Third Circuit Affirms Contempt on Foreign Bank Account Records Subpoena (3/14/17)

I previously reported on United States v. Chabot, 793 F.3d 338 (3d Cir 2015), here, an almost garden-variety case enforcing a grand jury subpoena for production of foreign bank account records.  See Third Circuit Applies Required Records Doctrine to Require Taxpayers to Respond to Compulsory Process About Foreign Bank Account (Federal Tax Crimes Blog 7/18/15), here.  Yesterday, the Third Circuit issued another opinion after Eli Chabot was held in contempt on remand for failure to comply.  United States v. Chabot, 2017 U.S. App. LEXIS 4355 (3d Cir. 2017) (nonprecedential), here.

In order to avoid contempt below on remand, the Chabots submitted

supplemental evidence, including a medical report questioning Eli's capacity to testify. They also submitted several letters from their foreign counsel and a report from an accounting firm denying that the Chabots had the requisite connection to any foreign financial accounts necessary for them to maintain documents under the Bank Secrecy Act. 

The trial court then found that

[T]he Government satisfied its initial burden, Chabot had to establish his "present inability to comply with the order in question." Gov't Br. 13. The Court found that Chabot failed to establish he lacked the requisite connection to the foreign financial accounts and held Chabot in civil contempt, ordering him to pay $250 per day as a coercive sanction. 

The Court of Appeals held that, once the Government establishes (1) a valid court order; (2) Chabot's knowledge of the order and (3) disobeyance of the order, the burden shifted to Chabot to either produce the records or establish a present inability to comply.  (Citing United States v. Rylander, 460 U.S. 752, 757 (1983)).  The court then cryptically held that the trial court had properly held Chabot in contempt.