U.S. District Judge Jed S. Rakoff made the comments from the bench during a morning conference in the run-up to former Beneficient CEO Bradley Heppner's scheduled April 6 trial on charges including fraud and lying to auditors.
Starting around 2018, Heppner, of Dallas, looted GWG Holdings, a publicly traded company he controlled that invested heavily in Beneficient, the Manhattan U.S. attorney's office charged last year. Heppner took millions for himself prior to GWG's bankruptcy, which caused $1 billion in investor losses, the feds say.
Heppner denies guilt and has argued, among other things, that the indictment unfairly blames him for the bankruptcy.
In 2025, after Heppner knew he was a law enforcement target, he used an unnamed AI tool to prepare 31 documents related to his legal case and shared them with defense counsel from Quinn Emanuel Urquhart & Sullivan LLP, according to filings and statements in court Tuesday.
That gave rise to a government request for the court not to shield the documents under either attorney-client privilege or under the theory that they are protected work product.
Judge Rakoff quickly dispatched the first theory, saying Tuesday, "I'm not seeing remotely any basis for any claim of attorney-client privilege."
On the work-product theory, defense counsel Benjamin O'Neil then argued that the documents incorporate information that Quinn Emanuel conveyed to Heppner.
"It's not as if these were documents created during the course of the alleged scheme," O'Neil said, though he conceded they "were prepared by the defendant of his own volition."
Prosecutor Alexandra Rothman said the documents do not "reflect the legal strategy" of Heppner's defense team.
Judge Rakoff agreed, concluding that the AI documents were not prepared by attorneys.
The judge also noted that the tool used by Heppner contains a provision that any information inputted is not confidential — essentially, that a user has no expectation of privacy.
O'Neil said that if prosecutors try to use the AI-generated information at trial, it could give rise to a "witness-advocate conflict" since his law firm would become a witness in such a scenario.
"That's an interesting point, and you've put the government on notice," Judge Rakoff said. Having defense counsel morph mid-trial into a witness would risk a mistrial, the judge suggested.
Also on Tuesday, Judge Rakoff said he is examining a defense dismissal motion, including an assertion that a count against Heppner of making false statements to auditors should be dismissed because the charged conduct took place in 2019, outside a four-year statute of limitations.
"I'm particularly intrigued by the motion to dismiss Count 4 as time-barred," the judge said.
The sides are due back in court on April 2.
Heppner is represented by Benjamin O'Neil, Christopher Clore, John Scanlon and Robert Zink of Quinn Emanuel Urquhart & Sullivan LLP.
The government is represented by Daniel Nessim and Alexandra Rothman of the U.S. Attorney's Office for the Southern District of New York.
The case is U.S. v. Heppner, case number 1:25-cr-00503, in the U.S. District Court for the Southern District of New York.
--Editing by Marygrace Anderson.
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