Fighting Fifth Amendment Claims: Can a Receiver Obtain Business Records When a Fifth Amendment Right Against Self-incrimination Is Asserted?

• Publication year: 2018
• Author: By Richard Weissman

Fighting Fifth Amendment Claims: Can a Receiver Obtain Business Records When a Fifth Amendment Right Against Self-Incrimination Is Asserted?

By Richard Weissman

Richard Weissman is a shareholder of Richard Weissman, Inc., APC, and serves as a federal and state court appointed receiver, provisional director, and partition referee, covering all fields of civil practice and regulatory enforcement throughout the United States. He can be reached at rweissman@rwreceiver.com.

Assume a receiver has just been appointed over Acme Corporation in a civil enforcement action brought by a state or federal regulatory agency. The order of appointment authorizes the receiver to take possession and control of all of Acme's assets, its ongoing business enterprise and all its business and financial records (expansively defined to include documents, computer hardware, software and all computer based records, floppy disks, CD-ROMs, "smart" cell phones, computer passwords and access codes, etc.). The receiver then serves the order on Acme's president, Mr. Smith, and immediate turnover of and access to the financial records.

Mr. Smith refuses, and the attorney for both Mr. Smith and Acme states that her clients are exercising their respective Constitutional rights against self-incrimination under the Fifth Amendment, which rights (it is asserted) preclude the receiver's obtaining Acme's records. The attorney also discloses that some of Acme's records are now in her possession (having been delivered by Mr. Smith). She asserts an attorney-client privilege in refusing to turn over these documents.

Is the Receiver sunk? Are these insurmountable Constitutional protections afforded to Acme and to Mr. Smith? Does the Fifth Amendment privilege against self-incrimination prevent the receiver from executing his duties set by the court? Does the attorney-client privilege apply under these facts? The short answer is: No, no, no and no!

IS THERE A CORPORATE PRIVILEGE?

May the receiver enforce the court's order granting him possession of the corporation's financial records against Acme? Absolutely. A corporation is not afforded any right or privilege against self-incrimination by the Fifth Amendment. The Fifth Amendment privilege against self-incrimination is a personal right, reserved only to a "natural person", who must directly assert the privilege.

The U.S. Supreme Court has stated it is well established that artificial entities such as corporations, partnerships, unincorporated associations (and similarly constituted entities), are not shielded by the Fifth Amendment. Acme, as a statutorily created entity, has an unconditional duty to produce records prepared and maintained in the ordinary course of business if required by court order or a subpoena for the production of records.

Acme does not possess a Fifth Amendment privilege precluding production of corporate financial records, correspondence, marketing and sales documents or the like even though such records would tend to establish...