United States v. All Funds on Deposit At

• Court: District Court, District of Columbia
• Decided: January 12, 2016
• Docket: Civil Action No. 2004-0798
• Status: Published

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

____________________________________ ) UNITED STATES OF AMERICA, ) ) Plaintiff, ) ) v. ) Civil Action No. 1:04-cv-00798 (PLF) ) ALL ASSETS HELD AT BANK JULIUS, ) Baer & Company, Ltd., Guernsey ) Branch, account number 121128, in the ) Name of Pavlo Lazarenko, et al., ) ) Defendants In Rem. ) ___________________________________ )

MEMORANDUM OPINION AND ORDER

On March 26, 2015, the Court referred this case to Magistrate Judge G. Michael

Harvey for the management of all discovery and the resolution of any discovery-related disputes.

See Referral Order at 1 (Mar. 26, 2015) [Dkt. 357]. One such dispute was presented to Judge

Harvey by Claimant Pavel Lazarenko’s Second Motion to Compel [Dkt. 369]. After the matter

was fully briefed and following a hearing on the motion, Judge Harvey issued a Memorandum

Opinion (“Mem. Op.”) on August 27, 2015 [Dkt. 434], denying the motion to compel.

Lazarenko filed an Objection to Magistrate Judge Harvey’s Memorandum Opinion [Dkt. 465],

the United States responded [Dkt. 498], and Lazarenko replied [Dkt. 510]. Having carefully

considered the matter, the Court now affirms Magistrate Judge Harvey’s decision in its entirety.

At issue on this motion to compel is an Internal Revenue Service Special Agent

Report (“SAR”), dated June 30, 2001, which was prepared in connection with Lazarenko’s

criminal prosecution in the United States District Court for the Northern District of California. Magistrate Judge Harvey found that the IRS Criminal Investigation Division prepared the SAR

and that it summarized facts, including witness interviews, related to the money laundering

claims against Lazarenko. The SAR also analyzed those facts and provided recommendations to

the United States Attorney as to which charges should be brought. Mem. Op. at 2-3.

Magistrate Judge Harvey concluded that: (1) the SAR constitutes work product

even though it was prepared by an IRS agent, rather than by an attorney; (2) the SAR was

submitted prior to the return of the superseding indictment against Lazarenko; (3) it was prepared

in order to assist the U.S. Attorney’s Office and apprise it of the IRS’s recommendations for

criminal charges against Lazarenko; (4) the SAR was prepared in anticipation of that criminal

prosecution; (5) the work product doctrine is applicable to the SAR, even though it was prepared

in anticipation of the prior criminal prosecution rather than the instant civil litigation; (6) the IRS

agent’s recommendations, opinions, and conclusions constitute opinion work product;

(7) Lazarenko failed to make the “extraordinary showing of necessity” necessary to obtain

opinion work product; (8) Lazarenko also is not entitled to disclosure of the remainder of the

SAR – the portions containing factual work product – because, according to the undisputed

declarations submitted by the government, all facts asserted in the SAR have already been

disclosed to Lazarenko; and (9) Lazarenko therefore cannot make the showing of “substantial

need” for the information and “undue hardship” in acquiring it that are required to discover

factual work product. Mem. Op. at 6-10. See Dir., Office of Thrift Supervision v. Vinson &

Elkins, LLP, 124 F.3d 1304, 1307-08 (D.C. Cir. 1997); U.S. ex rel. Landis v. Tailwind Sports

Corp., 303 F.R.D. 419, 425 (D.D.C. 2014); see also F.T.C. v. Grolier Inc., 462 U.S. 19, 25

(1983); F.T.C. v. Boehringer Ingelheim Pharmaceuticals, 778 F.3d 142, 151-53, 156 (D.C. Cir.

2015). In view of these findings and conclusions, Magistrate Judge Harvey found it unnecessary

2 to reach the question of whether the SAR is also protected under the deliberative process

privilege. Mem. Op. at 10 n. 5.

When a party objects to a Magistrate Judge’s determination with respect to a non-

dispositive matter – such as discovery generally or, more specifically, a motion to compel – “the

magistrate judge’s decision is entitled to great deference,” Beale v. District of Columbia, 545

F. Supp. 2d 8, 13 (D.D.C. 2008) (quoting Boca Investerings P’ship v. United States, 31 F. Supp.

2d 9, 11 (D.D.C.1998)), and it will not be disturbed unless it is “clearly erroneous” or “contrary

to law.” FED. R. CIV. P. 72(a); LOC. CIV. R. 72.2(c). Having carefully reviewed Magistrate

Judge Harvey’s Memorandum Opinion, the papers filed by the parties, the relevant case law, and

the Declarations of Richard J. Pietrofeso [Dkt. 405-1] and Richard G. Goldman [Dkt. 410-1 Ex.

A], along with the United States’ Statement and Supplemental Statement Concerning IRS

Special Agent Report [Dkt. 428 & 431], the Court concludes that Magistrate Judge Harvey

correctly articulated the applicable legal principles governing attorney work product, that his

findings of fact were not clearly erroneous, and that he properly applied the law to the facts.

Accordingly, it is hereby

ORDERED that Claimant’s Objection [Dkt. 465] to Magistrate Judge Harvey’s

Memorandum Opinion denying the motion to compel production of the SAR is OVERRULED;

and it is

FURTHER ORDERED that Magistrate Judge Harvey’s Memorandum Opinion of

August 27, 2015 [Dkt. 434] is AFFIRMED.

SO ORDERED.

/s/________________________ PAUL L. FRIEDMAN DATE: January 12, 2016 United States District Court