UNITED STATES OF AMERICA v. MELINA ALI
US Court of Appeals for the Fourth Circuit, Motz, Nov. 3, 2017,
Subpoena – Enforcement Order – Partial Compliance – Proof of actual possession is not necessary for a defendant to be found in contempt of an enforcement order related to a subpoena.
Facts:
Ali was a corporate officer for two corporations and had power of attorney for another. In 2013, Ali received a summons by the IRS to appear and present domestic and foreign records related to these businesses. Ali appeared before the IRS, but claimed her 5th Amendment privilege and refused to testify or produce documents.
The IRS petitioned a court to enforce the summons and a district court held a hearing and ordered Ali to produce the domestic and foreign records. Ali once again asserted her 5th Amendment claim, but turned over a number of domestic records to the IRS along with 4 pages of documents related to foreign accounts but that did not fulfill the court order.
The IRS believed that Ali was withholding documents and asked the court to hold her in contempt. At the contempt hearing, Ali stated for the first time that she did not have records related to foreign accounts.
The IRS showed evidence that Ali was in possession or control of certain documents, but Ali failed to provide evidence that she had made a good-faith effort to comply.
Ali was held in civil contempt.
Ali then appealed, arguing that she had a 5th Amendment privilege and that it was the government’s burden to prove that there were specific documents she did not turn over.
Held:
The 4th Circuit disagreed. A 5th Amendment privilege must be brought up at the compliance stage, not the enforcement stage.
Subpoena – Defense- A claim of “nonpossession” of records related to a subpoena must be brought at the enforcement stage, not the contempt stage
Subpoena – Defense – A claim of “nonpossession” can only be brought at the enforcement stage if there has been a change in circumstance that gives a present inability to comply
Subpoena – Enforcement Order – If someone receives a subpoena and fails to comply, the person issuing the subpoena can request that the court issue an enforcement order
Subpoena – Enforcement Order – Once an enforcement order is issued, failure to comply can result in a finding of contempt of court. The burden is initially on the complainant to show non-compliance and then on the respondent to show a good-faith effort.
Subpoena – Enforcement Order – An enforcement order related to a subpoena “establishes a presumption that the defendant possesses responsive documents.”
Subpoena – Enforcement Order – Partial compliance with an enforcement order is not enough to avoid contempt of court.
Subpoena – Enforcement Order – A complainant can prevail by showing by clear and convincing evidence that a defendant can be presumed to have more responsive documents. The complainant does not have to prove that the document exists and that it is in the actual possession of the defendant. For example: A response to an order to produce “bank records” will be presumptively incomplete if it fails to include bank statements.
Subpoena – Presumption- A corporate officer can be presumed to be custodian of records relating to the corporation unless she demonstrates otherwise
Civil Contempt – To civil contempt, a complainant must prove by clear and convincing evidence:
(1) A valid court order against someone against someone
(2) That person knew about the order
(3) The subject of the order knowingly violated it
(4) The person seeking the order was injured because of that violation