Opinion
1:02-cv-1807-JDT-WTL
April 11, 2003
Richard A. Young, KIGHTLINGER GRAY, and Jeffrey L. Hunter UNITED STATES ATTORNEY'S OFFICE.
ENTRY ON PETITION TO QUASH SUMMONS
This Entry is a matter of public record and is being made available to the public on the court's web site, but it is not intended for commercial publication either electronically or in paper form. Although the ruling or rulings in this Entry will govern the case presently before this court, this court does not consider the discussion in this Entry to be sufficiently novel or instructive to justify commercial publication or the subsequent citation of it in other proceedings.
This cause is before the court on a Petition to Quash Summons. The matter is fully briefed, and the court, being duly advised, DENIES the Petition and will order enforcement of the summons for reasons set forth below. The Internal Revenue Service ("IRS") is conducting an investigation of Nina M. Najjar a/k/a Nina M. Banks ("Ms. Najjar") to determine whether she has committed any offense connected with the administration or enforcement of the internal revenue laws for the tax years 1997, 1998, 1999, 2000, 2001 and 2002. Apparently, Mr. Banks is married to Ms. Najjar and they practice law in the State of Ohio. It is not clear whether they practice law together, but the court assumes so because they use the same Post Office Box number and apparently share use of the same trust account. In furtherance of this investigation, Special Agent Michael K. Klimczak issued an IRS summons to the Bank One Services Corp. located in Indianapolis, Indiana. The summons directed Bank One to appear before Special Agent Klimczak on November 25, 2002, to testify and to produce for examination the books, records, papers and other data specified in the summons. Included in the requested documents were documents relating to Bank One account #981640923, an account designated as an Interest on Lawyers' Trust Account ("IOLTA"). On November 22, 2002, Ms. Najar and Mr. James Banks ("petitioners") filed this action seeking to quash the summons served on Bank One. This entry will refer to the arguments presented on behalf of Ms. Najjar, but the results are the same as to Mr. Banks because of their sharing of the use of the bank account in question.
In their Petition, the Petitioners argue that the summons on Bank One should be quashed under the Ohio Code of Professional Responsibility Rule, DR 4-101(B)(1) and (2). DR 4-101(B)(1) and (2) summarily state that a lawyer shall not knowingly reveal a confidence or secret of a client. Petitioners contend that compliance with the summons would breach client confidentiality by revealing client names, amounts paid to petitioners, and client account numbers. Further, the Petitioners argue that the release of these alleged client confidences will lead to information that is not relevant to whether the Petitioners abided by the tax laws of the United States.
The form of the Petition itself is inadequate in that it does not contain an affidavit or sworn statement as required by 12 U.S.C. § 3410(a), and for that reason alone could be denied. It is also uncertain whether the Petition was filed in a timely manner. However, the government does not challenge the form or timing of the Petition and because it fails on the merits, the court will not elaborate on any potential procedural deficiencies.
In response to their Petition, the Defendant argues that the summons neither violates the attorney-client privilege nor the Ohio Code of Professional Responsibility, and, in turn, seeks an order enforcing the summons, as it is entitled to do under 12 U.S.C. § 3410(c) and 26 U.S.C. § 7609(b)(2)(A). The Defendant contends that the information contained in bank records is not confidential and that there is no legitimate expectation of privacy in the contents of checks, deposit slips, bank statements or other items in a bank's possession. Further, the Defendant argues that neither Ms. Najjar nor her clients can establish any rights in the bank's records to cloak them with the attorney-client privilege. The only relationship that existed with the bank, the Defendant argues, was that of a debtor and creditor.
The Defendant also argues that Ohio Code of Professional Responsibility Rule DR 4-101(B)(1) and (2) is not violated because DR 4-101(B)(1) and (2) prohibits a lawyer from revealing a confidence or secret of a client. In this case, however, the summons does not require any action by Ms. Najjar. Further, if the checks were a confidence or secret of the client, the Defendant argues, then Ms. Najjar violated DR 4-101(B)(1) and (2) when she deposited the checks with the bank, thereby disclosing whatever confidence they contained to the bank and its employees.
In their Reply Brief, the Petitioners state that Special Agent Klimczak has never indicated that there is any relevancy behind summonsing information on clients names, addresses and social security numbers. The Petitioners assert that the information is being requested to harass Ms. Najjar and her clients and to damage her law practice. According to the Defendant, however, Ms. Najjar's client information is necessary to complete its investigation. The Defendant argues that the only means of identification and verification of non-income and income items in an attorney's trust account may be through the trust account clients themselves. This court agrees with the Defendant. It only makes sense that the true usage of the account can be determined only by an examination of the actual deposits and withdrawals from the account, and a verification of the accuracy and legitimacy of those transactions.
Generally, there is no legitimate expectation of privacy in the contents of checks, deposit slips or bank statements in a bank's possession. See United States v. Miller, 425 U.S. 435, 442 (1976); Securities Exch. Comm'n v. First Sec. Bank, 447 F.2d 166, 167 (10th Cir. 1971), cert. denied, 404 U.S. 1038 (1972); O'Donnell v. Sullivan, 364 F.2d 43, 44 (1st Cir. 1966), cert. denied, 385 U.S. 969 (1966); Harris v. United States, 413 F.2d 316, 319-20 (9th Cir. 1969). Checks are negotiable instruments used in commercial transactions, voluntarily conveyed to banks, and exposed to the banks' employees in the ordinary course. Miller, 425 U.S. at 442. Case law establishes that petitioners' bank records are not protected by the attorney-client privilege. Further, the professional rules are not violated because Ms. Najjar is not revealing a confidence or secret of her clients. The summons requests that Bank One, not Ms. Najjar, produce the information requested. The Petitioners' arguments ignore the basic nature of such banking transactions. They are not confidential communications among attorney and client. They are commercial transactions which disclose the identity and other identifiers of the parties to the transaction to the third party banking institution. Even if the transactions could be viewed by a large stretch of the imagination to be communicative, in no way could they be considered to be confidential. If the Petitioners and their clients sought confidentiality regarding the monetary transactions, they blew any cover of secrecy by utilizing a commercial banking enterprise.
Under 12 U.S.C. § 3410(c), a court must determine whether there is "demonstrable reason to believe that the law enforcement inquiry is legitimate and a reasonable belief that the records sought are relevant to that inquiry." Names, addresses and social security numbers of Ms. Najjar's clients (or Mr. Banks, for that matter, to the extent that he shares the use of the account in question with Ms. Najjar) may be essential to complete the Defendant's investigation. As pointed out by the Defendant, the clients themselves may be instrumental in identifying and verifying non-income and income items in the attorney's trust account. Accordingly, the court finds that the materials sought in the investigation are legitimate and relevant to the investigation. Additionally, despite the allusions by the Petitioners to potential harassment of the lawyers and/or their clients, and damage to their law practice from these disclosures, they have not produced a shred of evidence to support their fears. The court finds that the record supports that the summons in question was issued pursuant to a legitimate investigation and that it has a relevant purpose related to that investigation.
For the reasons outlined above, the Petition to Quash Summons is DENIED. Further, pursuant to 12 U.S.C. § 3410(c), the court will order enforcement of the summons. ALL OF WHICH IS ENTERED this 11th day of April 2003.