13‐403‐cv In Re: Grand Jury Subpoena Dated February 2, 2012
UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
August Term, 2013
(Argued: August 22, 2013 Decided: December 19, 2013 )
Docket No. 13‐403‐cv
IN RE: GRAND JURY SUBPOENA DATED FEBRUARY 2, 2012
UNITED STATES OF AMERICA,
Movant‐Appellee,
‐v.‐
JOHN DOE,
Respondent‐Appellant.
Before:
WINTER, WESLEY, AND CARNEY, Circuit Judges.
1 John Doe appeals from a contempt order and an order compelling him to comply with a grand jury subpoena dated February 2, 2012, entered in the United States District Court for the Eastern District of New York (Joseph F. Bianco, Judge). The subpoena seeks records of Doe’s foreign banks accounts, which the Bank Secrecy Act requires United States resident account holders in foreign banks to maintain. See 31 C.F.R. § 1010.420. Doe resists, asserting that the Fifth Amendment privilege against self‐incrimination applies to his production of the requested documents. The district court held that the “required records” exception to the privilege applies; Doe contends both that the exception no longer exists and that, if it does, it does not apply. Finding these arguments unpersuasive, we AFFIRM the judgment of the district court.
AFFIRMED.
ROBERT S. FINK (Caroline Rule, Brian P. Ketcham, on the brief), Kostelanetz & Fink, LLP, New York, NY, for Appellant John Doe.
ALEXANDER P. ROBBINS (Kathryn Keneally, Assistant Attorney General, Frank P. Cihlar, Chief, Criminal Appeals & Tax Enforcement Policy Section, Gregory Victor Davis, Attorney, Tax Division, United States Department of Justice, on the brief), for Loretta E. Lynch, United States Attorney for the Eastern District of New York, Brooklyn, NY, for Appellee United States America.
Marc L. Greenwald, Cleland B. Welton II, Quinn Emanuel Urquhart & Sullivan, LLP, New York, NY, for Amicus Curiae New York Council of Defense Lawyers.
2 WESLEY, Circuit Judge:
John Doe appeals from a contempt order and an order compelling him to
comply with a grand jury subpoena entered in the United States District Court
for the Eastern District of New York (Joseph F. Bianco, Judge). With respect to
any foreign bank accounts in which Doe has a financial interest, the subpoena
seeks records that the Bank Secrecy Act(“BSA”) requires Doe to maintain. See 31
C.F.R. § 1010.420. Doe resists, asserting that the Fifth Amendment privilege
against self‐incrimination applies to his delivery of the requested documents.
The district court held that requiring Doe to produce the subpoenaed documents,
over his objections, did not violate Doe’s right against self incrimination because
that the documents were “required records” – records whose creation and
preservation serves a legitimate governmental regulatory interest. In re Grand
Jury Subpoena Dated February 2, 2012, 908 F. Supp.2d 348, 352 (E.D.N.Y. 2012).
Doe contends both that the “required records” doctrine no longer exists and that,
if it does, it does not apply to his case. We are not persuaded and AFFIRM the
judgment of the district court.
3 Background
A federal grand jury in the Eastern District of New York issued a subpoena
to Doe calling for him to produce records of his foreign bank accounts, including
the names of the account holders, the banks, the account numbers, the type of the
account, and the maximum value of the account1 – all information that must by
law be reported to the Commissioner of Internal Revenue. 31 C.F.R. §§ 1010.350,
1010.420. Doe did not comply. The government moved to compel Doe to
produce the documents and Doe continued to resist. The district court granted
the government’s motion. Subpoena Dated February 2, 2012, 908 F. Supp.2d 348.
Doe still refused to comply, and thereafter the district court entered an order
holding Doe in contempt for failure to produce the records. The court imposed a
sanction (suspended pending his appeal) of $1,000 per day until he complies.
1 Specifically, the grand jury’s subpoena requested production of:
Any and all records required to be maintained pursuant to 31 C.F.R. § 1010.420 (formerly 31 C.F.R. § 103.32) for the past 5 years relating to foreign financial bank, securities, or other financial accounts in a foreign country for which [Doe] had/ha[s] a financial interest in, or signature or other authority over and [is] required by law to file a Report of Foreign Bank and Financial Account (FBAR). The records required to be maintained pursuant to 31 C.F.R. § 1010.420 (formerly 31 U.S.C. § 103.32) include records that contain the name in which each such account is maintained, the number or other designation of such account, the name and address of the foreign bank or other person with whom such account is maintained, the type of such account, and the maximum value of each such account during the reporting period.
4 Discussion
Doe contends that the Fifth Amendment insulates him from a contempt
order based on his refusal to comply. He claims that the grand jury’s subpoena
requires him either to produce documents that might incriminate him or to
confirm that he failed to register his foreign bank accounts, which itself could be
incriminating. The government counters that while Doe might otherwise have
legitimate Fifth Amendment concerns, the subject documents are records
required by federal law, and that the government has a legitimate regulatory
interest in requiring Doe, and others like him, to maintain records of offshore
accounts. Accordingly, the government contends, it is entitled to demand that
Doe produce the records. Thus, we are presented with the question of whether
the subpoenaed records fall within the aptly named “required records” exception
to the Fifth Amendment act of production privilege. We hold that it does.
I. The Act of Production Privilege under the Fifth Amendment
The Fifth Amendment act of production privilege was first articulated in
Fisher v. United States, 425 U.S. 391 (1976). Fisher recognizes that the Fifth
Amendment privilege might protect an individual from being required to
produce documents, even if the documents’ contents are not protected by the
5 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.
In Fisher the Court addressed a consolidated challenge by two clients
whose lawyers were compelled to produce their tax records. Accountants had
prepared each client’s tax records and given them to their respective clients, who
in turn gave them to their attorneys for legal advice. 425 U.S. at 394. The Court
held:
The act of producing evidence in response to a subpoena . . . has communicative aspects of its own, wholly aside from the contents of the papers produced. Compliance with the subpoena tacitly concedes the existence of the papers demanded and their possession or control by the taxpayer. It also would indicate the taxpayer’s belief that the papers are those described in the subpoena.
Id. at 410. In Fisher, the only incriminating aspect of the documents was their
content, not their existence. Id. at 412. As a result, the privilege did not apply.
The Fisher Court noted that previously the “proposition that the Fifth
Amendment prevents compelled production of documents over objection that
such production might incriminate stem[med] from Boyd v. United States, 116 U.S.
616 [(1886)].” 425 U.S. at 405. However, the Court described Boyd’s protections
6 of private papers – heavily dependent on the theory that the privacy interests
protected in the Fourth Amendment also figure in Fifth Amendment inquiries –
as “a rule searching for a rationale consistent with the proscriptions of the Fifth
Amendment against compelling a person to give ‘testimony’ that incriminates
him.” Id. at 409. Instead of reaffirming Boyd’s private / public distinction, Fisher
articulated a new way of thinking about the Fifth Amendment privilege.2
Over 24 years after Fisher, the Court articulated a robust act of production
privilege in United States v. Hubbell, a wire fraud prosecution stemming from the
Whitewater investigation. 530 U.S. 27 (2000). Hubbell resisted initial subpoenas
by asserting his Fifth Amendment rights; the government granted him use
immunity for the act of production and then indicted him based on the content –
rather than the production – of the 13,120 pages of documents that he produced.
Id. at 45. The Court held that the content of the documents could not be used
2 The precise extent to which Fisher and subsequent cases constituted a repudiation of Boyd and its reasoning is debated, but scholars appear to agree that the Court sought to find similar constitutional protections without relying on Boyd’s analysis. Compare Samuel A. Alito, Jr., Documents and the Privilege against Self‐ Incrimination, 48 U. PITT. L. REV. 27, 51 (1986) (“While seeming to reject the entire framework on which Boyd rested, Fisher stopped short of expressly overruling Boyd) with RONALD JAY ALLEN ET AL., COMPREHENSIVE CRIMINAL PROCEDURE 308 (2d ed. 2005) (“The Court continued its reconstruction of Boyd in Fisher v. United States.”).
7 against Hubbell, in light of the testimonial nature of Hubbell’s extensive efforts in
identifying and producing them. Id. at 43‐46.
The documents did not magically appear in the prosecutor’s office like ‘manna from heaven.’ They arrived there only after respondent asserted his constitutional privilege, received a grant of immunity, and‐under the compulsion of the District Court’s order‐took the mental and physical steps necessary to provide the prosecutor with an accurate inventory of the many sources of potentially incriminating evidence sought by the subpoena.
Id. at 42. The Court differentiated Fisher, where “the IRS knew [that the
subpoenaed documents] were in the possession of the taxpayers’ attorneys.” Id.
at 44. In Hubbell, the government had “not shown that it had any prior
knowledge of either the existence or the whereabouts of the 13,120 pages of
documents ultimately produced by respondent.” Id. at 45. “It was
unquestionably necessary for respondent to make extensive use of ‘the contents
of his own mind’ in identifying the hundreds of documents responsive to the
requests in the subpoena.” Id. at 43 (quoting Curcio v. United States, 354 U.S. 118,
128 (1957)). The government was therefore forbidden to use even the contents of
the records and the court affirmed the dismissal of the indictment. Id. at 46.
The privilege has thus evolved since its inception to a broader prophylactic
regime that, in certain circumstances, protects individuals from producing
8 documents where they are incriminated by the contents of the documents. See id.
As applied, the privilege is practical; it inoculates people from being forced to
contribute to their own prosecution while not unduly restricting grand juries’
ability to seek the truth. Doe argues – and the government does not
meaningfully contest – that absent an exception, the act of production privilege
shields Doe from complying with the grand jury’s subpoena.
II. The Required Records Doctrine
A. Background
1. Origins and Interpretations
The act of production privilege contains exceptions, and among them is the
required records doctrine, first articulated in Shapiro v. United States, 335 U.S. 1
(1948). The required records exception applies only when the Fifth Amendment
privilege would otherwise allow a witness to avoid producing incriminating
documents. It abrogates the protection of the privilege for a subset of those
documents that must be maintained by law.
Shapiro was a prosecution of a fruit purveyor for illegal pricing under the
Emergency Price Control Act during the Second World War. Id. at 3. Shapiro,
the wholesaler, was served with a subpoena in September 1944 for invoices and
9 other business information “required to be kept pursuant to [Section 14 of
Maximum Price Regulation 426, 8 Fed. Reg. 9546 (1943)] 271 and 426.” Id. at 4‐5.
Although the Court acknowledged “that there are limits which the government
cannot constitutionally exceed in requiring the keeping of records which may
be . . . used in prosecuting statutory violations committed by the record‐keeper
himself,” the Court nonetheless compelled un‐immunized disclosure of these
documents. Id. at 32.
Subsequently, the Court set forth a three‐factor test to determine whether
documents are “required records.” “[F]irst, the purposes of the United Statesʹ
inquiry must be essentially regulatory; second, information is to be obtained by
requiring the preservation of records of a kind which the regulated party has
customarily kept; and third, the records themselves must have assumed ‘public
aspects’ which render them at least analogous to public documents.” Grosso v.
United States, 390 U.S. 62, 67‐68 (1968).
In Grosso’s sister case, the Court applied the three‐factor test to find the
required records exception inapplicable. Marchetti v. United States, 390 U.S. 39
(1968). Marchetti asserted his Fifth Amendment privilege in response to a
prosecution under a statutory scheme that required illegal gamblers to register
10 and pay an occupational tax. Id. at 41 (1968); see also Grosso, 390 U.S. at 64.
Marchetti was not inclined to disclose his illegal gambling for good reason. By
maintaining receipts of his illegal gambling successes (or failures) he admitted to
a crime. Those who break the law understandably are unlikely to register their
misdeeds with the government.
Even assuming that the “United States’ principal interest [was] the
collection of revenue, and not the punishment of gamblers,” the Court found that
Shapiro was distinguishable. Marchetti, 390 U.S. at 57. The records were not “of
the same kind as he has customarily kept;”3 there were no “public aspects . . . to
the records at issue;” and the records were collected about a group largely or
entirely defined by their illegal activities. Id. (internal quotation marks omitted);
see also Grosso, 390 U.S. at 68 (deciding the same thing in the context of a
gambler’s refusal to pay excise taxes and the occupation tax because “[h]ere, as in
Marchetti, the statutory obligations are directed almost exclusively to individuals
inherently suspect of criminal activities”). Marchetti’s refusal to comply with the
3 Indeed, it seems plausible that a gambler would not keep any records relating to his gambling activities. The Court needed only to note that the information required was “unrelated to any records which [Marchetti] may have maintained[] about his wagering activities.” Marchetti, 390 U.S. at 57.
11 statute was protected by the Fifth Amendment and not subject to the required
records exception. Id. at 60. His conviction was overturned.
2. Interaction with the act of production privilege
Doe and amicus contend that the required records doctrine is no longer
valid or that it applies only in exigent circumstances. To support this argument,
they point out that Shapiro was a wartime case that drew heavily on the reasoning
of Boyd v. United States, 116 U.S. 616 (1886), which has been either reconfigured or
abrogated by the Fisher line of cases. Prior precedents of this Court squarely
foreclose this argument.
Courts have consistently applied the required records doctrine and its
analytical framework as an exception to the Fifth Amendment privilege, long
after the expiration of any exigency. See, e.g., Baltimore City Dep’t of Social Servs. v.
Bouknight, 493 U.S. 549, 556‐559 (1990). This Court has twice explicitly rejected
the idea that the required records exception has been abrogated by the act of
production cases. In re Two Grand Jury Subpoenae Duces Tecum Dated Aug. 21,
1985, 793 F.2d 69, 73 (2d Cir. 1986) (“Two Subpoenae”); In re Doe, 711 F.2d 1187,
1192‐93 (2d Cir. 1983).
12 A psychiatrist associated with a clinic that freely distributed quaaludes to
patients without medical need was required to turn over subpoenaed W‐2 and
prescription forms along with patient files. In re Doe, 711 F.2d at 1189.
Conceding that “even Shapiro recognizes constitutional limits on the
government’s power to compel record keeping which might circumvent the
privilege contained in the Fifth Amendment,” we held that “there [wa]s a strong
correlation between the purpose of the New York law which require[d] that
patient files be kept and that for which their production [wa]s sought.” Id. at
1192. Finally, we rejected the argument that the act of production privilege
recognized in Fisher shielded the state‐required records from disclosure:
[T]he required records doctrine is an exception to the Fifth Amendment privilege. As such, it necessarily overrides the privilege in instances in which the privilege would otherwise apply. Fisher was not concerned with required records and nothing in its analysis could be construed as weakening the required records exception.
Id. at 1192‐93 (emphasis in original, internal citations omitted).
Three years later, an attorney appealed a contempt order entered because
of his failure to comply with subpoenas related to contingency fee arrangements
with his clients. Two Subpoenae, 793 F.2d at 70. After noting that the fee
documents were not covered by the attorney‐client privilege, this Court rejected
13 the lawyer’s Fifth Amendment argument based in part on the fact “that the
subpoenaed retainer agreements and closing statements . . . fall within the
‘required records’ exception to the fifth amendment.” Id. at 73. Although the
lawyer “claim[ed] that the ‘required records’ exception to the fifth amendment is
no longer valid after the Supreme Court’s decision in United States v. Doe, 465
U.S. 605 [(1984)],” we noted that “Doe did not involve required records, and
[found] nothing in its ‘act of production’ analysis that c[ould] be construed as
weakening the required records exception.” Id. (internal citation omitted). We
further explained the rationale for the required records exception:
First, if a person conducts an activity in which record‐keeping is required by statute or rule, he may be deemed to have waived his privilege with respect to the act of production – at least in cases in which there is a nexus between the government’s production request and the purpose of the record‐keeping requirement. Second, because the records must be kept by law, the record‐holder ‘admits’ little in the way of control or authentication by producing them.
Two Subpoenae, 793 F.2d at 73.4
4 Doe argues that the rationale for the survival of the required records doctrine does not apply in his case. However, we view this argument as relating to the applicability of the exception to his current case. Insofar as his attempt to distinguish Two Subpoenae challenges the continued existence of the required records exception, this argument has been squarely foreclosed by our prior precedents.
14 Based in part on the Two Subpoenae reasoning, this Court still recognizes
the required records exception. In 2008, we applied the exception to information
obtained from immigrants from specified countries who had responded to a
mandatory registration program following the attacks of September 11, 2001. See
Rajah v. Mukasey, 544 F.3d 427, 433, 442 (2d Cir. 2008). Information obtained
under this program was ultimately used by the government in the immigrants’
deportation proceedings. This Court denied the immigrants’ attempts to block
the use of the records through the Fifth Amendment because “the Fifth
Amendment’s act of production privilege does not cover records that are
required to be kept pursuant to a civil regulatory regime.” Id. at 442. The
required records exception remains a part of Fifth Amendment jurisprudence.
B. Application of the Required Records Doctrine to the BSA
Applying the Grosso test, several circuits have specifically held that the
required records exception applies to cases indistinguishable from the present
cases. See United States v. Under Seal, – F.3d —, No. 13‐4267 (4th Cir. Dec. 13,
2013); In re Grand Jury Proceedings, No. 4‐10, 707 F.3d 1262 (11th Cir. 2013); In re
Grand Jury Subpoena, 696 F.3d 428 (5th Cir. 2012); In re Special February 2011‐1
Grand Jury Subpoena Dated September 12, 2011, 691 F.3d 903 (7th Cir. 2012); In re
15 M.H., 648 F.3d 1067 (9th Cir. 2011). For the reasons stated below, we agree with
our sister circuits.
1. The “essentially regulatory” test
The first Grosso prong asks whether the record requirement is “essentially
regulatory.” This precludes Congress from circumventing the Fifth Amendment
privilege by enacting comprehensive legislation “directed at a ‘selective group
inherently suspect of criminal activities.’” Marchetti, 390 U.S. at 57 (quoting
Albertson v. Subversive Activities Control Bd., 382 U.S. 70, 79 (1965)). When
legislation is not “directed at the public at large” and concerns “an area
permeated with criminal statutes,” courts are more likely to hold that the
required records exception does not apply. Albertson, 382 U.S. at 79. In addition
to illegal gambling, courts have declined to apply the required records exception
to records regarding marijuana sales, ownership of dangerous firearms, and
other “area[s] permeated with criminal statutes,” Haynes v. United States, 390 U.S.
85, 99 (1968) (internal quotation marks omitted), but have applied the exception
in the context of drivers involved in automobile accidents, custodians of state‐
supervised children, and even various sections of the BSA.
16 Determining the target population of a statute is frequently difficult. In
California v. Byers, 402 U.S. 424, 430 (1971), the Supreme Court examined a
California statute in the context of “all persons who drive automobiles in
California,” despite the statute’s facial applicability only to people who have
been involved in automobile accidents resulting in damage to property. Id.
“Driving an automobile, unlike gambling, is a lawful activity. Moreover, it is not
a criminal offense under California law to be a driver ‘involved in an accident.’”
Id. at 431.
Similarly, this Court upheld a conviction under the BSA for failure to
report carrying over $5,000 in cash when leaving the country. United States v.
Dichne, 612 F.2d 632, 633 (2d Cir. 1979). We noted that the reporting requirement
had incriminating potential while also serving legitimate social interests; as a
result, “a balance must be struck between the competing interest of the state and
the individual when evaluating the constitutionality of a disclosure
requirement.” Id. at 638 (citing Byers, 402 U.S. at 427). Because “the
transportation of such amounts of currency is by no means an illegal act” in itself,
“as such [the statute] cannot be faulted as being aimed at an inherently suspect
group.” Id. at 639‐40. “In each of the Supreme Court cases holding a reporting
17 requirement invalid, the reporting individual was required to reveal to the
Government information which would almost necessarily provide the basis for
criminal proceedings against him for the very activity that he was required to
disclose.” Id. at 640. Insofar as transporting large amounts of money across
international borders is indicative of other illegal activity, this is still short of
requiring reporting from users of marijuana or gamblers, who would be
reporting the exact activity for which they would be susceptible for prosecution.
Dichne and other cases concluding that the BSA’s purpose is “essentially
regulatory” are informative but not dispositive with respect to the provisions at
issue here. Our inquiry is not whether the BSA as a whole was motivated by civil
or criminal concerns, but rather whether the specific section in question is
“essentially regulatory” or directed at “‘an area permeated with criminal
statutes.’” Byers, 402 U.S. at 430 (quoting Albertson, 382 U.S. at 79).
The record keeping regulation at issue here, 31 C.F.R. § 1010.420, targets
those engaged in the lawful activity of owning a foreign bank account. “There is
nothing inherently illegal about having or being a beneficiary of an offshore
foreign bank account.” M.H., 648 F.3d at 1074. Doe’s protestations
notwithstanding, owners of these accounts are not “inherently suspect” and the
statute is “essentially regulatory.”
18 Doe’s argument that the statute is criminally focused has some force. The
BSA declares that its purpose is “to require certain reports or records where they
have a high degree of usefulness in criminal, tax, or regulatory investigations or
proceedings, or in the conduct of intelligence or counterintelligence activities,
including analysis, to protect against international terrorism.” 31 U.S.C. § 5311.
It does list “criminal investigations” first, but this multifaceted statute clearly
contributes to civil and intelligence efforts wholly unrelated to any criminal
purpose.5
5 Doe points out that the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) lists the BSA as one of the tools that it uses to pursue its goals of criminal investigation. It is neither surprising nor persuasive that a law enforcement organization uses a multi‐purposed statute for law enforcement ends. We assume that insofar as the Central Intelligence Agency uses the BSA, it uses it for intelligence and counter‐intelligence purposes, while the Internal Revenue Service uses it for revenue collection purposes. Doe asserts that “[t]he government has never pointed to a ‘regulatory’ act that FinCEN performs with FBAR [Report of Foreign Bank and Financial Account] data.” Doe Brief at 35. However, other agencies also use the data obtained through the challenged reports:
The Treasury Department shares the information it collects pursuant to the Act’s requirements with other agencies—including the Office of the Comptroller of the Currency, the Consumer Financial Protection Bureau, the Federal Reserve Board, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of Thrift Supervision—none of which are empowered to bring criminal prosecutions.
Grand Jury Proceedings, No. 4‐10, 707 F.3d at 1271 (quoting Grand Jury Subpoena, 696 F.3d at 434).
19 Although portions of the statute’s legislative history support Doe’s
characterization of the BSA as focused on criminal activity, “[t]he Supreme Court
has already considered and rejected these arguments as they relate to the BSA
generally.” M.H., 648 F.3d at 1074 (citing Cal. Bankers’ Ass’n v. Shultz, 416 U.S. 21,
76‐77 (1974)). Moreover, “the question is not whether Congress was subjectively
concerned about crime when enacting the BSA’s recordkeeping and reporting
provisions, but rather whether these requirements apply exclusively or almost
exclusively to people engaged in criminal activity.” Grand Jury Proceedings, No. 4‐
10, 707 F.3d at 1271; accord Grand Jury Subpoena, 696 F.3d at 434. Looking beyond
“Congressional subjective intent” – if there could be such a thing – the BSA has
considerable regulatory utility outside of the criminal justice context.
The question becomes whether a statute with mixed criminal and civil
purposes can be “essentially regulatory” with respect to the required records
exception. We agree with our sister circuits: the fact “[t]hat a statute relates both
to criminal law and to civil regulatory matters does not strip the statute of its
status as ‘essentially regulatory.’” Grand Jury Proceedings, No. 4‐10, 707 F.3d at
1270. Because people owning foreign bank accounts are not inherently guilty of
criminal activity, the BSA’s applicable recordkeeping requirement, designed to
20 facilitate “criminal, tax, or regulatory investigations or proceedings, or [] the
conduct of intelligence or counterintelligence activities,” 31 U.S.C. § 5311, is still
essentially regulatory.
Doe argues that our reliance on Dichne and other cases involving ex post
challenges to the validity of statutory reporting requirements are distinguishable
from individual assertions of the privilege against self‐incrimination. These two
categories of challenges are indeed distinct. However, Supreme Court precedent
asks us to inquire into the purposes of the regulatory scheme pursuant to which
records are required – a necessarily generalized inquiry, and a matter discussed
in cases like Dichne. 612 F.2d at 640. Besides, in this case – as in Shapiro itself –
the witness asserted the privilege against self‐incrimination in response to the
subpoena issued. See Shapiro, 335 U.S. at 4‐5. “Shapiro did more than set the
constitutional parameters for record‐keeping requirements; it determined that the
Fifth Amendment is not a barrier to the enforcement of a valid civil regulatory
scheme.” Special February 2011‐1 Grand Jury Subpoena Dated September 12, 2011,
691 F.3d at 907. The fact that the specific records sought would support a
criminal prosecution did not defeat the “essentially regulatory” prong in that
case; the analysis does not come out differently here. The BSA’s recordkeeping
21 requirement at issue, 31 C.F.R. § 1010.420, is “essentially regulatory” for the
purposes of the required records analysis.
2. The “customarily kept” requirement
The second Grosso prong requires that the regulated “information is to be
obtained by requiring the preservation of records of a kind which the regulated
party has customarily kept.” Grosso, 390 U.S. at 68.6 Doe points to no cases in
which any court has held that records are not required because they are not
“customarily kept.”
The records required by 31 C.F.R. § 1010.420 are very basic – they “shall
contain the name in which each [] account is maintained, the number or other
designation of such account, the name and address of the foreign bank or other
person with whom such account is maintained, the type of such account, and the
maximum value of each such account during the reporting period.” In
determining that the records at issue are “customarily kept,” the district court
6 Citing Bouknight, the Government urges us to hold that this is no longer a requirement of the required records doctrine. Although Bouknight did not discuss the second Grosso prong, it was an atypical “required records” case that does not dictate our analysis here, as the regulated “evidence” was Bouknight’s infant. See 493 U.S. at 556‐ 62. Perhaps the Bouknight Court did not feel it necessary to discuss whether a child is “customarily kept” by his parents. We need not decide this issue for the purposes of this opinion as the “customarily kept” prong is easily met here.
22 relied in large part on the fact that another section of the BSA requires foreign
account holders to report substantially identical information to the IRS. See 31
C.F.R. § 1010.350(a). Doe contends that this reasoning is “tautological” in that it
permits Congress to manufacture a “custom” in order to satisfy the required
records doctrine by requiring that the records be kept. We need not address
whether, in another case, records “customarily kept” only because they are
required by law satisfy the prerequisites of the required records doctrine.
Here, the grand jury’s subpoena seeks information so basic that the
“argument that these records are not ‘customarily kept’ is a non‐starter.” Grand
Jury Proceedings, No. 4‐10, 707 F.3d at 1273. “A bank account’s beneficiary
necessarily has access to such essential information as the bank’s name, the
maximum amount held in the account each year, and the account number.”
M.H., 648 F.3d at 1076. “[C]ommon sense” dictates that beneficiaries keep these
records “in part because they need the information to access their foreign bank
accounts.” Id. The amount of money in the account is relevant to most foreign
bank account holders in that many people are regularly forced to assess
prospective purchases against the balance of their accounts. Most people check a
bank account before making a major purchase; not everyone who holds a foreign
23 bank account could, without a second thought, incur (for example) vast litigation
costs in a feckless attempt to avoid paying lawfully‐imposed taxes vital to the
functioning of the United States without needing to assess whether losing such a
challenge would leave them incapable of paying the inevitable hefty sanctions.
And even if the account holder is a person of great wealth surely they want to
know where that wealth is located.
Doe believes that, despite the basic presumption that bank account owners
know the location of their money, some individuals engaged in wrongdoing are
advised not to keep even this basic information.7 But even if those who possess
foreign bank accounts for the purposes of avoiding some specific U.S. tax or
criminal laws may be less likely to maintain these records, the BSA covers the
entire group of foreign bank account holders. We decline to look at the custom of
only the miscreants among the larger group of foreign bank account holders.
3. The “public aspects” prong
The third Grosso prong asks whether the required records “‘have assumed
‘public aspects’ which render them at least analogous to public documents.’”
7 Even if we were to look at only the customs of criminal circles, if a criminal don’t have this information, how can he retrieve his ill gotten gains? He must either possess a photographic memory or well‐encrypted devices hidden in some offshore location.
24 Grand Jury Proceedings, No. 4‐10, 707 F.3d at 1273 (quoting Grosso, 390 U.S. at 68).
The parties dispute the meaning of the “public aspects” test, which – as a vestige
of Boyd – may not have the same legal significance as it did in 1948, when the
public / private distinction was of paramount importance. Cf. Fisher, 425 U.S. at
400‐01, Samuel A. Alito, Jr., Documents and the Privilege against Self‐Incrimination,
48 U. PITT. L. REV. 27, 36‐44 (1986).
Doe urges us to hold that the test requires one of three factors: records
have “public aspects” when they “are a direct mainstay of a regulatory scheme
that promotes the public welfare,” “are vital to a regulatory regime promulgated
in response to emergency or other exigent conditions,” or “are routinely
forwarded to a regulatory or licensing body as a means of protecting the public.”
Doe Brief at 49‐50. Although he cites to authority in support of the proposition
that each of these is sufficient to establish “public aspects,” we see no evidence
that one of these three prongs must be met to conclude that the records have a
“public aspect.”
“The Government’s anxiety to obtain information known to a private
individual does not without more render that information public. Nor does it
stamp information with a public character that the Government has formalized
25 its demands in the attire of a statute.” Marchetti, 390 U.S. at 57. Marchetti restricts
Congress’s ability to require records for the purpose of securing access to
otherwise‐private information. However, “records required to be kept pursuant
to valid regulatory programs have a ‘public aspect’ for purposes of constitutional
analysis, and thus are not private papers entitled to the protection of the fourth or
fifth amendments.” Donovan v. Mehlenbacher, 652 F.2d 228, 231 (2d Cir. 1981).
“Where personal information is compelled in furtherance of a valid regulatory
scheme, as is the case here, that information assumes a public aspect.” M.H., 648
F.3d at 1077.
The rule distilled from Donovan and Marchetti is that records required to be
created under an otherwise valid regulatory regime necessarily have “public
aspects” for purposes of the required records exception to the Fifth Amendment
production privilege. A constitutionally infirm statute cannot recharacterize
private information as public. However, information that a statute lawfully
requires a person to record is legally distinct from information that no statute
lawfully requires anyone to record. This distinction is what the “public aspects”
prong of the required records doctrine recognizes. The record need not be
‘public’ in that anyone can examine or copy it at any time; it need only be
lawfully required to be kept.
26 Doe’s argument that the exception applies only in areas in which there are
already “substantive restrictions” in place is unpersuasive. “If the witness’s
argument were correct, then Congress would be prohibited from imposing the
least regulatory burden necessary; it would instead be required to supplement a
reporting or recordkeeping scheme with additional and unnecessary ‘substantive
restrictions’ for the sole purpose of upholding its record keeping and reporting
requirements.” Grand Jury Subpoena, 696 F.3d at 436. It is enough that Congress
could prohibit an activity to permit it to validly require records to be kept; it need
not actively prohibit – or otherwise significantly restrict – possession of foreign
bank accounts to give force to its recordkeeping requirements.
The BSA is an otherwise‐valid regulatory scheme that lawfully requires
beneficiaries of foreign bank accounts to retain records containing the basic
information about their accounts. 31 C.F.R. § 1010.420. This information,
required by lawful statute, has the “public aspects” that make it potentially
subject to a grand jury subpoena in a case where a witness could assert the Fifth
Amendment privilege to shield more distinctly private information. The
“required records” exception to the privilege therefore applies in this case.
***
27 Doe’s additional arguments are unpersuasive. Doe asserts that
production of records required to be kept may be compelled only when the
record keeper sought a related government benefit or license and thus may fairly
be said to have deliberately waived her Fifth Amendment privilege with respect
to those records by engaging in the regulated activity. He declares that the Fifth
Amendment cannot inadvertently be waived, and because (he asserts)
beneficiaries of foreign bank accounts are frequently unaware of the BSA’s
recordkeeping requirements, they cannot be deemed to have waived their Fifth
Amendment rights with respect to banking records .
Even if the latter assertion (regarding ignorance of the law’s recordkeeping
requirements) were true – a proposition that we seriously doubt – this argument
fails for two reasons. First, the Supreme Court has strongly hinted that, while a
waiver must be voluntary, there is no requirement “of any ‘knowing’ and
‘intelligent’ waiver” of Fifth Amendment rights. Schneckloth v. Bustamonte, 412
U.S. 218, 237 n.18 (1973). Second, the Fifth Amendment is inapplicable where the
testimonial act does not create a related risk of self‐incrimination. Because the
BSA only criminalizes a knowing and willful failure to engage in the required
recordkeeping, an account owner who was truly unaware of the recordkeeping
28 requirement would not incur related criminal sanctions by acknowledging in
response to a production order his negligent failure to maintain the required
records.8 31 U.S.C. § 5322. Thus, for the criminal provisions to apply in the first
place, this must be a case where an “individual [] enters upon a regulated activity
knowing that the maintenance of extensive records available for inspection by the
regulatory agency is one of the conditions of engaging in the activity.” Smith v.
Richert, 35 F.3d 300, 303 (7th Cir. 1994).
Finally, Doe’s assertion that the government could obtain his records only
by granting him immunity relies on the inapplicability of the required records
exception; here, production of the required records could be compelled without
first offering Doe immunity.
Conclusion
The required records exception to the Fifth Amendment privilege against
self‐incrimination still exists. The BSA’s requirements at issue here are
“essentially regulatory,” the subpoenaed records are “customarily kept,” and the
8 Although it is not necessary to our resolution of this case in which Doe has not alleged ignorance of the BSA’s recordkeeping requirements, the government’s brief acknowledges that “an individual who was unaware that he was engaging in a regulated activity would not be able to establish a risk of self‐incrimination in the first place.” Appellee Brief at 38 n.17.
29 records have “public aspects” sufficient to render the exception applicable.
Because Doe cannot lawfully excuse his failure to comply with the subpoena, the
district court was within its discretion to impose sanctions for his non‐
compliance.
For the foregoing reasons, the opinion and order of the district court is