740 F.2d 817 (11th Cir. 1984), 83-5708, In re Grand Jury Proceedings Bank of Nova Scotia

Docket Nº:83-5708, 84-5198.
Citation:740 F.2d 817
Party Name:In re GRAND JURY PROCEEDINGS the BANK OF NOVA SCOTIA. UNITED STATES of America, Plaintiff-Appellee, v. The BANK OF NOVA SCOTIA, Defendant-Appellant.
Case Date:August 14, 1984
Court:United States Courts of Appeals, Court of Appeals for the Eleventh Circuit
 
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740 F.2d 817 (11th Cir. 1984)

In re GRAND JURY PROCEEDINGS the BANK OF NOVA SCOTIA.

UNITED STATES of America, Plaintiff-Appellee,

v.

The BANK OF NOVA SCOTIA, Defendant-Appellant.

Nos. 83-5708, 84-5198.

United States Court of Appeals, Eleventh Circuit

August 14, 1984

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Griffin B. Bell, King & Spalding, Charles H. Kirbo, James A. Pardo, Jr., Atlanta, Ga., Danforth Newcomb, Shearman & Sterling, Henry Harfield, Roberta Bender, New York City, William E. Sadowski, Akerman, Senterfitt & Eidson, Miami, Fla., for defendant-appellant.

Herschel E. Sparks, Jr., Sage, Gray, Todd & Sims, Miami, Fla., Robert W. Brundige, Jr., New York City, for amicus curiae, The Canadian Bankers Ass'n.

Stanley Marcus, U.S. Atty., Thomas A. Blair, Linda Collins Hertz, Lawrence H. Sharf, Andrea M. Simonton, Asst. U.S. Attys., Miami, Fla., for plaintiff-appellee.

Andreas F. Lowenfeld, New York City, for the Government of Canada.

Parker D. Thomson, Thomson, Zeder, Bohrer, Werth, Adorno & Razook, Cloyce L. Mangas, Jr., Miami, Fla., for amicus curiae, The Cayman Islands, United Kingdom and Northern Ireland.

Appeals from the United States District Court for the Southern District of Florida.

Before FAY and ANDERSON, Circuit Judges, and BOYLE [*], District Judge.

FAY, Circuit Judge:

This case is an appeal by the Bank of Nova Scotia, ("The Bank"), of an order of civil contempt and the imposition of a $1,825,000 fine entered by the United States District Court for the Southern District of Florida. On numerous occasions the district judge ordered the Bank to comply with a grand jury subpoena duces tecum.

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* The Bank continuously disregarded the court's orders. The district judge concluded that the Bank did not act in good faith and found it in contempt of court. He imposed a $25,000 per day fine for as long as the Bank did not comply with the subpoena. The Bank challenges the order on various diplomatic and legal grounds. After a careful review of the record we conclude that the district judge was extremely patient. He did not abuse his discretion in finding the Bank in contempt of court and imposing the fine.

I. FACTS

The Bank of Nova Scotia is a Canadian banking corporation, headquartered in Toronto, with over 1,200 branches, offices and agencies in forty-six countries. On March 4, 1983, the Bank's Miami office was served with a grand jury subpoena duces tecum issued by the United States District Court for the Southern District of Florida. The subpoena called for the production of financial documents pertaining to two individuals and three companies from the Bank's branches in the Bahamas, the Cayman Islands and Antigua. 1 On March 22, 1983, the Bank's Miami office sent telexes to the Bahamian and Cayman branches informing them of the subpoena and asking them to search for the requested documents. The Bank produced no documents at its March appearance before the grand jury. On April 4, 1983, the Bank filed a motion to quash in the district court asserting that if it complied with the subpoena it would violate the secrecy laws of the Bahamas and the Cayman Islands. 2 The court denied the motion and ordered the Bank to produce the documents by May 31, 1983.

During the month of May the Bank made no effort to comply with the court's order by searching for the subpoenaed documents. Instead the Bank spent its time corresponding through counsel with the Assistant United States Attorney handling the grand jury proceedings. The Bank continuously requested the government to send letters rogatory and to show the materiality and necessity of the subpoenaed documents to the grand jury investigation. The government repeatedly stated that it was willing to provide any requested assistance, short of showing materiality and necessity or sending letters rogatory.

The only other effort by the Bank during the month of May to comply with the district court's order was the filing of a petition before the Grand Court of the Cayman Islands for permission to disclose the documents sought in the subpoena. The Grand Court denied the petition on May 31, 1983, but granted the Bank leave to renew it at a later date. The Court further ordered the Bank not to produce the subpoenaed documents. The Bank never appealed this order to the Court of Appeals in Jamaica.

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On June 1, 1983, the Bank filed another motion for relief from the subpoena in the district court. The court denied the motion on October 10, 1983, and ordered the Bank to comply with the subpoena by October 17, 1983, or face a contempt hearing on October 21, 1983. The Bank's only effort to locate any documents either in the Bahamas or in the Caymans between the June first motion and scheduled October hearing was a search conducted in Nassau on October 14, 1983, which produced no documents. The only document produced by the Bank during this seven month period was a xerox copy of a draft 3 drawn to Paula Brady by the branch in Nassau for $163,892.33. At the hearing the district court concluded the Bank had not made a good faith effort to comply with the subpoena and found it in contempt. The court imposed a fine of $25,000 per day, beginning on October 26, 1983, and continuing until the Bank complied with the subpoena or the grand jury expired. We stayed the fine from October 25, 1983 until November 14, 1983.

On November 11, 1983, the Attorney General of the Bahamas issued an order allowing the Bank to produce the requested documents. He concluded that since the Bahamian branch did not have an account relationship with the subjects of the subpoena the dealings of the parties in the Bahamas were not protected by the Bahamian bank privacy statute. On November fourteenth, just prior to the lifting of the stay of the $25,000 per day fine imposed by the district court, the Bank delivered the following documents from its Bahamian branches:

Copies of the following Certificates of Deposit:

a) CD 6511601 issued on March 2, 1979, for $50,000 payable to Paula or Frank Brady.

b) CD 6511799 issued on March 2, 1979, for $50,000 payable to Paula or Frank Brady.

c) CD 6511800 issued on March 2, 1979, for $50,000 payable to Paula or Frank Brady.

Draft requisition dated November 8, 1982, by Paula Brady drawn on Manufacturer's Hanover in New York for $163,892.33.

Nassau branch copy of the draft requisition of November 8, 1982.

Receipt dated November 8, 1982, signed by Paula Brady.

After this disclosure the Assistant United States Attorney insisted that there were Bahamian documents still missing. The Bank reiterated that all of its branches in Nassau had been searched and there were no other documents in the Bahamas.

On November 11, 1983, the Grand Court of the Cayman Islands reconsidered the issue of disclosure and again refused to permit the Bank to disclose the records. However, the Governor of the Islands, pursuant to Section 3(2)(b)(iv) of the confidentiality statute, 4 authorized the disclosure of the subpoenaed documents on November 17, 1983. The Bank immediately produced all of the documents which had been located at the Cayman branch of the Bank. Once again the Assistant United States Attorney reiterated that a substantial number of documents still had not been produced from the Bahamian branches in spite of the ruling by the Attorney General of the Bahamas permitting disclosure. 5

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In late November, 1983, Mr. Nicol, the assistant chief inspector for the Bank, was ordered to go to the Bahamas and "insure that [an] effective search had been carried out of the Bank's records in the Bahamas." Mr. Nicol arrived in Nassau on November 24, 1983, and immediately discovered additional documents in two of the Bank's Bahamian branches. 6 As a result of his search photocopies of the following items were turned over on December 5, 1983:

Composite 1: CD 1093134 dated January 11, 1979, for $20,000.

The register copy of this CD.

The diary debit copy showing that it was paid on April 11, 1979.

Composite 2: CD 1093357 dated April 11, 1979, for $20,542.46.

The register copy of this CD.

The auditor's copy of this CD.

Composite 3: CD 1093181 dated January 31, 1979, for $50,000.

The register copy of this CD.

Composite 4: CD 1093300 dated March 20, 1979 for $200,000.

The register copy of this CD.

Composite 5: CD 1093329 dated March 28, 1979, for $150,000.

The register copy of this CD.

The auditor's copy of this CD.

Composite 6: Draft sold to Paula Brady payable to Brady Farms for $100,000 on January 11, 1979.

Requisition for the draft.

Composite 7: Draft sold to Frank Brady payable to Brady Farms for $200,000 on February 23, 1979.

Requisition for the draft.

Composite 8: Draft sold to Frank Brady payable to Brady Farms for $40,000 on February 23, 1979.

Requisition for the draft.

Composite 9: Draft for $225,000 sold on March 19, 1979, payable to Brady Farms.

Requisition for the draft.

Composite 10: Draft sold to Frank Brady payable to Clay Island Farms for $250,000 sold on April 18, 1979.

Requisition for the draft.

Prior cancelled requisition for the draft.

Composite 11: Draft sold to Frank Brady payable to Calleaders Orr and Company for $170,000 sold on April 18, 1979.

Requisition for the draft.

Prior cancelled requisition for the draft.

The following other items were also produced on December 5, 1983:

Operation of Foreign Currency Deposit Account dated January 11, 1979, signed by Paula and Frank Brady.

Bank Form 702: Current Account document and operating record.

Several checking account statements.

Deposit slip dated March 20, 1979 and a credit memo with the same date.

Deposit slip and credit memo dated April 12, 1979.

Deposit slip and credit memo...

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