USA v. Carney, et al

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IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF ARKANSAS
FAYETTEVILLE DIVISION
UNITED STATES OF AMERICA 	PLAINTIFF
V. 	CASE NO. 5:25-CR-50005-001 & -002
JASON BOYD CARNEY and
LACEY CHRISTINA CARNEY 	DEFENDANTS
OPINION AND ORDER
Currently before the Court is Defendant Jason Boyd Carney’s Motion for Relief
Based on the Unlawful Piercing of the Attorney-Client Privilege (Doc. 106). Co-Defendant
Lacey Christina Carney joins the Motion. See Doc. 120. The Government filed a
Response in Opposition and supporting documents, which the Court also reviewed. See
Doc. 138. For the reasons explained below, the Motion is DENIED.
I. 	BACKGROUND
On November 27, 2023, federal agents applied for a warrant authorizing a search
of the Springdale residence owned by the Carneys in connection with an ongoing criminal
investigation. See Doc. 1-1, Case No. 5:23-CM-00053. The Honorable Christy Comstock,
Chief United States Magistrate Judge for the Western District of Arkansas, found probable
cause to issue the warrant and approved the seizure of certain items, including the
Carneys’ electronic devices, financial and banking records, real estate records, titles to
cars and boats, safes, and keys to deposit boxes. See id. Two days later, on November
29, agents executed the warrant, and by no later than that moment the Carneys were
aware that they were the targets of a criminal investigation.
The same day that federal agents raided the Carneys’ home, a federal grand jury
sitting in the Western District of Arkansas issued a subpoena directed to the Carneys’
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non-profit business, 2nd Milk, Inc., demanding the production of multiple categories of
documents related to the ongoing criminal investigation, including corporate financial and
personnel records, meeting minutes, policies, contracts, and corporate correspondence.
See Doc. 3-2, Case No. 2:24-CM-00013. The subpoena was served on Mr. Carney (in
his capacity as President of 2nd Milk) while his home was being searched. The subpoena
specified that 2nd Milk’s documents were to be returned to the grand jury by January 16,
2024. See id.
On December 1, 2023, two days after the execution of the search warrant, Mr.
Carney received a text message (“December 1 text message”) from the lawyer who was
simultaneously representing the Carneys in their individual capacities and 2nd Milk in
connection with the grand jury proceedings. For ease of reference, the Court will refer to
this lawyer as “Attorney-1,” as that is how he is identified in the Indictment. In the
December 1 text message, Attorney-1 suggested to Mr. Carney that he move any large
sums of money currently in his bank accounts to the attorney’s trust account to avoid
seizure by law enforcement. That advice proved to be prescient, as earlier that same day
the Government had filed a civil forfeiture complaint seeking the seizure of the Carneys’
home as proceeds of suspected criminal activity. See Doc. 2, Case No. 5:23-CV-5219.
On January 15, 2024—the day before 2nd Milk’s document production was due—
Attorney-1 filed a motion to quash the disclosure of 2nd Milk’s donor lists and donation
amounts and a motion to intervene and quash a third-party subpoena directed to 2nd
Milk’s tax preparer. See Docs. 1 & 2, Case No. 2:24-CM-00013. The Honorable Susan
O. Hickey, United States District Judge for the Western District of Arkansas,1 denied both
1 At that time Judge Hickey served as the court’s Chief Judge.
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motions and instructed 2nd Milk to produce all documents by March 5, 2024. See id.,
Docs. 6 & 7. Attorney-1 appealed the Court’s decision on March 6. In the meantime, 2nd
Milk produced some—but not all—of the documents responsive to the grand jury
subpoena, and the Government moved to compel the rest of the production. See Doc.
12. While the motion to compel was pending, the Eighth Circuit dismissed 2nd Milk’s
appeal. See Doc. 14. By May 24, 2024, 2nd Milk had still not completed its document
production, so the Government moved for an emergency hearing on its motion to compel,
which Judge Hickey set for an in-person hearing on June 11, 2024.
Mr. Carney and Attorney-1 both appeared at the hearing on the motion to compel,
during which Judge Hickey observed that 2nd Milk had not yet produced all emails, text
messages, social media files, board minutes, foreign bank accounts, expense records,
and donor records responsive to the grand jury’s subpoena. See Doc. 20, p. 6. By this
point the Carneys and Attorney-1 had the benefit of more than six months to review the
subpoenaed documents and to assert whatever objections as to privilege that they
deemed appropriate. 	In fact, during the hearing––in response to a question by the
Government’s counsel––Attorney-1 objected when reference was made to a March 2024
email (that 2nd Milk had already produced), claiming that it was an attorney-client
privileged communication. See id. at p. 19. Judge Hickey overruled the objection. See id.
Attorney-1 did not object to the production of the December 1 text, nor did the Carneys’
assert any other privilege objections during the hearing. Judge Hickey ultimately ruled
from the bench and granted the Government’s motion to compel. See id. at pp. 53–54. In
a written order filed on June 12, 2024, she directed “2nd Milk to immediately produce all
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items responsive to the subpoena at issue or SHOW CAUSE as to why 2nd Milk should
not be held in contempt for continued noncompliance with the subpoena.” (Doc. 18).
It appears that 2nd Milk completed its production on or about June 24, 2024, see
Doc. 138, p. 2, Case No. 5:25-CR-50005, and the December 1 text message was among
the materials produced that day. But the prosecutors did not have immediate access to
the document production. Instead, the Government had set up a filter team to review all
subpoenaed documents for privilege before they were turned over to the prosecution
team.
Once 2nd Milk’s production was complete, the lead prosecutor, Assistant United
States Attorney Hunter Bridges, emailed Attorney-1 on June 26, 2024, to ask whether
any of the documents should be flagged for the filter team as possibly privileged. See
Doc. 138-6. On June 27, Attorney-1 responded: “I don’t know the extent of what all was
included, but I would suspect that there are messages which 2nd Milk produced that may
contain privilege material for various parties that have had their emails produced. I do not
have authority from any party to waive any privileges.” Id. AUSA Bridges immediately
replied, “We can’t fully gauge where we stand until we have a better handle on the
privilege issue,” and requested the names and email addresses or phone numbers that
corresponded to any text messages or emails over which the Carneys were asserting
privilege. Id. 	Attorney-1 said, “Ok, let me see about getting phone numbers and
addresses for you,” but Attorney-1 (apparently) did not follow up as promised. Id.
On June 28, AUSA Bridges emailed Attorney-1 “looking for an update on
[potentially privileged] [phone] numbers and [email] addresses or whether your clients
(Lacey/Jason/2 nd Milk) will waive privilege for items in this production.” Id. In the same
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email, AUSA Bridges referenced the Court’s deadline and said he “was expecting
[Attorney-1] to have some sort of answer on [privileged items] today . . . .” Id. Although
the Court has not been provided copies of later communications between AUSA Bridges
and Attorney-1 (if they exist), it seems undisputed that Attorney-1 never asserted privilege
over the December 1 text message despite multiple opportunities and invitations to do
so. Without the benefit of further guidance by Attorney-1, the filter team began reviewing
2nd Milk’s production.
Fast forward about five months. On December 13, 2024, prior to any Indictment,
AUSA Seth Creed, who headed the filter team, presented an ex parte motion (Doc. 138-
1) and brief in support (Doc. 138-2) to Judge Comstock (the same magistrate judge who
made the probable cause determination to issue the search warrant for the Carney’s
home), asking that she decide whether the December 1 text message––to the extent it
constituted 	a 	privileged 	communication––could 	nevertheless 	be 	disclosed 	to 	the
prosecution team under the crime-fraud exception. Judge Comstock issued an ex parte
Order (Doc. 138-4) finding that the crime-fraud exception applied and authorized the filter
team to disclose the message to the prosecution team.
The Carneys were indicted on January 8, 2025, for conspiracy to commit wire
fraud, wire fraud, and structuring transactions to evade reporting requirements. See Doc.
1. The Government filed a First Superseding Indictment on May 21, adding claims of filing
false tax returns. See Doc. 53. Seven weeks ago on December 11, 2025, the Government
filed a Second Superseding Indictment. See Doc. 84. After that, the Government served
the Carneys’ trial counsel with more discovery, and in that production were copies of the
Government’s ex parte motion and Judge Comstock’s ex parte order concerning the
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December 1 text message. The Carneys now assert the following arguments in support
of their alternative claims for relief:
(1) because the December 1 text message was privileged, was disclosed to the
grand jury, and was potentially relied upon by the grand jury in returning the
Second Superseding Indictment, their Fifth Amendment rights were likely
violated, and therefore all charges against them should be dismissed as a
result;
(2) the Indictment should be dismissed because the Magistrate Judge was without
authority to rule on the privilege issue, and further, was not permitted to engage
in an in camera review and issue an ex parte order without giving Mr. Carney
the opportunity to present his arguments in favor of privilege; and
(3) in the alternative, the December 1 text message should be suppressed from
evidence at the trial because it was obtained in violation of the attorney-client
privilege.
The Court will address each claim for relief in turn.
II. 	DISCUSSION
A. Dismissal of Indictment Due to Disclosure of Privileged Material
The Carneys’ first argument is based on the naked assumption that the grand jury
was presented with an attorney-client privileged communication. The Carneys do not offer
any facts to support or explain their conclusion that the Government provided the
December 1 text message to the grand jury. However, according to AUSA Bridges, “[t]he
grand jury never reviewed the [December 1 text message] that Judge Comstock allowed
the filter team to release to the prosecution team,”. (Doc. 138, pp. 4–5). The Carneys offer
no rebuttal to the Government’s representation. On this record, it appears the premise of
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the Carneys’ argument is factually mistaken. 	The Carneys’ motion to dismiss the
Indictment on this basis is therefore denied. 2
B. Alleged Magistrate Judge Errors
The Carneys’ second contention—that the Magistrate Judge lacked the authority
to issue an order deciding whether the December 1 message was subject to the crime-
fraud exception is, in a word, puzzling. 	Magistrate judges are authorized to make
probable cause determinations and rule on pretrial discovery motions under 28 U.S.C.
§ 636(b)(1)(A). The Carneys cite to no law that would suggest only an Article III judge
may rule on privilege issues raised by a filter team.
Moreover––and 	contrary 	to 	the 	assertions 	in 	their 	motion––the 	procedural
background outlined above establishes that the Carneys had ample opportunity to assert
privilege over the December 1 text message to an Article III judge but declined to do so.
First, Attorney-1 moved to quash portions of 2nd Milk’s production—but not the December
1 text message specifically. And when Judge Hickey denied their motions, the Carneys
took an appeal to the Eighth Circuit––which was summarily dismissed.
When 2nd Milk failed to complete the production by Judge Hickey’s deadline, the
Government was forced to file a motion to compel. Mr. Carney and Attorney-1 then
appeared before Judge Hickey for an emergency hearing. During the hearing Attorney-1
took the opportunity to raise a privilege objection to a different communication (which was
denied), but he did not assert privilege with respect to the December 1 text message.3
2 If new information surfaces that the December 1 text message was presented to the
Grand Jury, then the Carney’s may renew their motion, and the Court will consider the
merits of their argument in light of the new information.
3 As the Government notes its brief, the December 1 text message was produced by 2nd
Milk, not the Carneys, individually. (Doc. 138, p. 6). This creates a separate question of
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Finally, in the days following the emergency hearing, AUSA Bridges emailed
Attorney-1 repeatedly to ask whether the Carneys intended to raise any new privilege
claims—even though Attorney-1 had not provided a privilege log with the final document
production, nor had he otherwise made an assertion of privilege. According to the
evidence before the Court, Attorney-1 either failed to respond to AUSA Bridges’s privilege
inquiries or failed to give him a straight answer. Either way, given Attorney-1’s silence, it
is unsurprising that the Government’s filter team chose to seek a definitive ruling on
privilege from Judge Comstock. Cf. United States v. Zolin, 491 U.S. 554, 565 (1989)
(holding 	that 	“no 	express 	provision 	of the Federal 	Rules of 	Evidence bars . . . in
camera review” of “allegedly privileged communications to determine whether those
communications fall within the crime-fraud exception”). The filter team certainly could
have assumed that 2nd Milk had waived the privilege, given the circumstances outlined
above—but it did not.
In summary, a magistrate judge did not preside over the Carneys’ and 2nd Milk’s
Motions to Quash the Subpoenas––an Article III judge did. 	A magistrate judge did not
preside over the emergency hearing on the Government’s Motion to Compel––an Article
III judge did. The Carneys were not deprived of an opportunity to challenge these rulings
on appeal––in fact, the Eighth Circuit dismissed the appeal that they did file. Even when
the Carneys were finally forced to complete the document production, they ignored
multiple additional invitations to assert privilege to the filter team.
waiver––which may, or may not, explain why Attorney 1 was not pressing the issue before
Judge Hickey.
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Here's what Chief Magistrate Judge Comstock did do. In a pre-indictment context,
where a defendant is not yet a party and targets are not made privy to filings on the
miscellaneous docket, she conducted what amounts to a probable cause determination
as to whether the December 1 text message was subject to the crime-fraud exception.
As explained in her order, Judge Comstock did so in accordance with established law.
(Doc. 138-4, pp. 4-5). 	She explicitly considered the applicability of the crime-fraud
exception to the December 1 text message in the context of the “Donor Check
Communications” that occurred between November 28 and December 26, 2023. Id. The
Carneys have been aware of this surrounding context since the filing of the initial
Indictment (Doc. 1, ¶¶ 34-37), yet they conveniently omit it when arguing against the
merits of Judge Comstock’s ruling. (Doc. 106, pp. 4-6).
Against this lengthy procedural backdrop, the Carneys’ suggestion that “the
Government engineered a scenario where Carney—who holds the privilege—never had
the opportunity to establish its applicability” (Doc. 106, p. 5) is demonstrably false and
completely disingenuous. 	Even if the Carneys were correct about the merits of their
privilege argument, they are wrong about the “highly prejudicial nature” of what followed.
Based on the information presently before the Court, the Carneys have not suffered any
prejudice because the December 1 text message was (apparently) not presented to the
grand jury. Therefore, dismissal of the Indictment due to alleged magistrate judge error
is denied.4
4 To the extent the Carneys also seek this Court’s review of Judge Comstock’s pre-
indictment ruling, the Court declines to do so at this time. 	The proper vehicle for such
review would be a liminal motion, but as discussed in the next section, the Government
does not presently intend to offer the December 1 text message into evidence at trial.
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C. Exclusion of December 1 Message at Trial Due to Attorney-Client Privilege
The Carneys’ final argument is that the December 1 text message should be
excluded from trial as privileged. In response, the Government states that it does not
intend to introduce the message at trial. See Doc. 138, p. 8 n.5. As the matter is currently
moot, 	the 	Court 	declines 	to 	issue 	an 	advisory 	opinion 	on 	privilege. 	However, 	if
circumstances change and the Government decides to offer the December 1 text
message in its case-in-chief, it should provide reasonable notice to the Carneys such that
they may seek liminal relief prior to trial.
For all these reasons, IT IS ORDERED that the Motion for Relief Based on the
Unlawful Piercing of the Attorney-Client Privilege (Doc. 106) is DENIED.
IT IS SO ORDERED on this 27 th day of January, 2026.
_______________________ ____________
TIMOTHY L. BROOKS
CHIEF UNITED STATES DISTRICT JUDGE
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