In re GRAND JURY SUBPOENA.
No. 11-20750.
United States Court of Appeals, Fifth Circuit.
Sept. 21, 2012.
696 F.3d 428
The Supreme Court‘s recent decision on the FSA‘s retroactivity does not change the result. Dorsey v. United States, — U.S. —, 132 S.Ct. 2321, 183 L.Ed.2d 250 (2012) addresses only the applicability of the FSA to those defendants who were convicted of crack cocaine offenses prior to the FSA‘s effective date of August 3, 2010, but were sentenced after that date. It does not address, or disturb, the basic principle that the FSA does not apply to those defendants who were both convicted and sentenced prior to the effective date of the FSA. See United States v. Reevey, 631 F.3d 110, 115 (3d Cir.2010) (holding that the FSA is not retroactive to individuals convicted and sentenced prior to the FSA‘s effective date). Thus, Turlington is incorrect to analogize his situation to that confronted in Dorsey. He is not like those defendants who are convicted of the crack offense prior to the FSA effective date, but sentenced after the effective date. He was both convicted and sentenced prior to the FSA‘s effective date. The fact that his supervised release was revoked after passage of the FSA is of no moment.
In sum, because, according to Johnson, the revocation of supervised release and imposition of the term of imprisonment relates back to the underlying conviction, and because McNeill persuades us that, like ACCA,
Turlington also challenges the substantive reasonableness of his sentence, which we review for abuse of discretion. United States v. Young, 634 F.3d 233, 237 (3d Cir.2011). Section 3583(e) requires district courts to consider the
C.
Accordingly, we will affirm the judgment of the District Court.
Frank Phillip Cihlar, Sr. Counsel, Gregory Victor Davis, Samuel Robert Lyons, Alexander Patrick Robbins (argued), Tax Div., App. Sec., Jonathan Richard Marx, U.S. Dept. of Justice, Washington, DC, for Plaintiff-Appellant.
Before DAVIS, DENNIS and HAYNES, Circuit Judges.
DENNIS, Circuit Judge:
This appeal arises from a grand-jury investigation in which the target of the investigation (the “witness“) was subpoenaed to produce any records of foreign bank accounts he was required to keep under Treasury Department regulations governing offshore banking. The witness informed the government that he would not comply with the subpoena, citing his Fifth Amendment privilege against self-incrimination, and the government moved to compel the witness to comply. After hearing argument, the district court denied the government‘s motion, and the government subsequently appealed.
This appeal requires us to address the Required Records Doctrine, under which the government may require that certain records be kept and later produced without implicating the privilege against self-incrimination. Two of our sister circuits have held that the doctrine applies to subpoenas identical to the one at issue and that, therefore, the subpoenas’ targets must comply with them. See In re M.H., 648 F.3d 1067, 1079 (9th Cir.2011); In re Special Feb. 2011-1 Grand Jury Subpoena Dated Sept. 12, 2011, 691 F.3d 903, 908-09 (7th Cir.2012). Because we conclude that the Required Records Doctrine applies in this case, we decline the witness‘s invitation to create a circuit split and according-
BACKGROUND
I.
The witness in this case is the target of a grand-jury investigation in the Southern District of Texas seeking to determine whether he used secret Swiss bank accounts to evade his federal income taxes. In February 2009, following an investigation into its cross-border banking business, the Swiss investment bank UBS AG (“UBS“) entered into a deferred-prosecution agreement with the Justice Department under which UBS (1) admitted to conspiring to defraud the U.S. government by helping U.S. taxpayers commit tax evasion and (2) provided the account records of approximately 250 of these taxpayers, including the witness.
Based on the records obtained from UBS, the government determined that the witness, through an offshore nominee entity, established an account with UBS in 2005. A grand-jury investigation subsequently uncovered other offshore entities the witness controlled. On February 25, 2011, the grand jury issued a subpoena to the witness for any foreign-account records he was required to keep under Treasury Department regulations governing offshore banking. See
[a]ny and all records required to be maintained pursuant to
31 C.F.R. § 103.32 relating to foreign financial accounts that [the witness] had/[has] a financial interest in, or signature authority over, including records reflecting the name in which each such account is 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 each specified year.1
The subpoena then states that “[s]uch accounts include, but are not necessarily limited to, the accounts of the following entities” and lists six entities that the witness allegedly controls.
On March 16, 2011, the witness informed the government, through counsel, that he would not comply with the subpoena, citing the Fifth Amendment. The witness argues that requiring him to produce the records sought would compel him to (1) admit the existence of the account, (2) admit his control over it, and (3) authenticate the records. Alternatively, the witness argues, assuming he has a foreign bank account but failed to comply with the record-keeping requirements of the Bank Secrecy Act (“BSA” or “the Act“), compelling him to produce these records would force him to admit to a violation of the Act‘s record-keeping provisions.
The government moved the district court to compel the witness to comply with the subpoena. The district court heard argument and subsequently denied the government‘s motion, which the government now appeals.
II.
The Currency and Foreign Transactions Reporting Act of 1970,
DISCUSSION
Because the BSA‘s record-keeping requirement is “essentially regulatory,” the records sought are of a kind “customarily kept” by account holders such as the witness, and the records have assumed “public aspects,” we conclude that the Required Records Doctrine applies and requires the witness to comply with the subpoena.
I.
“We review a district court‘s decision granting a motion to quash or modify a subpoena for abuse of discretion.” In re Grand Jury Proceedings, 115 F.3d 1240, 1243 (5th Cir.1997). Although this is a deferential standard, the district court abuses its discretion if its ruling is based on an erroneous view of the law. In re MBS Mgmt. Servs., Inc., 690 F.3d 352, 354 (5th Cir.2012).
II.
The Fifth Amendment to the United States Constitution provides that “[n]o person ... shall be compelled in any criminal case to be a witness against himself.”
Although one could reason that “[w]here documents are required to be kept and then produced, they are arguably compelled,” In re M.H., 648 F.3d at 1071, the Supreme Court has held that the privilege against self-incrimination does not bar 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). In Shapiro, the Court explained that Congress may impose record-keeping and inspection requirements as a condition of engaging in an activity that is within its power to regulate. Id. at 33, 68 S.Ct. 1375. In that case, “the Supreme Court required a wholesaler of fruit and produce to turn over certain records he was obliged to keep and maintain for examination pursuant to the Emergency Price Control Act, which applied in part to records ‘customarily kept.‘” In re M.H., 648 F.3d at 1072. The Supreme Court explained that this Required Records Doctrine “applies
That being said, the Required Records Doctrine does not empower the government to command every citizen to keep a diary of their crimes under the guise of regulation. See id. at 71, 68 S.Ct. 1375 (Jackson, J., dissenting). Rather, any record-keeping or inspection requirement under Shapiro must be directed at “an essentially non-criminal and regulatory area of inquiry,” Marchetti v. United States, 390 U.S. 39, 57, 88 S.Ct. 697, 19 L.Ed.2d 889 (1968) (internal quotation marks omitted), and may not be “directed almost exclusively to individuals inherently suspect of criminal activities,” Grosso v. United States, 390 U.S. 62, 68, 88 S.Ct. 709, 19 L.Ed.2d 906 (1968) (holding that the Required Records Doctrine does not permit the government to require record keeping of “wagering activities” as part of a “wagering excise tax” when gambling was generally illegal). Thus, the government may not make an end run on the Fifth Amendment and require criminals to self-report their offenses.
However, “[t]he hypothetical case in which every individual is required to maintain a record of everything he does that interests the government is remote from the case of the individual who enters upon a regulated activity knowing that the maintenance of extensive records available for inspection by the regulatory agency is one of the conditions of engaging in the activity.” Smith v. Richert, 35 F.3d 300, 303 (7th Cir.1994). Thus, the Required Records Doctrine permits “the government [to] have the means, over an assertion of the Fifth Amendment [privilege against self-incrimination], to inspect the records it requires an individual to keep as a condition of voluntarily participating in [a] regulated activity.” In re Special Grand Jury Subpoena, 691 F.3d at 908-09.
III.
In Grosso, the Supreme Court identified three “premises” of the Required Records Doctrine: “[F]irst, the purposes of the United States’ inquiry must be essentially regulatory; second, information is to be obtained by requiring the preservation of records of a kind which the regulated party has customarily kept; and third, the records themselves must have assumed ‘public aspects’ which render them at least analogous to public documents.” 390 U.S. at 67-68, 88 S.Ct. 709. These three premises—(1) “essentially regulatory“; (2) “customarily kept“; and (3) “public aspects“—have been recognized by half of the twelve courts of appeals (excluding the Federal Circuit).2 Although the Fifth Circuit has applied the first and third prongs of the Required Records Doctrine, see, e.g., In re Grand Jury Proceedings, 601 F.2d 162, 167-71 (5th Cir.1979), it has not applied the second prong, and so the government argues that the customarily kept prong is not required for the Required Records Doctrine to apply. However, “[e]ven if we assume, for purposes of decision, that all three prongs of the test set forth in Grosso apply, we conclude that all three require-
A.
The witness argues that the text of the BSA and its legislative history indicate that the record-keeping requirements imposed on foreign bank accounts are meant to aid law enforcement and that therefore the Act is not “essentially regulatory.” Implicit in the witness‘s argument is that because the BSA lists first among its purposes the gathering of information that has a “high degree of usefulness in criminal ... investigations,”
Notwithstanding his own argument, the witness acknowledges that the BSA has more than one purpose. And that a statute relates to criminal law in addition to regulatory matters does not strip the statute of its status as “essentially regulatory.” See Cal. Bankers Ass‘n v. Shultz, 416 U.S. 21, 76, 94 S.Ct. 1494, 39 L.Ed.2d 812 (1974) (“[T]hat a legislative enactment manifests a concern for the enforcement of the criminal law does not cast any generalized pall of constitutional suspicion over it.“); In re M.H., 648 F.3d at 1074 (“[T]hat 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.“).
Furthermore, although one purpose of the BSA was to help ferret out criminal activity, the Act requires records to be kept “where they have a high degree of usefulness in criminal, tax, or regulatory investigations.”
The district court‘s application of the “essentially regulatory” requirement was therefore erroneous. The district court ruled that the BSA‘s record-keeping requirements fail under Marchetti and Grosso because the “regulatory justifications” for the requirement “are but smoke and mirrors for [the government‘s] real concern: crime.” However, even ignoring the non-criminal purposes of the BSA, the question is not whether Congress was subjectively concerned about crime when enacting the Act‘s record-keeping 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. 697.
B.
That the records sought are of a kind customarily kept is not contested. Even if this were not the case, this prong of the Required Records Doctrine is easily satisfied here. The records sought 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. See In re M.H., 648 F.3d at 1076;
C.
Finally, we consider the witness‘s arguments that the third prong of the Required Records Doctrine is not met. In order to satisfy this prong, “the records [sought] must have assumed ‘public aspects’ which render them at least analogous to public documents.” Grosso, 390 U.S. at 68, 88 S.Ct. 709. Two courts of appeals have held that “if the government‘s purpose in imposing the regulatory scheme is essentially regulatory, then it necessarily has some ‘public aspects,‘” sufficient for the Required Records Doctrine‘s third prong. In re M.H., 648 F.3d at 1076 (citing Shapiro, 335 U.S. at 33-34, 68 S.Ct. 1375); accord Donovan v. Mehlenbacher, 652 F.2d 228, 231 (2d Cir.1981).
Drawing a distinction between individuals who publicly engage in business and those who privately open a foreign bank account, the witness argues that “[i]ndividuals subject to the BSA‘s foreign account record keeping requirements are not licensed, are subject to no substantive restrictions, and generally have not engaged in activities with the public or in the public sphere.” Br. for Appellee 22. Thus, the witness contends that substantive restrictions, like those imposed in Shapiro, were enacted in order to protect the public and that record-keeping requirements are meant to aid in the enforcement of these substantive restrictions. Accordingly, the “public aspects” necessary for the third prong do not come from record-keeping requirements, the witness argues, but rather from the underlying substantive restrictions enacted to protect the public. Because the BSA imposes no substantive restrictions on the holding of foreign bank accounts, the witness maintains that records of these accounts lack the “public aspects” required for the third prong of the Required Records Doctrine.
The witness misapprehends this prong of the Required Records Doctrine. Although the witness argues that substantive regulations designed to protect the public
Here, 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 is designed to serve an important public purpose sufficient to imbue otherwise private foreign bank account records with “public aspects” is not difficult to imagine. The witness “has not made a compelling argument that the information he is being asked to provide lacks ‘public aspects’ despite its essentially regulatory nature.” In re M.H., 648 F.3d at 1079. Accordingly, we find that the records sought have “public aspects” sufficient to satisfy the Required Records Doctrine‘s third prong.
CONCLUSION
For the foregoing reasons, we REVERSE the district court‘s denial of the government‘s motion to compel the witness to comply with the subpoena.
JAMES L. DENNIS
UNITED STATES CIRCUIT JUDGE
In re KATRINA CANAL BREACHES LITIGATION.
Nos. 10-30249, 10-31054 and 11-30808.
United States Court of Appeals, Fifth Circuit.
Sept. 24, 2012.
696 F.3d 436