908 F. Supp. 2d 348
E.D.N.Y2012Background
- Government seeks order compelling respondent to comply with a grand jury subpoena for five-year foreign bank records under the Bank Secrecy Act (FBAR/31 C.F.R. § 1010.420).
- Respondent opposes on two grounds: government already possesses the records and subpoena is for trial preparation; and compliance would violate Fifth Amendment privilege against self-incrimination.
- Subpoena was served February 8, 2012; compliance due February 23, 2012; respondent failed to respond.
- Oral argument occurred November 20, 2012, after which the court granted the government's motion to compel.
- Court holds that (a) there is no evidence that the government already possesses all responsive records or that the subpoena is for trial preparation; and (b) the required records exception applies under the Grosso test, placing the records outside the Fifth Amendment privilege.
- Court has previously held foreign bank records required to be kept under the BSA satisfy the required records exception; the three Grosso prongs are met here.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the government already possesses the records and the subpoena is for trial preparation. | Government lacks possession of all records; no abuse. | Respondent asserts possession and trial-prep motive. | No; lack of possession shown and no predominant trial-prep purpose proven. |
| Whether the Fifth Amendment applies to compelled production of foreign bank records. | Records are required and not self-incriminating under Grosso. | Production would infringe Fifth Amendment. | Grosso three-prong test satisfied; required records exception applies; Fifth Amendment does not block production. |
| Whether the Grosso prongs are satisfied for the required records exception. | Records are regulatory, customarily kept, with public aspects. | Records are private and not sufficiently public. | All three prongs met; records are ‘required records’ exception. |
| Whether the government could obtain records via foreign channels instead of a subpoena. | Foreign requests are slower and uncertain; BSA provides subpoena relief. | Foreign avenues preferred or required to be exhausted. | No requirement to delay; subpoena proper under BSA. |
Key Cases Cited
- Fisher v. United States, 425 U.S. 391 (U.S. 1976) (testimony/production can be testimonial and incriminating)
- United States v. Dichne, 612 F.2d 632 (2d Cir. 1979) (record-keeping regulation not inherently criminal; not a significant risk of self-incrimination)
- In re Grand Jury Investigation M.H., 648 F.3d 1067 (9th Cir. 2011) (Grosso test applied to foreign bank records; public aspects)
- In re Grand Jury Subpoena, 696 F.3d 428 (5th Cir. 2012) (requires Grosso elements for BSA record-keeping)
- Marchetti v. United States, 390 U.S. 39 (U.S. 1968) (public aspects of records; distinction between regulated records and private conduct)
- United States v. Leung, 40 F.3d 577 (2d Cir. 1994) (grand jury use for trial preparation concerns after indictment)
- United States v. Ohle, 678 F. Supp. 2d 215 (S.D.N.Y. 2010) (grand jury abuse considerations; no indictment yet)
- In re Special February 2011-1 Grand Jury Subpoena, 691 F.3d 903 (7th Cir. 2012) (Grosso test applied to special grand jury subpoena)