337 F. Supp. 3d 259
S.D. Ill.2018Background
- The IRS issued two summonses to Natalio Fridman (individually and as trustee of the David Marcelo Trust) seeking documents relating to alleged undisclosed foreign bank accounts and related transactions for tax-year investigation of 2008.
- District Court initially granted enforcement, rejecting Fridman’s blanket Fifth Amendment invocation and finding the government met the Powell relevance burden; Second Circuit vacated/remanded to develop the record on the act-of-production privilege and applicable exceptions.
- On remand the parties focused on three exceptions to the Fifth Amendment act‑of‑production privilege: required‑records, foregone‑conclusion, and collective‑entity doctrines; the government relies on foregone‑conclusion and collective‑entity, Fridman contests them and also claims lack of possession/control for some requests.
- The government narrowed/clarified several requests (identifying "Known Accounts" with bank, country and account numbers) and submitted declarations supporting knowledge and authentication of foreign records.
- The Court held trusts (including the David Marcelo Trust) are collective entities, found the government satisfied the foregone‑conclusion standard for numerous specified requests, ordered production of responsive documents in Fridman’s possession/control (including trust records), and required Fridman to appear for identification/authentication testimony.
Issues
| Issue | Plaintiff's Argument (United States) | Defendant's Argument (Fridman) | Held |
|---|---|---|---|
| Validity of Fifth Amendment invocation over document production | Government concedes invocation but contends exceptions (foregone‑conclusion and collective‑entity) negate privilege for many requests | Fridman argues blanket invocation is valid and exceptions do not apply to the contested requests | Court accepted invocation but found exceptions applicable; production ordered for specified requests |
| Foregone‑conclusion doctrine for listed account and transaction documents | Government identified Known Accounts and specific transfers with reasonable particularity and thus knows existence/location/authenticity at time of summons | Fridman contends government lacks reasonable particularity re existence/location of summoned documents and therefore doctrine inapplicable | Court applied Greenfield standard, found foregone‑conclusion applicable to Requests 1, 2 (to extent limited to Known Accounts), 4, and 7; production required |
| Collective‑entity doctrine: whether a trust is a collective entity | Government argues trusts (including the David Marcelo Trust) are collective entities; custodian cannot assert personal Fifth Amendment to refuse production of trust records | Fridman contends a traditional NY trust is not a collective entity and trustee is not a custodian of an entity for this purpose | Court followed circuits holding trusts are collective entities and Glaister reasoning; held the David Marcelo Trust is a collective entity and trust records must be produced; custodian must provide identification/authentication testimony (but oral testimonial privilege preserved for personal incrimination) |
| Scope of summons, possession/control, and capacity served (requests 3, 8, 9, 10) | Government argues summons directed to Fridman may reach documents he holds in any capacity (individual or representative); no need to re‑serve in separate capacities; IRS reasonably believes Fridman controls some third‑party account records | Fridman argues summons served only in his personal/trustee capacity and cannot be expanded to require production of corporate or third‑party records he does not possess or does not hold as custodian | Court held summons scope is not limited by the captioned capacity; to the extent Fridman possesses responsive records (individually or as custodian of a collective entity), he must produce them; if he lacks possession/control, he need not produce what he does not have |
Key Cases Cited
- Fisher v. United States, 425 U.S. 391 (privilege protects testimonial communications; foregone‑conclusion concept)
- Hubbell v. United States, 530 U.S. 27 (act‑of‑production has communicative aspects; limits of Fifth Amendment protection)
- United States v. Greenfield, 831 F.3d 106 (2d Cir.) (foregone‑conclusion standard and timing; reasonable particularity test)
- Bellis v. United States, 417 U.S. 85 (collective‑entity doctrine: individual cannot assert personal Fifth to avoid producing entity records)
- Braswell v. United States, 487 U.S. 99 (custodian’s production treated as act of entity; oral testimony limitation)
- Shapiro v. United States, 335 U.S. 1 (required‑records doctrine: no Fifth Amendment protection for records required by law)
- United States v. Powell, 379 U.S. 48 (government’s burden to show summons relevance)