Crypto Executive Urges Fifth Circuit to Reconsider IRS Summons Ruling
On Saturday, June 21, Rowland Marcus Andrade, head of ABTC Corp., asked the U.S. Court of Appeals for the Fifth Circuit to reconsider its decision that he cannot yet appeal a lower court’s ruling allowing the Internal Revenue Service to access his bank records. Andrade argued that the court overlooked his claims that the IRS summonses were legally deficient.
In his rehearing request, Andrade contested the Fifth Circuit’s May ruling, which determined he must wait for the government to decide whether to initiate legal action against him before challenging the district court’s decision. The three-judge panel’s per curiam opinion stated that Andrade could only appeal after a final order in a case involving his financial records or within 30 days of being notified that no lawsuit would be pursued. The panel noted that neither condition had been met.
Andrade, who was convicted of bitcoin-related fraud in a separate case in March, had sought to block IRS summonses issued to Bank of America and JPMorgan Chase Bank. He and ABTC Corp. claimed the IRS violated the Right to Financial Privacy Act by not properly notifying him of the summonses, specifically failing to comply with the act’s requirement to use his last known address.
The Fifth Circuit panel referenced Section 3410 of the federal banking code, which governs third-party subpoenas to banks. Under this section, a bank customer may challenge a subpoena for their records, but a denial of that challenge is not considered a final, appealable order. Andrade argued in his rehearing request that this provision unfairly guarantees a victory for the IRS, stating, “In Andrade v. IRS, the IRS wins.”
He further contended that Section 3410 may violate the U.S. Constitution by undermining judicial authority. Andrade urged the court to either invalidate the provision, which he said would create a conflict among federal circuits, or carve out exceptions to it. He emphasized the need for a mechanism to challenge what he described as a district court’s erroneous ruling, particularly given the alleged failure of the IRS summonses to comply with the Right to Financial Privacy Act.
Andrade criticized the Fifth Circuit for not holding oral arguments and for issuing a per curiam ruling, which he argued is typically reserved for noncontroversial cases. He called the decision a “flagrant abuse of discretion” given the significance and novelty of the issues raised. He also asserted that his case presented a novel question about whether state laws, including those in Texas, should take precedence in federal courts over Section 3410’s restrictions on appeals.
The dispute originated in February 2024 when Andrade and ABTC filed a lawsuit in a Texas federal district court to quash IRS summonses issued in 2023 as part of an investigation under the Bank Secrecy Act. They argued the IRS violated financial privacy laws by accessing customer records without a valid administrative subpoena.
The district court ruled that the request to quash was moot since the IRS had already obtained the records and found that the agency had properly notified Andrade and ABTC. The court also rejected their claims of violations under the Right to Financial Privacy Act. Andrade appealed to the Fifth Circuit in August.
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