United States of America v. DeMiro
Filing
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ORDER granting 1 Motion for Records. Signed by District Judge Lawrence P. Zatkoff. (MVer)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
THE UNITED STATES OF AMERICA,
Plaintiff,
MISC CASE NO. 11-51515
CRIMINAL NO. 10-20594
v.
HONORABLE LAWRENCE P. ZATKOFF
DANTE DEMIRO,
Defendant.
/
ORDER
I. INTRODUCTION
This matter is before the Court on the duly appointed Chapter 7 trustee’s, Gene R. Kohut,
(“Trustee”) of MuniVest Services, LLC and Dante DeMiro (collectively “Debtors”) Motion
Pursuant to Fed. R. Crim. P. 6(e) to Obtain Access to Bank and Financial Records that May Have
Been Obtained During Grand Jury Proceedings (“Motion for Records”) [dkt 1]. The United States
of America (the “Government”) has filed a response not objecting to the Trustee’s Motion. The
Court finds that the facts and legal arguments are adequately presented in the parties’ papers such
that the decision process would not be significantly aided by oral argument. Therefore, pursuant to
E.D. Mich. LR 7.1(f)(2), it is hereby ORDERED that the Motion be resolved on the briefs
submitted. For the following reasons, Defendant’s Motion for Records is GRANTED.
II. BACKGROUND
The Trustee’s request involves involuntary Chapter 7 bankruptcy petitions filed by Mona
Shores Public Schools (“Mona Shores”) against Debtors on October 12, 2010. Mona Shores filed
the bankruptcy petitions in an effort to retrieve more than $3 million dollars in investment funds
provided to Debtors.1 Due to the scope of Defendant’s criminal Ponzi scheme and Defendant’s
absence of participation in these bankruptcy cases, the Trustee is concerned about uncovering
additional information before the statute of limitations for avoidance actions in the bankruptcy cases
runs. The Trustee asserts that certain relevant bank and financial records may have been obtained
in the grand jury proceedings.
The grand jury proceedings and the criminal proceedings (except for an ancillary criminal
forfeiture proceeding) have concluded. The Trustee therefore seeks permission from the Court to
obtain access to any bank and financial records obtained in connection with the grand jury
proceedings relating to Defendant’s criminal case to allow the Trustee to administer Debtors’
bankruptcy cases and maximize any recovery to the victims and the creditors of Defendant’s
criminal acts pursuant to Fed. R. Crim. P. 6(3)(e)(i).
III. LEGAL STANDARD
Under Fed. R. Crim. P. 6(3)(e)(i), “[a] court may authorize disclosure . . . of a grand-jury
matter . . . preliminarily to or in connection with a judicial proceeding.” A party requesting grand
jury information must show the need “with particularity” so that “the secrecy of the proceedings
[may] be lifted discreetly and limitedly.” Douglas Oil Co. v. Petrol Stops Northwest, 441 U.S. 211,
221 (1979). This standard is satisfied by a showing that: “(1) the material sought is needed to avoid
a possible injustice in another judicial proceeding; (2) the need is greater than the need for continued
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Defendant operated a Ponzi scheme through his company, MuniVest Services, LLC. MuniVest
Services, LLC acted as the corporate identity for Defendant’s alleged criminal activities. Under
MuniVest Services, LLC Defendant claimed to be an “investment advisor.”
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secrecy; and (3) the request is structured to obtain only the material needed.” In re Antitrust Grand
Jury, 805 F.2d 155, 161 (6th Cir. 1986) (citing Douglas Oil Co., 441 U.S. at 222.).
IV. ANALYSIS
The Court finds that the Trustee’s request satisfies Fed. R. Crim. P. 6(3)(e)(i). First, the
trustee is seeking documents which may have been produced as part of the grand jury proceeding.
Second, the Chapter 7 bankruptcy cases are a judicial proceeding in connection with the grand jury
proceeding that involved Defendant’s criminal conduct. The Court now turns to whether the Trustee
has shown his need for seeking such documents with particularity.
A. THE MATERIAL SOUGHT AVOIDS A POSSIBLE INJUSTICE IN ANOTHER JUDICIAL PROCEEDING
As the Trustee has set forth in his Motion and Brief, according to Section 704 of the
Bankruptcy Code, he has the duties to account for the Debtors’ property and investigate the financial
affairs of Debtors. Because the bankruptcy cases were filed as involuntary petitions by Mona
Shores, Defendant is not participating in preparing and filing the applicable Schedules, Summary
of Schedules, Statement of Financial Affairs, lists containing the names and addresses of each
reasonably ascertainable creditor of Debtors, and the documents and statements required under Fed.
R. Bankr. P. 1007(b)(1). The Trustee therefore has undertaken this obligation.
Given the extent of Defendant’s criminal acts (victim restitution exceeds $12 million),
discovery related to the financial dealings of Debtors will provide the Trustee a more complete
understanding of Debtors’ financial affairs. With a more complete understanding, the Trustee can
maximize the return to the victims and the creditors of Debtors. Further, to the extent any such
documents were produced in the grand jury proceeding, obtaining the bank and financial records will
avoid duplication of efforts in the bankruptcy courts. As such, the Court finds that the bank and
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financial records sought avoid a possible injustice in the bankruptcy cases.
B. THE NEED IS GREATER THAN THE NEED FOR CONTINUED SECRECY
The Court finds that the need for these documents is greater than the need for continued
secrecy of Defendant’s grand jury proceedings. The Trustee is not requesting testimony of witnesses
at the grand jury, the identity of witnesses at the grand jury, nor the general information concerning
Defendant’s criminal conduct. See Douglas Oil Co., 441 U.S. at 219 n.10 (summarizing the reasons
for grand jury secrecy). Rather, the Trustee has limited his request to only the factual information
contained in any bank and financial records produced during the grand jury proceedings.
Additionally, as stated in Douglas Oil Co., while the grand jury’s conclusion does not
abrogate the need for secrecy, it does reduce the interests in grand jury secrecy. Douglas Oil Co.,
441 U.S. at 222 (“[T]he interests in grand jury secrecy, although reduced, are not eliminated merely
because the grand jury has ended its activities.”). In this case, Defendant has pled guilty to his
criminal conduct and the grand jury proceedings have concluded. Thus, for the reasons stated, the
need for these documents is greater than the need for continued secrecy of Defendant’s grand jury
proceedings.
C. THE REQUEST IS NARROWED TO OBTAIN ONLY THE INFORMATION NEEDED
As discussed, the Trustee is not seeking to review all testimony and documents produced in
conjunction with the grand jury proceeding. Rather, the Trustee has limited his request to only the
factual information contained in any bank and financial records produced during the grand jury
proceedings. Thus, the Court finds that the Trustee’s request is narrowly tailored to obtain only the
information needed to administer Debtors’ bankruptcy cases, complete Debtors’ required bankruptcy
documents, and maximize any recovery to the victims and the creditors of Debtors.
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V. CONCLUSION
Accordingly, and for the above reasons, IT IS HEREBY ORDERED that the Trustee’s
Motion Pursuant to Fed. R. Crim. P. 6(e) to Obtain Access to Bank and Financial Records that May
Have Been Obtained During Grand Jury Proceedings [dkt 1] is GRANTED.
To ensure that the secrecy of the grand jury proceedings is maintained to the extent possible,
IT IS FURTHER ORDERED that:
(a) the bank records and financial papers are produced to Gene R.
Kohut, the appointed Chapter 7 Trustee;
(b) review of the bank records and financial papers are limited to the
Trustee and Trustee’s counsel at the Wolfson Bolton law firm;
(c) the bank record and financial papers are used solely for execution
of the Trustee’s duties in the pending bankruptcy cases regarding
Defendant and MuniVest;
(d) the bank records and financial papers are destroyed at the
conclusion of these bankruptcy cases; and
(e) the Trustee bears all costs associated with obtaining the bank
records and financial papers he requests.
IT IS FURTHER ORDERED having addressed all requested relief in this case (CASE NO.
11-51515), this case is closed.
IT IS SO ORDERED.
S/Lawrence P. Zatkoff
LAWRENCE P. ZATKOFF
UNITED STATES DISTRICT JUDGE
Dated: December 14, 2011
CERTIFICATE OF SERVICE
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The undersigned certifies that a copy of this Order was served upon the attorneys of record
by electronic or U.S. mail on December 14, 2011.
S/Marie E. Verlinde
Case Manager
(810) 984-3290
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