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In re N.D.N.Y. Grand Jury Subpoena 86-0351-S

decided: February 4, 1987.

IN RE N.D.N.Y. GRAND JURY SUBPOENA # 86-0351-S; UNITED STATES OF AMERICA, APPELLEE
v.
A GRAND JURY WITNESS, APPELLANT



Appeal from a judgment of civil contempt entered by the United States District Court for the Northern District of New York, Thomas J. McAvoy, Judge, for the appellant's refusal to sign a "Consent Directive".

Author: Pratt

Before: LUMBARD, KEARSE, and PRATT, Circuit Judges.

PRATT, Circuit Judge:

Lee Alexander challenges on various grounds the judgment of the United States District Court for the Northern District of New York, Thomas J. McAvoy, Judge, holding him in contempt for failure to comply with the court's order to sign a "Consent Directive" designed to allow the government access to records of alleged transactions by Alexander with foreign financial institutions. We recognize that so-called "off-shore" and other foreign banking institutions present frustrating roadblocks to the government's efforts to enforce our tax and criminal laws, and we sympathize with the government's desire to develop and effective vehicle for limiting the utility of such accounts for illegally sheltering income. Nevertheless, we sense that there are boundaries to appropriate judicial involvement in these activities, and, because we believe the district court contravened sound judicial policy in this instance, we reverse.

BACKGROUND

Entrusted for sixteen years with serving the public interest as the mayor of Syracuse, New York, Lee Alexander currently stands suspected of improperly using his office to receive kickbacks and other extortionate payments. The alleged scheme involves the use of foreign financial institutions to shield those payments from discovery by domestic authorities. As the target of an ongoing grand jury investigation in to these allegations, Alexander was served with a subpoena duces tecum commanding him to appear before a grand jury with a signed copy of a "Consent Directive" drafted by the United States Attorney for the Northern District of New York. The text of that document provided, in essence, that Alexander authorized any financial institution at which he had an account to disclose that information, including copies of all documents with certificates of authenticity, to any agent or employee of the United States government. The Assistant United States Attorney responsible for presenting this matter to the grand jury frankly stated that the "subpoena is being issued to facilitate the grand jury's securing information from certain foreign financial institutions in which [Alexander] deposited assets which are believed to be proceeds of the extortion/kickback scheme now under investigation".

Alexander moved to quash the subpoena and the district court heard argument by the parties. Apart from a concession by the government to limit to limit the applicability of the document to only foreign financial institutions, the district court denied the motion and ordered Alexander to comply with the subpoena. Including that one amendment, the consent directive at issue on this appeal provides:

I, LEE ALEXANDER, of the State of New York in the United States of America, do hereby authorize and direct any bank, trust company, or other financial institution located outside the territorial United States at which I have or have had an account of any kind, or at which any corporation has or has had an account of any kind upon which I am or have been authorized to draw, to disclose all information and deliver copies of all documents of every nature in the possession or control of such bank, trust company, or other financial institution which relate to any such accounts, together with a certificate attesting to the authenticity of any and all such documents, to any agent or employee of the United States Government who presents a copy of this Consent Directive which has been certified by the Clerk of the United States District Court for the northern District of New York to such bank, trust company, or other financial institution, and this consent directive shall be irrevocable authority for doing so.

This authorization is intended to apply to any and all bank confidentiality laws of any state or nation, and shall be construed as consent with respect thereto as the same may apply to any accounts for which I may be or have been a relevant principal, signatory or beneficiary.

Lee Alexander

Appellant's appendix at A-27.

Alexander appeared before the grand jury, as directed, on December 3, 1986, and executed the "Consent Directive", but only after adding the phrase "executed under protest" above the signature line. Confronted with Alexander's refusal to sign without cautionary language, the government moved the district court to hold in contempt.

At a hearing before the district court that same day, Alexander's counsel argued that his client's execution "under protest" complied with the court's order because it in no way modified the "Consent Directive". Rather, he suggested that the added language did nothing more than ensure that the document was not a false document:

What this man simply said is that he would not sign something that was false. And if he signed it, without appending those words, it would be false because it speaks in terms of consent which is not his consent, he simply ...


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