United States District Court, S.D. Indiana, Indianapolis Division
ORDER ON MOTION TO QUASH AMENDED SUBPOENA BY THE
JAMES BURKHART DEFENDANTS
MCVICKER LYNCH UNITED STATES MAGISTRATE JUDGE
James Burkhart and companies with which he has (or had) some
affiliation-ACCD LLC d/b/a Crusader Healthcare Services III,
American Senior Care LLC, JACCD LLC d/b/a Crusader IV, 105214
Investments LLC d/b/a Crusader Healthcare Services, and
105210 Investments LLC d/b/a Crusader Services II-move to
quash a documents subpoena issued by plaintiff American
Senior Communities, L.L.C. to law firm Barnes & Thornburg
appreciate the context in which the subpoena was issued and
the motion to quash was filed, the court first provides some
background about this litigation, a criminal case, and James
Burkhart's Section 2255 civil proceeding.
civil case was filed on September 15, 2017, by American
Senior Communities, L.L.C. (“ASC”). ASC owns,
operates, and/or manages extended care facilities, including
assisted and independent senior living communities, nursing
homes, and skilled-living facilities. The Health and Hospital
Corporation of Marion County (“HHC”) holds the
health care operating licenses for most of the facilities
that ASC manages. ASC manages 78 skilled nursing homes, four
assisted living facilities, and numerous independent housing
units on behalf of HHC.
sued James Burkhart (its former chief executive officer),
Daniel Benson (its former chief operating officer), Roger
Werner (its former chief financial officer), Joshua Burkhart
(James's brother, who is or was an owner of companies
that did business with ASC and who worked for a CPA firm that
provided accounting services to ASC), Steven Ganote (who is
or was an owner of businesses that had contracts with ASC to
provide services or products),  and various entities in which one
or more of these individuals had ownership interests and
conducted business with ASC.
contends that the defendants “systematically
looted” ASC and defrauded the company of tens of
millions of dollars via (a) fraudulent business transactions
by which ASC paid inflated prices for products and services
to companies associated with one or more of the defendants,
(b) fraudulent kickbacks from vendors, (c) fraudulently
inflated salaries, bonuses, and perks, and (d) usurpation of
business opportunities. Some of the claims brought by ASC
have factual predicates that overlap with criminal charges
earlier brought in 2016 by the United States against James
Burkhart, his brother Joshua, and Messrs. Benson and Ganote.
with Barnes & Thornburg represented James Burkhart in the
criminal case, United States v. James Burkhart, et
al., No. 1:16-cr-00212-TWP-TAB. Mr. Burkhart eventually
pleaded guilty to certain counts (conspiracy to commit mail,
wire, and health care fraud, conspiracy to violate
anti-kickback statute, and money laundering) and was
sentenced on June 29, 2018, to 114 months' imprisonment.
See Judgment, Dkt. 287, in No.
1:16-cr-00212. In the criminal case, the court entered a
Second Amended Protective Order that, inter alia,
restricted the use of all documents produced to the
defendants by the United States or any third parties solely
for the preparation, trial, direct appeal, and collateral
attack (if any) of the case “and for no other purpose
whatsoever.” (A copy of the order is at Dkt. 134-2 in
December 20, 2018, Mr. Burkhart brought a civil action (No.
1:18-cv-04013-TWP-DLP) against the United States under 28
U.S.C. § 2255, seeking to vacate his convictions and to
set aside his sentence because of alleged conflicts of
interest of his counsel at Barnes & Thornburg. Mr.
Burkhart asserts that (i) an alleged victim of the crimes he
was charged with, HHC (the Health and Hospital Corporation of
Marion County, which holds the operating licenses for most of
the health care facilities managed by ASC), was one of Barnes
& Thornburg's long-term clients, (ii) the law firm
never disclosed to him its relationship with HHC, and (iii)
to his detriment, his defense counsel conducted discovery,
made strategy decisions, and gave advice upon which he relied
that were all tainted by counsel's loyalties to HHC. Mr.
Burkhart's Section 2255 petition contends that because of
his attorneys' conflicts of interest, he was deprived of
the effective assistance of counsel in violation of the Sixth
Section 2255 proceeding, Mr. Burkhart and the United States
agreed to the terms of a protective order that was entered by
the court on their motion. (A copy is at Dkt. 134-3 in this
case). The agreed order includes findings that Mr.
Burkhart's Section 2255 motion “constitutes an
implied waiver of his attorney-client privilege and
work-product protection” for documents and information
necessary for the government's defense of the motion and
for the litigation of the proceeding, including with respect
to documents relating to Barnes & Thornburg's
representation and advice in the criminal proceedings and
with respect to documents relating to the alleged potential
conflicts of interest. The order restricts the use and
sharing of the documents to the litigation of the claims in
the Section 2255 proceeding.
served an amended documents subpoena on Barnes &
Thornburg on April 18, 2019. (Dkt. 134-1). The subpoena seeks
all communications between counsel and Mr. Burkhart in
connection with the firm's representation of him in the
criminal case and a broad range of other documents, generally
relating to business and financial relationships between Mr.
Burkhart and ASC or HHC. The subpoena excludes from its scope
documents the law firm received in discovery from the United
States or third parties in the criminal case, i.e.,
those covered by the Second Amended Protective Order entered
November 20, 2017, in Case 1:1-cr-00212. The amended
• All documents relating to entities owned by James or
Joshua Burkhart, Daniel Benson, or Steven Ganote that did
business with ASC or HHC, including organizational documents,
communications, contracts, financial records, and bank
• All documents evidencing payments from ASC, HHC, or
any entity that did business with ASC or HHC, and to any of
the foregoing persons or any entity in which any had an
ownership or financial interest.
• All documents evidencing travel to China or business
conducted in China by ASC, James Burkhart, Daniel Benson, or
• All documents evidencing ASC's payment of bonuses
to James Burkhart, Daniel ...