A receiver tasked with recovering assets for investors in a civil fraud case has subpoenaed the attorney representing the defendant in a parallel criminal fraud proceeding, demanding access to his entire client file, a request the National Association of Criminal Defense Lawyers recently told a Harris County district judge is unprecedented.
In an objection to the request and motion to quash filed in the case Oct. 12, the NACDL and the Texas Criminal Defense Lawyers’ Association came to the defense of subpoenaed criminal defense attorney Richard Kuniansky, a former federal prosecutor, telling the court that “receivership does not override the client’s privileges and constitutional rights.”
The court-appointed receiver, Levi J. Benton of Levi Benton & Associates, a former civil district court judge in Harris County, subpoenaed Kunianski Sept. 14 to produce his entire criminal defense file pertaining to debtor Ataa Shadi.
NACDL and TCDLA told the court they could not find a single case where “a trustee or receiver has ever been given access to the debtor’s criminal defense file — much less given the power to use his attorney’s file against him.” If Benton got the file as he’s requested, it “would undermine well-established Constitutional and ethical principles.”
“If the court were to enforce this subpoena, then it would mean that no criminal defendant who ends up in bankruptcy or receivership could ever have a confidential relationship with his criminal defense attorney,” the groups argued. “It is hard to imagine a more intrusive invasion of Constitutional rights or the criminal lawyer’s duties than the receiver proposes.”
Benton told The Lawbook his schedule on Wednesday would not allow for an interview.
Kunianski told The Lawbook that Benton has remained “steadfast” in his position that he has the authority to access the entire file.
“This is a phenomenally important issue because it affects every criminal defense attorney in the state of Texas,” Kunianski said. “When you meet with your client, they know everything they tell you is confidential, protected by the attorney client privilege.”
But if Benton is granted his request for the file, that would change.
“Every criminal defense attorney would tell their client, you think everything you tell me is protected, but it’s not,” he said. “If a receiver is appointed, everything you say is fair game. How do you represent a client under those terms?”
Kunianski said Benton has effectively requested every communication between himself and Shadi dating back to 2014, when their attorney-client relationship began.
“Everything he’s been telling me for a period of [nine] years and that he believes is confidential can all the sudden be retrieved by a receiver,” Kunianski said. “To me, it’s crazy.”
The case has been assigned to Harris County District Judge Tanya Garrison. As of Wednesday, a hearing had not been set on the motion.
In the civil case, plaintiffs Ross Trewhella and Trejam Properties got a $3 million default judgment in their favor in January 2020.
Benton was appointed by the court to serve as receiver in the case in July 2020.
In the criminal case, Shadi was indicted in May by a grand jury in neighboring Fort Bend County on charges of securities fraud, money laundering and theft. Kuniansky is Shadi’s lawyer in the Fort Bend County proceedings.
Prosecutors allege that between Dec. 13, 2012, and Aug. 15, 2019, he defrauded dozens of individuals and entities by offering investments for sale through his companies — NAFA Partnership Ltd., NAFA Investment Corp. and Trading Concepts.
The indictment lists 72 allegedly fraudulent transactions totaling $9.7 million
Kuniansky is represented by David Gerger of Gerger, Hennessy & Martin on behalf of the NACDL and by Nicole DeBorde Hochglaube of Hochglaube & DeBorde on behalf of the TCDLA.
The plaintiff investors are represented by R. Kyle Hawes of Chamberlain, Hrdlicka, White, Williams & Aughtry.
Shadi is representing himself in the civil case.
The case number is 2019-76630.