PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
INTERNAL MEMORANDUM
February 10, 2023
TO: Conrad Ashby, Esq. (Billing Partner, White Collar & Investigations) Daniel Obi, Esq. (Lead Associate, Banking & Finance)
FROM: Lisa Morrow (Working Associate, Banking & Finance)
RE: Second Rolling Production — Grand Jury Subpoena Response, Grand Jury No. 22-GJ-4481 (U.S. District Court, Southern District of New York)
MATTER NO.: 1034-00001
CLIENT: Jonathan R. Caldwell
1. Purpose
This memorandum documents the contents, Bates range, and delivery details of the second rolling production of documents to the United States Attorney's Office for the Southern District of New York ("USAO S.D.N.Y.") in response to the federal grand jury subpoena issued under Grand Jury No. 22-GJ-4481. The subpoena was issued on November 18, 2022, and served on the client, Jonathan R. Caldwell ("Caldwell" or the "Client"), on November 21, 2022, at his residence located at 1140 Park Avenue, Apt. 14C, New York, NY 10128.
The second rolling production was made pursuant to the negotiated extended return date of February 10, 2023, as agreed upon by Assistant United States Attorney Miriam T. Goldfarb of the Complex Frauds & Cybercrime Unit, USAO S.D.N.Y., in her email correspondence to Conrad Ashby dated January 19, 2023, granting the second extension of time for the rolling production schedule. The first extension was previously agreed upon in AUSA Goldfarb's email of December 22, 2022, which established the three-tranche rolling production framework currently in effect.
The accompanying transmittal letter from Conrad Ashby to AUSA Goldfarb was sent concurrently with this production. A copy of that transmittal letter has been placed in the matter file. This memorandum is intended solely for internal use by the team and should not be transmitted to the Client, the government, or any third party.
2. Production Summary
The key details of the second rolling production are summarized below:
The production format, including the use of TIFF images with Ashgrove Technologies and Opticon load files, was established by agreement with the USAO S.D.N.Y. prior to Production 1 and has been maintained for consistency throughout the rolling production process. Clearpath Document Solutions confirmed via email to the undersigned on February 9, 2023, that the upload to the encrypted transfer platform was completed successfully and that AUSA Goldfarb's designated paralegal, Kevin Fong, was notified of the availability of the files for download.
3. Cumulative Production Statistics
The following table sets forth the cumulative production statistics through the date of this memorandum, including projections for the anticipated third and final production:
Additional cumulative metrics are as follows:
•  Total Documents Collected from All Custodians and Sources: Approximately 14,200 documents.
•  Total Data Volume Processed by Clearpath Document Solutions: Approximately 8.3 GB.
•  Total Documents Identified as Responsive (to date): Approximately 3,847 documents. This figure reflects the results of the search-term and manual review processes applied to the full collection set and is subject to minor adjustment as the final review pass for Production 3 is completed.
•  Documents Withheld on Privilege Grounds (cumulative, subject to final tally): Approximately 214 documents. The final count of privileged documents will be confirmed in connection with Production 3 and the accompanying comprehensive privilege log. This figure includes documents withheld from both Production 1 and Production 2, as well as a preliminary count of anticipated withholdings from the Production 3 review batch.
•  Estimated Remaining Documents for Final Production: Approximately 416 documents, pending completion of the final privilege review pass currently being conducted by the review team under Daniel Obi's supervision.
The discrepancy between the total responsive document count (approximately 3,847) and the sum of documents produced and withheld (approximately 3,217 produced plus approximately 214 withheld, totaling approximately 3,431) is attributable to the approximately 416 documents still pending final review and production in the third tranche. We do not anticipate that the final responsive document count will materially exceed the current estimate of 3,847.
4. Description of Documents in Production 2
4.1 Categories of Documents Included
The 1,375 documents included in Production 2 fall into the following principal categories:
Emails and Attachments — Caldwell/Stavros and Aegean Realty Partners LLC. This category comprises emails and attachments exchanged between Jonathan R. Caldwell (using the email address jrc@caldwellcap.com) and Marcus W. Stavros or other representatives of Aegean Realty Partners LLC. These communications relate to the Aegean Realty Fund IV LP and Aegean Realty Fund V LP investment matters. The documents include, among other things, capital call notices, distribution notices, quarterly performance reports, investor correspondence, and general business communications regarding the management and operations of the two funds. The date range of these communications spans approximately March 2017 through September 2019, corresponding to the period during which Caldwell maintained active investments in both Fund IV and Fund V. This category represents a substantial portion of the documents in Production 2, as the Caldwell-Stavros email correspondence was voluminous during this period.
Emails and Attachments — Caldwell/Westlake Fidelity Bank, N.A. This category comprises emails and attachments exchanged between Caldwell and personnel at Westlake Fidelity Bank, N.A. (headquartered at 600 Summer Street, Stamford, CT 06901), relating to the commercial real estate loan for the property located at 1500 Commerce Boulevard, Newark, NJ 07114 (the "Newark Property"). The Newark Property was held through Stavros-Caldwell Industrial LLC, a special-purpose entity in which Stavros held a 60% membership interest and Caldwell held a 40% membership interest. The documents in this category include loan documentation, draw requests, covenant compliance correspondence, financial reporting submissions to the bank, and general lender-borrower communications regarding the status of the loan facility. These communications are relevant to the subpoena's requests for documents relating to real estate financing transactions in which Caldwell participated.
Emails and Attachments — Caldwell/Harborview Trust Company. This category comprises emails and attachments exchanged between Caldwell and personnel at Harborview Trust Company (located at 88 Broad Street, Suite 200, Bridgeport, CT 06604), relating to escrow arrangements established for investor deposits in Aegean Realty Fund IV LP and Aegean Realty Fund V LP. These communications include escrow agreements, deposit confirmations, release authorizations, and related correspondence. The escrow arrangements were a component of the fund subscription process, and the documents in this category provide detail regarding the flow of investor funds into the fund vehicles.
Scanned Paper Files — Caldwell Office at 590 Madison Avenue. This category comprises scanned images of paper files collected from Caldwell's office at 590 Madison Avenue, 22nd Floor, New York, NY 10022. These paper files were collected by the Clearpath Document Solutions team on December 19, 2022, imaged, and processed for review. The paper files in Production 2 include the following subcategories:
•  Subscription agreements and related limited partnership documentation for Aegean Realty Fund IV LP (reflecting Caldwell's investment of $4.0 million, made in March 2017) and Aegean Realty Fund V LP (reflecting Caldwell's investment of $3.5 million, made in September 2018). These documents include executed subscription agreements, investor questionnaires, limited partnership agreements, and side letters.
•  Operating agreement and related formation documents for Stavros-Caldwell Industrial LLC (membership interests: 60% Stavros / 40% Caldwell), including the acquisition closing documents for the Newark Property at 1500 Commerce Boulevard, Newark, NJ 07114. The acquisition closed at a purchase price of $8.9 million, financed in part by a commercial mortgage loan from Westlake Fidelity Bank, N.A. in the principal amount of $5.34 million, with total equity of $3.56 million. Caldwell's equity contribution was $1.424 million (representing his 40% pro rata share of the equity). The closing documents include the purchase and sale agreement, the deed, the title insurance policy, the loan agreement and related security instruments, and settlement statements.
•  Property inspection reports and environmental assessments for the Newark Property, including a Phase I Environmental Site Assessment and a property condition report, both prepared in connection with the acquisition and the Westlake Fidelity Bank loan underwriting process.
Wire Transfer Confirmations and Bank Statements. This category comprises wire transfer confirmations and bank statements from Caldwell's personal bank accounts and accounts held in the name of Caldwell Capital Advisors LLC ("CCA"). These records reflect capital contributions made by Caldwell to Fund IV ($4.0 million), Fund V ($3.5 million), and Stavros-Caldwell Industrial LLC ($1.424 million), as well as distributions received by Caldwell from these entities. These documents are responsive to the subpoena's requests for financial records reflecting fund flows between Caldwell and the Stavros-related entities.
Appraisal Reports. This category comprises copies of appraisal reports prepared by Pinnacle Appraisal Group LLC (located at 355 Lexington Avenue, 9th Floor, New York, NY 10017) for properties associated with Aegean Realty Fund IV LP and for the 1500 Commerce Boulevard acquisition, to the extent that copies of such reports were in Caldwell's possession and maintained in his files at the office or residence. These appraisals were prepared by Pinnacle in connection with the fund's acquisition of properties and the Westlake Fidelity Bank loan underwriting for the Newark Property.
Correspondence Relating to the Management Fee Dispute. This category comprises correspondence relating to the dispute that arose in approximately October 2019 over approximately $340,000 in management fees that Marcus W. Stavros unilaterally charged to the operating account of 710 Flatbush Holdings LLC. These documents include emails, letters, and internal memoranda reflecting the factual circumstances of the dispute and initial communications regarding the business separation between Caldwell and Stavros. It should be noted that privileged communications with Whitmore & Kessler LLP regarding the negotiation and drafting of the separation agreement have been withheld from production; these withholdings are discussed in greater detail in Section 5 below.
4.2 Date Range of Documents
The documents in Production 2 predominantly cover the period from approximately January 2017 through December 2019. This date range corresponds to the middle and later phases of the Caldwell-Stavros business relationship and encompasses several significant events, including the Fund IV and Fund V investments, the acquisition and financing of the Newark Property through Stavros-Caldwell Industrial LLC, the management fee dispute involving the 710 Flatbush Holdings LLC operating account, and the onset of the business separation negotiations between Caldwell and Stavros. Some documents within this production batch may bear dates slightly outside this range where they form part of an email chain or document family that is principally within the January 2017 through December 2019 window.
4.3 Custodians.  The documents in Production 2 were collected from the following custodians and data sources:
•  Jonathan R. Caldwell — personal email account (jrc@caldwellcap.com), personal mobile device (iPhone, collected December 12, 2022), and physical paper files maintained at his residence (1140 Park Avenue, Apt. 14C, New York, NY 10128) and office (590 Madison Avenue, 22nd Floor, New York, NY 10022).
•  Caldwell Capital Advisors LLC shared drive — electronic files maintained on the shared network drive at the CCA office at 590 Madison Avenue, 22nd Floor, New York, NY 10022. This shared drive contained fund-related correspondence, financial records, and internal business documents of CCA relevant to the Caldwell-Stavros investment relationship.
No additional custodians beyond those identified in Production 1 were added for Production 2. The custodian list remains unchanged from the list set forth in the First Rolling Production Cover Memorandum dated January 20, 2023.
5. Privilege Withholdings in This Production Batch
During the review of the document population corresponding to Production 2, a number of documents were identified as subject to the attorney-client privilege and/or work product protection and have been withheld from production to the government. These withholdings were made in accordance with the Privilege Review Guidelines established by Conrad Ashby on December 14, 2022, and applied consistently across all three production tranches.
The documents withheld from Production 2 primarily consist of the following categories:
•  Communications with Whitmore & Kessler LLP. These are communications between Caldwell and attorneys at Whitmore & Kessler LLP (located at 277 Park Avenue, 40th Floor, New York, NY 10172), specifically with Patricia Sheldon, Esq. (Partner, Commercial Real Estate), regarding the negotiation and drafting of the separation agreement between Caldwell and Stavros, which became effective December 15, 2019. The communications include emails, letters, draft agreements with attorney annotations, and memoranda containing legal advice rendered by Ms. Sheldon in connection with the separation and the related buyout transaction. These documents are protected by the attorney-client privilege and, to the extent they reflect the mental impressions and legal strategies of counsel, by the work product doctrine.
•  Communications with Thornberg & Whitfield CPAs. These are communications between Caldwell and Thornberg & Whitfield CPAs (located at 521 Fifth Avenue, 17th Floor, New York, NY 10175), specifically with Helen R. Thornberg, CPA (Senior Partner), where tax advice was rendered at the direction of counsel in connection with the separation and buyout transaction. These communications are protected under the attorney-client privilege as communications made at the direction of legal counsel for the purpose of facilitating the rendition of legal advice, consistent with the principles set forth in United States v. Kovel, 296 F.2d 918 (2d Cir. 1961). Specifically, Ms. Sheldon of Whitmore & Kessler directed Caldwell to consult with Ms. Thornberg regarding certain tax implications of the proposed buyout structure, and the resulting communications were made in furtherance of, and integrated into, the legal advice Ms. Sheldon was providing.
These withholdings are consistent with the Privilege Review Guidelines and with the team's prior approach in Production 1. All withheld documents have been coded in the Clearpath review platform with the applicable privilege designation, a brief description of the basis for the privilege claim, and identification of the author, recipient, and date of the communication.
A comprehensive privilege log covering all approximately 214 withheld documents — cumulative across all three productions — will be prepared and delivered with the third and final production, currently scheduled for on or before February 24, 2023. The privilege log will be formatted in accordance with the requirements of the Local Rules of the Southern District of New York and will include sufficient detail to permit the government to evaluate the asserted privilege claims on a document-by-document basis.
6. Quality Control
Quality-control sampling was conducted on the Production 2 batch in accordance with the Document Review Protocol and Search Term Memorandum dated December 14, 2022, prepared by Daniel Obi. The quality-control measures applied to this production batch were as follows:
A random sample of approximately 10% of the coded documents in the Production 2 batch (approximately 138 documents) was pulled from the review platform and independently reviewed by Daniel Obi for consistency and accuracy of responsiveness and privilege coding. The sampling methodology was consistent with that applied to Production 1 and followed the parameters set forth in the Document Review Protocol.
No material coding errors were identified during the quality-control review. Three documents were found to contain minor metadata discrepancies — specifically, incorrect date-sent fields in the load file that did not match the face of the corresponding email — and these discrepancies were reported to Clearpath Document Solutions and corrected by Raj K. Anand's team prior to the finalization and delivery of the production. The corrected load files were verified by Daniel Obi on February 9, 2023.
All documents in the Production 2 batch were verified against the Bates numbering sequence to confirm that no gaps or duplicates exist within the range CALDWELL-01843 through CALDWELL-03217, and that the sequence continues without interruption from the last document in Production 1 (CALDWELL-01842). Clearpath Document Solutions provided a Bates continuity certification for this production batch, which has been placed in the matter file.
7. Issues Noted
The following issues have been identified during the review and preparation of Production 2 and are brought to the attention of the team for awareness and further consideration:
Forwarded Third-Party Communications. Several emails in this production batch reference or contain, as forwarded messages, communications between Marcus W. Stavros and third parties, including personnel at Pinnacle Appraisal Group LLC and Westlake Fidelity Bank, N.A. These are emails that were forwarded by Stavros to Caldwell, or on which Caldwell was copied, and which were therefore captured in Caldwell's email collection. These documents may be of particular interest to the government given the reported focus of the investigation on potentially inflated appraisals and false statements made to lenders in connection with the commercial real estate financing transactions at issue. These documents have been flagged in the Clearpath review platform with a "Government Interest" tag for the team's awareness. Because these documents are responsive to the subpoena and are not subject to any applicable privilege, they have been produced in the ordinary course. The team should be prepared for the possibility that the government may seek to use these documents as a basis for additional document requests or follow-up inquiries directed at Caldwell.
Absence of Direct Fund Transfers Between Caldwell and Stavros Personal Accounts. Consistent with the findings set forth in the Fund Flow Analysis Memorandum prepared by the undersigned and dated January 10, 2023, no documents in this production batch reflect any direct transfers of funds between Caldwell's personal bank accounts and Stavros's personal bank accounts. All fund flows reflected in the Production 2 documents are channeled through the entity-level accounts of Aegean Realty Fund IV LP, Aegean Realty Fund V LP, Stavros-Caldwell Industrial LLC, and 710 Flatbush Holdings LLC. This is a favorable factual point for the Client and is consistent with Caldwell's account of his financial dealings with Stavros.
Management Fee Dispute Documentation. Documents relating to the approximately $340,000 management fee dispute contain factual details about Stavros's unilateral fee charges to the 710 Flatbush Holdings LLC operating account. These documents include contemporaneous emails from Caldwell to Stavros objecting to the charges and requesting an accounting, as well as Stavros's responses. These materials may provide useful context for the government's understanding of Stavros's financial practices and the nature of the Caldwell-Stavros business relationship. To the extent that these documents tend to demonstrate Caldwell's lack of knowledge of, and objection to, Stavros's allegedly improper financial conduct, they may be favorable to the Client's position. However, the team should note that certain of these communications also reflect Caldwell's awareness, as of approximately October 2019, that Stavros was engaging in financial practices that Caldwell found objectionable, which could be relevant to any inquiry regarding the timing of Caldwell's knowledge.
8. Remaining Work and Timeline
Approximately 416 documents remain to be produced in the third and final production, which is currently scheduled for delivery on or before February 24, 2023. The final production will be designated as Production 3 and will continue the existing Bates numbering sequence from CALDWELL-03218.
The final production will consist primarily of documents from the later portion of the collection date range, spanning approximately late 2019 through December 31, 2021. The anticipated categories of documents in Production 3 include the following:
•  The separation agreement between Caldwell and Stavros, dated December 15, 2019, and related transaction documents, to the extent such documents are non-privileged. As noted in Section 5 above, attorney-client communications and work product relating to the negotiation and drafting of the separation agreement have been and will continue to be withheld.
•  Fund V LP redemption documentation reflecting Caldwell's redemption of his investment in Aegean Realty Fund V LP in March 2020 at a redemption value of $3.15 million (representing a loss of $350,000 on the original $3.5 million investment).
•  Buyout closing documents reflecting the following transactions: (i) Stavros's purchase of Caldwell's 50% membership interest in 710 Flatbush Holdings LLC for $3.4 million; and (ii) Stavros's purchase of Caldwell's 40% membership interest in Stavros-Caldwell Industrial LLC for $1.85 million. These transactions were consummated pursuant to the terms of the separation agreement.
•  Residual correspondence between Caldwell and Stavros or their respective representatives post-separation, including any final accounting reconciliations and wind-down communications.
The comprehensive privilege log, covering all approximately 214 documents withheld on privilege grounds across all three productions, will accompany the final production. Daniel Obi has commenced preparation of the privilege log, which is expected to be finalized by February 22, 2023, allowing two days for review and quality control prior to delivery.
Upon completion of the final production and delivery of the privilege log, the matter will be assessed for transition to monitoring or dormant status. This assessment will be contingent upon receipt of confirmation from AUSA Goldfarb that the USAO S.D.N.Y. does not anticipate issuing further document requests, seeking testimony from Caldwell before the grand jury, or scheduling any additional investigative steps that would require the active involvement of the defense team. Conrad Ashby will be responsible for initiating that communication with AUSA Goldfarb following the completion of Production 3.
9. Document Retention
All collected documents, comprising approximately 14,200 documents totaling approximately 8.3 GB of data, remain hosted on Clearpath Document Solutions' secure, access-controlled platform. Access to the hosted data is restricted to authorized personnel of the firm and is subject to the security protocols set forth in the firm's engagement letter with Clearpath Document Solutions dated December 8, 2022.
The litigation hold notice issued on December 5, 2022, to Jonathan R. Caldwell and Caldwell Capital Advisors LLC remains in full force and effect. The litigation hold requires the preservation of all documents and electronically stored information potentially relevant to the subject matter of the grand jury subpoena, and both Caldwell and CCA have acknowledged receipt of and compliance with the hold. No modifications to the scope of the litigation hold are recommended at this time.
All review coding, work product annotations, privilege designations, and issue tags applied during the document review process are preserved in the Clearpath review platform under the matter workspace designated 1034-00001. These materials constitute attorney work product and are maintained subject to the protections of the work product doctrine.
10. Distribution
This memorandum is being distributed internally to Conrad Ashby and Daniel Obi only. No copies have been or will be provided to the Client, to the government, or to any third party.
A copy of this memorandum will be retained in the firm's electronic matter file under Matter No. 1034-00001.
This memorandum constitutes attorney work product, is protected by the attorney-client privilege and the work product doctrine, and is not to be disclosed outside the firm without the express authorization of the billing partner.
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT This document was prepared in anticipation of litigation and in connection with the provision of legal advice. It reflects the mental impressions, conclusions, and legal theories of attorneys. Do not distribute, copy, or disclose without authorization.
Respectfully submitted,
Lisa Morrow Working Associate, Banking & Finance Matter No. 1034-00001
Date: February 10, 2023
Field | Detail
Production Number | 2 of 3 (anticipated; final production expected on or before February 24, 2023)
Bates Range | CALDWELL-01843 through CALDWELL-03217
Total Documents in This Production | 1,375
Production Format | TIFF images with corresponding load files (Ashgrove Technologies .dat and Opticon .opt), consistent with the format used for Production 1
Bates Stamping Convention | CALDWELL-NNNNN (five-digit sequential numbering, continuing from the last document in Production 1, CALDWELL-01842)
E-discovery Vendor | Clearpath Document Solutions Inc., 15 Maiden Lane, Suite 800, New York, NY 10038; Project Manager: Raj K. Anand
Method of Delivery | Secure file transfer via Clearpath Document Solutions' encrypted platform to AUSA Goldfarb at the USAO S.D.N.Y., One St. Andrew's Plaza / 500 Pearl Street, New York, NY 10007
Date of Delivery | February 10, 2023
Production | Date | Document Count | Bates Range
Production 1 | January 20, 2023 | 1,842 | CALDWELL-00001 through CALDWELL-01842
Production 2 | February 10, 2023 | 1,375 | CALDWELL-01843 through CALDWELL-03217
Cumulative to Date | — | 3,217 | CALDWELL-00001 through CALDWELL-03217
Production 3 (Est.) | On or before February 24, 2023 | Approx. 416 | CALDWELL-03218 through approx. CALDWELL-03633