Benthos Master Fund, Ltd. v. Etra

Background

On July 14, 2022, Judge Valerie E. Caproni ordered Aaron Etra to produce certain outstanding documents, including monthly statements from two accounts at Uni-Credit and Sberbank during a specified period. Etra did not produce those statements and stated that he did not have accounts at either bank. After an August 2, 2022 hearing, Judge Caproni referred to Magistrate Judge Katharine H. Parker the question whether Etra controlled accounts at the banks such that he was in contempt of the production order.

The parties briefed that issue and presented evidence and testimony at a November 9, 2022 evidentiary hearing.

Legal standard

Federal Rule of Civil Procedure 34 provides that a party may be required to produce documents in its possession, custody, or control. A document is within a party’s control if the party has the right, authority, or practical ability to obtain it. The party seeking production bears the burden of proving control. When a party denies having possession, custody, or control, the requesting party must make an adequate showing to overcome that denial.

Analysis

Etra testified under oath that he did not maintain European bank accounts and did not maintain or have access to accounts at Uni-Credit or Sberbank. He stated that he sometimes referred clients to Mag. Helmut Allesch, who maintained an escrow account at Sberbank, and that Allesch refused Etra’s request for statements from that account.

Benthos argued that the court should draw a negative inference that Etra controlled the accounts. First, Benthos relied on Etra’s deposition testimony that he had a European bank account, an interrogatory response listing “Uni-credit affiliate,” and Etra’s production of a Sberbank statement. Judge Parker concluded that Etra’s deposition testimony did not identify Uni-Credit or Sberbank. She also found that the discovery requests were broad enough to cover accounts with which Etra had some connection but did not control, and that Etra’s explanations were consistent with referrals to Allesch’s escrow accounts.

Second, Benthos argued that Etra’s travel to Europe supported an inference that he used the accounts. Etra testified that he traveled to see family and receive treatment and used his American bank account while in Europe. A Piermont Bank statement introduced by Benthos showed charges for food and other expenses in Europe, which supported that explanation.

Third, Benthos argued that Etra had not produced documents proving that he lacked control. Judge Parker held that Etra had no burden to make a further showing that he lacked control. Fourth, Benthos argued that Etra’s work with a Russian individual supported an inference that he had used Sberbank. But the parties did not dispute that Sberbank was not used in the underlying transaction, and Benthos conceded that point at the hearing.

Judge Parker concluded that Benthos’s arguments were speculative and that Benthos had not identified specific accounts or presented evidence establishing Etra’s control. Benthos did not call Mag. Allesch or any clients as witnesses and had not tried to contact Allesch to confirm Etra’s account of events.

Disposition

The court found that Benthos Master Fund, Ltd. had not met its burden to show that Etra controlled any bank accounts at Sberbank or Uni-Credit. Accordingly, the court found that Etra was not in contempt of the order requiring him to produce documents related to those accounts.