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United States v. Hansen

United States District Court, D. Idaho

November 18, 2019

UNITED STATES OF AMERICA, Plaintiff,
v.
DAVID HANSEN, Defendant.

          MEMORANDUM DECISION AND ORDER

          DAVID C. NYE, CHIEF U.S. DISTRICT COURT JUDGE

         I. INTRODUCTION

         Pending before the Court is David Hansen's Motion for a Protective Order (Dkts. 101, 103)[1] and Motion to Seal Filings in Support of Motion for Protective Order (Dkt. 102). Having reviewed the record and briefs, the Court finds that the facts and legal arguments are adequately presented. Accordingly, in the interest of avoiding further delay, and because the Court finds that the decisional process would not be significantly aided by oral argument, the Court will decide the Motion without oral argument. Dist. Idaho Loc. Civ. R. 7.1(d)(1)(B).

         For the reasons set forth below, the Court DENIES Hansen's Motion.

         II. BACKGROUND

         Yellowstone Partners, LLC, (“Yellowstone”) is an investment advisory firm located in Idaho Falls, Idaho. David Hansen was the owner and Chief Executive Officer of Yellowstone. The Government has charged Hansen with multiple counts of wire fraud and tax violations. Broadly speaking, the Government alleges that Hansen targeted certain Yellowstone clients in a vast overbilling scheme.

         To protect any privileged documents in discovery, the Government used a taint review process. The Court thoroughly explained this process in a previous order (Dkt. 49) and incorporates that explanation by reference here. To summarize, tens of thousands of electronic documents were reviewed for privileged information in steps by a filter team, an AUSA, and Hansen's counsel. After the taint review process, roughly 4, 668 documents were provided to the prosecution as “non-privileged.”

         Beginning in February 2017, the Government conducted key word searches of the “non-privileged” ESI. Among other things, these searches revealed allegedly fraudulent billing spreadsheets. Approximately fifteen (15) of these spreadsheets (the “Spreadsheets”) were stored on Hansen's desktop computer in a folder labeled “Attorney Client workfile, ”[2]as well as in other locations. At the time, however, the electronic location of the “non-privileged” ESI-including the Spreadsheets-was unknown to both the prosecution team and defense counsel. In other words, the prosecution team could view the Spreadsheets themselves, but did not know if they came from the “Attorney Client workfile” folder or some other folder. All the prosecution team knew was that the Spreadsheets came from Hansen's computer.[3]

         In August 2019-after multiple requests from Hansen-the Government prepared a list of native file paths for the documents seized from its search. It was at this time that both the prosecution and Hansen's counsel realized these fifteen spreadsheets had been stored in the “Attorney Client workfile” folder. The Government responded by filing a Notice of Intent to Continue Search of Electronically Stored Information. Dkt. 88. Based on the nature of the Spreadsheets and the folder Hansen stored them in, the Government believes Hansen is hiding other inculpatory evidence in his “Attorney Client workfile” folder and wants to search the 250 documents stored in that folder.

         Hansen responded quite differently. He contends that the Government impermissibly reviewed the documents contained in the “Attorney Client workfile” folder, which constitutes a breach of the attorney-client privilege. Based upon this belief, Hansen now seeks to prevent the Government from searching the contents of the “Attorney Client workfile” folder.

         III. LEGAL STANDARD

         Rule 16(d)(1) “Protective and Modifying Orders” provides that “[a]t any time the court may, for good cause, deny, restrict, or defer discovery or inspection, or grant other appropriate relief.” Fed. R. Crim. P. 16(d)(1). The “language of Rule 16(d)(1) . . . appears to focus on enforcing the mandatory disclosure provisions of Rule 16 itself.” U.S. v. Grace, 526 F.3d 499, 511 (9th Cir. 2008).

         “Because it impedes full and free discovery of the truth, the attorney-client privilege is strictly construed.” United States v. Ruehle, 583 F.3d 600, 607 (9th Cir. 2009). The burden lies with the party claiming the privilege to prove the existence of the privilege. Id. Generally speaking, a client cannot transform an otherwise unprivileged document into a privileged document simply by transferring it to his attorney. See Fisher v. United States, 425 U.S. 391, 403-04 (1976).

         IV. ...


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