Individual Seeks Supreme Court Review of IRS Summons Enforcement

NATALIO FRIDMAN,
Petitioner,
v.
UNITED STATES OF AMERICA,
Respondent.

In the
Supreme Court of the United States

On Petition for Writ of Certiorari to the
United States Court of Appeals for the Second Circuit

PETITION FOR A WRIT OF CERTIORARI

Richard A. Levine
Counsel of Record
Roberts & Holland LLP
1675 Broadway, 17th Floor
New York, New York 10019
(212) 903-8700
rlevine@rhtax.com
Attorneys for Petitioner

QUESTIONS PRESENTED

1. Does an individual retain his Fifth Amendment privilege in the face of the “foregone conclusion doctrine” when an IRS summons requires him, in effect, to provide testimony (akin to responses to interrogatories)?

2.Does an individual retain his Fifth Amendment privilege in the face of the “collective entity doctrine” when an IRS summons issued to him in his personal capacity seeks to compel production of documents of a corporation, but there is no evidence or no finding of fact that he is a custodian of the corporate records?

3. Can the Government compel an individual who asserts his Fifth Amendment privilege to disclose whether he is a custodian of records of a collective entity and then, in reliance on that compelled disclosure, demand that he produce the entity's records?

RELATED CASES

United States v. Fridman, No. 15-mc-64, U.S. District Court for the Southern District of New York. Judgment entered on November 25, 2015, and on November 14, 2018.

United States v. Fridman, No. 15-3969-cv, U.S. Court of Appeals for the Second Circuit. Judgment entered on December 13, 2016.

United States v. Fridman, No. 18-3530-cv, U.S. Court of Appeals for the Second Circuit. Judgment entered on September 9, 2020.

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TABLE OF CONTENTS

QUESTIONS PRESENTED

RELATED CASES

TABLE OF APPENDICES

TABLE OF AUTHORITIES

OPINIONS BELOW

JURISDICTION

CONSTITUTIONAL PROVISION INVOLVED

STATEMENT OF THE CASE

REASONS FOR GRANTING THE PETITION

CONCLUSION

TABLE OF APPENDICES

APPENDIX A — OPINION OF THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT, DATED SEPTEMBER 9, 2020

APPENDIX B — OPINION OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, DATED NOVEMBER 14, 2018

APPENDIX C — OPINION OF UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT, DATED DECEMBER 13, 2016

APPENDIX D — ORDER OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, DATED NOVEMBER 25, 2015

APPENDIX E — DENIAL OF REHEARING OF THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT, DATED DECEMBER 4, 2020

TABLE OF AUTHORITIES

Cases:

Statutes & Other Authorities:

U.S. Const. Amend. V

28 U.S.C. § 1254(1)

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OPINIONS BELOW

The opinion of the Court of Appeals is published at 974 F.3d 163 and is reproduced at App. A. The District Court's opinion is published at 337 F. Supp.3d 259 and is reproduced at App. B. The order of the Court of Appeals denying Petitioner's petition for rehearing en banc is unpublished and is reproduced at App. E. An earlier opinion of the District Court in this case is unpublished and is reproduced at App. D, and an earlier opinion of the Court of Appeals, vacating and remanding the District Court's earlier opinion, is available at 665 Fed. Appx. 94 and is reproduced at App. C.

JURISDICTION

The Court of Appeals issued its opinion on September 9, 2020. (App. A.) The Court of Appeals denied Petitioner's petition for rehearing en banc on December 4, 2020 (App. E.). Pursuant to this Court's order of March 19, 2020, regarding filing deadlines during the COVID-19 pandemic, this petition is due 150 days after the date of the denial of Petitioner's petition for rehearing en banc. This Court has jurisdiction under 28 U.S.C. § 1254(1).

CONSTITUTIONAL PROVISION INVOLVED

The Fifth Amendment to the United States Constitution provides in relevant part that “[n]o person . . . shall be compelled in any criminal case to be a witness against himself.”

STATEMENT OF THE CASE

This case raises three important questions as to the scope of the Fifth Amendment privilege: (i) whether the “foregone conclusion doctrine” applies where the compelled self-incrimination is styled as a demand for documents, but is, in substance, testimonial; (ii) whether an individual who is ordered to produce corporate documents in connection with an investigation of his personal income tax returns must prove he is not a custodian of records of the corporation, where the Government has not alleged, and no evidence has been introduced or finding of fact made to the effect that, he is such a custodian; and (iii) whether an individual can be compelled to disclose whether he is a custodian of records of a collective entity and then, in reliance on such compelled disclosure, be compelled to produce the entity's records under the collective entity doctrine.

A. Background and Procedural History

On December 19, 2013, the IRS issued two summonses to Petitioner in connection with an investigation into his personal income taxes for the year 2008. (CA JA 17-48.) One summons states that it is issued to Petitioner in his individual capacity. The other summons states that it is issued to Petitioner in his capacity as the Trustee of the David Marcelo Trust.¹ The document requests attached to each of the summonses are identical (id.), and consist of 21 separately numbered paragraphs, only nine of which are at issue in this Petition.² The summonses requested that Petitioner appear for an interview and produce the documents listed in the document request.

The summonses request that Petitioner (1) list the opening and closing date of all foreign accounts over which he had signatory authority since 1999 (Request #1); (2) produce 2006 and 2007 bank records for all his foreign accounts (Request #2); (3) produce enumerated bank documents relating to seven named corporations from “opening date to 1/31/2009” (Request #3); (4) produce bank documents to show the flow of funds, the account numbers, and the account holders' names for several specifically identified transactions (Request #7); and (5) produce various documents for “any Trust [other than the David Marcelo Trust] for which Petitioner is a Trustee or Beneficiary” (Requests #13, #15, #16, #17, #20). (CA JA 29-32.)

Petitioner appeared before the IRS in response to the summonses. He asserted his Fifth Amendment privilege in response to oral questions and in response to the summonses' demand for documents. On March 11, 2015, the Government filed a petition in the District Court to enforce the summonses. In support of its petition, the Government asserted that the documents requested were relevant to show that Petitioner had failed to file income tax returns, had filed false income tax returns, and had failed to report his income. (CA JA 51-63.) The Government asserted that the “collective entity” doctrine and the “foregone conclusion” doctrine applied to negate Petitioner's Fifth Amendment privilege with respect to production of the documents listed in the requests.

In response, Petitioner argued that a number of the requests were not requests for documents, but rather were demands for testimony. He also argued that the neither the “foregone conclusion” doctrine nor the “collective entity” doctrine applied to deny him the protection of the Fifth Amendment privilege. In response to Petitioner's contention that Requests #1, #2, and # 7 are requests for testimony, the Government, with the District Court's approval, revised those requests. In place of Request #1, asking Petitioner to list opening and closing dates of all foreign accounts over which he had signature authority since 1999, Petitioner was required to produce existing documents to show the opening and closing dates of those foreign accounts, on a list of 24 specific accounts, over which he had signatory authority. Request #7, which requests Petitioner to produce bank documents to show the flow funds, the account numbers, and the account holders' names for several specific transactions, was revised by the addition of the words “existing documents.” No changes were made to Requests #2, which requests various bank documents, and to Requests #13, #15, #16, #17 and #20, which demand that Petitioner produce documents relating to the David Marcelo Trust and “any other trust for which [Petitioner] is a Trustee or a Beneficiary.”

The District Court held a hearing on November 17, 2015; the hearing was not recorded, and no transcript was made. At the hearing, Petitioner objected that the revisions to the summonses did not cure the compelled testimonial aspects inherent in the requested responses, and asserted that he is protected from producing any documents by the Fifth Amendment. Petitioner also objected to the compelled production of documents relating to seven different corporations, on the grounds that the summonses were issued to Petitioner in his individual capacity in connection with an IRS investigation of his personal income taxes; they were not issued to any of the seven corporations nor to Petitioner as a custodian of any of the corporations. At the conclusion of the hearing, the District Court ruled from the bench granting the Government's petition to enforce the summonses.

Petitioner appealed. On December 13, 2016, the Second Circuit vacated the District Court's order and remanded to case to the District Court, on the grounds that the record was insufficiently developed to permit meaningful appellate review of the District Court's determination that the Fifth Amendment act of production privilege did not apply. (App. C.) On remand, and without holding an additional hearing, the District Court again granted the Government's petition to enforce the summonses in an opinion dated November 14, 2018. (App. B.)

Petitioner appealed the District Court's decision on the grounds that compliance with the document requests would require Petitioner to provide the Government with the equivalent of oral testimony, and that the District Court erred in holding that the “collective entity” doctrine and the “foregone conclusion” doctrine applied, because inter alia, the Government failed to demonstrate any custodial relationship between Petitioner and any of the seven corporations named in Request #3 at the time the summonses were issued.

On September 9, 2020, the Second Circuit affirmed the District Court's decision. (App. A.) Petitioner subsequently petitioned the Second Circuit for en banc review. The Second Circuit denied his petition on December 4, 2020. (App. E.)

B. The Fifth Amendment, the Act of Production Privilege, and the “Foregone Conclusion” Doctrine

The Fifth Amendment guarantees that “[n]o person . . . shall be compelled in any criminal case to be a witness against himself.” U.S. Const. amend. V. The Fifth Amendment privilege applies when a communication is testimonial, incriminating, and compelled. Hiibel v. Sixth Judicial Dist. Ct. of Nev., 542 U.S. 177, 189 (2004). Fifth Amendment protection applies in civil proceedings, such as those involving an IRS summons, where there is a credible threat of criminal exposure. See Mathis v. United States, 391 U.S. 1 (1968). In this case, the Government's assertions that it needs, and seeks to compel the production of, the documents in issue because it believes that Petitioner has failed to file income tax returns, has filed false income tax returns, and has failed to report all his income raise such a credible threat. (CA JA 52-53.)³ The questions presented in this Petition relate to the application of the Fifth Amendment privilege to the compelled production of documents.

In Fisher v. United States, 425 U.S. 391 (1976), this Court held that the Fifth Amendment protects not only compelled oral testimony, but also the testimonial aspects implicit in the compelled “act of production” of documents in response to an IRS summons. The implicit testimonial aspects of such an “act of production” are that: “(i) documents responsive to a given subpoena exist; (ii) they are in the possession or control of the subpoenaed party; (iii) the documents provided in response to the subpoena are authentic; and (iv) the responding party believes that the documents produced are those described in the subpoena.” United States v. Hubbell, 167 F. 3d 552, 567-68 (D.C. Cir. 1999), aff'd, 530 U.S. 27 (2000). Accordingly, the Government can overcome Fifth Amendment protection only by showing that, in light of information already in its possession, there are no implicit testimonial facts not already known that would be disclosed by the act of producing the documents demanded. See Fisher, 425 U.S. at 411-13.

On the particular facts in Fisher, this Court determined that there were no testimonial aspects to production of the documents protected by the Fifth Amendment that were not already known to the Government. Id. In describing this conclusion, the Court stated that “[t]he existence and location of the papers are a foregone conclusion and the taxpayer adds little or nothing to the sum total of the Government's information by conceding that he in fact has the papers.” 425 U.S. at 411. The Court in Fisher used the term “foregone conclusion” as a way of stating that there were no meaningful admissions of fact implicit in compelling the production of the documents requested by the summons, but these lower courts have overlooked the Court's focus in Fisher on the absence of testimonial aspects to the particular document production in issue. Rather, at the behest of the Government, many lower courts have mistakenly treated the term “foregone conclusion” as a separate test that permits the Government to require the production of the documents based on information relating solely to the existence and location of the documents.

In United States v. Hubbell, 530 U.S. 27 (2000), the only case in which this Court considered applying Fisher's “forgone conclusion” argument to a claim of Fifth Amendment privilege, this Court rejected the Government's effort to leap from the premise that the existence and possession of business records by Hubbell, a businessman, is a “foregone conclusion” to the conclusion this was sufficient to overcome the privilege that attached to the testimonial aspects of document production. The Court held that a subpoena required Hubbell to make use of the contents of his own mind to select documents responsive to the subpoena, thereby compelling him to be a witness against himself in violation of Fifth Amendment protection, and that such protection was effective whether or not the Government knew of the existence of the requested documents. 530 U.S. at 43-44.

Similarly, in this case, an “act of production” in compliance with the document requests at issue would compel Petitioner to make admissions of fact that may be used against him in violation of his Fifth Amendment privilege, apart from “foregone conclusions” regarding the existence, or his possession, of documents. The District Court and the Second Circuit, by limiting their “foregone conclusion” analyses to whether the Government had shown knowledge of the existence of the documents demanded and of their possession by Petitioner, ignored the purely testimonial aspects, not “foregone conclusions” at all, of producing documents in response to Requests 1, 2, 7, 13, 15, 16, 17, and 20.

C. The Fifth Amendment and the Collective Entity Doctrine

This Court has held for more than a century that the Fifth Amendment privilege is available only to individuals, and not to legal entities such as corporations and partnerships. See, e.g., Braswell v. United States, 487 U.S. 99 (1988); United States v. Doe, 465 U.S. 605 (1984); Curcio v. United States, 354 U.S. 118 (1957); United States v. White, 322 U.S. 694 (1944); Wilson v. United States, 221 U.S. 361 (1911); Hale v. Henkel, 201 U.S. 43 (1906). This Court has also held that, just as a “collective entity” cannot assert the Fifth Amendment privilege as a bar to production of the entity's records, a “custodian” in possession of a collective entity's records may similarly not refuse to produce them. See Braswell, 487 U.S. at 104-05; Bellis v. United States, 417 U.S. 85 (1974). However, this “collective entity” doctrine has never been applied by this Court — or so far as Petitioner is aware by any federal court — to negate the Fifth Amendment privilege of an individual, absent a finding of fact or the presentation of evidence to the effect that the individual was, at the time of the Government's demand for records, such a “custodian,” acting in a capacity such as employee, officer, director, or shareholder of the corporation.

Here, Request #3 demands that Petitioner produce an extensive list of documents pertaining to the banking relationships of seven corporations. The Government produced no evidence that any document demanded by Request #3 existed at the time the summonses were served, nor did it produce any evidence that Petitioner was in possession or control of any such documents. Indeed, the Government made no effort to show that Petitioner was an officer, director, employee, shareholder, or other “custodian” on behalf of any of the seven corporations. The Government did not allege that Petitioner held any such position, it offered to evidence to prove that he was, and neither the District Court nor the Second Circuit found as a fact that Petitioner held any such position at any of the seven corporations. Nevertheless, and notwithstanding that the summonses were issued to Petitioner in his individual capacity, in connection with an IRS investigation of his personal income tax returns, and notwithstanding that there was neither any allegation by the Government or finding of fact that Petitioner was an officer, director, employee, or other custodian of any corporate records nor any evidence to show that he was such a person, the Second Circuit erroneously applied the “collective entity” doctrine to compel Petitioner to produce the documents demanded by Request #3.

REASONS FOR GRANTING THE PETITION

This case presents important questions concerning Fifth Amendment protection from the compelled production of documents. This Court has allowed only limited exceptions to an individual's Fifth Amendment protection, in order to ensure that it is broad enough to prevent compelled testimony implicit in production of documents. Although, in Fisher, the Court held that the contents of documents voluntarily prepared are not protected by the Fifth Amendment privilege, 425 U.S. at 408-11, and, in Braswell, the Court held that a custodian of corporate records does not have a Fifth Amendment privilege with respect to the production of corporate records, 487 U.S. 99, the act of producing documents still has implicit testimonial aspects that are protected by the Fifth Amendment. The Second Circuit in this case has misapplied the doctrines of both Fisher and Braswell in a way that significantly and improperly limits the scope of Petitioner's Fifth Amendment privilege.

Accordingly, Petitioner asks the Court to hold that the so-called “foregone conclusion doctrine” cannot be used to compel an individual to provide specific factual information, even when the compulsion is styled as a document request, instead of an order for oral testimony or a written interrogatory. The Second Circuit here erroneously used that doctrine to deprive Petitioner of his Fifth Amendment. The Second Circuit's decision not only conflicts with this Court's opinions in Fisher and Hubbell, it sets a dangerous precedent obliterating Fifth Amendment protection by allowing the Government to structure requests for factual information as demands for documents.

Petitioner also asks the Court to make clear that an individual cannot be forced to prove a negative — that he was not a custodian of records of a collective entity — in order to assert Fifth Amendment privilege against compelled production of documents relating to that entity. In this case, there was no finding of fact, evidence, or even allegation by the Government that Petitioner was a custodian of records of any of the seven corporations listed in the summonses, and there was also no evidence or finding that any of corporate documents existed or that they were in Petitioner's possession or control. Nevertheless, the District Court held that Petitioner must produce bank records of seven corporations, unless he proves that he is not a custodian of their records. Imposition of such an obligation on Petitioner compels him to relinquish his Fifth Amendment privilege and to testify regarding his relationship, vel non, to the corporations, dramatically expanding the limited scope of the collective entity doctrine outlined by this court in Braswell.

A. The Second Circuit's Decision Conflicts with this Court's Opinions and Ignores the Pure Testimonial Aspects of Compelled Compliance with Document Requests #1, #2, #7, #13, #15, #16, #17, and #20.

In Fisher, this Court established the principle that, although contents of existing documents are not protected by Fifth Amendment privilege, the act of producing documents “has communicative aspects of its own, wholly aside from the existence of the papers demanded and their possession or control by the taxpayer.” 425 U.S. at 410. By complying with a demand for documents, an individual “tacitly concedes the existence of the papers demanded and their possession or control by the taxpayer . . . [as well as] the taxpayer's belief that the papers are those described in the subpoena.” Id. (emphasis added). This Court recognized that compelled production of documents described in a summons is, in effect, a compelled admission that the documents produced are the ones requested by the summons.

On the facts of Fisher, the Court held that compelled production of documents did not result in implicit, compelled testimony from the taxpayer, who was the target of the IRS investigation, because “the existence and location of the papers are a foregone conclusion and the taxpayer adds little or nothing to the sum total of the Government's information by conceding that he in fact has the papers.” 425 U.S. at 411. In its use of the phrase “foregone conclusion,” the Court did not create an exception to Fifth Amendment protection against self-incrimination. Rather, it merely described its conclusion that, in a particular set of circumstances, there were no meaningful testimonial aspects to compelled production of documents. Unfortunately, many courts, including the District Court and the Second Circuit below, have misunderstood the phrase “foregone conclusion” and applied it in a manner that focused only on whether the Government has shown that the requested documents exist and are in the possession of Petitioner; such courts have ignored the testimony inherent in admitting that the documents produced are the ones demanded.

In Hubbell, this Court rejected the Government's effort to overcome the testimonial aspects of document production by applying a “forgone conclusion” argument — namely, that the existence and possession of business records by Hubbell, a businessman, is a “foregone conclusion.” The Court ruled that, whether or not the Government knew of the existence and location of the requested documents, Hubbell was protected by the Fifth Amendment, because the subpoena required him to “make extensive use of the contents of his own mind in identifying the . . . documents responsive to the requests in the subpoena.” Hubbell, 530 U.S. at 43 (internal quotation marks and citations omitted).

Here, the Second Circuit's focus on whether the documents demanded exist and are Petitioner's possession ignored the fact that producing the documents is the equivalent of oral testimony.⁴ Request #1, which originally demanded that Petitioner provide a list of dates and identify accounts over which he had signatory authority, was modified to require Petitioner to provide existing documents sufficient to show the opening and closing dates of all foreign bank accounts listed on an exhibit “over which you have signatory authority since 1999“ (CA JA 29). Request #1, as modified, still requires Petitioner to specifically identify for the Government foreign accounts over which he has signature authority, as well which accounts may have been open or closed at the time the Summonses were issued.

Identifying for the Government all foreign accounts over which Petitioner has signature authority is clearly the equivalent of oral testimony. Compelling Petitioner to provide documents which show that same information is no different. The Second Circuit's decision to compel Petitioner to produce documents in response to Request #1 by applying the foregone conclusion doctrine is contrary to Fisher and Hubbell.

The same issue of compelled testimony applies to Request #2, which demands Petitioner produce records for “all your foreign accounts during 2006 and 2007.”

Request #7 also seeks to compel the equivalent of oral testimony from Petitioner. It originally asked him to explain the flow of funds in five specified transactions, and was modified to require him to produce bank documents that “show the flow of the funds” for those transactions. (CA JA 30.) This request does not merely demand that Petitioner produce customary bank records; it compels him to specifically identify for the Government documents that show how funds moved from one account to another. This amounts to the Government's compelling Petitioner to provide it with “a catalog of existing documents” that fit within the document request to answer a specific question, which is prohibited by this Court's precedent. See Hubbell, 530 U.S. at 42.

Document Requests #13, #15, #16, #17 and #20 all require Petitioner to provide bank records, trust agreements, books and records and certain correspondence for any trust [in addition to the David Marcelo trust] for which Petitioner is a trustee or a beneficiary (CA JA 31-32), thus compelling Petitioner to disclose his connection to trusts, if any, heretofore unknown to the Government. The Second Circuit's ruling to compel Petitioner to provide documents with regard to such trusts compels him to identify all trusts of which he is a trustee or a beneficiary; this is the equivalent of testimony protected by Fifth Amendment privilege. No reasonable application of the “foregone conclusion” doctrine or interpretation of the Court's opinions in Fisher or in Hubbell supports the Second Circuit's ruling.

Nor does the “collective entity” doctrine apply to compel Petitioner to produce the documents demanded and thereby to identify trusts of which he is a trustee or a beneficiary, but which are unknown to the Government. A traditional trust may be a collective entity,⁵ and, therefore, a trustee of a trust who is served with a summons to produce the trust's documents, as the custodian of the trust's records, may be unable to assert his personal Fifth Amendment “act of production” privilege with respect to producing the trust's documents. See Braswell, 487 U.S. 99. However, the custodian retains his personal Fifth Amendment privilege with respect to providing oral testimony. Curcio, 354 U.S. 118, 123-124.

The summonses were served on Petitioner in his individual capacity and in his capacity as trustee of the David Marcelo trust. Petitioner does not seek review of the demand for documents of the David Marcelo Trust in Requests #13, #15, #16, #17 and #20. He seeks review only with respect to documents of “any other trusts of which he is a trustee or a beneficiary.” The first part of each request constitutes a demand for the disclosure of the names of all trusts of which Petitioner is a trustee or a beneficiary, and the second part is the compelled production of the documents themselves. The first disclosure is the equivalent of compelled oral testimony protected by the Fifth Amendment, because the Government is not aware of the identity of any other trusts of which Petitioner is a trustee or a beneficiary, and Petitioner should not be compelled to provide that information.

In Braswell, the Court ruled that the act of production privilege set forth in Fisher and Hubbell did not protect a custodian of corporate records from compelled production of the corporation's books and records. 487 U.S. 99. The Court, however, limited this holding in Curcio, which protects a custodian of a collective entity's records from compelled oral testimony, as distinguished from testimony implicit in producing documents. Id. at 114-15. As to the demand for the names of trusts of which Petitioner is a beneficiary, a beneficiary of a trust is not a custodian of the trust's records. Even if Petitioner is viewed as a custodian of records for a trust of which he is a trustee, these requests seek to compel the equivalent of oral testimony to identify such trusts, which is prohibited by the Court's decision in Curcio.

This Court should grant review to ensure that document requests are not used to compel the equivalent of oral testimony, thereby depriving individuals of the protection afforded by the Fifth Amendment and affirmed by this Court's decisions in Fisher, Hubbell, and Curcio.

B. The Second Circuit Erroneously Held that Petitioner Must Prove that He is Not a Custodian of the Records of Seven Corporations, Despite Absence of Any Finding of Fact, Evidence, or Allegation that He Was the Custodian.

Request #3 demands that Petitioner produce: “All bank statements and all account opening documents, including but not limited to, Know Your Customer Account information, including signature cards, opening deposit slips, passport copies, certificates of beneficial ownership, letters of reference, certificates of clean funds and/or other source of funds documentation for accounts held under the name of Consist Teleinformatica Argentine; Consist Consultoria Systemast Repre; Wanstst Systemar DE Computacao CTDA; Consist France; Consist Asia Pacific; Mak Data System; Consist International Inc. from opening date to 1/31/2009.” (CA JA 29.)

The Government proffered no evidence to show that any of the requested documents existed on the date the summonses were issued, nor any evidence to show that Petitioner was in possession or control of any of the documents. As a result, the “existence and the location of the papers” is not a “foregone conclusion,” and their production may well add much 'to the sum total of the Government's information,'” In re Katz, 623 F.2d 122,126 (2d Cir. 1980) (citing Fisher, 425 U.S. at 411). The Government appears to have conceded that the foregone conclusion doctrine did not apply to Request #3 (CA Dkt. 52 at 19), and neither the District Court nor the Second Circuit held that the foregone conclusion applied to Request #3 to deprive Petitioner of his Fifth Amendment privilege.⁶ However, the District Court and the Second Circuit erroneously held that the collective entity doctrine applied to deny Fifth Amendment protection.

The summonses were issued to Petitioner in his individual capacity and in his capacity as trustee of the David Marcelo Trust. Declarations introduced by the Government in support of enforcement of the summonses make clear that the summonses were issued in connection with an examination of Petitioner's personal income tax liability for 2008, and not in connection with an examination of the returns of any corporations of the records of which Petitioner might be a custodian. (CA JA 55.) Indeed, no summons was issued to any of the seven corporations, and none of those corporations was being examined by the IRS. (See id.) The Government introduced no evidence to show that Petitioner was an officer, director, or employee of any of the corporations at the time the summonses were issued, or at any prior time, and neither the District Court nor the Second Circuit found that Petitioner held any of those positions, or that he was otherwise a custodian of the records of any of the seven corporations. Nevertheless, the Second Circuit required Petitioner to produce corporate records under the collective entity doctrine, because “[w]e adopt the D.C. Circuit's burden-shifting framework. See, e.g., In re Sealed Case, 877 F.2d 83, 87 (D.C. Cir. 1989). The Government need only show a reasonable basis to believe a defendant has the ability to produce records; once the Government has done so, the burden shifts to the defendant to explain or justify refusal. See id.” (App. A at 36.)

The Second Circuit's reliance on the D.C. Circuit's opinion in In re Sealed Case is misplaced and abandons the principle that the collective entity doctrine applies to an individual served with a summons or subpoena only if the individual is shown to be a custodian of the corporation's records. The respondent in In re Sealed Case was served with a subpoena as custodian of records of Corporation A. Based on that individual's admission that he was the president, chief executive officer, and major shareholder of Corporation A, the D.C. Circuit held that he was a custodian, and the burden then shifted to him to prove that he could not produce the records demanded. 877 F.2d at 87. In the present case, in contrast, Petitioner was not served with a summons as custodian of records for any corporation, and there was no showing of any kind that he was an officer, director, employee, or shareholder of any of the corporations at or near the time the summonses were issued. To shift to Petitioner the burden of showing that he was not a custodian of any of the corporations denies him Fifth Amendment protection, by forcing him to relinquish his Fifth Amendment privilege in order to preserve that privilege, in the absence of any evidence or even allegation introduced by the Government.

The long-established basis for denying an individual Fifth Amendment protection from producing a corporation's documents is that an individual who is an officer, or director, or employee of the corporation, or was otherwise a custodian of its records, holds the documents in a representative capacity or as an agent of the corporation. Since the corporation has no Fifth Amendment privilege with respect to its records, neither does its agent. See Braswell v. United States, 487 U.S. 99 (1988).⁷

The implicit testimonial aspects of compelled document production recognized in Fisher protect Petitioner from having to produce any of the documents, unless Petitioner is a custodian of the corporate records.⁸ The Second Circuit's opinion ignores all applicable precedents this Court and in the Courts of Appeals (including many of its own precedents), none of which applied the collective entity doctrine to an individual who was not an officer, director, employee, or shareholder of the corporation. See, e.g., United States v. Doe, 191 F.3d 173 (2d Cir. 1999); In re Grand Jury Subpoenas Duces Tecum Dated June 13, 1983 & June 22, 1983 (Saxon Industries), 722 F.2d 981 (2d Cir. 1983); SEC v. Forster, 147 F. Supp. 3d 223 (S.D.N.Y. 2015).

With no legal precedent to support its holding, the Second Circuit takes words out of context from a D.C. Circuit opinion whose facts in no way support the Second Circuit's decision. In in the absence of satisfying this Court's Fisher test that the documents requested exist and that they are in Petitioner's possession at the time the summonses were served, the Second Circuit simply ignores without any justification all legal precedents to deny petitioner Fifth Amendment protection. Petitioner is not aware of any decided case by any federal court that has applied the collective entity doctrine to deny Fifth Amendment protection in the absence of any evidence that an individual is a custodian of the corporate records under such facts.

The Second Circuit here improperly denied Petitioner his Fifth Amendment privilege by forcing him to prove that he cannot produce the corporations' records, even though there was no showing, or even allegation, that he could or that he had an agency relationship with any of the seven corporations at the time the summonses were issued. The Court should grant the Petition in order to clarify the application of the Fifth Amendment in these circumstances.

CONCLUSION

For the foregoing reasons, the petition for a writ of certiorari should be granted.

Respectfully submitted,

Richard A. Levine
Counsel for Petitioner
Roberts & Holland LLP
1675 Broadway 17th Fl.
New York, NY 10019
(212) 903-8729 rlevine@rhtax.com

May 3, 2021