United States v. Chen
United States Court of Appeals for the Ninth Circuit
99 F.3d 1495 (1996)
Tei Fu Chen and his wife (defendants) owned Sunrider Corporation, which imported goods from Asia. Their comptroller, at their direction, created fictitious invoices overstating what Sunrider paid for imported goods, which the Chens used to claim inflated costs and reduce their income tax liability. Sunrider's attorneys had no knowledge of this scheme. After the comptroller left the company, she gave incriminating documents to a customs agent, and the government indicted the Chens and Sunrider for tax evasion, conspiracy, and related crimes. When the government subpoenaed two Sunrider attorneys to testify before a grand jury, the attorneys moved to quash the subpoena on attorney-client privilege grounds; the district court denied the motion under the crime-fraud exception, despite finding the attorneys were unaware of the scheme, and the attorneys appealed.
Whether the crime-fraud exception to attorney-client privilege applies when there is a prima facie showing that a client's privileged communications furthered a present or intended crime, even though the client's attorney had no knowledge of the wrongdoing.