The opinion of the court was delivered by: ARTHUR SPATT, District Judge
MEMORANDUM OF DECISION AND ORDER
This decision concerns a motion pursuant to Rule 17(c) of the
Federal Rules of Criminal Procedure ("Fed.R.Crim.P.") by
non-party CIT Group, Inc. ("CIT") to quash the Subpoena ducus
tecum (the "Subpoena") served by RW Professional Leasing Services
Corp. ("RW"). In the alternative, CIT seeks to limit or modify
On or about April 2, 2003, RW was indicted and charged, along
with other defendants, with conspiracy to commit bank fraud and
wire fraud, and with committing bank fraud, and money laundering.
According to the superseding indictment filed on March 4, 2004,
RW was a closely held corporation that arranged financing for
medical providers to lease equipment and offered working capital
loans to medical providers. To provide these services, RW
obtained loans from financial institutions for the purported
purpose of purchasing medical equipment that would be leased to
medical providers. In many instances, the leases and the medical
equipment served as collateral for the loans.
The indictment charges that RW devised a scheme that involved
submitting sham documentation to financial institutions in order
to create the false impression that RW was providing leases for
its customers. It is further alleged that RW issued phony
equipment invoices directly to the medical providers in order to
receive payments that should have gone directly to the lending institutions. Instead of
submitting the medical provider's lease payments to the lending
institutions, it is alleged that RW would intentionally retain
the lease payments. In addition, it is alleged that RW concealed
prepayments and defaults of medical providers by creating false
checks that were designed to make it appear as though the medical
providers were continuing to make payments under their leases.
Newcourt Leasing Corporation ("Newcourt"), formerly known as
AT&T Capital Leasing Services, Inc. ("AT&T Capital"), was one of
the lending institutions that RW dealt with in these financial
transactions. CIT, the non-party and movant in this dispute, is
the successor to Newcourt. Beginning in 1992, RW was one of
approximately 30 other lease originators that participated in a
leasing arrangement with AT&T Capital known as the "Private Label
Program." This program allowed lease originators to arrange all
aspects of a capital lease and then present it to AT&T Capital
for funding. This included originating the leases; approving
applications; generating lease documents; and approving all
vendors, brokers, and end-users. After preparing the lease, the
lease originator would then present the leases to AT&T Capital.
If AT&T Capital decided to become the funding source it would
purchase the lease contract for a discounted price.
Through the Private Label Program, AT&T Capital was assigned
leases by RW and was granted a continuing security interest in
all equipment included in those leases, but it did not assume any of RW's obligations or duties.
At one point during their business relationship, the RW portfolio
of leases funded through AT&T's Capital exceeded $53 million and
included more than 1,300 lessees.
In August 1995, AT&T and RW ceased doing additional business
with each other but RW continued to manage and service the leases
that remained affiliated with AT&T. In that same year, CIT
succeeded AT&T Capital and withdrew the remaining leases that
were being serviced by RW. It is further alleged that when CIT
introduced itself to the lessees of these leases it became aware
of the apparent conversion of CIT's funds and the fraudulent and
wrongful action of RW and its principals as detailed in the
In 1996, RW commenced a law suit in Nassau County Supreme Court
against CIT (the "state action") alleging certain contract claims
related to the withdrawal of the leases. In this action CIT
brought several counterclaims against RW and its principals
asserting, among other things, fraud, misrepresentation,
conversion, and a request for a permanent injunction. The state
action lasted for seven years. In April 2003, the state action
was settled after the commencement of the criminal proceeding
There was extensive discovery by and between CIT and RW in the
state action. CIT asserts that it responded to fourteen separate
document demands and three separate sets of interrogatories
propounded by RW. CIT also states that no less than eighty-eight banker's boxes of documents were exchanged. The
documents that RW sought in the initial proceeding were retrieved
by CIT from computer databases that have been in use since 1992.
In order to comply with discovery, CIT had to employ a computer
consultant to write computer programs that could extricate the
necessary information from these databases. This consultant was
employed at the expense of CIT so that they could comply with
RW's discovery demands.
On August 25, 2004 RW filed the Subpoena with the Deputy Clerk
of the United States District Court for the Eastern District of
New York. The Subpoena consists of twenty-one document requests.
On November 11, 2004, CIT filed the instant motion to quash the
Subpoena arguing that it should not be compelled to comply
because the requests are general and unspecific. In addition, CIT
claims that many of the documents sought by the Subpoena are not
relevant and are inadmissible.
In particular, CIT states that they should not have to
re-produce the documents that were exchanged during discovery in
the state action because they were either already produced and
provided by CIT to RW, or produced to CIT by RW. CIT also asserts
that the document requests consist of only generalized and
unspecified demands that would result in the production of every
document ever created, generated, or received in relation to RW's
1,300 leases funded by AT&T. CIT contends that fourteen of RW's
requests for documents lack specificity; are overly broad; and
fail to focus on the events where RW is alleged to have engaged
in fraudulent and wrongful activities. In addition, according to CIT
many of the requests seek company wide information that is wholly
irrelevant to RW and its criminal litigation.
CIT also claims that the Subpoena served upon it is
unreasonable and oppressive. CIT asserts that the requests were
not made in good faith and therefore constitute a "fishing
expedition." It further states that any production of documents
in accordance with the Subpoena should properly be limited to
those relevant documents which pertain to the accounts relating
to the alleged fraudulent and wrongful activities of RW and its
RW concedes that certain documents were provided during the
state action, and that those documents need not be re-produced.
However, RW claims that CIT did not fully comply with RW's
discovery requests in the state action, and therefore, in that
respect the Subpoena in the criminal action does not request
duplicative material. RW also claims that CIT has not, in these
motion papers, provided any specific information as to what
documents it has already produced in response to RW's requests.
RW proposes that CIT provide it with a Bate-stamp number and a
certificate of authenticity for all the documents it has already
produced so that the information may be admissible as evidence
under Rule 803(6) of the Federal Rules of Evidence. RW also
argues that many of the documents produced in the state action by
CIT were substantially redacted and that CIT should not be
entitled to make such redactions in this criminal case ...