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United States v. Prelogar

United States District Court, W.D. Missouri, Western Division

January 18, 2019

United States of America, Plaintiff,
v.
Barrett Prelogar, Defendant. Number

          REPORT AND RECOMMENDATION

          JOHN T. MAUGHMER UNITED STATES MAGISTRATE JUDGE.

         Pending before the Court is the Defendant's Motion for Remedy Following Evidentiary Hearing [Doc. 67] filed on October 19, 2018, by defendant Barrett Prelogar (“Prelogar”). At issue in the motion is the remedy, if any, which should be afforded to Prelogar based on an ex parte interview conducted by government personnel with an individual who previously provided legal services to Prelogar. On October 2, 2018, the undersigned held an evidentiary hearing on the circumstances surrounding and substance of the referenced interview. Prelogar was present and represented by his counsel, Justin Gelfand and Sanford Boxerman. The government was represented by Assistant United States Attorney Paul Becker and David Zisserson, a trial attorney with the Department of Justice's Tax Division. At the hearing, two witnesses were called: James Wirken and Special Agent Alex Churchman with the Internal Revenue Service. Additionally, the following exhibits were offered and admitted into evidence:

Number

Description

Gov't #1

Thornhill letter to Ketchmark

Gov't #2

Thornhill letter to Shartar

Gov't #3

Thornhill email to Churchman (10/10/2015)

Gov't #4

Thornhill email to Churchman (10/16/2015)

Def't #5

Prelogar MOI

Def't #6

Matthews MOI

         On the basis of all the evidence adduced at the evidentiary hearing and following due consideration of the parties' extensive briefing, the undersigned submits the following:

         PROPOSED FINDINGS OF FACT

         1. Alex Churchman is a Special Agent with the Criminal Investigation Division of the Internal Revenue Service. Tr. at 32.

         2. Special Agent Churchman was assigned the lead case agent in a criminal tax investigation of Prelogar. Tr. at 32.

         3. For nearly 45 years, James Wirken (“Wirken”) was a practicing attorney in Kansas City. Missouri. Tr. at 5, 22.

         4. Beginning in the early 1990s, Wirken provided legal services to Prelogar.[1] Tr. at 5.

         5. Special Agent Churchman was aware that Wirken had previously represented Prelogar and Special Agent Churchman wanted to question Wirken after Wirken's name came up during the criminal investigation as being involved in a number of Prelogar's transactions. Tr. at 34-35.

         6. Special Agent Churchman wanted to evaluate whether Prelogar had a possible reliance-on-counsel defense. Tr. at 35.

         7. On March 21, 2017, Wirken met with Special Agent Churchman and Paul Becker, an Assistant United States Attorney in the Criminal Division in the United States Attorney's Office for the Western District of Missouri. Tr. at 6, 7, 32, 33.

         8. On March 21, 2017, Wirken was still on federal supervised release. Tr. at 6.

         9. On March 21, 2017, Prelogar had not yet been indicted. Tr. at 28.

         10. During the pre-indictment criminal investigation of Prelogar, he was being represented by a Kansas City attorney, Mark Thornhill. 52 \

         11. In September of 2014, Thornhill sent a letter to the case agent who preceded Special Agent Churchman that described certain financial arrangements involving Prelogar and noted that the particular actions were taken “after meeting with Wirken.” Tr. at 54-55; Gov't #1.

         12. In October of 2015, Thornhill sent an email to Special Agent Churchman providing copies of a deposition that Wirken had given in a prior case, stating “Mr. Prelogar wants you to have the transcripts, as they demonstrate his actions have all been lawful.” Tr. at 52-53; Gov't #2.

         13. Two weeks prior to the interview with Wirken, on March 8, 2017, Special Agent Churchman met with Thornhill regarding the ongoing criminal investigation of Prelogar. Tr. at 57.

         14. At the meeting, Thornhill brought up the issue that Prelogar's actions were undertaken upon Prelogar's reliance on legal counsel. Tr. at 60.

         15. Following the meeting, Thornhill sent a letter summarizing the meeting, noting that the case against Prelogar involved “issues of accounting and advice of counsel.” Tr. at 58-59; Gov't #3.

         16. The interview was arranged through communications between Wirken's criminal defense attorney and AUSA Becker. Tr. at 6-7, 33.

         17. Wirken was “absolutely” willing to speak with the government about Prelogar's criminal case as long as he was assured that he was not a target. Tr. at 6-7.

         18. Wirken attended the interview at the U.S. Attorney's office “voluntarily.” Tr. at 6-7, 33.

         19. The interview lasted approximately one to two hours. Tr. at 7, 33-34.

         20. The interview was not recorded, neither audio nor video. Tr. at 18, 35.

         21. During the interview, “at least a half dozen times, ” Wirken was asked about conversations he had with Prelogar. Tr. at 8.

         22. In response to such questions, Wirken said that he could not tell Special Agent Churchman and AUSA Becker “anything about the conversations from Mr. Prelogar to [Wirken] or from [Wirken] back to Mr. Prelogar because it was attorney-client privileged.” Tr. at 8-9, 23-24.

         23. In response to such questions, Wirken may have revealed the substance of some communications that he had with ...


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