Opinion ID: 1085611
Heading Depth: 4
Heading Rank: 1

Heading: Denial of Suppression

Text: Defendants challenge the district court’s denial of Shapiro’s motion to suppress evidence seized from Cobalt’s offices in Great Neck, New York and Springfield, Massachusetts on December 1, 2005, pursuant to search warrants purportedly obtained on false or incomplete information. They argue that the district court wrongfully denied them 7 a hearing on this claim. See United States v. Falso, 544 F.3d 110, 125 (2d Cir. 2008) (citing Franks v. Delaware, 438 U.S. 154 (1978)) (recognizing defendant’s right to hearing if he can make “substantial preliminary showing that a deliberate falsehood or statement made with reckless disregard for the truth was included in the warrant affidavit and the statement was necessary to the judge’s finding of probable cause” (internal quotation marks omitted)). Insofar as it is an open question in this circuit whether we review the denial of a Franks hearing de novo or for clear error, see id. at 126 n.21, we need not resolve that question here because Shapiro’s challenge fails under even the more rigorous de novo standard of review, see Hoffler v. Bezio, --- F.3d ----, 2013 WL 4016924,  (2d Cir. 2013). To determine whether a misstatement or omission is necessary to the finding of probable cause, i.e., whether it is material, we look to a hypothetical “corrected affidavit,” produced by adding to the original warrant affidavit the omitted information highlighted by defendants, as well as any other pertinent omitted information. United States v. Canfield, 212 F.3d 713, 718 (2d Cir. 2000). “If the corrected affidavit supports probable cause, the inaccuracies were not material to the probable cause determination and suppression is inappropriate.” Id. The question of whether the corrected affidavit demonstrates probable cause is a legal question that we review de novo. See id. Probable cause to search exists where circumstances indicate a “fair probability that contraband or evidence of a crime will be found in a particular place.” Illinois v. Gates, 462 U.S. 213, 238 (1983); see Florida v. Harris, 133 S. Ct. 1050, 1055 (2013) (observing that probable cause is “practical,” “commonsensical,” “all-things-considered” standard). 8 Both the Great Neck and Springfield warrants were supported by the November 30, 2005 affidavit of FBI Special Agent Jennifer May.4 May’s affidavit was based on her personal knowledge and on information obtained from (1) conversations with a cooperating witness (“CW”), who had provided reliable information to law enforcement in the past; (2) conversations with other law enforcement officers and witnesses; and (3) May’s review of bank, telephone, and Cobalt business records. Based on this information, May stated that there was probable cause to believe that, from approximately May 2004 to November 2005, defendants engaged in a “boiler room” investment fraud scheme in which more than 50 people had been induced to invest more than approximately $10 million. She further stated that there was probable cause to believe that evidence of this scheme was present at Cobalt’s Great Neck and Springfield offices. In support of her conclusion, May cited, inter alia, (1) phone records showing tens of thousands of short-duration, long-distance telephone calls in a pattern that, based on her training and experience, she believed was consistent with boiler room and cold-call solicitation efforts frequently used in investment scams; (2) the omission of defendants’ true positions at Cobalt and their prior criminal convictions from Cobalt’s July and December 2004 private placement memoranda (“PPM”); (3) a false statement in the December 2004 PPM that Shapiro received degrees from the University of Miami and Harvard University; (4) a recording between the CW and Shapiro, in which Shapiro admitted that he was running 4 The affidavit of FBI Special Agent Christopher Dillon submitted in support of the Springfield warrant incorporated May’s affidavit by reference. 9 Cobalt from a “tertiary position” because of “his personal situation,” May Aff. ¶ 21 (internal quotation marks omitted); (5) a recording between the CW and Shapiro in which Shapiro stated that his salesman would “say anything, do anything, [and] use anything” to sell investments, id. ¶ 27 (alteration in original); (6) bank records indicating that Shapiro had misappropriated investor funds for personal use; and (7) her training and experience that individuals involved in fraudulent investment schemes maintain various records for substantial periods of time evincing their operation of such schemes. Despite these facts, defendants claim that when May’s affidavit is corrected to add omitted facts regarding the CW—such as the nature of his past convictions, i.e., fraud and perjury; the loss of his law license; and his alleged efforts to compete with Cobalt—probable cause is negated. We disagree. May’s affidavit made clear that the CW had been convicted of federal crimes. Moreover, the CW’s information about Cobalt was corroborated through recordings and bank, business, and telephone records, and the CW was known to be reliable, insofar as he had previously testified on behalf of the government in a case that led to a conviction. Thus, the nature of the CW’s crimes and the other facts highlighted by defendants would not have discredited the CW’s account of the fraudulent scheme so as to defeat probable cause. See United States v. Wagner, 989 F.2d 69, 73 (2d Cir. 1993) (stating that “information provided by an informant from whom the government has received consistently reliable information in the past is likely to be sufficiently reliable to establish probable cause” and that informant’s entire account may be credited where “corroborated in material respects”). The remaining misrepresentations and omissions alleged by defendants 10 raise de minimis issues that do not negate probable cause when included in a corrected affidavit. Because defendants have not identified any material misrepresentations in or omissions from May’s affidavit that could negate probable cause, we identify no error in the district court’s determination that Shapiro failed to make the substantial preliminary showing necessary to justify a Franks hearing. Nor do we identify any error in its denial of Shapiro’s motion to suppress.