Helpful Tip of the Day: If You Work at a Bank, Don’t Send Your Friend a Copy of the Bank’s Grand Jury Subpoena

Karen Galo may have been trying to help out a friend, but now she faces five years in prison.

In early 2008, the U.S. Attorney’s Office for the Middle District of Florida opened a grand jury investigation into mortgage fraud and money laundering. The investigation’s target was Henry Inglesias. He held one or more accounts at Key West Bank in (where else?) Key West, Florida.

Ms. Galo was the head teller at the bank. According to her plea agreement, she was the officer at Key West Bank “responsible for processing grand jury subpoenas.” The grand jury sent the bank two subpoenas in September 2008 asking for information about Mr. Inglesias’ bank accounts there. They were addressed to Ms. Galo as “Custodian of Records.” Included with the subpoenas were standard warning letters to the recipient which stated—in all caps and bold letters

WARNING: PENALTIES EXIST FOR CERTAIN DISCLOSURES REGARDING GRAND JURY SUBPOENA.

Did she worry about those penalties? Not so much.

The letters also stated:

[Y]ou are advised that Title 18, United States Code, Section 1510(b)(1) makes it a crime for officials (including officers, directors, partners, employees, agents or attorneys) of a financial institution, with intent to obstruct a judicial proceeding, directly or indirectly, to notify any other person about the existence or contents of the accompanying subpoena for records, or the information that has been furnished to the Grand Jury in response to that subpoena.

If you aren’t familiar with Section 1510(b)(1), here it is:

18 USC § 1510 – Obstruction of criminal investigations

* * * * *

(b) (1) Whoever, being an officer of a financial institution, with the intent to obstruct a judicial proceeding, directly or indirectly notifies any other person about the existence or contents of a subpoena for records of that financial institution, or information that has been furnished in response to that subpoena, shall be fined under this title or imprisoned not more than 5 years, or both.

(2) Whoever, being an officer of a financial institution, directly or indirectly notifies—

(A) a customer of that financial institution whose records are sought by a subpoena for records; or

(B) any other person named in that subpoena;

about the existence or contents of that subpoena or information that has been furnished in response to that subpoena, shall be fined under this title or imprisoned not more than one year, or both.

The subpoenas were delivered at 1:15 pm on October 9th. Nine minutes later, Ms. Galo called Mr. Inglesias. Six minutes after hanging up with him, Ms. Galo faxed the subpoenas to Mr. Inglesias’ house. She not only faxed the subpoenas but the warning letters too. Mr. Inglesias then called her back two minutes later, and they spoke several times that day by phone.

Now, every bone in my defense lawyer body wants to give Ms. Galo the benefit of the doubt, right? Maybe she didn’t read the warning letter, maybe it was all legal gobbledygook, maybe she hadn’t ever been given proper compliance training about not disclosing a subpoena, or maybe she thought she was supposed to tell her customer when the bank receives a subpoena about his account.

Unfortunately for Ms. Galo, she dug herself a pretty deep hole. The Homeland Security Investigations (HSI) agent investigating the case called her that afternoon and learned that she knew Mr. Iglesias personally. He told her that it was a federal crime to discuss the subpoena with Mr. Iglesias. According to the plea agreement, “GALO said she understood and would not tell Inglesias anything about the subpoena.” She also denied that she had already told Mr. Inglesias about the subpoena. The next day, two other HSI agents interviewed her and she again denied telling Mr. Inglesias about the subpoenas but admitted she knew him and that he was a “close friend of her uncle.”

A confidential informant obtained copies of the faxes from Ms. Galo to Mr. Inglesias at some point in the investigation. It likely did not help Ms. Galo’s case that Mr. Inglesias fled to Central America and is apparently still at large.

Ms. Galo was indicted for three counts of obstruction of a grand jury investigation on June 21, 2012. She pleaded guilty on May 22, 2013, and agreed to cooperate with the government in return for a suggested sentence at the low end of the guidelines range. A sentencing date has not been set.

This is an interesting case that highlights the difference between the obligations of a bank that receives a subpoena and any other party that receives a subpoena. Grand jury secrecy generally does not cover the recipients of a subpoena. Only the grand jurors, court employees and the prosecutors must keep secret what happens in the grand jury under Federal Rule of Criminal Procedure 6(e)(2). But, Section 1510 makes it a crime for a financial institution to disclose a grand jury subpoena. This creates additional compliance issues for financial institutions. Although Ms. Galo does not fit the ideal of an unwitting violator, her tale is a cautionary one for bank employees.

This entry was posted in Grand Jury Subpoena, Obstruction, Plea Agreement and tagged . Bookmark the permalink.

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