Tips for Using Consent Directives as a Discovery Device for Offshore Bank Records

A consent directive directs recipients to release any records of whatever nature as may be requested in the directive, including confidential banking records. It is nothing more than a customer’s demand for his own records. A consent directive generally directs any bank or other financial institution that receives the consent directive to disclose any accounts held by the signatory. A signatory identifies neither the contemplated recipients nor accounts in the consent directive. The signatory does not admit the existence of any account at any financial institution. See Rigby v. Mastro, 585 B.R. 587, 2018 Bankr. Lexis 1671 at *5 (BAP 9^th Cir. June 5, 2018). The consent directive enables an adversary, on signed consent of the accountholder, to obtain account information from the accountholder’s bank or other financial institution.

Consent directives began to be utilized and receive judicial scrutiny in the early 1980s. United States v. Ghidoni, 732 F.2d 814 (11^th Cir. 1984). Later, in Doe v. United States, 487 U.S. 201, 108 S. Ct. 2341, 101 L. Ed. 2d 184 (1988), the United States Supreme Court found consent directives permissible, not testimonial, and thus did not violate the signer’s Fifth Amendment privilege.

Courts in civil matters have authorized consent directives based on their “broad discretion” to supervise discovery. See Bank of Crete v. Koskotas, 1989 U.S. Dist. Lexis 4289 at *2-3 (S.D. N.Y. Apr. 21, 1989); see also, Odyssey Reinsurance Co. v. Nagby, 2019 U.S. Dist. Lexis 108871 (S.D. Cal. June 27, 2019); Hansel ‘N Gretel Brand, Inc. v. Savitsky, 1997 U.S. Dist. Lexis 17615 (S.D.N.Y. Nov. 10, 1997); SEC v. College Bound, Inc., 155 F.R.D. 1 (D.D.C. 1994). This includes information in offshore institutions. See, e.g., Rigby v. Mastro, supra.

A court in a bankruptcy matter in 2018 also authorized the use of consent directives for the trustee in seeking to locate and recover assets of the estate. Rigby v. Mastro, supra.

The form of the consent cannot abrogate Fifth Amendment rights. United States v. Lehder-Rivas, 827 F.2d 682 (11^th Cir. 1987); United States v. Ghidoni, supra; SEC v. College Bound, supra. To protect against abrogation of Fifth Amendment rights, the consent form must conform to the requirements in Doe v. United States. That is, the form must not require the signer to admit the existence of any account in any bank or institution over which the party has or may have had control. It merely authorizes the bank or other institution to release information regarding such accounts that do or did exist. These forms should not identify the relevant bank. The form must also state it was executed pursuant to court order. Id.; see also, SEC v. College Bound, supra; Hansel ‘N Gretel, supra; Bank of Crete v. Koskotas, supra.

Thus, there are creative devices available for U.S. litigants to seek offshore bank or brokerage information from defendants, although the defendant’s consent to the directive is necessary. However, the proper form must be used to protect infringement of Fifth Amendment rights.