PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION
CALDERWOOD & HARKNESS LLP Attorneys at Law
450 Park Avenue, 30th Floor New York, New York 10022 Telephone: (212) 554-8100 Facsimile: (212) 554-8101
January 23, 2023
VIA HAND DELIVERY AND ENCRYPTED EMAIL
Jonathan R. Caldwell 1140 Park Avenue, Apt. 14C New York, New York 10128
Re: Grand Jury Subpoena Response — Grand Jury No. 22-GJ-4481, U.S. District Court for the Southern District of New York
Matter No.: 1034-00001
Dear Mr. Caldwell:
I write to provide you with a comprehensive status update on the document production being undertaken on your behalf in response to the federal grand jury subpoena duces tecum issued on November 18, 2022, by the United States Attorney's Office for the Southern District of New York (the "USAO"). As you are aware, this subpoena was issued under the direction of Assistant United States Attorney Miriam T. Goldfarb of the Complex Frauds & Cybercrime Unit and commands the production of documents and records falling within a number of broadly defined categories. This letter follows the completion of our first rolling production, which was transmitted to the government on January 20, 2023, and is intended to summarize the current state of the engagement and outline the anticipated next steps in the production process. I would encourage you to review this letter carefully and contact me with any questions at your earliest convenience.
Completion of the First Rolling Production
On January 20, 2023 — the negotiated extended return date that this firm secured through discussions with AUSA Goldfarb — Calderwood & Harkness transmitted the first rolling production of responsive documents to the USAO. This production consisted of 1,842 documents, Bates-stamped CALDWELL-00001 through CALDWELL-01842. All documents were produced in TIFF image format with accompanying load files (including extracted text, metadata fields, and unitization information), consistent with the government's production specifications as communicated to us during the meet-and-confer process.
The production was delivered via secure electronic file transfer facilitated by our e-discovery vendor, Clearpath Document Solutions Inc. Raj K. Anand, the project manager at Clearpath assigned to this engagement, coordinated the technical aspects of the transfer and has confirmed successful delivery and download by the USAO's litigation technology staff.
The first production encompassed the earliest-dated responsive materials within the collection, including the following principal categories of documents:
• Emails and correspondence between you and Marcus W. Stavros and/or Aegean Realty Partners LLC and its affiliated fund entities, specifically Aegean Realty Fund III LP, Aegean Realty Fund IV LP, and Aegean Realty Fund V LP. These communications span the early portion of the date range at issue and address, among other topics, the initial formation of the partnership interests, capital call schedules, distribution arrangements, and periodic investor reporting.
• Financial documents relating to your limited partnership investments in the Aegean fund entities, including subscription agreements, capital account statements, K-1 tax schedules received from the funds, and internal tracking records maintained by Caldwell Capital Advisors LLC.
• Records relating to the two joint venture entities — 710 Flatbush Holdings LLC and Stavros-Caldwell Industrial LLC — including organizational documents, operating agreements, capital contribution records, bank account statements, and correspondence with co-venture parties.
• Select communications with financial institutions, specifically Westlake Fidelity Bank, N.A. and Harborview Trust Company, that fell within the subpoena's defined scope. These materials include loan documentation, account correspondence, and wire transfer records associated with the investment activities described above.
In preparing this production, the review team exercised care to ensure that no documents subject to the attorney-client privilege or work product doctrine were inadvertently produced. We also entered into a Federal Rule of Evidence 502(d) clawback stipulation with the USAO, which was so-ordered by the Court on January 6, 2023, providing an additional safeguard against any inadvertent waiver of privilege.
Government Response to Date
As of the date of this letter, the firm has received no feedback, objections, follow-up requests, or other communications from AUSA Goldfarb or any other representative of the USAO regarding the content or sufficiency of the first rolling production. We interpret this silence as consistent with the normal course — it is typical for the government to reserve substantive comments until it has had the opportunity to review and absorb the produced materials over a period of weeks. Should the government identify any deficiencies or areas requiring supplementation, we expect that AUSA Goldfarb will raise those issues in subsequent correspondence or during our next scheduled conference call.
More broadly, the government's posture toward you continues to be cooperative and consistent with the representations made during the telephone proffer held on December 12, 2022. During that call, which I and Bernard Crawford attended on your behalf, AUSA Goldfarb confirmed that you are considered a witness and not a target or subject of the investigation. While this designation is significant and favorable, I would remind you — as we discussed in our meeting on December 14, 2022 — that such designations are not binding on the government and may change as the investigation progresses. We will continue to monitor the situation closely and will advise you immediately should the government's characterization of your status change in any respect.
No grand jury testimony date has been scheduled for you at this time. AUSA Goldfarb has indicated that testimony remains deferred pending the government's review of the complete document production, which is consistent with the understanding reached during our initial discussions with her office. We view this as a favorable development, as it affords us additional time to prepare you for potential testimony should a date ultimately be set.
Status of Ongoing Document Review
As you are aware, the document collection phase of this engagement was completed in late December 2022. The total volume of documents collected from all custodians and data sources amounts to approximately 14,200 documents comprising approximately 8.3 gigabytes of electronic data. The sources from which these materials were collected include the following:
(a) Your personal email account (jrc@caldwellcap.com), including all folders, archived messages, and attachments;
(b) Your personal mobile device, from which text messages, chat messages, photographs of documents, and calendar entries were extracted;
(c) Physical files maintained at your residence at 1140 Park Avenue, New York, New York, which were reviewed, selected, and scanned by the Clearpath team during the on-site collection on December 9, 2022;
(d) Physical files maintained at your office at 590 Madison Avenue, 22nd Floor, New York, New York, which were similarly collected and digitized;
(e) The Caldwell Capital Advisors LLC shared network drive, from which financial records, correspondence files, and internal memoranda were harvested.
The collected documents span the date range of January 1, 2014 through December 31, 2021, which corresponds to the temporal scope defined in the subpoena as narrowed through our negotiations with AUSA Goldfarb.
Following application of the agreed-upon keyword search terms, date-range filters, and custodian filters — which were designed to isolate documents potentially responsive to the subpoena's fourteen enumerated categories — the review team, led by senior associates Daniel Obi and Lisa Morrow, has completed first-pass responsiveness review on the substantial majority of the filtered document population. This first-pass review involves an initial assessment of each document for relevance to the subpoena's categories, followed by tagging and coding for further evaluation.
To date, the review team has identified approximately 3,800 or more documents as potentially responsive to the subpoena's categories. This tally is being refined on an ongoing basis as the remaining documents in the collection undergo second-pass review, during which borderline or complex documents are given closer scrutiny and final responsiveness determinations are made. I anticipate that the final number of responsive documents will be in the range of 3,700 to 4,200, though this figure may shift as the review process concludes.
Privilege review is being conducted concurrently with the responsiveness review. Documents that appear to be protected by the attorney-client privilege and/or the work product doctrine are being flagged, segregated, and catalogued for inclusion in a formal privilege log, which will accompany the final production to the government. The privileged materials identified to date fall principally into two categories:
(i) Communications with Whitmore & Kessler LLP, specifically with partner Patricia Sheldon, Esq., relating to the 2019 negotiation of the separation of your business interests from those of Marcus Stavros and the Aegean entities. These communications encompass legal advice rendered in connection with the negotiation and drafting of the buyout term sheet, the asset valuation dispute, and the ultimate dissolution of the Stavros-Caldwell Industrial LLC joint venture.
(ii) Communications with Thornberg & Whitfield CPAs, specifically with Helen R. Thornberg, CPA, in circumstances where tax advice was rendered at the direction of counsel and in furtherance of legal advice being provided by Whitmore & Kessler LLP. These materials include memoranda and supporting schedules prepared in connection with the tax treatment of partnership distributions and the characterization of certain payments received from the Aegean fund entities. To the extent these communications satisfy the requirements for privilege protection under applicable Second Circuit authority, they are being withheld.
We are carefully documenting the basis for each privilege assertion and will ensure that the privilege log contains sufficient detail to allow the government to assess the claims without revealing privileged content. Should any dispute arise regarding specific privilege assertions, we are prepared to seek judicial resolution through appropriate procedures.
Expected Timeline for Remaining Productions
The remaining responsive documents will be produced to the government in two additional rolling productions, as outlined below:
Second Rolling Production — On or before February 10, 2023. This is the date for which the firm requested, and received, a second extension from AUSA Goldfarb. The extension was requested by our letter dated January 18, 2023, and confirmed by AUSA Goldfarb's email response dated January 19, 2023. The second production is expected to encompass approximately 1,300 to 1,400 additional documents, covering the middle portion of the relevant date range (approximately 2017 through 2019). This tranche is anticipated to include substantial transactional correspondence related to the most active period of the Aegean fund investments, bank and financing records from Westlake Fidelity Bank, N.A. relating to credit facilities utilized in connection with the real estate transactions, and property-related materials including title documents, lease agreements, property management correspondence, and closing records pertaining to the 710 Flatbush Holdings LLC assets and the industrial properties held through Stavros-Caldwell Industrial LLC.
Third and Final Production — Late February 2023 (approximately two weeks following the second production). The third and final production will include all remaining responsive documents and will be accompanied by the completed privilege log listing each document withheld on grounds of attorney-client privilege, work product protection, or both. This final tranche is expected to encompass the latest-dated materials in the collection, including communications from 2020 and 2021, as well as any documents that required additional time for review due to their complexity, volume, or the presence of mixed-content privilege issues.
Upon completion of the third and final production and delivery of the privilege log, our document production obligations under the subpoena will be fully satisfied. At that point, we will send a certification letter to AUSA Goldfarb confirming the completeness of our production, subject to the standard reservations and qualifications.
Billing Update
I want to take this opportunity to provide you with a preliminary update on the financial status of the engagement. As you will recall, a retainer in the amount of $150,000.00 was deposited on December 7, 2022, into the firm's Interest on Lawyer Account (IOLA) trust account, Account No. 4401-8827-6650, maintained at Northern Capital Bank, N.A. Pursuant to the terms of our engagement letter dated December 5, 2022, the retainer has been applied against professional fees and costs incurred through December 2022 and into January 2023 as those fees and costs have been earned and invoiced.
Costs incurred to date include the $47,500.00 flat fee payable to Clearpath Document Solutions Inc. for document processing, hosting on the Relativity review platform, production formatting, and secure file transfer services, as well as miscellaneous courier, copying, and scanning expenses totaling approximately $2,300. Professional fees — encompassing the time of all attorneys and paralegals working on this matter — have been substantial, reflecting the volume of the document collection, the complexity of the review, and the multiple rounds of negotiation and correspondence with the USAO.
While the firm will provide a detailed, itemized invoice at the conclusion of the engagement (or at such earlier intervals as may be appropriate), I want to advise you that the accumulated professional fees and costs have substantially exhausted the retainer balance. You should anticipate an interim payment request in the near term, as the fees incurred through the completion of the second and third productions will exceed the remaining retainer funds. For your reference, the applicable billing rates established in the December 5, 2022 engagement letter are as follows:
I am happy to discuss the billing status in greater detail at your convenience, and I will ensure that any interim payment request is accompanied by a sufficiently detailed summary of the fees and costs incurred.
Reminders and Continuing Client Obligations
I would like to take this opportunity to reiterate several important reminders regarding your ongoing obligations in connection with this matter:
Document Preservation. The document preservation and litigation hold notice issued to you on December 5, 2022, remains in full force and effect. You must continue to preserve all documents, communications, and electronically stored information within the scope of that notice, including emails, text messages, voicemails, handwritten notes, financial records, and any other materials that may be relevant to the subjects addressed in the grand jury subpoena. You should not delete, discard, alter, or destroy any such materials, nor should you instruct anyone else to do so. If you have any questions about whether a particular document or category of documents falls within the scope of the preservation obligation, please contact me or Mr. Obi before taking any action.
No Contact with Witnesses. As I have previously advised, you should refrain from discussing the investigation, the substance of the subpoena, or any matters related to the grand jury proceedings with Marcus W. Stavros or any other individual who may be a witness in the investigation. This instruction is critically important and applies regardless of the context — social, professional, or otherwise — in which any such conversation might arise.
Communications from Third Parties. If you receive any direct communication — whether by telephone, email, letter, in-person visit, or any other means — from the United States Attorney's Office, from the law firm of Reddick, Sorrento & Hale LLP (which represents Mr. Stavros, specifically Victor A. Reddick, Esq.), from Graystone & Falk LLP (which represents Westlake Fidelity Bank, N.A., specifically Catherine A. Falk, Esq.), or from any other government agency, law enforcement representative, or third-party counsel regarding this investigation, you should contact Calderwood & Harkness immediately and should not respond independently. Any communication with outside parties regarding the investigation should be made only through this firm.
Testimony Status. No grand jury testimony date has been scheduled for you at this time. Should the government schedule a testimony date, we will advise you promptly and will arrange appropriate preparation sessions well in advance of any scheduled appearance.
Conclusion
The engagement team remains fully committed to protecting your interests throughout the course of this matter and will continue to work diligently to complete the remaining productions within the timeline described above. We are available to discuss this update, or any questions you may have, at your convenience. Please do not hesitate to contact me directly at the number and email address listed below.
We will continue to provide you with regular written updates as the document review progresses and as additional productions are completed. Should any significant developments arise in the interim — including any contact from the government or any change in the government's posture — we will notify you immediately.
Thank you for your continued confidence in Calderwood & Harkness. We look forward to bringing this phase of the engagement to a successful conclusion.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Conrad Ashby Partner, White Collar & Investigations Practice Group
Calderwood & Harkness LLP 450 Park Avenue, 30th Floor New York, New York 10022 Direct: (212) 554-8147
Email: cashby@calderwoodharkness.com
cc: Bernard Crawford, Esq. — Responsible Partner (Calderwood & Harkness LLP)
(File copy — Matter No. 1034-00001)
CONFIDENTIALITY NOTICE: This letter and any accompanying documents constitute a privileged and confidential attorney-client communication. This material is intended solely for the use of the individual or entity to whom it is addressed. If you are not the intended recipient, or an agent responsible for delivering this communication to the intended recipient, you are hereby notified that any review, dissemination, distribution, or copying of this communication is strictly prohibited. If you have received this communication in error, please notify Calderwood & Harkness LLP immediately by telephone at (212) 554-8100 and destroy all copies of this communication and any attachments.
| Timekeeper | Role | Hourly Rate |
| Conrad Ashby | Partner | $1,350.00 |
| Bernard Crawford | Partner | $1,275.00 |
| Daniel Obi | Senior Associate | $825.00 |
| Lisa Morrow | Associate | $675.00 |
| Paralegal Staff | — | $375.00 |