United States v. Eli Chabot
2015 U.S. App. LEXIS 12367
| 3rd Cir. | 2015Background
- IRS received French authorities’ information in 2010 about US persons with undisclosed HSBC accounts, including Eli Chabot as beneficial owner of Pelsa (2005–2007).
- June 20, 2012, IRS issued summons to Eli and Renee Chabot to produce documents for 2006–2009 foreign accounts; they refused citing Fifth Amendment privilege.
- IRS amended summons on November 16, 2012 to limit to records required under 31 C.F.R. § 1010.420; Chabots persisted in refusing.
- IRS filed petition to enforce the amended summons on May 14, 2014; District Court granted enforcement, finding the required records exception applicable.
- Chabots argued production itself could be criminally prosecutable and that the required records exception should not apply; issue on appeal is whether the records are within the exception and related policy concerns.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the required records exception applies to 31 C.F.R. § 1010.420 records | Chabots: exception should not apply | IRS: records fall within exception | Yes; records fall within the exception |
| Whether § 1010.420 has essentially regulatory purpose | Chabots: purpose is essentially criminal | Chabots: regulatory; noncriminal aims | Essentially regulatory |
| Whether the records are customarily kept by accountholders | Chabots: not typically kept | Chabots: generally kept for foreign banking | Yes, customarily kept |
| Whether the records have public aspects | Chabots: records are private | Chabots: records circulate to agencies for public purposes | Yes, records have public aspects |
Key Cases Cited
- Shapiro v. United States, 335 U.S. 1 (Supreme Court 1948) (first articulated the required records concept)
- Grosso v. United States, 390 U.S. 62 (Supreme Court 1968) (three-part Grosso test for required records)
- In re Grand Jury Subpoena Dated Feb. 2, 2012, 741 F.3d 339 (2d Cir. 2013) (applies required records to account records)
- Doe, In re Grand Jury Subpoena, 741 F.3d 339 (2d Cir. 2013) (applies required records to financial records; public aspects)
- Baltimore City Dept. of Soc. Servs. v. Bouknight, 493 U.S. 549 (U.S. 1990) (recognizes act-of-production rationale for required records)
- United States v. Under Seal, 737 F.3d 330 (4th Cir. 2013) (noncriminal purposes of record data underpin public aspects)
- In re Grand Jury Proceedings, 696 F.3d 428 (5th Cir. 2012) (regulatory purpose and public aspects of § 1010.420)
- In re Grand Jury Subpoena, 707 F.3d 1262 (11th Cir. 2013) (support for regulatory purpose of § 1010.420)