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Responding to Subpoenas and Search Warrants
BY: John Burrus, Esq.

Since banks are repositories for important financial information concerning their customers, they are often targets in efforts to accumulate evidence for both civil and criminal proceedings. The most common procedural devices for obtaining this evidence are subpoenas and search warrants. There are important differences between subpoenas and search warrants which dictate the proper manner of response and give rise to different rights and duties with respect to each.

A subpoena is a directive to produce described documents or other items of tangible property in the possession or control of the party served. Subpoenas may be issued by attorneys or courts in connection with civil litigation and may also be issued by some federal and state governmental agencies. Rules governing subpoenas provide the party served with a definite time to respond and include methods for challenging the subpoena's validity based on such factors as the method of service or the relevance of the items sought.

A search warrant is an order issued by a magistrate or judge authorizing law enforcement officers to search a particular place for specific documents or tangible property or for types of documents or property. Search warrants are utilized only in criminal investigations and are ordinarily granted to government investigators without notice to either the party being investigated or the party whose property is to be searched. The only requirement for a search warrant is that the government establish "probable cause" to believe that valid grounds exist to support the search. Probable cause is commonly established by an affidavit prepared by a government investigator.

Until fairly recently it was common for so-called "white collar" crime investigations to rely on subpoenas rather than search warrants, where possible, particularly when the investigation involved unrelated third parties. However, in the last several years, apparently for tactical reasons, these investigations have been utilizing search warrants even when a subpoena could have been used. In addition, search warrants are used by investigators, such as police and sheriffs' departments, who do not have subpoena power.

Under both state and federal law, a law enforcement officer enforcing a search warrant may "use and employ such force as may reasonably be necessary in the performance of the duties commanded by the warrant". This means that any person interfering with the search is subject to arrest and potential criminal charges. It also means that in executing the search the officer may disrupt normal business activities, obtain access to closed areas even if destruction or damage of property is required to gain access, and seize and remove documents and other property, including property which may contain the items being sought such as computers and back-up storage devices. An officer is given considerable discretion in determining how to proceed with execution of the warrant. However, the executing officer will typically allow someone who is not a target of the investigation (such as a bank, when its customer is being investigated) to voluntarily produce the items sought within a reasonable time. The very real threat to disrupt business by performing a full search of the premises is usually enough to obtain that person's cooperation.

The scope of a subpoena is different from that of a search warrant. A subpoena ordinarily describes broad categories of documents or other property and is effective to reach any such items in the custody or control of the subpoenaed party no matter where located. A search warrant, on the other hand, serves only to reach the items or types of items located at the premises where the warrant is to be executed. Thus, for example, a subpoena seeking "all records pertaining to account number 1234" would serve to reach those records even if they were in an off-premises storage facility or in possession of a service provider. However, a search warrant using the same description would only be technically effective to reach items which would be found by a search of the premises described in the warrant.

Subpoenas must be complied with unless proper court proceedings to stay the subpoena are instituted prior to the compliance date. Failure to do so can result in the bank and responsible officers being held in contempt of court. Ordinarily, it will be the customer and not the bank who will be interested in whether the subpoena should be complied with, and the bank will leave it to the customer to raise such issues as relevance and materiality.

A law enforcement officer who is executing a search warrant cannot be lawfully interfered with. However, officers using unreasonable means to execute a warrant are subject to court sanction after the fact, and there would be at least a strong argument that an officer who does not permit the bank to comply voluntarily without disruption of its business is acting unreasonably.

The bank's ability to recover its costs of compliance will depend upon the identity of the person seeking the information, the nature of the proceeding in which it is sought and, in some cases, the difficulty involved in complying with the request. As a general rule, the bank will be able to recover compliance costs in private civil litigation and when information is sought by federal agencies, but it will be unable to recover those costs in federal or state criminal proceedings or when the information is sought by state agencies. For more information, see the article "Recovery of Document Production Costs" in the October 1998 Independent Reporter.

Contact John E. Burrus at jeb@bsblaywers.com

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