In the Courts

On Feb. 1, 2010, in In re Grand Jury Subpoena Issued June 18, 2009, No. 09-3561-cv, the Second Circuit, in a per curiam opinion, held that a single-person corporation could not refuse to comply with a subpoena for production of corporate records by asserting the Fifth Amendment's “act of production” privilege. In its decision, the court extended its prior decision denying an exception to the collective-entity rule for corporations that were essentially single-person operations to the actual single-person corporation, finding that an intervening decision by the Supreme Court had not overturned the Second Circuit's earlier decision. The Second Circuit's decision affirmed a contempt order issued by the U.S. District Court for the Southern District of New York against Account Services Corporation (ASC) and KJB Financial Corporation (KJB), for failure to comply with a grand jury subpoena duces tecum.

The subpoena was issued on June 18, 2009, pursuant to an investigation into allegations of bank fraud, illegal gambling, and money laundering. Douglas Rennick, the sole owner, shareholder, officer and employee of both companies, unsuccessfully moved to quash the subpoena and, following his motion, Rennick himself was indicted on conspiracy, bank fraud, illegal gambling, and money laundering charges. ASC and KJB, upon refusing to respond to the subpoena, were held in contempt by the district court.