1034-00001 · Graystone & Falk LLP · Legal Analysis

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PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

INTERNAL MEMORANDUM

FROM: Conrad Ashby, Partner, White Collar & Investigations Practice Group, Calderwood & Harkness LLP

TO: Bernard Crawford, Responsible Partner; Daniel Obi, Lead Associate; Lisa Morrow, Working Associate

DATE: December 10, 2022

RE: Fifth Amendment and Testimonial Privilege Considerations — Representation of Jonathan R. Caldwell; 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

I. Purpose and Summary

This memorandum analyzes whether the Fifth Amendment privilege against self-incrimination is implicated by the demands of the federal grand jury subpoena served on our client, Jonathan R. Caldwell, on November 21, 2022, at his residence at 1140 Park Avenue, Apt. 14C, New York, NY 10128. The analysis addresses both the document production obligations and the testimonial obligations imposed by the subpoena, and it sets forth our recommended approach to each.

The subpoena at issue was issued on November 18, 2022, by the United States Attorney's Office for the Southern District of New York. The assigned prosecutor is Assistant United States Attorney Miriam T. Goldfarb of the Complex Frauds & Cybercrime Unit. The subpoena commands both the production of documents in enumerated categories and Mr. Caldwell's personal testimony before Grand Jury No. 22-GJ-4481, sitting in the United States District Court for the Southern District of New York.

Based on a telephone proffer conducted with AUSA Goldfarb on December 12, 2022, Mr. Caldwell has been informally confirmed as a witness — not a target or subject — of the ongoing grand jury investigation into Marcus W. Stavros and Aegean Realty Partners LLC. No formal target letter or subject letter has been issued to Mr. Caldwell. The government's stated interest in Mr. Caldwell relates to his role as a co-investor who may possess documents shedding light on representations made by Stavros to investors and on capital movements between various entities associated with the alleged scheme.

This memorandum concludes as follows: A blanket assertion of the Fifth Amendment privilege against self-incrimination is not warranted at this time with respect to either the document production or the testimonial obligation. With respect to document production, the entity records doctrine and the foregone conclusion doctrine substantially foreclose any Fifth Amendment objection. With respect to testimony, the risk of self-incrimination from truthful answers is, on the current record, remote and speculative rather than real and appreciable, and a blanket refusal to testify would be both legally unsupported and inconsistent with the cooperative posture we have adopted with the government.

However, this conclusion is not static. The situation warrants continuous monitoring and reassessment at each significant milestone. Specific areas of factual sensitivity exist — including the nature and source of distributions received by Mr. Caldwell and his potential exposure to appraisal reports that may have been inflated — that could assume greater significance if additional facts come to light. If Mr. Caldwell's status changes from witness to subject or target, or if the scope of the government's inquiry expands, this analysis must be revisited immediately. The detailed basis for these conclusions, and our specific recommendations, are set forth in the sections that follow.

II. Factual Background Relevant to the Analysis

A. The Grand Jury Investigation

The federal grand jury investigation is believed to have commenced in early 2022 and is focused principally on Marcus W. Stavros, the founder and sole managing principal of Aegean Realty Partners LLC, a Connecticut-based real estate syndication firm with offices at 280 Atlantic Street, Suite 510, Stamford, Connecticut 06901. The investigation is being conducted by the Complex Frauds & Cybercrime Unit of the U.S. Attorney's Office for the Southern District of New York, under the supervision of AUSA Miriam T. Goldfarb.

The suspected offenses under investigation include wire fraud in violation of 18 U.S.C. § 1343, bank fraud in violation of 18 U.S.C. § 1344, money laundering in violation of 18 U.S.C. § 1956, and conspiracy in violation of 18 U.S.C. § 371. Based on information communicated by AUSA Goldfarb during the December 12, 2022 telephone proffer, the government's theory of the case rests on the following principal allegations:

First, the government alleges that Stavros systematically inflated property appraisals through Pinnacle Appraisal Group LLC, a purportedly independent appraisal firm, in order to secure larger acquisition and refinancing loans from Westlake Fidelity Bank, N.A. and, to a lesser extent, Harborview Trust Company. The inflated appraisals are alleged to have enabled Stavros to extract excess loan proceeds that were not supported by the actual values of the underlying properties.

Second, the government alleges that Stavros diverted approximately $18.7 million in investor capital from Aegean Realty Fund IV LP and Aegean Realty Fund V LP to personal accounts and to fund shortfalls in earlier fund vehicles, including Fund II LP and Fund III LP. The government characterizes this pattern as a Ponzi-like structure in which distributions to earlier investors were funded not by legitimate investment returns but by capital contributed by later investors.

Third, the government alleges that Stavros caused false financial statements to be submitted to Westlake Fidelity Bank, N.A. and Harborview Trust Company in connection with loan applications, annual covenant compliance certifications, and periodic borrower reporting obligations. These false statements are alleged to have materially overstated the financial condition of the borrowing entities and the performance of the underlying properties.

According to the government's representations, estimated total investor losses across all Aegean Realty fund vehicles are approximately $43 million. Estimated total lender losses — principally to Westlake Fidelity Bank and Harborview Trust Company — are approximately $31 million.

Stavros is represented in the investigation by Victor A. Reddick of Reddick, Sorrento & Hale LLP, with offices at 1 Liberty Plaza, 37th Floor, New York, New York 10006. The government has retained Meridian Forensic Advisors LLC as its forensic accounting consultant for fund-flow tracing and financial analysis. The engagement is led by Nathan P. Solis, Managing Director of Meridian Forensic Advisors.

B. Mr. Caldwell's Relationship to the Investigation

Jonathan R. Caldwell, age 58, is the sole member and managing principal of Caldwell Capital Advisors LLC ("CCA"), a New York limited liability company formed in 2009 that manages approximately $340 million in real estate-focused investment assets across three fund vehicles. Mr. Caldwell is also the sole owner of JRC Realty Holdings LLC, a New York limited liability company that serves as a personal holding company for his direct real estate portfolio, which has an assessed value of approximately $78 million across fourteen properties in the New York, New Jersey, and Connecticut tristate area. Mr. Caldwell maintains his principal office at 590 Madison Avenue, 22nd Floor, New York, New York 10022, and resides at 1140 Park Avenue, Apt. 14C, New York, New York 10128.

Mr. Caldwell first met Marcus W. Stavros in approximately 2014 at the National Real Estate Investors Forum, an annual industry conference. The two developed a professional relationship that led to a co-investment period spanning approximately 2015 through 2019. During this period, Mr. Caldwell made investments in Aegean Realty fund vehicles and participated in direct co-investments with Stavros through joint venture entities.

Limited Partnership Investments in Aegean Realty Funds. Mr. Caldwell made the following limited partnership investments in Aegean Realty fund vehicles:

Direct Co-Investments Through Joint Venture Entities. In addition to the LP investments, Mr. Caldwell participated in two direct co-investments with Stavros through separately formed joint venture entities:

710 Flatbush Holdings LLC. This entity was a 50/50 joint venture between Caldwell and Stavros formed for the purpose of acquiring and operating 710 Flatbush Avenue, Brooklyn, New York 11225, a 42-unit mixed-use residential and commercial building. The property was acquired in April 2016 for a purchase price of $11.2 million. Mr. Caldwell's equity contribution was $2.8 million. The acquisition was financed in part by a mortgage loan of $5.6 million from Westlake Fidelity Bank, N.A.

Stavros-Caldwell Industrial LLC. This entity was a joint venture in which Stavros held 60% and Caldwell held 40%, formed for the acquisition and operation of 1500 Commerce Boulevard, Newark, New Jersey 07114, a 65,000 square foot industrial warehouse facility. The property was acquired in October 2017 for a purchase price of $8.9 million. Mr. Caldwell's equity contribution was $1,424,000. The acquisition was financed in part by a mortgage loan of $5.34 million from Westlake Fidelity Bank, N.A.

Mr. Caldwell's total equity invested across both JV entities was $4,224,000.

Distributions Received. Over the course of the co-investment period, Mr. Caldwell received aggregate distributions totaling $2,505,000 — $1,870,000 from the LP fund investments and $635,000 from the JV entities.

The Business Dispute and Separation. In October 2019, a business dispute arose between Caldwell and Stavros over approximately $340,000 in management fees that Stavros unilaterally charged to the 710 Flatbush Holdings LLC operating account. Mr. Caldwell objected to these charges, which he believed were unauthorized and inconsistent with the operating agreement. The dispute precipitated the end of the business relationship.

A separation agreement was negotiated through outside counsel — Patricia Sheldon of Whitmore & Kessler LLP — and became effective on December 15, 2019. Under the terms of the separation agreement: (i) Stavros purchased Caldwell's 50% interest in 710 Flatbush Holdings LLC for $3.4 million; (ii) Stavros purchased Caldwell's 40% interest in Stavros-Caldwell Industrial LLC for $1.85 million; and (iii) Caldwell's limited partnership interest in Aegean Realty Fund V LP was redeemed in March 2020 at a price of $3.15 million. Mr. Caldwell's interests in Fund III LP and Fund IV LP had previously been redeemed in the ordinary course.

All business ties between Caldwell and Stavros were completely severed by March 2020, approximately two years before the investigation is believed to have commenced.

C. Caldwell's Current Status in the Investigation

Per the December 12, 2022 telephone proffer with AUSA Goldfarb, Mr. Caldwell has been informally confirmed as a witness in the grand jury investigation. He is not considered a target or a subject. No formal target letter or subject letter has been issued to Mr. Caldwell.

The government's stated interest in Mr. Caldwell is limited to his role as a co-investor who may possess documents and firsthand knowledge relevant to: (a) representations made by Stavros to investors in connection with the Aegean Realty fund vehicles; (b) capital movements between entities in which both Caldwell and Stavros held interests; and (c) the operations of the JV entities, including dealings with Westlake Fidelity Bank.

Through negotiation with AUSA Goldfarb's office, Mr. Caldwell's testimony obligation has been deferred pending completion of the document production. No date for grand jury testimony has been scheduled. The government has agreed to provide reasonable advance notice before scheduling any testimony.

D. Scope of the Subpoena

The subpoena contains both a document production component and a testimonial component. The document demands cover all documents and communications between Caldwell (individually and through any entity he owns or controls) and Stavros (individually and through any entity he owns or controls), as well as all documents and communications between Caldwell and Westlake Fidelity Bank, N.A. or Harborview Trust Company, for the period from January 1, 2014 through December 31, 2021. The categories of documents demanded relate to:

(a) any real estate investment, co-investment, joint venture, or syndication involving Aegean Realty Partners LLC or any of its affiliated funds or entities;

(b) any loan, financing arrangement, mortgage, line of credit, or capital raise involving properties in which Caldwell and Stavros had a direct or indirect ownership or economic interest;

(c) any appraisal, valuation, property inspection report, environmental assessment, or due diligence report for any property in which Caldwell and Stavros had a direct or indirect interest;

(d) any transfer, wire, ACH payment, check, or other movement of funds between accounts held or controlled by Caldwell (or any entity he owns or controls) and accounts held or controlled by Stavros (or any Aegean Realty entity).

The testimonial component commands Mr. Caldwell's personal appearance and testimony before Grand Jury No. 22-GJ-4481. As noted above, this obligation has been deferred by agreement with the government pending completion of the document production.

III. Legal Framework — Fifth Amendment Privilege Against Self-Incrimination

A. Constitutional Foundation

The Fifth Amendment to the United States Constitution provides, in pertinent part, that no person "shall be compelled in any criminal case to be a witness against himself." U.S. Const. amend. V. Although the text refers to "any criminal case," the Supreme Court has long recognized that the privilege against self-incrimination extends far beyond the confines of a criminal trial. The privilege may be invoked in any proceeding — civil or criminal, formal or informal, administrative or judicial — where the answers might tend to incriminate the witness in future criminal proceedings. See Kastigar v. United States, 406 U.S. 441, 444–45 (1972) (describing the privilege as reflecting "our unwillingness to subject those suspected of crime to the cruel trilemma of self-accusation, perjury or contempt"); Lefkowitz v. Turley, 414 U.S. 70, 77 (1973) (holding that the privilege extends to any compelled testimony or statement that might be used in subsequent criminal proceedings).

The privilege is a personal right belonging to the individual witness, and it may be asserted in range settings, including before a grand jury. A witness subpoenaed to testify before a federal grand jury retains the right to refuse to answer specific questions where truthful answers would tend to incriminate the witness. United States v. Mandujano, 425 U.S. 564, 572 (1976) (plurality opinion) (observing that the Fifth Amendment "privilege can be claimed in any proceeding," including grand jury proceedings, and that a witness "may decline to answer on Fifth Amendment grounds"). The privilege thus serves as a critical safeguard for individuals who may be called upon to provide testimony that could expose them to criminal prosecution, even where they are not themselves the target of the investigation.

B. Standard for Invocation

The standard for invoking the Fifth Amendment privilege is well established. The privilege protects against a "real and appreciable" danger of self-incrimination, as distinguished from a danger that is merely "remote and speculative" or "imaginary and unsubstantial." Marchetti v. United States, 390 U.S. 39, 53 (1968); see also Brown v. Walker, 161 U.S. 591, 599–600 (1896). The witness need not demonstrate that criminal prosecution is imminent or even probable; rather, the question is whether the testimony could furnish "a link in the chain of evidence needed to prosecute" the witness. Hoffman v. United States, 341 U.S. 479, 486 (1951). As the Supreme Court explained in Hoffman, the privilege extends to answers that would "in themselves support a conviction" as well as answers that would "furnish a link in the chain of evidence needed to prosecute the claimant for a federal crime." Id.

At the same time, the privilege is not an absolute shield that allows a witness to refuse to answer any and all questions posed by a grand jury. The invocation must ordinarily be made on a question-by-question basis. A blanket refusal to testify — a declaration that the witness will not answer any questions whatsoever — is generally not permitted for witnesses who are not themselves targets of the investigation. See United States v. Bodwell, 66 F.3d 1000, 1001–02 (9th Cir. 1995) (holding that a blanket assertion of the Fifth Amendment by a non-target witness was improper); see also In re Grand Jury Subpoena Dated Oct. 9, 2003, No. 03-3483, 2004 WL 287605 (2d Cir. 2004) (recognizing the general principle that the privilege must be invoked as to particular questions). In the Second Circuit, the courts have consistently required witnesses to appear before the grand jury and assert the privilege as to individual questions, rather than refusing to appear or refusing to answer any question in advance.

The burden of establishing a valid claim of privilege initially rests with the witness, but this burden is not onerous. The court may sustain the privilege "if there is any reasonable possibility that the answers would be incriminating." In re Grand Jury Proceedings, 832 F.2d 554, 557 (11th Cir. 1987); Hoffman, 341 U.S. at 488 (noting that the court must be "governed as much by [its] personal perception of the peculiarities of the case as by the facts actually in evidence"). The judge must evaluate the implications of the question in the context of the particular case, taking into account the nature of the investigation, the relationship of the witness to the subject of the inquiry, and the potential for incrimination.

C. Distinction Between Targets, Subjects, and Witnesses

The Department of Justice maintains a classification system for individuals involved in grand jury investigations that distinguishes among targets, subjects, and witnesses. This classification, set forth in the Justice Manual (formerly the U.S. Attorneys' Manual) at § 9-11.151, carries practical significance for the assertion of Fifth Amendment rights and for the government's obligations with respect to rights advisements.

Under the Justice Manual, a "target" is a person as to whom the prosecutor or the grand jury has substantial evidence linking that person to the commission of a crime and who, in the judgment of the prosecutor, is a putative defendant. A "subject" is a person whose conduct is within the scope of the grand jury's investigation. A "witness" is a person who is called to testify before the grand jury and who is not a target or subject of the investigation — that is, a person whose own conduct is not under scrutiny but who possesses information relevant to the investigation.

These classifications carry specific implications under DOJ policy. Under Justice Manual § 9-11.150 et seq., targets must be advised of their Fifth Amendment rights before testifying before the grand jury. Subjects may, in the prosecutor's discretion, be advised of their rights. Witnesses generally are not advised of their Fifth Amendment rights, though the court retains authority to do so in appropriate circumstances.

It is critically important to note that the government's informal representations regarding a witness's status are not legally binding and do not create enforceable rights. A witness's status may change at any time — including during the course of grand jury proceedings themselves — based on the evolution of the evidence. The Supreme Court addressed this issue directly in United States v. Washington, 431 U.S. 181, 189–90 (1977), where the Court held that the failure to notify a grand jury witness of his target status did not render his subsequent testimony inadmissible, because target notification is not constitutionally required. The Washington decision underscores that the government's classification of an individual as a witness, subject, or target is a matter of prosecutorial discretion and policy, not of constitutional mandate, and that a witness cannot rely on such classifications as a guarantee against future prosecution.

The practical implication of this principle for Mr. Caldwell is clear: although AUSA Goldfarb has informally confirmed his witness status, this designation provides no assurance that he will not be reclassified as a subject or target at a later date. This reality informs our recommendation for continuous monitoring and reassessment, as discussed below.

D. Second Circuit-Specific Considerations

The Second Circuit has a well-developed body of case law addressing the scope of the Fifth Amendment privilege in the grand jury context. The Circuit generally defers to the grand jury's broad investigative authority, recognizing that the grand jury "can investigate merely on suspicion that the law is being violated, or even just because it wants assurance that it is not." United States v. R. Enterprises, Inc., 498 U.S. 292, 297 (1991) (citing United States v. Morton Salt Co., 338 U.S. 632, 642–43 (1950)). At the same time, the Second Circuit has consistently recognized the privilege against self-incrimination as a personal right that may be asserted by individual witnesses called before the grand jury. See, e.g., In re Grand Jury Subpoena Duces Tecum Dated Oct. 29, 1992, 1 F.3d 87 (2d Cir. 1993) (analyzing act-of-production issues in detail); In re Grand Jury Proceedings (Doe), 801 F.2d 569 (2d Cir. 1986).

The Second Circuit has also been receptive to the foregone conclusion doctrine as a limitation on act-of-production claims, as discussed in greater detail in Section IV.C below. The Circuit's approach generally requires a fact-specific inquiry into whether the government can demonstrate with "reasonable particularity" that it already knows of the existence, possession, and authenticity of the subpoenaed documents, such that the testimonial aspect of production adds nothing to what the government already knows. In re Grand Jury Subpoena Duces Tecum Dated Oct. 29, 1992, 1 F.3d at 93.

IV. Application to Mr. Caldwell's Document Production Obligations

A. The Required Records / Entity Records Doctrine

The Fifth Amendment privilege against self-incrimination is a personal privilege. It protects individuals, not entities. As a consequence, the privilege does not protect against the compelled production of records belonging to a collective entity — whether a corporation, a partnership, a limited liability company, or another organizational form. Braswell v. United States, 487 U.S. 99, 104–10 (1988) (holding that a custodian of corporate records may not resist a subpoena for such records on the ground that the act of producing them would incriminate him personally); Bellis v. United States, 417 U.S. 85, 88–90 (1974) (extending the principle to partnerships). The rationale underlying this doctrine is that an entity's records are the entity's property, not the custodian's, and that when an individual acts as custodian of entity records, he acts in a representative capacity and cannot claim the personal privilege.

This doctrine has direct application to the records of Caldwell Capital Advisors LLC (EIN 83-2174056) and JRC Realty Holdings LLC (EIN 81-4493217), both of which are New York limited liability companies of which Mr. Caldwell is the sole member and manager. Although these are single-member LLCs — a fact that might intuitively suggest they are indistinguishable from Mr. Caldwell himself — the entity records doctrine applies with equal force to closely held and even single-member entities. Under Second Circuit authority, a limited liability company, even one with a single member, is a separate juridical person, and its records are not protected by the custodian's personal Fifth Amendment privilege. See In re Grand Jury Subpoena Dated Nov. 12, 1991, 957 F.2d 807 (11th Cir. 1992) (sole proprietorship distinguished from entity with separate legal existence); see also Braswell, 487 U.S. at 110 (emphasizing that the relevant inquiry is whether the entity has a legal existence separate from the individual, not whether the individual exercises sole control).

The implication of this doctrine for the present matter is straightforward: documents that belong to CCA or JRC Realty Holdings as entity records — including operating agreements, financial statements, bank records, investor correspondence, tax returns, and similar documents maintained in the name of or on behalf of the entities — cannot be withheld on Fifth Amendment grounds, regardless of their content. Mr. Caldwell, as custodian of these records, acts in his representative capacity when producing them, and the privilege does not attach.

B. Personal Records of Mr. Caldwell

The analysis is different with respect to Mr. Caldwell's personal papers and effects. The Supreme Court's decision in Fisher v. United States, 425 U.S. 391 (1976), established that the contents of pre-existing documents are not themselves "testimony" within the meaning of the Fifth Amendment — the privilege protects against compelled testimony, not against the compelled production of documents whose contents were created voluntarily. Id. at 409–10. However, Fisher also recognized that the act of producing documents in response to a subpoena may itself be testimonial in character, because production implicitly communicates certain facts: that the documents exist, that they are in the possession or control of the producing party, and that they are authentic — i.e., that they are the documents described in the subpoena. Id. at 410–11.

This principle was elaborated in United States v. Hubbell, 530 U.S. 27 (2000), where the Supreme Court held that when the government has no prior knowledge of the existence or location of documents, the act of producing them in response to a broad subpoena can constitute testimonial communication protected by the Fifth Amendment. Id. at 43–45. In Hubbell, the subpoena was sweeping and the government conceded that it could not identify the documents it sought without the defendant's assistance, rendering the act of production an essential link in the chain of evidence.

For Mr. Caldwell, many of the subpoenaed documents could be characterized as personal records rather than entity records. These include, for example, personal email communications from his email address jrc@caldwellcap.com (to the extent they reflect personal communications rather than entity business), personal financial records maintained at his residence at 1140 Park Avenue, scanned paper files stored at both the Park Avenue residence and the office at 590 Madison Avenue, 22nd Floor, and handwritten notes or memoranda reflecting personal observations or reflections. To the extent these documents are properly characterized as personal records, the entity records doctrine does not apply, and the analysis proceeds to the act-of-production doctrine discussed below.

C. The Act-of-Production Doctrine

Under the framework established by Fisher and refined in Hubbell, the act of producing documents in response to a subpoena may itself constitute protected testimony if it implicitly communicates facts that are both (1) testimonial in nature and (2) incriminating. Specifically, the act of production may implicitly communicate:

(1) that the documents described in the subpoena exist;

(2) that the documents are in the possession or control of the person producing them; and

(3) that the documents are authentic — i.e., that they are what the subpoena calls for.

The act-of-production privilege is available only where these implicit communications are both testimonial and tend to incriminate the producing party. Fisher, 425 U.S. at 410–11. If the testimonial aspects of production are not incriminating, the privilege does not apply. Similarly, if the government can independently establish the facts that production would implicitly communicate — that is, if the existence, possession, and authenticity of the documents are "foregone conclusions" — then production adds nothing to the government's knowledge, and the testimonial component is insufficiently significant to trigger the privilege.

The foregone conclusion doctrine, first articulated in Fisher and applied extensively in the Second Circuit, provides that the act-of-production privilege does not apply where the government can show that it already knows, with reasonable particularity, that the documents exist, that they are in the possession or control of the subpoenaed party, and that they are authentic. Fisher, 425 U.S. at 411; In re Grand Jury Subpoena Duces Tecum Dated Oct. 29, 1992, 1 F.3d 87, 93 (2d Cir. 1993). Under this doctrine, the testimonial aspect of production "adds little or nothing to the sum total of the Government's information," and the act of production is therefore not sufficiently testimonial to warrant Fifth Amendment protection. Fisher, 425 U.S. at 411.

Application to Mr. Caldwell. The key question is whether the act of producing responsive documents would tend to incriminate Mr. Caldwell. On the current facts, the answer is no. Mr. Caldwell is a witness, not a target or subject of the investigation. The government's inquiry focuses on Stavros's alleged fraud — the inflation of appraisals, the diversion of investor capital, and the submission of false financial statements to lenders. The act of producing documents describing Mr. Caldwell's investments in the Aegean funds and his communications with Stavros does not, standing alone, tend to incriminate Mr. Caldwell in any criminal conduct.

Moreover, the foregone conclusion doctrine applies with particular force here. The existence and general nature of the subpoenaed documents are already known to the government or can be independently established through sources other than Mr. Caldwell's production. The government is aware — from the specificity of the subpoena itself, from the December 12 proffer conversation, from publicly available records, and from documents already obtained from other sources — of the following facts:

• That Mr. Caldwell was a limited partner in Aegean Realty Funds III, IV, and V, and that subscription agreements, capital call notices, distribution notices, investor reports, and related documents were generated in connection with these investments;

• That Mr. Caldwell was a co-owner of 710 Flatbush Holdings LLC and Stavros-Caldwell Industrial LLC, and that operating agreements, closing documents, correspondence with lenders, and financial records were generated in connection with these ventures;

• That Mr. Caldwell communicated with Stavros by email and other means during the period of their business relationship;

• That the JV properties were financed by Westlake Fidelity Bank, and that loan documents, appraisal reports, and related materials are in Mr. Caldwell's custody or control;

• That Mr. Caldwell and Stavros entered into a separation agreement in December 2019, and that documents relating to the negotiation and execution of that agreement exist.

Because the government already knows these documents exist, knows they are in Mr. Caldwell's possession, and can verify their authenticity through independent sources (including bank records, fund administrator records, and the files of other parties to the same transactions), the implicit testimony inherent in the act of production adds nothing to what the government already knows. The foregone conclusion doctrine thus substantially eliminates any act-of-production privilege that might otherwise attach.

D. Conclusion on Document Production

For the foregoing reasons, a Fifth Amendment objection to the document production obligation is not supported on the current facts. The entity records doctrine forecloses any objection with respect to records of Caldwell Capital Advisors LLC and JRC Realty Holdings LLC, as these are entity records for which the Fifth Amendment provides no protection. For personal records in Mr. Caldwell's possession, the act-of-production doctrine provides only narrow and theoretical protection, and the foregone conclusion doctrine likely defeats any assertion of the privilege given the government's existing knowledge of the relevant documents.

We therefore recommend that document production proceed as planned, in accordance with the timeline negotiated with AUSA Goldfarb's office. Attorney-client privilege and work product objections should be reserved as appropriate for the 214 documents identified to date as potentially privileged, and a privilege log should be prepared and served in connection with the production. No Fifth Amendment log or blanket objection is warranted.

V. Application to Mr. Caldwell's Testimonial Obligation

A. General Framework for Grand Jury Testimony

A witness subpoenaed to testify before a federal grand jury may invoke the Fifth Amendment privilege against self-incrimination on a question-by-question basis if a truthful answer to a particular question would tend to incriminate the witness. As discussed above, the witness must appear before the grand jury and assert the privilege as to each question — a blanket refusal to answer all questions is not permitted for a non-target witness. See Mandujano, 425 U.S. at 572–73; Bodwell, 66 F.3d at 1001–02.

The witness is not entitled to have counsel present in the grand jury room during testimony. However, the witness may step outside the grand jury room to consult with counsel after each question or group of questions, and this right is well recognized in the Southern District of New York. We would, of course, be present outside the grand jury room during any testimony by Mr. Caldwell and would be available for consultation throughout.

If the government believes that a witness's assertion of the Fifth Amendment is unjustified, or if the government wishes to compel testimony notwithstanding a valid assertion of the privilege, the government may seek a court order granting the witness immunity under 18 U.S.C. §§ 6002–6003. The immunity available under these provisions is "use and derivative-use immunity" — meaning that the government may not use the witness's immunized testimony, or any evidence derived from it, against the witness in any criminal prosecution. Kastigar, 406 U.S. at 453. If immunity is granted by court order, the witness must testify; a refusal to testify after a grant of immunity constitutes civil contempt and may result in incarceration until the witness complies. 28 U.S.C. § 1826.

B. Assessment of Whether Caldwell's Testimony Could Be Self-Incriminating

The central question for our analysis is whether Mr. Caldwell's truthful testimony before the grand jury could furnish "a link in the chain of evidence needed to prosecute" him for a federal crime. Hoffman, 341 U.S. at 486. This requires an assessment of the facts known to date and an identification of areas of potential factual sensitivity.

Facts Supporting the Absence of Self-Incrimination Risk. The following facts weigh against a finding that Mr. Caldwell's testimony would be self-incriminating:

• Mr. Caldwell was a passive limited partner in Aegean Realty Funds III, IV, and V. He was not involved in the management or operations of the funds, did not serve as a general partner, and had no authority over investment decisions, property management, or financial reporting. His role was that of an investor, not an operator or decision-maker.

• Mr. Caldwell was a co-owner of two JV entities with Stavros, but there is no indication in the record that Mr. Caldwell participated in inflating appraisals through Pinnacle Appraisal Group LLC, made or caused to be made false statements to Westlake Fidelity Bank or Harborview Trust Company, or participated in the diversion of investor capital from the Aegean funds.

• Mr. Caldwell severed all business ties with Stavros in December 2019, following the management fee dispute, and had no further involvement with any Aegean Realty entity after March 2020. This separation occurred approximately two years before the investigation is believed to have commenced.

• The government has confirmed Mr. Caldwell's witness status and has indicated that its interest in him is limited to his knowledge of Stavros's representations and capital movements.

• Mr. Caldwell has no criminal history. He has not been charged with, investigated for, or accused of any criminal conduct.

Areas of Factual Sensitivity. Notwithstanding the foregoing, the following areas warrant caution and require further examination before Mr. Caldwell provides testimony. These areas are addressed in greater detail in the separate exposure analysis memorandum dated December 15, 2022, which should be read in conjunction with this memorandum.

Distributions from fund vehicles and JV entities. Mr. Caldwell received aggregate distributions of $2,505,000 from the LP funds ($1,870,000) and from the JV entities ($635,000). If the government's forensic analysis establishes that some portion of these distributions was funded by diverted investor capital — consistent with the government's theory of a Ponzi-like structure — a theoretical question arises as to whether Mr. Caldwell "received proceeds" of the alleged fraud. Under 18 U.S.C. § 1957, it is a criminal offense to knowingly engage in a monetary transaction involving criminally derived property of a value greater than $10,000. However, the mens rea element of § 1957 requires that the defendant knew the property was derived from specified unlawful activity. On the current record, there is no basis to conclude that Mr. Caldwell had any such knowledge. The risk, while theoretically cognizable, is speculative.

Appraisal reports from Pinnacle Appraisal Group. Mr. Caldwell may have received appraisal reports from Pinnacle Appraisal Group LLC in connection with the two JV properties financed by Westlake Fidelity Bank — the 710 Flatbush Avenue property (loan of $5.6 million) and the 1500 Commerce Boulevard property (loan of $5.34 million). If Caldwell reviewed these appraisals and had knowledge that the valuations were inflated, this could theoretically implicate participation in or knowledge of bank fraud under 18 U.S.C. § 1344. However, the current record does not support such an inference. Mr. Caldwell has represented to us that he relied on Stavros and Pinnacle to handle the appraisal process and that he had no reason to believe the appraisals were inaccurate. A thorough review of Mr. Caldwell's files and communications should be conducted to confirm this representation before testimony is given.

The management fee dispute. The dispute over approximately $340,000 in management fees that precipitated the December 2019 separation could, in theory, be characterized by the government as evidence that Mr. Caldwell had awareness of financial irregularities in Stavros's operations. However, this fact cuts strongly in Mr. Caldwell's favor: it demonstrates that he objected to unauthorized charges, took affirmative steps to investigate and challenge Stavros's conduct, and ultimately severed the business relationship. This fact is more consistent with innocence than with complicity.

Overall Assessment. Based on the facts known to date, the risk of self-incrimination from truthful testimony is remote and speculative, not real and appreciable, under the standard articulated in Marchetti and Hoffman. Mr. Caldwell has no criminal history, was not involved in the alleged scheme, acted as a passive investor, and severed ties with Stavros after discovering irregularities in the management of the JV entities. While the theoretical sensitivity areas identified above merit careful attention during preparation, they do not, individually or collectively, rise to the level of a "real and appreciable" danger of self-incrimination that would justify invocation of the Fifth Amendment.

C. Recommendation Regarding Testimony

Based on the analysis set forth above, we make the following recommendations regarding Mr. Caldwell's testimonial obligation:

1. A blanket assertion of the Fifth Amendment is not warranted. Such an assertion would be inconsistent with the law governing non-target witnesses, would be inconsistent with the cooperative posture we have adopted with the government, and could provoke adverse consequences — including an application by the government to compel testimony, which we would likely lose, or a reassessment of Mr. Caldwell's status by the prosecution team.

2. Continue to defer testimony pending completion of document production and review. This has already been accomplished through negotiation with AUSA Goldfarb. The deferral serves multiple purposes: it allows us to complete our review of the documents in Mr. Caldwell's possession before he testifies, reducing the risk of inadvertent inconsistencies; it allows us to assess any issues raised by the documents before the government poses questions about them; and it maintains a cooperative posture while preserving our client's interests.

3. Conduct thorough preparation before any testimony date is scheduled. Before Mr. Caldwell appears before the grand jury, we must conduct a comprehensive preparation session — or, more likely, a series of preparation sessions — in which we review the documentary record in detail, walk through the anticipated topics of inquiry, identify any areas where a truthful answer might even arguably tend to incriminate Mr. Caldwell, and prepare him for the logistics and procedures of grand jury testimony. Particular attention should be paid to the sensitivity areas identified in Section V.B above.

4. Reserve the right to advise Mr. Caldwell to invoke the Fifth Amendment as to specific questions. Even though a blanket assertion is not warranted, we should preserve Mr. Caldwell's right to invoke the privilege on a question-by-question basis. If, during preparation or during the testimony itself, it becomes apparent that a particular line of inquiry could expose Mr. Caldwell to criminal liability — for example, questions probing his knowledge of the source of distributions or his review of specific appraisal reports — we should be prepared to advise him to assert the privilege as to those specific questions. Mr. Caldwell should be instructed that he has the right to step outside the grand jury room and consult with counsel before answering any question.

5. Monitor Mr. Caldwell's status continuously. If the government changes his classification from witness to subject or target, the entire analysis changes, and a blanket assertion of the Fifth Amendment may become appropriate. We should make inquiries of AUSA Goldfarb's office at regular intervals to confirm Mr. Caldwell's status, and we should be alert to any signals — such as changes in the tone or content of government communications, additional subpoenas, or requests for interviews — that might indicate a shift.

6. Consider requesting a proffer of testimony topics. It is standard practice in the Southern District of New York for defense counsel to request that the government provide an informal proffer or outline of the topics it intends to cover during a witness's grand jury testimony. Such a proffer would allow us to assess in advance whether any particular topics raise self-incrimination concerns and to prepare Mr. Caldwell accordingly. We recommend making this request at an appropriate time, likely after the document production is substantially complete.

D. Immunity Considerations

At this stage, there is no basis to request or expect the government to offer immunity to Mr. Caldwell. A request for immunity would be inconsistent with his witness status and could be perceived by the government as an indication that Mr. Caldwell has something to hide — a perception that could prompt exactly the kind of status reassessment we wish to avoid.

However, if circumstances were to change — for example, if Mr. Caldwell's status were reclassified from witness to subject or target, or if specific testimony were sought that implicated potential criminal exposure — we could explore several options:

• Proffer agreement ("Queen for a Day" agreement). Under such an agreement, Mr. Caldwell would provide the government with an off-the-record proffer of the testimony he could offer, subject to agreed-upon protections limiting the government's ability to use the proffer statements against him. Such agreements are routinely used in the S.D.N.Y. and can be a useful tool for managing risk while facilitating cooperation.

• Formal use/derivative-use immunity under 18 U.S.C. §§ 6002–6003. If the government determines that Mr. Caldwell's testimony is essential to the investigation and Mr. Caldwell asserts the Fifth Amendment as to specific questions, the government can apply to the court for an order compelling testimony under a grant of immunity. Under Kastigar, such immunity is coextensive with the scope of the privilege and bars the government from using the immunized testimony, or any evidence derived from it, in any criminal prosecution of the witness. We could seek such a grant if circumstances warranted, though the decision to apply for an immunity order rests with the government, not with the witness.

These options should remain available in our strategic toolkit, but they are premature given Mr. Caldwell's current witness status and the absence of any scheduled testimony date.

VI. Risk Factors Requiring Ongoing Monitoring

The conclusion that a Fifth Amendment assertion is not warranted rests on the facts as they are known today. Several risk factors could alter this analysis, and each must be monitored on an ongoing basis:

Change in status. The government's informal representation that Mr. Caldwell is a witness — and not a target or subject — is not legally binding. As discussed in Section III.C above, the government's classification of a witness's status is a matter of prosecutorial discretion, not of constitutional entitlement, and it may change at any time based on the evolution of the evidence. Mr. Caldwell's status could change as a result of documents produced by him or by other parties, testimony provided by other witnesses before the grand jury, or forensic analysis conducted by the government's consultants. Any indication that the government has changed or is considering changing Mr. Caldwell's status should be treated as a critical event requiring immediate reassessment.

Fund-flow tracing. The government has retained Meridian Forensic Advisors LLC, led by Nathan P. Solis, Managing Director, to conduct fund-flow tracing across the Aegean Realty fund vehicles and related entities. If this forensic analysis reveals that specific distributions received by Mr. Caldwell — totaling $2,505,000 — were funded by diverted investor capital rather than by legitimate investment returns, the government could take a heightened interest in whether Mr. Caldwell had knowledge of the source of those distributions. Such a finding would elevate what is currently a speculative risk into a concrete area of concern and would likely necessitate a reassessment of the self-incrimination analysis.

Third-party cooperation. If Stavros, through his counsel Victor A. Reddick of Reddick, Sorrento & Hale LLP, enters into a cooperation agreement with the government, any proffer or testimony by Stavros that implicates Mr. Caldwell in knowledge of or participation in the alleged fraud would change the calculus entirely. Similarly, if other witnesses — such as employees or agents of Pinnacle Appraisal Group LLC, officers of Westlake Fidelity Bank, or other investors in the Aegean funds — provide information implicating Caldwell, a reassessment would be required. We should endeavor to monitor, to the extent possible, whether Stavros or others are cooperating with the government.

Scope expansion. The investigation could expand beyond its currently understood parameters. The government's focus is presently on Stavros and Aegean Realty Partners, but federal investigations are inherently fluid, and the grand jury's investigative authority is broad. Additional subpoenas, search warrants, or informal inquiries directed at Mr. Caldwell or at entities associated with him could signal a change in the government's focus. Any such developments must be immediately communicated to the engagement team.

Recommendation. We recommend conducting a formal status assessment at each significant milestone in the matter, including: (i) after each document production tranche; (ii) after any communication with the government, whether initiated by the government or by our office; (iii) before any testimony is scheduled; and (iv) upon learning of any development in the broader investigation that could affect Mr. Caldwell's position. If any of the above risk factors materialize, the engagement team should reconvene immediately to reassess the Fifth Amendment analysis and to consider whether a change in strategy is warranted.

VII. Conclusion and Recommendations

Based on the foregoing analysis, we summarize our conclusions and recommendations as follows:

1. Document production. There is no Fifth Amendment basis to withhold documents responsive to the grand jury subpoena. The entity records doctrine applies to all records of Caldwell Capital Advisors LLC and JRC Realty Holdings LLC, precluding any Fifth Amendment objection as to those records. For Mr. Caldwell's personal records, the act-of-production doctrine provides only narrow and theoretical protection, and the foregone conclusion doctrine precludes assertion of the privilege under the current facts, given the government's existing knowledge of the subpoenaed documents. Document production should proceed as planned, in accordance with the schedule negotiated with AUSA Goldfarb's office. Attorney-client privilege and work product objections should be reserved for the 214 documents identified as potentially privileged, and a privilege log should be prepared and served in connection with the production.

2. Testimony. A blanket assertion of the Fifth Amendment privilege is not warranted and would be both legally unsupported and strategically counterproductive. We recommend continuing the strategy of deferring testimony pending completion of the document production and our review of the produced materials. If and when testimony is scheduled, we will conduct thorough preparation sessions with Mr. Caldwell, paying particular attention to the sensitivity areas identified in this memorandum. We will reserve the right to advise Mr. Caldwell to invoke the privilege on a question-by-question basis if specific questions implicate self-incrimination risk, and we will request an advance proffer of testimony topics from the government at the appropriate time.

3. Continuous review. This analysis is based on the facts as they are known on the date of this memorandum and should be revisited whenever materially relevant circumstances change. Specifically, the analysis should be reassessed if: (a) Mr. Caldwell's status changes from witness to subject or target; (b) fund-flow analysis by Meridian Forensic Advisors reveals that distributions to Mr. Caldwell were funded by diverted investor capital; (c) third-party testimony or cooperation implicates Mr. Caldwell in knowledge of or participation in the alleged fraud; or (d) any other new information alters the risk profile. Calendar reminders should be set for reassessment at each production milestone and upon any government contact.

4. No immunity request at this time. A request for immunity is premature and inconsistent with Mr. Caldwell's witness status. This recommendation should be revisited only if circumstances change materially, as described above.

VIII. Distribution and Confidentiality Notice

This memorandum constitutes attorney work product prepared in anticipation of litigation and is protected from disclosure under Federal Rule of Civil Procedure 26(b)(3) and its federal criminal counterpart, as well as under the work product doctrine as articulated in Hickman v. Taylor, 329 U.S. 495 (1947). This memorandum is also subject to the attorney-client privilege, as it reflects legal analysis and advice rendered by Calderwood & Harkness LLP to its client, Jonathan R. Caldwell, in connection with the matters described herein.

Distribution of this memorandum is strictly limited to the members of the Calderwood & Harkness LLP engagement team for this matter:

• Conrad Ashby, Partner

• Bernard Crawford, Responsible Partner

• Daniel Obi, Lead Associate

• Lisa Morrow, Working Associate

Do not forward, copy, scan, distribute, or disclose this memorandum to any person outside the engagement team, including other partners or associates of the Firm, without the express prior written approval of Conrad Ashby.

Any inadvertent disclosure of this memorandum does not constitute a waiver of any applicable privilege or protection.

Calderwood & Harkness LLP 450 Park Avenue, 30th Floor New York, New York 10022

Prepared by:

________________________________________

Conrad Ashby Partner, White Collar & Investigations Practice Group

Fund	Investment Date	Amount
Aegean Realty Fund III LP	June 2016	$2,500,000
Aegean Realty Fund IV LP	March 2017	$4,000,000
Aegean Realty Fund V LP	September 2018	$3,500,000
Total LP Investments	$10,000,000

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
INTERNAL MEMORANDUM
FROM: Conrad Ashby, Partner, White Collar & Investigations Practice Group, Calderwood & Harkness LLP
TO: Bernard Crawford, Responsible Partner; Daniel Obi, Lead Associate; Lisa Morrow, Working Associate
DATE: December 10, 2022
RE: Fifth Amendment and Testimonial Privilege Considerations — Representation of Jonathan R. Caldwell; 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
I. Purpose and Summary
This memorandum analyzes whether the Fifth Amendment privilege against self-incrimination is implicated by the demands of the federal grand jury subpoena served on our client, Jonathan R. Caldwell, on November 21, 2022, at his residence at 1140 Park Avenue, Apt. 14C, New York, NY 10128. The analysis addresses both the document production obligations and the testimonial obligations imposed by the subpoena, and it sets forth our recommended approach to each.
The subpoena at issue was issued on November 18, 2022, by the United States Attorney's Office for the Southern District of New York. The assigned prosecutor is Assistant United States Attorney Miriam T. Goldfarb of the Complex Frauds & Cybercrime Unit. The subpoena commands both the production of documents in enumerated categories and Mr. Caldwell's personal testimony before Grand Jury No. 22-GJ-4481, sitting in the United States District Court for the Southern District of New York.
Based on a telephone proffer conducted with AUSA Goldfarb on December 12, 2022, Mr. Caldwell has been informally confirmed as a witness — not a target or subject — of the ongoing grand jury investigation into Marcus W. Stavros and Aegean Realty Partners LLC. No formal target letter or subject letter has been issued to Mr. Caldwell. The government's stated interest in Mr. Caldwell relates to his role as a co-investor who may possess documents shedding light on representations made by Stavros to investors and on capital movements between various entities associated with the alleged scheme.
This memorandum concludes as follows: A blanket assertion of the Fifth Amendment privilege against self-incrimination is not warranted at this time with respect to either the document production or the testimonial obligation. With respect to document production, the entity records doctrine and the foregone conclusion doctrine substantially foreclose any Fifth Amendment objection. With respect to testimony, the risk of self-incrimination from truthful answers is, on the current record, remote and speculative rather than real and appreciable, and a blanket refusal to testify would be both legally unsupported and inconsistent with the cooperative posture we have adopted with the government.
However, this conclusion is not static. The situation warrants continuous monitoring and reassessment at each significant milestone. Specific areas of factual sensitivity exist — including the nature and source of distributions received by Mr. Caldwell and his potential exposure to appraisal reports that may have been inflated — that could assume greater significance if additional facts come to light. If Mr. Caldwell's status changes from witness to subject or target, or if the scope of the government's inquiry expands, this analysis must be revisited immediately. The detailed basis for these conclusions, and our specific recommendations, are set forth in the sections that follow.
II. Factual Background Relevant to the Analysis
A. The Grand Jury Investigation
The federal grand jury investigation is believed to have commenced in early 2022 and is focused principally on Marcus W. Stavros, the founder and sole managing principal of Aegean Realty Partners LLC, a Connecticut-based real estate syndication firm with offices at 280 Atlantic Street, Suite 510, Stamford, Connecticut 06901. The investigation is being conducted by the Complex Frauds & Cybercrime Unit of the U.S. Attorney's Office for the Southern District of New York, under the supervision of AUSA Miriam T. Goldfarb.
The suspected offenses under investigation include wire fraud in violation of 18 U.S.C. § 1343, bank fraud in violation of 18 U.S.C. § 1344, money laundering in violation of 18 U.S.C. § 1956, and conspiracy in violation of 18 U.S.C. § 371. Based on information communicated by AUSA Goldfarb during the December 12, 2022 telephone proffer, the government's theory of the case rests on the following principal allegations:
First, the government alleges that Stavros systematically inflated property appraisals through Pinnacle Appraisal Group LLC, a purportedly independent appraisal firm, in order to secure larger acquisition and refinancing loans from Westlake Fidelity Bank, N.A. and, to a lesser extent, Harborview Trust Company. The inflated appraisals are alleged to have enabled Stavros to extract excess loan proceeds that were not supported by the actual values of the underlying properties.
Second, the government alleges that Stavros diverted approximately $18.7 million in investor capital from Aegean Realty Fund IV LP and Aegean Realty Fund V LP to personal accounts and to fund shortfalls in earlier fund vehicles, including Fund II LP and Fund III LP. The government characterizes this pattern as a Ponzi-like structure in which distributions to earlier investors were funded not by legitimate investment returns but by capital contributed by later investors.
Third, the government alleges that Stavros caused false financial statements to be submitted to Westlake Fidelity Bank, N.A. and Harborview Trust Company in connection with loan applications, annual covenant compliance certifications, and periodic borrower reporting obligations. These false statements are alleged to have materially overstated the financial condition of the borrowing entities and the performance of the underlying properties.
According to the government's representations, estimated total investor losses across all Aegean Realty fund vehicles are approximately $43 million. Estimated total lender losses — principally to Westlake Fidelity Bank and Harborview Trust Company — are approximately $31 million.
Stavros is represented in the investigation by Victor A. Reddick of Reddick, Sorrento & Hale LLP, with offices at 1 Liberty Plaza, 37th Floor, New York, New York 10006. The government has retained Meridian Forensic Advisors LLC as its forensic accounting consultant for fund-flow tracing and financial analysis. The engagement is led by Nathan P. Solis, Managing Director of Meridian Forensic Advisors.
B. Mr. Caldwell's Relationship to the Investigation
Jonathan R. Caldwell, age 58, is the sole member and managing principal of Caldwell Capital Advisors LLC ("CCA"), a New York limited liability company formed in 2009 that manages approximately $340 million in real estate-focused investment assets across three fund vehicles. Mr. Caldwell is also the sole owner of JRC Realty Holdings LLC, a New York limited liability company that serves as a personal holding company for his direct real estate portfolio, which has an assessed value of approximately $78 million across fourteen properties in the New York, New Jersey, and Connecticut tristate area. Mr. Caldwell maintains his principal office at 590 Madison Avenue, 22nd Floor, New York, New York 10022, and resides at 1140 Park Avenue, Apt. 14C, New York, New York 10128.
Mr. Caldwell first met Marcus W. Stavros in approximately 2014 at the National Real Estate Investors Forum, an annual industry conference. The two developed a professional relationship that led to a co-investment period spanning approximately 2015 through 2019. During this period, Mr. Caldwell made investments in Aegean Realty fund vehicles and participated in direct co-investments with Stavros through joint venture entities.
Limited Partnership Investments in Aegean Realty Funds. Mr. Caldwell made the following limited partnership investments in Aegean Realty fund vehicles:
Direct Co-Investments Through Joint Venture Entities. In addition to the LP investments, Mr. Caldwell participated in two direct co-investments with Stavros through separately formed joint venture entities:
710 Flatbush Holdings LLC. This entity was a 50/50 joint venture between Caldwell and Stavros formed for the purpose of acquiring and operating 710 Flatbush Avenue, Brooklyn, New York 11225, a 42-unit mixed-use residential and commercial building. The property was acquired in April 2016 for a purchase price of $11.2 million. Mr. Caldwell's equity contribution was $2.8 million. The acquisition was financed in part by a mortgage loan of $5.6 million from Westlake Fidelity Bank, N.A.
Stavros-Caldwell Industrial LLC. This entity was a joint venture in which Stavros held 60% and Caldwell held 40%, formed for the acquisition and operation of 1500 Commerce Boulevard, Newark, New Jersey 07114, a 65,000 square foot industrial warehouse facility. The property was acquired in October 2017 for a purchase price of $8.9 million. Mr. Caldwell's equity contribution was $1,424,000. The acquisition was financed in part by a mortgage loan of $5.34 million from Westlake Fidelity Bank, N.A.
Mr. Caldwell's total equity invested across both JV entities was $4,224,000.
Distributions Received. Over the course of the co-investment period, Mr. Caldwell received aggregate distributions totaling $2,505,000 — $1,870,000 from the LP fund investments and $635,000 from the JV entities.
The Business Dispute and Separation. In October 2019, a business dispute arose between Caldwell and Stavros over approximately $340,000 in management fees that Stavros unilaterally charged to the 710 Flatbush Holdings LLC operating account. Mr. Caldwell objected to these charges, which he believed were unauthorized and inconsistent with the operating agreement. The dispute precipitated the end of the business relationship.
A separation agreement was negotiated through outside counsel — Patricia Sheldon of Whitmore & Kessler LLP — and became effective on December 15, 2019. Under the terms of the separation agreement: (i) Stavros purchased Caldwell's 50% interest in 710 Flatbush Holdings LLC for $3.4 million; (ii) Stavros purchased Caldwell's 40% interest in Stavros-Caldwell Industrial LLC for $1.85 million; and (iii) Caldwell's limited partnership interest in Aegean Realty Fund V LP was redeemed in March 2020 at a price of $3.15 million. Mr. Caldwell's interests in Fund III LP and Fund IV LP had previously been redeemed in the ordinary course.
All business ties between Caldwell and Stavros were completely severed by March 2020, approximately two years before the investigation is believed to have commenced.
C. Caldwell's Current Status in the Investigation
Per the December 12, 2022 telephone proffer with AUSA Goldfarb, Mr. Caldwell has been informally confirmed as a witness in the grand jury investigation. He is not considered a target or a subject. No formal target letter or subject letter has been issued to Mr. Caldwell.
The government's stated interest in Mr. Caldwell is limited to his role as a co-investor who may possess documents and firsthand knowledge relevant to: (a) representations made by Stavros to investors in connection with the Aegean Realty fund vehicles; (b) capital movements between entities in which both Caldwell and Stavros held interests; and (c) the operations of the JV entities, including dealings with Westlake Fidelity Bank.
Through negotiation with AUSA Goldfarb's office, Mr. Caldwell's testimony obligation has been deferred pending completion of the document production. No date for grand jury testimony has been scheduled. The government has agreed to provide reasonable advance notice before scheduling any testimony.
D. Scope of the Subpoena
The subpoena contains both a document production component and a testimonial component. The document demands cover all documents and communications between Caldwell (individually and through any entity he owns or controls) and Stavros (individually and through any entity he owns or controls), as well as all documents and communications between Caldwell and Westlake Fidelity Bank, N.A. or Harborview Trust Company, for the period from January 1, 2014 through December 31, 2021. The categories of documents demanded relate to:
(a) any real estate investment, co-investment, joint venture, or syndication involving Aegean Realty Partners LLC or any of its affiliated funds or entities;
(b) any loan, financing arrangement, mortgage, line of credit, or capital raise involving properties in which Caldwell and Stavros had a direct or indirect ownership or economic interest;
(c) any appraisal, valuation, property inspection report, environmental assessment, or due diligence report for any property in which Caldwell and Stavros had a direct or indirect interest;
(d) any transfer, wire, ACH payment, check, or other movement of funds between accounts held or controlled by Caldwell (or any entity he owns or controls) and accounts held or controlled by Stavros (or any Aegean Realty entity).
The testimonial component commands Mr. Caldwell's personal appearance and testimony before Grand Jury No. 22-GJ-4481. As noted above, this obligation has been deferred by agreement with the government pending completion of the document production.
III. Legal Framework — Fifth Amendment Privilege Against Self-Incrimination
A. Constitutional Foundation
The Fifth Amendment to the United States Constitution provides, in pertinent part, that no person "shall be compelled in any criminal case to be a witness against himself." U.S. Const. amend. V. Although the text refers to "any criminal case," the Supreme Court has long recognized that the privilege against self-incrimination extends far beyond the confines of a criminal trial. The privilege may be invoked in any proceeding — civil or criminal, formal or informal, administrative or judicial — where the answers might tend to incriminate the witness in future criminal proceedings. See Kastigar v. United States, 406 U.S. 441, 444–45 (1972) (describing the privilege as reflecting "our unwillingness to subject those suspected of crime to the cruel trilemma of self-accusation, perjury or contempt"); Lefkowitz v. Turley, 414 U.S. 70, 77 (1973) (holding that the privilege extends to any compelled testimony or statement that might be used in subsequent criminal proceedings).
The privilege is a personal right belonging to the individual witness, and it may be asserted in range settings, including before a grand jury. A witness subpoenaed to testify before a federal grand jury retains the right to refuse to answer specific questions where truthful answers would tend to incriminate the witness. United States v. Mandujano, 425 U.S. 564, 572 (1976) (plurality opinion) (observing that the Fifth Amendment "privilege can be claimed in any proceeding," including grand jury proceedings, and that a witness "may decline to answer on Fifth Amendment grounds"). The privilege thus serves as a critical safeguard for individuals who may be called upon to provide testimony that could expose them to criminal prosecution, even where they are not themselves the target of the investigation.
B. Standard for Invocation
The standard for invoking the Fifth Amendment privilege is well established. The privilege protects against a "real and appreciable" danger of self-incrimination, as distinguished from a danger that is merely "remote and speculative" or "imaginary and unsubstantial." Marchetti v. United States, 390 U.S. 39, 53 (1968); see also Brown v. Walker, 161 U.S. 591, 599–600 (1896). The witness need not demonstrate that criminal prosecution is imminent or even probable; rather, the question is whether the testimony could furnish "a link in the chain of evidence needed to prosecute" the witness. Hoffman v. United States, 341 U.S. 479, 486 (1951). As the Supreme Court explained in Hoffman, the privilege extends to answers that would "in themselves support a conviction" as well as answers that would "furnish a link in the chain of evidence needed to prosecute the claimant for a federal crime." Id.
At the same time, the privilege is not an absolute shield that allows a witness to refuse to answer any and all questions posed by a grand jury. The invocation must ordinarily be made on a question-by-question basis. A blanket refusal to testify — a declaration that the witness will not answer any questions whatsoever — is generally not permitted for witnesses who are not themselves targets of the investigation. See United States v. Bodwell, 66 F.3d 1000, 1001–02 (9th Cir. 1995) (holding that a blanket assertion of the Fifth Amendment by a non-target witness was improper); see also In re Grand Jury Subpoena Dated Oct. 9, 2003, No. 03-3483, 2004 WL 287605 (2d Cir. 2004) (recognizing the general principle that the privilege must be invoked as to particular questions). In the Second Circuit, the courts have consistently required witnesses to appear before the grand jury and assert the privilege as to individual questions, rather than refusing to appear or refusing to answer any question in advance.
The burden of establishing a valid claim of privilege initially rests with the witness, but this burden is not onerous. The court may sustain the privilege "if there is any reasonable possibility that the answers would be incriminating." In re Grand Jury Proceedings, 832 F.2d 554, 557 (11th Cir. 1987); Hoffman, 341 U.S. at 488 (noting that the court must be "governed as much by [its] personal perception of the peculiarities of the case as by the facts actually in evidence"). The judge must evaluate the implications of the question in the context of the particular case, taking into account the nature of the investigation, the relationship of the witness to the subject of the inquiry, and the potential for incrimination.
C. Distinction Between Targets, Subjects, and Witnesses
The Department of Justice maintains a classification system for individuals involved in grand jury investigations that distinguishes among targets, subjects, and witnesses. This classification, set forth in the Justice Manual (formerly the U.S. Attorneys' Manual) at § 9-11.151, carries practical significance for the assertion of Fifth Amendment rights and for the government's obligations with respect to rights advisements.
Under the Justice Manual, a "target" is a person as to whom the prosecutor or the grand jury has substantial evidence linking that person to the commission of a crime and who, in the judgment of the prosecutor, is a putative defendant. A "subject" is a person whose conduct is within the scope of the grand jury's investigation. A "witness" is a person who is called to testify before the grand jury and who is not a target or subject of the investigation — that is, a person whose own conduct is not under scrutiny but who possesses information relevant to the investigation.
These classifications carry specific implications under DOJ policy. Under Justice Manual § 9-11.150 et seq., targets must be advised of their Fifth Amendment rights before testifying before the grand jury. Subjects may, in the prosecutor's discretion, be advised of their rights. Witnesses generally are not advised of their Fifth Amendment rights, though the court retains authority to do so in appropriate circumstances.
It is critically important to note that the government's informal representations regarding a witness's status are not legally binding and do not create enforceable rights. A witness's status may change at any time — including during the course of grand jury proceedings themselves — based on the evolution of the evidence. The Supreme Court addressed this issue directly in United States v. Washington, 431 U.S. 181, 189–90 (1977), where the Court held that the failure to notify a grand jury witness of his target status did not render his subsequent testimony inadmissible, because target notification is not constitutionally required. The Washington decision underscores that the government's classification of an individual as a witness, subject, or target is a matter of prosecutorial discretion and policy, not of constitutional mandate, and that a witness cannot rely on such classifications as a guarantee against future prosecution.
The practical implication of this principle for Mr. Caldwell is clear: although AUSA Goldfarb has informally confirmed his witness status, this designation provides no assurance that he will not be reclassified as a subject or target at a later date. This reality informs our recommendation for continuous monitoring and reassessment, as discussed below.
D. Second Circuit-Specific Considerations
The Second Circuit has a well-developed body of case law addressing the scope of the Fifth Amendment privilege in the grand jury context. The Circuit generally defers to the grand jury's broad investigative authority, recognizing that the grand jury "can investigate merely on suspicion that the law is being violated, or even just because it wants assurance that it is not." United States v. R. Enterprises, Inc., 498 U.S. 292, 297 (1991) (citing United States v. Morton Salt Co., 338 U.S. 632, 642–43 (1950)). At the same time, the Second Circuit has consistently recognized the privilege against self-incrimination as a personal right that may be asserted by individual witnesses called before the grand jury. See, e.g., In re Grand Jury Subpoena Duces Tecum Dated Oct. 29, 1992, 1 F.3d 87 (2d Cir. 1993) (analyzing act-of-production issues in detail); In re Grand Jury Proceedings (Doe), 801 F.2d 569 (2d Cir. 1986).
The Second Circuit has also been receptive to the foregone conclusion doctrine as a limitation on act-of-production claims, as discussed in greater detail in Section IV.C below. The Circuit's approach generally requires a fact-specific inquiry into whether the government can demonstrate with "reasonable particularity" that it already knows of the existence, possession, and authenticity of the subpoenaed documents, such that the testimonial aspect of production adds nothing to what the government already knows. In re Grand Jury Subpoena Duces Tecum Dated Oct. 29, 1992, 1 F.3d at 93.
IV. Application to Mr. Caldwell's Document Production Obligations
A. The Required Records / Entity Records Doctrine
The Fifth Amendment privilege against self-incrimination is a personal privilege. It protects individuals, not entities. As a consequence, the privilege does not protect against the compelled production of records belonging to a collective entity — whether a corporation, a partnership, a limited liability company, or another organizational form. Braswell v. United States, 487 U.S. 99, 104–10 (1988) (holding that a custodian of corporate records may not resist a subpoena for such records on the ground that the act of producing them would incriminate him personally); Bellis v. United States, 417 U.S. 85, 88–90 (1974) (extending the principle to partnerships). The rationale underlying this doctrine is that an entity's records are the entity's property, not the custodian's, and that when an individual acts as custodian of entity records, he acts in a representative capacity and cannot claim the personal privilege.
This doctrine has direct application to the records of Caldwell Capital Advisors LLC (EIN 83-2174056) and JRC Realty Holdings LLC (EIN 81-4493217), both of which are New York limited liability companies of which Mr. Caldwell is the sole member and manager. Although these are single-member LLCs — a fact that might intuitively suggest they are indistinguishable from Mr. Caldwell himself — the entity records doctrine applies with equal force to closely held and even single-member entities. Under Second Circuit authority, a limited liability company, even one with a single member, is a separate juridical person, and its records are not protected by the custodian's personal Fifth Amendment privilege. See In re Grand Jury Subpoena Dated Nov. 12, 1991, 957 F.2d 807 (11th Cir. 1992) (sole proprietorship distinguished from entity with separate legal existence); see also Braswell, 487 U.S. at 110 (emphasizing that the relevant inquiry is whether the entity has a legal existence separate from the individual, not whether the individual exercises sole control).
The implication of this doctrine for the present matter is straightforward: documents that belong to CCA or JRC Realty Holdings as entity records — including operating agreements, financial statements, bank records, investor correspondence, tax returns, and similar documents maintained in the name of or on behalf of the entities — cannot be withheld on Fifth Amendment grounds, regardless of their content. Mr. Caldwell, as custodian of these records, acts in his representative capacity when producing them, and the privilege does not attach.
B. Personal Records of Mr. Caldwell
The analysis is different with respect to Mr. Caldwell's personal papers and effects. The Supreme Court's decision in Fisher v. United States, 425 U.S. 391 (1976), established that the contents of pre-existing documents are not themselves "testimony" within the meaning of the Fifth Amendment — the privilege protects against compelled testimony, not against the compelled production of documents whose contents were created voluntarily. Id. at 409–10. However, Fisher also recognized that the act of producing documents in response to a subpoena may itself be testimonial in character, because production implicitly communicates certain facts: that the documents exist, that they are in the possession or control of the producing party, and that they are authentic — i.e., that they are the documents described in the subpoena. Id. at 410–11.
This principle was elaborated in United States v. Hubbell, 530 U.S. 27 (2000), where the Supreme Court held that when the government has no prior knowledge of the existence or location of documents, the act of producing them in response to a broad subpoena can constitute testimonial communication protected by the Fifth Amendment. Id. at 43–45. In Hubbell, the subpoena was sweeping and the government conceded that it could not identify the documents it sought without the defendant's assistance, rendering the act of production an essential link in the chain of evidence.
For Mr. Caldwell, many of the subpoenaed documents could be characterized as personal records rather than entity records. These include, for example, personal email communications from his email address jrc@caldwellcap.com (to the extent they reflect personal communications rather than entity business), personal financial records maintained at his residence at 1140 Park Avenue, scanned paper files stored at both the Park Avenue residence and the office at 590 Madison Avenue, 22nd Floor, and handwritten notes or memoranda reflecting personal observations or reflections. To the extent these documents are properly characterized as personal records, the entity records doctrine does not apply, and the analysis proceeds to the act-of-production doctrine discussed below.
C. The Act-of-Production Doctrine
Under the framework established by Fisher and refined in Hubbell, the act of producing documents in response to a subpoena may itself constitute protected testimony if it implicitly communicates facts that are both (1) testimonial in nature and (2) incriminating. Specifically, the act of production may implicitly communicate:
(1) that the documents described in the subpoena exist;
(2) that the documents are in the possession or control of the person producing them; and
(3) that the documents are authentic — i.e., that they are what the subpoena calls for.
The act-of-production privilege is available only where these implicit communications are both testimonial and tend to incriminate the producing party. Fisher, 425 U.S. at 410–11. If the testimonial aspects of production are not incriminating, the privilege does not apply. Similarly, if the government can independently establish the facts that production would implicitly communicate — that is, if the existence, possession, and authenticity of the documents are "foregone conclusions" — then production adds nothing to the government's knowledge, and the testimonial component is insufficiently significant to trigger the privilege.
The foregone conclusion doctrine, first articulated in Fisher and applied extensively in the Second Circuit, provides that the act-of-production privilege does not apply where the government can show that it already knows, with reasonable particularity, that the documents exist, that they are in the possession or control of the subpoenaed party, and that they are authentic. Fisher, 425 U.S. at 411; In re Grand Jury Subpoena Duces Tecum Dated Oct. 29, 1992, 1 F.3d 87, 93 (2d Cir. 1993). Under this doctrine, the testimonial aspect of production "adds little or nothing to the sum total of the Government's information," and the act of production is therefore not sufficiently testimonial to warrant Fifth Amendment protection. Fisher, 425 U.S. at 411.
Application to Mr. Caldwell. The key question is whether the act of producing responsive documents would tend to incriminate Mr. Caldwell. On the current facts, the answer is no. Mr. Caldwell is a witness, not a target or subject of the investigation. The government's inquiry focuses on Stavros's alleged fraud — the inflation of appraisals, the diversion of investor capital, and the submission of false financial statements to lenders. The act of producing documents describing Mr. Caldwell's investments in the Aegean funds and his communications with Stavros does not, standing alone, tend to incriminate Mr. Caldwell in any criminal conduct.
Moreover, the foregone conclusion doctrine applies with particular force here. The existence and general nature of the subpoenaed documents are already known to the government or can be independently established through sources other than Mr. Caldwell's production. The government is aware — from the specificity of the subpoena itself, from the December 12 proffer conversation, from publicly available records, and from documents already obtained from other sources — of the following facts:
• That Mr. Caldwell was a limited partner in Aegean Realty Funds III, IV, and V, and that subscription agreements, capital call notices, distribution notices, investor reports, and related documents were generated in connection with these investments;
• That Mr. Caldwell was a co-owner of 710 Flatbush Holdings LLC and Stavros-Caldwell Industrial LLC, and that operating agreements, closing documents, correspondence with lenders, and financial records were generated in connection with these ventures;
• That Mr. Caldwell communicated with Stavros by email and other means during the period of their business relationship;
• That the JV properties were financed by Westlake Fidelity Bank, and that loan documents, appraisal reports, and related materials are in Mr. Caldwell's custody or control;
• That Mr. Caldwell and Stavros entered into a separation agreement in December 2019, and that documents relating to the negotiation and execution of that agreement exist.
Because the government already knows these documents exist, knows they are in Mr. Caldwell's possession, and can verify their authenticity through independent sources (including bank records, fund administrator records, and the files of other parties to the same transactions), the implicit testimony inherent in the act of production adds nothing to what the government already knows. The foregone conclusion doctrine thus substantially eliminates any act-of-production privilege that might otherwise attach.
D. Conclusion on Document Production
For the foregoing reasons, a Fifth Amendment objection to the document production obligation is not supported on the current facts. The entity records doctrine forecloses any objection with respect to records of Caldwell Capital Advisors LLC and JRC Realty Holdings LLC, as these are entity records for which the Fifth Amendment provides no protection. For personal records in Mr. Caldwell's possession, the act-of-production doctrine provides only narrow and theoretical protection, and the foregone conclusion doctrine likely defeats any assertion of the privilege given the government's existing knowledge of the relevant documents.
We therefore recommend that document production proceed as planned, in accordance with the timeline negotiated with AUSA Goldfarb's office. Attorney-client privilege and work product objections should be reserved as appropriate for the 214 documents identified to date as potentially privileged, and a privilege log should be prepared and served in connection with the production. No Fifth Amendment log or blanket objection is warranted.
V. Application to Mr. Caldwell's Testimonial Obligation
A. General Framework for Grand Jury Testimony
A witness subpoenaed to testify before a federal grand jury may invoke the Fifth Amendment privilege against self-incrimination on a question-by-question basis if a truthful answer to a particular question would tend to incriminate the witness. As discussed above, the witness must appear before the grand jury and assert the privilege as to each question — a blanket refusal to answer all questions is not permitted for a non-target witness. See Mandujano, 425 U.S. at 572–73; Bodwell, 66 F.3d at 1001–02.
The witness is not entitled to have counsel present in the grand jury room during testimony. However, the witness may step outside the grand jury room to consult with counsel after each question or group of questions, and this right is well recognized in the Southern District of New York. We would, of course, be present outside the grand jury room during any testimony by Mr. Caldwell and would be available for consultation throughout.
If the government believes that a witness's assertion of the Fifth Amendment is unjustified, or if the government wishes to compel testimony notwithstanding a valid assertion of the privilege, the government may seek a court order granting the witness immunity under 18 U.S.C. §§ 6002–6003. The immunity available under these provisions is "use and derivative-use immunity" — meaning that the government may not use the witness's immunized testimony, or any evidence derived from it, against the witness in any criminal prosecution. Kastigar, 406 U.S. at 453. If immunity is granted by court order, the witness must testify; a refusal to testify after a grant of immunity constitutes civil contempt and may result in incarceration until the witness complies. 28 U.S.C. § 1826.
B. Assessment of Whether Caldwell's Testimony Could Be Self-Incriminating
The central question for our analysis is whether Mr. Caldwell's truthful testimony before the grand jury could furnish "a link in the chain of evidence needed to prosecute" him for a federal crime. Hoffman, 341 U.S. at 486. This requires an assessment of the facts known to date and an identification of areas of potential factual sensitivity.
Facts Supporting the Absence of Self-Incrimination Risk. The following facts weigh against a finding that Mr. Caldwell's testimony would be self-incriminating:
• Mr. Caldwell was a passive limited partner in Aegean Realty Funds III, IV, and V. He was not involved in the management or operations of the funds, did not serve as a general partner, and had no authority over investment decisions, property management, or financial reporting. His role was that of an investor, not an operator or decision-maker.
• Mr. Caldwell was a co-owner of two JV entities with Stavros, but there is no indication in the record that Mr. Caldwell participated in inflating appraisals through Pinnacle Appraisal Group LLC, made or caused to be made false statements to Westlake Fidelity Bank or Harborview Trust Company, or participated in the diversion of investor capital from the Aegean funds.
• Mr. Caldwell severed all business ties with Stavros in December 2019, following the management fee dispute, and had no further involvement with any Aegean Realty entity after March 2020. This separation occurred approximately two years before the investigation is believed to have commenced.
• The government has confirmed Mr. Caldwell's witness status and has indicated that its interest in him is limited to his knowledge of Stavros's representations and capital movements.
• Mr. Caldwell has no criminal history. He has not been charged with, investigated for, or accused of any criminal conduct.
Areas of Factual Sensitivity. Notwithstanding the foregoing, the following areas warrant caution and require further examination before Mr. Caldwell provides testimony. These areas are addressed in greater detail in the separate exposure analysis memorandum dated December 15, 2022, which should be read in conjunction with this memorandum.
Distributions from fund vehicles and JV entities. Mr. Caldwell received aggregate distributions of $2,505,000 from the LP funds ($1,870,000) and from the JV entities ($635,000). If the government's forensic analysis establishes that some portion of these distributions was funded by diverted investor capital — consistent with the government's theory of a Ponzi-like structure — a theoretical question arises as to whether Mr. Caldwell "received proceeds" of the alleged fraud. Under 18 U.S.C. § 1957, it is a criminal offense to knowingly engage in a monetary transaction involving criminally derived property of a value greater than $10,000. However, the mens rea element of § 1957 requires that the defendant knew the property was derived from specified unlawful activity. On the current record, there is no basis to conclude that Mr. Caldwell had any such knowledge. The risk, while theoretically cognizable, is speculative.
Appraisal reports from Pinnacle Appraisal Group. Mr. Caldwell may have received appraisal reports from Pinnacle Appraisal Group LLC in connection with the two JV properties financed by Westlake Fidelity Bank — the 710 Flatbush Avenue property (loan of $5.6 million) and the 1500 Commerce Boulevard property (loan of $5.34 million). If Caldwell reviewed these appraisals and had knowledge that the valuations were inflated, this could theoretically implicate participation in or knowledge of bank fraud under 18 U.S.C. § 1344. However, the current record does not support such an inference. Mr. Caldwell has represented to us that he relied on Stavros and Pinnacle to handle the appraisal process and that he had no reason to believe the appraisals were inaccurate. A thorough review of Mr. Caldwell's files and communications should be conducted to confirm this representation before testimony is given.
The management fee dispute. The dispute over approximately $340,000 in management fees that precipitated the December 2019 separation could, in theory, be characterized by the government as evidence that Mr. Caldwell had awareness of financial irregularities in Stavros's operations. However, this fact cuts strongly in Mr. Caldwell's favor: it demonstrates that he objected to unauthorized charges, took affirmative steps to investigate and challenge Stavros's conduct, and ultimately severed the business relationship. This fact is more consistent with innocence than with complicity.
Overall Assessment. Based on the facts known to date, the risk of self-incrimination from truthful testimony is remote and speculative, not real and appreciable, under the standard articulated in Marchetti and Hoffman. Mr. Caldwell has no criminal history, was not involved in the alleged scheme, acted as a passive investor, and severed ties with Stavros after discovering irregularities in the management of the JV entities. While the theoretical sensitivity areas identified above merit careful attention during preparation, they do not, individually or collectively, rise to the level of a "real and appreciable" danger of self-incrimination that would justify invocation of the Fifth Amendment.
C. Recommendation Regarding Testimony
Based on the analysis set forth above, we make the following recommendations regarding Mr. Caldwell's testimonial obligation:
1. A blanket assertion of the Fifth Amendment is not warranted. Such an assertion would be inconsistent with the law governing non-target witnesses, would be inconsistent with the cooperative posture we have adopted with the government, and could provoke adverse consequences — including an application by the government to compel testimony, which we would likely lose, or a reassessment of Mr. Caldwell's status by the prosecution team.
2. Continue to defer testimony pending completion of document production and review. This has already been accomplished through negotiation with AUSA Goldfarb. The deferral serves multiple purposes: it allows us to complete our review of the documents in Mr. Caldwell's possession before he testifies, reducing the risk of inadvertent inconsistencies; it allows us to assess any issues raised by the documents before the government poses questions about them; and it maintains a cooperative posture while preserving our client's interests.
3. Conduct thorough preparation before any testimony date is scheduled. Before Mr. Caldwell appears before the grand jury, we must conduct a comprehensive preparation session — or, more likely, a series of preparation sessions — in which we review the documentary record in detail, walk through the anticipated topics of inquiry, identify any areas where a truthful answer might even arguably tend to incriminate Mr. Caldwell, and prepare him for the logistics and procedures of grand jury testimony. Particular attention should be paid to the sensitivity areas identified in Section V.B above.
4. Reserve the right to advise Mr. Caldwell to invoke the Fifth Amendment as to specific questions. Even though a blanket assertion is not warranted, we should preserve Mr. Caldwell's right to invoke the privilege on a question-by-question basis. If, during preparation or during the testimony itself, it becomes apparent that a particular line of inquiry could expose Mr. Caldwell to criminal liability — for example, questions probing his knowledge of the source of distributions or his review of specific appraisal reports — we should be prepared to advise him to assert the privilege as to those specific questions. Mr. Caldwell should be instructed that he has the right to step outside the grand jury room and consult with counsel before answering any question.
5. Monitor Mr. Caldwell's status continuously. If the government changes his classification from witness to subject or target, the entire analysis changes, and a blanket assertion of the Fifth Amendment may become appropriate. We should make inquiries of AUSA Goldfarb's office at regular intervals to confirm Mr. Caldwell's status, and we should be alert to any signals — such as changes in the tone or content of government communications, additional subpoenas, or requests for interviews — that might indicate a shift.
6. Consider requesting a proffer of testimony topics. It is standard practice in the Southern District of New York for defense counsel to request that the government provide an informal proffer or outline of the topics it intends to cover during a witness's grand jury testimony. Such a proffer would allow us to assess in advance whether any particular topics raise self-incrimination concerns and to prepare Mr. Caldwell accordingly. We recommend making this request at an appropriate time, likely after the document production is substantially complete.
D. Immunity Considerations
At this stage, there is no basis to request or expect the government to offer immunity to Mr. Caldwell. A request for immunity would be inconsistent with his witness status and could be perceived by the government as an indication that Mr. Caldwell has something to hide — a perception that could prompt exactly the kind of status reassessment we wish to avoid.
However, if circumstances were to change — for example, if Mr. Caldwell's status were reclassified from witness to subject or target, or if specific testimony were sought that implicated potential criminal exposure — we could explore several options:
• Proffer agreement ("Queen for a Day" agreement). Under such an agreement, Mr. Caldwell would provide the government with an off-the-record proffer of the testimony he could offer, subject to agreed-upon protections limiting the government's ability to use the proffer statements against him. Such agreements are routinely used in the S.D.N.Y. and can be a useful tool for managing risk while facilitating cooperation.
• Formal use/derivative-use immunity under 18 U.S.C. §§ 6002–6003. If the government determines that Mr. Caldwell's testimony is essential to the investigation and Mr. Caldwell asserts the Fifth Amendment as to specific questions, the government can apply to the court for an order compelling testimony under a grant of immunity. Under Kastigar, such immunity is coextensive with the scope of the privilege and bars the government from using the immunized testimony, or any evidence derived from it, in any criminal prosecution of the witness. We could seek such a grant if circumstances warranted, though the decision to apply for an immunity order rests with the government, not with the witness.
These options should remain available in our strategic toolkit, but they are premature given Mr. Caldwell's current witness status and the absence of any scheduled testimony date.
VI. Risk Factors Requiring Ongoing Monitoring
The conclusion that a Fifth Amendment assertion is not warranted rests on the facts as they are known today. Several risk factors could alter this analysis, and each must be monitored on an ongoing basis:
Change in status. The government's informal representation that Mr. Caldwell is a witness — and not a target or subject — is not legally binding. As discussed in Section III.C above, the government's classification of a witness's status is a matter of prosecutorial discretion, not of constitutional entitlement, and it may change at any time based on the evolution of the evidence. Mr. Caldwell's status could change as a result of documents produced by him or by other parties, testimony provided by other witnesses before the grand jury, or forensic analysis conducted by the government's consultants. Any indication that the government has changed or is considering changing Mr. Caldwell's status should be treated as a critical event requiring immediate reassessment.
Fund-flow tracing. The government has retained Meridian Forensic Advisors LLC, led by Nathan P. Solis, Managing Director, to conduct fund-flow tracing across the Aegean Realty fund vehicles and related entities. If this forensic analysis reveals that specific distributions received by Mr. Caldwell — totaling $2,505,000 — were funded by diverted investor capital rather than by legitimate investment returns, the government could take a heightened interest in whether Mr. Caldwell had knowledge of the source of those distributions. Such a finding would elevate what is currently a speculative risk into a concrete area of concern and would likely necessitate a reassessment of the self-incrimination analysis.
Third-party cooperation. If Stavros, through his counsel Victor A. Reddick of Reddick, Sorrento & Hale LLP, enters into a cooperation agreement with the government, any proffer or testimony by Stavros that implicates Mr. Caldwell in knowledge of or participation in the alleged fraud would change the calculus entirely. Similarly, if other witnesses — such as employees or agents of Pinnacle Appraisal Group LLC, officers of Westlake Fidelity Bank, or other investors in the Aegean funds — provide information implicating Caldwell, a reassessment would be required. We should endeavor to monitor, to the extent possible, whether Stavros or others are cooperating with the government.
Scope expansion. The investigation could expand beyond its currently understood parameters. The government's focus is presently on Stavros and Aegean Realty Partners, but federal investigations are inherently fluid, and the grand jury's investigative authority is broad. Additional subpoenas, search warrants, or informal inquiries directed at Mr. Caldwell or at entities associated with him could signal a change in the government's focus. Any such developments must be immediately communicated to the engagement team.
Recommendation. We recommend conducting a formal status assessment at each significant milestone in the matter, including: (i) after each document production tranche; (ii) after any communication with the government, whether initiated by the government or by our office; (iii) before any testimony is scheduled; and (iv) upon learning of any development in the broader investigation that could affect Mr. Caldwell's position. If any of the above risk factors materialize, the engagement team should reconvene immediately to reassess the Fifth Amendment analysis and to consider whether a change in strategy is warranted.
VII. Conclusion and Recommendations
Based on the foregoing analysis, we summarize our conclusions and recommendations as follows:
1. Document production. There is no Fifth Amendment basis to withhold documents responsive to the grand jury subpoena. The entity records doctrine applies to all records of Caldwell Capital Advisors LLC and JRC Realty Holdings LLC, precluding any Fifth Amendment objection as to those records. For Mr. Caldwell's personal records, the act-of-production doctrine provides only narrow and theoretical protection, and the foregone conclusion doctrine precludes assertion of the privilege under the current facts, given the government's existing knowledge of the subpoenaed documents. Document production should proceed as planned, in accordance with the schedule negotiated with AUSA Goldfarb's office. Attorney-client privilege and work product objections should be reserved for the 214 documents identified as potentially privileged, and a privilege log should be prepared and served in connection with the production.
2. Testimony. A blanket assertion of the Fifth Amendment privilege is not warranted and would be both legally unsupported and strategically counterproductive. We recommend continuing the strategy of deferring testimony pending completion of the document production and our review of the produced materials. If and when testimony is scheduled, we will conduct thorough preparation sessions with Mr. Caldwell, paying particular attention to the sensitivity areas identified in this memorandum. We will reserve the right to advise Mr. Caldwell to invoke the privilege on a question-by-question basis if specific questions implicate self-incrimination risk, and we will request an advance proffer of testimony topics from the government at the appropriate time.
3. Continuous review. This analysis is based on the facts as they are known on the date of this memorandum and should be revisited whenever materially relevant circumstances change. Specifically, the analysis should be reassessed if: (a) Mr. Caldwell's status changes from witness to subject or target; (b) fund-flow analysis by Meridian Forensic Advisors reveals that distributions to Mr. Caldwell were funded by diverted investor capital; (c) third-party testimony or cooperation implicates Mr. Caldwell in knowledge of or participation in the alleged fraud; or (d) any other new information alters the risk profile. Calendar reminders should be set for reassessment at each production milestone and upon any government contact.
4. No immunity request at this time. A request for immunity is premature and inconsistent with Mr. Caldwell's witness status. This recommendation should be revisited only if circumstances change materially, as described above.
VIII. Distribution and Confidentiality Notice
This memorandum constitutes attorney work product prepared in anticipation of litigation and is protected from disclosure under Federal Rule of Civil Procedure 26(b)(3) and its federal criminal counterpart, as well as under the work product doctrine as articulated in Hickman v. Taylor, 329 U.S. 495 (1947). This memorandum is also subject to the attorney-client privilege, as it reflects legal analysis and advice rendered by Calderwood & Harkness LLP to its client, Jonathan R. Caldwell, in connection with the matters described herein.
Distribution of this memorandum is strictly limited to the members of the Calderwood & Harkness LLP engagement team for this matter:
• Conrad Ashby, Partner
• Bernard Crawford, Responsible Partner
• Daniel Obi, Lead Associate
• Lisa Morrow, Working Associate
Do not forward, copy, scan, distribute, or disclose this memorandum to any person outside the engagement team, including other partners or associates of the Firm, without the express prior written approval of Conrad Ashby.
Any inadvertent disclosure of this memorandum does not constitute a waiver of any applicable privilege or protection.
Calderwood & Harkness LLP 450 Park Avenue, 30th Floor New York, New York 10022
Prepared by:
________________________________________
Conrad Ashby Partner, White Collar & Investigations Practice Group
Fund | Investment Date | Amount
Aegean Realty Fund III LP | June 2016 | $2,500,000
Aegean Realty Fund IV LP | March 2017 | $4,000,000
Aegean Realty Fund V LP | September 2018 | $3,500,000
Total LP Investments | $10,000,000

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

INTERNAL MEMORANDUM

MATTER NO.: 1034-00001

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