## Facts

- Martin Schwimmer, an attorney and investment adviser, arranged investments of employee benefit plan funds in bank certificates of deposit and received commissions that were not disclosed to plan decisionmakers.
- A jury in the Eastern District of New York convicted Schwimmer of RICO conspiracy, numerous counts of receiving illegal payments affecting employee benefit plans (18 U.S.C. § 1954), conspiracy to defraud the United States, and income tax evasion.
- Schwimmer and a co-defendant pursued a joint defense strategy through their counsel.
- The co-defendant’s attorney retained an accountant, Ralph Glickman, to assist the joint defense by analyzing financial transactions.
- Schwimmer provided confidential information to Glickman after being told the communications were protected by attorney-client privilege.
- After the co-defendant’s case ended, the government obtained documents prepared by Glickman; Schwimmer asserted the prosecution used derived information at his trial even if the documents were not introduced.

## Issues

1. Whether § 1954 covers a person who is not formally designated as an employee benefit plan’s “agent” or “counsel” but has significant influence over plan investment decisions.
2. Whether the § 1954 “bona fide compensation” exception requires disclosure of commissions or other compensation arrangements to qualify for the exception.
3. Whether Schwimmer’s communications to an accountant retained by a co-defendant’s lawyer pursuant to a joint defense were privileged under attorney-client and common-interest doctrines, and whether alleged governmental use required an evidentiary hearing and potential relief.

## Decision

- Affirmed the district court’s instruction that § 1954 may reach a person who, though not formally labeled an agent or counsel, exercises significant influence over plan investment decisions.
- Affirmed the instruction that undisclosed commissions do not fall within § 1954’s “bona fide compensation” exception; disclosure is required to claim the exception.
- Remanded for a limited evidentiary hearing on whether the government obtained and used privileged information from the joint-defense accountant, and, if so, whether the use prejudiced Schwimmer and warranted a remedy.

## Legal Principles

- For § 1954, functional role may control over formal title; a person with significant influence over plan decisions can qualify as an “agent” or “counsel” within the statute’s protective scope.
- The § 1954 “bona fide compensation” exception applies only to compensation for actual services that is disclosed so plan fiduciaries/beneficiaries can evaluate its propriety; undisclosed commissions are outside the exception.
- Attorney-client privilege protects confidential client communications made for obtaining legal advice; the privilege can extend to an accountant or similar professional when engaged at counsel’s direction to assist legal representation.
- Under the common-interest (joint-defense) doctrine, communications made in confidence to further an ongoing joint defense may remain privileged even if conveyed to another party’s counsel or their agent; litigation need not be pending and the communicating party’s own counsel need not be present.
- A defendant who makes a non-frivolous showing that the prosecution may have obtained and used privileged joint-defense communications is entitled to an evidentiary hearing to determine violation, prejudice, and appropriate remedy.

## Conclusion

The Second Circuit sustained Schwimmer’s convictions against challenges to the reach of § 1954 and the disclosure requirement for the “bona fide compensation” exception, but ordered a limited remand for a hearing to determine whether the government improperly used privileged joint-defense communications obtained from an accountant and whether any proven misuse prejudiced Schwimmer.


United States v. Schwimmer, 892 F.2d 237 (2d Cir. 1989)