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State v. McAllister

February 05, 2004


On appeal from Superior Court of New Jersey, Law Division, Morris County, No. 00-02-0282.

Before Judges Skillman, Wells and Fisher.

The opinion of the court was delivered by: Wells, J.A.D.


Argued September 30, 2003

During Marlene McAllister's criminal trial, the judge denied her motion to suppress and admitted her bank records in evidence. The prosecutor had obtained those records by the service of grand jury subpoenas on her banks without prior notice to her. We hold, on exclusively state constitutional grounds that, from the date of this decision forward, because persons have a legitimate expectation of privacy in the record of their banking transactions, the State must either obtain a search warrant based upon probable cause before acquiring bank records or provide notice and a reasonable opportunity to object to the issuance of a grand jury subpoena duces tecum for such records. While we conclude it was error to admit the records obtained in this case for failure to proceed under either alternative, under the factual circumstances of this case, the error was harmless and we affirm McAllister's conviction.

McAllister was indicted in November 1999 on four counts of third-degree fraudulent use of a credit card in violation of N.J.S.A. 2C:21-6h; one count of fourth-degree forgery in violation of N.J.S.A. 2C:21-1a(2); and, one count of third degree theft in violation of N.J.S.A. 2C:20-3. Prior to trial, the prosecutor moved to dismiss the first four of the above charges and a part of the theft count. The motion was granted. The trial proceeded on the forgery count and the remaining part of the theft count pertaining to the victim, George Uslar.

The jury trial consumed five days in January 2002 and resulted in McAllister's conviction of both counts. The following April, the judge sentenced McAllister to three years probation conditioned upon her serving 180 days in the county jail on the forgery and a concurrent term of two years probation conditioned upon her serving ninety days in the county jail on the theft count. Restitution was ordered in the sum of $35,616.04.

The facts as they emerged at trial are these. In October 1996, McAllister was hired to help George and Renee Ulsar, an elderly couple, around the house. Her job included running errands for the Ulsars, such as picking up their mail. In late 1997, George Ulsar began to suspect that McAllister was tampering with his mail. When by early 1998 he had not received his annual Merrill Lynch brokerage statement, he called its office and asked about the statement. Merrill Lynch advised the statement had been sent, but it offered to send another copy. On February 14, 1998, expecting the statement, Ulsar went to the post office to pick up the mail, only to find that McAllister had been there before him.

Ultimately, however, Ulsar received a copy of the statement and obtained, as well, the one picked up by McAllister. On February 21, 1998, he compared the two and found they were not the same. The statement from the broker listed a series of checks totaling in excess of $35,000 drawn against his account that he had not signed or authorized. That day, Ulsar reported the matter to the Harding Township police, who, on March 6, 1998, after a preliminary investigation, arrested McAllister at her place of employment. When one of the officers asked if there was anything she wanted to bring to the station with her, McAllister asked for the purse in her car. An officer went to McAllister's car, retrieved the purse and handed it to her. At the station, the purse and several of the items in it, including her checkbook register and other papers, were inventoried and reviewed by the investigators.

On March 8, 1998, the prosecutor executed, in the name of the county clerk, a grand jury subpoena duces tecum directed to Chase Manhattan Bank at its offices in New York City. The subpoena directed the bank to appear before the grand jury on March 17, 2002 and bring with it four records of McAllister's account: (1) a copy of her signature card; (2) the bank's statements for June, July, August and September 1997; (3) the identity of any other accounts in the name of Marlene McAllister; and (4) copies of deposit items that may be requested after review of statements. Another such subpoena was issued requiring an appearance before the grand jury on September 9, 1998 by the United National Bank and demanding records pertaining to McAllister's auto loan. It sought copies of paperwork pertaining to that loan to include payment history from August 1996 to September 1997. Both banks complied with the subpoenas and provided the records. Neither the prosecutor nor the banks notified McAllister that her banking records were being sought in connection with the investigation.

On the first day of trial, the judge heard argument on a motion to suppress McAllister's bank records. Finding no New Jersey authority directly on point, the judge relied on the United State Supreme Court decision in State v. Miller, 425 U.S. 435, 96 S. Ct. 1619, 48 L. Ed. 2d 71 (1976), to deny the application. He was persuaded by the Court's conclusion that there is no legitimate expectation of privacy in bank records.

McAllister's checkbook register, inventoried the day she was arrested, and the Merrill Lynch statements from which Ulsar had discovered the alleged defalcations were admitted in evidence. In accord with his earlier ruling, the judge admitted in evidence McAllister's Chase Manhattan bank statements and the auto loan payment record from United National Bank produced under subpoena. The Merrill Lynch cash management account statements and its cancelled checks showed six checks cleared the account signed between June 1, 1997 and August 1, 1997, which Ulsar denied signing or authorizing. Three of these checks were made to specific payees and three to"McAllister" or to"M. McAllister." One of the named payees on two of the checks was United National Bank where McAllister had an auto loan. The three checks made out to McAllister were deposited into her Chase Manhattan checking account and duly recorded in her check register.

McAllister raises a single point on appeal:



We begin our analysis with Miller, the case upon which the trial judge relied. There, Miller was convicted of possessing an unregistered still and various related charges. Id. at 436, 96 S. Ct. at 1621, 48 L. Ed. 2d at 75. Federal agents, via subpoenas duces tecum served on two banks where Miller had accounts, viewed microfilms of his records and obtained access to copies of certain checks and deposit slips. Ibid. Miller moved to suppress those records. Ibid. The district court denied his motion and eventually the records were admitted into evidence to establish certain overt acts necessary to prove the charges against him. Id. at 437, 96 S. Ct. at 1621, 48 L. Ed. 2d at 75. The circuit court of appeals reversed. Ibid. Upon further appeal to the United States Supreme Court, it reversed the circuit court, restoring the district court decision. Ibid. The Supreme Court stated:

On their face, the documents subpoenaed here are not respondent's"private papers." Unlike the claimant in Boyd, respondent can assert neither ownership nor possession. Instead, these are the business records of the banks. [B]anks are... not... neutrals in transactions involving negotiable instruments, but parties to the instruments with a substantial stake in their continued availability and acceptance." The records of respondent's accounts, like"all of the records (which are required to be kept pursuant to the Bank Secrecy Act,) pertain to transactions to which the bank was itself a party.".... Even if we direct our attention to the original checks and deposit slips, rather than to the microfilm copies actually viewed and obtained by means of the subpoena, we perceive no legitimate"expectation of privacy" in their contents. The checks are not confidential communications but negotiable instruments to be used in commercial transactions. All of the documents obtained, including financial statements and deposit slips, contain only information voluntarily conveyed to the banks and exposed to their employees in the ordinary course of business. The lack of any legitimate expectation of privacy concerning the information kept in bank records was assumed by Congress in enacting the Bank Secrecy Act, the expressed purpose of which is to require records to be maintained because they"have a high degree of usefulness in criminal tax, and regulatory investigations and proceedings." The depositor takes the risk, in revealing his affairs to another, that the information will be conveyed by that person to the Government. This Court has held repeatedly that the Fourth Amendment does not prohibit the obtaining of information revealed to a third party and conveyed by him to Government authorities, even if the information is revealed on the assumption that it will be used only for a limited purpose and the confidence placed in the third party will not be betrayed.

[Id. at 440-43, 96 S. Ct. at 1623-24, 48 L. Ed. 2d at 77-79. (citation omitted).]

Congress reacted somewhat unfavorably to Miller. In 1978, it passed the Right to Financial Privacy Act (RFPA). 12 U.S.C.A. 3401 to -22; Young v. U.S. Dept of Justice, 882 F.2d 633, 636 (2d Cir. 1989). An authoritative statement of the purposes of the Act and some of its central provisions were succinctly ...

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