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United States v. Conte

December 28, 2004

UNITED STATES OF AMERICA, PLAINTIFFS,
v.
VICTOR CONTE, JAMES VALENTE, GREG ANDERSON, AND REMI KORCHEMNY, DEFENDANTS.



The opinion of the court was delivered by: Susan Illston United States District Judge

ORDER RE: MOTIONS TO DISMISS, MOTIONS TO QUASH AND DISCOVERY MOTIONS

Now before the Court are various motions brought by defendants: 1) Valente and Conte's motion to dismiss for outrageous government conduct; 2) Anderson's motion to dismiss for outrageous government conduct, or in the alternative, sanctions; 3) Valente and Conte's motion to dismiss for prejudicial pretrial publicity; 4) Valente and Conte's motion to suppress; 5) Anderson's motion to quash search warrants; 6) Anderson's motion to suppress statements; 7) Anderson's motion to traverse the search warrants; and 8) Anderson's various discovery motions. Defendant Remi Korchemny joins in both motions to dismiss for outrageous government conduct and several of Anderson's discovery motions.

I. Defendants' Motions to Dismiss for Outrageous Government Conduct

Defendants move to dismiss the indictment based on outrageous government conduct in the course of the investigation and prosecution of this case. In order to prevail on claim of outrageous conduct, a defendant must allege and show that the government's conduct was "so grossly shocking and so outrageous as to violate the universal sense of justice." United States v. McClelland, 72 F.3d 717, 721 (9th Cir. 1995). This is "an extremely high standard." United States v. Smith, 924 F.2d 889, 897 (9th Cir. 1991); see also United States v. Ryan, 548 F.2d 782, 789 (9th Cir. 1976) (due process defense for outrageous government conduct is a narrow one). Outrageous government conduct requires more than negligence or poor judgment. See United States v. Wiley, 794 F.2d 514, 515 (9th Cir. 1986). The government's alleged disseminatio n of information to the media lies at the heart of defendants' motion.*fn1 Aside from Iran White's involvement in the May 2004 article published in Playboy magazine, defendants present argument, but no evidence, that any government agent is responsible for disclosing sensitive material, including grand jury testimony, to the media. Defendants have presented no evidence that the government endorsed Iran White's actions; in fact, the government disputes several of the assertions in the article. See Government's Opp'n at 11. White is no longer a state law enforcement agent. The Court finds that White's actions do not rise to the level of outrageous government conduct.

Therefore, defendants have not presented a sufficient factual basis to warrant an evidentiary hearing on this motion, given the "extremely high standard" of outrageous conduct. At this time, the Court DENIES without prejudice defendants' motion to dismiss for outrageous government conduct.

II. Valente and Conte's Motion to Dismiss for Prejudicial Pretrial Publicity

Defendants argue that pretrial publicity in this case has made it impossible to receive a fair trial. Defendants renew their claim that the government is responsible for the leaks, and, because of the publicity, ask the Court to dismiss the indictment in order to protect their Sixth Amendment rights. The government argues that the case law supports continuances, careful voir dire, or a change of venue to deal with pretrial publicity, instead of dismissal.

As discussed above, the defendants have presented no evidence in support of their claims that the government is responsible for providing sensitive information relating to the case to the media. With regard to pretrial publicity generally, courts have found that defendants may demonstrate actual or presumptive prejudice. Ainsworth v. Calderon, 138 F.3d 787, 795 (9th Cir. 1998).

Actual prejudice requires a showing that a substantial number of veniremen "admit to disqualifying prejudice." Murphy v. Florida, 421 U.S. 794, 803 (1975). In Irvin v. Dowd, 366 U.S. 717, 727 (1961), the Supreme Court found a "pattern of deep and bitter prejudice" based in part upon the court's removal for cause of 268 of the jury panel's 430 members. Defendants have made no such showing in this case of actual prejudice.

Presumptive prejudice can be proven when the "defendant proffers evidence of pervasive community prejudice in the form of highly inflammatory publicity or intensive media coverage." Capo v. Lukefahr, 595 F.2d 1086, 1090 (5th Cir. 1979). However, "[w]here there is a reasonable likelihood that prejudicial news prior to trial will prevent a fair trial, the judge should continue the case until the threat abates, or transfer it to another county not so permeated with publicity." Sheppard v. Maxwell, 384 U.S. 333, 363 (1966). The defendants do not request a change of venue or continuance; instead, defendants seek a dismissal of the entire action. The cases cited by defendant do not support so drastic a remedy. See, e.g., Rideau v. Louisiana, 373 U.S. 723 (1963); Sheppard, 384 U.S. 333. Therefore, the Court DENIES defendants' motion to dismiss based on prejudicial publicity.

III. Valente and Conte's Motion to Suppress

On September 3, 2003, the government conducted a search of BALCO Laboratories. Defendants Valente and Conte have brought a motion to suppress all evidence obtained in that search on numerous grounds.

A. Subpoenas of Financial Records

Defendants bring a challenge, based on the Right to Financial Privacy Act, to the government's use of grand jury subpoenas to obtain their personal financial records. The RFPA, 12 U.S.C. § 3401 et seq., generally prohibits any federal entity from obtaining access to copies of or information contained in financial records unless the customer consents or the government complies with the customer notice provisions required by law. In re Grand Jury Subpoena, 41 F.Supp.2d 1026, 1032 (D.Alaska 1999).

However, under 12 U.S.C. § 3413(i), the customer notice requirement in the RFPA does not apply to federal grand jury subpoenas. Id. Sections 3415 and 3420, which are the only sections of the RFPA which apply to federal grand jury subpoenas, deal with cost reimbursement and the presentation and maintenance of financial records. Id. Therefore, the grand jury subpoena of defendant's financial records without notice is proper and the government may rely on the information obtained pursuant to that warrant in the affidavit for the September 3, 2003 warrant.

B. June and July 2003 Search Warrants

Defendants challenge the June and July 2003 search warrants for Yahoo! and AOL email accounts used by Conte and BALCO, claiming that the warrants were stale, overbroad and lacked probable cause.

When reviewing a magistrate judge's determination of probable cause, this Court's duty "is simply to ensure that the magistrate judge had a substantial basis for concluding that probable cause existed." Illinois v. Gates, 462 U.S. 213, 238-9 (1983). The Court finds that Judge Lloyd had a substantial basis for concluding that the email accounts would contain email regarding the distribution of performance-enhancing drugs, based on the affidavits submitted by Agent Novitzky that demonstrated a multi-year history of involvement in performance-enhancing drugs.

The affidavits contained evidence linking BALCO to performance-enhancing drugs as late as May 2003. See Defendants' Ex. C at 19, 23. Additionally, the email accounts named in the search had been used recently. Id. at 48-49. Staleness must be evaluated in light of the particular facts of the case and the nature of the criminal activity and property sought. United States v. Greany, 929 F2d 523, 525 (9th Cir. 1991). The Court finds that the warrants were not stale, given the evidence present in the affidavits that spanned many years until May 2003. The Court finds that the warrants were not overbroad. The warrants did not, as defendants argue, authorize the seizure of "all electronic messages" from the accounts. Instead, the emails seized under the warrant were restricted to financial matters and performance-enhancing drugs. See Defendants' Exs. B, C (Attachment A). Warrants must clearly state the material sought and must be limited in scope commensurate to the basis for probable cause. United States v. Towne, 997 F.2d 537, 544 (9th Cir. 1993). The Court finds that the warrants in question were sufficiently limited to the probable cause described above.

Defendants also claim that the July 2003 warrant contains a violation of Franks v. Delaware, 438 U.S. 154 (1978), because the attached affidavit failed to include: 1) that BALCO was publicly engaged in the testing of blood samples for individuals other than athletes; 2) that Conte had stated publicly that he was not involved in distributions of illegal substances; and 3) that Conte was the target of competitors' ill will. Defendants have the burden in making a Franks claim. United States v. Tham, 960 F.2d 1391, 1396 (9th Cir. 1991). In order to have a valid Franks claim, defendants must make a "substantial preliminary showing that a false statement was 1) deliberately or recklessly included in an affidavit submitted in support of a search warrant; and 2) material to the magistrate's finding of probable cause." United States v. Motz, 936 F.2d 1021, 1023 (9th Cir. 1991). Defendants must make this showing as well for the reckless or intentional misstatement of facts. Tham, 960 F.2d at 1395. Defendants have made no showing that these omissions were intentional or reckless. However, even if these assertions are accepted as true for purposes of this motion and included in the affidavit, the affidavit is still sufficient to establish probable cause.

Therefore, the Court finds that the evidence obtained based on the June and July search warrants was properly included in the September 3, 2003 search warrant for BALCO.

C. September 2003 Search Warrant

Defendants challenge the validity of the September 3, 2003 search warrant of BALCO Laboratories, claiming that the warrant lacks probable cause, is stale and overbroad, and constitutes a Franks violation.

Defendants argue that the warrant lacks probable cause because it was based upon evidence obtained illegally from the June and July 2003 search warrants. However, the Court has found these warrants to be valid and rejects this argument.

Defendants' staleness argument is also rejected, as the affidavit attached to the search warrant contained evidence establishing a pattern of long-term involvement in performance-enhancing drugs as described above and presented evidence of activity as late as June 2003. See Government's Ex. L ("Novitzky September 2003 Affidavit") at 10, 13, 17, 22. In light of the particular facts of this case and the nature of the alleged criminal activity, the magistrate judge was justified in believing that probable cause had been demonstrated. United States v. Greany, 929 F2d 523, 525 (9th Cir. 1991).

Defendants argue that the search warrant was overbroad, as it gives the government permission to search "all controlled substances and other athletic performance-enhancing drugs, substances and paraphernalia." According to defendants, this would include almost every item in a nutritional laboratory. The Court disagrees and finds that the provision is valid considering the investigation involved the illegal distribution of performance-enhancing drugs.

The provision authorizing the seizure of correspondence between BALCO, its agents, and athletes is appropriate because of the evidence demonstrating a connection between athletics and BALCO's distribution of controlled substances, such as email and letter correspondence with athletes in which controlled substances were discussed. See Novitzky September 2003 Affidavit.

Based on the above discussion, the Court finds that the September 2003 warrant was valid and now turns to issues involving the execution of the warrant.

D. Execution of September 2003 Warrant

Defendants raise a number of issues regarding the execution of the warrant by law enforcement at BALCO on September 3, 2004. The Court ...


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