United States District Court, Eastern District of New York
September 10, 2001
STEPHEN D. SIEGFRIED, PLAINTIFF,
INSPECTOR GENERAL OF THE UNITED STATES DEPARTMENT OF AGRICULTURE, RESPONDENT.
The opinion of the court was delivered by: Spatt, District Judge.
Presently before the Court is a motion by the Stephen D.
Siegfried ("Siegfried" or the "plaintiff") to quash a subpoena
duces tecum number 6357 issued by the United States Department
of Agriculture ("USDA") to Northfork Bank, Mattituck, New York,
pursuant to the Inspector General Act of 1978, 5 U.S.C. app. 3,
§ 6(a)(4), and in accordance with the Right to Financial Privacy
Act of 1978 ("RFPA"), 12 U.S.C. § 3401-3422. The Government
opposes Siegfried's motion on the grounds that: (1) it is
untimely; and (2) the subpoena was properly issued, pursuant to
the RFPA, to secure information relevant to a legitimate law
The following facts are taken from the declaration of Special
Agent ("SA") Ellen Quackenbush of the Office of the Inspector
General ("OIG"), which was submitted in support of the
Government's memorandum of law in opposition to Siegfried's
motion to quash the subpoena.
The Rural Development ("RD") division of the USDA administers
the Rural Housing Loan Program whereby the USDA provides loans
to moderate-income individuals that enable those individuals to
buy houses in rural areas. In issuing these loans, RD
wire-transfers the funds into the escrow account belonging to
the buyer's attorney prior to the closing. On the day of the
closing, the attorney issues a check drawn against the escrow
account to the seller for the total RD loan amount.
According to the Government, in October 2000, Siegfried
represented a client who was purchasing a house through this
program. On October 16, 2000, RD wired the sum of $147,050 to
Siegfried's escrow account at the Bank of New York. The closing
was to occur the following day but was delayed. RD directed
Siegfried to return the funds that had been wired to him, but
Siegfried allegedly failed to return the funds. According to the
papers submitted by the Government, Siegfried still has not
returned the money to RD.
The OIG initiated an investigation into the missing funds and
assigned SA Quackenbush to the case. In her declaration, SA
Quackenbush states that she learned that four days after RD
wired the loan amount to Siegfried's Bank of New York account,
Siegfried transferred the sum of $151,653 from his Bank of New
York account to an account at Northfork Bank in Mattituck, New
York. SA Quackenbush also states that the balance in Siegfried's
Bank of New York account was "minimal" before the wire transfer
from RD. That evidence led SA Quackenbush to believe that the
sum transferred from Siegfried's Bank of New York account to his
Northfork Bank account included the entire amount of the loan
transferred from RD.
On June 25, 2001, in furtherance of the investigation into
Siegfried's involvement in the alleged violations of the Rural
Housing Loan Program, Paula F. Hayes, for Deputy Inspector
General Joyce N. Fleischman, USDA, issued an OIG administrative
subpoena duces tecum numbered 6357. The subpoena was issued to
Northfork Bank in Mattituck, New York and seeks Siegfried's
financial records. On June 28, 2001, SA Quackenbush served
Siegfried, via First Class U.S. Mail, with a copy of the
subpoena, along with the customer notice and challenge forms and
instructions required by the RFPA. On July 6, 2001, SA
Quackenbush served a copy of OIG subpoena 6357, via hand
delivery, on Northfork Bank in New York, New York.
On July 20, 2001, Siegfried filed a notice of motion for an
order pursuant to the customer challenge provisions of the RFPA.
Siegfried claims that the financial records sought by the OIG
are not relevant to the legitimate law enforcement inquiry
stated in the Customer Notice that was sent to him, because (1)
the nature of the alleged violation of the Rural Housing Loan
Program is not set forth with the required specificity; and (2)
the financial records sought pertain to an escrow account
containing funds belonging to people other than Siegfried, and
disclosure of those records would violated those individuals'
rights pursuant to the RFPA. The Rural Development division of
the USDA administers the Rural Housing Loan Program.
The RFPA controls Government access to bank records of
individuals. See 12 U.S.C. § 3401-3422. A customer who wishes
to challenge a subpoena duces tecum must do so within the time
frame set forth in the RFPA. See 12 U.S.C. § 3410(a). The
statute provides, in relevant part:
Within ten days of services or within fourteen days
of mailing of a subpoena, summons, or formal written
request, a customer may file a motion to quash an
administrative summons or judicial subpoena, or an
application to enjoin a Government authority from
obtaining financial records pursuant to a formal
written request, with copies served upon the
12 U.S.C. § 3401(a).
The few courts that have interpreted the procedural aspects of
the RFPA have done
so narrowly. The Supreme Court has found that "[a] customer's
ability to challenge a subpoena is cabined by strict procedural
requirements." Securities and Exchange Comm'n v. Jerry T.
O'Brien, Inc., 467 U.S. 735, 746, 104 S.Ct. 2720, 2726, 81
L.Ed.2d 615 (1984). The Court also that the objections portion
of the statute was drafted in such a way as to minimize any
delay in the agency's investigation. See id. To this end, the
Court noted that a customer wishing to challenge a subpoena
"must assert his claim within a short period of time." Id. A
district court, citing Jerry T. Obrien, has held that "[I]f a
motion to quash is not timely filed . . . a district court does
not have subject matter jurisdiction to hear the challenge."
Mackey v. United States Securities and Exchange Commission,
1997 WL 114801 *1 (Conn. 1997); see Friedman v. Inspector
General, U.S. Dept. of State, 1992 WL 321510, 1 (D.C. 1992)
(holding that "untimeliness is sufficient grounds for denying a
motion to quash").
Applying these standards to the case at hand, the Court finds
that Siegfried's customer complaint — in the form of a motion to
quash the subpoena — is untimely. SA Quackenbush served
Siegfried by First Class U.S. mail on June 28, 2001, with a copy
of the subpoena, forms and instructions on how and when to file
a challenge, as required by 12 U.S.C. § 3405(2). Those
instructions specifically informed Siegfried that if he failed
to file a customer complaint within 14 days of the subpoena was
mailed to him, the records and information sought by the OIG
would be disclosed. Siegfried did not file his customer
complaint — the motion to quash the subpoena — until July 20,
2001, which was 10 days after the 14-day deadline expired. See
12 U.S.C. § 3410(a).
Notably, Siegfried has proffered no reason explaining the
belated filing of his motion. This Court must apply the
procedural requirements of the RFPA strictly, Jerry T. O'Brien,
Inc., 467 U.S. at 746, 104 S.Ct. at 2726, and, in doing so,
finds that Siegfried's motion to quash the subpoena must be
dismissed as an untimely customer challenge. See
12 U.S.C. § 3410(a); Mackey, 1997 WL 114801 at *1 (dismissing motion
challenging subpoena because it was filed sixteen days after the
notice of the subpoena was mailed); Friedman, 1992 WL 321510
at *1 (emphasizing time restrictions of the act and dismissing
untimely motion challenging subpoena); Collins v. Commodity
Futures Trading Comm'n, 737 F. Supp. 1467, 1476 (N.D.Ill. 1990)
(dismissing five motions as untimely, in light of "the strict
procedural requirements which demand prompt action").
In light of the foregoing, it is hereby
ORDERED that the plaintiffs motion to quash the subpoena is
DENIED; and it is further
ORDERED that the Clerk of the Court is directed to close
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