MEMORANDUM
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
TO: Conrad Ashby, Partner, White Collar & Investigations Practice Group
FROM: Daniel Obi, Associate, Banking & Finance Practice Group
DATE: December 6, 2022
RE: Analysis of Grand Jury Subpoena — Grand Jury No. 22-GJ-4481, U.S. District Court for the Southern District of New York
CLIENT: Jonathan R. Caldwell
MATTER NO.: 1034-00001
I. Executive Summary
The purpose of this memorandum is to provide a comprehensive analysis of the grand jury subpoena duces tecum and ad testificandum issued to our client, Jonathan R. Caldwell, on behalf of Grand Jury No. 22-GJ-4481, empaneled in the United States District Court for the Southern District of New York, 500 Pearl Street, New York, New York 10007. This memorandum addresses the scope and burden of the subpoena's document demands, the testimonial component, privilege considerations, identification of custodians and data sources, and recommended next steps.
The subpoena was issued on November 18, 2022, by the United States Attorney's Office for the Southern District of New York. The designated prosecutor is Assistant United States Attorney Miriam T. Goldfarb of the Complex Frauds & Cybercrime Unit. The subpoena was personally served on Mr. Caldwell at his residence at 1140 Park Avenue, Apartment 14C, New York, New York 10128, on November 21, 2022. Mr. Caldwell contacted Calderwood & Harkness LLP shortly after service, and this engagement was formalized on December 1, 2022.
The original return date on the face of the subpoena is December 9, 2022. As of the date of this memorandum, December 6, 2022, the return date is only three calendar days away. Compliance within this timeframe is plainly impossible given the breadth of the document demands and the need for a thorough responsiveness and privilege review. Accordingly, one of our most immediate priorities is to seek an extension of the return date.
Based on my initial analysis, I offer the following summary recommendations:
1. Seek an extension of the return date to January 20, 2023, to allow sufficient time for document identification, collection, review, and production.
2. Propose a rolling production schedule to the government, permitting production to occur in tranches as documents are reviewed, rather than requiring a single comprehensive production on a date certain.
3. Defer the testimonial component of the subpoena pending the completion of document production and the government's review of the produced materials, thereby allowing both sides to focus on documents first and ensuring that any testimony is informed by a full understanding of the documentary record.
4. Begin immediate document identification, collection, and preservation across all relevant custodians and data sources, including the issuance of a formal litigation hold notice to Mr. Caldwell and to Caldwell Capital Advisors LLC.
As an important threshold matter, I note that Mr. Caldwell has no criminal history of any kind. Based on initial discussions with Mr. Caldwell and a preliminary review of the subpoena's scope and context, Mr. Caldwell does not appear to be a target or subject of the investigation. Rather, the investigation appears to focus on his former business associate, Marcus W. Stavros, founder and principal of Aegean Realty Partners LLC. Mr. Caldwell's involvement with Stavros was limited to a series of passive LP investments and two joint venture co-investments, all of which were terminated pursuant to a separation agreement effective December 15, 2019. That said, Mr. Caldwell's status should be confirmed through a proffer discussion with AUSA Goldfarb at the earliest opportunity, as discussed further in Section VIII below.
II. Background
A. The Client
Jonathan R. Caldwell is a fifty-eight-year-old New York-based real estate investor and asset manager. He has been active in the commercial real estate industry for over thirty years and has developed a reputation as a prudent and disciplined investor focused principally on multifamily residential and mixed-use properties in the New York metropolitan area.
Mr. Caldwell is the sole member and managing principal of Caldwell Capital Advisors LLC ("CCA"), a New York limited liability company that manages approximately $340 million in real estate-focused investment assets across three fund vehicles. CCA's principal office is located at 590 Madison Avenue, 22nd Floor, New York, New York 10022. CCA's Employer Identification Number is 83-2174056. CCA employs approximately twelve individuals, including investment professionals, operations staff, and administrative personnel.
In addition to CCA, Mr. Caldwell is the sole owner of JRC Realty Holdings LLC ("JRC Realty"), a personal holding company that holds his direct real estate portfolio. JRC Realty's portfolio consists of approximately fourteen properties in the New York tristate area with an aggregate assessed value of approximately $78 million. JRC Realty is also registered at 590 Madison Avenue, 22nd Floor, New York, New York 10022, and holds Employer Identification Number 81-4493217.
Mr. Caldwell first met Marcus W. Stavros in approximately 2014 at the National Real Estate Investors Forum, an annual industry conference. The two men developed a professional relationship based on shared interests in commercial real estate syndication and multifamily investing. Beginning in 2015 and continuing through 2019, Mr. Caldwell co-invested with Stavros in several syndication deals managed by Aegean Realty Partners LLC and its affiliated fund vehicles. Mr. Caldwell also entered into two direct joint venture co-investments with Stavros during this period.
The business relationship between Caldwell and Stavros deteriorated in late 2019 following a dispute over approximately $340,000 in management fees that Stavros unilaterally charged to the operating account of one of their joint ventures. The dispute culminated in a negotiated separation, formalized in a separation agreement effective December 15, 2019, pursuant to which Stavros bought out Caldwell's interests in their joint ventures and Caldwell redeemed his limited partnership interests in certain Aegean Realty funds. The details of this separation are described more fully below in Section II.C.
B. The Apparent Target — Marcus W. Stavros
Marcus W. Stavros is fifty-four years old and is the founder and principal of Aegean Realty Partners LLC ("Aegean Realty" or "ARP"), a Connecticut limited liability company formed on March 12, 2014. Aegean Realty's principal office is located at 280 Atlantic Street, Suite 510, Stamford, Connecticut 06901. Between 2016 and 2021, Aegean Realty raised approximately $215 million across seven syndication offerings structured as limited partnerships under Delaware law. These offerings involved the acquisition, renovation, and management of commercial real estate assets in the New York and Connecticut metropolitan areas.
Stavros resides at 45 Saugatuck Lane, Westport, Connecticut 06880. Based on the scope and focus of the subpoena's document demands — which center on Aegean Realty's financing arrangements, appraisal practices, and fund flows — it is my assessment that Stavros is the primary target of the grand jury investigation. The government appears to be investigating whether Stavros orchestrated a scheme to defraud institutional lenders, principally Westlake Fidelity Bank, N.A., by causing false financial statements and inflated appraisals to be submitted in connection with commercial real estate loans.
Stavros is represented by separate counsel: Victor A. Reddick of the firm Reddick, Sorrento & Hale LLP, located at 1 Liberty Plaza, 37th Floor, New York, New York 10006. We have had no direct contact with Mr. Reddick or his firm, and no joint defense or common interest agreement is contemplated. Given the nature of the investigation and the fact that Mr. Caldwell's interests may diverge significantly from those of Mr. Stavros, I recommend that we avoid entering into any such arrangement.
C. The Caldwell-Stavros Business Relationship
Mr. Caldwell's business dealings with Marcus Stavros and the Aegean Realty family of entities can be divided into two categories: (1) passive limited partnership investments in Aegean Realty fund vehicles, and (2) direct co-investments through jointly owned limited liability companies.
Limited Partnership Investments. Mr. Caldwell made the following LP investments in Aegean Realty syndication vehicles:
Each of these investments was made through standard subscription agreements, and Mr. Caldwell received private placement memoranda, operating agreements, quarterly investor reports, and K-1 schedules in connection with each fund.
Direct Co-Investments. In addition to his LP investments, Mr. Caldwell entered into two direct co-investments with Stavros through jointly owned limited liability companies:
710 Flatbush Holdings LLC — A New York limited liability company structured as a 50/50 joint venture between Caldwell and Stavros. The entity acquired a 42-unit mixed-use building located at 710 Flatbush Avenue, Brooklyn, New York 11225, in April 2016 for a total purchase price of $11.2 million. The acquisition was financed with $5.6 million in total equity (of which Caldwell contributed $2.8 million, representing his 50% share) and a $5.6 million commercial real estate loan from Westlake Fidelity Bank, N.A.
Stavros-Caldwell Industrial LLC — A New Jersey limited liability company structured as a 60/40 joint venture (60% Stavros, 40% Caldwell). The entity acquired a 65,000-square-foot industrial warehouse located at 1500 Commerce Boulevard, Newark, New Jersey 07114, in October 2017 for a total purchase price of $8.9 million. The acquisition was financed with $3.56 million in total equity (of which Caldwell contributed $1.424 million, representing his 40% share) and a $5.34 million commercial real estate loan from Westlake Fidelity Bank, N.A.
Mr. Caldwell's total joint venture equity contributions thus aggregated $4.224 million across the two co-investments.
Distributions and Returns. Over the course of the business relationship, Mr. Caldwell received aggregate distributions of approximately $1.87 million from his LP investments and approximately $635,000 from the JV entities, totaling approximately $2.505 million.
The Fee Dispute and Separation. In approximately October 2019, a dispute arose between Caldwell and Stavros regarding approximately $340,000 in management fees that Stavros had unilaterally charged to the operating account of 710 Flatbush Holdings LLC. Mr. Caldwell contended that these fees were not authorized under the operating agreement and had not been disclosed to him. The dispute prompted Mr. Caldwell to engage the law firm of Whitmore & Kessler LLP, with partner Patricia Sheldon serving as lead counsel, to negotiate a full separation from Stavros and the Aegean Realty entities.
The negotiation culminated in a separation agreement effective December 15, 2019, the material terms of which were as follows:
• Stavros purchased Caldwell's 50% interest in 710 Flatbush Holdings LLC for $3.4 million.
• Stavros purchased Caldwell's 40% interest in Stavros-Caldwell Industrial LLC for $1.85 million.
• Caldwell redeemed his LP interests in Aegean Realty Fund III LP and Aegean Realty Fund IV LP at that time, receiving cash consideration in amounts determined by the applicable redemption provisions.
• Caldwell's LP interest in Aegean Realty Fund V LP was not immediately redeemed due to a six-month redemption notice period required under that fund's partnership agreement. The Fund V interest was ultimately redeemed in March 2020 at a value of $3.15 million.
• The parties exchanged mutual general releases, subject to customary carve-outs for fraud and intentional misconduct.
Following the March 2020 Fund V redemption, Mr. Caldwell had no remaining financial interest in any Aegean Realty entity or any entity jointly owned with Stavros.
D. Key Third Parties Named or Implicated by the Subpoena
Several third parties are named in or implicated by the subpoena's document demands. The most significant are as follows:
Westlake Fidelity Bank, N.A. Westlake Fidelity Bank, N.A. is a nationally chartered commercial bank with principal offices at 600 Summer Street, Stamford, Connecticut 06901. Between 2016 and 2020, Westlake Fidelity Bank extended approximately $127 million in commercial real estate loans to various Aegean Realty syndication vehicles and related entities, including the two joint venture entities in which Mr. Caldwell held interests. Based on the subpoena's focus on loan documentation and financing arrangements, Westlake Fidelity Bank appears to be the primary victim lender in the government's investigation. Westlake Fidelity Bank is represented by the firm Graystone & Falk LLP, with Catherine A. Falk serving as lead partner, at 100 Pearl Street, Suite 1600, Hartford, Connecticut 06103.
Harborview Trust Company. Harborview Trust Company is a Connecticut state-chartered trust company located at 88 Broad Street, Suite 200, Bridgeport, Connecticut 06604. Harborview served as escrow agent for investor deposits in connection with at least two of the Aegean Realty fund offerings — specifically, Fund IV and Fund V. In addition, Harborview extended a $14.5 million mezzanine loan to one Aegean Realty entity, though it is not clear from the information presently available whether Mr. Caldwell was involved in any entity that was party to that mezzanine loan.
Pinnacle Appraisal Group LLC. Pinnacle Appraisal Group LLC is a New York-based real estate appraisal firm with offices at 355 Lexington Avenue, 9th Floor, New York, New York 10017. Pinnacle provided appraisals for several properties acquired by Aegean Realty entities. The government has raised questions about potentially inflated valuations issued by Pinnacle in connection with properties financed by Westlake Fidelity Bank. If the government's theory is that Stavros procured or caused inflated appraisals to be issued in order to secure larger loan amounts from institutional lenders, Pinnacle's role in the alleged scheme will be a central focus of the investigation. Any documents reflecting Mr. Caldwell's awareness of, reliance on, or concerns about Pinnacle's valuations will be of particular interest to the government.
III. Detailed Analysis of the Subpoena's Document Demands
A. Overview of Document Categories
The subpoena commands the production of all documents and communications falling within the date range of January 1, 2014 through December 31, 2021. This eight-year window encompasses the entire arc of the Caldwell-Stavros business relationship, from their initial meeting in approximately 2014 through a period extending approximately two years beyond the formal separation in December 2019.
The subpoena's document demands are organized into four principal categories, each of which is analyzed in detail below. The subpoena employs standard broad definitions of "documents" and "communications" that encompass, among other things, correspondence (including email and text messages), memoranda, reports, notes, financial statements, agreements, contracts, ledgers, bank statements, wire transfer confirmations, appraisals, and any other tangible or electronically stored information.
B. Category (a): Real Estate Investments, Co-Investments, and Syndications Involving Aegean Realty Partners or Affiliated Funds
Scope. The subpoena demands production of all documents and communications between Caldwell and Stavros, and between Caldwell and any Aegean Realty entity (including but not limited to Aegean Realty Partners LLC and its affiliated fund vehicles), relating to any real estate investment, co-investment, or syndication involving Aegean Realty Partners LLC or its affiliated funds.
Documents Likely Captured. This is the broadest category and will produce the highest volume of responsive documents. Based on my initial review of the subpoena's language and my discussions with Mr. Caldwell, I anticipate that this category will capture the following categories of documents:
• Subscription agreements executed by Mr. Caldwell in connection with his LP investments in Aegean Realty Fund III LP, Aegean Realty Fund IV LP, and Aegean Realty Fund V LP;
• Private placement memoranda ("PPMs") issued by Aegean Realty in connection with those fund offerings;
• Operating agreements and limited partnership agreements for Fund III, Fund IV, and Fund V;
• Operating agreements and joint venture agreements for 710 Flatbush Holdings LLC and Stavros-Caldwell Industrial LLC;
• Quarterly and annual investor reports, capital call notices, distribution notices, and other periodic communications issued by Aegean Realty to its investors, including Mr. Caldwell;
• All email correspondence between Mr. Caldwell and Stavros (or Stavros's staff at Aegean Realty) regarding investment decisions, property acquisitions, renovation plans, lease-up progress, property operations, and financial performance;
• Meeting notes, whether formal or informal, from meetings between Caldwell and Stavros relating to their co-investments;
• Term sheets, letters of intent, and preliminary deal memoranda for properties that were the subject of co-investments;
• Due diligence materials provided to or reviewed by Mr. Caldwell in connection with his LP investments and JV co-investments;
• The separation agreement effective December 15, 2019, together with all related negotiation correspondence, term sheets, draft agreements, and closing documents; and
• Any post-separation communications between Caldwell and Stavros or Aegean Realty entities, including correspondence relating to the Fund V redemption in March 2020.
Assessment. As noted, this is the broadest category and will generate the greatest volume of responsive material. The date range covers the entire period from the inception of the Caldwell-Stavros relationship (approximately 2014) through December 31, 2021, extending well past the separation in December 2019 and the final Fund V redemption in March 2020. While the volume of responsive documents for the post-separation period (January 2020 through December 2021) is expected to be significantly lower than for the period of active collaboration, there may be some residual correspondence — for example, communications regarding tax reporting, K-1 schedules, or the unwinding of administrative matters. We should collect broadly and review with this in mind.
The separation agreement and the surrounding negotiation correspondence present particular sensitivity from a privilege standpoint, as much of that correspondence involved communications between Mr. Caldwell and his counsel at Whitmore & Kessler LLP. This issue is addressed further in Section VII below.
C. Category (b): Loans, Financing Arrangements, and Capital Raises
Scope. The subpoena demands production of all documents and communications between Caldwell and Stavros, between Caldwell and any Aegean Realty entity, and between Caldwell and Westlake Fidelity Bank, N.A. or Harborview Trust Company, relating to any loan, financing arrangement, or capital raise involving properties in which Caldwell and Stavros had a direct or indirect interest.
Documents Likely Captured. I anticipate that this category will capture the following categories of documents:
• Loan documents for the $5.6 million Westlake Fidelity Bank, N.A. commercial real estate loan to 710 Flatbush Holdings LLC, including the loan agreement, promissory note, mortgage, and any ancillary agreements;
• Loan documents for the $5.34 million Westlake Fidelity Bank, N.A. commercial real estate loan to Stavros-Caldwell Industrial LLC, including the loan agreement, promissory note, mortgage, and any ancillary agreements;
• Any personal guaranty, indemnity, or contribution agreements that Mr. Caldwell may have executed in connection with either of these loans;
• Correspondence between Mr. Caldwell and Westlake Fidelity Bank, N.A. regarding loan applications, financial disclosures, borrower representations, and covenant compliance;
• Correspondence between Mr. Caldwell and Stavros regarding the financing of the JV acquisitions, including discussions of loan terms, lender requirements, and financial statement preparation;
• Communications regarding Harborview Trust Company's escrow arrangements for investor deposits in connection with Aegean Realty Fund IV LP and Aegean Realty Fund V LP;
• Any documents relating to Harborview Trust Company's $14.5 million mezzanine loan to an Aegean Realty entity, to the extent Mr. Caldwell was involved in any entity that was party to or benefited from that loan;
• Capital raise materials for the Aegean Realty funds in which Mr. Caldwell invested, including PPMs, investor solicitation correspondence, and marketing materials; and
• Financial statements, rent rolls, operating budgets, and other financial documentation submitted to lenders in connection with the loans described above.
Assessment. This category is particularly sensitive given the government's apparent focus on bank fraud allegations. The government's theory, as best we can discern from the subpoena and the surrounding context, appears to be that Stavros caused false financial statements and inflated appraisals to be submitted to Westlake Fidelity Bank, N.A. and potentially Harborview Trust Company in connection with commercial real estate loans extended to Aegean Realty entities. Any documents showing Mr. Caldwell's awareness — or, critically, his lack of awareness — of the financial statements and other representations submitted to lenders will be of significant importance. Documents in this category that demonstrate that Mr. Caldwell relied on information provided by Stavros or Aegean Realty without independent knowledge of its accuracy may be exculpatory to Mr. Caldwell and should be identified early in the review process. Conversely, any documents suggesting that Mr. Caldwell had reason to question the accuracy of financial information provided to lenders must be flagged for immediate partner review.
It bears emphasis that as a 50% co-venturer in 710 Flatbush Holdings LLC and a 40% co-venturer in Stavros-Caldwell Industrial LLC, Mr. Caldwell may have had some degree of involvement in the loan application process for the Westlake Fidelity Bank loans to those entities. The extent of his involvement — and, critically, whether he reviewed, signed, or was aware of any financial statements or borrower certifications submitted to Westlake Fidelity Bank — is a factual question that will need to be explored through a more detailed interview with Mr. Caldwell and a careful review of the documentary record.
D. Category (c): Appraisals, Valuations, and Property Inspection Reports
Scope. The subpoena demands production of all appraisal, valuation, or property inspection reports for properties in which Caldwell and Stavros had a direct or indirect interest.
Documents Likely Captured. I anticipate that this category will capture the following categories of documents:
• Appraisals prepared by Pinnacle Appraisal Group LLC for the property at 710 Flatbush Avenue, Brooklyn, New York 11225 (the 42-unit mixed-use building held by 710 Flatbush Holdings LLC);
• Appraisals prepared by Pinnacle Appraisal Group LLC for the property at 1500 Commerce Boulevard, Newark, New Jersey 07114 (the 65,000-square-foot industrial warehouse held by Stavros-Caldwell Industrial LLC);
• Any appraisals for properties held within Aegean Realty Fund III LP, Aegean Realty Fund IV LP, or Aegean Realty Fund V LP that were shared with investors, including Mr. Caldwell, in connection with fund reporting or capital call justifications;
• Internal valuation memoranda or analyses prepared by Mr. Caldwell or CCA staff regarding the Aegean Realty investments, including any comparative market analyses or independent assessments of property values; and
• Property inspection reports received by Mr. Caldwell in connection with pre-acquisition due diligence or ongoing asset management of the JV properties.
Assessment. While this category is narrower in scope than Categories (a) and (b), it goes to the heart of the alleged fraud scheme. If the government's theory is that Pinnacle Appraisal Group LLC issued inflated appraisals that were used to secure larger loan amounts from Westlake Fidelity Bank, then any documents reflecting Mr. Caldwell's review of, reliance on, or questioning of Pinnacle's valuations will be highly relevant. Of particular interest to the government will be any communications in which Mr. Caldwell expressed skepticism about appraised values, raised questions about the reasonableness of Pinnacle's conclusions, or compared Pinnacle's appraisals to his own internal valuation analyses. Equally significant will be the absence of any such communications, which could support the conclusion that Mr. Caldwell accepted the appraisals at face value and had no knowledge of any inflation.
During the document review, I recommend flagging any documents in which the appraised value of a property diverges significantly from the purchase price, the insured value, or CCA's internal valuation, as these discrepancies may be of particular interest to the government.
E. Category (d): Fund Transfers Between Caldwell and Stavros/Aegean Accounts
Scope. The subpoena demands production of all documents reflecting any transfer or movement of funds between accounts held or controlled by Caldwell and accounts held or controlled by Stavros or any Aegean Realty entity.
Documents Likely Captured. I anticipate that this category will capture the following categories of documents:
• Wire transfer confirmations and bank statements showing Mr. Caldwell's capital contributions to Aegean Realty Fund III LP ($2.5 million), Aegean Realty Fund IV LP ($4.0 million), Aegean Realty Fund V LP ($3.5 million), 710 Flatbush Holdings LLC ($2.8 million), and Stavros-Caldwell Industrial LLC ($1.424 million);
• Wire transfer confirmations and bank statements showing distributions received by Mr. Caldwell from the LP investments (aggregate approximately $1.87 million) and the JV entities (aggregate approximately $635,000), totaling approximately $2.505 million;
• Records of the buyout payments received by Mr. Caldwell under the December 15, 2019 separation agreement, specifically $3.4 million for his 50% interest in 710 Flatbush Holdings LLC and $1.85 million for his 40% interest in Stavros-Caldwell Industrial LLC;
• Records of the Fund V redemption payment of $3.15 million received in March 2020 following the expiration of the six-month redemption notice period;
• Any personal transfers between Mr. Caldwell and Stavros outside of the formal entity-level transactions, including any personal loans, advances, or reimbursements; and
• Bank statements for accounts through which the foregoing transfers were made, to the extent necessary to document the source and destination of funds.
Assessment. This category is directly relevant to the government's investigation of potential money laundering charges and its broader effort to trace fund flows through the Aegean Realty network of entities. I note that the government has retained Meridian Forensic Advisors LLC, a forensic accounting firm, to conduct a comprehensive fund-flow analysis of the Aegean Realty entities. The engagement is led by Nathan P. Solis, Managing Director, at Meridian Forensic Advisors. It is likely that Mr. Caldwell's bank records and wire transfer confirmations will be cross-referenced against the government's forensic analysis to verify the consistency of fund flows and to determine whether any payments to or from Caldwell were irregular, unexplained, or inconsistent with the legitimate investment activities described above.
From Mr. Caldwell's perspective, the fund transfer documents should largely corroborate a straightforward narrative: capital contributions in, distributions and buyout payments out, all consistent with the terms of the applicable subscription agreements, operating agreements, and the December 2019 separation agreement. We should nonetheless review these records carefully to confirm that there are no anomalous transfers that might require explanation.
IV. Analysis of the Testimonial Component
In addition to the document demands analyzed above, the subpoena commands Mr. Caldwell's personal testimony before Grand Jury No. 22-GJ-4481. The subpoena is styled as both duces tecum (requiring production of documents) and ad testificandum (requiring the witness to appear and give testimony).
No specific testimony date has been set on the face of the subpoena; rather, the subpoena appears to contemplate that testimony will coincide with the return date of December 9, 2022. As noted above, compliance with the document demands by December 9 is impossible, and testimony on that date would be premature and ill-advised for several reasons.
Recommendation: Defer Testimony. I recommend that we request AUSA Goldfarb agree to defer Mr. Caldwell's testimony pending the government's review of the document production. This is a common and widely accepted accommodation in SDNY grand jury practice. The rationale for deferral is straightforward: the government will be able to conduct more focused and productive questioning of Mr. Caldwell if it has first had the opportunity to review the documents he produces. From our perspective, deferral serves the equally important purpose of allowing us to review the full documentary record before preparing Mr. Caldwell for testimony, ensuring that his preparation is thorough and that he is not blindsided by documents he has not recently reviewed.
Deferral also preserves our ability to assess whether any particular line of questioning might implicate Mr. Caldwell's rights under the Fifth Amendment to the United States Constitution. While the Fifth Amendment implications should be analyzed separately in a dedicated memorandum if and when testimony is scheduled, my initial assessment is as follows: Mr. Caldwell, as a witness (and neither a target nor a subject of the investigation, based on our current understanding), is not in a position where a blanket assertion of the privilege against self-incrimination is warranted. A blanket assertion by a non-target witness can be viewed unfavorably by the government and may prompt further scrutiny. However, if specific questions arise that could expose Mr. Caldwell to criminal liability, he would retain the right to assert the privilege on a question-by-question basis. This assessment is preliminary and should be revisited after a proffer call with AUSA Goldfarb, during which we will seek to confirm Mr. Caldwell's status and gain a better understanding of the government's expectations for his testimony.
If the government insists on scheduling testimony before the completion of document production, we should request a reasonable period — no fewer than two to three weeks from the government's notification — to prepare Mr. Caldwell. Preparation should include a detailed review of all key documents, a mock examination covering anticipated areas of questioning, and a thorough discussion of the legal framework governing grand jury testimony, including Mr. Caldwell's rights and obligations as a witness.
V. Identification of Custodians and Data Sources
A. Primary Custodian: Jonathan R. Caldwell
Mr. Caldwell is the primary custodian of responsive documents. Based on my initial discussions with him, the following data sources have been identified:
Personal Email Account. Mr. Caldwell's principal email address is jrc@caldwellcap.com, which is hosted on CCA's email system. This account is likely the primary repository for correspondence with Stavros, Aegean Realty entities, Westlake Fidelity Bank, Harborview Trust Company, and other relevant parties. Based on Mr. Caldwell's estimate, this account contains several years of retained email and may include a substantial volume of communications with Stavros and Aegean Realty personnel dating back to 2014 or 2015.
Personal Mobile Device. Mr. Caldwell uses a personal mobile device (currently an Ashbury Corporation 14 Pro) for both voice calls and text-based communications. Text messages and communications through messaging applications (including but not limited to Westmark Software, Meridian Services Inc., and Signal) may contain responsive content, particularly informal or time-sensitive communications with Stavros. Mr. Caldwell has indicated that he exchanged text messages with Stavros on a regular basis during the period of their active business relationship. The mobile device should be imaged forensically by the e-discovery vendor to ensure complete capture of text message data.
Physical Files at Residence. Mr. Caldwell maintains some physical files at his residence at 1140 Park Avenue, Apartment 14C, New York, New York 10128. These may include hard copies of subscription agreements, closing binders for the JV acquisitions, quarterly investor reports, and correspondence received via mail. Mr. Caldwell has indicated that these files are stored in a home office and are reasonably organized.
Physical and Electronic Files at Office. Mr. Caldwell maintains both physical and electronic files at the offices of Caldwell Capital Advisors LLC, 590 Madison Avenue, 22nd Floor, New York, New York 10022. Physical files may include investment files, closing binders, and hard-copy correspondence. Electronic files include documents stored on Mr. Caldwell's desktop computer and on the CCA shared network drive (discussed separately below).
B. Secondary Custodian: Caldwell Capital Advisors LLC Shared Drive
The CCA shared network drive is a separate data source that should be treated as a secondary custodian. This shared drive is accessible to CCA employees and likely contains fund-related correspondence, investment committee memoranda, due diligence files, financial analyses, and other materials relating to Mr. Caldwell's investments in Aegean Realty funds. Files relating to the JV investments (710 Flatbush Holdings LLC and Stavros-Caldwell Industrial LLC) may also be stored on the shared drive, as CCA staff may have assisted Mr. Caldwell with financial analysis, reporting, and correspondence relating to those investments. The shared drive should be imaged or its contents collected in a forensically defensible manner.
C. Third-Party Sources (Not Under Client's Control)
Two third-party sources may hold relevant documents, though neither is within Mr. Caldwell's direct possession, custody, or control:
Whitmore & Kessler LLP (Patricia Sheldon, Lead Partner). Whitmore & Kessler LLP represented Mr. Caldwell in the 2019 separation negotiation with Stavros. The firm's files will contain the negotiation correspondence, drafts of the separation agreement, and related legal advice. These materials are in the possession of Mr. Caldwell's prior counsel and may be subject to the attorney-client privilege and work product doctrine. To the extent that any non-privileged documents in the Whitmore & Kessler files are responsive (for example, final executed agreements or factual materials that do not reflect legal advice), we may wish to request copies from the firm. However, this should be coordinated carefully to avoid any inadvertent waiver of privilege.
Thornberg & Whitfield CPAs (Helen R. Thornberg, Senior Partner). Thornberg & Whitfield is the accounting firm that has prepared tax returns and financial statements for CCA and JRC Realty. The firm's files may include K-1 schedules and related analyses from Mr. Caldwell's Aegean Realty fund investments, as well as financial statements that reflect the fund investments and JV interests. Some communications between Mr. Caldwell and Thornberg & Whitfield may be privileged under the Kovel doctrine (United States v. Kovel, 296 F.2d 918 (2d Cir. 1961)), to the extent the accountants were engaged at the direction of counsel to assist in the rendering of legal advice. This issue will require a fact-specific analysis during the privilege review.
Scope of Production Obligation. It is important to note that the subpoena is directed to Mr. Caldwell and commands production of documents within his "possession, custody, or control." Documents held solely by third parties not under Mr. Caldwell's control — such as Westlake Fidelity Bank's internal loan files, Aegean Realty's internal records, or Pinnacle Appraisal Group's work files — need not be produced by Mr. Caldwell. However, any documents that Mr. Caldwell received from or sent to those parties, or that are in his possession as copies, must be produced. This distinction should be communicated clearly to Mr. Caldwell as part of the preservation and collection process.
VI. Assessment of Scope — Breadth and Burden
The subpoena's document demands are broad in scope, covering a date range of January 1, 2014 through December 31, 2021 — a full eight-year period. This date range encompasses the entire Caldwell-Stavros business relationship, from the parties' initial meeting in approximately 2014 through a period extending approximately two years beyond the formal separation in December 2019 and approximately twenty-one months beyond the final Fund V redemption in March 2020.
The post-separation period (January 2020 through December 2021) may yield some responsive documents, most notably the Fund V redemption documentation from March 2020 and any residual communications between Caldwell and Aegean Realty entities regarding tax reporting (K-1 schedules for the 2019 and 2020 tax years), administrative wind-down matters, or the release of escrow funds. However, the volume of responsive documents for this post-separation period is expected to be significantly lower than for the period of active collaboration (2014–2019).
Estimated Volume. Based on my preliminary assessment of the custodians and data sources identified above, and taking into account the eight-year date range, the four categories of document demands, the multiple investment vehicles, and the involvement of institutional lenders, I estimate that the total volume of potentially responsive documents across all custodians and sources may be substantial — possibly in the range of 10,000 to 15,000 documents before responsiveness review. This estimate includes email correspondence (which is likely to constitute the largest component of the collection), transactional documents, financial records, and bank statements. The actual volume of documents produced to the government after responsiveness and privilege review will be lower, but the review burden is significant.
Motion to Quash. The subpoena is broad but not facially unreasonable given the scope of Mr. Caldwell's business dealings with Stavros, the multiple investment vehicles involved, the multi-year relationship, and the involvement of institutional lenders. In my assessment, a motion to quash the subpoena under Federal Rule of Criminal Procedure 17(c) is not warranted based on the scope alone. The Second Circuit has consistently held that grand jury subpoenas are entitled to a presumption of regularity and that the movant bears a heavy burden of demonstrating that the subpoena is unreasonable or oppressive. See In re Grand Jury Subpoena Duces Tecum Dated Sept. 15, 1983, 731 F.2d 1032, 1038 (2d Cir. 1984); see also United States v. R. Enterprises, Inc., 498 U.S. 292, 301 (1991) (holding that a party challenging a grand jury subpoena must demonstrate 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"). Given the direct nexus between the documents demanded and the subject matter of the investigation, it would be difficult to sustain a motion to quash.
That said, we should be prepared to negotiate narrowing of the subpoena's scope if the burden proves excessive after initial collection, or if certain categories of documents appear to be only tangentially related to the investigation's focus. A rolling production schedule, as recommended below, is a practical necessity given the volume of documents involved and the need for careful privilege review.
VII. Privilege Considerations — Preliminary Assessment
Several categories of potentially responsive documents may be subject to the attorney-client privilege and/or the work product doctrine. A preliminary assessment of these privilege issues is set forth below. A detailed privilege review protocol should be developed before document review commences, and a privilege log will need to be prepared and produced to the government for any documents withheld on privilege grounds.
Attorney-Client Privilege.
Communications with Whitmore & Kessler LLP. Communications between Mr. Caldwell and his counsel at Whitmore & Kessler LLP (Patricia Sheldon, lead partner) regarding the 2019 separation negotiation with Stavros are clearly protected by the attorney-client privilege. These communications were made in confidence by Mr. Caldwell to his attorney for the purpose of obtaining legal advice in connection with the fee dispute and the negotiated buyout. The privilege extends to drafts of the separation agreement and related legal memoranda, as well as to correspondence in which Ms. Sheldon conveyed legal advice or strategy to Mr. Caldwell. These documents should be withheld from production and logged on a privilege log.
Communications with Thornberg & Whitfield CPAs. Communications between Mr. Caldwell and the accounting firm Thornberg & Whitfield CPAs (Helen R. Thornberg, Senior Partner) present a more nuanced privilege question. As a general matter, communications with accountants are not privileged. However, under the Kovel doctrine, communications with an accountant may be protected by the attorney-client privilege if the accountant was retained by or at the direction of counsel to assist the attorney in rendering legal advice. See United States v. Kovel, 296 F.2d 918 (2d Cir. 1961). To invoke Kovel protection, we would need to establish that Thornberg & Whitfield was engaged at the direction of counsel (either Whitmore & Kessler or, potentially, other counsel) to assist in the provision of legal advice, rather than merely performing routine accounting or tax preparation services. This will require a fact-specific analysis of the circumstances under which particular communications occurred. For routine tax preparation and financial statement work, the Kovel doctrine is unlikely to apply.
Communications with Calderwood & Harkness LLP. Communications between Mr. Caldwell and this firm in connection with the present engagement are obviously protected by the attorney-client privilege. However, because this engagement was not formalized until December 2022, and the subpoena's document range ends December 31, 2021, communications with Calderwood & Harkness LLP are unlikely to fall within the responsive date range. To the extent any such communications exist within the date range (for example, if Mr. Caldwell had a prior unrelated consultation with the firm), they would be identified and withheld.
Work Product Doctrine.
Any litigation-related analysis or preparation materials generated by counsel — whether by Whitmore & Kessler LLP or by any other attorney — in connection with the 2019 fee dispute with Stavros or the subsequent separation negotiation may be protected by the work product doctrine under Federal Rule of Civil Procedure 26(b)(3) and its analogues. The work product doctrine protects materials prepared "in anticipation of litigation or for trial" by a party or the party's representative, including attorneys, consultants, and agents. To the extent that the fee dispute with Stavros was reasonably anticipated to give rise to litigation (as appears likely given the adversarial nature of the negotiations), materials prepared in anticipation of that litigation would be protected. Opinion work product — reflecting the mental impressions, conclusions, opinions, or legal theories of an attorney — receives the highest level of protection and is virtually immune from discovery.
Privilege Review Protocol. I recommend that we develop a detailed privilege review protocol before document review commences. The protocol should include the following elements:
• A list of attorneys and law firms whose communications with Mr. Caldwell are potentially privileged (Whitmore & Kessler LLP, Calderwood & Harkness LLP, and any other counsel);
• A list of accountants and other professionals whose communications may qualify for Kovel protection;
• Clear guidelines for reviewers regarding the identification and coding of privileged documents;
• A procedure for escalating privilege determinations that are uncertain or borderline to partner review (specifically, to you, Conrad, as the supervising partner on this matter); and
• A protocol for the preparation of the privilege log, including the level of detail required for each entry (date, author, recipient(s), general subject matter, and basis for privilege assertion).
VIII. Recommendations
A. Seek Extension of Return Date
The original return date of December 9, 2022 is only three calendar days from the date of this memorandum, and compliance within that timeframe is plainly impossible. The subpoena's document demands are broad, the volume of potentially responsive documents is substantial, and a responsible privilege review cannot be conducted on such an abbreviated timeline. I recommend that we send a letter to AUSA Goldfarb immediately — on December 7, 2022 at the latest — requesting an extension of the return date to January 20, 2023. The letter should emphasize the following points:
• Mr. Caldwell is fully cooperative and has no intention of obstructing or delaying the government's investigation;
• Mr. Caldwell has engaged experienced counsel at Calderwood & Harkness LLP and is committed to producing all responsive, non-privileged documents on a reasonable timeline;
• The breadth of the subpoena's document demands, the eight-year date range, and the multiple custodians and data sources involved make compliance by December 9 impracticable; and
• An extension to January 20, 2023 will allow sufficient time for document identification, collection, processing, review, and the first tranche of a rolling production.
This type of extension request is routine in SDNY grand jury practice and is typically granted without objection, particularly where the recipient of the subpoena demonstrates good faith cooperation. If AUSA Goldfarb resists the January 20 date, we should be prepared to negotiate an alternative date no earlier than January 13, 2023, and to propose an accelerated production of any narrowly defined "priority" categories of documents the government may identify.
B. Propose Rolling Production Schedule
Given the anticipated volume of documents and the need for thorough responsiveness and privilege review, I recommend that we propose a rolling production schedule to the government. This approach permits production to occur in tranches as documents are reviewed, rather than requiring a single comprehensive production on a date certain. A rolling production schedule has several advantages: it provides the government with responsive documents on an accelerated basis; it allows the review team to prioritize the most clearly responsive and sensitive categories of documents; and it provides flexibility to address unforeseen issues (such as newly identified custodians or data sources) without delaying the overall production.
I propose the following rolling production schedule:
• First Production (January 20, 2023): The largest tranche, consisting of clearly responsive, non-privileged documents from the most important categories, including transactional documents, key correspondence, and financial records. Target: the majority of responsive documents.
• Second Production (approximately February 10, 2023 — three weeks after first production): Additional responsive documents identified during continued review, including documents from secondary custodians and data sources.
• Third and Final Production (approximately February 24, 2023): Any remaining responsive documents, accompanied by a complete privilege log identifying all documents withheld on privilege grounds and the basis for each privilege assertion.
This approach is standard in SDNY grand jury subpoena practice and is typically accepted by the government, particularly where the subpoena recipient has demonstrated a cooperative posture.
C. Defer Testimonial Component
As discussed in Section IV above, I recommend that we request AUSA Goldfarb agree to defer Mr. Caldwell's grand jury testimony pending the government's review of the document production. This request should be made in connection with the extension request and the proposal for a rolling production schedule. The deferral serves the government's interest in conducting more informed and productive questioning of Mr. Caldwell and serves our interest in ensuring that Mr. Caldwell's preparation for testimony is thorough and based on a complete understanding of the documentary record.
If testimony is ultimately required, we should conduct thorough preparation with Mr. Caldwell well in advance of the scheduled date. Preparation should include a comprehensive review of key documents, a mock examination covering anticipated areas of questioning, and a detailed discussion of the legal framework governing grand jury testimony.
D. Immediate Document Preservation and Collection
I recommend that we issue a formal document preservation and litigation hold notice to Mr. Caldwell and to Caldwell Capital Advisors LLC at the earliest possible date. Ideally, this notice should have been issued as of December 5, 2022 (the date preceding the preparation of this memorandum), or as soon as the engagement was formalized. The preservation notice should instruct Mr. Caldwell and all relevant CCA personnel to preserve all documents and electronically stored information that may be responsive to the subpoena, including email, text messages, files stored on personal devices and shared drives, and physical documents. The notice should specifically prohibit the deletion, destruction, or alteration of any such materials.
Once the preservation notice is issued and acknowledged, we should begin collection from all identified custodians and data sources. Collection should be conducted in a forensically defensible manner to ensure the integrity and completeness of the data. For email and electronically stored information, this will involve either forensic imaging of devices and servers or the use of collection tools that preserve metadata and chain-of-custody information.
I recommend that we engage an e-discovery vendor for document processing, hosting, review, and production. Based on prior experience and the firm's existing relationship, I recommend engaging Clearpath Document Solutions Inc., located at 15 Maiden Lane, Suite 800, New York, New York 10038. The engagement would be managed by Raj K. Anand, Project Manager, with whom the firm has worked successfully on several prior matters. Clearpath has the capability to process large volumes of electronically stored information, host documents for review on a secure platform, and produce documents in the format required by the government (typically Bates-stamped TIFF images with load files containing extracted text and metadata).
E. Engage AUSA Goldfarb in Proffer Discussion
I recommend that we schedule a telephone conference with AUSA Goldfarb at the earliest opportunity to accomplish the following objectives:
• Confirm Mr. Caldwell's status. We should ask AUSA Goldfarb directly whether Mr. Caldwell is classified as a witness, subject, or target of the investigation. Under the U.S. Attorneys' Manual (now the Justice Manual), § 9-11.151, a "target" is a person as to whom the prosecutor or grand jury has substantial evidence linking him or her to the commission of a crime and who, in the judgment of the prosecutor, is a putative defendant. A "subject" is a person whose conduct is within the scope of the grand jury's investigation. A "witness" is a person who has relevant information but is not a subject or target. Confirming Mr. Caldwell's status will significantly affect our strategic approach.
• Understand the government's priorities. We should seek to understand which categories of documents the government considers most important and whether the government has specific priority areas within the broad scope of the subpoena. This information will guide the sequencing of our document review and production.
• Discuss deferral of testimony. We should raise the question of deferring Mr. Caldwell's testimony and gauge the government's receptivity.
• Establish a cooperative working relationship. More broadly, this initial contact will set the tone for the engagement with the prosecutor's office. Given Mr. Caldwell's posture as a cooperative witness, it is in his interest to establish a constructive and professional relationship with AUSA Goldfarb from the outset.
F. Develop Detailed Review Protocol
Once document collection is underway, I recommend that we prepare a detailed document review protocol tailored to the four categories of the subpoena's demands. The protocol should include the following components:
• Search terms: A comprehensive list of search terms designed to identify responsive documents efficiently. Initial search terms should include, at a minimum: "Stavros," "Aegean," "Aegean Realty," "Fund III," "Fund IV," "Fund V," "710 Flatbush," "Flatbush Holdings," "Stavros-Caldwell Industrial," "Commerce Boulevard," "Westlake," "Westlake Fidelity," "Harborview," "Pinnacle," "Pinnacle Appraisal," and relevant property addresses and entity names.
• Date filters: Application of the subpoena's date range (January 1, 2014 through December 31, 2021) to limit the review universe.
• Custodian filters: Separate review queues for each custodian and data source, allowing the review team to track progress and allocate resources effectively.
• Privilege review workflow: Clear guidelines for the identification, coding, and escalation of potentially privileged documents, with specific attention to communications involving Whitmore & Kessler LLP and Thornberg & Whitfield CPAs.
• Quality-control sampling: A systematic sampling protocol to ensure consistency of responsiveness and privilege determinations across the review team. I recommend a minimum 10% quality-control sample rate for all first-pass review decisions, with a higher sample rate during the initial phase of review until the team has calibrated its approach.
IX. Estimated Timeline and Resources
Based on my assessment of the scope of the subpoena, the volume of potentially responsive documents, and the workflow required for collection, processing, review, and production, I propose the following timeline:
Week of December 5–9, 2022:
• Engagement formalized and conflict check completed.
• Formal document preservation and litigation hold notice issued to Mr. Caldwell and Caldwell Capital Advisors LLC.
• Extension request letter sent to AUSA Goldfarb (target: December 7, 2022).
• E-discovery vendor (Clearpath Document Solutions Inc.) engaged and project parameters established.
• Initial custodian interviews conducted with Mr. Caldwell to identify all relevant data sources, establish the location and format of documents, and develop a collection plan.
Weeks of December 12–30, 2022:
• Document collection from all identified custodians and data sources completed.
• Collected data transferred to Clearpath for processing, de-duplication, and hosting on review platform.
• Development of search terms, date filters, and review protocol.
• Commencement of first-pass document review.
• Proffer call with AUSA Goldfarb, if not already completed.
Weeks of January 2–20, 2023:
• First-pass responsiveness review completed or substantially completed.
• Privilege review of flagged documents conducted.
• First rolling production prepared and delivered to the government by the January 20, 2023 return date.
Weeks of January 23–February 10, 2023: