A federal judge in Washington has ordered a businessman charged in a stock price manipulation scheme to disclose documents that his defense lawyers claimed the attorney-client privilege protected.
Chief Judge Royce Lamberth of U.S. District Court for the District of Columbia said the defendant, Shelly Singhal, the owner and chairman of the California-based SBI USA investment company, failed to show the thirteen documents in dispute should remain confidential. The judge's ruling is here.
A grand jury in April 2010 indicted Singhal on conspiracy and other charges for his alleged role in a stock price manipulation scheme. Prosecutors brought additional charges, in a separate case, against Singhal and two other people last May. Singhal’s company is in bankruptcy proceedings in California.
Three attorneys, including Robert Brown, a former partner at New York’s Reitler Brown & Rosenblatt (now Reitler Kailas & Rosenblatt) were also charged with crimes rooted in Singhal’s alleged stock scalping schemes. Each of the lawyers has pleaded guilty in Washington federal district court.
Brown was Singhal’s former lawyer and business partner. Prosecutors said Brown allegedly helped Singhal in scalping transactions through executing funds transfers and concealing the source of money used to illegally promote stocks.
Lamberth said in his ruling that Singhal and SBI, which is not a party in the criminal case, presented several variations of the attorney-client privilege. Several of the documents at issue are e-mails between a co-defendant and a lawyer who is not charged in the case.
In reviewing the dispute, Lamberth found, among other things, that the crime-fraud exception applies to several of the documents. The exception undercuts the attorney-client privilege when a client uses the relationship with an attorney to commit a crime.
Prosecutors presented evidence to Lamberth, in an ex parte filing, that the judge said could “establish the elements of an ongoing crime or fraud.”
Lamberth also examined Brown’s dual role as both lawyer to and business partner with Singhal. The government’s legal team, assistant U.S. attorneys Michael Atkinson and Seth Waxman, argued that Brown, in several exchanges with Singhal, served as a business partner, not as an attorney.
Lamberth said Brown’s management and investor responsibilities were outside his “sphere” as a lawyer, and he ordered Singhal to turn over that communication.
Singhal’s attorneys—Dickstein Shapiro white-collar defense partner Barbara “Biz” Van Gelder and Mark Srere, a Bryan Cave partner who specializes in criminal defense and investigations—were not immediately reached for comment this morning.