JUDGE RULES FEDS CAN EXAMINE FRY-SCHAFER FILES

Seized files' return denied: Attorney-physician couple lose their bid to
regain data taken by federal agents in a medical pot probe. By Wayne Wilson
Sacramento Bee Staff Writer (Published Oct. 24, 2001)

Thousands of files seized by federal drug agents from an attorney-physician
couple who advocate the medical use of marijuana need not be returned, a
judge ruled Tuesday.

U.S. Magistrate Gregory G. Hollows rejected the attorney-client privilege
asserted by the operators of California Medical Research Center in the El
Dorado County town of Cool, but set up rigid rules by which the
still-sealed records may be reviewed.

Neither attorney Dale C. Schafer nor his wife, Dr. Marion "Molly" P. Fry,
would discuss Hollows' findings, saying they had not yet seen the 28-page
order.

Their lawyer, J. David Nick of San Francisco, could not be reached for
comment, but after Monday's hearing in U.S. District Court in Sacramento,
he characterized the government's campaign against the pair as an "unsavory
attempt" to instill fear in seriously ill Californians.

The offices of Schafer and Fry, along with their nearby Greenwood residence
and a storage unit in Cool, were raided Sept. 28-29. A U-Haul truck
transported the seized computerized and paper files to Sacramento, where
they have been placed in a locked room on the 16th floor of the federal
courthouse.

Schafer and Fry have yet to be formally charged with a crime, but drug
agents alleged in the affidavit for a search warrant that the lawyer and
doctor were engaged in a scheme to unlawfully prescribe, cultivate and sell
marijuana.

The government called it a marijuana prescription "tag team" with the
doctor recommending pot therapy and the attorney advising patients how to
avoid conviction.

At Monday's hearing on the Schafer-Fry motion to return their files,
attorney Nick argued that the government is on a "fishing expedition,"
looking for evidence that would implicate thousands of sick people who use
marijuana medicinally.

Nick said the Compassionate Use Act, a 1996 state ballot measure, permits
Californians to employ pot therapy when it is recommended by a doctor. But
Assistant U.S. Attorney Anne Pings said that possession or distribution of
marijuana is a federal crime, regardless of one's claimed medical needs.

And, she said, the actions of Schafer and Fry went beyond the mere
recommendation of marijuana therapy.

"Attorney Schafer did more than advise clients about the ins and outs of
medical marijuana, including how to avoid prosecution or how to act after
an arrest," Hollows noted in his findings. "He coupled that advice with
sales of marijuana, distribution of marijuana clones, as well as the
organization of a business with his doctor-wife for the mass distribution
of marijuana through allegedly unlawful recommendations.

"At this point, there is probable cause to believe that attorney Schafer
not only advised his customers to possess marijuana in violation of federal
law, he took steps to ensure that possession," Hollows declared.

Schafer advertised on the Internet and in local papers, offering marijuana
recommendations from his business, Hollows stated. But "he affirmatively
told his purported clients from the inception of their meeting that he was
not their attorney," Hollows said, quoting a question-answer sheet
"apparently given to ... Schafer's customers": Q: Is Mr. Schafer my attorney?

A: No. Dale C. Schafer (has) provided you with legal consultation to assist
you in understanding (the applicable law) and how to keep you out of
trouble with law enforcement.

With that in mind, Magistrate Hollows reasoned, "Attorney Schafer's clients
could not have had a reasonable basis to believe that they were submitting
confidential information to their lawyer." Thus, there was no
attorney-client privilege, he found. Recognizing the "sensitive" nature of
the seized documents, Hollows ruled that the government will be allowed
access to some of the files only after they've been reviewed by a "special
master" for the purpose of establishing relevance.

The medical records themselves will not be opened because, under the
government's theory that all marijuana use is unlawful, any reason for such
use is not relevant, the magistrate noted.