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Penalosa v. Department of Defense

United States District Court, D. Colorado

April 8, 2015

NATHANIEL L. PENALOSA, Movant,
v.
DEPARTMENT OF DEFENSE, Respondent.

ORDER

RAYMOND P. MOORE, District Judge.

This matter is before the Court on Movant Nathaniel L. Penalosa's ("Movant") Motion for Order Pursuant to Customer Challenge Provisions of the Right to Financial Privacy Act of 1978, supported by a Sworn Statement of Movant, and supplemented with a subsequent Sworn Statement of Movant (ECF Nos. 1, 2, 9) (collectively, "Motion"). The Motion was filed pursuant to 12 U.S.C. § 3410 of the Right to Financial Privacy Act ("Privacy Act"), seeking to quash a subpoena duces tecum which Respondent Department of Defense intends to serve upon Movant's bank. Upon consideration of the Motion, the Response (ECF No. 14) filed April 6, 2015, the applicable law, and being otherwise fully advised in the premises, the Court DENIES the Motion as stated herein.

I. BACKGROUND

Movant is an active duty cadet at the United States Air Force Academy ("USAFA"). Movant received a Notice to Customer ("Notice") from the Department of the Air Force, informing him that the Office of the Inspector General, Department of Defense ("OIG DoD") is seeking Movant's financial information from USAA Federal Savings Bank ("Bank"). The OIG DoD has issued a subpoena duces tecum ("Subpoena"), which it has not yet served on the Bank, to obtain financial information in connection with an ongoing investigation to determine whether Movant violated Uniform Code of Military Justice ("UCMJ") Article 112a, "Wrongful use, possession, etc. of controlled substances."[1]

Movant timely challenges the Subpoena pursuant to 12 U.S.C. § 3410, arguing:

(1) the OIG DoD does not have statutory authority to issue the Subpoena because "the quantity of the controlled substance/drug involved must be equal to or in excess of the drug quantity specified for Base Offense Level 16 of the Drug Quantity Table found at § 2D1.1 of the Federal Sentencing Guidelines" and, here, the quantity of alleged controlled substances involved in the investigation does not meet that criteria; and,
2) the OIG DoD's Subpoena is overly broad and not narrowly tailored. The Subpoena should be limited to deposits into his checking and savings account, should exclude "[d]ebit and credit card transactions and other bank related documents, " and should be more limited as to the time frame for which the documents are sought.

(ECF No. 9, pages 2-3.[2]) Respondent contends Movant's arguments lack merit.

II. ANALYSIS

A. The Privacy Act

Pursuant to 12 U.S.C. § 3402, a Government authority may not "have access to or obtain copies of, or the information contained in the financial records of any customer from a financial institution unless the financial records are reasonably described and... (2) such financial records are disclosed in response to an administrative subpena or summons which meets the requirements of section 3405 of this title [12]." Under 12 U.S.C. § 3405, as relevant to the Motion, a government authority may obtain financial records pursuant to an administrative subpoena if "there is reason to believe that the records sought are relevant to a legitimate law enforcement inquiry." The customer, however, may file a motion to quash an administrative subpoena, and the Government is given the opportunity to respond. 12 U.S.C. § 3410(a) & (b).

In ruling on a motion to quash, the motion shall be denied if: (1) "the applicant is not the customer to whom the financial records sought by the Government authority pertain"; or (2) "there is a demonstrable reason to believe that the law enforcement inquiry is legitimate and a reasonable belief that the records sought are relevant to that inquiry." 12 U.S.C. § 3410(c). Conversely, the motion shall be granted if: (1) "the applicant is the customer to whom the records sought by the Government authority pertain;" and (2) "there is not a demonstrable reason to believe that the law enforcement inquiry is legitimate and a reasonable belief that the records sought are relevant to that inquiry, or that there has not been substantial compliance with the provisions of this chapter." 12 U.S.C. § 3410(c). The Court must decide the motion within seven calendar days of the filing of the Government's response.[3] 12 U.S.C. § 3410(b).

B. The Movant's Challenges

Essentially, Movant challenges the Subpoena on two bases: (1) lack of authority; and (2) relevancy. The Court ...


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