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UNITED STATES v. DUNCAN

January 5, 1989

UNITED STATES OF AMERICA, Plaintiff,
v.
R. BRUCE DUNCAN, Defendant


Ilana Diamond Rovner, United States District Judge.


The opinion of the court was delivered by: ROVNER

ILANA DIAMOND ROVNER, UNITED STATES DISTRICT JUDGE.

 I. INTRODUCTION

 The United States of America (the "government") brought this case pursuant to 26 U.S.C. ยงยง 7402(b) and 7604(a) to obtain judicial enforcement of an Internal Revenue Service ("IRS") summons. The summons, addressed to Duncan personally and d/b/a Chicago Appraisers (a sole proprietorship), was served on January 22, 1987. The summons directed R. Bruce Duncan to appear before IRS Revenue Agent Egan on February 18, 1987, to testify and produce certain books and records, including client information, government forms, correspondence, and other data. Duncan did not appear in response to the summons, but instead submitted a few documents. After the government filed this petition to enforce the summons, Duncan answered by making a blanket assertion of the Fifth Amendment privilege against self-incrimination.

 The government moved for summary enforcement of the petition in December of 1987. In that motion the government requested an order requiring Duncan to appear before the IRS and respond individually to each question asked and each document sought. On July 6, 1988, Duncan appeared before the IRS. He stated, through counsel, that he and the government had "agreed that it would be appropriate for [him] to come in and sit and be asked certain questions and be asked to respond to the questions." Transcript of July 6, 1988 deposition ("Tr.") at 3. Duncan brought a box containing certain documents to the deposition, but stated (again, through counsel) that he would not identify those documents in order to preserve his right not to incriminate himself under the "Act of Production Doctrine." *fn1" Tr. at 4. Duncan's counsel also stated that if the Court entered an order enforcing the summons, "Mr. Duncan will turn over the records that are contained within the box that he has brought with him here today as well as other records which are too voluminous for him to have brought down here which are maintained at his business offices in Northbrook." Id.

 The IRS District Counsel then asked Duncan a number of questions. Duncan answered only the first two questions, stating his name and address. He refused to answer the remaining questions "on the grounds that my answer may tend to incriminate me in violation of my privilege under the Fifth Amendment of the Constitution of the United States." Tr. at 5. Duncan refused to answer questions about his age, marital status, educational background, occupation, and the data requested in the IRS summons. At the end of the deposition, the IRS District Counsel specifically asked Duncan why he was claiming the Fifth Amendment with respect to the questions that were asked. Tr. at 10. Duncan's counsel responded:

 
No, I don't think we will explain why we are going to impose the 5th. I mean that would be waiving the privilege in order to assert the privilege.
 
. . . .
 
I want to make it clear the reason that we have declined to produce the documents is based on the Act of Production Doctrine as set forth in the Doe case.

 Tr. at 10-11.

 Pending before the Court is the government's motion to enforce the summons. *fn2" The government contends that Duncan failed to provide any support for his assertion of his Fifth Amendment privilege against self-incrimination. Duncan argues that he has sufficiently set forth the possibility of injurious disclosure as to both the testimony and the documents sought by the summons and therefore his Fifth Amendment claim is valid.

 II. DISCUSSION

 The summons in question seeks the business records of an individual doing business as a sole proprietorship. *fn3" The Supreme Court has held that the contents of subpoenaed business records are not privileged. Braswell v. United States, 487 U.S. 99, 108 S. Ct. 2284, 2287, 101 L. Ed. 2d 98 (1988); United States v. Doe, 465 U.S. 605, 613, 104 S. Ct. 1237, 1242, 79 L. Ed. 2d 552 (1984). However, the act of producing the documents may be privileged under the Fifth Amendment. Doe, supra, at 613. The Fifth Amendment is implicated in a claim of privilege relating to the production of business records only when an individual "is compelled to make a testimonial communication that is incriminating." Fisher v. United States, 425 U.S. 391, 408, 96 S. Ct. 1569, 1579, 48 L. Ed. 2d 39 (1976). In other words, in order to claim the privilege, the subpoenaed party must demonstrate that the act of producing the requested records would have both an incriminating effect and a testimonial aspect. *fn4" In Fisher the Court noted that "these questions perhaps do not lend themselves to categorical answers; their resolution may instead depend on the facts and circumstances of particular cases or classes thereof." 96 S. Ct. at 1581.

 The Court must determine whether Duncan's refusal to produce the documents is justified. The validity of the assertion does not hinge on Duncan's mere assertion that the act of production would have an incriminatory effect. See National Acceptance Co. of America v. Bathalter, 705 F.2d 924, 927 (7th Cir. 1983)). Nor must Duncan prove that he is faced with the actual possibility of prosecution. Rather, the Seventh Circuit has held that "when a witness can demonstrate any possibility of prosecution which is more than fanciful he has demonstrated a ...


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