Dallas Bar Association

Law Enforcement Access to Your Client’s Business Records

by Ted Steinke

When agencies like the FBI, Secret Service, State Securities Board or the Dallas Police Department’s Financial Crimes Unit want your client company’s business records, here’s how they’ll probably get them:

Subpoena

Subpoenas duces tecum are the most widely used, primarily because they are easy to get. Probable cause is not required, and in the case of grand jury subpoenas, there is very little, if any, judicial oversight. On the other hand, records that are sought late in the game, i.e. after indictment and right before trial, must be obtained by court-ordered subpoena, which offers slightly greater protection.

As a general rule, a properly limited subpoena does not constitute an unreasonable search and seizure. So your client’s Fourth Amendment rights are not ordinarily impacted. In addition, the United States Supreme Court has ruled that a subpoena for bank records is not barred by the Fourth Amendment, since those records belong to the bank, and not the customer. Said another way, your client has no standing to object to the bank’s compliance with a grand jury subpoena duces tecum.

The Supreme Court has also held that a corporation has no Fifth Amendment privilege in the contents of its business records. A corporation is a “creature of the State,” and the State retains “visitorial power” to investigate the corporation’s activities. In addition, these records are normally created voluntarily and without government compulsion, and the Fifth Amendment protects only against compelled self-incrimination.

This is known as the “Collective Entity Rule” and has even been applied to unincorporated associations and partnerships. Bottom line . . . if your client voluntarily created the document, the fact that it is incriminating will not protect it from being subpoenaed. The Collective Entity Rule also applies to the contents of a sole proprietor’sbusiness records, even though they may be “personal” to the owner. Likewise, the corporate “custodian of the records” cannot claim a Fifth Amendment privilege, even though the records may incriminate that individual personally.

Finally, documents in possession of third parties, such as attorneys, are generally not protected by the Fifth Amendment, unless the client himself could have successfully asserted the Fifth. Thus, if the documents were originally obtainable from your client, not even the attorney-client privilege will protect them while in the attorney’s hands. This rule has also been applied to accountants and bankruptcy trustees.

A subpoena, however, must be reasonable,i.e., (1) the documents sought must be relevant to the inquiry, (2) they must be adequately described and (3) the timeperiod covered must be reasonable. A subpoena may be quashed or modified (either by the court overseeing the grand jury or the trial court) if compliance would be unreasonable or oppressive, or if it is overbroad or too indefinite. Courts have wide discretion, however, and the Supreme Court has held that a grand jury subpoena issued through normal channels is presumed reasonable, with the burden of proving otherwise resting with your client.

Search Warrant

The second method to obtain corporate records is by evidentiary search warrant. The long-standing rule is that there is no special sanctity in papers, as opposed to other types of evidence (drugs, guns, bloody clothes, etc.), that renders them immune from search and seizure. Both state and federal law authorize search warrants to be issued for property constituting evidence of criminal conduct, and the definition of “property” includes documents, books, papers and other tangible objects.

Since the Fifth Amendment adheres to the person, and not the incriminating information, it will not prevent the search of your client’s corporate offices. However, the Fourth Amendment definitely is in play, and “general exploratory rummaging in a person’s belongings” is frowned upon. As a result, search warrants have been ruled too broad when they seek “any and all” records of a target’s business. But if the property is sufficiently described, or if a precise description is not possible, then the warrant will generally be approved.

Voluntary Production

The third way law enforcement could get your client’s records is by voluntary production, i.e., former or current employees turning them over. Generally, as long as the documents were not stolen (i.e., the employee had a right to be on the premises with legitimate access to the records), they will be admissible against your client.

Ted Steinke spent 18 years in the Dallas DA’s Office, primarily investigating and prosecuting white collar crime cases, before opening a solo criminal trial practice in 1994. He can be reached at ts@tedsteinke.com

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