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					                                   COMMENTS
   TO ENFORCE OR NOT TO ENFORCE? THE UBS JOHN DOE
SUMMONS AND A FRAMEWORK FOR POLICING U.S. TAX FRAUD
  AMID CONFLICTING INTERNATIONAL LAWS AND BANKING
                      SECRECY*


                                          I.     INTRODUCTION

     In early 2007, disgruntled former employee Bradley Birkenfeld1 blew the
whistle on Switzerland’s largest bank, United Bank of Switzerland (“UBS”),
uncovering one of the largest tax evasion scandals in U.S. history and leading to
the IRS investigation of nearly 52,000 possible U.S. tax evaders.2 UBS assisted its
wealthy U.S. clients in concealing nearly $20 billion of assets from the IRS.3 In
February 2009, UBS paid $780 million to the United States through a Deferred
Prosecution Agreement (“DPA”) for its responsibility in defrauding the United
States.4 The IRS then issued a John Doe summons to UBS seeking the names of U.S.
taxpayers with undeclared accounts between 2002 and 2007.5 Nearly 52,000 UBS
clients met this description.6 Never before has the IRS issued such a large-scale


* Emily Ann Busch, J.D. Candidate, Temple University Beasley School of Law, 2011. I would like to thank
Professor Alice Abreu for her valuable guidance and feedback. Additionally, I would like to thank the
entire Temple Law Review staff and editorial board, and more specifically Michael Connett, James
Stinsman, and Nicholas Mozal for their hard work and dedication. Finally, I would like to thank my
friends and family for all of their support throughout this process.
      1. Bradley Birkenfeld, a U.S. citizen who was residing in Switzerland, served as UBS director and
client advisor for American taxpayers with UBS accounts in Switzerland from 2001 to 2006. Declaration
of Daniel Reeves Exhibit C, at 2, United States v. UBS AG, No. 08-21864-MC (S.D. Fla. June 30, 2008). In
May 2005, Birkenfeld discovered an internal UBS document that misrepresented the way the bank
conducted its U.S. cross-border business and raised the issue with legal compliance. David S. Hilzenrath,
For American Who Blew Whistle, Only Reward May Be a Jail Sentence, WASH. POST, Aug. 20, 2009,
http://www.washingtonpost.com/wp-dyn/content/article/2009/08/19/AR2009081901386.html.
Shortly thereafter, UBS refused to pay Birkenfeld his bonus. Id. In retaliation, Birkenfeld wrote a letter to
a top UBS executive detailing the discrepancies between UBS’s actual practices and the way UBS
represented those practices on paper. Id. UBS took him seriously this time, changed its practices, and
vowed to settle the bonus dispute. Id. With the dispute still pending in early 2007, Birkenfeld notified
U.S. authorities. Id.
      2. Hilzenrath, supra note 1; Switzerland Urges US Court to Reject Tax Data Demand, IRISH TIMES, May
2, 2009, (Finance), at 22.
      3. Bruce Zagaris, U.S. Court Approves John Doe Summons in UBS Case, 24 INT’L ENFORCEMENT L. REP.
344 (2008).
      4. Deferred Prosecution Agreement at 3, United States v. UBS AG, No. 09-60033-CR (S.D. Fla. Feb.
18, 2009), available at http://www.justice.gov/tax/UBS_Signed_Deferred_Prosecution_Agreement.pdf.
      5. Declaration of Daniel Reeves, supra note 1, at 3.
      6. United States' Motion to Strike Section II, Paragraphs 24 Through 27 of the Declaration of Philip

                                                   185
186                                     TEMPLE LAW REVIEW                                         [Vol. 83


John Doe summons, and questions abound as to its legality. 7 No precedent
comparably parallels either the egregiousness of the violation, the reliability of the
evidence, or the number of names sought.8
      UBS, Switzerland, and the United States came to an agreement in August
2009 before the U.S. court ruled on the enforcement order, under which
Switzerland and UBS together would turn over 4,450 names to the IRS in
exchange for the United States withdrawing the summons. 9 Nevertheless, whether
UBS will comply with the deal remains unclear, though likely. A Swiss court’s
January 2010 ruling had the potential to invalidate the August 2009 agreement by
declaring parts of the agreement illegal and preventing Swiss authorities from
disclosing a U.S. citizen’s identity to the United States. 10 The ruling threatened to
set a pivotal precedent that would effectively preclude Switzerland from
complying with the August 2009 agreement, thereby unraveling the entire deal.11
However, the Swiss Parliament recently ratified the deal,12 making compliance
nearly certain.
      Whether Switzerland complies with the deal and produces the 4,450 names
by August 24, 2010 will not affect the utility of the following analysis. If
Switzerland does not comply with the deal, then the United States can and likely
will revive proceedings.13 At that time, the U.S. District Court for the Southern
District of Florida may again face a motion to quash the summons, but this time
will have to rule on it. Alternatively, if Switzerland does comply, then the IRS will
issue similar summonses to other banks.14 Regardless, a U.S. court will likely face
the issue shortly.
      This Comment analyzes whether the U.S. court should enforce the UBS
summons and provides a comprehensive analysis for evaluating similar


R. West at 1, United States v. UBS AG, No. 09-20423-CIV, 2009 WL 2332876 (S.D. Fla. June 30, 2009)
[hereinafter U.S. Motion to Strike West Declaration].
      7. Switzerland Urges US Court to Reject Tax Data Demand, supra note 2.
      8. See Press Release, Internal Revenue Serv., IRS to Receive Unprecedented Amount of Information
in UBS Agreement (Aug. 19, 2009), http://www.irs.gov/newsroom/article/0,,id=212124,00.html
[hereinafter IRS Press Release] (stating that DPA would result in “unprecedented” amount of
information—4,450 names—being disclosed to IRS, which is considerably less than the 52,000 names
sought in summons). See infra Part II.A.3 for a discussion of the DPA and UBS’s admission of illegal
conduct.
      9. Agreement Between the United States and the Swiss Confederation on the Request for
Information from the Internal Revenue Service of the United States Regarding UBS AG, a Corporation
Established Under the Laws of the Swiss Confederation, U.S.-Switz., at 2–3, 6, Aug. 19, 2009,
http://www.irs.gov/pub/irs-drop/us-swiss_government_agreement.pdf [hereinafter U.S.-Swiss Final
Agreement].
      10. Lynnley Browning, Swiss Ruling Jeopardizes Deal for UBS Clients’ Names, N.Y. TIMES, Jan. 23,
2010, at B2.
     11. See Matthew Saltmarsh, Swiss Hope to Salvage U.S. Deal on Disclosures: Court Ruling Barring
Release of Client Names Puts UBS in Tough Spot, INT’L HERALD TRIB., Jan. 28, 2010, at 19 (discussing Swiss
ruling).
      12. Lynnley Browning, Swiss Approve Deal for UBS to Reveal U.S. Clients Suspected of Tax Evasion,
N.Y. TIMES, June 18, 2010, at B3.
      13. Browning, supra note 10.
     14. See Browning, supra note 12 (noting that prosecutors have already begun scrutinizing other
banks).
2010]                             THE UBS JOHN DOE SUMMONS                                         187


summonses in the future. The UBS John Doe summons raises three paramount
issues. The first is whether a U.S. court can enforce a summons when compliance
with the summons requires a foreign summonee to violate its country’s laws and
therefore subjects the summonee to prosecution in the foreign country. With UBS,
compliance with the summons requires UBS employees to violate Switzerland’s
banking secrecy laws which forbid disclosing this information. 15 The second issue
is whether the summons is too broad to enforce. Finally, this Comment addresses
whether the Double Taxation Treaty between Switzerland and the United States
precludes issuing the John Doe summons, as the Treaty arguably provides an
alternative method for exchanging information.
     Part II.A details UBS’s pertinent history of dealings with the United States,
including: UBS’s role and responsibilities to the United States under the Qualified
Intermediary Agreement; UBS’s tax fraud scheme; the John Doe Summons; the
DPA; the August 2009 agreement between the United States, Switzerland, and
UBS; and the Swiss ruling that threatens to unravel the agreement. Part II.B sets
out the prior law regarding issuing, enforcing, and quashing summonses, such as
abuse of process, overbreadth, conflicting foreign laws, and treaties. Part II.C
summarizes the arguments of UBS, Switzerland, and the United States.
     Part III of this Comment argues that if the August 2009 agreement unravels
and if the United States revives proceedings, a U.S. court should enforce the
summons if faced with a motion to quash. Part III analyzes the factors set forth in
United States v. Powell,16 the statutory requirements, and why the UBS court
should reject UBS’s attempts to quash the unprecedented summons based on
overbreadth, comity, and the relevant treaty. In doing so, this Comment creates an
analytical framework that future courts may apply.

                                          II.   OVERVIEW


A.    History: UBS Unravels

      1.    Qualified Intermediary Agreement

     Effective January 1, 2001, UBS entered into a Qualified Intermediary
Agreement (“QI Agreement”) with the IRS.17 This agreement marked a significant
departure from Switzerland’s historically strict financial secrecy laws, which often
resulted in concealing taxable assets from the IRS.18 Becoming a QI enabled UBS to
assume the role and responsibilities of U.S. withholding agents,19 allowing the


      15. Amicus Brief of Government of Switzerland at 13, United States v. UBS AG, No. 09-20423-CIV,
(S.D. Fla. Apr. 30, 2009), 2009 WL 1612394.
      16. 379 U.S. 48, 57–58 (1964).
      17. Deferred Prosecution Agreement, supra note 4, Exhibit C, at 1.
      18. Press Release, U.S. Att’ys Office S. Dist. Fla., Foreign Bankers Charged with Aiding American
Billionaire Evade Income Tax on $200 Million (May 13, 2008), http://www.justice.gov/tax/usaopress/
2008/txdv08_080513-02.pdf.
      19. The IRS requires non-QI foreign banks to withhold thirty percent of all income earned from
U.S. securities, regardless of whether the account owner is a U.S. taxpayer or not. UBS, Qualified
188                                      TEMPLE LAW REVIEW                                           [Vol. 83


bank to determine from which accounts it must withhold income (based on the
status of the beneficial owner) without having to disclose the identities of its U.S.
clients to U.S. tax authorities.20
     In return for the benefits of QI status, UBS agreed to ensure that its clients
submit Form W-8BEN, which identifies foreign beneficial owners of bank
accounts, and Form W-9, which reports the identities of U.S. account holders to
the IRS.21 As a QI, UBS also agreed to file Form 1099 with the IRS to disclose
taxable income in the undeclared accounts.22
     Additionally, the QI Agreement mandates a procedure for navigating the
tension between Swiss bank secrecy laws and UBS’s obligations as a QI to disclose
a U.S. client’s gross income to the IRS.23 If (1) an American taxpayer refuses to
declare his or her offshore account to the IRS by submitting proper
documentation and (2) foreign laws prohibit the QI from disclosing the account
holder’s identity, then the foreign bank QI must get the account holder to either
(a) disclose his identity or (b) sell all of his U.S. securities managed in the foreign
account.24 If the account holder does not consent to either (a) or (b) within sixty
days, the bank must sell the U.S. securities.25

      2.     The Scheme

     UBS failed to follow this procedure and expressly violated the QI
Agreement.26 Many UBS clients refused to declare their accounts, to have taxes
withheld from their undeclared27 accounts, or to sell their U.S. investments as the
QI Agreement required.28 By following the QI Agreement, the bank risked losing
its U.S. offshore business, which earned UBS approximately $200 million per


Intermediary System: US Withholding Tax on Dividends and Interest Income from US Securities 1 (Oct.
2004),
https://www1.ubs.com/1/ShowMedia/bank_for_banks/offering/download?contentId=122487&name=
QI_Client_Info.pdf, reprinted in Declaration of Daniel Reeves, supra note 1, Exhibit G. Becoming a QI
allows foreign banks to obtain relief from withholding tax for those not liable for U.S. taxation without
having to file an application to reclaim the tax. Id. Non-U.S. taxpayers also prefer to bank with a QI
because they achieve reductions in withholding rates on U.S. securities. See id.
      20. Susan C. Morse, Qualified Intermediary or Bust?, 124 TAX NOTES 471 (2009).
      21. Declaration of Barry B. Shott at 2, United States v. UBS AG, No. 08-21864-MC (S.D. Fla. June 26,
2008), 2008 WL 4103758.
      22. Id. at 3. More specifically, Form 1099 identifies dividends, interests, rents, royalties, and other
taxable income from U.S. investments paid into the undeclared accounts. Id. “The Form 1099 is issued by
the bank to the United States taxpayer and the information contained therein is provided to the IRS.” Id.
      23. Morse, supra note 20, at 471. This procedure still constitutes a departure from Switzerland’s
usual treatment of its secrecy laws, which never before required compliance with U.S. tax laws. Id.
      24. Declaration of Barry B. Shott, supra note 21, at 3.
      25. Id.
      26. Deferred Prosecution Agreement, supra note 4, Exhibit C, at 1–2.
      27. An account is “undeclared” when the taxpayer fails to file the appropriate paperwork notifying
the IRS of its existence. Terry Philip Segal & Michael M. Mustokoff, Advice for Taxpayers with Undeclared
UBS Swiss Bank Accounts, MASS. LAW. WKLY., Dec. 15, 2008, at 2. Schedule B requires U.S. taxpayers to
declare foreign bank accounts in excess of $10,000 and to annually file a Foreign Bank Account Report.
Id. Those who fail to do this are undeclared to the IRS. Id.
      28. Deferred Prosecution Agreement, supra note 4, Exhibit C, at 4–5.
2010]                              THE UBS JOHN DOE SUMMONS                                          189


year.29 To avoid such a loss, UBS decided to violate the QI Agreement. The bank
sent a letter to its U.S. clients who elected not to provide Forms W-9 after UBS
became a QI, assuring them that they would continue to enjoy anonymity and that
UBS would not divulge their identities to the IRS.30 UBS even advertised
instituting a sham corporation as another way to circumvent the QI terms and U.S.
law:
      [I]f there is no desire to disclose the identities of . . . the beneficial owner
      to the US tax authorities, the possible alternatives are for US securities
      to be excluded from the portfolio, for the beneficial owner to hold them
      directly, or for a structure to be put in place between the foundation/trust
      and the bank which itself serves as an independent, non-transparent
      beneficial owner . . . and submits documentation to the QI to this effect.31
UBS then divided its U.S. clients into two groups: “(1) those who were willing to
submit Forms W-9 and have the bank file Forms 1099 reporting their earned
income, and (2) those who wished to remained [sic] ‘undeclared.’”32 The bank
continued to segregate its accounts in this fashion at the time the IRS issued the
summons.33
      Birkenfeld alleged that with the encouragement and direction of upper
management, UBS private banking employees helped its wealthy U.S. clients
conceal approximately $20 billion in assets from the IRS in undeclared accounts.34
U.S. clients formed offshore UBS accounts held by sham and nominee corporations
to conceal beneficial ownership in overseas tax haven jurisdictions.35 UBS directed
its clients to falsify IRS Forms W-8BEN to mislead the IRS into believing that the
sham entities owned the account, not the U.S. client.36 Likewise, UBS failed to issue
Forms 1099 to clients to file with the IRS, which would have identified the U.S.
clients as the true owners of the accounts.37 Finally, because it looked like non-U.S.
entities or persons owned the accounts, UBS and the U.S. clients never submitted
Forms 1099 reporting income earned on the offshore accounts to the IRS.38
Instead, UBS maintained relationships with Swiss and Liechtensteiner
businessmen who posed as owners and directors of the entities while the U.S.
clients with undeclared accounts secretly retained beneficial ownership.39
      Not only did UBS violate U.S. law and the QI Agreement, but it had sufficient
minimum contacts with the forum state and the United States to justify a U.S.


     29. Declaration of Daniel Reeves, supra note 1, Exhibit C, at 3.
     30. Declaration of Daniel Reeves, supra note 1, Exhibit E.
     31. Declaration of Daniel Reeves, supra note 1, Exhibit G, at 3 (emphasis added).
     32. Declaration of Daniel Reeves, supra note 1, at 12.
     33. Memorandum in Support of Ex Parte Petition for Leave to Serve “John Doe” Summons at 3,
United States v. UBS AG, No. 08-21864-MC (S.D. Fla. June 30, 2008) [hereinafter Memo for Leave to Serve
Summons].
     34. Zagaris, supra note 3.
     35. Declaration of Daniel Reeves, supra note 1, Exhibit C, at 3.
     36. Declaration of Daniel Reeves, supra note 1, at 11. IRS Form W-8BEN is entitled “Certificate of
Foreign Status of Beneficial Owner for United States Tax Withholding.” Id.
     37. Id. IRS Form W-9 is entitled “Request for Taxpayer Identification Number and Certification.” Id.
     38. Memo for Leave to Serve Summons, supra note 33, at 10–11.
     39. Declaration of Daniel Reeves, supra note 1, Exhibit C, at 3.
190                                    TEMPLE LAW REVIEW                                         [Vol. 83


court’s exercise of personal jurisdiction.40 First, UBS maintains two branches
within the forum state of Florida.41 Second, Birkenfeld was one of about fifty Swiss
UBS employees who traveled to the United States on a quarterly basis to service
its undeclared clients.42 The trips lasted on average from one to three weeks, and
the bankers tried to meet with three to five clients a day. In 2004 alone,
approximately thirty-two UBS bankers traveled to the United States and met with
U.S. clients approximately 3,800 times to provide unlicensed and unregistered
advice.43 UBS sponsored events where its employees met clients in the United
States and the bankers tried to solicit new business from existing and prospective
clients.44 Moreover, Birkenfeld and other UBS bankers advised U.S. clients on how
to evade U.S. taxes, including by:
      plac[ing] cash and valuables in Swiss safety deposit boxes;
      purchas[ing] jewels, artwork and luxury items using the funds in their
      Swiss bank account while overseas;
      misrepresent[ing] the receipt of funds from the Swiss bank account in
      the United States as loans from the Swiss Bank;
      destroy[ing] all off-shore banking records existing in the United States,
      and;
      utiliz[ing] Swiss bank credit cards that they claimed could not be
      discovered by United States authorities.45
      Despite the QI withholding and reporting requirements, UBS failed to report
any 1099 information to the IRS or withhold or pay any taxes. 46 Unable to
negotiate immunity as a whistleblower, Birkenfeld pled guilty to conspiring to
assist American Igor Olenicoff to conceal $200 million in assets and to evade
paying $7.2 million in taxes.47 Birkenfeld purchased diamonds using money from
Olenicoff’s offshore account and smuggled them into the United States in a
toothpaste tube, created sham and nominee accounts, and deposited checks from
U.S. clients into undeclared offshore accounts.48



     40. See, e.g., Kulko v. Superior Court, 436 U.S. 84, 98–101 (1978) (discussing minimum contacts
and requirements necessary for exercise of personal jurisdiction); Synthes (U.S.A.) v. G.M. Dos Reis Jr.
Ind. Com. de Equip. Medico, 563 F.3d 1285, 1296 (Fed. Cir. 2009) (finding that federal long arm statute
allows district courts to exert personal jurisdiction over foreign defendants when claim arises under
federal law and when “contacts with the United States, but not with the forum state, satisfy due
process”).
     41. Declaration of Daniel Reeves, supra note 1, at 10
     42. Declaration of Daniel Reeves, supra note 1, at 10–11.
     43. Information at 9–10, United States v. UBS AG, No. 09-60033-CR (S.D. Fla. Feb. 18 2009),
available at http://www.justice.gov/tax/UBS_Filed_Stamped_Information.pdf.
     44. Declaration of Daniel Reeves, supra note 1, Exhibit C, at 2.
     45. Declaration of Daniel Reeves, supra note 1, Exhibit C, at 3.
     46. Id. at 4.
     47. Declaration of Daniel Reeves, supra note 1, at 10. Birkenfeld’s Statement of Facts does not
specifically name UBS; he refers to UBS as “Swiss Bank” and to Igor Olenicoff as “I.O.” Id. On August 21,
2009, a federal judge sentenced Birkenfeld to forty months in prison. Press Release, Dep’t of Justice,
Former UBS Banker Sentenced to 40 Months for Aiding Billionaire American Evade Taxes (Aug. 21,
2009), http://www.justice.gov/opa/pr/2009/August/09-tax-831.html.
     48. Declaration of Daniel Reeves, supra note 1, Exhibit C, at 3–4.
2010]                               THE UBS JOHN DOE SUMMONS                                            191


      Ultimately, UBS’s actions constitute one of the largest tax evasion schemes in
U.S. history.49

      3.    John Doe Summons and Deferred Prosecution Agreement

      On June 30, 2008, the IRS petitioned the court to serve a John Doe summons50
on UBS.51 On July 1, 2008, less than two weeks after Birkenfeld pled guilty, a
federal judge granted the IRS authority to issue the summons, and IRS Agent
Brake delivered it to UBS on July 21, 2008.52 The UBS summons was directed at:
      United States taxpayers who, at any time between December 31, 2002
      and December 31, 2007, had financial accounts with UBS in Switzerland,
      and for whom UBS (1) did not have in its possession IRS Forms W-9, and
      (2) had not submitted timely and accurate IRS Forms 1099 to United
      States taxing authorities reporting all reportable payments made to the
      United States taxpayers.53
      The summoned class likely encompasses about 52,000 names of Americans
with undeclared accounts at UBS.54
      On February 18, 2009, the court approved a Deferred Prosecution Agreement
(“DPA”) between UBS and the United States.55 Under the DPA, UBS acknowledged
its responsibility for defrauding the U.S. government56 and accepted the Statement
of Facts as true and accurate depictions of its illegal actions.57 UBS agreed to pay
$780 million in fines, penalties, interest, and restitution to the U.S. government,58
to exit the business of providing banking services to U.S. clients with undeclared
accounts,59 and to implement and maintain a QI Compliance Program.60 Most
importantly, based on an order by the Swiss Financial Markets Supervisory
Authority (FINMA), UBS agreed to cooperate with the U.S. government and to


      49. See Juan Gonzalez, Unveils Bank Fraud, Gets Jail, N.Y. DAILY NEWS, Jan. 6, 2010, at 21 (describing
UBS’s actions as “biggest tax-evasion scheme in U.S. history”).
      50. A John Doe summons enables the IRS to investigate the tax compliance of an “ascertainable
group or class of persons” when it does not know their identities, but is aware of substantial tax
violations. I.R.C. § 7609(f)(1) (2006); Zagaris, supra note 3.
      51. Memo for Leave to Serve Summons, supra note 33.
      52. Petition to Enforce John Doe Summons at 3, United States v. UBS AG, 09-20423-MC (S.D. Fla.
Feb. 19, 2009), 2009 WL 864716.
      53. Declaration of Daniel Reeves, supra note 1, at 3.
      54. U.S. Motion to Strike West Declaration, supra note 6, at 1.
      55. Press Release, Dep’t of Justice, UBS Enters into Deferred Prosecution Agreement: Bank Admits
to Helping U.S. Taxpayers Hide Accounts from IRS; Agrees to Identify Customers and Pay $780 Million
(Feb. 19, 2009), http://www.usdoj.gov/tax/txdv09136.htm.
      56. Declaration of Daniel Reeves, supra note 1, Exhibit C, at 2.
      57. Deferred Prosecution Agreement, supra note 4, at 2.
      58. Id. at 3. The $780 million includes (1) $380 million in disgorgement of profits from UBS’s cross-
border business in the United States from 2001 through 2008 ($200 million of which will be separately
paid to the U.S. Securities and Exchange Commission), and (2) $400 million for: federal backup
withholding tax that UBS was required to withhold on the disclosed undeclared accounts from 2001
through 2008; interest and penalties; and restitution with interest on the unpaid taxes of the undeclared
U.S. taxpayers with offshore accounts at UBS. Id.
      59. Id. at 4.
      60. Id. at 5.
192                                     TEMPLE LAW REVIEW                                         [Vol. 83


provide the identities of and account information for U.S. clients with undeclared
accounts at UBS.61 In exchange for UBS’s compliance with the agreement, the
United States agreed to defer prosecution of UBS for eighteen months62 and to
recommend dismissing the charges if UBS fully complied.63 The United States
reserved the right to reinstate any investigation and prosecution against UBS in
the event that the bank violates the terms of the agreement.64
     On February 19, 2009, only one day after the court approved the DPA, the
United States filed a petition to enforce the IRS John Doe summons.65 The United
States also filed Declarations of Revenue Agents Daniel Reeves and Barry B.
Shott.66 On April 30, 2009, UBS filed its response.67

      4.    Agreement Reached, Agreement Abandoned?

     The court never ruled on whether it would enforce the summons because
UBS, Switzerland, and the United States reached an agreement on August 19,
2009.68 UBS agreed to disclose the names of 4,450 U.S. clients with undeclared
accounts,69 accounts which IRS Commissioner Douglas Shulman believed
cumulatively held over $18 billion at one point. 70
     The Swiss government agreed to review and process additional requests
regarding U.S. taxpayers’ accounts in other Swiss banks “to the extent that such a
request is based on a pattern of facts and circumstances equivalent to those of the
UBS case.”71 Provided UBS complies with the agreement, the IRS agreed to
withdraw “with prejudice” the summons for the UBS accounts not subject to the
treaty request before December 31, 2009,72 and to withdraw “with prejudice” the
summons for accounts subject to the treaty request by August 24, 2010.73


     61. Id. at 6.
     62. Id. at 10.
     63. Id.
     64. Id. at 11.
     65. Petition to Enforce John Doe Summons, supra note 52.
     66. See generally Declaration of Daniel Reeves, supra note 1; Declaration of Barry B. Shott, supra
note 21.
     67. Brief of UBS AG in Opposition to the Petition to Enforce the John Doe Summons, United States
v. UBS AG, No. 09-20423-CV (S.D. Fla. Apr. 30, 2009), 2009 WL 1612393 [hereinafter UBS Brief].
     68. U.S.-Swiss Final Agreement, supra note 9, at 2.
     69. Id. The August 2009 agreement requires the IRS to submit a treaty request under Article 26 of
the U.S.-Switzerland Double Taxation Treaty to the Swiss Federal Tax Administration (“SFTA”)
specifying the accounts and requires UBS to provide approximately 4,450 accounts to SFTA in response,
as well as notify the affected account holders. Id.; see also Convention Between the United States and the
Swiss Confederation for the Avoidance of Double Taxation with Respect to Taxes on Income, U.S.-Switz.,
Oct. 2, 1996, 26 U.S.T. 1996 [hereinafter 1996 Double Taxation Treaty]. SFTA’s decision is subject to
judicial review. U.S.-Swiss Final Agreement, supra note 9, at 2. The United States reserves the right to
resume action to enforce the John Doe summons if results are less than expected. IRS Press Release,
supra note 8. SFTA decides which of those accounts to disclose to the IRS. U.S.-Swiss Final Agreement,
supra note 9, at 2.
     70. Lynnley Browning, Deal on Names Cracks Secrecy at Swiss Banks, N.Y. TIMES, Aug. 20, 2009, at
A1. Others estimate the accounts concealed $20 billion. Zagaris, supra note 3.
     71. IRS Press Release, supra note 8.
     72. Settlement Agreement at 3, United States v. UBS AG, Aug 19, 2009 (attached to U.S.-Swiss Final
2010]                               THE UBS JOHN DOE SUMMONS                                             193


      However, the Swiss court’s January 2010 ruling seriously jeopardized the
August 2009 agreement and created the potential for the United States to revive
the summons.74 After a U.S. citizen appealed to prevent disclosure of his or her
identity, a Swiss federal administrative court ruled that Swiss authorities may not
transfer the tax cheat’s identity to the United States and declared parts of the
August 2009 agreement illegal under Swiss law.75 The court found that the
individual’s actions did not constitute “tax fraud,” and since “tax evasion” is not a
crime in Switzerland, the disclosure would violate Swiss banking secrecy laws.76
According to the Swiss court, “[p]rovided the taxpayer did nothing more than not
declare income, an account or return the Form W-9, consequently committing tax
evasion under Swiss law, he hasn’t acted fraudulently.”77 The Swiss ruling stated
that Switzerland may disclose only the identities of clients whose accounts were
held through sham corporations and trusts instead of their own names.78
      Although the Swiss court’s ruling prevents Switzerland from disclosing only
that one individual’s identity, the ruling “ha[d] the potential to unravel” the entire
August 2009 agreement by setting a pivotal precedent that effectively prevents
Switzerland from complying with the August 2009 agreement.79
      Recently, however, the Swiss Parliament ratified the deal, making compliance
nearly certain.80 Switzerland has until August 24, 2010 to produce the agreed
upon 4,450 names.81 If it fails to do so by that date, the United States will likely
revive the proceedings, including the John Doe summons. The Florida district
court will then have to rule on whether to enforce or quash the summons.
Alternatively, if Switzerland does comply, then the IRS will issue similar
summonses to other banks. Regardless, a U.S. court will face the issue shortly. This
Comment provides a framework for evaluating not only the UBS summons, but
also future summonses.




Agreement), available at http://www.irs.gov/newsroom/article/0,,id=212124,00.html (click “Bank
Agreement”).
      73. Id. at 4.
      74. Browning, supra note 10; see also Joseph Heaven et al., UBS Client Wins Case on Transfer of Tax
Data to U.S., BLOOMBERG.COM (Jan. 22, 2010 15:34 EST), http://www.bloomberg.com/apps/news?pid
=20601087&sid=am8E1uySaqxA&pos=1.
      75. Frank Jordans, Swiss in a Bind Over Ruling on US Tax Case, BOSTON GLOBE, Jan. 26, 2010,
http://www.boston.com/business/taxes/articles/2010/01/26/swiss_in_a_bind_over_ruling_on_us_tax_
case/.
      76. Browning, supra note 10. Switzerland operates under a very different definition of “tax fraud”
than the United States. Id.; see also James Nason, Why the Swiss Are Secretive, INT’L. HERALD TRIB., Feb. 12,
2010, at 19. Switzerland distinguishes between “tax fraud” and “tax evasion” and does not lift banking
secrecy laws in the case of tax evasion. Nason, supra.
      77. Heaven et al., supra note 74 (internal quotation marks omitted) (translating portions of Swiss
court’s opinion).
      78. Id.
      79. Browning, supra note 10 (quoting tax attorney Scott D. Michel) (internal quotation mark
omitted); see also Jordans, supra note 75 (quoting analyst’s opinion that "[t]he ruling right now suggests
that the agreement can't be executed" (internal quotation marks omitted)).
      80. Browning, supra note 12.
      81. Browning, supra note 10.
194                                      TEMPLE LAW REVIEW                                          [Vol. 83


B.    Prior Law

     On occasion, past courts have quashed summonses on the basis of abuse of
power,82 overbreadth,83 and comity.84 The following part reviews courts’
treatment of these arguments to evaluate UBS’s likelihood of success if it pursues
these arguments to quash the summons.

      1.    The Statutory Basis and Prima Facie Requirements for a Summons

     Internal Revenue Code §§ 7601, 7602, and 7609 provide the statutory basis
for summonses.85 Section 7601 furnishes the IRS with the authority to investigate
taxpayer compliance.86 The IRS need not have probable cause to investigate
because “[t]he purpose of the statutes is not to accuse, but to inquire.”87 Section
760288 provides the IRS with expansive investigatory authority and tools, like
summonses, to effectuate its responsibility under § 7601.89
     The Supreme Court first authorized the use of John Doe summonses in United
States v. Bisceglia.90 Congress later explicitly codified Bisceglia by enacting I.R.C.


     82. E.g., EEOC v. First Ala. Bank of Birmingham, 440 F. Supp. 1381, 1385–86 (N.D. Ala. 1977)
(finding issuance of summons to settle personal vendetta an abuse of power).
     83. E.g., United States v. Theodore, 479 F.2d 749, 754 (4th Cir. 1973) (finding summons overbroad
because it constituted “rambling exploration of a third party’s files” (internal quotation mark omitted)).
     84. E.g., United States v. First Nat’l Bank of Chi., 699 F.2d 341, 345–47 (7th Cir. 1983) (finding that
Greek banking secrecy laws prevailed over third-party IRS summons).
     85. I.R.C. §§ 7601, 7602, 7609 (2006).
     86. I.R.C. § 7601. The statute requires the Secretary of the Treasury “to the extent he deems it
practicable, [to] . . . inquire after and concerning all persons . . . who may be liable to pay any internal
revenue tax.” Id.
     87. United States v. Bisceglia, 420 U.S. 141, 146 (1975).
     88. I.R.C. § 7602(a). For investigating taxpayer compliance, the Secretary is authorized to execute
the following:
     (1) To examine any books, papers, records, or other data which may be relevant . . . to such
     inquiry;
     (2) To summon the person liable for tax or required to perform the act [e.g., filing a Form
     1099] . . . to produce such books, papers, records, or other data, and to give such testimony . . .
     as may be relevant or material to such inquiry; and
     (3) To take such testimony . . . under oath, as may be relevant or material to such inquiry.
Id.
     89. I.R.C. §§ 7601, 7602; see also United States v. Ritchie, 15 F.3d 592, 596 (6th Cir. 1994) (stating
that §§ 7601 and 7602 gives IRS extensive power to investigate taxpayers and that courts have
consistently agreed with this interpretation).
     90. 420 U.S. 141, 151 (1975). In Bisceglia, the IRS summoned a U.S. bank to determine the identity
of a person who had deposited 400 paper-thin $100 bills, so thin that only storage under abnormal
conditions could have caused such deterioration. Id. at 142–43. After the bank refused to comply with
the summons, the Court reasoned that the breadth of authority found in §§ 7601 and 7602 was
inconsistent with denying enforcement of a summons just because the IRS did not know the identity of
the person. Id. at 149. According to the Court, the IRS could not conduct a “meaningful investigation” if it
must always first ascertain the identity of persons. Id. at 150. Any other finding would “ignore[] the
[Internal Revenue Service’s] legitimate interest in . . . unusual financial transactions,” frustrate § 7601,
and flout principles of statutory construction. Id. at 149–50. The judiciary’s role is to protect against
“arbitrary or capricious action,” id. at 151, as § 7602 may not be used for “fishing expeditions” or
otherwise abused. Id. at 150.
2010]                               THE UBS JOHN DOE SUMMONS                                           195


§ 7609(f), which provides the statutory authority for a John Doe summons.91
Section 7609(f) also requires the IRS to establish that (1) the summons relates to
a particular person or ascertainable class; (2) a reasonable basis exists for issuing
the summons; and (3) no adequate alternative for acquiring the information
exists.92 Section 7609 lists additional requirements.93
      In United States v. Powell,94 the Supreme Court enumerated the good faith
requirements that the IRS must meet to establish its prima facie case for enforcing
a summons.95 According to Powell, the IRS must prove: (1) the investigation
serves a legitimate purpose; (2) the information might be relevant to the purpose;
(3) the IRS does not already possess the information summoned; and (4) the IRS
complied with § 7609(f).96 The government bears the initial and “‘slight’ or
‘minimal’” burden of establishing a prima facie case,97 which it can meet by
providing an affidavit from an IRS agent. 98 This slight burden effectuates the
“congressional policy choice in favor of disclosure of all information relevant to a
legitimate IRS inquiry.”99
      Once the government establishes its prima facie case, the burden becomes
“heavy” and shifts to the petitioner to rebut by refuting an established Powell
factor or by challenging the summons on “any appropriate grounds,”100 such as
showing that enforcement constitutes an abuse of process or that the summons is
overbroad or should not be enforced for policy reasons like comity.101 The
legitimate purpose test asks whether the summons relates to a good faith
investigation of taxpayer compliance.102

      2.    Reasons Courts May Quash a Summons

      a.    Courts May Quash a Summons When It Constitutes an Abuse of Process
     An abuse of process occurs when the IRS petitions a court to issue a
summons for an “improper purpose, such as to harass the taxpayer or to put
pressure on him to settle a collateral dispute, or for any other purpose reflecting



     91. I.R.C. § 7609(f).
     92. Id.
     93. See id. (providing additional requirements of John Doe Summons); see also § 7609(h)(1)
(providing requirements for when district court may assert jurisdiction). Due process requires that
minimum contacts be found in the district before a court may exercise jurisdiction. Int’l Shoe Co. v.
Washington, 326 U.S. 310, 317–22 (1945).
     94. 379 U.S. 48 (1964).
     95. Powell, 379 U.S. at 57–58
     96. Id.
     97. Mazurek v. United States, 271 F.3d 226, 229–30 (5th Cir. 2001).
     98. E.g., United States v. Stuart, 489 U.S. 353, 360 (1989) (“[T]he affidavits the IRS submitted . . .
plainly satisfied the requirements of good faith we set forth in Powell and have repeatedly reaffirmed.”).
     99. United States v. Arthur Young & Co., 465 U.S. 805, 816 (1984).
     100. E.g., United States v. White, 853, F.2d 107, 111 (2d Cir. 1988).
     101. E.g., United States v. LaSalle Nat’l Bank, 437 U.S. 298, 316 (1978); Mollison v. United States,
481 F.3d 119, 122–23 (2d Cir. 2007) United States v. Leventhal, 961 F.2d 936, 939–40 (11th Cir. 1992).
     102. Mollison, 481 F.3d at 124.
196                                    TEMPLE LAW REVIEW                                         [Vol. 83


on the good faith of the particular investigation.”103 Establishing an abuse of
process, however, is a “heavy burden” which requires a showing that the
misconduct was in “bad faith” or “egregious.”104 This heavy burden “is consistent
with the reluctance of courts to circumscribe the broad summons authority given
the IRS.”105 Courts have found that misconduct does not reach the egregious level
required for an abuse of process where the IRS issues a summons after ignoring
repeated requests to schedule a due process hearing 106 or where the IRS issues a
summons for research purposes, not for a criminal investigation.107 Alternatively,
courts may find an abuse of power in situations where the summons is used to
satisfy a personal vendetta108 or where the IRS commits fraud in gathering
information used to issue a summons.109

      b.    Courts May Quash a Summons When It Is Overbroad

      An IRS summons violates the Fourth Amendment when it is overbroad. Some
courts define overbroad as a summons that is “out of proportion to the ends
sought,”110 while others, like the Eleventh Circuit, narrowly define overbroad as a
summons that “does not advise the summoned party what is required of him with
sufficient specificity to permit him to respond adequately to the summons.”111 The
two considerations are specificity and relevance. 112 The IRS meets the relevancy
standard when the information summoned “might throw light upon the
correctness of the taxpayer’s return.”113 Although the IRS must have a “realistic
expectation rather than an idle hope that something might be discovered,” as
fishing expeditions are not permitted,114 the standard is lenient and requires mere


      103. United States v. Powell, 379 U.S. 48, 58 (1964).
      104. Beaumont Key Servs., L.L.C. v. United States, No. 3-05-CV-0973-L, 2005 WL 2007100, at *2
(N.D. Tex. Aug. 19, 2005).
      105. Id.
      106. Id.
      107. See United States v. First Nat’l Bank in Dall., 635 F.2d 391, 392–93 (5th Cir. 1981) (finding
collection of individual’s tax liability information for research as proper purpose).
      108. See EEOC v. First Ala. Nat’l Bank of Birmingham, 440 F. Supp. 1381, 1385–86 (N.D. Ala. 1977)
(quashing EEOC subpoena because investigator attempted to use his power to satisfy personal
vendettas).
      109. E.g., United States v. Deak-Perera & Co., 566 F. Supp. 1398, 1402 (D.D.C. 1983).
      110. E.g., United States v. Harrington, 388 F.2d 520, 523 (2d Cir. 1968) (quoting McMann v. SEC, 87
F.2d 377 (2d Cir. 1937)) (internal quotation marks omitted).
      111. United States v. Medlin, 986 F.2d 463, 467 (11th Cir. 1993) (quoting United States v. Wyatt,
637 F.2d 293, 302 n.16 (5th Cir. 1981)) (internal quotation marks omitted), quoted by United States v.
Hines, No. 6:08-mc-21-Orl-31DAB, 2008 U.S. Dist. LEXIS 37716, at *11 (M.D. Fla. May 7, 2008).
      112. See United States v. Morton Salt Co., 338 U.S. 632, 652 (1950) (indicating that investigatory
powers not exceeded when “demand is not too indefinite and the information sought is reasonably
relevant”). When deciding relevancy, courts must keep in mind the congressional intent behind § 7602
to give the IRS broad access to all relevant information. Segmond v. United States, 589 F. Supp. 568, 574
(S.D.N.Y. 1984); see also United States v. Giordana, 419 F.2d 564, 568 (8th Cir. 1969) (noting that if
taxpayer thinks a request for all relevant information is fishing expedition, then § 7602 licenses IRS to
fish).
      113. La Mura v. United States, 765 F.2d 974, 981 (11th Cir. 1985) (quoting Wyatt, 637 F.2d at 300)
(internal quotation marks omitted).
      114. Id. (quoting Wyatt, 637 F.2d at 300–01) (internal quotation marks omitted).
2010]                             THE UBS JOHN DOE SUMMONS                                         197


potential relevancy, not actual relevancy.115 The volume of information sought is
immaterial to the enforcement of a summons; “[b]roadness alone is not sufficient
justification to refuse enforcement . . . so long as the material sought is
relevant.”116
      United States v. Hines117 illustrates the overbreadth analysis that courts in the
Eleventh Circuit apply. The Hines summons sought any document, record, and
bank statement pertaining to the taxpayer’s finances during a four-month
period.118 The court rejected the overbreadth argument, finding the description of
the information sought specific because it was “sufficiently particular and limited
in scope” and relevant because it was necessary to determine the individual’s tax
liability.119
      Similarly, in United States v. Moeshlin,120 the court held that a summons was
not overbroad when it sought “all bank statements, checkbooks, . . . savings
account passbooks, and records of . . . deposit, for January 1, 2004.”121 The court
reasoned that the summons specified the type of documents to produce, limited
the time period,122 and did not require the summonee to “blindly guess at what he
must produce.”123 Likewise, in United States v. Bright,124 the court enforced a
summons despite finding that it required an “extensive amount of information.”125
The court did so for two reasons. First, the descriptions of the requested
documents were specific enough to notify the summonees of what they must
produce.126 Second, the summons did not seek irrelevant material because all of
the documents were related to the taxpayers’ “financial dealings” and, therefore,
relevant to determining their tax liability.127 Furthermore, in United States v.
Brigham Young University,128 the IRS had examined 162 of Brigham Young
University’s (“BYU”) in-kind donors, found that each of them overvalued the gift,
and thereafter issued a third-party John Doe summons to BYU to learn the names
of all donors “who made charitable contributions in kind to BYU . . . [during] 1976,
1977, and 1978.”129 The Tenth Circuit found that the summons did not constitute



     115. United States v. Arthur Young & Co., 465 U.S. 805, 814 (1984).
     116. United States v. Bright, No. 07-00311 ACK-KSC, 2007 U.S. Dist. LEXIS 67306, at *13 (D. Haw.
Sept. 11, 2007) (omission in original) (quoting Adams v. FTC, 296 F.2d 861, 867 (8th Cir. 1961))
(internal quotation marks omitted).
     117. No. 6:08-mc-21-Orl-31DAB, 2008 U.S. Dist. LEXIS 37716, at *10–12 (M.D. Fla. May 7, 2008).
     118. Hines, 2008 U.S. Dist. LEXIS 37716, at *5–6.
     119. Id. at *11–12.
     120. No. 2:06-cv-194-FtM-29DNF, 2007 U.S. Dist. LEXIS 44765 (M.D. Fla. Jan. 19, 2007).
     121. Moeshlin, 2007 U.S. Dist. LEXIS 44765, at *6–7.
     122. Id. at *7.
     123. Id. (quoting United States v. Medlin, 986 F.2d 463, 467 (11th Cir. 1993)) (internal quotation
mark omitted).
     124. No. 07-00311 ACK-KSC, 2007 U.S. Dist. LEXIS 67306 (D. Haw. Sept. 11, 2007).
     125. Bright, 2007 U.S. Dist. LEXIS 67306, at *13.
     126. Id. at *13–14. The summons requested fifteen categories of documents relating to the
taxpayers’ tax liability for 2002 and 2003. Id. at *2.
     127. Id. at *16.
     128. 679 F.2d 1345 (10th Cir. 1982).
     129. Brigham Young Univ., 679 F.2d at 1346.
198                                     TEMPLE LAW REVIEW                                          [Vol. 83


a fishing expedition because the IRS had a “reasonable basis” for suspecting tax
violations.130
     By contrast, other courts have quashed summonses on the basis of
overbreadth. For instance, in United States v. Theodore,131 the Fourth Circuit
quashed a summons that it deemed to be a fishing expedition because the IRS
requested all of the accounting firm’s clients’ records “in the hope” that the “IRS
might determine if there is an error in the return of some unknown taxpayer.”132
As the Theodore opinion noted, courts will not enforce “a rambling exploration of
a third party’s files.”133 Similarly, in United States v. Trader’s State Bank,134 the
Ninth Circuit held that a summons issued to third-party recordkeepers was
overbroad when it requested irrelevant information by requiring disclosure of all
church-banking transactions rather than only those related to the taxpayers at
issue.135

      c.    Courts May Quash a Summons Based on Comity, Conflicting Foreign Laws

      Comity addresses the deference that a forum must pay to a foreign
government when the need to balance conflicting laws arises. 136 Many countries
enact banking secrecy laws and blocking statutes to prohibit banks from divulging
information to foreign governments, thus creating a defense for bankers who do
not wish to comply with foreign requests for disclosure.137 U.S. courts may quash a
summons when it creates a conflict with foreign law. 138
      Switzerland enacted banking secrecy laws which make it a crime to divulge
confidential bank information. Article 271 of the Swiss Criminal Code prohibits
foreign administrative authorities from conducting investigations on Swiss
territory.139 Article 273 of the Swiss Criminal Code is specifically directed at


     130. Id. at 1348–50.
     131. 479 F.2d 749 (4th Cir. 1973).
     132. Theodore, 479 F.2d at 754 (emphases added) (quashing John Doe summons seeking copies of
all of accounting firm’s clients’ returns for three-year span and all notes or records pertaining to
returns).
     133. Id. (quoting United States v. Harrington, 388 F.2d 520, 523 (2d Cir. 1968)) (internal quotation
marks omitted).
     134. 695 F.2d 1132, 1133 (9th Cir. 1983).
     135. Trader’s State Bank, 695 F.2d at 1133.
     136. In 1895, the Supreme Court famously defined comity as “the recognition which one nation
allows within its territory to the legislative, executive, or judicial acts of another nation, having due
regard both to international duty and convenience, and to the rights of its own citizens.” Hilton v. Guyot,
159 U.S. 113, 164 (1895).
     137. C. Todd Jones, Compulsion Over Comity: The United States’ Assault on Foreign Bank Secrecy, 12
NW. J. INT’L L. & BUS. 454, 463–64 (1992).
     138. E.g., Societe Internationale Pour Participations Industrielles et Commerciales, S.A. v. Rogers,
357 U.S. 197, 213 (1958).
     139. SCHWEIZERISCHES STRAFGESETZBUCH [STGB] [CRIMINAL CODE] Dec. 21, 1937, as amended by SR
311.0, art. 271 (Switz.), available at http://www.admin.ch/ch/d/sr/3/311.0.de.pdf. An unofficial
translation of this provision is:
     Whoever, without authorization, performs acts for a foreign state on Swiss territory reserved
     to an authority or an official,
     whoever performs such acts for a foreign party or another foreign organization,
2010]                              THE UBS JOHN DOE SUMMONS                                         199


banking secrecy.140 Similarly, Article 47 of the Federal Act on Banks and Savings
Banks prohibits the disclosure of Swiss bank account information to third
parties.141 Since 1984, there have been twenty-nine convictions of Article 271
violations, twenty-six convictions of Article 273 violations,142 and forty-eight
convictions of Article 47 violations.143
     The Supreme Court first addressed U.S. discovery orders compelling a
summonee to violate foreign laws in 1958 in Societe Internationale Pour
Participations Industrielles et Commerciales, S.A. v. Rogers,144 where the United
States requested records that were in the possession of a third-party Swiss
bank.145 Notably, the Swiss government enjoined the company from complying
with the request when the Swiss Federal Attorney made a showing that complying
with the summons would violate Swiss banking secrecy laws.146
     The district court dismissed the complaint with prejudice when the
summoned party failed to comply with the production order, 147 but the Supreme


     whoever aids and abets such acts,
     shall be sentenced to imprisonment for up to the three years or a fine, in serious cases, to
     imprisonment for not less than one year.
Amicus Brief of Government of Switzerland, supra note 15, at 2.
     140. STGB, Dec. 21, 1937, SR 311.0, art. 273 (Switz.), available at http://www.admin.ch/ch/d/sr/
3/311.0.de.pdf. An unofficial translation of this provision is:
     Whoever seeks to discover a manufacturing or business secret in order to make it accessible
     to a foreign official agency or a foreign organization or private enterprise or their agents,
     whoever makes a manufacturing or business secret accessible to a foreign official agency or a
     foreign organization or private enterprise or their agents,
     shall be sentenced to imprisonment for up to three years or a fine, in serious cases, to
     imprisonment for not less than one year. A fine can be combined with the imprisonment.
Amicus Brief of Government of Switzerland, supra note 15, at 3.
     141. BUNDESGESETZ ÜBER DIE BANKEN UND SPARKASSEN [BANKG] [BA] Nov. 8, 1934, SR 952.0, art. 47
(Switz.), available at http://www.admin/ch/ch/d/sr/952_0/a47.html. An unofficial translation of this
provision is:
     1. Whoever intentionally:
           a. divulges a secret entrusted to him in his capacity as a management body, employee . . .
           of a bank, . . . or that he became aware of in this capacity;
           b. seeks to induce others to such a violation of professional secrecy
           shall be sentenced to imprisonment of up to three years or a fine.
     ....
     4. Violation of professional secrecy remains punishable after termination of the official
     relationship . . . .
     ....
     6. Prosecution and judgment of the acts under this provision are the responsibility of the
     cantons. The general provisions of the Swiss Criminal Code shall apply.
Amicus Brief of Government of Switzerland, supra note 15, at 3–4.
     142. Amicus Brief of Government of Switzerland, supra note 15, at 2–3.
     143. Id. at 4.
     144. 357 U.S. 197 (1958).
     145. Societe Internationale, 357 U.S. at 199.
     146. Id. at 200.
     147. Societe Internationale Pour Participations Industrielles et Commercials, S.A. v. Brownell, 145
F. Supp. 494, 494–96 (D.C.D.C. 1956).
200                                      TEMPLE LAW REVIEW                                           [Vol. 83


Court reversed,148 reasoning that the summonee had made a full and good faith
effort to produce the documents and that there was no showing of bad faith.149
The Supreme Court held that Swiss financial secrecy laws do not constitute a
complete bar to U.S. discovery orders and that U.S. courts may require foreign
parties to make their maximum efforts to comply.150 While the Court noted that
fear of prosecution for complying with a production order is a “weighty excuse for
nonproduction,”151 the Court refused to broadly hold that failure to comply due to
fear of punishment would preclude enforcement.152 To do so would undermine
congressional policies and encourage Americans to use offshore banks with
blocking laws to cheat the IRS.153
      While Societe Internationale left lower courts the discretion to use a good
faith approach on a case-by-case basis to determine when foreign laws might bar
production,154 it also left them with uncertainty as to what constitutes “good
faith.”155 Courts have since moved away from singularly analyzing good faith
because the approach ignores America’s strong national interest in furthering its
own law and frustrates Congress’s intent to promote the broad discovery
process.156 The Restatement (Second) of Foreign Relations Laws of the United
States, which provides the predominant method of analysis in the U.S., identifies
five factors that courts consider. These five factors are:
      (a) vital national interests of each of the states,
      (b) the extent and the nature of the hardship that inconsistent
      enforcement actions would impose upon the person,
      (c) the extent to which the required conduct is to take place in the
      territory of the other state,
      (d) the nationality of the person, and
      (e) the extent to which enforcement by action of either state can
      reasonably be expected to achieve compliance with the rule prescribed
      by that state.157


     148. Societe Internationale, 357 U.S. at 203, 213.
     149. Id. at 203.
     150. Id. at 205–06.
     151. Id. at 211.
     152. Id. at 205.
     153. Id.
     154. Id. at 213.
     155. See Keith Y. Cohan, Note, The Need for a Refined Balancing Approach When American Discovery
Orders Demand the Violation of Foreign Law, 87 TEX. L. REV. 1009, 1013 (2009) (discussing Societe
Internationale and noting Court did not instruct how to analyze good faith); see also Mark Brodeur, Note,
Court Ordered Violations of Foreign Bank Secrecy and Blocking Laws: Solving the Extraterritorial
Dilemma, 1988 U. ILL. L. REV. 563, 564, 582 (noting that lack of clarity in Societe Internationale resulted in
lower courts developing distinct legal analyses); David E. Teitelbaum, Note, Strict Enforcement of
Extraterritorial Discovery, 38 STAN. L. REV. 841, 871 (1986) (noting inconsistent application of Societe
Internationale’s good faith inquiry).
     156. See Cohan, supra note 155, at 1015 (noting problems with comity-only approach); see also
Ings v. Ferguson, 282 F.2d 149, 152 (2d Cir. 1960) (exemplifying comity-only approach by ignoring
American interest and quashing production order where it would cause “unnecessary” violation of
foreign laws).
     157. RESTATEMENT (SECOND) OF FOREIGN RELATIONS LAW OF THE UNITED STATES § 40 (1965).
2010]                              THE UBS JOHN DOE SUMMONS                                          201


      i.    The Eleventh Circuit

      Cayman National Bank, Ltd. v. United States158 illustrates the Eleventh
Circuit’s current analysis for assessing a summons that conflicts with foreign
law.159 In Cayman, a district court enforced a third-party summons issued on a
foreign bank despite the summonee’s defense that compliance would force it to
violate Cayman Islands' banking secrecy laws.160 As is typical of many courts,
Cayman purported to utilize the balancing factors under the Restatement (Second)
of Foreign Relations, but focused mainly on the vital national interests of each
state and the hardship to the summonee, while largely disregarding the other
factors.161 The court reasoned that a foreign country’s interest in privacy is
“substantially diminished” when the privacy interest concerns a U.S. citizen
subject to U.S. laws.162 Moreover, the United States has a more substantial interest
than a foreign government when a summons relates to the tax investigation of a
U.S. citizen.163
      Similarly, in In re Grand Jury Proceedings, United States v. Bank of Nova
Scotia164 (“Bank of Nova Scotia”), the Eleventh Circuit stated that it would not
privilege foreign banking secrecy laws where such laws are used to shield
criminal activities from U.S. authorities.165 U.S. citizens may not rely on foreign
banking laws as foreign nationals may; as the court reasoned, “even if the Cayman
Islands had an absolute right to privacy, this right could not fully apply to
American citizens.”166 U.S. citizens’ interest in private banking pursuant to foreign
secrecy laws is “substantially reduced” when the United States is conducting a
criminal investigation “since they are required to report those transactions to the
United States” anyway.167
      United States v. Hayes168 further suggests that the Eleventh Circuit will
enforce John Doe summonses requiring a summonee to violate Switzerland’s
secrecy laws when it furthers a tax fraud investigation.169 As the Eleventh Circuit



     158. No. 8:06-mc-50-T-24MAP, 2006 U.S. Dist. LEXIS 76379 (M.D. Fla. Oct. 20, 2006).
     159. Cayman Nat’l Bank, 2006 U.S. Dist. LEXIS 76379, at *6–7.
     160. Id. at *4, 14.
     161. Id. at *7–8 (analyzing only vital national interest and hardship); see also In re Grand Jury
Proceedings, United States v. Bank of Nova Scotia, 740 F.2d 817, 827–28 (11th Cir. 1984) [hereinafter
Bank of Nova Scotia] (noting bank’s bad faith, treating “vital national interests” factor as supreme, and
essentially ignoring other factors).
     162. Cayman Nat’l Bank, 2006 U.S. Dist. LEXIS 76379, at *8 (quoting United States v. Rubin, 836
F.2d 1096, 1102 (8th Cir. 1988)).
     163. Id.
     164. 740 F.2d 817, 825, 828 (11th Cir. 1984).
     165. Bank of Nova Scotia, 740 F.2d at 827–28. Pursuant to a drug investigation, the court upheld a
grand jury subpoena served on a Canadian bank’s Miami branch for banking documents located in the
Cayman Islands. Id. at 828.
     166. Id. at 828.
     167. Id.
     168. 722 F.2d 723 (11th Cir. 1984).
     169. Hayes, 722 F.2d at 724, 726 (ordering tax-shelter promoter to comply with two John Doe
summonses seeking documents related to tax fraud scheme which were located in Switzerland).
202                                      TEMPLE LAW REVIEW                                          [Vol. 83


earlier held, conflicts between laws of two countries do not excuse a party who
chooses to conduct transnational operations from complying with U.S. law. 170

      ii.   Other Circuits

      In United States v. Vetco Inc.,171 the Ninth Circuit held that possible criminal
penalties under Swiss law for violating banking secrecy laws did not preclude the
enforcement of a production order172 and that Societe Internationale “did not erect
an absolute bar” to enforcing a summons.173 The court reasoned that the United
States has a strong national interest in collecting taxes and preventing tax
fraud.174 Comparatively, Switzerland’s interest in preserving the secrecy of
business records was diminished because the summonee was a subsidiary of a
U.S. corporation and “Switzerland’s only interest is in protecting the privacy of its
non-consenting domiciliaries.”175
      Further, the court was “not persuaded” that Article 273 of the Swiss Penal
Code presented great hardship for two reasons.176 First, a Swiss Federal Attorney
representative stated in an affidavit that Article 34 of the Swiss Penal Code [now
Article 17], which relates to duress, may provide a defense to any Article 273
prosecution.177 Second, the court reasoned that any hardship imposed on Vetco
was avoidable because Vetco would not be in this situation had it complied with
IRS requirements in the first place.178
      Finally, the court found that no “substantially equivalent alternative” existed,
holding that even the Double Taxation Treaty between the United States and
Switzerland was not an adequate alternative because Switzerland reserved the
right to not comply under the Treaty, specifically in the case of tax fraud.179 Like
the Eleventh Circuit, the Vetco court merely glossed over the other factors without




      170. In re Grand Jury Proceedings United States v. Bank of Nova Scotia, 691 F.2d 1384, 1391 (11th
Cir. 1982) (affirming lower court decision requiring bank to produce documents after being served with
subpoena duces tecum, despite fact that production would violate Bahamian law). A subpoena duces
tecum is a subpoena directing production of books, records, and other documents. BALLENTINE’S LAW
DICTIONARY 1229 (3d ed. 1969).
      171. 691 F.2d 1281 (9th Cir. 1981).
      172. Vetco, 691 F.2d at 1291.
      173. Id. at 1287–88. The Ninth Circuit reasoned that unlike Societe Internationale, the Swiss
government never became a party to this case, the production would not violate Swiss law, and any
inability to produce would bolster rather than hamper the summonee. Id.
      174. Id. at 1289.
      175. Id.
      176. Id.
      177. Id.; see also United States v. Chase Manhattan Bank, 584 F. Supp. 1080, 1086 (S.D.N.Y. 1984)
(reasoning bank’s Hong Kong employees would have a valid defense in either country’s court to mitigate
any hardship otherwise imposed).
      178. Id. at 1289–90. But cf. First Nat’l City Bank of N.Y. v. IRS, 271 F.2d 616, 619–20 (2d Cir. 1959)
(showing more willingness than other circuits to find hardship exists by noting in dicta that a
production should not be ordered if bankers would actually be prosecuted).
      179. Vetco, 691 F.2d at 1290.
2010]                              THE UBS JOHN DOE SUMMONS                                          203


analysis.180 While Vetco is a Ninth Circuit case, the Eleventh Circuit has
consistently followed and cited it.181

      iii.   Cases Not Enforcing Summonses

      In United States v. First National Bank of Chicago,182 the court held that Greek
banking secrecy laws prevailed over a third-party IRS summons served on a
bank.183 In analyzing the vital national interest of each state, the court reasoned
that Greece’s secrecy laws served an “important” interest to both the country and
its financial integrity.184 Notably, this factor turned on the findings that the IRS
had already determined the tax liability of the couple whose records it sought
from the bank for purposes of tax collection and that the amount due was
“comparatively small.”185 Additionally, the Seventh Circuit emphasized that the
district court failed to provide a rationale for its decision, which contributed to the
Seventh Circuit’s holding that the district court’s enforcement constituted an
abuse of discretion and should be remanded.186
      Cochran Consulting, Inc. v. Uwatec USA, Inc.187 involved a civil patent suit
where the court found that the party receiving the discovery order did not possess
the proprietary code at issue, which was located in Switzerland, nor did it have a
right to obtain the code at issue due to patent laws.188 The court stated that “it is
inappropriate for the United States, a nation founded on the rule of law, to require
that a person violate the criminal laws of a sovereign nation.” 189 The court
reasoned that possession of the patent in Switzerland was not the result of trying
to “thwart discovery” or “hid[e] behind” Swiss laws.190
      In In re Sealed Case,191 the D.C. Circuit Court of Appeals dismissed a contempt
order for a grand jury subpoena duces tecum to a bank and its manager in a
money laundering investigation seeking documents located in a foreign country
with blocking statutes.192 The court limited its holding to the facts of that case. 193
First, the bank acted in good faith since it was not part of a criminal investigation



      180. Id. at 1290–91.
      181. See United States v. Elmes, 532 F.3d 1138, 1142 (11th Cir. 2008) (referencing Vetco); see also
Bank of Nova Scotia, 740 F.2d 817, 828 n.16 (11th Cir. 1984) (same); see also In re Grand Jury
Proceedings United States v. Bank of Nova Scotia, 691 F.2d 1384, 1388 (11th Cir. 1982) (same); see also
In re Request from Swiss Fed. Dep’t of Justice & Police, 731 F. Supp. 490, 491 (S.D. Fla. 1990) (same).
      182. 699 F.2d 341 (7th Cir. 1983).
      183. First Nat’l Bank of Chi., 699 F.2d at 342, 346.
      184. Id. at 346.
      185. Id.
      186. Id. at 345–46.
      187. 102 F.3d 1224 (Fed. Cir. 1996).
      188. Cochran Consulting, 102 F.3d at 1230.
      189. Id.
      190. Id. (internal quotation marks omitted).
      191. 825 F.2d 494 (D.C. Cir. 1987).
      192. In re Sealed Case, 825 F.2d at 495, 499.
      193. Id. at 499.
204                                       TEMPLE LAW REVIEW                                            [Vol. 83


and was merely a third party to the grand jury investigation, and second, the bank
manager had agreed to testify, but would not produce the documents.194

      d. Courts May Deny Enforcement Where Treaties and Information Exchange
      Agreements Constitute Adequate Alternatives for Acquiring the Information

      Both the 1951 and the 1996 Double Taxation Treaties between Switzerland
and the United States limit information sharing to instances involving specific
targeted requests. Article 16(1) of the 1951 Double Taxation Treaty and Article
26(1) of the 1996 Double Taxation Treaty are substantively identical and allow for
the exchange of information “as is necessary . . . for the prevention of fraud or the
like in relation to . . . taxes.”195 Under the 2003 “Mutual Agreement” regarding the
1996 Double Taxation Treaty, each party must demonstrate a “reasonable
suspicion” of “tax fraud or the like” to secure assistance, 196 but “tax fraud” does
not include “tax evasion.”197 Further, neither party to the agreement has an
obligation to comply with a treaty request.198
      Many courts reject the argument that either Double Taxation Treaty serves as
the sole means of obtaining records.199 However, a few courts have found that the


      194. Id. at 498–99.
      195. Compare Convention Between the United States and the Swiss Confederation for the
Avoidance of Double Taxation with Respect to Taxes on Income, U.S.-Switz. art. 16(1), September 27,
1951, 2 U.S.T. 1751, 1760–61 [hereinafter 1951 Double Taxation Treaty] (providing language quoted
above), with 1996 Double Taxation Treaty, supra note 69, art. 26(1) (providing substantively identical
language).
      196. Mutual Agreement Regarding the Administration of Article 26 (Exchange of Information) of
the Swiss-U.S. Income Tax Convention of October 2, 1996 (Jan. 23, 2003) [hereinafter 2003 Mutual
Agreement]. The 2003 Mutual Agreement provides guidance on what constitutes “tax fraud or the like”
under Article 26(1). See id. at 4 (“(a) Conduct . . . established to defraud individuals or companies, even
though the aim of the behavior may not be to commit tax fraud; (b) Conduct that involves the
destruction or non-production of records, or the failure to prepare or maintain correct and complete
records . . . or other matters required to be shown by such person in any tax return, if the person has not
properly reported such amounts in any such tax return; or (c) Conduct by a person subject to tax in the
requesting State that involves the failure to file a tax return . . . and an affirmative act that has the effect
of deceiving the tax authorities making it difficult to uncover or pursue the failure to file, including the
concealment of assets or covering up of sources of income or the handling of one’s affairs to avoid
making the records that are usual in transactions of the kind.”).
      197. In the 1996 Double Taxation Treaty, Switzerland agreed to provide information on
individuals only when it related to “tax fraud or the like,” but not “tax evasion.” Beckett G. Cantley, The
New Tax Information Exchange Agreement: A Potent Weapon Against U.S. Tax Fraud?, 4 HOUS. BUS. & TAX
L.J. 231, 232 n.8, 238 n.38 (2004). Negotiations are currently underway to expand it to cover “tax
evasion.” Bruce Zagaris, Swiss and U.S. Governments Adjourn Negotiations of Tax Treaty Protocol on
Information Exchange, 25 No. 7 INT’L ENFORCEMENT L. REP. 271, 271 (2009).
      198. 1951 Double Taxation Treaty, supra note 195, at art. 16(3) (“In no case shall the . . . Article be
construed . . . to impose . . . the obligation to carry out administrative measures at variance with the
regulations and practice of either contracting State or which would be contrary to its sovereignty,
security or public policy . . . .”). The 1996 Double Taxation Treaty is the same. See 1996 Double Taxation
Treaty, supra note 69, at art. 26(3).
      199. E.g., United States v. Vetco Inc., 691 F.2d 1281, 1286 n.4 (9th Cir. 1981). The Vetco court
reasoned that the U.S.-Swiss Double Taxation Treaty sought to prevent tax fraud and use of a summons
would “further [the Treaty’s] purpose, not negate it.” Id. Moreover, the Treaty did not state nor does
legislative history suggest that the Treaty is the exclusive method of information exchange. Id.
2010]                             THE UBS JOHN DOE SUMMONS                                        205


Treaty provides an adequate alternative to the summons. 200 For instance, a New
York court quashed a grand jury subpoena served on a bank seeking individuals’
bank records because: (1) the District Attorney could obtain the information in
two to three months through the Treaty since the case involved bribery; (2) the
District Attorney did not the need the documents for six months; and (3) the bank
acted in good faith.201
      Before UBS, Switzerland, and the IRS settled, the district court hearing the
case rejected the contention that the IRS had an “adequate alternative means” of
acquiring the information in a “timely and comprehensive fashion.”202 In doing so,
the court implicitly rejected the arguments that the procedures in the 1996
Double Taxation Treaty preclude use of a summons by providing the exclusive
method of information exchange.203 The court was “not persuaded” that any
alternatives to summonses, such as treaty requests, would be reliable or
efficient.204

C.    Arguments of UBS, Switzerland, and the United States

     This part discusses the arguments UBS, Switzerland, and the United States
asserted prior to the August 2009 agreement.205 If the United States revives the
summons, the parties will likely reassert many, if not all, of the same arguments.
Future summoned banks will probably utilize similar arguments as well.

      1.    UBS

      UBS argued that enforcing the summons would be improper for the following
reasons. First, when the United States agreed to the 1996 Treaty and the QI
Agreement, it acknowledged that Swiss banking secrecy laws prohibited
disclosing client identities.206 Under the 1996 Double Taxation Treaty, each party
reserved the right not to comply with a treaty request and the request would be
honored only upon the showing of a “reasonable suspicion” of “tax fraud or the
like.”207 Similarly, under the 2000 Model QI Agreement 6.01, a QI will not be
forced to disclose the identity of a U.S. account holder “if the QI is prohibited by
law from making the disclosure and it has taken steps to ensure that such account
holders do not hold U.S. securities.”208
      Second, UBS claimed that the summons was overbroad as it sought records of
thousands of accounts over a seven-year period, such that the IRS could not


     200. See, e.g., In re Two Grand Jury Subpoenas Duces Tecum Served Upon United Bank of Switz.,
N.Y.S.2d 253, 254–56 (N.Y. Sup. Ct. 1993).
     201. Id. at 224–26.
     202. United States v. UBS AG, No. 09-20423-CIV, 2009 WL 2241122, at *1 (S.D. Fla. July 7, 2009).
     203. If the Treaty did provide the exclusive method, then the court would have found it served as
an adequate alternative to the summons and must be used instead of the summons.
     204. UBS AG, 2009 WL 224112, at *1.
     205. See supra Part II.a.3 for a discussion of the agreement reached.
     206. UBS Brief, supra note 67, at 11.
     207. Id. at 5–6 (internal quotation marks omitted).
     208. Id. at 9 (emphasis added) (citing Model QI Agreement § 6.04 T. D. 8881, 2000-1 C.B. 1158
(2000)) (discussing steps which, if taken, would preclude need to divulge identity under 6.01).
206                                    TEMPLE LAW REVIEW                                         [Vol. 83


actually have had a “reasonable suspicion” of “tax fraud or the like.”209 UBS argued
that the breadth of this fishing expedition rendered the summons unlikely to be
relevant to the tax liability of a taxpayer.210 Further, the bank contended that the
use of “U.S. residents” in the summons includes some Swiss or foreign expatriates
who live or work in the United States but still maintain accounts in their native
Switzerland,211 and that “U.S. taxpayer” is overbroad because it included U.S.
expatriates and green card holders living in Switzerland.212
     Third, UBS argued that compliance with the summons would result in
prosecution for violations of Articles 271 and 273 of the Swiss Criminal Code and
Article 47 of the Federal Act on Banks and Savings Bank.213 Similarly, UBS argued
that Swiss courts have held that disclosing financial information constitutes
“business secrets” under Article 273, but did not list any supporting cases. 214 Most
importantly, UBS relied on Ings v. Ferguson215 and Cochran Consulting, Inc. v.
Uwatec USA, Inc.216 to emphasize the importance of considering whether a
summons would force someone to violate laws 217 and on In re Sealed Case218 and
In re Two Grand Jury Subpoenas Duces Tecum Served Upon Unite Bank of
Switzerland.219

      2.    Switzerland

     The Swiss government filed an amicus curiae brief arguing that the United
States should quash the summons and that the 1996 Double Taxation Treaty
provides the exclusive method of information exchange. Switzerland first argued
that UBS made good faith efforts at compliance, and second that the Treaty’s
purpose should “prevail over its literal application.” 220 Switzerland claimed that
the United States frustrated the Treaty’s fundamental purposes and violated it by
proceeding outside of the Treaty’s established procedures for information
exchange in favor of the summons.221 Third, Switzerland argued that compliance
with the summons would force UBS to violate Swiss law, namely: Articles 271 and


      209. Id. at 35–36.
      210. Id. at 37.
      211. Id. at 15–16.
      212. Id. at 16.
      213. Id. at 16–18. UBS pointed out that Switzerland has prosecuted similar actions in the past. Id.
      214. Id. at 17–18.
      215. 282 F.2d 149 (2d Cir. 1960).
      216. 102 F.3d 1224 (Fed. Cir. 1996).
      217. UBS Brief, supra note 67, at 21 (referencing Ings, 282 F.2d at 152 and Cochran Consulting, 102
F.3d at 1230).
      218. 825 F.2d 494 (D.C. Cir. 1987). See supra notes 191–94 and accompanying text for a discussion
of In re Sealed Case.
      219. 601 N.Y.S.2d 253 (N.Y. Crim. Ct. 1993). See supra note 201 and accompanying text for a
discussion of In re Two Grand Jury Subpoenas Duces Tecum Served Upon Union Bank of Switzerland.
      220. Amicus Brief of Government of Switzerland, supra note 15, at 12 (quoting Gabcikovo-
Nagymaros Project (Hung. v. Slovk.), 1997 I.C.J. 7, para. 142 (Sep. 25)). This amounts to an admission
that the Treaty’s language does not expressly provide that it is the exclusive method of information
exchange.
      221. Id. at 13.
2010]                               THE UBS JOHN DOE SUMMONS                                            207


273 of the Swiss Criminal Code and Article 47 of the Federal Acts on Banks and
Savings Banks.222 Fourth, the Swiss government believed the summons
constituted a fishing expedition because it was overbroad, vague, and the
summonee could not comply without violating Swiss law or the Treaty.223

      3.    United States

     The United States first argued that the Treaty neither provides an exclusive
method of obtaining information nor precludes the IRS from using its summons
power.224 Second, the United States claimed that UBS exhibited bad faith by
committing tax evasion on U.S. soil and by knowingly helping thousands of its U.S.
clients evade U.S. taxes.225
     Third, the United States rejected UBS’s characterization of the summons as
overbroad by reiterating cases which held that volume is an immaterial
consideration for overbreadth.226 According to the United States, the proper test is
whether the summons contains adequate detail to inform the summonee of what
he must produce and whether the information is relevant. 227 Because UBS
segregated its U.S. accounts into declared or undeclared accounts, the United
States believed that UBS already had the summoned accounts separate from the
declared accounts. Further, the United States argued that the undeclared accounts
were relevant because they represent Americans who broke the law.228
     On the issue of comity, the United States argued that Eleventh Circuit law is
well settled in favor of enforcement.229 The United States has a vital national
interest in its tax system which prevails over Switzerland’s interest in its banking
laws because the secrecy laws contain exceptions. 230 For instance, Article 17 of the


      222. Id. at 13–14. See supra notes 139–43 and accompanying text for a discussion of Swiss banking
secrecy laws. The Swiss Government relied on Societe Internationale. 357 U.S. 197, 211 (1958) (“[F]ear
of criminal prosecution constitutes a weighty excuse for nonproduction, and this excuse is not
weakened because the laws preventing compliance are those of a foreign sovereign.”). Switzerland also
relied on United States v. First National Bank of Chicago, which found Greece’s interest in its financial
secrecy laws “important.” Amicus Brief of Government of Switzerland, supra note 15, at 14–15
(discussing 699 F.2d 341, 346 (7th Cir. 1983)).
      223. Amicus Brief of Government of Switzerland, supra note 15, at 18.
      224. Memorandum of Law in Support of Petition to Enforce “John Doe” Summons at 31, United
States v. UBS AG., No. 09-20423-CIV (S.D. Fla. June 30, 2009) [hereinafter Memo to Enforce John Doe
Summons]. Despite UBS’s argument that the Treaty provides an exclusive method of information
exchange and therefore that the summons must be quashed, the language of the Treaty does not
proscribe an exclusive method, nor has any case ruled that it does. Id. at 27–28. United States v. Vetco
Inc., 691 F.2d 1281 (9th Cir. 1981) controls as the Eleventh Circuit repeatedly cites it. See supra note 182
and accompanying text for the Eleventh Circuit’s reliance on Vetco, including its holding that the Treaty
was not an adequate alternative because Switzerland reserved the right to not comply, specifically in the
case of tax fraud.
      225. Memo to Enforce John Doe Summons, supra note 224, at 8. UBS’s illegal conduct only ended
when the Department of Justice discovered its actions. That UBS may now attempt to comply by signing
the DPA. Id.
      226. Id. at 16.
      227. Id. at 15–16.
      228. Id. at 18.
      229. Id. at 19–23 (relying on Bank of Nova Scotia, 740 F.2d 817, 825, 828 (11th Cir. 1984)).
      230. Id. at 27.
208                                     TEMPLE LAW REVIEW                                         [Vol. 83


Swiss Penal Code contains a “necessity defense.”231 Moreover, the fact that FINMA
agreed to produce some records in the DPA proves Swiss secrecy laws are not
absolute and that the country circumvents them at will.232 Finally, the United
States argued that UBS would not face hardship and, in the alternative, any
hardship that does result is that which it “brought upon itself” by flouting the rules
in the first place.233
     Before UBS, Switzerland, and the IRS came to an agreement, the Florida
district court provided some rulings. The court rejected UBS’s contention that the
IRS had failed to establish the third prima facie requirement—that “the
information sought [was] not already within the [IRS’s] possession.”234 UBS
argued that the voluntary disclosures235 meant that the IRS already had
possession of some documents, but the court held that “mere possession of some
records the IRS seeks in its Summons . . . forms no basis for denial of
enforcement.”236

                                           III. DISCUSSION

      The UBS John Doe summons is the largest one ever issued by the IRS.237
Never before has a U.S. court ordered a foreign entity to commit 52,000 violations
of its country’s laws, and perhaps not surprisingly questions abound as to its
legality.238 Yet, the statutory and common law considerations for enforcing John
Doe summonses do not analyze the breadth of the summons allowed based on
numbers only, but on a balancing test that accounts for multiple considerations.239
This is a good thing. The alternative would allow the IRS to police small-scale tax
evasion while rendering the United States powerless to enforce its laws when
faced with reliable and specific evidence of the most egregious tax fraud scheme in
U.S. history.240 If the court quashed the summons, it would send the message that


      231. Id. at 28.
      232. Id. at 29.
      233. Id. at 30.
      234. United States v. UBS AG, No. 09-20423, 2009 WL 2241122, at *1 (S.D. Fla. July 7, 2009); see
also United States v. Powell, 379 U.S. 48, 57–58 (1964) (establishing prima facie requirements for
enforcing summons).
      235. The IRS’s Voluntary Disclosure Practice allows delinquent taxpayers to voluntarily disclose
their undisclosed interest in a foreign account. It allows taxpayers to comply with the laws, avoid larger
civil penalties, and generally limit or substantially reduce the risk of criminal prosecution. Voluntary
Disclosure: Questions and Answers, INTERNAL REVENUE SERVICE, http://www.irs.gov/newsroom/article/
0,,id=210027,00.html (last visited Feb. 9, 2011).
      236. UBS AG, No. 09-20423, 2009 WL 2241122, at *1 (emphasis added).
      237. See IRS Press Release, supra note 8 (stating that agreement with UBS would result in
“unprecedented” amount of information—4,450 names—being disclosed to IRS, which is considerably
less than the 52,000 names sought in summons).
      238. See Id. (noting that IRS’s request to force UBS to reveal identities of 52,000 Americans would
amount to violations of Swiss sovereignty and international law).
      239. See supra Part II.B.2b for a discussion of how the specificity/relevance test allows courts to
balance the breadth of the summons with the purpose for issuing it.
      240. Recall that Birkenfeld pled guilty and UBS admitted to assisting U.S. clients evade taxes and
agreed to pay the $780 million dollar fine before the IRS petitioned the court to enforce the summons to
learn the identities of the bank’s undeclared U.S. clients. See supra Part II.A.3 for a discussion of the
2010]                               THE UBS JOHN DOE SUMMONS                                            209


U.S. taxpayers may commit tax fraud and tax evasion in offshore accounts at
foreign banks with little risk, as long as the bank does the same for a sufficient
number of U.S. citizens.
     No precedent parallels either the egregiousness of the UBS violation, the
reliability of the evidence, or the number of names sought. This part argues that a
court should and likely will enforce the UBS summons if the August 2009
agreement unravels and the IRS revives the summons. In doing so, this part
provides a framework for analyzing similar motions to quash in the future.

A.    Powell Factors and Section 7609

     If faced with the issue, the UBS court will likely find that the IRS met its slight
burden of establishing a prima facie case by satisfying all of the Powell factors:
(1) the investigation served a legitimate purpose; (2) the information sought was
relevant to the purpose; (3) the IRS did not already possess the information
summoned; and (4) the IRS complied with I.R.C. § 7609(f). 241 First, the UBS
summons satisfies the legitimate purpose test, because, by seeking the names of
Americans with undeclared offshore accounts, it represents a good faith effort to
investigate taxpayer compliance.242 Second, the IRS meets the relevance
requirement since the standard merely requires that the summoned information
“might throw light upon the correctness of the taxpayer’s return.”243 UBS admitted
to assisting undeclared U.S. clients cheat the IRS when it signed the Deferred
Prosecution Agreement (“DPA”), thereby providing much more than a reasonable
basis for believing Americans were shielding assets in undeclared UBS bank
accounts.244 Third, the IRS does not know the names of those holding beneficial
ownership in undeclared UBS accounts, so it does not already possess the
information summoned. Finally, the IRS complied with the requirements of I.R.C.
§ 7609 because (a) IRS Agent Reeves’s affidavit satisfies the requirements of
§ 7609(f);245 (b) the Florida district court has jurisdiction pursuant to § 7609(h)
since UBS maintained two Florida branches;246 and (c) UBS ownership and
maintenance of two branches in Miami, along with its recruiting visits to the




Deferred Prosecution Agreement and timeline of events. UBS maintained its undeclared accounts
separately from its declared accounts. Declaration of Daniel Reeves, supra note 1, at 12.
      241. See United States v. Arthur Young & Co., 465 U.S. 805, 816 (1984) (describing IRS’s burden as
slight); United States v. Powell, 379 U.S. 48, 57–58 (1964) (providing factors).
      242. See Mollison v. United States, 481 F.3d 119, 124 (2d Cir. 2007) (defining legitimate purpose
test); U.S. Motion to Strike West Declaration, supra note 6, at 1 (stating that summons sought identity of
52,000 Americans evading U.S. tax laws).
      243. La Mura v. United States, 765 F.2d 974, 981 (11th Cir. 1985) (quoting United States v. Wyatt,
637 F.2d 293, 300 (5th Cir. 1981)) (internal quotation marks omitted) (discussing standard relevance
test).
      244. See supra Part II.A.3 for a discussion of the DPA; see also supra Part II.A.2 for a discussion of
the IRS’s knowledge of UBS’s wrongdoing via UBS’s own admission that it harbored undeclared U.S.
accounts.
      245. See, e.g., United States v. Stuart, 489 U.S. 353, 360 (1989) (finding IRS agent’s affidavit alone
satisfies Powell’s good faith requirements).
      246. Declaration of Daniel Reeves, supra note 1, at 10.
210                                    TEMPLE LAW REVIEW                                         [Vol. 83


United States, constitute sufficient minimum contacts to satisfy due process
considerations in exercising jurisdiction over UBS.247

B.    UBS’s Attempt to Rebut the IRS’s Case Will Likely Fail

     The UBS court should and likely will enforce the summons and reject UBS’s
arguments if faced with the issue. UBS failed to allege any abuse of process or
improper purpose as a basis for quashing the summons, and the court will not act
sua sponte to quash the summons.248

      1.    Overbreadth

     The Eleventh Circuit finds a summons overbroad when it “does not advise
the summoned party what is required of him with sufficient specificity to permit
him to respond adequately to the summons.”249 As previously noted, the two
considerations for evaluating the breadth of a summons are specificity and
relevance.250
     First, the UBS summons will likely pass the specificity test. A summons is
specific when it describes the information sought with enough particularity to put
the summonee on notice of what information it must produce,251 which for a John
Doe summons occurs when the description seeks the identities of an
“ascertainable group or class of persons.”252 The UBS summons seeks the
identities of all U.S. citizens with undeclared accounts, 253 and while this comprises
nearly 52,000254 accounts, the court should find that this represents an
ascertainable class to UBS. Given that UBS maintained its undeclared and declared
accounts in a segregated manner, the only logical inference is that UBS knew
exactly which accounts to produce.255 Thus, the fact that UBS already isolated all
of the undeclared U.S. accounts represents a key distinguishing factor in this case.



     247. See supra notes 40–48 and accompanying text for a discussion of UBS activities constituting
contacts with the forum state of Florida and the United States.
     248. See supra Part II.B.2.a for a discussion of quashing summonses for abuse of process. Even a
summonee who makes the allegation faces an uphill battle as courts require such egregious conduct that
quashing a summons is highly unlikely. Beaumont Key Servs., L.L.C. v. United States No. 3-05-CV-0973-L,
2005 WL 2007100, at *2 (N.D. Tex. Aug. 19, 2005).
     249. United States v. Medlin, 986 F.2d 463, 467 (11th Cir. 1993) (quoting United States v. Wyatt,
637 F.2d 293, 302 n.16 (5th Cir. 1981)) (internal quotation marks omitted).
     250. United States v. Morton Salt Co., 338 U.S. 632, 652 (1950).
     251. E.g., Medlin, 986 F.2d at 467. The Eleventh Circuit’s low standard for specificity merely
requires the summons to limit the time period and type of document so that the summonee need not
“blindly guess” at what he or she must produce. See United States v. Moeshlin, No. 2:06-cv-194-FtM-
29DNF, 2007 U.S. Dist. LEXIS 44765, at *7 (M.D. Fla. Jan. 19, 2007) (providing “blindly guess” language);
see also United States v. Hines, No. 6:08-mc-21-Orl-31DAB, 2008 U.S. Dist. LEXIS 37716, at *4, 9–12 (M.D.
Fla. May 7, 2008) (finding descriptions of summoned information specific enough despite being broad
and unspecific).
     252. I.R.C. § 7609(f)(1) (2006).
     253. Declaration of Daniel Reeves, supra note 1, at 3.
     254. U.S. Motion to Strike West Declaration, supra note 6, at 1.
     255. Declaration of Daniel Reeves, supra note 1, at 3; see also id. at 12 (explaining segregation of
accounts); Memo for Leave to Serve Summons, supra note 33, at 3 (same).
2010]                              THE UBS JOHN DOE SUMMONS                                          211


      Second, the UBS court should find that the summons sought relevant
information. A summons seeks relevant information when a reasonable basis
exists for believing that the summons “might throw light upon the correctness of
the taxpayer’s return.”256 UBS claimed that the volume of information was so great
that it could not possibly be relevant.257 Unfortunately for UBS, the fact that the
summons seeks an extensive volume of information does not render it a fishing
expedition, despite its unprecedented breadth.258 Courts continually hold that
broadness alone is immaterial to overbreadth when all of the information is
relevant.259 Here the client names from the 52,000260 undeclared accounts are all
relevant because every owner of an undeclared account unquestionably commits
tax fraud and tax evasion under U.S. law.261
      Arguably, the information that the UBS John Doe summons seeks is
guaranteed to be more relevant than any other John Doe summons previously
issued because when UBS signed the DPA it admitted to establishing sham
corporations, encouraging U.S. citizens not to file tax forms, and the existence of
undeclared accounts thought to conceal nearly $20 billion 262 of assets.263 Holding
that the summons constituted a fishing expedition in the face of such reliable
evidence of egregious tax fraud and tax evasion would flout both the text and the
congressional intent of § 7609(f), the statute authorizing John Doe summonses.264
Moreover, United States v. Bright265 exemplified the deference courts grant to the
IRS’s broad authority to investigate taxpayer compliance.266 The Bright court
reasoned that if all the documents relate to “financial dealings” of taxpayers, then
they are all relevant to investigating taxpayer compliance.267
      UBS also claimed that not all of the names within the summoned class were
relevant because (1) the use of “U.S. residents” in the summons included some



     256. La Mura v. United States, 765 F.2d 974, 981–82 (11th Cir. 1985) (quoting United States v.
Wyatt, 637 F.2d 293, 300 (5th Cir. 1981)) (internal quotation marks omitted). The test requires not
actual relevance, but potential relevance. United States v. Arthur Young & Co., 465 U.S. 805, 814 (1984).
     257. UBS Brief, supra note 67, at 35.
     258. See, e.g., United States v. Bright, No. 07-00311 ACK-KSC, 2007 U.S. Dist. LEXIS 67306, at *13
(D. Haw. Sept. 11, 2007) (citing Adams v. FTC, 296 F.2d 861, 867 (8th Cir. 1961)) (finding high volume of
requested information, without more, is immaterial so long as information is relevant to determining
taxpayer compliance).
     259. E.g., id.
     260. U.S. Motion to Strike West Declaration, supra note 6, at 1.
     261. Segal & Mustokoff, supra note 27. John Doe summonses are usually issued in the preliminary
stages of an investigation, which explains why the test requires mere potential relevancy and not actual
relevancy. See United States v. Arthur Young & Co., 465 U.S. 805, 814 (1984) (setting forth potential
relevancy standard); United States v. Bisceglia, 420 U.S. 141, 149–50 (1975) (discussing policy behind
John Doe summons and that no chance of meaningful investigation exists unless IRS knows names).
     262. Zagaris, supra note 3.
     263. See Deferred Prosecution Agreement, supra note 4, at 2 (noting UBS’s acknowledgment and
acceptance of its actions).
     264. See supra notes 91–93 and accompanying text for a discussion of § 7609(f).
     265. No. 07-00311 ACK-KSC, 2007 U.S. Dist. LEXIS 67306 (D. Haw. Sept. 11, 2007).
     266. Bright, 2007 U.S. Dist. LEXIS 67306, at *16; see also I.R.C. § 7601 (2006) (providing for broad
inquiry as to “who may be liable to pay any internal revenue tax”).
     267. Id.
212                                     TEMPLE LAW REVIEW                                          [Vol. 83


Swiss or foreign expatriates who live or work in the United States but still
maintain an account in their native Switzerland,268 and (2) “U.S. taxpayer”
includes U.S. expatriates and green card holders living in Switzerland.269 These
UBS arguments irrefutably fail because U.S. tax law requires such people to pay
taxes on their worldwide income.270
      Even if UBS’s arguments were viable under the U.S. tax code, all the IRS needs
is a mere reasonable suspicion of “tax fraud or the like” 271 to meet the potential
relevance standard.272 Like the paper-thin $100 bills in United States v.
Bisceglia,273 the fact that the IRS knew of U.S. citizens keeping undeclared
accounts, i.e. not reporting or paying taxes on their income, satisfies this minimal
standard. Any other finding would ignore the IRS’s “legitimate interest in . . .
unusual financial transactions.”274 Also, in United States v. Brigham Young
University,275 the IRS knew that 162 in-kind charitable donors overvalued their
gifts, yet the court allowed the IRS to investigate all other in-kind donors even
though it knew that not every single one of them committed tax fraud.276 A greater
basis exists for believing the information might shed light on taxpayer compliance
in the UBS case because the IRS already knew from the DPA that each and every
undeclared account sought violated U.S. tax law. 277 Otherwise the accounts would
not be undeclared.
      Although courts have consistently been uninterested in the volume or extent
of information summoned as long as the material summoned was relevant,278 no
summons has ever been so broad as to encompass nearly 52,000 accounts over a
seven-year period.279 However, UBS and future summonees seeking to prevent
enforcement under similar circumstances probably will not prevail in the
Eleventh Circuit unless they argue that the court should change its test when

      268. UBS Brief, supra note 67, at 15–16.
      269. Id. at 16.
      270. See Jibilian v. United States, No. 04-1663T, 2005 U.S. Claims LEXIS 185, at *7, 9 (Fed. Cl. June
6, 2005) (noting I.R.C. “imposes an income tax upon the income of United States citizens and resident
aliens” and that “citizen[s] of the United States, [are] subject to tax upon [their] worldwide income”).
      271. 2003 Mutual Agreement, supra note 196, at 1.
      272. United States v. Arthur Young & Co., 465 U.S. 805, 814 (1984); see also United States v.
Brigham Young Univ., 679 F.2d 1345, 1348–50 (10th Cir. 1982) (finding summons seeking information
on all in-kind donors to university not an overbroad fishing expedition where IRS knew that 162 in-kind
charitable donors had overvalued gifts).
      273. 420 U.S. 141, 150 (1975) (holding that summons for person who deposited 400 paper-thin
$100 bills in a bank was relevant where bills were so thin that only storage under abnormal conditions
could have caused such deterioration).
      274. Bisceglia, 420 U.S. at 149.
      275. 679 F.2d 1345 (10th Cir. 1982).
      276. Brigham Young Univ., 679 F.2d at 1348–50.
      277. See Deferred Prosecution Agreement, supra note 4, Exhibit C, at 2; see also United States v.
Theodore, 479 F.2d 749, 754–55 (4th Cir. 1973) (holding summons overbroad because no reason to
suspect taxpayer noncompliance, so not relevant).
      278. Brigham Young Univ., 679 F.2d at 1346, 1348–50.
      279. See IRS Press Release, supra note 8 (stating that agreement with UBS would result in
“unprecedented” amount of information—4,450 names—being disclosed to IRS, which is considerably
less than the 52,000 names sought in summons); U.S. Motion to Strike West Declaration, supra note 6, at
1 (detailing what UBS summons sought).
2010]                               THE UBS JOHN DOE SUMMONS                                           213


considering summonses requesting such extensive information. While UBS has a
better chance at prevailing in circuits that employ the other definition of
overbroad, “out of proportion to the end[s] sought,”280 the bank will likely still fail
because of the egregiousness of the violations; indeed the undeclared accounts
withheld nearly $20 billion in taxable assets from the IRS.281

      2.    Comity

      If the IRS revives the summons, the Florida district court should and likely
will follow Eleventh Circuit precedent to hold that international considerations do
not preclude the enforcement of the summons, despite UBS’s claim that
compliance would subject bank employees to prosecution for violating Swiss
blocking statutes.282
      Unfortunately for UBS, the Eleventh Circuit may be the circuit most likely to
enforce a summons compelling one to violate foreign banking secrecy laws by
furnishing protected documents located in a foreign country. 283 The Eleventh
Circuit has required defendants to violate Switzerland’s secrecy laws before,284
making it unlikely that the court will yield to Swiss law when precedent construes
Switzerland’s blocking statutes as not absolute.285
      While all courts purport to apply the Restatement factors, application differs
markedly between circuits.286 Outcomes in the Eleventh Circuit turn on the
analysis of two of these factors: the “vital national interests” of each state and the
“hardship” imposed on the summonee.287


      280. United States v. Harrington, 388 F.2d 520, 523 (2d Cir. 1968) (quoting McMann v. SEC, 87
F.2d 377, 379 (2d. Cir. 1937)) (internal quotation marks omitted).
      281. Zagaris, supra note 3.
      282. See United States v. Hayes, 722 F.2d 723, 724 (11th Cir. 1984) (threat of foreign prosecution
does not preclude enforcing a summons); Bank of Nova Scotia, 740 F.2d 817, 826–28 (11th Cir. 1984)
(same); In re Grand Jury Proceedings, United States v. Bank of Nova Scotia, 691 F.2d 1384, 1391 (11th
Cir. 1982) (same); see also United States v. Vetco Inc., 691 F.2d 1281, 1291 (9th Cir. 1981) (same), cited
with approval in Bank of Nova Scotia, 740 F.2d at 825, and United States v. Elmes, 532 F.3d 1138, 1142
(11th Cir. 2008), and In re Request from Swiss Fed. Dep’t of Justice & Police, 731 F. Supp. 490, 491 (S.D.
Fla. 1990), and In re Florida Peach Corp., 1982 Bankr. LEXIS 4867, *3 (Bankr. M.D. Fla. Feb. 8, 1982).
      283. See In re Sealed Case, 825 F.2d 494, 498 (D.C. Cir. 1987) (addressing Eleventh Circuit’s
willingness to enforce such summonses). UBS would be more likely to succeed in the Second Circuit,
which grants more deference to foreign law. See First Nat’l City Bank of N.Y. v. IRS, 271 F.2d 616, 619 (2d
Cir. 1959) (noting in dicta that production should not be ordered if bank would actually be forced to
violate Panamanian laws).
      284. See Hayes, 722 F.2d at 725–26 (holding that conflict with Swiss laws does not excuse
defendant from compliance with United States law).
      285. Vetco, 691 F.2d at 1287–88. The Eleventh Circuit’s repeated acceptance of Vetco evinces the
Eleventh Circuit’s view that Societe Internationale does not erect an absolute bar to U.S. discovery orders
in Switzerland. See supra notes 144–53 and accompanying text for a discussion of Societe Internationale.
See supra note 181 and accompanying text for a discussion of courts within the Eleventh Circuit
following Vetco.
      286. See Brodeur, supra note 155, at 564, 582 (noting that lack of clarity in Supreme Court’s
Societe Internationale decision resulted in different legal analyses among lower courts).
      287. See, e.g., Bank of Nova Scotia, 740 F.2d at 827–28 (analyzing merits of enforcing subpoena on
foreign bank by addressing dueling national interests and hardship that enforcement would create for
bank).
214                                     TEMPLE LAW REVIEW                                         [Vol. 83


      a.    Vital National Interest

     If the United States revives the summons and a court must rule on a motion
to quash it, the court should follow the Eleventh Circuit on the vital national
interest factor. These courts consistently hold that the U.S. national interest in
collecting taxes and preventing tax fraud prevails over a foreign country’s national
interest in protecting the privacy of its banking records. 288
     The UBS court should adhere to Cayman National Banks, ITD v. United
States289 and find that Switzerland’s national interest in its blocking laws is
“substantially diminished” because the privacy interests that the banking secrecy
laws seek to serve concern U.S. citizens subject to U.S. laws. 290 As the court in
United States v. Vetco Inc.291 recognized, Switzerland has a legitimate interest in
protecting the privacy of only Swiss citizens, not U.S. citizens.292 U.S. citizens do
not have as great a right to privacy as do Swiss citizens under Swiss laws.293
Further, the summons concerns a criminal tax investigation and U.S. citizens are
required to report that information to the IRS anyway.294 Therefore, the court
should and likely will interpret Switzerland’s interest in its laws as non-vital.
     In contrast, the UBS court should hold that the United States has a vital
national interest in collecting taxes and preventing tax fraud and that this interest
trumps Switzerland’s.295 As a matter of legislative intent, the U.S. privilege must
prevail over a foreign country when the summons involves a criminal
investigation of this nature.296 Any other finding would frustrate the policy of
preventing the use of blocking statutes to shield criminal activity.297
     Moreover, the egregiousness of the violations increase the United States’ vital
national interest in upholding its rule of law. UBS helped its clients conceal nearly
$20 billion in assets from the IRS in undeclared accounts, helped form offshore
nominee corporations to conceal beneficial ownership, and directed clients to


     288. E.g., Cayman Nat’l Bank, Ltd. v. United States, No. 8:06-mc-50-T-24MAP, 2006 U.S. Dist. LEXIS
76379, at *6–8 (M.D. Fla. Oct. 20, 2006).
     289. No. 8:06-mc-50-T-24MAP, 2006 U.S. Dist. LEXIS 76379 (M.D. Fla. Oct. 20, 2006).
     290. Cayman Nat’l Bank, 2006 U.S. Dist. LEXIS 76379 at *8.
     291. 691 F.2d 1281 (9th Cir. 1981).
     292. Vetco, 691 F.2d at 1289.
     293. See Bank of Nova Scotia, 740 F.2d 817, 828 (11th Cir. 1984) (“[E]ven if the Cayman Islands
had an absolute right to privacy, this right could not fully apply to American citizens. The interest of
American citizens in the privacy of their bank records [in the Cayman Islands] is substantially reduced
when balanced against the interests of their own government engaged in a criminal investigation since
they are required to report those transactions to the United States.”).
     294. Id.; cf. Cayman Nat’l Bank, 2006 U.S. Dist. LEXIS 76379, at *8 (noting that national interest is
substantially heightened where government seeks to enforce summons against American citizen in tax
investigation).
     295. See Vetco, 691 F.2d at 1289 (stating that collecting taxes and prosecuting fraud are “strong
American interest[s]”).
     296. See, e.g., Bank of Nova Scotia, 740 F.2d at 827–28 (illustrating U.S. privilege prevails when
criminal investigation is involved); United States v. Bisceglia, 420 U.S. 141, 150 (1975) (reasoning that
quashing summons in criminal investigation might frustrate legislative intent).
     297. See Societe Internationale, 357 U.S. 197, 205 (1958) (refusing to broadly hold that fear of
foreign prosecution always precludes enforcement because it would undermine congressional policies
and encourage Americans to use offshore banks with blocking laws to cheat the IRS).
2010]                              THE UBS JOHN DOE SUMMONS                                          215


falsify IRS Forms W-8BEN and forego filing IRS Forms W-9 or 1099.298 Such
severe violations augment the need for a serious response from U.S. officials,
making it more necessary for a court to apply the already pro-U.S. policies utilized
in Cayman National Bank, Vetco, United States v. Hayes, and Bank of Nova Scotia.299
      Like Cayman National Bank, the UBS case involves a third-party John Doe
summons issued on a bank.300 Similarly, both Hayes and Vetco Inc. involved IRS
summonses requesting documents located in Switzerland as part of tax fraud
investigations.301 Although Bank of Nova Scotia involved a grand jury subpoena, it
was issued pursuant to a criminal drug investigation and on a foreign bank’s
Miami branch for documents located in the Cayman Islands and protected by its
laws.302
      A court should also reject UBS’s arguments on the vital national interest
factor because the bank relies on materially distinguishable cases as the
authoritative basis for its arguments. For instance, UBS relies on Cochran
Consulting, Inc. v. Uwatec USA, Inc.,303 which stated that “it is inappropriate for . . . a
nation founded on the rule of law, to require that a person violate the criminal
laws of a sovereign nation.”304 Yet, Cochran Consulting, Inc. involved a civil patent
dispute, not a tax or even criminal investigation, and unlike UBS, the summonee
did not act in bad faith.305 Courts are understandably less likely to force violations
of foreign laws in civil cases when the U.S. interest is minimal because it is not a
party to the action.
      Similarly, UBS relies on United States v. First National Bank of Chicago,306
where the Seventh Circuit quashed a summons because the IRS had already
determined the tax liability of the couple whose records they sought and the
liability was “comparatively small.”307 In contrast, the IRS did not know the tax
liabilities of the individuals investigated, and the undeclared accounts allegedly
held $20 billion in assets.308
      UBS also cites In re Sealed Case309 to argue that the summons should be
quashed because of what it deems its good faith efforts to comply with conflicting


     298. See supra Part II.a.2 for a discussion of the tax fraud and tax evasion scheme.
     299. See Bank of Nova Scotia, 740 F.2d at 827–28 (refusing to privilege foreign laws used to shield
criminal activities); United States v. Hayes, 722 F.2d 723, 725–26 (11th Cir. 1984) (holding that party
required to produce documents for IRS must make all reasonable efforts to obtain documents even if
such efforts conflict with another country’s laws); Vetco, 691 F.2d at 1288–89 (finding foreign country’s
interest in privacy laws diminished when applied to U.S. citizens under criminal tax investigation);
Cayman Nat’l Bank, 2006 U.S. Dist. LEXIS 76379, at *8 (finding foreign country’s interest in privacy laws
“substantially diminished” when privacy interest concerns U.S. citizen subject to U.S. laws and that
domestic interest trumps foreign interest when summons relates to tax investigations of U.S. citizens).
     300. Cayman Nat’l Bank, 2006 U.S. Dist. LEXIS 76379, at *6.
     301. Hayes, 722 F.2d at 724; Vetco, 691 F.2d at 1284.
     302. Bank of Nova Scotia, 740 F.2d at 820.
     303. 102 F.3d 1224 (Fed. Cir. 1996).
     304. Cochran Consulting, 102 F.3d at 1230.
     305. Id. at 1225, 1230.
     306. 699 F.2d 341 (7th Cir. 1983).
     307. First Nat’l Bank of Chi., 699 F.2d at 346–47.
     308. Zagaris, supra note 3.
     309. 825 F.2d 494 (D.C. Cir. 1987).
216                                      TEMPLE LAW REVIEW                                           [Vol. 83


foreign laws.310 Yet, unlike In re Sealed Case, where the court found that the bank
acted in good faith since it was not part of the investigation and was merely a third
party, UBS acted in bad faith and was a target of the criminal investigation.311
      Finally, UBS relies on the Second Circuit’s statement that “courts dedicated to
the enforcement of our laws should not take such action as may cause a violation
of the laws of a friendly neighbor or, at the least, an unnecessary circumvention of
its procedures.”312 However, as other courts have noted, “the Second Circuit itself
has receded from [its] strong language.”313
      In conclusion, the court should find that the United States has a vital national
interest in collecting taxes and preventing tax fraud, one that trumps
Switzerland’s interest in its banking secrecy laws. If the U.S. interest does not
prevail when faced with possibly the largest tax evasion scheme in U.S. history,
then it is hard to imagine a situation in which it ever would. It is especially
paramount for courts ruling on summonses involving enormous tax schemes and
multiple violators to consider the impact its precedent will have on the United
States’ ability to uphold its rule of law. If the U.S. interest in collecting taxes and
preventing tax fraud does not prevail over foreign blocking statutes, then the
United States will have little recourse against such criminals and almost no ability
to enforce its laws when its treaty with a foreign country does not obligate
compliance with a treaty request. It would encourage international tax evasion, a
practice to which the United States allocated $332 million in 2010 alone to
curb.314

      b.     Hardship

    The only other factor courts in the Eleventh Circuit truly analyze is the
hardship that the threat of prosecution under foreign law poses to a summonee.315
However, the Eleventh Circuit often disregards any hardship when it results from
a summonee’s own bad faith.316 Likewise, the UBS court should find that UBS’s
egregious bad faith precludes consideration of any hardship that might result.317


      310. UBS Brief, supra note 67, at 23, 48 n.28 (citing In re Sealed Case, 825 F.2d at 498–99).
      311. Compare In re Sealed Case, 825 F.2d at 495, 498 (discussing bank’s good faith), with Deferred
Prosecution Agreement, supra note 4, at 2 (noting UBS’s acknowledgement and acceptance of its illegal
actions).
      312. Ings v. Ferguson, 282 F.2d 149, 152 (2d Cir. 1960), quoted in UBS Brief, supra note 67, at 21
n.9; see also In re Chase Manhattan Bank, 297 F.2d 611, 613 (2d Cir. 1962) (quoting Ings, 282 F.2d at
152).
      313. United States v. Vetco Inc., 691 F.2d 1281, 1288 n.8 (9th Cir. 1981) (citing Trade Dev. Bank v.
Cont’l Ins. Co., 469 F.2d 35, 40–42 (2d Cir. 1972); see also United States v. First Nat’l City Bank, 396 F.2d
897, 901–05 (2d Cir. 1968) (citing Ings, 282 F.2d at 152) (finding “little merit” to argument that mere
existence of foreign blocking statute requires a court to quash production order).
      314. Press Release, U.S. Dep’t of Treasury, Treasury Budget Invests in Effective Programs, Nation’s
Long Term Prosperity (May 7, 2009), http://www.financialstability.gov/latest/tg_050709.html.
      315. E.g., Bank of Nova Scotia, 740 F.2d 817, 827–28 (11th Cir. 1984) (citing RESTATEMENT (SECOND)
OF THE FOREIGN RELATIONS LAWS OF THE UNITED STATES § 40 (1965)).
      316. See id. at 828 (reasoning that if party chooses to do business in United States, it cannot later
argue that compliance with U.S. laws causes hardship); see also Vetco, 691 F.2d at 1289–90 (reasoning
that summonee could have avoided any hardship had it complied with U.S. laws in first place).
      317. The tough love approach to hardship resulting from bad faith seems like the Eleventh
2010]                               THE UBS JOHN DOE SUMMONS                                           217


      A court should reject UBS’s preposterous claim that it acted in good faith by
taking responsibility for its actions in the DPA.318 The bank’s acknowledgement of
its wrongdoing does not negate its bad faith prior to being caught.319 While the
court in In re Sealed Case320 found a bank’s good faith pivotal to the court’s
leniency, the bank in the case did not partake in any wrongdoing.321 Whereas UBS
facilitated the criminal activity, the bank in Sealed Case was a mere third party and
not a subject of the investigation.322 Not only did UBS help tens of thousands of
American citizens violate U.S. law, but it ended this practice only after the
Department of Justice learned of the bank’s conduct. 323 Therefore, the UBS court
should take the tough love approach. The court should reason that any hardship
could have been avoided had UBS complied with the laws in the first place,324 and
because UBS voluntarily chose to do business in the United States, it cannot later
complain that complying with U.S. laws would cause hardship.325 As one court
stated, “[i]f the only sanction for failing to comply with the . . . rules is having to
comply with the . . . rules if you are caught, the diligent are punished and the less
than diligent, rewarded.”326
      Even if the UBS court chooses not to overlook the possible hardship imposed
on UBS solely based on the bank’s bad faith, the court should follow previous
courts to interpret Switzerland’s laws as not actually presenting great hardship or
a real threat of prosecution.327 The Eleventh Circuit has repeatedly cited Vetco
with approval,328 which found that Swiss banking secrecy laws were not

Circuit’s embodiment of the bad faith/good faith analysis from Societe Internationale. See supra notes
144–53 and accompanying text for a discussion of Societe Internationale.
      318. Compare UBS Brief, supra note 67, at 46–48 & n.28 (arguing UBS acted in good faith by taking
various steps to comply with summons), with Deferred Prosecution Agreement, supra note 4, at 2
(noting UBS’s acknowledgement of its illegal actions).
      319. Memo to Enforce John Doe Summons, supra note 224, at 8.
      320. 825 F.2d 494 (D.C. Cir. 1987).
      321. See In re Sealed Cases, 825 F.2d at 497–99 (reversing civil contempt charges on bank for
failure to comply with subpoena to produce documents located in foreign country and protected by
blocking statutes because bank was third party to investigation and acted in good faith).
      322. Compare id. (involving third party to investigation), with Deferred Prosecution Agreement,
supra note 4, at 2 (noting UBS’s participation in illegal conduct).
      323. Memo to Enforce John Doe Summons, supra note 224, at 8.
      324. See United States v. Vetco Inc., 691 F.2d 1281, 1289–90 (9th Cir. 1981) (noting any hardship
imposed could have been avoided had summonee complied with U.S. laws).
      325. See Bank of Nova Scotia, 740 F.2d 817, 828 (11th Cir. 1984) (reasoning that one who chooses
to do business in United States cannot later argue that compliance with U.S. laws results in hardship);
see also In re Grand Jury Proceedings, United States v. Bank of Nova Scotia, 691 F.2d 1384, 1391 (11th
Cir. 1982) (quoting In re Grand Jury Proceedings, 532 F.2d 404, 410 (5th Cir. 1976)) (reasoning that
realities of international commerce do not mean U.S. criminal investigations must be “thwarted”
whenever conflicts with foreign laws arise).
      326. Poole ex rel. Elliott v. Textron, Inc., 192 F.R.D. 494, 506 (D. Md. 2000) (rejecting defendant’s
claim that incurring expenses from complying with court-ordered discovery request was sanction
enough for failing to comply with discovery rules in first place).
      327. See Vetco, 691 F.2d at 1289–90 (involving Switzerland’s laws, so same threat of hardship); see
also U.S.-Swiss Final Agreement, supra note 9 (detailing Switzerland’s concession that it would disclose
4,450 names to U.S. and thus illustrating that Switzerland freely circumvents its banking secrecy laws
when it wants to).
      328. See, e.g., Bank of Nova Scotia, 740 F.2d at 828 (citing with approval Vetco, 691 F.2d at 1289).
218                                   TEMPLE LAW REVIEW                                       [Vol. 83


absolute.329 Courts are “not persuaded” that Swiss blocking statutes present great
hardship.330 As the United States correctly pointed out, the fact that FINMA agreed
to produce some records under the DPA proves that Swiss secrecy laws are not
absolute and that the country circumvents them at will. 331 Moreover, the Swiss
Parliament’s recent action authorizing UBS to produce the names of the U.S. tax
evaders that would otherwise contravene Swiss banking secrecy law seriously
undercuts any hardship argument.332 Therefore, the court should find UBS
employees unlikely to face prosecution in Switzerland. Even if Switzerland does
decide to prosecute, Article 17 of the Swiss Penal Code, which relates to duress,
creates a defense which could mitigate any hardship imposed by a Swiss court.333
      UBS failed to pose what arguably could be its strongest argument. UBS should
have distinguished the hardship in this case from precedent by arguing that
because the summons requires approximately 52,000 violations of Swiss laws
rather than disclosing just a few individuals’ files, Switzerland would be more
likely to prosecute here. This would result in greater fines and imprisonment, and
hence greater hardship, for bank employees than in previous cases.
      While this is a valid distinction and a logical argument, the implications of
accepting it are untenable. It would mean that the more severe the tax scheme, the
less likely the United States could inquire into it via a John Doe summons.
Unfortunately for UBS, even this argument is unlikely to work considering that the
Eleventh Circuit balances the possibility of resulting hardship with the party’s
actions which brought forth the situation.334 Consequently, the UBS court should
not and likely will not quash the summons on the basis of hardship.

C.    Treaties
     According to I.R.C. § 7609(f)(3), a court may not authorize the IRS to issue a
John Doe summons if there is an adequate alternative for acquiring the
information.335 UBS argued that the Double Taxation Treaty provides the
exclusive method of information exchange between the United States and
Switzerland.336 The Florida district court implicitly rejected this argument and the
argument that the Treaty precludes the use of a summons when it ruled that the
IRS did not have an “adequate alternative means” of acquiring the information.337



     329. Vetco, 691 F.2d 1289 (noting duress defense available under Swiss Penal Code in Article 34
[now Article 17]).
     330. Vetco, 691 F.2d at 1289.
     331. See Memo to Enforce John Doe Summons, supra note 224, at 29 (“Swiss banking secrecy is not
an impenetrable wall.”). See supra note 61 and accompanying text for a discussion of Switzerland’s and
UBS’s agreement to release identities in the DPA.
     332. See Browning, supra note 12 (discussing Swiss Parliament’s ratification of deal).
     333. Memo to Enforce John Doe Summons, supra note 224, at 28; see also United States v. Chase
Manhattan Bank, 584 F. Supp. 1080, 1086 (S.D.N.Y. 1984) (reasoning that court order serves as valid
defense to prosecution in foreign country).
     334. E.g., Bank of Nova Scotia, 740 F.2d at 828.
     335. I.R.C. § 7609 (f)(3) (2006).
     336. UBS Brief, supra note 67, at 10–11; see also 1996 Double Taxation Treaty, supra note 69.
     337. United States v. UBS AG, No. 09-20423, 2009 WL 2241122, at *1 (S.D. Fla. July 7, 2009).
2010]                              THE UBS JOHN DOE SUMMONS                                          219


The district court viewed alternative methods, such as treaty requests, as neither
reliable nor efficient.338
      The court correctly found that the Treaty does not preclude the IRS from
using summonses.339 Under the 1996 Double Taxation Treaty, neither party has
an obligation to comply with a treaty request.340 Nonobligatory treaties should
provide no basis for courts to quash summonses, unless a foreign country agrees
to and actually does fully comply with such a request. 341 A treaty otherwise would
not provide an adequate alternative to a summons. Moreover, the Double Taxation
Treaty operates in the case of only tax fraud, but not tax evasion.342 As a result,
when the United States claims that an action constitutes tax fraud, Switzerland
nearly always characterizes it as tax evasion such that the Treaty does not
operate.343
      In fact, the Swiss federal administrative court did just that when it declared
part of the August 2009 agreement illegal in its January 2010 ruling, A.
v. Eidgenoessiche Steuerverwaltung (ESTV).344 This ruling illustrates Switzerland’s
obstinate attitude towards compliance and highlights why U.S. courts should not
find that the Double Taxation Treaty serves as an adequate alternative. According
to the Swiss court, the actions of the individual who challenged the disclosure of
his or her identity did not constitute “tax fraud,” and since “tax evasion” is not a
crime in Switzerland, the disclosure would violate Swiss banking secrecy laws.345
The court found that “not declar[ing] income, an account or return[ing] the form
W-9” is tax evasion, not tax fraud under Swiss law.346 The Swiss ruling stated that
Switzerland may disclose only the identities of clients whose accounts were held
through sham corporations and trusts instead of their own names.347 From the
American perspective, creating and applying this arbitrary distinction functions as
a mere guise designed to foster a banking industry that can profit from
international tax evasion.348


      338. UBS AG, 2009 WL 2241122, at *1.
      339. UBS AG, 2009 WL 2241122, at *1 (finding lack of adequate alternative to summons); see also
I.R.C. § 7609(f)(2) (authorizing summons only when no adequate alternative to obtaining information
exists).
      340. 2003 Mutual Agreement, supra note 196.
      341. See United States v. Vetco Inc., 691 F.2d 1281, 1290 (9th Cir. 1981) (finding 1951 Double
Taxation Treaty to be inadequate alternative because Switzerland reserved right to not comply with
treaty requests).
      342. 2003 Mutual Agreement, supra note 196.
      343. See supra notes 195–98 and accompanying text for a discussion of the 1996 Double Taxation
Treaty.
      344. See supra notes 74–79 and accompanying text for a discussion of the January 2010 Swiss
court ruling A. v. Eidgenoessiche Steuerverwaltung (ESTV), A-7789/2009 (Swiss Federal Administrative
Court).
      345. Browning, supra note 10. Switzerland operates under a very different definition of “tax fraud”
than the United States. Id. Switzerland distinguishes between “tax fraud” and “tax evasion” and does not
lift banking secrecy laws in the case of tax evasion. Nason, supra note 76.
      346. Browning, supra note 10; see also Heaven et al., supra note 74.
      347. Browning, supra note 10.
      348. Stanley Reed, The End of Swiss Banking as We Knew It?, BLOOMBERG.COM (Feb. 19, 2009),
http://www.businessweek.com/blogs/europeinsight/archives/2009/02/the_end_of_swiss_banking_as_
220                                     TEMPLE LAW REVIEW                                          [Vol. 83


     The Swiss court also blatantly disregarded the 2003 Mutual Agreement
providing guidance about what constitutes “tax fraud or the like” under Article
26(1) of the 1996 Double Taxation Treaty.349 The phrase “tax fraud or the like”
seems to contemplate a wider category of illegal activity than the Swiss court
applied and to somewhat blur Switzerland’s rigid distinction between tax fraud
and tax evasion.350 For instance, Part 4(b) of the 2003 Mutual Agreement states
that tax fraud exists where a taxpayer fails to produce, maintain, or properly
complete records for a tax return.351 As a matter of logic, offshore banking clients
choose to remain undeclared so that they can get away with not filing complete
and accurate IRS forms. Thus, contrary to the Swiss court’s ruling, the individual
in the case appears to have committed tax fraud, under the definition provided by
Part 4(b) of the 2003 Mutual Agreement.352 Similarly, Part 4(c) of the 2003 Mutual
Agreement provides that tax fraud exists when “an affirmative act” has the effect
and is for the purpose of deceiving the IRS.353 Funneling money into an
undeclared offshore bank account to hide it from the IRS seems to constitute “an
affirmative act,” but again, the Swiss court ignored this logical inference.354
     Although the UBS court already ruled on the Treaty, other courts that rule on
a summons protected by Swiss blocking statutes should also consider Vetco.355 In
Vetco, the Ninth Circuit found that the Double Taxation Treaty between the United
States and Switzerland does not preclude the use of an IRS summons because
(1) the purpose of the Treaty is to prevent tax fraud, (2) issuing the summons
would further the Treaty’s purpose, not negate it, and (3) the Treaty does not state
that it is the exclusive method of information exchange, nor does the legislative
history suggest it.356
     Moreover, courts ruling on summonses directed at foiling similarly egregious
tax schemes should distinguish In re Two Grand Jury Subpoenas Duces Tecum
Served Upon UBS,357 which found that the Treaty provided an adequate alternative


we_knew_it.html. Although the U.S. Internal Revenue Code does draw a distinction between tax fraud
and tax evasion, the distinction is that a tax must be due for there to be tax evasion, whereas no tax need
be due for one to commit tax fraud. Hugh Spall, International Tax Evasion and Tax Fraud: Typical
Schemes and the Legal Issues Raised by Their Detection and Prosecution, 13 LAWS. AMS. 325, 326–27
(1981). Most tax evaders also commit tax fraud by filing something false. Id. at 327.
      349. See supra notes 196–98 and accompanying text for a discussion of 2003 Mutual Agreement.
      350. See 2003 Mutual Agreement, supra note 196 (emphasis added) (defining “tax fraud or the
like”); Browning, supra note 10 (finding that phrase “tax fraud and the like” in August 2009 agreement
appears to signal Switzerland’s agreement to treat tax evasion as a crime).
      351. 2003 Mutual Agreement, supra note 196.
      352. See supra notes 74–79 and accompanying text for a discussion of A. vs. Eidgenoessiche
Steuerverwaltung (ESTV), A-7789/2009 (Swiss Federal Administrative Court).
      353. 2003 Mutual Agreement, supra note 196.
      354. See Declaration of Daniel Reeves, supra note 1, Exhibit C, at 3 (detailing actions of UBS and
account holders).
      355. United States v. Vetco Inc., 691 F.2d 1281, 1286 n.4 (9th Cir. 1981).
      356. Id. at 1286 n.4. This argument responds more to whether the Treaty provides the exclusive
method of information exchange as opposed to whether the Treaty constitutes an adequate alternative
to the summons under I.R.C. § 7609(f)(2). See id. (rejecting argument that Treaty is exclusive method of
information exchange).
      357. 601 N.Y.S.2d 253 (N.Y. Sup. Ct. 1993).
2010]                              THE UBS JOHN DOE SUMMONS                                         221


basis to the summons.358 In that case, there was no reason to believe the Swiss
government would intervene and not comply with a treaty request since the case
involved bribery and the bank acted in good faith. In other words, Switzerland did
not need to take a stand to protect its banking industry based on tax evasion. That
is not the case with UBS and other high profile schemes where the ability of the
United States to penetrate Swiss banking secrecy laws threatens to greatly reduce
the amount of future foreign capital flowing into Swiss banks. Courts should find
that Switzerland’s hostility toward complying with a treaty request renders a
nonobligatory Treaty an inadequate alternative.

                                         IV. CONCLUSION

      If the United States revives its proceedings against UBS, the court should
deny any motion to quash the summons. Because the Florida district court has
already ruled on the Treaty in the UBS case,359 two paramount issues remain:
overbreadth and comity.
      First, courts should reject arguments that this summons and others like it are
overbroad. Although the UBS John Doe summons is the broadest issued to date,
the statutory and common law tests for analyzing overbreadth balance specificity
and relevance.360 The UBS summons satisfies the specificity test, which requires
that a summons reference an “ascertainable group or class” 361 such that it puts the
summonee on notice of which accounts to produce. The fact that UBS segregated
its undeclared accounts from its declared accounts represents a key factor from
which future summoned banks may likely distinguish their situation when
arguing overbreadth. Further, the United States became certain of the violation
through the Deferred Prosecution Agreement. This knowledge guaranteed the
relevance of the summoned information, and the amount of summoned
information is immaterial to overbreadth as long as it is relevant.362 Applying this
test to the UBS case illustrates the pivotal role that the balancing framework plays
in enabling the United States to appropriately respond to different threats. While
at first glance a summons seeking the names of 52,000 individuals seems like it
must be too broad, that is not the case when the tax scheme was itself that broad.
      Second, any U.S. court should reject comity arguments when faced with a
similarly egregious violation.363 If the vital interest of the United States does not
prevail when faced with possibly the largest tax evasion scheme in U.S. history,
then it is hard to imagine a situation in which it ever would. Switzerland has
already shown that its banking laws are not absolute and that a duress type of
defense exists in Switzerland should the Swiss government prosecute UBS
employees who comply with the summons.364 Moreover, any argument that the


     358. In re Two Grand Jury Subpoenas, 601 N.Y.S.2d at 224–26.
     359. See supra Part III.C for a discussion of the Treaty.
     360. See supra Part II.B.2.b for a discussion of overbreadth.
     361. I.R.C. § 7609(f)(1) (2006).
     362. See supra note 112 for a discussion of IRS's broad authority under I.R.C. § 7602 to access all
relevant information, irrespective of its quantity.
     363. See supra Part II.B.2.c for a discussion of comity.
     364. See supra note 177 and accompanying text for a discussion of the duress defense.
222                                  TEMPLE LAW REVIEW                                     [Vol. 83


likelihood of prosecution is greater than normal because the summons required
52,000 violations of Swiss law must fail.
      Accepting UBS’s arguments that the volume of information summoned
renders the summons overbroad or that it presents too great a threat of
prosecutorial hardship would set an illogical precedent. It would allow the IRS to
police small-scale tax fraud, while rendering the United States powerless to
enforce its laws when faced with incredibly reliable and specific evidence of the
largest tax fraud scheme in U.S. history. Quashing this summons would send the
message that U.S. taxpayers may hide their money in offshore accounts with little
risk as long as the offshore bank does the same for a sufficient number of U.S.
citizens. To prevent the above results, the UBS court must enforce the summons.
Holding otherwise would only foster further tax evasion and seriously jeopardize
the ability of the United States to enforce its rule of law.

                                           ADDENDUM

      Switzerland has since complied with the August 19, 2009 agreement, and as a
result, the United States has withdrawn its summons.365 However, the IRS is now
scrutinizing other foreign banks selling tax-evasion services. According to the IRS
Commissioner, the agency has “additional cases and banks in [its] sights right
now.”366 Because this Comment provides a framework for evaluating not only the
UBS summons, but also similar future summonses, Switzerland’s compliance with
the deal does not affect the utility of the analysis. Indeed, based on the IRS’s
statements and its success in collecting from UBS and its clients, the IRS will likely
employ similar tactics against other banks. Thus, a U.S. court will almost certainly
face the enforcement issue in the near future.




    365. Lynnley Browning, U.S. Ends Inquiry of UBS Over Offshore Tax Evasion, N.Y. TIMES, Nov. 17,
2010, at B12.
    366. Browning, supra note 10.
2010]   THE UBS JOHN DOE SUMMONS   223

				
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