No. 68-C-388 | E.D.N.Y | Apr 25, 1968
Memorandum of Decision and Order
On September 12, 1967, an oral application to quash certain grand jury subpoenas that had been served upon Donald Weiss, as president of Nassau-Suffolk Business Exchange, Inc., and Morris Gaines, said corporation’s attorney, was made before this court. The subpoenas directed Messrs. Weiss and Gaines to produce, in effect, all of the corporation’s books and records under their custody and control.
In the interim, the grand jury has returned a forty-nine count indictment against Weiss and one Walter H. Spede, who formerly was the assistant cashier and manager of the Valley National Bank of Long Island, Setauket, New York.
Weiss claims that the compulsory production of the requested documents .would constitute a violation of his privilege against self-incrimination. In his affidavit of January 8? 1968, Weiss recites his belief that the current proceeding is related to his activities as'president of the aforesaid corporation, and that the material called for in the subpoenas might tend to incriminate him.
Apparently, Weiss and his wife are the corporation’s sole stockholders and officers; each owns a fifty percent stock interest, and the latter is the secretary-treasurer. Weiss further avers that on various occasions he has used the corporate bank account to pay his personal obligations, and has also deposited personal funds into the firm’s account. “In short,” he argues, “since the only persons entitled to the funds of the corporation were * * * [himself] and * * * [his] wife, * * * [he has] treated corporate funds and records as personal ones and personal funds as corporate funds whenever it was convenient to do so.”
Weiss does not contend, however, that the corporation did not conduct any business, nor does he maintain that the transactions recorded in the corporate books were merely payments of personal obligations and deposits of moneys unrelated to the firm’s activities. The applicant’s conclusory statements to the effect that purely personal matters have been intermingled with corporate matters are insufficient to support the quashing of the subpoenas. Of course, he is not precluded from attempting to demonstrate with particularity, upon production of the documents, that several of the items demanded by the subpoenas are his personal papers.
Nevertheless, as this court perceives his argument, Weiss does not maintain that the requested records must be regarded as his personal papers because of the nature of the transactions to which they relate. Instead, he claims that a small family corporation is closely analogous to a small family partnership, and that the transaction of business in either form constitutes “wholly individual activity.” See, Matter of Subpoena Duces Tecum, 81 F. Supp. 418" court="N.D. Cal." date_filed="1948-11-29" href="https://app.midpage.ai/document/in-re-subpoena-duces-tecum-1394683?utm_source=webapp" opinion_id="1394683">81 F.Supp. 418 (N.D.Cal.1948).
While the analogy urged upon this court may well have greater validity today than it did at some prior time,
When the privilege is asserted as a bar to the production of corporate books and records, however, the rule is to the contrary. See, Grant v. United
Accordingly, this court holds that “[e]orporate records which would tend to incriminate a corporate officer, can be subpoenaed even where the corporation is a mere alter ego of its owner.” Hair Indus., Ltd. v. United States, supra.
The motion is denied. Applicant Donald Weiss is directed to produce the corporate books and records pursuant to the subpoena before this court on May 10th, 1968, at 9:30 A.M.
The briefs of the parties erroneously adopted the caption of the criminal proceeding pending against Walter H. Spede and Donald Weiss (67 CR 410). The clerk is directed to file the papers under the above caption without fee.
. The court has since been informed that the requested documents are currently in Mr. Weiss’ possession, and that the parties have stipulated that no new subpoena need be served for their production should the court so direct.
. Twenty-nine counts charge Weiss and Spede with violations of sections 215 and 2 of title 18, United States Code. Twenty-nine other counts allege that they violated sections 656 and 2 of title 18. The final count alleges the formation of a criminal conspiracy in tontravention of section 371 of title 18. The indictment was returned on November 2, 1967.
. Affidavit of Donald Weiss, January 8, 1968, ¶ 5 at p. 3.
. The common law’s traditional refusal to recognize a partnership as a separate legal entity posed such serious procedural difficulties that, in many instances, the rule has had to be modified. See, e. g., Joscar Co. v. Consolidated Sun Ray, Inc., 212 F. Supp. 634" court="E.D.N.Y" date_filed="1963-01-08" href="https://app.midpage.ai/document/joscar-company-v-consolidated-sun-ray-inc-2253378?utm_source=webapp" opinion_id="2253378">212 F.Supp. 634 (E.D.N.Y.1963). In addition, Congress has employed the entity concept in defining the criminal conduct of partnerships. See, United States v. A. & P. Trucking Co., 358 U.S. 121, 79 S.Ct. 203, 3 L.Ed.2d 165 (1958). On the other hand, certain small business corporations may elect to be treated for tax purposes as if they were partnerships. See, 26 U.S.C. §§, 1371-1377 (1964), as amended, 80 Stat. 114 (1966).
. See, Wild v. Brewer, supra (dissenting opinion); Note, Books and Records and the Privilege Against Self-Incrimination, 33 Bklyn.L.Rev. 70, 74 (1966) ; Comment, Required Information and the Privilege Against Self-Incrimination, 65 Colum.L.Rev. 681 (1965); Recent Cases, 78 Harv.L.Rev. 455 (1964).