carson.motion to compel discovery

8/8/2019 Carson.motion to Compel Discovery

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Thomas H. Bienert, Jr. (SBN 135311) [email protected] BIENERT, MILLER, WEITZEL & KATZMAN, PLC115 Avenida MiramarSan Clemente, California 92672Phone: 949 369-3700, Fax: 949 369-3701Attorneys for Defendant, PAUL COSGROVE

Nicola T. Hanna (SBN 130694) [email protected] GIBSON DUNN & CRUTCHER LLP3161 Michelson Drive, Suite 1200Irvine, California 92612Phone: 949 451-3800, Fax: 949 451-4220Attorneys for Defendant, STUART CARSON

Kimberly A. Dunne (SBN 142721) [email protected] SIDLEY AUSTIN LLP555 W. Fifth Street, Suite 4000Los Angeles, California 90013-1010Phone: 213 896-6000, Fax: 213 896-6600Attorneys for Defendant, HONG CARSON

David W. Wiechert (SBN 94607) [email protected] LAW OFFICES OF DAVID W. WIECHERT107 Avenida Miramar, Suite ASan Clemente, California 92672Phone: 949 361-2822, Fax: 949 496-6753Attorneys for Defendant, DAVID EDMONDS

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIASOUTHERN DIVISION

UNITED STATES OF AMERICA

Plaintiff,

v.

STUART CARSON, HONG CARSON,

a/k/a Rose Carson, PAULCOSGROVE, DAVID EDMONDS,FLAVIO RICOTTI, and HAN YONGKIM,

Defendants.

CASE NO. SA CR-09-0077-JVS DEFENDANTS JOINT NOTICE OFMOTION AND MOTION TOCOMPEL DISCOVERY;[PROPOSED] ORDER

Date: September 28, 2009Time: 9:00 a.m.Ctrm: 10C [Hon. James V. Selna]

Case 8:09-cr-00077-JVS Document 101 Filed 09/04/09 Page 1 of 59


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TABLE OF CONTENTS

TABLE OF AUTHORITIES iv

MEMORANDUM OF POINTS AND AUTHORITIES . 1

I. INTRODUCTION . 1II. IMI/CCIS COOPERATION WITH THE GOVERNMENT

AND WITHHOLDING OF DISCOVERY .. 2

III. THE DOCUMENTS AND INFORMATION DEFENDANTSSEEK ARE DISCOVERABLE UNDER RULE 16, BRADY AND ITS PROGENY .. 6

A. The Government is Obligated to Produce the RequestedDocuments Under Rule 16(a)(1)(E) Because TheyAre In Its Possession, Custody or Control and AreMaterial to the Defense ... 6

1. The Documents Defendants Seek Are in theGovernments Possession, Custody or Control . 6

2. The Documents Defendants Seek are Materialto the Defense ... 9

a. CCIs Electronic Database .. 10

b. The 5.5 Million Pages of RelevantEvidence Housed in CCIs ElectronicDatabase . 15

c. The Documents Identified in CCIsPrivilege Log That CCI Disclosed tothe Government . 15

i. The Attorney-Client Privilege

Does Not Apply to theDocuments in the Privilege LogBecause They Were Prepared forthe Government 17

ii. Any Attorney-Client PrivilegeHas Been Waived 19



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iii. Work Product Protection HasBeen Waived 19

d. Documents Missing from the DiscoveryProduced by the Government . 21

e. IMI/CCIs 2007 Investigation Materials . 23

f. Documents Relating to IMI/CCIs 2004Audit 25

g. Documents Relating to Any Investigations,Audits or Inquiries Conducted by IMI/CCIinto Allegations of Wrongdoing byDefendants .......................................................... 27

h. IMI/CCIs FCPA and Travel Act TrainingMaterials . 27

i. The Set of Binders in Ms. Carsons Office,and the Binder Mr. Cosgrove Gaveto Steptoe 28

j. Defendants Personnel Files 28

k. Documents Reflecting CommunicationsBetween IMI and/or CCI and theGovernment 29

l. Documents Reflecting CommunicationsBetween IMI/CCI and Customers orThird-Party Witnesses Regarding theAllegations in the Indictment .. 31

m. Documents Relating to the InternalInvestigation Conducted by ChinaNational Offshore Oil Corporation andAny Other CCI Customers intoAllegations of Bribery by CCI 32

n. The Government is Obligated UnderRule 16(a)(1)(A) and (B) to Producethe Notes and Written Reports of Defendants Statements . 34



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B. The Court Should Compel the Government to ProduceExculpatory Evidence, Including the 2007 InvestigationMaterials, Correspondence Between IMI/CCI and theGovernment, and 2004 Audit Documents to theExtent They Contain Brady Material .. 36

C. The Court Should Compel the Government to ProduceImpeachment Evidence, Including the 2007Investigation Materials, 2004 Audit Documents, andCooperating Witnesses Computers and PersonnelFiles to the Extent They Contain Giglio Material 40

D. Defendants are Entitled to Statements of Non-TestifyingAlleged Co-conspirators .. 42

E. The Court Should Direct the Government to PreserveAgents/Investigators Notes and Continue toProduce Discovery on an Ongoing Basis 42

F. The Court Should Direct the Government to Complywith the Courts Order Regarding the Bill of Particulars . 43

IV. CONCLUSION .. 44



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TABLE OF AUTHORITIES

CASES:

Beckwith v. United States

425 U.S. 341 (1976) .36 Brady v. Maryland

373 U.S. 83 (1963) passim

Garrity v. New Jersey385 U.S. 493 (1967) .36

Giglio v. United States405 U.S. 150 (1972) .40

Hamric v. Bailey386 F.2d 390 (4 th Cir. 1967) ..40, 41

In re Columbia/HCA Healthcare Corp. Billing Practices Litigation293 F.3d 289 (6 th Cir. 2002) 20

In re Grand Jury Invest.974 F.2d 1068 (9 th Cir. 1992) ..17

In re Leslie Fay Companies, Inc. Securities Litigation226 F.R.D. 579 (N.D. Ohio 2005) ...21

In re OM Group Securities Litigation226 F.R.D. 579 (N.D. Ohio 2005) ...21

In re Qwest Communications Intl Inc.450 F.3d 1179 (10 th Cir. 2006) 19

In re Syncor Erisa Litigation229 F.R.D. 636 (C.D. Cal. 2005) 19

LaMere v. Risley827 F.2d 622 (9 th Cir. 1987) 40

Napue v. Illinois360 U.S. 264 (1959) ..40-41

Pennsylvania v. Ritchie480 U.S. 39 (1987) .43

United States v. Acosta357 F. Supp. 2d 1228 (D. Nev. 2005) 37



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TABLE OF AUTHORITIES CONTINUED:

CASES CONTD:

United States v. Agurs427 U.S. 97 (1976) ...37, 43

United States v. Bagley473 U.S. 667 (1985) ...40

United States v. Bailleaux685 F.2d 1105 (9 th Cir. 1982) ....35

United States v. Bergonzi216 F.R.D. 487 (N.D. Cal. 2003) ... passim

United States v. Black 767 F.2d 1334 (9 th Cir. 1985) ....31

United States v. Cadet 727 F.2d 1453 (9 th Cir. 1984) 40, 41, 42

United States v. Harris543 F.2d 1247 (9 th Cir. 1976) 42

United States v. Hibler 463 F.2d 455 (9 th Cir. 1972) .37

United States v. Intl Union of Petroleum & Indus. Workers, AFL-CIO870 F.2d 1450 (9 th Cir. 1989 ..6

United States v. Johnson525 F.2d 999 (2d Cir. 1975) .35

United States v. Kilroy523 F. Supp. 206 (E.D. Wis. 1981) .. 9

United States v. Layton564 F. Supp. 1391 (D. Or. 1983) 35

United States v. Liquid Sugars, Inc.158 F.R.D. 466 (E.D. Cal 1994) .10

United States v. Lloyd 992 F.2d 348 (D.C. Cir. 1993) 10, 13, 16

United States v. Mandel914 F.2d 1215 (9 th Cir. 1990) 9



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CASES CONTD:

United States v. Marshall132 F.3d 63 (D.C. Cir. 1998) ....27

United States v. Mass Inst. of Tech.129 F.3d 681 (1 st Cir. 1997) ..20

United States v. Miller 529 F.2d 1125 (9 th Cir. 1976) .36, 37

United States v. Morrison43 F.R.D. 516 (N.D. Ill. 1967) .35

United States v. Nicholas606 F. Supp. 2d 1109 (C.D. Cal. 2009) ..24, 36

United States v. Payden613 F. Supp. 800 (S.D.N.Y. 1983) ...42

United States v. Poindexter 727 F. Supp. 1470 (D.D.C. 1989) 35

United States v. Pollard 856 F.2d 619 (4 th Cir. 1988) 30

United States v. Price566 F.3d 900 (9 th Cir. 2009) ....37

United States v. Stein488 F. Supp. 2d 350 (S.D. N.Y. 2007) .6, 7, 8, 9, 30

United States v. Sudikoff 36 F. Supp. 2d 1196 (C.D. Cal. 1999) ...17, 37

United States v. Thompson562 F.3d 387 (D.C.Cir. 2009) .20

United States v. Turkish458 F. Supp. 874 (S.D.N.Y. 1978) .42

United States v. Zuno-Arce44 F.3d 1420 (9 th Cir. 1995) 40



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STATUTES:

The Foreign Corruption Practices Act of 1977 ...1, 25, 27, 28

The Travel Act of 1952 ...1, 25, 27, 28

The Jencks Act ...42

18 U.S.C. 1519...1

RULES:

Fed. R. Crim. P. 16 . passim Fed. R. Evid. 801(d)(2)(E) ....42

TREATISES:

7 Moores Federal Practice 34.14[2][b] (3d ed. 2006) 6



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Thomas H. Bienert, Jr. (SBN 135311) [email protected] BIENERT, MILLER, WEITZEL & KATZMAN, PLC115 Avenida MiramarSan Clemente, California 92672Phone: 949 369-3700, Fax: 949 369-3701Attorneys for Defendant, PAUL COSGROVE

Nicola T. Hanna (SBN 130694) [email protected] GIBSON DUNN & CRUTCHER LLP3161 Michelson Drive, Suite 1200Irvine, California 92612Phone: 949 451-3800, Fax: 949 451-4220Attorneys for Defendant, STUART CARSON

Kimberly A. Dunne (SBN 142721) [email protected] SIDLEY AUSTIN LLP555 W. Fifth Street, Suite 4000Los Angeles, California 90013-1010Phone: 213 896-6000, Fax: 213 896-6600Attorneys for Defendant, HONG CARSONDavid W. Wiechert (SBN 94607) [email protected] LAW OFFICES OF DAVID W. WIECHERT107 Avenida Miramar, Suite ASan Clemente, California 92672Phone: 949 361-2822, Fax: 949 496-6753Attorneys for Defendant, DAVID EDMONDS

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIASOUTHERN DIVISION

UNITED STATES OF AMERICA

Plaintiff,

v.

STUART CARSON, HONG CARSON,

a/k/a Rose Carson, PAULCOSGROVE, DAVID EDMONDS,FLAVIO RICOTTI, and HAN YONGKIM,

Defendants.

CASE NO. SA CR-09-0077-JVS DEFENDANTS JOINT NOTICE OFMOTION AND MOTION TOCOMPEL DISCOVERY;[PROPOSED] ORDER

Date: September 28, 2009Time: 9:00 a.m.Ctrm: 10C [Hon. James V. Selna]



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TO THE HONORABLE COURT, ALL PARTIES AND THEIR

ATTORNEYS OF RECORD:

PLEASE TAKE NOTICE that on September 28, 2009, at 9:00 a.m., in the

courtroom of the Honorable James V. Selna, or as soon thereafter as this mattermay be heard, defendants Stuart Carson, Paul Cosgrove, Hong Carson, and David

Edmonds will, and hereby do, move this Court to compel the government to

produce the following discovery:

Control Components Inc.s (CCI) Electronic Database collected

during its internal investigation;

The documents identified in CCIs privilege log that CCI disclosed to

the government;

Documents missing from the 37,000 pages of discovery produced to

date by the government;

Documents relating to the 2007-08 investigation into commission

payments conducted on behalf of CCI and/or its parent company, IMI

plc (IMI);

Documents relating to the 2004 audit of commission payments

conducted on behalf of IMI and/or CCI (IMI/CCI), including

documents reviewed by the auditors, documents reflecting results of the

audit, and any related communications of CCIs Board of Directors,

management, and/or employees;

Documents relating to any investigations, audits, or inquiries conducted

by IMI/CCI into allegations of wrongdoing by Defendants; IMI/CCIs FCPA and Travel Act training materials, including training

offered in China in or around 2006;

The set of binders in the possession of defendant Hong Carson as of

August 17, 2007, containing materials related to CCI commission

payments for projects in China, and the binder defendant Cosgrove



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gave to the law firm of Steptoe & Johnson (Steptoe) in August 2007

containing information relating to CCIs commission payments and

CCIs organizational structure;

Defendants personnel files from IMI/CCI; Documents reflecting communications and/or agreements between

IMI/CCI and the government, including the U.S. Department of Justice,

the U.S. Attorneys Office for the Central District of California, and the

Federal Bureau of Investigation;

Documents reflecting communications between IMI/CCI and

customers or third-party witnesses regarding the allegations in the

Indictment;

Documents relating to the internal investigation undertaken by CCI

customers, including, but not limited to, China National Offshore Oil

Corporation (CNOOC), Dongfang Electric (Dongfang), Guohua

Electric Power (Guohua) and the Chinese State-owned Assets

Supervision and Administration Commission (SASAC), into

allegations of bribery by CCI and/or its employees, including

communications between CCI and/or the government and CNOOC,

Dongfang, Guohua, SASAC and/or the Chinese government, and

communications between CCI and the government relating to the

alleged bribery of CNOOC, Dongfang, Guohua and/or other officials;

Notes and any written reports, memoranda or e-mail summaries of

Defendants statements made to Steptoe and/or Ernst & Young inAugust 2007;

Discovery required by Brady v. Maryland , 373 U.S. 83 (1963) and

Giglio v. United States , 405 U.S. 150 (1972);

Statements of non-testifying alleged co-conspirators; and

Supplemental Bill of Particulars.



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This motion is based on the instant Notice, the attached Memorandum of

Points and Authorities, and the exhibits attached to the Declaration of Kenneth

Miller, and is brought pursuant to Rule 16 of the Federal Rules of Criminal

Procedure, Brady v. Maryland , 373 U.S. 83 (1963), Giglio v. United States , 405U.S. 150 (1972), all other applicable constitutional, statutory, and case authority,

and such evidence and argument as may be presented at the hearing of this motion.

DATED: September 4, 2009 Respectfully submitted,

BIENERT, MILLER, WEITZEL & KATZMANPLC

By: S/Thomas H. Bienert, Jr. _________________Thomas H. Bienert, Jr.Attorneys for Defendant PAUL COSGROVE

GIBSON, DUNN & CRUTCHER LLP

By: S/Nicola T. Hanna _____________________Nicola T. Hanna

Attorneys for Defendant STUART CARSON

SIDLEY AUSTIN LLP

By: S/Kimberly A. Dunne _________________Kimberly A. DunneAttorneys for Defendant HONG CARSON

LAW OFFICES OF DAVID W. WIECHERT

By: S/David W. Wiechert _________________David W. WiechertAttorneys for Defendant DAVID EDMONDS



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MEMORANDUM OF POINTS AND AUTHORITIES

I. INTRODUCTION

In a 16-count indictment returned on April 8, 2009 (the Indictment), the

government charges six former executives, including Stuart Carson, Hong RoseCarson, Paul Cosgrove and David Edmonds (collectively Defendants) of Rancho

Santa Margarita-based Control Components Inc. (CCI or the Company) with

orchestrating a wide-ranging conspiracy to violate the Foreign Corrupt Practices

Act (the FCPA) and the Travel Act. The Indictment also charges various

combinations of defendants with nine counts of substantive violations of the FCPA

and five counts of substantive violations of the Travel Act. Additionally, the

Indictment charges one defendant with obstruction of justice under 18 U.S.C.

1519.

As this Court is aware, the allegations in the Indictment are sweeping both

in terms of the timeframe (and frequency) of the alleged wrongdoing, as well as in

the geographic diversity of the locations in which the wrongdoing allegedly

occurred. According to the Indictment, over a nine-year period (between 1998 and

2007), Defendants allegedly made and caused [CCI] employees and agents to

make corrupt payments to officers and employees of numerous state-owned and

privately-owned customers around the world for the purpose of assisting in

obtaining or retaining business for [CCI]. Indictment, 14. And the government

alleges that between 2003 and 2007, the Defendants bribed customers in over

thirty countries with approximately 236 payments totaling approximately

$6.85 million to secure a series of projects that resulted in net profits to [theiremployer, CCI] of approximately $46.5 million. Id . The government has also

alleged that, in addition to these payments, Defendants bribed customers with

overseas holidays, extravagant vacations, lavish sales events, and

expensive gifts. Id. , 19, 20, 22 & 23.

CCI, identified as Company A in the Indictment, designs and manufactures



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control valves for use in the nuclear, oil and gas, and power generation industries. 1

CCI is a subsidiary of a British firm, IMI, plc (IMI). Exh. A. CCI is a large and

diverse enterprise, with thousands of customers across the globe. CCI presently

employs individuals in over 15 countries and utilizes commissioned local salesrepresentative organizations in over 60 countries. Id .

Defendants are former CCI executives, each of whom worked at CCI for a

substantial period of time. Stuart Carson was the Chief Executive Officer of CCI

from 1989 to 2005. Indictment, 4. Rose Carson served as CCI's Manager of

Sales for China and Taiwan from 2000 to 2002 and then served as Director of

Sales for China and Taiwan from 2002 to 2007. Paul Cosgrove was CCI's

Executive Vice President from 2002 to 2007 and served as the head of CCI's

Worldwide Sales Department from 1992 to 2007. Id. , 6. Dave Edmonds was

CCI's Vice-President of Worldwide Customer Service from 2000 to 2007. Id. , 7.

II. IMI/CCIs COOPERATION WITH THE GOVERNMENT ANDWITHHOLDING OF DISCOVERY

In 2007, IMI and CCI initiated an internal investigation into alleged unlawful

payments and expenses in connection with CCI's procurement of contracts. IMIretained the law firm of Steptoe & Johnson (Steptoe) to conduct the internal

investigation and Steptoe, in turn, retained the accounting firm of Ernst & Young

(EY) to assist with the investigation. As part of the internal investigation, Steptoe,

EY and CCI personnel interviewed defendants Rose Carson, Cosgrove and

Edmonds (Interviewed Defendants) in August 2007 and took notes of the

interviews.

Further, EY collected from IMI and CCI over 5.5 million pages of relevant

documents and electronic records worldwide, including e-mail, accounting records,

1 See CCI Website Profile attached as Exhibit A to the Declaration of Kenneth Miller (Miller Declaration).



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agency agreements, and forensic images of over 200 computer hard drives, which

were compiled into a comprehensive, searchable electronic database (CCI

Electronic Database), and Steptoe conducted over 125 employee interviews in

approximately 15 countries, including the United States, the United Kingdom,Switzerland, Italy, France, Austria, Sweden, Japan, Korea, China, Malaysia,

Singapore, India, Indonesia, and the United Arab Emirates. 2

Steptoe produced to the government real time updates of its witness

interviews, presumably including oral descriptions of the Interviewed Defendants

statements made to Steptoe in August 2007. Exh. B, p. 5, lns. 19-26. At the

governments request, IMI and CCI also prepared extensive factual analyses and

summaries identifying the 236 alleged improper payments as well as alleged

improper expenses, which the government relied upon to tailor its investigation and

secure the Indictment against Defendants. Id . at p. 6, lns. 1-18.

Incredibly, of the more than 5.5 million pages of relevant documents obtained

by IMI and CCI, Steptoe selected less than 1% roughly 42,000 pages to disclose

to the government, seemingly focusing on those documents that appear to cast

blame on Defendants while protecting IMI and CCIs own interests. The

government apparently relied primarily on the 42,000 pages hand-picked by IMI and

CCI in tailoring its investigation and securing the Indictment against Defendants.

CCIs Plea Agreement confirms that the government has control over the

entire scope of the 5.5 million pages of relevant documents in this case, thereby

giving it access to what is essentially an entire warehouse of documents material to

the defense. But despite Defendants detailed requests for this discovery, and thegovernments control over and access to the documents Defendants seek, the

2 See Memorandum on Behalf of Control Components, Inc. in Support of Rule11(c)(1)(C) Plea and Agreed-Upon Sentence (CCI Sentencing Memo), p. 3, lns.11-19; 23-26, attached as Exhibit B to the Miller Declaration.



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government has produced only 37,000 pages of discovery to Defendants of the

42,000 received from CCI and disclosed only oral descriptions of the purported

statements the Interviewed Defendants made to Steptoe and EY. The government

also refuses to produce IMI/CCIs analyses and summaries documents prepared atthe governments request and disclosed to the government under the guise of the

attorney-client and attorney work product privileges asserted by CCI, and maintains

that it has otherwise complied with its discovery obligations to Defendants in this

case. The government is mistaken.

The 5.5 million pages of relevant documents contained in CCIs Electronic

Database demonstrate that the amount of evidence material to Defendants case far

exceeds the approximately 37,000 pages of discovery the government has produced

in this case. The government essentially outsourced its investigation to Steptoe and

is now trying to avoid producing documents it indisputably would have to produce if

it had the documents in its physical possession. The government should not be

permitted to use the fact that Steptoe conducted the investigation as a shield from

producing the documents Defendants seek, while it has the ability to use this

evidence as a sword against Defendants at a later time.

Given the cooperative relationship between CCI and the government, which is

both documented and mandated by contract in the CCI Plea Agreement, it is clear

that the government has control over the entire scope of material documents in this

case, and has the ability to access them with a simple request to CCI. To limit the

governments Rule 16 obligations to production of the small subset of documents

currently in the governments hands would effectively permit a cooperatingdefendant such as CCI to steer the governments investigation and craft the evidence

in a manner that furthers its own interests at the expense of others who are not privy

to the information from which the cooperating defendant cherry-picked.

Moreover, the government has failed to produce Brady material that is

indisputably in its possession, despite its assurances and the Courts standing Order.



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Despite Defendants repeated requests for Brady material in April and June 2009,

the government sat on patently exculpatory information, including a letter from

Steptoe dated June 22, 2009, wherein CCI acknowledged the possibility that some

or all of the funds in question were . . . not passed through to employees of customers or end users. The government chose to produce Steptoes letter only

after Defendants learned through media reports that CCI had informed a Chinese

customer that it had no evidence of bribes being paid to its employees (despite a

DOJ press release and CCIs representations to the Court in its Statement of Facts to

its Plea Agreement that said otherwise), and after Defendants specifically asked the

government for all information and documents related to the media report (and over

one month after the government assured Defendants that it had complied with its

Brady obligations). The governments nonchalance about complying with its

discovery obligations contravenes the Courts Order requiring forthwith production

of Brady material and stands to prejudice Defendants ability to prepare their

defense.

Considering the complexity of the case, including the vast number of

witnesses located in various parts of the world and the number of transactions at

issue in the Indictment, it is imperative that all discovery to which Defendants are

entitled be produced well in advance of trial, including forthwith production of

Brady material, in order to facilitate Defendants effective preparation for trial and

avoid any delays. Because the documents Defendants seek are material to the

defense and are within the governments control, and because any applicable

privileges have been waived as a result of IMI/CCIs disclosure to the government,the government simply has no basis for failing to produce the requested discovery to

Defendants or withholding patently exculpatory information. Accordingly,

defendants Stuart Carson, Rose Carson, Paul Cosgrove and David Edmonds move

the Court for an order compelling production of the items described herein.



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III. THE DOCUMENTS AND INFORMATION DEFENDANTS SEEK AREDISCOVERABLE UNDER RULE 16, BRADY AND ITS PROGENY

A. The Government is Obligated to Produce the Requested DocumentsUnder Rule 16(a)(1)(E) Because They are in Its Possession, Custody orControl and Are Material to the Defense

1. The Documents Defendants Seek are in the GovernmentsPossession, Custody or Control

Federal Rule of Criminal Procedure 16(a)(1)(E) (Rule 16) provides that the

government must permit the defendant to inspect and to copy all documents and

other physical objects in the governments possession, custody or control that are

(i)material to preparing the defense, (ii) intended for use by the government as

evidence in its case-in-chief at trial, or (iii) obtained from or belonging to the

defendant. Fed. R. Crim. P. 16(a)(1)(E)(i)-(iii). CCIs Plea Agreement gives the

government the unqualified right to demand from CCI the production of any non-

privileged documents within CCIs control. As a result, the government is in

possession, custody or control of documents that are stored at IMI/CCI and its

agents and is obligated to produce them to the extent they are material to the

defense. Legal ownership of the requested documents or things is not

determinative, nor is actual possession necessary if the party has control of the

items. Control has been defined to include the legal right to obtain the documents

requested upon demand. The term control is broadly construed. United States

v. Stein , 488 F. Supp. 2d 350, 361 (S.D.N.Y. 2007) (quoting MOORES FEDERAL

PRACTICE 34.14[2][b], at 34-64 (3d ed. 2006) (footnotes omitted)); accord

United States v. Intl Union of Petroleum & Indus. Workers, AFL-CIO , 870 F.2d

1450, 1452 (9th Cir. 1989).As reflected in CCIs Plea Agreement:

CCI agrees to continue to cooperate fully with the Department and the

Federal Bureau of Investigation, in a manner consistent with the non-

waiver agreement between the parties, dated October 18, 2007, and

consistent with applicable law and regulations including labor, data



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protection, and privacy laws. . . . CCI shall truthfully disclose to the

Department all non-privileged information with respect to the

activities of CCI and its affiliates, its present and former directors,

officers, employees, agents, consultants, contractors andsubcontractors, concerning all matters relating to corrupt payments to

foreign public officials or to employees of private customers in

connection with their operations about which CCI has any knowledge

and about which the Department, the Federal Bureau of Investigation,

or, at the request of the Department, any foreign law enforcement

authorities and agencies, shall inquire. This obligation of truthful

disclosure includes the obligation of CCI to provide to the

Department, upon request, any non-privileged document, records, or

other tangible evidence relating to such corrupt payments to foreign

public officials or to employees of private customers about which the

aforementioned authorities and agencies shall inquire of CCI, subject

to the direction of the Department. 3

In Stein , defendants, former KPMG partners, sought from the government

production of correspondence between KPMG and the government, including draft

plea agreements and other communications, on the grounds that the government had

control over the requested documents based on the governments legal right under

KPMGs Deferred Prosecution Agreement to obtain any documents relating to the

case from KPMG. 488 F. Supp. 2d at 357. KPMG resisted production, arguing that

the government did not have Rule 16 control over the documents that were not in itsphysical possession whether or not the government may assert a claim to the

documents pursuant to the Deferred Prosecution Agreement. Id . at 360, 363. It

3 See CCI Plea Agreement, 6 attached as Exhibit C to the Miller Declaration.



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also argued the Deferred Prosecution Agreement simply vested discretion in the

government to request documents from KPMG, leaving the court unable to compel

the government to make such a request. Id . at 363.

Rejecting KPMGs first argument, the court held that Rule 16 speaks of possession, custody or control, not simply possession. Id . KPMGs arguments

would read the words custody or control out of the rule in flat contravention of the

principle that all words in a statute, rule or contract are to be given meaning

whenever possible. It therefore is not surprising that every circuit to have

considered the question has held that control under the federal rules of procedure

includes the legal right to obtain the documents in question. Id . In rejecting

KPMGs second argument, the court noted that Rule 16 requires that the

government produce all documents material to preparing the defense that are within

its possession, custody or control. Since the Deferred Prosecution Agreement gave

the government the legal right to obtain these documents subject to the limited

carve-out for privileged documents, the government had control over the documents

sought by defendants. Id . Once control is established, the obligation exists. Id .

The government also resisted production by arguing that the language

obligating entities with which the government enters into non-prosecution or

deferred prosecution agreements to produce documents upon the governments

request is standard and that the implications of holding that such language places

the documents in the governments control would be untenable. Id . at 362.

Rejecting this argument, the court noted that [t]he plain language of Rule 16 makes

clear that documents material to the defense that are within the governments controlare producible. That the government has begun making broad use of pre-indictment

cooperation agreements in recent years or that it might regard compliance with its

discovery obligations in such cases to be inconvenient warrants no different

conclusion. If the government is uncomfortable with the consequences of such

cooperation agreements, it need not insist upon them in future cases. Id . at 364.



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The court concluded that the requested documents were in the possession,

custody or control of the government subject only to the carve-out for privileged

documents. Id . The court further held that because KPMG failed to establish that

any privilege applied to the documents, all responsive documents are within thegovernments control and directed the government to produce the requested

documents that were in KPMGs physical possession pursuant to Rule 16. Id .

Like Stein , CCIs Plea Agreement reflects that the government has the legal

right to demand production by CCI of any of its non-privileged documents in

connection with the governments case. The governments 302 statement for IMIs

in-house counsel, John OShea, underscores this point as OShea agreed to provide

material documents to Steptoe, rather than to the FBI. 4 The documents Defendants

seek are plainly within the governments control and the government is obligated to

produce them. See United States v. Kilroy , 523 F. Supp. 206 (E.D. Wis. 1981)

(holding that since the defendants former employer, Standard Oil, was cooperating

with the government and making available any records which Standard Oil had, the

records were within the governments control under Rule 16). Accordingly,

Defendants respectfully request that the Court direct the government to produce the

documents Defendants seek within 30 days.

2. The Documents Defendants Seek are Material to the Defense

To obtain discovery through Rule 16, the defendant must make a prima facie

showing of materiality. United States v. Bergonzi , 216 F.R.D. 487, 501 (N.D. Cal.

2003) (citing United States v. Mandel , 914 F.2d 1215, 1219 (9th Cir. 1990)). The

materiality requirement is not a heavy burden; rather, evidence is material as long as

4 See document bates numbered CCI_357, FBI 302 statement of John JosephPatrick OShea dated May 22, 2008, attached as Exhibit D to the MillerDeclaration (OShea still maintained the training notes he used for the trainingand will provide those notes to Steptoe and Johnson.).



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there is a strong indication that the evidence will play an important role in

uncovering admissible evidence, aiding witness preparation, corroborating

testimony, or assisting impeachment or rebuttal. Bergonzi , 216 F.R.D. at 501 (citing

United States v. Liquid Sugars, Inc ., 158 F.R.D. 466, 471 (E.D. Cal. 1994)); United States v. Lloyd , 992 F.2d 348, 350-51 (D.C. Cir. 1993). A defendant meets the

materiality standard by presenting facts tending to show that the government is in

possession of information helpful to the defense. Bergonzi , 216 F.R.D. at 501.

a. CCIs Electronic Database

The Indictment alleges that Defendants made and caused CCI employees and

agents to make 236 improper payments in over thirty countries between 2003 and

2007. Indictment, 14. CCIs Electronic Database, comprised of over 5.5 million

pages of relevant evidence that EY gathered from IMI/CCI in connection with the

investigation of alleged improper payments and expenses, including email,

accounting records, agency agreements and forensic images of over 200 computer

hard drives (Exh. B, p. 3, lns. 15-19), undoubtedly includes the specific documents

that Defendants have repeatedly requested from the government relating to each of

the 236 alleged improper payments referenced in the Indictment and identified in the

Bill of Particulars.

To date, however, the government has produced only 37,000 pages of

discovery, including a very small portion of Defendants e-mails spanning the

2000 to 2006 time period, expense reports and some of KPMGs annual audit

documents for the same 2000 to 2006 time period, and agency agreements and

accounting records for only some of the 236 payments identified in the Bill of Particulars. The discovery produced by the government fails to include key

documents relating to each of the alleged improper payments identified in the Bill

of Particulars, including the contracts for each project, accounting records

reflecting each of the alleged improper payments, e-mails and correspondence



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relating to the projects and alleged improper payments, and the project files CCI

kept for each project. 5

Notably, of the documents that have been produced, many reflect

irregularities and/or fail to include the documents in their entirety. For example,document bates numbered CR0833-0834 consists of an April 28, 2004 e-mail from

CCI employee Sara Peng to defendant Paul Cosgrove, with a cc to defendant

Rose Carson, containing six paragraphs of information, including two paragraphs

identifying Beneficiary information. Document number 0000212 (which is bates

numbered 127 on the actual document) contains the same April 28, 2004 e-mail

from Sara Peng, but includes only three paragraphs of information, omitting three

paragraphs of information found in the e-mail bates numbered CR0833-0834,

including those identifying the Beneficiary information. 6

Similarly, a document bates numbered CS2002 consists of an e-mail dated

April 21, 2004 from Mahesh Shah to Steven Har, with a response e-mail on

the same page dated August 25, 2007, almost three and one-half years after the

initial e-mail was sent, and in or around the time that IMI/CCI commenced its

investigation. 7 The August 25, 2007 e-mail response contains no From

information in the header of the e-mail, leaving Defendants to guess at the actual

author of the e-mail without explanation for the three-year gap in response time.

The fact that some of the governments discovery plainly includes altered

5 For example, payment number 47 in the Bill of Particulars lists an allegedpayment of $7,612 to Fu Xiangwei. However, Defendants are unable to find anydocuments in the discovery showing or discussing a payment of $7,612 for thatproject, let alone to Fu Xiangwei.

6 See documents bates numbered CR0833-0834 and document number0000212 (bates numbered 127) attached as Exhibit E to the Miller Declaration.

7 See document bates numbered CS2002 attached as Exhibit F to the MillerDeclaration.



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documents underscores Defendants need for CCIs Electronic Database.

The governments discovery produced to date fails to include a vast amount

of relevant evidence in the governments control that is material to the defense.

Because each of the key documents material to the alleged improper payments andfacts at issue in the Indictment appear to be contained in CCIs Electronic

Database, Defendants are entitled to CCIs Electronic Database under Rule 16.

Emails : E-mails relating to the 236 payments will likely specify the

individuals who negotiated and participated in the calculation and approval of the

payment of commissions under the project contracts. Further, e-mails to and from

Defendants, including those on which they were copied, are necessary to

demonstrate Defendants understanding of the transactions, including the cultivation

and use of friends-in-camp (FICs) as a legitimate sales model, rather than a

vehicle created for paying bribes, and knowledge concerning the identity of the third

parties receiving commissions. 8 Demonstrating the sheer volume of e-mails

Defendants received and the number of projects they were working on at the time of

the allegedly improper payments will further shed light on Defendants

understanding and state of mind with respect to the transactions at issue in this case.

Project Files : CCI kept files for each of its projects. The project files

relating to each of the 236 alleged improper payments, as well as documents relating

to the travel and entertainment referenced in the Indictment, are material to the

defense because they are vital in uncovering admissible evidence concerning the

facts at issue in the Indictment. The project files contain information concerning the

persons involved in the procurement of each of the contracts relating to the allegedimproper payments, as well as communications between CCI employees on the one

8 To the extent the Database does not contain all of Defendants e-mailscovering the time period alleged in the Indictment, Defendants seek these e-mailsfor the reasons stated herein.



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hand, and customer employees and third party agents on the other, regarding

procurement of the contracts at issue.

Further, the project files will likely uncover information relating to the

amount of commissions to be paid under the contracts and the intended recipients of the commissions, as well as the nature and extent of the third-party agents

involvement in the procurement of the contracts at issue. Documents relating to the

alleged improper travel and entertainment will similarly uncover evidence

concerning the circumstances and persons involved in the alleged improper travel

and entertainment, including the nature and extent of Defendants involvement in

the same.

Agency Agreements/Accounting Records : The agency agreements

contained in CCIs Electronic Database, pursuant to which the commission

payments were made, are necessary to establish the terms and conditions under

which representatives and consultants were paid under the contracts and to

demonstrate whether such payments were legitimate. Accounting records will

uncover evidence as to what payments were actually made, and will presumably

reveal the identity of the recipients and, importantly, whether the recipient of each

alleged improper payment was a foreign official or an employee of a private

company.

Defendants Computers : The forensic images of Defendants hard drives

and laptop computers (presumably contained in the Electronic Database) are

expected to contain at least some information concerning Defendants cultivation

and use of FICs and knowledge concerning the identity of third parties receivingcommissions. Thus, the Database is material to the defense as it contains

information central to each of the facts at issue concerning the alleged corrupt

payments, and will undoubtedly aid in identifying witnesses, corroborating

testimony, and aiding in preparation for trial. Lloyd , 992 F.2d at 351.

Significantly, the documents contained in CCIs Electronic Database served



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as the basis for Steptoes determinations concerning Defendants purported

culpability in this case with respect to the 236 payments referenced in the

Indictment. Based on the Database, Steptoe allegedly determined that:

CCIs former President, Stuart Carson . . . was the prime architect of a sales model in which employees and agents cultivated relationships

with employees of state-owned and private customers that frequently

involved corrupt payments to the customer employees to help CCI

obtain or retain business. At the direction of Mr. Carson and other

senior managers, approximately 236 corrupt payments were made to

officers and employees of state-owned and private companies in

thirty-six countries from approximately 2003 through August 2007.

The corrupt payments totaled approximately $6.85 million, and the

related sales generated approximately $46.5 million in net profits.

In addition, the independent investigation found that CCIs former

managers arranged for overseas holidays for employees of state-

owned and private customers under the guise of training and

inspection trips. Stuart Carson and his wife, Hong Rose Carson,

also arranged extravagant vacations for themselves and executives of

state-owned and private customers including first-class airfare and

five-star accommodations. These holidays and vacations were

intended to reward customer employees for causing their employer to

purchase CCI products and to obtain new business or retain currentbusiness for CCI.

Exh. B, p. 4, lns. 1-18. The Indictment plainly reflects that this information, in turn,

served as the basis for the charges against Defendants as it recites almost verbatim

Steptoes determinations concerning Defendants alleged culpability. See

Indictment, 14 ([A]pproximately $6.85 million in total improper payments were



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made in approximately 236 payments in over thirty countries and resulted in net

profits to [CCI] of approximately $46.5 million from the sales related to those

corrupt payments.). The documents contained in CCIs Electronic Database,

particularly those relating to the 236 payments Steptoe identified for the governmentthat are now referenced in the Indictment, will undoubtedly uncover admissible

evidence and aid in Defendants trial preparation. Accordingly, Defendants are

entitled to this discovery under Rule 16(a)(1)(E), and the government should be

compelled to produce it. 9

b. The 5.5 Million Pages of Relevant Evidence Housed inCCIs Electronic Database

While Defendants are entitled to CCIs Electronic Database under Rule16(a)(1)(E), Defendants alternatively request the 5.5 million pages of documents

contained therein for the reasons stated in section III.A.2.a. above. Each of the more

than 5.5 million pages of documents is material to the defense as they relate directly

to each of the 236 payments referenced in the Indictment and identified in the Bill of

Particulars.

c.

The Documents Identified in CCIs Privilege Log That CCIDisclosed to the Government

Defendants are entitled to the eight documents identified in CCIs privilege

log that were disclosed to the government, and any underlying documents, because

they are material to the defense and any privileges attaching to these documents

have been waived. These documents include analyses and charts of potentially

improper payments, analyses and charts of allegedly improper meals, travel and

entertainment expenses, and an analysis of IMIs and CCIs profits from 2003-

9 To the extent CCIs Electronic Database does not contain the documentsidentified herein relating to each of the alleged improper payments, including thosefrom CCIs foreign offices, Defendants respectfully request these documents aswell for the reasons stated herein.



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2007. 10

These documents are patently material to the defense because they relate

precisely to the facts at issue in the Indictment concerning alleged improper

payments and expenses. Their materiality is underscored by CCIs assertions in itsSentencing Memorandum concerning the role these documents played in the

governments prosecution of Defendants. According to CCI:

Perhaps most significantly, at the Departments request IMI and CCI

prepared an extensive factual analysis and summary of the improper

payments at issue. The analysis was accompanied by supporting

email records, correspondence, agent invoices, wire transfer and bank

records, and other accounting documentation. . . . IMI and CCI

provided similar analyses to the Department relating to gifts, travel

and entertainment of state-owned customers. These analyses provided

a roadmap for the prosecution of individuals and also formed the

basis of [CCIs] Plea Agreement. Without them, the Department

would have faced substantial difficulty identifying all of the improper

payments at issue.

Exh. B, p.6, lns. 7-17. Because these documents served as a roadmap for the

governments prosecution of Defendants and were central in identifying the alleged

improper payments and expenses that now form the basis of the Indictment,

Defendants are entitled to these documents under Rule 16(a)(1)(E) because they

undoubtedly will play an important role in uncovering admissible evidence and

aiding Defendants preparation for trial. Lloyd , 992 F.2d at 351.The government refuses to produce these documents to Defendants on the

grounds that CCI has reserved its right to assert certain privileges over the

10 See CCI Privilege Log attached as Exhibit G to the Miller Declaration.



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documents. The privilege log indicates that CCI asserts the attorney-client privilege

as to seven of the eight documents, and CCI asserts the attorney work product

doctrine as to all eight. Exh. G. But neither privilege applies here.

i. The Attorney-Client Privilege Does Not Apply to theDocuments in the Privilege Log Because They WerePrepared for the Government

In order for the attorney-client privilege to apply, the communication sought

to be protected must, among other things, be made in confidence. Bergonzi , 216

F.R.D. at 493 (citing In re Grand Jury Invest ., 974 F.2d 1068, 1071 (9th Cir. 1992)).

Communications between a client and attorney made for the purpose of relaying

communications to a third party are not confidential and not protected by the

attorney-client privilege. Bergonzi, 216 F.R.D. at 493 (citing United States v.

Sudikoff , 36 F. Supp. 2d 1196, 1204-05 (C.D. Cal. 1999)).

In Bergonzi , defendants, former McKesson Corporation executives, sought

production of McKessons internal investigation report and underlying materials,

including interview memoranda, prepared by the companys outside counsel,

Skadden, Arps, Slate, Meagher & Flom (Skadden), in connection with

McKessons internal investigation into accounting irregularities. 216 F.R.D. at 490.

The defendants argued that the attorney-client privilege did not apply to the

documents sought and that they were entitled to them under Rule 16 and Brady

because, inter alia , the materials at issue were prepared for the government to obtain

leniency and not for the purpose of assisting in providing legal advice, and the

company waived any claim of privilege by voluntarily producing the materials to the

government. Id . at 492.In analyzing the privilege issues, the district court noted that it was

undisputed that McKesson retained Skadden to gather relevant facts and to develop

an effective legal strategy for responding to potential securities fraud claims as a

result of the accounting regularities, and that prior to preparation of the documents,

Skadden, acting on behalf of the company, had agreed to turn them over to the SEC



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and United States Attorneys Office pursuant to confidentiality agreements. Id . at

493. Although the confidentiality agreements stated that (i) the documents were

created solely for the purposes of providing legal advice to the Company and the

Audit Committee, (ii) communications were protected by the work-productdoctrine and attorney-client privilege, and (iii) the company did not want to or

intend to waive the protection from further disclosure, the confidentiality

agreements made clear that prior to preparation of the Report and Back-up

Materials, the Company agreed to disclose the documents to the Government. Id .

Further, the confidentiality agreements authorized the SEC to, in its

discretion, determine that disclosure is otherwise required by federal law or in

furtherance of [either entities] discharge of its duties and responsibilities, and the

company consented to the disclosure of the documents to a federal grand jury as

the [USAO] deems appropriate, and in any criminal prosecution that may result

from the [USAOs] investigation. Id . at 494. For these reasons, the district court

rejected the companys argument that it intended the communications at issue to

remain confidential. Id . at 493-94. The court concluded that because Skadden made

the investigation report and back-up materials with the intent to relay them to the

government, the attorney-client privilege did not apply. Id . at 493-94. It is

difficult for the Court to imagine how the communication between the company and

Skadden were confidential communications between attorney and client when

Skadden prepared the Report and Back-up Material after the company agreed to

disclose the same to the Government. Id . at 494 n.7. As the court noted, [s]uch a

disclosure conflicts with the underlying rationale behind the privilege, namely thatthe privilege encourages frank discussions between an attorney and his client. Id .

As in Bergonzi , the attorney-client privilege does not apply to the documents

listed in CCIs privilege log if as appears to be the case - they were created with

the intent to relay them to the government. Thus, to the extent that the extensive

factual analysis and summary of the improper payments at issue and similar



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analyses . . . relating to gifts, travel and entertainment expenses and improper

training trips identified in CCIs Sentencing Memorandum are the seven of eight

Analyses and Supplemental Version[s] identified in CCIs privilege log, the

attorney-client privilege does not apply because the documents were admittedlymade for the purpose of relaying the communication to a third party, indeed, the

documents were created at the governments request .

ii. Any Attorney-Client Privilege Has Been Waived

Even if the attorney-client privilege applied to the documents listed in CCIs

privilege log, CCI waived the privilege (both as to these documents and all

documents related to the same subject matter) as a result of its disclosure of the

documents to the government. See Bergonzi , 216 F.R.D. at 494 n.8, 497-98

(holding that even if the attorney-client privilege attached to documents at issue,

privilege was waived as a result of, inter alia , the corporations disclosure of the

documents to the government); In re Qwest Communications Intl Inc., 450 F.3d

1179, 1185 (10th Cir. 2006) ([T]he attorney-client privilege is lost if the client

discloses the substance of an otherwise privileged communication to a third party.)

(citation omitted); In re Syncor Erisa Litig ., 229 F.R.D. 636, 645 (C.D. Cal. 2005)

(Generally, the voluntary disclosure of a privileged attorney-client communication

to a third party waives the privilege.). Accordingly, Defendants are entitled to

these documents under Rule 16(a)(1)(E), and the government should be compelled

to produce them.

iii. Any Work Product Protection Has Been Waived

The attorney work product doctrine protects from disclosure documentsprepared in anticipation of litigation by or for an attorney, but work product

protection is waived where disclosure of the otherwise privileged documents is

made to a third party and that disclosure enables an adversary to access the

information. See In re Syncor Erisa Litig. , 229 F.R.D. at 645 (citing Bergonzi, 216



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F.R.D. at 497); United States v. Mass. Inst. Of Tech. , 129 F.3d 681, 687 (1st Cir.

1997).

In Bergonzi , for example, the court found that the documents prepared by

Skadden were protected from disclosure by the work product doctrine but concludedthat work product protection was waived as a result of, inter alia , the companys

disclosure of the documents to the government. 216 F.R.D. at 495-497. Once a

party has disclosed work product to one adversary, it waives work product

protection as to all other adversaries. Id . at 498. Because McKesson disclosed the

documents at issue to an adversary, the government, the disclosure constituted a

waiver of the attorney work product doctrine, and any work product protection

claimed against production to the defendants was also waived. Id .

As the court reasoned, [i]n the final analysis, the ability to prepare ones case

in confidence, which is the chief reason articulated in Hickman for the work product

protections, has little to do with talking to the Government. Id . at 497 (citing In re

Columbia/HCA Healthcare Corp. Billing Practices Litigation , 293 F.3d 289, 306-07

(6 th Cir. 2002)); see also United States v. Thompson , 562 F.3d 387, 394 (D.C.Cir.

2009) ([D]isclosure of work product materials can waive the privilege for those

materials if such disclosure, under the circumstances, is inconsistent with the

maintenance of secrecy from the disclosing partys adversary.) (citation and

internal quotation marks omitted).

As in Bergonzi , any privileges attaching to the documents listed in the

privilege log here have been waived as a result of IMI/CCIs disclosure of these

materials to the government. CCIs Sentencing Memorandum highlights the extentof IMI/CCIs disclosure of the otherwise privileged documents:

Throughout its investigation, Steptoe, at the direction of [IMIs]

Special Committee, made rolling productions of documents and

provided real time updates about witness interviews to the

Department, pursuant to a non-waiver agreement. Steptoe gave the



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Department detailed summaries of the employee interviews and

binders of key documents organized by witness. In total, Steptoe gave

the Department more than a dozen such interview downloads, each

covering numerous employees, and produced more than 42,000 pagesof documents in hard copy and electronic, searchable format. 11

Exh. B, p. 5, lns. 19-28; p. 6, lns. 1-6. Because CCI disclosed the documents

identified in the privilege log to the government, such disclosure constituted a

waiver of the attorney work product privilege, and any work product protection

claimed against production to the Defendants was also waived. Bergonzi , 216

F.R.D. at 498.

CCIs waiver also applies to the materials underlying the analyses and charts

identified in the privilege log, and the government should be required to produce

those documents as well. See In re Leslie Fay, Inc. Sec. Litig. , 161 F.R.D. 274, 281

(S.D.N.Y. 1995) (holding that waiver of attorney work product and attorney-client

privileges applied to documents underlying report to the extent report referenced or

concerned the underlying documents); In re OM Group Securities Litigation , 226

F.R.D. 579 (N.D. Ohio 2005) (holding that disclosure of presentation materials to

adverse party waived attorney-client privilege with regard to presentation materials

and underlying documents referred to by presentation materials). Accordingly,

Defendants are entitled to these documents under Rule 16(a)(1)(E), and the

government should be compelled to produce them.

11 Defendants have asked the government about the provisions of the non-waiver agreement referenced in CCIs Sentencing Memo, but the government hasfailed to provide this information.



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d. Documents Missing from the Discovery Produced by theGovernment

CCI confirms in its Sentencing Memorandum that Steptoe gave the

Department detailed summaries of the employee interviews and binders of key

documents organized by witness. In total, Steptoe gave the Department more than

a dozen such interview downloads, each covering numerous employees, and

produced more than 42,000 pages of documents in hard copy and electronic,

searchable format. Exhibit B, p. 5, lns. 22-26. To date, however, the government

has produced only 37,000 pages of documents. Thus, Defendants appear to be

missing 5,000 pages of discovery material to the case. To the extent any of the

5,000 outstanding pages of discovery are not covered by those documents listed inCCIs privilege log, discussed in Section III.A.2.c, above, Defendants respectfully

request that the Court direct the government to produce this outstanding discovery

forthwith.

Additionally, several of the documents in the governments discovery refer to

notes or other documents but fail to include those notes or documents. For example,

the document bates numbered CHART0345 has a paperclip photocopied in thecorner, and a handwritten notation which reads see RC notes, but there are no

notes attached to the document. 12 Similarly, documents consecutively bates

numbered CHART 1203 through 1206 indicate at the top right corner of each page

that they are part of an eight-page e-mail, but pages two, four and seven are not

included in the e-mail string. Exh. H. The same is true for document bates

numbered CHART 1207, which indicates at the top right corner that it is Page 1 of

2, but page two is not included in the discovery. Id .

12 See documents bates numbered CHART0345, CHART 1203 1206, andCHART 1207 attached as Exhibit H to the Miller Declaration.



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As each of the documents contained or referenced in the governments

discovery are material to the defense, Defendants necessarily need the documents in

their entirety, rather than portions or incomplete e-mail strings for which context

and key information is lacking, in order to make meaningful use of the informationand adequately prepare for trial. Accordingly, Defendants respectfully request that

the Court direct the government to produce the missing pages of discovery identified

herein by Defendants, as well as any missing documents Defendants may discover

in the future in the course of reviewing the discovery.

e. IMI/CCIs 2007 Investigation Materials

Defendants seek the investigation materials Steptoe prepared on behalf of

IMI/CCI in connection with the internal investigation in 2007 and 2008, including

Steptoes report and supporting documentation (2007 Investigation Materials)

reflecting its determinations referenced in CCIs Sentencing Memoranda, as these

documents are material to the defense. The 2007 Investigation Materials identify

the basis for Steptoes determinations concerning Defendants culpability and will

therefore reveal other admissible evidence, such as the identification of third-parties

involved in or responsible for the alleged unlawful payments and documents

providing context and insight to these transactions and the FICs at issue, largely

unidentified by the government to date.

Additionally, the 2007 Investigation Materials will likely identify relevant

witnesses, such as the 125 witnesses referenced in CCIs Sentencing Memo who

were interviewed by Steptoe, EY or any other investigator in connection with

IMI/CCIs internal investigation. In short, this information is anticipated tostrengthen defenses and provide a basis for impeaching the governments theories

regarding Defendants culpability. See Bergonzi , 216 F.R.D. at 502 n.17 (noting

materiality of internal investigation report under Rule 16 because such information

may shed light on the issue of relative culpability of third parties and provide a

basis for impeaching the Governments theories of culpability with respect to these



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defendants).

To the extent the 2007 Investigation Materials include Steptoes, EYs or any

other investigators interview memoranda or underlying notes of the 125 CCI

employee interviews, Defendants are entitled to this information under Rule 16.The interview memoranda reflect statements by CCI employees and third parties

interviewed in the course of CCIs internal investigation of the alleged improper

payments that now form the basis of the charges against Defendants. The interview

memoranda likely provide facts concerning the alleged improper payments and, as

reflected in the governments 302s, appear to include exculpatory information

concerning the facts at issue in the Indictment. For example, the 302 statement of

cooperating witness Mario Covino states that during his first interview with Steptoe

attorneys, he did not tell the Steptoe attorneys all that he knew [and] attempted to

explain the emails as being benign. 13 To the extent Covinos statements to Steptoe

denied allegations of improper payments or provided alternative explanations

regarding the nature of the transactions at issue in this case, such information is

patently material to the defense (and, as discussed in section III.B., infra , is

exculpatory and discoverable under Brady ).

Additionally, the interview memoranda of Defendants interviews, in

particular, are relevant to determine the sufficiency of Steptoes warnings to

Defendants and whether Defendants statements should be suppressed. See United

v. Nicholas , 606 F. Supp. 2d 1109, 1116, 1121 (C.D Cal. 2009) (suppressing all

evidence reflecting the defendants statements made to company attorneys as a

result of attorneys ethical violations due, in part, to attorneys failure to provideUpjohn warnings). Unless the government demonstrates that the interviewees are

13 See document bates numbered CCI_226, FBI 302 statement of MarioCovino dated February 25, 2008, attached as Exhibit I to the Miller Declaration.



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prospective or actual government witnesses and those witnesses created the

memoranda or adopted and approved the memoranda, such materials are

discoverable under Rule 16 and should be produced. See Bergonzi , 216 F.R.D. at

500 (holding that interview memoranda are not covered by Jencks Act and arediscoverable under Rule 16 because government failed to demonstrate that witnesses

were prospective or actual witnesses who created the memoranda or, at least,

adopted and approved the memoranda as their statements).

The 2007 Investigation Materials, including Steptoes interview memoranda,

unquestionably influenced the governments decision-making in this case by

focusing the investigation on certain payments and providing facts and evidence

concerning the companys and third-parties relative culpability. Accordingly, this

discovery is clearly material to Defendants case and the government should be

compelled to produce it.

f. Documents Relating to IMI/CCIs 2004 Audit

In 2004, IMI/CCI conducted an internal audit of commission payments for

contracts procured in foreign countries including China and Korea. The Indictment

alleges a conspiracy to violate the FCPA and Travel Act dating back to 1998 and

charges substantive violations of the FCPA in Counts 2 through 4, and the Travel

Act in Count 11 for payments specifically made in 2004 relating to contracts in

China and Korea. Indictment, 14, 33, 35.

While the government has produced some documents relating to the 2004

Audit, such as consulting agreements, e-mails, correspondence, and minutes of IMI

board meetings, there are certain documents referenced in this discovery that do notappear to be included in the documents produced to date. For example, the

document bates numbered IMI0001 states that [a] report on the issues arising in

relation to the US audit and action taken in response would be made to the [Audit]



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Committee in December. 14 However, the report is not included in the documents

the government has produced to date. As some documents relating to the 2004

Audit appear to be missing from the governments production, Defendants seek all

documents relating to IMI/CCIs 2004 Audit of commission payments, includingreports and underlying materials, because these documents are material to the

defense.

The 2004 Audit specifically looked into the alleged improper payment of

commissions and expenses by CCI employees in countries including China and

Korea, which presumably included payments relating to the contracts now identified

in the Indictment, and at least 53 payments identified in the Bill of Particulars for

contracts involving China and Korea in 2004. As such, this information is patently

discoverable under Rule 16(a)(1)(E), as it will uncover admissible evidence and

identify witnesses that are germane to the charges in the Indictment and at least 53

payments identified in the Bill of Particulars. 15 Significantly, the 2004 Audit

apparently determined that no improper payments were made. Accordingly, these

documents will strengthen defenses and provide a basis for impeaching the

governments theories of culpability with respect to Defendants conduct relating to

contracts in China and Korea that are charged in the Indictment.

Further, these documents are material because they bear directly on

allegations in the Indictment that defendant Stuart Carson attempted to halt the 2004

Audit (Indictment, 24), defendants Rose Carson and Edmonds provided false

information to internal auditors during the 2004 Audit ( id ., 25), and defendant

Edmonds created false invoices in an attempt to mislead CCI auditors regardingcertain commission payments. Id ., 26. The 2004 Audit documents also bear

14 See document bates numbered IMI0001 attached as Exhibit J to the MillerDeclaration.

15 See Bill of Particulars attached as Exhibit K to the Miller Declaration.



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directly on allegations in CCIs Plea Agreement that defendant Cosgrove instructed

CCI employees to withhold information from auditors during the 2004 Audit. 16 The

2004 Audit documents will undoubtedly uncover admissible evidence concerning

these allegations, will corroborate testimony, and will aid in Defendants preparationfor trial. See United States v. Marshall , 132 F.3d 63, 67 (D.C. Cir. 1998) (holding

that inculpatory evidence is just as likely to assist in the preparation of the

defendants defense as exculpatory evidence).

g. Documents Relating to Any Investigations, Audits orInquiries Conducted by IMI/CCI into Allegations of Wrongdoing by Defendants

Defendants seek all documents relating to any investigations, audits or

inquiries (Inquiries) conducted by IMI/CCI into allegations of wrongdoing by

Defendants because such documents are material to the defense. To the extent

documents exist relating to such Inquiries - other than the 2007 Investigation and

2004 Audit - they likely contain information relating to IMI/CCIs findings

concerning Defendants alleged wrongdoing with respect to their conduct while

employed at CCI and, specifically, likely contain information demonstrating that the

Inquiries uncovered no wrongdoing by Defendants. As such, this information is

discoverable under Rule 16(a)(1)(E) because it will play an important role in

uncovering admissible evidence and, to the extent it contains exculpatory

information, will strengthen possible defenses.

h. IMI/CCIs FCPA and Travel Act Training Materials

Defendants seek IMI/CCIs training materials relating to FCPA and Travel

Act compliance provided to Defendants during the time period covered by theIndictment because they are material to the defense. FCPA and Travel Act training

materials will play an important role in uncovering admissible evidence and

16 See Statement of Facts 20, attached as Exhibit 1 to CCI Plea Agreement,attached as Exhibit C to the Miller Declaration.



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strengthening defenses, including that IMI/CCI failed to provide requisite training to

Defendants and that Defendants lacked the requisite scienter to commit FCPA and

Travel Act offenses. Accordingly, Defendants are entitled to this discovery under

Rule 16(a)(1)(E), and the government should be compelled to produce it.i. The Set of Binders in Ms. Carsons Office, and the Binder

Mr. Cosgrove Gave to Steptoe

Defendants seek the set of binders in Ms. Carsons possession at CCI as of

August 17, 2007, which contain documents relating to commission payments in

China, and the binder Mr. Cosgrove prepared and gave to Steptoe during his

interview in August 2007 because they are material to the defense. Ms. Carsons

binders contain evidence relating to CCIs commission payments for China projects,and Mr. Cosgroves binder contains information from Mr. Cosgrove concerning

CCIs policies and procedures relating to the procurement of contracts and payment

of commissions. This discovery may shed light on Ms. Carsons and Mr.

Cosgroves conduct relating to the alleged improper payments and will play an

important role in uncovering admissible evidence relating to the facts at issue in the

Indictment. Accordingly, Defendants are entitled to this discovery under Rule16(a)(1)(E), and the government should be compelled to produce it.

j. Defendants Personnel Files

Defendants seek their IMI and CCI personnel files because these documents

are material to the defense. The government produced only portions of Defendants

CCI personnel files, and failed to include key documents relating to Defendants

employment with IMI and CCI, including Defendants performance reviews. In

addition to the performance reviews, the personnel files likely contain other

documents relating to Defendants employment with IMI/CCI, including documents

reflecting the scope of Defendants job responsibilities, defined and sanctioned by

IMI/CCI, as well as information relating to any allegations of wrongdoing by

Defendants or IMI and CCIs recognition of Defendants performance. Such



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discovery will play an important role in uncovering admissible evidence regarding

allegations of the alleged misconduct and will strengthen defenses. To the extent

Defendants performance reviews or other documents in the personnel files indicate

that Defendants were cleared of any allegations of misconduct, such information ispatently material to allegations in the Indictment and is discoverable under Brady .

k. Documents Reflecting Communications Between IMI and/orCCI and the Government

Defendants seek documents reflecting correspondence and communications

between IMI/CCI and the government relating to the investigation into the alleged

improper pa