IN RE: Grand Jury Proceedings, No. 4-10
No. 12-13131
UNITED STATES COURT OF APPEALS FOR THE ELEVENTH
CIRCUIT
707 F.3d 1262; 2013 U.S. App. LEXIS 2752; 2013-1
U.S. Tax Cas. (CCH) P50,182; 111 A.F.T.R.2d (RIA) 794;
23 Fla. L. Weekly Fed. C 1864
February 7, 2013, Decided
SUBSEQUENT HISTORY: Motion
granted by In re Grand Jury Proceedings (No. 4-10), 133 S. Ct. 2790, 186 L. Ed.
2d 217, 2013 U.S. LEXIS 4239 (U.S., 2013)
US Supreme Court
certiorari denied by In re Grand Jury Proceedings (No. 4-10), 2013 U.S. LEXIS
5531 (U.S., Oct. 7, 2013)
PRIOR HISTORY: [**1]
Appeal from the United
States District Court for the Northern District of Georgia. D.C.
Docket No. GJ 4-10.
DISPOSITION: AFFIRMED.
CASE SUMMARY:
PROCEDURAL POSTURE: Petitioner Target refused to produce foreign bank account
records under a grand jury subpoena duces tecum. The U.S. District Court for
the Northern District of Georgia granted the government's motion to compel,
ruling the records were required under the Bank Secrecy Act (BSA), 31 U.S.C.S.
§ 5311 et seq., and were not subject to a Fifth Amendment self-incrimination
privilege under the Required Records Exception. The Target appealed.
OVERVIEW: Under
31 C.F.R. § 1010.420, the records contained information that the Target -- if
he had such accounts and met other BSA qualifications -- had to keep, report,
and maintain for inspection. The records, which the BSA and its regulations
required him to maintain, were "essentially regulatory,"
"customarily kept," and had "public aspects." That the BSA
related both to criminal law and civil regulatory matters did not strip it of
its status as "essentially regulatory." Its use as a tool to combat
certain criminal activity was insufficient to render it essentially criminal as
opposed to essentially regulatory. The records were also of the same type that
a reasonable account holder would keep to access his account. The BSA was a
valid regulatory regime and information sought pursuant to it assumed a
"public aspect." Voluntarily choosing to engage in an activity
imposing record-keeping requirements under a valid civil regulatory scheme
carried consequences, including a possibility that those records might have to
be produced upon demand, despite any Fifth Amendment privilege. That was true
whether the privilege arose by virtue of the records' contents or by the act of
producing them.
OUTCOME: The
district court's grant of the government's motion to compel was affirmed.
CORE TERMS: target,
records exception, subpoena, self-incrimination, producing, recordkeeping,
inspection, Bank Secrecy Act, testimonial, reporting requirements, customarily,
subpoenaed, foreign bank, subpoenas duces tecum, criminal activities,
incriminating, inherently, reporting, compelled, grand jury investigation,
financial interest, regulated, contempt, banking, regulatory scheme, present
case, implementing, offshore, resident, prong
LexisNexis(R)
Headnotes
Administrative Law >
Agency Investigations > Constitutional Rights > Self-Incrimination
Privilege
Administrative Law >
Governmental Information > Recordkeeping & Reporting
Constitutional Law >
Bill of Rights > Fundamental Rights > Procedural Due Process >
Self-Incrimination Privilege
[HN1] The United States
Supreme Court has recognized an exception (the Required Records Exception) to
the self-incrimination privilege when certain records are kept pursuant to a
valid regulatory scheme.
Administrative Law >
Governmental Information > Recordkeeping & Reporting
Banking Law > Federal
Acts > Bank Secrecy Act
[HN2] Each United States
person must file a Treas. Dep't Form 90-22.1 Report of Foreign Bank and
Financial Accounts if that person has a financial interest in, or signature
authority over, any financial account or other financial interest maintained in
a foreign country. 31 U.S.C.S. § 5314; 31 C.F.R. §§ 1010.350,
1010.420.
Civil Procedure >
Appeals > Standards of Review > De Novo Review
Civil Procedure >
Appeals > Standards of Review > Fact & Law Issues
Constitutional Law >
Bill of Rights > Fundamental Rights > Procedural Due Process >
Self-Incrimination Privilege
[HN3] An appellate court
reviews the district court's findings of relevant facts for clear error, and
reviews the district court's application of the Fifth Amendment privilege
against self-incrimination de novo. Where the issue on appeal is solely a legal
one, review is de novo.
Administrative Law >
Governmental Information > Recordkeeping & Reporting
Banking Law > Federal
Acts > Bank Secrecy Act
[HN4] The Bank Secrecy
Act's purpose 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.S. § 5311. The Secretary of the
Treasury must require U.S. citizens and residents, as well as any person doing
business in the United States, to keep records and file reports regarding their
foreign financial transactions and relationships. 31 U.S.C.S.
§ 5314(a).
Administrative Law >
Governmental Information > Recordkeeping & Reporting
Banking Law > Federal
Acts > Bank Secrecy Act
[HN5] See 31 U.S.C.S. §
5314(a).
Administrative Law >
Governmental Information > Recordkeeping & Reporting
Banking Law > Federal
Acts > Bank Secrecy Act
Tax Law >
International Taxes > Americans Operating Abroad > General Overview
[HN6] Pursuant to the 31
U.S.C.S. § 5314(a) instruction, the Secretary of the
Treasury has implemented regulations that require U.S. citizens, residents, and
business entities to report their foreign financial accounts to the IRS. 31 C.F.R. § 1010.350.
Banking Law > Federal
Acts > Bank Secrecy Act
Tax Law >
International Taxes > Americans Operating Abroad > General Overview
[HN7] See 31 C.F.R. §
1010.350(a).
Administrative Law >
Governmental Information > Recordkeeping & Reporting
Banking Law > Federal
Acts > Bank Secrecy Act
Tax Law >
International Taxes > Americans Operating Abroad > General Overview
[HN8] A regulation under
the Bank Secrecy Act, 31 U.S.C.S. § 5311 et seq., mandates that those persons
who are required to report foreign financial interests under 31 C.F.R. §
1010.350 retain certain foreign financial records for at least five years,
making them available for inspection as authorized by law. 31
C.F.R. § 1010.420. These foreign financial records must contain (1) the
name in which each such account is maintained; (2) the number or other
designation of such account; (3) the name and address of the foreign bank or
other person with whom such account is maintained; (4) the type of such
account; and (5) the maximum value of each such account during the reporting
period. 31 C.F.R. § 1010.420.
Administrative Law >
Governmental Information > Recordkeeping & Reporting
Banking Law > Federal
Acts > Bank Secrecy Act
Constitutional Law >
Congressional Duties & Powers > Commerce Clause > Commerce With Other
Nations
Tax Law >
International Taxes > Americans Operating Abroad > General Overview
[HN9] It is plainly
within Congress's power to regulate foreign financial transactions undertaken
by U.S. citizens and residents by mandating that such financial activity be
reported yearly to the federal government. U.S. Const. art.
I, § 8, cl. 3, vests Congress with the authority to regulate commerce with
foreign nations.
Constitutional Law >
Bill of Rights > Fundamental Rights > Procedural Due Process >
Self-Incrimination Privilege
[HN10] See U.S. Const.
amend. V.
Constitutional Law >
Bill of Rights > Fundamental Rights > Procedural Due Process >
Self-Incrimination Privilege
[HN11] The Fifth
Amendment's self-incrimination privilege provision applies when the accused is
compelled to make a testimonial communication that is incriminating. Courts
have interpreted broadly what constitutes a "testimonial communication."
Constitutional Law >
Bill of Rights > Fundamental Rights > Procedural Due Process >
Self-Incrimination Privilege
[HN12] The act of
producing evidence in response to a subpoena has communicative aspects of its
own for purposes of the Fifth Amendment's self-incrimination privilege, wholly
aside from the contents of the papers produced. The issue then becomes whether
the "tacit averments" made by producing the requested materials are
both "testimonial" and "incriminating" for purposes of
applying the Fifth Amendment.
Administrative Law >
Agency Investigations > Constitutional Rights > Self-Incrimination
Privilege
Administrative Law >
Governmental Information > Recordkeeping & Reporting
Constitutional Law >
Bill of Rights > Fundamental Rights > Procedural Due Process >
Self-Incrimination Privilege
[HN13] Although the
Fifth Amendment protects an individual against self-incrimination by barring
the government from compelling him to give "testimony" that
incriminates him, its protective shield is not absolute. In some instances,
Congress may, without violating an individual's Fifth Amendment privilege,
require that individual to report information to the government, despite the
fact that the information may incriminate the individual.
Administrative Law >
Agency Investigations > Constitutional Rights > Self-Incrimination
Privilege
Administrative Law >
Governmental Information > Recordkeeping & Reporting
Constitutional Law >
Bill of Rights > Fundamental Rights > Procedural Due Process >
Self-Incrimination Privilege
[HN14] When the
government is authorized to regulate an activity, an individual's Fifth
Amendment privilege does not prevent the government from imposing
recordkeeping, inspection, and reporting requirements as part of a valid regulatory
scheme. Based on 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. The rationale underlying the Required Records
Exception is twofold. First, voluntary participation in an activity that, by
law or statute, mandates recordkeeping may be deemed a waiver of the act of
production privilege because the obligations to keep and produce the records
are in a sense consented to as a condition of being able to carry on the
regulated activity involved. Second, because such recordkeeping is done
pursuant to legal mandate, the mere response by production is no more a
violation of the privilege against self-incrimination than requiring the
creation of the record itself, for it is the record, presumably, that might
incriminate the recordholder.
Administrative Law >
Agency Investigations > Constitutional Rights > Self-Incrimination
Privilege
Administrative Law >
Governmental Information > Recordkeeping & Reporting
Constitutional Law >
Bill of Rights > Fundamental Rights > Procedural Due Process >
Self-Incrimination Privilege
[HN15] The United States
Supreme Court has articulated three "premises" or elements of the
Required Records Exception to the Fifth Amendment's self-incrimination
privilege as follows: (1) the purposes of the United States' inquiry must be
essentially regulatory; (2) the information is to be obtained by requiring the
preservation of records of a kind which the regulated party has customarily kept;
and (3) the records themselves must have assumed "public aspects"
which render them at least analogous to public documents.
Administrative Law >
Agency Investigations > Constitutional Rights > Self-Incrimination
Privilege
Administrative Law >
Governmental Information > Recordkeeping & Reporting
Constitutional Law >
Bill of Rights > Fundamental Rights > Procedural Due Process >
Self-Incrimination Privilege
[HN16] That a statute
relates both to criminal law and to civil regulatory matters does not strip the
statute of its status as "essentially regulatory" for purposes of the
Required Records Exception to the Fifth Amendment's self-incrimination
privilege.
Administrative Law >
Governmental Information > Recordkeeping & Reporting
Banking Law > Federal
Acts > Bank Secrecy Act
[HN17] The United States
Supreme Court has observed that the goal of assisting in the enforcement of
criminal laws was undoubtedly prominent in the minds of the legislators, as
they considered the Bank Secrecy Act, 31 U.S.C.S. § 5311 et seq. The Supreme
Court further observed that Congress seems to have been equally concerned with
civil liability which might go undetected by reason of
transactions of the type required to be recorded or reported. The Supreme Court
therefore concluded that the fact that a legislative enactment manifests a
concern for the enforcement of the criminal law does not cast any generalized
pall of constitutional suspicion over it.
Administrative Law >
Governmental Information > Recordkeeping & Reporting
Banking Law > Federal
Acts > Bank Secrecy Act
[HN18] The Bank Secrecy
Act requires records to be kept where the records have a high degree of
usefulness in criminal, tax, or regulatory investigations. 31
U.S.C.S. § 5311.
Administrative Law >
Governmental Information > Recordkeeping & Reporting
Banking Law > Federal
Acts > Bank Secrecy Act
[HN19] Violations of the
Bank Secrecy Act (BSA) can be enforced by civil or criminal means, and Congress
has emphasized that the availability of civil sanctions is of great importance
in assuring compliance with regulations of the type contemplated by the BSA. 31 U.S.C.S. §§ 5321(a)(3), (d), 5322(a), (b).
Administrative Law >
Agency Investigations > Constitutional Rights > Self-Incrimination
Privilege
Administrative Law >
Governmental Information > Recordkeeping & Reporting
Banking Law > Federal
Acts > Bank Secrecy Act
Constitutional Law >
Bill of Rights > Fundamental Rights > Procedural Due Process >
Self-Incrimination Privilege
[HN20] Even ignoring the
non-criminal purposes of the Bank Secrecy Act (BSA), 31 U.S.C.S. § 5311 et
seq., the question for purposes of the Required Records Exception to the Fifth
Amendment's self-incrimination privilege is not whether Congress was
subjectively concerned about crime when enacting the BSA's recordkeeping and
reporting provisions, but rather whether these requirements apply exclusively
or almost exclusively to people engaged in criminal activity. Therefore, that
Congress aimed to use the BSA as a tool to combat
certain criminal activity is insufficient to render the BSA essentially
criminal as opposed to essentially regulatory.
Administrative Law >
Governmental Information > Recordkeeping & Reporting
Banking Law > Federal
Acts > Bank Secrecy Act
[HN21] There is nothing
inherently illegal about having or being a beneficiary of an offshore foreign
banking account, and nothing about having a foreign bank account on its own
suggests a person is engaged in illegal activity. The recordkeeping
requirements of the Bank Secrecy Act, 31 U.S.C.S. § 5311 et seq., as
implemented by 31 C.F.R. §§ 1010.350, 1010.420, are essentially regulatory in
nature, as they do not target inherently illegal activity or a group of persons
inherently suspect of criminal activity.
Administrative Law >
Agency Investigations > Constitutional Rights > Self-Incrimination
Privilege
Administrative Law >
Governmental Information > Recordkeeping & Reporting
Constitutional Law >
Bill of Rights > Fundamental Rights > Procedural Due Process >
Self-Incrimination Privilege
[HN22] The second
"premise" of the Required Records Exception to the Fifth Amendment's
self-incrimination privilege examines whether the records sought are of the
type typically kept in connection with the regulated activity.
Administrative Law >
Agency Investigations > Constitutional Rights > Self-Incrimination
Privilege
Administrative Law >
Governmental Information > Recordkeeping & Reporting
Banking Law > Federal
Acts > Bank Secrecy Act
Constitutional Law >
Bill of Rights > Fundamental Rights > Procedural Due Process >
Self-Incrimination Privilege
[HN23] The foreign
financial account information required to be kept under 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. Foreign financial account records are
"customarily kept" in satisfaction of the second "premise"
of the Required Records Exception to the Fifth Amendment self-incrimination
privilege 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 accounts, the name and address of the bank where an account
is held, and the maximum value of the account.
Administrative Law >
Agency Investigations > Constitutional Rights > Self-Incrimination
Privilege
Administrative Law >
Governmental Information > Recordkeeping & Reporting
Constitutional Law >
Bill of Rights > Fundamental Rights > Procedural Due Process >
Self-Incrimination Privilege
[HN24] The third
"premise" of the Required Records Exception to the Fifth Amendment
self-incrimination privilege requires that the requested records have assumed
"public aspects" which render them at least analogous to public documents.
Administrative Law >
Agency Investigations > Constitutional Rights > Self-Incrimination
Privilege
Administrative Law >
Governmental Information > Recordkeeping & Reporting
Constitutional Law >
Bill of Rights > Fundamental Rights > Procedural Due Process >
Self-Incrimination Privilege
[HN25] Generally, where
personal information is compelled in furtherance of a valid regulatory scheme,
that information assumes a public aspect for purposes of the Required Records
Exception to the Fifth Amendment self-incrimination privilege. The fact that
the records sought are typically considered private does not bar them from possessing
the requisite public aspects.
Administrative Law >
Agency Investigations > Constitutional Rights > Self-Incrimination
Privilege
Administrative Law >
Governmental Information > Recordkeeping & Reporting
Banking Law > Federal
Acts > Bank Secrecy Act
Constitutional Law >
Bill of Rights > Fundamental Rights > Procedural Due Process >
Self-Incrimination Privilege
[HN26] The Bank Secrecy
Act, 31 U.S.C.S. § 5311 et seq., is a valid regulatory
regime, and therefore, the information sought pursuant to the Act assumes a
"public aspect" for purposes of the Required Records Exception to the
Fifth Amendment self-incrimination privilege. The Treasury Department shares
the information it collects pursuant to the Act's record-keeping
and reporting requirements with a number of other agencies. That this data
sharing serves an important public purpose sufficient to imbue otherwise
private foreign bank account records with "public aspects" is not
difficult to imagine.
Administrative Law >
Agency Investigations > Constitutional Rights > Self-Incrimination
Privilege
Administrative Law >
Governmental Information > Recordkeeping & Reporting
Banking Law > Federal
Acts > Bank Secrecy Act
Constitutional Law >
Bill of Rights > Fundamental Rights > Procedural Due Process >
Self-Incrimination Privilege
[HN27] The fact that 31
C.F.R. § 1010.420 requires foreign accountholders to keep foreign financial
account records, but to file only the Treas. Dep't Form 90-22.1 Report of
Foreign Bank and Financial Accounts concerning those records with the Treasury
Department, does not extinguish the public aspects of such records for purposes
of the Required Records Exception to the Fifth Amendment self-incrimination
privilege. There is no material distinction between records required
to be kept by law and those regularly or "easily accessed" by
the government.
Administrative Law >
Governmental Information > Recordkeeping & Reporting
[HN28] It is up to
Congress to determinate the appropriate level of regulation that should
accompany its mandate that certain records be kept.
Administrative Law >
Agency Investigations > Constitutional Rights > Self-Incrimination
Privilege
Administrative Law >
Governmental Information > Recordkeeping & Reporting
Constitutional Law >
Bill of Rights > Fundamental Rights > Procedural Due Process >
Self-Incrimination Privilege
[HN29] One of the
rationales, if not the main rationale, behind the Required Records Doctrine as
an exception to the Fifth Amendment self-incrimination privilege is that the
government or a regulatory agency should have the means, over an assertion of
the Fifth Amendment privilege, to inspect the records it requires an individual
to keep as a condition of voluntarily participating in that regulated activity.
That goal would be easily frustrated if the Required Records Doctrine were
inapplicable whenever the act of production privilege was invoked. The
voluntary choice to engage in an activity that imposes record-keeping
requirements under a valid civil regulatory scheme carries consequences,
perhaps the most significant of which, is the possibility that those records
might have to be turned over upon demand, notwithstanding any Fifth Amendment
privilege. That is true whether the privilege arises by virtue of the contents
of the documents or by the act of producing them.
Administrative Law >
Agency Investigations > Constitutional Rights > Self-Incrimination
Privilege
Administrative Law >
Governmental Information > Recordkeeping & Reporting
Constitutional Law >
Bill of Rights > Fundamental Rights > Procedural Due Process >
Self-Incrimination Privilege
[HN30] The
act-of-production privilege with regard to the Fifth Amendment
self-incrimination privilege is not directed at the production of
"required records," and the proper designation by the government of
certain records to be kept by an individual necessarily implies an obligation
to produce them. The obligation to keep and produce the
records are in a sense consented to as a condition of being able to
carry on the regulated activity involved. Further, in this respect, the mere
response by production is no more a violation of the privilege against
self-incrimination than requiring the creation of the record itself, for it is
the record, presumably, that might incriminate.
COUNSEL: For UNITED
STATES OF AMERICA, Plaintiff-Appellee: Frank Phillip Cihlar, Gregory Victor
Davis, Alexander Patrick Robbins, U.S. Department of Justice, Tax Division,
Appellate Section, WASHINGTON, DC; Steven D. Grimberg, Lawrence R. Sommerfeld,
Sally Yates, U.S. Attorney's Office, ATLANTA, GA.
For ANNAMALAI ANNAMALAI,
PARVATHI SIVA, Defendant-Appellant: Jerome J.
Froelich, McKenney & Froelich, ATLANTA, GA.
JUDGES: Before HULL,
WILSON and HILL, Circuit Judges.
OPINION BY: HULL
OPINION
[*1264] HULL, Circuit Judge:
This appeal
concerns a grand jury investigation and the issuance of subpoenas duces tecum
to a target (the "Target") and his wife, which required the
production of records concerning their foreign financial accounts. The Target
and his wife refused to comply with the subpoenas by producing their records, asserting
their Fifth Amendment privilege against self-incrimination. The government
moved to compel, pointing out that
[HN1] the Supreme Court has recognized an exception (the "Required
Records Exception") to the self-incrimination privilege when certain
records are kept pursuant to a valid regulatory scheme. See Shapiro v. United
States, 335 U.S. 1, 32-33, 68 S. Ct. 1375, 1391-93, 92 L. Ed. 1787 (1948).
The [**2] government
contended that the foreign financial account records sought in this case fell
within that Exception. The district court agreed, ruling that the Required
Records Exception applied to the subpoenaed records, and therefore, the records
were not subject to the Target and his wife's privilege against
self-incrimination.
After review
and oral argument, we join the three of our sister circuits that have [*1265]
considered the same issue here about foreign financial
account records and conclude that the subpoenaed records fall within the
Required Records Exception. We thus affirm the district court's grant of the
government's motion to compel.
I. BACKGROUND
The relevant
facts are both brief and undisputed. The present appeal arises out of a grand
jury investigation in the Northern District of Georgia, jointly conducted by
the Internal Revenue Service ("IRS"), the U.S. Department of Justice
Tax Division, and the U.S. Attorney's Office (collectively, the
"government"). The government suspected that the Target, along with
his wife, maintained foreign bank accounts both together and individually. For
the years under investigation, the Target and his wife filed joint tax returns.
Among other things, [**3]
the government's investigation focused on the Target and his wife's failures
to: (1) disclose on their tax returns their ownership of or income derived from
their foreign accounts; and (2) file, with the U.S. Department of the Treasury,
Forms TD F 90-22.1, Reports of Foreign Bank and Financial Accounts ("FBAR")
for these alleged accounts.1
1 [HN2] "Each United States
person" must file an FBAR form if that person has a financial
interest in, or signature authority over, any financial account or other
financial interest maintained in a foreign country. See 31
U.S.C. § 5314; 31 C.F.R. §§ 1010.350, 1010.420.
During the
course of its investigation, on June 29, 2011, the grand jury, at the request
of the U.S. Attorney, issued subpoenas duces tecum to both the Target and his
wife. These subpoenas required the Target and his wife to produce any foreign
financial account records that they were required to keep pursuant to the
federal regulations governing offshore banking. Specifically, the subpoenas
requested:
[f]or the tax years 2006 to the present: any and all records
required to be maintained pursuant to 31 C.F.R. § 103.32 relating to foreign
financial accounts that you had/have a financial interest [**4] in, or signature authority
over, including records reflecting the name in which each such account is
maintained, 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 each specified year.2
2 On March
31, 2011, 31 C.F.R. § 103.32 became 31 C.F.R. § 1010.420. Compare 31 C.F.R. §
103.32 (2010) with id. § 1010.420 (2011); see also Transfer and Reorganization
of Bank Secrecy Act Regulations, 75 Fed. Reg. 65806-01 (Oct.
26, 2010).
The Target
and his wife informed the government that they would not produce the subpoenaed
records. Thereafter, on September 20, 2011, the government filed a motion
seeking to compel their compliance with the subpoenas. In its motion, filed in
the district court, the government argued that the Bank Secrecy Act
("BSA"), 31 U.S.C. § 5311 et seq., and its
implementing regulations, required the Target and his wife to keep the foreign
financial account records sought by the subpoenas. Because the subpoenas were
directed at only those records kept "within the requirements of [the]
regulations," the Required Records Exception to the Fifth Amendment
privilege [**5] against
self-incrimination applied, such that the Target and his wife could not resist
complying with the subpoenas on Fifth Amendment grounds. The government
requested that the district court grant the motion to compel and enter an order
directing the Target and his wife "to show cause why they should not be
held in contempt for failing to comply with the subpoenas."
[*1266] The Target and his wife filed a response
to the government's motion to compel, arguing that the Required Records
Exception did not apply to them based on the particular facts and circumstances
of their case.
On November
7, 2011, the district court granted the government's motion to compel. In
pertinent part, the district court found that the documents requested in the
subpoenas fell within the Required Records Exception because: (1) federal law
required the Target and his wife to maintain and make available for inspection
records regarding their foreign financial accounts; (2) that recordkeeping
requirement, imposed by federal statute and implemented by federal regulations,
was part of a civil regulatory scheme that was "'essentially regulatory'
and not criminal in nature"; (3) the records were of the sort that
"bank customers [**6]
would customarily keep"; and (4) the records had "public
aspects" because they contained information that federal law required the
Target and his wife to maintain and make available for inspection by the IRS,
as well as report to the Treasury Department. The district court ordered the
Target and his wife to produce the subpoenaed foreign financial account records
"or be subject to contempt."
The Target
and his wife did not comply with the district court's order. On March 5, 2012,
the government moved the district court to hold the Target and his wife in
contempt, pursuant to 28 U.S.C. § 1826. The district court issued an order
holding the Target and his wife in contempt for their failure to comply with
the district court's earlier November 7 order. The district court, however,
stayed the enforcement of its contempt order pending the outcome of any appeal.
The Target and his wife timely appealed.
II. DISCUSSION
On appeal,
the Target3 argues that he properly invoked his Fifth Amendment
privilege against self-incrimination, and that the district court erred in
concluding that the Required Records Exception applied to the subpoenaed
records. The Target also argues that because his act of [**7] producing the subpoenaed
records could potentially be incriminating, his Fifth Amendment privilege
against self-incrimination should apply to his act of production, as well as
applying to the records themselves.4
3 Although
both the Target and his wife received identical subpoenas and both are
appealing the district court's contempt order, we refer to the Target as a
singular entity in our discussion, for ease of reference.
4 [HN3] "We review the district
court's findings of relevant facts for clear error, . . . and review the
district court's application of the Fifth Amendment privilege de novo." In
re Grand Jury Subpoena Duces Tecum Dated Mar. 25, 2011, 670 F.3d 1335, 1338
(11th Cir. 2012) (citations omitted). In the present case, because the issue on
appeal is solely a legal one, our review is de novo. Id.
Before
discussing these privilege issues, we review the Bank Secrecy Act and its related
regulations.
A. The Bank Secrecy Act
The
Currency and Foreign Transactions Reporting Act of 1970, Pub. L. 91-508,
84 Stat. 1118 (1970), is generally referred to as the Bank Secrecy Act
("BSA"). [HN4] The BSA's
purpose is "to require certain reports or records where they have a high
degree of usefulness in criminal, [**8]
tax, or regulatory investigations or proceedings. . .
." 31 U.S.C. § 5311. Section 241 of the BSA,
codified at 31 U.S.C. § 5314, provides that the [HN5] "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
[*1267] 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). In
short, the Secretary of the Treasury must require U.S. citizens and residents,
as well as any person doing business in the United States, to "keep
records and file reports" regarding their foreign financial transactions
and relationships. See id.
[HN6] Pursuant to this Section 241
instruction, the Secretary of the Treasury has implemented regulations that
require U.S. citizens, residents, and business entities to report their foreign
financial accounts to the IRS. See 31 C.F.R. § 1010.350. Specifically, the
reporting regulation requires that:
[HN7] Each United States person having a
financial interest in, or signature or other authority over, a bank,
securities, or other financial account in a foreign [**9] country shall report such
relationship to the Commissioner of Internal Revenue for each year in which
such relationship exists and shall provide such information as shall be
specified in a reporting form prescribed under 31 U.S.C. 5314 to be filed by
such persons. The form prescribed under section 5314 is the Report of Foreign
Bank and Financial Accounts (TD-F 90-22.1), or any successor form.
31 C.F.R. § 1010.350(a)
(emphasis added).
[HN8] A separate regulation mandates that
those persons who are required to report foreign financial interests under §
1010.350 retain certain foreign financial records for at least five years,
making them "available for inspection as authorized by law." Id. § 1010.420. These foreign financial records must contain
(1) "the name in which each such account is maintained"; (2)
"the number or other designation of such account"; (3) "the name
and address of the foreign bank or other person with whom such account is maintained";
(4) "the type of such account"; and (5) "the maximum value of
each such account during the reporting period." Id.5
5 We note
that the Target has raised no challenge to the constitutionality or legality of
either the Bank Secrecy Act or its implementing [**10] regulations. And [HN9] it is plainly within Congress's
power to regulate foreign financial transactions undertaken by U.S. citizens
and residents by mandating that such financial activity be reported yearly to
the federal government. See U.S. Const.
art. I, § 8, cl. 3 (vesting Congress with the authority "[t]o regulate Commerce with foreign Nations"); Cal.
Bankers Ass'n v. Shultz, 416 U.S. 21, 59, 94 S. Ct. 1494, 1516, 39 L. Ed. 2d
812 (1974) (upholding the constitutionality of the Bank Secrecy Act, noting
that "[t]he plenary authority of Congress to regulate foreign commerce,
and to delegate significant portions of this power to the Executive, is well
established").
The records
named in the subpoenas here mirror the records that § 1010.420 requires persons
maintaining foreign financial interests to keep and maintain for government
inspection. The information contained in those subpoenaed records is also
identical to information that persons subject to § 1010.420 annually report to
the U.S. Department of the Treasury through FBAR, Form TD F 90-22.1.
Thus, the records at issue contain information that the Target--if he has a
foreign financial account and meets other qualifications specified in the
BSA--must keep, [**11]
report to the Treasury Department, and maintain for inspection.
The question
here is whether records that federal law requires a person to keep and make
available for inspection by the federal government can be subpoenaed by the
government in a grand jury investigation when the holder of the records asserts
his Fifth Amendment privilege against self-incrimination. We now turn to a
discussion of the Fifth Amendment and the Required Records Exception to
that [*1268]
Amendment's privilege against self-incrimination.
B. The Fifth Amendment's
Privilege against Self-Incrimination
The Fifth
Amendment to the United States Constitution states that [HN10] "[n]o
person . . . shall be compelled in any criminal case to be a witness against
himself. . . ." [HN11] This
provision applies "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, 1579, 48 L. Ed. 2d
39 (1976); see also United States v. Doe, 465 U.S. 605, 610, 104 S. Ct. 1237,
1241, 79 L. Ed. 2d 552 (1984) ("[T]he Fifth
Amendment protects [a] person . . . from compelled self-incrimination.").
Courts have
interpreted broadly what constitutes a "testimonial communication."
In Fisher, the Supreme Court [**12]
stated that [HN12] "[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, 96 S. Ct. at 1581;
see also Doe, 465 U.S. at 612, 104 S. Ct. at 1242 ("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[ ]
the existence of the papers demanded and their possession or control," as
well as his "belief that the papers are those described in the
subpoena." Fisher, 425 U.S. at 410, 96 S. Ct. at 1581;
see also Baltimore City Dep't of Soc. Servs. v. Bouknight, 493 U.S. 549,
554-55, 110 S. Ct. 900, 904-05, 107 L. Ed. 2d 992 (1990) ("[T]he act of complying with the government's demand testifies
to the existence, possession, or authenticity of the things produced.").
The issue then becomes whether the "tacit averments" made by
producing the requested materials are both "'testimonial' and
'incriminating' for purposes of applying the Fifth Amendment." Fisher, 425
U.S. at 410, 96 S. Ct. at 1581; see also In re Three Grand Jury Subpoenas [**13] Duces Tecum Dated Jan. 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.").
C. The Required Records
Exception
[HN13] Although the Fifth Amendment
protects an individual against self-incrimination by barring the government
from "compelling [him] to give 'testimony' that incriminates him,"
its protective shield is not absolute. Fisher, 425 U.S. at
409, 96 S. Ct. at 1580. In some instances, Congress may, without
violating an individual's Fifth Amendment privilege, require that individual
"to report information to the government," despite the fact that the
information "may incriminate the individual." United
States v. Garcia-Cordero, 610 F.3d 613, 616 (11th Cir. 2010).
Of relevance
to the present case, the Supreme Court has made clear that [HN14] when the government is authorized
to regulate an activity, an individual's Fifth Amendment privilege does not
prevent the government from imposing recordkeeping, inspection, and reporting
requirements as part of a valid [**14]
regulatory scheme. See Shapiro v. United States, 335 U.S. 1, 32-33, 68 S. Ct.
1375, 1391-93, 92 L. Ed. 1787 (1948). Based on 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 [*1269] are
the appropriate subjects of governmental regulation, and the enforcement of
restrictions validly established." Id. at 17, 68 S. Ct.
at 1384 (quoting Wilson v. United States, 221 U.S. 361, 380, 31 S. Ct. 538,
544, 55 L. Ed. 771 (1911)).
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, voluntary participation in an activity that, by law
or statute, mandates recordkeeping may be deemed a waiver of the act of
production privilege because the "obligations to keep and produce the
records are in a sense consented to as a condition of being able to carry on
the regulated activity involved." In re Grand Jury Proceedings
("McCoy & Sussman"), 601 F.2d 162, 171 (5th Cir. 1979).6 Second, because such recordkeeping is done
pursuant to legal [**15]
mandate, "the mere response by production is no more a violation of the
privilege against self-incrimination than requiring the creation of the record
itself, for it is the record, presumably, that might incriminate [the
recordholder]." Id.; see also Two Grand Jury Subpoenae, 793 F.2d at 73
("[B]ecause the records must be kept by law, the
record-holder 'admits' little in the way of control or authentication by
producing them.").
6 In Bonner
v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc), we adopted
as binding precedent all decisions of the former Fifth Circuit handed down
prior to October 1, 1981.
Building on
Shapiro, [HN15] the Supreme Court
later articulated three "premises" or elements of the Required
Records Exception in a pair of cases that dealt with whether the Exception
applied to the payment of an excise tax on illegal gambling wagers. See Grosso
v. United States, 390 U.S. 62, 67-68, 88 S. Ct. 709, 713, 19 L. Ed. 2d 906,
1968-1 C.B. 496 (1968); Marchetti v. United States,
390 U.S. 39, 56-57, 88 S. Ct. 697, 707, 19 L. Ed. 2d 889, 1968-1 C.B. 500
(1968). The Supreme Court described the three "premises" as follows:
(1) "the purposes of the United States' inquiry must be essentially
regulatory"; (2) the "information is to be obtained [**16] by requiring the
preservation of records of a kind which the regulated party has customarily
kept"; and (3) "the records themselves must have assumed 'public aspects'
which render them at least analogous to public documents." Grosso, 390 U.S. at 67-68, 88 S. Ct. at 713. Concluding that
the Required Records Exception was inapplicable in Grosso and Marchetti, the
Supreme Court stressed that any recordkeeping or inspection requirement under
Shapiro must be directed at "an essentially non-criminal and regulatory
area of inquiry," Marchetti, 390 U.S. at 57, 88 S. Ct. at 707, rather than
"directed almost exclusively to individuals inherently suspect of criminal
activities," Grosso, 390 U.S. at 68, 88 S. Ct. at 713.
In the nearly
45 years that have elapsed since the Supreme Court laid out the Required
Records Exception's three "premises" in Grosso and Marchetti, many of
our sister circuits have recognized and applied these "premises" as
though they were elements of the Required Records Exception. See, e.g., In re
Grand Jury Subpoena, 696 F.3d 428, 432-36 (5th Cir. 2012); In re Special Feb.
2011-1 Grand Jury Subpoena Dated Sept. 12, 2011, 691 F.3d 903, 905-09 (7th Cir.
2012), petition for cert. [**17]
filed, 2013 WL 152456 (U.S. Jan. 9, 2013) (No. 12-853); [cert. denied 133 S.
Ct. 2338, 185 L. Ed. 2d 1064 (2013)] In re Grand Jury Investigation M.H., 648
F.3d 1067, 1071-79 (9th Cir. 2011), cert. denied, 133 S. Ct. 26, 183 L. Ed. 2d
676 (2012); In re Grand Jury Subpoena ("Spano"), 21 F.3d 226, 228-30
(8th Cir. 1994); In re Grand Jury Subpoena Duces Tecum Served upon Underhill
("Underhill"), 781 F.2d 64, 67-70 (6th Cir. 1986); United States v.
Dichne, 612 F.2d 632, [*1270] 638-41
(2d Cir. 1979); United States v. Webb, 398 F.2d 553, 556 (4th Cir. 1968).
Importantly
here, in several of these cases--In re M.H. (9th Cir.), Grand Jury Subpoena
Dated Sept. 12, 2011 (7th Cir.), and In re Grand Jury Subpoena (5th Cir.)--our sister circuits upheld the application of the Required
Records Exception to individuals who were served with subpoenas that sought the
production of financial records required to be kept pursuant to the BSA and its
implementing regulations. In re Grand Jury Subpoena, 696 F.3d at 430-31; Grand
Jury Subpoena Dated Sept. 12, 2011, 691 F.3d at 909; In re M.H., 648 F.3d at
1069; see also Dichne, 612 F.2d at 638-41 (applying
the Required Records Exception to the BSA's currency reporting requirements).
D. Analysis--Application
of the Required Records Exception
With [**18] this analytical framework
in place, we now turn to our application of the Required Records Exception to
the particular records at issue here. For the reasons set forth below, we
conclude that the government has met its burden of proving that the foreign
financial account documents sought from the Target, which the BSA and its
implementing regulations require him to maintain, satisfy the
"premises" of the Required Records Exception.7 Because the
Exception applies, both the documents themselves and the act of producing them
fall outside the purview of the Fifth Amendment.
7 Our
predecessor Court, the Fifth Circuit, applied the first and third
"premises"--the "essentially regulatory" and "public
aspects" elements--but did not explicitly mention the "customarily
kept" element. See McCoy & Sussman, 601 F.2d at 167-71; cf.
Garcia-Cordero, 610 F.3d at 616-18 (discussing and applying the
"regulatory regime exception" to the Fifth Amendment, in a case that
did not involve physical records, without mention of a "customarily
kept" element). In light of this precedent, the government encourages us
to apply only the first and third "premises" in the present case. We
need not decide if the second "premise" [**19] or element applies
because, like the Fifth Circuit in its more recent decision, even if we were to
"assume, for purposes of decision, that all three prongs of the test set
forth in Grosso apply," we would nevertheless "conclude that all
three requirements are met in this case." In re Grand
Jury Subpoena, 696 F.3d at 433-34 (quoting In re M.H., 648 F.3d at 1073).
1. "Essentially
Regulatory"
The Target
argues that the text of the BSA and its legislative history indicate Congress
intended for the recordkeeping and reporting requirements imposed on foreign
financial accountholders to aid law enforcement, and therefore, that the
purpose of the Act is criminal in nature rather than "essentially
regulatory." Grosso, 390 U.S. at 67-68, 88 S. Ct. at
713. He asserts that because the Act lists first among its purposes the
gathering of information that has a "high degree of usefulness in
criminal, tax, or regulatory investigations," 31 U.S.C. § 5311 (emphasis
added), the Act's chief purpose is to fight crime.
The Target
also acknowledges, however, that the BSA has multiple purposes. [HN16] That a statute relates both to
criminal law and to civil regulatory matters does not strip the statute of its
status [**20] as
"essentially regulatory." See Cal. Bankers Ass'n v. Shultz, 416 U.S.
21, 76-77, 94 S. Ct. 1494, 1525, 39 L. Ed. 2d 812 (1974); In re Grand Jury Subpoena,
696 F.3d at 434-35; In re M.H., 648 F.3d at 1074. In Shultz, [HN17] the Supreme Court observed that
the goal of assisting in the enforcement of criminal laws "was undoubtedly
prominant [sic] in the minds of the legislators," as they considered the
Bank Secrecy Act. Shultz, 416 U.S. at 76-77, 94 S. Ct. at
1525. The Supreme Court further observed that [*1271] "Congress seems to have been
equally concerned with civil liability which might go undetected by reason of
transactions of the type required to be recorded or reported.
. . ." Id. at 76, 94 S. Ct. at 1525. The Supreme
Court therefore concluded that "the fact that a
legislative enactment manifests a concern for the enforcement of the criminal
law does not cast any generalized pall of constitutional suspicion over
it." Id. at 77, 94 S. Ct. at 1525.
Furthermore, [HN18] the BSA also requires records to
be kept "where [the records] have a high degree of usefulness in criminal,
tax, or regulatory investigations. . . ." 31 U.S.C. § 5311 (emphasis added). The House Report, that
accompanied the Act, acknowledged that the Act's [**21] recordkeeping and
reporting requirements not only would "aid duly constituted authorities in
lawful investigations," but also would "facilitate the supervision of
financial institutions properly subject to federal supervision" and would
"provide for the collection of statistics necessary for the formulation of
monetary and economic policy." H.R. Rep. No. 91-975 (1970), reprinted in
1970 U.S.C.C.A.N. 4394, 4405. As the Fifth Circuit recently noted,
the Treasury
Department shares the information it collects pursuant to the Act's
requirements with other agencies--including the Office of the Comptroller of
the Currency, the Consumer Financial Protection Bureau, the Federal Reserve
Board, the Federal Deposit Insurance Corporation, the National Credit Union
Administration, and the Office of Thrift Supervision--none of which are
empowered to bring criminal prosecutions.
In re Grand
Jury Subpoena, 696 F.3d at 434-35 (citing 31 U.S.C. § 5319; 31 C.F.R. §
1010.950(a)-(b)). Furthermore, [HN19] violations of the BSA can be
enforced by civil or criminal means, and Congress emphasized that the
availability of civil sanctions is "of great importance in assuring
compliance with regulations of the type contemplated [**22] by [the BSA]." H.R.
Rep. No. 91-975, reprinted in 1970 U.S.C.C.A.N. 4394, 4405; see 31 U.S.C. §§
5321(a)(3) and (d), 5322(a) and (b).
[HN20] Even ignoring the non-criminal
purposes of the BSA, the question is not whether Congress was subjectively
concerned about crime when enacting the BSA's recordkeeping and reporting
provisions, but rather whether these requirements apply exclusively or almost
exclusively to people engaged in criminal activity. See Marchetti, 390 U.S. at
57, 88 S. Ct. at 707. "Therefore, that Congress aimed to use the BSA as a
tool to combat certain criminal activity is insufficient to render the BSA
essentially criminal as opposed to essentially regulatory." In re M.H., 648 F.3d at 1074.
In Dichne,
the Second Circuit held that a similar recordkeeping and reporting requirement
of the BSA was not subject to the Fifth Amendment's privilege against
self-incrimination. 612 F.2d at 638-41. 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. § 5316 (previously codified at 31 U.S.C. § 1101). The
Second Circuit noted that because "the transportation [**23] 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 Second Circuit
therefore held that "[i]n view of the lack of a
direct linkage 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 [*1272]
group, . . . 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, activity required by the BSA
statute was not subject to 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 [**24] 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[s]
to protect.").
The BSA and
its implementing regulations at issue here apply to a wide range of
individuals. [HN21] "There is
nothing inherently illegal about having or being a beneficiary of an offshore
foreign banking account," and "[n]othing
about having a foreign bank account on its own suggests a person is engaged in
illegal activity." In re M.H., 648 F.3d at 1074.
We agree with our three sister circuits that the recordkeeping requirements of
the BSA, as implemented by 31 C.F.R. §§ 1010.350 and 1010.420, are essentially
regulatory in nature, as they do not target inherently illegal activity or a
group of persons inherently suspect of criminal activity. See In re Grand Jury
Subpoena, 696 F.3d at 435 (holding that "[b]ecause
the BSA's recordkeeping 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 [**25] regulatory,' satisfying
the [Required Records Exception]'s first prong"); Grand Jury Subpoena
Dated September 12, 2011, 691 F.3d at 909 (concluding that the first
"premise" of the Required Records Exception, as it pertained to BSA
records, was satisfied); In re M.H., 648 F.3d at 1075 (holding that 31 C.F.R.
§1010.420 was "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").
For these
reasons, we conclude that the requested foreign financial account records
satisfy the first "premise" of the Required Records Exception, as the
government's interest is "essentially regulatory" in nature.
2. "Customarily
Kept"
[HN22] The second "premise" of
the Required Records Exception examines whether the records sought are of the
type typically kept in connection with the regulated activity. Grosso, 390 U.S. at 68, 88 S. Ct. at 713; Marchetti, 390 U.S. at
57, 88 S. Ct. at 707. The Target argues that the foreign financial
account records sought from him do not satisfy this "premise" because
the records generally relate to "secret [**26] accounts of which records
are normally not maintained."
The Ninth
Circuit has held that [HN23] the
foreign financial account information required to be kept under 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 M.H., 648 F.3d at 1076. The Fifth Circuit has concluded similarly,
stating that foreign financial account records are "customarily kept"
in satisfaction of the Required [*1273] Records
Exception's second "premise" 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. . . ." In re Grand Jury Subpoena, 696 F.3d at 435; see also Grand Jury Subpoena Dated Sept. 12, 2011, 691
F.3d at 909 (concluding that the second prong of the Required Records Exception
was met).
We agree.
Simply put, the Target's argument that these records are not
"customarily [**27]
kept" is a non-starter. In addition to needing these foreign financial
account records to comply with tax and Treasury Department reporting obligations,
"the records sought are also of the same type that a reasonable account
holder would keep in order to access his account." Grand
Jury Subpoena, 696 F.3d at 435. We conclude that the subpoenaed foreign
financial account records here are of a kind "customarily kept" in
connection with the regulated activity of offshore banking, thereby satisfying
the second "premise" of the Required Records Exception.
3. "Public
Aspects"
[HN24] The third "premise" of
the Required Records Exception requires that the requested records "have
assumed 'public aspects' which render them at least analogous to public
documents." Grosso, 390 U.S. at 68, 88 S. Ct. at 713.
The Target asserts that an individual's personal financial records do not
possess sufficient "public aspects" to satisfy this prong of the
test.
[HN25] Generally, "[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 M.H., 648 F.3d at 1077. The fact
"that the records sought are typically considered private [**28] does not bar them from
possessing the requisite public aspects." In re Grand
Jury Subpoena, 696 F.3d at 436. As we concluded above, [HN26] the BSA is a valid regulatory
regime, and therefore, the information sought pursuant to the Act "assumes
a public aspect." In re M.H., 648 F.3d at 1077.
The Fifth Circuit noted that "the Treasury
Department shares the information it collects pursuant to the [Bank Secrecy]
Act's record-keeping and reporting requirements with a number of other
agencies. That this data sharing [serves] an important public purpose
sufficient to imbue otherwise private foreign bank account
records with 'public aspects' is not difficult to imagine." In re Grand Jury Subpoena, 696 F.3d at 436.
[HN27] The fact that 31 C.F.R. § 1010.420
requires foreign accountholders to keep foreign financial account records, but
to file only the TD F 90-22.1 FBAR form concerning those records with
the Treasury Department, does not extinguish the public aspects of the records
here. The Supreme Court has recognized that there is no material distinction between
records required to be kept by law and those regularly
or "easily accessed" by the government. See Marchetti, 390 U.S. at 56
n.14, 88 S. Ct. at 706 n.14 [**29]
("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, this
Court finds that the Target's records sought here have "public
aspects," satisfying the third and final "premise" of the
Required Records Exception. See Grand Jury Subpoena Dated Sept. 12, 2011, 691
F.3d at 909 (concluding that respondent could not resist a subpoena on Fifth
Amendment grounds because the requested
[*1274] records met the three
prongs of the Required Records Exception).8
8 We also
reject the Target's argument that the Required Records Exception is only
triggered where there is some level of licensure or heightened government
regulation at issue. We agree with the government's position that [HN28] it is up to Congress to
determinate the appropriate level of regulation that should accompany its
mandate that certain records be kept. We note that the Fifth Circuit recently
arrived at the same conclusion, holding that "[i]f
the witness's argument were correct, then Congress would be prohibited from
imposing the least regulatory burden necessary; it would [**30] instead be required to
supplement a reporting or recordkeeping scheme with additional and unnecessary
'substantive restrictions' for the sole purpose of upholding its record keeping
and reporting requirements," and thus, "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 (internal quotations omitted).
E. The Act-of-Production
Privilege
We now
address the Target's contention that the Required Records Exception is not
applicable to a case such as this where the act of producing the records would
be compelled, testimonial, and self-incriminating. We reject the Target's
attempt to draw a distinction, for Fifth Amendment privilege purposes, between
his act of producing the records and the records themselves. As the Seventh
Circuit has persuasively stated,
[HN29] [o]ne of
the rationales, if not the main rationale, behind the Required Records Doctrine
is that the government or a regulatory agency should have the means, over an
assertion of the Fifth Amendment Privilege, to inspect the records it requires
an individual to keep as a condition of voluntarily [**31] participating in that
regulated activity. That goal would be easily frustrated if the Required
Records Doctrine were inapplicable whenever the act of production privilege was
invoked.
The voluntary
choice to engage in an activity that imposes record-keeping requirements under
a valid civil regulatory scheme carries consequences, perhaps the most
significant of which, is the possibility that those records might have to be
turned over upon demand, notwithstanding any Fifth Amendment privilege. That is
true whether the privilege arises by virtue of the contents of the documents or
[by the] act of producing them.
Grand Jury Subpoena
dated Sept. 12, 2011, 691 F.3d at 908-09 (citations omitted) (emphasis added).
Although the
Supreme Court decided its "act-of-production" privilege cases after
it decided Shapiro, Grosso, and Marchetti, it has since applied the rationale
behind the Required Records Exception to negate a witness's act-of-production
privilege. See Bouknight, 493 U.S. at 555-62, 110 S. Ct. at 905-09 (holding, in
a case involving a mother's refusal, on Fifth Amendment grounds, to comply with
a court order to turn her child over to a social services agency, "[e]ven assuming that this [**32] limited testimonial
assertion is sufficiently incriminating and 'sufficiently testimonial for purposes
of the privilege,' Bouknight may not invoke the privilege to resist the
production order because she has assumed custodial duties related to production
and because production is required as part of a noncriminal regulatory
regime" (citation omitted)); see also Spano, 21 F.3d at 228-30 (holding
that "the required records exception to the Fifth Amendment privilege will
apply to the act of production by a sole proprietor even where the act of
production could involve compelled testimonial self-incrimination");
Underhill, 781 F.2d at 70 ("In our view, in order to have meaning the required
records exception must apply to the act of production as well [*1275] as the contents of documents to which
the doctrine applies.").
Indeed, in
McCoy & Sussman, our predecessor Court determined that [HN30] the act-of-production privilege
discussed in Fisher was "not directed at the production of 'required
records,'" and that "[t]he proper
designation by the government of certain records to be kept by an individual
necessarily implies an obligation to produce them." 601
F.2d at 170-71. The Court added that the "obligation [**33] to keep and produce the
records are in a sense consented to as a condition of being able to carry on
the regulated activity involved." Id. at 171.
Further, "[i]n this respect, the mere response by
production is no more a violation of the privilege against self-incrimination
than requiring the creation of the record itself, for it is the record,
presumably, that might incriminate." Id.9
9 McCoy was
the sole proprietor and operator of a customshouse brokerage office. McCoy & Sussman, 601 F.2d at 166. Representatives of the
U.S. Customs Service sought to inspect McCoy's records "in accordance with
regulations [19 C.F.R. §§ 111.21 et seq.] requiring customshouse
brokers to maintain records of their business and allow access to them."
Id. McCoy refused to permit the inspection. Id. As part of a grand jury
investigation, McCoy was later served with a subpoena duces tecum requiring the
production of certain records. Id. McCoy contended that
"even if the subpoena were limited to 'required records,' he would be
privileged from producing the records because the mere act of producing them
would be, in effect, testimonial." Id. at 170.
This Court rejected that contention as to "required records." [**34] Id. at
170-71.
We likewise
reject the Target's assertion that the resolution of this question is
controlled by our decision in United States v. Argomaniz, 925 F.2d 1349 (11th
Cir. 1991). In Argomaniz, this Court concluded that a criminal defendant was
entitled to invoke his Fifth Amendment privilege against self-incrimination as
it pertained to his act of producing incriminating business records to the IRS.
925 F.2d at 1355-56. However, the Argomaniz Court did
not address the Required Records Exception as it pertained to the defendant's
assertion of privilege, and there is no indication that the records sought by
the IRS in Argomaniz were records that the defendant was required by federal
law to maintain, present for inspection, or file pursuant to a valid exercise of
congressional authority. Accordingly, Argomaniz is materially distinguishable
from the present case.
In sum, to
the extent that the Required Records Exception operates to extinguish the
Target's Fifth Amendment privilege against self-incrimination, it necessarily
extinguishes this privilege as to both the act of producing the records and the
records themselves.
III. CONCLUSION
For the
reasons stated above, and after oral
[**35] argument and our review of the record in the present case,
we affirm the district court's order granting the government's motion to compel
the Target and his wife to comply with the subpoenas duces tecum for their
foreign financial account records.10
10 In this
appeal, the government has never sought any oral testimony from the Target or
his wife, and thus this case involves only records and the act of producing
those records.
AFFIRMED.