Circuit Confirms Contempt Order for Failure to Produce Records
Forced compliance with a subpoena for foreign bank records U.S. citizens are required to maintain under the Bank Secrecy Act does not violate the Fifth Amendment privilege against self incrimination, the U.S. Court of Appeals for the Second Circuit has ruled.
Agreeing that the "required records" exception to the privilege applies, the Second Circuit affirmed a contempt order issued by Eastern District Judge Joseph Bianco (See Profile) for failure to comply with a grand jury subpoena in a Brooklyn banking investigation.
Judges Ralph Winter (See Profile), Richard Wesley (See Profile) and Susan Carney (See Profile) rejected the argument of a "John Doe" that the required records exception no longer exists and, even if it does, doesn't apply to him in In re: Grand Jury Subpoena Dated February 2, 2012, 13-403-cv.
The regulation promulgated under the Bank Secrecy Act (BSA), Regulation 31 C.F.R. §1010.420, requires that records of foreign bank accounts, including the names of account holders, the names of the banks, the type of account and the maximum value of the account be reported to the Commissioner of Internal Revenue.
These same records were subpoenaed by the grand jury in Brooklyn, and when Doe did not comply, the government moved to compel and Bianco granted the motion.
When Doe continued to resist, Bianco held him in contempt and imposed a penalty of $1,000 per day until he complied, a penalty that was suspended pending appeal.
Writing for the court, Wesley said the Supreme Court case of Fisher v. United States, 425 U.S. 391 (1976), recognized "the Fifth Amendment privilege might protect an individual from being required to produce documents, even if the documents' content are not protected by the privilege, when the witness's simple act of producing the documents could be used against the witness—for example, in those cases when the simple fact that the witness possessed the documents would be incriminating."
Twenty-four years later, in the Whitewater prosecution of Webster Hubbell, the government granted Hubbell use immunity for the act of producing some 13,120 pages of documents but not for the content of those documents.
But the Supreme Court held in United States v. Hubbell, 500 U.S. 27 (2000), that Hubbell could not be prosecuted for the content either. The court distinguished Fisher, where the "IRS knew [that the subpoenaed documents were in the hands of the taxpayers' attorneys" from Hubbell, where "It was unquestionably necessary for [Hubbell] to make extensive use of 'the contents of his own mind' in identifying the hundreds of documents responsive to the requests in the subpoena."
Wesley said the privilege has evolved "to a broader prophylactic regime that, in certain circumstances, protects individuals from producing documents where they are incriminated by the contents of the documents."