United States v. Galliani

Background

The court addressed three joint letters concerning discovery. The court heard argument on February 15, 2024.

Temporal Scope — Docket No. 49

The court granted the government's motion to compel. Assuming the complaint's allegations were true, the court found that the requested communications were relevant to a claim or defense and proportional to the needs of the case.

Butterfield Bank — Docket No. 48

The court denied the government's motion to compel documents concerning Butterfield Bank. Federal Rule of Civil Procedure 34(a)(1)(A) requires a party to produce documents within its possession, custody, or control. The government did not establish that Mr. Galliani had control over the documents, which means a legal right to obtain them upon demand. The court rejected the government's argument that Butterfield Bank's willingness to produce the documents if Mr. Galliani signed a waiver established that right.

Privilege Dispute — Docket No. 50

Attorney-Client Privilege and Privilege Log

The government argued that it needed more information to determine whether communications listed on Mr. Galliani's privilege log were protected by the attorney-client privilege. The court was unpersuaded. It found the log sufficient because it identified the communications' nature, dates, senders and recipients, and general subjects. The court also noted that there was no dispute that Mr. Galliani hired the identified attorneys to provide legal advice.

The government did not request review of the communications by the judge in private, and the court stated that, in any event, the government had not shown a sufficient factual basis for such review. The court found that the involvement of Mr. Galliani's daughter, Pamela Gagliani, did not establish a good-faith basis to believe that five withheld communications were unprivileged. The court noted that Ms. Gagliani is a trust and estates attorney, had advised her father for many years, and that the communications also involved another attorney. The court further stated that a formal representation agreement is not required to invoke attorney-client privilege.

Requests 7 and 8

Request 7 sought written correspondence and notes of oral communications, excluding communications with attorneys and Karen Stepper or someone from her office, concerning foreign bank account reports and related reporting requirements through December 31, 2017. Mr. Galliani said he would produce non-privileged responsive documents but apparently had not stated whether he was withholding any responsive documents as privileged or identified related privilege-log entries. The court found the government's request for that information reasonable.

Request 8 sought documents supporting Mr. Galliani's contention that Ms. Stepper advised him that he did not have to file a foreign bank account report. The court noted that the request sought documents supporting his defense, rather than all communications with Ms. Stepper.

Tax-Practitioner Privilege

The government argued that Mr. Galliani had not provided enough information to invoke the tax-practitioner privilege under 26 U.S.C. § 7525. The court disagreed. It found that the privilege-log entries identified the type and subject of each communication and that nearly all the withheld documents reflected communications after the government began its audit, supporting the assertion that they concerned audit-related advice.

The court noted that two entries concerned tax advice about private annuities and estate planning rather than the audit. However, the court found no suggestion that the accountants were retained to prepare tax returns, or that the documents were worksheets or other materials involving financial data, deductions, or gain-and-loss calculations that would fall outside the privilege. The court also found no showing of a good-faith basis to believe that the communications were not as described in the privilege log.

Disposition

The order states that it disposes of Docket Nos. 48, 49, and 50. It expressly grants the motion concerning the temporal scope and denies the motion concerning Butterfield Bank. In the portion addressing Docket No. 50, the court finds the privilege log and tax-practitioner privilege assertions sufficient, declines in-camera review, and finds the government's requests concerning Requests 7 and 8 reasonable.