Opinion ID: 2723829
Heading Depth: 3
Heading Rank: 2

Heading: Proof of Necessity for the Wiretap

Text: In order to obtain authorization for a wiretap, the government must make “a full and complete statement as to whether or not other investigative procedures have been tried and failed or why they reasonably appear to be unlikely to succeed if tried or to be too dangerous.” 18 U.S.C. § 2518(1)(c). The government’s burden “is not great,” and compliance with this requirement is analyzed in a “practical and common-sense fashion.” United States v. Campos, 541 F.3d 735, 746 (7th Cir. 2008) (internal quotation marks omitted). The statute does not require the government to show absolute necessity, id.; the point is to ensure that wiretaps are not used routinely as the first step in an investigation, United States v. Thompson, 944 F.2d 1331, 1340 (7th Cir. 1991). Nos. 12-3819, 12-3833 & 12-3867 11 The defendants claim that evidence gathered from the wiretap should have been excluded because the government failed to demonstrate the necessity of tapping Durham’s phone. We review the finding of necessity for abuse of discretion. United States v. McLee, 436 F.3d 751, 763 (7th Cir. 2006). To obtain authorization to tap Durham’s phone, the government submitted a 45-page affidavit summarizing evidence gathered over the course of a nearly eight-month investigation. The government began looking into Fair after a board member advised the FBI that Durham had been running the company as a Ponzi scheme, had made more than $100 million in loans from Fair to related companies, and had made misrepresentations to investors. That was the extent of the board member’s cooperation, however. The subsequent investigation involved gathering information through a variety of channels. The FBI contacted the SEC, which was conducting its own investigation of Fair. The FBI also reviewed records in the public domain and subpoenaed from the Federal Reserve Bank of New York. An FBI agent posing as a potential investor spoke with Fair sales representatives over the phone, met with them twice in person, and ultimately purchased a certificate in an effort to gather relevant information about the scheme. The FBI also interviewed two confidential informants who provided some useful information but were not close enough to the scheme to provide current information about Durham’s activities. Agents also used a pen register to monitor Durham’s phone calls. The affidavit went on to explain that these measures had not yielded enough evidence to successfully prosecute Durham 12 Nos. 12-3819, 12-3833 & 12-3867 or reveal other guilty parties; it also explained that other standard investigative techniques were not viable under the circumstances. If Fair was operating as a Ponzi scheme, the investigation needed to move quickly in order to protect investors. Subpoenaing and sifting through volumes of financial records looking for proof would be too slow. So too would attempting to infiltrate the scheme’s inner circle; that would require getting an undercover agent in place and allowing time to penetrate what was likely to be a cautious group of fraudsters. On the other hand, if the company was merely undercapitalized, secrecy was vital, and word of a criminal investigation could provoke a run causing Fair to collapse when it otherwise could be saved. So subpoenaing witnesses and internal records or executing a search warrant would be unwise. Other methods of investigation had exhausted their utility. The FBI had no further leads on informants with more direct knowledge of the scheme, and pen registers had revealed all they could. This thorough affidavit easily established the necessary foundation for the wiretap. Far from asking for a wiretap after little conventional investigation, the government first used a variety of other techniques to gather information. And the wiretap application provided a reasonable explanation as to why other standard investigative techniques would not be appropriate. The defendants counter that the stated reasons for the wiretap were too generic and relied on inherent limitations in other investigative techniques that could apply to any investigation of large-scale financial fraud. But the affidavit did not Nos. 12-3819, 12-3833 & 12-3867 13 merely state the limitations of a given alternative in general terms—it did not say, for example, that a pen register only showed the phone numbers called but not the contents of those conversations. Instead, the affidavit tied the limitations to the particular investigation at hand. That the justifications might apply in other, similar investigations is not fatal to an application for a wiretap; a particular kind of crime may pose common, recurring problems for investigators. What matters is that other available investigative procedures had been tried, or were inadvisable or unlikely to succeed under the circumstances. The government’s application established the necessary foundation for the wiretap as required by § 2518(1)(c). The defendants rely on some authority from other circuits, but the cases are distinguishable. For example, United States v. Blackmon, 273 F.3d 1204, 1207–08 (9th Cir. 2001), applied de novo review, not review for abuse of discretion, the standard used in our circuit. Moreover, the wiretap affidavit in Blackmon was highly generic and also riddled with errors. Finally, the majority opinion in Blackmon drew a strong dissent arguing that abuse of discretion was the correct legal standard and explaining that the affidavit was sufficient under that standard. See id. at 1211–12 (Wardlaw, J., dissenting). United States v. Lilla, 699 F.2d 99 (2d Cir. 1983), is likewise distinguishable. It involved an affidavit containing a bare conclusion that no other investigative techniques would suffice without explaining “what, if any, investigative techniques were attempted prior to the wiretap request.” Id. at 104. In contrast, the affidavit here contained many pages of information detailing the government’s previous efforts and a reasoned explanation of why other techniques would be inadvisable or likely unproductive. 14 Nos. 12-3819, 12-3833 & 12-3867 The government met its burden of showing necessity for the wiretap.