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In re Various Grand Jury Subpoenas

United States District Court, S.D. New York

May 25, 2017

In re VARIOUS GRAND JURY SUBPOENAS

          ORDER

          WILLIAM H. PAULEY III U.S.D.J.

         Respondent Subject E moves to purge her contempt citation. For the reasons that follow, Subject E's motion is denied.

         BACKGROUND

         This is Subject E's third attempt to purge the contempt citation arising from her failure to comply with this Court's February 13, 2013 Memorandum and Order (the "Order"). The tortured history of this proceeding need not be recited in great detail, but resolving what Subject E has termed her "concluding motion to purge contempt" requires a brief discussion of the relevant background.

         On January 24, 2017, this Court held Subject E in civil contempt based on her refusal to respond to a grand jury subpoena seeking foreign bank records. In re Various Grand Jury Subpoenas, 2017 WL 361685 (S.D.N. Y Jan. 24, 2017). To assure full compliance, this Court imposed monetary sanctions of $1, 000 per day. In the weeks that followed, Subject E authorized several foreign banks to release the relevant records to the Government. Based on those authorizations, Subject E filed her first motion to purge contempt, assuring this Court of her full compliance. On February 13, 2017, this Court denied her motion without prejudice. Because Swiss law precluded some of the foreign banks from directly transmitting records to the Government, this Court directed Subject E to find other ways to facilitate the disclosure of those records. In re Various Grand Jury Subpoenas, 2017 WL 564676 (S.D.N.Y.Feb. 13, 2017).

         Subject E's subsequent efforts proved more fruitful. By the time she filed her second motion to purge, Subject E appeared to have produced most of the records to the Government. Instead of directing the banks to produce their records to the Government, Subject E asked for the records and then transmitted them to the Government. But Subject E disclaimed responsibility over a remaining subset of documents, claiming that the bank, Credit Suisse, refused to accede to her consent directive. Credit Suisse objected to a specific phrase in the directive-that Subject E's request for records was compelled by court order-explaining that by operation of Swiss law it could only disclose its records pursuant to a directive omitting such phrase. Subject E refused to sign the bank's version of the directive on grounds that doing so would create a testimonial communication in violation of her Fifth Amendment rights.

         On April 3, 2017, this Court rejected that argument and denied her second purgation motion. This Court held that Second Circuit precedent prohibited the use of consent directives omitting reference to a court order on the basis that they were dishonest and misleading, not because they were unconstitutional. In re Various Grand Jury Subpoenas, 2017 WL 1234051 (S.D.N.Y. Apr. 3, 2017). In denying Subject E's second application, this Court expressly declined to dictate the course of action she should take to obtain the Credit Suisse records, holding only that Subject E had not availed herself of all options and failed to meet the burden of demonstrating full compliance.

         Subject E now brings a third motion to purge contempt, claiming that issuing a consent directive is the only way to obtain records from foreign banks. Credit Suisse claims that the Swiss Criminal Code prohibits disclosure of records absent Swiss government approval through a treaty based process. It further asserts that it cannot comply with a directive stating that it is submitted under compulsion of a U.S. court order. (Declaration of Alain Leibman In Support of Concluding Purge Motion, ECF No. 74-1, Ex. AA.) Without a properly worded consent directive, Subject E argues that "no path remains open" to comply with the Order. (Memorandum of Law of Subject E in Support of Concluding Motion to Purge Contempt and Vacate Contempt Citation ("Mot."), ECF No. 74, at 13.)

         DISCUSSION

         I. Standard

         As an initial matter, Subject E misconstrues the standard under which contempt is purged. She improperly shifts the burden of production to the Government, claiming the Government must show that "proof of non-compliance is clear and convincing, " and that she "was not reasonably diligent in attempting to comply." (Mot. at 10 (internal quotation marks and citations omitted).) But once a party is held in contempt, the onus is on the contemnor to show affirmative acts demonstrating compliance. See Int'l Union, United Mine Workers of Am. v. Bagwell, 512 U.S. 821, 828 (1994) ("[T]he contemnor is able to purge the contempt and obtain his release by committing an affirmative act, and thus carries the keys of his prison in his own pocket.") (citing In re Nevitt 117 F. 448, 461 (8th Cir. 1902)). For the past five months, Subject E has been held in contempt and has failed, on multiple occasions, to overcome the burden of proving full compliance.

         "In order to purge a civil contempt citation, a contemnor must establish 'clearly, plainly, and unmistakably' that compliance with the underlying order has either been accomplished or is impossible." S.E.C. v. Platinum Inv. Corp., 2004 WL 1886401, at *3 (S.D.N.Y. Aug. 24, 2004) (citing Huber v. Marine Midland Bank, 51 F.3d 5, 10 (2d Cir. 1995)); In re Marc Rich & Co., 736 F.2d 864, 866 (2d Cir. 1984) ("The burden of proving plainly and unmistakably that compliance is impossible rests with the contemnor."). Courts in the Second Circuit have consistently held that a contemnor's inability to comply with a court order "must amount to an impossibility to comply." JSC Foreign Econ. Assoc. Technostroyexport v. Int'l Dev. and Trade Servs., Inc., 2005 WL 1983905, at *9 (S.D.N.Y. Aug. 18, 2005) (citing Huber, 51 F.3d at 10; Platinum Inv. Corp.. 2004 WL 1886401, at *3; A.V. By Versace. Inc. v. Gianni Versace S.p.A., 279 F.Supp.2d 341, 346 (S.D.N.Y. 2003)) (emphasis original).

         II. Analysis

         The thrust of Subject E's argument is that an appropriately phrased consent directive is the only way to obtain documents from foreign banks. Signing any directive omitting the operative language-that it is either compelled by court order or made under protest-would result in executing a false document contravening Second Circuit precedent. Thus, according to Subject E, Credit Suisse's refusal to recognize her consent directive leaves her with no options and should relieve her from seeking disclosure of the records in question. In support of her motion, Subject E describes in great ...


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