The opinion of the court was delivered by: Michael P. McCUSKEY Chief U.S. District Judge
Friday, 22 April, 2011 02:59:50 PM
Clerk, U.S. District Court, ILCD
This case is before the court for ruling on two motions filed by Defendants, Jimmy A. LaCost and LaCost Amusements, Inc. (LaCost Amusements), as well as a motion for leave to intervene filed by the Illinois Department of Financial and Professional Regulation. This court has carefully considered the arguments presented and rules as follows: (1) Defendants' Motions to Compel (#57, #58) are DENIED and the Motion for Leave to Intervene (#64) is GRANTED.
On January 6, 2010, the grand jury returned a 12-page, 109 count indictment (#1) against Jimmy A. LaCost, Michael W. LaCost and LaCost Amusements. In Counts 1 through 54, Defendants Jimmy LaCost and LaCost Amusements were charged with committing specified structured transactions over a period from January 25, 2005, to June 22, 2009, for the purpose of evading the reporting requirements of 31 U.S.C. § 5313(a), and regulations prescribed thereunder, while violating another law of the United States as set forth in Count 55 of the indictment, and as part of a pattern of illegal activity involving more than $100,000 in a 12-month period commencing on January 1, 2008, in violation of 31 U.S.C. § 5324(a)(3) and (d)(2), 18 U.S.C. § 2, and 31 C.F.R. § 103.11. In Count 55, all three Defendants were charged with conducting, financing, managing, supervising, directing, and owning part of an illegal gambling business, namely, a gambling business providing and maintaining video gambling machines and devices, in violation of 18 U.S.C. §§ 2 and 1955(a). In Counts 56 through 109, Defendants Jimmy LaCost and LaCost Amusements were charged with separate specified incidents of money laundering, from January 25, 2005, to June 22, 2009, in violation of 18 U.S.C. §§ 2 and 1956(a)(1)(B)(ii). The indictment also alleged that the property involved in transactions or attempted transactions in violation of 18 U.S.C. § 1956 is subject to forfeiture. Defendants are represented by retained counsel and have pleaded not guilty to the charges.
On July 30, 2010, Defendants filed a Motion for Entry of Order Permitting their Counsel to Cause the Issuance of a Subpoena Duces Tecum to MainSource Bank (#50). Defendants stated that, in order to defend against the charges against them, they needed to obtain documents from MainSource Bank. Defendants attached, as Exhibit A, a list of the documents they needed to obtain from MainSource Bank prior to trial. The list included seven categories of documents to be provided by MainSource Bank.
On August 27, 2010, the Government filed its Response to Defendants' Motion Re: Issuance of a Subpoena Duces Tecum to MainSource Bank (#52). The Government stated that, as a general matter, it had no objection to Defendants' Motion. The Government further stated, however, that Defendants' proposed subpoena sought production of "[a]ny and all Suspicious Activity Reports ('SAR's') filed by the bank with government or other regulatory authorities related to deposits made by, or other banking activity of, LaCost Amusements, Inc. or Jimmy LaCost." The Government stated that financial institutions are prohibited from disclosing SARs pursuant to subpoenas. See 31 C.F.R. § 103.18(e).
On September 2, 2010, this court entered an Opinion (#53). Based upon the Government's Response, this court concluded that Defendants' Motion must be granted in part and denied in part.
The Motion was granted as to six of the seven categories of documents listed in Exhibit A. However, the Motion was denied as to the third listed category of documents seeking production of SARs.
On March 9, 2011, Defendants Jimmy A. LaCost and LaCost Amusements
filed a Motion to Compel Compliance with Subpoena Duces Tecum to
MainSource Bank (#57) and a Motion to Compel Disclosure by the United
States of Material Pursuant to Brady and/or Giglio (#58).*fn1
In their Motion to Compel Compliance (#57), Defendants stated
that, in December 1999, LaCost Amusements opened a corporate bank
account at Capstone Bank in Kankakee. In 2003, MainSource Bank
purchased Capstone Bank. From that time to the present, LaCost
Amusements has continued to bank at MainSource Bank. Defendants stated
that the charges against them in this case are based on deposits to
LaCost Amusement's bank accounts at MainSource Bank. Defendants argued
that, to defend these charges, Defendants need to obtain documentary
evidence from MainSource Bank.
Defendants stated that, in response to their Subpoena, MainSource Bank produced some documents to counsel for Defendants but had not produced certain materials requested pursuant to paragraph 5 of the Subpoena. Specifically, Defendants stated that MainSource Bank did not produce "incident reports" that training materials indicate must be prepared to inform management of suspicious activities and the original or business record equivalent of any supporting documentation for any SAR that Capstone Bank/MainSource Bank was required to maintain. Defendants stated that MainSource Bank indicated that it could not produce these records because it could neither confirm nor deny the existence of an SAR or provide documentation related to an SAR. Defendants argued that "supporting documentation"for an SAR is discoverable. Defendants also argued that the records requested from MainSource Bank are clearly relevant to the structuring and money laundering ...