Case 8:19-cr-00061-JVS Document 35 Filed 05/20/19 Page 1 of 9 Page ID #:374

Case 8:19-cr-00061-JVS Document 35 Filed 05/20/19 Page 1 of 9 Page ID #:374
1 NICOLA T. HANNA
United States Attorney
2 LAWRENCE S. MIDDLETON
Assistant United States Attorney
3 Chief, Criminal Division
JULIAN L. ANDRÉ (Cal. Bar No. 251120)
4 Assistant United States Attorney
Major Frauds Section
5 1100 United States Courthouse
312 North Spring Street
6 Los Angeles, California 90012
Telephone: (213) 894-6683
7 Facsimile: (213) 894-6269
Email: Julian.L.Andre@usdoj.gov
8
BRETT A. SAGEL (Cal. Bar. No. 243918)
9 Assistant United States Attorney
Ronald Reagan Federal Building
10 411 West Fourth Street, Suite 8000
Santa Ana, California 92701
11 Telephone: (714) 338-3598
Facsimile: (714) 338-3708
12 Email: Brett.Sagel@usdoj.gov
13 Attorneys for Plaintiff

UNITED STATES OF AMERICA
14
UNITED STATES DISTRICT COURT
15
FOR THE CENTRAL DISTRICT OF CALIFORNIA
16
SOUTHERN DIVISION
17
UNITED STATES OF AMERICA, SA CR No. 19-061-JVS
18
Plaintiff, STIPULATION AND REQUEST FOR:
19 (1) ORDER AUTHORIZING DISCLOSURE OF
v. TAX RETURNS AND RETURN INFORMATION;
20 AND (2) PROTECTIVE ORDER LIMITING
MICHAEL JOHN AVENATTI, DISCLOSURE OF PROTECTED TAX
21 INFORMATION AND SENSITIVE
Defendant. INFORMATION
22
[PROPOSED ORDER LODGED
23 CONCURRENTLY HEREWITH]
24
25 Plaintiff United States of America, by and through its counsel
26 of record, the United States Attorney for the Central District of
27 California (“USAO”) and Assistant United States Attorneys Julian L.
28 André and Brett A. Sagel, and defendant MICHAEL JOHN AVENATTI

1 (“defendant”), both individually and by and through his counsel of
2 record, H. Dean Steward (collectively, the “parties”), hereby
3 stipulate, agree, and request that the Court enter: (1) an Order
4 Authorizing Disclosure of Tax Returns and Return Information; and (2)
5 a Protective Order Limiting Disclosure of Protected Tax Information
6 and Sensitive Information.
7 The bases for this stipulation and request are the following:
8 1. On April 10, 2019, a grand jury for the Central District of
9 California returned a 36-count indictment charging defendant with:
10 (a) ten counts of wire fraud, in violation of 18 U.S.C. § 1343;
11 (b) eight counts of willful failure to collect and pay over withheld
12 taxes, in violation of 26 U.S.C. § 7202; (c) one count of endeavoring
13 to obstruct the administration of the Internal Revenue Code, in
14 violation of 26 U.S.C. § 7212(a); (d) ten counts of willful failure
15 to file tax returns, in violation of 26 U.S.C. § 7203; (e) two counts
16 of bank fraud, in violation of 18 U.S.C. § 1344(1); (f) one count of
17 aggravated identity theft, in violation of 18 U.S.C. § 1028A(a)(1);
18 (g) three counts of false declaration in a bankruptcy, in violation
19 of 18 U.S.C. § 152(3); and (h) one count of false oath in a
20 bankruptcy proceeding, in violation of 18 U.S.C. § 152(2). Defendant
21 was arraigned on April 29, 2019, and trial is currently set for
22 August 27, 2019.
23 2. As part of its investigation in the above-captioned case,
24 the government is in possession of documents related to the charges
25 against defendant, and seeks to provide those documents to counsel
26 for defendant (although some of the material may exceed the scope of
27 the government’s discovery obligations). The discovery in this
28 matter is likely to be voluminous. The government currently
2
1 anticipates that its initial discovery production will consist of
2 over 110,000 pages of materials. The government also anticipates
3 producing to the defense at a later date additional documents and
4 records obtained from search warrants executed during the course of
5 the government’s investigation.
6 3. Among the documents the government may like to produce to
7 defendant are tax returns and return information (as defined in 26
8 U.S.C. § 6103(b)(2))) of various third-parties, including, but not
9 limited to, defendant’s former spouse and defendant’s former
10 employees.
11 4. 26 U.S.C. § 6103(h)(4)(D) specifically authorizes the Court
12 to issue an order authorizing the disclosure of tax returns and
13 return information in a case involving tax administration to the
14 extent such disclosure is required by Federal Rule of Criminal
15 Procedure 16 or 18 U.S.C. § 3500. Further, Brady v. Maryland, 373
16 U.S. 83 (1963), requires the government to turn over to criminal
17 defendants all materials which may be exculpatory. The government’s
18 investigative file in this case involves “return information” of
19 various third parties, which specifically relates to the
20 investigation against defendant. This information may be necessary
21 to the defendant to prepare his defense. See United States v. Lloyd,
22 992 F.2d 348 (D.C. Cir. 1993) (remand ordered to determine whether
23 withheld third party tax return information was materially
24 exculpatory).
25 5. Additionally, among the documents that the government would
26 like to produce are documents that contain personal identification
27 information, financial records, and sensitive or confidential
28 information relating to third parties, including, but not limited to,
3
1 defendant’s former clients or employees (“Sensitive Information”).
2 The term “Sensitive Information” includes, without limitation, the
3 names of alleged victims, witnesses, and other third parties; dates
4 of birth; social security numbers; driver’s license numbers; PIN
5 numbers; bank or financial account information; taxpayer
6 identification information; tax information; home addresses; phone
7 numbers; email addresses; employment information; passwords;
8 attorney-client communications; and confidential legal information.
9 6. The return information and Sensitive Information of third-
10 parties (collectively, the “Protected Information”) is interspersed
11 throughout the discovery in this case and the Protected Information
12 itself, in many instances, has evidentiary value. To redact the
13 Protected Information by hand would therefore be prohibitively time
14 consuming and may also prevent defense counsel from effectively
15 reviewing relevant material in the documents containing Protected
16 Information.
17 7. The parties recognize that the Protected Information that
18 the government produces to the defense is solely for the use of
19 defendant, his attorneys, or other individuals or entities acting
20 within the attorney-client relationship to prepare for the trial in
21 this case. The purpose of the proposed Protective Order is to
22 prevent the unauthorized dissemination, distribution, or use of
23 materials containing the Protected Information of others.
24 8. Therefore, in order to permit the government to provide
25 discovery material to defense counsel while avoiding the unauthorized
26 dissemination, distribution, or use of Protected Information (i.e.,
27 tax returns, return information, and Sensitive Information) relating
28 to victims, witnesses, and other third parties, the parties have
4
1 stipulated to the entry of: (1) an Order Authorizing Disclosure of
2 Tax Returns and Return Information; and (2) a Protective Order
3 Limiting Disclosure of Tax Returns, Return Information, and Sensitive
4 Information.
5 Accordingly, the parties hereby stipulate and request that the
6 Court issue an Order and Protective Order that mandates the
7 following:
8 A. Pursuant to 26 U.S.C. § 6103(h)(4)(D), the government may
9 produce to counsel for defendant copies of tax returns and return
10 information obtained by the USAO during the course of the
11 investigation leading to the indictment and currently in the USAO’s
12 possession.
13 B. In order to permit the government to provide discovery
14 material to counsel of record for defendant, while avoiding the
15 unauthorized dissemination, distribution, or use of tax returns and
16 return information, as well as personal identification information,
17 financial records, and other sensitive or confidential information
18 relating to third parties, including defendant’s former clients or
19 employees (“Sensitive Information”), the parties have stipulated to
20 the entry of this Protective Order in the above-captioned case,
21 United State v. Michael John Avenatti, SA CR No. 19-061-JVS.
22 C. The term “Sensitive Information” includes, without
23 limitation, the names of alleged victims, witnesses, and other third
24 parties; dates of birth; social security numbers; driver’s license
25 numbers; PIN numbers; bank or financial account information; taxpayer
26 identification information; tax information; home addresses; phone
27 numbers; email addresses; employment information; passwords;
28 attorney-client communications; and confidential legal information.
5
1 D. This Protective Order shall apply to all discovery
2 materials containing tax returns and return information (as defined
3 in 26 U.S.C. § 6103(b)(2))) and Sensitive Information (collectively,
4 the “Protected Information”) that is produced to the defense team, as
5 defined below, before or after the execution of this Protective
6 Order.
7 E. For the purposes of this Order, the term “defense team”
8 refers to the counsel of record for defendant and any other defense
9 attorneys for defendant, defense investigators, retained experts or
10 potential experts, and paralegal and legal assistants providing
11 assistance on this case who have been advised of their obligations
12 under the Protective Order and agreed to follow its terms. The
13 “defense team,” for the purposes of the Protective Order, includes
14 defendant. The “defense team” does not include family members and
15 other associates of defendant.
16 F. Defendant’s undersigned counsel of record agrees to advise
17 all members of the defense team of their obligations under the
18 Protective Order and ensure their agreement to follow the Protective
19 Order, prior to providing members of the defense team with access to
20 any Protected Information.
21 G. The defense team, including defendant, shall use materials
22 containing Protected Information only for the preparation and
23 litigation of this matter, and for no other purpose. Litigation of
24 this matter includes any appeal filed by defendant, and any motion
25 filed by defendant pursuant to 28 U.S.C. § 2255.
26 H. The defense team, including defendant, shall not permit
27 anyone who is not a member of the defense team to retain in his or
28 her possession any materials containing Protected Information.
6
1 I. The defense team may review materials containing Protected
2 Information with witnesses or potential witnesses in this case
3 (including their counsel), but the witnesses or potential witnesses
4 may not retain any materials containing Protected Information after
5 his or her review of those materials with the defense team is
6 complete.
7 J. The defense team shall maintain all discovery materials
8 containing Protected Information safely and securely, and shall
9 exercise reasonable care in ensuring the confidentiality of those
10 materials.
11 K. To the extent that notes are made that memorialize, in
12 whole or in part, Protected Information, or to the extent that copies
13 of materials containing Protected Information are made for authorized
14 use by members of the defense team, such notes, copies, must be
15 handled in accordance with the terms of the Protective Order.
16 L. If a party needs to file materials with the Court
17 containing unredacted Protected Information or needs to divulge
18 Protected Information in court filings, such filings should be made
19 under seal. If the Court rejects the request to file such Protected
20 Information under seal, the party seeking to file such Protected
21 Information shall provide advance written notice to the other party
22 to afford such party an opportunity to object or otherwise respond to
23 such intention. If the other party does not object to the proposed
24 filing, the party seeking to file such information shall redact the
25 Protected Information and make all reasonable attempts to limit the
26 divulging of Protected Information.
27 M. Upon the final disposition of this case, materials
28 containing Protected Information shall not be used, in any way, in
7
1 any other matter, absent a court order. All materials containing
2 Protected Information maintained in the defense team’s files shall
3 remain subject to the Protective Order unless and until such order is
4 modified by court order. Within thirty days of the conclusion of
5 appellate and post-conviction proceedings, the defense team shall
6 return any materials containing Protected Information to the USAO or
7 certify that such materials have been destroyed. Defense counsel is,
8 however, authorized to retain any such materials that defense counsel
9 is required to maintain under the California Rules of Professional
10 Responsibility or any other applicable rule of professional
11 responsibility.
12 N. In the event that there is a substitution of counsel prior
13 to when such documents must be returned, new defense counsel must
14 join this Protective Order before any materials containing Protected
15 Information may be transferred from the undersigned defense counsel
16 to the new defense counsel, who then will become the defense team’s
17 ///
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Case 8:19-cr-00061-JVS Document 35 Filed 05/20/19 Page 1 of 9 Page ID #:374

13 Attorneys for Plaintiff

25 Plaintiff United States of America, by and through its counsel

26 of record, the United States Attorney for the Central District of

27 California (“USAO”) and Assistant United States Attorneys Julian L.

28 André and Brett A. Sagel, and defendant MICHAEL JOHN AVENATTI

1 (“defendant”), both individually and by and through his counsel of

2 record, H. Dean Steward (collectively, the “parties”), hereby

4 Authorizing Disclosure of Tax Returns and Return Information; and (2)

5 a Protective Order Limiting Disclosure of Protected Tax Information

6 and Sensitive Information.

8 1. On April 10, 2019, a grand jury for the Central District of

9 California returned a 36-count indictment charging defendant with:

10 (a) ten counts of wire fraud, in violation of 18 U.S.C. § 1343;

12 taxes, in violation of 26 U.S.C. § 7202; (c) one count of endeavoring

13 to obstruct the administration of the Internal Revenue Code, in

14 violation of 26 U.S.C. § 7212(a); (d) ten counts of willful failure

15 to file tax returns, in violation of 26 U.S.C. § 7203; (e) two counts

16 of bank fraud, in violation of 18 U.S.C. § 1344(1); (f) one count of

17 aggravated identity theft, in violation of 18 U.S.C. § 1028A(a)(1);

18 (g) three counts of false declaration in a bankruptcy, in violation

19 of 18 U.S.C. § 152(3); and (h) one count of false oath in a

20 bankruptcy proceeding, in violation of 18 U.S.C. § 152(2). Defendant

22 August 27, 2019.

23 2. As part of its investigation in the above-captioned case,

24 the government is in possession of documents related to the charges

25 against defendant, and seeks to provide those documents to counsel

27 the government’s discovery obligations). The discovery in this

28 matter is likely to be voluminous. The government currently

1 anticipates that its initial discovery production will consist of

2 over 110,000 pages of materials. The government also anticipates

3 producing to the defense at a later date additional documents and

4 records obtained from search warrants executed during the course of

5 the government’s investigation.

6 3. Among the documents the government may like to produce to

7 defendant are tax returns and return information (as defined in 26

8 U.S.C. § 6103(b)(2))) of various third-parties, including, but not

9 limited to, defendant’s former spouse and defendant’s former

11 4. 26 U.S.C. § 6103(h)(4)(D) specifically authorizes the Court

12 to issue an order authorizing the disclosure of tax returns and

13 return information in a case involving tax administration to the

14 extent such disclosure is required by Federal Rule of Criminal

15 Procedure 16 or 18 U.S.C. § 3500. Further, Brady v. Maryland, 373

16 U.S. 83 (1963), requires the government to turn over to criminal

17 defendants all materials which may be exculpatory. The government’s

18 investigative file in this case involves “return information” of

19 various third parties, which specifically relates to the

20 investigation against defendant. This information may be necessary

21 to the defendant to prepare his defense. See United States v. Lloyd,

23 withheld third party tax return information was materially

25 5. Additionally, among the documents that the government would

26 like to produce are documents that contain personal identification

27 information, financial records, and sensitive or confidential

28 information relating to third parties, including, but not limited to,

1 defendant’s former clients or employees (“Sensitive Information”).

2 The term “Sensitive Information” includes, without limitation, the

3 names of alleged victims, witnesses, and other third parties; dates

4 of birth; social security numbers; driver’s license numbers; PIN

5 numbers; bank or financial account information; taxpayer

6 identification information; tax information; home addresses; phone

7 numbers; email addresses; employment information; passwords;

8 attorney-client communications; and confidential legal information.

9 6. The return information and Sensitive Information of third-

10 parties (collectively, the “Protected Information”) is interspersed