## Facts

- Martin Schwimmer was convicted after a jury trial in the Eastern District of New York for racketeering conspiracy, illegal payments involving employee benefit plans, conspiracy to defraud the United States, and tax evasion.
- The convictions arose from a scheme in which Schwimmer and a co-defendant received commissions from financial institutions in connection with investments of employee benefit plan funds.
- Before indictment, counsel for Schwimmer and the co-defendant cooperated and jointly retained an accountant to analyze transactions and prepare workpapers; Schwimmer provided information with an expectation of attorney-client protection.
- The government met with the accountant three times and obtained a copy of the workpapers.
- Two meetings primarily concerned calculating a forfeiture amount for the co-defendant, not building the prosecution’s case against Schwimmer.
- The prosecutor warned the accountant not to disclose communications with Schwimmer; the prosecutor did not review the workpapers until the remand hearing, and the trial prosecutor who conducted cross-examinations had not seen or discussed them.
- The government represented it was ready for trial before obtaining the workpapers; asserted spreadsheet changes stemmed from forfeiture negotiations and other non-privileged sources.
- On remand for an evidentiary hearing, the district court found no use or derivative use of privileged information in investigating or trying Schwimmer.

## Issues

1. Whether the government’s contact with a defense-retained accountant and acquisition of his workpapers violated the Sixth Amendment or attorney-client privilege so as to require reversal, given the district court’s finding of no use or derivative use.
2. Whether the jury could be instructed that 18 U.S.C. § 1954 applies to a person who, though not formally designated a plan fiduciary or agent, significantly influenced plan investment decisions.
3. Whether the jury could be instructed that undisclosed commissions cannot qualify for § 1954’s “bona fide compensation” exception.

## Decision

- The Second Circuit affirmed the judgment of conviction.
- The court upheld the district court’s finding that the government neither used nor made derivative use of privileged information obtained from the accountant.
- The court approved the § 1954 instruction extending coverage to persons whose investment advice significantly influenced plan decisions, regardless of formal title.
- The court approved the instruction that commissions must be disclosed to qualify as “bona fide compensation” under § 1954.

## Legal Principles

- Intrusion into attorney-client-related communications does not require reversal absent a showing that privileged information was actually used or had a derivative effect on the prosecution’s investigation, charging, or trial strategy.
- For § 1954, functional influence over employee benefit plan decisions can bring a person within the statute’s scope even without formal fiduciary designation.
- The § 1954 “bona fide compensation” exception does not protect secret or undisclosed commissions; transparency to the affected plan is required for compensation to be treated as bona fide.

## Conclusion

The Second Circuit affirmed Schwimmer’s convictions because the record supported a finding that the prosecution made no use or derivative use of the accountant’s privileged materials, and because the challenged jury instructions correctly treated § 1954 as covering those with significant influence over plan investment decisions while requiring disclosure of commissions to invoke the statute’s bona fide compensation exception.


United States v. Schwimmer, 924 F.2d 443 (2d Cir. 1991)