United States v. Jacobs

Donald E. Jacobs (defendant) was invited to participate as a leader in a financial scheme called Debt Elimination Program (DEP), in which debtors were convinced to buy worthless, fake financial instruments that the debtors would use to pay off their debts in exchange for a 15 percent fee. The fee would be split between Jacobs and two other DEP leaders. After taking several steps to begin participating in the scheme, Jacobs wrote a letter to his attorney, Jay Swob, asking Swob to investigate the DEP and opine on the venture. Swob responded to Jacobs’s letter, advising Jacobs not to participate in what clearly appeared to be an illegal scheme. Despite Swob’s advice, Jacobs decided to continue pursuing the scheme. Further, Jacobs began falsely telling potential customers that he had discussed the matter with his attorney, who had confirmed the legality of the DEP. Jacobs was eventually charged with multiple counts of bank fraud and mail fraud for his participation in the DEP scheme. During the trial, the judge admitted as evidence Swob’s letter to Jacobs, in which Swob warned Jacobs of the illegality of the DEP. Jacobs was convicted of multiple charges of conspiracy, bank fraud, and mail fraud. Jacob appealed the convictions and sentences to the United States Court of Appeals for the Second Circuit, arguing that Swob’s letter was admitted in violation of the attorney-client privilege.