The federal court of appeals ruled that a former attorney for Vince McMahon was wrong to withhold some documents from a federal grand jury as it investigated how McMahon handled multimillion-dollar settlement agreements with two female employees who accused him of sexual abuse.
Three judges on the 2nd U.S. Court of Appeals in New York upheld a lower court ruling, which stated the documents were not protected by attorney-client privilege because of an exception for “crime or fraud.” The identities of the parties were not disclosed.
The appeals court said the lower court judge found prosecutors had reasonable grounds to believe that McMahon and his lawyer illegally “circumvented” the WWE’s internal controls and created false records when they concealed the employees’ claims and settlement agreements from the company, and that they made false and misleading statements to the company’s auditors — even though McMahon paid the settlements with funds that did not come from the company.
The appellate panel said that while McMahon’s lawyer submitted many materials in response to a grand jury subpoena, they also submitted a log of 208 documents that were being withheld under assertions of attorney-client privilege.
When the lawyer withheld some of the documents claiming attorney-client privilege, prosecutors asked the lower court to compel production of the records — leading to the appeal decided Monday.
The appellate judges wrote, “Because the settlement agreements resolving the Victims’ claims were ‘structured and negotiated ... to keep them hidden from (the Company),’ the district court found that ’all communications about the claims and settlement agreements were made in furtherance of the criminal scheme to keep (the Company) and its auditors unaware of the allegations.’”
On January 10, Vince McMahon resolved his SEC charges relating to undisclosed settlements. The SEC said McMahon agreed to pay a $400,000 civil penalty and reimburse the WWE $1.33 million after consenting to an order finding that he violated the Securities Exchange Act. McMahon at the time that "the case is closed."
According to the AP, the status of the grand jury investigation is not immediately clear. The U.S. attorney’s office in Manhattan has declined to comment when asked about the investigation, which it has not publicly disclosed.
On January 31, just over a year after the original lawsuit was filed, former employee Janel Grant filed an amended lawsuit In case against Vince McMahon, John Laurinaitis, and WWE with new evidence.
