Cir. 1996) (citing In re Grand Jury 

Subpoena, 884 F.2d 124, 127 (4th Cir. 1989)). For the crimefraud exception to apply, “it is enough that the communication 

furthered, or was intended by the client to further . . . 

illegality.” In re Grand Jury Proceedings # 5, 401 F.3d at 251. 

The burden is on the party asserting the crime-fraud exception, 

here the Government, to make a prima facie showing that the 

exception applies. Id.; see also In re Grand Jury Proceedings, 

33 F.3d 342, 348 (4th Cir. 1994). 

The invocation of the crime-fraud exception requires a 

prima facie showing that “(1) the client was engaged in or 

planning a criminal or fraudulent scheme when he sought the 

advice of counsel to further the scheme, and (2) the documents 

containing the privileged materials bear a close relationship to 

the client's existing or future scheme to commit a crime or 
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fraud.” In re Grand Jury Proceedings # 5, 401 F.3d at 251 

(citations omitted). A party invoking the crime-fraud exception 

can satisfy the first prong of this test by making a prima facie 

showing of evidence, which, if accepted by the trier of fact, 

establishes the elements of an ongoing or prospective violation 

of the law. Id. The second prong of this test is satisfied with 

a showing of a close relationship between the withheld 

communications and the alleged violation. Id. Once a sufficient 

showing has been made, the attorney-client privilege ceases to 

protect any of the communications related to the alleged 

violation. In re Grand Jury Subpoena, 419 F.3d 329, 345 (5th 

Cir. 2005) (citing In re Sealed Case, 676 F.2d 793, 812 n.74 

(D.C. Cir. 1982)). 

As this court described in its initial remand order, the 

district court could decide whether the crime-fraud exception 

applies in either of two ways. See In re Grand Jury Subpoena # 

06-1, 274 F. App’x at 309. One approach permits the district 

court to examine the withheld documents in an in camera hearing 

after the Government makes a factual showing that would support 

a good faith belief by a reasonable person that an examination 

of the withheld documents would reveal evidence of a violation 

of the law. Id. at 310 (citations omitted). In the alternative, 

the district court could make a determination that the crime-
10 

fraud exception applied without examining the withheld documents 

by conducting an ex parte and in camera examination of evidence 

from the Government. Id. This second alternative does not 

require that the Government make a threshold factual showing of 

the basis for the application of the crime-fraud exception. Id.

In determining whether the crime-fraud exception applies, courts 

may rely on evidence not ordinarily admissible at trial. In re 

Grand Jury Subpoena, 884 F.2d at 127. 

III. 

 “A district court's determination that the government made 

a prima facie showing of crime or fraud should be upheld absent 

a clear showing of abuse of discretion.” In re Grand Jury 

Proceedings #5, 401 F.3d at 254. In addition, we may affirm on 

any ground appearing in the record whether or not the district 

court relied on it. Scott v. United States, 328 F.3d 132, 137 

(4th Cir. 2003). While this court expresses no opinion as to 

whether the district court’s application of the crime-fraud 

exception based on a violation of § 7206(1) was an abuse of 

discretion, we find that the totality of the evidence supports 

the application of the crime-fraud exception based on a 

violation of 18 U.S.C. § 371 as was argued by the Government 

below. 
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IV. 

A. PRIMA FACIE SHOWING OF VIOLATION OF 18 U.S.C. § 371 

 Counsel argues that the district court erred in holding 

that the Government established a prima facie case for a 

violation of § 7206(1) because line 22 did not require the 

Corporation to disclose a relationship with a donee when the 

donee was a company and not an individual. Title 18, United 

States Code, Section 371, however, makes it a crime to engage in 

a conspiracy to commit any offense against the United States or 

to defraud the United States. The elements of a prima facie case 

for a conspiracy to defraud the United States under 18 U.S.C. § 

371 are: (1) an agreement to accomplish an illegal objective 

against the United States, (2) one or more overt acts in 

furtherance of the illegal purpose, and (3) intent to commit the 

substantive offense, i.e., to defraud the United States. United 

States v. Douglas, 398 F.3d 407, 413 (6th Cir. 2005). 

 In its ex parte submission, the Government has provided the 

court with prima facie evidence that the Corporation, its 

principals and the Isle of Man Entity had an agreement to 

defraud the United States Government in contravention of § 371. 

The Government’s submission provides prima facie evidence that 

the Corporation and the Isle of Man Entity entered an agreement 

to defraud the United States both by concealing the ultimate 
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disposition of the Corporation’s funds through the transfer of 

assets overseas and by using the Corporation’s tax-exempt status 

to circumvent the collection of taxes on the profits of 

individuals. Such a purpose falls directly within the confines 

of § 371. The transfer of $22,523,478 to the Isle of Man Entity 

would be an overt act in furtherance of this purpose. 

 

B. CLOSE RELATIONSHIP BETWEEN THE COMMUNICATIONS AND ALLEGED 

§ 371 VIOLATION 

 Counsel also argues that the district court erred in 

finding that the withheld documents bore the requisite close 

relationship to the allegedly false statements on the 

Corporation’s tax returns. The crime-fraud exception is 

limited to those communications and documents in furtherance of 

future or ongoing criminal or fraudulent conduct. In re Grand 

Jury Subpoena, 419 F.3d at 343. Therefore, a party seeking 

access to materials via the crime-fraud exception must 

demonstrate a close relationship between the desired materials 

and an alleged criminal or fraudulent conduct. In re Grand Jury 

Proceedings # 5, 401 F.3d at 251. However, in making the close 

relationship determination, courts must take into account that 

the party invoking the crime-fraud exception, here the 

Government, does not know exactly what the material will show. 
13 

See In re Grand Jury Investigation, 842 F.2d 1223, 1227 (11th 

Cir. 1987). Courts can base a finding of the requisite close 

relationship on an examination of an in camera submission of 

evidence by the party invoking the exception so long as the 

court has some evidence of the contents of the withheld 

material. See In re Grand Jury Proceedings, 33 F.3d at 351; cf.

In re Grand Jury Proceedings # 5, 401 F.3d at 255. 

 In making this finding we review both the Government’s ex 

parte submission of evidence and Counsel’s privilege log, which 

references documents from as early as 1986. The Government’s 

evidence indicates that the Corporation’s scheme to defraud the 

United States dates back as far as 1984 and that the Corporation 

sought Counsel’s legal advice for the sole purpose of 

facilitating its scheme to defraud the United States. Therefore, 

all of the withheld documents bear the requisite close 

relationship to the alleged violation of § 371 because they were 

in furtherance of the alleged scheme. We conclude that the 

Government has made a prima facie showing that there is a close 

relationship between the withheld documents and the alleged 

violation of § 371. 
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C. CONCLUSION 

 Based on the forgoing analysis, we find that all of the 

documents in Counsel’s privilege log fall within the crime-fraud 

exception to the attorney-client privilege. It follows that 

Counsel must produce these documents to the Government pursuant 

to the grand jury subpoena. 

 Because we find that the crime-fraud exception vitiates the 

privileged status of these documents, we do not reach the issues 

of whether the attorney-client privilege applies to dissolved 

corporations or whether the attorney-client privilege was waived 

by the Corporation in this case. 

V. 

 For the foregoing reasons, we affirm, on alternate grounds, 

the district court’s order granting the Government’s motion to 

compel. 

AFFIRMED