Commercial Litigation and Arbitration

Attorney Admissions Offered Against Client

When are extrajudicial statements of counsel admissible against the client? In United States v. Jung, 473 F.3d 837 (7th Cir. 2007), the defendant was charged with securities fraud for putting his investors' money at risk for debts that were not theirs (i.e., exposing their assets to cross-collateralization, which resulted in millions of dollars in losses). The distinguished District Judge admitted statements from the defendant's corporate counsel that the defendant's actions were improper and illegal and that the defendant had taken the investors' assets unbeknownst to them, among others. The government proffered evidence that these statements were made by the attorney in conversations with investors made at his client’s behest. The Court of Appeals recognized that "[a]n attorney may be the agent of his client for purposes of Rule 801(d)(2)(D)." It held these statements inadmissible, however, because the attorney was not, when he spoke, acting "in an investigative capacity" or "attempting to develop a defense strategy" but, rather, acting to "notify victims about the situation on behalf of defendant as part of a strategy to be cooperative."

Why this distinction should be dispositive, from an evidentiary perspective, is a bit puzzling. The Seventh Circuit admirably wanted to avoid chilling the attorney-client relationship. If, however, the defendant himself had made the calls to investors, the statements would be in. If the defendant had engaged a PR firm to do it, same result. Cushioning the blow by asking his lawyer to serve as an intermediary would seem to fall squarely within Rule 801(d)(2)(D).

In all events, the Seventh Circuit held the error harmless and affirmed the conviction.

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