Benthos Master Fund, Ltd. v. Etra

Background

On July 14, 2022, Judge Valerie Caproni ordered Respondent Aaron Etra to produce monthly statements from two bank accounts at Uni-Credit and Sberbank. The required period began August 1, 2018, and extended until the accounts were closed or, if they remained open, until the present. The production deadline was July 18, 2022, and Etra did not comply.

Benthos Master Fund later informed the court that Etra had previously testified under oath that he maintained accounts with those banks and that he still had not produced the statements. Etra responded that the accounts were “held and operated by” an Austrian fiduciary, Helmut Allesch. Etra submitted a letter attributed to Allesch saying that Allesch operated fiduciary or trust accounts, including accounts involving Sberbank and Uni-Credit, for several of Etra’s clients. The letter said Allesch could provide only one Sberbank statement and did not explain why additional statements were unavailable.

Issue referred to the court

After an August 2, 2022 hearing, Judge Caproni referred to Magistrate Judge Parker the question whether Etra controlled the Sberbank and Uni-Credit account documents and therefore was in contempt of the order requiring their production.

Order

Judge Parker scheduled an evidentiary hearing for October 6, 2022, to determine whether Etra had control over the documents. The parties were required to be prepared to present testimony, documents, and argument. Etra was directed to bring witnesses, including Allesch and clients who could testify about the accounts, as well as records concerning the accounts’ type, ownership, management, beneficial interests, Allesch’s fiduciary appointment, and relevant client agreements. Etra also had to authenticate documents and provide certified English translations for documents not in English. Benthos Master Fund was directed to bring witnesses and documents supporting its position that Etra had possession, custody, or control of the account records.

The order explained that Federal Rule of Civil Procedure 34(a) covers documents in a party’s “possession, custody or control.” The court stated that control includes the right, authority, or practical ability to obtain documents from another person or entity. The order did not decide whether Etra controlled the records or whether he was in contempt. It scheduled a hearing to decide that question.

Other direction

The court allowed witnesses to testify remotely if necessary, but required the parties to attend the hearing in person absent exigent circumstances. The parties had to notify the court by September 30, 2022, if an overseas witness needed to testify by telephone or video. Because Etra had registered electronically but had not filed a formal notice of appearance, the court asked Benthos Master Fund to serve the order on him by email and first-class mail.