Opinion
No. 00-20176 Ml/Bre
December 7, 2001
ORDER ADOPTING REPORT AND RECOMMENDATION
This cause is before the Court in connection with the report and recommendation of Magistrate Judge J. Daniel Breen regarding Defendant's motions to suppress the fruits of a search warrant, for a Franks hearing, and for the return of certain items seized. The report and recommendation was filed on November 14, 2001. Magistrate Judge Breen recommends that the Court deny Defendant's motion to suppress, deny Defendant's request for a Franks hearing, and deny Defendant's motion for return of items seized. Defendant filed objections and exceptions to the magistrate judge's report and recommendation on November 26, 2001.
Defendant limited his objections and exceptions to the magistrate judge's recommendations regarding his motions to suppress and for a Franks hearing.
Defendant excepts or objects to seven aspects of the magistrate judge's report and recommendation. First, Defendant notes his exception to the statement in the report and recommendation that he has not made an offer of proof to support his claims. (Def.'s Obj. and Exc. To Mag. Judge's Rep. and Rec. and Order, p. 1.) The magistrate was incorrect in stating at page ten of his report and recommendation that Defendant had not submitted any proof in support of his claims. Defendant did, in fact, submit proof as part of his supplemental motion to suppress. His error, however, did not affect the outcome of his report and recommendation because the magistrate judge nonetheless "considered each of the defendant's arguments." (Report and Recommendation and Order, p. 10.) In addition, despite the statement at page ten, it is clear that the magistrate judge considered the proof submitted by Defendant in evaluating his arguments. Id., p. 13.
The Court has evaluated the proof submitted by Defendant, which includes a confidential work report prepared by Counsel for the NASD, Nina S. McKenna, dated February 18, 1997, and a copy of a page in an offering document from Ray and Ross Transport, Inc., dated February 1, 1996. Defendant asserts that Agent Tichenor omitted from his affidavit Ms. McKenna's statement in the first paragraph of her letter, "Please be advised that the following synopsis of facts consists of my personal observations, rather than the viewpoint of NASD Regulation, Inc." Defendant argues that this omission "shows a conscious disregard for the truth or possibly a deliberate falsehood on the part of the affiant." (Def.'s Supp. to Mot. to Supp. and Reply to Govt. Resp., p. 2.) The Court finds that Defendant has not, as is required, made a strong preliminary showing that Special Agent Tichenor, with an intention to mislead, excluded this statement from his affidavit. See Mays v. City of Dayton, 134 F.3d 809, 815-16 (6th Cir.), cert. denied, 524 U.S. 942 (1998). Even if Defendant had made such a showing, this omission was not critical to the finding of probable cause. Id. at 816.
Defendant also points to paragraph four on page two of the McKenna letter, in which she states that "the offering documents were prepared by Larry Baresel." Defendant asserts that Special Agent Tichenor's affidavit states that David Namer prepared the offering documents with the assistance of Larry Baresel. Defendant argues that this statement constitutes "a knowing or reckless disregard for the truth or possibly a deliberate falsehood on the part of the affiant." (Def.'s Supp. to Mot. to Supp. and Reply to Govt. Resp., p. 2.) The Court finds that even if the statement was made knowingly and intentionally, or with reckless disregard for the truth, it does not render probable cause insufficient to support the search warrant for the Rex Road offices. See Franks v. Delaware, 438 (3.5. 154, 155-56 (1978). Both Defendant and his in-house counsel, Larry Baresel, used the Rex Road offices. Defendant and Baresel collaborated on various business activities in connection with the charges in this case. Whether Defendant or Baresel prepared the offering documents at issue has no bearing on the ultimate finding of probable cause to search the Rex Road offices.
Defendant also points to one sentence in the offering documents from Ray and Ross Transport, Inc., which states that "there is no public market for the notes and there is no assurance that one will develop." Defendant asserts that this statement contradicts Special Agent Tichenor's statement on page 12 of his affidavit that "the DTC copies omitted all references to the private nature of these securities." Defendant argues that the statement from the Ray and Ross offering document proves that the affiant's statement on page 12 is false. (Def.'s Supp. to Mot. to Supp. and Reply to Govt. Resp., p. 3.) Defendant asserts that the Ray and Ross offering document was in Special Agent Tichenor's possession when he prepared his affidavit, but not that it was part of the version of the entire document submitted to the DTC. Therefore, affiant's statement on page 12 is not necessarily proved false by the statement in the Ray and Ross offering document. In any event, even if the statement on page 12 was deliberately or recklessly false, it did not affect the finding of probable cause. See Franks, 438 U.S. at 155-56.
The remainder of Defendant's objections and exceptions to the report and recommendation pertain to the validity of the magistrate judge's conclusions. The Court has reviewed the magistrate judge's report and recommendation and the record in this case. Based on a de novo review, the Court hereby ADOPTS the magistrate judge's report and recommendation and Defendant's motion to suppress and to return items seized is DENIED.