## Facts

- Business owners G.S. and F.S. retained bankruptcy attorney J.P. for pre-bankruptcy “exemption planning” because they held significant non-exempt assets.
- J.P. warned the clients about limits of lawful planning and risks of bankruptcy fraud, including insider transactions with relatives and later repurchase of transferred assets.
- The clients executed multiple transfers of stock and other property to family members, including transactions involving a purported loan and collateral; G.S.’s father supplied the loan funds.
- J.P. assisted in structuring and documenting aspects of the asset transfers.
- About a year later, G.S. and F.S. filed for bankruptcy; J.P. was not counsel of record in the bankruptcy case.
- After the bankruptcy concluded, G.S. and F.S. regained or repurchased the transferred property from relatives “for no loss.”
- A federal grand jury investigated possible bankruptcy fraud and subpoenaed J.P. for testimony and documents, including opinion work product related to the transfers.
- J.P. refused to comply, asserting attorney-client privilege and work-product protection; the government invoked the crime-fraud exception.

## Issues

1. Whether the government showed probable cause that the clients were engaged in, or planning, bankruptcy fraud and that J.P.’s communications and work product were used in furtherance of that fraud.
2. Whether the crime-fraud exception can pierce work-product protection, including opinion work product, in a grand jury investigation.
3. Whether the district court properly relied on in camera review to find probable cause and compel production and testimony.

## Decision

- The Eighth Circuit affirmed the order compelling J.P. to testify and produce subpoenaed materials.
- The court held the government made the required probable-cause showing that the communications and materials were in furtherance of an intended or ongoing fraud to conceal assets from creditors and the bankruptcy court.
- The court concluded the crime-fraud exception defeated both attorney-client privilege and work-product protection on the record presented, including certain opinion work product.
- The court deferred to the district court’s in camera evaluation and found no abuse of discretion in applying the exception.

## Legal Principles

- Attorney-client privilege does not protect communications made for the purpose of furthering a crime or fraud; it protects only communications seeking lawful legal advice.
- To invoke the crime-fraud exception in the grand jury context, the government must show probable cause that (1) a crime or fraud was committed or planned and (2) the attorney’s services or the communications were used in furtherance of it.
- The crime-fraud exception may also reach attorney work product, and on an adequate showing can extend to opinion work product when the materials are sufficiently connected to furthering the crime or fraud.
- A district court may determine applicability of the exception through in camera review consistent with grand jury secrecy; appellate review is deferential to the district court’s probable-cause finding and application of the exception.

## Conclusion

The Eighth Circuit upheld compelled disclosure to a grand jury where probable cause supported that pre-bankruptcy planning communications and attorney materials were used to advance a scheme to conceal assets, bringing the evidence within the crime-fraud exception notwithstanding attorney-client privilege and work-product protections.


In re Grand Jury Proceedings (G.S., F.S.), 609 F.3d 909 (8th Cir. 2010)