Source: https://www.scribd.com/document/43900975/Decision-Allowing-Wiretaps-in-Galleon-Group-Case
Timestamp: 2019-04-26 00:58:07+00:00

Document:
Federal judge's decision allowing government wiretaps to be used in the criminal case against the Galleon Group founder Raj Rajaratnam and the former hedge fund consultant Danielle Chiesi.
does not specifically authorize wiretaps to investigate insider trading alone.
remainder of the affidavit demonstrated ample reason to find probable cause.
of Rajaratnam upon which the government’s criminal investigation substantially relied.
evidence suggested that Rajaratnam and others conducted their scheme by telephone.
recording calls unrelated to the crimes the government had probable cause to suspect.
to wiretap Rajaratnam’s and Chiesi’s phones.
Commission is referred to as the SEC throughout.
intercepting communications over Rajaratnam’s phone on or about March 10.
each application authorized by a judge in this district. (Gov’t Opp’n to Rajaratnam Exs.
was returned on February 9, 2010 (Gov’t Opp’n to Rajaratnam Ex. 12).
vel non of whether the necessity requirement has been satisfied.” United States v.
judgment on other aspects of the defendants’ motion to suppress. (July 27, 2010 Hr’g Tr.
wiretap and (ii) that wiretapping was necessary to the government’s investigation.
the same extent as if probable cause was lacking on the face of the affidavit.” Id. at 156.
“Post Hr’g Reply Br.” refer to the parties’ submissions following the Franks hearing.
may only be authorized to investigate offenses specified in Section 2516. See 18 U.S.C.
executed order.” United States v. Marion, 535 F.2d 697, 700 (2d Cir. 1976) (quoting S.
States v. Levine, 690 F. Supp. 1165, 1171 (E.D.N.Y. 1988).
applications candidly detailed the nature of the scheme for which wiretaps were sought.
or of any State or political subdivision thereof.” 18 U.S.C. § 2517(3).
legitimate reason for the wiretap to begin with.
use of wiretaps in connection with the government’s investigation.
finding of an issuing judicial officer that probable cause exists.”).
wire fraud a “fig leaf” (Rajaratnam Reply Br. at 40).
the interception of communications relating to money laundering); United States v.
criminal statute for which wiretapping was authorized as well as another criminal law.
Defendants say that this sort of anticipated interception cannot count as incidental.
test. “Incidental,” not “inadvertent,” is the word used in Title III’s legislative history.
Defendants deny that they are asking for an absolute bar. (July 27, 2010 Hr’g Tr.
2516. That is not what the statute says.
long as the government applied to do so “as soon as practicable.” 18 U.S.C. § 2517(5).
can introduce wiretap evidence under Section 2517(5).
trading cases where a wire is involved.
papers and determined that the statute’s requirements had been satisfied,” United States v.
the renewal and amendment application papers.”).
v. Fury, 554 F.2d 522, 530 (2d Cir. 1977)).
certainties.’” Walczyk v. Rio, 496 F.3d 139, 156 (2d Cir. 2007) (quoting Gates, 462 U.S.
gaining color from the others,” rather than “in isolation” from one another. Gotti, 42 F.
determination of the issuing [judge].” Walczyk, 496 F.3d at 157; see United States v.
government’s affidavit misstated or omitted material information about probable cause.
have an opportunity to assess the affidavit without the inaccuracies.”).
probable cause.” Canfield, 212 F.3d at 718 (internal quotation marks omitted).
this Court to defer to.
Court now sets forth its reasoning.
mislead” or “made in reckless disregard of whether [it] would mislead.” United States v.
day wiretap, any deficiencies in subsequent wiretap applications are of no consequence.
to justify renewals of the wiretap.
standard in Title III is actually distinct from the constitutional standard in Franks.”); Tr.
the law of this circuit. See United States v. Bianco, 998 F.2d 1112, 1125-26 (2d Cir.
297, 300–01 (4th Cir. 1990) (formatting normalized)).
621, 2007 WL 1075041, at *26 (S.D.N.Y. Apr. 4, 2007) (Karas, J.).
710 F. Supp. 2d at 373; Vilar, 2007 WL 1075041, at *26; United States v. Harper, No.
05-CR-6068, 2006 WL 2873662, at *8 (W.D.N.Y. Oct. 6, 2006); United States v.
247 F. Supp. 2d at 473, 479; United States v. Markey, 131 F. Supp. 2d 316, 324 (D.
U.S. 118 (1997); Beard v. City of Northglenn, Colo., 24 F.3d 110, 116 (10th Cir. 1994).
veracity of the statement.” Perez, 247 F. Supp. 2d at 474 (emphasis added).
to know.” Perez, 247 F. Supp. 2d at 474 (Chin, J.); United States v. Harding, 273 F.
worked out of Galleon’s offices, and Zvi Goffer, who worked as a trader for Galleon.
numerous discussions with a cooperating source (‘CS-1’)” we now know to be Khan.
investigation. The way the government parses Kang’s grammar may be literally right.
false statement that Khan had been cooperating with the FBI only since November 2007.
similar conduct, raising obvious questions as to her credibility.
on December 2, 2009, that court granted the unopposed motion.
included” (Tr. at 65) and that the government “wish[es] it would have been included” (Id.
frankly, should have been exhibited to Judge Lynch.
that he took this view “[b]ecause of [sic] the volumes are down, right?” (Rajaratnam Br.
for an accused individual to deny having committed a crime before confessing to it.
margins would decline the following quarter (“volumes were down”).
the company and RAJARATNAM said yes, somebody who knows.
Judge Lynch, not quoted the most inculpatory version of Rajaratnam’s words.
work.” (Rajaratnam Br. Ex. D.1 at 6.) This was not an omission designed to mislead.
evince a lack of frankness that should be found in all ex parte applications.
The inaccuracies and inadequacies in the Kang affidavit give the Court pause.
minimally adequate facts to establish probable cause? See Coreas, 419 F.3d at 155.
accurately disclosed,” her “general allegations” should be “discarded.” (Rajaratnam Br.
inside information about her company.
of 2007 as compared to the third quarter of that year (an increase of only six percent).
an anonymous tipper. That strengthens the case for believing her. See Caldarola v.
indicia of credibility—sufficient at least to support a finding of probable cause to search.
and opprobrium of having admitted criminal conduct.” United States v. Harris, 403 U.S.
respects, the entire account may be credited, including parts without corroboration.”).
admissions are not made in an attempt to reduce the individual’s share of the blame.
conduct provide at least some support for probable cause. But there is more.
least a fair probability that insider trading was afoot.
Drimal told the cooperator that he had provided the same four stocks to Rajaratnam. (Id.
This evidence, taken alone, is far from conclusive of Rajaratnam’s culpability.
Lynch to have found probable cause.
decision to deny Rajaratnam’s motion for suppression.
to a warrant is presumed valid.”).
Chiesi apparently gave to Rajaratnam concerning AMD, Akamai, IBM, and Microchip.
concerns the timing of the deal, which itself may be material.
certainly minimally adequate to support Judge Sullivan’s finding of probable cause.
succeed if tried or to be too dangerous,” 18 U.S.C. § 2518(1)(c), as Title III requires.
Concepcion, 579 F.3d at 219 (quoting S. Rep. No. 90-1097, at 12).
statements that other investigative procedures would prove unsuccessful” do not suffice.
involved in the use of conventional techniques.”) (internal quotation marks omitted).
exhaustion of ordinary investigative techniques. (See Chiesi Br. at 13; Chiesi Reply Br.
F.3d 1179, 1188 (10th Cir. 1997), overruled on other grounds by United States v.
(10th Cir. 1995) (quoting United States v. Apodaca, 820 F.2d 348, 350 (10th Cir.), cert.
electronic surveillance into a tool of last resort.”).
procedures are not feasible.” Lilla, 699 F.2d at 103.
whether the necessity requirement has been satisfied.” United States v. Rajaratnam, No.
documents suggested that Rajaratnam was exchanging inside information by telephone.
contemporaneous, conventional investigation of the same conduct was, in fact, achieving.
unlikely to succeed if tried” (Kang Ex. 1 at 38) remains just that—boilerplate.
warrants “is not appropriate at this stage of the investigation, as the locations where . . .
government had not had the time to review them all and was relying on the SEC to do so.
reference to the acquisition and review of trading records as an investigative technique.
so with respect to the issue of necessity in particular. See United States v. King, 991 F.
F.2d 665, 670-71 (5th Cir. 1991); United States v. Cole, 807 F.2d 262, 267-68 (1st Cir.
made the former showing but not the latter.
trading, all of which was at the core of the government’s own criminal investigation.
revealed at the suppression hearing.” Ippolito, 774 F.2d at 1486 n.1.
application apple” (Rajaratnam Post Hr’g Reply Br. at 5) is appealing, but overly simple.
612 F.3d 998, 1003 n.7 (8th Cir. 2010).
wiretap application as well as those omitted therefrom.
through the use of a wiretap does not preclude a finding of necessity.”).
Rajaratnam introduced no evidence that any of these records produced anything of value.
conspiracy is sufficient for a finding of ‘necessity’ under the statute.”).
at 4.) It is clear that conventional techniques have at least proven adequate in the past.
document subpoenas, search warrants, and other forms of documentary investigation.
Over four million documents from targets and third parties had already been gathered.
additional documents would have produced qualitatively different evidence.
techniques before resorting to electronic surveillance.” Concepcion, 579 F.3d at 218.
Government satisfied the necessity requirement”).
the twelve other potential interviewees that the SEC had identified, including Rajiv Goel.
conventional technique that would, in fact, be likely to succeed.
her cooperation does not necessarily imply that other targets could also be flipped.
754 F.2d 1427 (2d Cir. 1985).
government with Rajaratnam’s own burden of proof. See Franks, 438 U.S. at 155-56.
DEA” or a related investigation conducted by Canadian authorities. Id. at 1301, 1314.
did exactly the opposite with respect to the SEC.
exception of United States v. Lilla, 699 F.2d 99 (2d Cir. 1983), and United States v.
purchased drugs and, to all appearances, could easily approach again. See id. at 104.
infiltration and “normal” governmental surveillance.
the affidavit, as corrected, here.
of validity with respect to the affidavit supporting the search warrant”, Franks, 438 U.S.
affidavit. But it has little relevance to Chiesi.
not that she had only three.
hedge fund, New Castle, could jeopardize the investigation. (Gov’t Opp’n to Chiesi Ex.
previous few years, and it could have done the same for New Castle records. (Chiesi Br.
suppression by satisfying a lower standard.
Chiesi or other target subjects would be too risky and could jeopardize the investigation.
of whom “communicates directly with CHIESI or any other TARGET SUBJECT.” (Id.
Franks, 438 U.S. at 171.
determination that was made,” Miller, 116 F.3d at 663.
similar from one narcotics operation to another”).
required to resort to measures that will clearly be unproductive.” Terry, 702 F.2d at 310.
investigatory objectives.30 See Gambino, 734 F. Supp. at 1103; United States v.
578 F. Supp. at 989.
authorizing the wiretaps of Chiesi’s phones.
as to ‘minimize’ the interception of such conversations.” Scott v. United States, 436 U.S.
circumstances. See Scott, 436 U.S. at 139; Salas, 2008 WL 4840872, at *6.
may be justified in an attempt to determine the precise scope of the enterprise.” Id.
v. Capra, 501 F.2d 267, 275–76 (2d Cir. 1974).
The government has the burden to show that it properly minimized intercepts.
219, 2005 WL 1384027, at *3 (S.D.N.Y. June 8, 2005) (citing cases); United States v.
Ianniello, 621 F. Supp. 1455, 1470 (S.D.N.Y. 1985) (Weinfeld, J.).
government’s conduct in monitoring the Rajaratnam wiretap was objectively reasonable.
so conducted that innocent conversation can be totally eliminated.”).
1999 WL 649020, at *6 (S.D.N.Y. Aug. 25, 1999) (internal citations omitted).
objectively reasonably under the circumstances. No suppression is required.
contends that the government made virtually no effort to minimize these recordings.
percent of the total duration of those calls.
discussed AMD, a company about which inside information was allegedly exchanged.
minimization requirement. See Pichardo, 1999 WL 649020, at *6.
The government’s efforts here were at least as good as those upheld in Salas.
which were non-pertinent calls that were not minimized at all. 2008 WL 4840872, at *7.
finds the government’s conduct objectively reasonable under the circumstances.
government had obtained pursuant to wiretaps of phones used by C.B. Lee and Ali Far.
government's failure to establish necessity.

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