Opinion
DOCKET NO. A-5123-11T3
03-21-2013
IN RE STATE GRAND JURY INVESTIGATION
Vikrant Pawar argued the cause for appellants Robert Blossner, Tom Cataldo, Paul Chiaramonte, Murray Richman, Stacey Richman, and John Weichsel. Christopher S. Romanyshyn argued the cause for respondent State of New Jersey (Jeffrey S. Chiesa, Attorney General, attorney; Mark G. Eliades and Mr. Romanyshyn, Deputy Attorneys General, of counsel and on the brief). Henry E. Klingeman argued the cause for amicus curiae The Association of Criminal Defense Lawyers of New Jersey (Krovatin Klingeman, LLC, attorneys; Mr. Klingeman and Helen A. Nau, on the brief).
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Yannotti and Harris.
On appeal from the Superior Court of New Jersey, Law Division, Mercer County, DCJ No. 10-03248.
Vikrant Pawar argued the cause for appellants Robert Blossner, Tom Cataldo, Paul Chiaramonte, Murray Richman, Stacey Richman, and John Weichsel.
Christopher S. Romanyshyn argued the cause for respondent State of New Jersey (Jeffrey S. Chiesa, Attorney General, attorney; Mark G. Eliades and Mr. Romanyshyn, Deputy Attorneys General, of counsel and on the brief).
Henry E. Klingeman argued the cause for amicus curiae The Association of Criminal Defense Lawyers of New Jersey (Krovatin Klingeman, LLC, attorneys; Mr. Klingeman and Helen A. Nau, on the brief). PER CURIAM
By leave granted, six criminal defense attorneys appeal the April 20, 2012 order of the Law Division denying their motion to quash subpoenas issued by a State grand jury for "all fee records . . . from May 15, 2010, through the return date of the subpoena" regarding "any defendant named within State Grand Jury Indictment 10-05-00057-S returned on May 14, 2010." We affirm the denial of the motion, but we stay the enforcement of the subpoenas until the termination of individualized proceedings in Indictment 10-05-00057-S.
I.
We garner the facts from the piecemeal record compiled on appellants' motion to quash. On May 14, 2010, a State grand jury issued a thirty-four count indictment charging thirty-four individuals with, among other things, "racketeering, in violation of N.J.S.A. 2C:41-2(c) and (d); falsifying records, in violation of N.J.S.A. 2C:21-4; failure to file tax returns, in violation of N.J.S.A. 54:52-8; failure to pay gross income taxes, in violation of N.J.S.A. 54:52-9; [and] money laundering, in violation of N.J.S.A. 2C:21-25, involving property valued in excess of $500,000." In re Custodian of Records, Criminal Div. Manager, 420 N.J. Super. 182, 184-85 (App. Div.), leave to appeal granted, 2 08 N.J. 364 (2011). The indictment averred that the indictees' "predicate criminal activity occurred between in or about January 2005, and in or about April 2010." The alleged racketeering conduct included gambling, theft, aggravated assault, forgery and fraudulent practices, failure to file tax returns or reports, failure to pay gross income taxes, bribery, possession of controlled dangerous substances with the intent to distribute, unlawful use of firearms, money laundering, and conspiracy to commit the foregoing offenses.
Our review has been hampered by the failure of appellants to include the full record of the motion to quash in their appendix. We have been further stymied by appellants' almost-nonexistent compliance with Rule 2:6-2(a)(4)'s requirement that all facts included in the statement of facts be followed by "references to the appendix or transcript." We have refrained from including factual references in this opinion that we cannot verify from the submitted record.
According to the affidavit of Stephen J. Taylor, Assistant Attorney General and Director of the New Jersey Division of Criminal Justice, it was only after the issuance of the indictment that a separate investigation "was initiated on May 24, 2010." More than a year later, on May 25, 2011, Taylor "authorized the issuance of the State grand jury subpoenas," which were served on each privately-retained defense attorney for the indicted defendants in early June 2011.
All of the subpoenas sought the same data:
With respect to any defendant named within State Grand Jury Indictment 10-05-00057-S, returned on May 14, 2010:As far as the record reveals, only the six appellants formally challenged the subpoenas.
all fee records including but not limited to: (1) Cash Receipt entries; (2) Bank Deposit tickets including the cancelled deposit items [checks/money orders]; (3) Receipts issued for payments, including cash, check or any other form; (4) Payment ledgers; (5) Retained copies of any checks received and/or currency tendered; (6) Any
documents identifying the person making the payment; (7) Currency Transaction Reports; (8) IRS Forms 8300; and (9) Records identifying anything of value received in lieu of cash or check and the identity of the person tendering the things of value relative to legal services provided or agreed to be provided [directive and/or derivative] regarding the charges contained in said indictment from May 15, 2010, through the return date of the subpoena.
The Law Division conducted oral argument on appellants' motion in August 2011. The affected attorneys argued that the subpoenas improperly infringed upon the indicted defendants' constitutional right to counsel and invaded the attorney-client privilege. The State contended that the subpoenas targeted only post-indictment activities thereby obviating any right-to-counsel concerns, and the requested fee information did not implicate the attorney-client privilege.
On April 20, 2012, Law Division issued an eighteen-page written opinion, which denied the motion to quash. The court found that the activities being investigated were specifically outside of the time frame set by the May 2010 indictment, and consequently, "[t]his court finds that the State is well within its authority to use the State Grand Jury to investigate the potential additional charges." Furthermore, relying mostly on federal decisional law, the court found that the attorney-client privilege did not extend to the indicted defendants with regard to the disclosure of the attorney fee records. The court also rejected arguments relating to the reach of Rule 1:21-6 and the State's alleged lack of compliance with internal protocols for the issuance of grand jury subpoenas. Appellants moved for leave to appeal, which we granted in June 2012.
Through our own research we discovered that the Law Division judge issued a twenty-five page written amplification on May 10, 2012. See R. 2:5-1(b). Inexplicably, the parties did not include that later decision in their appendices. See R. 2:6-1(a)(1)(I).
On appeal, appellants present the following arguments for our consideration:
The arguments of amicus curiae, The Association of Criminal Defense Lawyers of New Jersey, are similar, but not identical in scope, to those raised by appellants.
POINT I: THIS COURT SHOULD UPHOLD DEFENDANT'S SIXTH AMENDMENT CONSTITUTIONALLY PROTECTED RIGHTS BY QUASHING THE SUBPOENAS ISSUED TO DEFENSE COUNSEL.We are mostly unpersuaded by these arguments, and consequently affirm, except for imposing a stay upon the enforcement of the subpoenas until the termination of individualized proceedings in Indictment 10-05-00057-S.
POINT II: THIS COURT SHOULD QUASH THE POST-INDICTMENT SUBPOENA.
POINT III: THIS COURT SHOULD ENACT SOME PROCEDURAL SAFEGUARDS TO PREVENT ABUSE OF GRAND JURY SUBPOENAS.
II.
Subpoenas may be issued by the State as part of its investigatory power when gathering information to put before a grand jury prior to indictment. In re Grand Jury Appearance Request by Loigman, 183 N.J. 133, 141 (2005). "'It is a grand inquest, a body with powers of investigation and inquisition, the scope of whose inquiries is not to be limited narrowly by questions of propriety or forecasts of the probable result . . . or by doubts whether any particular individual will be found properly subject to an accusation of a crime.'" In re Grand Jury Subpoenas Duces Tecum Served by Sussex Cnty., 241 N.J. Super. 18, 26 (App. Div. 1989) (quoting Blair v. United States, 250 U.S. 273, 282, 39 S. Ct. 468, 471, 63 L. Ed. 979, 983 (1919)). In addition, grand jury proceedings are presumed valid, thus the aggrieved parties bear the burden of proving that the grand jury was used for an improper purpose. State v. Francis, 191 N.J. 571, 587 (2007) (citing In re Addonizio, 53 N.J. 107, 126 (1968)).
In Francis, the Court recognized a distinction between pre-indictment and post-indictment use of the grand jury process, stating:
based on whether the State's challenged use of the grand jury occurred pre- or post-indictment, different rules apply in respect of grand jury abuse claims. In the pre-indictment setting, the inquiry must focus on whether the evidence the State sought was relevant to the crimes under investigation. If the claims of grand jury abuse arise in respect to use of the grand jury after an indictment has been returned, we join the unbroken line of authority that holds that such use of the grand jury is permitted unless the dominant purpose of that use was to buttress an indictment already returned by the grand jury. Post-indictment, the State may continue to use the grand jury to investigate additional or new charges against a defendant. However, once an indictment is returned, the State may not use the grand jury to gather evidence solely in respect of the charges already filed.
[Id. at 591-92.]
We have little difficulty in agreeing with the Law Division that (1) the May 2010 indictment and (2) the investigation into similar post-indictment conduct of some or all of the indicted defendants represent separate spheres of inquiry authorized to the State. The dominant purpose of the latter line of inquiry — including the payment of counsel fees as outlined in the challenged subpoenas — can have no capacity "to buttress an indictment already returned by the grand jury." Ibid. The requested materials, by definition, will have their genesis in events that occurred after the May 2010 indictment was issued, and necessarily involve circumstances temporally separate from the subjects of the alleged "predicate criminal activity [that] occurred between in or about January 2005, and in or about April 2010." Obviously, the State cannot be prevented from investigating and later indicting already-indicted individuals if those individuals continue criminal conduct after the indictment. A defendant cannot be immunized from future scrutiny of a similar offense just because he or she has already been charged with the prior misconduct. Nor can the involvement of an attorney — unwitting or otherwise — automatically shield possible wrongdoing.
We are aware, of course, that the second investigation was commenced only ten days after the issuance of the May 14, 2010 indictment. "The timing of the subpoena casts significant light on its purpose." In re Grand Jury Subpoena Duces Tecum, 767 F.2d 26, 29 (2nd Cir. 1985). Although appellants allege that the State informed them during a (pre-indictment) November 24, 2009 meeting that the State would be issuing subpoenas for attorney fee records, the subpoenas were not issued until after the second investigation commenced, months later.
Nothing in the record provides competent evidence about this meeting.
As part of this post-indictment investigation of money-laundering, the State also sought information from others with financial records relating to the indictees' post-May 14, 2010 conduct. Based upon the record on appeal, the State is legitimately utilizing its grand jury investigatory powers to pursue new or additional charges against persons who are already subject to prosecution. The fruits, if any, of the subpoenas cannot be used in the prosecution of the already-pending indictment, and we discern no misconduct by the State as long as it hews to this limitation.
We next turn to appellant's contention that the subpoenas infringe upon the attorney-client privilege. They rely heavily on our decision in Custodian of Records, supra, 420 N.J. Super. at 187, which held that
[d]efendant is charged with offenses that directly relate to his financial condition and dealings, including failure to file tax returns, failure to pay gross income taxes, and money laundering. Thus, the Attorney General's subpoena could very well include documents or other materials that would be useful to the State in prosecuting the pending charges against defendant. If any of those materials would not be discoverable by the State under Rule 3:13-3(d), their production in response to the Attorney General's subpoena would place defendant in a position where his confidential disclosures to obtain representation by an attorney could be used against him in the very proceeding in which he sought representation. This would violate one of the basic purposes of the attorney-client privilege, which is to allow a person to seek
legal representation without suffering any detrimental consequences.
[Id. at 187.]
Custodian of Records addressed a trial (not grand jury) subpoena issued to the records' custodian in the Morris vicinage Criminal Division Manager's Office seeking copies of the financial records that one of the indicted defendants used in his application for representation by the Public Defender. We held that those financial records and other information provided to the Criminal Division Manager's Office were protected by the attorney-client privilege and by Administrative Directive #1-06, which adopted the "Uniform Defendant Reporting System" utilized to determine a defendant's indigency. Id. at 188-89.
Administrative Directive #1-06 requires defendants to complete a Uniform Defendant Intake Report (UDIR), which requests, among other things, their employment and financial status. The UDIR contains a certification immediately above the space for a defendant's signature as follows:
I certify that the foregoing statements made by me in the above Financial Statement are true. If I have indicated above that I wish to be represented by a public defender, I am submitting this Financial Statement in support of my application to establish indigency, and I am aware that if any statements made by me in the Financial Statement are willfully false, I am subject to punishment as provided by R. 1:4-4(b).
Although expansive in its reach, we view Custodian of Records as entirely distinguishable from the present case. The most significant difference lies in the nature of the present grand jury subpoenas, which markedly differ from the trial subpoena issued in Custodian of Records. Custodian of Records presented a threat to the attorney-client relationship because the subpoenaed information was sought to be used against the defendant in the very matter for which the attorney was retained. Here, the State is using a separate grand jury to investigate potential wrongdoing, and has conceded that it cannot utilize the subpoena's harvest in any fashion related to the May 2010 indictment.
While other jurisdictions have held that private attorney fee records are not automatically shielded by the attorney-client privilege, see, e.g., United States v . Haddad, 527 F.2d 537, 538 (6th Cir. 1975); In Re Grand Jury Proceedings, 680 F.2d 1026, 1027 (5th Cir. 1982), our state has not explicitly so stated. Nevertheless, New Jersey courts "vigorously" protect the attorney-client privilege. Weingarten v. Weingarten, 2 34 N.J. Super. 318, 324 (App. Div. 1989).
The attorney-client privilege is the oldest privilege known to common law. Halbach v. Boyman, 369 N.J. Super. 323, 328 (App. Div. 2004). "The privilege recognizes that sound legal advice or advocacy serves public ends and rests on the need to 'encourage full and frank communication between attorneys and their clients.'" United Jersey Bank v. Wolosoff, 196 N.J. Super. 553, 561 (App. Div. 1984) (quoting Upjohn Co. v. United States, 449 U.S. 383, 389, 101 S. Ct. 677, 682, 66 L. Ed. 2d 584, 591 (1981)). As our courts have noted, however, "the privilege results in suppression of evidence and to that extent is at war with the truth." Ibid. (citing In re Selser, 15 N.J. 393, 405-06 (1954)); see also State v. Mauti, 208 N.J. 519, 536 (2012) ("[P]rivileges are not absolute and may, occasionally, yield to competing legal principles.").
In light of these principles, "[t]he determination whether a communication between a client and an attorney is protected must be made 'on the basis of the purposes for which the privilege exists and the reasons for its assertion in the context of the particular case.'" Custodian of Records, supra, 420 N.J. Super. at 187 (quoting Fellerman v. Bradley, 99 N.J. 493, 502 (1985)). Based upon the record presented to us, the data sought by the State's subpoenas — narrowly tailored to non-communicative, non-confidential attributes of the parties' business relationship — neither invade the attorney client privilege nor erode the protections available to indigent and non-indigent defendants alike. However, the circumstances of this case, while not presenting a clear erosion of the attorney-client privilege, nevertheless raise legitimate alarms about a deleterious inhibiting effect upon the relationship between appellants and their indicted clients.
Appellants contend that issuance of these subpoenas will have a chilling effect on the relationship between counsel and client, and results in an abuse of the indicted defendants' constitutionally-protected rights. They further argue that denying the motion to quash will:
1) chill the relationship between lawyer and client; 2) create an immediate conflict of interest for the attorney/witness; 3) divert the attorney's time and resources away from his client; 4) discourage attorneys from providing representation in controversial criminal cases; and 5) force attorneys to withdraw as counsel because of ethical rules prohibiting an attorney from testifying against his client.
Amicus curiae similarly contend that the State's subpoenas created "a chilling effect on the attorney-client relationships, and is demoralizing to the criminal defense bar." Both arguments concentrate on the substantial similarity between the crimes charged in the May 2010 indictment — racketeering and money laundering — and the focus of the post-indictment investigation: money laundering. The arguments also highlight the disquiet and incongruity engendered by having the all of the indicted defendants' private defense attorneys potentially called as grand jury witnesses against their clients, albeit in a subsequent proceeding.
Appellants have not argued that a prosecutor must cease all investigatory efforts once an indictment is issued. Moreover, "a grand jury [is permitted to] continue an investigation once an indictment has issued, if the purpose of the investigation is to identify further crimes committed by the indictees or to identify unnamed actors." State v. Johnson, 287 N.J. Super. 247, 259 (App. Div.), certif. denied, 144 N.J. 587 (1996). The attorney-client relationship cannot, of course, be used to screen or promote illegitimate acts. See United States v. Gordon-Nikkar, 518 F.2d 972, 975 (5th Cir. 1975).
Notwithstanding that these principles are manifest, it is also plain that
there are latent ethical issues in the serving of a subpoena on actual or prospective counsel opponent should be perceived without much difficulty. Even where an indictment may not have issued, and thus technically the attorney/witness is not yet an "adversary," since the subpoena . . . seeks to compel evidence []concerning a person who is represented by the attorney/witness,[] it relates to an established attorney-client relationship. The serving of a subpoena under such circumstances will immediately drive a chilling wedge between the attorney/witness and his client. This wedge is the natural consequence of several underlying factors created by this anomalous situation. Most obvious is the fact that the client is uncertain at best, and suspicious at worst,
that his legitimate trust in his attorney may be subject to betrayal. And because the subpoenaed attorney/witness may himself feel intimidated, this may in fact take place if there is not even minimal ethical control regulating the subpoenaing of an attorney/witness to seek evidence against his client.
[United States v. Klubock, 832 F.2d 649, 653 (1st Cir. 1987).]
Amicus curiae argue that the subpoenas create a conflict of interest between attorney and client. The lawyers' interest lies in avoiding potential contempt sanctions by complying with the subpoenas, or at least by expending the fewest possible resources in resisting them. By contrast, the clients' interest in lessening the likelihood of indictment on additional charges would require the lawyer to do his or her utmost, including incurring contempt citations, to resist the subpoena. "[R]equiring each attorney to become a witness against his [or her] client inevitably drives a wedge between attorney and client, may disqualify the attorneys from representing the clients in [other] proceedings, and potentially may require the attorneys to withdraw." In re Grand Jury Matters, 751 F .2d 13, 19 (1st Cir. 1984).
What strikes us as most relevant in our analysis is the indiscriminate use of the subpoenas, that is, each and every private attorney representing an indicted defendant was issued a subpoena. Such a cover-the-waterfront inquiry indubitably raises concerns of fairness and the potential for both misunderstanding by, and intimidation of, defense counsel and their clients.
It is well-established that "[t]he Sixth Amendment of the United States Constitution and Article I, Paragraph 10 of the New Jersey Constitution both guarantee that, in a criminal proceeding, the accused shall have the right to the assistance of counsel in his defense." State v. Nash, 212 N.J. 518, 541 (2013) (citing U.S. Const. amend. VI.; N.J. Const. art. I, ¶ 10). We view the peculiar and broad spectrum use of the subpoenas against all of the indicted defendants' private attorneys to potentially infringe on their clients' Sixth Amendment rights. We further view Custodian of Records as presaging our concern, by tracing the contours for an appropriate post-indictment subpoena:
We also of course do not preclude issuance of the type of grand jury subpoena involved in [In re Grand Jury Subpoena Duces Tecum Served Upon Levy, 165 N.J. Super. 211 (Law Div. 1978), aff'd o.b., 171 N.J. Super. 475 (App. Div. 1979)] once the trial of the charges against defendant has been completed.We do not view any delay in the grand jury's completion of its post-May 2010 investigation as impeding the administration of justice any more than did the multi-year lag that occurred between the investigation and issuance of the indictment in May 2010.
[Id. at 192.]
There can be no absolute rule that frees an attorney, merely because he or she is such, to refuse to give unprivileged evidence to a grand jury. Even when trials are pending, a grand jury's right to unprivileged evidence may outweigh the right of the defense bar and its clients not to be disturbed. However, the State's broad-stroke-approach tips the scale in favor of caution in order to ensure that the indicted defendants are not deprived of counsel of their choice. Even if subsequent events prove that such counsel were paid through illegal means, remedies remain available to the State.
In order to accommodate the disparate interests of the State, the indictees, and their attorneys, we stay the execution and enforcement of the subpoenas until the termination of individualized proceedings in Indictment 10-05-00057-S.
The fee information sought by the prosecution is neither privileged nor directly incriminatory of appellants' clients since they stand indicted; therefore, the subpoenas should not be quashed. Nevertheless, their enforcement should be stayed until appellants' representations of defendants in this matter are terminated either by judgment after trial, by plea, or otherwise. In this way, the inevitable "chilling effect" that the very summoning of appellants before the Grand Jury has on their relationship with their clients will be ameliorated, as it should be absent a showing by the prosecution that theThus, as each indicted defendant's pending charges are resolved — through dismissal or judgment of conviction — the State's subpoena to that defendant's particular attorney shall become enforceable, and compliance therewith shall be required.
information it seeks must be had from appellants at this time.
[In re Grand Jury Subpoena of Stewart, 548 N.Y.S.2d 679, 680 (App. Div. 1989) (citations omitted).]
We reject appellants' argument that is bottomed upon a putative violation of Massiah v. United States, 377 U.S. 201, 205-06, 84 S. Ct. 1199, 1202-03, 12 L. Ed. 2d 246, 250 (1964) (holding that when evidence is elicited from a defendant after his right to counsel has attached (but in the absence of counsel) is a violation of the Sixth Amendment), as meritless. R. 2:11-3(e)(2). Not only have appellants failed to factually demonstrate the basis of this claim, it is belied by the welter of properly-cited evidentiary materials reflecting the unremarkable origins of the post-indictment investigation.
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I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION
The Directive, but not the UDIR, states in pertinent part, that
(2) information on the intake form may not be used in grand jury proceedings or at trial, even for purposes of cross-examination[.]