Summary:
The Trustee sought a 2004 Exam and documents from First Citizens Bank ("FCB"), based on a belief that the Debtor had used a checking account at FCB in connection with a Ponzi scheme. FCB sought to quash this discovery, arguing that the Trustee was on a fishing expedition to establish claims against FCB in relation to the alleged scheme.
The bankruptcy court rejected the argument of FCB, holding that Rule 2004 is "unfettered and broad" in scope. As the type of information that would be revealed relates to the "act and conduct" of the Debtor in using his bank accounts, it was permissible.
FCB also argued that 31 U.S.C. § 5318(g)(2)(A)(i) and related regulations, precluded release of this information as the information was privileged as a Suspicious Activity Report ("SAR") that could not be released to third parties. Following Gregory v. Bank One, 200 F. Supp.2d 1000, 1003 (S.D. Ind. 2002) and Weil v. Long Island Sav. Bank, 195 F. Supp.2d 383, 389 (E.D.N.Y. 2001), the bankruptcy court did quash the request for production of any SARs. This protection was limited only to the SARs themselves, as documents do not "become privileged because they may prompt the filing of a SAR or because they support the filing of a SAR or are referred to in a SAR."
For a copy of the opinion, please see:
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