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Current Developments in the Commercial Divisions of the
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Posted: August 20, 2016

Law Firm Records Ordered Produced Under Crime-Fraud Exception

On August 11, 2016, Justice Bransten of the New York County Commercial Division issued a decision in Fragin v. First Funds Holdings LLC, 2016 NY Slip Op. 31537(U), ordering the production of privileged documents under the crime-fraud exception, explaining:

The central issue on this motion is whether the documents that Moses and Singer seeks to shield under the attorney-client privilege are nonetheless discoverable pursuant to the crime-fraud exception. The crime-fraud exception encompasses a fraudulent scheme, an alleged breach of fiduciary duty or an accusation of some other wrongful conduct. A party seeking to invoke the crime-fraud exception must demonstrate that there is a factual basis for a showing of probable cause to believe: (1) that a fraud or crime has been committed and (2) that the communications in question were in furtherance of the fraud or crime. Fragin has made this requisite two-part showing.

Fragin has demonstrated facts adequate to support a conclusion by probable cause that the asset transfer between FFH and Principis, executed around the time of Fragin’s investment, was a fraudulent conveyance under DCL ยง 276.

. . .

The seventeen documents produced in camera for the Court’s review likewise contain communications made in furtherance of the alleged fraudulent conveyance and fraud. By this, the Court does not find for the purpose of this motion that Moses & Singer attorneys knowingly participated in Mezei’s allegedly fraudulent conduct. Such a showing is not required. Instead, the documents demonstrate work by Moses & Singer attorneys at Mezei and Cohen’s behest, and on Mezei and Cohen’s behalf, in furtherance of the asset transfer, which as addressed above, satisfies the first prong of the crime-fraud exception test.

(Internal quotations and citations omitted) (emphasis added).

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