Cinque Terre Financial Group Limited

NOT FOR PUBLICATION
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
_______________________________________
)
In re: 	) 	Chapter 15
)
CINQUE TERRE FINANCIAL GROUP 	)
LIMITED, 	) 	Case No. 16-11086
)
Debtor in a 	)
Foreign Proceeding. 	)
)
MEMORANDUM DECISION ON MOTION TO VACATE, IN PART,
APRIL 29, 2016 ORDER AND TO QUASH THE MAY 2, 2016 SUBPOENA
APPEARANCES:
KELLNER, HERLIHY, GETTY & FRIEDMAN, LLP
470 Park Avenue South
7th Floor North
New York, NY 10016
By: 	Eugene Getty, Esq.
ASTIGARRAGA, DAVIS MULLINS & GROSSMAN, PA
1001 Brickell Bay Drive
9th Floor
Miami, FL 33131
By: 	Gregory Grossman, Esq.
HARRIS, ST. LAURENT & CHAUDHRY LLP
40 Wall Street, 53rd Floor
New York, NY 10005
By: 	Andrew St. Laurent, Esq.
HOLLAND & KNIGHT LLP
Warren E. Gluck, Esq.
Christopher R. Nolan, Esq.
31 West 52 nd Street
New York, New York 10019
By: 	Warren E. Gluck, Esq.
Christopher R. Nolan, Esq.
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JAMES L. GARRITY, JR.
UNITED STATES BANKRUPTCY JUDGE
Before the Court is the Motion of Richard Rothenberg (“Rothenberg”) to Vacate, in Part,
This Court’s April 29, 2016 Order (the “April Order”), and to Quash the May 2, 2016 Subpoena
(the “Subpoena”) Issued Thereunder [ECF No. 35] (the “Motion”), in the chapter 15 case
(pending recognition) of Cinque Terre Financial Group Limited (“Cinque Terre” or the
“Debtor”). By his Motion, Rothenberg seeks to partially vacate this Court’s April Order granting
certain provisional relief as to Rothenberg, and quash the Subpoena commanding, inter alia, the
production of various documents and information, on the ground that the mere fact of producing
any such documents violates his Fifth Amendment right against self-incrimination. The
Liquidator opposes the Motion, contending that Rothenberg, as a custodian of Cinque Terre’s
books and records, cannot invoke the privilege, and in any case, does not meet the standards
required by the privilege.
Because the Court concludes that Rothenberg was the Debtor’s Chief Financial Officer
(“CFO”) at the time the April Order and Subpoena were issued, and that the Subpoena was
issued to Rothenberg in his capacity as a representative of Cinque Terre, such that Rothenberg
was a “custodian,” within the meaning of the term used in Braswell v. United States, 487 U.S. 99
(1988), Rothenberg is not entitled to assert the “act of production” privilege under the Fifth
Amendment with respect to the production of Cinque Terre’s corporate documents.
Accordingly, pursuant to Rule 45 of the Federal Rules of Civil Procedure, made applicable
herein by Rule 9016 of the Federal Rules of Bankruptcy Procedure, the Court modifies and limits
the scope of the Subpoena to require the production of Cinque Terre’s corporate records in
Rothenberg’s possession, custody or control. In addition, the Court modifies paragraph 2 of the
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April Order (discussed below) to direct Rothenberg to immediately provide counsel to the
Liquidator with the computer files and/or network stored files of Cinque Terre in his possession,
custody or control, and paragraphs 3 and 4 of that order (discussed below) to direct Rothenberg
to turnover only the corporate files, documents and emails of Cinque Terre in his possession,
custody or control.
Thus, the Motion is granted in part, and denied in part, and the Subpoena and April Order
are modified as set forth herein.
Jurisdiction
The Court has jurisdiction pursuant to 28 U.S.C. §§157(a) and 1334(a), and the Amended
Standing Order of Referral of Cases to Bankruptcy Judges of the United States District Court for
the Southern District of New York, dated January 31, 2012 (Preska, C.J.). This is a “core
proceeding” under 28 U.S.C. § 157(b)(2).
Background 1
Cinque Terre is a limited liability company formed under the laws of the British Virgin
Islands. Prior to the commencement of the BVI Liquidation (defined below), Cinque Terre was
purportedly engaged in the business of international energy transactions. The sole shareholder
and director of Cinque Terre is an Italian national named Alexander Bazzoni (“Bazzoni”), who
had been conducting business from Switzerland, but may have recently relocated to Venezuela.
On November 15, 2015, Pegasus Oil Trading Limited, a creditor of Cinque Terre, applied
to the Eastern Caribbean Supreme Court High Court of Justice, Virgin Islands Commercial
Division, in the British Virgin Island (the “BVI Court”) for an order under the BVI Insolvency
Act of 2003 (“2003 Act”) placing Cinque Terre in liquidation and appointing a liquidator (the
1 	Except as otherwise noted, the underlying facts are not in dispute.
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“BVI Liquidation”). RB International Finance (USA) LLC (“RB International”), another
creditor of Cinque Terre, subsequently sought to intervene, and was substituted as the petitioning
creditor. On April 11, 2016, the BVI Court heard and granted the application. On the same day,
the BVI Liquidation order was entered and Stuart MacKellar (the “Liquidator”) was appointed as
the Liquidator of the Debtor.
On April 27, 2016 (the “Petition Date”), the Liquidator, acting on behalf of Cinque Terre,
filed a voluntary petition under chapter 15 of the Bankruptcy Code in this Court for recognition
of the BVI Liquidation as a foreign main or non-main proceeding. The Debtor also filed an
Application for Ex Parte Relief For Temporary Restraining Order and for an Order Granting
Provisional Relief Under Bankruptcy Code Section 1519 [ECF No. 6] (the “Provisional Relief
Motion”), supported by the Declaration of Stuart Mackellar [ECF No. 3] (the “MacKellar
Declaration”) and Declaration of Andrew Thorp [ECF No. 4] (the “Thorp Declaration”). The
Provisional Relief Motion sought, on an ex-parte basis, the entry of an order:
a. 	enjoining all persons and entities subject to the jurisdiction of this Court from
destroying, secreting, altering, deleting or otherwise disposing of any documents,
records, emails, filings, or other information, however stored, concerning or
relating to the assets, affairs, rights, obligations or liabilities of Cinque Terre, and
directing them to provide access to such documents, records, emails, or
information via the applicable electronic means;
b. 	enjoining all persons and entities subject to the jurisdiction of this Court from
moving or otherwise disposing of Cinque Terre’s assets or records outside the
jurisdiction of this Court, including without limitation, to Venezuela;
c. 	staying the pending action by Centauro Liquid Opportunities Master Fund, L.P.
against Cinque Terre entitled Centauro Liquid Opportunities Master Fund, L.P. v.
Bazzoni, 1:15-cv-09003-LTS-SN (S.D.N.Y.) (the “District Court Action”);
d. 	authorizing the Liquidator or technicians acting on his behalf to conduct
expedited discovery, including an inspection of the computer(s) and email
accounts utilized in relation to Cinque Terre used by Cinque Terre’s Chief
Financial Officer, Richard Rothenberg, and directing Mr. Rothenberg to provide
the necessary access to the same;
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e. 	authorizing the Liquidator or technicians acting on his behalf to download and
image the contents of Richard Rothenberg’s computer hard drive, including to
access and download any network-stored files to which Richard Rothenberg’s
computer or Richard Rothenberg have access, including but not limited to emails;
f. 	directing Richard Rothenberg to furnish any logon-information and passwords
necessary for the Liquidator or technicians acting on his behalf to access Richard
Rothenberg’s computer files and/or the network-stored files to which Richard
Rothenberg’s computer or Richard Rothenberg have access;
g. 	directing Richard Rothenberg to appear for examination before the Court or
alternatively authorizing the Liquidator to issue a subpoena for a Fed. R. Bankr.
Proc. 2004 examination duces tecum concerning the records, assets, affairs,
rights, obligations or liabilities of Cinque Terre and shortening the number of
days to produce responsive documents to seven (7) days from the date of service
on Mr. Rothenberg;
h. 	upon written request served by the Liquidator, directing the turnover of any and
all documents, records, filings, or other information, however stored, accessible
by persons in the United States, regarding the assets, affairs, rights, obligations or
liabilities of Cinque Terre from any person or entity subject to this Court’s
jurisdiction, including but not limited to Cinque Terre’s former officers, directors,
employees, representatives, legal advisors, shareholders, members, subsidiaries,
counterparties, financial institutions, investment advisors and accountants;
i. 	waiving the security provisions of Federal Rules of Civil Procedure 65(c); and
j. 	granting such other relief as may be just and proper.
As support for his request for provisional relief, the Liquidator advised that based upon
his investigation of Cinque Terre’s affairs since his appointment, he believed that there were
“significant indicia of fraud” surrounding Cinque Terre’s business, and that Cinque Terre would
suffer irreparable harm if the ex-parte relief were not granted because Bazzoni “may cause the
transfer of Cinque Terre’s remaining records and assets to Venezuela or some other destination
outside the jurisdiction of this Court before the Court has the opportunity to rule on the Petition.”
See Provisional Relief Motion ¶ ¶ 10, 11. Further, with respect to Rothenberg, the Liquidator
was “concerned that any documents or other information concerning Cinque Terre’s business
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and operations that remain in Mr. Rothenberg’s possession may be at risk of spoliation if not
recovered in the very near term.” Id. ¶ 14.
On the same day, this Court held an ex-parte hearing on the Provisional Relief Motion,
granted, in part, the Liquidator’s request for a temporary restraining order, and set a hearing for
May 10, 2016 (“First Provisional Relief Hearing”) to consider the additional relief sought in the
Provisional Relief Motion, upon notice to parties. See April Order [ECF No. 9]. Pursuant to the
April Order:
1. 	Richard Rothenberg, the chief financial officer of Cinque Terre, was temporarily
enjoined from destroying, secreting, altering, deleting or otherwise disposing of
any documents, records, emails, filings, or other information, however stored,
concerning or relating to the assets, affairs, rights, obligations or liabilities of
Cinque Terre;
2. 	Mr. Rothenberg was directed to immediately provide counsel to the Liquidator
access to and copies of, as well as furnish any logon-information and passwords
necessary for the Liquidator or technicians acting on his behalf to access, the
computer files and/or the network-stored documents of Cinque Terre;
3. 	Mr. Rothenberg was directed to immediately turnover and/or provide copies of all
files and documents stored on his personal computer that concern Cinque Terre;
4. 	Mr. Rothenberg was directed to immediately turnover and/or provide copies of
any all emails concerning Cinque Terre, whether those emails are stored on his
computer, on a server for Cinque Terre, or on any cloud or web-based email
service including but not limited to yahoo.com; and
5. 	The Liquidator was authorized to issue a subpoena (the “Subpoena”) for a
Fed.R.Bankr. Proc. 2004 oral examination and production of documents
concerning the records, assets, affairs, rights, obligations or liabilities of Cinque
Terre and shortening the number of days to appear for the examination and
produce the documents to seven (7) days from the date of service on Mr.
Rothenberg.
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Pursuant to the April Order, the Liquidator issued the Subpoena, dated May 2, 2016, on
“Richard Rothenberg,” commanding his appearance for a Rule 2004 Examination, and the
production of the following documents:2
1. 	All documents in your possession, custody or control that concern, relate to, or
pertain to Cinque Terre during the Relevant Time Period.3
2. 	All email communications by your or to you that concern, relate to, or pertain to
Cinque Terre during the Relevant Time Period.
3. 	Documents sufficient to identify any logon-information and passwords necessary
to access any files or documents of Cinque Terre including but not limited to all
computer files or network-stored documents of Cinque Terre.
4. 	Documents sufficient to identify the location of any documents over which
Cinque Terre has possession, custody, or control.
5. 	Documents sufficient to identify the name and location of all persons employed
by Cinque Terre during the Relevant Time Period.
6. 	Documents sufficient to identify the name and location of all lawyers,
accountants, financial managers, auditors, consultants, and agents of Cinque Terre
during the Relevant Time Period.
On May 10, 2016, Rothenberg, by his counsel, filed the Motion, seeking to quash the
Subpoena and vacating most of the provisional relief (see #2 - #4 above) granted in the April
Order. As discussed in further detail below, Rothenberg argues that “compliance with the
[April] Order and the Subpoena would require [him] to incriminate himself,” in violation of his
rights against self-incrimination under the Fifth Amendment. See Motion at 1.
On the same day, at the First Provisional Relief Hearing, the Court continued the
temporary relief under the April Order to the date of the hearing on the Debtor’s petition for
recognition of the foreign proceeding, granted certain additional provisional relief (including the
2 	The Subpoena is attached to the Declaration of Andrew St. Laurent [ECF. No. 37].
3 	Relevant Time Period is defined in the Subpoena as January 1, 2010 to the present.
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stay of the District Court Action as to the Debtor), but carved out the specific relief as to
Rothenberg.4 The Court then set a hearing date of May 20, 2016 (the “Motion to Quash
Hearing”) to consider the Motion and the remaining relief sought in the Provisional Relief
Motion with respect to Rothenberg. See Order (A) Granting, In Part, Provisional Relief Under
Section 1519 of the Bankruptcy Code, (B) Setting Briefing Schedule on Non-Party’s Motion to
Vacate Order and to Quash Subpoena, and (C) Scheduling Further Hearing on Request for
Provisional Relief and Non-Party’s Motion [ECF No. 47] (the “Provisional Relief Order”).
On May 17, 2016, the Liquidator filed its Opposition to the Motion to Vacate and Quash
[ECF No. 46] (the “Liquidator’s Opposition”). Rothenberg then filed its Reply in Further
Support of His Motion to Vacate and Quash on May 18, 2016 [ECF No. 49] (the “Rothenberg
Reply”). The Motion to Quash Hearing was held on May 20, 2016.
Discussion
Legal Standards
The Fifth Amendment of the U.S. Constitution states:
No person shall be held to answer for a capital, or otherwise infamous crime, unless
on a presentment or indictment of a grand jury, except in cases arising in the land
or naval forces, or in the militia, when in actual service in time of war or public
danger; nor shall any person be subject for the same offense to be twice put in
jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness
against himself, nor be deprived of life, liberty, or property, without due process of
law; nor shall private property be taken for public use, without just compensation.
U.S. Const. amend. V. This constitutional right against self-incrimination ensures that one
cannot be compelled to be a witness against oneself, which has been construed as protecting
individuals from compelled testimony. See, e.g., Couch v. United States, 409 U.S. 322, 328
(1973) (“Compulsion upon the person asserting it is an important element of the privilege, and
4 	At that hearing, Rothenberg’s counsel agreed that Rothenberg would continue to abide by the temporary
injunction against the disposal of Cinque Terre’s documents and assets.
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prohibition of compelling a man … to be witness against himself is a ‘prohibition of the use of
physical or moral compulsion to extort communications from him.’”) (quoting Holt v. United
States, 218 U.S. 245, 252-53 (1910)); see also In re Grand Jury Subpoenas Deuces Tecum Dated
June 13, 1983 and June 22, 1983, 722 F.2d 981 (2d Cir. 1983) (“The rationale [of the Fifth
Amendment privilege] has been that a person’s papers represent his personal communications
and that without such protection he could be subjected to coercion designed to extract the
evidence from him in the same manner as if he were forced to testify against himself.”). As the
language of the Fifth Amendment makes plain, such right is personal to the individual, and may
not be raised by a corporate entity. See Couch, 409 U.S. at 328 (“It is important to reiterate that
the Fifth Amendment privilege is a personal privilege; it adheres basically to the person….”);
Curcio v. United States, 354 U.S. 118, 125 (1957) (“It is settled that a corporation is not
protected by the constitutional privilege against self-incrimination.”).
The protection against testimonial self-incrimination has been extended to the context of
responding to subpoenas and summonses by the “act of production” doctrine, the contours of
which were principally established in three leading Supreme Court cases: Fisher v. United
States, 425 U.S. 391 (1976), United States v. Doe, 465 U.S. 605 (1984), and Balt. City Dep’t of
Social Servs. v. Bouknight, 493 U.S. 549 (1990). The act of production doctrine is based upon
the principle that:
The act of producing evidence in response to a subpoena nevertheless has
communicative aspects of its own, wholly aside from the contents of the papers
produced. 	Compliance with the subpoena tacitly concedes the existence of the
papers demanded and their possession or control by the [respondent]. It would also
indicate the [respondent’s] belief that the papers are those described in the
subpoena.
Fisher, 425 U.S. at 410 (citing Curcio, 354 U.S. at 125). See also Doe, 465 U.S. at 613 (“[B]y
producing documents in compliance with a subpoena, the witness would admit that the papers
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existed, were in his possession or control, and were authentic.”).
In the Second Circuit, the cases generally hold that this “act of production” privilege
applies in two situations: (1) if the existence and location of the subpoenaed papers are unknown
to the government, then the [respondent’s] compelled production of those documents ‘tacitly
concedes the existence of the papers demanded and their possession or control by the
[respondent]’ and (2) where the [respondent’s] production of documents may ‘implicitly
authenticate’ the documents and in so doing provide a link in the chain of incrimination.” United
States v. Fox, 721 F.2d 32, 36 (2d Cir. 1983); In re Grand Jury Subpoena Deuces Tecum Dated
Oct. 29, 1992, 1 F.3d 87, 93 (2d Cir. 1993) (“1992 Subpoena”) (same); In re Grand Jury
Subpoena Dated July 6, 2005, 256 Fed. App’x. 379, 381 (2d Cir. 2007) (same); accord In re DG
Acquisition Corp., 208 B.R. 323 (Bankr. S.D.N.Y. 1997) (“The rule in the Second Circuit to
determine whether individuals may invoke the “Act of Production” doctrine uses a two part test.
First, the court must determine whether the production of documents would be testimonial.
Second, the subpoenaed party must demonstrate that the summoned documents are
incriminating.”) (internal citation omitted).
Stated another way, “it is now settled that an individual may claim an act of production
privilege to decline to produce documents, the contents of which are not privileged, where the
act of production is, itself, (1) compelled, (2) testimonial, and (3) incriminating.” In re Three
Grand Jury Subpoenas Duces Tecum Dated Jan. 29, 1999, 191 F.3d 173, 178 (2d Cir. 1999)
(citing Doe, 465 U.S. at 612-14); see also United States v. Gendreau, No. 12-Misc-303, 2014
WL 464754, at *2 (S.D.N.Y. Jan. 22, 2014) (same); SEC v. Forster, No. 15-MC-246, 2015 WL
7960386, at *3 (S.D.N.Y. Dec. 5, 2015) (same).
The caselaw is also settled that there are exceptions to the act of production privilege
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where (1) the existence and location of the subpoenaed papers are known, such that the
production is not testimonial5 — see, e.g., In re Grand Jury Subpoena Duces Tecum Dated Nov.
13, 1984, 616 F. Supp. 1159, 1161 (E.D.N.Y. 1984) (“1984 Subpoena”) (“If the government can
demonstrate with reasonable particularity that it knows of the existence and location of
subpoenaed documents, no privilege to refuse production on the first ground exists.”) (citing
Fox, 721 F.2d at 37) (emphasis added); and (2) where the documents subpoenaed may be
authenticated by other means—see id. (“Conversely, when the government can authenticate the
documents without relying on any act by petitioner, then production by petitioner does not
implicate the Fifth Amendment.”); see also In re Hyde, 235 B.R. 539, 546 (S.D.N.Y. 1999)
(“[I]n those cases that did not hold production privileged, there were means of authenticating the
documents other than directly through the production sought.”).
The Parties’ Arguments
In the Motion, Rothenberg asserts that compliance with the April Order and the Subpoena
violates his “act of production” privilege because all three elements required under this
privilege—compulsion, testimony and incrimination—are triggered by the required production.
Specifically, Rothenberg contends that, first, as to compulsion, “it is self-evident that the [April]
Order and Subpoena are compulsory.” Motion at 6. 7 Second, as to the production being
5 	This is also referred to as the “foregone conclusion” exception. See, e.g., 1992 Subpoena, 1 F.3d at 93 (“Since
Doe produced a copy of the calendar to the SEC and testified about his possession and use of it, its existence and
location are ‘foregone conclusion[s],’ and his production of the original ‘adds little or nothing to the sum total of the
Government’s information.”) (citing Fisher, 425 U.S. at 411); accord In re Grand Jury Subpoena Duces Tecum
Dated Mar. 25, 2011, 670 F.3d 1335 (11th Cir. 2012) (“2011 Subpoena”) (“[U]nder the ‘foregone conclusion’
doctrine, an act of production is not testimonial—even if the act conveys a fact regarding the existence or location,
possession, or authenticity of the subpoenaed materials—if the Government can show with ‘reasonable particularity’
that, at the time it sought to compel the act of production, it already knew of the materials, thereby making any
testimonial aspect a ‘foregone conclusion.’”).
7 	At the Motion to Quash Hearing, counsel for the Liquidator conceded that this first prong of compulsion has
been met because compliance with the April Order and Subpoena is necessarily compulsory.
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testimonial, Rothenberg argues that the Subpoena is so broad, he is effectively compelled to
provide testimonial information in the form of responsive documents—for example, the April
Order requires him to provide “all files and documents stored on his personal computer that
concern Cinque Terre,” and the Subpoena requires production of “[a]ll emails communications
by you or to you that that concern, relate to, or pertain to Cinque Terre during the Relevant Time
Period,” such that Rothenberg is required to “demonstrate the existence of, his possession of, and
the authenticity of using the ‘contents of his own mind.’” Id. (citing United States v. Hubbell,
530 U.S. 27 (2000)8 ) Third, “the potentially incriminatory aspect of such a production is made
evident by the Liquidator’s own statements that his investigation ‘revealed significant concerns
of fraud.’” Rothenberg also argues that “[b]oth the [April] Order and the Subpoena are directed
at [him] personally.” Id.
The Liquidator counters that Rothenberg was not subpoenaed in his personal capacity;
rather, the April Order was directed to Rothenberg “in his capacity as CFO of Cinque Terre.”
Further, he contends that Rothenberg “as the Chief Financial Officer of Cinque Terre, is a
custodian of Cinque Terre’s records,” and as such, is not entitled to invoke the Fifth Amendment
privilege because of the “collective entity” rule. See Liquidator’s Opposition at 4.
The Liquidator also asserts that the act of production doctrine does not apply because
Rothenberg has not established the testimonial and incriminatory elements. According to the
Liquidator, Rothenberg’s act of producing is not testimonial because the Liquidator is “already
aware of the existence and possession of the computer, bank accounts, the email accounts, and
8 	See also 2011 Subpoena, 670 F.3d at 1345 (“[T]he Fifth Amendment privilege is not triggered where the
Government merely compels some physical act, i.e., where the individual is not called upon to make sure of the
contents of his mind.”) (citing Hubbell); In re Welsh, No. 13-02457, 2013 Bankr. LEXIS 4716, at *15 (Bankr.
E.D.N.C. Nov. 7, 2013) (“In determining whether the act of production itself compelled testimonial
communications, the Court has looked to whether the respondent was required to use ‘the contents of his own mind’
in order to comply with the request.”).
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certain files that were requested.” Liquidator Opposition at 9. Additionally, he says that
Rothenberg has not met his burden of proving that the act of producing the documents requested
would be incriminating. Liquidator’s Opposition at 10.
In reply, Rothenberg asserts that neither the April Order nor the Subpoena designated
Rothenberg as the Debtor’s CFO, indicating that the production was directed at Rothenberg in a
personal capacity. Moreover, Rothenberg claims that he had been “separated” from Cinque
Terre by the Liquidator since at least since April 27, 2016. Rothenberg Reply at 4.
Rothenberg also dismisses the Liquidator’s foregone conclusion exception—of “already
[being] aware” of the existence of the information sought as having “no evidentiary support” and
bearing no relationship to the broad requests in the April Order and Subpoena. In addition, he
contends that under the analysis in In re Hyde, 235 B.R. at 544, “the assertion that a given
production would be incriminating should be credited by the Court,” and no further showing on
the incrimination prong need be made. Rothenberg Reply at 9.
Analysis
The Court begins its analysis by considering the capacity in which Rothenberg was
subpoenaed and directed under the April Order to produce the documents and information
because, as a threshold matter, if Rothenberg was a custodian of the books and records of the
Cinque Terre, the Supreme Court has long held that a custodian in a representative capacity of a
corporate entity cannot resist a subpoena for the production of such corporate documents on Fifth
Amendment grounds. See Braswell v. United States, 487 U.S. 99 (1988); accord Armstrong v.
Guccione, 470 F3d 89 (2d Cir. 2006).
In Braswell, the petitioner was served with a grand jury subpoena issued to “Randy
Braswell, President Worldwide Machinery Sales, Inc. [and] Worldwide Purchasing, Inc.” that
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required him to produce the books and records of the two named corporations. 487 U.S. at 100.
In addressing the issue before it of “whether the custodian of corporate records may resist a
subpoena for such records on the ground that the act of production would incriminate him in
violation of the Fifth Amendment,” the Supreme Court undertook an extensive analysis of the
applicable jurisprudential precedents, beginning with the “collective entity” rule established
under Doe, 465 U.S. at 613. The Braswell Court noted that:
[W]e have long recognized that, for purposes of the Fifth Amendment, corporations
and other collective entities are treated differently from individuals. This doctrine
– known as the collective entity rule – has a lengthy and distinguished pedigree.
487 U.S. at 104. The Court then continued to discuss the line of cases following Doe that have
expanded this principle to apply to corporate officers acting in a custodian capacity from
asserting a personal Fifth Amendment privilege, concluding:
The plain mandate of these decisions is that without regard to whether the subpoena
is addressed to the corporation, or as here, to the individual in his capacity as a
custodian… a corporate custodian such as petitioner may not resist a subpoena for
corporate records on Fifth Amendment grounds.
Id. at 109 (citing Dreier v. United States, 221 U.S. 394 (1911); Bellis v. United States, 471 U.S.
85 (1974)). See also Hale v. Henkel, 201 U.S. 43 (1906); Wilson v. United States, 221 U.S. 361
(1911); Curcio, 354 U.S. at 122 (“The foregoing cases stand for the principle that the books and
records of corporations cannot be insulated from reasonable demands of governmental
authorities by a claim of personal privilege on the part of their custodian.”).
The holding in Braswell was recently reinforced by the Second Circuit in Armstrong, 470
F.3d 89, and In re Grand Jury Subpoena Issued June 18, 2009, 593 F.3d 155 (2d Cir. 2010) (per
curiam) (“2009 Subpoena”). In Armstrong, the Second Circuit addressed the issue of “whether
Armstrong’s Fifth Amendment right against compelled self-incrimination protects him from
being compelled by court order to produce corporate records and assets, which he holds as a
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custodian for the corporation.” 593 F.3d at 93. There, Armstrong, a former corporate officer,
had refused to comply with a turnover order that directed “Armstrong and the Corporate
Defendants … turn over to the court-appointed receiver all corporate books, records, and ‘assets
of the Corporate Defendants [that the defendants had] in their current possession, custody or
control.” Initially noting that “Braswell controls here,” and that the case was a “routine
application of Braswell,” the Second Circuit went on to address Armstrong’s contention that the
Supreme Court’s decision in United States v. Hubbell, 530 U.S. 27 (2000) 9 undermined the
holding in Braswell. The Second Circuit then concluded that the Court remained “bound by the
Supreme Court’s holding in Braswell.” Id. at 98.
Similarly, in 2009 Subpoena, the Second Circuit again affirmed the holding in Braswell,
this time in the context of a sole-propriertorship. 593 F.3d at 156-57. The Court noted, that:
Under the long established “collective entity rule,” however, corporations cannot
avail themselves of the Fifth Amendment privilege. A corollary of this rule is that
the custodian of corporate records, who acts as a representative of the corporation,
cannot refuse to produce corporate records on Fifth Amendment grounds. This is
true (1) whether the subpoena is directed to the corporation itself or to the custodian
in his representative capacity, and (2) “regardless of how small the corporation may
be.”
Id. at 157-58.
Applying these cases here, the parties do not dispute that the act of production privilege is
unavailing to a custodian who responds to a subpoena in a representative capacity for the
production of corporate documents. The crux of the parties’ dispute is whether Rothenberg is
such a custodian. To that end, Rothenberg asserts that the Subpoena and April Order were
9 	The issue in Hubbell was whether the government had made “derivative use” of the testimonial aspect of the
respondent’s production in obtaining the respondent’s indictment and preparing for trial even though the
government did not intend to use the act of production at trial. 530 U.S. at 41-44. Except as part of a string cite, the
Hubbell Court did not otherwise mention Braswell. In Armstrong, the Second Circuit noted Hubbell’s impact on
Braswell in that “Hubbell recognized that the compelled production of documents can be testimonial to the extent
that such production communicates a statement of fact….” The Second Circuit then found that “Braswell is not
wholly inconsistent with Hubbell.” 470 F.3d at 98.
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addressed to him personally, not as CFO or custodian of Cinque Terre. See Rothenberg Reply at
2. Rothenberg further claims that he is not the CFO of Cinque Terre and “has not been since at
least April 27, 2016.” See Rothenberg Reply at 4. In support of this contention, Rothenberg
cites to a reference to himself as the former CFO of Cinque Terre, and other references to former
officers and directors of Cinque Terre, by the Liquidator in the MacKellar Declaration. Id. at 4-
5. The Liquidator disputes this position, arguing that Rothenberg himself has acknowledged his
position as Cinque Terre’s CFO in an email exchange with the Liquidator. See Liquidator’s
Opposition at 5 (citing to MacKellar Declaration, ECF No. 3-3 at 3). The Liquidator also argues
that no such “magic words” are necessary to denote Rothenberg’s representative capacity as
custodian. See Motion to Quash Hearing Tr.
In the first instance, it matters not whether the Liquidator addressed the subpoena to
Rothenberg in his capacity of a corporate officer or custodian of the Debtor’s records, or
individually. See In re Teknek, LLC, No. 05 B 27545, 2006 WL 2136046, at *4 (Bankr. N.D. Ill.
June 30, 2006). (“[A]s long as a subpoena is addressed to a specific person who would have
sufficient control and power to physically produce specified documents in the event that such
person desired to do so, the person must comply with the subpoena; there is no capacity defense
to a subpoena that requires the party serving it to speculate as to which hat the compelled person
mush garnish in order to conjure up the ability and power to produced certain documents and
information.”) The distinction is important here due to Rothenberg’s argument that his status as
custodian impacts his ability to assert a Fifth Amendment privilege in seeking to quash the
subpoena. “[T]he party invoking a privilege [under Fed. R. Civ. P. 45(d)(3)(A)(iii)] bears the
burden of establishing its applicability to the case at hand.” La Suisse, Societe D’Assuarances
Sur La Vie v. Kraus, 62 F. Supp. 3d 358, 362 (S.D.N.Y. 2014) (quoting In re Grand Jury
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Subpoenas Dated Mar. 19, 2002 & August 2, 2002, 318 F.3d 379, 384 (2d Cir. 2003)); see also
HDSherer LLC v. Nat. Molecular Testing Corp., 292 F.R.D. 305, 308 (D.S.C. 2013) (“[T]he
burden of proof is with the party objecting to the discovery to establish that the challenged
production should not be permitted.”). As a result, the burden is on Rothenberg to establish that
he is not a custodian because such distinction is part of his assertion of the privilege in
challenging the production.
The Court finds, based on the evidentiary record before it, that Rothenberg has failed to
carry his burden in demonstrating that he was not the Debtor’s CFO at the time that the April
Order and Subpoena were issued.10 First, as noted by the Liquidator, Rothenberg’s own email,
dated April 15, 2016, stated: “I am the Chief Financial Officer of the Company.” See
Rothenberg Email dated 4/15/16 [attached as Exhibit 3 to MacKellar Declaration] (the
“Rothenberg April Email”).
Second, the parties do not dispute, and as also evidenced by the Rothenberg April Email,
that under the 2003 Act, commencement of the BVI Liquidation did not displace or otherwise
separate Rothenberg from his position as the Debtor’s CFO. To the contrary, Section 175(1)(b)
of the 2003 Act, provides that upon the commencement of a liquidation proceeding, “the
directors and other officers of the company remain in office, but they cease to have any powers,
functions or duties other than those required or permitted under [the Act].” See Thorp
Declaration ¶ 11. See also Rothenberg April Email (“I understand that I remain in office at the
Company though I cannot exercise my powers otherwise than in accordance with the BVI
Insolvency Act, 2003.”)
Third, Rothenberg did not submit any documentary evidence, such as a notice of
10 	See Armstrong, 470 F.3d at 98-99 (noting that respondent’s status as custodian should be evaluated as of the
time that the turnover order was issued).
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termination or letter of resignation, showing that he had ceased to be Cinque Terre’s CFO as of
April 27, 2016. Indeed, when asked by the Court at the Motion to Quash Hearing as to the
details of Rothenberg’s purported separation from the Debtor, counsel for Rothenberg could not
provide any.
Fourth, the only documentary evidence that is in the record as to Rothenberg’s status is
Rothenberg’s resignation email dated May 19, 2016. See Rothenberg Email, dated May 19, 2016
[Liquidator’s Exhibit 1] (the “Rothenberg Resignation Email”). Notwithstanding Rothenberg’s
bald statement therein, that “[he has] not been Chief Financial Officer or Director of Cinque
Terre Financial Group, Limited, since at least April 27, 2016,” the Rothenberg Resignation
Email actually cuts in favor of the Liquidator; not only is the timing of such email self-serving
(exchanged just one day before the Motion to Quash Hearing, and after Rothenberg had been
served with the April Order and the Subpoena), but would be wholly unnecessary if Rothenberg
had, in fact, already been separated from Cinque Terre as of April 27, 2016.
Lastly, although there were several references by the Liquidator to “former employees of
Cinque Terre” in the MacKellar Declaration, such statements were not specific to Rothenberg,
except for one. But that is contradicted by the Liquidator’s statements elsewhere in the
MacKellar Declaration referring to Rothenberg as the existing CFO (see MacKellar Declaration
¶¶ 17, 34(a), 35(f)), as well as in the April Order directed to Rothenberg, “as Cinque Terre’s
Chief Financial Officer.” April Order at (ordered) ¶ 1.
As Cinque Terre’s CFO, Rothenberg acts in a custodian capacity in respect of the
corporate documents in his possession, custody or control. Accordingly, the Court further finds
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that the act of production privilege does not apply here.11
Modification of the Subpoena and April Order
The holdings in Braswell and its progeny establish that a custodian may not resist a
subpoena for corporate documents on Fifth Amendment grounds. 487 U.S. at 119 (emphasis
added). Here, the April Order and Subpoena require the production of documents and
information beyond the corporate books and records of Cinque Terre.12 Thus, to the extent that
the Liquidator seeks additional information outside of the corporate documents held by
Rothenberg as custodian, the production demand must be modified accordingly.
Rule 45(d)(3)(A) of the Federal Rules of Civil Procedure states that:
On a timely motion, the court for the district where compliance is required must quash or
modify a subpoena that:
(i) 	fails to allow a reasonable time to comply;
(ii) 	requires a person to comply beyond the geographical limits specified in
Rule 45(c);
(iii) 	requires disclosure of privileged or other protected matter, if no exception
or waiver applies; or
(iv) 	subjects a person undue burden.
Fed. R. Civ. P. 5(d)(3)(A). Thus, under Rule 45, courts generally have broad discretion to
modify subpoenas to fashion appropriate remedies and address parties’ concerns. Cf. Northrop
Corp. v. McDonnell Douglas Corp., 751 F.2d 395, 403 (D.C. Cir. 1984) (stating that courts
should consider in their discretion “the possibility of modifying the subpoena rather than
quashing” it); Flanagan v. Wyndham Int’l. Inc., 231 F.R.D. 98, 102 (D. D.C. 2005) (“A court
should be loathe to quash a subpoena if other protection of less absolute character is possible”).
11 	Because the Court concludes that the act of production privilege is inapplicable, the Court does not need to
reach the question of whether the three prongs under the privilege—namely, compulsion, testimony, and
incrimination—has been established by Rothenberg.
12 	This point is also conceded to by the Liquidator, stating “Rothenberg cannot seek Fifth Amendment protection
from these requests, at least with respect to Cinque Terre’s records.” (emphasis added). Liquidator’s Opposition at
6.
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Accordingly, the Subpoena is modified to limit Rothenberg’s production, as to each
category of documents requested, to the corporate books and records and other information of
Cinque Terre that Rothenberg possesses in a representative capacity. In addition, paragraphs 2, 3
and 4 of the April Order are modified to reflect that the order is directing Rothenberg’s actions as
custodian of Cinque Terre’s records, as follows:
2. 	Mr. Rothenberg is directed to immediately turnover and/or provide copies of all
computer files and/or network-stored documents of Cinque Terre in his
possession, custody or control;
3. 	Mr. Rothenberg is directed to immediately turnover and/or provide copies of all
Cinque Terre’s corporate files and documents stored on his personal computer;
and
4. 	Mr. Rothenberg is directed to immediately turnover and/or provide copies of all
emails, whether such stored on a server for Cinque Terre, or on any cloud or web-
based email service, including but not limited to yahoo.com, that he sent or
received in his capacity as Cinque Terre’s Chief Financial Officer or Director.
All other provisions of the April Order remain intact.
Conclusion
Based upon the foregoing, the Motion to Quash is granted in part and denied in part. The
Liquidator is to settle an order consistent with this Memorandum Decision.
Dated: New York, New York
May 24, 2016
/s/ James L. Garrity, Jr.
________________________________
Honorable James L. Garrity, Jr.
United States Bankruptcy Judge
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