News & Events

Is Fraud the Exception?

It is not uncommon for companies to hire lawyers to investigate matters and to find out what happened when a crisis occurs.  After all, the company needs advice and counsel from its attorneys as to what to do; candid advice and counsel that is protected.  Everybody understands this, but apparently not all federal regulators are willing to abide by it.  Recently, a document obtained through a Freedom of Information Act request reveals the fight over interview notes of attorneys hired by JPMorgan Chase in the aftermath of the Bernie Madoff scandal.

The Office of the Comptroller sought the investigative reports and the notes of interviews of the attorneys hired by JPMorgan Chase.  JPMorgan Chase refused to provide them so the Office of the Comptroller conducted its own interviews.  It became suspicious, however, after it said bank employees appeared not to remember things.  The matter was referred to the Treasury Department’s Office of Inspector General (“TOIG”) who then requested the notes via subpoena.  Once again, JPMorgan Chase asserted the attorney-client privilege and/or attorney work-product doctrine but TOIG argued that the attorney interview notes should not be afforded any privilege because they involved advice to the client to aid in the commission of a fraud or crime – the so-called “crime-fraud” exception.  The crime considered here was apparently perjury; perjury that had to have been encouraged by the attorneys representing JPMorgan Chase.

Ultimately, the Department of Justice rejected such a charge after TOIG asked it to enforce the subpoena determining that TOIG had not provided any basis for suggesting that these notes were made for the purpose of furthering a fraud or crime.  But the fact that a government agency was so intent on acquiring attorney notes; going so far as to state it should receive them under the crime-fraud exception without any basis to suspect that advice was given in furtherance of a crime or fraud is disturbing and unnecessary.  As it turns out, the government collected $2 billion in settlement from JPMorgan Chase over its failures to detect problems with Madoff.  Apparently, the attorneys conducting the investigation for JPMorgan Chase did give candid advice and the government benefitted from that.

Amanda B. Barbour

Amanda Barbour