Opinion
00-CR-009S(Sr)
January 10, 2002
REPORT, RECOMMENDATION AND ORDER
Pursuant to 28 U.S.C. § 636(b)(1), all pretrial matters in this case were originally referred to former Magistrate Judge Carol E. Heckman by the Hon. William M. Skretny. Subsequently, by order of Chief Judge David G. Larimer, all pretrial matters in this case were referred to the undersigned. A specific order recommitting certain issues to be determined by this Court was issued by Judge William M. Skretny on October 16, 2000. The defendants are charged in a one-count indictment with conspiracy to commit wire fraud in connection with telemarketing activities, in violation of 18 U.S.C. § 1343 and 371.
PRELIMINARY STATEMENT
Presently before me are three matters which are all interrelated. The first and second issues to be addressed were specifically referred by Judge Skretny by his Order of October 16, 2000 and involve the prior Report and Recommendation of former Magistrate Judge Carol E. Heckman, which was filed on May 22, 2000 (Dkt. #13). In her Report and Recommendation, Judge Heckman recommended that the defendants' motion seeking suppression of certain evidence be denied. After careful study of that Report and Recommendation, Judge Skretny determined that additional findings were necessary prior to rendering his decision on the defendants' motion to suppress and therefore, recommitted the matter to the undersigned for such findings. This Report relates to the detention of certain UPS packages by UPS representatives and the length of time said packages were detained in light of the government's concessions that "(1) probable cause did not exist at the time the packages were `detained' by UPS; and (2) UPS was acting as an agent of the Government at the time when (sic) it `detained' the packages at issue." See Order of Judge Skretny, dated October 16, 2000, ¶ 6 (Dkt. #36).
It also should be noted that during the course of the hearing conducted before the undersigned, the government reiterated its position that UPS was acting as the government's agent:
THE COURT: Are you stipulating that the detention, if it was done by UPS, was done on behalf of the Government, and, therefore, it was Government action?
MR. BRUCE: Absolutely.
T. 97.
Specifically, Judge Skretny ordered that this matter be recommitted to the undersigned for further findings on:
(1) whether reasonable suspicion existed at the time that UPS "detained" the packages at issue and (2) whether the length of time that the packages were "detained" before a search warrant was issued was reasonable under the law.
Order of Judge Skretny (Dkt. #36) (emphasis added). It should be noted that Judge Skretny declined to adopt then-Magistrate Judge Heckman's findings and recommendation on these issues. Id. at p. 2 ("[I]n all other aspects, this Court accepts Judge Heckman's Report and Recommendation for the authorities cited and the reasons contained therein.") (emphasis added). Judge Skretny further ordered that I determine whether a hearing is necessary to resolve said issues. A hearing was ordered and held on December 27, 2000, and upon completion of same, oral argument by counsel was also heard. Thereafter, a briefing schedule was established for the filing of briefs on the issues by the respective parties. This schedule was amended at the request of defense counsel and government counsel.
Subsequently, defense counsel filed a motion for reconsideration of this Court's Decision and Order denying defendants' request for a Franks hearing. Argument of this motion was consolidated with the issues relating to defendants' motion to suppress, and oral argument was heard on August 17, 2001. On November 5, 2001, the Court held a hearing with counsel to address the issue of whether the defendants had standing to make the motion to suppress, an issue that is discussed in more detail below.
The final issue to be addressed in this Report is the motion of the defendants seeking reconsideration of their application for a hearing pursuant to Franks v. Delaware, 438 U.S. 154 (1978).
During my deliberations on the legal issues presented for determination, I, sua sponte, raised the issue of "standing" on the part of the defendants to make the motion to suppress. More specifically, the addressee on each of the packages at issue is Advanced Distributing, the fictitious business name utilized by a corporation known as PPG Enterprises, Inc. This corporation is not a defendant in this proceeding. The expectancy of privacy would normally rest in the sender of the package and the recipient-addressee of the package. As a result, it would appear that the individual defendants herein had no reasonable expectation of privacy in the packages at issue. They were to be delivered to a business address and facility and presumably opened by staff employees of Advanced. However, the government has not asserted any claim contesting the right of the defendants to make the motion to suppress and has agreed to the filing and arguing of such motions. That being the case, I have not addressed this issue any further and make no finding or recommendation with respect to said issue.
The following constitutes my analysis of the facts and the law to be applied with respect to the issues submitted to me and my recommendation based on said analysis.
FACTS
Sometime prior to December 2, 1993, a Buffalo Telemarketing Task Force ("Task Force") was created for the purpose of investigating and assisting in the prosecution of telemarketing companies engaging in fraudulent telemarketing practices. This Task Force is composed of representatives from various law enforcement agencies, including the FBI, Secret Service, United States Postal Authorities, and the New York State Police. The members of the Task Force work collaboratively with the United States Attorney's Office for the Western District of New York in carrying out their responsibilities. T. 20. For purposes of this Report and Recommendation, the principal members of the Task Force are Special Agent Elizabeth R. Rios of the FBI and State Investigator Thomas Flechsenhaar of the New York State Police.
References to "T" are to the transcript of the hearing conducted by the Court on December 27, 2000.
One of the techniques utilized by telemarketing companies engaged in fraudulent telemarketing is described as either a "one in four" or a "one-in-five" sweepstakes wherein and whereby a victim is telephonically advised that he or she has won one of four, or one of five, valuable prizes such as a large-screen television or a pre-paid vacation. However, in order to be able to claim this prize, the victim must first purchase a particular product such as a water filtering system from the company at a purchase price of $600 or some other highly inflated price over the true value of the product in question. Elderly adults are the usual targets of this practice. T 24, 28-29, 32-33.
Advanced Distributing ("Advanced"), the assumed business name for PPG Enterprices, Inc. of which the defendants Geiger and Gerace are alleged to be the sole shareholders and officers, is located at 3109 Delaware Avenue, Kenmore, New York and is engaged in a telemarketing business. On or about December 2, 1993, a telemarketing fraud file on Advanced ("Advanced File") was opened by the Task Force as a result of a complaint having been filed by an alleged victim with the FBI. Thereafter, in 1994, numerous individual and law enforcement complaints against Advanced were noted in the file, which complaints were received from various locations in New York and New Jersey. T. 21-23, 40. Basically, these complaints indicated that customers of Advanced had not received the prizes that had been promised to them. Special Agent Rios became the case agent on the Advanced File in October, 1994, and at that time, she reviewed the file. Based on her experience in investigating telemarketing fraud, she concluded from this review that Advanced was engaged in a "one-in-four" or "one-in-five" scheme in carrying on its business activities. T. 24, 51-52.
Investigator Flechsenhaar testified that he has substantial experience in investigating telemarketing companies, including those that were engaged in one-in-four and one-in-five sweepstakes schemes. T. 192, 194-95.
On December 19, 1994, Investigator Flechsenhaar was contacted by James Castiglione who was the loss prevention manager for the Buffalo Office of United Parcel Service ("UPS"). Mr. Castiglione advised Investigator Flechsenhaar that a Mary A. Martinkovic from Aurora, Illinois had contacted UPS with a request that certain money which she had sent to Advanced via UPS be returned to her. T. 52-53, 172-74, 213-14, 222. Mr. Castiglione asked Investigator Flechsenhaar to call Ms. Martinkovic and determine whether "she wanted this deal [with Advanced] to be consummated, whether she was comfortable with the fact that she had forwarded the money." T. 153. Investigator Flechsenhaar called Ms. Martinkovic and interviewed her on the telephone which caused him to believe that she was confused about having sent money amounting to $1,500 to Advanced at its Delaware Avenue address in Kenmore, New York as a result of being told that she was a winner of additional monies. Nevertheless, according to Investigator Flechsenhaar, she requested that the UPS package that she had sent to Advanced be returned to her. T. 154-155, 224-25, 229, 255-56.
Prior to the December 19, 1994 contact by Mr. Castiglione, Investigator Flechsenhaar apparently had no knowledge of Advanced and its business activities. As a result of this contact, Investigator Flechsenhaar conducted a complete review of the Advanced File in the Task Force office. T. 198. He requested Mr. Castiglione keep him advised of any UPS packages addressed to Advanced when they arrived in the UPS Buffalo depot. Also, on or about December 19, 1994, Investigator Flechsenhaar conducted a physical surveillance of Advanced's offices at 3901 Delaware Avenue and made notes of the New York license plate numbers on the vehicles parked in the company's parking lot, some of which he later determined belonged to the individuals whom alleged victim-customers of Advanced identified as being the names of persons who had called them on behalf of Advanced. T. 55, 200.
Investigator Flechsenhaar briefed Special Agent Rios on or about December 19, 1994 as to his conversation with Mr. Castiglione and interview of Ms. Martinkovic. Thereafter, Special Agent Rios reviewed the 302 reports that Investigator Flechsenhaar had prepared with respect to the events of December 19, 1994. This review caused her to conclude that Ms. Martinkovic had been victimized by Advanced since "she [Martinkovic] assumed she was a prize winner." However, Special Agent Rios could not determine from this review whether Ms. Martinkovic had been the vicitm of a one-in-four or one-in-five scheme. T. 54.
As a result of the aforesaid events of December 19, 1994 and the review of the Advanced File, Investigator Flechsenhaar concluded that Advanced utilized a modus operandi in carrying out its telemarketing activities wherein and whereby an Advanced employee would call someone and state directly or by implication to the person called that he or she would receive one of four or one of five different prizes consisting generally of a large-screen television set, pre-paid vacation, cash or an automobile. The person would then be requested to purchase a product being sold by Advanced such as a home cleaning product, or personal care product or water purifier. Often the person was allegedly told that he or she had already won the prize but that before it could be claimed, the person had to buy the product in question and make payment for same. This modus operandi, he opined, constituted illegal telemarketing. T. 200-205.
Thereafter, on the morning of January 12, 1995, Investigator Flechsenhaar, as part of his routine investigative procedure of contacting common carriers, called Mr. Castiglione at the Buffalo office of UPS and inquired as to whether any packages had been received for delivery to Advanced. T. 181-82, 215-16, 230. Mr. Castiglione advised him that three such packages had arrived. T. 182, 230. As a result of this report, Investigator Flechsenhaar contacted Assistant United States Attorney Anthony Bruce for the purpose of determining whether the Task Force could seize or detain the packages in question. Mr. Bruce advised him that the packages could be detained. T. 182-83, 230. Upon that advice, Investigator Flechsenhaar contacted Mr. Castiglione in the morning hours of January 12, 1995 and directed him to detain the three packages addressed to Advanced since the Task Force was going to attempt to contact the senders of those packages to determine if they had been victimized by Advanced's employees by use of a fraudulent scheme. He further advised Mr. Castiglione that the Task Force would be applying for a search warrant for the three packages. T. 183.
Investigator Flechsenhaar advised Special Agent Rios of the arrival and detention of the three UPS packages addressed to Advanced, but no one on the Task Force apparently ever made a determination as to the date and time of arrival of the packages in the Buffalo UPS depot. T. 55-56, 74. Nevertheless, Special Agent Rios concluded that the three packages contained "fruits of crime" which she described as checks from alleged victims made payable to Advanced. She based this conclusion on her experience as a law enforcement agent and her claimed knowledge of the alleged modus operandi of Advanced. This claimed knowledge was based on the ongoing investigation of Advanced, including the prior complaints contained in the Advanced File. T. 69-71. She believed that in all likelihood, each package would contain a check or money order made payable to Advanced which would be encashed by it in a normal business way. T. 129-30. It should be noted that on cross-examination, Special Agent Rios admitted that such check or money order would be available for retrieval after it had been cashed since the cancelled check would be returned to the alleged victim maker, and the encashed money order or other type of negotiable instrument would be returned to the issuing financial institution. Investigator Flechsenhaar conceded this as well. T. 132, 208-209.
Special Agent Rios testified that she contacted Assistant United States Attorney Anthony Bruce to determine "what I can do" with respect to the packages in question. The names and addresses of the senders appearing on the UPS packages were obtained from UPS, and Special Agent Rios and Investigators Flechsenhaar and Kirkpatrick attempted to telephonically contact each of these senders of the packages on January 12, 1995. These senders were identified as Steve Brown ("Brown"), David Maffei ("Maffei") and Harlen Merkel ("Merkel") by Mr. Castiglione. T. 57-58. Long distance information of the telephone company and out-of-state local police departments were utilized by Special Agent Rios and Investigators Flechsenhaar and Kirkpatrick to locate the aforesaid senders and their telephone numbers. T. 184-85, 261. Multiple attempts were made by these investigators, approximately four to six calls to each sender, to reach these senders. However, they were totally unsuccessful in this endeavor on January 12, 1995. T. 58-63. Attempts were also made to contact these senders by having the local police in the communities in which they resided visit their homes to determine if they were present. T. 59. Investigators Flechsenhaar and Kirkpatrick pursued their efforts of contacting the senders until approximately 5:00 p.m. on January 12, 1995, that being the end of their normal work day. Special Agent Rios testified that she continued in her attempts to contact the senders until approximately 7:00 p.m. on January 12, 1995. T. 63.
There appears to be confusion about the call or calls to Assistant United States Attorney Bruce, i.e., whether Special Agent Rios made the call or whether it was Investigator Flechsenhaar who made the call, or whether each made a call as to what could be done with the packages.
On the following day, January 13, 1995, a representative of UPS advised the Task Force that an additional six packages had been received in the Buffalo depot for delivery to Advanced. T. 64. Investigator Flechsenhaar learned of this sometime prior to 9:00 a.m. on January 13, 1995 and requested UPS to hold these six packages along with the previous three packages that had been detained on January 12, 1995. T. 188-89. Once again, the senders' names and addresses on the packages were obtained by the investigators and the same efforts and methods utilized by the investigators on January 12, 1995 in attempting to contact senders were put into effect for the six packages made known on January 13, 1995. These attempts began at 7:00 a.m. on January 13, 1995 and did not conclude until 7:00 p.m. of that day after numerous calls were placed to each sender ranging from ten (10) calls by Special Agent Rios, twelve (12) calls by Investigator Fitzpatrick and fifteen to twenty (15-20) calls by Investigator Flechsenhaar. T. 65-69, 186, 190, 264.
Unlike their efforts on January 12, 1995, the efforts of January 13, 1995 proved successful in that six of the nine senders of the packages were reached by the investigators and telephonically interviewed. T. 66, 119, 127, 268-69. The sender of one of the packages could not be identified since there was only a partial return address on the package. T. 188-89. The six senders in question were identified as being Steve Brown, Steve Catlin, Walter Kramer, Harlen Merkle, Gloria Roseland and Thelma Thompson, and each was interviewed by either Special Agent Rios, Investigator Flechsenhaar or Investigator Kirkpatrick. As a result of these interviews, the Task Force investigators concluded that Advanced had perpetrated a fraudulent one-in-four or one-in-five telemarketing scheme as to those persons thereby causing Special Agent Rios to apply for a search warrant so as to authorize an outright seizure of the nine (9) packages detained by UPS. More specifically, Special Agent Rios testified that the initial decision to have UPS detain the packages in question and the justification for the subsequent search warrant were based on:
As will be discussed later, certain material facts with respect to the interviews of Steve Brown and Gloria Roseland were omitted from Special Agent Rios' affidavit in support of her application for a search warrant submitted to Magistrate Judge Maxwell.
information we already knew about the company, about there (sic) were already complaints that were filed, they were already suspect (sic) of ripping people off, and I knew they were using UPS, and I knew what was in there were fruits of the crime, and I didn't want these people to get ripped off. And I wanted to, you know, get a search warrant. Make sure and see what was in them.
T. 77-78.
Investigator Flechsenhaar testified that UPS was directed to detain the packages because they had come from out of state, which was common to the operation of telemarketing companies, combined with his knowledge of Advanced based on his conversations with Mr. Castiglione on December 19, 1994, his review of the Advanced File, his surveillance of Advanced's premises and his interview of Ms. Martinkovic. T. 207. He suspected that the senders of the nine packages detained had been defrauded by Advanced and that each package contained a check made payable to Advanced, and he therefore wanted to protect these victims. T. 208-09.
Special Agent Rios appeared before Magistrate Judge Maxwell on January 14, 1995 and obtained a search warrant based on her affidavit sworn to January 14, 1995 wherein she basically set forth the history of the Task Force's investigation pertaining to Advanced, including the purported interviews of the six senders previously identified herein. In summing up this investigation, Special Agent Rios asserted that the facts set forth in her affidavit
At the time of the search warrant application on January 14, 1995, a tenth (10th) parcel addressed to Advanced had been detained by UPS representatives.
establish that salespersons of ADVANCED . . . have made false and misleading promises and representation (sic) for obtaining money by means of interstate wire communications in violation of Title 18, Section 1343. . . .
Rios Affidavit, ¶ 6, attached to Dkt. #7, Exhibit A.
Further, the packages were alleged to contain "the fruits of said violations," i.e., checks made payable to Advanced by the victims of this fraudulent telemarketing scheme. Id.
On January 14, 1995, Magistrate Judge Maxwell issued a search warrant for the search and seizure of the ten packages detained by UPS on January 12 and 13, 1995 pursuant to the directives of the Task Force representatives.
On January 17, 1995, James Castiglione advised the Task Force that another package addressed to Advanced had been received by UPS at its Buffalo depot. Special Agent Rios submitted an affidavit sworn to on January 17, 1995 along with an application for a search warrant for this package based on the results of the search and seizure of the ten packages conducted on January 14, 1995.
The search of the ten packages on January 14, 1995 resulted in the seizure of ten checks totaling approximately $8,760 made payable to Advanced. Magistrate Judge Maxwell issued a search warrant on January 17, 1995 for this additional package.
At the time UPS was directed by representatives of the Task Force to detain the parcels sent by Brown, Maffei and Merkle, the Task Force had not received any complaints from, or information about, any of these senders; nor did the Advanced File contain any complaints by them or any other information relating to these individuals. As Special Agent Rios testified, "[t]hey were new victims . . . [t]hey were new people." T. 116. However, Special Agent Rios admitted in her testimony that when Brown was contacted by a representative of the Task Force, he specifically directed that his transaction with Advanced be allowed to be consummated and that she had not disclosed this fact to Magistrate Judge Maxwell either in her affidavit or in conference with him at the time of her application for the warrant. T. 154-155. Nor did she disclose that Brown was 35 years of age as learned by the Task Force. Another disturbing deficiency in Special Agent Rios' disclosures to Magistrate Judge Maxwell existed in her recitation of facts relating to the Task Force interview of alleged victim Roseland. Although her affidavit describes in detail the alleged conversation between Roseland and a representative of Advanced resulting in a check in the sum of $598 being sent by Roseland to Advanced via UPS, Special Agent Rios failed to inform Magistrate Judge Maxwell that Ms. Roseland had already stopped payment on the check in question and that Rios was aware of this prior to submitting her affidavit in support of her application for a search warrant. The 302 report reflecting the telephone interview of Ms. Roseland on January 13, 1995 wherein she advised Investigator Kirkland that she had stopped payment on her check to Advanced had been supplied to Agent Rios prior to her completion of her affidavit submitted in support of her application for the search warrant. For reasons unexplained, Agent Rios failed to make this information known to Judge Maxwell either in her affidavit or orally when appearing before him for the warrant.
There are a number of other discrepancies in the Rios affidavit and her testimony as pointed out during the hearing conducted by this Court on December 27, 2000, but they do not require elaboration at this time for purposes of resolving the present issues at hand.
DISCUSSION 1. Reasonable Suspicion to "Seize" Packages
It is well-settled that reasonable suspicion is not susceptible to precise definition, but rather is the result of cumulative facts or factors that would lead a reasonable person to suspect the existence of criminal activity. United States v. Glover, 957 F.2d 1004, 1009 (2d Cir. 1992). A Terry stop is permissible if under a totality of the circumstances, reasonable suspicion is present. United States v. Cortez, 449 U.S. 411, 418 (1981); Terry v. Ohio, 392 U.S. 1 (1968). It has been repeatedly stated that a court must do its best to review the facts "through the eyes of a reasonable and cautious police officer on the scene, guided by his experience and training." United States v. Bayless, 201 F.3d 116, 132 (2d Cir. 1999), citing United States v. Oates, 560 F.2d 45, 61 (1977).
Terry stops have been extended to the seizure or detention of packages as well as persons. In a well-written opinion, the Southern District of New York discussed the seminal United State Supreme Court decision on the issue of detention of packages:
In United States v. Van Leeuwen, 397 U.S. 249, 90 S.Ct. 1029, 25 L.Ed.2d 282 (1970), the United States Supreme Court held that the temporary detention of packages for purposes of investigation is not an "unreasonable seizure" in violation of the Fourth Amendment, provided (1) law enforcement authorities have a reasonable suspicion of criminal activity; and (2) the packages are not detained for an unreasonable length of time. See also United States v. Place, 462 U.S. 696, 702, 103 S.Ct. 2637, 2641-42, 77 L.Ed.2d 110 (1983) (applying doctrine of Terry v. Ohio, 392 U.S. 1, 88 S.Ct. 1868, 20 L.Ed.2d 889 (1968), to detention of personal property, and holding that detention of luggage on less than probable cause, in order to pursue a limited course of investigation, does not violate defendant's Fourth Amendment rights where there is "reasonable articulable suspicion" that luggage contains contraband or evidence of a crime).
United States v. Martinez, 869 F. Supp. 202, 205 (S.D.N.Y. 1994). Justice Douglas, writing for the United States Supreme Court of the United States in United States v. Van Leeuwen stated that:
No interest protected by the Fourth Amendment was invaded by forwarding the packages the following day rather than the day when they were deposited. The significant Fourth Amendment interest was in the privacy of this first-class mail; and that privacy was not disturbed or invaded until the approval of the magistrate was obtained.
United States v. Van Leeuwen, 397 U.S. at 253; see Melita v. United States, 2001 WL 829867 (S.D.N.Y. July 20, 2001). Therefore, mere detention of the package, so long as the length of detention is not unreasonably long, does not run afoul of the Fourth Amendment to the United States Constitution. This assumes, of course, that there is sufficient reasonable suspicion to detain or seize the package in the first instance. Thus it is clear that a determination must first be made as to whether the Task Force had reasonable articulable suspicion to detain the packages addressed to Advanced which arrived at the Buffalo, New York UPS depot on January 12 and 13, 1995.
As set forth above, three packages were detained and/or seized by the UPS at the Task Force's direction on January 12, 1995, and an additional six packages were detained and/or seized in the same manner on the following day.
The testimony of the Task Force members who appeared before me establishes that the Task Force had maintained a file on Advanced that contained numerous complaints about Advanced from alleged victims. Agent Rios and Investigator Flechsenhaar were familiar with a telemarketing scheme known as one-in-four or one-in-five, in which an alleged victim is contacted by telephone and, essentially, told to send in a sum of money in exchange for being identified as the winner of a substantial prize. They had learned from their review of the Advanced File that Advanced had used such a scheme in allegedly defrauding members of the public prior to January 1995. When the Task Force agents learned that three packages addressed to Advanced had been received by the local UPS depot, the government argues, it was reasonable for them to be suspicious about such packages potentially containing checks or other forms of payments to Advanced, which would have been consistent with Advanced's modus operandi of requiring victims to mail payment to Advanced.
In arguing for suppression, the defendants maintain that the government lacked reasonable suspicion to detain the UPS-transported packages since there were no specific complaints made to, or known by, the Task Force about the detained packages prior to the detention. Moreover, they argue that with respect to the packages sent by alleged victims Roseland and Brown, the Task Force knew by mid-day on January 13, 1995, that Roseland had already stopped payment on the check contained within her package and that Brown specifically stated his desire to the Task Force that his transaction with Advanced go forward. See Stipulation of Facts among the Parties, filed on May 8, 2001 (Dkt. #47). The existence of these factors, claim the defendants, demonstrates that the government did not have reasonable suspicion to detain any packages, and at a minimum, any reasonable suspicion to detain the Roseland and Brown packages evaporated by mid-day on January 13, 1995.
"A government official may not remove a package from the stream of mail and detain it without a warrant unless he has `a reasonable suspicion based on articulable, objective facts that a package contains contraband.'" United States v. Reeves, 233 F.3d 555, 558 (8th Cir. 2000) (Bye, J., dissenting) (citing United States v. Sundby, 186 F.3d 873, 875 (8th Cir. 1999)), (in turn citing United States v. Van Leeuwen, 397 U.S. at 251-53); but see U.S. v. Quiroz, 57 F. Supp.2d 805 (D.Minn. 1999) (holding that the brief taking of a package from FedEx, for the purposes of a drug dog sniff, did not constitute detention for which reasonable suspicion is necessary). Although I credit the government agents' testimony that they believed that they knew of Advanced's alleged modus operandi, I do not think that such information, even if buttressed by the specific facts contained within the Task Force's file on Advanced, creates reasonable suspicion to believe that all packages received from individuals which had been shipped via UPS to Advanced's Buffalo, New York address might contain fruits of a crime. What is troublesome is that this is exactly what the government contends — that it possessed reasonable suspicion that any package sent to Advanced must necessarily contain fruits of a crime. In like manner, I do not accept the contention of counsel for the government that every transaction made by Advanced, and indeed every telephone call made by a representative of Advanced, would be considered a fraudulent criminal transaction.
During the course of the hearing, the following colloquy occurred:
THE COURT: But is it the Government's position that every package sent to Advanced is a fruit-of-the-crime package?
MR. BRUCE: I would think so, yes.
* * *
THE COURT: Every transaction that they made, every telephone call that they made, you say was a fraudulent criminal transaction?
MR. BRUCE: There is reasonable suspicion to believe. . . . [b]ased on the investigation to date.
T. 151.
Nevertheless, for purposes of this analysis, assuming that every transaction attempted or consummated by Advanced is criminal in nature, as the government so vigorously contends, such a position does not logically translate into a reasonable belief or conclusion that every package sent by an individual to Advanced must, necessarily, contain fruits of a crime. In United States v. Johnson, 171 F.3d 601(8th Cir. 1999), the Court of Appeals for the Eighth Circuit was equally troubled by law enforcement officials who did not establish specific, articulable facts to underlie their assertion of reasonable suspicion.
In Johnson, a postal inspector detained an Express Mail package which fit the Express Mail/Narcotics Profile that the authorities had developed in order to combat trafficking in narcotics. Johnson, 171 F.3d at 602. The profile included such things as handwritten labels, being sent from and delivered to the same address, although to a different person and utilizing different zip codes, and originating from a known drug source state. Id. A canine sniff revealed the presence of narcotics, and the authorities applied for and received a warrant to search the package, finding narcotics contained therein. Id. at 603. The defendant moved to suppress the evidence, arguing that the officer did not have reasonable suspicion to detain the package in the first instance; thereafter, the magistrate judge denied the motion. Id. After a de novo review, the district court adopted the magistrate judge's conclusions, and the case was appealed to the circuit court, which reversed. Id. Although Johnson is a drug trafficking case, the reasoning used by the circuit court is equally applicable in this matter. As stated by the Johnson court, "[t]he Supreme Court has made it particularly clear that `based on the whole picture, the detaining officers must have a particularized and objective basis for suspecting a particular [package detained] of criminal activity.'" Johnson, 171 F.3d at 604 (citing United States v. Cortez, 449 U.S. 411, 417-418 (1981)) (emphasis added).
I note that most cases in this subject area deal with narcotics offenses.
Reasonable suspicion about the particular packages at UPS was missing when the Task Force directed UPS to detain those packages in the morning hours of January 12 and 13, 1995. As admitted by Agent Rios, they did not have any objective suspicions that were directly related to the packages that had come into the UPS depot nor did they possess any information, much less complaints about Advanced, from the senders of same; rather, their detention directive to UPS was based on "information we already knew about the company, about there were already complaints that were filed [sic], they were already suspect (sic) of ripping people off. . . ." T. 77. While law enforcement officials are certainly permitted to draw inferences from facts known to them and from their experience, "those inferences and deductions must be explained." Johnson, 171 F.3d at 604; Cortez, 449 U.S. at 418-422. "Specifically, the Fourth Amendment requires an officer to explain why the officer's knowledge of particular criminal practices gives special significance to the apparently innocent facts observed." Johnson, 171 F.3d at 604; Cortez, 449 U.S. at 418-422.
In this case, nothing in the record before me suggests that there was anything inherently suspicious about the packages that had arrived at the Buffalo UPS depot. The Task Force members did not explain the connection between their knowledge of Advanced's prior practices and the packages detained by UPS.
Agent Rios simply made a conclusory statement, that "[she] knew what was in there were fruits of the crime [sic]," but failed to explain how she developed reasonable suspicion that these particular packages were suspect. Contrary to the suggestion of government counsel in his post-hearing brief, the record does not suggest that the most-recently interviewed alleged victim, Ms. Martinkovic, alluded to the one-in-four or one-in-five scheme that was believed by the government to be the modus operandi of Advanced. Such a nexus between Martinkovic and the alleged modus operandi is completely absent, as admitted by Rios. T. 54. Thus, at the time the packages were ordered detained, the Task Force's direct information about Advanced's alleged modus operandi, as established from interviews of alleged victims contained in the file, was at least five months old, since such a scheme had not been described by Ms. Martinkovic, in her telephone interview with Investigator Flechsenhaar. T. 50, 54.
It is too simplistic, in my opinion, to state that if an allegedly fraudulent telemarketing organization conducts its business by obtaining monies via mail from individual victims, then it is reasonable to suspect that all packages addressed to Advanced must contain fraudulently-obtained monies, denominated by the Task Force as fruits of the crime. While the sending of monies in this manner may occur in some instances, the Task Force did nothing to distinguish the packages that arrived at UPS on January 12 and 13, 1995 from innocent mailings such as personal missives and the like. Simply put, the Task Force members did not explain what caused them to conclude that these particular packages may have contained fruits of a crime. See Johnson, 171 F.3d at 604. There was nothing specific about these particular packages, which came to light during an apparently random, though typical, call from the Task Force to the common carrier UPS, that reflects the reasonable suspicion that government agents claimed to have possessed at the time of the detention.
The government will undoubtedly take issue with this Court's reliance on Johnson, arguing that the law enforcement officials in Johnson relied on an Express Mail/Narcotics Profile, and not on their experience and expertise in such law enforcement matters. There is, however, little difference in the approach taken by the Johnson authorities and the Task Force in this case. The officer's reliance on the profile in Johnson is analogous to the Task Force's reliance on the alleged modus operandi of fraudulently scheming telemarketers in this matter. Without more, neither profile provides sufficiently particularized and objective facts upon which to find that reasonable suspicion existed at the time in question.
Furthermore, in light of the stipulation of facts entered into by counsel with respect to the timing of the telephone calls to the senders of packages (Dkt. #47), it is apparent to me that the government could not have possessed reasonable suspicion to believe that the packages of Roseland and Brown bore criminal fruits once they had contacted each sender by telephone on January 13, 1995, the day prior to their warrant application. Finally, it bears mentioning that Agent Rios's testimony revealed misstatements and omissions in both her affidavit in support of the search warrant and in her testimony. She inexplicably failed to include pertinent information about alleged victims Roseland and Brown in her affidavit. Further, without explanation, she contradicted herself about whether she, personally, had made any attempts to contact alleged victims by telephone on January 12, 1995. Under all of the circumstances set forth in the record, including the testimony of Agent Rios and Investigators Flechsenhaar and Kirkpatrick, I conclude that the government did not have reasonable suspicion on January 12, 1995 to direct UPS to detain the three packages addressed to Advanced, and furthermore, did not have reasonable suspicion on January 13, 1995, to direct UPS to detain the six packages addressed to Advanced. Since the affidavit of Agent Rios for the January 17, 1995 warrant was based on the information gleaned from the seizure and search of the January 12 and 13 packages, the warrant is unconstitutionally defective because it is "fruit from the poisoned tree." Therefore, it is my recommendation that this package be suppressed as well.
2. Three-Day Detention of the Packages
The next inquiry that Judge Skretny requested that I make is whether the length of time that the packages were detained before a search warrant was issued was reasonable under the law. "Even where law enforcement officials have reasonable suspicion to detain a package, the United States Supreme Court has held that, `[t]heoretically . . . detention of mail could at some point become an unreasonable seizure of `papers' or `effects' within the meaning of the Fourth Amendment.'" Martinez, 869 F. Supp. at 206 (citing Van Leeuwen, 397 U.S. at 252).
Both the government and the defendant have cited United States v. LaFrance, 879 F.2d 1 (1st Cir. 1989) in support of their diametrically opposed positions. LaFrance involved the delivery of a FedEx package suspected of containing narcotics. Upon learning that the package had arrived in FedEx's control, law enforcement officials directed FedEx to detain the package. In examining the actions of the law enforcement personnel who attempted to conduct their investigation over the course of several more hours, well past the time when Mr. LaFrance expected delivery of the package, the First Circuit Court of Appeals held:
In a parcel detention case, as with luggage detention, reasonableness remains the focus of judicial inquiry. But, what is reasonable in one type of situation may not be reasonable in the other. Put another way, "reasonableness `is a mutable cloud, which is always and never the same.'" Sierra Club v. Sec'y of the Army, 820 F.2d 513, 517 (1st Cir. 1987) (quoting and paraphrasing Ralph Waldo Emerson). We must ask whether the detention, taken as a whole, or any step therein, was unreasonable. In so doing, we must be careful of the citizen's rights, and equally careful that we do not hold law enforcement to a standard akin to perfection.
Id. at 6. The approach taken by the parties in applying the LaFrance test is interesting. The government, warning that the Court must not apply a stopwatch to the actions of the law enforcement personnel, commences its examination of the circumstances as of the moment the initial three parcels are directed by the Task Force to be held. In contrast, the defendants begin their analysis approximately 13 months earlier, when the Task Force first opened a file on Advanced.
In its fact-sensitive analysis, the government argues that the agents and investigators worked diligently from early on January 12, 1995 to the time they made application for the search warrant, some two days later on Saturday, January 14, 1995, describing how the agents were required to locate telephone numbers for the senders of the packages, and how they endeavored to contact each of the nine senders, making repeated telephone calls during the day and evening hours of January 12 and 13, 1995. I cannot disagree that such activity demonstrates diligence and a concentrated, vigorous approach to ascertaining enough factual information to support a finding of probable cause upon which to issue a search warrant.
Nevertheless, I am troubled by the facts highlighted by the defendants. The Task Force opened a file on Advanced in December of 1993, and merely filed complaints therein, and based on the record before me, had not actively investigated Advanced in a manner calculated to determine whether its activities were illegal until December of 1994.
Particularly troubling is the three and a half week hiatus between the time of the Martinkovic interview, and the call from Investigator Flechsenhaar to UPS to request that UPS be "on watch" for packages addressed to Advanced, which Flechsenhaar admitted was merely a routine call he made to various common carriers at regular intervals. There is a complete absence of any investigation or development of new information on the part of the Task Force during the more than three weeks between the Martinkovic complaint and the detention of the UPS packages. Based on the testimony of the government witnesses, nothing occurred during this time period to advance the investigation, or to assist the Task Force members in developing adequate reasonable suspicion, much less probable cause, to believe that certain individual packages mailed to Advanced contained fruits of a crime. It is not the Court's province to suggest appropriate alternative methods for conducting law enforcement's business of investigating crime, but rather, to determine whether in a specific instance, the government officials acted in a reasonable manner. I conclude that in this case they did not act reasonably when they failed to adequately investigate Advanced, and develop fresh information about its modus operandi prior to ordering the packages in question detained.
But it is not this lack of diligent preparation or investigation alone that compels my finding that the time period during which the packages were detained, absent a warrant, was unreasonable as a matter of law. I also base my conclusion on the fact that no exigency existed with respect to the packages in question. As Agent Rios admitted, the evidence she was seeking — checks or other instruments of payment — could have been obtained from the alleged victim or the bank or other financial institution upon which the instruments were drawn. See T. 129-130, 132, 208-209 (Investigator Flechsenhaar essentially conceded this fact as well during his testimony). As succinctly stated by the United States Supreme Court, "the Court has interpreted the [ Fourth] Amendment to permit seizure of the property, pending issuance of a warrant to examine its contents, if the exigencies of the circumstances demand it. . . ." United States v. Place, 462 U.S. 686 [ 462 U.S. 696], 701 (1983) (emphasis added); see also United States v. Martin, 157 F.3d 46 (2d Cir. 1998). In keeping in mind this important principle, I conclude that no actual exigency existed at the time the Task Force directed UPS to detain the packages.
This adds to the government's burden, in my opinion, of showing how its actions in attempting to obtain probable cause were handled with dispatch and did not lead to an unreasonably long warrantless detention of the packages. In my estimation, the government has failed to do so.
I find United States v. Martin, 157 F.3d 46, relied upon by former Magistrate Judge Heckman in her Report and Recommendation (Dkt. #13), to be distinguishable because Martin's holding was premised on a finding by the Second Circuit Court of Appeals that there was probable cause to detain the package in question. Martin stated specifically that a warrantless detention of a package based on probable cause is allowed to continue for a longer period of time — though not an unreasonable or indefinite length of time — than a package that has been detained based only on reasonable suspicion. Martin, 157 F.3d at 54 (finding that United States v. Place was not controlling because the package in Martin was detained based on probable cause, not reasonable suspicion). As the Supreme Court of the United States has recognized, "[t]he length of the detention of respondent's [possessions] alone precludes the conclusion that the seizure was reasonable in the absence of probable cause." United States v. Place, 462 U.S. 696, 709 (1983). Because Magistrate Judge Heckman's determination was premised on the existence of probable cause at the inception of the detentions, a circumstance that the government now concedes did not exist, I do not feel constrained to adopt Magistrate Judge Heckman's reasoning.
Magistrate Judge Heckman's belief that probable cause existed is amply demonstrated by the passage that states "[as discussed above, the seizure of the parcels was based on more than reasonable suspicion. . . ." Dkt. #13 at page 9. The former magistrate judge did not at that time have the benefit of the government's concession on this point, nor did she have an opportunity to observe and listen to the law enforcement officers give their testimony, both of which place me in a better position to assess this most critical issue.
Although neither party raises this particular point, it is also true that the government investigation of Advanced — and its attempt to establish probable cause — did not require the continued detention of these packages. Stated another way, the Task Force did not need to detain the packages in order to conduct their telephone investigations. With the exception of one package, the government had in its possession the names and addresses of the senders which enabled the agent to obtain the telephone numbers of the senders of the packages. It did not need to continue to detain the packages in order to make contact with these alleged victims and obtain information and/or evidence of Advanced's alleged wrongdoings so as to develop probable cause and apply for a search warrant of Advanced's premises, where the packages in question most likely would be located after delivery by UPS.
Thus, this case is factually distinguishable from Martinez, upon which the government relies, because the government's detention of the packages in Martinez was necessary so as to allow for a canine sniff and thereby develop probable cause. Martinez, 869 F. Supp. at 207; see also Martin, 157 F.3d at 53 ("Had UPS delivered the package to Martin, the police would have risked the `loss or destruction of suspected contraband.'"). There was no suspicion of contraband in these packages; at best the agents suspected that they would find checks or money orders made payable to the order of Advanced. The government did not identify any exigency related to the nine packages, other than the Task Force's desire to protect innocent victims from losing their cash, a rationale that is lacking and completely unsupported in the cases of Roseland and Brown. Nor would there be any risk of destruction of evidence since the checks and money orders would have to be presented and delivered to a financial institution (presumably Advanced's bank) for encashment. Once cashed, the cancelled checks and money orders would be returned to their makers or issuers.
With regard to the packages sent to Advanced by Roseland and Brown, further support for my conclusion is found in their interviews with the Task Force representatives. As set forth above, Ms. Roseland informed the investigators that she had already stopped payment on her check to Advanced. Agent Rios's explanation that she intended to prevent victims from being defrauded rings hollow as to Roseland. Mr. Brown informed the agents that he wished his payment to be made to Advanced and his transaction consummated. This fact contradicts the Task Force's belief that the Brown package contained fruits of a crime.
Determining whether the length of the detention of the packages was reasonable is a fact-specific inquiry and requires balancing of the government's interests against those of the defendants. See Place, 462 U.S. at 703-707. Upon consideration of all of the factors that underlie this inquiry, I must conclude that the detention of the first three packages for some 51 hours and of the next six packages for over 27 hours was not reasonable.
This duration is, as suggested by the government, calculated from 8:00 a.m. on January 12, 1995 to 11:43 a.m. on January 14, 1995. See Memorandum Regarding the Order of October 16, 2000 (Dkt. #44) at page 8.
This duration is calculated from approximately 8:00 a.m. on January 13, 1995 until 11:43 a.m. on January 14, 1995.
3. Franks Hearing Reconsideration
Defendants seek a hearing under Franks v. Delaware, 438 U.S. 154 (1978), to challenge the truthfulness of factual assertions made by Agent Rios in her affidavits supporting the warrant applications. They were denied this relief by Magistrate Judge Heckman, and they have moved for reconsideration on this issue.
For the reasons that follow, I grant their motion for reconsideration in that I have in fact reconsidered their application, but deny their motion for a Franks hearing.
A defendant is permitted to challenge the veracity of a search warrant in limited circumstances. One such circumstance is where the affidavit in support of the search warrant is alleged to contain deliberately or recklessly false or misleading information.
United States v. Canfield, 212 F.3d 713, 717 (2d Cir. 2000); see also Franks v. Delaware, 438 U.S. at 164-72. Franks v. Delaware summarizes the standard that a defendant must meet in order to be entitled to such hearing:
To mandate an evidentiary hearing, the challenger's attack must be more than conclusory and must be supported by more than a mere desire to cross-examine. There must be allegations of deliberate falsehood or of reckless disregard for the truth, and those allegations must be accompanied by an offer of proof. They should point out specifically the portion of the warrant affidavit that is claimed to be false; and they should be accompanied by a statement of supporting reasons. Affidavits or sworn or otherwise reliable statements of witnesses should be furnished, or their absence explained. . . . Finally, if these requirements are met, and if, when material that is the subject of the alleged falsity or reckless disregard is set to one side, there remains sufficient content in the warrant affidavit to support a finding of probable cause, no hearing is required. On the other hand, if the remaining content is insufficient, the defendant is entitled, under the Fourth and Fourteenth Amendments, to his hearing. Whether he will prevail at that hearing is, of course, another issue.
Franks v. Delaware, 438 U.S. at 171-72.
Stated another way, to require a Franks hearing, a defendant must make a substantial preliminary showing that (1) the warrant affidavit contains a false statement, (2) the allegedly false statement was made knowingly and intentionally or with reckless disregard for the truth, and (3) the allegedly false statement was necessary for a finding of probable cause. United States v. Salameh, 152 F.3d 88, 113 (2d Cir. 1998), cert. denied, 525 U.S. 1112 (1999); United States v. Levasseur, 816 F.2d 37, 43 (2d Cir. 1987), cert. denied, 507 U.S. 954 (1993); United States v. Longo, 70 F. Supp.2d 225, 254 (W.D.N.Y. 1999).
As a result of the government's admission, "the issuing judge's probable cause determination is not due any deference because he did not have an opportunity to assess the affidavit without the inaccuracies." Canfield, 212 F.3d at 717.
With regard to the criteria that "there must be allegations of deliberate falsehood or reckless disregard for the truth," the government responds that "[h]ere we concede counsel have succeeded." See Government's Response (Dkt. #51) at p. 10.
To suppress evidence obtained pursuant to an affidavit containing erroneous information, the defendant must show that: (1) the claimed inaccuracies or omissions are the result of the affiant's deliberate falsehood or reckless disregard for the truth; and (2) the alleged falsehoods or omissions were necessary to the [issuing] judge's probable cause finding.
Canfield, 212 F.3d at 717-18, citing United States v. Salameh, 152 F.3d 88, 113 (2d Cir. 1998).
It is emphasized that in addition to the defendants' preliminary showing, they must include both allegations and offers of proof as to the materiality of the information omitted. Id.; see also United States v. Zhang Jian Zhong, 833 F. Supp. 1010, 1014 (S.D.N.Y. 1993). If, after setting aside (or, alternatively, inserting) the allegedly misleading statements or omissions, the affidavit nonetheless presents sufficient information to support a finding of probable cause, the district court need not conduct a Franks hearing. Salameh, 152 F.3d at 113; see also United States v. Ferguson, 758 F.2d 843, 849 (2d Cir.), cert. denied, 474 U.S. 841 (1985); United States v. Longo, 70 F. Supp.2d at 254.
As set forth above, the government essentially has conceded that the omissions of various facts by Agent Rios created a scenario whereby her warrant affidavits were "false" in that they omitted relevant information and factual background. I certainly agree with this concession. Information about the age of Brown (under 35 years old), the fact that Brown desired to have his transaction with Advanced consummated, the stop payment order issued by Roseland, the possession and storage by Advanced of substantial prizes, the lack of evidence from Martinkovic of a four-in-one or five-in-one scheme by Advanced and the existence of no complaints contained in the Task Force's file on Advanced by Brown, Maffei or Merkel prior to detention of their packages (and the lack of a complaint by Brown even after detention, as referred to above), all are relevant facts, known to Agent Rios and excluded by her at the time she penned the warrant affidavits. Because the facts omitted bear direct relevance to the facts included in the affidavits, and because Agent Rios conceded that she knew of such facts at the time in question, I can only conclude that she intentionally omitted such facts from her affidavits.
Relying on the authorities originally cited by Magistrate Judge Heckman, and with the benefit of the hearing testimony of Agent Rios as well as Investigators Flechsenhaar and Kirkpatrick, I conclude that the material omissions made by Agent Rios were "clearly critical" to Magistrate Judge Maxwell's finding of probable cause. See, e.g., Rivera v. United States, 928 F.2d 592, 604 (2d Cir. 1991); see also United States v. Reivich, 793 F.2d 957, 961 (8th Cir. 1986). This is because those omissions may very well have influenced Magistrate Judge Maxwell and caused him to conclude that the government lacked the necessary probable cause for a search warrant, at least as to the Brown and Roseland packages.
The defendants did have an opportunity to cross-examine Agent Rios and Investigators Flechsenhaar and Kirkpatrick in the hearing before me on December 27, 2000, and their cross-examination specifically addressed the Martinkovic, Roseland and Brown factual circumstances. However, they did not have an opportunity to inquire as to the other material omissions in the Rios Affidavit, as set forth above, and under the authority of Franks, should be permitted an opportunity to do so. However, in light of my finding that the government did not possess reasonable suspicion to detain the packages in the first instance and, secondly, that the time period between the detention of the packages, and the application for the search warrant was unreasonable, I decline at this time to order a Franks hearing. The denial of the defendants' motion for a Franks hearing is done with the express belief that if the district court adopts this Report and Recommendation, it will suppress the evidence at issue on this motion, thereby making such hearing unnecessary. In the event the district court declines to adopt this Report and Recommendation, or declines to suppress the evidence, the defendants will be permitted to raise the issue of a need for a Franks hearing again before me.
CONCLUSION
Based on the foregoing, I hereby answer the inquiries put to me by Judge Skretny as follows: (1) reasonable suspicion did not exist for the detention of the packages at the time that UPS "detained" them; (2) the length of time that the packages were "detained" before a search warrant was issued was not reasonable under the law. Furthermore, I grant the defendants' motion for reconsideration of their request for a Franks hearing but decline to order such hearing at this time for the reasons set forth above. Accordingly, it is hereby
ORDERED pursuant to 28 U.S.C. § 636(b)(1) that: This Report, Recommendation and Order be filed with the Clerk of the Court.
ANY OBJECTIONS to this Report, Recommendation and Order must be filed with the Clerk of this Court within ten (10) days after receipt of a copy of this Report, Recommendation and Order in accordance with the above statute, Fed.R.Civ.P. 72(b) and Local Rule 72.3(a)(3).
The district court will ordinarily refuse to consider de novo, arguments, case law and/or evidentiary material which could have been, but were not presented to the magistrate judge in the first instance. See, e.g., Patterson-Leitch Co., Inc. v. Massachusetts Municipal Wholesale Electric Co., 840 F.2d 985 (1st Cir. 1988).
Failure to file objections within the specified time or to request an extension of such time waives the right to appeal the District Court's Order. Thomas v. Arn, 474 U.S. 140 (1985); Wesolek, et al. v. Canadair Ltd., et al., 838 F.2d 55 (2d Cir. 1988).
The parties are reminded that, pursuant to Rule 72.3(a)(3) of the Local Rules for the Western District of New York, "written objections shall specifically identify the portions of the proposed findings and recommendations to which objection is made and the basis for such objection and shall be supported by legal authority." Failure to comply with the provisions of Rule 72.3(a)(3), or with the similar provisions of Rule 72.3(a)(2) (concerning objections to a Magistrate Judge's Decision and Order), may result in the District Court's refusal to consider the objection.
The Clerk is directed to send a copy of this Report, Recommendation and Order to the attorneys for the parties.