## I L L I N O I S 

## O F F I C I A L 

## R E P O R T S Appellate Court

People v . Radojcic , 2012 IL App (1st) 102698

Appellate Court Caption THE PEOPL E OF THE STATE OF IL L INOI S, Plaintiff-Appellant, v. BU DIMI R RADOJC I C and MARK HELFAN D, Def endants-A ppellees (Suzana Radojcic, Mirjana Omickus, Christa Patterson, Def endants).

District & N o. First District, Third Division Docke t No. 1-10-2698

Filed May 2, 2012

Held ( Note : T

his syl lab us

con st it ute s n o par t of the opi nio n of the cour t but has bee n pre

par ed by the Rep o rt er of D e c i s i o n s f

o r t h e

c o n v e n i e n c e o

f t h e

rea der

. ) I n a prosec ution for financ ial instit ution frau d
, t h e trial court err ed in striking defe ndan t ’s at t orney from the list of witnesses, since the State
prese nted sufficie nt testimony to g i ve a rea sonable person cause to suspect that defe ndan t used his communications with his attorney to advanc e his attempts to commit fra ud, and under those circ umstances, the attorney -client privileg e did not prec lude the attorne y ’s testimony

.

Dec ision Under Review Appea l from the Circuit Court of Cook County
, No

. 07-CR-25197; the Hon. Thomas J. Hennelly , J udg e, pre siding.

J udg ment Reverse d and re manded.Counsel on

Appea l Lisa Madig an, Attorney Gene ral, of Chic ago (Michae l A. Scodro, Michae l M. G lick, and David Simps on, Assistant A ttorney s Gene ral, of counsel), f

or the People.

L en Goodman L aw Offic e LL C (L eonard C. Goodman an d M el issa A. M at u z ak, of counsel), and Michae l J

. Pelletier, Alan D. Goldberg
, an d Michae l G. Soukup, all of State Appellate Def ender ’s Offic e, both of Chicag o, for a

ppellees.

Panel J USTI CE NEVILLE delivere d the judg ment of the c ourt, with opinion. Presiding J ustice Ste ele and J ustice Salone concur red in the judgme nt and opinion.

OP INION

¶ 1 I n this prosec ution for financ ial instit ution fraud and other crimes, the trial court held that attorney -client privileg e barr ed the State from callin g d e f e n d an t- a p p e ll e e B u d imir Radojcic’s former attorney as a witness. We addre ss two questions in the appeal: (1) Did the trial court follow proper proce dures for deciding whether to bar the proposed witness? ; and (2) Did the evidenc e show that the attorney -client privileg e applied to the communications betwee n the defe ndant and his former attorney ? ¶ 2 We hold that befor e the trial court excl u d es t es t i m o n y fr o m an attorney beca use of
at torney -client privileg e, the court must consider whether the party seeking to u s e t h e test i m o n y h as made a sufficie nt showing to g ive the court rea son to question witnesses in

came ra to determine whether the attorney -client privilege applied to the communications betwee n the attorney and the client. We find that the S tate presented testim ony that would
g ive a rea sonable person cause to suspect that the client here used his communications with his attorney to advanc e his att em pts to commit crimes or fraud. Acc ording ly
, we hold that attorney -client privileg e does not prec lude testimony from the attorney here
, and we reve rse and re mand for a

trial at which theState may call the attorney

as a w itness.

¶ 3 BA CKGROUND ¶ 4 Fr om 2002 throug h 2008, Mark Helfand repres en t ed Bu d i mir Radojcic in connec tion with sever al re al estate transac tions. Fe dera l investigators who studied some of the
transac tions believ ed t h ey s aw evidenc e of crimes. I n Aug ust 2007, the I llinois Attorney Gene ral soug ht to persua de a g rand jury to return indictments ag ainst Radojcic, Helfand and

sever al other pe rsons involved in the real estate transactions. ¶ 5 Christa Patterson testified befor e the g rand jury that Radojcic hired her to work for J ewe l

-2-Windows, a corpor ation he operated. Patterson ex plained that Radojcic, throug h sever al

corpor ations including J ewe l Windows, purcha sed apartment buildings in Ch i ca go and

converted the units into condominiums. He then fou n d straw buy ers who would first purcha se the unit s at the price s Radojcic set, and then sell the units to other corpor ations Radojcic opera

ted. The straw buy ers sent fal s e i nformation to mortg ag e broker s to obtain loans for the straw pur chase s. ¶ 6 Patterson described the proc ess to the g rand jury with the specific example of Daniella Kuljanin
, wh o purcha sed all three condominium units in a buil ding Radojcic converted to condominiums. Kuljanin obtained separate loans from three di ffe rent le n ders for t he three
transac tions, with all three loan applications made at the same time, with closing s schedule d

a day or two apart, so that the three lender s would not find out about the multipl e purcha ses. To persua de the lender s that Kuljanin could repay the loans, R ad o j ci c p ut money into Kuljanin’s acc ount for a short time while the lender s went throug h the proce ss for approva l of t he mortg ag e loans. F or some other straw purchase rs, R adojcic’ s corpor ations provided false verific ations of employ ment to the mortg ag e l en ders. After the banks approve d the loans for Kuljanin, Kuljanin returne d to Radojcic the money he had g iven her to inflate her bank acc ount. Kuljanin rec eived the three loans and g ave the cash to Patterson, who kept it in a safe in J ewe l Windows’ office s. Radojcic used this elabor ate proce ss to obtain the loans beca use he neede d to keep his name off of all d o cuments related to the transac tions. Patterson said Radojcic owed the Un i t ed S tates I nterna l Revenue Service unpaid taxes of about $2 million. ¶ 7 Patterson testified that Helfand prepa red documents neede d to convert the apartments to condominiums, and then he prepa red the deeds conveying t h e p ro p erties to the straw purcha sers and from the stra w purc haser s to corpora tions Radojcic controlled. ¶ 8 Biljana Arany os, who acte d as a straw purcha ser for eig ht condominiums, testified that her loan applications included false st at em en t s about her income and assets. She did not write the false statements. Someone working for Radojcic prepa red the applications Ara ny os signe d. I n May 2006, Patterson g ave Arany os $65,000 to deposit into Arany os’s acc ount for

a few day s, and then Arany os g ave the money to a corpor ation Radojcic controlled. Although Arany os went to seven of the eig ht closing s, she knew nothing about the purcha ses. She did not find out the amounts of the mortg ag es until the closings. ¶ 9 The g rand jury indicted Radojcic, H elfand, Patterson, and some others on a long list of char g es, including theft, forg ery , and fi n an cial instit ution fraud. The prosec utors included Helfand on the list of witnesses they i n t en d ed to call to testify ag ainst Radojcic. Both Radojcic and Helfand objected on the basis of attorney -clien t p ri v i l ege. I n response to the objection, t he prosecutor presented transcripts of the grand jury testimony and arg ued t h at the testimony of Patterson and Arany os sh o wed that the attorney -client privileg e did not apply

. The trial court found that the State had not met its burden of prese nting a prima facie

case for finding that Radojcic committed a crime and his communications with Helfand further ed the criminal enter prise. On that basis, the court sustained the objections of Helfand and Radojcic and struck He l fand’s name from the list of witnesses. The State filed a

certificate stating that the ruling substantially impaired its ability to prosec ute Radojcic, and it filed a notice of appeal. Supreme Court Rule 604(a) (1) g ives this court jurisdiction to hear

-3-this appeal. Ill. S. C t. R. 604(a)(1) (ef f. Jul y 1, 2006).

¶ 10 ANALYSI S ¶ 11 Standard of Re view ¶ 12 The parties disag ree about the standard of revie w applicable to the trial court’s r uling. Radojcic contends that we should revie w the evidentiary ruling for abuse of discretion, while the State maintains that we should revie w the ru l i ng de novo beca use it involved the
ap p licability of a privileg e. Although fede ral courts have used the abuse of di s cr et i o n standard in simil ar case s ( e.g. , United States v. BDO Seidman, LLP
, 492 F.3d 806, 814 (7th Cir. 2007)), I llinois courts have revie wed de novo decisions conce rning the admissibili ty of evidenc e when a party claims attorney -client privileg e. People v. McRae
, 2011 IL App (2d) 090798, ¶ 25; Cangelosi v. Capasso
, 366 I ll. App. 3d 225, 227 (2006). We will follow I llinois authority

. Acc ording ly
, we revie w de novo the leg al issue of whether the trial court followed proper proc edure s when it consider ed the objection to the i nclusion of Helfand’s name on the list of witnesses. See W oods v. Cole , 181 I ll. 2d 512, 516 (1998).

¶ 13 Procedur es for Determining Whether Privileg e B ars Te stimony ¶ 14 I n In re Marriage of Dec ker
, 153 Ill. 2d 298 (1992), our supreme court s et out the law pertaining to attorney -client privileg e. Gene rally
, clien t s have the rig ht to preve nt the disc losure in judicial proce eding s of the communications betwee n the attorney and the client. Dec ker
, 153 I ll. 2d at 312. Howeve r, the client loses the privileg e if he “see ks or obtains the service s of an attorney in further ance of criminal or fraudulent activity .” Dec ker
, 153 I ll. 2d
at 313. The party seeking disclosure of the communications bear s the burden of proving the client has lost the privileg e. Dec ker
, 153 I ll. 2d at 321. To defe at the privileg e, the party seeking disclosure must show “that a prudent person ha[s] a rea sonable basis to suspect the
perpe tration or attempted perpe tration of a crime or fraud, and that the communications wer e in further ance there of.” In re Grand Jury Subpoena Duce s Tecum Dated Sept. 15, 1983
, 731 F.2d 1032, 1039 (2 d C ir. 1984), quoted in Dec ker
, 153 I ll. 2d at 322. Often, only the communication itself can show that the privileg e does not apply

. Dec ker
, 153 I ll. 2d at 322. I n some such case s, when other evidenc e fails to show that the client has lost the privileg e, the trial court may hear evidenc e in came ra to determine whether the privileg e ap p lies. Be fore hearing evidenc e in came ra , the judge should require the party seeking disclosure to show fac ts that wo u l d s u p p o rt a rea sonable belief “that in came ra revie w of the materia ls
may reve al evidence to establish the claim that the crime-fr aud exception applies.” United States v. Zolin , 491 U.S. 554, 572 (1989), quoted in Dec ker , 153 I ll. 2d at 324. ¶ 15 We rec og nize that the appellate court, in Mueller Industries, Inc. v. B erkm a n , 3 9 9 I ll. App. 3d 456, 470 (2010), appa re n t l y i n t erpr eted Dec ker to require a showing of probable

cause to believe that the client committed a crime and his communications with his attorney further ed that crime befor e th e co urt could hear evidenc e in came ra about the communications betwee n the attorney and the client. We find that the proce dure delineate d in Mueller does not comport with the lang uag e of Dec ke r , espec ially wher e the court in Dec ker adopts the standar d set in Zolin . There fore , we f ollow Dec ker , and not Mueller
, on

-4-this proce dural issue. As long as the party seeking to defe at the privileg e has shown fac ts that

support a reasonable belief that disclosure of the communications may prove the privileg e does not apply
, the court has discretion to hear evidenc e of those communications in came ra

. Dec ker , 153 I ll. 2d at 324. ¶ 16 Her e, t h e t rial judge found that the evidenc e apar t from the communications with the attorney did not show that a prudent person would have a rea sonable basi s t o s u s pect that those communications further ed the attempt to perpe trate crimes or fraud. The court simply omitted the next step, in which it should have determined whether the prosec ution prese nted sufficie nt evidenc e to support a rea sonable belief that the communications themselves could show that Radojcic lost the privileg e by using the communications with Helfand to further his attempts to perpe trate crimes or fraud. We hold that the trial court er red when i t struck Helfand’s name from the list of witnesses, and excluded from evidenc e all communications b et we en Radojcic and Helfand, without considering whether the evidenc e supported a

rea sonable be lief that those communications mi g ht reve al that Radojcic lost the privileg e.

¶ 17 Sufficienc y of the Evidenc e to Show the Privileg e Doe s Not Apply ¶ 18 Radojcic asks us to remand for the trial court to determine whether the court should he ar testimony in came ra and then decide whether that testimony suffice s to meet the State’s burden of showing that Radojcic lost the privileg e. The State contends that the testimony of Patterson and Arany os shows that a prudent person would have rea son to suspe ct both that Radojcic attempted to commit crimes or fraud and that his communications with Helfand further ed that projec t. Thus, acc ording to the State, we should reinstate Helfand as a witness and re mand for trial. ¶ 19 T o p ro v e Radojcic g uilty of loan fraud, the prosec utors need prove only that Radojci c knowing ly participated in making false statements in loan applications with intent to defr aud the financ ial instit ution. See People v. Aguilar
, 366 Ill. App. 3d 341, 3 4 3 -4 4 (2006); 720 IL CS 5/5-2(c)
, 16H-25, 1 6 H-30 (West 2006). Both Patterson and Arany os testified to R ad o jcic’s extensive role in the use of false statements on loan applications so s t ra w purcha sers, including Arany os, could obtain loans from various financ ial instit utions. Both witnesses said Radojcic retained the loan proce eds. Radojcic and Helfand do not contest the sufficie ncy of the evidenc e to show rea son to suspect Radojcic committed crimes and fraud. ¶ 20 I nstead, Radojcic and Helfand arg ue that the State has not show n any rea son to suspe ct that the communications betwee n Radojcic and Helfand further ed the attemp t s t o commit

cr i m es o r fraud. First, Radojcic points out that, acc ording to Patterson, Patterson g av e Helfand many of the instructions that he carri ed out. Patterson also testified that Radojcic told her what to tell Helfand, what to do to obtain loans, and what to do with the money once the lender g ave it to the straw purcha ser. Radojcic contends that the fac t that Patterson spoke d i re ct l y to Helfand shows that his own communications with Helfand did not further t h e crimes or fraud. We adopt the State’s per suasive re sponse to this arg ument. ¶ 21 Either Radojcic communicated with Helfand throug h Patterson or Patterson acte d on her

own when she told Helfand what to do. I f Patterson spoke to Helfand on her own behalf
, only she has the attorney -client privileg e, and Radojcic cannot assert her privileg e as g rounds to

-5-bar Helfand as a witness. See People v. Adam
, 51 I ll. 2d 46, 48 (1972). Patterson waived her

privileg e by testify ing to the grand jury about her discussions with Helfan d

. S ee People v. Simms
, 192 I ll. 2d 348, 382 (2000). Thus, insofar as Patterson acte d on her own, and not as a conduit for Radojcic’s instructions, the trial court should pe rmit the State to call Helf and

as a w itness to testify

about his discussions with P atterson. ¶ 22 I f Patterson mere ly acte d as a conduit for Radojcic’s instructions to Helfand, she either
acte d as Radojcic’s ag ent or she acte d as a third party , not an ag ent for Radojcic. I f Patterson did not act as Radojcic’s ag ent when she convey ed Radojcic’s instructions to Helfand, then the privileg e does not apply to the communications. “A defe ndant’s voluntary disclosure of information, or other matters subject t o being testified to, in the presence of *** any other third person who is not the ag ent of the defe ndant or his attorney is not privileg ed.” Simms
, 192 I ll. 2d at 382. Ag ain, if Patterson did not a ct as Radojcic’s ag ent, the trial court should permit the State to call Helfand as a witness to testify about the nonpriv i l eged communications he rec eived throug h Patterson, insofar as those communications have any bearing on the char g es ag ainst any of the de fendants. ¶ 23 I f Patterson acte d as Radojcic’s ag ent, then the communications with Helfand count, for
purposes of the attorney -client privileg e, ex ac t l y as though Radojcic spoke the words himself. See Lama v. Presk ill , 353 I ll. App. 3d 300, 306 (2004). Thus, the c ourt must look
to those communications to determine whether Radojcic has lost the attorney -client pri vileg e by using his communications with Helfand to furthe r the c rimes or fr aud. ¶ 24 Patterson testified that, at Radojcic ’s behe st, Helfand prepa red the leg al documents for

converting the apartment buildings to condominiums, for the sales to straw purcha sers, and for the resa les from the straw p u rc h as ers to the corporations Radojcic controlled. Wit hout the condominium conver sions, the straw purcha sers could not have purcha sed the units, and there fore they could not have obtained the mortg ag e loans. Wit hout the sales documents and the closing s of the sales, the banks would not have loaned the straw purcha sers the money

. Thus, Helfand’s work helped complete t he crime of obt aining the l oans from the financial instit utions by means of falsified loan applications. The communications with Helfand, and Helfand’s work in acc ord wit h the i nstruct i o n s , helped with the commi ssion of t he crimes even if Helfand did not know about the falsified loan applications and even if H elfand did
not himself commit any crime or fraud

. S ee R a diac Abrasives, Inc. v. Diamond Technologies, Inc.
, 177 Ill. App. 3d 628, 6 35 (1988). We find that Patterson’s testimony provides a re a s o n a

ble person with a rea sonable basis to suspect that the communications with Helfand delineating instructions for the prepa ration of documents neede d to rec eive the loans further ed the crimes and fraud. There fore , applying the test set out in Dec ker
, we find that the State has prese nted sufficie nt evidenc e to show that the attorney -client privileg e does not p r e v e n t Helfand from testify ing about his communications with Radojcic and the acts he too k in f ollowing Radojcic’s instructions. Acc ording ly
, we reve rse the trial court’s decision and

remand for a

trial at which theprosec ution may call He lfand a s a witness.

¶ 25 CONCLUSI ON ¶ 26 Be fore striking He lfand fr om the witness list, t he trial court should have addre ssed t he

-6-issue of whether the State prese nted s ufficie nt evidenceto support a reasonable belief that

the communica t i ons betwee n Radojcic and Helfand might show that Radojcic used the communications to advanc e his attempts to perpe trate crimes or e n g a g e in f r a u du le nt activity

. On de novo review of the court’s decision, we find that the evidenc e shows that Radojcic used h i s instructions to Helfand to further his attempts to commit crimes or eng ag e in fraudulent activity

. There fore
, the trial court err ed when it struck He lfand’s name from the list of witnesses. Acc ording ly , we r ever se the trial c ourt’s dec ision and remand f or trial.

¶ 27 Reverse d and re manded.

-7-