Filing 36

ORDER - IT IS THEREFORE ORDERED that Wynn properly withheld documents labeled IN_CAMERA000001IN_CAMERA000041 under the SAR privilege. Wynn will not be compelled to produce these documents. Signed by Magistrate Judge Brenda Weksler on 6/4/2024. (Copies have been distributed pursuant to the NEF - DLS)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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IN RE APPLICATION OF STEPHEN
SHEFSKY FOR AN ORDER TO TAKE
DISCOVERY FOR USE IN FOREIGN
PROCEEDINGS UNDER 28 U.S.C. § 1782

Case No. 2:23-cv-00633-JCM-BNW
ORDER

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As part of its May 20, 2024 Order, the Court directed Wynn to provide certain documents

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to the Court for in camera review to determine whether Wynn had properly wielded the

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Suspicious Activity Report (“SAR”) privilege. ECF No. 35. Stephen Shefsky sought documents

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related to transactions between Wynn and purported fraudster David Bunevacz, along with his

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stepdaughter M.H. Bunevacz. Wynn complied with the Order by serving Shefsky with a

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privilege log and submitting the corresponding documents to the Court. Because each of the

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documents would reveal the existence or nonexistence of a SAR, the Court will not compel

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Wynn to disclose the documents.

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I.

LEGAL STANDARD

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Under the Bank Secrecy Act (“BSA”), the Secretary of the Treasury “may require any

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financial institution . . . to report any suspicious transaction relevant to a possible violation of

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law or regulation.” 31 U.S.C. § 5318(g)(1).

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The Financial Crimes Enforcement Network (“FinCEN”) and the Office of the

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Comptroller of the Currency (“OCC”) have each issued relevant regulations. FinCEN requires a

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SAR when a transaction involves at least $5,000 and the financial institution “knows, suspects,

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or has reason to suspect that . . . [t]he transaction involves funds derived from illegal activities or

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is intended or conducted in order to hide or disguise funds or assets derived from illegal

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activities.” 31 C.F.R. § 1020.320(a)(2)(i). Similarly, the OCC requires a financial institution to

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file a SAR when it “detect[s] a known or suspected violation of Federal law or a suspicious

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transaction related to a money laundering activity or a violation of the [BSA].” 12 C.F.R.

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§ 21.11(a). Financial institutions file their SARs with FinCEN. 31 C.F.R. § 1020.320(b)(2); 12

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C.F.R. § 21.11(c).
If a financial institution makes a SAR, then it and its employees are prohibited from

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“notify[ing] any person involved in the transaction that the transaction has been reported.” 31

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U.S.C. § 5318(g)(2)(A)(i). Regulations from FinCEN and the OCC also prohibit a financial

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institution from disclosing a SAR along with any information that “would” reveal the existence

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of a SAR. 31 C.F.R. § 1020.320(e)(1)(i); 12 C.F.R. § 21.11(k)(1)(i). Both FinCEN and the OCC

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have issued interpretive guidance stating that the disclosure prohibitions extend to no-SAR

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decisions as well. 75 FED. REG. 75593, 75595 (Dec. 3, 2010) (“An institution also should afford

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confidentiality to any document stating that a SAR has not been filed.”); 75 FED. REG. 75576,

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75579 (Dec. 3, 2010) (“By extension, a national bank also must afford confidentiality to any

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document stating that a SAR has not been filed.”). The logic driving both of these interpretations

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is that if a financial institution were able to disclose “information when a SAR is not filed,

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institutions would implicitly reveal the existence of a SAR any time they were unable to produce

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records because a SAR was filed.” 75 FED. REG. 75593, 75595 (Dec. 3, 2010).

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Stated plainly, then, “the key query is whether any ... documents suggest, directly or

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indirectly, that a SAR was or was not filed.” In re JPMorgan Chase Bank, N.A., 799 F.3d 36, 43

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(1st Cir. 2015) (citations omitted). When the OCC promulgated its final regulations, it

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emphasized that “the strong public policy that underlies the SAR system as a whole . . . leans

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heavily in favor of applying SAR confidentiality not only to a SAR itself, but also in appropriate

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circumstances to material prepared by the national bank as part of its process to detect and report

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suspicious activity, regardless of whether a SAR ultimately was filed or not.” 75 FED. REG.

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75576, 75579 (Dec. 3, 2010). To that end, some courts have held that “documents which have

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been prepared as part of a national bank’s process for complying with federal reporting

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requirements are covered by the SAR privilege.” Lan Li v. Walsh, No. CV 16-81871, 2020 WL

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5887443, at *2 (S.D. Fla. Oct. 5, 2020) (citation omitted).

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There are limitations to the scope of the SAR. The regulations provide that the disclosure

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prohibition does not extend to “[t]he underlying facts, transactions, and documents upon which a

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SAR is based.” See, e.g., 31 C.F.R. § 1020.320(e)(1)(ii)(A)(2); Cotton v. PrivateBank and Trust

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Co., 235 F. Supp. 2d 809, 815 (N.D. Ill. 2002) (“Documents which give rise to suspicious

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conduct . . . are to be produced in the ordinary course of discovery because they are business

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records made in the ordinary course of business”). Plus, the use of the term “would” in the

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regulations has been construed to mean that “review of the document must” reveal “with

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effective certainty the existence of a SAR.” First Am. Title Ins. Co. v. Westbury Bank, 2014 WL

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4267450, at *2 (E.D. Wis. Aug. 29, 2014). “[I]nformation that, with aid of supposition or

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speculation, might tend to suggest to a knowledgeable reviewer whether a SAR was filed, is not

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privileged.” Id. To the extent the SAR privilege applies, it “is unqualified and cannot be

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waived.” Id.

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II.

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ANALYSIS
Shefsky propounded document requests on Wynn, some of which Wynn contends

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implicate documents protected by the SAR privilege. See ECF Nos. 1-4, 22, 29. The Court

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ordered Wynn to serve Shefsky with a privilege log and to submit the withheld documents for in

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camera review. ECF No. 35. Wynn complied, producing 5 documents that span 41 pages. The

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Court will address each document in turn.

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1. Document 1: The documents relate to transactions between Wynn and
Bunevacz. Because producing them would disclose whether or not a SAR was
filed, Wynn properly withheld these documents under the SAR privilege. 12
C.F.R. § 21.11(k). Wynn will not be compelled to produce documents labeled
IN_CAMERA000001–IN_CAMERA000007.
2. Document 2: These documents are similar in nature to those found at
Document 1. Because producing them would disclose whether or not a SAR
was filed, Wynn properly withheld these documents under the SAR privilege.
Wynn will not be compelled to produce documents labeled
IN_CAMERA000008–IN_CAMERA000015.
3. Document 3: These documents are similar in nature to those found at
Document 1. Because producing them would disclose whether or not a SAR
was filed, Wynn properly withheld these documents under the SAR privilege.
Wynn will not be compelled to produce documents labeled
IN_CAMERA000016–IN_CAMERA000027.
4. Document 4: These documents are similar in nature to those found at
Document 1. Because producing them would disclose whether or not a SAR
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was filed, Wynn properly withheld these documents under the SAR privilege.
Wynn will not be compelled to produce documents labeled
IN_CAMERA000028–IN_CAMERA000035.

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5. Document 5: These documents are similar in nature to those found at
Document 1, though they also include emails by Wynn employees. Because
producing them would disclose whether or not a SAR was filed, Wynn
properly withheld these documents under the SAR privilege. Wynn will not be
compelled to produce documents labeled IN_CAMERA000036–
IN_CAMERA000041.

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Because the Court finds that all 5 of the withheld documents are protected by the

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SAR privilege, it will not compel Wynn to produce them.

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III.

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CONCLUSION
IT IS THEREFORE ORDERED that Wynn properly withheld documents labeled

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IN_CAMERA000001–IN_CAMERA000041 under the SAR privilege. Wynn will not be

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compelled to produce these documents.

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DATED this 4th day of June 2024.

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BRENDA WEKSLER
UNITED STATES MAGISTRATE JUDGE

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