In re Blunden, CV 95-4299-RSWL(RMCx).

• Decision Date: 18 August 1995
• Docket Number: No. CV 95-4299-RSWL(RMCx).,CV 95-4299-RSWL(RMCx).
• Court: U.S. District Court — Central District of California
• Parties: In re Administrative Subpoena Directed to Craig BLUNDEN, Custodian of Records, Provident Savings Bank.

896 F. Supp. 996

In re Administrative Subpoena Directed to Craig BLUNDEN, Custodian of Records, Provident Savings Bank.

No. CV 95-4299-RSWL(RMCx).

United States District Court, C.D. California.

August 18, 1995.

COPYRIGHT MATERIAL OMITTED

Miguel P. Inumerable, Inumerable and Inumerable, Los Angeles, CA, for movant.

Faith A. Devine, Assistant United States Attorney, Los Angeles, CA, for U.S.

MEMORANDUM DECISION AND ORDER

CHAPMAN, United States Magistrate Judge.

On June 28, 1995, Blas and Azucena Taon (hereafter "the Taons") filed a Motion to Quash the administrative subpoena duces tecum (hereafter "subpoena") served by the Department of Justice (hereafter "Government") on Craig Blunden, the custodian of records for Provident Savings Bank (hereafter "Bank"). On July 12, 1995, the Court issued an Order re Further Proceedings, requiring Government to file a sworn response to Taons' motion, and directing that the response include documentation of the receipt by the Taons of notice of the subpoena. The Court further ordered that the Taons could reply to Government's sworn response. On July 25, 1995, Government filed a response with the supporting declaration of Cynthia S. Matsumoto, a paralegal. The parties appeared for oral argument on August 16, 1995.

BACKGROUND

On June 7, 1995, Government served an administrative subpoena duces tecum by certified mail on the custodian of records for Bank, and gave notice to the Taons of the subpoena; however, the notice was not actually received by the Taons until June 13, 1995. The subpoena was "issued pursuant to 12 U.S.C. § 1833a(f)(1) in the course of an investigation to determine where there is or has been a violation of one of the enumerated provisions of Title 18 U.S.C. §§ 1014 and 1344, in connection with a loan applied for by the Taons from Bank." It ordered Bank to produce the following documents for inspection and copying:

Copies of the loan application, underwriting worksheets and memos, tax returns, conversation logs, any document relating to the loan that shows the tax returns submitted to Provident Savings Bank are false, including information obtained from the IRS and Form 4506, and any documents relating to the loan applied for by Blas A. Taon and Azucena D. Taon during November 1993. Please send a listing of other loan applications submitted to Provident Savings Bank by Mortgage City, brokerage firm, and Victor Santos and Honorato Quijano, brokers which involve possible discrepancies. Please remove all other borrowers' name from this list.

Furthermore, Bank was advised not to produce the requested documents until it had received a certification of compliance with the applicable provisions of the Right to Financial Privacy Act.

The Taons move to quash the subpoena on three grounds: (1) that the issuance of the subpoena to Bank, under the circumstances, violates the Taons' constitutional rights to privacy and against self-incrimination; (2) that the subpoena is not specific, but is a blanket demand amounting to a fishing expedition; and (3) that the documents sought are not relevant because there are no pending criminal charges or other proceedings.

Government, in its response, voluntarily strikes the second and third sentences regarding the documents Bank is to produce, thereby limiting the subpoena to documents relating to the Taons' loan application to Bank. Government cites its authority under 12 U.S.C. § 1833a to issue subpoenas to investigate violations of 18 U.S.C. §§ 1014 (false statement for the purpose of influencing a lending institution) and 1344 (bank fraud), and in the declaration of Ms. Matsumoto represents that an investigation of the Taons began following Government's receipt "in April of 1995, of a Criminal Referral Form from Provident Savings Bank reporting a suspected loan fraud by Blas and Azucena Taon in connection with the loan Mr. and Mrs. Taon applied for in November 1993." Government also asserts the Taons' Motion to Quash is untimely.

DISCUSSION

The Right to Financial Privacy Act (hereafter "RFPA"), 12 U.S.C. §§ 3401 et seq., was, in large part, passed in response to the decision in United States v. Miller, 425 U.S. 435, 96 S.Ct. 1619, 48 L.Ed.2d 71 (1976), where the Supreme Court held that bank customers have no reasonable expectation of privacy, under the Fourth Amendment, in bank records of their accounts. Breakey v. Inspector General of the United States Dept. of Agriculture, 836 F.Supp. 422, 426 (E.D.Mich.1993). Accord: Hunt v. United States Securities & Exchange Comm., 520 F.Supp. 580, 601 (N.D.Tex.1981); Hancock v. Marshall, 86 F.R.D. 209, 210 (D.D.C.1980). RFPA "permits individuals to contest Government access to certain records held by banks and other financial institutions ... by requiring the Government authority to notify the bank customer of the subpoena or summons served on the financial institution as well as the nature of the law enforcement inquiry to which the subpoena or summons relates." Hancock, 86 F.R.D. at 210.

"The requirements set forth within the Act itself are straightforward. The two salient sections of the Act are 12 U.S.C. § 3405 (Requirements for administrative subpoena and summons) and 12 U.S.C. § 3410 (Section dealing with customer challenges)." Breakey, 836 F.Supp. at 425. Section 3405 requires the subpoena to state with reasonable specificity the nature of the law enforcement inquiry. Section 3410(c) provides, in part, that the Court may quash the subpoena if it finds that the movant is a customer to whom the records sought pertain and "there is not a demonstrable reason to believe that the law enforcement inquiry is legitimate and a reasonable belief that the records sought are relevant to that inquiry...." "The RFPA narrowly constrains the range of decisions which the Court may make with regard to motions to quash." Collins v. Commodity Futures Trading Comm., 737 F.Supp. 1467, 1478 (N.D.Ill.1990). "Within the framework of the RFPA, only three questions are relevant: (1) Is there a legitimate law enforcement inquiry; (2) are the subpoenaed bank records relevant to the inquiry; and (3) has the government agency complied with the requirements of the RFPA?" Id. at 1480.

"The ultimate burden of showing that the records sought are relevant to a legitimate law enforcement inquiry is on the government." Id. "For purposes of an administrative subpoena, the notion of relevancy is a broad one. An agency `can investigate merely on the suspicion that the law is being violated, or even just because it wants assurance that it is not.' So long as the material "`touches a matter under investigation,'" an administrative subpoena will survive a challenge that the material is not relevant." (citations omitted.) Collins, 737 F.Supp. at 1479 (quoting Sandsend Financial Consultants, Ltd. v. Federal Home Bank Bd., 878 F.2d 875, 882 (5th Cir.1989)).

We must first consider whether the Taons' Motion to Quash is timely. Section 3410(a) permits a bank customer to file a motion to quash a subpoena "within ten days of service or within fourteen days of mailing...." It is undisputed that the subpoena was mailed to the Taons on June 7, 1995, and that the Taons actually received the mailed subpoena on June 13, 1995. The former date requires filing of the motion to quash by June 21, 1995, and the latter date requires filing of the motion to quash by June 23, 1995. The Taons have met neither deadline, filing their Motion to Quash on June 28, 1995. Despite the untimeliness of the Motion to Quash, the Court has considered the merits of the Taons' arguments.

The first challenge, that production of the records would violate the Taons' right to privacy and their Fifth Amendment right against self-incrimination, is easily disposed of. Loan applications, with supporting documentation, are clearly bank records over which the customers¹ do not have exclusive control and in which they have only a limited expectation of privacy. See...