Wednesday, May 21, 2014

The Proffer Agreement, the 5th Amendment and the Cloned Files

This post examines a U.S. District Court Judge’s analysis of a rather unusual motion to suppress; we will get back to the nature of the motion in a bit. First, I need to outline what happened to cause the filing of the motion to suppress. U.S. v. Scott, 2014 WL 1410261 (U.S. District Court for the District of Massachusetts 2014).
In February of 2009, “Michael David Scott was informed that he was the target of a federal investigation into alleged mortgage lending fraud.”  U.S. v. Scott, supra.  The judge notes that the the indictment against Scott charges him with recruiting straw buyers as purported purchasers of condominium buildings and with preparing false mortgage applications and closing documents to procure mortgage loan proceeds.”  U.S. v. Scott, supra.  You can read more about the facts in the case and the charges in the news stories you can find here and here.
The judge then explains that on
February 23, 2009, Scott and his then-counsel William Keefe were invited by the U.S. Attorney's Office in Boston to enter into a proffer agreement. The proffer agreement was a standard form use immunity agreement drafted by the government. See Kastigar v. U.S., 406U.S. 441 (1972). It stated, insofar as is relevant here,

`1. No statements made or other information provided by Michael Scott, will be used by the United States Attorney directly against him, except for purposes of cross-examination and/or impeachment. . . .’

`2. The government may make derivative use of, or may pursue any investigative leads suggested by, any statements made or other information provided by Michael Scott in the course of the proffer. Any evidence directly or indirectly derived from the proffer may be used against him and others in any criminal case or other proceeding.’
U.S. v. Scott, supra.  For more on proffer agreements, check out this article.
Three days later, Scott and Keefre met with prosecutors in a second proffer session:
During that meeting, Scott agreed to permit government agents to access and copy the hard drives of his server and office computers, which he admitted contained records relevant to the government's investigation. After several subsequent meetings, Assistant U.S. Attorney Victor Wild emailed attorney Keefe on April 23, 2009, asking that Scott sign a consent-to-search form prior to the records being examined.

On May 15, 2009, two FBI special agents and two government computer technicians met with Scott at his office. Scott was presented with, and signed, a FBI consent-to-search form authorizing the government to make forensic images of the storage drives on Scott's Compaq Presario desktop computer and his Dell PowerEdge server. While the technicians imaged the computer and server, the FBI agents interviewed Scott further. Although Keefe had authorized the May 15th meeting with his client, he chose not to be present.

In total, Scott met with representatives of the government eighteen times between February and December of 2009 and, during that period, provided the government with some 800 documents. 
U.S. v. Scott, supra.  I could not find a sample of the FBI’s FD-26 consent to search form online, but you can download a similar form, used for electronic evidence, here.
In 2009, Scott filed a voluntary petition for bankruptcy and in January of 2010 he met with the “Trustee for the United States, the Trustee's counsel, and the Trustee's accounting firm, Verdolino & Lowey (V & L).”  U.S. v. Scott, supra.  Scott “provided V & L with his Dell server, his IBM laptop computer, and 29 boxes of business records. V & L imaged the server and the computer and returned them to Scott.” U.S. v. Scott, supra.  
In March of 2010, the Trustee told the FBI and U.S. Attorney’s Office “of his suspicion that Scott was attempting to perpetrate a bankruptcy fraud.”  U.S. v. Scott, supra.  In July of 2010, the Trustee’s Office “provided the U.S. Attorney's Office with a list of files found on the V & L copies of Scott's server and laptop drives” and “a two-page summary of V & L's `preliminary observations’ about the contents of the files.”  U.S. v. Scott, supra.  
Some eighteen months later, on February 17, 2012, the Trustee advised [Assistant U.S. Attorney] Wild that he had tentatively agreed to dismiss Scott's bankruptcy case, which he believed would obligate him to return the computer images and paper documents to Scott. A week later, the U.S. Attorney's Office requested that the Trustee provide it with the V & L computer images and the 29 boxes of paper records.

On March 14th, 2012, the Trustee dismissed Scott's bankruptcy petition. He then advised Assistant U.S. Attorney Wild that he was faced with conflicting legal obligations and requested that the government issue a subpoena for Scott's records. Between March 15 and March 20, 2012, the Trustee furnished the U.S. Attorney's Office with detailed descriptions of the computer and server images and the paper records.

On March 21, 2012, an FBI Special Agent submitted an affidavit in support of a search warrant to seize the V & L imaged copies of Scott's server and laptop, as well as the paper records being held at V & L's office. The affidavit relied in large part on data obtained from the FBI's review of Scott's server that had been imaged at his office on May 15, 2009. A Magistrate Judge issued the warrant and the government executed it the following day.
U.S. v. Scott, supra.  
Scott then moved to suppress the information the government obtained
directly from his desktop computer and server, as well as the material seized from V & L's office, on the grounds that the use of this evidence against him would contravene the terms of the proffer agreement and violate his rights under the 5th Amendment.

Scott also alleges that the Trustee's retention of the material after the dismissal of his bankruptcy petition constituted an unlawful governmental seizure. The government in opposition asserts that Scott, by signing the FBI consent-to-search form, waived the protections of the proffer agreement and, even if he did not, the inclusion of the data learned from the search in the application for the March 22, 2012 search warrant was a permitted `derivative use.’

With regard to Scott's 4th Amendment claim, the government maintains that Scott had no expectation of privacy in the cloned files as they had been voluntarily produced to the Trustee, and that in any event, the Trustee was not acting as an agent of the prosecution.
U.S. v. Scott, supra.  
In analyzing the arguments for both sides, the judge noted, first, that the prosecution argued that the FBI consent to search form Scott signed
exempted the data obtained from his desktop computer and server from the proffer agreement's assurance that `[n]o statements made or other information provided by Michael Scott’ would be used directly against him. This contention rests on the rote acknowledgment in the preprinted consent form that the signee is `giv[ing] permission for this search [ ] freely and voluntarily [ ] and not as the result of threats or promises of any kind.’ Because of Scott's abjuration of any “promise,” the government argues that the subsequently executed consent form trumps the guarantees of the proffer agreement.
U.S. v. Scott, supra.  
The judge then explained that proffer agreements are construed under
contract-law principles and, as in the case of an ordinary contract, the language of the agreement defines the rights and obligations of the parties. . . . Where that language is subject to conflicting interpretations, it is the intent of the parties in forming the agreement that controls. . . . There is . . . a significant caveat -- `[u]nlike the normal commercial contract, it is due process that requires that the government adhere to the terms of any immunity agreement it makes.’ Affiliated FM Ins. Co. v. Constitution Reinsurance Corp., 416 Mass. 839 (Massachusetts Supreme Court 1994) (quoting U.S. v. Pelletier, 898 F.2d 297 (U.S.Court of Appeals for the 2d Circuit 1990)). . . . 

As a result, a court's regard for a defendant's bargained-for protections is `glossed with a concern that the defendant's consent to appear at a proffer session should not become a lever that can be used to uproot his right to fundamental fairness under the Due Process Clause.’ Affiliated FM Ins. Co. v. Constitution Reinsurance Corp., supra. Moreover, given its overwhelming bargaining advantage, any ambiguity in the agreement is construed against the government. Affiliated FM Ins. Co. v. Constitution Reinsurance Corp., supra.
U.S. v. Scott, supra.  
The judge then found that in this case, the prosecutors
far from squaring the corners, lopped them off at their edges. The May 15, 2009 meeting at which the government imaged Scott's computers was the eighth of eighteen serial proffer sessions in which Scott participated. The government does not dispute that it never explained to Scott's attorney, nor did it warn Scott before he signed it, that the consent-to-search form was intended to operate as a waiver or modification of the proffer agreement.

It strains credulity to believe the government's position that the proffer agreement was amended by the consent-to-search form is anything but a creative after-the-fact invention. Nor would it be reasonable to suppose that Scott, who at the time did not have counsel present, would have understood that he was giving up the protections of the government's immunity offer.

This is doubly so when considered in the light of Scott's (and his lawyer's) participation in ten subsequent proffer sessions. As Scott's new counsel concisely puts it, `[n]othing in the proffer agreement suggests that [ ] Scott's bargained-for safeguards would stand or fall depending on the manner in which he provided information to the government, much less that they could be utterly lost if he signed the wrong form.’

U.S. v. Scott, supra.  
He also pointed out that the prosecution’s
reliance on U.S. v. Merz, 2009 WL 1183771 (U.S. District Court for the Eastern District of Pennsylvania 2009), is misplaced. The Merz court permitted additional charges to be brought against a defendant based on information obtained from the government's assumption of [his] online identity on an internet message board, the permission for which the defendant had given during a proffer session pursuant to a signed consent form.

In Merz, however, the government and the defendant agreed that the information gained from exploiting [his] identity constituted derivative evidence admissible under the proffer agreement. The issue before the Merz court was whether the defendant was entitled to equitable legal immunity, an issue that hinged on whether the government breached its duty of good faith in failing to honor a promise of leniency. . . .

The question here is not whether the government failed to pursue leniency for Scott, but whether the government effectively duped Scott into waiving the guarantee that evidence he provided would not be used directly against him.

U.S. v. Scott, supra.  
The judge then noted that the prosecution’s “final claim” was that whether the
whether have obtained a warrant for the May 15, 2009 search without relying on Scott's signing of the consent form. Even were this true, the due process inquiry is `not concerned with what the government might have done but, rather, with what the government did.’ U.S. v. Melvin, 730 F.3d 29 (U.S. Court of Appeals for the 1st Circuit 2013).

The government did not obtain a warrant for the electronic devices in Scott's possession, but instead “relied on its (mistaken) interpretation of the proffer agreement. Much as it might like to do so, it cannot reinvent that agreement now.” U.S. v. Melvin, supra. It follows that the information obtained from Scott's server and desktop computer as a result of the search conducted pursuant to the May 15, 2009 consent form may not be used directly against Scott at trial.

U.S. v. Scott, supra.  
The judge then took up, and rejected, the government’s argument that the use of the
Information provided by Scott to support the application for the March 22, 2012 search warrant constituted a permissible `derivative use’ under the terms of the proffer agreement. Essential to this argument is the meaning of the term `derivative’. . . . A thing derivative is `[s]omething derived; a thing flowing, proceeding, or originating from another.’ The New Shorter Oxford English Dictionary, 641 (1993).

In this instance, the government relied on data from the server that Scott had provided to obtain a warrant to seize the exact same data. It is conceptually impossible for a thing to be derived from its identical self. If the right to make derivative use of proffered evidence means that an offer of immunity can be overcome by simply making a copy of the thing proffered, a defendant is left bare of protection for anything but the verbatim use of his statements at trial, thus rendering meaningless the protection extended in the agreement to `other information provided.’

U.S. v. Scott, supra.  
The judge then addressed the government’s related argument that what it
may have lost under the 5th Amendment, it can reclaim under the 4th Amendment. If this were strictlya 4th Amendment suppression case, the government would certainly be right. When Scott filed a petition for voluntary bankruptcy and turned over the required records of the estate to the Trustee, including the server and hard drives copied by V & L, he surrendered any reasonable expectation he might have had in their contents. `It is well settled that when an individual reveals private information to another, he assumes the risk that his confidant may reveal that information to the authorities, and if that occurs, the 4th Amendment does not prohibit the governmental use of that information.’ U.S. v. Jacobsen, 466 U.S. 109 (1984). . . .

Scott points to no authority supporting his assertion that the Bankruptcy Code (assuming that it could trump the Fourth Amendment) bestows a guarantee of privacy in voluntarily disclosed records. . . .

U.S. v. Scott, supra.  
The judge then posed a rhetorical question, i.e.,
[w]hy is it then that the information the government received from Scott during his proffer, even though barred from any direct use at trial because of the 5th Amendment, cannot be used as the fruits of a lawful 4th Amendment seizure?

The answer lies in the core guarantees of the Amendments themselves. Unlike the 5th Amendment exclusionary rule, which is universal and applies to any compelled statement or incriminating act, such as one given under an offer of immunity, the 4th Amendment exclusionary rule is `a judicially created remedy designed to safeguard 4th Amendment rights generally through its deterrent effect, rather than a personal constitutional right of the party aggrieved.’ United States v. Calandra, 414 U.S. 338 (1974). Where “‘the exclusionary rule does not result in appreciable deterrence, then, clearly, its use . . . is unwarranted.’” Arizona v. Evans, 514 U.S. 1 (1995) (quoting U.S. v. Janis, 428 U.S. 433 (1976)).

Because the 5th Amendment enshrines a right that is personal to a defendant, its exclusionary rule sweeps more broadly than does that of the 4th Amendment and it does not admit of exceptions. It is true that 5th Amendment does not in all circumstances forbid the government from exploiting derivative evidence discovered as the result of a 5h Amendment violation. . . . Here, however, the government in a sense created its own dilemma by assuring Scott that it would not use against him at trial any statement that he gave or any other information that he provided. Having platted the corners, it was for the government to turn them squarely. It did not.

U.S. v. Scott, supra (emphasis in the original).
The judge therefore “allowed” Scott’s “motion to suppress the cloned files imaged after the execution of the consent-to-search form” and his “motion to suppress the cloned files seized pursuant to the search warrant of March 22, 2012”, which means he won.  U.S. v. Scott, supra

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