TelexFree Trustee’s privilege waiver approved
Following a request that a proposed order be drafted up and sent a court email address, an actual order on the Trustee’s motion for privilege waiver was posted yesterday.
The short of it is the order was approved, with any client-attorney privilege TelexFree might have otherwise enjoyed waived in connection
with the prosecution by the United States Department of Justice of criminal indictments issued against Carlos Wanzeler and James Merrill, and in connection with the civil action commenced by the Securities and Exchange Commission against the Debtors and other parties.
Objections filed by TelexFree owners Carlos Wanzeler and James Merrill were acknowledged, but overruled.
Since the order was passed two additional interesting documents have appeared on KCC’s log of documents related to the case.
Both of the documents in question have been filed are from Joseph Davis, an attorney an shareholder of Greenberg Truarig.
The documents in question are supplement declarations, which appear to be in support of assertions the Trustee made relating to the seized data, concerning any possible breach of attorney-privilege between Merrill, Wanzeler and their personal lawyers.
To that end, Davis in both declarations distances himself and Greenberg Traurig from having personally represented Wanzeler or Merrill in any extended capacity.
At the hearing on September 23, the Court directed Greenberg Traurig to supplement paragraph 6 of the Declaration of Joseph P. Davis III in Support of the Greenberg Traurig Retention Application to further clarify Greenberg Traurig’s role in connection with the interviews on the record of Carlos Wanzeler and James Merrill by the Massachusetts Securities Division.
Greenberg Traurig was retained by Debtor TelexFree, Inc. (“TelexFree”) in February 2014 as co-counsel with the firm of Garvey Schubert Barer in connection with the investigation initiated by the MSD and in responding to information requests from the MSD (the “Investigation”).
Jeffrey Babener of the firm of Babener & Associates also provided legal counsel to TelexFree related to the Investigation.
On February 12, 2014, attorneys Mark Berthiaume of Greenberg Traurig and Robert Weaver of Garvey Schubert Barer attended a meeting with representatives of TelexFree, including Mr. Wanzeler and Mr. Merrill, at the offices of TelexFree in Marlborough.
At the meeting, Mr. Berthiaume and Mr. Weaver instructed Mr. Wanzeler and Mr. Merrill that Greenberg Traurig and Garvey Schubert Barer had been retained by, and would be acting on behalf of, TelexFree and not Mr. Wanzeler and Mr. Merrill individually.
On March 3, 2014, Mr. Weaver, on behalf of Garvey Schubert Barer and Greenberg Traurig, emailed letters to Mr. Wanzeler and Mr. Merrill regarding the subpoenas for the sworn testimony of Messrs. Wanzeler and Merrill scheduled for March 25, 2014 and March 26, 2014.
In the Representation Notice Letter, Mr. Weaver stated that he was writing “to memorialize a discussion Mark Berthiaume and I had with you when we met at your offices in Marlborough on February 12, 2014.”
Mr. Weaver further wrote:
“It is necessary to emphasize that all of our activities to date and in the future regarding this matter have been, and will continue to be, on behalf of the Company. Our client is TelexFREE, not you.”
In preparation for the MSD interviews, Mr. Berthiaume met with Mr. Wanzeler and Mr. Merrill. During those meetings, he again explained that Greenberg Traurig represented TelexFree and not Mr. Wanzeler and Mr. Merrill in their individual capacity.
In a limited capacity, Mark Bethiaume of Greenberg and Traurig did wind up representing Merrill and Weaver, but only during the Securities Division interview.
In response to the question of whether Mr. Merrill was represented by counsel at the interview, Mr. Merrill responded that he was.
Counsel for the MSD then asked the lawyers if they represented “Mr. Merrill in his individual capacity today?”
In response, Mr. Berthiaume said, “I am representing the corporation, but for the purposes of today’s testimony, I am here representing Mr. Merrill.”
Mr. Wanzeler was asked the same questions at his interview on the record on March 26, 2014.
I’m not sure exactly how that panned out, given the repeated assertion that TelexFree would be the only party represented by Berthiaume – but I think it has to do with Merrill and Wanzeler being represented only in their capacity as the owners of TelexFree – not individually.
Had the representation been individual, Wanzeler and Merrill would have been able to assert personal client-attorney priviledge.
Davis’ third declaration (the quoted text is taken from the second, with the first not appearing on KCC’s log), is made in relation to James Merrill’s detention by federal authorities.
Following the detention by federal authorities of James Merrill on May 9, 2014, Mr. Berthiaume, with the assistance of an associate, provided information to
Mr. Merrill’s criminal defense counsel related to the Debtors’ operations, court filings and evidentiary submissions and the legal standards for detention pending trial.
Mr. Berthiaume also discussed his personal view of Mr. Merrill’s detention with the United States Attorneys’ Office.
Mr. Berthiaume did not appear or otherwise act as counsel for Mr. Merrill, and no time related to this activity was billed to the Debtors’ estate.
To that extent, Davis’ declarations are clarifying that at no point in time did Greenberg Traurig represent Merrill or Wanzeler in a personal capacity.
Pending further declaration by lawyers with other firms representing TelexFree, one can safely assume the question of whether they represented Merrill and Wanzeler in a personal capacity at any given time wasn’t contestable.
In summary, regulators are now wholly free to trawl the entirety of the 400 terabytes of information seized from TelexFree offices, in addition to the physical data recovered, and build their respective cases around them.
This includes the criminal charges filed against James Merrill and Carlos Wanzeler, as well as the SEC and Massachusetts Securities Division’s civil cases against TelexFree, Wanzeler and Merrill and several of the scam’s top investors.
Due to the amount of data seized, it’s probably going to take some time for authorities to sift through it all and pluck out the juicy incriminating bits. Should make for some extremely interesting filings when they’re done though!