People v. Radojcic , 2013 IL 114197 ( 2013 )

2013 IL 114197
IN THE
SUPREME COURT
OF
THE STATE OF ILLINOIS
(Docket Nos. 114197, 114214 cons.)
THE PEOPLE OF THE STATE OF ILLINOIS, Appellee, v.
BUDIMIR RADOJCIC et al., Appellants.
Opinion filed November 21, 2013.
JUSTICE THEIS delivered the judgment of the court, with opinion.
Chief Justice Garman and Justices Freeman, Thomas, Kilbride,
Karmeier, and Burke concurred in the judgment and opinion.
OPINION
¶1 At issue in this appeal is whether, pursuant to the crime-fraud exception
to the attorney-client privilege, attorney Mark Helfand may testify
regarding communications with Budimir Radojcic, a former client, at
Radojcic’s criminal trial. The circuit court of Cook County concluded that
the State failed to meet its evidentiary burden for application of the
exception, and struck Helfand’s name from the State’s witness list. The
appellate court reversed, holding that the crime-fraud exception applied.
2012 IL App (1st) 102698.
¶2 For the reasons that follow, we affirm the judgment of the appellate
court.
¶3 BACKGROUND
¶4 On December 5, 2007, a Cook County grand jury entered a 52-count
indictment against Radojcic, Helfand, and three others: Suzana Radojcic
and Mirjana Omickus (Radojcic’s daughters), and Christa Patterson. The
indictment charged defendants with the following crimes: continuing
financial crimes enterprise (720 ILCS 5/16H-50 (West 2008)); conspiracy
to commit a financial crime (720 ILCS 5/16H-45 (West 2008)); financial
institution fraud (720 ILCS 5/16H-25 (West 2008)); theft (720 ILCS 5/16-1
(West 2008)); money laundering (720 ILCS 5/29B-1 (West 2008)); forgery
(720 ILCS 5/17-3 (West 2008)); wire fraud (720 ILCS 5/17-24(a) (West
2008)); and mail fraud (720 ILCS 5/17-24(b) (West 2008)). The indictment
also charged Radojcic individually with being an organizer of a continuing
financial crimes enterprise. 720 ILCS 5/16H-55 (West 2008).
¶5 Generally, the State alleged that, beginning in August 2004, defendants
participated in a scheme, orchestrated by Radojcic, under which properties
owned or otherwise controlled by him, which he had allegedly converted
to condominiums, were sold to straw buyers who then conveyed the
properties back to Radojcic. To purchase the properties, the straw buyers
allegedly obtained mortgage loans through fraudulent means.
¶6 The indictment focused on 10 such mortgages and two straw buyers.
Specifically, the State alleged that Suzana Radojcic and Mirjana Omickus
recruited Danijela Kuljanin and Biljana Aranyos to purchase certain
properties for Radojcic’s benefit. Aranyos purchased four condominium
units at 5516 South Prairie Avenue in Chicago, and three condominium
units at 3338 South Calumet Avenue in Chicago. Kuljanin purchased three
condominium units at 6507 South Langley Avenue in Chicago. Suzana
Radojcic paid Kuljanin at least $2,000 to purchase the three units for
Radojcic, and Radojcic told Aranyos and Kuljanin that he would make the
mortgage payments for them. According to the indictment, the lenders
defrauded in these transactions included Wells Fargo Bank, Franklin
American Mortgage Company, Credit Suisse Financial Corporation,
Countrywide Mortgage Corporation, Mortgage Lender USA, Inc., Argent
Mortgage Company, Taylor Bean & Whitaker Mortgage Company, BNC
Mortgage, Inc., and Long Beach Mortgage Company.
¶7 Suzana Radojcic and Omickus prepared the mortgage loan applications
for the 10 properties at issue. Those applications, the State alleged, were
materially false in that they overstated the applicant’s income, overstated
the amount of money the applicant had on deposit, and/or overstated the
amount of the applicant’s earnest money deposit. At least with respect to
the purchases involving Aranyos, Omickus allegedly facilitated the
temporary deposit of funds into Aranyos’ personal account to create the
impression that Aranyos had the appropriate funds on hand. Omickus and
Suzana Radojcic also submitted to the lenders “gift letters” falsely
reporting that Aranyos and Kuljanin had received gifts of money, which
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had been deposited into their respective accounts.
¶8 Christa Patterson, the office manager for Jewel Windows, which also
employed Aranyos, coordinated the real estate closings, provided
verification of employment for certain buyers, signed real estate sales
contracts for certain properties, and arranged for appraisals that used other
properties Radojcic owned as comparable properties. Patterson also
communicated with Helfand who, as part of the scheme, set up a land trust
under which Patterson held the power of direction.
¶9 The State further alleged that Radojcic took the proceeds from the
condominium sales, which were received at closing in the form of checks
from the title company, to the Belmont and Cicero Currency Exchange.
There, Radojcic obtained several money orders in various amounts, with
the name of the payee and remitter in blank, to conceal his involvement.
¶ 10 In addition to communicating with Jewel Windows and setting up a
land trust, the State alleged that Helfand caused condominium declarations
and bylaws to be created and filed to support the mortgage applications.
Helfand further caused deeds to be signed and recorded in which Radojcic,
through others, retained control of the properties. In particular, Helfand
prepared deeds for the three condominium units Kuljanin purchased, and
instructed her to execute the deeds, which she did, so that the units could
be transferred back to Radojcic.
¶ 11 Finally, the State alleged that Radojcic, through an entity known as
B&B Properties II, LLC, fraudulently obtained rental checks exceeding
$500,000 from the United States Department of Housing and Urban
Development.
¶ 12 In November 2009, following discovery, the State indicated its intent
to call Helfand as a witness during its case in chief, in exchange for “use
immunity.” See 725 ILCS 5/106-2.5(b) (West 2008). Both Helfand and
Radojcic filed written objections, arguing that such testimony would violate
the attorney-client privilege. According to Helfand’s pleading, in which
Radojcic joined, between late 2002 and 2008, Helfand was hired to perform
legal work for Radojcic, Patterson, “and their affiliated companies.”
Helfand, who described himself as a “real estate and corporate attorney,”
stated that the “real estate work for Radojcic consisted primarily of
representing Bozena Radojcic [Radojcic’s wife] and the affiliated
companies of Radojcic in the buying and selling of real estate, converting
apartment buildings into condominiums, and appearing in court to clear up
building [code] violations.”
¶ 13 The State maintained that Helfand’s testimony regarding the work he
performed in connection with the real estate transactions identified in the
indictment would not require disclosure of confidential communications
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and, therefore, would not implicate the attorney-client privilege. The State
further maintained that, to the extent Helfand’s testimony would reveal
confidential communications, his testimony should be allowed pursuant to
the crime-fraud exception to the attorney-client privilege. In support of its
argument that the crime-fraud exception applied, the State relied on the
grand jury testimony of Patterson and Aranyos, as well as the grand jury
testimony of Thomas Hoffman, an agent for the Department of Housing and
Urban Development, upon which the indictment in this case was returned.1
¶ 14 Aranyos testified that she worked for Jewel Windows from February
2005 through September 2006, primarily in the company’s construction and
home improvement sector. She was paid $500 per week in cash. Aranyos
understood that Radojcic, who hired her, was the owner. Aranyos, however,
reported to Patterson, the office manager. Radojcic was in the office for
only brief periods of time, typically meeting with Patterson behind closed
doors.
¶ 15 According to Aranyos, Radojcic’s three daughters—Mirjana, Suzana,
and Zorika—all worked in the mortgage industry. In early 2006, Mirjana
approached Aranyos about buying a condominium in a three-unit building
at 3338 South Calumet Avenue in Chicago. Aranyos understood that
Radojcic would be the actual owner and, pursuant to a written agreement,
Radojcic would make the payments on the mortgage Aranyos obtained.
Aranyos agreed to obtain a mortgage for that property, as well as the other
two condominiums in the three-unit Calumet Avenue building. In addition,
she obtained mortgages in her name on all four condominiums in a four-
unit building at 5116 South Prairie Avenue in Chicago.2 In exchange for her
participation in the condominium purchases, Aranyos received $40,000 in
cash. Aranyos understood that each condominium she purchased was in
some way “operated” by Radojcic or B&B Properties, a Radojcic company
that bought and sold real estate. Aranyos became aware that the
condominium units were later rented and that B&B Properties was the
1
Although Radojcic and Helfand maintain that a transcript of
Hoffman’s grand jury testimony was not before the trial court, we have
carefully reviewed the record and conclude otherwise. We note that the
initial page of the transcripts bears the stamp of the circuit court, evincing
a filing date of March 5, 2010. That date coincides with the filing date of
the State’s response to Radojcic’s and Helfand’s objection to Helfand
testifying.
2
The record is unclear as to whether the Prairie Avenue condominiums
that Aranyos purchased were located at 5116 or 5516 South Prairie Avenue.
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landlord.
¶ 16 Aranyos further testified that she did not understand the mortgage
process and simply signed the mortgage applications and related documents
that Mirjana and Patterson prepared. Some of the mortgage documents
misstated the length of her employment at Jewel Windows or overstated her
income. In addition, the earnest money required for the purchases was
supplied by Patterson. Aranyos explained that cash, totaling as much as
$65,000, was temporarily deposited into her account and withdrawn after
closing. At least in one instance, the funds were returned to B&B
Properties. Aranyos also testified regarding a “gift letter” submitted to a
lender which falsely indicated a gift of $65,000 had been made to her by
her uncle, Marvin Freeman. No gift was made, and Freeman was not her
uncle; he was the owner of the Belmont and Cicero Currency Exchange,
with whom Jewel Windows did considerable business.
¶ 17 Aranyos testified that following two of the closings, she signed
quitclaim deeds transferring the properties back to Radojcic or Jewel
Windows. She recalled that Helfand attended at least two closings,
representing Radojcic or B&B Properties.
¶ 18 Patterson testified that she worked for Radojcic for 15 years. Although
she is listed with the Secretary of State’s office as the sole proprietor of
Jewel Windows, Patterson testified that Radojcic owns and operates the
company. Patterson identified other companies, including B&B Properties,
B&R Investments, Fields Windows and Doors, and Fields Interior and
Exterior Corporation, that are owned and operated by Radojcic, even
though, on paper, Patterson or Radojcic family members are identified as
the owners. Patterson testified that Radojcic would purchase multiunit
buildings, convert the buildings to condominiums, and sell the
condominiums to straw buyers. The buyers would transfer the property
back to one of Radojcic’s companies, after which Radojcic would rent the
units. Radojcic’s name, however, would not appear on any of the
documentation.
¶ 19 While employed at Jewel Windows, Patterson was involved in
obtaining straw buyers and facilitating the mortgage application process.
She confirmed that the mortgage applications contained false information,
and that funds, belonging to Radojcic, were temporarily deposited into a
buyer’s account until the mortgage was obtained. Funds were obtained
through the Belmont and Cicero Currency Exchange, which Radojcic and
Jewel Windows used as a bank. Radojcic maintained no bank accounts.
Patterson also worked with certain appraisers, telling them what value
needed to be set for a property, and identifying which Radojcic properties
could be used as “comps.”
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¶ 20 Patterson testified that she communicated with Helfand, who prepared
the condominium conversion documents and two deeds for each property.
One deed, which was included in the closing packet, conveyed the property
from a Radojcic company to the straw buyer. A second deed, which
Helfand would have recorded a week or two after the closing, conveyed the
property back to the same or a different Radojcic company. Patterson
provided directions to Helfand identifying the company to which Radojcic
wanted the property conveyed and how the funds should be distributed.
Patterson explained:
“We sold condos straight out and we used straw buyers to take the
mortgages out. So if we sold a condo straight out, if the condo was
worth 250, Bud [Radojcic] would only want 200. So the direction
given to Mark [Helfand] is, Bud only gets $200,000. The change
goes to the buyer.”
The “change” was payment to the straw buyer for permitting his or her
name to be used in the transaction.
¶ 21 With respect to the Langley Avenue building, Patterson testified that
the mortgage applications for the three units Kuljanin purchased were
provided to three different lenders simultaneously, so that the applications
could be processed simultaneously and, as a result, close within a day or
two of each other. In this way, the lenders would not be aware that Kuljanin
was buying three units. The loans for the three Langley Avenue units were
obtained through Bell Capital, for whom Kuljanin, Radojcic’s three
daughters, and Radojcic’s former wife, Mira Kostic, worked.
¶ 22 With respect to the Calumet Avenue building, Patterson testified that
the property was originally purchased in the name of Radojcic’s wife. The
property was then transferred to B&B Properties, which, in turn, sold the
three units to Aranyos. Helfand attended all three closings. According to
Patterson, she sometimes instructed Aranyos to convey directions to
Helfand, and that he was thus aware that Aranyos worked at Jewel
Windows.
¶ 23 Finally, Patterson testified that she maintained a list of all of
Radojcic’s properties, indicating how title was held. The condominium
units were used as rental property, 90% of which were occupied by “section
8” tenants.3 The Department of Housing and Urban Development issued
rent checks for such tenants to B&B Properties, which in turn were
3
This is an apparent reference to section 8 of the United States Housing
Act of 1937, providing federally funded low-income housing assistance.
See 42 U.S.C. § 1437f.
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conveyed to Radojcic. Patterson explained that Radojcic’s name did not
appear on any of the Department’s documents because Radojcic was $2
million in debt to the Internal Revenue Service.
¶ 24 Hoffman, an agent for the Department of Housing and Urban
Development, testified that he participated in an investigation of Radojcic
in cooperation with the United States Secret Service and postal inspection
agents. The investigation disclosed that Radojcic, Helfand, Patterson,
Omickus, and Suzana Radojcic were involved in a mortgage fraud scheme.
Hoffman’s testimony concerning the overall scheme, including the false
mortgage applications, the straw buyers, the transfer of the properties back
to a Radojcic company, use of the properties as section 8 housing, and
Helfand’s involvement in the real estate closings, tracked Patterson’s
testimony. Hoffman also testified, like Patterson, that Radojcic’s name did
not appear on any of the documents.
¶ 25 Hoffman further testified that shortly after the closings on the three
Langley Avenue units that Kuljanin purchased, Kuljanin deeded all three
units to a land trust, in which Patterson held the power of direction.
Helfand was involved in this transaction and notarized Kuljanin’s signature
on the deed transferring the properties to the trust. According to Hoffman,
the three lenders involved in the initial purchase were not notified of the
transfer.
¶ 26 Finally, Hoffman testified that during 2005, 2006, and a portion of
2007, the Department of Housing and Urban Development paid B&B
Properties, for section 8 housing, approximately $700,000. Had the
Department been aware of the underlying fraud, those funds would not
have been paid.
¶ 27 After considering the foregoing transcripts and the parties’ arguments,
the trial court ruled that the State had not met its evidentiary burden for
application of the crime-fraud exception, and struck Helfand’s name from
the State’s witness list. The State subsequently filed a certificate of
substantial impairment and notice of appeal.
¶ 28 The appellate court, applying de novo review, reversed and remanded
for a trial at which the State may call Helfand as a witness. 2012 IL App
(1st) 102698, ¶¶ 2, 12. Relying on the standard set forth in In re Marriage
of Decker, 153 Ill. 2d 298 (1992), the appellate court found that the grand
jury testimony presented by the State “would give a reasonable person
cause to suspect that the client here used his communications with his
attorney to advance his attempts to commit crimes or fraud.” Id. ¶ 2.
¶ 29 We allowed the petitions for leave to appeal filed by Radojcic and
Helfand (Ill. S. Ct. R. 315 (eff. Feb. 26, 2010)), and consolidated the cases
for review.
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¶ 30 ANALYSIS
¶ 31 I
¶ 32 At issue is whether the State made the requisite evidentiary showing for
application of the crime-fraud exception. The parties disagree as to the
appropriate standard of review. Radojcic argues that the trial court’s ruling
should be reviewed for an abuse of discretion. Although Helfand advocates
a bifurcated standard of review, he, too, argues that the trial court’s ruling
as to the admissibility of his testimony should be reviewed for an abuse of
discretion. The State, echoing the appellate court, urges de novo review.
We agree with the State.
¶ 33 The standard of review identifies the degree of deference a reviewing
court will give to the decision below. See In re D.T., 212 Ill. 2d 347, 355
(2004); AFM Messenger Service, Inc. v. Department of Employment
Security, 198 Ill. 2d 380, 390 (2001); Timothy J. Storm, The Standard of
Review Does Matter: Evidence of Judicial Self-Restraint in the Illinois
Appellate Court, 34 S. Ill. U. L.J. 73 (2009). The most deferential standard
of review is abuse of discretion, which is “traditionally reserved for
decisions made by a trial judge in overseeing his or her courtroom or in
maintaining the progress of a trial.” D.T., 212 Ill. 2d at 356. Radojcic
argues that this deferential standard applies here because the trial court was
required to make factual findings in order to determine whether the crime-
fraud exception applies.
¶ 34 Although a trial court’s factual findings are accorded deference on
review and will only be reversed if they are against the manifest weight of
the evidence, that deference “is grounded in the reality that the circuit court
is in a superior position to determine and weigh the credibility of the
witnesses, observe the witnesses’ demeanor, and resolve conflicts in their
testimony.” People v. Richardson, 234 Ill. 2d 233, 251 (2009). Here,
however, the State offered no live testimony, only transcripts from the
grand jury proceedings. Thus, the trial court did not occupy a position
superior to the appellate court or this court in evaluating the evidence
offered by the State in support of the crime-fraud exception. See Addison
Insurance Co. v. Fay, 232 Ill. 2d 446, 453 (2009).
¶ 35 Furthermore, the only “finding” the trial court made was that the State
had failed to make the evidentiary showing required for application of the
exception. That determination was not a factual one, but rather a legal one,
not unlike a trial court’s ultimate ruling on a suppression motion. Such
legal determinations are reviewed de novo. See Richardson, 234 Ill. 2d at
251 (“a court reviews de novo the ultimate legal question posed by the
challenge to the circuit court’s ruling on the suppression motion”). We note
that in a case similar to the one at bar, where we were called upon to review
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deposition testimony to determine whether a party had waived the attorney-
client privilege, we applied de novo review. Center Partners, Ltd. v.
Growth Head GP, LLC, 2012 IL 113107, ¶ 65 (citing Norskog v. Pfiel, 197
Ill. 2d 60, 71 (2001)). Radojcic and Helfand offer no reasoned basis for
applying a different standard here.
¶ 36 We recognize, as Radojcic notes, that federal courts of appeal have
reviewed district court decisions regarding the crime-fraud exception for
an abuse of discretion. See, e.g., United States v. BDO Seidman, LLP, 492
F.3d 806, 818 (7th Cir. 2007); In re Feldberg, 862 F.2d 622, 626 (7th Cir.
1988). We are not bound by these decisions (Sundance Homes, Inc. v.
County of Du Page, 195 Ill. 2d 257, 276 (2001)), and decline to adopt the
federal standard of review as our own. We will follow Illinois precedent
and apply de novo review.
¶ 37 II
¶ 38 Preliminary to our consideration of the parties’ arguments, we consider
the nature of the attorney-client privilege and the crime-fraud exception.
¶ 39 The attorney-client privilege is the oldest of the privileges for
confidential communications known to the common law. 8 John H.
Wigmore, Evidence § 2290, at 542 (McNaughton rev. ed. 1961). The
purpose of the privilege, which belongs to the client (Decker, 153 Ill. 2d at
313), is to encourage and promote full and frank communication between
the client and his or her attorney, without the fear that confidential
information will be disseminated to others. People v. Simms, 192 Ill. 2d
348, 381 (2000); Consolidation Coal Co. v. Bucyrus-Erie Co., 89 Ill. 2d
103, 117-18 (1982). The privilege embodies the principle that sound legal
advice and advocacy are dependent upon such full and frank
communication. Upjohn Co. v. United States, 449 U.S. 383, 389 (1981).
¶ 40 This court has recognized the following essential elements for the
creation and application of the attorney-client privilege:
“ ‘(1) Where legal advice of any kind is sought (2) from a
professional legal adviser in his capacity as such, (3) the
communications relating to that purpose, (4) made in confidence
(5) by the client, (6) are at his instance permanently protected (7)
from disclosure by himself or by the legal adviser, (8) except the
protection be waived.’ ” People v. Adam, 51 Ill. 2d 46, 48 (1972)
(quoting 8 John H. Wigmore, Evidence § 2292, at 554
(McNaughton rev. ed. 1961)).
Accord Simms, 192 Ill. 2d at 381. Although this formulation of the privilege
suggests that only communications “by the client” are protected from
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disclosure, the modern view is that the privilege is a two-way street,
protecting both the client’s communications to the attorney and the
attorney’s advice to the client. Edward J. Imwinkelried, The New Wigmore:
A Treatise on Evidence § 6.6.1, at 585 (2002). See also Midwesco-Paschen
Joint Venture for the Viking Projects v. Imo Industries, Inc., 265 Ill. App.
3d 654, 660-61 (1994) (rejecting the argument that only communications
from a client to an attorney are covered by the attorney-client privilege); In
re Marriage of Granger, 197 Ill. App. 3d 363, 374 (1990) (observing that
the attorney-client privilege applies “not only to the communications of a
client to his attorney, but also to the advice of an attorney to his client”).
¶ 41 The attorney-client privilege, like all testimonial privileges, is
inherently “inconsistent with the search for truth” because it “prevent[s]
otherwise relevant and admissible evidence from being disclosed.” People
v. Knuckles, 165 Ill. 2d 125, 135 (1995). Thus, the attorney-client privilege
constitutes a departure from the general duty to disclose and, accordingly,
must be “strictly confined within its narrowest possible limits.” Waste
Management, Inc. v. International Surplus Lines Insurance Co., 144 Ill. 2d
178, 190 (1991). The crime-fraud exception, relevant here, is one of the
recognized limits to the attorney-client privilege. The exception is triggered
“when a client seeks or obtains the services of an attorney in furtherance of
criminal or fraudulent activity.” Decker, 153 Ill. 2d at 313. “[W]here the
crime-fraud exception applies, no attorney-client privilege exists
whatsoever.” Id.
¶ 42 The rationale underlying the crime-fraud exception is intimately
connected to the nature of the attorney-client relationship. As we explained
in Decker, “in seeking legal counsel to further a crime or fraud, the client
does not seek advice from an attorney in his professional capacity.” Id. The
client either conspires with the attorney or deceives the attorney. In the
former case, the privilege will not apply because it cannot be the attorney’s
business to further any criminal object. In the latter case, the privilege does
not apply because the attorney’s advice has been obtained by a fraud. Id. In
other words, the attorney-client privilege “takes flight if the relation is
abused.” Clark v. United States, 289 U.S. 1, 15 (1933).
¶ 43 A client, of course, may consult with his or her attorney about the legal
implications of a proposed course of conduct, or how to defend against the
legal consequences of past conduct, without triggering the crime-fraud
exception. Such good-faith consultations are protected by the attorney-
client privilege. Decker, 153 Ill. 2d at 314; 8 John H. Wigmore, Evidence
§ 2298, at 573 (McNaughton rev. ed. 1961). The privilege does not extend,
however, to a client who seeks or obtains the services of an attorney to
further an “ongoing or future crime or fraud.” Edward J. Imwinkelried, The
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New Wigmore: A Treatise on Evidence § 6.13.2, at 976 (2002). Such a
client “will have no help from the law.” Clark, 289 U.S. at 15. See also
Edna Selan Epstein, The Attorney-Client Privilege and the Work-Product
Doctrine, in Section of Litigation, American Bar Association 253 (3d ed.
1997) (“All the policy reasons that support the existence of the [attorney-
client] privilege are said to cease as soon as the line is crossed from advice
on conforming one’s actions to the mandate of the law or defending against
the consequences of past actions into the domain of contemplated or actual
illegal action.”).
¶ 44 Disclosure of otherwise privileged attorney-client communications
under the crime-fraud exception cannot be based solely on a charge of
illegality unsupported by any evidence. Decker, 153 Ill. 2d at 321. Rather,
“[t]o drive the privilege away, there must be something to give colour to the
charge.” (Internal quotation marks omitted.) Id. (quoting Clark, 289 U.S.
at 15). Specifically, the proponent of the crime-fraud exception must
present evidence from which a “ ‘prudent person’ ” would have a
“ ‘reasonable basis to suspect’ ” (1) “ ‘the perpetration or attempted
perpetration of a crime or fraud, and’ ” (2) “ ‘that the communications were
in furtherance thereof.’ ” Decker, 153 Ill. 2d at 322 (quoting In re Grand
Jury Subpoena Duces Tecum Dated September 15, 1983, 731 F.2d 1032,
1039 (2d Cir. 1984)).4 The difficulty of making this evidentiary showing
lies in the fact that the best and often only evidence of whether the
exception applies is the allegedly privileged communication itself. Id.
“However, if the communication itself is used to make the initial
determination of whether the crime-fraud exception applies, the privilege
is violated and the protected interest suffers because of the forced public
revelation.” Id.
¶ 45 In Decker, this court addressed this evidentiary dilemma and adopted
the approach set forth in United States v. Zolin, 491 U.S. 554 (1989). Id. at
323-25. Under this approach, the trial court may conduct in camera review
of the communications at issue to determine whether the crime-fraud
exception applies. Before such review may be undertaken, however, the
proponent of the crime-fraud exception must make “ ‘ “a showing of factual
basis adequate to support a good faith belief by a reasonable person,”
[citation] that in camera review of the materials may reveal evidence to
establish the claim that the crime-fraud exception applies.’ ” Id. at 324
(quoting Zolin, 491 U.S. at 572). This evidentiary showing is lesser than the
showing ultimately needed to establish application of the crime-fraud
4
This evidentiary burden has been described as both a prima facie
showing and a probable cause showing. See Decker, 153 Ill. 2d at 322.
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exception. Id. Ideally, in camera review should be conducted by a judge
other than the judge presiding over the matter at which the communications
would be introduced. Id. at 325. In camera questioning of the attorney must
be narrowly tailored so that confidential information is not needlessly
disclosed. Id.
¶ 46 Overall, the approach adopted in Decker for in camera review balances
the interests protected by the attorney-client privilege with this state’s
“strong policy of encouraging disclosure, with an eye toward ascertaining
that truth which is essential to the proper disposition of a lawsuit.” Waste
Management, 144 Ill. 2d at 190.
¶ 47 With this background, we consider the parties’ arguments.
¶ 48 III
¶ 49 Radojcic and Helfand urge us to reverse outright the judgment of the
appellate court, arguing that Helfand performed legitimate and routine legal
services in connection with Radojcic’s real estate transactions, and that the
State never contended that Helfand’s work was anything but lawful. We
reject this argument. The focus of the crime-fraud exception is on the intent
of the client (Radiac Abrasives, Inc. v. Diamond Technology, Inc., 177 Ill.
App. 3d 628, 635 (1988)), not the legitimacy of the services provided by
the attorney. An attorney may be completely innocent of wrongdoing, yet
the privilege will give way if the client sought the attorney’s assistance for
illegal ends. Clark, 289 U.S. at 15. Although here, the State also secured an
indictment against the attorney, proof that Helfand participated in the
mortgage fraud scheme is a matter distinct from, and not a necessary
condition for, application of the crime-fraud exception.
¶ 50 Radojcic and Helfand also argue that the evidence submitted by the
State was insufficient to meet its burden under Decker. We disagree.
¶ 51 As set forth in greater detail earlier in this opinion, Patterson was a
Radojcic employee for 15 years and office manager of Jewel Windows. She
was intimately involved in Radojcic’s business affairs and testified
extensively about Radojcic’s real estate transactions and business practices.
Patterson relayed that Radojcic, through several companies which, on
paper, were owned by her and Radojcic family members, purchased
multiunit buildings, converted them to condominiums, and sold the
condominiums to straw buyers who transferred the properties back to a
Radojcic company. Thereafter, Radojcic would rent the condominiums,
primarily as section 8 housing. According to Patterson, Radojcic owed the
Internal Revenue Service $2 million, and Radojcic thus kept his name off
of any corporate, mortgage, real estate or financial documents. Radojcic
used the Belmont and Cicero Currency Exchange as a bank, funneling
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funds obtained at the real estate closings through the exchange. Patterson
also testified regarding the fraudulent statements made on the mortgage
applications, the methods used to inflate a straw buyer’s assets, the manner
in which the appraisal process for the condominiums was influenced, and
the process used to insure that the lenders were unaware that a straw buyer
was purchasing more than one condominium unit at the same time.
¶ 52 Aranyos, one of the two straw buyers identified in the indictment,
testified that Radojcic hired her to work at Jewel Windows and that she
understood Radojcic was the owner. She explained how she had been
approached by one of Radojcic’s daughters about obtaining a mortgage in
her name, but for Radojcic’s benefit. Although earning only $500 per week
at Jewel Windows, Aranyos was able to secure seven mortgages in her
name to buy properties she understood were in some way operated by
Radojcic. Aranyos identified some of the fraudulent means utilized by
Radojcic’s daughter and Patterson in the mortgage application process:
overstating salary, enhancing employment history, creating fictional gifts
from family members, and depositing funds, temporarily, into Aranyos’
account.
¶ 53 Agent Hoffman’s testimony regarding the joint investigation of
Radojcic by federal authorities was generally consistent with Patterson’s
testimony. Hoffman also verified that Radojcic, through an entity known
as B&B Properties, had received approximately $700,000 through the
Department of Housing and Urban Development for his section 8 tenants.
¶ 54 As to the legal services Helfand provided, Aranyos testified that
Helfand attended at least two of the closings representing either Radojcic
or B&B Properties. Patterson testified that Helfand prepared the
condominium conversion documents, and prepared and had recorded two
deeds for each of the sales: one transferring the property from a Radojcic
entity to the straw buyer, and one transferring the property from the straw
buyer back to a Radojcic entity. Helfand also took direction from Patterson,
and at times from Aranyos, as to which company Radojcic wanted the
property conveyed, and how Radojcic wanted the sale proceeds divided.
The division of proceeds included a payment to the straw buyer. Hoffman
likewise testified as to Helfand’s involvement in the condominium
conversions and real estate closings, as well as Helfand’s involvement in
the transfer of the three units Kuljanin purchased into a land trust
controlled by Patterson.
¶ 55 We conclude that the grand jury testimony satisfied the State’s burden
under Decker to provide “a reasonable basis to suspect the perpetration or
attempted perpetration of a crime or fraud” by Radojcic. (Internal quotation
marks omitted.) Decker, 153 Ill. 2d at 322. By all accounts, Radojcic was,
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to use the State’s parlance, “at the center” of an elaborate scheme through
which carefully structured real estate transactions became the vehicles
through which he was able to defraud numerous lenders, as well as the
Department of Housing and Urban Development, all the while keeping his
name off of any documentation. We disagree with Radojcic that the State’s
evidence does not connect him to the fraudulent mortgage applications
themselves. Although no evidence was offered that Radojcic completed or
signed the mortgage applications, the implication of Patterson’s and
Aranyos’ testimony is that Radojcic caused or prompted the making of the
false mortgage applications. Helfand concedes this point.
¶ 56 We also conclude that the grand jury testimony satisfied the State’s
burden under Decker to provide a reasonable basis to suspect that
Radojcic’s communications with Helfand, to the extent they relate to the
real estate transactions identified in the indictment, “were in furtherance”
of the mortgage fraud scheme. Id. Contrary to the position advanced by
Radojcic and Helfand, the State was not required to offer evidence that
Radojcic communicated with Helfand regarding the fraudulent mortgage
applications. The filing of the mortgage applications was but one step in the
mortgage fraud scheme allegedly employed by Radojcic. That scheme
began with Radojcic’s acquisition of multiunit buildings, and included the
conversion of those buildings to condominiums, the sale of the
condominiums to straw buyers for a kickback, the transfer of the
condominiums back to Radojcic, the eventual rental of the condominiums
as section 8 housing, and the funneling of sale proceeds through the
currency exchange. Thus, even if the communications between Radojcic
and Helfand did not touch on the mortgage applications themselves, we
agree with the State that any legal consultations between Radojcic and
Helfand that related to the real estate transactions identified in the
indictment furthered Radojcic’s mortgage fraud scheme. As the appellate
court observed, “Without the sales documents and the closings of the sales,
the banks would not have loaned the straw purchasers the money.” 2012 IL
App (1st) 102698, ¶ 24.
¶ 57 We recognize that the State offered no evidence of direct
communication between Radojcic and Helfand. Rather, the implication of
the grand jury testimony is that Radojcic communicated with Helfand
through Patterson. Whether Patterson was acting as an agent of Radojcic
or otherwise was not litigated in the trial court, and that issue is not
properly before us. We need only determine whether the State offered
sufficient evidence to suspect that Radojcic’s communications with
Helfand—however those communications were carried out—furthered
Radojcic’s mortgage fraud scheme. The State met its evidentiary burden.
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¶ 58 Relying on Mueller Industries, Inc. v. Berkman, 399 Ill. App. 3d 456
(2010), Radojcic argues that “[w]ithout reviewing the communications
themselves, no court can conclusively find that the crime-fraud exception
applies to them.” Thus, Radojcic maintains that, at a minimum, this case
must be remanded for in camera examination of Helfand. We disagree.
¶ 59 Decker did not hold that in camera review is required in every case
before a court can determine that the crime-fraud exception applies. Rather,
Decker simply recognized the often difficult task of proving the exception
using only evidence independent of the communication itself. Decker, 153
Ill. 2d at 322. Had this court intended in camera review to be a requirement
in every case in which the crime-fraud exception is at issue, we would not
have left the decision to conduct in camera review to the trial court’s
discretion. Id. at 324.
¶ 60 Zolin, on which Decker relied, also makes plain that in camera review
is not indispensable to a showing that the crime-fraud exception applies.
See Zolin, 491 U.S. at 575 n.13 (observing that, on remand, the court of
appeals would have the opportunity to determine whether enough evidence
was presented to establish that the sought-after tapes came within the
crime-fraud exception, “even without in camera review of the tapes”).
Moreover, we agree with Zolin that a blanket rule allowing or requiring in
camera review as a tool for determining the applicability of the crime-fraud
exception would place an undue burden on our trial courts. Id. at 571.
¶ 61 Radojcic’s reliance on Mueller in support of in camera examination of
Helfand is misplaced. In Mueller, the appellate court considered whether
five categories of documents sought by the plaintiff, which the defendant
maintained were subject to the attorney-client privilege, were discoverable
under the crime-fraud exception. Relying on Decker, the appellate court
remanded the matter to the trial court to conduct an in camera review of the
documents to determine conclusively which documents, if any, furthered
the defendant’s alleged fraud. Mueller, 399 Ill. App. 3d at 472-73.
¶ 62 Although remand for in camera review may have been appropriate in
Mueller, its analysis is flawed because it suggests that the proponent of the
crime-fraud exception must make a prima facie showing before a court may
hear evidence in camera. Id. at 470. As Decker makes plain, a lesser
showing is required for in camera review. Decker, 153 Ill. 2d at 324. This
inconsistency aside, the circumstances prompting in camera review in
Mueller are absent from the instant case. We are not here faced with an
extensive production request. Our task is simply to determine whether
Helfand may testify about certain communications with Radojcic. We have
already determined that any communication relating to the real estate
transactions identified in the indictment furthered the alleged fraud and are
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not shielded by the attorney-client privilege. No reason exists for Helfand
to be examined in camera prior to testifying at trial.
¶ 63 Radojcic’s fear, that all attorney-client communications between
himself and Helfand will be subject to release unless Helfand is examined
in camera, is unfounded. We reiterate that the only attorney-client
communications subject to disclosure are communications that relate to the
real estate transactions identified in the indictment. Communications
between Radojcic and Helfand that relate to any other matter are yet
shielded by the attorney-client privilege.
¶ 64 CONCLUSION
¶ 65 For the reasons stated, we affirm the judgment of the appellate court.
¶ 66 Affirmed.
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