(CN) - A one-person company has no Fifth Amendment right to refuse to hand over corporate records, the 2nd Circuit ruled.
In June of last year, a grand jury subpoenaed the corporate records of Account Service Corp. and KJB Financial Corp., which are owned by Douglas Rennick, the sole shareholder, officer and employee of both companies.
Rennick moved to quash the subpoena, asserting his Fifth Amendment right against self-incrimination.
In August, he was indicted on charges of conspiracy, bank fraud, illegal gambling and money laundering.
A judge then held him in contempt for refusing to hand over the company records, and Rennick appealed.
"Under the long-established 'collective entity rule' ... corporations cannot avail themselves of the Fifth Amendment privilege," the Manhattan-based appeals court ruled.
"This is true ... 'regardless of how small the corporation may be,'" the court wrote, quoting the Supreme Court in Bellis v. U.S.
The three-judge panel upheld the contempt finding.
"Our conclusion that a one-person corporation cannot avail itself of the Fifth Amendment privilege is not only support by our precedent, but is sensible," the judges concluded.
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