If a witness in a Rule 2004 examination is under criminal investigation, the Fifth Amendment privilege ordinarily protects the witness from being compelled to produce most documents other than tax returns, according to an encyclopedic opinion by Bankruptcy Judge Ronald B. King of San Antonio.
The witness was a former executive of a company in chapter 11. According to Judge King, he had “significant involvement in and control over the debtor’s accounting functions.” The debtor had scheduled a claim against him in an unknown amount for fraud and breach of fiduciary duty.
In an examination under Rule 2004, the debtor’s counsel sought testimony and production of documents “detailed” in what Judge King said were “forty-two expansively written paragraphs.”
The witness said he was the subject of a criminal investigation and was represented at his Rule 2004 examination by both bankruptcy and criminal counsel. He answered questions asking for his name and address. Asserting the Fifth Amendment privilege against self-incrimination, he refused to produce any documents and declined to answer virtually all other questions.
The debtor filed a motion to compel production of documents. In an opinion on August 24, Judge King mostly denied the motion, absolving the witness from the duty to produce documents such as communications and records related to his bank accounts. Judge King only required the witness to produce his tax returns and W-2s under the so-called required documents doctrine.
Judge King traced the history of the privilege, going back to an 1807 opinion by Chief Justice John Marshall. Judge King said that a witness may invoke the privilege “when he or she believes the testimony may travel down the road of possible self-incrimination.” Asserting the privilege comes with a price, he said, because a civil court may draw a negative inference but is not required to do so.
Judge King explained that the privilege “explicitly” extends to protection from production of documents “if the production itself would have testimonial aspects that could be self-incriminating.” He paraphrased the Supreme Court as holding “that the act of production itself may implicitly communicate statements of fact, such as the existence of documents, the defendant’s possession and control of the documents, and the documents’ authenticity.”
According to the Supreme Court, “it is not necessary for the documents to be incriminating,” Judge King said. Instead, it is “essential” for the witness “to believe (and be able to demonstrate in camera, if necessary) that there is a ‘real and substantial risk’ that the information may tend to incriminate or lead to incrimination.”
Judge King laid out the two primary exceptions to the privilege: the foregone conclusion doctrine and the required records doctrine.
Although not pertinent to the case at hand, the foregone conclusion doctrine requires production of documents when control and authenticity of the documents are not at issue and the witness is only being asked to surrender the documents.
With regard to the required records doctrine, Judge King said that the Fifth Circuit and three other circuits have required production of foreign bank account records that the witness was required to keep under Treasury Department regulations. “It follows,” Judge King said, that the privilege relieves the witness from producing “records not required by law to be kept or disclosed to a public agency.” [Emphasis in original.]
Judge King said, however, that neither the foregone conclusion doctrine nor the required records doctrine requires the production of “business records that proprietors might be generally assumed to keep.” To compel production, he said, the “documents must be either previously known about and have no issue of authenticity (foregoing conclusion), or required by law to be kept or disclosed to a public agency (required records).”
Judge King said that the case at bar mirrored U.S. v. Doe, 465 U.S. 605 (1984), where the defendant had been required to produce personal tax returns. He therefore compelled the witness to produce his personal tax returns for the prior four years and forms W-2. Without examining the documents in camera, he absolved the witness from producing “his communications, bank account balances and information, or alleged written admissions of guilt.”