PAGE 1 – OPINION AND ORDER

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF OREGON

UNITED STATES OF AMERICA,

v.

DAN HEINE and DIANA YATES,

Defendants.

Case No. 3:15-cr-238-SI-2

OPINION AND ORDER ON 

DEFENDANT DIANA YATES’S 

MOTION TO SUPPRESS

Billy J. Williams, United States Attorney, and Claire M. Fay, Michelle Holman Kerin, and Quinn 

P. Harrington, Assistant United States Attorneys, UNITED STATES ATTORNEY’S OFFICE FOR THE 

DISTRICT OF OREGON, 1000 S.W. Third Avenue, Suite 600, Portland, OR 97204. Of Attorneys 

for the United States of America.

Jeffrey Alberts and Mark Weiner, PRYOR CASHMAN, LLP, 7 Times Square, New York, NY 

10036; Caroline Harris Crowne and Michael C. Willes, TONKON TORP, LLP, 1600 Pioneer 

Tower, 888 S.W. Fifth Avenue, Portland, OR 97204. Of Attorneys for Defendant Dan Heine.

Janet Lee Hoffman, Kelsey R. Jones, Andrew T. Weiner, Katherine Feuer, and Douglas J. 

Stamm, JANET HOFFMAN & ASSOCIATES, LLC, 1000 S.W. Broadway, Suite 1500, Portland OR 

97205; Matthew J. Kalmanson, HART WAGNER, LLP, 1000 SW Broadway, Suite 2000, Portland, 

OR 97205. Of Attorneys for Defendant Diana Yates.

Michael H. Simon, District Judge.

Defendants Dan Heine (“Heine”) and Diana Yates (“Yates”) are charged with conspiring

to commit bank fraud and making false bank entries, reports, and transactions during the time 

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when they were the two most senior officers of The Bank of Oswego (the “Bank”). ECF 1.

Before the Court is Defendant Yates’s Motion to Suppress (“Motion”). ECF 308.

Between November 2012 through June 2013, Yates had several noncustodial interactions

with special agents from the Federal Bureau of Investigation (“FBI”), some of which she 

initiated. Yates also had her third-party deposition taken by the Bank on May 9, 2013 in a civil 

lawsuit brought by the Bank against another former Bank employee. In her Motion, Yates moves 

to suppress two types of statements that she made. First, Yates moves to suppress every 

statement that she made to the FBI on the grounds that the agents’ allegedly psychologically 

coercive tactics rendered Yates’s statements involuntary under the Fifth Amendment. Second, 

Yates moves to suppress all of the testimony that she gave during her third-party deposition in 

the civil lawsuit brought by the Bank against former Bank employee Geoffrey Walsh. In that 

lawsuit, styled The Bank of Oswego v. Geoffrey S. Walsh, Case No. CV12060128, Clackamas 

County Circuit Court (“Walsh Lawsuit”), the Bank was represented by an outside law firm. 

Yates argues that an attorney with that law firm acted as an agent of the government when he 

took Yates’s third-party deposition in the Walsh Lawsuit. According to Yates, the government 

thereby abused the Walsh Lawsuit to elicit incriminating statements from Yates in violation of 

her Fifth Amendment rights.

The Court held a joint evidentiary hearing to consider Yates’s Motion to Suppress and 

two additional motions to suppress filed by Defendant Heine. The first day of the hearing was 

held on August 22, 2016, and it focused on Heine’s first motion. At the request of the parties, the 

evidentiary hearing resumed on November 7, 2016, and continued day-to-day until 

November 10, 2016. During the five-day suppression hearing (including August 22), the Court 

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received numerous exhibits and declarations and also heard testimony from the following twelve 

witnesses:

1. Assistant United States Attorney Claire Fay;

2. FBI Special Agent Matthew Swansinger;

3. FBI Special Agent Michael Maestas;

4. FBI Forensic Accountant Glenese Klein;

5. FDIC-OIG Special Agent Michael Wixted;

6. FDIC Attorney Lori Honjiyo;

7. FDIC Field Supervisor Paul Hornberger;

8. Former FDIC Attorney Lesley Williams;

9. Former FDIC Investigation Specialist Janie Spaulding;

10. Attorney Michael Seidl (previously representing Mr. Heine);

11. Attorney Jeffrey Edelson (representing Ms. Yates in the Walsh Lawsuit); and

12. Attorney Casey Nokes (representing the Bank in the Walsh Lawsuit).

The Court has considered all of the evidence and arguments presented by the parties. For the 

reasons that follow, the Court denies Yates’s Motion to Suppress.

BACKGROUND

As alleged in the Indictment (ECF 1), in 2004, Heine and Yates co-founded the Bank, a 

financial institution engaged in the business of personal and commercial banking and lending. 

The Bank is headquartered in Lake Oswego, Oregon.1 Heine served as the Bank’s President and 

Chief Executive Officer (“CEO”). As President and CEO, Heine supervised and managed the 

Bank’s affairs and operations. Heine also was a member of the Bank’s Board of Directors (the 

“Board”). Heine left the Bank in September 2014. Yates served as the Bank’s Executive Vice 

President and Chief Financial Officer (“CFO”). As CFO, Yates was responsible for ensuring the 

Bank’s compliance with federal and state regulations. Yates also was the Secretary of the Board. 

Yates resigned from the Bank in March 2012 after disagreements with Heine.

 

1 On August 12, 2016, the Bank sold loans and other assets to HomeStreet Bank. The 

Bank of Oswego continues to exist as a corporate entity, but has relinquished its banking charter 

and now operates as Oswego Resolution. ECF 481 at ¶¶ 3-4 (Decl. of Stephen G. Andrews).

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Both Heine and Yates were responsible for ensuring that the Bank operated in a sound 

and safe manner and for keeping the Board informed about the Bank’s financial condition and 

the adequacy of the Bank’s policies, procedures, and internal controls. Additionally, Heine and 

Yates were members of the Bank’s Internal Loan Committee (the “ILC”). The duties of the ILC 

included approving loans that were outside the authority of individual Bank loan officers, 

ensuring the quality of the Bank’s loan portfolio and minimizing risks in that portfolio. 

The Bank is subject to regular monitoring and examinations by the FDIC. For example, 

federal regulations require the Bank to file with the FDIC what are commonly known as “Call 

Reports” on a regular basis. A Call Report contains data about the Bank’s financial position and 

is divided into a number of schedules. One of these schedules, known as “Schedule RC-N,” 

requires disclosure of the correct value of outstanding loans.

On June 23, 2015, a federal grand jury returned a 27-count Indictment against both Heine 

and Yates, alleging misconduct related to their activities with the Bank. The Indictment charges 

Heine and Yates with one count of conspiring to commit bank fraud, in violation of 18 U.S.C. 

§ 1349, and 26 counts of making false bank entries, reports, and transactions, in violation of 

18 U.S.C. § 1005. The Indictment alleges that beginning about September 2009 and continuing 

through at least September 2014, Heine and Yates conspired to defraud the Bank through 

materially false representations and promises. The Indictment further alleges that one of the 

purposes of the conspiracy was to conceal the true financial condition of the Bank from the 

Board, the Bank’s shareholders, the Bank’s regulators (including the FDIC), and the public. 

According to the Indictment, Heine and Yates reported false and misleading information about 

loan performance, concealed information about the status of foreclosed properties, made 

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unauthorized transfers of Bank proceeds, and failed to disclose material facts about loans to the 

Board, shareholders, and regulators, all in an effort to conceal the Bank’s financial condition.

The Indictment against Heine and Yates alleges the following five schemes that 

purportedly advanced the alleged conspiracy’s purpose of falsely creating a healthier appearance 

of the Bank’s finances than actually existed:

1. Payments Made on Delinquent Loans. Heine and Yates made payments, using 

Bank proceeds, on behalf of Bank customers who were delinquent on their loans. 

The payments sometimes were made without the knowledge or consent of the 

Bank’s customer. The payments were made so that the delinquent loans would not 

appear in the Call Reports. On March 31, 2011, Yates transferred funds from a 

Bank customer’s business checking account to the customer’s personal loan 

account, which was delinquent, without the customer’s consent. Heine and 

Yates’s alleged practice of paying delinquent loans with Bank or other proceeds 

hid delinquent loans that otherwise would have been included in the Call Reports 

and reported to the Board.

2. Wire Transfer and Loan to Bank Customer M.K. Between July 2010 and 

September 2010, Heine and Yates permitted to be made an unsecured draw in the 

amount of $675,000 for Bank customer M.K. and then approved a $1.7 million 

loan for the benefit of M.K. in order to conceal the unsecured draw and to pay 

other Bank borrowers’ delinquent loans. Yates approved the unsecured draw.

3. Straw Buyer Purchase. From October 2010 through May 2011, Heine and Yates 

recruited a Bank employee, Daniel Williams (“Williams”), to facilitate a straw 

buyer purchase of real property located at 952 A Avenue, Lake Oswego, Oregon 

97034 (the “A Avenue Property”) for the purpose of concealing a loss to the 

Bank. Heine and Yates gave Williams two checks totaling $267,727.89 from the 

Bank’s cash account to purchase the A Avenue Property. Yates falsely 

represented in transactional documents that Williams funded the purchase 

personally.

4. Other Real Estate Owned (“OREO”) Properties Sold to Bank Customer R.C.

From March 2010 through June 2013, Heine and Yates removed two properties 

from the Bank’s OREO account after the properties were sold to a Bank borrower, 

R.C., even though the sales did not meet the requirements to remove the 

properties from the account. Heine and Yates did not require R.C. to make any 

down payment and provided R.C. with full financing from the Bank for both 

properties. As a result of the transactions, the properties were no longer reported 

on the Call Reports as OREO assets. On January 24, 2011, FDIC examiners 

questioned the validity of the removal of the properties from the Bank’s OREO 

account and advised Heine and Yates that the purchases did not meet the 

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minimum equity requirements needed to remove the properties. Yates advised the 

FDIC examiners that R.C. was going to make down payments for the two homes, 

which would then permit the Bank properly to remove the properties from the 

OREO account. On January 31, 2011, Yates prepared two memos to each of the 

R.C. loan files that falsely stated R.C. was willing to make a 15 percent down 

payment on the properties. Heine and Yates represented that R.C. paid down 

payments for the properties, when in fact no payment was received by the Bank.

5. Misrepresentations to Shareholders. From September 2009 through 

September 2014, Heine and Yates caused the Bank to misrepresent to the Bank’s 

shareholders the Bank’s “Texas Ratio,” which is a measure of the Bank’s credit 

troubles and potential for bank failure, thus misrepresenting the true extent of the 

Bank’s delinquent loans.

ECF 1 at 4-11, ¶¶ 13-26. The Indictment further alleges that Heine and Yates knowingly 

made 26 false entries in the books, reports, and statements of the Bank with the intent to injure 

and defraud the Bank. Heine and Yates allegedly did so by omitting material information about 

the true status and condition of loans and assets from the Call Reports and reports to the Board.

Id. at 12-14.

The Indictment also names Geoffrey Walsh (“Walsh”) as a person who played a role in 

the alleged conspiracy. Walsh was the former Senior Vice President of Lending at the Bank. In 

May 2012, the Bank, acting through Heine, terminated the employment of Walsh for cause, in 

part based on Walsh’s alleged misconduct concerning lending practices. In July 2013, Walsh was 

indicted and charged in a separate case for conspiracy to commit wire fraud, wire fraud, and 

conspiracy to make false entries in bank records, among other charges. United States v. Walsh, 

Case No. 3:13-cr-00332-SI-1 (D. Or.) (“Walsh Criminal Action”). On July 22, 2015, Walsh 

pleaded guilty to certain charges alleged in a superseding indictment and second superseding 

information in the Walsh Criminal Action. In Walsh’s plea agreement, he accepted responsibility 

for his role in many of the same acts described in the Indictment against Heine and Yates. Walsh 

is awaiting sentencing.

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FINDINGS OF FACT

The Court finds the following facts by a preponderance of the evidence.

A. Early Stages of the FDIC’s Civil Investigation and the FBI’s Criminal Investigation

On December 15, 2009, the FDIC issued a Safety and Soundness Examination Report,

finding “less than satisfactory conditions” at the Bank. ECF 354 at 38 (Gov’t Ex. AA). In an 

effort to correct these conditions, the Bank and the FDIC entered into a Memorandum of 

Understanding (“MOU”) on June 1, 2010. Id. at 37-41. Under the MOU, the Bank agreed to 

provide additional reporting to the FDIC and to meet certain financial benchmarks. Id. On 

January 24, 2011, the FDIC and the Oregon Division of Finance and Corporate Securities began 

a joint examination of the Bank. ECF 320-10 at 1-2 (Heine Ex. J).

On May 29, 2012, Heine filed a Suspicious Activity Report (“SAR”), naming Yates. 

ECF 327-1 at 14-20 (Yates Ex. 6). The SAR asserts, among other things, that Yates contacted 

Bank customers and third parties regarding customers’ confidential information after her 

departure from the Bank in March 2012. Id. at 19. The SAR also describes improper lending 

practices on the part of Walsh. Id. As alleged in the SAR, Yates knew of and signed off on many 

of Walsh’s allegedly improper loans. Id.

In June 2012, Heine called the FBI to report alleged criminal activity conducted by 

Walsh. ECF 354 at 29-33 (Gov’t Ex. BB). Heine reported that Walsh improperly used customer 

funds to make loans to other customers that the Bank ordinarily would not have approved. Id.

at 31. Heine also stated that Yates may have been involved with Walsh’s allegedly improper 

activities because she approved many of the loans at issue. Id. Grand jury proceedings against 

Walsh began soon thereafter. ECF 320-3 (Heine Ex. C). On July 17, 2012, the FBI executed 

search warrants on Walsh’s home. ECF 362-1 (Gov’t Ex. EE).

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By July 18, 2012, the FDIC told the FBI that it was pursuing a “Walsh/Yates” 

investigation. ECF 327-1 at 21 (Yates Ex. 7). Later that month, FBI agents met with FDIC 

representatives to discuss their respective investigations into alleged misconduct at the Bank. Id.

at 22-23 (Yates Ex. 8). The FDIC advised the FBI that it would continue its investigation into 

Walsh’s lending practices and report any information to the FBI that would support the criminal 

investigation. Id. at 23.

In the fall of 2012, the Bank provided the FBI with additional information about the 

conduct of Yates and Walsh, including information that the Bank obtained as a result of its own 

internal investigation. Id. at 26-28, 32 (Yates Exs. 10, 11, 13). The Bank generally provided this 

information pursuant to grand jury subpoenas. See, e.g., id. at 28, 32.

B. The Bank’s Civil Lawsuit Against Walsh

In June 2012, the Bank sued Walsh, claiming misappropriation of the Bank’s trade 

secrets and breach of the duty of loyalty. The Amended Complaint in the Walsh Lawsuit alleged, 

among other things, that Walsh engaged in misconduct involving a $1.7 million loan to Bank 

customer M.K. Although the Amended Complaint in the Walsh Lawsuit alleged that Yates, as 

well as Walsh, used the Bank’s confidential and proprietary information for her own financial 

and professional gain, Yates was not named by the Bank as a defendant in the Walsh Lawsuit.

On May 9, 2013, an attorney with the Bank’s outside law firm that was handling the 

Walsh Lawsuit, Mr. Casey Nokes (“Nokes”), took Yates’s third-party deposition in the Walsh

Lawsuit, pursuant to a civil subpoena. At her deposition, Yates was represented by attorney 

Jeffrey M. Edelson (“Edelson”). During the Yates deposition, Nokes questioned Yates about a 

number of subjects, including the A Avenue transaction, a wire transfer from the Bank to its 

customer M.K., and certain loans made by the Bank to R.C. The parties in the Walsh Lawsuit 

agreed to a stipulated protective order, which was entered by the court. Under that stipulated 

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protective order, the transcript of Yates’s deposition would be treated as confidential, but could 

be disclosed to “[a]ppropriate law enforcement officials” without prior consent. ECF 362-3 

(Gov’t Ex. GG) at ¶ 8(f).

2

Nokes did not receive any direction, instruction, or suggestion from the FBI, the FDIC, 

the U.S. Attorney’s Office, or any other part of the federal or state government on any aspect of 

civil discovery or otherwise during Nokes’s representation of the Bank in the Walsh Lawsuit. No 

one from the government asked the Bank or its counsel to take Yates’s deposition in the Walsh

Lawsuit or requested that any specific questions be asked of Yates during her deposition or 

suggested that the deposition cover any particular topics or issues. In taking Yates’s deposition 

on May 9, 2013 in the Walsh Lawsuit, Nokes acted solely in the interest of his client, the Bank, 

without any governmental involvement.

On June 4, 2013, however, several weeks after the Yates deposition was taken, Nokes left 

a voicemail message for FBI Special Agent Matthew Swansinger. On June 6, 2013, Nokes spoke 

with Swansinger and stated that during her deposition Yates’s statements were “evasive or 

incredible and plain silly.” Nokes further advised Swansinger that Yates testified that she had 

authorized wire transfers for Bank customers “if they were good for it.” Nokes also asked 

Swansinger whether the Bank was still considered by the FBI to be a victim. Special Agent 

Swansinger replied that the investigation was still active “based upon information provided by 

 

2 Yates asserts that it is unusual for a stipulated protective order in a civil lawsuit to 

provide that otherwise confidential information may be disclosed to law enforcement without 

prior consent. The Court agrees. The record, however, contains no evidence explaining either the 

origin or purpose of that clause. Yates also asserts that under the protective order, a party may 

only use documents designated as confidential for “the prosecution or defense” of the Walsh

Lawsuit “and for no other purpose.” ECF 362-3 (Gov’t Ex. GG) at ¶ 6. The parties designated 

Yates’s deposition transcript as confidential. Yates Ex. 63. The Court, however, need not resolve 

whether the Bank’s disclosure to the FDIC of Yates’s deposition transcript violated the 

protective order in the Walsh Lawsuit entered in state court.

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the bank and others.” ECF 327-3 at 2 (Yates Ex. 33). Two months later, in August 2013, the U.S. 

Attorney’s Office requested from the FDIC and received a copy of the transcript of Yates’s 

deposition taken by the Bank in the Walsh Lawsuit. ECF 362-5 at 1-2 (Gov’t Ex. II at 1-2).3

C. Yates’s Interactions with Federal Investigators

From November 2012 through August 2013, Yates provided information both to the FBI 

and the FDIC. On December 13, 2012, Yates spoke with FBI Special Agent Swansinger and FBI 

Special Agent Michael L. Maestas. Id. at 65 (Yates Ex. 17). Yates reported to the agents that she 

had received a telephone call from an employment “headhunter” with whom Yates had been 

working to try to find new employment. Yates explained that the headhunter told Yates that the 

headhunter recently had spoken with Heine and that Heine had said that Yates was under 

investigation by the FBI. Id. Yates told the FBI agents that she was concerned by Heine’s 

statement. Id. As described in the FBI’s FD-302 form that memorialized the interaction, the FBI 

agents advised Yates that they were interviewing her regarding transactions that occurred at the 

Bank and that their case was still under investigation. Id. Yates’s own notes of the interaction, 

however, read:

12.13.12 DY [Diana Yates] contacts FBI to ensure that I am not 

under any type of legal investigation. The FBI-Matt Swansong 

[sic] is surprised that I am asking the questions and ensures me that 

I am not. States that no one has been charged and that I may be 

called for a potential witness if they move forward. They provide 

no assurance that their investigation is going anywhere. Seem 

surprised that Dan Heine would say such things as they are the FBI 

and do not tell anyone who they are investigating. State that they 

are not working for Dan Heine.

 

3 On or about June 21, 2013, Nokes, the Bank’s attorney in the Walsh Lawsuit, sent a 

copy of the transcript of the Yates deposition from May 9, 2013 to the FDIC, along with the 

exhibits from that deposition. Yates Ex. 185; Yates Ex. 188 at 2.

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Id. at 62 (Yates Ex. 15).

4 Yates created her notes in early January 2013. ECF 392 ¶ 2 (Supp. 

Yates Declaration).

According to Yates, at this time she was considering bringing a civil lawsuit against 

Heine and the Bank on the grounds that they were interfering with her finding new employment. 

ECF 340 ¶ 5 (Yates Declaration). Yates told Agents Swansinger and Maestas about her possible 

civil action against Heine and the Bank. Id. Yates asserts that during her interview with the FBI 

on December 13, 2012, the agents led Yates to believe that they would help her build her civil 

case. Yates believed that, in return, she would help the agents develop their criminal case against 

Heine. Id. ¶¶ 5-6. Yates adds that Agents Swansinger and Maestas “were always friendly with 

[her], and repeatedly indicated they were on [Yates’s] side.” Id. ¶ 8. 

Bonn Phillips, an FDIC Case Manager in the FDIC’s San Francisco office, told one of 

Yates’s potential employers that his team at the FDIC was in the process of “conducting an 

investigation into her actions while she was CFO” because of “concerns with [her] and how she 

performed at the Bank of Oswego.” ECF 327-1 at 63 (Yates Ex. 16). On January 4, 2013, Yates 

called FDIC Field Supervisor Paul T. Hornberger (“Hornberger”), who was then in the FDIC’s 

Portland office. According to Yates’s notes of the phone call, Hornberger told Yates that “there 

have been no negative comments that have [come] out of his office” about her.5Id. at 62 (Yates 

Ex. 15). That same day, Yates emailed to Hornberger at the FDIC a list of grievances concerning 

Heine’s conduct as Bank President and CEO. Id. at 9 (Yates Ex. 3). Yates wrote to the FDIC, in 

part: “I appreciate that the list of incidents remain confidential under the whistle blowing 

 

4 Yates’s notes are redacted in the record but appear in Yates’s Memorandum in Support 

of her Motion to Suppress. ECF 328 at 8. 

5 Yates’s notes are redacted in the record but appear in Yates’s Memorandum in Support 

of her Motion to Suppress. ECF 328 at 8-9.

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statute.” Id. Hornberger’s email response reads, in full: “Thanks—your concerns are noted. pth.” 

Id. In May 2013, Yates forwarded her email exchange with the FDIC, including her list of 

incidents, to FBI Special Agent Swansinger. Id.

Yates continued to provide the FBI with information relating to activities at the Bank, 

including alleged misconduct on the part of Walsh and Heine. See, e.g., ECF 327-3 at 3-8 (Yates 

Ex. 34) (FD-302 of May 28, 2013 interview with Yates); Id. at 9 (Yates Ex. 35) (FD-302 of 

May 29, 2013 email correspondence with Yates); Id. at 54-55 (Yates Ex. 35) (FD-302 of June 3, 

2013 interview with Yates); Id. at 61-63 (Yates Ex. 38) (FD-302 of June 6, 2013 interview with 

Yates); ECF 362-8 at 1-2 (Gov’t Ex. LL) (FD-302 of June 22, 2013 email from Yates to Special 

Agent Swansinger); ECF 362-9 at 1-6 (Gov’t Ex. MM) (FD-302 of August 15, 2013 email from 

Yates to Special Agent Swansinger).

On May 3, 2013, Special Agent Michael Wixted of the FDIC’s Office of Inspector 

General (“OIG”)6emailed to FBI Special Agent Swansinger a draft PowerPoint presentation,

summarizing the FDIC’s investigation thus far into the conduct of Walsh, Yates, and others. 

ECF 327-3 at 1 (Yates Ex. 32); ECF 327-2 at 80-113 (Yates Ex. 31). The PowerPoint includes 

possible charges that could be brought against Yates and others. Id.

On Monday, June 3, 2013, FBI Special Agent Swansinger called Yates. She then sent an 

email to attorney Edelson, who represented Yates during her deposition on May 9, 2013 in the 

Walsh Lawsuit. Yates wrote to Edelson:

Matt Swansinger, FBI called me again and I mentioned to him 

some of the concerns. I am planning on meeting them again on 

 

6

The mission of the FDIC’s OIG is to investigate fraud, waste, and mismanagement, 

with a focus on fraudulent transactions. The FDIC’s OIG can be characterized as the law 

enforcement arm of the FDIC and is separate from the civil enforcement and bank examination 

activities of the FDIC. The FDIC’s bank examiners may refer matters to the FDIC’s OIG.

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Thursday [June 6, 2013] @3. Can you call Matt at 503.224.4181 

with concerns. Perhaps I am crazy but I trust these guys.

ECF 327-3 at 59 (Yates Ex. 36).

7 After receiving this email from Yates, her attorney, Edelson,

had a telephone conversation with Special Agent Swansinger. ECF 329 ¶ 6 (Edelson 

Declaration). According to Edelson, the conversation with Special Agent Swansinger led 

Edelson to believe that Yates was not a target of the criminal investigation. Id.

As discussed above, on Thursday, June 6, 2013, the Bank’s outside attorney Nokes was 

interviewed by Special Agent Swansinger, after Nokes had left a voicemail message for 

Swansinger on June 4. Nokes stated that Yates recently had been deposed by the Bank in the 

Walsh Lawsuit. Nokes added that Yates’s statements were “evasive or incredible and plain silly” 

and that Yates had authorized wire transfers for Bank customers “if they were good for it.” 

Nokes added that the Bank will be asking the state court in the Walsh Lawsuit to lift the 

continuance that had been put in place and expected that discovery in that case “will be reopened 

against Walsh.” Nokes also asked Swansinger whether the Bank “was still being considered a 

victim in the case.” Swansinger replied that “it was still an active investigation.” Yates Ex. 33.

On that same day, Thursday, June 6, 2013, Special Agents Swansinger and Maestas 

interviewed Yates at a Starbuck’s near her home. Yates described various activities engaged in 

by Heine at the Bank. Yates also explained that she had been recently deposed by the Bank in the 

Walsh Lawsuit. Yates Ex. 38. Although not mentioned anywhere in the FBI’s FD-302 statement, 

during this meeting Special Agents Swansinger and Maestas asked Yates whether she would be 

willing to wear a “wire” secretly to record conversations with Heine. Yates considered the 

request, but ultimately declined.

 

7

The email is redacted in the record but appears in Yates’s Memorandum in Support of 

her Motion to Suppress. ECF 328 at 11.

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The next day, June 7, 2013, Assistant U.S. Attorney Claire Fay (“AUSA Fay”) sent 

Edelson a “proffer letter” for Yates. ECF 327-3 at 68 (Yates Ex. 40). The proffer letter stated, in 

relevant part:

The purpose of your client making a proffer is to provide the 

USAO [the U.S. Attorney’s Office] with an opportunity to assess 

the value, extent, and truthfulness of your client’s information 

about the criminal activity of the client and others. . . .

Except as outlined herein, the USAO agrees that statements made 

by your client after signing this agreement may not be used in the 

USAO’s case-in-chief against your client should a trial be held for 

any charges pending or later filed in the course of this 

investigation.

ECF 362-7 (Gov’t Ex. KK). As described in his declaration, Edelson explains:

The proffer letter appeared to contain standard verbiage that was 

inconsistent with Agent Swansinger’s assurances that Ms. Yates 

was not a target. I determined that Ms. Yates would be better off 

relying on Agent Swansinger’s promises rather than sign a 

document that contained inaccurate representations. I understood 

that the United States Attorney’s Office did not allow changes to 

its standard letter. Therefore, I advised Ms. Yates not to sign it.

ECF 329 ¶ 7. 

On June 20, 2013, Edelson and Yates met with AUSA Fay and FBI Special Agents

Swansinger and Maestas. ECF 327-3 at 75-82 (Yates Ex. 44). Yates discussed a range of topics 

with AUSA Fay and the special agents, including the A Avenue property, Walsh’s allegedly

improper lending practices, and the $675,000 wire transfer loan from the Bank to its customer 

M.K. Id.

After a conversation on August 9, 2013 with FDIC counsel, Edelson became concerned 

that Yates could become, or potentially had already become, a subject of the FDIC civil 

investigation, rather than merely a witness. ECF 329 ¶ 9 (Edelson Declaration). Edelson also 

assumed that the FDIC could share information with the U.S. Attorney’s Office. Id. As a result, 

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Edelson advised Yates to seek the assistance of a criminal defense attorney. Id. Even after 

receiving this advice, Yates asserts that she continued to believe that her status was only as a 

cooperating witness, telling Edelson that she did “not think that the FBI will charge [her]” 

because “they have proof that [she] tried to blow the whistle.”8ECF 327-3 at 71-72 (Yates 

Ex. 42).

By October 2013, Yates had retained criminal defense counsel to represent her in both 

the FDIC civil investigation and the federal criminal investigation. See ECF 362-2 at 1 (Gov’t 

Ex. FF). On June 26, 2014, AUSA Fay notified Yates’s defense counsel that the U.S. Attorney’s 

Office considered Yates a target in the grand jury investigation into alleged misconduct at the 

Bank. Id. at 3.

CONCLUSIONS OF LAW

A. Yates’s Statements to FBI Agents

Yates moves to suppress all of the statements that she made to FBI special agents on the 

grounds that her statements were “involuntary” and thus obtained by the government in violation 

of her Fifth Amendment rights. Yates argues that her statements were involuntary because the 

FBI engaged in a deception calculated to make Yates believe that she was solely a cooperating 

witness and had no criminal exposure in the investigation into the Bank. According to Yates, she 

was particularly susceptible to such tactics due to her reasonable belief in her status as a 

whistleblower and her lack of experience with the criminal justice system.

The Self-Incrimination Clause of the Fifth Amendment provides that no person “shall be 

compelled in any criminal case to be a witness against himself.” U.S. CONST., AMEND. V. To 

effectuate this right, the government may not use a defendant’s statements against her at trial if 

 

8

The email is redacted in the record but appears in Yates’s Memorandum in Support of 

her Motion to Suppress. ECF 328 at 13.

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the defendant gave the statements involuntarily. See United States v. Preston, 751 F.3d 1008, 

1010, 1015 (9th Cir. 2014). A statement is involuntary for purposes of the Fifth Amendment if it 

is the product of physical or psychological coercion. Arizona v. Fulminante, 499 U.S. 279, 287 

(1991). The government has the burden of proving, by a preponderance of the evidence, that a 

defendant gave a challenged statement voluntarily. United States v. Bautista, 362 F.3d 584, 589 

(9th Cir. 2004). 

An inquiry into the voluntariness of a confession “takes into consideration the totality of 

all the surrounding circumstances—both the characteristics of the accused and the details of the 

interrogation.” Preston, 751 F.3d at 1016 (emphasis in original) (quoting Dickerson v. United 

States, 530 U.S. 428, 434 (2000)). Some of the factors that courts consider include the 

defendant’s age, education, intelligence, and knowledge of her rights; the duration and nature of 

the detention or questioning; and whether physical punishment was used or threatened. 

Schneckloth v. Bustamonte, 412 U.S. 218, 226 (1973). “Ultimately, the voluntariness 

determination ‘depend[s] upon a weighing of the circumstances of pressure against the power of 

resistance of the person confessing.’” Preston, 751 F.3d at 1016 (alteration in original) (quoting 

Dickerson, 530 U.S. at 434).

Yates argues that the Supreme Court’s decision in Santobello v. New York, 404 U.S. 257 

(1971), and its progeny are applicable in this case. In Santobello, the government agreed to not 

seek the statutory maximum prison sentence in exchange for the petitioner’s plea of guilty to a 

lesser-included offense. 404 U.S. at 258. At sentencing, the government breached this agreement 

and recommended the maximum sentence. Id. at 259. The Supreme Court vacated the trial 

court’s judgment and sentence, concluding “that the interests of justice and appropriate 

recognition of the duties of the prosecution in relation to promises made in the negotiation of 

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pleas of guilty will be best served by remanding the case to the state courts for further 

consideration.” Id. at 262-63; see also United States v. Baird, 218 F.3d 221, 224, 226 (3d Cir. 

2000) (concluding that the government breached a written cooperation agreement when it used 

incriminating admissions made as part of the agreement to increase the defendant’s punishment 

at sentencing). 

The Court finds that Yates’s comparison to Santobello is unpersuasive. Unlike Santobello

and its progeny, breach of a plea agreement or cooperation agreement is not at issue in this case.

Nor is there any claim or evidence in the pending matter of any breach of an express promise 

made by the government. Rather, Yates argues only that the FBI agents impliedly promised

Yates that she was a witness, and not a suspect, in the criminal investigation.

“Assuredly, interrogating officers can make false representations concerning the crime or 

the investigation during questioning without always rendering an ensuing confession coerced.

But false promises stand on a different footing.” Preston, 751 F.3d at 1026 (citation omitted); see 

also Hutto v. Ross, 429 U.S. 28, 30 (1976) (per curiam) (instructing that the test of voluntariness 

“is whether the confession was ‘extracted by any sort of threats or violence, (or) obtained by any 

direct or implied promises, however slight, (or) by the exertion of any improper influence’”) 

(quoting Bram v. United States, 168 U.S. 532, 542-43 (1897)). For example, in United States v. 

Preston, the Ninth Circuit concluded that the district court erred in admitting the defendant’s 

confession, where the 18-year-old defendant had a severe intellectual impairment; the 

interrogating officers engaged in repetitive questioning and threatened that the interrogation 

“would continue without end”; and the officers made “false promises of leniency and 

confidentiality.” 751 F.3d at 1027-28. Similarly, in Henry v. Kernan, 197 F.3d 1021 (9th Cir. 

1999), the Ninth Circuit held that a defendant’s confession was involuntary when the 

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PAGE 18 – OPINION AND ORDER

interrogating officers ignored the defendant’s “clear and repeated invocations of his Miranda

rights” and made “misleading comments intended to convey the impression that anything said by 

the defendant would not be used against him for any purposes.” Id. at 1027-28. One of the 

officers told the defendant that “what you say can’t be used against you right now.” Id. at 1027 

(quotation marks omitted).

In support of her argument that the FBI agents impliedly promised Yates that she was a 

cooperating witness, Yates identifies three occasions during which she asserts the government

impliedly misrepresented to her or her civil attorney, Edelson, that she was not under 

investigation:

1. Yates’s December 13, 2012 telephone conversation with Special Agent

Swansinger. According to Yates’s notes of the telephone call, Swansinger assures 

Yates that she is not under investigation. Yates’s notes also state, however, that 

Swansinger told her that the FBI “do[es] not tell anyone who they are 

investigating.” ECF 327-1 at 62 (Yates Ex. 15) (redacted); ECF 328 at 8 (Yates’s 

Memorandum) (emphasis added). According to the FBI’s FD-302 form 

memorializing the interaction, the FBI advised Yates that when the FBI 

interviewed her it was regarding transactions that occurred at the Bank, and that 

the case was still “under investigation.” ECF 327-1 at 65 (Yates Ex. 17).

2. Yates’s January 2013 telephone conversation with the FDIC’s Hornberger and 

subsequent email to Hornberger in which Yates states that “I appreciate that the 

list of incidents remain confidential under the whistle blowing statute.” Id. at 9. 

According to Yates’s notes of the telephone call, the FDIC’s Hornberger told 

Yates that “there have been no negative comments that have [come] out of his 

office” about her. ECF 327-1 at 62 (Yates Ex. 15) (redacted); ECF 328 at 8-9 

(Yates’s Memorandum).

3. Edelson’s June 6, 2013 telephone call with Special Agent Swansinger and 

Edelson’s statement in his declaration that, based on this conversation, he 

believed that Yates was not a target of the criminal investigation. ECF 329 ¶ 6. 

Yates asserts that, contrary to the government’s representations, the “FBI identified 

Ms. Yates as a target of their investigation by end of October 2012.” ECF 328 at 19 (Yates’s 

Memorandum in Support of Motion to Suppress). In support of this proposition, Yates identifies 

communications from the fall of 2012 from the Bank to FBI Special Agent Swansinger and FBI 

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Forensic Accountant Klein regarding the $675,000 wire transfer from the Bank to its customer 

M.K. that implicate Yates in the transaction. ECF 327-1 at 26-27, 32-55 (Yates Exs. 10, 13). In 

none of the communications identified by Yates, however, all of which are from Bank 

employees to the FBI, does any FBI agent state that Yates is a target of their investigation.

9

In addition, the government argues that under U.S. Department of Justice policy, a 

“target” is a term of art in federal criminal investigations. A target is defined as: “a person as to 

whom the prosecutor or the grand jury has substantial evidence linking him or her to the 

commission of a crime and who, in the judgment of the prosecutor, is a putative defendant.” 

U.S. ATTORNEY MANUAL 9-11.151 (emphasis added). As late as October 2013, the federal grand 

jury and the U.S. Attorney’s Office had not yet determined Yates’s status in the investigation. 

ECF 362-2 at 1 (Gov’t Ex. FF). It was not until almost one year later, on June 26, 2014, that the 

U.S. Attorney’s Office notified Yates’s criminal defense counsel that Yates is a target in the 

grand jury investigation. Id. at 3. Thus, the government argues, the FBI agents’ purported

assurances that Yates was not a target of the investigation through June 2013 were accurate, even 

assuming the truth of Yates’s version of those statements.

Yates replies that she cannot be expected to understand that the term “target” has a 

specific meaning with regard to federal criminal investigations. Yates, however, has failed to 

identify with specificity any false promise, either express or implied, made by any government 

agent in this case. Further, the Court agrees with the government that Yates’s personal 

characteristics support the conclusion that her interactions with government agents were 

 

9

The Court notes, however, that on May 3, 2013, FDIC-OIG Special Agent Wixted 

emailed FBI Special Agent Swansinger a draft PowerPoint presentation that contained possible 

charges that could be brought against Yates. See ECF 327-3 at 1 (Yates Ex. 32) (email); 

ECF 327-2 at 80-113 (Yates Ex. 31) (PowerPoint). In Wixted’s email to Swansinger, Wixted 

asks: “Is there anything you want to do on this case?” ECF 327-3 at 1 (Yates Ex. 32). No 

responsive email from Swansinger appears in the record.

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voluntary. Yates is a highly educated, sophisticated banking executive with extensive experience 

as a CFO in two separate banks. Thus, this case is not like Preston, where the defendant was a 

mentally disabled 18-year-old and particularly susceptible to the interrogating officers’ “false 

promises of leniency.” Preston, 751 F.3d at 1026.

The Court also finds that the details of Yates’s interactions with the government 

demonstrate voluntariness. Her conversations both with the FBI special agents and the FDIC’s

personnel, including Hornberger, occurred in noncustodial settings. Indeed, Yates herself 

initiated several of these interactions. Furthermore, Yates was represented by counsel during the 

relevant time period. Accordingly, the Court holds that, under the totality of the circumstances, 

the government has carried its burden of proving the voluntariness of Yates’s statements. The 

Court therefore denies Yates’s Motion to Suppress the statements that she made to the FBI while 

not in custody.

B. Yates’s Deposition in the Civil Lawsuit The Bank of Oswego v. Geoffrey Walsh

Yates also moves to suppress the entirety of her sworn deposition testimony taken in the 

Walsh Lawsuit on the grounds that the government acted in bad faith by using a parallel civil 

proceeding (the Walsh Lawsuit) to elicit incriminating statements from Yates in violation of her 

Fifth Amendment rights. In support of her argument, Yates discusses inapplicable case law in 

which the government itself conducted simultaneous civil and criminal investigations, such as 

the Supreme Court’s decision in United States v. Kordel, 397 U.S. 1 (1970), and the Ninth 

Circuit’s opinion in United States v. Stringer, 535 F.3d 929 (9th Cir. 2008). See ECF 328 

at 29-31 (Yates’s Memorandum in Support of Motion to Suppress). Yates’s argument depends 

entirely upon the unproven premise that Casey Nokes, the Bank’s private outside attorney, acted 

as an agent of the government when he took Yates’s third-party deposition in the Walsh Lawsuit.

See ECF 328 at 26-29.

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A private party may be found to have acted “as an ‘instrument’ or agent of the state” 

under certain circumstances. Coolidge v. New Hampshire, 403 U.S. 443, 488 (1971). The critical 

factors in this analysis are: “(1) whether the government knew of and acquiesced in the intrusive 

conduct; and (2) whether the party performing the search intended to assist law enforcement 

efforts or further his own ends.” United States v. Cleaveland, 38 F.3d 1092, 1093 (9th Cir. 1994) 

(quoting United States v. Reed, 15 F.3d 928, 931 (9th Cir. 1994). “The defendant has the burden

of establishing government involvement in a private search.” Id. (emphasis added).

Yates argues that United States v. Walther, 652 F.2d 788 (9th Cir. 1981), is analogous to 

the case at hand.10 In Walther, the Ninth Circuit considered whether the district court erred in 

granting the defendants’ motions to suppress evidence obtained after an airline employee opened 

a suspicious overnight case, discovered that it contained a white powder substance, and then 

contacted DEA agents, who confirmed that the substance was cocaine. Id. at 790. The defendant 

had shipped the overnight case as a “Speed Pak.” Id. Before the trial court, the airline employee 

testified that he had opened about ten “Speed Paks” in the past and had frequently discovered 

illegal drugs that he reported to the DEA. Id. The employee additionally testified that he only 

opened the overnight case because he was suspicious that it contained illegal drugs. Id. at 792.

 

10 The Court notes that Coolidge, Cleaveland, Reed, and Walther all considered whether 

private conduct could be considered governmental conduct in the Fourth Amendment context, 

whereas, here, Yates argues that her Fifth Amendment rights were violated. As Yates points out, 

however, courts recognize that a private party can violate a defendant’s Fifth Amendment rights 

while acting on behalf of the government. See, e.g., United States v. Roston, 986 F.2d 1287, 1292 

(9th Cir. 1993) (instructing that a private party may be required to give an individual a Miranda

warning when the private party is acting on behalf of the state); United States v. Pace, 833 F.2d 

1307, 1313 (9th Cir. 1987) (finding that a Miranda warning was not required where no preexisting agreement between a cellmate informant and law enforcement existed; the cellmate 

informant acted on his own initiative in obtaining the defendant’s confession; and there was no 

quid pro quo relationship between the cellmate informant and law enforcement).

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The Ninth Circuit affirmed the district court’s finding that the airline employee was a 

government agent, explaining that “legitimate business considerations such as prevention of 

fraudulent loss claims were not a factor” in the airline employee’s decision to open the overnight 

case and that the employee, thus, had the requisite mental state of a government “instrument or 

agent.” Id. The Ninth Circuit also concluded that the government acquiesced to the employee’s 

conduct, although the government did not direct the airline employee to open the particular 

overnight case at issue:

We are also satisfied that Rivard’s [the employee’s] prior 

experience with the DEA provides proof of the government’s 

acquiescence in the search. While the DEA had no prior 

knowledge that this particular search would be conducted and had 

not directly encouraged Rivard to search this overnight case, it had 

certainly encouraged Rivard to engage in this type of search. 

Rivard had been rewarded for providing drug-related information 

in the past. He had opened Speed Paks before, and did so with no 

discouragement from the DEA. The DEA thus had knowledge of a 

particular pattern of search activity dealing with a specific 

category of cargo, and had acquiesced in such activity. 

We emphasize the narrowness of our holding. It is dependent upon 

the trial court’s finding of extensive contact between Rivard and 

the DEA and its finding on Rivard’s motivation for opening the 

overnight case. The DEA either knew or should have known that 

Rivard had made it a practice to inspect Speed Paks, and had 

acquiesced in that practice. We do not by this opinion diminish the 

duty of any private citizen to report possible criminal activity, nor 

do we frown upon the use of paid informants. We merely hold that 

the government cannot knowingly acquiesce in and encourage 

directly or indirectly a private citizen to engage in activity which it 

is prohibited from pursuing where that citizen has no motivation 

other than the expectation of reward for his or her efforts.

Id. at 793 (emphasis added).

Yates argues that this case is similar to Walther because the record establishes extensive 

and collusive contact between the Bank and Special Agents Swansinger and Maestas. According 

to Yates, a quid pro quo relationship existed between the Bank and the FBI agents such that the 

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Bank was able to avoid criminal prosecution in exchange for providing incriminating evidence 

against Walsh and Yates.11 Yates further argues:

Though not necessary to establish an agency relationship, it is also 

probable that FBI agents knew of Ms. Yates’s deposition and 

collaborated with the Bank to conduct it. The FBI agents worked 

with the Bank extensively during this time. In the month before 

Ms. Yates’s deposition, the FBI agents and attorney Nokes

frequently discussed the status of the Bank’s civil case against 

Geoff Walsh. Given the number of discussions they had and the 

persistent belief in Ms. Yates’s culpability, it is highly plausible—

and indeed very likely—that attorney Nokes told the agents of Ms. 

Yates [sic] deposition in advance.

ECF 328 at 28 (Yates’s Memorandum in Support of Motion to Suppress). Finally, Yates asserts 

that the similarities between the government’s investigation and the questions that Nokes asked 

Yates during her deposition provide circumstantial evidence that Nokes was acting as the 

government’s agent.

The Court finds that the Bank and its attorney, Nokes, cooperated with federal 

investigators and complied with grand jury subpoenas both before and after Yates’s deposition. 

For example, on April 30, 2013, Nokes spoke with FBI Special Agent Swansinger and FBI 

Forensic Accountant Klein about the possible straw buyer purchase of the A Avenue property. 

ECF 327-2 at 15 (Yates Ex. 24). On June 6, 2013, Nokes notified Agent Swansinger that Yates 

recently had been deposed in the Bank’s civil lawsuit against Walsh. ECF 327-3 at 2 (Yates 

Ex. 33). According to the FBI report of the interview, Nokes commented that Yates’s answers 

during the deposition were evasive and implied that Yates would inappropriately authorize wire 

transfers for Bank customers. Id.12

 

11 Yates does not identify any evidence in the record that supports this assertion. See

ECF 328 at 27 (Yates’s Memorandum in Support of Motion to Suppress). 

12 Yates also presents evidence that the Bank voluntarily cooperated with the FDIC in its 

investigation. The Court accepts this conclusion, but it does not alter the result. Neither the Bank 

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The Court concludes that Yates’s comparison of this case to Walther is unpersuasive. 

This case is not like Walther, where the DEA “had knowledge of a particular pattern of search 

activity dealing with a specific category of cargo, and had acquiesced in such activity.” 652 F.2d 

at 793 (emphasis added). Yates has not presented any evidence that the government knew in 

advance that the Bank would take Yates’s deposition, let alone encouraged the Bank to take that 

deposition, before the June 6, 2013, conversation between Nokes and FBI Special 

Agent Swansinger. Although the Bank cooperated with the FBI during their investigation into 

alleged criminal activity at the Bank, the record shows that the communications between the 

Bank (including its attorney) and government investigators were routine interactions expected 

from an alleged victim of a case.

Furthermore, Nokes did not receive “any direction, instruction, or suggestion from the 

Federal Bureau of Investigation, Federal Deposit Insurance Corporation, Department of Justice, 

or any other part of the federal or state government on any aspect of civil discovery or 

otherwise” during his time representing the Bank in the Walsh Lawsuit. ECF 220-1 ¶ 5. Nokes 

“acted on [his] own initiative without any government involvement.” Cf. United States v. Roston, 

986 F.2d 1287, 1292 (9th Cir. 1993). Yates’s suggestion to the contrary is speculation,

unsupported by any record evidence. Accordingly, the Court concludes that Yates has not shown 

that the “government knew of and acquiesced in” the Bank taking her deposition. See 

Cleaveland, 38 F.3d at 1093.

Walther also is different from this case in that the airline employee in that case testified 

that he only opened the overnight case because he was suspicious that it contained illegal drugs; 

thus, he did not conduct the search out of any motivation to carry out the business interests of his 

 

nor its attorneys were agents for the government, including the FBI, the U.S. Attorney’s Office, 

the FDIC, or the FDIC-OIG.

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employer. 652 F.2d at 791-92. Unlike in Walther, Nokes “has a legitimate independent 

motivation” for taking Yates’s deposition—gathering evidence for the Bank’s civil lawsuit 

against Walsh. Cf. id. at 792. According to Nokes, he acted solely in the interests of his private 

client, the Bank, throughout his representation of the Bank. ECF 220-1 ¶ 4 (Nokes Declaration). 

Thus, the Court concludes that Nokes did not act “on behalf of” the government when he took 

the deposition of Yates in the Walsh Lawsuit. Roston, 986 F.2d at 1292 (quoting Jones v. 

Cardwell, 686 F.2d 754, 756 (9th Cir. 1982)).

Yates has not established that either the Bank or its attorney “intended to assist law 

enforcement efforts,” rather than merely to “further [the Bank’s] own ends,” in conducting the 

Bank’s civil discovery in the Walsh Lawsuit. See Cleaveland, 38 F.3d at 1093. Because Yates 

has not satisfied her burden of establishing government involvement in a private search, id., the 

Court denies Yates’s Motion to Suppress her deposition testimony taken in the Walsh Lawsuit.

CONCLUSION

Yates’s Motion to Suppress (ECF 308) is DENIED.

IT IS SO ORDERED.

DATED this 18th day of November, 2016.

/s/ Michael H. Simon

Michael H. Simon

United States District Judge

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