Hoopes et al v. Commodity Futures Trading Commission

Filing 6

MEMORANDUM DECISION AND ORDER denying 3 Motion to Quash; denying 4 Motion to Quash; denying 1 Motion to Quash; denying 2 Motion to Quash. Signed by Judge B. Lynn Winmill. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by krb)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO

JUSTIN HOOPES and HARLEY HOOPES,
Plaintiffs,

Case No. 4:11-mc-07055-BLW

v.

MEMORANDUM DECISION
AND ORDER

U.S. COMMODITY FUTURES TRADING
COMMISSION,
Defendant.

Before the Court are Plaintiffs’ Motions to Quash Subpoena (Docket No. 1, 2, 3,
and 4) by the U.S. Commodity Futures Trading Commission. The Court has determined
that oral argument will not significantly assist the decisional process; therefore the matter
will be resolved without a hearing. The motion is fully briefed and at issue. For the
following reasons, the Court will deny the Motions.
BACKGROUND
On March 16, 2011, Defendant U.S. Commodity Futures Trading Commission
(CFTC) issued subpoenas to East Idaho Credit Union and Zions National Bank seeking
documents and information regarding accounts in the names of Plaintiffs Justin and
Harley Hoopes in accordance with the Right to Financial Privacy Act of 1978 , 12 U.S.C.
MEMORANDUM DECISION & ORDER - 1

§§ 3401-22 (1994). CFTC sought these documents pursuant to an internal order of
investigation on January 11, 2011, captioned, “In the Matter of Certain Persons Engaged
in Fraud with Respect to Pooled Investments and/or Managed Accounts.” See Def’s
Resp., Exibit 1 at 1, Dkt. 5-1. CFTC issued these subpoenas in connection with a
legitimate law enforcement inquiry in order to determine the source of approximately 1.9
million dollars deposited into two futures trading accounts carried at Dorman Trading
(Dorman), a brokerage house in Chicago, in the Plaintiffs’ names. Def’s Resp., Exhibit 2,
Dkt. 5-2. CFTC has obtained evidence that Justin Hoopes may have drafted a letter
misstating the balance in his Dorman futures accounts, and forged the signature of the
broker handling these accounts in order to obtain a loan from a third party. Def’s Resp.,
Exhibit 4, Dkt. 5-4.
On March 25, 2001, Plaintiffs Justin and Harley Hoopes each filed motions to
quash CFTC’s subpoenas to East Idaho Credit Union and Zions Bank on the basis that
“they need more time to retain counsel.” H. Hoopes Sworn Stat., Dkt. No. 1 at 2; H.
Hoopes Sworn Stat., Dkt. No. 2 at 2; J. Hoopes Sworn Stat., Dkt. No. 3 at 3; J. Hoopes
Sworn Stat., Dkt. No. 4 at 2.

ANALYSIS
Under the Right to Financial Privacy Act of 1978 (RFPA), 12 U.S.C. §§ 3401-22
(1994), a customer may file a motion to quash a judicial subpoena. There are two
grounds on which a customer may base a challenge to release of his financial records: (1)
that the government has not met the RFPA requirements; (2) that the financial records
MEMORANDUM DECISION & ORDER - 2

sought are not relevant to a legitimate law enforcement inquiry. 12 U.S.C. §§ 3410(a)(1)(2), (c). RFPA requires that all customer motions to quash contain an affidavit or sworn
statement stating, “the applicant’s reasons for believing that the financial records sought
are not relevant to the legitimate law enforcement inquiry stated by the Government
authority in its notice, or that there has not been substantial compliance with the
provisions of this chapter.” 12 U.S.C. § 3410(a)(2).
In Plaintiffs’ Motions to Quash Subpoenas to East Idaho Credit Union and Zions
Bank, Plaintiffs do not claim that the financial records sought by CFTC are not relevant to
a legitimate law enforcement inquiry, nor that CFTC has failed to substantially comply
with the requirements of the RFPA. Rather, Plaintiffs filed their motions to quash on the
basis that “they need more time to retain counsel.” H. Hoopes Sworn Stat., Dkt. No. 1 at
2; H. Hoopes Sworn Stat., Dkt. No. 2 at 2; J. Hoopes Sworn Stat., Dkt. No. 3 at 3; J.
Hoopes Sworn Stat., Dkt. No. 4 at 2. Consequently, Plaintiffs have not complied with the

RFPA’s requirement for customer challenges. The Court finds that Plaintiffshave failed
to comply with the RFPA’s requirements for customer challenges, and that the motions to
quash should be denied. E.g., Donovan v. U.A. Local 38 Plumbers and Pipe Trades
Pension Funds, 569 F. Supp. 1488, 1490 (N.D.Cal. 1983).
ORDER
IT IS ORDERED:
1.

Plaintiffs’ Motions (Docket No. 1, 2, 3, and 4) to Quash Subpoena are
DENIED.

MEMORANDUM DECISION & ORDER - 3

DATED: May 15, 2011

Honorable B. Lynn Winmill
Chief U. S. District Judge

MEMORANDUM DECISION & ORDER - 4