United States v. Stephen M. Rakes
136 F.3d 1, 1998 WL 46915 (1998)
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Rule of Law:
The crime-fraud exception to the marital communications and attorney-client privileges does not apply when the privilege holders are victims of a crime. Forfeiture of these privileges requires wrongful complicity in the underlying criminal activity, not merely innocent or involuntary action taken under duress.
Facts:
- In 1983, Stephen and Julie Rakes, with the assistance of their attorney John Sullivan, established and opened a liquor store named Stippo's, Inc.
- Shortly after opening, the Rakeses were allegedly threatened by unnamed people for underpricing competitors.
- In January 1984, James 'Whitey' Bulger allegedly visited Stephen Rakes at home and threatened to kill him unless Bulger or his associates were made partners in the store.
- Following the threat, Stephen Rakes had confidential conversations with his wife, Julie, and his attorney, Sullivan, about the situation.
- By May 1984, the Rakeses, again with Sullivan's legal assistance, transferred ownership of Stippo's, Inc. to an alleged associate of Bulger for a fraction of its value.
- In 1991 and 1995, Stephen Rakes testified before a federal grand jury that he had sold the store voluntarily for a profit and denied being threatened.
Procedural Posture:
- A federal grand jury indicted Stephen Rakes on charges of perjury and obstruction of justice.
- In the U.S. District Court, Rakes filed a pre-trial motion to suppress evidence of conversations with his former wife and former attorney, asserting marital and attorney-client privileges.
- The district court held an in camera hearing on the motion.
- The district court granted Rakes's motion, suppressing the communications with one minor exception.
- The government, as the appellant, filed an interlocutory appeal of the district court's suppression order to the U.S. Court of Appeals for the First Circuit, with Stephen Rakes as the appellee.
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Issue:
Does the crime-fraud exception to the marital communications and attorney-client privileges apply to confidential communications made by victims of an ongoing extortion scheme?
Opinions:
Majority - Boudin, Circuit Judge.
No, the crime-fraud exception to the marital communications and attorney-client privileges does not apply to communications made by victims of a crime. The court held that the Rakeses were victims of the extortion, not willing participants, and their actions did not constitute the kind of wrongful complicity required to vitiate the privileges. The court reasoned that 'participation' as a victim, such as handing over property under threat of violence, is not the type of involvement that triggers the crime-fraud exception. This exception is meant for situations where a client or spouse is actively using the relationship to further a crime, not for victims discussing their plight. The court distinguished this case from precedents where spouses were jointly engaged in a criminal enterprise. Additionally, the court rejected the government's waiver argument, holding that Stephen Rakes's disclosure of the underlying facts of the extortion to a third party did not waive the privilege protecting the separate, confidential communications about those facts with his wife and attorney.
Analysis:
This decision significantly clarifies the scope of the crime-fraud exception to testimonial privileges, establishing a protective boundary for crime victims. It sets a precedent that the exception is triggered by culpable participation in a crime, not by actions taken under duress as a victim. This strengthens the policy rationales behind the marital and attorney-client privileges—promoting open and confidential communication—by assuring victims they can seek spousal and legal counsel without fear of forfeiture. The ruling prevents the government from using the exception to compel testimony from victims about their private discussions concerning the very crime that harmed them, thereby drawing a firm line between a criminal accomplice and an unwilling victim.
