In re Subpoenas, 12 Misc. 381.
| Decision Date | 03 April 2017 |
| Docket Number | 12 Misc. 381. |
| Citation | 248 F.Supp.3d 525 |
| Parties | IN RE: VARIOUS GRAND JURY SUBPOENAS |
| Court | U.S. District Court — Southern District of New York |
Daniel Walter Levy, David Benton Massey, Jared P Lenow, Jason Harris Cowley, U.S. Attorney's Office, New York, NY, for Plaintiff.
Alain Leibman, Fox, Rothschild, LLP (L'vlle), Lawrenceville, NJ, Matthew Stephen Adams, Fox Rothschild, Attorneys at Law (NYC), New York, NY, for Defendant.
Respondent Subject E renews her motion to purge contempt. For the following reasons, Subject E's motion is denied without prejudice, and the commencement of sanctions is suspended until April 24, 2017.
On January 24, 2017, this Court held Subject E in civil contempt, and imposed sanctions to take effect at a later date, for her failure to obtain and produce bank records pursuant to a grand jury subpoena (the "Sanctions Order"). See In re Various Grand Jury Subpoenas, 235 F.Supp.3d 472, 2017 WL 361685 (S.D.N.Y. Jan. 24, 2017). On February 8, 2017, Subject E moved to purge contempt claiming that she had fully complied with the chief directive of the Sanctions Order—to "locate and produce all foreign bank account records responsive to the 2010 Subpoena that she has the legal authority or practical ability to obtain." In re Various Grand Jury Subpoenas, 235 F.Supp.3d at 482, 2017 WL 361685, at *7. This Court denied Subject E's motion, holding that she did not exhaust her ability to obtain documents from certain foreign banks, and failed to demonstrate plainly and unmistakably that compliance with the Sanctions Order was impossible. In re Various Grand Jury Subpoenas, 2017 WL 564676, at *2 (S.D.N.Y. Feb. 13, 2017) (the "Suspension Order"). Nevertheless, because it appeared Subject E had undertaken good faith steps to comply with the subpoena, this Court suspended the commencement of sanctions to allow her another opportunity to achieve full compliance.
On March 29, 2017, Subject E renewed her motion to purge contempt, claiming that she took "every step required ... to secure, and turn over to the Government, ‘required records.’ " (Respondent's Memo. of Law in Support of Renewed Motion to Purge Contempt and Vacate Contempt Citation ("Mot."), at 11.) Subject E's motion catalogues the additional steps undertaken to obtain and produce records—e.g., the issuance of directives to several foreign banks, subsequent discussions with bank representatives, and productions to the Government.
The Government opposes Subject E's request, and identifies a discrete category of documents relating to a "Swiss bank account"—at Credit Suisse—"held directly in Subject E's name" and "held by the Subject E Foundation" that Subject E failed to produce. (Government Response Ltr. dated Mar. 30, 2017 ("Opp."), ECF No. 71, at 1–2; Hearing Transcript dated Mar. 31, 2017 ("Tr."), at 22:16–17 ().) According to the Government, they are "key documents that relate to critical and central subjects of the ongoing grand jury investigation: the circumstances surrounding the establishment of the Subject E Foundation, the source of its funds, and who was involved." (Opp. at 1.) Based on the parties' submissions, it appears that the Credit Suisse documents were not produced because Subject E refused to sign the bank's version of the consent directive. (Opp. at 2.)
Subject E counters that the type of consent directive mandated by Credit Suisse—either the one drafted by Credit Suisse's counsel or the standard form typically executed by Credit Suisse clients who wish to obtain copies of their account records—would risk violating her Fifth Amendment testimonial privilege. More specifically, citing In re N.D.N.Y. Grand Jury Subpoena, 811 F.2d 114 (2d Cir. 1987) (" In re Alexander" ), Subject E contends that because the Credit Suisse directive fails "to indicate that it ... [is] executed under compulsion of court order," signing it would, among other issues, create a testimonial communication that could be used against her in a pending criminal trial. (Tr. at 9:3–9.)
In civil contempt cases, the "opportunity to purge is essential." CBS Broadcasting Inc. v. FilmOn.com, Inc., 814 F.3d 91, 101 (2d Cir. 2016). The imposition of sanctions tied to a finding of civil contempt is appropriate only after the contemnor has had an opportunity to purge. See CBS Broadcasting, 814 F.3d at 102. Indeed, the Second Circuit recognized that "repeated findings of contempt, with proper notice of daily prospective fees, provide[ ] [a] defendant with an adequate opportunity to purge." CBS Broadcasting, 814 F.3d at 102. And that comports with the "underlying concern of protecting the due process rights of parties and prevent[ing] the arbitrary exercise of judicial power." CBS Broadcasting, 814 F.3d at 102 (citing Int'l Union, United Mine Workers of Am. v. Bagwell, 512 U.S. 821, 834, 114 S.Ct. 2552, 129 L.Ed.2d 642 (1994) ).
Here, Subject E has had at least two opportunities to purge contempt—once after issuance of the Sanctions Order and another time following entry of the Suspension Order. On each occasion, Subject E took a number of steps to comply with the grand jury subpoena, making productions of some, but not all, "required records" to the Government. But a good faith effort to comply does not amount to full and actual compliance. The Government claims, and Subject E does not dispute, that a discrete category of documents—Credit Suisse records dating to the 2005 and 2006 period—which clearly fall within the ambit of the grand jury subpoena have not been produced.
Subject E takes issue with the form of the Credit Suisse consent directive (the "CS Directive"), claiming that it omits a critical phrase—that her directive to produce records is made pursuant to a court order—and that such omission violates her Fifth Amendment testimonial privilege. She cites In re Alexander and In re Grand Jury Subpoena, Two Grand Jury Contemnors, 826 F.2d 1166 (2d Cir. 1987) (" Two Contemnors"), in support of her position that the "directive itself violates [her] Fifth Amendment privilege against being compelled to give the government testimonial evidence, evidence that respondent controls or has accounts there, evidence that the respondent authenticates the resulting production." (Tr. at 25:3–7.)
But those two decisions do not stand for the proposition that omitting a representation from the consent directive that it is "being executed under compulsion of court order" (Tr. at 9:8–9) violates the Fifth Amendment. In fact, In re Alexander expressly "ma[de] clear that [its] holding is not founded on constitutional grounds, but merely upon [the Court of Appeal's] supervisory authority over the district courts." In re Alexander, 811 F.2d at 118. There, the Second Circuit held that a consent directive either omitting that it is issued pursuant to a court order or under protest would "offend [ ] basic precepts of honest behavior by invoking the district court's imprimatur on a document that would be misleading"—the imprimatur being the district court's order coercing the contemnor to sign a directive that is not entirely accurate. In re Alexander, 811 F.2d at 117–18. And Two Contemnors held the same, essentially adopting the holding of In re Alexander—that "so long as a directive indicated that it was signed under protest or pursuant to a district court order, it would not be considered misleading"—but said it provided no basis for a Fifth Amendment violation. 826 F.2d at 1171.
In both cases, the consent directives at issue did not "implicate any testimonial communication" or "impair [a contemnor's] rights under the [F]ifth [A]mendment" so long as they "employ[ed] language [ ] requir[ing] disclosure only if the bank has such accounts." In re Alexander, 811 F.2d at 117 (emphasis original); Two Contemnors, 826 F.2d at 1170 ( ) (citing United States v. Ghidoni, 732 F.2d 814, 819 (11th Cir. 1984) ).
Here, although the CS Directive omits any reference to this Court's Sanctions Order, it is not testimonial in nature because it seeks disclosure of documents only if the bank has "any account" held in Subject E's name or held for the benefit of the Subject E Foundation. (See Ex. A; Compare Opp., Ex. A and Ex. B ("I hereby instruct and authorize [the bank] to disclose copies of any and all account records in [the bank's] possession ...") with In re Alexander, 811 F.2d at 115 ().) The directives at issue are Doe v. United States, 487 U.S. 201, 215, 108 S.Ct. 2341, 101 L.Ed.2d 184 (1988).
And, while the language of the CS Directive (or the standard directive signed by other Credit Suisse accountholders) does not make clear whether the accountholder in question actually maintains, or has maintained, an account with the bank, the facts in this proceeding differ materially from In re Alexander and Two Contemnors because the parties already know that such accounts do exist. According to the Government, "Subject E's counsel apparently [ ] receive[d] an incomplete set of account documents" that were mistakenly produced by Credit Suisse. (See Opp. at 2, n.1.) Thus, the potential risk of a ...
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