Benthos Master Fund, Ltd. v. Etra

Background

Benthos Master Fund, Ltd. sought to collect a judgment exceeding $5 million against Aaron Etra. The judgment followed the court’s confirmation of an arbitration award arising from a transaction in which Benthos paid $5 million for Bitcoin, but did not receive Bitcoin. Etra had acted as the escrow agent, and the opinion states that he released Benthos’s funds in violation of contractual and fiduciary duties.

During enforcement proceedings, Benthos served subpoenas seeking financial records and information. The court repeatedly ordered Etra to comply. The court later held him in civil contempt and ordered his incarceration until he produced required documents and information and paid Benthos $145,718.49. The court also ordered a forensic examination of his electronic devices.

Etra eventually asserted the Fifth Amendment privilege against compelled self-incrimination. That privilege can protect a person from being forced to provide testimonial information that could help establish a federal crime. Etra argued that producing the ordered materials could connect him to the 2018 transfer of Benthos’s funds or expose him to prosecution for perjury, false statements, destruction of evidence, or criminal contempt. He also argued that examining his electronic devices would reveal his possession and control of potentially incriminating information.

Fifth Amendment ruling

The court concluded that Etra had shown a sufficient risk of self-incrimination concerning testimonial communications linking him to the disposition of Benthos’s funds in 2018. The court also concluded that producing records from UniCredit or SberBank could incriminate Etra for perjury because he had testified under oath that he did not control accounts at those banks.

The court rejected Etra’s blanket attempt to withhold all ten categories of materials identified in the contempt order. It held that Etra had not made a sufficiently specific showing that most of the requested materials would incriminate him. The court also found that many bank and credit-card records could be authenticated without relying on Etra’s testimony, or that Etra had already disclosed the existence or control of the relevant accounts.

The court therefore denied Etra’s request to exclude the following categories from the materials needed to purge his contempt: an accounting of funds received from legal, paymaster, escrow-related, or other services; specified Citibank records; records for European accounts other than accounts at SberBank or UniCredit; specified M&T, Piermont, and other bank-account records; specified credit-card records; escrow agreements for 41 identified clients; financial and judgment-related communications; documents concerning Etra’s services; and a list of his financial accounts. Several of those denials were without prejudice to Etra making a more specific, private submission to the court identifying particular information that might incriminate him.

The court permitted Etra to refuse to produce records for European accounts he controlled at SberBank or UniCredit. It did not excuse him from producing records for other European accounts unless he made the required specific showing. The court also held that Etra could not avoid the forensic examination merely by giving his devices to counsel. Etra had not shown that he gave the devices to counsel to obtain legal advice, and counsel’s prior representation that counsel possessed the devices had effectively identified and authenticated them. The forensic examination would therefore proceed.

Request to expand appointed counsel’s role

Etra’s lawyer had been appointed for the limited purpose of representing him in the civil-contempt matter. Etra asked the court to expand that appointment to include filing a petition challenging his confinement. The court noted that Etra had not identified grounds for such a petition and that the Second Circuit had already appointed counsel for his appeal of the contempt order. The court denied Etra’s request to expand the scope of his appointed counsel’s representation.

Disposition

Judge Caproni granted in part and denied in part Etra’s motion to exclude materials based on the Fifth Amendment. She denied Etra’s request to expand appointed counsel’s role. The contempt order was modified to reflect the limited exception for certain SberBank and UniCredit records and the other specific production requirements. Etra remained required to pay the stated amount toward purging his contempt, and the parties and Benthos’s forensic expert were ordered to attend a status conference about examining Etra’s devices.