Monday, January 13, 2014

The Computers, the Motion to Suppress and the 180 Days

After he was charged, in an indictment returned by a federal grand jury, with “conspiracy to commit securities fraud, wire fraud, mail fraud, and interstate transportation of stolen property”, Douglas L. Swenson filed a “Motion to Suppress Evidence Obtained From Illegally Executed Search Warrant”.  U.S. v. Swenson, 2014 WL 66469 (U.S. District Court for the District of Idaho 2014).

The only information I could find about the facts that led to the indictment came from a press release issued by the U.S. Attorney for the District of Idaho, which says Swenson and the other defendants

publicly represented that [the DBSI Group of Companies (DBSI)] was a profitable company  and had a net worth in excess of $105 million. The indictment further alleges that the defendants knew and believed that, contrary to the disclosures made to investors and their own DBSI employees involved with the marketing and selling of DBSI investments, DBSI’s real estate and non-real estate business activities were universally unprofitable; DBSI’s much-touted Master Lease investment product was losing approximately $3 million dollars a month; and DBSI was relying on new investor funds, including investor money that DBSI represented would only be used in particular circumstances, to continue operations and pay returns to other DBSI investors.

The indictment alleges that the conspiracy continued until DBSI filed for bankruptcy in November 2008. The 89 count Superseding Indictment also charges all of the defendants with 44 counts of securities fraud, 34 counts of wire fraud, six counts of interstate transportation of stolen property taken by fraud, and two counts of bank fraud. The defendants are also charged with conspiracy to commit money laundering.

This FBI press release provides more information about the facts in the case.

After being charged, Swenson filed several motions seeking to suppress evidence and otherwise limit the scope of the prosecution.  The motion noted above sought asked the U.S. District Court Judge who has the case to suppress certain evidence:

Pursuant to a valid search warrant, Government agents searched Swenson's residence on September 9, 2010. Agents seized several items, including electronic evidence consisting of two computers, an external hard drive, and an image of another computer. Swenson asks the Court to suppress all electronic evidence, as well as all other evidence seized from the residence.

U.S. v. Swenson, supra.

To understand the basis of Swenson’s motion, it is helpful to understand what was involved in issuing the warrant that authorized the seizure of the computers and other digital devices.  According to Swenson’s Motion to Suppress Evidence Obtained from Illegally Executed Search Warrant,

[m]ore than three years ago the government applied for a warrant to search defendant Douglas Swenson's home. The government wanted to seize not only Mr. Swenson's personal papers and documents, it wanted to take his computers. 

To do so, Special Agent Keith Tippets of the Internal Revenue Service's Criminal Investigations Division (`IRS-CID’), who submitted a sworn affidavit to obtain the warrant, promised Magistrate Judge Candy Dale that electronic information at Mr. Swenson's home would only be seized under certain circumstances and would only be searched pursuant to a strict protocol limiting the information to which investigating agents would have access.

Knowing that the government would not be permitted to hold the electronic material indefinitely, Agent Tippets also promised that his review of the material would be conducted promptly and in no event later than 180 days after execution of the warrant.

Based on these promises in the affidavit, Magistrate Judge Dale issued a search warrant directing that electronic material seized pursuant to the search warrant be reviewed according to the protocol within six months of its issuance, or by March 3, 2011. By that date, according to the search warrant's express terms, information covered by the warrant was required to be made available to investigating agents; the remaining material not covered by the search warrant would be returned to Douglas Swenson or otherwise not be made unavailable to investigating agents.

Armed with the search warrant, the IRS-CID entered Doug Swenson's home and seized a substantial amount of electronic material. However, IRS-CID, having used a warrant to enter a person's home, and having taken a citizen's private material, has not even bothered to look at any of that material. Indeed, even as of the date of this motion, three years after issuance of the warrant, and after two indictments have been returned, nobody from the government has bothered to review the material.

Motion to Suppress Evidence Obtained from Illegally Executed Search Warrant, U.S. v. Swenson, 2013 WL 6798456 (November 20, 2013).

According to the Motion to Suppress, the warrant was executed

at Mr. Swenson's home on September 9, 2010. The search lasted several hours. Ultimately, paper documents and devices containing electronically stored information were seized. The electronically stored information was contained on two computer laptops, an external hard drive, and an image of a laptop. 

Motion to Suppress, supra.

The Motion to Suppress also explains that during

discovery proceedings in this case, counsel for Mr. Swenson contacted the government, requesting a meeting on November 14, 2013. . . .

 Counsel sought this meeting for the purpose of reviewing the materials seized during the search of Mr. Swenson's residence, including tangible documents, hardware, and electronic information. . . . Additionally, counsel sought to ensure that the government had complied with the warrant's procedures applying to electronically stored information. . . . To this end, counsel requested the opportunity to question someone knowledgeable about the electronic searches at the November 14thmeeting. . . .

 Assistant United States Attorney Mark Williams responded to this request:

`It is our understanding that we have not reached an agreement on how to deal with all filter issues. As such, we have not reviewed the computer(s) seized from Doug's residence yet. On November 14th we plan to discuss with you filter procedures so we may search the computers in the near future.’ . . .

Subsequently, Mr. Swenson's counsel asked whether any extensions of the deadline set in the search warrant to review the electronic material had been obtained from the Court. To date, the government has not responded.

Motion to Suppress, supra. As noted above, the Motion to Suppress was filed on November 20, 2013.

In his motion, Swenson argued that under Rule 41(e)(2)(B) of the Federal Rules of Criminal Procedure, a search warrant

`may authorize the seizure of electronic storage media or the seizure or copying of electronically stored information.’ This provision further provides that `[u]nless otherwise specified, the warrant authorizes a later review of the media or information consistent with the warrant.’ Id. (emphasis added).

Here, the warrant specified that the later review would be completed within 180 days. Accordingly, the government's proposal to search at the present time -- long after the 180 day period has expired -- violates Rule 41. Violations of Rule 41 fall into two categories: `fundamental’ violations and `technical’ violations. See U.S. v. Ritter, 752 F.2d 435 (U.S. Court of Appeals for the 9th Circuit 1985).

A `fundamental’ violation is one which is `unconstitutional under traditional 4th Amendment standards.” U.S. v. Johns, 948 F.2d 599 (9th Cir. 1991). A fundamental violation results in automatic suppression of the evidence produced. U.S. v. Johns, supra (citing U.S. v. Luk, 859 F.2d 667 (U.S. Court of Appeals for the 9th Circuit 1988)). By contrast, technical violations of Rule 41 require suppression only where there is prejudice or `evidence of intentional and deliberate disregard of a provision in the rule.’ U.S. v. Stefanson, 648 F.2d 1231 (U.S. Court of Appeals for the 9th Circuit 1981) (quoting U.S. v. Radlick, 581 F.2d 225 (U.S. Court of Appeals for the 9th Circuit 1978)).

Because the violation at issue here rises to a constitutional error, it is `fundamental’ and requires automatic suppression. Because this fundamental error involves `flagrant disregard’ for the terms of the warrant, all the fruits of the September 9th, 2010 search must be suppressed.

Motion to Suppress, supra (emphasis in the original).

The federal judge who has the case began the opinion in which he rules on Swenson’s Motion to Suppress by noting that

[t]he Government concedes that the Court should suppress the electronic evidence because the Government did not search the computers within the 180–day time limit set in the search warrant. The Court will do so. Thus, the only issue remaining is whether the Court should suppress the rest of the evidence seized from Swenson's residence.

U.S. v. Swenson, supra.

The judge began his analysis of that issue by explaining that the 4th Amendment

protects `[t]he right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures.’ U.S. Constitution amendment IV. Except under exceptions not relevant here, evidence seized without a valid search warrant is generally excluded from trial. Moreover, evidence seized beyond the terms of a valid search warrant also violates the 4th Amendment, and is likewise generally excluded from trial.

However, when the Government seizes evidence beyond the scope of a valid search warrant, the Court need not suppress evidence which was not tainted by the violation, except where there is a `flagrant disregard for the terms of the warrant.’ U.S. v. Sedaghaty, 728 F.3d 885 (U.S. Court of Appeals for the 9th Circuit 2013). . . . The Court should only suppress evidence within the scope of the warrant `when the violations of the warrant's requirements are so extreme that the search is essentially transformed into an impermissible general search.’ U.S. v. Sedaghaty, supra.

U.S. v. Swenson, supra.

In seeking suppression, Swenson argued that

the Government transformed the search into a general search by retaining the electronic material for an unreasonable amount of time, failing to determine whether the electronic material contained any seizable material, and never returning it to Swenson after the 180 days expired.

U.S. v. Swenson, supra.  As this article explains, the 4th Amendment was adopted to prohibit the use of “general warrants,” which allowed British officers to conduct “general searches.” Basically a general warrant was a blank check that let an officer search anywhere for anything based on his personal inclination; the 4th Amendment was meant to protect citizens by requiring that search warrants be based on probable cause, i.e., specific reasons to believe evidence of a crime would be found in a given place.

Here, the judge did not buy Swenson’s general warrant/general search argument:

After the Government seized the evidence from Swenson's home, Swenson's counsel and Government attorneys corresponded about a protocol for the Government to review the electronic material without observing potential attorney/client privileged material on the computers. . . .  The negotiations failed. The Government never searched the computers, and ultimately decided that it could not do so based upon the 180–day time limitation in the search warrant.

One could argue that once the Government realized it would not reach an agreement with Swenson on how to search the computers without invading the attorney/client privilege, it should have asked the Court to intervene or returned the computers to Swenson immediately. In fact, this may have been the more prudent avenue for the Government. Instead, the Government retained the computers without searching them for approximately three years.

However, the Government did make the electronic material on the computers available to Swenson. Moreover, Swenson did not ask the Court to order the Government to return the computers. Thus, there is no prejudice to Swenson regarding any evidence on the computers—Swenson has had an opportunity to review any evidence on the computers, and the Government has not.

U.S. v. Swenson, supra. 

The judge therefore held that the circumstances at issue here did not involve

a `flagrant disregard for the terms of the warrant.’  U.S. v. Sedaghaty, supra. This is not a case where the Government violated the warrant's requirements in such an extreme way that the search was transformed into an impermissible general search.

In fact, in the end, the Government did less of a search than allowed by the search warrant, and never viewed the information on the computers. U.S. v. Sedaghaty, supra.

Accordingly, the Court will deny the motion to suppress evidence other than the electronic evidence. As mentioned above, the Court will grant the motion to suppress the electronic evidence, and if it has not already done so, the Government shall immediately return the electronic evidence to Swenson.

U.S. v. Swenson, supra. 

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