IN RE GRAND JURY
SUBPOENA DATED FEBRUARY 2, 2012, UNITED STATES OF AMERICA, Movant VERSUS JOHN
DOE, Respondent.
No 12-cv-00553 (JFB)
UNITED STATES DISTRICT COURT FOR THE EASTERN
DISTRICT OF NEW YORK
908 F. Supp. 2d 348; 2012 U.S. Dist. LEXIS
174712
December 10, 2012, Decided
December 10, 2012, Filed
SUBSEQUENT HISTORY: Affirmed by
United States v. Doe (In re Grand Jury Subpoena Dated February 2, 2012), 2013
U.S. App. LEXIS 25316 (2d Cir. N.Y., Dec. 19, 2013)
CORE TERMS: subpoena,
grand jury, foreign bank, records exception, prong, record-keeping,
self-incrimination, respondent's argument, testimonial, customarily,
inherently, preparing, compelled, Resp't's Mem of Law, reporting requirement,
oral argument, incriminating, additionally, inspection, disclosure, banking,
treaty, Bank Secrecy Act, requested documents, financial interest, criminal
activities, regulatory scheme, public documents, quotation marks,
above-referenced
COUNSEL: [**1] For Movant: Loretta Lynch,
U.S. Attorney, Eastern District of New York, Central Islip, N.Y.; Jeffrey B.
Bender and Mark W. Kotila, Trial Attorneys, Northern Criminal Enforcement Section
Tax Division, U.S. Department of Justice.
For Respondent: Brian P.
Ketcham, Kostelanetz & Fink, LLP, Center, New York, N.Y.
JUDGES: JOSEPH F.
BIANCO, United States District Judge.
OPINION BY: JOSEPH F.
BIANCO
OPINION
[*350] MEMORANDUM AND ORDER
Joseph F. Bianco, District Judge:
The United
States of America (the "government") seeks an order compelling John
Doe ("respondent") to comply with a grand jury subpoena dated
February 2, 2012 (the "Subpoena"). Respondent opposes the
government's motion on two grounds: (1) the government already possesses the
records sought by the Subpoena and is improperly using the grand jury's
subpoena power to prepare for trial; and (2) compelling compliance with the
Subpoena would violate respondent's Fifth Amendment privilege against
self-incrimination. For the reasons set forth on the record on November 20,
2012 and provided in detail herein, the Court orders respondent to comply with
the Subpoena.
Specifically,
the Court finds that no evidence supports the conclusion that the government is
already in possession [**2]
of the requested documents or that the government has issued the Subpoena for
purposes of preparing for trial. Additionally, the Court holds that the
requested documents fall within the required records exception and, thus, are
outside the scope of respondent's Fifth Amendment privilege.
I. Background
As part of
its investigation, the grand jury in the Eastern District of New York issued a
subpoena to respondent that sought the production of foreign bank records that
account holders are required by law to keep and maintain for a period of five
years. In particular, the Subpoena sought the following foreign bank account
records:
Any and all
records required to be maintained pursuant to 31 C.F.R. § 1010.420 (formerly 31
C.F.R. § 103.32) for the past 5 years relating to foreign financial bank,
securities, or other financial accounts in a foreign country for which you
had/have a financial interest in, or signature or other authority over and are
required by law to file a Report of Foreign Bank and Financial Account (FBAR).
The records required to be maintained pursuant to 31 C.F.R. § 1010.420
(formerly 31 C.F.R. § 103.32) include records that contain the name in which
each such account is [**3]
maintained, the number or other designation of such account, the name and
address of the foreign bank or other person with whom such account is
maintained, the type of such account, and the maximum value of each such
account during the reporting period.
The government
served respondent with the Subpoena on February 8, 2012, and the Subpoena
required compliance by February 23, 2012. Respondent has failed to respond to
the Subpoena. On August 17, 2012, the government moved to compel respondent's
compliance with the Subpoena. On September 27, 2012, respondent filed his
opposition to the government's motion. On October 9, 2012, the government filed
its reply. The Court heard oral argument on November 20, 2012 and, following
the argument, issued an oral decision
[*351] granting the
government's motion to compel.
II. Discussion
A. Issuance of Subpoena
Respondent
argues that the government's motion to compel should be denied because (1) the
government already possesses the records sought by the subpoena, and (2) the
government may not use the grand jury to prepare for trial. For the reasons set
forth below, the Court concludes that these arguments have no merit.
As a
threshold matter, although courts [**4]
must ensure that the grand jury process is not being abused
by the government, it is not the role of the courts to micromanage the
government's presentation of evidence to the grand jury. See, e.g., United
States v. Kleen Laundry & Cleaners, Inc., 381 F. Supp. 519, 521-22
(E.D.N.Y. 1974) ("It is now the United States Attorney who gathers the
evidence for later presentation to the grand jury. . .
. So broad is his role in practice that courts are loath to
review prosecutorial actions."). Having carefully reviewed the
submissions, the Court finds no evidence of abuse of the grand jury process by
the government in any way.
First,
respondent's argument that the government already possesses the information
requested by the Subpoena is based upon sheer speculation and is denied by the
government. (See Gov't Reply Mem. of Law at 2) ("The respondent's
argument begins with the false premise that the government already possesses
the records sought by the Subpoena."); (id.) ("The respondent
. . . has no basis for his contention that the government 'already possesses
the documents sought by the subpoena.'" (quoting
Resp't's Mem. of Law in Opp'n at 3)). Although the government attached to its
motion [**5] to compel a
selection of documents from one foreign bank account with dates spanning from
1992 to August 2008, those documents are hardly (on their face) co-extensive
with the scope of the Subpoena. Specifically, the Subpoena required the
production of documents for a five-year period prior to February 2012. Thus,
the government's selection does not contain any documents for the majority of
the five-year period covered by the Subpoena. Moreover, there are no documents
from other foreign banks at which the respondent, unbeknownst to the
government, may have had accounts. In other words, it is self-evident that the
government would have no way of ensuring that all such records from all
foreign bank accounts -- for which respondent has a financial interest, or is a
signatory, or has authority over -- have been uncovered unless respondent
complies with the Subpoena. In short, there is no reason to believe that the
government already possesses all documents sought by the Subpoena.
Additionally, the fact that the government has some of respondent's foreign
bank records clearly does not preclude it from seeking all such relevant
foreign bank records. See, e.g., United States v. Dionisio, 410
U.S. 1, 13, 93 S. Ct. 764, 35 L. Ed. 2d 67 (1973) [**6] ("The grand jury may
well find it desirable to call numerous witnesses in the course of an
investigation. It does not follow that each witness may resist a subpoena on
the ground that too many witnesses have been called.").
Respondent
seeks to counter this proposition by citing to Application of Linen Supply
Cos., 15 F.R.D. 115, 119 (S.D.N.Y. 1953). However, that decision is clearly
distinguishable. In that case, the court held that the recipients of a grand
jury subpoena did not need to provide the originals of documents for which the
government already possessed copies. Id. at 119.
Here, the grand jury has not received any
[*352] documents from respondent
and, thus, it cannot be determined that the grand jury will have access to all
potentially responsive documents. Accordingly, the above-referenced case is
inapposite to the instant situation.
Respondent's
second argument, that the grand jury is being used by
the government to prepare for trial, is similarly unavailing. This argument is
a legal non-starter in the instant case because the grand jury has not returned
an indictment. Stated differently, the concern that the government is abusing
the grand jury by preparing for trial only arises [**7] after the grand jury has
returned an indictment. See, e.g., United States v. Leung, 40
F.3d 577, 581 (2d Cir. 1994) ("It is, of course, improper for the
Government to use the grand jury for the sole or dominant purpose of preparing
for trial under a pending indictment." (emphasis
added)); see also United States v. Ohle, 678 F. Supp. 2d 215, 233
(S.D.N.Y. 2010) (same); United States v. Bin Laden, 116 F. Supp. 2d 489
(S.D.N.Y. 2000) (citing cases). Here, there are no pending charges that have
been returned by the grand jury; moreover, there is no trial. In short, no
evidence supports the conclusion that the government has issued the Subpoena
for the sole or dominant purpose of preparing for a trial, particularly when no
charges have yet been brought. For this reason, respondent's argument does not
provide a basis to deprive the government, and the grand jury, of these
potentially relevant documents.
B. The Fifth Amendment
and the Required Records Exception
Respondent
next argues that, if this Court were to compel compliance with the Subpoena,
respondent's rights under the Fifth Amendment would be violated. Respondent
additionally asserts that the required records exception is not applicable. [**8] For the following reasons,
the Court disagrees with respondent's argument and concludes that the required
records exception overrides any Fifth Amendment privilege.
1. Legal Standard
The Fifth
Amendment's protection against self-incrimination is well-established.
See U.S. Const. amend. V ("No person . . . shall
be compelled in any criminal case to be a witness against himself.").
Its protections are triggered "when the accused is compelled to make a [t]estimonial [c]ommunication that is incriminating." Fisher
v. United States, 425 U.S. 391, 408, 96 S. Ct. 1569, 48 L. Ed. 2d 39
(1976); see also United States v. Hubbell, 530 U.S. 27, 34, 120
S. Ct. 2037, 147 L. Ed. 2d 24 (2000). Courts have interpreted what constitutes
a "testimonial communication" broadly. In Fisher, the Supreme
Court stated that "[t]he act of producing
evidence in response to a subpoena . . . has communicative aspects of its own,
wholly aside from the contents of the papers produced." 425 U.S. at 410; see
also United States v. Doe, 465 U.S. 605, 612, 104 S. Ct. 1237, 79 L.
Ed. 2d 552 (1984) ("A government subpoena compels the holder of the
document to perform an act that may have testimonial aspects and an
incriminating effect."). For instance, by complying with a subpoena, the
subpoena recipient may "tacitly concede[] [**9] the existence of the papers
demanded and their possession or control," as well as his or her
"belief that the papers are those described in the subpoena." Fisher, 425 U.S. at 410. The question thus becomes
whether the "tacit averments" made through the production of the
requested materials are both "'testimonial' and 'incriminating' for
purposes of applying the Fifth Amendment." Id.; see also In re
Three Grand [*353] Jury Subpoenas
Duces Tecum Dated January 29, 1999, 191 F.3d 173, 178 (2d Cir. 1999)
("[I]t is now settled that an individual may claim an act of production
privilege to decline to produce documents, the contents of which are not
privileged, where the act of production is, itself, (1) compelled, (2)
testimonial, and (3) incriminating."). The answer to this question will
often turn on the particular facts and circumstances of a given case. See
Fisher, 425 U.S. at 410.
Although
the Fifth Amendment guards an individual from self-incrimination by barring the
government from "compelling a person to give 'testimony' that incriminates
him," id. at 409, its protective
shield is not all-encompassing. The Supreme Court has made clear that the
privilege against self-incrimination does not [**10] prevent the government
from imposing record-keeping and inspection requirements as part of a valid
regulatory scheme. See Shapiro v. United States, 335 U.S. 1,
32-33, 68 S. Ct. 1375, 92 L. Ed. 1787 (1948). Generally referred to as the
required records exception, the government may mandate the retention or
inspection of records as "to public documents in public offices, [and]
also [as] to records required by law to be kept in order that there may be
suitable information of transactions which are the appropriate subjects of
governmental regulation, and the enforcement of restrictions validly
established." Id. at 17 (quoting Wilson v.
United States, 221 U.S. 361, 380, 31 S. Ct. 538, 55 L. Ed. 771 (1911)) (no
internal quotation marks).
The rationale
underlying the required records exception is "twofold." In re Two Grand Jury Subpoenae Duces Tecum, 793 F.2d 69, 73
(2d Cir. 1986). First, participation in an activity that, by law or
statute, mandates record-keeping may be deemed a
waiver of the act of production privilege, "at least in cases in which
there is a nexus between the government's production request and the purpose of
the record-keeping requirement." Id. Second, because such record-keeping is done pursuant to legal mandate (as opposed
to an [**11] individual's
voluntary choice), "the record-holder 'admits' little in the way of
control or authentication by producing them." Id. (quoting In re
Grand Jury Subpoena Served Upon Underhill, 781 F.2d 64, 65 (6th Cir.
1986)); cf. In re Grand Jury Investigation M.H., 648 F.3d 1067, 1071-72
(9th Cir. 2011) (stating that "where documents are voluntarily
created and kept, compelling their disclosure does not implicate the privilege
against self-incrimination," but "[w]here
documents are required to be kept and then produced, they are arguably
compelled," and further noting that "the privilege does not extend to
records required to be kept as a result of an individual's voluntary
participation in a regulated activity").
In order for
documents "[t]o constitute 'required records'
[they] must satisfy a three-part test," commonly referred to as the Grosso
test, first set forth in the Supreme Court's Grosso v. United States
decision: "(1) [**12]
the requirement that [records] be kept must be essentially regulatory, (2) the
records must be of a kind which the regulated party has customarily kept, and
(3) the records themselves must have assumed 'public aspects' which render them
analogous to public documents." In re Doe, 711 F.2d 1187, 1191 (2d
Cir. 1983) (citing Grosso v. United States, 390 U.S. 62, 67-68, 88 S.
Ct. 709, 19 L. Ed. 2d 906, 1968-1 C.B. 496 (1968)); see also Rajah v.
Mukasey, 544 F.3d 427, 442 (2d Cir. 2008) (stating "the Fifth
Amendment's act of production privilege does not cover records that are
required to be kept pursuant to a civil regulatory regime").
[*354] The record-keeping regulation that is at
the center of this dispute is the Currency and Foreign Transactions Reporting
Act of 1970, Pub. L. 91-508, 84 Stat. 1118 (1970), generally referred to as the
Bank Secrecy Act ("BSA"). The purpose of this regulation is "to
require certain reports or records where they have a high degree of usefulness
in criminal, tax, or regulatory investigations or proceedings." 31 U.S.C. § 5311. Section 241(a) of the Act provides that
the "Secretary of the Treasury shall require a resident or citizen of the
United States or a person in, and doing business in, the United States, to [**13] keep records, file
reports, or keep records and file reports, when the resident, citizen, or
person makes a transaction or maintains a relation for any person with a
foreign financial agency." Id. § 5314(a).
Pursuant to this instruction, the Secretary of the Treasury has implemented
regulations that require U.S. citizens and residents to disclose their foreign
bank accounts, see 31 C.F.R. § 1010.350; such regulations also mandate
that "each person having a financial interest in or signature or other
authority over any such account" retain such records for at least five
years, making them "available for inspection as authorized by law," id.
§ 1010.420.
This Court
has previously held that foreign bank records that are required to be
maintained under the BSA, pursuant to 31 C.F.R. § 1010.420, 31 U.S.C. § 5311 et seq., fall within the required records
exception to the act of production privilege under the Fifth Amendment. See
In re Grand Jury Subpoena Dated September 9, 2011, No.
2:11-mc-00747-JFB, 2011 U.S. Dist. LEXIS 156979 (E.D.N.Y. Dec. 30, 2011). That
analysis, incorporated below, applies with equal force to the Subpoena at issue
in this case. At the time of the Court's prior decision, the Second Circuit
had [**14] not yet decided
the issue; other courts, however, including the Ninth Circuit and several
district courts, had reached the same conclusion. See, e.g., In re
Grand Jury Investigation M.H., 648 F.3d 1067 (9th Cir. 2011); In re Grand Jury Subpoena No. 10-04-400, No. GJ 10-4 (D. Az. May 18, 2011) (annexed to government's motion
papers); In re Grand Jury Subpoenas dated January 3, 2011, No. FGJ 10-403-073 (S.D. Fl. Mar. 4, 2011) (annexed to government's
motion papers). Moreover, since this Court's decision in December 2011,
both the Fifth and Seventh Circuits have reached the same conclusion. See
In re Grand Jury Subpoena, 696 F.3d 428 (5th Cir. 2012); In re Special February 2011-1 Grand Jury Subpoena Dated
September 12, 2011, 691 F.3d 903 (7th Cir. 2012). The Court finds the
analysis contained in the above-referenced cases, although not binding, to be
persuasive.1
1 The
language of the Subpoena in this case is identical in all material respects to
those contained in the above-referenced cases.
For the
reasons set forth below, the Court concludes that the government has met its
burden of proving that the foreign financial account documents sought from
respondent, which the BSA requires respondent [**15] to maintain, satisfy the
three Grosso requirements. Accordingly, the required records exception applies,
and the documents fall outside the purview of the Fifth Amendment.
a. "Essentially
Regulatory"
The first
prong of the Grosso test requires that the statutory scheme
giving rise to the record-keeping requirement be "essentially
regulatory" and not criminal in nature. In United States v. Dichne,
the Second Circuit held that a similar recordkeeping requirement of the BSA did
not violate the Fifth Amendment's privilege [*355] against
self-incrimination. 612 F.2d 632, 638-41 (2d Cir. 1979).
The provision
at issue in Dichne required anyone exporting or importing monetary
instruments worth more than $5,000 (now $10,000) to file a report with the
Secretary of the Treasury. See 31 U.S.C. 1101. The Second Circuit noted
that because "the transportation of such amounts of currency is by no
means an illegal act, the District Court was correct in its finding that the
reporting requirement was not addressed to a highly selective group inherently
suspect of criminal activities." Dichne, 612 F.2d
at 639 (internal quotation marks omitted). The court therefore held that
"[i]n view of the lack of a direct linkage [**16] between the required
disclosure and the potential criminal activity, and in view of the fact that
the statute is not directed at an inherently suspect group, we conclude that
the reporting requirement does not present such a substantial risk of
incrimination so as to outweigh the governmental interest in requiring such a
disclosure." Id. at 641 (internal quotation marks
omitted). Consequently, the statute did not violate the Fifth
Amendment's privilege against self-incrimination. Id.; see also United
States v. Sturman, 951 F.2d 1466, 1487 (6th Cir. 1991) ("The Bank
Secrecy Act applies to all persons making foreign deposits, most of whom do so
with legally obtained funds. The requirement is imposed in the banking
regulatory field which is not infused with criminal
statutes. In addition, the disclosures do not subject the defendant to a real
danger of self-incrimination since the source of the funds is not disclosed . .
. . Thus, the defendant has failed to show that the
Bank Secrecy Act violated any individual right [that] . . . Grosso seek
to protect.").
Likewise, the
provision at issue here, 31 C.F.R. § 1010.420, applies to hundreds of thousands
of foreign bank accounts.2 "There is [**17] nothing inherently illegal
about having or being a beneficiary of an offshore foreign banking
account." In re Grand Jury Investigation M.H.,
648 F.3d at 1074. Because the record-keeping requirements of 31 C.F.R. §
1010.420 do not target inherently illegal activity, the provision is
essentially regulatory in nature.3 See In re Grand Jury
Subpoena No. 11-20750, 696 F.3d at 435 (holding that "[b]ecause the BSA's record-keeping requirements serve purposes
unrelated to criminal law enforcement and because the provisions do not
exclusively target people engaged in criminal activity, we conclude that the
requirements are 'essentially regulatory,' satisfying the [required records
exception]'s first prong"); In re Special February 2011-1 Grand Jury
Subpoena Dated September 12, 2011, 691 F.3d at 909 (finding first prong of
Grosso test met); In re Grand Jury Investigation M.H., 648 F.3d at 1075
(holding that records kept under 31 C.F.R. § 1010.420 were "essentially
regulatory" because the information sought was "not inherently
criminal," and therefore, "being required to provide that information
would generally not establish a significant link in a chain of evidence tending
to prove guilt."); [**18]
In re Grand Jury Subpoena No. 10-04-400, No. GJ 10-04 (D. Ariz. May 18,
2011) (stating reporting requirements of 31 C.F.R. § 1010.420 are
"essentially regulatory" [*356] because they are
"directed to the public at large and are intended to advance the important
public purposes inherent in the regulatory tax scheme"); In re Grand
Jury Subpoenas dated January 3, 2011, No. FGJ 10-403-073
(S.D. Fla. Mar. 4, 2011) (stating "record-keeping and reporting
requirements of the BSA have consistently been determined to be regulatory, and
not criminal, in nature").
2 See
Treasury Inspector General for Tax Administration, "New Legislation Could
Affect Filers of the Report of Foreign Bank and Financial Accounts, but
Potential Issues are Being Addressed," Ref. #2010-30-125 (Sept. 29, 2010)
at 7, available at
http://www.treasury.gov/tigta/auditreports/2010reports/201030125fr.pdf.
3 Indeed, the
plaintiff's arguments to attempt to show otherwise are similar to those
considered and rejected by the Fifth Circuit in In re Grand Jury Subpoena
No. 11-20750, 696 F.3d at 434-35.
For these
reasons, the Court concludes that the requested foreign financial records
satisfy the first prong of the Grosso test and are
"essentially [**19]
regulatory" in nature.
b. "Customarily
Kept"
Grosso's second prong
asks whether the records are typically kept in connection with the regulated
activity. The Ninth Circuit has held that the information required to be kept by
31 C.F.R. § 1010.420 is "basic account information that bank customers
would customarily keep, in part because they must report it to the IRS every
year as part of the IRS's regulation of offshore banking, and in part because
they need the information to access their foreign bank accounts." In re Grand Jury Investigation M.H., 648 F.3d at 1076.
The Fifth Circuit has concluded similarly, stating that records are
"customarily kept" in satisfaction of the required records
exception's second prong where they "are of the same type that the witness
must report annually to the IRS pursuant to the IRS's regulation of offshore
banking: the name, number, and type of account(s), the name and address of the
bank where an account is held, and the maximum value of the account during the
reporting period." In re Grand Jury Subpoena No. 11-20750, 696 F.3d
at 435; see also In re Grand Jury Investigation M.H.,
648 F.3d at 1075 (holding in a nearly identical case that second prong [**20] of required records doctrine
met). This Court agrees. Accordingly, the records the Subpoena seeks are of a
kind "customarily kept" by respondent, thereby satisfying the second
prong of the Grosso test.
c. "Public
Aspects"
The third Grosso
factor requires that the requested records "have assumed 'public aspects'
which render them at least analogous to public documents." Grosso, 390 U.S. at 68. Respondent asserts that an
individual's personal financial records do not possess sufficient public
aspects to satisfy this prong of the test. (Resp't's Mem. of Law in Opp'n at
22.) Generally, the fact "that the information sought is traditionally
private and personal as opposed to business-related does not automatically
implicate the Fifth Amendment." In re Grand Jury Subpoena No. 11-20750,
696 F.3d at 436; see also In re Grand Jury
Investigation M.H., 648 F.3d at 1077. However, the Ninth Circuit accurately
noted that "[w]here personal information is
compelled in furtherance of a valid regulatory scheme, as is the case here,
that information assumes a public aspect." In re
Grand Jury Investigation M.H., 648 F.3d at 1077.
Additionally,
the fact that 31 C.F.R. § 1010.420 requires foreign bank-account [**21] holders to simply keep
records, but not to file those records with the government, does not extinguish
the public aspects of the records. Id. Indeed, the Supreme Court has
acknowledged that there is no distinction between those records required to be kept by law and those regularly or
"easily accessed" by the government. See Marchetti
v. United States, 390 U.S. 39, 56 n.14, 88 S. Ct. 697, 19 L. Ed. 2d 889,
1968-1 C.B. 500 (1968) ("We perceive no meaningful difference between an
obligation to maintain records for inspection, and such an obligation
supplemented by a requirement that those records be filed periodically with
officers of the United States."). Thus, the Court finds that the
record-keeping requirements [*357] of 31 C.F.R. §
1010.420 have "public aspects," satisfying the third and final prong
of the Grosso test. See In re Special February 2011-1 Grand Jury
Subpoena, 691 F.3d at 909 (concluding that respondent could not resist a
subpoena on Fifth Amendment grounds because the requested records met the three
prongs of the required records exception).4
4 The Court
also rejects respondent's argument that the required records exception is only
triggered where there is some level of licensure or heightened government
regulation at issue. [**22]
(See Resp't's Mem. of Law in Opp'n at 8) (stating
"the required records exception to the act of production privilege stems
from exigent circumstances not present in the regulatory scheme issued under
the [BSA]"). The Court agrees with the government's position, stated at
oral argument, that it is up to Congress to determinate the appropriate level
of regulation that should accompany a required records mandate. The Court
likewise notes that the Fifth Circuit held similarly in its most recent
decision, stating "adopting a rule that the
legitimacy of a recordkeeping requirement depends on Congress first enacting substantive
restrictions would lead to absurd results." In re
Grand Jury Subpoena, 696 F.3d at 436.
In sum,
because all three prongs of the Grosso test are met, the required
records exception is applicable, and the Fifth Amendment's safeguards are not
available to respondent in this instance.
C. Availability of
Records From Foreign Banks
The Court
briefly addresses respondent's argument that the government in this case could
have sought to obtain the requested documents by means of foreign request,
specifically, via such foreign treaties as "the Foreign Account Tax
Compliance Act, [**23] new
and/or updated bilateral tax treaties permitting the expanded exchange of tax
information, Mutual Legal Assistance Treaties, Tax Information Exchange
Agreements, and Simultaneous Criminal Investigation Programs." Resp't's Mem. of Law in Opp'n at 8.
At oral argument, the government explained the impracticalities of such a
process, emphasizing in particular the length of time generally associated with
such requests, as well as the government's lack of information throughout the
entire request process to the foreign government.5 As the government
accurately noted, Congress enacted the BSA so as to ameliorate the difficulties
and challenges associated with obtaining records by means of a foreign treaty.
The Court agrees with the government and finds no reason as to why a significantly
longer process, with uncertain results, should have to be used in the instant
case. There is no requirement that the government only subpoena foreign bank
records from an individual as a last resort when other efforts to obtain such
documents from the foreign bank have been exhausted. Such a rule has no basis
in the law and could significantly delay criminal investigations. Accordingly,
the Court rejects [**24]
that argument by respondent.
5 The
government offered several examples at oral argument of factors that would
hinder the government's ability to obtain records through foreign request.
These examples include, but are not limited to, the transmission and
translation of the government's request to the appropriate foreign entity; that
entity's seeking of the records from the appropriate bank; a foreign court's
consideration of whether such records may in fact be produced; the
corresponding appeal period applicable to any such determination; and the
government's lack of any notification as to the status of its request following
its initial transmittal, including lack of notification as to any judicial
decisions issued or ongoing appeals concerning production of the documents.
Each and all of these factors might significantly lengthen the record request
process that the BSA sought to improve.
III. CONCLUSION
Having
carefully reviewed the respondent's arguments, the Court finds
respondent's [*358] position unpersuasive.
The Court rejects, due to lack of evidentiary support, respondent's contention
that the government already possesses all documents sought by the Subpoena. The
Court likewise rejects [**25]
respondent's argument, also on grounds of insufficient evidence and the fact
that there are no pending charges, that the government
here issued the Subpoena for the sole or dominant purpose of preparing for a
trial. The Court continues to hold that the record-keeping provision of the BSA
meets the three requirements for the required records exception set forth in Grosso.
Thus, the records sought by the Subpoena are "required records" exempt from the Fifth Amendment privilege against
self-incrimination. Because the required records exception applies, respondent
must comply with the Subpoena.
SO ORDERED.
JOSEPH F.
BIANCO
United States
District Judge
Dated:
December 10, 2012
Central
Islip, NY