By: Jessica Corso

 Law360, New York (March 11, 2015, 7:35 PM ET)—New York prosecutors fired back Tuesday at a bid to throw out the indictment of lenders and individuals charged with participating in an illegal “pay day syndicate,” saying attorney-client emails introduced to the grand jury didn’t taint the process because they aren’t privileged.

In a response filed in state court Tuesday, the Manhattan district attorney’s office argued that it did not violate attorney-client privilege laws by introducing emails exchanged between legal counsel Joanna Temple—who is also charged in the case—and top executives at a dozen payday-lending companies to the grand jury that handed down the indictment in the case.

The prosecutors say the emails, in which Temple allegedly told her clients their activities were not illegal, are not privileged because they fall under the crime-fraud exception.

“Where a person seeks an attorney’s advice in order to further the commission of a crime or fraud, there is no attorney client privilege and those communications are subject to disclosure,” the district attorney’s office said.

The prosecutors also argue that Temple, as an attorney, has no standing to assert attorney-client privilege; that standing, they say, lies with the client.

The indicted executives had also informed the prosecuting attorneys that they planned to use the emails as a defense to prove that they acted on advice of counsel to commit the alleged criminal acts, according to prosecutors, who questioned the defense’s ability to mark the emails as privileged if they real some ant to be exculpatory.

Temple attorney Priya Chaudhry of Harris, O’Brien, St. Laurent & Chaudhry LLP struck back at the state’s response Wednesday, telling Law 360 that her client shouldn’t be charged for giving what she believed to be accurate legal advice to her clients.

“I think nothing in their papers disabuses our position that they over stepped their bounds in charging an attorney in giving legal advice, “Chaudhry said. “We remain confident that their novel theory of‘ false legal advice’ does not make a crime.”

Temple, creator Carey Vaughn Brown and one other executive, Ronald Beaver, linked to at least a dozen payday lending companies were charged in August with offering loans that are illegal under state law.

The state alleges the companies comprised a “pay day syndicate” that preyed upon consumers by offering small-scale loans with yearly interest rates ranging between 350 percent and 650 percent, despite New York’s interest rate cap of 25 percent on loans of less than$2.5million.

Brown is represented by Paul Shechtman of Zuckerman Spaeder LLP. Beaver is represented by Denis Patrick Kelleher of Clayman & Rosenberg LLP. Temple is represented by Priya Chaudhry of Harris, O’Brien, St. Laurent & Chaudhry LLP.

New York is represented by Assistant District Attorneys Julieta V. Lozano and Kevin Wilson.

The case is The People of the State of New York v. Carey Vaughn Brownetal., case number 2687/2014, in the Supreme Court of the State of New York, County of New York.

–Additional reporting by Stewart Bishop. Editing by Mark Lebetkin.