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United States v. Hoffman

United States District Court, E.D. Louisiana

March 20, 2015

UNITED STATES OF AMERICA
v.
PETER M. HOFFMAN, MICHAEL P. ARATA, SUSAN HOFFMAN, SECTION

ORDER AND REASONS

MARTIN L. C. FELDMAN, District Judge.

Before the Court are two motions by defendant Peter Hoffman: (1) motion to exclude statements by defendant Michael Arata as subject to attorney-client privilege (Federal Rule of Evidence 501); and (2) motion for severance pursuant to Rule 14(a) of the Federal Rules of Criminal Procedure.[1] For the reasons that follow, the motion to exclude statements is DENIED in part insofar as the Hoffmans assert blanket privilege, but the Court defers ruling as to specific communications pending the submission of supplemental papers addressing whether or not specific communications might be privileged. The motion for severance is DENIED without prejudice as premature.

Background

In this white collar criminal case, the government charges three defendants with wire fraud, mail fraud, conspiracy, aiding and abetting, and, as to Mr. Arata only, also charges false statements to federal agents.[2]

In connection with transforming a dilapidated mansion at 807 Esplanade Avenue into a post-production film studio, the government charges that Peter and Susan Hoffman and Michael Arata (who through companies they owned were partners in various movie industry ventures) committed, aided and abetted, and conspired to commit, mail and wire fraud by submitting false and misleading bank statements and expense reports in order to deceive the State of Louisiana into issuing state tax credits that they had not actually earned and were not entitled to receive.[3]

In late 2013, during the federal government investigation into Louisiana film infrastructure tax credit fraud, the government was approaching a five-year statute of limitations on federal crimes government agents believed had been committed. It was during this time frame that the government was considering whether or not Michael Arata should be charged with federal crimes along with Peter and Susan Hoffman in connection with certain infrastructure tax credit applications that had been submitted to the State.[4] On December 20, 2013 the government moved to compel Michael Arata to answer questions and produce documents; Arata had refused to do so because Peter Hoffman had asserted the attorney-client privilege. Judge Milazzo ordered that Arata appear in camera for examination by the Court on January 14, 2014. After meeting with him, Judge Milazzo found that Arata had no attorney-client relationship with Hoffman with regard to 807 Esplanade. Judge Milazzo then denied Peter Hoffman's motion for reconsideration, again finding that there was no attorney-client privilege because Arata and Hoffman were business partners in 807 Esplanade.

On more than one occasion during the government's investigation, Mr. Arata, who was represented by counsel, met with FBI agents and government attorneys. One such meeting took place on January 27, 2014 at the FBI's New Orleans Field Office. Michael Arata was present with his attorneys, Eddie Castaing and Billy Gibbens. AUSA Dall Kammer was also present, along with Melanie Haggarty, a forensic accountant with the FBI. After Mr. Arata, his counsel, and AUSA Kammer signed a proffer agreement, FBI Special Agent Robert Blythe conducted the questioning; the substance of the interview, the information provided by Mr. Arata to interviewing agents, was transcribed by the Special Agent Blythe in a 10-page Form 302.

At the end of the three-hour meeting, the participants discussed meeting for another session but, instead, ten days later, on February 6, 2014, a grand jury returned a six-count Indictment, charging Peter Hoffman and Michael Arata with conspiracy (Count 1), as well as aiding and abetting, and actually committing wire fraud (Counts 2-6), in violation of 18 U.S.C. §§ 371, 2, and 1343. After first superseding on April 3, 2014, [5] the government filed a 25-count second superseding indictment on May 15, 2014, charging the Hoffmans and Mr. Arata with conspiring to commit, committing, and aiding and abetting, wire and mail fraud, in violation of 18 U.S.C.§§ 371, 1343, 1341, and 2. The second superseding indictment also charges Mr. Arata with making false statements to federal agents, in violation of 18 U.S.C. § 1001.[6]

Counts 22 through 25 (four false statement counts) charge that Mr. Arata made false statements to FBI agents during the January 27, 2014 proffer session. Whether or not the government may in its case-in-chief introduce Arata's proffered statements has been the subject of prior motion practice. See United States v. Arata, No. 14-22, 2014 WL 5040721 (E.D. La. Oct. 8, 2014) and United States v. Arata, No. 14-22, 2014 WL 7330618 (E.D. La. Dec. 18, 2014). Mr. Arata sought dismissal of Counts 22 through 25 on the ground that, by bringing those charges the government breached a proffer agreement. In denying the motion without prejudice on October 8, 2014, the Court examined the terms of the written proffer agreement. United States v. Arata, No. 14-22, 2014 WL 5040721 (E.D. La. Oct. 8, 2014). The Court determined that "the government has not breached the proffer agreement simply by presenting to the grand jury and including the false statement counts in the superseding and second superseding indictment[;] the government did not need to seek the Court's advance permission to charge Mr. Arata." See Arata, 2014 WL 5040721, at *6 (emphasis added). Nevertheless, the Court noted that the parties' submissions and, thus, the Court's ruling left outstanding "an obvious unresolved issue that must be dealt with, pre-trial[:] whether or not Mr. Arata materially breached an agreement with the government such that the government is absolved of any of its obligations under the proffer agreement." Id . Thereafter, the government filed a motion to vitiate the proffer agreement with Arata; in so doing, the government sought a judicial determination that Mr. Arata breached the proffer agreement, thereby absolving the government from its conditional promise not to use his proffer statements in its casein-chief. Arata opposed the motion and requested an evidentiary hearing. The Court granted Arata's request for an evidentiary hearing and deferred ruling on the government's motion pending a limited evidentiary hearing. United States v. Arata, No. 14-22, 2014 WL 7330618 (E.D. La. Dec. 18, 2014). On December 18, 2014, the Court summarized at some length the parties' contentions and their characterization of the documentary evidence. But the Court deferred ruling on whether the government had proven by a preponderance of the evidence that Arata had materially breached the proffer agreement's requirement that he "be completely truthful." Meanwhile, Mr. Arata also challenged the admissibility of his proffered statements on an independent ground: he sought an order precluding the government from using his proffer statements in the government's case-in-chief on the ground that his statements constitute plea discussions rendered inadmissible by Federal Rule of Evidence 410. An evidentiary hearing was held on February 25, 2015[7] in which evidence was presented on the government's motion to vitiate the proffer agreement and on Arata's motion to preclude the government from using his January 27 statements in its case-inchief. On March 6, 2015 the Court issued its Order and Reasons in which it granted the government's motion to vitiate the proffer agreement on the ground that the government had carried its preponderance burden as to the legal fees issue, and denied Arata's motion in limine regarding Federal Rule of Evidence 410 on the ground that there was no evidence that there were any plea discussions during the proffer.

Almost a year after Judge Milazzo issued her rulings regarding Hoffman's attorney-client privilege claims, Peter and Susan Hoffman now seek to exclude all statements made by Arata in his January 27, 2014 proffer session with the FBI, as well as all communications between him and Arata "relating to the requirements to obtain tax credits under Louisiana law." Peter Hoffman also urges the Court to sever his trial from Mr. Arata's.

I.

A.

Peter Hoffman asserts that Michael Arata was counsel for Seven Arts Pictures Louisiana LLC, and that "Arata has made statements disclosing information learned through the course of his representation." Asserting the attorney-client privilege and invoking Federal Rule of Evidence 501, Peter and Susan Hoffman seek to exclude certain statements or information from evidence at trial. In particular, the Hoffmans seek to exclude the statements made by Michael Arata to the FBI on January 27, 2014, as reflected in the Form 302, in which Special Agent Blythe memorialized his interview with Michael Arata, as well as "all documents or other tangible things... between Mr. Arata and Mr. Hoffman relating to the requirements to obtain tax credits under Louisiana law." More specifically, the Hoffmans identify as privileged certain exhibits (Exhibits A, B, C, D, E, G, H, J, and K) attached to Mr. Arata's prior motion to dismiss or sever on the ground of prejudicial joinder. Each of these exhibits, Hoffman submits, are confidential communications whose predominant purpose was legal advice under the film tax credit statute and regulations.

The government urges the Court to deny the Hoffmans' motion to exclude statements for four reasons: (1) they have not satisfied their burden of proof; (2) no privilege exists because Arata and Hoffman were business partners; (3) the ...


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