MEMORANDUM AND ORDER
The Indictment in this case charges 36 defendants with conspiracy to commit racketeering, health care fraud, mail fraud, and money laundering in connection with an allegedly fraudulent no-fault insurance scheme. Presently before the Court are several pretrial motions filed by certain Defendants. Oral argument on these motions was held on April 19, 2013. For the reasons set forth below, the motion to suppress evidence seized from the TriState Billing office is granted, while Defendants’ other motions are denied.
I. Motion to Strike the Fraudulent Incorporation Theory from the Indictment
Defendants Yuriy Zayonts, Michael Danilovich, and Boris Treysler, joined by several other Defendants, move to strike portions of the Indictment insofar as they are based on the Government’s theory of “fraudulent incorporation,” arguing that the theory is legally insufficient to support a conviction for mail fraud or health care fraud (or conspiracy or RICO charges premised on those offenses).
A. Background
The Indictment charges a complex scheme to defraud automobile insurance companies through New York’s No Fault Comprehensive Motor Vehicle Insurance Reparation Act (the “No-Fault Law”), N.Y. Ins. Law § 5102 et seq. With respect to the fraudulent incorporation theory, the Indictment alleges as follows:
5. At all times relevant to this Indictment, pursuant to New York State Law, all medical clinics in New York State must have been incorporated, owned, operated, and/or controlled by a licensed medical practitioner in order to be eligible for reimbursement under the No-Fault Law. Insurance companies would deny all billings for medical treatments from a medical clinic that was not actually owned, operated and controlled by a licensed medical practitioner.
6. In actuality, the No-Fault Clinics were not owned, operated, and controlled by a licensed medical practitioner; instead, the actual owners, operators, and controllers of the No-Fault Clinics were individuals who were not licensed medical practitioners and who were not identified on documents filed with the New York State authorities (the “No-Fault Clinic Controllers”). The No-Fault Clinic Controllers, among other things, paid a fee and/or salary to licensed medical professionals (the “No-Fault Doctors”) so that the No-Fault Doctors would (1) incorporate a professional corporation under which a No-Fault Clinic could bill insurance companies; (2) open a bank account for the Clinic; (3) sign the lease for the Clinic property; (4) sign the Clinic’s bills for treatments under the No-Fault Law; and/or (5) make the excessive and unnecessary prescriptions and referrals for additional treatments and medical supplies to other fraudulent medical clinics. In addition, the No-Fault Clinic Controllers, among other things, invested the initial funds to establish the No-Fault Clinics; identified the locations for the Clinics; negotiated the rent for the Clinics’ leases; sourced and paid for the Clinics’ equipment; arranged for Patients to receive treatment; and/or received most, if not all, of any proceeds from the No-Fault Clinics.
7. Furthermore, the No-Fault Clinic Controllers arranged for other similarly fraudulently incorporated entities to provide excessive and unnecessary medical treatments based on referrals from the No-Fault Doctors (the “Modality Clinics”).... In return, the No-Fault Clinic Controllers received cash kickbacks for each referral from other individuals who fraudulently owned, operated and controlled the Modality Clinics (the “Modality Clinic Controllers”). Similar to the No-Fault Clinics, many of the Modality Clinics were fraudulently incorporated by licensed medical practitioners who did not own, operate and/or control the Modality Clinics (the “Modality Professionals”).
(Indictment ¶¶ 5-7.)
New York’s No-Fault Law requires automobile insurance companies to reimburse drivers and passengers for “[a]ll necessary expenses” up to $50,000 resulting from personal injuries arising out of motor vehicle accidents. N.Y. Ins. Law § 5102. Pursuant to regulations promulgated by the New York State Superintendent of Insurance, an insured may assign his or her benefits to the health care provider, which may then receive direct payment for the services provided. 11 N.Y.C.R.R. § 65-3.11(a). The regulations further provide:
A provider of health care services is not eligible for reimbursement under section 5102(a)(1) of the [New York] Insurance Law if the provider fails to meet any applicable New York State or local licensing requirement necessary to perform such service in New York or meet any applicable licensing requirement necessary to perform such service in any other state in which such service is performed.
11 N.Y.C.R.R. § 65-3.16(a)(12).
The New York State Department of Education is authorized to issue a certificate of authority to a “qualified professional service corporation” that is organized pursuant to Section 1503 of the New York Business Corporation Law. N.Y. Educ. Law § 6507(4)(e). Section 1503 provides that such an entity’s certificate of incorporation
(i) shall state the profession or professions to be practiced by such corporation and the names and residence addresses of all individuals who are to be the original shareholders, directors and officers of such corporation, and (ii) shall have attached thereto a certificate or certificates issued by the licensing authority certifying that each of the proposed shareholders, directors and officers is authorized by law to practice a profession which the corporation is being organized to practice and, if applicable, that one or more of such individuals is authorized to practice each profession which the corporation is authorized to practice.
N.Y. Bus. Corp. Law § 1503(b). Section 1507(a) of that statute provides that “[a] professional service corporation may issue shares only to individuals who are authorized by law to practice in this state a profession which such corporation is authorized to practice.... ” Section 1508 states that “[n]o individual may be a director or officer of a professional service corporation unless he is authorized by law to practice in this state a profession which such corporation is authorized to practice and is either a shareholder of such corporation or engaged in the practice of his profession in such corporation.”
In short, New York licensing requirements are structured so as to “prohibit nonphysicians from owning or controlling medical service corporations.” State Farm Mut. Auto. Ins. Co. v. Mallela,
In Mallela, the New York Court of Appeals, answering a question certified by the Second Circuit, held both that the above-referenced regulations are valid, and that “fraudulently incorporated” medical corporations “are not entitled to reimbursement” from insurers under the No-Fault Law. Id. at 320, 322,
B. Discussion
On a motion to dismiss the Indictment, the Court assumes the truth of the allegations in the Indictment. See United States v. Velastegui,
Defendants contend that the Indictment’s fraudulent incorporation theory is legally insufficient for several reasons. They argue (1) that the alleged facts do not establish any affirmative misrepresentation or omission sufficient to support a charge of fraud; (2) that the alleged facts fail to support any contemplated injury to the insurers; and (3) that the fraudulent incorporation theory fails to implicate a cognizable property interest of the insurers. Each of these arguments is addressed in turn.
1. Affirmative Misrepresentation or Omission
“The [federal] fraud statutes are violated by affirmative misrepresentations or by omissions of material infоrmation
IF THE PROVIDER OF SERVICE IS A PROFESSIONAL SERVICE CORPORATION OR DOING BUSINESS UNDER AN ASSUMED NAME (DBA), LIST THE OWNER AND PROFESSIONAL LICENSING CREDENTIALS OF ALL OWNERS (Provide an additional attachment if necessary).
In the blank space following this language on the form, the PCs included the name of a medical doctor or other professional. The Government argues that because the person named was not the “true owner” of the PC, but was only the “paper owner” or “straw owner,” this constitutes an affirmative misrepresentation to the insurer on the NF3 form.
Defendants do not offer a persuasive reason for concluding that the statements of ownership on the NF3 forms were, as a matter of law, not affirmative misrepresentations. Defendants simply assert, absent citation to any authority, that “the doctors who incorporated the PCs are, indeed, the owners of the PCs.” (Zayonts Mem. at 7.) According to Defendants, this must be the case, because the certificates of incorporation of the PCs list the doctors as the original shareholders, directors, and officers of the PCs. It is simply irrelevant to the question of ownership, argue Defendants, whether those doctors then “turn[ ] over the business operation of [the] PC[s] to [ ] non-professional[s].” (Zayonts Mem. at 9.)
The Court disagrees that the issue of who “owns” a PC can necessarily be resolved simply by examining the PC’s certificate of incorporation. Rather, the question of “ownership” is considered a question of fact, or a mixed question of law and fact. See, e.g., New Windsor Volunteer Ambulance Corps, Inc. v. Meyers,
Moreover, to the extent that Defendants are arguing that the evidence thus far
2. Injury to Insurers
Defendants also argue that the fraudulent incorporation theory is legally insufficient because it does not establish any intent to cause injury to the insurers. While fraud does not require actual injury to the victim, it does require “that some actual harm or injury was contemplated by the schemer.” United States v. D'Amato,
Relying on Judge Sifton’s reasoning in State Farm Mut. Auto. Ins. Co. v. Mallela,
This argument lacks merit, most importantly because it fails to account adequately for the New York Court of Appeals’ 2005 decision in Mallela. There, the Court of Appeals definitively held that, as a matter of New York law, fraudulently incorporated PCs “are not entitled to reimbursement” by insurers.
The fact that Mallela was a civil case is simply beside the point, as New York law, as construed by the New York Court of Appeals in Mallela, does not create the substantive federal offenses at issue. Rather, the Court here looks to New York law simply to determine whether a material misrepresentation has been made and whether it was made with the intent to defraud. On those issues, Mallela is crystal clear.
3. Property Interest of Insurers
Defendant Danilovich argues that the fraudulent incorporation theory is legally insufficient for a different reason: that an insurer’s right to withhold payment is not a cognizable property interest under the mail fraud statute. Because the insurer’s right to withhold funds from layperson-owned PCs is a non-discretionary obligation, he argues, it does not implicate the insurer’s “right to control” its assets, as contemplated by the line of Second Circuit decisions recognizing deprivations of such a “right to control” as satisfying the “property” element of the mail fraud statute. See, e.g., United States v. Mittelstaedt,
The Indictment, however, does not rely on a deprivation of the insurers’ “right to control” their property. Rather, it rests simply on the alleged deprivation of their monetary interest in nonpayment of claims — where PC-claimants are “ineligible” for payment under New York law. That monetary interest is a legally cognizable interest in money or property under the mail fraud statute.
Danilovich also argues that the insurers’ interest in nonpayment is based on a state regulation promulgated for public policy reasons, conferring only an “incidental benefit” on insurers. (Danilovich Mem. at 6-7.) But the fact that the insurer’s interest arises from a state regulation (as construed by the New York Court of Appeals in Mallela) does not make it any less of a cognizable interest in money or property. Here, that interest is tangible and economic — distinguishing it from the state’s interest in video poker licenses considered by the Supreme Court in Cleveland v. United States,
C. Conclusion
For the foregoing reasons, Defendants’ motion to dismiss the fraudulent incorporation theory from the indictment is denied.
II. Motion to Suppress Evidence Seized from the Tri-State Search
The Fourth Amendment commands that “no warrants shall issue, but upon probable cause, supported by oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.” U.S. Const. Amend. IV. Thus, the Warrants Clause both “requires particularity and forbids over-breadth.” United States v. Cioffi,
A. Background
On February 27, 2012, Magistrate Judge Cheryl Poliak of the Eastern District of New York issued search warrants for six premises, including Tri-State. Probable cause for the Tri-State warrant was based upon the affidavit of Michael D. Kelley, a special agent with the Federal Bureau of Investigation, Eurasian Organized Crime Squad (“the Kelley Affidavit”). The TriState warrant appears to have been issued based upon two separate sections of the Kelley Affidavit, located in Paragraphs 5 and 12. Paragraph 5 of the Kelley Affidavit states in relevant part:
h. In order to handle the significant number of bills and paychecks, some members of the scheme established billing and collection companies, usually under the auspices of a law office. These entities handle all of the paperwork for No-Fault Clinics, and also deal with any disputes or arbitration that arise from the fraudulent billing. In order to manage the billing and collections for the clinics, the members of the scheme often obtain signature stamps from the incorporating medical professionals for the clinics so that they can bypass the step needed to get the signature of the licensed medical professional. In truth, the members of the scheme who operate the billing and collections entities actually control the clinics, so that signature stamp is a necessary piece of equipment to effectively perpetuate [sic ] the fraud.
Paragraph 12 of the Kelley Affidavit, the sole paragraph concerning the probable cause for searching “Premises # 2” (i.e. Tri-State) in particular, states:
a. CW-1 reports that he knows that ZAYONTS and KREMERMAN maintain their billing for their Modality Clinics at PREMISES #2. CW-1 knows this, in part, because CW-1 has met with ZAYONTS and KREMERMAN at that location on several occasions, most recently on February 1, 2012. In fact, CW-1 reports that he received kickbacks from the Modalities controlled by ZAYONTS and KREMERMAN at PREMISES # 2.
b. Yet another cooperating witness (“CW-3”), who was arrested on bank fraud charges, confirms that CW-3 regularly cashed checks for ZAYONTS, and that ZAYONTS controls a business location at 28 Dooley Street (PREMISES # 2) which is involved in billing.
The Kelley Affidavit was not incorporated by reference into the Tri-State warrant. “Attachment A,” the sole attachment to the Tri-State warrant, lists the “Items to Be Searched For and Seized.” Those items are as follows:
1. Bank account information;
2. Ledgers documenting patient medical treatment, tests provided, and other records related to patient care;
3. Signature stamps;
4. Calendars and patient appointment records;
5. Cellphones of TARGET SUBJECTS found at SUBJECT PREMISES;
6. Checks, cash, and other financial instruments;
7. Computers;
8. Thumb drives;
9. In order to search for the items described above that may be maintained in electronic media, law enforcement personnel are authorized to search, copy, image and seize the following items for either on site or off site review:
1. Any computer equipment and storage device capable of being used to commit, further or store evidence of the federal criminal offenses of wire fraud; mail fraud; bank fraud; health care fraud; and/or money laundering;
2. Any computer equipment used to facilitate the transmission, creation, display, encoding or storage of data, including word processing equipment, modems, docking stations, monitors, printers, plotters, encryption devices, and optical scanners;
3. Any magnetic electronic or optical storage device capable of storing data, such as floppy disks, hard disks, tapes, CD-ROMs, CD-R, CD-RWs, DVDs, optical disks, printer or memory buffers, smart cards, PC cards, memory calculators, electronic dialers, electronic notebooks, and personal digital assistants;
4. Any documentation, operating logs and reference manuals regarding the operation of the computer equipment, storage devices or software;
5. Any applications, utility programs, compilers, interpreters, and other software used to facilitate direct or indirect communication with the computer hardware, storage device or data to be searched;
6. Any physical keys, encryption devices, dongles, and similar physical items that are necessary to gain access to the computer equipment, storage devices or data;
7. Any passwords, password files, test keys, encryption codes or other information or other information necessary to access the computer equipment, storage devices or data; and
8. Files, records, programs, logs, electronic communications, scanning programs, financial records, hackingsoftware, routing configuration software. 4
B. Standing
“Fourth Amendment rights are personal rights which, like some other constitutional rights, may not be vicariously asserted.” Alderman v. United States,
Tri-State was incorporated in New York State on April 7, 2011, and Zaretskiy is its sole shareholder and President. (Dkt. No. 456, Ex. A.) Kremerman and Zayonts have submitted sworn declarations attesting that they both “participated in managing and running the operations of Tri-State Billing Corp. and shared [Zaretskiy’s] interests in the company.” (Dkt. No. 535, Exs. 1-2.) These three Defendants therefore have standing to challenge the TriState search. No other Defendants in this action have demonstrated a possessory or proprietary interest in Tri-State, or any other basis for a reasonable expectation of privacy in the office. Thus, to the extent that other Defendants in this case request the suppression of evidence seized pursuant to the warrant that purported to authorize a search of Tri-State, their motions are denied.
C. Particularity
The Fourth Amendment requires that warrants state with particularity the items to be searched and seized. This requirement traces directly back to the Framers’ experience of tyranny before this Nation’s founding: “The Fourth Amendment was a response to the English Crown’s use of general warrants, which often allowed royal officials to search and seize whatever and whomever they pleased while investigating crimes or affronts to the Crown.... The principal evil of the general warrant was addressed by the Fourth Amendment’s particularity requirement.” Ashcroft v. al-Kidd, — U.S.-,
Courts implement the particularity requirement by insisting that warrants not “leave to the unguided discretion of the officers executing the warrant the decision as to what items may be seized.” United States v. Riley,
It is clearly established that supplementary documents, including affidavits submitted to a magistrate judge to demonstrate probable cause, can particularize a warrant only if attached and incorporated into the warrant by reference. See United States v. Rosa,
In the Second Circuit, there is no settled formula for determining whether a warrant lacks particularity. Nonetheless, in a thoughtful and scholarly opinion, Judge Karas has noted “two factors that, above others, tend to define a warrant’s insufficient particularity.” United States v. Vilar, No. 05 Cr. 621,
First, warrants are generally found to be insufficiently particular where nothing on the face of the warrant tells the searching officers for what crime the search is being undertaken. Second, warrants will frequently lack particularity where they include a general, catchall paragraph or provision, often one authorizing the seizure of any or all records of a particular type.
Id. (quotation marks, citations, and alterations omitted). Courts do not require that a defendant demonstrate both of these deficiencies; rather, one or the other will typically render a warrant unconstitutional. See George,
The factors identified by Judge Karas are not exhaustive: lack of particularity may result from, or at least be suggested by, other circumstance-specific considerations. For example, “[i]n a number of out-of-circuit decisions, courts have found warrants for the seizure of records constitutionally deficient where they imposed too wide a time frame or failed to include one altogether.” United States v. Cohan,
1. Limitations by Crime
Nothing on the face of the TriState warrant informs the searching officer for which crimes the search is being undertaken. Accord United States v. Hickey,
The warrant first enumerates eight categories of “Items to be Searched For and Seized,” including bank account information, ledgers documenting patient medical treatment, computers, signature stamps, calendars and other patient appointment records, and financial instruments. At no point prior to or during the enumeration of these eight items does the warrant offer any indication of the relevant criminal allegations. The officers are thus directed to these categories without a single word of guidance regarding the type of criminal offense under investigation.
Only in a single subsection of Item 9 does the warrant refer to any criminal offenses, namely “wire fraud; mail fraud; bank fraud; health care fraud; and/or money laundering.” The Government asserts that the language of Item 9(1) of the warrant provides notice of the “statutes and conduct that give rise to the search and seizure” at issue. (Gov’t Mem. at 82; see also id. at 72 n.38 (“While Attachment A could have been worded more carefully, a reasonable law enforcement [officer] would have understood that the description of the crimes in paragraph 9(1) of Attachment A was applicable to all of the search.”).) The Court disagrees.
As the Tri-State warrant explains, Item 9 is meant to guide the officer in “searching] for the items described above that may be maintained in electronic media ” (emphasis added). By clear implication, Item 9 does not pertain to any physical evidence. As a result, to the extent that Items 1-8 consist of non-electronic evidence — and Items 1-6 are all either physical evidence or the kind of evidence that may exist in either physical or electronic form — nothing in Item 9 limits the scope of the warrant as to those items by specifying criminal offenses. Thus, an officer tasked only with conducting a physical search might well miss this supposed limit, as might any officer who reads the warrant in a straightforward fashion and
Further, even as to electronic evidence, Item 9 does not provide any actual limitation based on criminal offense. Item 9 begins by stating that, “[i]n order to search for the items described above that may be maintained in electronic media, law enforcement personnel are authorized to search, copy, image and seize the following items for either on site or off site review” (emphasis added). The warrant then contains eight subsections, seven of which lack any reference to any federal criminal offense. These eight subsections, however, each afford the searching offers an individually sufficient basis for searching and seizing items found at Tri-State. This is made apparent by the fact that each subsection refers to “Any” evidence of a particular sort, and the fact that these subsections are linked conjunctively by “and” at the end of subsection 7. Thus, “[i]n order to search for [Items 1-8] that may be maintained in electronic media,” Item 9 allows the searching officers to seize any of eight different kinds of evidence, and only one out of those eight evidentiary categories refers to a federal criminal offense. The other seven subsections, which allow seizure of virtually any electronics, as well as any documentation, reference manuals, software, physical keys, encryption devices, passwords, financial records, and electronic communication that might bear on the search and seizure of electronic evidence, make no reference to any federal crime and do not incorporate by reference the federal crimes described in subsection 9(1). In other words, Items 9(2) through 9(8) allow for extremely broad electronic searches, and are, by the logic of the warrant, not narrowed by any references to the crimes committed. An officer would see no offense-based limit on her ability to seizure virtually any electronics found on the premises.
Moreover, as is explained in more detail infra, Item 7 — “Computers”—and Item 8 — “Thumb Drives” — are not limited by Item 9, as computers and flash drives cannot be “maintained in electronic media.” Thus, at most, Item 9(1) limits an officer’s ability to search and seize electronic evidence aside from computers and thumb drives.
Although the Government compares the language putatively limiting the language in the Tri-State warrant to language in three other warrants recently discussed by courts in this district, the differences between those warrants and this one illuminate the serious particularity problem here. (See Gov’t Mem. at 82 (likening the Tri-State warrant to those discussed in United States v. Hernandez, United States v. Dupree, and United States v. Levy).
In United States v. Hernandez, Judge Baer found sufficient particularity in warrants that described the property to be searched for and seized as “Evidence of crimes; contraband, fruits of crimes, or other items illegally possessed; or property designed for use, intended for use, or
Judge Crotty relied upon comparable reasoning in United States v. Levy, where the search warrant “identified the Levys’ residence as the property to be searched, and stated that it was believed to conceal ‘[e]vidence, [f]ruits, and instrumentalities of criminal violations of Title 18, United States Code, Sections 1343 and 1349, as further described in ‘Attachment B.’ ” No. 11 Cr. 62,
Similarly, in United States v. Dupree,
Unlike the warrants in Hernandez, Levy, and Dupree, the Tri-State warrant does not direct searching officers to seize evidence related to, or concerning, any particular crime or type of crime. By comparison, for the reasons set forth above, as to all or nearly all of the evidence whose seizure was authorized by the Tri-State warrant, the warrant simply
In sum, there is no offense indicated as to any physical evidence. There is no offense indicated as to computers and thumb drives (Items 7 and 8). There is no offense indicated as to seven subsections of material that may be searched for and seized “[i]n order to search for the items described above that may be maintained in electronic media.” There is no relevance requirement imposed on the single subsection of Item 9 that does mention specific offenses. And as to that single subsection, it is not clear that it authorizes officers to search for and seize anything that could not be searched for and seized pursuant to one or another of the broad categories set forth elsewhere in the warrant. Even acknowledging that “[t]he nature of [this] crime ... may require a broad search,” Dupree,
2. The Scope of the Categories to Be Searched and Seized
The Tri-State warrant contains excessively broad categories of items to be searched for and seized, and thereby permits a searching officer to rummage through and seize nearly any conceivable paper and electronic document at TriState. This failing provides an independent basis for deeming the warrant deficient. See Buck,
The Tri-State warrant allows for the seizure of categories of materials that other courts have recognized to be impermissibly broad. For instance, it covers “[c]hecks, cash, and other financial instruments” without indicating any individuals, entities, offenses, time frame, or relevance. See United States v. Gigante,
Next, the warrant indiscriminately permits the search of all “Computers” and “Thumb drives.” Courts have disallowed such broad, un-partieularized grants of authority to search teams. See Rosa,
The Tri-State warrant also permits the seizure of “Cellphones of TARGET SUBJECTS found at SUBJECT PREMISES,” a category that would have been sufficiently narrow had the warrant incorporated by reference the Kelley Affidavit. As it stands, however, neither the warrant nor Attachment A defines “TARGET SUBJECTS,” leaving the officers executing the
In addition to the breadth of these categories, several of them also suffer from ambiguity. For example, the reference to “financial instruments” could afford a reasonable officer extremely broad discretion in deciding what items fall within this term’s scope. Indeed, that point was illustrated at the suppression hearing, where Agent Steven Naum acknowledged that he was not sure whether the reference to financial instruments would have authorized the seizure of financial contracts, insurance policies, or titles to real estate. He did think, however, that it would cover ATM cards and credit cards. That uncertainty is understandable, especially given that the warrant provides no context, reference to сertain crimes, indications of target subjects, or any other information that would narrow an ambiguous term’s vast sweep.
At bottom, missing from all of these categories — and from the warrant in general — are any instructions to the officers to search for and seize records related to the five modality clinics at the center of the alleged conspiracy in question, related to particular suspects in the case, limited to the time period of the suspected conspiracy, related to the crimes alleged, or any other limits.
Together, the Tri-State warrant authorized the officers to search for and seize almost everything that one could expect to find at a billing office: any cash or checks, any document that might be considered to be some sort of “financial instrument,” all patient records and everything else related to patient records, and all bank information. In addition to all that physical evidence, the warrant authorized the unlimited search and seizure of all computers and thumb drives, as well as virtually anything electronic and anything related to the use or operation of those electronics. The warrant also allowed the officers to seize the cell phones of unspecified “TARGET SUBJECTS,” which on the face of the warrant provided the officers with discretion to seize the phone of any person found on the premises. As explained below, the warrant lacked probable cause to justify the breadth of this search. Of immediate concern here, however, is the fact that it conferred on the searching officers discretion to seize virtually everything short of any diaries, clothing, and love letters that employees may have brought to work. The broad, undefined, and ambiguous terms of this search warrant render it, for all practical purposes, a prohibited general warrant to search Tri-State for evidence of a crime.
3. Failure to Temporally Limit the Warrant
Also missing from the Tri-State warrant is any temporal limitation on the items to be searched. See Hernandez,
4. Confusing Provisions in the Tri-State Warrant
An additional basis for concluding that the Tri-State warrant lacked particularity rests in the confusing relationship between Item 9 and the remainder of the warrant. Specifically, Item 9 indicates that law enforcement personnel may search for and seize broad categories of electronic equipment and related material “to search for the items described above that may be maintained in electronic media.” The clear suggestion is that the search of electronic media is somehow limited by Item 9 and its various subsection — even though it is doubtful that the combination of those broad subsections actually imposes any limit. But then the warrant also separately allows for the search of “[computers” and “[t]humb drives,” categories which are not limited by Item 9’s plain language at all and to which it would be nonsensical to apply Item 9.
The oddity of separately including unlimited terms for “computers” and “thumb drives,” and then including a laundry list of purportedly limiting electronics-related provisions that partly overlap with those blanket terms, could well create confusion on the part of an officer committed to properly executing the warrant. See Abrams,
5. The All-Records Exception
Under certain, limited circumstances, a warrant lacking in particularity can be saved by the so-called “all records exception.” “Under that exception, all records of a business may be seized if there is probable cause to believe that the entire operation is permeated with fraud.” Hickey,
To trigger the all records exception, “it is not necessary that the affidavit supporting the search warrant set forth specific factual evidence demonstrating that every part of the enterprise in question is engaged in fraud.” United States v. Burke,
In cases where the all records exception has been applied, the affidavit submitted in support of the warrant contained detailed information that would provide reason to believe that all or nearly all of the business under investigation was illegal. For example, courts have applied the all records rule where government agencies received 250 complaints about an enterprise’s fraudulent activity and interviewed 20 former employees, see Burke,
Courts have held the Government to this probable cause showing and have refused to apply the all records exception where there is insufficient reason to believe that a business is permeated with fraud. Thus, in United States v. Burke, Judge Mukasey concluded that the exception did not apply where an affidavit described six fraudulent transactions involving Salvador Dali prints at Barclay Galleries, described four fraudulent statements made to a seventh customer about Dali prints, noted a few other misrepresentations, and indicated that the Government believed the operation involved a boiler room operation.
Although fraudulent activities in one line of business may show that others too are fraudulent ... this is not such a case. To the contrary, as [the] affidavit makes clear, the government long before these searches had limited its investigation of Barclay to the sale of Dali prints.... Nor did the government make any showing that the sale of Dali prints was inseparable from the sale of prints by other painters.
Id. at 1141. Thus, a lack of probable cause concerning the scope of the fraud, and the extent to which fraud actually permeated a business, barred invocation of the all records exception.
Similarly, in United States v. Hickey, Judge Hurley found the exception inapplicable where the affidavit spoke to a single overriding scheme and a few acts of possessing firearms, but did not provide probable cause to believe that two corporations, in particular, were permeated with fraud rather than involved in fraud.
Judge Karas echoed this logic in Vilar, where the affidavit made “no explicit allegation that the Amerindo entities were permeated with fraud,” “the wrongdoing alleged in the Affidavit touch[ed] on but a fraction of [the entities’] assets,” and “the Warrant application sufficiently identifi[ed] only two victims of Defendants’ alleged conduct.”
This evidence falls short of probable cause to believe that Tri-State was “pervaded” by fraud. Even assuming that the Kelley Affidavit provides probable cause to believe that Zayonts controlled, in whole or in part, Tri-State — and this is a questionable assumption, since Tri-State occupied only a single floor of the building in question — there is no basis in the affidavit for the inference that illegal activities pervaded the office.
Accordingly, the all records exception does not apply to the Tri-State search.
6. Conclusion
In light of the Tri-State warrant’s failure to limit the search through reference to criminal offenses, inclusion of vague and impermissibly broad terms, lack of temporal limitation, and use of confusing language that confers too much discretion on the executing officers, the Court concludes that the Tri-State warrant violated the particularity requirement.
B. Overbreadth
In determining whether a warrant is overbroad, courts must focus on “whether there exists probable cause to support the breadth of the search that was authorized.” Hernandez,
“[Pjrobable cause to search is demonstrated where the totality of circumstances indicates a ‘fair probability that contraband or evidence of a crime will be found in a particular place.’ ” Walczyk v. Rio,
C. Good Faith
“The fact that a Fourth Amendment violation occurred — ie., that a search or arrest was unreasonable — does not necessarily mean that the exclusionary rule applies.” Herring v. United States,
1. Good Faith and Overbreadth
Suppression is appropriate where probable cause is “based on an affidavit so lacking in indicia of probable cause as to render official belief in its existence entirely unreasonable.” Leon,
2. Good Faith and Lack of Particularity
The Tri-State search was conducted pursuant to a warrant whose lack of particularity resulted primarily from the offi
In Groh v. Ramirez, a Bivens case decided just under a decade ago, the Court held that an agent of the Bureau of Alcohol, Tobacco and Firearms (“ATF”) had violated clearly established law when he еxecuted a search warrant that lacked particularity.
The presence of a search warrant serves a high function, and that high function is not necessarily vindicated when some other document, somewhere, says something about the objects of the search, but the contents of that document are neither known to the person whose home is being searched nor available for her inspection.
id (quotation marks and internal citation omitted).
The ATF agent also argued that “a search conducted pursuant to a warrant lacking particularity should be exempt from the presumption of unreasonableness if the goals served by the particularity requirement are otherwise satisfied.” Id. at 560,
Turning to qualified immunity, the Court emphasized that “the particularity requirement is set forth in the text of the Constitution” and “no reasonable officer could believe that a warrant that plainly did not comply with that requirement was valid.” Id. at 563,
Several years after Groh, the Supreme Court decided Herring. In Herring, the Court declined to suppress the fruits of a search executed pursuant to a warrant that was mistakenly reported to be outstanding by the computer database of a neighboring county. Outlining the good faith standard described supra, the Court emphasized the price of suppression and cautioned that judges must look for culpability and deterrence benefits before suppressing.
As the Sixth Circuit noted shortly after Herring was decided, ‘Herring does not purport to alter that aspect of the exclusionary rule which applies to warrants that are facially deficient warrants ab initio.” Lazar,
In United States v. Rosa, on highly unusual facts, the Second Circuit concluded that the Herring good faith inquiry is relevant to potential suppression of evidence resulting from the execution of a facially deficient warrant.
The Rosa court held the warrant unconstitutional, as it “failed to describe with particularity the evidence sought and, more specifically, to link that evidence to the criminal activity supported by probable cause.” Id. at 62. It also acknowledged that Groh’s bar on the use of unincorporated and unattached affidavits to cure defective warrants had abrogated a Second Circuit ease holding to the contrary. Id. at 63 (recognizing that Groh abrogated United States v. Bianco,
Reaching the Government’s good faith argument, the Rosa court noted that a Fourth Amеndment violation does not always justify suppression. Id. at 64 (discussing Herring,
Thus, in some circumstances, there will be daylight between (1) a finding that an officer acted in an objectively unreasonable manner and (2) a finding that the deterrence and culpability concerns identified in Herring weigh in favor of suppression. For that reason, courts must independently test each requirement before suppressing. But these factors will likely align in the vast majority of cases where the applicable Fourth Amendment law is clearly established. Under the applicable standard of objective reasonableness, officers are presumed to be aware of clearly established constitutional law and may thus be presumed to act with gross negligence, recklessness, or deliberation when they violate it. See George,
As explained supra, the Rosa court faced an unusual situation that drove a wedge between the requirements of Groh and Herring. To support its conclusiоn that the officers’ conduct constituted an act of “isolated negligence,” and therefore lacked the objectively deliberate character required to justify suppression, Rosa signaled to a number of fact-specific considerations.
First, and most importantly, the entire course of events unfolded under intense “time pressure[ ]” in the “three hours from 2:00 a.m. to 5:00 a.m.[,]” forcing the officers to act “with necessary speed in the early hours of the morning.” Rosa,
Second, over the course of just a few hours, Blake served as the affiant, the officer in charge of executing the search, and the officer tasked with searching the digital media seized. While this triple role would not have obviated one of the Groh Court’s main concerns about unincorporated and unattached affidavits — namely, notice to the person being searched that the officers were acting with lawful authority,
Finally, Alosa considered a number of other factors in concluding that Blake’s conduct reflected isolated negligence. The warrant at issue was not grossly deficient, the underlying affidavit — with which Blake was intimately familiar — '“specifically requested that the search warrant be limited to obtaining evidence of these crimes”; the warrant was based on a strong showing of probable cause; there was no evidence that Blake had misled the town justice in his warrant application; and there was no evidence that the officers searched for or seized any items unrelated to the crimes for which probable cause had been shown. Rosa,
Ultimately, then, Rosa’s conclusion that Blake had acted negligently, despite his violation of clearly established law, rested principally on the exigencies of his situation and the fact that Blake was physically present and in charge at every step of the investigation. See Rosa,
In sum, under Groh, Herring, and Rosa, the Court must first consider whether the officers in this case acted in an objectively reasonable mannеr. If the answer to that question is no, and if the officers violated clearly established law, then the Court must determine whether the officers nonetheless fall into the narrow gap described in Rosa between violations of clearly established law and circumstances where an officer’s conduct nonetheless constituted isolated negligence.
a. Objective Reasonableness
As explained above, “the" same standard of objective reasonableness that [applies] in the context of a suppression hearing in Leon defines the qualified immunity accorded an officer who obtained or relied on an allegedly invalid warrant.” Messerschmidt,
All of the law governing the particularity analysis set forth 'supra was clearly established at the time of the Tri-State search. It was clearly established that a warrant which fails to specify the crimes for which the search was being undertaken lacks particularity. See George,
b. Culpability and Deterrence
Even though its agents violated clearly established law with which they are presumed to be familiar, the Government could still avail itself of the good faith exception by showing that the agents’ conduct was insufficiently culpable and did not implicate deterrence concerns. In Rosa, an unusual confluence of mitigating factors supported a finding of good faith. Here, by contrast, the violation did not result from isolated negligence and does call for deterrence.
First, there is no evidence that the TriState search involved any sort of exigency that might excuse the failure to incorporate or attach Agent Kelley’s affidavit. This case is thus distinguishable from Rosa, where — due to the nature of the alleged crime and the haste of the investigation — Blake was forced to gather evidence, write his affidavit, bring his warrant before a magistrate, and execute his search and seizure in a three-hour span before sunrise.
Next, unlike in Rosa, the affiant in this case, Agent Kelley, did not lead the TriState search team. In fact, Agent Kelley was not a member of the search team and none of the officers conducting the search were given copies of the Kelley Affidavit. (Id. at 50:15-19 (“I did not read the affidavit.”).).
In Rosa, Blake’s failure to incorporate or attach the affidavit constituted isolated negligence where, under intense time pressure and less than two hours after consulting a magistrate judge, Blake personally executed a search warrant based on his affidavit. But if the rule announced in Grok still stands as clearly established law, then surely Groh prohibits officers from claiming good faith whenever they execute a deficient warrant and insist that they came to learn the contents of the affidavit through some other means. That is especially true in cases like this one, where the affiant did not oversee execution of the warrant, the search team leader and his team had never read the affidavit, and the agents relied principally on a briefing that purported to convey the gist of the relevant information. See Rosa,
Moreover, even if some combination of the briefing and “Operations Order Form” did help limit the search of physical evidence, the Government has proffered no evidence regarding the officers tasked with the search of all electronics seized from Tri-State. Agent Naum, the Government’s sole witness at the hearing, disavowed any knowledge of how the electronic searches are being carried out. (Supp. Tr. at 97:4-8 (“Q. You had no participation whatsoever with the search of these electronic storage devices? A. No. Q. You don’t know how that was conducted, correct? A. No.”)
In sum, whereas the officer in Rosa acted under extraordinary pressures, had personal knowledge of the affidavit, and did not “actually rel[y] on the defective warrant,”
Nor do the remaining Rosa factors alter this conclusion.
Ultimately, the culpability and deterrence concerns articulated in Herring are very much at stake in this case. The officers violated clearly established Fourth Amendment law in two respects, by executing a warrant that lacked both particularly and overbreadth. Moreover, they did so even though they are presumed to be familiar with the governing law and even though they acted on the basis of extensive training and experience. See United States v. Lindsey,
This conduct is deterrable, and the Constitution requires its deterrence. After Groh and Rosa, it is be clear that unincorporated, unattached affidavits do not confer particularity on a facially deficient warrant. Ryan,
c. Conclusion: Suppression is Warranted
“The Fourth Amendment’s requirements regarding search warrants are not ‘formalities.’ ” Voustianiouk,
The Court will determine the appropriate scope of this suppression remedy following further submissions by the parties and a subsequent hearing.
A. Minimization
Defendant Zemlyansky has moved to suppress all communications intercepted pursuant to the wiretap of his phone for failure to abide by Title III of the Omnibus Crime Control and Safe Streets Act of 1968 (“Title III”), 18 U.S.C. § 2510 et seq.
Title III requires that eavesdropping “be conducted in such a way as to minimize the interception of communications not otherwise subject to interception under this chapter.” 18 U.S.C. § 2518(5). To that end, “[e]very order and extension thereof shall contain a provision that the authorization to intercept shall be executed as soon as practicable, [and] shall be conducted in such a way as to minimize the interception of communications not otherwise subject to interception under this chapter.” Id. This obligation to minimize serves as a safeguard against undue intrusion of privacy. United States v. Terry,
The Government has the burden to show good faith compliance with minimization requirements. United States v. Rizzo,
1. The Government’s Steps to Minimize
The Government can establish that it has taken reasonable steps to minimize by showing:
1) maintenance of monitoring logs; 2) judicial supervision of the progress of the surveillance; 3) provision of written and oral instructions to monitoring personnel regarding the legal requirements for minimization; 4) requiring all monitoring personnel to read the court orders and applications, and posting of the minimization instructions, court orders and applications at the monitoring plant; and 5) supervision by the prosecutor.
United States v. Marroquin-Corzo, No. 10 Cr. 892,
The Government has sufficiently demonstrated that it has followed the requisite steps to ensure proper minimization. The Government assiduously kept monitoring logs; sought and received judicial supervision for each wiretap (see Gov’t Mem., Exs. 1, 3-5); provided accurate periodic reports to the Court (see Zemlyansky Mem., Ex. B); provided written and oral instructions to monitoring personnel and translators (see Gov’t Mem., Exs. 2, 6); required all monitoring personnel and translators to read the relevant court orders and applications and posted those materials in the wiring room; and ensured the wiretapping was monitored by an AUSA. Thus, the Government has met its prima facie burden of compliance with the minimization requirements. Cf. Marroquin-Corzo,
2. Unreasonable Interception of Calls
The burden therefore shifts to Zemlyansky to demonstrate that “a substantial number of non-pertinent conversations [were] intercepted unreasonably.” Rajaratnam,
The Supreme Court has listed several nonexclusive factors that courts should assess in determining whether agents acted reasonably in minimizing intercepted communications: (1) the length of non-pertinent calls; (2) whether the non-pertinent calls were “one-time” calls; (3) the ambiguous nature of the conversations or pattern of calls; (4) whether the investigated conduct involved a widespread conspiracy; (5) the public or private nature of the target phone; and (6) the stage of the surveillance. Scott,
In this Circuit, there is a general rule that, in complex cases such as this one, the minimization requirement does not extend to calls under two minutes in length; stated differently, there is a strong presumption that the Government has not acted unreasonably by failing to suppress such calls. See United States v. Bynum,
However, while there is a strong presumption that calls under two minutes need not be minimized, officers may nevertheless be expected in certain circumstances to minimize in a shorter period of time.
The Government monitored 3,747 calls in this wiretap, and only a small fraction of the calls — short of one hun
Zemlyansky nonetheless argues that roughly twenty percent of the calls monitored were improperly minimized, including the majority of the calls between Zemlyansky and his wife; the majority of the calls between Zemlyansky and his family members; and calls between Zemlyansky and paramours and prostitutes.
The Court also agrees with the Government that the calls between Zemlyansky and his paramours were by and large properly minimized. The calls were made to nine different telephone numbers, and the calls to each number were generally too infrequent and too far apart to establish a pattern of innocence. Nor, generally, did thе subject matter of these calls immediately and definitively indicate their irrelevance to the case. Therefore, neither exception to the two minute rule is applicable to this group of calls.
More troubling is the 'Government’s monitoring of the calls between Zemlyansky and apparent prostitutes. While it is true that the 62 calls went to over 30 telephone numbers and to as many, if not more, different individuals, it is nonetheless the case that the private nature, as well as the irrelevance, of many of these calls should “have been apparent within seconds.” Goffer,
Despite the fact that the Government improperly failed to minimize a number of deeply private calls between Zemlyansky and prostitutes, the Government’s minimization, when viewed as a whole, was nonetheless not unreasonable. Accordingly, total suppression in this instance would be “drastic and excessive.” DePalma,
Accordingly, Zemlyansky’s motion to suppress the entire wiretap is denied. Accord Kazarian,
B. The Necessity of the Wiretap after the Sukhman Cooperation Agreement
Zemlyansky also argues that the monitoring of Zemlyansky’s phone after Robert Sukhman agreed to begin cooperating with the Government on July 13, 2011 was in violation of Title III. While “not contesting the Court’s wiretap authorization on [June] 28, 2011,” Zemlyansky contends that “the Court’s finding of continued ‘necessity’ on July 15, 2011 was erroneous because the [Government now had access to a cooperator intimately involved in the alleged criminal conduct.” (Zemlyansky Mem. at 37.)
“While Title III allows for wiretaps in limited circumstances,” Congress contemplated the courts playing an active role in preventing unwarranted electronic intrusions. United States v. Concepcion,
To the end, § 2518(1)(c) requires that each application for a wiretap contain “a full and complete statement as to whether or not other investigative procedures have been tried and failed or why they reasonably appear to be unlikely to succeed if tried or to be too dangerous.” It is the role of the reviewing judge to ensure this standard has been met, see § 2518(3)(c), “so that ‘wiretapping is not resorted to in situations where traditional investigative techniques would suffice to expose the crime.’” Concepcion,
The defendant bears the burden of proving that necessity for the wiretap was lacking. United States v. Magaddino,
On July 15, 2011, the Government sent a periodic report to Judge Jones, updating her on her June 28, 2011 Order authorizing the wiretap of, inter alia, Zemlyansky’s telephone. (Gov’t Mem., Ex. B at US001307-US001315.) The periodic report noted:
On July 13, 2011, SUKHMAN and an attorney representing SUKHMAN met with the Government and SUKHMAN agreed to cooperate. Based on SUKHMAN’s willingness to cooperate with the Government, on July 13, 2011, the FBI stopped monitoring TARGET CELLPHONE-2 [Sukhman’s phone].... The Government submits, however, the continued interception of wire communications occurring over the TARGET CELLPHONE-1 and TARGET CELLPHONE-3 is necessary to assist in revealing: (i) the nature, extent and methods of operation of the TARGET OFFENSES by the TARGET SUBJECTS; (ii) the identities and roles of the TARGET SUBJECTS, their accomplices, aiders and activities; (iii) the receipt and distribution of money involved in those activities; (iv) the locations and items, including telecommunications devices used in furtherance of those activities; (v) the existence and locations of records; (vi) the location and source of resources used to finance their illegal activities; and (vii) the location and disposition of the proceeds from those activities.
{Id. at US001314.)
The June 27, 2011 wiretap application (Gov’t Mem., Ex. 5 (“June 2011 App.”)), together with the June 15, 2011 period report, adequately supported Judge Jones’ finding that it was necessary to continue the wiretap despite Sukhman’s cooperation. At that point, Sukhman’s cooperation had just begun, and it was simply not possible to foresee to what fruits, if any,
The Court declines to second guess Judge Jones’s determination that the wiretap remained necessary even after Sukhman agreed to cooperate with the Government. Accordingly, Zemlyansky’s motion to suppress wiretap evidence is denied.
IV.Motions for Government Disclosure of Various Materials
Defendants Geris, Shapiro, and Danilovich have moved for an order requiring the Government to immediately disclose certain materials, including those mandated by Brady v. Maryland,
V. Motion for Severance
Shapiro has moved for severance pursuant to Rule 14 of the Federal Rules of Criminal Procedure. The Court agrees with the Government that this motion is premature. Shapiro is not part of the first cohort to be tried, and the exact configuration of the co-defendants with whom he will be tried is far from determined. Shapiro’s motion to sever is therefore denied as premature, without prejudice to renewal at a later stage in the proceedings. Accord United States v. Rodriguez, No. 08 Cr. 1311,
VI. Motions for a Bill of Particulars
Geris and Shapiro have each moved for a bill of particulars pursuant to Rule 7(f) of Criminal Procedure. Defendants are both
“Whether to grant a bill of particulars rests within the sound discretion of the district court.” United States v. Panza,
On October 5, 2012, Defendant Zayonts moved for a bill of particulars on behalf of all Defendants, seeking: “(1) specification of the victims of the frauds charged in the indictment; (2) specification of the false and fraudulent representations to the victims of the frauds charged in the indictment and the respect to which the statement is false.” (Dkt. No. 359 at 2.) This Court denied that motion, holding that “there is sufficient particularity in the Government’s submissions for the defendants to understand, for the purposes of preparing for trial, the alleged fraud.” (Tr. of Oral Arg., Dec. 5, 2012, at 67.) This conclusion holds true for Geris and Shapiro as well. The charges against Geris and Shapiro have been explained in sufficient detail via the Indictment and other documents filed in the course of this litigation. Geris and Shapiro’s motions for bills of particulars are therefore denied.
VII. Motions to Strike Surplusage from the Indictment
Shapiro and Danilovich have moved to strike surplusage in the Indictment, pursuant to Federal Rule of Criminal Procedure 7(d). The Court has not yet determined whether the Indictment will be provided or read to the jury. These motions are therefore denied as premature, without prejudice to renewal at a later stage in the proceedings. Accord United States v. Wilson,
VIII. Motion to Dismiss Count One as Duplicitous
Treysler moves to dismiss Count One of the Indictment as impermissibly duplicitous. For the reasons set forth below, that motion is denied.
“An indictment is impermissibly duplicitous where: 1) it combines two or more distinct crimes into one count in contravention of Fed.R.Crim.P. 8(a)’s requirement that there be ‘a separate count for each offense,’ and 2) the defendant is prejudiced thereby.” United States v. Sturdivant,
A conspiracy indictment presents “unique issues” in the duplicity analysis because “a single agreement may encompass multiple illegal objects.” In this Circuit “it is well established that ‘[t]he allegation in a single count of a conspiracy to commit several crimes is not duplicitous, for “[t]he conspiracy is the crime and that is one, however diverse its objects.” ’ ” ... [U]nder the law of this Circuit, “acts that could be charged as separate, counts of an indictment may instead be charged in a single count if those acts could be characterized as part of a single continuing scheme.”
United States v. Aracri,
If the Indictment sufficiently alleges a single conspiracy, the question whether one or several conspiracies exist is left to the jury. U.S. v. Rajaratnam,
Accordingly, Treysler’s motion to dismiss Count One is denied denied.
IX. Conclusion
For the foregoing reasons, the motion of Defendants Zaretskiy, Zayonts, and Kremerman to suppress evidence is GRANTED. Defendants’ other motions are DENIED.
The Clerk of the Court is directed to close the motions at Docket Numbers 433, 437, 446, 449, 451, 452, 457, 458, 463, 466, 470, and 472.
SO ORDERED.
Notes
. An evidentiary hearing on Defendant Michael Barukhin’s motion to suppress evidence (Dkt. No. 446) was held on May 2, 2013. That motion was denied for the reasons stated on the record on that date.
. It is true, as Defendants emphasize, that this representation made in the NF3 form goes only to "ownership,” and not to "operation” or "control” of the PC. The Government concedes, however, that the "misrepresentation of fraudulent incorporation” underlying its theory in this case "goes to the actual ownership of the medical clinics.” (See Gov’t Letter dated April 25, 2013, Dkt. No. 596.)
. Similarly, it is premature to decide at this stage whether the evidence at trial will warrant an instruction on finding fraud on the basis of a material omission (based on a duty to disclose) or a "half truth.” See, e.g., Autuori,
. Hereinafter, the Tri-State warrant and Attachment A shall simply be referred to as “the Tri-State warrant.”
. The Second Circuit has unequivocally rejected the argument that the particularity requirement should be relaxed when dealing with electronic information. See Rosa, 626 F.3d at 63 n. 2 (“We reject the Government's contention that all of the electronic equipment seized from Rosa’s apartment could be searched without a warrant because it was subject to later forfeiture. The Government's position that the entire contents of Rosa's computers and related storage media could be searched under the terms of this warrant leads to the evisceration of the Fourth Amendment’s requirement of an ex ante probable cause determination.” (citation omitted)); accord United States v. Comprehensive Drug Testing, Inc.,
. Courts have made quite clear that the all records exception is inapplicable where the company to be searched “maintained a legitimate business.” Dupree,
. The Government makes much of Paragraph 5(h), in which Agent Kelley makes the assertion, unmoored to any citation or concrete evidence, that "[i]n truth, the members of the scheme who operate the billing and collections entities actually control the clinics.” Even if Agent Kelley’s statement were true, the Court finds that it still would not trigger the all records exception, since probable cause to believe in actual control is not coextensive with probable cause to believe that a business is pervaded by fraud. A fraudulent scheme may include a business that devotes five percent of its work to the scheme and ninety-five percent to perfectly legitimate dealings. In any event, there are two other distinct and individually sufficient reasons to conclude that Paragraph 5(h) does not trigger the all records exception. First, this paragraph appears to reflect Kelley's own summary of the other allegations, rather than a distinct basis for probable cause, and as such the Court must examine the facts alleged in support of probable cause rather than a conclusory assertion layered on top of those facts. Second, to the extent that this paragraph is meant to provide probable cause for an all records search, the absence, of any supporting information from a CW or other investigatory efforts pointing either to pervasiveness or
. When multiple officers are involved in an illegal search, ''[i]t is necessary to consider the objective reasonableness, not only of the officers who eventually executed a warrant, but also of the officers who originally obtained it or who provided information material to the probable-cause determination.” Leon,
. The Court reserved judgment on whether the analysis would change if the warrant expressly incorporated the warrant by reference. See Groh,
. The Ninth Circuit has shed helpful light on the parameters of Herring:
Herring’s emphasis on an objective reasonableness standard is paramount here where the officers made a mistake of law, rather than a mistake of fact. In Herring, the police officers made a mistake of fact— whether an arrest warrant existed for the defendant. Here, the officers made a mistake of law — they did not realize that a seizure must last no longer than reasonably necessary for the police, acting with diligence, to obtain the warrant. Our precedent distinguishes between mistakes of fact and mistakes of law because mistakes of law can be deterred more readily than mistakes of fact.
U.S. v. Song Ja Cha,
. But see Craig M. Bradley, Is the Exclusionary Rule Dead?, 102 J. Crim. L. & Criminology 1, 18 (2012) (speculating that, due to personnel changes in the, mid-2000s, the Court may in the future decide to read Groh differently and depart from the Groh Court’s holding that police cannot prevail merely by demonstrating that they limited searches to what a fully incorporated warrant would have permitted — in short, "Groh is a dead Herring ”).
. It is also possible that another consideration influenced the outcome of Rosa: the fact that, at the time Blake conducted his search, governing Second Circuit law provided that, in at least some situations, an unincorporated and unattached affidavit could cure an unparticularized warrant. See Bianco,
. The Court held a suppression hearing on May 9, 2013 to ascertain certain objective facts about the Tri-State search that bear on its analysis of good faith under Rosa and Herring.
. Agent Kelley did stop by the Tri-State office for a short period during the beginning of the search. (See GX-7). However, Agent Naum could not offer any specifics about what role, if any, Agent Kelley played in the search during his brief visit to Tri-State. Further, though Agent Naum stated that he would have called Agent Kelley mid-search if the need arose, he does not recall making any such calls and does not recall that Agent Kelley — either in person or on the phone— played any role in shaping his team's execution of the warrant. (Supp. Tr. at 125:19— 126:12.) The Court therefore accords little weight tо these facts.
.This is not to say that doing so would have sufficed to create a good faith basis for the search. Rather, it may have contributed — if joined to other mitigating factors — to a finding of good faith.
.At the suppression hearing, the Government conceded that it has begun to search the electronic evidence. (Supp. Tr. at 153:15-17.) When asked by the Court if there were "evidence as to the good faith [of] those searches,” the Government replied, "Only the representations that we have made, that ... We have been searching them using the names of some of the target subjects, the names of the PCs that have come up in this case that are related to this entity....” (Id. at 153:18-22.) These unsworn statements of counsel do not constitute evidence sufficient for the Government to meet its burden of demonstrating good faith. See United States v. Washington, No. 12 Cr. 146,
. Again, the contrast between the situation here and the facts of Rosa is noteworthy. In Rosa, the Second Circuit noted that the affiant, Blake, personally seized and searched all electronic evidence.
. The Tri-State warrant was less obviously deficient than the warrant in Rosa, but Rosa did not purport to define the minimum required level of deficiency. The Tri-State war
. Though his subjective intent is irrelevant, Agent Naum's statements at the suppression hearing are illustrative of this concern. He candidly testified'that "I don't question if the [magistrate judge] made the appropriate decision,” adding in response to further questioning that he might do so only if a warrant were ‘‘so far out of the realm” and it "made absolutely no sense.” (Supp. Tr. at 47:18-48:2.)
. Because Defendants' motion is granted, the Court need not reach their argument in the alternative that evidence from the TriState electronics must be suppressed as a
. Other courts in this district have indicated that non-pertinent, non-minimized calls under two minutes may be per se reasonable. See, e.g., Kazarian,
.Zemlyansky also suggests that an unspecified number of calls concerning gambling were inappropriately minimized. This is a dubious claim, considering the fact that the “operation of illegal gambling business” was listed as a target offense in each wiretap order. In any event, Zemlyansky has failed to specify which calls in particular were inappropriately monitored, which is fatal to his claim. See Kazarian,
. Some of the calls highlighted by Zemlyansky were non-pertinent and were not minimized within two minutes. However, those calls have been accounted for in the Court’s general analysis of calls violating the Bynum rule, supra. Here, the Court solely considers whether certain types of calls should have been minimized before the two minute mark.
. Additionally, this Court rejects Defendant’s contention that the privileged nature of the phone calls between spouses per se requires immediate minimization. As Judge Gleeson has noted,
Courts frequently simply assume that privileged communications are ‘not otherwise subject to interception’ and that their interception must therefore be minimized pursuant to § 2518(5), but the statute does not support that assumption. Communications undoubtedly occur that are both pertinent to the crimes enumerated in an order issued pursuant to 18 U.S.C. § 2518 and privileged under some other body of law, and nothing in Title III prohibits the interception of such communications based on their privileged status. Indeed, the statute expressly contemplates that privileged communications will be intercepted, and provides that such communications 'intercepted in accordance with, or in violation of, the provisions of this chapter’ shall not lose their privileged character. 18 U.S.C. § 2517(4) (emphasis added). This provision supports the inference that pertinent but privileged communications may properly be intercepted, and nothing in the statute provides otherwise.
United States v. Simels, No. 08 Cr. 640(JG),
. Nor is the Court persuaded by the Government’s contention at oral argument that the officers might have surmised that Zemlyansky was violating the Mann Act.
. It is unnecessary for the Court to suppress the calls between Zemlyansky and prostitutes, as the Government has already represented to the Court that they will not be used at trial. The Court will hold the Government to that representation.
. In its opposition brief, the Government represented that it would comply with its obligations under Rule 16 by the end of March 2013. (Gov't Mem. at 95.) The Court therefore assumes that Shapiro's motion for" Rule 16 materials is moot.