1034-00001 · Graystone & Falk LLP · Legal Analysis

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PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

MEMORANDUM

TO: Conrad Ashby, Partner, White Collar & Investigations Practice Group

FROM: Daniel Obi, Associate, Banking & Finance Practice Group

DATE: December 7, 2022

RE: Grand Jury Subpoena Compliance Obligations — Second Circuit Law; Grand Jury No. 22-GJ-4481, U.S. District Court for the Southern District of New York

MATTER NO.: 1034-00001

CLIENT: Jonathan R. Caldwell

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I. Introduction and Purpose

This memorandum analyzes the legal standards governing compliance with the federal grand jury subpoena duces tecum and ad testificandum issued on November 18, 2022, in connection with Grand Jury No. 22-GJ-4481, which was served on our client, Jonathan R. Caldwell, on November 21, 2022, at his residence located at 1140 Park Avenue, Apartment 14C, New York, New York 10128. The subpoena was issued by Assistant United States Attorney Miriam T. Goldfarb of the Complex Frauds & Cybercrime Unit, United States Attorney's Office for the Southern District of New York, 500 Pearl Street, New York, New York 10007. The original return date specified on the face of the subpoena is December 9, 2022.

The subpoena seeks both the production of documents and testimony before the grand jury. It commands Mr. Caldwell to produce all documents and communications between himself and Marcus W. Stavros, between himself and any entity affiliated with or operating under the name Aegean Realty Partners LLC, and between himself and Westlake Fidelity Bank, N.A. or Harborview Trust Company, for the period from January 1, 2014 through December 31, 2021. The scope of the subpoena encompasses four specified categories of documents: (a) real estate investments, co-investments, or syndications involving Aegean Realty Partners or its affiliated funds; (b) any loan, financing arrangement, or capital raise involving properties in which Mr. Caldwell and Mr. Stavros had a direct or indirect interest; (c) any appraisal, valuation, or property inspection report for such properties; and (d) any transfer or movement of funds between accounts held or controlled by Mr. Caldwell and accounts held or controlled by Mr. Stavros or any Aegean Realty entity. In addition, the subpoena commands Mr. Caldwell's personal testimony before the grand jury.

Based on our preliminary communications with AUSA Goldfarb and the information available to us at this time, Mr. Caldwell is believed to be a witness — not a target or subject — in a federal investigation directed at his former business associate, Marcus W. Stavros, and Stavros's real estate investment firm, Aegean Realty Partners LLC. The investigation is understood to involve suspected violations of federal criminal law, including 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. While the precise contours of the government's investigation have not been disclosed — and indeed, the government is under no obligation to disclose them — the categories of documents sought suggest that the investigation is focused on potentially fraudulent real estate syndication transactions, inflated property appraisals used to obtain bank financing, and the laundering of proceeds through various entity structures controlled or influenced by Mr. Stavros.

This memorandum addresses the following topics:

1. The legal framework governing compliance with federal grand jury subpoenas, including the broad investigative authority of the grand jury, the obligations attendant to a subpoena duces tecum, and the obligations attendant to a subpoena ad testificandum;

2. The grounds available under Federal Rule of Criminal Procedure 17(c)(2) for motions to quash or modify a grand jury subpoena, including unreasonableness, oppressiveness, relevance challenges, and privilege-based objections;

3. Timing requirements and rolling production practice in the Southern District of New York, including procedures for requesting extensions of the return date and the benefits and mechanics of rolling production;

4. The penalties for non-compliance with a grand jury subpoena, including civil contempt, criminal contempt, obstruction of justice, and the practical consequences of a non-cooperative posture; and

5. Conclusions and recommendations for the handling of this matter, including our assessment that the subpoena is facially valid, that a motion to quash is not warranted, that scope negotiation and an extension of the return date are the appropriate course, and that strict and timely compliance is imperative.

II. Legal Framework for Grand Jury Subpoena Compliance

A. Broad Investigative Authority of the Grand Jury

The federal grand jury occupies a unique and central role in the administration of criminal justice. The Supreme Court has long recognized that the grand jury possesses broad investigative powers and functions as an arm of the court with wide latitude to investigate potential criminal activity. See United States v. R. Enterprises, Inc., 498 U.S. 292, 297 (1991) ("The grand jury occupies a unique role in our criminal justice system. It is an investigatory body charged with the responsibility of determining whether or not a crime has been committed."); Branzburg v. Hayes, 408 U.S. 665, 688 (1972) (noting the "longstanding principle that the public has a right to every man's evidence" and that this right is "particularly applicable to grand jury proceedings") (internal quotation marks omitted). The grand jury's investigative authority is necessarily broad because its task is not merely to determine whether a particular charge should be brought, but to ascertain whether a crime has been committed and, if so, who committed it. See Blair v. United States, 250 U.S. 273, 282 (1919).

Federal Rule of Criminal Procedure 17(a) provides the procedural mechanism by which the grand jury exercises its investigative authority. Rule 17(a) authorizes the issuance of subpoenas commanding the attendance and testimony of witnesses and, under Rule 17(c), the production of "any books, papers, documents, data, or other objects the subpoena designates." Fed. R. Crim. P. 17(a), (c)(1). A grand jury subpoena is presumed to have been issued in good faith and in furtherance of a legitimate investigation. United States v. R. Enterprises, Inc., 498 U.S. at 301 (holding that grand jury subpoenas are "presumed to be reasonable" and that "the burden of showing unreasonableness must be on the recipient who seeks to avoid compliance"). This presumption of regularity attaches to the subpoena issued in the present matter, and as discussed below, nothing in the facts known to us at this time would overcome that presumption.

Importantly, the recipient of a grand jury subpoena is not entitled to know the nature, scope, or direction of the grand jury's investigation as a precondition to compliance. The secrecy of grand jury proceedings — protected by Federal Rule of Criminal Procedure 6(e) — serves essential functions, including preventing the flight of targets, protecting the grand jurors from interference, and encouraging the free and full disclosure of information by witnesses. See Douglas Oil Co. v. Petrol Stops Nw., 441 U.S. 211, 218–19 (1979). A witness may not refuse to comply with a grand jury subpoena on the ground that the witness does not understand the relevance of the documents or testimony sought, nor may a witness insist upon an explanation from the government before furnishing the requested evidence. See Blair, 250 U.S. at 282 ("[A witness] is not entitled to set limits to the investigation that the grand jury may conduct.").

It is a fundamental principle that every citizen has a duty to provide evidence to the grand jury when lawfully summoned. See Kastigar v. United States, 406 U.S. 441, 443–44 (1972) ("The duty to testify has long been recognized as a basic obligation that every citizen owes his Government."). This duty extends to both testimonial and documentary evidence. Compliance with a grand jury subpoena is not optional, and a witness may resist the subpoena only on the basis of a recognized legal privilege or constitutional protection — most commonly, the Fifth Amendment privilege against self-incrimination, the attorney-client privilege, or the work product doctrine — or by demonstrating to the court that the subpoena is unreasonable or oppressive within the meaning of Rule 17(c)(2). Absent such a showing, the witness is obligated to comply fully and promptly.

B. Subpoena Duces Tecum — Documentary Obligations

Federal Rule of Criminal Procedure 17(c) governs subpoenas duces tecum — that is, subpoenas commanding the production of documents and tangible evidence. Rule 17(c)(1) provides that a "subpoena may order the witness to produce any books, papers, documents, data, or other objects the subpoena designates." The rule requires that the subpoena describe the documents sought with "reasonable particularity," such that the recipient can identify, locate, and produce the responsive materials. See In re Grand Jury Subpoena Duces Tecum Dated Nov. 15, 1993, 846 F. Supp. 11, 13 (S.D.N.Y. 1994); United States v. Gurney, 558 F.2d 1202, 1209 (5th Cir. 1977) (discussing the particularity requirement in the context of grand jury subpoenas).

The recipient of a grand jury subpoena duces tecum is obligated to produce all responsive, non-privileged documents within the recipient's "possession, custody, or control." This standard is well-established and has been broadly construed by courts in the Second Circuit and elsewhere. The concept of "possession, custody, or control" is not limited to documents in the physical possession of the subpoena recipient. Rather, it encompasses documents held by agents, employees, accountants, attorneys, and other persons or entities on behalf of the recipient, so long as the recipient has the legal right, authority, or practical ability to obtain the documents. See In re Grand Jury Subpoenas Dated Mar. 19, 2002 & Aug. 2, 2002, 318 F.3d 379, 383–84 (2d Cir. 2003) (discussing the scope of "possession, custody, or control" in the grand jury context); In re Grand Jury Subpoena (Custodian of Records, Newparent, Inc.), 2004 WL 3019869, at *3 (S.D.N.Y. Dec. 29, 2004).

In the present matter, the "possession, custody, or control" standard extends the scope of Mr. Caldwell's production obligation to documents maintained in the following locations and repositories:

(a) Physical documents located at Mr. Caldwell's residence at 1140 Park Avenue, Apartment 14C, New York, New York 10128;

(b) Physical and electronic documents located at the offices of Caldwell Capital Advisors LLC ("CCA"), Mr. Caldwell's investment advisory firm, at 590 Madison Avenue, 22nd Floor, New York, New York 10022;

(c) Electronic documents stored on the CCA shared network drive, including files created, modified, or stored by Mr. Caldwell or at his direction;

(d) Electronic communications sent to or from Mr. Caldwell's personal email account, jrc@caldwellcap.com; and

(e) Electronic data stored on Mr. Caldwell's personal mobile device (iPhone 14 Pro, Tidewater Industries ID associated with the jrc@caldwellcap.com account).

Based on our preliminary assessment, which included consultation with Mr. Caldwell and an initial data mapping exercise conducted by our retained e-discovery vendor, Clearpath Document Solutions Inc. (project manager Raj K. Anand), the estimated volume of potentially responsive documents across all custodians and data sources is approximately 14,200 documents, comprising approximately 8.3 gigabytes of data. This estimate is subject to refinement as collection and processing proceed.

C. Subpoena Ad Testificandum — Testimonial Obligations

In addition to the documentary demands discussed above, the subpoena at issue commands Mr. Caldwell to appear and testify before Grand Jury No. 22-GJ-4481. The obligation to testify before the grand jury is independent of and separate from the obligation to produce documents. Even if all documentary production were complete, Mr. Caldwell would remain obligated to appear and testify unless excused by the government or the court.

A grand jury witness is obligated to answer all questions posed by the grand jurors and the government's attorney, subject only to valid claims of constitutional or evidentiary privilege. The most significant of these privileges in the grand jury context is the Fifth Amendment privilege against compelled self-incrimination, which permits a witness to refuse to answer specific questions where the answers might tend to incriminate the witness. See Kastigar v. United States, 406 U.S. 441 (1972). The scope of the Fifth Amendment privilege and its potential application to Mr. Caldwell's testimony are the subject of a separate memorandum currently in preparation.

It bears emphasis that through negotiation with AUSA Goldfarb, we intend to seek deferral of Mr. Caldwell's testimonial obligation pending the government's receipt and review of the document production. This is a common and widely accepted practice in the Southern District of New York. The rationale underlying this practice is practical: the government's review of the documentary production often enables more focused and efficient questioning of the witness, and deferral reduces the likelihood that the witness will need to appear for multiple sessions. The government's willingness to defer the testimonial component of a subpoena is, however, entirely discretionary. There is no legal entitlement to deferral, and the government may insist upon the witness's appearance at the original return date or at any other time during the life of the grand jury. Accordingly, while we are optimistic that AUSA Goldfarb will agree to a deferral, we should advise Mr. Caldwell that he must remain prepared to appear on relatively short notice if the government declines or subsequently revokes any deferral agreement.

III. Grounds for Motions to Quash or Modify

A. Standard for Motions to Quash — Fed. R. Crim. P. 17(c)(2)

Federal Rule of Criminal Procedure 17(c)(2) provides the sole procedural mechanism by which a grand jury subpoena recipient may challenge the subpoena before the issuing court. Rule 17(c)(2) states: "On motion made promptly, the court may quash or modify the subpoena if compliance would be unreasonable or oppressive." Fed. R. Crim. P. 17(c)(2). The rule vests substantial discretion in the district court to determine whether compliance with a particular subpoena would be unreasonable or oppressive under the circumstances.

The burden of demonstrating that compliance with a grand jury subpoena would be unreasonable or oppressive rests squarely on the movant — that is, the subpoena recipient who seeks to avoid compliance. See United States v. R. Enterprises, Inc., 498 U.S. 292, 301 (1991). This burden is a heavy one. The Supreme Court in R. Enterprises articulated the standard as follows: a motion to quash a grand jury subpoena duces tecum should be denied unless the district court determines that "there is no reasonable possibility that the category of materials the Government seeks will produce information relevant to the general subject of the grand jury's investigation." Id. at 301. This standard accords great deference to the grand jury's investigative prerogative and reflects the strong presumption of regularity that attaches to grand jury subpoenas.

Courts in the Second Circuit have consistently applied the R. Enterprises standard and have rarely granted motions to quash grand jury subpoenas. See, e.g., In re Grand Jury Subpoena, 223 F.3d 213, 216 (2d Cir. 2000) (reaffirming the strong presumption of regularity); In re Grand Jury Proceedings, 486 F.3d 85, 90 (3d Cir. 2007) (collecting cases from multiple circuits applying the R. Enterprises framework). The Southern District of New York, in particular, has a well-established practice of declining to quash grand jury subpoenas absent extraordinary circumstances, reflecting the court's recognition of the grand jury's essential role in the investigation and prosecution of federal crimes. See In re Grand Jury Subpoena Duces Tecum Dated Nov. 15, 1993, 846 F. Supp. at 13–14 (S.D.N.Y. 1994).

The practical import of this standard for our analysis is clear: unless the subpoena issued to Mr. Caldwell is facially defective, seeks documents with no conceivable relevance to the investigation, or imposes a burden so extraordinary as to constitute legal oppressiveness, a motion to quash will not succeed. As discussed in the following subsections, none of these circumstances is present here.

B. Unreasonableness. A grand jury subpoena may be deemed "unreasonable" within the meaning of Rule 17(c)(2) if it seeks documents or testimony that bear no conceivable relationship to the grand jury's investigation. The unreasonableness inquiry focuses on the relevance of the materials sought rather than on the burden of production. However, the relevance standard applicable to grand jury subpoenas is extraordinarily broad — far broader than the relevance standard applied to the admissibility of evidence at trial under Federal Rules of Evidence 401 and 402.

The Supreme Court has explained that a grand jury subpoena need not satisfy the evidentiary relevance requirements applicable at trial. See United States v. R. Enterprises, Inc., 498 U.S. at 297 ("[A grand jury] can investigate merely on suspicion that the law is being violated, or even just because it wants assurance that it is not.") (quoting United States v. Morton Salt Co., 338 U.S. 632, 642–43 (1950)). The government need demonstrate only that the documents or testimony sought "may be" relevant to a legitimate investigation; there is no requirement that the materials be directly relevant to a specific criminal charge, that they constitute admissible evidence, or that they pertain to conduct that ultimately results in an indictment. See id. at 301; In re Grand Jury Subpoena Duces Tecum, 767 F.2d 26, 29 (2d Cir. 1985) (noting that "the relevancy test for grand jury subpoenas is quite broad").

Applied to the subpoena at issue, the categories of documents demanded are facially and plainly relevant to the government's investigation into Mr. Stavros and Aegean Realty Partners. The subpoena seeks communications between Mr. Caldwell and Mr. Stavros, communications between Mr. Caldwell and Aegean Realty entities, and communications between Mr. Caldwell and the two banking institutions — Westlake Fidelity Bank, N.A. and Harborview Trust Company — that appear to have provided financing for real estate transactions at the center of the investigation. The specified categories of documents — relating to real estate investments, syndications, financings, appraisals, and fund transfers — are directly connected to the suspected criminal conduct (wire fraud, bank fraud, money laundering, and conspiracy) attributed to Mr. Stavros and Aegean Realty Partners.

Mr. Caldwell's involvement with Aegean Realty Partners was substantial. Based on information provided by Mr. Caldwell during our initial client interview:

• Mr. Caldwell co-invested in three Aegean Realty syndication vehicles — Aegean Realty Partners Fund III LP, Aegean Realty Partners Fund IV LP, and Aegean Realty Partners Fund V LP — with total limited partner capital commitments of approximately $10.0 million;

• Mr. Caldwell co-owned two commercial properties through joint venture limited liability companies with Mr. Stavros: (i) 318 West 47th Street Holdings LLC (a mixed-use property in Manhattan, equity contribution of approximately $2.6 million) and (ii) 780 Atlantic Avenue Ventures LLC (a residential conversion project in Brooklyn, equity contribution of approximately $1.624 million), for a combined equity investment of approximately $4.224 million; and

• Mr. Caldwell maintained regular business communications with Mr. Stavros and various Aegean Realty personnel between approximately 2014 and 2020, when the business relationship was effectively terminated following Mr. Caldwell's redemption from Fund V and his initiation of separation negotiations through outside counsel (Patricia Sheldon of Whitmore & Kessler LLP).

Given the nature and extent of Mr. Caldwell's business relationship with Mr. Stavros and the Aegean Realty entities, the documents sought by the subpoena are plainly relevant to the grand jury's investigation. Mr. Caldwell's financial records, communications, and transactional documents are precisely the type of evidence that the grand jury would need to evaluate in order to understand the structure and mechanics of the Aegean Realty syndication vehicles, the financing arrangements associated with the co-owned properties, and the flow of funds between and among the various entities and individuals involved.

Conclusion: The subpoena is not unreasonable as to its subject matter scope. A challenge to the subpoena on the ground of unreasonableness would not succeed.

C. Oppressiveness. A grand jury subpoena may also be quashed or modified if compliance would impose an "oppressive" burden on the recipient. See Fed. R. Crim. P. 17(c)(2). The oppressiveness inquiry is distinct from the unreasonableness inquiry and focuses on the practical burden of compliance rather than on the relevance of the materials sought. Courts consider a range of factors in assessing whether a subpoena is oppressive, including the volume of documents sought, the breadth of the time period covered, the financial and logistical resources of the recipient, and the time allowed for compliance. See In re Grand Jury Subpoena Duces Tecum Dated Nov. 15, 1993, 846 F. Supp. at 14; In re Grand Jury Subpoena, 2001 WL 940056, at *2 (S.D.N.Y. Aug. 20, 2001).

In the present matter, several features of the subpoena warrant consideration in connection with the oppressiveness analysis:

Volume. The estimated volume of approximately 14,200 documents / 8.3 gigabytes of data is substantial but not extraordinary by the standards of complex federal investigations. Courts in the Southern District of New York routinely oversee grand jury proceedings involving far larger document sets, and sophisticated recipients such as Mr. Caldwell — who maintains records through a registered investment advisory firm with dedicated administrative staff and information technology infrastructure — are generally expected to be capable of managing document collections of this magnitude.

Time Period. The date range specified in the subpoena — January 1, 2014 through December 31, 2021 — encompasses approximately eight years. While this is a broad time frame, it is proportionate to the known duration of Mr. Caldwell's business relationship with Mr. Stavros and the Aegean Realty entities. Mr. Caldwell first met Mr. Stavros in approximately 2014, Aegean Realty Partners was formed on March 12, 2014, and the last relevant transaction was Mr. Caldwell's redemption from Aegean Realty Partners Fund V LP in March 2020. An eight-year date range is not unusual in complex fraud investigations, particularly where the suspected conduct spans multiple years and involves multiple transactions.

Return Date. The original return date of December 9, 2022, provides only eighteen days from the date of service on November 21, 2022. Given the estimated volume of responsive materials and the need for thorough privilege review, this timeline is tight. However, the appropriate remedy for an impractical return date is a negotiated extension or, if necessary, a motion to modify the return date under Rule 17(c)(2), rather than a motion to quash the subpoena in its entirety. Courts distinguish between subpoenas that are substantively oppressive (i.e., that seek an unreasonable volume or scope of materials) and subpoenas that are merely operationally challenging due to tight timelines; the latter category is addressed through extension, not quashing.

Resources of the Recipient. Mr. Caldwell is a high-net-worth individual with substantial financial resources. He serves as the managing member and principal of Caldwell Capital Advisors LLC, a registered investment advisory firm with approximately $340 million in assets under management. His personal real estate portfolio is valued at approximately $78 million. Given these resources, a claim of financial oppressiveness — that is, a claim that the costs of collection, processing, review, and production would impose an undue financial hardship — would be unlikely to succeed. Courts have consistently held that the resources of the subpoena recipient are a relevant factor in the oppressiveness analysis and that recipients with the means to comply are expected to bear the costs of compliance. See, e.g., In re Grand Jury Subpoena, 2001 WL 940056, at *3 (S.D.N.Y. Aug. 20, 2001).

Conclusion: The subpoena is not oppressive in the legal sense. The volume of documents is manageable, the time period is proportionate to the relevant conduct, and Mr. Caldwell has the financial resources to bear the costs of compliance. However, the original return date of December 9, 2022 is impractical and requires extension. A motion to quash on oppressiveness grounds is not warranted; scope negotiation and extension requests are the appropriate course of action.

D. Relevance Challenges

As discussed in Section III.B above, the relevance standard applicable to grand jury subpoenas is extraordinarily broad. A subpoena recipient may not successfully challenge a grand jury subpoena by arguing that the documents sought are irrelevant unless the recipient can demonstrate that there is "no reasonable possibility" that the materials will produce information relevant to the general subject of the grand jury's investigation. United States v. R. Enterprises, Inc., 498 U.S. at 301.

Several additional principles bear emphasis in the context of relevance challenges to grand jury subpoenas:

First, a subpoena recipient cannot challenge relevance by arguing that he or she is merely a witness rather than a target or subject of the investigation. The grand jury is entitled to "every man's evidence," Branzburg, 408 U.S. at 688, and the fact that a witness has not been personally implicated in criminal conduct does not diminish the grand jury's authority to compel the production of the witness's documents and testimony. A witness's documents may shed light on the conduct of others, and the grand jury is entitled to investigate fully without limitation based on the status of any particular subpoena recipient.

Second, a subpoena recipient cannot successfully argue that the documents sought are unlikely to yield information about the target's conduct. The grand jury is an investigative body; its function is to gather evidence and determine whether probable cause exists to return an indictment. The relevance of particular documents cannot be assessed in advance with precision, and the grand jury is entitled to cast a wide net in pursuit of evidence that may bear upon the investigation. See United States v. Dionisio, 410 U.S. 1, 15 (1973); In re Grand Jury Subpoena Duces Tecum, 767 F.2d at 29.

Conclusion: A relevance-based challenge to the subpoena would not succeed. The materials sought are facially relevant to the investigation, and Mr. Caldwell's status as a witness does not provide a basis for resisting the subpoena.

E. Privilege as a Basis for Withholding (Not Quashing)

The attorney-client privilege and the work product doctrine are recognized as valid bases for withholding specific documents from production in response to a grand jury subpoena. However, the assertion of privilege with respect to particular documents does not generally support a blanket motion to quash the subpoena as a whole. Rather, the appropriate mechanism is to produce all responsive, non-privileged documents while withholding documents claimed to be privileged and providing the government with a privilege log that identifies each withheld document with sufficient specificity to permit an assessment of the privilege claim. See In re Grand Jury Subpoena Dated Jan. 4, 1984, 750 F.2d 223, 224–25 (2d Cir. 1984); United States v. Construction Products Research, Inc., 73 F.3d 464, 473 (2d Cir. 1996).

In the present matter, we anticipate that the privilege review will identify a limited number of documents subject to the attorney-client privilege and/or the work product doctrine. Based on our preliminary review and Mr. Caldwell's initial identification of counsel who provided legal advice during the relevant period, the principal categories of privileged communications are expected to include:

(1) Communications between Mr. Caldwell and the law firm of Whitmore & Kessler LLP — specifically, his primary contact attorney, Patricia Sheldon — relating to the 2019 separation negotiation with Mr. Stavros. These communications involved legal advice regarding the unwinding of Mr. Caldwell's joint venture interests and his redemption rights under the Aegean Realty fund agreements, and they are squarely within the scope of the attorney-client privilege.

(2) Communications between Mr. Caldwell and Thornberg & Whitfield CPAs — specifically, Helen R. Thornberg — to the extent that such communications involved the rendering of tax advice at the direction of counsel. Under the Kovel doctrine, communications with a non-attorney retained by or at the direction of an attorney for the purpose of enabling the attorney to render legal advice may be protected by the attorney-client privilege. See United States v. Kovel, 296 F.2d 918, 921–22 (2d Cir. 1961). Not all communications with Thornberg & Whitfield will qualify; the privilege attaches only to those communications made at the direction of counsel for the purpose of facilitating the provision of legal advice.

A separate privilege review guidelines memorandum is being prepared to establish the protocols and standards that will govern the privilege review process, including the criteria for identifying potentially privileged documents, the procedures for escalating privilege determinations, and the format and content requirements for the privilege log.

It is important to note that the crime-fraud exception to the attorney-client privilege is not implicated with respect to Mr. Caldwell's own communications. The crime-fraud exception provides that the attorney-client privilege does not protect communications made in furtherance of a crime or fraud. See In re Grand Jury Subpoena, 731 F.2d 1032, 1038 (2d Cir. 1984); Clark v. United States, 289 U.S. 1, 15 (1933). Based on all information currently available, there is no indication that Mr. Caldwell sought legal advice from any attorney for the purpose of furthering criminal conduct. Mr. Caldwell's consultations with Whitmore & Kessler LLP concerned the legitimate negotiation of a business separation from Mr. Stavros, and his consultations with Thornberg & Whitfield CPAs concerned routine tax compliance matters. Accordingly, the crime-fraud exception should not apply to any of Mr. Caldwell's privileged communications, and we do not anticipate that the government will challenge any privilege assertions on this basis.

IV. Timing Requirements and Rolling Production Practice

A. Return Date and Extensions

As noted above, the original return date specified on the face of the subpoena is December 9, 2022 — a mere eighteen days from the date of service on November 21, 2022. Given the estimated volume of approximately 14,200 potentially responsive documents comprising approximately 8.3 gigabytes of data, and the need for thorough collection, processing, review, and privilege analysis, compliance by December 9, 2022 is not feasible as a practical matter.

It is, however, well-established and standard practice in the Southern District of New York for the government to grant reasonable extensions of grand jury subpoena return dates, particularly where the volume of responsive materials is large, the recipient has engaged counsel and is proceeding in good faith toward compliance, and the extension will not prejudice the grand jury's investigation. Extensions are typically negotiated informally between counsel for the subpoena recipient and the assigned AUSA. In most cases, this negotiation occurs through an exchange of letters or emails, and no formal court filing is required or expected.

If the government refuses to agree to a reasonable extension, the subpoena recipient may move the court for a modification of the return date under Rule 17(c)(2). However, such motions are rarely necessary, as AUSAs in the Southern District of New York are generally receptive to reasonable extension requests from cooperating witnesses who are proceeding in good faith.

We have already submitted a letter to AUSA Goldfarb, dated today, December 7, 2022, requesting an extension of the return date from December 9, 2022 to January 20, 2023. The letter explains the estimated volume of responsive materials, describes the collection and processing efforts underway, and proposes a rolling production schedule as described in Section IV.B below. We anticipate that AUSA Goldfarb will agree to this extension, based on our assessment of the cooperative posture that the government has thus far maintained with respect to Mr. Caldwell's involvement in the investigation. In the event that the initial extension to January 20, 2023 proves insufficient to complete the review of all potentially responsive materials, a second extension should be sought in a timely manner.

B. Rolling Production

Rolling production — the practice of producing documents in tranches as they are reviewed, rather than withholding all production until the final return date — is a widely accepted and encouraged practice in grand jury proceedings in the Southern District of New York. Rolling production offers significant advantages to both the subpoena recipient and the government:

• Demonstrates good faith compliance. By producing documents on an ongoing basis, the recipient demonstrates that it is diligently working toward full compliance and is not engaging in delay or obstruction. This is particularly important for witnesses like Mr. Caldwell, whose continued status as a witness (rather than a subject or target) may depend in part on the government's assessment of his level of cooperation.

• Allows the government to begin reviewing documents sooner. The government's investigation does not halt while the subpoena recipient completes its review. By producing documents in tranches, the recipient enables the government to begin its review and analysis of the materials at an earlier stage, which may in turn advance the investigation and reduce the overall timeline.

• Provides the recipient with additional time to complete review. Rolling production effectively extends the period available for the review of the full document collection, because early tranches are produced at or near the return date while later tranches are produced on a negotiated schedule. This is particularly beneficial where the volume of responsive materials is large and thorough privilege review is required.

Rolling production is not a legal right, and the government is not obligated to accept a rolling production proposal. However, in practice, AUSAs in the Southern District of New York almost always agree to rolling production when it is requested in good faith and accompanied by a reasonable proposed schedule. The government's interest is in receiving responsive documents, not in imposing artificial deadlines that may compromise the quality or completeness of the production.

For the present matter, we propose the following rolling production schedule, subject to AUSA Goldfarb's agreement:

• First production: On or before January 20, 2023 (the proposed extended return date), consisting of documents from the custodial sources most readily accessible and least likely to raise privilege issues — principally, transactional documents from Mr. Caldwell's files at CCA and financial records relating to the Aegean Realty fund investments.

• Subsequent productions: At approximately two- to three-week intervals following the first production, with each subsequent tranche consisting of additional reviewed documents organized by custodial source or document category, until the production is complete.

• Final production: Upon completion of the privilege review, accompanied by a comprehensive privilege log identifying all documents withheld on the basis of privilege.

Each production tranche should be accompanied by a transmittal letter addressed to AUSA Goldfarb identifying the Bates range of the documents produced, the custodial sources from which the documents were drawn, and a reservation of all rights and objections with respect to the scope of the subpoena and the privilege status of any documents withheld.

C. No Formal Court Deadline Until Compliance Demanded

Unlike civil subpoenas governed by Federal Rule of Civil Procedure 45, which are subject to more formal procedural mechanisms for enforcement, grand jury subpoena return dates are typically enforced through the AUSA and, ultimately, by the grand jury's authority to compel compliance through contempt proceedings. There is no automatic consequence of failing to comply on the precise return date specified in the subpoena; rather, the enforcement mechanism is the government's discretion to seek a court order compelling compliance or to initiate contempt proceedings if the recipient fails to comply without lawful justification.

As a practical matter, this means that informal extension agreements negotiated between the recipient's counsel and the assigned AUSA are generally sufficient to govern the timing of production, and no formal court approval is required. This is the standard practice in the Southern District of New York, and it is the approach we are pursuing in this matter.

However, it is essential that all extension agreements and understandings regarding the production schedule be documented in writing — whether by letter, email, or other written communication — to protect against any future claim by the government that Mr. Caldwell failed to comply with the subpoena in a timely manner. Written documentation of extension agreements serves as evidence of the parties' mutual understanding and provides a clear record that the recipient acted in good faith and with the government's consent. We will maintain a comprehensive file of all correspondence with AUSA Goldfarb regarding the production schedule and any modifications thereto.

V. Penalties for Non-Compliance

The penalties for non-compliance with a grand jury subpoena are severe, and the consequences of failing to comply — whether through outright refusal, delay, partial compliance, or destruction of responsive materials — can be devastating for the non-compliant witness. This section reviews the principal categories of penalties and their relevance to Mr. Caldwell's situation.

A. Civil Contempt

A witness who fails to comply with a grand jury subpoena without lawful excuse may be held in civil contempt. The statutory basis for civil contempt of recalcitrant grand jury witnesses is 28 U.S.C. § 1826, which provides that whenever a witness in any grand jury proceeding "refuses without just cause shown to comply with an order of the court to testify or provide other information," the court may confine the witness for a period not to exceed eighteen months or "until such time as the witness is willing to give such testimony or provide such information." 28 U.S.C. § 1826(a).

Civil contempt under Section 1826 is coercive in nature — its purpose is to compel compliance with the subpoena, not to punish the witness for past disobedience. Accordingly, the witness holds the "keys to the jail" and may be released at any time by agreeing to comply with the court's order. In addition to confinement, the court may impose coercive fines designed to compel compliance, which may escalate over time until the witness complies.

The maximum period of confinement under Section 1826(a) is eighteen months or the life of the grand jury, whichever is shorter. While Mr. Caldwell is a cooperating witness who has every intention of complying with the subpoena, the civil contempt provisions underscore the seriousness with which the courts treat non-compliance and reinforce the importance of timely and complete production.

B. Criminal Contempt

In addition to civil contempt, willful failure to comply with a grand jury subpoena may constitute criminal contempt under 18 U.S.C. § 401. Unlike civil contempt, criminal contempt is punitive rather than coercive — its purpose is to punish the witness for past disobedience of a court order, rather than to compel future compliance. A finding of criminal contempt requires proof that the witness willfully and deliberately disobeyed the court's order, as distinguished from mere inadvertence or inability to comply.

Criminal contempt is a serious matter carrying potential penalties of fines and imprisonment. While the precise penalties for criminal contempt are determined by the court and depend on the severity of the offense, the consequences can be substantial, particularly where the court concludes that the witness's non-compliance was deliberate and calculated to obstruct the grand jury's investigation. See, e.g., In re Grand Jury Witness, 835 F.2d 437, 440 (2d Cir. 1987) (discussing criminal contempt sanctions for grand jury witnesses).

C. Obstruction of Justice

Perhaps the most serious consequence of non-compliance — and the one most relevant to Mr. Caldwell's document preservation obligations — is the potential for criminal prosecution under the federal obstruction of justice statutes. The destruction, alteration, or concealment of documents responsive to a grand jury subpoena may constitute a violation of one or more of the following statutes:

• 18 U.S.C. § 1503 (Obstruction of Court Proceedings). Section 1503 prohibits corruptly endeavoring to influence, obstruct, or impede the due administration of justice. This provision has been applied to the destruction or concealment of documents in response to a grand jury subpoena. Violations of Section 1503 are punishable by imprisonment of up to ten years.

• 18 U.S.C. § 1519 (Destruction, Alteration, or Falsification of Records in Federal Investigations). Enacted as part of the Sarbanes-Oxley Act of 2002, Section 1519 makes it a crime to knowingly destroy, alter, conceal, cover up, falsify, or make a false entry in any record, document, or tangible object with the intent to impede, obstruct, or influence the investigation or proper administration of any matter within the jurisdiction of any department or agency of the United States. Section 1519 is notably broad and does not require a pending proceeding; it applies to the destruction of documents in anticipation of a federal investigation. Violations are punishable by imprisonment of up to twenty years.

These are serious felony offenses carrying substantial prison terms, and their applicability to the destruction or concealment of documents responsive to a grand jury subpoena is well established. See, e.g., United States v. Quattrone, 441 F.3d 153 (2d Cir. 2006) (upholding obstruction conviction based on destruction of documents in connection with a federal investigation); Kraft Quill CPAs LLP v. United States, 544 U.S. 696 (2005) (discussing the scope of obstruction statutes in the context of document destruction).

In light of these risks, a document preservation and litigation hold notice was issued to Mr. Caldwell and to Caldwell Capital Advisors LLC immediately upon our engagement in this matter. The litigation hold notice, dated December 5, 2022, instructs Mr. Caldwell and all relevant CCA personnel to preserve all documents and electronically stored information that may be responsive to the subpoena, including emails, text messages, voicemails, documents stored on shared drives or cloud services, and physical documents. The notice specifically prohibits the destruction, deletion, alteration, or concealment of any potentially responsive materials, and it directs the suspension of any routine document destruction or data retention policies that might otherwise result in the loss of responsive materials. Compliance with the litigation hold notice must be monitored on an ongoing basis throughout the pendency of the grand jury investigation.

D. Practical Consequences of Non-Compliance

Beyond the formal legal penalties described above, non-compliance or partial compliance with a grand jury subpoena can have significant practical consequences for the subpoena recipient. Even short of contempt proceedings or obstruction charges, a failure to cooperate fully and in a timely manner can result in increased government scrutiny of the witness's own conduct. A witness who is perceived as uncooperative, evasive, or obstructive is far more likely to attract the attention of prosecutors and investigators, and such behavior may lead to an elevation of the witness's status from witness to subject or target of the investigation.

Conversely, full and timely cooperation with the grand jury subpoena reinforces Mr. Caldwell's status as a cooperating witness, demonstrates his lack of involvement in the suspected criminal conduct, and maintains a constructive and professional relationship with the government. In matters involving complex financial investigations, the government routinely distinguishes between cooperative witnesses — who are treated with courtesy and professional respect — and non-cooperative witnesses — who may find themselves subjected to additional subpoenas, search warrants, or criminal exposure assessments. We strongly advise Mr. Caldwell to adopt and maintain a posture of full cooperation throughout this process.

VI. Analysis of the Specific Subpoena at Issue

A. Facial Validity

The subpoena at issue was issued by a duly empaneled grand jury — Grand Jury No. 22-GJ-4481 — sitting in the United States District Court for the Southern District of New York. It was issued by AUSA Miriam T. Goldfarb, who is authorized to act on behalf of the grand jury in her capacity as an attorney for the United States assigned to the investigation. The subpoena satisfies the procedural requirements of Federal Rule of Criminal Procedure 17(a) and (c), including proper issuance, proper service, and a description of the documents sought with sufficient particularity.

The four specified categories of documents demanded by the subpoena are as follows:

(a) All documents and communications relating to real estate investments, co-investments, or syndications involving Aegean Realty Partners LLC or any of its affiliated entities or funds, including but not limited to Aegean Realty Partners Fund III LP, Aegean Realty Partners Fund IV LP, Aegean Realty Partners Fund V LP, 318 West 47th Street Holdings LLC, and 780 Atlantic Avenue Ventures LLC;

(b) All documents and communications relating to any loan, financing arrangement, capital raise, or credit facility involving any property or properties in which Jonathan R. Caldwell and Marcus W. Stavros had a direct or indirect interest, including but not limited to financing obtained from or through Westlake Fidelity Bank, N.A. and Harborview Trust Company;

(c) All appraisals, valuations, property inspection reports, environmental assessments, and similar documents prepared for, commissioned by, or received by Jonathan R. Caldwell in connection with any property or properties described in categories (a) or (b); and

(d) All documents and communications relating to any transfer, wire, or movement of funds between or among accounts held, controlled, or beneficially owned by Jonathan R. Caldwell (or any entity controlled by Jonathan R. Caldwell) and accounts held, controlled, or beneficially owned by Marcus W. Stavros (or any entity controlled by Marcus W. Stavros), including but not limited to any Aegean Realty entity.

The date range specified in the subpoena — January 1, 2014 through December 31, 2021 — is proportionate to the known relationship period between Mr. Caldwell and Mr. Stavros. Mr. Caldwell met Mr. Stavros in approximately early 2014; Aegean Realty Partners LLC was formed on March 12, 2014; the earliest co-investment identified by Mr. Caldwell (his initial commitment to Aegean Realty Partners Fund III LP) was made in or about June 2014; and the last substantive transaction in the business relationship was Mr. Caldwell's redemption from Aegean Realty Partners Fund V LP in March 2020. The end date of December 31, 2021 provides a reasonable additional period to capture any post-separation communications or trailing financial transactions.

Conclusion: The subpoena is facially valid. It was issued by a duly empaneled grand jury through an authorized AUSA, it describes the documents sought with reasonable particularity, and it covers a date range that is proportionate to the relevant conduct and business relationship. There are no facial defects that would support a challenge to the validity of the subpoena.

B. Scope Negotiation Opportunities

While a motion to quash the subpoena is not warranted for the reasons discussed in Section III above, informal scope negotiation with AUSA Goldfarb is both appropriate and standard practice. It is common for counsel representing grand jury subpoena recipients to engage in discussions with the assigned AUSA regarding the scope and parameters of the documentary demands, with the objective of clarifying ambiguous terms, narrowing overly broad categories, and reducing the burden of collection and review without undermining the government's legitimate investigative interests.

In this matter, we have identified the following possible areas for scope negotiation:

(i) Limiting the date range on certain categories. For category (a) (investments, co-investments, and syndications involving Aegean Realty entities), the full date range of January 1, 2014 through December 31, 2021 is appropriate. However, for category (c) (appraisals, valuations, and property inspection reports), it may be possible to narrow the date range to the period during which specific properties were acquired, financed, or refinanced — typically a narrower window than the full eight-year range. Such a narrowing would reduce the volume of responsive documents without depriving the government of relevant materials.

(ii) Clarifying the meaning of "direct or indirect interest." Category (b) encompasses loans, financing arrangements, and capital raises involving properties in which Mr. Caldwell and Mr. Stavros had "a direct or indirect interest." The phrase "indirect interest" is potentially broad and could encompass entities in which Mr. Caldwell had no meaningful involvement or knowledge — for example, entities in which Mr. Caldwell's limited partnership interest in an Aegean Realty fund gave him an indirect, passive interest in underlying properties. We should discuss with AUSA Goldfarb whether the government intends this category to capture only properties in which Mr. Caldwell had an active, direct investment interest or also passive, indirect interests through fund vehicles.

(iii) Excluding duplicative documents across custodial sources. Where the same document exists in multiple custodial sources — for example, a document stored both on the CCA shared drive and in Mr. Caldwell's personal email — it may be possible to agree with AUSA Goldfarb that a single production of the document (from one source) is sufficient, thereby reducing the volume and cost of the production.

Any scope modifications agreed upon with AUSA Goldfarb should be documented in writing — ideally through an exchange of letters — to ensure a clear record of the agreed-upon parameters of the production obligation.

C. Testimonial Deferral

As discussed in Section II.C above, the subpoena commands Mr. Caldwell's testimony before the grand jury in addition to the production of documents. We recommend requesting deferral of the testimonial component of the subpoena pending the government's receipt and review of the documentary production. This is standard practice in the Southern District of New York and is routinely granted by AUSAs when the subpoena recipient is cooperating with the documentary production and has engaged experienced counsel.

The rationale for testimonial deferral is straightforward: the government's review of the documents produced will typically inform the scope and focus of the grand jury's questioning, resulting in a more efficient and productive testimony session. Deferral also benefits the witness and his counsel by providing additional time to prepare for testimony, including the development of a comprehensive understanding of the documentary record. We will include our request for testimonial deferral in our ongoing correspondence with AUSA Goldfarb, and we anticipate that the request will be granted.

If testimony is ultimately required — as it almost certainly will be, at some point during the life of the grand jury — additional analysis of Fifth Amendment considerations will be necessary. A separate memorandum on Fifth Amendment and testimonial privilege considerations is currently in preparation and will address, among other topics: (a) the scope of Mr. Caldwell's Fifth Amendment privilege, if any, with respect to specific questions that may be posed by the grand jury; (b) the procedural and strategic considerations associated with asserting the Fifth Amendment privilege before the grand jury; and (c) the potential consequences of invoking the privilege, including the possibility that the government may offer use immunity under 18 U.S.C. §§ 6002–6003 to compel testimony.

VII. Conclusions and Recommendations

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

1. The subpoena is facially valid. It was issued by a duly empaneled grand jury through an authorized AUSA, describes the documents sought with reasonable particularity, and covers a date range proportionate to the relevant conduct and business relationship. There are no facial defects or procedural irregularities that would support a challenge to the validity of the subpoena.

2. A motion to quash is not warranted. The subject matter of the subpoena is plainly relevant to the grand jury's investigation into suspected wire fraud, bank fraud, money laundering, and conspiracy involving Mr. Stavros and Aegean Realty Partners LLC. The scope of the document demands is not unreasonable given the nature and extent of Mr. Caldwell's business relationship with Mr. Stavros and the Aegean Realty entities. The burden on Mr. Caldwell, while substantial in terms of volume and logistical complexity, does not rise to legal oppressiveness given his considerable financial resources and the seriousness of the underlying investigation. A motion to quash would be unsuccessful and, moreover, would risk signaling a non-cooperative posture to the government.

3. Scope negotiation is appropriate. We should continue discussions with AUSA Goldfarb to clarify and, where possible, narrow the scope of the document demands, with the objective of reducing the burden of collection and review without impairing the government's investigative interests. Specific areas for negotiation include limiting the date range on certain categories, clarifying the meaning of "direct or indirect interest," and addressing the treatment of duplicative documents across custodial sources. All agreements regarding scope modifications should be memorialized in writing.

4. An extension of the return date is essential. The original return date of December 9, 2022 is impractical given the estimated volume of approximately 14,200 documents comprising approximately 8.3 gigabytes of data across multiple custodians and data sources. Our extension request — seeking a revised return date of January 20, 2023, with a rolling production schedule — was submitted to AUSA Goldfarb on December 7, 2022. If the initial extension proves insufficient to complete the review, a second extension should be sought promptly and in good faith.

5. Rolling production should be employed. We recommend producing documents in tranches as the review is completed, beginning with the first production on or before the extended return date and continuing at approximately two- to three-week intervals until the production is complete. Each production tranche should be accompanied by a transmittal letter identifying the Bates range of the documents produced and reserving all rights and objections. This approach demonstrates good faith compliance, enables the government to begin its review at an earlier stage, and is the standard and expected practice in the Southern District of New York.

6. Testimony should be deferred. We should request that Mr. Caldwell's testimony obligation be deferred pending the government's receipt and review of the documentary production. This is a routine accommodation that is regularly granted by AUSAs in the Southern District of New York and serves the interests of both the government and the witness. We will include this request in our ongoing correspondence with AUSA Goldfarb.

7. Strict compliance is imperative. Given the serious consequences of non-compliance — including civil contempt (confinement for up to eighteen months), criminal contempt (fines and imprisonment), obstruction of justice charges (imprisonment for up to twenty years under 18 U.S.C. § 1519), and the potential escalation of Mr. Caldwell's status from witness to subject or target — we must ensure timely, complete, and good-faith compliance with the subpoena. The document preservation and litigation hold notice was issued to Mr. Caldwell and Caldwell Capital Advisors LLC on December 5, 2022, and compliance with the hold must be monitored on an ongoing basis. Collection from all identified custodians and data sources should proceed immediately, and processing by our retained e-discovery vendor, Clearpath Document Solutions Inc. (project manager Raj K. Anand), should commence as soon as data collection is complete.

8. Privilege review must be thorough. Documents subject to the attorney-client privilege or the work product doctrine must be identified during the review process and withheld from production. The principal categories of privileged communications are expected to include communications between Mr. Caldwell and Whitmore & Kessler LLP (Patricia Sheldon) relating to the 2019 separation negotiation with Mr. Stavros, and communications between Mr. Caldwell and Thornberg & Whitfield CPAs (Helen R. Thornberg) where tax advice was rendered at the direction of counsel. A comprehensive privilege log must be prepared and delivered to the government with the final production. Separate privilege review guidelines are being prepared and will be circulated to the review team prior to the commencement of document review.

VIII. Closing

I am available to discuss this analysis and the recommendations set forth herein at your convenience. Please do not hesitate to contact me if you would like to schedule a meeting to review the memorandum in detail or to discuss the strategy for AUSA engagement, the document collection and review process, or any other aspect of this matter.

As noted above, two related memoranda are currently in preparation and will be circulated upon completion:

(1) Fifth Amendment and Testimonial Privilege Analysis — addressing the scope of Mr. Caldwell's Fifth Amendment privilege, the strategic considerations associated with invoking the privilege before the grand jury, and the potential for government-conferred use immunity; and

(2) Privilege Review Guidelines Memorandum — establishing the protocols, standards, and procedures governing the review of documents for attorney-client privilege a

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
MEMORANDUM
TO: Conrad Ashby, Partner, White Collar & Investigations Practice Group
FROM: Daniel Obi, Associate, Banking & Finance Practice Group
DATE: December 7, 2022
RE: Grand Jury Subpoena Compliance Obligations — Second Circuit Law; Grand Jury No. 22-GJ-4481, U.S. District Court for the Southern District of New York
MATTER NO.: 1034-00001
CLIENT: Jonathan R. Caldwell
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I. Introduction and Purpose
This memorandum analyzes the legal standards governing compliance with the federal grand jury subpoena duces tecum and ad testificandum issued on November 18, 2022, in connection with Grand Jury No. 22-GJ-4481, which was served on our client, Jonathan R. Caldwell, on November 21, 2022, at his residence located at 1140 Park Avenue, Apartment 14C, New York, New York 10128. The subpoena was issued by Assistant United States Attorney Miriam T. Goldfarb of the Complex Frauds & Cybercrime Unit, United States Attorney's Office for the Southern District of New York, 500 Pearl Street, New York, New York 10007. The original return date specified on the face of the subpoena is December 9, 2022.
The subpoena seeks both the production of documents and testimony before the grand jury. It commands Mr. Caldwell to produce all documents and communications between himself and Marcus W. Stavros, between himself and any entity affiliated with or operating under the name Aegean Realty Partners LLC, and between himself and Westlake Fidelity Bank, N.A. or Harborview Trust Company, for the period from January 1, 2014 through December 31, 2021. The scope of the subpoena encompasses four specified categories of documents: (a) real estate investments, co-investments, or syndications involving Aegean Realty Partners or its affiliated funds; (b) any loan, financing arrangement, or capital raise involving properties in which Mr. Caldwell and Mr. Stavros had a direct or indirect interest; (c) any appraisal, valuation, or property inspection report for such properties; and (d) any transfer or movement of funds between accounts held or controlled by Mr. Caldwell and accounts held or controlled by Mr. Stavros or any Aegean Realty entity. In addition, the subpoena commands Mr. Caldwell's personal testimony before the grand jury.
Based on our preliminary communications with AUSA Goldfarb and the information available to us at this time, Mr. Caldwell is believed to be a witness — not a target or subject — in a federal investigation directed at his former business associate, Marcus W. Stavros, and Stavros's real estate investment firm, Aegean Realty Partners LLC. The investigation is understood to involve suspected violations of federal criminal law, including 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. While the precise contours of the government's investigation have not been disclosed — and indeed, the government is under no obligation to disclose them — the categories of documents sought suggest that the investigation is focused on potentially fraudulent real estate syndication transactions, inflated property appraisals used to obtain bank financing, and the laundering of proceeds through various entity structures controlled or influenced by Mr. Stavros.
This memorandum addresses the following topics:
1. The legal framework governing compliance with federal grand jury subpoenas, including the broad investigative authority of the grand jury, the obligations attendant to a subpoena duces tecum, and the obligations attendant to a subpoena ad testificandum;
2. The grounds available under Federal Rule of Criminal Procedure 17(c)(2) for motions to quash or modify a grand jury subpoena, including unreasonableness, oppressiveness, relevance challenges, and privilege-based objections;
3. Timing requirements and rolling production practice in the Southern District of New York, including procedures for requesting extensions of the return date and the benefits and mechanics of rolling production;
4. The penalties for non-compliance with a grand jury subpoena, including civil contempt, criminal contempt, obstruction of justice, and the practical consequences of a non-cooperative posture; and
5. Conclusions and recommendations for the handling of this matter, including our assessment that the subpoena is facially valid, that a motion to quash is not warranted, that scope negotiation and an extension of the return date are the appropriate course, and that strict and timely compliance is imperative.
II. Legal Framework for Grand Jury Subpoena Compliance
A. Broad Investigative Authority of the Grand Jury
The federal grand jury occupies a unique and central role in the administration of criminal justice. The Supreme Court has long recognized that the grand jury possesses broad investigative powers and functions as an arm of the court with wide latitude to investigate potential criminal activity. See United States v. R. Enterprises, Inc., 498 U.S. 292, 297 (1991) ("The grand jury occupies a unique role in our criminal justice system. It is an investigatory body charged with the responsibility of determining whether or not a crime has been committed."); Branzburg v. Hayes, 408 U.S. 665, 688 (1972) (noting the "longstanding principle that the public has a right to every man's evidence" and that this right is "particularly applicable to grand jury proceedings") (internal quotation marks omitted). The grand jury's investigative authority is necessarily broad because its task is not merely to determine whether a particular charge should be brought, but to ascertain whether a crime has been committed and, if so, who committed it. See Blair v. United States, 250 U.S. 273, 282 (1919).
Federal Rule of Criminal Procedure 17(a) provides the procedural mechanism by which the grand jury exercises its investigative authority. Rule 17(a) authorizes the issuance of subpoenas commanding the attendance and testimony of witnesses and, under Rule 17(c), the production of "any books, papers, documents, data, or other objects the subpoena designates." Fed. R. Crim. P. 17(a), (c)(1). A grand jury subpoena is presumed to have been issued in good faith and in furtherance of a legitimate investigation. United States v. R. Enterprises, Inc., 498 U.S. at 301 (holding that grand jury subpoenas are "presumed to be reasonable" and that "the burden of showing unreasonableness must be on the recipient who seeks to avoid compliance"). This presumption of regularity attaches to the subpoena issued in the present matter, and as discussed below, nothing in the facts known to us at this time would overcome that presumption.
Importantly, the recipient of a grand jury subpoena is not entitled to know the nature, scope, or direction of the grand jury's investigation as a precondition to compliance. The secrecy of grand jury proceedings — protected by Federal Rule of Criminal Procedure 6(e) — serves essential functions, including preventing the flight of targets, protecting the grand jurors from interference, and encouraging the free and full disclosure of information by witnesses. See Douglas Oil Co. v. Petrol Stops Nw., 441 U.S. 211, 218–19 (1979). A witness may not refuse to comply with a grand jury subpoena on the ground that the witness does not understand the relevance of the documents or testimony sought, nor may a witness insist upon an explanation from the government before furnishing the requested evidence. See Blair, 250 U.S. at 282 ("[A witness] is not entitled to set limits to the investigation that the grand jury may conduct.").
It is a fundamental principle that every citizen has a duty to provide evidence to the grand jury when lawfully summoned. See Kastigar v. United States, 406 U.S. 441, 443–44 (1972) ("The duty to testify has long been recognized as a basic obligation that every citizen owes his Government."). This duty extends to both testimonial and documentary evidence. Compliance with a grand jury subpoena is not optional, and a witness may resist the subpoena only on the basis of a recognized legal privilege or constitutional protection — most commonly, the Fifth Amendment privilege against self-incrimination, the attorney-client privilege, or the work product doctrine — or by demonstrating to the court that the subpoena is unreasonable or oppressive within the meaning of Rule 17(c)(2). Absent such a showing, the witness is obligated to comply fully and promptly.
B. Subpoena Duces Tecum — Documentary Obligations
Federal Rule of Criminal Procedure 17(c) governs subpoenas duces tecum — that is, subpoenas commanding the production of documents and tangible evidence. Rule 17(c)(1) provides that a "subpoena may order the witness to produce any books, papers, documents, data, or other objects the subpoena designates." The rule requires that the subpoena describe the documents sought with "reasonable particularity," such that the recipient can identify, locate, and produce the responsive materials. See In re Grand Jury Subpoena Duces Tecum Dated Nov. 15, 1993, 846 F. Supp. 11, 13 (S.D.N.Y. 1994); United States v. Gurney, 558 F.2d 1202, 1209 (5th Cir. 1977) (discussing the particularity requirement in the context of grand jury subpoenas).
The recipient of a grand jury subpoena duces tecum is obligated to produce all responsive, non-privileged documents within the recipient's "possession, custody, or control." This standard is well-established and has been broadly construed by courts in the Second Circuit and elsewhere. The concept of "possession, custody, or control" is not limited to documents in the physical possession of the subpoena recipient. Rather, it encompasses documents held by agents, employees, accountants, attorneys, and other persons or entities on behalf of the recipient, so long as the recipient has the legal right, authority, or practical ability to obtain the documents. See In re Grand Jury Subpoenas Dated Mar. 19, 2002 & Aug. 2, 2002, 318 F.3d 379, 383–84 (2d Cir. 2003) (discussing the scope of "possession, custody, or control" in the grand jury context); In re Grand Jury Subpoena (Custodian of Records, Newparent, Inc.), 2004 WL 3019869, at *3 (S.D.N.Y. Dec. 29, 2004).
In the present matter, the "possession, custody, or control" standard extends the scope of Mr. Caldwell's production obligation to documents maintained in the following locations and repositories:
(a) Physical documents located at Mr. Caldwell's residence at 1140 Park Avenue, Apartment 14C, New York, New York 10128;
(b) Physical and electronic documents located at the offices of Caldwell Capital Advisors LLC ("CCA"), Mr. Caldwell's investment advisory firm, at 590 Madison Avenue, 22nd Floor, New York, New York 10022;
(c) Electronic documents stored on the CCA shared network drive, including files created, modified, or stored by Mr. Caldwell or at his direction;
(d) Electronic communications sent to or from Mr. Caldwell's personal email account, jrc@caldwellcap.com; and
(e) Electronic data stored on Mr. Caldwell's personal mobile device (iPhone 14 Pro, Tidewater Industries ID associated with the jrc@caldwellcap.com account).
Based on our preliminary assessment, which included consultation with Mr. Caldwell and an initial data mapping exercise conducted by our retained e-discovery vendor, Clearpath Document Solutions Inc. (project manager Raj K. Anand), the estimated volume of potentially responsive documents across all custodians and data sources is approximately 14,200 documents, comprising approximately 8.3 gigabytes of data. This estimate is subject to refinement as collection and processing proceed.
C. Subpoena Ad Testificandum — Testimonial Obligations
In addition to the documentary demands discussed above, the subpoena at issue commands Mr. Caldwell to appear and testify before Grand Jury No. 22-GJ-4481. The obligation to testify before the grand jury is independent of and separate from the obligation to produce documents. Even if all documentary production were complete, Mr. Caldwell would remain obligated to appear and testify unless excused by the government or the court.
A grand jury witness is obligated to answer all questions posed by the grand jurors and the government's attorney, subject only to valid claims of constitutional or evidentiary privilege. The most significant of these privileges in the grand jury context is the Fifth Amendment privilege against compelled self-incrimination, which permits a witness to refuse to answer specific questions where the answers might tend to incriminate the witness. See Kastigar v. United States, 406 U.S. 441 (1972). The scope of the Fifth Amendment privilege and its potential application to Mr. Caldwell's testimony are the subject of a separate memorandum currently in preparation.
It bears emphasis that through negotiation with AUSA Goldfarb, we intend to seek deferral of Mr. Caldwell's testimonial obligation pending the government's receipt and review of the document production. This is a common and widely accepted practice in the Southern District of New York. The rationale underlying this practice is practical: the government's review of the documentary production often enables more focused and efficient questioning of the witness, and deferral reduces the likelihood that the witness will need to appear for multiple sessions. The government's willingness to defer the testimonial component of a subpoena is, however, entirely discretionary. There is no legal entitlement to deferral, and the government may insist upon the witness's appearance at the original return date or at any other time during the life of the grand jury. Accordingly, while we are optimistic that AUSA Goldfarb will agree to a deferral, we should advise Mr. Caldwell that he must remain prepared to appear on relatively short notice if the government declines or subsequently revokes any deferral agreement.
III. Grounds for Motions to Quash or Modify
A. Standard for Motions to Quash — Fed. R. Crim. P. 17(c)(2)
Federal Rule of Criminal Procedure 17(c)(2) provides the sole procedural mechanism by which a grand jury subpoena recipient may challenge the subpoena before the issuing court. Rule 17(c)(2) states: "On motion made promptly, the court may quash or modify the subpoena if compliance would be unreasonable or oppressive." Fed. R. Crim. P. 17(c)(2). The rule vests substantial discretion in the district court to determine whether compliance with a particular subpoena would be unreasonable or oppressive under the circumstances.
The burden of demonstrating that compliance with a grand jury subpoena would be unreasonable or oppressive rests squarely on the movant — that is, the subpoena recipient who seeks to avoid compliance. See United States v. R. Enterprises, Inc., 498 U.S. 292, 301 (1991). This burden is a heavy one. The Supreme Court in R. Enterprises articulated the standard as follows: a motion to quash a grand jury subpoena duces tecum should be denied unless the district court determines that "there is no reasonable possibility that the category of materials the Government seeks will produce information relevant to the general subject of the grand jury's investigation." Id. at 301. This standard accords great deference to the grand jury's investigative prerogative and reflects the strong presumption of regularity that attaches to grand jury subpoenas.
Courts in the Second Circuit have consistently applied the R. Enterprises standard and have rarely granted motions to quash grand jury subpoenas. See, e.g., In re Grand Jury Subpoena, 223 F.3d 213, 216 (2d Cir. 2000) (reaffirming the strong presumption of regularity); In re Grand Jury Proceedings, 486 F.3d 85, 90 (3d Cir. 2007) (collecting cases from multiple circuits applying the R. Enterprises framework). The Southern District of New York, in particular, has a well-established practice of declining to quash grand jury subpoenas absent extraordinary circumstances, reflecting the court's recognition of the grand jury's essential role in the investigation and prosecution of federal crimes. See In re Grand Jury Subpoena Duces Tecum Dated Nov. 15, 1993, 846 F. Supp. at 13–14 (S.D.N.Y. 1994).
The practical import of this standard for our analysis is clear: unless the subpoena issued to Mr. Caldwell is facially defective, seeks documents with no conceivable relevance to the investigation, or imposes a burden so extraordinary as to constitute legal oppressiveness, a motion to quash will not succeed. As discussed in the following subsections, none of these circumstances is present here.
B. Unreasonableness. A grand jury subpoena may be deemed "unreasonable" within the meaning of Rule 17(c)(2) if it seeks documents or testimony that bear no conceivable relationship to the grand jury's investigation. The unreasonableness inquiry focuses on the relevance of the materials sought rather than on the burden of production. However, the relevance standard applicable to grand jury subpoenas is extraordinarily broad — far broader than the relevance standard applied to the admissibility of evidence at trial under Federal Rules of Evidence 401 and 402.
The Supreme Court has explained that a grand jury subpoena need not satisfy the evidentiary relevance requirements applicable at trial. See United States v. R. Enterprises, Inc., 498 U.S. at 297 ("[A grand jury] can investigate merely on suspicion that the law is being violated, or even just because it wants assurance that it is not.") (quoting United States v. Morton Salt Co., 338 U.S. 632, 642–43 (1950)). The government need demonstrate only that the documents or testimony sought "may be" relevant to a legitimate investigation; there is no requirement that the materials be directly relevant to a specific criminal charge, that they constitute admissible evidence, or that they pertain to conduct that ultimately results in an indictment. See id. at 301; In re Grand Jury Subpoena Duces Tecum, 767 F.2d 26, 29 (2d Cir. 1985) (noting that "the relevancy test for grand jury subpoenas is quite broad").
Applied to the subpoena at issue, the categories of documents demanded are facially and plainly relevant to the government's investigation into Mr. Stavros and Aegean Realty Partners. The subpoena seeks communications between Mr. Caldwell and Mr. Stavros, communications between Mr. Caldwell and Aegean Realty entities, and communications between Mr. Caldwell and the two banking institutions — Westlake Fidelity Bank, N.A. and Harborview Trust Company — that appear to have provided financing for real estate transactions at the center of the investigation. The specified categories of documents — relating to real estate investments, syndications, financings, appraisals, and fund transfers — are directly connected to the suspected criminal conduct (wire fraud, bank fraud, money laundering, and conspiracy) attributed to Mr. Stavros and Aegean Realty Partners.
Mr. Caldwell's involvement with Aegean Realty Partners was substantial. Based on information provided by Mr. Caldwell during our initial client interview:
• Mr. Caldwell co-invested in three Aegean Realty syndication vehicles — Aegean Realty Partners Fund III LP, Aegean Realty Partners Fund IV LP, and Aegean Realty Partners Fund V LP — with total limited partner capital commitments of approximately $10.0 million;
• Mr. Caldwell co-owned two commercial properties through joint venture limited liability companies with Mr. Stavros: (i) 318 West 47th Street Holdings LLC (a mixed-use property in Manhattan, equity contribution of approximately $2.6 million) and (ii) 780 Atlantic Avenue Ventures LLC (a residential conversion project in Brooklyn, equity contribution of approximately $1.624 million), for a combined equity investment of approximately $4.224 million; and
• Mr. Caldwell maintained regular business communications with Mr. Stavros and various Aegean Realty personnel between approximately 2014 and 2020, when the business relationship was effectively terminated following Mr. Caldwell's redemption from Fund V and his initiation of separation negotiations through outside counsel (Patricia Sheldon of Whitmore & Kessler LLP).
Given the nature and extent of Mr. Caldwell's business relationship with Mr. Stavros and the Aegean Realty entities, the documents sought by the subpoena are plainly relevant to the grand jury's investigation. Mr. Caldwell's financial records, communications, and transactional documents are precisely the type of evidence that the grand jury would need to evaluate in order to understand the structure and mechanics of the Aegean Realty syndication vehicles, the financing arrangements associated with the co-owned properties, and the flow of funds between and among the various entities and individuals involved.
Conclusion: The subpoena is not unreasonable as to its subject matter scope. A challenge to the subpoena on the ground of unreasonableness would not succeed.
C. Oppressiveness. A grand jury subpoena may also be quashed or modified if compliance would impose an "oppressive" burden on the recipient. See Fed. R. Crim. P. 17(c)(2). The oppressiveness inquiry is distinct from the unreasonableness inquiry and focuses on the practical burden of compliance rather than on the relevance of the materials sought. Courts consider a range of factors in assessing whether a subpoena is oppressive, including the volume of documents sought, the breadth of the time period covered, the financial and logistical resources of the recipient, and the time allowed for compliance. See In re Grand Jury Subpoena Duces Tecum Dated Nov. 15, 1993, 846 F. Supp. at 14; In re Grand Jury Subpoena, 2001 WL 940056, at *2 (S.D.N.Y. Aug. 20, 2001).
In the present matter, several features of the subpoena warrant consideration in connection with the oppressiveness analysis:
Volume. The estimated volume of approximately 14,200 documents / 8.3 gigabytes of data is substantial but not extraordinary by the standards of complex federal investigations. Courts in the Southern District of New York routinely oversee grand jury proceedings involving far larger document sets, and sophisticated recipients such as Mr. Caldwell — who maintains records through a registered investment advisory firm with dedicated administrative staff and information technology infrastructure — are generally expected to be capable of managing document collections of this magnitude.
Time Period. The date range specified in the subpoena — January 1, 2014 through December 31, 2021 — encompasses approximately eight years. While this is a broad time frame, it is proportionate to the known duration of Mr. Caldwell's business relationship with Mr. Stavros and the Aegean Realty entities. Mr. Caldwell first met Mr. Stavros in approximately 2014, Aegean Realty Partners was formed on March 12, 2014, and the last relevant transaction was Mr. Caldwell's redemption from Aegean Realty Partners Fund V LP in March 2020. An eight-year date range is not unusual in complex fraud investigations, particularly where the suspected conduct spans multiple years and involves multiple transactions.
Return Date. The original return date of December 9, 2022, provides only eighteen days from the date of service on November 21, 2022. Given the estimated volume of responsive materials and the need for thorough privilege review, this timeline is tight. However, the appropriate remedy for an impractical return date is a negotiated extension or, if necessary, a motion to modify the return date under Rule 17(c)(2), rather than a motion to quash the subpoena in its entirety. Courts distinguish between subpoenas that are substantively oppressive (i.e., that seek an unreasonable volume or scope of materials) and subpoenas that are merely operationally challenging due to tight timelines; the latter category is addressed through extension, not quashing.
Resources of the Recipient. Mr. Caldwell is a high-net-worth individual with substantial financial resources. He serves as the managing member and principal of Caldwell Capital Advisors LLC, a registered investment advisory firm with approximately $340 million in assets under management. His personal real estate portfolio is valued at approximately $78 million. Given these resources, a claim of financial oppressiveness — that is, a claim that the costs of collection, processing, review, and production would impose an undue financial hardship — would be unlikely to succeed. Courts have consistently held that the resources of the subpoena recipient are a relevant factor in the oppressiveness analysis and that recipients with the means to comply are expected to bear the costs of compliance. See, e.g., In re Grand Jury Subpoena, 2001 WL 940056, at *3 (S.D.N.Y. Aug. 20, 2001).
Conclusion: The subpoena is not oppressive in the legal sense. The volume of documents is manageable, the time period is proportionate to the relevant conduct, and Mr. Caldwell has the financial resources to bear the costs of compliance. However, the original return date of December 9, 2022 is impractical and requires extension. A motion to quash on oppressiveness grounds is not warranted; scope negotiation and extension requests are the appropriate course of action.
D. Relevance Challenges
As discussed in Section III.B above, the relevance standard applicable to grand jury subpoenas is extraordinarily broad. A subpoena recipient may not successfully challenge a grand jury subpoena by arguing that the documents sought are irrelevant unless the recipient can demonstrate that there is "no reasonable possibility" that the materials will produce information relevant to the general subject of the grand jury's investigation. United States v. R. Enterprises, Inc., 498 U.S. at 301.
Several additional principles bear emphasis in the context of relevance challenges to grand jury subpoenas:
First, a subpoena recipient cannot challenge relevance by arguing that he or she is merely a witness rather than a target or subject of the investigation. The grand jury is entitled to "every man's evidence," Branzburg, 408 U.S. at 688, and the fact that a witness has not been personally implicated in criminal conduct does not diminish the grand jury's authority to compel the production of the witness's documents and testimony. A witness's documents may shed light on the conduct of others, and the grand jury is entitled to investigate fully without limitation based on the status of any particular subpoena recipient.
Second, a subpoena recipient cannot successfully argue that the documents sought are unlikely to yield information about the target's conduct. The grand jury is an investigative body; its function is to gather evidence and determine whether probable cause exists to return an indictment. The relevance of particular documents cannot be assessed in advance with precision, and the grand jury is entitled to cast a wide net in pursuit of evidence that may bear upon the investigation. See United States v. Dionisio, 410 U.S. 1, 15 (1973); In re Grand Jury Subpoena Duces Tecum, 767 F.2d at 29.
Conclusion: A relevance-based challenge to the subpoena would not succeed. The materials sought are facially relevant to the investigation, and Mr. Caldwell's status as a witness does not provide a basis for resisting the subpoena.
E. Privilege as a Basis for Withholding (Not Quashing)
The attorney-client privilege and the work product doctrine are recognized as valid bases for withholding specific documents from production in response to a grand jury subpoena. However, the assertion of privilege with respect to particular documents does not generally support a blanket motion to quash the subpoena as a whole. Rather, the appropriate mechanism is to produce all responsive, non-privileged documents while withholding documents claimed to be privileged and providing the government with a privilege log that identifies each withheld document with sufficient specificity to permit an assessment of the privilege claim. See In re Grand Jury Subpoena Dated Jan. 4, 1984, 750 F.2d 223, 224–25 (2d Cir. 1984); United States v. Construction Products Research, Inc., 73 F.3d 464, 473 (2d Cir. 1996).
In the present matter, we anticipate that the privilege review will identify a limited number of documents subject to the attorney-client privilege and/or the work product doctrine. Based on our preliminary review and Mr. Caldwell's initial identification of counsel who provided legal advice during the relevant period, the principal categories of privileged communications are expected to include:
(1) Communications between Mr. Caldwell and the law firm of Whitmore & Kessler LLP — specifically, his primary contact attorney, Patricia Sheldon — relating to the 2019 separation negotiation with Mr. Stavros. These communications involved legal advice regarding the unwinding of Mr. Caldwell's joint venture interests and his redemption rights under the Aegean Realty fund agreements, and they are squarely within the scope of the attorney-client privilege.
(2) Communications between Mr. Caldwell and Thornberg & Whitfield CPAs — specifically, Helen R. Thornberg — to the extent that such communications involved the rendering of tax advice at the direction of counsel. Under the Kovel doctrine, communications with a non-attorney retained by or at the direction of an attorney for the purpose of enabling the attorney to render legal advice may be protected by the attorney-client privilege. See United States v. Kovel, 296 F.2d 918, 921–22 (2d Cir. 1961). Not all communications with Thornberg & Whitfield will qualify; the privilege attaches only to those communications made at the direction of counsel for the purpose of facilitating the provision of legal advice.
A separate privilege review guidelines memorandum is being prepared to establish the protocols and standards that will govern the privilege review process, including the criteria for identifying potentially privileged documents, the procedures for escalating privilege determinations, and the format and content requirements for the privilege log.
It is important to note that the crime-fraud exception to the attorney-client privilege is not implicated with respect to Mr. Caldwell's own communications. The crime-fraud exception provides that the attorney-client privilege does not protect communications made in furtherance of a crime or fraud. See In re Grand Jury Subpoena, 731 F.2d 1032, 1038 (2d Cir. 1984); Clark v. United States, 289 U.S. 1, 15 (1933). Based on all information currently available, there is no indication that Mr. Caldwell sought legal advice from any attorney for the purpose of furthering criminal conduct. Mr. Caldwell's consultations with Whitmore & Kessler LLP concerned the legitimate negotiation of a business separation from Mr. Stavros, and his consultations with Thornberg & Whitfield CPAs concerned routine tax compliance matters. Accordingly, the crime-fraud exception should not apply to any of Mr. Caldwell's privileged communications, and we do not anticipate that the government will challenge any privilege assertions on this basis.
IV. Timing Requirements and Rolling Production Practice
A. Return Date and Extensions
As noted above, the original return date specified on the face of the subpoena is December 9, 2022 — a mere eighteen days from the date of service on November 21, 2022. Given the estimated volume of approximately 14,200 potentially responsive documents comprising approximately 8.3 gigabytes of data, and the need for thorough collection, processing, review, and privilege analysis, compliance by December 9, 2022 is not feasible as a practical matter.
It is, however, well-established and standard practice in the Southern District of New York for the government to grant reasonable extensions of grand jury subpoena return dates, particularly where the volume of responsive materials is large, the recipient has engaged counsel and is proceeding in good faith toward compliance, and the extension will not prejudice the grand jury's investigation. Extensions are typically negotiated informally between counsel for the subpoena recipient and the assigned AUSA. In most cases, this negotiation occurs through an exchange of letters or emails, and no formal court filing is required or expected.
If the government refuses to agree to a reasonable extension, the subpoena recipient may move the court for a modification of the return date under Rule 17(c)(2). However, such motions are rarely necessary, as AUSAs in the Southern District of New York are generally receptive to reasonable extension requests from cooperating witnesses who are proceeding in good faith.
We have already submitted a letter to AUSA Goldfarb, dated today, December 7, 2022, requesting an extension of the return date from December 9, 2022 to January 20, 2023. The letter explains the estimated volume of responsive materials, describes the collection and processing efforts underway, and proposes a rolling production schedule as described in Section IV.B below. We anticipate that AUSA Goldfarb will agree to this extension, based on our assessment of the cooperative posture that the government has thus far maintained with respect to Mr. Caldwell's involvement in the investigation. In the event that the initial extension to January 20, 2023 proves insufficient to complete the review of all potentially responsive materials, a second extension should be sought in a timely manner.
B. Rolling Production
Rolling production — the practice of producing documents in tranches as they are reviewed, rather than withholding all production until the final return date — is a widely accepted and encouraged practice in grand jury proceedings in the Southern District of New York. Rolling production offers significant advantages to both the subpoena recipient and the government:
• Demonstrates good faith compliance. By producing documents on an ongoing basis, the recipient demonstrates that it is diligently working toward full compliance and is not engaging in delay or obstruction. This is particularly important for witnesses like Mr. Caldwell, whose continued status as a witness (rather than a subject or target) may depend in part on the government's assessment of his level of cooperation.
• Allows the government to begin reviewing documents sooner. The government's investigation does not halt while the subpoena recipient completes its review. By producing documents in tranches, the recipient enables the government to begin its review and analysis of the materials at an earlier stage, which may in turn advance the investigation and reduce the overall timeline.
• Provides the recipient with additional time to complete review. Rolling production effectively extends the period available for the review of the full document collection, because early tranches are produced at or near the return date while later tranches are produced on a negotiated schedule. This is particularly beneficial where the volume of responsive materials is large and thorough privilege review is required.
Rolling production is not a legal right, and the government is not obligated to accept a rolling production proposal. However, in practice, AUSAs in the Southern District of New York almost always agree to rolling production when it is requested in good faith and accompanied by a reasonable proposed schedule. The government's interest is in receiving responsive documents, not in imposing artificial deadlines that may compromise the quality or completeness of the production.
For the present matter, we propose the following rolling production schedule, subject to AUSA Goldfarb's agreement:
• First production: On or before January 20, 2023 (the proposed extended return date), consisting of documents from the custodial sources most readily accessible and least likely to raise privilege issues — principally, transactional documents from Mr. Caldwell's files at CCA and financial records relating to the Aegean Realty fund investments.
• Subsequent productions: At approximately two- to three-week intervals following the first production, with each subsequent tranche consisting of additional reviewed documents organized by custodial source or document category, until the production is complete.
• Final production: Upon completion of the privilege review, accompanied by a comprehensive privilege log identifying all documents withheld on the basis of privilege.
Each production tranche should be accompanied by a transmittal letter addressed to AUSA Goldfarb identifying the Bates range of the documents produced, the custodial sources from which the documents were drawn, and a reservation of all rights and objections with respect to the scope of the subpoena and the privilege status of any documents withheld.
C. No Formal Court Deadline Until Compliance Demanded
Unlike civil subpoenas governed by Federal Rule of Civil Procedure 45, which are subject to more formal procedural mechanisms for enforcement, grand jury subpoena return dates are typically enforced through the AUSA and, ultimately, by the grand jury's authority to compel compliance through contempt proceedings. There is no automatic consequence of failing to comply on the precise return date specified in the subpoena; rather, the enforcement mechanism is the government's discretion to seek a court order compelling compliance or to initiate contempt proceedings if the recipient fails to comply without lawful justification.
As a practical matter, this means that informal extension agreements negotiated between the recipient's counsel and the assigned AUSA are generally sufficient to govern the timing of production, and no formal court approval is required. This is the standard practice in the Southern District of New York, and it is the approach we are pursuing in this matter.
However, it is essential that all extension agreements and understandings regarding the production schedule be documented in writing — whether by letter, email, or other written communication — to protect against any future claim by the government that Mr. Caldwell failed to comply with the subpoena in a timely manner. Written documentation of extension agreements serves as evidence of the parties' mutual understanding and provides a clear record that the recipient acted in good faith and with the government's consent. We will maintain a comprehensive file of all correspondence with AUSA Goldfarb regarding the production schedule and any modifications thereto.
V. Penalties for Non-Compliance
The penalties for non-compliance with a grand jury subpoena are severe, and the consequences of failing to comply — whether through outright refusal, delay, partial compliance, or destruction of responsive materials — can be devastating for the non-compliant witness. This section reviews the principal categories of penalties and their relevance to Mr. Caldwell's situation.
A. Civil Contempt
A witness who fails to comply with a grand jury subpoena without lawful excuse may be held in civil contempt. The statutory basis for civil contempt of recalcitrant grand jury witnesses is 28 U.S.C. § 1826, which provides that whenever a witness in any grand jury proceeding "refuses without just cause shown to comply with an order of the court to testify or provide other information," the court may confine the witness for a period not to exceed eighteen months or "until such time as the witness is willing to give such testimony or provide such information." 28 U.S.C. § 1826(a).
Civil contempt under Section 1826 is coercive in nature — its purpose is to compel compliance with the subpoena, not to punish the witness for past disobedience. Accordingly, the witness holds the "keys to the jail" and may be released at any time by agreeing to comply with the court's order. In addition to confinement, the court may impose coercive fines designed to compel compliance, which may escalate over time until the witness complies.
The maximum period of confinement under Section 1826(a) is eighteen months or the life of the grand jury, whichever is shorter. While Mr. Caldwell is a cooperating witness who has every intention of complying with the subpoena, the civil contempt provisions underscore the seriousness with which the courts treat non-compliance and reinforce the importance of timely and complete production.
B. Criminal Contempt
In addition to civil contempt, willful failure to comply with a grand jury subpoena may constitute criminal contempt under 18 U.S.C. § 401. Unlike civil contempt, criminal contempt is punitive rather than coercive — its purpose is to punish the witness for past disobedience of a court order, rather than to compel future compliance. A finding of criminal contempt requires proof that the witness willfully and deliberately disobeyed the court's order, as distinguished from mere inadvertence or inability to comply.
Criminal contempt is a serious matter carrying potential penalties of fines and imprisonment. While the precise penalties for criminal contempt are determined by the court and depend on the severity of the offense, the consequences can be substantial, particularly where the court concludes that the witness's non-compliance was deliberate and calculated to obstruct the grand jury's investigation. See, e.g., In re Grand Jury Witness, 835 F.2d 437, 440 (2d Cir. 1987) (discussing criminal contempt sanctions for grand jury witnesses).
C. Obstruction of Justice
Perhaps the most serious consequence of non-compliance — and the one most relevant to Mr. Caldwell's document preservation obligations — is the potential for criminal prosecution under the federal obstruction of justice statutes. The destruction, alteration, or concealment of documents responsive to a grand jury subpoena may constitute a violation of one or more of the following statutes:
• 18 U.S.C. § 1503 (Obstruction of Court Proceedings). Section 1503 prohibits corruptly endeavoring to influence, obstruct, or impede the due administration of justice. This provision has been applied to the destruction or concealment of documents in response to a grand jury subpoena. Violations of Section 1503 are punishable by imprisonment of up to ten years.
• 18 U.S.C. § 1519 (Destruction, Alteration, or Falsification of Records in Federal Investigations). Enacted as part of the Sarbanes-Oxley Act of 2002, Section 1519 makes it a crime to knowingly destroy, alter, conceal, cover up, falsify, or make a false entry in any record, document, or tangible object with the intent to impede, obstruct, or influence the investigation or proper administration of any matter within the jurisdiction of any department or agency of the United States. Section 1519 is notably broad and does not require a pending proceeding; it applies to the destruction of documents in anticipation of a federal investigation. Violations are punishable by imprisonment of up to twenty years.
These are serious felony offenses carrying substantial prison terms, and their applicability to the destruction or concealment of documents responsive to a grand jury subpoena is well established. See, e.g., United States v. Quattrone, 441 F.3d 153 (2d Cir. 2006) (upholding obstruction conviction based on destruction of documents in connection with a federal investigation); Kraft Quill CPAs LLP v. United States, 544 U.S. 696 (2005) (discussing the scope of obstruction statutes in the context of document destruction).
In light of these risks, a document preservation and litigation hold notice was issued to Mr. Caldwell and to Caldwell Capital Advisors LLC immediately upon our engagement in this matter. The litigation hold notice, dated December 5, 2022, instructs Mr. Caldwell and all relevant CCA personnel to preserve all documents and electronically stored information that may be responsive to the subpoena, including emails, text messages, voicemails, documents stored on shared drives or cloud services, and physical documents. The notice specifically prohibits the destruction, deletion, alteration, or concealment of any potentially responsive materials, and it directs the suspension of any routine document destruction or data retention policies that might otherwise result in the loss of responsive materials. Compliance with the litigation hold notice must be monitored on an ongoing basis throughout the pendency of the grand jury investigation.
D. Practical Consequences of Non-Compliance
Beyond the formal legal penalties described above, non-compliance or partial compliance with a grand jury subpoena can have significant practical consequences for the subpoena recipient. Even short of contempt proceedings or obstruction charges, a failure to cooperate fully and in a timely manner can result in increased government scrutiny of the witness's own conduct. A witness who is perceived as uncooperative, evasive, or obstructive is far more likely to attract the attention of prosecutors and investigators, and such behavior may lead to an elevation of the witness's status from witness to subject or target of the investigation.
Conversely, full and timely cooperation with the grand jury subpoena reinforces Mr. Caldwell's status as a cooperating witness, demonstrates his lack of involvement in the suspected criminal conduct, and maintains a constructive and professional relationship with the government. In matters involving complex financial investigations, the government routinely distinguishes between cooperative witnesses — who are treated with courtesy and professional respect — and non-cooperative witnesses — who may find themselves subjected to additional subpoenas, search warrants, or criminal exposure assessments. We strongly advise Mr. Caldwell to adopt and maintain a posture of full cooperation throughout this process.
VI. Analysis of the Specific Subpoena at Issue
A. Facial Validity
The subpoena at issue was issued by a duly empaneled grand jury — Grand Jury No. 22-GJ-4481 — sitting in the United States District Court for the Southern District of New York. It was issued by AUSA Miriam T. Goldfarb, who is authorized to act on behalf of the grand jury in her capacity as an attorney for the United States assigned to the investigation. The subpoena satisfies the procedural requirements of Federal Rule of Criminal Procedure 17(a) and (c), including proper issuance, proper service, and a description of the documents sought with sufficient particularity.
The four specified categories of documents demanded by the subpoena are as follows:
(a) All documents and communications relating to real estate investments, co-investments, or syndications involving Aegean Realty Partners LLC or any of its affiliated entities or funds, including but not limited to Aegean Realty Partners Fund III LP, Aegean Realty Partners Fund IV LP, Aegean Realty Partners Fund V LP, 318 West 47th Street Holdings LLC, and 780 Atlantic Avenue Ventures LLC;
(b) All documents and communications relating to any loan, financing arrangement, capital raise, or credit facility involving any property or properties in which Jonathan R. Caldwell and Marcus W. Stavros had a direct or indirect interest, including but not limited to financing obtained from or through Westlake Fidelity Bank, N.A. and Harborview Trust Company;
(c) All appraisals, valuations, property inspection reports, environmental assessments, and similar documents prepared for, commissioned by, or received by Jonathan R. Caldwell in connection with any property or properties described in categories (a) or (b); and
(d) All documents and communications relating to any transfer, wire, or movement of funds between or among accounts held, controlled, or beneficially owned by Jonathan R. Caldwell (or any entity controlled by Jonathan R. Caldwell) and accounts held, controlled, or beneficially owned by Marcus W. Stavros (or any entity controlled by Marcus W. Stavros), including but not limited to any Aegean Realty entity.
The date range specified in the subpoena — January 1, 2014 through December 31, 2021 — is proportionate to the known relationship period between Mr. Caldwell and Mr. Stavros. Mr. Caldwell met Mr. Stavros in approximately early 2014; Aegean Realty Partners LLC was formed on March 12, 2014; the earliest co-investment identified by Mr. Caldwell (his initial commitment to Aegean Realty Partners Fund III LP) was made in or about June 2014; and the last substantive transaction in the business relationship was Mr. Caldwell's redemption from Aegean Realty Partners Fund V LP in March 2020. The end date of December 31, 2021 provides a reasonable additional period to capture any post-separation communications or trailing financial transactions.
Conclusion: The subpoena is facially valid. It was issued by a duly empaneled grand jury through an authorized AUSA, it describes the documents sought with reasonable particularity, and it covers a date range that is proportionate to the relevant conduct and business relationship. There are no facial defects that would support a challenge to the validity of the subpoena.
B. Scope Negotiation Opportunities
While a motion to quash the subpoena is not warranted for the reasons discussed in Section III above, informal scope negotiation with AUSA Goldfarb is both appropriate and standard practice. It is common for counsel representing grand jury subpoena recipients to engage in discussions with the assigned AUSA regarding the scope and parameters of the documentary demands, with the objective of clarifying ambiguous terms, narrowing overly broad categories, and reducing the burden of collection and review without undermining the government's legitimate investigative interests.
In this matter, we have identified the following possible areas for scope negotiation:
(i) Limiting the date range on certain categories. For category (a) (investments, co-investments, and syndications involving Aegean Realty entities), the full date range of January 1, 2014 through December 31, 2021 is appropriate. However, for category (c) (appraisals, valuations, and property inspection reports), it may be possible to narrow the date range to the period during which specific properties were acquired, financed, or refinanced — typically a narrower window than the full eight-year range. Such a narrowing would reduce the volume of responsive documents without depriving the government of relevant materials.
(ii) Clarifying the meaning of "direct or indirect interest." Category (b) encompasses loans, financing arrangements, and capital raises involving properties in which Mr. Caldwell and Mr. Stavros had "a direct or indirect interest." The phrase "indirect interest" is potentially broad and could encompass entities in which Mr. Caldwell had no meaningful involvement or knowledge — for example, entities in which Mr. Caldwell's limited partnership interest in an Aegean Realty fund gave him an indirect, passive interest in underlying properties. We should discuss with AUSA Goldfarb whether the government intends this category to capture only properties in which Mr. Caldwell had an active, direct investment interest or also passive, indirect interests through fund vehicles.
(iii) Excluding duplicative documents across custodial sources. Where the same document exists in multiple custodial sources — for example, a document stored both on the CCA shared drive and in Mr. Caldwell's personal email — it may be possible to agree with AUSA Goldfarb that a single production of the document (from one source) is sufficient, thereby reducing the volume and cost of the production.
Any scope modifications agreed upon with AUSA Goldfarb should be documented in writing — ideally through an exchange of letters — to ensure a clear record of the agreed-upon parameters of the production obligation.
C. Testimonial Deferral
As discussed in Section II.C above, the subpoena commands Mr. Caldwell's testimony before the grand jury in addition to the production of documents. We recommend requesting deferral of the testimonial component of the subpoena pending the government's receipt and review of the documentary production. This is standard practice in the Southern District of New York and is routinely granted by AUSAs when the subpoena recipient is cooperating with the documentary production and has engaged experienced counsel.
The rationale for testimonial deferral is straightforward: the government's review of the documents produced will typically inform the scope and focus of the grand jury's questioning, resulting in a more efficient and productive testimony session. Deferral also benefits the witness and his counsel by providing additional time to prepare for testimony, including the development of a comprehensive understanding of the documentary record. We will include our request for testimonial deferral in our ongoing correspondence with AUSA Goldfarb, and we anticipate that the request will be granted.
If testimony is ultimately required — as it almost certainly will be, at some point during the life of the grand jury — additional analysis of Fifth Amendment considerations will be necessary. A separate memorandum on Fifth Amendment and testimonial privilege considerations is currently in preparation and will address, among other topics: (a) the scope of Mr. Caldwell's Fifth Amendment privilege, if any, with respect to specific questions that may be posed by the grand jury; (b) the procedural and strategic considerations associated with asserting the Fifth Amendment privilege before the grand jury; and (c) the potential consequences of invoking the privilege, including the possibility that the government may offer use immunity under 18 U.S.C. §§ 6002–6003 to compel testimony.
VII. Conclusions and Recommendations
Based on the foregoing analysis, our conclusions and recommendations are as follows:
1. The subpoena is facially valid. It was issued by a duly empaneled grand jury through an authorized AUSA, describes the documents sought with reasonable particularity, and covers a date range proportionate to the relevant conduct and business relationship. There are no facial defects or procedural irregularities that would support a challenge to the validity of the subpoena.
2. A motion to quash is not warranted. The subject matter of the subpoena is plainly relevant to the grand jury's investigation into suspected wire fraud, bank fraud, money laundering, and conspiracy involving Mr. Stavros and Aegean Realty Partners LLC. The scope of the document demands is not unreasonable given the nature and extent of Mr. Caldwell's business relationship with Mr. Stavros and the Aegean Realty entities. The burden on Mr. Caldwell, while substantial in terms of volume and logistical complexity, does not rise to legal oppressiveness given his considerable financial resources and the seriousness of the underlying investigation. A motion to quash would be unsuccessful and, moreover, would risk signaling a non-cooperative posture to the government.
3. Scope negotiation is appropriate. We should continue discussions with AUSA Goldfarb to clarify and, where possible, narrow the scope of the document demands, with the objective of reducing the burden of collection and review without impairing the government's investigative interests. Specific areas for negotiation include limiting the date range on certain categories, clarifying the meaning of "direct or indirect interest," and addressing the treatment of duplicative documents across custodial sources. All agreements regarding scope modifications should be memorialized in writing.
4. An extension of the return date is essential. The original return date of December 9, 2022 is impractical given the estimated volume of approximately 14,200 documents comprising approximately 8.3 gigabytes of data across multiple custodians and data sources. Our extension request — seeking a revised return date of January 20, 2023, with a rolling production schedule — was submitted to AUSA Goldfarb on December 7, 2022. If the initial extension proves insufficient to complete the review, a second extension should be sought promptly and in good faith.
5. Rolling production should be employed. We recommend producing documents in tranches as the review is completed, beginning with the first production on or before the extended return date and continuing at approximately two- to three-week intervals until the production is complete. Each production tranche should be accompanied by a transmittal letter identifying the Bates range of the documents produced and reserving all rights and objections. This approach demonstrates good faith compliance, enables the government to begin its review at an earlier stage, and is the standard and expected practice in the Southern District of New York.
6. Testimony should be deferred. We should request that Mr. Caldwell's testimony obligation be deferred pending the government's receipt and review of the documentary production. This is a routine accommodation that is regularly granted by AUSAs in the Southern District of New York and serves the interests of both the government and the witness. We will include this request in our ongoing correspondence with AUSA Goldfarb.
7. Strict compliance is imperative. Given the serious consequences of non-compliance — including civil contempt (confinement for up to eighteen months), criminal contempt (fines and imprisonment), obstruction of justice charges (imprisonment for up to twenty years under 18 U.S.C. § 1519), and the potential escalation of Mr. Caldwell's status from witness to subject or target — we must ensure timely, complete, and good-faith compliance with the subpoena. The document preservation and litigation hold notice was issued to Mr. Caldwell and Caldwell Capital Advisors LLC on December 5, 2022, and compliance with the hold must be monitored on an ongoing basis. Collection from all identified custodians and data sources should proceed immediately, and processing by our retained e-discovery vendor, Clearpath Document Solutions Inc. (project manager Raj K. Anand), should commence as soon as data collection is complete.
8. Privilege review must be thorough. Documents subject to the attorney-client privilege or the work product doctrine must be identified during the review process and withheld from production. The principal categories of privileged communications are expected to include communications between Mr. Caldwell and Whitmore & Kessler LLP (Patricia Sheldon) relating to the 2019 separation negotiation with Mr. Stavros, and communications between Mr. Caldwell and Thornberg & Whitfield CPAs (Helen R. Thornberg) where tax advice was rendered at the direction of counsel. A comprehensive privilege log must be prepared and delivered to the government with the final production. Separate privilege review guidelines are being prepared and will be circulated to the review team prior to the commencement of document review.
VIII. Closing
I am available to discuss this analysis and the recommendations set forth herein at your convenience. Please do not hesitate to contact me if you would like to schedule a meeting to review the memorandum in detail or to discuss the strategy for AUSA engagement, the document collection and review process, or any other aspect of this matter.
As noted above, two related memoranda are currently in preparation and will be circulated upon completion:
(1) Fifth Amendment and Testimonial Privilege Analysis — addressing the scope of Mr. Caldwell's Fifth Amendment privilege, the strategic considerations associated with invoking the privilege before the grand jury, and the potential for government-conferred use immunity; and
(2) Privilege Review Guidelines Memorandum — establishing the protocols, standards, and procedures governing the review of documents for attorney-client privilege a

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

MEMORANDUM

MATTER NO.: 1034-00001

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