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    589 motiontosupress 589 motiontosupress Document Transcript

    • Case 4:09-cr-00342 Document 589 Filed in TXSD on 01/06/12 Page 1 of 40 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISIONUNITED STATES OF AMERICA § Plaintiff § CRIM. DOC. H-09-342-1(S) § HONORABLE DAVID HITTNER vs. § § §ROBERT ALLEN STANFORD § Defendant § MOTION TO SUPPRESS FOR VIOLATION OF THE FOURTH AMENDMENT AND REQUEST FOR EVIDENTIARY HEARINGTO THE HONORABLE JUDGE DAVID HITTNER: Robert Allen Stanford, the Accused in this matter, respectfully requeststhis Court to conduct a hearing on this motion to suppress certain evidencebased upon violations of his Fourth Amendment right to protection from illegalsearch and seizures, and would show as follows: I. RELEVANT FACTS 1. On or about February 16, 2009, a motion and proposed Order was filed bythe United States Securities and Exchange Commission (“SEC”) requesting theappointment of Ralph Janvey as Receiver over numerous corporate entitiesowned by the Defendant.1 The Proposed Order requested by the SEC obligated                                                                                                                1 The Motion for Order Appointing Receiver, and Proposed Order prepared bythe Securities and Exchange Commission specifically requesting appointment ofRalph Janvey as Receiver, and obligating Janvey as Receiver to “[p]romptly   -­‐1-­‐  
    • Case 4:09-cr-00342 Document 589 Filed in TXSD on 01/06/12 Page 2 of 40the Receiver to provide the SEC and any other governmental organization with“all information and documentation they may seek in connection with itsregulatory or investigatory activities.” (emphasis added). At a hearing in whichthe Accused was not represented by counsel, a receiver, Ralph Janvey(“Receiver”), was appointed in the Northern District of Texas for, among others,Stanford International Bank, Ltd. (SIB), Stanford Group Company (SGC),Stanford Capital Management, LLC (SCM), and Robert Allen Stanford.2 Mr.Stanford is a U.S. citizen born in Mexia, Texas, and was the sole shareholder ofall the corporate entities the Receiver was appointed to oversee by the Court. 2. Pursuant to the Order Appointing Receiver (the Order), the Court in theNorthern District, by way of the Receiver: assume[d] exclusive jurisdiction and [took] possession of the assets, monies, securities, properties, real and personal, tangible and intangible, of whatever kind and description, wherever located, and the legally recognized privileges (with regard to the entities), of the                                                                                                                                                                                                                                                                                                                                                          provide the United States Securities and Exchange Commission and othergovernmental agencies with all information and documentation they may seek inconnection with its regulatory or investigatory activities”, footnote 2, infra, wassubmitted to the Court on February 16, 2009, and signed by District JudgeO’Connor on the same date. (emphasis added). The Motion was filed the nextday with the Clerk of Court on February 17, 2009. Monday, February 16, 2009was a federal holiday—Washington’s Birthday—and no court staff would haveordinarily been working to help the Judge draft the detailed 11-page Order. <seehttp://www.opm.gov/operating_ status_schedules/ fedhol/ 2009.asp> <lastvisited 01/03/2012>. See footnote 2.2 See Securities and Exchange Commission v. Stanford International Bank, Ltd.,et al., Case No. 3:09-CV-0298, Doc. 10 (“Receiver Order”), attached as ExhibitA.   -­‐2-­‐  
    • Case 4:09-cr-00342 Document 589 Filed in TXSD on 01/06/12 Page 3 of 40 Defendants and all entities they own[ed] or control[led]…and the books and records, client lists, account statements, financial and accounting documents, computers, computer hard drives, computer disks, internet exchange servers telephones, personal digital devices and other informational resources of or in possession of the Defendants, or issued by Defendants and in possession of any agent or employee of the Defendants.”3 3. Paragraph 5 of the Proposed Order requested by the SEC, and signed bythe Court, orders that “the Receiver is specifically directed and authorized toperform the following duties:…(k) [p]romptly provide the United StatesSecurities and Exchange Commission and other governmental agencies with allinformation and documentation they may seek in connection with its regulatoryor investigatory activities.”4 (emphasis added). 4. Before this time, the SEC, Department of Justice (“DOJ”), FBI, and U.S.Postal Inspectors had been working together in jointly investigating the StanfordFinancial Group, Stanford International Bank Limited, and other Stanfordentities, since at least Summer 2008. See Written Testimony of Charles W. Rawlto the House Financial Services Subcommittee On Oversight & InvestigationsHearing, May 13, 2011, p. 3-4.5 According to Rawl’s written testimony, In June 2008, we learned that Louisiana Attorney General Investigators had met with the SEC, the FBI and the DOJ.…On August 6, 2008, I was interviewed by the SEC, the DOJ, the Postmaster Inspector General’s office and the FBI for                                                                                                                3 Id. at ¶ 1.4 Id. at ¶ 5, subsection (k).5 Attached as Exhibit B.   -­‐3-­‐  
    • Case 4:09-cr-00342 Document 589 Filed in TXSD on 01/06/12 Page 4 of 40 approximately seven hours. A few days later, my attorney was contacted and told that I was the SEC’s man and would make an excellent witness. They “would be in touch soon.” “Soon” felt like an eternity. The SEC Inspector General later confirmed this was about the time that the DOJ asked the SEC to “stand down” in its investigation of Stanford. The SEC was awakened when news of the Madoff Ponzi scheme broke in December 2008. Within days of Madoff’s arrest, the SEC contacted us in a panic, wanting to meet immediately after many months of silence. The SEC was so anxious at this point, they asked to meet over the Christmas weekend. We met with the SEC the first week of January 2009. At this point, the SEC expressed its concerns about lacking jurisdiction over the Antigua-based bank. We helped the SEC design the legal strategy to implicate the domestic U.S. broker-dealer in the offshore bank fraud. 5. In the Receiver’s initial submission for legal fees, Baker Botts, inrepresenting the Receiver, specifically noted that it “[c]oordinated with the SEC,DOJ, FBI, USPI, DOL and DEA in identifying and gathering relevant documentsand information.”6 II. THE RECEIVER’S RELATIONSHIP WITH THE COURT AND OBLIGATION TO PRODUCE RECORDS TO GOVERNMENT AGENCIES CONSTITUTES STATE ACTION 6. The Receiver in this matter is a private equity receiver appointed pursuantto the Court’s equitable powers and 28 U.S.C. § 754 and § 959, the statutesregulating district courts in appointing receivers.7 “Court appointed receivers act                                                                                                                6 See 3:09-CV-0298, Doc. 385.7 28 U.S.C. § 959, “Trustees and Receivers Suable; Management; State Laws”,states:“(a) Trustees, receivers or managers of any property, including debtors inpossession, may be sued, without leave of the court appointing them, with   -­‐4-­‐  
    • Case 4:09-cr-00342 Document 589 Filed in TXSD on 01/06/12 Page 5 of 40as arms of the court.” Davis v. Bayless, 70 F.3d 367, 373 (5th Cir. 1995). Stateaction exists in “cases in which the government has ‘so far insinuated itself intoa position of interdependence (with a private entity) that it must be recognized asa joint participant in the challenged activity…’” Dobyns v. E-Systems, Inc., 667F.2d 1219 (5th Cir. 1982) (quoting Burton v. Wilmington Parking Authority, 365U.S. 715 (1961)) (emphasis added). Once the Court in the Northern Districtplaced “its power…and prestige” behind the Receiver, and obligated theReceiver to provide the Securities and Exchange Commission and othergovernmental agencies with all information and documentation they sought inconnection with their regulatory or investigatory activities, the relationshipbetween the two was one of “interdependence.” Burton, 365 U.S. at 724-25. 7. The Fourth Amendment protects against unreasonable searches andseizures by Government officials and those private individuals acting as                                                                                                                                                                                                                                                                                                                                                          respect to any of their acts or transactions in carrying on business connectedwith such property. Such actions shall be subject to the general equity power ofsuch court so far as the same may be necessary to the ends of justice, but thisshall not deprive a litigant of his right to trial by jury.(b) Except as provided in section 1166 of title 11, a trustee, receiver ormanager appointed in any cause pending in any court of the United States,including a debtor in possession, shall manage and operate the property in hispossession as such trustee, receiver or manager according to the requirements ofthe valid laws of the State in which such property is situated, in the same mannerthat the owner or possessor thereof would be bound to do if in possessionthereof.”   -­‐5-­‐  
    • Case 4:09-cr-00342 Document 589 Filed in TXSD on 01/06/12 Page 6 of 40“instrument[s] or agent[s] of the Government.” See U.S. CONST. AMEND. IV;Coolidge v. New Hampshire, 403 U.S. 445, 487 (1971). 8. Determining whether the requisite agency relationship exists“necessarily turns on the degree of the Government’s participation in theprivate party’s activities, . . . a question that can only be resolved ‘in light ofall the circumstances.’” Skinner v. Railway Labor Executives Assn, 489 U.S.602, 614-15 (1989). In Skinner, the Supreme Court found that privaterailroads, in performing drug tests on their employees in a manner expresslyencouraged and authorized under Government regulations, acted as agentssufficient to implicate the Fourth Amendment. Id. The Court concluded that“specific features of the regulations combine to convince us that theGovernment did more than adopt a passive position toward the underlyingprivate conduct.” Id. 9. Pursuant to the Receivership Order, U.S. Marshals Service deputiesand FBI agents physically assisted the Receiver throughout its takeover of allStanford-related entities cited in the Receivership Order.8 The District Court,at the request of the SEC, specifically ordered that “Upon the request of theReceiver, the United States Marshal’s Office is hereby ordered to assist theReceiver in carrying out his duties to take possession, custody, or control                                                                                                                8 See Exhibit C, Video of Seizures.   -­‐6-­‐  
    • Case 4:09-cr-00342 Document 589 Filed in TXSD on 01/06/12 Page 7 of 40of, or identify the location of, any Receivership Estate assets or records.”Receivership Order, at ¶ 6, n. 2. 10. Where the police prevent a property owner from using reasonableforce to protect his property from private action, state action under the FourthAmendment is established. Soldal v. Cook County, 506 U.S. 56, 60, n.6.(1992) (citing Adickes v. S. H. Kress & Co., 398 U.S. 144, 152, 90 S. Ct.1598, 26 L. Ed.2d 142 (1970) (“Private persons, jointly engaged with stateofficials in the prohibited action, are acting ‘under color’ of law for purposesof the statute. To act ‘under color’ of law does not require that the accused bean officer of the State. It is enough that he is a willful participant in jointactivity with the State or its agents.”). Although this action by the U.S.Marshal’s Service was likely provided to ensure the unchallenged takeover ofthe Stanford entities by the Receiver and its agents, “[s]uch ‘participationwould establish both state action and action under color of state law,’” thusimplicating Fourth Amendment requirements. Id.; see also Taunt v. Barman(In re Barman), 252 B.R. 403, 413, n.6 (Bankr. E.D. Mich. 2000) (quotingHowerton v. Gabica, 708 F.2d 380, 382, n.5 (9th Cir. 1983) (action taken bylandlord was ‘under color of state law’ where actions of police officer inaccompanying landlord when serving eviction notice and in privately   -­‐7-­‐  
    • Case 4:09-cr-00342 Document 589 Filed in TXSD on 01/06/12 Page 8 of 40approaching tenants and recommending that they leave created appearancethat police sanctioned eviction.)). III. THEFT OF CONFIDENTIAL BANKING DATA BY STATE ACTOR. A. THE COURT MUST SUPPRESS ALL DATA AND INFORMATION ILLEGALLY OBTAINED FROM SIBL AND STCL IN ANTIGUA, THROUGH UNAUTHORIZED ACCESS IN VIOLATION OF THE TREATIES AND LAWS OF THE UNITED STATES, AND LAWS AND COURT ORDERS OF ANTIGUA, AND ALL FRUITS DERIVED THEREFROM. 11. In Reid v. Covert, 354 U.S. 1 (1957), the Supreme Court ruled thatconstitutional protections apply to U.S. citizens while abroad. There the Courtheld: The United States is entirely a creature of the Constitution. Its power and authority have no other source. It can only act in accordance with all the limitations imposed by the Constitution. When the Government reaches out to punish a citizen who is abroad, the shield which the Bill of Rights and other parts of the Constitution provide to protect his life and liberty should not be stripped away just because he happens to be in another land.Id. at 5-6 (emphasis added; footnote omitted). 12. The Receiver acted outside the scope of the Receivership Order when itobtained control of records and documents of SIB that were outside the territorialjurisdiction of the United States District Court. All evidence obtained in Antiguawas outside the scope of the Receivership Order, and the statutes Congress hasimposed limiting the territorial jurisdiction of federal district courts inreceivership proceedings. See 28 U.S.C. § 754. The Receiver’s actions as a state   -­‐8-­‐  
    • Case 4:09-cr-00342 Document 589 Filed in TXSD on 01/06/12 Page 9 of 40actor also violated U.S. treaty law. See Organization of American States Treaty,<http://www.oas.org/en/member_states/member_state.asp?sCode=ANT><lastvisited Jan. 3, 2012>. 13. After taking control of the Stanford entities within the United States, theReceiver ordered a Stanford employee to unlawfully obtain unauthorized accessinto Stanford International Bank (“SIB”) servers containing confidential bankcustomer data located in Antigua, and download the entire bank customerdatabase in violation of U.S. computer unauthorized access statutes, Antiguanlaw and court orders. See Letter from Ralph Janvey to Stanford Employees(undated).9 Sohil Merchant, a former Stanford IT employee, has stated toinvestigators for the defendant that, pursuant to Janvey’s claim of lawfulauthority as stated in his letter, he acquiesced in circumventing the securitymeasures protecting SIB computers located in Antigua from allowing access tocustomer bank data by non-bank employees, which Mr. Merchant understoodwas prohibited under Antiguan law, and downloaded the entire SIB bankcustomer database to a computer in the United States controlled by the Receiver.Id. The Receiver’s agent, FTI Consulting, in prior sworn testimony before thisCourt, was less than candid when they testified that the SIB bank customer data                                                                                                                9 Attached as Exhibit D.   -­‐9-­‐  
    • Case 4:09-cr-00342 Document 589 Filed in TXSD on 01/06/12 Page 10 of 40obtained by unauthorized access into SIB’s Antiguan servers was previouslyexisting in Stanford Financial Group’s accounting department in Houston: MR. DeGUERIN: Clarification again, your Honor. Are they talking about SIB worldwide or only the SIB that’s reflected in the United States or records that are available to the receiver in the United States as opposed to records elsewhere in the world, particularly Antigua? THE COURT: What’s the answer to that? THE WITNESS: This record purports to provide the financial statements for Stanford International Bank, Limited, which is I believe located in Antigua. THE COURT: And it’s an Antigua record, yes? THE WITNESS: It’s a record that was located in the United States that purports to be the financial statements for the bank thats located in Antigua. THE COURT: All right. MR. DeGUERIN: Well, foundation, your Honor. Im not satisfied with the foundation. But we can address that as we go along. THE COURT: Okay. What’s your objection? MR. DeGUERIN: That the proper foundation has not been laid for this to be a record of the worldwide operations of Stanford International Bank. And the statement of the witness is it appears to be this rather than this is what it is. So he can’t vouch for it. THE COURT: How did you obtain it? THE WITNESS: It was located in the Stanford offices located in Houston. THE COURT: Okay. THE WITNESS: In their accounting department. [p. 28-30] … Q And did you continuously have access to this database? A No. Q All right. What happened to the database? A At one point our access was shut off. Q And who shut it off? Was it shut off in the United States or was it shut off in a foreign country? A I don’t know.   -­‐10-­‐  
    • Case 4:09-cr-00342 Document 589 Filed in TXSD on 01/06/12 Page 11 of 40 Q And these were records that you had access to in Houston that were records of customers of what bank? A Stanford International Bank, Limited. Q And where is that bank physically located? A My understanding is Antigua. Q All right. And you were able to retrieve records from this database when you first got in there into the Stanford Financial Group offices. Is that what you just testified to? A We were able to access those records at some point after we arrived in Houston at the -- Q You made analysis of customer deposits as of February 2009? A Correct. Q All right. And from that database and those records, those customer level account records, you were able to determine that there was CD depositors for which Stanford International Bank was obligated to the tune of 7.2 billion; is that correct? A Correct. Q As of the records that you were retrieving from that database, that customer level database. A Yes. Q And at some point in time you were not able to access that database any more because it had been terminated in some fashion. A We continue to have access to the records that -- Q You had retrieved. A That we had gained access to initially. We are not, to the best of my knowledge, able to continue to access those records. Q Because that actual database has been disrupted somehow. A Yes. Q That has prevented you from continuously accessing. A Yes. [p. 34-35]Detention Hearing Transcript, pp. 28-30, 34-35, United States v. Robert AllenStanford, Case No. 4:09-cr-00342, Doc. 46.10 14. This testimony is false or, at a minimum, materially misleading, becauseunlike the testimony offered to the Court, there was no access to SIB bank                                                                                                                10 Attached as Exhibit E.   -­‐11-­‐  
    • Case 4:09-cr-00342 Document 589 Filed in TXSD on 01/06/12 Page 12 of 40customer data in the Antiguan database from non-SIB employees at StanfordFinancial Group in Houston, as this would violate Antiguan law, in particularInternational Business Corporations Act, § 244(1). Stanford Financial Groupemployees were aware of these Antiguan laws restricting access to customerbanking data by non-SIB employees, which is reflected in the letter from Janveyto the Houston IT staff addressing their concerns. (“You have asked whetheraccessing information that is obtainable through computer systems located in theUnited States, but which may be information protected from certain disclosuresunder the laws of Antigua, can be provided to me (and persons under mydirection and control) as Receiver under the order. The Answer is yes.”). SeeExhibit D. 15. By ordering unauthorized access into SIB’s banking server in Antigua inorder to download SIB bank customers’ account data, and taking SIB’s databaseinto the custody of the Receiver in the U.S., Janvey exceeded the scope of itsauthority under the Receivership Order entered by the U.S. District Court for theNorthern District of Texas, n. 1, which by statute limits the Receiver’sjurisdiction to take possession of property to judicial districts of the UnitedStates. See 28 U.S.C. §§ 959; 754. The Receiver’s acts also violated Antiguanlaw and court orders, including the Antigua and Barbuda International Business   -­‐12-­‐  
    • Case 4:09-cr-00342 Document 589 Filed in TXSD on 01/06/12 Page 13 of 40Corporations Act, § 244(1) in particular,11 and the Antiguan High Court’s Feb.26, 2009 Order at ¶ 12,12 which prior to the unauthorized access by the Receiverhad explicitly ruled that “(1) no disclosure of customer specific information isauthorized without further or other order of Court; and, (2) no disclosure ofinformation is permitted under this Order to any foreign governmental orregulatory body unless such disclosure is subject to mutual disclosureobligations. For purposes of this Order, customer specific information meansinformation of sufficient detail to enable a recipient of the information toidentify the customer in question, the customer’s address or other location,and/or the amount of such customer’s credit balances or other investments in theRespondents/ Defendants.” 16. On April 24, 2009, the High Court of Antigua had rejected U.S. ReceiverRalph Janvey’s petition to be appointed Receiver-Manager of SIB underAntiguan law, and appointed the Antiguan Receiver-Managers as Liquidators.April 24, 2009 Judgment of High Court of Justice, Antigua and Barbuda, p. 18at ¶ 64.13 Receiver Janvey never obtained legal authority to access SIB customeraccount data under either U.S. or Antiguan law, and violated U.S. law (18U.S.C. § 1030) by obtaining unauthorized access into SIB’s Antiguan banking                                                                                                                11 Attached as Exhibit F.12 Attached as Exhibit G.13 Attached as Exhibit H.     -­‐13-­‐  
    • Case 4:09-cr-00342 Document 589 Filed in TXSD on 01/06/12 Page 14 of 40servers, as well as Antiguan law and court orders. Antigua and BarbudaInternational Business Corporations Act, § 244(1), supra. 17. There is no doubt that the territorial jurisdiction of receivers appointed byfederal courts is limited to judicial districts of the United States. As the NinthCircuit held in Securities and Exch. Commn. v. Ross, 504 F.3d 1130, 1145-46(9th Cir. 2007), agreeing with the D.C. Circuit in SEC v. Bilzerian, 378 F.3d1100 (D.C. Cir. 2004) and the Sixth Circuit in Haile v. Henderson Natl Bank,657 F.2d 816 (6th Cir. 1981): Just as those statutes permit the district court to exercise nationwide jurisdiction, [28 U.S.C.] §§ 754 and 1692 permit the district court to obtain jurisdiction in a district where receivership property is located so long as the receiver has properly filed pursuant to § 754. See, e.g., SEC v. Bilzerian, 378 F.3d 1100 (D.C. Cir. 2004); SEC v. Vision Commns, Inc., 74 F.3d 287 (D.C. Cir. 1996); Haile v. Henderson Natl Bank, 657 F.2d 816 (6th Cir. 1981). We agree with the D.C. and Sixth Circuits that § 1692 extends “the territorial jurisdiction of the appointing court . . . to any district of the United States where property believed to be that of the receivership estate is found, provided that the proper documents have been filed in each such district as required by § 754.” Bilzerian, 378 F.3d at 1103-05; accord Haile, 657 F.2d at 823. (emphasis added).The Sixth Circuit recognized in Haile that “by statute, the territorial jurisdictionof the appointing court is extended to any district of the United States whereproperty believed to be that of the receivership estate is found, provided that theproper documents have been filed in each such district as required by § 754.”Haile v. Henderson Natl Bank, 657 F.2d 816, 823 (6th Cir. 1981)(emphasis   -­‐14-­‐  
    • Case 4:09-cr-00342 Document 589 Filed in TXSD on 01/06/12 Page 15 of 40added). A receiver appointed by a federal district court thus is restricted bystatute to the territorial jurisdiction of the appointing court, and any judicialdistrict of the United States where a copy of the complaint and order ofappointment are filed within ten days of entry of the order of appointmentpursuant to 28 U.S.C. § 754. “The failure to file such copies in any district shalldivest the receiver of jurisdiction and control over all such property in thatdistrict.” Id. Receivers appointed by a federal district court have no statutoryjurisdiction outside the territorial limits of the United States. 18. Similar to the receiver jurisdiction statute, a federal district judge ormagistrate has no authority to issue a search warrant outside the borders of theUnited States or its territories, possessions, commonwealths, except for U.S.diplomatic missions abroad. FED. R. CRIM. P. 41(b)(1-5). See United States v.Bin Laden, 126 F.Supp.2d 264, 275 n.13 (S.D.N.Y. 2000) (“There is not even astatutory provision for standard law enforcement searches conducted abroad.Rule 41(a) of the Federal Rules of Criminal Procedure, which governs domesticlaw enforcement searches, limits the jurisdiction of a federal magistrate.”);Weinberg v. United States, 126 F.2d 1004, 1006 (2d Cir. 1942) (“With very fewexceptions, United States district judges possess no extraterritorialjurisdiction.”).   -­‐15-­‐  
    • Case 4:09-cr-00342 Document 589 Filed in TXSD on 01/06/12 Page 16 of 40 19. As the U.S. Supreme Court has held, a search warrant issued by a UnitedStates magistrate authorizing a search outside the territorial limits of the UnitedStates “would be a dead letter outside the United States.” United States v.Verdugo-Urquidez, 494 U.S. 259, 274, 110 S.Ct. 1056 (1990). Any restrictionson searches and seizures incident to American action abroad “must be imposedby the political branches through diplomatic understanding, treaty, orlegislation.” Verdugo-Urquidez, 494 U.S. at. 275. The United States andAntigua and Barbuda are Charter Members of the Organization of AmericanStates, a treaty of the United States. See Department of State, Treaties in Force211(2011);<http://www.oas.org/en/member_states/member_state.asp?sCode=ANT><last visited Jan. 3, 2012>. As the Second Circuit has noted, the UnitedStates has agreed in the Organization of American States Treaty to respect theterritorial sovereignty of member states, including Antigua and Barbuda: Here, in contrast, Toscanino alleges that he was forcibly abducted from Uruguay, whose territorial sovereignty this country has agreed in two international treaties to respect. The Charter of the United Nations, the members of which include the United States and Uruguay, see Department of State, Treaties in Force 402-03 (1973), obligates ‘All Members’ to ‘refrain…from the threat or use of force against the territorial integrity of political independence of any state …’ See U.N. Charter, art. 2 para. 4. Additionally, the Charter of the Organization of American States, whose members also include the United States and Uruguay, see Department of State, Treaties in Force 359 (1973), provides that the ‘territory of a state is inviolable; it may not be the object, even temporarily, . . . of . . . measures of force taken by another state, directly or indirectly, on any grounds whatever . . ..’ See O.A.S. Charter, art. 17….   -­‐16-­‐  
    • Case 4:09-cr-00342 Document 589 Filed in TXSD on 01/06/12 Page 17 of 40 Since the United States thus agreed not to seize persons residing within the territorial limits of Uruguay, appellants allegations in this case are governed not by Ker but by the Supreme Courts later decision in Cook v. United States, 288 U.S. 102, 53 S.Ct. 305, 77 L.Ed. 641 (1933).United States v. Toscanino, 500 F.2d 267, 277-78 (2nd Cir. 1974). 17. Where violations of international treaties of the United States by stateactors occur, the rule established by the Supreme Court in Cook v. United States,288 U.S. 102, 120-22, 53 S.Ct. 305, 77 L.Ed. 641 (1933) controls. In Cook theSupreme Court held: Searches and seizures in the enforcement of the laws prohibiting alcoholic liquors are governed, since the 1930 Act, as they were before, by the provisions of the Treaty…. The objection to the seizure is not that it was wrongful merely because made by one upon whom the government had not conferred authority to seize at the place where the seizure was made. The objection is that the government itself lacked power to seize, since, by the Treaty, it had imposed a territorial limitation upon its own authority. The Treaty fixes the conditions under which a “vessel may be seized and taken into a port of the United States, its territories or possessions for adjudication in accordance with” the applicable laws. Thereby, Great Britain agreed that adjudication may follow a rightful seizure. Our government, lacking power to seize, lacked power, because of the Treaty, to subject the vessel to our laws. To hold that adjudication may follow a wrongful seizure would go far to nullify the purpose and effect of the Treaty…. Here, the objection is more fundamental. It is to the jurisdiction of the United States. The objection is not met by distinguishing between the custody of the Coast Guard and the subsequent custody of the Marshal. Nor is it lost by the entry of an answer to the merits. The ordinary incidents of possession of the vessel and the cargo yield to the international agreement.   -­‐17-­‐  
    • Case 4:09-cr-00342 Document 589 Filed in TXSD on 01/06/12 Page 18 of 40Cook v. United States, 288 U.S. at 120-22 (dismissing the libel). (emphasisadded). 20. The U.S. Department of Justice recognizes that searches by Americanstate actors taking place in another country must be accomplished with thepermission of the local country and its laws. In the Department of Justicemanual “Searching and Seizing Computers and Obtaining Electronic Evidencein Criminal Investigations,” the Department notes: When United States authorities investigating a crime believe electronic evidence is stored by an Internet service provider or on a computer located abroad (in “Country A”), U.S. law enforcement usually must seek assistance from law enforcement authorities in Country A. Since, in general, law enforcement officers exercise their functions in the territory of another country with the consent of that country, U.S. law enforcement should only make direct contact with an ISP located in Country A with (1) prior permission of the foreign government; (2) approval of DOJ’s Office of International Affairs (“OIA”) (which would know of particular sensitivities and/or accepted practices); or (3) other clear indicia that such practice would not be objectionable in Country A…. Where Country A cannot otherwise provide informal assistance, requests for evidence usually will be made under existing Mutual Legal Assistance Treaties (MLATs) or Mutual Legal Assistance Agreements, or through the Letters Rogatory process. See 28 U.S.C. § 1781-1782.… In the event that United States law enforcement inadvertently accesses a computer located in another country, CCIPS, OIA, or another appropriate authority should be consulted immediately, as issues such as sovereignty and comity may be implicated.   -­‐18-­‐  
    • Case 4:09-cr-00342 Document 589 Filed in TXSD on 01/06/12 Page 19 of 40United States Department of Justice, Searching and Seizing Computers andObtaining Electronic Evidence in Criminal Investigations (July 2002), pp. 24-26. IV. THE DEFENDANT HAS STANDING TO ASSERT THE RECEIVER’S UNLAWFUL SEARCH AND SEIZURE OF SIB BANK DATA IN ANTIGUA, DUE TO HIS LIABILITY FOR NEGLIGENCE IN ALLOWING THE RECEIVER TO GAIN UNAUTHORIZED ACCESS TO SIB BANK CUSTOMER DATA. 21. Under Antiguan law, the Defendant, as an “officer” under the AntiguanInternational Business Corporations Act, owed a duty to SIB bank customers toprevent the unauthorized access of third parties to confidential SIB bankcustomer data. Antiguan International Business Corporations Act (IBCA) §244(1).14 IBCA § 244(1) states: Subject to an express agreement between a banking corporation and a customer of the corporation, no person shall disclose any information relating to the business affairs of the customer that he has acquired as an officer, employee, agent, auditor, solicitor of the banking corporation, or otherwise in the performance of his duties or the exercise of his functions under this Act, except in the performance or exercise of those duties or functions…or pursuant to an order of a court of competent jurisdiction in Antigua and Barbuda. 22. The failure to exercise due care in complying with the InternationalBusiness Corporations Act results in liability for officers of Antiguan banks.IBCA § 95 states: (1) Every director and officer of a corporation in exercising his powers and discharging his duties must                                                                                                                14 Attached as Exhibit F.   -­‐19-­‐  
    • Case 4:09-cr-00342 Document 589 Filed in TXSD on 01/06/12 Page 20 of 40 (a) act honestly and in good faith with a view to the best interests of the corporation; and (b) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. (2) Every director and officer of a corporation must comply with this Act and the regulations and with the articles and by- laws of the corporation and any unanimous shareholder agreement relating to the corporation. (3) Subject to subsection (3) of section 124, no provision in a contract, the articles of a corporation, its bylaws or any resolution, relieves a director or officer of the corporation from the duty to act in accordance with this Act or the regulations, or relieves him from liability for a breach of this Act or the regulations.An “officer” is defined in the Act to include “the chairman, deputy chairman,president, or vice-president.” IBCA § 2(k)(1). The Accused was the Chairman ofSIB at the time the Receiver gained unauthorized access to SIB bank customerrecords, and had lawful possession of the bank records as an officer of SIB. V. THE ACCUSED HAS STANDING TO ASSERT VIOLATION OF THE FOURTH AMENDMENT 23. Whether a search violated a defendant’s Fourth Amendment rightsinvolves two inquiries. First, a defendant must establish that he or she had asubjective expectation of privacy in the place or property searched. Smith v.Maryland, 442 U.S. 735, 740 (1979). Second, a defendant must establish thatsociety would recognize his or her subjective expectation as objectivelyreasonable. “[A] person who is not the owner of the container but who possessesit by virtue of his status as bailee certainly has standing to object to illegal   -­‐20-­‐  
    • Case 4:09-cr-00342 Document 589 Filed in TXSD on 01/06/12 Page 21 of 40interference with his possessory interest.” 4 Wayne R. LaFave, Search andSeizure § 11.3(f), at 344 (2d ed. 1987). See generally United States v. Oswald,783 F.2d 663, 666 (6th Cir.1986) (explaining “[a] suitcase or briefcase isproperty of a kind in which the owner or bailee normally has a strong expectationof privacy”). 24. In United States v. Perea, 986 F.2d 633, 639-40 (2nd Cir. 1993), theSecond Circuit applying bailee standing under the Fourth Amendment, held: A bailee has the right--and often the duty--to exclude others from possession of the property entrusted to him. See generally Dobie, Handbook on the Law of Bailments and Carriers § 61, at 133 (1914) (right); id. § 65, at 157-58 (duty); Story, Commentaries on the Law of Bailments § 422a, at 421 (4th ed. 1846) (right); id. § 457, at 465-66 (duty). “As to everybody except the true owner of” the bailed property, the bailee “ha[s] the right of the owner to have and defend its custody and direct possession.” Foulke v. New York Consolidated Railroad Co., 228 N.Y. 269, 275, 127 N.E. 237 (1920). And with respect to that property, the bailee, whether gratuitous or for hire, has some duty of care. See, e.g., Voorhis v. Consolidated Rail Corp., 60 N.Y.2d 878, 879, 470 N.Y.S.2d 364, 365, 458 N.E.2d 823, 823 (1983) (gratuitous bailee must avoid gross negligence; gross negligence presumed from nonreturn of property); Aronette Manufacturing Co. v. Capitol Piece Dye Works, Inc., 6 N.Y.2d 465, 468, 190 N.Y.S.2d 361, 364, 160 N.E.2d 842, 844 (1959) (bailee for mutual benefit must exercise ordinary care). Further, even if he would not be liable to the bailor, the bailee has a sufficient possessory interest to permit him to “recover for the wrongful act of a third party resulting in the loss of, or injury to, the subject of the bailment.” Rogers v. Atlantic, Gulf & Pacific Co., 213 N.Y. 246, 258, 107 N.E. 661 (1915). Accordingly, in the Fourth Amendment context, bailees can have a sufficient interest in bailed property to give them standing to object to its seizure or search. See, e.g., United States v. Benitez- Arreguin, 973 F.2d 823, 827-28 (10th Cir.1992); Robles v. State,   -­‐21-­‐  
    • Case 4:09-cr-00342 Document 589 Filed in TXSD on 01/06/12 Page 22 of 40 510 N.E.2d 660, 663 (Ind.1987), cert. denied, 487 U.S. 1218, 108 S.Ct. 2872, 101 L.Ed.2d 907 (1988); State v. Casey, 59 N.C.App. 99, 296 S.E.2d 473, 482 (1982); State v. Grundy, 25 Wash.App. 411, 607 P.2d 1235, 1237-38 (1980), review denied, 95 Wash.2d 1008 (1981); see also United States v. Oswald, 783 F.2d 663, 666 (6th Cir.1986) (“suitcase or briefcase is property of a kind in which the owner or bailee normally has a strong expectation of privacy”). See generally 4 LaFave, Search and Seizure § 11.3(f), at 344 (2d ed. 1987) (“person who is not the owner of the container but who possesses it by virtue of his status as bailee certainly has standing to object to illegal interference with his possessory interest”). 25. In United States v. Benitez-Arreguin, 973 F.2d 823, 827-28 (10th Cir.1992), applying a bailee’s standing to challenge unlawful search and seizureunder the Fourth Amendment, where the bailee was carrying luggage for anotherperson, the Tenth Circuit held: We agree that in such circumstances a bailee carrying luggage for another person could have a legitimate expectation of privacy in the luggage. In analyzing the case of a bailee, we consider the factors that generally might give any defendant a legitimate expectation of privacy, including ownership, lawful possession, or lawful control of the property or place searched. A bailee may make a substantial claim of legitimate expectation of privacy because, as we have observed, “[a]lthough neither ownership nor lawful possession are determinative, they are often dispositive factors.” Id. at 445; see also Rakas v. Illinois, 439 U.S. 128, at 143 n. 12, 99 S.Ct. at 430 n. 12 (1978) (one owning or lawfully possessing or controlling property will in all likelihood have legitimate expectation of privacy by virtue of right to exclude). 26. Other Circuits are in agreement. In Via Mat Intern. South America Ltd. v.United States, 446 F.3d 1258, 1262-63 (11th Cir. 2006), the defendant, atransport company, was transporting cash for a currency exchange house from   -­‐22-­‐  
    • Case 4:09-cr-00342 Document 589 Filed in TXSD on 01/06/12 Page 23 of 40Uruguay to London for deposit there, when the currency was seized by the U.S.government in Miami. The government claimed the transport company could notcontest the seizure because it had no standing. The Eleventh Circuit held: At the heart of Article III standing is the existence of an injury, not ownership. Ownership of property that has been seized can be evidence of the existence of an injury that is direct enough to confer standing, but ownership is not required; non-owners, such as bailees or those with possessory interests, can also have injuries resulting from the seizure of property that are sufficient to establish standing. See United States v. $38,000.00 in U.S. Currency, 816 F.2d 1538, 1544 (11th Cir. 1987) (“A claimant need not own the property in order to have standing to contest its forfeiture; a lesser property interest, such as a possessory interest, is sufficient for standing.... As a bailee, [the plaintiff] has a possessory interest in the bailed currency…[and] has Article III standing to contest the forfeiture of the currency.”); United States v. $260,242.00 in U.S. Currency, 919 F.2d 686, 687-88 (11th Cir. 1990) (“[A] possessory interest generally is constitutionally sufficient for claims in forfeiture actions.”). The economic harm to a party with a possessory interest in seized property, imposed by virtue of its liability to the owner of such property, can constitute a palpable injury sufficient to confer standing under Article III. The Second Circuit, in United States v. Cambio Exacto, 166 F.3d 522, 527-28 (2nd Cir. 1999), held that two money transmitters had standing to contest the forfeiture of money seized out of their accounts by the Government due to crimes allegedly committed by their clients. The court found that the companies “had a financial stake in the funds because they had a liability to their customers in an amount equal to the forfeited funds.” Id. at 528. “Substantial economic harm is plainly the type of injury for which parties may seek redress in federal court.” Id. The injury was “the direct result of ‘putatively illegal’ [G]overnmental action in the form of an allegedly unlawful forfeiture. This injury would be redressed by a successful challenge to the forfeiture. Article III does not require more.” Id. (citations omitted).   -­‐23-­‐  
    • Case 4:09-cr-00342 Document 589 Filed in TXSD on 01/06/12 Page 24 of 40 Though Via Mat was not the owner of the monetary instruments, it had a possessory interest in the property when it was seized by the Government. Via Mat then suffered a direct, substantial economic injury due to its liability to Lespan for any of the property the Government did not return to the owner. Via Mats injury is real and direct, and is sufficient under Article III.Via Mat Intern. South America Ltd. v. United States, 446 F.3d 1258, 1262-63(11th Cir. 2006). 27. In United States v. Cambio Exacto, 166 F.3d 522, 528 (2nd Cir. 1999), theperson contesting government seizure was a money transmitter who had itsfunds, obtained from a client, seized by the government. The money transmitterwas liable if it failed to deliver the client’s funds under New York law. TheSecond Circuit held: It is clear in any event that Perusa and Pan American have produced other evidence of a “distinct and palpable injury” sufficient to give them standing under Article III. See Warth, 422 U.S. at 501, 95 S.Ct. 2197. They had a financial stake in the funds because they had a liability to their customers in an amount equal to the forfeited funds. Those liabilities exposed them to substantial economic loss, if they made up the shortfall created by the forfeitures, or to potential loss of the bonds that they were required to post according to New York law in order to operate as money transmitters. Substantial economic harm is plainly the type of injury for which parties may seek redress in federal court. The injury that Pan American and Perusa assert is also the direct result of “putatively illegal” governmental action, Gladstone, Realtors, 441 U.S. at 99, 99 S.Ct. 1601, in the form of an allegedly unlawful forfeiture. This injury would be redressed by a successful challenge to the forfeiture. Article III does not require more.   -­‐24-­‐  
    • Case 4:09-cr-00342 Document 589 Filed in TXSD on 01/06/12 Page 25 of 40 28. In United States v. $100,348.00 in U.S. Currency, 354 F.3d 1110, 1119-20(9th Cir. 2004), the Ninth Circuit held: [A] gratuitous bailee like Mayzel has a sufficient property interest in the seized property such that he would be ‘punished’ by the forfeiture and can therefore bring a challenge in his own right under the Excessive Fines Clause….As a gratuitous bailee, Mayzel has rights and obligations with respect to the entrusted funds. A gratuitous bailee must deliver the property to the owner on demand. If he misdelivers the property to the wrong person, even by accident, he is liable to the owner for conversion. See Byer v. Canadian Bank of Commerce, 8 Cal.2d 297, 65 P.2d 67, 68 (1937) (holding a gratuitous bailee liable for the bonds entrusted to it when the bailee delivered the bonds to an impostor). Moreover, a gratuitous bailee owes a duty to exercise ‘slight care’ over the property. Todd, 23 Cal.Rptr.2d at 494. Consequently, he is liable for loss or damage to the property if he is grossly negligent in handling it. (citations omitted). 29. The defendant, as the chairman of the corporation with possession,custody and control of SIB’s bank customer data, owed an explicit duty of care toSIB’s bank customers under Antiguan law; and therefore has standing under theFourth Amendment to challenge illegal search and seizure of SIB bank data. VI. VIOLATION OF THE ACCUSED’S FOURTH AMENDMENT RIGHT TO PRIVACY – PERSONAL DATA 30. The Accused has standing to object to the admissibility of evidenceseized pursuant to the Receivership Order in the Northern District, which wassubsequently turned over to the Department of Justice (DOJ) and FederalBureau of Investigations (FBI) for use in its criminal investigation andprosecution.   -­‐25-­‐  
    • Case 4:09-cr-00342 Document 589 Filed in TXSD on 01/06/12 Page 26 of 40 31. The Fourth Amendment guarantees that “[t]he right of the people to besecure in their persons, houses, papers, and effects, against unreasonablesearches and seizures, shall not be violated.” The Supreme Court has held that“the word ‘houses,’ as it appears in the Amendment, is not to be taken literally,and that the protection of the Amendment may extend to commercial premises.”Mancusi v. DeForte, 392 U.S. 364 (1968). 32. As the Supreme Court made clear in Soldal, “[The court of appeals]acknowledged what is evident from our precedents—that the Amendmentsprotection applies in the civil context as well. See O’Connor v. Ortega, 480 U.S.709 (1987), New Jersey v. T.L.O., 469 U.S. 325, 334-335 (1985); Michigan v.Tyler, 436 U.S. 499, 504-506 (1978); Marshall v. Barlow’s Inc., 436 U.S. 307,312-313 (1978); Camara v. Municipal Court of San Francisco, 387 U.S. 523,528 (1967)). Nor did the Court of Appeals suggest that the Fourth Amendmentapplied exclusively to law enforcement activities. It observed, for example, thatthe Amendments protection would be triggered ‘by a search or other entry intothe home incident to an eviction or repossession.’” Soldal, 506 U.S. at 67. 33. “[S]eizures of property are subject to Fourth Amendment scrutiny eventhough no search within the meaning of the Amendment has taken place. Moregenerally, an officer who happens to come across an individual’s property in a   -­‐26-­‐  
    • Case 4:09-cr-00342 Document 589 Filed in TXSD on 01/06/12 Page 27 of 40public area could seize it only if Fourth Amendment standards are satisfied—forexample, if the items are evidence of a crime or contraband.” Id. at 68. 34. “It has long been settled that one has standing to object to a search of hisoffice, as well as of his home.” Mancusi, 392 U.S. at 369 (citing Gould v.United States, 255 U.S. 298; United States v. Lefkowitz, 285 U.S. 452; Goldmanv. United States, 316 U.S. 129; cf. Lopez v. United States, 373 U.S. 427; Osbornv. United States, 385 U.S. 323). A. THE ACCUSED HAS A REASONABLE EXPECTATION OF PRIVACY IN PERSONAL FILES AND E-MAILS 35. The Accused, as an employee and sole owner of his companies, has areasonable expectation of privacy in the offices of those companies, and hispersonal papers and effects. “[T]he question whether an employee has areasonable expectation of privacy must be addressed on a case-by-case basis.”O’Connor v. Ortega, 480 U.S. 709, 718 (1987). In O’Connor, the SupremeCourt held that a government doctor had a reasonable expectation of privacy inhis personal desk and file cabinets in his office which had been searched bysupervisors for evidence of misconduct. “As with the expectation of privacy inone’s home, such an expectation in one’s place of work is ‘based upon societalexpectations that have deep roots in the history of the Amendment.’”O’Connor, 480 U.S. at 716 (quoting Oliver v. United States, 466 U.S. 170, 178). 36. The Court in O’Connor went on to state:   -­‐27-­‐  
    • Case 4:09-cr-00342 Document 589 Filed in TXSD on 01/06/12 Page 28 of 40 [T]he individual’s interest in privacy and personal security suffers whether the government’s motivation is to investigate violations of criminal laws or breaches of other statutory or regulatory standards. [I]t would be anomalous to say that the individual and his private property are fully protected by the Fourth Amendment only when the individual is suspected of criminal behavior. Because the reasonableness of an expectation of privacy, as well as the appropriate standard for a search, is understood to differ according to context, it is essential to first delineate the boundaries of the workplace context. The workplace includes those areas and items that are related to work and are generally within the employer’s control.O’Connor, 480 U.S. at 715 (citing New Jersey v. T.L.O., 469 U.S. 325, 335(1985) (quoting Marshal v. Barlow’s Inc., 436 U.S. 307, 312-313 (1978) andCamara v. Municipal Court, 387 U.S. 523, 530 (1967)) (internal citationsomitted). 37. Email and file servers are today’s Information Age business equivalent ofthe locked, shared file cabinets housing business records and letters found to bewithin the reasonable sphere of personal privacy contemplated by the FourthAmendment in Mancusi v. DeForte, 392 U.S. 364, 367-70, 88 S.Ct. 2120, 20L.Ed.2d 1154 (1968). In Mancusi v. DeForte, the Supreme Court held: The Fourth Amendment guarantees that The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated.   -­‐28-­‐  
    • Case 4:09-cr-00342 Document 589 Filed in TXSD on 01/06/12 Page 29 of 40 The papers which were seized in this case belonged not to DeForte, but to the Union. Hence, DeForte can have personal standing only if, as to him, the search violated the “right of the people to be secure in their…houses…” This Court has held that the word “houses,” as it appears in the Amendment, is not to be taken literally, and that the protection of the Amendment may extend to commercial premises. See, e.g., See v. Seattle, 387 U.S. 541; Go-Bart Importing Co. v. United States, 282 U.S. 344; Silverthorne Lumber Co. v. United States, 251 U.S. 385. Furthermore, the Amendment does not shield only those who have title to the searched premises. It was settled even before our decision in Jones v. United States, 362 U.S. 257, that one with a possessory interest in the premises might have standing. See, e.g., United States v. Jeffers, 342 U.S. 48. In Jones, even that requirement was loosened, and we held that anyone legitimately on premises where a search occurs may challenge its legality . . . when its fruits are proposed to be used against him. 362 U.S. at 267.[5] The Courts recent decision in Katz v. United States, 389 U.S. 347, also makes it clear that capacity to claim the protection of the Amendment depends not upon a property right in the invaded place, but upon whether the area was one in which there was a reasonable expectation of freedom from governmental intrusion. See 389 U.S. at 352. The crucial issue, therefore, is whether, in light of all the circumstances, DeForte’s office was such a place. The record reveals that the office where DeForte worked consisted of one large room, which he shared with several other union officials. The record does not show from what part of the office the records were taken, and DeForte does not claim that it was a part reserved for his exclusive personal use. The parties have stipulated that DeForte spent “a considerable amount of time” in the office, and that he had custody of the papers at the moment of their seizure. We hold that, in these circumstances, DeForte had Fourth Amendment standing to object to the admission of the papers at his trial. It has long been settled that one has standing to object to a search of his office, as well as of his home. See, e.g., Gouled v. United States, 255 U.S. 298; United States v. Lefkowitz, 285 U.S. 452; Goldman v. United States, 316 U.S. 129; cf. Lopez v. United States, 373 U.S. 427; Osborn v. United States, 385 U.S. 323. Since the Court in Jones v. United States, supra, explicitly did away with   -­‐29-­‐  
    • Case 4:09-cr-00342 Document 589 Filed in TXSD on 01/06/12 Page 30 of 40 the requirement that, to establish standing, one must show legal possession or ownership of the searched premises, see 362 U.S. at 265-267, it seems clear that, if DeForte had occupied a “private” office in the union headquarters, and union records had been seized from a desk or a filing cabinet in that office, he would have had standing. Cf. Go-Bart Importing Co. v. United States, 282 U.S. 344; Silverthorne Lumber Co. v. United States, 251 U.S. 385. In such a “private” office, DeForte would have been entitled to expect that he would not be disturbed except by personal or business invitees, and that records would not be taken except with his permission or that of his union superiors. It seems to us that the situation was not fundamentally changed because DeForte shared an office with other union officers. DeForte still could reasonably have expected that only those persons and their personal or business guests would enter the office, and that records would not be touched except with their permission or that of union higher-ups. This expectation was inevitably defeated by the entrance of state officials, their conduct of a general search, and their removal of records which were in DeFortes custody. It is, of course, irrelevant that the Union or some of its officials might validly have consented to a search of the area where the records were kept, regardless of DeForte’s wishes, for it is not claimed that any such consent was given, either expressly or by implication.Mancusi v. DeForte, 392 U.S. at 367-70. 38. In today’s computerized, Internet-centered business environment,computer and email servers are the equivalent of the shared file cabinets of theMancusi case and its era of technology. Because persons working in a businessshare password-limited locked access to the “file cabinet” of the Internet era—the password-protected computer and computer servers where they store emailsand files—search and seizure of these “file cabinets” without a warrant violatesthe Fourth Amendment’s prohibition against warrantless searches and seizures,   -­‐30-­‐  
    • Case 4:09-cr-00342 Document 589 Filed in TXSD on 01/06/12 Page 31 of 40unless there is a clearly-established exception to the warrant requirement, andsuppression is mandated under the Supreme Court’s precedent in Mancusi. 39. In United States v. Warshak, 631 F.3d 266, 285-86 (6th Cir. 2010), theSixth Circuit held that e-mails are the practical equivalent of letters in today’stechnological environment and normal business and personal usage, and as such,are protected by the Fourth Amendment warrant requirement. Bearing repeating,there the Court held: In confronting this question, we take note of two bedrock principles. First, the very fact that information is being passed through a communications network is a paramount Fourth Amendment consideration. See ibid.; United States v. U.S. Dist. Court, 407 U.S. 297, 313, 92 S.Ct. 2125, 32 L.Ed.2d 752 (1972) (“[T]he broad and unsuspected governmental incursions into conversational privacy which electronic surveillance entails necessitate the application of Fourth Amendment safeguards." ). Second, the Fourth Amendment must keep pace with the inexorable march of technological progress, or its guarantees will wither and perish. See Kyllo v. United States, 533 U.S. 27, 34, 121 S.Ct. 2038, 150 L.Ed.2d 94 (2001) (noting that evolving technology must not be permitted to “erode the privacy guaranteed by the Fourth Amendment”); see also Orin S. Kerr, Applying the Fourth Amendment to the Internet: A General Approach, 62 Stan. L.Rev. 1005, 1007 (2010) (arguing that “the differences between the facts of physical space and the facts of the Internet require courts to identify new Fourth Amendment distinctions to maintain the function of Fourth Amendment rules in an online environment”). With those principles in mind, we begin our analysis by considering the manner in which the Fourth Amendment protects traditional forms of communication. In Katz, the Supreme Court was asked to determine how the Fourth Amendment applied in the context of the telephone. There, government agents had affixed an electronic listening device to the exterior of a public phone booth, and had used the device to intercept and record several phone   -­‐31-­‐  
    • Case 4:09-cr-00342 Document 589 Filed in TXSD on 01/06/12 Page 32 of 40 conversations. See 389 U.S. at 348, 88 S.Ct. 507. The Supreme Court held that this constituted a search under the Fourth Amendment, see id. at 353, 88 S.Ct. 507, notwithstanding the fact that the telephone company had the capacity to monitor and record the calls, see Smith, 442 U.S. at 746-47, 99 S.Ct. 2577 (Stewart, J., dissenting). In the eyes of the Court, the caller was “surely entitled to assume that the words he utter[ed] into the mouthpiece w[ould] not be broadcast to the world.” Katz, 389 U.S. at 352, 88 S.Ct. 507. The Court’s holding in Katz has since come to stand for the broad proposition that, in many contexts, the government infringes a reasonable expectation of privacy when it surreptitiously intercepts a telephone call through electronic means. Smith, 442 U.S. at 746, 99 S.Ct. 2577 (Stewart, J., dissenting) (“[S]ince Katz, it has been abundantly clear that telephone conversations are fully protected by the Fourth and Fourteenth Amendments.”). Letters receive similar protection. See Jacobsen, 466 U.S. at 114, 104 S.Ct. 1652 (“Letters and other sealed packages are in the general class of effects in which the public at large has a legitimate expectation of privacy [.]”); Ex Parte Jackson, 96 U.S. 727, 733, 24 L.Ed. 877 (1877). While a letter is in the mail, the police may not intercept it and examine its contents unless they first obtain a warrant based on probable cause. Ibid. This is true despite the fact that sealed letters are handed over to perhaps dozens of mail carriers, any one of whom could tear open the thin paper envelopes that separate the private words from the world outside. Put another way, trusting a letter to an intermediary does not necessarily defeat a reasonable expectation that the letter will remain private. See Katz, 389 U.S. at 351, 88 S.Ct. 507 (“[W]hat [a person] seeks to preserve as private, even in an area accessible to the public, may be constitutionally protected.”). Given the fundamental similarities between email and traditional forms of communication, it would defy common sense to afford emails lesser Fourth Amendment protection. See Patricia L. Bellia & Susan Freiwald, Fourth Amendment Protection for Stored E-Mail, 2008 U. Chi. Legal F. 121, 135 (2008) (recognizing the need to “eliminate the strangely disparate treatment of mailed and telephonic communications on the one hand and electronic communications on the other”); City of Ontario v. Quon, __ U.S. __, 130 S.Ct. 2619, 2631, 177 L.Ed.2d 216 (2010) (implying that “a search of [an individuals] personal e-mail account” would be just   -­‐32-­‐  
    • Case 4:09-cr-00342 Document 589 Filed in TXSD on 01/06/12 Page 33 of 40 as intrusive as “a wiretap on his home phone line”); United States v. Forrester, 512 F.3d 500, 511 (9th Cir.2008)(holding that “[t]he privacy interests in [mail and email] are identical”). Email is the technological scion of tangible mail, and it plays an indispensable part in the Information Age. Over the last decade, email has become “so pervasive that some persons may consider [it] to be [an] essential means or necessary instrument[ ] for self-expression, even self-identification.” Quon, 130 S.Ct. at 2630. It follows that email requires strong protection under the Fourth Amendment; otherwise, the Fourth Amendment would prove an ineffective guardian of private communication, an essential purpose it has long been recognized to serve. See U.S. Dist. Court, 407 U.S. at 313, 92 S.Ct. 2125; United States v. Waller, 581 F.2d 585, 587 (6th Cir.1978) (noting the Fourth Amendment’s role in protecting “private communications”). As some forms of communication begin to diminish, the Fourth Amendment must recognize and protect nascent ones that arise. See Warshak I, 490 F.3d at 473 (“It goes without saying that like the telephone earlier in our history, e- mail is an ever-increasing mode of private communication, and protecting shared communications through this medium is as important to Fourth Amendment principles today as protecting telephone conversations has been in the past.”). If we accept that an email is analogous to a letter or a phone call, it is manifest that agents of the government cannot compel a commercial ISP to turn over the contents of an email without triggering the Fourth Amendment. An ISP is the intermediary that makes email communication possible. Emails must pass through an ISP’s servers to reach their intended recipient. Thus, the ISP is the functional equivalent of a post office or a telephone company. As we have discussed above, the police may not storm the post office and intercept a letter, and they are likewise forbidden from using the phone system to make a clandestine recording of a telephone call—unless they get a warrant, that is. See Jacobsen, 466 U.S. at 114, 104 S.Ct. 1652; Katz, 389 U.S. at 353, 88 S.Ct. 507. It only stands to reason that, if government agents compel an ISP to surrender the contents of a subscribers emails, those agents have thereby conducted a Fourth Amendment search, which necessitates compliance with the warrant requirement absent some exception. As an initial matter, it must be observed that the mere ability of a third-party intermediary to access the contents of a   -­‐33-­‐  
    • Case 4:09-cr-00342 Document 589 Filed in TXSD on 01/06/12 Page 34 of 40 communication cannot be sufficient to extinguish a reasonable expectation of privacy. In Katz, the Supreme Court found it reasonable to expect privacy during a telephone call despite the ability of an operator to listen in. See Smith, 442 U.S. at 746-47, 99 S.Ct. 2577 (Stewart, J., dissenting). Similarly, the ability of a rogue mail handler to rip open a letter does not make it unreasonable to assume that sealed mail will remain private on its journey across the country. Therefore, the threat or possibility of access is not decisive when it comes to the reasonableness of an expectation of privacy. Nor is the right of access. As the Electronic Frontier Foundation points out in its amicus brief, at the time Katz was decided, telephone companies had a right to monitor calls in certain situations. Specifically, telephone companies could listen in when reasonably necessary to “protect themselves and their properties against the improper and illegal use of their facilities.” Bubis v. United States, 384 F.2d 643, 648 (9th Cir.1967). In this case, the NuVox subscriber agreement tracks that language, indicating that “NuVox may access and use individual Subscriber information in the operation of the Service and as necessary to protect the Service.” Acceptable Use Policy, available at http:// business. windstream. com/ Legal/ acceptable Use.htm (last visited Aug. 12, 2010). Thus, under Katz, the degree of access granted to NuVox does not diminish the reasonableness of Warshak’s trust in the privacy of his emails. Our conclusion finds additional support in the application of Fourth Amendment doctrine to rented space. Hotel guests, for example, have a reasonable expectation of privacy in their rooms. See United States v. Allen, 106 F.3d 695, 699 (6th Cir. 1997). This is so even though maids routinely enter hotel rooms to replace the towels and tidy the furniture. Similarly, tenants have a legitimate expectation of privacy in their apartments. See United States v. Washington, 573 F.3d 279, 284 (6th Cir. 2009). That expectation persists, regardless of the incursions of handymen to fix leaky faucets. Consequently, we are convinced that some degree of routine access is hardly dispositive with respect to the privacy question. Accordingly, we hold that a subscriber enjoys a reasonable expectation of privacy in the contents of emails “that are stored with, or sent or received through, a commercial ISP.” Warshak I,   -­‐34-­‐  
    • Case 4:09-cr-00342 Document 589 Filed in TXSD on 01/06/12 Page 35 of 40 490 F.3d 455, 473 (6th Cir. 2007); see Forrester, 512 F.3d at 511 (suggesting that “[t]he contents [of email messages] may deserve Fourth Amendment protection”). The government may not compel a commercial ISP to turn over the contents of a subscribers emails without first obtaining a warrant based on probable cause. Therefore, because they did not obtain a warrant, the government agents violated the Fourth Amendment when they obtained the contents of Warshaks emails. Moreover, to the extent that the SCA purports to permit the government to obtain such emails warrantlessly, the SCA is unconstitutional.Warshak, 631 F.3d at 285-86. 40. In United States v. Finley, 477 F.3d 250, 259 (5th Cir. 2007), the FifthCircuit recognized the continuing precedential value of Mancusi, and applied itsholding to find that a reasonable expectation of privacy in text messages (a formof email messaging on phones) exists for an employee on his employer-providedcellphone that was seized and then searched by law enforcement. There the FifthCircuit held: In determining whether a defendant has a reasonable expectation of privacy sufficient to contest the validity of a search, we inquire “(1) whether the defendant is able to establish an actual, subjective expectation of privacy with respect to the place being searched or items being seized, and (2) whether that expectation of privacy is one which society would recognize as reasonable.” The factors we consider include: whether the defendant has a [property or] possessory interest in the thing seized or the place searched, whether he has a right to exclude others from that place, whether he has exhibited a subjective expectation of privacy that it would remain free from governmental intrusion, whether he took normal precautions to maintain privacy[,] and whether he was legitimately on the premises.   -­‐35-­‐  
    • Case 4:09-cr-00342 Document 589 Filed in TXSD on 01/06/12 Page 36 of 40 The district court found that, although Finley’s employer issued him the cell phone, Finley nonetheless maintained a property interest in the phone, had a right to exclude others from using the phone, exhibited a subjective expectation of privacy in the phone, and took normal precautions to maintain his privacy in the phone. The government concedes that Finley had a possessory interest in the cell phone and that his use of the phone weighs in favor of his right to challenge the search. The sole basis for the government’s argument appears to be that Finleys employer, not Finley, had a property interest in the phone and that Finley should have expected the employer to read the messages on the phone after he returned it to the employer. But a property interest in the item searched is only one factor in the analysis, and lack thereof is not dispositive. See, e.g., Mancusi v. DeForte, 392 U.S. 364, 368, 88 S.Ct. 2120, 20 L.Ed.2d 1154 (1968) (“[C]apacity to claim the protection of the [Fourth] Amendment depends not upon a property right in the invaded place but upon whether the area was one in which there was a reasonable expectation of freedom from governmental intrusion.”); see also Cardoza-Hinojosa, 140 F.3d at 615 (“[N]o one of [the Ibarra] factors is necessarily decisive ....”). The district court did not clearly err in finding that Finley had a right to exclude others from using the phone. That Finley’s employer could have read the text messages once he returned the phone does not imply that a person in Finley’s position should not have reasonably expected to be free from intrusion from both the government and the general public. Further, the government stipulated that Finley’s employer permitted him to use the phone for his own personal purposes. And we see no error in the district court’s finding that Finley took normal precautions to maintain his privacy in the phone, despite the governments protestation that the phone was not password protected. In these circumstances, we conclude that Finley had a reasonable expectation of privacy in the call records and text messages on the cell phone and that he therefore has standing to challenge the search.Finley, 477 F.3d at 259 (citations omitted).   -­‐36-­‐  
    • Case 4:09-cr-00342 Document 589 Filed in TXSD on 01/06/12 Page 37 of 40 41. Searches and seizures of homes or offices by state actors require a validwarrant under the Fourth Amendment, or must occur under a recognizedexception to the warrant requirement. VII. ALL “FRUITS OF THE POISONOUS TREE” MUST BE SUPPRESSED 42. The “fruit of the poisonous tree” doctrine holds that the use of derivativeevidence must be suppressed if the evidence is discovered by the exploitation ofa prior illegality. Nardone v. United States, 308 U.S. 338, 84 L.Ed. 307, 60 S.Ct.266 (1939). “The exclusionary prohibition extends as well to the indirect as thedirect product of such invasions.” Wong Sun v. United States, 371 U.S. 471, 484,83 S.Ct. 471, 416 (1963). “The test for determining whether evidence isinadmissible as fruit of the poisonous tree is ‘whether, granting establishment ofthe primary illegality, the evidence to which instant objection is made has beencome at by exploitation of that illegality or instead by means sufficientlydistinguishable to be purged of the primary taint.’” Ward v. Dretke, 420 F.3d479, 488 (5th Cir. 2005); Wong Sun, 371 U.S. 471, 488 (internal quotation marksand citations omitted). 43. “Evidence that would otherwise be suppressible as fruit of the poisonoustree is purged of the primary taint ‘if it derives from an independent source, if thelink to the illegally secured evidence is attenuated, or if it would inevitably havebeen discovered without the aid of the illegally obtained evidence.’” Ward, 420   -­‐37-­‐  
    • Case 4:09-cr-00342 Document 589 Filed in TXSD on 01/06/12 Page 38 of 40F.3d 479, 488-89; United States v. Singh, 261 F.3d 530, 535 (5th Cir. 2001); seealso United States v. Ceccolini, 435 U.S. 268, 276-77 (1978) (holding that eventestimonial evidence is subject to suppression if it represents the unattenuatedfruit of an illegal search and seizure). 44. The evidence seized by the Receiver’s unauthorized access could not havebeen obtained through an independent source or inevitably discovered. Asdetailed above, the evidence was kept in one location housed on a server in SIBin Antigua. Without this unauthorized access the Receiver would have no othermeans of obtaining this evidence from any other source. Thus, due to thesecircumstances, it is clear that the Receiver was well aware of these circumstancesand chose to exceed the scope of its Receivership Order, violate the laws of theUnited States and Antigua and Barbuda, and Antiguan Court orders. Given theseviolations, the Court should suppress the evidence that is discovered by theexploitation of this prior illegality as fruits of the poisonous tree. PRAYER The Accused files this motion and request an evidentiary hearing, afterwhich, all matters illegally obtained be suppressed.   -­‐38-­‐  
    • Case 4:09-cr-00342 Document 589 Filed in TXSD on 01/06/12 Page 39 of 40 Respectfully submitted, BY: /s/ Ken McGuire Kenneth W. McGuire Federal Admission No. 21917 State Bar No. 00798361 P.O. Box 79535 Houston, TX 77279 Telephone: (713) 223-1558 Facsimile: (713) 335-3340 /s/ Ali R. Fazel Ali R. Fazel State Bar of Texas: 24012611 1004 Congress St., 3rd Floor Houston, Texas 77002 Phone: (713) 229-9292 Fax: (713) 229-9931 Attorneys for Defendant, ROBERT ALLEN STANFORD CERTIFICATE OF SERVICE & CONFERENCE I, Ken McGuire, do hereby certify that on this January 6th ,2012, a copy of the foregoing Motion was served by ECF service to thefollowing counsel of record, and their position on this motion is as follows:Gregg Costa [ ] UNOPPOSEDU.S. Attorney’s Office [X] OPPOSEDP.O. Box 61129 [ ] COULD NOT REACHHouston, Texas 77002Attorney for United States /S/ Ken McGuire KENNETH W. MCGUIRE   -­‐39-­‐  
    • Case 4:09-cr-00342 Document 589 Filed in TXSD on 01/06/12 Page 40 of 40 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISIONUNITED STATES OF AMERICA § Plaintiff § CRIMINAL DOCKET H-09-342-1 § HONORABLE DAVID HITTNERvs § §ROBERT ALLEN STANFORD § Defendant §   ORDER Defendants motion to suppress is hereby: GRANTED: Set for a hearing on this ______ day of ________________, 2012. DENIED: _____________________________ DAVID HITTNER UNITED STATES DISTRICT JUDGE   -­‐40-­‐