In re 25 Grand Jury Subpoenas

• Decision Date: 02 March 1987
• Docket Number: No. SM 86-98.,SM 86-98.
• Citation: 654 F. Supp. 647
• Parties: In re 25 GRAND JURY SUBPOENAS DATED OCTOBER 21, OCTOBER 22, AND DECEMBER 3, 1986.
• Court: U.S. District Court — Northern District of Indiana

654 F. Supp. 647

In re 25 GRAND JURY SUBPOENAS DATED OCTOBER 21, OCTOBER 22, AND DECEMBER 3, 1986.

No. SM 86-98.

United States District Court, N.D. Indiana, South Bend Division.

March 2, 1987.

R. Michael Parker, Elkhart, Ind., for petitioner.

Thomas O. Plouff, Asst. U.S. Atty., South Bend, Ind., for defendant.

MEMORANDUM AND ORDER

ALLEN SHARP, Chief Judge.

This case is before the court on two motions to quash grand jury subpoenas. The first motion, filed on November 5, 1986, requests an order quashing twenty-five (25) subpoenas issued October 21 and October 22, 1986, each listing twelve (12) categories of documents, and served on each subpoenaed entity. The second motion filed January 5, 1987, requests an order quashing seven (7) subpoenas issued on December 3, 1986, each listing twelve (12) categories of documents, and by agreement served upon an individual designated to accept service for the seven (7) entities. The government filed a written response on January 17, 1987. In addition, the court heard oral argument on November 6, 1986 and January 16, 1987.

The issue before the court is the alleged tension between the "act of production" doctrine announced in Fisher v. United States, 425 U.S. 391, 96 S.Ct. 1569, 48 L.Ed.2d 39 (1976), further described in United States v. Doe, 465 U.S. 605, 104 S.Ct. 1237, 79 L.Ed.2d 552 (1984),¹ and the "collective entity rule" expressed in Bellis v. United States, 417 U.S. 85, 94 S.Ct. 2179, 40 L.Ed.2d 678 (1974). This trilogy of cases sets the parameters which guide the analysis of the facts and circumstances before this court.

A brief synopsis of the facts and circumstances of this case is critical. The petitioner is the target of a grand jury investigation. The government served subpoenas upon a number of entities, in which the petitioner is the principal shareholder, partner or settlor. Some of the entities are trusts which the petitioner states do not exist because the settlor "never executed trust instrument." The petitioner states that he is not the custodian nor director or officer of several of the other entities. Nevertheless, the petitioner has agreed to provide "certain documents evidencing transactions between third persons and the entity." Further, the petitioner states that he is unaware of an entity named on one subpoena and "therefore, has no records for that entity." The majority of the remaining subpoenas were directed toward corporations or partnerships. The petitioner states that:

The equity interests and/or partnership interests (excluding an interest of less than 5% in one entity of the subpoenaed entities have never been owned outside of the family.

The petitioner asserts his personal Fourth and Fifth Amendment rights with respect to the documents of the subpoenaed entities. It is argued that since the entities are closely held corporations or partnerships in which all the stock is held by family members or partnerships in which all interest is held by family members that the act of production would be compelled testimony which would be incriminating.

The government bears the initial burden to demonstrate that the subpoenas do not violate the Fourth and Fifth Amendment restrictions or the provisions of Rule 17(c) of the Federal Rules of Criminal Procedure. "To be valid a subpoena duces tecum must meet the following requirements:

(1) The documents requested must be relevant to the subject matter of a legitimate grand jury investigation;

(2) The subpoena must describe the materials to be produced with reasonable particularity; and

(3) The documents may not cover more than a reasonable period of time.

(Under Seal) v. United States, 634 F.Supp. 732, 733 (E.D.N.Y.1986); In re Rabbinical Seminary Netzach Israel Ramailis, 450 F.Supp. 1078, 1084 (E.D.N.Y.1978). The petitioner is being investigated for possible violations of Sections 841(a)(1) and 846 of Title 21 of the United States Code and Section 7201 of Title 26 of the United States Code. The subpoenaed documents are relevant to the grand jury's investigation. Further, the twelve (12) categories listed in each subpoena describe the items requested "with sufficient particularity that the person commanded to comply will know what he is being directed to produce." (Under Seal) v. United States, 634 F.Supp. at 733; In re Corrado Brothers, Inc., 367 F.Supp. 1126, 1132 (D.Del.1973). The time period which the requested documents cover, 1981 through 1985, is not unreasonable.

Since 1886 the Supreme Court of the United States has steadfastly held that "any forcible and compulsory extortion of a man's own testimony or of his private papers to be used as evidence to convict him of crime" would violate the Fifth Amendment. Boyd v. United States, 116 U.S. 616, 630, 6 S.Ct. 524, 532, 29 L.Ed. 746 (1886); accord, Bellis v. United States, 417 U.S. 85, 88-89, 94 S.Ct. 2179, 2182-2183, 40 L.Ed.2d 678 (1974); United States v. White, 322 U.S. 694, 697-699, 64 S.Ct. 1248, 1250-1251, 88 L.Ed. 1542 (1944). The analysis of the Fifth Amendment privilege, as applied to production of documents of collective entities, has evolved from a focus on the protection of personal privacy and property to whether an "act" of production is testimonial and potentially incriminating. See, United States v. Doe, 465 U.S. 605, 104 S.Ct. 1237, 79 L.Ed.2d 552 (1984); Fisher v. United States, 425 U.S. 391, 96 S.Ct. 1569, 48 L.Ed.2d 39 (1976); Bellis v. United States, 417 U.S. 85, 94 S.Ct. 2179, 40 L.Ed.2d 678 (1974); Curcio v. United States, 354 U.S. 118, 77 S.Ct. 1145, 1 L.Ed.2d 1225 (1957); United States v. White, 322 U.S. 694, 64 S.Ct. 1248, 88 L.Ed. 1542 (1944); Wilson v. United States, 221 U.S. 361, 31 S.Ct. 538, 55 L.Ed. 771 (1911); In re Harris, 221 U.S. 274, 31 S.Ct. 557, 55 L.Ed. 73 (1911); Hale v. Henkel, 201 U.S. 43, 26 S.Ct. 370, 50 L.Ed. 652 (1906); Boyd v. United States, 116 U.S. 616, 6 S.Ct. 524, 29 L.Ed. 746 (1886). Recently the lower courts have focused on the act of production and whether that is testimonial and potentially incriminating. See, In re Subpoena Duces Tecum, 795 F.2d 904 (11th Cir.1986); United States v. Lang, 792 F.2d 1235 (4th Cir.1986) (Judge Swygert), cert. denied, ___ U.S. ___, 107 S.Ct. 574, 93 L.Ed.2d 578 (1986); In re Sealed Case, 791 F.2d 179 (D.C.Cir.1986) (Judge Scalia); In re Grand Jury Subpoena, 784 F.2d 857 (8th Cir.1986), cert. granted, ___ U.S. ___, 107 S.Ct. 59, 93 L.Ed.2d 18 (1986), cert. dismissed, ___ U.S. ___, 107 S.Ct. 918, 93 L.Ed.2d 865 (1987); In re Grand Jury Subpoenas Issued to Thirteen Corps., 775 F.2d 43 (2d Cir.1985), cert. denied sub nom, Roe v. United States, ___ U.S. ___, 106 S.Ct. 1459, 89 L.Ed.2d 716 (1986); In re Grand Jury Proceedings, 771 F.2d 143 (6th Cir.1985) (en banc), cert. denied sub nom, Morganstern v. United States, ___ U.S. ___, 106 S.Ct. 594, 88 L.Ed.2d 574 (1985); In re Grand Jury Matter (Brown), 768 F.2d 525 (3d Cir.1985) (en banc); In re Kave, 760 F.2d 343 (1st Cir.1985); In re Grand Jury Proceedings, 759 F.2d 1418 (9th Cir.1985); In re Grand Jury Proceedings (Vargas), 727 F.2d 941 (10th Cir.1984), cert. denied sub nom, Vargas v. United States, 469 U.S. 819, 105 S.Ct. 90, 83 L.Ed.2d 37 (1984); United States v. Porter, 711 F.2d 1397 (7th Cir.1983); United States v. Kent, 646 F.2d 963 (5th Cir.1981); Pacific Mutual Life Ins. Co. v. American National Bank and Trust Co. of Chicago, 649 F.Supp. 281 (N.D.Ill.1986); In re Grand Jury Subpoena, 635 F.Supp. 569 (N.D.Ga.1986); (Under Seal) v. United States, 634 F.Supp. 732 (E.D.N.Y.1986); In re Grand Jury Subpoenas Duces Tecum Served Upon 22nd Ave. Drug, Inc., 633 F.Supp. 419 (S.D.Fla.1986); United States v. McPhaul, 617 F.Supp. 58 (D.C.N.C.1985), appeal dismissed, 786 F.2d 1158 (4th Cir. 1986); United States v. Katin, 109 F.R.D. 406 (D.Mass.1986). That focus and subsequent analysis creates significantly different results depending on whether the facts and circumstances include subpoenas to individual persons, sole proprietorships, partnerships, unincorporated associations or corporations.

It is clear that the Fifth Amendment privilege protects compelled testimony and production of personal papers by an individual. In addition, since United States v. Doe, the owner of a sole proprietorship may not be compelled to produce certain business records where production of the documents would relieve the government of the need to authenticate the documents. See United States v. Doe, 465 U.S. at 610-614, 104 S.Ct. at 1240-1243; Fisher v. United States, 425 U.S. at 410, 96 S.Ct. at 1580. The basis of the Court's decision in Doe is the intimate relationship between an individual who owns a sole proprietorship and the records of the sole proprietorship. Id. Since the owner of a sole proprietorship is the only individual who could have created the records, compelling him to produce them is testimonial and depending on the content could be incriminating. This case does not involve subpoenas issued to either an individual or a sole proprietorship.

In this case subpoenas were served on some partnerships. The petitioner argues that because the interests in the partnerships are almost exclusively held by the petitioner and/or his family that the analysis of Doe should be applied. However, the express language of Doe which stresses the unique relationship between the owner of a sole proprietorship and the records of that proprietorship limits its application. The facts and circumstances related to the petitioner's claims as to the partnership records are analogous to the claims of the petitioner in Matter of September, 1975 Special Grand Jury, 435 F.Supp. 538 (N.D. Ind.1977). In that case the partnership consisted of a husband and wife. The grand jury subpoenaed the partnership books and records. Based on the Bellis decision, Judge McNagny held that "the fact that partners are husband and wife does not alter the applicability of Indiana partnership law." Id., at 543. In Bellis, "the Supreme Court, relying on its earlier opinion in...