Case of the Day: Gushlak v. Gushlak

The case of the day is Gushlak v. Gushlak (2d Cir. 2012). The case makes an important point about the procedure in § 1782 cases, and so as not to bury the lede, I’ll just state the point here: It is proper to apply ex parte for judicial assistance. The target of the discovery can assert whatever arguments he wishes on a motion to quash the subpoena.

I first discussed the case in my post of September 6, 2011. Here was my description of the facts:

Myron Gushlak was an investment banker who, according to the New York Daily News, “live[d] in a mansion in the Cayman Islands and pa[id] no taxes.” In May 2011, he pleaded guilty to conspiracy to commit securities fraud and conspiracy to commit money laundering and was sentenced to 72 months in prison and a $25 million fine. Gushlak was also embroiled in divorce proceedings in the Cayman Islands.

Gushlak’s wife, Debbie Gushlak, made an application for judicial assistance seeking subpoenas directed to Yelena Furman (who described herself as Mr. Gushlak’s girlfriend), David Lubin, and Warden Duke Terrell, the warden of the prison where Gushlak was serving his sentence. According to Debbie Gushlak, Furman was involved in Gushlak’s businesses, and on the day Gushlak was sentenced, Debbie Gushlak claimed that Furman “flew to the Cayman Islands and was seen removing boxes of documents and electronic equipment from the Gushlaks’ condominium.” After Gushlak was sent to prison, according to the affidavit, Furman acted for Gushlak under a power of attorney. Lubin was a lawyer for Gushlak. Mrs. Gushlak’s proposed subpoenas sought, in broad terms, documents relating to property of Mr. or Mrs. Gushlak, documents concerning communications with the Gushlaks or their sons, and documents concerning several companies that Mrs. Gushlak suspected were connected with Mr. Gushlak.

The judge granted Mrs. Gushlak’s requests as to Mr. Gushlak and Furman, and both appealed.

Mr. Gushlak’s appeal argued a denial of due process. He asserted that the judge had granted the petition “without notice one day prior to the return date on the court’s order to show cause.” The Second Circuit rejected this argument and made an important procedural point: applications for judicial assistance can properly be made ex parte. Indeed, by issuing an order to show cause, the judge had given Mr. Gushlak more notice of the proceedings than discovery targets usually receive.

Furman’s argument went to the merits of the judge’s Intel analysis, which means she had to argue that the judge had abused his discretion—a tough standard to meet. The Second Circuit rejected her arguments without much analysis.

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