The Paper Chase

January 20, 2003 • Commentary
This article was published in Forbes Magazine, Jan. 20, 2003.

Every day businesses across America get subpoenas from law enforcement agencies. The police are trying to uncover illegal activity, and they want business records — a Visa chit, a printout of 200 phone calls, a copy of every check a bank customer has written. Most businesses want to be helpful. But who should bear the costs of collecting the information?

Under existing law the costs are borne by business. And sometimes those costs are huge. The U.S. Telecom Association says that one of its member companies spent $3.7 million a year accommodating law enforcement subpoenas (and civil investigative demands, which are subpoena‐​like orders coming from agencies rather than grand juries).

Since the Sept. 11 attacks the demands have gotten more insistent. Finding 19 telltale airplane tickets in a sea of 600 million is no small task. Banks handle 200 million checks and more than a trillion wire transactions a day. Kindly fish through that, the cops are saying to the banks, and spot the money launderers.

To crack down on money laundering, in 1970 Congress required banks to maintain copies of all the checks that passed through their institutions. A congressional report estimated that a minimum of 20 billion checks would have to be microfilmed every year. The constitutionality of the law was challenged, partly because Congress made no attempt to compensate the banks for that mandate. The Supreme Court upheld the law, however, finding the cost burden to be not “unreasonable.”

Elizabeth Duke, chairman‐​elect of the American Bankers Association, says, “I can tell you from personal experience that the cost to the banks is huge. Whenever you get an agent [usually from the Internal Revenue Service] on a fishing expedition, the cost can really soar.” Keep in mind that both the states and the federal government are enacting ever more criminal statutes.

While the law provides an avenue for “unreasonable” subpoenas to be “quashed,” this safety fuse is all but useless as a practical matter. Why should a business spend money on lawyers when the courts almost always side with the police?

One wireless carrier received a subpoena in 2001 that contained 50 pages of telephone numbers. The police demanded the customer records for every phone number listed — and the subpoena had to be answered in five days. A professional had to spend an entire week on nothing else. And remember, that’s just one subpoena from one single agency. Computerization might or might not reduce the burden. What if the subpoena can be answered only by hiring a computer programmer?

One telephone company received a subpoena from the Drug Enforcement Administration demanding all published and unlisted phone numbers and customer names in its service area. Much of that information could have been obtained from commercial databases. The DEA took the cheap and easy route — cheap and easy for itself, that is.

No business is exempt from the subpoena power of government. Police agencies are demanding client information from airlines, car rental companies, credit card companies, universities, hospitals, Internet service providers and even bookstores. The federal government has made its position plain in court papers: Despite any costs, despite any risk of possible lawsuits, despite any conscientious objections, “the Executive Branch of government has inherent power to require the assistance of citizens in carrying out its law enforcement duties,” according to the Department of Justice. Whatever happened to that old American adage, “Don’t Tread on Me”?

President Bush and the incoming Congress have an opportunity to put some restraints on these overweening, unfunded mandates. The first step ought to be requiring the government to reimburse innocent bystanders for their time and trouble in complying with police demands. If the money were taken directly out of the budgets of the police agencies, the costly fishing expeditions would stop and a semblance of reasonableness would be restored.

About the Author
Tim Lynch
Adjunct Scholar and Former Director, Project on Criminal Justice