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United States v. Rafiekian

United States District Court, E.D. Virginia, Alexandria Division

July 9, 2019

UNITED STATES OF AMERICA
v.
BIJAN RAFIEKIAN and KAMIL EKIM ALPTEKIN, Defendants.

          MEMORANDUM OPINION AND ORDER

          ANTHONY J. TRENGA UNITED STATES DISTRICT JUDGE.

         Currently before the Court are the following Motions:

         (1) Defendant Bijan Rafiekian's Motion to Dismiss the Indictment [Doc. No. 190] (the “Motion to Dismiss”);

         (2) Defendant Bijan Rafiekian's Motion In Limine to Exclude Out-Of-Court Statements by Co-Conspirators [Doc. No. 154] (the “Motion to Exclude Co-Conspirator Statements”);

         (3) Defendant Bijan Rafiekian's Motion to Dismiss the Indictment and Exclude and Suppress Privileged Information [Doc. No. 163] (the “Motion to Exclude Privileged Information”);

         (4) the Government's Motions to Establish the Crime-Fraud Exception as to Defendants Rafiekian [Doc. No. 173] and Alptekin [Doc. No. 182] (collectively, the “Motions to Establish Crime-Fraud Exception”);

         (5) Defendant Bijan Rafiekian's Motion for an Evidentiary Hearing [Doc. No. 186] (the “Motion for Evidentiary Hearing”);

         (6) Defendant Bijan Rafiekian's Motion In Limine to Preclude the Government From Arguing that Turkey Funded FIG's Work for Inovo [Doc. No. 165] (the “Motion to Preclude Argument on Turkey Funding”); and

         (7) Defendant Bijan Rafiekian's Motion for Additional Peremptory Challenges and a Jury Questionnaire [Doc. Nos. 150 and 152] (the “Motion for Additional Peremptory Challenges and Jury Questionnaire”).

         The Court held hearings on these motions on June 13 and June 28, 2019, following which it took the Motions under advisement. For the reason stated below, the Court rules as follows with respect to the issues raised in these motions:

         (1) In order to prove a violation of 18 U.S.C. § 951, an essential element of the offense is that the defendant engaged in conduct that was not an excluded legal commercial transaction. However, the Superseding Indictment sufficiently alleges in substance the essential elements and the Motion to Dismiss [Doc. No. 190] is DENIED.

         (2) The United States at this point has not presented or proffered evidence sufficient to establish by a preponderance of the evidence a conspiracy for the purposes of admitting against the Defendant the hearsay statements of alleged co-conspirators pursuant to Fed.R.Evid. 801(d)(2)(E); and the Motion to Exclude Co-Conspirator Statements [Doc. No. 154] is GRANTED to that extent, without prejudice to admitting communications to Rafiekian for the limited purpose of establishing what he was told or knew about a relevant issue, or the proffer of additional evidence at trial with respect to admissibility under Fed.R.Evid. 801(b)(2)(E), and is otherwise DENIED.

         (3) Pending further order by the Court, the United States may not argue or state to the jury that Turkey, in fact, funded the work by Flynn Intel Group, Inc. (“FIG”) under the contractual arrangement between FIG and Inovo, BV (“Inovo”); and the Motion to Preclude Argument on Turkey Funding is GRANTED, provided, however, the jury may be told in opening statement what the evidence will show concerning what Rafiekian was told about Turkey's involvement.

         (4) The Defendant shall have 15 peremptory challenges, and the United States 10 peremptory challenges; and the Motion for Additional Peremptory Challenges and Jury Questionnaire [Doc. Nos. 150 and 152] is GRANTED to that extent and is otherwise DENIED.

         (5) With respect to the attorney-client privilege issues presented in the pending motions [Doc. Nos. 163, 173, 182, and 186]:

(a) Defendant Rafiekian's statements to the law firm of Covington & Burling LLP (“Covington”) are not privileged to the extent made for the purposes of the public disclosures contained in the March 7, 2017 filing by Covington on behalf of FIG pursuant to the Foreign Agents Registration Act (“FARA”);
(b) Covington's opinion work product pertaining to the FARA filing, including the information it received, its assessment of that information, the judgments it made, and what caused it to include the allegedly false statements, is not protected opinion work product. However, any other opinion work product cannot be disclosed based on the crime-fraud exception;
(c) The attorney-client privilege attaching to communications from Rafiekian personally, as opposed to communications conveyed in his capacity as a representative of FIG, has not been waived, including as to any such statements by Rafiekian to Covington in August 2016 in connection with his potential retention of Covington; and
(d) Given the Court's ruling as to the non-privileged nature of communications to Covington for the purposes of the FARA filing, and the prospect that the United States will offer into evidence only non-privileged communications to Covington, the Court defers ruling on the remaining privilege issues, which present substantial unresolved legal and factual issues, including whether there was a valid waiver of the attorney-client privilege by Michael Flynn on behalf of FIG at the government's request as part of his duty of cooperation pursuant to the resolution of criminal charges against him and after he caused FIG's dissolution based on allegedly false representations; and if that waiver was invalid, the legal consequences of that conduct.

         I. BACKGROUND

         A. Charges Against Rafiekian

         The Superseding Indictment [Doc. No. 141], returned on May 23, 2019, contains two counts against Rafiekian. Count One charges Rafiekian under 18 U.S.C. § 371 with conspiring with Co-Defendant Kamil Ekim Alptekin[1] and others to (1) act as an agent of the Turkish government without prior notification to the Attorney General in violation of 18 U.S.C. § 951 and (2) file a materially false FARA filing in violation of 22 U.S.C. § 618(a)(2). Count Two charges Rafiekian under 18 U.S.C. § 951 with knowingly acting and causing others to act in the United States as agents of the Turkish government without prior notification to the Attorney General, as required by law. Although Rafiekian is charged with conspiring to file a materially false FARA filing, he has not been charged with an underlying FARA offense, including under either 22 U.S.C. § 618(a)(1) for failing to register as a foreign agent under 22 U.S.C. § 612, or under 22 U.S.C. § 618(a)(2) for a false FARA filing.

         B. The Superseding Indictment

         In support of these charges, the Superseding Indictment alleges the following:[2]

         (1) Flynn Intel Group and its Involvement in the Alleged Conspiracy The Defendant and others participated in a conspiracy that began in July 2016 and continued through March 2017 pertaining to work relating to Turkey performed by FIG, which was co-founded and co-owned by Rafiekian (FIG's Vice-Chairman, Director, Secretary, and Treasurer) and former National Security Adviser Michael Flynn (FIG's Chairman and Chief Executive Officer). Superseding Indictment ¶ 1. To perform this work, FIG was engaged by, and signed a contract with, Inovo, a company formed by Alptekin in the Netherlands. Id. ¶¶ 2, 22. The engagement was formalized in a written contract between FIG and Inovo on or about September 3, 2016, though FIG had begun work on the project, which was initially known as the Truth Campaign and later became known as Operation/Project Confidence, in late July. See Id. ¶ 22. Under the terms of the contract, the parties entered into a 90-day engagement for which FIG was to receive a total of $600, 000 broken into three $200, 000 payments from Inovo, of which Alptekin received twenty percent for his “advisory support.” Id. ¶¶ 17-18, 22.

         Pursuant to its contract with Inovo, FIG was expected to “deliver findings and results including but not limited to making criminal referrals” related to Fethullah Gulen, a Turkish imam, writer, and political figure residing in the United States. Id. ¶¶ 3-4, 22. Specifically, the project was supposed to result in “[a] 60 minutes video productions documenting the investigations” into Gulen. GEX 23B. The purpose of this work was to “discredit and delegitimize [Gulen] in the eyes of politicians and the public, and ultimately to secure [his] extradition.” Superseding Indictment ¶ 3. This goal is in line with the interests of the Turkish government, which has “accused [Gulen] of plotting to overthrow the Turkish government, ” of “being behind” certain politically motivated investigations in Turkey, and of “leading an armed terrorist group, ” and has formally and openly sought his extradition from the United States government, particularly after a failed July 2016 coup d'état attempt in Turkey, which the Turkish government maintained he had orchestrated. Id. ¶¶ 5-7.

         Though FIG's contract for this work was with Inovo, which also paid its fees, the Turkish government directed FIG's work through Alptekin and approved the budget for, and received regular updates on, the progress of FIG's work. Id. ¶ 3. In that regard, several emails between Rafiekian, Alptekin, and Flynn prior to FIG's official engagement indicate that FIG and Inovo only entered into a formal engagement after receiving the approval of high-level Turkish government officials. See Id. ¶¶ 8-9, 14-16. After FIG had been engaged by Inovo, Rafiekian, Alptekin, Flynn, and other members of the project met with high-level Turkish officials on September 19, 2016, where they discussed the Turkish government's efforts to convince the U.S. government to extradite Gulen to Turkey. Id. ¶ 28. Alptekin had weekly telephone calls with Rafiekian, Flynn, and other FIG team members as to FIG's progress on the project, which he then passed on to Turkish officials, and then relayed their feedback on the project to Rafiekian and Flynn. Id. ¶¶ 39-40.

         As part of the project, FIG provided consulting and lobbying services to the Turkish government, Id. ¶ 1, which were designed to “influence U.S. politicians and public opinion, ” Id. ¶ 3. Specifically, Rafiekian and others involved in the project “visited with and lobbied a member of Congress, a Congressional staffer, and a state government official in an attempt to depict [Gulen] as a threat who should be returned to Turkey and to persuade them to hold Congressional hearings regarding [Gulen].” Id. ¶ 30. Rafiekian, working with Alptekin and Flynn, also helped draft an op-ed concerning Gulen entitled Our Ally Turkey Is In Crisis and Needs Our Support, and then helped place it in The Hill newspaper, where it was published on November 8, 2016 under Flynn's name. Id. ¶¶ 45-50. Rafiekian sent Alptekin his initial draft of the op-ed immediately after Alptekin complained to him that FIG had not publicized enough negative information about Gulen and asked that they find a “smoking gun.” Id. ¶ 44.

         (2) The FARA Filing

         In August 2016, Rafiekian contacted, but did not retain, Covington “to provide advice concerning FARA, ” see Ex. G to Mot. to Exclude Privileged Information, and in September 2016, Rafiekian consulted with Robert Kelley, an attorney who later became FIG's General Counsel, about whether FIG was required to register under FARA, see Ex. B to Opp'n to Mots. to Establish Crime-Fraud Exception. Based on Kelley's advice, FIG registered under the Lobbying Disclosure Act (“LDA”) at that time. See id.

         On November 8, 2016, the same day as the publication of the op-ed, Donald Trump won the Presidential election, leading to Flynn's appointment as National Security Advisor designate for the incoming administration, and FIG discontinued its operations soon after. [Doc. No. 164] at 9; see also Ex. A to Reply in Support of Mot. to Exclude Privileged Information. Nevertheless, the publication of the op-ed triggered a letter dated November 30, 2016 to Flynn and FIG from the FARA Registration Unit of the U.S. Department of Justice (the “FARA Unit”) regarding whether FIG, Flynn, or any other individuals had an obligation to register as an agent of a foreign government under FARA. Superseding Indictment ¶ 51; see also Ex. A to Reply in Support of Mot. to Exclude Privileged Information. In response to the FARA Unit's inquiry, FIG, through Flynn, hired Covington to assist with evaluating whether a FARA filing was required, and Flynn also retained Covington personally. Superseding Indictment ¶ 52; see also Ex. 1 to Opp'n to Mot. to Exclude Privileged Information. Concurrently, both FIG as a corporate entity and Flynn personally were also represented by Kristen Verderame. See [Doc. No. 196] at 3.

         By letter dated January 11, 2017, Covington provided a written response to the FARA Unit's November 30, 2016 inquiry. See Ex. A to Reply in Support of Mot. to Exclude Privileged Information. In that letter, Covington advised that “the existence of [the FARA Unit's] letter was not known to General Flynn and FIG until approximately December 24, 2016, because FIG generally suspended its activities in mid-November, including the use of the office to which the letter was sent.” Id. Covington further advised:

[B]ased on currently available information, we anticipate that General Flynn and FIG likely will file a FARA registration statement and supplemental statement for FIG's representation of Inovo BV, in lieu of the Lobbying Disclosure Act (“LDA”) filing that FIG filed on September 30, 2016. Although the LDA filing disclosed FIG's engagement by Inovo BV, in hindsight it seems likely that the subject matter of FIG's representation of Inovo BV may have called for registration under FARA rather than under the LDA . . . . [W]e have not yet reached a final determination as to the foreign principal(s) to be listed in a FARA registration. We are also continuing to assess the role of various consultants and employees who performed work for Inovo BV in order to determine whether any of them are required to file short-form FARA registrations.

Id. With respect to the op-ed authored by Flynn and published in The Hill newspaper on November 8, 2016, Covington advised:

It is our current understanding that the op-ed was initiated by General Flynn himself, and that he intended the op-ed to summarize a No. of his longstanding public statements and positions regarding issues relating to Turkey, Syria, and the Islamic State in Iraq and Syria. We also believe that the op-ed may have been prepared in the context of FIG's representation of Inovo BV, as the draft op-ed was shared with a representative of Inovo BV prior to publication and the op-ed related to subject matters overlapping with FIG's representation of Inovo BV.

Id.

         Based on the information that it obtained during its investigation, including from Flynn, Rafiekian, Alptekin, and others, Covington filed a retroactive FARA registration on FIG's behalf on March 7, 2017 (the “FARA filing”). Superseding Indictment ¶ 55. In its cover letter to the FARA Unit with respect to that filing, Covington stated that it was filing under FARA because FIG's work for Inovo “could be construed to have principally benefitted the Republic of Turkey.” Ex. D to Mot. to Exclude Privileged Information.

         The Superseding Indictment alleges that the FARA filing contains materially false information and that between January and March 2017, Rafiekian and Alptekin “knowingly provided false information to [Covington attorneys] in an effort to hide from the attorneys - and ultimately from the FARA Unit - the involvement of Turkish government officials in the project.” Superseding Indictment ¶ 52. Specifically, the Superseding Indictment alleges that Rafiekian made the following false representations to Covington:

a. The meeting with Turkish officials on or about September 19, 2016 in New York City had nothing to do with Project Confidence, and instead was in furtherance of an abandoned “Project Truth” that was distinct from Project Confidence;
b. There were no other contacts with Turkish government officials regarding the project;
c. The op-ed was [Flynn's] own idea, and he wrote it on his own behalf, and unrelated to the project;
d. [Alptekin] did not want the op-ed to be published; and e. Payments from [FIG] to [Inovo] were refunds for lobbying and public ...

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