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United States v. Gorski

United States Court of Appeals, First Circuit

December 9, 2015

UNITED STATES OF AMERICA, Appellee, Cross-Appellant,
DAVID E. GORSKI, Defendant, Appellee, Cross-Appellee, LEGION CONSTUCTION, INC., Interested Party, Appellant, Cross-Appellee.


Tracy A. Miner, with whom Megan A. Siddall and Demeo LLP were on brief, for Gorski.

Martin G. Weinberg, with whom Kimberly Homan was on brief, for Legion Construction, Inc.

Jennifer Hay Zacks, Assistant United States Attorney, with whom Carmen M. Ortiz, United States Attorney, was on brief, for the United States.

Before Lynch, Selya, and Kayatta, Circuit Judges.


These interlocutory appeals are from a district court order that, among other things, compels the law firm of Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, P.C. (Mintz Levin) to produce certain documents pertaining to a fraud allegedly committed by David Gorski in his operation of Legion Construction, Inc. (Legion). Gorski and Legion appeal the district court's order that attorney-client privileged documents be produced under the crime-fraud exception. The prosecution cross-appeals the district court's decision to exclude communications between Gorski and his personal attorney, Elizabeth Schwartz, from the production order. We conclude that we have jurisdiction over Legion's appeal and the prosecution's cross-appeal, but not over Gorski's appeal. We dismiss Gorski's appeal for want of appellate jurisdiction. We affirm the production order as to Mintz Levin. We vacate the district court's decision to exclude Gorski's communications with Schwartz from the production order and remand that portion of its order.


The prosecution alleges that from about late 2005 to about November 2010, Gorski fraudulently represented to federal government agencies that Legion was a Service-Disabled Veteran Owned Small Business Entity (SDVOSB) in order to qualify for and obtain government contracts.

By statute, at least three percent of all government contracts must go to SDVOSBs. 15 U.S.C. § 644(g)(1)(A)(ii). To qualify as an SDVOSB, an entity must be at least fifty-one percent owned by one or more service-disabled veterans. 13 C.F.R. § 125.9; 38 C.F.R. § 74.3. The entity must also be controlled by one or more service-disabled veterans, meaning that both long-term decision-making and day-to-day management are conducted by service-disabled veterans. 13 C.F.R. § 125.10(a); 38 C.F.R. § 74.4(a), (c)(1). Before February 8, 2010, the service-disabled veteran owners were not required to work full time but had to "show sustained and significant time invested in the business." 38 C.F.R. § 74.4(c)(1) (2008). Effective February 8, 2010, the regulations were amended to require that a service-disabled veteran owner "work full-time in the business." 38 C.F.R. § 74.4(c)(1) (2010). The February 8, 2010, amendment also eliminated the self-certification procedure that had been in effect for SDVOSBs, replacing it with a formal verification process. 38 C.F.R. § 74.2. The essence of the criminal case against Gorski is that Gorski, a non-veteran, made false statements about the ownership, operation, and control of Legion to appear to be in compliance with the SDVOSB eligibility requirements while retaining effective ownership and control of the company for himself.

The prosecution alleges the following facts. Around late 2005, Gorski approached Veteran A, a service-disabled veteran, to start a construction business targeting SDVOSB contracts. Gorski told Veteran A that he wanted Veteran A's involvement for his "veteran status." Gorski filed a certificate of incorporation for Legion in January 2006, with Veteran A listed as president and himself as vice president.

From January 2006 to August 2007, Veteran A was nominally the fifty-five percent owner of Legion. In August 2007, Gorski caused Legion to undergo a corporate restructuring in which Gorski became a nominal forty-nine percent owner, Veteran A became a nominal eleven percent owner, and Veteran B -- also a service-disabled veteran -- became nominal owner of the remaining forty percent. However, Veteran A received no compensation for the stock that he relinquished. Meanwhile, Gorski retained effective control of Legion by having the veterans execute demand notes payable to Gorski and secured by their shares of Legion stock, as well as by having them sign employment agreements that allowed Gorski to terminate their employment with Legion for cause. Gorski also placed his wife on Legion's payroll even though she had fulltime employment elsewhere, as a disguised method to pay himself more money than he was paying the veterans. Throughout this time, Legion was awarded government contracts based on representations that it qualified as an SDVOSB.

In late 2009, Legion retained Mintz Levin in anticipation of the February 8, 2010, amendment in regulatory criteria for SDVOSBs. Mintz Levin effected a corporate restructuring under which Veteran B purchased Veteran A's remaining stock, resulting in Veteran B nominally owning fifty-one percent of Legion's shares and Gorski nominally owning forty-nine percent. Although the purchase did not occur until March 23, 2010, the documents were dated "as of" February 1, 2010 -- before the date of the regulatory amendments.

At some point, Gorski also engaged Elizabeth Schwartz, an attorney unaffiliated with Mintz Levin, for legal advice ...

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