A former Aeropostale clothing executive cannot claim privilege to exclude from his upcoming trial for allegedly taking kickbacks an email listing his assets sent to his company account by an attorney preparing his will, a judge has ruled.
Christopher Finazzo, a former Aeropostale chief merchandising officer, was indicted in 2010, accused of sending more than $350 million of Aeropostale’s business to a supplier in exchange for kickbacks. Finazzo, who faces mail and wire fraud charges, has pleaded not guilty.
"The Court finds that Finazzo has no reasonable expectation of privacy or confidentiality in any communications he made through his Aeropostale e-mail account," Eastern District Judge Roslynn Mauskopf (See Profile) wrote in United States v. Finazzo, 1:10-cr-00457. "Aeropostale had a clear and long-consistent policy of limiting an employee’s personal use of its systems, reserving its right to monitor an employee’s usage of the system, and making abundantly clear to its employees, including Finazzo, that they had no right to privacy when using them."
Finazzo’s trial is scheduled to begin April 8. Prosecutors have alleged that, in exchange for his directing Aeropostale to buy merchandise from clothing vendor South Bay Apparel, the vendor’s owner, Douglas Dey, secretly paid money back to Finazzo. Dey pleaded guilty last September to charges stemming from the scheme.
Finazzo received the email at issue in August 2006 from his personal attorney, Angela Siegel. Attached was a list Siegel had prepared for creating a will—including several companies Finazzo co-owned with Dey.
Finazzo claims that when he received the email, he sent it to a non-company account and deleted it from his inbox and told Siegel to send confidential information only to another email address.
Later in 2006, during an unrelated internal investigation, a firm retained by Aeropostale, Kroll, uncovered the email. When Aeropostale learned Finazzo had undisclosed ownership interests in companies owned by one of its primary vendors, it fired him.
Finazzo was called to a meeting in November 2006 with then-company chief Julian Geiger and general counsel Edward Slezak, where he was confronted with the email and asked to explain it.
Finazzo went line by line through the list of assets attached to the email and admitted joint ownership with Dey, according to a summary of the meeting in the judge’s decision.
Geiger told Finazzo he was being fired. Finazzo insisted he had merely made an honest disclosure mistake and encouraged Aeropostale to continue buying from Dey, according to the decision.
"It is clear that Aeropostale was unaware of the kickback scheme now alleged in the indictment," Mauskopf wrote. "Indeed, that appears to be the precise purpose of most of Finazzo’s statements during the meeting."
Mauskopf said the general tone of the meeting was friendly, and at one point, Geiger recalled Finazzo as being his "key partner and key friend in life" and began to cry.
The judge said because Siegel’s email was sent to Finazzo’s Aeropostale address, Finazzo’s request to preclude it at trial would turn on his expectation of privacy.
A 2004 Aeropostale employee handbook said employees should have no expectation of privacy when using company systems.
Finazzo submitted a corporate employee handbook for 2007, which said, "except for limited and reasonable personal use…company systems should be used for company business only."
But Mauskopf said no matter what policy was in effect, none accorded Finazzo an expectation of privacy in his company account.
She said both parties agreed that Siegel’s email was "disclosed" to third parties, when Kroll searched Finazzo’s company account and when Geiger and Slezak confronted him with the email. The question is whether either of these disclosures defeats the privilege, she said.
The judge said that "a communication cannot be ‘intended’ to remain confidential, however, when made through a medium that subjects it to disclosure to third parties… Sending and receiving e-mails via an employer e-mail account, such as Finazzo’s Aeropostale account here, is one such example. If Finazzo was aware, or should have been aware, that third parties had access to any e-mails sent or received via his Aeropostale account, he cannot assert privilege over them."
Finazzo said he was not aware that the company actually monitored email accounts because Aeropostale’s CEO regularly violated Aeropostale’s policies on personal usage of its email system without any consequences.
"But Finazzo was aware that Aeropostale explicitly reserved the right to monitor his work e-mail account, and it is his disregard of that explicit and not inconsequential risk—as demonstrated by the ultimate disclosure of Finazzo’s e-mail—that waives the privilege," the judge said.
Finazzo said he didn’t know Siegel was going to send him the email and didn’t consent or encourage her to send it on his company account. But Mauskopf said Finazzo had earlier corresponded with Siegel from his Aeropostale account.
"Finazzo chose to communicate with his lawyer through a medium in which he had no expectation of privacy, thus inviting responses via that same medium," she said. "To the extent Finazzo did not anticipate his e-mail correspondence taking a confidential turn, his obligation to protect the privilege required him to take action to prevent disclosure of any such material."
Even if his use of company email system didn’t defeat his privilege claim, the judge said, "his hour-long discussion with Geiger and Slezak about that same e-mail certainly waived it," the judge said.
The judge said that when a proponent of a privilege is faced with a breach of confidentiality, "he or she must object, and not partake in it."
Robert Zito and Alan Lewis, partners at Carter Ledyard & Milburn who represent Finazzo, declined to comment.
A spokesman for the Eastern District U.S. Attorney’s Office declined to comment. The case is being handled by Assistant U.S. Attorney Winston Paes.
Siegel disagreed with the ruling.
"I sent an e-mail to my client with the expectation of privacy," said Siegel, a Garden City solo practitioner. "It was between me and him. If I would have thought anybody else could have accessed it, I would not have sent it."
She added that other clients often email her from work.
"That should be privileged," she said.
Siegel said the decision has serious implications for lawyers.
"It’s kind of scary because as lawyers we communicate with clients all the time" by email, she said. "That means we all have to worry that if a client e-mails us from a work account…we have to make sure we don’t send anything that is confidential."
@|Christine Simmons can be contacted at email@example.com.