Embattled personal injury attorney Tom Girardi claims a search warrant executed by the FBI to obtain evidence from his firm’s bankruptcy trustee violated his Fourth Amendment rights, Brandon Lowrey of Law360 writes.

“[The] arguments raise a sensitive question at the intersection of bankruptcy and criminal law: When can Chapter 7 bankruptcy trustees, who are obligated to cooperate with law enforcement, waive a debtor’s privilege and search-and-seizure rights?” Lowrey writes.

According to Lowery’s article, Girardi’s Ch. 7 Evidence Fight May Raise Novel Issues (subscription required), the FBI obtained millions of emails and records from Girardi Keese via its bankruptcy trustee that Girardi says are his personal documents.  While case law allows a trustee to waive some rights on behalf of a corporation or partnership, according to Lowery, sole proprietorships like Girardi Keese are treated as private individuals.  The trustee had no right to waive Girardi’s personal rights, Girardi’s counsel argues, so the FBI’s seizure and review of documents without a warrant or Girardi’s waiver of privilege was improper.

Bienert Katzman Littrell Williams LLP Partner Steven Jay Katzman, spoke with Lowery on the matter. 

“Steven Katzman, whose experience includes years as a federal prosecutor specializing in bankruptcy fraud and as a U.S. trustee, said he cannot recall ever serving a search warrant on a bankruptcy trustee or hearing about it being done. But he said Girardi's arguments are compelling and raise "bona fide, litigable issues."

Katzman, a partner with Bienert Katzman Littrell Williams LLP, said there was a strong legal argument that trustees are acting as agents of the government when cooperating with law enforcement. Trustees' statutory obligations to turn over evidence are enforced by their supervisor, the U.S. trustee, whose office is part of the U.S. Department of Justice.

The attorney-client privilege issue also touches on some sparse areas of case law. However, Katzman said, current law suggests privilege would remain intact for documents provided to a bankruptcy trustee. The success of this argument may depend on whether Girardi reasonably expected his communication with his counsel to be confidential, Katzman said.”

U.S. District Judge Josephine L. Staton will hear argument on Girardi’s motion on July 26, 2024.  Girardi’s trial is currently set for August 2024.

Read more:

• Read the full article on Law360.com (subscription required).
• Learn more about BKLW’s bankruptcy litigation practice, including creditor, debtor, and trustee representation, asset recovery investigation, claims objections, and plan confirmation at bkwlaw.com.