Wednesday, July 11, 2012

Fraud, Discovery and the Motion for Return of Property


After being indicted for mail fraud, wire fraud and conspiracy to commit mail and/or wire fraud in violation of 18 U.S. Code §1349, Barrett Byron Staton filed a motion for return of property under Rule 41(g) of the Federal Rules of Criminal Procedure.  U.S. v. Staton, et al., Indictment, 2011 WL 8184554 (U.S. District Court for theEastern District of Pennsylvania 2011). 

As I’ve explained in other posts, when someone files a Rule 41(g) motion, they are not asking to have evidence suppressed, exactly.  They are, instead, asking the court to return their property to them because it was, or so they argue, seized improperly.  As I’ve also noted, if the court grants the motion, it must return the property to its owner.

While we’re not directly concerned with the facts that led to the filing of charges against Staton and his co-defendants, Matthew Staton and William Haken, Jr., I think it’s useful to know how the prosecution arose:

Essentially, (collectively, `Defendants), would use various office copier brokerage businesses (`Businesses’) to entice small businesses and non-profit organizations (`Customers’) into executing new office copier leases by making attractive promises. Defendants did not fulfill these promises.

They were supposed to use the payments received from the financing companies as a result of the new leases for the Customers' benefit (e.g., to pay off their office copier leases). However, the payments were instead used for personal expenses. When Defendants became overwhelmed with complaints from the Customers, they would shut down the Business, only to reopen it under a different company name, and at times, under a nominee owner. Defendant Barrett Byron Staton also used the Businesses to obtain financing for personal purchases that included luxury vehicles. . . .

U.S. v. Staton, supra.  (From here on, “Staton” refers to Barrett Byron Staton.)

During the investigation, FBI agents and other officers executed a search warrant at Staton’s home, where they seized a computer, and at a self-storage unit, from which they seized “[c]ompact disks” and “`various other documents’”.  U.S. v. Staton, supra.  Several years later (the investigation apparently was in process from 2004 to 2008), they executed another warrant at Staton’s home and seized

(1) a Grey Averatec Laptop, 3260 series; (2) a Dell CPU, Serial No. X–10–60256–00045–599–844–596; (3) a Dell CTU, Serial No. CP 384–00144–348–171–542; (4) a Dell CPU, Serial No. BSB 481–J4BG1C6H6C6–KPUFR–FCR4F–2MXFB; (5) `Various CD's’; and (6) a `Number of USB units.’

U.S. v. Staton, supra. 

FBI computer experts examined the “computer hard drives and other electronic devices” that were seized during the investigation and found they “documents, including internal office memoranda concerning, and business records showing, fraudulent deals and e-mails.”  U.S. v. Staton, supra. Since the prosecution intends to use these documents at Staton’s trial, they are a target of “discovery,” i.e., the process by which both sides can get access to evidence the other side intends to use at trial. 

After Staton was indicted, the prosecution invited his lawyer to the U.S. Attorney's Office in Wilmington, Delaware to review the evidence. U.S. v. Staton, supra. In March of 2012, Staton went to the office to review the evidence.  U.S. v. Staton, supra. He and his lawyer “`were shown the computer hard drives and other electronic media devices’” noted above. U.S. v. Staton, supra. At the end of the review, the prosecution “offered to copy any paper documents or computer data” they asked for. U.S. v. Staton, supra.

On April 26, 2012, Staton asked for an “imaged copy of the seized materials” and on April 27, the prosecution told Staton’s lawyer that “if he wanted an imaged hard drive containing data of the material seized during the 2004 and 2008 searches, he would have to send the Government a hard drive.” U.S. v. Staton, supra. 

On May 2, Staton’s lawyer provided two hard drives. U.S. v. Staton, supra. On May 10, the prosecution gave Staton’s lawyer “imaged hard drives containing the data of the items seized during the 2004 and 2008 searches.”  U.S. v. Staton, supra.  It also gave him “a copy of the word search used by the Government's computer expert.”  U.S. v. Staton, supra.

On May 11, Staton’s lawyer “informed the Government that he and [Staton] could not access the data on these imaged hard drives.” U.S. v. Staton, supra. His email said “the imaged hard drives did not have accessible materials on them and that while `[t]here are files, [ ] you can't get into the files. There is also gibberish which I don't understand.’”  U.S. v. Staton, supra. 

The lawyer offered to bring the prosecution one of the hard drives for inspection, noting that he was sending the other hard drive to Staton’s expert so he could  Counsel noted that he was forwarding the other hard drive to Defendant's expert so he could “have access and physical custody over it.” U.S. v. Staton, supra. Staton’s lawyer also asked for “`[a]ny guidance [the Government] and [its] technical people could give us.’”  U.S. v. Staton, supra.

On May 17, the Court held a status conference on this issue. U.S. v. Staton, supra. After the conference, the Government gave Staton “three manuals produced by the Department of Justice to show [him] and his computer experts how to download and use free forensic software available on the Internet.” U.S. v. Staton, supra.Id.) The software would let him “access . . . the Internet.” U.S. v. Staton, supra.Id.) It would also allow him “access to the data stored on the imaged hard drives.”  U.S. v. Staton, supra.

Since Staton’s lawyer claimed “he still could not access the data on the imaged hard drives”, the prosecution, on May 24, gave him “a Government-issued laptop, pre-loaded with the free forensic software, that permitted [Staton] to view the data on the imaged hard drives.” U.S. v. Staton, supra.  It also told the lawyer that “he would still need to download some software programs, such as Microsoft Word or Excel, in order to view the data.”  U.S. v. Staton, supra. 

Staton’s lawyer “contacted several information technology professionals to determine the availability and accessibility of such software programs”, but Staton claimed that “even if he were to obtain these programs, `there is no guarantee at this point in time that the programs obtained will access all the files on the computers if all of the appropriate programs are not obtained.’” U.S. v. Staton, supra.   He therefore filed his Rule 41(g) motion for return of property “to `avoid that exercise’ of obtaining the necessary software.”  U.S. v. Staton, supra.  

On June 4, in response to the Motion, the prosecution met with Staton’s lawyer and installed “Microsoft Office software (e.g., Microsoft Word, Excel and Powerpoint) onto the Government-issued laptop.” U.S. v. Staton, supra. The prosecution “confirmed that the forensic software, in conjunction with the Microsoft Office programs, properly opened the data on the imaged hard drives.” U.S. v. Staton, supra. 

The prosecution could not access “the Peachtree data files, since it did not possess the software required for opening those files.”  U.S. v. Staton, supra.  (The opinion notes that these files “related to an accounting software program” Staton used during the time frame at issue in the indictment. U.S. v. Staton, supra.) The prosecution did install “trial Peachtreee software on the laptop”, but Staton “still could not access the Peachtree data files on the imaged hard drives.”  U.S. v. Staton, supra.  

On June 6, Staton’s lawyer told the prosecution they had downloaded the “Peachtree data files onto a different computer”, but the “free trial . . . installed on the Government-issued laptop did not allow for access to those files.” U.S. v. Staton, supra. In his email, the lawyer noted that the “free trial . . . does not authorize to go back into pre-existing Peachtree documents.” U.S. v. Staton, supra.   

On June 7, the prosecution “bought new software that permitted access to the Peachtree files.”  U.S. v. Staton, supra.  It notified Staton’s lawyer and offered him two options: (i) come to the U.S. Attorney's Office in Wilmington “as soon as practical to inspect the Peachtree files”; or (ii) buy the same software the prosecution bought and let the prosecution install it onto “Staton’s Government-issued laptop to ensure he had access to this data.” U.S. v. Staton, supra. 

The “estimated cost” of the software was $569.00. U.S. v. Staton, supra.  On June 8, Staton indicated that his lawyer would “inspect the Peachtree files on June 9  at the U.S. Attorney's Office.” U.S. v. Staton, supra.  

After outlining all this, the district court judge who has the case began his ruling on Staton’s motion for return of property.  U.S. v. Staton, supra.  He noted that Staton made several arguments for why the property should be returned:  (i) “none of the seized items are contraband” (i.e., things it is illegal to possess, like drugs or child pornography); (ii) returning the property will let Staton review the data without the need for “government intervention” or to hire “outside personnel” to access the data; (iii) the prosecution “no longer needs . . these items” since it has examined them and copies the files it needs; and (iv) the prosecution has “had “`more than a reasonable time within which to derive from the items seized that which it sought.’”  U.S. v. Staton, supra.  

The prosecution, in turn, argued that (i) it has provided Staton with the original imaged hard drives plus “`a laptop computer, forensic software to review the computer data, access to other specialized software programs, and personalized instruction from government personnel on how to operate these software programs’”; and (ii) “has a reasonable need” to retain the property because the items contain evidence . . . for its prosecution in this case, and it needs to `preserve the integrity of the computer data contained inside these items.’” U.S. v. Staton, supra.  

The judge found that Staton had “not met his burden of proving why he is entitled to the return of his property at this juncture.”  U.S. v. Staton, supra.  He noted that since the prosecution “intends to use this evidence to prove its case at trial, its need for these materials remains ongoing in this case and the Motion will be denied.”  U.S. v. Staton, supra.  The judge also explained that if the prosecution were ordered to return the

materials it seized in 2004 and 2008 prior to trial, [Staon] could destroy the data contained therein or create new data, then claim bad faith retention by the Government. Moreover, by maintaining custody and control over the materials that were seized in 2004 and 2008, the Government can ensure that the chain of custody for the data contained in these materials is preserved for trial.

U.S. v. Staton, supra.  

The judge also found that, based on the facts outlined above, the prosecution had “met, and exceeded, its obligations to allow [Staton] access to the materials.”  U.S. v. Staton, supra.  He explained that this is not a case in which the prosecution has

hindered [Staton’s] access to the materials . . . or has only allowed access to the materials at the eve of trial. The facts clearly point to the contrary. The Government has made these materials available to the defense for at least the last five months. It is [Staton] who has not taken advantage of the Government's offers of access to these materials. 

Accordingly, the circumstances in this case cannot support a grant of a Motion for Return of Property.

U.S. v. Staton, supra.  

(In a footnote, the judge says Staton “presently lives in Florida” and claims “family obligations prevented him from coming to Wilmington to view” the materials with his lawyer.  U.S. v. Staton, supra.)

So, as must be obvious, the judge denied Staton’s motion for return of property. U.S. v. Staton, supra.  
  

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