Opinion ID: 2708942
Heading Depth: 3
Heading Rank: 1

Heading: Bank records

Text: In June of 2010, the plaintiffs sent interrogatories to the defendants to acquire the defendants’ bank account records. The defendants failed to comply, prompting the magistrate to grant the plaintiffs a motion to compel. The defendants then produced some records from a handful of accounts. But these records revealed other accounts also controlled by the defendants, which they had not disclosed. The plaintiffs identified eighteen such undisclosed accounts through sub‐ poenas and a tip from Polish prosecutors. They were unable to get records for two of the accounts, which were housed in non‐U.S. banks.
Adam Swiech owned one of these accounts, a Bank Julius Baer account in Switzerland. This was the account flagged for the plaintiffs by Polish prosecutors, who provided doc‐ uments showing money flowing into the account from KBP accounts. Through a subpoena, the plaintiffs obtained wire 6 No. 13‐2435 transfer records from American accounts held by Lewicki that showed additional transfers into the Julius Baer account. Swiech did not turn over any records, and he refused to acknowledge he owned the account (he claimed it belonged to his minor son). By the end of 2011, Swiech had produced nothing, despite multiple discovery requests, and claimed the records were not within his control. The magistrate was unconvinced by Swiech’s story and ordered production of the records by January 6, 2012. Throughout January and February of 2012, Swiech made a few halfhearted efforts to obtain the records. On January 6, the defendants’ counsel sent the plaintiffs a copy of a letter that Swiech supposedly sent to Julius Baer. The letter did not, however, request any specific records or provide an ac‐ count number or other identifying information. The magis‐ trate judge then instructed Swiech about the form that a proper records request should take—i.e., that the letter should include sufficient identifying information. Swiech sent another letter on January 16, but again failed to include an account number. The defendants’ lawyer apparently called Julius Baer on February 2, and was told that an ac‐ countholder could acquire information by appearing in per‐ son or by requesting it in writing. Still, Swiech produced nothing. Finally, at the end of February, the plaintiffs moved for sanctions and sought to have Swiech held in contempt. The magistrate found Swiech’s behavior sanctionable, but declined to hold him in contempt. Instead, she sanc‐ tioned Swiech with a potential adverse jury instruction: if Swiech failed to produce the records by the close of discov‐ ery, the jury would be instructed that the records would have been adverse to him. No. 13‐2435 7 The plaintiffs objected to this ruling in the district court, and the district judge found the sanction unreasonably leni‐ ent in light of Swiech’s repeated discovery violations. In an August 13, 2012 order, the district judge held Swiech in con‐ tempt, citing a need to leave “escalating sanctions … on the table in order to ensure compliance with court orders.” She noted that the magistrate’s adverse jury instruction gave Swiech the option of continued delay by allowing him to produce the documents at the close of the discovery—when they would be less useful to the plaintiffs—while still avoid‐ ing the sanction. Swiech could also opt not to produce the records at all—say, if they turned out to be very damaging— and live with the adverse instruction. Swiech argues that the magistrate judge did not clearly err and that it was therefore an abuse of discretion for the district court to hold him in contempt. We disagree. Swiech’s efforts to comply with the magistrate’s production orders were minimal, at best. He did not disclose the account’s ex‐ istence and then denied owning it. Once he got around to requesting records, he sent patently inadequate letters to Jul‐ ius Baer that did not comply with the magistrate judge’s or‐ ders. Indeed, both judges agreed that Swiech had disobeyed several explicit production orders. Given that, the district judge’s decision to stiffen the pen‐ alty was sensible. She noted that the records at issue were central to the case (the plaintiffs suspected that the Julius Baer account was a clearinghouse for money being looted from KBP), and that an adverse jury instruction was insuffi‐ cient impetus for Swiech to comply. She discussed Swiech’s history of discovery violations and explained her reasoning for imposing tougher sanctions. Moreover, contempt was a 8 No. 13‐2435 reasonable sanction. District courts must support a contempt finding with clear and convincing evidence that the court’s clear order has been violated. See Autotech Techs. LP v. Inte‐ gral Research & Dev. Corp., 499 F.3d 737, 751 (7th Cir. 2007). Swiech’s overtly noncompliant behavior in response to the magistrate’s production orders certainly qualifies. Thus, the district judge’s decision to hold Swiech in contempt was not an abuse of discretion.
The second controversial account was a Polish HSBC ac‐ count belonging to Lewicki. Lewicki first claimed the ac‐ count was irrelevant to the dispute. He then produced an affidavit saying that he was having difficulty getting the rec‐ ords from HSBC. After more back and forth between Lewicki and the magistrate, Lewicki produced only an online transaction log for the account, which contained no details about the wire transfers the plaintiffs were interested in. The plaintiffs moved to sanction Lewicki at the same time as they did Adam Swiech. Lewicki told the magistrate judge that despite his best efforts, he could do no better than the transaction log. Lewicki’s evidence of these efforts con‐ sisted of one letter that he sent the bank; a declaration claim‐ ing that he called the bank and was told wire transfer rec‐ ords were unavailable and that the bank would not confirm their unavailability in writing; and a flier from HSBC Poland indicating that it would be winding down its banking ser‐ vices in Poland. The magistrate judge had also ordered the defendants’ attorney to contact HSBC himself, but he did not do so. Counsel instead submitted a declaration stating that No. 13‐2435 9 he “truly and honestly believed” that document production was complete. Nonetheless, the magistrate judge declined to hold Lewicki in contempt or impose sanctions. The magistrate found Lewicki’s efforts more laudable than Adam Swiech’s, and concluded that the former had complied with the dis‐ covery orders. The district judge disagreed in her August 13 order, however. The district judge found Lewicki incredible and his declaration about his phone call with HSBC insuffi‐ cient to account for the absence of wire transfer records. Not‐ ing Lewicki’s history of discovery violations and dishonesty, the court held him in contempt as well. This order was a dramatic shift from the magistrate judge’s response, but that does not mean it was an abuse of discretion. Lewicki’s single, apparently unanswered letter to HSBC does not demonstrate a diligent effort at compliance. Moreover, Lewicki’s proffered flier from HSBC, which indi‐ cated a winding‐down of retail banking in Poland, did not suggest that record availability would be compromised in any way.3 The district judge’s decision to hold Lewicki in contempt was based largely on her finding that Lewicki was not credi‐ ble. This finding, in turn, was informed by Lewicki’s pattern of discovery violations and recalcitrance. We are in no posi‐ tion to question the court’s credibility finding—especially 3 The flier indicated that HSBC Poland’s Internet banking services would cease after December 31, 2011, but that paper statements would still be available by mail. The flier did not contain any information on the availability of other types of records, such as the wire transfer confirma‐ tions sought by the plaintiffs. 10 No. 13‐2435 where, as here, the court’s determination appears reasona‐ ble. The defendants argue that the district court should not have discredited Lewicki’s declaration stating that he called the bank and was told wire transfer records were unavaila‐ ble and that the bank could not provide written confirma‐ tion. There was no evidence in the record to rebut the decla‐ ration’s assertions, the defendants contend, and under the circumstances, Lewicki could do no more than attest to the records being unavailable. But this objection does not ex‐ plain why the district judge was obligated to credit Lewicki’s declaration in the first place. This is especially true because the same declaration contained Lewicki’s incredible story about his destruction of Richard Swiech’s computer hard drive (more on that below), which cast doubt on the reliability of his entire statement. Cf. United States v. Terry, 572 F.3d 430, 434 (7th Cir. 2009) (affording “special defer‐ ence” to the district court’s credibility determinations stem‐ ming from testimony at a suppression hearing because of the court’s superior ability to evaluate credibility); Xiao v. Mukasey, 547 F.3d 712, 717 (7th Cir. 2008) (noting, in the im‐ migration context, that a single significant discrepancy was “enough to find petitioners’ entire testimony not credible”). Moreover, as the district judge noted, the wire transfer rec‐ ords that the plaintiffs sought were commonly available; at the very least, it should have been possible for Lewicki to provide confirmation from HSBC if the documents were in fact unavailable. Lewicki’s claim to the contrary was emi‐ nently suspect. In sum, the district judge’s credibility deter‐ mination was not an abuse of discretion. No. 13‐2435 11 Once the district judge found Lewicki’s testimony incred‐ ible, it followed that the magistrate judge had clearly erred by not imposing sanctions. It also meant that there was clear and convincing evidence to support a contempt finding, be‐ cause what remained was Lewicki’s unexcused failure to produce documents after multiple production orders. Thus, the district court’s imposition of harsher sanctions was no abuse of discretion.