anthony v. bell v. sigir

IN THE UNITED STATES DISTRICT COURTNORTHERN DISTRICT OF GEORGIA

NEWNAN DIVISION

:ANTHONY B. BELL, : :Movant, :

:v. :

:SPECIAL INSPECTOR GENERAL FOR : CIVIL ACTION NO.IRAQ RECONSTRUCTION, : 3:09-mi-00003 and

: 3:09-mi-00002 :

::

Respondent. :

RESPONSE TO MOTION FOR ORDER PURSUANT TO CUSTOMER CHALLENGEPROVISIONS OF RIGHT TO FINANCIAL PRIVACY ACT

COMES NOW, the Respondent Special Inspector General for Iraq

Reconstruction (“OIG-Iraq Reconstruction”), by its attorney, the

United States Attorney for the Northern District of Georgia,

files this response to Petitioner’s Motion for Order Pursuant to

Customer Challenge Provisions of Right to Financial Privacy Act

(“Motion”). Petitioner’s Motion is the equivalent to a motion to

quash a subpoena issued by Respondent OIG-Iraq Reconstruction,

for bank records pertaining to Petitioner’s account(s) and

transactions. There is reason to believe the law enforcement

inquiry is legitimate and that the records sought by the subpoena

are relevant to the inquiry. Therefore, the Court should dismiss

Petitioner’s challenge and order enforcement of the subpoena.

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FACTUAL AND PROCEDURAL BACKGROUND

Anthony Bell is a former Colonel in the United States Army.

Exhibit A, Declaration of Special Agency James J. Crowley

(hereinafter referred to as “Crowley Decl.”), at ¶ 5. From June

29, 2003 through March 15, 2004, Mr. Bell was the contracting

officer for the Coalition Provisional Authority (“CPA”) in

Baghdad, Iraq. Crowley Decl., at ¶ 5. As head of the

Contracting Activity, Mr. Bell entered into contracts for

reconstruction projects in Iraq. Crowley Decl., at ¶ 6. These

contracts were funded by money designated by Congress for Iraq

reconstruction. Crowley Decl., at ¶ 6.

In 2004, OIG-Iraq Reconstruction received information from a

confidential source that Mr. Bell and another individual were

receiving kickbacks in connection with contracts for

reconstruction projects in Iraq. Crowley Decl., at ¶ 7. The

confidential source was killed in Iraq. Crowley Decl., at ¶ 8.

During the course of the investigation, OIG-Iraq

Reconstruction learned that Mr. Bell may have accounts with

Suntrust Bank and the National Bank of Commerce. Crowley Decl.,

at ¶ 10. Because Mr. Bell’s bank accounts may reveal information

concerning the pending criminal investigation related to Mr.

Bell, OIG-Iraq Reconstruction determined that it was necessary to

review these accounts. Crowley Decl., at ¶ 12.

On January 9, 2009 Inspector General Stuart Bowen issued two

subpoenas on Anthony Bell, along with instructions regarding how

to challenge the subpoenas, pursuant to the Right to Financial

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Privacy Act of 1978, 12 U.S.C. §§ 3401-3422. Crowley Decl., at ¶

13.

On January 27, 2009, Anthony Bell filed the instant action

challenging the subpoenas because the account number listed on

the subpoena is incorrect. [Doc. 1]. Mr. Bell also challenged

the subpoena for records from the National Bank of Commerce

asserting that he does not have any accounts at this financial

institution. With respect to this claim, the Respondent

acknowledges that Mr. Bell is correct and therefore, the subpoena

with respect to the National Bank of Commerce is moot. Besides

these technical arguments, Mr. Bell asserts no additional basis

for his challenge.

During the pendency of this action, OIG-Iraq Reconstruction

has learned that Mr. Bell does not have any accounts with

National Bank of Commerce. Crowley Decl., at ¶ 14. However,

with respect to Suntrust, OIG-Iraq Reconstruction has confirmed

that Mr. Bell does have an account with Suntrust. Crowley Decl.,

at ¶ 16. According to Suntrust, it has identified records

responsive to the OIG-Iraq Reconstruction subpoena and is holding

the requested records pending the outcome of the above-styled

action. Crowley Decl., at ¶ 16.

RELEVANT STATUTORY SCHEME

A. Special Inspector General for Iraq Reconstruction

The Office of the Special Inspector General for Iraq

Reconstruction was created in 2004, pursuant to P.L. 108-106, as

amended, to investigate and audit funds made available for Iraq

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The IG’s investigative and subpoena authority extends1

to civil and criminal matters. See e.g., United States v. AeroMayflower Transit Co., Inc., 831 F.2d 1142, 1146 (D.C. Cir.1987)(“the Act gives the Inspector General both civil andcriminal investigative authority and subpoena powers coextensivewith the authority.”); United States v. Medic House, Inc., 736 F.Supp. 1531, 1535 (W.D. Mo. 1989)(“The courts have recognized theIG’s authority to conduct criminal investigations and to issue

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reconstruction. Crowley Decl., ¶ 2. Pursuant to P.L. 108-106,

as amended, the OIG-Iraq Reconstruction has the same authority

and duties of an Inspector General as defined by the Inspector

General Act of 1978, 5 U.S.C.A. App. 3. Crowley Decl., ¶ 3.

Among other things, OIG-Iraq Reconstruction is authorized to

conduct criminal investigations related to funds used for Iraq

reconstruction and to issue subpoenas in furtherance of its

investigations. Crowley Decl., ¶ 4.

B. The Inspector General Act

The Inspector General Act of 1978 (IG Act), 5 U.S.C.A. App.

3, establishes the Inspector General’s authority to issue a

subpoena. The IG Act gives each Inspector General a mandate to

conduct investigations, and to prevent and detect waste, fraud

and abuse in his or her agency’s programs and operations. 5

U.S.C. Appx. 3 §§ 2, 4 (1988). Section 4(a) of the IG Act grants

broad authority to Inspectors General “to conduct, supervise, and

coordinate audits and investigations relating to the programs and

operations of the [agency within which the IG Inspectors General

authority to issue subpoenas for purposes coextensive with the

IG’s general investigative authority. Id. at § 4(a)(4). The1

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subpoenas in conjunction with those investigations.”).

H.R. Rep. No. 1383, 95 Cong., 2d Sess. 33-34,th2

reprinted in 1978 U.S.C.C.A.N. 9273, 9305-9306.

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Inspector General of the Iraq Reconstruction must:

* Prevent and detect fraud and abuse related to the fundsused for Iraq reconstruction activities. 5 U.S.C. App.3 § 4(a)(1); Crowley Decl., ¶¶ 2 and 4.

* Help identify and prosecute those participating infraud and abuse related to the expendituresspecifically allocated for Iraq Reconstructionactivities. 5 U.S.C. App. 3 § 4(a)(5); Crowley Decl.,¶ 4.

* Report to the Attorney General and possible violationsof Federal criminal law that the Inspector General’sOffice has discovered.

5 U.S.C. App. 3 § 4(d).

Congress gave the Inspectors General broad subpoena power to

carry out these mandates:

[E]ach Inspector General, in carrying out the provisions of

this Act, is authorized * * * to require by subpoena [sic] the

production of all information, documents, reports, answers,

records, accounts, papers, and other data and documentary

evidence necessary in the performance of the functions assigned

by this Act, which subpoena [sic], in the case of contumacy or

refusal to obey, shall be enforceable by order of any appropriate

United States district court. Id. at § 6(a)(4).

C. The Right to Financial Privacy Act

Congress enacted the Right to Financial Privacy Act

(“RFPA”) in response to United States v. Miller, 425 U.S. 4352

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Notice is not required for grand jury subpoenas. Id. 3

The RFPA requires only “substantial complaince.” 124

U.S.C. § 3410(a)(2). This standard is intended to ensure thatminor violations do not prevent access to records sought. H.R.Rep. No. 1383, 95 Cong., 2ds Sess. 224 (1978)(additional viewsth

of Mr. LaFalce), reprinted in 1978 U.S. Cong. & Ad. News 9354.

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(1976), which held that a bank customer had no constitutional

right under the Fourth Amendment to privacy in banking records

related to his accounts. See Davidov v. U.S. Securities and

Exchange Commission, 415 F. Supp. 2d 386 (S.D.N.Y., Feb. 17,

2006). In enacting RFPA, Congress gave bank customers protection

beyond what was afforded in the Constitution. See Young v. U.S.

Department of Justice, 882 F.2d 633 (2d Cir. 1989)(cert. denied,

493 U.S. 1073; McDonough v. Widnall, 891 F.Supp. 1439 (D. Colo.

1985).

The RFPA permits government authorities to obtain bank

records by a subpoena authorized by law as long as there is

reason to believe the records “are relevant to a legitimate law

enforcement inquiry,” 12 U.S.C. § 3407(1), and appropriate notice

is given to the bank customer whose records are sought. 12

U.S.C. § 3407(2). See In re Grand Jury Subpoena, 41 F.Supp.2d

1026, 1032 (D. Alaska 1999). Appropriate notice under the3

statute consists of a copy of the subpoena and reasonably

specific notice of the nature of the law enforcement inquiry. 12

U.S.C. § 3405(2). The customer has the opportunity to challenge4

the subpoena “within ten days of service or within fourteen days

of mailing” of the subpoena or summons. 12 U.S.C. § 3410. Any

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such challenge “shall contain” an affidavit or sworn statement

that the “the applicant is a customer of the financial

institution from which financial records pertaining to him have

been sought,” and also stating the petitioner’s “reasons for

believing that the financial records sought are not relevant to

the legitimate inquiry stated by the government” in its notice or

that the government authority has not substantially complied with

the RFPA. 12 U.S.C. § 3410(a)(1) and (2).

The challenge provisions were drafted “‘in a fashion that

minimizes the risk that the customers’ objections to subpoenas

will delay or frustrate agency investigations.’” Irani v. United

States, 448 F.3d 507, (2d Cir. May 11, 2006)(quoting SEC v. Jerry

T. O’Brien, Inc., 467 U.S. 735, 745-46(1984). The court shall

deny such a challenge if it finds that ‘there is a demonstrable

reason to believe that the law enforcement inquiry is legitimate

and a reasonable belief [by the agency] that the records sought

are relevant to that inquiry.” 12 U.S.C. § 3410(c).

The customer has the initial burden of showing a prima facie

case of impropriety. In other words, the customer must show a

“factual basis for his conclusion that the records are

irrelevant.” In re U.S. SEC Private Investigation., 1990 WL

119321 (S.D.N.Y. August 10, 1990), citing and quoting Hancock v.

Marshall, 86 F.R.D. 209, 211 (D.C.D.C. 1980)). Absent such a

showing, th court may deny the motion without further inquiry.

Even if the customer makes such a showing, the RFPA “does

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not require the agency to show that the records are relevant, but

only that there is ‘a reasonable belief that the records sought

are relevant’ . . . What need be shown is not probable cause, but

good reason to investigate. A mere belief is not enough, but a

reasonable belief is.” Id.

ARGUMENT

A. Introduction

The court should deny Bell’s motion because (1) the

investigation and the issuance of the subpoena are within the

authority of the agency; (2) the documents sought are reasonably

related to the inquiry; and (3) the demands are not unduly

burdensome or unreasonably broad. United States v. Morton Salt

Co., 388 U.S. 632, 652 (1950); Oklahoma Press Publishing Co. v.

Walling, 327 U.S. 186, 208-209 (1946); Endicott v. Perkins, 317

U.S. 501, 509 (1943). See also United States v. Florida Azalea

Specialists, 19 F.3d 620, 623 (11 Cir. 1994)(“an administrativeth

subpoena should be enforced ‘if the inquiry is within the

authority of the agency, the demand is not too indefinite and the

information sought is reasonably relevant’”).

B. The Supoena Satisfies the RFPA Standards

When a financial institution subpoena is challenged under

the RFPA, the court’s inquiry is limited to determining whether:

(1) the RFPA procedures were followed; (2) the law enforcement

inquiry is legitimate; and (3) there is a reasonable belief that

the records sought are relevant to the inquiry. See 12 U.S.C. §

3410(c); Douglas v. United States, 410 F. Supp. 2d 294 (S.D.N.Y.

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Jan. 25, 2006). The subpoena passes muster on all three fronts.

First, the OIG-Iraq Reconstruction followed the RFPA

procedures by serving a copy and all the relevant forms to Bell.

See Crowley Decl. ¶ 13.

Second, the law enforcement inquiry is legitimate. The

Inspector General has broad authority under the IG Act to conduct

audits and investigations related to agency programs and

operations, and subpoena records in connection with such

inquiries. 5 U.S.C. app. 3 §§ 4(a)(1), 6(a)(4). In establishing

the Inspector General, “Congress conferred very broad audit,

investigatory, and subpoena powers on each department or agency,

to help promote efficiency and prevent fraud, waste, abuse and

mismanagement in federal government programs.” Winters Ranch

Partnership v. Viadero, 123 F.3d 327, 330 (5 Cir. 1997).th

The investigation into allegations of fraud concerning the

expenditure of money allocated for Iraq reconstruction falls well

within that broad grant of authority. Investigations of this

nature safeguard the integrity of government funds and programs.

An investigation is legitimate if it is one the agency is

authorized to make and is not being conducted solely for an

improper purpose, such as political harassment or intimidation,

or is otherwise in bad faith. Pennington v. Donovan, 574 F.Supp.

708, 709 (S.D. Tex. 1983). An investigation into whether a

former Colonel of the United States Army received kickbacks while

he was performing his duties as a contracting officer responsible

for safeguarding the funds allocated for Iraq reconstruction

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satisfies this standard.

Third, the OIG-Iraq Reconstruction has a reasonable belief

that the subpoenaed records are relevant to the investigation.

See Crowley Decl., ¶ 12. The bank records are likely to show the

source and amount of money received by Bell and that information

is directly relevant to allegations that Bell received kickbacks

while he was performing his duties as a contractor officer in

Iraq. The agency’s belief that the documents are relevant to its

inquiry into possible fraud is reasonable and entitled to

deference. Resolution Trust Corp. v. Walden, 18 F.3d 943, 946

(D.C. Cir. 1994)(court should defer to the agency’s relevancy

assessment as long as it is “‘not obviously wrong.’”).

In view of the well-established principle ofdeference to agency discretion in issuingsubpoenas and in the absence of contrarylegislative history, we believe Congressintended that the court’s accept theInspector General’s determination of whatinformation is “necessary to carry out thefunctions assigned by this Act.” so long asth information is relevant to an InspectorGeneral’s function.

United States v. Westinghouse Electric Corp., 788 F.2d 164 at 171

(3d Cir. 1986); see also Oklahoma Press Publishing Co. v.

Walling, 327 U.S. at 214 (agencies generally are granted broad

deference in determining scope of their investigative authority).

Moreover, as the Supreme Court has stated, production of

evidence will be ordered unless the documents are “plainly

incompetent or irrelevant to any lawful purpose” of the agency.

Endicott Johnson Corp. v. Perkins, 317 U.S. 501, 509 (1943);

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Moreover, Mr. Bell also challenges the subpoena for5

records from the National Bank of Commerce asserting that he doesnot have any accounts at this financial institution. With respectto this claim, the Respondent acknowledges that Mr. Bell iscorrect and therefore, the subpoena with respect to the NationalBank of Commerce is moot.

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accord, United States v. Aero Mayflower Transit Co., Inc., 831

F.2d 1142, 1145 (D.C. Cir. 1987); Westinghouse Electric Corp.,

788 F.2d at 170. A court will enforce a subpoena for records

that may simply lead to other evidence which, in turn, will

establish violations of law. Pennington, 574 F.Supp. at 709.

In the context of a challenge to a RFPA subpoena, courts

have adopted a “strictly limited role” when they review

administrative subpoenas. See Sandsend Fin. Consultants Ltd.,

878 F.2d 879. The Act itself was crafted cautiously to limit a

customer’s right to challenge an administrative subpoena:

[The RFPA] carefully limits the kinds of customers towhom it applies, §§ 3401(4), (5), and the types ofrecords they may seek to protect, § 3401(2). Acustomer’s ability to challenge a subpoena is cabinedby strict procedural requirements. For example, hemust assert his claim within a short period of time,§ 3402(a), and cannot appeal an adverse determinationuntil the Government has completed its investigation,§ 3410(d). Perhaps most importantly, the statute isdrafted in a fashion that minimizes the risk thatcustomers’ objections will delay or frustrate agencyinvestigations.

Jerry T. O’Brien, Inc., 467 U.S. at 745-46.

Bell’s challenge to the subpoena rests solely on the ground

that the account number identified in the subpoena is incorrect. 5

Bell does not deny, however, that he has an account at Suntrust.

Indeed, Bell admits that his financial records are held by

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Suntrust Bank and lists his bank routing number. [See Doc. 1].

Assuming that Bell is correct and the bank routing number on the

subpoena is incorrect, this is not a basis for quashing the

subpoena. Both Suntrust and Mr. Bell have confirmed that he has

an account with Suntrust. In fact, the bank has identified the

relevant records related to Mr. Bell and is ready and able to

produce them as soon as this action is resolved.

In sum, Bell has failed to establish any basis for his

challenge to the subpoena and the OIG-Iraq Reconstruction has

established the legitimacy of its investigation and the relevancy

of the records. Therefore, the court should deny Bell’s motion

and order that the subpoena be enforced.

Respectfully Submitted this 2 day of March, 2009.nd

DAVID E. NAHMIASUNITED STATES ATTORNEY

/s/ Aileen Bell Hughes AILEEN BELL HUGHESASSISTANT U.S. ATTORNEYGeorgia Bar No. 375505600 Richard B. Russell Bldg.75 Spring Street, SWAtlanta, Georgia 30303(404) 581-6133(404) 581-6150 (facsimile)Aileen.Bell.Hughes@usdoj.gov

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CERTIFICATE OF COMPLIANCE

I certify that the documents to which this certificate is

attached have been prepared with one of the font and point

selections approved by the Court in Local Rule 5.1B for documents

prepared by computer.

/s/ Aileen Bell Hughes AILEEN BELL HUGHES Assistant U.S. Attorney

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CERTIFICATE OF SERVICE

I certify that I have caused to be mailed a copy of the

RESPONSE TO MOTION FOR ORDER PURSUANT TO CUSTOMER CHALLENGE

PROVISIONS OF RIGHT TO FINANCIAL PRIVACY ACT by depositing a

copy thereof, postage prepaid, in the United States Mail

addressed as follows in the mail addressed:

Anthony B. Bell103 Marks StylePeachtree City, Georgia 30269

This 2 day of March, 2009.nd

/s/ Aileen Bell Hughes AILEEN BELL HUGHESAssistant United States Attorney

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