The case of the day is United States v. Badger (D. Utah 2013). In 2004, the defendant, George Badger, had consented to entry of a judgment against him in a case brought by the SEC. The claim in the case was that Badger had bribed brokers to induce them to sell stock in his golf course development to their clients. The judgment was for $19 million, of which Badger had voluntarily paid $2,228. (The government had collected an additional $13,000 by garnishment). With interest, the amount outstanding was $32 million.
The government brought a second action against Badger and his wife, the SB Trust, Ardco Leasing & Investment LLC, American Resources and Development Co., and Springfield Finance and Mortgage Co. The claim was that the other defendants were Badger’s nominees and alter egos and that their assets should be available to satisfy the judgment.
The government sought issuance of a letter of request to obtain discovery from Miltex, Banque SCS, and Camille Froidevaux, all in Switzerland; according to the government, Badger “has used them as nominees to funnel money into the United States.” Badger and the other defendants opposed the motion on the grounds that “Swiss law will prevent [the government] from obtaining the discovery it seeks.”
The judge’s discussion of the general law of letters of request is not recommended: he says, incorrectly, that he is being asked to issue a letter of request pursuant to 28 U.S.C. § 1782, and he seems to say that the Hague Evidence Convention is the sole mechanism by which a court can issue a letter of request. But the judge properly dispatched Badger’s argument. I assume Badger’s argument is a reference to Article 271 of the Swiss Penal Code, which makes it illegal in Switzerland to “carr[y] out activities on behalf of a foreign state on Swiss territory without lawful authority, where such activities are the responsibility of a public authority or public official.” Article 271 curtails the ability of a US court to order a Swiss party to provide discovery under the FRCP, but the whole point of the Hague Convention is to allow the US court to request the Swiss authorities themselves to compel the evidence, so I question whether Badger’s argument has any real force. In any case, the judge found that Badger had failed to persuade him that the evidence would not be produced, and “mere speculation about whether Plaintiff will in fact obtain the desired discovery does not constitute good cause” to refuse to issue a letter of request.